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GAO-13-541R: 

United States Government Accountability Office: 
Washington, DC 20548: 

April 15, 2013: 

The Honorable Max Baucus:
Chairman:
The Honorable Orrin Hatch:
Ranking Member:
Committee on Finance:
United States Senate: 

The Honorable Frank Lautenberg:
Chairman:
The Honorable Mike Johanns:
Ranking Member:
Subcommittee on Financial Services and General Government:
Committee on Appropriations:
United States Senate: 

The Honorable Charles W. Boustany, Jr.
Chairman:
The Honorable John Lewis:
Ranking Member:
Subcommittee on Oversight:
Committee on Ways and Means:
House of Representatives: 

This letter transmits briefing slides based on our work to date in 
response to your requests for an interim assessment of the Internal 
Revenue Service's (IRS) 2013 filing season performance and a summary 
of IRS budget data. See appendix I for the briefing slides. 

Our briefing objectives were to (1) provide an assessment to date of 
IRS's 2013 performance in processing tax returns, delivering refunds, 
and providing telephone service; and (2) describe IRS dollar and 
staffing trends for fiscal years 2010 to 2014 and the reduction, by 
appropriation, to IRS resources due to sequestration. 

To conduct this work, we analyzed IRS workload, timeliness, and other 
data for processing returns, delivering refunds, and providing 
telephone service. We interviewed IRS officials and representatives of 
tax preparation and tax software firms on filing season performance 
and challenges. In addition, we summarized the President's budgets and 
IRS congressional budget justifications from fiscal years 2010 through 
2014, reviewed Office of Management and Budget (OMB) guidance on 
sequestration, and interviewed IRS officials in the offices of the 
Chief Financial Officer and Corporate Budget. 

We conducted this performance audit from March to April 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. We interviewed 
IRS officials and determined that the data presented in this briefing 
were sufficiently reliable for our purposes. 

In summary, so far in the 2013 filing season, we found the following: 

* Despite a late start due to tax law changes, IRS and stakeholders 
reported relatively smooth operations. Although the number of tax 
returns received and refunds issued was lower in the beginning of the 
filing season than last year, by the end of March these gaps had 
closed considerably. 

* Overall, the percentage of callers who sought and received live 
assistance from a telephone assistor has been comparable to last year, 
but lower than 2010 and 2011. However, taxpayers waited less time to 
speak with an assistor, which IRS officials attributed to quicker call 
handling. Although IRS received more calls about identity theft than 
last year, access to speak with an IRS assistor who specializes in 
identity theft has been higher. Further, taxpayers currently are 
waiting over 7 minutes to speak with these assistors. 

In addition, IRS budget data shows: 

* an increase of 9 percent ($1 billion) in discretionary funding and 
an increase of 8 percent (6,732 full-time equivalents) in staffing 
over fiscal year 2012 actual levels in the 2014 request. According to 
OMB calculations, IRS expects a $597 million reduction in 
discretionary funding in fiscal year 2013 as a result of sequestration. 

Agency Comments and Our Evaluation: 

On April 12, 2013, IRS provided technical comments on our findings, 
which we have incorporated where appropriate. 

As arranged with your office, unless you publicly announce the 
contents of this report earlier, we plan no further distribution until 
11 days after the date of this report. At that time, we will send 
copies of this report to other Chairmen and Ranking Members of Senate 
and House committees and subcommittees that have appropriation and 
oversight responsibilities for IRS. We also will be sending copies to 
the Acting Commissioner of Internal Revenue, the Secretary of the 
Treasury, and the Chairman of the IRS Oversight Board. Copies also are 
available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact us at (202) 512-9110 or whitej@gao.gov or mctiguej@gao.gov. 
Contact points for our offices of Congressional Relations and Public 
Affairs are on the last page of this report. GAO staff members who 
made major contributions to this report are listed in appendix II. 

Sincerely yours, 

Signed by: 

James R. White: 
Director, Tax Issues: 
Strategic Issues: 

Signed by: 

James R. McTigue, Jr.
Director, Tax Issues: 
Strategic Issues: 

[End of section] 

Appendix I: 

Internal Revenue Service: 2013 Tax Filing Season Performance to Date 
and Budget Data: 

Prepared for Congressional Committees: 

April 15, 2013: 

Objectives: 

You requested interim information on the 2013 filing season and the 
Internal Revenue Service’s (IRS) budget. This briefing: 

* provides an assessment to date of IRS’s 2013 performance in 
processing tax returns, delivering refunds, and providing telephone 
service; and; 

* describes IRS dollar and staffing trends for fiscal years 2010 to 
2014 and the reduction, by appropriation, to IRS resources due to 
sequestration. 

Scope and Methodology: 

To conduct this work, we: 

* analyzed IRS workload, timeliness, and other data for processing, 
refunds, and telephone service; 

* interviewed IRS officials and representatives of selected tax 
preparation and tax software firms on filing season performance and 
challenges; and; 

* summarized the President’s budgets and IRS congressional 
justifications from fiscal years 2010 through 2014, reviewed Office of 
Management and Budget (OMB) guidance on sequestration, and interviewed 
IRS officials in the offices of the Chief Financial Officer and 
Corporate Budget. 

We conducted this performance audit from March to April 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. We interviewed 
IRS officials and determined that the data presented in this briefing 
were sufficiently reliable for our purposes. 

Results in Brief: 

So far this filing season, despite a late start due to tax law changes: 

* IRS and stakeholders reported relatively smooth operations. 

* The number of tax returns received and refunds issued was much lower 
in the beginning of the filing season compared to last year. However, 
by the end of March, these gaps had closed considerably. 

* Overall access to IRS telephone assistors is comparable to last 
year, but lower than 2010 and 2011. However, taxpayers waited less 
time to speak with an assistor than last year, which IRS officials 
attribute to handling calls quicker. 

* IRS has seen a substantial increase in calls about identity theft 
since last year. 

- Access to speak to an IRS assistor about identity theft issues is 
higher than last year and IRS’s 2013 goal. 

- Currently, taxpayers are waiting just over 7 minutes to speak with 
an IRS assistor who specializes in identity theft, compared to IRS’s 
goal of 15 minutes or less. 

The 2014 budget request for IRS shows an increase of 9 percent ($1 
billion) in discretionary funding and an increase of 8 percent (6,732 
full-time equivalents) in staffing over fiscal year 2012 actual 
levels. According to the OMB calculations, IRS expects a $597 million 
reduction in discretionary funding in fiscal year 2013 as a result of 
sequestration. 

Background: 

Figure 1: Timing of Key Filing Season Events for 2013 Compared to 2012: 

[Refer to PDF for image: timeline] 

2012 Tax Year: 

January 17, 2012: 
Filing season opened. IRS began processing electronic and paper 
returns for individual income tax filers.        

April 17, 2012: 
Filing deadline.
        
2013 Tax Year:           

January 2, 2013: 
The American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240) was 
passed. The act made permanent many of the tax cuts enacted in 2001 
and 2003, and extended many tax provisions. IRS delayed the start of 
the 2013 filing season to implement tax law changes enacted under this 
act. 

January 30, 2013: 
Filing season opened. IRS began processing electronic and paper 
returns for most individual income tax filers, but delayed the 
availability of some forms, including Form 4562 (Depreciation and 
Amortization) and Form 8863 (Education Credits). 

February 10, 2013: 
IRS began accepting Form 4562 (Depreciation and Amortization). 

March 4, 2013: IRS began accepting returns for all individual income 
tax filers, and accepting all remaining forms, including Form 5695 
(Residential Energy Credits). 

April 15, 2013: Filing deadline. 

Source: GAO analysis of IRS documents. 

[End of figure] 

In 2012, we reported that problems with the IRS Modernized E-File 
(MeF) system contributed to delayed refunds for millions of taxpayers. 
Given the importance of MeF and the problems IRS experienced last 
filing season, we recommended that IRS ensure that its contingency 
plan for MeF is reviewed and updated in time for the 2013 filing 
season.[Footnote 1] IRS agreed with this recommendation and took 
actions, which are discussed later in this briefing. 

Identity theft is a growing problem for taxpayers and IRS. We recently 
reported that IRS has taken several steps to detect and prevent 
identity theft-based refund fraud including developing new fraud 
filters.[Footnote 2] IRS expanded those filters in 2013. 

IRS’s telephone services are a large scale operation, responding to 
tens of millions of calls. Our past reports have emphasized the 
importance of improving taxpayers’ access to IRS’s telephone assistors 
as part of an overall effort to improve overall taxpayer service. 

Paid preparers are critical to tax administration and prepare about 60 
percent of all tax returns filed. In recent years, IRS has implemented 
new regulations governing paid preparers. As of January 18, 2013, a 
federal district court opinion prevents IRS from enforcing some of the 
regulations, such as those requiring continuing education, governing 
certain paid preparers. IRS is appealing the opinion. 

IRS presents its budget request and receives funding from Congress 
through four discretionary appropriation accounts: Taxpayer Services, 
Enforcement, Operations Support, and Business Systems Modernization. 

2013 Filing Season: 

The Number of Refunds Issued Is Catching Up to Last Year: 

Figure 2: Number of Individual Tax Refunds IRS Issued by Week, 2012-
2013: 

[Refer to PDF for image: multiple line graph] 

Date: 1/4; 
2012 Number of refunds issued: 0; 
2013 Number of refunds issued: 0. 

Date: 1/11; 
2012 Number of refunds issued: 0; 
2013 Number of refunds issued: 0. 

Date: 1/18; 
2012 Number of refunds issued: 1 million; 
2013 Number of refunds issued: 0. 

Date: 1/25; 
2012 Number of refunds issued: 4 million; 
2013 Number of refunds issued: 0. 

Date: 2/1; 
2012 Number of refunds issued: 16 million; 
2013 Number of refunds issued: 5 million. 

Date: 2/8; 
2012 Number of refunds issued: 23 million; 
2013 Number of refunds issued: 16 million. 

Date: 2/15; 
2012 Number of refunds issued: 35 million; 
2013 Number of refunds issued: 27 million. 

Date: 2/22; 
2012 Number of refunds issued: 45 million; 
2013 Number of refunds issued: 38 million. 

Date: 3/1; 
2012 Number of refunds issued: 52 million; 
2013 Number of refunds issued: 46 million. 

Date: 3/8; 
2012 Number of refunds issued: 59 million; 
2013 Number of refunds issued: 53 million. 

Date: 3/15; 
2012 Number of refunds issued: 65 million; 
2013 Number of refunds issued: 60 million. 

Date: 3/22; 
2012 Number of refunds issued: 70 million; 
2013 Number of refunds issued: 66 million. 

Date: 3/29; 
2012 Number of refunds issued: 75 million; 
2013 Number of refunds issued: 72 million. 

Date: 4/5; 
2012 Number of refunds issued: 80 million; 
2013 Number of refunds issued: 78 million. 

Note: Dates for 2012 and 2013 are not exact, but comparable. 

Source: GAO analysis of IRS data. 

[End of figure] 

The Dollar Amount of Refunds Issued Is Catching Up to Last Year: 

Figure 3: Dollar Amount of Individual Tax Refunds IRS Issued by Week, 
2012-2013: 

[Refer to PDF for image: multiple line graph] 

Date: 1/4; 
2012 amount of refunds issued: 0; 
2013 amount of refunds issued: 0. 

Date: 1/11; 
2012 amount of refunds issued: 0; 
2013 amount of refunds issued: 0. 

Date: 1/18; 
2012 amount of refunds issued: $2 billion; 
2013 amount of refunds issued: 0. 

Date: 1/25; 
2012 amount of refunds issued: $16 billion; 
2013 amount of refunds issued: 0. 

Date: 2/1; 
2012 amount of refunds issued: $57 billion; 
2013 amount of refunds issued: $17 billion. 

Date: 2/8; 
2012 amount of refunds issued: $77 billion; 
2013 amount of refunds issued: $52 billion. 

Date: 2/15; 
2012 amount of refunds issued: $111 billion; 
2013 amount of refunds issued: $82 billion. 

Date: 2/22; 
2012 amount of refunds issued: $139 billion; 
2013 amount of refunds issued: $114 billion. 

Date: 3/1; 
2012 amount of refunds issued: $158 billion; 
2013 amount of refunds issued: $135 billion. 

Date: 3/8; 
2012 amount of refunds issued: $174 billion; 
2013 amount of refunds issued: $155 billion. 

Date: 3/15; 
2012 amount of refunds issued: $189 billion; 
2013 amount of refunds issued: $172 billion. 

Date: 3/22; 
2012 amount of refunds issued: $201 billion; 
2013 amount of refunds issued: $188 billion. 

Date: 3/29; 
2012 amount of refunds issued: $213 billion; 
2013 amount of refunds issued: $202 billion. 

Date: 4/5; 
2012 amount of refunds issued: $225 billion; 
2013 amount of refunds issued: $214 billion. 

Note: Dates for 2012 and 2013 are not exact, but comparable. 

Source: GAO analysis of IRS data. 

[End of figure] 

Return Types and Refund Characteristics Compared to Prior Years: 

Table 1: Tax Returns Processed through early April 2013 (in Thousands): 

Number of individual tax returns processed: 
2009: 89,215; 
2010: 85,210; 
2011: 87,595; 
2012: 96,556; 
2013: 93,103; 
Percentage change from 2012 to 2013: -3.6%. 

Electronic: 
2009: 70,705; 
2010: 71,153; 
2011: 76,664; 
2012: 85,904; 
2013: 84,443; 
Percentage change from 2012 to 2013: -1.7%. 

Paper: 
2009: 18,510; 
2010: 14,057; 
2011: 10,932; 
2012: 10,653; 
2013: 8,660; 
Percentage change from 2012 to 2013: -18.7%. 

Percentage electronically filed[A]: 
2009: 79.3%; 
2010: 83.5%; 
2011: 87.5%; 
2012: 89.0%; 
2013: 90.7%; 
Percentage change from 2012 to 2013: n/a. 

Number of refunds issued (millions)
2009: 77.7; 
2010: 74.1; 
2011: 75.2; 
2012: 80.4; 
2013: 77.8; 
Percentage change from 2012 to 2013: -3.2%. 

Amount of refunds (billions)
2009: $210.2; 
2010: $219.4; 
2011: $219.8; 
2012: $224.7; 
2013: $214.5; 
Percentage change from 2012 to 2013: -4.5%. 

Average refund amount[B]: 
2009: $2,705; 
2010: $2,960; 
2011: $2,922; 
2012: $2,794; 
2013: $2,755; 
Percentage change from 2012 to 2013: -1.4%. 

Legend: n/a = not applicable. 

Source: GAO analysis of IRS data. 

Notes: Data are from January 1 of each year through April 3, 2009; 
April 2, 2010; April 1, 2011; April 6, 2012; and April 5, 2013. 
Numbers may not add due to rounding. 

[A] The percentage of returns filed electronically early in the filing 
season is likely to decline before the filing season is over. 
Taxpayers filed about 82 percent of all individual returns 
electronically in 2012. 

[B] Average refund amount is in actual dollars. 

[End of table] 

Telephone Access: Level of Service Comparable to Last Year, but Lower 
than 2010 and 2011, and Wait Time Is Down: 

Table 2: IRS Call Volume and Performance from January 1 through Late 
March: 

Call volume (in millions): 

Total calls to IRS[A]: 
2009: 52.4; 
2010: 48.7;
2011: 53.3; 
2012: 65.1; 
2013: 59.0; 
Percent change from 2012 to 2013[D]: -9.0%. 

Automated calls answered: 
2009: 19.6;
2010: 23.1;
2011: 26.8;
2012: 36.4;
2013: 32.4;
Percent change from 2012 to 2013[D]: -11.0%. 

Assistor answered calls: 
2009: 14.9;
2010: 12.6;
2011: 12.8;
2012: 10.6;
2013: 11.2; 
Percent change from 2012 to 2013[D]: 5.0%. 

Abandoned, busies, and disconnects: 
2009: 17.9;
2010: 13.0;
2011: 13.7;
2012: 18.1;
2013: 15.4;
Percent change from 2012 to 2013[D]: -15.0%. 

Performance: 

Level of service-–Percentage of callers seeking live assistance who 
receive it: 
Fiscal year goal[B]: 
2009: 77.0%[C]; 
2010: 71.0%; 
2011: 71.0%; 
2012: 61.0%; 
2013: 70.0%; 
Percent change from 2012 to 2013[D]: 15.0%; 
Actual to date: 
2009: 64.0%; 
2010: 75.0%; 
2011: 75.0%; 
2012: 68.0%; 
2013: 69.0%; 
Percent change from 2012 to 2013[D]: 2.0%. 

Average wait time (in minutes): 
Fiscal year goal[B]: 
2009: 10.4; 
2010: 11.6; 
2011: 11.6; 
2012: 19; 
2013: 14.6; 
Percent change from 2012 to 2013[D]: -23.0%; 
Actual to date: 
2009: 8.8%; 
2010: 9.9%; 
2011: 9.7%; 
2012: 15.9%; 
2013: 13.8%; 
Percent change from 2012 to 2013[D]: -13.0%. 

Source: GAO analysis of IRS data. 

Note: Unless otherwise noted, data are cumulative for IRS from January 
1 of each year to April 4, 2009; April 3, 2010; April 2, 2011; March 
31, 2012; and March 30, 2013. 

[A] The numbers in the table are the total automated, assistor 
answered, abandoned, busy, and disconnected calls, and do not reflect 
the total number of attempted calls to IRS. 

[B] The goal listed is for the entire fiscal year, not just the period 
from January 1 through late March. We believe comparing performance 
during the filing season to fiscal year goals is appropriate as IRS’s 
filing season performance is an indicator of its performance for the 
entire year. 

[C] IRS revised its original fiscal year goal of 77.0 percent down to 
70.0 percent because of high call volume from taxpayers requesting 
electronic filing authentication information and asking stimulus-
related questions. 

[D] The numbers in the table are rounded, but the percent change was 
calculated using exact values. Therefore, in some cases, the percent 
change is slightly different than it would be if it were calculated 
using the rounded values in the table. 

[End of table] 

Identity Theft Calls Have Increased Since Last Year; IRS Attributes 
This to an Increase in Identity Theft Related Fraud Attempts: 

Table 3: IRS Identity Theft Call Volume and Performance from January 1 
through Late March: 

Call volume: 

Total calls answered: 
2009: 49,763; 
2010: 62,502; 
2011: 109,713; 
2012: 342,336; 
2013: 484,946; 
Percent change from 2012 to 2013[B]: 41.7%. 

Automated calls answered: 
2009: 6,216; 
2010: 6,608; 
2011: 17,473; 
2012: 44,590; 
2013: 47,959; 
Percent change from 2012 to 2013[B]: 7.6%. 

Assistor answered calls: 
2009: 43,547; 
2010: 55,894; 
2011: 92,240; 
2012: 297,746; 
2013: 436,987; 
Percent change from 2012 to 2013[B]: 46.8%. 

Abandoned calls: 
2009: 20,797; 
2010: 39,103; 
2011: 75,903; 
2012: 195,000; 
2013: 253,0633; 
Percent change from 2012 to 2013[B]: 0.0%. 

Performance: 

Level of service-–Percentage of callers seeking live assistance who 
receive it: 
Fiscal year goal[A]: 
2009: 80%; 
2010: 76%; 
2011: 76%; 
2012: 72%; 
2013: 80%; 
Percent change from 2012 to 2013[B]: 11%. 
Actual to date: 
2009: 93%; 
2010: 80%; 
2011: 74%; 
2012: 77%; 
2013: 83%; 
Percent change from 2012 to 2013[B]: 8%. 

Average wait time (in minutes): 
Fiscal year goal[A]: 
2009: 10.4; 
2010: 11.6; 
2011: 11.6; 
2012: 18.8; 
2013: 15.0; 
Percent change from 2012 to 2013[B]: -20.0%; 
Actual to date: 
2009: 1.1%; 
2010: 5.6%; 
2011: 10.9%; 
2012: 11.0%; 
2013: 7.5%; 
Percent change from 2012 to 2013[B]: -30.0%. 

Source: GAO analysis of IRS data. 

Note: Unless otherwise noted, data are cumulative for IRS from January 
1 of each year to April 4, 2009; April 3, 2010; April 2, 2011; March 
31, 2012; and March 30, 2013. 

[A] The goal listed is for the entire fiscal year, not just the period 
from January 1 through early March. We believe comparing performance 
during the filing season to fiscal year goals is appropriate as IRS’s 
filing season performance is an indicator of its performance for the 
entire year. 

[B] The numbers in the table are rounded, but the percent change was 
calculated using exact values. Therefore, in some cases, the percent 
change is slightly different than it would be if it were calculated 
using the rounded values in the table. 

[End of table] 

Performance on IRS’s Paid Preparer Lines Has Improved: 

Table 4: IRS Paid Preparer Call Volume and Performance from January 1 
through Late March: 

Call volume: 
Assistor answered calls: 
2009: 342,887; 
2010: 331,328; 
2011: 349,768; 
2012: 317,635; 
2013: 374,448; 
Percent change from 2012 to 2013[B]: 17.9%. 

Abandoned calls: 
2009: 72,154; 
2010: 118,526; 
2011: 142,144; 
2012: 175,360; 
2013: 130,235; 
Percent change from 2012 to 2013[B]: -26%. 

Performance: 

Level of service-–Percentage of callers seeking live assistance who 
receive it: 
Fiscal year goal[A]: 
2009: 82%; 
2010: 76%; 
2011: 78%; 
2012: 72%; 
2013: 75%; 
Percent change from 2012 to 2013[B]: 4%; 
Actual to date: 
2009: 90%; 
2010: 79%; 
2011: 82%; 
2012: 71%; 
2013: 82%; 
Percent change from 2012 to 2013[B]: 15%. 

Average wait time (in minutes): 
Fiscal year goal[A]: 
2009: 6.5; 
2010: 10; 
2011: 10.7; 
2012: 26.2; 
2013: 20.7; 
Percent change from 2012 to 2013[B]: -21%; 
Actual to date: 
2009: 3.1; 
2010: 10.4; 
2011: 9.6; 
2012: 25; 
2013: 12.3; 
Percent change from 2012 to 2013[B]: -50%. 

[End of table] 

Other Filing Season Observations: 

IRS officials and stakeholders reported relatively smooth operations 
despite the late start. 

* For example, IRS performed additional testing of MeF, which 
officials believe helped ensure improved performance and updated its 
contingency plan as we recommended last year.[Footnote 3] To date, IRS 
has relied solely on MeF and has not had to redeploy its legacy e-file 
system, as was its contingency. 

IRS and stakeholders reported a processing issue for about 700,000 tax 
returns filed with the Form 8863 before February 22. 

* In late March, IRS reported that some taxpayers have already 
received their refunds and others will get their refunds in another 2 
to 4 weeks. IRS expects for nearly all of these to be issued refunds 
in early- to mid-April. 

Budget Data and Trends: 

Dollars by Appropriation Account, Fiscal Years 2010 through 2014: 

Table 5: IRS Fiscal Years 2010 through 2014 Budget by Appropriation 
Account (Dollars in Millions): 

Appropriation account: Enforcement; 
Fiscal year 2010 enacted: $5,504; 
Fiscal year 2011 enacted: $5,493; 
Fiscal year 2012 enacted: $5,299; 
Fiscal year 2013 annualized continuing resolution[A]: $5,331; 
Fiscal year 2014 requested: $5,667; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: $367; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: 7%. 

Appropriation account: Operations support; 
Fiscal year 2010 enacted: $4,084; 
Fiscal year 2011 enacted: $4,057; 
Fiscal year 2012 enacted: $3,947; 
Fiscal year 2013 annualized continuing resolution[A]: $3,971; 
Fiscal year 2014 requested: $4,481; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: $533; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: 14%. 

Appropriation account: Taxpayer services; 
Fiscal year 2010 enacted: $2,279; 
Fiscal year 2011 enacted: $2,293; 
Fiscal year 2012 enacted: $2,240; 
Fiscal year 2013 annualized continuing resolution[A]: $2,254; 
Fiscal year 2014 requested: $2,413; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: $173; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: 8%. 

Appropriation account: Business Systems Modernization (BSM); 
Fiscal year 2010 enacted: $264; 
Fiscal year 2011 enacted: $263; 
Fiscal year 2012 enacted: $Fiscal year 2012 enacted: $330; 
Fiscal year 2013 annualized continuing resolution[A]: $332; 
Fiscal year 2014 requested: $301; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: -$29; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: -9%. 

Appropriation account: Health Insurance Tax Credit Administration 
(HITCA)[B]; 
Fiscal year 2010 enacted: $16; 
Fiscal year 2011 enacted: $15; 
Fiscal year 2012 enacted: [B]; 
Fiscal year 2013 annualized continuing resolution[A]: [B]; 
Fiscal year 2014 requested: [B]; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: n/a; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: n/a. 

Appropriation account: Subtotal; 
Fiscal year 2010 enacted: $12,146; 
Fiscal year 2011 enacted: $12,122; 
Fiscal year 2012 enacted: $11,817; 
Fiscal year 2013 annualized continuing resolution[A]: $11,888; 
Fiscal year 2014 requested: $12,861; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: $1,044; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: 9%. 

Other resources, such as user fees: 
Fiscal year 2010 enacted: $539; 
Fiscal year 2011 enacted: $655; 
Fiscal year 2012 enacted: $695; 
Fiscal year 2013 annualized continuing resolution[A]: $905; 
Fiscal year 2014 requested: $497; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: -$198; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: -29%. 

Total funding available for obligation: 
Fiscal year 2010 enacted: $12,686; 
Fiscal year 2011 enacted: $12,777; 
Fiscal year 2012 enacted: $12,512; 
Fiscal year 2013 annualized continuing resolution[A]: $12,793; 
Fiscal year 2014 requested: $13,358; 
Dollar change fiscal year 2012 enacted compared to fiscal year 2014 
requested: $846; 
Percent change fiscal year 2012 enacted compared to fiscal year 2014 
requested: 7%. 

Legend: n/a = not applicable. 

Source: Fiscal Year 2012, 2013, and 2014 Congressional budget 
justifications for IRS. 

Note: Dollars are nominal and not adjusted for inflation, and numbers 
may not add due to rounding. 

[A] A full-year 2013 appropriation for this account was not enacted at 
the time the budget was prepared; therefore, the budget assumes this 
account is operating under the Continuing Appropriations Resolution, 
2013 (P.L. 112–175). The amounts included for 2013 reflect the 
annualized level provided by the continuing resolution and do not 
include reductions due to sequestration. 

[B] In fiscal year 2012, administrative resources for HITCA were moved 
to the Taxpayer Services appropriation under the Consolidated 
Appropriations Act, 2012 (Pub. L. No. 112-74). 

[End of table] 

Staffing by Appropriation Account, Fiscal Years 2010 through 2014: 

Table 6: Fiscal Years 2010 through 2014 Full-Time Equivalents (FTE) by 
Appropriation Account: 

Appropriation account: Enforcement; 
Fiscal year 2010 actual: 50,400; 
Fiscal year 2011 actual: 49,920; 
Fiscal year 2012 actual: 47,189; 
Fiscal year 2013 annualized continuing resolution[A]: 46,702; 
Fiscal year 2014 requested: 49,987; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: 2,798; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: 6%. 

Appropriation account: Operations support; 
Fiscal year 2010 actual: 12,262; 
Fiscal year 2011 actual: 12,103; 
Fiscal year 2012 actual: 11,499; 
Fiscal year 2013 annualized continuing resolution[A]: 12,240; 
Fiscal year 2014 requested: 13,143; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: 1,6441; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: 4%. 

Appropriation account: Taxpayer services; 
Fiscal year 2010 actual: 31,607; 
Fiscal year 2011 actual: 31,574; 
Fiscal year 2012 actual: 30,236; 
Fiscal year 2013 annualized continuing resolution[A]: 30,402; 
Fiscal year 2014 requested: 32,575; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: 2,339; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: 8%. 

Appropriation account: BSM; 
Fiscal year 2010 actual: 337; 
Fiscal year 2011 actual: 309; 
Fiscal year 2012 actual: 562; 
Fiscal year 2013 annualized continuing resolution[A]: 513; 
Fiscal year 2014 requested: 513; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: -49; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: -9%. 

Appropriation account: HITCA[B]; 
Fiscal year 2010 actual: 12; 
Fiscal year 2011 actual: 0; 
Fiscal year 2012 actual: 0; 
Fiscal year 2013 annualized continuing resolution[A]: 0; 
Fiscal year 2014 requested: 0; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: n/a; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: n/a. 

Subtotal: 
Fiscal year 2010 actual: 94,618; 
Fiscal year 2011 actual: 93,906; 
Fiscal year 2012 actual: 89,486; 
Fiscal year 2013 annualized continuing resolution[A]: 89,857; 
Fiscal year 2014 requested: 96,218; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: 6,732; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: 8%. 

Other resources, such as user fees: 
Fiscal year 2010 actual: 752; 
Fiscal year 2011 actual: 1,003; 
Fiscal year 2012 actual: 2,185; 
Fiscal year 2013 annualized continuing resolution[A]: 1,698; 
Fiscal year 2014 requested: 1,093; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: -1,092; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: -50%. 

Total FTEs: 
Fiscal year 2010 actual: 95,370; 
Fiscal year 2011 actual: 94,909; 
Fiscal year 2012 actual: 91,671; 
Fiscal year 2013 annualized continuing resolution[A]: 91,555; 
Fiscal year 2014 requested: 97,311; 
FTE change fiscal year 2012 actual compared to fiscal year 2014 
requested: 5,640; 
Percent change fiscal year 2012 actual compared to fiscal year 2014 
requested: 6%. 

Legend: n/a = not applicable. 

Source: Fiscal Year 2012, 2013 and 2014 Congressional budget 
justifications for IRS. 

[A] A full-year 2013 appropriation for this account was not enacted at 
the time the budget was prepared; therefore, the budget assumes this 
account is operating under the Continuing Appropriations Resolution, 
2013 (P.L. 112–175). The amounts included for 2013 reflect the 
annualized level provided by the continuing resolution and do not 
include reductions due to sequestration. 

[B] In fiscal year 2012, administrative resources for HITCA were moved 
to the Taxpayer Services appropriation under the Consolidated 
Appropriations Act, 2012 (Pub. L. No. 112-74). 

[End of table] 

IRS Expanded Efforts to Identify Savings and Efficiencies: 

In April 2011, we reported that IRS identified information technology 
(IT) infrastructure savings through a systematic review of contract 
and other IT activities, which identified opportunities to streamline 
costs for providing IT services while maintaining service levels. 
[Footnote 4] 

We recommended that IRS further expand efforts to systematically 
identify savings and efficiencies as part of its budget development 
process on a periodic, but not necessarily annual, basis. 

In preparing its fiscal year 2012 budget, IRS officials informed us 
they examined all base operations at a high level, and absorbed 
reductions to its fiscal year 2012 appropriation by decreasing full-
time equivalents and other costs such as travel, training, consulting 
services, and IT investments. 

In ongoing work, we are assessing how IRS prioritizes and justifies 
spending, including its base budget. 

Sequestration: 

Sequestration Reduces Fiscal Year 2013 Budget Levels for IRS: 

According to the Acting IRS Commissioner, as a result of 
sequestration, IRS may plan to: 

* continue to operate under a hiring freeze; 

* reduce funding for grants and other expenditures; 

* cut costs in areas such as travel, training, facilities, and 
supplies; 

* review contract spending to ensure only the most critical and 
mandatory requirements are fully funded; and; 

* furlough all staff for a total of 5 to 7 days after the filing 
season ends. 

Table 7: IRS Funding Subject to Sequestration and Subsequent 
Reductions to Discretionary IRS Appropriation Accounts for Fiscal Year 
2013[A]: 

Amounts in millions: 

Discretionary appropriation account: Enforcement; 
Total sequestrable budget authority amount: $5,348; 
Sequester percentage: 5%; 
Total sequester amount: $267. 

Discretionary appropriation account: Operations support; 
Total sequestrable budget authority amount: $3,983; 
Sequester percentage: 5%; 
Total sequester amount: $199. 

Discretionary appropriation account: Taxpayer services; 
Total sequestrable budget authority amount: $2,271; 
Sequester percentage: 5%; 
Total sequester amount: $114. 

Discretionary appropriation account: BSM;
Total sequestrable budget authority amount: $332; 
Sequester percentage: 5%; 
Total sequester amount: $17. 

Total discretionary: 
Total sequestrable budget authority amount: $11,934;
Total sequester amount: $597. 

Source: Office of Management and Budget, “OMB Report to the Congress 
on the Joint Committee Sequestration for Fiscal Year 2013.” 

[A] Discretionary appropriations are budgetary resources that are 
provided in appropriations acts, and do not fund mandatory programs. 
Sequestration also requires reductions of 5.1 percent to other 
nonexempt nondefense mandatory programs. IRS has eight appropriation 
accounts, such as the IRS Miscellaneous Retained Fees account, that 
fall into this category. The total sequester amount for those 
appropriation accounts is $232 million. 

[End of table] 

GAO on the Web: 
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[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

James R. White, (202) 512-9110, whitej@gao.gov: 

James R. McTigue, Jr., (202) 512-9110, mctiguej@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Joanna Stamatiades, 
Assistant Director; James Cook, Dewi Djunaidy, Lois Hanshaw, LaKeshia 
Allen Horner, Kirsten B. Lauber, Mark Kehoe, Natalie Maddox, Libby 
Mixon, Laurel Plume, Neil Pinney, Mark Ryan, Erinn L. Sauer, Cynthia 
Saunders, and Robert Yetvin made key contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, Internal Revenue Service: Interim Results of 2012 Filing 
Season and Summary of the Fiscal Year 2013 Budget Request, [hyperlink, 
http://www.gao.gov/products/GAO-12-566] (Washington, D.C.: Mar. 20, 
2012). 

[2] GAO, Identity Theft: Total Extent of Refund Fraud Using Stolen 
Identities is Unknown, [hyperlink, 
http://www.gao.gov/products/GAO-13-132T], (Washington, D.C.: Nov. 29, 
2012). 

[3] [hyperlink, http://www.gao.gov/products/GAO-12-566]. 

[4] GAO, IRS Budget 2012: Extending Systematic Reviews of Spending 
Could Identify More Savings Over Time,[hyperlink, 
http://www.gao.gov/products/GAO-11-547] (Washington, D.C.: Apr. 11, 
2011). 

[End of section] 

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[End of document]