TIGTA: IRS slow to stop fraudsters exploiting tax practitioner telephone line

The Internal Revenue Service did little to stop fraudsters who used the Practitioner Priority Service Line to fraudulently file 4,828 tax returns and claim nearly $462 million in refunds, according to a report by the Treasury Inspector General for Tax Administration. 

Of these illicit claims, the IRS detected and stopped 4,254, but it did not stop 574 returns resulting in estimated losses of more than $47 million. In response, TIGTA issued an alert on Feb. 8 to request the IRS’s plan to immediately stop the fraud. On April 8, the IRS implemented additional authentication controls.

Specifically, the IRS gave PPS assisters access to the Secure Access Digital Identity dashboard. Assisters would ask the caller to verify the SOR identification number associated to the mailbox in order to authenticate that the SOR mailbox belongs to the authorized representative.

TIGTA recommended that:

1. The IRS provide and train assisters on SADI;
2. Establish a service-wide process where representatives from key functional areas are responsible for expeditiously reviewing and addressing emerging/ongoing fraud schemes where advanced analytics and matching to IRS-sourced information proactively identifies a scam;
3. Restrict access to all SOR IDs associated with fraudulent activity; and,
4. Develop processes and procedures to ensure that fraudulent SOR IDs are timely restricted.

The IRS agreed with three of the four recommendations and partially agreed with one recommendation, which was not specified in the report.