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American Rescue Plan Act: Implementation of
Advance Recovery Rebate Credit Payments
March 21, 2022
Report Number: 2022-47-030
TIGTACommunications@tigta.treas.gov | www.treasury.gov/tigta
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
HIGHLIGHTS: American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Final Audit Report issued on March 21, 2022
Report Number 2022-47-030
Why TIGTA Did This Audit
This audit was initiated to assess
the accuracy of the IRS’s issuance
of advance Recovery Rebate Credit
(RRC) payments under the
American Rescue Plan Act of 2021.
This review is part of a series of
audits to evaluate the IRS’s
implementation of the various
advance RRC payments and the
processing of RRC claims. TIGTA is
conducting a separate review of
the IRS’s processing of RRC claims
on Tax Year 2020 tax returns.
Impact on Taxpayers
The American Rescue Plan Act,
signed into law on March 11, 2021,
creates a third RRC of up to
$1,400 per eligible individual for
Tax Year 2021. The legislation also
directs the IRS to make advance
payments of the RRC as soon as
possible but no later than
December 31, 2021. The Act also
requires the IRS to make ‘plus-up’
payments to individuals whose
advance payment was initially
based on a Tax Year 2019 return
and who subsequently file their
Tax Year 2020 return.
The IRS began issuing the advance
RRC payments on March 11, 2021,
the same day the American Rescue
Plan Act was enacted. As of
September 16, 2021, the IRS has
issued more than 175 million
advance RRC payments to
167.4 million individuals totaling
$408 billion, more than 10 million
of which were plus-up payments
totaling $21 billion.
What TIGTA Found
TIGTA’s review of the 175 million advance RRC payments issued to
167.4 million individuals as of September 16, 2021, found that the IRS
correctly computed the RRC amount for 166.6 million individuals
(99.48 percent). However, the IRS issued more than 1.2 million
payments totaling $1.9 billion to potentially ineligible individuals.
These payments stem from deficiencies TIGTA previously reported
based on its review of the IRS’s implementation of the Coronavirus
Aid, Relief, and Economic Security Act Economic Impact Payments
that the IRS did not address. These include payments to ineligible
dependents and nonresidents and duplicate payments to individuals
with a filing status change.
TIGTA also identified 644,705 potentially eligible individuals who had
not received payments totaling $1.6 billion. These include:
•
419,822 individuals who have an ITIN that did not receive
payments totaling $1.2 billion for an eligible dependent. As of
September 16, 2021, 417,749 individuals have been considered
for payment.
•
133,578 individuals eligible for payments totaling $195 million
because of the unemployment benefit exclusion.
•
39,666 individuals who have an unresolved condition in their
tax account or who had a change in filing status. As of
September 16, 2021, 27,901 individuals have been considered
for payment.
•
51,639 individuals incorrectly marked as being a resident of a
U.S. territory who potentially qualify for $144 million in
payments. The IRS informed us eligible accounts were
expected to be considered on November 24, 2021.
TIGTA alerted IRS management that these taxpayers were not
receiving payments. The IRS agreed with all except the 133,578
individuals and implemented programming changes to consider the
other impacted individuals. TIGTA also identified 294,274 individuals
who were issued an advance payment and reported to the IRS that
they had not received their payment or who have not yet activated
their advance RRC debit card (also referred to as EIP [Economic
Impact Payments] cards).
What TIGTA Recommended
TIGTA made seven recommendations in this report which include
ensuring that the individuals TIGTA identified who have not been
considered for an advance payment receive a payment if eligible and
notifying all individuals who do not receive an advance payment
before December 31, 2021, that they are potentially eligible to claim
the RRC on their Tax Year 2021 tax return.
The IRS agreed with all seven of TIGTA’s recommendations.
U.S. DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220
TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
March 21, 2022
MEMORANDUM FOR: COMMISSIONER OF INTERNAL REVENUE
FROM:
Michael E. McKenney
Deputy Inspector General for Audit
SUBJECT:
Final Audit Report – American Rescue Plan Act: Implementation of
Advance Recovery Rebate Credit Payments (Audit # 202140725)
This report presents the results of our review to evaluate the accuracy of the Internal Revenue
Service’s (IRS) issuance of American Rescue Plan Act stimulus payments to individuals. This
review was part of our Fiscal Year 2021 discretionary audit work and addresses the major
management and performance challenge of Implementing Tax Law Changes.
Management’s complete response to the draft report is included as Appendix III.
Copies of this report are also being sent to the IRS managers affected by the report
recommendations. If you have any questions, please contact me or Russell P. Martin,
Assistant Inspector General for Audit (Returns Processing and Account Services).
American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Table of Contents
Background .....................................................................................................................................Page 1
Results of Review .......................................................................................................................Page 2
Unaddressed Deficiencies Continue to Result in
the Issuance of Erroneous Advance Payments .........................................................Page 3
Recommendation 1: ...................................................................Page 5
Recommendation 2: ...................................................................Page 7
Some Eligible Individuals Still Have Not Received
an Advance Recovery Rebate Credit Payment ..........................................................Page 7
Recommendations 3 through 6: ..............................................Page 9
Recommendation 7: ...................................................................Page 10
Appendices
Appendix I – Detailed Objective, Scope, and Methodology ................................Page 11
Appendix II – Outcome Measures .................................................................................Page 13
Appendix III – Management’s Response to the Draft Report .............................Page 20
Appendix IV – Glossary of Terms ...................................................................................Page 26
Appendix V – Abbreviations.............................................................................................Page 27
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American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Background
The American Rescue Plan Act of 2021 (ARPA),1 signed into law on March 11, 2021, creates a
third Recovery Rebate Credit (RRC) of up to $1,400 per eligible individual for Tax Year 2021. The
legislation also directs the IRS to make advance payments of the RRC as soon as possible but
no later than December 31, 2021. While several of the eligibility requirements for the ARPA RRC
are the same as for previously enacted RRCs, there are some notable differences. For example,
the credit amount was increased to $1,400 for each eligible adult and $1,400 for each qualifying
dependent, the income phase-out limits were significantly lowered, and the Act expanded
eligibility to include all dependents regardless of age. The ARPA also allowed taxpayers with an
Individual Taxpayer Identification Number (ITIN) to claim the RRC for their dependents who
have a valid Social Security Number (SSN).2
Another significant change is that the ARPA requires the IRS to make ‘plus-up’ payments.
Plus-up payments are made to individuals whose advance payment was initially based on a
Tax Year 2019 tax return and who subsequently filed their Tax Year 2020 return. The plus-up
payment is the difference between the amounts individuals were eligible to receive based on the
two returns. Finally, similar to the Coronavirus Aid, Relief, and Economic Security (CARES) Act3
and Consolidated Appropriations Act, 2021 (CAA)4 payments, these payments cannot be offset
to satisfy unpaid tax debt or other Federal debt, including child support.
A prior Treasury Inspector General for Tax Administration (TIGTA) review identified
potentially erroneous CARES Act Economic Impact Payments (EIP) issued to ineligible
individuals
In May 2021,5 we reported that some EIPs were sent to potentially ineligible individuals.
Specifically, as of July 16, 2020, the IRS had issued more than 4.4 million EIPs totaling nearly
$5.5 billion to potentially ineligible individuals. Figure 1 provides more details on these EIPs.
1 Pub. L. No. 117-2, Title IX, Subtitle G.
2 ITINs are issued by the IRS to individuals who are required to have a Taxpayer Identification Number for tax
purposes but do not have and are not eligible to obtain an SSN.
3 Pub. L. No. 116-136, Title II, Subtitle B.
4 Pub. L. No. 116-260.
5 TIGTA, Report No. 2021-46-034, Implementation of Economic Impact Payments (May 2021).
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American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Figure 1: Potentially Erroneous EIPs Issued as of July 16, 2020
Payments
Dollars
Deceased
2,174,616
$3.5 billion
Dependents
1,844,846
$1.4 billion
Nonresidents
324,864
$444 million
Duplicate U.S. Territory Payments
61,119
$92 million
Duplicate Payments for Filing Status Changes
46,763
$69 million
Total
4,452,208
$5.5 billion
Source: TIGTA analysis of payments issued as of July 16, 2020.
We recommended that, prior to issuing future EIPs, the IRS ensure that processes are developed
to cross-check return filings to identify and prevent payments to individuals who are not eligible
based on applicable dependency requirements. The IRS disagreed with this recommendation,
stating that IRS systems do not have the ability to use outside data sources to obtain the
information needed to implement this recommendation. However, the IRS does capture each
use of a Taxpayer Identification Number (TIN) for an applicable tax year in the Duplicate TIN
database. The TINs that are used more than once are identified with a priority code. At a
minimum, we believe the IRS can use the Duplicate TIN database to determine whether a TIN
has already been used as a dependent on a tax return before issuing an EIP. While this effort
may require additional programming to retrieve the dependent information, we strongly believe
that the IRS should consider these changes for any future advance payments that may be issued
as improper payments related to dependents remains an ongoing concern.
Results of Review
The IRS began issuing the advance RRC payments on March 11, 2021, the same day the ARPA
was enacted. As of September 16, 2021, the IRS has issued more than 175 million advance RRC
payments to 167.4 million individuals totaling $408 billion. More than 10 million of the 175
million payments were plus-up payments totaling $21 billion. Our review of these payments
found that the IRS correctly computed the advance RRC amount for more than 166.6 million
individuals (99.48 percent). However, as with prior issued RRCs, the IRS issued more than 1.2
million payments totaling $1.9 billion to potentially ineligible individuals. These erroneous
payments stem from deficiencies we previously reported based on our review of the IRS’s
issuance of the CARES Act EIP that the IRS did not address. These include payments to ineligible
dependents, nonresidents, and individuals who had a filing status change since Tax Year 2019.
We also identified 644,705 eligible individuals who had not received their advance payment as
of September 16, 2021. These individuals are entitled to advance RRC payments totaling
$1.6 billion. These include individuals who have an ITIN who did not receive a payment for their
eligible dependents with a valid SSN and individuals who were eligible based on the IRS’s
adjustment of their unemployment income exclusion from taxable income.
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American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Unaddressed Deficiencies Continue to Result in the Issuance of Erroneous
Advance Payments
In May 2021, we reported that IRS processes did not prevent nearly 2.3 million potentially
erroneous CARES Act EIPs totaling approximately $2 billion. These erroneous payments were
made to ineligible dependents, nonresidents, individuals residing in the U.S. territories, and
individuals who had a filing status change. We made recommendations during our prior review
to address these conditions. However, as we noted previously, IRS management disagreed with
our recommendations. Figure 2 summarizes the recommendations we made that the IRS
disagreed with.
Figure 2: Prior Unagreed Recommendations and Alerts Made by TIGTA
Recommendations
Recommendation #2: The Commissioner, Wage and Investment Division, should ensure that, prior to
issuing future EIPs, processes are developed to cross-check return filings to identify and prevent payments
to individuals who are not eligible based on applicable dependency requirements.
E-Mail Alert: The IRS should conduct additional analysis of individuals with Citizenship Code B to prevent
erroneous future advance payments.
Source: TIGTA’s May 2021 report on EIPs.
This current review of ARPA advance RRC payments issued as of September 16, 2021, identified
more than 1.2 million potentially erroneous advance payments totaling $1.9 billion. Figure 3
provides more details on these advance payments.
Figure 3: Potentially Erroneous ARPA Advance
RRC Payments Issued as of September 16, 2021
Payments
Dollars
Dependents
544,323
$856 million
Nonresidents
342,173
$579 million
Individuals With Filing Status Change
191,768
$271 million
Programming Error6
60,824
$109 million
Duplicate U.S. Territory Payments
56,380
$109 million
Deceased Individuals
9,592
$13 million
Total
1,205,060
$1.9 billion
Source: TIGTA analysis of payments issued as of September 16, 2021.
Similar to the CARES Act and CAA payments, the IRS generally does not have the authority to
recover ARPA advance RRC payments that were issued in error.
6 Includes scenarios where issued payments were not recorded when a taxpayer has an invalid TIN or when a newly
issued TIN does not have a corresponding IRS Master File account.
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American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
Payments were erroneously issued to individuals who were claimed as dependents
Our analysis of advance RRC payments issued as of September 16, 2021, identified
544,323 potentially erroneous payments totaling $856 million associated with ineligible
dependents. These include:
•
364,312 payments totaling $602 million issued to individuals who filed their own return
and were also claimed as a dependent on someone else’s tax return. IRS instructions
direct taxpayers to check a box on their tax return to notify the IRS that they can be
claimed as someone else’s dependent. The IRS programming relied on this checkbox to
identify individuals who were not eligible for an advance payment. Although these
individuals were claimed as a dependent on someone else’s tax return, they did not
check the dependent box on their tax return as required, resulting in an advance
payment being erroneously sent.
•
126,652 payments totaling $177 million for qualifying dependents claimed on more than
one tax return. These payments involved 118,446 unique dependent TINs. The number
of times a particular child’s TIN was used on a tax return ranged from two tax returns to
22 tax returns.
•
53,359 payments totaling more than $76 million issued to Social Security Administration
(SSA) retirement (hereafter just called SSA), Railroad Retirement Board (RRB), SSA
Supplemental Security Income (SSI), and Department of Veteran Affairs (VA) beneficiaries
who were claimed as a dependent on a Tax Year 2020 tax return that was filed before the
advance payment was issued. IRS management is still researching these accounts to
determine why they were not identified as dependents.
The ARPA states that, to be eligible for the advance payment, an individual cannot be claimed as
a dependent on someone else’s Federal income tax return. In May 2021, we reported that these
same conditions resulted in the issuance of 745,386 potentially erroneous CARES Act EIPs
totaling $851 million. As detailed above, the IRS took no actions to address this deficiency.
Payments were erroneously issued to nonresidents and individuals in a U.S. territory
Our analysis of advance RRC payments issued as of September 16, 2021, identified
342,173 payments totaling $579 million that were issued to individuals whose SSN indicates
they are a legal alien authorized to work in the United States. However, each of these
individuals had no Federal Insurance Contributions Act (FICA) tax withheld from their wages in
Calendar Years 2019 or 2020, which indicates they are likely not considered a U.S. resident.
Certain nonresident aliens are exempt from FICA taxes based on their VISA type, such as
nonresident alien students and professors temporarily present in the United States. The ARPA
states that an individual must be a U.S. citizen or resident alien to be eligible for the advance
payment. The IRS website provides the following information regarding this eligibility
requirement:
Do I qualify for the third payment if I’m a resident alien? (added March 26, 2021)
A person who’s a qualifying resident alien with a valid SSN is eligible for the payment only if
he or she is a qualifying resident alien in 2021 and may not be claimed as a dependent of
another taxpayer. A nonresident alien in 2021 isn’t eligible for the payment. An alien who
received a payment but isn’t a qualifying resident alien for 2021 should return the payment to
the IRS by following the instructions as described in Returning the Economic Impact Payment.
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As of September 16, 2021, 1,185 individuals returned nearly $2 million in payments erroneously
issued.
Individuals with addresses in a U.S. territory received an advance payment
Our review of advance RRC payments issued as of September 16, 2021, identified
56,380 payments totaling $109 million that were issued to individuals who used a U.S. territory
address on their tax return. The use of a U.S. territory address increases the risk of a duplicate
erroneous payment by the territory. The IRS has previously established processes to identify IRS
advance payments made to individuals with a U.S. territory address and to share such data with
the territories to identify duplicate erroneous payments.
Similar to the first and second EIPs, the U.S. territories were required to establish new
implementation plans with the Department of the Treasury for the issuance of the advance RRC
payment. The Department of the Treasury approved the plans for American Samoa, the
Northern Mariana Islands, Guam, and the U.S. Virgin Islands on April 9, 2021. The plan for
Puerto Rico was approved on April 12, 2021.
According to the IRS, these plans require the U.S. territories to send the Department of the
Treasury and the IRS accounting reports of all advance payments that have been issued on a
quarterly basis. The first reporting was due to the IRS in April 2021. The IRS uses these reports
to identify potential duplicate payments. Information regarding potential duplicate payments
will then be shared with the territories for their local compliance work. IRS management stated
they have received all relevant reports from the territories. However, as of the issuance of this
report, the IRS has provided TIGTA with the required ARPA advance RRC payment reports for
just one territory, the U.S. Virgin Islands.
Recommendation 1: The Commissioner, Large Business and International Division, should
coordinate with the territories to share information that will enable the territories to recover
duplicate payments that the territories have issued, to the extent permitted under the relevant
territory’s domestic law.
Management’s Response: The IRS agreed with this recommendation and has
implemented a plan to coordinate with the territories to share information that will
enable the territories to recover duplicate payments that the territories have issued, to
the extent permitted under the relevant territory’s domestic law.
Duplicate advance payments were issued to individuals whose filing status or partner
changed between Tax Year 2019 and Tax Year 2020
Our analysis of advance RRC payments issued as of September 16, 2021, identified
191,768 individuals who received duplicate advance RRC payments totaling $271 million
because of a change in their filing status or filing partner. These include:
•
137,244 individuals with plus-up payments totaling $159 million who were issued for
dependents but had already received the maximum qualified advance RRC payment for
those dependents. These individuals claimed the same dependent on a jointly filed Tax
Year 2019 tax return and on a nonjoint Tax Year 2020 tax return (e.g., Married Filing
Separately). When we alerted IRS management to this condition, they disagreed that
these are erroneous payments. IRS management stated that, under the ARPA, the
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plus-up payment is based upon the Tax Year 2020 return, reduced by the amount
already paid to the individual. Under this application, changes from one tax year to the
next in dependent eligibility, adjusted gross income limitations, or filing status can cause
an additional payment as prescribed by the ARPA. We disagree with this argument as
the individuals we identified clearly received duplicate payments for the same
dependents.
•
36,567 individuals with plus-up payments totaling $50 million who filed a joint Tax Year
2019 tax return and subsequently filed a joint Tax Year 2020 tax return with a different
spouse. When we alerted IRS management to this condition, they disagreed that these
payments are erroneous. Similar to the item above, IRS management stated that these
payments were calculated as prescribed by the ARPA.
•
17,957 individuals with advance RRC payments totaling $62 million who filed as Married
Filing Jointly in Tax Year 2019 and subsequently filed as Single (i.e., with a filing status of
Single, Head of Household, Qualifying Widow(er), or Married Filing Separately) in Tax
Year 2020 as the primary taxpayer on a tax return. The IRS implemented programming
in response to our review of the implementation of the CARES Act EIPs to prevent these
payments from being issued. However, because the IRS processed payments based on
Tax Years 2019 and 2020 returns at the same time, the programming was unable to mark
the account for the Tax Year 2019 return to show a payment was issued before the Tax
Year 2020 payment was issued.
Erroneous advance payments were issued because of programming errors
Our analysis of advance RRC payments issued as of September 16, 2021, identified
60,824 potentially erroneous payments totaling $109 million that resulted from various IRS
computer programming errors. These include:
•
44,903 payments totaling $64 million issued for a deceased dependent. The ARPA states
that individuals with a date of death prior to January 1, 2021, are not eligible for an
advance RRC payment. We alerted the IRS to this programming error in April 2021. IRS
management agreed that these payments were issued erroneously. However, IRS
management did not provide their corrective action to address future erroneous
payments. We identified 406 additional payments for a deceased dependent that were
issued after we alerted IRS management.
•
8,972 duplicate payments totaling $30 million issued for a spouse whose previously
issued advance payment was not successfully recorded on their tax accounts, resulting in
a subsequent erroneous payment when the taxpayer was considered for a plus-up
payment. We alerted the IRS to this programming error in April 2021. IRS management
agreed these payments were erroneous. However, IRS management did not provide
their corrective action to address future erroneous payments. We identified 2,498
additional payments that were issued after our alert.
•
6,949 payments totaling $15 million issued for dependents that have an ITIN. The ARPA
states a dependent must have a valid, issued SSN to be eligible for an advance payment.
We alerted the IRS to this programming error in April 2021. IRS management agreed
these payments were erroneous. However, IRS management did not provide their
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corrective action to address future erroneous payments. We identified 5,496 additional
payments that were issue after our alert.
Erroneous advance payments were issued to deceased individuals
The ARPA states that individuals with a date of death prior to January 1, 2021, are not eligible
for an advance RRC payment. Our analysis of advance payments as of September 16, 2021,
found 26,468 advance payments were issued to an individual deceased prior to January 1, 2021.
As of September 16, 2021, 7,623 of these payments have been rejected by the bank or returned
undeliverable to the IRS. The remaining 18,845 outstanding payments total $28 million. Our
review of these payments found:
•
9,592 payments totaling $14 million were issued to an individual for whom the IRS had a
date of death before the payment was issued. Of these, 9,279 payments were issued to a
beneficiary and 313 payments were issued based on a tax return.
•
9,253 payments totaling $15 million for which the IRS was informed of the individual’s
date of death after the payment was issued. Of these, 6,315 payments were issued to a
beneficiary and 2,938 payments were issued based on a tax return.
IRS management informed us that the 9,279 payments for which the IRS had a date of death
before payment issuance were issued because the beneficiaries’ date of death information was
not verified before payment issuance. The IRS also stated the 313 payments issued based on a
tax return were due to timing issue whereby the individual’s account was not updated with the
date of death information before payment issuance.
Recommendation 2: If Congress enacts additional stimulus payments, the Commissioner,
Wage and Investment Division, should consider additional programming changes to prevent
ineligible individuals from receiving advance payments, including individuals claimed as
dependents or dependents claimed on multiple returns, nonresident individuals, individuals who
had a filing status or filing partner change, deceased individuals, and individuals affected by the
mentioned related programming errors.
Management’s Response: The IRS agreed with this recommendation. IRS management
stated that they will consider lessons learned from the 2020 and 2021 legislation to
prevent payments to or on behalf of ineligible individuals to the greatest extent possible,
should additional stimulus payments be enacted by Congress in future legislation.
Some Eligible Individuals Still Have Not Received an Advance Recovery
Rebate Credit Payment
Our review of processed tax returns identified 644,705 eligible individuals who have not received
their advance RRC payments totaling $1.6 billion. For each of the bulleted items below, we
provided the IRS with the TINs associated with these eligible individuals that have yet to receive
their payment. These include:
•
419,822 individuals who have an ITIN and did not receive advance payments totaling
$1.2 billion for an eligible dependent as of April 1, 2021. The ARPA allows individuals
who have an ITIN to receive a payment for their dependents who have a valid SSN. We
notified IRS management of our concerns during our review. IRS management stated
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that programming errors prevented these individuals from being considered for an
advance dependent payment. The IRS implemented programming changes on April 22,
2021, and as of September 16, 2021, 417,749 (99.5 percent) individuals have been
considered for an advance RRC payment.
•
133,578 individuals who are eligible for advance payments totaling $195 million resulting
from the IRS adjusting these individuals associated Tax Year 2020 return to exclude
reported unemployment benefit income as of September 16, 2021. The ARPA excluded
the first $10,200 in unemployment compensation benefits from taxable income in Tax
Year 2020. To lessen the burden on impacted taxpayers who may have already filed their
Tax Year 2020 tax return, the IRS proactively adjusted qualified individuals’ tax returns.
We alerted the IRS to these individuals and recommended that the IRS issue advance
payments to these individuals. IRS management disagreed with our recommendation.
IRS management stated that, once a taxpayer has been evaluated for an advance
payment based on a Tax Year 2019 or Tax Year 2020 return, the ARPA does not provide
for reconsiderations of that taxpayer using the same tax period. These taxpayers will
need to claim the 2021 RRC on their Tax Year 2021 returns.
•
25,525 individuals with a processed tax return as of March 25, 2021, who have not been
considered for an advance payment because they have an unresolved condition in their
tax account (e.g., a pending transaction). These individuals are entitled to $85 million in
advance RRCs. The IRS will consider these individuals for an advance RRC payment once
these conditions have been resolved. Our analysis of payments issued as of
September 16, 2021, found that 22,727 (89 percent) of the 25,525 individuals have been
considered for an advance payment.
•
14,141 individuals who, as of May 6, 2021, were bypassed for a payment because they
were a spouse on a Married Filing Jointly Tax Year 2019 return and the primary taxpayer
subsequently filed a Tax Year 2020 return as Single. We estimated that these individuals
are entitled to $20 million in advance RRCs. We alerted IRS management of these
individuals on May 6, 2021. IRS management informed us that they submitted a
programming change request to consider these individuals in June 2021. As of
September 16, 2021, 5,174 (37 percent) of the 14,141 taxpayers filed their own Tax
Year 2020 return and have been considered for an advance RRC payment.
•
51,639 individuals whose tax account was incorrectly marked as being a resident of a U.S.
territory and potentially qualify for $144 million in advance payments. The IRS informed
us eligible accounts are expected to be considered on November 24, 2021. The IRS has
issued guidance for IRS employees who answer the telephone instructing them to verify
with the individual that the individual did not live in a territory during Calendar Year
2020. If the taxpayer confirms they did not live in a U.S. territory, the IRS will remove the
account indicator and consider the individual for an advance RRC payment.
In addition, we identified 294,274 individuals who were issued an advance payment whose
access to their stimulus funds was delayed or who still do not have access to their stimulus
funds. These include:
•
104,904 individuals who have initiated a trace on their advance RRC payment as of
May 27, 2021. Taxpayers can request a payment trace to locate their ARPA payment if
the Get My Payment tool shows a payment has been issued and the taxpayer has not
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American Rescue Plan Act: Implementation of Advance Recovery Rebate Credit Payments
received it within certain time frames. As of May 27, 2021, the IRS has researched and
reissued the payments for 57,980 taxpayers. IRS guidelines state that these traces should
be resolved “as soon as possible,” but there is not an established time frame goal for
resolution. Internal guidelines also do not require tax examiners to document when a
trace is completed. As such, we are unable to determine whether the traces initiated by
the remaining 46,924 taxpayers have been resolved or are still being worked by the IRS.
•
189,370 individuals who have not activated their advance RRC debit card as of
September 5, 2021.
Recommendation 3 (E-mail Alert): We notified IRS management during our review that
individuals who have an ITIN were not receiving an advance payment for their eligible
dependents. We recommended the IRS review the returns we identified and revise
programming as needed to ensure that these individuals receive payment for their qualified
dependents.
Management’s Response to Alert: IRS management agreed with our recommendation
and implemented programming changes on April 22, 2021, to ensure that ITIN taxpayers
with eligible dependents are considered for an advance payment.
Recommendation 4 (E-mail Alert): We notified IRS management on May 6, 2021, of our
concerns that individuals were being bypassed for an advance payment because they were a
spouse on a Married Filing Jointly Tax Year 2019 return, and the primary taxpayer subsequently
filed a Tax Year 2020 return as Single.
Management’s Response to Alert: IRS management agreed with our recommendation
and informed us that they submitted a programming change request to consider these
individuals in June 2021.
Recommendation 5 (E-mail Alert): Ensure that the 51,639 taxpayers we identified with an
incorrect territory marker have their territory markers reversed and are considered for the
advance RRC payment.
Management’s Response to Alert: IRS management agreed with our recommendation
and informed us that they submitted a programming change request to remove the
territory markers from affected accounts and consider these individuals for the EIP in
November 2021.
The Commissioner, Wage and Investment Division, should:
Recommendation 6: Notify all individual taxpayers who will not receive an advance RRC before
December 31, 2021, that they are potentially eligible to claim the RRC on their Tax Year 2021 tax
return. These notifications should include the 133,578 individuals we identified who are
potentially eligible based on the unemployment compensation adjustment, the 2,798 individuals
who have unresolved conditions in their tax account, the 2,073 ITIN filers who did not receive
advance payments for an eligible dependent, and the remaining individuals who were bypassed
for a payment because of a filing status change and have not yet been considered for a
payment.
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Management’s Response: The IRS agreed with this recommendation and has
conducted both traditional and social media outreach to engage those who are
potentially eligible to claim the RRC on their Tax Year 2021 tax return. IRS management
stated that additional outreach will continue through the filing season through the Get
Ready campaign and additional filing season campaigns as well as through tax partners
including Volunteer Income Tax Assistance partners, congressional liaisons, oversight
organizations, and other Federal, State and local government communications channels.
Recommendation 7: Work with the Department of the Treasury’s Bureau of the Fiscal Service
to send a letter to individuals who have not activated their advance RRC debit card prior to the
start of the 2022 Filing Season to provide instructions on how to activate the card or report it as
lost or stolen.
Management’s Response: The IRS agreed with this recommendation. The Bureau of
the Fiscal Service sent letters to individuals who received the third EIP via debit card in
September and October 2021, asking them to activate the card and advising them on
how they could obtain a replacement if it could not be located. Another round of
targeted mailings was sent the week of February 7, 2022, to cardholders who had
activated the debit card containing either the second or third EIP, but not both, or had
not activated either card.
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Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this audit was to evaluate the accuracy of the IRS’s issuance of the ARPA
stimulus payments to individuals. To accomplish our objective, we:
•
Assessed the IRS’s outreach and assistance to individuals regarding the advanced RRC
payments.
•
Ensured that the advance RRC payments computed by the IRS were accurate.
•
Determined whether all eligible taxpayers received an advance RRC payment prior to
December 31, 2021. We also quantified the number of eligible individuals who did not
receive an advance RRC payment and the amount that was not issued.
•
Determined whether the IRS took sufficient actions to prevent ineligible individuals from
receiving an advance RRC payment.
Performance of This Review
This review was performed with information obtained from the Wage and Investment Division
Headquarters; Accounts Management function; Customer Assistance, Relationships, and
Education function; and Return Integrity and Compliance Services function in Atlanta, Georgia,
and the Information Technology organization in Lanham-Seabrook, Maryland, during the period
of March to November 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 Russell P. Martin, Assistant Inspector General for Audit
(Returns Processing and Account Services); Deann L. Baiza, Director; Ngan B. Tang, Audit
Manager; Jane G. Lee, Senior Auditor; Tracy Winfield, Auditor; Karen A. Brown, Information
Technology Specialist; Shannon D. Cummings, Information Technology Specialist; and
Donald J. Meyer, Information Technology Specialist.
Validity and Reliability of Data From Computer-Based Systems
During this review, we obtained extracts from the Individual Master File for Tax Years 2019, 2020,
and 2021; the Individual Return Transaction File for Processing Years 2019 and 2020; the
Information Returns Master File for Tax Years 2019 and 2020; the Individual Master File Refund
File and the National Account Profile for Processing Year 2021 that were available on TIGTA’s
Data Center Warehouse. We obtained the SSA, SSI, RRB, and VA beneficiary recipient files from
the IRS. We obtained data from the IRS that detailed the specific individuals who were subject
to the unemployment income exclusion. We also obtained data from the IRS that detailed the
individuals who filed a Tax Year 2019 return in the territories. Before relying on the data, we
ensured that each file contained the specific data elements we requested. In addition, we
selected data from each extract and verified that the data in the extracts were the same as the
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data captured in the Integrated Data Retrieval System. We also performed analyses to ensure
the validity and reasonableness of our data, such as ranges of dollar values and obvious invalid
values. Based on the results of our tests, we believe that the data used in our review were
reliable.
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 also include the
systems for measuring, reporting, and monitoring program performance. We determined that
the following internal controls were relevant to our audit objective: the process for planning,
organizing, directing, and controlling program operations for the issuance of the advance
payments. We evaluated these controls by meeting with IRS management, reviewing IRS
procedures, and reviewing IRS reports.
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Appendix II
Outcome Measures
This appendix presents detailed information on the measurable impact that our recommended
corrective actions will have on tax administration. These benefits will be incorporated into our
Semiannual Report to Congress.
Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Potential; 52,025 payments totaling $99,345,198
that were issued to individuals who used a U.S. territory address on their tax return (see
Recommendation 1).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021, and the National Account Profile for Processing Year 2021.
We obtained data from the IRS that detailed the specific individuals who filed a Tax Year 2019
return in the territories.
Our computer analyses of payments that were issued as of September 16, 2021, identified
56,380 payments totaling $109,187,500 that were issued to individuals who used a U.S. territory
address on their tax return.
To be conservative, we removed all payments that were included in more than one type of
erroneous payment to arrive at 55,884 payments totaling $107,935,900. We then analyzed the
Individual Master File as of September 16, 2021, and removed 2,987 payments totaling
$7,124,902 that have been cancelled by the bank or returned to the IRS as undeliverable. We
also removed 872 payments totaling $1,465,800 that were voluntarily returned by the
individuals. These adjustments left 52,025 payments totaling $99,345,198 that were issued to
individuals who used a U.S. territory address on their tax return.
Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Potential; 510,589 payments totaling
$765,185,583 that were issued to individuals due to dependent-related issue
(see Recommendation 2).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
Our computer analyses of payments that were issued as of September 16, 2021, identified
544,323 potentially erroneous payments totaling $855,964,071 due to dependent-related issue.
These included:
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o 364,312 payments totaling $602,449,271 for which the individual was a dependent on
someone else’s return and filed their own tax return. These individuals did not check
the box on their tax return indicating they can be claimed as a dependent.
o 126,652 payments due to the dependent being used on multiple returns. We initially
identified 118,446 unique dependent TINs that were used as a dependent on more
than one tax return, and the IRS issued a qualifying dependent payment on each of
those returns. These TINs were used on 245,098 tax returns. Because one of the
instances in which the same dependent is used more than once is a legitimate
payment for the EIP, the difference between 245,098 less than unique list of
dependent SSNs (118,446) equals the 126,652 excess dependent-related payments
paid to duplicate primary taxpayers. Because eligible individuals can receive up to
$1,400 for each qualifying dependent, we estimated $177,312,800 (126,652 x $1,400)
for qualifying dependent claimed on more than one tax return.
o 53,359 payments totaling $76,202,000 for which SSA/SSI/RRB/VA beneficiaries
received the EIP based on SSA/SSI/RRB/VA data and were also claimed as a
dependent on a tax return.
To be conservative, we removed all payments that were included in more than one type of
erroneous payment to arrive at 539,724 payments totaling $842,206,971. We then analyzed the
Individual Master File as of September 16, 2021, and removed 28,519 payments totaling
$76,074,888 that have been cancelled by the bank or returned to the IRS as undeliverable. We
also removed 616 payments totaling $949,500 that were voluntarily returned by the individuals.
These adjustments left 510,589 payments totaling $765,182,583 that were issued to individuals
due to dependent-related issue.
Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Actual; 318,376 payments totaling $530,982,534
that were issued to potential ineligible nonresidents (see Recommendation 2).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Information Returns
Master File for Tax Years 2019 and 2020; the Individual Master File Refund File for Processing
Year 2021; and the National Account Profile for Processing Year 2021.
Our computer analyses of payments that were issued as of September 16, 2021, identified
342,173 payments totaling $578,916,772 issued to potential ineligible nonresidents. These
individuals’ SSN indicates they are a legal alien authorized to work in the United States.
However, these individuals had no FICA tax withheld from their wages in Calendar Years 2019
or 2020.
To be conservative, we removed all payments that were included in more than one type of
erroneous payment to arrive at 337,694 payments totaling $564,288,795. We then analyzed the
Individual Master File as of September 16, 2021, and removed 18,133 payments totaling
$31,521,478 that have been cancelled by the bank or returned to the IRS as undeliverable. We
also removed 1,185 payments totaling $1,784,783 that were voluntarily returned by the
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individuals. These adjustments left 318,376 payments totaling $530,982,534 that were issued to
potential ineligible nonresidents.
Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Potential; 190,535 payments totaling
$268,122,629 that were issued to individuals who received duplicate advance RRC
payments because of a change in their filing status or filing partner (see
Recommendation 2).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
Our analysis of payments issued as September 16, 2021, identified 191,768 individuals who
received duplicate advance RRC payments totaling $270,798,857 because of a change in their
filing status or filing partner. These include:
o 137,244 individuals with plus-up payments totaling $158,891,947 that were issued for
dependents that had already received the advance RRC payment for their dependent.
These individuals claimed the same dependent on a jointly filed Tax Year 2019 tax
return and a nonjoint Tax Year 2020 tax return.
o 36,567 individuals with plus-up payments totaling $49,525,962 who filed a joint Tax
Year 2019 tax return and subsequently filed a joint Tax Year 2020 tax return with a
different spouse.
o 17,957 individuals with advance RRC payments totaling $62,380,948 who filed as
Married Filing Jointly in Tax Year 2019 as the secondary taxpayer on a tax return and
filed as Single, i.e., used a filing status of Single, Head of Household, Qualifying
Widow(er), or Married Filing Separately, in Tax Year 2020 as the primary taxpayer on
a tax return. IRS implemented programming in response to our review of the
implementation of the CARES Act EIPs to prevent these payments from being issued.
However, because the IRS processed payments based Tax Years 2019 and 2020
returns at the same time, the programming was unable to mark the account for the
Tax Year 2019 return to show a payment was issued before the Tax Year 2020
payment was issued.
To be conservative, we removed all payments that were included in more than one type of
erroneous payment to arrive at 191,088 payments totaling $269,753,588. We then analyzed the
Individual Master File as of September 16, 2021, and removed 276 payments totaling $936,600
that have been cancelled by the bank or returned to the IRS as undeliverable. We also removed
277 payments totaling $694,359 that were voluntarily returned by the individuals. These
adjustments left 190,535 payments totaling $268,122,629 that were issued to individuals who
received duplicate advance RRC payments because of a change in their filing status or filing
partner.
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Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Potential; 55,852 payments totaling $92,865,991
that were issued to individuals due to programming errors (see Recommendation 2).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
We also obtained the Social Security, SSI, RRB, and VA beneficiary recipient files from the IRS.
Our computer analyses of payments that were issued as of September 16, 2021, identified
60,824 potentially erroneous payments totaling $108,824,053 due to programming errors.
These included:
o 44,903 payments totaling $63,663,600 issued for a deceased dependent.
o 8,972 duplicate payments totaling $29,847,253 issued for a spouse whose previously
issued advance payment was not successfully recorded on their tax accounts,
resulting in subsequent erroneous payment when the taxpayer was considered for a
plus-up payment.
o 6,949 payments totaling $15,313,200 issued for dependents that have an ITIN.
To be conservative, we removed all payments that were included in more than one type of
erroneous payment to arrive at 56,020 payments totaling $93,141,241. We then analyzed the
Individual Master File as of September 16, 2021, and removed 168 payments totaling $275,250
that were voluntarily returned by the individuals. These adjustments left 55,852 potentially
erroneous payments totaling $92,865,991 due to programming errors.
Type and Value of Outcome Measure:
•
Cost Savings (Funds Put to Better Use) – Potential; 6,315 payments totaling $8,800,476
that were issued to individuals who were deceased prior to January 1, 2021 (see
Recommendation 2).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Master File Refund File for Processing Year 2021; and the National Account Profile for
Processing Year 2021.
Our computer analyses of payments that were issued as of September 16, 2021, identified
9,592 payments totaling $13,533,169 that were issued to individuals who were deceased prior to
January 1, 2021. To be conservative, we removed all payments that were included in more than
one type of erroneous payment to arrive at 8,317 payments totaling $11,739,849. We then
analyzed the Individual Master File as of September 16, 2021, and removed 1,991 payments
totaling $2,923,973 that have been cancelled by the bank or returned to the IRS as
undeliverable. We also removed 11 payments totaling $15,400 that were voluntarily returned by
the individuals. These adjustments left 6,315 payments totaling $8,800,476 that were issued to
individuals who were deceased prior to January 1, 2021.
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Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Actual; 417,749 ITIN filers with valid SSN dependents
received totaling $1,171,566,995 (see Recommendation 3).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
Our computer analyses of payments that were issued as of April 1, 2021, identified
419,822 individuals who have an ITIN and did not receive advance payments for eligible
dependents. The ARPA allows individuals who have an ITIN to receive a payment for their
dependents who have a valid SSN. IRS management stated that programming errors prevented
these individuals from being considered for an advance dependent payment. The IRS
implemented programming changes on April 22, 2021, and as of September 16, 2021,
417,749 ITIN taxpayers who filed a Tax Year 2020 return containing valid SSN dependents have
been issued advance RRC payments totaling $1,185,948,912. To be conservative, we analyzed
the Individual Master File as of September 16, 2021, and removed $14,381,917 that have been
cancelled by the bank or returned to the IRS as undeliverable. This adjustment left
417,749 individuals who received advance payments totaling $1,171,566,995.
Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Actual; 5,174 individuals who had a change in filing
status received an advance payment totaling $7,987,991 (see Recommendation 4).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
We also obtained the Social Security, SSI, RRB, and VA beneficiary recipient files from the IRS.
Our computer analyses of the SSA/SSI/RRB/VA beneficiary recipient files identified
14,141 individuals who, as of May 6, 2021, were bypassed for a payment because they were a
spouse on a joint Tax Year 2019 return and the primary taxpayer subsequently filed a Tax
Year 2020 return as Single. IRS management informed us that they submitted a programming
change request to consider these individuals in June 2021. We analyzed the Individual Master
File, and as of September 16, 2021, 5,174 individuals filed their own Tax Year 2020 return and
have been issued an advance payment totaling $8,241,391. To be conservative, we removed
$253,400 that have been cancelled by the bank or returned to the IRS as undeliverable. This
adjustment left 5,174 individuals who received advance payments totaling $7,987,991.
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Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Potential; 7,565 individuals who had a change in
filing status are eligible for payments totaling $10,591,000 (see Recommendation 4).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
We also obtained the Social Security, SSI, RRB, and VA beneficiary recipient files from the IRS.
Our computer analyses of the SSA/SSI/RRB/VA beneficiary recipient files identified
14,141 individuals who were bypassed for a payment because they were a spouse on a joint Tax
Year 2019 return and the primary taxpayer subsequently filed a Tax Year 2020 return as Single.
IRS management informed us that they submitted a programming change request to consider
these individuals in June 2021. We analyzed the Individual Master File, and as of September 16,
2021, 5,174 individuals filed their own Tax Year 2020 return and have been considered for an
advance payment. Further analysis of the remaining 8,967 individuals identified 7,565 who were
still bypassed for a payment. Because each eligible individual can receive up to $1,400, we
estimated that these individuals are entitled to $10,591,000 (7,565 x $1,400).
Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Potential; 51,639 individuals whose tax account was
incorrectly marked as being a resident of a U.S. territory and are eligible for $144,126,174
(see Recommendation 5).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
We also obtained data from the IRS that detailed the specific individuals who filed a Tax
Year 2019 return in the territories.
Our review of the Tax Year 2019 information provided by the U.S. territories initially identified
432,623 individuals with a territory indicator but no corresponding record in the Tax Year 2019
territory reports. Of these, we identified 51,639 individuals with a filed Tax Year 2020 return as
of September 16, 2021, who are eligible for $144,126,174 in advance RRCs.
Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Potential; 2,073 ITIN filers with valid SSN dependents
who did not receive advance payments totaling $5,258,891 (see Recommendation 6).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
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Our computer analyses of payments that were issued as of April 1, 2021, identified
419,822 individuals who have an ITIN and did not receive advance payments for eligible
dependents. The ARPA allows individuals who have an ITIN to receive a payment for their
dependents who have a valid SSN. IRS management stated that programming errors prevented
these individuals from being considered for an advance RRC payment. The IRS implemented
programming changes on April 22, 2021, and as of September 16, 2021, 417,749 ITIN taxpayers
who filed a Tax Year 2020 return containing valid SSN dependents have been considered for an
advance RRC payment. The remaining 2,073 individuals did not receive advance RRC payments
totaling $5,258,891.
Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Potential; 133,578 individuals who are eligible for
payments totaling $195,263,435 because of the unemployment benefit exclusion (see
Recommendation 6).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
We obtained data from the IRS which detailed the specific individuals who were subject to
unemployment income exclusion.
We used IRS-provided data of 13,580,357 individuals with unemployment benefit exclusions and
found 133,578 individuals who are eligible for payments totaling $195,263,435 as of
September 16, 2021. These individuals either did not receive any or only received a phase-out
payment due to their adjusted gross income before the unemployment benefit exclusion. IRS
management stated that, once a taxpayer has been evaluated for an advance payment based on
a Tax Year 2019 or Tax Year 2020 return, the ARPA does not provide for reconsiderations of that
taxpayer using the same tax period.
Type and Value of Outcome Measure:
•
Taxpayer Rights and Entitlements – Potential; 2,798 individuals who have an unresolved
condition in their tax account are eligible for payments totaling $6,289,882 (see
Recommendation 6).
Methodology Used to Measure the Reported Benefit:
We obtained extracts from the Individual Master File for Tax Years 2019, 2020, and 2021; the
Individual Return Transaction File for Processing Years 2020 and 2021; the Individual Master File
Refund File for Processing Year 2021; and the National Account Profile for Processing Year 2021.
Our computer analyses of individuals with a processed tax return as of March 25, 2021,
identified 25,525 individuals with an unresolved condition in their tax account. The IRS will
consider these individuals for an advance RRC payment once these conditions have been
resolved. We analyzed the Individual Master File as of September 16, 2021, and identified
22,727 individuals who have been considered for an advance payment. The remaining
2,798 individuals who have an unresolved condition on their tax account are eligible for
payments totaling $6,289,882.
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Appendix III
Management’s Response to the Draft Report
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Appendix IV
Glossary of Terms
Term
Definition
Data Center Warehouse
A TIGTA repository of IRS data.
Duplicate TIN Database
A database the IRS captures every TIN used on an individual income tax
return and categorizes duplicate TIN uses.
Filing Season
The period from January through mid-April when most individual income
tax returns are filed.
Individual Master File
The IRS database that maintains transactions or records of individual tax
accounts.
Individual Return
Transaction File
A database the IRS maintains that contains information on the individual tax
returns it receives.
Individual Taxpayer
Identification Number
ITINs are issued by the IRS to individuals who are required to have a
Taxpayer Identification Number for tax purposes but do not have and are
not eligible to obtain a Social Security Number.
Information Returns
Master File
Creates and maintains a master file of current and prior year information
returns.
Integrated Data Retrieval
System
IRS computer system capable of retrieving or updating stored information.
It works in conjunction with a taxpayer’s account records.
National Account Profile
A compilation of selected entity data from various IRS Master Files and the
SSA.
Processing Year
The calendar year in which the tax return or document is processed by the
IRS.
Refund File
This file captures all refunds that are sent by the IRS to the Bureau of the
Fiscal Service for processing. The Bureau of the Fiscal Service is responsible
for generating the actual refunds based upon the information provided by
the IRS. The refunds are sent by the Bureau of the Fiscal Service to the
taxpayers in the form of bank account direct deposits or mailed paper
checks. The file captures the name, address, and account information for
the individuals receiving the refunds and are useful for identifying tax
refund fraud.
Tax Year
A 12-month accounting period for keeping records on income and
expenses used as the basis for calculating the annual taxes due. For most
individual taxpayers, the tax year is synonymous with the calendar year.
Taxpayer Identification
Number
A nine-digit number assigned to taxpayers for identification purposes.
Depending upon the nature of the taxpayer, the Taxpayer Identification
Number is an Employer Identification Number, an SSN, or an ITIN.
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Appendix V
Abbreviations
ARPA
American Rescue Plan Act of 2021
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
FICA
Federal Insurance Contributions Act
IRS
Internal Revenue Service
ITIN
Individual Taxpayer Identification Number
RRB
Railroad Retirement Board
RRC
Recovery Rebate Credit
SSA
Social Security Administration
SSI
Supplemental Security Income
SSN
Social Security Number
TIGTA
Treasury Inspector General for Tax Administration
TIN
Taxpayer Identification Number
VA
Department of Veteran Affairs
To report fraud, waste, or abuse,
call our toll-free hotline at:
(800) 366-4484
By Web:
www.treasury.gov/tigta/
Or Write:
Treasury Inspector General for Tax Administration
P.O. Box 589
Ben Franklin Station
Washington, D.C. 20044-0589
Information you provide is confidential, and you may remain anonymous.