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Treasury Inspector Says IRS Can Improve Processing of Frozen Credit Accounts

While the IRS does have certain procedural requirements and standardized systematic checks in place to identify and resolve most frozen credit accounts, the recent Treasury Inspector General for Tax Administration (TIGTA) audit found that the IRS can take further steps to improve its processing of frozen credit accounts. The report found that the IRS failed to timely take actions to resolve frozen credit accounts for $46.4 million credits of individual taxpayers and $1.6 billion credits of businesses.

The report made 10 recommendations for the IRS take to improve its processing of frozen credit accounts. The IRS agreed with 9 of 10 the recommendations and “plans to take appropriate corrective actions.” The recommendations include improved training procedures and updating its computer system. The IRS, however, disagreed that it needs to improve its measures to resolve issues with the Offshore Voluntary Disclosure Program.

The IRS believes that “due to resources constraints,” the agency will be limited in its efforts to implement certain recommendations. The TIGTA noted that it believes the IRS remains at risk to continue to not timely resolve frozen credits in taxpayer accounts if the IRS does not implement all of TIGTA’s recommendations.

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