TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Performance Measures and Improved Case Tracking Would Help the Exempt Organizations Function Better Allocate Resources
March 13, 2008
Reference Number: 2008-10-057
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
March 13, 2008
MEMORANDUM FOR COMMISSIONER, TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Performance Measures and Improved Case Tracking Would Help the Exempt Organizations Function Better Allocate Resources (Audit # 200710037)
This report presents the results of our review to assess the Exempt Organizations (EO) function Review of Operations Unit’s effectiveness in identifying and evaluating recently established tax-exempt organizations that may not be complying with their stated tax-exempt purposes and/or may not be current with all filing requirements.[1] In addition, we determined whether the results of reviews of recently established tax-exempt organizations were used to identify emerging trends or issues for future compliance work or education and outreach activities. This audit was developed as part of the Treasury Inspector General for Tax Administration Office of Audit’s Fiscal Year 2008 Annual Audit Plan related to the Major Management Challenge of tax compliance initiatives.
Impact on the Taxpayer
The President’s Management Agenda states
that scarce Federal Government resources should be allocated to programs that
deliver results. However, the EO
function has not defined goals or established an effective tracking system to
measure the results of Review of Operations Unit work. As a result, there is a need for EO function
management to perform more detailed analyses of completed casework related to
recently established tax-exempt organizations to determine if taxpayer funds
allocated to this activity are being used wisely and tax-exempt organizations
are being contacted only when necessary.
Synopsis
The Review of
Operations Unit has implemented a follow-up process to select a sample of tax-exempt
organizations that have recently received tax-exempt status from the Internal
Revenue Service (IRS). Most of the organizations
were selected 3 years after they received their tax-exempt status. We
sampled closed cases from these recently established organizations and
concluded that, overall, the Review of Operations Unit is processing cases
according to Unit procedures to determine if the organizations were
operating primarily for the purposes for which they were granted tax-exempt
status and were current in filing required returns. IRS records show that 81 percent (525 of 650 cases closed) of these
cases were closed with no change, indicating there were no potential noncompliance
issues identified in its limited review.
However, we were unable to fully assess the
effectiveness of the Review of Operations Unit’s work for several reasons. EO function management has not
established comprehensive performance measures for the Unit to identify
specific Unit goals and assist in measuring its overall success. Also, some case results are not captured on
the Review of Operations Unit database to effectively track the Unit’s overall
accomplishments. For example, the Unit sometimes uses the no change
disposal code even though productive actions were taken by the Unit (e.g.,
changes were made to some tax-exempt organizations’ return filing requirements
on an IRS database). If this type
of positive impact on tax administration is not captured, EO function
management could mistakenly believe more than 80 percent of the recently
established tax-exempt organizations reviewed by the Review of Operations Unit
are being closed without any positive actions and may decide that the benefit or
impact of the Unit is low. In actuality,
the percentage of cases closed with a positive action may be higher.
Further, EO function management does not
analyze the results of Unit casework related to recently established
tax-exempt organizations to identify potential issues for future educational and
compliance activities. By developing detailed goals for the Unit, establishing performance
measures to track the Unit’s progress in meeting these goals, and ensuring
that accurate data are captured for analysis, the EO function will be better
able to evaluate the Unit’s success and ensure that the proper level of resources are
allocated to the Unit.
Recommendations
We recommended that the
Director, EO, establish performance measures for the Review of Operations Unit,
track all actions taken by the Unit to help measure its accomplishments, and
analyze the results of recently established tax-exempt organizations casework
for potential educational and compliance activities.
Response
IRS management agreed with
all of our recommendations. The EO
function is in the process of developing additional performance measures for
the Review of Operations Unit and adding more fields to the Unit’s database to
capture additional results. In addition,
EO function management is currently reviewing the results of cases closed
within the Unit or transferred to the EO Examinations function to
determine whether the review of recently established tax-exempt organizations
should continue. Management’s complete
response to the draft report is included as Appendix V.
Copies of this report are also being sent to the IRS
managers affected by the report recommendations. Please contact me at (202) 622-6510 if you
have questions or Nancy A. Nakamura, Assistant Inspector General for
Audit (Headquarters Operations and Exempt Organizations Programs), at (202)
622-8500.
Appendices
Appendix
I – Detailed Objectives, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Outcome Measures
Appendix V
– Management’s Response to the Draft Report
|
EO |
Exempt Organizations |
|
IRS |
Internal Revenue Service |
Organizations that are recognized by the Internal
Revenue Service (IRS) as tax-exempt under Section 501(c)(3)[2] of the Internal Revenue Code are eligible to
receive tax-deductible contributions from the public. To be recognized as a Section 501(c)(3) tax-exempt
organization, an applicant (with certain exceptions) must file an Application
for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue
Code (Form 1023) with the IRS describing its current or planned financial and
program activities, organizational documents, and governance structure. After reviewing the Form 1023, the IRS may either
deny the application or grant the applicant tax-exempt status. Once an organization is granted tax-exempt status
by the IRS, it generally may continue to rely on this initial determination as
long as there are no substantial changes in the organization’s character,
purposes, or methods of operation. Further,
when
tax-exempt status is granted, it is rarely revoked unless an unfavorable
examination is completed. However, an organization
may change and grow significantly over time, sometimes in ways inconsistent
with its tax exemption.
There has been significant growth in the
number of entities recognized as tax-exempt, with more than 70,000 tax-exempt
applications processed annually. In
Fiscal Year 2006, there were approximately 1.6 million tax-exempt organizations
(excluding churches) with $2.4 trillion in assets and $1.2 trillion in annual
revenues. An organization must disclose
on its annual information returns filed with the IRS whether it has made any
significant changes to (1) the activities it conducts to further its tax-exempt
purposes or (2) its organizing and governing documents. If so, it must describe the changes made and
attach the pertinent documents. The IRS has
the authority to conduct examinations of tax-exempt organizations to determine
if they qualify for continued tax exemption and assess additional taxes for
noncompliance. However, each year, the
Exempt Organizations (EO) function examines less than 1 percent of existing
tax-exempt organizations.
Currently, there is
no mechanism in the law requiring a periodic review of the basis for an
organization’s tax-exempt status. In
addition, IRS management has reported that abusive tax schemes involving
various types of tax-exempt and government entities appear to have grown. Left unchallenged, such schemes not only
undermine confidence in our voluntary compliance tax system but also can
undermine support for charitable giving, a unique and important feature of our
society. Congress has discussed the
possibility of requiring informal filings by certain tax-exempt organizations
to coincide with their fifth anniversary of being recognized as tax-exempt. The IRS could then review an organization’s
activities to assure it is operating exclusively for the purposes for which it
was granted tax exemption. The Advisory
Committee on Tax Exempt and Government Entities[3] also recommended an operational review at a
3-year, 5-year, or some other appropriate interval after tax exemption is
recognized, to focus on actual operations, charitable accomplishments,
relationships with insiders, and lobbying and political activity.
In response to these
concerns and recommendations, the EO function created the Review of Operations Unit
as part of the EO Compliance Area in August 2005. One of the Unit’s responsibilities is
performing operational reviews of organizations to ensure they are operating in
accordance with their tax-exempt purposes and are current with all filing
requirements.
This review was
performed at the EO Examinations function in
Additional Information Will Assist in Evaluating the Performance of and Allocating Resources for the Review of Operations Unit
Overall,
the Review of Operations Unit properly processed cases related to recently
established tax-exempt organizations. When processing cases, the Unit
takes actions to ensure the accuracy of tax-exempt organizations’ accounts,
which also provides a benefit to other EO function units relying on the account
data. It developed a process to sample tax-exempt organizations that had recently
received tax-exempt status and followed that process. For example, the Unit selected tax-exempt organizations
approximately 3 years after they had received exempt status and determined if
they appeared to be operating in accordance with their tax-exempt purposes and were
current with all filing requirements.
We were
unable to fully assess the effectiveness of the Review of Operations Unit
because performance measures have not been established and case results are not
being captured effectively.
However, we were unable
to fully assess the effectiveness of the Review of Operations Unit’s work for
several reasons. EO function
management has not established comprehensive performance measures for the Unit
to identify specific Unit goals and assist in measuring its overall success. Also, some case results are not captured on
the Review of Operations Unit database to effectively track the Unit’s overall
accomplishments. Further, EO function
management does not analyze the results of Review of Operations Unit casework
related to recently established tax-exempt organizations to determine the
effectiveness of the Unit’s work and identify potential issues for future educational
and compliance activities. By developing detailed goals for the Unit, establishing performance
measures to track the Unit’s progress in meeting these goals, and ensuring
that accurate data are captured for analysis, the EO function will be better able to
evaluate the Unit’s ability to bring organizations into compliance and ensure
that the proper level of resources are allocated to the Unit.
The
EO function implemented a process to follow up on recently established tax-exempt
organizations but should develop performance measures
The Review of
Operations Unit was originally implemented to complete compliance reviews on tax-exempt
organizations to determine whether they are operating in accordance with their tax-exempt
purposes and are current with their filing requirements. Unit personnel review information available
on the Integrated Data Retrieval System,[4] filed returns, applications for tax exemption,
and the Internet to assess the organizations’ operations and make
recommendations for further actions.
These reviews also include identifying indicators of fraud, evidence of
unrelated business income and employment tax issues, and excessive compensation
issues. If no potential compliance
issues are identified, the Review of Operations Unit will close the case as “No
Change.” Generally, if potential
compliance issues are identified, the Unit will transfer the case to the EO
Examinations function for further review.
We reviewed a
statistical sample of 98 cases closed as "No Change" in the Unit from July 1,
2006, through June 30, 2007.
All of the 98 cases involved recently established tax-exempt
organizations, 94 (96 percent) of the 98 cases were properly processed. For the four incorrectly processed cases, Unit personnel did not ensure
that all returns were filed as required
or did not update the Integrated Data Retrieval System to correctly reflect the
organization’s filing requirements. The
Unit planned to reopen these four cases to properly address all potential
compliance issues.[5]
From its inception in August 2005 through July 2007, the Review of Operations Unit closed 2,750 cases for all of its various programs, including work-related to recently established tax-exempt organizations, and other casework in support of major EO function compliance initiatives, such as credit counseling and political activity by tax-exempt organizations. Figure 1 shows approximately 24 percent (650 of 2,750 cases) of the Unit’s work was focused on a periodic follow-up of recently established tax-exempt organizations.
Figure 1: Review
of Operations Unit Workload Analysis
(August 2005 through July 2007)
|
|
Total Review of Operations Unit Closed Cases |
Recently Established Closed Cases Only |
|
No
Change Closures |
1,948 (71
percent) |
525 (81 percent) |
|
Miscellaneous
Closures |
191 (7 percent) |
28 (4 percent) |
|
Transfers
to the
EO Examinations Function |
611 (22 percent) |
97 (15 percent) |
|
Total
Case Closures |
2,750 |
650 |
Source: Review of Operations Unit database.
The President’s
Management Agenda states that scarce Federal Government resources should be
allocated to programs that deliver results.
However, the EO function has not developed comprehensive performance
measures[6] for the Review of Operations Unit. Since the Unit’s inception in August 2005,
the only performance measure established for it is the number of cases
closed. The current goal is 1,500 case
closures annually. Without
performance data to measure the productivity and impact of the Review of
Operations Unit, the EO function cannot determine the best way to allocate its
resources. EO function management is considering
the use of measures such as the number of days to process a case, hours per case,
and use of the proper disposal code when cases are closed.
EO
function management should improve how closed case information is captured and
perform analyses of closed case results
Improvements can be made in how case results
are captured on the Review of Operations Unit database to effectively track the
Unit’s overall accomplishments. In
addition, no analyses have been completed of the Unit’s work related to
recently established tax-exempt organizations either closed in the Review of
Operations Unit or transferred to the EO Examinations function to assess
the productivity of the cases and identify potential areas for additional
compliance and/or educational activities.
The
Review of Operations Unit should capture more accurate information on its
database to better portray the results of its work. The
Unit uses a limited number of disposal codes (used to describe the outcome of the
case reviews) on its database to track the actions taken by its personnel on
the cases (e.g., "No Change" or "transfer to EO Examinations function"). Because the Unit uses very few disposal codes
other than "No Change," it is difficult for EO function management to determine
the impact of the Unit’s actions. In 20 (20
percent) of 98 "No Change" cases we reviewed, either the cases were closed
using the wrong disposal code or new disposal codes/fields on the database
could be used to better track the effectiveness of the Unit.[7] In 16[8] of the 20 cases, the Unit used the "No Change"
disposal code even though productive actions were taken by the Unit (e.g.,
changes were made to some tax-exempt organizations’ return filing requirements
on an IRS database). For the
remaining four cases, the Unit made a minor closing error (one case was closed
as "No Change" without taxpayer contact, but contact was made by the Unit) or
Unit personnel either should have used an existing disposal code other than "No
Change" (one case) or a disposal code was not available that accurately
tracked the actions taken on the case (two cases).
We believe these types of actions should be
tracked because they benefit other EO function units relying on the account
data. For example, updating an
organization’s filing requirements to show it is not required to file returns will
eliminate unnecessary future contacts by the EO function to follow up on
the nonfiled returns. If case results
showing this type of positive impact are not captured, EO function
management could mistakenly believe more than 80 percent (see Figure 1) of the
recently established tax-exempt organizations reviewed by the Review of
Operations Unit are being closed without any positive actions and may decide
the benefit or impact of the Unit is low.
In actuality, the percentage of cases closed with a positive action may
be higher.
In addition, the Review of Operations Unit database
could track additional information related to the identified issues for cases
transferred for examination work. The
current Review of Operations Unit database is unable to capture more than one potential
examination issue[9] identified per case, although up to three issues
could be documented in the case file. By
capturing all issues identified by the Unit for potential compliance activity,
EO function management will have more complete information available for future
analyses.
EO function management stated the "No Change"
disposal code was used because management wanted to track whether the Review of
Operations Unit contacted organizations during its case processing. Two "No Change" disposal codes are often used
by the Unit: “no change with taxpayer
contact” and “no change without taxpayer contact.” This was an operational decision to measure
the differences between the Review of Operations Unit and another EO function
unit. However, now that the Review of
Operations Unit has been reviewing recently established tax-exempt
organizations for 2 years, we believe there is an opportunity to improve the
data captured to analyze the true impact of the Unit.
Additional
analyses of closed case results should prove beneficial. When the Review of Operations Unit identifies an issue(s) in a recently
established tax-exempt organization case that requires further review, it transfers
the case to the EO Examinations function.
To determine how well the Unit is identifying issues for the EO Examinations
function, it is important to track a case through to the final examination results. The Unit uses project codes to track cases by
the various programs worked in the Unit, such as recently established
tax-exempt organization cases, credit counseling cases, and political activity
cases.
However, the Review of Operations Unit project
code is often changed when a case is transferred from the Unit to the EO
Examinations function. Therefore, we
could not determine if the EO Examinations function identified noncompliance
or assessed additional taxes on the recently established tax-exempt
organization cases that were transferred from the Review of Operations Unit. If the EO function were able to trace recently
established cases through to their final disposition in the EO Examinations
function, EO function management could decide if the Review of Operations Unit
is identifying productive cases and determine the correct allocation of
resources that should be dedicated to recently established tax-exempt organization
casework. Without this information, it
will be difficult for the EO function to make a data-driven decision in
this regard.
In addition to
determining the productivity of cases transferred from the Review of Operations
Unit, the EO function could use the results of closed cases to identify needed
internal training. For example, the EO
function Special Review Unit (a different Unit) conducted a review of
examinations closed as "No Change" that originated in the Review of Operations
Unit to determine, in part, if the cases were properly closed by the EO
Examinations function. This analysis
showed that the majority of cases were properly closed by EO Examinations
function. However, the Special Review Unit determined many of the cases
reviewed involved a specific type of tax-exempt organization. As a result, EO function management
determined that additional internal training within the Review of Operations
Unit may be necessary in this area to better process these cases and determine whether they should be referred for
examination.
Analyses of recently established tax-exempt
organization cases closed in the Review of Operations Unit or transferred to the
EO Examinations function could also provide input to EO function
management in determining the need for additional taxpayer education and
compliance activities. For example, if
closed case results show that recently established tax-exempt organizations are
not always filing required returns, additional taxpayer educational activities
could be conducted to assist this type of organization in understanding filing
obligations. Similarly, closed case
results could reveal compliance trends in recently established tax-exempt
organizations. If any trends are identified,
the EO function could divert resources to a special project(s) to bring recently
established tax-exempt organizations back into compliance.
Improved tracking of issues identified by the
Review of Operations Unit and overall case results will ensure EO function
management has complete and accurate data for conducting ongoing analyses,
which could be used to ensure the Unit is focusing its limited resources on the
most productive areas, transferring productive cases for review to the EO Examinations
function, and reducing taxpayer burden by limiting taxpayer contact for
tax-exempt organizations that are compliant with their filing requirements. These analyses could also support future
resource allocation decisions.
During our
fieldwork, EO function management stated that statistical projections of
case results may be completed in the future to determine if common issues are being
identified for Review of Operations Unit cases.
In addition, management indicated that the Unit’s review of recently
established tax-exempt organizations has not resulted in many transfers to the
EO Examinations function (97 cases over a 2-year period). Therefore,
results have yet to be analyzed.
Recommendations
The Director, EO, should:
Recommendation 1: Establish performance measures for the Review of Operations Unit to assist management in evaluating the productivity of the Unit and aid in allocating resources within the EO function.
Management’s Response: IRS management agreed with this recommendation. The EO function is currently developing additional performance measures for the Review of Operations Unit.
Recommendation 2: Improve the type of closed case information captured on the Review of Operations Unit database (such as new disposal codes and/or additional data fields) to more clearly measure the accomplishments of the Unit.
Management’s Response: IRS management agreed with this recommendation. EO function management is amending the Unit’s database to capture more case review results.
Recommendation 3: Analyze the results of recently established tax-exempt organization cases closed in the Review of Operations Unit or transferred by the Unit for examination to evaluate its productivity and assess whether any common issues were identified for potential internal training needs and future compliance and/or educational activities.
Management’s Response: IRS management agreed with this recommendation. The EO function is reviewing a sample of closed cases to determine whether to continue performing a sample review of recently established tax-exempt organizations and if possible training needs exist.
Appendix I
Detailed Objectives, Scope, and Methodology
The overall objectives of this review were to assess the EO function Review of Operations
Unit’s effectiveness in identifying and evaluating recently established tax-exempt
organizations that may not be complying with their stated tax-exempt purposes
and/or may not be current with all filing requirements. In addition, we determined whether the
results of reviews of recently established tax-exempt organizations were used
to identify emerging trends or issues for future compliance work or education
and outreach activities. To accomplish
our objectives, we:
I.
Assessed
the process the Tax Exempt and Government Entities Division follows to identify
and evaluate recently established tax-exempt organizations that may not be complying
with their stated tax-exempt purposes and/or may not be current with all filing
requirements.
A.
Interviewed
Tax Exempt and Government Entities Division Data Analysis Unit personnel to assess
the process followed to identify and select the sample of recently established
tax-exempt organizations for evaluation by the Review of Operations Unit each
year.
B.
Interviewed
applicable EO function management to determine the current process followed to
identify and evaluate whether tax-exempt organizations are operating in
accordance with their approved tax-exempt purposes and are current with all
filing requirements.
C.
Interviewed
EO Examinations function management to determine the process for assigning and
reviewing cases transferred from the Review of Operations Unit.
D.
Interviewed
EO function management to determine the goals of the Review of Operations Unit
and identified any performance measures established by management to measure
the effectiveness of the Unit in achieving established goals.
II.
Determined
any results of the EO function’s efforts (in both the Review of Operations Unit
and EO Examinations function) to identify and review cases to ensure
recently established tax-exempt organizations are operating for their approved
tax-exempt purposes and filing all required returns.
A. Obtained statistics from the Review of
Operations Unit’s database on the EO function’s efforts to identify and
review cases, including the number of tax-exempt organizations identified,
number of tax-exempt organizations reviewed, and results of the reviews.
B.
Determined the number of case transfers made from
the Review of Operations Unit to the EO Examinations function for further
review and the results of the transfers.
C.
Interviewed applicable EO function management
to determine whether results of recently established tax-exempt organization
reviews and examinations are used to identify any emerging trends or issues for
future compliance work or future education and outreach activities.
III.
Determined
whether recently established tax-exempt organization cases that should have
been transferred to the EO Examinations function for further development were
not identified and referred by the Review of Operations Unit as required.
A.
Obtained
a download from the Review of Operations Unit’s database of all 291 cases
closed from July 1, 2006, through June 30, 2007, without being
transferred for an examination.
B.
Selected
and reviewed a random sample of 98 cases from the universe of 291 closed cases
to identify any that should have been transferred for an examination. We computed a statistical sample size using a
90 percent confidence level, +5 percent precision rate, and 10 percent
expected error rate.
Data validation methodology
We obtained extracts from the Review of Operations Unit database as well as the Returns Inventory Classification System during our review. Validations performed included ensuring that only appropriate data were included in each field and the time period for the data met our requirements. We determined that all data received were sufficiently reliable for our use.
Internal controls
methodology
Internal controls relate to management’s plans, methods, and procedures used to meet their mission, goals, and objectives. Internal controls include the processes and procedures for planning, organizing, directing, and controlling program operations. They include the systems for measuring, reporting, and monitoring program performance. We determined the following internal controls were relevant to our audit objectives: the EO function’s policies, procedures, and practices for planning, managing and monitoring the Review of Operations Unit efforts to review recently established tax-exempt organizations. We evaluated these controls by interviewing management, reviewing applicable information, and analyzing closed cases.
Appendix II
Major Contributors to This Report
Nancy
A. Nakamura, Assistant Inspector General for Audit (Headquarters Operations and
Exempt Organizations Programs)
Troy
D. Paterson, Director
Jeffrey
M. Jones, Audit Manager
Cheryl
J. Medina, Lead Auditor
Julia
M. Moore, Senior Auditor
David
P. Robben, Senior Auditor
Appendix III
Acting Commissioner C
Office of the Commissioner – Attn: Acting Chief of Staff C
Deputy Commissioner for Services and Enforcement SE
Deputy Commissioner, Tax Exempt and Government Entities Division SE:T
Director, Exempt Organizations, Tax Exempt and Government Entities Division SE:T:EO
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal Control OS:CFO:CPIC:IC
Audit Liaison: Director, Communications and Liaison, Tax Exempt and Government Entities Division SE:T:CL
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. These benefits will be incorporated into our Semiannual Report to Congress.
Type and Value of Outcome Measure:
· Reliability of Information – Actual; four taxpayer accounts affected (see page 3).
Methodology Used to Measure the Reported Benefit:
We reviewed a statistically valid sample of 98 cases from a universe of 291 cases closed by the Review of Operations Unit from July 1, 2006, through June 30, 2007, involving recently established tax-exempt organizations. In four cases, additional actions should have been taken prior to case closure by Unit personnel, who did not ensure all returns were filed as required or did not update the IRS database to correctly reflect each organization’s filing requirements. The Unit planned to reopen these four cases to properly address all potential compliance issues.
Type and Value of Outcome Measure:
· Reliability of Information – Potential; 59 taxpayer accounts affected (see page 3).
Methodology Used to Measure the Reported Benefit:
We
reviewed a statistically valid sample of 98 cases from a universe of 291 cases
closed by the Review of Operations Unit from July 1, 2006, through June 30,
2007, involving recently established tax-exempt organizations. Our case review identified 20 (20 percent) of
98 cases that could be better tracked on the Review of Operations Unit database
to improve the reliability of the data. We computed the outcome measure by
multiplying the 20 percent error rate times the universe of 291 cases,
resulting in a projection of 59 taxpayer accounts affected.
Improved tracking of issues identified by the Unit and overall case results will ensure EO function management has complete and accurate data for conducting ongoing analyses, which could be used to ensure the Unit is focusing its limited resources on the most productive areas, transferring productive cases for review to the EO Examinations function, and reducing taxpayer burden. These analyses could also support future resource allocation decisions.
Appendix V
Management’s Response to the Draft Report
The response was
removed due to its size. To see the
response, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.
[1] In August 2005, the EO function established the Review of Operations Unit to review the operations of tax-exempt organizations. This was in response to discussions held by Congress to require informal filings by certain tax-exempt organizations to coincide with their fifth anniversary of being recognized as tax-exempt, which would allow a review by the Internal Revenue Service of the organizations’ activities.
[2] Section 501(c)(3) (2006).
[3] This Committee provides a public forum through which to discuss issues and enable the IRS to receive input on the development and implementation of IRS policy.
[4] An IRS
computer system capable of retrieving or updating stored information; it works
in conjunction with a taxpayer’s account records.
[5] See Appendix IV for additional details.
[6] Performance goals are estimates of results expected for a given period of time. They are included in plans as indicators of what an organizational unit wants to achieve.
[7] See Appendix IV for additional details.
[8]
In one case, the Unit also used the wrong
disposal code when closing it. To avoid
double counting, we did not include this issue as a closing error.
[9] Examples of examination issues include delinquent filings, incomplete filings, and political activities.