Federal budget formulation processes include fewer controls and reviews, and provide less information on tax expenditures—which represented an estimated $1.23 trillion in forgone revenues in fiscal year 2015—than for discretionary or mandatory spending. For example, in the President’s budget, tax expenditure revenue loss estimates are presented separately from related spending, making their...

The Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC), and the American Opportunity Tax Credit (AOTC) provide tax benefits to millions of taxpayers—many of whom are low-income—who are working, raising children, or pursuing higher education. These credits are refundable in that, in addition to offsetting tax liability, any excess credit over the tax liability is refunded t...

Internal Revenue Service (IRS) data are not sufficient for identifying who claims a tax expenditure and how much they claim for $492 billion or almost half the dollar value of all tax expenditures that GAO examined. Such basic data are not available at IRS for tax expenditures because they do not have their own line item on a tax form. This included $102 billion of tax expenditures that were not o...

GAO's previous work has shown that, once enacted, tax expenditures and their relative contributions toward achieving federal missions and goals are often less visible than spending programs, which are subject to more systematic review. One reason for this is that they often operate, in practice, like entitlement programs not subject to annual appropriations. Since 1994, GAO has recommended greater...

The tax credit for qualified research expenses provides significant subsidies to encourage business investment in research intended to foster innovation and promote long-term economic growth. Generally the credit provides a subsidy for research spending in excess of a base amount but concerns have been raised about its design and administrability. Government Accountability Office (GAO) was asked t...

We identified the available education and employment benefits to help servicemembers, veterans, and their families achieve civilian jobs. We found 11 agencies offering 45 programs. A 12th agency also administered a tax exclusion for GI Bill benefits, which allows recipients to exclude these benefits from their taxable income. We found no existing inventory that could easily give Congress or poten...

Over half of the 24 Chief Financial Officers Act of 1990 (CFO Act) agencies were reported by their inspectors general (IG) as noncompliant with one or more criteria under the Improper Payments Elimination and Recovery Act of 2010 (IPERA) for fiscal years 2016 and 2017. Nine CFO Act agencies have been reported as noncompliant in one or more programs every year since the implementation of IPERA in f...

How do you get drug manufacturers to make drugs that treat rare diseases—when they may not sell enough to make a profit? The Food and Drug Administration designates some drugs as "orphan drugs," which allows manufacturers to obtain incentives (like tax breaks) for developing drugs that treat rare diseases. But we found that FDA reviewers don’t always include all the required information in th...

In 2018, there were 22 tax credit scholarship (TCS) programs authorized across 18 states, which provide state tax credits for individual and business donations that fund scholarships for students to attend elementary and secondary private schools (see figure).Tax Credit Scholarship Programs by State, Authorized as of January 2018Note: Each state has one program, except for Pennsylvania and Arizona...

Developers can apply for federal Low-Income Housing Tax Credits to help them build affordable housing projects. The amount of credit depends largely on project costs. Project costs we looked at varied widely (shown below), and federal oversight of costs is limited. Federal and state agencies could use data on variables that affect cost—such as square footage and building type—to better monito...

How do taxpayers know if they will get a tax refund or owe money? Employers must withhold federal income taxes on employee pay, and employees can claim allowances to exclude part of their pay from such withholding. IRS publishes withholding tables so employers know how much to withhold. Recent tax law changes gave Treasury discretion to set the value of the withholding allowance for 2018. Treasu...

We examined 2018 enrollment in Affordable Care Act health insurance exchanges and federal efforts to encourage enrollment. We found: About 8.7 million people bought insurance in 2018 through the federal website (healthcare.gov), 5% less than in 2017. Health and Human Services reduced its advertising and other consumer outreach. The 23 stakeholders we interviewed had mixed views about the effect...

This report provides an update on the nation's fiscal health as of the end of fiscal year 2017, and describes its likely fiscal future if policies don’t change. Among its findings: The federal government’s current fiscal path is unsustainable. Publicly held debt was 76 percent of GDP at the end of fiscal year 2017 and it will surpass its historical high of 106 percent within 14 to 22 years. ...

The six agencies GAO reviewed reported taking various approaches related to key components of estimating improper payments—shown in the figure below—for 10 selected programs, which collectively reported outlays of over $2.5 trillion for fiscal year 2017.Key Components in the Development of Improper Payment EstimatesSample selection. Eight of the 10 programs GAO reviewed reported using statist...

Fraudsters used false identities to steal at least $1.68 billion in tax refunds in 2016. To help address fraud and compliance issues, Congress moved up the deadline for employers to submit W-2s and had IRS hold refunds for those claiming certain tax credits beginning in 2017. These changes gave IRS more time to work on identifying discrepancies before issuing refunds. We found this process helpe...