Open Recommendations

Review the population of nonfilers with gambling winnings for TYs 2018 through 2020 that were not identified by the IMF CCNIP and begin appropriate enforcement actions as warranted.

The Commissioner, SB/SE Division, should expand the wager codes to specifically include sports betting and use the wager code as a tool to identify potential noncompliance of excise taxes.

The Commissioner, SB/SE Division, should conduct an environment scan of the current and potential future conditions of the sports betting and online gambling industries, the industries’ risks, and the impact on tax compliance, and develop a process to identify and address Form 730 nonfilers and underreporter noncompliance.

The Chief, Taxpayer Services, should at the start of each filing season, determine if any Free File Program partners have been identified or sanctioned for an unauthorized disclosure of taxpayer information and document actions taken to mitigate the potential risk to the Program.

The Chief, Taxpayer Services, should identify IRS personnel with the appropriate technical expertise to review the participating partners’ privacy disclosures and taxpayer consents each filing season to evaluate whether the format and content of written consents complies with Treas. Reg. 301.7216-3 and other IRS guidance.

The Chief, Taxpayer Services, should evaluate the feasibility of using additional avenues (such as letters, text messaging, and e-mails) to reach eligible Free File Program taxpayers. This should include determining if any of these avenues can be associated with increased participation.

The Chief, Taxpayer Services, should identify and incorporate appropriate qualitative and quantitative measures into the Free File Program communication plan that allow for evaluating the effectiveness of outreach efforts.

The Chief, Taxpayer Services, should develop a comprehensive MOU provision testing plan that ensures that all sections of the MOU (and addendums, as applicable) are being addressed each filing season. This should include noting which provisions cannot be reviewed along with an explanation why.

On February 28, 2024, we alerted the ERC Team Lead of our concern and recommended that the IRS review the 139,993 and 44,930 Tax Years 2020 and 2021 returns and consider them for post-refund compliance to recover any potentially erroneous ERC paid.

The Commissioner, Small Business/Self-Employed Division, should ensure that the 923 entities we identified receive a disallowance letter to prevent erroneous ERC claims from being paid.

The Chief Information Officer should timely remediate or mitigate all vulnerabilities in accordance with IRS policies.

The Chief Information Officer should ensure that systems are in place to reconcile the temporary and unknown repositories to verify that assets are assigned to an established group.

The Chief Information Officer should ensure that systems are in place to reconcile duplicate accounting of assets in the repository.

The Chief Information Officer should evaluate the temporary and unknown repositories to establish ownership of assets.

The Chief Information Officer should resolve configuration compliance settings in accordance with Federal and IRS policies.

The Chief Tax Compliance Officer and Chief, Taxpayer Services should develop a coversheet to be included with and/or revise the CP161 notice to clearly inform business taxpayers that they are in a Federally declared disaster area, they have been automatically granted payment relief, and the payment of their balance due taxes is not due until the end of the postponement period shown on the coversheet and/or notice as the due date. If a coversheet is included with the CP161 notice, ensure that taxpayers are informed to disregard the payment due date shown on the CP161 notice.

The Chief Information Officer and the Chief, Direct File, should ensure that Direct File developers document their test plan with traceability to test types, test cases, and test results.

The Director, Collection Policy, SB/SE Division, should remind revenue officers of their obligation to comply with I.R.C. § 6103, ensuring that they follow the proper Oral Disclosure Consent procedures to prevent unauthorized disclosure of taxpayer return information and avoid any potential violation of a taxpayer’s rights under I.R.C. § 6103.

The Chief Human Capital Officer should create and implement a systemic fix to ensure that Section 1204 managers completing their quarterly certifications are automatically routed to the appropriate SharePoint page(s) when their responses necessitate additional information reporting about potential ROTER violations.

The Chief Human Capital Officer should perform an annual reconciliation to ensure that: 1) all Section 1204 employees assigned the yearly Section 1204 mandatory briefing are accounted for in the yearly Section 1204 population and 2) the entire Section 1204 population has been assigned the annual Section 1204 mandatory briefing.

The Director, Collection Policy, SB/SE Division, should revise the Internal Revenue Manual (IRM) to require revenue officers to check their mail and faxes for any CDP levy hearing requests prior to issuing levies.

The Director, Collection Policy, SB/SE Division, should provide training to remind revenue officers that for manually created balance due modules within the ICS, they must manually verify the CDP levy notice was timely issued and that the modules are not part of an open CDP hearing prior to levy. In addition, revise the IRM to require that revenue officers document the ICS history with confirmation that required notices were provided prior to issuing a levy on a manually created balance due module.

The Director, Field Collection, SB/SE Division, should ensure that the taxpayers who were not given the opportunity for a CDP hearing are given their CDP rights, if appropriate; and obtain authorization to retain any improper levy proceeds or refund the proceeds to the taxpayer.

The Director, Field Collection, SB/SE Division, should ensure that the instances identified in this report that are associated with unauthorized representatives receiving CDP levy notices due to various revenue officer errors are discussed with the responsible employees and their managers so that they can protect taxpayer’s rights and prevent unauthorized disclosures. These employee’s managers should consider the failure to observe written regulations, orders, rules, or procedures that result in the violation of improper disclosure of tax return information when evaluating employees’ performance or for misconduct if such action on the part of the employee is intentional.

Establish procedures for Appeals officers to verify and document, as part of the law and administrative review, whether any prohibited levy action was taken on the subject tax modules for which a taxpayer requests a levy CDP hearing.