Management Report: Improvements Are Needed to Enhance IRS's Internal Controls and Operating Effectiveness Page: 4 of 38
This text is part of the collection entitled: Government Accountability Office Reports and was provided to UNT Digital Library by the UNT Libraries Government Documents Department.
Extracted Text
The following text was automatically extracted from the image on this page using optical character recognition software:
visited 3 service center campuses,5 3 lockbox banks," 10 TACs, and 5 field office
units.7 We conducted our fieldwork between January 2008 and November 2008.
Further details on our audit scope and methodology are included in our report on
the results of our audits of IRS's fiscal years 2008 and 2007 financial statements.8
Additionally, details on our methodology are reproduced in their entirety in
enclosure I.
Penalty Calculation Programs
IRS's controls over computer programs affecting penalty assessments did not always
ensure that the programs were designed or functioned in accordance with the intent
of established policies and procedures.
The Internal Revenue Code (IRC)9 grants IRS broad authority to assess penalties
against taxpayers for noncompliance with tax laws such as failing to file a tax
return, failing to pay taxes owed, or inaccurately reporting taxes. IRS establishes
the specific policies and procedures for calculating and assessing penalties in its
Internal Revenue Manual (IRM).10 In accordance with the IRM, IRS's business
operating divisions work with its Modernization and Information Technology
Services to implement computerized programs within its master files" to calculate
and assess penalties against taxpayers in relation to unpaid tax assessments or
violations of the tax laws.
5Service center campuses process tax returns and payments submitted by taxpayers.
'Lockbox banks are commercial banks that operate under contract with the Treasury's Financial
Management Service to provide tax receipt processing and deposit services on behalf of IRS.
7Field offices are comprised of various units located within IRS's Small Business and Self
Employed (SB/SE), Large and Mid-Size Business (LMSB), and Tax-Exempt and Government
Entities (TE/GE) operating divisions that administer tax services to corporations, partnerships,
small businesses, state and Indian tribal governments, major universities, community
organizations, municipalities, pension funds, and individuals with certain types of nonsalary
income.
sGAO-09-119.
9See 26 U.S.C. 6651, 6654, 6655, 6662.
1See IRM, 20.1.2, Failure to File/Failure to Pay Penalties (Apr. 25, 2008).
"IRS's master files contain detailed records of taxpayer accounts. There are several master files,
the most significant of which are the individual master file, which contains tax records of
individual taxpayers, and the business master file, which contains tax records of corporations and
other businesses.GAO-09-513R IRS Management Report
Page 4
Upcoming Pages
Here’s what’s next.
Search Inside
This text can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Text.
United States. Government Accountability Office. Management Report: Improvements Are Needed to Enhance IRS's Internal Controls and Operating Effectiveness, text, June 24, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc295736/m1/4/: accessed April 23, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.