Treasury
Inspector General for Tax Administration
Office of Audit
PUBLISHING
AND MAIL COSTS NEED TO BE MORE EFFECTIVELY MANAGED TO REDUCE FUTURE COSTS
Issued on February 28, 2011
Highlights
Highlights of Report Number:
2011-40-025 to the Internal Revenue Service Commissioner for the Wage and Investment Division.
IMPACT ON TAXPAYERS
Part of the
Internal Revenue Service’s (IRS) mission is to help taxpayers understand and
meet their tax responsibilities. To
assist taxpayers in complying with their tax filing obligations, the IRS
provides forms with instructions and publications to individual and business
taxpayers. The Fiscal Year 2010
publishing and mail budget was more than $272 million.
WHY TIGTA DID THE AUDIT
The IRS stated in
its Fiscal Year 2011 budget request that it would reduce publishing and mail
costs by $26 million through efficiencies and savings, including eliminating
the automatic mailing of business tax products.
This audit was initiated to evaluate the IRS’s efforts to reduce
publishing and mail costs for tax forms and publications sent to businesses and
nonprofits.
WHAT TIGTA FOUND
The IRS
is reducing publishing and mail costs, but recent reductions have resulted from
budget cuts and were not part of a long-term strategy. In response to the cost savings proposed in
the Fiscal Year 2011 budget request, the IRS formed task forces to identify
ways to achieve cost savings. A task force
proposed 25 actions to reduce publishing and mail costs and lay the foundation
for long-term implementation of cost reductions for Fiscal Year 2011 and
beyond. However, the task force proposal
did not include documentation to show the methodology used to make the
proposals, how the estimates were calculated or validated, or how the IRS will
measure the results or the cost savings of the proposals.
The task
force believed that reducing the mailings of forms instead of eliminating them
was a more cautious approach, affecting fewer taxpayers in the short term. Nevertheless, IRS executives decided to
eliminate all mailings of tax packages for U.S. Individual Income Tax Return
(Form 1040), partnerships, and corporations in Fiscal Year 2011 in order to
meet the cost savings presented in the Fiscal Year 2011 budget request. This could increase burden and reduce compliance
for those taxpayers who rely on receiving these packages by mail.
As the IRS moves
forward with the proposed cost savings or pursues other methods of saving
publishing and mail costs, it needs to implement sufficient controls and
procedures to ensure the methodology for the decisions are documented and that
the data used are accurate and complete.
In addition, these controls should be part of
a long-term strategy to continually assess publishing and mail costs and identify
opportunities for cost reductions and efficiencies.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the Commissioner, Wage
and Investment Division, establish and implement a system of internal controls
to ensure that savings and cost data related to the elimination or reduction of
mailing tax products are current and reliable. A strategy should be developed to ensure that
publishing and mail costs are continually evaluated. The strategy should include goals and
measures, as well as steps to monitor the effect on taxpayer burden and
compliance.
In their response to the report, IRS
officials agreed with both recommendations.
Management implemented a system to ensure that savings and cost data
related to the elimination or reduction of mailing tax products are current and
reliable. The IRS also developed
strategies to ensure that publishing and mail costs
are continually evaluated, including a comprehensive strategy to measure the
effect on compliance and taxpayer burden of the current cost saving proposals.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go
to:
http://www.treas.gov/tigta/auditreports/2011reports/201140025fr.html
Email Address: TIGTACommunications@tigta.treas.gov
Phone
Number: 202-622-6500
Web Site: http://www.tigta.gov