Improvements Are Needed in Resource Allocation and Management Controls for Audits of High-Income Taxpayers

Recommendation 1 of 1: The Commissioner, Large Business and International (LB&I) Division, and the Commissioner, Small Business/Self-Employed (SB/SE) Division, should reevaluate the appropriate income thresholds for the IRS's High-Income and High-Wealth strategy and use the results of the evaluation to ensure that audit resources are being applied to the appropriate taxpayer income levels.

The Commissioner, LB&I Division, should coordinate with the Office of Research, Analysis, and Statistics to perform a cost/benefit analysis of the outsourcing initiative to determine if its benefits outweigh the costs of the revenue foregone by the other industries. If the costs outweigh the benefits, discontinue the outsourcing initiative.

The Commissioner, Large Business and International (LB&I) Division, should coordinate with the IRS Commissioner to pursue the system modifications needed to enable GHW Industry management to systemically quantify complete enterprise case examination results and use the data to further enhance their enterprise audit approach. In the interim, the Commissioner, LB&I Division, should coordinate with the Office of Research, Analysis, and Statistics to develop a process to manually measure the total tax impact of GHW Industry enterprise case examinations.

The Commissioner, LB&I Division, should ensure that the LB&I Division's Scorecard reports accurately reflect that there currently is no measure of GHW Industry audit quality.

The Commissioner, LB&I Division, should engage the QSP group to conduct permanent ongoing quality reviews of closed GHW Industry and outsourced enterprise examination cases and take appropriate actions based on the QSP group's findings.