04 Oct IRS Form 3949-A Information Referral – PROBLEMS
After it was learned that thousands of identity theft ‘Information Referrals’ reported on IRS Form 3949‑A were not being processed the Treasury Secretary General for Tax Administration (TIGTA) investigated and published a report (#2012-40-106) essentially stating that the “process for individuals to report suspected tax law violations is not efficient or effective.” It seems to in fact have lead to identity theft victims being ignored.
Basically the problem as far as I can tell is that IRS Form 3439-A should NOT be used for both blowing the whistle on a tax cheat and also as a means for identity theft victims to report their status to the IRS. Here are twelve highlights directly from the report:
1. The IRS website for reporting fraud was visited 501,218 times in Fiscal Year 2011, and during that year 116,307 individuals submitted a Form 3949‑A, Information Referral, to the IRS.
2. About 3,000 Forms 3949‑A used to report identity theft were destroyed due to a lack of procedures on how to process these claims. Victims were not notified.
3. Reporting guidelines provided to taxpayers and employees are confusing and inconsistent and cause individuals to use Forms 3949‑A for other than its intended purpose. This creates a burden on both the individuals and tax administration.
4. A lack of oversight and effective procedures has resulted in workable Forms 3949‑A, including identity theft claims, being destroyed without any acknowledgement of receipt to the taxpayer.
5. Reporting guidelines provided to taxpayers and employees are confusing and inconsistent.
6. Instructions on Form 3949‑A do not explain what types of fraud and tax law violations to report using this form. As a result, individuals often use Form 3949‑A for purposes other than reporting suspected tax fraud or tax law violations.
7. Because Form 3949‑A lacks specificity, taxpayers do not always provide the IRS with sufficient information for the IRS to take action.
8. The IRS routes identity theft referrals received on a Form 3949‑A as regular correspondence, which delays actions from being taken on identity theft cases.
9. Many referrals do not meet any criteria under which the IRS could or would be able to take action(s).
10. A lack of quality review resulted in referrals being destroyed.
11. The forms are often used for other purposes (e.g., claims by victims of identity theft).
12. Ineffective routing procedures and oversight have allowed Forms 3949-A to be mis-routed to the wrong functions. Others are mistakenly considered unworkable and retained for 90 days and then destroyed.