American Rescue Plan Act: Assessment of the Child Tax Credit Update Portal’s Capabilities and Related Processes
- Document type
- Report
- Date
- 2022-07-25
Summary
A final audit report of the Treasury Inspector General for Tax Administration, Report Number 2022-47-042, issued July 25, 2022 to the Commissioner of Internal Revenue by Deputy Inspector General for Audit Heather M. Hill. The audit assesses the IRS's customer service efforts for the Child Tax Credit Update Portal required by the American Rescue Plan Act of 2021 and nonportal update methods. TIGTA reports that the IRS issued approximately 216.9 million advance payments totaling $93.5 billion as of December 2021, and that capabilities to update the number of qualifying children and filing status were not deployed in Calendar Year 2021. It found the reconciliation process did not account for undelivered checks. TIGTA made two recommendations, which IRS management agreed with and implemented; the report includes appendices on methodology, management's response and abbreviations.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
American Rescue Plan Act: Assessment
of the Child Tax Credit Update Portal’s
Capabilities and Related Processes
July 25, 2022
Report Number: 2022-47-042
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined
to be restricted from public release has been redacted from this document. 1
TIGTACommunications@tigta.treas.gov | www.treasury.gov/tigta
HIGHLIGHTS: American Rescue Plan Act: Assessment of the
Child Tax Credit Update Portal’s Capabilities and Related Processes
Final Audit Report issued on July 25, 2022 Report Number 2022-47-042
Why TIGTA Did This Audit What TIGTA Found
The American Rescue Plan Act of In preparation for issuing advance monthly Child Tax Credit
2021 requires the IRS to develop payments, the IRS launched a series of comprehensive and
an online portal to provide far-reaching education and awareness campaigns. The IRS also
taxpayers with the ability to coordinated with internal and external stakeholders to identify the
unenroll from receiving advance taxpayers most impacted from these changes to focus outreach
payments. The portal would also efforts. The IRS’s collective outreach efforts included providing
allow taxpayers to update their information on www.IRS.gov; updating tax publications; developing
mailing address, bank account and distributing marketing materials; using traditional and social
information, number of qualifying media, including YouTube videos; and conducting in-person
children, filing status, and annual outreach events.
income.
On January 24, 2022, the Department of the Treasury and the
This audit was initiated to assess White House announced the relaunch of a revamped website,
the IRS’s customer service efforts www.ChildTaxCredit.gov, with new features to help taxpayers file
to assist taxpayers with the Child their tax returns and get updates on the Child Tax Credit. TIGTA
Tax Credit Update Portal and reviewed the revamped website and notified IRS management of
nonportal update methods. potential inaccuracies (e.g., inoperable links and references to filing
status thresholds).
Impact on Tax Administration
In addition, the IRS established controls to track advance Child Tax
On July 15, 2021, the IRS issued
Credit updates and detect potentially fraudulent tax returns filed
the first of six advance Child Tax
through the Child Tax Credit Non-filer Sign-up Tool. As of
Credit payments. As of
December 28, 2021, the IRS selected 133,057 nonfiler tax returns as
December 2021, the IRS issued
potential identity theft, of which 1,349 tax returns were confirmed
approximately 216.9 million
identity theft.
advance payments totaling
$93.5 billion. Finally, the legislation requires taxpayers to reduce their Child Tax
Credit by the amount of advance payments received when filing their
The Child Tax Credit Update Portal
Tax Year 2021 tax return. Although the IRS has developed a process
allows taxpayers to unenroll from
to identify discrepancies between the advance payments reported on
advance payments and update the
the tax return and advance payments recorded on the taxpayer’s
following: mailing address, bank
account, the process did not account for undelivered checks.
account information, and annual
income. However, not all What TIGTA Recommended
capabilities were made available
TIGTA made two recommendations, including that the IRS notify the
to taxpayers during Calendar
Department of the Treasury regarding concerns with the accuracy of
Year 2021. The IRS did not deploy
the information on the www.ChildTaxCredit.gov web page and
the capabilities for taxpayers to
develop programming that will account for undelivered checks
update the number of qualifying
during the reconciliation process.
children and to update their filing
status. IRS management agreed with and has implemented both
recommendations.
U.S. DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20024
TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
July 25, 2022
MEMORANDUM FOR: COMMISSIONER OF INTERNAL REVENUE
FROM: Heather M. Hill
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – American Rescue Plan Act: Assessment of the
Child Tax Credit Update Portal’s Capabilities and Related Processes
(Audit # 202140731)
This report presents the results of our review to assess the Internal Revenue Service’s customer
service efforts to assist taxpayers with the Child Tax Credit Update Portal and nonportal update
methods. This review is part of our Fiscal Year 2022 Annual Audit Plan and addresses the major
management and performance challenges of Implementing Tax Law Changes and Supporting an
Enhanced Taxpayer Experience.
Management’s complete response to the draft report is included as Appendix II.
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
Diana M. Tengesdal, Acting Assistant Inspector General for Audit (Returns Processing and
Account Services).
American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Table of Contents
Background .....................................................................................................................................Page 1
Results of Review .......................................................................................................................Page 2
Recommendation 1: ...................................................................Page 3
Some Legislatively Mandated Features of the Child Tax
Credit Update Portal Were Not Deployed..................................................................Page 4
Controls Were Established to Track Advance Child Tax
Credit Updates and Detect Potentially Erroneous
Reporting ................................................................................................................................Page 5
Programming to Identify Discrepancies Resulting From
the Reconciliation of Advance Child Tax Credit Payments
Is Being Developed..............................................................................................................Page 6
Recommendation 2: ...................................................................Page 7
Appendices
Appendix I – Detailed Objective, Scope, and Methodology ................................Page 8
Appendix II – Management’s Response to the Draft Report...............................Page 10
Appendix III – Abbreviations ............................................................................................Page 14
American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Background
The American Rescue Plan Act of 2021 (ARPA), 1 enacted on March 11, 2021, enhances the Child
Tax Credit for Tax Year 2 2021 by increasing the amount of the credit from $2,000 to $3,000 per
child under the age of 18 ($3,600 per child under 6) and making the credit fully refundable for
taxpayers who meet the principle abode requirements. 3 In addition, this legislation directs the
Internal Revenue Service (IRS) to establish a program to allow taxpayers to receive advance
periodic payments during Calendar Year 2021, equal to 50 percent of the IRS’s estimate of the
credit allowed for Tax Year 2021. Taxpayers will receive the remaining half of the credit in
Calendar Year 2022 when they file their Tax Year 2021 tax return.
Finally, the legislation requires the IRS to develop an online portal, which the IRS named the
Child Tax Credit Update Portal (CTC Update Portal). This portal is to provide taxpayers with the
ability to unenroll from receiving advance payments. The portal would also allow taxpayers to
update their mailing address, bank account information, number of qualifying children, filing
status, and annual income. Updates made to the taxpayer’s information via the CTC Update
Portal will be reflected in the IRS’s records and will be factored into the taxpayer’s advance
monthly payment. The IRS began developing the CTC Update Portal immediately upon
implementation of the ARPA and, on June 21, 2021, deployed the first release, which allowed
taxpayers to check if they were eligible to receive or unenroll from receiving the advance
payments. As of March 3, 2022, the IRS expended $31.5 million in developing, implementing,
and maintaining the CTC Update Portal.
Processes and procedures for taxpayers to access the CTC Update Portal and make
nonelectronic updates
Taxpayers can access the CTC Update Portal either by using their existing IRS online service
account (e.g., Get Transcript Application) 4 or creating an account using the Secure Access Digital
Identity system. Because the Secure Access Digital Identity system is intended to improve
taxpayer access to IRS online services as well as provide the next generation identification
proofing, 5 the IRS accelerated the launch of this system.
For those taxpayers who may not have access to the Internet, the IRS developed alternative,
nonelectronic processes to enable these taxpayers to perform many of the functionalities that
the CTC Update Portal provides. For example, the IRS created a dedicated telephone line for
taxpayers to call and unenroll or provide the IRS with updated information. The dedicated
1
Pub. L. No. 117-2.
2
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.
3
The Treasury Inspector General for Tax Administration (TIGTA) has an audit reviewing the accuracy of advance
payments and ensuring that the IRS identifies all qualified taxpayers (TIGTA, Audit No. 202140727, Implementation of
Child Tax Credit Advanced Periodic Payments).
4
Allows taxpayers to view and download their tax information, such as account transactions, line-by-line tax return
information, and income reported to the IRS. Taxpayers can download or print five distinct transcript types: tax
account, tax return, record of account, wage and income, and verification of nonfiling.
5
Verifying the claimed identity of an applicant by collecting and validating sufficient information, e.g., identity history,
credentials, and documents, about a person.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
telephone line was also available in Spanish and made use of Over-the-Phone Interpretation
service for other languages. In addition, taxpayers had the option to visit a Taxpayer Assistance
Center, 6 where updates like those offered via the IRS dedicated telephone line could be made.
The IRS’s customer service representatives, 7 by phone or in person (at a Taxpayer Assistance
Center), will authenticate the taxpayer and then enter the taxpayer’s request or updated
information in the Accounts Management System. 8 Similar to the CTC Update Portal, changes
made in the Accounts Management System will update the IRS’s records and will be factored
into the taxpayer’s next monthly advance payment. It should be noted that taxpayers can
update their bank account information only through the CTC Update Portal.
Results of Review
In preparation for issuing advance monthly Child Tax Credit payments, the IRS launched a series
of comprehensive and far-reaching education and awareness campaigns. This was to ensure
that taxpayers understood changes to the eligibility requirements and inform taxpayers of the
Child Tax Credit Non-filer Sign-up Tool as well as the CTC Update Portal and nonelectronic
processes to unenroll or update their information. The IRS also coordinated with internal and
external stakeholders to identify the taxpayers most impacted by these changes to focus
outreach efforts. The IRS’s collective outreach efforts included providing information on
www.IRS.gov; updating tax publications; developing and distributing marketing materials; using
traditional and social media, including YouTube videos; and conducting in-person outreach
events. For example, the IRS:
• Created a Frequently Asked Questions page on the IRS web page dedicated to the
Child Tax Credit and advance payments. The web page, which was translated into
seven languages, includes information on eligibility, calculating the advance payment,
reconciling the credit, etc. The web page also includes information on how to access and
use the CTC Update Portal as well as nonelectronic update methods. The IRS continues
to update the information on this web page as needed with new topics and updated
information.
• Partnered with the Free File Alliance to develop the Child Tax Credit Non-filer Sign-up
Tool to help taxpayers who do not have a Federal tax return filing requirement to submit
the needed tax return for eligibility for the advance Child Tax Credit payments or
Economic Impact Payments. As of December 4, 2021, the IRS accepted approximately
6
An IRS office with employees who answer questions, provide assistance, and resolve account-related issues for
taxpayers face-to-face.
7
Receives or initiates contact with taxpayers or their representatives to encourage voluntary compliance and resolves
account inquiries, performs research on taxpayer accounts to facilitate case resolution, coordinates with external
collection partners to resolve identified issues that impede case resolution, and adjusts taxpayer accounts.
8
A system that provides employees access to multiple IRS systems through their computers and allows for inventory
management, case delivery, history narratives, print-to-fax capabilities for sending information to taxpayers, and
electronic referral generation.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
390,200 tax returns filed through the nonfiler tools (including the Child Tax Credit
Non-filer Sign-up Tool and the third-party filing tool). 9
• Hosted outreach events throughout the country to assist taxpayers, including assistance
with their advance payment eligibility. These events were staffed by IRS personnel,
which allowed the taxpayers to visit an IRS or non-IRS location to get assistance in filling
out the Child Tax Credit Non-filer Sign-up Tool or checking their eligibility for advance
Child Tax Credit payments.
• Launched survey questions throughout the advance Child Tax Credit payment process,
from June 2021 to November 2021, to track and evaluate the taxpayer’s experience. For
example, survey questions included whether the taxpayer visited the IRS website,
www.IRS.gov, as a result of the advance Child Tax Credit and what specific task (i.e.,
unenroll, update taxpayer information) the taxpayer was looking to accomplish. As a
result of these surveys, the IRS was able to clarify guidance/responses for taxpayers. For
example, the IRS informed taxpayers that, although bank account updates will be
processed, the updates will not show in the CTC Update Portal right away.
• Issued approximately 70 million letters notifying taxpayers of potential eligibility for
advance payments and the potential amount of payments. 10 Additionally, the letters
provided basic eligibility requirements, pointed taxpayers to resources on the IRS’s web
page, and provided the taxpayers with the dedicated telephone line.
In addition to the IRS’s efforts detailed above, on January 24, 2022, the Department of the
Treasury and the White House announced the relaunch of a revamped website,
www.ChildTaxCredit.gov, with new features to help taxpayers file their tax returns and get
updates on the Child Tax Credit.
Recommendation 1 (e-mail alert): On January 25, 2022, we notified the Director, Return
Integrity and Compliance Services, of potential inaccuracies and other areas of concern based
on our review of information on www.ChildTaxCredit.gov. For example, the website references
Publication 972, Child Tax Credit and Credit for Other Dependents, which the IRS made obsolete
for Tax Year 2021, and did not reference thresholds for single or married filing separately
taxpayers. We recommended that the IRS review our concerns and share them with the
Department of the Treasury to address.
Management Action in Response to Alert: The IRS agreed with this recommendation.
On January 27, 2022, IRS management shared our concerns with the Department of the
Treasury, which has since updated several website links to provide taxpayers with correct
information.
As mentioned above, the IRS, as required by legislation, developed an online portal to enable
taxpayers to unenroll from receiving advance Child Tax Credit payments as well as to update key
information used to compute their monthly advance payment amounts. In addition, the IRS
created a nonelectronic process that also allows taxpayers to unenroll from receiving advance
9
On September 1, 2021, a third-party entity, in collaboration with the White House and the Department of the
Treasury, developed a similar nonfiler tool to allow taxpayers another tool to gain eligibility for advance payments
through November 15, 2021.
10
These letters include the Letter 6416 and 6416-A, Advance Child Tax Credit Outreach; Letter 6417, Advance Child
Tax Credit Payment; and Letter 6472, Advance Child Tax Credit Outreach (Treasury).
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Child Tax Credit payments and update similar information. Since becoming available on
June 21, 2021, the IRS reports that the CTC Update Portal has been accessed 39.6 million times
by approximately 5 million users through December 3, 2021. Key information as to the actions
taken on the CTC Update Portal include:
• 2.1 million taxpayers unenrolled.
• 2 million bank accounts were updated.
• 447,000 taxpayer mailing addresses were updated.
• 40,000 taxpayers updated their adjusted gross income.
For those taxpayers seeking assistance via nonelectronic processes, the IRS reports receiving
4.6 million calls on the dedicated telephone line between June 6, 2021, and January 1, 2022,
regarding the Child Tax Credit and more than 550,000 taxpayers visiting a Taxpayer Assistance
Center for face-to-face appointments between July 1, 2021, and December 31, 2021. 11 Finally,
the IRS developed a Spanish version of the CTC Update Portal, which was made available to
users on November 23, 2021. As of December 3, 2021, the Spanish version had been accessed
approximately 7,800 times by taxpayers.
The IRS issued the first of six monthly advance Child Tax Credit payments on July 15, 2021,
four months after the ARPA was enacted. As of December 2021, the IRS issued approximately
216.9 million advance payments totaling $93.5 billion. This required a significant undertaking on
the part of the IRS as it needed to develop processes and procedures to determine eligibility,
compute payment amounts, and develop an online portal and nonelectronic assistance options
for taxpayers to provide the IRS with updates to key information used to compute the payment
amounts. This was all accomplished while the IRS was also tasked with rolling out a third round
of Economic Impact Payments, mid–filing season changes in processing of tax returns (e.g.,
systems, tax forms, instructions, publications, letters, and notices) due to the retroactive effect of
some of the ARPA provisions, and digitalization efforts to mitigate the impact of the pandemic
on in-person processes. Although we brought some concerns to the IRS’s attention, overall the
actions taken on the part of IRS employees involved with the implementation of this legislation
directly assisted millions of taxpayers in obtaining much-needed advance Child Tax Credit
payments.
Some Legislatively Mandated Features of the Child Tax Credit Update Portal
Were Not Deployed
The IRS did not provide the ability for taxpayers using CTC Update Portal or nonelectronic
processes to update the number of qualifying children or their filing status as required by
legislation. Figure 1 provides the status of the required functionalities and the dates of
implementation.
11
The IRS did not track if the specific visits to the Taxpayer Assistance Center were related to the Child Tax Credit.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Figure 1: CTC Update Portal Release Schedule
Functionality Release Date Portal Nonportal
Check eligibility and unenroll from advance payments June 21, 2021
Update direct deposit account information 12 June 30, 2021
Update mailing address August 20, 2021
Update adjusted gross income November 1, 2021
Update number of qualifying children 13 Not Deployed
Update filing status Not Deployed
Source: Review of the Child Tax Credit Frequently Asked Questions on www.IRS.gov.
IRS management stated that, on November 12, 2021, the Department of the Treasury made the
decision to only release the Spanish version of the CTC Update Portal and not release the last
functionalities scheduled for November 23, 2021. As a result, taxpayers were not able to update
the number of qualifying children or their filing status for Calendar Year 2021. At the time of
our reporting, legislation had not been enacted to extend the advance Child Tax Credit
payments. In our ongoing conversations, IRS management stated they continue to work with
the Department of the Treasury and prepare themselves in the event legislation is enacted.
Controls Were Established to Track Advance Child Tax Credit Updates and
Detect Potentially Erroneous Reporting
The IRS created processes to update tax accounts associated with taxpayers initiating specific
actions on the CTC Update Portal, thereby ensuring that the IRS had the most current
information needed to update the advance Child Tax Credit payment amounts. Depending on
the specific action initiated, the IRS developed separate codes that would post to the taxpayer’s
account to identify these updates. Our review of these codes identified the following concerns
that we brought to management’s attention:
• As of July 31, 2021, we identified 289 taxpayers who unenrolled using the CTC Update
Portal; however, there was no corresponding entry on the taxpayer’s tax account to
prevent the taxpayer from receiving the advance monthly payment. When we brought
this concern to management’s attention, management responded that these taxpayers
did not successfully complete the unenrollment process or did not have an account on
the Master File. Taxpayers without an account would not be eligible to receive the
advance payments. As a result, these taxpayers did not receive an advance payment
even though there was no code on the taxpayer’s account. Additionally, on
12
The bank account updates are only made in the CTC Update Portal to ensure that only the taxpayer would be
responsible for entering their banking information.
13
This capability was being developed for the last release of the CTC Update Portal; however, it was not deployed
(along with the update for filing status).
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
September 9, 2021, the IRS resolved many of these accounts that did not successfully
complete the unenrollment process.
• As of August 7, 2021, we identified 24 taxpayers who potentially unenrolled from
advance Child Tax Credit payments using a nonportal method, but their tax account did
not reflect the appropriate unenrollment code. When asked to explain why this
occurred, IRS management stated that customer service representatives were putting a
note in their system on the taxpayer’s account who called and their spouse’s account
when only one taxpayer was calling to unenroll. Each taxpayer, individually, must
unenroll from the advance payments. The IRS communicated the issue with the
customer service representatives to ensure that they follow the procedures to place
unenrollment notes on only the correct taxpayer in the Accounts Management System.
• As of August 15, 2021, we identified 13 bank account and routing number combinations
used a total of 335 times to update taxpayers’ information in the CTC Update Portal.
This indicated there could be a potential for fraud. Management subsequently reviewed
the 13 bank accounts and determined that there were no other common characteristics
***************************************2***************************************, that would
lead the IRS to conclude that these were potentially fraudulent updates. Management
determined that these accounts may be for taxpayers using a third-party entity to receive
their advance Child Tax Credit payment. The IRS converted the fourth and subsequent
direct deposits over to paper checks on these 13 bank accounts.
• As of November 30, 2021, we identified 1,895 taxpayer requests for a paper check that
did not receive the appropriate update to prevent a direct deposit. IRS management
stated that there was a known issue with taxpayers in a married filing jointly status for
which one taxpayer does not have a tax account on which to post the paper check
request. IRS management stated that, due to other priorities, programming updates
were not implemented because the taxpayers still received an advance payment. The IRS
is continuing to analyze these cases to ensure that all taxpayers identified are associated
with this known issue. The IRS has also been tracking all the known issues that should be
addressed if legislation is passed to extend advance payments of the Child Tax Credit.
Additionally, the IRS created a new filter in the Dependent Database14 to detect potentially
fraudulent tax returns filed through the Child Tax Credit Non-filer Sign-up Tool. Moreover, all
tax returns filed through the Child Tax Credit Non-filer Sign-up Tool, including the third-party
tool, were run through the identity theft filters. As of December 28, 2021, the IRS selected
133,057 nonfiler tax returns as potential identity theft, of which 1,349 tax returns were confirmed
identity theft.
Programming to Identify Discrepancies Resulting From the Reconciliation of
Advance Child Tax Credit Payments Is Being Developed
The ARPA also required the taxpayer to reduce their Child Tax Credit by the amount of advance
payments received when filing their Tax Year 2021 tax return. In response to this provision, the
14
An IRS system that uses a set of sophisticated rules and scoring models along with internal and external data to
evaluate tax returns and validate taxpayers’ entitlement to refunds. This system scores tax returns and selects
questionable returns for audit.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
IRS updated Schedule 8812, Credits for Qualifying Children and Other Dependents, and the
instructions to assist taxpayers with this required reconciliation. Specifically, instructions were
updated on how to figure the Child Tax Credit, report the advance Child Tax Credit payments
received, and calculate any additional tax owed if the taxpayer receives excess advance
payments. Schedule 8812 assists taxpayers with reducing their Child Tax Credit by the amount
of advance payments, thus reconciling their advance payments. Taxpayers will receive a
Letter 6419, 2021 Total Advance Child Tax Credit (AdvCTC) Payments, that reports to the
taxpayer the aggregate amount of advance payments received during Calendar Year 2021 and
the number of qualifying children used to determine the amount of advance payment.
Additionally, on January 31, 2022, the IRS released an Advance Child Tax Credit Payment
Summary page in the Online Account platform. This page contains similar information to the
Letter 6419, except that it is updated daily to reflect any payment reversals due to undeliverable
checks and rejected direct deposits. The IRS has developed a process to identify discrepancies
between the advance Child Tax Credit payments reported on the tax return via the Letter 6419
and recorded on the taxpayer’s account. The IRS will update the taxpayer’s tax return to reflect
what is recorded on the tax account and then correspond with the taxpayer regarding the
changes. Additionally, the Letter 6419 instructs taxpayers to contact the IRS’s dedicated Child
Tax Credit phone line if there is a concern with the amount on the letter.
Recommendation 2 (e-mail alert): On January 28, 2022, we notified the Director, Return
Integrity and Compliance Services, of our concerns with the reconciliation process when there
are undelivered checks. This concern arises when the taxpayer files their Tax Year 2021 tax
return but has a check for an advance Child Tax Credit payment that was returned undelivered
after the taxpayer filed their tax return. In these situations, the taxpayer will not receive the
payment from the undelivered check and will need to work with the IRS, after filing their tax
return, to recover their payment. We recommended that the IRS develop a process to continue
to proactively identify and correct accounts with undelivered advance Child Tax Credit that post
to accounts after the IRS processes the Tax Year 2021 tax return.
Management Action in Response to Alert: The IRS agreed with this recommendation
and has updated its programming as of March 3, 2022, to generate a new internal
account transcript when an advance Child Tax Credit payment (or Economic Impact
Payment) is returned after the tax return posts. This allows the IRS to proactively adjust
the account without the taxpayer contacting the IRS. We are conducting a separate
review to evaluate the reconciliation of the advance Child Tax Credit payments and will
include this new process as part of that review. 15
15
TIGTA, Audit No. 202240712, American Rescue Plan Advanced Child Tax Credit Tax Filing Reconciliation for
Individuals.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to assess the IRS’s customer service efforts to assist
taxpayers with the CTC Update Portal and nonportal update methods. To accomplish our
objective, we:
• Determined if taxpayers using the CTC Update Portal are accurately receiving (or not
receiving) the benefits they have elected or not elected. Specifically, we evaluated the
CTC Update Portal unenrollment requests effective for the August 2021 advance
payment, CTC Update Portal mailing address updates effective for the October 2021
advance payment, and all CTC Update Portal bank account update requests effective for
the December 2021 advance payment.
• Determined if taxpayers using the nonportal methods to update their account for the
advance Child Tax Credit are accurately receiving (or not receiving) the benefits they
have elected or not elected. Specifically, we evaluated all unenrollment requests and
mailing address updates made through nonportal methods effective for the
September 2021 advance payment.
• Assessed the status of the service being provided to taxpayers who use the nonportal
method to update the information for the advance Child Tax Credit.
• Assessed the IRS’s process to evaluate tax returns filed through the Child Tax Credit
Non-filer Sign-up Tool for potential fraud and identity theft.
• Assessed the IRS’s outreach and communication plan to determine if the IRS is following
its plans and issuing clear and accurate guidance.
Performance of This Review
This review was performed with information obtained from the IRS Wage and Investment
Division’s Return Integrity and Compliance Services operation during the period August 2021
through March 2022. 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); Diana M. Tengesdal, Director; Jonathan Lloyd, Audit
Manager; Tina Fitzsimmons, Lead Auditor; Lauren Bourg, Senior Auditor; Michael Russell, Senior
Auditor; and Aranxa Delgado, Auditor.
Validity and Reliability of Data From Computer-Based Systems
During this review, we relied on data obtained from the CTC Update Portal (which contained the
unenrollment, bank account, and mailing address update requests) and the Accounts
Management System (which contained the details of taxpayers’ discussions with the IRS). We
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
also relied on the Individual Master File 1 entity and tax account data on Treasury Inspector
General for Tax Administration’s Data Center Warehouse 2 to review transaction codes. 3 Before
relying on the data, we ensured that each file contained the specific data elements we requested
and selected random samples of each extract and verified that the data in the extracts were the
same as the data captured in the CTC Update Portal, Accounts Management System, and
Integrated Data Retrieval System. 4 Based on the results of our testing, we believe the data files
used in our review are 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 include the systems
for measuring, reporting, and monitoring program performance. We determined that the
following internal controls were relevant to our audit objective: controls to ensure that the
taxpayer updates were accurately posted to the taxpayer’s account, IRS procedures in the
Internal Revenue Manual related to the advance Child Tax Credit, and the IRS’s publicly issued
guidance such as, Frequently Asked Questions and tax forms, instructions, and letters. We
evaluated these controls by assessing the CTC Update Portal and nonportal updates, reviewing
IRS procedures in the Internal Revenue Manual, meeting with IRS management and subject
matter experts, and evaluating IRS publicly issued guidance.
1
The IRS database that maintains transactions or records of individual tax accounts.
2
A TIGTA repository of IRS data.
3
A three-digit code used to identify actions being taken on a taxpayer’s account.
4
An IRS computer system capable of retrieving or updating stored information. It works in conjunction with a
taxpayer’s account records.
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Appendix II
Management’s Response to the Draft Report
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
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Update Portal’s Capabilities and Related Processes
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
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American Rescue Plan Act: Assessment of the Child Tax Credit
Update Portal’s Capabilities and Related Processes
Appendix III
Abbreviations
ARPA American Rescue Plan Act of 2021
CTC Update Portal Child Tax Credit Update Portal
IRS Internal Revenue Service
TIGTA Treasury Inspector General for Tax Administration
Page 14
To report fraud, waste, or abuse,
call our toll-free hotline at:
(800) 366-4484
By Web:
www.treasury.gov/tigta/
Or Write:
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File and source
- File
- 2022-47-042-assessment-of-the-child-tax-credit.pdf
- Size
- 2,251,541 bytes
- SHA-256
- 838b6d25b325602b0f5cbc93dfecb5b64312f8aae36d4a466e9c2b7ed4ce7afa
- Original
- www.oversight.gov