TIGTA has recommended that the IRS add criteria to pinpoint high-risk carryforward claims and to identify and examine returns with discrepancies, among other suggestions.
“The IRS should have some mechanism for measuring and monitoring deductions or credits that lead to a carryover and adjusting them or questioning them when they don’t agree with their records,” said Zinman, who added that some local taxing agencies, like those in Philadelphia, send a loss carryover statement each year to a taxpayer who claimed a net operating loss in a prior year.
Stoner said he finds the abuse surprising given the resources of the IRS.
“I don’t understand why there is such an abuse with the IRS computer matching systems," Stoner said. "They should have any carryforwards taken on previous years’ returns in the taxpayer’s file going forward."