Recommendation: The Commissioner of Internal Revenue should identify agency-wide and division performance goals that align with IRS's strategic service goals and objectives for an improved taxpayer experience. (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 should identify performance measures with targets for improving the taxpayer experience that link with the related performance goals. (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 ensure that the taxpayer experience measures cover all of the factors for customer service identified in OMB guidance as well as service channels across the tax process phases. (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 Commissioner of Internal Revenue should ensure that taxpayer experience measures reflect the highest-impact taxpayer journeys and key transactions, as consistent with OMB guidance. (Recommendation 4)

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 regularly analyze and use the results of the performance measures and surveys on the taxpayer experience to help improve performance. (Recommendation 5)

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 processes for using performance results on the taxpayer experience as part of resource allocation decisions intended to improve performance. (Recommendation 6)

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 publicly report available information on taxpayer experience performance, including the measures and related targets, for example by providing it on IRS.gov and in IRS publications. (Recommendation 7)

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 IRS should change Schedule C or Form 1099-NEC so that taxpayers can identify if they received payment for platform work. (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 IRS should develop a process for monitoring feedback on its communications efforts and products tailored for platform workers, which should include documenting and evaluating feedback. (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 IRS should clarify the instructions and publications for Forms 1040 and 1099-K by adding plain language to clearly indicate to platform workers that the forms apply to them. (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 Commissioner of IRS should work with the Secretary of the Treasury to amend the 6050W "tie-breaker rule" that applies to duplicative reporting requirements so that payments made through a TPSO's third party payment network are reportable under Section 6041, rather than under Section 6050W. (Recommendation 4)

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 IRS should work with Treasury to determine what thresholds would be the most appropriate for payment information reporting and, if warranted, recommend that Congress adjust the thresholds. (Recommendation 5)

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 IRS should work with the Secretary of the Treasury to implement withholding that is voluntary for companies making payments for services to platform workers and other independent contractors who choose to participate. (Recommendation 6)

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 IRS should assess the impact of withholding that is voluntary for companies, once implemented, and if warranted, work with the Secretary of the Treasury on a proposal to Congress that would require TPSOs to offer tax withholding to platform workers and other independent contractors who choose to participate. (Recommendation 7)

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 modify the title of IRS's employment-related identity theft action code 525 to reflect the type of employment-related identity fraud encompassed by this action code. (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 should assess and document the feasibility of incorporating additional checks into its automated checks of employment-related identity fraud for populations at risk of employment-related identity fraud, such as children, elderly, deceased persons, and individuals associated with multiple wage records. (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 assess and document the costs and benefits of using the Withholding Compliance Program (WHC) to address compliance risks posed by potential employment-related identity fraudsters who owe taxes and take appropriate action, as needed. (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 Commissioner of Internal Revenue should modify Automated Underreporter (AUR) to include wage discrepancy checks for victims of employment-related identity fraud once IRS has updated AUR's legacy programming code. (Recommendation 4)

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, in collaboration with the Commissioner of Social Security, develop and document a plan for updating future Combined Annual Wage Reporting (CAWR) MOUs. The plan should identify actions, time frames, and responsible parties, including executive leadership. (Recommendation 5)

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, in collaboration with the Commissioner of Social Security, develop and implement goals and performance measures for the CAWR MOU. (Recommendation 6)

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, in collaboration with the Commissioner of Social Security, develop and document a strategy for assuring that the reviews required by the updated MOU are completed within the specified time frames. (Recommendation 7)

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, in collaboration with the Commissioner of Social Security, clearly define data elements they exchange with SSA. (Recommendation 8)

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 Social Security should, in collaboration with the Commissioner of Internal Revenue, develop and document a plan for updating future CAWR MOUs. The plan should identify actions, time frames, and responsible parties, including executive leadership. (Recommendation 9)

Agency: Social Security 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 Commissioner of Social Security should, in collaboration with the Commissioner of Internal Revenue, develop and implement goals and performance measures for the CAWR MOU. (Recommendation 10)

Agency: Social Security 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 Commissioner of Social Security should, in collaboration with the Commissioner of Internal Revenue, develop and document a strategy for assuring that the reviews required by the updated MOU are completed within the specified time frames. (Recommendation 11)

Agency: Social Security 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 Commissioner of Social Security should, in collaboration with the Commissioner of Internal Revenue, clearly define the data elements they exchange with IRS. (Recommendation 12)

Agency: Social Security Administration
Status: Open

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

Recommendation: We recommend that the Commissioner of Internal Revenue update and implement policies and procedures for developing a courier contingency plan to prohibit managers responsible for overseeing the preparation of taxpayer receipts for deposits from also transporting them to financial institutions. (Recommendation 20-01)

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

Comments: The IRS agreed with this recommendation and stated that the Wage and Investment organization will update the Courier Contingency Plan polices and procedures to provide for appropriate segregation of duties or other curative measures.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement manual refund procedures to direct (1) initiators to document (e.g., record on the taxpayers' accounts or annotate on the related manual refund forms) the justification for bypassing the IAT tool warning related to potential duplicate tax refunds on taxpayers' accounts and (2) managers to monitor whether such warnings were bypassed and review the justifications for reasonableness prior to approving manual refund forms. (Recommendation 20-02)

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

Comments: The IRS agreed with this recommendation and stated that the Wage and Investment organization agrees that actions need to occur to address duplicate tax refund conditions through improved manual refund procedures to require (1) initiator to document the justification for bypassing the Integrated Automated Technologies (IAT) tool warning related to potential duplicate tax refunds on taxpayers' accounts and (2) managers to review the justification documented for bypassing the IAT tool warning for reasonableness prior to approving manual refund forms. However, IRS also stated that it was unable to commit to implementing a corrective action plan at this time due to budgetary constraints on system enhancements.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement actions to provide reasonable assurance that business units record the acceptance of goods and services in a timely manner in accordance with IRS policies and procedures. (Recommendation 20-03)

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

Comments: The IRS agreed with this recommendation and stated that the CFO organization will determine the reasons for business unit(s) non-compliance with established policies and procedures related to timely recording of receipts and acceptance of goods and services and, based on this evaluation, develop an action plan that once completed will provide additional tools to aid the business units in reasonably ensuring compliance with established requirements.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement actions to provide reasonable assurance that the future lease payment amounts for non-cancellable operating leases are calculated correctly. (Recommendation 20-04)

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

Comments: The IRS agreed with this recommendation and stated that the CFO organization will update policies and procedures to include additional instructions needed to calculate the future lease payments due on the non-cancelable leases with terms greater than one year and will also create an automated calculation to determine the number of remaining months of lease payments.

Recommendation: GSA should assess and address the reliability of the information used to calculate reported cost savings for the broker program. (Recommendation 1)

Agency: General Services Administration
Status: Open
Priority recommendation

Comments: In June 2020, GSA said the agency would validate system data through regional and broker outreach and fully utilize validated system data to manage the broker program. The agency also said it will develop a quality control plan and follow-up on outcomes. We will continue to monitor GSA's progress with implementing this recommendation.

Recommendation: GSA should develop outcome-based metrics to evaluate the effectiveness of using brokers to supplement the GSA's leasing workforce. (Recommendation 2)

Agency: General Services Administration
Status: Open

Comments: Although GSA initially did not concur with this recommendation, the agency stated in June 2020 that it agrees with the recommendation and will take steps to implement it. Specifically, GSA plans to revise the broker performance standards and document broker effectiveness through lease cost avoidance, timely lease replacement, and earned commission credits. We will continue to monitor GSA's progress with implementing this recommendation.

Recommendation: The Director of BLM should establish outcome-oriented performance measures to assess the effectiveness of the reorganization. (Recommendation 1)

Agency: Department of the Interior: Bureau of Land Management
Status: Open

Comments: The department neither agreed nor disagreed with our recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Director of BLM should develop an implementation plan for the reorganization that includes milestones and deliverables to track and communicate implementation progress. (Recommendation 2)

Agency: Department of the Interior: Bureau of Land Management
Status: Open

Comments: The department neither agreed nor disagreed with our recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Director of BLM should complete a strategic workforce plan that addresses how it will recruit for and fill vacant positions resulting from the relocations. (Recommendation 3)

Agency: Department of the Interior: Bureau of Land Management
Status: Open

Comments: The department neither agreed nor disagreed with our recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of the Interior should ensure its bureau leadership incorporates key practices for effective agency reforms prior to implementing reorganization activities at other Interior bureaus. (Recommendation 4)

Agency: Department of the Interior: Office of the Secretary
Status: Open

Comments: The department neither agreed nor disagreed with our recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Chief Counsel of the Internal Revenue Service, in coordination with appropriate offices, should identify and document parameters and procedures for applying enhanced collaborative approaches to regulation and other guidance development with IRS Business Operating Divisions. (Recommendation 1)

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

Comments: As of August 2020, IRS disagrees with this recommendation and does not plan to take action on it. IRS officials said their Chief Counsel Directives Manual provides sufficient guidance and flexibility to allow for enhanced collaboration when appropriate. However, officials acknowledged that this collaboration was particularly helpful in implementing TCJA provisions and greatly contributed to IRS's successful implementation. By implementing this recommendation, IRS can help ensure that institutional knowledge and beneficial practices from TCJA implementation will be documented and effectively leveraged to support implementation of future time-sensitive or complex tax law changes without restricting IRS's flexibility. Documenting procedures would ensure IRS can retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel.

Recommendation: The Commissioner of Internal Revenue should develop a process to accurately and thoroughly capture implementation status of ongoing projects in accordance with Standards for Internal Control in the Federal Government. (Recommendation 2)

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

Comments: As of August 2020, IRS disagrees with this recommendation and does not plan to take action on it. IRS officials acknowledged inconsistencies in reports but said these inconsistencies were not detrimental to overall implementation. We maintain that accurately and thoroughly capturing implementation status on ongoing projects would provide accurate information to decision makers and could prevent potential misreporting, mismanagement, or inefficient resource investment in the future.

Recommendation: The Commissioner of Small Business/Self Employed should coordinate with appropriate IRS divisions or offices to identify the costs and benefits of retroactively transcribing taxpayer data resulting from TCJA. (Recommendation 3)

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

Comments: As of August 2020, IRS disagrees with this recommendation and does not plan to take action on it. IRS officials said the retroactive transcription of TCJA returns would be a time intensive activity with significant opportunity costs, and that the benefits of retroactive transcription are currently not quantifiable. A high-level analysis of costs and benefits could help IRS management determine what, if any, data would benefit compliance and enforcement efforts. IRS could use readily available existing information (such as the number of returns affected by a certain provision, LB&I and IT cost data on conversion efforts already implemented, or the usefulness of past compliance analytics in similar areas) to inform the analysis. For example, IRS staff are manually reviewing certain forms associated with one TCJA provision for compliance purposes and IRS could use information from this effort (e.g., amount of time and any compliance results) to inform a high-level estimate of costs and benefits.

Recommendation: Based on the costs and benefits identified in recommendation 3, the Commissioner of Small Business/Self Employed should determine which TCJA provisions' data should be converted into a more useful electronic format for compliance and enforcement purposes and work with the appropriate offices to obtain the transcribed data, as appropriate. (Recommendation 4)

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

Comments: As of August 2020, IRS disagrees with this recommendation and does not plan to take action on it. IRS officials said that implementing this recommendation would require identifying the costs and benefits, which they do not plan to take action on. However, IRS officials acknowledged that IRS operating divisions and offices make strategic decisions regarding how best to use TCJA-related return data for compliance and enforcement purposes. We believe that converting data in instances where the benefits outweigh the costs would better position IRS to more effectively and efficiently pursue its mission of ensuring taxpayer compliance. For example, in the case of one TJCA provision, because IRS is not collecting information in an easily accessible format, IRS staff are manually reviewing forms to help with compliance efforts.

Recommendation: The Assistant Secretary of Tax Policy should update Treasury's internal guidance to ensure that Treasury's regulatory impact analyses include examination of the distributional effects of revenue changes when regulations influence tax liability. (Recommendation 5)

Agency: Department of the Treasury: Office of the Assistant Secretary of the Treasury (Tax Policy)
Status: Open

Comments: As of August 2020, Treasury disagrees with this recommendation and does not plan to take action on it. Treasury officials said the analyses underlying Treasury's tax regulations have fully complied with the Memorandum of Agreement established with the U.S. Office of Management and Budget (OMB), which focuses on non-revenue effects. We maintain that decisions Treasury and IRS made when developing regulations to implement TCJA could potentially impact tax liability by billions of dollars per year; however, Treasury's internal guidance dictates that these revenue effects should not be included in its economic analyses of the regulations. In some regulations, Treasury has addressed revenue effects in its analyses, but this has not been done consistently. By adjusting its internal guidance to ensure that distributional effects of revenue changes are consistently reflected in its analyses, it would better inform the regulatory decision-making process, while also providing the public with greater transparency.

Recommendation: The Commissioner of Internal Revenue should update the FAQs issued in 2019 to include a statement that the FAQs may serve as a source of general information but cannot be relied upon by taxpayers as authoritative since they are not binding on IRS. (Recommendation 1)

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

Comments: IRS disagreed with this recommendation. In an August 2020 letter, IRS stated that the 2019 currency FAQs are illustrative of how longstanding tax principles apply to property transaction and IRS does not take positions contrary to public FAQs. However, if IRS intends the public FAQs on virtual currency to be binding on IRS it could address our recommendation by publishing the FAQs in the Internal Revenue Bulletin. Doing so would render a disclaimer statement unnecessary and would satisfy the intent of the recommendation. We will continue to follow up with IRS on this recommendation and will provide an update if IRS takes action.

Recommendation: The Commissioner of Internal Revenue should take steps to increase third-party reporting on taxable transactions involving virtual currency, which could include clarifying IRS's interpretation of existing third-party reporting requirements under the Internal Revenue Code and Treasury Regulations, or pursuing statutory or regulatory changes. (Recommendation 2)

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

Comments: IRS agreed with this recommendation. In August 2020, IRS informed us that IRS's Office of Chief Counsel and the Department of the Treasury are developing guidance that will address third-party reporting on certain taxable transactions involving virtual currency. IRS expects that this guidance will also propose rules to avoid duplicate reporting under other information reporting regimes that may apply to transactions involving virtual currency. We will continue to monitor IRS's efforts to increase third-party reporting on taxable transactions involving virtual currency.

Recommendation: The Commissioner of Internal Revenue should clarify the application of reporting requirements under FATCA to virtual currency. (Recommendation 3)

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

Comments: IRS disagreed with this recommendation. In an August 2020 letter, IRS said it intends to focus on developing guidance regarding information reporting on certain virtual currency transactions involving U.S. businesses instead of clarifying the application of reporting requirements under FATCA to virtual currency. IRS stated that additional guidance on FATCA requirements may be appropriate in the future as the workings of foreign virtual currency exchanges become more transparent over time. We found that many virtual currency stakeholders were uncertain about how, if at all, FATCA requirements apply to virtual currency and would benefit from clarifications to the guidance. We will continue to follow up with IRS on this recommendation and will provide an update if IRS takes action.

Recommendation: The Director of FinCEN, in coordination with IRS as appropriate, should make a statement about the application of foreign account reporting requirements under the Bank Secrecy Act to virtual currency readily available to the public. (Recommendation 4)

Agency: Department of the Treasury: Financial Crimes Enforcement Network
Status: Open

Comments: FinCEN agreed with this recommendation. When we can confirm that FinCEN has taken action we will provide updated information.

Recommendation: The Commissioner of Internal Revenue should designate a dedicated entity to provide oversight of agency-wide efforts to detect, prevent, and resolve business IDT, consistent with leading practices. This may involve designating one business unit as a lead entity or leveraging cooperative relationships between business units to establish a business IDT leadership team. This entity should have defined responsibilities and authority for managing fraud risk. (Recommendation 1)

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

Comments: In January 2020, IRS agreed to designate a dedicated entity to provide oversight of agency-wide business IDT efforts and stated that it will determine the appropriate oversight structure and scope of authority.

Recommendation: The Commissioner of Internal Revenue should develop a fraud risk profile for business IDT that aligns with leading practices. This should include (1) identifying inherent fraud risks of business IDT, (2) assessing the likelihood and impact of inherent fraud risks, (3) determining fraud risk tolerance, and (4) examining the suitability of existing fraud controls. (Recommendation 2)

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

Comments: In January 2020, IRS agreed but did not provide details on the actions it plans to take to address the recommendation.

Recommendation: The Commissioner of Internal Revenue should develop, document, and implement a strategy for addressing fraud risks that will be identified in its fraud risk profile. (Recommendation 3)

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

Comments: In January 2020, IRS agreed but did not provide details on the actions it plans to take to address the recommendation.

Recommendation: The Commissioner of Internal Revenue should ensure that IRS collects additional data on business IDT by identifying and implementing new fraud filters consistent with its fraud risk profile. This should include prioritizing IDT filters for tax forms determined to be most at risk based on an analysis of risk tolerances. (Recommendation 4)

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

Comments: In January 2020, IRS agreed but did not provide details on the actions it plans to take to address the recommendation.

Recommendation: The Commissioner of Internal Revenue should identify and implement methods to address delays in resolving business IDT cases due to correspondence-based authentication. This could involve using different methods for taxpayer authentication based on the risk level of the return. (Recommendation 5)

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

Comments: IRS agreed with the recommendation. In January 2020, IRS stated that it will complete an analysis of other authentication methods.

Recommendation: The Commissioner of Internal Revenue should establish customer service-oriented performance goals for resolving business IDT cases. (Recommendation 6)

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

Comments: IRS neither agreed nor disagreed with our recommendation to establish customer service-oriented performance goals for resolving business identity theft cases. In January 2020, IRS stated that it will review its customer service-oriented performance goals and modify them, as warranted, to address the resolution of business identity theft cases. Doing so would meet the intent of our recommendation.

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 Commissioner of Internal Revenue should make publicly available, such as on its website, a list of tax topics considered out of scope for CSRs to answer on the telephone, as well as include references for how and where to find information about these topics. (Recommendation 1)

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

Comments: IRS agreed with this recommendation and said it would make out-of-scope topics more readily available for taxpayers.

Recommendation: The Commissioner of Internal Revenue should reconcile authority and implement procedures for routinely reviewing the English versions of IRS's most commonly used vital tax products and web pages to ensure that information is included in commonly encountered languages about where taxpayers with LEP can obtain the translated content. If such content is not translated, the products and web pages should include information about where taxpayers with LEP can obtain language assistance from IRS. (Recommendation 2)

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

Comments: IRS neither agreed nor disagreed with this recommendation. In commenting on the draft report, IRS said the recommendation affects multiple stakeholders and IRS is evaluating the recommendation and actions for implementation. IRS said it would provide additional details at a later time.

Recommendation: The Commissioner of Internal Revenue should reconcile authority and implement procedures for routinely reviewing its multilingual web pages to effectively prevent, or detect and correct, errors such as incorrect or outdated information. For example, these procedures could call for the divisions to work with the Linguistics, Policy, Tools, & Services (LPTS) section whenever the English version of translated content is updated. (Recommendation 3)

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

Comments: IRS agreed with this recommendation, saying each business unit would be required to work with the Linguistic Policy, Tools and Services Section whenever the English version of translated content is updated. IRS also said interpreting the Form 1040 into different languages would be a major accomplishment that it wishes to achieve in the near future.

Recommendation: The Commissioner of Internal Revenue should conduct the four-factor assessment of its language services to persons with LEP for its most commonly used vital tax products to determine (1) which products should be translated and into what languages, and (2) what interpretation assistance will be provided to arrive at the appropriate mix of translation and interpretation services. IRS should document these assessments, including the determinations it made, and take action as appropriate based on these assessments. (Recommendation 4)

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

Comments: IRS neither agreed nor disagreed with this recommendation. In commenting on the draft report, IRS said the recommendation affects multiple stakeholders and IRS is evaluating the recommendation and actions for implementation. IRS said it would provide additional details at a later time.

Recommendation: The Commissioner of Internal Revenue should collect and use employee input on the strengths and weaknesses of its customer service training, including on whether training is effective in improving CSRs' performance, to inform changes to its training program and strategy under the Taxpayer First Act. (Recommendation 5)

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

Comments: IRS agreed with this recommendation and said it would review the employee training evaluation process to determine what steps can be taken to improve training, such as making certain evaluations mandatory for employees and updating the surveys with more focused questions in order to get more substantial feedback.

Recommendation: The Commissioner of Internal Revenue should direct the Wage and Investment division to develop and implement a strategy, in collaboration with its strategic workforce planning initiative, for the efficient use of overtime. (Recommendation 6)

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

Comments: IRS agreed with this recommendation.

Recommendation: The Commissioner of Internal Revenue should further assess the increase in "system downtime" and identify possible solutions to mitigate any problems and reduce system downtime. (Recommendation 7)

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

Comments: IRS agreed with this recommendation. In commenting on the draft report, IRS said it completed a further assessment after our audit and identified potential contributing factors. IRS said it implemented changes to the call center environment and was updating the Customer Service Representative technology platform to further improve system availability.

Recommendation: The Commissioner of Internal Revenue should perform regular monitoring of fluctuations in system downtime charges, such as increases overall or by specific units, to determine what, if any, factors are interrupting CSRs' work. (Recommendation 8)

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

Comments: IRS said it agreed with this recommendation and would monitor the system downtime reported by the Customer Service Representatives (CSR) in Customer Account Services. In commenting on the draft report, IRS said it had implemented changes to the call center environment and was updating the CSR technology platform to further improve system availability.

Recommendation: The Commissioner of the IRS should ensure that information is collected on taxpayers' experiences with all online services and the extent to which the services are meeting taxpayers' needs. (Recommendation 1)

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

Comments: IRS agreed with this recommendation. In June 2020, IRS reported that it intends to "implement new surveys to better capture customer experience data" with its online services. To this end, IRS in March 2020 published a notice in the Federal Register stating that it intends to seek approval from the Office of Management and Budget (OMB) on collecting information in a manner consistent with section 280 of OMB's Circular A-11 intended to improve the customer experience with federal services. Among other requirements, section 280 of Circular A-11 directs agencies to collect feedback from customers. IRS states that it intends to complete this process and fully address the recommendation by the end of calendar year 2021. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should ensure that information collected on taxpayers' experiences with online services is summarized in the document serving as IRS's performance plan and report. (Recommendation 2)

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

Comments: IRS agreed with this recommendation. In June 2020, IRS reported that it is working to "implement new surveys to better capture customer experience data" and intends to publish this information on Performance.gov. Further, IRS states that it "will evaluate and identify the most appropriate medium each year for publication of data based on statutory and other requirements" and expects to fully address this recommendation by November 15, 2022. Section 280 of the Office of Management and Budget's Circular A-11 states that in addition to publishing this information on Performance.gov, agencies should also summarize this information in performance plans and reports. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should direct the Director of OLS and the Chief Research and Analytics Officer to work together to analyze the potential effects of online services on taxpayer burden. (Recommendation 3)

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

Comments: IRS agreed with this recommendation. In June 2020, IRS reported two planned actions to address this: 1) IRS will conduct comparative analyses of the current Individual Taxpayer Burden and Taxpayer Compliance Burden surveys and expects to complete this by September 30, 2020; and 2) IRS will implement new customer experience surveys to better capture comparative data relating to user perceptions of the ease and effectiveness of both online and traditional interactions and expects to complete this by the end of calendar year 2021. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should ensure that taxpayer input is included as an element of IRS's identification and prioritization process for new online services. (Recommendation 4)

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

Comments: IRS agreed with the recommendation. In June 2020, IRS reported that it plans to introduce new survey methods to obtain taxpayer input regarding potential new online services. One specific example IRS provided was testing a new version of the irs.gov satisfaction survey. This new version, which was launched in January 2020, asks respondents what additional online services taxpayers would like and solicits suggestions from taxpayers for improving IRS's online services. IRS stated that it is currently evaluating this new survey method. IRS expects to fully address the recommendation by the end of calendar year 2021. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should work with relevant officials to set a target to reduce taxpayer burden through the development of new online services. (Recommendation 5)

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

Comments: IRS did not agree with this recommendation. In June 2020, IRS stated that it will analyze the effect of online services on taxpayer burden in response to recommendation number 3 of this report. However in regards to setting a target, IRS reiterated its view that its "taxpayer burden measurement methodology is not designed to evaluate the effect of specific online services or web site enhancements." Further, IRS states that changes in tax policy (e.g., the Tax Cuts and Jobs Act of 2017) can affect taxpayer burden and it believes other factors, such as ease of use of online services, are more important to the taxpayer experience. Our report recognized that it may take time for the relevant IRS offices to review how online services may be affecting taxpayer burden. However, we continue to believe that this recommendation has merit because IRS has previously stated that it expects online services to reduce taxpayer burden, thereby contributing to one of IRS's strategic goals. Since IRS has already stated it plans to analyze the effect of online services on taxpayer burden in response to recommendation number 3, we believe it would be relatively easy for IRS to use the results of that analysis to set a more specific goal. For example, IRS in its June 2020 update refers to the time taxpayers spend using online services. A potential research question could be the extent to which taxpayers are more efficiently completing tasks using IRS's online services as IRS makes improvements to these services. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should direct the Chief Information Officer and the Director of OLS to ensure that planned future capabilities of digital communication platforms are tested or piloted before deployment with a particular focus on mitigating the risks that were identified in prior pilots of digital communication services, such as challenges in establishing common objectives and enrolling taxpayers. (Recommendation 6)

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

Comments: IRS agreed with this recommendation. In June 2020, IRS reported that it will apply multiple user preference and usability testing methods to the design of Taxpayer Digital Communications. For example, IRS said it surveyed visitors to IRS.gov about their views towards digital communications in the winter of 2019-2020 and in March 2020 conducted remote testing sessions with taxpayers to obtain feedback on two possible design options. IRS says additional testing may be done and expects to fully address this recommendation by November 30, 2020. We will continue to monitor IRS's efforts to address this recommendation.

Recommendation: The Commissioner of the IRS should direct the Commissioner of W&I to work with the Director of OLS to ensure that future decisions regarding whether to renew the Free File agreement incorporate findings from a comprehensive examination of the benefits and costs of the agreement as it relates to long term plans for IRS's online services, including plans to file amended returns electronically. (Recommendation 7)

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

Comments: Our report identified IRS's pledge to "not enter the tax preparation software and e-filing services marketplace" as a potential cost of IRS's agreement with Free File, Inc. to provide services to eligible taxpayers. Shortly after our report was issued, the Commissioner of the Wage and Investment Division signed on December 23, 2019 an addendum to the most recent agreement between IRS and Free File, Inc. which among other provisions struck the language prohibiting IRS from offering its own online filing services. Under the terms of the addendum, companies participating in Free File, Inc. will continue to provide services to eligible taxpayers subject to some new requirements, such as a prohibition on companies excluding their services from internet search engines and surveying a sample of taxpayers about their experiences. The agreement between IRS and Free File, Inc. remains scheduled to expire in October 2021. While the deletion of the language prohibiting IRS from offering its own online filing services removes a cost for IRS, our recommendation was for any future renewal of the agreement to be based on a comprehensive examination of the benefits and costs of the agreement as it relates to IRS's plans to expand online services. IRS agreed with our recommendation. In June 2020, IRS said that it "would continue to coordinate with appropriate stakeholders to assess the costs and benefits derived from the Free File agreement and incorporate findings in future agreements". In addition, several new developments have occurred related to Free File: 1) IRS used Free File, Inc. in the spring of 2020 to develop a website to identify Americans who were not required to file a 2019 tax return and may be eligible for economic impact payments pursuant to the Coronavirus Aid, Relief, and Economic Security Act; 2) IRS announced in May 2020 that taxpayers will soon be able to electronically file an amended return using tax software and IRS's announcement of this planned capability refers to its agreement with Free File, Inc.; and 3) one of the ten companies which had been participating in Free File, Inc. announced it plans to leave in October 2020. We will continue to monitor IRS's efforts to address the recommendation.

Recommendation: The Commissioner of Internal Revenue should undertake a risk assessment of tax-exempt entity Form 8886-T filings. Based on the findings of the risk assessment, IRS should then determine whether steps are needed to increase compliance, such as, for example, through increased outreach to tax-exempt entities or assessment of nonfiling penalties. (Recommendation 1)

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

Comments: IRS agreed with the recommendation. In a July 2020 letter to GAO, IRS said the Tax Exempt/Government Entities division is documenting the process for reviewing Form 8886-T filings and analyzing whether all tax-exempt entities that should file Form 8886-T are filing it as required. As of August 2020, IRS officials expected to complete their analysis in November 2020. GAO continues to monitor IRS's progress.

Recommendation: The Commissioner of Internal Revenue should link audit data on abusive tax schemes involving tax-exempt entities across operating divisions and use the linked data to assess emerging issues and develop policy responses. (Recommendation 2)

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

Comments: In July 2020, IRS officials said they were working to determine if database coding on abusive schemes involving tax-exempt entities can be added across the agency's audit divisions. As of August 2020, IRS officials said this work will be done by June 2021. GAO continues to monitor IRS's progress.

Recommendation: The Commissioner of Internal Revenue should test the ability of the Return Inventory Classification System to facilitate analysis and monitoring of audit data across the operating divisions and to support the IRS's enforcement objectives. (Recommendation 3)

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

Comments: In a July 2020 letter 2020, IRS officials said they agreed with this recommendation and have begun to analyze its feasibility. IRS's plans include determining if the Return Inventory Classification System (RICS) could support analysis and monitoring of audit data across IRS's operating divisions. To that end, IRS plans to host cross-divisions meetings to determine what data can be shared and how the data can be monitored with RICS. As of August 2020, IRS expected to complete its analysis by March 2022. GAO continues to monitor IRS's progress.

Recommendation: The Commissioner of Internal Revenue should use existing data analytic tools to further mine Form 8886 and Form 8918 data, which could be used to find audit leads on tax-exempt entity involvement in potentially abusive tax schemes. (Recommendation 4)

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

Comments: In a July 2020 letter, IRS said it will explore the use of existing data analytic tools to mine data and to identify undiscovered exempt-entity involvement in abusive tax schemes. As part of that effort, IRS plans to continue to evolve its text processing. IRS also plans to determine if optical character recognition can be used to identify keywords in disclosure reports that could help determine whether a tax-exempt entity was a party to a reportable transaction that warrants further investigation and whether that would be productive. As of August 2020, IRS expected to complete its analysis by March 2022. GAO continues to monitor IRS's progress.

Recommendation: The Commissioner of Internal Revenue should develop guidance to help managers ensure referrals about abusive schemes involving tax-exempt entities are made across operating divisions. This could be accomplished by, for example, adopting specific guidance for audit managers to look for referral accuracy in their reviews of case closings. (Recommendation 5)

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

Comments: In a July 2020 letter, IRS said it agreed with the recommendation and will develop guidance to assist mangers across the agency's divisions to ensure referrals involving tax-exempt entities are directed to the Tax Exempt/Government Entities (TE/GE) division. The letter also said IRS plans to provide training across examination units to instruct staff to make referrals appropriately and correctly. IRS expects to complete the TE/GE guidance and training material by June 2021. As of August 2020, TE/GE officials said the other examination divisions are expected to incorporate the forthcoming procedural guidance in their work processes by 2022. GAO continues to monitor IRS's progress.

Recommendation: The Chief Operating Officer of Federal Student Aid should obtain data in order to verify income information for borrowers reporting zero income on IDR applications. For example, Education could pursue access to federal data sources or obtain access to an appropriate private data source. (Recommendation 1)

Agency: Department of Education: Office of Federal Student Aid
Status: Open

Comments: Education generally agreed with this recommendation. Education stated that the President's fiscal year 2020 budget request includes a proposal that Congress pass legislation allowing the IRS to disclose tax return information directly to the department for the purpose of administering certain federal student financial aid programs. According to the agency, such legislation, if enacted, would allow borrowers to more easily certify their income on an annual basis to maintain enrollment in IDR plans, and allow the department to use the information to mitigate improper payments to borrowers as a result of misreported income data. Section 3 of the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act), enacted in December 2019, provided Education with statutory authority to access certain Internal Revenue Service data for the purpose of determining eligibility for IDR plans, among other things (Public Law 116-91). As of August 2020, Education had begun planning for the implementation of the legislation. The Congressional Budget Office estimated that use of this authority to verify eligibility for IDR plans could result in over $2 billion in savings for 2020-2029.

Recommendation: The Chief Operating Officer of Federal Student Aid should implement data analytic practices, such as data matching, and follow-up procedures to review and verify that borrowers reporting zero income on IDR applications do not have sources of taxable income at the time of their application. (Recommendation 2)

Agency: Department of Education: Office of Federal Student Aid
Status: Open

Comments: Education agreed with this recommendation, and from January to March 2020 initiated a pilot program with three of its loan servicers to conduct additional verification of income or family size information on IDR plan applications for a random sample of borrowers each month. When initiated, the pilot focused on IDR borrowers who self-certified that they had no income or who reported certain family sizes. According to Education, selected borrowers would be asked to provide documentation to their servicers to support the income or family size reported on their IDR application. In the event errors were identified, servicers would work with the borrowers to update their applications. If these reviews resulted in changes to a borrower's monthly payment amount, the borrower would be expected to begin paying the new amount within the next 60 days. According to Education, as of the end of March 2020 when the pilot was put on hold, participating servicers selected 48,855 borrowers for verification. The verification pilot was put on hold as it implemented student loan relief for borrowers under the CARES Act in response to the COVID-19 global pandemic (Public Law 116-136). Specifically, on March 27, 2020, the CARES Act was enacted, which suspended student loan payments due, interest accrual, and involuntary collections for Direct and Federal Family Education Loans held by Education through September 30, 2020. According to Education, the Department suspended all IDR recertifications during this period. On August 8, 2020, the President issued a presidential memorandum directing the Secretary of Education to extend this relief to borrowers through December 31, 2020. Education reported that it will weigh options for resuming the pilot against other critical priorities and available resources, noting that its long-term strategy is to fully implement the authorities granted under the FUTURE Act, which provides Education with statutory authority to access certain Internal Revenue Service data for the purpose of determining eligibility for IDR plans, among other things (Public Law 116-91). GAO will continue to monitor Education's actions in this area, and will close the recommendation when Education provides documentation that it has implemented data analytic practices and follow-up procedures to review and verify that borrowers reporting zero income on IDR applications do not have sources of taxable income at the time of their application.

Recommendation: The Chief Operating Officer of Federal Student Aid should implement data analytic practices, such as data mining, and follow-up procedures to review and verify family size entries in IDR borrower applications. For example, Education could review and verify all borrower reports of family size or a subset identified as being most susceptible to fraud or error. (Recommendation 3)

Agency: Department of Education: Office of Federal Student Aid
Status: Open

Comments: Education agreed with this recommendation, and from January to March 2020 established a pilot program with three of its loan servicers to conduct additional verification of income or family size information on IDR plan applications for a random sample of borrowers each month. When initiated, the pilot focused on IDR borrowers who self-certified that they had no income or who reported certain family sizes. According to Education, selected borrowers would be asked to provide documentation to their servicers to support the income or family size reported on their IDR application. Education noted that under the pilot, loan servicers were required to request additional information from borrowers to verify family sizes greater than five; specifically, a statement listing each family member residing with the borrower and for whom the borrower pays at least 51 percent of the support. In the event errors were identified, servicers would work with the borrowers to update their applications. If these reviews resulted in changes to a borrower's monthly payment amount, the borrower would be expected to begin paying the new amount within the next 60 days. According to Education, as of the end of March 2020 when the pilot was put on hold, participating servicers selected 48,855 borrowers for verification. The verification pilot was put on hold as Education implemented student loan relief for borrowers under the CARES Act in response to the COVID-19 global pandemic (Public Law 116-136). Specifically, on March 27, 2020, the CARES Act was enacted, which suspended student loan payments due, interest accrual, and involuntary collections for Direct and Federal Family Education Loans held by Education through September 30, 2020. According to Education, the Department suspended all IDR recertifications during this period. On August 8, 2020, the President issued a presidential memorandum directing the Secretary of Education to extend this relief to borrowers through December 31, 2020. Education reported that it will weigh options for resuming the pilot against other critical priorities and available resources, noting that its long-term strategy is to fully implement the authorities granted under the FUTURE Act, which provides Education with statutory authority to access certain Internal Revenue Service data for the purpose of determining eligibility for IDR plans, among other things (Public Law 116-91). GAO will continue to monitor Education's actions in this area, and will close the recommendation when Education provides documentation that it has implemented data analytic practices and follow-up procedures to review and verify family size entries in IDR borrower applications.

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: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials implement the necessary actions to effectively address the two primary causes of the significant deficiency in IRS's internal control over unpaid assessments. These actions should (1) resolve the system limitations affecting the recording and maintenance of reliable and appropriately classified unpaid assessments and related taxpayer data to support timely and informed management decisions, and enable appropriate financial reporting of unpaid assessment balances throughout the year, and (2) identify the control deficiencies that result in significant errors in taxpayer accounts and implement control procedures to routinely and effectively prevent, or detect and correct, such errors. (Recommendation 19-01)

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

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, IRS documented the key management decisions in the design and use of the estimation process. This step should reduce the risk that IRS may perform sampling procedures inconsistent with management intent or plans. Continued management commitment and sustained efforts are necessary to build on the progress made to date and to fully address IRS's remaining unresolved issues concerning the management and reporting of unpaid assessments. We will assess IRS's progress in addressing these issues during our audit of IRS's fiscal year 2020 financial statements.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials document and implement a formal comprehensive strategy to provide reasonable assurance concerning its nationwide coordination, consistency, and accountability for internal control over key areas of physical security. This strategy should include nationwide improvements for (1) coordinating among the functional areas involved in physical security; (2) implementing and monitoring the effectiveness of physical security policies, procedures, and internal controls; and (3) ongoing communication in identifying, documenting, and taking corrective action to resolve underlying control issues that affect IRS's facilities. (Recommendation 19-02)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that Facilities Management and Security Services is in the process of developing and documenting a formal, comprehensive strategy. According to IRS officials, this strategy will include different overarching goals, such as improving workforce effectiveness, ensuring appropriate monitoring functions and employee accountability, and improving coordination and communication of policies and procedures. IRS plans to complete the formal, comprehensive strategy during fiscal year 2020 and finalize the implementation of this strategy by March 2021.

Recommendation: The Commissioner of Internal Revenue should ensure that appropriate IRS officials determine the reasons staff did not consistently comply with IRS's existing requirement for maintaining an emergency contact list at all of its facilities and, based on this determination, establish a process to enforce compliance with the requirement. (Recommendation 19-03)

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

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, IRS used a questionnaire survey and obtained feedback from security section chiefs and physical security specialists to determine the reasons staff did not consistently comply with IRS's existing requirement to maintain an emergency contact list at all IRS facilities. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will establish a process to better enforce compliance with the requirement based on the results of the feedback obtained.

Recommendation: The Commissioner of Internal Revenue should ensure that appropriate IRS officials establish and implement policies and procedures requiring that corrective actions be documented in the Alarm Maintenance and Testing Certification Report for malfunctioning alarms identified in the annual alarm tests. (Recommendation 19-04)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will (1) update the Internal Revenue Manual to reflect the requirement to use the Alarm Maintenance and Testing Certification Report to document alarm testing results, including any malfunctioning alarms and related corrective actions taken, as appropriate;, and (2) review the Alarm Maintenance and Testing Certification Report Form and incorporate any additional instructions and fields to document the specific alarms tested, the testing results, and related corrective actions taken, as appropriate.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials establish and implement policies or procedures, or both, to provide reasonable assurance that the video surveillance systems at all IRS facilities record activity at the correct time and are properly secured. The policies or procedures should include periodic checks and adjustments, as needed, as part of the annual service and maintenance of security equipment and systems. (Recommendation 19-05)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will develop, document, and implement policies or procedures, or both, to provide reasonable assurance of the accuracy and physical security of the video surveillance systems at all IRS facilities by including periodic checks and adjustments, as needed, as part of the annual service and maintenance of security equipment.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to clarify (1) who is responsible for conducting the annual review of the visitor access logs, (2) the date by which the review is to be conducted, and (3) how the review should be documented. (Recommendation 19-06)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Information Technology and the Criminal Investigation organizations will update and implement their policies or procedures, or both, to clarify (1) who is responsible for conducting the annual review of the visitor access logs, (2) the date by which the review is to be conducted, and (3) how the review should be documented.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials (1) identify the reason IRS's policies and procedures related to the transmittal forms were not always followed and (2) design and implement actions to provide reasonable assurance that SB/SE units comply with these policies and procedures. (Recommendation 19-07)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that the Small Business/Self-Employed (SB/SE) Field Collection organization determined that the reasons the policies and procedures were not always followed were either a lack of understanding of the requirements or a lack of consistency in adhering to them. In order to address this, in October 2019, Field Collection distributed a memorandum to its area directors, territory managers, and group managers, reminding them of the required remittance processing procedures, emphasizing the importance of following the procedures, and requesting that they distribute the information in the memorandum within their organization. IRS officials stated that the memorandum will help assure that SB/SE Field Collection units comply with the applicable policies and procedures. Since this memorandum was issued after the end of our fiscal year 2019 audit, we will review the implementation of this action during our fiscal year 2020 audit. Further, IRS officials stated that during fiscal year 2020, the SB/SE Examination organization will identify the reason that IRS's policies and procedures for transmittal forms were not followed, and based on this, it will add guidance to the applicable Internal Revenue Manual sections to clarify and supplement the service-wide guidance for the appropriate control, monitoring, and review of the forms used to transmit packages containing personally identifiable information.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to clearly define the roles and responsibilities of second-level managers and IDRS security account administrators for validating the information on USR designation forms, including specifying how the information should be validated. (Recommendation 19-08)

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

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, the Information Technology (IT) organization updated IRS's Integrated Data Retrieval System (IDRS) security policy contained in the Internal Revenue Manual to ensure that the IDRS account administration process complies with IRS's personnel security policy regarding background investigation completion dates. In addition, IRS officials stated that by November 2020, the IT organization will update the Unit Security Representative (USR) designation form, as well as policies and procedures, to clearly define the roles and responsibilities of second-level managers and IDRS security account administrators for validating the information on USR designation forms, including how the information should be validated.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement procedures to clearly specify the tax refund data elements that PVS COs are required to verify before certifying the tax refunds in SPS. (Recommendation 19-09)

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

Comments: During fiscal year 2019, the Information Technology organization updated its standard operating procedures to clearly specify the tax refund data elements that the Processing Validation Section Certifying Officers are required to verify before certifying the tax refunds in the Secure Payment System. Since IRS completed this action after we had already performed our fiscal year 2019 testing related to the certification of tax refunds, we will evaluate IRS's actions to address this recommendation during our fiscal year 2020 audit.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials establish and implement a review process to provide reasonable assurance that the RSNs that Data Conversion key entry operators enter into the ISRP system and post to the master files are correct. (Recommendation 19-10)

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

Comments: IRS actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Wage & Investment organization will establish and implement a review process to provide reasonable assurance that the Refund Schedule Numbers on manual refund forms are transcribed accurately into the Integrated Submission and Remittance Processing system.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials implement a validity check in the ISRP system to confirm that RSNs that Data Conversion key entry operators enter into the system have the required 14 digits. (Recommendation 19-11)

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

Comments: IRS officials stated that the Wage and Investment organization agrees that developing and implementing a Unified Work Request for programming changes is needed to systemically validate the refund schedule numbers input into the Integrated Submission and Remittance Processing system; however, IRS officials indicated that the organization is unable to commit to implementing a corrective action because of budgetary constraints. As a result, IRS will place this recommendation on hold until funds are available.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to require that reviewers follow up with tax examiners to verify the errors that tax examiners made in working on cases related to suspicious or questionable tax returns are corrected. (Recommendation 19-12)

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that by April 2020, IRS will update and implement policies or procedures, or both, requiring that reviewers follow up with tax examiners to verify that the errors tax examiners made in working a case related to suspicious or questionable tax returns are corrected.

Recommendation: Congress should consider providing IRS with explicit authority to establish security requirements for the information systems of paid preparers and Authorized e-file Providers. (Matter for Consideration 1)

Agency: Congress
Status: Open

Comments: No action has been taken on this matter as of December 2019.

Recommendation: The Commissioner of Internal Revenue should develop a governance structure or other form of centralized leadership, such as a steering committee, to coordinate all aspects of IRS's efforts to protect taxpayer information while at third-party providers. (Recommendation 1)

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

Comments: In its initial response to our draft report, IRS disagreed with this recommendation. In November 2019, IRS said that it agreed with the intent of the recommendation, but did not agree to implement it, citing the need for additional explicit authority to establish security requirements for the information systems of paid preparers and others who electronically file. IRS reported that to effectively establish data safeguarding policies and implement strategies enforcing compliance with those policies, a centralized leadership structure requires the statutory authority that clearly communicates the authority of the IRS to do so. Without such authority, implementing the recommendation would be an inefficient, ineffective, and costly use of resources, according to IRS. We disagree that convening a governance structure or other centralized form of leadership would require additional statutory authority or be inefficient, ineffective, and costly. As discussed in the report, IRS has seven different offices across the agency working on information security-related activities that could benefit from centralized oversight and coordination, such as updating existing standards, monitoring Authorized e-file Provider program compliance, and tracking security incident reports.

Recommendation: The Commissioner of Internal Revenue should modify the Authorized e-file Provider program's requirements to explicitly state the required elements of an information security program as provided by the FTC Safeguards Rule. (Recommendation 2)

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

Comments: In its initial response to our draft report, IRS disagreed with this recommendation. In November 2019, IRS said it agreed with this recommendation and would update IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns, to include security elements that are consistent with the FTC Safeguards Rule. IRS plans to update the publication by November 2020.

Recommendation: The Commissioner of Internal Revenue should require that all tax software providers that participate in the Authorized e-file Provider program follow the subset of NIST Special Publication 800-53 controls that were agreed upon by the Security Summit participants. (Recommendation 3)

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

Comments: In its initial response to our draft report, IRS disagreed with this recommendation. In November 2019, IRS stated it was in agreement with the intent of this recommendation; however, IRS does not plan to implement it without additional statutory authority to require Authorized e-file Provider Program participants to comply with the NIST Special Publication 800-53. We continue to believe that under IRS's existing authority, IRS has already established some information security requirements for a portion of tax software providers, those that are online providers. IRS has the opportunity to further establish standards for all tax software providers by incorporating the subset of NIST controls into its Authorized e-file Provider program, which would capitalize on the work it has completed with the Security Summit members.

Recommendation: The Commissioner of Internal Revenue should regularly review and update the security requirements that apply to tax software providers and other Authorized e-file Providers. (Recommendation 4)

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

Comments: IRS agreed with this recommendation and in November 2019 said that it will update IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns, with a formal memorandum to all internal stakeholders during the annual review process. IRS plans to take this action by November 2020.

Recommendation: The Commissioner of Internal Revenue should update IRS's monitoring programs for electronic return originators to include techniques to monitor basic information security and cybersecurity issues. Further, IRS should make the appropriate revisions to internal guidance, job aids, and staff training, as necessary. (Recommendation 5)

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

Comments: In its initial response to our draft report, IRS disagreed with this recommendation. In November 2019, IRS stated it was in agreement with the intent of this recommendation; however, it does not plan to implement it. IRS reported it does not have the statutory authority to establish policy on information security and cybersecurity issues, nor to enforce compliance if noncompliance is observed. Additionally, IRS said that the specialized technical skills required to monitor compliance with information and cybersecurity standards, should statutory authority be granted, would require additional funding to meet those monitoring needs. However, as we reported, IRS already monitors physical aspects of information security, which goes beyond existing Authorized e-file Provider program requirements. Since most individuals now file tax returns electronically, having checks for physical security without comparable checks for cybersecurity does not address current risks, as cyber criminals and fraudsters are increasingly attacking third-party providers, as IRS has noted. We believe that incorporating some basic cybersecurity monitoring into the visits would provide IRS the opportunity to help inform the most vulnerable third-party providers of additional guidance and resources.

Recommendation: The Commissioner of Internal Revenue should conduct a risk assessment to determine whether different monitoring approaches are appropriate for all of the provider types in the IRS's Authorized e-file Provider program. If changes are needed, IRS should make appropriate revisions to the monitoring program, internal guidance, job aids, and staff training, as necessary. (Recommendation 6)

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

Comments: In its initial response to our draft report, IRS disagreed with this recommendation. In November 2019, IRS said it agreed with the intent of this recommendation; however it does not plan to implement it. IRS stated that absent statutory authority and funding, an assessment of the different monitoring approaches is moot. We disagree with this conclusion. As discussed in the report, IRS does not systematically monitor the existing security requirements for online providers, nor does it conduct information security or cybersecurity monitoring for all types of Authorized e-file Providers. We believe that IRS could conduct a risk assessment of its current monitoring program within existing statutory authority and make necessary changes that would provide better assurance that all types of providers are receiving some level of oversight and that IRS is addressing the greatest risk areas appropriately.

Recommendation: The Commissioner of Internal Revenue should standardize the incident reporting requirements for all types Authorized e-file Providers. (Recommendation 7)

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

Comments: IRS agreed with this recommendation and in November 2019 said that it would develop a standardized process for all Authorized e-file Providers to report security incidents to IRS. IRS said it plans to update IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns, to include this standardized process by November 2020.

Recommendation: The Commissioner of Internal Revenue should document intake, storage, and sharing of the security incident data across IRS offices. (Recommendation 8)

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

Comments: In its initial response to our draft report, IRS agreed with this recommendation. In November 2019, IRS said it agreed with this recommendation with respect to the formal process for tax professionals to report data breaches to the IRS through the Stakeholder Liaison function within the Communications and Liaison organization. According to IRS, procedures are documented in the Data Breach Incident Reporting Instructions that are followed during the intake process. IRS said that upon completion, the breach information is disseminated to other offices within the IRS, depending on the nature of the breach incident reported. According to IRS, all 2018 and 2019 Tax Pro Data Breach incidents remain stored in the Data Breach module of the Return Preparer Database. We will follow up to confirm the information IRS described and determine if these procedures cover all of the IRS offices included in our report.

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: The Commissioner of Internal Revenue should finalize the PDC program objectives so that they are clearly defined in consistent terms, and assure that the key program risks, measures, and targets are linked with the objectives. (Recommendation 1)

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

Comments: IRS partially agreed with recommendation. IRS said it would use consistent terms in developing measures that link to its PDC program objectives, but did not agree that program objectives are necessarily framed in terms of program risks. In December 2019, IRS provided new objectives linked with proposed measures to assess collection agencies. In February 2020, IRS said it intends to award new contracts in 2021 that will include performance measures linked to program objectives. To fully address GAO's recommendation, IRS also needs to identify targets for measures linked to program objectives.

Recommendation: The Commissioner of Internal Revenue should include the Department of the Treasury Inspector General for Tax Administration (TIGTA) costs in IRS's reporting of PDC program costs. (Recommendation 2)

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

Comments: IRS disagreed with the recommendation. In October 2019 IRS said that including TIGTA costs in reporting program costs would be inconsistent with legislative requirements that define program costs as IRS's costs and with IRS cost-accounting practices. However, we maintain that the FAST Act set minimum reporting requirements to which IRS can add more information. Also, the existing cost accounting standards and practices to which IRS refers govern IRS's accounting for and reporting of costs incurred by IRS, not to fuller reporting of the PDC program's costs to the federal government. We will continue to pursue this recommendation and update its status in response to any changes.

Recommendation: The Commissioner of Internal Revenue should report the amount of collected revenue sent to the general fund of the Treasury and amounts retained by IRS to pay its costs. (Recommendation 3)

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

Comments: IRS agreed with our recommendation and in October 2019 said it plans to report PDC revenue amounts going to the Treasury and to IRS's retained funds by February 2020. As of March 2020, we had not received documentation from IRS to demonstrate it had done so.

Recommendation: The Commissioner of Internal Revenue should analyze PDC program results to identify the types of cases that are not potentially collectible and should not be assigned to collection agencies. (Recommendation 4)

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

Comments: IRS disagreed with the recommendation and said such analysis is unnecessary due to a legal requirement to assign all such cases to collection agencies and because there is very little cost in doing so. Our report noted that IRS has the authority and responsibility for efficient program operations to not assign uncollectible debt cases. In February 2020, IRS said that the assignment and recall of cases add nothing to the cost. We disagree, noting that IRS has not supported this assertion. IRS incurred some portion of its PDC costs from assigning and recalling cases that collected no revenue. Even if these costs are minor, they would be greater than the amount collected. We maintain the importance of this recommendation because IRS has incurred tens of millions of dollars in costs with little or no revenue collected for most of the PDC cases that IRS has closed.

Recommendation: The Commissioner of Internal Revenue should analyze PDC program results and the cases not assigned to the PDC program to identify the types of inactive cases IRS will not pursue that could be assigned to collection agencies to improve PDC program results. (Recommendation 5)

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

Comments: IRS agreed and noted that it already had the recommended analyses built into the PDC case identification process. IRS also provided documentation to GAO in December 2019 and its comments in February 2020 repeated its view that its process already identified other inactive cases that have not been assigned to PDC. IRS's documentation during the review and provided in December did not show how IRS analyzes its debt inventory and PDC results to identify inactive cases that are not being assigned to PDC but may be worth pursuing.

Recommendation: The Commissioner of Internal Revenue should clearly document and distinguish the complete list of identified risks to taxpayers in the PDC program risk register, and align the risks with PDC program objectives. (Recommendation 6)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019, on actions taken to implement the recommendation. IRS actions included a risk register with related information on the analyses and response to the listed risks.

Recommendation: The Commissioner of Internal Revenue should clearly document the severity of impacts of the taxpayer risks, as well as the likelihood of each taxpayer risk after responding to it, in the PDC program risk register, and use this information to prioritize risks to address and guide selection of risk responses. (Recommendation 7)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019, on actions taken to implement the recommendation. IRS actions included a risk register with related information on the analyses and response to the listed risks.

Recommendation: The Commissioner of Internal Revenue should clearly document how each risk response aligns with specific taxpayer risks in the PDC program risk register. (Recommendation 8)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019, on actions taken to implement the recommendation. IRS actions included a risk register with related information on the analyses and response to the listed risks.

Recommendation: The Commissioner of Internal Revenue should document how IRS's monitoring of the PDC program provides information on specific taxpayer risks and how well specific responses are working to address each risk, and should supplement IRS's monitoring of taxpayer complaints with Federal Trade Commission (FTC) complaint data. (Recommendation 9)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019 on actions taken to implement the recommendation, such as outreach to FTC on its system to record the complaints.

Recommendation: The Commissioner of Internal Revenue should more fully seek and document feedback from external stakeholders representing vulnerable taxpayers to identify and appropriately respond to possible PDC taxpayer risks. (Recommendation 10)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019 on actions taken to implement the recommendation, such as a system to record feedback received.

Recommendation: The Commissioner of Internal Revenue should clearly document an assessment of fraud risks related to the PDC program. (Recommendation 11)

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

Comments: IRS agreed with the recommendation and said that by June 2020, it would conduct a fraud risk assessment based on the Fraud Reduction and Data Analytics Act of 2015 and OMB guidance. We will update the status when we complete review of any documentation IRS provides on actions taken to implement the recommendation.

Recommendation: The Commissioner of Internal Revenue should ensure that its printed guidance to PDC taxpayers includes information about reporting scams to TIGTA. (Recommendation 12)

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

Comments: IRS agreed with the recommendation. We will update the status after completing review of documentation IRS provided in December 2019 on actions taken to implement the recommendation.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA staff record and track contact with taxpayers. (Recommendation 2)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS has taken steps to develop and implement an integrated case inventory and management system capable of recording and tracking taxpayer contacts. It expects this system to be deployed by October 2020.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA staff record and track the hours they spend on MAP cases. (Recommendation 3)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS has taken steps to develop and implement an integrated case inventory and management system capable of tracking actual time worked on cases. It expects this system to be deployed by October 2020.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that Advance Pricing and Mutual Agreement Program (APMA) identify and record the dates of key milestones throughout MAP case resolutions. (Recommendation 4)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS plans to review its current practices in order to ensure they are in line with the GAO's recommendation with respect to MAP cases, as well as APA cases. IRS has taken steps to develop and implement an integrated case inventory and management system that it expects to deploy by October 2020.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA puts procedures in place to review the quality of inventory data. (Recommendation 5)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS has taken steps to develop and implement an integrated case inventory and time management system for APMA's MAP (and other) cases that it believes will help it quickly identify when case and inventory data do not meet quality standards. The new system is expected to be deployed by October 2020.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA records the dollar amounts of MAP case outcomes in its database. (Recommendation 6)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS has taken steps to record these amounts in the inventory management system that is expected to be deployed by October 2020.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA analyzes trends in case characteristics as part of routine program management activities. (Recommendation 7)

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

Comments: IRS agreed with GAO's recommendation. As of July 2020, IRS is exploring ways to examine correlations between case management and administrative characteristics as part of ongoing, routine measurement of stages of the MAP.

Recommendation: The Commissioner of Internal Revenue should direct USCA to ensure that APMA identify and record categories of the tax issue relevant in the dispute. (Recommendation 8)

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

Comments: IRS agreed with GAO's recommendation. APMA already tracks issue classification data for completed APA cases for its annual report to Congress on the APA program, and IRS agrees that a similar system can and should be pursued for MAP cases. Implementing an integrated inventory management system capable of tracking these data across both MAP and APA cases would be especially informative and helpful for APMA management. As of July 2020, the IRS has taken steps to develop and implement such a system. It is expected to be deployed by October 2020..

Recommendation: The Commissioner of Internal Revenue should ensure that the Deputy Commissioner for Services and Enforcement develops and documents improved controls for the validity, completeness, and accuracy of data on FBAR exams and enforcement actions. (Recommendation 2)

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

Comments: In a letter dated October 15, 2018, IRS's Deputy Commissioner for Services and Enforcement stated that IRS is in the process of designing a new FBAR database solution using the FISMA-compliant Entellitrak case management system. The solution will include data fields and systemic controls to ensure the accurate recording and reporting of FBAR case information essential to the whistleblower program. As of December 2019, IRS officials said they are on track to complete this action by June 2020. When we can confirm that IRS has completed this action, we will provide updated information.

Recommendation: The Commissioner of Internal Revenue should direct the Chief of Appeals, in coordination with the IRS Human Capital Office, to conduct a skills gap analysis specific to Appeals mission needs and develop a strategy for mitigating any identified gaps. (Recommendation 1)

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

Comments: IRS agreed with this recommendation. As of April 2020, the Office of Appeals stated that it is working with the IRS Human Capital Office to design a questionnaire for all Appeals managers to identify the technical and organizational skills necessary to meet organizational short and long-term needs for the Appeals Officer position. This information will be used to conduct a skills gap analysis on the current Appeals workforce and to enhance the selection/hiring process to ensure future hires possess necessary skills. IRS plans to complete these actions by October 2020, and Appeals stated that time frame for this corrective action may be affected by budgetary and resource constraints. GAO will continue to monitor IRS's implementation of this recommendation.

Recommendation: The Commissioner of Internal Revenue should evaluate the existing monitoring for collection due process appeal requests and address deficiencies in collection staff meeting the requirement for timely transfer to the Office of Appeals. (Recommendation 2)

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

Comments: IRS agreed with this recommendation. In July 2019, IRS evaluated the existing monitoring for collection due process appeal requests to identify any impediments to collection staff timely transferring these requests to the Office of Appeals and provided the studies and related recommendations to GAO. The affected IRS collection units have developed action plans to address deficiencies in case transfer time. These plans include modifying inventory software to alert both staff and managers on the number of days collection due process requests have been under review. IRS also plans to update relevant IRM documentation in early 2020 to ensure that receipt dates of collection due process appeal requests are recorded for all cases and that there is appropriate notation of reasons why certain cases exceed established timeframes for transfer to the Office of Appeals. To fully implement this recommendation, IRS will need to provide GAO copies of the updated IRM as well as evidence of other corrective actions outlined in its evaluations of its monitoring procedures for collection due process appeal requests. GAO will continue to monitor the implementation of this recommendation.

Recommendation: The Commissioner of Internal Revenue should establish timeframes and monitoring procedures for timely transfer of taxpayer appeals requests by examination compliance units to the Office of Appeals. (Recommendation 3)

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

Comments: IRS agreed with this recommendation. All four IRS business operating divisions have a corrective action plan and established and documented time frames for timely appeal transfer as of February 2020. While three business operating divisions have reporting procedures planned for monitoring timely appeal transfer, one division has not provided a plan for monitoring its timeliness in transferring cases to the Office of Appeals. To fully implement this recommendation, IRS needs to assess whether the planned monitoring actions will result in timely transfer of examination appeals. As of February 2020, data tracking the time from taxpayer request for appeal to when it is received by the Office of Appeals indicated that the actual transfer times are longer than the established time frames. Delays in transferring such requests can result in increased interest costs for taxpayers because interest continues to accumulate on the tax liability during the appeal process. Further, taxpayers unsure of their appeal status may call or write to IRS, tying up other IRS staff to respond to inquiries about appeals delayed in transfer. GAO will continue to monitor IRS's implementation of this recommendation.

Recommendation: The Commissioner of Internal Revenue should direct the Chief of Appeals to regularly report and share with each compliance unit the data on the time elapsed between when a taxpayer requests an appeal to when it is received in the Office of Appeals. (Recommendation 4)

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

Comments: IRS agreed with this recommendation. In February 2019, IRS stated that the Chief of Appeals will share with each compliance unit data on the time elapsed between when a taxpayer requests an appeal to when it is received in the Office of Appeals. Appeals will also conduct an assessment with IRS compliance units of the time elapsed between when a taxpayer requests an appeal to when it is received in the Office of Appeals and implement improvements based on that assessment. As of February 2020, Appeals demonstrated that it provided to compliance units initial example data that tracks the time from taxpayer request for appeal to when it is received by the Office of Appeals. As of April 2020, it continues to refine the format of these reports. Appeals said it plans to do an assessment of the data with compliance units and will provide an example of this analysis when it is complete. IRS plans to complete these actions by October 2020, and GAO will continue to monitor IRS's implementation of this recommendation.

Recommendation: The Commissioner of Internal Revenue should provide more transparency to taxpayers on historical average total appeal resolution times. This could include publishing average total resolution times by workstream on an Office of Appeals web page as well as including total expected times in the Appeals welcome letter. (Recommendation 5)

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

Comments: IRS agreed with this recommendation. In February 2019, IRS stated that the Chief of Appeals will review appeal resolution times and participate in IRS-wide efforts to improve transparency of resolution timeframes. As of June 2019, the Office of Appeals explained that IRS was beginning to simplify its website, including the Appeals website, with a focus on making it more customer friendly. IRS plans to complete these actions by June 2020, and GAO will continue to monitor IRS's implementation of this recommendation.

Recommendation: The Secretary of the Treasury, consistent with its responsibilities under GPRAMA and Executive Orders for customer service, should ensure that the Commissioner of Internal Revenue takes action to make Appeals customer service standards and performance results more transparent to the public. This could include publishing customer service standards and related performance measure results on the Office of Appeals web page on IRS.gov. (Recommendation 6)

Agency: Department of the Treasury
Status: Open

Comments: Treasury agreed with this recommendation and plans to monitor IRS implementation. In February 2019, IRS stated that it will publish customer service standards and related performance measure results on the Office of Appeals web page on IRS.gov. As of April 2020, the Office of Appeals stated it plans to use information from its redesigned customer satisfaction survey to address this recommendation and is determining how to include the performance information on its website. IRS plans to complete these actions by June 2020, and GAO will continue to monitor IRS's implementation of this recommendation.

Recommendation: The Secretary of the Treasury, consistent with its responsibilities under GPRAMA and Executive Orders for customer service, should ensure that the Commissioner of Internal Revenue takes action to develop a mechanism to solicit and consider public input and customer feedback on a regular basis on current and proposed IRS appeal policies and procedures. This could include leveraging existing IRS advisory bodies or establishing an Office of Appeals advisory body representing the taxpaying public, the tax practitioner community, and businesses to solicit customer perspectives. (Recommendation 7)

Agency: Department of the Treasury
Status: Open

Comments: Treasury agreed with this recommendation and will monitor IRS implementation. In February 2019, IRS stated that it will leverage existing IRS advisory bodies to solicit customer perspectives. In January 2020, the Office of Appeals reported that it had begun to meet with the IRS Advisory Committee (IRSAC) to solicit customer perspectives, with its first interactions beginning in November 2019. The Office of Appeals stated that, in addition to this action, its leadership continues to meet with other external bodies to capture public input and customer feedback on an ad hoc basis. As of April 2020, the Office of Appeals stated it plans to participate in IRSAC's public meetings. Since the Office of Appeals has only begun leveraging IRSAC to solicit customer perspectives in November 2019 in a working session, GAO will continue to monitor the implementation of this recommendation to ensure sustained interaction with IRSAC through working sessions, as well as public meetings.

Recommendation: The Commissioner of Internal Revenue should take steps to improve the implementation of IRS's information security program by entering correct contractor password expiration dates, per IRS's policy, in the system used for managing user access authorizations. (Recommendation 1)

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: The Commissioner of Internal Revenue should take steps to improve the implementation of IRS's information security program by documenting access authorizations for non-unique accounts. (Recommendation 2)

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: The Commissioner of Internal Revenue should take steps to improve the implementation of IRS's information security program by reviewing non-unique accounts at least annually, per IRS's policy. (Recommendation 3)

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: Congress should consider legislation to require that returns prepared electronically but filed on paper include a scannable code printed on the return. (Matter for Consideration 1)

Agency: Congress
Status: Open

Comments: Congress introduced the Acting on the Annual Duplication Report Act of 2019 on July 18, 2019. If enacted this legislation would require returns prepared electronically but filed on paper include a scannable code. Congress had not passed the legislation as of February 2020.

Recommendation: Based on the assessment in recommendation 2, the Commissioner of Internal Revenue should implement the most cost-effective method to digitize information provided by taxpayers who file returns on paper. (Recommendation 3)

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

Comments: IRS agreed with this recommendation and in December 2019 indicated that it plans to begin scanning and digitizing individual tax returns filed on paper beginning in October 2021. According to IRS, digitizing paper returns at intake would allow IRS to reduce processing time, use the same RRP fraud filters on all paper and electronic forms, and allow more pre-refund audits or investigations, among other benefits.

Recommendation: The Commissioner of Internal Revenue should evaluate the costs and benefits of expanding RRP to analyze individual returns not claiming refunds to support other enforcement activities. (Recommendation 4)

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

Comments: IRS agreed with this recommendation and told us expanding the use of RRP is an agency goal. In December 2019, IRS officials reported that internal IRS offices are collaborating on identifying priorities for expanding use of RRP to support other enforcement activities, such as pre-refund audits and investigations, and improve detection and treatment of fraud and noncompliance.

Recommendation: Based on the assessment in recommendation 4, the Commissioner of Internal Revenue should expand RRP to support identified activities. (Recommendation 5)

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

Comments: As of June 2019, IRS has not yet completed its analysis of the costs and benefits of expanding RRP, and therefore has not taken action to expand RRP based on this assessment. IRS agreed with the recommendation but noted that it must first evaluate opportunities to expand RRP. Implementing this recommendation could help IRS streamline the detection and treatment of fraud as well as promote voluntary compliance with tax laws.

Recommendation: The Director of OMB should ensure the consistent application of the requirement for respondent time costs, including clarifying instructions for when and how to include fringe benefits. (Recommendation 1)

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: In April 2019, we requested information from OMB on the agency's implementation of our recommendation but as of May 2019 have not received any status updates. We will continue to monitor OMB's efforts to address our recommendation.

Recommendation: The Director of OMB should review the policies, procedures, and related control activities to ensure that the agency's Paperwork Reduction Act review process is operating effectively. (Recommendation 2)

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: In April 2019, we requested information from OMB on the agency's implementation of our recommendation but as of May 2019 have not received any status updates. We will continue to monitor OMB's efforts to address our recommendation.

Recommendation: The Secretary of Agriculture should review the policies, procedures, and related control activities to ensure that the agency's Paperwork Reduction Act review process is operating effectively. (Recommendation 3)

Agency: Department of Agriculture
Status: Open

Comments: In June 2019, USDA provided an update on efforts to review its Paperwork Reduction Act (PRA) policies and procedures. To ensure that its PRA process is operating effectively, USDA reviewed and updated its internal guidance on preparing information collection request supporting statements, including sections regarding the calculation of respondent burden hour and cost estimates. This updated guidance encourages consultation with potential respondents to help develop these burden estimates. A new PRA consultation checklist directs agency officials to seek input from individuals outside of USDA regarding the agency's burden estimates for an information collection request, including the validity of the methodology and assumptions used in the estimate calculations. The updated guidance specifies that fringe benefits, such as paid leave, insurance, and retirement contributions, should be included in the wage rates used for respondent burden cost estimates. It also clarifies when roundtrip travel time and costs should be included in burden estimates. According to USDA officials, the agency meets with PRA Coordinators to ensure compliance with the updated guidance. These are positive steps toward improving USDA's burden calculation process. However, USDA has not yet provided evidence of a review or revision of its information collection request review process. A review or revision of this process could help USDA better identify errors in burden estimate calculations prior to the final information collection request being sent to OMB and released to the public.

Recommendation: The Secretary of Health and Human Services should review the policies, procedures, and related control activities to ensure that the agency's Paperwork Reduction Act review process is operating effectively. (Recommendation 5)

Agency: Department of Health and Human Services
Status: Open

Comments: In October 2018, HHS provided a statement of actions it had taken to address this recommendation. HHS stated that it had added reporting tools to its Common Data Element Repository (CDER) Library that could help improve tracking of information related to HHS's Information Collection Requests. HHS also stated that it had launched daily emails to Paperwork Reduction Act (PRA) staff to inform them of Office of Management and Budget (OMB) Notices of Action related to Information Collection Requests. Additionally, HHS released an information collection burden calculator tool in the CDER Library to give PRA staff the ability to create burden tables for consistent use across multiple platforms for a single Information Collection Request. According to HHS officials, this tool incorporates both wages and employee benefits in the burden calculations. As of August 2019, HHS's burden calculator tool has been included as a resource on PRA.Digital.gov, a new OMB website that serves as a PRA knowledge base for federal staff. While these are important steps, we are awaiting additional details on how these changes have affected HHS's PRA review process. We will continue to monitor HHS's progress toward addressing our recommendation.

Recommendation: The Secretary of Health and Human Services should leverage existing consultation with stakeholders and the public to explicitly seek input on the estimated burden imposed by information collections. (Recommendation 6)

Agency: Department of Health and Human Services
Status: Open

Comments: In October 2018, HHS stated that it continues to leverage consultation mechanisms for input on the burdens imposed by information collections. According to the agency, it plans to increase the use of the eRulemaking program's Federal Docket Management System for all information collections, including non-rule Information Collection Requests. HHS also stated it plans to contact stakeholders to discuss potential information collections and receive burden estimates. As of August 9, 2019, we have not received an update about HHS's actions or plans. We will continue to monitor HHS's efforts to address our recommendation.

Recommendation: The Secretary of Transportation should review the policies, procedures, and related control activities to ensure that the agency's Paperwork Reduction Act review process is operating effectively. (Recommendation 7)

Agency: Department of Transportation
Status: Open

Comments: In its September 2018 recommendation implementation update, Department of Transportation (DOT) stated that the department began an internal review of the Paperwork Reduction Act program operations, policy, and guidance. Officials reported that they anticipate issuing an updated policy by September 30, 2019. We will continue to monitor DOT's efforts to address our recommendation.

Recommendation: The Secretary of Transportation should leverage existing consultation with stakeholders and the public to explicitly seek input on the estimated burden imposed by information collections. (Recommendation 8)

Agency: Department of Transportation
Status: Open

Comments: In its September 2018 recommendation implementation update, Department of Transportation (DOT) stated that the department began an internal review of the Paperwork Reduction Act program operations, policy, and guidance. Officials reported that they anticipate issuing an updated policy by September 30, 2019. We will continue to monitor DOT's efforts to address our recommendation.

Recommendation: Congress may wish to consider amending the Paperwork Reduction Act to more explicitly require federal agencies to consult with potential respondents on each information collection beyond the publication of Federal Register notices using efficient and effective consultation methods. (Matter for Consideration 1)

Agency: Congress
Status: Open

Comments: As of July 2019, no relevant legislation has been enacted. We will continue to monitor legislation to see if it addresses our matter for congressional consideration.

Recommendation: The Secretary of Transportation should include enough information in Federal Register notices to allow the public to reasonably calculate or determine the number of respondents, the frequency of response, and the average burden time per response for each information collection activity. (Recommendation 9)

Agency: Department of Transportation
Status: Open

Comments: In its September 2018 recommendation implementation update, Department of Transportation (DOT) stated that the departmental Paperwork Reduction Act (PRA) Officer has reviewed the Notice templates and checklist with DOT component PRA Officers during monthly PRA meetings and has applied additional scrutiny in the review process. DOT officials stated that the department began an internal review of the Paperwork Reduction Act program operations, policy, and guidance that will include additional aids to support Notice development. Officials reported that they anticipate issuing an updated policy by September 30, 2019. We will continue to monitor DOT's efforts to address our recommendation.

Recommendation: The Commissioner of Internal Revenue should leverage existing consultation with stakeholders and the public to explicitly seek input on the estimated burden imposed by information collections. (Recommendation 10)

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

Comments: According to IRS, agency officials met with representatives of external stakeholder organizations on the Information Reporting Program Advisory Committee (IRPAC) to seek input on the burden experience of their participants and the communities they represent. As a result of these discussions, the IRPAC has added the burden experience as defined by the PRA as a monthly agenda topic for the 2019 session. As of September 2019, IRS officials reported that the IRPAC has not yet met in 2019. Once we receive documentation confirming this action, we will update the status of the recommendation accordingly.

Recommendation: The Commissioner of Internal Revenue should include enough information in Federal Register notices to allow the public to reasonably calculate or determine the number of respondents, the frequency of response, and the average burden time per response for each information collection activity. (Recommendation 11)

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

Comments: In October 2018, Internal Revenue Service (IRS) reported that it continues to standardize the review process by developing a checklist that ensures all required elements are included in the Federal Register notice. Agency officials stated that the agency will complete the development and delivery of training for employees with responsibility for PRA compliance in fiscal year 2019. We will continue to monitor IRS's progress toward completing these actions.

Recommendation: The Commissioner of the IRS should ensure the operational analysis for IMF fully addresses greater utilization of technology or consolidation of investments to better meet organizational goals. (Recommendation 1)

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

Comments: In August 2019, IRS provided its fiscal year 2018 Operational Analysis Results report, dated June 24, 2019. The report demonstrated that IRS, in response to our recommendation, had ensured that the operational analysis for IMF fully addressed greater utilization of technology or consolidation of investments to better meet organizational goals. However, the operational analysis did not reflect IRS's progress to date in modernizing IMF and the associated challenges. As we reported, this omission is concerning given the risk exposure from the agency's continued use of the legacy assembly language code. In order to close the recommendation, IRS needs to update the operational analysis to reflect its progress modernizing IMF.

Recommendation: The Commissioner of the IRS should ensure the operational analysis for Telecommunications Systems and Support (TSS) addresses the extent to which the investments support customer processes as designed, and how well the investments are delivering the goods or services they were designed to deliver. (Recommendation 3)

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

Comments: In August 2019, IRS provided its fiscal year (FY) 2018 Operational Analysis Results report, dated June 24, 2019. While the report included a summary of the FY 2018 operational analysis for TSS, it did not identify the metrics used to determine whether TSS supported customer processes or delivered the goods and services that it is intended to deliver. To close this recommendation, IRS will need to provide the detailed operational analysis for TSS incorporating these metrics. As of December 2019, IRS has not provided the full TSS operational analysis to GAO. Upon receiving the document, we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should ensure the operational analysis for TSS includes a comparison of current performance with a pre-established cost baseline. (Recommendation 4)

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

Comments: In August 2019, IRS provided GAO its fiscal year (FY) 2018 Operational Analysis Results report. While the report included a summary of the FY 2018 operational analysis for the Telecommunications Systems and Support (TSS) investment , including planned and actual cost figures for FY2018, the report did not indicate whether the planned cost figure for FY2018 accounted for reimbursable costs and user fees, as we reported. To address this recommendation, IRS will need to provide a full operational analysis for TSS, as well as documentation showing whether reimbursable costs and user fees are included in the planned cost figure. As of December 2019, IRS has not provided a full TSS operational analysis to GAO. Upon receiving the document, we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should ensure the operational analysis for End User Systems and Services includes a comparison of current performance with a pre-established cost baseline. (Recommendation 5)

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

Comments: In August 2019, IRS provided its fiscal year (FY) 2018 Operational Analysis Results report, dated June 24, 2019. While the report included a summary of the FY 2018 operational analysis for End User Systems and Services (EUSS) investment, including planned and actual cost figures for FY2018, it did not specify whether the planned cost figure accounted for multi-year funding and user fees, as we reported. To address this recommendation, IRS will need to provide a full operational analysis for EUSS, as well as documentation showing whether multi-year funding and user fees are included in the planned cost figure. As of December 2019, IRS has not provided the full EUSS operational analysis to GAO. Upon receiving it, we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IMF investment. (Recommendation 7)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates on the status of the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IMF investment. (Recommendation 8)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates on the status of the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice for prioritizing risk for the IMF investment. (Recommendation 9)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates indicating whether the agency has implemented the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IMF investment. (Recommendation 10)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates on the status of the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IMF investment. (Recommendation 11)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates on the status of the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IDRS investment. (Recommendation 12)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates indicating whether the agency has implemented the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IDRS investment. (Recommendation 13)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates on the status of the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IDRS investment. (Recommendation 14)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates indicating whether the agency has implemented the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IDRS investment. (Recommendation 15)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by November 2019. As of December 2019, IRS has not provided any updates indicating whether the agency has implemented the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the MSSS investment. (Recommendation 16)

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

Comments: In November 2019, IRS provided its IT Enterprise Operations Mainframe and Servers Services and Support (MSSS) Risk Management Plan, dated October 7, 2019. While the plan addressed most of the activities associated with the preparing for risk management key practice, it did not identify risk constraints, risk assumptions, or risk tolerance for the MSSS investment. Upon receiving further information, we will review it to determine if IRS has fully addressed this recommendation.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the MSSS investment. (Recommendation 18)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by October 2019. In November 2019, IRS provided its IT Enterprise Operations Mainframe and Servers Services and Support (MSSS) Risk Management Plan, dated October 7, 2019, along with several other documents associated with the agency's IT risk management process. However, the documents do not demonstrate that IRS has implemented the activities associated with the Analyze Risk key practice. Specifically, while the plan describes a risk analysis process in which risks are classified as high, medium, or low risk, neither the plan nor any of the other documents describes criteria for evaluating and quantifying risk likelihood and severity (impact) levels. Additionally, the Risk Management Plan does not indicate whether analysis of MSSS risks includes both inherent and residual risks. Upon receiving additional information indicating that IRS has addressed these activities, we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the MSSS investment. (Recommendation 19)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by October 2019. In November 2019, IRS provided its IT Enterprise Operations Mainframe and Servers Services and Support (MSSS) Risk Management Plan, dated October 7, 2019, along with several other documents associated with the agency's IT risk management process. However, the documents do not demonstrate that IRS has established threshold values for MSSS risk categories or alternative courses of action for critical risks. Upon receiving additional information indicating that it has addressed these activities. we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the MSSS investment. (Recommendation 20)

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

Comments: In September 2018, IRS told GAO it would implement the recommendation by October 2019. In November 2019, IRS provided its IT Enterprise Operations Mainframes and Servers Services and Support (MSSS) Risk Management Plan, dated October 7, 2019, along with several other documents associated with the agency's IT risk management process. However, the documents do not demonstrate that IRS has fully implemented all of the activities associated with the monitoring, reporting, and controlling key practice. Specifically, our review of the documents shows that IRS has not established threshold values for MSSS risk categories, and as a result is unable to compare the status of risks to acceptability thresholds to determine the need for implementing a risk mitigation plan. In addition, although the MSSS Risk Management Plan was updated in October 2019, its previous revision occurred in October 2017, indicating that IRS has not yet reviewed all aspects of the risk management program at least once a year. Upon receiving additional information that IRS has addressed these activities, we will review it to determine if IRS has implemented the recommendation.

Recommendation: The Commissioner of the IRS should fully implement IT workforce planning practices, including the following actions (1) setting the strategic direction for workforce planning; (2) analyzing the workforce to identify skill gaps; (3) developing strategies and implementing activities to address skill gaps; and (4) monitoring and reporting on progress in addressing skill gaps. (Recommendation 21)

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

Comments: In September 2018, IRS told GAO it had initiated efforts to address workforce planning agency-wide. The agency stated that the Human Capital Office in coordination with the Information Technology organization prioritizes critical skills gaps to develop gap mitigation strategies, which are implemented through IT annual training plans and succession planning efforts. IRS also stated that the mitigation plans will be monitored in the current Project and Portfolio Management System and that the Human Capital and Information Technology organizations will monitor resource capacity, skills, assigned work effort, and staff availability. In addition, IRS stated that it would utilize special hiring authorities as a competency and staffing mitigation strategy. The agency noted that the special authorities are subject to the availability of resources and agency approval. Further, IRS stated that, due to the diversion of IT resources to the Tax Cuts and Jobs implementation, development of a plan for scaling and expansion of workforce planning efforts will commence after the opening of Filing Season 2020. IRS stated that, due to those constraints, it could not provide a date for fully implementing the recommendation. As of December 2019, IRS has not provided any updates indicating whether it has implemented the recommendation. When we confirm what actions IRS has taken, we will provide updated information.

Recommendation: Based on the estimates developed in Recommendation 1, the Commissioner of Internal Revenue should direct the Identity Assurance Office to prioritize foundational initiatives in its Identity Assurance Strategy and Roadmap. (Recommendation 2)

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

Comments: As of January 2020, the Internal Revenue Service (IRS) had taken preliminary steps to prioritize its foundational initiatives in its Identity Assurance Strategy and Roadmap (Roadmap), as GAO recommended in June 2018. For example, IRS documentation stated that initial efforts to update the original Roadmap included collecting implementation documents for the 14 foundational initiatives. IRS stated that this information and progress that IRS has made on the initiatives shows that the initiatives are a priority for IRS leadership. However, IRS has not used this information to clearly prioritize in-progress initiatives or supporting activities going forward. IRS stated that it intends to update its Roadmap annually, including prioritizing new and existing authentication initiatives and capabilities. IRS's continued attention to this action will help ensure that in-progress authentication initiatives are prioritized and completed.

Recommendation: The Commissioner of Internal Revenue should establish a policy for conducting risk assessments for telephone, in-person, and correspondence channels for authentication. This policy should include, for example, the frequency of assessments to be performed and timeframes for addressing deficiencies. (Recommendation 3)

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

Comments: As of November 2019, IRS officials had developed a draft policy for conducting risk assessments for telephone, in-person, and correspondence channels for authentication, as we recommended. IRS officials stated that once this policy is approved, it will be used to develop a plan to perform risk assessments for these authentication channels. IRS's continued attention to this recommendation will help ensure that it is aware of emerging threats to the tax environment.

Recommendation: Consistent with the policy developed in Recommendation 3, the Commissioner of Internal Revenue should direct the Identity Assurance Office and IRS business owners to develop a plan for performing risk assessments for telephone, in-person, and correspondence channels for authentication. (Recommendation 4)

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

Comments: As of November 2019, IRS officials stated that they will develop a plan for performing risk assessments for telephone, in-person, and correspondence channels for authentication by May 2020. Until IRS develops and implements this plan, these authentication channels may be more vulnerable to fraudulent activity, including unauthorized attempts to access taxpayer information.

Recommendation: The Commissioner of Internal Revenue should establish a mechanism to collect data on outcomes for telephone, in-person, and correspondence authentication, consistent with federal standards for internal control. (Recommendation 5)

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

Comments: As of November 2019, IRS officials stated that the agency intends to implement this recommendation by spring 2020. Officials noted that developing a systemic solution for collecting data on all authentication outcomes is complex and involves multiple IRS business divisions. Until IRS fully addresses this recommendation, it will have limited insight into the number of taxpayers who fail authentication and the reason for failure.

Recommendation: The Commissioner of Internal Revenue should revise or establish, as appropriate, procedures to ensure data quality in the Account Management Services (AMS) consistent with federal standards for internal control. (Recommendation 6)

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

Comments: As of November 2019, IRS stated that it has planned enhancements to its authentication data collection procedures in AMS. Officials stated that by June 2020, they intend to implement improvements for ensuring data quality of authentication outcomes. Until IRS fully implements our recommendation, it will be limited in conducting systematic data analysis on taxpayer authentication outcomes.

Recommendation: The Commissioner of Internal Revenue should ensure that IRS business units have access to complete AMS data to monitor authentication performance and identify potential issues. (Recommendation 7)

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

Comments: As of November 2019, IRS officials told us that IRS has explored options that will allow the agency to more effectively record, track, and monitor authentication outcomes. IRS officials said that they are developing and testing a tool to document Taxpayer Protection Program interactions, outcomes of taxpayer authentication, and the reasons for authentication failures. Officials stated that IRS plans to have this tool implemented by spring 2020, one year later than originally planned. Officials stated that the delay is due to additional technical programming to fully develop the tool. We will follow up on IRS's actions to determine the extent to which they implement our recommendation.

Recommendation: The Commissioner of Internal Revenue should direct the Identity Assurance Office and other appropriate business partners to develop a plan--including a timeline, milestone dates, and resources needed--for implementing changes to its online authentication programs consistent with new NIST guidance. (Recommendation 8)

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

Comments: As of January 2020, IRS has taken steps to implement this recommendation. Efforts include developing plans for a new authentication capability to authenticate taxpayer's identities online using external partners, consistent with National Institute of Standards and Technology (NIST) guidance. IRS officials told us that they plan to work with external partners to perform additional testing on its new authentication platform this year, including a usability study to understand user experience. IRS officials also stated that they are determining a schedule for fully implementing these NIST-compliant taxpayer authentication capabilities. IRS's timely implementation of NIST's guidance is critical to help the agency mitigate potential security weaknesses in its existing online authentication programs.

Recommendation: In accordance with the plan developed in Recommendation 8, the Commissioner of Internal Revenue should implement improvements to IRS's systems to fully implement NIST's new guidance. (Recommendation 9)

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

Comments: As of January 2020, IRS has taken steps to develop plans for a new authentication capability to authenticate taxpayer's identities online using external partners, consistent with National Institute of Standards and Technology (NIST) guidance. IRS officials stated that they are determining a schedule for fully implementing these NIST-compliant taxpayer authentication capabilities. As noted in our report, IRS's timely implementation of NIST's new guidance is critical, as it can help the agency mitigate potential security weaknesses in its existing online authentication programs.

Recommendation: The Commissioner of Internal Revenue should develop a repeatable, comprehensive process to identify and evaluate alternative options for improving taxpayer authentication, including technologies in use by industry, states, or other trusted partners. (Recommendation 10)

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

Comments: As of January 2020, the Internal Revenue Service (IRS) had taken steps to develop a repeatable, comprehensive process to identify and evaluate alternative options for improving taxpayer authentication, as GAO recommended in June 2018. IRS stated that the draft process was being reviewed by the Chief Privacy Officer and it expects to finalize the process in spring 2020. IRS also stated that the Identity Assurance office will be ready to use the repeatable process once it is approved by IRS leadership. IRS's continued attention to this action will help ensure that it has a sound rationale for its investment decisions and the resources it needs to make authentication improvements in a timely manner.

Recommendation: Based on the approach developed in Recommendation 10, the Commissioner of Internal Revenue should include and prioritize these options, as appropriate, in IRS's Identity Assurance Strategy and Roadmap. (Recommendation 11)

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

Comments: As of January 2020, the Internal Revenue Service (IRS) had taken steps to develop a repeatable, comprehensive process to identify and evaluate alternative options for improving taxpayer authentication. However, IRS had not yet included and prioritized these options, as appropriate, in IRS's Identity Assurance Strategy and Roadmap (Roadmap), as GAO recommended in June 2018. IRS stated that it expects to finalize its process to evaluate alternative authentication options in spring 2020. IRS documentation states that it plans to update its Roadmap annually, but it has not articulated a timeline for doing so in 2020. IRS's continued attention to this action will help ensure that it has a sound rationale for its investment decisions and the resources it needs to make authentication improvements in a timely manner.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials, based on IRS's research and determination, design and implement the corrective actions necessary to reasonably assure that IRS effectively resolves and records unpostable transactions in a timely manner, including establishing clearly defined time frames in the Internal Revenue Manual (IRM) by which the IRS operating divisions should correct unpostable transactions and appropriate related oversight and review processes. (Recommendation 18-02)

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

Comments: IRS's actions to address this recommendation are ongoing. As of September 30, 2019, three of the four operating divisions involved in this recommendation designed and implemented the corrective actions necessary to reasonably assure that IRS effectively resolved and recorded unpostable transactions in a timely manner. In March 2019, one operating division determined that based on the research performed, no actions needed to be taken by the operating division to effectively resolve and record unpostable transactions in a timely manner. We will continue to evaluate IRS's actions to address this recommendation during our audit of IRS's fiscal year 2020 financial statements.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Submission Processing internal control review. These policies should include or be accompanied by procedures to (1) assess and update the review questions and cited IRM criteria to reasonably assure they align with the controls under review; (2) periodically evaluate and document a review of the error threshold methodology to assess its current validity based on changes to the operating environment; (3) report findings identified in the Findings and Corrective Actions Report; and (4) assess and monitor (a) safeguarding internal control activities across all work shifts, particularly during peak seasons, (b) safeguarding internal control activities for the appropriate use and destruction of hard copy taxpayer information, and (c) the results of relevant functional level reviews. (Recommendation 18-03)

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

Comments: During fiscal year 2019, IRS developed policies in the Internal Revenue Manual (IRM) for conducting and monitoring the Submission Processing internal control review. Specifically, the IRM addresses the (1) designated roles and responsibilities among IRS business units for ensuring the review questions and associated criteria are assessed and updated to align with internal controls under review; (2) requirements for periodically evaluating the error threshold methodology used in the review; (3) procedures for the review to assess and monitor (a) internal control activities across work shifts and (b) internal control activities for appropriate use and destruction of hard-copy taxpayer information. However, the IRM did not include requirements for reporting findings identified during all components of the internal control review and for assessing and monitoring results of relevant functional level reviews. Since IRS developed the relevant IRM policies and procedures after we had already performed our fiscal year 2019 internal control testing, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Audit Management Checklist review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review; (2) clarify the minimum requirements for how frequently the review should be completed at its various facilities while considering factors that may affect the most appropriate timing of these reviews, such as changes in personnel, operational processes, or information technology; and (3) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-04)

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

Comments: In September 2019, IRS notified stakeholders of the added procedures to the Internal Revenue Manual (IRM) for (1) conducting the Audit Management Checklist reviews, including how frequently the reviews should be completed; (2) developing corrective actions for deficiencies; and (3) tracking the status of the corrective actions until fully implemented. Since IRS provided us the IRM procedures after the end of our fiscal year 2019 audit, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the All Events History Report review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review and (2) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-05)

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

Comments: In September 2019, IRS notified stakeholders of the added procedures to the Internal Revenue Manual (IRM) for conducting the All Events History Report reviews, including developing and monitoring corrective actions for deficiencies until fully implemented. Since IRS provided us the IRM procedures after the end of our fiscal year 2019 audit, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

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: The Acting Commissioner of Internal Revenue should assess options for improving enforcement of late W-2 filing penalties, for example, by mailing notices before the next filing deadline. (Recommendation 2)

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

Comments: As of October 2019, IRS continues to disagree with this recommendation. IRS stated that it does not have all the information required for calculating and sending late penalty notifications prior to the beginning of the next filing season. However, in its response, IRS did not consider other options that could be available prior to finalizing penalty calculations, such as communicating with the employers earlier in the process. As noted in our report, quickly responding to employers that filed late increases the potential for compliance, thereby increasing the availability of W-2 data for systemic verification to detect and prevent fraud and noncompliance. We continue to believe that assessing the options for improving enforcement of late W-2 filing penalties, such as through earlier communication, would help IRS identify potential opportunities to encourage compliance with the W-2 filing deadline and verify more wage information before releasing refunds. We will continue to discuss options with IRS regarding this recommendation.

Recommendation: The Acting Commissioner of Internal Revenue should develop an evaluation plan to fully assess the benefits and costs, including taxpayer burden, of modifying the February 15 refund hold, and determine how this effort informs IRS's overall compliance strategy for refundable tax credits and fraud risk management. (Recommendation 3)

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

Comments: As of January 2020, IRS has assessed the benefits of modifying the refund hold, but it has not assessed the costs, as GAO recommended in January 2018. In November 2018, IRS provided its assessment of the February 15 refund hold. In it, IRS reiterated its findings regarding the benefits of the refund hold. These benefits included potential savings if IRS modified the hold to include all taxpayers, extended the hold to a later date when more W-2 data are available, or made both changes. However, IRS did not include any assessment of costs to achieve these potential savings, such as the costs for IRS to review any additional returns that would be identified under a modified refund hold. It did not assess taxpayer burden, either. IRS also did not determine how the February 15 refund hold informs IRS's overall compliance strategy for refundable tax credits and its fraud risk management strategy. In January 2019, IRS took actions to hold more returns beyond the February 15 refund hold date using a risk-based selection method. Nevertheless, without a complete assessment of the benefits and costs, including taxpayer burden, IRS is making a decision based upon incomplete information. Further, if Congress or Treasury considered making any changes, they too would have incomplete information on which to direct IRS's actions.

Recommendation: Based on the benefits and costs assessment in Recommendation 3, the Acting Commissioner of Internal Revenue should use IRS's existing authority to modify the refund hold such that it minimizes the risk of releasing fraudulent or noncompliant refunds. (Recommendation 4)

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

Comments: As of January 2020, IRS has taken actions consistent with our recommendations by modifying its filters to hold more returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) beyond the February 15 refund hold date based on a risk-based selection method. In addition, in May 2019, IRS officials told us they are making similar changes for the 2020 filing season to hold more high-risk returns not claiming EITC or ACTC until W-2 data are available. This action, if taken, would be consistent with our recommendations. In 2018, IRS assessed the benefits of modifying the refund hold, however, it did not assess or document the costs, including taxpayer burden, or determine how the February 15 refund hold informs IRS's overall compliance strategy for refundable tax credits and its fraud risk management strategy. Completing these actions, along with the planned modifications, would fully address our recommendations, which would enable IRS to make decisions based on completed information.

Recommendation: The Acting Commissioner of Internal Revenue should assess the benefits and costs of additional uses and applications of W-2 data for pre-refund compliance checks, such as addressing underreporting, employment fraud, and other fraud or noncompliance before issuing refunds. (Recommendation 5)

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

Comments: In September 2019, IRS provided results for a pilot encouraging voluntary compliance through expanded systemic verification using W-2 data. In the pilot, IRS sent soft notices to a targeted group of taxpayers whose returns under-reported income compared to W-2 data. In its analysis, IRS reported that some taxpayers voluntarily amended their returns after receiving the soft notice, resulting in a net increase in tax revenue. If IRS determines that the benefits outweigh the costs of adopting this practice based on the pilot results, or assesses additional options to address other fraud and noncompliance before issuing refunds, it would satisfy our recommendation. We will continue to follow IRS's progress on the pilot and its results.

Recommendation: Based on the assessment in Recommendation 5, the Acting Commissioner of Internal Revenue should implement any identified changes to improve pre-refund compliance checks. (Recommendation 6)

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

Comments: In September 2019, IRS provided an evaluation of a pilot it conducted during tax year 2019. In the pilot, IRS sent soft notices to a targeted group of taxpayers whose returns under-reported income compared to W-2 data. In its analysis, IRS reported that some taxpayers voluntarily amended their returns after receiving the soft notice, resulting in a net increase in tax revenue. IRS told us they intend to continue the pilot during tax year 2020. We will continue to follow IRS's progress on the pilot and its results.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the Information Sharing and Analysis Center (ISAC) pilot better aligns with leading practices for effective pilot design. This should include (1) establishing criteria for assessing whether the pilot's objectives have been met before making decisions about its scalability and whether, how, and when to when to proceed to full implementation; and (2) developing a data analysis plan that identifies data sources and criteria necessary for effectively evaluating the pilot. (Recommendation 1)

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

Comments: IRS transitioned the Information Sharing and Analysis Center (ISAC) from a pilot to full implementation in October 2018. As of June 2020, we have requested documentation from IRS related to this transition to determine if it is consistent with the recommendation to align with leading practices. We will continue to monitor ISAC activities.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the ISAC Partnership develops an outreach plan to expand membership and improve states' and industry partners' understanding of the ISAC's benefits. (Recommendation 2)

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

Comments: The ISAC annual report released in April 2018 cites plans to continue to grow member participation from private sector and other government agencies and to provide opportunities to deepen members' participation with clear guidelines. As of June 2020, we have requested additional information about participation levels and ongoing outreach efforts. Developing an outreach plan to broaden membership to non-Security Summit members of industry and financial institutions would further promote stakeholders collaborating and sharing fraud information.

Recommendation: The Commissioner of Internal Revenue should re-establish long-term, quantitative goals for improving voluntary compliance. (Recommendation 1)

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

Comments: IRS reported it does not agree with the recommendation. In September 2018, IRS officials stated that the Fiscal Year 2018-2022 IRS Strategic Plan included six strategic goals and six performance measures. However, none of those performance measures related to a long-term, quantitative goal for improving voluntary compliance. In its 60-day letter, IRS agreed that improving voluntary compliance is core to its mission; however, it stated that creating a quantifying goal will do little to advance that purpose. IRS provided several reasons why it should not create a quantitative measure, including the voluntary compliance rate could rise over time without any help from IRS, or fall despite additional effort from IRS. Further, IRS reported that the voluntary compliance rate is not effective to making strategic and operational decisions. However, as we note in the report, setting long-term strategic goals is essential for results-oriented management, because such goals explain in greater specificity the results an agency is intending to achieve. Further, focusing on intended results can promote strategic and disciplined management decisions that are more likely to be effective because managers who use fact-based performance analysis are better able to target areas most in need of improvement and to select appropriate interventions. As of August 2020, there has been no change in this status.

Recommendation: The Commissioner of Internal Revenue should instruct the appropriate officials to develop and document a strategy that outlines how IRS will use National Research Program data to update compliance strategies that could help address the tax gap. (Recommendation 2)

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

Comments: As of August 2020, IRS stated that it is working on a redesign of the National Research Program (NRP). The outcome of the redesign will determine the scope of the information available from NRP in the future. IRS reported that next steps to address this recommendation is contingent on the completion of the NRP redesign.

Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should implement the audit plans for the 12 systems and applications that we reviewed in the production computing environment.

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, but the agency provided some evidence of its progress in implementing this recommendation. When IRS fully implements this recommendation, we will review relevant IRS actions.

Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should ensure that system administrators and security operations analysts are alerted in the event of audit processing failures.

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should regularly update configuration standards and guidelines for network devices to incorporate recommendations from industry leaders, security agencies, and key practices from IRS partners to address known vulnerabilities applicable to IRS's environment.

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should implement a compliance verification application, or other appropriate process, to ensure configuration policies are comprehensively tested on the mainframe.

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: To help strengthen information security controls over key financial and tax processing systems, and to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue, in addition to addressing previously made but still unresolved recommendations from our prior audits, should identify and review service organizations' listing of user controls that are deemed relevant and test those controls to appropriately draw conclusions about the operating effectiveness of controls.

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

Comments: During GAO's audit of FY 2019 IRS financial statements, IRS did not submit this recommendation for closure, nor did the agency provide evidence that it had implemented this recommendation. When IRS indicates that it has implemented this recommendation, we will review relevant IRS actions.

Recommendation: To improve annual reporting on PTC improper payments, control activities related to eligibility determinations, and calculations of advance PTC, the Secretary of Health and Human Services should direct the Administrator of CMS to annually report improper payment estimates and error rates for the advance PTC program.

Agency: Department of Health and Human Services
Status: Open
Priority recommendation

Comments: The Department of Health and Human Services (HHS) concurred with this recommendation. On May 23, 2018, HHS's Centers for Medicare and Medicaid Services (CMS) stated that it is currently in the process of developing an improper payment measurement for the advance premium tax credit (PTC). The development of the measurement methodologies will be a multi-year process which consists of the development of measurement policies, procedures, and tools. It also includes extensive pilot testing to ensure an accurate and efficient improper payment estimate, as well as, acquisition activities for procurement of improper payment measurement contractors. In January 2020, CMS stated that it is still in the process of developing an improper payment measurement for the advance PTC. Further, CMS stated that it provided progress updates in the fiscal year 2019 HHS agency financial report (AFR), and will continue to do so in future AFRs until an improper payment rate is estimated. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: To improve annual reporting on PTC improper payments, control activities related to eligibility determinations, and calculations of advance PTC, and until annual reporting of improper payment estimates and error rates for the advance PTC program is performed, the Secretary of Health and Human Services should direct the Administrator of CMS to disclose significant matters relating to the Improper Payments Information Act (IPIA) estimation, compliance, and reporting objectives for the advance PTC program in the agency financial report, including CMS's progress and timeline for expediting the achievement of those objectives and the basis for any delays in meeting IPIA requirements.

Agency: Department of Health and Human Services
Status: Open

Comments: HHS concurred with this recommendation. On February 28, 2018, the Department of Health and Human Services's (HHS) Centers for Medicare and Medicaid Services (CMS) stated that updates on the advance premium tax credit (PTC) program improper payment measurement development were provided in the fiscal year (FY) 2017 Agency Financial Report (AFR), which was published in November 2017. In FY 2018, we reviewed the FY 2017 AFR that HHS's CMS cited in support for closing this recommendation. Based on our review, the FY 2017 AFR does not address our recommendation as it does not provide a timeline for reporting an improper payment estimate. In FY 2019, we reviewed HHS's FY 2018 AFR published in November 2018, which includes a statement that HHS will continue to update its annual AFRs on the status of the measurement program development until the improper payment estimate is reported. However, this latest AFR also does not provide a timeline for reporting an improper payment estimate for HHS's PTC program. In January 2020, CMS stated that it is in the process of procuring federal contractors to perform the improper payment measurement. However, CMS further stated that due to uncertainties surrounding the timing of the procurement, CMS does not anticipate publishing a reporting timeline until the contracts have been awarded. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: To improve annual reporting on PTC improper payments, control activities related to eligibility determinations, and calculations of advance PTC, the Secretary of Health and Human Services should direct the Administrator of CMS to design and implement procedures for verifying the identities of phone and mail applicants to reasonably assure that ineligible individuals are not enrolled in qualified health plans in the marketplaces or provided advance PTC.

Agency: Department of Health and Human Services
Status: Open

Comments: The Department of Health and Human Services (HHS) neither agreed nor disagreed with this recommendation. Regarding verification of filer identity, HHS stated, in response to the draft report, that for individuals starting an application via phone, the call center representatives use verbal attestations for verifications from individuals. HHS stated that for paper applications, individuals must provide names and complete addresses as well as other information. In addition, HHS stated that individuals must attest that the information they provide on all applications is accurate by signing under penalty of perjury. However, these steps do not involve the verification of an applicant's identity to a third-party source. In August 2018, HHS officials stated that they are exploring alternatives for assessing risk and ensuring integrity of applicant information that is provided to the program and ways to ensure personal information provided by an individual is accurate through a variety of means. After this analysis phase, they will assess resource requirements, cost, and operational implications for potential implementation approaches with a target date for completion of 2019. As of December 2018, HHS had not designed and implemented procedures for verifying the identities of phone and mail applicants, as GAO recommended. As of January 2020, HHS indicated that it is developing new policy and guidance which could significantly change potential solutions or requirements. However, HHS did not provide us a time frame for when it plans to finalize the new policy and guidance. We will continue to monitor agency's actions to address the recommendation.

Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to assess the program against applicable IPIA-defined thresholds and conclude on its susceptibility to significant improper payments, and revise the scope of its improper payments susceptibility assessment for the PTC program to include instances in which advance PTC is greater than or equal to the amount of PTC claimed on the tax return. If the program meets the IPIA definition for being susceptible to significant improper payments based on this assessment, estimate and report improper payments associated with the PTC program consistent with IPIA requirements.

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

Comments: The Internal Revenue Service (IRS) partially agreed with this recommendation. On December 13, 2019, IRS provided us a status update and stated that its Research, Applied Analytics and Statistics division completed an analysis of net premium tax credit (PTC) using National Research Program (NRP) tax years 2015 and 2014 data during the 4th quarter of fiscal year 2019 and developed improper payment estimates using two different methodological approaches. However, IRS indicated that it did not publish these improper payment estimates in Treasury's Agency Financial Report for two reasons: (1) there is as yet insufficient NRP data to develop an estimate that is within the confidence interval and margin of error prescribed by the Office of Management and Budget for improper payments sampling, and (2) the Department of the Treasury (Treasury) wishes to engage with Health and Human Services' Centers for Medicare & Medicaid Services on the potential for developing a joint rate estimate for advance PTC and PTC. In addition, IRS noted that it had not yet determined whether this is even possible from a data compatibility standpoint. Further, IRS stated that while the estimates do not meet the statistical precision requirement, they do suggest that Net PTC would meet the criteria to be considered susceptible to significant improper payments. IRS indicated that when it last discussed this recommendation with GAO, it was suggested this recommendation would be closed once improper payment rates are published. However, IRS would now like GAO to consider closing this recommendation at this time given (1) the IRS's efforts to analyze potential improper payments, (2) Treasury's new approach to reporting, and (3) the need for additional years of data before a statistically valid estimate can be developed. We do not believe the recommendation should be closed at this time based on the three reasons IRS has listed above. However, we credit IRS for exploring ways to meet the intent of the recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: To comply with improper payments reporting requirements and improve procedures related to processing PTC information on tax returns, the Commissioner of Internal Revenue should direct the appropriate officials to assess and document the feasibility of approaches for incorporating information from the marketplaces on individuals who did not demonstrate that they met the eligibility requirements for citizenship or lawful presence in the tax compliance process. If determined feasible, IRS should work with Treasury to require marketplaces to periodically provide such information on individuals and use such information to recover advance PTC made for those individuals.

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

Comments: The Internal Revenue Service (IRS) agreed with this recommendation. In December 2018, an IRS official indicated that IRS conducted a detailed review of the recommendation. IRS informed GAO that it is internally discussing an alternative way to address the recommendation to prevent premium tax credit to noncitizens. The IRS official indicated that IRS is reviewing this alternative with the Department of the Treasury and the Department of Health and Human Services' Centers for Medicare & Medicaid Services. IRS did not provide GAO with a time frame for its implementation. On December 13, 2019, IRS provided us a status update and stated that it had no new information for this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: To further ensure that the new campaigns under LB&I's new approach for addressing tax compliance are implemented successfully, the Commissioner should document lessons learned from stakeholder input and past performance.

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

Comments: As of February 2020, IRS officials said LB&I has developed and deployed the Campaign Development Form and the LB&I Taxpayer Registry to capture stakeholder input and feedback. The form documents all actions and a decision made on a particular campaign and is used to monitor real-time performance. While this will help IRS document lessons learned moving forward, IRS officials have not said how they would document lessons learned in the past.

Recommendation: To reduce uncertainty and provide FHFA sufficient direction for carrying out its responsibilities as conservator of the enterprises, Congress should consider legislation that establishes objectives for the future federal role in housing finance, including the structure of the enterprises, and a transition plan to a reformed housing finance system that enables the enterprises to exit conservatorship.

Agency: Congress
Status: Open

Comments: As of March 16, 2020, Congress has not taken action on this matter.

Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and communicate Field Collection program and case selection objectives, including the role of fairness, in clear and measurable terms sufficient for use in internal control.

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

Comments: IRS agreed with the recommendation and described actions being taken to address it. In June 2019, IRS officials told us they were beginning an initiative designed to help identify a program's objectives in relationship to the IRS Strategic Plan and that Field Collection was chosen as one of the pilot programs for this initiative. In September 2020, IRS officials provided us draft program and case selection objectives and said they expected to complete actions to implement the recommendation in Fall 2020.

Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and implement performance measures clearly linked to the Field Collection program and case selection objectives.

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

Comments: IRS agreed with the recommendation and outlined planned actions to address it. In June 2019, IRS officials told us they were beginning an initiative designed to help identify a program's objectives in relationship to the IRS Strategic Plan and that Field Collection was selected as one of the pilot programs for this initiative. In September 2020, IRS officials provided us draft program and case selection objectives and said they expected to complete actions to implement the recommendation in Fall 2020.

Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should incorporate program and case selection objectives into existing risk management systems or use other approaches to identify and analyze potential risks to achieving those objectives so that Field Collection can establish risk tolerances and appropriate control procedures to address risks.

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

Comments: IRS agreed with the recommendation and outlined planned actions to address it. In June 2019, IRS officials told us they were beginning an initiative designed to help identify a program's objectives in relationship to the IRS Strategic Plan and that Field Collection was selected as one of the pilot programs for this initiative. Since program and case selection objectives are necessary before appropriate risk management systems can be established, in September 2020, IRS officials said they expected to complete actions to implement program and case selection objectives in Fall 2020 but provided no anticipated completion date for actions to identify and analyze potential risks to those objectives and related risk management actions.

Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and communicate control procedures guidance for group managers to exercise professional judgment in the Field Collection program case selection process to achieve fairness and other program and collection case selection objectives.

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

Comments: IRS agreed with the recommendation and described actions it will take to address it. In June 2019, IRS officials told us they are beginning an initiative designed to help identify a program's objectives in relationship to the IRS Strategic Plan. IRS selected Field Collection as one of the pilot programs for this initiative which would include actions to address this recommendation. In September 2020, IRS officials said they had revised the Internal Revenue Manual to guide group managers on elements to consider in selecting cases. We will update the status of IRS's actions to implement the recommendation after review of any documentation IRS provides.

Recommendation: To ensure that Field Collection program case selection processes support IRS's and the Collection program's mission, including applying tax laws with integrity and fairness to all, the Commissioner of Internal Revenue should develop, document, and implement procedures to periodically monitor and assess the design and operational effectiveness of both automated and manual control procedures for collection case selection to assure their continued effectiveness in achieving program objectives.

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

Comments: IRS agreed with the recommendation and outlined planned actions to address it. In June 2019, IRS officials told us they are beginning an initiative designed to help identify a program's objectives in relationship to the IRS Strategic Plan. IRS selected Field Collection as one of the pilot programs for this initiative. According to IRS officials, this pilot effort is ongoing and includes consideration of how the agency will address this recommendation. In September 2020, we met with IRS officials to discuss the status of actions to implement this recommendation but no anticipated completion date was provided.

Recommendation: To enhance the budget process and to improve transparency, the Commissioner of Internal Revenue, to the extent feasible, should ensure that the CJ includes data by appropriation account on the amount of funding requested to maintain current services for each future state theme.

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

Comments: In its fiscal year 2017 congressional justification, IRS modified how its budget data were organized, including linking requested increases to future state themes, but did not clarify how current spending by themes relates to appropriation accounts. Information on current spending by theme and account is important to ensure transparency on the current funding levels to assist Congress in making informed budget decisions. As reported in October 2018 in GAO-19-108R, the themes under the Future State vision are now being pursued as part of IRS's strategic plan for fiscal years 2018 to 2022-issued in May 2018. IRS has been phasing out the use of the term Future State and did not include it in its fiscal year 2020 congressional justification. Including data on the themes in the strategic plan would provide additional transparency and improve the quality of the information available to Congress for budget deliberations.

Recommendation: As Treasury works with IRS to improve the quality and accuracy of budget data, the Secretary of the Treasury should ensure sufficient controls are in place to make certain that the information technology investment reports generated from the SharePoint Investment Knowledge Exchange are accurate. This includes, for example, taking steps to reduce the need for manual corrections to the data.

Agency: Department of the Treasury
Status: Open

Comments: As of November 2017, Treasury Department officials took steps to address the need to manually correct budget data for the fiscal year 2017 budget request. However, as of October 2019, we have not received documentation that they have done so for future budget years. Improved information would help Treasury and IRS better account for information technology resources. We will continue to monitor Treasury's progress.

Recommendation: To help IRS improve its process for determining IT funding priorities and to provide timely information on the progress of its investments, the Commissioner of IRS should direct the Chief Technology Officer to establish, document, and implement policies and procedures for selecting new and reselecting ongoing business systems modernization activities, consistent with IRS's process for prioritizing operations support priorities, which addresses (1) prioritization and comparison of IT assets against each other, (2) criteria for making selection and prioritization decisions, and (3) ensuring IRS executives' final funding decisions on IT proposals are based on IRS's prioritization process.

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

Comments: In September 2018, IRS provided GAO a slide deck titled "Prioritization Process for the Business Systems Modernization (BSM) Program/Projects" which describes a process for prioritizing BSM investments and capabilities within the investments. However, the slides were labeled "pre-decisional." In addition, they did not include specific procedures for prioritizing investments. In April 2020, IRS informed us that it had moved its target for fully implementing the recommendation to November 2020. We will continue to monitor IRS's efforts to implement the recommendation.

Recommendation: To help IRS improve its process for determining IT funding priorities and to provide timely information on the progress of its investments, the Commissioner of IRS should direct the Chief Technology Officer to modify existing processes for Foreign Account Tax Compliance Act (FATCA) and Return Review Program (RRP) for measuring work performed by IRS staff to incorporate best practices, including accounting for actual work performed and using the level of effort measure sparingly.

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

Comments: In May 2018, IRS told GAO it had implemented the recommendation. As supporting evidence, the agency provided an April 2018 update to its Investment Performance Tool user guide along with briefing slides specifying actions taken to modify its processes to measure work performed by IRS staff. We reviewed the evidence provided and determined that it was not sufficient to close the recommendation as implemented. Specifically, while the Investment Performance Tool user guide included updated procedures for measuring work performed by IRS staff which aligned with best practices, it did not clearly state that earned value (or work performed) during an iteration should always be based on to the percentage of planned features or user stories that were completed for that iteration. In addition, IRS did not provide evidence that it had used its updated procedures for the Return Review Program investment. We followed up with IRS to obtain this documentation. The agency subsequently provided the requested documentation to us and, as of July 2020, we were reviewing it to determine the extent to which it addresses the recommendation.

Recommendation: To strengthen efforts to identify and address noncompliance with the EITC, ACTC, and AOTC, the Commissioner of Internal Revenue should direct Refundable Credits Policy and Program Management (RCPPM) to take necessary steps to ensure the reliability of collections data and periodically review that data to (a) compute a collections rate for post-refund enforcement activities and (b) determine what additional analyses would provide useful information about compliance results and costs of post-refund audits and document-matching reviews.

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

Comments: No executive action taken as of December 2019. The Internal Revenue Service (IRS) disagreed with this May 2016 recommendation. IRS raised concerns about the cost of studying collections data for post-refund enforcement activities. GAO recognizes that gathering collections data has costs and the data have limitations, notably that not all recommended taxes are collected. However, use of these data -- once IRS is able to verify their reliability -- could better inform resource allocation decisions and improve the overall efficiency of enforcement efforts. By not taking necessary steps to ensure the reliability of that data and to link them to tax assessments to calculate a collections rate, IRS lacks critical information. Periodic reviews of collections data and analyses could help IRS officials more efficiently allocate limited enforcement resources by providing a more complete picture about compliance results and costs.

Recommendation: The IRS Commissioner should direct the appropriate IRS officials to determine the reason(s) why staff did not always comply with IRS's established policies and procedures related to initiating, monitoring, and reviewing the monitoring of manual refunds and, based on this determination, establish a process to better enforce compliance with these requirements.

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

Comments: During fiscal year 2019, we identified instances where staff did not comply with IRS's policies and procedures related to monitoring and reviewing the monitoring of manual refunds. IRS officials stated that the Wage and Investment (W&I) organization determined that a fully automated process to perform monitoring of manual refunds is the optimal solution to address, at an enterprise level, deficiencies associated with reliance on employees to monitor refunds in process and take appropriate action when potential duplicate or erroneous refund conditions are encountered. In addition, IRS officials indicated that the W&I organization will develop business requirements and request programming through the Unified Work Request process; however, limited resources and competing priorities prevent the identification of an implementation date. As a result, IRS will place this recommendation on hold until an implementation date is known.

Recommendation: The IRS Commissioner should direct the appropriate IRS officials to identify the cause of and implement a solution for dealing with the periodic backlogs of ICO inventory that is hampering the performance of quality reviews.

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

Comments: During fiscal year 2019, the Wage and Investment (W&I) organization determined that periodic backlogs of Input Correction Operation (ICO) inventory were caused by a combination of factors, such as systemic issues, fluctuations in projected filings, and hiring challenges. IRS officials stated that the W&I organization has also identified and implemented several strategies to address ICO backlogs and mitigate the impact on the quality review program, including hiring more staff in ICO functions, using seasonal employees, cross-training, overtime, transferring of work, and updating the Internal Revenue Manual. Since IRS provided us with this information near the end of our fiscal year 2019 audit in September 2019, we will evaluate IRS's actions to address this recommendation during our fiscal year 2020 audit.

Recommendation: The IRS Commissioner should direct the appropriate officials to establish and implement monitoring procedures designed to reasonably assure that the key detailed information for tangible capitalized P&E is properly recorded and updated in the KISAM system.

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

Comments: IRS established the Asset Management Program Monitoring and Review procedure, effective October 1, 2016, for performing quarterly sample reviews of Information Technology (IT) assets in the Knowledge, Incident/Problem, Service Asset Management (KISAM) system. In September 2017, IRS also revised the Internal Revenue Manual to require Facilities Management and Security Services territory managers or section chiefs to review KISAM key data elements for non-IT assets to verify that they are correct and updated. However, during our fiscal year 2018 floor-to-book inventory testing, we identified exceptions where (1) a key detailed information element (e.g., building code) for property and equipment (P&E) assets was not properly recorded in KISAM and (2) P&E assets found on the floor did not have asset records in KISAM. We will conduct inventory testing and follow-up to determine the status of this issue during our audit of IRS's fiscal year 2020 financial statements.

Recommendation: In addition to implementing our previous recommendations, to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue should update system and application audit plans based on the current version of referenced policies and guidelines and when significant changes are made to a system or application.

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

Comments: During GAO's audit of IRS' FY 2019 financial statements, IRS indicated that it had not yet implemented this recommendation. When the agency indicates that it has implemented this recommendation, we will review its actions.

Recommendation: To improve the use of warranties and guarantees in Navy shipbuilding, the Secretary of the Defense should direct the Secretary of the Navy, for future ship construction contracts, to determine whether or not a warranty as provided in the FAR, provides value and document the costs, benefits, and other factors used to make this decision. To inform this determination, the Navy should begin differentiating the government's and shipbuilder's responsibility for defects and track the costs to correct all defects after ship delivery.

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD partially concurred with this recommendation in February 2016 by committing to study policy changes with regard to warranties, but disagreed that additional cost data were needed to inform these decisions, and questioned whether warranties are suitable for ship acquisitions. In February 2017, a Navy-funded study found that the Navy had no policy to collect data, and that the little data available were not useful for determining when warranties are suitable. In response to the study, the Navy agreed that, by December 2017, it would make some policy and contractual changes to collect data, but it continued to maintain that warranties are likely not suitable for ship contracts. In January 2018, the Navy issued guidance to help contracting officers determine when and how to use a warranty or guarantee, but the Navy has collected only one warranty cost proposal from one shipbuilder for a contract for a single ship and, going forward, Navy officials stated that they do not have plans to systematically collect such data. In August 2019, we recommended in GAO-19-512 that the Navy collect warranty pricing on its new class of frigates, as the Navy initially did not include warranty pricing as part of its request for proposals for the ship class. However, as of August 2020, the Navy has not made meaningful efforts to gain pricing data for warranties and has stated that the department does not plan to take any further action. To fully implement this recommendation, the Navy needs to collect additional data in order to determine cases in which warranties could contribute to improvements in the cost and quality of Navy ships.

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 January 2020, 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 because of the technical nature and complexity of the various referral types. The cross-functional team had worked with IRS On Line Services to develop an online application prototype and was considering the cost-effectiveness of a commercial off-the-shelf product. According to 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 of the new cross-division referral coordination committee. As of January 2020, IRS was still considering funding for online referral submission development. IRS estimated that a commercial off-the-shelf product would cost about $2 million with an online referral capacity operational within one year. IRS said it will consider further consolidating the referral programs once the online application is in place. Without continued progress on efforts to consolidate referral intake, IRS faces continued inefficiencies in receiving and processing referrals as well as public confusion caused by trying to choose among multiple forms.

Recommendation: To improve performance management of taxpayer services, the Secretary of the Treasury should update the Department's performance plan to include overage rates for handling taxpayer correspondence as a part of Treasury's performance goals.

Agency: Department of the Treasury
Status: Open

Comments: In May 2017, Treasury officials told us that they planned to include correspondence data as part of Treasury's fiscal year 2018 annual performance plan and fiscal year 2016 annual performance report. While the fiscal year 2016 performance report included data on correspondence overage rates, as of August 2019, Treasury has not included correspondence overage as part of its performance goals. We continue to believe this recommendation is valid.

Recommendation: To help ensure the Bureau focuses its resources on those activities that show promise for substantially reducing enumeration cost, in advance of the 2016 Census Test and later tests, the Secretary of Commerce should direct the Under Secretary of the Economics and Statistics Administration and the Director of the U.S. Census Bureau to, ensure systematic capture of information about fieldwork cases that experience problems by including information in enumerator training about where to record the issues, who to contact, what details to include, and the importance of doing so.

Agency: Department of Commerce
Status: Open
Priority recommendation

Comments: Commerce concurred with this recommendation. The Census Bureau informed us in December 2015 that no later than the end of December 2015, it would document how these matters have been addressed in the enumerator training (or in help screens on their mobile device) planned for the 2016 Census Test, and that it would use results and observations from that test to further refine such information for future tests and for the 2020 Census. The Bureau provided us with related training materials for the 2016 Test, yet we made similar observations during the 2016 test and the 2018 End-to-End test. For the Bureau to be informed on any additional training needs or other operational decisions for 2020, it will need to continue to expand its efforts in collecting information on enumerator-reported problems per our 2015 recommendation. In April 2020, Bureau officials said that it was not likely they would be able to incorporate additional changes for the 2020 Census field operations. With the Bureau's more recent April announcement to further delay field operations due to the Covid-19 outbreak, we are continuing to ask the Bureau if there is opportunity to address this recommendation. To fully implement this recommendation, the Bureau needs to identify what information it finds valuable to have from its enumerators, such as the incidence of specific technical problems with the survey instrument or mobile device and ensure that enumerators and their first-line supervisors are made aware of the importance of recording such information and how to do so.

Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement objectives for the collection program and ACS, and define the key term of "fairness" as it applies to collection activities, which can be communicated to IRS staff.

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

Comments: In January 2017, IRS supplied documentation on how it had established a fairness policy statement, which is incorporated into the Internal Revenue Manual, communicated to staff in email, and provided via a powerpoint presentation to staff. IRS also established and documented collection program objectives as part of its FY2017 Collection Program Letter. In October 2017, IRS shared additional draft documentation with GAO that would align SB/SE objectives with objectives from its FY2017 Collection Program Letter as well as other information such as performance measures. Following our assessment and request for more information, in November 2017, IRS provided a document intended to define certain collection program objectives, but it did not clearly define fairness or collection program and ACS objectives. We provided IRS feedback on the document in November 2017, January 2018, and July 2018. In June 2019, IRS officials provided information on an ongoing IRS initiative to identify objectives for various programs, but the collection program with its automated case processes was not among the pilot programs. As a result, any actions to implement the recommendation will be stalled until the initiative's pilot programs are complete. As of December 2019, IRS had not provided a planned date when it expects to complete them. We will update the status of IRS's plans and actions to implement the recommendation after we complete review of any documents IRS provides, as we requested in December 2019.

Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should establish, document, and implement clear objectives for the collection program and enterprise-wide case categorization and routing processes, and define key terms, such as "fairness" and "risk."

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

Comments: IRS agreed with the recommendation. In March 2017, IRS provided documentation of actions taken on the recommendation, but the documents did not clearly define and communicate program objectives sufficient for internal control to support the collection program mission, including fairness in case selection. In November 2017, IRS provided additional documentation but it did not address case selection fairness or other objectives for the collection program and enterprise-wide case categorization and routing processes. In June 2019, IRS officials provided information on an ongoing IRS initiative to identify objectives for various programs, but the collection program with its case processes was not among the pilot programs. As a result, any actions to implement the recommendation will be stalled until the initiative's pilot programs are complete. As of November 2019, IRS had not provided a planned date when it expects to complete them. We will update the status of IRS's plans and actions to implement the recommendation after we complete review of any documents IRS provides, as we requested in December 2019.

Recommendation: To help ensure the IRS collection program meets its mission and selects cases fairly, the Commissioner of Internal Revenue should build upon existing Enterprise Risk Management (ERM) guidance to help managers identify internal and external risks to collection program objectives, and better understand how long-standing risk processes integrate with new ERM approaches; incorporate this guidance into existing or future ERM or collection program risk assessment processes.

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

Comments: IRS agreed with the recommendation. In November 2016, IRS provided documentation of risk management training for managers intended to assist them in understanding their responsibilities for identifying internal and external risks to collection program objectives. However, since objectives for the collection program and fairness were not yet clearly defined, such guidance could not be effectively incorporated into risk assessment processes. In March 2017, IRS provided documentation of further actions taken, but the documents did not clearly define and communicate program objectives sufficient for internal control, including risk assessment. In November 2017, IRS provided additional documentation but it did not address case selection fairness or other objectives for the collection program. In June 2019, IRS officials provided information on an ongoing IRS initiative to identify objectives for various programs, but the collection program was not among the pilot programs. As a result, any actions to implement the recommendation will be stalled until the initiative's pilot programs are complete. As of November 2019, IRS had not provided a planned date when it expects to complete them. We will update the status of IRS's plans and actions to implement the recommendation after we complete review of any documents IRS provides, as we requested in December 2019.

Recommendation: To strengthen oversight of the individual shared responsibility and premium tax credit provisions, the Commissioner of Internal Revenue should assess whether or not the data received from the health insurance marketplaces are sufficiently complete and accurate to enable effective correction of tax returns at-filing based on matching with the marketplace data and, if the assessment determines that such corrections would be effective, seek legislative authority to correct tax returns at-filing based on the marketplace data.

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

Comments: The Internal Revenue Service (IRS) agreed with GAO's recommendation. IRS reports that the quality of data submitted by health insurance marketplaces has improved since the 2015 return filing season, and it continues to use its correspondence process for resolving discrepancies between marketplace data and that reported by the taxpayer after the return has been filed. IRS has not considered requesting legislative authority to correct tax returns at the time of filing based specifically on discrepancies between the data submitted by the health insurance marketplace and reported by the taxpayer. Agency officials believe that would be premature at this time. They noted that a broader legislative initiative has already been proposed that would grant IRS with correctable error authority in cases where the information provided by the taxpayer does not match the information contained in government databases. Should this broad authority be granted in the future, IRS will then consider how to approach correction of tax returns at the time of filing based on discrepancies with health insurance marketplace data. Such authority was also included in the Administration's 2021 budget.

Recommendation: To strengthen oversight of the individual shared responsibility and premium tax credit provisions, the Commissioner of Internal Revenue should evaluate IRS efforts to collaborate and communicate with key external stakeholders to inform efforts related to implementation of the new 2015 PPACA requirements.

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

Comments: The Internal Revenue Service (IRS) agreed with GAO's recommendation but has not yet initiated an evaluation of collaboration and communication efforts with external stakeholders. IRS currently utilizes informal feedback processes to share information and identify opportunities for improvement with external stakeholders in implementing the shared responsibility payment and premium tax credit provisions. We continue to encourage IRS to evaluate its collaboration and communication efforts, but such an evaluation has not yet happened. We will continue to monitor IRS efforts.

Recommendation: To better align program goals with agency missions and improve program administration and oversight, Congress should consider designating the Department of Housing and Urban Development as a joint administrator of the program responsible for oversight. As part of the deliberation, Congress also should direct HUD to estimate the costs to monitor and perform the additional oversight responsibilities, including a discussion of funding options.

Agency: Congress
Status: Open

Comments: As of June 2020, Congress had not enacted legislation to give HUD an oversight role for LIHTC.

Recommendation: In addition to implementing our previous recommendations, to effectively implement key elements of the IRS information security program, the Commissioner of Internal Revenue should ensure that control testing methodology and results fully meet the intent of the control objectives being tested.

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

Comments: During our audit of IRS's FY 2019 financial statements, , the agency submitted this recommendation for closure, but our testing determined it should remain open. Subsequently, IRS updated its anticipated closure date for the recommendation to July 2020. As part of our FY 2020 audit, we will continue to monitor IRS's progress in ensuring that its control testing methodology and results fully meet the intent of the control objectives being tested.

Recommendation: In addition to implementing our previous recommendations, to effectively implement key elements of the IRS information security program, the Commissioner of Internal Revenue should update the remedial action verification process to ensure actions are fully implemented.

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

Comments: During the audit of IRS's FY 2019 financial statements, the agency submitted this recommendation for closure, but our testing determined that it should remain open. While IRS continued to make positive steps to address our recommendation, the agency's implementation of corrective actions did not fully address it. As part of our FY 2020 audit, we will continue to monitor IRS's progress in strengthening its remedial action verification process and ensuring its corrective actions are fully implemented.

Recommendation: To improve the reliability and reporting of investment performance information and management of selected major investments, the Commissioner of the IRS should direct the Chief Technology Officer to modify reporting of the Affordable Care Act Administration testing status to senior management to include a comprehensive report on all impacted systems--including an explanation for why impacted systems were not tested at a particular level--and ensure this reporting is aligned with the manner in which testing is being performed.

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

Comments: IRS disagreed with this recommendation at the time we made it stating that it followed a rigorous risk-based process for planning the tests of ACA-impacted systems, including the types and levels of testing, and that it had comprehensive reporting for the filing season 2015 release, which included ACA impacted systems. However, as noted in our report, our review of ACA Testing Review Checkpoint reports and filing season reports, which officials stated were used to provide comprehensive reports to senior managers, did not identify the status of testing for all systems impacted by ACA Releases 5.0 and 6.0. In September 2017, IRS finished developing ACA and the investment transitioned to the operations and maintenance phase. We followed up with IRS to determine the extent to which it might be implementing the recommendation in light of this transition. In response, in June and December 2019 , IRS provided some documentation, including systems acceptance test plans and end-of-test results reports for ACA releases completed since September 2017. We reviewed the documentation provided and determined that it did not provide a status of testing for all systems impacted as we recommended. As of September 2020, we were following up with IRS to determine if the agency has other documentation provided to senior managers that addresses our recommendation.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to better present a more coherent picture of all federal programs, revise relevant guidance to direct agencies to collaborate with each other in defining and identifying programs that contribute to common outcomes.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to better present a more coherent picture of all federal programs, revise relevant guidance to provide a time frame for what constitutes "persistent over time" that agencies can use as a decision rule for whether to include short-term efforts as programs.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to better present a more coherent picture of all federal programs, define plans for when additional agencies will be required to develop program inventories.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to better present a more coherent picture of all federal programs, include tax expenditures in the federal program inventory effort by designating tax expenditure as a program type in relevant guidance.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: No executive action has been taken. As of October 2020, OMB had not taken action to include tax expenditures in the federal program inventory, as GAO recommended in October 2014. The GPRA Modernization Act of 2010 requires OMB to publish a list of all federal programs on a central, government-wide website. The federal program inventory is the primary tool for agencies to identify programs that contribute to their goals, according to OMB's guidance. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In June 2019 and July 2020, OMB issued guidance (Circular No. A-11) that states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. According to OMB, this will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements nor the actions GAO recommended including designating tax expenditures as a program type. By including tax expenditures in the inventory, OMB could help ensure that agencies are properly identifying the contributions of tax expenditures to the achievement of their goals.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to better present a more coherent picture of all federal programs, include tax expenditures in the federal program inventory effort by developing, in coordination with the Secretary of the Treasury, a tax expenditure inventory that identifies each tax expenditure and provides a description of how the tax expenditure is defined, its purpose, and related performance and budget information.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: No executive action has been taken. As of October 2020, OMB had not taken action to include tax expenditures in the federal program inventory, as GAO recommended in October 2014. The GPRA Modernization Act of 2010 requires OMB to publish a list of all federal programs on a central, government-wide website. The federal program inventory is the primary tool for agencies to identify programs that contribute to their goals, according to OMB's guidance. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In June 2019 and July 2020, OMB issued guidance (Circular No. A-11) that states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. According to OMB, this will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements nor the actions GAO recommended including designating tax expenditures as a program type. By including tax expenditures in the inventory, OMB could help ensure that agencies are properly identifying the contributions of tax expenditures to the achievement of their goals.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to help ensure that the information agencies provide in their inventories is useful to federal decision makers and key stakeholders, and to provide greater transparency and ensure consistency in federal program funding and performance information, revise relevant guidance to direct agencies to consult with relevant congressional committees and stakeholders on their program definition approach and identified programs when developing or updating their inventories.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to help ensure that the information agencies provide in their inventories is useful to federal decision makers and key stakeholders, and to provide greater transparency and ensure consistency in federal program funding and performance information, revise relevant guidance to direct agencies to identify in their inventories the performance goal(s) to which each program contributes.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To ensure the effective implementation of federal program inventory requirements and to make the inventories more useful, the Director of OMB should, to help ensure that the information agencies provide in their inventories is useful to federal decision makers and key stakeholders, and to provide greater transparency and ensure consistency in federal program funding and performance information, ensure, during OMB reviews of inventories, that agencies consistently identify, as applicable, the strategic goals, strategic objectives, agency priority goals, and cross-agency priority goals each program supports.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: As of October 2020, the Office of Management and Budget (OMB) had not taken any actions in response to our recommendations related to the federal program inventory. Although OMB published an initial inventory covering the programs of 24 federal agencies in May 2013, OMB decided to postpone further development of the inventory in order to coordinate with the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act). In its June 2019 and July 2020 updates to Circular No. A-11, OMB provided a time frame for doing so. OMB's guidance states that beginning with the 2021 budget cycle, agencies' program activities will be used for the inventory's program-level reporting requirements. This will allow OMB and agencies to present program-level spending data, by leveraging what is reported on USASpending.gov as required by the DATA Act. However, OMB's guidance does not cover other inventory information reporting requirements, nor the actions we recommended. We will continue to monitor progress.

Recommendation: To promote retirement savings without creating permanent tax-favored accounts for a small segment of the population, Congress should consider revisiting the use of IRAs to accumulate large balances and consider ways to improve the equity of the existing tax expenditure on IRAs. Options could include limits on (1) the types of assets permitted in IRAs, (2) the minimum valuation for an asset purchased by an IRA, or (3) the amount of assets that can be accumulated in IRAs and employersponsored plans that get preferential tax treatment.

Agency: Congress
Status: Open

Comments: No legislation limiting account owner accumulations enacted as of February 2020. In its October 2014 report, GAO found that individuals with limited, occupationally related opportunities could engage in sophisticated investment strategies and accumulate considerable tax-preferred wealth in IRAs and subsequently suggested to Congress legislative options. The Senate Finance Committee held a hearing on a range of IRA policy issues in September 2014 for which GAO provided a statement for the record that covered preliminary data on IRA balances. The Setting Every Community Up for Retirement Enhancement Act of 2019, enacted in December 2019 as division O of the Further Consolidated Appropriations Act, 2020, amended a number of requirements related to retirement accounts (Public Law 116-94). For example, section 401 limits inherited beneficiaries' ability to continue tax deferral to 10 years beyond the account owner's death. This provision somewhat reduces the long-term financial benefits of accumulating large balances in IRA accounts. However the Act did not adopt any of the other limits identified in GAO's October 2014 report. Without legislation, the intended broad-based tax benefits of IRAs are likely to continue to be skewed toward a select group of individuals.

Recommendation: To improve IRS's ability to detect and pursue noncompliance associated with undervalued assets sheltered in IRAs and prohibited transactions, the Commissioner of Internal Revenue should work in consultation with the Department of the Treasury on a legislative proposal to expand the statute of limitations on IRA noncompliance to help IRS pursue valuation-related misreporting and prohibited transactions that may have originated outside the current statute's 3-year window.

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

Comments: IRS agreed with GAO's October 2014 recommendation on IRAs with large balances and said it had discussed the recommendation with Treasury's Office of Tax Policy and Benefits Tax Counsel. Consequently, IRS said Treasury is aware of IRS's willingness to support legislative efforts in this area. Ultimately, Treasury reviews all tax legislative proposals and presents the administration's tax proposals for congressional consideration. However, Treasury has not released a legislative proposal as of January 2020. GAO reported in January 2020 that IRS examination said the 3-year statute of limitations for assessing taxes owed remains an obstacle in pursuing noncompliance that may span the many years of an IRA investment.

Recommendation: To help taxpayers better understand compliance risks associated with certain IRA choices and improve compliance, the Commissioner of Revenue should, building on research data on IRAs holding nonpublic assets, identify options to provide outreach targeting taxpayers with nonpublic IRA assets and their custodians, such as reminder notices that engaging in prohibited transactions can result in loss of the IRA's tax-favored status.

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

Comments: IRS has taken some action to provide general outreach and as of January 2020 has ongoing compliance research that could inform additional opportunities to target outreach to taxpayers with nonmarketable IRA assets at greater risk of noncompliance, as GAO recommended in October 2014. In June 2016, IRS published information on IRS.gov outlining the new information to be reported for nonmarketable IRA assets and included a general caution that IRAs with nonmarketable investments or assets under direct taxpayer control may be subject to a heightened risk of committing prohibited transactions. This caution is similar to those that IRS added to its publications about IRA contributions and distributions. It is a step toward helping taxpayers better understand which investments pose greater risks. In February 2018, IRS completed its first analysis of new information about the amounts and types of nonpublic IRA assets from Form 5498 for tax year 2016 that was filed in 2017. In October 2019, IRS also completed an interim compliance research project examining a sample of tax returns to determine whether the beneficiary of the IRA caused his or her IRA to engage in a prohibited transaction. As of January 2020, IRS was conducting a new compliance research project examining IRAs holding certain nonpublic asset types. The compliance research began in February 2019 and is to be completed in January 2021. Unless IRS augments outreach based on reliable data about nonpublicly traded IRA investments, taxpayers at greater risk may not be able to ensure compliance with rules on prohibited transactions.

Recommendation: To help ensure that agencies report comparable and reliable data to Enterprise Human Resources Integration (EHRI), the Director of OPM, in coordination with agencies and payroll service providers, should develop guidance for agencies on which activities to enter, or not enter, as paid administrative leave in agency time and attendance systems.

Agency: Office of Personnel Management
Status: Open

Comments: To address agency use of paid administrative leave that may exceed reasonable amounts as well as discrepancies in recording and reporting paid administrative leave, in December 2016, Congress passed the "Administrative Leave Act of 2016." The act mandates new categories of paid leave, including "investigative leave," "notice leave," and "weather and safety leave" and sets limitations on the duration of paid administrative leave as well as the new categories of investigative and notice leave. The Act also requires OPM to establish regulations on (1) when to grant administrative leave and the other new categories of paid leave, and (2) the proper recording and reporting of these types of paid leave. In July 2017, OPM proposed new rules to regulate paid administrative leave, but has not finalized all these rules. In April 2018, OPM issued final regulations for "weather and safety leave" and announced that it would issue separate final regulations for "administrative leave," "investigative leave," and "notice leave" at a later date. In July 2019, OPM officials told us that they have not finalized the remaining regulations due to legal and practical concerns related to employees serving overseas. For example, the proposed rules could conflict with overseas personnel observing local holidays for security, diplomatic, and practical reasons. OPM also announced that it is reconvening its interagency working group for dismissal and closure procedures to update its "DC Dismissal and Closure Procedures" guidance to reflect the new "weather and safety leave" procedures. In addition, in response to our recommendation, in May 2015, OPM issued a fact sheet on administrative leave, which discusses the appropriate use of an agency's administrative leave authority, including a definition of administrative leave as well as applicable government-wide, individual agency, and emergency policies on the use of administrative leave. However, this fact sheet will need to be revised to reflect the newly issued regulations for "weather and safety leave" in addition to the regulations for the other categories of paid leave when they are in effect. Once all regulations are finalized, the proposed rules, along with updated fact sheet guidance, should help agencies and federal employees appropriately use, record, and report administrative leave. We will be contacting OPM to receive an update on the status of this recommendation once all the regulations are finalized and the fact sheet guidance is revised.

Recommendation: To help ensure that agencies report comparable and reliable data to EHRI, the Director of OPM, in coordination with agencies and payroll service providers, should provide updated and specific guidance to payroll service providers on which activities to report, or not report, to the paid administrative leave data element in EHRI.

Agency: Office of Personnel Management
Status: Open

Comments: To address agency use of paid administrative leave that may exceed reasonable amounts as well as discrepancies in recording and reporting paid administrative leave, in December 2016, Congress passed the "Administrative Leave Act of 2016." The act mandates new categories of paid leave, including "investigative leave," "notice leave," and "weather and safety leave" and sets limitations on the duration of paid administrative leave as well as the new categories of investigative and notice leave. The Act also requires OPM to establish regulations on (1) when to grant administrative leave and the other new categories of paid leave, and (2) the proper recording and reporting of these types of paid leave. In July 2017, OPM proposed new rules to regulate paid administrative leave, but has not finalized all these rules. In April 2018, OPM issued final regulations for "weather and safety leave" and announced that it would issue separate final regulations for "administrative leave," "investigative leave," and "notice leave" at a later date. To accompany the final regulations for "weather and safety leave," OPM issued two new data standards for agencies to report Paid Holiday Time Off and Weather and Safety Leave Hours Used that became effective in May 2018. Also, in November 2018, OPM released an update to its "DC Dismissal and Closure Procedures" guidance to reflect the new "weather and safety leave" procedures. Once all regulations are finalized, the proposed rules, along with updated guidance to payroll providers for reporting paid administrative leave and the new leave categories, should help agencies report comparable and reliable data to EHRI. We will be contacting OPM to receive an update on the status of this recommendation once the regulations are finalized and the guidance is revised.

Recommendation: The Commissioner of Internal Revenue should track the results of large partnerships audits: (a) define a large partnership based on asset size and number of partners; (b) revise the activity codes to align with the large partnership definition; and (c) separately account for field audits and campus audits.

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

Comments: IRS has taken actions to implement GAO's September 2014 recommendation, but the definition IRS provided is not likely to help it analyze results from audits of the very large partnerships that GAO's report covered. In September 2017, IRS defined large partnerships as those with assets of $10 million or more, without regard to the number of partners. With changes to the Tax Equity and Fiscal Responsibility Act of 1982 partnership audit procedures and enactment of the Bipartisan Budget Act of 2015 (BBA) (sections 1101 and 1102 of Public Law 114-74), IRS officials said that the number of partners is no longer a critical factor when defining a large partnership. IRS is correct that the number of partners is no longer relevant to this statutory definition of large partnership. The recently eliminated Electing Large Partnerships audit procedures had defined large partnerships as those with 100 or more direct partners in a taxable year. Even so, IRS's new definition of large partnerships is limited compared to large corporations. IRS has defined eight asset categories for tracking large corporation audit results while it has one for large partnerships, which vary widely based on asset amounts and complex structures. As GAO reported, during tax years 2002 through 2011, the number of large partnerships with 100 or more direct and indirect partners as well as $100 million or more in assets more than tripled to 10,099, some of which had assets exceeding $5 billion. In tax year 2011, more than two-thirds of these large partnerships had at least 100 or more pass-through entities as direct and indirect partners. Until IRS develops a more expansive definition of large partnerships, IRS may have challenges analyzing the results from its audits of large partnerships. As of January 2020, IRS had revised its activity codes to create a category for its large partnership definition as well as created a reporting and monitoring structure for its new definition to track the results from auditing large partnerships. IRS also created reports to regularly track audit results (e.g., dollar amounts, hours, number of returns, campus versus field locations) for this one category. IRS officials said they plan to use the reports to analyze audit results to identify opportunities to better plan and use resources in auditing large partnerships but this outcome may not be possible with the statutory changes governing partnerships. Given the challenges involving such audits, IRS officials said they have started efforts to better select partnership returns for audits based on compliance risk. They said these efforts will extend at least through fiscal year 2021. Thus, IRS does not yet know whether the audit results will be sufficient to analyze ways to better plan and use IRS audit resources as well as to analyze noncompliance risk for its new definition. IRS's analysis may not be able to achieve these ends with only one asset category to cover the wide range of asset amounts above $10 million.

Recommendation: The Commissioner of Internal Revenue should analyze the audit results by these activity codes and types of audits to identify opportunities to better plan and use IRS resources in auditing large partnerships.

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

Comments: As of January 2020, IRS created a reporting and monitoring structure for its new large partnership definition to track the results from auditing large partnerships. IRS also created reports to regularly track audit results (e.g., dollar amounts, hours, number of returns, campus versus field locations) for this one category. IRS officials said they plan to use the reports to analyze audit results to identify opportunities to better plan and use resources in auditing large partnerships but this outcome may not be possible with the statutory changes governing partnerships. Thus, IRS does not yet know whether the audit results will be sufficient to analyze ways to better plan and use IRS audit resources as well as to analyze noncompliance risk for its new definition. IRS's analysis may not be able to achieve these ends with only one asset category to cover the wide range of asset amounts above $10 million. Given these and other challenges involving such audits, IRS officials said they have started efforts to better select partnership returns for audits based on compliance risk. They said these efforts will extend at least through fiscal year 2021.

Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should establish formal program objectives.

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

Comments: IRS correspondence audit program officials planned a working group to develop formal program objectives. In November 2016, IRS officials provided documents intended to define the program objectives, but the objectives were unclear. As of December 2019, IRS officials provided draft program objectives to GAO for discussion and are responding to comments from GAO. We will update the status when IRS provides any further supporting documentation, as we requested in March 2020.

Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should ensure that the program measures reflect those objectives.

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

Comments: IRS officials said that, among other actions, they plan to review and update program documentation and guidance as warranted to ensure a clear link between correspondence audit program objectives and related measures. IRS officials provided documentation in November 2016, but program measures could not be clearly linked to objectives because the objectives were not clear. As of December 2019, IRS officials provided draft measures for their draft program objectives to GAO and are responding to comments from GAO. We will update the status when IRS provides any further supporting documentation, as we requested in March 2020.

Recommendation: To clarify the desired results of the correspondence audit program and its linkages to IRS-wide activities, the Commissioner of the Internal Revenue Service should clearly link those measures with strategic IRS-wide goals on ensuring compliance in a cost-effective way while minimizing taxpayer burden.

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

Comments: IRS officials said that, among other actions, they plan to review and update program documentation and guidance as warranted to ensure that program measures clearly link to IRS strategic goals. IRS officials provided documentation in November 2016,but measures for the program could not be clearly linked to either the program objectives or IRS goals because the objectives were not clear. As of December 2019, IRS officials provided GAO with draft linkages to IRS's strategic goals for the draft measures and program objectives and are responding to comments from GAO on those linkages. We will update the status when IRS provides any further supporting documentation, as we requested in March 2020.

Recommendation: While IRS works to improve the quality of its Schedule K-1 data, the Commissioner of Internal Revenue should develop a plan for conducting testing or other analysis to determine whether the improved Schedule K-1 data, perhaps combined with other IRS information about businesses and taxpayers, could be used more effectively to ensure compliance with the reporting of flow-through income.

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

Comments: IRS stated that it understands the objective of this recommendation and, at such time that resources are available to enhance capabilities, it would consider the proposed methodology of advanced testing. However, based on current and anticipated budget constraints, it does not expect its plans to change in the near future. As of September 2020, there has been no change. As such we will continue to monitor progress.

Recommendation: If Congress agrees that significant paid preparer errors exist, it should consider legislation granting IRS the authority to regulate paid tax preparers.

Agency: Congress
Status: Open

Comments: Multiple bills have been introduced in the Congress that would authorize the Department of Treasury to regulate paid tax preparers, as GAO recommended in April 2014. The most recent bills include: H.R. 3157, H.R. 3330, S. 1192, and Section 5 of S. 1138. As of August 2020, no action has been taken on any of these bills. In addition, multiple other bills were introduced in both the House and Senate between 2014 and 2018 to regulate paid tax preparers. GAO testified on October 1, 2015 on improper payments and the tax gap before Senate Finance and on December 10, 2015 on GAO recommendations before the Subcommittee on Regulatory Affairs and Federal Management, Committee on Homeland Security and Governmental Affairs, US Senate. Both hearings increased attention to GAO's matter to Congress that tax preparers be regulated. Paid preparer regulation may increase the accuracy of tax returns and potentially reduce the tax gap.

Recommendation: To help ensure that qualified CDRs promote improved quality and efficiency of physician care for Medicare beneficiaries, the Secretary of Health and Human Services should direct CMS to establish a requirement for qualified CDRs to demonstrate improvement on key measures of quality and efficiency for their target populations.

Agency: Department of Health and Human Services
Status: Open

Comments: As of April 2019, HHS officials reported that they were implementing new requirements for qualified CDRs, but these requirements were not related to demonstrating improvement on the measures of quality and efficiency, as GAO recommended. We will update the status of this recommendation when we receive additional information.

Recommendation: To help ensure that qualified CDRs promote improved quality and efficiency of physician care for Medicare beneficiaries, the Secretary of Health and Human Services should direct CMS to establish a process for monitoring compliance with requirements for qualified CDRs that draws on relevant expert judgment. This process should assess CDR performance on each requirement in a way that takes into account the varying circumstances of CDRs and their available opportunities to promote quality and efficiency improvement for their target populations.

Agency: Department of Health and Human Services
Status: Open

Comments: As of April 2019, HHS officials have not informed us of any actions taken to implement this recommendation. We will update the status of this recommendation when we receive additional information.

Recommendation: To help ensure that qualified CDRs promote improved quality and efficiency of physician care for Medicare beneficiaries, the Secretary of Health and Human Services should determine and implement actions to reduce barriers to the development of qualified CDRs, such as (1) developing guidance that clarifies Health Insurance Portability and Accountability Act requirements to promote participation in qualified CDRs; (2) working with private sector entities to make relevant multipayer cost data available to qualified CDRs; (3) testing one or more models of shared savings between Medicare and qualified CDRs that achieve reduced Medicare expenditures with improved quality of care, and (4) providing technical assistance to qualified CDRs.

Agency: Department of Health and Human Services
Status: Open

Comments: As of April 2019, HHS officials have not informed us of any actions taken to implement this recommendation beyond providing limited technical assistance to qualified CDRs through monthly support calls and an annual kick-off meeting. We will update the status of this recommendation when we receive additional information.

Recommendation: To help ensure that qualified CDRs promote improved quality and efficiency of physician care for Medicare beneficiaries, the Secretary of Health and Human Services should determine key data elements needed by qualified CDRs--such as those relevant for a required core set of measures--and direct Office of the National Coordinator for Health Information Technology and CMS to include these data elements, if feasible, in the requirements for certification of EHRs under the EHR incentive programs.

Agency: Department of Health and Human Services
Status: Open

Comments: As of April 2019, HHS officials have not informed us of any actions taken to implement this recommendation. We will update the status of this recommendation when we receive additional information.

Recommendation: To improve DOD's estimates and comparisons of the full cost of its military, civilian, and contractor workforces and to improve DOD's methodology for estimating and comparing the full cost of its various workforces, the Secretary of Defense should direct the Office of Cost Assessment and Program Evaluation to further develop guidance for cost elements that users have identified as challenging to calculate, such as general and administrative, overhead, advertising and recruiting, and training.

Agency: Department of Defense
Status: Open

Comments: According to DOD's April 2017 report on Comparing the Cost of Civilians and Contractors, DOD's Cost Assessment and Program Evaluation (CAPE) office is updating fiscal year 2017 estimates in its Full Cost of Manpower (FCoM) system to reflect separate officer and enlisted training costs. If more specific cost estimates are required, users of FCoM are directed to cost estimating tools operated by the military departments.

Recommendation: To improve DOD's estimates and comparisons of the full cost of its military, civilian, and contractor workforces and to improve DOD's methodology for estimating and comparing the full cost of its various workforces, the Secretary of Defense should direct the Office of Cost Assessment and Program Evaluation to develop business rules for estimating the full cost of National Guard and Reserve personnel.

Agency: Department of Defense
Status: Open

Comments: According to DOD's April 2017 report in Comparing the Cost of Civilians and Contractors, a cost estimating function for Reserve Component personnel far exceeds the combination of variables for developing active component and DOD civilian cost estimates. Due to the scope of the Full Cost of Manpower (FCoM) contract, OSD(CAPE) has not adopted this recommendation in terms of a web-based application. However, OSD(CAPE) intends to address general business rules for Reserve Component cost estimates in the next DoDI revision.

Recommendation: To improve DOD's estimates and comparisons of the full cost of its military, civilian, and contractor workforces and to improve DOD's methodology for estimating and comparing the full cost of its various workforces, the Secretary of Defense should direct the Office of Cost Assessment and Program Evaluation, in coordination with the department's Office of the Actuary and appropriate federal actuarial offices, to reevaluate the inclusion and quantification of pension, retiree health care costs, and other relevant costs of an actuarial nature and make revisions as appropriate.

Agency: Department of Defense
Status: Open

Comments: According to DOD's April 2017 report on Comparing the Cost of Civilians and Contractors, OSD(CAPE) has reviewed the inclusion of payments that the government makes to retirement and health benefits. All identified costs that are attributable to current retirees and past service of active civilian and military personnel, such as unfunded liabilities, are being revised in the cost estimating guidelines. OSD(CAPE) intends to incorporate these changes in the next DoDI revision and coordinate a review with the Office of the DoD Actuaty.

Recommendation: To improve DOD's estimates and comparisons of the full cost of its military, civilian, and contractor workforces and to improve DOD's ability to estimate contractor support costs, the Secretary of Defense should direct the Office of Cost Assessment and Program Evaluation, consistent with established practices for developing credible cost estimates, to research the data sources it is currently using and reassess its contractor support data sources for use when determining contractor support costs.

Agency: Department of Defense
Status: Open

Comments: According to DOD's April 2017 report on Comparing the Cost of Civilian and Contractors, the department's efforts to improve data sources are ongoing.

Recommendation: To ensure that IRS is meeting the stated goals of CAP, the Principal Deputy Commissioner of Internal Revenue and Deputy Commissioner for Services and Enforcement should track savings from Compliance Maintenance and CAP overall and develop a plan for reinvesting any savings.

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

Comments: As of December 2019, IRS had taken some steps to implement this August 2013 recommendation, but had not developed a plan to track and reinvest any savings. IRS provided documents from October 2019 which discussed how portfolio management is used as a tool to prioritize and allocate time to eight compliance program areas, including CAP. IRS officials explained that any hours saved in a compliance program area are reallocated to the same or another compliance program area based on the division's strategic priorities rather than a plan focusing on CAP. Furthermore, CAP has not yet achieved the desired outcome of saving resources, according to IRS. If IRS finds any savings from CAP, it will need to develop a plan for reinvesting it to expand audit coverage. Without a plan for tracking savings and using them to increase audit coverage, IRS cannot be assured that the savings are effectively invested in either CAP or non-CAP taxpayers with a high compliance risk.

Recommendation: To increase the effectiveness of IRS's examinations individual tax returns, the Commissioner of Internal Revenue should transcribe data from paper-filed Form 1040 Schedules C and E that are not currently transcribed and make that data available to SB/SE examiners for classification. If IRS has evidence that the costs related to transcribing all such data on Schedules C and E are prohibitive, IRS could do one or both of the following actions: (1) transcribe less data by transcribing only the missing data for selected line items, such as certain, large expense line items, or (2) develop a budget proposal to fund an initiative for transcribing Schedule C and E.

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

Comments: IRS has taken some steps to implement this May 2013 recommendation. In September 2015, IRS completed a study on whether to transcribe more data from paper-filed returns. IRS officials said the study showed that the benefits to be derived from additional transcription are not significant and would not outweigh the added cost. That study did not provide specific information about the costs and benefits of transcribing information from Schedules C and E. In December 2018, IRS provided a cost-benefit estimate for transcribing all data from Schedules C and E and concluded that the cost of transcribing all additional Schedule C and Schedule E lines would exceed the expected benefits. This analysis satisfied the first part of GAO's recommendation. However, the study did not address whether transcribing certain, select lines on Schedules C and E would be cost-effective, as GAO's recommendation suggested. Having specific data transcribed and electronically available likely will improve the classification of audits as well as the quality of the audits, according to examiners GAO spoke with for the report. As of March 2020, GAO continues to monitor IRS's progress.

Recommendation: The Acting Commissioner of the Internal Revenue Service should direct appropriate officials to develop a long-term strategy to improve web services provided to taxpayers, in accordance with Howto.gov and other federal guidance outlined in our report. To accomplish this, the IRS should establish a numerical or other measureable goal to improve taxpayer satisfaction and a timeframe for achieving it.

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

Comments: IRS has made progress in improving its online services strategy, as we recommended, but as of February 2020, IRS has not yet completed its efforts. IRS's strategy has evolved from a singular focus on on-line services to a more comprehensive strategy of taxpayer interaction through all service channels. In February 2016, IRS announced an agency-wide Future State Initiative, which in part, aims to deliver service improvements across different taxpayer interactions such as individual online accounts assistance, exams, and collections. In July 2016, the official responsible for IRS's on-line office reported that the agency is working towards developing an overall customer service satisfaction goal as part of the IRS Future State Initiative. The official said that this goal is broadly meant to cover various ways the public interacts with IRS, including web, phone, correspondence and walk in. In November 2016, IRS provided documentation on the goals of the Future State Initiative. However, this documentation does not include specific numerical targets for the performance measures that IRS expects to achieve for each goal or a timeline to achieve those goals. IRS officials stated they will incorporate a customer service satisfaction goal in its upcoming strategic plan. IRS released the Fiscal Year 2018-2022 Strategic Plan, however a numerical or other measureable goal to improve taxpayer satisfaction with the website was not included in it. We are currently following up with IRS to determine their next steps.

Recommendation: The Acting Commissioner of Internal Revenue should take the following action outline a strategy that defines appropriate levels of telephone and correspondence service and wait time and lists specific steps to manage service based on an assessment of time frames, demand, capabilities, and resources.

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

Comments: IRS neither agreed nor disagreed with GAO's recommendation from December 2012, but has made progress in developing a customer service strategy that defines appropriate levels of telephone service; however, as of February 2020, IRS had not finalized its strategy nor determined the appropriate levels of service for correspondence and wait time. In January 2017, IRS shared results of a benchmarking study that compared its telephone service, measures, and goals to comparable agencies and companies. The team that conducted the study recommended options for additional measures to indicate the level of access taxpayers have to service across service channels. In September 2019, IRS provided GAO its revised customer service strategy; however, it did not include correspondence service. In July 2019, the Taxpayer First Act (Public Law 116-25) was enacted which requires IRS to develop a comprehensive customer service strategy. As of February 2020, IRS had established an internal office to implement this requirement. Completion of a comprehensive customer service strategy that defines appropriate levels of service and wait time as well as specific steps to manage services based on an assessment of time frames, demand, capabilities, and resource requirements would enable IRS to make a more informed request to Congress about resources needed to deliver specific levels of service. Further, finalizing a long-term comprehensive strategy will help ensure IRS is maximizing the benefit to taxpayers and possibly reduce costs in other areas.

Recommendation: To reduce the compliance burden on taxpayers making noncash contributions, Congress should consider raising the threshold at which taxpayers are required to have qualified appraisals for a particular contribution. Raising the threshold and giving IRS the authority to adjust this value for inflation in the future would maintain the consistent treatment of taxpayers over time.

Agency: Congress
Status: Open

Comments: No actions taken as of January 2020. We continue to monitor for new legislation.

Recommendation: To provide federal policymakers information on the relative effectiveness of Title IV programs and higher education tax expenditures, the Secretary of Education should take advantage of opportunities presented by recent and anticipated substantive program changes to sponsor and conduct evaluative research into the effectiveness of Title IV programs and higher education tax expenditures at improving student outcomes.

Agency: Department of Education
Status: Open
Priority recommendation

Comments: As of January 2020, the Department of Education (Education) had made some progress toward sponsoring and conducting evaluative research into the effectiveness of Title IV programs and higher education tax expenditures at improving student outcomes, as GAO recommended and Education agreed to in 2012. For example, Education took several steps to make data on higher education programs more accessible for research purposes. Education officials also said they are convening stakeholder panels including both governmental and nongovernmental researchers to identify and prioritize key policy questions related to Title IV and higher education tax expenditures. Afterward, Education is planning to partner with governmental or external researchers--via contracts or grants--to investigate the issues identified as priorities. GAO believes that Education's leadership of such efforts would represent a meaningful commitment to make progress on addressing this recommendation. Given that Education has identified a critical research gap in the area of linking higher education financing to student outcomes, GAO continues to emphasize that Education should ensure that its efforts result in actively sponsoring or conducting evaluative research specific to federal programs and assistance that can be used in future policymaking. Making these data-sharing and research efforts a priority will help policymakers make fact-based decisions on the merits and value of various federal assistance efforts.

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.

Recommendation: Congressmay wish to consider amending the Internal Revenue Code to authorize IRS to assess penalties on preparers for failure to comply with section 6011(e)(3).

Agency: Congress
Status: Open

Comments: A bill was introduced on June 28, 2011, which would have amended electronic filing requirements for paid preparers. This included language amending section 6695 of the Internal Revenue Code to include a penalty of $50 for failure to electronically file returns under section 6011 (e)(3). However, this bill was never enacted. As of January 2020, there are no bills pending that would provide IRS with authority to penalize paid preparers for failure to electronically file returns as GAO recommended

Recommendation: To better ensure that economically similar outcomes are taxed similarly and minimize opportunities for abuse, the Secretary of the Treasury should undertake a study that compares the current approach to alternative approaches for the taxation of financial derivatives. To determine if changes would be beneficial, such a study should weigh the tradeoffs to IRS and taxpayers that each alternative presents, including simplicity, administrability, and economic efficiency.

Agency: Department of the Treasury
Status: Open

Comments: Treasury disagreed with this recommendation based on the fact that many outside studies already exist and IRS did not comment. The Tax Cuts and Jobs Act enacted in December 2017 did not include any requirements that Treasury study alternative approaches for the taxation of financial derivatives. However members of Congress have released proposals for a mark-to-market tax system, which would include financial derivatives. GAO continues to maintain that further study is needed in coordination with IRS and will continue to monitor the climate for such a study.

Recommendation: The Commissioner of the IRS should direct the appropriate IRS officials to revise the post orders for the service center campuses (SCC) and lockbox bank security guards to include specific procedures for timely reporting exterior lighting outages to SCC or lockbox bank facilities management. These procedures should specify (1) whom to contact to report lighting outages and (2) how to document and track lighting outages until resolved.

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

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, Facilities Management and Security Services (FMSS) will update the Internal Revenue Manual to reflect the necessary guidance for service center guards and FMSS physical security specialists to know (1) whom the guards are to contact to report lighting outages and (2) how lighting outages are to be documented and tracked until resolved.

Recommendation: Congress may wish to consider instituting a penalty on non-material advisor promoters for failing to provide investor lists to IRS within a specified time period when requested, comparable to the 20-business-day requirement for material advisors.

Agency: Congress
Status: Open

Comments: As of February 2020, we have not identified legislative action in the 114th or 115th Congress or any enacted legislation since 2011 amending section 6111 (disclosure of reportable transactions including the definition of a material advisor), section 6112 (requirement to keep lists of investors) or section 6708 (imposing the penalty for failure to maintain and provide lists to IRS).

Recommendation: To improve reporting on the results of examinations on ATAT issues, the Commissioner of Internal Revenue should separately track the tax amounts recommended, assessed, and collected between ATAT issues and non-ATAT issues.

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

Comments: As of December 2019, IRS did not plan on taking any further actions to track examination results for ATAT versus non-ATAT issues, as GAO recommended in May 2011. In July 2012, IRS told GAO that although it agreed with GAO's May 2011 recommendation, resource and capability constraints preclude it from capturing information in this way. GAO maintains that tracking examination results for ATAT versus non-ATAT issues would provide IRS management with the data needed to make informed judgments about program effectiveness and resource allocations. IRS has taken steps to check whether taxpayers file all required ATAT-related disclosure obligations. In February 2013, IRS implemented a new indicator and matching process to regularly review whether taxpayers are meeting their ATAT-related filing obligations. Additionally, IRS developed a procedure to evaluate the completeness of ATAT-related disclosure forms and follow up on incomplete forms as necessary and updated the Internal Revenue Manual to reflect these changes. Developing and implementing these new processes and procedures will provide IRS with additional information for determining whether the disclosures are made as required and are complete.

Recommendation: To ensure that IRS can adequately enforce certain tax provisions, Congress may wish to consider providing IRS with MEA to use tax return information from previous years to ensure that taxpayers do not improperly claim credits or deductions in excess of lifetime limits where applicable.

Agency: Congress
Status: Open

Comments: As of March 2020, Congress has expanded IRS's math error authority in certain circumstances, but not as broadly as GAO suggested in February 2010. Section 208 of division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113 enacted in December 2015) gave IRS the authority to use math error authority if (1) a taxpayer claimed the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Tax Credit (AOTC) during the period in which a taxpayer is not permitted to claim such credit as a consequence of either having made a prior fraudulent or reckless claim; or (2) a taxpayer omitted information required to be reported because the taxpayer made prior improper claims of the Child Tax Credit or the AOTC. While expanding math error authority is consistent with what GAO suggested in February 2010, GAO maintains that a broader authorization of math error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. If Congress decides to extend broader math error authority to IRS, controls may be needed to ensure that this authority is used properly such as requiring IRS to report on its use of math error authority. The Administration also requested that Congress expand IRS's math error authority as part of the Service's Congressional Budget Justification and Annual Performance Report and Plan for fiscal year 2021. Specifically, the Administration requested authority to correct a taxpayer's return in the following circumstances: 1) the information provided by the taxpayer does not match the information contained in government databases or Form W-2, or from other third party databases as the Secretary determines by regulation; 2) the taxpayer has exceeded the lifetime limit for claiming a deduction or credit; or 3) the taxpayer failed to include with his or her return certain documentation that is required to be included on or attached to the return. As of March 2020, the Congress had not provided IRS with such authority.

Recommendation: To gain efficiencies and improve taxpayer service, the Commissioner of Internal Revenue should direct the appropriate officials, based on the quality of service provided by comparable organizations and on what matters most to the customer, to determine a customer service telephone standard, and the resources required to achieve this standard based on input from Congress and other stakeholders.

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

Comments: As of August 2019, IRS finalized a customer service strategy identifying an optimal telephone level of service. According to the strategy, IRS has a process to compare major metrics with other agencies and private industry, and conducted two studies to look at industry practices. In response to our recommendation, IRS compared its telephone data with similar telephone environments, and determined that a telephone level of service between 70 and 80 percent provides an optimal balance for servicing customer service telephones and paper correspondence requests. However, IRS faced two significant challenges in managing the 2019 filing season: (1) implementing major tax law changes from the Tax Cuts and Jobs Act (TCJA), and (2) a lapse in appropriations that left IRS unfunded during five weeks leading up to the opening of the 2019 filing season. As a result of issues stemming from these challenges, IRS revised its 2019 filing season telephone service goals from 80 percent to 65 percent during the filing season, and from 75 percent to 63 percent for all of fiscal year 2019. By not maintaining the identified optimal level of service standard, IRS is missing opportunities to illustrate gaps between actual and desired levels of service that may have resulted from issues linked to TCJA implementation and the lapse in appropriations. IRS did outline steps it is taking to achieve the optimal range of 70-80 percent telephone level of service outlined in its customer service strategy. Specifically, IRS said that it is working to upgrade equipment for all IRS business units that provide telephone services to taxpayers. It also cited examples of these upgrades, such as implementing a customer callback system that allows callers to keep their place in queue without remaining on the phone. While IRS said it has allocated funding to begin the development and installation of the customer callback feature, it did not provide an estimate of the resources required to upgrade the equipment and otherwise achieve the optimum range of telephone level of service. By not providing sufficient information to Congress on resources needed to achieve an optimal level of service, IRS is missing opportunities to justify the resources it believes are needed to improve taxpayer service.

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 December 2019, 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. With a more strategic approach, IRS would be better positioned to address network noncompliance across the agency.

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 2019, Congress has 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 2019, Congress has not eliminated the sailing permit requirement.

Recommendation: The Congress may wish to consider broadening IRS's ability to use math error authority (MEA), with appropriate safeguards against misuse of that authority.

Agency: Congress
Status: Open

Comments: Congress has expanded IRS's math error authority in certain circumstances, but not as broadly as we suggested in February 2010. Section 208 of division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113 enacted in December 2015) gave IRS the authority to use math error authority if (1) a taxpayer claimed the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Tax Credit (AOTC) during the period in which a taxpayer is not permitted to claim such credit as a consequence of either having made a prior fraudulent or reckless claim; or (2) a taxpayer omitted information required to be reported because the taxpayer made prior improper claims of the Child Tax Credit or the AOTC. In addition, Congress expanded math error authority for the First-Time Homebuyer Credit in November 2009. While expanding math error authority is consistent with what we suggested in February 2010, we maintain that a broader authorization of math error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. If Congress decides to extend broader math error authority to IRS, controls may be needed to ensure that this authority is used properly such as requiring IRS to report on its use of math error authority. The Administration also requested that Congress expand IRS's math error authority as part of the President's budget proposal for fiscal year 2021. Specifically, the Administration requested authority to correct a taxpayer's return in the following circumstances: 1) the information provided by the taxpayer does not match the information contained in government databases; 2) the taxpayer has exceeded the lifetime limit for claiming a deduction or credit; or 3) the taxpayer has failed to include with his or her return certain documentation that is required by statute. As of January 2020, the Congress had not provided IRS with such authority. We continue to believe that Congress should broaden IRS's math error authority with appropriate safeguards in order to help reduce the tax gap, which is the difference between tax amounts that taxpayers should have paid and what they actually paid .

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 January 2020, 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.

Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should issue regulations clarifying the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations.

Agency: Department of the Treasury
Status: Open

Comments: Treasury issued proposed regulations clarifying the definition of gross receipts on December 13, 2013 and solicited public comments. During the course of 2014, tax practitioners and business executives submitted comments criticizing the regulations and asking for them to be withdrawn. As of March 2020, Treasury has yet to issue final regulations that would include responses to these criticisms. The regulations would not become effective until the tax year beginning after the date on which the regulations are published in final form.

Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify what types of activities are considered to be qualified support activities.

Agency: Department of the Treasury
Status: Open

Comments: As of March 2020, Treasury has not issued regulations to clarify what types of activities are considered to be qualified support activities.

Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify when commercial production of a qualified product is deemed to begin.

Agency: Department of the Treasury
Status: Open

Comments: As of March 2020, Treasury has not issued regulations to more clearly identify when commercial production of a qualified product is deemed to begin.

Recommendation: In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider eliminating the regular credit option for computing the research credit.

Agency: Congress
Status: Open

Comments: While legislation has been introduced to expand the research tax credit, as of December 2019, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or to add a minimum base to the ASC option, as GAO suggested in November 2009. The credit is designed to encourage business innovation by providing a subsidy for new research. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may reduce economic efficiency and, thereby, diminish any economic benefits of the credit.

Recommendation: In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider adding a minimum base to the ASC that equals 50 percent of the taxpayer's current-year qualified research expenses.

Agency: Congress
Status: Open

Comments: While legislation has been introduced to expand the research tax credit, as of December 2019, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or to add a minimum base to the ASC option, as GAO suggested in November 2009. The credit is designed to encourage business innovation by providing a subsidy for new research. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may reduce economic efficiency and, thereby, diminish any economic benefits of the credit. Adding a minimum base for the ASC would reduce the revenue cost of the credit without affecting the average incentive it provides for research.

Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by updating the historical base period that regular credit claimants use to compute their fixed base percentages.

Agency: Congress
Status: Open

Comments: While legislation has been introduced to expand the research tax credit, as of March 2020, no action has been taken by Congress to update the historical base period that regular credit claimants use to compute their fixed base percentages.

Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by eliminating base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.

Agency: Congress
Status: Open

Comments: While legislation has been introduced to expand the research tax credit, as of March 2020, no action has been taken to eliminate base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.

Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by clarifying for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the regular credit were discontinued for future years.

Agency: Congress
Status: Open

Comments: While legislation has been introduced to expand the research tax credit, as of March 2020, no action has been taken by Congress to clarify for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular, it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the regular credit were discontinued for future years.

Recommendation: To better ensure the notice phase is achieving desired results at the lowest costs, the Commissioner of Internal Revenue should provide IRS collection managers and executives accessible, reliable information on what the business rules are.

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

Comments: In August 2017, IRS provided documentation of plans to periodically share with appropriate staff business rules information, along with related results of periodic evaluations of the business rules for the four highest-volume collection notices. In February 2018, IRS officials said that conducting the evaluations will depend on resources being available from the multiple functions involved. As of December 2019, IRS had not provided GAO with documentation of time frames for regularly sharing business rules information. We will update the status when IRS provides supporting documentation on actions taken, as we requested in December 2019.

Recommendation: To better ensure the notice phase is achieving desired results at the lowest costs, the Commissioner of Internal Revenue should periodically and regularly evaluate the business rules in terms of efficiency and effectiveness or other results and ensure the results are available to managers so the data and methodologies can be used or considered in future evaluations.

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

Comments: In August 2017, IRS provided documentation of plans to periodically evaluate the business rules for the four highest-volume collection notices and share evaluation results with appropriate staff. In February 2018, IRS officials said that conducting the evaluations will depend on resources being available from the multiple functions involved. As of December 2019, IRS had not provided GAO with documentation of any evaluation results or a date when IRS expects to complete the first such evaluation. Nor had IRS provided time frames for regularly conducting and sharing business rules evaluation results. We will update the status when IRS provides supporting documentation on actions taken, as we requested in December 2019.

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 agreed to research 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 December 2019, 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.

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

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

Comments: No executive action taken. IRS had not addressed this action and had no plans to do so as of January 2020. IRS did not agree with GAO's May 2009 recommendation and the agency maintains that existing examination guidance provides examiners with sufficient information to properly examine this deduction. For tax years beginning after December 31, 2016, section 11042 of Public Law 115-97 caps the deduction for state and local taxes, including real estate taxes, at $10,000. In its 2009 review, GAO found that some examiners were not confirming that taxpayers were entitled to deduct real estate charges claimed, even in situations where their deductibility may have been in question. As a result, GAO maintains that examiners are continuing to rely on guidance that is inadequate to properly examine this deduction and that action should be taken to clarify the guidance.

Recommendation: To improve IRS's guidance to its examiners auditing the real-estate tax deduction, the Commissioner of Internal Revenue should revise the guidance to require examiners to ask taxpayers to substantiate the deductibility of the amounts claimed whenever they are examining the real-estate tax deduction and they have reason to believe that taxpayers have claimed nondeductible charges that are large, unusual, or questionable.

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

Comments: No executive action taken. IRS had not addressed this action and had no plans to do so as of January 2020. IRS did not agree with GAO's May 2009 recommendation and the agency maintains that existing examination guidance provides examiners with sufficient information to properly examine this deduction. For tax years beginning after December 31, 2016, section 11042 of Public Law 115-97 caps the deduction for state and local taxes, including real estate taxes, at $10,000. In its 2009 review, GAO found that some examiners were not confirming that taxpayers were entitled to deduct real estate charges claimed, even in situations where their deductibility may have been in question. As a result, GAO maintains that examiners are continuing to rely on guidance that is inadequate to properly examine this deduction and that action should be taken to clarify the guidance.

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 taken, as of March 2020, to require payers engaged in a trade or business to report on payments to corporations for services, thereby reducing these payers' burden to determine which payments require reporting, as GAO recommended in January 2009. Reporting of third-party information is a powerful compliance tool, and eliminating the reporting exemption for payments to corporations would be a cost-effective way to improve voluntary compliance.

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. Additional data were 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 March 2020, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by May 2020. GAO 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 collected data on 1099-MISC reporting as part of its National Research Program (NRP) study on employment taxes, a program that involved examinations of a sample of tax returns for 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 March 2020, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by May 2020. GAO will continue to monitor IRS's progress.

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

Agency: Congress
Status: Open

Comments: As of March 2020, Congress has expanded IRS's math error authority in certain circumstances, but not as broadly as GAO suggested in February 2010. Section 208 of division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113 enacted in December 2015) gave IRS the authority to use math error authority if (1) a taxpayer claimed the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Tax Credit (AOTC) during the period in which a taxpayer is not permitted to claim such credit as a consequence of either having made a prior fraudulent or reckless claim; or (2) a taxpayer omitted information required to be reported because the taxpayer made prior improper claims of the Child Tax Credit or the AOTC. While expanding math error authority is consistent with what GAO suggested in February 2010, GAO maintains that a broader authorization of math error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. If Congress decides to extend broader math error authority to IRS, controls may be needed to ensure that this authority is used properly such as requiring IRS to report on its use of math error authority. The Administration also requested that Congress expand IRS's math error authority as part of the Service's Congressional Budget Justification and Annual Performance Report and Plan for fiscal year 2019. Specifically, the Administration requested authority to correct a taxpayer's return in the following circumstances: 1) the information provided by the taxpayer does not match the information contained in government databases; 2) the taxpayer has exceeded the lifetime limit for claiming a deduction or credit; or 3) the taxpayer has failed to include with his or her return certain documentation that is required by statute. As of April 2019, the Congress had not provided IRS with such authority.

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: No legislative action had been taken, as of January 2020, to make owners of rental real estate subject to the same payment reporting requirements regardless of whether they engaged in a trade or business under current law, as GAO recommended in August 2008. Changing reporting requirements and holding taxpayers with rental real estate to the same filing requirements as taxpayers whose activities are considered a trade or business would provide clarity about who is required to file, which would improve tax compliance.

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

Agency: Congress
Status: Open

Comments: As of February 2020, we continue to monitor the issue.

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 as of March 2020. GAO suggested in February 2008 that as Congress considers whether tax-exempt governmental bonds should be used for professional sports stadiums that are generally privately used, it also should consider whether other privately used facilities, including hotels and golf courses, should continue to be financed with such bonds. Reconsidering the tax-exempt status of certain bonds could generate hundreds of millions of dollars in additional federal revenue.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of the Office of Management and Budget (OMB), in consultation with the Secretary of the Treasury, should resume presenting tax expenditures in the budget together with related outlay programs to show a truer picture of the federal support within a mission area.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: No executive action taken as of February 2020. OMB had not presented tax expenditures in the fiscal year 2021 budget together with the related outlay programs. OMB did not agree that GAO's September 2005 recommendation is necessary and stated that presenting information on tax expenditures together with related outlay programs is not useful for budgeting and that such a presentation is not part of the congressional budget process. However, the Congressional Budget Act of 1974 requires a list of tax expenditures, including special tax credits, deductions, exclusions, exemptions, deferrals, and preferential tax rates. Whereas OMB favors reporting tax expenditures separately from the rest of the budget, GAO has reported that an integrated presentation is also useful to show the relative magnitude of tax expenditures compared to spending and credit programs across mission areas. OMB previously presented tax expenditure sums alongside outlays and credit activity for each budget function in the federal budget from fiscal year 1998 through fiscal year 2002, but discontinued the practice. Tax expenditures resulted in $1.32 trillion in forgone revenue in fiscal year 2019 and have been roughly approximate to federal discretionary spending levels in recent years.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should require that tax expenditures be included in the PART process and any future such budget and performance review processes so that tax expenditures are considered along with related outlay programs in determining the adequacy of federal efforts to achieve national objectives.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: OMB made some progress in including tax expenditures along with related outlay programs in the executive branch's budget and performance review processes, as GAO recommended in September 2005. However, as of December 2019, OMB had not developed a systematic approach for conducting such reviews, and OMB staff told GAO that they were not pursuing the effort because of competing priorities, as well as capacity and resource constraints. Prior to that time, OMB had made some progress on the action. The President's fiscal year 2012 budget stated that the administration would work toward examining the objectives and effects of the wide range of tax expenditures in the budget. The GPRA Modernization Act of 2010 (GPRAMA) requires OMB and the agencies to identify the relevant tax expenditures that contribute to each crosscutting priority goal. Beginning with its August 2012 update to Circular No. A-11 with guidance for implementing GPRAMA and continuing in subsequent annual updates, OMB has directed agencies to identify tax expenditures that contribute to each of their agency priority goals. Beginning with the July 2013 update, OMB expanded its guidance to include identifying these contributions to agency strategic objectives. In both its July 2013 and July 2014 guidance, OMB stated that it planned to work with the Department of the Treasury (Treasury) and agencies to facilitate alignment of tax expenditure information with agency priority goals and strategic objectives. However, in its June 2015 update of this guidance, OMB removed the language about working with Treasury and agencies to align tax expenditures with agency goals. OMB's December 2019 guidance still requires agencies to identify tax expenditures that contribute to their agency priority goals and strategic objectives.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should develop and implement a framework for conducting performance reviews of tax expenditures. In developing the framework, the Director should (1) determine which agencies will have leadership responsibilities to review tax expenditures, how reviews will be coordinated among agencies with related responsibilities, and how to address the lack of credible performance information on tax expenditures; (2) set a schedule for conducting tax expenditure evaluations; (3) re-establish appropriate methods to test the overall evaluation framework and make improvements as experience is gained; and (4) to identify any additional resources that may be needed for tax expenditure reviews.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: Treasury did not submit comments on this report and deferred to OMB. OMB agreed that this recommendation had promise and also said that tax expenditure evaluations were the responsibility of Treasury, which had access to the necessary data. As of February 2020, when the President's fiscal year 2021 budget was released, the Director of OMB had not developed a framework for reviewing tax expenditure performance, as GAO recommended in June 1994 and again in September 2005. Since their initial efforts in 1997 and 1999 to outline a framework for evaluating tax expenditures and preliminary performance measures, OMB and the Department of the Treasury have ceased to make progress and retreated from setting a schedule for evaluating tax expenditures. The President's fiscal year 2012 budget stated that developing an evaluation framework is a significant challenge due to limited data availability and analytical constraints of isolating the effect of any single program. The administration planned to focus on addressing some of these challenges so it can work toward crosscutting analyses that examine tax expenditures alongside related spending programs. However, OMB and Treasury have not reported on progress on this recommendation since the President's fiscal year 2012 budget. In December 2019, OMB said its Office of Economic Policy is responsible for the framework outline. OMB said it was exploring options to further develop its evaluation framework, which would include working with Treasury. The budget released in February 2020 did not provide an update on these evaluation framework efforts.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should develop and implement a framework for conducting performance reviews of tax expenditures. In developing the framework, the Director should (1) determine which agencies will have leadership responsibilities to review tax expenditures, how reviews will be coordinated among agencies with related responsibilities, and how to address the lack of credible performance information on tax expenditures; (2) set a schedule for conducting tax expenditure evaluations; (3) re-establish appropriate methods to test the overall evaluation framework and make improvements as experience is gained; and (4) to identify any additional resources that may be needed for tax expenditure reviews.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: No executive action has been taken. As of February 2020, when the President's fiscal year 2021 budget was released, the Director of OMB had not developed a framework for reviewing tax expenditure performance, as GAO recommended in June 1994 and again in September 2005. Since their initial efforts in 1997 and 1999 to outline a framework for evaluating tax expenditures and preliminary performance measures, OMB and the Department of the Treasury have ceased to make progress and retreated from setting a schedule for evaluating tax expenditures. The President's fiscal year 2012 budget stated that developing an evaluation framework is a significant challenge due to limited data availability and analytical constraints of isolating the effect of any single program. The administration planned to focus on addressing some of these challenges so it can work toward crosscutting analyses that examine tax expenditures alongside related spending programs. However, OMB and Treasury have not reported on progress on this recommendation since the President's fiscal year 2012 budget. As of December 2019, OMB said its Office of Economic Policy is responsible for the framework outline. OMB said it was exploring options to further develop its evaluation framework, which would include working with Treasury. The budget released in February 2020 did not provide an update on these evaluation framework efforts.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should require that tax expenditures be included in the PART process and any future such budget and performance review processes so that tax expenditures are considered along with related outlay programs in determining the adequacy of federal efforts to achieve national objectives.

Agency: Department of the Treasury
Status: Open

Comments: In October 2005, the Department of the Treasury responded that this recommendation did not relate to Treasury. OMB made some progress in including tax expenditures along with related outlay programs in the executive branch's budget and performance review processes, as GAO recommended in September 2005. However, as of December 2019, OMB had not developed a systematic approach for conducting such reviews, and OMB staff told GAO that they were not pursuing the effort because of competing priorities, as well as capacity and resource constraints. The President's fiscal year 2012 budget stated that the administration would work toward examining the objectives and effects of the wide range of tax expenditures in the budget. The GPRA Modernization Act of 2010 (GPRAMA) requires OMB and the agencies to identify the relevant tax expenditures that contribute to each crosscutting priority goal. Beginning with its August 2012 update to Circular No. A-11 with guidance for implementing GPRAMA and continuing in subsequent annual updates, OMB has directed agencies to identify tax expenditures that contribute to each of their agency priority goals. Beginning with the July 2013 update, OMB expanded its guidance to include identifying these contributions to agency strategic objectives. In both its July 2013 and July 2014 guidance, OMB stated that it planned to work with the Department of the Treasury (Treasury) and agencies to facilitate alignment of tax expenditure information with agency priority goals and strategic objectives. However, in its June 2015 update of this guidance, OMB removed the language about working with Treasury and agencies to align tax expenditures with agency goals. OMB's December 2019 guidance still requires agencies to identify tax expenditures that contribute to their agency priority goals and strategic objectives.