IRS Could Improve Justification for Budgets, GAO Says

Congressional justification data. The Internal Revenue Service (IRS) has taken steps to manage its budget more strategically but did not make linkages between priorities and appropriations accounts. IRS prioritized a subset of its 19 strategic objectives for action and established six themes that represent its "future state" vision for tax administration. In the fiscal year 2017 congressional justification (CJ), IRS linked requests for increased funding to themes and included details on how much would be funded by each appropriation account. However, IRS did not provide data on how much it spends in support of each theme or the amount of funding needed to maintain current levels by theme. IRS is working to develop such data, but officials cited challenges with data availability and tracking spending by themes. Such information would provide transparency on the current funding levels which assist Congress in making informed budget decisions.

User fee spending. IRS has permanent, indefinite authority to obligate and spend user fee collections, which it obligates as part of its budget execution process. IRS's user fee spend plan must be approved by both the Department of the Treasury (Treasury) and the Office of Management and Budget. IRS was directed to wait 30 days following the submission of the user fee spend plan to Congress before obligating funds. As seen in the table, planned user fee spending increased more than $220 million (79 percent) between fiscal years 2011 and 2016. Of the $509 million planned user fee obligations in fiscal year 2016, the largest amounts are for the Patient Protection and Affordable Care Act ($204 million) and the Foreign Account Tax Compliance Act ($62 million).

 

User Fee Funding Obligated by IRS Appropriation Account,

 

Fiscal Year 2011 through 2015

 

Actuals, and 2016 Planned (Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 2.]

 

 

 

                                Contents

Because of the size of IRS's budget and the importance of its service and compliance programs for all taxpayers, you asked us to review the fiscal year 2017 budget request for IRS. In this report, we assess (1) the extent to which IRS's fiscal year 2017 congressional justification (CJ) presents data on requested funding levels by appropriation accounts and in alignment with agency priorities, (2) IRS's management and allocation of user fees, and (3) the costs and reporting of IRS's information technology investments.

To assess the extent to which the CJ provides data on funding levels by appropriation accounts and agency priorities, we reviewed IRS documentation on the implementation of the future state vision and on the process used to prioritize requested program increases -- the future state is IRS's vision for the future of tax administration to help IRS more efficiently and effectively implement its mission. We reviewed the CJs from fiscal years 2013 through 2017 for spending and staffing data, and for changes to the budget presentation. During a meeting with appropriations staff from both the majority and the minority, we discussed their needs for obtaining information to make appropriations decisions as IRS makes changes in its budget presentation. To describe IRS's user fee funding, we reviewed IRS's authority to collect and obligate user fees, the President's budget requests from fiscal years 2013 through 2017, and IRS budget and planning documents.³ To assess the costs of IRS's information technology (IT) investments, we reviewed congressional justifications, capital investment plans and summaries, and IRS data for fiscal years 2011 to 2017. We analyzed reported cost and schedule data for major IT investments and interviewed Department of the Treasury (Treasury) officials to assess the accuracy of these data and the procedures used to report information to Congress. We compared data reported in the fiscal year 2016 CJ and the fiscal year 2017 capital investment plan and summary, and assessed the extent to which IRS reporting complied with federal internal control standards.⁴ As applicable for each objective, we interviewed IRS Corporate Budget and IT officials, and reviewed data collection procedures. We determined that the data used in this report were sufficiently reliable for our purposes.

We conducted this performance audit from December 2015 to July 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Background

IRS Budget Structures

Funding requests for IRS are organized by appropriation account, which aligns broadly with its strategic goals to (1) deliver high-quality and timely service to reduce taxpayer burden, and encourage voluntary compliance; and (2) effectively enforce the law to ensure compliance with tax responsibilities and combat fraud. IRS funds its IT investments from its Operations Support and Business Systems Modernization appropriation accounts. IRS's four appropriation accounts and the fiscal year 2016 appropriations are as follows:⁵

• Enforcement ($4.86 billion): Funds activities such as determining and collecting owed taxes, providing legal and litigation support, and conducting criminal investigations.

• Operations Support ($3.75 billion): Funds activities including rent and facilities expenses, IRS-wide administration activities, and IT maintenance and security.

• Taxpayer Services ($2.33 billion): Funds taxpayer service activities and programs, including prefiling assistance and education, filing and account services, and taxpayer advocacy services.

• Business Systems Modernization ($290 million): Funds the planning and capital asset acquisition of IT to modernize IRS business systems.

Future State

Since 2014, IRS has undertaken a multiyear effort to develop a vision for the future state of tax administration to fulfill its mission more efficiently and effectively. To focus this effort, IRS narrowed 19 existing objectives to a core set of objectives that were used to develop six future state themes:

User Fees

A user fee is charged to beneficiaries of certain goods or services provided by the federal government.⁷ In general, a user fee is related to a voluntary transaction or request for government goods or services above and beyond what is normally provided to the public. Although IRS services and operations are primarily funded through annual appropriations, IRS has the authority to supplement its appropriations with other resources, such as user fees. Until 1995, IRS user fee collections were deposited into the Treasury's general fund. In 1995, Congress granted IRS authority to retain and obligate up to $119 million in user fee revenue to supplement its annual appropriation.⁸ In 2005, Congress removed the limit of $119 million and IRS was permitted to retain and obligate user fees that were implemented after September 30, 1994, or the portion of the fee that has been increased since September 30, 1994, for those fees that existed prior to that date.⁹ For example, fees for installment agreements -- monthly payment plans for taxes owed -- were established after September 30, 1994, and therefore IRS retains the full amount of the fee collected. However, the fee for enrolling as an actuary is divided between IRS and the general fund of the Treasury because this user fee existed prior to September 30, 1994.

In fiscal year 2016, IRS expects to collect about $422 million in user fee revenue from sources such as installment agreements (about $155 million) and income verification express services (about $51 million). IRS deposits user fees that it is authorized to retain into its Miscellaneous Retained Fees Fund -- an estimated $411 million in fiscal year 2016 -- before transferring funds to an appropriation account to be obligated. For fiscal year 2016, planned user fee obligations ($509 million) account for about 4 percent of IRS's total obligations ($12,374 million). IRS's user fee funds are available until expended (no-year funds) and funds that are not obligated in the fiscal year in which they are collected are carried over to the next fiscal year.

Information Technology and Appropriations Increases

IT comprises a significant portion of IRS's budget and plays a critical role in enabling IRS to carry out its mission and responsibilities. IRS's fiscal year 2016 appropriations include about $2.5 billion for IT investments; this represents 20 percent of the total IRS budget.¹⁰ IRS relies on IT systems to process tax returns, account for tax revenues collected, send bills for taxes owed, issue refunds, assist in the selection of tax returns for audit, and provide telecommunications services for all business activities, including providing taxpayers with toll-free access to tax information, among other things.

IRS's fiscal year 2016 appropriations increased by $290 million. IRS is required by law to allocate these funds across three areas: customer service representative level of service, cybersecurity, and identity theft prevention.¹¹ IRS plans to use this funding to invest in (1) increased telephone level of service, including reduced wait times and improved performance on IRS's Taxpayer Protection Program/Identity Theft Toll Free Line; (2) cybersecurity, including network security improvements, protection from unauthorized access, and enhanced insider threat detection; and (3) identity theft refund fraud prevention. As shown in table 1, cybersecurity was allocated almost one-third of the funding, solely from the Operations Support appropriation account. This funding includes $7 million (50 additional full-time equivalents) to maintain the cybersecurity workforce.

 

Table 1: IRS Allocation of $290 Million Increase in Appropriations

 

from Fiscal Years 2015 to 2016 (Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 12.]

 

 

 

 

Figure 1: Cybersecurity Funding at IRS, Fiscal Years 2014

 

Estimated, 2015 Actual, 2016 Enacted, and 2017 Requested

 

(Dollars in Millions)

 

 

 

Note: IRS officials said that the fiscal year 2014 amount is an estimate because it did not track cybersecurity costs separately from identity theft prevention and refund fraud until fiscal year 2015.

The President's fiscal year 2017 budget also requests cybersecurity funds provided through a Treasury Cybersecurity Enhancement Account, which is intended to bolster Treasury's overall cybersecurity posture. The request includes $62 million for IRS, including $54.7 million to directly support IRS cybersecurity efforts by securing data, improving continuous monitoring, and other initiatives.

IRS Did Not Fully Link Future State Themes to Appropriation Accounts in Its 2017 Congressional Justification

IRS's Senior Executive Team recognized that the 19 strategic objectives listed in the 2014-2017 IRS Strategic Plan were too broad a set of priorities for IRS future state vision. In January 2015, the Senior Executive Team agreed on six enterprise themes to support the future state vision that aligned with a subset of the strategic objectives and were informed by the needs of the business units.

IRS modified its approach to prioritizing programs and initiatives for requested funding increases in fiscal year 2017. In January 2015, the Office of Planning, Programming and Audit Oversight asked the operating divisions to submit program increase proposals they believed necessary for IRS to achieve its priorities. This office reviewed the proposals to ensure they aligned with IRS's strategic plan and submitted them to the Senior Executive Team for consideration. The Senior Executive Team prioritized the proposed program increases through a voting process to ensure that they aligned with IRS's strategy and resource needs.

According to IRS officials, funding increases were requested for fewer programs as a result of this new approach. Specifically, in the fiscal year 2017 CJ, increases were requested for 14 programs, whereas in the fiscal year 2016 CJ, increases in 25 programs were requested.

In its fiscal year 2017 CJ, IRS explained how requests for increased funding were linked to appropriations accounts, but it did not provide this information for the amount requested to maintain current funding levels. IRS linked each requested program increase to a future state theme and included details on how much of the requested increase would be funded by each of the four appropriation accounts.¹² Figure 2 shows each of the 14 program increase requests organized by theme or focus area, with funding requested broken out by appropriation account. Including data on the appropriation account provides additional transparency and improves the quality of the information available to Congress for budget deliberations.

 

Figure 2: IRS's Fiscal Year 2017 Requested Increase by Program and

 

Appropriation Account (Dollars in Millions)

 

 

 

However, IRS did not provide data on how much it is currently spending in support of each theme. As a result, it is unclear what amount of funding would be required to maintain current levels by theme. According to officials, IRS is working to develop such data, but officials cited technical challenges with data availability and comparability as well as challenges identifying spending for specific themes, some of which are worded broadly.

OMB Circular A-11 requires that an agency prepare justifications in concise, specific terms and cover all programs and activities of the agency. Additionally, the guidance specifies that an agency should consult with relevant congressional appropriations committees to confirm their support for modifications to the CJ's format. In adopting a new approach by prioritizing a subset of objectives, IRS modified how its budget data were organized, but did not clarify how spending by themes relates to appropriation accounts. Congressional appropriations' staff from both the majority and minority with whom we spoke told us they wanted more information on base spending by theme and account. Such information is important to ensure transparency on the current funding levels to assist Congress in making informed budget decisions.

IRS Used Its Flexibility to Spend User Fee Revenue to Fund Priorities

IRS Allocated User Fees as Part of Its Broader Budget Execution Process

IRS has permanent, indefinite authority to obligate user fee collections. This authority allows the agency flexibility in the use of these funds. While IRS does not need congressional approval of its user fee spend plan, it must obtain approval from Treasury and OMB. Additionally, for fiscal year 2016, IRS was directed to wait 30 days following the submission of the user fee spend plan to Congress before obligating these funds.¹³

IRS's Chief Financial Officer has oversight responsibilities for the initial assessment, updates, collection, and review of user fees. While the Chief Financial Officer does not provide the services for which user fees are charged, the office is responsible for ensuring that user fees are appropriately collected, deposited, and reported.¹⁴ As seen in table 2, IRS plans to allocate $509 million of user fee revenues in fiscal year 2016 across three appropriation accounts. This represents 4 percent of IRS's total obligations in fiscal year 2016 ($12.37 billion).

 

Table 2: IRS Fiscal Year 2016 Allocation of User Fee Revenue

 

(Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 17.]

 

 

 

In May 2016, IRS announced that it is revising a number of existing user fees to more closely match the cost of providing the service and implementing new user fees for some additional services as a result of its 2015 Biennial Fee Review. Agencies are required to review, on a biennial basis, the fees, royalties, rents, and other charges for services and things of value and make recommendations on revising those charges to reflect costs incurred.¹⁷ IRS expects total annual user fee revenue to increase by $128 million when the fees are fully implemented. Officials said they plan to continue their current policy regarding how user fee revenue is allocated.

IRS Officials Cited Change in Appropriations and Cost of Implementing Mandates for Shift in User Fee Allocations

According to IRS officials, the planning process for allocating user fee revenue has been consistent between fiscal years 2011 and 2016. However, according to IRS officials, changes in appropriation levels and the cost of implementing mandates has resulted in a shift in how user fee revenue has been allocated. As shown in table 3 and the sidebar, both the amount and allocation of user fee funds shifted between fiscal years 2011 and 2016.

 

Table 3: User Fee Funds Obligated by IRS Appropriation Account,

 

Fiscal Year 2011 through 2015 Actuals, and 2016 Planned

 

(Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 19.]

 

 

 

 

_____________________________________________________________________

 

 

User Fee Allocations

 

In addition to changes in the allocation of user fee funds across appropriation accounts, IRS has also changed the amount it retains and the amount it carries over to the next fiscal year. The amount of user fee revenue that IRS collected and retained increased from $324 million in fiscal year 2011 to $391 million in fiscal year 2015. As previously mentioned, IRS is implementing changes to user fees which it expects to generate an additional $128 million annually, all of which IRS is authorized to retain and spend. In fiscal year 2011, user fee obligations ($285 million) accounted for 2.2 percent of IRS's total obligations ($12,777 million). For fiscal year 2016, planned user fee obligations ($509 million) account for about 4 percent of IRS's total obligations ($12,374 million).

 

Table 4: IRS User Fee Carryover Balances from Fiscal Year 2011

 

through 2015 Actuals and 2016 Estimates (Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 21.]

 

 

 

IRS Reported the Fiscal Year 2017 President's Budget Request of $2.8 Billion for IT Spending Differently Than in Prior Years

IT is a significant portion -- about 21 percent -- of the total IRS budget request for fiscal year 2017. The President requested $2.8 billion for IRS's IT investments in fiscal year 2017, an increase of about 15 percent. This includes a $391 million (65 percent) increase for non-major IT investments and a $33 million (2 percent) decrease for major IT investments as shown in figure 3.²⁰

 

Figure 3: Information Technology Investments, Fiscal Years 2011

 

through 2015 Actual, 2016 Enacted, and 2017 Requested

 

(Dollars in Millions)

 

 

 

Note: Numbers may not sum to totals because of rounding.

IT investments are funded through the Operations Support and the Business Systems Modernization appropriation accounts and user fees. These investments generally support (1) day-to-day operations (which include operations and maintenance, as well as development, modernization, and enhancements to existing systems); and (2) modernization efforts in support of IRS's goals. For IRS's 23 major IT investments, the amount requested for fiscal year 2017 is $1.8 billion, which is funded primarily through the Operations Support appropriation account as shown in figure 4.²¹

 

Figure 4: Major Information Technology Investments by Funding

 

Source, Fiscal Year 2017 Requested (Dollars in Millions)

 

 

 

In previous years, IRS reported data on its IT investments in the CJ in a Summary of Capital Investments and Portfolio of Major Investments. The Summary of Capital Investments listed major and non-major IT investment totals and major IT investments by funding source. The Portfolio of Major Investments included a comprehensive list and description of major IT investments. For fiscal year 2017, IRS moved the Summary of Capital Investments from the CJ to a link on Treasury's website that was accessible 30 days following the release of the President's budget.²² This website also includes a Capital Investment Plan, similar to the Portfolio of Major Investments.

Treasury provides capital investment information on its website for each Treasury bureau. Treasury is required to submit a Capital Investment Plan to Congress no later than 30 days following the submission of the President's budget.²³ According to IRS and Treasury officials, Treasury asked IRS to move the capital investment information from the CJ to a separate website to give Treasury additional time to review the data to improve reliability. According to IRS officials, this approach also eliminated the possibility of administrative errors in transcribing data from one database to another. While the move delayed the availability of the IRS information, the timing was consistent with capital investment reporting by other Treasury bureaus.

Treasury Lacked Controls to Detect Errors in Reporting Certain IT Spending Data

In the fiscal year 2017 IRS Summary of Capital Investments, Treasury reported the non-major IT investment total inaccurately for the 3 fiscal years presented (fiscal years 2015 actual, 2016 enacted, and 2017 requested). Treasury underreported the amounts by about $4 million (less than 1 percent) in each fiscal year. Consequently, Treasury also reported the IT total for major and non-major IT investments inaccurately.

According to IRS and Treasury officials, this discrepancy was the result of an error introduced during the 30-day Treasury review process. IRS enters IT investment information into Treasury's SharePoint Investment Knowledge Exchange (SPIKE) system.²⁴ IRS and Treasury review and monitor the information before the Capital Investment Plan and the Summary of Capital Investments reports are generated. According to IRS officials, for fiscal year 2017, Treasury took a more active role in reviewing the information submitted by IRS on IT investments. During the review process, manual adjustments in SPIKE caused an error that resulted in two rows of non-major IT investments being excluded from the non-major IT total.

We asked IRS about the discrepancy, and IRS approached Treasury with the issue and Treasury subsequently corrected the error in SPIKE and revised the Summary of Capital Investments on Treasury's website. Stronger internal controls could help prevent such mistakes, such as effective monitoring of Treasury-generated IRS information technology investment reports. According to federal internal control standards, ongoing monitoring should occur in the course of normal operations. Monitoring should be performed continually and be ingrained in the agency's operations. It includes regular management and supervisory activities, comparisons, reconciliations, and other actions people take in performing their duties.²⁵ According to Treasury officials, Treasury is aware of the need to reduce manual corrections by making improvements to SPIKE, but has yet to take steps to fully ensure that such errors will not occur in future budget cycles.

In June 2015, we reported on a separate ongoing monitoring internal control issue which resulted in IRS providing inaccurate data on actual obligations to date for major IT investments in its fiscal year 2016 CJ.²⁶ As a result of our recommendation that IRS implement internal controls to ensure the accuracy of information on major IT investments reported in the annual CJ, IRS took additional steps when preparing the fiscal year 2017 CJ. This included performing an operational review to examine the existing procedures. In addition, for the fiscal year 2017 IT investment reports, IRS implemented processes to ensure accurate and reliable data such as comparing its IT data maintained on control charts to the data it enters in SPIKE. IRS performed this reconciliation individually for each IT investment. However, IRS reported that it did not review the Summary of Capital Investments generated by Treasury in its entirety for accuracy after it was generated from SPIKE.

Without effectively monitoring IT investment information, Treasury risks continued errors in the information it reports on its IT investments. Such errors could negatively affect Congress's ability to obtain accurate information on IT investments needed to inform future budget decisions and oversight.

Conclusions

IRS intended to improve its budget process by aligning its spending priorities with themes supporting its future state vision, but the effort remains a work in progress. For fiscal year 2017, IRS did not make clear how spending by themes relates to appropriation accounts and how this advances IRS's priorities; this linkage is important to the clarity and transparency of IRS's budget presentation. Appropriations staff told us this information would help them make informed budget and oversight decisions. While IRS faces data challenges that may limit its ability to fully link funding requests to appropriation accounts, providing these linkages to the extent feasible will improve transparency and provide Congress with information to assist in making informed decisions. Additionally, accurate and timely budget data are key to effective congressional oversight. Since IT is such a significant portion -- about 21 percent -- of the total budget request for IRS, it is particularly important to have robust controls in place to ensure the data's accuracy.

Recommendations for Executive Action

To enhance the budget process and to improve transparency, we recommend that the Commissioner of Internal Revenue, to the extent feasible, ensure that the CJ includes data by appropriation account on the amount of funding requested to maintain current services for each future state theme.

As Treasury works with IRS to improve the quality and accuracy of budget data, we recommend that the Secretary of the Treasury ensure sufficient controls are in place to make certain that the information technology investment reports generated from SPIKE are accurate. This includes, for example, taking steps to reduce the need for manual corrections to the data.

Agency Comments and Our Evaluation

We provided a draft of this report to the Commissioner of Internal Revenue and the Secretary of the Treasury for comment. In written comments reproduced in Appendix IV, IRS agreed with the recommendation related to the presentation of data in the Congressional Justification. IRS plans to provide a robust description of planed activities and outcomes for funding requested to maintain current services. Given IRS's emphasis on the future state, budget data on the amount requested to maintain current services for each theme is particularly valuable. In a separate email response, Treasury agreed with the recommendation related to information technology internal controls. Treasury noted that it plans to implement improvements to SPIKE in the next few months that would address our recommendation by avoiding the need for manual corrections moving forward. IRS and Treasury also provided technical comments which were incorporated as appropriate.

We are sending copies of this report to the Chairman and Ranking Members of other Senate and House committees and subcommittees that have appropriation, authorization, and oversight responsibilities for IRS.

We are also sending copies to the Commissioner of Internal Revenue, the Secretary of the Treasury, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-9110 or mctiguej@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.

² GAO, Internal Revenue Service: Preliminary Observations on the Fiscal Year 2017 Budget Request and 2016 Filing Season Performance, GAO-16-459R (Washington, D.C.: Mar. 8, 2016).

³ The President's budget request for fiscal year 2013 contains actual data from fiscal year 2011. The President's budget request for fiscal year 2014 contains actual data for fiscal year 2012.

⁴ GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014).

⁵ In addition to the amount appropriated to these four accounts, IRS supplements its budgetary resources through collections, such as user fees, which are not appropriated annually. Also, in addition to the appropriations for these four accounts, $290 million was appropriated for "measurable improvements in the customer service representative level of service rate, to improve the identification and prevention of refund fraud and identity theft, and to enhance cybersecurity to safeguard taxpayer data" to be transferred to the Enforcement, Operations Support, or Taxpayer Services accounts. Pub. L. No. 114-113, div. E, § 113, 129 Stat. 2242, 2430 (Dec. 18, 2015). The amounts listed here reflect those transfers.

⁶ Office of Management and Budget, Circular No. A-11, Preparation, Submission, and Execution of the Budget, (Washington, D.C.: June 2015).

⁷ GAO, A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP (Washington, D.C.: September 2005).

⁸ Pub. L. No. 103-329, title 1, § 3, 108 Stat. 2382, 2388-2389 (Sept. 30, 1994).

⁹ Pub. L. No. 109-115, div. A, title II, § 209, 119 Stat. 2396, 2439 (Nov. 30, 2005).

¹⁰ Total IT investments ranged from 19 to 21 percent of total budgetary resources from fiscal years 2011 to 2017.

¹¹ Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, div. E, § 113, 129 Stat. 2242, 2430 (Dec. 18, 2015).

¹² IRS only listed program increases under three of the six themes in the fiscal year 2017 CJ.

¹³ 161 Cong. Rec. H10135 (Dec. 17, 2015).

¹⁴ GAO-12-193.

¹⁵ User fees under the Return Preparer Program and the Photocopy Program are applied only towards the reimbursement of the costs of managing those two programs respectively. The Historical Easement Fee is required to be used to fund enforcement compliance with that specific requirement. 26 U.S.C. § 170(f)(13)(C). In fiscal year 2016, this totaled $13.3 million.

¹⁶ For more information about continuing resolutions, see GAO, Continuing Resolutions: Uncertainty Limited Management Options and Increased Workload in Selected Agencies, GAO-09-879 (Washington, D.C.: Sept. 24, 2009).

¹⁷ 31 U.S.C. § 902(a)(8). Also, see OMB Circular A-25, § 8(e).

¹⁸ GAO, IRS 2016 Budget: IRS Is Scaling Back Activities and Using Budget Flexibilities to Absorb Funding Cuts, GAO-15-624 (Washington, D.C.: June 24, 2015).

¹⁹ The remaining PPACA funding between fiscal years 2010 and 2015 was from the Department of Health and Human Services Health Insurance Reform Implementation Fund ($559 million, 34 percent), Taxpayer Services ($77 million, 5 percent), and Enforcement ($53 million, 3 percent).

²⁰ Treasury guidance defines a major investment as one that costs $10 million in either the current year or budget year, costs $50 million over the 5-year period extending from the prior year through 2 years after the budget year, or meets other specific criteria established by Treasury or OMB, such as having significant program or policy implications. OMB has instructed agencies not to categorize IT capital planning and Chief Information Officer function investments as major IT investments.

²¹ See appendix II for a summary of IRS's major IT investments.

²²http://www.treasury.gov/about/budget-performance/pages/summary-of-capital-investments.aspx.

²³ Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, div. E, § 123, 129 Stat. 2242, 2432 (Dec. 18, 2015).

²⁴ SPIKE is Treasury's capital planning portfolio management tool. SPIKE is used to generate data for the Capital Investment Plan and the Summary of Capital Investments.

²⁵ GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014).

²⁶ See GAO-15-624. For other budget-related recommendations that remain open, see appendix III.

 

END OF FOOTNOTES

 

 

* * * * *

 

 

Appendix I: Internal Revenue Service Funding and Full-Time

 

Equivalents Data from Fiscal Year 2011 through 2017

 

 

Table 5: Internal Revenue Service (IRS) Funding, Fiscal Years 2011

 

through 2016 Enacted and 2017 Requested (Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 28.]

 

 

 

 

Table 6: Internal Revenue Service (IRS) Full-Time Equivalents

 

(FTE), Fiscal Years 2011 through 2015 Actual, 2016 Enacted,

 

and 2017 Requested

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 29.]

 

 

 

 

* * * * *

 

 

Appendix II: Summary of the Internal Revenue Service's

 

Major Information Technology Investments

 

 

Table 7: Major IT Investments (Dollars in Millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 30.]

 

 

 

 

 

 

 

 

* * * * *

 

 

Appendix III: Our Open Budget-Related Recommendations to the

 

Internal Revenue Service

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 33.]

 

 

 

 

 

 

 

 

* * * * *

 

 

Appendix IV: Comments from the Internal Revenue Service

 

 

July 5, 2016

 

Thank you for the opportunity to review the draft GAO report, IRS 2017 BUDGET: IRS Could Improve Presentation of Budget Data in Its Congressional Justification (GAO-16-695). We appreciate that GAO recognizes the important role our service and compliance programs provide to all taxpayers. As in prior years, the IRS Congressional Justification (CJ) reflects continued improvements in the transparency, data quality, and accuracy of budget data through the strengthening of validation processes and controls.

Below are the IRS's comments on each specific recommendation.

Recommendation #1: To the extent feasible, ensure that the Congressional Justification includes data by appropriation account on the amount of funding requested to maintain current services for each future state theme.

Comment:

We agree with this recommendation. To ensure transparency and ease of communicating the Service's base and requested investments, the IRS will ensure its budget requests are identified by appropriation account with a robust description of what it expects to achieve at base funding levels and how the requested initiatives would improve performance and program delivery.

Recommendation #2: The Secretary of the Treasury should ensure sufficient controls are in place to make certain that the information technology investment reports generated from SharePoint Knowledge Information Exchange (SPIKE) system are accurate. This includes, for example, taking steps to reduce the need for manual corrections to the data.

Comment:

Since this recommendation is addressed to Department of the Treasury, we provided this document to them for review. Treasury indicated that they will provide a written response directly to GAO.

If you have any questions, please contact me, or a member of your staff may contact Ursula S. Gillis, Chief Financial Officer, at (202) 317-6400.

James R. McTigue, Jr. (202) 512-9110, mctiguej@gao.gov

Staff Acknowledgments

In addition to the individual named above, the following staff made key contributions to this report: Thomas Gilbert, Assistant Director; Melissa King, Analyst-in-Charge; Charles Fox; Robert Gebhart; Carol Henn; Laurie King; Edward Nannenhorn; Sabine Paul; Bradley Roach; Robert Robinson; Cynthia M. Saunders; Andrew J. Stephens; and Elwood White.

GAO's Mission

The Government Accountability Office, the audit, evaluation, and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO's commitment to good government is reflected in its core values of accountability, integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost is through GAO's website (http://www.gao.gov). Each weekday afternoon, GAO posts on its website newly released reports, testimony, and correspondence. To have GAO e-mail you a list of newly posted products, go to http://www.gao.gov and select "E-mail Updates."

Order by Phone

The price of each GAO publication reflects GAO's actual cost of production and distribution and depends on the number of pages in the publication and whether the publication is printed in color or black and white. Pricing and ordering information is posted on GAO's website, http://www.gao.gov/ordering.htm.

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates.

Listen to our Podcasts and read The Watchblog.

Visit GAO on the web at www.gao.gov.

To Report Fraud, Waste, and Abuse in Federal Programs

Contact:

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-4400, U.S. Government Accountability Office, 441 G Street NW, Room 7125, Washington, DC 20548

Public Affairs

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 U.S. Government Accountability Office, 441 G Street NW, Room 7149 Washington, DC 20548