Tax Administration

Congress is studying whether greater taxpayer compliance might be achieved by publicly reporting individuals who have failed to file their federal tax returns. This report provides information on state and local public disclosure programs. GAO determines (1) which state and local governments are running programs to publicly disclose the names of taxpayers who are delinquent in paying the income taxes that they owe or do not file income tax returns, (2) the differences among these programs, and (3) state and local revenue officials' views on whether their disclosure programs are improving compliance.

GAO noted that: (1) of the state and local governments GAO surveyed, only four states--Connecticut, Illinois, Montana, and New Jersey--and the District of Columbia are operating programs to publicly disclose the names and other information about individuals or businesses that are delinquent in paying income taxes; (2) none of the programs include specific provisions for disclosing the names of taxpayers that simply fail to file their required tax returns; (3) instead, compliance employees are to assess taxes owed by nonfilers they have identified and then process nonfiler accounts in the same manner as other taxpayers' accounts; (4) in the event that such nonfilers are found to be delinquent, they also become subject to public disclosure; (5) the five public disclosure programs differ in regard to their legal authority and operations; (6) like the federal government, the four states and the District of Columbia have tax provisions that protect the confidentiality of taxpayer information; (7) two states--Connecticut and Illinois--and the District have enacted legislation providing explicit statutory authority for their programs, notwithstanding confidentiality safeguards; (8) the two other states--Montana and New Jersey--have not; (9) officials from these two states said that they do not need additional statutory authority to implement public disclosure because a tax delinquency is a matter of public record after certain legal action has been taken, such as filing a certification of debt in superior court, which is entered into a judgment docket; (10) the programs also operate differently, varying as to the procedures leading up to disclosure, the media through which disclosure is made, the type of information disclosed, and how often that information is updated; (11) revenue office officials from the four states and the District of Columbia believe that their programs have improved or will improve compliance; (12) however, officials are unable to isolate the gain in revenue collections directly attributable to their programs; (13) as they explained, public disclosure is one of many tools that revenue offices use to gain compliance; and (14) some revenue office officials also noted that factors outside the control of their offices--notably, the economy--affect compliance.