Tax Relief Improvements Underway for Taxpayers Wrongfully Detained or Taken Hostage

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Date Issued

Monday, February 2, 2026

Submitting OIG

Treasury Inspector General for Tax Administration

Agencies Reviewed/Investigated

Internal Revenue Service

Report Number

2026-IE-R002

Report Type

Inspection / Evaluation

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 Commissioner, Small Business/Self-Employed Division, should review all taxpayer accounts that had a hostage indicator, but were not identified on partner agency lists, to determine whether appropriate corrective actions and relief are necessary after the removal of the hostage indicator, e.g., ensure that refunds are issued, interest paid on held returns, etc.
2	No	$0	$0
The Commissioner, Small Business/Self-Employed Division, should establish a process to regularly review and closely monitor taxpayer accounts with a hostage indicator. The indicator should be placed or removed from accounts to ensure that IRS records reconcile with State Department and FBI listings of individuals held in captivity and seeking tax relief. The indicator should also be removed from tax accounts that are not identified on the partner agency’s listings.
3	No	$0	$0
The Commissioner, Small Business/Self-Employed Division, should develop internal procedures to reengage released taxpayers and ensure that, at a minimum, account transactions, penalties, refunds, and records are accurate and up to date.
4	No	$0	$0
The Commissioner, Small Business/Self-Employed Division, should restrict who can add or remove hostage indicators.
5	No	$0	$0
The Commissioner, Small Business/Self-Employed Division, should ensure that the programming for the hostage indicator is functioning as intended, and that unintended actions are not occurring on taxpayer accounts. In the interim, consider coordinating with the Identity Theft Victim Assistance Program when the IRS is notified of a new impacted taxpayer to provide appropriate protection, such as an IP PIN.