Tax Administration:

Alternative Strategies to Obtain Compliance Data

GGD-96-89: Published: Apr 26, 1996. Publicly Released: Apr 26, 1996.

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GAO assessed the potential effects on the Internal Revenue Service's (IRS) compliance programs of postponing the 1994 Taxpayer Compliance Measurement Program (TCMP) survey and identified some potential short- and long-term TCMP alternatives.

GAO found that: (1) IRS postponed the 1994 TCMP because of criticisms and budget constraints; (2) IRS does not know how it will obtain the taxpayer compliance data it needs; (3) the loss of 1994 TCMP data could increase compliant taxpayers' burden over the long term because audits may become less targeted; (4) to mitigate the data losses over the short term, IRS could employ a number of alternatives, including doing a smaller survey; (5) any alternative should reduce sample size to lessen taxpayer burden and administrative costs, maintain IRS ability to update the discriminant function scoring system, and maximize the use of already completed work; (6) a limited survey would reduce the quantity and quality of the data collected, but still provide national compliance data; (7) IRS must determine how it will measure compliance over the long term, since its workload and future revenues depend on taxpayers' voluntary compliance; (8) long-term alternatives include conducting small multiyear TCMP audits, using data from operational audits to assess compliance changes, and conducting periodic national mini-TCMP audits; (9) IRS must decide on a compliance information-gathering alternative in the near term, since any alternative will take several years to develop and implement; and (10) the alternatives will likely not gather data as comprehensive as the originally planned TCMP data.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS closed this recommendation in January 1997 because Compliance Research stated that no short-term alternatives were determined to be available or feasible. The Price-Waterhouse report also did not reflect such alternatives.

    Recommendation: To provide the data necessary to help meet the objectives of IRS compliance strategies, the Commissioner of Internal Revenue should identify a short-term alternative strategy to minimize the negative effects of the compliance information that is likely to be lost because TCMP was postponed.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS closed this recommendation in May 1997 because Compliance Research received the Price-Waterhouse report describing the development of a long-term strategy for gathering compliance data.

    Recommendation: To provide the data necessary to help meet the objectives of IRS compliance strategies, the Commissioner of Internal Revenue should develop a cost-effective, long-term strategy to ensure the continued availability of reliable compliance data.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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