Potential Problem With Federal Tax System Postemployment Conflicts of Interest Can Be Prevented

GAO evaluated the administration of the post-Federal employment restrictions by the Departments of Justice and the Treasury, including the Internal Revenue Service (IRS), to determine if their controls were adequate to prevent, identify, and remedy conflicts of interest in the Federal tax system. The positions covered in the review were selected because they involved responsibilities conducive to postemployment conflicts of interest and were most likely to be filled by persons who did not intend to make public service a career.

Results of a questionnaire sent by GAO to former employees indicated that: (1) 86 percent of the respondents were involved in Federal tax matters; (2) 44 percent of the respondents noted that they had not been informed of postemployment restrictions; and (3) an additional 29 former employees did not receive complete information on the restrictions from their former agencies. Justice, Treasury, and IRS do not know how many former employees are working in private tax practice. They do not monitor their former employees' subsequent involvement in Federal tax matters either to detect violations of the restrictions or to determine if postemployment problems exist. The number of former employees working in private sector tax jobs and facing conflict-of-interest situations is great enough to require that compliance with the postemployment restrictions be monitored to ensure that violations are detected. Once they are detected, violators must be disciplined in accordance with the applicable statute and regulations. Although Treasury has a system for disciplining violators, few suspected violations have been processed through the system. Final regulations have been issued which require that agencies: (1) establish education and counseling programs to cover postemployment matters, (2) take prompt and effective administrative actions to remedy actual or potential violations, and (3) periodically evaluate the adequacy and effectiveness of their postemployment enforcement systems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Johnny C. Finch Team: General Accounting Office: General Government Division Phone: (202) 512-7824