Tax Administration: IRS Should Evaluate the Changes to Its Offer
in Compromise Program (15-MAR-02, GAO-02-311).
A growing backlog of cases and longer processing times have
prompted concern about the management of the Internal Revenue
Service's (IRS) Offer in Compromise (OIC) Program. OIC inventory
and processing time have grown despite significant increases in
program staff. Program changes increased the demand for offers,
the number of processing steps, and the number of staff hours
needed to process the case. Yet, the demand for offers exceeded
staff's capacity to process them. The extent to which IRS'
current initiatives would reduce the OIC Program inventory and
processing time is uncertain. The current initiatives are
intended to separate the processing of less complex and more
complex offers, with lower-grade staff using standardized
procedures to process less complex offers and higher-grade staff
specializing in more complex offers. IRS projects that the
initiatives will stabilize the inventory and keep up with the
flow of new offers by the end of fiscal year 2002. IRS fulfilled
the requirements of the IRS Restructuring and Reform Act of 1998
in terms of independently reviewing all proposed offer
rejections, considering the facts and circumstances of each
taxpayer when determining allowances for monthly living expenses,
and not rejecting offers from low-income taxpayers solely on the
basis of the amount offered. IRS lacks data on the effect on
taxpayers of its 1998 decision that IRS did not have the
authority to enter into partial payment installment agreements.
IRS officials said the policy change created a situation in which
taxpayers who were willing to pay some of their tax liability
might not qualify for either an installment agreement or an
offer. According to these officials, the only other option was to
put such taxpayers' accounts into inactive status.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-311
ACCNO: A02744
TITLE: Tax Administration: IRS Should Evaluate the Changes to
Its Offer in Compromise Program
DATE: 03/15/2002
SUBJECT: Tax administration
Taxpayers
Program evaluation
Program management
Claims processing
IRS Offer in Compromise Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-02-311
Report to the Chairman and Ranking Minority Member, Committee on Finance, U.
S. Senate
United States General Accounting Office
GAO
March 2002 TAX ADMINISTRATION
IRS Should Evaluate the Changes to Its Offer in Compromise Program
GAO- 02- 311
Page i GAO- 02- 311 Offers in Compromise Letter 1
Results in Brief 2 Background 4 Objectives, Scope, and Methodology 8
Inventory and Processing Times Grew because Staffing Increases
Were Outpaced by Program Changes 9 The Extent to Which IRS?s Current
Initiatives Would Reduce Offer
Inventory and Processing Time Is Uncertain 18 IRS Fulfilled Certain
Requirements of the Restructuring Act 29 IRS Lacked Data and Written Plans
for Partial Payment Installment
Agreements 32 Conclusions 35 Recommendations for Executive Action 37 Agency
Comments and Our Evaluation 37
Appendix I Total Tax Liability Compromised 39
Appendix II IRS?s Partial Payment Installment Agreement Proposal 40
Appendix III Comments from the Internal Revenue Service 43
Appendix IV Comments from the Taxpayer Advocate Service 46
Tables
Table 1: Number of Direct Collection Field Staff Hours Charged to the OIC
Program and Total Direct Collection Field Staff Hours (Fiscal Years 1997-
2001) 16 Table 2: Comparison of Direct Field Collection Staff Hours
Charged to the OIC Program, by Category of Staff (Fiscal Years 1997 and
2001) 17 Table 3: IRS?s Projected Results for Centralized and Fast Track
Processing (As of January 2002) 21 Contents
Page ii GAO- 02- 311 Offers in Compromise
Table 4: IRS?s Other Initiatives, Expected Results, and Status (As of
December 2001) 24 Table 5: Total Tax Liability Compromised (Fiscal Years
1991- 2001) 39
Figures
Figure 1: Simplified Overview of the Offer Process 6 Figure 2: End- of- Year
Offer Inventory (Fiscal Years 1997- 2001) 10 Figure 3: Age of Cases at
Disposition (Fiscal Years 1997- 2001) 11 Figure 4: Offer Applications and
Workable Offers Received (Fiscal
Years 1997- 2001) 13 Figure 5: Workable Offers and Offer Dispositions
(Fiscal Years
1997- 2001) 18 Figure 6: Overview of Centralized and Fast Track Offer
Processing 19
Abbreviations
ETA effective tax administration FTE full- time equivalent GPRA Government
Performance and Results Act IRS Internal Revenue Service OIC offer in
compromise OPERA Office of Program Evaluation and Risk Analysis TIGTA
Treasury Inspector General for Tax Administration
Page 1 GAO- 02- 311 Offers in Compromise
March 15, 2002 The Honorable Max Baucus Chairman The Honorable Charles E.
Grassley Ranking Minority Member Committee on Finance United States Senate
A growing backlog of cases and longer processing times have prompted concern
on the part of taxpayers, Congress, and other stakeholders about the
management of the Internal Revenue Service?s (IRS) Offer in Compromise (OIC)
Program. An offer in compromise is an agreement between a taxpayer and the
IRS to settle or ?compromise? the taxpayer?s tax liability for less than the
full amount owed. Generally, IRS considers offers in cases in which
taxpayers cannot afford to pay the full tax liability. In recent years,
particularly since the enactment of the Internal Revenue Service
Restructuring and Reform Act of 1998 (Restructuring Act), the demand for
offers has increased significantly. Even though IRS added staff to the
program, the inventory of unresolved offers and the processing times have
grown. IRS now takes about 10 months, on average, to make an offer
determination.
Because of your concern about the growing inventory and processing times,
you asked us to review IRS?s administration of the program. Specifically,
you asked us to (1) determine why the inventory of cases and case processing
times have continued to grow; (2) assess whether IRS?s current initiatives
for managing the OIC Program will reduce inventory and processing times; and
(3) determine whether IRS is fulfilling the requirements of the
Restructuring Act in terms of independently reviewing all proposed
rejections of offers, considering the facts and circumstances of each case,
and not rejecting offers from low- income taxpayers solely on the basis of
the amount offered.
You also asked us to review a recent change to IRS?s installment agreement
program. An installment agreement allows taxpayers to pay their tax
liability over time. In 1998, IRS counsel determined that IRS did not have
the authority to enter into an installment agreement that would not fully
pay the tax liability within the time allowed by law. Because of concern
that this decision would leave some taxpayers unable to qualify for either
an installment agreement or an offer, you asked us to determine the extent
to which IRS has information on how the counsel decision
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 02- 311 Offers in Compromise
affects taxpayers and to evaluate IRS?s legislative proposal for a new
partial payment installment agreement program.
To address these objectives, we reviewed and analyzed program data from IRS
statistical reports and program documents and reviewed offer policies and
procedures and studies by an outside contractor and the Treasury Inspector
General for Tax Administration (TIGTA). We focused on fiscal years 1997
through 2001 because this was a period of enormous change in the OIC
Program. We also interviewed IRS officials, including officials responsible
for the OIC and installment agreement programs. Our scope and methodology
are discussed in greater detail in a separate section of this report.
OIC inventory and processing time have grown, largely because IRS was unable
to keep pace with the effects of program changes, despite significant
increases in program staff. Between fiscal years 1997 and 2001, the ending
inventory of unresolved offers almost tripled to about 95,000 and the
percentage of cases that were closed within 6 months dropped from 64 to 32
percent. Program changes, some initiated by IRS and some mandated by the
Restructuring Act, increased the demand for offers, the number of processing
steps, and the number of staff hours needed to process a case. During the
same period, staff hours charged to the OIC Program more than doubled,
growing to 18 percent of total staff hours charged to all of IRS?s programs
for collecting tax debts. Yet, the demand for offers exceeded staff?s
capacity to process them.
The extent to which IRS?s current initiatives would reduce the OIC Program
inventory and processing time is uncertain. Generally, the current
initiatives are intended to separate the processing of less complex and more
complex offers, with lower- grade staff using standardized procedures to
process less complex offers and higher- grade staff specializing in more
complex offers. IRS projects that the initiatives will stabilize the
inventory and keep up with the flow of new offers by the end of fiscal year
2002. More specifically, IRS projects that in fiscal year 2004, it will
close 40 percent more cases, using 10 percent fewer and lowergrade staff
than in fiscal year 2001. IRS?s projections depend on a series of
assumptions such as the number of staff hours needed per case. Many of the
assumptions have little empirical basis, however; in some cases, offer
program officials had no choice but to rely on professional judgment. They
acknowledge that the projections are uncertain and said that because of the
escalating inventory, processing time, and staffing costs, they felt that
they had to take a ?calculated risk? and begin implementing the initiatives.
Results in Brief
Page 3 GAO- 02- 311 Offers in Compromise
The uncertainty about the projected results, combined with the costs of
staffing the program, underscores the importance of evaluation plans, timely
performance data, and goals for improving the program. As of January 2002,
IRS had not completed plans for evaluating the effectiveness of most of the
initiatives, had not completed plans for a performance data system in light
of the initiatives, and had not set goals for processing time based on an
evaluation of taxpayer needs, other benefits, and costs. Such information
would give program managers, who are likely to face divergences between
actual and projected results, a better understanding of the factors
affecting the initiatives? performance and options for improving their
performance.
IRS fulfilled the requirements of the Restructuring Act in terms of
independently reviewing all proposed offer rejections, considering the facts
and circumstances of each taxpayer when determining allowances for monthly
living expenses, and not rejecting offers from low- income taxpayers solely
on the basis of the amount offered. TIGTA reported in June 2000 that IRS was
carrying out the act?s requirements in these three areas. In discussions
with TIGTA, the National Taxpayer Advocate, and other IRS officials, we
found no evidence indicating that IRS was not following the new procedures.
IRS lacks data on the effect on taxpayers of its 1998 counsel decision that
IRS did not have the authority to enter into partial payment installment
agreements. According to IRS officials, the policy change created a
situation in which taxpayers who were willing to pay some of their tax
liability might not qualify for either an installment agreement or an offer.
Instead, according to these officials, the only option was to put such
taxpayers? accounts into inactive status. IRS?s legislative proposal gives
IRS broad discretion over how to implement a partial payment installment
agreement program. IRS has not prepared written documentation describing
eligibility, procedures, staffing needs, information system needs, projected
costs, or evaluation plans. Such written documentation would provide outside
stakeholders, including Congress, useful information about the impact of the
legislative proposal and IRS?s capacity to manage the new program.
Evaluations would give IRS managers a better understanding of program
performance and a better basis for considering changes to improve
performance.
In this report, we are recommending that the Commissioner of Internal
Revenue (1) develop plans for evaluating the various offer initiatives and
move no new initiative into implementation without a finalized evaluation
plan; (2) determine which OIC Program performance and cost data should
Page 4 GAO- 02- 311 Offers in Compromise
be collected; (3) set goals for offer processing time that are based on
taxpayer needs, other benefits, and costs; and (4) prepare documentation
describing its proposed partial payment installment agreement program in
more detail.
The OIC Program is one of IRS?s collection programs to resolve delinquent
tax accounts. Taxpayers who do not pay their taxes in full when they file
their tax returns or when IRS determines that they owe additional taxes are
subject to IRS?s collection process. The collection process begins when IRS
sends the taxpayer a bill demanding full payment. For taxpayers who are
unwilling or unable to pay, IRS may take enforcement action through liens,
levies, or seizures of property; place the account in a temporary inactive
status; or refer the case to IRS counsel for litigation. By law, IRS has 10
years from the date of assessment to collect delinquent taxes from a
taxpayer. Taxpayers who are willing to pay may qualify for an installment
agreement, which allows payments to be made over time; taxpayers who cannot
afford to pay their full liability may be eligible for an offer in
compromise.
Section 7122 of the Internal Revenue Code gives IRS authority to settle tax
debts through compromises, that is, by accepting less than full payment.
Historically, IRS?s compromise authority has been limited to cases where
there was doubt as to liability or doubt as to collectibility. In July 1999,
IRS issued temporary regulations allowing for a third type of compromise
when there is no doubt as to liability or collectibility but when
compromising the taxes would promote effective tax administration. IRS can
accept the following types of compromise.
A compromise based on doubt as to liability can be accepted when there is
a dispute that the tax liability is correct.
A compromise based on doubt as to collectibility can be accepted when (1)
it is unlikely that the tax liability can be collected in full and (2) the
amount of the taxpayer?s offer reasonably reflects collection potential- the
net equity of the taxpayer?s assets plus the amount that IRS could collect
from the taxpayer?s future income. Because IRS?s policy is to allow
taxpayers sufficient resources to provide for necessary living expenses, if
special circumstances exist, such as advanced age or serious illness of the
taxpayer, IRS may accept an offer for an amount that is less than what could
be collectible based on the taxpayer?s financial condition. Background
Page 5 GAO- 02- 311 Offers in Compromise
A compromise based on effective tax administration can be accepted only
when (1) there is no dispute about the tax liability and (2) the taxpayer
has sufficient resources to fully pay the tax but collection of the
liability in full would either create an economic hardship or be detrimental
to voluntary compliance.
As illustrated in figure 1, the offer process starts when an offer
application is submitted by a taxpayer or his or her representative. The
offer must be supported by a current statement of the taxpayer?s financial
condition, including data on assets and liabilities and a monthly income and
expense analysis. If the taxpayer has not filed all required federal tax
returns or is in bankruptcy, the offer is not considered workable and will
be returned to the taxpayer. If the offer is eligible for consideration and
the offer package is incomplete, IRS will contact the taxpayer and attempt
to obtain the missing information. If the taxpayer does not provide the
requested information, the offer application will be returned to the
taxpayer.
Page 6 GAO- 02- 311 Offers in Compromise
Figure 1: Simplified Overview of the Offer Process
Source: Review of IRS?s written procedures and discussions with IRS
officials.
IRS determines whether offer is acceptable based
on ability to pay Taxpayer
submits application and financial
information IRS determines whether
taxpayer is eligible -filed all income tax
returns -not in bankruptcy
No Yes
IRS proposes rejection
IRS?s independent review determines whether the correct
decision was made IRS sends rejection letter
to taxpayer IRS returns
application to taxpayer
Taxpayer raises offer to acceptable level
Counsel review when tax liability exceeds $50,000
No No Yes Yes
IRS reconsiders offer acceptability
Yes No
IRS accepts offer
Page 7 GAO- 02- 311 Offers in Compromise
Once an offer package is complete, IRS determines whether the offer is
acceptable by reviewing and verifying the taxpayer?s financial data. The
verification includes a review of prior- year tax returns as well as records
showing the taxpayer?s assets, bank accounts, and personal and real
property. The taxpayer may be asked to provide additional documentation to
verify financial or other information. If the financial statement becomes
older than 12 months while the offer is being processed, the taxpayer must
be contacted to update the information.
When an offer is unacceptable, IRS gives the taxpayer the opportunity to
submit an amended offer, withdraw the offer application, or seek an
alternative resolution to the case. When an offer is rejected, the taxpayer
will be notified in writing after an independent administrative review of
the proposed rejection. The letter will explain the reason for the decision
and give instructions on how the taxpayer may appeal the decision. If an
offer application is returned because the taxpayer did not provide all
requested financial information, IRS?s policy is to conduct an independent
administrative review of the offer application before returning it to the
taxpayer.
After an offer is accepted by IRS, 1 the taxpayer will be notified in
writing and given instructions on how to make the agreed payments. IRS
allows taxpayers three payment options- an immediate payment (within 90 days
of acceptance); a short- term deferred payment plan (after more than 90 days
but within 2 years of acceptance); or a deferred payment plan (during the
remaining statutory period for collecting the tax).
Another way that IRS collects delinquent taxes is through installment
agreements. Under an installment agreement, the taxpayer remains obligated
to pay the entire tax liability and agrees to do so in installments over a
period of time not to exceed the remaining statutory period allowed IRS by
law to collect the tax liability, plus a 5- year extension. Interest
continues to accrue on the unpaid balance. IRS may periodically review a
taxpayer?s financial condition and pursue further collection action if the
taxpayer?s ability to pay increases in the future.
1 The tax code requires that legal counsel review an offer involving
liabilities of $50, 000 or more before IRS can accept the offer.
Page 8 GAO- 02- 311 Offers in Compromise
To determine why the inventory of cases and case processing times have
continued to grow, we reviewed and analyzed OIC Program data from IRS
statistical reports; reviewed OIC policies and procedures, program
documents, and changes mandated by the Restructuring Act; and interviewed
IRS officials. Since offers based on doubt as to liability are not processed
by collection staff and represent less than one percent of all offers, we
omitted them from our review. We did not check the reliability of IRS?s
program data in the automated OIC system, the collection time reporting
system, and the OIC quality measurement system.
To assess whether IRS?s current initiatives for managing the OIC Program
will reduce inventory and processing times, we analyzed IRS?s bases for the
assumptions underlying the initiatives. As part of our evaluation, we
interviewed IRS officials and reviewed relevant program documents, data, and
studies by an outside contractor. Because the success of the initiatives
depends in part on how well they are managed, we assessed IRS?s goals and
evaluation plans. For criteria for this assessment, we relied on past GAO
reports on performance management and IRS?s guidance on program evaluation.
To determine whether IRS is fulfilling the requirements of the Restructuring
Act in terms of independently reviewing all proposed offer rejections,
considering the facts and circumstances of each case, and not rejecting
offers from low- income taxpayers solely on the basis of the amount offered,
we reviewed relevant laws, regulations, and program guidance; studies by
TIGTA; and reports by the OIC quality review program, IRS?s appeals office,
and the National Taxpayer Advocate. We also interviewed IRS officials.
To determine the extent to which IRS has information on how the policy
change eliminating partial payment installment agreements affects taxpayers
and to evaluate IRS?s plan for a new partial payment installment agreement
program, we interviewed installment agreement program officials and
officials with responsibility for developing IRS?s legislative proposal
relating to installment agreements. We also reviewed installment agreement
policies and procedures, program documents and data, IRS?s legislative
proposal, and examples of circumstances in which taxpayers may not qualify
for either an installment agreement or an offer.
We performed our investigation at IRS?s national headquarters and its Small
Business and Self- Employed headquarters; IRS offices in Oakland and Fresno,
California, and in Austin, Texas; IRS centers in Fresno and Austin; IRS?s
appeals office; the National Taxpayer Advocate?s office; and Objectives,
Scope,
and Methodology
Page 9 GAO- 02- 311 Offers in Compromise
the OIC quality review program in Atlanta, Georgia. The offices and centers
in California and Texas were subjectively selected because of their location
and experience with offers. We also reviewed a subjectively selected sample
of accepted, rejected, and returned offers in the offices we visited.
We did our work from May 2001 through January 2002 in accordance with
generally accepted government auditing standards. We requested comments on a
draft of this report from the Commissioner of Internal Revenue. His written
comments are discussed near the end of this report and are reprinted in
appendix III. In addition, the National Taxpayer Advocate provided written
comments, which are reprinted in appendix IV.
OIC inventory and processing times grew, largely because increases in
staffing were outpaced by the effects of program changes. Between fiscal
years 1997 and 2001, the inventory of unresolved offers almost tripled and
the percentage of offers processed within 6 months dropped from 64 percent
to 32 percent. Program changes, some initiated by IRS and some mandated by
the Restructuring Act, contributed to increases in the demand for offers,
the number of processing steps, and the number of staff hours needed to
process a case. Despite significant increases in the staff devoted to the
OIC Program, IRS was unable to close as many cases as it received.
During fiscal years 1997 through 2001, IRS?s ending inventory of offers, or
the number of cases still unresolved at the end of the fiscal year, grew
from about 32,300 to about 94,900 offers. As figure 2 shows, most of the
growth occurred during fiscal years 1999 and 2000, when the inventory rose
by almost 50,000 offer cases. Inventory and
Processing Times Grew because Staffing Increases Were Outpaced by Program
Changes
Inventory and Processing Times Have Grown
Page 10 GAO- 02- 311 Offers in Compromise
Figure 2: End- of- Year Offer Inventory (Fiscal Years 1997- 2001)
Source: Unpublished IRS data on OIC activity for fiscal years 1997- 2001
(IRS rept. no. 5000- 108).
IRS measures its timeliness in processing offers by the percentage of offers
completed within 6 months of the date that the offer is accepted for
investigation. Our analysis of IRS data showed that from fiscal years 1997
through 2001, the percentage of cases that were closed within 6 months
dropped from 64 to 32 percent, the percentage that were closed within 6 to
12 months grew from 29 to 43 percent, and the percentage closed after more
than 12 months rose from 7 to 25 percent, as illustrated by figure 3.
0 20,000
40,000 60,000
80,000 100,000
120,000 2001 2000 1999 1998 1997 94,931
Fiscal Year 32,279
37,941 62,551
87,456 Number
Page 11 GAO- 02- 311 Offers in Compromise
Figure 3: Age of Cases at Disposition (Fiscal Years 1997- 2001)
Note: ?Disposition? means closed as accepted, rejected, or withdrawn.
Source: Unpublished IRS data on OIC activity for fiscal years 1997- 2001
(IRS rept. no. 5000- 108).
Although IRS does not routinely report the average number of days it takes
to close a case, data from an IRS sample of closed offer cases 2 showed
that, on average, it took about 292 days to close an offer case 3 during
fiscal year 2000 and about 312 days to close an offer case during fiscal
year 2001.
2 The sample consists of offers that were closed as accepted, rejected, or
withdrawn and that were reviewed by the OIC quality review program between
March 1, 2000, and September 30, 2001.
3 The number of days required to close a case was measured from the date
that the offer was received by the offer program to the date that the case
was closed.
0 20
40 60
80 2001 2000 1999 1998 1997 Fiscal Year Percentage
0- 6 months 6- 12 months 12 or more months
Page 12 GAO- 02- 311 Offers in Compromise
Other data describing the results of the OIC Program are included in
appendix I. The data include the dollar amount accepted in compromise and
the amount of the total tax liability compromised.
Program changes contributed to the growth in inventory and processing times.
First, program changes increased the demand for offers, as measured by the
number of workable offers, or new offers that meet IRS?s criteria for
processing. 4 Second, some changes increased the complexity of the offer
process, resulting in more processing steps and staff hours to process a
case.
Our analysis of IRS?s data showed that the number of workable offers doubled
over the last 5 years, from about 51,700 offers in fiscal year 1997 to about
104,500 in fiscal year 2001, as illustrated by figure 4.
4 IRS accepts all offers for processing except those from taxpayers who have
not filed all required federal tax returns or are in bankruptcy. Program
Changes
Contributed to the Growth in Demand, Processing Steps, and Staff Hours Per
Case
Page 13 GAO- 02- 311 Offers in Compromise
Figure 4: Offer Applications and Workable Offers Received (Fiscal Years
1997- 2001)
Note: Workable offers were calculated by subtracting from the number of
offer applications received during the fiscal year the sum of the number of
offers transferred to another IRS office and the number of offers returned
to taxpayers as not eligible for consideration.
Source: Unpublished IRS data on OIC activity for fiscal years 1997- 2001
(IRS rept. no. 5000- 108).
According to IRS officials, the following program changes, some initiated by
IRS and some mandated by the Restructuring Act, increased the demand for
offers.
Increase in publicity. In response to a Restructuring Act requirement that
IRS inform taxpayers about the availability of offers in compromise as an
option for resolving tax debts, the agency undertook outreach and education
efforts. According to IRS officials, these efforts, along with media
coverage, brought the revised program to the attention of taxpayers and
practitioners who represent taxpayers. IRS officials told us that
practitioners, in turn, have extensively marketed the revised OIC Program as
a way for taxpayers to settle their tax debts for ?cents on the dollar.?
0 50,000
100,000 150,000
2001 2000 1999 1998 1997 Fiscal Year
Offer applications Workable offers
Number
Page 14 GAO- 02- 311 Offers in Compromise
Change in processability criteria. Before 1999, IRS would not process an
offer application that was incomplete. In 1999, IRS made all offer
applications eligible for processing, except those from taxpayers in
bankruptcy proceedings or from taxpayers who had not filed all required
federal tax returns. Instead of returning an incomplete offer to the
taxpayer, IRS started working with taxpayers to obtain the information
needed to process the offer. This change in processability criteria
increased the number of workable offers.
Elimination of partial payment installment agreements. Prior to 1998, IRS
allowed partial payment installment agreements with payment periods that
could last 15 years and longer. In 1998, IRS counsel determined that IRS did
not have the authority to enter into installment agreements that would not
fully pay the liability within the 10- year statutory collection period plus
a 5- year extension. IRS officials stated that as a result of this decision,
more taxpayers turned to the OIC Program. However, IRS officials told us
they could not quantify the impact that this policy change has had on the
demand for offers.
Expanded bases for accepting offers to include effective tax
administration. In response to the Restructuring Act, IRS expanded the bases
for considering offers to include effective tax administration (ETA), which
requires considering such factors as equity and hardship. Although the
expansion had the potential to increase the demand for offers, IRS officials
told us that they do not track the number of offers submitted on the basis
of these factors. However, IRS data on the number of offers accepted by type
showed that there were 261 ETA offers in fiscal year 2000 and 272 ETA offers
in fiscal year 2001, suggesting that the impact on demand may have been
small.
More payment options. In 1999, IRS made available a long- term deferred
payment option that allows taxpayers to pay the offer amount over the
remaining statutory collection period. This change had the potential to
increase demand, but IRS officials could not quantify the impact.
Three of the program changes that increased demand also increased the number
of processing steps and staff hours needed per case. Changing the
processability criteria resulted in IRS staff?s spending time to work with
taxpayers to complete offer applications. Expanding the bases for accepting
offers means that before rejecting an offer based on doubt as to
Page 15 GAO- 02- 311 Offers in Compromise
liability or doubt as to collectibility, IRS must determine whether the
factors considered under ETA or special circumstances criteria apply. 5
Making more payment options available increased the amount of staff time
required to calculate offer amounts. However, IRS could not quantify the
impact of these changes.
According to IRS officials, other program changes also added the following
steps to the process and increased staff hours per case.
Independent administrative review. The Restructuring Act required that IRS
establish procedures for an independent administrative review of any
proposed offer rejection before notifying the taxpayer. IRS extended the
review to include offers to be returned for failure to provide requested
financial information. Consequently, the independent administrative reviews
increased staff hours per case and added a step to the offer process for
rejected offers and returned offers. However, IRS does not currently track
the time spent on offers by the independent reviewers.
Revised offer form. IRS had to revise the offer form to reflect changes
required by the Restructuring Act. 6 Since an offer in compromise is a legal
contract between the taxpayer and IRS, the form had to be revised so that
the offer contract and the acceptance letter would have the same terms. Form
revisions added a step to the offer process for taxpayers who had to
resubmit their offers on current forms.
Between fiscal years 1997 and 2001, IRS took several actions to manage the
growing inventory and processing time, including shifting significant
numbers of staff to the OIC Program from other field collection activities.
However, the growth in staffing was outpaced by the increases in demand and
complexity of case processing in terms of processing steps and hours needed
to process a case. Despite more than doubling direct staff time and
5 In addition, all ETA offers must first be considered under doubt as to
liability or doubt as to collectibility before being considered under ETA. 6
These requirements included informing the taxpayer of their rights and IRS?s
obligations, eliminating the statutory waiver provision, providing for
severability in the event of default by jointly liable taxpayers with joint
offers, and expanding the bases of compromise to include ETA offers.
Increased Staffing
Outpaced by Growth in Demand, Processing Steps, and Hours Needed to Process
a Case
Page 16 GAO- 02- 311 Offers in Compromise
taking other actions, IRS was unable to reduce inventory and processing
times.
Staff hours grew. IRS officials told us that as the demand for offers grew,
the cost of staffing the program grew as well. IRS reassigned staff to the
OIC Program from other collection programs, such as delinquent account and
tax return investigations. As table 1 shows, the number of direct collection
field staff hours charged to the OIC Program 7 more than doubled, from about
728,000 hours in fiscal year 1997 to about 1.6 million hours in fiscal year
2001. At the same time, the number of direct hours charged to all field
collection activities declined by about 30 percent, from about 12.7 million
hours in fiscal year 1997 to about 8.9 million hours in fiscal year 2001.
With the growth in OIC Program hours and the decrease in total collection
hours, the share of total direct field collection staff hours devoted to the
OIC Program grew from about 6 percent in fiscal year 1997 to 18 percent in
fiscal year 2001. IRS officials told us that having devoted such a large
proportion of collection resources to the OIC Program may be negatively
impacting other collection programs.
Table 1: Number of Direct Collection Field Staff Hours Charged to the OIC
Program and Total Direct Collection Field Staff Hours (Fiscal Years 1997-
2001)
Direct field staff hours Fiscal year OIC Program Total collection
Offer hours as a percentage of total
collection hours
1997 727,682 12,684,232 5. 7 1998 741,143 11,412,249 6. 5 1999 860,125 9,
426,813 9.1 2000 1,287,046 8,556,527 15.0 2001 1,600,074 8,892,385 18.0
Source: GAO analysis of unpublished IRS data on the Collection Time
Reporting System for fiscal years 1997- 2001 (IRS rept. no. 5000- 23).
As shown in table 2, while the percentage of OIC Program staff categorized
as professionals has decreased slightly between fiscal years 1997 and 2001,
they continued to account for about three- quarters of offer
7 IRS does not routinely measure total staff time devoted to the OIC
Program. Direct staff time does not include time spent on processing offers
by management, service center employees, district counsel, and the
independent reviewers. It also does not include time spent by revenue
officers explaining or soliciting offers and working with taxpayers to
complete offer applications.
Page 17 GAO- 02- 311 Offers in Compromise
staff. These staff, generally revenue officers at the GS- 11 and GS- 12
grade levels, 8 investigate offers, negotiate with taxpayers, and make the
decision to reject or accept an offer. During the same time period, the
percentage of lower- grade paraprofessional staff increased slightly. These
staff, generally tax examiners at the GS- 4, GS- 5, and GS- 6 grade levels,
perform less complex tasks, such as working with taxpayers to prepare a
complete offer application.
Table 2: Comparison of Direct Field Collection Staff Hours Charged to the
OIC Program, by Category of Staff (Fiscal Years 1997 and 2001)
Category FY 1997 Percentage FY 2001 Percentage
Professional 564,666 78 1, 173,531 73 Paraprofessional 119,587 16 333,272 21
Clerical 43,429 6 93,271 6
Total 727,682 100 1,600,074 100
Source: GAO analysis of unpublished IRS data on the Collection Time
Reporting System for fiscal years 1997- 2001 (IRS rept. no. 5000- 23).
In addition to increasing staff, IRS took other actions to improve the
efficiency of the program. These actions included creating an offer
specialist position for revenue officers to exclusively process offers and
make the program more consistent; revising offer processing procedures,
including streamlining investigations of certain offers with liabilities of
$50,000 or less; and revising the offer application package so that
taxpayers can better understand what documents must be submitted for IRS to
consider an offer. In addition, IRS used an outside contractor to conduct a
review of the OIC Program to find ways to improve the offer process and
reduce the inventory of unresolved offers. Some of the initiatives resulting
from these efforts will be discussed later.
Demand exceeded the number of offer cases closed by staff. As shown in
figure 5, there was a large increase in offer dispositions after fiscal year
1999. However, in spite of the increases in offer staffing and dispositions,
the demand for offers, as measured by the number of workable offers received
each year, generally exceeded the number of cases staff closed. Increases in
staff hours per case, caused in part by
8 ?Grade level? means the level of classification that an employee has under
a position classification system (i. e., referring to the duties, tasks, and
functions he or she performs).
Page 18 GAO- 02- 311 Offers in Compromise
additional processing steps, contributed to the inability of staff to keep
up with demand.
Figure 5: Workable Offers and Offer Dispositions (Fiscal Years 1997- 2001)
Note: ?Dispositions? mean cases closed as accepted, rejected, or withdrawn.
Source: GAO analysis of unpublished IRS data on OIC activity for fiscal
years 1997- 2001 (IRS rept. no. 5000- 108).
IRS has begun implementing a new strategy for processing offers, consisting
of several separate initiatives intended to reduce inventory and processing
time. Less complex offers will be processed centrally using standardized
procedures intended to reduce staff hours per case and allow processing by
lower- grade staff, while more complex offers will continue to be processed
by higher- grade professional staff. Overall, IRS is projecting that
standardization will allow fewer, lower- grade staff to process more cases.
The accuracy of IRS?s projected results for the initiatives is uncertain.
Many of the underlying assumptions have little empirical basis- in some
cases, program managers had no choice but to rely on their professional
judgment. This uncertainty underscores the importance of timely program
performance data and evaluations. However, as of January 2002, IRS had not
completed plans for either a The Extent to Which
IRS?s Current Initiatives Would Reduce Offer Inventory and Processing Time
Is Uncertain
0 20,000
40,000 60,000
80,000 100,000
120,000 2001 2000 1999 1998 1997 Fiscal Year Number
Workable offers Offer dispositions
Page 19 GAO- 02- 311 Offers in Compromise
performance data system or evaluations for most of the initiatives making up
the new strategy.
IRS has two key initiatives under way to reduce inventory and processing
times- centralized processing and fast track processing. Centralized
processing will use lower- grade staff to process new, less complex cases
centrally and free up higher- grade staff for other field collection
activities. Fast track processing will use both higher- and lower- grade
field staff to close all less complex cases in the existing field inventory
9 during fiscal year 2002.
Figure 6: Overview of Centralized and Fast Track Offer Processing
Source: Discussions with IRS officials.
IRS centralized the locations where all offers are received and initially
processed into two IRS centers- Brookhaven and Memphis- in August 2001. The
new process is illustrated in figure 6. Lower- grade staff, known as process
examiners (GS- 4, GS- 5, and GS- 6), initially process new offer
applications, determining eligibility for consideration and assembling case
files. Other lower- grade staff, known as offer examiners (GS- 7 and GS- 9),
work the less complex offers to completion using standardized
9 The field inventory is located in IRS offices throughout the country.
Centralized and Fast Track
Processing Allow for Standardization and Lower- Grade Staff, but Results Are
Uncertain
New offers Centralized initial processing
Less complex offers
Centralized processing
More complex offers
Existing field inventory
More complex offers
Less complex offers
Field processing Fast track processing in the field
Page 20 GAO- 02- 311 Offers in Compromise
procedures. The criteria for centralized processing include a tax liability
of less than $50,000; wage or self- employment income; no employees;
personal income tax, penalty assessment, or employment tax liability; and
simple assets such as a personal residence. More complex new offers are sent
to the field where higher- grade offer specialists (generally GS- 11 and GS-
12) work the cases to completion. These cases take longer to investigate and
may require face- to- face meetings with the taxpayer.
IRS began using fast track processing in January 2002. Fast track cases must
meet essentially the same criteria as cases processed centrally. However,
IRS has designed fast track processing to take less time than centralized
processing. Under fast track, field staff 10 would spend less time verifying
a taxpayer?s financial information and taxpayers would not be required to
provide supporting documentation. Instead, IRS would rely on electronically
available data 11 to verify financial information.
IRS expects to stabilize inventory and keep up with the flow of new cases by
the end of fiscal year 2002. As table 3 shows, IRS is projecting that
centralized and fast track processing would reduce fiscal year 2002 ending
inventory to 48,000 cases- a level that IRS expects to maintain through
fiscal year 2004. IRS projects that it can maintain this inventory level
while reducing total full- time equivalent positions (FTE) 12 and using
lower- grade staff. More specifically, IRS projects that in fiscal year 2004
it will close 40 percent more cases using 10 percent fewer FTEs and lower-
grade FTEs than in fiscal year 2001.
10 These staff generally consist of revenue officers or offer specialists
(GS- 11 and GS- 12) and tax examiners (GS- 7). 11 Sources of electronic data
include databases maintained by IRS as well as contracted research sources
that provide credit and property data. 12 An FTE generally consists of one
or more employed individuals who collectively complete 2,080 work hours in a
given year. Therefore, either one full- time employee or two half- time
employees equal one FTE.
Page 21 GAO- 02- 311 Offers in Compromise
Table 3: IRS?s Projected Results for Centralized and Fast Track Processing
(As of January 2002)
Fiscal year Submissions Field
FTEs a Centralized
FTEs Closures b Ending
inventory
2001 [Actual] 125,390 1, 507
117,915 94,931 2002 [Projected] 138,000 1, 168 650 c 185,000 48,000 2003
[Projected] 151,000 574 650 151,000 48,000 2004 [Projected] 166,000 631 715
166,000 48,000 a Field FTEs include offer specialists and tax examiners, as
well as trainers and coaches at the
centralized sites. b Closures include cases closed, cases returned as
unprocessable, and cases transferred to another
IRS office. c Staff would be phased in during the first year of operation.
Source: IRS.
IRS?s projections for centralized processing and fast track processing were
based on a series of assumptions regarding offer submissions, percentage of
offers meeting centralized criteria, number of cases meeting fast track
criteria, direct staff hours needed per case, and staffing levels.
Specifically, IRS made the following assumptions.
Offer submissions, or new offer applications, would grow at a rate of 10
percent a year from fiscal years 2002 through 2004.
Fifty- one percent of the submissions would meet the criteria for
centralized processing, but the percentage would increase to 70 percent in
fiscal year 2003.
Thirty- three thousand cases in the field inventory at the beginning of
fiscal year 2002 would meet fast track criteria.
Staff in the centralized sites would take an average of 2 hours to
determine processability and assemble each new case and an average of 6
hours to close those cases meeting the centralized criteria.
Staff in the field would take an average of 4 hours to close cases in the
existing field inventory that meet fast track criteria.
Six hundred fifty FTEs would be needed in the centralized sites in fiscal
years 2002 and 2003. These FTEs would be phased in during fiscal year 2002
as new staff received formal and on- the- job training.
Approximately 225 offer specialists and tax examiners could close all fast
track cases in the field during fiscal year 2002.
Page 22 GAO- 02- 311 Offers in Compromise
Whether these projections accurately predict IRS?s future performance is
uncertain. While the future is always uncertain, the extent of the
uncertainty about the projections may be significant. As discussed below,
some of the underlying assumptions were based on the experience of a pilot
program, 13 others lacked a basis that could be verified, and some have
changed over time. For many of the assumptions, there was little empirical
basis- in many cases, program managers had no choice but to rely on their
professional judgment. Program officials acknowledged the uncertainty. They
said that because of escalating inventory, processing time, and costs, they
felt they had to take a ?calculated risk? and begin implementing the
initiatives.
Projecting offer submissions. According to OIC Program officials, IRS?s
projections for the number of offer submissions that it expects to receive
through fiscal year 2004 are based on a 10 percent growth rate. IRS has
revised its projections for offer submissions several times. Because the
growth rate can fluctuate, and because offer submissions can be affected by
factors beyond the control of IRS- such as changes in the economy- the
accuracy of the current projections is uncertain.
Projecting the percentage of offers meeting centralized criteria.
IRS based its assumption for the percentage of cases meeting centralized
criteria on a profile of the automated offer in compromise database. On the
basis of that profile, IRS estimated that 51 percent of the cases involved
liabilities of $50,000 or less. In fiscal year 2003, IRS plans to replace
its dollar- based criteria with complexity- based criteria. IRS estimates
that as a result of this change, 70 percent of the new offer submissions in
fiscal year 2003 will meet the centralized processing criteria. IRS
officials said that this percentage was based on professional judgment and
would be revised when there is agreement on a definition of ?complexity.? As
a result, it is difficult to project with any certainty the percentage of
offers that would meet the revised criteria.
Projecting the number of fast track cases in the field inventory.
IRS based its assumption for the number of fast track cases on a 13
According to program officials, IRS had successfully used streamlined
processes requiring less investigation and lower- grade staff (generally GS-
4 through GS- 7) to work some lowvalue cases. Because of this experience,
IRS piloted the use of streamlined procedures and lower- grade staff to
process less complex offers in two locations. Before the pilot could be
completed, IRS officials made the decision to implement centralized
processing nationwide. IRS could not provide supporting data, however,
because it did not retain the data after the decision was made to
centralize.
Page 23 GAO- 02- 311 Offers in Compromise
qualitative review of a 1- week sample of closed cases selected for its OIC
quality review program in April 2001.
Projecting direct staff hours per case for centralized processing. IRS
based its projections for direct staff hours per case on its centralized
pilot experience. However, IRS was unable to provide any data from its pilot
that would support the number of direct staff hours needed to assemble and
close cases at the centralized sites.
Projecting direct staff hours per case for fast track processing.
IRS based its projections for direct staff hours per case on OIC data and
professional judgment.
Projecting staffing levels for centralized processing. IRS projected
centralized staffing of 650 FTEs based on professional judgment and assumed
a 20 percent productivity improvement over that of the pilot. IRS officials
told us that the level of staffing for centralized processing was selected
to result in processing less complex cases within 6 months.
Projecting staffing levels for fast track processing. IRS based its
staffing levels for fast track processing on the number of cases meeting
fast track criteria and the number of staff hours needed to close a case.
IRS has several other initiatives under way or under consideration that are
intended to limit the number of new offer submissions, reduce staff hours
per case for certain categories of cases, and remove cases from existing
inventory. These initiatives include the use of overtime in the field and
the centralized sites, procedure and policy changes, and legislative and
regulatory proposals. IRS?s projected results for these other initiatives
were generally based on the professional judgment of OIC Program officials
and their experiences. Because IRS has not had experience with some of these
initiatives, IRS officials said they could not project results with any
certainty. The possible effects of these other initiatives were not
considered in IRS?s projections for centralized or fast track processing.
Table 4 summarizes the expected results and status of IRS?s other
initiatives. Following the table, we provide more detail on each of the
initiatives. Other Initiatives Aim to
Limit New Submissions and Improve Processing Efficiency, But Results Are
Uncertain
Page 24 GAO- 02- 311 Offers in Compromise
Table 4: IRS?s Other Initiatives, Expected Results, and Status (As of
December 2001)
Initiative Expected Results Status
Overtime Reduce inventory- how much depends on amount of overtime approved
Planned for fiscal year 2002. Expanded Return Authority
Reduce inventory by up to 15,000 cases in FY 2002
Reduce new submissions by up to 10 percent
Close 4 percent of new submissions more quickly
Implemented in September 2001.
Quick Hits Reduce inventory by 4,600 cases in FY 2002
Reduce new submissions by up to 5 percent
Close 5% of new cases more quickly
Under counsel review. Frivolous Offers Reduce new submissions by
up to 15 percent
Close 5 percent of new submissions more quickly
Legislative proposal pending. Statutory Period Reduce new submissions-
how much depends on the number of taxpayers who submit offers to delay
collection activity
Legislative proposal pending. Counsel Review Reduce processing time for
all offers for liabilities between $50,000 and $250,000
Legislative proposal pending. User Fee Reduce new submissions by
up to 3 percent Legislative proposal pending. Source: IRS.
Overtime in field and centralized sites. IRS used 74,000 hours of overtime
for offer work in the field during fiscal year 2001. In fiscal year 2002,
IRS plans to continue the use of overtime in both the field and the
centralized sites to ensure that projected staffing levels are reached. At
the time of our review, the number of hours had not yet been determined and
approved.
Expanded return authority. To reduce the time that staff spend processing
submissions that are not serious offers, IRS expanded its criteria for
returning offers to taxpayers. Previously, IRS would make at least two
attempts to request additional documentation to verify financial or other
information from a taxpayer before an offer would be returned for failure to
provide the requested information. As of September 2001, IRS
Page 25 GAO- 02- 311 Offers in Compromise
makes only one attempt to request information from a taxpayer before
returning the offer. Further, IRS may reject an offer if a taxpayer (1)
resubmits an offer that is not materially different from a previous offer
that was either rejected with appeal rights or returned; (2) resubmits an
offer within 1 year of having defaulted and received a termination letter;
or (3) filed an offer solely to delay enforcement action after being
notified of IRS?s intent to levy or seize.
As a result of its expanded return authority, IRS estimated that as many as
15,000 of the cases in its existing inventory would be closed in fiscal year
2002; future submissions would be reduced by as much as 10 percent; and 4
percent of the new offers would be closed more quickly, primarily in the
centralized sites. IRS officials told us that these projections were based
on professional judgment and that the results would depend on when
practitioners and taxpayers learn about IRS?s new procedures. IRS officials
told us that they are tracking returned offers and would be able to tell in
the future whether these are good estimates. As of late November 2001, IRS
told us that 700 offers or about 2 percent of submissions had been closed
under the expanded return authority.
Quick hits. To reduce offer submissions, IRS may change its procedures to
allow taxpayers with multiple delinquencies to enter into an installment
agreement for one or more of their delinquencies rather than place all of
them in a currently- not- collectible status. This initiative is currently
under counsel review. According to IRS, this initiative would accomplish, in
some cases, the same results as the legislative proposal to change Internal
Revenue Code Section 6159 to allow for partial payment installment
agreements (discussed below). For example:
A taxpayer owes $20,000 for 2 years of delinquencies-$ 5, 000 for one year
and $15,000 for the other- but he cannot full pay within the 73 months
remaining before the collection statute expires. However, the taxpayer can
pay $200 a month, for a total of $14,600. Under quick hits, IRS would take
an installment agreement for $5,000 and put the other year of delinquency or
$15,000 in a currently not collectible status. The taxpayer would be
expected to make payments on the installment agreement but not on the
separate delinquency that was put in a currently not collectible status.
Based on installment agreement data and professional judgment, IRS estimated
that under quick hits, 4,600 cases could be closed from the existing
inventory in fiscal year 2002 and future offer submissions could be reduced
by up to 5 percent, primarily in the centralized sites. Also, IRS estimated
that 5 percent of the future inventory could be closed more quickly,
primarily in the centralized sites.
Page 26 GAO- 02- 311 Offers in Compromise Frivolous offers. To discourage
offers aimed at delaying collection
action, IRS is requesting legislative authority to establish a $5,000
penalty for frivolous offers. IRS developed its legislative proposal for
frivolous offers to supplement its expanded return procedures (also
discussed above). Based on professional judgment and offer experience, IRS
estimates that this proposal, if approved, would generally discourage most
abuse, reduce new offer submissions by as much as 15 percent, and close 5
percent of new cases more quickly, primarily in the centralized sites.
Statutory period. IRS is also requesting legislative authority for the
collection statute to be suspended when an offer is submitted. As discussed
above, by law IRS has 10 years from the date of assessment to collect the
delinquent taxes from the taxpayer. However, when a taxpayer files an offer,
the collection statute does not stop while the offer is pending. This has
encouraged some taxpayers to file offers as an attempt to delay collection
action while the statutes of limitation on collecting their tax debts
continue to expire. IRS officials believe this proposal would reduce the
number of new submissions. However, IRS cannot quantify the potential
reduction of future submissions that may have been submitted in order to
delay collection action.
Counsel review. To reduce processing time, IRS is requesting legislative
authority to change the threshold for counsel review of offers. Section
7122( b) of the Internal Revenue Code requires counsel review in all cases
where the total liability is $50,000 or more. According to IRS?s quality
review of a sample of closed offer cases, it took an average of 57.2 days
for cases to be sent to and returned from counsel during fiscal year 2001.
IRS questioned the added value of the counsel review for offers for
liabilities less than $250,000 and has proposed that the threshold be raised
from $50,000 to $250,000. If this authority is granted, it would reduce
processing time for offers for liabilities between $50,000 and $250,000. An
IRS official told us that 31.2 percent of the offers closed in fiscal year
2000 were for tax liabilities between $50,000 and $250,000 and 4.8 percent
were for tax liabilities of $250,000 or more.
User fee. To offset the cost of the direct staff hours used to process
offers, IRS is requesting legislative authority to charge taxpayers a user
fee. Although offers from low- income taxpayers and offers based on
effective tax administration would be exempt, the taxpayer would need to pay
a user fee when the offer is submitted and would be reimbursed later. Based
on IRS?s best guess, this proposal, if approved, would reduce new offers by
as much as 3 percent.
Page 27 GAO- 02- 311 Offers in Compromise
As of January 2002, IRS had not completed plans for evaluating the
effectiveness of most of its offer initiatives, had not completed plans for
a performance data system, and had not set program goals based on an
evaluation of taxpayer needs, other benefits, and costs. Without such plans
and goals, IRS may not be able to determine the effectiveness of the
initiatives.
Program officials said that they intend to evaluate centralized processing.
IRS?s Office of Program Evaluation and Risk Analysis (OPERA) has agreed to
conduct an evaluation, but a plan for the evaluation had not yet been
developed. Program officials told us, however, that they had put in place
measures for centralized processing and that program managers were
continually collecting data and making changes as centralized processing was
being implemented. Officials said that such monitoring would enable them to
know whether centralized processing was meeting IRS?s goals for closing
cases within 6 months and for the percentage of cases closed within 6
months.
An evaluation plan for the fast track program has been developed by OPERA.
According to OPERA officials, the plan is designed to assess fast track as
it has been implemented in the field and also to assess whether the offer
program database includes sufficient information for effective program
management. The planned evaluation is also intended to provide some
information useful for deciding whether to expand fast track processing. OIC
Program officials stated that they are considering whether to expand fast
track processing to cover new, less complex cases, which are processed
centrally. It is not clear whether centralized fast track would be the same
as the fast track currently being implemented in the field. For example, the
mix of high- and low- grade staff used in the field is different from the
mix of staff being used centrally. In addition, the data being verified
electronically in the field is not the same as the data being submitted in
new cases. According to OPERA officials, the planned fast track evaluation
is also intended to determine whether program results differ because of such
variables.
OIC Program officials said that they do not plan to develop evaluation plans
for their other initiatives. Without such plans, it may be difficult to
distinguish the impact of one initiative from that of another.
Because actual inventory and processing time could be greater or less than
projected, IRS managers may need to decide whether and how to make
additional changes to the OIC Program. For example, if results are better
than the projections, IRS may have opportunities to reassign some offer
staff. If results are worse than projected, other approaches to managing
Plans for Evaluations and
Data Collection Are Incomplete, and the Goal for Processing Time Has Not
Been Verified
Page 28 GAO- 02- 311 Offers in Compromise
inventory and processing time may need to be considered. Such decisionmaking
would benefit from reliable, timely performance and cost data and
evaluations. The Government Performance and Results Act (GPRA) of 1993 and
IRS guidance both stress the benefits of first gathering and then evaluating
data to help managers understand the factors that influence performance.
While reliable, timely performance data and evaluations are always
beneficial, the uncertainty about both the results and the costs of the
offer initiatives highlights the importance of tracking and evaluating the
initiatives? performance.
Planning for data collection and evaluation is also important. Systematic
attention to the design of data collection and evaluation efforts can help
assure the usefulness of the efforts and safeguard against using time and
resources ineffectively. Before information is collected, an evaluation plan
should specify details, including the data to be collected, data sources,
data collection methods, basis for comparing outcomes, and an analysis plan.
We recognize that collecting performance data and conducting performance
evaluations have costs. Consequently, the amount of data to collect and the
scope and depth of evaluations should be based on the resources required and
the benefits of the information.
As noted earlier in this report, IRS did not track some data that might be
useful for managing the OIC Program or determining the effectiveness of the
initiatives. These data might include, for example, the total staff time
devoted to the OIC Program, the time taken by the independent administrative
review, and the percentage of taxpayers who failed to comply with the terms
of their offer, by year of acceptance. Whether such data are worth
collecting depends on the extent to which they contribute to better program
management or to a better evaluation of the effectiveness of the offer
initiatives. As noted earlier, OPERA?s evaluation of fast track field
processing includes an assessment of data needed for effective program
management. Similar assessments of performance data needs for centralized
processing and the other initiatives would also contribute to better program
management.
IRS measures processing time relative to a standard of six months, but
empirical information has never been used to verify that standard as an
appropriate measure of program performance. IRS officials said that the
6month standard was based on their professional judgment about what IRS
could achieve and what taxpayers would accept.
Page 29 GAO- 02- 311 Offers in Compromise
In two recent reports, we discussed the benefits of setting service goals
after evaluating taxpayer or customer needs, other benefits, and costs. 14
More specifically, we discussed industry guidance for customer service that
recommended setting goals based on how long customers are willing to wait
for the service, the value of the service to the organization, and the costs
of providing the service. Without goals for offer processing time based on
such factors, IRS lacks a yardstick for measuring the effectiveness of the
initiatives and lacks criteria for making strategic decisions about issues
such as staffing levels.
IRS has implemented the following provisions mandated by the Restructuring
Act: (1) independently reviewing all proposed offer rejections before
notifying taxpayers; (2) considering the facts and circumstances of each
taxpayer when determining allowances for monthly living expenses; and (3)
not rejecting offers from low- income taxpayers solely on the basis of the
amount offered. The Treasury Inspector General for Tax Administration
(TIGTA) reviewed IRS?s implementation of these Restructuring Act provisions
and reported in June 2000 that IRS had modified its offer procedures to
carry out the act?s requirements. Further, TIGTA, IRS officials, and the
National Taxpayer Advocate found no evidence to indicate that IRS was not
following the new procedures.
The Restructuring Act required that IRS establish procedures for an
independent review of any rejection of a proposed offer before the rejection
is communicated to the taxpayer. The Restructuring Act also stipulated that
these procedures should allow taxpayers to appeal the offer rejection to
IRS?s Office of Appeals. To implement the requirement, IRS established an
independent administrative review process. IRS went beyond the requirements
of the Restructuring Act by expanding the review process to include offers
being returned because the taxpayer did not provide requested financial
information. 15 IRS also modified its internal guidance by adding criteria
for the independent review and delivered a 16- hour training course to all
independent reviewers.
14 U. S. General Accounting Office, IRS Telephone Assistance: Opportunities
to Improve Human Capital Management, GAO- 01- 144 (Washington, D. C.: Jan.
30, 2001); U. S. General Accounting Office, IRS Telephone Assistance:
Limited Progress and Missed Opportunities to Analyze Performance in the 2001
Filing Season, GAO- 02- 212 (Washington, D. C.: Dec. 7, 2001).
15 Withdrawn offers are not subject to IRS?s independent administrative
review process. IRS Fulfilled Certain
Requirements of the Restructuring Act
IRS Independently Reviewed All Proposed Offer Rejections Before Notifying
Taxpayers
Page 30 GAO- 02- 311 Offers in Compromise
In June 2000 TIGTA reported that IRS had implemented the Restructuring Act
requirements for establishing an independent administrative review. TIGTA
based its finding on a survey of IRS field office directors and a review of
a random sample of rejected offers submitted after enactment of the
Restructuring Act. The survey of field office directors showed that the
independent administrative review had been implemented in all field offices.
In its review of rejected offers, TIGTA found no evidence that any offer had
been rejected without undergoing the administrative review before IRS
notified taxpayers of the rejections and their rights to appeal them.
In 2001, IRS officials from the Small Business and Self- Employed
headquarters and the appeals office told us that they had seen no evidence
to suggest that the independent reviews were not taking place. Furthermore,
an OIC Program official told us that IRS had added internal controls to its
management information system to ensure that an independent administrative
review occurs before the taxpayer is notified of the rejection and his or
her appeal rights. As a result of these controls, IRS?s letter notifying
taxpayers of rejections cannot be system generated until the independent
review has been completed and a reason code has been entered into the
automated OIC information system.
Although TIGTA found no evidence suggesting that the required reviews of
rejected offers were not taking place, TIGTA did raise an issue about
withdrawn offers. In its June 2000 report and in another report issued in
May 2001, TIGTA expressed concern about IRS?s procedures that allow
taxpayers to withdraw their offers. If an offer cannot be given favorable
consideration, IRS allows the taxpayer to withdraw the offer and advises him
or her that in withdrawing the offer, he or she loses any appeal rights.
TIGTA believed that taxpayers would be better served were the proposed offer
rejection to proceed through the independent administrative review process,
because the taxpayer would retain the right to appeal the proposed
rejection. In response to TIGTA?s concern, IRS stated that it believed that
allowing for withdrawals serves the interest of both the government and the
taxpayer by avoiding unnecessary costs to both parties.
Page 31 GAO- 02- 311 Offers in Compromise
IRS reviewed the reasonableness of an offer based on the amount the taxpayer
is willing to pay given, among other things, the taxpayer?s necessary living
expenses. In 1995, IRS published national and local schedules that set
limits on allowable monthly living expenses. In 1998, Congress directed IRS,
in the Restructuring Act, to consider the facts and circumstances of a
particular taxpayer?s case in determining whether the national and local
schedules were adequate. If the facts and circumstances indicated that the
use of schedule allowances would be inadequate, the taxpayer should not be
limited by the national and local allowances.
IRS acted as follows to address the Restructuring Act requirement regarding
facts and circumstances.
Issued temporary regulations in July 1999 providing that the applicability
of the allowable expense standards would be determined by the facts and
circumstances of each taxpayer?s case.
Revised the Internal Revenue Manual to provide that the national and local
standards would serve as the starting point in evaluating the taxpayer?s
financial condition. If, however, the facts indicated that use of the
scheduled allowances would be inadequate under the circumstances, IRS will
allow the taxpayer adequate basic living expenses.
Established criteria to be used by the independent reviewers in
determining whether the decision to reject an offer is appropriate.
According to the criteria, reviewers must determine whether the offer
investigator considered the facts and circumstances of the taxpayer in
deciding whether the national and local expense standards were appropriately
applied.
Initiated a separate review of a sample of closed offer cases as part of
its collection quality review program in March 2000. According to IRS
officials, in the past, few offers had been selected for review in the
collection quality review program, because the numbers of offers were small
in relation to other types of collection cases.
In its June 2000 report, TIGTA found that IRS was considering the facts and
circumstances of taxpayers when determining how much should be allowed for
monthly living expenses. TIGTA reviewed a random sample of rejected offers
to determine whether it appeared that any offer was rejected in which the
taxpayer claimed that IRS?s allowable living expense schedules were
insufficient. Also, based on TIGTA?s findings, IRS updated its procedures by
adding clarifying guidelines for the way that equity in IRS Considered the
Facts
and Circumstances of Each Taxpayer When Determining Allowances for Monthly
Living Expenses
Page 32 GAO- 02- 311 Offers in Compromise
assets necessary for the production of income or health and welfare of the
taxpayer?s family should be treated in analyzing a taxpayer?s offer.
As mentioned above, IRS?s independent administrative reviewers are
responsible for reviewing proposed offer rejections to determine, among
other things, whether the facts and circumstances were considered in
determining whether the national and local expense standards were
appropriately applied. Reviewers told us that when they did not agree with a
proposed rejection, it was generally because the decision was not fully
documented.
To ensure that offers from low- income taxpayers are considered, the
Restructuring Act required that IRS not reject offers from low- income
taxpayers solely on the basis of the amount offered. In response, IRS
revised its internal guidance to provide that an offer may not be rejected
solely on the basis of the offer amount. In its review of a sample of
rejected offers, TIGTA found no indication that IRS had rejected any offer
solely based on the low dollar amount of the offer. In addition, OIC Program
officials, an appeals official, and the National Taxpayer Advocate told us
that they had seen no evidence that offers from low- income taxpayers were
being rejected solely on the basis of the amount offered. 16
IRS could not produce reliable data on the effects of the 1998 IRS counsel
determination that IRS did not have the authority to enter into installment
agreements that would not fully pay the tax liability before the collection
statute expired. IRS?s legislative proposal that would expressly allow IRS
to enter into partial payment installment agreements is broadly worded and
leaves considerable discretion to IRS. As of December 2001, IRS did not have
a business case, implementation plan, or other written documentation
describing features of the new program, including eligibility requirements,
potential number of such agreements, monitoring process, staffing needs,
information system needs, projected costs, and evaluation plans.
16 The National Taxpayer Advocate commented that some taxpayers and
practitioners had incorrectly interpreted this provision to mean that IRS
must accept all low- dollar offers, regardless of the facts and
circumstances of the case. IRS Did Not Reject Offers
from Low- Income Taxpayers Solely on the Basis of the Amount Offered.
IRS Lacked Data and Written Plans for Partial Payment Installment Agreements
Page 33 GAO- 02- 311 Offers in Compromise
In April 1998, IRS counsel determined that IRS did not have the authority to
enter into installment agreements that would not provide for full payment of
the taxpayer?s liability before the collection statute expired. According to
IRS officials, this policy change created a situation in which some
taxpayers who were willing to pay some amount would not qualify for either
an installment agreement or an offer. Instead, the only option for IRS was
to put the account in inactive status, creating, according to IRS officials,
a new group of cases for which there was no resolution. An apparent
?procedural gap? existed, because offers in compromise or enforcement
actions, such as the seizure of assets, were not practical alternatives for
some cases in which IRS previously would have accepted a partial payment
installment agreement.
As of December 2001, IRS lacked reliable data on how the prohibition of
partial payment installment agreements affected taxpayers. IRS attempted to
count the number of taxpayers who entered into partial payment agreements in
the past, but sufficiently reliable data were not available to complete the
analysis. IRS developed some general data on the potential effects that the
policy change had on the installment agreement program in terms of changes
in the volumes of cases and tax dollars collected through installments, but
it was unable to measure actual effects. IRS officials told us that since
1998, some taxpayers who were denied a partial payment installment agreement
might have submitted an offer application. However, IRS cannot quantify the
number of such taxpayers, the outcome of their offers, or the increase in
the number of submissions that the OIC Program may have received as a result
of the installment agreement policy change.
Nor was IRS able to provide a sample of actual cases that fell into the
procedural gap. For example, in following up on the collection procedural
gap, IRS?s Small Business and Self- Employed headquarters? officials
reviewed 23 cases that the field staff believed had no resolution. The
officials concluded that all of the cases could be resolved using existing
enforcement authorities.
In 2001, IRS drafted a legislative proposal that would amend the Internal
Revenue Code to expressly allow IRS to enter into partial payment
installment agreements. Under IRS?s proposal, section 6159 would be amended
to allow IRS to enter into written agreements in which a taxpayer would be
allowed to make payment on any tax in installments if IRS determines that
such agreement will facilitate full or partial collection of the liability.
IRS officials said that the new authority to accept partial IRS Lacked Data
on the
Effect of Prohibiting Partial Payment Installment Agreements
IRS?s Proposed Legislative Change Allows Broad Discretion and Lacks an
Implementation Plan
Page 34 GAO- 02- 311 Offers in Compromise
payment installment agreements would be used only in those narrow
circumstances in which IRS?s only other option would be to assign the case
an inactive status. (See appendix II for a copy of IRS?s proposal and
examples of what would be accepted as a partial payment installment
agreement.)
Officials also said that acceptance of partial payment installment
agreements would not prevent IRS from pursuing other collection actions
against taxpayers. Specifically, they said that IRS would monitor a
taxpayer?s income and assets over the life of a partial payment installment
agreement. If a taxpayer?s income increased, or if assets were accumulated
to allow for larger payments, then IRS would demand such payments from the
taxpayer. IRS officials said the ability to monitor a taxpayer?s income and
assets and to demand additional payments was a key difference between the
proposed partial payment installment agreement program and the OIC Program.
Under the OIC Program, a contractual agreement compromises a taxpayer?s
liability. The unpaid portion is written off and IRS agrees to take no
further collection action after the taxpayer meets all terms of the offer.
IRS?s legislative proposal is broadly worded, granting considerable
discretion to IRS to tailor the provision?s use through regulation.
According to IRS officials, although it is their intention to use the
provision narrowly, the proposal was intentionally written broadly so that
IRS would not have to request a legislative change in order to make policy
improvements.
As noted by the National Taxpayer Advocate, the lack of specific guidance
regarding the appropriate circumstances under which IRS would accept a
partial payment installment agreement leaves open the possibility of abuse.
The taxpayer advocate endorsed the proposal but suggested that Congress
provide guidance as to what factors IRS should consider when entering into
partial payment installment agreements. The advocate expressed concern that
the availability of partial payment installment agreements provided the
opportunity for certain taxpayers to abuse the system by allowing them to
continue living in an affluent lifestyle encumbered by debt. The advocate
also cautioned that taxpayers should not be allowed to enter into partial
payment agreements until they demonstrate the willingness and ability to
retire their tax debt.
Although IRS officials state that the proposed authority to grant partial
payment agreements is intended to be used only in narrow circumstances, the
legislative proposal, as currently written, offers no provisions to
Page 35 GAO- 02- 311 Offers in Compromise
ensure that these agreements are entered into only under appropriate
circumstances. IRS has not described how it will evaluate agreements to
ensure that revenue officers are not using the partial payment installment
agreement when a seizure or an offer is, in fact, a viable alternative. IRS
officials said, however, that the collection process leaves little
discretion to revenue officers as to when a partial payment installment
agreement would be appropriate.
As of December 2001, IRS had not developed a business case, implementation
plan, or other written documentation describing the features of the proposed
partial payment installment agreement program. Specifically, IRS did not
have written documentation on key program design issues, such as eligibility
requirements for a partial payment installment agreement, the potential
number of taxpayers who might request such agreements, or procedures for
accepting, rejecting, reviewing, and monitoring agreements. Nor did IRS have
documentation on the resources that would be required for the program,
including staffing, information systems, and projected costs. Business
cases, which would include such information, are commonly used management
tools that provide a basis for making resource allocation decisions and for
monitoring and evaluating a project?s performance. Such written
documentation would provide outside stakeholders, including Congress, useful
information about the impact of the legislative proposal and IRS?s capacity
to manage the new program.
Particularly important is the fact that IRS has not developed an evaluation
plan to monitor and assess the performance of its proposed partial payment
installment agreement program. As noted earlier, both GPRA and IRS guidance
emphasize the importance of collecting performance data and analyzing such
data to understand the factors that affect performance. Without a mechanism
to track performance and evaluate the program, IRS would not have
information to guide informed decision- making regarding resource
allocations to the program, appropriate staffing levels, and staff
productivity or to determine whether the program is operating as intended.
As was the case with the OIC initiatives, the lack of information about
partial payment installment agreements underscores the importance of program
evaluation. Evaluations would give IRS managers a better understanding of
program performance and a better basis for considering changes to improve
performance.
IRS?s Offer in Compromise Program is a necessary element of the agency?s
overall collection effort. Because some taxpayers will inevitably be unable
to fully pay their tax liabilities, IRS must have a program that can timely
Conclusions
Page 36 GAO- 02- 311 Offers in Compromise
and fairly compromise such tax debts. However, a continued increase in the
inventory of cases, processing time, and costs would put the effectiveness
of the OIC Program at risk.
Whether IRS?s initiatives for improving the OIC Program will succeed in
reducing inventory and processing time while holding costs at a sustainable
level is uncertain. Because of the uncertainty, program managers will likely
have to make adjustments to the program as actual performance diverges from
projected performance in unpredictable ways. Several steps, if taken now,
could better prepare offer program managers for making such decisions. Goals
based on an evaluation of taxpayer needs, other benefits, and costs could
provide criteria for judging the effectiveness of the initiatives. Timely
data could allow program managers to routinely track progress. Evaluations
could determine the effectiveness of the initiatives and the reasons for
their effectiveness. Armed with such an understanding, program managers
would have a better basis for making future adjustments to the program.
The uncertainty about the effect of the initiatives on program performance
also means that the future costs of the program could be higher than
projected. OIC Program costs, measured by the numbers of staff or as a
proportion of collection resources, have risen significantly in recent
years. IRS recognizes that the proportion of collection resources devoted to
the OIC Program may be negatively affecting other collection programs.
Consequently, IRS?s centralized and fast track processing initiatives are
intended to increase the involvement of lower- grade collection staff in the
OIC Program and to eventually free up higher- grade field staff for other
collection activities. If projected results are not realized and costs
continue to rise, however, Congress and IRS may need to address the question
of the affordability of the OIC Program as it is presently constituted. The
uncertainty about the costs of the present initiatives means that it may be
premature to reconsider the program now. However, uncertainty about future
program costs reinforces the importance of timely performance data and
program evaluations. Such information will be critical for ongoing
congressional oversight.
IRS?s proposal for a partial payment installment agreement program suffers
from weaknesses similar to those in the OIC Program initiatives. Little
reliable information exists now about the likely effects of the program, and
there is no written plan for evaluating the success of the program if the
proposal is passed. Managers of such a program would benefit from timely
performance data and evaluations that provide a more
Page 37 GAO- 02- 311 Offers in Compromise
informed basis for making decisions about how to manage and improve the
program.
As IRS makes changes to its OIC Program, we recommend that the Commissioner
of Internal Revenue
develop evaluation plans for the various offer initiatives that include
details on data to be collected, data collection methods, basis for
comparing outcomes, quality of decisions, and an analysis plan and move no
new initiatives into implementation without a finalized evaluation plan;
determine which OIC Program performance and cost data should be collected
to monitor program performance, given resource constraints, and ensure that
such data are collected in a timely and reliable manner; and
set goals for offer processing time that are based on taxpayer needs,
other benefits, and costs.
In addition, we recommend that the Commissioner of Internal Revenue prepare
documentation for its proposal to allow partial payment installment
agreements. The documentation should describe key features of the proposal,
including the benefits to taxpayers; the processes for accepting, rejecting,
reviewing and monitoring the agreements; resource needs; the number of
taxpayers that could be affected; and plans for evaluating the impact of the
program.
On March 13, 2002, we received written comments on a draft of this report
from the Commissioner of Internal Revenue (see app. III). The commissioner
generally concurred with our recommendations and stated that our report is
comprehensive and accurately accounts for the factors that influence the
offer inventory.
The National Taxpayer Advocate also provided comments, which are reprinted
in appendix IV. The advocate agreed with our findings and expressed support
for IRS?s proposal to allow partial payment installment agreements.
Recommendations for
Executive Action Agency Comments and Our Evaluation
Page 38 GAO- 02- 311 Offers in Compromise
As we agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days
from its issue date. We will then send copies of this report to the
Commissioner of Internal Revenue and other interested parties. We will also
make copies available to others who request them.
If you have any questions or would like additional information, please call
me or Charlie Daniel at (202) 512- 9110. Key contributors to this report are
Susan Malone and Sharon K. Caporale.
James R. White Director, Tax Issues
Appendix I: Total Tax Liability Compromised Page 39 GAO- 02- 311 Offers in
Compromise
Table 5: Total Tax Liability Compromised (Fiscal Years 1991- 2001) Fiscal
year Amount accepted
(dollars in millions) Total tax liability (dollars in millions) Percent of
total tax
liability
1991 37.1 139.8 27 1992 106.2 661.1 16 1993 209.6 1, 377.4 15 1994 280.8 1,
633.5 17 1995 297.1 1, 855.7 16 1996 286.8 2, 169.8 13 1997 295.0 1, 986.8
15 1998 290.1 1, 971.2 15 1999 311.6 2, 355.6 13 2000 316.2 2, 586.9 12 2001
340.8 2, 688.7 13
Source: GAO analysis of unpublished IRS data on OIC activity for fiscal
years 1997- 2001 (IRS rept. no. 5000- 108).
Appendix I: Total Tax Liability Compromised
Appendix II: IRS?s Partial Payment Installment Agreement Proposal
Page 40 GAO- 02- 311 Offers in Compromise
Appendix II: IRS?s Partial Payment Installment Agreement Proposal
Appendix II: IRS?s Partial Payment Installment Agreement Proposal
Page 41 GAO- 02- 311 Offers in Compromise
Appendix II: IRS?s Partial Payment Installment Agreement Proposal
Page 42 GAO- 02- 311 Offers in Compromise
Appendix III: Comments from the Internal Revenue Service
Page 43 GAO- 02- 311 Offers in Compromise
Appendix III: Comments from the Internal Revenue Service
Appendix III: Comments from the Internal Revenue Service
Page 44 GAO- 02- 311 Offers in Compromise
Appendix III: Comments from the Internal Revenue Service
Page 45 GAO- 02- 311 Offers in Compromise
Appendix IV: Comments from the Taxpayer Advocate Service
Page 46 GAO- 02- 311 Offers in Compromise
Appendix IV: Comments from the Taxpayer Advocate Service
Appendix IV: Comments from the Taxpayer Advocate Service
Page 47 GAO- 02- 311 Offers in Compromise
Appendix IV: Comments from the Taxpayer Advocate Service
Page 48 GAO- 02- 311 Offers in Compromise (440060)
The General Accounting Office, the 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.
The fastest and easiest way to obtain copies of GAO documents is through the
Internet. GAO?s Web site (www. gao. gov) contains abstracts and full- text
files of current reports and testimony and an expanding archive of older
products. The Web site features a search engine to help you locate documents
using key words and phrases. You can print these documents in their
entirety, including charts and other graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ?Today?s Reports,? on its Web
site daily. The list contains links to the full- text document files. To
have GAO e- mail this list to you every afternoon, go to www. gao. gov and
select "Subscribe to daily e- mail alert for newly released products" under
the GAO Reports heading.
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:
U. S. General Accounting Office P. O. Box 37050 Washington, D. C. 20013
To order by Phone: Voice: (202) 512- 6000 TDD: (202) 512- 2537 Fax: (202)
512- 6061
GAO Building Room 1100, 700 4th Street, NW (corner of 4th and G Streets, NW)
Washington, D. C. 20013
Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm, E- mail:
fraudnet@ gao. gov, or 1- 800- 424- 5454 or (202) 512- 7470 (automated
answering system).
Jeff Nelligan, Managing Director, NelliganJ@ gao. gov (202) 512- 4800 U. S.
General Accounting Office, 441 G. Street NW, Room 7149, Washington, D. C.
20548 GAO?s Mission
Obtaining Copies of GAO Reports and Testimony
Order by Mail or Phone Visit GAO?s Document Distribution Center
To Report Fraud, Waste, and Abuse in Federal Programs
Public Affairs
*** End of document. ***