IRS Challenged By New Tax Laws

by Mike Godfrey, Tax-News.com, Washington

01 November 2010

The United States Internal Revenue Service (IRS) timely processed individual tax returns during the 2010 filing season, but implementing some new tax provisions presented challenges, according to a report released by the Treasury Inspector General for Tax Administration (TIGTA).

Each year, the TIGTA said, the income tax filing season, from January 1 to April 15, is critical for the IRS, as it is when most individuals file their income tax returns and contact the IRS with questions about specific tax laws or filing procedures.

The TIGTA found, however, that, while the IRS received about 132m individual income tax returns and issued approximately 101m refunds totaling almost USD292bn up to the end of May this year, those returns contained nearly 23.7m errors, an increase of more than 7% over the same period last year.

The TIGTA identified inadequate controls, and incomplete and inaccurate programming, resulting in over 125,000 individuals receiving USD111m in erroneous Recovery Act-related tax benefits, including erroneous First-Time Homebuyer Credits, Making Work Pay and Government Retiree Credits, plug-in electric vehicle credits, and non-business energy property credits. It also identified nearly USD96m in erroneous Qualified Motor Vehicle Tax deductions on individual income tax returns.

“During the 2010 filing season, the IRS timely processed individual income tax returns and issued refunds on schedule,” said J. Russell George, the TIGTA. “However, while the IRS did a good job overall, improvements are needed to prevent erroneous claims for credits and deductions.”

TIGTA made specific recommendations to the IRS, which have been agreed and will be implemented.

Recommended