New GAO Report
Source: Government Accountability Office
eCommerce Customer Registration (PDF)
Source: U.S. Department of Health and Human Services, Office of Inspector General
The U.S. Postal Service’s Customer Registration application allows customers to create accounts through USPS.com to purchase products and services through over 40 eCommerce applications such as Every Door Direct Mail, Premium Forwarding Service, Click-N-Ship, and the Postal Store. Customers must provide personally identifiable information to create an account. There were over 24 million Customer Registration users as of June 2014 and revenue totaled about $1.2 billion in fiscal year (FY) 2013.
Our objective was to determine the effectiveness of controls used to safeguard the eCommerce Customer Registration process and reduce online credit card fraud.
What the OIG Found
Controls used to safeguard the eCommerce Customer Registration process and reduce online credit card fraud need improvement. Management has not established a threshold for fraud-related chargebacks (transactions rejected by credit card companies) for the four eCommerce applications in our review. As a result, management cannot objectively measure when to increase oversight and controls to reduce fraud.
Of the four applications, Click-N-Ship’s credit card fraud-related loss of $4.6 million was above the industry’s recommended threshold for acceptable levels of credit card fraud in FY 2013. In addition, management did not always ensure all credit card company chargebacks were validated.
Further, seven of the eight Customer Registration controls we tested worked as management intended. However, we identified one vulnerability that could permit a cyber criminal to impersonate a valid user and obtain postage using stolen credit card data. Finally, we did not identify any critical or high-risk vulnerabilities when conducting over 3,000 additional tests of the USPS.com login page.
What the OIG Recommended
We recommended management establish a threshold for credit card fraud and develop a policy defining chargeback roles and responsibilities. We also recommended management maintain chargeback research results from all eCommerce managers and configure eCommerce applications to prevent the noted security vulnerability.
Affordable Care Act: Improvements Needed to IRS’s Medical Device Excise Tax Program
Source: Treasury Inspector General for Tax Administration
The Internal Revenue Service (IRS) needs to improve its strategy to ensure accurate reporting and payment of the Medical Device Excise Tax, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
The Affordable Care Act includes an excise tax equal to 2.3 percent of the sales price for medical devices sold beginning January 1, 2013. Manufacturers, producers, and importers are responsible for collecting the excise tax and must file a Form 720, Quarterly Federal Excise Tax Return. The Joint Committee on Taxation estimated revenues from the medical device excise tax of $20 billion for Fiscal Years 2013 through 2019.
The overall objective of TIGTA’s review was to assess the IRS’s processing of tax returns reporting the medical device excise tax and its efforts to identify taxpayer noncompliance.
TIGTA found that both the number of Forms 720 filed reporting the medical device excise tax and the amount of associated revenue reported were lower than estimated.
The IRS is attempting to develop a compliance strategy to ensure that businesses are compliant with the filing and payment requirements and has taken several measures to advise medical device manufacturers of the new excise tax. However, the IRS cannot identify the population of medical device manufacturers registered with the Food and Drug Administration that are required to file a Form 720 and pay the excise tax.
In addition, processing controls do not ensure the accuracy of medical device excise tax figures reported on paper-filed Forms 720. TIGTA’s analysis of 5,107 Forms 720 processed for the first half of 2013 identified discrepancies in the amount of the excise tax and/or taxable sales amount captured from 276 paper-filed tax returns. TIGTA identified medical device excise tax discrepancies totaling almost $117.8 million when comparing the excise tax amount captured by the IRS from the Form 720 to the excise tax amount that TIGTA calculated.
Finally, the IRS erroneously assessed 219 failure-to-deposit penalties totaling $706,753 against businesses filing a Form 720 for the six months ending June 30, 2013, which was designated a penalty relief period. The IRS had reversed 133 of the 219 penalty assessments. When TIGTA alerted the IRS of the remaining 86 penalties, IRS management reversed the penalties and issued apology letters to the affected taxpayers.
“While the IRS has taken steps to educate medical device manufacturers of the medical device excise tax during implementation, it faces challenges to definitively identify manufacturers subject to the medical device excise tax reporting and payment requirements,” said J. Russell George, Treasury Inspector General for Tax Administration.
TIGTA recommended that the IRS continue refining its compliance strategy to include actions that can be taken to identify noncompliant manufacturers. Additionally, TIGTA recommended that the IRS review the 276 tax returns TIGTA identified to determine the proper excise tax owed, establish a process to verify the accuracy of the medical device excise tax amount for paper-filed Forms 720, and initiate a process to correspond with taxpayers to obtain missing taxable sales or tax amounts.
The IRS agreed with TIGTA’s recommendations and plans to consider alternative strategies for identifying noncompliant manufacturers, identify programming changes needed to improve the math verification for paper-filed Forms 720, and implement procedures for corresponding with taxpayers if the changes can be accomplished within budgetary constraints. The IRS also indicated that approximately two-thirds of the paper-filed tax returns TIGTA identified were reviewed.
TIGTA Issues Report on the IRS’s External Leads Program
Source: Treasury Inspector General For Tax Administration
Participation in the Internal Revenue Service (IRS) External Leads Program is growing, resulting in the receipt of a significantly larger volume of leads about questionable tax refunds, but the IRS is not always verifying the leads timely, according to a new report by the Treasury Inspector General for Tax Administration (TIGTA).
The IRS’s External Leads Program receives leads about questionable tax refunds identified by a variety of partner organizations that include financial institutions, brokerage firms, government and law enforcement agencies, State agencies and tax preparers. The questionable tax refunds include Treasury checks, direct deposits, and prepaid debit cards.
The overall objective of this review was to assess the effectiveness of the IRS’s External Leads Program in recovering questionable tax refunds.
Since taking over the External Leads Program in January 2010, the IRS’s Wage and Investment Division has performed outreach in an effort to continuously increase the number of organizations participating in this program, TIGTA found. Participation and the number of questionable refunds returned and dollars associated have grown significantly. The IRS measures the External Leads Program’s success by volume and dollars associated with questionable returned refunds.
The program has grown from 10 partner financial institutions returning $233 million in 2010 to 258 partner financial institutions and partner organizations returning more than $576 million in 2013.
“The IRS’s External Leads Program has more than doubled the amount of questionable refunds returned over the past three years, thus saving tax dollars,” said J. Russell George, Treasury Inspector General for Tax Administration. “However, opportunities exist to improve the program,” George added.
According to the report, the IRS is not always verifying leads timely, and verification time frame goals differ significantly based on the lead type. The timely verification goals do not take into consideration the burden on legitimate taxpayers whose refund is being held until the verification is completed.
In addition, leads are inconsistently tracked in multiple inventory systems, and the inventory systems do not provide key information such as how the lead was resolved.
TIGTA recommended that the IRS establish more consistent time frames to verify leads; communicate these verification time frames to external partners; develop a process to ensure that leads are verified timely; consolidate the current lead inventory tracking systems into a single tracking system; and ensure that key information is captured as to how each lead is resolved.
The IRS agreed with TIGTA’s recommendations and is evaluating the treatment streams and work processes associated with the various types of referrals received in the External Leads Program to identify appropriate time frames; working to improve the effectiveness of existing reporting capabilities in evaluating program quality and timeliness; and evaluating the feasibility and potential benefits of consolidating the independent inventory tracking databases into one system.
Small Business and Strategic Sourcing: Lessons from Past Research and Current Data
Source: RAND Corporation
The Department of Defense (DoD) may face challenges as it attempts to maintain its goal of spending about 23 percent of its prime-contract dollars for goods and services with small businesses and at the same time apply strategic-sourcing practices to reduce total costs and improve performance in ways that will not conflict with small-business goals while making DoD purchasing more effective and efficient. Strategic sourcing practices, for example, recommend consolidation of the supply base to reduce total costs, which can lead to fewer, larger, longer-term contracts with fewer and, often, larger suppliers.
Pension Reform Handbook: A Starter Guide for Reformers
Source: Reason Foundation
Depending on what assumptions you use, current state and local government workers will earn between $4 trillion and $8 trillion in retirement benefits by the time they retire. But jurisdictions across the nation—from small special districts to large state governments—face a serious problem: in some cases, pension systems have only a fraction of the assets they need to meet their obligations. The existence of massive unfunded liabilities undermines the soundness of pension plans and threatens the fiscal stability of governments.
In almost every case, dealing with these serious problems is guaranteed to be a complex and politically contentious process. But the good news is that a number of jurisdictions have paved the way for substantive reform, and several state and local governments now stand as models from which others can learn.
This handbook aims to capture the experience of policymakers in those jurisdictions and bring together the best practices that have emerged from their reform efforts, as well as the important lessons learned. By presenting these alongside the general principles and approaches that work to reform public policy, this handbook represents a “what you need to know” starter guide for anyone planning to reform their jurisdiction’s pension system.
Review of Alleged Patient Deaths, Patient Wait Times, and Scheduling Practices at the Phoenix VA Health Care System
Review of Alleged Patient Deaths, Patient Wait Times, and Scheduling Practices at the Phoenix VA Health Care System (PDF)
Source: U.S. Department of Veterans Affairs, Office of Inspector General
This is the final report addressing allegations of gross mismanagement of VA resources, criminal misconduct by senior leadership, systemic patient safety issues, and possible wrongful deaths at the Phoenix VA Health Care System. The OIG found patients at the Phoenix VA Health Care System experienced access barriers that adversely affected the quality of primary and specialty care provided for them. Patients frequently encountered obstacles when patients or their providers attempted to establish care, when they needed outpatient appointments after hospitalizations or emergency department visits, and when seeking care while traveling or temporarily living in Phoenix.
In February 2014, a whistleblower alleged that 40 veterans died waiting for an appointment but the whistleblower did not provide us with a list of 40 patient names. However, we conducted a broader review of 3,409 veteran patients identified from multiple sources, including the electronic wait list, various paper wait lists, the OIG Hotline, the U.S. House Veterans Affairs Committee and other congressional sources, and media reports. We were unable to assert that the absence of timely quality care caused the deaths of these veterans.
This report includes case reviews of 45 patients who experienced unacceptable and troubling lapses in follow-up, coordination, quality, and continuity of care. The patients discussed reflect both patients who were negatively impacted by care delays (28 patients including 6 deaths), as well as patients whose care deviated from the expected standard independent of delays (17 patients including 14 deaths). In addition to 1,400 veterans waiting to receive a scheduled primary care appointment who were appropriately included on the Phoenix VA Health Care System Electronic Wait List, we identified over 3,500 additional veterans. Many of the 3,500 veterans were on what we determined to be unofficial wait lists and were at risk of never obtaining their requested or necessary appointments.
Since the Phoenix VA Health Care System story first appeared in the national media, the OIG received approximately 225 allegations regarding health care at Phoenix and approximately 445 allegations regarding manipulated wait times at other VA medical facilities. The VA OIG Office of Investigations opened investigations at 93 sites of care in response to allegations of wait time manipulations. We are coordinating our investigations with the Department of Justice and the Federal Bureau of Investigation.