Tax Policy:

Insufficient Information to Assess Effect of Tax Free Education Assistance

GGD-89-76: Published: Jun 23, 1989. Publicly Released: Jul 6, 1989.

Additional Materials:


Jennie S. Stathis
(202) 512-5407


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO: (1) evaluated data that the Department of the Treasury used to assess the effect of section 127 of the Internal Revenue Code; and (2) assessed the availability and reliability of 11 data elements relating to section 127.

GAO found that: (1) in June 1988, Treasury concluded that section 127 should not be extended; (2) in reaching its conclusion, Treasury relied on information that, although the best available, was insufficient to support its conclusion, since the data came from surveys that were not specifically focused on gathering data to evaluate the success of section 127, had low response rates, or were not representative of the population being surveyed; (3) in 1984, Congress enacted a reporting requirement to provide a basis for assessing the section, but the required information was not sufficiently specific; and (4) the 11 data elements would be useful in assessing the section, but none of them were available from reliable sources.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 127 has been extended several times since GAO issued its report. In each case, nothing was done to revise the employer reporting requirement. It seems obvious that the recommendation has had no impact, and GAO sees no reason to keep it open any longer.

    Matter: Congress can decide to not reinstate the expired section 127 or to reinstate it permanently or temporarily. If the decision is to reinstate it, Congress may want to revise the reporting requirement to better assess the provision's effects. This could be done by requiring information on the salary level of participants and the average benefit at each salary level. To help make any further assessment of the section, Congress could also specify that the data be reported for a sufficient length of time to adequately measure any effects.


Explore the full database of GAO's Open Recommendations »

Jan 27, 2021

Jan 19, 2021

Jan 11, 2021

Dec 10, 2020

Nov 19, 2020

Oct 15, 2020

Oct 14, 2020

Sep 29, 2020

Aug 27, 2020

Jul 24, 2020

Looking for more? Browse all our products here