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. The IRS is not efficiently or effectively processing these referrals. ...
guidelines provided to taxpayers and employees are confusing and inconsistent.
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. Additionally, because Form 3949‑A
lacks specificity, taxpayers do not always provide the IRS with sufficient
information for the IRS to take action. Finally, 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.
As a result, many referrals do not meet any criteria
under which the IRS could or would be able to take action(s). A lack of
quality review resulted in referrals being destroyed. Additionally, the forms are
often used for other purposes (e.g., claims by victims of identity
theft). 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.
Ineffective routing procedures and oversight have
allowed Forms 3949-A to be misrouted to the wrong functions. Others are
mistakenly considered unworkable and retained for 90 days and then destroyed.