Skip to Highlights
Highlights

Congress established the Empowerment Zone and Enterprise Community (EZ/EC) program in 1993 and the Renewal Community (RC) program in 2000 to provide assistance to the nation's distressed communities. To date, Congress has authorized three rounds of EZs, two rounds of ECs, and one round of RCs. The Community Renewal Tax Relief Act of 2000 mandated that GAO audit and report in 2004, 2007, and 2010 on the EZ/EC and RC programs and their effect on poverty, unemployment, and economic growth. This report describes (1) the features of the EZ/EC and RC programs, (2) the extent to which the programs have been implemented, and (3) the methods used and results found in evaluations of their effectiveness.

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To facilitate the administration, audit, and evaluation of the EZ/EC and RC programs, HUD, USDA, and IRS should collaborate to (1) identify the data needed to assess the use of the tax benefits and the various means of collecting such data; (2) determine the cost-effectiveness of collecting these data, including the potential impact on taxpayers and other program participants; (3) document the findings of their analysis; and, if necessary, (4) seek the authority to collect the data, if a cost- effective means is available.
Closed - Not Implemented
In response to GAO's recommendation, officials from HUD, USDA, and IRS met to identify data needed to assess the use of the tax benefits and identified three means of collecting such data. These methods include (1) using existing data to extrapolate an estimate of the use of some tax benefits; however, such data would be limited to the national level; (2) changing tax return forms to indicate the Empowerment Zone or Renewal Community in which each benefit is claimed; and (3) surveying businesses located in Empowerment Zones and Renewal Communities about tax benefit use. They also discussed the cost-effectiveness of each of the data collection options. The IRS Director of Research, Analysis, and Statistics, sent a letter to GAO that documented these discussions and indicated that the agencies were unable to agree on a cost effective method of collecting the data. GAO has been told that none of the agencies plan to seek the authority to collect the data at this time.
Department of Housing and Urban Development To facilitate the administration, audit, and evaluation of the EZ/EC and RC programs, HUD, USDA, and IRS should collaborate to (1) identify the data needed to assess the use of the tax benefits and the various means of collecting such data; (2) determine the cost-effectiveness of collecting these data, including the potential impact on taxpayers and other program participants; (3) document the findings of their analysis; and, if necessary, (4) seek the authority to collect the data, if a cost- effective means is available.
Closed - Not Implemented
In response to GAO's recommendation, officials from HUD, USDA, and IRS met to identify data needed to assess the use of the tax benefits and identified three means of collecting such data. These methods include (1) using existing data to extrapolate an estimate of the use of some tax benefits; however, such data would be limited to the national level; (2) changing tax return forms to indicate the Empowerment Zone or Renewal Community in which each benefit is claimed; and (3) surveying businesses located in Empowerment Zones and Renewal Communities about tax benefit use. They also discussed the cost-effectiveness of each of the data collection options. The IRS Director of Research, Analysis, and Statistics, sent a letter to GAO that documented these discussions and indicated that the agencies were unable to agree on a cost effective method of collecting the data. GAO has been told that none of the agencies plan to seek the authority to collect the data at this time.
Internal Revenue Service To facilitate the administration, audit, and evaluation of the EZ/EC and RC programs, HUD, USDA, and IRS should collaborate to (1) identify the data needed to assess the use of the tax benefits and the various means of collecting such data; (2) determine the cost-effectiveness of collecting these data, including the potential impact on taxpayers and other program participants; (3) document the findings of their analysis; and, if necessary, (4) seek the authority to collect the data, if a cost- effective means is available.
Closed - Not Implemented
In response to GAO's recommendation, officials from HUD, USDA, and IRS met to identify data needed to assess the use of the tax benefits and identified three means of collecting such data. These methods include (1) using existing data to extrapolate an estimate of the use of some tax benefits; however, such data would be limited to the national level; (2) changing tax return forms to indicate the Empowerment Zone or Renewal Community in which each benefit is claimed; and (3) surveying businesses located in Empowerment Zones and Renewal Communities about tax benefit use. They also discussed the cost-effectiveness of each of the data collection options. The IRS Director of Research, Analysis, and Statistics, sent a letter to GAO that documented these discussions and indicated that the agencies were unable to agree on a cost effective method of collecting the data. GAO has been told that none of the agencies plan to seek the authority to collect the data at this time.

Full Report

GAO Contacts