Tax Administration:

Congress Needs More Information on Compliance Initiative Results

GGD-92-118: Published: Jul 31, 1992. Publicly Released: Jul 31, 1992.

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Pursuant to a congressional request, GAO monitored the Internal Revenue Service's (IRS) tracking of three compliance initiatives funded as part of the IRS fiscal year (FY) 1991 appropriation.

GAO found that: (1) the IRS March 1992 5-year revenue projection for its training, examination, and collection initiatives was $2.4 billion, which was 25 percent less than the original revenue target in the President's FY 1991 budget submission; (2) current IRS tracking reports do not provide Congress with the information it needs to assess the net effect of the staffing increases it authorized in FY 1991; (3) IRS has reduced its staffing and revenue baselines for the collection and examination initiatives to accommodate changing program priorities and the need to fund unbudgeted costs; (4) IRS needs to report total staffing levels achieved and total revenue generated, rather than reporting the difference between an estimated, changing baseline and actual results; (5) the IRS tracking methodology does not provide for offsetting the revenue loss that may result from the FY 1992 baseline reductions to account for actual staffing reductions from FY 1991; and (6) IRS needs to report and explain the reasons for any differences in what Congress expected and what IRS actually achieved.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS revised its tracking approach in an attempt to address GAO's recommendation. Although GAO still has some problems with IRS' approach, this recommendation is being closed. GAO's focus, and IRS', is now on the compliance initiatives authorized for fiscal year 1995. IRS will apparently be developing a new methodology for tracking the results of those initiatives. GAO will be monitoring that tracking.

    Recommendation: The Commissioner of Internal Revenue should report the net revenue effect of the staffing increases that Congress authorized in FY 1991 to congressional oversight, budget, and appropriation committees. In doing so, IRS needs to revise its tracking approach so that it: (1) compares the total examination and collection staffing levels that Congress authorized in FY 1991 and the total revenue Congress expected from that authorization to the total examination and collection staffing levels and revenue that IRS actually achieved; and (2) explains the reasons for the differences in what Congress expected and what IRS actually achieved.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS said that Collection had revised and validated its revenue-estimating methodology and was continuing to work with the Finance Division to improve documentation. GAO reviewed the revised methodology as described in the FY 1993 second quarter tracking report for 1991 initiatives. The methodology did not fully explain how IRS had derived some of the revenue estimates. In addition, GAO found errors in the narrative description. According to an IRS official, Finance was continuing to work with the functions to improve revenue estimation methodology. GAO subsequently looked at some of the documentation behind the revenue estimates associated with the fiscal year 1995 compliance initiatives and saw enough evidence of methodological improvement to warrant closing this recommendation. That does not mean, however, that there may not be lingering problems.

    Recommendation: The Commissioner of Internal Revenue should direct the Assistant Commissioner for Collection to review the revenue estimation methodology for the collection function to ensure that its assumptions and the data that are used for computing revenue estimates are valid and adequately documented.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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