Archive
New From the GAO
New GAO Report
Source: Government Accountability Office
Tax Administration: IRS Could Improve Examinations by Adopting Certain Research Program Practices. GAO-13-480, May 24.
http://www.gao.gov/products/GAO-13-480
Highlights – http://www.gao.gov/assets/660/654835.pdf
Treasury Inspector General for Tax Administraion — Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review
Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review (PDF)
Source: Treasury Inspector General for Tax Administration\
IMPACT ON TAXPAYERS
Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to review for indications of significant political campaign intervention. Although the IRS has taken some action, it will need to do more so that the public has reasonable assurance that applications are processed without unreasonable delay in a fair and impartial manner in the future.WHY TIGTA DID THE AUDIT
TIGTA initiated this audit based on concerns expressed by members of Congress. The overall objective of this audit was to determine whether allegations were founded that the IRS: 1) targeted specific groups applying for tax-exempt status, 2) delayed processing of targeted groups’ applications, and 3) requested unnecessary information from targeted groups.WHAT TIGTA FOUND
The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention. Ineffective management: 1) allowed inappropriate criteria to be developed and stay in place for more than 18 months, 2) resulted in substantial delays in processing certain applications, and 3) allowed unnecessary information requests to be issued.Although the processing of some applications with potential significant political campaign intervention was started soon after receipt, no work was completed on the majority of these applications for 13 months. This was due to delays in receiving assistance from the Exempt Organizations function Headquarters office. For the 296 total political campaign intervention applications TIGTA reviewed as of December 17, 2012, 108 had been approved, 28 were withdrawn by the applicant, none had been denied, and 160 were open from 206 to 1,138 calendar days (some for more than three years and crossing two election cycles).
More than 20 months after the initial case was identified, processing the cases began in earnest. Many organizations received requests for additional information from the IRS that included unnecessary, burdensome questions (e.g., lists of past and future donors). The IRS later informed some organizations that they did not need to provide previously requested information. IRS officials stated that any donor information received in response to a request from its Determinations Unit was later destroyed.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS finalize the interim actions taken, better document the reasons why applications potentially involving political campaign intervention are chosen for review, develop a process to track requests for assistance, finalize and publish guidance, develop and provide training to employees before each election cycle, expeditiously resolve remaining political campaign intervention cases (some of which have been in process for three years), and request that social welfare activity guidance be developed by the Department of the Treasury.In their response to the report, IRS officials agreed with seven of our nine recommendations and proposed alternative corrective actions for two of our recommendations. TIGTA does not agree that the alternative corrective actions will accomplish the intent of the recommendations and continues to believe that the IRS should better document the reasons why applications potentially involving political campaign intervention are chosen for review and finalize and publish guidance.
New From the GAO
New GAO Reports
Source: Government Accountability Office
1. Agricultural Research: Two USDA Agencies Can Enhance Safeguards against Project Duplication and Strengthen Collaborative Planning. GAO-13-255, April 12.
http://www.gao.gov/products/GAO-13-255
Highlights – http://www.gao.gov/assets/660/653753.pdf
2. Management Report: Improvements Are Needed to Enhance the Internal Revenue Service’s Internal Controls. GAO-13-420R, May 13.
http://www.gao.gov/products/GAO-13-420R
3. President’s Emergency Plan for AIDS Relief: Shift toward Partner-Country Treatment Programs Will Require Better Information on Results. GAO-13-460, April 12.
http://www.gao.gov/products/GAO-13-460
Highlights – http://www.gao.gov/assets/660/653767.pdf
4. Defense Logistics: The Department of Defense’s Report on Strategic Seaports Addressed All Congressionally Directed Elements. GAO-13-511R, May 13.
http://www.gao.gov/products/GAO-13-511R
New From the GAO
New From the GAO
Source: Government Accountability Office
Reports
1. Transportation Worker Identification Credential: Card Reader Pilot Results Are Unreliable; Security Benefits Need to be Reassessed. GAO-13-198, May 8.
http://www.gao.gov/products/GAO-13-198
Highlights – http://www.gao.gov/assets/660/654432.pdf
2. Internal Revenue Service: Preliminary Observations on the Fiscal Year 2014 Budget Request. GAO-13-599R, May 3.
http://www.gao.gov/products/GAO-13-599R
Testimonies
1. Social Security Administration: Preliminary Observations on the Death Master File, by Daniel Bertoni, director, education, workforce, and income security issues, before the Senate Committee on Homeland Security and Governmental Affairs. GAO-13-574T, May 8.
http://www.gao.gov/products/GAO-13-574T
Highlights – http://www.gao.gov/assets/660/654412.pdf
2. Homeland Security: DHS and TSA Continue to Face Challenges Developing and Acquiring Screening Technologies, by Stephen M. Lord, director, forensic audits and investigative services, before the Subcommittee on Transportation Security, House Committee on Homeland Security. GAO-13-469T, May 8.
http://www.gao.gov/products/GAO-13-469T
Highlights – http://www.gao.gov/assets/660/654420.pdf
3. Department of Energy: Observations on Project and Program Cost Estimating in NNSA and the Office of Environmental Management, by David Trimble, director, natural resources and environment, before the Subcommittee on Strategic Forces, Senate Committee on Armed Services. GAO-13-510T, May 8. http://www.gao.gov/products/GAO-13-510T
Highlights – http://www.gao.gov/assets/660/654424.pdf
2010 Foreign Trust Statistics
Source: Internal Revenue Service
The 2010 foreign trust statistics reported on Forms 3520 and 3520-A show an increasing interest in foreign investment by U.S. taxpayers, and the impact of changes made in 1996 to information reporting requirements. The number of Form 3520 returns reporting foreign trust transactions and certain foreign gifts rose by 104.1 percent, from 7,956 in 2006 to 16,242 in 2010, while the number of Form 3520-A foreign “grantor” trust returns rose 84.6 percent, from 3,819 to 7,051. U.S. “persons” transferred nearly $1.5 billion in assets to foreign trusts in 2010. In addition, some 7,051 foreign grantor trusts reported total assets of $35.3 billion, distributions of $4.0 billion, and net income (loss) of $1.1 billion during this same period. Finally, in transactions generally separate from foreign trust activity, U.S. persons received gifts or bequests of $7.3 billion from nonresident aliens, foreign estates, foreign corporations, and foreign partnerships during 2010.
FinCEN — SAR Activity Review – Trends, Tips & Issues — May 2013
SAR Activity Review – Trends, Tips & Issues — May 2013 (PDF)
Source: FinCEN (Financial Crimes Enforcement Network)
The SAR Activity Review – Trends, Tips & Issues is a product of continual dialogue and collaboration among the nation’s financial institutions, law enforcement officials and regulatory agencies to provide meaningful information about the preparation, use and value of Suspicious Activity Reports (SARs) and other FinCEN reports filed by financial institutions.
The Trends & Analysis section of this issue opens with an article on SAR filing patterns related to elder financial exploitation before and after the publication of FinCEN Advisory FIN-2011-A003 (Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation) in February 2011. In this section we also report on trends related to SAR filings involving accountants and involving insider abuse within depository institutions. We close this section with an article from FinCEN’s Office of Special Programs Development on how financial institutions have made use of, and benefited from, information sharing under Section 314(b) of the USA PATRIOT Act.
The Law Enforcement Cases section includes interesting and informative summaries of cases that demonstrate the importance and value of BSA data to the law enforcement community. Cases in this section highlight how BSA data, and the detection and analysis of suspicious transactions by financial institutions, proved to be of value to law enforcement and prosecutors.
The month of May is Older Americans Month, and in the Issues & Guidance section we include a message from the Consumer Financial Protection Bureau (CFPB) on efforts by CFPB, FinCEN and others to raise awareness of elder financial exploitation. In this section, we include an additional article with information beneficial to filers of the new FinCEN SAR: SAR Narrative Key Terms: Updated Guidance on the Use of SAR Check Box Items.
See also: SAR Activity Review – By the Numbers – May 2013 (PDF)
New From the GAO
New GAO Reports and Testimonies
Source: Government Accountability Office
Reports
1. Federal Courthouses: Recommended Construction Projects Should Be Evaluated under New Capital- Planning Process. GAO-13-263, April 11.
http://www.gao.gov/products/GAO-13-263
Highlights – http://www.gao.gov/assets/660/653747.pdf
2. NASA: Assessments of Selected Large-Scale Projects. GAO-13-276SP, April 17.
http://www.gao.gov/products/GAO-13-276SP
Highlights – http://www.gao.gov/assets/660/653867.pdf
3. Veterans Health Care: VHA Has Taken Steps to Address Deficiencies in Its Logistics Program, but Significant Concerns Remain. GAO-13-336, April 17.
http://www.gao.gov/products/GAO-13-336
Highlights – http://www.gao.gov/assets/660/653887.pdf
4. Information Technology: Consistently Applying Best Practices Could Help IRS Improve the Reliability of Reported Cost and Schedule Information. GAO-13-401, April 17.
http://www.gao.gov/products/GAO-13-401
Highlights – http://www.gao.gov/assets/660/653845.pdf
Testimonies
1. U.S. Postal Service: Urgent Action Needed to Achieve Financial Sustainability, by Gene L. Dodaro, Comptroller General of the United States, before the House Committee on Oversight and Government Reform. GAO-13-562T, April 17.
http://www.gao.gov/products/GAO-13-562T
Highlights – http://www.gao.gov/assets/660/653840.pdf
2. Federal Courthouses: Most Recommended New Construction Projects Do Not Qualify Under Improved Capital-Planning Process, by Mark L. Goldstein, director, physical infrastructure issues, before the House Committee on Transportation and Infrastructure. GAO-13-523T, April 17.
http://www.gao.gov/products/GAO-13-523T
3. F-35 Joint Strike Fighter: Program Has Improved in Some Areas, but Affordability Challenges and Other Risks Remain, by Michael J. Sullivan, director, acquisition and sourcing management, before the Subcommittee on Tactical Air and Land Forces, House Committee on Armed Services. GAO-13-500T, April 17.
http://www.gao.gov/products/GAO-13-500T
Highlights – http://www.gao.gov/assets/660/653858.pdf
4. Foreclosure Review: Lessons Learned Could Enhance Continuing Reviews and Activities under Amended Consent Orders, by Lawrance L. Evans, Jr., director, financial markets and community investment, before the Subcommittee on Housing, Transportation, and Community Development, Senate Committee on Banking, Housing, and Urban Affairs. GAO-13-550T, April 17.
http://www.gao.gov/products/GAO-13-550T
New From the GAO
New GAO Reports and Testimonies
Source: Government Accountability Office
Reports
1. Acquisition Workforce: Federal Agencies Obtain Training to Meet Requirements, but Have Limited Insight into Costs and Benefits of Training Investment. GAO-13-231, March 28.
http://www.gao.gov/products/GAO-13-231
Highlights - http://www.gao.gov/assets/660/653438.pdf
2. Managing For Results: Agencies Have Elevated Performance Management Leadership Roles, but Additional Training Is Needed. GAO-13-356, April 16.
http://www.gao.gov/products/GAO-13-356
Highlights - http://www.gao.gov/assets/660/653796.pdf
3. Grants Management: Oversight of Selected States’ Disbursement of Federal Funds Addresses Timeliness and Administrative Allowances. GAO-13-392, April 16.
http://www.gao.gov/products/GAO-13-392
Highlights - http://www.gao.gov/assets/660/653806.pdf
4. IRS Website: Long-Term Strategy Needed to Improve Interactive Services. GAO-13-435, April 16.
http://www.gao.gov/products/GAO-13-435
Highlights - http://www.gao.gov/assets/660/653777.pdf
Testimonies
1. Federal Support for Renewable and Advanced Energy Technologies, by Frank Rusco, director, natural resources and environment, before the Subcommittees on Oversight and Energy, House Committee on Science, Space, and Technology. GAO-13-514T, April 16.
http://www.gao.gov/products/GAO-13-514T
2. Aviation Safety: FAA Efforts Have Improved Safety, but Challenges Remain in Key Areas, by Gerald L. Dillingham, Ph.D., director, physical infrastructure, before the Senate Committee on Commerce, Science, and Transportation. GAO-13-442T, April 16.
http://www.gao.gov/products/GAO-13-442T
Highlights - http://www.gao.gov/assets/660/653802.pdf
IRS Releases the Dirty Dozen Tax Scams for 2013
IRS Releases the Dirty Dozen Tax Scams for 2013
Source: Internal Revenue Service
The Internal Revenue Service today issued its annual “Dirty Dozen” list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.
The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.
2012 IRS Data Book
Source: Internal Revenue Service
The Internal Revenue Service (IRS) has released the 2012 IRS Data Book, a snapshot of agency activities for fiscal year 2012—Oct. 1, 2011, to Sept. 30, 2012. In addition to information on taxes collected and returns processed, the report also includes information about enforcement, taxpayer assistance, and the IRS budget and workforce, among others.
New From the GAO
New GAO Reports
Source: Government Accountability Office
DEPARTMENT OF ENERGY
Status of Loan Programs
GAO-13-331R, Mar 15, 2013
HOUSING AND URBAN DEVELOPMENT
Strategic Human Capital and Workforce Planning Should be an Ongoing Priority
GAO-13-282, Mar 15, 2013
INFORMATION SECURITY
IRS Has Improved Controls but Needs to Resolve Weaknesses
GAO-13-350, Mar 15, 2013
MEDICAID
Additional Enrollment and Expenditure Data for the Transitional Medical Assistance Program
GAO-13-454R, Mar 15, 2013
National Taxpayer Advocate’s 2012 Annual Report to Congress
National Taxpayer Advocate’s 2012 Annual Report to Congress
Source: Internl Revenue Service
From press release:
National Taxpayer Advocate Nina E. Olson today released her 2012 Annual Report to Congress, identifying the need for tax reform as the overriding priority in tax administration. The Advocate also expressed concern that the IRS is not adequately funded to serve taxpayers and collect tax, and identified ways in which this chronic underfunding harms taxpayers and the public fisc. She also found that the IRS is not doing enough to assist victims of tax-related identity theft and return preparer fraud.
The National Taxpayer Advocate’s annual report designates the complexity of the tax code as the #1 most serious problem facing taxpayers and recommends that Congress take significant steps to simplify it. “The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns,” Olson wrote. “It obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay; it facilitates tax avoidance by enabling sophisticated taxpayers to reduce their tax liabilities and provides criminals with opportunities to commit tax fraud; and it undermines trust in the system by creating an impression that many taxpayers are not compliant, thereby reducing the incentives that honest taxpayers feel to comply.”
See also: National Taxpayer Advocate’s FY 2013 Objectives Report to Congress (PDF)
The Economic Case for Higher Education
The Economic Case for Higher Education
Source: U.S. Department of the Treasury and U.S. Department of Education
As the semester draws to a close at schools and universities across the country and college applications are submitted, the Treasury Department has released a report that should be food for thought for students scrambling to complete their work and finish their exams. The new report, prepared in conjunction with the Education Department, shows that investing in education expands job opportunities, boosts America’s competitiveness, and supports the kind of income mobility that is fundamental to a growing economy.
While post-secondary education has become increasingly important over time, there have also been growing concerns about the accessibility and affordability of higher education. In particular, students and their families are bearing a greater share of college costs than a generation ago. In an effort to help counteract these trends, the Obama Administration has implemented several new policies to provide relief for students and their families, including increasing Pell grants, introducing the American Opportunity Tax Credit, keeping Stafford loan interest rates low, and expanding “income-based repayment.” This report confirms the critical importance of higher education, showing the personal economic benefits of attending college, and includes data and analysis on the broader role of a well-educated workforce, which is vital to our nation’s future economic growth.
American companies and businesses require a highly skilled workforce to meet the demands of today’s increasingly competitive global economy. This report explores the current state of higher education, with a high-level overview of the market and a more detailed discussion and analysis of the financial aid system. The report also outlines the important steps the President has already taken to make higher education more accessible and affordable.
SARs Regarding Foreclosure Rescue Scams Increase
SARs Regarding Foreclosure Rescue Scams Increase
Source: Financial Crimes Enforcement Network
Suspicious activity reports (SARs) regarding foreclosure rescue scams continued to grow in the first half of 2012, even as the total number of SARs indicating mortgage loan fraud (MLF) declined, the Financial Crimes Enforcement Network (FinCEN) announced today in its latest Mortgage Loan Fraud Update. This update to FinCEN’s prior MLF reports looks at SAR filings from April through June 2012 (2012 Q2).
Foreclosure rescue scams target homeowners facing foreclosure with services or advice promising to stop or delay the foreclosure process. These scams prey on the vulnerability of individuals who are in danger of losing their homes. Some of these scams require homeowners to transfer their home’s title or make monthly mortgage payments to the purported "rescuer." Victims may lose thousands of dollars in fabricated fees, and risk losing their homes as well.
Financial institutions filed 2,360 foreclosure rescue related SARs in the first half of 2012. If this current pace continues, the total number of foreclosure rescue scam SARs for the calendar year will far exceed the total of 2,782 reported in 2011. In 2012 Q2, financial institutions submitted 17,476 total MLF SARs, a 41 percent decrease over 2011 Q2; 1,325 (8 percent) of these were related to foreclosure rescue.
Geographically, foreclosure rescue SAR subjects were disproportionately concentrated in California. This was consistent with FinCEN’s past research on debt elimination scams, a type of foreclosure rescue scam, which indicated a large number of the California subjects. Foreclosure rescue SARs filed during this period also noted higher violation amounts as compared to typical MLF SARs.
Statistics of Income — Individual Income Tax Returns 2010
Individual Income Tax Returns 2010 (PDF)
Source: Internal Revenue Service
This report contains data on sources of income, adjusted gross income, exemptions, deductions, taxable income, income tax, modified income tax, tax credits, self-employment tax, and tax payments. Classifications are by tax status, size of adjusted gross income, marital status, type of tax computation and age.
FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements
FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements
Source: Financial Crimes Enforcement Network
Financial Crimes Enforcement Network (FinCEN) Director James H. Freis, Jr. today announced the issuance of an advisory for non-bank residential mortgage lenders and originators (RMLOs) to help them identify and report suspicious activity related to potential mortgage fraud. In his remarks before the American Association of Residential Mortgage Regulators’ (AARMR’s) 23rd Annual Regulatory Conference, he also discussed FinCEN’s new anti-money laundering (AML) requirements for RMLOs. As of Monday, Aug. 13, RMLOs must comply with FinCEN’s final rule requiring the establishment of AML programs and the filing of suspicious activity reports (SARs).
…
FinCEN’s Web site is a key source of information available to both regulators and RMLOs. FinCEN has created a page under the "Financial Institutions" link specifically for mortgage companies and brokers, which contains a variety of publications to assist RMLOs with compliance. Earlier this week, FinCEN issued a Notice to remind RMLOs of their compliance obligations under FinCEN’s regulations. In addition, FinCEN issued an administrative ruling, providing that RMLOs who are also subsidiaries of financial institutions that require the RMLOs to have AML programs and file SARs and are examined by a Federal functional regulator are deemed to comply with FinCEN’s regulations. FinCEN has also made available a Webinar for RMLOs that contains useful references, red flags for potential money laundering, and additional guidance based on inquiries that have been received through FinCEN’s Regulatory Helpline.
FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies
FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies
Source: Financial Crimes Enforcement Network
Pressing forward in its efforts to address a wide range of criminal risks, particularly in the residential real estate market, the Financial Crimes Enforcement Network (FinCEN) today released its first targeted study analyzing reports indicating suspicious activities involving the Real Estate Title and Escrow Industry.
The study identified thousands of instances where financial institutions, particularly banks and Money Services Businesses (MSBs), filed suspicious activity reports (SARs) involving title and escrow companies, often in connection with mortgage fraud. FinCEN does not currently require title and escrow companies themselves to file SARs, but many have reported suspicious activities by annotating the Report of Cash Payments Over $10,000 Received in a Trade or Business (FinCEN Form 8300) that they are required to file.
"This first baseline study will help inform our ongoing efforts to identify regulatory gaps that criminals look to take advantage of," said FinCEN Director James H. Freis, Jr. "We can now more efficiently and effectively address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action."
+ Full Report (PDF)
California, Nevada, Florida Top Mortgage Fraud SAR List Criminals Continuing Debt Elimination and Foreclosure Rescue Scams
Source: Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network today released its First Quarter 2012 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows California, Nevada, and Florida leading the nation in the number of MLF SAR subjects per capita. Of the 50 most populous Metropolitan Statistical Areas (MSAs) ranked by the number of MLF SAR subjects reported, the top nine are MSAs located in California, Nevada, and Florida, with the Los Angeles-Long Beach-Santa Ana area ranked first in the nation.
Nineteen percent of Q1 MLF SARs report activity that occurred within the past two years. Of this more recent activity, there were sharp increases in debt elimination schemes (14 percent of this reporting in Q1 2012 versus 9 percent in 2011) and other foreclosure rescue scams (8 percent of these Q1 filings versus less than 2 percent in 2011). Financial institutions filed 17,651 MLF SARs in the first quarter of 2012 down from 25,485 filed in the same quarter of 2011. Previous record levels were attributable to mortgage loan repurchase demands prompting reviews of dated mortgages. This trend continues, though diminished, as 72 percent of Q1 filings still report suspicious activity that occurred more than four years ago.
IRS: Statistics of Income Bulletin — Spring 2012
Statistics of Income Bulletin — Spring 2012 (PDF)
Source: Internal Revenue Service
The Statistics of Income (SOI) Bulletin is issued quarterly by the Statistics of Income Division of the Internal Revenue Service. The report provides the earliest published annual financial statistics obtained from the various types of tax and information returns filed, as well as information from periodic or special analytical studies of particular interest to students of the U.S. tax system, tax policymakers, and tax administrators. Selected historical and other data tables, previously published in every issue of the SOI Bulletin, now are published only in the spring issue of the Bulletin. These tables are also available on SOI’s pages of the IRS Web site (www.irs.gov/taxstats).
FinCEN — The SAR Activity Review – By the Numbers
The SAR Activity Review – By the Numbers (PDF)
Source: Financial Crimes Enforcement Network
This report covers total Suspicious Activity Report (SAR) filings by covered industries for 2011. This issue of By The Numbers, a staple of FinCEN’s analytical reports, features some significant changes that add value for FinCEN’s audience. Readers will see new pie charts, bar charts, and line graphs. As FinCEN transitions to a new integrated forms environment with improved technology it will continue to develop new, more informative models to illustrate the data. In this edition of BTN, readers will see new interactive tables with geographic summaries at the county level to enhance State graphical displays, or “ heat maps.” Similarly, FinCEN is providing metropolitan statistical area (MSA) summary tables of SAR data as well as spreadsheets illustrating filing rates and percentage changes for 2010 and 2011 in the “Characterizations of SARs” by State and Territories charts. Readers can access the data through hyperlinks embedded in the report.
See also: 21st SAR Activity Review: Trends, Tips, & Issues
