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IRS Need to Improve Internal Controls: GAO

May 14, 2013

The Government Accountability Office (GAO) published a report on May 13, 2013, addressed to Mr. Steven T. Miller, the Acting Commissioner of Internal Revenue, stating that the IRS needed to enhance its internal controls. The report mentions the deficiencies in the IRS’ unpaid tax assessments estimation process, refunds disbursement, authorization of manual refunds, and the excise tax receipt certification process. The problems identified in the report are for the 2012 fiscal year.

According to the report, 60 previous recommendations by the GAO as of September 30, 2012, identifying problems and suggesting corrective measures remain unanswered. The IRS completed corrective action for only 23. The agency is in a tight corner as the quality of its processes has been identified as lacking, and the price for it is ultimately paid by taxpayers.

The IRS says it will complete corrective actions on the present report by the GAO by October 2014. It promises to perform risk assessments to estimate the appropriate level of Integrated Data Retrieval System (IDRS) access that should be given to IRS employees who handle hardcopy taxpayer receipts and sensitive taxpayer information. The GAO says it will analyze and evaluate the steps taken by the IRS and publish its results.

Not only is the IRS battling non-compliance, the agency is also fighting non-compliance and tax fraud within its own walls. News of increasing tax non-compliance among federal workers has been a surprise. As many as 312,000 federal workers and retirees owed more than $3.5 billion in taxes as of Sep 30, 2011.

In some cases, unscrupulous former IRS employees steal fellow taxpayers’ money easily because they know the processing methods of the IRS. It is important that the IRS fixes the loopholes and inefficiencies to limit the cost taxpayers pay for losses of tax revenue.

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