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GAO-09-571R 1 (2009-05-07)

handle is hein.gao/gaobaannh0001 and id is 1 raw text is: I Am,GA 0 T E IAccountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 May 7, 2009 The Honorable John Lewis Chairman The Honorable Charles W. Boustany, Jr. Ranking Member Subcommittee on Oversight Committee on Ways and Means House of Representatives Subject: Tax Administration: Possible Implications of Expanding Refund Offset Provisions Millions of federal taxpayers receive billions of dollars in income tax refunds every year. Many of these refunds are paid to taxpayers who owe money to the federal government or to their state or local government. The law allows certain types of debts to be collected through offsets of federal income tax refunds before payments are issued to taxpayers-in calendar year 2008, over $5 billion was deducted from income tax refunds and used instead to pay other federal agency nontax debt, state income tax debt, and overdue child support payments. Due in part to the current economic downturn and the financial problems of state and local governments, interest has grown in potential expansion of the refund offset program as a means to collect additional kinds of state or local debts. On the basis of your request, this letter's objectives are to describe (1) recent proposals to expand the refund offset program, and (2) challenges and design issues that would need to be addressed by policymakers and program administrators in the event of program expansion, including the implications of eliminating the current requirement that tax refund offsets for state income tax debts are allowed only when the affected taxpayer lives in the state seeking the offset. We identified and reviewed recent legislative and interest group proposals to expand the tax refund offset program. We reviewed agency documentation on program operations and obtained summary data from the Department of the Treasury's Financial Management Service (FMS) on debt collected through offset. We determined that the data provided by FMS were sufficiently reliable for background purposes in this letter. We researched the relevant statutory and regulatory provisions pertaining to the offset of federal income tax refunds. We interviewed officials from the Department of Treasury's FMS, Internal Revenue Service (IRS), and Office of Tax Policy to both obtain an understanding of refund offset program operations and officials' perspective on possible program expansion as suggested in GAO-09-571R Tax Refund Offsets

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