IRS doesn’t have Sufficient Data to Measure Tax Expenditures

Saturday, June 15, 2013 Print Email

In a new report of Government Accountability Office, It found that the IRS doesn’t have sufficient data and information to know that who is claiming tax expenditure and how much he/she is claiming.

The term tax expenditure includes, tax deductions, preferred tax rates, special exclusions and exemptions from taxation, deferrals of tax liability, credits, that are exception from normal tax. All these exceptions signify a considerable federal obligation. From the estimate of treasury department in year 2011, it found that one trillion dollar in revenue has gone through tax expenditures. Due to decrease in revenue the federal government reduces economic activities, and also face budget deficit.

The federal government uses revenue to meet the tax expenses that decreases funds that are accumulated for other economic activities of federal government. This reduction in revenue causes budget deficit for federal government. The IRS is responsible for administration of tax expenses, and other laws related to tax. The IRS has no authority to gather and then evaluate data that are used for the administration of tax expenses. In a latest report of GAO, it is mention that the basic data for tax expenses is not accessible at the IRS department for estimation of tax expenses, as, many of these tax expenses are not present on the tax form.

The DOE department make standards to measure the tax and set goals for the outlay program. This department is not responsible to make measures, and set goals for comparable tax expenses, and not the related agencies of federal government has right to do this task.

When IRS is only administer and evaluate the tax expenditures according to tax laws, if Congress gives it access data that is required for the management of the tax code.

The GAO has freshly issued a guide having code GAO-13-167SP that will help to evaluate the performance of tax expenses. It is also seen in the report that GAO does not provide recommendations. The IRS department present technical comments in the report where it feel right place, but the repose letter of IRS officers are not incorporated in this report.

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