Tax Administration: Investigating Illegal Income--Success Uncertain, Improvements Needed
GGD-88-61
Published: Apr 25, 1988. Publicly Released: Apr 25, 1988.
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Highlights
In response to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Special Enforcement Program (SEP), which IRS uses to investigate tax law violations and potential taxable income related to illegal activities, to identify: (1) the law enforcement results and tax revenues generated from program operations; and (2) management improvements that could enhance program operations.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | To improve the management of SEP operations, the Commissioner of Internal Revenue should collect management information relating to key program objectives, and identify the tax revenues generated by SEP cases. |
IRS formed a task force to review its reporting system. The Criminal Investigations Case Management Information System was revised to track civil assessments and collections on closed cases.
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| Internal Revenue Service | To improve the management of SEP operations, the Commissioner of Internal Revenue should review existing Case Management and Time Reporting System (CM&TRS) input controls to determine how the accuracy of management information can be improved. |
IRS conducted reviews in each region to assess procedures for ensuring timely and accurate input of information into CM&TRS. The division chiefs stressed the accuracy of CM&TRS will be a priority in all operations reviews conducted by the chiefs.
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| Internal Revenue Service | To improve the management of SEP operations, the Commissioner of Internal Revenue should: (1) work with IRS Chief Counsel and Department of Justice representatives to provide better guidance for special agents on what constitutes grand jury information; and (2) require special agents to consult with IRS Chief Counsel attorneys, or with U.S. attorney representatives if IRS Chief Counsel is not involved, at the close of a grand jury case to help determine what information could be forwarded to Examination for civil action. |
IRS, in coordination with Justice, has revised the Chief Counsel Directive Manual. Revised manual material and a legislative guidance memo has been issued.
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| Internal Revenue Service | To improve the management of SEP operations, the Commissioner of Internal Revenue should establish a district office program to monitor the civil actions taken by various IRS components on closed criminal cases. |
Criminal Investigations implemented a manual transmittal dated May 2, 1990 which established a procedure for more prompt notification to Counsel and Exam when Grand Jury and administrative investigations are closed. Criminal Investigations revised its management information system to track civil assessments and collections on closed criminal cases.
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ConvictionsCriminal procedureInvestigations by federal agenciesLaw enforcementOrganized crimeProgram managementTax administration systemsTax evasionTax lawTax violations