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Treasury Inspector General for Tax Administration

Press Release

August 26, 2013
TIGTA - 2013-30
Contact: David Barnes
(202) 622-3062

Further IRS Action Needed to Develop Implementation of New Fraud Detection System

WASHINGTON – The Internal Revenue Service (IRS) must take further action to ensure the successful deployment and implementation of its new fraud detection system, which is planned to help identify fraudulent tax refunds prior to issuance.

This is a finding of a new audit released today by the Treasury Inspector General for Tax Administration (TIGTA).

The IRS estimates tax refund fraud at more than $19.2 billion each fiscal year. The successful implementation of the IRS’s new fraud detection system, known as the Return Review Program, is expected to increase the dollar amount of fraudulent tax refunds identified annually and also to help the IRS to reduce improper payments.

TIGTA conducted this audit to determine if the IRS was adequately managing the development risks associated with its new fraud detection system. TIGTA found that improvements were needed to address system development risks inherent with the introduction of new technology.

The report also made six recommendations for system development process improvements. The IRS agreed with those recommendations and reported that it had completed two corrective actions prior to the issuance of TIGTA’s final report.

“Fraud detection systems are of critical importance in the fight against tax fraud,” said J. Russell George, Treasury Inspector General for Tax Administration. “If deployed correctly, the Return Review Program could significantly enhance the IRS’s capabilities to prevent, detect, and resolve tax refund fraud, including identity theft,” he added.

Read the report.


Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.

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