Tax Administration:

IRS Excise Tax Audits of Manufacturers and Importers of Sporting Goods

GGD-87-27FS: Published: Jan 5, 1987. Publicly Released: Jan 15, 1987.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) compliance activities and the Departments of the Treasury's and the Interior's accounting procedures for federal excise taxes of manufacturers and importers of certain categories of sporting goods.

GAO noted that it was unable to develop statistics comparing IRS audit coverage of sporting goods manufacturers and importers of sporting goods since neither the Business Master File nor the Audit Information Management System differentiated between domestic manufacturers and importers. GAO found that: (1) IRS audit coverage of sporting goods manufacturers averaged 2.88 percent annually, as compared to 7.34 percent for sporting goods importers; (2) examinations of importers resulted in higher proposed additional tax and penalties; (3) the proportion of examinations that did not result in an IRS proposed change to taxpayer excise tax liabilities averaged 21.92 percent and 26.01 percent, respectively; and (4) the comparative statistics may not be representative of the universe of excise tax return filers, since over one-half of the names on the Business Master File were unidentifiable.

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