Treasury Inspector General for Tax Administration
November 26, 2014
TIGTA - 2014-47
Contact: David Barnes
WASHINGTON – The Internal Revenue Service (IRS) is charged with collecting the Nation's taxes while also providing quality customer service. Accurate processing of so-called "frozen credit accounts" – accounts that require special handling or await the occurrence of a pending future event – is important to ensure that the IRS is providing quality customer service.
Frozen credit accounts that are not adequately identified and resolved could lead to: barred assessments, collections, and refunds due to the expiration of the applicable statute of limitations; unnecessary payment of additional interest to taxpayers for not timely issuing applicable refunds; or taxpayer burden if delayed refunds or payments not applied to the proper tax module affect the taxpayer's ability to meet financial obligations.
The IRS has procedural requirements and standardized systemic checks in place to identify and resolve most frozen credit accounts. In addition, the IRS has conducted research projects to help identify ways to improve the processing of these accounts. However, a review by the Treasury Inspector General for Tax Administration (TIGTA) found that further IRS actions are still needed to resolve some frozen credit accounts and some IRS computer systems need modifications to better reflect current procedures.
By reviewing samples of three different frozen credit conditions, TIGTA identified 156 individual tax modules with credits of $46.4 million and 128 business tax modules with credits of almost $1.6 billion for which the IRS did not take actions that could have resolved the credit tax modules sooner.
TIGTA made 10 recommendations for the IRS to reemphasize existing procedures, establish and enforce new procedures, and make improvements to computer systems. IRS management agreed with nine of the 10 recommendations and plans to take appropriate corrective actions.
"By improving adherence to its processing procedures and making improvements to certain computer systems, the IRS can minimize resolution delays for many frozen credit accounts," said J. Russell George, Treasury Inspector General for Tax Administration.
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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