Tax Administration: IRS Measures Could Provide a More Balanced Picture of Audit Results and Costs
GGD-98-128
Published: Jun 23, 1998. Publicly Released: Jun 23, 1998.
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Highlights
Pursuant to a congressional request, GAO provided information on the Internal Revenue Service's (IRS) measures of the results of its audits of tax returns, focusing on: (1) how much of the additional taxes recommended in all types of audits that were closed in fiscal year (FY) 1992 through FY 1997 had been settled or were still in dispute and, if settled, how much had been assessed and collected as of September 27, 1997; (2) how much of the recommended additional taxes had been assessed and collected for audits closed in FY 1992; and (3) whether broad IRS measures of audit results fully represented audit revenues and costs.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop meaningful ways to report the results to Congress from tracking, over a reasonable number of future years, existing IRS data on the assessment and collection of additional amounts recommended in specific types of audits closed for each fiscal year. One option for developing reporting formats could be the tables used in this report. The reports would provide fuller measures of the impacts of audits across IRS than those just on taxes recommended. |
Closed – Not Implemented
In each annual budget submission, IRS officials state that they plan to report, by fiscal year, to Congress on the amount of taxes recommended through audits and the amounts collected of the taxes recommended. The first reporting was slated for the fiscal year 2002 budget submission. Since then, GAO has been tracking this. The IRS does not appear to have firm plans to implement this recommendation anytime soon. For that reason, GAO is closing it as not implemented.
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| Internal Revenue Service | The Commissioner of Internal Revenue should develop a way to track the direct staff costs of collecting tax assessments associated with specific types of audits. Similarly, the Commissioner also should determine how to account for IRS' indirect costs in auditing returns, settling audit disputes, and collecting audit assessments by type of audits. In analyzing how to account for these indirect costs, IRS may find that the activity-based costing model being developed can serve as a helpful tool. |
Closed – Not Implemented
The IRS is building an activity-based cost model to track different types of costs for various programs at the IRS. The IRS believes the model will have the ability--once completed--to track costs by audit type. The IRS completed the user needs study of field offices in June 2000. The study was evaluated by GAO as part of the IRS financial audit. The IRS has purchased the new system and has been trying to implement it since then. As of July 2005, GAO could not get clear information about when the system would be implemented, if at all. GAO has decided to close this recommendation as not implemented.
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Cost analysisData integrityFederal taxesGovernment collectionsIncome taxesPerformance measuresTax administrationTax return auditsTaxesTaxpayers