Generally, employers are required to withhold income taxes on employee pay, but employees can exclude part of their pay from withholding. Currently, the amount of an employee's pay to be excluded from withholding is determined by multiplying the number of withholding allowances an employee claims by a set dollar value. Internal Revenue Service (IRS) guidance directs employees to claim withholding

The Internal Revenue Service (IRS) has made progress in resolving a number of previously reported control deficiencies. During fiscal year 2017, the agency made improvements in access controls by, for example, restricting unnecessary user access to certain applications and enforcing strong encryption on certain systems. IRS also corrected a previously identified contingency planning weakness for

The Internal Revenue Service (IRS) has identified over 100 interactions requiring taxpayer authentication based on potential risks to IRS and individuals. IRS authenticates millions of taxpayers each year via telephone, online, in person, and correspondence to ensure that it is interacting with legitimate taxpayers. IRS's estimated costs to authenticate taxpayers vary by channel. IRS has made pro

The performance of the Internal Revenue Service's (IRS) selected information technology (IT) investments that GAO reviewed varied. Specifically, the four selected investments in the development phase that GAO reviewed spent less than planned, but most were behind schedule and delivered less scope than planned. In addition, the five selected investments in the operations and maintenance phase that

During its audit of the Internal Revenue Service's (IRS) fiscal years 2017 and 2016 financial statements, GAO identified a new control deficiency involving the timely correction and posting of tax transactions to taxpayer accounts that contributed to IRS's continuing material weakness in internal control over unpaid assessments as of September 30, 2017. GAO also identified another new deficiency

IRS continues to confront the ongoing problems of identity theft (IDT) refund fraud. The agency estimates that at least $1.68 billion was paid in IDT refund fraud in 2016. To help address this issue, consistent with GAO's prior reporting, the Protecting Americans from Tax Hikes Act of 2015 advanced the deadline for employers to file W-2s to SSA to January 31 (about 1 to 2 months earlier than in p

Federal agencies generally use one of four payroll shared service centers (SSCs) to process employee timesheets, assure withheld tax is paid, and send Form W-2 Wage and Tax Statement (W-2) data to the Social Security Administration (SSA) and state tax authorities. GAO found these SSCs generally sent this W-2 data to SSA and states in a timely manner for tax years 2015 and 2016. However, SSCs vari

Forty-five states and the District of Columbia levy taxes on the sale of goods and certain services, including those sold remotely, such as over the Internet. In 1992, the Supreme Court ruled in Quill v. North Dakota that a state can only require a business to collect and remit sales tax if the business has substantial presence, referred to as nexus, in that state. However, the decision stated th

The Internal Revenue Service's (IRS) latest tax gap estimate found that taxpayers voluntarily and timely paid about 81.7 percent of the taxes they should have paid for tax years 2008-2010. As with past estimates, underreporting of individual income taxes accounted for the largest portion of the 2008-2010 tax gap. IRS believes the tax gap estimates are sufficiently reliable to provide a snapshot o

The Internal Revenue Service (IRS) launched an Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (ISAC) pilot for the 2017 filing season. It aims to allow IRS, states, and tax preparation industry partners to quickly share information on identity theft (IDT) refund fraud. The ISAC pilot includes two components: an online platform run by IRS to communicate data on suspected f