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GGD-78-70 1 (1978-08-15)

handle is hein.gao/gaobaaxub0001 and id is 1 raw text is: DCCURENT RISUNI 06819 - CB22873681 (Restricted) Additional IRS Actions Needed To Bake Sure That Individuals Pay the Correct Social Security Tax. GGD-78-70; B-137762. August 15, 1978. 33 pp. + 3 appendices (18 pp.). Report to Sen. Russell B. Long, Chairman, Joint Ccamittee on Taxation; Rep. Al Ullman, Vice Chairman, Jcint Committee on Taxation; by Elmer B. Sraats, Comptrcller GeLeral. Issue Area: Tax Administration (2700); Tax Policy (1500). Contact: General Government Div. Budget Function: General Government: Central Fiscal Cperations (803). Orqanization Concerned: Internal Revenue Service. Congressional Relevancc: Joint Comitte -- Taxaticn. Rep. Al Ullaan; Sen. Russell B. Long. Authority: Federal Insurance Contributions Act. Self-Employment Contributions Act. 26 U.S.C. 3121(a). 26 U.S.C. 3401(a). 26 U.S.C. 1402(b). The focus of the Internal Revenue Service (IRS) audits .s on the proper reporting and payment of income taxes rather than on the accurate reporting of and payment Cf social security taxes. There is a need to recognize that iny problem nffecting social security taxes will grcw in importance as these taxes increase in the coming years. Findings/Conclusions: A net underpayment of about-S32 million to the Social Securit7 Tax Fund resulted from: tne number and quality of IES audits of social security taxes paid by taxpayers who indicated they had self-employment incomes; problems that the IRS and taxpayers ihave in determining whether miscellaneous earned income is subject to social security tax and, If so, what kind; and th adequacy of IRS programs to ensure zcFer reporting and payment of social security taxes. Recommendations: The IRS should: revise its procedures to require classifiers to lock at the self-employment tax issue when identifying areas for audit; require quality review staffs to identify and report on all errors so that error patterns and trends are identified and made available for management consideration of program quality; impleaent on a test basis a service center audit program to identify obvious social security tax errors on returns with attached schedule SE~s and expand the program to all se-rvice cent rs if it proves to be cost effective; revise taz auditor and exasiner c,.urse material to provide more training in social security tax problems; expand the self-employment tax prcgram to include returns reporting wother inccmeu subject to federal Insurance Contributions Act social security tax; and specify the factors to be included in the service center qlaiitl review program audit reports and require the quality teview staffs to send reports on their review efforts to appro iate aanagement officials. (Author/SC) /

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