The IRS relies extensively on IT systems to collect more than $3 trillion in taxes and distribute over $400 billion in refunds annually. In FY 2020, the IRS expects to spend approximately $3.2 billion on IT investments. We testified on several IT problems that could make it harder for the IRS to do its job (e.g., security control deficiencies that could result in unauthorized access to taxpayer da...

According to the IRS, providing top-quality service is a critical part of its mission. IRS plans call for improved taxpayer experiences and services. However, the IRS doesn't have performance goals specifying the desired improvements. For example, one IRS division has broad plans to monitor the taxpayer experience and address identified issues. But it doesn't have performance goals with measures t...

Nonprofit community hospitals can be tax-exempt if they: Provide community benefits, e.g., run an emergency room that is open to all, regardless of ability to payMeet legal requirements in the Patient Protection and Affordable Care Act, e.g., set billing and collection limits While the IRS can easily verify whether the legal requirements are met, it is harder to verify community benefits because t...

GAO was asked to issue a legal decision regarding whether Internal Revenue Service (IRS) Notice 2020-65, regarding the deferral of certain payroll tax obligations due to COVID-19, is a rule under the Congressional Review Act (CRA). On August 28, 2020, the Internal Revenue Service (IRS) issued Notice 2020-65 "Relief with Respect to Employment Tax Deadlines Applicable to Employers Affected by the On...

GAO reviewed the Department of the Treasury, Internal Revenue Service's (IRS) new rule on Guidance Under Sections 951A and 954 Regarding Income Subject to a High Rate of Foreign Tax. GAO found that the final rule relates to changes made by the Tax Cuts and Jobs Act. The rule (1) provides that the global intangible low-taxed income (GILTI) high-tax exclusion in section 951A(c)(2)(A)(i)(III) of the...

Obtaining insurance from offshore companies can provide legitimate federal tax benefits, as long as the insurance is genuine and taxpayers accurately report assets, claim appropriate benefits, and pay taxes owed. But offshore insurance products can also be abused. We reviewed abuses of two types—"micro-captive insurance" and variable life insurance. For example, micro-captive insurance is when s...

GAO notified the President of the Senate and the Speaker of the House of Representatives that the U.S. Department of the Treasury (Treasury) violated the Antideficiency Act when it obligated funds in a manner prohibited by law, and that Treasury failed to report this violation despite the Act's reporting requirement under 31 U.S.C. § 1351. Under 31 U.S.C. § 1351, agencies must immediately report...

Tax-exempt organizations often provide charitable services or membership benefits—and they generally don’t pay federal income taxes. However, they do file an annual return to report their tax-exempt activities. In 2016, IRS started using analytical models as part of an approach to use data to select which of these returns to review for compliance with tax-exempt laws. The models score each re...

Generally, federal agencies are only allowed to spend the money that Congress has given them. During a government shutdown, agencies may not have funds—raising questions about whether work may continue. How do agencies plan for this? We reviewed 4 agencies’ contingency plans and operations during FY 2019’s partial shutdown. The plans generally followed federal guidance, but didn’t cover p...

Smartphones and apps have made it easier for people to find work through new online marketplaces, such as ride sharing or meal delivery. But these “platform” or “gig” workers may not understand all of the tax obligations of their new job. For example, companies may classify them as independent contractors instead of employees, and they may not know to make estimated quarterly tax payments...