Applying Agreed-Upon Procedures: Federal Unemployment Taxes Page: 4 of 9
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Enclosure
Description of findings and results
Based on supporting documentation, collection amounts were recorded to
the appropriate period for all 40 sampled FUTA collection transactions.
3. Determine whether the transactions were properly classified as FUTA
receipts by reviewing source documentation maintained in IRS's files (e.g.,
tax returns).
Description of findings and results
Based on supporting documentation, collection amounts were recorded in
the correct tax class3 for 39 of the 40 sampled transactions. One sampled
transaction, which was classified as a FUTA receipt, should have been
classified as a corporate tax payment (tax class 3). IRS discovered the
error and made the correction after our sample cutoff date but before the
end of the fiscal year.
Based on our testing results, the net most likely error for the first 8 months
of fiscal year 2004 is $141 million. The net upper error limit is $414 million.
4. Confirm FUTA transactions paid via the Electronic Federal Tax Payment
System (EFTPS)4 to determine whether the recorded transactions are valid
and reflect the proper amounts, are applied to the proper tax period, and
are properly classified as FUTA receipts.
Description of findings and results
Of the 40 sampled FUTA collection transactions, 33 were paid via EFTPS.
The bank confirmations showed that all 33 transactions were valid and had
been recorded to the proper tax period and tax class and for the proper
amounts.
II. Analytical procedures
A. Perform analytical procedures on FUTA revenue collection and refund data
for the period not subject to detailed tests of transactions to determine
whether reported fiscal year 2004 revenue collections and refunds appear
reasonable.
3IRS assigns a tax class number to specific types of taxes. FUTA taxes are tax class 8.
4EFTPS is a Financial Management Service system maintained by two financial agents for the government.
EFTPS is used for initiating tax payments electronically. Employers who make federal tax deposits
exceeding $200,000 must use EFTPS to pay their FUTA taxes. The $200,000 threshold includes all federal
tax deposits, such as deposits for employment tax, excise tax, and corporate income tax. Taxpayers who
are not required to make electronic deposits may voluntarily participate in EFTPS.GAO-05-27R Unemployment Trust Fund Procedures
Page 4
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United States. Government Accountability Office. Applying Agreed-Upon Procedures: Federal Unemployment Taxes, text, November 5, 2004; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302221/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.