TIGTA Says IRS Could Improve COVID-19 Distribution Compliance

TIGTA Says IRS Could Improve COVID-19 Distribution Compliance

Treasury Inspector General for Tax Administration

The IRS took steps to inform taxpayers of retirement provisions in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), but it could do more to ensure compliance with the provisions, the Treasury Inspector General for Tax Administration said in a report dated July 20.

The IRS took steps to inform taxpayers of retirement provisions in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), but it could do more to ensure compliance with the provisions, the Treasury Inspector General for Tax Administration said in a report dated July 20.

The IRS took steps to inform taxpayers of retirement plan provisions in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), but it could do more to ensure compliance with the provisions, the Treasury Inspector General for Tax Administration said in a report dated July 20. The report, released July 22, said the IRS distributed news releases, notices, and a tax tip to educate taxpayers about the new early distribution and required minimum distribution provisions. It also developed compliance plans for sections 2202 and 2203 of the CARES Act. The plan for section 2202 identified risks associated with taxpayer eligibility for early distributions and recommended further monitoring of taxpayer compliance, and the plan for section 2203 didn’t identify any risks with the minimum distribution waiver, but notified examiners of the provision, the report said. TIGTA said the IRS is adding section 2202 training to examiner training for fiscal 2021 and plans to add related information to the knowledge management and transfer program. Various reports show that millions of taxpayers took coronavirus relief distributions in tax year 2020, according to the report. TIGTA noted that the section 2202 compliance plan could be improved by including objective criteria for a research or compliance project, ensuring the assignment of cases involving distributions, or creating a section 2202 lead sheet. TIGTA recommended that IRS management gather sufficient information to assess compliance with section 2202 and consider creating a lead sheet. The IRS disagreed with both recommendations.

The IRS took steps to inform taxpayers of retirement plan provisions in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), but it could do more to ensure compliance with the provisions, the Treasury Inspector General for Tax Administration said in a report dated July 20. The report, released July 22, said the IRS distributed news releases, notices, and a tax tip to educate taxpayers about the new early distribution and required minimum distribution provisions. It also developed compliance plans for sections 2202 and 2203 of the CARES Act. The plan for section 2202 identified risks associated with taxpayer eligibility for early distributions and recommended further monitoring of taxpayer compliance, and the plan for section 2203 didn’t identify any risks with the minimum distribution waiver, but notified examiners of the provision, the report said. TIGTA said the IRS is adding section 2202 training to examiner training for fiscal 2021 and plans to add related information to the knowledge management and transfer program. Various reports show that millions of taxpayers took coronavirus relief distributions in tax year 2020, according to the report. TIGTA noted that the section 2202 compliance plan could be improved by including objective criteria for a research or compliance project, ensuring the assignment of cases involving distributions, or creating a section 2202 lead sheet. TIGTA recommended that IRS management gather sufficient information to assess compliance with section 2202 and consider creating a lead sheet. The IRS disagreed with both recommendations.