Report (2021-10-20)

Document type: report
Date: 2021-10-20

Summary

A final audit report by the Treasury Inspector General for Tax Administration, Report Number 2022-16-002, issued October 20, 2021, on the Taxpayer Advocate Service's actions to assist taxpayers under the CARES Act. The report states that TAS received over 6,000 cases it coded as CARES Act-related, but a statistical sample showed 18 percent of accepted cases did not meet TAS criteria. It finds that 225 of 575 reviewed cases involved CARES Act issues without the required code, and that five of 110 sampled cases were miscoded. It also reports that TAS spent $3.2 Million to work COVID-19-related issues and describes systemic issues reported on SAMS in CY 2020. TIGTA recommends reinforcing case-acceptance guidance and considering an issue code for stimulus-type payments, and TAS management agreed with both recommendations.

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TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

The Taxpayer Advocate Service Assisted Thousands of
Taxpayers With CARES Act Issues but Faced Challenges
in Identifying and Tracking Applicable Cases

October 20, 2021

Report Number: 2022-16-002

TIGTACommunications@tigta.treas.gov | www.treasury.gov/tigta 1
HIGHLIGHTS: The Taxpayer Advocate Service Assisted Thousands of Taxpayers
With CARES Act Issues but Faced Challenges in Identifying and Tracking Applicable Cases
Final Report issued on October 20, 2021 Report Number 2022-16-002

Why TIGTA Did This Audit What TIGTA Found
This audit is one in a series being TAS has taken numerous actions to assist taxpayers in response to
conducted by TIGTA as part of our the enactment of the CARES Act. This includes identifying and
oversight role of the IRS’s response addressing CARES Act issues affecting large groups of taxpayers
to the coronavirus pandemic, (Systemic Advocacy) and assisting individual taxpayers (Case
including implementation of the Advocacy) as well as taking other actions to keep the public apprised
applicable Coronavirus Aid, Relief, of CARES Act issues. However, TIGTA determined that TAS accepted
and Economic Security (CARES) Act cases that did not meet its criteria and did not properly track CARES
provisions. Our overall objective Act issues.
was to assess the Taxpayer
The IRS acted quickly to administer the main provisions of the
Advocate Service’s (TAS) actions to
CARES Act, specifically concerning the EIPs. While the distribution
assist taxpayers in response to the
of the EIPs was mostly successful, EIP-related problems became
implementation of the CARES Act.
apparent early in the process. However, the IRS initially lacked the
TIGTA previously issued an interim capabilities to resolve EIP-related problems. As the IRS began
report describing the actions TAS implementing processes to fix EIP issues, TAS started accepting
has taken to assist taxpayers in certain EIP cases in August 2020. TAS records indicate that it
response to the enactment of the received over 6,000 cases it coded as CARES Act–related and that
CARES Act. over 5,000 of these taxpayers were provided assistance or relief for
their issue(s) through the TAS program.
Impact on Taxpayers
Although TAS developed criteria specifying the types of issues it
Soon after the IRS began issuing
would accept, TIGTA’s review of a statistical sample of TAS cases
Economic Impact Payments (EIP) in
showed that 18 percent of the cases accepted did not meet TAS
response to the CARES Act, TAS
criteria. In these instances, TAS’s ability to resolve taxpayer problems
started receiving reports of
was limited, and its resources might have been better spent assisting
EIP-related issues. TAS’s statutory
taxpayers whose issues met its criteria.
mission is assisting taxpayers in
resolving tax problems with the Additionally, TAS cannot accurately identify the number of CARES Act
IRS, identifying areas in which cases received, although employees were advised to use specific
taxpayers have problems with the coding to identify cases involving these issues. TIGTA reviewed
IRS, and making administrative and 575 cases that did not include a CARES Act designation code and
legislative recommendations to determined that 225 cases involved CARES Act issues but were not
mitigate tax problems. coded as such on the Taxpayer Advocate Management Information
System. Additionally, TIGTA reviewed a statistical sample of
110 cases designated as CARES Act–related and determined that
five cases were coded as having CARES Act issues when they did not.
TAS management agreed and has corrected the miscoded cases.
What TIGTA Recommended
TIGTA recommended that the National Taxpayer Advocate reinforce
existing guidance to ensure that TAS employees are adhering to
guidance concerning contacts not meeting TAS criteria and consider
establishing an issue code to identify cases involving stimulus-type
payments. TAS management agreed with both recommendations
and will remind all employees to use the most current guidance
when determining whether to accept a case and will create
undesignated issue codes to track future stimulus payments or other
emerging issues.
U.S. DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION

October 20, 2021

MEMORANDUM FOR: COMMISSIONER OF INTERNAL REVENUE

FROM: Michael E. McKenney
Deputy Inspector General for Audit

SUBJECT: Final Audit Report – The Taxpayer Advocate Service Assisted Thousands
of Taxpayers With CARES Act Issues but Faced Challenges in Identifying
and Tracking Applicable Cases (Audit # 202110612)

This report presents the results of our review to assess the Taxpayer Advocate Service’s actions
to assist taxpayers in response to the implementation of the Coronavirus Aid, Relief, and
Economic Security (CARES) Act. This review is part of the Treasury Inspector General for Tax
Administration’s oversight of the Internal Revenue Service’s response to the Coronavirus Disease
2019 (COVID-19) pandemic and is included in our Fiscal Year 2021 Annual Audit Plan. It
addresses the major management and performance challenge of Responding to the COVID-19
Pandemic.
Management’s complete response to the draft report is included as Appendix III.
Copies of this report are also being sent to the Internal Revenue Service managers affected by
the report recommendations. If you have any questions, please contact me, or Heather M. Hill,
Assistant Inspector General for Audit (Management Services and Exempt Organizations).
The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

Table of Contents
Background .....................................................................................................................................Page 1

Results of Review .......................................................................................................................Page 2
The Taxpayer Advocate Service Continues to Address
Systemic Issues Affecting Large Groups of Taxpayers ...........................................Page 2
The Taxpayer Advocate Service Assisted Thousands of
Individual Taxpayers but Also Accepted Some Cases
That Did Not Meet Its Criteria .........................................................................................Page 6
Recommendation 1: ...................................................................Page 9

The Taxpayer Advocate Service Continues to Educate
and Assist Taxpayers ...........................................................................................................Page 9
The Taxpayer Advocate Service Spent $3.2 Million to
Work COVID-19–Related Issues .....................................................................................Page 10
The Taxpayer Advocate Service Cannot Accurately
Identify the Number of CARES Act Cases Received ................................................Page 10
Recommendation 2: ...................................................................Page 12

Appendices
Appendix I – Detailed Objective, Scope, and Methodology ................................Page 13
Appendix II – Outcome Measure ...................................................................................Page 15
Appendix III – Management’s Response to the Draft Report .............................Page 16
Appendix IV – Abbreviations ...........................................................................................Page 20
The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

Background
The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act was enacted on
March 27, 2020, and is the largest economic rescue package in U.S. history, providing for
more than $2 trillion in economic relief. 1 The Act was passed in response to the Coronavirus
Disease 2019 (COVID-19) outbreak and its impact on the economy, public health, State and
local governments, individuals, and businesses.
The CARES Act contains numerous tax-related provisions affecting individuals and businesses
and provided approximately $750 million in additional funding to the Internal Revenue Service
(IRS) to administer and oversee these provisions. One of the significant CARES Act provisions
involves the issuance of recovery rebates, also referred to as Economic Impact Payments (EIP), of
$1,200 per individual ($2,400 to couples filing a joint return) and $500 for each qualifying
dependent. The payments were to be issued to all U.S. residents with income below certain
threshold amounts who met certain other criteria, such as having a work-eligible Social Security
Number. 2 Figure 1 shows highlights of some of the significant CARES Act provisions affecting
individuals and businesses.
Figure 1: Highlights of CARES Act Provisions

Source: Treasury Inspector General for Tax Administration (TIGTA) analysis of the CARES Act.
As an independent part of the IRS, the Taxpayer Advocate Service (TAS) has the responsibility to
help taxpayers resolve problems with the IRS, identify administrative and legislative causes of
those problems, and make recommendations to the IRS and Congress on how to mitigate the
problems. TAS employees work in one of three main areas: Systemic Advocacy, Case Advocacy,
or the Headquarters offices. Systemic Advocacy is charged with resolving IRS systemic problems
that affect large groups of taxpayers, whereas Case Advocacy assists individual taxpayers in
resolving tax problems. The Headquarters office oversees the overall administration of TAS
functions.

1
Pub. L. No. 116-136, 134 Stat. 281.
2
The Social Security Administration assigns Social Security Numbers to U.S. citizens and people lawfully admitted to
the United States on a permanent basis and to individuals authorized by the Department of Homeland Security to
work in the United States on a temporary basis.
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The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

This audit is one in a series of audits being conducted by TIGTA as part of our oversight role of
IRS’s response to the coronavirus pandemic, including implementation of the applicable CARES
Act provisions. 3 We previously issued an interim report describing the actions TAS has taken to
assist taxpayers in response to the enactment of the CARES Act. 4

Results of Review
TAS has taken numerous actions to assist taxpayers in response to the implementation of the
CARES Act. This includes:
• Identifying and addressing CARES Act issues affecting large groups of taxpayers
(Systemic Advocacy).
• Assisting individual taxpayers (Case Advocacy).
• Taking other actions to educate and keep the public apprised of CARES Act issues.
However, TAS accepted cases that did not meet case acceptance criteria and did not properly
track CARES Act cases received. As such, TAS cannot accurately identify the number of
CARES Act cases received and used resources to handle cases that did not meet its criteria.

The Taxpayer Advocate Service Continues to Address Systemic Issues
Affecting Large Groups of Taxpayers
Soon after the IRS began issuing the EIPs, TAS started receiving reports of EIP-related issues
affecting certain groups of taxpayers. In an effort to identify and address systemic EIP issues,
TAS established a COVID-19 Rapid Response Team. The team includes members from various
functions within TAS and is responsible for identifying, researching, elevating, and responding to
emerging issues that impact taxpayer burden and rights. The Rapid Response Team works
directly with IRS operating divisions and responds to issues raised by employees and taxpayers.
As part of its role, the Rapid Response Team identified problems requiring additional IRS
guidance for taxpayers who were experiencing certain CARES Act–related problems. TAS
management stated that the IRS created numerous Frequently Asked Questions on the IRS.gov
website in response to recommendations made by the Rapid Response Team.

COVID-19–related problems account for a substantial number of systemic issues
reported to TAS
Many of the issues raised were submitted to TAS through the Systemic Advocacy Management
System (SAMS), a system available to IRS employees and the public to report IRS systemic

3
TIGTA, 2021 Annual Audit Plan.
4
TIGTA, Report No. 2021-16-019, Interim Report – Taxpayer Advocate Service Actions to Assist Taxpayers in Response
to the Implementation of the Coronavirus Aid, Relief, and Economic Security Act (Mar. 2021).
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The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
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problems to TAS. 5 During Calendar Year (CY) 2020, TAS received 1,264 issues on SAMS, and TAS
identified 553 of these as COVID-19–related issues. 6
CARES Act–related problems (primarily those pertaining to EIPs) comprise the largest category
of COVID-19 issues. We identified 384 CARES Act–related issues that were reported on SAMS in
CY 2020. 7 The majority of these issues apply to the EIP, and the largest category involves injured
spouse EIP problems. TAS classified COVID-19 issues into eight categories, but the majority of
CARES Act issues (over 90 percent) were identified as being in one of four categories, as shown
in Figure 2.
Figure 2: Primary CARES Act Issues Reported

Issue Description

COVID EIP Injured This issue involves instances in which a nonliable spouse’s portion of the EIP (or
Spouse the entire EIP) was offset to the liable spouse’s child support debt, regardless of
whether an injured spouse claim was filed.
COVID Processing This issue involves problems caused by changes in processes and procedures
that prevented timely resolution of certain issues. For example, the identity
verification processes delayed issuance of stimulus payments.
COVID EIP This issue involves instances relating to nonreceipt of EIPs for various reasons
and instances in which the EIP was not the amount expected.
COVID Website This issue involves problems related to the Get My Payment Tool; submitting
nonfiler information, etc.
Source: TIGTA review of issues reported on SAMS in CY 2020.
Once an issue is submitted through SAMS, it generally goes through a three-stage review
process to determine how best to address the concern raised. Based on this review, TAS may
identify a systemic issue in need of attention and create one of three types of projects to
address the issue:
1. Information Gathering Projects (IGPs) are used to identify emerging trends or issues
generated from new legislation or significant IRS policy, process, or procedural changes.
These projects are categorized as either Research or Monitor IGPs.
• A Research IGP is created to determine if an issue is a systemic problem that should
potentially be addressed in an Advocacy Project or an Immediate Intervention Project
or be assigned to a collaborative team or task force.
• A Monitor IGP is used to track SAMS issues or developments on an emerging issue.
For example, Systemic Advocacy may wish to collect information related to the
passage of new legislation or a new administrative procedure. This allows Systemic
Advocacy to be aware of the issue for discussions with the IRS and for keeping the
public apprised of the issue through outreach efforts.

5
SAMS is overseen by TAS’s Systemic Advocacy group. Both internal (e.g., IRS employees) and external (e.g.,
taxpayers) submitters can use SAMS to report systemic issues that adversely impact taxpayers. The issues put on
SAMS are reviewed by employees in the Systemic Issue Review and Evaluation group. The goal is to resolve the
systemic issue (problem), and this often involves recommendations to change IRS procedures and processes.
6
These are unaudited results; we did not assess the accuracy of this coding.
7
The remaining 169 issues fall into one of four categories: COVID–Exam, COVID–Collection, COVID–Individual Issue,
or COVID–Taxpayer Service.
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but Faced Challenges in Identifying and Tracking Applicable Cases

2. Immediate Intervention Projects are the result of an operational issue that causes
immediate, significant harm to multiple taxpayers and demands an urgent response.
3. Advocacy Projects are used to identify and address systemic and procedural issues,
analyze the underlying causes of problems, and propose corrective actions.
Most of the CARES Act issues submitted on SAMS did not result in the creation of a new project.
Over 70 percent were closed on SAMS under the category “Already Resolved” or “Systemic Issue
Elevated.” This includes 137 issues that were identified as having been resolved by the IRS, were
in the process of being resolved, or were addressed through IRS guidance. For example, TAS
received multiple SAMS submissions relating to EIPs received in the name of a deceased spouse,
and these issues were closed as “Already Resolved” on SAMS because the concerns raised were
addressed on the Frequently Asked Question’s section of the IRS.gov site or there was existing
internal guidance.
Another 133 issues were closed when the issue was “elevated” in that it was brought to the
attention of the applicable personnel in TAS or the IRS. According to TAS management, these
submissions may have included issues that were already being addressed as part of an IGP. For
example, Systemic Advocacy received more than 100 SAMS submissions related to EIP injured
spouse claims and created an IGP soon after problems were initially identified in April 2020.
Subsequent receipts of injured spouse issues were “elevated” as the issue was being considered
as part of the existing IGP. The remaining CARES Act issues were closed under 10 other issue
disposition categories, with 14 resulting in the creation of an IGP.

Sixteen CARES Act Systemic Advocacy projects were created
As of December 31, 2020, TAS Systemic Advocacy created 16 CARES Act–related projects, most
(14 of 16) of which were IGPs. Six of the IGPs are categorized as Research IGPs, with eight being
categorized as Monitor IGPs. All but four of the projects were closed as of June 30, 2021.
Figure 3 shows the disposition of the 12 closed projects.

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The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

Figure 3: Disposition of Twelve Closed CARES Act Systemic Advocacy Projects

CARES Act Project Issue Type of Project Disposition As Indicated by TAS

Estimated Tax Penalties Research IGP Issue not resolved but affects a small number of
From Net Operating Losses taxpayers.

Prior Year Refund Claims Monitor IGP Issue not systemically resolved, but affected
Preventing EIP Issuance taxpayers may still claim the Recovery Rebate
Credit (RRC) on Tax Year (TY) 2020 returns.

Reduced EIP for Married Monitor IGP Issue considered resolved – recovery was
Recipients of Supplemental implemented in September 2020 for most Social
Security Income Security Administration/Social Security Income
recipient EIP issues.

Primary and Spouse Research IGP Partially resolved – systemically corrected but not
Taxpayer Check Box Issues in time for issuance of all EIPs in CY 2020.

EIP Reduced to $250 for Monitor IGP Issue not systemically resolved, but affected
Dependent Child taxpayers may still claim RRC on TY 2020 returns.

EIP Debit Cards Not Issued Research IGP Issue to be monitored by Systemic Advocacy
As Indicated on the IRS COVID-19 Rapid Response Team.
System

Returned International EIPs Research IGP Issue to be monitored by Systemic Advocacy
COVID-19 Rapid Response Team.

External Leads – EIP Monitor IGP Issue considered resolved – Internal Revenue
Manual (IRM) was updated in July 2020.

Non-Filer Tool Programming Monitor IGP Issue considered resolved – a systemic fix was
Error – EIP for Dependents implemented in August 2020.

EIPs Returned Undeliverable Research IGP Issue considered resolved – IRM was updated;
however, not all accounts were timely corrected.
Taxpayers may still claim RRC.

Form 7200 – Advance of Research IGP Issue considered resolved – internal guidance was
Employer Credit developed.

C Freeze Holding Refund Advocacy Issue considered resolved – once the Bureau of the
Project Fiscal Service issued the majority of the EIPs, the
IRS released the freezes that were preventing the
issuance of tax refunds.
Source: TAS management and TIGTA analysis of project status on SAMS effective June 30, 2021.

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The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

Figure 4 shows the details of the four open CARES Act–related Systemic Advocacy projects:
Figure 4: Status of Four Open CARES Act–Related Systemic Advocacy Projects

Type of
CARES Act Project Issue Project Details

Pertains to instances in which a nonliable spouse’s
portion of the EIP (or the entire EIP) was offset to
the liable spouse’s child support debt, regardless of
EIP Injured Spouse Monitor IGP whether an injured spouse claim was filed.
Although the IRS has implemented three systemic
corrections, not all taxpayer accounts have been
corrected.

Addresses IRS handling of the increased volume of
Delays in Processing Net refund claims related to changes in the Net
Monitor IGP
Operating Loss Refund Claims Operating Loss Carryback rules established under
the CARES Act.

Systemic Advocacy is seeking clarification on the
Deductibility of Paycheck tax treatment of forgivable loans received by
Monitor IGP
Protection Loans companies through the Paycheck Protection
Program.

Involves instances in which current year refunds
and EIPs were stopped by the Bureau of the Fiscal
Refunds Intercepted by the Advocacy
Service. The IRS has implemented systemic
Bureau of the Fiscal Service Project
corrections, but it is not yet apparent if all affected
taxpayer accounts have been corrected.
Source: TAS management and TIGTA analysis of project status on SAMS effective June 30, 2021.

The Taxpayer Advocate Service Assisted Thousands of Individual Taxpayers
but Also Accepted Some Cases That Did Not Meet Its Criteria
The IRS acted quickly to administer the main provisions of the CARES Act, specifically concerning
the EIPs. 8 While the distribution of the EIPs was mostly successful, problems involving certain
groups of taxpayers became apparent soon after the Act was passed.
During our interim review, we reported that TAS capabilities to resolve EIP-related issues were
initially limited because the IRS had not established processes and procedures to resolve most
of these issues. As other IRS functions began implementing processes to fix EIP issues, TAS
established criteria for the types of cases it would take and started accepting certain EIP-related
cases on August 10, 2020. TAS criteria include issues involving:
• Unresolved lost/missing/undeliverable EIPs.

8
TIGTA, Report No. 2020-46-041, Interim Results of the 2020 Filing Season: Effect of COVID-19 Shutdown on Tax
Processing and Customer Service Operations and Assessment of Efforts to Implement Legislation Provisions
(June 2020).
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The Taxpayer Advocate Service Assisted Thousands of Taxpayers With CARES Act Issues
but Faced Challenges in Identifying and Tracking Applicable Cases

• EIPs returned by joint filers of which one spouse is ineligible (e.g., deceased or
incarcerated). 9
• Unprocessed injured spouse claims associated with the tax return used to calculate the
EIP (TYs 2019 or 2018, as applicable) or secured by TAS. 10
Additionally, since the CARES Act stipulates that EIPs cannot be made or allowed after
December 31, 2020, TAS implemented a policy to stop accepting EIP-only cases by
November 24, 2020. 11
We identified a population of 6,260 CARES-coded closed cases received by TAS between
August 10, 2020, and December 31, 2020. According to TAS records, over 5,000 (81 percent) of
these cases involved taxpayers who received assistance (13 percent) or relief (68 percent) for
their issue(s). 12 Although TAS was not able to provide the relief requested in 32 percent of
cases, it reported providing assistance to 817 (13 percent) of these taxpayers. TAS considers
assistance to be provided if helpful information is shared with the taxpayer even if it had no
direct bearing on the relief the taxpayer requested.
As part of our review, we selected a statistical sample of 110 cases to determine if the cases
were properly identified as having CARES Act issues and if TAS’s decision to accept the case was
based on the criteria in effect at the time. 13 We determined that five of the 110 cases were
erroneously coded as having CARES Act issues. Of the remaining 105 cases, 19 (18 percent) did
not meet TAS criteria at the time they were accepted.
Nine of the 19 cases involve taxpayer disagreements with the factors used in determining their
eligibility for the EIP. For example, if the taxpayer’s TY 2018 tax return was used as the basis for
determining the EIP amount because their TY 2019 tax return had not yet been processed, the
IRS could not subsequently change this determination. Instead, these taxpayers would need to
claim the RRC on their TY 2020 tax return.14 Similarly, if taxpayers were claimed as dependents
on the base year (TY 2018 or TY 2019) return, they were ineligible for the EIP but may be entitled
to the RRC on their TY 2020 tax return.
Additionally, TAS accepted cases that were being resolved by the IRS through “recovery”
processes. Some EIPs were erroneously offset to spousal child support obligations or were
intercepted by the Bureau of the Fiscal Service because they were issued to deceased or

9
Pursuant to a permanent injunction entered in Scholl v. Mnuchin, No. 20-cv-05309 (N.D. Cal. Oct. 14, 2020), the IRS
cannot deny a payment to someone solely because they are incarcerated. In October and November 2020, the IRS
took action to issue EIPs to individuals that were previously denied EIPs due to their incarceration.
10
This pertains to instances in which a nonliable spouse’s portion of the EIP (or the entire EIP) was offset to the liable
spouse’s child support debt.
11
Beginning January 1, 2021, taxpayers who did not receive an EIP or received an amount less than they were entitled
to in CY 2020 can claim or reconcile the RRC on their TY 2020 Form 1040, U.S. Individual Income Tax Return, or
Form 1040-SR, U.S. Income Tax Return for Seniors. The last date that TAS could issue an Operations Assistance
Request to the Wage and Investment Division to request an adjustment be made to the EIP was November 30, 2020.
12
TAS records indicate that 4,246 taxpayers (68 percent) received full or partial relief of the problem that resulted in
their TAS case. In these instances, the CARES Act issue could be either the primary or secondary issue.
13
See Appendix I for details on our sampling methodology.
14
The EIPs were issued as advance payments of the RRC. Eligible individuals who did not receive the full EIP amount
may claim the RRC on their TY 2020 tax return.
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but Faced Challenges in Identifying and Tracking Applicable Cases

incarcerated individuals. 15 As a result, the IRS took action to recover and reissue these EIPs (as
applicable) through systemic processes. For example, TIGTA previously reported that, in some
instances, EIPs were issued in the names of two spouses although one spouse was recently
deceased.16 Some of these EIPs were intercepted and were later reissued in the name of the
surviving spouse. This includes instances in which TAS erroneously requested EIPs on behalf of
the surviving spouse who were also issued duplicate EIPs through the systemic process.17 In
other instances, TAS accepted EIP cases not meeting criteria after the November cut-off date for
case acceptance. Figure 5 shows the categories of cases in our sample that did not meet TAS
criteria but were accepted in the TAS program.
Figure 5: CARES Act Cases Accepted by TAS That
Did Not Meet TAS Case Acceptance Criteria

Number
Reason TAS Criteria Was Not Met of Cases

Disagreements with the factors used to determine EIP eligibility or how the 9
EIP was calculated (applicable tax year used, dependency status, validity of
Social Security Number, etc.)
Issues addressed through the recovery process – EIPs intercepted by the 7
Bureau of the Fiscal Service
Miscellaneous noncriteria 3
Total 19
Source: TIGTA review of a statistical sample of TAS case files.
The TAS IRM provides guidance on handling cases that do not meet TAS case acceptance
criteria. However, TAS management indicated the procedures to return a case that does not
meet criteria are burdensome and were not used in these instances. 18 Further, TAS contend that
taxpayers benefit from receiving an explanation from TAS even if TAS is unable to provide the
relief they requested. Management also cited a number of factors contributing to the errors,
including changes in IRS guidance and guidance that was not always clear. Further, 11 of the
19 cases were established based on referrals from congressional offices, and employees may not
have been aware that the policies for accepting cases from congressional offices were revised
during CY 2020.
In general, TAS cannot provide the assistance requested by taxpayers if the IRS has no
procedures in place to do so. Further, if the taxpayer’s issue is being resolved through systemic
processes, there is generally no advantage to establishing a case with TAS. In both instances,
TAS is using resources that may be better spent assisting taxpayers whose problems can be

15
Established on October 7, 2012, with the consolidation of two Department of the Treasury bureaus: the Bureau of
the Public Debt and the Financial Management Service. The Bureau of the Fiscal Service operates the Federal
Government’s collections and deposit systems, provides central payment services to the American public on behalf of
Government agencies, and assists in the prevention of improper payments.
16
TIGTA, Report No. 2021-46-034, Implementation of Economic Impact Payments (May 2021).
17
At the time TAS requested the duplicate EIPs on behalf of the surviving spouse, they were erroneously issued.
However, the Consolidated Appropriations Act, enacted on December 27, 2020, clarified that individuals who died in
CY 2020 are eligible to receive the RRC. Therefore, while the surviving spouses were not entitled to receive the EIPs,
they would have been entitled to receive the amount by claiming the RRC.
18
IRM 13.1.16.15, Contacts Not Meeting TAS Criteria, March 11, 2021, provides detailed instructions on actions to be
taken by TAS employees who receive taxpayer inquiries that do not meet TAS criteria.
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resolved using existing IRS procedures. This is especially important now because TAS is
experiencing a significant increase in the volume of case receipts compared to same period in
the previous year. 19
TAS criteria has been revised since our review was completed and are always subject to change
as conditions within the IRS change. For example, per a memorandum issued May 4, 2021, TAS
will generally not accept cases related to unemployment compensation received in TY 2020
because the IRS is already implementing a systemic relief processes that will adjust taxpayer
accounts and TAS cannot “meaningfully advocate” on behalf of affected taxpayers. Given that
TAS lacks the authority to resolve all account-related issues and frequently requires the
assistance of other functions within the IRS, it is important for TAS to focus its limited resources
on issues that meet its criteria and can be resolved through established processes.

Recommendation 1: The National Taxpayer Advocate should reinforce existing guidance to
ensure that TAS employees are adhering to: a) the IRM guidance concerning contacts not
meeting TAS criteria and b) TAS policies related to the handling of congressional referrals.
Management’s Response: Management agreed with this recommendation and will
remind all employees to use the most current guidance in place when determining
whether to accept a case.

The Taxpayer Advocate Service Continues to Educate and Assist Taxpayers
TAS has continued to post informative and relevant blogs to keep the public apprised of CARES
Act issues. In the first four months of CY 2021, TAS posted 11 blogs (five corresponding Spanish
blogs) on various CARES Act–related topics.
Notably, TAS posted two blogs related to the IRS’s refund offset process in which it discussed
the impact on stimulus payments. The IRS is authorized to offset a taxpayer’s refund to pay
outstanding Federal tax liabilities and is generally required to offset refunds to certain nontax
debts, including past-due child support, unpaid student loans, and other Federal and State
liabilities. TAS noted that the CARES Act did not allow for the EIPs or RRC’s to be offset to
satisfy outstanding debts, with the exception of past-due child support. The Consolidated
Appropriations Act of 2021 went further and protected the second round of stimulus payments
from all offsets, including past-due child support. However, it limited the exception only to
advance payments and retroactively revised CARES Act § 2201(d), subjecting RRCs to regular
offset rules for unpaid Federal taxes and certain other debts. TAS noted disparate treatment of
EIP payments resulting from these two legislative actions.
As such, TAS recommended that the IRS use its discretion and refrain from offsetting RRC’s
against Federal tax debts, noting that, while the Internal Revenue Code permits such offsets, the
IRS has the authority to “bypass” the offsets. Subsequently, the IRS agreed to use its discretion
to bypass offsets (for Federal tax debts) when processing RRC claims on TY 2020 tax returns.

19
Results from TAS first quarter Fiscal Year 2021 Business Performance Review show the volume of case receipts
increased 54 percent from first quarter Fiscal Year 2020 receipts. A fiscal year is any yearly accounting period,
regardless of its relationship to a calendar year. The Federal Government’s fiscal year begins on October 1 and ends
on September 30.
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Our review of TAS records shows that TAS continued to work with the IRS to address ways to
ensure that taxpayers whose payments had already been offset are made whole.
Additionally, in a blog dated April 29, 2021, TAS provides guidance on the tax treatment of
Paycheck Protection Program loans. Under the CARES Act, a Paycheck Protection Program loan
recipient is eligible for forgiveness of indebtedness for all or a portion of the stated principal
amount of the loan if certain conditions are satisfied. To qualify, the loan had to be made to an
eligible business (with no more than 500 employees) and be used for payroll costs and certain
other expenses (e.g., rent, mortgage interest, utilities) within a certain period of time. The TAS
blog addresses concerns raised with the implementation of the Paycheck Protection Program
and directs readers to the available guidance to address these concerns.

The Taxpayer Advocate Service Spent $3.2 Million to Work COVID-19–Related
Issues
TAS received $3.2 million in CARES Act funds in Fiscal Year (FY) 2020 to address work related to
COVID-19 and more than $90,000 for cash award payouts. Due to cancelled in-person training
and travel, TAS experienced cost savings in FY 2020 and did not expend any of the $3.2 million
until FY 2021. 20 By April 15, 2021, TAS had expended the entire $3.2 million on employee labor
charges and overtime to address CARES Act–related work. We found this to be reasonable due
to the significant increase in the number of phone calls and cases (related to EIP issues)
received. TAS reported a 54 percent increase in the volume of cases received in the first quarter
of FY 2021 as compared to the first quarter of FY 2020. TAS management anticipates that
additional supplemental funding will be needed to address the influx.21 TAS continues to offer
employees limited overtime as it anticipates that case work and call volumes will continue to
increase for the foreseeable future.
TIGTA is currently conducting a review to evaluate the controls implemented by the IRS to
ensure that appropriated CARES Act funds are adequately tracked and used. An interim report
has been issued, and the final report is expected to be issued in February 2022. 22

The Taxpayer Advocate Service Cannot Accurately Identify the Number of
CARES Act Cases Received
When TAS provides assistance to taxpayers through the Case Advocacy program, it is important
that there is a process in place to track the number and type of issues that required TAS
assistance. Without accurate information, TAS management cannot reliably use the Taxpayer
Advocate Management Information System (TAMIS) for decision-making and planning

20
While TAS experienced cost savings due to cancelled travel and training in FY 2020 and FY 2021, due to the effects
of the pandemic, it did not track the surplus.
21
TAS advised that employees record COVID-19–related time charges in the IRS’s Single Entry Time Reporting system.
TAS tracks its budget and spending in the Integrated Financial System.
22
TIGTA, Report No. 2021-16-026, Status of Coronavirus Response Funding (May 2021).
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purposes. 23 During our interim review, we identified 70 cases involving CARES Act issues that
were not coded as such on TAMIS. TAS management agreed and subsequently updated the
coding on these cases. TAS also advised that it provided CARES Act–specific training to its
employees that should reduce the number of miscoded cases. We conducted a follow-up
review of cases received after the EIP training was delivered in October 2020 to determine
whether the case coding had improved.
We identified 575 TY 2020 closed cases that were received between October 20, 2020, and
November 24, 2020, that did not include a CARES Act code. We determined that 225 of the
575 cases involved CARES Act issues but were not coded as such on TAMIS. TAS confirmed our
finding and corrected the miscoded cases in TAMIS. 24
Additionally, as part of our review of a random sample of 110 CARES Act–coded cases, we
determined that five of the cases had the “CARES” designation on TAMIS although we did not
identify any CARES Act issue. TAS management agreed with our finding and corrected the
coding for these cases.
Per TAS guidance, cases involving issues stemming from the CARES Act must be coded
accurately and timely to capture information about the types of questions and assistance
requests received in TAS. Employees are instructed to enter the “CARES" code in TAMIS for
problems related to:
• EIPs.
• Form 7200, Advanced Payment of Employer Credits Due to COVID-19.
• Deferred Employer Tax Payments, Employee Retention Credits, and the Qualified Sick
and Family Leave Wages Credit.
Further, employees are to use this coding when casework involves CARES Act–related
discussions and when addressing secondary issues and "incidental matters.” Advocates should
also enter “2020” as the applicable tax year for cases involving the EIP.
Although the majority of CARES Act cases involve problems related to the EIP, there is currently
no issue code for stimulus payments, and employees are required to manually enter “CARES”
into a TAMIS field that is not commonly used. 25 We asked TAS management if they had
considered creating an issue code for stimulus-type payments. While they acknowledged that
their tracking process could be improved, they indicated they had not considered creating a
specific issue code because additional stimulus payments were unlikely. They stated that they

23
TAMIS is an Oracle web-based inventory control and report system used to control and track TAS cases and
provide management information. In April 2020, TAS created a code to identify certain CARES Act cases on TAMIS
and instructed employees to use the code when the taxpayer’s inquiry involves the EIP or the employer credits for
paid sick leave and employee retention.
24
We identified an additional seven cases that were improperly coded as COV19 instead of CARES. TAS management
advised that they include cases for which the designation was intended, but input incorrectly, when attempting to
quantify CARES Act cases. TAS subsequently corrected the coding on these cases.
25
Issue codes are used to identify the problem as stated by the taxpayer (Taxpayer Issue Code); identify the
underlying IRS policy, procedure, or issue that generated the TAS case (Primary Core Issue Code); and identify
additional issues for which TAS performed additional research or took some action to resolve before closing the case
(Secondary Core Issue Code).
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have the capability to data mine TAMIS if there is a need to identify cases involving specific
issues.
However, stimulus-type advance payments have been issued in the past in response to another
economic crisis 26 and are continuing per recent legislation. 27 Creating an issue code for
stimulus/advance payments is appropriate given that the Primary Core Issue Code field is a
required entry on TAMIS and, unlike the current process, TAS personnel would not be required
to add typed-in entries in a separate field. Further, case advocates are required to verify the
accuracy of the issue codes as part of their closing actions. This additional level of review could
help improve accuracy. We believe that proper TAMIS case coding helps management identify
trends affecting taxpayers and assists management in readily identifying and reporting case
information.

Recommendation 2: The National Taxpayer Advocate should consider establishing an issue
code for stimulus-type payments.
Management’s Response: TAS management agreed with this recommendation and will
create undesignated issue codes to track future stimulus payments or other emerging
issues.

26
TIGTA, Report No. 2009-40-069, Evaluation of Efforts to Ensure Eligible Individuals Received Their Economic
Stimulus Payment (Apr. 2009).
27
The Economic Stimulus Act of 2008, Pub. L. No. 110–185, 122 Stat. 613, provided for economic stimulus payments
that began on April 28, 2008. The Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020),
and the American Rescue Plan of 2021, Pub. L. No. 117-2, 135 Stat., provided for economic stimulus payments that
began on December 27, 2020, and March 11, 2021, respectively. In addition, the American Rescue Plan of 2021
provides for advance payments of child tax credits.
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Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to assess TAS’s actions to assist taxpayers in response to
the implementation of the CARES Act. To accomplish our objective, we:
• Assessed TAS’s efforts to identify and address CARES Act–related issues impacting
individual taxpayers.
o Identified the number of TAS cases involving TY 2020 that were received after
October 20, 2020, (after TAS employees received CARES Act specific training) and
before November 24, 2020 (when TAS employees were instructed to stop accepting
EIP–only cases).
 Identified the number of cases with CARES Act issues that did not have the
CARES Act code.
 Confirmed exception cases with TAS management.
o Identified the number of CARES Act cases received between August 10, 2020, when
TAS began accepting certain EIP cases, and December 31, 2020.
 Selected a statistically valid sample of 110 closed CARES Act cases from a
population of 6,260 cases received between August 10 and December 31, 2020,
using information available in TAMIS. The sample was selected using a
confidence level of 95 percent, a precision rate of ±6 percent, and an expected
error rate of 10 percent. Our sampling methodology was developed with
assistance from our contracted statistician.
 Determined if cases were properly identified as involving CARES Act issues.
 Determined whether TAS’s decision to accept the cases was based on
appropriate criteria established as a result of IRS process changes or other
guidelines.
 Confirmed exception cases with TAS management.
• Assessed TAS’s efforts to identify and address CARES Act–related systemic issues
impacting a large number of taxpayers.
o Queried SAMS to identify the number of CARES Act–related Systemic Advocacy
referrals and the total number of referrals received in SAMS during CY 2020.
o Determined the number of CARES Act referrals that became projects and identified
the type and status of the projects.
• Determined how TAS used CARES Act funding.

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Performance of This Review
This review was performed with information obtained from TAS Headquarters office located in
Washington, D.C., and other TAS locations throughout the United States during the period from
February through July 2021. We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objective. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objective.
Major contributors to the report were Heather Hill, Assistant Inspector General for Audit
(Management Services and Exempt Organizations); Troy Paterson, Director; Debbie Kisler, Acting
Director; Melinda Dowdy, Audit Manager; Mary Herberger, Lead Auditor; and Yasmin Ryan,
Senior Auditor.

Validity and Reliability of Data From Computer-Based Systems
We performed tests to assess the reliability of data obtained from TAMIS. We evaluated the
data by reviewing fields for reasonableness and matching the data to statistical information
provided by TAS. We determined that the data were sufficiently reliable for the purposes of this
report.
We also performed tests to assess the reliability of data from SAMS. We evaluated the data by
reviewing fields for reasonableness and comparing the data to information provided by TAS.
We determined that the data were sufficiently reliable for the purposes of this report.

Internal Controls Methodology
Internal controls relate to management’s plans, methods, and procedures used to meet their
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance. We determined that the
following internal controls were relevant to our audit objective: TAS’s policies, procedures, and
practices for identifying and processing individual CARES Act cases on TAMIS and systemic
issues submitted on SAMS. We evaluated these controls by interviewing TAS management,
reviewing internal and external guidance and the applicable sections of the IRM, reviewing a
statistical sample of cases coded as being related to the CARES Act, reviewing cases that were
not coded as being related to the CARES Act, and reviewing issues submitted and the CARES Act
projects that were created on SAMS.

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Appendix II
Outcome Measure
This appendix presents detailed information on the measurable impact that our recommended
corrective actions will have on tax administration. This benefit will be incorporated into our
Semiannual Report to Congress.

Type and Value of Outcome Measure:
Reliability of Information – Actual; 225 cases not captured as CARES Act cases as required
(see Recommendation 2).

Methodology Used to Measure the Reported Benefit:
We determined that 225 of the 575 TY 2020 closed cases that were received between
October 20 and November 24, 2020, involved CARES Act issues but did not include the
CARES Act code on TAMIS as required.

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Appendix III
Management’s Response to the Draft Report

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Appendix IV
Abbreviations

CARES Act Coronavirus Aid, Relief, and Economic Security Act
COVID-19 Coronavirus Disease 2019
CY Calendar Year
EIP Economic Impact Payment
FY Fiscal Year
IGP Information Gathering Project
IRM Internal Revenue Manual
IRS Internal Revenue Service
RRC Recovery Rebate Credit
SAMS Systemic Advocacy Management System
TAMIS Taxpayer Advocate Management Information System
TAS Taxpayer Advocate Service
TIGTA Treasury Inspector General for Tax Administration
TY Tax Year

Page 20
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