IRS Ignoring Reports of Tax Fraud

October 4, 2012 Taxation in USA

Tax Fraud ReportWASHINGTON D.C. – The IRS is shredding tip-offs and information about tax evaders and identity thieves, as information from thousand of taxpayers is ignored due to filing errors.

In a report made public on October 3rd the US Treasury Inspector General for Tax Administration (TIGTA) revealed that the procedures for reporting tax fraud to the Internal Revenue Service (IRS) are often too confusing for taxpayers and a significant amount of the tips provided to the Service cannot be used as they are submitted on the wrong forms or do not have enough data.

According to the report, in the 2010 fiscal year the IRS almost 90 000 whislteblowing reports but almost 15 000 were destroyed and investigations were never launched to the reported matter.

In the 2011 fiscal year more than 12 000 reports were destroyed from the more than 116 000 tip-offs submitted in that year, and in the period between April and September 2012 the IRS destroyed  over 6 000 reports of the nearly 55 000 submissions received.

The Inspector General found that the instructions provided by the IRS for reporting tax fraud is “confusing and inconsistent”, and the explanations given to taxpayers did not clearly specify which form must be used for different types of fraud, with many complaints being wrongly lodged on a Information Referral Form 3949A, when it should have been completed as an Identity Theft Affidavit Form 14039 or a Complaint: Tax Return Preparer Form 14157.

Some tip-offs were also destroyed as they did not have enough information about the submitter or their complaint.

The report into the handling of the fraud complaints also found that the IRS did not have adequate internal procedures to handle incorrectly completed whistleblowing submissions, and did not follow any steps to inform the submitter that the report was not completed correctly.

Photo by Canadian Pacific (away till late Oct)