Reports Show The IRS Is Exposing Taxpayers To Serious Risks

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A new report issued by the Government Accountability Office (GAO) shows eight high-risk areas in the Internal Revenue Service which pose serious privacy and financial threats to taxpayers, according to The Fiscal Times.

One of the areas highlighted in the report demonstrates that the IRS has no ability to determine whether their IT financial reporting systems are effective.

The IRS has also not been following standardized procedures for evaluating time cards, leading to serious questions about whether employees are receiving excess pay. As an example, during the government shut down last year, two employees managed to rack up 80 hours. This went unnoticed by managers.

Controls are not even in place for establishing that refunds are not issued to deceased taxpayers. This opens the door substantially to identity fraud, as well as the IRS issuing refunds to unauthorized individuals. According to the report, 78 percent of suspicious refunds were issued to deceased persons.

A previous report released by the GAO earlier in June found similar problems in the IRS’ internal structure.

Taxpayers who are audited by the IRS do not receive refunds until the audit is finished, but although the IRS promises reasonable amounts of time for getting to the bottom of the issue, it often takes months and months to wrap-up correspondence. According to the GAO, the IRS lags on over 50 percent of communication with audited taxpayers, which hurts the agency’s ability to work on other cases, and also hurts the taxpayer.

“[O]ur analyses of IRS data found unnecessary burden imposed on taxpayers with unclear notices generating phone calls that IRS examiners were not prepared to answer while refunds are delayed.,” the report notes.

As a result of the delays, taxpayers often clog up IRS phone lines, wondering when they will receive further correspondence, which only leads to increased delays in processing.

The IRS has actually agreed to implement the reforms the GAO recommended, which would substantially reduce wait times, although John Dalrymple, the IRS deputy commissioner for services and enforcement, was concerned about the agency’s ability to step up its performance.

“It is important to note that reductions in the IRS budget have stretched enforcement resources across the agency,” said Dalrymple.

However, despite the IRS’ apparent eagerness to internally push for reform, the IRS has not made any plans or created any timelines to indicate actual willingness to cooperate on previous reforms, as of January 2014. The latest report, too, has the IRS in agreement with recommendations, but again, it is totally unclear at what point the controls will be implemented.

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