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    Subject Term: "Late payments"

    2 publications with a total of 9 open recommendations
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    7 open recommendations
    Recommendation: To help ensure SB/SE's audit selection program meets its mission and selects returns fairly, the Commissioner of Internal Revenue should clearly define and document the key term "fairness" for return selection activities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to incorporate a definition of fairness into the Internal Revenue Manual (IRM), which serves as a single point of reference for guidance to IRS examiners. In February 2016, the Deputy Commissioner of Services and Enforcement (S&E) reiterated IRS's definition of fairness in the examination process to S&E employees. In January 2017, IRS issued interim guidance on fairness in examination case selection. IRS officials said that this guidance is considered "final" until the IRM is updated, no later than January 2019. In February 2017, IRS issued an article on its IRWeb and a message from the Deputy Commissioner S&E on defining fairness in the exam process. We are awaiting resolution of how this definition will be used in three other recommendations on communicating examples as well as developing both a related objective and measure.
    Recommendation: To help ensure SB/SE's audit selection program meets its mission and selects returns fairly, the Commissioner of Internal Revenue should clearly communicate examples of fair selections to staff to better assure consistent understanding.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to communicate examples of fairness to managers and examiners involved in selecting tax returns for examination. In March 2017, the Director of IRS Small Business/Self Employed (SB/SE) Examination-Headquarters issued a memo to SB/SE examination directors that included examples illustrating the fairness definition in return selection. The examples were to be shared with directors, management, and examiners involved in return selection. To close this recommendation, we are waiting for resolution of how the fairness definition will be implemented through related recommendations on developing program objectives and measures assessing fairness in return selection.
    Recommendation: To help ensure SB/SE's audit selection program meets its mission and selects returns fairly, the Commissioner of Internal Revenue should develop, document, and implement program-level objective(s) to evaluate whether the return selection process is meeting its mission of applying the tax law with integrity and fairness to all.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to review its current objectives for the SB/SE examination program and found that an additional program-level objective to evaluate fairness in the return selection was necessary. The new objective is "Ensure examinations are initiated based on indicators of noncomplicance. In addition, ensure a review of the decisions to survey a return (i.e., not initiate an examination) are based on upon factors outlined in the Internal Revenue Manual (IRM) and approved by an appropriate level of management." In March 2017, IRS issued interim guidance communicating the new objective, which was sent to Examination Directors. The guidance and objective were also posted on the IRweb, which is available to all IRS employees. IRS officials said that the interim guidance is considered final until it can be incorporated into the IRM, which should be done within 2 years of when the interim guidance is issued. We are awaiting IRS's response to a related recommendation on developing a measure for this selection objective before deciding to close this recommendation.
    Recommendation: To help ensure that SB/SE's audit selection objective(s) on fairness are used and met, the Commissioner of Internal Revenue should develop, document, and implement related performance measures that would allow SB/SE to determine how well the selection of returns for audit meets the new objective(s).

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to develop, document, and implement additional performance measures if new objectives related to fair return selection were implemented. In March 2017, IRS developed a new objective on fair return selection. In April 2017, IRS officials said that they were working on performance measures related to the new objective on fair return selection. They plan to meet with GAO in 1-2 months to obtain our feedback on the measures.
    Recommendation: To help ensure that SB/SE's audit selection objective(s) on fairness are used and met, the Commissioner of Internal Revenue should incorporate the new objective(s) for fair return selection into the SB/SE risk management system to help identify and analyze potential risks to fair selections.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to consider any new objectives related to fair return selection within SB/SE's current risk management process framework. In March and April 2017, SB/SE developed a tool (RAFT) to include the fair selection objective (and related activities) into its risk register, which is monitored quarterly. IRS provided documentation from the Exam Risk Council meeting that they have discussed and assessed these risks. IRS is still working on documentation to show they are addressing our recommendations and the associated risks. IRS officials said the documentation is due in August 2017.
    Recommendation: The Commissioner of Internal Revenue should develop and implement consistent documentation requirements to clarify the reasons for selecting a return for audit and who reviewed and approved the selection decision.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to evaluate the need to improve its documentation of return selection decisions and the review and approval process. In March 2017, various IRS functions completed templates showing the current status of return selection documentation requirements. As a result, they found that they could improve the consistency and clarity in documentation, approval and review requirements across workstreams by clearly defining procedures and ensuring they are formally documented in the IRM. The Director of Exam Case Selection issued a memo directing that documentation requirements be made consistent in the IRM. IRS officials said that revised documentation requirements are due in August 2017, with IRM incorporation at a later date.
    Recommendation: The Commissioner of Internal Revenue should develop, document, and implement monitoring procedures to ensure that decisions made and coding used to select returns for audit are appropriate.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to review its current procedures for monitoring return selection decisions and coding used to select returns. In April 2017, IRS officials provided documentation showing they had reviewed campus examination selection dollar thresholds and campus source code definitions. They found that improvements could be made in clarifying source code definitions and reviewing dollar thresholds used to categorize and select, respectively, returns for examination. IRS has issued an IRM procedural update to implement these changes. During our meeting with IRS, we clarified that our recommendation covered monitoring selection decisions more broadly, which IRS acknowledged. Officials said that additional documentation on monitoring selection decisions will be due by August 2017.
    Director: Irving, Susan J
    Phone: (202) 512-6806

    2 open recommendations
    Recommendation: In light of declining discretionary budgets, to reduce or eliminate the reliance of the AQI program on taxpayer funding, Congress should consider allowing USDA to set AQI fees to recover the aggregate estimated costs of AQI services--thereby allowing the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program.

    Agency: Congress
    Status: Open

    Comments: As of March 2017, Congress had not passed legislation to give the Secretary of Agriculture authority to set fee rates to fully recover the aggregate costs of agricultural quarantine inspection (AQI) services, as GAO suggested in March 2013. In the 114th Congress, the Savings, Accountability, Value, and Efficiency Act of 2015 was introduced in the House and referred to the committees of jurisdiction. The act would require the Secretary of Agriculture to (1) study whether the amount of AQI fees collected cover the aggregate costs of AQI services, and (2) report to Congress the results of the study and any recommendations for ensuring that fees covered costs. The act would not authorize the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program. The current AQI fee authority does not permit the U.S. Department of Agriculture to set AQI fees to recover the aggregate estimated costs of AQI services. Authorizing the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program would save the federal government money by reducing the program's reliance on U.S. Customs and Border Protection's annual Salaries and Expenses appropriation.
    Recommendation: Congress should consider amending USDA's authorization to assess AQI fees on bus companies, private vessels, and private aircraft and include in those fees the costs of AQI services for the passengers on those buses, private vessels, and private aircraft.

    Agency: Congress
    Status: Open

    Comments: As of March 2017, Congress had not passed legislation to give the Secretary of Agriculture authority to assess agricultural quarantine inspection (AQI) fees on private vessels, private aircraft, and commercial buses and include in those fees the costs of AQI services for the passengers on those vehicles. In the 114th Congress, the Savings, Accountability, Value, and Efficiency Act of 2015 was introduced in the House and referred to the committees of jurisdiction. The act would require the Secretary of Agriculture to (1) study whether the amount of AQI fees collected cover the aggregate costs of AQI services, and (2) report to Congress the results of the study and any recommendations for ensuring that fees covered costs. The current AQI fee authority does not permit the U.S. Department of Agriculture to assess AQI fees on private vessels, private aircraft and commerical buses and to recover, through those fees, the costs of AQI services for the passengers on those vehicles.