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IRS Is Fine With A Little Fraud, Rejects GAO Recommendation

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Internal Revenue Service (IRS) officials shot down a congressional watchdog’s plea to improve the federal tax agency’s monitoring system to prevent paying fraudsters tax returns, according to a new Government Accountability Office (GAO) report.

GAO officials urged the IRS to beef up oversight of tax returns after IRS managers told GAO auditors some IRS employees release tax returns when the filer’s account is under review or that person filed more than one tax return, often because IRS representatives don’t understand the codes on a taxpayer’s account. But IRS officials defied GAO’s recommendation.

“IRS disagreed with our recommendation to improve data for monitoring refund releases, stating that the problem is not widespread and current processes are sufficient,” GAO said. “We maintain that the data IRS uses are not sufficient to make such a determination.”

GAO also discovered the IRS doesn’t notify taxpayers when a dependent’s name appears on a fraudulent tax form.

“According to IRS officials, the agency does not consider a dependent to be a victim if his or her Social Security number had been used as a dependent on a fraudulent return,” GAO said. “By not notifying taxpayers that their dependents’ information may have been used to commit fraud, IRS is limiting taxpayers’ ability to take action to protect their dependents’ identity.”

IRS officials agreed with GAO’s recommendation to tell filers if fraudulent returns list someone’s dependents.

Republicans hammered the IRS for these and other failures in a Wednesday House Committee on Oversight and Government Reform (HOGR) hearing on IRS customer service before tax season.

Florida Republican Rep. Ron DeSantis demanded answers from IRS officials after the tax agency located nearly 7,000 additional documents from the conservative targeting scandal in response to a Freedom of Information Act (FOIA) lawsuit from conservative watchdog Judicial Watch.

DeSantis asked — and IRS Deputy Commissioner for Services and Enforcement John Dalrymple could not answer — whether the IRS released those same documents to HOGR, as congressional committees have requested all records related to IRS’ targeting of conservative groups applying for nonprofit status.

“We need answers on those emails,” DeSantis said.

Wisconsin Republican Rep. Glenn Grothman criticized the agency for failing to provide consistent answers when taxpayers call customer service, saying IRS representatives can give two different answers to the same question. (RELATED IRS Paid Executives To Live In Luxurious DC Hotels)

Dalrymple claimed internal quality assurance tests of IRS calls reveal employees’ answers are correct 90 percent of the time, but federal investigators haven’t reviewed that issue lately.

Georgia Republican Rep. Jody Hice questioned the IRS’ priorities, demanding answers from Dalrymple on how much time IRS employees spend on union work or “official time.” Dalrymple could not give an answer. (RELATED: Government Union Work Jumps Ahead In Line For Care At VA)

“You don’t have a resource problem. You have a waste problem,” Hice said.

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