The Internal Revenue Service managed to weather the targeting scandal during 2015 without any officials facing criminal charges – but many more controversies ensued and the tax-collecting agency ends the year with yet another mark against its competency.
This time the agency’s watchdog found that the IRS doled out fraudulent tax returns totaling about $46 million for tax year 2014 because of a “computer programming error and the ineffective monitoring of potentially fraudulent tax returns.” The faulty payments were made to 17,000 people.
IRS Commissioner John Koskinen testifies on Capitol Hill in Washington. (AP Photo)
“While the IRS has made important strides in its programs that prevent the issuance of fraudulent refunds, our auditors found that it is not always ensuring that tax examiners timely complete their verification work before releasing refunds,” said J. Russell George, Treasury Inspector General for Tax Administration.
In its defense, the IRS asserted its Integrity and Verification Operations unit stopped $15 billion in phony refunds to more than 2 million tax returns for confirmed for identity theft in the past year. It also agreed to implement all of the inspector general’s recommendations.
In June, the inspector general found the IRS had contracts with 17 companies that were tax delinquents, despite a ban on doing business. In May, the IG found that nearly 1,600 IRS employees had willfully evaded taxes themselves.
Based on inconsistencies in his testimony before Congress, and a reluctance to provide information, the House Oversight and Government Reform Committee has recommended that IRS Commissioner John Koskinen be impeached and removed from his position.
Rep. Diane Black (R-Tenn.), a member of the House Ways and Means Committee, which writes tax policy, said Congress should be held partially accountable after last week’s budget vote.
“We didn’t need another reminder that the IRS is mired in incompetence and mismanagement, but we got it anyway,” Black said. “It is abundantly clear that Commissioner John Koskinen has failed in his duty to restore trust at the IRS and must be replaced, but Congress is not guiltless either. Just last week, my colleagues voted over my objections to give this bureaucracy another $290 million in the bloated omnibus bill. Only in Washington is this kind of ineptitude rewarded with a bigger check. Taxpayers have every right to be outraged by the dysfunction at the IRS – I know I am.”
In the case of the fraudulent tax returns, the inspector general’s report found that more than $27 million of 2014 tax year refunds were erroneously issued for 13,043 tax year 2013 tax returns. Further 3,910 tax year 2013 returns that the IRS selected for verification had no indication, but received a total of $19 million in tax returns.
