BUSINESS
06/23/2013 01:02 pm ET Updated Jul 09, 2013

IRS Sent $46 Million In Refunds To 'Unauthorized' Workers At One Atlanta Address

In what appears to be a significant oversight, the Internal Revenue Service sent a total of $46,378,040 in refunds to "unauthorized" workers at one address in Atlanta, Ga., according to a report from the Treasury Inspector General for Tax Administration.

Brought to light last year by WTHR-TV Indianapolis, the IRS' $46 million in refunds included 23,994 tax payouts sent to the particular property in 2011.

As the audit report discloses, the Atlanta address is one of several that received a high number of refunds for Individual Taxpayer Identification Number (ITIN) tax returns. ITINs are issued to those who are ineligible to obtain a Social Security number. However, it seems, the application for these identification numbers is flawed.

In the July 2012 report, entitled "Substantial Changes Are Needed to the Individual Taxpayer Identification Number Program to Detect Fraudulent Applications," the Treasury Inspector General recommends an overhaul of the ITIN application program so that suspicious applicants are identified from the get-go.

The report from the Treasury Inspector General, who is charged with the independent oversight of IRS activities, reads:

This audit was initiated because TIGTA received IRS employee complaints referred from members of Congress alleging that IRS management responsible for overseeing the ITIN operation was encouraging employees to assign ITINs to applicants when the ITIN application was fraudulent... The audit found that the ITIN application review and verification process is so deficient that there is no assurance that ITINs are not being assigned to individuals submitting questionable applications.

By May, many of the report's recommendations were addressed, however, the Inspector General's office still cautioned that further improvements to the ITIN program are required.

This is not the first time the IG has chided the IRS for ineffective management. Earlier this year, the IG determined that the government agency used an "inappropriate criteria" for judging organizations seeking to gain a tax-exempt status.

The much-anticipated report released in May stemmed from allegations -- which the IRS later acknowledged -- that certain conservative groups were being targeted for extra scrutiny. The IRS targeting scandal is currently under investigation by congressional panels and the Federal Bureau of Investigation.

CORRECTION: An earlier version of this article stated that the report was brought to light by CNSNews.com. The finding was actually first spotted by Bob Segall at WTHR-TV Indianapolis as part of the station's "Investigating the IRS" series.

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