Impact of the Paperwork Reduction Act on the Internal Revenue Service's Ability To Administer the Tax Laws

Concern was expressed that section 202 of the proposed Taxpayer Compliance Improvement Act of 1982 would exempt the Internal Revenue Service (IRS) from key provisions of the Paperwork Reduction Act of 1980. GAO was requested to analyze the impact of the Paperwork Act on the ability of IRS to administer the tax laws, particularly the Taxpayer Compliance Improvement Act. The analysis was directed to any problems created for IRS either by the Paperwork Act itself or by the Office of Management and Budget's (OMB) implementation of that Act.

In the opinion of GAO, the Paperwork Reduction Act has not adversely affected the ability of IRS to administer the tax laws. The OMB reviews of the reporting and recordkeeping requirements submitted by IRS have been completed within the statutory timeframes set by the Act. IRS and OMB officials agree that OMB does not need full-time experts to review the IRS requirements. GAO does not believe that the Paperwork Act would impede the IRS ability to effectively implement the Taxpayer Compliance Improvement Act or that IRS should be exempted from any provisions of the Paperwork Act. The Act is intended to benefit both the public and the Federal Government by reducing paperwork burdens and improving agencies' effectiveness through better management of their information resources. Significantly, both IRS and Department of the Treasury officials stated that they do not support exempting IRS from the Paperwork Reduction Act. If such an exemption were enacted, Congress, OMB, and the public would lose accountability and oversight for about 50 percent of the paperwork burden imposed by the Federal Government.