Tax Administration

While it is important for all citizens to pay their fair share of taxes, it is equally important for the Internal Revenue Service (IRS) to treat taxpayers fairly. GAO is generally satisfied with IRS' implementation of the Taxpayer Bill of Rights, which established rules and procedures for resolving problems arising from IRS' interpretation and administration of the tax laws. The act also stresses principles such as fairness, consistent application of laws and regulations, and the right of taxpayers to receive clear explanations of their tax situation. GAO believes that most IRS employees work diligently to treat taxpayers fairly and equitably. But IRS--an organization with 120,000 employees at over 700 locations who must administer complex tax laws--may not always provide taxpayers with the treatment to which they are entitled. For this reason, IRS will need to continually emphasize the act's requirements and measure performance in meeting its intent. GAO summarized this report in testimony before Congress; see: Tax Administration: IRS' Implementation of the Taxpayer Bill of Rights, by Jennie S. Stathis, Director of Tax Policy and Administration Issues, before the Subcommittee on Private Pension Plans and Oversight of the Internal Revenue Service, Senate Committee on Finance. GAO/T-GGD-92-9, Dec. 10, 1991 (eight pages).

GAO found that: (1) IRS statistics show that it aided about 32,500 taxpayers in fiscal years 1990 and 1991 through the Taxpayer Assistance Order Program; (2) IRS established procedures to inform taxpayers of their rights and guard against the use of enforcement results to evaluate employees or impose production quotas; (3) some taxpayers with hardships may be unaware that assistance is available; (4) IRS sends taxpayers copies of a taxpayer's rights guide, but does not emphasize to taxpayers the importance of reading the publication; (5) IRS uses inconsistent methods of notifying taxpayers when it cancels installment agreements; (6) in October 1991, IRS changed its procedures to allow the withdrawal of tax lien notices that were not filed according to IRS guidelines; (7) IRS interprets the holding period on levied bank deposits as applying to the amount of time that banks hold levied funds, and does not immediately notify taxpayers about a levy; and (8) IRS plans to ensure that notices setting the time and place of examinations comply with the Taxpayer Bill of Rights.

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.

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