The Internal Revenue Service was unable to deploy an $8.6 million case management system for matching tax returns with information returns from banks and brokerage firms reporting data such as credit card transactions and the cost basis of trades, according to a new government report.
The report, from the Treasury Inspector General for Tax Administration, noted that Congress enacted information reporting and document matching legislation starting in 2009 to narrow the $450 million tax gap by requiring third-party payors to submit information returns to the IRS reporting income earned by businesses on merchant payment card and the cost basis for securities transactions.
In response, the IRS began creating the software infrastructure needed to implement the Information Reporting and Document Matching program and has developed and deployed four out of five IRDM information technology projects. However, according to TIGTA, the IRS developed, but did not deploy, its IRDM Case Management System to manage business taxpayer cases with identified underreported income.
Years of budget cuts are having a negative impact on the ability of the Internal Revenue Service to collect delinquent taxes, according to a new government report. The IRS’s Automated Collection System is responsible for answering incoming taxpayer calls as well as working the inventory of taxpayer delinquent accounts, the report from the Treasury Inspector General for Tax Administration noted. Since fiscal year 2010, the ACS workforce has declined by 39 percent due to attrition or reassignment, TIGTA found. Because those resources are needed to answer telephone calls, fewer resources are available to work on the inventory of past-due taxes.
This has contributed to unfavorable trends in several ACS business results, the report noted, including the amount of new inventory of cases of uncollected taxes outpacing closures of such cases; the inventory of delinquent tax cases taking longer to close; more cases being closed as uncollectible; fewer enforcement actions being taken; and more aged cases being transferred to a holding file queue that the IRS maintains of uncollected taxes. In addition, the IRS has not established performance metrics to measure the effect that answering incoming calls has had on compliance business results, TIGTA pointed out. Capturing such data would allow ACS management to assess the impact of prioritizing call handling.