How the District of Columbia Might Better Manage Its Tax Compliance Program
GGD-76-46: Published: Mar 12, 1976. Publicly Released: Mar 12, 1976.
- Full Report:
In the District of Columbia, the Department of Finance and Revenue (DFR) administers the tax laws, and the Tax Compliance and Registration Division informs and assists taxpayers. The District has encouraged voluntary compliance with tax laws by an active program of taxpayer assistance and enforcement: identification of and followup on nonfilers, audit of tax returns, and collection of delinquent taxes. However, more could be done. The District must find out why people need help with their tax returns, do not file returns or pay their taxes, and make mistakes in preparing their returns. The District needs to establish a system for analyzing the voluntary taxpayer-compliance program and provide for obtaining the information for such analysis.
The DFR agreed that more emphasis on program analysis and evaluation is needed, and internal evaluation of department programs was transferred to the Office of the Director of Finance and Revenue. The review by GAO indicated that: organizations are operating in the District under the presumption that they are exempt from income and franchise tax; other organizations which the District has exempted from franchise and income tax apparently have not been exempted from Federal tax or have had their Federal exemptions terminated; and many organizations no longer operating in the District are on record in its active exemption files.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The District should review its exemption program with a view toward developing ways to strengthen its supervision of tax-exempt organizations. The District should consider establishing application filing fees in order to help offset the costs of administering the program. The Mayor should insure that DFR completes its review of the information and resource requirements for systematic analysis and evaluation of the tax compliance program and takes appropriate action to establish a management information system. The Mayor also should provide the necessary resources to support DFR's efforts to improve the voluntary taxpayer compliance program. Administration of the District's self-assessed taxes would be improved by establishing computerized master (historical) tax files.