Tax Administration:

IRS' Plans to Measure Tax Compliance Can Be Improved

GGD-93-52: Published: Apr 5, 1993. Publicly Released: Apr 5, 1993.

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GAO: (1) discussed the uses of the Internal Revenue Service's (IRS) Taxpayer Compliance Measurement Program (TCMP) data; (2) evaluated the merits of IRS concerns with TCMP; and (3) identified ways to improve TCMP while it continues to meet user needs.

GAO found that: (1) IRS uses TCMP data to make statistically reliable estimates of compliance nationwide and develop formulas for selecting tax returns for audits; (2) TCMP is important to non-IRS users for policy formulation, research, and revenue estimation; (3) IRS plans to redesign TCMP to make it less costly and less intrusive on compliant taxpayers, and increase productivity; (4) implementation of proposed TCMP changes will hamper IRS ability to detect changes in and improve voluntary compliance, reduce taxpayer burden, and increase productivity; and (5) redesigning TCMP will not meet non-IRS user needs or provide a consistent measure of compliance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS agreed not to implement the proposed changes in its January 1993 letter (see report).

    Recommendation: The Commissioner of Internal Revenue should not implement the three currently proposed TCMP changes.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Not Implemented

    Comments: On the basis of congressional complaints and budget concerns, IRS dropped plans to do another TCMP. That TCMP was to start in fall 1995. GAO issued a report in April 1996 on ways to replace TCMP.

    Recommendation: The Commissioner of Internal Revenue should ensure that any proposed changes to TCMP meet the four criteria GAO discussed.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Not Implemented

    Comments: IRS agrees with the idea of shortening the time to get results, yet IRS now plans to triple the number of audits. With over 100,000 more audits, IRS cannot shorten the time.

    Recommendation: The Commissioner of Internal Revenue should shorten the time needed to produce final TCMP results.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Not Implemented

    Comments: Given the lead time necessary to adequately redesign TCMP and plan the next cycle, IRS could not meet the 1993 target. IRS will do a TCMP cycle for 1994.

    Recommendation: The Commissioner of Internal Revenue should not postpone the next TCMP beyond tax year 1993 returns.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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