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    Subject Term: "Operational examinations"

    1 publication with a total of 1 open recommendation
    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 January 2018, we are in the process of reviewing additional examination data that IRS has sent to support their position that additional transcription would not be worthwhile. 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.