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Open Recommendations

Tax Gap: IRS Should Take Steps to Ensure Continued Improvement in Estimates

GAO-24-106449
Jun 05, 2024
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6 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should ensure officials in the Research, Applied Analytics and Statistics Division work with officials in the Small Business/Self-Employed and Large Business and International Divisions to develop and report on analyses that could provide stakeholders with more confidence in the methods used to estimate undetected noncompliance, and information on its root causes. (Recommendation 1)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation on key components of the NRP AI models, such as which model options were considered and chosen for implementation, and how IRS determined risk levels and time frames for risk level updates. (Recommendation 2)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation for the NRP AI models on the technical specifications needed to run the model, such as how the data are to be split or divided. (Recommendation 3)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should ensure IRS has complete documentation on how to update the NRP sample selection process in response to changes in the operating environment, including the performance of its AI models and risk level analysis. (Recommendation 4)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should complete documentation on processes for assessing the results of AI model updates, including validating the models. (Recommendation 5)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should develop and document a plan for evaluating the redesigned sample selection process, including factors IRS will consider in determining whether or how to continue using it. (Recommendation 6)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

IRS Direct File: Actions Needed during Pilot to Improve Information on Costs and Benefits

GAO-24-107236
Apr 09, 2024
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3 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should ensure that relevant officials apply best practices to estimate and document the full costs of developing and operating a Direct File system. (Recommendation 1)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should ensure that relevant officials estimate and document the potential benefits of a Direct File system. (Recommendation 2)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Internal Revenue Service The Commissioner of Internal Revenue should use the cost and benefit data collected during the pilot along with other relevant considerations to inform future decisions about the Direct File system. (Recommendation 3)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

IRS Reform: Following Leading Practices and Improving Cost Estimation Policies Could Benefit Agency Efforts

GAO-24-106091
Feb 14, 2024
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5 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service As IRS implements its agency reform efforts, the Commissioner of Internal Revenue should ensure that IRS can demonstrate that it is following relevant leading agency reform practices. (Recommendation 1)
Open
IRS agreed with this recommendation. In its comments on our February 2024 report, IRS stated that it is in the process of implementing leading agency reform practices but did not provide supporting evidence. In May 2024, IRS released an update to its April 2023 Inflation Reduction Act Strategic Operating Plan. GAO will continue to monitor IRS's implementation of these plans. Following leading practices will help ensure IRS is successful in making the transformational tax administration reforms described in its Strategic Operating Plan.
Internal Revenue Service The Commissioner of Internal Revenue should establish a cost estimating policy for estimating costs of non-IT initiatives that addresses the 12 steps and associated best practices found in our Cost Guide. (Recommendation 2)
Open
In January 2024, IRS officials said they agree with formalizing IRS's existing guidance, but will document a policy that allows IRS to tailor whether all steps are needed, depending on the situation or type of estimate. We will continue to monitor the agency's progress on implementing this recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should include IRS's policy for estimating costs of non-IT initiatives in the IRM and issue interim guidance while the IRM section is being developed. (Recommendation 3)
Open
In January 2024, IRS officials said they are in the process of publishing cost estimation guidance for non-IT initiatives in the IRM. We will continue to monitor the agency's progress on implementing this recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should incorporate all 12 steps and associated best practices found in our Cost Guide into IRS's IT cost estimation procedures. (Recommendation 4)
Open
In January 2024, IRS officials said the agency will assess which GAO steps and best practices will be included in the IRS IT cost estimation procedures and incorporate the steps that are applicable to IRS IT operational requirements. We will continue to monitor the agency's progress on implementing this recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should include IRS's IT cost estimation procedures in the IRM and issue interim guidance while the IRM section is being developed. (Recommendation 5)
Open
In January 2024, IRS officials said the agency is in the process of publishing existing cost estimation guidance for IT initiatives in the IRM. We will continue to monitor the agency's progress on implementing this recommendation.

Tax Compliance: Opportunities Exist to Improve IRS High-Income/High-Wealth Audits

GAO-24-106112
Feb 12, 2024
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8 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should assess whether IRS's research data on HI/HW returns have sufficient coverage and quality to understand the complexity and compliance related to HI/HW tax returns. (Recommendation 1)
Open
IRS agreed with the recommendation. According to IRS, it plans to use data analytics to better understand the filing profile of high-income/high-wealth taxpayers. To fully implement this recommendation, IRS needs to assess whether its underlying research data is sufficient to analyze this taxpayer population. We will continue to monitor IRS's efforts to address our recommendation.
Internal Revenue Service Based on an assessment of the coverage and quality of HI/HW tax return research data, the Commissioner of Internal Revenue should take steps to improve those data, if needed, to better understand the complexity and compliance related to HI/HW tax returns. (Recommendation 2)
Open
IRS agreed with the recommendation. According to IRS, it plans to improve data analytics to identify cases (tax returns) for high risk of noncompliance. To fully implement this recommendation, IRS needs to also improve the underlying data, based on a data assessment, it plans to analyze. We will continue to monitor IRS's efforts to address our recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should develop evaluation plans that include relevant evaluation questions and appropriate evaluation designs to evaluate the effectiveness of IRS's models for selecting HI/HW returns for audit. (Recommendation 3)
Open
IRS agreed with the recommendation. We will continue to monitor IRS's efforts to address our recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should use IRS's evaluation plans to evaluate the effectiveness of its models for selecting HI/HW returns for audit. (Recommendation 4)
Open
IRS agreed with the recommendation. We will continue to monitor IRS's efforts to address our recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should develop a mechanism for consistently collecting and using feedback from audit staff. (Recommendation 5)
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IRS agreed with the recommendation. According to IRS, it is creating a more formalized structure to receive feedback from audit staff. We will continue to monitor IRS's efforts to address our recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should assess IRS's current and future hiring and training needs for HI/HW auditing, including the number of staff and their skills. (Recommendation 6)
Open
IRS agreed with the recommendation. According to IRS, it is increasing the hiring capacity of its Human Capital Office, as well as increasing its efforts to hire and train individuals with the skill and potential to work more complicated high-income/high-wealth audit cases. To fully implement this recommendation, IRS needs to determine what skills are needed and the extent to which IRS needs to hire and train for such skills. We will continue to monitor IRS's efforts to address our recommendation.