Tax Administration:

FedState Efforts Offer Opportunities but Program Needs Improvement

GGD-97-16: Published: Oct 31, 1996. Publicly Released: Oct 31, 1996.

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GAO reviewed the status of the Internal Revenue Service's (IRS) FedState Cooperative Program, focusing on: (1) potential program benefits to taxpayers, IRS, and the states; (2) conditions that may impede program success; and (3) states' concerns on the impact of IRS reorganization on the program.

GAO found that: (1) the potential benefits of the FedState program include increasing taxpayer compliance, reducing taxpayer burden, and improving the efficiency of tax administration functions; (2) the FedState joint electronic filing program reduces administrative costs for IRS and the states by detecting math errors and eliminating transcription errors; (3) taxpayer data tape exchanges enable IRS and the states to identify taxpayers who fail to file a return or who owe more taxes; (4) the state refund offset program allows IRS to levy state refunds to fulfill the federal tax debt; (5) IRS lacks a centralized, strategic plan for ensuring that the FedState program is achieving the agency's objectives; (6) IRS and the states do not have a system to monitor and assess the results of individual FedState projects; (7) IRS needs to establish performance-based criteria for the program so that district offices can make more informed decisions on resource allocations and program priorities; and (8) some states have expressed concern that the reorganization of IRS will have a negative impact on the FedState program.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The FedState Relations Office, through the leadership of the FedState Steering Committee, established plans and procedures that link FedState project objectives to IRS and state mission objectives. In addition,the FedState Program Letter for Fiscal Year 1997 provides guidance about the FedState Program, its objectives and current priorities.

    Recommendation: To enhance opportunities for increased benefits from the FedState program, the Commissioner of Internal Revenue should develop and monitor, in conjunction with the states, implementation of a strategic framework that links FedState project objectives to IRS and state mission objectives.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: As stated in the agency comments section of the report, establishment of performance goals and reporting procedures to monitor and assess program results have been provided to IRS field offices for implementation. Quarterly reports, as well as measures for new initiatives and specific results for ongoing projects, are also required. Continuation of these monitoring initiatives will provide information to monitor and assess program results.

    Recommendation: To enhance opportunities for increased benefits from the FedState program, the Commissioner of Internal Revenue should establish performance goals and ways to monitor and assess program results.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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