Internal Revenue Service Issues

This report is part of the transition series, a set of 28 reports summarizing GAO's findings on major problems confronting federal agencies, as well as economic and management issues facing Congress and the incoming Administration. One cluster of transition reports, including those on the budget deficit and investment, addresses broad policy issues affecting government as a whole and its relationship to the economy. Another group of reports addresses issues affecting specific federal agencies, such as the Defense Department and the Internal Revenue Service. A third group of reports looks at cross-cutting management issues--everything from financial management to information management. GAO highlighted many of these problems in a similar set of reports issued in 1988. In some instances, progress has been made; all too often, however, the problems have continued to fester and grow worse. In general, the state of management in the federal government is poor. Too many management ideas--and resulting agency structures and processes--that worked well in the past now hinder the government from responding quickly and effectively to a world in tremendous flux. Most agencies have no strategic vision of the future, lack sound systems to collect and apply financial and program information to gauge operational success and accountability, and too often do without people with the skills necessary to accomplish their missions. The Comptroller General summarized the series in testimony before Congress; see: Major Issues Facing a New Congress and a New Administration, by Charles A. Bowsher, Comptroller General of the United States, before the Senate Committee on Governmental Affairs. GAO/T-OCG-93-1, Jan. 8, 1993 (30 pages).

GAO found that: (1) IRS needs to reassess its traditional functional and organizational structure to improve its tax system administration; (2) tax systems modernization requires the redesign of IRS automated systems and the formalization of an operational strategy; (3) IRS needs better personnel management, training, and integrity in the face of its modernization program and personnel downsizing; (4) to support its strategic business process, IRS needs to develop performance measures related to voluntary compliance, reducing taxpayer burden, and improving productivity and customer satisfaction; (5) IRS needs to improve its management of unpaid tax collections, increase voluntary compliance, and rethink its enforcement approach; (6) IRS needs to integrate its financial management systems to accurately allocate taxes and provide comprehensive and reliable financial information; (7) IRS needs to prioritize the demands on its criminal investigation resources; and (8) IRS needs to be able to quickly analyze its administration of any new consumption tax and advise policymakers of its implications.