Tax Administration

Process Used to Revise the Federal Employment Tax Deposit Regulations Gao ID: GGD-95-8 December 29, 1994

This report reviews the development of the revised federal employment tax deposit regulations issued by the Treasury Department and the Internal Revenue Service (IRS) in September 1992. GAO discusses (1) whether the Treasury and IRS developed the regulations by applying principles from IRS' Compliance 2000 approach, which is designed to improve voluntary taxpayer compliance, reduce taxpayer burden, and increase IRS attention to the needs of those parties affected by its actions; (2) how the process used by Treasury and IRS to develop and revise regulations could be improved; and (3) how Treasury and IRS officials know when their efforts to develop and revise regulations produce regulations that are simple and easy to understand.

GAO found that: (1) the new tax deposit regulations are considered to be significantly simpler and easier for stakeholders to understand and comply with than the proposed regulations; (2) the new regulations provide most employers with a fixed deposit rule that they can follow for an entire calendar year; (3) in keeping with Compliance 2000, IRS obtained stakeholders' input throughout the revision process; (4) although stakeholders are satisfied with the final employment tax deposit regulations, certain stakeholders are dissatisfied with various aspects of the regulatory development process; (5) although Treasury and IRS officials are not always able to interact with all stakeholders to the extent the stakeholders desire, Treasury and IRS officials could improve their future communications with stakeholders by directing drafters' attention to stakeholders' concerns; and (6) IRS officials used some measures to gauge the simplicity of the revised regulations and to balance simplicity with other regulatory objectives while revising the employment tax deposit regulations.


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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