Administrative Changes Could Strengthen IRS' Claims for Rewards Program

GAO reviewed the Internal Revenue Service's (IRS) administration of the Claims for Rewards Program to determine whether it was operating effectively in detecting unreported income.

GAO found that: (1) the program has helped IRS identify and collect taxes which might not have been realized without information provided by program participants; and (2) IRS personnel were not fully aware of the program's processing requirements and were not giving claims priority consideration. IRS has no time requirements for processing claims for rewards allegations; therefore, GAO formulated criteria based on the length of time IRS national and district officials said these processing functions should take. Using these criteria, GAO found that, in 79 percent of the reward claims filed in two large IRS district offices, it took longer than officials said it should take to perform one or more processing functions. GAO also found that: (1) in six cases, IRS collected taxes after declaring them uncollectible; (2) claims examiners did not routinely check corresponding delinquent account transcripts to ensure that claimants were paid any additional rewards due; (3) IRS disallowed 87 percent of the closed claims because the claimant did not provide sufficient information; and (4) if IRS had permitted partial awards more often, some program participants could have received rewards sooner. GAO also found that: (1) participants often received small rewards and had to wait a long time to receive them; and (2) if the minimum reward were raised, the effect on the program's revenue-yield-to-cost ratio would be negligible.

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