This is the accessible text file for GAO report number GAO-11-547 
entitled 'IRS Budget 2012: Extending Systematic Reviews of Spending 
Could Identify More Savings Over Time' which was released on May 11, 
2011. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

April 2011: 

IRS Budget 2012: 

Extending Systematic Reviews of Spending Could Identify More Savings 
Over Time: 

GAO-11-547: 

Contents: 

Letter: 

Background: 

Results In Brief: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Updated Briefing for Senate and House Committees: 

Appendix II: List of Open Matters for Congress and Recommendations to 
IRS That Could Result in Potential Savings or Increased Revenues: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: List of Open Matters for Congress and Recommendations to IRS 
That Could Result In Potential Savings or Increased Revenues: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 11, 2011: 

The Honorable Richard J. Durbin:
Chairman:
The Honorable Jerry Moran:
Ranking Member:
Subcommittee on Financial Services and General Government:
Committee on Appropriations:
United States Senate: 

The Honorable Charles W. Boustany, Jr.
Chairman:
The Honorable John Lewis:
Ranking Member:
Subcommittee on Oversight:
Committee on Ways and Means:
House of Representatives: 

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, you 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.[Footnote 1] 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. 

We conducted our work in Washington, D.C. and New Carrollton, Maryland 
where key IRS officials involved with the budget and IT systems are 
located. Generally, we compared the President's fiscal year 2012 
budget justification for IRS to enacted amounts by appropriation from 
fiscal year 2008 through fiscal year 2010, including the fiscal year 
2011 budget justification and annualized continuing resolution (CR) 
levels. Specifically, to address the first four objectives, we 
reviewed the budget and supplemental documents and considered other 
sources such as the IRS Strategic Plan 2009-2013, Office of Management 
and Budget (OMB) Circular A-11, and GAO's Cost Estimating and 
Assessment Guide.[Footnote 2] We also interviewed officials in the 
Chief Financial Officer's (CFO) office. For the fifth objective to 
assess major IT systems' costs and performance, we reviewed 
documentation such as the 2010 Enterprise Transition Plan, and 
interviewed officials in IRS's Modernization and Information 
Technology Services office. For the sixth objective to describe how 
PPACA costs are presented, we reviewed relevant sections of the budget 
and supplemental documents, and interviewed budget and program office 
officials working on PPACA implementation. Finally, for the seventh 
objective we interviewed CFO officials to obtain information on prior 
year budget recommendations and judgmentally selected and relied on 
prior work in identifying opportunities for potential savings or 
increased revenue.[Footnote 3] Based on previous tests of the major 
data systems IRS uses to prepare its budget justification, we 
determined the data in those systems were sufficiently reliable for 
our purposes. 

On March 31, 2011 we briefed the Subcommittee on Financial Services 
and General Government, Committee on Appropriations, United States 
Senate and on April 7, 2011 we briefed the Subcommittee on Oversight, 
Committee on Ways and Means, United States House of Representatives on 
the results of our work on the fiscal year 2012 budget request for 
IRS. This report summarizes and transmits updated materials we used at 
these briefings, which are reprinted in appendix I, and includes 
related conclusions and recommendations. 

We conducted this performance audit from November 2010 through April 
2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

The President's fiscal year 2012 budget request for the IRS is 
presented in two key documents: (1) the Congressional Budget 
Justification, which provides a detailed justification of proposed IRS 
spending, and (2) the Appendix to the President's Budget. In general, 
there are three levels to IRS's budget presentation: 

* The first level includes five IRS appropriation accounts: Taxpayer 
Services, Enforcement, Operations Support, Business Systems 
Modernization (BSM), and Health Insurance Tax Credit Administration 
(HITCA). 

* The second level is IRS's budget activities, which divide the 
appropriation accounts into more basic functions. For example, the 
Operations Support appropriation has three budget activities: 
Infrastructure, Shared Services and Support, and Information Services. 
Infrastructure funds items such as rent, building services, and non-IT 
equipment. Shared Services and Support includes general policy and 
management functions such as human resources and strategic planning, 
as well as other functions like printing and postage. Information 
Services funds staffing, equipment and related costs to maintain and 
operate information systems not specifically designated as part of BSM. 

* The third level includes multiple program activities for every 
budget activity. For example, in the Infrastructure budget activity, 
there are four program activities: Building Delegation, Rent, Space 
and Housing/Non-IT Equipment, and Security. 

Results In Brief: 

* The IRS fiscal year 2012 budget request is a 9.4 percent, or $1.14 
billion, increase over fiscal year 2010 with most of the increases for 
the Enforcement and Operations Support appropriations. It is a 20 
percent increase over 2008. The budget justification proposes a 6 
percent increase in full time equivalent staff since 2010 and an 11 
percent increase since 2008. 

* IRS projects $190 million in savings and efficiencies for fiscal 
year 2012, which includes a $75 million reduction in IT infrastructure 
spending. The IT savings resulted from a systematic review of IT 
systems and contracts and the use of leading practices in systems 
development. Although IRS looks for savings throughout the agency, 
these efforts are not as systematic as the IT review. IRS budget 
officials cited costs as the reason. IRS IT officials told us 
approximately five full time staff were dedicated to finding the IT 
savings. In addition to projecting savings for 2012, the budget 
justification for IRS reported on the amount of savings realized in 
2010. According to IRS, realized savings in 2010 were about $5 million 
greater than originally projected but the budget justification did not 
specify how the additional savings were used. 

* The fiscal year 2012 budget justification includes 17 new 
enforcement, taxpayer service, and other initiatives with a total cost 
of approximately $839 million. The justification included ROI 
estimates for 6 of them, with an average ROI of 6.4 to 1. 

* The budget justification includes 21 legislative proposals which 
according to IRS, if enacted, could result in over $10 billion in 
savings or increased revenues over 10 years. IRS was able to report 
costs for 14 of these proposals, but the costs were aggregated. Cost 
information for each of the 14 proposals is available from IRS and 
could be more useful to the Congress when weighing the merits of each 
proposal. 

* IRS is requesting $2.67 billion for IT funding in fiscal year 2012; 
$2.3 billion of this funding is for Operations Support and the 
remaining amount is for BSM. Out of these appropriations, IRS funds 
about 155 IT systems, including 31 major systems. The justification 
summarizes cost and schedule performance information for BSM, but not 
other major IT systems. Without such summary information Congress 
lacks a high level indicator of performance for most of IRS's IT 
spending. 

* The total justification for PPACA in fiscal year 2012 is $473.4 
million, or 42 percent of the fiscal year 2012 requested funding 
increase. These costs are spread over five program initiatives within 
the Enforcement, Operations Support, and Taxpayer Services 
appropriations. While the PPACA costs are easily identified by 
initiative, the total cost is not shown. The total can be calculated 
by adding the PPACA costs across the five initiatives. 

* IRS implemented several of our prior recommendations to improve its 
budget presentation, including comparing projected savings to actual 
savings.[Footnote 4] Several of our open matters for Congress or 
recommendations to IRS have the potential to increase revenue or 
savings if implemented.[Footnote 5] See appendix II for details on 
open matters and recommendations. 

Conclusions: 

IRS has taken important steps to identify savings and efficiencies, 
including its systematic approach to identifying IT savings. Extending 
this systematic approach agency wide has the potential to identify 
additional savings. While some resources would be needed to implement 
such an approach, those costs could be reduced by targeting areas with 
high potential, i.e., not necessarily examining every area of the 
budget every year, and would likely be more than offset by newly 
realized savings and efficiencies. 

The budget justification provides useful information to congressional 
appropriators and others for making decisions about budgetary trade- 
offs. We identified three areas where further information in the 
budget justification could be beneficial: describing how any savings 
in excess of projections are used, providing costs estimates for 
individual legislative proposals, and including IT cost and schedule 
performance information for major systems in the Operations Support 
appropriation. 

Recommendations for Executive Action: 

To improve the usefulness of the budget request for IRS, we recommend 
the Commissioner of Internal Revenue take the following four actions: 

* further expand efforts to systematically identify savings and 
efficiencies as part of its budget development process on a periodic, 
but not necessarily annual, basis; 

* report in its budget justification how savings beyond projections 
were used. The amount of explanation provided should correspond to the 
amount of the savings; 

* provide cost estimates for individual legislative proposals in 
future budget justifications; and: 

* include measures of cost and schedule performance for major IT 
systems in Operations Support, such as it does for BSM. 

Agency Comments and Our Evaluation: 

In commenting on a draft of this report, IRS officials said that, due 
to the short time frame for GAO's report, they did not have time to 
fully analyze the recommendations and, therefore, were unable to 
respond to them at the time. They provided technical comments, and we 
made those changes where appropriate. 

As agreed with your offices unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 2 days 
from the report date. At that time we plan to send copies of this 
report to the Chairmen and Ranking Members of other Senate and House 
committees and subcommittees that have appropriation, authorization, 
and oversight responsibilities for IRS. We are also sending copies to 
the Commissioner of Internal Revenue, the Secretary of the Treasury, 
the Chairman of the IRS Oversight Board, and the Director of the 
Office of Management and Budget. Copies are also available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions or wish to discuss the 
material in this report further, please contact me at (202) 512-9110 or 
WhiteJ@gao.gov. Contact points for our offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. GAO staff members who made major contributions to this report 
are listed in appendix III. 

Signed by: 

James R. White: 
Director, Tax Issues: 
Strategic Issues: 

[End of section] 

Appendix I: Updated Briefing for Senate and House Committees: 

A Review of the Fiscal Year 2012 Budget Justification for the Internal 
Revenue Service: 

Prepared for the: 

Subcommittee on Financial Services and General Government,
Committee on Appropriations, U.S. Senate (March 31, 2011): 

and the: 

Subcommittee on Oversight, Committee on Ways and Means, U.S.
House of Representatives (April 7, 2011): 

Updated April 11, 2011: 

Objectives: 	 

Because of the size of IRS's budget and the importance of its service 
and compliance programs for all-taxpayers, you 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.[Footnote 6] Based on your request our 
objectives were to: 

* describe IRS's budget and staffing trends for fiscal years 2008 
through 2012; 

* assess IRS's process for identifying potential savings and how it 
used savings that were greater than projected; 

* describe new enforcement, taxpayer service and other initiatives in 
the fiscal year 2012 budget justification, including estimates for 
return on investment (ROI); 

* assess any legislative proposals in the budget justification and how
IRS reports their costs; 

* assess how the budget justification reports on the costs and
performance of major information technology (IT) systems; 

* describe how 2012 Patient Protection and Affordable Care Act
(PPACA) costs are presented in the budget justification; and; 

* 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. 

Scope and Methodology: 

To address each objective, we compared the President's FY 2012 budget 
justification for IRS to enacted amounts by appropriation from FY 2008 
through FY 2010, including the FY 2011 budget justification and 
annualized continuing resolution (CR) levels. Specifically, to: 

* address the first four objectives, we reviewed relevant documents 
and interviewed officials in the Chief Financial Officer's (CFO) 
office; 

* determine major IT systems, costs, and schedules, we reviewed 
documentation, such as the 2010 Enterprise Transition Plan, and 
interviewed officials in the Modernization and Information Technology 
Services office; 

* describe how PPACA costs are presented, we reviewed documents and 
interviewed budget and program office officials working on PPACA 
implementation; and; 

* obtain information on prior year budget recommendations, we 
interviewed CFO officials; to provide information on open matters and 
recommendations, we judgmentally selected ones with a potential to 
increase savings or revenues and primarily relied on GAO's prior work. 

We conducted this performance audit from November 2010 through April 
2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides that reasonable basis. 
Based on previous tests of the major data systems IRS uses to prepare 
its budget justification, we determined the data in those systems were 
sufficiently reliable for our purposes. 

Results in Brief: 

The IRS fiscal year 2012 budget request is a 9.4 percent, or $1.14 
billion, increase over fiscal year 201Q with most of the increases for 
the Enforcement and Operations Support appropriations. It is a 20 
percent increase over 2008. The budget justification proposes a6 
percent increase in full time equivalent staff since 2010 and an 11 
percent increase since 2008. 

IRS projects $190 million in savings and efficiencies for fiscal year 
2012, which includes a $75 million reduction in IT infrastructure 
spending The IT savings resulted from a systematic review that IRS 
officials said applied leading practices in systems development and 
resulted in additional saving. Although IRS looks for savings 
throughout the agency these efforts are not as systematic as the IT 
review. IRS budget officials cited costs as the reason. IRS IT 
officials told us approximately five full time staff were dedicated to 
finding the IT savings. In addition to projecting savings for 2012, 
IRS reported on the amount of savings realized in 2010. Realized 
savings in 2010 were about $5 million greater than originally 
projected but the budget justification did not specify how the 
additional savings were used. 

The fiscal year 2012 budget justification includes 17 new enforcement, 
taxpayer service, and other initiatives with a total cost of 
approximately $839 million. The justification included ROI estimates 
for six of them, with an average ROI of 6.4 to 1 by fiscal year 2014. 

The budget justification includes 21 legislative proposals which IRS 
estimated, if enacted, could result in over $10 billion in savings or 
increased revenues over 10 years. IRS was able to report estimated 
costs for 14 of these proposals, but the costs were aggregated. Cost 
information for each of the 14 proposals is available and could be 
more useful to Congress when weighing the merits of each proposal. 

IRS is requesting $2.67 billion for IT funding in fiscal year 2012, 
$2.3 billion of this funding is for Operations Support and the 
remaining amount is for Business Systems Modernization (BSM). Out of 
these appropriations, IRS funds about 155 IT systems, including 31 
major systems. The justification summarizes cost and schedule 
performance information for BSM, but not other major IT systems. 
Without such summary information Congress lacks a high level indicator 
of performance for most of IRS's IT spending. 

The total request for PPACA in fiscal year 2012 is $473.4 million, or 
42 percent of the fiscal year 2012 requested funding increase. These 
costs are spread over five program initiatives within the Enforcement, 
Operations Support, and Taxpayer Services appropriations. While the 
PPACA costs are easily identified by initiative, the total cost is not 
shown. The total can be calculated by adding the PPACA costs across 
the five initiatives. 

IRS implemented several of our prior recommendations to improve its 
budget presentation, including comparing projected savings to actual 
savings.[Footnote 7] Several of our open matters for Congress or 
recommendations to IRS have the potential to increase revenue or 
savings if implemented.[Footnote 8] (See Appendix II for details on 
open matters and recommendations.) 

Budget Trends: 

The President's FY 2012 budget request for IRS is $13.3 billion, a 9.4 
percent increase ($1.14 billion) over FY 2010. This was a 20 percent 
increase over 2008. 

Most of the increase goes toward Enforcement or Operations Support. 

* Operations Support includes facilities, information systems, and 
general management. 

The $1.14 billion increase includes: 

* + $838.8 million for new service, enforcement, and infrastructure 
initiatives; 

* + $401.7 million to reach the FY 2011 President's policy level; 

* + $ 85.7 million for inflation; and; 

* - $189.9 million in savings and efficiencies. 

IRS expects to collect approximately $384 million from other 
resources, such as reimbursables and user fees. 

Budget Trends, FY 2008 through FY 2012: 

Figure 1: FY 2008 through FY 2010 Enacted Amounts, FY 2011 Annualized 
CR levels, and FY 2012 Budget Request for IRS by Appropriation: 

[Refer to PDF for image: multiple line graph] 
	
Fiscal year: 2008; 
Enforcement: $4.780 billion; 
Taxpayer Services: $2.191 billion; 
Operations Support: $3.841 billion; 
Business Systems Modernization (BSM): $267 million; 
Health Insurance Tax Credit Administration (HITCA): $15 million. 

Fiscal year: 2009; 
Enforcement: $5.117 billion; 
Taxpayer Services: $2.293 billion; 
Operations Support: $3.867 billion; 
Business Systems Modernization (BSM): $230 million; 
Health Insurance Tax Credit Administration (HITCA): $15 million. 

Fiscal year: 2010; 
Enforcement: $5.504 billion; 
Taxpayer Services: $2.279 billion; 
Operations Support: $4.084 billion; 
Business Systems Modernization (BSM): $264 million; 
Health Insurance Tax Credit Administration (HITCA): $16 million. 

Fiscal year: 2011; 
Enforcement: $5.504 billion; 
Taxpayer Services: $2.279 billion; 
Operations Support: $4.084 billion; 
Business Systems Modernization (BSM): $264 million; 
Health Insurance Tax Credit Administration (HITCA): $16 million. 

Fiscal year: 2012; 
Enforcement: $5.967 billion; 
Taxpayer Services: $2.345 billion; 
Operations Support: $4.621 billion; 
Business Systems Modernization (BSM): $334 million; 
Health Insurance Tax Credit Administration (HITCA): $18 million. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications. 

Note: FY 2011 data are the annualized CR level, which is about 4 
percent less than the FY 2011 request. 

[End of figure] 

Budget Data, FY 2008 through FY 2012: 

Table 1: FY 2008 through FY 2010 Enacted Amounts, FY 2011 Requested, 
FY 2011 Annualized CR Levels, and FY 2012 Budget Request for IRS by 
Appropriation: 

Appropriation: Enforcement; 
FY 2008	enacted: $4.780 billion; 
FY 2009	enacted: $5.117 billion; 
FY 2010	enacted: $5.504; 
FY 2011 requested: $5.797 billion; 
FY 2011	annualized CR: $5.504 billion; 
FY 2012 requested[A]: $5.967 billion; 
Percentage change FY 2010 enacted through FY 2012 requested: 8.4%. 

Appropriation: Taxpayer Services; 
FY 2008	enacted: $2.191 billion; 
FY 2009	enacted: $2.293 billion; 
FY 2010	enacted: $2.279 billion; 
FY 2011 requested: $2.322 billion; 
FY 2011	annualized CR: $2.279 billion; 
FY 2012 requested[A]: $2.345 billion; 
Percentage change FY 2010 enacted through FY 2012 requested: 2.9%. 

Appropriation: Operations Support; 
FY 2008	enacted: $3.841 billion; 
FY 2009	enacted: $3.867 billion; 
FY 2010	enacted: $4.084 billion; 
FY 2011 requested: $4.108 billion; 
FY 2011	annualized CR: $4.084 billion; 
FY 2012 requested[A]: $4.621 billion; 
Percentage change FY 2010 enacted through FY 2012 requested: 13.1%. 

Appropriation: BSM; 
FY 2008	enacted: $267 million; 
FY 2009	enacted: $230 million; 
FY 2010	enacted: $264 million; 
FY 2011 requested: $387 million; 
FY 2011	annualized CR: $264 million; 
FY 2012 requested[A]: $334 million; 
Percentage change FY 2010 enacted through FY 2012 requested: 26.4%. 

Appropriation: HITCA; 
FY 2008	enacted: $15 million; 
FY 2009	enacted: $15 million; 
FY 2010	enacted: $16 million; 
FY 2011 requested: $19 million; 
FY 2011	annualized CR: $16 million; 
FY 2012 requested[A]: $18 million; 
Percentage change FY 2010 enacted through FY 2012 requested: 12.5%. 

Appropriation: Subtotal; 
FY 2008	enacted: $11.095 billion; 
FY 2009	enacted: $11.523 billion; 
FY 2010	enacted: $12.146 billion; 
FY 2011 requested: $12.633 billion; 
FY 2011	annualized CR: $12.146 billion; 
FY 2012 requested[A]: $13.284 billion; 
Percentage change FY 2010 enacted through FY 2012 requested: 9.4%. 

Other resources available for obligation: 
FY 2008	enacted: $566 million; 
FY 2009	enacted: $390 million; 
FY 2010	enacted: $539 million; 
FY 2011 requested: $444 million; 
FY 2011	annualized CR: $526 million; 
FY 2012 requested[A]: $384 million; 
Percentage change FY 2010 enacted through FY 2012 requested: (29%). 

Total funding available for obligation: 
FY 2008	enacted: $11.661 billion; 
FY 2009	enacted: $11.913 billion; 
FY 2010	enacted: $12.686 billion; 
FY 2011 requested: $13.077 billion; 
FY 2011	annualized CR: $12.672 billion; 
FY 2012 requested[A]: $13.668 billion; 
Percentage change FY 2010 enacted through FY 2012 requested: 7.7%. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications. 

Note: Dollars are nominal and not adjusted for inflation and numbers 
may not add due to rounding. 

[A] Includes an approximately $402 million adjustment to reach the FY 
2011 President policy level, minus salary increases. 

[End of table] 

Other Resources Available for Obligation, FY 2008 through FY 2012: 

Table 2: Other Resources Available for Obligation, FY 2008 through FY 
2010 Actual; FY 2011 Projected; FY 2011 Annualized CR Projected; and 
FY 2012 Projected: 
								
Other resources: User fees; 
FY 2008	actual:	$247 million; 
FY 2009	actual:	$166 million; 
FY 2010	actual:	$176 million; 
FY 2011	projected: $194 million; 
FY 2011	annualized CR projected: $204 million; 
FY 2012	projected: $204 million. 

Other resources: Offsetting collections--reimbursables; 
FY 2008	actual:	$140 million; 
FY 2009	actual:	$114 million; 
FY 2010	actual:	$138 million; 
FY 2011	projected: $145 million; 
FY 2011	annualized CR projected: $137 million; 
FY 2012	projected: $138 million. 

Other resources: Available multi-year/no-year funds; 
FY 2008	actual:	$137 million; 
FY 2009	actual:	$86 million; 
FY 2010	actual:	$196 million; 
FY 2011	projected: $105 million; 
FY 2011	annualized CR projected: $185 million; 
FY 2012	projected: $41 million. 

Other resources: Recoveries; 
FY 2008	actual:	$5 million; 
FY 2009	actual:	$0.89 million; 
FY 2010	actual:	$6 million; 
FY 2011	projected: N/A; 
FY 2011	annualized CR projected: N/A; 
FY 2012	projected: N/A. 

Other resources: 50 percent carryover; 
FY 2008	actual:	$19 million; 
FY 2009	actual:	$16 million; 
FY 2010	actual:	$36 million; 
FY 2011	projected: N/A; 
FY 2011	annualized CR projected: N/A; 
FY 2012	projected: N/A. 

Other resources: Transfers in/out; 
FY 2008	actual:	$18 million; 
FY 2009	actual:	$8 million; 
FY 2010	actual:	($12 million); 
FY 2011	projected: N/A; 
FY 2011	annualized CR projected: N/A; 
FY 2012	projected: N/A. 

Total other resources available for obligation: 
FY 2008	actual:	$566 million; 
FY 2009	actual:	$390 million; 
FY 2010	actual:	$539 million; 
FY 2011	projected: $444 million; 
FY 2011	annualized CR projected: $526 million; 
FY 2012	projected: $384 million. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications. 

Note: Dollars are nominal and not adjusted for inflation and numbers 
may not add due to rounding. N/A means data not yet available.							 

[End of table] 

Full-Time Equivalents (FTE) Trends: 
	
Under the budget request, IRS's overall FTEs would increase by more 
than 5 percent for FY 2012 over FY 2010 levels, with the largest 
increases in Enforcement and Operations Support. 

* Enforcement would increase by 8 percent (4,182 FTEs), and, 

* Operations Support would increase by approximately 7 percent (880
FTEs). 
	
This is a 6 percent increase in FTE staff since 2010 and an 10 percent 
increase since 2008. 

Operations Support is the second largest appropriations account. It 
has, however, the third largest FTE count because it includes non-FTE 
costs such as rent, IT hardware, and contractor support. 

FTEs Funded from Appropriation Accounts, FY 2008 through FY 2012: 

Figure 2: FY 2008 through FY 2010 FTEs, FY 2011 Annualized CR level 
FTEs, and FY 2012 Requested FTEs by Appropriation: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2008; 
Enforcement: 47,596; 
Taxpayer Services: 31,949; 
Operations Support: 12,495; 
BSM: 358; 
HITCA: 17. 

Fiscal year: 2009; 
Enforcement: 48,952; 
Taxpayer Services: 32,622; 
Operations Support: 12,267; 
BSM: 333; 
HITCA: 15. 

Fiscal year: 2010; 
Enforcement: 50,983; 
Taxpayer Services: 31,063; 
Operations Support: 12,372; 
BSM: 333; 
HITCA: 15. 

Fiscal year: 2011; 
Enforcement: 50,983; 
Taxpayer Services: 31,063; 
Operations Support: 12,372; 
BSM: 333; 
HITCA: 15. 

Fiscal year: 2012; 
Enforcement: 54,582; 
Taxpayer Services: 31,686; 
Operations Support: 13,142; 
BSM: 453; 
HITCA: 15. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications. 

Note: FY 2011 data is the annualized CR level, which is about 4 
percent less than the FY 2011 request. 

[End of figure] 

Table 3: IRS FY 2008 through FY 2010 FTEs, FY 2011 Requested FTEs, FY 
2011 Annualized CR FTEs, and FY 2012 Requested FTEs: 

Appropriation:	Enforcement; 
FY 2008 actual:	46,431; 
FY 2009 actual:	47,361; 
FY 2010 actual:	50,400; 
FY 2011 requested: 52,863; 
FY 2011	annualized CR[A]: 50,983; 
FY 2012 requested: 54,582; 
Percentage change FY 2010 through FY 2012 requested: 8.3% 

Appropriation:	Taxpayer Services; 
FY 2008 actual:	31,487; 
FY 2009 actual:	32,422; 
FY 2010 actual:	31,607; 
FY 2011 requested: 30,668; 
FY 2011	annualized CR[A]: 31,063; 
FY 2012 requested: 31,686; 
Percentage change FY 2010 through FY 2012 requested: less than 1.0% 

Appropriation:	Operations Support; 
FY 2008 actual:	12,079; 
FY 2009 actual:	12,101; 
FY 2010 actual:	12,262; 
FY 2011 requested: 12,384; 
FY 2011	annualized CR[A]: 12,372; 
FY 2012 requested: 13,142; 
Percentage change FY 2010 through FY 2012 requested: 7.2%. 

Appropriation:	BSM; 
FY 2008 actual:	347; 
FY 2009 actual:	322; 
FY 2010 actual:	337; 
FY 2011 requested: 489; 
FY 2011	annualized CR[A]: 333; 
FY 2012 requested: 453; 
Percentage change FY 2010 through FY 2012 requested: 34.4%. 

Appropriation:	HITCA; 
FY 2008 actual:	10; 
FY 2009 actual:	10; 
FY 2010 actual:	12; 
FY 2011 requested: 15; 
FY 2011	annualized CR[A]: 15; 
FY 2012 requested: 15; 
Percentage change FY 2010 through FY 2012 requested: 25%. 

Appropriation:	Subtotal; 
FY 2008 actual:	90,354; 
FY 2009 actual:	92,216; 
FY 2010 actual:	34,618; 
FY 2011 requested: 96,419; 
FY 2011	annualized CR[A]: 94,766; 
FY 2012 requested: 99,878; 
Percentage change FY 2010 through FY 2012 requested: 5.6%. 

Other FTEs: 
FY 2008 actual:	1,331; 
FY 2009 actual:	1,153; 
FY 2010 actual:	752; 
FY 2011 requested: 961; 
FY 2011	annualized CR[A]: 659; 
FY 2012 requested: 659; 
Percentage change FY 2010 through FY 2012 requested: (12.4%). 

Total FTEs: 
FY 2008 actual:	91,685; 
FY 2009 actual:	93,369; 
FY 2010 actual:	95,370; 
FY 2011 requested: 97,380; 
FY 2011	annualized CR[A]: 95,425; 
FY 2012 requested: 100,537; 
Percentage change FY 2010 through FY 2012 requested: 5.4%. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications. 

[A] IRS reported FY 2011 FTEs assuming an annualized CR, but officials 
told us it cannot maintain that level without a funding increase. 

[End of table] 

FTEs Funded from Reimbursables, User Fees, Transfers, and Available 
Multi-Year/No-Year Funds, FY 2008 through FY 2012: 

Table 4: FY 2008 through FY 2010 FTEs Actual, FY 2011 Projected FTEs, 
FY 2011 Annualized CR FTEs, and FY 2012 Projected FTEs: 

Other FTEs: Offsetting collections--reimbursables; 
FY 2008 actual:	1,038; 
FY 2009 actual:	792; 
FY 2010 actual:	659; 
FY 2011 projected: 961; 
FY 2011	annualized CR: 659; 
FY 2012 projected: 659. 

Other FTEs: User fees; 
FY 2008 actual:	0; 
FY 2009 actual:	273; 
FY 2010 actual:	93; 
FY 2011 projected: 0; 
FY 2011	annualized CR: 0; 
FY 2012 projected: 0. 

Other FTEs: Transfers in/out; 
FY 2008 actual:	293; 
FY 2009 actual:	0; 
FY 2010 actual:	FY 2010 actual:	0; 
FY 2011 projected: 0; 
FY 2011	annualized CR: 0; 
FY 2012 projected: 0. 

Other FTEs: Available multi-year/no-year funds; 
FY 2008 actual:	0; 
FY 2009 actual:	88; 
FY 2010 actual:	0; 
FY 2011 projected: 0; 
FY 2011	annualized CR: 0; 
FY 2012 projected: 0. 

Other FTEs: 
FY 2008 actual:	1,331; 
FY 2009 actual:	1,153; 
FY 2010 actual:	752; 
FY 2011 projected: 961; 
FY 2011	annualized CR: 659; 
FY 2012 projected: 659. 

Source: FY 2008 through FY 2012 IRS Congressional Budget 
Justifications.	 

[End of table] 

IRS Projected $190 Million in Savings and Efficiencies in FY 2012: 

Table 5: Savings and Efficiencies, FY 2012: 

Reduce IT infrastructure: 
Taxpayer Services: 0;
Enforcement: 0;
Operations Support: $75.0 million; 
BSM: 0;
HITCA: 0;
Total: $75.0 million. 

Reduce training, travel, and programs: 
Taxpayer Services: $9.9 million; 
Enforcement: $9.4 million; 
Operations Support: $5.9 million; 
BSM: 0;
HITCA: $1.2 million; 
Total: $27.4 million. 

Increase E-File savings: 
Taxpayer Services: $21.4 million; 
Enforcement: 0;
Operations Support: $1.0 million; 
BSM: 0;
HITCA: 0;
Total: $22.4 million. 

Nonrecurring costs reductions: 
Taxpayer Services: 0;
Enforcement: 0;
Operations Support: $22.1 million; 
BSM: 0;
HITCA: 0;
Total: $22.1 million. 

Reduce contracts: 
Taxpayer Services: $4.5 million; 
Enforcement: $0.3 million; 
Operations Support: $15.9 million; 
BSM: 0;
HITCA: 0;
Total: $20.8 million. 

Reduce administrative expenses: 
Taxpayer Services: $5.6 million; 
Enforcement: $8.3 million; 
Operations Support: $0.5 million; 
BSM: 0;
HITCA: 0;
Total: $14.4 million. 

Eliminate lockbox fees: 
Taxpayer Services: 0;
Enforcement: $4.0 million; 
Operations Support: 0;
BSM: 0;
HITCA: 0;
Total: $4.0 million. 

Reduce certain mailings: 
Taxpayer Services: 0;
Enforcement: 0;
Operations Support: $4.0 million; 
BSM: 0;
HITCA: 0;
Total: $4.0 million. 

Total savings and efficiencies: 
Taxpayer Services: $41.4 million; 
Enforcement: $22.0 million; 
Operations Support: $124.4 million; 
BSM: 0;
HITCA: $1.2 million; 
Total: $190.0 million. 

Source: FY 2012 IRS Congressional Budget Justification Numbers may not 
add due to rounding. 

[End of table] 

IRS Expanded Efforts to Identify Savings and Efficiencies, but Did Not 
Systematically Review All Spending: 

To develop FY 2012 budget, the IRS Commissioner directed business 
units to perform a "bottom up" review—-including an employee 
suggestion component. According to IRS budget officials, most of the 
$115 million in non-IT savings shown in Table 5 were identified 
through this process. These savings were about one percent of total 
non-IT spending ($10.6 billion). 

The $75 million in IT infrastructure savings shown in Table 5 were 
identified, according to IRS IT officials, through a systematic review 
of contract and other IT activities. These officials said the
identified opportunities to streamline costs for providing IT services 
while maintaining service levels. One result was the elimination of 
unused software licenses. IRS also applied leading practices in 
systems development which resulted in additional savings. Total 
savings achieved were about three percent of total IT spending ($2.7 
billion). 

IRS budget officials told us that systematic reviews--such as the IT 
review--are not conducted agency wide because of costs. IT officials 
said that IRS devoted about five FTEs to their review. 

Best practices suggest that agencies routinely identify savings and 
efficiencies.[Footnote 9] 

By not applying the more systematic and productive IT approach agency 
wide, IRS might be missing opportunities to realize savings and 
efficiencies. The cost of the systematic approach could be reduced by 
not reviewing each budget area annually. 

Recommendation: IRS should further expand its efforts to 
systematically identify savings and efficiencies as part of its budget 
development process on a periodic, but not necessarily annual, basis. 

IRS Realized Efficiencies in Excess of Projections: 

* IRS implemented our recommendation to provide information comparing 
projected to actual savings. 

* IRS's approach to projecting savings is conservative and consistent 
with GAO guidance.[Footnote 10] 

* IRS realized 7 percent ($5 million) more than projected from 
increased e-filing and IT infrastructure and process improvements. 

* The budget justification did not explain how excess savings were 
used. IRS officials stated the information was available. 

* Our prior work has emphasized the importance of transparency in 
agencies' budget presentations.[Footnote 11] 

* Knowing how an agency spent excess savings, particularly in years 
when the excess is significant, could help Congress assess budgetary 
needs in the future. 

Recommendation: IRS 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. 

FY 2012 Budget Justification Includes 17 New Program Initiatives: 

The 17 new program initiatives have a total IRS estimated cost of 
approximately $839 million. 

* Enforcement initiatives: $606 million; 

* Taxpayer Service initiatives: $114 million; 

* Infrastructure initiatives: $119 million. 

IRS estimated an ROI projection for six of the Enforcement initiatives. 

Enforcement Initiatives: 

Table 6: Enforcement Initiatives Expected to Produce an ROI, Costs, 
Revenue, and Purpose: 

Enforcement initiative: Increase international service and enforcement; 
Estimated Cost (FY 2012): $72.6	
Estimated Cost (FY 2014): $57.1	
Estimated Revenue FY 2014 and ROI[A]: $467.1; Projected ROI: 8.2 to 1; 
Purpose: Implement changes required by Foreign Account Tax Compliance 
Act (FATCA). 

Enforcement initiative: Increase collection coverage; 
Estimated Cost (FY 2012): $52.0	
Estimated Cost (FY 2014): $45.2	
Estimated Revenue FY 2014 and ROI[A]: $398.3; Projected ROI: 8.8 to 1; 
Purpose: Expand work on the collection inventory and improve 
collection processes. 

Enforcement initiative: Ensure accurate delivery of tax credits; 
Estimated Cost (FY 2012): $ 51.0	
Estimated Cost (FY 2014): $45.0	
Estimated Revenue FY 2014 and ROI[A]: $183.3; Projected ROI: 4.1 to 1;	
Purpose: Improve delivery of existing credits. Note: The full 
estimated cost of this initiative is $260.3 million[B]. 

Enforcement initiative: Implement merchant card and basis reporting; 
Estimated Cost (FY 2012): $35.8	
Estimated Cost (FY 2014): $30.8	
Estimated Revenue FY 2014 and ROI[A]: $185.7; Projected ROI: 6 to 1; 	
Purpose: Implement merchant card payment and third party 
reimbursements and basis reporting on security sales. 

Enforcement initiative: Increase coverage to	address tax law changes 
and other compliance issues; 
Estimated Cost (FY 2012): $29.8	
Estimated Cost (FY 2014): $27.3	
Estimated Revenue FY 2014 and ROI[A]: $80.8; Projected ROI: 3 to 1;	
Purpose: Compliance programs for new provisions such as direct-pay 
bonds, tax-exempt hospitals, fees on manufacturers and importers of 
prescription drugs, the excise tax on indoor tanning, etc. Note: The 
full cost of this initiative is $96.7 million[B]. 

Enforcement initiative: Administer new statutory reporting 
requirements; 
Estimated Cost (FY 2012): $2.6
Estimated Cost (FY 2014): $2.4	
Estimated Revenue FY 2014 and ROI[A]: $16.9;	Projected ROI: 7 to 1;		
Purpose: Implement new 1099 reporting requirements and health coverage 
information reporting associated with PPACA. Note: The full estimated 
cost of this initiative is $58.5 million[B]. 

Enforcement initiative: Total; 
Estimated Cost (FY 2014): $243.7	
Estimated Revenue FY 2014 and ROI[A]: $207.8	
Estimated Revenue FY 2014 and ROI[A]: $1,332.1; Projected ROI: 6.4 to 1. 

Source: GAO analysis of IRS's FY 2012 Congressional Budget 
Justification. 

[A] FY 2014 projected revenue when staff reach full potential. 

[B] For the purpose of ROI calculation, capital IT expenses related to 
the implementation of PPACA and nonrevenue-producing portions of 
initiatives are excluded from this table. 

[End of table] 

IRS Is Making Progress in Its Ability to Provide Actual ROI 
Information: 

* We previously recommended that IRS provide Congress with information 
comparing projected ROI information to actual R01.[Footnote 12] 

* In response, IRS developed a preliminary means of determining actual 
revenue collected from enforcement initiatives proposed in FY 2009. 

* Initial comparisons of actual to projected revenue show revenue was 
much higher than projected. IRS officials told us actual revenue data 
included outliers—-one time, large-scale revenue collection efforts—-
that were not included in projections. We did not determine the 
reliability of the figures. 

* IRS's ROI calculations have limitations that reflect the challenges 
of estimating ROIs. For example, they do not include benefits of 
improved voluntary compliance. In addition, the "investment" or costs 
should ideally recognize not just IRS costs but any costs borne by 
others. IRS's ROI estimates provide useful information but, given the 
limits of current data, are not complete estimates of benefits and 
costs. 

Taxpayer Service Initiatives: 

Table 7: Taxpayer Service Initiatives, Costs, and Expected Benefits: 

Taxpayer Service initiative: Improve taxpayer service;	
Costs: $81.3 million; 
Expected benefits: Staffing to address rising demand and increase the 
Customer Service Representative Level of Service (LOS) from the 
planned target of 71 percent in	FY 2010 to 80 percent in FY 2012 and 
handle increased calls from new tax law provisions, including PPACA. 
Note: increasing the LOS to 80 percent assumes that IRS also receives 
the $25.9 million requested in the FY 2011 budget justification.	 

Taxpayer Service initiative: Expand online options through IRS.gov 
improvements; 
Costs: $33.0 million; 
Expected benefits: Moves high-volume transactions to IRS.gov, 
improving self-service, reducing taxpayer burden, increasing 
compliance, reducing costs, and improving security.	 

Taxpayer Service initiative: Total;	
Costs: $114.3 million. 

Source: IRS's FY 2012 Congressional Budget Justification. 

[End of table] 

Related to these initiatives, GAO has recently recommended that IRS 
establish a customer service telephone standard and has reported that 
visits to IRS.gov have increased. 2010 Tax Filing Season: IRS's 
Performance Improved in Some Key Areas, but Efficiency Gains Are 
Possible in Others, GA0-11-111 (Washington, D.C.: Dec. 16, 2010). 

Other Enforcement, Infrastructure, and IT Initiatives: 

Table 8: Non-R01 Initiatives, Cost and Purpose and Related GAO Work: 

Program initiative: Continue migration from aging tax administration 
system	
Cost: $333.6 million; 
Purpose and Related GAO work: Funding for several ongoing Business 
Systems Modernization (BSM) projects; GAO-08-420, Business Systems 
Modernization: Internal Revenue Service's Fiscal Year 2008 Expenditure 
Plan. 

Program initiative: Implement individual coverage requirement and 
employer responsibility payments;	
Cost: $62.5 million; 
Purpose and Related GAO work: Fund the development of IT and 
infrastructure related to PPACA. 

Program initiative: Upgrade Integrated Financial System;	
Cost: $27.5 million; 
Purpose and Related GAO work: Upgrade for financial system. 

Program initiative: Leverage return preparer program to reduce 
noncompliance;	
Cost: $16.6 million;	
Purpose and Related GAO work: Enforcement of preparer compliance with 
IRS rules; GAO-06-563T, Paid Tax Return Preparers: In a Limited Study, 
Chain Preparers Made Serious Errors. 

Program initiative: Enhance physical security for federal employees;	
Cost: $15.5 million;	
Purpose and Related GAO work: Upgrade physical security of IRS 
facilities; GA0-10-873. Building Security: New Federal Standards Hold 
Promise, but Could Be Strengthened to Better Protect Leased Space. 

Program initiative: Enhance security and disaster recovery systems 
capability;	
Cost: $12.0 million;	
Purpose and Related GAO work: Improve critical disaster recovery 
capabilities for systems' GAO-11-308, Information Security: IRS Needs 
to Enhance Internal Control over Financial Reporting and Taxpayer 
Data, pg. 19. 

Program initiative: Address appeals workload growth;	
Cost: $9.1 million;	
Purpose and Related GAO work: Increase staffing to handle rising 
appeals inventories; GAO-07-112, Tax Administration: Little Evidence 
of Procedural	Errors in Collection Due Process Appeal Cases, but 
Opportunities Exist to Improve the Program. 

Program initiative: Implement uncertain tax position reporting 
requirements;	
Cost: $4.1 million;	
Purpose and Related GAO work: Provide guidance and certainty on tax 
positions; GAO-11-278, High-Risk Series: An Update, pg. 139.
		
Program initiative: Leveraging data to improve compliance;	
Cost: $1.4 million;	
Purpose and Related GAO work: Capitalize on recent increases in data 
reported to IRS. 

Program initiative: Total; 
Cost: $482.30 million.	 

Source: GAO analysis of FY 2012 IRS Congressional Budget Justification 
and previous GAO reports. 

[End of table] 

Legislative Proposals: 

The budget justification includes 21 legislative proposals which, if 
enacted, could result in over $10 billion in savings or increased 
revenues over 10 years. 

Some of the proposals are related to prior GAO work: 

1. Provide Treasury with the regulatory authority to require 
electronic filing of all Form 5500 Annual Report information. 

* GAO-05-491, Private Pensions: Government Actions Could Improve the 
Timeliness and Content of Form 5500 Pension Information. 

2. Require taxpayers who prepare their returns electronically, but 
file their returns on paper, to print their returns with a 2-D bar 
code. 

* GAO-08-38, Tax Administration: 2007 Filing Season Continues Trend of
Improvement, but Opportunities to Reduce Costs and Increase Tax 
Compliance Should be Evaluated. pp. 15-16. 

3. Allow IRS to collect data from the U.S. Bureau of Prisons to reduce 
fraudulent claims. 

* GAO has previously published reports citing the benefits of sharing 
data with other agencies to better ensure taxpayers are meeting their 
tax obligations, including GA0-06-100, Taxpayer Information: Options 
Exist to Enable Data Sharing Between IRS and USCIS but Each Presents 
Challenges. 

4. Allow IRS to absorb credit and debit card processing fees for 
certain tax payments. 

* GAO-10-11, Budget Issues: Electronic Processing of Non-IRS 
Collections Has Increased but Better Understanding of Cost Structure 
Is Needed. 

5. Increase the penalty imposed on paid preparers who fail to comply 
with Earned Income Tax Credit due diligence requirements. 

* GAO-06-563T Paid Tax Return Preparers: In a Limited Study, Chain 
Preparers Made Serious Errors. 

IRS Reported Cost Estimates for Some Legislative Proposals: 

* IRS implemented our prior recommendation to provide more information 
about the costs of legislative proposals. It projected that aggregate 
implementation costs for 14 proposals would be $50.4 million over 3 
years.[Footnote 13] Cost information, however, exists for each 
individual proposal. 

* Congress often considers individual legislative proposals. Without 
knowing the estimated costs to implement an individual proposal, 
Congress is left without important information when weighing proposals. 

* IRS officials cautioned that there is some uncertainty with cost 
estimates and noted that enacted legislation can be different from 
initial proposals. 

Recommendation: IRS should provide cost estimates for individual 
legislative proposals in future budget justifications. 

IT Spending is $2.67 Billion of the IRS Budget Request: 

IRS's IT funding is primarily in two appropriations accounts: 

* Operations Support: $2.3 billion; 

* BSM: $333.6 million. 

IRS funds 155 IT systems. Of these, about 31 are considered "major," 
each having an overall life-cycle cost of greater than $50 million or 
an annual budget of greater than $5 million. The other 124 systems are 
"non-major." 

Top IT Investments:	 

According to the IRS Enterprise Transition Plan 2010, the top IT 
investments based on funding allocation and mission impact are: 

* Customer Account Data Engine (CADE) 2 — $199 million; 

* Modernized e-File (MeF) — $34 million; 

* IRS Portal Strategy — $113 million; 

* Information Returns and Document Matching (IRDM) — $23 million; 

* Implement Return Review Program (RRP) — $21 million; 

* Enterprise Data Access Strategy (EDAS) — Integrated Production Mode 
(IPM) — $7 million. 

IRS Summarizes Cost and Schedule Performance for BSM, but Not for 
Other Major Systems: 

* The budget justification includes information on the percentage of 
BSM projects within 10 percent of initial cost and schedule goals, but 
not for major IT projects in Operations Support. 

* IRS has detailed cost and schedule performance information for non-
BSM major IT projects, but has not been directed to include it in the 
budget. 

* Congressional stakeholders we met with stated that having a summary 
of cost and schedule performance data for major IT systems in
Operations Support would be helpful for oversight. 

Recommendation: IRS should include measures of cost and schedule 
performance for major IT systems in Operations Support, such as it 
does for BSM. 

Cost of Implementing PPACA:	 

The total FY 2012 request for PPACA is $473.4 million. 

* PPACA costs are spread over five initiatives, under 3 appropriation 
accounts. 

* PPACA costs by initiative are labeled; PPACA costs by appropriation 
are not shown. 

* Total PPACA costs are not shown, but can be calculated by adding the 
costs in the five initiatives. 

IRS received funding to implement the PPACA in FY 2010 and FY 2011 
from the Department of Health and Human Service's (HHS) Health 
Insurance Reform Implementation Fund (HIRIF). IRS does not plan to use 
HIRIF funds after FY 2011. According to IRS officials, it received: 

* $20 million in FY 2010 and; 

* $72 million for first two quarters in FY 2011. Officials expect to 
request more for the remainder of FY 2011, but do not plan to use 
HIRIF funds after FY 2011. 
 
PPACA Costs Are Spread Across Five Initiatives and Three Appropriation 
Accounts: 

Table 9: FY 2012 PPACA Costs and FTEs: 

FY 2012 initiatives with PPACA costs: Improve taxpayer service; 
Taxpayer Services, Dollars: $20.7 million; 
Taxpayer Services, FTE: 150; 
Enforcement, Dollars: 0; 
Enforcement, FTE: 0; 
Operations Support[A], Dollars: $30.6 million; 
Operations Support[A], FTE: 0; 
Total, Dollars: $51.3 million; 
Total, FTE: 150. 

FY 2012 initiatives with PPACA costs: Increase coverage to address tax 
law changes and other compliance issues; 
Taxpayer Services, Dollars: $4.9 million; 
Taxpayer Services, FTE: 46;	
Enforcement, Dollars: $22.8 million; 
Enforcement, FTE: 174;
Operations Support[A], Dollars: $45.9 million; 
Operations Support[A], FTE: 143;	
Total, Dollars: $73.6 million; 	
Total, FTE: 363. 

FY 2012 initiatives with PPACA costs: Ensure accurate delivery of tax 
credits; 
Taxpayer Services, Dollars: $4.9 million; 
Taxpayer Services, FTE: 49;	
Enforcement, Dollars: $23.0 million; 		
Enforcement, FTE: 233;
Operations Support[A], Dollars: $199.5 million; 
Operations Support[A], FTE: 222;	
Total, Dollars: $227.5 million; 	
Total, FTE: 504. 

FY 2012 initiatives with PPACA costs: Administer new statutory 
reporting requirements[B]; 
Taxpayer Services, Dollars: $1.1 million; 		
Taxpayer Services, FTE: 7;
Enforcement, Dollars: $5.1 million; 
Enforcement, FTE: 48;
Operations Support[A], Dollars: $52.4 million; 	
Operations Support[A], FTE: 132; 
Total, Dollars: $58.5 million; 	
Total, FTE: 187. 

FY 2012 initiatives with PPACA costs: Implement individual coverage 
requirement and	employer responsibility payments; 
Taxpayer Services, Dollars: 0; 
Taxpayer Services, FTE: 0;
Enforcement, Dollars: 0; 
Enforcement, FTE: 0;
Operations Support[A], Dollars: $62.5 million; 	
Operations Support[A], FTE: 65	
Total, Dollars: $62.5 million; 	
Total, FTE: 65.
								
FY 2012 initiatives with PPACA costs: Total FY 2012 PPACA initiatives; 	
Taxpayer Services, Dollars: $31.6 million; 	
Taxpayer Services, FTE: 252;	
Enforcement, Dollars: $50.9 million; 	
Enforcement, FTE: 455;	
Operations Support[A], Dollars: $390.9 million; 
Operations Support[A], FTE: 562;
Total, Dollars: $473.4 million; 
Total, FTE: 1,269. 

Source: IRS FY 2012 Congressional Budget Justification and GAO 
analysis of IRS data. 

[A] PPACA costs by appropriation were provided through supplemental 
data from IRS. 

[B] The administration has proposed to repeal the PPACA provision to 
implement New 1099 Reporting Requirements" from the initiative 
Administer New Statutory Reporting Requirements, estimated to be $23.3 
million. Congress approved H.R. 4 and the bill is currently in front 
of the President for signature. If enacted, H.R. 4 would repeal the 
1099 reporting requirements in PPACA. 

[End of table] 

Most PPACA Costs Are for Contractors, Software, Equipment, and 
Infrastructure: 

Table 10: FY 2012 Non-FTE and FTE Related PPACA Costs by Program 
Initiative: 

FY 2012 PPACA Program initiatives: Improve taxpayer service; 
Non-FTE Costs: 
Contractor services: 0; 
Software: 0; 
Computer equipment: 0; 
Facilities and	infrastructure: $29.1 million;
Total: $29.1 million;
FTE Costs: 
Total: $22.2 million;	
Total PPACA costs: $51.3 million. 

FY 2012 PPACA Program initiatives: Increase coverage to address tax 
law changes and other compliance issues; 
Non-FTE Costs: 
Contractor services: $12.1 million;	
Software: $0.750 million;	
Computer equipment: $7.5 million;		
Facilities and	infrastructure: 0; 
Total: $20.3 million;	
FTE Costs: 
Total: $53.3 million;	
Total PPACA costs: $73.6 million.
							
FY 2012 PPACA Program initiatives: Ensure accurate delivery of tax 
credits;	
Non-FTE Costs: 
Contractor services: $112.0 million;	
Software: $10.9 million;	
Computer equipment: $17.0 million;		
Facilities and	infrastructure: $13.8 million;
Total: $153.6 million;	
FTE Costs: 
Total: $73.8 million;	
Total PPACA costs: $227.5 million. 

FY 2012 PPACA Program initiatives: Administer new statutory reporting 
requirements;	
Non-FTE Costs: 
Contractor services: $19.9 million;	
Software: $3.2 million;	
Computer equipment: $5.0 million;	
Facilities and	infrastructure: 0; 
Total: $28.1 million;		
FTE Costs: 
Total: $30.4 million;	
Total PPACA costs: $58.5 million. 

Implement individual coverage requirement and employer responsibility; 
payments; 
Non-FTE Costs: 
Contractor services: $43.0 million;	
Software: $1.0 million;	
Computer equipment: $7.0 million;			
Facilities and	infrastructure: 0; 
Total: $51.1 million;
FTE Costs: 
Total: $11.4 million;	
Total PPACA costs: $62.5 million. 

Total FY 2012 PPACA non-FTE related cost:	
Non-FTE Costs: 
Contractor services: $187.0 million;	
Software: $15.9 million;	
Computer equipment: $36.5 million;			
Facilities and	infrastructure: $42.9 million;
Total: $282.2 million;
FTE Costs: 
Total: $191.1 million;	
Total PPACA costs: $473.4 million. 

Source: IRS FY2012 Congressional Budget Justification and GAO analysis 
of IRS data. Note: Numbers may not add due to rounding.	 

[End of table] 

IRS Has Made Progress In Implementing Recommendations From Prior GAO 
Budget Work: 

RS changed its budget justification so it: 

* provides information comparing estimated prior year savings to 
actuals, 

* provides the aggregate costs of most legislative proposals, and, 

* provides a brief description of performance measures used in the 
budget.[Footnote 14] 

IRS is making progress in its ability to provide actual ROI 
information.[Footnote 15] 

All of these changes will help improve transparency and provide 
decision makers with better information. 

Open Recommendations from Past Budget Reviews: 

* Provide additional information, which could be qualitative if 
necessary to avoid losing existing reprogramming flexibility, about 
the program activities in the budget justification to better indicate 
IRS's priorities.[Footnote 16] 

* Explain in the budget justification noteworthy changes in 
performance goals that reflect changes from previous performance and 
describe the impact on funding). 

* Extend the use of ROI in future budget proposals to include major 
enforcement programs.[Footnote 17] 

Open Matters for Congress and Recommendations to IRS Could Result in 
Potential Savings or Increased Revenues: 

* Twenty-four GAO reports contain 7 matters for Congress and 77 
recommendations to IRS: 
- 39 increase revenue; 14 increase both savings and revenue; and 31 
have indirect financial benefits. 

* For example, if IRS implemented our recommendations to help make 
taxpayers better aware of what real estate taxes are nondeductible IRS 
could increase revenue by tens or hundreds of million dollars per 
year. [Footnote 18] 

[End of Appendix I, Briefing Slides] 

Appendix II: List of Open Matters for Congress and Recommendations to 
IRS That Could Result in Potential Savings or Increased Revenues: 

Table 1: List of Open Matters for Congress and Recommendations to IRS 
That Could Result In Potential Savings or Increased Revenues: 

Matter for congressional consideration or recommendation for executive 
action: Congress may wish to consider requiring IRS to periodically 
adjust for inflation, and round appropriately, the fixed dollar 
amounts of the civil penalties to account for the decrease in real 
value over time and so that penalties for the same infraction are 
consistent over time. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-07-1062#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Inflation Has Significantly Decreased the Real Value of Some Penalties 
(07-1062). 

Matter for congressional consideration or recommendation for executive 
action: The Secretary of the Treasury should ensure that the tax gap 
strategy includes (1) a segment on improving sole proprietor 
compliance that is coordinated with broader tax gap reduction efforts 
and (2) specific proposals, such as the options we identified, that 
constitute an integrated package. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-07-1014#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: A Strategy 
for Reducing the Gap Should Include Options for Addressing Sole 
Proprietor Noncompliance (07-1014). 

Matter for congressional consideration or recommendation for executive 
action: The Acting Commissioner of Internal Revenue should direct the 
appropriate officials to determine actions needed to require software 
vendors to include bar codes on printed individual income tax returns 
and the cost of those actions. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-38#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Administration: 
2007 Filing Season Continues Trend of Improvement, but Opportunities 
to Reduce Costs and Increase Tax Compliance Should be Evaluated (08-
38). 

Matter for congressional consideration or recommendation for executive 
action: The Acting Commissioner of Internal Revenue should direct the 
appropriate officials to determine how much electronic filing would 
have to increase, either through electronic filing mandates or bar 
coding, for the benefits of transcribing all remaining paper returns 
to exceed the costs. (To see the current status of this recommendation 
view: [hyperlink, 
http://www.gao.gov/products/GAO-08-38#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Administration: 
2007 Filing Season Continues Trend of Improvement, but Opportunities 
to Reduce Costs and Increase Tax Compliance Should be Evaluated (08-
38). 

Matter for congressional consideration or recommendation for executive 
action: The Acting Commissioner of Internal Revenue should direct the 
appropriate officials to determine the benefits, in terms of 
processing costs and improved enforcement, of having all return 
information available electronically. (To see the current status of 
this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-38#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Administration: 
2007 Filing Season Continues Trend of Improvement, but Opportunities 
to Reduce Costs and Increase Tax Compliance Should be Evaluated (08-
38). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should extend the use of 
return on investment (ROI) in future budget proposals to include major 
enforcement programs. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-567#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Internal Revenue 
Service: Fiscal Year 2009 Budget Request and Interim Performance 
Results of IRS's 2008 Tax Filing Season (08-567). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should develop a process 
to monitor collection actions taken by revenue officers against 
egregious payroll tax offenders to ensure collection actions 
appropriately utilize all available collection tools contained in the 
Internal Revenue Manual. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should develop and 
implement procedures to expeditiously file a Notice of Federal Tax 
Lien against property as soon as possible after payroll tax debt is 
identified (including cases in the queue awaiting assignment) and 
ensure liens are filed on both businesses with unpaid payroll taxes 
and owners/officers assessed a TFRP. (To see the current status of 
this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should develop and 
implement procedures to monitor and report on revenue officers' 
compliance with the new TFRP assessment time frames to ensure revenue 
officers are making TFRP determinations and assessments in a timely 
manner. (To see the current status of this recommendation view: 
[hyperlink, http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should develop 
performance goals and measures that specifically evaluate the 
accumulation of unpaid payroll taxes by businesses (especially 
egregious businesses with over 20 quarters of payroll tax debt), the 
extent and timeliness of TFRP assessments, and the effectiveness of 
actions taken to collect unpaid payroll taxes and TFRP assessments. 
(To see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should review current 
case prioritization and assignment practices to determine if IRS's 
enforcement and collection procedures could be enhanced by requiring, 
to the maximum extent feasible, businesses with egregious payroll tax 
debt and the responsible owners/officers with a Trust Fund Recovery 
Penalty (TFRP) assessment be treated as a single unified and 
coordinated collection effort assigned to a single revenue officer. 
(To see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide better monitoring and more detailed guidance on 
collection actions to be pursued against egregious payroll tax 
offenders, to strengthen existing collection tools, and to develop 
additional enforcement tools to effectively identify potential levy 
sources, the Commissioner of Internal Revenue should work with states 
that have developed procedures for matching financial accounts to tax 
debts to evaluate the potential for IRS to either develop and 
implement similar measures or partner with states that currently have 
that tool to leverage their efforts to assist revenue officers in 
identifying a business's leviable assets. (To see the current status 
of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-617#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Businesses Owe Billions in Federal Payroll Taxes (08-617). 

Matter for congressional consideration or recommendation for executive 
action: To provide clarity for which taxpayers with rental real estate 
activity must report expense payments on information returns and to 
provide greater information reporting, Congress may wish to consider 
amending the Internal Revenue Code to make all taxpayers with rental 
real estate activity subject to the same information reporting 
requirements as other taxpayers operating a trade or business. (To see 
the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-956#recommendations]); 
Potential financial impact: $3.1 billion over 10 years; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions That 
Could Improve Rental Real Estate Reporting Compliance (08-956). 

Matter for congressional consideration or recommendation for executive 
action: To help IRS identify taxpayers who may have misreported their 
rental real estate activity, the Commissioner of Internal Revenue 
should require third parties to report mortgaged property addresses on 
Form 1098 mortgage interest statements. (To see the current status of 
this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-08-956#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions That 
Could Improve Rental Real Estate Reporting Compliance (08-956). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of the Internal Revenue Service should 
determine why U.S. withholding agents and Qualified Intermediaries 
report billions of dollars in funds flowing to unknown jurisdictions 
and to unidentified recipients. Based on this determination, IRS 
should take appropriate steps to recover any withholding taxes that 
should have been paid and to better ensure that U.S. taxes are 
withheld when account owners do not properly identify themselves. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-08-99#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Qualified Intermediary Program Provides Some Assurance That Taxes on 
Foreign Investors Are Withheld and Reported, but Can Be Improved (08-
99). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should develop an action 
plan for its reject working group that includes such elements as the 
scope of responsibility, a plan for testing changes, and a schedule 
for implementing changes. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-1026#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Opportunities Exist for IRS to Enhance Taxpayer Service and 
Enforcement for the 2010 Filing Season (09-1026). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should develop and 
document a strategy to prevent and resolve errors causing 
electronically filed returns to be rejected. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-1026#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Opportunities Exist for IRS to Enhance Taxpayer Service and 
Enforcement for the 2010 Filing Season (09-1026). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should involve 
stakeholders from the paid preparer and tax software industries in 
IRS's current reject working group. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-1026#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Opportunities Exist for IRS to Enhance Taxpayer Service and 
Enforcement for the 2010 Filing Season (09-1026). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should provide paid 
preparers and software providers with clearer descriptions of why 
returns are rejected. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-1026#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Opportunities Exist for IRS to Enhance Taxpayer Service and 
Enforcement for the 2010 Filing Season (09-1026). 

Matter for congressional consideration or recommendation for executive 
action: Given the potential for improving compliance now and in the 
future, Congress may wish to provide IRS with the authority to use 
math error checks to identify and correct returns with ineligible (1) 
IRA "catch-up" contributions, and (2) contributions to traditional 
IRAs from taxpayers over age 70-1/2. (To see the current status of 
this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-146#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Administration: 
IRS's 2008 Filing Season Generally Successful Despite Challenges, 
although IRS Could Expand Enforcement during Returns Processing (09-
146). 

Matter for congressional consideration or recommendation for executive 
action: To simplify the burden that the corporate exemption places on 
payers to distinguish payees' business status and also provide greater 
information reporting, Congress may wish to consider requiring payers 
to report payments to corporations on the form 1099 MISC, as we 
previously suggested and as proposed in the Bush Administration's 
budget. (To see the current status of this recommendation view: 
[hyperlink, http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To gauge the extent of 1099-MISC payer noncompliance and its 
contribution to the tax gap, the Commissioner of Internal Revenue 
should, as part of future research studies, determine the nature and 
characteristics of those payers that do not comply with 1099-MISC 
reporting requirements so that this information can be factored into 
an IRS-wide strategy for increasing 1099-MISC payer compliance. (To 
see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To gauge the extent of 1099-MISC payer noncompliance and its 
contribution to the tax gap, the Commissioner of Internal Revenue 
should, as part of future research studies, develop an estimate of 
1099-MISC payer noncompliance. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To help IRS improve its use of 1099-MISC information, the 
Commissioner of Internal Revenue should collect and analyze data on 
the types of unproductive AUR cases to help identify reoccurring 
errors for use in the AUR case selection process and for identifying 
ways to improve guidance and outreach to help payers and payees more 
accurately report 1099-MISC payments. (To see the current status of 
this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To help payers better understand their 1099-MISC reporting 
responsibilities, the Commissioner of Internal Revenue should assess 
whether adding a checkbox to business tax returns, inquiring whether 
all 1099-MISCs have been submitted, to serve as a reminder to payers 
would help increase 1099-MISC payer compliance. (To see the current 
status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To help payers better understand their 1099-MISC reporting 
responsibilities, the Commissioner of Internal Revenue should include 
a chart on the Form 1099-MISC as well as business income tax 
instructions for distinguishing reportable from non-reportable 
payments and for calculating whether reportable payments reached the 
1099-MISC reporting threshold. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To increase IRS's ability to detect 1099-MISC payer 
noncompliance, the Commissioner of Internal Revenue should test the 
option of developing a stop filer notice program to target business, 
state, and local entities that submitted 1099-MISC one year but did 
not do so the next. (To see the current status of this recommendation 
view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To reduce the submission burden facing many payers each 
submitting small numbers of 1099-MISCs, the Commissioner of Internal 
Revenue should collect data on the numbers of computer-generated black 
and white 1099-MISCs submitted by payers and the labor spent 
reentering forms that cannot be scanned, and evaluate the cost-
effectiveness of eliminating or relaxing the red ink requirement. (To 
see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-238#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Could Do 
More to Promote Compliance by Third Parties with Miscellaneous Income 
Reporting Requirements (09-238). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to assess the extent to which the reliance 
on tax software creates significant risks to tax administration, 
particularly in the areas of tax return accuracy, the security and 
privacy of taxpayer information, and the reliability of electronic 
filing. (To see the current status of this recommendation view: 
[hyperlink, http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to develop and implement a plan for 
effectively monitoring compliance with recommended security and 
privacy standards for the 2010 filing season. (To see the current 
status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to determine if tax software companies that 
are authorized to participate in online filing are adhering to 
advisory security and privacy standards for the 2009 filing season. 
(To see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to ensure that, as part of the second phase 
of IRS's Advancing E-file Study, surveys ask taxpayers the effect of 
tax software pricing changes and the opportunity to file for free 
using online tax forms on IRS's Web site on their decision to either 
file or not file tax returns electronically. (To see the current 
status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to require tax software companies, as soon 
as practical, to include a software identification number that 
specifically identifies the software package used to prepare tax 
returns, which can be used in IRS research efforts. (To see the 
current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help increase electronic filing and allow IRS to better 
target its efforts, the Commissioner of Internal Revenue should direct 
the appropriate officials to the extent possible, study the effect of 
the 2009 pricing changes and the opportunity to file for free using 
online tax forms on IRS's Web site on taxpayers' use of tax software 
and electronic filing rates. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-297#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated 
Risks (09-297). 

Matter for congressional consideration or recommendation for executive 
action: To help ensure that individual taxpayers are getting the best 
information and assistance possible from third parties on how to 
comply with the real-estate tax deduction, the Commissioner of 
Internal Revenue should reach out to local governments to explore 
options for clarifying charges on the local tax bills or adding 
disclaimers to these bills that some charges may not be deductible. 
(To see the current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To help ensure that individual taxpayers are getting the best 
information and assistance possible from third parties on how to 
comply with the real-estate tax deduction, the Commissioner of 
Internal Revenue should reach out to mortgage servicers to discuss 
adding disclaimers to their annual statements that some charges may 
not be deductible. (To see the current status of this recommendation 
view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To help ensure that individual taxpayers are getting the best 
information and assistance possible from third parties on how to 
comply with the real-estate tax deduction, the Commissioner of 
Internal Revenue should reach out to tax-preparation software firms 
and other tax preparers to ensure that they are alerting taxpayers 
that some local charges are not deductible and that they are aware of 
any enhancements to IRS's guidance. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To improve IRS's guidance to its examiners auditing the real- 
estate tax deduction, the Commissioner of Internal Revenue should 
revise the guidance to indicate that evidence of deductibility should 
not rely on mortgage escrow statements, Forms 1098, and canceled 
checks (which can be evidence of payment), and may require more than 
reliance on a real-estate tax bill. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To improve IRS's guidance to its examiners auditing the real- 
estate tax deduction, the Commissioner of Internal Revenue should 
revise the guidance to require examiners to ask taxpayers to 
substantiate the deductibility of the amounts claimed whenever they 
are examining the real-estate tax deduction and they have reason to 
believe that taxpayers have claimed nondeductible charges that are 
large, unusual, or questionable. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To learn more about where tax noncompliance is most likely, 
the Commissioner of Internal Revenue should identify a cost-effective 
means of obtaining information about charges that appear on real-
estate tax bills in order to identify local governments with 
potentially large nondeductible charges on their bills. (To see the 
current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: To learn more about where tax noncompliance is most likely, 
the Commissioner of Internal Revenue should, if such local governments 
are identified, obtain and use the information, including uses such as 
compliance research focused on nondeductible charges; 
outreach to such local governments to help them determine which 
charges are deductible charges and help affected taxpayers correctly 
compute the deduction; 
targeted outreach to the tax-preparation and mortgage-servicer 
industries, and targeted examinations of the real-estate tax deduction 
in the localities. (To see the current status of this recommendation 
view: [hyperlink, 
http://www.gao.gov/products/GAO-09-521#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Real Estate Tax 
Deduction: Taxpayers Face Challenges in Determining What Qualifies; 
Better Information Could Improve Compliance (09-521). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should collect and retain 
the cost and revenue data needed to develop ROI estimates for programs 
requiring businesses to demonstrate federal tax compliance to obtain 
state business licenses. (To see the current status of this 
recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-569#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Opportunities Exist to Improve Tax Compliance of Applicants for State 
Business Licenses (09-569). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should evaluate the ROI 
of existing arrangements where states require federal tax compliance 
to qualify for state business licenses to determine whether the ROI of 
these programs is sufficient to merit their expansion. (To see the 
current status of this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-569#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Opportunities Exist to Improve Tax Compliance of Applicants for State 
Business Licenses (09-569). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should, to the extent 
that existing data-sharing arrangements have a sufficiently high ROI, 
coordinate with states to expand requirements to comply with federal 
taxes to qualify for state business licenses and monitor the ROI of 
these expansions to gauge their success. (To see the current status of 
this recommendation view: [hyperlink, 
http://www.gao.gov/products/GAO-09-569#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: 
Opportunities Exist to Improve Tax Compliance of Applicants for State 
Business Licenses (09-569). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of the IRS should take steps to develop ROIs 
for IRS's enforcement programs using actual revenue and full cost data 
and compare the actual ROIs to the projected ROIs included in the 
budget requests. (To see the current status of this recommendation 
view: [hyperlink, http://gao.gov/products/GAO-09-754#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Internal Revenue 
Service: Review of the Fiscal Year 2010 Budget Request (09-754). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should conduct a test to 
evaluate whether mortgage interest deduction-related outreach programs 
to taxpayers and tax return preparers could be a cost-effective way to 
reduce noncompliance; 
outreach might include sending correspondence covering key rules and 
common mistakes or promoting seminars on common types of misreporting. 
(To see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-769#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Home Mortgage 
Interest Deduction: Despite Challenges Presented by Complex Tax Rules, 
IRS Could Enhance Enforcement and Guidance (09-769). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should investigate 
whether using information from private sources would be productive in 
detecting mortgage interest noncompliance, especially for home equity 
debt. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-09-769#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Home Mortgage 
Interest Deduction: Despite Challenges Presented by Complex Tax Rules, 
IRS Could Enhance Enforcement and Guidance (09-769). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should revise Form 1098 
to require third parties to provide information on mortgage balances, 
the address of a home securing a mortgage, and an indicator of whether 
the mortgage is for a current year refinancing. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-769#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Home Mortgage 
Interest Deduction: Despite Challenges Presented by Complex Tax Rules, 
IRS Could Enhance Enforcement and Guidance (09-769). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should revise examiner 
training materials by adding examples cited as common problems by 
auditors and paid tax return preparers, such as those involving 
multiple homes or home-based businesses, and after the Chief Counsel's 
final determination on the acquisition limit, revise examiner training 
and the worksheet in guidance to reflect the project's outcome. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-769#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Home Mortgage 
Interest Deduction: Despite Challenges Presented by Complex Tax Rules, 
IRS Could Enhance Enforcement and Guidance (09-769). 

Matter for congressional consideration or recommendation for executive 
action: In order to better assess whether changes are needed in the 
way IRS administers activities not engaged in for profit provisions, 
the Commissioner of Internal Revenue should take steps to collect 
information on examinations of activities not engaged in for profit 
issues from the compliance program. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-815#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Limiting 
Sole Proprietor Loss Deductions Could Improve Compliance but Would 
Also Limit Some Legitimate Losses (09-815). 

Matter for congressional consideration or recommendation for executive 
action: In order to better assess whether changes are needed in the 
way IRS administers activities not engaged in for profit provisions, 
the Commissioner of Internal Revenue should take steps to estimate the 
extent of activities not engaged in for profit noncompliance from its 
ongoing research programs. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-815#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Limiting 
Sole Proprietor Loss Deductions Could Improve Compliance but Would 
Also Limit Some Legitimate Losses (09-815). 

Matter for congressional consideration or recommendation for executive 
action: To better ensure the notice phase is achieving desired results 
at the lowest costs, the Commissioner of Internal Revenue should 
establish objectives and performance measures to reflect the desired 
results for the notice phase. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-976#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Debt Collection: 
IRS Needs to Better Manage the Collection Notices Sent to Individuals 
(09-976). 

Matter for congressional consideration or recommendation for executive 
action: To better ensure the notice phase is achieving desired results 
at the lowest costs, the Commissioner of Internal Revenue should 
periodically and regularly evaluate the business rules in terms of 
efficiency and effectiveness or other results and ensure the results 
are available to managers so the data and methodologies can be used or 
considered in future evaluations. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-976#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Debt Collection: 
IRS Needs to Better Manage the Collection Notices Sent to Individuals 
(09-976). 

Matter for congressional consideration or recommendation for executive 
action: To better ensure the notice phase is achieving desired results 
at the lowest costs, the Commissioner of Internal Revenue should 
provide IRS collection managers and executives accessible, reliable 
information on what the business rules are. (To see the current status 
of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-09-976#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Debt Collection: 
IRS Needs to Better Manage the Collection Notices Sent to Individuals 
(09-976). 

Matter for congressional consideration or recommendation for executive 
action: To improve compliance with shareholder basis rules, Congress 
may wish to require S corporations to calculate and report 
shareholder's stock and debt basis as completely as possible. S 
corporations would report the calculation on the Schedule K-1 and send 
it to shareholders as well as IRS. If Congress judges that stock 
purchase price information that is currently only available to 
shareholders should not be transmitted to the S corporation due to 
privacy concerns, an alternative is to require that S corporations 
report less complete basis calculations using information already 
available to the S corporation. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-195#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions 
Needed to Address Noncompliance with S Corporation Tax Rules (10-195). 

Matter for congressional consideration or recommendation for executive 
action: To help address the compliance challenges with S corporation 
rules, the Commissioner of Internal Revenue should identify and 
evaluate options for improving the performance of paid preparers who 
prepare S corporation returns, such as licensing preparers and 
ensuring that appropriate penalties are available and used. (To see 
the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-195#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions 
Needed to Address Noncompliance with S Corporation Tax Rules (10-195). 

Matter for congressional consideration or recommendation for executive 
action: To help address the compliance challenges with S corporation 
rules, the Commissioner of Internal Revenue should provide more 
specific guidance to shareholders and tax preparers, such as that 
provided to IRS examiners, on determining adequate shareholder 
compensation through means such as IRS's Web site. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-195#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions 
Needed to Address Noncompliance with S Corporation Tax Rules (10-195). 

Matter for congressional consideration or recommendation for executive 
action: To help address the compliance challenges with S corporation 
rules, the Commissioner of Internal Revenue should require examiners 
to document their analysis such as using comparable salary data when 
determining adequate shareholder compensation or document why no 
analysis was needed. (To see the current status of this recommendation 
view: [hyperlink, http://gao.gov/products/GAO-10-195#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions 
Needed to Address Noncompliance with S Corporation Tax Rules (10-195). 

Matter for congressional consideration or recommendation for executive 
action: To help address the compliance challenges with S corporation 
rules, the Commissioner of Internal Revenue should send additional 
guidance on S corporation rules and record-keeping requirements to new 
S corporations to distribute to their shareholders, including 
providing guidance on calculating basis and directing them to the 
specific IRS Web site related to S corporation tax rules. (To see the 
current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-195#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: Actions 
Needed to Address Noncompliance with S Corporation Tax Rules (10-195). 

Matter for congressional consideration or recommendation for executive 
action: Congress may wish to consider providing IRS with math error 
authority (MEA) to use prior years' tax return information to 
automatically verify taxpayers' compliance with the limit on the 
number of years the Hope credit can be claimed. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-225#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): 2009 Tax Filing 
Season: IRS Met Many 2009 Goals, but Telephone Access Remained Low, 
and Taxpayer Service and Enforcement Could Be Improved (10-225). 

Matter for congressional consideration or recommendation for executive 
action: To reduce taxpayer confusion and enhance compliance with the 
eligibility requirements for higher education benefits, IRS should 
determine the feasibility of using current information reported on 
Form 1098-T, such as school location and taxpayer identification 
number or social security number (SSN), in IRS's compliance programs. 
(To see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-225#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): 2009 Tax Filing 
Season: IRS Met Many 2009 Goals, but Telephone Access Remained Low, 
and Taxpayer Service and Enforcement Could Be Improved (10-225). 

Matter for congressional consideration or recommendation for executive 
action: To reduce taxpayer confusion and enhance compliance with the 
eligibility requirements for higher education benefits, IRS should 
revise Form 1098-T to improve the usefulness of information on 
qualifying education expenses. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-225#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): 2009 Tax Filing 
Season: IRS Met Many 2009 Goals, but Telephone Access Remained Low, 
and Taxpayer Service and Enforcement Could Be Improved (10-225). 

Matter for congressional consideration or recommendation for executive 
action: The Congress may wish to consider broadening IRS's ability to 
use math error authority (MEA), with appropriate safeguards against 
misuse of that authority. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-349#recommendations]); 
Potential financial impact: Increase savings and revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Recovery Act: IRS 
Quickly Implemented Tax Provisions, but Reporting and Enforcement 
Improvements Are Needed (10-349). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should determine if 
creating an automated program to identify nonresident aliens who may 
have improperly filed Form 1040 instead of Form 1040NR by using ITIN 
information would be a cost-effective means to improve compliance. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-429#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Compliance: IRS 
May Be Able to Improve Compliance for Nonresident Aliens and Updating 
Requirements Could Reduce Their Compliance Burden (10-429). 

Matter for congressional consideration or recommendation for executive 
action: To ensure federal contractors comply with filing requirements, 
the Commissioner of Internal Revenue should establish a process 
similar to the Federal Employee/Retiree Delinquency Initiative (FERDI) 
program for federal workers and retirees that will give a high 
priority to businesses identified as potential nonfilers that have 
federal contracts. (To see the current status of this recommendation 
view: [hyperlink, http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To ensure that IRS does not inappropriately close cases as not 
liable to file returns, the Commissioner of Internal Revenue should 
reinforce to collections staff the need to check for business activity 
using information return data and selection codes. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To ensure that IRS does not inappropriately close cases as not 
liable to file returns, the Commissioner of Internal Revenue should 
study the feasibility and cost-effectiveness of using private sector 
business activity data and federal contract data to make a 
determination of whether federal contractors and other businesses are 
liable for filing tax returns. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To identify additional actions to help achieve the goal of 
fewer unproductive cases, the Commissioner of Internal Revenue should 
add closing codes that would better indicate all known causes for "not 
liable to file" determinations and use this information to analyze 
causes of unproductive cases and use them as appropriate to identify 
any actions IRS could take either administratively or through 
education and outreach that could reduce the number of business 
nonfiler cases where the filing requirement in IRS's records is not 
applicable. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To monitor the performance of business nonfiler activities, 
the Commissioner of Internal Revenue should develop a separate 
efficiency measure for business nonfilers insofar as doing so is cost-
effective. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To monitor the performance of business nonfiler activities, 
the Commissioner of Internal Revenue should develop an evaluation plan 
for the BMF CCNIP selection codes, including both an initial 
evaluation and an ongoing monitoring plan, and conduct an evaluation 
based on this plan. Results from the study and the ongoing monitoring 
could be used to refine the selection codes to improve the 
effectiveness of the program. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To monitor the performance of business nonfiler activities, 
the Commissioner of Internal Revenue should set a deadline for 
developing data that can be used to measure the performance of the BMF 
CCNIP and its business nonfiler compliance activities overall. (To see 
the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: To understand the scope of the business nonfiler population, 
the Commissioner of Internal Revenue should estimate the magnitude of 
business nonfiling among businesses registered with IRS, using data 
from its operational files to select cases for further investigation. 
Based on the results of this work IRS should develop a tax gap 
estimate for the impact of business nonfiling insofar as doing so is 
cost-effective. (To see the current status of this recommendation 
view: [hyperlink, http://gao.gov/products/GAO-10-950#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Has 
Modernized Its Business Nonfiler Program but Could Benefit from More 
Evaluation and Use of Third-Party Data (10-950). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should ensure that staff 
members who will be using current and additional network tools fully 
understand the tools' capabilities. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-968#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Can 
Improve Efforts to Address Tax Evasion by Networks of Businesses and 
Related Entities (10-968). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should establish an IRS- 
wide strategy with goals, which may need to be developed 
incrementally, to coordinate and plan ongoing and future efforts to 
identify and pursue network tax evasion. The strategy should include: 
(1) assessing the effectiveness of network analysis tools, such as yK-
1; (2) determining the feasibility and benefits of increasing access 
to existing IRS data, such as scanning additional data from Schedule K-
1, or collecting additional data for use in its network analysis 
efforts; (3) putting the development of analytical techniques and 
tools that focus on networks as the unit of analysis, such as 
GraphQuery, on a specific time schedule; and (4) deciding how network 
efforts will be managed across IRS, such as whether a core program 
team or management group is needed. (To see the current status of this 
recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-68#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Can 
Improve Efforts to Address Tax Evasion by Networks of Businesses and 
Related Entities (10-968). 

Matter for congressional consideration or recommendation for executive 
action: The Commissioner of Internal Revenue should establish formal 
mechanisms for front-line users to interact directly with tool 
programmers and program analysts to ensure future network analysis 
tools, such as GraphQuery, are easy to use and help achieve goals. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-968#recommendations]); 
Potential financial impact: Indirect financial benefit; 
Management area: Enforcement; 
Title of report (fiscal year-GAO report number): Tax Gap: IRS Can 
Improve Efforts to Address Tax Evasion by Networks of Businesses and 
Related Entities (10-968). 

Matter for congressional consideration or recommendation for executive 
action: To enhance IRS's ability to detect noncompliance with mortgage 
debt forgiveness provisions, the Commissioner of Internal Revenue 
should determine if available data (including IRS and third-party 
data) would allow IRS to better identify whether the debt being 
excluded is for a principal residence. (To see the current status of 
this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To enhance IRS's ability to detect noncompliance with mortgage 
debt forgiveness provisions, the Commissioner of Internal Revenue 
should modify Form 1099-C to require lenders to identify in a more 
useable format (check boxes or coding, for example) the specific type 
of canceled debt and capture the information in IRS's databases. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To enhance IRS's ability to detect noncompliance with mortgage 
debt forgiveness provisions, the Commissioner of Internal Revenue 
should modify Form 982, Part 1 to segregate the total dollar amount of 
forgiven debt by exclusion type and capture the information in IRS's 
databases. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To enhance IRS's ability to detect noncompliance with mortgage 
debt forgiveness provisions, the Commissioner of Internal Revenue 
should modify the Form 982 and Form 1099-C so that filers disclose the 
address of the secured property for which the debt is being forgiven 
and capture the information in IRS's databases. (To see the current 
status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To enhance IRS's ability to detect noncompliance with mortgage 
debt forgiveness provisions, the Commissioner of Internal Revenue 
should use the additional data reported on the revised Form 982 and 
Form 1099-C to assess the extent to which taxpayers are compliant. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To provide better information for paid preparers and taxpayers 
to determine eligibility for excluding forgiven mortgage debt from 
taxable income, the Commissioner of Internal Revenue should explore 
and implement readily available low-cost options to help clarify the 
tax treatment of forgiven debt, including options such as either 
sending notices to taxpayers when a lender files a Form 1099-C 
indicating a forgiven mortgage and the taxpayer does not file a Form 
982 or documenting that the costs of doing so would exceed the 
benefits. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To provide better information for paid preparers and taxpayers 
to determine eligibility for excluding forgiven mortgage debt from 
taxable income, the Commissioner of Internal Revenue should explore 
and implement readily available low-cost options to help clarify the 
tax treatment of forgiven debt, including options such as making IRS's 
interactive tool for canceled debt publicly available for the 2011 
filing season. (To see the current status of this recommendation view: 
[hyperlink, http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To provide better information for paid preparers and taxpayers 
to determine eligibility for excluding forgiven mortgage debt from 
taxable income, the Commissioner of Internal Revenue should explore 
and implement readily available low-cost options to help clarify the 
tax treatment of forgiven debt, including options such as using IRS's 
telephone software to obtain better information about why, if at all, 
taxpayers call IRS with questions about forgiven mortgage debt. (To 
see the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Matter for congressional consideration or recommendation for executive 
action: To provide better information for paid preparers and taxpayers 
to determine eligibility for excluding forgiven mortgage debt from 
taxable income, the Commissioner of Internal Revenue should explore 
and implement readily available low-cost options to help clarify the 
tax treatment of forgiven debt, including options such as working with 
software companies to more fully support complex debt cancellation 
issues, particularly those related to forgiven mortgage debts. (To see 
the current status of this recommendation view: [hyperlink, 
http://gao.gov/products/GAO-10-997#recommendations]); 
Potential financial impact: Increase revenue; 
Management area: Enforcement and taxpayer services; 
Title of report (fiscal year-GAO report number): Tax Administration: 
Expanded Information Reporting Could Help IRS Address Compliance 
Challenges with Forgiven Mortgage Debt (10-997). 

Source: GAO, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-
318SP (Washington, D.C.: Mar. 11, 2011) and GAO, Internal Revenue 
Service: Assessment of Budget Justification for Fiscal Year 2011 
Identified Opportunities to Enhance Transparency, GAO-10-687R 
(Washington, D.C.: May 26, 2010). 

[End of table] 

[End of Appendix II] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

James R. White, (202) 512-9110 or WhiteJ@gao.gov: 

In addition to the contact named above, Libby Mixon, Assistant 
Director; Mark Abraham; Shea Bader; Amy Bowser; Bill Cordery; Chuck 
Fox; Carol Henn; Hannah Hunt; Sairah Ijaz; Shirley Jones; Paul 
Middleton; Sabine Paul; Melanie Papasian; Tomas Ramirez, Jr.; Cynthia 
Saunders; Steve Sebastian; Tom Short; Joanna Stamatiades; Meredith 
Trauner; and Kate Wulff made key contributions to this report. 

[End of Appendix III] 

Footnotes: 

[1] PPACA was enacted on March 23, 2010 and contains various tax and 
other provisions that IRS is responsible for administering. Patient 
Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 
(March 23, 2010). 

[2] GAO, GAO: Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[3] GAO, Internal Revenue Service: Assessment of Budget Justification 
for Fiscal Year 2011 Identified Opportunities to Enhance Transparency, 
[hyperlink, http://www.gao.gov/products/GAO-10-687R] (Washington, 
D.C.: May 26, 2010) and GAO, Opportunities to Reduce Potential 
Duplication in Government Programs, Save Tax Dollars, and Enhance 
Revenue, [hyperlink, http://www.gao.gov/products/GAO-11-318SP] 
(Washington, D.C.: Mar. 11, 2011). 

[4] GAO, Internal Revenue Service: Assessment of Budget Justification 
for Fiscal Year 2011 Identified Opportunities to Enhance Transparency, 
[hyperlink, http://www.gao.gov/products/GAO-10-687R] (Washington, 
D.C.: May 26, 2010) and GAO, Internal Revenue Service: Review of the 
Fiscal Year 2010 Budget Request and Interim Performance Results of 
IRS's 2008 Tax Filing Season, [hyperlink, 
http://www.gao.gov/products/GAO-09-754] (Washington D.C.: June 3, 
2009). 

[5] GAO, Opportunities to Reduce Potential Duplication in Government 
Programs, Save Tax Dollars, and Enhance Revenue, [hyperlink, 
http://www.gao.gov/products/GAO-11-318SP] (Washington, D.C. March 1, 
2011) and GAO, Real Estate Tax Deduction: Taxpayers Face Challenges in 
Determining What Qualifies; Better Information Could Improve 
Compliance, [hyperlink, http://www.gao.gov/products/GAO-09-521] 
(Washington, D.C.: May 13, 2009). 

[6] PPACA was enacted on March 23, 2010 and contains various tax and 
other provisions that IRS is responsible for administering. Patient 
Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 
(March 23, 2010). 

[7] GAO, Internal Revenue Service: Assessment of Budget Justification 
for Fiscal Year 2011 Identified Opportunities to Enhance Transparency, 
[hyperlink, http://www.gao.gov/products/GAO-10-687R] (Washington, 
D.C.: May 26, 2010) and GAO, Internal Revenue Service: Review of the 
Fiscal Year 2010 Budget Request and Interim Performance Results of 
IRS's 2008 Tax Filing Season, [hyperlink, 
http://www.gao.gov/products/GAO-09-754] (Washington D.C.: June 3, 
2009). 

[8] GAO, Opportunities to Reduce Potential Duplication in Government 
Programs, Save Tax Dollars, and Enhance Revenue, [hyperlink, 
http://www.gao.gov/products/GAO-11-318SP] (Washington, D.C. March 1, 
2011) and GAO, Real Estate Tax Deduction: Taxpayers Face Challenges in 
Determining What Qualifies; Better Information Could Improve 
Compliance, [hyperlink, http://www.gao.gov/products/GA0-09-521] 
(Washington, D.C.: May 13, 2009). 

[9] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/AIMD-00-21.3.1] (Washington, 
D.C.; November 1999). GAO, Opportunities to Reduce Potential 
Duplication in Government Programs, Save Tax Dollars, and Enhance 
Revenue, [hyperlink, http://www.gao.gov/products/GAO-11-318SP] 
(Washington, D.C.; March 1, 2011). 

[10] GAO, Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[11] GAO, Executive Guide: Effectively Implementing the Government 
Performance and Results Act, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June 
1996). 

[12] GAO, Internal Revenue Service: Review of the Fiscal Year 2010 
Budget Request, [hyperlink, http://www.gao.gov/products/GAO-09-754], 
(Washington, D.C.: Jun 3, 2009). 

[13] IRS did not have time to estimate costs for new legislative 
proposals presented for the first time in the FY 2012 budget request. 

[14] GAO, Internal Revenue Service: Assessment of Budget Justification 
for Fiscal Year 2011 Identified Opportunities to Enhance Transparency, 
[hyperlink, http://www.gao.gov/products/GAO-10-687R] (Washington, 
D.C.: May 26, 2010). 

[15] GAO, Internal Revenue Service: Review of the Fiscal Year 2010 
Budget Request, [hyperlink, http://www.gao.gov/products/GAO-09-754] 
(Washington D.C.: June 3, 2009). 

[16] GAO, Internal Revenue Service: Assessment of Budget Justification 
for Fiscal Year 2011 Identified Opportunities to Enhance Transparency, 
[hyperlink, http://www.gao.gov/products/GAO-10-687R] (Washington, 
D.C.: May 26, 2010). 

[17] GAO, Internal Revenue Service: Fiscal Year 2009 Budget Request 
and Interim Performance Results of IRS's 2008 Tax Filing Season, 
[hyperlink, http://www.gao.gov/products/GAO-08-567] (Washington D.C.: 
Mar. 13, 2008). 

[18] GAO, Opportunities to Reduce Potential Duplication in Government 
Programs, Save Tax Dollars, and Enhance Revenue, [hyperlink, 
http://www.gao.gov/products/GAO-11-318SP] (Washington, D.C. March 1, 
2011) and GAO, Real Estate Tax Deduction: Taxpayers Face Challenges in 
Determining Related What Qualifies; Better Information Could Improve 
Compliance, [hyperlink, http://www.gao.gov/products/GA0-09-521] 
(Washington, D.C.: May 13, 2009). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: