Skip to main content

Tax Administration: Sole Proprietor Identification Numbers Can Be Improved

GGD-95-160 Published: Sep 18, 1995. Publicly Released: Sep 18, 1995.
Jump To:
Skip to Highlights

Highlights

Pursuant to a congressional request, GAO reviewed whether the Internal Revenue Service (IRS): (1) accurately cross references the two identification numbers that self-employed individuals report on their tax returns; and (2) needs to take any actions to improve the accuracy of its cross-reference files.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should establish returns-processing and compliance-screening procedures to help remove erroneous cross-referenced taxpayer identification numbers from sole proprietors' tax records.
Closed – Not Implemented
IRS stated that this corrective action calls for management to initiate a multi-functional study to determine the extent and impact of erroneous cross-references on the Master files and recommend appropriate corrective actions. To perform this study, Submission Processing would need to validate/perfect the Sole Proprietor Identification Numbers. For this action to occur, it would need to prepare a Request for Information Services (RIS) to request the needed programming changes and develop the related procedural changes for field personnel. Submission Processing has indicated that: (1) Information Services would not accept this RIS because it is not associated with tax law change or year 2000 change, or budget/resource related; and (2) funding would have to be provided to address the additional workload generated by this study. Because of the tight budget for Compliance organizations, financial resources to fund Submission Process for this study are not available.
Internal Revenue Service The Commissioner of Internal Revenue should evaluate the feasibility of eliminating the requirement that sole proprietors use EIN for filing business returns.
Closed – Not Implemented
IRS stated that this corrective action calls for management to evaluate the feasibility of eliminating the requirement that sole proprietors use Employer Identification Numbers for filing business returns. Without performing the study discussed under the previous recommendation, no recommendation regarding the feasibility of eliminating the requirement that sole proprietors use Employer Identification Numbers can be made.

Full Report

Office of Public Affairs

Topics

Management information systemsNoncompliancePersonal income taxesReporting requirementsSelf-employedSocial security numberTax administration systemsTax nonpaymentTax returnsTaxpayers