Tax Administration

Congress Needs More Information on Compliance Initiative Results Gao ID: GGD-92-118 July 31, 1992

The Internal Revenue Service (IRS) has three initiatives under way to (1) increase collection staff so that IRS can collect more delinquent accounts, (2) increase examination staff so that IRS can audit more returns, and (3) revise the training program for revenue agents to free up more experienced staff for audit work. In providing IRS with more enforcement staff during a time of budgetary constraints, Congress needs to understand the net impact of any additional staff it authorizes. IRS' current tracking system focuses on the revenue gained from the staffing increases for these initiatives but ignores reductions in revenue that result from reductions to baseline staffing. IRS needs to track the total picture so that Congress can assess the net effect of its staffing increases. Although IRS recognizes the importance of documenting its methodology, assumptions, and the data it uses to develop its revenue estimates, IRS did not follow this standard for its collection initiative.

GAO found that: (1) the IRS March 1992 5-year revenue projection for its training, examination, and collection initiatives was $2.4 billion, which was 25 percent less than the original revenue target in the President's FY 1991 budget submission; (2) current IRS tracking reports do not provide Congress with the information it needs to assess the net effect of the staffing increases it authorized in FY 1991; (3) IRS has reduced its staffing and revenue baselines for the collection and examination initiatives to accommodate changing program priorities and the need to fund unbudgeted costs; (4) IRS needs to report total staffing levels achieved and total revenue generated, rather than reporting the difference between an estimated, changing baseline and actual results; (5) the IRS tracking methodology does not provide for offsetting the revenue loss that may result from the FY 1992 baseline reductions to account for actual staffing reductions from FY 1991; and (6) IRS needs to report and explain the reasons for any differences in what Congress expected and what IRS actually achieved.

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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