Tax Administration

Allegations of taxpayer abuse prompted Congress to pass the Taxpayer Bill of Rights in 1988. Six years later, GAO issued a report (GAO/GGD-95-14) urging the Internal Revenue Service (IRS) to strengthen its controls for ensuring that taxpayers are treated properly. Although IRS has acted on some of the recommendations GAO made in that report, GAO remains unable to determine the adequacy of IRS' system of controls to identify, address, and prevent instances of abuse. GAO is encouraged by IRS' recent decision to develop a taxpayer complaint tracking system that uses the definition of taxpayer abuse found in GAO's 1994 report for defining elements of taxpayer complaints. In GAO's view, it is critical that IRS sustain this commitment. IRS needs a more-effective complaints tracking system because--even though data systems run by IRS, the Justice Department, and others contain information on the treatment of taxpayers--the data relevant to employee misconduct or taxpayer complaints are not readily distinguishable from other allegations that do not involve taxpayers. Moreover, the systems do not have the same employee identifiers or common data elements, and the data are not captured in a consistent manner that allows for consolidation relative to the number or outcome of taxpayer complaints using the definition IRS is adopting.

GAO found that: (1) the adequacy of IRS controls against taxpayer abuse is uncertain because IRS does not have the capability to capture management information on taxpayer abuse; (2) IRS is establishing a tracking system to handle taxpayer complaints and reviewing its management information systems to determine the best way to capture relevant information for the complaint system; (3) the tracking system will enable IRS to better identify instances of taxpayer abuse and ensure that actions are taken to prevent their recurrence; (4) IRS is improving controls over its employees' access to computerized taxpayer accounts, establishing an expedited appeals process for some collection actions, and classifying recurring taxpayer problems by major issues; (5) it is not possible to determine the extent to which allegations of taxpayer abuse are received and investigated, since IRS, OIG, and DOJ information systems do not include specific data elements on taxpayer abuse; (6) OIG has increased the number of investigations involving senior IRS employees' alleged misconduct, fraud, and abuse; (7) OIG refers most of these allegations to IRS for investigation and administrative action; and (8) IRS is taking a considerable amount of time to respond to OIG investigations and referrals regarding senior IRS officials' disciplinary actions.