IRS audit exposes shocking flaws in e-file provider approvals
A new report has revealed flaws in the IRS’s approval process for electronic tax filing providers. The review found that some approved e-file providers had tax compliance issues, criminal records, or unverified citizenship status. The Treasury Inspector General for Tax Administration (TIGTA) made five recommendations to address these gaps.
The IRS’s systems failed to flag suitability concerns in 14 cases. Among these, three providers had criminal histories, while two lacked fingerprint records. Another had unverified citizenship status.
Tax compliance was another issue. Eight approved providers owed unpaid balances or had delinquent tax statuses. The report also highlighted that around 6,300 Responsible Officials—those overseeing e-file applications—had unknown citizenship status due to incomplete Social Security Administration (SSA) data. Internal rules were broken as well. Sixty-seven IRS employees were improperly listed as Responsible Officials on e-file applications, violating agency policies. In response, the IRS agreed with four of TIGTA’s recommendations. It partially agreed with a fifth, which involved improving citizenship verification for Responsible Officials.
The findings show gaps in the IRS’s oversight of e-file providers. The agency has committed to strengthening its review process, but some concerns—like citizenship verification—remain only partially addressed. The changes aim to prevent unsuitable applicants from gaining approval in the future.
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