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IRS — Accumulation and Distribution of Individual Retirement Arrangements, 2011–2012

January 28, 2015 Comments off

Accumulation and Distribution of Individual Retirement Arrangements, 2011–2012
Source: Internal Revenue Service

Twelve tables presenting statistics for taxpayers with individual retirement arrangements (six each for Tax Years 2011 and 2012) are now available. The tables are organized by adjusted gross income, age, and marital status. Information for both traditional and Roth IRAs is provided.

National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Taxpayer Service and Taxpayer Bill of Rights

January 16, 2015 Comments off

National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Taxpayer Service and Taxpayer Bill of Rights
Source: Internal Revenue Service

National Taxpayer Advocate Nina E. Olson today released her 2014 annual report to Congress, which expresses concern that taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures. The report recommends that Congress enact a principles-based Taxpayer Bill of Rights, adopt additional safeguards to make those rights meaningful, and provide sufficient funding to make the “Right to Quality Service” a reality.

In the preface to the report, Olson emphasizes four points:

  • “First, the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively;
  • “Second, the lack of effective administrative and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted 16 or more years ago;
  • “Third, the combined effect of these trends is reshaping U.S. tax administration in ways that are not positive for future tax compliance or for public trust in the fairness of the tax system; and
  • “Fourth, this downward slide can be addressed if Congress makes an investment in the IRS and holds it accountable for how it applies that investment.”

The report says the combination of the IRS’s increasing workload, the erosion of public trust occasioned by the IRS’s use of “tea party” and similar terms in screening applicants for tax-exempt status, and the sharp reduction in funding have created a “perfect storm” of trouble for tax administration and therefore for taxpayers. “Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” Olson wrote.

The report also urges Congress to enact comprehensive tax reform, pointing out that simplification would ease burdens on taxpayers and the IRS alike.

TIGTA — The Internal Revenue Service Does Not Adequately Manage I.T. Security Risk-Based Decisions

December 26, 2014 Comments off

The Internal Revenue Service Does Not Adequately Manage I.T. Security Risk-Based Decisions
Source: Treasury Inspector General for Tax Administration

The Internal Revenue Service (IRS) does not adequately document its risk-based decisions involving Information Technology security, according to a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

Risk-based decisions are made when the IRS wants to make an exception to its own policies and requirements based on suitable justification and a thorough assessment of evident and potential risks. For decisions related to the security of information systems, exceptions are allowed if meeting the requirement is 1) not technically or operationally possible or 2) not cost effective.

When risk-based decisions are not made within the established guidelines, the organization may be accepting too much risk related to security of its systems and data. Consequently, taxpayer data may not be secured and may be vulnerable to unauthorized disclosure, which can lead to identity theft. Furthermore, accepted weaknesses may result in security breaches, which can cause network disruptions and prevent the IRS from performing vital taxpayer services, such as processing tax returns, issuing refunds, and answering taxpayer inquiries.

The IRS Could Improve its Inventory Controls Over Wireless Devices, TIGTA Finds

December 23, 2014 Comments off

The IRS Could Improve its Inventory Controls Over Wireless Devices, TIGTA Finds
Source: Treasury Inspector General for Tax Administration

At the Internal Revenue Service (IRS), more than 94 percent of the employees who had BlackBerry® smartphones, cellular phones, or wireless aircard devices were appropriately assigned them; however, the IRS’s system of records designed to document wireless device inventory was not consistently updated as changes occurred, which resulted in almost 57 percent of inventory records being inaccurate.

That is among the findings of a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

“In Fiscal Year 2013, the IRS spent more than $13.7 million on wireless telecommunication devices and maintained an inventory of more than 49,000 devices that it reported as being in use,” said J. Russell George, Treasury Inspector General for Tax Administration. “Effective controls over the assignment of and inventory accounting for these devices is important to ensure proper stewardship of Government funds.”

TIGTA — IRS Has Insufficient Controls Over the Outside Employment of IRS Employees

December 3, 2014 Comments off

IRS Has Insufficient Controls Over the Outside Employment of IRS Employees
Source: Treasury Inspector General for Tax Administration

The Internal Revenue Service (IRS) has insufficient controls over the outside employment or business activities of its employees, according to a new report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

Generally, IRS employees are allowed to engage in outside employment or business activities after obtaining written approval. Effective controls over outside employment can reduce the risk of conflicts of interest that could result in decisions that are not in the best interest of American taxpayers.

The overall objective of TIGTA’s audit was to determine whether the IRS has controls in place to provide reasonable assurance that outside employment requests are documented and reviewed for conflicts with employees’ official duties.

IRS records indicate that, in Calendar Year 2011, nearly 3,000 of the more than 6,000 active, full-time IRS employees who held jobs or participated in business activities outside the IRS did not have approval for outside employment or the activities were not documented on the IRS’s Outside Employment System as required. IRS Human Capital Office management was generally not aware of the number of employees with unapproved outside employment because responsibility has not been assigned for overseeing the overall outside employment process. In addition, the IRS stated that it does not have authorization to use taxpayer information (e.g., Form W 2, Wage and Tax Statement) to identify employees with unapproved outside income because Internal Revenue Code Section 6103 does not clearly provide that tax data can be used for this purpose.

“Our report found that it will be difficult for the IRS to monitor outside employment because 93 percent of the existing records in the database used to compile outside employment requests are out of date,” said J. Russell George, Treasury Inspector General for Tax Administration. “Moreover, approval of outside employment requests is not always documented on the database or in Official Personnel Folders, in part because of confusing and incomplete guidance.”

The Internal Revenue Service Advisory Council (IRSAC) Releases 2014 Annual Report

November 25, 2014 Comments off

The Internal Revenue Service Advisory Council (IRSAC) Releases 2014 Annual Report
Source: Internal Revenue Service

The Internal Revenue Service Advisory Council held its annual public meeting today and released its annual report, which includes recommendations on a wide range of tax administration issues.

IRSAC is an advisory group to the entire agency. IRSAC’s primary purpose is to provide an organized public forum of relevant tax administration issues for the Commissioner, senior IRS executives and representatives of the public to discuss relevant tax issues.

IRSAC members convey the public’s perception of professional standards and best practices for tax professionals and IRS activities; offer constructive observations regarding current or proposed IRS policies, programs, and procedures; and suggest improvements to IRS operations.

Based on its findings and discussions, IRSAC made several recommendations on a broad range of issues and concerns including IRS funding, as well as topics identified by subgroups covering the Office of Professional Responsibility and Large Business and International, Small Business/Self-Employed and Wage and Investment operating divisions.

IRSAC is administered by the National Public Liaison Office. IRSAC draws its members from the tax professional community and members of academia.

TIGTA — Improvements Are Needed to Ensure That the Search and Seizure Warrant Process Is Adequately Documented and That Evidence Is Properly Secured

November 5, 2014 Comments off

Improvements Are Needed to Ensure That the Search and Seizure Warrant Process Is Adequately Documented and That Evidence Is Properly Secured
Source: Treasury Inspector General for Tax Administration

The Internal Revenue Service (IRS) does not always follow all procedures to ensure that evidence it seizes is properly stored and controlled, according to a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

Each IRS Criminal Investigation (CI) special agent has the authority to perform all duties under all laws and regulations administered by the IRS, including the authority to conduct searches and issue search and seizure warrants.

TIGTA’s audit was initiated to determine whether CI is properly processing search and/or seizure warrants and following the policies for maintaining the chain of custody for any evidence obtained.

TIGTA requested 152 closed search and/or seizure warrant cases from the IRS to review. However, CI management did not provide 91 of these cases. According to CI management, these cases contained grand jury information, were part of an ongoing investigation, or had been sealed by the court.

For 70 of these cases, CI management could not provide any documentation to support that these cases contained grand jury information, were part of an ongoing investigation, or were sealed. As such, TIGTA had to rely on CI management’s verbal statements. This constitutes a significant scope impairment because it prevented TIGTA from fully evaluating CI’s processing of search and seizure warrants and from determining whether the IRS is following established legal requirements to prevent the abuse of taxpayer rights.

However, TIGTA was able to review the remaining 61 closed search and/or seizure warrant cases provided by the IRS and found that 14 cases were missing documentation of the Criminal Tax Counsel’s post-search warrant inventory review, were missing signed affidavits, and/or contained errors on their search warrants.

“Our report found that procedures were not always followed to ensure that seized evidence was properly stored and/or controlled,” said J. Russell George, Treasury Inspector General for Tax Administration. “Without maintaining proper documentation and following evidence procedures, evidence may be inappropriately disclosed, lost, tampered with, or stolen.”

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