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...

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...

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...

The Internal Revenue Service must keep its computer systems secure to protect financial and taxpayer data. Every year since FY 1997, we have assessed whether the IRS had effective controls in place to safeguard this information. During this year’s audit, we identified new and continuing deficiencies in information system security controls. These deficiencies affect IRS’s ability to help ensur...

Employment-related identity fraud occurs when people use a name or Social Security number (SSN) other than their own to get a job. This fraud makes it harder for IRS to collect taxes and harder for the Social Security Administration to manage benefits. Though the true scope of this fraud is unknown, we identified 1.3 million SSNs from 2016 that were associated with both signs of potential fraud (...

During our FY 2019 financial statement audit of the IRS, we found 4 new internal control issues. For example, when taxpayers’ payments go to IRS, employees prepare the deposits and couriers take them to the bank. When the couriers were unable to work, managers transported the money. But the same managers were also overseeing the preparation of those deposits—increasing the risk of theft. As...

Improper payments—those made by the federal government to the wrong person, in the wrong amount, or for the wrong reason—are a significant problem. In fiscal year 2019, government-wide improper payment estimates totaled about $175 billion. The law requires certain agencies to develop and monitor ways to reduce improper payments and take corrective actions to target their root causes. However,...