Tax Administration:

IRS Should Expand Financial Disclosure Requirements

GGD-92-117: Published: Aug 17, 1992. Publicly Released: Sep 21, 1992.

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Jennie S. Stathis
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Pursuant to a congressional request, GAO reviewed the adequacy of Internal Revenue Service (IRS) procedures and practices to detect and prevent employee conflicts of interest, focusing on the adequacy of the IRS employee financial disclosure process.

GAO found that: (1) IRS does not require financial disclosure statements from many employees who are vulnerable to conflicts of interest; (2) IRS did not comply with Department of the Treasury regulations regarding confidential financial disclosure statements; (3) the IRS Internal Audit Division identified managers and examiners who had financial conflicts of interest with the corporations they examined; (4) IRS has taken steps to require financial disclosure statements, but needs to broaden its coverage to include more employees; and (5) IRS will use financial disclosure reporting and information on employees' work assignments to prevent conflicts of interest.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: IRS does not agree that all these employees should be required to file disclosure statements. Soon after this report was issued, Treasury sought Office of Government Ethics (OGE) approval of an alternative procedure for the approximately 40,000 employees involved, but OGE did not approve. Later, after revised OGE regulations were issued that gave agencies greater discretion in determining coverage for financial disclosure, IRS sought and obtained exceptions for the classes of employees involved from Treasury's Designated Agency Ethics Official.

    Recommendation: The Secretary of the Treasury should direct the Commissioner of Internal Revenue to require annual confidential financial disclosure statements from all revenue agents, revenue officers, and criminal investigators.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Implemented

    Comments: IRS and Treasury have identified and required about 5,800 employees to file annual disclosure statements.

    Recommendation: The Secretary of the Treasury should direct the Commissioner of Internal Revenue to determine, with Treasury designated agency ethics official assistance, whether other employees are vulnerable to conflicts because of their duties and responsibilities, and decide whether they should file annual disclosure statements.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Treasury instructed IRS to implement its own regulations and implementing procedures to address this issue. These procedures were approved by the Treasury's Designated Agency Ethics Officials in September 1993.

    Recommendation: The Secretary of the Treasury should direct the Commissioner of Internal Revenue to ensure that IRS reviewing officials have adequate information on employee investments and specific work assignments to enable them to determine whether reported financial interests conflict with employee duties and responsibilities.

    Agency Affected: Department of the Treasury


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