Treasury Inspector General for Tax Administration
June 8, 2017
Contact: Karen Kraushaar, Director of Communications
WASHINGTON — The Internal Revenue Service (IRS) has made improvements in its time frames to close taxpayer identity theft cases by centralizing victim assistance into a single organizational directorate and by improving its processes and procedures, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
Identity theft for the purpose of committing refund fraud occurs when an individual uses another person’s name and Taxpayer Identification Number to file a fraudulent tax return. The objective of TIGTA’s review was to determine whether the centralization of the IRS identity theft functions improved assistance to identity theft victims.
In March 2015, TIGTA reported that the IRS took an average of 278 days to close taxpayer-initiated identity theft cases. In July 2015, the IRS centralized multiple functions working to assist identity theft victims into one IRS organization called the Identity Theft Victim Assistance (IDTVA) Directorate, with the goal of improving taxpayers’ experience of working with the IRS to resolve their identity theft cases.
TIGTA’s review of 51,749 taxpayer-initiated identity theft refund cases closed by the IDTVA between August 1, 2015, and May 25, 2016, identified that case closure time frames had improved. The cases were closed in an average of 166 days, which is 112 days (40 percent) less than the 278 days reported in TIGTA’s previous review. The improved timeliness is attributable to clearer lines of responsibility in the IDTVA and improved case processing guidance. TIGTA also identified improvement in the number of identity theft case resolution errors. In its 2015 review, TIGTA found that IRS employees did not correctly resolve 11 percent of the cases, resulting in the victim receiving an incorrect refund amount, while that error rate dropped to 7 percent for the period between August 1, 2015, and May 25, 2016.
“Refund fraud adversely affects the ability of innocent taxpayers to file their tax returns and timely receive their tax refunds, often imposing significant personal hardship,” said J. Russell George, Treasury Inspector General for Tax Administration. “The IRS has improved its assistance to these victims of identity theft,” he added.
TIGTA did identify one area where further improvements can be achieved. IDTVA managers are not consistently conducting required monthly reviews of employees’ identity theft casework. TIGTA recommended that the IRS ensure that managerial reviews are conducted in compliance with internal guidelines. The IRS agreed with TIGTA’s recommendation.
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.