IRS missing referrals on preparers

IRS staffers didn’t evaluate roughly a third of referrals dealing with potentially fraudulent tax return preparers, according to a new federal report.

{mosads}Treasury’s inspector general for tax administration said that the IRS return preparer office generally does a good job overseeing what both the agency and Congress believe is a big problem: preparers who bilk taxpayers out of their refunds.

But the inspector general added that limited resources and insufficient procedures had kept the IRS from getting to as many referrals, as it should.

“Since the majority of individual taxpayers now rely on others to prepare their income tax returns, preparer accuracy, integrity, and reliability have never been more important,” Russell George, the tax administration inspector general, said in a statement. “The IRS must do everything it can to enforce the law and protect the taxpayer against inaccurate or fraudulent return preparation.”

Roughly six in 10 taxpayers use a paid preparer, and the IRS has pointed to fraud issues within that community as among the more common tax scams.

The IRS and lawmakers are also more broadly trying to fight identity theft scams, in which paid preparers sometimes take part.

Referrals to the office overseeing return preparers can come from inside the IRS or from taxpayers and other preparers. Treasury’s inspector general said it reviewed 2,134 referrals that three separate offices received between 2010 and 2012, and found return preparer coordinators hadn’t evaluated 722 of them.

The IRS responded to the audit by saying they’d make improvements to the sharing and tracking of the referrals, and acknowledged that diminishing resources were a problem.