The Treasury Inspector General for Tax Administration (TIGTA) has identified concerns with IRS payment programs including inaccurate assessment of risk for the U.S. Coronavirus Economic Impact Payment program, the Sick and Paid Family Leave, Credit and the Employee Retention Tax Credit, along with self-employment income reporting to the Social Security Administration (SSA).
According to the TIGTA report, IRS reevaluated and agreed that the Coronavirus Economic Impact Payment program was susceptible to improper payments. However, TIGTA was unable to review IRS’ assessment of improper payment risk for fiscal year 2021 because IRS didn’t complete an accurate assessment of the Sick and Paid Family Leave Credit and Employee Retention Tax Credit until after TIGTA’s fieldwork was complete.
Additionally, IRS failed to calculate and report the dollar amount and percentage rate of improper payments for the Net Premium Tax Credit for fiscal year 2021, but plans to report make good on that reporting.
TIGTA is required to annually assess and report on IRS’ compliance with Payment Integrity Information Act of 2019 reporting. IRS also began receiving digital transcripts from SSA in 2019, although, IRS says that SSA doesn’t provide signed statements to the IRS for individuals who admitted to fraudulently reporting self-employment (SE) income for purposes of claiming the Earned Income Tax Credit.
“In response to a prior TIGTA recommendation, steps were taken to begin receiving the SE income transcripts from the SSA in a digital manner in July 2019,” wrote TIGTA. “However, IRS management states that the SSA does not provide signed statements to the IRS for individuals who admitted to fraudulently reporting SE income for purposes of claiming the EITC as the SSA believes sharing this information violates the Privacy Act.”
TIGTA made five recommendations regarding SSA and IRS’ capabilities of reviewing transcripts and payment programs, including:
- Ensure all transcripts from SSA that identify individuals that overreport self-employment income are reviewed to reduce improper payments;
- Establish processes to ensure SE transcript cases that SSA indicates are for an individual falsely reported self-employment income for the purpose of claiming Earned Income Tax Credit (EITC) are screened for EITC bans;
- Establish a method to transfer SE transcript information to IRS in an electronic format;
- Establish a process to systemically monitor transcripts to ensure impending statute expirations are worked first; and
- Develop measures to evaluate the performance of the SSA self-employment Income Transcript program, “including developing a method to determine the program’s return on investment or equivalent measure.”
IRS agreed to all of the recommendations, except for the fourth recommendation regarding impending statute expirations. It said that IRS receives data weekly, but only typically delivers cases to be worked twice per year.