Procedures Are Needed to Prevent Backdating Penalty Approvals

Date Issued

Friday, May 1, 2026

Submitting OIG

Treasury Inspector General for Tax Administration

Agencies Reviewed/Investigated

Internal Revenue Service

Report Number

2026-300-021

Report Type

Audit

Agency Wide

Yes

Number of Recommendations

Questioned Costs

Funds for Better Use

Report updated under NDAA 5274

Open Recommendations

This report has 5 open recommendations.

Recommendation Number	Significant Recommendation	Recommended Questioned Costs	Recommended Funds for Better Use
1	No	$0	$0
The Chief Tax Compliance Officer should promote the use of digital approvals on penalty approval documents to enhance record integrity, accountability, and evidentiary reliability.
2	No	$0	$0
The Chief Tax Compliance Officer should work with the Commissioners of the SB/SE and LB&I Divisions to review and revise penalty procedures, as needed, to ensure consistency when obtaining and documenting penalty approvals and verifying compliance with I.R.C. § 6751(b) requirements.
3	No	$0	$0
The Chief Counsel should formalize procedures in the CCDM for Chief Counsel attorneys to require verification of I.R.C. § 6751(b) compliance in all docketed cases, which may include reviewing electronic document properties and corroborating evidence (e.g., case activity records and emails).
4	No	$0	$0
The Commissioners of the Small Business/Self-Employed and Large Business and International Divisions should communicate to compliance employees that it is not appropriate to backdate penalty approvals and penalty approval documents must be dated contemporaneously, remind employees when supervisory approval is required, and provide guidance on how to update signed documents when a change is needed.
5	No	$0	$0
IRS Chief Counsel should update the CCDM to ensure that Chief Counsel management will direct a review following a court’s imposition of sanctions against Chief Counsel.