WASHINGTON, D.C. – Today, the Government Accountability Office (GAO) released two new reports regarding serious flaws in the Internal Revenue Service’s (IRS) audit selection processes. GAO confirmed that these flaws mean the IRS could continue to unfairly target American taxpayers based on their political beliefs and other First Amendment protected views.

House Ways and Means Chairman Kevin Brady (R-TX) and Subcommittee on Oversight Chairman Peter Roskam (R-IL) expressed concerns about GAO’s findings and called on the IRS to immediately take action.

“In December, Congress passed into law regulations to ensure that the IRS can no longer target American taxpayers for their political beliefs,” said Chairman Brady. “GAO has now exposed serious weaknesses in the IRS’s auditing process and confirmed that Americans remain at risk of political targeting.  Ways and Means members will hold the IRS accountable for quickly implementing GAO’s recommendations and finally treating all American taxpayers fairly.”

“We already knew the IRS was targeting political opponents of the Administration when vetting groups applying for tax-exempt status. Now we have reports from GAO raising concerns about the audit selection process throughout IRS operations. The American people deserve better. We must do more to ensure the IRS treats all Americans fairly, holds employees responsible for these abuses accountable, and implements procedures to prevent this abuse from ever happening again,” said Subcommittee Chairman Roskam

BACKGROUND ON THE REPORTS

After Committee members learned that the IRS had targeted conservative groups applying for tax-exempt status, they were concerned that this could be happening in other divisions within the agency, particularly audit selection.

As a result, the Committee asked the GAO to review each business unit within the IRS to determine whether there were protections in place to ensure that audits are selected fairly and without bias.

On July 23, 2015, GAO released its first report on the Tax Exempt/Government Entities division and the Oversight Subcommittee held a hearing on this report.

Today’s GAO reports confirm serious problems at the Small Business/Self Employed unit and the Wage & Investment unit.

GAO Report on Small Business/Self Employed Unit

• GAO found that the IRS does not have strong internal controls and did not have consistent procedures for documenting audit selection decisions, which increases the risk of unfair audit selection.
• GAO concluded that “the lack of strong control procedures increases the risk that the audit program’s mission of fair and equitable application of the tax laws will not be achieved.”
• GAO made seven recommendations to strengthen the audit selection process, and the IRS agreed to implement them.

GAO Report on Wage & Investment Unit

• Similar to the other business units, GAO found that the Wage & Investment unit did not always document how cases were selected for audit.
• GAO found that the IRS did not provide support for changes in selection processes and procedures.
• GAO also found that the IRS does not conduct continuous reviews of its audit selections, and instead only reviews it once a year.
• GAO concluded that internal controls should be strengthened to “provide greater assurance that W&I is fulfilling its mission to select tax returns with fairness and integrity.”
• GAO made seven recommendations to strengthen the process, and the IRS agreed.