Washington, D.C. -- Calculations of economic stimulus payments by the Internal Revenue Service may have been wrong in nearly 400,000 cases.

Treasury Inspector General for Tax Administration J. Russell George said in testimony before the House Ways and Means Oversight Subcommittee that as of mid-June, the IRS had issued approximately 76.5 million stimulus payments totaling approximately $63.9 billion. His office has determined that the IRS correctly calculated the stimulus payment for 99.6 percent of the returns.

However, TIGTA identified approximately 385,000 stimulus payments in which its calculation did not agree with the IRS's. The differences in some cases resulted from programming that did not include all qualified self-employment income and losses in the determination of eligibility. As of May 30, 2008, TIGTA had identified approximately 25,000 returns for which the stimulus payment was not allowed.

Many taxpayers did not receive the child portion of the stimulus payment because they did not check the Child Tax Credit qualifying box on the tax return. When TIGTA raised this concern, the IRS initially responded that it could not allow the child portion of the stimulus payment in these instances because eligibility for the Child Tax Credit could not be determined from the information on the tax return.

The IRS subsequently announced that it would issue the additional child portion of the stimulus payment to approximately 350,000 households in July. TIGTA is in the process of quantifying the number of individuals that might be affected.


Washington, D.C. -- The Internal Revenue Service should make several changes in its electronic filing system to address concerns raised by the American Institute of CPAs and others, according to two new reports.

The Treasury Inspector General for Tax Administration issued a report calling for the IRS to put in place a formal process for identifying, reporting and resolving application-processing issues that occur in the e-file system. TIGTA also said that the IRS should perfect the validation controls in the system to verify that taxpayers file the correct tax return based on their established filing election.

In the other report, TIGTA initiated an audit in response to concerns raised by AICPA representatives about the lack of an IRS self-help assistance option when an e-filed tax return is rejected. TIGTA recommended that the IRS develop a self-assistance option on IRS.gov that allows customers to obtain detailed explanations of e-file rejection conditions, including the steps to resolve them, and look into providing in the acknowledgement file the information that would allow customers to resolve their rejection conditions once individual tax returns are transitioned to the modernized e-file program.

The IRS, in response, has added a self-assistance option for the 13 most common rejection codes, providing descriptions and suggested solutions. IRS management also plans to study the feasibility of adding a more comprehensive self-assistance option to the Web site.

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