Tax News

CCH (cch.taxgroup.com) reports:

The Government Accountability Office (GAO) has issued a report addressing the need for improvement by the IRS in handling its paper case files. The study, prompted by the IRS's inability to locate files requested by the GAO, showed the IRS lacks an effective process for locating paper case files. The GAO noted that the IRS does not track whether files requested have been located and, if not, the reason for the inability to locate the file. Consequently, the IRS lacks sufficient data to evaluate its file management processes. The report further noted that missing files can result in lost revenue, as well as undue taxpayer burden.
Senate Finance Committee ranking member Charles E. Grassley, R-Iowa, in a written statement criticized the IRS's lost paperwork, stating, "If the tables were turned, and it was the taxpayer losing his records, the IRS would have zero tolerance." He went on to say that the findings of the GAO are made worse by the fact that they are coming, "... a day after the House voted against private contractors assisting the IRS in its work on debt collection." According to the senator, the IRS may need more, not fewer, private contractors to assist with its work.
The GAO recommends the IRS take measures to ensure management of paper case files are in accordance with the Federal Records Act (FRA) and internal control standards and that it establish a tracking system for lost files. Moreover, the IRS should develop performance measures to assess needed improvements. In addition to other recommendations that would require IRS evaluation to determine their feasibility, the GAO recommended monitoring of case file performance across internal compliance programs. The IRS agreed, and has outlined actions to take in response to the recommendations.
GAO Report: Tax Administration --The Internal Revenue Service Can Improve Its Management of Paper Case Files (GAO-07-1160)
SFC Release on Grassley's Comments on GAO Report