Watchdog Report: IRS Audit Process at Risk of Abuse, Targeting
Today, the Government Accountability Office (GAO) released a report detailing striking flaws in the IRS audit selection process that could lead to targeting of organizations based on their political beliefs and other First Amendment protected views. In the wake of the Lois Lerner scandal—which revealed that the IRS targeted conservative groups—the Ways and Means Committee asked GAO to look into the IRS audit process for tax-exempt organizations. The committee feared that the IRS could use its vast auditing power to target groups the same way. These fears were confirmed in today’s report.
GAO’s final report shows that the current audit process indeed is ripe for improper targeting. According to GAO, “the control deficiencies GAO found increase the risk that EO (Exempt Organizations unit) could select organizations for examination in an unfair manner—for example, based on an organization’s religious, educational, political, or other views.”
The GAO report’s supporting findings include:
- IRS’s audit procedures are not sufficiently documented or followed, and in some instances, GAO found that even the IRS did not have a record of why certain cases were selected for audit.
- The same small group of people have been reviewing audit referrals, which are essentially third-party complaints made to IRS, for years without sufficient review or oversight of their decisions.
- Management within IRS does not consistently monitor selection decisions, which could allow people with bias to unfairly select organizations for audit.
These weaknesses undermine the agency’s commitment to serving taxpayers, as well as the integrity of tax administration as a whole. Audits can cost a huge amount of time and money—and can devastate a non-profit organization. After all that has taken place, it is astonishing that the IRS still operates in a way that allows the targeting of people based on their beliefs to go unchecked. That is why the Ways and Means Oversight Subcommittee is holding today’s hearing. Led by Subcommittee Chairman Peter Roskam (R-IL), we will demand answers from IRS Commissioner John Koskinen as to how his agency will address these weaknesses and restore the trust of the American people.
As Chairman Roskam said, “This report exposes a new and more egregious frontier of potential targeting in the agency’s audit selection process. . . . If the agency wants to restore public confidence, the American people need to see concrete reforms to ensure that they will never again be targeted.”