Earned Income Credit: IRS' Tax Year 1994 Compliance Study and Recent Efforts to Reduce Noncompliance
GGD-98-150
Published: Jul 28, 1998. Publicly Released: Aug 27, 1998.
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Highlights
Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) 1994 Earned Income Credit (EIC) compliance study, focusing on: (1) evaluating IRS' study methodology to determine if the reported results were reasonably accurate; (2) identifying the primary sources of EIC noncompliance found in the study; and (3) determining whether recent IRS compliance efforts are designed to address the primary sources of noncompliance.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should ensure that customer service efforts aimed at EIC claimants be available earlier in the filing season when most EIC claims are filed. |
IRS told GAO that customer service efforts aimed at EIC claimants would be provided much earlier in the 1999 filing season. For example, IRS said that it would start offering Saturday service at its walk-in sites in January. GAO's review of the 1999 filing season showed that IRS did begin providing EIC-related customer service earlier.
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| Internal Revenue Service | The Commissioner of Internal Revenue should include prominent information regarding the 2-year and 10-year sanctions and the recertification process in the Form 1040 EIC instructions and Schedule EIC. |
IRS revised its Schedule EIC instructions for tax year 1998 to include information on the 2-year and 10-year sanctions and the recertification process. However, IRS did not make any changes to the Schedule EIC itself. GAO again recommended such a change in its report on the 1998 tax filing season (GGD-99-21).
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| Internal Revenue Service | To provide a basis for continually improving and refocusing EIC compliance efforts, the Commissioner of Internal Revenue should develop evaluation plans for each compliance initiative component that will provide, in succeeding years of the initiative, timely data for decisionmakers. |
According to IRS, it has taken several steps to better help it get timely data on the results of its various compliance initiative components. For example, it has implemented a Compliance Research Initiative Tracking System that it says allows it to quickly extract taxpayer information in order to more expeditiously determine the impact of tested methodologies used to address Earned Income Credit compliance problems. Also according to IRS, it has developed a methodology for measuring the results of its initiatives on a year-to-year basis.
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Topics
Income taxesNoncomplianceTax administrationTax creditTax nonpaymentTax refundsTax return auditsTax violationsEarned income tax creditTaxpayers