- How to read an oversight report
- Find a report
- Backup withholding and Form 945
- Penalties and how the IRS uses 1099s
- FIRE, IRIS, paper and the e-file mandate
- Form 1099-K and platforms
- TINs: ITINs, EINs, EFINs and identity theft
- Workers, section 530 and third-party payers
- Foreign payees and withholding agents
- Digital assets
- Questions people ask
How to read an oversight report
TIGTA audits are the more useful of the two for a payer. They are built from the IRS's own data, usually the information returns master file matched against the payer or payee accounts, so the figures describe exactly the populations the IRS can see: payers who filed 1099s with withholding but no Form 945, payees whose TIN has been missing for two years, 1099-Ks with no return behind them. Each report ends with recommendations and the IRS's written response, and the IRS's refusals are as informative as its agreements. GAO reports are broader, aimed at Congress, and track whether the IRS implemented each recommendation for years afterward; the status pages are the best public record of what the IRS has promised and when.
Figures are each report's own, for the tax year it audited.
Three cautions. The figures are for the tax year audited and the IRS has often changed the process since; the page gives the report's numbers and says where a later report updated them. Redactions (shown as rows of asterisks in the PDFs) remove the IRS's selection criteria, so a report can tell you that the IRS matches box 4 withholding to Form 945 but not the threshold at which a case is opened; this page does not guess at them. And a recommendation the IRS 'agreed with' is a plan, not a program; the follow-up reports, where they exist, say what was actually built.
Find a report
Backup withholding and Form 945
Accuracy of Taxpayer Identification Numbers on Information Returns Can Be Improved
GAO GGD-88-110Sept. 1988
Found: The first oversight review of the TIN penalty program, done at congressional request, looked at whether the IRS enforced withholding when financial institutions filed interest and dividend returns with missing or incorrect TINs, whether it gave payers accurate and timely information, and how it reduced bad TINs.
Recommended and the IRS answer: Both recommendations closed as implemented: examiners now check payer compliance with withholding during audits, and the IRS uses its Key Index File each year to research missing and incorrect TINs on the returns with the highest yield.
For payers: The audit-time check on payer withholding that TIGTA found missing in 2016 was first recommended here, nearly thirty years earlier.
Additional Actions to Enforce Payment Card Reporting Requirements Could Reduce the Tax Gap
TIGTA 2015-40-089Sept. 25, 2015
Found: Calendar year 2013 Forms 1099-K: 10,216 forms with a missing payee TIN reported $10.6 billion of gross transactions, so payers were required to withhold almost $3 billion and withheld nothing. 2,933 forms with $543.9 million of transactions carried the TIN of a deceased individual, and TIN Matching did not alert the payer. 84,107 individuals and 443,528 businesses with 1099-K income had filed no return.
Recommended and the IRS answer: The IRS agreed with six of seven recommendations, including penalties on certain noncompliant payers and using 1099-K data in the nonfiler program; it declined a programming change for budget reasons.
For payers: The first time TIGTA quantified payer backup withholding failures from the information returns themselves. The method, matching the TIN field to the withholding field, is what the IRS now runs.
Due to the Lack of Enforcement, Taxpayers Are Avoiding Billions of Dollars in Backup Withholding
TIGTA 2016-40-078Sept. 14, 2016
Found: Nearly $9 billion was not withheld on tax year 2013 returns with missing or incorrect TINs. 13,647 payers filed 27,576 returns with the same missing TIN two years running ($14.3 billion paid, nearly $4 billion required, just over $1 million withheld); 62,714 payers filed 203,751 returns with the same incorrect TIN four years running ($17 billion paid, nearly $5 billion required, $1 million withheld). The IRS notified payers of only 10.8 million (57 percent) of the 18.9 million bad-TIN returns it identified, with no documented reason for the exclusions. 2.3 million returns for 1.6 million people carried a deceased individual's TIN.
Recommended and the IRS answer: The IRS agreed to a Service-wide backup withholding enforcement strategy, to document the notice exclusion criteria, and to address deceased-TIN reporting.
For payers: The report behind the current backup withholding compliance program; the TIGTA findings page reads it in full. A missing TIN repeated across years is the selection pattern.
Billions of Dollars in Non-Payroll Tax Withholding Discrepancies Are Not Being Addressed
TIGTA 2019-40-028May 20, 2019
Found: Tax year 2016: 7,265 payers reported almost $923 million of withholding on Forms 1099 and W-2G but filed no Form 945; 3,163 payers reported about $760 million less on Form 945 than on their 1099s and W-2Gs; 773 payers filed Forms 1096 showing $243 million of withholding without the underlying forms, without a 945 and without any deposits; 3,527 payers filed a 945 reporting $241 million of withholding but no 1099s or W-2Gs at all.
Recommended and the IRS answer: The IRS agreed to use data analytics to size the problem and choose compliance treatments; the specific process TIGTA recommended is redacted.
For payers: This is the audit that produced the Form 945 reconciliation the IRS now runs between box 4 withholding on 1099s and W-2Gs and the 945. The 945 compliance check page describes the matching as the IRS now runs it.
Backup Withholding Noncompliance and Underreported Employment Taxes Continue to Contribute Billions of Dollars to the Tax Gap
TIGTA 2021-40-030May 17, 2021
Found: Tax year 2018: 182,075 payers filed 440,404 returns with a missing or incorrect payee TIN and did not withhold $13.3 billion on $55.6 billion of reported income. 52,500 payers filed 2.7 million returns, $3.7 billion of payments, under TINs of people dead for at least three years. A programming error kept the IRS from selecting the Combined Annual Wage Reporting cases with the highest assessment potential; the 21,372 cases it worked for tax year 2017 produced $58.8 million where $133.1 million more was available.
Recommended and the IRS answer: The IRS agreed to build a process for income reported under deceased payee TINs and declined to study the repeater indicator for CAWR case selection.
For payers: The numbers the IRS quotes when it explains the backup withholding program. The IRS agreed to build a process around deceased-payee reporting; a payee's death is a reason to re-solicit, not to keep filing under the old SSN.
Penalties and how the IRS uses 1099s
Tax Gap: IRS Could Do More to Promote Compliance by Third Parties with Miscellaneous Income Reporting Requirements
GAO GAO-09-238Jan. 28, 2009
Found: Payers reported $6 trillion on Forms 1099-MISC for 2006, but only 8 percent of the 50 million small businesses filed any, and the IRS did not know how many of the other 92 percent should have. GAO pressed again for reporting of payments to corporations. Follow-up research the IRS supplied to close the recommendations estimated that 59 percent of employers with a filing requirement were noncompliant, that unreported payments averaged $141 billion a year, and that about 1.4 million small employers filed no 1099-MISC at all.
Recommended and the IRS answer: Seven of eight recommendations implemented: the 'did you file required Forms 1099' checkbox on Schedule C and business returns dates from this report (2011), as does the Publication 535 reminder. The IRS kept the red-ink requirement after a timing test (4,027 red-ink forms processed in 2 hours 9 minutes against 28 hours 44 minutes to key photocopies). Congress has not acted on the corporate reporting recommendation.
For payers: The two questions on every business return about 1099 filing exist because of this report, and a 'no' answer is an examination lead. The corporate exemption survives, which is why the 1099 decision tool still turns on payee entity type.
Tax Administration: Better Coordination Could Improve IRS's Use of Third-Party Information Reporting to Help Reduce the Tax Gap
GAO GAO-21-102Dec. 15, 2020
Found: For tax year 2018 the IRS processed more than 3.5 billion information returns of 50 types and used them in compliance checks on more than 150 million individual returns. Legacy systems limited processing, no single office owned information returns, and the 2017 modernization plan had been paused.
Recommended and the IRS answer: Nine recommendations; seven closed. The IRS evaluated its late-filer penalty program (September 2021 and January 2022) and concluded it encourages timely filing; it launched the 1099 e-filing platform (IRIS) for the 2023 season and published a three-year Information Returns Modernization road map; in February 2025 it evaluated six forms (1099-B, 1099-R, W-2G, 1099-INT, 1099-MISC and Schedule K-1). Expanded reporting on sole proprietors and a coordination mechanism remain open; the IRS expected to finalize an information return compliance strategy by October 1, 2025.
For payers: IRIS and the Information Returns Modernization road map are the IRS's answer to recommendations 6 and 7. The late-filer penalty review is the IRS's own finding that 6721 works, which is the answer to anyone expecting the penalty to be relaxed.
Tax Enforcement: IRS Can Improve Use of Information Returns to Enhance Compliance
GAO GAO-24-107095Nov. 15, 2023
Found: The IRS received more than 5 billion information returns in 2022. Where there is little or no third-party reporting, taxpayers misreport about 50 percent of the time; half of taxpayers with rental income misreported. In fiscal year 2022 the Automated Underreporter program closed 1,582,131 cases worth $8.7 billion and Automated Substitute for Return 295,577 cases worth $2.9 billion. The IRS expected about 44 million Forms 1099-K in 2024 and had no plan to analyze them.
Recommended and the IRS answer: Five recommendations to the IRS (a coordination mechanism, sole proprietor reporting research, a systematic evaluation plan, the right payment reporting thresholds, and 1099-K data analysis) and one matter for Congress: subject rental real estate to the same reporting rules as other businesses.
For payers: The 50 percent figure is the IRS's own research and is the reason the agency defends 1099 penalties: the form is the compliance mechanism.
Employers Who Do Not Comply With Requests to Provide Complete and Accurate Wage Documents Are Not Always Assessed Penalties
TIGTA 2015-40-090Sept. 22, 2015
Found: Of the tax year 2011 Combined Annual Wage Reporting cases the Social Security Administration referred, the IRS failed to assess more than $200 million of penalties on 32 employers whose W-2 wages were understated by more than $2 billion, and erroneously excluded 608 cases (more than $22 million of penalties, $225 million of underreported wages) through programming errors. A lawsuit settlement requires the IRS to work every SSA referral.
Recommended and the IRS answer: The IRS agreed to build a process to assess penalties on employers that do not reply to requests for missing Forms W-2 and to fix the programming.
For payers: A CAWR letter that goes unanswered is an intentional disregard penalty case; the CAWR page covers the letters.
Case Selection Processes Result in Billions of Dollars in Potential Employer Underreported Tax Not Being Addressed
TIGTA 2017-40-038July 26, 2017
Found: Of 137,272 tax year 2013 IRS-CAWR discrepancy cases the IRS worked 23,184 (17 percent); the 114,088 unworked cases held more than $7 billion of potential underreported tax. Selection did not prioritize by potential assessment, and 3,137 of the cases also had a prior-year discrepancy worth $448 million.
Recommended and the IRS answer: The IRS agreed with six of seven recommendations and refused to add prior-year cases automatically when a current-year case is selected, though it will treat a prior-year discrepancy as a selection factor.
For payers: An employer whose 941 totals and W-2 totals disagree in two consecutive years is the case the IRS now prefers to work.
Action Is Being Taken to Address the System Limitation That Contributed to the Destruction of Tax Year 2019 Paper-Filed Information Returns
TIGTA 2024-406-007Nov. 8, 2023
Found: In March 2021 the IRS destroyed about 30 million unprocessed tax year 2019 paper information returns because its systems cannot process a paper information return after the calendar year in which it was filed and the 13.5 million backlogged tax returns took priority. 1.3 million payers may have had returns destroyed; 484 of 50,732 potential examination cases might have been selected on them; few if any payers were penalized for late filing of a destroyed return. TIGTA found the decision reasonable in the circumstances.
Recommended and the IRS answer: One recommendation, on lockable waste bins at the Austin campus, implemented immediately. The IRS is expanding paper processing capacity to prior-year filings.
For payers: A paper 1099 filed late in the year could, until this fix, vanish without being matched or penalized. The paper 1099 page explains the processing window; the e-file mandate at ten returns removed most of the exposure.
Procedures Are Needed to Prevent Backdating Penalty Approvals
TIGTA 2026-300-021May 1, 2026
Found: After the Tax Court found backdated supervisory approvals in LakePoint Land II (T.C. Memo. 2023-111), the IRS reviewed 1,268 syndicated conservation easement cases for IRC 6751(b) compliance. Thirteen docketed cases lacked valid approval; in seven the approvals were backdated and the IRS conceded more than $68 million of penalties. TIGTA found further documentation problems: multiple lead sheet versions with identical digital signatures, penalties in letters never approved on a lead sheet, and reports showing unapproved penalties.
Recommended and the IRS answer: Five recommendations, all accepted: procedures aligned to the regulations, a message to compliance staff that backdating is not acceptable, and digital approvals on penalty lead sheets.
For payers: Information return penalties assessed by computer need no 6751(b) approval, but a 6721(e) intentional disregard penalty proposed by an examiner does, and the approval date is now a question worth asking; the Appeals page covers the 6751(b) argument.
FIRE, IRIS, paper and the e-file mandate
A Service-Wide Strategy Is Needed to Increase Business Tax Return Electronic Filing
TIGTA 2014-40-084Sept. 24, 2014
Found: Business returns were e-filed at 41 percent for tax year 2012 against 81 percent for individuals; 21.1 million employment tax returns (71 percent) were on paper. No process consistently identified filers who ignored e-file requirements or assessed penalties. The review covered information returns as well as tax returns.
Recommended and the IRS answer: The IRS agreed with five of eight recommendations and refused three, including consistent identification and penalty of businesses that do not meet e-file requirements.
For payers: The e-file mandate for 1099s was then 250 returns and loosely enforced; the 2023 regulations took it to ten, and TIGTA's point about enforcement stands.
Strengthened Validation Controls Are Needed to Protect Against Unauthorized Filing and Input of Fraudulent Information Returns
TIGTA 2019-40-071Sept. 26, 2019
Found: The FIRE system did no identity proofing of users, contrary to federal standards. 524 tax year 2016 information returns were filed by employers on the IRS's Suspicious EIN Listing, 113 of them confirmed bogus, reporting $1.4 million of income and $12,600 of withholding. 24,826 paper prior-year Forms 1096 for tax year 2015, with more than 85,000 returns, $13.8 billion in box 5 and $2 billion of withholding, were not posted to the Information Returns Master File.
Recommended and the IRS answer: Seven recommendations; the IRS agreed with five and partly with one: a Digital Identity Risk Assessment and identity proofing for FIRE users, filters for questionable submissions, and blocking locked entities from FIRE. It would not pay to upgrade the paper transcription system given the low volume of late paper returns.
For payers: FIRE and IRIS logins now sit behind identity proofing, which is what this report asked for. A late paper 1096 may never be posted, which also means it may never be matched.
A Service-Wide Strategy Is Needed to Address Challenges Limiting Growth in Business Tax Return Electronic Filing
TIGTA 2022-40-036May 4, 2022
Found: Business e-filing rose from 41 percent in 2014 to 63 percent. The IRS had no process to identify corporate, employer and highway use filers who ignore e-file mandates: 15,108 filers paper-filed 22,569 tax year 2018 returns that had to be e-filed. Paper processing cost $226 million in fiscal year 2020. The report opens with the 30 million destroyed information returns.
Recommended and the IRS answer: The IRS agreed to a Service-wide e-file strategy and refused to build processes to identify noncompliant corporate filers or to assess e-file penalties consistently.
For payers: The 2023 e-file regulations and the IRIS build are the IRS's answer; penalty enforcement of the mandate remains the open item.
Taxpayer First Act: The IRS Implemented the Information Returns Intake System, Although Users Experienced Some Slight Processing Delays During Peak Processing
TIGTA 2025-405-013Feb. 28, 2025
Found: By May 2024 IRIS had received 12.4 million Forms 1099: 10.2 million through Application to Application and 2.2 million through the Taxpayer Portal. Of 38 business rules, 37 worked. Seventeen legacy paper-processing rules were missing (nine) or different (eight) in IRIS; paper 1099 processing stopped in April 2024 because IRIS accepted a paper form only if its data aligned perfectly with the system fields, and resumed in August 2024 after patches, with 8.5 million paper forms still to process in September. Performance problems near January 31, 2024 were fixed within 48 hours by adding capacity.
Recommended and the IRS answer: Two recommendations (fix the rule; use the paper criteria); the IRS agreed with one and partly with the other, citing a holistic review of intake.
For payers: The only independent account of IRIS's first two seasons. The IRIS hub and the FIRE to IRIS page cover what has changed since; paper 1099s are now keyed into IRIS and judged by IRIS rules.
Form 1099-K and platforms
The Internal Revenue Service Is Underutilizing Form 1099-K Data to Identify Tax Returns for Audit
TIGTA 2017-30-083Sept. 29, 2017
Found: The Payment Mix Methodology pilot that compared 1099-K data to returns was effective for some return types but the IRS was considering dropping it. 20,881 taxpayers with a single 1099-K reported less than 90 percent of the form's amount with a gap over $10,000 and showed no audit activity.
Recommended and the IRS answer: The IRS generally agreed to test compliance projects using 1099-K data and to find out why large discrepancies were not selected, while disputing the size of the problem.
For payers: A 1099-K that is far larger than the gross receipts on the return is an audit selector; payees who ask the filer for a 'corrected' lower amount are asking for a false return.
Expansion of the Gig Economy Warrants Focus on Improving Self-Employment Tax Compliance
TIGTA 2019-30-016Feb. 14, 2019
Found: Nine gig platforms' Forms 1099-K for 2012 to 2015 produced 264,346 Automated Underreporter cases, up 237 percent over the period; 59 percent were never worked, including 2,817 taxpayers who underreported in all four years ($2.7 billion). AUR staff removed cases without justification and made errors. The $20,000 and 200-transaction threshold meant most gig workers received no form at all.
Recommended and the IRS answer: The IRS agreed or partly agreed with nine of eleven recommendations and Counsel was asked for guidance clarifying third-party reporting rules and to pursue a change to the threshold.
For payers: Two years later Congress cut the 1099-K threshold to $600; the Form 1099-K page has what happened next, including the 2025 reinstatement of the old threshold.
Taxpayer Compliance: More Income Reporting Needed for Taxpayers Working through Online Platforms
GAO GAO-20-366May 28, 2020
Found: An estimated 1.5 to 2 million platform workers, many unaware they are contractors. Platforms reported only above $20,000 and 200 transactions, which often exceeded a worker's gross pay from one company. GAO proposed voluntary withholding, since withholding 'substantially increases the compliance rate'.
Recommended and the IRS answer: Seven recommendations; three closed (feedback monitoring, plain-language 1099-K instructions, and the 6050W tie-breaker rule, which the American Rescue Plan Act resolved by statute). The IRS disagreed with flagging platform pay on Schedule C or 1099-NEC and with voluntary withholding, saying policy is not its role; the threshold recommendation is open with no response.
For payers: The tie-breaker change matters to platforms: a payment settled through a third-party network is reportable on 1099-K, not 1099-NEC, and the 2021 Act settled which rule wins.
Billions in Potential Taxes Went Unaddressed From Unfiled Returns and Underreported Income by Taxpayers That Received Form 1099-K Income
TIGTA 2021-30-002Dec. 30, 2020
Found: Tax year 2017: 314,586 business taxpayers with $335.5 billion of 1099-K income had no return and were not identified as nonfilers because their accounts had no open filing requirement or no account existed; 62,087 individual nonfilers with $575 million were missed; 325,060 business and 103,991 individual nonfilers that were identified ($203 billion and $3 billion) were not worked; 45,169 business underreporter cases with $73 billion were not selected. Working only the largest cases could assess $5.7 billion.
Recommended and the IRS answer: The IRS agreed with three of seven recommendations: review start-date criteria for new entities, define high-income business nonfilers, and work a share of the individual nonfilers.
For payers: A 1099-K filed under an EIN with no return behind it is the lead TIGTA asked the IRS to work, and the IRS agreed to define high-income business nonfilers. Payees whose TIN is missing from a 1099-K do not escape; they are the backup withholding population in the 2015 report above.
Tax Administration: IRS Needs to Take Additional Actions to Prepare for New Information Reporting Requirements
GAO GAO-24-107028Sept. 19, 2024
Found: The IRS twice delayed the $600 Form 1099-K threshold without consistently documenting the risks behind the decisions, and planned digital asset (1099-DA) outreach without applying 1099-K lessons or evaluating its communications. The Joint Committee on Taxation scored digital asset reporting at $28 billion over ten years. GAO reviewed 13 studies on the costs third-party filers bear in tracking what they must report.
Recommended and the IRS answer: Four recommendations, all accepted. The risk assessment policy remains open (May 2026). The stakeholder-feedback recommendation was closed as no longer valid after the 2025 reconciliation act retroactively reinstated the pre-2021 1099-K threshold. The digital asset communication strategy (four key messages, an interactive tool) and periodic evaluation were implemented in 2025 and 2026.
For payers: GAO's status page is the clearest official statement that the $600 threshold is gone retroactively. The 1099-DA outreach plan is where filers of the new form should look for the IRS's expectations.
TINs: ITINs, EINs, EFINs and identity theft
Review and Verification of Individual Taxpayer Identification Number Applications Has Improved; However, Additional Processes and Procedures Are Still Needed
TIGTA 2013-40-052May 2, 2013
Found: After a 2012 complaint-driven audit found ITIN review 'so deficient' there was no assurance of legitimacy, the IRS tightened review: questionable applications rejected rose from 226,011 (July to December 2011) to 340,659 (same period 2012). About 1.3 million ITINs were assigned in 2012. No process yet worked fraud schemes or mined past applications for indicators.
Recommended and the IRS answer: The IRS agreed to flag applications sharing characteristics with past questionable ones, subject to funding, and to keep weekly examiner meetings.
For payers: The start of the ITIN tightening that produced the 2015 expiration rules; an ITIN on a W-9 has been subject to deactivation ever since.
Stolen and Falsely Obtained Employer Identification Numbers Are Used to Report False Income and Withholding
TIGTA 2013-40-120Sept. 23, 2013
Found: 767,071 tax year 2011 e-filed individual returns claimed refunds on false income and withholding under 285,670 EINs: 277,624 stolen EINs on 752,656 returns ($2.2 billion of refunds issued) and 8,046 falsely obtained EINs on 14,415 returns ($50 million). TIGTA estimated $2.3 billion a year of such refunds. The IRS lacked timely third-party W-2 data to detect them.
Recommended and the IRS answer: The IRS agreed to update fraud filters; details are redacted.
For payers: Your EIN on a fraudulent W-2 is a business identity theft case; the EIN misuse page covers Form 14039-B. The January 31 W-2 deadline enacted in 2015 gave the IRS the W-2 data this report said it lacked.
Processes Are Being Established to Detect Business Identity Theft; However, Additional Actions Can Help Improve Detection
TIGTA 2015-40-082Sept. 9, 2015
Found: The IRS had defined business identity theft and run a detection project for corporate returns, but 233 processing year 2014 business returns were filed under EINs on its own suspicious list, 97 of them claiming $2.5 million of refunds. State information sharing covered only individual identity theft.
Recommended and the IRS answer: All recommendations accepted: procedures for suspicious EINs, a systemic filter, expanded state sharing, and business outreach.
For payers: The Suspicious EIN Listing referenced in later FIRE and IRIS controls starts here.
The Number of Employment-Related Identity Theft Victims Is Significantly Greater Than Identified
TIGTA 2017-40-031June 20, 2017
Found: About 2.4 million returns a year are filed with an ITIN but report wages, the signature of someone working under another person's SSN. 497,248 victims without a tax account were not identified in processing year 2015 and 60,823 with an account got no marker; TIGTA projected 272,416 more victims on paper ITIN returns. The IRS's Form W-2 perfection process did not flag employment identity theft.
Recommended and the IRS answer: The IRS disagreed with five of seven recommendations, leaving 548,968 identified victims without action; TIGTA's audit comments call the refusal contrary to the IRS's own practice.
For payers: A W-2 with an SSN that TIN Matching accepts but a name that does not match the employee is this pattern, and the SSA's notices to employers are its visible end.
Processes Do Not Always Ensure That Electronic Filing Identification Numbers Are Assigned to Qualified Applicants or Deactivated When Required
TIGTA 2018-40-003Nov. 15, 2017
Found: The IRS did not verify citizenship for all e-file applicants: 45 approved applications listed a principal or responsible official who was not a citizen or resident alien per SSA records and 1,494 individuals had no citizenship status on file. Nine of 34 sampled partnership applications omitted a 5-percent-or-greater partner; TIGTA projected 256 of 969.
Recommended and the IRS answer: The IRS agreed with six recommendations, partly with one, and refused to suspend the EFINs of the nine partnerships or to review 286 suspicious EFINs for fraud.
For payers: The EFIN suitability rules that trip up Form 1042 e-filers (citizenship, fingerprints, every 5-percent owner) are enforced because of this and the 2026 follow-up; see EFIN for Form 1042 filers.
Processes Need to Be Improved to Identify Incomplete and Fraudulent Applications for Individual Taxpayer Identification Numbers
TIGTA 2018-40-010Jan. 29, 2018
Found: Of 662,168 ITINs issued for tax treaty purposes, only 2,869 (5.3 percent) of the 54,294 used on 2014 to 2016 returns actually claimed treaty benefits. 8,110 revoked ITINs were still valid on the master file and 687 belonged to deceased individuals whose accounts were not locked. Certified Acceptance Agent controls were weak.
Recommended and the IRS answer: Seventeen recommendations; the IRS accepted fifteen and refused to restrict treaty-purpose ITINs to treaty use.
For payers: A treaty-purpose ITIN presented on a W-9 for domestic reporting is exactly the misuse TIGTA described; it is still a valid TIN for Form 1099 purposes unless deactivated.
Some Legal Requirements to Deactivate Individual Taxpayer Identification Numbers Have Not Been Met
TIGTA 2018-40-011Jan. 29, 2018
Found: The PATH Act required deactivation of unused ITINs from December 31, 2015 and of pre-2008 ITINs on January 1, 2017; the IRS could not determine issuance dates before 2014 and deactivated 384,421 against the four million required. Of 23 million ITINs, 12.4 million needed deactivation; errors left 89,105 active (1,298 returns filed) and wrongly deactivated 133,054; 11,350 deactivated ITINs were used on 9,818 returns.
Recommended and the IRS answer: The IRS agreed with eight of ten recommendations and refused to resume rejecting e-filed returns with inactive ITINs.
For payers: An ITIN not used on a return for three consecutive years expires. A payee's expired ITIN is still a TIN for 1099 purposes, but the payee cannot use it to file; the ITIN page explains what to tell them.
Actions Are Needed to Reduce the Risk of Fraudulent Use of Employer Identification Numbers and to Improve the Effectiveness of the Application Process
TIGTA 2018-40-013Feb. 7, 2018
Found: Between January and June 2017 the IRS identified about 10,000 business returns with identity theft characteristics and $137 million of refunds. Programming errors assigned more than 227,000 EINs to sole proprietors who already had one or were deceased. Of 206 sampled paper EIN applications 66 (32 percent) had processing errors, projecting to 20,867.
Recommended and the IRS answer: Eighteen recommendations; the IRS accepted fifteen.
For payers: Duplicate EINs for one sole proprietor are a TIN Matching trap: either number may match the name, and the IRS's own records say which one the payee should be using.
Additional Actions Can Be Taken to Further Reduce Refund Losses Associated With Business Identity Theft
TIGTA 2018-40-061Aug. 20, 2018
Found: The IRS's 25 business identity theft filters flagged 20,764 processing year 2017 returns with $2.2 billion of refunds, but some return types were not screened (15,127 returns, $200 million). Only 220 of 5,133 EINs on the Suspicious EIN Listing had locked accounts; 1,097 EINs were removed from the list on grounds TIGTA questioned; 872 confirmed identity theft returns had $61 million of refunds released in error.
Recommended and the IRS answer: Ten recommendations; eight accepted and two partly. The IRS will lock accounts only on clear indications of fraud.
For payers: Locked EINs are what the FIRE and IRIS filters later check against.
Processes Do Not Ensure That Individual Taxpayer Identification Numbers Are Issued Only to Qualifying Individuals With a Tax Administration Need
TIGTA 2020-40-064Sept. 17, 2020
Found: More than 24 million ITINs issued by December 2019. The IRS renewed 38,597 ITINs between January 2017 and April 2019 that were never then used on a return; issued 562 ITINs on identical identifying information and 2,239 on duplicate documents; let the Secondary Review Team run out of time before issuance; and kept using Certified Acceptance Agents it had removed (15 of 94 terminated in 2016 were back).
Recommended and the IRS answer: Twenty-four recommendations; the IRS accepted thirteen and refused eleven, including ending CAA authentication of identity.
For payers: Renewal now requires a tax return attached (processing year 2022 on), which is the recommendation the IRS later adopted.
Administration of the Individual Taxpayer Identification Number Program
TIGTA 2022-40-013Jan. 26, 2022
Found: 25.1 million ITINs issued since 1996. The IRS had implemented ten of thirteen agreed recommendations from 2020 and taken no action on nine of the eleven it had refused; it did adopt the tax-return-with-renewal rule for 2022 with five exemptions. Duplicate entity information and duplicate documents still were not caught.
Recommended and the IRS answer: Twenty-one recommendations; eleven accepted, including discontinuing foreign Certified Acceptance Agents.
For payers: The IRS's refusal list is the better guide to what an ITIN proves: identity verification by a CAA, which TIGTA has questioned since 2018.
Administration of the Individual Taxpayer Identification Number Program
TIGTA 2024-400-012Dec. 19, 2023
Found: 26 million ITINs issued, 5.8 million active, almost 487,000 issued in 2022. CAA compliance reviews fell from over 300 a year (2016 to 2019) to 25 in fiscal year 2022 and none in 2023. 5,534 returns were paid $10.9 million of retroactive credits on ITINs issued after the return due date, and 2,519 returns were wrongly denied $4.7 million. An external study showed document verification could drop from 20 minutes to two seconds with third-party equipment.
Recommended and the IRS answer: Eight recommendations; the IRS accepted all but an online Form W-7, because it must handle original documents.
For payers: No online W-7 means an ITIN still takes weeks; a payee who says one is 'applied for' needs the Form W-7 receipt and backup withholding in the meantime.
Further Improvements Are Needed to Strengthen the Controls for Issuing Employer Identification Numbers
TIGTA 2025-400-036July 25, 2025
Found: The online EIN system is still rated identity assurance level 1, the same as in January 2020, despite pandemic credit fraud; TIGTA's investigators reported stopping $3.5 billion of credit claims filed on EINs obtained for that purpose. More than 8,000 EINs were issued to the same responsible party on the same day, nine SSNs applied for more than 10,000 EINs with similar business characteristics, more than 77,000 EINs went to a redacted category of applicant from 2018 to 2023, sole proprietors still receive multiple EINs, and estates carry no date of death.
Recommended and the IRS answer: Twelve recommendations, all accepted: raise the identity assurance level, stop control circumvention, detect abuse systemically, and capture more applicant information.
For payers: An EIN proves nothing about the entity behind it. The EIN lookup and a TIN match confirm the pairing of name and number, not the legitimacy of the business, which is why sanctions and registration checks sit beside them.
Assessment of the IRS's Individual Taxpayer Identification Number Program
TIGTA 2026-400-016Mar. 27, 2026
Found: About 31 million ITINs issued since 1996, 5 million active, 469,888 issued in 2025. In processing years 2023 and 2024, 45,386 returns claimed $172.4 million of credits ITIN holders were ineligible for, $142.8 million of it refundable and paid; 43,604 of those returns used ITINs that had expired before the due date and were renewed afterward, which the IRS allowed under Notice 2016-48's rule that a renewed ITIN keeps its original issuance date. No on-site CAA compliance review has been done since September 2019.
Recommended and the IRS answer: Six recommendations, all accepted, including treating the renewal date as the issuance date where the PATH Act's intent requires it.
For payers: The current ITIN figures: roughly one in six ITINs ever issued is active. Expect expired ITINs on W-9s from occasional payees, and expect the IRS to tighten the renewal rule.
The IRS Has Approved Potentially Ineligible Applicants to be Authorized e-File Providers
TIGTA 2026-IE-R006May 27, 2026
Found: Of about 116,000 e-file provider applications accepted from January 2022 to March 2025, a sample of 138 responsible officials found 14 with unaddressed suitability issues (eight tax compliance, five criminal history, one citizenship); 138 individuals were accepted whose records showed them ineligible on citizenship; about 6,300 had unknown status and 47 percent of a sample were never verified; 67 IRS employees were listed as responsible officials.
Recommended and the IRS answer: Five recommendations; four accepted and one partly: fix the tax compliance programming, verify citizenship in continuous suitability, enroll fingerprinted participants in FBI continuous monitoring, and identify IRS employees systemically.
For payers: Expect slower EFIN approvals and more continuous-suitability letters. A filer whose EFIN is suspended mid-season needs a transmitter with its own; the 1042 EFIN page covers the routes.
Workers, section 530 and third-party payers
Employee Misclassification: Improved Coordination, Outreach, and Targeting Could Better Ensure Detection and Prevention
GAO GAO-09-717Aug. 10, 2009
Found: Misclassified workers lose protections and employers underpay tax; GAO found weak coordination between the Labor Department, the IRS and states.
Recommended and the IRS answer: All seven recommendations implemented. The IRS's answer to recommendation 4, extending the Classification Settlement Program to employers who reclassify voluntarily, became the Voluntary Classification Settlement Program announced in September 2011. The Questionable Employment Tax Practices team and a DOL-to-IRS referral procedure also date from here.
For payers: The VCSP exists because of this report. The CSP and VCSP page explains the 10 percent deal.
Processes Are Needed to Link Third-Party Payers and Employers to Reduce Risks Relating to Employment Tax Fraud
TIGTA 2015-40-023Mar. 2, 2015
Found: About 40 percent of small firms use a third-party payer. Only reporting agents (Form 8655) and section 3504 agents (Form 2678) must file an authorization; payroll service providers and PEOs are invisible to the IRS. Eleven of 85 authorization forms and 13 of 78 Form 2678 accounts carried errors.
Recommended and the IRS answer: The IRS agreed with three of five recommendations and partly with two; the certified PEO program enacted in December 2014 links only PEOs that certify.
For payers: A payroll provider that files your 945 or 1099s under its own TCC does not change who is liable; the reporting agents page covers the Form 8655 record to keep.
Improvements to the SS-8 Program Are Needed to Help Workers and Improve Employment Tax Compliance
TIGTA 2018-30-077Sept. 19, 2018
Found: The SS-8 program had no guidance for gig economy workers; 15 gig cases sat an average of 524 days and were then closed as undecidable because the businesses had section 530 relief. Employment Tax Examination received no SS-8 referrals from October 2014 to April 2018. Decisions were untimely in 129 of 189 determinations and 26 of 66 opinions reviewed.
Recommended and the IRS answer: All recommendations accepted: gig guidance and training, a referral function, checking whether businesses comply with determinations, and working with Treasury on legislation to amend section 530 so the IRS can act prospectively.
For payers: Section 530 is the reason an SS-8 determination against a business often changes nothing, and the IRS has been asking Congress to change that since 2018. The SS-8 page and the determinations explorer show the program's output.
Billions of Dollars of Nonfiler Employment Taxes Went Unassessed in the Automated 6020(b) Program Due Primarily to Resource Limitations
TIGTA 2019-30-069Sept. 16, 2019
Found: Business nonfiler case creation declined from fiscal year 2011 and virtually stopped in October 2016; new Automated 6020(b) cases, in which the IRS prepares an employment tax return for a nonfiler, were halted on November 7, 2016.
Recommended and the IRS answer: The IRS agreed with three of six recommendations and partly with three, pending a research project on business nonfiler inventory.
For payers: Resource limits, not policy, stopped the program. The unfiled 945 page covers what the IRS does with a return it can see withholding for but never received.
Improvements to the Employment Tax Examination Process Are Needed to Increase Taxpayer Compliance and Collection Potential
TIGTA 2023-30-009Feb. 13, 2023
Found: The gross employment tax gap was $93 billion for 2014 to 2016 (19 percent of $496 billion). Specialty Employment Tax examinations assessed more per return but had a higher no-change rate; classification decisions were undocumented and managerial reviews missing; the IRS had no way to track businesses granted section 530 relief.
Recommended and the IRS answer: The IRS agreed with four recommendations and partly with the section 530 tracking mechanism, which it will explore.
For payers: Section 530 relief granted in one examination is not recorded anywhere a later examiner can find it; keep your own copy of the closing letter.
Foreign payees and withholding agents
Additional Controls Are Needed to Help Ensure That Nonresident Alien Individual Property Owners Comply With Tax Laws
TIGTA 2017-30-048Aug. 23, 2017
Found: Of 149 sampled nonresident aliens renting U.S. property in 2013, 102 (68 percent) netted expenses without the required 871(d) election, so $1.78 million of gross rent should have borne 30 percent withholding ($533,000, or $56.2 million projected). At least 28 of 214 foreign owners in five counties appeared not to report rent at all.
Recommended and the IRS answer: The IRS agreed to revise Form 1040-NR for the election and to start a compliance initiative; it refused FIRPTA-database verification of withholding credits.
For payers: A property manager paying rent to a foreign owner is a withholding agent at 30 percent on gross rent unless it holds a W-8ECI; the foreign payee guide covers the form.
Despite Spending Nearly $380 Million, the Internal Revenue Service Is Still Not Prepared to Enforce Compliance With the Foreign Account Tax Compliance Act
TIGTA 2018-30-040July 5, 2018
Found: FATCA reports from foreign institutions lacked valid TINs, so matching failed. 62,398 tax year 2015 Forms 1042-S had invalid TINs, reporting more than $717 million with just over $47 million withheld; most Form 1099 series returns in the FATCA population did have valid TINs.
Recommended and the IRS answer: The IRS agreed with four of six recommendations, including strengthening the accuracy of Form 1042-S reporting.
For payers: An invalid or missing recipient TIN on a 1042-S is visible to the IRS and is now a filter. The 1042-S instructions' TIN rules and the chapter 4 status codes are where examiners start.
Forms, Instructions, Publications, and Procedures Need to Be Improved for Some Nonresident Aliens Eligible for Treaty-Based Income Exemptions
TIGTA 2018-30-074Sept. 20, 2018
Found: Of 125 sampled Forms 1040-NR claiming treaty exemptions, 113 (90 percent) appeared entitled, but 69 had received only a W-2 and no 1042-S for the exempt wages because the employer had no Form 8233; 54 of them reduced W-2 wages themselves ($344,640) and eight followed the instructions and lost $35,278 of exemptions. Four taxpayers took the exemption twice.
Recommended and the IRS answer: Both recommendations accepted: clarify the forms for employees without a Form 8233 and increase outreach to withholding agents.
For payers: If a foreign employee gives you Form 8233, the treaty-exempt wages go on Form 1042-S, not the W-2. TIGTA's sample shows how often employers get that split wrong.
Millions of Dollars in Discrepancies in Tax Withholding Required by the Foreign Investment in Real Property Tax Act Are Not Being Identified or Addressed
TIGTA 2020-40-014Mar. 9, 2020
Found: 2,988 buyers had $688 million of discrepancies between Forms 8288-A filed in 2017 and the withholding assessed; 3,184 Forms 8288 had $264 million never assessed; Forms 1099-S were not used to find buyers who never withheld (about $22 million for 2017); 1,835 foreign sellers may have received $60 million of excess credits.
Recommended and the IRS answer: Twelve recommendations, all accepted, including a FIRPTA database quality strategy and training.
For payers: The IRS now has a reason to compare every 1099-S showing a foreign seller to a Form 8288. The FIRPTA page covers the buyer's obligation.
Withholding Compliance Efforts for Partnerships With Foreign Partners Can Be Improved
TIGTA 2020-30-026June 15, 2020
Found: Sampled partnerships remitted their section 1446 tax, but the Project 1446 database held significant errors that prevent verifying credits and finding nonfilers. For tax year 2016, 17,734 partnerships filed Forms 8804 with Forms 8805 reporting nearly $3.7 billion of withholding.
Recommended and the IRS answer: Three recommendations, all accepted.
For payers: Form 8805 credits are checked against a database TIGTA found unreliable; a foreign partner whose credit is denied needs the partnership's 8805 copy.
Continued Efforts Are Needed to Address Billions of Dollars in Reporting and Payment Discrepancies Relating to Tax Withheld From Foreign Persons
TIGTA 2020-40-021June 17, 2020
Found: IRS filters missed 1,919 withholding agents with $182.7 million of Form 1042 to 1042-S discrepancies; 366 agents claimed $506 million more in withholding credits than their 1042-S forms reported; a new filter found 1,569 agents that filed no 1042-S; 7,910 Forms 1040-NR claimed credits with no supporting 1042-S and fell under the verification threshold, which the IRS cannot check systemically because a recipient TIN is not required on every 1042-S.
Recommended and the IRS answer: Twelve recommendations; the IRS accepted five and refused seven, including reviewing the discrepancies TIGTA found and changing the Campaign 817 filters.
For payers: The Form 1042 to 1042-S reconciliation is the foreign-payee twin of the 945 reconciliation. The foreign vendor exam page shows how Campaign 817 uses it.
Additional Actions Are Needed to Address Non-Filing and Non-Reporting Compliance Under the Foreign Account Tax Compliance Act
TIGTA 2022-30-019Apr. 7, 2022
Found: FATCA cost $574 million from 2010 to 2020 and produced 847 campaign letters and no campaign assessments ($14 million from other examinations). More than 330,000 taxpayers with foreign accounts over $50,000 filed no Form 8938 for 2016 to 2019, a potential $3.3 billion of penalties. Only 12 soft letters went to foreign institutions.
Recommended and the IRS answer: Six recommendations; the IRS agreed to set goals and timelines and to consider expanding the FFI campaign, and refused to issue a notice to Model 1 IGA countries.
For payers: Chapter 4 withholding by U.S. payers is enforced through Form 1042 reconciliation rather than FATCA campaigns; the campaigns' weakness does not reach withholding agents.
Digital assets
Virtual Currencies: Additional Information Reporting and Clarified Guidance Could Improve Tax Compliance
GAO GAO-20-188Feb. 12, 2020
Found: Information returns did not identify virtual currency transactions, reporting by third parties was limited, and part of the 2019 guidance (the FAQs) was not authoritative without the IRS saying so. The IRS had sent letters to more than 10,000 taxpayers in July 2019.
Recommended and the IRS answer: Recommendation 2, increase third-party reporting, was overtaken by the Infrastructure Investment and Jobs Act (November 15, 2021), which created broker reporting; the FAQ disclaimer was adopted in 2021 and 2022; the FATCA-for-digital-assets recommendation stays open.
For payers: Form 1099-DA is the end of a line that starts here.
The Internal Revenue Service Can Improve Taxpayer Compliance for Virtual Currency Transactions
TIGTA 2020-30-066Sept. 24, 2020
Found: Of seven examined exchanges, some had the characteristics of third-party settlement organizations required to file Form 1099-K above $20,000 and 200 transactions, yet TIGTA could identify only one exchange of nine that issued Forms 1099-B for 2015 to 2018, and Bank Secrecy Act examiners did not refer income tax issues.
Recommended and the IRS answer: The IRS agreed to the recommendations on referrals and reporting (details in the report).
For payers: Before Form 1099-DA, exchanges were being measured against the 6050W third-party network rules.
The Internal Revenue Service Is Developing a Digital Asset Monitoring and Compliance Strategy
TIGTA 2024-IE-R005Dec. 18, 2023
Found: Taxpayers reporting virtual currency transactions on Form 1040 rose from about 2.3 million (2020) to 6.8 million (2021). The IRS created a Digital Asset Advisory Committee (February 2022), a Digital Asset Initiative (June 2022) and a project office (October 2022); the 6045 proposed regulations were published August 29, 2023 and the 6050I cash-reporting regulations for digital assets remained in draft.
Recommended and the IRS answer: No recommendations.
For payers: The 6050I rule, treating digital assets as cash for Form 8300, is the one still unfinished; the Form 8300 page notes the statutory change and the missing regulations.
Virtual Currency Tax Compliance Enforcement Can Be Improved
TIGTA 2024-300-030July 10, 2024
Found: Criminal Investigation ran 390 digital asset cases from 2018 to 2023 with 224 prosecution recommendations, but civil enforcement was 'indirect and negligible': the Form 1040 digital asset question was not being used for case selection (details redacted). The proposed regulations delayed gross proceeds reporting to 2025 and basis reporting to 2026, which TIGTA said would cost revenue.
Recommended and the IRS answer: Three recommendations, all accepted, including a compliance plan built on Form 1099-DA data.
For payers: The IRS has committed, in writing, to select cases from 1099-DA. The first forms for 2025 transactions are the baseline.
Questions people ask
Can I cite a TIGTA report in a penalty response?
Yes, for what it is: an official description of how the IRS program works and what it prioritizes. It is not law and does not bind the examiner, but a 972CG response that shows the payer fixed exactly the failure TIGTA found industry-wide (a missing TIN repeated across years, say) is describing a responsible-manner correction in the IRS's own terms.
Where are the reports before 2013?
TIGTA's older reports are on tigta.gov; the index used for this page (oversight.gov) begins in late 2012. The two reports that matter most for payers before then, GAO's 1988 TIN penalty review and its 2009 1099-MISC report, are included above.
Why are the IRS's own thresholds missing?
TIGTA redacts law enforcement criteria under its disclosure review (the '2' redaction code), and this site does not reconstruct them. The case selection page explains what is public about selection.
How often is this page updated?
TIGTA publishes about 100 reports a year and GAO updates recommendation status continually. The page is refreshed when a new report on information reporting, withholding or TINs appears; the oversight.gov index, filtered to TIGTA, is the place to check for newer ones.