Tax Administration

Accuracy of Taxpayer Identification Numbers on Information Returns Can Be Improved Gao ID: GGD-88-110 September 6, 1988

In response to a congressional request, GAO assessed the Internal Revenue Service's (IRS) administration of its Taxpayer Identification Number (TIN) Penalty Program, specifically how IRS: (1) enforced withholding requirements when financial institutions, or payers, submitted returns with missing or incorrect TIN; (2) provided accurate and timely information to payers; and (3) reduced missing and incorrect TIN on information returns.

GAO found that IRS: (1) did not enforce the interest and dividend withholding requirement as it applied to TIN; (2) did not monitor the extent to which payers withheld payments or determine the reasons for nonwithholding; (3) had no basis for determining whether a payer was liable for the amount not withheld; and (4) may have lost an estimated $2.4 billion in tax not withheld in 1985. GAO also found that IRS: (1) resolved about 10 percent of its missing TIN problems by using two tax-return files to generate lists of incorrect and missing TIN; (2) did not allow payers enough time to correct their data before submitting the next year's information returns; and (3) did not use any manual research procedures to resolve errors.

Recommendations

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