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    Subject Term: "Fair market value"

    2 publications with a total of 5 open recommendations
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    4 open recommendations
    Recommendation: To promote retirement savings without creating permanent tax-favored accounts for a small segment of the population, Congress should consider revisiting the use of IRAs to accumulate large balances and consider ways to improve the equity of the existing tax expenditure on IRAs. Options could include limits on (1) the types of assets permitted in IRAs, (2) the minimum valuation for an asset purchased by an IRA, or (3) the amount of assets that can be accumulated in IRAs and employersponsored plans that get preferential tax treatment.

    Agency: Congress
    Status: Open

    Comments: In its October 2014 report, GAO found that individuals with limited, occupationally related opportunities could engage in sophisticated investment strategies and accumulate considerable tax-preferred wealth in IRAs and subsequently suggested to Congress legislative options. As of March 2017, legislation had not been introduced on any aspect of this suggestion, although the Senate Finance Committee held a hearing on IRA policy in September 2014 for which GAO provided a statement for the record.
    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 March 2017, 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. Once IRS completes electronically compiling the new Form 5498 information for tax year 2016 that is filed in 2017, IRS researchers plan to use the asset type data to streamline the process of identifying those IRAs. As of March 2017, IRS examination officials did not have a date on when the new IRA asset type data will be available for further analysis.
    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. However, Treasury and IRS have not drafted a legislative proposal as of March 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 compiled data to target outreach to taxpayers with nonmarketable IRA assets at greater risk of noncompliance, as GAO recommended in October 2014. In June 2016, IRS published information on 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 March 2017, IRS was compiling the IRA assets data for tax year 2016 that is filed in 2017, but IRS had not provided a date on when the new IRA asset type data will be available for further analysis.
    Director: Wise, David J
    Phone: (202) 512-2834

    1 open recommendations
    Recommendation: To enhance transparency and allow for more informed decision making related to the appropriate role of leasing in GSA's real property portfolio, the Administrator of GSA should include in the lease prospectus a description of the length of time that an agency estimates it will need the space, an historical account of how long the agency has been in the particular building it is occupying at the time of the prospectus, and any major investments the agency will have to make to the leased space to meet its mission. For those spaces for which the agency has a long-term projected need, also include an appropriate form of cost-to-lease versus cost-to-own analysis.

    Agency: General Services Administration
    Status: Open

    Comments: As of March 2017, GSA had not incorporated the recommended information into its fiscal year 2016 lease prospectuses and did not plan to do so in future prospectuses. GSA officials stated that GSA may not know how long an agency will need the space or the amount of investment that will be needed, so this information would be difficult to incorporate. However, in its 2013 review, GAO found that 9 of the 12 case study leases included space for long-term or mission critical space needs for tenant agencies. Some of the tenant agencies in these leases had been housed in multiple successive leases far longer than the statutory term limit of 20 years for a single GSA lease-situations that would lend themselves to analyzing the extent to which it would be more cost-effective for the government to own rather than lease. Moreover, GSA and the agency are likely to have general information on the complexity and likely investment needed to meet an agency's mission-related needs in leased space that could be included in the prospectus. Including the recommended information would increase transparency and facilitate more informed decision making by Congress.