Filing Season Results

TIGTA 2021

The Inspector General of Tax Administration (TIGTA) provides independent oversight over the IRS and publicly releases numerous reports available for the public on its website. Its mission is to promote the efficient administration of U.S. tax laws and prevent fraud and waste in the IRS. On March 9, 2022, it released its Results of the 2021 Filing Season, offering ten recommendations for IRS to improve its internal programming procedures to catch erroneous returns. It is no surprise that the IRS continues to struggle with backlogs and hiring shortages, something any U.S. taxpayer already knows, but the focus of this post is its report and recommendation regarding fraudulent returns.

The report noted that during the 2021 filing season, the IRS identified 156,465 fraudulent returns, stopping 152,887 from being processed, which was a 1% increase from the previous year. For fraudulent returns involving identity theft, the IRS established the Identity Protection Personal Identity Number (IP PIN), which is automatically issued to confirmed victims of identity theft. As part of the Taxpayer First Act, taxpayers who suspect they are victims of identity theft can request an IP PIN from the IRS. After a taxpayer obtains an IP PIN, if someone tries to use a tax ID to file a return without the IP PIN, the return will be marked as “unpostable” and submitted for identity theft screening. TIGTA recommended that the IRS establish a timeline for determining whether the IP PIN program is an effective use of resources.

The IRS also flags suspicious returns filed under Social Security Numbers belonging to incarcerated people. One of the more striking contrasts between the 2020 and 2021 tax filing seasons was the number of prisoner returns that were marked for identity theft screenings. That number jumped from 39,035 in 2020 to 421,009 in 2021, likely due to the Economic Impact Payments available in 2021. 

TIGTA has a wealth of information on its website. You can check it out and learn more here.

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