Report Type
Submitting Agency
State/Local Agency
State (State and Local Reports)
Fraud Type
Agency Reviewed
- (-) Internal Revenue Service (11)
- (-) Railroad Retirement Board (5)
- (-) Small Business Administration (5)
- (-) Tennessee Valley Authority (1)
- Chemical Safety and Hazard Investigation Board (1)
- Department of Defense (4)
- Department of Education (7)
- Department of Health & Human Services (18)
- Department of Homeland Security (14)
- Department of Housing and Urban Development (1)
- Department of Justice (2)
- Department of Labor (21)
- Department of the Interior (2)
- Department of the Treasury (8)
- Department of Transportation (4)
- Department of Veterans Affairs (2)
- Election Assistance Commission (2)
- Environmental Protection Agency (3)
- General Services Administration (1)
- National Science Foundation (3)
- National Security Agency (1)
- Social Security Administration (3)
- U.S. Agency for International Development (1)
- U.S. Postal Service (9)
Related Organizations
Management Challenges
Any Recommendations
Any Open Recommendations
Reports
COVID-19 and Disaster Assistance Information Systems Security Controls
Ensure the existing SBA System Development Methodology is updated to include supply chain risk-management practices as required by OMB Circular A-130 and high-value asset system designation guidance. Also, ensure high-value asset system risks are incorporated into the enterprise risk management framework, as recommended by OMB M-19-03 and SBA SOP 90 47 6.
Implement an automated process to document and monitor system changes as recommended by NIST SP 800-53 Rev. 5.
Communicate and enforce the SBA System Development Methodology in which a traceability matrix is used to ensure that system requirements can be tested and demonstrated in the operational system. Ensure all requirements are aligned with the contractual acceptance criteria.
Implement in updated agency guidance, the requirements of OMB Circular No. A-123 that stipulate a SOC 1 Type 2 report is needed for all new and existing financial systems. This guidance should also require confirmation at least annually that the controls are functioning as designed.
Enforce the requirement to establish and implement internal controls to ensure appropriate program officials perform and document contract reviews to ensure that information security is appropriately addressed in the contracting language, as required by OMB Circular A-130 and SBA SOP 90 47 6.
In conjunction with the Enterprise Risk Management Board, implement enterprise-wide privacy risk mitigation practices that can be assimilated into new and existing system program designs.
Complete an initial assessment and authorization for each information system and all agency-designated common controls before operation.
Transition information systems and common controls to an ongoing authorization process (when eligible for such a process) with the formal approval of the respective authorizing officials or reauthorize information systems and common controls as needed, on a time or event-driven basis in accordance with agency risk tolerance, as required by OMB Circular No. A-130 and SOP 90 47 6.
Review and update POA&Ms at least quarterly as required by SOP 90 47 6.
Ensure data-sharing agreements are reviewed annually as required by SBA SOP 90 47 6.
Delays in Management Actions Contribute to the Continued Tax Processing Center Backlogs
On September 16, 2021, we notified the Director, Submission Processing, Wage and Investment Division, that the IRS needed to identify when to stop coding and editing9 prior year tax returns to prevent having to rework these returns (a situation that occurred during the 2020 Filing Season). For example, the IRS needed to send 822,994 business tax returns back to the Code and Edit function at the beginning of Processing
Year 2021 to be re-edited to allow for processing. This occurred because these tax returns, although edited, had not been entered into the IRS’s tax processing system by the end of Processing Year 2020. This resulted in an inefficient use of the IRS’s resources because IRS employees needed to re-edit the tax returns. We recommended that the IRS develop a plan to not only limit the number of returns that would require rework, but also any potential downtime in the Code and Edit function so that resources can be maximized for processing tax returns.
On September 29, 2021, we notified the Director, Submission Processing, Wage and Investment Division, of our observation that paper-filed
information returns were being sorted and batched. According to both Tax Processing Centers, a decision had not yet been made regarding if the information return documents will be processed or destroyed. As we reported in September 2021,10 the IRS faced similar decisions during Processing Year 2020 and destroyed approximately 30 million paper-filed information return documents around March 19, 2021, because the documents could no longer be processed through its systems. We recommended that the IRS determine if/when Processing Year 2021 paper-filed information return documents would be processed. As an alternative to destroying these documents, we recommended that management evaluate and consider scanning the information return documents using the Service Center Recognition Image Processing System while forgoing the data validation process.
On September 17, 2021, we notified the Director, Submission Processing, Wage and Investment Division, of our concerns with the processing of a backlog of taxpayer address changes using a first-in/first-out method. As of August 27, 2021, the Ogden Entity function had more than 173,000 address change requests in its ending inventory. In our discussions with Ogden Entity function management, they estimated that due to the backlog of inventory, more than 50 percent of the address change requests the staff were working had already been made by other means, e.g., the filing of a tax return that automatically updates the taxpayer’s address. As such, Entity function employees were needlessly expending
resources working address change requests for which the address was already updated. We recommended that the IRS evaluate changing the order in which address changes are worked to a last-in/first-out method.
On October 21, 2021, we notified the Director, Submission Processing, Wage and Investment Division, of our concerns related to the accuracy of
information communicated to taxpayers regarding transcript request methods. For example, our review of information posted on IRS.gov found that non-paper-based methods for requesting tax transcripts were not communicated clearly. Whereas, the Form 4506-T, Request
for Transcript of Tax Return, and Form 4506, Request for Copy of Tax Return, provide information for automated self-help service tools. We also found that the instructions on the Forms 4506 and 4506-T do not align with the website wording and could cause confusion for taxpayers. We recommended that IRS management update IRS.gov to provide clear communications on available resources. This includes updating the Forms 4506 and 4506-T tip sections to match IRS.gov language and conducting outreach to encourage individual taxpayers to obtain tax transcripts using the various automated methods.
On September 16, 2021, we notified the Director, Submission Processing, Wage and Investment Division, of our concerns about the printing
capacity of the new electronic fax (e-fax) equipment in the Error Resolution System functional area, noting that this new equipment can only print about 20,000 to 30,000 pages/month (approximately 240,000/year) whereas, the prior equipment printed roughly 2 million documents
per year. In addition, in the three months since Ogden received this new equipment, it has burned out and needed new parts. Although Ogden ordered new multifunctional print devices, those were not to be delivered until January 2022. As a workaround, Ogden used two printers
that had a capacity of about 15,000 pages per month. We recommended that the Submission Processing function collaborate with Managed Print Services and the Information Technology organization to identify and expeditiously resolve all instances of printer capacity, break/fix, etc.
issues that are causing work stoppages in the Tax Processing Centers.
On December 17, 2021, we notified the Commissioner, Wage and Investment Division, of our concern that the resources assigned to the RAIVS unit were not commensurate between the Kansas City and Ogden Tax Processing Centers. In our discussions, IRS management advised that taxpayer tax transcript requests had been previously transshipped from the Kansas City Tax Processing Center to the Austin Tax Processing Center with the last transshipment of work occurring in October 2021. On January 11, 2022, we notified the Director, Submission Processing, Wage and Investment Division, of the same concern noting that during our December 2021 walkthroughs, Kansas City management stated they have 70 full-time employees in the RAIVS/Income Verification Express Service’s unit. Whereas, Ogden management stated they have 183 full-time employees. As of December 10, 2021, the Kansas City RAIVS unit had over 751,000 unprocessed requests compared to a little more than 145,000 unprocessed requests in the Ogden RAIVS unit. We recommended that the IRS evaluate alternatives to address the volume of RAIVS inventory at the Kansas City Tax Processing Center. This should include an evaluation of the capacity to reallocate staffing at the Kansas City Tax Processing Center to assist the RAIVS unit, and/or realignment of work among the various Tax Processing Centers, i.e., transship inventory from
Kansas City to Ogden.
The Commissioner, Wage and Investment Division, should immediately take steps to address the imbalance of Tax Processing Center staffing and inventory to address the continued backlog of transcript requests.
The Commissioner, Wage and Investment Division, should develop a detailed strategy to show how current and future staffing resources, including available surge team members, will be used to address the significant backlog of amended returns in the Submission Processing function’s inventory.
The Commissioner, Wage and Investment, should ensure that the various products and IRS.gov landing pages are updated to reflect acceptable methods for faxing information to the IRS.
COVID-19 Economic Injury Disaster Loan Applications Submitted from Foreign IP Addresses
Thoroughly review each COVID-19 EIDL, grant, and advance application submitted from foreign IP addresses that were approved and funded and verify eligibility. If ineligibility or evidence of potential fraud is found, SBA should stop any further or future disbursements, recover any disbursed funds, and refer fraudulent loans to OIG for investigation.
Examine controls related to foreign IP addresses and ensure these controls are more effective in future disaster processing systems.
Compliance Efforts Are Needed to Address Refund Claims Reported on Form 1139 That Are Based on the CARES Act Net Operating Loss Carryback Provisions
Track and monitor examination results for the 25 “still open” examinations of Forms 1120 with reported NOL and an associated Form 1139 reported in Figure 4 of this report, excluding Joint Committee Refund cases which currently have specific monitoring requirements in place.
Use the examination results from Recommendation 1 to assess whether to increase the number of examinations of Forms 1120 with reported NOL and an associated Form 1139.
The Commissioner, SB/SE Division should review the examination results and computations of proposed NOL adjustments for the 25 “still open” Form 1120 examinations with associated Forms 1139, as referenced in Figure 4, excluding Joint Committee Refund cases which currently have specific review requirements in place, to determine if the interim guidance regarding NOLs is being properly followed.
The RRB Did Not Have Detailed Project Plans to Expend Information Technology Modernization Funds
The Railroad Retirement Board's Bureau of Information Services should identify, and document detailed project plans for their Information Technology Modernization initiatives through the Information Resources Management Strategic Plan, which should include the agency's goals, project milestones, and a description of the work necessary, as required by the Office of Management and Budget Circular A-130.
Processing of Recovery Rebate Credit Claims During the 2021 Filing Season
On June 15, 2021, we alerted IRS management of our concerns with the systemic calculation of the allowable RRC amount. We recommended that IRS management review the returns we identified and provide us with any corrective actions they intended to take.
Conduct analysis of Tax Year 2020 tax returns processed after May 27, 2021, to identify additional individuals who received an RRC for a qualifying child for which the IRS has already paid an EIP or an RRC to someone else and take the actions needed to recover RRC payments that are determined to be erroneous.
Review the 7,022 individuals identified in which the IRS issued multiple RRCs for a qualifying child who was claimed on more than one tax return and take the actions needed to recover payments that are determined to be erroneous.
Conduct analysis of Tax Year 2020 tax returns processed after May 27, 2021, to identify additional individuals who received an RRC for a qualifying child who was claimed on more than one tax return and take the actions needed to recover payments that are determined to be erroneous.
Review the 75,594 tax returns identified in which the individual is potentially a nonresident alien and take the actions needed to recover the RRC payments that are determined to be erroneous.
Perform analysis of Tax Year 2020 tax returns filed after May 27, 2021, to identify additional tax returns with the same characteristics as those the IRS determined were filed by a nonresident alien and take the actions needed to recover erroneous RRC payments.
The Commissioner, Wage and Investment Division, should coordinate with the Territories to confirm and recover erroneous RRCs.
Review the nearly 6.9 million potentially eligible individuals we provided to the IRS who had not filed a Tax Year 2020 tax return as of May 27, 2021, and send a letter to those individuals who still have not filed a Tax Year 2020 return to encourage them to file a return and claim the RRC if eligible.
Review the 3.1 million eligible individuals we identified who filed a Tax Year 2020 return and proactively issue these taxpayers their credit.
Conduct additional analysis to identify tax returns filed after May 27, 2021, in which an individual is eligible for the RRC based on their Tax Year 2020 tax return and did not claim the credit, and proactively issue the taxpayer their credit.
If IRS management does not proactively issue the RRC to individuals who filed a return and did not claim the credit, the IRS should notify these individuals that they are eligible to claim the RRC and should file an amended tax return to claim the credit.
On March 19, 2021, we alerted IRS management of our concerns that an incorrect amount of advance payments was being used to calculate the RRC for some taxpayers. We recommended that IRS management review the returns we identified and provide us with any corrective actions they intended to take.
Work with the BFS to ensure that individuals who were denied the RRC and have still not activated their EIP1 or EIP2 debit card as of December 31, 2021, have EIPs reversed in their tax account and are issued their RRC. These processes should include notifying Metabank that the debit cards in question are to be cancelled.
Work with the BFS to obtain recurring data during Processing Year 2022 to identify individuals who have not activated their advance ARPA RRC debit card at the time a return is filed and implement processes to reverse the advance payment so these individuals can receive the RRC on their Tax Year 2021 tax return.
We alerted the Commissioner, Wage and Investment Division, of our concerns that the IRS was unnecessarily burdening taxpayers whose RRC claims were identified for manual ERS review. We recommended the IRS develop processes to systemically adjust RRC claims using the computer-generated RRC calculation.
On April 6, 2021, we alerted IRS management of our concerns regarding ERS tax examiners incorrectly computing the RRC (see management’s action in response to Recommendation 1). We recommended the IRS review the returns we identified and take the actions necessary to ensure that these taxpayers receive the amount of the RRC
they are entitled to receive.
On March 12, 2021, we alerted IRS management of our concerns that some tax returns were not being identified by fraud filters. We recommended IRS management review the returns we identified and associated fraud filters to identify why these returns were not selected and make programming changes as necessary to ensure proper
identification of returns with potentially questionable claims.
Conduct analysis to identify Tax Year 2020 RRC claims processed after May 27, 2021, to identify other returns in which ERS tax examiners incorrectly calculated the number of allowable dependents and returns that were not reprocessed per IRS guidance after programming was corrected, and ensure that these taxpayers receive the correct amount of the RRC.
Review the 14,508 individuals identified in which the IRS issued an RRC to an individual who was claimed as a dependent on someone else’s tax return but did not check the dependent box and take the actions needed to recover payments that are determined to be erroneous.
Conduct analysis of Tax Year 2020 tax returns processed after May 27, 2021, to identify additional individuals who received an RRC and were also claimed as a dependent on someone else’s tax return but did not check the dependent box, and take the actions needed to recover the RRC payments that are determined to be erroneous.
Review the 238,680 individuals under the age of 25 identified as potential dependents and take the actions needed to recover payments that are determined to be erroneous.
Review the 15,741 individuals identified in which the individual incorrectly received an RRC and an EIP for the same qualifying child and take the actions needed to recover RRC payments that are determined to be erroneous.
The Child Tax Credit Update Portal Was Successfully Deployed, but Security and Process Improvements Are Needed
Program and Organizational Changes Are Needed to Address the Continued Inadequate Tax Account Assistance Provided to Taxpayers
On September 20, 2021, we notified the Director, Accounts Management, that the Austin site was not requiring Accounts Management screeners to come into the office to perform their duties, resulting in a significant backlog and delays in inventory being routed to Accounts Management to be worked. We recommended that the IRS establish consistent guidance and clarification on when resources can be directed to the office to help with screening inventory, to ensure that sufficient staff is available to screen documents in a timely manner, and establish processes to monitor the progress,
The Commissioner, Wage and Investment Division, should update existing scanning software or obtain a new scanning software to
address document capacity concerns.
The Commissioner, Wage and Investment Division, should ensure that programming is updated to systemically reject electronic
submissions of Forms 2848 and 8821 when missing one of the five essential elements (name, address, signature, etc.) without manually mailing a rejection letter.
The Commissioner, Wage and Investment Division, should ensure that the rejection letter used for Forms 2848 and 8821 is updated
to include language that a revised form can be submitted electronically via an IRS Tax Pro Account25 or through Taxpayer Digital Communication.
The Commissioner, Wage and Investment Division, should develop an action plan to prioritize the continued expansion of documents that can be sent in via electronic fax and converted into a Correspondence Imaging System (CIS) image.
Develop an action plan to prioritize the continued expansion of documents that can be sent in via electronic fax and converted into a CIS image.
The Commissioner, Wage and Investment Division, should Identify priority work that needs to be expedited by the Image Control Team (ICT) and assess the feasibility of creating an electronic fax number to receive this inventory.
On July 12, 2021, TiGTA notified the Director, Accounts Management, of concerns regarding inaccuracies as it related to the compiling and reporting of the Accounts Management Inventory Report (AMIR). TIGTA recommended that the IRS perform a reconciliation of each Accounts Management site’s AMIR to the source reports to identify inventory inconsistencies and reporting errors by site
The Commissioner, Wage and Investment Division, should complete the inventory reconciliations for the four remaining Accounts
Management site’s to identify and correct inventory inaccuracies and inconsistencies and implement processes to provide oversight by periodically performing reconciliations for each site so that any future inconsistencies and errors are identified and corrected in a timely manner.
The Commissioner, Wage and Investment Division, should develop specific and detailed instructions for preparing the Accounts Management Inventory Report (AMIR), including how controlled and uncontrolled inventory should be captured
The Commissioner, Wage and Investment Division, should develop a process to systemically pull all controlled inventory for each
Accounts Management site for the Accounts Management Inventory Report (AMIR) to ensure consistency, reduce human error, and
increase efficiencies
The Commissioner, Wage and Investment Division, should modify Accounts Management inventory reporting to report unassigned
controlled inventory separately on the nationwide Accounts Management Inventory Report (AMIR) and limit the site-specific AMIRs to only
the inventory assigned to be worked in each site.
The Commissioner, Wage and Investment Division, should evaluate directing taxpayers to send tax account correspondence and
replies intended for Accounts Management directly to Campus Support Sites for processing to reduce backlogs at Tax Processing Centers and improve services to taxpayers.
The Commissioner, Wage and Investment Division, should prioritize the development and implementation of tools that will enable
taxpayers seeking assistance or responding to Accounts Management to correspond with the IRS electronically, including the ability to directly upload documents into Accounts Management’s inventory.
The Chief Taxpayer Experience Officer, in conjunction with the Director, IRS NEXT Office, should evaluate establishing two distinct IRS programs as part of the IRS reorganization under the Taxpayer First Act – one dedicated to answering toll-free telephone calls and one dedicated to working Accounts Management inventory – with adequate staffing to provide appropriate service to taxpayers using each channel.
On June 9, 2021, we notified the Director, Customer Account Services, that Submission Processing requested resources from Accounts Management to assist with clearing the Image Control Team (ICT) backlog and was told by Campus Support management that no resources could be made available to assist with reducing the ICT backlog. We recommended that the IRS assess the availability of Campus Support’s ICT staffing or other resources that could be made available to assist with clearing the ICT backlogs at Tax Processing Centers.
On September 3, 2021, we notified the Director, Accounts Management, of concerns relating to the newly stood-up Fresno Campus Support Site, including scanners not being used to the full extent possible. We recommended that IRS management provide us with it plans to address our concerns identified with the new Fresno Campus Support Site, including additional staffing to assist Image Control Team (ICT).
The Commissioner, Wage and Investment Division, should complete a strategic review of all 10 Image Control Team (ICT) sites to determine what contributes to the ICT’s inability to timely scan and validate documents. Based on the results of this review, initiate steps to address the concerns identified. This should include the development of an action plan to ensure that the high-capacity ICT scanners and staffing are realigned to the appropriate sites based on actual or expected inventory levels and that responsibility of the ICT operations are consolidated under the appropriate function.
The Commissioner, Wage and Investment Division, should cross-train additional mail clerks at Campus Support Sites to work Image Control Team (ICT) validations, freeing up additional resources in sites with higher inventories needing to be scanned, or consider shipping inventory to sites with less inventory to be scanned.
The Commissioner, Wage and Investment Division, should develop specific instructions and a common template for all 10 Image Control Team (ICT) sites to consistently capture ICT inventory information.
Railroad Retirement Board Did Not Implement Sufficient Internal Controls in the Mobile Phones Deployed as a Result of the Pandemic
The Bureau of Information Services should update their mobile phone policies to include and implement a National Archives and Records Administration-approved records schedule and transfer procedures for electronic records associated with mobile phones.
The Bureau of Information Services should develop and implement a records management and retention system for electronic records.
The Bureau of Information Services should research the capabilities of Railroad Retirement Board's Microsoft Azure Cloud's functionality to determine feasibility of incorporating the automated records management and retention capabilities to govern the mobile phones electronic records.
The Bureau of Information Services should submit a yearly affidavit to confirm electronic records associated with mobile phones have been identified and retained until the full transition into Microsoft Azure Cloud.
The Railroad Retirement Board's Director of Administration should define and communicate 'personal usage' establishing Railroad Retirement Board's core hours of 5:00 am to 7:00 pm. Any usage outside of core hours would be considered personal usage excluding business management purposes.
The Railroad Retirement Board's Bureau of Information Services should 1) continue efforts to update the Telecommuting and Mobile Security Computing Policy with current laws and regulations and 2) develop a periodic monitoring control to assess personal usage and address it according to agency guidance.
The Bureau of Information Services should incorporate the mobile phones in an existing assessable unit and update their mobile phone policies to include documentation regarding the specific roles and responsibilities of each office overseeing the mobile phone program.
The Bureau of Information Services should enforce and execute a review and approval process for application and software download and restrict access to specified applications found in their Railroad Retirement Board G-6 Rules of Behavior.
The Bureau of Information Services should implement procedures to periodically track, log, and monitor iPhone usage and the completion of the G-6 Acknowledgement Statement.
The Bureau of Information Services should periodically review the mobile phone inventory for completeness and accuracy to include a comparison with Railroad Retirement Board's personnel position index.
The Bureau of Information Services should implement the use of unique identifiers between disparate data sets (e.g., mobile phone inventory, personnel position index) to facilitate comparisons and reconcile inconsistent information.
Management Information Report - Railroad Retirement Board's Actions in Response to Pandemic Funding
The Bureau of Fiscal Operations should reconcile the obligations as reported to USAspending.gov and the weekly outlay report to determine the correct total for Coronavirus Disease 2019 obligations charged to the $5 million technology appropriation.
The Railroad Retirement Board's Executive Committee should establish a group tasked with hiring decisions for appropriated funds from the American Rescue Plan Act. This group should use documented and reliable procedures that are based on accurate and reliable data sources to determine hiring and staffing levels using appropriated funders from the American Rescue Plan Act.
The Railroad Retirement Board's Executive Committee should reconsider and revise its plans concerning hiring based on the American Rescue Plan Act appropriation because adequate supporting documentation had not been prepared.