IRS Missing, Not Investigating Tax Fraud Indicators in Audits, TIGTA Report Says

The Internal Revenue Service may be missing or not investigating indicators of tax fraud in almost a quarter of high-income and sole proprietor taxpayer returns with tax liabilities of more than $10,000, the Treasury Inspector General for Tax Administration said in a report released April 17.

TIGTA estimated that taxpayers may have avoided $5.8 million in civil fraud penalties due to these overlooked fraud indicators.

TIGTA reviewed a statistical sample of 100 office audits, closed between October 2009 and September 2010, and identified 26 audits with fraud indicators that were not recognized and investigated in accordance with some key IRS ...