TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Office of Audit
ADDITIONAL STEPS NEED TO BE COMPLETED
TO ENSURE THE SUCCESS OF THE SERVICE-WIDE NON-FILER STRATEGY
Issued on September 22, 2008
Highlights
Highlights of
Report Number: 2008-30-165 to the Internal
Revenue Service Deputy Commissioner for Services and Enforcement.
IMPACT ON TAXPAYERS
Individuals, businesses, and other taxable entities with
income more than certain threshold amounts are required to file income tax
returns. The timely filing of required
tax returns is critical to the
WHY TIGTA DID THE AUDIT
This
audit was initiated to review the
progress the IRS’ Small Business/Self-Employed Division has made in identifying
non-filers and determining what potential new data sources for detecting
non-filers and other forms of underreporting have been investigated that could
assist in that effort. The report identifies
additional steps the IRS needs to take to ensure the success of its
Service-wide Non-filer Strategy.
In response to a
prior TIGTA audit report, the IRS agreed to develop a Service-wide Non-filer
Strategy to coordinate and track all efforts taken to plan, control, and
improve efficiency in identifying and working non-filer cases. As part of this
strategy, the IRS was to establish measurable program goals, develop an
organization-wide tracking system to monitor progress, and leverage technology
and research capabilities to increase the use of third-party information to identify unknown non-filers and
improve non-filer case selection. In
addition, the IRS was to partner with external sources to develop and implement
effective outreach and education actions to reduce the number of chronic
non-filers and allocate compliance resources accordingly.
WHAT
TIGTA FOUND
TIGTA found that Service-wide non-filer
outcome and performance measures were not yet approved and adopted and there
was no systemic method in place to track and monitor cases that are worked as
part of Service-wide Non-filer Strategy Initiatives.
As part of the review, TIGTA tried to identify any potential
new/external data sources that were being used (or were planned to be used) by
the IRS for taxpayer outreach and education as part of the Service-wide
Non-filer Strategy to address chronic and unknown non-filers. While IRS management pointed to the use of
external data obtained from the State Reverse File Match Initiative and other State
provided data as examples of their use of third-party data to identify
non-filers, the initiatives appear to be limited in scope. The IRS does not currently participate in any
purchasing agreements with private external data sources
WHAT TIGTA RECOMMENDED
TIGTA
recommended that the Deputy Commissioner for Services and Enforcement establish
Service-wide Non-filer Strategy outcome and performance measures, develop a
Service-wide systemic method to track and monitor cases selected to be worked
as part of non-filer initiatives, and explore the costs/benefits of purchasing
agreements with private external data sources.
In
their response to the report, IRS officials agreed with all of the
recommendations. IRS management has 1) developed
outcome and performance measures, 2) plans to assess whether current systems
can be enhanced to track and monitor cases and, if not feasible, plans to
determine the cost for developing an enterprise system, and 3) plans to explore
which private data sources would enhance the IRS’ available internal research
and determine the costs/benefits of using these private data sources.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2008reports/200830165fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov