IRS Tax Offset Program Needs Fixes to Stop Erroneous Refunds

The IRS failed to apply millions in taxpayer overpayments toward outstanding debt due to procedural and programming errors, the agency watchdog found.

The Treasury Inspector General for Tax Administration identified 2,093 individual and business tax accounts with overpayments totaling more than $8 million that weren’t offset because IRS workers manually processed a refund or credit but didn’t correctly identify that those taxpayers had outstanding tax debt. The review also identified 287 individual tax accounts with overpayments totaling more than $2.5 million, and 2,139 business tax accounts with overpayments totaling $68.1 million for which overpayments weren’t applied to outstanding tax ...