IRS Budget 2012: Extending Systematic Reviews of Spending Could Identify More Savings Over Time
Highlights
The financing of the federal government depends largely on the Internal Revenue Service's (IRS) efforts to collect taxes. These efforts focus on providing taxpayer services, such as electronic filing and telephone assistance, to make voluntary compliance easier and enforcing tax laws to ensure everyone meets their obligations to pay taxes. To fund IRS's 2012 operations, the President requested $13.3 billion spread over five appropriations, including $6 billion for enforcement, $4.6 billion for operations support, and $2.3 billion for taxpayer services. Because of the size of IRS's budget and the importance of its service and compliance programs for all taxpayers, Congress asked us to review the fiscal year 2012 budget justification for IRS. Special areas of interest included any new tax law enforcement and taxpayer service initiatives, the cost of implementing IRS's responsibilities under the Patient Protection and Affordable Care Act (PPACA), and any opportunities for savings. Based on your request our objectives were to: (1) describe IRS's budget and staffing trends for fiscal years 2008 through 2012; (2) assess IRS's process for identifying potential savings and how it used savings that were greater than projected; (3) describe new enforcement, taxpayer service and other initiatives in the fiscal year 2012 budget justification, including any estimates of return on investment (ROI); (4) assess any legislative proposals in the budget justification and how IRS reports their costs; (5) assess how the budget justification reports on the costs and performance of major information technology (IT) systems; (6) describe how 2012 PPACA costs are presented in the budget justification; and (7) document IRS's implementation of our budget recommendations from prior years' reports as well as highlight our open matters for Congress and recommendations to IRS with potential savings or revenues.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | To improve the usefulness of the budget request for IRS, the Commissioner of Internal Revenue should 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 and 2013 budgets, IRS budget officials addressed our recommendation by examining base operations and identifying savings and efficiencies through reductions to full-time equivalents and other costs such as travel, training, consulting services, IT investments, and space optimization. Officials stated that they plan to continue these systematic reviews for the foreseeable future.
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| Internal Revenue Service | To improve the usefulness of the budget request for IRS, the Commissioner of Internal Revenue should report in its budget justification how savings beyond projections were used. The amount of explanation provided should correspond to the amount of the savings. |
On February 13, 2012, IRS reported how savings beyond projections were used in its fiscal year 2013 Congressional Justification. Specifically, IRS reported that it realized $277.2 million and 960 full-time equivalents (FTEs) in actual savings for fiscal year 2011 - $86.5 million and 488 FTEs more than projected - and included explanations of how such savings were realized.
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| Internal Revenue Service | To improve the usefulness of the budget request for IRS, the Commissioner of Internal Revenue should provide cost estimates for individual legislative proposals in future budget justifications. |
On February 13, 2012, IRS provided cost estimates for individual legislative proposals in its fiscal year 2013 Congressional Budget Justification.
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| Internal Revenue Service | To improve the usefulness of the budget request for IRS, the Commissioner of Internal Revenue should include measures of cost and schedule performance for major IT systems in Operations Support, such as it does for Business Systems Modernization (BSM). |
On February 13, 2012, IRS provided measures of cost and schedule performance for major IT systems listed under Operations Support in its fiscal year 2013 Congressional Budget Justification.
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