Oversight Board Identifies IRS Problems

The IRS Oversight Board released its annual report to Congress on Thursday, describing the IRS’ performance during fiscal 2010 and its progress in meeting the goals in its strategic plan.


The board describes the challenges the IRS has faced in recent years in administering new tax laws enacted to provide economic relief during the recession. The report notes that “[t]he IRS has responded well to these challenges, but the result has been to stretch the IRS’ resources thin.” An appendix to the report describes the effects recent tax law changes have had on tax administration during the 2007 through 2010 filing seasons. The board is concerned that there is an “under-appreciation of the importance of tax administration to the nation’s economic well-being as evidenced by a willingness to expand the complexity of the tax code with little regard for the impact on taxpayers or the resources needed by the IRS to administer the code.”


However, despite facing the challenge of implementing various new tax provisions, the IRS had “a generally successful 2010 filing season,” the report concludes.


The report identifies two systemic weaknesses that the IRS should address: the tax gap and information technology. The reports states that “[f]ailure to mitigate these weaknesses will cause long-term performance issues for the tax administration system.”


The report notes that neither the board nor the IRS can determine whether any progress is being made in reducing the tax gap. IRS estimates of the size of the tax gap are based on data from 2001 returns (although it plans to update its tax gap estimate by the end of this year). Without more frequent measurements, it is “ very difficult to evaluate the overall effect of those programs on voluntary compliance.” The board plans to work with the IRS to help develop ways to evaluate the effectiveness of IRS programs.


The report also assesses the IRS’ progress on its business systems modernization program. It notes that the IRS did not receive the amount of funding it had requested for the program in fiscal 2011 and that “low funding levels represent a risk to the timely and successful delivery of the program.” In March, the board recommended that the business systems modernization program receive $333.6 million in fiscal 2012.


More from the JofA:


 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.