A pension payment, an annuity or a withdrawal from an individual retirement account produces the same piece of paper twice. One copy of Form 1099-R goes to the retiree, usually in January. The other goes to the Internal Revenue Service, and it is not due there until the end of March. A federal watchdog has now measured how much of the filing season falls inside that gap, and the answer is most of it.
Fifteen Million Returns With Nothing to Check Them Against
The IRS does not take a filed return at face value. It compares what the return reports against the information returns that banks, employers, plan administrators and insurers file separately, and it runs fraud filters against that comparison before releasing a refund. Those filters can only test what the agency already holds. When the third-party form has not arrived, there is nothing on the other side of the equation.
During the 2024 filing season, as of that April 15, the agency had no information return on file at the time of filing for roughly 15 million of the 20 million tax returns reporting Form 1099-R income, according to final audit report 2026-400-019 from the Treasury Inspector General for Tax Administration, issued May 13, 2026 over the signature of Diana M. Tengesdal, the deputy inspector general for audit. That is 75 percent of the retirement-income returns filed in that window. Together those returns claimed more than $46 billion in refunds.
What the rule leaves out: Which account a withdrawal comes from first decides how much of a retirement income is taxed, and no agency notice works that order out. See the account withdrawal order in The Retirement Tax & Withdrawal Planner.
A March 31 Deadline the Filing Season Outruns
The mismatch is structural, not accidental. Congress accelerated some information-return deadlines years ago: employers must get Form W-2 and nonemployee compensation returns to the government by January 31. The forms that report retirement money were left where they were. Form 1099-R, which covers distributions from pensions, annuities, profit-sharing and retirement plans, IRAs and insurance contracts, remains due to the IRS by March 31, as does Form W-2G for gambling winnings. Filing season traditionally opens in January. A retiree who files in early February is filing against an IRS database that will not receive the matching form for another seven or eight weeks, which is exactly the period in which refunds go out.
The inspector general has been making the same argument for nearly a decade. The 2026 audit points back to TIGTA report 2017-40-017, which concluded that access to third-party income and withholding information at the point returns are processed is an important tool for preventing tax fraud. What changed in the intervening years was the deadline for wage forms, not the deadline for retirement forms, which left the pension and annuity population on the wrong side of a reform that had already been made for workers.
What a Missing Match Means on a Retiree’s Return
The practical effect is that the arithmetic on a retirement return goes unverified at the moment it matters most. A 1099-R shows the gross distribution in one box and the taxable portion in another, and the payer is not always able to fill in the second one, because it may not know what the retiree did with the money or how much after-tax basis sits in the account. Rollovers, partial conversions and inherited accounts all land in that grey space. The figure that reaches the return is frequently the taxpayer’s own determination, and so is the federal withholding credit claimed against it.
When the matching form finally lands, the comparison happens anyway, only later and in writing. The IRS says it sends a notice or letter when it has a question about a return, when it has changed or corrected one, when a refund amount has shifted or when a balance is due, and it warns that a taxpayer who disagrees must reply by the date printed on the notice to preserve appeal rights. A retiree who has already spent the refund can therefore find the disagreement arriving months after the cash did, with interest running on anything ultimately owed. The scale of what the filters do catch is modest by comparison: TIGTA reported that for processing year 2024 the IRS identified about 6,600 questionable returns associated with Forms 1099-R and W-2G.
Gambling Winnings Sit in the Same Blind Spot
The other March 31 form produces the same result in a smaller population. For the 2024 filing season, the IRS had no matching information return for 1 million of the 1.3 million returns that reported Form W-2G income, or 77 percent, and those returns claimed $3.6 billion in refunds. The two forms share a deadline and a consequence: a casino jackpot and a pension distribution both reach the agency’s fraud filters after the refund has cleared rather than before.
A $944 Million Estimate and a Recommendation Only Congress Can Finish
TIGTA put a price on the delay. The audit behind the finding ran from August 2024 through November 2025 and drew on data and interviews at the IRS units that do this screening, Taxpayer Services Return Integrity and Compliance Services in Atlanta and Austin. If the filing deadline for certain information returns, including Forms 1099-R and W-2G, were moved earlier, the inspector general estimated the IRS could increase the revenue it protects by $944 million across fiscal years 2025 through 2034. That figure is a projection rather than a booked amount, and it rests on the assumption that data in hand at filing time catches what data in hand in April does not.
The report carries a single recommendation, directed at the Chief, Taxpayer Services: work with the Treasury Department’s Office of Tax Policy to request legislation accelerating the deadline for every information return currently due March 31. IRS management agreed and said it would share the report with that office. Nothing in that exchange changes a deadline. Statute sets the March 31 date, so retirement-income forms will keep arriving after the returns that report them until Congress decides otherwise, and the audit closes with the recommendation still sitting at the legislative stage.
The Decisions a 1099-R Records but Never Explains
Form 1099-R reports what came out of a retirement account after the fact. It does not say which account should have been drawn down first, how the distribution moved the taxable share of a Social Security benefit, or whether the year’s total pushed a household into a higher Medicare premium bracket. Those decisions are made before the form is issued and are not revisited by any notice the agency sends afterward.
The Retirement Tax & Withdrawal Planner is a 12-page planner with four calculators covering provisional income, IRMAA tier, RMD schedule and Roth bracket fill, plus the senior deduction.
Look up the IRMAA appeal route for Form SSA-44 in The Retirement Tax & Withdrawal Planner.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources.
