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GGD-96-96R 1 (1996-03-25)

handle is hein.gao/gaobaclcr0001 and id is 1 raw text is: GAO United States GAO) General Accounting Office Washington, D.C. 20548 General Government Division B-265769 March 25, 1996 The Honorable John Glenn Ranking Minority Member Committee on Governmental Affairs United States Senate Dear Senator Glenn: This letter responds to your request that we review the status and results of efforts by the Internal Revenue Service (IRS) to reduce its exposure to fraud in 1995. Controls over persons filing fraudulent returns and receiving fraudulent refunds can be implemented either before the return is filed, where the focus is on deterring fraud, or after the return is filed, where the focus shifts to identifying returns involving possible noncompliance. In 1995, after being urged to take immediate action by us, Congress, and a Department of the Treasury task force on fraud, IRS introduced new controls and expanded existing controls in both of those areas. Several of the steps IRS took in 1995 are ones that we think are necessary to help deter persons from filing fraudulent returns, and there is evidence that those steps had a positive deterrent effect. Other steps IRS took to identify questionable returns after they were filed seemed reasonable in concept but encountered several problems in implementation. For example, many of the cases involving missing or invalid Social Security Numbers (SSNs) that IRS selected for review were unproductive and resulted in an inefficient use of resources and undue taxpayer burden.' DETERRING FRAUD It is to IRS' advantage to keep persons from filing fraudulent returns. By doing so, IRS can avoid the cost it might otherwise incur in identifying and investigating the fraudulent returns and can avoid the risk of either not catching the fraud or catching it too late to prevent issuing the refund. To improve its controls in this area in 1995, IRS (1) expanded the number of controls in its electronic filing system, (2) revised its process for checking the suitability 'As used in this letter, an invalid SSN is one that does not match Social Security Administration records. GAO/GGD-96-96R IRS Efforts to Control Fraud in 1995

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