Tax Administration: IRS Could Reduce the Number of Unproductive Business Nonfiler Investigations
GGD-88-77
Published: May 24, 1988. Publicly Released: Jun 20, 1988.
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Highlights
Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) efforts to detect business nonfilers, focusing on ways IRS could reduce the number of unproductive investigations.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | To reduce the number of unproductive nonfiler investigations, the Commissioner of Internal Revenue should adopt additional research techniques, such as using variations of the business name and the actual signature name on the return, and actively pursue the receipt of forms to identify businesses with previously issued EIN. |
IRS added additional research procedures to the Internal Revenue Manual and initiated new follow-up procedures to secure the receipt of forms to identify businesses with previously issued EIN. Action was completed in July 1990.
|
| Internal Revenue Service | To reduce the number of unproductive nonfiler investigations, the Commissioner of Internal Revenue should revise employment tax return instructions and business nonfiler notices to emphasize to businesses the importance of filing required quarterly employment tax returns. |
IRS reviewed all business nonfiler notices and letters for tone and content and revised instructions for Form 941 (Employers Quarterly Federal Tax Return) based on its review, and a new Treasury regulation that eliminates the need to file for seasonal employees.
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| Internal Revenue Service | To reduce the number of unproductive nonfiler investigations, the Commissioner of Internal Revenue should modify criteria for deleting invalid employment tax return filing requirements to include the results of nonfiler investigations. |
IRS changed its procedures for noting that a taxpayer is not liable for filing a return based on information determined as a result of their nonfiler investigations.
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| Internal Revenue Service | To reduce the number of unproductive nonfiler investigations, the Commissioner of Internal Revenue should ensure that the filing status determined from nonfiler investigations is accurately recorded on business master file accounts. |
IRS revised Internal Revenue Manual guidelines to correct this problem.
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CorporationsIncome taxesManagement information systemsMonitoringTax administrationTax lawTax nonpaymentTax returnsTaxesUnemployment