October 15,
2009
MEMORANDUM FOR SECRETARY GEITHNER
FROM: J. Russell George /s/ J. Russell George
Inspector
General
SUBJECT: Management and Performance Challenges
Facing the Internal
Revenue Service for Fiscal Year 2010
The Reports Consolidation Act of 2000[1] requires that the Treasury Inspector
General for Tax Administration (TIGTA) summarize, for inclusion in the Department of the Treasury Accountability
Report for Fiscal Year 2009, its perspective on the most serious management
and performance challenges confronting the Internal Revenue Service (IRS or
Service). The top ten challenges in
order of priority are:
TIGTA’s assessment of the major IRS
management challenge areas for Fiscal Year 2010 has changed from the prior
year. The changes include reorganizing
the priority of challenges four through nine, revising the titles of three
challenges to better reflect their current emphasis, and adding a new challenge
entitled “Globalization.”
Although not listed as challenges, two
issues – tax law complexity and proposed healthcare reform legislation – warrant
additional consideration. While “Complexity
of the Tax Law” does not appear on this year’s list of challenges because it
has been overtaken by other concerns, it remains a serious, underlying issue with
wide-ranging implications for both the IRS and taxpayers. Tax law complexity and frequent revisions to
the Internal Revenue Code make it more difficult for the IRS to explain and
enforce the tax laws and more costly for taxpayers who want to comply. However, as the IRS lacks the authority to
enact changes to the tax law, it can do little but continue to react to the
frequently changing Internal Revenue Code while the debate over many
significant issues continues.
Similarly, numerous tax law changes are
contained in the healthcare reform legislation presently working its way
through Congress. The proposals include a
number of provisions that could have a significant effect on the IRS in the
coming year. As policies under
consideration continue to look toward the Internal Revenue Code to effect
changes, the IRS potentially faces the challenge of responding quickly by shifting
resources and altering established plans.
However, in doing so, there is some risk to the IRS’s overall mission if
the actions taken cause a decline in the quality and effectiveness of service
or taxpayer perception.
The following is a discussion of each
of the most serious management and performance challenges facing the IRS during
Fiscal Year 2010.
The Business Systems Modernization Program
(Modernization Program or Program) is a complex effort to modernize IRS
technology and related business processes.
It involves integrating thousands of hardware and software components while
replacing outdated technology and maintaining the current tax system. The IRS originally estimated that the
Modernization Program would last up to 15 years and incur contractor costs of
approximately $8 billion.[2] The Program is now in its 11th year
and has received approximately $2.7 billion for contractor services, plus an
additional $353 million for internal IRS costs.
TIGTA reviews have identified
weaknesses in program management processes throughout the life of the
Modernization Program. While the IRS has
improved its controls over these processes as the Program has continued to
mature, several weaknesses continue to exist.
Recent TIGTA audits have identified continued problems in requirements
development and management, program management, contract management and
security controls.
Although the Modernization Program has
continued to help improve IRS operations, project development activities have
not always implemented planned processes effectively or delivered all planned
system capabilities. The past year’s
Program performance did not continue the trend of improvement it demonstrated
in the prior three years. For example,
from May 2008 to May 2009, five of the 17 project milestones scheduled for
completion were significantly over budget, and three of 17 milestones were
significantly behind schedule.
The Modernization Program has
experienced significant and frequent turnover of high-level IRS and Program
executives. Since the Program began in
1999, three Commissioners, five Chief Information Officers, and, recently, a
Chief Technology Officer have overseen the Program. Many of these executives have made major
changes to the Program’s direction and strategies during their tenure. These changes in direction and strategy have
made it challenging to achieve continuity and long-term success.
The IRS has recognized that it faces
challenges in meeting the requirements of the next phase of project development
and system integration. As a result, the
IRS has stated that a strategy correction is needed to meet changing business
needs, have a more agile information technology environment, and reduce risks
with associated costs to build and maintain systems.
The immediate challenge recognized by
the IRS is the future of the Customer Account Data Engine,[3] the
acknowledged centerpiece of the Modernization Program. Since the IRS initiated the Customer Account
Data Engine project in 1999, after spending $335 million in development costs,
it has been able to process only about 30 percent of the individual income tax
returns filed. Limitations in Customer
Account Data Engine capabilities, including those reported by TIGTA and the
Government Accountability Office (GAO) in previous years, have resulted in the IRS’s
effort to reengineer processing of individual taxpayer accounts and the ability
to use downstream systems to improve customer service. With the pending changes and the yet to be
determined implementation of a reengineered process, the risks to the success of
the Modernization Program are significant.
Since 1995, the IRS has identified and
reported the Modernization Program as a material weakness. The Program and processes have not progressed
enough to eliminate the material weakness designation. Until the IRS is able to show consistent
progress and improvement in the management of its Modernization Program and
adequately addresses past TIGTA and GAO recommendations, the Program will remain
a high risk for the IRS and will continue to be considered a material weakness.
Millions of taxpayers
entrust the IRS with sensitive financial, personal, and other data that are
processed by and stored on IRS computer systems. Reports of identity theft from both the
private and public sectors have heightened awareness of the need to protect these
data. The risk that taxpayers’
identities could be stolen by exploiting security weaknesses in the IRS’s
computer systems continues to increase, as does the risk that IRS computer
operations could be disrupted. Internal
factors (such as the increased connectivity of computer systems and increased
use of portable laptop computers) and external factors (such as the volatile
threat environment resulting from increased terrorist and hacker activity)
require strong security controls.
Homeland Security
Presidential Directive-20[4] requires Federal Government agencies to develop
business continuity plans[5] to enable the recovery of critical functions after a
disaster or emergency. To comply with
the Directive, the IRS must develop and continually update its business continuity
plans to protect employees and recover critical business processes, data, and
information technology systems. The IRS
must protect large amounts of sensitive taxpayer data in addition to more than 100,000
employees and contractors in more than 660 facilities throughout the country. In reviews of these plans,[6] we determined that the IRS’s business continuity
planning efforts have not been sufficient to ensure that critical business
processes and systems may be efficiently restored in the event of a
disaster. We also found a majority of
the incident management, business resumption, and disaster recovery plans
lacked detailed planning information and recovery strategies.
The Federal Information
Security Management Act (FISMA)[7] requires each Federal Government agency to report
annually to the Office of Management and Budget and to Congress on the
effectiveness of its security programs and to perform an annual independent
evaluation of its information security program and practices. The number of incidents reported by Federal
agencies has increased dramatically over the past three fiscal years, from
5,503 incidents in 2006 to 16,843 incidents in 2008.[8] The IRS has
made steady progress in complying with FISMA requirements since the law’s
enactment in 2002 and continues to place a high priority on efforts to improve
its security program. However, the IRS needs
to do more to adequately secure its systems and data. Past audits have shown that the most
significant areas of concern are compliance with mandated security
configurations, implementation of access controls for computer systems, and use
of audit trails to detect computer intrusions and misuse.
The introduction of
malware,[9] also known as malicious code or malicious software,
into the IRS network continues to present a growing security concern. Although the IRS has had success in
preventing serious infections, the number of malware incidents within the IRS
continues to rise. Malware is difficult
to combat because it is delivered through commonly used applications and
devices, such as e-mail, the Internet, and portable media devices. Without sufficient controls to prevent the
introduction of malware, IRS computers and the sensitive taxpayer data stored
on them are at risk of compromise that could result in identity theft and
fraud.
Identity theft and phishing[10] schemes are also growing security concerns. TIGTA works closely with the IRS to identify
and investigate these schemes. Attempts
at identity theft and phishing related to Federal income taxes continue to rise
with incidents growing more than seven times in 2008.[11] In its 2009-2013
Strategic Plan, the IRS identifies the explosion in electronic data, online
interactions, and related security risks as a major trend expected to affect the
Service over the next five years.
Another
compelling challenge confronting the IRS is tax compliance. Tax compliance initiatives include the administration of tax regulations,
collection of the correct amount of tax from businesses and individuals, and
oversight of tax-exempt and government entities. Increasing voluntary compliance and
reducing the Tax Gap[12] are currently the focus of many IRS
initiatives. Nevertheless, the IRS is
facing significant challenges in obtaining more complete and timely data, and developing
the methods necessary to interpret the data.
Businesses and Individuals
The IRS estimated the gross Tax
Gap for Tax Year 2001 to be approximately $345 billion. Underreporting of taxes, which is comprised
of four major components (individual income tax, employment tax, corporate
income tax, and estate and excise taxes), is estimated at $285 billion and
accounts for the largest portion of the Tax Gap. Overall, the underreporting of individual
income tax and employment tax constitute over 70 percent of the gross Tax Gap.
In August 2007, the
Department of the Treasury and the IRS issued a report entitled Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance,
which details the strategy being taken to address the Tax Gap by increasing
voluntary compliance.[13] TIGTA
provided an evaluation of this strategy in 2008 and reported that the long-term
success of the strategy will, in large part, be dependent on addressing several
risk factors, including some that are beyond the control of the IRS.[14]
The IRS’s Fiscal Year 2010
budget submission requests $603 million above its Fiscal Year 2009 enacted
budget. More than half of this amount,
$332 million, is intended for additional compliance initiatives that will
target the Tax Gap. The IRS must
continue to seek accurate measures for the various components of the Tax Gap
and the effectiveness of the actions taken to reduce it. Broader strategies and better research are
needed to determine what actions are most effective in addressing
noncompliance.
Tax-Exempt Entities
The IRS continues to face challenges in administering
programs focused on ensuring that tax-exempt organizations comply with
applicable laws and regulations to qualify for
tax-exempt status. The number of organizations
granted tax-exempt status each year continues to increase. With more than $15 trillion in assets
currently controlled by tax-exempt organizations or held in tax-exempt
retirement programs and financial instruments, the IRS recognized in its 2009-2013
Strategic Plan that it must provide more careful oversight and advisory support
than ever before. In addition, the IRS’s Fiscal Year 2010 budget submission recognizes the
importance of maintaining a strong enforcement presence in the tax-exempt sector
to ensure charitable organizations are not used for non-charitable or illegal
purposes, including financing terrorist activities.
In a report issued in Fiscal Year 2009, we determined
that the Federal Government is at risk of losing future tax revenue because the
IRS has not developed or implemented the processes necessary to identify and
address noncompliance with State volume cap limits for tax-exempt private
activity bonds. Without these processes,
tax-exempt private activity bonds could be issued in excess of federally
mandated yearly State dollar limits without the IRS detecting and addressing
the noncompliance.[15]
Each filing season tests the IRS’s ability to
implement tax law changes made by Congress.
It is during the filing season that most individuals file their income
tax returns and contact the IRS with questions about specific tax laws or
filing procedures. Correctly
implementing tax law changes is a continuing challenge because the IRS must
identify the tax law changes; revise the various tax forms,
instructions, and publications; and reprogram the computer systems used for
processing returns. Changes to the tax
laws have a major effect on how the IRS conducts its activities, what resources
are required, and how much progress can be made on strategic goals.
Congress frequently changes the tax laws, so some
level of change is a normal part of the IRS environment. However, certain types of changes and the
timing of those changes can significantly affect the IRS in terms of the quality
and effectiveness of its service and how taxpayers perceive the IRS. In its
2009-2013 Strategic Plan, the IRS identifies the increasing complexity of tax
administration, which includes responding to new tax provisions and adjusting
to expiring ones, as a major trend expected to affect the Service over the next
five years.
American Recovery and Reinvestment
Act
The
American Recovery and Reinvestment Act of 2009[16] (Recovery Act) was signed
into law on February 17, 2009. The Recovery
Act presents significant challenges to
all Federal agencies as they move to implement provisions quickly while
attempting to minimize risk and meet increased standards for transparency and
accountability. With its numerous tax
provisions, the Recovery Act poses significant challenges to the IRS as the Nation’s
tax collection agency and administrator of the tax laws. These provisions, which impact both individual
and business taxpayers, will challenge the IRS as it attempts to implement the
required changes over multiple filing seasons.
Other Tax Law Changes
Other
recent legislation that has affected the IRS includes the Housing
and Economic Recovery Act of 2008,[17] the Emergency
Economic Stabilization Act of 2008,[18] and the Economic Stimulus Act of 2008.[19] These three Acts contained numerous tax law
changes that challenged the IRS during the 2009 Filing Season. Despite these challenges, the 2009 Filing
Season was generally successful, although the Recovery Rebate Credit, part of the Economic Stimulus Act of 2008, did cause
significant taxpayer confusion. Although
the IRS initiated a number of efforts to educate and assist individuals in computing
the Recovery Rebate Credit, the Credit still resulted in millions of taxpayer errors. Two
significant issues that could affect the IRS’s 2010 Filing Season include Alternative Minimum Tax relief and the
proposed healthcare legislation.
Since
the late 1990’s, the IRS has increased its delivery of quality customer service
to taxpayers. In July 2005, Congress
requested that the IRS develop a five-year plan, including an outline of which
services the IRS should provide and how it will improve services for taxpayers. The IRS developed the plan – the Taxpayer
Assistance Blueprint – which focuses on services that support the needs of
individual filers who file or should file the Form 1040 series tax returns.[20] The Blueprint includes
performance measures, service improvement initiatives, and an implementation
strategy for improving future service investment decisions. The
IRS has begun implementing the initiatives, but many are dependent on future
funding.
Despite having a plan in
place to improve service, providing quality service to taxpayers remains a
significant challenge for the IRS. For
example, the Toll-Free Telephone Program only achieved a 58.8 percent Level of
Service[21]
during the 2009 Filing Season (through March 7, 2009) because of increased call
demand for prior year Adjusted Gross Income and the Recovery Rebate Credit. Furthermore, the average speed to answer
taxpayers’ calls was 586 seconds (9.8 minutes), and the number of blocked calls
during the 2009 Filing Season increased more than seven times over the 2008
Filing Season.[22] Taxpayer Assistance Centers[23]
answered only 67 percent of tax law questions accurately and 82 percent of tax
account[24]
questions accurately.[25] Additionally, the Volunteer Program, which
plays an increasingly important role in the IRS’s efforts to improve taxpayer
service and facilitate participation in the tax system, accurately prepared
only 59 percent of TIGTA’s test tax returns.
The Department of the Treasury and the
IRS recognize that effective taxpayer service has a significant impact on
voluntary tax compliance. Assisting
taxpayers in preparing their returns by answering tax questions reduces the
burden of notices and correspondence that taxpayers might have received if they
made errors on their returns. Taxpayer service also reduces overall
unintentional noncompliance and the need for compliance activity in the future. The IRS continues to focus on the importance
of improving service by emphasizing it as one of the two main goals in its
2009-2013 Strategic Plan.
Since 2001, the GAO has
designated strategic human capital management as a high-risk area within the
Federal Government. In its 2009 update,
the GAO reported that despite significant progress over the last few years the
area remains a high risk because of a continuing need for a government-wide
framework to advance human capital reform.[26]
The Commissioner of
Internal Revenue (Commissioner) indicated his recognition of the need for
greater attention to human capital. The
Commissioner established the Workforce of Tomorrow Task Force to address
recruitment and retention issues so that the IRS has the necessary leadership
and workforce in place to address future challenges. Beginning in Fiscal Year 2008, TIGTA
developed a broad audit strategy for addressing human capital at an IRS
agency-wide level using the Human Capital Assessment and Accountability
Framework[27] as a guide.
Like
many other Federal Government agencies, the IRS has experienced workforce
challenges over the past few years, including recruiting, training, and
retaining employees, as well as an increasing number of employees who are
eligible to retire. More than half of
the IRS’s employees and managers have reached age 50, and 39 percent of IRS
executives are currently eligible for retirement. To fill the projected shortage in leadership,
the IRS has stated that it must recruit one manager a day for the next 10
years. Furthermore, the rate at which
new recruits in mission critical occupations are leaving the IRS during the
first and second year of employment has increased since Fiscal Year 2005. The pending loss of institutional knowledge
and expertise at all levels and the challenge of retaining a highly skilled
workforce increase the risk that the IRS may not be able to achieve its
mission.
The
IRS’s challenge of having the right people in the right place at the right time
is made more difficult by many complex internal and external factors. The work performed by IRS employees
continually requires greater expertise as tax laws become more complex, manual
systems used to support tax administration become computer based, and attempts
by taxpayers and tax practitioners to evade compliance with the tax laws become
more sophisticated. The IRS must also
compete with other Government agencies and private industry for the same human
resources, complicated by the fact that younger generations of employees move
between jobs more frequently than employees in the past. Furthermore, budget constraints, legislative
changes, and economic shifts can create unforeseen challenges for the IRS in
addressing its long-term human capital issues. In its 2009-2013 Strategic Plan, the IRS
identifies human capital challenges as a major trend expected to affect the
Service over the next five years.
As defined by the Improper
Payments Information Act of 2002,[28] an
improper payment is any payment that
should not have been made or that was made in an incorrect amount (including
overpayments and underpayments) under statutory, contractual, administrative,
or other legally applicable requirements.
It includes any payment to an ineligible recipient, any payment for an
ineligible service, any duplicate payment, payments for services not received,
and any payment that does not account for credit for applicable discounts. For the IRS, improper and erroneous payments
generally involve improperly paid refunds, tax return filing fraud, or
overpayments to vendors or contractors.
Refundable Credits
The
IRS administers numerous refundable tax credits. These refundable credits allow individual
taxpayers to reduce their tax liability below zero and, thus, receive a tax
refund even if no income tax was withheld or paid. Two significant refundable credits are the
Earned Income Tax Credit (EITC) and the Additional Child Tax Credit. The recently enacted American Recovery and
Reinvestment Act of 2009 also authorized several new refundable credits, examples
of which include the Making Work Pay Credit and First-Time Homebuyer Credit.
The
EITC remains the main refundable credit and continues to be vulnerable to a
high rate of noncompliance, including incorrect or erroneous claims caused by
taxpayer error and resulting from fraud.
The IRS has successfully developed a number of processes to identify
erroneous EITC payments prior to issuance.
However, because compliance resources are limited and alternatives to
traditional compliance methods have not been developed, the majority of the
potentially erroneous EITC claims identified continue to be paid in error. The IRS reports $10 billion to $12 billion
annually in erroneous EITC payments.[29]
Contract and Other Payments
Each
year, the Federal Government spends billions of dollars to acquire goods and
services. In Fiscal Year 2008, Federal
contracting outlays were more than $500 billion. Similarly, contract spending by the IRS represents
a significant outlay of Service funds. Numerous
past TIGTA audits have identified millions of dollars in questioned costs and
several instances of contractor fraud. A
summary of our work in this area over a period of approximately four years
concluded that an incomplete invoice verification process resulted in the IRS paying
approximately $7.5 million in questionable contract charges. In addition, an analysis of Defense Contract
Audit Agency reports issued in Fiscal Years 2006 and 2007 identified
approximately $167 million in questionable charges directly related to IRS
contracts.[30]
The scope, complexity, and
magnitude of the international financial system present significant enforcement
challenges for the IRS. As technology
continues to advance and cross-border transactions rise, the IRS faces the growing
challenge created by economic globalization.
Technological advances have provided opportunities for offshore
investments that were once only possible for large corporations and wealthy
individuals.
Taxpayers with
international activities – individuals, businesses, and tax-exempt
organizations – continue to grow in number and variety. Examples of this trend include: 1) United States-based corporations more than
tripled their foreign profits between 1994 and 2004, from $89 billion to $298
billion, with 58 percent of those profits earned in low-tax or no-tax
jurisdictions; 2) the number of multinational corporations worldwide has grown
from an estimated 3,000 in 1990 to over 63,000 in 2007; 3) the total income
reported for 2005 from active foreign corporations owned by United States
taxpayers exceeded $1.8 trillion; and 4) the percentage of Americans’ income
originating from foreign sources doubled between 2001 and 2006.
The IRS is challenged by a
lack of information reporting on many cross-border transactions. In addition, the varying legal requirements
imposed by different jurisdictions result in the formation of complex business
structures that make it difficult to determine the full scope and effect of
cross-border transactions. However, over
the past few years, the IRS has taken actions to better coordinate
international tax compliance issues. In
September 2007, the IRS announced a Service-wide Approach to International Tax
Administration highlighted by three strategic goals: 1) improving taxpayer
service; 2) enhancing enforcement and modernizing the IRS for improving
voluntary compliance with international tax provisions; and 3) reducing the Tax
Gap attributable to international transactions.
In addition, the Commissioner has emphasized that international issues
will be a top priority during his tenure.
The IRS has also made other changes to its structure and processes,
including increasing cooperation and outreach efforts to foreign governments. In its
2009-2013 Strategic Plan, the IRS identifies accelerating globalization as a
major trend expected to affect the Service over the next five years.
The
IRS must ensure that tax compliance activities are balanced against the rights
of taxpayers to receive fair and equitable treatment. The IRS continues to dedicate significant
resources and attention to implementing the taxpayer rights provisions of the IRS
Restructuring and Reform Act of 1998 (RRA 98).[31] Annual audit
reports are mandated for the following taxpayer rights provisions:
In general, the IRS has improved its compliance with these
statutory taxpayer rights provisions. The IRS has shown improvement over prior years when
documenting that taxpayers were informed of their rights. However, there were still instances in which
there was no documentation in the related case files to show that taxpayers
were advised of their rights regarding assessment statute extensions,[32] and the IRS did not always follow procedures for
mailing notices to taxpayers or their representatives in Federal Tax Lien
cases.[33]
Some IRS management information systems do not track cases that require
mandatory annual audit coverage.[34] Thus,
neither TIGTA nor the IRS could evaluate the Service’s compliance with certain
RRA 98 provisions.
Leveraging Data to Improve Program Effectiveness and
Reduce Costs
While the IRS has made some progress in
using its data to improve program effectiveness and reduce costs, this area continues
to be a major challenge. The IRS lacks a
comprehensive, integrated system that provides accurate, relevant, and timely
financial and operating data that describes performance measures, productivity,
and associated costs of IRS programs. In
addition, the IRS cannot produce timely, accurate, and useful information
needed for day-to-day decisions, which hinders its ability to address financial
management and operational issues to fulfill its responsibilities.
TIGTA and the GAO have continued to
report that various IRS management information systems are insufficient to
enable IRS management to measure costs, determine if performance goals have
been achieved, or monitor progress in achieving program goals. In its most recent financial statement audit,
the GAO noted that the IRS continues to face several key issues that represent
material weaknesses in internal control, including not having current and
reliable ongoing cost information to support management decision making and to
prepare cost-based performance measures.[35] In addition, our analysis of the IRS’s
December 31, 2008, Federal Financial Management Improvement Act of 1996 (FFMIA)[36] remediation
plan found that the IRS did not include remediation actions to address certain
GAO findings and recommendations related to the IRS’s noncompliance with the
FFMIA. These findings and
recommendations related to the IRS’s Integrated Financial System, which
provides the Service with an integrated accounting system to account for and
control resources.[37]
Conclusion
The above are the ten major management and
performance challenges for the IRS in Fiscal Year 2010. TIGTA’s Fiscal Year
2010 Annual Audit Plan contains our planned reviews and is organized
by these challenges. If you have
questions or wish to discuss TIGTA’s views on the IRS’s challenges in greater
detail, please contact me at (202) 622-6500.
cc: Deputy Secretary
Assistant Secretary for Management and Chief Financial Officer
Commissioner of Internal Revenue
[1] 31 U.S.C. § 3516(d).
[2] Treasury Inspector General for Tax Administration,
Ref. No. 2009-20-136, Annual Assessment
of the Business Systems Modernization Program (2009).
[3]
The Customer Account Data Engine is the
foundation for managing taxpayer accounts in the IRS Modernization plan. When completed, it will consist of databases
and related applications that will replace the existing IRS Master File
processing systems and will include applications for daily posting, settlement,
maintenance, refund processing, and issue detection for taxpayer tax account
and return data.
[4]
National
Continuity Policy, dated May 4, 2007
(also known as National Security Presidential Directive-51). This Directive establishes a comprehensive
national policy on the continuity of Federal Government structures and
operations.
[5]
IRS business continuity plans include an
Occupant Emergency Plan, which provides instructions to safely evacuate
employees and visitors from a facility or shelter them in place; an Incident
Management Plan, which addresses the overall command structure that would be
implemented in an emergency; a Business Resumption Plan, which provides
instructions for recovering and restoring disrupted business processes; and a
Disaster Recovery Plan, which addresses recovery and restoration of information
technology systems and data.
[6]
Treasury Inspector General for Tax
Administration, Ref. No. 2009-20-038, Better
Emergency Preparedness Planning Could Improve Business Continuity Efforts
(2009).
[7] Federal Information Security Management Act of 2002, 44 U.S.C. §§ 3541–3549.
[8]
[9] Malware refers to a program inserted into a computer
with the intent of compromising the confidentiality, integrity, or availability
of an organization’s data, applications, or operating systems.
[10] Phishing is the act of sending an e-mail to a user
falsely claiming to be an established, legitimate enterprise in an attempt to
scam the user into surrendering private information that could be used for
identity theft.
[11]
Internal Revenue Service Strategic Plan
2009-2013.
[12] The IRS defines the Tax Gap as the difference
between the estimated amount taxpayers owe and the amount they voluntarily and
timely paid for a tax year.
[13]
An updated report providing an overview of
efforts to close the Tax Gap was issued in July 2009.
[14] Treasury Inspector General for Tax Administration, Ref. No. 2008-30-094, Additional Actions Are Needed to Effectively Address the Tax Gap (2008).
[15]
Treasury Inspector General for Tax
Administration, Ref. No. 2009-10-097, Future
Tax Revenues Are at Risk Because Certain Tax-Exempt Bonds May Exceed Annual
Dollar Limits Without Detection (2009).
[16] Pub. L. No. 111-5, 123 Stat. 115.
[17] Pub. L. No. 110-289, 122 Stat. 2654.
[18] Pub. L. No. 110-343, 122 Stat. 3766.
[19] Pub. L. No. 110-185, 122 Stat. 613.
[20] The Form 1040 series tax returns
include any IRS tax forms that begin with “1040” such as the U.S. Individual
Income Tax Return (Form 1040), U.S. Individual Income Tax Return (Form 1040-A),
and Income Tax Return for Single and Joint Filers With No Dependents (Form
1040EZ).
[21]
Level of Service is the IRS’s primary measure
of providing taxpayers with access to an assistor. Level of Service reflects the relative success rate of taxpayers who call the 20 Customer Account
Services toll-free telephone lines seeking assistance from an assistor. It measures the success rate of access to the
telephone system using the number of calls answered by IRS assistors.
[22] A blocked call is one that cannot be connected immediately
because either: 1) no circuit is
available at the time the call arrives (i.e., the taxpayer receives a busy
signal); or 2) the system is programmed to block calls from entering the queue
when the queue backs up beyond a defined threshold (i.e., the taxpayer receives
a recorded announcement to call back at a later time). The IRS refers to the latter type of blocked
call as a courtesy disconnect. The IRS
blocked more calls during the filing season rather than allow more callers to
wait on hold.
[23]
Taxpayer Assistance Centers are walk-in sites where taxpayers can obtain answers to both
account and tax law questions, as well as receive assistance in preparing their
tax returns.
[24]
A tax account is a
record of a taxpayer’s tax and tax-related data recorded on the IRS’s Master File
database.
[25] Treasury Inspector General for Tax Administration, Ref. No. 2009-40-058, Interim Results of the 2009 Filing Season (2009).
[26]
[27]
The Framework was
established by the United States Office of Personnel Management. It provides consolidated guidance for
agencies to transform human capital management and understand what is to be
done, how it can be done, and how to gauge progress and results. It also presents the expectations that guide
the agency’s assessment of human capital efforts.
[28] Pub. L. No. 107-300, 116 Stat. 2350.
[29] Treasury Inspector General for Tax Administration, Ref. No. 2009-40-024, The Earned Income Tax Credit Program Has Made Advances; However, Alternatives to Traditional Compliance Methods Are Needed to Stop Billions of Dollars in Erroneous Payments (2008).
[30] Treasury Inspector General for Tax Administration,
Ref. No. 2008-10-092, Procurement’s
Control Environment Was Ineffective and Did Not Prevent Overpayments to
Contractors (2008).
[31] Pub. L. No. 105-206, 112 Stat. 685
(codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C.,
19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49
U.S.C.).
[32] Treasury Inspector General for Tax Administration,
Ref. No. 2009-30-113, Fiscal Year 2009
Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When
Requested to Extend the Assessment Statute (2009).
[33] Treasury Inspector General for Tax Administration,
Ref. No. 2009-30-089, Additional Actions
Are Needed to Protect Taxpayers’ Rights During the Lien Due Process (2009).
[34] Treasury Inspector General for Tax Administration,
Ref. No. 2009-30-046, Fiscal Year 2009
Statutory Review of Disclosure of Collection Activity With Respect to Joint
Returns (2009) and Treasury Inspector General for Tax Administration, Ref.
No. 2009-30-054, Fiscal Year 2009
Statutory Review of Restrictions on Directly Contacting Taxpayers (2009).
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