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 IRS estimates, taxpayers collectively pay about 82% of the taxes they owe. This difference between what taxpayers owe and what they pay voluntarily and on time is known as the tax gap, which IRS estimated averaged $458 billion a year for 2008-2010. We testified that key factors contributing to the gap include tax code complexity and declining IRS budgets. We also testified about mult...

IRS estimated that criminals used stolen identities to try to claim $12.2 billion in refunds in 2016. IRS protected $10.5 billion but paid at least $1.6 billion. To help address this issue, which we added to our High Risk list in 2015, IRS checks whether millions of taxpayers are who they say they are. We testified that IRS has improved its taxpayer authentication efforts, but should take additio...

GAO has issued a series of reports in recent years which have identified numerous opportunities for the Internal Revenue Service (IRS) to improve the management of its major acquisitions and operational, or legacy, information technology (IT) investments. For example,In June 2016, GAO reported that IRS had developed a structured process for allocating funding to its operations activities, consiste...

In its May 2016 report on the Low-Income Housing Tax Credit (LIHTC) program of the Internal Revenue Service (IRS), GAO found that state and local housing finance agencies (allocating agencies) implemented requirements for allocating credits, reviewing costs, and monitoring projects in varying ways. Moreover, some allocating agencies' day-to-day practices to administer LIHTCs also raised concerns....

The IRS has faced the ongoing problem of identity theft refund fraud and improper payments. For the 2017 tax filing season, IRS implemented W-2 systemic verification—which compares W-2 wage data to taxpayers' returns before paying refunds. This could help identify discrepancies and fraudulent refunds. In this testimony, we reported that these W-2 data helped identify $863 million in refunds as...

Taxpayers rely on IRS to help them comply with the tax code and file their taxes. We testified that, although IRS improved its telephone service during the 2016 tax filing season, service year-round was not as good. We also looked at how IRS helps taxpayers who are victims of ID theft refund fraud—wherein fraudsters pose as taxpayers and file returns seeking refunds. IRS has improved service fo...

The Internal Revenue Service (IRS) improved phone service to taxpayers during the 2016 filing season compared to last year. According to IRS, this is due in part to the additional $290 million in funding Congress provided to improve customer service, identity theft (IDT) refund fraud, and cybersecurity efforts. However, IRS expects its performance for the entire fiscal year will not reach the leve...

In March 2016, GAO reported that the Internal Revenue Service (IRS) had instituted numerous controls over key financial and tax processing systems; however, it had not always effectively implemented other controls intended to properly restrict access to systems and information, among other security measures. In particular, while IRS had improved some of its access controls, weaknesses remained in...

Claims of the small employer health tax credit have continued to be lower than thought eligible by government agency and small business group estimates, limiting the effect of the credit on expanding health insurance coverage through small employers. In 2014, about 181,000 employers claimed the credit, down somewhat from 2010 (see figure). These numbers are relatively low compared to the number of...