Tax Services

What is the IRS Matching Program?

In previous tax seasons, the IRS didn’t start auditing tax returns until many months after they were filed.

But in 2017, things changed. The IRS moved toward more upfront matching to improve tax return accuracy and increase its enforcement.

What is the IRS Matching Program?

Enter the “IRS Matching Program”, an upfront audit alternative. With this program, the IRS scrutinizes income reporting before sending refunds. Through this program, the IRS upfront matching of filed tax returns against Forms W-2 and Form 1099.

How does the IRS Matching Program Work?

  1. The IRS receives a tax return.
  2. The IRS matches the return against Forms W-2 and/or Forms 1099 that the IRS has received.
  3. If everything matches between the return and the information statements, the IRS releases the refund.
  4. If the IRS finds a mismatch, the IRS freezes the refund and sends a notice to the taxpayer asking for more information to prove their income and withholding.

Why did the IRS Start Income Matching?

Until 2017, the IRS couldn’t properly scrutinize tax returns before issuing refunds.

When it came to checking upfront on whether taxpayers correctly reported their wages and other income, the IRS couldn’t match income information against tax returns before sending the refunds. Fraudsters took advantage of this situation to commit refund fraud.

The PATH Act transformed this issue by helping the IRS fight stolen identity refund fraud and allowing the IRS to do a “quick audit” of tax returns before sending refunds.

The law requires earlier Form W-2 filing, which gave the IRS more time to match returns in the short time that is tax season.

What Can You Do?

To avoid a mismatch, work with a tax advisor to file an accurate return and report all income received in a tax year. In addition, if you discover a tax return error, make sure to amend the return as soon as possible to avoid penalties or audits.

Taxes can be confusing – especially when tax law changes frequently and creates more complexity on your return. For this reason, consult an expert who to avoid a refund hold and even an audit.

Find your match at Block Advisors now.

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