TIGTA reports ongoing IRS challenges

A recent report from the Treasury Inspector General for Tax Administration (TIGTA) provides important insight into ongoing challenges within the IRS. While TIGTA reports are often technical, they offer valuable takeaways for tax professionals seeking to better understand how IRS operations may affect their work and their clients.

TIGTA’s role is to provide independent oversight of IRS programs and operations. These reviews are intended to improve efficiency, strengthen compliance, and identify fraud and abuse. The latest report shows that while the IRS has made progress in some areas, significant challenges remain.

What TIGTA findings mean for practitioners

TIGTA reports often point to areas where the IRS may increase oversight or enforcement. For tax professionals, this can signal where additional scrutiny may occur.

The report highlights uneven progress across IRS operations. Some improvements have been made, but gaps in implementation and monitoring continue to create risk. This affects not only the IRS but also practitioners who depend on consistent processes and timely responses.

Ongoing data implementation challenges

One of the most important findings in the report is the IRS’ continued struggle with data implementation. 

TIGTA reviewed the IRS’s self-assessment, which uses a zero-trust data maturity model to evaluate progress. The IRS rates five of eight key data functions at the traditional stage, including data inventory management, data categorization, governance capability, data availability and data encryption. TIGTA generally agreed with this self-assessment, noting that more complex functions require further evaluation.

Other findings

The IRS also has difficulty maintaining a complete and reliable inventory of its systems. Without this, it is challenging to fully track where taxpayer data is stored and how it is used.

Not all systems produce complete or consistent audit trail data. This limits the IRS’ ability to detect unauthorized access or investigate potential misuse. While the IRS has implemented improvements (such as automatic removal of network access since September 2022), TIGTA still finds residual risks and some disagreement remains. 

In some cases, individuals who should no longer have access to systems retained that access. TIGTA found instances where former employees and contractors still had access to sensitive systems. The IRS has disputed some of these findings, stating that network access removal is now automated and that some of TIGTA’s data was outdated or misinterpreted. However, TIGTA maintains that risks are not fully eliminated. While modernization efforts are underway, TIGTA noted that the IRS is still evaluating improvements in some areas rather than fully implementing them. 

How this affects your practice

These data challenges can directly impact tax professionals and their clients. Limitations in IRS systems may lead to delays in processing, inconsistent enforcement or additional requests for documentation.

Practitioners may also see increased scrutiny in areas where TIGTA has identified compliance gaps. This makes it even more important to ensure returns are accurate, complete and well documented.

Key takeaways  

The report reinforces several important points for practitioners:

• IRS systems are still evolving and may not always function consistently.
• Data limitations can lead to delays or additional scrutiny.
• Strong documentation and due diligence are critical.
• Awareness of IRS challenges can help manage client expectations.

Looking ahead

The IRS continues to work on modernization and operational improvements. However, progress takes time and some long-standing issues remain.

NATP will continue to monitor these efforts and share updates that highlight risks and areas for improvement. For tax professionals, staying informed can help identify potential challenges before they affect clients.