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As of May 16, 2024, there are 5119 open recommendations that still need to be addressed. 413 of these are priority recommendations, those that we believe warrant priority attention. Learn more about our priority designation on our Recommendations page.

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5081 - 5100 of 5119 Recommendations, including 413 Priority Recommendations

Tax Policy: The Research Tax Credit's Design and Administration Can Be Improved

GAO-10-136
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8 Open Recommendations
Agency Recommendation Status
Department of the Treasury In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should issue regulations clarifying the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations.
Open

Treasury issued proposed regulations clarifying the definition of gross receipts on December 13, 2013 and solicited public comments. During the course of 2014, tax practitioners and business executives submitted comments criticizing the regulations and asking for them to be withdrawn. As of February 2023, Treasury has yet to issue final regulations that would include responses to these criticisms. The regulations would not become effective until the tax year beginning after the date on which the regulations are published in final form.
Department of the Treasury In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify what types of activities are considered to be qualified support activities.
Open

As of February 2023, Treasury has not issued regulations to clarify what types of activities are considered to be qualified support activities.
Department of the Treasury In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify when commercial production of a qualified product is deemed to begin.
Open

As of February 2023, Treasury has not issued regulations to more clearly identify when commercial production of a qualified product is deemed to begin.
Congress In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider eliminating the regular credit option for computing the research credit.
Open

As of January 2024, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or to add a minimum base to the ASC option, as GAO suggested in November 2009. The credit is designed to encourage business innovation by providing a subsidy for new research. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may
Congress In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider adding a minimum base to the ASC that equals 50 percent of the taxpayer's current-year qualified research expenses.
Open

As of January 2024, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or to add a minimum base to the ASC option, as GAO suggested in November 2009. The credit is designed to encourage business innovation by providing a subsidy to new research. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may
Congress If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by updating the historical base period that regular credit claimants use to compute their fixed base percentages.
Open

As of January 2024, no action has been taken by Congress to update the historical base period that regular credit claimants use to compute their fixed base percentages.
Congress If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by eliminating base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.
Open

As of January 2024, no action has been taken to eliminate base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.
Congress If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by clarifying for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the regular credit were discontinued for future years.
Open

As of January 2024, no action has been taken by Congress to clarify for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular, it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the

Tax Debt Collection: IRS Needs to Better Manage the Collection Notices Sent to Individuals

GAO-09-976
James R. White
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1 Open Recommendations
Agency Recommendation Status
Internal Revenue Service 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.
Open

IRS originally agreed with GAO and planned to regularly evaluate the business rules. However, in March 2021, IRS told GAO that it no longer planned to do such evaluations. GAO asked IRS for more information on its rationale for not conducting periodic reviews of the dollar thresholds of the rules to meet the intent of the recommendation, which is to determine whether the existing thresholds are still appropriate. In January 2022, IRS responded that it was reconsidering potentially taking steps to implement GAO's recommendation. IRS provided documentation in November 2023, but it was not fully

Flood Insurance: Opportunities Exist to Improve Oversight of the WYO Program

GAO-09-455
Orice Williams Brown
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2 Open Recommendations
Agency Recommendation Status
Department of Homeland Security To provide transparency and accountability over the payments FEMA makes to WYOs for expenses and profits, the Secretary of Homeland Security should direct the Under Secretary of Homeland Security, FEMA, to consider the results of the analysis of payments, actual expenses, and profit in evaluating the methods for paying WYOs.
Open

According to FEMA officials, FEMA planned to respond to this recommendation as part of its development of a final rule on WYO compensation practices, required by the Biggert-Waters Act. FEMA issued an Advance Notice of Proposed Rulemaking (ANPRM) on July 8, 2019 seeking comments by September 6, 2019 regarding possible approaches to incorporating actual flood insurance expense data into the WYO payment methodology. As of February 2021, FEMA officials said that they completed reviewing comments received in response to the July 2019 notice and concluded that they needed to reassess their approach
Department of Homeland Security To provide transparency and accountability over the payments FEMA makes to WYOs for expenses and profits, the Secretary of Homeland Security should direct the Under Secretary of Homeland Security, FEMA, to determine in advance the amounts built into the payment rates for estimated expenses and profit.
Open

According to FEMA officials, FEMA planned to respond to this recommendation as part of its development of a final rule on WYO compensation practices, required by the Biggert-Waters Act. FEMA's current payment rates do not explicitly consider WYO insurers' actual expenses and profit. FEMA issued an Advance Notice of Proposed Rulemaking (ANPRM) on July 8, 2019 seeking comments by September 6, 2019 regarding possible approaches to incorporating actual flood insurance expense data into the WYO payment methodology. As of February 2021, FEMA officials completed reviewing comments received in

Medicare Physician Payments: Fees Could Better Reflect Efficiencies Achieved When Services Are Provided Together

GAO-09-647
James Cosgrove
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1 Open Recommendations
Agency Recommendation Status
Congress To ensure that savings are realized from the implementation of an MPPR or other policies that reflect efficiencies occurring when services are furnished together, Congress may wish to consider exempting these savings from budget neutrality.
Open – Partially Addressed

Congress has exempted savings from the implementation of multiple procedure payment reductions (MPPR) for certain diagnostic imaging and therapy services from the budget neutrality requirement, as GAO suggested in July 2009. For example, the Consolidated Appropriations Act of 2016 revised the payment reduction for the professional component of multiple diagnostic imaging services from 25 percent to 5 percent beginning on January 1, 2017, and exempted the reduced expenditures attributable to this MPPR from the budget neutrality provision. (Pub. L. No. 114-113, 129 Stat. 2242 (2015)). However

Real Estate Tax Deduction: Taxpayers Face Challenges in Determining What Qualifies; Better Information Could Improve Compliance

GAO-09-521
James R. White
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2 Open Recommendations
Agency Recommendation Status
Internal Revenue Service To improve IRS's guidance to its examiners auditing the real-estate tax deduction, the Commissioner of Internal Revenue should revise the guidance to indicate that evidence of deductibility should not rely on mortgage escrow statements, Forms 1098, and cancelled checks (which can be evidence of payment), and may require more than reliance on a real-estate tax bill.
Open

No executive action taken. IRS has not addressed this action and had no plans to do so as of March 2024. IRS did not agree with GAO's May 2009 recommendation and the agency maintains that existing examination guidance provides examiners with sufficient information to properly examine this deduction. For tax years beginning after December 31, 2016, section 11042 of Public Law 115-97 caps the deduction for state and local taxes, including real estate taxes, at $10,000. GAO maintains that examiners are continuing to rely on guidance that is inadequate to properly examine this deduction and that
Internal Revenue Service To improve IRS's guidance to its examiners auditing the real-estate tax deduction, the Commissioner of Internal Revenue should revise the guidance to require examiners to ask taxpayers to substantiate the deductibility of the amounts claimed whenever they are examining the real-estate tax deduction and they have reason to believe that taxpayers have claimed nondeductible charges that are large, unusual, or questionable.
Open

No executive action taken. IRS has not addressed this action and had no plans to do so as of March 2024. IRS did not agree with GAO's May 2009 recommendation and the agency maintains that existing examination guidance provides examiners with sufficient information to properly examine this deduction. For tax years beginning after December 31, 2016, section 11042 of Public Law 115-97 caps the deduction for state and local taxes, including real estate taxes, at $10,000. In its 2009 review, GAO found that some examiners were not confirming that taxpayers were entitled to deduct real estate charges

Tax Gap: IRS Could Do More to Promote Compliance by Third Parties with Miscellaneous Income Reporting Requirements

GAO-09-238
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1 Open Recommendations
Agency Recommendation Status
Congress To simplify the burden that the corporate exemption places on payers to distinguish payees' business status and also provide greater information reporting, Congress may wish to consider requiring payers to report payments to corporations on the form 1099 MISC, as we previously suggested and as proposed in the Bush Administration's budget.
Open

No legislative action has been taken, as of March 2024, to require payers engaged in a trade or business to report on payments to corporations for services, thereby reducing these payers' burden to determine which payments require reporting, as GAO recommended in January 2009. Reporting of third-party information is a powerful compliance tool, and eliminating the reporting exemption for payments to corporations would be a cost-effective way to improve voluntary compliance, resulting in increased revenue.

Radio Communications: Congressional Action Needed to Ensure Agencies Collaborate to Develop a Joint Solution

GAO-09-133
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1 Open Recommendations
Agency Recommendation Status
Congress Congress may wish to consider requiring the Departments of Justice, Homeland Security, and Treasury to collaborate on the development and implementation of a joint radio communications solution. Specifically, Congress may wish to consider requiring the departments to (1) establish an effective governance structure that includes a formal process for making decisions and resolving disputes, (2) define and articulate a common outcome for this joint effort, and (3) develop a joint strategy for improving radio communications.
Open – Partially Addressed

Legislation has been enacted to provide funding for, among other things, the development of a nationwide, interoperable broadband network that is aimed at improving interoperable radio communications among public safety officials. However, the use of the broadband network by public safety users is voluntary. In addition, as of February 2024, officials from the Departments of Justice, Homeland Security, and the Treasury stated that they currently do not expect to use the nationwide public safety broadband network to fully support their mission-critical voice operations. As a result, this

Tax Administration: IRS's 2008 Filing Season Generally Successful Despite Challenges, although IRS Could Expand Enforcement during Returns Processing

GAO-09-146
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1 Open Recommendations
Agency Recommendation Status
Congress Given the potential for improving compliance now and in the future, Congress may wish to provide IRS with the authority to use math error checks to identify and correct returns with ineligible (1) IRA "catch-up" contributions, and (2) contributions to traditional IRAs from taxpayers over age 70-1/2.
Open

In December 2019, the SECURE Act of 2019 removed the 70-1/2 age limit for contributions to traditional IRAs. Therefore, math error authority to verify ineligible contributions by age is no longer necessary in this case. As of March 2024, Congress had not provided IRS math error authority for IRA "catch-up" contributions. GAO maintains that providing IRS with math error authority to identify and correct ineligible claims for taxpayers contributing to IRAs would enable IRS to correct obvious noncompliance and would be less intrusive and burdensome to taxpayers than audits.

Highway Safety: Foresight Issues Challenge DOT's Efforts to Assess and Respond to New Technology-Based Trends

GAO-09-56
Nancy R. Kingsbury
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1 Open Recommendations
Agency Recommendation Status
Department of Transportation In order to develop an approach to decision making and the development of evidence on high-clockspeed trends affecting highway safety that are characterized by uncertainty, the Secretary of Transportation should consider and evaluate practices and principles for making decisions under conditions of uncertainty and for using data in such decision making and, on that basis, develop an approach to guide decision making on high-clockspeed trends that, although somewhat uncertain, may affect highway safety.
Open

In GAO-09-56, GAO recommended the Secretary of Transportation consider and evaluate practices and principles for making conditions under uncertainty and for using data in light of issues encountered in developing evidence on high-clockspeed trends affecting highway safety that are characterized by uncertainty. GAO had studied driver distraction involving electronic devices, in particular cell phones with texting capability and identified these evolving electronic devices as a high clockspeed trend. DOT reports several actions on distracted driving, specifically: (1) an Executive Order to

Tax Gap: Actions That Could Improve Rental Real Estate Reporting Compliance

GAO-08-956
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1 Open Recommendations
Agency Recommendation Status
Congress To provide clarity for which taxpayers with rental real estate activity must report expense payments on information returns and to provide greater information reporting, Congress may wish to consider amending the Internal Revenue Code to make all taxpayers with rental real estate activity subject to the same information reporting requirements as other taxpayers operating a trade or business.
Open

No legislative action had been taken, as of March 1, 2024, to make owners of rental real estate subject to the same payment reporting requirements regardless of whether they engaged in a trade or business under current law, as GAO recommended in August 2008. Changing reporting requirements and holding taxpayers with rental real estate to the same filing requirements as taxpayers whose activities are considered a trade or business would provide clarity about who is required to file, which would improve tax compliance and result in increased revenue.

Tax Expenditures: Available Data Are Insufficient to Determine the Use and Impact of Indian Reservation Depreciation

GAO-08-731
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1 Open Recommendations
Agency Recommendation Status
Congress Given the lack of information on IRD users and where property claimed under IRD is placed in service, Congress may wish to consider requiring IRS to collect information identifying which taxpayers use IRD and the reservation and/or address where they have placed the property into service. In deliberating additional requirements, Congress should weigh the need for more IRD information with the associated costs of collecting and analyzing the information as well as the effects on IRS's other priorities.
Open

As of March 2024, no legislative action has been taken to direct IRS to collect more information about taxpayer use of the accelerated depreciation incentive for projects in tribal communities. The provision expired as of January 1, 2022, and taxpayers cannot use this accelerated depreciation for Indian reservation property placed into service after December 31, 2021. The provision has previously expired and been extended retroactively, so GAO continues to monitor the issue.
Note: the list of open recommendations for the last report may continue on the next page.

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