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Washington, DC, United States (AHN) – Internal Revenue Service employees okayed tax returns with potential fraud issues without management approval, according to a report released Tuesday by the Treasury Inspector General for Tax Administration (TIGTA).”

“The major concern we have is that the cases are surveyed without proper authorization and that there is no quality review process to prevent cases from being closed without proper justification and authorization, proper statute considerations, and evaluation for taxpayer contact,” TIGTA officials told All Headline News.

TIGTA reviewed 311 tax returns with Abusive Tax Avoidance Transaction (ATAT) issues from 2006 to 2008 and noted in its report that, “group managers in IRS’s Small Business/Self-Employed Division did not always follow IRS surveying guidelines and did not always have justification for surveying specific tax returns.”

With ATATs being “one of the IRS’s highest priorities,” J. Russell George, the Treasury Inspector General for Tax Administration, stated, “Surveying such tax returns without proper justification or approval could be counterproductive to the IRS’s goal to combat abusive schemes.”

“This approach can erode the public’s confidence in the IRS’s ability to enforce tax laws in a fair, equitable, and consistent manner,” George cautioned.

Asked if any IRS employee was brought to book for making wrong tax assessments or follow-ups, TIGTA officials said, “To our knowledge, there were no IRS employees disciplined or penalized for surveying a tax return with an abusive tax avoidance transaction (ATAT) issue.”

The IRS, however, “agreed to reeducate its examination employees on the survey process and proper procedures,” TIGTA officials told AHN, adding, “We do not plan on a follow-up report at this time.”

The IRS defines an ATAT as tax evasion, or more specifically, “a transaction that reduces a tax liability by taking a tax position not supported by tax law or inconsistent with the intent of the law.”

A survey is a determination by an IRS employee that the examination of the tax return is not warranted.

“It is generally expected that tax returns selected for examination will be worked to completion and could result in assessing additional tax and bringing the taxpayer into compliance,” TIGTA noted in its report.

In its recommendations, TIGTA asked the IRS “to develop internal controls and provide training for employees to ensure proper survey justification for tax returns with ATAT issues,” suggesting “returns be reviewed by an independent function, and that procedures be developed to ensure surveyed tax returns are included in the quality review process.”

The IRS agreed with the aforementioned recommendations, TIGTA stated, but the IRS did not agree with TIGTA recommendations that, “the IRS should ensure tax returns with ATAT issues (surveyed as excess inventory) can be readily identified and examinations are completed once taxpayers are contacted.”

Another TIGTA recommendation that IRS disagreed with is that, “procedures should be developed to ensure surveyed tax returns are included as part of the quality review process.”

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