Employees at the Internal Revenue Service surveyed tax returns  with Abusive Tax Avoidance Transaction issues without management approval, according to a new report.

The Treasury Inspector General for Tax Administration reviewed 311 tax returns with ATAT issues from 2006 to 2008 and found 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.

An ATAT according to the IRS, is defined "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."

"Surveying such tax returns without proper justification or approval could be counterproductive to the IRS's goal to combat abusive schemes," said J. Russell George, Treasury Inspector General for Tax Administration

TIGTA recommended that the IRS develop internal controls and provide training for employees to ensure proper survey justification for tax returns with ATAT issues. TIGTA also recommended that 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 TIGTA's recommendations.


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