GAO: Mismanagement Continues to Plague IRS

Washington, DC — Senate Governmental Affairs Committee Chairman Fred Thompson (R-TN) today expressed his disappointment over the continued mismanagement at the Internal Revenue Service (IRS) following the release of a General Accounting Office (GAO) report on the agency. According to GAO, the IRS still can?t adequately track tax payments, doesn?t know how much money comes in for Social Security, and is providing access to cash, checks, and sensitive taxpayer information to known criminals.

Governmental Affairs Committee Chairman Fred Thompson, who held hearings on management at the IRS in 1997 and 1998, said of the report, “Poll after poll shows that Americans are losing faith in their government. And once again we see that the IRS can?t keep its own books while demanding that taxpayers keep theirs.”

The GAO report ? an audit required under the Chief Financial Officers Act ? details the extent of the problems at IRS:

    IRS is slow to correct erroneous assessments against taxpayers. In one case, it took 18 months for IRS to correct an input error that resulted in an erroneous assessment of over $160,000 against a taxpayer who was actually due a refund.

    Because of computer security weaknesses, individuals are capable of obtaining personal taxpayer information and using it to commit financial crimes in the taxpayer?s name (identity fraud), such as fraudulently establishing credit and running up debts.

    IRS is giving access to cash, checks, and personal taxpayer information to known criminals. GAO found that 4,835 employees were hired to process taxes before fingerprint checks were completed. It was later discovered that employees had unsuitable backgrounds, such as previous theft, assault, or weapons charges.

    IRS is unable to determine the specific amount of revenue it actually collects for Social Security, Medicare, Highway, or other relevant trust funds.

    IRS has no idea how much it owns in property and equipment. According to its records, IRS didn?t know it had possession of such things as videoconferencing equipment and 3 recently acquired mail-sorting machines that cost over $800,000 each.

Senator Thompson said, “This audit shows that IRS doesn?t know how much money is coming in or where that money is going. It shows that IRS sends money back to people who owe taxes and make erroneous assessments against those who don?t. Perhaps worst of all, IRS is giving custody of checks and cash and access to personal taxpayer information to criminals. In one case, GAO reports that service center guards and staff did not i.d. a courier before giving him a $28 million deposit, even though he was not the regular courier.”

In 1998, IRS reform legislation was passed and enacted that promised to protect taxpayers by increasing oversight of IRS, holding employees accountable for their actions and creating a new arsenal of taxpayer protections.

Senator Thompson remarked, “I applaud Chairman (Charles) Rosotti?s efforts and I think he?s the right man for the job. But, this audit shows just how difficult it is to implement good management practices in federal agencies. These problems are long lasting and he still has to make considerable progress to meet the standards the public expects.”

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A copy of the GAO audit is available at the Governmental Affairs Committee, 340 Dirksen.