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IRS Could Improve Anti-Identity Theft Program

19 July 2013   (0 Comments)
Posted by: Author: Mike Godfrey
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Author: Mike Godfrey

Although the United States Internal Revenue Service (IRS) is detecting more cases of identity theft through its Taxpayer Protection Program (TPP), it still needs to develop processes to reduce the burden on taxpayers who are the victims of this crime, according to a new audit report by the Treasury Inspector General for Tax Administration (TIGTA).

It was explained that the IRS implemented the TPP to review tax returns that the IRS proactively identifies as involving potential identity theft, so as to prevent the issuance of fraudulent refunds. TIGTA initiated its audit to evaluate whether the Program effectively helped the IRS assist taxpayers and resolve identity theft cases.

TIGTA found that the TPP improves identity theft detection. For example, in 2012, the Program identified almost 325,000 tax returns that involved identity theft, and the IRS prevented the issuance of fraudulent tax returns totaling USD2.2bn. These tax returns were identified before processing was completed to protect tax refunds from being issued.

However, TIGTA also found that controls over the identity theft tax returns worked in the TPP need to be strengthened. Tests of identity theft cases showed that the controls relating to the Program's data, cases worked and training were insufficient.

"The TPP is important to the IRS's efforts to combat tax refund fraud and help victims of identity theft receive their refunds," said the TIGTA's Inspector General J. Russell George. "While the Program has yielded some favorable outcomes, more needs to be done to strengthen program controls."

TIGTA recommended that the IRS develop processes to ensure that required identity theft indicators are placed on taxpayer accounts and employees properly update the Account Management Services system with actions they take when working identity theft cases. In addition, timeliness measures need to be developed to accurately track the length of time required to resolve TPP cases.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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