Tax Administration
Benefits of a Corporate Document Matching Program Exceed the Costs Gao ID: GGD-91-118 September 27, 1991The Internal Revenue Service's (IRS) document matching program for payments to individuals has proven to be a highly cost-effective way of bringing in billions of dollars in tax revenues to the Treasury while boosting voluntary compliance. GAO believes that similar results would arise if the law required information returns that reported payments to corporations and if IRS developed a program to match these documents to corporate tax returns. This report analyzes the steps needed to make such a program reality. First, Congress needs to pass legislation requiring that payments to corporations be reported on information returns and to appropriate enough money for IRS to implement the program. Second, IRS must take steps to (1) ease any burdens the reporting requirement places on the business community and (2) facilitate the reporting and matching of documents. For example, IRS could phase in the reporting requirement and document match over several years and slowly expand the program as both IRS and the business community learn from their initial experiences.
GAO believes that Congress: (1) and IRS could reduce the burden of a corporate matching system by phasing in the reporting requirement and document matching over several years and slowly expanding the program as both IRS and the business community learn from their initial experiences; and (2) needs to pass legislation that would authorize IRS to require payors to report payments to corporations, appropriate funds to cover additional IRS costs, and earmark such appropriations specifically for the corporate information returns and matching program.
RecommendationsOur 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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