Assessment of the IRS's Individual Taxpayer Identification Number Program
Why did we do this audit? The PATH (Protecting Americans from Tax Hikes) Act requires TIGTA to review the ITIN (Individual Taxpayer Identification Number) program every two years. We assessed whether the IRS is effectively assigning ITINs only to individuals with a valid tax need and that they are complying with rules that restrict certain tax credits when a valid ITIN is not issued by the return due date. What did we find? The IRS has processes to determine whether ITINs are valid and meet eligibility rules when tax returns are filed. However, we found that for Tax Years 2023 and 2024, 45,386 returns claimed about $172 million in credits for which ITIN holders were not eligible to receive, including $142.8 million in refundable credits. We also identified: - 294 returns with more than $637,000 in ineligible credits due to missing SSNs, of which about $303,000 were paid as refunds.
- 45,092 tax returns retroactively claimed about $171.7 million in credits.
In addition, the IRS allowed $142.5 million for the refundable portions on: - 1,488 tax returns where taxpayers did not have an ITIN originally issued on or before the tax return due date; and
- 43,604 tax returns where taxpayers' ITINs expired before the tax return due date.
The IRS did not agree that they erroneously allowed credits on the 43,604 tax returns that retroactively claimed credits after the expired ITINs were renewed. The IRS stated it followed existing guidance but could have prevented up to $138.8 million in credits if policies were better aligned with the PATH Act. While the IRS plans to modernize the ITIN process, progress depends on available resources. We also found the IRS has not completed required reviews of Certifying Acceptance Agents since 2019 due to resource constraints.
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