Noncompliance (1 - 10 of 39 items)
IRS Return Selection: Certain Internal Controls for Audits in the Small Business and Self-Employed Division Should Be Strengthened
GAO-16-103: Published: Dec 16, 2015. Publicly Released: Jan 13, 2016.
The Small Business/Self-Employed (SB/SE) division of the Internal Revenue Service (IRS) uses over 30 methods, called workstreams, to identify and review tax returns that may merit an audit. These returns were initially identified through seven sources which include referrals; computer programs that run filters, rules, or algorithms to identify potentially noncompliant taxpayers; and related return...
Virtual Economies and Currencies: Additional IRS Guidance Could Reduce Tax Compliance Risks
GAO-13-516: Published: May 15, 2013. Publicly Released: Jun 17, 2013.
Transactions within virtual economies or using virtual currencies could produce taxable income in various ways, depending on the facts and circumstances of each transaction. For example, transactions within a "closed-flow" virtual currency system do not produce taxable income because a virtual currency can be used only to purchase virtual goods or services. An example of a closed-flow transaction...
Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion
GAO-13-318: Published: Mar 27, 2013. Publicly Released: Apr 26, 2013.
As of December 2012, the Internal Revenue Service's (IRS) four offshore programs have resulted in more than 39,000 disclosures by taxpayers and over $5.5 billion in revenues. The offshore programs attract taxpayers by offering a reduced risk of criminal prosecution and lower penalties than if the unreported income was discovered by one of IRS's other enforcement programs. For the 2009 Offshore Vol...
Tax Gap: Complexity and Taxpayer Compliance
GAO-11-747T: Published: Jun 28, 2011. Publicly Released: Jun 28, 2011.
Taxes are necessary because they fund the services provided by government. Several years ago, the Internal Revenue Service (IRS) estimated that the gross tax gap--the difference between taxes owed and taxes paid on time--was $345 billion for 2001. In the face of large and growing deficits, it is important to seek out potential causes and solutions to the tax gap. Achieving high levels of voluntary...
Tax Gap: Actions Needed to Address Noncompliance with S Corporation Tax Rules
GAO-10-195: Published: Dec 15, 2009. Publicly Released: Jan 14, 2010.
S corporations are one of the fastest growing business types, accounting for nearly 4 million businesses in 2006. However, long-standing problems with S corporation compliance produce revenue losses in individual income taxes and employment taxes. GAO was asked to (1) describe the reasons businesses choose to become S corporations, (2) analyze types of S corporation noncompliance, what IRS has don...
Tax Administration: Opportunities Exist for IRS to Enhance Taxpayer Service and Enforcement for the 2010 Filing Season
GAO-09-1026: Published: Sep 23, 2009. Publicly Released: Oct 16, 2009.
Preparing for the tax filing season is a significant undertaking for Internal Revenue Service (IRS). The filing season is when most individuals file their tax returns, receive refunds, and contact IRS if they have questions. As returns are received, IRS begins a series of automated compliance checks to correct errors on tax returns and ensure that refunds are justified. For example, IRS rejects el...
Tax Gap: Limiting Sole Proprietor Loss Deductions Could Improve Compliance but Would Also Limit Some Legitimate Losses
GAO-09-815: Published: Sep 10, 2009. Publicly Released: Oct 13, 2009.
Sole proprietors, who own unincorporated businesses by themselves, underreported their net income by 57 percent or $68 billion for 2001, according to the Internal Revenue Service's (IRS) most recent estimate. The underreporting includes both understated receipts and overstated expenses and may result in losses that can be deducted against income from other sources, such as wages. GAO was asked to...
Home Mortgage Interest Deduction: Despite Challenges Presented by Complex Tax Rules, IRS Could Enhance Enforcement and Guidance
GAO-09-769: Published: Jul 29, 2009. Publicly Released: Aug 31, 2009.
The home mortgage interest deduction is the third most expensive federal income tax expenditure, with the government expected to forgo about $80 billion of revenue for the deduction in 2009.1 Subject to various limitations, taxpayers may deduct interest on home-secured loans, such as mortgages, mortgage refinancings, and home equity loans, including those taken as lump sum amounts and home equity...
Tax Compliance: Opportunities Exist to Improve Tax Compliance of Applicants for State Business Licenses
GAO-09-569: Published: Jun 15, 2009. Publicly Released: Jul 16, 2009.
The California Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE), requires applicants for California business licenses in three industries--farm labor contracting, garment manufacturing, and car washing and polishing--to be in compliance with federal employment tax obligations to qualify. Based on questions about whether the Internal Revenue Service (IRS) is fully...
Management Report: Improvements Are Needed to Enhance IRS's Internal Controls and Operating Effectiveness
GAO-09-513R: Published: Jun 24, 2009. Publicly Released: Jun 24, 2009.
In November 2008, we issued our report on the results of our audit of the Internal Revenue Service's (IRS) financial statements as of, and for the fiscal years ending, September 30, 2008, and 2007, and on the effectiveness of its internal controls as of September 30, 2008. We also reported our conclusions on IRS's compliance with significant provisions of selected laws and regulations and on wheth...