Audit: Some payments to IRS being improperly transferred

Generally speaking, payments get sent to the Excess Collection Files when someone pays their taxes without filing a return, the IRS can’t figure out which taxpayer to send a return to, or for a few other reasons.

In its investigation, the tax administration inspector general found that almost a quarter — 13 of 56 — of the large-dollar transfers it examined required, but did not receive, higher-up approval.

The audit also reported that, in the vast majority of cases the inspector general examined, the IRS was not informing taxpayers in certain cases that they had a right to request a refund. In those instances, payments had been funneled to the excess account because the agency had not been allowed to make an assessment.

The inspector general made five recommendations to the IRS, including to revise various forms or letters, all of which were accepted by the agency.