TAX EXPENDITURES

IRS Data Available for 

Evaluations Are 

Limited

Report to Congressional Requesters

April 2013

GAO-13-479

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-479, a report to 

congressional requesters

April 2013

TAX EXPENDITURES

IRS Data Available for Evaluations Are Limited

Why GAO Did This Study

By one measure, tax expenditures 

resulted in an estimated $1 trillion of 

revenue forgone by the federal 

government in fiscal year 2011. GAO 

has recommended greater scrutiny of 

tax expenditures, as periodic reviews 

could help determine how well specific 

tax expenditures achieve their goals 

and how their benefits and costs 

compare to those of other programs 

with similar goals. To assist with this, 

GAO recently issued a guide (GAO-13-

167SP) for evaluating the performance 

of tax expenditures. GAO was asked to 

identify data needed for evaluating tax 

expenditures and its availability. This 

report: (1) determines the information 

available from IRS for evaluating tax 

expenditures; and (2) compares, for a 

few case studies, the information 

identified by federal agencies for 

evaluating outlay programs with similar 

purposes to tax expenditures. To 

address these objectives, GAO 

analyzed 173 tax expenditures, and 

information from IRS tax forms, federal 

agency performance reports, and prior 

GAO reports.

What GAO Recommends

GAO made no recommendations in 

this report. IRS provided technical 

comments that were incorporated as 

appropriate.

What GAO Found

Internal Revenue Service (IRS) data are not sufficient for identifying who claims a 

tax expenditure and how much they claim for $492 billion or almost half the dollar 

value of all tax expenditures that GAO examined. Such basic data are not 

available at IRS for tax expenditures because they do not have their own line 

item on a tax form. This included $102 billion of tax expenditures that were not on 

tax forms, such as the exclusion of interest on life insurance savings, and $390

billion of tax expenditures that were on tax forms but did not have their own line 

items, such as the credit for holding clean renewable energy bonds which is 

aggregated with other credits on a single line item. 

Tax Expenditures on Tax Forms by Estimated Dollar Amount, Fiscal Year 2011

In four cases in which the Office of Management and Budget (OMB) identified 

outlay programs and comparable tax expenditure programs that shared similar 

purposes, the related agencies produced performance measures and goals only 

for the outlay programs and not for the comparable tax expenditures. For 

example, OMB identified the Alternative Technology Vehicle Credit as having a 

comparable purpose to the Department of Energy (DOE) Vehicle Technologies 

outlay program—both are intended to create more fuel efficient modes of 

transportation. DOE produced a performance measure and goal for the outlay 

program—petroleum consumption reduced by 570 million gallons per year by 

2011—as required under the provisions of the Government Performance and 

Results Act of 1993 and the Government Performance and Results Act 

Modernization Act of 2010. However, DOE did not produce measures and goals 

for the comparable tax expenditure as neither act requires DOE or other federal 

agencies to do so. Although IRS is responsible for administering these tax 

expenditures, it is required by law, unless otherwise directed by Congress, to 

collect only data which are required for administration of the tax code. GAO has 

recommended that the agencies responsible for tax expenditures be identified 

and the lack of credible performance data be addressed. View GAO-13-479. For more information, 

contact James R. White at (202) 512-9110 or 

whitej@gao.gov.
Page i GAO-13-479 Data for Tax Expenditures

Letter 1 

Background 3

Information for Almost $500 Billion of Tax Expenditures Is Not 

Collected on Tax Forms 5

Case Studies of Comparable Outlay and Tax Expenditure Programs 

Show Differences in Data Available for Measuring Performance 10

Concluding Observations 15

Agency Comments and Our Evaluation 15

Appendix I Scope and Methodology 17

Appendix II Tax Expenditures and Their Inclusion on Tax Forms 20

Appendix III GAO Contact and Staff Acknowledgments 26

Tables

Table 1: Tax Expenditures on Tax Forms by Type of Tax 

Expenditure, Tax Year 2011 6

Table 2: Descriptions of Comparable Outlay Programs and Tax 

Expenditures 11

Table 3: Purposes of Outlay Programs and Comparable Tax 

Expenditures for Four Case Studies, Fiscal Year 2011 12

Table 4: Performance Measures and Goals of Outlay Programs and 

Comparable Tax Expenditures for Four Case Studies, 

Fiscal Year 2011 13

Table 5: Tax Expenditures and Their Relationship to Tax Forms by 

Type of Tax Expenditure, Tax Year 2011 20

Figure

Figure 1: Tax Expenditures on Tax Forms by Estimated Dollar 

Amount, Fiscal Year 2011 8

Contents 
Page ii GAO-13-479 Data for Tax Expenditures

Abbreviations

CAP Cross-Agency Priority 

CRS Congressional Research Service

DOE Department of Energy 

DOL Department of Labor 

EZ Empowerment Zone

GPRA Government Performance and Results Act of 1993 

GPRAMA Government Performance and Results Act Modernization 

 Act of 2010

HUD Department of Housing and Urban Development

IRD Indian reservation depreciation 

IRS Internal Revenue Service 

OMB Office of Management and Budget 

SOI Statistics of Income

Treasury Department of the Treasury

WIA Workforce Investment Act 

WOTC Work Opportunity Tax Credit

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Page 1 GAO-13-479 Data for Tax Expenditures

United States Government Accountability Office

Washington, DC 20548

April 30, 2013

The Honorable John Lewis

Ranking Member

Committee on Ways and Means

Subcommittee on Oversight

United States House of Representatives

The Honorable Lloyd Doggett

United States House of Representatives

Tax expenditures are special exemptions and exclusions from taxation, 

deductions, credits, deferrals of tax liability, and preferential tax rates that 

are exceptions from a “normal” tax. They represent a substantial federal 

commitment. An estimated $1 trillion in revenue was forgone through tax 

expenditures in fiscal year 2011—an estimate produced by summing the 

Department of the Treasury’s (Treasury) estimates for each of the 173 tax 

expenditures reported in that year. As we have pointed out in our recently 

issued guide to evaluating tax expenditures, many tax expenditures are 

equivalent to spending through the tax code.1 For example, some tax 

expenditure programs are intended, like some spending programs, to 

encourage economic development in disadvantaged areas, finance 

postsecondary education, and stimulate research and development. The 

revenue the federal government forgoes from tax expenditures reduces 

funds available for other federal activities, requires higher tax rates to 

raise any given amount of revenue, or increases the budget deficit. The 

Internal Revenue Service (IRS) is responsible for administering the tax 

laws, including those for tax expenditures. However, IRS is not required 

to collect or evaluate data other than those which are required for 

administration of the tax code unless it is legislatively mandated to collect 

additional information. 

Since 1994, we have recommended greater scrutiny of tax expenditures, 

as periodic reviews could help determine how well specific tax 

expenditures work to achieve their goals and how their benefits and costs 

compare to those of spending and other programs with similar goals.

 

1

GAO, Tax Expenditures: Background and Evaluation Criteria and Questions, 

GAO-13-167SP (Washington, D.C.: Nov. 29, 2012).

 
 

Page 2 GAO-13-479 Data for Tax Expenditures

Our recently issued guide, cited above, provides a framework for 

evaluating the performance of tax expenditures. As requested, this report 

focuses on the availability of data needed to evaluate tax expenditures. 

Specifically, our objectives are to (1) determine the information available 

from IRS for evaluating tax expenditures; and (2) compare, for a few case 

studies, the information identified by federal agencies for evaluating 

outlay programs with similar purposes to tax expenditures.

To address the first objective, we identified 173 tax expenditures for fiscal

year 2011 from Treasury’s list of tax expenditures from the Budget of the 

United States Government, Fiscal Year 2012.

2 To determine the dollar 

amount of these tax expenditures, we used revised fiscal year 2011 

estimates from the fiscal year 2013 budget. We then reviewed IRS tax 

returns, information returns, other tax forms, and publications for tax year 

2011 to determine whether they had information on the tax expenditures 

that appeared on the Treasury list.3 For those tax expenditures that had 

information, we reviewed IRS’s Statistics of Income (SOI) documentation 

guide, Proposed Tax Year 2010 Forms and Schedules, the latest year 

available, to determine whether SOI collects this information from tax 

forms.4 We also reviewed our prior reports to identify instances where IRS 

data available for evaluating tax expenditures were limited and the 

limitations were not remedied by data from other sources.

To address the second objective, we based our selection of case studies 

on the tax expenditures identified by agencies and the Office of 

Management and Budget (OMB) as contributing to crosscutting priority 

goals. We chose Department of Energy (DOE) and Department of Labor 

(DOL) outlay programs that we considered comparable to these tax 

expenditures for fiscal year 2011—the year most closely corresponding to 

our list of tax expenditures and estimates of their dollar value. We 

analyzed these reports for examples of information reported for the 

Weatherization, Vehicle Technologies, Renewable Energy, and the 

 

2

Office of Management and Budget, Analytical Perspectives, Budget of the United States 

Government, Fiscal Year 2012 (Washington, D.C.: 2011).

3

For purposes of this report, we will refer to IRS tax returns, information returns, and other 

tax forms as “tax forms”. 

4

SOI analyzes data from tax forms to study and report on such things as sources of 

income, exemptions, deductions, tax credits, and tax payments.
 

Page 3 GAO-13-479 Data for Tax Expenditures

Workforce Investment Act5 (as it pertained to dislocated workers) outlay 

programs and used the performance evaluation criteria developed in a 

prior report to assess their usefulness for evaluations. Detailed 

information on our scope and methodology can be found in appendix I.

We conducted this performance audit from September 2012 through April 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Tax expenditures are provisions of the tax code that are viewed as 

exceptions to the “normal structure” of the individual and corporate 

income tax (i.e., exceptions to taxing income).6 They take the form of 

exemptions, exclusions, deductions, credits, deferrals, and preferential 

tax rates; however, not all such provisions are tax expenditures. For 

example, some provisions that determine tax liability, such as business 

expense deductions, are not considered to be tax expenditures because 

costs of earning income are usually deducted in calculating taxable 

income for businesses. Generally, tax expenditures grant special tax relief 

for certain kinds of behavior by taxpayers or for taxpayers in special 

circumstances.7 Holding tax rates constant, tax expenditures result in 

forgone tax revenue the government incurs by granting the relief.8 Many 

 

5

The Workforce Investment Act of 1998, Pub. L. No. 105-220, 112 Stat. 936 (Aug. 7, 

1998). 

6

The concept of tax expenditures extends beyond the income tax. Tax expenditures also 

exist for other types of taxes such as excise and payroll taxes; however, this report 

considers only tax expenditures for the federal income tax system.

7

While income tax expenditures are exceptions to taxing income, not all such exceptions 

are considered tax expenditures. Furthermore, the tax expenditures discussed in this 

report are for an income tax; different tax expenditures would apply in the case of a 

consumption tax. For details on the concept of tax expenditures and the different types of 

tax expenditures, see GAO-13-167SP and GAO, Understanding the Tax Reform Debate: 

Background, Criteria, & Questions, GAO-05-1009SP (Washington, D.C.: Sept. 1, 2005).

8

Revenue loss estimates do not incorporate any behavioral responses and, thus, do not 

necessarily represent the exact amount of revenue that would be gained if a specific tax 

expenditure was repealed.

Background 
 

Page 4 GAO-13-479 Data for Tax Expenditures

of these provisions may, in effect, be viewed as spending programs 

channeled through the tax system.

Congress updated the statutory framework for performance management 

in the federal government, the Government Performance and Results Act 

of 1993 (GPRA), with the GPRA Modernization Act of 2010 (GPRAMA).

9

Both acts require agencies to set goals and measure and report the 

performance of their programs. GPRAMA introduced a more integrated 

and crosscutting approach to performance measurement that cuts across 

organizational boundaries. The act requires that OMB, in coordination 

with agencies, develop long-term crosscutting priority goals to improve 

performance and management of the government. OMB is to coordinate 

annually with agencies to develop a federal government performance 

plan which establishes performance indicators for achieving these goals.

Moreover, GPRAMA requires that this plan identify the tax expenditures 

that contribute to each crosscutting priority goal. As we noted in a recent 

report,10 sporadic progress has been made along these lines. OMB 

Circular A-11 guidance directs agencies to list tax expenditures among 

the various programs and activities that contribute to the subset of 

performance goals that are designated as agency priority goals.11

A performance evaluation of a tax expenditure program would use largely 

the same concepts, methods, and types of data as an evaluation of an 

outlay program. In prior reports, we have described in some detail how 

such program evaluations would be conducted to measure progress 

toward achieving the program’s intended purpose.12 Even if a tax 

 

9

Government Performance and Results Act of 1993, Pub. L. No. 103-62, 107 Stat. 285 

(Aug. 3, 1993). GPRA Modernization Act of 2010, Pub. L. No. 111-352, 124 Stat. 3866 

(Jan. 4, 2011).

10GAO, Managing for Results: GAO’s Work Related to the Interim Crosscutting Priority 

Goals under the GPRA Modernization Act, GAO-12-620R (Washington, D.C.: May 31, 

2012). 

11Another recent GAO report found that only one agency had identified tax expenditures 

that support an agency performance goal. See GAO, Managing for Results: Agencies 

Should More Fully Develop Priority Goals under the GPRA Modernization Act, 

GAO-13-174 (Washington, D.C.: Apr. 19, 2013).

12See for example GAO, Designing Evaluations: 2012 Revision, GAO-12-208G

(Washington, D.C.: Jan. 31, 2012) and Executive Guide: Effectively Implementing the 

Government Performance and Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1, 

1996).
 

Page 5 GAO-13-479 Data for Tax Expenditures

expenditure is meeting its intended purpose, broader questions can be 

asked about its effects beyond that purpose. Specifically, the long 

standing criteria of fairness, economic efficiency, transparency, simplicity, 

and administrability can be used to evaluate whether a tax expenditure is 

good tax policy.13

Some agencies may be better positioned to collect tax expenditure 

information and make it available for analysis than others. As we said in 

our Guide for Evaluating Tax Expenditures, for a tax expenditure that is 

part of a crosscutting agency priority goal, the responsible agencies 

identified in the related performance plan may be the logical agencies 

responsible for evaluating the tax expenditure. Although IRS is the federal 

agency responsible for administering tax expenditures, it is not 

responsible for the program areas targeted by many tax expenditures. 

The information available at IRS is generally limited by the Paperwork 

Reduction Act to data used for tax administration, not for performance 

evaluation.14

Of the 163 tax expenditures identified by Treasury for tax year 2011,15

102, or 63 percent, were not on a tax return, information return, or other 

tax form; or they were on these tax forms but did not have their own line 

item, as shown in table 1. For these tax expenditures, the tax forms do 

not capture information on who claimed the tax expenditures and how 

much they claimed. An example of a tax expenditure not on a tax form is 

the exclusion of interest on life insurance savings where the taxpayer is 

not asked to report the amount of the exclusion anywhere on a tax form, 

while an example of a tax expenditure without its own line item is the 

credit for holding clean renewable energy bonds where the credit is 

 

13See GAO-13-167SP and GAO-05-1009SP. 

14Pub. L. No. 104-13, §3506, 109 Stat.171-172 (May 22, 1995). 

15We report our analysis for 163 of 173 tax expenditures identified by Treasury. We 

excluded 10 tax expenditures because either they were not in effect in 2011 or we 

believed the tax expenditure amounts, if identifiable, would not be complete. Of these, 5

were not in effect for tax year 2011; 3 only had part of the tax expenditure reported on a 

tax form, such as the Exclusion of Benefits and Allowances to Armed Forces Personnel 

where only the combat pay portion was reported on a Form W-2 (Wage and Tax 

Statement); and 2 had the reporting on the tax form as optional, such as Employer Plans 

on Form W-2.

Information for 

Almost $500 Billion of 

Tax Expenditures Is 

Not Collected on Tax 

Forms
 

Page 6 GAO-13-479 Data for Tax Expenditures

aggregated with other credits on a single line item.16 Nearly all deferrals 

or exclusions were either not on a tax form or did not have their own line 

item. For information on our classification by specific tax expenditure, see 

appendix II.

Table 1: Tax Expenditures on Tax Forms by Type of Tax Expenditure, Tax Year 2011

Type of tax 

expenditure

Number of tax 

expenditures

not on a tax form 

Number of tax 

expenditures on a tax 

form but did not have 

their own line itema

Number of tax 

expenditures on a 

tax form and had 

their own line itemb Totals

Percentage of tax

expenditures

that did not have

their own line item

Credits 0 10 29 39 26

Deductions 0 10 15 25 40

Exemptions 0 3 4 7 43

Exclusions 23 27 8 58 86

Deferrals 4 19 1 24 96

Preferential tax rates 0 5 2 7 71

Multiple typesc 0 1 2 3 33

Totals 27 75 61 163 63

Source: GAO analysis of Treasury tax expenditures and IRS tax forms.

a

Some tax expenditures may be combined with other tax expenditures or similar transaction types 

that are not tax expenditures on the same line of a tax form.

b

Some tax expenditures use multiple tax forms, multiple line items, or both to account for all parts of 

the tax expenditure. When multiple forms or line items were used, we considered the tax expenditure 

as having its own line item when all parts of the tax expenditure were on tax forms and had their own 

line items.

c

A tax expenditure can include more than one type, as in the case of the adoption credit and 

exclusion.

If a tax expenditure has its own line item on a tax form, the IRS can 

identify the claimant and amount of the claim. These account for about 

half of the total tax expenditures. As shown in figure 1, these accounted 

for $501 billion of the almost $1 trillion of revenue estimated by Treasury 

in 2011 for the tax expenditures that we analyzed. The remaining $492 

 

16Another example of aggregation is the three tax expenditures dealing with the 

deductibility of different types of charitable contributions (education, health, and other 

contributions) which are reported on a single line item. Although charitable contributions 

are listed as one deduction under the tax code, they are broken out in the budget into 

three functional categories and are counted as three separate tax expenditures by 

Treasury.
 

Page 7 GAO-13-479 Data for Tax Expenditures

billion were not on tax forms or did not have their own line items.17 Having 

such basic information about tax expenditures can facilitate certain kinds 

of analysis. Specifically, when a tax expenditure has its own line item, the 

claimant can be matched to his or her income which is also reported on 

the tax return. This linkage facilitates analyses of the distributional effects 

of a tax expenditure by showing tax expenditure use by income 

category.18

 

17Estimates of the amount of revenue forgone for tax expenditures where IRS does not 

have information about who claims the tax expenditure and how much they claim require 

the use of data sources outside IRS such as the U.S. Census Bureau and the Bureau of 

Economic Analysis. In these cases, the amounts are inferred from economic aggregates 

and no attempt is made to determine the number of claimants and their characteristics, 

which makes these estimated total amounts of limited value for performance or 

effectiveness reviews.

18See GAO, Energy Conservation and Climate Change: Factors to Consider in the Design 

of the Nonbusiness Energy Property Credit, GAO-12-318 (Washington, D.C.: Apr. 2, 

2012) for a distributional analysis of the equity effects of changes in the design of the 

Residential Energy Credit. It is important to note that the claimant of a tax expenditure is 

not always the beneficiary. For example, while state and local tax-exempt bondholders 

could be considered to be the direct claimants or recipients of a tax expenditure, to the 

extent that interest costs for tax-exempt state and local bonds are lower than they would 

be otherwise, state and local governments benefit from the tax expenditure.
 

Page 8 GAO-13-479 Data for Tax Expenditures

Figure 1: Tax Expenditures on Tax Forms by Estimated Dollar Amount, Fiscal Year 

2011

The sum of tax expenditure revenue loss estimates that appear in figure 1 

approximates the total revenue forgone through tax expenditure 

provisions. While sufficiently reliable as a gauge of general magnitude, 

the sum of the individual revenue loss estimates has important limitations 

in that any interactions between tax expenditures will not be reflected in 

the sum.19

Data necessary to assess how often a tax expenditure is used and by 

whom generally would not be collected on tax returns unless IRS needs 

the information to know the correct amount of taxes owed or is 

legislatively mandated to collect or report the information. IRS is obligated 

 

19For further discussion of the limitations of tax expenditure estimates see GAO-13-167SP

and GAO, Government Performance and Accountability: Tax Expenditures Represent a 

Substantial Federal Commitment and Need to Be Reexamined, GAO-05-690, 

(Washington, D.C.: Sept. 23, 2005).
 

Page 9 GAO-13-479 Data for Tax Expenditures

under the Paperwork Reduction Act to keep the administrative burden on 

taxpayers as low as possible, while still fulfilling its mission.20

In prior reports, we identified tax expenditures that could not be evaluated 

because appropriate data were not available from any source, including 

sources other than IRS. One example is Indian reservation depreciation 

(IRD), where IRS did not collect information on the identity of claimants, 

amounts claimed, or the location of the qualified investment. In addition, 

we could not find reliable data at other agencies on which taxpayers use 

IRD, how much IRD investment was made, or whether the provision was 

having a positive effect on economic development.21

For some tax expenditures, IRS data limitations can be remedied to some 

extent by information available from other federal agencies. For example, 

for Empowerment Zone (EZ) employment tax credits, IRS cannot 

separate the total credits claimed to show how much was claimed for 

specific EZ communities. This limitation is partially remedied by the 

Department of Housing and Urban Development (HUD), which collects 

community level information for some EZ-related tax expenditures. 

However, as we have previously reported, HUD was unable to validate 

the information on the use of some of these tax expenditures and it tracks 

 

20One way IRS makes tax expenditure data available to external parties such as the 

public and other government agencies is through its Statistics of Income Division. Section

6103 of the Internal Revenue Code requires confidentiality of returns and return 

information and limits the types of information IRS can share with these external parties.

21GAO, Tax Expenditures: Available Data Are Insufficient to Determine the Use and 

Impact of Indian Reservation Depreciation, GAO-08-731 (Washington, D.C.: June 26, 

2008). GAO has found a lack of evaluation data for other tax expenditures as well. See, 

for example, GAO, Community Development: Limited Information on the Use and 

Effectiveness of Tax Expenditures Could Be Mitigated through Congressional Attention, 

GAO-12-262 (Washington, D.C.: Feb. 29, 2012).

Data for Evaluating Tax

Expenditures May Not Be 

Available from Other 

Sources 
 

Page 10 GAO-13-479 Data for Tax Expenditures

only a portion of the EZ employment credits.22 HUD and IRS have begun 

collaborating to produce better data on the use of EZ tax credits.

For some tax expenditures, it may be possible to estimate missing IRS 

information using other sources such as public records, state agency 

records, and surveys. However, in general, such estimates cannot be 

expected to be as precise as data from tax returns. For example, in the 

case of an evaluation of the Research Tax Credit, a measure of spending 

that qualifies for the credit derived from research spending as reported on 

corporate annual reports will not be as accurate as a measure derived 

from corporate tax returns because of differences in the tax and 

accounting rules for reporting the spending.23 The less accurate data can 

lead to less reliable conclusions from the evaluation.

After reviewing the GPRAMA-mandated cross-agency priority (CAP) 

goals established by OMB and federal agencies, we chose four outlay 

programs—three addressing energy efficiency and one addressing job 

training—that we considered to be comparable to certain tax 

expenditures based on their similar purposes. Table 2 provides 

descriptions of these tax expenditures and comparable outlay programs.

 

22GAO, Empowerment Zone and Enterprise Community Program: Improvements 

Occurred in Communities, but the Effect of the Program is Unclear, GAO-06-727

(Washington, D.C.: Sept. 22, 2006). In some cases, when the basic data about claimants 

and amounts claimed were available in IRS, researchers outside the agencies have been 

able to measure aspects of the performance of certain tax expenditures using the agency 

data. For example, we matched IRS data on claimants of the Work Opportunity Tax Credit 

(WOTC) with DOL and state employment agency data to analyze characteristics of WOTC 

employers and the wage and employment history of WOTC hires. See GAO, Work 

Opportunity Tax Credit: Employers Do Not Appear to Dismiss Employees to Increase Tax 

Credits, GAO-01-329 (Washington, D.C.: Mar. 13, 2001).

23For a discussion of data reliability issues, see GAO, Tax Policy and Administration: 

Review of Studies of the Effectiveness of the Research Tax Credit, GAO/GGD-96-43

(Washington, D.C.: May 21, 1996).

Case Studies of 

Comparable Outlay 

and Tax Expenditure 

Programs Show 

Differences in Data 

Available for 

Measuring 

Performance 
 

Page 11 GAO-13-479 Data for Tax Expenditures

Table 2: Descriptions of Comparable Outlay Programs and Tax Expenditures

Outlay programs

Weatherization Assistance Vehicle Technologies

Renewable

Energy Programs

Workforce Investment

Act (WIA) as it pertains

to dislocated workers

DOE provides assistance 

through its Weatherization 

Assistance Program to lowincome families to reduce their 

energy bills by making their 

homes more energy efficient.

The program includes 

Sustainable Energy Resources 

for Consumers Grants, which 

provide $90 million in grants 

under the American Recovery 

and Reinvestment Act to 

support the use of energy 

efficiency and renewable energy 

technologies by 101 highperforming local weatherization 

providers.

The program has developed the 

National Training and Education 

Resource to provide an “open 

source” platform for learners 

and instructors.

DOE provides funding 

opportunities for advanced 

vehicle technology projects 

through competitive 

solicitations for private firms, 

educational institutions, 

nonprofit organizations, state 

and local governments, Native 

American organizations, and 

individuals.

DOE also provides funding 

through the Small Business 

Innovation Research and 

Small Business Technology 

Transfer to small (i.e., no more 

than 500 employees) 

businesses. For fiscal year

2013 there is $34 million in 

funds available for grants up to 

$3.45 million. 

DOE provides:

SunShot: 

Funding for research and 

development of concentrating 

solar power technologies through 

competitive awards to industry, 

national laboratories, and 

universities for making solar 

energy systems cost competitive 

without subsidies.

Wind: 

Funding for wind power in rural, 

agricultural, and Native American 

communities through Wind 

Powering America awards to 

such entities as public-owned 

utilities and cooperatives.

Biomass:

Funding for research for 

converting biomass resources 

into biofuels. Criteria for grants 

are unique to each request for 

proposal.

DOL provides funding for 

services to dislocated workers 

including those who have been 

laid off, have exhausted 

unemployment compensation, 

are unlikely to return to their 

previous industry, or are 

displaced homemakers.

The funds are allocated to 

states, which then may allocate 

them to specialized centers in 

local labor market areas to 

provide services, including job 

search, placement assistance, 

and career counseling to 

qualified dislocated workers.

Tax expenditures

Residential Energy Credits

Alternative-Technology 

Vehicle Credit

Renewable

Energy Production Credits

Work

Opportunity Tax Credit

A credit equal to 10 percent of 

the purchase price of qualified 

residential energy efficiency 

property, up to $500.

A credit equal to 30 percent of 

residential solar electric and 

water heating property, 

geothermal heat pumps, small 

wind energy property, and fuel 

cell power plants. For fuel cell 

property, the credit is limited to 

$500 per half kilowatt of 

capacity.

A credit equal to 50 percent of 

the incremental cost of 

technology, which cannot 

exceed $4,000 to $32,000 per 

vehicle, depending on the 

vehicle type. The credit 

includes a 30 percent bonus 

credit for certain types of new 

qualified technology and 

higher credits are allowed for 

heavier vehicles.

Solar:

A credit equal to 1.1 cents per 

kilowatt hour for electricity 

produced from qualified property.

Wind:

A credit equal to 2.2 cents per 

kilowatt hour for electricity 

produced from qualified property.

Biomass: 

A credit equal to 2.2 cents per 

kilowatt hour for electricity

generated.

A credit generally equal to 40 

percent of the first $6,000 of 

wages during the first year of 

hire if the qualified worker is 

retained for at least 400 hours 

(and 25 percent for 120 to 399 

hours).

Sources: U.S. Congress, Senate Committee on the Budget, Tax Expenditures: Compendium of Background Material on Individual 

Provisions, S. Prt. 111-58. Prepared by CRS (Washington, D.C.: December 2010); U.S Department of Energy, Fiscal Year 2011 Annual 

Performance Report; and Workforce Investment Act of 1998. The information from the annual reports was accessed from 

http://www.performance.gov on October 19, 2012.

Note: Residential Energy Credits refers to the tax credits for residential energy efficient property and 

for energy efficiency improvements to existing homes. Renewable Energy Production Credits refers 

to the tax credits for electricity production from renewable resources.
 

Page 12 GAO-13-479 Data for Tax Expenditures

As shown in table 3, the four comparable outlay programs and tax 

expenditures associated with DOE and DOL had broadly similar purposes

in the areas of energy conservation and employment.24

Table 3: Purposes of Outlay Programs and Comparable Tax Expenditures for Four Case Studies, Fiscal Year 2011

Outlay programs

Weatherization Assistance Vehicle Technologies Renewable Energy Programs

Workforce Investment

Act as it pertains

to dislocated workers 

To coordinate with national 

goals to reduce petroleum 

consumption and increase the 

energy efficiency of the U.S. 

economy, aiming at market 

transformation to reduce market 

barriers to the cost effective 

adoption of renewable energy 

and energy efficiency 

technologies.

To develop more energy 

efficient and environmentally 

friendly highway transportation 

technologies that will enable 

America to use less petroleum. 

The long-term aim is to 

develop “leap frog” 

technologies that will provide 

Americans with greater 

freedom of mobility and energy 

security, while lowering costs 

and reducing impacts on the 

environment.

SunShot: to make solar energy 

technologies cost-competitive by 

2020.

Wind: to enable rapid expansion 

of clean, affordable, reliable, 

domestic wind power to promote 

national security, economic 

vitality, and environmental 

quality.

Biomass: to sustainably 

transform the nation’s abundant 

renewable resources into 

biomass energy. 

To increase opportunities for 

America’s workers to acquire 

the skills and knowledge to 

succeed in a knowledge-based 

economy.

 

24The purposes for tax expenditures in table 3 were derived from U.S. Congress, Senate 

Committee on the Budget, Tax Expenditures: Compendium of Background Material on 

Individual Provisions, S. Prt. 111-58. Prepared by the Congressional Research Service 

(CRS) (Washington, D.C.: December 2010). The purposes for the outlay programs were 

derived from the DOE and DOL fiscal year 2011 agency performance reports. Categories 

of outlay programs that were comparable to the tax expenditures were identified in the 

annual reports and we matched the tax expenditures to specific programs within these 

categories by comparing their structure and purpose. Details of this match are provided in 

appendix I.
 

Page 13 GAO-13-479 Data for Tax Expenditures

Tax expenditures

Residential Energy Credits 

Alternative-Technology 

Vehicle Credit

Renewable Energy

Production Credits

Work Opportunity

Tax Credit

To reduce energy consumption 

by enhancing residential energy 

efficiency, consistent with 

increasing energy security and 

addressing environmental 

concerns.

To transform the mode of 

transportation in the United 

States toward clean, fuelefficient vehicles, reducing 

reliance on imported petroleum. 

To encourage the development 

and utilization of electric 

generating technologies that use 

specified renewable energy 

resources, as opposed to 

conventional fossil fuels.

To help individuals, who have 

difficulty obtaining employment 

in both good and bad 

economic times, get jobs in the 

private sector. The credit is 

designed to reduce the relative 

cost of hiring the low-skilled 

individuals by subsidizing their 

wages, and hence to increase 

employers’ willingness to give 

them jobs despite their 

presumed low productivity.

Sources: U.S. Congress, Senate Committee on the Budget, Tax Expenditures: Compendium of Background Material on Individual 

Provisions, S. Prt. 111-58. Prepared by CRS (Washington, D.C.: December 2010); U.S Department of Energy, Fiscal Year 2011 Annual 

Performance Report; and U.S. Department of Labor, Fiscal Year 2011 Annual Performance Report. The information from the annual 

reports was accessed from http://www.performance.gov on October 19, 2012.

As shown in table 4, DOE and DOL produced performance measures and 

goals for outlay programs in their annual reports but did not do so for the 

comparable tax expenditures. Agencies were not required by GPRAMA to 

produce these measures for the tax expenditures. Also, IRS collects the 

basic information about claimants and the amounts claimed for the four 

tax expenditures in our case studies. (See appendix II table 5). But, since 

IRS is not tasked with evaluating tax expenditures, it has not formulated 

performance measures or goals for these tax expenditures.

Table 4: Performance Measures and Goals of Outlay Programs and Comparable Tax Expenditures for Four Case Studies, 

Fiscal Year 2011 

Outlay programs

Weatherization Assistance Vehicle Technologies

Renewable

Energy Programs

Workforce Investment

Act as it pertains

to dislocated workers 

Performance measures

Number of weatherized homes Gallons of petroleum saved

Kilowatts per kilogram, kilowatts

per liter, and cost at kilowatt peak

SunShot (Solar): change in 

electricity cost

Wind: number of wind turbines 

installed

Biomass: production capacity 

of gallons of advanced biofuels

Average earnings for WIArelated dislocated worker
 

Page 14 GAO-13-479 Data for Tax Expenditures

Outlay programs

Weatherization Assistance Vehicle Technologies

Renewable

Energy Programs

Workforce Investment

Act as it pertains

to dislocated workers 

Performance goals

Weatherize over 1 million 

homes starting in fiscal year 

2002

Reduce petroleum 

consumption by 570 million 

gallons per year by 2011

Reduce cost of electric-drive 

technologies to $18 per kilowatt 

peak

SunShot (Solar): electricity 

cost reduced to 14 to16 cents 

per kilowatt hour

Wind Energy: 5,369 wind 

turbines in fiscal year 2011 

Biomass: increase production 

capacity by more than 5 million 

gallons of advanced biofuels in 

fiscal year 2011; to 100 million 

by fiscal year 2014 

Six months average earnings 

for WIA-related dislocated 

worker increased to $16,567 by 

fiscal year 2013

Data sources used in the performance reports

An Evaluation of State Energy 

Program Accomplishments: 

2002 Program Year, 

ORNL/Con-492, (adjusted for 

inflation) 2005 Oak Ridge 

National Laboratory; available 

by contacting DOE. 

National Renewable Energy 

Laboratory’s Clean Cities 2010 

Annual Metrics Report

(NREL/TP-7A30-52714).

September 2011 Oak Ridge 

National Laboratory monthly 

status report to DOE.

SunShot (Solar): results from 

National Renewable Energy 

Laboratory’s Solar Advisor 

Model, available by contacting 

DOE.

Wind: American Wind Energy 

Association’s 2010 U.S. Small 

Wind Turbine Market Report. 

Biomass: engineering 

independent reports on the 

Abengoa Hugoton and 

Mascoma Frontier Renewables 

projects (confidential and 

business sensitive). 

Data in DOL Fiscal Year Annual 

Performance Report, based on 

data collected through annual 

(ETA-9091) and quarterly (ETA9090) state WIA performance 

reports. 

Tax expenditures

Residential Energy Credits 

Alternative-Technology 

Vehicle Credit

Renewable Energy 

Production Credits Work Opportunity Tax Credit

Neither IRS nor the agencies responsible for these outlay programs created performance goals or measures for tax expenditures in 

fiscal year 2011. GPRA and GPRAMA do not require them to do so.

Sources: U.S. Congress, Senate Committee on the Budget, Tax Expenditures: Compendium of Background Material on Individual 

Provisions, S. Prt. 111-58. Prepared by CRS (Washington, D.C.: December 2010); U.S. Department of Energy, Fiscal Year 2011 

Annual Performance Report; and U.S. Department of Labor, Fiscal Year 2011 Annual Performance Report.. 

The performance measures shown in table 4 can track the progress of 

the outlay programs, on an ongoing basis, toward specific goals (stated in 

terms of number of gallons produced, number of turbines installed, etc.). 

However, additional data may be needed for an assessment of broader 

purposes and the impact of the programs. For example, for the vehicle 

technologies program, the purpose of reducing petroleum consumption 
 

Page 15 GAO-13-479 Data for Tax Expenditures

can be measured by the performance measure in table 4 (gallons of 

petroleum saved) but additional data are needed to measure the outlay 

program’s broader purpose of reducing environmental impacts.25

With so much spending going through the tax code in the form of tax 

expenditures, the need to determine whether this spending is achieving 

its purpose becomes more pressing. This report identifies gaps in the 

data required to evaluate tax expenditures but makes no 

recommendations on how to fill these gaps. A key step in collecting the 

data is first determining who should undertake this task. As we said in our 

guide for evaluating tax expenditures, the agency or agencies responsible 

for the program ought to determine what data should be collected to 

evaluate tax expenditures relevant to their goals. We recommended in 

our 2005 report that the Director of OMB, in consultation with the 

Secretary of the Treasury, determine which agencies will have leadership 

responsibilities to review tax expenditures and how to address the lack of 

credible performance information on tax expenditures.26 However, these 

agencies have not yet been identified. GPRAMA may make a start on 

answering the question of who should evaluate tax expenditures by 

requiring that the responsible agencies identify the various program 

activities that contribute to their goals, which we believe should include 

tax expenditures.

The IRS provided technical comments after viewing a draft of this report, 

which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we are sending copies of this report to the Acting 

Commissioner of Internal Revenue and other interested parties. This 

 

25Our analysis of the agencies’ data is for the performance measures that appear in their 

fiscal year 2011 performance reports. We did not attempt to determine whether the 

agencies had attempted such evaluations or to examine these or any other data that they 

may have used for these evaluations.

26GAO-05-690. 

Concluding 

Observations 

Agency Comments 

and Our Evaluation
 

Page 16 GAO-13-479 Data for Tax Expenditures

report will also be available at no charge on GAO’s website at 

http://www.gao.gov. 

If you have any questions on this report, please contact me at (202) 512-

9110 or whitej@gao.gov. Contact points for our offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

Key contributors to this report are listed in appendix III.

James R. White

Director, Tax Issues

 Strategic Issues
Appendix I: Scope and Methodology

Page 17 GAO-13-479 Data for Tax Expenditures

To determine what Internal Revenue Service (IRS) data are available for 

evaluating tax expenditures, we used 173 tax expenditures for fiscal year 

2011 that were developed by the Department of the Treasury (Treasury) 

and reported by the Office of Management and Budget (OMB) in 

Analytical Perspectives, Budget of the United States Government, Fiscal 

Year 2012. We reviewed IRS tax returns, tax forms, information returns, 

and publications for tax year 2011 and categorized the tax expenditures 

based on whether they were (1) not listed on tax forms, (2) listed on tax 

forms but did not have their own line item, or (3) listed on tax forms and 

had their own line item so the claimants and the amount claimed could be 

identified. The tax returns we reviewed were primarily Form 1040 for 

individual taxpayers, Form 1120 for corporate taxpayers, and Form 990 

for tax-exempt organizations. Although the tax expenditure concept can 

also be applied to other kinds of taxes, such as excise taxes, this report 

covers only tax expenditures for the federal income tax system.

We sent a list of the tax expenditures that we initially identified as not 

appearing on a tax form to IRS for verification of our assignment of these 

tax expenditures to this category. (IRS was not able to verify our 

assignment of all of the tax expenditures to their categories due to time 

constraints encountered as the agency readied for the tax filing season.) 

In addition, when IRS verified those not listed on a tax form, it generally 

used information from tax returns but not from information returns. 

Our assignment of the tax expenditures to the three categories 

sometimes required that we make judgments about the adequacy of the 

information on the tax forms. For example, according to IRS, the amount 

of deferred income from installment sales can be obtained from Form 

6252 (Installment Sale Income) by subtracting the installment sale income 

line item from the gross profit line item. However, according to OMB, this 

difference does not represent the amount of the tax expenditure. The tax 

expenditure is the deferred amount less than $5 million for which nondealers are not required to pay interest on their deferred taxes. Therefore, 

since we could not identify the deferral amount for non-dealers, and the 

amount of the tax expenditure deferral does not have its own line item, we 

classified it as a tax expenditure that is on a tax form but does not have 

its own line item.

During our matching, we identified 10 tax expenditures that we did not 

include in our analysis because (1) they were not available in tax year 

2011, such as the Hope Tax Credit which was temporarily replaced by the 

American Opportunity Tax Credit; (2) some but not all parts of the tax 

expenditure were on a tax form, such as the Exclusion of Benefits and 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 18 GAO-13-479 Data for Tax Expenditures

Allowances to Armed Forces Personnel where only the combat pay 

portion was reported on a tax form—Form W-2 (Wage and Tax 

Statement); and (3) where reporting of the tax expenditure was optional, 

such as Employer Plans on Form W-2. Some tax expenditures use 

multiple tax forms, multiple line items, or both on the forms to account for 

all parts of the tax expenditure. When multiple forms or line items were 

used, we considered the tax expenditure as having its own line item when 

all parts of the tax expenditure were on tax forms and had their own line 

items. For example, the Adoption Credit and Exclusion tax expenditure 

lists the credit and exclusion on different line items of the Form 8839 

(Qualified Adoption Expenses). Therefore, we considered this tax 

expenditure as having its own line item. 

We used the fiscal year 2013 budget, for fiscal year 2011 revised 

estimates, to identify the tax expenditure amounts. We chose the tax 

expenditure estimates reported in the budget for our analysis because 

Treasury develops revised estimates based on changes in tax policy and 

economic activity for the year prior to the reported fiscal budget year (i.e., 

retrospective estimates). Even though Treasury’s estimates are 

retrospective, the final reported numbers are still estimates and may not 

reflect additional policy changes. In addition, tax expenditure revenue loss 

estimates for specific provisions do not take into account potential 

behavioral responses to changes in these provisions on the part of 

taxpayers. These revenue loss estimates do not represent the amount of 

revenue that would be gained if certain tax expenditures were repealed 

since repeal would probably change taxpayer behavior in some way that 

would affect revenue.

For tax expenditures that were listed on tax forms, we reviewed IRS’s 

Statistics of Income (SOI) Proposed Tax Year 2010 Forms and 

Schedules to determine whether SOI collected data for tax year 2010, the 

latest year available. We also reviewed SOI publications to identify the 

types of available information and whether they included tax 

expenditures. We reviewed our prior reports to identify instances where 

IRS data available for evaluating tax expenditures were limited and the 

limitations were not remedied by data from other sources. 

To analyze examples of data that agencies used to evaluate outlay 

programs that are comparable to tax expenditures, we visited the 

performance.gov web site on October 19, 2012. We reviewed the 

Government Performance and Results Act Modernization Act of 2010-

mandated crosscutting, or what OMB calls cross-agency priority (CAP), 

goals for contributing agencies and programs that explicitly included tax 
Appendix I: Scope and Methodology

Page 19 GAO-13-479 Data for Tax Expenditures

expenditures among their policy initiatives. As examples of tax 

expenditures, we chose five tax credits from the sixteen tax expenditures 

listed under the CAP goal of energy efficiency and the one tax credit 

listed under the CAP goal of job training. As examples of what we 

considered to be comparable outlay programs, we chose three energy 

efficiency and renewable energy outlay programs, Weatherization, 

Vehicle Technologies, and Renewable Energy, and one Department of 

Labor-based outlay program, the Workforce Investment Act as it 

pertained to dislocated workers. We then reviewed the 2011 annual 

performance reports from the Department of Energy and the Department 

of Labor. We used fiscal year 2011 performance reports so the 

performance data would be comparable to the tax expenditure data we 

analyzed for tax year 2011. These performance reports were not 

available for fiscal year 2012. We identified their performance measures 

and goals, as well as the data they used to evaluate and assess these 

outlay programs. Lastly, we used our own criteria for performance 

measures and examples of data used to construct them. Table 2 

provides a more detailed description of the tax expenditures and 

comparable outlay programs.
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 20 GAO-13-479 Data for Tax Expenditures

To determine whether tax expenditures were included on tax forms and 

had their own line items, we matched the Department of Treasury’s list of 

tax expenditures for fiscal year 2011 to Internal Revenue Service tax 

forms for tax year 2011. The relationships of the tax expenditures to tax 

forms are shown in table 5.

Table 5: Tax Expenditures and Their Relationship to Tax Forms by Type of Tax Expenditure, Tax Year 2011

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Credits

Inventory property sales source rules exception X 

Credit for increasing research activities X 

Alternative fuel production credit X 

Energy production credit X 

Energy investment credit X 

Alcohol fuel credits X 

Biodiesel and small agri-biodiesel producer tax credits X 

Credit for holding clean renewable energy bonds X 

Credit for investment in clean coal facilities X 

Credit for construction of new energy efficient homes X 

Credit for energy efficiency improvements to existing homes X 

Credit for energy efficient appliances X 

Credit for residential energy efficient property X 

Qualified energy conservation bonds X 

Advanced energy property credit X 

Tax incentives for preservation of historic structures X 

Industrial carbon dioxide capture and sequestration tax credit X 

Credit for low-income housing investments X 

Credit for homebuyer X 

Tax credit for certain expenditures for maintaining railroad tracks X 

Investment credit for rehabilitation of structures (other than historic) X 

New markets tax credit X 

Credit to holders of gulf tax credit bonds X 

Lifetime learning tax credit X 

American opportunity tax credit X 

Credit for holders of zone academy bonds X 

Qualified school construction bonds X 

Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 21 GAO-13-479 Data for Tax Expenditures

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Work opportunity tax credit X 

Employer-provided child care credit X 

Child tax credit X 

Credit for child and dependent care expenses X 

Credit for disabled access expenditures X 

Employee retention credit for employers in certain federal disaster 

areas 

X 

Credit for employee health insurance expenses of small business X 

Tax credit for orphan drug research X 

Tax credit for health insurance purchased by certain displaced and 

retired individuals X 

Tax credit for the elderly and disabled X 

Earned income tax credit X 

Build America bonds X 

Total 0 10 29

 

Deductions

Excess of percentage over cost depletion, fuels X 

Exception from passive loss limitation for working interests in oil 

and gas properties X 

Allowance of deduction for certain energy efficient commercial 

building property X 

Deduction for endangered species recovery expenditures X 

Small life insurance company deduction X 

Deductibility of mortgage interest on owner-occupied homes X 

Deductibility of state and local property tax on owner-occupied 

homes X 

Exception from passive loss rules for $25,000 of rental loss X 

Ordinary income treatment of loss from small business corporation 

stock sale X 

Deduction for U.S. production activities X 

Special rules for certain film and television production X 

Deductibility of student-loan interest X 

Deduction for higher education expenses X 

Deductibility of charitable contributions (education) X 

Special deduction for teacher expenses X 
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 22 GAO-13-479 Data for Tax Expenditures

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Deductibility of charitable contributions, other than education and 

health X 

Self-employed medical insurance premiums X 

Medical savings accounts/health savings accounts X 

Deductibility of medical expenses X 

Deductibility of charitable contributions (health) X 

Special Blue Cross/Blue Shield deduction X 

Additional deduction for the blind X 

Additional deduction for the elderly X 

Deductibility of casualty losses X 

Deductibility of nonbusiness state and local taxes other than on 

owner-occupied homes X 

Total 0 10 15

 

Exemptions

Exemption of credit union income X 

Special alternative tax on small property and casualty insurance 

companies X 

Tax exemption of certain insurance companies owned by taxexempt organizations X 

Exemption of certain mutuals’ and cooperatives’ income X 

Recovery zone bonds X 

Tribal economic development bonds X 

Parental personal exemption for students age 19 or over X 

Total 0 3 4 

 

Exclusions

Exclusion of income earned abroad by U.S. citizens X 

Exclusion of certain allowances for federal employees abroad X 

Exclusion of interest on energy facility bonds X 

Exclusion of utility conservation subsidies X 

Exclusion of interest on bonds for water, sewage, and hazardous 

waste facilities X 

Exclusion of gain or loss on sale or exchange of certain brownfield 

sites X 

Treatment of loans forgiven for solvent farmers X 

Exclusion of interest on life insurance savings X 
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 23 GAO-13-479 Data for Tax Expenditures

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Exclusion of interest spread of financial institutions X 

Exclusion of interest on owner-occupied mortgage subsidy bonds X 

Exclusion of interest on rental housing bonds X 

Capital gains exclusion on home sales X 

Exclusion of net imputed rental income X 

Discharge of mortgage indebtedness X 

Cancellation of indebtedness X 

Exceptions from imputed interest rules X 

Capital gains exclusion of small corporation stock X 

Step-up basis of capital gains at death X 

Exclusion of interest on small issue bonds X 

Exclusion of reimbursed employee parking expenses X 

Exclusion for employer-provided transit passes X 

Exclusion of interest on bonds for highway projects and rail-truck 

transfer facilities X 

Exclusion of interest for airport, dock, and similar bonds X 

Education individual retirement accounts X 

State prepaid tuition plans X 

Exclusion of interest on student-loan bonds X 

Exclusion of interest on bonds for private nonprofit educational 

facilities X 

Exclusion of interest on savings bonds redeemed to finance 

educational expenses X 

Exclusion of employer-provided educational assistance X 

Discharge of student loan indebtedness X 

Employer provided child care exclusion X 

Assistance for adopted foster children X 

Exclusion of employee meals and lodging (other than military) X 

Exclusion of certain foster care payments X 

Exclusion for benefits provided to volunteer EMS and firefighters X 

Exclusion of employer contributions for medical insurance 

premiums and medical care X 

Exclusion of interest on hospital construction bonds X 

Distributions from retirement plans for premiums for health and 

long-term care insurance X 

Exclusion of railroad retirement system benefits X 

Exclusion of workers’ compensation benefits X 
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 24 GAO-13-479 Data for Tax Expenditures

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Exclusion of public assistance benefits (normal tax method) X 

Exclusion of special benefits for disabled coal miners X 

Exclusion of military disability pensions X 

401(k) plans X 

Individual retirement accounts X 

Low and moderate income savers credit X 

Keogh plans X 

Premiums on group term life insurance X 

Premiums on accident and disability insurance X 

Income of trusts to finance supplementary unemployment benefits X 

Social Security benefits for retired workers X 

Social Security benefits for disabled workers X 

Social Security benefits for spouses, dependents and survivors X 

Exclusion of veterans death benefits and disability compensation X 

Exclusion of veterans pensions X 

Exclusion of GI bill benefits X 

Exclusion of interest on veterans housing bonds X 

Exclusion of interest on public purpose state and local bonds X 

Total 23 27 8 

 

Deferrals

Deferral of income from controlled foreign corporations (normal tax 

method) X 

Deferred taxes for financial firms on certain income earned 

overseas

X 

Expensing of research and experimentation expenditures (normal 

tax method) X 

Expensing of exploration and development costs, fuels X 

Deferral of gain from dispositions of transmission property to 

implement Federal Energy Regulatory Commission restructuring 

policy

X 

Temporary 50 percent expensing for equipment used in the refining 

of liquid fuels X 

Natural gas distribution pipelines treated as 15-year property X 

Amortize all geological and geophysical expenditures over 2 years X 

Expensing of exploration and development costs, nonfuel minerals X 

Excess of percentage over cost depletion, nonfuel minerals X 
Appendix II: Tax Expenditures and Their 

Inclusion on Tax Forms

Page 25 GAO-13-479 Data for Tax Expenditures

Tax expenditure

Tax expenditure 

not on tax form

Tax expenditure

on tax form

but did not have

its own line item

Tax expenditure on 

tax form and had

its own line item 

Expensing of multiperiod timber growing costs X 

Expensing of certain capital outlays X 

Expensing of certain multiperiod production costs X 

Deferral of gain on sale of farm refiners X 

Expensing of reforestation expenditures X 

Deferral of income from installment sales X 

Accelerated depreciation on rental housing (normal tax method) X 

Carryover basis of capital gains on gifts X 

Accelerated depreciation of buildings other than rental housing 

(normal tax method) X 

Accelerated depreciation of machinery and equipment (normal tax 

method) X 

Expensing of certain small investments (normal tax method) X 

Deferral of tax on shipping companies X 

Expensing of environmental remediation costs X 

Deferral of interest on US savings bonds X 

Total 4 19 1

 

Preferential tax rates

Capital gains treatment of royalties on coal X 

Capital gains treatment of certain timber income X 

Capital gains treatment of certain income X 

Income averaging for farmers X 

Treatment of qualified dividends X 

Capital gains (except agriculture, timber, iron ore, and coal) X 

Graduated corporation income tax rate (normal tax method) X 

Total 0 5 2 

 

Multiple types

Tax credit and deduction for clean-fuel burning vehicles X 

Empowerment zones and renewal communities X 

Adoption credit and exclusion X 

Total 0 1 2 

 

Total for all tax expenditures 27 75 61

Source: GAO analysis of Treasury tax expenditures and IRS tax forms.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 26 GAO-13-479 Data for Tax Expenditures

James R. White, (202) 512-9110 or whitej@gao.gov

In addition to the contact name above, Kevin Daly, (Assistant Director), 

Laurie King (Analyst-in-Charge), Jeff Arkin, Elizabeth Curda, Robert 

Gebhart, Lois Hanshaw, Benjamin Licht, Ed Nannenhorn, Karen O’Conor, 

Michael O’Neill, Robert Robinson, Alan Rozzi, MaryLynn Sergent, 

Stephanie Shipman, and Anne Stevens all made contributions to this

report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(451006)
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