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GGD-94-141R 1 (1994-06-16)

handle is hein.gao/gaobackox0001 and id is 1 raw text is: 151q02 0 United States General Accounting Office Washington, D.C. 20548 General Government Division B-257608 June 16, 1994 The Honorable Jim Sasser Chairman, Committee on the Budget United States Senate Dear Mr. Chairman: By letter dated June 14, 1994, you referred to the additional budget authority being requested for fiscal year 1995 Internal Revenue Service (IRS) compliance initiatives and asked for our opinion on the effect of the additional authority on budget deficits over the next 5 years. We believe that the additional budget authority will not increase the budget deficit over the 5-year period in question provided (1) the funds are used as intended to increase IRS' enforcement staffing levels and thus generate more revenues through enhanced compliance efforts, (2) funds are provided in the fiscal years after 1995 to maintain the increased staffing levels, and (3) IRS is able to successfully hire, train, and retain the additional staff provided by the budget authority. A deficit increase in the first year is possible because of the lag between the time new staff are hired and the time they become productive. In our opinion, however, based on past reviews of IRS' enforcement programs, an increase in enforcement staffing will help generate significant revenues over the long term, provided the increased staffing levels are maintained. IRS' enforcement presence is relatively low (e.g., IRS now audits less than 1 percent of the total number of income tax returns filed) and yet revenues to be collected are substantial--the estimated income tax gap for tax year 1992 was $127 billion. Last month, we issued a report on the tax gap in which, among other things, we discussed efforts toward and ideas for reducing the gap, including the possibility of providing IRS with additional enforcement resources.1 'Tax Gap: Many Actions Taken But a Cohesive Compliance Strategy Needed (GAO/GGD-94-123, May 11, 1994). GAO/GGD-94-141R, IRS Compliance Initiatives

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