Summary: In response to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Special Enforcement Program (SEP), which IRS uses to investigate tax law violations and potential taxable income related to illegal activities, to identify: (1) the law enforcement results and tax revenues generated from program operations; and (2) management improvements that could enhance program operations.
GAO found that: (1) since 1980, SEP efforts have resulted in fewer discontinued investigations, more indictments, and more convictions; (2) of the SEP cases closed in fiscal year 1985, 47 percent resulted in tax-related convictions, 68 percent of those convictions resulted in jail sentences, 42 percent resulted in criminal fines, and 38 percent of those investigated were major criminals; (3) IRS referred 55 percent of the cases closed in 1985 and 64 percent of the cases closed in 1982 for tax assessment examinations; (4) IRS collected $11.2 million of the $37.6 million in assessed taxes, interest, and penalties, $2.2 million of which was on illegal-source income; (5) 76 percent of the 509 cases included inaccurate or incomplete management information that resulted in misleading reports; (6) IRS officials inconsistently interpreted what constituted grand jury information; and (7) 7 of 8 district officers had no management system to ensure interdivisional coordination and prompt civil action on closed criminal cases.
