WASHINGTON The Internal Revenue Service (IRS) educates its employees on their
tax responsibilities, yet it is unable to detect whether all IRS employees are complying
with the law, according to a new audit report released publicly today by the Treasury
Inspector General for Tax Administration (TIGTA).
While the IRS electronically matches its employee payroll records with tax account
records maintained for all taxpayers, it does not detect all potential noncompliance,
TIGTA auditors found.
TIGTA identified 133 potentially noncompliant employees who were not detected by the
IRS's computer application over a two-year period. As a result, no action was taken by
the IRS to analyze and address this potential employee misconduct for noncompliance
with tax laws.
"To maintain public confidence in the agency entrusted to administer the Nation's tax
law system, the IRS must ensure that potential misconduct concerning noncompliance
with the tax laws is identified and addressed," said J. Russell George, the Treasury
Inspector General for Tax Administration.
In addition, TIGTA determined the IRS significantly reduced the focus of its Employee
Tax Compliance Program partially based on a study it conducted showing that IRS
employees were more compliant compared to the general taxpaying public. IRS reports
show that about 3 percent of IRS employees are noncompliant each year. TIGTA's audit
concurred with the IRS's decision to use resources as efficiently as possible, however, the
report concluded that the IRS should periodically reevaluate the ETC program's direction
to ensure proper oversight of employees' compliance with their tax obligations.
TIGTA made four recommendations in its report, including that the IRS should
determine whether disciplinary action is warranted in the cases of the 133 potentially
noncompliant employees it found. The IRS agreed to work the additional cases, review
its computer application, and revise the goals and mission of the program, but it stated
that it had no plans to develop new noncompliance detection efforts to specifically
monitor IRS employee tax compliance because it believes the current noncompliance
detection processes used for all taxpayers (including IRS employees) are sufficient in
number and appropriate in scope.