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Open Recommendations

Tax Administration: IRS Needs to Take Additional Actions to Prepare for New Information Reporting Requirements
GAO-24-107028
Sep 19, 2024
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4 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should update IRS's policies and procedures to require a documented risk assessment for substantive tax administration decisions and include guidance on when these assessments are needed, such as when a decision could affect a large number of taxpayers or when decisions could generate congressional or oversight scrutiny. (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 offices implementing the lowered Form 1099-K reporting threshold develop and implement a process to comprehensively and systematically document stakeholder feedback. (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 ensure the Communication and Liaison Office and the Office of Digital Asset Initiative consult with the offices implementing the lowered Form 1099-K reporting threshold and incorporate any lessons learned and effective outreach strategies into their communication strategy for the new digital asset reporting requirements. (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 the Communication and Liaison Office and the Office of Digital Asset Initiative update their Communication Strategy to include periodic evaluation of their outreach and education efforts to assess whether they are meeting the agency's goals and providing timely, understandable, readily available, and accessible information to tax professionals, industry, and taxpayers. (Recommendation 4)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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
IRS agreed with this recommendation. 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
IRS agreed with this recommendation. 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
IRS agreed with this recommendation. 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
IRS agreed with this recommendation. 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
IRS agreed with this recommendation. 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
IRS agreed with this recommendation. 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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2 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
IRS agreed with our recommendation. IRS reported in May 2024 that the Direct File pilot conducted during the 2024 filing season cost about $20.2 million. IRS officials continue to work on developing more complete cost estimates for future filing seasons. IRS officials provided a rough cost estimate for Direct File during the 2025 filing season in July 2024 and updated their estimates in October 2024. However, IRS officials did not estimate certain costs, such as customer service expenses. IRS officials reported in October 2024 that they are planning to develop more comprehensive cost estimates and are also working to improve cost estimation policies across the agency to align procedures with best practices.
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
IRS agreed with the recommendation. IRS reported in May 2024 that the majority of taxpayers who participated in the Direct File pilot conducted during the 2024 filing season found its new system to be "much easier" than the filing method they used during the prior year. The Department of the Treasury estimated the amount of money taxpayers saved in tax preparation fees by using Direct File. IRS officials reported in October 2024 that they plan to assess the extent to which Direct File may have helped taxpayers claim credits and benefits they are eligible for and potential challenges taxpayers may face in using Direct File. IRS officials are also conducting additional survey research related to the potential benefits of Direct File, such as the extent to which the system may have saved taxpayers time and another survey concerning taxpayers' interest in using Direct File and experiences with chat-based customer support.

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
1 Priority
Agency Affected Recommendation Status
Internal Revenue Service
Priority Rec.
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. For example, one of the leading practices involves considering high-risk issues. In June 2023, IRS officials told us they were working to map the April 2023 Inflation Reduction Act Strategic Operating Plan's objectives and initiatives to our unimplemented priority recommendations. As of May 2024, IRS does not have an estimated completion date for this effort. Further, in May 2024, IRS released an update to the Strategic Operating Plan. However, IRS has not provided information to show how its plan would address those recommendations we have highlighted as being of the highest priority. To fully implement this recommendation, IRS needs to show how it is using the leading practices to inform its planning and assess its reform efforts. 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.
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