Tax Administration:

Information on Selected IRS Tax Enforcement and Collection Efforts

GAO-01-589T: Published: Apr 5, 2001. Publicly Released: Apr 5, 2001.

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This testimony discusses (1) the relationship between Internal Revenue Service (IRS) audits of taxpayers and other programs IRS uses to ensure that taxpayers' returns are accurate and (2) how IRS is managing the increased workload in two of its programs--offers-in-compromise and innocent spouse claims. IRS audited more than 600,000 taxpayers in fiscal year 2000, either face-to-face or through the mail. IRS has several programs that use computerized screening procedures to review all tax returns to detect certain types of errors. These programs result in millions of contacts with taxpayers to inform them of adjustments IRS made to their liabilities, seek explanations for errors IRS believes were made, or ask taxpayers to check whether they erred on their returns. The programs vary in their similarity to audits; some of the programs are most similar to audits that IRS conducts through the mail. The programs that IRS uses to detect errors on tax returns rely completely on information that taxpayers report on the tax returns and that IRS receives from third parties. Therefore, audits remain an important tax enforcement tool. Several factors suggest that IRS may be gaining better management control over the innocent spouse workload. Unlike the offer-in-compromise program, the workload for the innocent spouse program appears to have leveled off after increases following enactment of the IRS Restructuring and Reform Act. With this leveling off and enhancements to its case processing capacity, IRS plans to move many cases back into its centralized case processing facility this fiscal year, potentially freeing up hundreds of field staff to return to other examination-related duties. In the last two years, the offer-in-compromise program has experienced a greater rise in its workload and is not as far along as the innocent spouse program in implementing processes that IRS believes will help gain better control over the workload.

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