Actions Have Been Taken to Enhance Fuel Tax Credit Screening and Examination Processes; However, Improvements Are Still Needed

Submitting OIG:

Treasury Inspector General for Tax Administration

Date Issued:

Thursday, September 7, 2023

Agency Reviewed / Investigated:

Internal Revenue Service

Submitting OIG-Specific Report Number:

2023-30-053

Location(s):

Agency-Wide

Type of Report:

Audit

Questioned Costs:

Funds for Better Use:

Number of Recommendations:

Report updated under NDAA 5274:

View Document:

Attachment	Size
202330053fr.pdf	2.88 MB

Recommendation Number	Recommendation Status	Significant Recommendation
1	Open	No
Ensure that the FTC examination workplan maintains flexibility to address higher dollar FTC claims without a business purpose. In addition, the W&I Division should perform ongoing analysis for high-dollar questionable FTC claims that are not being selected for examination to determine if the selection process should be adjusted.
2	Open	No
Require all examinations that identify improper FTC claims to check prior year taxpayer returns for additional improper FTC claims. In addition, future examination selection criteria should include repeated filers with improper FTC claims who continue to submit returns with FTC claims.
4	Open	No
The Commissioner, W&I Division, should revise Form 4136 to require the taxpayer to certify that the FTC for off-highway business use is being claimed for equipment or a vehicle that was not registered, or required to be registered, for use on public highways.
6	Open	No
The Commissioner, W&I Division, and Commissioner, SB/SE Division, should develop a process to identify and check future FTC examination closure anomalies, such as an increased or partially decreased FTC claim, to ensure that examination adjustments are posting properly to taxpayer accounts.
7	Open	No
The Commissioner, W&I Division, should lower the threshold criteria for FTC claim scheme analysis to expand the scope of returns considered, particularly to identify schemes with large numbers of returns below the IRS’s compliance threshold. Analysis should also focus on preparer misconduct schemes committed by unscrupulous tax return preparers and ghost preparers.

Recommendation Number

Recommendation Status

Significant Recommendation

Additional Details

Open

Ensure that the FTC examination workplan maintains flexibility to address higher dollar FTC claims without a business purpose. In addition, the W&I Division should perform ongoing analysis for high-dollar questionable FTC claims that are not being selected for examination to determine if the selection process should be adjusted.

Open

Require all examinations that identify improper FTC claims to check prior year taxpayer returns for additional improper FTC claims. In addition, future examination selection criteria should include repeated filers with improper FTC claims who continue to submit returns with FTC claims.

Open

The Commissioner, W&I Division, should revise Form 4136 to require the taxpayer to certify that the FTC for off-highway business use is being claimed for equipment or a vehicle that was not registered, or required to be registered, for use on public highways.

Open

The Commissioner, W&I Division, and Commissioner, SB/SE Division, should develop a process to identify and check future FTC examination closure anomalies, such as an increased or partially decreased FTC claim, to ensure that examination adjustments are posting properly to taxpayer accounts.