type: other

jurisdiction: US

text: b'TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION\n\n\n\n\n Better Screening and Monitoring of\n E-File Providers Is Needed to Minimize the\n Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n September 19, 2007\n\n Reference Number: 2007-40-176\n\n\n\n\n This report has cleared the Treasury Inspector General for Tax Administration disclosure review process\n and information determined to be restricted from public release has been redacted from this document.\n\n Redaction Legend:\n 1 = Tax Return/Return Information\n 2(e) = Law Enforcement Procedure(s)\n 2(f) = Risk Circumvention of Agency Regulation or Statute (whichever is applicable)\n 3(d) = Identifying Information - Other Identifying Information of an Individual or Individuals\n\n\n Phone Number | 202-927-7037\n Email Address | Bonnie.Heald@tigta.treas.gov\n Web Site | http://www.tigta.gov\n\x0c DEPARTMENT OF THE TREASURY\n WASHINGTON, D.C. 20220\n\n\n\n\nTREASURY INSPECTOR GENERAL\n FOR TAX ADMINISTRATION\n\n\n\n\n September 19, 2007\n\n\n MEMORANDUM FOR COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED\n DIVISION\n COMMISSIONER, WAGE AND INVESTMENT DIVISION\n\n FROM: Michael R. Phillips\n Deputy Inspector General for Audit\n\n SUBJECT: Final Audit Report \xe2\x80\x93 Better Screening and Monitoring of E-File\n Providers Is Needed to Minimize the Risk of Unscrupulous Providers\n Participating in the E-File Program (Audit # 200740020)\n\n This report presents the results of our review to determine whether the Internal Revenue\n Service\xe2\x80\x99s (IRS) screening and monitoring of electronic filing (e-file) Providers is effective. This\n audit is a followup to prior Treasury Inspector General for Tax Administration (TIGTA)\n reviews.1\n\n Impact on the Taxpayer\n The primary means by which the IRS regulates e-file Providers are the application screening\n process and the monitoring program. The application screening process does not ensure the\n integrity of the individuals applying for participation in the e-file Program and the monitoring\n program does not ensure e-file Providers are compliant with e-file Program requirements.\n Inadequate screening and monitoring increases the risk to both the taxpaying public and the\n Federal Government for potential losses associated with unscrupulous e-file Providers.\n\n\n\n\n 1\n Improvements to the Electronic Return Originator Monitoring Program Are Needed (Reference\n Number 2003-30-039, dated January 2003), Improvements Are Needed in the Screening and Monitoring of E-File\n Providers to Protect Against Filing Fraud (Reference Number 2004-40-013, dated November 2003), and E-File\n Providers Are Not Adequately Screened (Reference Number 2002-40-111, dated June 2002).\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nSynopsis\nThere were 259,009 authorized electronic return originators2 as of May 22, 2007, who\nelectronically filed (e-filed) about 55 million (71 percent) of the approximately 77.1 million\ne-filed tax returns accepted in Calendar Year 2007. The application screening process is used to\nensure individuals applying for entry into the e-file Program have met required screening and\nverification checks before they are authorized to participate in the e-file Program. Monitoring\nvisits are the primary means to verify compliance with many of the e-file Program requirements.\nThe IRS has an effective process for ensuring applicants meet age requirements and e-file\nProviders meet certain suitability checks, such as tax compliance. A review of 98 applications\nfound that tax compliance checks were correctly performed for the 137 Principal and\nResponsible officials3 and the 94 businesses listed on these applications. However, the IRS does\nnot have an independent verification process to confirm the accuracy of applicants who claim\nthey are a Not-for-Profit service. In addition, the IRS does not verify citizenship. Tests of\n 98 applications showed 3 of the 137 applicants were either\n Applicant requirements and\n aliens not allowed to work or alien students with restricted\n suitability checks are not work authorizations. In a previous audit,4 we conducted a\n verified or consistently similar test to identify individuals whose citizenship\n performed. indicator identified them as not being a citizen or legal\n resident alien. A total of 85 individuals were referred to\n the IRS for research. Of the 85 individuals,\n52 (61 percent) were eventually removed from the e-file Program. For 40 (77 percent) of the\n52 individuals removed, the applicants falsified their applications by identifying themselves as\nUnited States citizens or legal resident aliens.\nFurthermore, credit checks are not performed and criminal background checks are limited. The\nIRS does verify the status of individuals who submit a professional certification in lieu of a\nfingerprint card to ensure they are still in good standing with the organization that issued the\ncertification. It also verifies all new applicants are at least 21 years of age and not deceased.\n\n\n\n2\n Electronic Return Originators (ERO) originate the electronic submission of income tax returns to the IRS. An\nERO electronically submits income tax returns that are either prepared by the ERO firm or collected from a\ntaxpayer.\n 3\n A Principal includes the sole proprietor, partners, or individuals authorized to act for the entity in legal and/or tax\n matters. A Responsible Official is the first point of contact with the IRS and has the authority to sign revised IRS\n e-file applications and ensures the e-file Provider adheres to the provisions of the revenue procedure as well as all\n publications and notices governing the IRS. There were a total of 138 Principal and Responsible Officials on the\n 98 applications. One individual did not list a Social Security Number on the application, so their tax compliance or\n citizenship status could not be verified.\n4\n E-File Providers Are Not Adequately Screened (Reference Number 2002-40-111, dated June 2002).\n 2\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nTesting also identified that deficiencies prevent the IRS from measuring program performance\nand ensuring that authorized e-file Providers are in conformance with e-file Program guidelines.\nFor example:\n \xe2\x80\xa2 Current procedures do not ensure e-file Providers most at risk of noncompliance are\n selected for monitoring visits, including the scheduling of required followup visits.\n \xe2\x80\xa2 E-file Providers who were issued written reprimands were not subject to the required\n followup visits.\n \xe2\x80\xa2 Procedures have not been developed requiring e-file Monitoring Coordinators to record\n the receipt and disposition of referrals.\n \xe2\x80\xa2 E-file Providers determined to be in violation of e-file Program requirements were not\n suspended.\n \xe2\x80\xa2 Documentation supporting e-file Provider appeal requests and decisions associated with\n these requests is inadequate.\n \xe2\x80\xa2 E-file Monitoring Program management information is inaccurate.\nFinally, the IRS does not have a process to review e-file Provider cases, worked by its Criminal\nInvestigation function, to identify opportunities to improve on the screening checks and selection\ncriteria for monitoring visits. Characteristics of these cases could identify risk factors or\nindicators to be used to screen unscrupulous individuals from entry into the e-file Program and\nidentify unscrupulous e-file Providers in the e-file Program. The Criminal Investigation function\ninitiated 315 criminal cases involving tax return preparers during Fiscal Years 2006 and 2007\n(as of April 30, 2007).\n\nRecommendations\nThe Commissioner, Wage and Investment Division, should ensure applicants who claim to be a\nNot-For-Profit are in fact a Not-For-Profit and revise screening procedures to require validation\nof an applicant\xe2\x80\x99s citizenship. The Commissioner, Small Business/Self Employed Division,\nshould develop processes to ensure risk-based selection criteria is used to select e-file Providers\nfor monitoring visits, the receipt and disposition of referrals are recorded, e-file Providers are\nsuspended when recommended, adequate documentation supporting appeals is maintained, and\nmanagement information accurately reflects e-file Monitoring Program results. In addition,\nprocedures should be clarified as to when followup visits should be performed. Both\nCommissioners should ensure results of criminal cases involving e-file Providers are used to\nidentify potential risk factors or indicators that can be built into the screening and monitoring\nprocess to improve on the identification of unscrupulous e-file Providers.\n\n\n 3\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nResponse\nIRS management agreed with eight of our nine recommendations and partially agreed with\none recommendation. The Electronic Tax Administration Office is currently partnering with\nStakeholder Partnerships, Education, and Communication Headquarters office to establish\nformal procedures for validating existing authorized IRS e-file Providers as an organization\nproviding a Not-for-Profit service. The Electronic Tax Administration Office has taken steps to\nreview the citizenship verification process and develop a solution. The citizenship codes of\napplicants can be checked using the Data Master One5 tape from the Social Security\nAdministration before they are accepted into the IRS e-file Program. Applicants found to have a\ncitizenship code that shows they are an alien in the United States and are not a legal resident\nalien will be manually contacted for verification before the application can be completed. For\nexisting applicants, a one-time query will be made using these same procedures. Individuals\nwho are not able to verify that they are United States citizens or legal resident aliens will be\nsuspended from the IRS e-file Program.\nIRS management has developed a risk-based selection criterion and procedures regarding\nfollowup visits. Both of these items should be published by January 30, 2008. IRS management\nhas developed a process to keep track of referrals and Electronic Filing Identification Number\nsuspension cases through a new control log.\nIRS management has clarified procedures requiring the maintenance of adequate documentation\nsupporting an e-file Provider\xe2\x80\x99s request for an appeal, as well as documentation supporting the\nreview and outcome of an appeal. They have also developed a process to keep track of results\nthat are kept by the Area E-File Monitoring Coordinators.\nIRS management will study the feasibility of using results of criminal cases involving e-file\nProviders to identify risk factors or indicators for the suitability process. This will require\nworking with the Criminal Investigation Division to obtain criminal case characteristics of\nproviders of e-file returns and any other information they might have. We believe management\xe2\x80\x99s\naction satisfies the intent of our recommendation. Management\xe2\x80\x99s complete response to the draft\nreport is included as Appendix VI.\nCopies of this report are also being sent to the IRS managers affected by the report\nrecommendations. Please contact me at (202) 622-6510 if you have questions or\nMichael E. McKenney, Assistant Inspector General for Audit (Wage and Investment Income\nPrograms), at (202) 622-5916.\n\n\n\n\n5\n The Data Master One (DM\xe2\x80\x931) File Data Store contains data from the Social Security Administration used to verify\ntaxpayers who do not have a primary Master File account.\n 4\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Table of Contents\n\nBackground ..........................................................................................................Page 1\n\nResults of Review ................................................................................................Page 5\n The Application Screening Process Does Not Ensure the Integrity\n of the Individuals Applying for Participation in the E-File Program ...........Page 5\n Recommendations 1 and 2: ..............................................Page 9\n\n The Monitoring Program Does Not Ensure E-File Providers Are\n Compliant With Program Requirements.......................................................Page 10\n Recommendations 3 through 5:.........................................Page 16\n\n Recommendations 6 through 8:.........................................Page 17\n\n Reviews of Closed Criminal Cases Involving E-File Providers May\n Identify Risk Factors or Indicators to Detect Unscrupulous E-File\n Providers .......................................................................................................Page 18\n Recommendation 9:........................................................Page 19\n\n\nAppendices\n Appendix I \xe2\x80\x93 Detailed Objective, Scope, and Methodology ........................Page 20\n Appendix II \xe2\x80\x93 Major Contributors to This Report ........................................Page 22\n Appendix III \xe2\x80\x93 Report Distribution List .......................................................Page 23\n Appendix IV \xe2\x80\x93 Prior Treasury Inspector General for Tax\n Administration Report Recommendations....................................................Page 24\n Appendix V \xe2\x80\x93 Examples of E-File Provider Requirements Verifiable\n Only Through a Monitoring Visit .................................................................Page 28\n Appendix VI \xe2\x80\x93 Management\xe2\x80\x99s Response to the Draft Report ......................Page 29\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Abbreviations\n\ne-file, e-filed Electronic Filing, Electronically Filed\nERO Electronic Return Originator\nIRS Internal Revenue Service\nTIGTA Treasury Inspector General for Tax Administration\nU.S. United States\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Background\n\nThe Internal Revenue Service\xe2\x80\x99s (IRS) electronic filing (e-file) Program offers\ntaxpayers an alternative to filing a traditional paper tax return. The\ne-file Program enables tax returns to be sent to the IRS in an electronic\nformat via an authorized IRS e-file Provider. An e-file Provider is generally the first point of\ncontact for most taxpayers filing a tax return through the IRS\xe2\x80\x99 e-file Program. Figure 1 lists\ntypes of authorized e-file Providers.\n Figure 1: Types of Authorized IRS E-File Providers\n Electronic Return EROs originate the electronic submission of income tax returns to\n Originator (ERO) the IRS. An ERO electronically submits income tax returns that are\n either prepared by the ERO firm or collected from a taxpayer.\n\n Intermediate Service Intermediate Service Providers receive tax return information from\n Providers EROs or from taxpayers who file electronically using a personal\n computer, modem, and commercial tax preparation software on an\n Internet site; process the tax return information; and either forward\n the information to a transmitter or send the information back to the\n EROs or taxpayers.\n\n Transmitters Once the return is prepared, the income tax return data is sent to\n the IRS by a transmitter. Transmitters must have software and\n modems that allow them to connect with IRS computers. EROs\n and Intermediate Service Providers may also apply to be\n transmitters and transmit return data themselves or they may\n contract with accepted third-party transmitters who will transmit the\n data for them.\n\n Software Developers Software Developers write the e-file programs according to IRS file\n specifications and record layouts making IRS e-file and\n Federal/State e-file possible. The IRS and participating States\n require that all software pass a series of tests each year. Once\n approved, this software may be sold and used by EROs.\n Source: IRS training guidance provided to individuals interested in becoming e-file Providers.\n\nThere were 259,009 authorized EROs as of May 22, 2007, who electronically filed (e-filed)\nabout 55 million (71 percent) of the approximately 77.1 million e-filed tax returns accepted in\nCalendar Year 2007. The primary means by which the IRS regulates e-file Providers are the\napplication screening process and the monitoring program.\nThe application screening process is used to ensure individuals applying for entry into the\ne-file Program have met required screening and verification checks before they are authorized to\n\n Page 1\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nparticipate in the Program. To become an e-file Provider, an applicant is required to complete\nan Application to Participate in the IRS e-file Program (Form 8633) and submit it and a\nfingerprint card to the IRS. The IRS allows an individual with a professional certification to\nsend a copy of the certification in lieu of a fingerprint card. Certifications include Attorney,\nCertified Public Accountant, Enrolled Agent, and Banking Official. Each application is\nrequired to identify Principal(s) and at least one Responsible Official.\n\xe2\x80\xa2 A Principal includes the sole proprietor, partners, or individuals authorized to act for the\n entity in legal and/or tax matters. At least one such individual must be listed on the\n application.\n\xe2\x80\xa2 A Responsible Official is the first point of contact with the IRS and has the authority to sign\n revised IRS e-file applications. A Responsible Official ensures the e-file Provider adheres\n to the provisions of the revenue procedure as well as all publications and notices governing\n IRS e-file.\nThe requirements and suitability checks outlined in the IRS e-file Application and Participation\n(Publication 3112) include:\n\xe2\x80\xa2 Applicant must be a United States (U.S.) citizen or legal resident alien.\n\xe2\x80\xa2 Applicant must be 21 years of age as of the date of the application.\nSuitability checks may include:\n\xe2\x80\xa2 Criminal background check.\n\xe2\x80\xa2 Credit history check.\n\xe2\x80\xa2 Tax compliance check to ensure all required tax returns are filed and paid and to identify\n fraud and preparer penalties.\nAll authorized e-file Providers, except those that function solely as Software Developers, must\nmeet requirements and pass suitability checks prior to\nacceptance in the e-file Program. If an individual does E-file Program requirements are\nnot meet the requirements and/or fails a suitability meant to protect the Program\xe2\x80\x99s\ncheck, the application will be denied. Applicants denied image and integrity.\nparticipation in IRS e-file will be notified in writing and\nmay appeal the decisions.\nOnce approved, e-file Providers must maintain strict adherence to Program requirements to\nensure continued participation. Program requirements are outlined in Revenue Procedure\n2005\xe2\x80\x9360, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns\n(Publication 1345), and the Filing Season Supplement for Authorized IRS e-file Providers\n(Publication 1345A). Requirements include the need to ensure tax returns are accurately filed,\nare supported by the appropriate documentation, are signed by the taxpayers, and security\n\n Page 2\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nsystems are in place to prevent unauthorized access to taxpayer accounts and personal\ninformation by third parties.\nThe e-file Monitoring Program requires IRS employees visiting e-file Provider sites to, for\nexample, review the quality of IRS e-file submissions for rejects,1 check adherence to signature\n requirements on tax returns, scrutinize advertising\n The e-file Monitoring Program is material, and examine records and office procedures. A\n designed to ensure e-file monitoring visit is the primary means to verify\n Providers are in compliance with compliance with many of the e-file Program\n requirements. requirements. Appendix V provides examples of those\n e-file Program requirements that can only be verified via\n a monitoring visit.\nEach year during the filing season,2 specially trained IRS employees visit approximately\n1 percent of all authorized e-file Provider establishments to perform comprehensive operational\nreviews. Figure 2 shows the trends in the e-file Monitoring Program during the 2005 through\n2007 Filing Seasons.\n Figure 2: Trends in E-File Monitoring Program for\n the 2005-2007 Filing Seasons\n Tax Total e-file\n Return Total e-file Providers Monitoring\n Filing Included in Selection Visits\n Season Process Planned\n 2007 127,000 1,270\n 2006 105,300 1,053\n 2005 117,571 1,175\n Source: IRS documentation related to planning its\n annual e-file Provider monitoring visits.\n\nMonitoring visits involve an assessment of e-file Provider business practices, including methods\nfor advertising, preparing tax returns, and safeguarding sensitive taxpayer information.\nViolations of e-file requirements can result in the following:\n\xe2\x80\xa2 Verbal warning \xe2\x80\x93 oral admonishment to the e-file Provider for not adhering to e-file\n Program rules and entails discussion of possible consequences relating to further\n noncompliance.\n\n\n1\n When an e-filed return is transmitted to the IRS, it is run through a series of validity and error checks. These\nchecks look for such things as names and Social Security Numbers that match IRS records, math errors, and other\ncommon errors. If errors are found, the return is rejected back to the e-file Provider to fix the error and resubmit\nthe return.\n2\n The filing season is the period from January through mid-April when most individual income tax returns are filed.\n Page 3\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\xe2\x80\xa2 Written reprimand \xe2\x80\x93 issuance of a formal written warning, communicating more serious\n violations.\n\xe2\x80\xa2 Suspension \xe2\x80\x93 a 1 to 2 year removal from the e-file Program.\n\xe2\x80\xa2 Expulsion \xe2\x80\x93 permanent removal from the e-file Program.\nThe IRS Wage and Investment Division is responsible for the oversight of the e-file Provider\nscreening process. The Small Business/Self-Employed Division is responsible for the\nMonitoring Program. This review is a followup review to previous audits the Treasury\nInspector General for Tax Administration (TIGTA) performed assessing the effectiveness of the\nIRS\xe2\x80\x99 screening and monitoring of e-file Providers.3 Appendix IV provides a list of the\nrecommendations and corrective actions associated with these reviews.\nThis review was performed at the Electronic Tax Administration function in Washington, D.C.;\nthe e-file Unit in the Andover, Massachusetts, Submission Processing Site; and the Small\nBusiness/Self-Employed Division Headquarters located in New Carrollton, Maryland.\nAdditionally, visits were made to the Los Angeles, California, and Philadelphia, Pennsylvania,\nSmall Business/Self-Employed Division Planning and Special Programs offices. Records were\nobtained from the Small Business/Self-Employed Division Planning and Special Programs\noffices in Chicago, Illinois, and Jacksonville, Florida. This audit was conducted during the\nperiod December 2006 through June 2007. The audit was conducted in accordance with\nGovernment Auditing Standards. Detailed information on our audit objective, scope, and\nmethodology is presented in Appendix I. Major contributors to the report are listed in\nAppendix II.\n\n\n\n\n3\n Improvements to the Electronic Return Originator Monitoring Program Are Needed (Reference\nNumber 2003-30-039, dated January 2003), Improvements Are Needed in the Screening and Monitoring of E-File\nProviders to Protect Against Filing Fraud (Reference Number 2004-40-013, dated November 2003), and E-File\nProviders Are Not Adequately Screened (Reference Number 2002-40-111, dated June 2002).\n Page 4\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Results of Review\n\nThe Application Screening Process Does Not Ensure the Integrity of\nthe Individuals Applying for Participation in the E-File Program\nThe IRS has an effective process for ensuring applicants meet age requirements and e-file\nProviders meet certain suitability checks, such as tax compliance. However, the IRS does not\nhave an independent verification process to confirm the accuracy of applicants who claim they\n are a Not-For-Profit service. Additionally, the IRS does\n Program requirements and not verify citizenship; credit checks are not performed;\n suitability checks are not and criminal background checks are limited.\n verified or consistently\n performed. The IRS does verify the status of applicants who submit\n professional certifications in lieu of a fingerprint card to\n ensure they are still in good standing with the particular\n organizations that issued the certifications. It also verifies\nall new applicants are at least 21 years of age and not deceased. Additionally, the IRS\ndeveloped an automated process to check and monitor tax compliance of both applicants and\nexisting approved e-file Providers.\nThere are currently no national standards an individual is required to satisfy before presenting\nhimself or herself as a Federal tax preparer and selling tax preparation services to the public.\nTax compliance checks, validation of professional certification, confirmation of age\nrequirements, and sampled criminal background checks reduce the risk of non-integrity of e-file\nProviders. However, it is important that the IRS adequately screens e-file Provider applicants to\nprotect both the taxpaying public and the Federal Government from losses resulting from\nactions by unscrupulous Providers.\n\nAn automated process checks and monitors tax compliance for applicants and\nexisting e-file Providers\nIn Fiscal Year 2004, the IRS developed the Automated e-file Application Processing system.\nThis system automates the process of checking and monitoring tax compliance and ensures\napplicants and approved e-file Providers are current with their tax return filings and tax\npayments. In addition, this process ensures individuals and businesses have not been assessed\n\n\n\n\n Page 5\n\x0c\x0c\x0c\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nSocial Security Numbers; and income, employment, and bank account details) is regarded as a\nprime target for identity thieves.\n\nRecommendations\nThe Commissioner, Wage and Investment Division, should:\nRecommendation 1: Verify that Not-for-Profit applicants are a Not-for-Profit service. For\nexisting authorized e-file Providers who are a Not-for-Profit service, a validation should be\nperformed to ensure these e-file Providers are in fact a Not-for-Profit service.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation.\n The Electronic Tax Administration Office is currently partnering with Stakeholder\n Partnerships, Education, and Communication Headquarters to establish formal\n procedures for validating existing authorized IRS e-file Providers as an organization\n providing a Not-for-Profit service via management reports, screening prior to acceptance\n for the IRS e-file Program, etc.\nRecommendation 2: Revise screening procedures to require validation of an applicant\xe2\x80\x99s\ncitizenship. This process should require corresponding with potential applicants whose\ncitizenship indicators reflect a non-citizenship status. For existing authorized e-file Providers,\nthe IRS should conduct a validation to identify individuals with non-citizenship statuses and\ndevelop a process to confirm the citizenship of these individuals.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation.\n The Electronic Tax Administration Office has already taken steps to review the\n citizenship verification process and develop a solution. The citizenship codes of\n applicants can be checked, using the Data Master One10 tape from the Social Security\n Administration, before they are accepted into the IRS e-file Program. Any applicants\n found to have a citizenship code that shows they are an alien in the U.S. and are not a\n legal resident alien will be manually contacted for verification before the application can\n be completed. For existing applicants, the Electronic Tax Administration Office will\n perform a one-time query prior to implementing the same procedures. Individuals who\n are unable to verify that they are U.S. citizens or legal resident aliens will be suspended\n from the IRS e-file Program.\n\n\n\n\n10\n The Data Master One File Data Store contains data from the Social Security Administration used to verify\ntaxpayers who do not have a primary Master File account.\n Page 9\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nThe Monitoring Program Does Not Ensure E-File Providers Are\nCompliant With Program Requirements\nDeficiencies prevent the IRS from measuring program performance and ensuring that\nauthorized e-file Providers are in conformance with e-file Program guidelines. Current\nprocedures do not ensure Providers most at risk of noncompliance are selected for monitoring\nvisits and Providers in violation of Program requirements are suspended. E-file Provider\nappeals are not well documented and the e-file Monitoring Program management information is\ninaccurate.\nImprovements are needed to ensure the e-file Monitoring Program will have the most impact in\ndetecting and stopping unscrupulous Providers. Taxpayers and the Federal Government\xe2\x80\x99s risk\nfrom fraudulent tax return filings increases when noncompliant e-file Providers are not\nidentified. The recent filing of civil injunction suits against five corporations that operate tax\npreparation businesses shows the importance of adequate oversight over e-file Providers. The\nlawsuits allege the e-file Providers created and fostered an environment in which fraudulent tax\nreturn preparation is encouraged and flourishes. The suits allege more than $70 million in\ncombined losses to the Federal Government.\nThroughout the audit, as we brought the following issues to IRS management\xe2\x80\x99s attention,\nmanagement understood the significance of the issues and took immediate actions to address\nthese concerns. These actions often included the immediate development and issuance of\ninterim guidance.\n\nTargeted monitoring visits are not based on risk factors and required followup\nvisits are not being conducted\nCurrent procedures do not ensure the established risk-based selection process is followed when\nselecting e-file Providers for monitoring visits. Required followup visits are not being\nconducted. In addition, documentation is not maintained to support referrals from internal and\nexternal sources and the actions taken based on these referrals.\nThere are three types of monitoring visits, prioritized by: Referrals, Follow up, and\nTargeted/Random. For Targeted monitoring visits, the established risk-based selection criteria\nis to include e-file Providers who e-filed 100 or more tax\nreturns, had a reject rate of at least 25 percent, and/or\n Deficiencies in the e-file\nhad 25 percent or more missing U.S. Individual Income Monitoring Program put the\nTax Declaration for an IRS e-file Return (Form 8453). integrity of the e-file Program at\nThese criteria were established in response to a prior risk.\nTIGTA audit11 that recommended the IRS develop\n\n11\n Improvements to the Electronic Return Originator Monitoring Program Are Needed (Reference\nNumber 2003-30-039, dated January 2003).\n Page 10\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nuniform risk-based selection criteria to take advantage of available information and data for\nselecting e-file Providers for its monitoring visits. In addition, guidelines require that all e-file\nProviders who are issued written reprimands be subject to followup monitoring visits in the\nsubsequent tax return filing season to ensure corrective actions have been taken.\nRisk-based selection criteria to identify those e-file Providers to be visited is not being\nfollowed\n\nTesting at two Area Offices12 identified that monitors were\nnot following the risk-based criteria when selecting e-file Monitoring Coordinators were\nProviders to review. A review of the characteristics of not aware of the risk-based\n criteria to be followed when\n40 randomly sampled e-file Providers selected for identifying e-file Providers for a\nmonitoring visits for the 2007 Filing Season identified monitoring visit.\nthat:\n\xe2\x80\xa2 Three (8 percent) of the 40 e-file Providers e-filed\n fewer than 100 tax returns. Of the 3, 1 e-file Provider did not have any tax returns filed,\n while 2 others had filed returns totaling 15 and 23.\n\xe2\x80\xa2 Thirty-two (80 percent) of the 40 e-file Providers had reject rates below 25 percent. For\n example, 2 e-file Providers had reject rates of only 4 and 8 percent.\nAn ample number of e-file Providers that met specific risk-based criteria could have been\nselected for monitoring visits. Analysis of tax data for these 2 Area Offices identified 453 e-file\nProviders that met the criteria of having filed 100 or more tax returns and a 25 percent or greater\nreject rate \xe2\x80\x93 200 in one of the Areas and 253 in the other Area. Workload planning required\nthese two Areas in total to perform 220 visits.\nMonitoring Coordinators13 in these two Area Offices stated they were unaware of selection\ncriteria. The criteria had not been added to formal guidance documents. Coordinators\nacknowledged that selections were often tied to visits conducted as part of the Earned Income\nTax Credit Due Diligence Program. As a result, monitoring visits were at times limited\ngeographically and had no relationship to any of the selection criteria. The coupling of visits\nfor the two Programs was a resource driven decision to save on travel and staff expenditures.\n\n\n\n\n12\n A geographic organizational level used by IRS business units and offices to help their specific types of taxpayers\nunderstand and comply with tax laws and issues.\n13\n Monitoring Coordinators develop annual monitoring visit plans including identification of subject e-file\nProviders and train territory office employees (i.e. monitors) responsible for performing the monitoring visits. The\nMonitoring Coordinators also review monitoring visit case files.\n Page 11\n\x0c\x0c\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nDecisions for reversing e-file Provider suspensions are not well documented\nDocumentation supporting decisions to reverse recommended suspensions is not maintained by\nArea Offices. A review of 18 proposed suspensions from 2 Area Offices found that\n8 (44 percent) of the proposed suspensions were reversed by the Monitoring Coordinators. The\nsuspensions were reduced to either warnings or written reprimands. For 5 (63 percent) of\n8 reversals documentation was not available to show either the rationale for the reversals or the\nspecific individuals involved in the reversal decisions.\nAn e-file Provider advised of either a proposed suspension (i.e., not effective until all appeal\noptions are exhausted) or an immediate suspension has the right to submit, to the IRS within\n30 days, a written request for appeal that must be accompanied by supporting documentation.\nThe appeal process is comprised of two levels, the first being an administrative review decided\nby Area Office officials. If the e-file Provider is not satisfied with the outcome of the\nadministrative review, he or she may proceed to the\nsecond level and file a formal appeal. Adequate documentation\n was not maintained\nFormal guidelines state the Monitoring Coordinator will supporting appeal\ndecide whether to reverse the suspensions. Guidance decisions.\nalso outlines that an administrative review committee\nwill review and decide the appeals. However, guidance\ndoes not detail specific documentation to be maintained.\nStandards for Internal Controls in the Federal Government mandate that all transactions and\nother significant events need to be clearly documented and the documentation should be readily\navailable for examination.\n\nManagement information used to monitor e-file Providers is not accurate\nThree of four Monitoring Coordinators submitted inaccurate management information reports to\nNational Program Management at the conclusion of the\n2006 Filing Season. Reviews of e-file monitoring case Inaccuracies in management\nfiles in two of four Area Offices identified inaccuracies information resulted from the\nin reporting the disposition of monitoring visits. lack of a reconciliation process.\nFigure 4 provides a comparison of the actual disposition\nto what was reported (excluding suspension information\nfor which separate testing was performed).\n\n\n\n\n Page 14\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Figure 4: Comparison of Actual Results of 2006 Filing Season\n Monitoring Visits With Information Reported\n Results Results Reported to\n per TIGTA Review for Two National Program\n Sampled Area Offices Management\n Difference\n In Compliance 89 97 8%\n Verbal Warning 20 25 20%\n Written Reprimand 57 44 -30%\n In Compliance 28 36 22%\n Verbal Warning 4 14 71%\n Written Reprimand 9 9 ---\n Source: TIGTA review of monitoring case files maintained in two\n Area Monitoring Coordinator offices sampled.\n\nIn addition, two of four Area Offices\xe2\x80\x99 management information relating to suspensions was\ninaccurate. Figure 5 provides a comparison of what was reported to actual results.\n Figure 5: Comparison of Actual Suspensions\n With the Number Reported\n Results Per TIGTA Results Reported to\n Review National Management\n\n Proposed Immediate Proposed Immediate\n\n Area A 17 0 16 3\n Area B 11 0 11 0\n Area C 5 2 0 5\n Area D 0 0 0 0\n\n Total 33 2 27 8\n\n Source: TIGTA review of suspension documentation obtained from\n Area Offices Monitoring Coordinators included in our sample.\n\nBeginning the last week of January each year and throughout the filing season, Monitoring\nCoordinators are required to report weekly, to the National Program Management, the number\nof e-file monitoring visits completed, along with the specific results of those monitoring visits.\nThese weekly reports are based on data the Coordinators receive from the offsite monitors who\nperformed the visits.\nInaccuracies result when the Monitoring Coordinators review the cases after they have already\nreported the weekly results to the National Management. The Monitoring Coordinators review\n\n Page 15\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nthe monitoring visit case files after the end of the filing season, and at times the reviews result\nin a change to the disciplinary actions recommended by the offsite monitor who performed the\nvisit. However, Monitoring Coordinators are not updating management information with\nchanges based on their reviews.\nNot updating results when proposed suspensions are reversed on appeal and a lesser disciplinary\naction is recommended also contributes to the inaccuracies in management information.\nInaccurate management information impedes the IRS\xe2\x80\x99 ability to effectively quantify the scope\nand results of the e-file Monitoring Program and to make informed business decisions relative to\nProgram direction.\n\nRecommendations\nThe Commissioner, Small Business/Self Employed Division, should:\nRecommendation 3: Develop a process that ensures established risk-based selection criteria\nis used to identify e-file Providers for monitoring visits.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. A\n risk-based selection criterion has been developed and added to Internal Revenue Manual\n 4.21.1, Electronic Filing Program-Monitoring the IRS e-file Program, which should be\n published by January 30, 2008.\nRecommendation 4: Clarify procedures regarding when followup visits should be\nperformed and implement a process that ensures followup visits are conducted in accordance\nwith the clarified guidelines.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation.\n Procedures regarding followup visits have been clarified and added to Internal Revenue\n Manual 4.21.1, Electronic Filing Program-Monitoring the IRS e-file Program, which\n should be published by January 30, 2008.\nRecommendation 5: Develop a process to record the receipt and disposition of referrals\nfrom internal and external sources. This process should also ensure the timely referral to other\nIRS functions, if recommended.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. A\n process has been developed to keep track of these cases through a new control log kept\n by the Area E-File Monitoring Coordinators to be forwarded to the Headquarters analyst\n at the end of each quarter, including the end of the calendar year. This new procedure\n has been added to Internal Revenue Manual 4.21.1, Electronic Filing\n Program-Monitoring the IRS e-file Program, which should be published by\n January 30, 2008.\n\n\n Page 16\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nRecommendation 6: Develop a process to ensure e-file Provider privileges are suspended\nwhen recommended and consideration is given and notated if Principal(s) and/or Responsible\nOfficial(s) should be removed from the e-file Program.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. A\n process has been developed to keep track of Electronic Filing Identification Number\n suspension cases through a new control log kept by the Area E-File Monitoring\n Coordinators to be forwarded to the Headquarters analyst at the end of each quarter,\n including the end of the calendar year. This new procedure has been added to Internal\n Revenue Manual 4.21.1, Electronic Filing Program-Monitoring the IRS e-file Program,\n which should be published by January 30, 2008.\nRecommendation 7: Develop procedures requiring the maintenance of adequate\ndocumentation supporting an e-file Provider\xe2\x80\x99s request for an appeal, as well as documentation\nsupporting the review and outcome of an appeal.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation.\n Procedures have been clarified and incorporated into Internal Revenue Manual 4.21.1,\n Electronic Filing Program-Monitoring the IRS e-file Program, which should be\n published by January 30, 2008.\nRecommendation 8: Develop a process to ensure management information accurately\nreflects the results of the e-file Monitoring Program.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. A\n process has been developed to keep track of results that are kept by the Area E-File\n Monitoring Coordinators to be forwarded to the Headquarters analyst at the end of each\n quarter, including the end of the calendar year. This new procedure has been added to\n Internal Revenue Manual 4.21.1, Electronic Filing Program-Monitoring the IRS e-file\n Program, which should be published by January 30, 2008.\n\n\n\n\n Page 17\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nReviews of Closed Criminal Cases Involving E-file Providers May\nIdentify Risk Factors or Indicators to Detect Unscrupulous E-file\nProviders\nThe IRS does not have a process to review e-file Provider cases worked by its Criminal\nInvestigation function to identify opportunities to improve on the screening checks and selection\ncriteria for monitoring visits. Characteristics of these cases could identify risk factors or\nindicators to be used to screen unscrupulous individuals from entry into the e-file Program and\nidentify unscrupulous e-file Providers in the e-file Program. The Criminal Investigation\nfunction initiated 315 criminal cases involving tax return preparers during Fiscal Years 2006\nand 2007 (as of April 30, 2007). The Criminal Investigation function currently does not track\ntax preparer cases by whether or not the individual was an e-file Provider, but an analyst stated\nthat most of these cases involve e-file Providers.\nAn example included in a prior TIGTA report14 detailed a closed criminal case concerning an\ne-file Provider who pled guilty to filing false tax returns. This case exemplifies the importance\nof the IRS including reject rates as a risk factor in the monitoring visit selection criteria. This\ne-file Provider had a reject rate in excess of 40 percent for tax returns submitted during the 2001\nand 2002 Filing Seasons. The high reject rate resulted from a process known as \xe2\x80\x9cwashing.\xe2\x80\x9d\nThe washing entailed the e-file Provider submitting tax returns using fraudulently obtained\nSocial Security Numbers. As part of the IRS\xe2\x80\x99 validity checks, it verified the Social Security\nNumbers using computer files to determine if they were valid and/or were previously used on\nanother tax return. If the checks identified problems, the tax return was rejected and the e-file\nProvider was provided an explanation on why the tax return was rejected. The e-file Provider\nwould keep track of the rejected Social Security Numbers to ensure they were not used on\nsubsequently submitted fraudulent tax returns. The IRS has since added a high reject rate as\none of the indicators for identifying an e-file Provider for a monitoring visit.\nThis e-file Provider filed approximately 9,000 fraudulent tax returns over a 3-year period and\nreceived approximately $7 million in fraudulent tax refunds in 1 year alone. This e-file Provider\nhad a criminal history before being accepted into the Program. The e-file Provider pled guilty\nto filing false, fictitious, and fraudulent claims against the U.S. (tax returns); conspiracy to file\nfalse claims against the U.S.; and conspiracy to negotiate forged U.S. Treasury checks of\napproximately $33,000.\n\n\n\n\n14\n Improvements Are Needed in the Screening and Monitoring of E-File Providers to Protect Against Filing Fraud\n(Reference Number 2004-40-013, dated November 2003).\n Page 18\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\nRecommendation\nThe Commissioners, Wage and Investment Division, and Small Business/Self Employed\nDivision, should:\nRecommendation 9: Ensure results of criminal cases involving e-file Providers are used to\nidentify potential risk factors or indicators that can be built into the screening and monitoring\nprocess to improve on the identification of unscrupulous e-file Providers.\n Management\xe2\x80\x99s Response: IRS management partially agreed with this\n recommendation. The Wage and Investment and Small Business/Self-Employed\n Divisions will study the feasibility of using results of criminal cases involving e-file\n Providers to identify risk factors or indicators for the suitability process. This will\n require working with the Criminal Investigation Division, to obtain criminal case\n characteristics of providers of e-file returns and any other information they might have.\n If a work request is needed for enhancements to the electronic e-file Application, more\n time will be needed for funding and implementation of new electronic processes.\n\n\n\n\n Page 19\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix I\n\n Detailed Objective, Scope, and Methodology\n\nOur overall objective was to determine whether the IRS\xe2\x80\x99 screening and monitoring of e-file\nProviders is effective. To accomplish this objective, we:\nI. Determined whether the initial and periodic screening process is effectively identifying those\n e-file Providers that are not in compliance with Program requirements.\n A. Assessed actions taken by the IRS in response to prior TIGTA recommendations.\n B. Determined whether applicants met e-file requirements prior to acceptance in the\n Program.\n 1. Obtained a list of active e-file Providers from the Third Party Data Store.1 To\n validate this data, we selected five records from the Third Party Data Store extract\n and validated them to printouts from the Third Party Data Store.\n 2. Selected a statistically valid sample of 98 active e-file Providers out of 29,454 e-file\n applications that were accepted in 2006 to assess compliance with e-file\n requirements. Our sample size was selected based on a 10 percent error rate, a\n 5 percent precision rate, and a 90 percent confidence level.\n a) Performed data matches for all Principal(s) and Responsible Official(s)2 listed\n on the application to confirm that they were in compliance with age and\n citizenship requirements and that the individuals were not deceased.\n b) Performed data matches for the business, all Principal(s), and Responsible\n Official(s) to ensure they were tax compliant.\n c) Determined whether a fingerprint card or professional certification was received\n for all Principal(s) and Responsible Official(s) listed on the application.\n d) Determined whether a mandatory criminal background check was performed for\n those applicants who indicated on the application that the firm failed to file\n\n\n1\n The Third Party Data Store is an electronic database that houses all pertinent information on third parties that\ninteract with the IRS through e-Services. For example, this database contains information on all registered users and\ne-file Providers, along with information on their e-file activity.\n2\n A Principal includes the sole proprietor, partners, or individuals authorized to act for the entity in legal and/or tax\nmatters. A Responsible Official is the first point of contact with the IRS and has the authority to sign revised IRS\ne-file applications and ensures the e-file Provider adheres to the provisions of the revenue procedure as well as all\npublications and notices governing IRS e-file.\n Page 20\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n business tax returns or pay tax liabilities, or an individual on the application\n indicated they had been assessed preparer penalties, been convicted of a crime,\n failed to file personal tax returns or pay tax liabilities, or been convicted of any\n criminal offense under the U.S. Internal Revenue laws.\n e) For those individuals in our sample selected for a criminal background check,\n assessed the actions taken based on any results received back from the Federal\n Bureau of Investigation and determined whether results were received prior to\n acceptance.\n C. Determined whether the IRS has a process to ensure applicants selecting Not-for-Profit\n are in fact Not-For-Profit.\n D. Determined whether the IRS\xe2\x80\x99 screening process is effective.\nII. Determined whether the IRS\xe2\x80\x99 e-file monitoring process effectively identifies any e-file\n Providers who are not complying with Program requirements.\n A. Assessed related actions the IRS took in response to prior TIGTA recommendations.\n B. Determined whether the IRS has established a process to effectively track and resolve\n referrals received.\n C. Assessed the process for e-file Monitoring Coordinators to follow when referring an\n e-file Provider to the Examination and/or Criminal Investigation function.\n D. Evaluated whether the checksheet that e-file monitors use to ensure completeness of\n monitoring visits includes an assessment of all Program requirements.\n E. Assessed the effectiveness of the process followed for selecting e-file Providers for\n monitoring visits.\n F. Determined if disciplinary actions resulting from violations identified during\n 2006 monitoring visits were carried out in accordance with guidelines. For the two Area\n Offices we visited, we determined whether written reprimands issued to noncompliant\n e-file Providers were followed-up on, as required.\n G. For the two Area Offices visited, reviewed the effectiveness of actions taken to suspend\n e-file Providers. Sites visited were selected to ensure broad geographic coverage.\n Because of significant issues identified, we expanded testing to two other Area Offices,\n selected based on the relative high volume of suspensions in Calendar Year 2006. In\n total, we assessed the processing of all 35 proposed and immediate suspensions imposed\n in Calendar Year 2006.\n H. Identified control breakdowns and attempted to assess the impact on taxpayers and the\n IRS.\n\n\n Page 21\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix II\n\n Major Contributors to This Report\n\nMichael E. McKenney, Assistant Inspector General for Audit (Wage and Investment Income\nPrograms)\nAugusta R. Cook, Director\nRussell P. Martin, Audit Manager\nPamela DeSimone, Lead Auditor\nRobert Howes, Senior Auditor\nAndrea Hayes, Auditor\nMary Keyes, Auditor\n\n\n\n\n Page 22\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix III\n\n Report Distribution List\n\nActing Commissioner C\nOffice of the Commissioner \xe2\x80\x93 Attn: Acting Chief of Staff C\nDeputy Commissioner for Services and Enforcement SE\nDeputy Commissioner, Small Business/Self-Employed Division SE:S\nDeputy Commissioner, Wage and Investment Division SE:W\nDirector, Compliance, Small Business/Self-Employed Division SE:S:C\nDirector, Customer Account Services, Wage and Investment Division SE:W:CAS\nDirector, Customer Assistance, Relationships, and Education, Wage and Investment Division\nSE:W:CAR\nDirector, Electronic Tax Administration, Wage and Investment Division SE:W:ETA\nDirector, Strategy and Finance, Wage and Investment Division SE:W:S\nChief, Performance Improvement, Wage and Investment Division SE:W:S:PI\nChief Counsel CC\nNational Taxpayer Advocate TA\nDirector, Office of Legislative Affairs CL:LA\nDirector, Office of Program Evaluation and Risk Analysis RAS:O\nOffice of Internal Control OS:CFO:CPIC:IC\nAudit Liaison: Senior Operations Advisor, Wage and Investment Division SE:W:S\n\n\n\n\n Page 23\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix IV\n\n Prior Treasury Inspector General for Tax\n Administration Report Recommendations\n\n Report Corrective Action per the\n Reference Recommendation IRS\n\n 2004-40-013 Ensure citizenship and age Agreed \xe2\x80\x93 will ensure\n November requirements are met. responsible officials possess\n 2003 1 valid Social Security\n Numbers.\n Ensure criminal background Agreed - process requires the\n checks are obtained purchase of scanning\n electronically. hardware and software.\n Completion of this acquisition\n process will not occur before\n the 2004 Filing Season.\n For unprocessable fingerprint Agreed - guidelines revised\n cards, a name check should be and the Federal Bureau of\n used as the basis for the criminal Investigation will be\n background check. requested to perform a\n background check using name\n and other available\n information on unprocessable\n cards.\n Ensure individuals who provide Agreed - revised IRS e-file\n professional certifications are in Application and Participation\n current standing. (Publication 3112) as well\n guidelines and procedures.\n Also, enrolled agents will be\n validated during application\n process. There is no central\n repository for a systemic\n check for the other categories\n of professionals. Will pursue\n other methods to perform\n check of other categories.\n\n\n\n1\n Improvements Are Needed in the Screening and Monitoring of E-file Providers to Protect Against Filing Fraud\n(Reference Number 2004-40-013, dated November 2003).\n Page 24\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Report Corrective Action per the\n Reference Recommendation IRS\n\n 2004-40-013 Periodic updates of criminal Disagreed \xe2\x80\x93 no action.\n November investigations.\n 2003\n (continued)\n Use e-file reject rates for Agreed \xe2\x80\x93 will develop related\n selecting monitoring visits. guidance.\n Establish a system to measure Agreed \xe2\x80\x93 will revise\n the effectiveness of the e-file monitoring reports to reflect\n Provider monitoring program. the results broken down by\n referral type.\n 2003-30-039 Establish a goal and method for Disagreed \xe2\x80\x93 cannot accurately\n January 20032 measuring program effectiveness measure results of visits.\n for improving ERO compliance,\n such as results of followup visits.\n Maintain case documentation - Agreed - issued memo\n re-enforce that followup visits guidance.\n are a measure of monitoring the\n impact on compliance.\n Allow time for case building. Agreed - training provided.\n\n Ensure ease of identifying Agreed - guidance issued.\n referral sites.\n Develop process for proper mix Agreed - guidance issued.\n of random/mandatory visits -\n broad geographic coverage.\n\n Develop uniform risk-based Agreed - Guidance issued on\n criteria for selecting e-file use of indicators in selecting\n Providers to include in e-file Providers for\n monitoring visit plans. monitoring visits.\n Provide clear and unambiguous Agreed - Guidelines revised.\n infraction and sanction\n guidelines.\n\n\n\n\n2\n Improvements to the Electronic Return Originator Monitoring Program Are Needed (Reference\nNumber 2003-30-039, dated January 2003)\n Page 25\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Report Corrective Action per the\n Reference Recommendation IRS\n\n 2003-30-039 Revise e-file Monitoring Agreed - instructed monitors\n January 2003 Guidelines to consider Earned to pursue due diligence\n (continued) Income Tax Credit due diligence penalties when appropriate.\n when determining e-file Provider\n compliance with Internal\n Revenue Service e-file Program\n requirements.\n Ensure complete case Agreed - guidance issue.\n documentation is maintained.\n 2002-40-111 Screening procedures should Disagreed - due to view that\n June 2002 3 include independent validation of number of ineligible\n citizenship and age. applicants based on age and\n citizenship is small.\n All applicants should be Disagreed \xe2\x80\x93 Experience\n subjected to credit and criminal shows credit checks are\n background checks before ineffective. Case study\n acceptance in the e-file Program. showed background\n investigations reveal\n information usually not of\n significance to deny\n participation in the e-file\n Program. E-file growth and\n return preparation for\n low-income taxpayers would\n be adversely affected with\n checks at volunteer sites.\n Perform subsequent Disagreed - report does not\n credit/criminal checks at regular justify need. Regular\n intervals. monitoring of Providers\n occurs ensuring compliance\n with rules, and the audit\n report does not show\n screening and monitoring\n processes produce negative\n results, thus justifying\n additional checks.\n\n\n\n\n3\n E-file Providers Are Not Adequately Screened (Reference Number 2002-40-111, dated June 2002).\n Page 26\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Report Corrective Action per the\n Reference Recommendation IRS\n\n 2002-40-111 Guidelines for handling Agreed - will request new\n June 2002 fingerprint cards returned as fingerprint cards from\n (continued) unprocessable should be applicants and resubmit them\n followed and individuals with to the Federal Bureau of\n unprocessable fingerprint cards Investigation. No need to\n should be contacted and a new contact those who were\n card provided for completion of already identified to date\n criminal check. since those individuals are\n already participants in the\n Program. Will issue interim\n guidance on obtaining new\n fingerprint cards.\n\nSource: Prior TIGTA Reports as cited.\n\n\n\n\n Page 27\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix V\n\n Examples of E-File Provider Requirements Verifiable\n Only Through a Monitoring Visit\n\n\xe2\x80\xa2 Accepting tax returns from persons other than taxpayers or authorized e-file Providers.\n\xe2\x80\xa2 Conduct of a disreputable nature.\n\xe2\x80\xa2 Earned Income Tax Credit Due Diligence Checklist and Worksheet not on file.\n\xe2\x80\xa2 Failure to check identification of tax return filers.\n\xe2\x80\xa2 Failure to notify the IRS of changes in Application to Participate in the IRS e-file Program\n (Form 8633) (e.g., not notifying the IRS of business address and contact information\n changes).\n\xe2\x80\xa2 Failure to protect taxpayer information from potential misuse.\n\xe2\x80\xa2 Failure to retain required records.\n\xe2\x80\xa2 Knowingly employing a denied/suspended e-file Provider.\n\xe2\x80\xa2 Not complying with advertising standards (e.g., posting misleading advertising material).\n\xe2\x80\xa2 Preparation of tax returns using leave and earnings statements rather than required Wage and\n Tax Statement (Form W-2).\n\xe2\x80\xa2 Unethical practices in tax return preparation.\n\xe2\x80\xa2 Untimely, missing, or incomplete U.S. Individual Income Tax Declaration for an IRS e-file\n Return (Form 8453) (i.e., failure to adhere to taxpayer signature requirements).\n\n\n\n\n Page 28\n\x0c Better Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n Appendix VI\n\nManagement\xe2\x80\x99s Response to the Draft Report\n\n\n\n\n Page 29\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 30\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 31\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 32\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 33\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 34\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 35\n\x0cBetter Screening and Monitoring of E-File Providers Is Needed to\n Minimize the Risk of Unscrupulous Providers Participating\n in the E-File Program\n\n\n\n\n Page 36\n\x0c'


type: contracts

jurisdiction: EU

text:
12.6.2008
 LT
 Europos Sąjungos oficialusis leidinys
 L 154/30
 EEE JUNGTINIO KOMITETO SPRENDIMAS
 Nr. 15/2008
 2008 m. vasario 1 d.
 iš dalies keičiantis EEE susitarimo XX priedą (Aplinka)
 EEE JUNGTINIS KOMITETAS,
 atsižvelgdamas į Europos ekonominės erdvės susitarimą su pakeitimais, padarytais Protokolu, patikslinančiu Europos ekonominės erdvės susitarimą (toliau – Susitarimas), ypač į jo 98 straipsnį,
 kadangi:
 (1)
 Susitarimo XX priedas iš dalies pakeistas 2007 m. gruodžio 7 d. EEE jungtinio komiteto sprendimu Nr. 169/2007 (1).
 (2)
 Į Susitarimą turi būti įtrauktas 2006 m. lapkričio 3 d. Komisijos sprendimas 2006/799/EB, nustatantis patikslintus ekologinius kriterijus ir susijusius vertinimo ir patikros reikalavimus suteikiant Bendrijos ekologinį ženklą dirvožemio savybes gerinančioms medžiagoms (2).
 (3)
 Sprendimu 2006/799/EB panaikinamas Komisijos sprendimas 2001/688/EB (3), kuris yra įtrauktas į Susitarimą ir todėl pagal Susitarimą turi būti panaikintas,
 NUSPRENDĖ:
 1 straipsnis
 Susitarimo XX priedo 2d punkto (Komisijos sprendimas 2001/688/EB) tekstas pakeičiamas taip:
 „32006 D 0799: 2006 m. lapkričio 3 d. Komisijos sprendimas 2006/799/EB, nustatantis patikslintus ekologinius kriterijus ir susijusius vertinimo ir patikros reikalavimus suteikiant Bendrijos ekologinį ženklą dirvožemio savybes gerinančioms medžiagoms (OL L 325, 2006 11 24, p. 28).“
 2 straipsnis
 Sprendimo 2006/799/EB tekstas islandų ir norvegų kalbomis, kuris turi būti paskelbtas Europos Sąjungos oficialiojo leidinio EEE priede, yra autentiškas.
 3 straipsnis
 Šis sprendimas įsigalioja 2008 m. vasario 2 d., jei EEE jungtiniam komitetui buvo pateikti visi pranešimai, kurie numatyti Susitarimo 103 straipsnio 1 dalyje (4).
 4 straipsnis
 Šis sprendimas skelbiamas Europos Sąjungos oficialiojo leidinio EEE skyriuje ir EEE priede.
 Priimta Briuselyje 2008 m. vasario 1 d.
 EEE jungtinio komiteto vardu
 Pirmininkas
 Alan SEATTER
 (1) OL L 124, 2008 5 8, p. 37.
 (2) OL L 325, 2006 11 24, p. 28.
 (3) OL L 242, 2001 9 12, p. 17.
 (4) Konstituciniai reikalavimai nenurodyti.