The President's fiscal year 2012 budget proposal requests $13.6 billion to fund the Internal Revenue Service (IRS), including $204 million in spending funded through user fee collections. Well-designed and well-implemented user fees can reduce taxpayer burden by funding portions of IRS services that provide special benefits to users beyond what is normally provided to the public. As such, GAO was asked to (1) describe the types and amounts of IRS user fees and how IRS collects and uses them, (2) assess how IRS sets and reviews existing user fees, and (3) assess how IRS identifies additional areas where new fees could be justified. GAO reviewed relevant laws, guidance, and literature on user fee design and implementation. GAO reviewed IRS documents and cost estimates and interviewed IRS officials in the Chief Financial Officer's (CFO) office and program divisions.
Recommendations for Executive Action
|Internal Revenue Service||1. The Commissioner of Internal Revenue should include certain fees in the biennial review that were previously omitted.|
|Internal Revenue Service||2. The Commissioner of Internal Revenue should develop supplemental guidance or tools that provide more detailed information on data and assumptions to include in cost estimates.|
|Internal Revenue Service||3. The Commissioner of Internal Revenue should better document the factors considered in setting and reviewing existing user fees.|
|Internal Revenue Service||4. The Commissioner of Internal Revenue should better document the decisions made in setting and reviewing existing user fees.|
|Internal Revenue Service||5. The Commissioner of Internal Revenue should provide clear, specific, and direct guidelines for IRS employees and managers to follow in identifying potential fee opportunities.|