Latest news with #TIGTA
Yahoo
20 hours ago
- Business
- Yahoo
Lax IRS review opened way for Form 941 business fraud: Inspector General
This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. Dive Brief: Lax review by the IRS opened the way for swindlers to file bogus Forms 941 and bag tax refund checks even after agency managers were informed of the risk from such business fraud, the Treasury Inspector General for Tax Administration said. TIGTA last year alerted the IRS that investigators found that the agency provided more than $93 million in fraudulent refund checks to 20 businesses, TIGTA said in a report. IRS staff failed to properly authenticate callers and enabled the wrongdoing by providing fraudsters with account, deposit and other tax information. 'IRS management was aware of the risk of erroneous refunds being issued,' TIGTA said, adding that 'the agency did not take action to prevent the scheme.' Dive Insight: The report, criticizing staff who handle queries from callers to Business Security Tax and Practitioner Priority Service telephone lines, identifies errors that preceded a historic agency shakeup this year under the Trump administration. The White House during the first half of 2025 slashed the IRS work force from 102,000 to less than 76,000, with Taxpayer Service staff shrunk by 22%, National Taxpayer Advocate Erin M. Collins said in June. The tally includes employees who accepted an early resignation offer and will stay on payroll through Sept. 30. Roughly 26% of revenue agents and 27% of tax examiners have left the agency or intend to do so, TIGTA said in July. 'With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year's filing season,' Collins said in a June report. The Trump administration, in its 2026 budget request, flagged the risks from mass cuts in taxpayer services and requested the hiring of 11,000 customer service employees. At current staff levels, 'most taxpayers would be unable to reach the IRS by phone or receive answers to questions related to tax compliance,' the IRS said. 'Taxpayers that do get through will face long wait times.' Meanwhile, the Trump administration has triggered unprecedented turnover in the agency's top spot. During the past eight months, the administration has cycled through seven commissioners, a position with a five-year tenure. Dozens of top career civil servants have left the IRS, with many resigning after the announcement of a memorandum of understanding on the use of tax data between the IRS and Immigration and Customs Enforcement. 'During Trump's first term, turnover in senior leadership was tempered in important ways by a bulwark of qualified, dedicated civil servants in federal agencies,' Brookings said this month in a report. 'This time the damage is far more severe. 'To date, career officials have shown remarkable tenacity in performing their legally mandated responsibilities to protect taxpayer data,' Brookings said. 'But with the loss of leadership, the guardrails are weakening — and the likelihood of a competently run tax season dims.' The IRS pledged last month to take steps aimed at averting the filing of fraudulent Forms 941 and illegitimate refunds, including improved training and increased use of electronic payments rather than the issuance of checks. 'The protection of taxpayer information and prevention of fraudulent refunds are top priorities for the IRS,' Kenneth Corbin, chief of the Taxpayer Services Division, said in a July 3 letter to TIGTA. Recommended Reading Restatements decline, with small companies more prone to error: CAQ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hill
21 hours ago
- Business
- The Hill
IRS wrongfully fired thousands, watchdog finds
The terminated employees were not given proper notice, nor was their performance taken into account when getting rid of them, the office of the Treasury Inspector General for Tax Administration (TIGTA) concluded in a report released. 'Internal procedures were not followed when sending the termination notices. Policies and procedures require the IRS to give probationary employees a 30-day notice and consider their performance prior to terminating them,' TIGTA found. In February, the IRS fired 6,700 employees designated as probationary, meaning they were working for the agency on a trial basis prior to becoming full staff members. The hires were part of a large-scale overhaul of the agency initiated by Democrats in 2022 as part of their Inflation Reduction Act. That legislation awarded the agency an initial $80 billion funding boost to be spent over the subsequent decade. More than half of the initial money — $45 billion — was earmarked for extra tax enforcement, specifically increased audits for wealthy Americans. The IRS even set up a new division to go after complex partnerships, or nested legal entities that can shelter funds that are owed to the government. The Hill's Tobias Burns has more here.
The Hill
a day ago
- Business
- The Hill
IRS broke rules in firing probationary employees, Treasury Department watchdog finds
The IRS broke its own rules when it fired thousands of employees earlier this year on the orders of the Trump administration, the Treasury Department's internal watchdog agency found last week. The terminated employees were not given proper notice, nor was their performance taken into account when getting rid of them, the office of the Treasury Inspector General for Tax Administration (TIGTA) concluded in a report released on Thursday. 'Internal procedures were not followed when sending the termination notices. Policies and procedures require the IRS to give probationary employees a 30-day notice and consider their performance prior to terminating them,' TIGTA found. In February, the IRS fired 6,700 employees designated as probationary, meaning they were working for the agency on a trial basis prior to becoming full staff members. The hires were part of a large-scale overhaul of the agency initiated by Democrats in 2022 as part of their Inflation Reduction Act. That legislation awarded the agency an initial $80 billion funding boost to be spent over the subsequent decade. More than half of the initial money — $45 billion — was earmarked for extra tax enforcement, specifically increased audits for wealthy Americans. The IRS even set up a new division to go after complex partnerships, or nested legal entities that can shelter funds that are owed to the government. Auditing sophisticated companies requires skilled staff, and the IRS had just started hiring a first tranche of personnel to make that happen, many of whom were in their trial period at the agency when they got canned by the Trump administration. When they got fired, they were told it was for performance reasons, but TIGTA found on Thursday that the agency didn't take performance into account when issuing pink slips. 'Termination letters cited performance as a reason for termination; however, the IRS did not consider individual performance when deciding which employees to terminate,' TIGTA concluded. The Trump administration has declared an all-out bureaucratic war on public sector unions, firing employees at many different government agencies through a special cost-cutting panel. Last week, courts gave the go-ahead to the administration's plan to do away with collective bargaining rights at a number of agencies. It's not clear whether TIGTA's report presents a legal vulnerability for the Trump administration, but public sector unions are showing the resolve to fight for their jobs. 'Our friends with the VA have had their union contract terminated. They've had their rights to collective bargaining stripped. This is, we think, an illegal action,' Daniel Scharpenburg, vice president of the National Treasury Employee Union Chapter 66, said in a social media video posted last week, encouraging fellow union members to rally. Republicans worked throughout the back half of the Biden administration to kill the IRS funding boost, clawing back an initial $20 billion before eventually freezing the rest of the audit funding through what was likely a stealth negotiating maneuver. Biden administration officials told The Hill last year they had known about that loophole in the appropriations process and worked to prevent rescissions with requests to Congress. House Ways and Means Committee ranking member Richard Neal (D-Mass.) told The Hill last year that the freeze was likely due to a mistake.
Forbes
31-07-2025
- Business
- Forbes
President Trump Is Downsizing The Internal Revenue Service
The Internal Revenue Service (IRS), part of the Department of the Treasury, is the federal agency responsible for administering and enforcing federal tax laws. It is currently facing significant challenges due to budget cuts implemented by President Trump. IRS Staffing Cuts Highlighted in Inspector General Report The Treasury Inspector General for Tax Administration (TIGTA) publishes reports that provide insight into the operations of the IRS. On July 18, 2025, TIGTA released report number 2025-IE-R027. The report reveals that the IRS employed 103,000 people at the beginning of 2025. By May, 26,000 of those employees had left or will soon leave, reducing the agency's workforce to 77,000—an attrition that will take place over just seven months (IRS data table). One Big Beautiful Bill Introduces Sweeping Tax Changes Congress passed—and President Trump signed into law—One Big Beautiful Bill (OBBB), officially titled An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14 (full bill text). OBBB is a comprehensive tax overhaul passed solely with Republican votes through the Senate reconciliation process. It includes numerous complex tax and non-tax provisions, which will: The Legacy of the Inflation Reduction Act On Aug. 16, 2022, President Biden and Congress passed the Inflation Reduction Act (IRA), which increased IRS funding by $80 billion over 10 years. Later acts of Congress reduced this amount to $38 billion. TIGTA tracked the IRS's use of these funds. As of Sept. 30, 2024, the IRS had spent only $9 billion. Of that amount, $2 billion went toward regular annual operating expenses due to shortfalls in its base budget (TIGTA March 2025 report). The intent of this funding was to modernize the IRS and to increase enforcement on higher income taxpayers. Treasury Requests Less IRS Funding in 2026 On May 30, 2025, the Department of the Treasury submitted its budget request for fiscal year 2026, calling for a 20% funding reduction compared to the prior year. Excluding IRA-related funds, the Treasury is requesting $12 billion for 2026, down from $13.2 billion in 2025. Additionally, the department has asked Congress to rescind another $17 billion of the IRA funding, leaving just $21 billion available—more than half of which has already been spent (Treasury FY 2026 budget request). Congress Proposes Even Deeper Cuts House Republicans on the Appropriations Committee have introduced a proposal to cut another $2.8 billion from the IRS budget for 2026—above and beyond the Treasury's request. If enacted, this would reduce the IRS budget to levels not seen since 2002 (Bloomberg report). The tax code the IRS is required to enforce is much larger and more complicated than it was in 2002. Mounting Challenges for the IRS The IRS faces several challenges heading into the next filing season: The new IRS commissioner recently stated that the 2026 tax filing season will likely begin around Feb. 16. This indicates the IRS realizes next filing season will be difficult. What Taxpayers Can Do Now The upcoming tax season will likely be difficult for the IRS, taxpayers, and tax professionals alike. Here are steps individuals and families can take to prepare: Looking Ahead President Trump and he Trump administration are implementing major changes to the IRS. The real impact of these shifts will become clearer in the year to come. Many tax professionals expect the next filing season to be quite challenging.
CNBC
12-06-2025
- Business
- CNBC
Senate confirms Billy Long as next IRS Commissioner. What taxpayers might expect amid agency cutbacks
The Senate on Thursday confirmed Billy Long as the next IRS Commissioner, which could mark a shift for taxpayers amid sweeping agency cuts. Picked by President Donald Trump, the former Missouri Congressman's nomination received mixed support from Washington and the tax community. But Senate Republicans confirmed Long via a party-line vote. During the confirmation process, Long faced Democratic scrutiny over Trump loyalties and ties to dubious tax credits, among other questions, which he addressed during a May Senate Finance Committee hearing and written testimony. More from Personal Finance: Trump's 'big beautiful' spending bill could curb low-income tax creditHere's what's happening with unemployed Americans — in five chartsHere's the economic cost of the Trump, Harvard battle over student visas When asked about Trump's power over the agency during the May Senate hearing, Long said: "The IRS will not, should not be politicized on my watch." In written testimony, Long said he would "follow the law" when asked for specifics about how he would respond to political favor requests from Trump. "The confirmation process was pretty controversial," said Carl Tobias, law professor at University of Richmond's School of Law. But it's currently unclear what Long as IRS Commissioner will mean for taxpayers, he said. Long's confirmation comes amid widespread IRS cuts from Elon Musk's Department of Government Efficiency. The hiring freeze, deferred resignation programs and reductions in force "will have significant impacts" on IRS operations, the Treasury Inspector General for Tax Administration, or TIGTA, said in a June 6 report. A separate TIGTA report from May found the agency had lost nearly one-third of its so-called revenue agents, who conduct audits, as of March 2025. The "tax gap" — federal levies incurred but not paid voluntarily on time — was estimated at $696 billion for tax year 2022, according to the latest IRS data. When asked about the tax gap, Long answered in written testimony: "My goal is to modernize and streamline the IRS, so we are collecting the maximum amount owed each year." Meanwhile, Trump's fiscal 2026 budget request calls for a 37% reduction in IRS spending, including staffing and technology cuts. These reductions could impact revenue collections, according to a Budget Lab at Yale analysis. In a May House Appropriations subcommittee hearing, U.S. Treasury Secretary Scott Bessent said "collections" were among his IRS priorities. He said "smarter IT" and the "AI boom" could help meet revenue goals. In 2022, Congress approved nearly $80 billion in IRS funding, with more than half earmarked for enforcement of corporate and high-net-worth tax dodgers. That funding has since been targeted by Republicans. As the agency faces cuts, it could also soon see more administrative work once Republicans enact sweeping tax changes via Trump's big beautiful spending bill. For example, one provision would require precertification of each qualifying child for filers claiming the earned income tax credit. This could be challenging amid staffing cuts, experts say.
