Information Reporting

Pursuant to a congressional request, GAO reviewed the reporting of interest payments on an Internal Revenue Service (IRS) form when the same information is reported on annual cumulative bank statements. GAO noted that: (1) the Interest and Dividend Tax Compliance Act of 1983 requires that payors provide payees with information on interest payments on separate, specified forms that contain no other information; (2) the separate reporting of interest payments may increase taxpayer compliance due to the added visibility of a separate mailing; and (3) IRS believes information reporting is central to its Compliance 2000 program, since taxpayers who receive information returns voluntarily report 85 percent to 99 percent of their income.