Dec 10th 2010
The watchdog over costs and efficiency at the Internal Revenue Service has saved taxpayers almost $3 billion over six months, according to a new report to Congress.
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The report of the Treasury Inspector General for Tax Administration (TIGTA) covers April 1 through September 30 of this year. It outlines the results of the 86 audits and 2,105 investigations the office has completed over the six-month period, a time when the IRS was at a key point in a long-range project to modernize its electronic tax filing system.
The IRS also was dealing with erroneous refunds under tax credit programs and tax fraud by prison inmates. The report says $2.74 billion in cost savings was identified, and another $3.74 billion of revenue was protected by the office’s work.
The report also recounts investigations by TIGTA special agents, who identified 460 taxpayers who might pose a risk to the IRS and its employees. TIGTA provided armed escorts 62 times. Some of the threats included delivery of bags of white powder to IRS facilities in Austin, Texas, and Baltimore, which turned out to be baking soda. Fingerprint analysis led to the September indictment of Michael Wayne Patterson.
In addition, the report stated, an Alabama man was sentenced to 52 months in prison for ramming his SUV into an IRS building, injuring two employees. A North Carolina man was sentenced to 46 months for threatening an IRS agent by phone, saying repeatedly, “I’m gonna off you.” A California man was sentenced to five years probation for making a bomb threat at the Fresno Service Center. Another California man was taken into custody after handing an IRS employee a note that read BOMB BAG and patting his backpack. No bomb was found. A Florida woman was indicted after allegedly making threatening phone calls to IRS employees over a five-year period. In one, she threatened to kill the worker and the worker’s family.
Other high-profile investigations include:
- EMC Corp. paid the United States $87.5 million to settle a lawsuit alleging violation of the False Claims Act and the Federal Anti-Kickback Act by making false claims that induced the General Services Administration to enter into a contract.
- Two IRS Service Center employees in Kentucky were sentenced to prison for stealing money orders from June through December of 2009.
- William Murray of California was sentenced to 19 and a half years in prison for mail fraud and interference with tax administration in a Ponzi scheme, which amounted to $13.3 million stolen from clients between 2001 and 2009. He was ordered to pay more than $10 million in restitution to victims.
Audit results include:
- A comprehensive strategy is being developed to identify individuals who must repay first-time homebuyer credits. About 1.8 million claimed nearly $12.5 billion in first-time homebuyer credits in 2009, but 950,000 will have to pay them back because their homes were purchased in 2008.
- Auditors recommended that the IRS should use Currency Transaction Reports more fully in its pursuit of people who don’t file or who under-report taxes. Several hundred audits were started from Currency Transaction Reports and recommended additional taxes of $13.6 million, the report states.
- Audits also showed control weaknesses in processing refunds for nonresident aliens, and the IRS agreed to take corrective actions.