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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) and the U.S. Customs Service's data exchange system. GAO found that: (1) IRS has total access to Customs information and plans to develop and implement databases to facilitate information retrieval and sharing; (2) IRS is legally prohibited from disclosing unauthorized taxpayer information, and could not provide timely information due to IRS audits and current database limitations; (3) Customs has access to certain taxpayer, banking, and public tax-related information, but it wants greater access to unshared information; (4) Customs had planned to implement a paperless data exchange system, but it found significant administrative barriers to data sharing; (5) IRS and Customs have implemented a formalized interagency working agreement, joint training for computer audit specialists, and cooperative efforts for collecting importer tax refunds; and (6) limitations on interagency cooperative efforts include differences in Customs and IRS databases, and product value calculation methodologies.

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