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GAO-23-106351 1 (2022-11-28)

handle is hein.gao/gaonyc0001 and id is 1 raw text is: U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 November 28, 2022 Congressional Requesters Internal Revenue Service: Information about Funding, Financial Reporting Controls, and GAO Recommendations The Inflation Reduction Act of 2022 (Public Law 117-169), signed into law on August 16, 2022, provided the Internal Revenue Service (IRS) with $79.4 billion in funding over 10 years to enhance IRS resources and improve taxpayer compliance, among other purposes. In October 2022, IRS estimated that the annual net tax gap-the difference between taxes owed and taxes paid on time-was $428 billion, on average, for tax years 2014-2016. Enforcement of tax laws helps fund the U.S. government by collecting revenue from noncompliant taxpayers and promoting voluntary compliance by building confidence that everyone is paying their fair share in taxes. As such, it is critically important for IRS to effectively plan, prioritize, and manage this new funding. We have made numerous recommendations to IRS that, if fully implemented, could significantly improve IRS's operations. Further, we have several ongoing and planned audits to help the Congress in its oversight of IRS's effective and proper management of these funds. You asked us for information about IRS funding, IRS financial reporting and information system controls, and IRS high-risk areas and our related recommendations. To address the questions, we reviewed IRS annual appropriations for fiscal years 2002 to 2022 and supplemental funding received in recent years based on analysis from our IRS filing season work.1 We reviewed the results of our recent audits of IRS's financial statements, including our subsequently issued management reports. These reports present new deficiencies in IRS's internal control over financial reporting and the status of IRS's corrective actions to address prior deficiencies.2 We also reviewed our prior high-risk reports and June 2022 letter to IRS on priority 1GAO, Tax Filing: 2021 Performance Underscores Need for IRS to Address Persistent Challenges, GAO-22-104938 (Washington, D.C.: Apr. 11, 2022). We expect to issue a report on the 2022 filing season in December 2022. 2GAO, Financial Audit: IRS's FY2022 and FY2021 Financial Statements, GAO-23-105564 (Washington, D.C.: Nov. 10, 2022); Financial Audit: IRS's FY2021 and FY2020 Financial Statements, GAO-22-104649 (Washington, D.C.: Nov. 10, 2021); and, Management Report: IRS Needs to Improve Financial Reporting and Information System Controls, GAO-22-105559 and GAO-22-105558SU (Limited Official Use Only version) (Washington, D.C.: May 25, 2022). GAO-23-106351 IRS Oversight Page 1

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