INCLINE VILLAGE, Nev. - We never cease to be amazed at the number of clients who suggest that they want to tell IRS to send the refund dough straight to their bank account. In order to do so, of course, those folks' returns have to reflect their account identity. And who thinks IRS is on top of carefully keeping track of that info, not to mention the consideration of allowing them to know your bank account identity when it may come time for them to try to squeeze some bucks out of you? Are you sure you want them to have direct access to your account in that event?
So, now cometh the Treasury Inspector General for Tax Administration (TIGTA) whose recent audit of IRS controls of IRS procedures in these cases was a little less than complimentary. In fact, TIGTA found that IRS procedures regarding the direct deposit of tax refunds are susceptible to fraud.
TIGTA's report states that, "The majority of individual taxpayers are now choosing to have their Federal tax refunds directly deposited to their checking or savings accounts or to a debit card."
We say, "Why?"
TIGTA goes on to note that IRS deposited more than 79 million refunds (72 percent of total refunds) directly into taxpayers' bank accounts during Calendar Year 2011.
These direct deposits accounted for more than $246 billion (that's a "B") in refunds.
And if you choose to split your refund among up to three different checking or savings accounts, check out IRS Form 8888, "Allocation of Refund (Including Savings Bond Purchases)."
And to add insult to injury, this TIGTA audit was performed at the IRS Fresno "Service" Center, in Fresno, CA, the site with which many folks in these parts deal.
So, getting to the bottom line, the first "result" reported by TIGTA of its review is simply this: "Processes Are Not Sufficient to Ensure Tax Refunds Are Deposited."
And this is not the first time TIGTA has found about IRS dalliances in this area. TIGTA has previously reported that processes are insufficient to ensure the accuracy of tax refund direct deposits and minimize fraud - the same thing they found in a 2008 audit!
(Nice follow up, IRS.)
And you want to give IRS your account number???
- CONSULT YOUR TAX ADVISOR - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org.