irs audit attorneys- Issues with the IRS’ Procedures to Authenticate Foreign Documents

Tuesday, September 22, 2015
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According to the Internal Revenue Service’s (IRS) regulatory and auditing body (TIGTA), a new report indicates that the agency does not have in place effective procedures that are meant to ensure the authenticity of copies of important documents that are certified by a foreign issuing agency.  The authenticity is being jeopardized for applications applying for an Individual Taxpayer Identification Number (ITIN). TIGTA conducted this audit in an attempt to determine if there were procedures to ensure that documents are authentic when certified by a foreign issuing agency.  Originally, the audit began because there was a complaint made by an IRS employee that claimed that the IRS’s ITIN application procedures in fact are not guaranteeing that the documents certified by a foreign issuing agency are authentic.
It is important to have an ITIN Number for tax purposes if a taxpayer does not have a Social Security Number or cannot obtain one due to eligibility purposes. Individuals can be issued an ITIN regardless of their immigration status. In 2014, over 638,000 ITINs were issued by the IRS.  The audit validated the complaint that was made by the IRS employee. 

What does this mean? Basically, tax examiners are not qualified to authenticate copies of foreign documents that are certified by foreign issuing agencies.  The tax examiners do not have the tools in which to properly verify the foreign documents.  In addition, the procedures that the IRS developed cannot rule out if the ITINs are being issued due to false documentation.  It is critical for the IRS to be able to verify individuals’ identities and foreign status before processing an ITIN. This will affect tax returns and refunds that need to be issued. That’s why authenticating foreign documents is a necessary step in assigning an ITIN.

The IRS’ audit report requested that tax examiners be equipped with resourceful reference materials to assist them in the verification and authentication efforts of copies of certified foreign documents by a foreign issuing agency.  Also, a request was made for the IRS to create a process to train tax examiners on how to verify the authenticity of copies of foreign documents that have been certified by a foreign issuing agency.