The Internal Revenue Service has inadequate controls over dishonored checks from taxpayers, putting millions of dollars at risk, according to a new report.
The report, from the Treasury Inspector General for Tax Administration, found problems in the IRSs handling of taxpayer payments that are subsequently dishonored by the banks in which they are deposited. Dishonored payments are not processed by banks for a variety of reasons, the report noted, including insufficient taxpayer funds. The IRS occasionally issues a refund to a taxpayer who had submitted an overpayment of taxes before the IRS realizes that the taxpayer's check has been dishonored by the bank. This results in the taxpayer receiving an erroneous refund.
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