Tax Administration:

IRS' Combined Annual Wage Reporting Reconciliation Program

GGD-89-21: Published: Dec 14, 1988. Publicly Released: Dec 14, 1988.

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Pursuant to a congressional request, GAO provided information on the Internal Revenue Service's (IRS) Combined Annual Wage Reporting Reconciliation Program (CAWRRP), focusing on: (1) CAWRRP objectives and operations; and (2) tax amounts assessed, abated, and collected as a result of CAWRRP.

GAO found that: (1) under an agreement between IRS and the Social Security Administration (SSA), IRS assumed responsibility for matching employers' annual earnings information reported to SSA with the comparable quarterly earnings information and income tax withholding reports submitted to IRS; (2) the number of discrepancies with potential tax implications which IRS annually identified totalled about 500,000 between 1981 and 1984 and then increased to 791,000 in 1986; (3) IRS resolved an average of 54 percent of the discrepancies between 1981 and 1986; and (4) the discrepancies accounted for about 0.1 percent of the taxes withheld from 1981 to 1986. GAO also found that, from 1981 to 1984, IRS: (1) assessed employers additional taxes, interest, and penalties of $2.7 billion, but abated almost $1.4 billion of those assessments; and (2) collected almost $500 million. In addition, GAO found that IRS plans to double its staff assigned to CAWRRP cases in fiscal year 1989, which should allow IRS to resolve almost all of the cases with tax implications and help IRS identify patterns of employers who are responsible for the discrepancies.

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