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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.
Desk Review of the State of North Dakota’s Use of Coronavirus Relief Fund Proceeds
Treasury OIG should follow-up with North Dakota's management to confirm the transactions noted as unsupported or ineligible expenditures within the Contracts greater than or equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types are recouped or replaced by other eligible expenditures, not previously charged to CRF, that were incurred during the period of performance. Based on North Dakota management's responsiveness to Treasury OIG's requests and its ability to provide sufficient documentation, Treasury OIG should determine the feasibility of conducting an audit for the Contracts greater than or equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types. Treasury OIG should follow-up with Treasury's Office of Capital Access to ensure that management decision letters are issued on the findings identified by the auditor in the Single Audit Report for fiscal years 2021/2022 (combined report). Treasury OIG should follow-up on any CRF specific questioned costs reported in the fiscal year 2021-2022 Single Audit report. 1) Treasury OIG should determine the feasibility of performing additional follow-up with North Dakota to determine if there were other instances of unsupported balances within the DUC oil well grant program; 2) Follow-up with North Dakota management and request that management performs an analysis over all of their grants portal reported balances to determine if there were other instances of subscription costs that extended past September 30, 2022 in addition to the items found through testing; and 3) request that North Dakota management conduct a general ledger detail reconciliation related to the interest income. Based on the results of this analysis, Treasury OIG should determine if the analysis supports the $6,651 difference between the interest earned per the general ledger and the interest claimed in the grants reporting portal.
Desk Review of Oklahoma County, Oklahoma's Use of Coronavirus Relief Fund Proceeds
Treasury Office of Inspector General (OIG) should follow up with Oklahoma County's management to confirm if the $91,218 noted as unsupported expenditures within the Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types can be supported. If support is not provided, Treasury OIG should recoup the funds or request Oklahoma County management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. In addition, Treasury OIG should request Oklahoma County management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance for the $326,664 of ineligible costs charged to the Transfers greater than or equal to $50,000 payment type. If support is not provided, Treasury OIG should recoup the funds. Further, based on Oklahoma County's responsiveness to Treasury OIG's requests and management's ability to provide sufficient documentation and/or replace unsupported and ineligible transactions charged to CRF with valid expenditures, Treasury OIG should determine the feasibility of conducting an audit for the Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types. Treasury OIG should follow-up with Oklahoma County to request that Oklahoma County management performs an assessment over the $1,288,109 in grants funds paid to the Oklahoma County Home Finance Authority, which were not tested by Castro, to determine if rental assistance payments and prepaid debit cards payments were made utilizing solely Oklahoma County's CRF proceeds, or if these expenses were paid with State of Oklahoma and Oklahoma City funding sources. If support is not provided, Treasury OIG should recoup the funds or request Oklahoma County management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance.
Desk Review of the State of Nebraska’s Use of Coronavirus Relief Fund Proceeds
Treasury OIG should confirm if the transactions noted as unsupported expenditures within Grants greater than or equal to $50,000, Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment can be supported. If support is not provided, Treasury OIG should recoup the funds or request that Nebraska provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. Further, based on Nebraska's responsiveness to Treasury OIG's requests and its ability to provide sufficient documentation and/or replace unsupported transactions charged to the CRF with valid expenditures, we recommend Treasury OIG determine the feasibility of conducting an audit for the Grants greater than or equal to $50,000, Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types. Castro also identified other matters throughout the course of the desk review which warrant recommendations to Treasury OIG for additional action. Castro recommends Treasury OIG follow-up on these issues: 1) Request that Nebraska perform an assessment over whether there were any additional indirect costs claimed within its Transfers greater than or equal to $50,000 CRF submission, in addition to those tested by Castro. Castro recommends Treasury OIG determine if these costs should be recouped or replaced by other eligible expenditures, not previously charged to CRF, that were incurred during the period of performance; and 2) Castro tested $6,075 out of the total amount of $1,597,068 in Substantially Dedicated Payroll [1] costs claimed by Nebraska. Since Castro identified ineligible questioned costs within these Aggregate Payments to Individuals Substantially Dedicated Payroll expenditures tested, Castro recommends Treasury OIG determine if there were other instances of ineligible balances within the remaining portion of this balance.
Desk Review of the State of New Hampshire’s Use of Coronavirus Relief Fund Proceeds
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with New Hampshire's management to confirm if the $14,027,288 noted as unsupported expenditures within the Direct Payments greater than or equal to $50,000 payment type can be supported. If support is not provided, Treasury OIG should recoup the funds or request New Hampshire management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. ' In addition, Castro recommends that Treasury OIG request New Hampshire management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance for the $2,397,551 of ineligible costs charged to the Grants greater than or equal to $50,000 payment type. If support is not provided, Treasury OIG should recoup the funds. Further, based on New Hampshire management's responsiveness to Treasury OIG's requests and management's ability to provide sufficient documentation and/or replace unsupported and ineligible transactions charged to CRF with valid expenditures, Castro recommends Treasury OIG determine the feasibility of conducting an audit for the Grants greater than or equal to $50,000 and Direct Payments greater than or equal to $50,000 payment types.
Implementation of Tax Year 2020 Employer Tax Credits Enacted in Response to the COVID-19 Pandemic
Desk Review of the Government of Guam’s Use of Coronavirus Relief Fund Proceeds
Castro recommends Treasury OIG follow-up with Guam's management to confirm the transactions noted as unsupported expenditures within the Direct Payments greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals can be supported. If support is not provided, Treasury OIG should recoup the funds or request that Guam management provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. Further, based on the Government of Guam's responsiveness to Treasury OIG's requests and its ability to provide to provide sufficient documentation and/or replace unsupported and ineligible transactions charged to the CRF with valid expenditures, Castro recommends Treasury OIG determine the feasibility of conducting an audit for the Direct Payments greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals payment types.
Desk Review of State of Arizona's Use of Coronavirus Relief Fund Proceeds
Office of Inspector General (OIG) request Arizona perform an assessment over whether there were any additional indirect costs claimed within its Grants greater than or equal to $50,000 CRF submission, and identify those for removal and repayment to Treasury, as applicable. In addition, Castro recommends that Treasury OIG request that Arizona management provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance for the $55,413 of ineligible costs charged to the Grants greater than or equal to $50,000 payment type. If support is not provided, Treasury OIG should recoup the funds.
Treasury OIG follow-up with Arizona's management to confirm if the $117,614,002 noted as unsupported expenditures within the Transfers greater than or equal to $50,000 payment type can be supported. If support is not provided, Treasury OIG should recoup the funds or request Arizona's management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. Further, based on Arizona management's responsiveness to Treasury OIG's requests and management's ability to provide sufficient documentation and/or replace unsupported and ineligible transactions charged to CRF with valid expenditures, Castro recommends Treasury OIG determine the feasibility of conducting an audit for Transfers greater than or equal to $50,000 payment type.
Treasury OIG request that Arizona management completes a reconciliation of its Transfers greater than or equal to $50,000 population utilizing state agency incurred expenditures at the invoice level. Based on Arizona management's ability to provide a sufficient general ledger detail reconciliation for Transfers greater than or equal to $50,000, we recommend Treasury OIG determine the feasibility of performing additional testing over Transfers greater than or equal to $50,000.
Treasury OIG determine the feasibility of performing additional follow-up with Arizona to determine if there were other instances of unsupported balances within the remaining untested balance of Substantially Dedicated Payroll costs. Castro further recommends that Treasury OIG follow-up with Arizona's management to confirm if the $18,133,411 noted as unsupported expenditures within the Aggregate Payments to Individuals payment type can be supported. If support is not provided, Treasury OIG should recoup the funds or request Arizona's management to provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance. Further, based on Arizona management's responsiveness to Treasury OIG's requests and management's ability to provide sufficient documentation and/or replace unsupported transactions charged to CRF with valid expenditures, Castro recommends Treasury OIG determine the feasibility of conducting an audit for the Aggregate Payments to Individuals payment type.
Request documentation of any additional annual leave payments that were earned prior to the CRF covered period were claimed as CRF expenses, and identify those for reversal and repayment to Treasury, as applicable. Additionally, request Arizona provide support for replacement expenses, not previously charged, that were eligible during the CRF period of performance for the $18,631 of ineligible costs charged to the Aggregate Payments to Individuals payment type. If support is not provided, recoup the funds. Based on Arizona's responsiveness to Treasury OIG's requests and Arizona's ability to provide sufficient documentation and/or replace ineligible transactions charged to CRF with valid expenditures, determine the feasibility of conducting an audit for the Aggregate Payments to Individuals payment type.
Challenges for Consideration in Implementing and Overseeing the CARES Act
The IRS Continues to Reduce Backlog Inventories in the Tax Processing Centers
On June 6, 2023, we notified the Director, Customer Account Services, Wage and Investment Division, of our concerns regarding the overpayments being erroneously held. We recommended that the IRS identify a process to review and release the overpayments that are being erroneously held. We also recommended that the IRS request programming changes, if needed, to ensure that all accounts with overpayments are identified and release the overpayments where warranted.
The Commissioner, Wage and Investment Division, should perform an analysis of Tax Year 2019 tax accounts with abated Failure to File penalties due to Notice 2022-36, to identify additional tax accounts for which overpayments are being held from issuance and take the actions needed to systemically release the overpayments where warranted.