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    Results:

    Federal Agency: "Department of the Treasury: Internal Revenue Service"

    67 publications with a total of 203 open recommendations including 16 priority recommendations
    Director: David A. Powner
    Phone: (202) 512-9286

    21 open recommendations
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for IMF fully addresses greater utilization of technology or consolidation of investments to better meet organizational goals. (Recommendation 1)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for IDRS addresses the extent to which the investments support customer processes as designed, and how well the investments are delivering the goods or services they were designed to deliver. (Recommendation 2)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for Telecommunications Systems and Support (TSS) addresses the extent to which the investments support customer processes as designed, and how well the investments are delivering the goods or services they were designed to deliver. (Recommendation 3)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for TSS includes a comparison of current performance with a pre-established cost baseline. (Recommendation 4)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for End User Systems and Services includes a comparison of current performance with a pre-established cost baseline. (Recommendation 5)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should ensure the operational analysis for MSSS addresses alternative methods of achieving the same mission needs and strategic goals. (Recommendation 6)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IMF investment. (Recommendation 7)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IMF investment. (Recommendation 8)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice for prioritizing risk for the IMF investment. (Recommendation 9)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IMF investment. (Recommendation 10)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IMF investment. (Recommendation 11)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IDRS investment. (Recommendation 12)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IDRS investment. (Recommendation 13)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IDRS investment. (Recommendation 14)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IDRS investment. (Recommendation 15)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the MSSS investment. (Recommendation 16)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with identifying risk for the MSSS investment. (Recommendation 17)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the MSSS investment. (Recommendation 18)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the MSSS investment. (Recommendation 19)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the MSSS investment. (Recommendation 20)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Commissioner of the IRS should fully implement IT workforce planning practices, including the following actions (1) setting the strategic direction for workforce planning; (2) analyzing the workforce to identify skill gaps; (3) developing strategies and implementing activities to address skill gaps; and (4) monitoring and reporting on progress in addressing skill gaps. (Recommendation 21)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Beryl H. Davis
    Phone: (202) 512-2623

    1 open recommendations
    Recommendation: The Commissioner of IRS should update IRS's improper payment estimation methodology to not exclude recovered overpayments from its EITC improper payment estimate. (Recommendation 5)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Clark, Cheryl E
    Phone: (202)512-9377

    5 open recommendations
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials research and determine why IRS's existing policies and procedures intended to timely follow up on, resolve, and record unpostable transactions were not fully effective in achieving these objectives. (Recommendation 18-01)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that during fiscal years 2018 and 2019, its Wage and Investment, Criminal Investigation, and Small Business/Self-Employed organizations, as well as the Office of Appeals, will research and determine the reasons why IRS's existing policies and procedures intended to follow-up on, resolve, and record its unpostable transactions timely were not fully effective in achieving these objectives.
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials, based on IRS's research and determination, design and implement the corrective actions necessary to reasonably assure that IRS effectively resolves and records unpostable transactions in a timely manner, including establishing clearly defined time frames in the Internal Revenue Manual (IRM) by which the IRS operating divisions should correct unpostable transactions and appropriate related oversight and review processes. (Recommendation 18-02)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that during fiscal years 2018 through 2020, its Criminal Investigation, Wage and Investment, and Small Business/Self-Employed organizations, as well as the Office of Appeals will design and implement, based on research related to unpostable transactions, any necessary corrective actions to reasonably assure that IRS effectively resolves and records unpostable transactions timely, including the establishment of clearly defined timeframes in the IRM by which unpostable transactions should be corrected and the appropriate related oversight and review processes.
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Submission Processing internal control review. These policies should include or be accompanied by procedures to (1) assess and update the review questions and cited IRM criteria to reasonably assure they align with the controls under review; (2) periodically evaluate and document a review of the error threshold methodology to assess its current validity based on changes to the operating environment; (3) report findings identified in the Findings and Corrective Actions Report; and (4) assess and monitor (a) safeguarding internal control activities across all work shifts, particularly during peak seasons, (b) safeguarding internal control activities for the appropriate use and destruction of hard copy taxpayer information, and (c) the results of relevant functional level reviews. (Recommendation 18-03)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by March 2019, its Wage and Investment organization will develop and implement policies in the IRM for conducting and monitoring the submission processing internal control review. These policies should include or be accompanied by procedures to (1) assess and update the review questions and cited IRM criteria to reasonably assure that they align with the controls under review; (2) periodically evaluate and document a review of the error threshold methodology to assess its current validity based on changes to the operating environment; (3) report findings identified in the Findings and Corrective Actions Report; and (4) assess and monitor (a) safeguarding internal control activities across all work shifts, particularly during peak seasons; (b) safeguarding internal control activities for the appropriate use and destruction of hardcopy taxpayer information; and (c) the results of relevant functional level reviews.
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Audit Management Checklist review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review; (2) clarify the minimum requirements for how frequently the review should be completed at its various facilities while considering factors that may affect the most appropriate timing of these reviews, such as changes in personnel, operational processes, or information technology; and (3) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-04)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by August 2018, its Facilities Management and Security Services organization will issue an IRM interim guidance memo establishing policy for conducting and monitoring the Audit Management Checklist (AMC) review, including (1) periodically monitoring the review results; (2) clarifying the frequency that various facilities should conduct the AMC reviews and any process change that could affect the timing of reviews, such as changes to personnel, operational processes, or information technology; and (3) reasonably assuring that corrective actions for all identified deficiencies are tracked until fully implemented. In addition, by July 2020, its Facilities Management and Security Services organization will add guidance to the applicable IRM establishing policy for conducting and monitoring the AMC reviews as described in the IRM interim guidance.
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the All Events History Report review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review and (2) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-05)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by August 2018, its Facilities Management and Security Services organization will issue an IRM interim guidance memo establishing requirements for conducting an All Events History Report (AEHR) review and providing guidance on how it should be performed, including (1) periodically monitoring the review results and (2) reasonably assuring that corrective actions for all identified deficiencies are tracked until fully implemented. In addition, by August 2020, its Facilities Management and Security Services organization will update IRM 10.2.14, Methods of Providing Protection, to add guidance for conducting the AEHR reviews as described in the IRM interim guidance.
    Director: Charles Jeszeck
    Phone: (202) 512-7215

    5 open recommendations
    Recommendation: The IRS Commissioner should review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and clarify for the public the Internal Revenue Code's requirements in these circumstances. (Recommendation 2)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and to clarify for the public the Internal Revenue Code's requirements in these circumstances. We will consider closing this recommendation when the agency provides evidence that it completed these efforts.
    Recommendation: The IRS Commissioner should consider revising the letter forwarding program in a cost-effective manner to again provide information on behalf of plan sponsors on unclaimed retirement accounts to participants. (Recommendation 3)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS disagreed with this recommendation, noting that the IRS address of record for a participant would likely be of no greater value than addresses available through alternatives such as commercial locator services. However, our report does not cite the accuracy of IRS addresses, but rather other benefits that make a program revision worth considering, specifically the likelihood that individuals will open IRS correspondence, and the trust DOL places in the service as way for plan fiduciaries to meet their obligations. IRS also stated that the limited number of IRS staff and resources impact the feasibility of reinstating this program for plan participants. We continue to believe that expanding the letter forwarding program would be beneficial, and we encourage IRS to consider cost-effective ways to do so.
    Recommendation: The IRS Commissioner should clarify how U.S. individuals are to report their foreign retirement accounts. The clarification could include addressing how these accounts should be designated and how the taxpayer should report contributions, earnings, and distributions made from the account. (Recommendation 4)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. We encourage IRS to take the necessary steps to dispel any confusion U.S. individuals may have over how to properly classify and report their foreign retirement accounts on a U.S. tax return-such clarification should help ensure that these taxpayers can meet their tax reporting obligations.
    Recommendation: The IRS Commissioner should systematically analyze data reported through Form 8938 filings on foreign retirement accounts owned by U.S. individuals with the goal of developing an evidence-based understanding of how these accounts change over time and what level of risk these accounts pose for tax evasion. To assist with this analysis, IRS should consider revising Form 8938 to more clearly distinguish between retirement accounts and other types of accounts or assets being reported by taxpayers under current reporting requirements. (Recommendation 5)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS disagreed with this recommendation but not on its merits, citing a lack of resources to implement it. Specifically, IRS noted that although the modification to the Form 8938 suggested in this recommendation may seem minor, systemically collecting and analyzing the data would require resources beyond those currently available to IRS. However, our report notes that IRS indicated that they already collect foreign account filing data through the Form 8938 and that the current reporting requirements help the agency to "keep a line of sight" on U.S. individuals' foreign pension arrangements. IRS told us that without such data being reported, U.S. individuals with foreign retirement accounts may seek to avoid proper reporting on their tax returns when distributions are made. However, without agreeing to take steps to analyze these data reported by taxpayers, the question remains why the agency continues to collect such information-which we show in the report to present a substantial reporting burden on taxpayers-if the agency has no plan to analyze the data in order to make an informed decision about the risk for tax evasion that such accounts present. It is also unclear how IRS would maintain a line of sight on foreign retirement accounts belonging to U.S. individuals without analyzing the data reported by taxpayers on such accounts. We recognize that resources are limited. When staff and resources become available, IRS should modify the form and conduct a systematic analysis of these data-data that current law requires taxpayers to report-in order to assess the risk of tax evasion that foreign retirement accounts pose. Such an analysis can provide a basis to reach an evidence-based understanding of how these accounts change over time and what level of risk they pose for tax evasion, and U.S. individuals owning foreign retirement accounts will continue to face these substantial reporting burdens without the knowledge that the data they are required to provide will be put to good use by the federal government.
    Recommendation: The IRS Commissioner should take steps to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, for example, by working with the Social Security Administration as necessary. (Recommendation 6)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. The agency indicated it would work to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, and agreed to take steps to ensure that the data reported on Form 8955-SSA are accurate and to advise plan sponsors of any changes to reporting these data.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    6 open recommendations
    Recommendation: The Acting Commissioner of Internal Revenue should collect data to track late W-2 filing penalty notices and the extent to which they are associated with fraud and noncompliant returns. (Recommendation 1)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Acting Commissioner of Internal Revenue should assess options for improving enforcement of late W-2 filing penalties, for example, by mailing notices before the next filing deadline. (Recommendation 2)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Acting Commissioner of Internal Revenue should develop an evaluation plan to fully assess the benefits and costs, including taxpayer burden, of modifying the February 15 refund hold, and determine how this effort informs IRS's overall compliance strategy for refundable tax credits and fraud risk management. (Recommendation 3)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: Based on the benefits and costs assessment in Recommendation 3, the Acting Commissioner of Internal Revenue should use IRS's existing authority to modify the refund hold such that it minimizes the risk of releasing fraudulent or noncompliant refunds. (Recommendation 4)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Acting Commissioner of Internal Revenue should assess the benefits and costs of additional uses and applications of W-2 data for pre-refund compliance checks, such as addressing underreporting, employment fraud, and other fraud or noncompliance before issuing refunds. (Recommendation 5)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: Based on the assessment in Recommendation 5, the Acting Commissioner of Internal Revenue should implement any identified changes to improve pre-refund compliance checks. (Recommendation 6)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    2 open recommendations
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the Information Sharing and Analysis Center (ISAC) pilot better aligns with leading practices for effective pilot design. This should include (1) establishing criteria for assessing whether the pilot's objectives have been met before making decisions about its scalability and whether, how, and when to when to proceed to full implementation; and (2) developing a data analysis plan that identifies data sources and criteria necessary for effectively evaluating the pilot. (Recommendation 1)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has developed a draft Pilot Program Management Plan for the ISAC. According to IRS, the plan is being finalized and it will be shared with us once completed. We will continue to monitor progress on this effort.
    Recommendation: The Acting Commissioner of Internal Revenue should ensure that the ISAC Partnership develops an outreach plan to expand membership and improve states' and industry partners' understanding of the ISAC's benefits. (Recommendation 2)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The ISAC annual report released in April 2018 cites plans to continue to grow member participation from private sector and other government agencies and to provide opportunities to deepen members' participation with clear guidelines. However, as of May 2018, we have not received documentation of an outreach plan. Developing an outreach plan to broaden membership to non-Security Summit members of industry and financial institutions would further promote stakeholders collaborating and sharing fraud information.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    2 open recommendations
    Recommendation: The Commissioner of Internal Revenue should re-establish long-term, quantitative goals for improving voluntary compliance. (Recommendation 1)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS reported it does not agree with the recommendation. IRS agreed that improving voluntary compliance is core to its mission; however, creating a quantifying goal will do little to advance that purpose. IRS provided several reasons why it should not create a quantitative measure, including the voluntary compliance rate could rise over time without any help from IRS, or fall despite additional effort from IRS. Further, IRS reported that the voluntary compliance rate is not effective to making strategic and operational decisions. However, as we note in the report, setting long-term strategic goals is essential for results-oriented management, because such goals explain in greater specificity the results an agency is intending to achieve. Further, focusing on intended results can promote strategic and disciplined management decisions that are more likely to be effective because managers who use fact-based performance analysis are better able to target areas most in need of improvement and to select appropriate interventions.
    Recommendation: The Commissioner of Internal Revenue should instruct the appropriate officials to develop and document a strategy that outlines how IRS will use National Research Program data to update compliance strategies that could help address the tax gap. (Recommendation 2)

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS stated that Research, Applied Analytics, and Statistics (RAAS), with input from other IRS offices, will prepare a strategy for addressing noncompliance by June 15, 2019. The document will include discussions of (1) conducting the NRP studies to collect the data for analysis and (2) the subsequent analyses and uses of these data for informing operational activities. A strategy that provides an overall picture of how NRP data are used will help Congress and other decision makers to understand the merits of what they are being asked to fund. Further, a strategy that incorporates the results of NRP data will help IRS leverage the compliance data it collects or allocate enforcement resources in the most cost-effective manner.
    Director: John E. Dicken
    Phone: (202) 512-7114

    1 open recommendations
    Recommendation: In implementing the age and gender adjustment, the Commissioner of Internal Revenue should consider taking steps to mitigate the limitations of the BCBS Standard plan premium cost data--such as by combining data from multiple FEHBP plans. If combining the costs of plans with different benefit structures, the Commissioner should consider whether an appropriate actuarial adjustment should be used. If the Commissioner interprets that the statute does not provide the flexibility to mitigate the limitations of the BCBS Standard plan premium cost data by combining data from multiple sources or by other means, the Commissioner should seek that authority from Congress.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Wilshusen, Gregory C
    Phone: (202) 512-6244

    10 open recommendations
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should implement the audit plans for the 12 systems and applications that we reviewed in the production computing environment.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should ensure that system administrators and security operations analysts are alerted in the event of audit processing failures.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should update information contingency plan test procedures to include updating contingency plans to reflect changes to the current operating environment.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should ensure that approved risk-based decisions pertaining to database configurations are based on suitable justification.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should develop, document, and implement the use of detailed procedures to facilitate the periodic review and analysis of audit records for its financial systems.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should develop an enterprise-wide system owner procedural document to control critical mainframe operating system commands.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should regularly update configuration standards and guidelines for network devices to incorporate recommendations from industry leaders, security agencies, and key practices from IRS partners to address known vulnerabilities applicable to IRS's environment.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should implement a compliance verification application, or other appropriate process, to ensure configuration policies are comprehensively tested on the mainframe.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should ensure that all known significant audit findings and recommendations related to financial reporting, which includes those in GAO's public and limited official use only reports, that directly relate to the objective of A-123 internal control tests are reviewed and monitored.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should identify and review service organizations' listing of user controls that are deemed relevant and test those controls to appropriately draw conclusions about the operating effectiveness of controls.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Director: Beryl H. Davis
    Phone: (202) 512-2623

    5 open recommendations
    including 3 priority recommendations
    Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to assess the program against applicable IPIA-defined thresholds and conclude on its susceptibility to significant improper payments, and revise the scope of its improper payments susceptibility assessment for the PTC program to include instances in which advance PTC is greater than or equal to the amount of PTC claimed on the tax return. If the program meets the IPIA definition for being susceptible to significant improper payments based on this assessment, estimate and report improper payments associated with the PTC program consistent with IPIA requirements.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: The Internal Revenue Service (IRS) partially agreed with this recommendation. IRS stated it will conduct a quantitative analysis of the premium tax credit (PTC) using National Research Program (NRP) data when the tax year 2014 NRP data become available. However, until IRS conducts an appropriate risk assessment consistent with the Improper Payments Information Act of 2002, as amended, it will continue to be uncertain about whether it should estimate the amount of improper PTC payments. We will continue to monitor the agency's actions to address this recommendation.
    Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to assess and document the feasibility of approaches for incorporating information from the marketplaces on individuals who did not demonstrate that they met the eligibility requirements for citizenship or lawful presence in the tax compliance process. If determined feasible, IRS should work with Treasury to require marketplaces to periodically provide such information on individuals and use such information to recover advance PTC made for those individuals.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The IRS agreed with this recommendation. IRS stated that it will evaluate the feasibility of receiving information from the marketplaces, and the value of using that information in its processes. If IRS determines that obtaining the data would be feasible and using it would be cost-effective, IRS will consult with Treasury on regulations or other guidance needed to obtain the information. Although eligibility determinations for the advance PTC are made outside the IRS's purview, the IRS has taken steps to ensure that the PTC is administered fairly and properly. For example, IRS has updated guidance in Publication 974, Premium Tax Credit, to clarify that any advance payment of the PTC made on behalf of individuals who did not meet the citizenship or lawful presence requirements must be repaid in full. Taxpayers are required to report the excess advance PTC on their tax returns. If they do not, IRS will address it through post-filing compliance. We will request and review supporting documentation for IRS's reported actions.
    Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to assess whether IRS should require its examiners to verify health care coverage of individuals to determine eligibility for PTC. To do this, IRS should complete its evaluation of the level of noncompliance related to duplicate health insurance coverage. Based on this evaluation and if cost effective, IRS should design and implement formal policies and procedures to routinely identify individuals inappropriately receiving PTC because of their eligibility for or enrollment in health care programs outside of the marketplaces and notify such individuals of their ineligibility for PTC.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: The Internal Revenue Service (IRS) agreed with this recommendation. IRS stated that it developed a Patient Protection and Affordable Care Act Compliance Strategy in October 2016, which included post-filing checks for the premium tax credit (PTC). However, IRS did not update the Internal Revenue Manual (IRM) to require examiners in the postcompliance units to use the checklist. Until such policies and procedures are incorporated in the IRM, IRS is vulnerable to improperly providing PTC to ineligible recipients. We will continue to monitor the agency's actions to address this recommendation.
    Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to design and implement procedures in the Internal Revenue Manual (IRM) for examiners in the post-filing compliance units to review tax returns for health insurance coverage for the entire year, and to identify and assess individual shared responsibility payments (SRP) from those who are not appropriately reporting SRPs on their tax returns.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS disagreed with this recommendation. However, IRS stated that, among other things, it has drafted a new IRM section for examiners who are responsible for reviewing tax returns to determine whether health insurance is reflected for the taxpayer for the entire year, and for identifying and assessing SRP on taxpayers who are not appropriately reporting SRP on their tax returns. IRS stated that the IRM section is pending approval by Exam Policy. Although IRS stated that it disagreed with our recommendation, we believe that the actions that IRS described in its response to our draft report would sufficiently address our recommendation if implemented effectively.
    Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to design and implement procedures in the IRM to regularly notify nonfilers of the requirement to file tax returns in order to continue to receive advance PTC in the future.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: The Internal Revenue Service (IRS) partially agreed with this recommendation. IRS stated that it developed a process for sending notices to individuals who received advance premium tax credit (PTC) paid on their behalf in the previous calendar year and who failed to file a tax return or requested an extension to file. IRS stated that being flexible in its approach has allowed IRS to refine the process to improve efficiency and effectiveness. IRS further stated that it will determine whether the information should be included in an existing Internal Revenue Manual. We agree that IRS should review its process to improve the efficiency and effectiveness of its operations. However, we continue to believe that IRS needs to design and implement procedures to regularly notify non-filers of the need to file to continue receiving advance PTC. This action would decrease the risk that the ad hoc notification process will not be followed consistently in each filing season. We will continue to monitor the agency's actions to address this recommendation.
    Director: Clark, Cheryl E
    Phone: (202)512-9377

    10 open recommendations
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to develop and implement a process to reasonably assure that IRS operating divisions and the information technology (IT) organization effectively coordinate with the Chief Financial Officer (CFO) organization when making programming changes to information systems affecting financial reporting.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by December 2017, the Information Technology (IT) organization, in collaboration with the Chief Financial Officer (CFO) organization, will develop and implement a process to reasonably assure that IRS operating divisions and the IT organization effectively coordinate with the CFO organization when making programming changes to information systems affecting financial reporting. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to research and determine the reason the IT organization did not follow IRS policy to thoroughly test programming changes related to the automation of specific penalty abatement procedures to reasonably assure that they worked as intended before implementation. Based on this determination, the IRS Commissioner should direct the appropriate IRS officials to establish a process to better ensure compliance with existing policies for testing programming changes, including the use and review of the Applications Development transmittal checklist when developing program changes and retention of test results.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by June 2018, the IT organization will research IRS policies and practices for testing programming changes to determine what modifications may be needed to reasonably assure programming changes work as intended before implementation. Based on this research, the IT organization will update the affected policies and implement any related process changes, as needed. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to strengthen the process for reasonably assuring that the Internal Revenue Manual (IRM) is reviewed annually to align with the current control procedures and guidance being implemented by agency personnel. This should include a mechanism for reasonably assuring that program owner directors (1) review their respective program control activities and related guidance annually and timely update the IRM as needed, (2) document their reviews, and (3) utilize interim guidance and supplemental guidance correctly for their intended purposes.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by March 2018, the Research, Applied Analytics and Statistics organization will strengthen the process to reasonably assure that all IRMs are reviewed annually to align with the current control procedures and guidance being implemented by IRS personnel. This will include a mechanism to reasonably assure that program owner directors (1) review their respective program control activities and related guidance annually, and update the IRM timely, if needed; (2) document their reviews; and (3) use interim guidance and supplemental guidance correctly for their intended purposes. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to ensure that the respective Agency-Wide Shared Services IRM and supplemental guidance related to the frequency of performing (1) emergency/alarm contact-list validation, (2) duress alarm inventory validation, and (3) federal security risk assessments are consistent.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation and considers it closed. IRS stated that in February 2017, the Agency-Wide Shared Services (AWSS) organization updated SOP-17-0002, Alarm Notification, Testing and Maintenance, to synchronize the frequency of performing (1) emergency/alarm contact-list validation; (2) duress alarm inventory validation; and (3) federal security risk assessments, with revised IRM 10.2.14.9, Methods of Providing Protection, Detection Equipment, and IRM 10.2.11.2.5 (3), Facility Security Risk Management. We will assess IRS's actions during our fiscal year 2017 financial statement audit.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to update the respective (1) Privacy, Governmental Liaison and Disclosure and (2) CFO IRM sections related to the definition of the tax gap to align with the current understanding followed by IRS personnel.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that in April 2017, the CFO organization updated IRM 1.34.1.2 (124) Revenue Accounting, Definitions and Acronyms, to align the tax gap definition with the current understanding followed by IRS personnel. Further, by February 2018, the Privacy, Governmental Liaison and Disclosure organization will remove the tax gap definition from IRM 11.4.1.3.1.2, Tax Gap Initiatives. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to revise the applicable IRM sections pertaining to manual refunds to require employees to verify the validity of the digital signatures on the manual refund request forms and the manual refund signature authorization forms.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by March 2018, the Wage and Investment (W&I) organization will revise the applicable IRM manual refund sections to require that employees validate the digital signatures on the manual refund request forms and the manual refund signature authorization forms. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to revise system access rights in Human Resources (HR) Connect to prevent HR assistants within the Employment Operations office from approving and releasing pay-related personnel actions to the National Finance Center (NFC).

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation and considers it closed. IRS stated that in February 2017, the Human Capital Office (HCO) revised system access rights in HR Connect to prevent the Employment Operations Office HR assistants from approving and releasing pay-related personnel actions to the National Finance Center (NFC). We will assess IRS's actions during our fiscal year 2017 financial statement audit.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to revise the HR Connect HR User Profiles Desk Guide to clearly indicate that HR assistants within the Employment Operations office should not be granted access to approve and release pay-related personnel actions to NFC.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation and considers it closed. IRS stated that in February 2017, HCO revised the HR Connect HR User Profiles Desk Guide to clearly indicate that the Employment Operations Office HR assistants should not be granted access to approve and release pay-related personnel actions to NFC. We will assess IRS's actions during our fiscal year 2017 financial statement audit.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to establish and implement procedures to periodically review the process for determining the intragovernmental costs and costs with the public for each major program reported in the notes to the financial statements to provide reasonable assurance that these amounts are reliable and fairly presented.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by February 2018, the CFO organization will establish and implement procedures to review periodically the process for determining intragovernmental and public costs for each major program reported in the notes to the financial statements, providing reasonable assurance that these amounts are reliable and presented fairly. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to provide clear guidelines as to what events constitute removal from IRS premises and the disposal date that should be recorded in its inventory system, either through an update of the IRM or other property and equipment-related desk guides.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with this recommendation. IRS stated that by December 2017, the AWSS organization will provide clear guidelines on events that constitute removal of trackable property and equipment assets from IRS premises, and the disposal date that should be recorded in its inventory system, either by updating the IRM or the property and equipment-related desk guides. We will follow-up during our audit of IRS's FY 2017 financial statements to determine the status of this recommendation.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    5 open recommendations
    Recommendation: To help ensure that IRS leverages lessons learned from the NRP examinations and effectively completes operational employment tax examinations, the Commissioner of Internal Revenue should develop and document plans to analyze the results in 2017 of the NRP employment tax study to identify the major issues of noncompliance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, IRS said in July 2017 that it would develop and document plans to comprehensively analyze the National Research Program (NRP) study results and identify major issues of noncompliance. IRS also said it would complete data perfection activities and deliver the updated data to its data warehouse system. In April 2018, IRS provided a high level data analysis plan to study the NRP employment tax data. The data analysis plan noted that IRS business units would review and compare desired outcomes against NRP data elements to determine the necessary database queries needed and potential benefits by June 2018. IRS also provided documentation that the data had been perfected and uploaded in January 2018, and were ready to be analyzed. GAO will continue to monitor IRS's data analysis planning of the NRP employment tax data as IRS business units determine what elements to analyze and the outcome of such analysis.
    Recommendation: To help ensure that IRS leverages lessons learned from the NRP examinations and effectively completes operational employment tax examinations, the Commissioner of Internal Revenue should develop and document plans for addressing the noncompliance identified in IRS's analysis of the NRP employment tax results.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, IRS said in July 2017 that it plans to research how the National Research Program (NRP) study results can be used to enhance workload selection programs and will develop and initiate an action plan based on studying the NRP results. IRS confirmed this status in April 2018 and plans to complete the work by January 2019.
    Recommendation: To help ensure that IRS leverages lessons learned from the NRP examinations and effectively completes operational employment tax examinations, the Commissioner of Internal Revenue should develop and document plans for assessing the results of the NRP employment tax study to estimate the current state of the employment tax gap.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, in July 2017 IRS said it will update its tax gap estimates, which will include updating the employment tax gap estimates. IRS confirmed this status in April 2018 and plans to complete the effort by January 2020.
    Recommendation: To help ensure that IRS leverages lessons learned from the NRP examinations and effectively completes operational employment tax examinations, the Commissioner of Internal Revenue should determine whether and when to provide the Information Return Analysis System upfront for Small Business/Self-Employed division operational examinations based on criteria such as whether it would help identify more noncompliance, reduce taxpayer burden, and improve audit efficiency by reducing overall IRS costs (examiner versus campus costs).

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, in July 2017 IRS said it will gather additional data and insights on the opportunities and challenges of incorporating Information Return Analysis System (IRAS) data into the classification process. In March and April 2018, IRS officials said IRS plans to issue a policy alert to notify IRS staff about the availability of IRAS for use on employment tax audits. IRS also plans to offer training to IRS staff in September 2018 on how to access and use IRAS. Finally, IRS officials said they recently changed the availability of IRAS to staff but did not provide supporting documentation indicating such a change. GAO will continue to monitor IRS's progress implementing this recommendation.
    Recommendation: To help ensure that IRS leverages lessons learned from the NRP examinations and effectively completes operational employment tax examinations, the Commissioner of Internal Revenue should regularly remind employment tax examiners how they can access and request the CP2100 and cash transaction data for operational employment tax examinations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, in July 2017 IRS said it will provide reminders to examiners regarding the cash transaction data and the CP2100, hold training sessions, and include information on both tools on its internal website for examiners. In October 2017, TE/GE provided documentation that it would establish annual reminders on the CP2100 and cash transaction data, which employees can also access on TE/GE's intranet. TE/GE also held a training session on using the CP2100 for employment tax examinations. SB/SE planned to complete its tasks by October 2018.
    Director: James R. McTigue Jr.
    Phone: (202) 512-9110

    14 open recommendations
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including defining objectives to identify risk and defining risk tolerances.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that workload selection for campaigns has been centralized and returns are prioritized and risk-assessed, based on established objectives and defined compliance goals. They also said objectives and risk tolerances for other selection methods are now defined in other agency guidance. As of April 2018, we are in the process of reviewing the guidance.
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including identifying, analyzing, and responding to risks to achieving the objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that they have closed documentation gaps for the remaining selection methods they still use through new procedures and guidance. As of April 2018, we are in the process of reviewing the documentation.
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including designing control activities to achieve objectives and responding to risks.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that they have designed control activities for individual campaigns but has not addressed other selection methods. As of April 2018, we will continue monitoring IRS efforts on this recommendation.
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including using quality information to achieve objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they are actively using quality results in their current metrics. Additionally, they said LB&I is revising quality measures to ensure IRS accurately captures results from campaign-related work. Quality Review scores are shared with Practice Areas for use in measuring objectives. As of April 2018, we will monitor the progress IRS makes on the revised quality measures.
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including communicating internally the necessary quality information about the objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they are developing a standard governance process for each program for case selection and will be using prioritization tools and feedback loops to communicate quality information. They said additional time is needed to develop a standardized governance process and feedback mechanism for each program. The additional time is also needed to collect the appropriate documentation on LB&I's current workload selection methods. As of April 2018, we will continue to monitor IRS's progress.
    Recommendation: As LB&I finishes implementing its new approach and decides which selection methods will be used with the campaigns, the Commissioner of Internal Revenue should ensure that the documentation gaps in policies and procedures are addressed for six internal control principles for the selection methods that will be used, including evaluating issues and remediating identified internal control deficiencies on a timely basis.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that the campaign development process includes a continual feedback mechanism that allows IRS to evaluate issues and remediate identified internal control deficiencies on a timely basis. They said that they have created similar procedures for their other selection methods as well. As of April 2018, we are in the process of reviewing this documentation.
    Recommendation: Also in accordance with federal internal control standards, the Commissioner should direct LB&I to adopt a standard process for monitoring audit selection decisions in the field, such as by modifying the existing quality control system.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they will design a standard process to monitor and review audit selection decisions in the field. As of April 2018, we will continue to monitor IRS's progress.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should create a timetable with specific dates for implementing its new compliance approach.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that LB&I will perfect a timeline that will allow it to track the progress of each campaign as it makes its way from inception to approval by the Compliance Integration Council. As of April 2018, we will monitor LB&I's progress.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should establish metrics to help determine whether the campaign effort overall meets LB&I's goals.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they have approved new performance metrics on campaigns and established a plan to use the metrics to assess the campaign program overall. As of May 2018, we are reviewing the supporting documentation for the plan implementation.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should finalize and document plans to evaluate the human resources expended on campaign activities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they are developing a standard governance process for each case selection program. Campaigns will be run as projects to include scope and scheduled resources. The officials said they have completed an initial skills assessment but need additional time to develop our workload plan versus the utilization plan. They will use the feedback loop to make adjustments to resources to ensure subsequent campaigns are resourced appropriately. As of April 2018, we will monitor IRS's progress.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should document lessons learned from stakeholder input and past performance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of April 2018, IRS officials said LB&I has developed and deployed the Campaign Development Form and the LB&I Taxpayer Registry to capture stakeholder input and feedback. The form documents all actions and a decision made on a particular campaign and is used to monitor real-time performance. While this will help IRS document lessons learned moving forward, IRS officials have not said how they would document lessons learned in the past.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should monitor overall performance across future campaigns, not just individual compliance projects, and in doing so ensure that the data used for monitoring accounts for the costs beyond the auditor's time can clearly be linked with specific selection methods, including the Discriminant Analysis System method, to the extent that the selection methods continue to operate.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they have identified resources used in compliance activities, formed a baseline of resources from prior years, identified data sources and a resource calculator tool, and implemented an action plan to monitor resources across compliance programs. As of May 2018, we will monitor the implementation of these plans.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should develop and document criteria to use in choosing selection methods for campaigns using audits.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of April 2018, IRS officials said that the Campaign Development Form records all decisions and allows LB&I staff to monitor effectiveness, as well as to prioritize for the highest compliance impact. IRS also has produced a campaign framework and campaign submission instructions, which we are in the process of reviewing for how closely it addresses the recommendation.
    Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should set a timetable to analyze and mitigate risks and document specific metrics for assessing mitigation of identified risks.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said they created a timetable to mitigate risks, prioritize selections, and document metrics for assessing whether progress is being made toward goals. The timetable includes the following: Standardize a process to analyze and mitigate risk for campaign selection and implementation and create a standard process for tracking mitigations measure on the risks. As of April 2018, we are in the process of reviewing IRS's supporting documentation.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    3 open recommendations
    Recommendation: The Commissioner of Internal Revenue should develop and maintain an online dashboard to display customer service standards and performance information such that it is easily accessible and improves the transparency of its taxpayer service.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In April 2017, IRS reported that it is evaluating the data that it can make available online. IRS also indicated that it will include the service standards that taxpayers should expect when interacting with IRS. IRS expects to make this information available online by February 2018.
    Recommendation: The Commissioner of Internal Revenue should review its document retrieval and scanning processes to identify potential training or guidance needs or other potential efficiencies.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In April 2017, IRS reported that it issued guidance to employees in February 2017 reminding them to follow IRS procedures that require thorough research of information contained in IRS systems before requesting a hard copy of documents from file storage or archives. However, IRS has not completed a review of its document retrieval and scanning processes to identify potential efficiencies. Without this review, IRS is missing potential opportunities to retrieve and scan the documents that employees require in a timely manner.
    Recommendation: The Commissioner of Internal Revenue should revise IRS's notices to IDT refund fraud victims to include information such as (1) whether any dependents were claimed on the fraudulent return, (2) to the extent possible, if those dependents match any of those the taxpayer claimed the same tax year, and (3) how to request a redacted copy of the fraudulent return.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In April 2017, IRS reported that it will revise its notices to victims of identity theft to include information that will advise them to protect the personally identifiable information of their dependents. The notice will also direct them to revised information and guidance on irs.gov. IRS expects to complete the revisions by July 2018.
    Director: Charles Jeszeck
    Phone: (202) 512-7215

    1 open recommendations
    Recommendation: To assist IRA owners in addressing challenges associated with investing their retirement savings in unconventional assets, the Commissioner of Internal Revenue should provide guidance to IRA owners and custodians on how to determine and document fair market value (FMV) for certain categories of hard-to-value unconventional assets. For example, IRS could consider updating Form 5498 instructions to custodians on how to document FMV for hard-to-value assets (e.g., last-known FMV based on independent appraisal, acquisition price) and provide guidance directed at account owners that provides examples of how to ascertain FMV for different types of unconventional assets.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed that guidance should be provided to IRA owners and custodians and stated that the guidance could be provided as part of an item currently on the 2016-2017 Priority Guidance Plan. IRS will recommend to Treasury that the regulation project address this issue. We will consider closing this recommendation when the agency provides documentation that this effort has been completed. In its 2018 update, IRS stated that it had discussed this issue with Counsel and Treasury and it was agreed that fair market value would be a part of the guidance currently on the 2017 Priority Guidance Plan. IRS further noted that it would be premature to modify instructions to custodians on how to determine and document FMV for hard-to- value assets while this guidance project is pending. GAO will not close this recommendation as implemented until the new guidance is issued.
    Director: James McTigue
    Phone: (202) 512-9110

    5 open recommendations
    Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and communicate Field Collection program and case selection objectives, including the role of fairness, in clear and measurable terms sufficient for use in internal control.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and described actions it will take to address it, to include that the Small Business/Self-Employed Division (SB/SE) will develop fiscal year 2017 program objectives that align with the mission of SB/SE and that the Collection program will develop and document specific Field Collection and case selection activities that will support SB/SE objectives. However, it is not clear how these efforts will be fully responsive our recommendation to establish Field Collection (not division-level) program and case selection objectives sufficient for use in internal control. IRS said it planned to complete actions on this recommendation by July 2017. We will update the status of IRS's implementation of the recommendation after we complete review of any documents IRS provides on actions taken.
    Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and implement performance measures clearly linked to the Field Collection program and case selection objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and outlined planned actions to address it. However, since it is not clear that IRS's planned actions to implement our first recommendation will result in Field Collection program and case selection objectives sufficient for internal control purposes, IRS's ability to address the related recommendation to establish performance measures may be limited. IRS said it planned to complete actions on this recommendation by August 2017. We will update the status of IRS's implementation of the recommendation after we complete review of any documents IRS provides on actions taken.
    Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should incorporate program and case selection objectives into existing risk management systems or use other approaches to identify and analyze potential risks to achieving those objectives so that Field Collection can establish risk tolerances and appropriate control procedures to address risks.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and outlined planned actions to address it. However, since it is not clear that IRS's planned actions to implement our first recommendation will result in Field Collection program and case selection objectives sufficient for internal control purposes, IRS's ability to address the related recommendation to assess program risks may be limited. IRS said it planned to complete actions on this recommendation by July 2017. We will update the status of IRS's implementation of the recommendation after we complete review of any documents IRS provides on actions taken.
    Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and communicate control procedures guidance for group managers to exercise professional judgment in the Field Collection program case selection process to achieve fairness and other program and collection case selection objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and described actions it will take to address it, to include review of current procedures and guidance and making changes, if necessary. IRS said it planned to complete actions on this recommendation by July 2017. We will update the status of IRS's implementation of the recommendation after we complete review of any documents IRS provides on actions taken.
    Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and implement procedures to periodically monitor and assess the design and operational effectiveness of both automated and manual control procedures for collection case selection to assure their continued effectiveness in achieving program objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and outlined planned actions to address it. However, since it is not clear that IRS's planned actions to implement our first recommendation will result in Field Collection program and case selection objectives sufficient for internal control purposes, IRS's ability to address the related recommendation to monitor control procedures may be limited. IRS said it planned to complete actions on this recommendation by July 2017. We will update the status of implementation of the recommendation after we complete review of documents IRS provides on the actions taken.
    Director: Michelle Sager
    Phone: (202) 512-6806

    2 open recommendations
    Recommendation: The Commissioner of Internal Revenue should communicate more clearly the limitations of information not published in the IRB to taxpayers. Such action could include adding clarifying language to some pieces of information not published in the IRB, like FAQs, and amending policies and procedures, such as the Internal Revenue Manual (IRM), to clarify when IRS information should contain a statement regarding its legal authority and whether the item can be used or cited as precedent.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of May 2017, IRS has informed GAO that it has implemented the recommendation. GAO is in the process of verifying that the recommendation was successfully implemented.
    Recommendation: The Commissioner of Internal Revenue should take action to ensure that required steps are consistently documented during key phases of the non-regulatory guidance process, as defined in the Chief Counsel Directives Manual.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of May 2017, IRS has informed GAO that it has implemented the recommendation. GAO is in the process of verifying that the recommendation was successfully implemented.
    Director: Rebecca Shea
    Phone: (202) 512-2834

    1 open recommendations
    Recommendation: To maximize resources for the Inland Waterways Trust Fund, the Commissioner of Internal Revenue should consult with the U.S. Army Corps of Engineers to explore options to obtain proprietary data to enhance IRS's efforts to ensure taxpayer compliance with the inland waterways fuel tax.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: According to IRS, strict disclosure laws have inhibited the successful execution of a nondisclosure agreement with the U.S. Army Corps of Engineers. As of June 2018, IRS counsel is continuing to explore avenues with U.S. Army Corps of Engineers counsel to reach agreement on a modified non-disclosure agreement. However, no agreement to share the data has been made yet. In addition, IRS is reviewing other publicly available data, including data from the U.S. Coast Guard, to determine its usability for fuel tax compliance purposes.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To enhance the budget process and to improve transparency, the Commissioner of Internal Revenue, to the extent feasible, should ensure that the CJ includes data by appropriation account on the amount of funding requested to maintain current services for each future state theme.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In its fiscal year 2017 congressional justification, IRS modified how its budget data were organized, including linking requested increases to future state themes, but did not clarify how current spending by themes relates to appropriation accounts. Information on current spending by theme and account is important to ensure transparency on the current funding levels to assist Congress in making informed budget decisions. IRS did not include data on the future state themes in the fiscal year 2018 congressional justification and, according to IRS officials, it did not report this information in any other budget document. According to IRS officials, it did not report budget data by future state theme because IRS is working to transition the future state themes into the strategic plan. Including data on the appropriation account would provide additional transparency and improve the quality of the information available to Congress for budget deliberations.
    Director: David A. Powner
    Phone: (202) 512-9286

    3 open recommendations
    Recommendation: To help IRS improve its process for determining IT funding priorities and to provide timely information on the progress of its investments, the Commissioner of IRS should direct the Chief Technology Officer to establish, document, and implement policies and procedures for selecting new and reselecting ongoing business systems modernization activities, consistent with IRS's process for prioritizing operations support priorities, which addresses (1) prioritization and comparison of IT assets against each other, (2) criteria for making selection and prioritization decisions, and (3) ensuring IRS executives' final funding decisions on IT proposals are based on IRS's prioritization process.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In April 2017, IRS stated that it had several process improvements underway that would impact its documentation of policies and procedures for prioritizing business systems modernization activities. In April 2018, the agency committed to addressing the recommendation by September 2018.
    Recommendation: To help IRS improve its process for determining IT funding priorities and to provide timely information on the progress of its investments, the Commissioner of IRS should direct the Chief Technology Officer to modify existing processes for Foreign Account Tax Compliance Act (FATCA) and Return Review Program (RRP) for measuring work performed by IRS staff to incorporate best practices, including accounting for actual work performed and using the level of effort measure sparingly.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In May 2018, IRS provided GAO a report and supporting documentation showing that it had addressed this recommendation in April 2018. We are reviewing the documentation to determine whether IRS's actions sufficiently address the recommendation.
    Recommendation: To help IRS improve its process for determining IT funding priorities and to provide timely information on the progress of its investments, the Commissioner of IRS should direct the Chief Technology Officer to report on actual costs and scope delivery at least quarterly for the Customer Account Data Engine 2 and the Affordable Care Act Administration. For these investments, IRS should develop metrics similar to FATCA and RRP.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS began reporting on actual costs and scope delivery at least quarterly for the Customer Account Data Engine 2 investment using metrics similar to FATCA and RRP and provided quarterly reports for fiscal year 2016 and the first two quarters of fiscal year 2017 to GAO. As of September 2017, the agency had not implemented the recommendation for the Affordable Care Act Administration investment because it did not see the benefit in doing so given that development work was minimal. We are following up with IRS on this as part of an ongoing review of the agency's information technology operations.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    3 open recommendations
    Recommendation: To strengthen efforts to identify and address noncompliance with the EITC, ACTC, and AOTC, the Commissioner of Internal Revenue should direct Refundable Credits Policy and Program Management (RCPPM) to, building on current efforts, develop a comprehensive operational strategy that includes all the RTCs for which RCPPM is responsible. The strategy could include use of error rates and amounts, evaluation and guidance on the proper use of indicators like no-change and default rates, and guidance on how to weigh trade-offs between equity and return on investment in resource allocations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, the Internal Revenue Service (IRS) was taking steps to develop a comprehensive refundable tax credit compliance strategy, as GAO recommended in May 2016. According to IRS, the strategy will include the four largest refundable tax credits for individual taxpayers -- the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Premium Tax Credit. IRS officials reported they are evaluating the effect of various compliance treatments on different outcomes such as lowest taxpayer burden, return on investment, reduced improper payments, and change in taxpayer behavior, among others. According to IRS, this research informed the fiscal year 2018 exam work plan. Specifically, IRS reported using this research to identify the approximate volumes of treatments for each refundable credit and to allocate resources accordingly. IRS also reported that by May 2018, it plans to complete research efforts and use the results to design new compliance campaigns and develop evaluation tools. It will be important for IRS to follow through with this strategy. A more comprehensive approach could help IRS determine whether its current allocation of resources is optimal, and if not, what adjustments are needed.
    Recommendation: To strengthen efforts to identify and address noncompliance with the EITC, ACTC, and AOTC, the Commissioner of Internal Revenue should direct Refundable Credits Policy and Program Management (RCPPM) to take necessary steps to ensure the reliability of collections data and periodically review that data to (a) compute a collections rate for post-refund enforcement activities and (b) determine what additional analyses would provide useful information about compliance results and costs of post-refund audits and document-matching reviews.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: No executive action taken as of December 2017. The Internal Revenue Service (IRS) disagreed with this May 2016 recommendation. IRS raised concerns about the cost of studying collections data for post-refund enforcement activities. GAO recognizes that gathering collections data has costs and the data have limitations, notably that not all recommended taxes are collected. However, use of these data -- once IRS is able to verify their reliability -- could better inform resource allocation decisions and improve the overall efficiency of enforcement efforts. By not taking necessary steps to ensure the reliability of that data and to link them to tax assessments to calculate a collections rate, IRS lacks critical information. Periodic reviews of collections data and analyses could help IRS officials more efficiently allocate limited enforcement resources by providing a more complete picture about compliance results and costs.
    Recommendation: To strengthen efforts to identify and address noncompliance with the EITC, ACTC, and AOTC, the Commissioner of Internal Revenue should direct Refundable Credits Policy and Program Management (RCPPM) to, as RCPPM begins efforts to track the number of erroneous returns claiming the ACTC or AOTC identified through pre-refund enforcement activities, such as screening filters and use of math error authority, it should develop and implement a plan to collect and analyze these data that includes such characteristics as identifying timing goals, resource requirements, and the appropriate methodologies for analyzing and applying the data to compliance issues.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, the Internal Revenue Service (IRS) was taking steps toward developing a comprehensive refundable tax credit compliance strategy, as GAO recommended in May 2016. According to IRS, the strategy will include timing goals, resource requirements, and appropriate methodologies for analysis and application for the Additional Child Tax Credit and the American Opportunity Tax Credit. IRS officials reported they are evaluating the effect of various compliance treatments on different outcomes such as lowest taxpayer burden, return on investment, reduced improper payments, and change in taxpayer behavior, among others. According to IRS, this research informed the fiscal year 2018 exam work plan. Specifically, IRS reported using this research to identify the approximate volumes of treatments for each refundable credit and to allocate resources accordingly. IRS also reported that by May 2018, it plans to complete research efforts and use the results to design new compliance campaigns and develop evaluation tools. It will be important for IRS to follow through with this strategy. This information should help IRS deepen its understanding of common errors made by taxpayers claiming these credits; IRS could then use these insights to develop strategies to educate taxpayers.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    2 open recommendations
    Recommendation: To further deter noncompliance in the Taxpayer Protection Program, the Commissioner of Internal Revenue should, in accordance with OMB and NIST e-authentication guidance, implement appropriate actions to mitigate risks identified in the assessment.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, IRS had taken actions to mitigate risks, but needed to implement updates to its TPP authentication process. Based on the results of IRS's risk assessment, the agency took TPP's online authentication service offline and stated that officials are working to improve the level of assurance for the web application. In the interim, taxpayers authenticated their identities by phone or in-person. In February 2017, IRS implemented a new authentication process for TPP's phone authentication. In December 2017, officials told GAO they plan to re-launch TPP online authentication in two phases. IRS plans to launch the first phase in March 2018 to allow taxpayers to inform IRS that they did not file the return in question. The second phase, which IRS plans to launch in late 2018, will enable taxpayers who did file the returns in question to authenticate their identities and receive their refunds. Implementing improvements to strengthen TPP could help IRS prevent fraudsters from passing authentication and potentially receiving millions of dollars in refunds, as well as improve IRS's return on investment for its fraud detection efforts.
    Recommendation: To improve the quality of the Taxonomy's IDT refund fraud estimates, the Commissioner of Internal Revenue should utilize return-level data--where available--to reduce overcounting and improve the quality and accuracy of the refunds-prevented estimates.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of April 2018, IRS has taken steps to use return-level data to reduce overcounting in its Taxonomy estimates. For example, in developing its 2015 Taxonomy, IRS began using return-level data to improve estimates related to e-file rejects. However, IRS needs to further use return-level data to reduce the potential effect of overcounting on other Taxonomy estimates. As we reported in May 2016, IRS may be overcounting refunds for returns detected by IRS defenses because the agency uses the Global Identity Theft Report (Global Report) to calculate estimates for this category. More specifically, refunds for returns that are detected by multiple defenses can be counted multiple times in IRS's estimates. IRS already has a count of known and potential identity theft returns in its modeling dataset that the agency could use to help reduce overcounting for these estimates; however, IRS reported that it intends to use the Global Report for its upcoming 2017 Taxonomy. In August 2016, IRS reported that the agency did not agree with GAO's recommendation and noted that the agency does not think that adopting a different methodology for Taxonomy estimates is an effective use of agency resources.
    Director: Clark, Cheryl E
    Phone: (202) 512-9377

    8 open recommendations
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to establish a process to prevent Employment Operations staff from allowing potential employees to enter on duty without favorable determinations of suitability by Personnel Security adjudicators.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2016, IRS's Human Capital Office developed a process and revised procedures for its Employment Operations office to conduct monitoring procedures to reasonably assure that new employees do not enter on duty before prescreening adjudications are completed and approved by Personnel Security adjudicators. However, during our fiscal year 2017 audit, we identified IRS employees who entered on duty without completed or approved suitability adjudication determinations. IRS stated that in fiscal year 2018, it plans to determine the additional steps needed to reasonably assure that Employment Operations staff do not allow potential employees to enter on duty without approved adjudication determinations.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to establish a policy and procedures requiring IRS officials to review and address situations in which it is later discovered that an employee deemed unsuitable for employment during the prescreening process was erroneously allowed to enter on duty.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. While IRS responded that it established a policy and related procedures, it has not sufficiently demonstrated that the policy and procedures were implemented. During our fiscal year 2017 audit, we identified an instance where an employee was allowed to enter on duty and it was subsequently discovered that this employee was deemed unsuitable for employment during the prescreening process. IRS was unable to demonstrate that its procedures had been carried out for this employee. IRS stated that in fiscal year 2018, it plans to determine the additional steps needed to reasonably assure that it addresses situations in which it is later discovered that an employee deemed unsuitable for employment during the prescreening process was erroneously allowed to enter on duty.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to develop and provide training, on a recurring basis, to all Facilities Management and Security Services specialists and managers involved in the duress alarm validation and testing process to reinforce the related policies and procedures.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that by June 2018, it plans to develop mandatory training for all physical security specialists and managers responsible for duress alarm validation and testing. In addition, it plans to develop a policy to ensure that the training is completed annually.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to determine the reason(s) why staff did not always comply with IRS's established policies and procedures related to initiating, monitoring, and reviewing the monitoring of manual refunds and, based on this determination, establish a process to better enforce compliance with these requirements.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in September 2017, its Taxpayer Advocate Service organization established a process to better enforce the policies and procedures related to initiating, monitoring, and reviewing the monitoring of manual refunds. However, IRS anticipates that efforts by its Wage & Investment organization will not be completed until fiscal year 2018.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to enhance the training program provided to COs to address all the job responsibilities related to certifying manual refunds for payment, including the required review of supporting documentation for manual refunds.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in fiscal year 2018, it plans to develop and provide interim training to Certifying Officers on their roles and responsibilities related to certifying manual refunds for payment, including requirements to review supporting documentation for manual refunds. In addition, IRS stated that by February 2019, it also plans to develop a training course that will be provided annually.
    Recommendation: The IRS Commissioner should direct the appropriate IRS officials to identify the cause of and implement a solution for dealing with the periodic backlogs of ICO inventory that is hampering the performance of quality reviews.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in fiscal year 2018, it plans to identify the cause of and implement a solution for dealing with the periodic backlogs of Input Correction Operation inventory.
    Recommendation: The IRS Commissioner should direct the appropriate officials to establish and implement monitoring procedures designed to reasonably assure that the key detailed information for tangible capitalized P&E is properly recorded and updated in the KISAM system.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS established the Asset Management Program Monitoring and Review procedure, effective October 1, 2016, for performing quarterly sample reviews of IT assets in the Knowledge, Incident/Problem, Service Asset Management (KISAM) system. In September 2017, IRS also revised the Internal Revenue Manual to require Facilities Management and Security Services territory managers or section chiefs to review KISAM key data elements for non-IT assets to verify that they are correct and updated. During our fiscal year 2017 audit, we verified that IRS conducted quarterly reviews of a sample of IT and non-IT asset records in KISAM. Since fiscal year 2017 was the first year that IRS implemented its quarterly reviews, we will further assess the effectiveness of these reviews in providing reasonable assurance that key detailed information is properly recorded and updated in KISAM during our fiscal year 2018 audit when we conduct tests of physical inventory.
    Recommendation: The IRS Commissioner should direct the appropriate officials to design a process to reasonably assure the adequacy of detailed supporting information for tangible P&E amounts recorded in the general ledger.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in fiscal year 2018, its Chief Financial Officer organization plans to implement a property and equipment (P&E) subsidiary ledger and also design and implement processes based on the P&E subsidiary ledger that will reasonably assure the adequacy of detailed supporting information for tangible P&E amounts recorded in the general ledger.
    Director: Daniel Garcia-Diaz
    Phone: (202) 512-8678

    2 open recommendations
    Recommendation: To receive more consistent information on LIHTC noncompliance, the IRS Commissioner should collaborate with the allocating agencies to clarify when allocating agencies should report such information on the Form 8823 (report of noncompliance or building disposition). The IRS Commissioner should collaborate with the Department of the Treasury in drafting such clarifications to help ensure that any new guidance is consistent with Treasury regulations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, as of March 2018, IRS stated it reviewed the Form 8823 Audit Technique Guide to determine whether additional guidance and clarification were needed for allocating agencies to report noncompliance information on the form. Moreover, IRS attended an industry conference with allocating agencies where Form 8823 noncompliance issues were discussed. Additionally, IRS officials conducted phone calls with a random sample of 15 allocating agencies to ask questions about the agencies' understanding of the Form 8823 guidelines. According to IRS officials, the results showed that there is an understanding of what was required on the Form 8823, but compliance with guidelines varied by the allocating agencies' surveyed. Therefore, no plans were made to clarify the guidance. As we identified in our report, there were varying practices for reporting noncompliance and the reasons for inconsistent reporting included conflicting guidance, different interpretations of the guidance, and lack of IRS feedback about agency submissions. Furthermore, the results of IRS's outreach to a sample of allocating agencies also identified variation in compliance, yet IRS has made no changes to its guidance. Until additional action is taken by IRS, this recommendation will remain open.
    Recommendation: To improve IRS's processes for identifying the most significant noncompliance issues, the IRS Commissioner should evaluate how IRS could use HUD's Real Estate Assessment Center databases, including how the information might be used to reassess reporting categories on the Form 8823 and to reassess which categories of noncompliance information have to be reviewed for audit potential.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In response to this recommendation, as of March 2018, IRS officials stated that since HUD's database with property inspection data was not complete and contained data from only about 31 allocating agencies, did not cover the same categories on the Form 8823, and contained properties other than LIHTC, it was unclear how the database could be used. IRS officials said they would continue exploring the use of HUD's database, but stated the agency was constrained due to staffing levels and budget, which limited its full ability to assess the use of database. However, as we stated in our report, HUD officials expect to include all allocating agencies in the database and functionality is available in the database to filter only LIHTC properties. We continue to believe HUD's data collection effort has created opportunities to share inspection data with IRS that could improve the effectiveness of reviews of LIHTC noncompliance. We will continue to monitor IRS's progress in evaluating the use of HUD's database for reporting information on noncompliance.
    Director: Wilshusen, Gregory C
    Phone: (202) 512-6244

    2 open recommendations
    Recommendation: In addition to implementing our previous recommendations, to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue should update system and application audit plans based on the current version of referenced policies and guidelines and when significant changes are made to a system or application.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: At the beginning of GAO's audit of IRS' FY 2017 financial statements, IRS indicated that it had not yet implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Recommendation: In addition to implementing our previous recommendations, to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue should update the security plan for systems that provide network infrastructure services to IRS personnel and information systems to reflect changes to the operating environment.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: During our audit of its FY 2017 financial statements, IRS submitted this recommendation for closure, but our testing determined that it should remain open. When IRS indicates that it has implemented this recommendation, we will review its actions.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    7 open recommendations
    including 1 priority recommendation
    Recommendation: The Commissioner of Internal Revenue should establish, document, and implement an organizational structure identifying responsibility for defining objectives with an appropriate line of reporting for measuring costs and results for information referrals.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken some actions to establish, document, and implement an organizational structure identifying responsibility for defining objectives with an appropriate line of reporting for measuring costs and results for information referrals. The cross-functional team established by the Deputy Commissioner for Services and Enforcement assessed the feasibility of consolidating various information referral programs under one structure and made recommendations to the Deputy Commissioner of Services and Enforcement. W&I has existing processing in place for receiving and processing paper forms and retained the intake and screening responsibilities. Oversight of Form 3949-A intake transitioned from Accounts Management to Submission Processing Headquarters in October 2016. SB/SE is responsible for defining objectives and monitoring results for information referrals. As of February 2018, IRS had established some internal accounting codes to help measure costs and results. GAO will continue to monitor IRS's actions to monitor costs and outcomes from leveraging referrals from the public alleging tax noncompliance.
    Recommendation: The Commissioner of Internal Revenue should ensure that the IRM has internal controls for processing information referrals by establishing, documenting, and implementing supervisory review and segregation of duties for inventory management reporting procedures.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken some action to ensure that the IRM has internal controls for processing information referrals by establishing, documenting, and implementing supervisory review and segregation of duties for inventory management reporting procedure. IRS added Internal Revenue Manual procedures for the Submissions Processing Image Control Team for supervisory review and segregation of duties. Specifically, no one individual should control all key aspects of a transaction or event, and duties for processing, recording, reviewing transactions, and preparing inventory reports, are to be separated among individuals to reduce the risk of error or fraud. GAO continues to monitor IRS action to implement controls to ensure the reliability of information referral intake and routing inventory reporting.
    Recommendation: The Commissioner of Internal Revenue should ensure that the IRM has internal controls for processing information referrals by establishing, documenting, and implementing ongoing monitoring of information referrals retained for destruction, including a mechanism for tracking the reasons referrals were retained prior to destruction.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken actions to establish and document controls for monitoring information referrals retained prior to destruction. In January 2018, IRS updated Internal Revenue Manual (IRM) procedures requiring managers to ensure quality reviews are performed and recorded for information referrals screened by the clerks, including referrals retained for destruction. The retention file is to be subject to weekly review, and managers are to monitor and track the reasons for referrals being retained prior to destruction. GAO continues to monitor IRS action to analyze the volume of incoming referrals retained to avoid destroying referrals that could help combat tax noncompliance. As of February 2018, IRS also has taken action to document controls over information referrals routed to the Wage and Investment (W&I) and Small Business and Self-Employed (SB/SE) divisions for audit consideration. For Form 3949-A information referrals, W&I and SB/SE campus examination units are to retain rejected referrals for 90 days after classification and selected referrals for three years after the examination closing date. IRM procedures updated in October 2017 specify that W&I and SB/SE campus examination management are to conduct periodic reviews of the rejected information referrals to ensure the fairness and integrity of the classification process. SB/SE field examination also has new procedures for tracking and monitoring the inventory of examination leads received, including information referrals reported by the public. A referral coordinator is to review information referrals for examination potential and log whether a referral was selected for examination or not. IRM procedures specify referrals not selected are to be retained for 26 months prior to destruction. GAO continues to monitor IRS action to implement new controls over considering information referrals as examination leads.
    Recommendation: The Commissioner of Internal Revenue should ensure that the IRM has internal controls for processing information referrals by establishing, documenting, and implementing procedures for each IRS operating unit receiving information referrals to provide feedback on the number and types of referrals misrouted and on their disposition, and a mechanism to analyze patterns of misroute errors.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken actions to document procedures to provide feedback to the Submissions Processing Image Control Team on the number and types of information referrals misrouted and a mechanism to analyze patterns of misroute errors. In October 2017, IRS updated Internal Revenue Manual procedures specifying that the Wage & Investment and Small Business and Self Employed divisions are to return any referrals received that do not meet the routing guidelines. The Image Control Team is to re-route the referrals to the appropriate area and track the volume of misroutes in its inventory reports. IRS uses bi-monthly meetings to facilitate communication and feedback on the number and types of referrals misrouted and on their disposition. GAO continues to monitor IRS action to implement controls to reduce misrouting which can result in delays and added costs for re-screening.
    Recommendation: The Commissioner of Internal Revenue should establish a coordination mechanism to facilitate communication and information sharing across IRS referral programs on crosscutting tax issues and ways to improve efficiency in the mechanisms for public reporting of possible tax violations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken some action to establish a coordination mechanism to help IRS referral programs communicate and share information, as GAO recommended in its February 2016 report. IRS established a cross-functional team in February 2016 to comprehensively review IRS's referral programs. Among other things, this team explored aligning all IRS referral programs within an organizational structure to more efficiently coordinate, communicate, and share information across the referral programs. The Deputy Commissioner of Services and Enforcement directed the largest recipient of referrals to facilitate quarterly meetings in order to improve communication and information sharing across multiple IRS referral programs. As of February 2018, three initial meetings had been held, and IRS has drafted a charter to formalize the new referral coordination working group. GAO will continue to monitor the IRS charter approval and working group meetings.
    Recommendation: The Commissioner of Internal Revenue should direct the referral programs to establish a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission in order to better position IRS to leverage specialized expertise while exploring options to further consolidate the initial screening operations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: As of February 2018, IRS had taken some action to establish a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission, as GAO recommended in its February 2016 report. IRS established a cross-functional team in February 2016 to comprehensively review IRS's referral programs. Among other things, the team has explored options to consolidate the initial screening operations and determine the scope and complexity for moving the referral process to an online format. According to IRS, an electronic submission process is expected to provide better access to the program and reduce the burden associated with making a written report or referral. In November 2016, the cross-functional team requested information technology resources for fiscal year 2019 to develop an online system which could potentially replace four separate referral forms, filter out incomplete referrals, and electronically route referrals for further IRS action. IRS assessed options for consolidating all forms for the various referral programs and determined that consolidating them to a single form was not feasible because of the technical nature and complexity of the various referral types. As of February 2018, the cross-functional team had worked with IRS On Line Services to develop an online application prototype and was considering the cost-effectiveness of a commercial off-the-shelf product. According to IRS, the online application will make it easier for the public to report possible tax violations. Also, the online system will improve efficiency in coordination and provide reports that will be incorporated into the quarterly coordination meetings to achieve a broader collaborative mechanism across the multiple referral programs. IRS said it will consider further consolidating the referral programs once the online application is in place. GAO will continue to assess these efforts as they are further developed.
    Recommendation: The Commissioner of Internal Revenue should ensure that the Internal Revenue Manual (IRM) has internal controls for processing information referrals by establishing, documenting, and implementing procedures for maintaining and communicating the information referral screening and routing guidelines to the Image Control Team (ICT) and IRS units receiving information referrals as well as procedures for ICT screening and routing operations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken actions to document the information referral screening and routing guidelines, used by the Image Control Team and IRS units receiving information referrals, in the Internal Revenue Manual (IRM). The IRM procedures detail procedures for the Image Control Team screening of form 3949-A. Updates of the screening and routing guidelines are communicated to the Image Control Team and other IRS units by the IRS Servicewide Electronic Research Program which provides IRS employees intranet access to the IRM and other IRS information. GAO continues to monitor IRS action to implement the controls for processing information referrals.
    Director: Jessica Lucas-Judy
    Phone: (202) 512-9110

    4 open recommendations
    Recommendation: To help ensure W&I meets its mission and selects audits fairly and with integrity, the Commissioner of Internal Revenue should clearly define and document: (1) key terms such as "fairness"; and (2) W&I program level objectives, performance measures, and indicators for audit selection to evaluate whether the audit selection process is meeting its mission of applying the tax law with integrity and fairness to all.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In January 2018, IRS told us that its definition of fairness and its objective with audit selection is now documented in Internal Revenue Manual section 4.1.26. However, IRS has not indicated how it would develop program-level performance measures, as we recommended. IRS has told us that many of its existing performance measures provide key indicators and insights as to program performance with respect to fairness, such as the rate of examinations resulting in changes proposed to the reported tax, cycle time for the examination, and yield from the examination. However, as we noted in our December 2015 report, these performance measures focus on audit results rather than audit selection and W&I has not created indicators to evaluate what no-change rate is good or bad, or what rate would indicate fair selections. As of April 2018, we continue to monitor IRS's actions, including reviewing any supporting documentation the agency provides, to determine whether its actions address all aspects of our recommendation.
    Recommendation: To help ensure W&I meets its mission and selects audits fairly and with integrity, the Commissioner of Internal Revenue should clearly communicate these terms, objectives, measures, and indicators to all staff involved in the selection of returns for audit.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In January 2018, IRS said it established an objective for audit selection in Internal Revenue Manual Section 4.1.26 and communicated this with staff. In April 2018, IRS sent additional documentation on communication for its staff regarding an objective for audit selection. We are in the process of reviewing the additional documentation.
    Recommendation: To help ensure W&I meets its mission and selects audits fairly and with integrity, the Commissioner of Internal Revenue should incorporate the new objective(s) into W&I risk assessments done for audit selection processes.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In April 2017, IRS said that Internal Revenue Manual (IRM) Section 4.1.26 incorporates its new objectives into risk assessments done for the audit selection process. As of April 2018, we are reviewing additional documentation IRS submitted toward fulfilling the remaining aspects of our recommendation.
    Recommendation: To help ensure W&I meets its mission and selects audits fairly and with integrity, the Commissioner of Internal Revenue should ensure that internal control responsibilities are communicated and documented for all employees, including non-managers, tasked with revising or applying W&I audit selection criteria for potential audits.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In January 2018, IRS provided evidence that it had communicated and documented internal control responsibilities to employees, though the evidence presented was not clear about whether the communication was made to all employees tasked with revising or applying audit selection criteria, as directed in the recommendation. As of April 2018, we are continuing to communicate with IRS about additional evidence.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To help ensure that SB/SE's audit selection objective(s) on fairness are used and met, the Commissioner of Internal Revenue should incorporate the new objective(s) for fair return selection into the SB/SE risk management system to help identify and analyze potential risks to fair selections.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed to consider any new objectives related to fair return selection within SB/SE's current risk management process framework. In March and April 2017, SB/SE developed a tool (RAFT) to include the fair audit selection objective (and related activities) into its risk register, which is monitored quarterly. IRS provided documentation from the Exam Risk Council meeting that they have discussed and assessed these risks. IRS decided that the risk was manageable, especially with its ongoing efforts to ensure fair audit selection. In October 2017, IRS also added the new objective to Internal Revenue Manual subsection 4.1.1.1 on ensuring fair return selection. We are deferring closing this recommendation until IRS provides evidence that it will continue to consider audit selection regularly in its risk management system, such as issuing a written reminder for managers to consider risk when selecting and reviewing audit cases.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement objectives for the collection program and ACS, and define the key term of "fairness" as it applies to collection activities, which can be communicated to IRS staff.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In January 2017, IRS supplied documentation on how it had established a fairness policy statement, which is incorporated into the Internal Revenue Manual, communicated to staff in email, and provided via a powerpoint presentation to staff. IRS also established and documented collection program objectives as part of its FY2017 Collection Program Letter. In October 2017, IRS shared additional draft documentation with GAO that would align SB/SE objectives with objectives from its FY2017 Collection Program Letter as well as other information such as performance measures. In January 2018, IRS agreed to share workforce planning documentation with GAO that would align with its collection program letter process. GAO continues to monitor IRS activity to create a process where key areas of focus may change from year to year, but the alignment to goals, objectives, and fairness remains consistent.
    Director: Mctigue Jr, James R
    Phone: (202) 512-9110

    5 open recommendations
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement clear objectives for the collection program and enterprise-wide case categorization and routing processes, and define key terms, such as "fairness" and "risk."

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation. In March 2017, IRS provided a document intended define the objectives and "fairness," but it did not clearly define objectives for the collection program and enterprise-wide case categorization and routing processes, but instead identified division-level objectives and fiscal year 2017 collection strategies. The document also did not clearly define and communicate objectives--to include fairness--to staff in measurable terms that would be easily understood. Further, the objectives definitions were not were not clear and sufficient to support the design of internal control for related risks, the development of performance measures to determine whether objectives were achieved, and control assessments to assure case selections effectively support the collection program mission over time, including fairness. In August 2017, we shared this assessment with IRS and asked whether or when Collection plans to develop or provide additional documents.
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should build upon existing Enterprise Risk Management (ERM) guidance to help managers identify internal and external risks to collection program objectives, and better understand how long-standing risk processes integrate with new ERM approaches; incorporate this guidance into existing or future ERM or collection program risk assessment processes.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and said it would continue to build upon existing risk management guidance by finalizing and making available training for managers, which would assist them in understanding their responsibilities for identifying internal and external risks to Collection program objectives. In November 2016, IRS provided documentation of risk management training for managers. However, since objectives for the collection program, enterprise-wide case categorization and routing processes, and fairness were not yet clearly defined, such guidance cannot be effectively incorporated into risk assessment processes to identify internal and external risks to collection program objectives. In August 2017, we shared this assessment with IRS and asked whether or when Collection plans to develop or provide additional documents.
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should clearly establish, document, and implement case categorization and routing procedures--such as those for IDS, high priority case selection, and any other important processes--to support collection program objectives and IRS goals.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with the recommendation and said it would review its case prioritization and selection processes and implement and communicate clear guidance and documentation to appropriate IRS staff. In November 2016, IRS provided documents on collection processes, but the information was either technical or covered Automated Collection System (ACS) or Field Collection processes rather than enterprise-wide processes to support collection program objectives and IRS goals. More specifically, the documents did not provide corrected guidance on the role of the Inventory Delivery System and modeling in shelving or routing cases to either ACS or the Field, or provide guidance on how management is to select priority area cases. In August 2017, we shared this assessment with IRS and asked whether or when Collection plans to develop or provide additional documents.
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement procedures for the periodic evaluation of the efficiency and effectiveness of collection-wide case categorization, routing rules, and case selection processes.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS said agreed that continually improving its performance is important and said that Collection would review and, if needed, update its internal management documents. In July 2017, IRS provided documents that identified and established responsibilities for periodic, regular review procedures to potentially update dollar thresholds used in routing collection inventory for potential selection, including IDS and its decision rules to route cases to one collections function instead of another (i.e., the Automated Collection System versus Field Collection. In August 2017, we asked IRS when it plans to conduct the first such evaluations and requested that it provide documentation of results of those implemented evaluations when available.
    Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement procedures for periodic updates of dollar thresholds for categorizing case selection, including those identified as "high risk."

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed that continually improving its performance is important and said that Collection would review and, if needed, update its internal management documents. In July 2017, IRS provided documents that identified and established responsibilities for periodic, regular review procedures to potentially update dollar thresholds used in systems that use a dollar threshold to prioritize Collection cases. In August 2017, we asked IRS when it plans to conduct the first such evaluations and requested that it provide documentation of results of those implemented evaluations when available.
    Director: James R. McTigue, Jr.,
    Phone: (202) 512-9110

    3 open recommendations
    Recommendation: To strengthen oversight of the individual shared responsibility and premium tax credit provisions, the Commissioner of Internal Revenue should assess whether or not the data received from the health insurance marketplaces are sufficiently complete and accurate to enable effective correction of tax returns at-filing based on matching with the marketplace data and, if the assessment determines that such corrections would be effective, seek legislative authority to correct tax returns at-filing based on the marketplace data.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The Internal Revenue Service (IRS) agreed with GAO's recommendation. IRS reports that the quality of data submitted by health insurance marketplaces has improved since the 2015 return filing season, and it continues to use its correspondence process for resolving discrepancies between marketplace data and that reported by the taxpayer after the return has been filed. IRS has not considered requesting legislative authority to correct tax returns at the time of filing based specifically on discrepancies between the data submitted by the health insurance marketplace and reported by the taxpayer. Agency officials believe that would be premature at this time. They noted that a broader legislative initiative has already been proposed that would grant IRS with correctable error authority in cases where the information provided by the taxpayer does not match the information contained in government databases. Should this broad authority be granted in the future, IRS will then consider how to approach correction of tax returns at the time of filing based on discrepancies with health insurance marketplace data. Such authority was also included in the Administration's 2019 budget.
    Recommendation: To strengthen oversight of the individual shared responsibility and premium tax credit provisions, the Commissioner of Internal Revenue should work with CMS to get the total amount of advance PTC paid for the 2014 tax year and establish, as a baseline, the aggregate amount of the gap between advance PTC paid and advance PTC reported for the 2014 tax year, and track this aggregate gap for future tax years to help in evaluating the effectiveness of IRS's PTC education and compliance efforts.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The Internal Revenue Service (IRS) agreed with GAO's recommendation in part. As one of the ongoing efforts by the IRS to evaluate the effectiveness of its implementation of the premium tax credit (PTC) provision for tax year 2014, IRS plans to perform as analysis of reporting of advance payments of the PTC by the Marketplaces. The results of this analysis and other efforts will help inform the IRS of potential areas for improvement in education, tax filing and compliance activities. IRS has been tracking the amount of advance PTC paid based on summary data provided by the Centers for Medicare & Medicaid Services (CMS) for 2014 and 2015 as well as the gap between the amounts paid compared to the amount reported by taxpayers. However, IRS has not yet resolved all issues with CMS related to properly allocating all payments to 2014 and 2015. Complete data for 2016 are not yet available.
    Recommendation: To strengthen oversight of the individual shared responsibility and premium tax credit provisions, the Commissioner of Internal Revenue should evaluate IRS efforts to collaborate and communicate with key external stakeholders to inform efforts related to implementation of the new 2015 PPACA requirements.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The Internal Revenue Service (IRS) agreed with GAO's recommendation but has not yet initiated an evaluation of collaboration and communication efforts with external stakeholders. IRS currently utilizes informal feedback processes to share information and identify opportunities for improvement with external stakeholders in implementing the shared responsibility payment and premium tax credit provisions. We continue to encourage IRS to evaluate its collaboration and communication efforts.
    Director: Mctigue Jr, James R
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To better ensure the EO unit's adherence to the TE/GE division's mission of "applying the tax law with integrity and fairness to all" in selecting exempt organizations to review or examine, the Commissioner of Internal Revenue should direct EO to develop, document, and implement additional monitoring procedures in order to ensure case selection controls, including ensuring that procedures for obtaining required signatures and documenting explanations for selection decisions, are being followed.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The Internal Revenue Service's Exempt Organizations (EO) unit issued a memo, in October 2015, to Area Managers requiring that they complete monthly sample reviews of closed and dismissed cases to ensure that proper managerial approvals are documented. EO also issued a memo, in April 2016, to examination staff and managers, emphasizing the importance of documenting justifications for examination dismissals. Additionally, operational reviews are conducted to ensure that the monitoring samples are being reviewed. In January 2017, EO's Exempt Organization Classification Area (EOCA) resumed quality reviews, which includes a review of documentation and EOCA database entries. As of December 2017, monitoring has not increased for EO referrals.
    Director: Clark, Cheryl E
    Phone: (202) 512-9377

    3 open recommendations
    Recommendation: The Commissioner of IRS should direct the appropriate IRS officials to establish a process to ensure that the requirement for unauthorized access awareness training is explicitly communicated to non-IRS contractors who have unescorted access to IRS facilities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that by August 2018, its FMSS organization plans to partner with key stakeholders to identify the remaining actions and timeframes necessary to refine existing policies, procedures, and processes to ensure (1) oversight among IRS's key stakeholders to determine whether potential service awards that involve routine, unescorted, unsupervised physical access to taxpayer information by non-IRS contractors, require the completion of unauthorized access security awareness training and (2) the resulting processes and responsibilities are clear for each stakeholder to verify that the required training is completed.
    Recommendation: The Commissioner of IRS should direct the appropriate IRS officials to establish procedures to monitor whether non-IRS contractors with unescorted physical access to IRS facilities are receiving unauthorized access awareness training.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that by October 2018, it plans to send out communication to its FMSS field offices that will include SOPs for monitoring and acquiring unauthorized access awareness training documentation for each non-IRS contractor.
    Recommendation: The Commissioner of IRS should direct the appropriate IRS officials to determine why staff did not consistently comply with IRS's existing requirements for the final candling of receipts at service center campuses and lockbox banks, including logging remittances found during final candling on the final candling log at the time of discovery, safeguarding the remittances at the time of discovery, transferring the remittances to the deposit unit promptly, and passing one envelope at a time over the light source, and based on this determination, establish a process to better enforce compliance with these requirements.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in fiscal year 2018, it plans to identify and analyze the risks associated with candling at the SCCs and lockbox banks, along with any mitigating factors, to determine whether further actions are warranted.
    Director: Kingsbury, Nancy R
    Phone: (202) 512-2700

    2 open recommendations
    including 2 priority recommendations
    Recommendation: In addition to implementing our previous recommendations, to effectively implement key elements of the IRS information security program, the Commissioner of Internal Revenue should ensure that control testing methodology and results fully meet the intent of the control objectives being tested.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: During the audit of IRS's FY 2017 financial statements, IRS indicated that it had reviewed its security controls assessment standard operating procedure and trained contractors. While positive steps, these corrective actions did not fully address our recommendation. As part of our FY 2018 audit, we will continue to monitor the agency's progress in ensuring that its control testing methodology and results fully meet the intent of the control objectives being tested.
    Recommendation: In addition to implementing our previous recommendations, to effectively implement key elements of the IRS information security program, the Commissioner of Internal Revenue should update the remedial action verification process to ensure actions are fully implemented.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: During the audit of IRS's FY 2017 financial statements, IRS indicated that it had updated its standard operating procedures for validating remedial actions and has a team in place to ensure that remedial actions are fully implemented. However, these corrective actions did not fully address our recommendation. As part of our FY 2018 audit, we will continue to monitor the agency's progress in strengthening its remedial action verification process.
    Director: David Powner
    Phone: (202) 512-9286

    1 open recommendations
    Recommendation: To improve the reliability and reporting of investment performance information and management of selected major investments, the Commissioner of the IRS should direct the Chief Technology Officer to modify reporting of the Affordable Care Act Administration testing status to senior management to include a comprehensive report on all impacted systems--including an explanation for why impacted systems were not tested at a particular level--and ensure this reporting is aligned with the manner in which testing is being performed.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS disagreed with this recommendation at the time we made it stating that it followed a rigorous risk-based process for planning the tests of ACA-impacted systems, including the types and levels of testing, and that it had comprehensive reporting for the filing season 2015 release, which included ACA impacted systems. However, as noted in our report, our review of ACA Testing Review Checkpoint reports and filing season reports, which officials stated were used to provide comprehensive reports to senior managers, did not identify the status of testing for all systems impacted by ACA Releases 5.0 and 6.0. We therefore concluded that the recommendation was still valid. As of July 2017, IRS had not changed its position. We will be following up with the agency to discuss the recommendation.
    Director: James R.McTigue, Jr.
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To improve oversight of charitable organizations, the Commissioner of Internal Revenue should direct EO to develop quantitative, results-oriented compliance goals and additional performance measures and indicators that can be used to assess impact of exams and other enforcement activities on compliance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS reported it has taken a series of actions to implement this recommendation. First, in FY 2016, IRS implemented a new data-driven case selection model to identify the most non-compliant returns based upon what is reported. IRS plans to measure the effectiveness of these new data-analytic models and use that performance information as the basis for ongoing discussions with EO Examinations managers on which queries are yielding results and which need to be modified or deleted from the work plan. IRS also developed a weighted disposal code measure, which is intended to help examiners prioritize case selection according to criteria that give more weight to more consequential outcomes. For example, a data mining query generating a lot of revocations would take priority over a query that may only generate written advisories. IRS incorporated the new measure into its current and future work plan monitoring and projections. IRS also began discussions with TE/GE Research and SOI to figure out how to define compliance for the EO population, establish a compliance baseline, and how to develop methods to measure the impact of enforcement actions on voluntary compliance levels in the EO population. Once all these actions are fully implemented, IRS will be in a better position to use this information to develop quantitative, results-oriented compliance goals and additional performance measures and indicators that can be used to assess impact of exams and other enforcement activities on compliance.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    3 open recommendations
    Recommendation: To improve IRS's ability to detect and pursue noncompliance associated with undervalued assets sheltered in IRAs and prohibited transactions, the Commissioner of Internal Revenue should conduct research using the new Form 5498 data to identify IRAs holding nonpublic asset types, such as profits interests in private equity firms and hedge funds, and use that information for an IRSwide strategy to target enforcement efforts.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of February 2018, IRS had taken some action to develop a research plan using the new information on types of nonpublic IRA assets reported on Form 5498. Previously, IRS searched terms in Form 5498 filings to identify IRAs holding assets with the greatest risk of noncompliance. In January 2016, IRS started a research project to examine a sample of tax returns based on certain nonpublic IRA asset types. IRS plans to use the research results due in June 2018 to develop an IRS-wide strategy to target enforcement efforts to those IRAs where the beneficiary of the IRA has caused his or her IRA to engage in a prohibited transaction. As of February 2018, IRS completed electronically compiling the new Form 5498 information for tax year 2016 that was filed in 2017. IRS researchers plan to use the asset type data to streamline the process of identifying those IRAs and were working to extract the IRA data for further analysis as of February 2018.
    Recommendation: To improve IRS's ability to detect and pursue noncompliance associated with undervalued assets sheltered in IRAs and prohibited transactions, the Commissioner of Internal Revenue should work in consultation with the Department of the Treasury on a legislative proposal to expand the statute of limitations on IRA noncompliance to help IRS pursue valuation-related misreporting and prohibited transactions that may have originated outside the current statute's 3-year window.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with GAO's October 2014 recommendation on IRAs with large balances and said it had discussed the recommendation with Treasury's Office of Tax Policy and Benefits Tax Counsel. Consequently, IRS said Treasury is aware of IRS's willingness to support legislative efforts in this area. Ultimately, Treasury reviews all tax legislative proposals and presents the administration's tax proposals for congressional consideration. However, Treasury has not released a legislative proposal as of December 2017.
    Recommendation: To help taxpayers better understand compliance risks associated with certain IRA choices and improve compliance, the Commissioner of Revenue should, building on research data on IRAs holding nonpublic assets, identify options to provide outreach targeting taxpayers with nonpublic IRA assets and their custodians, such as reminder notices that engaging in prohibited transactions can result in loss of the IRA's tax-favored status.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has taken some action to provide general outreach but has not yet analyzed data to target outreach to taxpayers with nonmarketable IRA assets at greater risk of noncompliance. In June 2016, IRS published information on IRS.gov outlining the new information to be reported for nonmarketable IRA assets and included a general caution that IRAs with nonmarketable investments or assets under direct taxpayer control may be subject to a heightened risk of committing prohibited transactions. This caution, similar to those that IRS added to its publications about IRA contributions and distributions, is a step toward helping taxpayers better understand which investments pose greater risks. IRS said results from an ongoing compliance research project may help in targeting outreach to taxpayers holding certain IRA assets at greater risk of noncompliance. IRS said it could refine its outreach to those taxpayers with nonpublic IRA assets using the new asset type data once compiled electronically. As of February 2018, IRS had compiled the IRA assets data for tax year 2016 that were filed in 2017, and was working to extract the new IRA asset type data for further analysis.
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    2 open recommendations
    including 2 priority recommendations
    Recommendation: The Commissioner of Internal Revenue should track the results of large partnerships audits: (a) define a large partnership based on asset size and number of partners; (b) revise the activity codes to align with the large partnership definition; and (c) separately account for field audits and campus audits.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS has taken actions to implement GAO's September 2014 recommendation, but the definition IRS provided is not likely to help it analyze results from audits of the very large partnerships that GAO's report covered. In September 2017, IRS defined large partnerships as those with assets of $10 million or more, without regard to the number of partners. With changes to the Tax Equity and Fiscal Responsibility Act of 1982 partnership audit procedures and enactment of the Bipartisan Budget Act of 2015 (BBA) (sections 1101 and 1102 of Public Law 114-74), IRS officials said that the number of partners is no longer a critical factor when defining a large partnership. IRS is correct that the number of partners is no longer relevant to this statutory definition of large partnership. The recently eliminated Electing Large Partnerships audit procedures had defined large partnerships as those with 100 or more direct partners in a taxable year. Even so, IRS's new definition of large partnerships is limited compared to large corporations. IRS has defined eight asset categories for tracking large corporation audit results while it has one for large partnerships, which vary widely based on asset amounts and complex structures. As GAO reported, during tax years 2002 through 2011, the number of large partnerships with 100 or more direct and indirect partners as well as $100 million or more in assets more than tripled to 10,099, some of which had assets exceeding $5 billion. In tax year 2011, more than two-thirds of these large partnerships had at least 100 or more pass-through entities as direct and indirect partners. Until IRS develops a more expansive definition of large partnerships, IRS may have challenges analyzing the results from its audits of large partnerships. IRS is taking steps to revise activity codes, as GAO recommended. IRS is creating a reporting and monitoring structure for its new definition to track the results from auditing large partnerships. IRS does not yet know whether the audit results will be sufficient to analyze ways to better plan and use IRS audit resources as well as analyze noncompliance risk for its new definition. IRS's analysis may not be able to achieve these ends with only one asset category to cover the wide range of asset amounts above $10 million. IRS will also be able to account for field and campus audits.
    Recommendation: The Commissioner of Internal Revenue should analyze the audit results by these activity codes and types of audits to identify opportunities to better plan and use IRS resources in auditing large partnerships.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS agreed with our recommendation. IRS is creating a reporting and monitoring structure of partnership audits based on its new definition to track the results from auditing large partnerships. However, IRS's new definition of a large partnership is not detailed, which may not allow IRS to identify what types of large partnerships present a high noncompliance risk. IRS only plans to have one category ($10 million or more in assets) for large partnerships. A more detailed definition, in line with the various size categories for large corporations, would allow IRS to complete more detailed analysis of large partnership noncompliance.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    2 open recommendations
    Recommendation: Because ROI provides insights on the productivity of a program and is one important factor in making resource allocation decisions, the Commissioner of Internal Revenue should calculate actual ROI for implemented initiatives, compare the actual ROI to projected ROI, and provide the comparison to budget decision makers for initiatives where IRS allocated resources.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: No executive action taken as of November 2017. While IRS agreed that having actual ROI data for implemented initiatives would be useful, it did not believe it was feasible to produce such estimates, as GAO recommended in June 2014. GAO maintains that IRS should be able to provide some information on past initiatives, such as whether funds requested were used in the manner originally proposed. As of December 2016, IRS officials reported there is no timeline for full implementation. In March 2017, IRS officials confirmed that they do not isolate the revenue attributable to a specific initiative, but pointed to other efforts to help manage IRS's budget, including establishing the Office of Planning, Programming and Audit Coordination and the Planning Community of Practice, which are intended to improve investment planning processes. While these other efforts are intended to help IRS act more strategically, comparing projected ROI to actual ROI can help hold managers and IRS accountable for the funding received.
    Recommendation: Because ROI provides insights on the productivity of a program and is one important factor in making resource allocation decisions, the Commissioner of Internal Revenue should use actual ROI calculations as part of resource allocation decisions.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has begun taking steps to determine ROI calculations, but is not yet using them for resource allocation decisions, as GAO recommended in June 2014. In October 2016, IRS officials reported there is no timeline for full implementation, but that the work is ongoing. For example, as of November 2017, IRS's Office of Research, Applied Analytics, and Statistics had developed a methodology for estimating the marginal relationship between direct revenue and cost for examinations. The estimates are necessary inputs to establish a measure of ROI, which in turn can guide resource allocation decisions. IRS plans to use these estimates to inform future examination plans, but considerable work remains in this long-term effort. Until IRS develops a measure for ROI and uses it to help inform resource allocation decisions, the agency may be forgoing additional revenues.
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    5 open recommendations
    including 4 priority recommendations
    Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should establish formal program objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS correspondence audit program officials planned a working group to develop formal program objectives. In November 2016, IRS officials provided documents intended to define the program objectives, but the objectives were unclear. IRS officials said that they expected to describe the objectives in program guidance changes anticipated by July 2018; as of December 2017, officials said they had not yet begun steps to clearly document those objectives.
    Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should ensure that the program measures reflect those objectives.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS officials said that, among other actions, they plan to review and update program documentation and guidance as warranted to ensure a clear link between correspondence audit program objectives and related measures. IRS officials provided documentation in November 2016, but program measures could not be clearly linked to objectives because the objectives were not clear. As of December 2017, officials had no planned date by which to clearly document the program objectives and their links with program measures.
    Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should clearly link those measures with strategic IRS-wide goals on ensuring compliance in a cost-effective way while minimizing taxpayer burden.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS officials said that, among other actions, they plan to review and update program documentation and guidance as warranted to ensure a clear link between correspondence audit program objectives and related measures. IRS officials provided documentation in November 2016, but program measures could not be clearly linked to objectives because the objectives were not clear. As of December 2017, officials had no planned date by which to clearly document the program objectives and their links with program measures.
    Recommendation: To better inform decisions being made about the correspondence audit program, the Commissioner of the Internal Revenue Service should document how the decisions are to be made using the performance information (including criteria and tolerances used).

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials agreed with the recommendation and said they would thoroughly document the program plan development process but did not refer to documenting how program decisions are to be made using performance information. In July 2017 and December 2017, officials provided documents describing current correspondence audit planning processes, but the documents lacked specific details on how the decisions are to be made and the role of performance information, criteria, and tolerances to be used in those decisions.
    Recommendation: To better inform decisions being made about the correspondence audit program, the Commissioner of the Internal Revenue Service should track and use other program data that have not been used to provide more complete performance information. Examples of data that could be tracked and used include how much of the recommended tax amounts is collected over time; taxpayer burden and experience such as how often audits are resolved in one contact, how often taxpayers correspond or call, and how long taxpayers wait for IRS to respond to their documents and for the audit to close; and costs beyond the direct audit time, such as the costs to answer taxpayer calls per audit, assess the recommended tax, and collect those tax assessments.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS took some steps to track and use other program data that have not been used. In July 2017, IRS officials provided documentation showing they had implemented a new planning method considering collection results data for fiscal year 2017. IRS officials said they expect to have more complete data on the costs of audits in March 2018. As of December 2017 they had not provided supporting documentation on the status of efforts to use these and other program data, such as whether or when IRS will use data on IRS's costs and taxpayers' burden related to audits
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    1 open recommendations
    Recommendation: While IRS works to improve the quality of its Schedule K-1 data, the Commissioner of Internal Revenue should develop a plan for conducting testing or other analysis to determine whether the improved Schedule K-1 data, perhaps combined with other IRS information about businesses and taxpayers, could be used more effectively to ensure compliance with the reporting of flow-through income.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS stated that it understands the objective of this recommendation and,at such time that resources are available to enhance capabilities, it would consider the proposed methodology of advanced testing. However, based on current and anticipated budget constraints, it does not expect its plans to change in the near future.
    Director: Wilshusen, Gregory C
    Phone: (202) 512-6244

    1 open recommendations
    Recommendation: To effectively implement key components of the IRS information security program, the Commissioner of Internal Revenue should update access request policies and procedures to ensure that they contain sufficiently detailed information of access requests and access assignments to facilitate effective review and verification of appropriate access privileges.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In March 2018, IRS indicated that it had implemented this recommendation and provided updated policies and procedures as support of its actions. In May 2018, we determined that the updated polices and procedures did not contain sufficiently detailed information of access requests and access assignments for effectively reviewing and verifying appropriate access privileges. We will continue to evaluate IRS's implementation of this recommendation during our audit of the agency's fiscal year 2018 financial statements.
    Director: David A. Powner
    Phone: (202) 512-9286

    1 open recommendations
    Recommendation: To improve the reliability of reported cost and schedule variance information for major investments, the Commissioner of IRS should direct the Chief Technology Officer to ensure that projected cost and schedule variances for in-process activities are updated monthly, for the six investments for which we reviewed monthly updates, consistent with OMB and Treasury reporting requirements, by ensuring investment staff have a consistent understanding of the information to be included in monthly reports.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: To address this recommendation, in October 2014, IRS provided training to its project staff, which focused on, among other things, the monthly update of investment performance information. In addition, in fiscal year 2016, IRS began using a tool to track performance information, including progress in meeting cost and schedule goals for ongoing investments, for two investments in development. IRS is now expanding the use of this tool to other investments. As of November 2017, we were reviewing the implementation of the tool as part of an ongoing review of IRS's information technology operations. We will determine whether IRS's implementation of the tool fully addresses this recommendation.
    Director: Jeszeck, Charles A
    Phone: (202) 512-7215

    1 open recommendations
    Recommendation: To ease the burden on plan sponsors, enhance compliance, and help ensure that disclosures to participants are written in a manner that can be understood by the average participant, Labor, IRS, and PBGC should work together to create and regularly update a comprehensive online tool for plan sponsors to search for the reports and disclosures they are required to provide based on plan type, design, and circumstances.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials noted that they were continuing their efforts to ensure that plan sponsors have access to comprehensive and up-to-date online resources. They said they had met with Labor and PBGC officials to discuss the value and feasibility of developing and maintaining a comprehensive online tool, but that with decreased resources, they believed it was unlikely for the agency to create and regularly update such a tool. However, they indicated that they would continue to confer with Labor and PBGC colleagues to determine if it would be possible to cross-reference existing agency resources online. IRS subsequently reported that they had created an IRS-specific Reporting and Disclosure Guide that identifies reports and disclosures plan sponsors are required to provide, that the guide was cross-referenced with the DOL/PBGC Reporting and Disclosure Guide, and that all the resources had been posted on the appropriate websites. The IRS Guide was posted to the www.irs.gov site on 9/18/2014 (see https://www.irs.gov/retirement-plans/retirement-plan-reporting-and-disclosure). Cross-referencing each agency's guidance is helpful, but this is not the same as providing an integrated cross-agency online tool. GAO continues to believe that a well-designed comprehensive online tool could be very helpful, especially for small employers. GAO continues to believe that such a tool would be beneficial to plan sponsors of all sizes.
    Director: White, James R
    Phone: (202) 512-9110

    1 open recommendations
    Recommendation: To ensure that IRS is meeting the stated goals of CAP, the Principal Deputy Commissioner of Internal Revenue and Deputy Commissioner for Services and Enforcement should track savings from Compliance Maintenance and CAP overall and develop a plan for reinvesting any savings.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, IRS had taken some steps to implement this recommendation, but was not fully tracking the amount of dollar savings from using CAP nor developing a plan to reinvest any savings, as GAO recommended in August 2013. IRS tracks savings by analyzing and comparing the workload inventory of account coordinators who handle CAP cases against team coordinators who handle non-CAP cases. This caseload comparison is a part of IRS's annual CAP evaluation and was included in its June 2014 CAP evaluation plan. Based on GAO's review of the evaluation plan and results, IRS's caseload comparison did not show the amount of dollar savings from CAP. The comparison for tax years 2010 through 2012 showed that account coordinators handling CAP cases exclusively or in conjunction with non-CAP cases have a larger caseload than team coordinators handling non-CAP cases. In addition, IRS had not developed a plan for reinvesting any savings, as GAO recommended in August 2013. Such a plan could help IRS increase audit coverage. IRS stated that it cannot measure the CAP's impact on audit coverage because audit coverage is based on staffing and compliance priorities. Also, IRS said that while quantifying monetary savings would be difficult, it has reinvested its savings by expanding account coordinators' caseloads as shown in the average caseload of CAP and non-CAP cases worked. However, without a plan for tracking savings and using them to increase audit coverage, IRS cannot be assured that the savings are effectively invested in either CAP or non-CAP taxpayers with a high compliance risk. IRS was evaluating the CAP program to determine how it fits with IRS's future vision for examinations. It had no timetable for completing this evaluation. IRS did not accept new CAP applications for the 2016-2018 filing seasons during the program assessment.
    Director: White, James R
    Phone: (202)512-5594

    1 open recommendations
    Recommendation: To increase the effectiveness of IRS's examinations individual tax returns, the Commissioner of Internal Revenue should transcribe data from paper-filed Form 1040 Schedules C and E that are not currently transcribed and make that data available to SB/SE examiners for classification. If IRS has evidence that the costs related to transcribing all such data on Schedules C and E are prohibitive, IRS could do one or both of the following actions: (1) transcribe less data by transcribing only the missing data for selected line items, such as certain, large expense line items, or (2) develop a budget proposal to fund an initiative for transcribing Schedule C and E.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of May 2018, IRS officials said they are continuing to review the costs of transcribing the paper-filed data from Schedules C and E. Previously, IRS completed a study on whether to transcribe more data from paper-filed returns by comparing the benefits to classifying tax returns for audit from doing this transcription. They said the study showed that the benefits to be derived from additional transcription are not significant and would not outweigh the added cost. However, IRS had not provided specific information -- including the new examination data sent in January 2018 -- about the costs and benefits from transcribing information from Schedules C and E that we mentioned in our recommendation. Having more data transcribed and electronically available from these areas likely will improve the classification of audits as well as the quality of the audits, according to examiners we spoke with for the report.
    Director: Clark, Cheryl E
    Phone: (202)512-9377

    3 open recommendations
    Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to perform a risk assessment to determine the appropriate level of Integrated Data Retrieval System (IDRS) access that should be granted to employee groups that handle hard-copy taxpayer receipts and related sensitive taxpayer information as part of their job responsibilities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. Although IRS performed a risk assessment to determine the appropriate level of Integrated Data Retrieval System (IDRS) access that should be granted to Taxpayer Assistance Center (TAC) employees who handle hard-copy taxpayer receipts and related sensitive taxpayer information as part of their job responsibilities, it has not undertaken a global review of the level of access provided to all non-TAC employee groups that have IDRS access and staff-like access to hard copy taxpayer receipts and related sensitive information. IRS stated that by October 2019, its Large Business and International, Tax Exempt Government Entity, Taxpayer Advocate Service, and Small Business Self-Employed organizations, in coordination with its information technology organization, will complete a risk assessment of all employee groups that handle hard copy taxpayer receipts and related sensitive taxpayer information to determine the most appropriate level of IDRS access. Based on the results of the assessment, these organizations plan to develop follow-up actions to mitigate or, where appropriate, accept the related risks from incompatible job duties of affected employee groups.
    Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to, based on the results of the risk assessment, update the Internal Revenue Manual (IRM) accordingly to specify the appropriate level of IDRS access that should be allowed for (1) remittance perfection technicians and (2) all other employee groups with IDRS access that handle hard-copy taxpayer receipts and related sensitive information as part of their job responsibilities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. As a result of its risk assessment efforts, IRS updated the IRM to restrict the use of certain Integrated Data Retrieval System (IDRS) command codes for remittance perfection technicians. In May 2016, IRS reassessed the risks at its Taxpayer Assistance Centers (TAC), including the specific risks and mitigating factors associated with allowing TAC employees to process taxpayer remittances and to adjust taxpayer accounts. However, IRS has not updated the IRM to reflect policy changes based on its risk assessment related to TAC employees. IRS stated that in fiscal year 2018, it plans to revise the applicable IRM sections for any policy changes, including specifying the appropriate level of IDRS access allowed for TAC employees who process payments. IRS also stated that by October 2020, it plans to undertake a global review of the level of access provided to non-TAC employee groups that have access to IDRS and hard copy taxpayer receipts and related sensitive information and update the applicable IRM sections.
    Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to establish procedures to implement the updated IRM, including required steps to follow to prevent (1) remittance perfection technicians and (2) all other employee groups that handle hard-copy taxpayer receipts and related sensitive information as part of their job responsibilities from gaining access to command codes not required as part of their designated job duties.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. As a result of its risk assessment efforts, IRS updated the Internal Revenue Manual (IRM) to include procedures to restrict the use of certain Integrated Data Retrieval System (IDRS) command codes for remittance perfection technicians. However, IRS has not updated the IRM to reflect policy changes based on the results of its risk assessment related to Taxpayer Assistance Center (TAC) employees and, as applicable, other employees who have access to sensitive command codes and handle hard copy taxpayer receipts and related sensitive information as part of their job duties. IRS stated that by October 2020, it plans to undertake a global review of the level of access provided to non-TAC employee groups that have access to IDRS and hard copy taxpayer receipts and related sensitive information, update the applicable IRM sections, and establish applicable procedures to adhere to the IRM updates.
    Director: Powner, David A
    Phone: (202)512-9286

    3 open recommendations
    Recommendation: To improve the reliability of reported cost and schedule variance information for the seven major investments we reviewed, the Acting Commissioner of IRS should direct the Chief Technology Officer to improve the reliability of cost estimates by addressing the weaknesses we identified in this report so that each investment at least substantially meets each of the characteristics of a reliable cost estimate.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: We followed up on the status of IRS's actions to address this recommendation for the Customer Account Data Engine (CADE) 2, the Return Review Program (RRP), and IRS.gov, the three investments with significant planned expenditures for development in fiscal year 2017, according to data reported on the Federal IT dashboard (the remaining four investments in our 2013 review are primarily in operations and maintenance based on the same IT dashboard data). We selected CADE 2, RRP, and IRS.gov because they would benefit most from improvements to cost estimates given their life cycle stage. In the Summer of 2017, IRS provided documentation to demonstrate actions taken to address the weaknesses we had identified with the CADE 2, and RRP cost estimates. We are currently analyzing this information. For IRS.gov, IRS told us the investment had been in operations and maintenance for several years and was therefore not producing the cost documentation that is typically associated with development efforts. We requested documentation supporting this claim and as of September 2017 were waiting to receive it.
    Recommendation: To improve the reliability of reported cost and schedule variance information for the seven major investments we reviewed, the Acting Commissioner of IRS should direct the Chief Technology Officer to improve the extent to which schedules are well-constructed and controlled by addressing the weaknesses we identified in this report so that each investment at least substantially meets each of these characteristics.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: We followed up on the status of IRS's actions to address this recommendation for the Customer Account Data Engine (CADE) 2, the Return Review Program (RRP), and IRS.gov, the three investments with significant expenditures planned for development in fiscal year 2017, according to data reported on the Federal IT dashboard (the remaining four investments in our 2013 review are primarily in operations and maintenance based on the same IT dashboard data). We selected CADE 2, RRP, and IRS.gov because they would benefit most from improvements to schedule estimates given their life cycle stage. In the Summer of 2017, IRS provided documentation to demonstrate actions taken to address the weaknesses we had identified with the CADE 2, and RRP schedule estimates. We are currently analyzing this documentation. For IRS.gov, IRS told us the investment had been in operations and maintenance for several years and was therefore not producing the schedule estimates that are typically associated with development efforts. We requested documentation supporting this claim and as of September 2017 were waiting to receive it.
    Recommendation: To improve the reliability of reported cost and schedule variance information for the seven major investments we reviewed, the Acting Commissioner of IRS should direct the Chief Technology Officer to develop and implement guidance that specifies best practices--such as including evaluating critical path (for projected schedule), using earned value management data, evaluating the performance of completed work and comparing it to the remaining budget, assessing commitment values for material needed to complete remaining work, and estimating future conditions--to consider when determining projected cost and schedule amounts.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In June 2016, we reported on IRS's development and implementation of its Investment Performance Tool for tracking cost, schedule and scope metrics for its IT investments. At the time, IRS was using the tool for two investments. As of September 2017, we were reviewing the agency?s use of the tool as part of an ongoing review. We plan to further examine the use of the tool and the supporting guidance to determine the extent to which they address this recommendation.
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    2 open recommendations
    including 1 priority recommendation
    Recommendation: The Acting Commissioner of the Internal Revenue Service should direct appropriate officials to develop a long-term strategy to improve web services provided to taxpayers, in accordance with Howto.gov and other federal guidance outlined in our report. To accomplish this, the IRS should establish a numerical or other measureable goal to improve taxpayer satisfaction and a timeframe for achieving it.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has made progress in improving its online services strategy, as we recommended, but as of March 2017, IRS has not yet completed its efforts. IRS's strategy has evolved from a singular focus on on-line services to a more comprehensive strategy of taxpayer interaction through all service channels. In February 2016, IRS announced an agency-wide Future State Initiative, which in part, aims to deliver service improvements across different taxpayer interactions such as individual online accounts assistance, exams, and collections. In July 2016, the official responsible for IRS's on-line office reported that the agency is working towards developing an overall customer service satisfaction goal as part of the IRS Future State Initiative. The official said that this goal is broadly meant to cover various ways the public interacts with IRS, including web, phone, correspondence and walk in. In November 2016, IRS provided documentation on the goals of the Future State Initiative. However, this documentation does not include specific numerical targets for the performance measures that IRS expects to achieve for each goal or a timeline to achieve those goals. IRS officials stated they will incorporate a customer service satisfaction goal in its upcoming strategic plan. As of May 2018, IRS had not released the Fiscal Year 2018-2022 Strategic Plan.
    Recommendation: The Acting Commissioner of the Internal Revenue Service should direct appropriate officials to develop a long-term strategy to improve web services provided to taxpayers, in accordance with Howto.gov and other federal guidance outlined in our report. To accomplish this, the IRS should develop business cases for all new online services, describing the potential benefits and costs of the project, and use them to prioritize future projects.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS has made progress in improving its online services strategy, as we recommended, but as of May 2018, IRS has not yet completed its efforts. IRS's strategy has evolved from a singular focus on on-line services to a more comprehensive strategy of taxpayer interaction through all service channels. In November 2017, IRS officials shared a draft outline of their Strategic Plan for 2018-2022 with GAO. The draft outline describes IRS's goals and objectives including expanding digital options for taxpayers and professionals to interact efficiently with IRS. However, this documentation is at a high level and subject to change. Until IRS releases the final Strategic Plan for 2018-2022, GAO will continue to assess the steps IRS is taking to develop a long-term strategy to improve web services for taxpayers. In addition, in November 2017, IRS implemented a new process to identify and prioritize IRS-wide investments and unfunded requirements which are outside the annual budget process. As a part of this new process, IRS's business units are to submit business cases that describe the need for the new investment, costs, benefits, return on investment, risks, and alignment with the Strategic Plan. IRS officials said they will use this prioritization process to score or rank investments using a standard -set of criteria. Having a prioritized list of unfunded requirements would allow IRS executives to allocate resources to the highest priorities when additional funding becomes available.
    Director: White, James R
    Phone: (202) 512-9110

    1 open recommendations
    including 1 priority recommendation
    Recommendation: The Acting Commissioner of Internal Revenue should take the following action outline a strategy that defines appropriate levels of telephone and correspondence service and wait time and lists specific steps to manage service based on an assessment of time frames, demand, capabilities, and resources.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS has made progress in developing a customer service strategy with defined appropriate levels of service and steps needed to provide such service, as we recommended; however, as of March 2017, IRS has not completed its efforts. In December 2015, concerned that the Department of the Treasury and IRS did not believe they needed to develop a comprehensive customer service strategy, we suggested that Congress consider requiring Treasury to develop such a strategy in consultation with IRS that would, among other things, determine appropriate telephone and correspondence levels of service. This includes establishing a customer service standard and identifying the resources required to achieve that standard. Taking these steps would increase transparency and help IRS communicate its resource needs, while helping Congress make more informed decisions about IRS's budget. In February 2016, IRS announced a "Future State" vision for agency-wide operations, which aims to improve services across different taxpayer interactions such as individual online account assistance, exams, and collections. In December 2016, IRS reported that it had undertaken a study on benchmarking its telephone performance against the best in the business, which we are currently reviewing. It also reported that many of our taxpayer service-related recommendations will ultimately be incorporated into IRS's Future State initiative. In November 2016, IRS provided documentation on the goals of the initiatives, which included goals on improving taxpayer service. However, this documentation does not include specific numerical targets that IRS expects to achieve for those goals. We will continue to assess this initiative as IRS works to develop it. However, it is unclear the extent to which and when our recommendations will be fulfilled by IRS's initiative. We maintain that Treasury should develop a comprehensive strategy in consultation with IRS which would enable IRS to make a more informed request to Congress about resource requirements needed to deliver specific levels of service. Finalizing a long-term comprehensive strategy will help ensure IRS is maximizing the benefit to taxpayers and possibly reduce costs in other areas, such as for IRS's telephone operations.
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    2 open recommendations
    including 1 priority recommendation
    Recommendation: To better ensure that IRS's limited enforcement resources are allocated in a manner that maximizes the revenue yield of the income tax, subject to other important objectives of tax administration, such as minimizing compliance costs and ensuring equitable treatment across different groups of taxpayers, the Commissioner of Internal Revenue should review disparities in the ratios of direct revenue yield to costs across different enforcement programs and across different groups of cases within programs and determine whether this evidence provides a basis for adjusting IRS's allocation of enforcement resources each year. As part of this review, IRS should develop estimates of the marginal direct revenue and marginal direct cost within each enforcement program and each taxpayer group.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS agrees in principle to using ratios of direct revenue yield-to-cost to adjust its enforcement resource allocation, as GAO recommended in December 2012; however, IRS officials plan to wait until it has developed such ratios at the marginal level (e.g., for the last cases worked within specific categories of exams) before they make such adjustments. GAO maintains that IRS has a basis to adjust its allocation of enforcement resources each year and could improve resource allocation immediately (while it is still working to develop the marginal ratios) by using average yield-to-cost ratios for each category. IRS has developed a methodology for estimating marginal ratios for their correspondence examination program. IRS officials are working to apply this methodology within that program. While they did not have a detailed timeline for full implementation, as of October 2017, they plan on implementing the use of marginal ratios for resource allocation by 2019. If IRS does not take into account some measure of revenue yield per dollar of cost when making allocation decisions, it will miss an opportunity to collect significant amounts of additional revenue.
    Recommendation: To better ensure that IRS's limited enforcement resources are allocated in a manner that maximizes the revenue yield of the income tax, subject to other important objectives of tax administration, such as minimizing compliance costs and ensuring equitable treatment across different groups of taxpayers, the Commissioner of Internal Revenue should review disparities in the ratios of direct revenue yield to costs across different enforcement programs and across different groups of cases within programs and determine whether this evidence provides a basis for adjusting IRS's allocation of enforcement resources each year.As part of this review, IRS should explore the potential of estimating the marginal influence of enforcement activity on voluntary compliance, potentially taking advantage of new NRP data.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has not yet found a way to use NRP data or other data sources to estimate the indirect effects of audits. While they continue to explore alternative ways to estimate these effects, they expect to continue to account for these effects subjectively as they develop their enforcement resource allocation plans. As of October 2017, IRS officials had concluded that because NRP audits, which are conducted for research purposes, are significantly different from ordinary, operational audits, the NRP data would not be useful to estimate the effects of these operational audits on future compliance. However, if IRS does not take into account some measure of revenue yield per dollar of cost when making allocation decisions, it will miss an opportunity to collect significant amounts of additional revenue.
    Director: Clark, Cheryl E
    Phone: (202)512-3000

    1 open recommendations
    Recommendation: The Commissioner of the Internal Revenue Service should direct the appropriate IRS officials to update the Internal Revenue Manual (IRM) to specify steps to be followed to prevent campus support clerks as well as any other employees who process payments through the electronic check presentment system from making adjustments to taxpayer accounts.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. Although IRS updated the Internal Revenue Manual (IRM) in an attempt to meet the intent of this recommendation, IRS did not undertake a global review of the level of access provided to all employee groups that handle hard copy taxpayer receipts and related sensitive information. As a result, in May 2016, IRS reassessed the risks at its Taxpayer Assistance Center's (TAC), where employees process taxpayer remittances through the electronic check presentment system and adjust taxpayer accounts. However, IRS has not updated the IRM to reflect policy changes based on its risk assessment. IRS stated that in fiscal year 2018, its Wage & Investment organization will ensure that applicable IRM sections are revised for any policy changes based on its risk assessment, including specifying the appropriate level of Integrated Data Retrieval System access given to TAC employees who process payments.
    Director: White, James R
    Phone: (202) 512-9110

    2 open recommendations
    including 1 priority recommendation
    Recommendation: The Commissioner of Internal Revenue should develop a new refund timeliness measure and goal to more appropriately reflect current capabilities.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of April 2018, IRS had not developed a new measure for refund timeliness. In August 2016, IRS reiterated that it has no plans to develop a new refund timeliness performance measure or goal, nor does it plan to revise its existing measure or goal to issue refunds due for tax returns filed on paper within 40 days. During the 2018 tax filing season, taxpayers filed nearly 90 percent of returns electronically, and, as a means to set taxpayer expectations, IRS publicly reports that about 90 percent of taxpayers owed a refund received it in less than 21 days. Accordingly, we continue to believe that IRS's sole performance measure of issuing paper-filed refunds within 40 days is outdated and does not acknowledge advances in technology that allow IRS to issue refunds faster. We agree with IRS that the environment has changed considerably since we made this recommendation--the growth in identity theft refund fraud has increased the need for additional scrutiny of tax refunds, which can add to the time needed to process tax returns. IRS can take into account its concerns and set a performance measure and goal that would be both challenging and obtainable. Without a measure and goal to assess refund timeliness that includes both paper and electronically filed returns and is reflective of IRS's current capabilities, IRS is missing opportunities to provide optimum levels of taxpayer service while also ensuring that taxpayers receive accurate refunds. As such, we believe that our recommendation remains valid.
    Recommendation: The Commissioner of Internal Revenue should complete an Internet strategy that (1) provides a justification for the implementation of online self-service tools and includes an assessment of providing online self-service tools that allow taxpayers to access and update elements of their account online; (2) acknowledges the cost and benefits to taxpayers of new online services; (3) sets the time frame for when the online service would be created and available for taxpayer use; and (4) includes a plan to update the strategy periodically.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open
    Priority recommendation

    Comments: IRS has made progress in improving its online services strategy, as we recommended; however, as of May 2018 IRS has not yet completed its efforts. In November 2017, IRS officials shared a draft outline of their Strategic Plan for 2018-2022 with GAO. The draft describes IRS's goals and objectives including expanding digital options for taxpayers and professionals to interact efficiently with IRS. However, this documentation is at a high level and subject to change. Once IRS releases its final Strategic Plan for 2018-2022, GAO will assess the steps IRS is taking to develop a comprehensive plan for online services. A long-term comprehensive strategy for its online services will help ensure IRS is maximizing the benefit to taxpayers from this investment and reduce costs in other areas, such as for IRS's telephone operations.
    Director: Powner, David A
    Phone: (202)512-9286

    1 open recommendations
    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to define and implement a process, including defined criteria, for reselecting ongoing projects.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In March, 2017, IRS issued its Portfolio Investment Plan Process Description Manual for selecting and prioritizing new and ongoing operations support activities. The manual includes criteria for prioritizing selections; and provides for comparing assets against one another to create a prioritized portfolio; and ensuring executives' funding decisions are based upon the process for selecting and prioritizing activities. In March 201, IRS updated the manual and also issued related detailed procedures. In April 2018, IRS committed to documenting a similar process for prioritizing business systems modernization activities, including reselecting ongoing projects, by September 2018.
    Director: Clark, Cheryl E
    Phone: (202)512-9521

    3 open recommendations
    Recommendation: Based on a review of all existing contracts under $100,000 without an appointed COTR that should require contract employees to obtain favorable background investigation results, the Commissioner of the IRS should direct the appropriate IRS officials to amend those contracts to require that favorable background investigations be obtained for all relevant contract employees before routine, unescorted, unsupervised physical access to taxpayer information is granted.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that in fiscal year 2018, it plans to review all contracts under $100,000 open as of October 1, 2016, and ensure that each contract includes a clause requiring that favorable background investigations be obtained for all relevant contract employees before they are granted routine, unescorted, unsupervised physical access to taxpayer information. However, as long as IRS does not have a policy for reviewing potential service contracts (see Recommendation 13), IRS's review should include existing contracts within the most recent fiscal year.
    Recommendation: The Commissioner of the IRS should direct the appropriate IRS officials to establish a policy requiring collaborative oversight between IRS's key offices in determining whether potential service contracts involve routine, unescorted, unsupervised physical access to taxpayer information, thus requiring background investigations, regardless of contract award amount. This policy should include a process for the requiring business unit to communicate to the Office of Procurement and the Human Capital Office the services to be provided under the contract and any potential exposure of taxpayer information to contract employees providing the services, and for all three units to (1) evaluate the risk of exposure of taxpayer information prior to finalizing and awarding the contract and (2) ensure that the final contract requires favorable background investigations as applicable, commensurate with the assessed risk.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that by August 2018, several internal organizations plan to partner to identify the remaining actions needed to address this recommendation. Proposed actions include refining policies and procedures to reasonably assure that (1) oversight between IRS's key offices is conducted to determine whether potential service awards that IRS enters into involve routine, unescorted, unsupervised physical access to taxpayer information by contractors, thus requiring background investigations, and (2) the resulting processes clarify who is responsible for completing the various steps, as well as who should maintain documentation of the approved access determination prior to the contractor providing services.
    Recommendation: The Commissioner of the IRS should direct the appropriate IRS officials to revise the post orders for the service center campuses (SCC) and lockbox bank security guards to include specific procedures for timely reporting exterior lighting outages to SCC or lockbox bank facilities management. These procedures should specify (1) whom to contact to report lighting outages and (2) how to document and track lighting outages until resolved.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS's actions to address this recommendation are ongoing. IRS stated that by June 2018, it plans to analyze all campus post orders and update them as needed to ensure that documented procedures specify (1) whom to contact to report lighting outages and (2) how to document and track lighting outages until resolved.
    Director: White, James R
    Phone: (202)512-5594

    1 open recommendations
    Recommendation: To improve reporting on the results of examinations on ATAT issues, the Commissioner of Internal Revenue should separately track the tax amounts recommended, assessed, and collected between ATAT issues and non-ATAT issues.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, IRS did not plan on taking any further actions to track examination results for ATAT versus non-ATAT issues, as GAO recommended in May 2011. In July 2012, IRS told GAO that although it agreed with GAO's May 2011 recommendation, resource and capability constraints preclude it from capturing information in this way. GAO maintains that tracking examination results for ATAT versus non-ATAT issues would provide IRS management with the data needed to make informed judgments about program effectiveness and resource allocations. IRS has taken steps to check whether taxpayers file all required ATAT-related disclosure obligations. In February 2013, IRS implemented a new indicator and matching process to regularly review whether taxpayers are meeting their ATAT-related filing obligations. Additionally, IRS developed a procedure to evaluate the completeness of ATAT-related disclosure forms and follow up on incomplete forms as necessary and updated the Internal Revenue Manual to reflect these changes. Developing and implementing these new processes and procedures will provide IRS with additional information for determining whether the disclosures are made as required and are complete.
    Director: White, James R
    Phone: (202)512-5594

    1 open recommendations
    Recommendation: To gain efficiencies and improve taxpayer service, the Commissioner of Internal Revenue should direct the appropriate officials, based on the quality of service provided by comparable organizations and on what matters most to the customer, to determine a customer service telephone standard, and the resources required to achieve this standard based on input from Congress and other stakeholders.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In January 2017, IRS officials provided results of a benchmarking study that it completed in response to our recommendation. In that study, an IRS team compared IRS's service, measures and goals to comparable agencies and companies. For example, IRS compared the types of measures the companies used, including those that were primarily service-driven and resource-driven. As a result, the team recommended options for additional measures to indicate the level of access taxpayers have to service, including across channels. In addition, IRS concluded that the ideal level of service is 83 percent, which optimizes a balance between wait time, disconnects, and assistor availability. It also recommended exploring using new technology including email, online chat, and telephone call back features as well as to establish regularly scheduled follow-up benchmarking. However, IRS did not adopt the standard level of service goal of 83 percent. Furthermore, in its fiscal year 2018 performance measures and goals, IRS planned a 39 percent level of service, which is substantially lower than the prior 2 year targets, both of which IRS exceeded. In addition, IRS did not estimate the resources required to achieve the level of service standard that it identified in its 2016 benchmarking study. While these benchmarking results represent an important step toward delivering a certain standard of telephone service, without actually setting goals that are consistent with those results and determining and communicating the resources required to achieve them, IRS is unable to work effectively with Congress and other stakeholders to deliver desired levels of service.
    Director: White, James R
    Phone: (202)512-5594

    1 open recommendations
    Recommendation: The Commissioner of Internal Revenue should establish an IRS-wide strategy with goals, which may need to be developed incrementally, to coordinate and plan ongoing and future efforts to identify and pursue network tax evasion. The strategy should include: (1) assessing the effectiveness of network analysis tools, such as yK-1; (2) determining the feasibility and benefits of increasing access to existing IRS data, such as scanning additional data from Schedule K-1, or collecting additional data for use in its network analysis efforts; (3) putting the development of analytical techniques and tools that focus on networks as the unit of analysis, such as GraphQuery, on a specific time schedule; and (4) deciding how network efforts will be managed across IRS, such as whether a core program team or management group is needed.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of December 2017, IRS had not created a documented, agency-wide strategy to manage network noncompliance efforts. However, IRS has developed elements of the strategy, as GAO recommended in September 2010. For example, IRS has made and continues to focus on making iterative improvements to its network analysis tools. Although these improvements are not contained within an IRS-wide strategy, they relate to assessing effectiveness. For example, IRS has taken steps to assess its most predominantly used network analysis tool. As part of an annual survey, IRS asked users of this tool about its effectiveness and to suggest improvements. IRS also certified the tool as conforming to agency guidelines and requirements for usefulness. However, IRS has not created a strategic approach on managing network compliance efforts across IRS that includes time frames for network analysis tool development, and the agency has no plans to do so.
    Director: White, James R
    Phone: (202)512-5594

    2 open recommendations
    Recommendation: To understand the scope of the business nonfiler population, the Commissioner of Internal Revenue should estimate the magnitude of business nonfiling among businesses registered with IRS, using data from its operational files to select cases for further investigation. Based on the results of this work IRS should develop a tax gap estimate for the impact of business nonfiling insofar as doing so is cost-effective.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of August 2017, IRS said it did not plan to develop a partial estimate of the business nonfiler rate, as we recommended in August 2010. IRS reported that funding would likely be unavailable for it to do so using operational data. According to IRS, its existing operational data on business nonfilers are sufficient. However, even a partial estimate could give IRS additional information that would be useful in its strategic planning and help it determine what priority it should place on this type of noncompliance.
    Recommendation: To monitor the performance of business nonfiler activities, the Commissioner of Internal Revenue should set a deadline for developing data that can be used to measure the performance of the BMF CCNIP and its business nonfiler compliance activities overall.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has determined that it does not have the necessary data that could be used to measure its business nonfiler efforts across the agency and that it therefore cannot set a deadline for developing such data, as GAO recommended in August 2010. According to IRS, developing such data would be prohibitively costly. Rather, as of August 2017, IRS plans to continue to use the data at the operating division level. Without going through the process of developing performance data, IRS is unable to know what data would aid in monitoring and evaluating its business nonfiler efforts. Absent cross-agency performance data, IRS is unable to fully understand the outcomes of its business nonfiler efforts.
    Director: White, James R
    Phone: (202)512-5594

    3 open recommendations
    Recommendation: To enhance IRS's ability to detect noncompliance with mortgage debt forgiveness provisions, the Commissioner of Internal Revenue should modify Form 982, Part 1 to segregate the total dollar amount of forgiven debt by exclusion type and capture the information in IRS's databases.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of March 2018, IRS has not yet revised the Form 982 consistent with our recommendation. Form 982 directs taxpayers to identify the type(s) of forgiven debt. For example, taxpayers check a box to indicate forgiven mortgage debt used to buy, build, or substantially improve a principal residence. However, the Form 982 is used to report other types of forgiven debt, such as debt related to real property used in a trade or business, and the form does not require taxpayers to report the dollar amounts for each exclusion type. This means that IRS does not necessarily know how much of the forgiven debt should be attributed to a taxpayer's principal residence. Section 40201 of the Bipartisan Budget Act of 2018 (Public Law 115-123) extended the exclusion of forgiven mortgage debt to debt discharged before January 1, 2018 which the Joint Committee on Taxation estimated would cost $2.4 billion in fiscal year 2018. The relatively low-cost steps GAO recommended could help IRS ensure compliance with forgiven mortgage debt requirements if IRS used the information.
    Recommendation: To enhance IRS's ability to detect noncompliance with mortgage debt forgiveness provisions, the Commissioner of Internal Revenue should modify the Form 982 and Form 1099-C so that filers disclose the address of the secured property for which the debt is being forgiven and capture the information in IRS's databases.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: While IRS has not revised the Forms 982 and 1099-C consistent with our recommendation, Congress directed IRS to collect additional information concerning mortgage interest payments, which prompted IRS to revise a related form. Congress, in July 2015, enacted the Surface Transportation and Veterans Health Care Choice Improvement Act (Public Law 114-41). Section 2003 of the act requires taxpayers receiving mortgage interest payments to report the origination date of the mortgage, the amount of outstanding principal at the beginning of the calendar year, and the property's address. This new reporting requirement applies to returns that would be filed in 2017. In response to the legislation, IRS updated Form 1098 Mortgage Interest Statement for the 2017 tax filing season. As of January 2018, IRS officials told GAO that they are not currently using the new property address data collected on this form to automatically detect potential taxpayer noncompliance. As of March 2018, IRS had not yet revised two other forms to the extent we recommended--the Forms 982 and 1099-C--to collect specific information from taxpayers and lenders concerning the amount of forgiven debt attributable to a principal residence and the location of the taxpayer's principal residence. Specifically, Form 982 does not direct taxpayers to identify the address for which debt is being forgiven nor does Form 1099-C direct lenders to report the address. Section 40201 of the Bipartisan Budget Act of 2018 (Public Law 115-123) extended the exclusion of forgiven mortgage debt to debt discharged before January 1, 2018 which the Joint Committee on Taxation estimated would cost $2.4 billion in fiscal year 2018. The relatively low-cost steps GAO recommended could help IRS ensure compliance with forgiven mortgage debt requirements if IRS used the information.
    Recommendation: To enhance IRS's ability to detect noncompliance with mortgage debt forgiveness provisions, the Commissioner of Internal Revenue should use the additional data reported on the revised Form 982 and Form 1099-C to assess the extent to which taxpayers are compliant.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: While IRS has not fully revised the Forms 982 and 1099-C consistent with our recommendation, Congress directed IRS to collect additional information concerning mortgage interest payments which prompted IRS to revise a related form, and IRS officials are considering how to use the additional data. As of March 2018, the Form 982 does not direct taxpayers to identify the address for which debt is being forgiven. For the Form 1099-C, IRS began requiring lenders to provide more information about the type of event that resulted in the cancellation of the debt. However, as of March 2018, the Form 1099-C does not direct lenders to report the address of the property for which mortgage debt is being forgiven. In July 2015, Congress enacted the Surface Transportation and Veterans Health Care Choice Improvement Act (Public Law 114-41). Section 2003 of the act requires taxpayers receiving mortgage interest payments to report the origination date of the mortgage, the amount of outstanding principal at the beginning of the calendar year, and the property's address. This new reporting requirement applies to returns that would be filed in 2017. In response to the legislation, IRS updated Form 1098 Mortgage Interest Statement for the 2017 filing season. As of January 2018, IRS officials told GAO that they are not currently using the new property address data collected on this form to automatically detect potential taxpayer noncompliance. Section 40201 of the Bipartisan Budget Act of 2018 (Public Law 115-123) extended the exclusion of forgiven mortgage debt to debt discharged before January 1, 2018 which the Joint Committee on Taxation estimated would cost $2.4 billion in fiscal year 2018. The relatively low-cost steps GAO recommended could help IRS ensure compliance with forgiven mortgage debt requirements if IRS used the information.
    Director: Clark, Cheryl E
    Phone: (202)512-9521

    1 open recommendations
    Recommendation: The Commissioner of IRS should direct the appropriate IRS officials to, once IRS identifies the control weaknesses that result in inaccuracies or errors that affect the financial reporting of unpaid tax assessments, implement control procedures to routinely prevent, or to detect and correct, such errors.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS created a long-term corrective action plan that contains specific actions to improve control procedures to prevent or detect errors. While IRS completed some actions during fiscal year 2016, it has not completed most of the actions in the plan or documented milestones or target completion dates for these remaining actions. In addition, during fiscal year 2016, GAO and IRS continued to identify misclassified unpaid assessments that resulted from inaccuracies or errors in taxpayer accounts. Thus, IRS's actions to date have not been effective at fully addressing the issues that continue to cause a lack of transaction traceability and material inaccuracies produced by the subsidiary ledger. We will continue to evaluate IRS's actions to address this recommendation during our fiscal year 2017 audit.
    Director: White, James R
    Phone: (202) 512-9039

    2 open recommendations
    Recommendation: To better ensure the notice phase is achieving desired results at the lowest costs, the Commissioner of Internal Revenue should provide IRS collection managers and executives accessible, reliable information on what the business rules are.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In February 2018, IRS officials said that they plan to assemble a notice process evaluation team that will draft and submit, by July 2, 2018, a review plan proposal for management to consider. However, IRS noted that conducting the review will depend on resources being available from the multiple functions involved. We will update the status when IRS provides supporting documentation on actions taken.
    Recommendation: To better ensure the notice phase is achieving desired results at the lowest costs, the Commissioner of Internal Revenue should periodically and regularly evaluate the business rules in terms of efficiency and effectiveness or other results and ensure the results are available to managers so the data and methodologies can be used or considered in future evaluations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: In February 2018, IRS officials said that they plan to assemble a notice process evaluation team that will draft and submit, by July 2, 2018, a review plan proposal for management to consider. However, IRS noted that conducting the review will depend on resources being available from the multiple functions involved. We will update the status when IRS provides supporting documentation on actions taken.
    Director: White, James R
    Phone: (202)512-9110

    1 open recommendations
    Recommendation: In order to better assess whether changes are needed in the way IRS administers activities not engaged in for profit provisions, the Commissioner of Internal Revenue should take steps to estimate the extent of activities not engaged in for profit noncompliance from its ongoing research programs.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS is researching sole proprietor noncompliance, as GAO recommended in September 2009. It is focusing on those who improperly claim business losses (i.e., not profits). IRS's Office of Research, Analysis and Statistics is using the reporting compliance study of Form 1040 filers to gather the data on such noncompliant business losses. This research covered sampled tax returns filed for tax years 2009, 2010, and 2011 and used audits of the sampled tax returns that are filed for each tax year. In November 2016, IRS research officials provided the initial rough estimates of the percentage of disallowed losses and associated dollar amounts for all 3 tax years but as of March 2017, they had not yet indicated how these estimates helped IRS to understand the nature of the tax noncompliance. The officials cautioned that their ability to develop the estimates depends on the number of observations that can be applied from each tax year. This research, when completed, could help IRS to identify noncompliant sole proprietor issues and take action to reduce losses. As of March 2018, IRS research officials indicated that they are still doing the necessary analysis given other priorities.
    Director: White, James R
    Phone: (202)512-3000

    2 open recommendations
    Recommendation: In order to ensure the most efficient, fair, and consistent administration of civil tax penalties, and that penalties are achieving their purpose of encouraging voluntary compliance, the Commissioner of Internal Revenue should direct the Office of Servicewide Penalties (OSP) to evaluate penalty administration and penalties' effect on voluntary compliance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: The Office of Servicewide Penalties (OSP) initiated a plan to comprehensively evaluate penalty administration and the impact of penalties on voluntary compliance. They stated that they understand such a plan will be useful in identifying priorities and determining additional potential resource needs. However, OSP put this plan on hold while they developed a business case for obtaining more staff and resources. OSP is in the process of obtaining feedback to refine their business case for final submission. While they await approval of the business case they have not done any work on the comprehensive plan. As the comprehensive plan remains incomplete, OSP has not yet undertaken an evaluation of penalties' effect on voluntary compliance. In December 2011 OSP formed a Civil Penalties Administrative Improvement Initiative team that has the goal of making improvements to civil penalty administration. Activities underway as of February 2013 include developing measures to improve taxpayer consistency and taking actions to improve the Reasonable Cause Assistant computer system. We learned in February 2015 that the program is now under a new executive. When we met with the new agency officials in April 2015 they told us that they had a new effort underway to develop a comprehensive strategy that examines the impact of penalties on voluntary compliance while ensuring quality. IRS finalized a Penalty Performance Plan on March 6, 2017, which we are currently reviewing.
    Recommendation: In order to ensure the most efficient, fair, and consistent administration of civil tax penalties, and that penalties are achieving their purpose of encouraging voluntary compliance, the Commissioner of Internal Revenue should direct OSP to develop and implement a plan to collect and analyze penalty-related data. The plan should address the constraints officials have identified as impeding progress in analyzing penalties.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: Office of Servicewide Penalties (OSP) initiated a plan to comprehensively evaluate penalty administration and the impact of penalties on voluntary compliance. However, OSP put this plan on hold while they developed a business case for obtaining more staff and resources. As of February 2013 the business case has not progressed and OSP has taken no additional action to complete the comprehensive plan. We learned in February 2015 that the program is now under a new executive. When we met with the new agency officials in April 2015 they told us that they had a new effort underway to develop a comprehensive strategy that examines the impact of penalties on voluntary compliance while ensuring quality. IRS finalized a Penalty Performance Plan on March 6, 2017, which we are currently reviewing.
    Director: White, James R
    Phone: (202)512-5594

    2 open recommendations
    Recommendation: To gauge the extent of 1099-MISC payer noncompliance and its contribution to the tax gap, the Commissioner of Internal Revenue should, as part of future research studies, develop an estimate of 1099-MISC payer noncompliance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: According to IRS, developing such an estimate requires a multi-pronged approach and a large amount of coordinated effort. One prong is to determine the extent of filing compliance among employers. A second prong would determine the extent to which 1099-MISC payers properly report their payments. Starting with the Tax Year 2001 individual income tax reporting compliance study, the National Research Program (NRP) office has been collecting some data related to Form 1099-MISC compliance, from both the payer and payee perspectives. Additional data will be generated by the NRP reporting compliance study for employment tax. As part of the NRP employment tax research, IRS examiners were to review taxpayers' Form 1099 filing compliance. Data collected from these studies should shed some light on whether employers are appropriately reporting required payments on Form 1099-MISC. As of March 2018, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by December 2018. IRS plans to complete its final analysis of the extent of Form 1099-MISC payer noncompliance in parallel with analysis for its next tax gap estimates. We will continue to monitor IRS's progress.
    Recommendation: To gauge the extent of 1099-MISC payer noncompliance and its contribution to the tax gap, the Commissioner of Internal Revenue should, as part of future research studies, determine the nature and characteristics of those payers that do not comply with 1099-MISC reporting requirements so that this information can be factored into an IRS-wide strategy for increasing 1099-MISC payer compliance.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS researchers are collecting data on 1099-MISC reporting as part of its National Research Program (NRP) study on employment taxes, a program that involved examinations of a sample of tax returns for tax years 2008 through 2010. As part of the NRP employment tax research, IRS examiners were to review taxpayers' Form 1099 filing compliance. Collecting data on this issue will enable IRS to study the nature and characteristics of payers that do not comply with 1099-MISC reporting requirements. As of March 2018, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by December 2018. IRS plans to complete its 1099-MISC payer reporting compliance analysis in parallel with analysis for its next tax gap estimates. We will continue to monitor IRS's progress.
    Director: Clark, Cheryl E
    Phone: (202) 512-3000

    1 open recommendations
    Recommendation: To address other issues that may exist in IRS's master files that affect penalty calculations, the Commissioner of Internal Revenue should direct appropriate IRS officials to, in instances where programs are not functioning in accordance with the intent of the IRM, take appropriate action to correct the programs so that they function in accordance with the IRM.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: According to IRS, it had substantially completed its corrective actions to address 19 penalty programming issues it had identified from its internal assessment of penalty computation programs. However, as of September 30, 2016, IRS had not provided us with supporting documentation to validate that it completed the corrective actions. We will continue to evaluate IRS's actions to address this recommendation during our fiscal year 2017 financial statement audit.
    Director:
    Phone:

    1 open recommendations
    Recommendation: The Commissioner of Internal Revenue should match independent contractors' information returns with their tax returns to more systematically identify employers who are misclassifying employees as independent contractors and to better target audit resources for doing employment tax examinations.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: Call 202/512-6100 for additional information.