TIGTA Semiannual Report to Congress, October 1, 2020 through March 31, 2021
Summary
This is the Treasury Inspector General for Tax Administration (TIGTA) Semiannual Report to Congress for October 1, 2020 - March 31, 2021, opening with a message from Inspector General J. Russell George. It states that TIGTA's Office of Audit completed 21 audits and its Office of Investigations completed 1,287 investigations, with monetary benefits totaling almost $7 billion. The report says the CARES Act appropriated approximately $750 million to the IRS to administer its tax provisions, and that as of December 31, 2020 the IRS issued more than 315 million Economic Impact Payments totaling $422 billion. TIGTA was reviewing the IRS's handling of those payments, customer service and employee safety during the pandemic.
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Treasury Inspector General for Tax Administration
Semiannual Report to Congress
October 1, 2020 - March 31, 2021
Inspector General’s Message to Congress
I am pleased to present this Semiannual Report to Congress,
summarizing the accomplishments of the Treasury Inspector
General for Tax Administration (TIGTA) during the period October 1,
2020 through March 31, 2021. Some of TIGTA’s notable
achievements in pursuit of its mission to provide oversight of the
Internal Revenue Service (IRS) and protect the integrity of Federal
tax administration are highlighted in the various audits,
investigations, and inspections and evaluations in this report.
During this reporting period, TIGTA’s Office of Audit completed 21
audits, and its Office of Investigations completed 1,287
investigations. In addition, TIGTA’s combined audit and investigative
efforts have resulted in the recovery, protection, and identification of monetary
benefits totaling almost $7 billion.
The coronavirus pandemic remains one of the most critical challenges confronting the IRS and
TIGTA. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the largest
economic rescue package in U.S. history, had a significant impact on the IRS and Federal tax
administration. The CARES Act contained numerous tax-related provisions impacting
individuals and businesses and appropriated approximately $750 million to the IRS to
administer these provisions. Most notably, the CARES Act required the IRS to send Economic
Impact Payments (EIPs) to eligible American households.
Congress passed additional pandemic relief legislation during this reporting period – the
Coronavirus Response and Relief Supplemental Appropriations Act of 2021 and the American
Rescue Plan Act of 2021. These acts require the IRS to send additional EIPs and recovery
rebates, respectively, to eligible American households.
The IRS took unprecedented actions to issue EIPs. As of December 31, 2020, the IRS issued
more than 315 million EIPs, totaling $422 billion. As required by the CARES Act, the IRS
established processes to issue a notice to each recipient that shows the payment amount and
the method used to send it.
TIGTA continues to review the actions taken by the IRS to ensure that eligible taxpayers
received EIPs and to prevent improper payments. TIGTA also is assessing the impact of the
pandemic on the IRS’s ability to provide effective customer service, conduct examinations,
and collect revenue. In addition, TIGTA is evaluating the IRS’s efforts to protect its employees
and its response to health and safety incidents that occurred during the pandemic.
TIGTA’s Office of Investigations continues to work with the IRS to prevent and detect any
scams, including those involving the theft of EIPs. TIGTA continues to investigate and deter
attacks against online IRS applications, as part of its responsibility for investigating and
October 1, 2020 – March 31, 2021 │3
deterring tax-related cybercrime and disrupting cyber-based schemes by illicit actors who
impersonate taxpayers and IRS employees.
Consistent with TIGTA’s mission, we will continue to work closely with Congress, the
Administration, the IRS, and all of our stakeholders on behalf of taxpayers to ensure that our
Nation’s system of tax administration is efficient, effective, and fair.
Sincerely,
J. Russell George
Inspector General
4│ October 1, 2020 – March 31, 2021
Table of Contents
Inspector General’s Message to Congress ........................................................................................... 3
TIGTA’s Profile ......................................................................................................................................... 7
Statutory Mandate ....................................................................................................................... 7
Organizational Structure .............................................................................................................. 8
Authorities..................................................................................................................................... 8
Pandemic Relief Oversight Efforts ......................................................................................................... 9
Promote the Economy, Efficiency, and Effectiveness of Tax Administration ...................................... 15
Implementing Tax Law Changes ................................................................................................ 15
Improving Tax Reporting and Payment Compliance ................................................................ 17
Protect the Integrity of Tax Administration ............................................................................................ 22
The Performance Model .............................................................................................................. 22
Performance Area: Employee Integrity....................................................................................... 22
Identity Theft and the Insider Threat...................................................................................... 23
Employee Integrity ................................................................................................................... 23
Employee Integrity Projects .................................................................................................... 24
Performance Area: Employee and Infrastructure Security ....................................................... 25
Performance Area: External Attempts to Corrupt Tax Administration...................................... 27
Cybercrime .............................................................................................................................. 27
Corrupt Interference ............................................................................................................... 27
Impersonation Scams and Schemes .................................................................................... 28
Tax Preparer Outreach ........................................................................................................... 31
Advance Oversight of America’s Tax System ........................................................................................ 32
Audit Statistical Reports ......................................................................................................................... 34
Reports With Questioned Costs ................................................................................................ 34
Reports With Recommendations That Funds Be Put to Better Use.......................................... 35
Reports With Additional Quantifiable Impact on Tax Administration ........................................ 36
Investigations Statistical Reports .......................................................................................................... 38
Significant Investigative Achievements ...................................................................................... 38
Status of Closed Criminal Investigations .................................................................................... 39
Criminal Dispositions ................................................................................................................... 39
Administrative Dispositions on Closed Investigations ............................................................... 39
Summary of Investigative Reports and Criminal Referrals........................................................ 40
Interference .................................................................................................................................. 40
Instances of Whistleblower Retaliation ...................................................................................... 40
Closed Investigations Involving Internal Revenue Service Senior
Government Employees ............................................................................................................... 41
October 1, 2020 – March 31, 2021 │5
Appendices
Appendix I – Other Statistical Reports .................................................................................................. 42
Reports With Significant Unimplemented Corrective Actions ................................................... 42
Other Statistical Reports.............................................................................................................. 60
Appendix II – Audit Products .................................................................................................................. 61
Appendix III – TIGTA’s Statutory Reporting Requirements ................................................................... 63
Appendix IV – Section 1203 Standards ................................................................................................ 66
Appendix V – Inspector General Peer Review Activity .......................................................................... 67
Appendix VI – Data Tables Provided by the Internal Revenue Service ............................................... 68
Internal Revenue Service Memorandum .................................................................................... 68
Report of Employee Misconduct by Disposition Groups ............................................................ 69
Report of Employee Misconduct National Summary ................................................................. 70
Summary of Substantiated I.R.C. Section 1203 Inquiries Recorded in ALERTS ..................... 71
Glossary of Acronyms ............................................................................................................................. 72
6│ October 1, 2020 – March 31, 2021
TIGTA’s Profile
The Treasury Inspector General for Tax
Administration (TIGTA) provides audit,
investigative, and inspection and evaluation Statutory Mandate
services that promote economy, efficiency,
and integrity in the administration of the Protect against IRS employee
Internal Revenue laws. TIGTA also provides improprieties and external attempts
independent oversight of the Internal to corrupt or threaten IRS employees.
Revenue Service (IRS), the IRS Oversight
Board, and the IRS Office of Chief Counsel. Provide policy direction and conduct,
Although TIGTA is placed organizationally supervise, and coordinate audits and
within the Department of the Treasury investigations related to IRS programs
(Treasury Department) and reports to the and operations.
Secretary of the Treasury and to Congress, it
functions independently from all other offices
Review existing and proposed
and bureaus within the Treasury Department.
legislation and regulations related to
IRS programs and operations, and
TIGTA oversees all aspects of activity related make recommendations concerning
to the Federal tax system as administered by the impact of such legislation or
the IRS. TIGTA protects the public’s regulations.
confidence in the tax system by identifying
and recommending strategies for addressing
Promote economy and efficiency in
the IRS’s management challenges and the administration of tax laws.
implementing the priorities of the Treasury
Department.
Prevent and detect waste, fraud, and
TIGTA’s organizational structure (see following abuse in IRS programs and
page) is comprised of the Office of the operations.
Inspector General and six functional offices:
the Office of Investigations; the Office of Inform the Secretary of the Treasury
Audit; the Office of Inspections and and Congress of problems and
Evaluations; the Office of Mission Support; the deficiencies identified and of the
Office of Information Technology; and the progress made in resolving them.
Office of Chief Counsel.
October 1, 2020 – March 31, 2021 │7
Organizational Structure
Inspector
General
Chief Counsel
Deputy Inspector
Deputy Inspector Deputy Inspector
Deputy Inspector General for Chief Information
General for General for
General for Audit Inspections and Officer
Investigations Mission Support
Evaluations
Authorities
TIGTA has all of the authorities granted under the Inspector General Act of 1978, as amended
(Inspector General Act). 1 In addition to the standard authorities granted to Inspectors
General, TIGTA has access to tax information in the performance of its tax administration
responsibilities. TIGTA also reports potential criminal violations directly to the Department of
Justice (DOJ) when TIGTA deems that it is appropriate to do so. TIGTA and the Commissioner
of Internal Revenue (Commissioner or IRS Commissioner) have established policies and
procedures delineating responsibilities to investigate potential criminal offenses under the
Internal Revenue laws. In addition, the IRS Restructuring and Reform Act of 1998 (RRA 98)2
amended the Inspector General Act to give TIGTA the statutory authority to carry firearms,
execute search and arrest warrants, serve subpoenas and summonses, and make arrests as
set forth in Internal Revenue Code (I.R.C.) Section (§) 7608(b)(2).
1 5 United States Code (U.S.C.). app. (2012 & Supp. IV 2017).
2 Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16
U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49 U.S.C. (2012)).
8│ October 1, 2020 – March 31, 2021
Pandemic Relief Oversight Efforts
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)3 was
signed into law. The CARES Act is the largest economic rescue package in U.S. history and will
have a significant impact on the IRS and Federal tax administration. The CARES Act contains
numerous tax-related provisions affecting individuals and businesses and appropriated
$750.7 million in additional funding to the IRS to administer and oversee these provisions.
The following summaries highlight some of the pandemic-related audits, investigations, and
evaluations completed during this six-month reporting period:
Systems Processing Economic Impact Payments Performed Well and the Get My Payment
Application Security Vulnerabilities Are Being Remediated (Report Number 2021-26-006)
On April 10, 2020, the IRS issued more than 81.4 million payments totaling more than
$147.6 billion. As of September 25, 2020, the IRS issued more than 165 million Economic
Impact Payments (EIPs) totaling more than $276 billion. This audit was initiated to review the
effectiveness of IRS systems security and operations related to processing CARES Act EIPs.
Overall, the 16 IRS tax systems involved in delivering EIPs to individuals performed well.
However, a coding issue in the software developed to process the payments affected the
Individual Master File’s performance. The IRS fully restored the system within 24 hours, and
the affected payments were processed the following business day.
TIGTA determined that 463 (99 percent) of 470 required baseline security controls and
control enhancements were implemented for the Get My Payment application. The security
controls not implemented related to vulnerability scanning, flaw remediation, information
input validation, cryptographic protection, and information system component inventory. In
response to these findings, the Applications Development function opened a Plan of Action
and Milestones to address each deficiency. However, the IRS failed to timely remediate
17 critical (four unique) and 169 high (five unique) security vulnerabilities that were identified
in the Get My Payment application database.
Lastly, the IRS assessed the Get My Payment application’s appropriate identity and
authenticator assurance levels at level two, higher than the currently implemented level one.
Although the IRS implemented identity and authenticator assurance levels below the
assessed level, TIGTA found that the Digital Identity Acceptance Statement met the National
Institute of Standards and Technology and agency requirements by including a detailed
implementation and rationale, compensating controls and risk mitigation factors, a
description of risk acceptance, and a plan of action.
3 Pub. L. No. 116-136, 134 Stat. 281.
October 1, 2020 – March 31, 2021 │9
TIGTA recommended that the IRS ensure that:
• Critical and high security vulnerabilities are timely remediated based on
agency-defined timelines, and
• Plans of Action and Milestones associated with the Get My Payment application are
completed timely based on agency defined timelines and processes.
The IRS agreed with both of the recommendations.
Interim Report - Taxpayer Advocate Service Actions to Assist Taxpayers in Response to the
Implementation of the Coronavirus Aid, Relief, and Economic Security Act (Report Number
2021-16-019)
Soon after the IRS began issuing EIPs in response to the CARES Act, the Taxpayer Advocate
Service (TAS) started receiving reports of EIP-related issues. TAS’s statutory mission is to
assist taxpayers in resolving tax problems with the IRS, identify areas in which taxpayers have
problems with the IRS, and make administrative and legislative recommendations to mitigate
tax problems.
TIGTA issued this interim audit report to provide information about TAS’s initial actions to
assist taxpayers with CARES Act issues. TIGTA plans to issue a subsequent report later in
Calendar Year 2021 that will supplement the information in this report as well as provide
information on how TAS plans to spend funding it received to cover pandemic-related costs.
The TAS has taken numerous actions to assist taxpayers in response to the enactment of the
CARES Act. This includes identifying and addressing CARES Act issues affecting large groups
of taxpayers (Systemic Advocacy) and assisting individual taxpayers (Case Advocacy), as well
as taking other actions to educate and assist taxpayers during the pandemic.
After the IRS began issuing EIPs on April 10, 2020, TAS started receiving reports of EIP-related
issues affecting large groups of taxpayers. As of October 21, 2020, more than 450 systemic
issues related to the Coronavirus Disease 2019 (COVID-19) had been submitted on the
system that TAS uses to track issues affecting multiple taxpayers, and TAS had initiated 16
CARES Act-related Systemic Advocacy projects as a result. TAS officials stated that the largest
category of these issues related to EIPs. In addition, TAS issued a Proposed Taxpayer
Advocate Directive in June 2020 directing the IRS to immediately develop a process to correct
EIP errors for instances in which an eligible individual had not received his or her EIP or had
not received the correct amount. Subsequently, the IRS has taken action to systemically
correct errors affecting certain groups of taxpayers.
In addition to its efforts involving Systemic Advocacy, TAS has made efforts to assist individual
taxpayers with EIP-related issues. TAS initially accepted cases related solely to EIP issues, but
issued guidance on May 14, 2020, indicating that it would no longer accept these cases.
TIGTA reviewed a judgmental sample of these cases and determined that case advocates
were unable to assist most taxpayers with EIP issues because TAS employees lacked the
10 │ October 1, 2020 – March 31, 2021
capabilities to resolve EIP problems on individual accounts. As the IRS began implementing
processes to fix certain EIP issues, TAS started accepting some EIP-related cases on
August 10, 2020. TAS records indicated that more than 2,800 CARES Act cases were opened
in Fiscal Year (FY) 2020.
To further its efforts to keep the public informed about CARES Act issues, TAS also has
frequently updated its blogs and used social media accounts to disseminate information to
taxpayers. Furthermore, as part of an IRS-wide team, TAS has provided suggestions and
recommendations for frequently asked questions and answers, taxpayer communications,
and Internet content. In addition, TAS provided additional funding to Low Income Taxpayer
Clinics to allow the clinics to continue to assist taxpayers during the pandemic.
This report was prepared to provide interim information only. Therefore, no recommendations
were made in this report.
Interim Report – IRS COVID-19 Response Timeline and Policies to Protect Employee
Health and Safety (Report Number 2021-16-020)
The COVID-19 pandemic has affected the IRS’s ability to perform its responsibilities of
processing tax returns, tax payments, and tax refunds. The pandemic also threatens the lives
of IRS employees, several of whom have passed away from the virus since March 2020. As
such, the IRS has had to balance the completion of its mission and the health and safety of
its employees.
TIGTA issued this interim report to provide information about actions the IRS has taken to
protect the health and safety of its employees during the COVID-19 pandemic. This audit was
requested by Congress in House Report 116–456, accompanying the Consolidated
Appropriations Act, 2021. 4 The House Report instructed TIGTA to submit a report within
90 days of enactment. TIGTA plans to issue a subsequent report later in FY 2021 that will
provide updates to the information in this report, as well as additional information on the IRS’s
pandemic planning efforts.
On January 21, 2020, the Centers for Disease Control and Prevention reported the first case
of COVID-19 in the United States. On March 11, 2020, the World Health Organization officially
declared COVID-19 a pandemic and, shortly thereafter, the first case of an IRS employee
testing COVID-19 positive was reported. In response to the pandemic and resulting State stay-
at-home orders, the IRS began closing its facilities on March 16, 2020. On March 30, 2020,
the IRS directed all employees with portable work to evacuate worksites and work from home
or an alternate location, effectively closing all IRS facilities, though some employees continued
to report to certain locations to perform mission-essential work.
As State and local governments began lifting restrictions, the IRS was also aware of the needs
of taxpayers and the increasing backlog of work. On April 27, 2020, the IRS began the
4 Pub. L. No. 116-260, 134 Stat. 1182 (2020).
October 1, 2020 – March 31, 2021 │ 11
process of recalling employees to its facilities in phases, beginning with voluntary recalls to
select facilities and transitioning to a broader opening of facilities nationwide for mission-
essential, nonportable work. The IRS reported that all of its facilities have been open to
mission-essential functions and nonportable work since July 13, 2020.
Since reopening IRS facilities across the country for limited operations, the number of IRS
employees who reported testing positive for COVID-19 has increased. As of February 28,
2021, 3,404 IRS employees reported having tested positive for COVID-19. IRS data showed
that approximately 45 percent of these employees reported to an IRS facility during the
14 days preceding a positive test result for COVID-19.
As part of its efforts to quickly inform and protect employees during the early stages of the
COVID-19 pandemic, the IRS made Federal guidance available to all employees, in addition to
developing and issuing its own internal guidance. These internal guidelines generally aligned
with Federal guidelines and best practices issued by the Office of Personnel Management, the
Centers for Disease Control and Prevention, the Government Accountability Office, and other
Federal authorities.
TIGTA will continue to review the IRS’s actions to protect the health and safety of its
employees and provide updated information in a subsequent report to be issued later this
fiscal year. This report was prepared to provide interim information only. As such, TIGTA did
not make any recommendations in this report.
Man Pleads Guilty to Wire Fraud for His Role in Theft of Economic Impact Payments5
On February 24, 2021, in the Eastern District of Texas, James Mwanza was sentenced for wire
fraud. Mwanza devised a scheme to defraud the IRS and obtain money by filing fraudulent tax
returns. Mwanza was indicted on June 18, 2020, for wire fraud, theft of Government money,
and aggravated identity theft. He pled guilty on November 19, 2020.
According to the court documents, from about January 2020 through April 2020, Mwanza
presented himself as a tax preparer and unlawfully obtained, from his employer and other
sources, individuals’ means of identification, which included their names, birth dates, and
Social Security Numbers. Additionally, Mwanza illegally obtained IRS Electronic Filing
Numbers assigned to tax preparation firms not affiliated with him. Mwanza used the
information he obtained to electronically file tax returns and claim false tax refunds totaling
$7,814. The filing of the false tax returns also triggered the issuance of Economic Impact
Payments totaling $3,400, which he retained.
Mwanza was sentenced to six months’ imprisonment, three years of supervised release,
ordered to pay $5,800 in restitution, and a $100 assessment fee.
5 The facts in the summarized case narrative come from court documents of the jurisdiction named.
12 │ October 1, 2020 – March 31, 2021
Interim Report – The IRS Leveraged Its Telework Program to Continue Operations During
the COVID-19 Pandemic (Report Number 2021-IE-R002)
Telework allows Federal agencies to continue operations during a pandemic or other event
that would result in the closure of Federal Government buildings. To effectively continue
operations during an emergency, as many employees as possible should be prepared to
telework. On March 13, 2020, the President of the United States declared a national
emergency due to the outbreak of the COVID-19 pandemic. By March 16, 2020, the IRS
began closing some offices. Effective March 30, 2020, IRS employees were directed to
evacuate offices and telework, if possible. In July 2020, the IRS reopened offices to
employees with nonportable work and mission-critical functions.
TIGTA determined the IRS effectively used its telework program to reduce the impact of the
COVID-19 pandemic on IRS operations.
The COVID-19 pandemic began to have a significant impact on IRS operations in mid-March
2020 when the IRS began to close facilities and employees were diagnosed with COVID-
19. Between March 14 and March 28, 2020, the number of employees who worked any
amount of time at IRS facilities declined from about 70,700 to 19,400, and the number of
employees who teleworked any amount of time increased from about 27,500 to 41,000. By
March 28, 2020, the IRS placed nearly 35,000 employees on paid Weather and Safety Leave
because they could not work in IRS facilities or telework during some portion of the two-week
period. Effective March 30, 2020, the IRS directed all employees, except for those individuals
performing mission-critical functions that could not be performed remotely, to vacate the work
site and work from home or an alternate location.
Between April 2020 and the end of September 2020, the IRS steadily increased telework
participation and reopened IRS facilities to some employees. By September 26, 2020, almost
60,700 employees teleworked a portion of the week, while approximately 25,600 employees
worked from an IRS facility for a portion of the week. For this same week, approximately
6,700 employees reported time to Weather and Safety Leave. The figure below illustrates the
increase in telework participation from after the COVID-19 outbreak was declared a national
emergency and through September 2020.
October 1, 2020 – March 31, 2021 │ 13
Source: TIGTA analysis of IRS data.
By December 19, 2020, around 4,600 IRS employees recorded time to Weather and Safety
Leave.
Information in this interim report was requested by Congress in House Report 116–456,
accompanying the Consolidated Appropriations Act, 2021. TIGTA was instructed to submit a
report within 90 days of enactment. TIGTA plans to issue a subsequent report that will provide
additional information on IRS’s use of telework during the pandemic.
TIGTA made no recommendations in this report.
14 │ October 1, 2020 – March 31, 2021
Promote the Economy, Efficiency, and
Effectiveness of Tax Administration
TIGTA’s Office of Audit strives to promote the economy, efficiency, and effectiveness of tax
administration. TIGTA provides recommendations to improve IRS systems and operations and
to ensure the fair and equitable treatment of taxpayers. TIGTA’s comprehensive and
independent performance audits of the IRS’s programs and operations primarily address
statutorily mandated reviews and high-risk challenges the IRS faces.
The IRS’s implementation of audit recommendations results in:
• Cost savings;
• Increased or protected revenue;
• Protection of taxpayers’ rights and entitlements; and
• More efficient use of resources.
Each year, TIGTA identifies and addresses the IRS’s major
management and performance challenges. The Office of Audit places audit emphasis on
statutory coverage required by RRA 98 and other laws, as well as areas of concern to
Congress, the Secretary of the Treasury, the IRS Commissioner, and other key stakeholders.
Audit Emphasis Areas for October 2020 Through March 2021
Implementing Tax Law Changes
Improving Tax Reporting and Payment Compliance
The following summaries highlight significant audits completed in each area of emphasis
during this six-month reporting period:
Implementing Tax Law Changes
Results of the 2020 Filing Season and Effects of the COVID-19 on Tax Processing
Operations (Report Number 2021-46-023)
The filing season, defined as the period from January through mid-April, is critical for the IRS.
It is during this time that most individuals file their income tax return and contact the IRS if
they have questions about specific laws or filing procedures.
The 2020 Filing Season was unlike any other. The IRS had to take unprecedented and drastic
actions to address COVID-19 and protect the health and safety of its employees and the
October 1, 2020 – March 31, 2021 │ 15
taxpaying public. These actions included closing Taxpayer Assistance Centers, Tax Processing
Centers, and offices nationwide. In addition, on March 20, 2020, the Treasury Department
extended the Federal income tax filing due date from April 15, 2020, to July 15, 2020. As of
November 13, 2020, the IRS had received approximately 168 million tax returns (with
91 percent electronically filed) and issued more than 125 million refunds totaling
$316 billion.
This audit was initiated to provide selected information related to the IRS’s 2020 Filing
Season, including information related to the impact of COVID-19. The overall objective of this
review was to evaluate whether the IRS timely and accurately processed individual paper and
electronically filed tax returns during the 2020 Filing Season.
As of December 25, 2020, the IRS had more than 11.7 million paper-filed individual and
business returns that still needed to be processed. The backlog of returns, correspondence,
and other types of work resulting from the pandemic had, and will continue to have, a
significant impact on the associated taxpayers. For example, the unprocessed individual
returns, as well as the additional returns and correspondence in the Error Resolution, Rejects,
Unpostables functions and the Accounts Management inventory, include taxpayers who have
yet to receive their Tax Year (TY) 2019 tax refunds.
The IRS’s ability to resolve these backlogs could be affected by the need to divert resources to
issue additional EIPs or an unforeseen closure of IRS Tax Processing Centers due to the
pandemic. The ability of these taxpayers to contact the IRS to receive updated information
about the status of their refunds is a further challenge as staffing issues continue to hinder
the IRS’s ability to provide adequate customer service.
Much of the work performed at the IRS’s Tax Processing Centers is not conducive to a
telework environment. This work includes the receiving, sorting, and distributing of mail and
the processing of paper tax returns, which requires manually inputting information from the
tax return into IRS systems, correcting errors, and corresponding with the taxpayer, if needed.
As of November 14, 2020, the IRS had more than 2.9 million pieces of unopened mail and
4.7 million individual paper tax returns to process. In addition, the IRS had more than
600,000 returns in its Error Resolution inventory, nearly 3.7 million cases in its Accounts
Management inventory, and more than 1.3 million returns in its fraud program inventories as
of this same period.
When the IRS closed its offices nationwide, it stopped answering 81 of its 87 toll-free taxpayer
assistance telephone lines and closed all 358 Taxpayer Assistance Centers. In addition,
10,792 of the 11,014 Volunteer Income Tax Assistance/Tax Counseling for the Elderly partner
sites remained closed as of May 24, 2020. The IRS had reopened 80 of its toll-free
telephone lines as of November 5, 2020, and 263 of its Taxpayer Assistance Centers as of
November 16, 2020.
This report was prepared to provide information only. Therefore, no recommendations were
made in this report.
16 │ October 1, 2020 – March 31, 2021
Improving Tax Reporting and Payment Compliance
A Provision in the American Rescue Plan of 2021 Will Help Improve Tax Compliance in the
Gig Economy, Virtual Currency Exchange Markets, and Other Emerging Economies
TIGTA performed two audits 6 which include the issue of information reporting of certain
business-related payments. I.R.C. § 6050W was added in 2008 and requires reporting of
certain payments made in settlement of payment cards and also addressed the reporting
requirements of “third party settlement organizations” (TPSO), which at the time primarily
covered online auction sites. This law only required reporting payments to the IRS at the
threshold of $20,000 and 200 transactions per year on Form 1099-K, Payment Card and
Third Party Network Transaction, a much higher threshold than the IRS reporting requirements
for other business-related payments which stands at $600 annually (normally reported on the
Form 1099-MISC, Miscellaneous Information). After the enactment of the law, new Internet
platform industries began to emerge and grow exponentially, including ridesharing businesses
and virtual currency exchanges. Many of these Internet platforms fell under the TPSO
definition and so did not report payments to workers unless the high threshold was met, while
other Internet platform businesses did not report them at all.
TIGTA’s audits demonstrated that there was significant noncompliance in information
reporting, and even when there was information reporting, taxpayers in these emerging
industries were not always reporting their payments as income. TIGTA recommended that the
IRS work with the Treasury Office of Tax Policy to pursue regulatory or legislative change
relating to the third-party reporting thresholds established in I.R.C. § 6050W. The Treasury
Deaprtment included this legislative proposal in its budget submissions for FYs 2020 and
2021. As part of the American Rescue Plan Act of 2021 7, Congress addressed the disparity of
information reporting between the TPSOs and other types of businesses. Section 9674 of the
American Rescue Plan Act of 2021 changes the threshold for reporting requirements from
$20,000 and 200 transactions annually to $600 annually, so that TPSOs are subject to the
same reporting requirements as other businesses.
TIGTA will soon be issuing another TPSO-related report 8 on peer-to-peer payment Internet
platform businesses (many of which are also TPSOs) which allow customers to easily and
cheaply send money both for business and personal reasons.
6 TIGTA, Ref. No. 2019-30-016, Expansion of the Gig Economy Warrants Focus on Improving Self-Employment
Tax Compliance (Feb. 2019); TIGTA, Ref. No. 2020-30-066, The Internal Revenue Service Can Improve Taxpayer
Compliance for Virtual Currency Transactions (Sept. 2020).
7 Pub. L. No. 117-2, 135 Stat. 4.
8 TIGTA, Draft Report No. 2019-30-019, The Internal Revenue Service Faces Challenges in Addressing the
Growth of Peer-to-Peer Payment Application Use.
October 1, 2020 – March 31, 2021 │ 17
Billions of Potential Taxes Went Unaddressed From Unfiled Returns and Underreported
Income by Taxpayers That Received Form 1099-K Income (Report Number 2021-30-002)
If taxpayers are not reporting or are underreporting Form 1099-K income, they are potentially
not paying the appropriate taxes on the income. To help decrease the Tax Gap, promote
fairness, and protect the integrity of the tax system, it is important for the IRS to identify and
address taxpayers with the highest risk of noncompliance. This audit was initiated to
determine whether the IRS is identifying and addressing individual and business taxpayers
with underreported income or unfiled returns related to Form 1099-K income. The report
focused on identifying the general population of individual and business taxpayers that
received Form 1099-K for TY 2017, but underreported the income or did not file a tax return,
and how the IRS is addressing this tax noncompliance.
TY 2017 Form 1099-K Recipients
Form 1099-K Business Form 1099-K
Recipients Individual Recipients
Form 1099-K Documents 6,371,901 3,354,329
Unique Taxpayer Identification Numbers (TIN) 3,349,296 2,622,703
Source: TIGTA analysis of Information Returns Master File Form 1099-K file data.
For TY 2017, numerous business and individual nonfiler taxpayers with Form 1099-K income
were not identified and cases were not created by the IRS’s nonfiler programs. In other cases,
they were identified but not worked by the IRS. TIGTA identified 314,586 business taxpayers
with $335.5 billion in Form 1099-K income that appeared to have a filing obligation but were
not identified as nonfilers by the IRS. The problem was that the IRS could not use third-party
information returns, such as Form 1099-K data, to identify business nonfilers and create
cases if the taxpayers’ accounts were coded as not having an open filing requirement, or no
tax account existed because the business had never filed a tax return.
The IRS also did not identify all individual nonfilers with significant Form 1099-K income.
TIGTA identified 62,087 individual nonfilers with $575 million in Form 1099-K income who
the IRS had not identified as nonfilers and nonfiler cases were not created. While the IRS
cannot work all of the nonfiler cases it identifies due to resource limitations, TIGTA identified
a significant number (325,060 business nonfilers and 103,991 individual nonfilers with
$203 billion and $3 billion in Form 1099-K income, respectively) that were not selected to be
worked.
Also for TY 2017, numerous business and individual taxpayers with reporting discrepancies of
at least $10,000 between the reported TY 2017 income on the return and the Form 1099-K
income were not identified by the IRS’s Underreporter programs, or were identified but not
worked. For example, the IRS does not identify fiscal year business underreporters. There
18 │ October 1, 2020 – March 31, 2021
were 3,314 Form 1120, U.S. Corporation Income Tax Return, fiscal year filer business
nonfilers with $1.5 billion in underreported Form 1099-K income. Additionally, TIGTA
identified a significant number of underreporter cases (45,169 business underreporter cases)
not selected to be worked by the Field Case Selection unit, with $73 billion in potentially
underreported Form 1099-K income.
TIGTA estimated that if the IRS identified, created, and worked just the nonfiler and
underreporter cases with Form 1099-K income of $1 million or more for businesses (Form
1120) and $100,000 or more for individuals, the IRS could potentially assess an additional
$5.7 billion in taxes.
As a result, TIGTA made seven recommendations to help improve the case identification,
creation, and work selection processes for the nonfiler and underreporter programs. IRS
management agreed with only three of the seven recommendations and disagreed with the
other four.
Improvements Have Been Made, but Controls Need to Be Strengthened to Detect Improper
Self-Employed Retirement Deductions (Report Number 2021-10-007)
Self-employed taxpayers may deduct contributions made to their own self-employed
retirement accounts on their individual tax return under certain circumstances. Without
effective controls to prevent or detect potentially improper deductions, self-employed
individuals may claim unallowable or fraudulent deductions.
TIGTA previously reported that the IRS did not have sufficient controls to identify taxpayers
who deducted contributions made to self-employment retirement accounts but did not have
evidence of self-employment activity. In response to the previous report, 9 the IRS improved its
process to detect unallowable self-employed retirement deductions. This audit was initiated
to determine whether the IRS had sufficient controls to prevent and detect improper
deductions for contributions made by self-employed taxpayers to their self-employed
retirement plans.
The IRS improved internal controls to prevent self-employed retirement plan deductions for
taxpayers who do not have evidence of self-employment. TIGTA previously reported that, in
TY 2011, two percent of tax returns filed claiming a self-employed retirement deduction did
not have evidence of self-employment. In this review, TIGTA determined that, for TY 2017,
less than one-half of one percent of such returns did not have this evidence. The IRS’s
corrective actions resulted in an 84 percent improvement compared to the prior report.
However, the IRS could further improve its process to confirm self-employment activity if it
included Schedule SE, Self-Employment Tax, when processing tax returns.
9 TIGTA, Ref. No. 2014-10-008, Millions of Dollars in Potentially Improper Self-Employed Retirement Plan
Deductions Are Allowed (Mar. 2014).
October 1, 2020 – March 31, 2021 │ 19
Tax Returns Without Evidence of Self-Employment Activity
Source: TIGTA analysis of TY 2011 and TY 2017 individual tax returns.
The IRS could also make processing improvements to identify invalid deductions. For
example, TIGTA determined that 42,991 tax returns potentially included deductions over
permitted amounts. Additionally, 485 returns included deductions for Simplified Employee
Pension plan contributions, but did not report net earnings from self-employment. TIGTA
estimated these potentially improper deductions resulted in an underpayment of
approximately $178 million in taxes.
IRS studies have consistently demonstrated that compliance is higher when there is third-
party information reporting. In contrast, reported amounts that have little or no information
reporting, such as business income, have significantly lower compliance rates. Retirement
plan administrators are not required to report contributions made to Defined Contribution and
Defined Benefit Plans. TIGTA determined taxpayers deducted approximately $14.7 billion
related to contributions for which third-party reporting for retirement contributions was not
required.
When applicable, retirement plan administrators report contributions on Form 5498, IRA
Contribution Information. However, unlike contributions made to traditional or Roth Individual
20 │ October 1, 2020 – March 31, 2021
Retirement Accounts, Form 5498 does not include all contributions made to self-employed
retirement plans during the contribution window. For TY 2017, TIGTA identified 193,985 tax
returns with approximately $1.4 billion more in deductions than the amounts reported on
Forms 5498. However, because Forms 5498 and the tax returns had different reporting
periods, it was difficult for the IRS to identify any overstated deductions.
What TIGTA Recommended
TIGTA made a number of recommendations, including:
• Adding Schedule SE to processing controls;
• Enhancing controls to determine the reasonableness of self-employed retirement
deductions;
• Assessing the need for additional third-party data to verify deductions; and
• Changing Form 5498 instructions for consistency.
IRS management agreed with two recommendations and plans to take corrective actions.
However, the IRS did not agree to enhancing controls to determine the reasonableness of self-
employed retirement deductions, assessing the need for additional third-party data, and
changing the Form 5498 instructions. TIGTA believes that these actions would improve tax
compliance and potentially increase revenue by $890 million over the next five years.
October 1, 2020 – March 31, 2021 │ 21
Protect the Integrity of Tax Administration
TIGTA is statutorily mandated to protect the integrity of Federal tax administration. TIGTA
accomplishes this mission through the investigative work conducted by the Office of
Investigations (OI). Through its investigative programs, OI protects the integrity of the IRS and
its ability to collect revenue owed to the Federal Government by investigating violations of
criminal and civil law that adversely impact Federal tax administration, as well as
administrative misconduct by IRS employees.
The Performance Model
The Office of Investigations accomplishes its mission through the hard work of its employees,
whose efforts are guided by a performance model that focuses on three primary areas of
investigative responsibility:
Employee integrity;
Employee and infrastructure security; and
External attempts to corrupt tax administration.
IRS employee misconduct undermines the IRS’s ability to deliver taxpayer services, to enforce
tax laws effectively, and to collect taxes owed to the Federal Government. External threats
against the IRS impede its ability to fairly, efficiently, and safely carry out its role as the
Nation’s revenue collector. Individuals who attempt to corrupt or otherwise interfere with the
IRS through various schemes and frauds adversely impact the IRS’s ability to collect revenue.
TIGTA investigates these serious offenses and refers them to IRS management when they
involve IRS employee misconduct. When appropriate, TIGTA also refers its investigations to
the DOJ or to State authorities for prosecution.
Performance Area: Employee Integrity
In order for the country’s tax system to operate successfully, taxpayers must have confidence
in the fair and impartial administration of Federal tax laws and regulations. IRS employee
misconduct can erode the public’s trust and impede the IRS’s ability to enforce tax laws.
Employee misconduct can take many forms, such as: the misuse of IRS resources or
authority; theft; fraud; extortion; taxpayer abuse; unauthorized access to, and disclosure of,
tax returns and return information; and identity theft.
22 │ October 1, 2020 – March 31, 2021
During this reporting period, employee integrity investigations
accounted for 31 percent of OI’s work. The Office of
Investigations conducted 542 employee misconduct
investigations that were referred to the IRS for action. The
IRS took action on 507, and closed 35 investigations without
action. 10
Identity Theft and the Insider Threat
The following case represents OI’s efforts to address identity
theft and the insider threat during the reporting period: 11
Former Fresno IRS Employee Sentenced to Six Years in Prison for Wire Fraud, Aggravated
Identity Theft, and Tax Fraud
On December 8, 2020, in the Eastern District of California, former IRS tax examiner Marcela
Heredia was sentenced to six years in prison for wire fraud, aggravated identity theft, and
making and subscribing a false return. Heredia was indicted on April 6, 2017, for devising a
scheme to defraud the IRS and taxpayers by submitting fraudulent income tax returns.
According to the court documents, beginning around February 2011 and continuing through
September 2013, Heredia worked at the IRS and at a transitional living center where young
adults reside. Heredia told residents at the transitional living center that she was an IRS
employee who could prepare their individual tax returns. Rather than completing tax returns
as agreed, Heredia told the residents they did not earn enough income to file a tax return.
Without their knowledge, Heredia then used the residents’ personal identifying information, to
include full names and Social Security Numbers, to file fraudulent individual tax returns with
the IRS. The tax returns contained false employers, education expenses, wages, and
dependents. On each fraudulent tax return, Heredia indicated the IRS should send the
refunds to her. In the individual tax returns submitted to the IRS, Heredia falsely claimed
more than $20,000 in refunds.
Heredia was sentenced to six years’ imprisonment, three years’ supervised release, ordered to
pay restitution in the amount of $39,905, and a special assessment fee of $1,200.
Employee Integrity
The following cases represent OI’s efforts to address employee integrity during the reporting
period: 12
10 These data may pertain to investigations referred administratively in prior reporting periods and do not
necessarily relate to the total number of misconduct investigations that were referred to the IRS for action during
this reporting period.
11 The facts in the summarized case narrative come from court documents of the jurisdiction named.
12 The facts in the summarized case narratives come from court documents of the jurisdictions named.
October 1, 2020 – March 31, 2021 │ 23
IRS Employee Charged with Tax Fraud
On February 25, 2021, in the Western District of Tennessee, IRS Tax Examiner Linda Williams
was indicted for filing false tax returns.
According to the court documents, Williams, while employed by the IRS, prepared and
electronically filed income tax returns for herself, friends, and family, and received preparation
fees for her services. Williams intentionally included materially false deductions on IRS Forms
1040, U.S. Individual Income Tax Returns, for tax years 2014, 2015, and 2016 that she knew
the taxpayers were not entitled to claim. In total, Williams prepared and filed returns claiming
more than $500,000 in false deductions.
If convicted, Williams could be sentenced to up to three years’ imprisonment, three years’
supervised release, a fine of up to $250,000, and a $100 special assessment fee.
IRS Employee Arrested for Conspiracy to Distribute Cocaine
On October 21, 2020, in the District of New Jersey, IRS Supervisory Revenue Agent Michael
Shelli was arrested for conspiracy to distribute cocaine. Shelli was charged by criminal
complaint on October 20, 2020.
According to the court documents, from in or around January 2010 through March 2020,
Shelli bought over five kilograms of cocaine and then distributed the illegal substance in and
around Albany, New York. On a monthly basis, Shelli had a courier pick up cocaine from a
residence in New Jersey and deliver it to Shelli’s residence in Albany, New York. Shelli would
then repackage the cocaine and sell it in the New York area.
If convicted, Shelli could receive a maximum penalty of life in prison and a fine of up to $10
million.
Employee Integrity Projects
As part of its employee integrity focus, TIGTA also conducts investigative initiatives to detect
misconduct in IRS programs. During this reporting period, TIGTA initiated 14 proactive
projects to detect systemic weaknesses or potential IRS program vulnerabilities. TIGTA’s most
successful integrity project involves the detection of IRS employees who abuse their access to
taxpayer information to commit identity theft and other crimes.
24 │ October 1, 2020 – March 31, 2021
Performance Area: Employee and Infrastructure Security
Collecting taxes is a critical function of the Federal Government.
Threats and assaults directed at IRS employees, facilities, and
infrastructure impede the effective and safe administration of the
Federal tax system and the IRS’s ability to collect tax revenue. In
addition to traditional direct threat vectors, TIGTA also actively
pursues, investigates, and mitigates emerging threats to the IRS’s
ability to conduct Federal tax administration in cyberspace. The
Office of Investigations receives referrals of all reports of threats,
assaults, and forcible interference against IRS employees in the
course of performing their official duties.
Contact with the IRS can be stressful and emotional for taxpayers. While the majority of
taxpayer contacts are routine, some may become confrontational and even violent. TIGTA’s
special agents are statutorily mandated to provide physical security, known as “armed
escorts,” to IRS employees who have face-to-face contact with taxpayers who may pose a
danger to the employee, and to ensure that IRS employees have a secure environment in
which to perform their critical functions of tax administration. During this reporting period, OI
provided three armed escorts for IRS employees.
The Office of Investigations undertakes investigative initiatives to identify individuals who
could commit violence against, or otherwise pose a threat to, IRS employees, facilities, or
infrastructure. The Office of Investigations also provides intelligence to IRS officials to assist
them in making proactive operational decisions about potential violence or other activities
that could pose a threat to IRS systems, operations, and employees.
The investigative information sharing between OI and the IRS’s Office of Employee Protection
(OEP) to identify “potentially dangerous” taxpayers is one example of TIGTA’s commitment to
protecting IRS employees. Taxpayers who meet OEP’s criteria receive a designation as
potentially dangerous. Five years after this designation
has been made, TIGTA conducts a follow-up assessment of
the taxpayer so that OEP can determine if the taxpayer still
presents a potential danger to IRS employees.
During this reporting period, employee and infrastructure
security investigations accounted for 45 percent of OI’s
work.
The following cases represent OI’s efforts to ensure the
safety of IRS employees during the reporting period: 13
13 The facts in the summarized case narratives come from court documents of the jurisdictions named.
October 1, 2020 – March 31, 2021 │ 25
Maryland Man Detained Pending Trial for Tweeting His Intent to Blow Up IRS Headquarters
On January 25, 2021, in the District of Maryland, Cody Mohr was ordered detained pending
trial for tweeting several messages indicating his intent to blow up the IRS headquarters
building in Washington, D.C.
According to the court documents, on January 15, 2021, Mohr of Columbia, Maryland,
tweeted several messages stating his intent to blow up the IRS’s headquarters building. The
tweets indicated he was announcing his intention so that IRS employees would have the
chance to escape alive. He spoke about ways to obtain firearms and how to build semi-
automatic rifles. Other tweets indicated that he was focused on thinking about ways to kill
Nancy Pelosi, Speaker of the United States House of Representatives. In another tweet, Mohr
stated that it would be “cool” to drive 80 miles per hour into a million people. Mohr admitted
that he owns three firearms. Due to the nature of Mohr’s tweets and that he owns and has
access to firearms, he was remanded into custody pending trial.
If convicted, Mohr could receive up to 10 years’ imprisonment.
Washington Man Sentenced in Scheme to Obstruct the IRS
On January 11, 2021, in the District of Oregon, Theron Marrs was sentenced for tax evasion.
Marrs was initially indicted on July 18, 2017, for obstructing the due administration of the
Internal Revenue laws, tax evasion, and filing false Federal tax returns.
According to the court documents, Marrs was a resident of Bend, Oregon, from 2005 through
July 2015, and has been a resident of Camas, Washington, since August 2015. Marrs was
involved in several businesses, including debt elimination, multilevel marketing, and tax
advice. He owned and operated the website livingfreeandclear.com, through which he sold
and promoted abusive tax avoidance schemes.
Prior to 2010, Marrs had a history of timely filing his Federal income tax returns. However,
from about February 2011, until the date of his indictment, Marrs corruptly endeavored to
obstruct and impede the due administration of the Internal Revenue laws and willfully
attempted to evade and defeat the payment of Federal income tax through a variety of acts.
As part of his scheme, Marrs attempted to evade the payment of more than $265,000 owed
for taxes by concealing and attempting to conceal income, assets, and financial transactions
from the IRS using businesses and nominee entities. In furtherance of this scheme, and as
part of his efforts to impede and obstruct the IRS, Marrs sent IRS employees false payment
instruments, including fraudulent bills of exchange, bonds, money orders, and checks,
attempting to mislead the IRS into accepting such items as payment for his Federal income
tax due.
Additionally, Marrs sent IRS employees threatening and harassing correspondence, filed
bogus and retaliatory lawsuits against IRS employees, and attempted to file a criminal
complaint against IRS employees. He also filed frivolous documents with the U.S. District
26 │ October 1, 2020 – March 31, 2021
Court for the District of Oregon, and filed a false Uniform Commercial Code lien. For Calendar
Years 2005, 2006, 2007, 2009, and 2010, Marrs willfully filed, under the penalties of perjury,
false individual Federal tax returns with the IRS, in which he claimed minimal income for each
of these years, ranging from $0 to approximately $5,515, while at the same time claiming tax
refunds totaling approximately $122,348.
Marrs was sentenced to five years’ probation, and ordered to pay $264,187.69 in restitution
and a $100 assessment fee.
Performance Area: External Attempts to Corrupt Tax Administration
TIGTA also investigates external attempts to corrupt or impede tax administration. Individuals
may interfere with the IRS’s ability to collect revenue for the U.S. in many ways. For instance,
they may impersonate IRS employees or misuse IRS seals and symbols; file false or frivolous
documents against IRS employees; use fraudulent IRS documentation to perpetrate criminal
activity; offer bribes to IRS employees to influence their tax cases; commit fraud in contracts
the IRS awards to contractors; or commit cybercrimes.
Cybercrime
Attacks against online IRS applications can cause wide-ranging negative implications. This
was demonstrated through purposeful misuses of IRS online applications in an effort to obtain
loan benefits associated with the CARES Act. These attempts to corrupt or otherwise interfere
with tax administration not only inhibit the IRS’s ability to collect revenue, but also undermine
the public’s confidence in fair and effective tax administration.
During this reporting period, investigations into attempts to
corrupt or impede tax administration accounted for 24
percent of OI’s work.
Corrupt Interference
The following case represents OI’s efforts to address and
deter external attempts to corrupt tax administration
during the reporting period: 14
Florida Tax Intermediary Charged with Wire Fraud
On October 7, 2020, in the Southern District of Florida, a warrant was issued for the arrest of
Jocelyn Lynch for wire fraud in connection with a scheme to steal IRS tax payments. On
October 9, 2020, Lynch surrendered to the U.S. Marshals Service.
14 The facts in the summarized case narrative come from court documents of the jurisdiction named.
October 1, 2020 – March 31, 2021 │ 27
According to the court documents, from on or about January 1, 2013 through January 17,
2020, Lynch promoted herself as a tax intermediary who could help clients settle outstanding
tax debt owed to the IRS. At least three taxpayers hired Lynch to settle their debt with the IRS
with an offer in compromise (OIC), which allows taxpayers to settle debt for less than the full
amount owed. Lynch assisted her clients by completing IRS forms falsely representing she
negotiated an OIC with the IRS on their behalf. Lynch instructed her clients to deposit
payments intended for the IRS into her personal bank account and falsely represented that
she would forward the payments to the IRS. Lynch subsequently provided her clients with
fraudulent documentation and receipts purportedly from the IRS. In total, Lynch received
approximately $363,994 in payments from her clients.
If convicted, Lynch faces a maximum sentence of 20 years’ imprisonment.
Impersonation Scams and Schemes
Individuals may corrupt tax administration by impersonating IRS employees in an effort to
obtain personally identifiable information (PII) from unsuspecting taxpayers or to steal their
money. Such impersonators may claim to be IRS employees on the telephone or may misuse
IRS logos, seals, or symbols to create official-looking letters and e-mails. They often tell their
victims that they owe money to the IRS and must pay through a preloaded debit card, wire
transfer, or gift card from Apple iTunes®, Walmart®, or Target®. Sometimes they trick
taxpayers into providing their PII, which the impersonator then uses to commit identity theft.
TIGTA aggressively investigates these criminal activities to ensure that taxpayers maintain
confidence in the integrity of Federal tax administration. For more than 10 years, the IRS has
compiled an annual list of commonly encountered scams, called the “Dirty Dozen” list of tax
scams. Many of these scams peak during the tax filing season, as people prepare their
returns or use the services of paid preparers. The IRS telephone impersonation scam is, once
again, included in that list.
Between October 2013 and March 2021, TIGTA logged more than 2.5 million contacts from
taxpayers who reported that they had received telephone calls from individuals who claimed
to be IRS employees. The impersonators told the victims that they owed additional tax and
that if they did not immediately pay, they would be arrested or face other adverse
consequences. As of March 31, 2021, 15,979 victims have reported to TIGTA that they had
lost more than $82.6 million, collectively, to the scam’s perpetrators.
Because of their complexity, scams such as these are not typically resolved quickly. This wide-
ranging scam has claimed victims in every State. The top five States by number of victims
who have suffered financial losses are California, Florida, Illinois, New York, and Texas.
28 │ October 1, 2020 – March 31, 2021
Financial Losses by State
Source: TIGTA’s Office of Investigations
Since the IRS scam’s inception, 247 individuals have been charged in Federal court for their
role, 34 of which were charged during this reporting period. Ninety-nine of those individuals
have been sentenced and collectively received a total of more than 403 years’
imprisonment. This effort has resulted in more than 832 impersonation scam-related
investigations and financial restitutions of more than $167,367,085.
The following cases are representative of OI’s efforts to investigate IRS impersonation scams
during the reporting period: 15
Indian-Based VoIP Provider and Its Director Indicted for Facilitating Millions of Scam
Robocalls to Americans
On October 21, 2020, in the Northern District of Georgia, Indian-based Voice over Internet
Protocol (VoIP) provider E Sampark and its Director, Gaurav Gupta, were indicted in a first of
its kind indictment for conspiracy to commit wire fraud and wire fraud in connection with
15 The facts in the summarized case narratives come from court documents of the jurisdictions named.
October 1, 2020 – March 31, 2021 │ 29
facilitating tens of millions of scam calls to American taxpayers on behalf of India-based
phone scammers.
According to the court documents, from at least in or about May 2015 and continuing through
in or about June 2020, Gupta directed and operated E Sampark, a VoIP company that
allegedly sent calls from India-based call centers to victims of the United States, both directly
and through VoIP providers located in the United States. The scammers purported to be
legitimate U.S. Government agencies and businesses and misled victims over the phone. The
scammers allegedly used multiple frauds including IRS impersonation, Social Security
impersonation, and loan scams. As a part of the IRS impersonation scam, the scammers
posed as IRS or Treasury officials and defrauded U.S. residents into believing they owed
money to the IRS or face arrest and fine if they did not pay alleged back taxes, fines, and fees
immediately.
Gupta and E Sampark maintained approximately 60 servers in Florida that the company used
at times to connect India-based callers with American taxpayers. The servers contained more
than 130,000 recordings of scam calls, including robocall voicemail recordings, and
conversations between the India-based scammers and U.S. victims. American taxpayers
suffered financial losses of more than $20 million as a result of the scam.
If convicted, Gupta could receive a statutory maximum penalty of 30 years’ imprisonment
and/or a fine of up to $1 million.
Medical Practice Employee Sentenced for Impersonating an IRS Employee, Aggravated
Identity Theft, Tax and Bank Fraud
On January 6, 2021, in the District of Oregon, Anndrea Jacobs was sentenced for filing false
tax returns, false impersonation of an employee of the United States, and aggravated identity
theft in connection with her former employment at a medical practice in La Grande, Oregon.
In addition, by an amended judgment dated January 11, 2021, Jacobs was sentenced for
bank fraud in connection with her former employment at a dental practice in Hood River,
Oregon. In September 2018, Jacobs was indicted for numerous Federal offenses, including
the impersonation of an IRS employee.
According to the court documents, Jacobs was involved in a scheme to defraud a former
employer by embezzling approximately $1 million between January 2011 and December
2015. In order to conceal her embezzlement activity, Jacobs created false entries in the
business books and records that overstated the business’ expenses and estimated tax
payments. Then Jacobs convinced her former employer to grant her limited Power of Attorney
to handle the employer’s collection action with the IRS. Jacobs changed her employer’s
contact information with the IRS to her own and diverted all IRS correspondence and
communications to herself. Jacobs then created a fictitious identity as an IRS Taxpayer
Advocate, established a phone number and a voicemail account for the fictitious identity,
provided her employer with a fictitious IRS tax case number, and purported to assist her
employer with the IRS tax collection issues while impersonating an IRS employee.
30 │ October 1, 2020 – March 31, 2021
While on pre-trial release for the aforementioned offenses, from approximately August 2019
through October 2019, Jacobs stole checks from the dental practice in Hood River, Oregon,
valued at more than $22,000. On June 9, 2020, Jacobs was indicted for bank fraud.
Jacobs was sentenced to four years’ imprisonment and five years’ supervised release, and
ordered to pay restitution of $1,207,537, and a special assessment of $400. This
investigation was worked jointly by TIGTA, IRS Criminal Investigation, and the Federal Bureau
of Investigation.
Tax Preparer Outreach
In addition to promoting employee integrity, TIGTA also is committed to tax preparers’
education on integrity. Tax preparers play an important role to ensure the integrity of tax
administration because of their frequent contact with the IRS and their influence on tax
compliance.
During this reporting period, TIGTA special agents provided four integrity presentations to tax
preparers at various locations nationwide. The presentations detailed TIGTA’s role in
protecting the integrity of Federal tax administration; how to identify various forms of
preparer misconduct; and common IRS impersonation scams.
The following case represents OI’s efforts to protect tax administration from unscrupulous
tax preparers during the reporting period: 16
Tax Preparer Pleads Guilty to Defrauding Clients Out of $4,000,000
On November 13, 2020, in the Central District of California, Edgardo Montalban was charged
with aggravated identity theft and conspiracy to commit wire fraud, and pled guilty to
conspiracy to commit wire fraud. Montalban devised a scheme to defraud taxpayers of their
money.
According to the court documents, beginning in or before 2013 and continuing through
September 2020, Montalban presented himself as an accountant and tax preparer and
instructed his clients to invest in a non-existent Federal grant program. Montalban told his
clients that if they paid him in cash the amount of taxes their dormant companies owed, the
Federal Government would issue them grants many times larger. Montalban used counterfeit
U.S. Treasury checks as props to entice and obtain the cash from his clients. After Montalban
had his clients pay him, he made up excuses as to why their Treasury checks had been
delayed, and tricked the victims into paying him more money to receive the non-existent
checks. Montalban defrauded his clients out of approximately $4,000,000.
At sentencing, Montalban could receive a maximum penalty of 20 years’ imprisonment, and a
fine of up to $250,000.
16 The facts in the summarized case narrative come from court documents of the jurisdiction named.
October 1, 2020 – March 31, 2021 │ 31
Advance Oversight of America’s Tax System
TIGTA’s Office of Inspections and Evaluations (I&E) identifies opportunities for improvement in
IRS and TIGTA programs by performing inspections and evaluations that report timely, useful,
and reliable information to decision makers and stakeholders.
This function has two primary product lines: inspections and evaluations.
Inspections are intended to:
• Provide factual and analytical information;
• Monitor compliance;
• Measure performance;
• Assess the effectiveness and efficiency of programs and operations;
• Share best practices; and
• Inquire into allegations of waste, fraud, abuse, and mismanagement.
Evaluations are intended to:
• Provide in-depth reviews of specific management issues, policies, or programs;
• Address Governmentwide or multi-agency issues; and
• Develop recommendations to streamline operations, enhance data quality, and
minimize inefficient and ineffective procedures.
The following report highlights I&E’s work during the reporting period:
Oversight of Reported Sexual Harassment Allegations Needs Improvement
(Report Number 2021-IE-R001)
Sexual harassment is unwelcomed and unwanted sexual advances, requests for sexual favors
and other verbal, visual, or physical conduct of a sexual nature that creates an intimidating,
hostile, or offensive work environment or which affects the employee’s employment
status. This project was initiated to review the IRS’s tracking of reported sexual harassment
allegations, the investigation or inquiry into the alleged harassment, and the discipline of IRS
employees in substantiated allegations.
Sexual harassment allegations are not being reported to the IRS’s Anti-Harassment Program,
despite Equal Employment Opportunity Commission (EEOC) guidance that all harassment
allegations should be addressed in a centralized location. According to the EEOC, at a
minimum, all harassment allegations (sexual and non-sexual) must be reported to the Anti-
Harassment Program. However, TIGTA found that sexual harassment allegations are
addressed outside of this process. Although the EEOC requires agencies to have systems that
32 │ October 1, 2020 – March 31, 2021
accurately collect, monitor, and analyze all reported harassment allegations, the IRS does not
have a system to track all sexual harassment allegations. Without such a system, the IRS
cannot ensure that investigations into all allegations are timely completed and resolved.
As part of this review, nearly 26,000 IRS employees responded to a TIGTA survey related to
perceptions of sexual harassment at the IRS. Approximately seven percent of survey
respondents believe that sexual harassment occurs at the IRS frequently, and another 45
percent believe that it occurs sometimes. When offered multiple options for reporting sexual
harassment, respondents most frequently said that they would report the harassment to IRS
management.
TIGTA reviewed the case files of a judgmental sample of 54 sexual harassment allegations
and found that there is no consistency or standardized approach to document management
investigations or the investigations’ overall findings, conclusions, and recommendations. For
13 allegations (24 percent), TIGTA could not find documentation to support that management
conducted an investigation or if any corrective action was taken.
TIGTA also found that documentation in case files supporting disciplinary action against
employees could be improved. In certain cases reviewed, management did not identify
allegations as potential sexual harassment when selecting offenses to charge the employee
with during the disciplinary adjudication process. More than one-half of the penalties imposed
on employees deviated from the recommendations in the IRS Penalty Guide.
TIGTA made seven recommendations, including that the IRS:
• Revise its policy to ensure that all sexual harassment allegations are reported to the
Anti-Harassment Program;
• Develop a system that centrally tracks all allegations of sexual harassment; and
• Develop guidance on how to properly conduct and document management inquiries
and implement procedures for ensuring that management adequately documents the
selection of offenses and penalties when misconduct is substantiated.
IRS management agreed with TIGTA’s recommendations.
October 1, 2020 – March 31, 2021 │ 33
Audit Statistical Reports
Reports with Questioned Costs
TIGTA issued no audit reports with questioned costs during this semiannual reporting period.
The phrase “questioned costs” means costs that are questioned because of:
• An alleged violation of a provision of a law, regulation, contract, or other requirement
governing the expenditure of funds;
• A finding, at the time of the audit, that such cost is not supported by adequate
documentation (an unsupported cost); or
• A finding that expenditure of funds for the intended purpose is unnecessary or
unreasonable.
The phrase “disallowed cost” means a questioned cost that management, in a management
decision, has sustained or agreed should not be charged to the Government.
34 │ October 1, 2020 – March 31, 2021
Reports With Recommendations That Funds Be Put to Better Use
TIGTA issued two audit reports during this semiannual reporting period with the
recommendation that funds be put to better use. 17 The phrase “recommendation that funds
be put to better use” means funds could be used more efficiently if management took actions
to implement and complete the recommendation, including:
• Reductions in outlays;
• Deobligations of funds from programs or operations;
• Costs not incurred by implementing recommended improvements related to
operations;
• Avoidance of unnecessary expenditures noted in pre-award reviews of contract
agreements;
• Prevention of erroneous payment of refundable credits, e.g., Earned Income Tax Credit;
or
• Any other savings that are specifically identified.
The phrase “management decision” means the evaluation by management of the findings and
recommendations included in an audit report, and the issuance of a final decision concerning
its response to such findings and recommendations, including actions deemed necessary.
Amount
Report Category Number
(in thousands)
1. Reports with no management decision at the beginning of the
0 $0
reporting period
2. Reports issued during the reporting period 2 $261,691
3. Subtotals (Item 1 plus Item 2) 2 $261,691
4. Reports for which a management decision was made during the
reporting period
a. Value of recommendations to which management agreed
i. Based on proposed management action 2 $259,253
ii. Based on proposed legislative action 0 $0
b. Value of recommendations to which management did not agree 1 18 $2,438
5. Reports with no management decision at the end of the reporting
0 $0
period (Item 3 minus Item 4)
6. Reports with no management decision within six months of
0 $0
issuance
17 See Appendix II for identification of audit reports involved.
18 One audit report (2021-40-008) contained four Funds Put to Better Use outcome measures. The IRS agreed
with three and disagreed with one of the four outcome measures.
October 1, 2020 – March 31, 2021 │ 35
Reports With Additional Quantifiable Impact on Tax Administration
In addition to questioned costs and funds put to better use, the Office of Audit has identified
measures that demonstrate the value of audit recommendations to tax administration and
business operations. These issues are of interest to executives at the IRS and the Treasury
Department, Members of Congress, and the taxpaying public, and are expressed in
quantifiable terms to provide further insight into the value and potential impact of the Office of
Audit’s products and services. Including this information also promotes adherence to the
intent and spirit of the Government Performance and Results Act.
Definitions of these additional measures are:
Increased Revenue: Assessment or collection of additional taxes.
Revenue Protection: Ensuring the accuracy of the total tax, penalties, and interest paid to the
Federal Government.
Reduction of Burden on Taxpayers: Decreases by individuals or businesses in the need for,
frequency of, or time spent on communication, record keeping, preparation, or costs to comply
with tax laws, regulations, and IRS policies and procedures.
Taxpayer Rights and Entitlements at Risk: The protection of due process rights granted to
taxpayers by law, regulation, or IRS policies and procedures. These rights most commonly
arise when filing tax returns, paying delinquent taxes, and examining the accuracy of tax
liabilities. The acceptance of claims for and issuance of refunds (entitlements) are also
included in this category, such as when taxpayers legitimately assert that they overpaid their
taxes.
Taxpayer Privacy and Security: Protection of taxpayer financial and account information
(privacy). Processes and programs that provide protection of tax administration, account
information, and organizational assets (security).
Inefficient Use of Resources: Value of efficiencies gained from recommendations to reduce
cost while maintaining or improving the effectiveness of specific programs; resources saved
would be available for other IRS programs. Also, the value of internal control weaknesses that
resulted in an unrecoverable expenditure of funds with no tangible or useful benefit in return.
Reliability of Management Information: Ensuring the accuracy, validity, relevance, and
integrity of data, including the sources of data and the applications and processing thereof,
used by the organization to plan, monitor, and report on its financial and operational
activities. This measure will often be expressed as an absolute value, i.e., without regard to
whether a number is positive or negative, of overstatements or understatements of amounts
recorded on the organization’s documents or systems.
Protection of Resources: Safeguarding human and capital assets, used by or in the custody of
the organization, from accidental or malicious injury, theft, destruction, loss, misuse,
overpayment, or degradation.
36 │ October 1, 2020 – March 31, 2021
The number of taxpayer accounts and dollar values shown in the following chart were
derived from analyses of historical data and are thus considered potential barometers
of the impact of audit recommendations. Actual results will vary depending on the
timing and extent of management’s implementation of the corresponding corrective
actions and the number of accounts or subsequent business activities affected as of
the dates of implementation. Also, a report may have issues that affect more than one
outcome measure category.
The following reports contained quantifiable impacts other than the number of taxpayer
accounts and dollar value:
Number of
Number of Dollar Value
Outcome Measure Category Taxpayer
Reports 19 (in thousands)
Accounts
Increased Revenue 1 15,034 $5,723,172
Revenue Protection 2 43,476 $938,533
Reduction of Burden on Taxpayers 2 1,899,439 $0
Taxpayer Rights and Entitlements at
3 12,366 $9,100
Risk
Taxpayer Privacy and Security 1 4,726 $0
Inefficient Use of Resources 1 583 $0
Reliability of Management Information 1 0 $0
Protection of Resources 1 0 $0
Management did not agree with the outcome measures in the following reports:
• Increased Revenue: Report Number 2021-30-002
• Revenue Protection: Report Numbers 2021-10-007 and 2021-40-009
• Taxpayer Rights and Entitlements: Report Number 2021-30-010
• Inefficient Use of Resources: Report Number 2021-40-009
The following report contained quantifiable impacts other than the number of taxpayer
accounts and dollar value:
• Protection of Resources: Report Number 2021-20-003
• Reliability of Information: Report Number 2021-20-003
19 See Appendix II for identification of audit reports involved.
October 1, 2020 – March 31, 2021 │ 37
Investigations Statistical Reports20
Significant Investigative Achievements (October 1, 2020 through March 31, 2021)
Complaints/Allegations Received by TIGTA
Complaints Against IRS Employees 1,409
Complaints Against Non-Employees 1,968
Total Complaints/Allegations 3,377
Status of Complaints/Allegations Received by TIGTA
Investigations Initiated 787
In Process Within TIGTA 21 260
Referred to IRS for Action 340
Referred to IRS for Information Only 887
Referred to a Non-IRS Entity 22 0
Closed With No Referral 387
Closed Associated With Prior Investigation 415
Closed With All Actions Completed 301
Total Complaints 3,377
Investigations Opened and Closed
Total Investigations Opened 1,336
Total Investigations Closed 1,287
Financial Accomplishments
Embezzlement/Theft Funds Recovered $195,077
Contract Fraud and Overpayments Recovered 0
Court-Ordered Fines, Penalties, and Restitution $24,306,044
Out-of-Court Settlements 0
Potentially Compromised by Bribery 0
Tax Liability of Taxpayers Who Threaten and/or Assault IRS Employees $1,606,638
IRS Assets and Resources Protected Against Malicious Loss 0
Total Financial Accomplishments $26,107,759
20 Includes the reporting requirements under the Inspector General Empowerment Act of 2016, Pub. L. No. 114-
317, 130 Stat. 1595.
21 Complaints for which final determination had not been made at the end of the reporting period.
22 A non-IRS entity includes other law enforcement entities or Federal agencies.
38 │ October 1, 2020 – March 31, 2021
Status of Closed Criminal Investigations
Criminal Referral Employee Non-Employee Total
Referred – Accepted for Prosecution 9 120 129
Referred – Declined for Prosecution 122 254 376
Referred – Pending Prosecutorial Decision 7 63 70
Total Criminal Referrals 23 138 437 575
No Referral 224 439 663
Criminal Dispositions 24
Criminal Disposition Employee Non-Employee Total
Guilty 4 51 55
Nolo Contendere (no contest) 0 0 0
Pretrial Diversion 3 0 3
Deferred Prosecution 25 0 0 0
Not Guilty 0 0 0
Dismissed 0 2 2
Total Criminal Dispositions 7 53 60
Administrative Dispositions on Closed Investigations 26
Removed/Terminated 33
Suspended/Reduction in Grade 67
Resigned/Retired/Separated Prior to Adjudication 77
Oral or Written Reprimand/Admonishment 126
Clearance Letter/Closed, No Action Taken 81
Alternative Discipline/Letter With Cautionary Statement/Other 105
Non-Employee Actions 27 481
Total Administrative Dispositions 970
23 Criminal referrals include both Federal and State dispositions.
24 Final criminal dispositions during the reporting period. These data may pertain to investigations referred
criminally in prior reporting periods and do not necessarily relate to the investigations referred criminally in the
previous Status of Closed Criminal Investigations table.
25 Generally, in a deferred prosecution, the defendant accepts responsibility for his/her actions and complies
with certain conditions imposed by the court. Upon the defendant’s completion of the conditions, the court
dismisses the case. If the defendant fails to fully comply, the court reinstates prosecution of the charge.
26 Final administrative dispositions during the reporting period. These data may pertain to investigations referred
administratively in prior reporting periods and do not necessarily relate to the investigations closed in the
Investigations Opened and Closed table.
27 Administrative actions taken by the IRS against non-IRS employees (e.g., contractors).
October 1, 2020 – March 31, 2021 │ 39
Summary of Investigative Reports and Criminal Referrals
Criminal Referral Breakdown
Number of Investigative Reports Issued 505
Referred to the Department of Justice for Criminal Prosecution 490
Referred to State/Local Prosecuting Authorities 15
Number of Indictments and Criminal Informations 104
Indictments 76
Criminal Informations 28
Source: TIGTA OI’s Criminal Results Management System.
Interference
During the reporting period, there were no attempts by the IRS to interfere with the
independence of TIGTA. Additionally, the IRS did not resist, object to oversight activities, or
significantly delay access to information.
Instances of Whistleblower Retaliation
During the reporting period, there were no investigations regarding whistleblower retaliation.
40 │ October 1, 2020 – March 31, 2021
Closed28 Investigations Involving IRS Senior Government Employees29
If Declined,
Detailed Description of the Facts and Criminal Date
Disposition: Date of
Circumstances of the Investigation: Status: Referred:
Declination:
A senior Government employee was
No
alleged to have engaged in an
Suspension Referral N/A N/A
inappropriate relationship with another
Made
employee.
A senior Government employee was No
alleged to have engaged in unauthorized Oral/Written Counseling Referral N/A N/A
outside employment. Made
A senior Government employee was
alleged to have received unjust No
compensation by receiving Admonished/Reprimanded Referral N/A N/A
unemployment compensation from the Made
State of Texas.
A senior Government employee was No
alleged to have unlawfully accessed tax Clearance Letter Referral N/A N/A
return information. Made
A senior Government employee was No
alleged to have violated the IRS Oral/Written Counseling Referral N/A N/A
procedural manual. Made
A senior Government employee was No
alleged to have engaged in improper Clearance Letter Referral N/A N/A
management practices. Made
A senior Government employee was No
alleged to have sexually harassed an Clearance Letter Referral N/A N/A
employee. Made
A senior Government employee was No
Closed Without Action
alleged to have engaged in unauthorized Referral N/A N/A
Letter
outside employment. Made
28 When TIGTA refers an IRS employee investigation to the IRS, the investigation remains open until all actions
are completed, including any penalty imposed upon the employee by the IRS. TIGTA closes an employee
investigation after receiving notice from the IRS of the administrative action taken in response to that
investigation.
29 For this report, a “senior Government employee” refers to an officer or employee in the Executive branch who
occupies a position classified at or above GS-15 of the General Schedule. 5 U.S.C app § 5(f)(7).
October 1, 2020 – March 31, 2021 │ 41
Appendix I
Other Statistical Reports
Reports With Significant Unimplemented Corrective Actions
The Inspector General Act, as amended, requires the identification of any outstanding
unimplemented recommendations, including the aggregate potential cost savings of those
recommendations described in previous semiannual reports for which corrective actions have not
been completed. The following list is based on information from the Treasury Department’s Joint
Audit Management Information System (JAMES).30,31
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
INEFFICENCIES IN PROCESSING OPERATIONS ASSISTANCE REQUESTS CAUSED
TAXPAYERS UNNECESSARY DELAYS
2007-10-068 May 2007 12/15/21 F-3, R-1: Revise Form 12412, Operations Assistance Request, to allow
requests to be closed as completed or as misrouted only if they had been
sent to the wrong Operations liaison.
THE OFFICE OF RESEARCH, ANALYSIS, AND STATISTICS NEEDS TO ADDRESS
COMPUTER SECURITY WEAKNESSES
September
2008-20-176 09/30/21 F-1, R-5: Ensure that audit and accountability controls are sufficient by
2008
requiring audit logs to be maintained a minimum of six years and to be
periodically reviewed by the security officer.
CONTINUED CENTRALIZATION OF THE WINDOWS ENVIRONMENT WOULD
IMPROVE ADMINISTRATION AND SECURITY EFFICIENCIES
September 11/15/21 F-2, R-2: Ensure that scanning tools, such as the Business DNA software,
2011-20-111
2011 are utilized to locate unauthorized servers, workstations, and domains on
the IRS network, and adequate procedures are developed and implemented
to ensure that they are removed.
30 This summary data does not include recommendations that are specifically prohibited from disclosure by any
provision of law, such as 26 U.S.C. § 6103, protecting tax returns and return information, or that are specifically
required by Executive Order to be protected from disclosure in the interest of national defense or national
security or in the conduct of foreign affairs.
31 The Office of Audit has previously designated several reports with unimplemented recommendations as
“Sensitive But Unclassified (SBU).” These SBU reports include subject matter that might create a risk of
circumvention of the law if publicly released. There are no potential cost savings associated with any
unimplemented recommendations from these reports.
42 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
AN ENTERPRISE APPROACH IS NEEDED TO ADDRESS THE SECURITY RISK
OF UNPATCHED COMPUTERS
2012-20-112 September 11/15/21 F-1, R-1: Ensure that the IRS completes the deployment of an automated
2012 asset discovery tool (or tools if needed) and builds an accurate and
complete inventory of information technology assets (including hardware
and software) that reside on the IRS network.
CUSTOMER ACCOUNT DATA ENGINE 2: SYSTEM REQUIREMENTS AND
TESTING PROCESSES NEED IMPROVEMENTS
September
2012-20-122
2012 04/15/21 F-3, R-2: Ensure all database issues identified are resolved or an action plan
is developed with specific corrective actions and time periods.
REVISING TAX DEBT IDENTIFICATION PROGRAMMING AND CORRECTING
PROCEDURAL ERRORS COULD IMPROVE THE TAX REFUND OFFSET
PROGRAM
On Hold 32 F-1, R-1: Revise identification processes to include sole proprietor
March information from Form SS-4, Application for Employer Identification Number,
2016-40-028
2016 to identify individual tax refunds to offset to business tax debt.
03/15/23 F-3, R-1: Revise computer programming to use the Limited Liability
Company indicator on the business tax account to ensure that individual tax
refunds are not offset to the associated Limited Liability Company’s
business tax debt.
EMPLOYEES SOMETIMES DID NOT ADHERE TO E-MAIL POLICIES WHICH
INCREASED THE RISK OF IMPROPER DISCLOSURE OF TAXPAYER
October INFORMATION
2017-30-010
2016
12/15/21 F-3, R-1: Update the Enterprise Electronic Fax system to allow encrypted
messages to be sent to the system server.
IMPROVEMENTS ARE NEEDED TO ENSURE THAT TAX ACCOUNTS ON THE
AUTOMATED NON-MASTER FILE ARE ACCURATELY PROCESSED
On Hold F-1, R-1: Correct Automated Non-Master File programming to compute and
assess the Failure to File penalty on Form 1040NR, U.S. Nonresident Alien
Income Tax Return, accounts in which the TIN is an Employee Identification
2017-40-037 May 2017 Number (EIN).
On Hold F-1, R-2: Correct Automated Non-Master File programming to use the
correct date when computing the Failure to File penalty. In addition,
programming should be corrected to ensure that the proper penalty rate is
used to compute the penalty amount.
Potential Increased Revenue: $354,153
32 Except for two reports, recommendations designated as “On Hold” were agreed to by the IRS, but action was
deferred pending the availability of funds. The recommendation for Reference Number 2017-40-085 was
agreed to by the IRS, but was placed on “On Hold” because the IRS is awaiting input from another agency. The
recommendation for Reference Number 2020-30-066 was agreed to by the IRS, but was placed on “On Hold”
because the process by which guidance is developed is not within the IRS’ sole control.
October 1, 2020 – March 31, 2021 │ 43
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
INFORMATION TECHNOLOGY: IMPROVEMENTS ARE NEEDED IN
ENTERPRISE-WIDE DISASTER RECOVERY PLANNING AND TESTING
2017-20-024 June 2017
07/15/22 F-2, R-1: Reach consensus regarding the maximum tolerable downtime or
recovery time objective for each mission-essential function.
CASE SELECTION PROCESSES RESULT IN BILLIONS OF DOLLARS IN
POTENTIAL EMPLOYER UNDERREPORTED TAX NOT BEING ADDRESSED
2017-40-038 July 2017
On Hold F-3, R-1: Establish a systemic process to match data fields to perfect
unpostable Forms W-3, Transmittal of Wage and Tax Statements.
ADDITIONAL CONTROLS ARE NEEDED TO HELP ENSURE THAT
NONRESIDENT ALIEN INDIVIDUAL PROPERTY OWNERS COMPLY WITH TAX
LAWS
August
2017-30-048
2017 On Hold F-1, R-1: Request that a revision be made to Form 1040-NR to enable
nonresident aliens to make an election under I.R.C. § 871(d) and revise
processing procedures to ensure that the IRS records the election.
THE INTERNAL REVENUE SERVICE IS NOT IN COMPLIANCE WITH FEDERAL
REQUIREMENTS FOR SOFTWARE ASSET MANAGEMENT
September
2017-20-062 09/15/21 F-1, R-1: Establish executive governance for Software Asset Management
2017
within the IRS which acts as a centralized group to ensure that effective and
knowledgeable decisions are being made timely by authorized personnel.
FURTHER ACTIONS ARE NEEDED TO REDUCE THE RISK OF EMPLOYMENT
TAX FRAUD TO BUSINESSES THAT USE THE SERVICES OF PROFESSIONAL
EMPLOYER ORGANIZATIONS
September On Hold F-3, R-1: Establish processes and procedures to reduce unnecessary
2017-40-085
2017 resources expended notifying employers of an address change when
programming incorrectly identifies an address change resulting from minor
formatting revisions.
PROCESSES NEED TO BE IMPROVED TO IDENTIFY INCOMPLETE AND
FRAUDULENT APPLICATIONS FOR INDIVIDUAL TAXPAYER IDENTIFICATON
NUMBERS
On Hold F-3, R-2: Ensure that programming changes are made to require mandatory
January review when the Real-Time System alerts tax examiners that an applicant is
2018-40-010 using duplicate supporting documents as has previously been used to obtain
2018
an Individual Taxpayer Identification Number (ITIN).
07/15/21 F-4, R-1: Review the 8,110 ITINs identified with a revoked status in the Real-
Time System but still valid on the Individual Master File and take necessary
action to change the ITINs to invalid.
44 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
ACTIONS ARE NEEDED TO REDUCE THE RISK OF FRAUDULENT USE OF
EMPLOYER IDENTIFICATION NUMBERS AND TO IMPROVE THE
EFFECTIVENESS OF THE APPLICATION PROCESS
On Hold F-2, R-1: Correct programming to reject EIN applications when an EIN has
February previously been assigned to the same sole proprietor and to reject
2018-40-013 applications when IRS data indicate that the sole proprietor is deceased.
2018
On Hold F-3, R-1: Perform an assessment to determine how an additional field could
be added to the Business Master File so that both the decedent SSN and a
responsible party TIN can be captured for estates and trusts.
On Hold F-3, R-5: Develop programming to reject estate applications if the decedent
TIN is not that of a deceased individual.
ACTIVE DIRECTORY OVERSIGHT NEEDS IMPROVEMENT AND CRIMINAL
INVESTIGATION COMPUTER ROOMS LACK MINIMUM SECURITY CONTROLS
On Hold F-2, R-1: Complete a cost analysis to: 1) determine the efficacy of relocating
2018-20-034 June 2018 Criminal Investigation (CI) assets in each of the field offices to existing IRS
computer rooms versus upgrading the CI computer rooms to ensure that
assets are protected in accordance with Federal and Internal Revenue
Manual (IRM) security requirements, and 2) implement the most cost
effective solution.
THE INTERNAL REVENUE SERVICE LACKS A COORDINATED STRATEGY TO
ADDRESS UNREGULATED RETURN PREPARER MISCONDUCT
2018-30-042 July 2018 10/15/21 F-1, R-2: Establish goals that support the Service-wide Return Preparer
Strategy being developed by the Deputy Commissioner for Services and
Enforcement and monitor progress towards those goals.
IMPROVEMENTS ARE NEEDED IN THE WITHHOLDING COMPLIANCE
PROGRAM
September On Hold F-3, R-2: Analyze the current selection criteria used by the Withholding
2018-30-072 Compliance System to determine if the taxpayers identified for systemic
2018
lock-in letter issuance are the best use of limited resources. This would
include potentially identifying taxpayers with multiple years of
underwithholding and the percentage of inventory that includes nonfilers.
ELECTRONIC AUTHENTICATION SECURITY CONTROLS HAVE IMPROVED, BUT
CONTINUED PROGRESS IS NEEDED TO ENSURE THE PROTECTION OF
PUBLIC-FACING APPLICATIONS
2019-20-017 April 2019 02/15/23 F-1, R-1: Ensure that public-facing legacy applications are complying with
National Institute of Standards and Technology Special Publication 800-63-3
and that an implementation plan includes specific timelines for
accomplishing full compliance of legacy applications.
IMPLEMENTATION OF THE TAX CUTS AND JOBS ACT DEEMED REPATRIATION
TAX PRESENTED SIGNIFICANT CHALLENGES
2019-34-033 May 2019 On Hold F-2, R-1: Take steps to ensure that Section 965 payments are recorded with
the correct designated payment code.
October 1, 2020 – March 31, 2021 │ 45
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
SOFTWARE VERSION CONTROL MANAGEMENT NEEDS IMPROVEMENT
10/15/21 F-1, R-3: Create and execute a plan to periodically monitor and compare
software running on the enterprise against the Enterprise Architecture
2019-20-031 June 2019 Enterprise Standards Profile Product Catalog for accuracy.
10/15/21 F-1, R-4: Remove unauthorized software or update the Enterprise Standards
Profile Product Catalog to reflect the correct information, if warranted.
10/15/21 F-1, R-5: Document and approve risk acceptance to continue using older
versions of software, i.e., sunset, archived/retired.
ACTIONS HAVE NOT BEEN TAKEN TO IMPROVE AMENDED TAX RETURN
REVIEW PROCEDURES TO REDUCE ERRONEOUS AND FRAUDULENT
REFUNDS
On Hold F-1, R-3: Complete a business case and request funding for expansion of e-
filing to amended returns in the 2020 Filing Season in an effort to reduce
unnecessary processing costs and erroneous refunds resulting from
2019-40-042 July 2019 amended returns.
Potential Funds Put to Better Use: $79,413,315
09/15/21 F-2, R-1: Update tax examiner and customer service representative review
guidelines to incorporate additional verification steps to be taken similar to
those systemically performed when verifying a refundable claim on an
original tax return.
On Hold F-3, R-3: Establish processes to evaluate amended tax returns.
BILLIONS OF DOLLARS OF POTENTIALLY ERRONEOUS CARRYFORWARD
CLAIMS ARE STILL NOT BEING ADDRESSED
10/15/21 F-1, R-1: Ensure that criteria is added to the Research Credit selection risk
August tool to identify high-risk carryforward Research Credit discrepancy claims on
2019-40-044
2019 returns selected for examination and determine if the carryforward claims
taken by the taxpayers are accurate.
12/15/21 F-1, R-2: Identify and examine returns with discrepancies of General
Business Credit carryforward claims.
ADDITIONAL ACTIONS ARE NEEDED TO REDUCE ALIMONY REPORTING
DISCREPANCIES ON INCOME TAX RETURNS
On Hold F-2, R-1: Include the validation of the alimony recipient TIN as part of the
August
2019-40-048 IRS’s tax return processing systemic TIN validation process.
2019
On Hold F-2, R-2: Modify Error Resolution System programming to send both e-filed
and paper tax returns that contain an invalid recipient TIN to the Error
Resolution function for review and correspondence with the taxpayer.
THE FIRST PHASE OF THE DATA LOSS PREVENTION SOLUTION IS WORKING
AS INTENDED, BUT THE REMAINING PHASES CONTINUE TO EXPERIENCE
DELAYS
06/15/21 F-1, R-1: Deploy the Data-at-Rest and Data-in-Use components of the Data
August Loss Prevention solution.
2019-20-049
2019 10/15/21 F-1, R-2: Ensure that project documents are prepared and maintained as
required for effective project management, which should help ensure the
successful delivery of the final two components of the Data Loss Prevention
solution.
46 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
THE BRING YOUR OWN DEVICE PROGRAM’S SECURITY CONTROLS NEED
IMPROVEMENT
10/15/21 F-3, R-1: Ensure the retention of Bring Your Own Device (BYOD) program
application audit logs for the appropriate period and periodic review of the
application audit logs by an independent source.
10/15/21 F-4, R-1: Update BYOD program procedures and guidelines to include: 1)
September providing malware prevention training to users; 2) updating the
2019-20-046 documentation for device operating system and technical baseline
2019
configurations; 3) maintaining and reviewing application audit logs,
specifically time frames for each; 4) clarifying the Computer Security Incident
Response Center reporting procedures for a lost or stolen device; 5)
informing the BYOD program when a device is lost or stolen so that the
application data are remotely wiped; and 6) tracking the manual and
systemic application data wipes by the BYOD program on a periodic basis.
SOME COMPONENTS OF THE PRIVACY PROGRAM ARE EFFECTIVE;
HOWEVER, IMPROVEMENTS ARE NEEDED
September
2019-20-062 07/15/21 F-2, R-1: Implement a fully integrated information security continuous
2019
monitoring process that includes privacy risks.
FISCAL YEAR 2019 STATUTORY REVIEW OF COMPLIANCE WITH LEGAL
GUIDELINES WHEN ISSUING LEVIES
September
2019-30-070 09/15/21 F-1, R-2: Ensure that corrective programming is implemented so that
2019
Collection Due Process (CDP) notices are issued for Federal contractor levies
that are fully paid after the levy issuance.
STRENGTHENED VALIDATION CONTROLS ARE NEEDED TO PROTECT
AGAINST UNAUTHORIZED FILING AND INPUT OF FRAUDULENT INFORMATION
RETURNS
2019-40-071 September
2019 10/15/21 F-1, R-1: Ensure that the required Digital Identity Risk Assessment is
completed for the Filing Information Returns Electronically system and an
implementation plan for identity proofing the system’s users is developed.
ADDITIONAL ACTIONS ARE NEEDED TO FURTHER REDUCE UNDELIVERABLE
MAIL
On Hold F-1, R-1: Develop Service-wide processes and procedures to ensure that all
operating divisions suppress the issuance of nonstatutory notices to
taxpayers that have an undelivered mail indicator on their account; suppress
September the issuance of correspondence when a taxpayer’s address of record is an
2019-40-074
2019 IRS campus; and research and update taxpayer addresses for which the U.S.
Postal Service returns undeliverable mail with a yellow label that provides a
more current address.
On Hold F-2, R-1: Install and use hygiene software to perfect taxpayer addresses on
the ITIN Real-Time System.
October 1, 2020 – March 31, 2021 │ 47
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
THE USE OF SCHEDULE K-1 DATA TO ADDRESS TAXPAYER NONCOMPLIANCE
CAN BE IMPROVED
11/15/21 F-1, R-3: Establish a process to use more e-filed Schedule K-1 data for
noncompliance identification and determine the feasibility of transcribing
more data from paper Schedule K-1.
September On Hold F-3, R-3: Ensure that the computer problem that caused amended
2019-30-078
2019 Schedules K-1 not to be marked as amended on the Information Returns
Master File has been corrected.
On Hold F-3, R-4: Establish a process to record Schedules K-1 as amended when
submitted with an amended flow-through return regardless of whether the
Schedule K-1 itself is marked as amended.
PROCESSES DO NOT ADEQUATELY REDUCE THE RISK THAT OUTSIDE
EMPLOYMENT ACTIVITIES WILL CONFLICT WITH EMPLOYEES’ OFFICIAL
DUTIES
09/15/21 F-2, R-3: Revise internal outside employment guidelines to require
September employees to resubmit their outside employment requests at least annually
2019-10-080
2019 and modify the Outside Employment System to allow for the systemic
closure of all requests for which a renewal was not timely received.
09/15/21 F-2, R-4: Create a plan for housing the Outside Employment System or
create a new database to ensure that outside employment requests are
tracked after the Totally Automated Personnel System is shut down.
PROCESSES AND PROCEDURES FOR REHIRING EMPLOYEES WITH PRIOR
CONDUCT OR PERFORMANCE ISSUES WERE IMPLEMENTED BUT NOT
ALWAYS FOLLOWED
September
2019-10-081 05/15/21 F-1, R-1: Update the IRM to require Employment Talent and Security staff to
2019
review all Automated Labor and Employer Relations Tracking System issues
in the hiring tool, not just those within the past six years.
IMPROVEMENTS ARE NEEDED TO ENSURE THAT CONSISTENT SUITABILITY
CHECKS ARE PERFORMED FOR PARTICIPATION IN INTERNAL REVENUE
SERVICE PROGRAMS
November On Hold F-4, R-2: Develop processes and procedures to ensure that continuous
2020-40-005
2019 criminal background checks are conducted on all program participants as
part of the Federal Bureau of Investigations Records of Arrests and
Prosecutions Back Program.
MANY ORGANIZATIONS ARE NOT NOTIFYING THE INTERNAL REVENUE
SERVICE OF THEIR INTENT TO OPERATE UNDER INTERNAL REVENUE CODE
SECTION 501 (c)(4) AS REQUIRED BY LAW
10/29/21 F-1, R-2: Use internal sources of information, e.g., applications for tax-
January exempt status filed after July 8, 2016, to assist with detecting I.R.C. §
2020-10-001
2020 501(c)(4) organizations that have not filed Forms 8976, Notice of Intent to
Operate Under Section 501(c)(4), and update the Exempt Organizations (EO)
Determinations Unit procedures to include verifying that I.R.C. § 501(c)(4)
organizations have met their Form 8976 notification requirement when
processing applications for tax-exempt status.
48 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
RESULTS OF THE 2019 FILING SEASON
On Hold F-2, R-2: Implement programming to compute the correct allowable
increase in the standard deduction for tax returns for which a taxpayer does
January not have an entry for the spouse but checks one or more of the checkboxes
2020-44-007 that indicate that the spouse was age 65 or older and/or was blind.
2020
On Hold F-2, R-11: Create a business rule to reject tax returns when a casualty and
theft loss deduction is included on Schedule A, Itemized Deductions, and
Form 4684, Casualties and Thefts, does not include the required Federal
Emergency Management Agency disaster declaration number.
ACTIVE DIRECTORY OVERSIGHT NEEDS IMPROVEMENT
12/15/21 F-1, R-3: Prioritize all computer rooms housing Integrated Submission and
Remittance Processing domain controllers for access control upgrades to
February ensure that these rooms are compliant with Federal multifactor
2020-20-006
2020 authentication requirements.
12/15/24 F-2, R-6: Ensure that business role account passwords are appropriately
configured to expire and require that Personal Identity Verification cards be
used in accordance with policy.
AUTHORITIES PROVIDED BY THE INTERNAL REVENUE CODE ARE NOT
EFFECTIVELY USED TO ADDRESS ERRONEOUS REFUNDABLE CREDIT AND
WITHHOLDING CREDIT CLAIMS
04/15/21 F-1, R-1: Assess the erroneous refund penalty for reduced or disallowed
withholding and refundable credit claims on all claims for which the IRS
determines the claim is excessive and does not have a reasonable basis,
and the taxpayer is not subject to the penalties under I.R.C. §§ 6662,
6662A, and 6663.
February Potential Increased Revenue: $534,674,880
2020-40-008 On Hold F-2, R-2: Develop processes and procedures to manually set a
2020
recertification indicator on tax accounts associated with refundable credit
claims that were disallowed through the Automated Questionable Credit
(AQC) program until a systemic process is implemented.
On Hold F-2, R-4: Ensure that a systemic process is implemented to set the
recertification indicator on taxpayers’ accounts when refundable credit
claims are disallowed as part of the IRS’s AQC program.
04/15/21 F-3, R-1: Update the systemic process to include applying the two-year ban
for disallowed Advanced Child Tax Credit and American Opportunity Tax
Credit claims.
October 1, 2020 – March 31, 2021 │ 49
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
COMPLEXITY AND INSUFFICIENT OVERSIGHT OF THE FREE FILE PROGRAM
RESULT IN LOW TAXPAYER PARTICIPATION
10/15/21 F-1, R-2: Require Free File Inc. (FFI) members to fully disclose all criteria on
the IRS.gov Free File web page that taxpayers must meet to e-file their
Federal tax return for free.
09/15/21 F-2, R-1: Take immediate action to address the IRS Advisory Council’s
recommendations to: 1) establish goals and performance metrics for the
Free File Program; 2) develop standards for frequently logging on to
February
2020-40-009 members’ Free File websites as taxpayers and preparing returns that meet
2020
the members’ Free File criteria; and 3) test members’ websites to simulate
returning Free File taxpayers to determine if the websites direct taxpayers to
the Free File web page.
06/15/21 F-2, R-3: Update the Adherence Testing Review Guide to include the specific
tests to be performed to assess FFI member compliance with Memorandum
of Understanding requirements.
06/15/21 F-3, R-3: Work with FFI members to develop procedures to conduct
customer satisfaction surveys.
THE ENTERPRISE CLOUD PROGRAM DEVELOPED A STRATEGY, BUT WORK
REMAINS TO ACHIEVE CLOUD-BASED MODERNIZATION GOALS
08/15/21 F-1, R-2: Ensure that all workstreams needed for implementing the
Enterprise-wide cloud strategy are developed.
March 08/15/21 F-2, R-2: Develop Enterprise-wide policies and procedures that specifically
2020-20-010 address cloud requirements that must be considered and met prior to
2020
deciding to procure cloud services.
08/15/21 F-2, R-3: Ensure IRS adherence to the Federal Information Technology
Acquisition Reform Act legislation and Cloud First policy by requiring all new
information technology projects be evaluated by the Enterprise Cloud
Program for cloud service consideration and approval.
WHILE PROGRESS IS BEING MADE ON DIGITAL IDENTITY REQUIREMENTS,
COMPLETION DATES TO ACHIEVE COMPLIANCE WITH IDENTITY PROOFING
STANDARDS HAVE NOT BEEN ESTABLISHED
02/15/22 F-2, R-1: Ensure that the Identity and Access Management Design and
March Innovation Branch performs the planned tests; completes a go/no-go
2020-20-012
2020 evaluation of the Secure Access Digital Identity (SADI) platform based on the
results from the tests; determines and incorporates the additional needs for
the initial release of the SADI platform; and develops and implements the
plan to successfully migrate all of the online applications from the current
system of processes to the SADI platform, as expeditiously as is possible.
50 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
MILLIONS OF DOLLARS IN DISCREPANCIES IN TAX WITHHOLDING REQUIRED
BY THE FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT ARE NOT BEING
IDENTIFIED OR ADDRESSED
09/15/21 F-1, R-1: Initiate actions to address the accuracy of existing data in the
Foreign Investment in Real Property Tax Act (FIRPTA) database.
09/15/21 F-1, R-3: Ensure that tax examiners are aware of the procedures to properly
allocate FIRPTA withholding among multiple sellers when the buyer does not
correctly submit a Form 8288-A, Statement of Withholding on Dispositions
by Foreign Persons of U.S. Real Property Interests, for each seller.
09/15/21 F-1, R-4: Review the 2,988 buyers that TIGTA identified with a discrepancy
between the withholding reported on Form 8288, U.S. Withholding Tax
Return for Dispositions by Foreign Persons of U.S. Real Property Interests,
and the withholding reported on the associated Form 8288-A and correct
the withholding recorded in the FIRPTA database or the buyer’s tax account
as appropriate.
On Hold F-2, R-1: Implement processes and procedures to ensure that tax examiners
accurately determine and assess the proper amount of FIRPTA withholding
tax a buyer should report and pay when the application for the Withholding
March Certificate attached to the Form 8288 was not filed on or before the date of
2020-40-014 transfer of the property.
2020
09/15/21 F-2, R-2: Ensure that tax examiners are aware of the processes and
procedures to determine and assess the proper amount of FIRPTA
withholding tax a buyer should report and pay when the buyer reports
reduced withholding and no Withholding Certificate is attached to the Form
8288.
09/15/21 F-2, R-3: Implement processes and procedures to ensure that tax examiners
accurately determine and assess the proper amount of FIRPTA withholding
tax a buyer should report and pay when an approved Withholding Certificate
is attached to the Form 8288.
09/15/21 F-2, R-4: Ensure that the correct amount of FIRPTA withholding tax is
assessed for the buyers that filed the 2,268 Forms 8288 that TIGTA
identified for which the Withholding Certificate was not submitted timely and
the 916 Forms 8288 that TIGTA identified for which the assessed
withholding is not supported by an approved Withholding Certificate.
09/15/21 F-3, R-1: Review the 1,835 taxpayers that TIGTA identified that potentially
received erroneous FIRPTA withholding credits and take the appropriate
steps to recover credits paid in error.
09/15/21 F-3, R-2: Ensure that tax examiners document the steps taken to verify the
claim in the Credit Verification section of the FIRPTA database as required.
BOND PROMOTER MISCONDUCT PROCEDURES SHOULD BE IMPROVED
07/15/21 F-2, R-1: Develop a data-driven method to track and quantify specific
March
2020-10-016 noncompliance issues, i.e., the promoter penalty, that are otherwise
2020
embedded in generic reference numbers, and update related guidance and
train employees as needed.
October 1, 2020 – March 31, 2021 │ 51
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
THE GROWTH OF THE MARIJUANA INDUSTRY WARRANTS INCREASED TAX
COMPLIANCE EFFORTS AND ADDITIONAL GUIDANCE
10/15/21 F-3, R-1: Leverage publically available State tax information and expand use
March of Fed/State agreements to identify nonfilers and unreported income in the
2020-30-017
2020 marijuana industry.
Potential Increased Revenue: $19,345,235
04/15/21 F-4, R-1: Increase educational outreach towards unbanked taxpayers
making cash deposits regarding the unbanked relief policies available.
IMPROPER PAYMENT REPORTING HAS IMPROVED; HOWEVER, THERE HAVE
BEEN NO SIGNIFICANT REDUCTIONS TO THE BILLIONS OF DOLLARS OF
IMPROPER PAYMENTS
2020-40-025 April 2020 09/15/22 F-1, R-1: Work with the Department of Health and Human Services to
develop a comprehensive risk assessment of improper Premium Tax Credit
payments, including the risk of Advanced Premium Tax Credit improper
payments.
UNDERCOVER TRAVEL EXPENSES WERE GENERALLY SUPPORTED;
HOWEVER, CONTROLS COULD BE IMPROVED
10/15/21 F-1, R-1: Ensure that management’s approval is obtained when reserving
hotel rooms exceeding the applicable temporary duty location rate and the
use of luxury vehicles and require agents to include management’s prior
2020-10-030 May 2020 approval in their travel voucher documentation.
10/15/21 F-2, R-1: Periodically assess undercover travel on a function-wide basis to
identify potential areas for improved efficiency, to identify best practices to
ensure agents’ safety, and to ensure that the investigative imprest fund is
only used for travel costs when needed to maintain the security of
undercover operations.
CONTINUED EFFORTS ARE NEEDED TO ADDRESS BILLIONS OF DOLLARS IN
REPORTING AND PAYMENT DISCREPANCIES RELATING TO TAX WITHHELD
FROM FOREIGN PERSONS
2020-40-021 June 2020
09/30/21 F-4, R-1: Further lower the dollar tolerance used to select Forms 1040NR
with unsupported withholding credits for manual verification before refunds
are issued.
SOME CORRECTIVE ACTIONS TO ADDRESS REPORTED INFORMATION
TECHNOLOGY WEAKNESSES WERE NOT FULLY AND EFFECTIVELY
IMPLEMENTED AND DOCUMENTED
06/15/22 F-1, R-3: Verify through testing that the IRS Information Technology
organization is able to recover mission-essential functions identified by the
2020-20-022 June 2020 Cybersecurity function within the maximum tolerable downtimes or recovery
time objectives.
06/15/21 F-2, R-1: Ensure that any appropriate documentation subsequently provided
during this review is uploaded to the JAMES for the judgmentally sampled
proposed corrective actions that lacked sufficient documentation to support
their closure.
52 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
THE LARGE CASE EXAMINATION SELECTION METHOD CONSISTENTLY
RESULTS IN HIGH NO-CHANGE RATES
07/15/21 F-1, R-1: Formulate an action plan to reduce the examination no-change
rates, refine the examination process to avoid working pickup returns unless
issues have been established on primary tax returns that may affect prior or
subsequent years, minimize the hours expended on no-change closures by
2020-30-031 June 2020
monitoring excessive time applied to returns, and encourage terminating an
examination when issues do not materialize regardless of how many hours
have been incurred.
07/15/21 F-3, R-1: Analyze examination results for Discriminant Analysis System
returns on a regular basis in order to take timely corrective actions for
unfavorable trends.
PERFORMANCE MEASURES ARE NEEDED TO EVALUATE THE RESULTS OF
DIRECT PAY BOND PROCESSING CHARGES
04/15/21 F-1, R-1: Develop performance measures that track the efficiency of subsidy
2020-10-032 June 2020 payment request processing, including processing time, employee's total
direct time, the number of subsidy payment requests that require error
resolution and correspondence, the number of payments that are rejected,
and the amount of interest paid.
ACCESS TO FACILITIES AND SENSITIVE TAXPAYER INFORMATION WAS NOT
ALWAYS REVOKED FOR SEPARATED EMPLOYEES
09/15/21 F-1, R-2: Develop a process to notify the supervisors of managers who input
late separation Personnel Action Requests (PAR) that encourages
supervisors to remind managers of their responsibilities for inputting
separation PARs timely.
2020-10-034 June 2020 05/15/21 F-1, R-3: Develop procedures to notify supervisors of managers who do not
recover security items from separating employees, and include guidance to
remind managers of their responsibilities for securing security items from
separating employees.
05/15/21 F-1, R-4: Update the IRM to clarify that managers are responsible for filing a
Situational Awareness Management Center report when they are unable to
recover security items from separating employees.
MOST INTERNAL REVENUE SERVICE APPLICATIONS DO NOT HAVE
SUFFICIENT AUDIT TRAILS TO DETECT UNAUTHORIZED ACCESS TO
SENSITIVE INFORMATION
09/15/21 F-1, R-1: Develop and implement a methodology to identify and annually
update the inventory of all applications that store or process taxpayer data
and PII for the purpose of detecting improper cyber activities and to
reconstruct events for potential criminal investigations. Furthermore, audit
2020-20-033 July 2020 trail records for the applications should be included in the Security Audit and
Analysis System.
10/15/21 F-1, R-2: Obtain the list of 13 applications with an Audit Control Response
(ACR) that references the obsolete IRM, conduct a revalidation of the
auditable events, and issue an Audit Trail Deficiency Memorandum to the
application owner, if needed, to require an ACR update to comply with the
current list of auditable events. In addition, ensure that revalidations are
conducted annually as required.
October 1, 2020 – March 31, 2021 │ 53
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
TAX COMPLIANCE CHECKS FOR FEDERAL EMPLOYMENT SUITABILITY HAVE
IMPROVED, BUT THERE ARE STILL SOME INCONSISTENCIES
2020-10-035 July 2020 08/15/21 F-1, R-1: Align IRS suitability tax compliance checks to ensure consistent
policies, procedures, and standards that reflect compliance with I.R.C. and
Executive Order 13467 requirements.
THE ANNUAL INVENTORY CERTIFICATION PROCESS FOR NON-INFORMATION
TECHNOLOGY ASSETS NEEDS IMPROVEMENT
08/15/21 F-1, R-1: Ensure that monitoring procedures are designed to reasonably
assure that the controls established over the management of non-
2020-10-039 July 2020 information technology assets are properly adhered to by Facilities
Management and Security Services staff.
08/15/21 F-1, R-2: Review and update the existing Desk Guide to establish
standardized procedures for remote inventory certification that ensures
uniform completion and maintenance of supporting documentation.
STRATEGIES AND PROTOCOLS TO AUTHENTICATE NETWORK USER
IDENTITIES ARE EFFECTIVE; HOWEVER, MORE ACTION IS NEEDED TO VERIFY
THE IDENTITY OF DEVICES
02/15/22 F-1, R-1: Require the User and Network Services and Cybersecurity
functions to coordinate with AT&T to implement certificate-based
authentication for devices connecting to the internal network through a
Virtual Private Network.
09/15/21 F-2, R-1: Coordinate with the business units that internally manage non-
August
2020-20-036 802.1X protocol compatible devices to develop a comprehensive plan with
2020
milestones to reduce the number of whitelisted devices that currently
authenticate to the Identity Services Engine (ISE) using the Media Access
Control Authentication Bypass protocol.
04/15/21 F-3, R-1: Ensure that Enterprise Life Cycle methodology artifacts for the
Unified Access Project are completed, including requirements and design
artifacts to aid system understanding and maintenance, as well as security,
contingency planning, and testing artifacts to enable the secure operation of
the ISE.
SUBSTANTIAL PROGRESS HAS BEEN MADE IN IMPLEMENTING THE INSIDER
THREAT CAPABILITY, BUT IMPROVEMENTS ARE NEEDED
05/15/21 F-1, R-3: Ensure that the User Behavior Analytics Capability (UBAC) project
August
2020-20-043 implementation plan includes the National Insider Threat Task Force's
2020
recommended training for UBAC personnel. In addition, the IRS should
document all UBAC training efforts and, at least annually, ensure that all
UBAC personnel have completed the required training.
54 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
LEGACY SYSTEMS MANAGEMENT NEEDS IMPROVEMENT
09/15/21 F-1, R-2: Implement Portfolio Rationalization or a similar program IRS
enterprise-wide to identify, prioritize, and execute the updating, replacing, or
retiring of current and future legacy systems. This should include
August consideration of the system as well as the subsystem levels.
2020-20-044
2020 09/15/21 F-1, R-3: Ensure that all systems are included in the As-Built Architecture
with complete and accurate information, including the managing
organization(s), application age, and programming language.
06/15/22 F-2, R-1: Capture operations and maintenance costs for its current
information technology infrastructure at the subsystem level.
FISCAL YEAR 2020 STATUTORY REVIEW OF RESTRICTIONS ON DIRECTLY
CONTACTING TAXPAYERS
04/15/21 F-2, R-1: Revise Form 1023, Application for Recognition of Exemption Under
Section 501(c)(3) of the Internal Revenue Code, and/or instructions to
ensure that taxpayers who are applying for exempt status and who have a
August valid Power of Attorney (POA) can clearly elect whether they or their POA
2020-30-046
2020 should serve as the initial contact with EO Determinations.
04/15/21 F-2, R-2: Update EO Determinations training and the IRM to include bypass
procedures and to stress that, when an organization is represented by a
valid POA, the taxpayer can elect whether they or their POA should serve as
the main point of contact with EO Determinations.
SENSITIVE TAX RECORDS COULD NOT ALWAYS BE LOCATED OR TIMELY
PROVIDED
August 07/15/21 F-1, R-1: Create a centralized system to track sensitive paper tax records.
2020-10-050
2020 07/15/21 F-1, R-2: Develop and implement a quality review process to provide
reasonable and ongoing assurance that the correct tax records are being
sent to the correct address.
CONTROLS OVER THE MANAGEMENT AND SECURITY OF OFFICIAL
PASSPORTS NEED IMPROVEMENT
07/15/21 F-2, R-1: Ensure that related travel files and passports are not being
August retained beyond established time frames unless there is a legitimate
2020-10-051 business need for them.
2020
04/15/21 F-3, R-1: Consider including a requirement for independent periodic or
annual surprise security reviews of the passport offices to ensure that
passport personnel are adhering to updated guidelines for securing and
safeguarding passports.
REVIEW OF THE INDEPENDENT OFFICE OF APPEALS COLLECTION DUE
PROCESS PROGRAM
04/15/21 F-1, R-1: Require the applicable Office of Appeals technical employees to
August
2020-10-054 complete available training on determining the timeliness of CDP and
2020
Equivalent Hearing requests, and issue additional interim guidance to
provide clarity around what constitutes a timely filed CDP request.
October 1, 2020 – March 31, 2021 │ 55
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
PROCESSES DO NOT ENSURE THAT TAXPAYERS FILING AN INCORRECT
FORM 1120 SERIES TAX RETURN ARE APPROPRIATELY ASSESSED TAX
September
2020-40-052 07/15/21 F-2, R-1: Remove the Form 1120-S, U.S. Income Tax Return for an S
2020
Corporation, filing requirement from the 1,588 accounts that TIGTA
identified.
THE ACCURACY OF CURRENCY TRANSACTION REPORT DATA IN IRS
SYSTEMS SHOULD BE IMPROVED TO ENHANCE ITS USEFULLNESS FOR
COMPLIANCE PURPOSES
September
2020-30-055
2020 11/15/21 F-1, R-1: Improve the case identification and selection process by using
currency transaction reports data to systemically identify potentially
noncompliant taxpayers and nonfilers.
FISCAL YEAR 2020 STATUTORY AUDIT OF COMPLIANCE WITH LEGAL
GUIDELINES RESTRICTING THE USE OF RECORDS OF TAX ENFORCEMENT
RESULTS
September 10/15/21 F-1, R-2: Implement systemic controls such as an electronic Section 1204
2020-30-059
2020 certification process that includes automated reminders to both employees
and their managers to ensure that the discussion and acknowledgement of
the retention standards is completed within the time frames established
under the Code of Federal Regulations Section 430.206 policy.
PROCESS AUTOMATION BENEFITS ARE NOT BEING MAXIMIZED, AND
DEVELOPMENT PROCESSES NEED IMPROVEMENT
07/15/21 F-1, R-1: Maximize the timely use of the Contractor Responsibility
September Determination Robot.
2020-20-060 Potential Funds Put to Better Use: $2,427,000
2020
10/15/21 F-3, R-1: Finalize an automation program governance structure, involving
both technology and business stakeholders.
07/15/21 F-3, R-2: Finalize a development methodology suitable for automation
projects.
THE ENTERPRISE CASE MANAGEMENT SOLUTION DEVELOPMENT IS
DELAYED, AND ADDITIONAL ACTIONS ARE NEEDED TO DEVELOP A
DECOMMISSIONING STRATEGY
09/15/21 F-2, R-1: Develop a legacy case management capability and process
decommissioning strategy that informs the Enterprise Case Management
September (ECM) solution's sequencing and enables the Information Technology
2020-20-061
2020 organization to execute decommissioning system activities in a timely
manner.
09/15/21 F-3, R-1: Coordinate with the business operating divisions to perform the fit-
gap analysis on all case management systems to maximize the ECM
solution's functionality and ensure that the majority of legacy case
management systems are consolidated.
56 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
IMPROVEMENTS ARE NEEDED TO ENSURE THAT WIRELESS NETWORKS ARE
SECURE
12/15/21 F-1, R-1: Ensure that the 25 wireless network security-related weaknesses
are resolved and that the evidence supporting the weakness closures is
updated in the Treasury Federal Information Security Modernization Act of
2014 Inventory Management System for subsequent testing and closure
approval.
12/15/21 F-2, R-1: Correct the wireless access point inventory issues that TIGTA
identified and shared with management.
06/15/21 F-2, R-2: Update the internal procedures to provide detailed requirements
for reviews and updates to the wireless access point inventory, including
taking photographs of the devices during the deployment and replacement
September stages.
2020-20-063
2020 11/15/21 F-2, R-3: Improve the current inventory management system and platform to
ensure that all changes to wireless access point components are updated
simultaneously.
09/15/21 F-3, R-1: Ensure that the User and Network Services (UNS) function reviews
and minimizes the broadcast range of the wireless access point signals to be
within IRS-controlled boundaries. In addition, ensure that the broadcast
range for the wireless access points planned for model replacement is
minimized.
12/15/21 F-3, R-2: Ensure that the UNS function disables and locks the wireless
capability in multifunction printers to comply with IRM policy.
06/15/21 F-3, R-3: Ensure that UNS function multifunction printer action plans include
details that will address multifunction printer monitoring and disabling and
locking the wireless signal capability.
October 1, 2020 – March 31, 2021 │ 57
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
PROCESSES DO NOT ENSURE THAT INDIVIDUAL TAXPAYER IDENTIFICATION
NUMBERS ARE ISSUED ONLY TO QUALIFYING INDIVIDUALS WITH A TAX
ADMINISTRATION NEED
04/15/21 F-3, R-3: Ensure that monthly analysis of ITIN Real-Time System data is
performed to identify Form W-7, Application for IRS Individual Taxpayer
Identification Number, applications submitted using duplicate supporting
documents and take actions on the identified applications as appropriate.
07/15/21 F-3, R-5: Develop processes and procedures to identify active ITINs
assigned to individuals whose ITIN was revoked or who are deceased and
take appropriate actions to deactivate the ITIN or add a deceased lock on
their tax account.
05/15/21 F-3, R-6: Review the 89 ITINs identified as revoked and still active and the
51 ITINs assigned to deceased individuals that are not locked that TIGTA
September identified and take appropriate action to deactivate the ITINs or add a
2020-40-064 deceased lock on the tax account.
2020
06/15/21 F-4, R-3: Review the 39 ITINs identified by the Secondary Review Team
(SRT) and 613 active ITINs identified by TIGTA for which the Form W-7
application used an address identified by the SRT as part of a pattern of
Form W-7 applications with potentially fraudulent supporting documents to
determine whether the ITINs need to be revoked or deactivated.
04/15/21 F-6, R-2: Review the 509 ITINs that TIGTA identified that have not been
deactivated as required and take the actions needed to revoke, deactivate,
or renew them as appropriate.
On Hold F-7, R-1: Develop processes and procedures to identify retroactive claims
erroneously paid and erroneously disallowed due to tax examiner errors.
Once these claims are identified, take steps to recover erroneous credit
payments or ensure that taxpayers receive the benefits to which they are
entitled.
FISCAL YEAR 2020 STATUTORY REVIEW OF COMPLIANCE WITH LEGAL
GUIDELINES WHEN ISSUING LEVIES
02/15/22 F-1, R-1: Ensure that corrective programming is implemented so that, when
a revenue officer generates a disqualified employment tax levy, the
Integrated Collection System (ICS) properly posts in the case history and
notifies employees to send the post-levy CDP notice.
02/15/22 F-1, R-2: Ensure that corrective programming is implemented so that, when
September a revenue officer levies a tax module that is not in Field Collection status, he
2020-30-065 or she is notified to verify the proper time has passed since the CDP notice
2020
issuance.
02/15/22 F-1, R-3: Ensure that corrective programming is implemented so that, when
a jeopardy levy is issued, the ICS posts in the case history and notifies
employees to send the post-levy CDP notice.
02/15/22 F-1, R-4: Ensure that corrective programming is implemented so that, when
a revenue officer levies an ICS-only balance due module in the ICS, he or she
is notified to verify the CDP notices were properly issued.
THE INTERNAL REVENUE SERVICE CAN IMPROVE TAXPAYER COMPLIANCE
FOR VIRTUAL CURRENCY TRANSACTIONS
September
2020-30-066 On Hold F-1, R-1: Continue efforts to close the virtual currency information gap by
2020
issuing guidance clarifying the proper information reporting associated with
virtual currency transactions.
58 │ October 1, 2020 – March 31, 2021
Reference Projected
Issued Report Title and Recommendation Summary
Number Completion
(F = Finding No., R = Recommendation No.)
Date
TAXPAYER FIRST ACT: IMPLEMENTATION OF IDENTITY THEFT VICTIM
ASSISTANCE PROVISIONS
September 04/15/21 F-2, R-2: Add employment identity theft markers to the 60,872 victims’ tax
2020-45-070
2020 accounts that TIGTA identified.
04/15/21 F-2, R-7: Ensure that the Computer Paragraph 01E Notice is issued to the
3,292 victims.
MORE ENFORCEMENT AND A CENTRALIZED COMPLIANCE EFFORT ARE
REQUIRED FOR EXPATRIATION PROVISIONS
01/15/22 F-1, R-2: Update the Letter 2399C and Letter 4135C for compliance under
the Heroes Earnings Assistance and Relief Tax Act (HEART Act) and develop
IRM procedures to use these letters to obtain Form 8854 when a Form DS-
4083, Certificate of Loss of Nationality of the United States is received and
September no Form 8854, Initial and Annual Expatriation Statement, is received.
2020-30-071 01/15/22 F-2, R-1: Evaluate the information reported on Form 8854 and determine
2020
what data fields should be added to the expatriate database to ensure tax
compliance of taxpayers who expatriate, e.g., Form 8854, Part IV, Section B,
Property Owned on Date of Expatriation.
01/15/22 F-2, R-2: Develop IRM procedures for transcribing Form 8854 data, correct
Form 8854 data when information as filed by expatriates is missing or
incomplete, and prepare analysis as needed to determine if the expatriate is
a covered expatriate and subject to tax under I.R.C. §877A.
October 1, 2020 – March 31, 2021 │ 59
Other Statistical Reports
The Inspector General Empowerment Act of 2016 requires Inspectors General to address the
following issues for the Offices of Audit and Inspections and Evaluations: 33
Issue Result for TIGTA
Interference/Access to Information
Report any attempt to interfere with the independence of
TIGTA, including: budget constraints designed to limit the As of March 31, 2021, there were no
capabilities of TIGTA; and incidents of resistance or attempts to interfere with the independence
objection to oversight activities of TIGTA. of TIGTA or any instances of restricted or
significantly delayed access to information.
Report restricted or significantly delayed access to
information, including the justification of the
establishment for such action.
Disputed Recommendations
As of March 31, 2021, there were no
Provide information on significant management decisions instances in which significant
in response to recommendations with which the Inspector recommendations were disputed.
General disagrees.
Revised Management Decisions
Provide a description and explanation of the reasons for As of March 31, 2021, there were no
any significant revised management decisions made significant revised management decisions.
during the reporting period.
Reports Issued in the Prior Reporting Period With No
Management Response
As of March 31, 2021, there were no prior
Provide a summary of each report issued before the reports for which management’s response
beginning of the current reporting period for which no was not received within 60 days of issuance.
management response was received within 60 days of
the report issuance date.
Disclosure
As of March 31, 2021, there were no reports
Provide detailed descriptions of the circumstances of that had been closed and were not disclosed
each inspection, evaluation, and audit that was closed by to the public.
the agency and was not disclosed to the public.
Review of Legislation and Regulations
TIGTA’s Office of Chief Counsel reviewed 82
Review existing and proposed legislation and regulations, proposed regulations and legislative requests
and make recommendations concerning the impact of during this reporting period.
such legislation or regulations.
33 Results listed are for this reporting period only.
60 │ October 1, 2020 – March 31, 2021
Appendix II
Audit Products (issued between October 1, 2020 and March 31, 2021)
Report
Report Title Outcome Measure(s)
Number
October 2020
Refinement and Expansion of Filters to Include
Cost Savings (Funds Put to Better
2021-40-004 Additional Business Returns Will Continue to Improve
Use): $250,081,498
Business Identity Theft Detection Efforts
Annual Assessment of the Internal Revenue Service’s
2021-20-001 N/A
Information Technology Program for Fiscal Year 2020
November 2020
NO REPORTS ISSUED
December 2020
Improvements Have Been Made, but Controls Need
Revenue Protection: $889,830,985
2021-10-007 to Be Strengthened to Detect Improper Self-Employed
impacting 43,476 taxpayer accounts
Retirement Deductions
Cost Savings (Funds Put to Better
Expansion of Self-Correction for Electronic Filers and Use): $11,609,610; Taxpayer
Other Improvements Could Reduce Taxpayer Burden Burden: 1,899,192 tax returns
2021-40-008
and Costs Associated With Tax Return Error impacted; Taxpayer Rights and
Resolution Entitlements: $9,092,664 impacting
12,147 tax returns
Security Controls Over Electronic Crimes Labs Need Reliability of Information; Protection
2021-20-003
Improvement of Resources 34
Consolidation of Examination Case Selection and
Assignment in the Tax Exempt and Government
2021-10-005 N/A
Entities Division Created Benefits, but Additional
Improvements Are Needed
Systems Processing Economic Impact Payments
2021-26-006 Performed Well and the Get My Payment Application N/A
Security Vulnerabilities Are Being Remediated
Fiscal Year 2021 Biannual Independent Assessment Taxpayer Rights and Entitlements:
2021-30-010
of Private Collection Agency Performance $7,419 impacting seven taxpayers
34 Outcome measure details are redacted because TIGTA has determined that it contains law enforcement
techniques/procedures and guidelines for law enforcement investigations or prosecutions.
October 1, 2020 – March 31, 2021 │ 61
Billions in Potential Taxes Went Unassessed From Increased Revenue:
2021-30-002 Unfiled Returns and Underreported Income by $5,723,171,594 impacting 15,034
Taxpayers That Received Form 1099-K Income taxpayer accounts
January 2021
Revenue Protection: $48,701,800;
Inefficient Use of Resources: 583
Millions of Dollars in Potentially Erroneous Qualified
2021-40-009 tax returns impacted; Taxpayer
Business Income Deductions Are Not Being Verified
Rights and Entitlements:
212 taxpayer accounts impacted
Processes Exist to Assist Taxpayers With Misdirected
2021-40-012 Refunds, but Additional Controls Could Further Help N/A
to Prevent Them
Review of the Internal Revenue Service’s Purchase
2021-10-014 Card Violations Report and the Status of N/A
Recommendations
February 2021
Additional Security Processes Are Needed to Prevent
Taxpayer Privacy and Security: 4,726
2021-45-017 Unauthorized Release of Tax Information Through the
taxpayer accounts impacted
Income Verification Express Service Program
Obstacles Exist in Detecting Noncompliance of Tax-
2021-10-013 N/A
Exempt Organizations
Emphasis on Unrelated Business Income Tax
2021-30-016 N/A
Enforcement Should be Enhanced
March 2021
Trends in Compliance Activities Through Fiscal Year
2021-30-011 N/A
2019
Interim Report – Taxpayer Advocate Service Actions
to Assist Taxpayers in Response to the
2021-16-019 N/A
Implementation of the Coronavirus Aid, Relief, and
Economic Security Act
High-Income Taxpayers Who Owe Delinquent Taxes
2021-30-015 N/A
Could Be More Effectively Prioritized
Compliance Services Collection Operations Should
Taxpayer Burden: 247 taxpayer
2021-30-018 Improve the Timeliness of Responding to Taxpayer
accounts impacted
Correspondence
Results of the 2020 Filing Season and Effects of
2021-46-023 N/A
COVID-19 on Tax Processing Operations
Interim Report - IRS COVID-19 Response Timeline and
2021-16-020 N/A
Policies to Protect Employee Health and Safety
62 │ October 1, 2020 – March 31, 2021
Appendix III
TIGTA’s Statutory Reporting Requirements
The following table reflects the FY 2021 statutory reviews.
Reference to
Explanation of the Provision Comments/TIGTA Audit Status
Statutory Coverage
Requires TIGTA to evaluate the IRS’s
Enforcement Statistics compliance with restrictions under
RRA 98 § 1204 on the use of Fieldwork currently in process.
I.R.C. § 7803(d)(1)(A) enforcement statistics to evaluate IRS
employees.
Requires TIGTA to evaluate the IRS’s
Restrictions on Directly Contacting compliance with restrictions under I.R.C.
Taxpayers § 7521 on directly contacting taxpayers Fieldwork currently in process.
I.R.C. § 7803(d)(1)(A)(ii) who have indicated they prefer their
representatives be contacted.
Requires TIGTA to evaluate the IRS’s
Filing of a Notice of Lien compliance with required procedures
Fieldwork currently in process.
I.R.C. § 7803(d)(1)(A)(iii) under I.R.C. § 6320(a) upon the filing of
a notice of lien.
Requires TIGTA to include information
Extensions of the Statute of regarding extensions of the statute of
Limitations for Assessment of Tax limitations for assessment of tax under
I.R.C. § 6501 and the provision of Fieldwork currently in process.
I.R.C. § 7803(d)(1)(C)
notice to taxpayers regarding the right to
I.R.C. § 6501(c)(4)(B) refuse or limit the extension of particular
issues or a particular period of time.
Levies Requires TIGTA to evaluate the IRS’s
compliance with required procedures Fieldwork currently in process.
I.R.C. § 7803(d)(1)(A)(iv) under I.R.C. § 6330 regarding levies.
Requires TIGTA to evaluate the IRS’s
Collection Due Process compliance with required procedures
under I.R.C. §§ 6320 and 6330 Fieldwork currently in process.
I.R.C. §§ 7803(d)(1)(A)(iii) and (iv) regarding taxpayers’ rights to appeal lien
or levy actions.
Requires TIGTA to evaluate the IRS’s
Seizures compliance with required procedures
Fieldwork currently in process.
I.R.C. § 7803(d)(1)(A)(iv) under I.R.C. §§ 6330 through 6344
when conducting seizures.
Taxpayer Designations – Illegal Tax
Protester Designation and Similar
Designations An evaluation of the IRS’s compliance
with restrictions under RRA 98 § 3707 Fieldwork currently in process.
on designation of taxpayers.
I.R.C. § 7803(d)(1)(A)(v)
October 1, 2020 – March 31, 2021 │ 63
Reference to
Explanation of the Provision Comments/TIGTA Audit Status
Statutory Coverage
Disclosure of Collection Activity With Requires TIGTA to review and certify
Respect to Joint Returns whether the IRS is complying with I.R.C.
§ 6103(e)(8), which requires the IRS to
I.R.C. § 7803(d)(1)(B) (TIGTA
disclose information to an individual Fieldwork currently in process.
requirement)
filing a joint return on collection activity
I.R.C. § 6103(e)(8) (IRS involving the other individual filing the
requirement) return.
Requires TIGTA to include in each
Semiannual Report to Congress the
number of taxpayer complaints received
Taxpayer Complaints Statistical results on the number of
and the number of employee
taxpayer complaints received are
I.R.C. § 7803(d)(2)(A) misconduct and taxpayer abuse
shown on page 38.
allegations received by the IRS or TIGTA
from taxpayers, IRS employees, and
other sources.
Administrative or Civil Actions With Requires TIGTA to include information
Respect to the Tax Collection regarding any administrative or civil
Practices Act of 1996 actions with respect to violation of
I.R.C. § 7803(d)(1)(G) the fair debt collection provision of I.R.C. Fieldwork currently in process.
§ 6304, including a summary of such
I.R.C. § 6304 actions and any resulting judgments or
RRA 98 § 3466 awards granted.
Requires TIGTA to include information
regarding improper denial of requests
Denials of Requests for Information for information from the IRS, based on a
statistically valid sample of the total
I.R.C. § 7803(d)(1)(F) Fieldwork currently in process.
number of determinations made by the
I.R.C. § 7803(d)(3)(A) IRS to deny written requests to disclose
information to taxpayers on the basis of
I.R.C. § 6103 or 5 U.S.C. § 552(b)(7).
Security Reviews:
Adequacy and Security of the
Requires TIGTA to evaluate the IRS’s Rep. No. 2021-20-001; Oct. 2020
Technology of the IRS
adequacy and security of its technology. Rep. No. 2021-20-003; Dec. 2020
I.R.C. § 7803(d)(1)(D)
Rep. No. 2021-26-006; Dec. 2020
Rep. No. 2021-10-014; Jan. 2021
Government Charge Card Abuse TIGTA’s review of the IRS’s purchase
Prevention Act of 2012 Requires TIGTA to report on the IRS’s card program found that controls were
progress in implementing purchase and generally effective, and the number of
Pub. L. No. 112-194 travel card audit recommendations. purchase card violations identified by
(October 2012) the IRS Credit Card Services Branch
were minimal and generally for nominal
amounts.
Improper Payments Elimination and Requires TIGTA to assess the IRS’s
Recovery Act of 2010 compliance with improper payment Fieldwork currently in process.
31 U.S.C. § 3321 requirements.
64 │ October 1, 2020 – March 31, 2021
Reference to
Explanation of the Provision Comments/TIGTA Audit Status
Statutory Coverage
Digital Accountability and
Transparency Act of 2014 Requires TIGTA to assess the
(DATA Act) completeness, timeliness, quality, and
Fieldwork currently in process.
accuracy of data that the IRS submits to
Pub. L. No. 113-101, 128 Stat. comply with the DATA Act.
1124 (2014)
Rep. No. 2021-30-010; Dec. 2020
TIGTA identified a risk that too many
PCA employees have access to
Fixing America’s Surface taxpayer banking information, which
Requires TIGTA to perform an increases the risk of fraud.
Transportation Act independent biannual assessment of Additionally, TIGTA determined that the
private collection agency (PCA) methodology being used by the IRS to
Pub. L. No. 114-94, 129 Stat. 1312 performance.
(2015) exclude low-income taxpayers at or
below 200 percent of the Federal
Poverty Level may not prevent all of
these taxpayers from being assigned to
PCAs.
Rep. No. 2021-16-020; Mar. 2021
As of February 28, 2021, 3,404 IRS
employees reported having tested
positive for COVID-19. IRS data show
that approximately 45 percent of these
employees reported to an IRS facility
House Report 116-456 on the during the 14 days preceding a positive
Consolidated Appropriations Act of test result for COVID-19. During the
early stages of the COVID-19 pandemic,
2021 Requires TIGTA to assess the IRS’s the IRS made Federal guidance
policies and guidance related to the available to all employees, in addition
Pub. L. No. 116-260, H.R. 133, health and safety of all IRS employees. to developing and issuing its own
116th Cong. (2020) internal guidance. TIGTA’s review
found that these internal guidelines
generally aligned with Federal
guidelines and best practices issued by
the Office of Personnel Management,
the Centers for Disease Control and
Prevention, the Government
Accountability Office, and other Federal
authorities.
October 1, 2020 – March 31, 2021 │ 65
Appendix IV
Section 1203 Standards
In general, the IRS Commissioner shall terminate any IRS employee if there is a final
administrative or judicial determination that, in the performance of official duties, such
employee committed any misconduct violations outlined below. Such termination shall be a
removal for cause on charges of misconduct.
Misconduct violations include:
• Willfully failing to obtain the required approval signatures on documents authorizing the
seizure of a taxpayer’s home, personal belongings, or business assets;
• Providing a false statement under oath with respect to a material matter involving a
taxpayer or taxpayer representative;
• Violating, with respect to a taxpayer, taxpayer representative, or other employee of the
IRS, any right under the Constitution of the United States, or any civil right established
under Title VI or VII of the Civil Rights Act of 1964; Title IX of the Education Amendments
of 1972; Age Discrimination in Employment Act of 1967; Age Discrimination Act of 1975;
Section 501 or 504 of the Rehabilitation Act of 1973; or Title I of the Americans With
Disabilities Act of 1990;
• Falsifying or destroying documents to conceal mistakes made by any employee with
respect to a matter involving a taxpayer or taxpayer representative;
• Committing assault or battery on a taxpayer, taxpayer representative, or another
employee of the IRS, but only if there is a criminal conviction or a final judgment by a
court in a civil case with respect to the assault or battery;
• Violating the I.R.C., the Treasury Department regulations, or policies of the IRS (including
the IRM) for the purpose of retaliating against or harassing a taxpayer, taxpayer
representative, or other employee of the IRS;
• Willfully misusing provisions of I.R.C. § 6103 for the purpose of concealing information
from a congressional inquiry;
• Willfully failing to file any return of tax required under the I.R.C. on or before the date
prescribed therefore (including any extensions), unless such failure is due to reasonable
cause and not to willful neglect;
• Willfully understating Federal tax liability, unless such understatement is due to
reasonable cause and not to willful neglect; and
• Threatening to audit a taxpayer for the purpose of extracting personal gain or benefit.
The IRS Commissioner may mitigate the penalty of removal for the misconduct violations
outlined above. The exercise of this authority shall be at the sole discretion of the
Commissioner and may not be delegated to any other officer. The Commissioner may
establish a procedure that will be used to decide whether an individual should be referred to
the Commissioner for determination. Any mitigation determination by the Commissioner in
these matters may not be appealed in any administrative or judicial proceeding.
66 │ October 1, 2020 – March 31, 2021
Appendix V
Inspector General Peer Review Activity
This appendix implements Section 989C of the Dodd-Frank Wall Street Reform and
Consumer Protection Act. 35
For the period October 1, 2020 – March 31, 2021:
Peer Reviews Conducted of TIGTA by Another Office of Inspector General
During the reporting period, the Department of Education Office of Inspector General
conducted a peer review of TIGTA’s I&E. In its December 21, 2020, report, the Department
of Education Office of Inspector General concluded that TIGTA’s I&E policies and procedures
generally met the professional and quality standards addressed in the external peer review.
Outstanding Recommendations From Peer Reviews of TIGTA
There are no outstanding recommendations from peer reviews of TIGTA.
Peer Reviews Conducted by TIGTA
On September 22, 2020, TIGTA’s Office of Audit began its review of the Environmental
Protection Agency Office of the Inspector General and completed the review on March 8,
2021. TIGTA’s Office of Audit issued the draft report on March 15, 2021.
Outstanding Recommendations From Peer Reviews Conducted by TIGTA
There are no outstanding recommendations from peer reviews conducted by TIGTA.
35 Pub. L. 111-203, 124 Stat. 1376 (2010) (codified at 5 U.S.C. app §5(a)(14)-16)).
October 1, 2020 – March 31, 2021 │ 67
Appendix VI
Data Tables Provided by the Internal Revenue Service
The memorandum copied below is the IRS’s transmittal to TIGTA. The tables that follow the
memorandum contain information that the IRS provided to TIGTA and consist of IRS employee
misconduct reports from the IRS Automated Labor and Employee Relations Tracking System
(ALERTS) for the period October 1, 2020 through March 31, 2021. Also, data concerning
substantiated RRA 98 § 1203 allegations for the same period are included. IRS management
conducted inquiries into the cases reflected in these tables.
Internal Revenue Service Memorandum
The Following Tables Are Provided by the IRS:
68 │ October 1, 2020 – March 31, 2021
Report of Employee Misconduct by Disposition Groups
TIGTA Report Employee Tax Employee
Administrative
Disposition of Compliance Character Totals
Case
Investigation Case Investigation
REMOVAL (PROBATION PERIOD COMPLETE) 27 32 10 - 69
REMOVAL AT OPM DIRECTION - - - 6 6
PROBATION/SEPARATION 1 154 0 3 158
SEPARATION OF TEMPORARY EMPLOYEE 1 20 - 2 22
RESIGNATION, RETIREMENT, ETC.
7 25 10 - 42
(REASON NOTED ON SF50)
RESIGNATION, RETIREMENT, ETC. (REASON
17 55 31 4 107
NOT NOTED ON SF50)
SUSPENSION, 14 DAYS OR LESS 40 76 104 3 223
SUSPENSION, MORE THAN 14 DAYS 20 17 27 - 64
INDEFINITE SUSPENSION 1 5 - - 6
REPRIMAND 58 78 48 16 200
ADMONISHMENT 44 88 97 6 235
WRITTEN COUNSELING 29 100 92 34 255
ORAL COUNSELING - 8 4 - 12
ALTERNATIVE DISCIPLINE: IN LIEU OF
- 8 0 - 8
REPRIMAND
ALTERNATIVE DISCIPLINE: IN LIEU OF
2 7 6 2 17
SUSPENSION
CLEARANCE LETTER 45 49 7 - 101
CLOSED WITHOUT ACTION CAUTIONARY
75 131 92 124 422
LETTER
CLOSED WITHOUT ACTION LETTER 26 35 13 12 86
TERMINATION FOR ABANDONMENT OF
- 22 - - 22
POSITION
CASE SUSPENDED PENDING EMPLOYEE
- - - - -
RETURN TO DUTY
PROSECUTION PENDING FOR TIGTA’S ROI - - - - -
CLOSED - SUPPLEMENTAL REQUESTED - - - - -
FORWARDED TO TIGTA - 2 - - 2
TOTAL 393 912 541 211 2057
Source: ALERTS (extract date: April 1, 2021). Columns containing numbers of three or less and
protected by I.R.C. § 6103 are notated with a zero and are not reflected in the column and row totals.
October 1, 2020 – March 31, 2021 │ 69
Report of Employee Misconduct National Summary
Cases Closed
Cases
Inventory Open Conduct Non- Ending
Conduct Merged
Case Type Inventory Cases Conduct Inventory
Issues With Other
Received Issues
Cases
Administrative
512 1,068 1,080 23 45 432
Case
Employee
Character 154 192 239 13 - 94
Investigation
Employee Tax
Compliance 1,010 434 598 46 - 800
Case
TIGTA Report of
498 371 452 10 - 407
Investigation
Total 2,174 2,065 2,369 92 45 1,733
Source: ALERTS (extract date: April 1, 2021).
Administrative Case - Any matter involving an employee in which management conducted an inquiry
into alleged misconduct.
Employee Character Investigations - Any matter involving a New Background Investigation Case
investigation into an employee’s background that is referred to management for appropriate action.
Employee Tax Compliance Case - Any conduct matter that is identified by the Employee Tax
Compliance program which becomes a matter of official interest.
TIGTA Investigation - Any matter involving an employee in which TIGTA conducted an
investigation into alleged misconduct and referred a Report of Investigation to the IRS for
appropriate action.
70 │ October 1, 2020 – March 31, 2021
Summary of Substantiated I.R.C. Section 1203
Inquiries Recorded in ALERTS
Removed In
Resigned/ Probation Penalty
§ 1203 Violation Removals On Other Personnel Total
Retired Separation Mitigated
Grounds Process
1203(b)(2): FALSE
STATEMENT UNDER OATH
- - - 1 - 1 2
1203(b)(3): CIVIL
RIGHTS/CONSTRUCTIVE - - - 1 - - 1
VIOLATION
1203(b)(4): CONCEALED
WORK ERROR
- - - 1 - 1 2
1203(b)(6):
I.R.C/IRM/REG 1 - - - - - 1
VIOLATION-RETALIATION
1203(b)(8): WILLFUL
UNTIMELY RETURN
5 8 - 0 39 105 157
1203(b)(9): WILLFUL
UNDERSTATED TAX
9 0 - 4 34 83 130
1203(b)(10): THREAT OF
AUDIT FOR PERSONAL - 1 - - - 1 2
GAIN
Total 15 9 - 7 73 191 295
Source: ALERTS (extract date: April 1, 2021). Columns containing numbers of three or less and
protected by I.R.C. § 6103 are annotated with a zero and are not reflected in the column and row totals.
The cases reported as Removals and Penalty Mitigated do not reflect the results of any third-party
appeal.
October 1, 2020 – March 31, 2021 │ 71
Glossary of Acronyms
ACR Audit Control Response
ALERTS Automated Labor and Employee Relations Tracking System
AQC Automated Questionable Credit
BYOD Bring Your Own Device
CARES Act Coronavirus Aid, Relief, and Economic Security Act
CDP Collection Due Process
CI Criminal Investigation
COVID-19 Coronavirus Disease 2019
DATA Act Digital Accountability and Transparency Act of 2014
DOJ Department of Justice
ECM Enterprise Case Management
EEOC Equal Employment Opportunity Commission
EIN Employer Identification Number
EIP Economic Impact Payment
EO Exempt Organizations
FFI Free File Inc.
FIRPTA Foreign Investment in Real Property Tax Act
FY Fiscal Year
I&E Office of Inspections and Evaluations
ICS Integrated Collection System
I.R.C. Internal Revenue Code
IRM Internal Revenue Manual
IRS Internal Revenue Service
72 │ October 1, 2020 – March 31, 2021
ISE Identity Services Engine
ITIN Individual Taxpayer Identification Number
JAMES Joint Audit Management Enterprise System
OEP Office of Employee Protection
OI Office of Investigations
OIC Offer in Compromise
PAR Personnel Action Request
PCA Private Collection Agency
PII Personally Identifiable Information
POA Power of Attorney
RRA 98 Restructuring and Reform Act of 1998
SADI Secure Access Digital Identity
SBU Sensitive But Unclassified
SRT Secondary Review Team
SSN Social Security Number
TAS Taxpayer Advocate Service
TIGTA Treasury Inspector General for Tax Administration
TIN Taxpayer Identification Number
TPSO Third-Party Settlement Organization
TY Tax Year
UBAC User Behavior Analytics Capability
UNS User and Network Services
U.S.C. United States Code
VoIP Voice over Internet Protocol
October 1, 2020 – March 31, 2021 │ 73
74 │ October 1, 2020 – March 31, 2021
October 1, 2020 – March 31, 2021 │ 75
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