Tax AdministrationAlternative Strategies to Obtain Compliance Data Gao ID: GGD-96-89 April 26, 1996
In October 1995, the Internal Revenue Service (IRS) decided to postpone indefinitely the 1994 Taxpayer Compliance Measurement Program because of budget concerns. In addition, Congress, taxpayer groups, paid preparers, and others exerted considerable pressure to cancel the program because of its cost to and burden on taxpayers. For more than 30 years, this program has been IRS' primary means for gathering comprehensive and reliable taxpayer compliance data. IRS has used the data to identify areas in which tax law needs to be changed to improve voluntary compliance and to estimate the tax gap and its components. This report determines the effects on IRS' compliance programs of postponing the 1994 Taxpayer Compliance Measurement Program and identifies potential short- and long-term alternatives to the planned Taxpayer Compliance Measurement Program for collecting these data.
GAO found that: (1) IRS postponed the 1994 TCMP because of criticisms and budget constraints; (2) IRS does not know how it will obtain the taxpayer compliance data it needs; (3) the loss of 1994 TCMP data could increase compliant taxpayers' burden over the long term because audits may become less targeted; (4) to mitigate the data losses over the short term, IRS could employ a number of alternatives, including doing a smaller survey; (5) any alternative should reduce sample size to lessen taxpayer burden and administrative costs, maintain IRS ability to update the discriminant function scoring system, and maximize the use of already completed work; (6) a limited survey would reduce the quantity and quality of the data collected, but still provide national compliance data; (7) IRS must determine how it will measure compliance over the long term, since its workload and future revenues depend on taxpayers' voluntary compliance; (8) long-term alternatives include conducting small multiyear TCMP audits, using data from operational audits to assess compliance changes, and conducting periodic national mini-TCMP audits; (9) IRS must decide on a compliance information-gathering alternative in the near term, since any alternative will take several years to develop and implement; and (10) the alternatives will likely not gather data as comprehensive as the originally planned TCMP data.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.Director: Team: Phone: