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Open Recommendations

Direct File: IRS Successfully Piloted Online Tax Filing but Opportunities Exist to Expand Access
GAO-25-106933
Dec 19, 2024
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4 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should ensure relevant officials collaborate on recruiting and training customer service representatives for Direct File and document an annual process for recruiting and training employees. (Recommendation 1)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should continue to coordinate with state revenue agencies to expand taxpayer access to Direct File and, as necessary, take steps to ensure the availability of the federal Direct File program to eligible taxpayers in all states. (Recommendation 2)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should ensure IRS's planned research on potential Direct File users includes research questions that will allow the agency to collect data that can be used to prioritize the development of new capabilities for Direct File. (Recommendation 3)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should identify additional data that could be prepopulated in Direct File returns and develop a plan for testing the accuracy of prepopulating the data and its effect on the taxpayer experience. (Recommendation 4)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Tax Administration: IRS Needs to Take Additional Actions to Prepare for New Information Reporting Requirements
GAO-24-107028
Sep 19, 2024
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4 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should update IRS's policies and procedures to require a documented risk assessment for substantive tax administration decisions and include guidance on when these assessments are needed, such as when a decision could affect a large number of taxpayers or when decisions could generate congressional or oversight scrutiny. (Recommendation 1)
Open
IRS agreed with this recommendation and reported that its Enterprise Risk Management will update its policies and procedures to require a documented risk assessment for substantive tax administration decisions and include guidance on when these assessments are needed by September 2025. Assessing risks and documenting key decisions would help promote accountability and transparency to ensure IRS has a sound rationale for its implementation decisions.
Internal Revenue Service The Commissioner of Internal Revenue should ensure offices implementing the lowered Form 1099-K reporting threshold develop and implement a process to comprehensively and systematically document stakeholder feedback. (Recommendation 2)
Open
IRS agreed with this recommendation and as of March 2025 reported the agency would develop a process to document stakeholder feedback and communicate updated Form 1099-K guidance to appropriate parties by July 2026. IRS reported that it was researching internal systems and plans to leverage existing technology to decrease implementation time and costs. Having a process that comprehensively and systematically tracks stakeholder feedback, such as a designated place for such feedback, will help IRS ensure it is prepared and well positioned to implement changes to the Internal Revenue Code and make tax administration decisions.
Internal Revenue Service The Commissioner of Internal Revenue should ensure the Communication and Liaison Office and the Office of Digital Asset Initiative consult with the offices implementing the lowered Form 1099-K reporting threshold and incorporate any lessons learned and effective outreach strategies into their communication strategy for the new digital asset reporting requirements. (Recommendation 3)
Open
IRS agreed with the recommendation and as of March 2025 reported that it developed a communication strategy for the Digital Assets program that incorporated lessons learned during the implementation of the Form 1099-K outreach efforts. IRS reported that it is creating a tailored approach to ensure effective outreach for the Digital Assets program's audience. As part of this, IRS reported that officials are identifying outreach opportunities to address the specific challenges associated with this audience. We are requesting documentation of these efforts and will determine the extent to which they fulfill our recommendation. Incorporating lessons learned from prior experience could help the agency's efforts to educate and communicate with taxpayers and tax preparers. These insights could help officials target communication and education efforts. Tax preparers, taxpayers, and others would be more prepared for the new requirements, thus facilitating IRS's implementation and avoiding potential delays due to confusion over the changes.
Internal Revenue Service The Commissioner of Internal Revenue should ensure the Communication and Liaison Office and the Office of Digital Asset Initiative update their Communication Strategy to include periodic evaluation of their outreach and education efforts to assess whether they are meeting the agency's goals and providing timely, understandable, readily available, and accessible information to tax professionals, industry, and taxpayers. (Recommendation 4)
Open
IRS agreed with the recommendation and as of March 2025 reported that the agency is building mechanisms to gather feedback and measure the effectiveness of outreach activities. By October 2025, IRS plans to leverage existing stakeholder networks, use data-driven insights to inform updates, and ensure a focus on accessibility and clarity in communications. IRS also reported that it is seeking opportunities to refine outreach methods to meet the needs of its audiences in the digital space. Periodically evaluating its communication approach to providing information to tax professionals, industry, and taxpayers can help IRS ensure it is well positioned for the new reporting to begin. It would help IRS know if its outreach and education efforts are timely, understandable, readily available, and accessible to its audience so IRS can make adjustments to address confusion, if needed.

Tax Gap: IRS Should Take Steps to Ensure Continued Improvement in Estimates
GAO-24-106449
Jun 05, 2024
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6 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should ensure officials in the Research, Applied Analytics and Statistics Division work with officials in the Small Business/Self-Employed and Large Business and International Divisions to develop and report on analyses that could provide stakeholders with more confidence in the methods used to estimate undetected noncompliance, and information on its root causes. (Recommendation 1)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation on key components of the NRP AI models, such as which model options were considered and chosen for implementation, and how IRS determined risk levels and time frames for risk level updates. (Recommendation 2)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation for the NRP AI models on the technical specifications needed to run the model, such as how the data are to be split or divided. (Recommendation 3)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should ensure IRS has complete documentation on how to update the NRP sample selection process in response to changes in the operating environment, including the performance of its AI models and risk level analysis. (Recommendation 4)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation on processes for assessing the results of AI model updates, including validating the models. (Recommendation 5)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should develop and document a plan for evaluating the redesigned sample selection process, including factors IRS will consider in determining whether or how to continue using it. (Recommendation 6)
Open
IRS agreed with this recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

IRS Direct File: Actions Needed during Pilot to Improve Information on Costs and Benefits
GAO-24-107236
Apr 09, 2024
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2 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should ensure that relevant officials apply best practices to estimate and document the full costs of developing and operating a Direct File system. (Recommendation 1)
Open
IRS agreed with our recommendation. IRS reported in May 2024 that the Direct File pilot conducted during the 2024 filing season cost about $20.2 million. IRS officials continue to work on developing more complete cost estimates for future filing seasons. IRS officials provided a rough cost estimate for Direct File during the 2025 filing season in July 2024 and updated their estimates in October 2024. However, IRS officials did not estimate certain costs, such as customer service expenses. IRS officials reported in October 2024 that they are planning to develop more comprehensive cost estimates and are also working to improve cost estimation policies across the agency to align procedures with best practices.
Internal Revenue Service The Commissioner of Internal Revenue should ensure that relevant officials estimate and document the potential benefits of a Direct File system. (Recommendation 2)
Open
IRS agreed with the recommendation. IRS reported in May 2024 that the majority of taxpayers who participated in the Direct File pilot conducted during the 2024 filing season found its new system to be "much easier" than the filing method they used during the prior year. The Department of the Treasury estimated the amount of money taxpayers saved in tax preparation fees by using Direct File. IRS officials reported in October 2024 that they plan to assess the extent to which Direct File may have helped taxpayers claim credits and benefits they are eligible for and potential challenges taxpayers may face in using Direct File. IRS officials are also conducting additional survey research related to the potential benefits of Direct File, such as the extent to which the system may have saved taxpayers time and another survey concerning taxpayers' interest in using Direct File and experiences with chat-based customer support.
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