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...

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...

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...

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...

Each year, we make more than 1,000 recommendations to help improve the federal government. We alert department heads to the recommendations where they can save the most money, address issues on our High Risk List, or significantly improve government operations. This report outlines our 24 priority open recommendations for the Internal Revenue Service as of April 2020. For example, 2 recommendati...

According to IRS, the Tax Cuts and Jobs Act of 2017 was the most sweeping tax law change in over 3 decades—with 86 provisions that modified, added to, or repealed business and international taxes. IRS prioritized and implemented key provisions of the act and provided taxpayer guidance. But there are challenges to fully implementing the act. For example, tax return data related to some of the n...

As virtual currencies like bitcoin grow in popularity, how can IRS be sure that people are paying relevant taxes? IRS addressed some taxpayer questions in its 2014 and 2019 virtual currency guidance. For example, the guidance says that using virtual currency can produce taxable capital gains. But IRS could do more to help taxpayers comply. Financial institutions already report information about...

Thieves can claim a business’s tax refund by fraudulently using the business’s tax ID number and other identifying information. Between January 2017 and August 2019, IRS’s efforts to prevent this type of fraud helped keep $384 million out of criminals’ hands. However, we found that IRS could do more to combat this evolving threat. We made 6 recommendations to help IRS stay ahead of crimi...