Summary: The Internal Revenue Service (IRS) continues to be plagued by serious internal control weaknesses that have led to disbursements of fraudulent and other questionable tax refunds, IRS employees stealing taxpayer receipts, and errors or delays in posting payments to taxpayers' accounts. These control weaknesses fall into five major categories: (1) unpaid assessments, (2) security over receipts and taxpayer information, (3) refunds and earned income tax credits, (4) revenue reporting and distribution, and (5) financial reporting. Some weaknesses were evident in GAO's first audit of IRS' financial statements in fiscal year 1992. Some weaknesses are more pervasive than GAO had previously reported. For example, GAO found varying degrees of weaknesses over the security of receipts and taxpayer information at all 10 IRS service centers, at other IRS offices, and at banks that process taxpayer information for IRS. Until IRS corrects these shortcomings--such as ensuring that taxpayer accounts are properly credited for payments made--these conditions will undermine IRS' ability to deliver quality customer service.
