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    Results:

    Subject Term: "Tax violations"

    12 publications with a total of 24 open recommendations including 1 priority recommendation
    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 January 2017, IRS has taken some action to implement this recommendation. IRS told us it established a cross-functional team in February 2016 to conduct a comprehensive review of IRS's referral programs, including the information referral process. IRS completed its review and plan for the organizational structure in December 2016. The Wage and Investment division will retain the intake and screening responsibilities. The Small Business and Self-Employed division will be responsible for defining objectives and monitoring results for information referrals. We continue to monitor IRS implementation of the planned cost and results measurement and reporting.
    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 January 2017, IRS has taken some action on this recommendation. IRS told us it established a cross-functional team in February 2016 to conduct a comprehensive review of IRS's referral programs, including the information referral process. IRS completed its review and plan for the organizational structure in December 2016. Once IRS approves the organizational structure, IRS will document new and updated screening and routing procedures in the Internal Revenue Manual as well as guidance for the Image Control Team and other IRS units receiving information referrals. IRS plans to implement this recommendation by September 2017.
    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 January 2017, IRS has taken some action to implement this recommendation. IRS told us it established a cross-functional team in February 2016 to conduct a comprehensive review of IRS's referral programs, including the information referral process. IRS completed its review and plan for the organizational structure in December 2016. Once IRS approves the organizational structure, IRS will establish and document Internal Revenue Manual procedures, including criteria for retaining information referrals for destruction. IRS plans to implement this recommendation by September 2017.
    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 January 2017, IRS has taken some action to implement this recommendation. IRS told us it established a cross-functional team in February 2016 to conduct a comprehensive review of IRS's referral programs, including the information referral process. IRS completed its review and plan for the organizational structure in December 2016. Once IRS approves the organizational structure, IRS will establish and document Internal Revenue Manual procedures, including guidelines for IRS units receiving information referrals. IRS plans to implement this recommendation by September 2017.
    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 March 2017, 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 is to explore aligning all IRS referral programs within an organizational structure to more efficiently coordinate, communicate, and share information across the referral programs by December 2017. As of March 2017, 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. The meetings are scheduled to begin by summer 2017.
    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 March 2017, 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 due to the technical nature and complexity of the various referral types. As of March 2017, the cross-functional team has worked with IRS On Line Services to develop an online application prototype and is also considering the cost-effectiveness of a commercial off-the-shelf product. According to the 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 has said it will consider further consolidating the referral programs once the online application is in place.
    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 January 2017, IRS has taken some action on this recommendation. IRS told us it established a cross-functional team in February 2016 to conduct a comprehensive review of IRS's referral programs, including the information referral process. IRS completed its review and plan for the organizational structure in December 2016. Once IRS approves the organizational structure, IRS will document new and updated screening and routing procedures in the Internal Revenue Manual as well as guidance for the Image Control Team and other IRS units receiving information referrals. IRS plans to implement this recommendation by September 2017.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    2 open recommendations
    Recommendation: To further encourage whistleblowers to provide information to IRS about serious tax noncompliance and to protect whistleblowers, Congress should consider legislation that would provide protections for tax whistleblowers against retaliation from their employers.

    Agency: Congress
    Status: Open

    Comments: On March 29, 2017, the Senate Finance Committee introduced the IRS Whistleblower Improvements Act of 2017, which would provide anti-retaliation protections for whistleblowers who bring information on tax noncompliance to IRS. The act would provide protections for employees from discharge, demotion, suspension, threats, harassment, or any other discrimination in reprisal for lawful actions to provide information to the IRS or to participate in a judicial action taken by the IRS relating to an alleged underpayment of tax or violation of tax laws. On April 20, 2016, the Senate Finance Committee approved provisions to improve the IRS's whistleblower program and protect tax whistleblowers from retaliation from their employers. The provision extends anti-retaliation provisions to IRS whistleblowers that are presently afforded to whistleblowers under the False Claims Act and Sarbanes-Oxley. However, no action passed on this Senate bill in the 114th congress. We will continue to monitor legislative action in this area.
    Recommendation: The Commissioner of Internal Revenue should direct the Whistleblower Office Director to establish a process to ensure whistleblower addresses are being properly updated in E-TRAK to ensure the WO does not send whistleblower mail to outdated or incorrect addresses. This process could include developing a change of address form specific to whistleblowers and including a blank copy of it in every correspondence with whistleblowers or referencing the importance of updating the WO with any address change in every correspondence with whistleblowers.

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

    Comments: In a January 29, 2016 letter, the IRS Deputy Commissioner for Services and Enforcement said that the Whistleblower Office will emphasize in education materials, fact sheets, and other communications with whistleblowers the importance of whistleblowers providing updates to the IRS of any address changes, along with reminders of how to submit address changes to the Whistleblower Office. In August and September of 2016, IRS revised templates for standard letters sent to whistleblowers reminding them of the importance of updating their addresses with the Whistleblower Office and providing direction for how to do so. IRS also published a fact sheet for whistleblowers, which is available on www.irs.gov, that also provides information on how whistleblowers should notify the Whistleblower Office of any address change. As of February 2017, IRS had not taken action to establish a process to ensure that address changes are being properly updated in E-TRAK and that mail is being sent only to the correct address. We will continue to follow-up with IRS on this recommendation.
    Director: Mctigue Jr, James R
    Phone: (202) 512-9110

    2 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 May 2017, monitoring has not increased for EO referrals.
    Recommendation: In addition, the Commissioner of Internal Revenue should determine what additional controls may be needed to ensure that all closed examination files are tracked and maintained accurately.

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

    Comments: In 2016, the Tax Exempt and Government Entities Unit (TE/GE) reviewed its internal processes and procedures and met with the Wage and investment (W&I) Files Unit to discuss procedures for requesting closed case files, according to Exempt Organizations Examinations (EOE) officials. TE/GE developed a desk guide for the Exempt Organizations Case Selection and Delivery Unit to document the procedures for requesting, tracking and monitoring closed case file requests. In addition, TE/GE provided recommendations to the W&I Files unit on modifications to the Internal Revenue Manual (IRM) that would facilitate coordination; as of June 2017, W&I has not implemented these recommendations. The EOE unit will also continue to expand electronic case management efficiencies.
    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 March 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
    Phone: (202) 512-9039

    2 open recommendations
    Recommendation: Given the increasing extent of business travel to the U.S. and the eroding effect of inflation, Congress may wish to consider raising the amount of U.S. income paid by a foreign employer that is exempt from tax for nonresidents who meet the other conditions of the exemption.

    Agency: Congress
    Status: Open

    Comments: As of August 2017, the Congress had not raised the amount of U.S. income paid by a foreign employer that is exempt from tax for nonresidents who meet the other conditions of the exemption.
    Recommendation: Given the difficulty of enforcing the requirement for aliens to obtain certificates of compliance--sailing permits--before departing the country and the existence of withholding requirements and tax treaties, Congress may wish to consider eliminating the sailing permit requirement.

    Agency: Congress
    Status: Open

    Comments: As of August 2017, the Congress has not eliminated the sailing permit requirement.
    Director: Brostek, Michael
    Phone: (202)512-9039

    1 open recommendations
    Recommendation: To improve compliance with shareholder basis rules, Congress may wish to require S corporations to calculate and report shareholder's stock and debt basis as completely as possible. S corporations would report the calculation on the Schedule K-1 and send it to shareholders as well as IRS. If Congress judges that stock purchase price information that is currently only available to shareholders should not be transmitted to the S corporation due to privacy concerns, an alternative is to require that S corporations report less complete basis calculations using information already available to the S corporation.

    Agency: Congress
    Status: Open

    Comments: As of August 2017, Congress had not enacted legislation to require S corporations--a federal business type that provides certain tax benefits like passing income and losses to shareholders' individual returns-- to calculate and report shareholder's stock and debt basis as completely as possible and report the calculation to shareholders and IRS, as GAO suggested in December 2009.
    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.
    Director: White, James R
    Phone: (202)512-5594

    3 open recommendations
    Recommendation: 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.

    Agency: Congress
    Status: Open

    Comments: No legislative action has been identified 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. On March 23, 2010, Congress enacted section 9006 of the Patient Protection and Affordable Care Act of 2010 (Public Law 111-148), which expanded information reporting to include payments made to corporations, consistent with GAO's January 2009 matter for congressional consideration. The provision also required payers to report payments for property and gross proceeds. The provision was to be effective for payments after December 31, 2011, requiring payers to report beginning in January 2013 on payments to corporations made in 2012 for property or services. However, Congress repealed the provision on April 14, 2011, by section 2 of the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (Public Law 112-9).
    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. With the ongoing annual individual income tax reporting compliance studies, the IRS will gather more data on this issue. However, by themselves, these efforts will not provide a comprehensive picture of the scope of potential Form 1099-MISC non-compliance. 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 July 2017, IRS had completed portions of its analysis of the NRP employment tax sample results and was working to resolve data issues. IRS estimates its analysis of the extent of Form 1099-MISC payer noncompliance will be complete by December 2017. 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 involves examinations of a sample of tax returns expected to culminate in 2015. The examinations include 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 July 2017, IRS had completed portions of its analysis of the NRP employment tax sample results and was working to resolve data issues. IRS estimates its 1099-MISC payer reporting compliance analysis will be completed in December 2017.We will continue to monitor IRS's progress.
    Director: White, James R
    Phone: (202)512-3000

    1 open recommendations
    Recommendation: 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.

    Agency: Congress
    Status: Open

    Comments: As of March 2017, no legislation had been identified 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. In the 112th Congress, Congress enacted the Small Business Jobs Act of 2010 (Public Law 111-240), which contained a provision that required, in general, persons receiving rental income from real estate to be considered engaged in a trade or business and therefore subject to the reporting requirements of section 6041 of the Internal Revenue Code, which was consistent with GAO's August 2008 matter for congressional consideration. However, Congress repealed the provision on April 14, 2011, by section 3 of the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (Public Law 112-9).
    Director: White, James R
    Phone: (202) 512-9039

    1 open recommendations
    Recommendation: As Congress considers whether tax-exempt governmental bonds should be used for professional sports stadiums that are generally privately used, it may also wish to consider whether other facilities, including hotels and golf courses, that are privately used should continue to be financed with tax-exempt governmental bonds.

    Agency: Congress
    Status: Open

    Comments: No legislative action enacted as of March 2017. A bill was introduced in Congress in February 2017 (H.R. 811) which, if enacted, would, in general, not allow tax-exempt government bonds to be used to finance professional sports stadiums. Reconsidering the tax-exempt status of certain bonds could generate hundreds of millions of dollars in additional federal revenue.
    Director: White, James R
    Phone: (202)512-5594

    1 open recommendations
    Recommendation: The Secretary of the Treasury should ensure that the tax gap strategy includes (1) a segment on improving sole proprietor compliance that is coordinated with broader tax gap reduction efforts and (2) specific proposals, such as the options we identified, that constitute an integrated package.

    Agency: Department of the Treasury
    Status: Open

    Comments: As of August 2017, Treasury has taken no action to address this recommendation and has not provided GAO with plans to do so. Treasury's tax gap strategy does not cover sole proprietor compliance in detail while coordinating it with broader tax gap reduction efforts as GAO recommended in July 2007. In March 2016, Treasury officials reported to GAO that they have implemented or proposed several actions to address the tax gap among sole proprietors, such as requiring reporting on payment card payments and improved audit selection procedures for sole proprietors. However, GAO's July 2007 report noted there are many trade offs involved in various options for improving sole proprietor compliance. GAO recommended that Treasury's strategy for reducing the tax gap include a segment on sole proprietor compliance that is coordinated with broader tax gap reduction efforts.