IRS RFI: Inflation Reduction Act (IRA) Initiative 2.1: Identify Errors During Filing

Notice ID 24-IRA-OBSA

The overall goal of Initiative 2.1 is to develop the capability for IRS to identify issues with tax returns at the point of filing, notify taxpayers and tax professionals about those potential issues, and allow them to make corrections, reducing the need to resolve errors later. To achieve this goal, the IRS will develop the capability to perform real-time checks of electronically filed return for errors in real time, match those returns against available third-party and internal data, and evaluate the taxpayer’s eligibility for credits and deductions. The IRS will also develop the capability to explain potential issues in plain language via notifications that could be delivered to taxpayers and preparers directly or through their tax software. Notifications would include instructions on how to correct the issue and resubmit the return. The IRS could then resolve issues before resubmission or follow existing processes to reject returns or accept them prior to resolution. Partnerships with tax preparation software companies will also facilitate issue resolution prior to acceptance.

The IRS is looking for vendors who can support the IRS in planning, executing, and coordinating complex project portfolios that will achieve the following outcomes:

1.1 Leveraging Information Returns to Reduce Issues

The planned outcomes include the capability to:

• Match information return documents to the associated tax return within IRS systems.
• Allow taxpayers to access their information return documents through their Individual Online Accounts.
• Process information return documents earlier in the year as needed.
• Validate a taxpayer’s estimated tax payments against their payment history within IRS systems.
• Identify errors on tax returns within IRS’s electronic tax filing systems in a manner consistent with the existing Error Resolution System (ERS).

1.2 Engaging Software Companies to Resolve or Identify Issues Quickly

The planned outcomes include:

• Providing compliance business logic to tax software providers so they can better assist taxpayers in avoiding errors.
• Providing credit business logic to tax software providers so they can better assist taxpayers in obtaining as many appropriate credits as possible.
• Identifying indicators of malicious tax preparer clusters to share with tax software providers to assist in better warning potential taxpayer victims.
• Improving partnerships with tax software providers to identify ghost preparers and warn potentially victimized taxpayers.
• Developing the capability to provide real-time access to information return data to tax preparation software at the point of filing so they can better assist taxpayers in avoiding errors.

1.3 Leveraging Advanced Analytics to Detect Issues at Filing

The planned outcomes include:

• Facilitating the use of data throughout the IRS to help ensure the service is focused on areas that will result in a maximum impact for the service and taxpayer.

1.4 Detect Scams and Schemes at Filing

The planned outcomes include the capability to:

• Match tax returns against prior year returns and tax account information to reject returns with indicators consistent with known scams/schemes.
• Implement future matching against additional indicators relating to scams/schemes not yet identified…

More here.

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