Recommendation: The Commissioner of Internal Revenue should assess options for updating Publications 590-A and 590-B to either include more information or direct taxpayers to other resources for IRA owners with investments in unconventional assets. Such information could include: storage requirements for IRA investments in certain precious metals; valuation methods for hard-to-value IRA assets; the Department of Labor's process for granting exemptions to IRA prohibited transactions rules; and IRA investments with the potential to create unrelated business income tax liabilities. (Recommendation 1)

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

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Commissioner of Internal Revenue, building on forthcoming compliance research using new IRA asset data, should evaluate the feasibility of requiring disclosure for high-risk IRA asset types associated with abusive schemes as transactions of interest. (Recommendation 2)

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

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Commissioner of Internal Revenue should develop resources (such as training materials or job aids) for Small Business/Self-Employed examiners conducting IRA owner audits that explain how IRAs with unconventional assets can generate unrelated business income tax liability, and how examiners can refer cases to unrelated business income experts in IRS for assistance. (Recommendation 3)

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

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Director of DFAS should, in accordance with the FMR, implement procedures to help ensure that FBWT reconciliations are consistently performed and that all DFAS sites review and document research conducted on the causes of any differences arising from these reconciliations. (Recommendation 1)

Agency: Department of Defense: Defense Finance and Accounting Service
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. They stated that the Defense Finance and Accounting Service (DFAS) will update the Financial Management Regulation (FMR) and implement procedures to help ensure Fund Balance with Treasury (FBWT) reconciliations are performed consistently and appropriate research on the causes of any difference arising from these reconciliations is reviewed and documented by all DFAS sites. Further, DFAS will update internal documentation/policy to outline DFAS roles and processes for FBWT reconciliations as well as include guidance on the execution of DOD's FMR FBWT reconciliation requirements. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should update the FMR to clearly define the required supporting documentation for system-generated accounting adjustments, including the required documentation of business rules driving the recording of these adjustments, such as documentation of the programming logic. (Recommendation 2)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. They stated that the Department is developing a checklist of required supporting documents for incorporation into the DOD Financial Management Regulations (FMR). They will update the DOD FMR Volume, 6A, Chapter 2 to define the required supporting documentation for system generated accounting adjustments. Additionally, the Defense Finance and Accounting Service (DFAS) will update internal documentation to include narratives outlining the business rules for system generated accounting adjustments with the required supporting documentation. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should perform and document a comprehensive review of the FMR accounting adjustment category codes to determine their ongoing applicability or the need for additional codes to reflect the current financial reporting environment. (Recommendation 3)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department intends to collaborate with the financial community to update the category codes within the DOD Financial Management Regulations (FMR). Specifically, the Office of the Under Secretary of Defense will perform a comprehensive review of Journal Voucher Category Codes listed in DOD FMR, Volume 6A, Chapter 2 and update regulations based on feedback. The Defense Finance and Accounting Service will update internal documentation and procedures to reflect any code changes identified in the revised DOD FMR. The estimated completion date for this recommendation is July 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should establish procedures to help ensure the consistent implementation of the requirements of DFAS Form 9339. (Recommendation 4)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department plans to update the Defense Finance and Accounting Service (DFAS) Form 9339 and develop and conduct refresher training to all users of the Form 9339. The estimated completion date for this recommendation is September 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should update policies and procedures to identify the causes of out-of-balance accounting adjustments and resolve the causes in a timely manner. (Recommendation 5)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department is collaborating on utilizing existing data to identify and resolve out-of-balances and update DOD Financial Management Regulation, Volume 6A, Chapter 2 to include a section conveying out-of-balance accounting adjustments are not authorized. Root cause analysis efforts will be performed in conjunction with corrective action plans (CAPs) for recommendations 6--8. The estimated completion date for this recommendation is December 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement policies and procedures to help ensure that root cause analyses for accounting adjustments are consistently performed and documented across DOD. (Recommendation 6)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department, in conjunction with the Director of Defense Finance and Accounting Service (DFAS), intends to utilize existing advanced analytics tools to research and document root cause analyses. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow-up on this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement policies and procedures to help ensure consistent development, implementation, monitoring, and documentation of action plans across DOD that address accounting adjustment causes that staff identified internally. (Recommendation 7)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department intends to collaborate with the financial community, including the Director of the Defense Financial and Accounting Service (DFAS), and utilize existing tools for documenting and implementing consistent procedures for action plans of accounting adjustments. The analytical tool, Advana will be used to analyze the action plan code for consistent analysis to be performed across the DOD. The estimated completion date for the implementation of this recommendation is February 2021. We will continue to follow-up on this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement procedures across DOD that include clearly defined outcomes focused on reducing accounting adjustments (supported and unsupported) with specific actionable steps and procedures for achieving stated goals. (Recommendation 8)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department, in conjunction with the Director of the Defense Finance and Accounting Service, plans to utilize existing tools to define and measure the outcomes of accounting adjustments. The estimated completion date for the implementation of this recommendation is April 2021. We will continue to follow-up on this recommendation.

Recommendation: The Board of Governors of the Federal Reserve System should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 1)

Agency: Federal Reserve System
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Comptroller of the Currency should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 2)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Chairman of the Federal Deposit Insurance Corporation should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Chairman of the National Credit Union Administration should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of banks' BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods. (Recommendation 4)

Agency: National Credit Union Administration
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA clarify internal guidance for daily account reviews by specifying criteria for the level (such as percentage or dollar amount) of change in transportation account balances that would require DSCA to contact DFAS for further examination. (Recommendation 1)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to establish a percentage threshold for monitoring daily account balance changes. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA establish a methodology to calculate a target range, with desired upper and lower bounds, for FMS transportation account balances that could be used to better inform DSCA's account reviews. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to create internal guidance for calculating upper and lower bounds and to monitor the accounts against them. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA modify the internal guidance for the annual review process to include the specific steps DSCA officials should take in preparing the annual report, including ensuring that they incorporate rigorous analysis into the annual reports. (Recommendation 3)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to update internal guidance with specific criteria for measuring the health of the accounts and to perform rigorous analysis of historical account data as part of its annual review process. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA develop internal guidance related to the redistribution of funds between the FMS trust fund fee accounts. Such internal guidance could include criteria for when to consider redistributing funds between accounts and for when to return those funds, how to analyze the amount of any redistributions needed, and how to clearly report any redistributions to DSCA management. (Recommendation 4)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to update internal guidance with specific criteria and analysis steps to follow when making determinations about redistributing funds between the FMS trust fund fee accounts. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA assess whether funds redistributed from the administrative account to the transportation account should be moved back to the FMS administrative account and document this decision. If the Director of DSCA determines that the funds should be moved back to the FMS administrative account, the Director should ensure the movement of funds in accordance with this decision. (Recommendation 5)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and explained certain steps DSCA has already taken in response. In particular, DSCA has completed an assessment of the health of the main FMS transportation account sufficient to determine that it plans to move the redistributed funds back to the FMS administrative account and DSCA has taken initial steps to move those funds. We will continue to monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA develop internal guidance for the steps that DSCA, in combination with DFAS, should undertake when a Building Partner Capacity-specific transportation account closes to help ensure that any remaining unused funds are transferred to the miscellaneous receipts of the U.S. Treasury in accordance with DOD officials' stated intention to do so. (Recommendation 6)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to develop guidance for DFAS to follow when Building Partner Capacity-specific transportation accounts close to ensure any remaining funds are transferred to the miscellaneous receipts of the U.S. Treasury. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA create specific internal guidance for how and from where data should be obtained to be used for its transportation fee rate reviews and the timeframes the data should cover to ensure DSCA has a systematic sample upon which to base its rate setting decisions. This updated internal guidance should be based on consultations with the military departments, DFAS, and U.S. Transportation Command (TRANSCOM) on which sources of transportation cost and fee data are the most reliable and comparable for use in its FMS transportation fee rate reviews. (Recommendation 7)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and stated that DSCA has discussed with other relevant DOD agencies in a Transportation Working Group how to best address it. In particular, DSCA noted this Working Group has decided that all data for the rate reviews should come from common data systems and be submitted in a uniform manner. Upon determination of the systems to use and processes to follow, DSCA plans to update internal guidance accordingly. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA develop specific internal guidance to follow when performing transportation fee rate reviews. Such internal guidance could specify when these reviews should occur; a process to obtain management commitment to complete a review before DSCA requests that the military departments compile data for it; and a process for performing the reviews that includes developing clear, documented goals and an appropriate level of analysis to best ensure that DSCA's analysis meets those goals. (Recommendation 8)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to update internal guidance for FMS transportation fee rate reviews to ensure they are completed every 5 years. We will monitor DSCA's implementation of this aspect of the recommendation, as well as the other aspects related to DSCA providing greater specificity about the processes for obtaining management commitment and for performing the rate reviews.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA conduct a review of the current structure of the FMS transportation fee rate, in consultation with other relevant DOD agencies, to determine if other rate structures could better balance considerations related to administrative burden, equity, efficiency, and revenue adequacy. (Recommendation 9)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to perform rigorous analysis and to consult with other relevant DOD agencies in the Transportation Working Group about whether the current structure of the FMS transportation fee rate is still valid or should be updated, and to update internal guidance as appropriate. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA clarify internal guidance for the military departments on how to calculate the estimated actual transportation prices to charge FMS purchasers for certain items, such as by specifying a calculation methodology. This updated internal guidance should be based on consultations with the military departments, TRANSCOM, and any other relevant DOD components on which sources of data and which calculation methodologies would be most accurate. (Recommendation 10)

Agency: Department of Defense
Status: Open

Comments: In DSCA's letter responding to this report, DSCA concurred with this recommendation and identified plans to address it, such as to consult with other relevant DOD agencies in the Transportation Working Group to review this calculation methodology, determine a revised methodology that better aligns with TRANSCOM's transportation routes and contracting costs, and to update internal guidance as appropriate. We will monitor DSCA's implementation of this recommendation.

Recommendation: The Secretary of Labor should document internal policies and procedures for managing the IRA prohibited transaction exemption process. (Recommendation 1)

Agency: Department of Labor
Status: Open

Comments: DOL agreed with this recommendation and plans to create an internal procedure manual which will document the Office of Exemption Determinations' process for managing IRA prohibited transaction exemption applications. When we confirm what actions DOL has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Labor, in consultation with the Commissioner of Internal Revenue, should establish a formal means, such as a memorandum of understanding or other mechanism, to support and guide DOL's and IRS's collaborative efforts to oversee IRA prohibited transaction exemptions. (Recommendation 2)

Agency: Department of Labor
Status: Open

Comments: DOL agreed with this recommendation and plans to periodically discuss all IRA exemption cases with IRS and did not elaborate on the formal means for this information sharing. IRS said that it has met with DOL to formalize collaboration on exemptions from prohibited transaction treatment in IRAs. DOL agreed to contact IRS within 25 days of DOL receiving an IRA prohibited transaction exemption application to determine if there are any Internal Revenue Code issues. To avoid any disclosure concerns, DOL will not identify the applicant at that time. This new process will be reflected in DOL's forthcoming internal procedure manual for the prohibited transaction exemption process.

Recommendation: The Commissioner of Internal Revenue, in consultation with the Secretary of Labor, should establish a formal means, such as a memorandum of understanding or other mechanism, to support and guide DOL's and IRS's collaborative efforts to oversee IRA prohibited transaction exemptions. (Recommendation 3)

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

Comments: IRS agreed with this recommendation and said it has met with DOL to formalize collaboration on exemptions from prohibited transaction treatment in IRAs. DOL agreed to contact IRS within 25 days of DOL receiving an IRA prohibited transaction exemption application to determine if there are any Internal Revenue Code issues. To avoid any disclosure concerns, DOL will not identify the applicant at that time. This new process will be reflected in DOL's forthcoming internal procedure manual for the prohibited transaction exemption process.

Recommendation: Congress should consider amending the Internal Revenue Code, Bank Secrecy Act of 1970, and other statutes, as needed, to address overlap in foreign financial asset reporting requirements for the purposes of tax compliance and detection, and prevention of financial crimes, such as by aligning the types of assets to be reported and asset reporting thresholds, and ensuring appropriate access to the reported information.

Agency: Congress
Status: Open

Comments: No legislative action enacted as of January 2020. Congress has not amended the Internal Revenue Code, Bank Secrecy Act of 1970 and other statutes as needed to address overlap in foreign financial asset reporting requirements, as GAO suggested in April 2019. GAO continues to believe that if Congress were to modify these various statutes, the reporting burden created by navigating multiple reporting requirements will be reduced. Modifying these statutes will also allow for the use foreign financial asset information collected under the Foreign Account Tax Compliance Act to prevent and detect financial crimes.

Recommendation: The Commissioner of Internal Revenue should develop a plan to mitigate risks with compliance activities due to the lack of accurate and complete Taxpayer Identification Numbers of U.S. account holders collected from FFIs. (Recommendation 1)

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

Comments: The Internal Revenue Service (IRS) has taken several steps to improve collection of accurate and complete taxpayer identification numbers (TINs) from foreign financial institutions (FFIs). For example, in December 2019, IRS officials said they began identifying 2017 records submitted by FFIs without valid TIN fields or corresponding dates of birth for account holders. IRS also launched a campaign to identify FFIs that did not file a Form 8966 with IRS. While these steps can improve the quality of account data submitted by FFIs, IRS still faces ongoing risks that receiving inaccurate or incomplete TINs pose to efforts to identify and combat taxpayer and FFI noncompliance. Additionally, IRS has not yet developed a plan that elaborates on these risks and identifies steps to mitigate them, as we recommended in April 2019. Without such a strategy, IRS may fail to identify opportunities to adjust compliance programs to better enforce FFI reporting of valid TINs and identify U.S. persons who are not complying with FATCA reporting requirements.

Recommendation: The Commissioner of Internal Revenue should ensure that appropriate business units conducting compliance enforcement and research have access to consistent and complete data collected from individuals' electronic and paper filings of Form 8938 and elements of parent individual tax returns. As part of this effort, the Commissioner should ensure that IRS provides clear guidance to the business units for accessing such data in IRS's Compliance Data Warehouse. (Recommendation 2)

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

Comments: The Internal Revenue Service (IRS) has taken several steps to address this recommendation. According to IRS Information Technology division officials, as of December 2019, they deliver paper and electronically filed Form 8938 data to IRS's Research, Applied Analytics, and Statistics organization on a monthly basis, and makes such data available in the Compliance Data Warehouse (CDW) for use by agency officials. According to Large Business and International (LB&I) Division officials, IRS's enforcement functions also have access to this data. One outcome of this access, according to LB&I officials, is the use of FATCA data in the development of compliance examination leads. However, IRS has not yet developed clear guidance for business units to access relevant data from Forms 8938 and elements of parent individual tax returns in CDW, as we recommended. Without such guidance, CDW users may be less likely to effectively leverage CDW data for examination purposes.

Recommendation: The Commissioner of Internal Revenue should employ a comprehensive plan for managing efforts to leverage FATCA data in agency compliance efforts. The plan should document and track activities over time to
• ensure individuals and FFIs comply with FATCA reporting requirements;
• assess and mitigate data quality risks from FFIs;
• improve the quality, management, and accessibility of FATCA data for compliance, research, and other purposes; and
• establish, monitor, and evaluate compliance efforts involving FATCA data intended to improve voluntary compliance and address noncompliance with FATCA reporting requirements. (Recommendation 3)

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

Comments: In September 2019, IRS's Deputy Commissioner for Services and Enforcement said that IRS disagreed with our April 2019 recommendation. The Deputy Commissioner said that resources that would be dedicated to update a comprehensive plan unique to FATCA-such as the FATCA Compliance Roadmap-are better spent on enforcement activities. The Deputy Commissioner also said that IRS's strategy for FATCA compliance will instead be part of IRS's Large Business & International (LB&I) Division's overall portfolio management strategy. Implementing enforcement activities could increase taxpayers' and foreign financial institutions' (FFIs) compliance with FATCA reporting requirements. While IRS does not have to revise and reemploy its FATCA Compliance Roadmap, it can employ a comprehensive plan as part of LB&I's portfolio management strategy to evaluate FATCA enforcement activities already in place, and determine the extent to which these activities improve voluntary compliance and address noncompliance with FATCA reporting requirements. Without such a plan, IRS risks not maximizing efforts to manage and address the myriad of challenges it faces in effectively ensuring taxpayer compliance.

Recommendation: The Commissioner of Internal Revenue should assess factors contributing to unnecessary Form 8938 reporting and take steps, as appropriate, to address the issue. Depending on the results of the assessment, potential options may include:
• identifying and implementing steps to further clarify IRS Form 8938 instructions and related guidance on IRS's website on determining what foreign financial assets to report, and how to calculate and report asset values subject to reporting thresholds; and
• conducting additional outreach to educate taxpayers on required reporting thresholds, including notifying taxpayers that may have unnecessarily filed an IRS Form 8938 to reduce such filings. (Recommendation 4)

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

Comments: As of February 2020, IRS officials said the agency is in the process of obtaining 2017 and 2018 tax data to analyze the number of unnecessary filings of Form 8938. Completing this data analysis and identifying the full range of factors contributing to unnecessary Form 8938 reporting will allow IRS to better address such factors. These efforts, in turn, will reduce the risk that taxpayers file-and IRS processes-forms that taxpayers were not required to submit to IRS.

Recommendation: The Secretary of the Treasury should lead efforts, in coordination with the Secretary of State and Commissioner of Social Security, to establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 5)

Agency: Department of the Treasury
Status: Open

Comments: The Department of the Treasury (Treasury) has taken some steps to implement GAO's April 2019 recommendation. Specifically, Treasury proposed changes to the Internal Revenue Service (IRS) relief procedures to abate assessments for certain expatriating taxpayers and is working with IRS and the Department of State (State) to publicize the procedures. In addition, Treasury led efforts with IRS, State, and the Social Security Administration (SSA) to develop frequently asked questions that combine relevant guidance for individuals to obtain a Social Security number, renounce U.S. citizenship, and comply with U.S. tax obligations. However, as of December 2019, Treasury lacked a collaborative interagency mechanism to address ongoing issues U.S. persons living abroad continue to encounter from implementation of Foreign Account Tax Compliance Act (FATCA) reporting requirements. In November 2019, Treasury said it was not the appropriate agency to lead these coordination efforts. However, GAO continues to believe that because Treasury is ultimately responsible for effectively administering FATCA, it is in a better position than State or SSA to establish an effective collaborative mechanism. Doing so will help agencies address the ongoing issues Americans living abroad experience from FATCA.

Recommendation: The Secretary of State, in coordination with the Secretary of the Treasury and Commissioner of Social Security, should establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 6)

Agency: Department of State
Status: Open

Comments: The Department of State (State) has taken several steps to implement GAO's April 2019 recommendation. In September 2019, State worked with the Department of the Treasury (Treasury), the Internal Revenue Service (IRS), and Social Security Administration (SSA) to develop and post online frequently asked questions on how to obtain a Social Security number, renounce U.S. citizenship, and comply with U.S. tax obligations. Additionally, State officials participated in an October 2019 webinar hosted by IRS regarding newly approved tax relief procedures for certain former citizens who have renounced U.S. citizenship and seek to be federal tax compliant. State also established procedures with SSA for its embassies and consulates abroad to help U.S. citizens apply for a Social Security number during the passport application process without SSA permission, thus removing a significant barrier in serving U.S. citizens abroad. However, as of December 2019, State lacked a collaborative interagency mechanism with Treasury to address ongoing FATCA implementation issues related to access to foreign financial services and denial of employment and promotion opportunities overseas. Treasury is responsible for leading efforts to establish such a mechanism; however, State's participation in such a mechanism on a continuing basis will help agencies address remaining issues Americans living abroad experience from FATCA.

Recommendation: The Commissioner of Social Security, in coordination with the Secretaries of State and Treasury, should establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 7)

Agency: Social Security Administration
Status: Open

Comments: The Social Security Administration (SSA) has taken or plans to take steps to implement GAO's April 2019 recommendation. SSA worked with the Department of the Treasury (Treasury), the Internal Revenue Service, and the Department of State (State) to develop and post online frequently asked questions on how to obtain a Social Security number, renounce U.S. citizenship, and comply with U.S. tax obligations. Additionally, in October 2019, SSA said it plans to conduct outreach events for U.S persons living abroad who need Social Security numbers. However, as of December 2019, SSA lacked a collaborative interagency mechanism with Treasury and State to address ongoing FATCA implementation issues, such as recurring issues U.S. persons may have obtaining Social Security numbers. Treasury is responsible for leading efforts to establish such a mechanism; however, SSA's participation in such a mechanism on a continuing basis will help agencies address remaining issues Americans living abroad experience from FATCA.

Recommendation: To better identify the incidence and amount of loan offsets in 401(k) plans nationwide, we recommend that the Secretary of Labor direct the Assistant Secretary for the Employee Benefits Security Administration, in coordination with IRS, to revise the Form 5500 to require plan sponsors to report qualified plan loan offsets as a separate line item distinct from other types of distributions. (Recommendation 1)

Agency: Department of Labor
Status: Open

Comments: DOL neither agreed nor disagreed with this recommendation. The agency said it would consider the recommendation as part of its overall evaluation of the Form 5500. IRS said it would work with DOL as it responds to this recommendation.

Recommendation: The Secretary of Defense should ensure that the Under Secretary of Defense (Comptroller), in coordination with the U.S. Army, Air Force, Navy, and Marine Corps, conduct a review of the foreign currency rates used at disbursement to determine whether cost-saving opportunities exist by more consistently selecting cost-effective rates at disbursement. (Recommendation 1)

Agency: Department of Defense
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. As of August 2019, DOD had planned actions to update Volume 6A, Chapter 7 of the Financial Management Regulation (FMR) with guidance on rates for disbursement to ensure all components are utilizing the most cost-effective rates while balancing mission requirements and time required to process transactions. DOD estimates that the FMR revision will be completed by October 31, 2020. Until the revision to the FMR is completed, DOD risks paying more to disburse funds for overseas expenditures than would otherwise be required.

Recommendation: The Secretary of Defense should ensure that the Under Secretary of Defense (Comptroller) analyze realized and projected losses to determine the necessary size of the FCFD account balance and use the results of this analysis as the basis for transfers of unobligated balances to the account. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: The Department of Defense (DOD) partially concurred with this recommendation. However, as of August 2019, DOD had not planned any actions intended to implement this recommendation. According to DOD, projecting foreign currency gains or losses to determine the necessary size of the Foreign Currency Fluctuations, Defense (FCFD) account balance would only be possible if foreign currency rates do not fluctuate. DOD states that if projected gains or losses are used to determine the necessary size of the FCFD account when foreign currency rates are volatile, it would expose the department to additional risk. In our report, we acknowledged the inherent challenge in projecting foreign currency gains or losses. However, we also noted that DOD already projects foreign currency gains or losses as the basis for transfers out of the FCFD account but does not use the same analysis to inform its transfers into the account. Further, DOD has the flexibility to make multiple transfers of funds to the FCFD account in a fiscal year in response to any unforeseen foreign currency fluctuations. Without an analysis of projected losses to determine the necessary size of the account balance, DOD may be maintaining the account at a higher balance than is necessary and losing opportunities to more efficiently use funds.

Recommendation: The Secretary of Defense should ensure that the Under Secretary of Defense (Comptroller) revise the Financial Management Regulation to include guidance on ensuring that data are complete and accurate, including assignment of responsibility for correcting erroneous data in its Foreign Currency Fluctuations Defense (O&M) reports. (Recommendation 3)

Agency: Department of Defense
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. As of August 2019, DOD had planned actions to revise Volume 6A, Chapter 7 of the Financial Management Regulation (FMR) to ensure reporting is complete and accurate and assign responsibilities to DOD components for data correction. DOD estimates that the revision to the FMR will be completed by October 31, 2020. Without updated guidance to ensure that the data that tracks foreign currency gains and losses are complete, DOD and Congress will continue to lack quality information with which to make decisions and exercise stewardship over resources for managing foreign currency fluctuations.

Recommendation: The Secretary of Defense should ensure that the Secretary of the Army develop a plan with timelines for implementing changes to its General Fund Enterprise Business System to accurately record its disbursements, consistent with DOD Financial Management Regulation guidance. (Recommendation 4)

Agency: Department of Defense
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. As of August 2019, DOD had planned actions intended to address the recommendation. Specifically, the Secretary of the Army intended to develop a Systems Change Request for how disbursements are recorded in the General Fund Enterprise Business System to be consistent with DOD's Financial Management Regulation. DOD estimates that the system changes will be complete by the second quarter of FY 2020. Until DOD completes its planned actions to address this recommendation, the Army and DOD will continue to lack accurate information for tracking and helping to manage foreign currency gains and losses.

Recommendation: Congress should consider legislation modifying the Internal Revenue Code to allow routine account transfers within the same foreign workplace retirement plan or between two foreign workplace retirement plans in the same country to be free from U.S. tax in countries covered by an existing income tax treaty that provides for favorable U.S. tax treatment of foreign workplace retirement plan contributions.

Agency: Congress
Status: Open

Comments: We will monitor congressional action related to this matter.

Recommendation: The Secretary of Labor should issue guidance on the obligations under the Employee Retirement Income Security Act of 1974 of sponsors of ongoing plans to prevent, search for, and pay costs associated with locating missing participants. (Recommendation 1)

Agency: Department of Labor
Status: Open

Comments: Labor agreed with this recommendation. In June 2019, the Department reported that it engaged with a range of stakeholders on issues surrounding missing and unresponsive participants, including representatives of plans, employers, financial services groups, consumer groups, and state unclaimed property funds. Their goal is to help plans locate and pay retirement benefits to missing participants and beneficiaries; they will evaluate constructive guidance to issue. There is no specific timeline for next steps regarding subregulatory guidance or regulatory proposals. GAO will monitor the agency's progress in implementing this recommendation.

Recommendation: The IRS Commissioner should review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and clarify for the public the Internal Revenue Code's requirements in these circumstances. (Recommendation 2)

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

Comments: IRS agreed to review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and to clarify for the public the Internal Revenue Code's requirements in these circumstances. We will consider closing this recommendation when the agency provides evidence that it completed these efforts.

Recommendation: The IRS Commissioner should consider revising the letter forwarding program in a cost-effective manner to again provide information on behalf of plan sponsors on unclaimed retirement accounts to participants. (Recommendation 3)

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

Comments: IRS disagreed with this recommendation, noting that the IRS address of record for a participant would likely be of no greater value than addresses available through alternatives such as commercial locator services. However, our report does not cite the accuracy of IRS addresses, but rather other benefits that make a program revision worth considering, specifically the likelihood that individuals will open IRS correspondence, and the trust DOL places in the service as way for plan fiduciaries to meet their obligations. IRS also stated that the limited number of IRS staff and resources impact the feasibility of reinstating this program for plan participants. We continue to believe that expanding the letter forwarding program would be beneficial, and we encourage IRS to consider cost-effective ways to do so.

Recommendation: The IRS Commissioner should clarify how U.S. individuals are to report their foreign retirement accounts. The clarification could include addressing how these accounts should be designated and how the taxpayer should report contributions, earnings, and distributions made from the account. (Recommendation 4)

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

Comments: IRS agreed with this recommendation. We encourage IRS to take the necessary steps to dispel any confusion U.S. individuals may have over how to properly classify and report their foreign retirement accounts on a U.S. tax return-such clarification should help ensure that these taxpayers can meet their tax reporting obligations.

Recommendation: The IRS Commissioner should systematically analyze data reported through Form 8938 filings on foreign retirement accounts owned by U.S. individuals with the goal of developing an evidence-based understanding of how these accounts change over time and what level of risk these accounts pose for tax evasion. To assist with this analysis, IRS should consider revising Form 8938 to more clearly distinguish between retirement accounts and other types of accounts or assets being reported by taxpayers under current reporting requirements. (Recommendation 5)

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

Comments: IRS disagreed with this recommendation but not on its merits, citing a lack of resources to implement it. Specifically, IRS noted that although the modification to the Form 8938 suggested in this recommendation may seem minor, systemically collecting and analyzing the data would require resources beyond those currently available to IRS. However, our report notes that IRS indicated that they already collect foreign account filing data through the Form 8938 and that the current reporting requirements help the agency to "keep a line of sight" on U.S. individuals' foreign pension arrangements. IRS told us that without such data being reported, U.S. individuals with foreign retirement accounts may seek to avoid proper reporting on their tax returns when distributions are made. However, without agreeing to take steps to analyze these data reported by taxpayers, the question remains why the agency continues to collect such information-which we show in the report to present a substantial reporting burden on taxpayers-if the agency has no plan to analyze the data in order to make an informed decision about the risk for tax evasion that such accounts present. It is also unclear how IRS would maintain a line of sight on foreign retirement accounts belonging to U.S. individuals without analyzing the data reported by taxpayers on such accounts. We recognize that resources are limited. When staff and resources become available, IRS should modify the form and conduct a systematic analysis of these data-data that current law requires taxpayers to report-in order to assess the risk of tax evasion that foreign retirement accounts pose. Such an analysis can provide a basis to reach an evidence-based understanding of how these accounts change over time and what level of risk they pose for tax evasion, and U.S. individuals owning foreign retirement accounts will continue to face these substantial reporting burdens without the knowledge that the data they are required to provide will be put to good use by the federal government.

Recommendation: The IRS Commissioner should take steps to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, for example, by working with the Social Security Administration as necessary. (Recommendation 6)

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

Comments: IRS agreed with this recommendation. The agency indicated it would work to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, and agreed to take steps to ensure that the data reported on Form 8955-SSA are accurate and to advise plan sponsors of any changes to reporting these data.

Recommendation: The Social Security Administration Commissioner should take steps to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, for example, by working with IRS as necessary. (Recommendation 7)

Agency: Social Security Administration
Status: Open

Comments: SSA agreed with this recommendation. In November 2019, SSA stated that the agency is meeting with the IRS regularly to discuss Form 8955-SSA, which provides the basis for the information shown in the "Potential Private Retirement Benefit Information" notice. The IRS agreed to incorporate SSA's suggestion to update Form 8955-SSA to explain that the filer should include the individual pension plan participant's full social security number (SSN) on the form. SSA reported that it is working with the IRS to clarify coding instructions for Form 8955-SSA and institute a new edit to its paper processing to ensure accuracy. They are also considering potential data exchanges with filers. We will monitor the agency's progress in completing these tasks.

Recommendation: To better protect the retirement savings of individuals who change jobs, while retaining policies that provide 401(k) plans relief from maintaining small, inactive accounts, Congress should consider amending current law to repeal the provision that allows plans to disregard amounts attributable to rollovers when determining if a participant's plan balance is small enough to forcibly transfer it.

Agency: Congress
Status: Open

Comments: There has been no congressional action as of March 2020. Although bipartisan legislation proposed in February 2018 discussed changes to the amount of vested savings that could be forced out of a 401(k) plan, it did not address whether or not the definition of vested savings for this purpose would continue to exclude rollovers. As we reported in GAO-15-73, rollover savings are always vested when they are transferred into a plan account. If Congress looks further at amending rules related to the threshold for forced distributions, and particularly if that threshold is raised, it bears consideration whether all of an individuals' vested savings--including rollover amounts--should be included in the calculation of that threshold.

Recommendation: To ensure that individuals have access to consolidated online information about their multiple 401(k) plan accounts, the Secretary of Labor should convene a taskforce to consider establishing a national pension registry. The taskforce could include industry professionals, plan sponsor representatives, consumer representatives, and relevant federal government stakeholders, such as representatives from Social Security Administration, Pension Benefit Guaranty Corporation, and Internal Revenue Service, who could identify areas to be addressed through the regulatory process, as well as those that may require legislative action.

Agency: Department of Labor
Status: Open
Priority recommendation

Comments: As of December 2019, the Department of Labor (DOL) has not allocated staff or other resources to look at convening a task force of stakeholders to consider the need for a national pension registry. The agency previously noted the PBGC's expansion of its registry of accounts left in closed defined benefit plans to include accounts in 401(k) plans. However, PBGC's expansion included only transfers from terminating 401(k) plans, not from active plans. In February 2018, bi-partisan legislation was proposed to create a national, online registry for much of Americans' retirement savings account information, particularly those accounts which might otherwise become lost. To create the proposed "Retirement Savings Lost and Found" or something similar would require coordinated regulatory action on the part of multiple agencies, which could only benefit from the initial work and findings of a pension registry task force. The need for access to consolidated online information about multiple 401(k) plan accounts is only growing. Therefore, we continue to recommend that DOL facilitate a task force of stakeholders to identify and discuss legal and other logistical issues critical to the potential creation of a national pension registry.

Recommendation: To ensure that 401(k) plan participants have timely and adequate information to keep track of all their workplace retirement accounts, the Social Security Administration's Acting Commissioner should make information on potential vested plan benefits more accessible to individuals before retirement. For example, the agency could consolidate information on potential vested benefits, currently sent in the Potential Private Retirement Benefit Information notice, with the information provided in the Social Security earnings and benefits statement.

Agency: Social Security Administration
Status: Open

Comments: SSA disagreed with this recommendation, but did seek legal guidance to determine if it is permissible to include a general statement encouraging potential beneficiaries to pursue any external pension benefits in its benefit Statement. SSA's Office of the General Counsel determined that it would be permissible as long as it includes information required by law and the information is accurate. However, as of March 2020, SSA continues to believe that adding such information would place SSA in a position to respond to issues or questions about ERISA and private pension plans, which SSA considers to be outside its mission and about which the agency has no firsthand legal or operational knowledge. While we appreciate SSA's concern about providing information or advice about private pension plans, the agency already has a procedure for responding to such inquiries. The agency's Notice of Potential Private Retirement Benefit Information directs recipients to contact DOL with any questions about private retirement savings. We would expect that any increase in individuals asking SSA about their retirement savings, which could result from making information on vested benefits more accessible, could be handled in the same way. SSA said it also believes that the current benefit Statement adequately covers the fact that people need other savings, pensions, and investments and the agency sends notices to people who may quality for other pensions. We welcome SSA's efforts to raise awareness about the role of private retirement savings in ensuring financial security and in to notify individuals of potential benefits. However, these efforts do not supplant the need for individuals to have early and ongoing access to complete information on their potential plan benefits. In February 2018, bipartisan members of Congress introduced legislation that would make this possible. The Retirement Savings Lost and Found Act of 2018 (S. 2474) would house SSA's data on potential private retirement benefits in a secure database, which would be searchable online by participants and beneficiaries prior to retirement. Whether the legislation is enacted or not, we continue to believe that SSA should work to make its valuable data on potential vested plan benefits more accessible to individuals before retirement.

Recommendation: To prevent forced-transfer IRA balances from decreasing due to the low returns of the investment options currently permitted under the Department of Labor's safe harbor regulation, the Secretary of Labor should expand the investment alternatives available. For example, the forced-transfer IRA safe harbor regulations could be revised to include investment options currently under the qualified default investment alternatives regulation applicable to automatic enrollment, and permit forced-transfer IRA providers to change the investments for IRAs already established.

Agency: Department of Labor
Status: Open

Comments: As of April 2020, DOL had not taken action on this recommendation. In 2019, DOL noted that it was engaged more generally with a range of stakeholders on issues surrounding missing and unresponsive participants with the goal of helping plans to locate and pay retirement benefits to missing participants and beneficiaries. We continue to encourage DOL to expand the safe harbor for IRAs created for forced transfers to include investment alternatives more likely to preserve principal and even increase it over time, such as what is permitted for qualified default investment alternatives under the safe harbor for automatic enrollment.

Recommendation: Disparities in tax rates on smoking tobacco products have negative revenue implications because they create incentives for manufacturers and consumers to substitute higher-taxed products with lower-taxed products. In light of that fact, as Congress continues its oversight of CHIPRA and Tobacco Control Act implementation, it may wish to consider modifying tobacco tax rates to eliminate significant tax differentials between similar products. Specifically, Congress may wish to consider equalizing tax rates on roll-your-own and pipe tobacco and, in consultation with Treasury, also consider options for reducing tax avoidance due to tax differentials between small and large cigars.

Agency: Congress
Status: Open

Comments: As of March 2020, Congress has not passed legislation to eliminate tax differentials between roll-your-own and pipe tobacco or between small and large cigars. In the 116th Congress, five bills have been introduced to create tax equity between roll-your-own and pipe tobacco, as GAO suggested in its April 2012 report. However, these bills have not been enacted. In addition, the 116th Congress has not passed legislation to address tax differentials between small and large cigars. Modifying tax rates to eliminate the tax differentials between similar tobacco products could address potential future revenue losses stemming from the substitution of higher-taxed products with lower-taxed products.

Recommendation: The Commissioner of Internal Revenue should develop a new refund timeliness measure and goal to more appropriately reflect current capabilities.

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

Comments: As of March 2020, IRS had not developed a new measure for refund timeliness. In early 2019, Treasury announced that it would discontinue reporting the refund timeliness measure beginning with fiscal year 2019 because it was based on paper returns, which account for approximately 10 percent of returns. Nevertheless, as of January 2020, IRS continues to use this measure internally to monitor performance. During the 2019 tax filing season, taxpayers filed about 90 percent of returns electronically, and as a means to set taxpayer expectations, IRS publicly reported that about 90 percent of taxpayers owed a refund received it in less than 21 days. Accordingly, we continue to believe that IRS's sole performance measure of issuing paper-filed refunds within 40 days is outdated and does not acknowledge advances in technology that allow IRS to issue refunds faster. We agree with IRS that the environment has changed considerably since we made this recommendation--the growth in identity theft refund fraud has increased the need for additional scrutiny of tax refunds, which can add to the time needed to process tax returns. IRS can take into account its concerns and set a performance measure and goal that would be both challenging and obtainable. Without a measure and goal to assess refund timeliness that includes both paper and electronically filed returns and is reflective of IRS's current capabilities, IRS is missing opportunities to provide optimum levels of taxpayer service while also ensuring that taxpayers receive accurate refunds. As such, we believe that our recommendation remains valid.