TAX FRAUD AND 

NONCOMPLIANCE

IRS Can Strengthen 

Pre-refund Verification 

and Explore More 

Uses

Report to Congressional Requesters

January 2018

GAO-18-224

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-224, a report to 

congressional requesters

January 2018

TAX FRAUD AND NONCOMPLIANCE

IRS Can Strengthen Pre-refund Verification and 

Explore More Uses

What GAO Found

Beginning in 2017, as required by law, the Internal Revenue Service (IRS) held 

all refunds for taxpayers claiming the Earned Income Tax Credit (EITC) or 

Additional Child Tax Credit (ACTC) until February 15. IRS also took actions to 

verify wage and other information reported on tax returns before issuing refunds, 

referred to as systemic verification, but several factors limited its success. IRS 

received over twice as many (over 214 million) Forms W-2, Wage and Tax 

Statement (W-2) by February 15 compared to the same time in 2016, and 

reported that W-2 data were responsible for improving fraud detection and 

reducing taxpayer burden. However, IRS was unable to verify over half of the 

returns it held until February 15 before issuing the refunds. For example, IRS 

received W-2s daily but its information technology systems processed them

weekly. In response to GAO’s review, IRS reported it is planning to assess 

options for processing W-2s daily. Also, some employers submit W-2s late, but 

IRS did not track the extent to which late W-2s are associated with fraud or 

noncompliance. Further, IRS has not assessed options for enforcing late W-2 

penalties earlier. Additionally, about 9 percent (about 23 million) of W-2s were 

filed on paper, which IRS does not begin to receive from the Social Security 

Administration (SSA) until March. By law, employers who file 250 or more W-2s 

are required to file W-2s electronically, while those who file fewer than 250 W-2s 

may opt to file on paper or electronically. In August 2014, GAO suggested that 

Congress provide the Secretary of the Treasury with the authority to lower the 

electronic filing requirement from 250 W-2s to 5 to 10. This action could also 

have the benefit of reducing SSA’s W-2 paper processing costs by $9.7 to $11.3

million per year. These issues reduce IRS’s access to timely W-2 data, limiting 

its ability to prevent fraud and reduce noncompliance before issuing refunds.

IRS’s preliminary and final analyses of the February 15 refund hold both showed

that IRS could have detected significantly more in potential fraud and

noncompliance if it held all refunds until late February, when it had more W-2 

data available. There are differences between these analyses. For example, the 

final analysis included more returns and estimated total revenue IRS could 

protect by extending the refund hold and expanding it to all taxpayers. In that 

analysis, IRS estimated that it could have protected $100 million in fraud and 

noncompliance had it held all taxpayer refunds until February 15—$35 million 

more than it protected by holding refunds with EITC or ACTC. IRS further 

estimated that moving the refund hold to March 1 for all taxpayers could protect 

$895 million compared to $533 million if it only held refunds with EITC or ACTC 

until that date. However, GAO found limitations to IRS’s analyses. For example, 

while IRS has plans to further explore holding refunds longer, it does not have an 

evaluation plan to assess the effectiveness of the refund hold on systemic 

verification. Also, IRS did not fully assess the benefits and costs, including 

taxpayer burden, of the refund hold, nor how its analysis informs its broader 

fraud risk management or compliance efforts. As a result, IRS does not have 

sufficient information to inform a decision on potential changes to the refund hold 

date and those subjected to it. Finally, IRS has not assessed the benefits and 

costs of expanding systemic verification to use for pre-refund compliance checks 

in other areas such as income underreporting and employment fraud. Therefore,

IRS may be missing opportunities to maximize use of early W-2 data.

View GAO-18-224. For more information, 

contact Jessica Lucas-Judy at (202) 512-9110

or lucasjudyj@gao.gov.

Why GAO Did This Study

IRS continues to confront the ongoing 

problems of identity theft (IDT) refund 

fraud. The agency estimates that at 

least $1.68 billion was paid in IDT 

refund fraud in 2016. To help address 

this issue, consistent with GAO’s prior 

reporting, the Protecting Americans 

from Tax Hikes Act of 2015 advanced 

the deadline for employers to file W-2s 

to SSA to January 31 (about 1 to 2 

months earlier than in prior years). This 

change allows IRS more time to match 

wage information to tax returns through 

systemic verification, and identify any

discrepancies before issuing refunds. 

GAO was asked to assess how well 

IRS implemented systemic verification. 

GAO assessed IRS’s performance 

using systemic verification and the 

extent to which IRS analyzed the 

effectiveness of the refund hold on this

process. GAO analyzed IRS and SSA

data and documents, observed SSA’s 

paper W-2 process, and interviewed 

IRS and SSA officials. GAO compared 

IRS actions to laws; IRS policies; and 

standards for internal control, fraud risk 

management, and program evaluation.

What GAO Recommends

GAO recommends IRS collect data to 

track late W-2 filing penalties and 

assess options for earlier enforcement;

assess the benefits and costs of using 

existing authority to hold refunds 

longer, hold all refunds, or both, and 

expanding systemic verification to 

other areas; and take actions based on 

the assessments. IRS listed steps to 

respond to 5 of 6 recommendations, 

but said it could not enforce penalties 

earlier. GAO recognizes the challenges 

but clarified that assessing other 

options would provide benefits, as 

discussed in the report.
Page i GAO-18-224 Tax Fraud and Noncompliance

Letter 1

Background 4

Systemic Verification Shows Promise but Legacy Information 

Technology and Issues with Employer W-2 Filing Limit Its 

Success 10

IRS’s Analyses of the Refund Hold Are Limited, Hampering Their 

Usefulness for Decision Making and IRS Has Not Explored 

Additional Uses of Systemic Verification 20

Conclusions 28

Recommendations for Executive Action 29

Agency Comments and Our Evaluation 30

Appendix I Objectives, Scope, and Methodology 34

Appendix II Comments from the Internal Revenue Service 38

Appendix III Comments from the Social Security Administration 43

Appendix IV GAO Contact and Staff Acknowledgments 44

Table

Table 1: Pre-refund Systemic Verification Results for Returns with 

the Earned Income Tax Credit or Additional Child Tax 

Credit Initially Processed through February 14, 2017 12

Figures

Figure 1: Example of a Successful Identity Theft Refund Fraud 

Attempt 5

Figure 2: Systemic Verification for Returns with and without 

Earned Income and Additional Child Tax Credits 8

Figure 3: Percentage of W-2s Available for Systemic Verification 

for the 2016 and 2017 Filing Seasons 11

Contents
Page ii GAO-18-224 Tax Fraud and Noncompliance

Figure 4: Effect of Different Refund Hold Dates on Amount of 

Potentially Fraudulent or Noncompliant Refunds Detected 

with Systemic Verification among 35.7 Million Electronic 

Returns Filed before February 15 22
Page iii GAO-18-224 Tax Fraud and Noncompliance

Abbreviations

the Act Protecting Americans from Tax Hikes Act of 2015

ACTC Additional Child Tax Credit

EITC Earned Income Tax Credit

IDT identity theft 

IRM Internal Revenue Manual 

IRMF Information Return Master File

IRS Internal Revenue Service

IT Information Technology

NTA National Taxpayer Advocate

OCR optical character recognition

PII personally identifiable information 

RRP Return Review Program

SSA Social Security Administration

Treasury Department of the Treasury

WBDOC Wilkes-Barre Direct Operations Center

W-2 Form W-2, Wage and Tax Statement

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-18-224 Tax Fraud and Noncompliance

441 G St. N.W.

Washington, DC 20548

January 30, 2018

Congressional Requesters

In recent years, the Internal Revenue Service (IRS) has faced ongoing 

problems with fraud and noncompliance. This includes identity theft (IDT) 

refund fraud, which occurs when a fraudster obtains an individual’s Social 

Security number, date of birth, or other personally identifiable information 

(PII), and uses it to file a fraudulent tax return seeking a refund. IRS 

estimates that at least $12.24 billion in IDT tax refund fraud was 

attempted in calendar year 2016—of which it prevented at least $10.56 

billion (86 percent)—but at least $1.68 billion (14 percent) was paid.1 This 

represents an improvement compared to prior years. Improper payments 

have been another costly problem, which includes both fraudulent activity 

and noncompliance.2 IRS estimates also show that the Earned Income 

Tax Credit (EITC) has consistently had a high improper payment rate.3

For fiscal year 2017, IRS reported that total EITC payments were $68 

billion, of which $16.2 billion were estimated to be improper.4

To help address these issues, IRS implemented a process to verify wage 

and related information on all tax returns with refunds for the 2016 filing 

season, referred to as systemic verification.5 We previously reported that 

 1

Because of the difficulties in estimating the amount of undetectable fraud, the actual 

amount could differ from these estimates. In addition, due to differences in detection and 

calculation methods, the numbers are not fully comparable from year to year. However, 

the estimates indicate an overall decline in identity theft attempts.

2

As estimated and reported by federal agencies under the Improper Payments Information 

Act of 2002, Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002) codified as amended at 

31 U.S.C. § 3321 note, an improper payment is any payment that should not have been 

made or that was made in an incorrect amount. Agencies also report as improper any 

payments for which they are unable to find sufficient supporting documentation. 

3

EITC was enacted in 1975 to encourage work by offsetting payroll taxes for low-income 

taxpayers. This credit is refundable in that, in addition to offsetting tax liability, any excess 

credit over the tax liability is refunded to the taxpayer. IRS updates EITC improper 

payment estimates annually.

4

IRS does not estimate improper payment rates for other refundable tax credits. 

5

Beginning in 2016, IRS requested W-2 information from employers to validate information 

on returns selected by fraud filters. This provided IRS with a limited amount of W-2 data 

earlier in the filing season to use for pre-refund validation checks. See GAO, Identity Theft 

and Tax Fraud: IRS Needs to Update Its Risk Assessment for the Taxpayer Protection 

Program, GAO-16-508 (Washington, D.C.: May 24, 2016).

Letter
Page 2 GAO-18-224 Tax Fraud and Noncompliance

the information that employers report on Form W-2, Wage and Tax 

Statement (W-2), had not been available to IRS until after it issued most 

refunds.6 With earlier access to W-2 data, IRS could use this information 

to verify taxpayers’ returns and identify any discrepancies before 

potentially issuing billions of dollars in fraudulent refunds. Such 

verification could also prevent some EITC improper payments. Consistent 

with our prior reporting, Congress enacted the Protecting Americans from 

Tax Hikes Act of 2015 (the Act) in 2015, which required employers to 

submit W-2s to the Social Security Administration (SSA) by January 31, 

effective beginning in 2017.7

Compared to prior years, the new deadline is 1 month earlier if filing on 

paper or 2 months earlier if filing electronically.8 SSA then provides W-2 

data to IRS for verifying employee wage and withholding data on tax 

returns. The Act also required IRS to hold refunds for all taxpayers 

claiming EITC or Additional Child Tax Credit (ACTC) until February 15.9

In April 2017, we testified based on our initial review that this process 

holds promise for combatting IDT refund fraud and reducing improper 

payments, but IRS faced some implementation challenges.10

You asked us to review the 2017 filing season to determine how well IRS 

implemented systemic verification. We assessed (1) IRS’s performance in 

detecting fraud and noncompliance using systemic verification, and SSA’s 

performance providing timely W-2 data to IRS; and (2) the extent to which 

IRS analyzed the effectiveness of the refund hold on systemic verification 

as well as opportunities for IRS to apply systemic verification to other 

efforts to detect fraud and noncompliance.

 6

GAO, 2017 Filing Season: New Wage Verification Process Holds Promise but IRS Faced 

Implementation Challenges, GAO-17-525T (Washington, D.C.: Apr. 26, 2017). 

7

Consolidated Appropriations Act, 2016, (the Protecting Americans from Tax Hikes Act of 

2015 was included as a provision of the Consolidated Appropriations Act, 2016), Pub. L. 

No. 114-113, div. Q, Title II, § 201(a), 129 Stat. 2242, 3076 (Dec. 18, 2015) (codified at 26 

U.S.C. § 6071(c)). 

8

Prior to enactment of the amending provisions of the Protecting Americans from Tax 

Hikes Act of 2015, paper W-2s were due on or before the last day of February and 

electronically-filed W-2s were due March 31. 

9

Pub. L. No. 114-113, § 201(b), codified at 26 U.S.C. § 6402(m). ACTC is the refundable 

portion of the Child Tax Credit and provides tax relief to low-income families with children. 

10GAO-17-525T. 
Page 3 GAO-18-224 Tax Fraud and Noncompliance

To assess IRS’s performance detecting fraud and noncompliance using 

systemic verification, we reviewed preliminary 2017 filing season data 

and analyses of systemic verification results. We also reviewed applicable 

laws, IRS documentation, and policies, and we interviewed IRS officials. 

We compared IRS’s actions to IRS’s Strategic Plan, which includes 

objectives to strengthen refund fraud prevention by using third-party data 

and analytics for timely, informed decision making, and to innovate 

technology systems to support IRS’s business needs.11 We also 

compared IRS’s actions to the Standards for Internal Control in the 

Federal Government, which call for management to design and 

implement internal controls within programs based on the related benefits 

and costs.12 To assess SSA’s performance providing timely data to IRS, 

we compared IRS and SSA data to SSA’s goals. We also observed paper 

W-2 processing and interviewed staff and managers at SSA’s paper W-2 

processing facility in Wilkes-Barre, Pennsylvania.

To assess the extent to which IRS conducted analyses on the 

effectiveness of the refund hold and opportunities to improve systemic 

verification and apply it to other efforts to detect fraud and 

noncompliance, we assessed IRS data for 2017 and analyses of 

verification outcomes under different scenarios against overarching 

concepts and leading practices provided in our Fraud Risk and 

Management Framework and Program Evaluation guidance.13 We also 

determined whether IRS conducted a complete economic analysis of the 

effects on taxpayer burden based on interviews with IRS and Department 

of the Treasury (Treasury) officials, and three economic experts. We 

identified key elements experts reported that IRS should consider. We 

selected these three economists based on their expertise in the field of 

tax policy and refundable tax credits, and to ensure variation in 

perspectives on tax issues. The views of these experts are not 

generalizable. In addition, we interviewed IRS officials on the benefits and 

costs of systemic verification.

 11IRS, Strategic Plan: Fiscal Year 2014-2017.

12GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). 

13See GAO, A Framework for Managing Fraud Risks in Federal Programs, 

GAO-15-593SP (Washington, D.C.: July 2015) and Designing Evaluations: 2012 Revision,

GAO-12-208G (Washington, D.C.: January 2012).
Page 4 GAO-18-224 Tax Fraud and Noncompliance

To assess the reliability of the data we used for this report, we reviewed 

IRS and SSA reports on W-2 data, and IRS reports on systemic 

verification and its results. We also reviewed IRS reports on the 

performance of its fraud filters. We examined systemic verification data to 

identify obvious errors or outliers or potential data limitations that would 

affect how we use the data, and we found no such problems. We also 

interviewed IRS officials about their data quality procedures and the data 

and their limitations. We determined that the data presented in this report 

are sufficiently reliable for the purposes of our reporting objectives. More 

information on our scope and methodology can be found in appendix I.

We conducted this performance audit from March 2017 to January 2018 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Viewed broadly, IDT refund fraud is composed of two crimes: (1) the theft 

or compromise of PII, and (2) the use of stolen (or otherwise 

compromised) PII to file a fraudulent tax return and collect a fraudulent 

refund. Figure 1 presents an example of how fraudsters may use stolen 

PII and other information, real or fictitious (e.g., sources and amounts of 

income), to complete and file a fraudulent tax return and successfully 

receive a refund. In this example, a taxpayer may alert IRS of IDT refund 

fraud. Alternatively, IRS can detect IDT refund fraud through its 

automated filters that search for specific characteristics as well as through 

other reviews of taxpayer returns. IRS reported that, through September 

2017, the number of taxpayers reporting that they were a victim of IDT 

refund fraud had decreased by about 40 percent compared to the same 

period in 2016 (from 348,650 to 208,503).14 IRS officials attribute this 

decline to improved fraud filters.

 14Earlier in 2017, IRS reported that the number of IDT victims had decreased by 47 

percent. Since that time, IRS had received additional claims from taxpayers. 

Background

IDT Refund Fraud
Page 5 GAO-18-224 Tax Fraud and Noncompliance

Figure 1: Example of a Successful Identity Theft Refund Fraud Attempt

We have long highlighted the importance of pre-refund compliance 

checks as a means to improve compliance while minimizing taxpayer 

burden. As we testified in 2011, pre-refund compliance checks help IRS 

to confirm taxpayers’ identity, quickly and efficiently correct some errors 

with virtual certainty, and identify and audit some returns before refunds 

Pre-refund Compliance 

Checks
Page 6 GAO-18-224 Tax Fraud and Noncompliance

are issued.15 They also have the potential to deter billions of dollars in 

erroneous refunds, especially for refundable tax credits. These credits 

have complex eligibility requirements and are often overclaimed. IRS’s 

ability to match tax returns to information provided by third parties, 

including from financial institutions, can help enforce compliance with the 

tax laws. Pre-refund checks benefit taxpayers directly when IRS identifies 

underclaimed benefits.

Pre-refund compliance checks can reduce the tax gap created when 

taxpayers file returns that, for example, underreport their tax liability. In 

2016, IRS estimated that the average annual gross tax gap was $458 

billion for tax years 2008 to 2010.16 IRS estimated that through late 

payments and enforcement actions, it would collect an additional $52 

billion annually for those tax years, resulting in an average net tax gap of 

$406 billion.17 Because of the importance of improving voluntary 

compliance and addressing the tax gap, we continued to include 

Enforcement of Tax Laws as a high-risk area in our 2017 High-Risk 

Report.18

As noted previously, beginning in 2017 the Protecting Americans from 

Tax Hikes Act of 2015 requires employers to submit W-2s to SSA by 

January 31 (about 1 to 2 months earlier than in prior years, depending on 

the method of filing). It also requires IRS to hold refunds for all taxpayers 

claiming EITC or ACTC until February 15. In October 2017, IRS reported 

that, among the 13.4 million refunds subjected to this hold, it had 

completed processing 10.3 million refunds totaling $51.2 billion. Although 

IRS has authority to hold additional refunds until it receives more W-2 

data, IRS, in consultation with Treasury, decided not to exercise this 

 15GAO, Tax Refunds: Enhanced Prerefund Compliance Checks Could Yield Significant 

Benefits, GAO-11-691T (Washington, D.C.: May 25, 2011).

16GAO, Tax Gap: IRS Needs Specific Goals and Strategies for Improving Compliance, 

GAO-18-39 (Washington, D.C.: Oct. 31, 2017).

17Underreporting of tax liabilities accounted for most of the tax gap estimate for these tax 

years, making up 84 percent of the entire estimated gross tax gap. Individual income 

taxes made up the largest portion of underreporting, followed by employment taxes and 

corporation income taxes. 

18We designated enforcement of tax laws as a high-risk area in 1990 because of its 

susceptibility to fraud, waste, and mismanagement. See GAO, High-Risk Series: Progress 

on Many High-Risk Areas, While Substantial Efforts Needed on Others, GAO-17-317 

(Washington, D.C.: Feb. 15, 2017). 

Systemic Verification
Page 7 GAO-18-224 Tax Fraud and Noncompliance

authority in 2017.19 IRS officials explained that they did not do more than 

required by the law because it would be a major shift in refund issuance 

causing a strain on the economy, industry partners, taxpayers, and IRS 

telephone and other operations. Officials said that they expect to learn 

from their experience during the 2017 filing season and will continue to 

consider changes for future filing seasons as they have for 2018. 

However, all returns—with EITC or ACTC and without EITC or ACTC—

were subject to systemic verification as well as other fraud filters.

Systemic verification is one element of IRS’s Return Review Program 

(RRP), its primary system to detect fraud and noncompliance. RRP is a 

platform that runs individual tax returns through a comprehensive set of 

rules and models to detect potential taxpayer fraud and other 

noncompliance, then selects returns for various treatment options. 

Systemic verification categorized taxpayer returns in one of three 

outcomes to detect potentially fraudulent or noncompliant returns (see 

figure 2):

1. Wage information verified: Income and withholding on the return 

matches W-2 data within the allowed threshold.

2. False or incorrect income: Information on the return is not valid 

when compared to W-2 data. This mismatch can include income, 

withholding, employer identification number, or other characteristics.

3. Unable to verify: Unable to verify income or withholding on the return 

because W-2 data are unavailable or the taxpayer did not report wage 

income but had other types of income such as Social Security or selfemployment. IRS reprocessed (looped) all returns that reported wage 

income through RRP when new third-party data became available. 

For EITC or ACTC returns that IRS was required to hold until 

February 15, IRS had additional time to reprocess these returns 

before releasing the refund.

 19Under section 6201 of the Internal Revenue Code, IRS is authorized and required to 

make the inquiries, determinations, and assessments of all taxes as necessary. 26 U.S.C. 

§ 6201. IRS has the authority to hold refunds in conjunction with those determinations.
Page 8 GAO-18-224 Tax Fraud and Noncompliance

Figure 2: Systemic Verification for Returns with and without Earned Income and Additional Child Tax Credits

Note: IRS holds any refunds (including those for which W-2 data are not available) for which the 

return is flagged for further review by its identity theft fraud filters or other pre-refund filters.
Page 9 GAO-18-224 Tax Fraud and Noncompliance

After systemic verification is completed, IRS either continues processing 

the refunds for release or holds the refunds for additional review. For 

returns where IRS either verified or was unable to verify the wage 

information, the refunds were processed (beginning February 15 for 

returns with EITC or ACTC) unless selected by the fraud filters for 

review.20 However, IRS does not have the authority to correct a 

taxpayer’s return based on W-2 data, so it must initiate a correspondence 

audit which, as we have reported, is more costly to IRS, more 

burdensome on the taxpayer, and more time consuming for both.21

Therefore, for returns with false or incorrect income, IRS froze the refund 

and directed it to various units for review depending on the results of 

systemic verification and fraud filters. For example, if IRS suspected that 

the return was IDT refund fraud, it directed it to the Taxpayer Protection 

Program to verify the taxpayer. For returns where IRS suspected potential 

noncompliance, it directed the return to the Integrity and Verification 

Operations group.

 20If a tax return is not selected by fraud filters for review, additional compliance checks 

might affect a refund being released, for example, if the taxpayer owes taxes from prior 

years. 

21We have previously reported that the authority to correct a taxpayer’s return based on 

reliable third-party data, referred to as math error authority or correctible error authority, 

has the potential to reduce costly burdensome audit processes for both IRS and the 

taxpayer, and improve compliance. See GAO, Refundable Tax Credits: Comprehensive 

Compliance Strategy and Expanded Use of Data Could Strengthen IRS’s Efforts to 

Address Noncompliance, GAO-16-475 (Washington, D.C.: May 27, 2016).
Page 10 GAO-18-224 Tax Fraud and Noncompliance

By mid-February 2017, 2 weeks following the new W-2 filing deadline and 

about when the refund hold expired, IRS had received more than twice as 

many (over 214 million) W-2s than SSA provided at a similar time in 2016 

(see figure 3). Nevertheless, IRS did not have all W-2 data in time to 

conduct pre-refund checks of wages, withholding, and other information 

before issuing refunds, especially early in the filing season.

Systemic Verification 

Shows Promise but 

Legacy Information 

Technology and 

Issues with Employer 

W-2 Filing Limit Its 

Success

Early W-2 Data and the 

Refund Hold Helped IRS 

Prevent Fraud and 

Noncompliance for a 

Limited Number of Tax 

Returns
Page 11 GAO-18-224 Tax Fraud and Noncompliance

Figure 3: Percentage of W-2s Available for Systemic Verification for the 2016 and 2017 Filing Seasons

Note: Percentages were calculated using total number of W-2s received and processed through 

October 10, 2017.

Despite not having all W-2 data, IRS was able to identify and prevent 

some fraud and noncompliance before issuing refunds. IRS received and 

initially processed through systemic verification a total of about 35.1 

million individual tax returns through February 14, representing nearly 

$200 billion in refunds.22

 22This amount is higher than typical at this point in the filing season because it included a 

substantially large refund, which IRS held for review due to the amount. 
Page 12 GAO-18-224 Tax Fraud and Noncompliance

As shown in table 1, nearly 13.4 million (38 percent) of those returns 

claiming about $115 billion in refunds were filed by taxpayers who 

claimed EITC, ACTC, or both, and were subject to the refund hold. Using 

systemic verification, as of February 14, 2017, IRS determined that nearly 

150,000 of these 13.4 million returns (1 percent) were potentially 

fraudulent because they included false or incorrect income. The returns 

represented approximately $800 million in refunds. IRS also verified wage 

and other information for approximately 4.72 million (35 percent) of those 

returns filed and processed through February 14, representing $73.5 

billion in refunds.23 However, IRS was unable to verify 7.79 million (58 

percent) of these returns before it released refunds because W-2 data 

were unavailable, as described later in this report. Finally, table 1 also 

notes that, as of October 2017, IRS reported that, among those returns 

filed and processed through February 14, 10.3 million had completed 

processing and $51.2 billion in refunds had been issued.

Table 1: Pre-refund Systemic Verification Results for Returns with the Earned Income Tax Credit or Additional Child Tax

Credit Initially Processed through February 14, 2017

Number of returns 

(millions)

Percent of returns Refund amount 

(billions of dollars)

Percent of refunds

Wage information verified 4.72 35 73.5 63

False or incorrect income 0.15 1 0.8 1

Unable to verify 7.79 58 38.4 33

No wage income reported 0.72 5 2.9 3

Total 13.4a 100 115.6 100

Source: GAO analysis of Internal Revenue Service data. | GAO-18-224

Notes: Percentages may not total to 100 due to rounding. These numbers represent initial systemic 

verification results as of February 14, 2017. These figures do not reflect the final number of returns or 

refund amounts issued after undergoing all compliance checks.

a

As of October 2017, IRS reported that, among these returns, 10.3 million had completed processing 

and $51.2 billion refunds had been issued. IRS continues to process the remaining returns and have 

indicated that at least some are confirmed fraudulent.

As the February 15 refund hold expiration approached, IRS continued to 

reprocess (loop) returns through systemic verification as more W-2 data 

became available. In doing so, IRS staff identified 12,000 more returns, in 

addition to the 150,000 initially identified, that they suspected to be 

 23IRS may select a return for review even if it cleared systemic verification because it 

triggered other fraud filters. 
Page 13 GAO-18-224 Tax Fraud and Noncompliance

fraudulent. This brought the total number of potentially fraudulent or 

noncompliant returns to about 162,000 with nearly $863 million in 

refunds. IRS manually held these refunds and referred the suspicious 

returns for further screening to the Integrity and Verification Operations 

group. IRS later cleared approximately 150,000 (93 percent) of these 

returns and released about $797 million in refunds. IRS confirmed that 

approximately 12,000 (7 percent) of the returns that it had not cleared 

were fraudulent, eventually protecting $65 million, which included $51 

million in EITC or ACTC claims.

To reduce false positives (when legitimate tax returns are erroneously 

selected for review), an IRS working group made several changes to how 

IRS’s fraud filters make selections based on W-2 data and other 

information. For 2018, IRS plans to automatically select returns that it had 

held manually in 2017. However, officials noted that while verifying wage 

information is important, the complexity of determining EITC and ACTC 

eligibility remains a challenge.24

We reviewed IRS’s systemic verification results and found that IRS 

improved its selections of potentially fraudulent returns with W-2 data 

contributing to its fraud filters. As of February 15, returns selected for 

review by systemic verification comprised 14,618 (6 percent) of all paper 

and electronic returns selected as potential identity theft by the fraud 

filters. By September 15, selections from systemic verification increased 

to nearly 78,369 (about 10 percent) of all returns selected as potential 

identity theft. Moreover, we found that if more W-2 data were available 

earlier, IRS could have excluded more returns from review, thereby 

reducing or eliminating work and reducing taxpayer burden by not 

delaying legitimate taxpayers’ returns. For example, systemic verification 

allowed IRS to exclude about 321,000 electronically-filed tax returns out 

of more than 700,000 that had been selected for review by the fraud 

filters.25

 24The complexity of eligibility requirements and lack of third-party data complicate IRS’s 

ability to administer these credits. For example, for EITC and ACTC, each child must meet 

certain age, residency, and relationship tests. However, third-party data for IRS to use in 

verifying these requirements are not easy to identify. IRS generally conducts a 

correspondence audit to verify that a taxpayer meets the requirements for income and that 

their children meet both residency and relationship requirements.

25The number of paper-filed tax returns excluded from selection as potential identity theft 

due to W-2 data was unavailable. 
Page 14 GAO-18-224 Tax Fraud and Noncompliance

We found that IRS’s ability to verify information on tax returns early in the 

filing season was limited because of its Information Technology (IT) 

systems and issues with employers filing W-2s on paper or after the filing 

deadline.

IT systems. IRS receives and maintains validated taxpayer data, 

including W-2 and 1099-MISC forms, through the Information Return 

Master File (IRMF) system.26 IRS received W-2 data from SSA daily but 

only loads the data onto IRMF weekly due to the legacy design of this 

system. This contributed to IRS’s inability to verify more than half (7.79 

million or 58 percent) of tax returns with EITC or ACTC claiming $38.4 

billion in refunds when the February 15 refund hold expired. IRS officials 

stated that due to the system’s legacy design, adding new or updating 

existing information return documents requires the agency to reload its 

entire file, which contains billions of information returns.27

Officials reported that this process can take up to 3 days or more to 

complete, depending on the file size of the incoming and existing data, 

and has prevented IRMF from processing and making the W-2 data 

available for use, as it is received from SSA. Consequently, while IRS had 

received a total of about 210.9 million W-2s by February 13, it received an 

additional 3.9 million W-2s between February 13 and 20 that IRS was 

unable to use in systemic verification before the February 15 refund hold 

expired.

In October 2017, IRS officials told us several reasons why they were not 

addressing IT limitations. At that time, they said they had discussed 

various options to make W-2 data available faster, but they had not 

assessed whether IRMF processing could occur more than once weekly.

Further, these officials said IRS developed a plan to modernize IRMF, 

which would allow for faster processing, but officials told us that this effort 

is on hold because of competing priorities and funding shortages.28 These 

officials also said they had not considered the potential financial benefits 

 26Form 1099-MISC is an information return used to report miscellaneous income, such as 

from royalties of $10 or more or nonemployee services of $600 or more.

27As of October 2017, IRS had loaded approximately 3.6 billion documents into the IRMF 

file.

28IRS’s plan to modernize IRMF is called the Information Return System Modernization 

program. 

IRS’s Ability to Process 

W-2s Was Limited by Its 

Information Technology 

Systems and Issues with 

Employer W-2 Filing
Page 15 GAO-18-224 Tax Fraud and Noncompliance

of either modifying existing procedures or continuing to pursue 

modernizing IRMF to process W-2 data more frequently for use in 

systemic verification.

However, in response to our discussions, in November 2017, IRS officials 

reported they had started to assess the possibility of processing W-2 data 

on IRMF daily. Specifically, IRS is planning to assess daily processing for 

the months of January and February during the 2019 filing season when 

the number of information returns is lower and the file is less time 

consuming to load. They noted they would not have time to assess their 

options and make necessary changes to process W-2s daily for the 2018 

filing season.

As we reported in October 2017, IRS faces challenges with managing its 

aging legacy systems, and with establishing a process for prioritizing its 

modernization efforts.29 IRS’s planned action is consistent with its 

strategic plan, which includes objectives to strengthen refund fraud 

prevention by using third-party data and analytics for timely, informed 

decision making, and to innovate technology systems to support IRS’s 

business needs.30 It is also consistent with Standards for Internal Control 

in the Federal Government, which calls for management to design and 

implement internal controls within programs based on the related benefits 

and costs.31 By taking its planned action to assess processing W-2 data 

more frequently, IRS would be in a better position to make informed 

decisions about the future of IRMF and its modernization efforts.

Paper W-2 processing. Of the 253 million W-2s that SSA received by 

December 1, 2017, about 23 million (9 percent) were paper. SSA 

receives and processes paper W-2s at the Wilkes-Barre Direct 

Operations Center (WBDOC) in Wilkes-Barre, Pennsylvania. Beginning in 

October or November of each year, WBDOC programs and tests its 

systems for transmitting transcribed paper W-2 data. The majority of W2s that WBDOC receives are in optical character recognition (OCR) 

format, which SSA can scan into its systems instead of manually entering 

the data. Officials stated that W-2s that are not in OCR format require 

 29GAO, Information Technology: Management Attention Is Needed to Successfully 

Modernize Tax Processing Systems, GAO-18-153T (Washington, D.C.: Oct. 4, 2017).

30IRS, Strategic Plan: Fiscal Year 2014 - 2017. 

31GAO-14-704G. 
Page 16 GAO-18-224 Tax Fraud and Noncompliance

more time and effort to process.32 This process of developing, testing, 

scanning, or entering data manually occurs between October and March 

before WBDOC begins transmitting the paper W-2 data to SSA’s 

Baltimore facility. Beginning in March, SSA continually transmits all paper 

and electronic W-2 data to IRS.33

By law, employers who file 250 or more W-2s are required to file W-2s 

electronically, while those who file fewer than 250 W-2s may opt to file on 

paper or electronically.34 This requirement has not changed since 1989 

when employers filed electronically using magnetic media or other 

machine-readable forms.35 Since then, technological advancements allow 

employers to file for free using SSA’s website or other software packages. 

Consequently, even though not required, by July 28, 2017, SSA had 

received approximately 69 million electronically filed W-2s from about 4.4 

million employers who filed fewer than 250 W-2s.

In August 2014, we reported that lowering the electronic W-2 filing 

requirement would not only contribute to IRS’s ability to verify 

employment information on tax returns, but it could reduce administrative 

costs for SSA.36 According to SSA estimates, the cost to transcribe and 

process a total of 24.2 million paper W-2s in 2016 was about $13.3 

million, or $0.55 per paper W-2. In addition to the cost savings from 

lowering the electronic filing requirement, as we reported in August 2014, 

there would be fewer transcription errors and fewer W-2s subject to the 

longer paper W-2 processing time.37 In that report, we suggested that 

Congress should consider providing the Secretary of Treasury with the 

regulatory authority to lower the requirement for electronic filing of W-2s 

 32W-2s that are not in OCR format include hand-printed W-2 forms and/or forms in nonstandard format. SSA has a process to encourage employers to resubmit their W-2s 

electronically or in the proper paper format. 

33For the 2017 filing season, electronic W-2 data were transmitted to IRS beginning in 

December 2016. 

3426 U.S.C. § 6011(e)(2)(A).

35Omnibus Budget Reconciliation Act of 1989 (the Improved Penalty Administration and 

Compliance Tax Act was included as a provision of the Omnibus Budget Reconciliation 

Act of 1989), Pub. L. No. 101-239, title VII, § 7713(a), 103 Stat. 2106, 2394 (Dec. 19, 

1989).

36GAO, Identity Theft: Additional Actions Could Help IRS Combat the Large, Evolving 

Threat of Refund Fraud, GAO-14-633 (Washington, D.C.: Aug. 20, 2014).

37GAO-14-633. 
Page 17 GAO-18-224 Tax Fraud and Noncompliance

from 250 returns annually to between 5 to 10 returns, as appropriate. In 

August 2017, SSA officials estimated that SSA can save between $9.7 

and $11.3 million per year if the W-2 paper filing requirement is lowered 

to 10 or fewer W-2s. These officials reported that this estimate is based 

on a projected increase of 17.6 million to 20.6 million in electronically filed 

W-2s and a decrease of paper W-2s by more than two-thirds.

Late W-2 filing. IRS began publicizing the change in the W-2 deadline in 

June 2016. Nevertheless, about 260,000 employers missed the January 

31 filing deadline, accounting for late filing of about 7.9 million W-2s in 

2017.38 IRS officials stated that, of the 27,764 employers who had 

requested an extension for time to file W-2s, as discussed below, IRS 

approved approximately 6,500 (23.4 percent), which account for 

approximately 1.1 million W-2s (13.9 percent) of the 7.9 million late filed 

W-2s. Because IRS has not yet started to assess penalties, it does not 

yet know how many of these will be subjected to a penalty.

Generally, an employer must pay a penalty for failing to file an information 

return timely or correctly unless an exception applies, such as being 

granted an extension. However, IRS has changed how it enforces late 

filing penalties by not mailing some proposed penalty notices to 

employers who fail to file W-2s timely. For example, IRS mailed all 

penalty notices to employers who failed to timely file in 2014. However, it 

did not mail all penalty notices for 2015 and 2016 to employers who failed 

to file W-2s timely. IRS officials told us that, due to a lack of resources to 

manage all the penalty cases, they began applying a risk-based selection 

process to prioritize compliance efforts. Moreover, officials told us they 

did not collect data to track how many penalty notices IRS did or did not 

mail for late-filed W-2s, nor the associated penalties IRS proposed to 

assess for 2015 and 2016.

By law, there are some exceptions to the enforcement of penalties on 

those who fail to file correct information on or before the required filing 

date, and who fail to include all of the information required to be shown on 

 38This does not include employers that do not file W-2s, but are required to do so. 
Page 18 GAO-18-224 Tax Fraud and Noncompliance

the return, or include incorrect information, without correction.39 However, 

by not mailing all penalty notices, as it did in the past, IRS is not using a 

tool to collect, at the least cost, the proper amount of tax revenue, is not 

enhancing or promoting voluntary compliance, and it is missing an 

opportunity to educate and help the employer understand his or her legal 

obligations and rights.40 Additionally, without timely W-2 data to complete 

pre-refund checks against filed returns, IRS risks releasing fraudulent and 

noncompliant refunds or burdening legitimate taxpayers whose returns 

could be cleared with the W-2 data. IRS officials told us that they are 

monitoring the effect of not mailing all notices on the number of late 

filings. However, as of November 2017, IRS did not have plans to track 

and evaluate the extent to which the late W-2s are associated with 

fraudulent or noncompliant refunds.

In addition, IRS does not mail penalty notices until up to a year and a half 

after the missed deadline. For example, IRS will not assess and mail 

penalty notices for the approximately 260,000 employers who filed W-2s 

or other information returns late in 2017 until summer 2018. In part, this is 

because IRS waits to compile all late-filed information returns, not just W2s, some of which are not due until April. Further, late-filing penalty 

amounts increase incrementally until August 1 for employers who file or 

correct information returns after the filing deadline. Finally, for 2017, IRS 

did not finish transcribing and processing the more than 40 million paperfiled information returns until about late September. However, IRS 

officials have not assessed the options for mailing penalty notices for late 

W-2s earlier or communicating with the employers earlier in the process. 

These officials told us that the penalty notice process is consistent with 

IRS’s enforcement procedures. They further added that mailing multiple 

penalty notices could increase burden and cost for both the taxpayer and 

IRS. However, quickly responding to employers that filed late increases 

the potential for compliance, thereby increasing the availability of W-2 

 3926 U.S.C. § 6721 (a)(1)-(2). See also, 26 U.S.C. §§ 6722-24. IRS has procedural 

requirements that must be met before a penalty is assessed. For example, an initial 

determination of a penalty must be personally approved (in writing) by the immediate 

supervisor of the individual making the initial assessment determination prior to being 

assessed, unless an exception applies. 26 U.S.C. § 6751(b) and Internal Revenue Manual 

(IRM) Part 20, Chapter 1, Section 1, 2.3. There are exceptions to penalty assessments as 

well, such as if it is shown that any failure is due to reasonable cause and not to willful 

neglect. 26 U.S.C. § 6724(a). Other exceptions resulting in a waiver include statutory 

exceptions, administrative waivers, or correction of IRS error. IRM Part 20, Chapter 1, 

Section 1.3.

40IRM Part 20, Chapter 1, Section 7, 1.1, 1.3, and 1.4.
Page 19 GAO-18-224 Tax Fraud and Noncompliance

data for systemic verification to detect and prevent fraud and 

noncompliance. Finally, because it takes up to a year and a half for IRS to 

identify the late filing and mail the penalty notice, it is possible that the 

employer could have filed W-2s late two years in a row without IRS 

notifying him/her of the first late filing.

W-2 extensions. In 2017, IRS received 27,764 employer requests for an 

extension of time to file W-2s, which is substantially higher compared to

prior years. IRS officials attribute the increase in extension requests to the 

new early filing deadline. IRS also began requiring employers to provide 

reasonable cause and only file their requests on paper.41 Prior to 2017, 

employers could file for an automatic 30-day request for extension, 

electronically or on paper. Because IRS manually processed all requests 

to determine if the cause was reasonable, IRS did not complete its 

processing until November 2017. Consequently, employers would not 

know until after the extended deadline whether IRS granted them the 

extension.

IRS officials told us that, for 2017, they notified about 10,000 employers 

who requested but were not granted an extension that they would not be 

penalized this year. Officials also notified these employers that they would 

be penalized next year under the same conditions. In November 2017, 

IRS officials said that they are reviewing the extent to which extension 

requests made in 2017 affected systemic verification. For 2018, IRS plans 

to continue requiring employers to file extension requests on paper.

 41Employers request extensions of time to file W-2s by filing Form 8809, Application for 

Extension of Time To File Information Returns.
Page 20 GAO-18-224 Tax Fraud and Noncompliance

IRS officials examined the effectiveness of the February 15 refund hold 

by analyzing how systemic verification results differ under several 

hypothetical scenarios. For example, IRS could extend the refund hold 

date beyond February 15 when more W-2 data are available for systemic 

verification before issuing refunds. While the law states that IRS cannot 

release refunds with EITC or ACTC before February 15,42 IRS has 

discretion to continue to hold all refunds until it can verify W-2 data, and 

has the authority to expand the refund hold to all taxpayers, not just those 

who claimed EITC or ACTC.43 Further, the law does not preclude IRS 

from releasing refunds with EITC or ACTC on a rolling basis after 

February 15, or in conjunction with an extension of the refund hold.44

In October 2017, the National Taxpayer Advocate (NTA) told us that she 

supports potential modifications to the refund hold.45 In addition, in a June 

 42Pub. L. No. 114-113, § 201(b), codified at 26 U.S.C. § 6402(m).

4326 U.S.C. § 6201. Under Section 6201 of the Internal Revenue Code, IRS is authorized 

and required to make the inquiries, determinations, and assessments of all taxes as 

necessary. IRS has the authority to hold refunds in conjunction with those determinations. 

However, Section 6611(e) of the Code generally requires the payment of interest on 

refunds if any overpayment of tax is not refunded within 45 days after the last day 

prescribed for filing the return tax (determined without regard to any extension of time for 

filing the return). 26 U.S.C. § 6611(e).

44See, 26 U.S.C. § 6402(m).

45The National Taxpayer Advocate is the leader of the Taxpayer Advocate Service, an 

independent organization inside IRS that assists taxpayers in resolving problems and 

works for systemic changes to mitigate taxpayer problems.

IRS’s Analyses of the 

Refund Hold Are 

Limited, Hampering 

Their Usefulness for 

Decision Making and 

IRS Has Not Explored 

Additional Uses of 

Systemic Verification

IRS Completed Its

Analyses of Potential 

Changes to the Refund 

Hold but Did Not Fully 

Assess the Benefits and 

Costs and Taxpayer 

Burden
Page 21 GAO-18-224 Tax Fraud and Noncompliance

2017 annual report to Congress, the NTA stated that holding the refunds 

for all taxpayers longer so that IRS can verify W-2 data could help IRS 

prevent tax refund fraud before refunds are issued.46 The NTA also 

recommended that IRS research the benefits and costs of delaying refund 

payments.

During the 2017 filing season, IRS reviewed limited preliminary systemic 

verification data to assess potential changes to the February 15 refund 

hold. In October 2017, IRS completed its final analysis, which included 

more data on taxpayers who filed after the February 15 refund hold and 

estimated potential amounts of protected refunds. However, both 

analyses have limitations.

Preliminary Analysis

We assessed IRS’s preliminary analysis of the 35.7 million returns filed by 

all taxpayers (those who claimed EITC or ACTC and those who did not) 

before February 15 and which were subjected to systemic verification.47

IRS’s analysis included actual results from systemic verification for these 

tax returns for each week between February 15 and March 15 after 

reprocessing the returns when new W-2 data became available. Our 

assessment of IRS’s preliminary analysis showed that by both extending 

the refund hold date beyond February 15 and expanding the refund hold 

to all returns:

• IRS could have verified more than twice as many returns. By 

March 15, IRS could have verified wage information for more than 

twice as many returns before issuing refunds—30.5 million compared 

to 14.3 million verified by February 15. By only holding returns until 

February 15, IRS would be unable to verify W-2 data for 20.2 million 

(56 percent) tax returns, representing $66.6 billion in refunds, before 

releasing the refunds.

• IRS could have detected about $3 billion—twice as much–in 

potential fraud and noncompliance. If IRS had held all taxpayers’

refunds until late February or early March, it could have detected 

 46National Taxpayer Advocate, Objectives Report to Congress, Fiscal Year 2018, Volume 

2, June 28, 2017.

47This total includes an additional 600,000 returns that IRS had received before February 

15, but had yet to process. Therefore, it is different from the 35.1 million returns discussed 

earlier in this report, which only include the returns IRS had processed through February 

14, 2017. 
Page 22 GAO-18-224 Tax Fraud and Noncompliance

about twice as much potential fraud or noncompliance before issuing 

refunds, as shown in figure 4, because it had more W-2 data available 

at that time compared to February 15. For example, if IRS held all 

taxpayers’ refunds until March 1, it could have identified $2.87 billion 

compared to $1.47 billion as of February 15, about a 95 percent 

increase. If IRS held all taxpayers’ refunds until March 8, it could have 

identified even more in potentially fraudulent or noncompliant refunds 

before issuing them ($3.18 billion compared to $1.47 billion as of 

February 15, an increase of about 116 percent). However, these 

potential fraudulent or noncompliant refunds do not represent 

potential refunds that IRS could protect. This is because IRS limits the 

number of cases it selects for review due to the large volume of work 

this represents and limited staff available. Further, some returns that 

IRS selects for review are false positives—legitimate tax returns 

erroneously selected for review.

Figure 4: Effect of Different Refund Hold Dates on Amount of Potentially Fraudulent 

or Noncompliant Refunds Detected with Systemic Verification among 35.7 Million 

Electronic Returns Filed before February 15
Page 23 GAO-18-224 Tax Fraud and Noncompliance

Our Fraud Risk Framework provides a comprehensive set of overarching 

concepts of fraud risk management and leading practices that serve as a 

guide for agency managers to use when developing efforts to combat 

fraud in a strategic, risk-based way.48 For example, a leading practice in 

the Fraud Risk Framework emphasizes risk-based preventive activities 

for strategically managing fraud risk to help avoid a costly and inefficient 

“pay and chase” model. Additional leading practices call for federal 

agencies to continuously monitor and evaluate the effectiveness of 

preventive activities and to consider the benefits and costs of its control 

activities. Further, key concepts in the Fraud Risk Framework highlight 

the importance of measuring outcomes to adapt fraud detection and 

prevention activities. Additionally, we have reported that program 

evaluation provides agencies with objective information on program 

effectiveness and efficiency.49 Program evaluation is necessary to inform 

and improve IRS’s fraud risk management activities.

However, when we compared IRS’s preliminary analysis to the Fraud 

Risk Framework and program evaluation standards, we found that it was 

limited in several areas:

• IRS has not documented an evaluation plan, goals, or strategy 

related to the refund hold. To ensure an evaluation’s credibility, 

agencies should develop evaluation plans with clearly defined 

program goals and researchable evaluation questions. However, IRS 

did not have documentation detailing an evaluation plan or program 

goals that includes the purpose of the analysis and the research 

questions it is assessing. Moreover, IRS plans to continue assessing 

the effectiveness of the refund hold on systemic verification.

In May 2016, we recommended that IRS develop an overall 

compliance strategy that includes refundable credits, such as EITC 

and ACTC.50 In February 2017, IRS reported that it is taking steps to 

implement this recommendation. However, it is unclear how IRS plans 

to incorporate the results of its analysis of systemic verification into its 

overall compliance and fraud risk management strategy.

 48GAO-15-593SP.

49GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.: January 

2012). 

50GAO-16-475.
Page 24 GAO-18-224 Tax Fraud and Noncompliance

• IRS did not determine how many potentially fraudulent or 

noncompliant refunds it issued before verifying against W-2 

data. A key benefit of obtaining W-2 data early in the filing season is 

to verify that the information matches before issuing the refund. In its 

preliminary results, IRS reported the number and amount of refunds it 

identified as potentially fraudulent or noncompliant before issuance 

only for taxpayers that claimed EITC or ACTC and whose refunds IRS 

held until February 15. Of the 22.1 million taxpayers who filed before 

February 15 and did not claim these credits, IRS identified 

approximately 196,000 returns filed by taxpayers claiming nearly $580 

million in refunds as potentially fraudulent or noncompliant. IRS did 

not report the number of refunds that were issued before IRS had 

identified them as potentially fraudulent.

• IRS has not fully assessed the burden on the taxpayers who 

were subjected to the refund hold date. We have reported that a 

key concept in tax administration is reducing unnecessary taxpayer 

burden, which is the direct time and money that taxpayers spend to 

comply with tax laws, including costs for paid tax preparation.51 Three 

economic experts we interviewed cited key factors that IRS could 

consider in assessing the burden to taxpayers as a result of the 

refund hold.52 For example, experts told us that IRS could examine 

changes in taxpayer behavior, such as waiting to file a return later, or 

shifting from using Free File to paid preparation that can offer refundrelated financial products such as an advance on their refund.53

These experts also indicated that IRS could compare the amount of 

fraud or noncompliance that IRS prevented among taxpayers claiming 

EITC or ACTC against taxpayers who do not claim these credits. All 

experts we interviewed agreed that more than 1 year of data might be 

needed to assess short-term and long-term effects of the refund hold 

on taxpayer behavior and patterns of fraud and noncompliance.

 51GAO, IRS Correspondence Audits: Better Management Could Improve Tax Compliance 

and Reduce Taxpayer Burden, GAO-14-479 (Washington, D.C.: June 2014).

52See appendix I for a description of our methodology and selection of economic experts. 

53The Free File program is public-private partnership between IRS and the Free File 

Alliance. Free File is a consortium of 12 leading tax software providers who make their 

products available exclusively at IRS.gov. Each Free File software provider sets its own 

criteria for eligibility, generally based on income, age, state residency, or military service. 

A refund anticipation loan is an example of a refund-related financial product that 

taxpayers can use when they do not want to wait for their tax refunds. This loan is 

borrowed from a lender based on the taxpayer’s anticipated tax refund.
Page 25 GAO-18-224 Tax Fraud and Noncompliance

IRS officials told us that they have added a question to IRS’s 

customer satisfaction survey to determine how taxpayers got their 

information about the refund hold. They have also indicated they are 

analyzing taxpayer behaviors related to the timing of filing and 

taxpayers’ use of refund-related financial products. However, IRS has 

not provided us with the revised survey or its results, nor provided 

documentation of what is included in the analyses. IRS officials told us 

that they have limited resources to conduct research and have not 

completed the work because they are prioritizing other research 

efforts.

The limitations of IRS’s preliminary analysis prevent IRS from fully 

understanding the effectiveness of systemic verification and refund hold, 

and hampers IRS’s broader fraud risk management and compliance 

efforts. IRS officials stated that they did not document an evaluation plan, 

include key data, determine how many refunds were issued before 

detecting potential fraud and noncompliance, nor assess taxpayer 

burden. Without a documented evaluation plan that includes key data to 

assess the success of preventing fraud and noncompliance before 

issuing refunds, IRS risks relying on insufficient information to make 

decisions on potential changes to the refund hold date and those 

subjected to it. For example, by not assessing taxpayer burden, IRS does 

not understand how taxpayers are affected by the current hold date or 

whether extending the hold or expanding it to all taxpayers would 

increase taxpayer burden.

Final Analysis

IRS completed its final analysis of the refund hold in October 2017 and 

provided us with a draft. Based on our initial review, IRS’s findings 

correspond with those in the preliminary analysis discussed above in that 

IRS could detect much more potential fraud and noncompliance if it held 

refunds longer. However, there were key differences between the 

preliminary analysis and IRS’s final analysis. First, IRS assessed two 

potential refund hold dates after February 15—February 28 and March 1, 

when IRS receives the majority of W-2s. Second, IRS included all returns 

that would be affected by the two extended refund hold dates rather than 

only those that filed before February 15. Third, IRS estimated the total 

amount of fraud and noncompliance that it could protect under these two 

extended refund hold dates. Finally, IRS based its estimates on returns 
Page 26 GAO-18-224 Tax Fraud and Noncompliance

that had completed final processing rather than returns that had not 

completed processing.54

In its final analysis, IRS estimated that it could detect about $7.1 billion in 

potential fraud and noncompliance if it held refunds with EITC or ACTC 

until March 1, of which it could protect about $533 million. This is about 

$468 million more than what IRS protected by holding refunds with EITC 

or ACTC until February 15. Further, IRS estimated that it could have 

protected $100 million in fraud and noncompliance had it held all taxpayer 

refunds until February 15—$35 million more than it protected with the 

current hold and verification process. IRS further estimated that by 

holding all refunds until March 1, it could protect about $895 million.

Various factors account for the differences between what IRS could 

detect as potential fraud and noncompliance and what it estimated that it 

could protect. First, IRS limits the number of cases it selects for review 

due to the large volume of work required to review all returns flagged by 

systemic verification and other fraud filters and limited staff available. 

Second, some returns that IRS selects for review are false positives—

legitimate tax returns erroneously selected for review—so not all the 

returns will be confirmed as fraud or noncompliant.

In its final analysis, IRS had not addressed the limitations noted above for 

the preliminary analysis. However, IRS expects to further explore the 

possibility of holding refunds beyond February 15. IRS also plans to 

complete additional analyses, including the effect of W-2 extension 

requests on systemic verification and taxpayers’ use of refund-related 

financial products. As IRS continues analyzing the effectiveness of the 

refund hold date on systemic verification, the limitations we outlined 

above will continue to prevent IRS from fully understanding the 

effectiveness of systemic verification and refund hold, and hamper IRS’s 

broader fraud risk management and compliance efforts.

 54Not all returns will complete processing for various reasons such as those returns that 

are confirmed as fraudulent or duplicate.
Page 27 GAO-18-224 Tax Fraud and Noncompliance

As noted, the Fraud Risk Framework emphasizes the use of fraud 

prevention activities to help federal agencies avoid the costly and 

inefficient “pay-and-chase” model. However, IRS has not assessed the 

benefits and costs of additional uses of early W-2 data to prevent fraud 

and noncompliance before issuing refunds. For example, IRS has not 

determined the value of using W-2 data to address employment fraud or 

underreporting prior to issuing refunds. Employment fraud is a type of 

identity theft refund fraud that occurs when an identity thief uses a 

taxpayer’s name and Social Security number to obtain a job and claims a 

refund. Underreporting occurs when a taxpayer underreports income or 

claims unwarranted deductions or tax credits. With its Automated 

Underreporter program, which is utilized after the filing season and after 

refunds have been issued, IRS electronically matches income information 

reported to IRS by third parties, such as banks and employers, against 

the information that taxpayers report on their tax returns.

With earlier W-2 information, IRS can detect more possible employment 

fraud or underreporting before issuing refunds. For example, if IRS has 

two W-2s reporting wage income for a taxpayer, but that taxpayer did not 

report both on his or her tax return, the taxpayer may have underreported 

his or her income or could be a victim of employment fraud. IRS officials 

stated that they are not using systemic verification to review such 

instances before issuing a refund because it would require them to follow 

the deficiency process.55 IRS typically begins this process when it has 

completed all of its compliance checks later in the filing season when it 

has most third-party data available for verification. IRS then sends the 

taxpayer a notice that informs him or her that IRS has proposed an 

adjustment to taxes owed because the third-party data IRS received does 

not match what the taxpayer reported on his or her tax return. The notice 

also informs the taxpayer of his or her right to challenge any resultant tax 

increase with the U.S. Tax Court.

IRS officials told us they do not want to issue the notice earlier because 

that could encourage taxpayers to file in Tax Court before IRS has 

completed its review. IRS officials stated that they did not see the 

 5526 U.S.C. § 6212. The deficiency process includes sending the taxpayer a “statutory 

notice of deficiency” or “90 day letter,” which is a legal notice in which the Commissioner 

determines the taxpayer’s tax deficiency. IRS is required to issue a notice of deficiency 

before assessing additional income tax, estate tax, gift tax, and certain excise taxes 

unless the taxpayer agrees to the additional assessment.

IRS Has Not Analyzed the 

Benefits and Costs of 

Additional Uses of Early 

W-2 Data and Systemic 

Verification
Page 28 GAO-18-224 Tax Fraud and Noncompliance

potential benefits of taking intermediate steps before sending a notice of 

deficiency, such as holding the refunds and corresponding with the 

taxpayer to resolve the discrepancy. However, while IRS had not 

explored this or other potential uses of W-2 data, IRS officials 

acknowledged that it would be worthwhile to consider additional 

opportunities of earlier W-2 data.

Earlier availability of W-2s and other information returns can help IRS 

identify and prevent fraud and noncompliance before issuing refunds.56

However, without assessing the benefits and costs, IRS does not know 

the extent to which it can use earlier W-2 data for other pre-refund 

compliance checks.

During the 2017 filing season, IRS’s ability to detect and prevent fraud 

and noncompliance improved because it received significantly more W-2 

data earlier and utilized it to verify wage, withholding, and other 

information on millions of tax refunds. Based on these results, systemic 

verification shows promise for preventing fraudulent refunds and reducing 

noncompliance. Nevertheless, the agency faced challenges that limited 

its success in implementing systemic verification.

Similar to taking action to assess the potential for processing more W-2s 

early in the filing season, IRS can take additional steps to increase the 

availability of more W-2 data. By not collecting data to track late W-2 

filings, IRS could not measure the extent to which late W-2 filings are 

associated with fraud and noncompliance. Further, by not taking earlier

action to improve enforcement of penalties for late W-2 filings, IRS is 

missing an opportunity to encourage compliance with the W-2 filing 

deadline and verify more wage information before releasing refunds. As a 

result, IRS risks releasing fraudulent and noncompliant refunds. We have 

also previously identified action Congress could take to increase the 

availability of W-2 data to IRS early in the filing season. In August 2014, 

we suggested that Congress provide the Secretary of the Treasury with 

 56These pre-refund compliance checks are consistent with IRS’s earlier vision of a Real 

Time Tax system. We found that Real Time Tax had the potential to provide substantial 

benefits, including reducing taxpayer burden and improving compliance, but it could 

require significant and possibly costly changes and impose new burdens on third parties. 

However, in April 2016, IRS officials stated the agency had no plans to continue pursuing 

Real Time Tax due to a lack of resources and competing priorities. See GAO, Tax 

Refunds: IRS Is Exploring Verification Improvements, but Needs to Better Manage Risks,

GAO-13-515 (Washington, D.C.: June 4, 2013).

Conclusions
Page 29 GAO-18-224 Tax Fraud and Noncompliance

the authority to lower the electronic filing requirement from 250 W-2s to 5 

to 10 W-2s. This action would also have the benefit of reducing SSA’s W2 paper processing costs by millions of dollars each year.

In addition, the February 15 refund hold for EITC and ACTC claims 

afforded IRS an opportunity to verify return information with early W-2 

data before issuing refunds. IRS took steps to collect and assess 

preliminary data on systemic verification and the refund hold during the 

filing season. In addition, IRS completed its final analysis that considers 

different scenarios for holding refunds longer and the potential revenue it 

could protect. However, IRS’s efforts are not guided by an evaluation plan 

to assess the results of systemic verification in preventing fraud and 

noncompliance before issuing refunds. Developing and implementing an 

evaluation plan that fully assesses the benefits and costs of that hold date 

would help IRS determine the effectiveness of systemic verification, its 

fraud risks, and the effect of the refund hold on taxpayer burden. IRS 

would then be in a better position to modify the refund hold under its 

existing authority and balance detecting and preventing fraud and 

noncompliance with taxpayer burden. Further, it is not clear how the 

analysis informs IRS’s broader fraud risk management efforts and other 

compliance strategies. Finally, with these data, IRS has the potential to 

improve tax enforcement in other areas such as for underreporting or 

employment fraud. While IRS has measures in place to address these 

issues after paying refunds, taking action before issuing refunds can 

prevent fraud and noncompliance and save IRS time and resources.

We are making the following six recommendations to IRS.

The Acting Commissioner of Internal Revenue should collect data to track 

late W-2 filing penalty notices and the extent to which they are associated 

with fraud and noncompliant returns. (Recommendation 1)

The Acting Commissioner of Internal Revenue should assess options for 

improving enforcement of late W-2 filing penalties, for example, by 

mailing notices before the next filing deadline. (Recommendation 2)

The Acting Commissioner of Internal Revenue should develop an 

evaluation plan to fully assess the benefits and costs, including taxpayer 

burden, of modifying the February 15 refund hold, and determine how this 

effort informs IRS’s overall compliance strategy for refundable tax credits 

and fraud risk management. (Recommendation 3)

Recommendations for 

Executive Action
Page 30 GAO-18-224 Tax Fraud and Noncompliance

Based on the benefits and costs assessment in Recommendation 3, the 

Acting Commissioner of Internal Revenue should use IRS’s existing 

authority to modify the refund hold such that it minimizes the risk of 

releasing fraudulent or noncompliant refunds. (Recommendation 4)

The Acting Commissioner of Internal Revenue should assess the benefits 

and costs of additional uses and applications of W-2 data for pre-refund 

compliance checks, such as addressing underreporting, employment 

fraud, and other fraud or noncompliance before issuing refunds. 

(Recommendation 5)

Based on the assessment in Recommendation 5, the Acting 

Commissioner of Internal Revenue should implement any identified 

changes to improve pre-refund compliance checks. (Recommendation 6)

We provided a draft of this product to Treasury and SSA for review and 

comment. IRS provided written comments, which are summarized below 

and reproduced in appendix II. SSA responded in writing with no 

comments (see appendix III). SSA and Treasury provided technical 

comments, which we incorporated as appropriate. 

In its written comments, IRS did not state whether it agreed or disagreed 

with our recommendations, but outlined planned steps to address five of 

the six recommendations. If implemented as planned, IRS’s proposed 

actions for recommendations 1, 4, 5 and 6, could meet the intent of the 

recommendations. However, for the third recommendation to develop an 

evaluation plan to fully assess the costs and benefits of modifying the 

February 15 refund hold, it is not clear whether IRS’s planned actions will 

fully satisfy the recommendation. IRS stated that it would assess and 

evaluate options for improvements to its refundable tax credits and fraud 

risk management strategies. However, IRS did not specify whether this 

evaluation would fully assess the benefits and costs, including taxpayer 

burden, of modifying the February 15 refund hold. As we reported, a 

documented evaluation plan that includes key data to assess the success 

of preventing fraud and noncompliance before issuing refunds will help 

IRS make better-informed decisions on potential changes to the refund 

hold date and those subjected to it. This includes, for example, assessing 

taxpayer burden to understand how taxpayers are affected by the current 

hold date and whether extending the hold or expanding it to all taxpayers 

would increase taxpayer burden. 

Agency Comments

and Our Evaluation
Page 31 GAO-18-224 Tax Fraud and Noncompliance

Regarding the second recommendation in our draft report to assess 

options for improving enforcement of late W-2 filing penalties by mailing 

notices before the next filing deadline, IRS stated that the timing of the 

receipt of a W-2 account file from SSA and the overall complexity of the 

process precludes notices from being issued prior to the start of the next 

filing season. Specifically, IRS noted that it assesses penalties on 

approximately 40 different types of information returns—in addition to W2s—and that the penalty calculation is complex. For W-2s, IRS explained 

that it receives a reconciled file from SSA in December that identifies 

those employers that should not be penalized. Finally, IRS noted that 

issuing penalty notices on a piecemeal basis would burden the taxpayer 

and potentially lead to erroneous notices. We recognize that there are 

challenges to issuing penalty notices, or other communications, before 

the next filing season. However, there are also benefits. As we reported, 

earlier communication with the employer, whether it includes a penalty 

assessment or not, increases the potential for compliance, helps 

taxpayers avoid filing late in the subsequent year, and increases the

availability of W-2 data for systemic verification to detect and prevent 

fraud and noncompliance. However, we continue to believe that 

assessing the options for improving enforcement of late W-2 filing 

penalties, such as through earlier communication, would help IRS identify 

potential opportunities to encourage compliance with the W-2 filing 

deadline and verify more wage information before releasing refunds. We 

intended the recommendation to be inclusive of other options beyond 

mailing notices earlier. As a result, we clarified the recommendation to 

make mailing notices before the next filing deadline an example.

We are sending copies of this report to the appropriate congressional 

committees, the Acting Commissioner of Internal Revenue, the Acting 

Commissioner of Social Security, the Secretary of the Treasury, and other 

interested parties. In addition, the report is available at no charge on the 

GAO website at http://www.gao.gov.
Page 32 GAO-18-224 Tax Fraud and Noncompliance

If you or your staff have any questions about this report, please contact 

me at (202) 512-9110 or lucasjudyj@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. Key contributors to this report are listed in 

appendix IV.

Jessica Lucas-Judy

Director, Tax Issues

Strategic Issues
Page 33 GAO-18-224 Tax Fraud and Noncompliance

List of Requesters

The Honorable Orrin Hatch

Chairman

The Honorable Ron Wyden

Ranking Member

Committee on Finance

United States Senate

The Honorable Kevin Brady

Chairman

Committee on Ways and Means

House of Representatives

The Honorable Lynn Jenkins

Chairman

The Honorable John Lewis

Ranking Member

Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

The Honorable Vern Buchanan

Chairman

Subcommittee on Tax Policy

Committee on Ways and Means

House of Representatives

The Honorable Sander Levin

House of Representatives

The Honorable Peter Roskam

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-18-224 Tax Fraud and Noncompliance

Our objectives in this report were to assess

• the Internal Revenue Service’s (IRS) performance in detecting fraud 

and noncompliance using systemic verification, and the Social 

Security Administration’s (SSA) performance providing timely Form 

W-2, Wage and Tax Statement (W-2) data to IRS; and

• the extent to which IRS analyzed the effectiveness of the refund hold 

on systemic verification as well as opportunities for IRS to apply 

systemic verification to other efforts to detect fraud and 

noncompliance.

To answer the first objective, we

• obtained and analyzed IRS documents and data, including documents 

describing the implementation of IRS’s systemic verification of W-2 

data and preliminary systemic verification data on the 2017 filing 

season, and used this information to determine how IRS used early 

W-2 data;

• reviewed the Protecting Americans from Tax Hikes Act of 2015 (the 

Act) and related tax laws and regulations to understand IRS’s 

systemic verification matching W-2 data against individual income tax 

returns affected by the Act (taxpayers claiming the Earned Income 

Tax Credit (EITC) or the Additional Child Tax Credit (ACTC)), as well 

as other returns not affected by the Act (those not claiming EITC or 

ACTC), and statutory requirements for penalties, electronic filing, and 

authority to hold refunds;

• reviewed IRS laws, regulations, and policies on penalty assessments 

for filing W-2s late, IRS data on late W-2s for 2017, and interviewed 

IRS officials to understand the process for assessing penalties;

• interviewed officials from IRS’s Wage and Investment division (which 

is responsible for managing filing season operations) on the 

challenges in implementing systemic verification, as well as planned 

improvements;

• interviewed officials from IRS’s Information Technology Applications 

Development unit to understand the technological capabilities of IRS’s 

Information Return Master File and related systems and identify 

system limitations and improvements. We compared IRS’s actions to 

IRS’s Strategic Plan, which includes objectives to strengthen refund 

fraud prevention by using third-party data and analytics for timely, 

informed decision making, and to innovate technology systems to 

support IRS’s business needs. We also compared IRS’s actions to the 

Standards for Internal Control in the Federal Government, which call 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-18-224 Tax Fraud and Noncompliance

for management to design and implement internal controls within 

programs based on the related benefits and costs;1

• observed and interviewed SSA employees processing and 

transcribing paper W-2s at the SSA’s Wilkes-Barre Direct Operations 

Center in Wilkes-Barre, Pennsylvania to understand how this work is 

performed and the time required for completing it;

• reviewed our prior reports, including reports on the filing season, tax 

credits, and identity theft, and evaluated IRS’s actions to implement 

selected prior recommendations; and

• interviewed SSA managers and staff who oversee and process paper 

Form W-2 data and transmit the data to IRS, and obtained and 

analyzed SSA goals, documents, and data, including data on costs for 

processing paper W-2s.

To answer the second objective, we

• reviewed IRS documents that included internal working group meeting 

minutes, planning documents, and management reports;

• assessed IRS’s data for 2017 and its preliminary and final analyses 

on the systemic verification results and outcomes under different 

scenarios for the 2017 filing season;

• compared IRS’s efforts to detect and prevent fraudulent and 

noncompliant refund payments with leading practices in our A 

 1

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). 
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-18-224 Tax Fraud and Noncompliance

Framework for Managing Fraud Risks in Federal Programs (Fraud 

Risk Framework) and program evaluation;2

• interviewed officials from IRS’s Wage and Investment division on the 

benefits and costs of systemic verification and to determine whether 

IRS conducted an economic analysis of the effects on taxpayers 

burden as a result of holding all taxpayer’s refunds until February 15;

• interviewed three economic experts to identify factors that IRS should 

consider or study following implementation of the Act. We selected 

economists based on their expertise in the field of tax policy and 

refundable tax credits, and to ensure variation in perspectives on tax 

issues. We asked similar questions of each economist and analyzed 

their comments to identify commonalities. We used these interviews 

to identify factors that IRS should consider in evaluating the refund 

hold date and any potential changes to it. The views of the economic 

experts are not generalizable; and

• interviewed officials from the Department of the Treasury’s (Treasury) 

Bureau of the Fiscal Service and Office of Tax Policy about their 

actions to prepare for releasing a large volume of refunds on February 

15 and to determine what analyses, if any, Treasury had conducted 

on taxpayer burden related to the holding all taxpayer’s refunds until 

February 15.

To assess the reliability of the data we used for this report, we reviewed 

IRS and SSA reports on W-2 data and IRS reports on systemic 

verification and its results. We also reviewed IRS reports on the 

 2

See GAO-14-704G and GAO, A Framework for Managing Fraud Risks in Federal 

Programs, GAO-15-593SP (Washington, D.C.: July 2015). This framework is a 

comprehensive set of leading practices that serves as a guide for program managers to 

use when developing efforts to combat fraud in a strategic, risk-based manner. We 

identified these leading practices through focus groups with antifraud professionals; 

interviews with government, private sector, and nonprofit antifraud experts; and a review 

of literature. We used the leading practices in this framework to assess IRS efforts 

because, as the framework states, it encompasses control activities to prevent, detect, 

and respond to fraud, as well as structures and environmental factors that influence or 

help managers achieve their objective to mitigate fraud risks. Thus, this framework is 

applicable to IRS efforts to address fraud risks in systemic verification. Pursuant to the 

Fraud Reduction and Data Analytics Act of 2015, the Director of the Office of Management 

and Budget is to establish, in consultation with the Comptroller General, guidelines for 

agencies to establish financial and administrative controls to identify and assess fraud 

risks and design and implement control activities to prevent, detect, and respond to fraud, 

including improper payments, and which are to incorporate the leading practices identified 

in GAO’s Fraud Risk Framework. Pub. L. No. 114-186, 130 Stat. 546 (June 30, 2016). 

See also GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.: 

January 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-18-224 Tax Fraud and Noncompliance

performance of its fraud filters. We examined systemic verification data to 

identify obvious errors or outliers and assessed potential data limitations 

that would affect use of the data for assessing performance. We also 

interviewed IRS officials about their data quality procedures and the 

reliability and limitations of these data. We determined that the data 

presented in this report are sufficiently reliable for the purposes of our 

reporting objectives.

We conducted this performance audit from March 2017 to January 2018 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the Internal 

Revenue Service

Page 38 GAO-18-224 Tax Fraud and Noncompliance

Appendix II: Comments from the Internal 

Revenue Service
Appendix II: Comments from the Internal 

Revenue Service

Page 39 GAO-18-224 Tax Fraud and Noncompliance
Appendix II: Comments from the Internal 

Revenue Service

Page 40 GAO-18-224 Tax Fraud and Noncompliance
Appendix II: Comments from the Internal 

Revenue Service

Page 41 GAO-18-224 Tax Fraud and Noncompliance
Appendix II: Comments from the Internal 

Revenue Service

Page 42 GAO-18-224 Tax Fraud and Noncompliance
Appendix III: Comments from the Social 

Security Administration

Page 43 GAO-18-224 Tax Fraud and Noncompliance

Appendix III: Comments from the Social 

Security Administration
Appendix IV: GAO Contact and Staff Acknowledgments

Page 44 GAO-18-224 Tax Fraud and Noncompliance

Jessica Lucas-Judy (202) 512-9110, lucasjudyj@gao.gov

In addition to the contact named above, Joanna Stamatiades, Assistant 

Director; Erin Saunders Rath, Analyst-in-Charge; Jessica Ard; Mark 

Canter; Jacqueline Chapin; Jehan Chase; Felisa Garmon; Robert 

Gebhart; Tom Gilbert; Andrew Howard; Kirsten B. Lauber; Japheth

 McGee; Paul Middleton; Ed Nannenhorn; Sabine Paul; Bradley Roach;

 and Robert Robinson made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101953)
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