Tax Administration: Tax Compliance Initiatives and Delinquent Taxes

GAO discussed the Internal Revenue Service's (IRS) compliance initiatives and progress in collecting tax debts. GAO noted that: (1) IRS estimated that taxpayers failed to pay $127 billion in income taxes in 1992, but the tax-gap estimate did not include other delinquent taxes; (2) IRS audited less than 1 percent of fiscal year (FY) 1993 income tax returns and pursued less than 37 percent of the identified cases of underreported income; (3) more than one half of the 1994 delinquent accounts were backlogged at the end of the year; (4) IRS compliance initiatives could be improved by more efficient use of IRS resources, simpler tax laws, improved administrative processes, and more enforcement resources; (5) despite measures to increase IRS enforcement staff, staffing levels have declined since 1989; (6) the FY 1995 appropriation act prevents IRS from diverting enforcement funds to other purposes; (7) IRS has developed a new method for tracking the results of the 1995 compliance initiative, but its data may not be accurate; and (8) IRS has implemented new measures to improve its collection of delinquent taxes, but it needs to improve the accuracy of its accounts receivable inventory and its inefficient collection process.