As a result, TIGTA recommended that the IRS increase employee education when dealing with inadvertent disclosures.
For how TIGTA found that the IRS mishandles federal tax lien filings, click here.
However, TIGTA found that some CI special agents did not meet all firearms training and qualification requirements.
An audit on PTIN applications by TIGTA, the Treasury Inspector General for Tax Administration, offered some surprising results.
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Moreover, TIGTA found, Internal Revenue Service employees and prisoners were among those making erroneous or apparently fraudulent claims.
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The case studies in the TIGTA report involved large scale fraud and only about five years of jail time.
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The TIGTA report notes that donations of motor vehicles are commonly messed up.
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However, the TIGTA report also seems to confirm a long-standing unwillingness by top IRS officials to publicly acknowledge the mess.
In addition, TIGTA found 100% noncompliance with new computer-coding procedures put in place in 2007 to monitor undeliverable lien notices.
In three-quarters of the cases sampled, TIGTA found that the IRS failed to contact the taxpayer by the promised date.
In sum, TIGTA found an IRS staff scrambling to keep up with requests for tax-exempt status in an area it did not understand well.
In addition, TIGTA recommended the establishment of a process for CI Headquarters to monitor and periodically review special agent firearms training and qualification records.
In addition, TIGTA estimated that about 2% of lien notices during the same 12 months may have been mailed late to the taxpayers themselves.
In 84% of the 300 cases of undelivered lien notices TIGTA reviewed, IRS employees did not perform the required research to find a different address.
The TIGTA report compared the number of noncompliance issues to the IRS employee population and found a steady 3% noncompliance rate over the five years.
For example, in prior TIGTA audits, IRS employees were found to have possibly claimed the first-time homebuyer credit, education credits, and plug-in and hybrid vehicle credits.
That IRS employee warned Lerner he had to recuse himself and in November 2011 notified TIGTA, which is charged with investigating misconduct involving IRS employees.
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The TIGTA report praises these efforts while criticizing the backlog.
Even when communications to taxpayers were made, TIGTA found that, in 74% of the incidents that required notification, communications to taxpayers were not made in a reasonable amount of time.
For more on what TIGTA found in its audit on tax preparer compliance with the new regs, you can read the December 2011 TIGTA report here (downloads as a pdf).
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Both the TIGTA report and efforts the IRS is now making to reduce faulty claims demonstrate the difficulties Congress creates for tax administrators when it requires so many subsidies to be administered through the tax code.
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In addition to moving to recover all the faulty credits TIGTA uncovered, the IRS is slowly rewriting its computer codes and revising its forms to deter (or at least be able to identify after the credit has been paid) bogus claims.
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