IRS botches vetting on $46 million in refunds

The IRS doled out $46 million in improperly vetted tax refunds during the 2013 tax year, according to a report released Monday.

Government inspectors blamed a programming error and incomplete reviews for the release of millions of dollars through potentially fraudulent claims.

{mosads}The Treasury Inspector General for Tax Administration (TIGTA) identified $27 million in refunds issued after a programming error overrode two-week processing delays the IRS places on potentially fraudulent claims. Inspectors said another $19 million in refunds did not appear to be properly vetted by IRS agents. 

“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.

TIGTA suggested the IRS fix the programming error and develop processes to check the verification of tax refunds. The inspectors said the IRS agreed to recommendations and would take action.

Republican lawmakers have long been critical of the IRS. Rep. Diane Black (R-Tenn.) called the findings “another reminder that the IRS is mired in incompetence and mismanagement.”

“Taxpayers have every right to be outraged by the dysfunction at the IRS — I know I am,” said Black, a member of the tax-writing House Ways and Means Committee.