Treasury Inspector General for 

Tax Administration

FY 2014

President’s Budget
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Table of Contents

Section 1 – Purpose ....................................................................................................................... 3

1A – Mission Statement.............................................................................................................. 3

1.1 – Appropriations Detail Table .............................................................................................. 3

1B – Vision, Priorities and Context............................................................................................ 3

Section 2 – Budget Adjustments and Appropriation Language............................................. 11

2.1 – Budget Adjustments Table............................................................................................... 11

2A – Budget Increases and Decreases Description................................................................... 11

2.2 – Operating Levels Table.................................................................................................... 13

2B – Appropriations Language and Explanation of Changes................................................... 14

2C – Legislative Proposals........................................................................................................ 14

Section 3 – Budget and Performance Plan ............................................................................... 15

3A – Audit................................................................................................................................. 15

3.1.1 – Audit Budget and Performance Plan............................................................................. 17

3B – Investigations ................................................................................................................... 17

3.1.2 – Investigations Budget and Performance Plan ............................................................... 21

Section 4 – Supplemental Information...................................................................................... 22

4A – Summary of Capital Investments..................................................................................... 22
Section 1 – Purpose

1A – Mission Statement

Provide integrated audit, investigative, and inspection and evaluation services that promote 

economy, efficiency, and integrity in the administration of the internal revenue laws. 

1.1 – Appropriations Detail Table

Dollars in Thousands

 FY 2012 FY 2013 FY 2014 FY 2012 to FY 2014

Treasury Inspector General for Tax 

Administration Enacted Annualized Request $ Change % Change

Resources 

 CR Rate 

 FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Audit 349 57,306 349 57,656 349 58,190 0 884 0.00% 1.54%

Investigations 486 94,390 486 94,968 486 91,348 0 (3,042) 0.00% -3.22%

Subtotal New Appropriated Resources 835 $151,696 835 $152,624 835 $149,538 0 ($2,158) 0.00% -1.42%

Other Resources:

Reimbursables 2 900 2 900 2 1,000 0 100 0.00% 11.11%

Subtotal Other Resources 2 $900 2 $900 2 $1,000 0 $100 0.00% 11.11%

Total Budgetary Resources 837 $152,596 837 $153,524 837 $150,538 0 ($2,058) 0.00% -1.35%

1B – Vision, Priorities and Context

Previously a longstanding oversight office within the Internal Revenue Service (IRS), the 

Treasury Inspector General for Tax Administration (TIGTA) was created by the Congress as a 

part of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98). TIGTA is 

mandated to provide independent audit, investigative, and inspection and evaluation services 

necessary to improve the quality and credibility of IRS operations, including oversight of the IRS 

Chief Counsel and the IRS Oversight Board. TIGTA reviews IRS programs, makes 

recommendations to improve effectiveness and efficiency, and investigates allegations of fraud, 

waste, and abuse. TIGTA’s Office of Audit (OA) conducts audits that advise the American 

people, the Congress, the Secretary of the Treasury, and IRS management of high-risk issues 

relating to the administration of IRS programs and operations. TIGTA’s audit recommendations 

aim to improve IRS systems and operations, while ensuring fair and equitable treatment of 

taxpayers. Through criminal and administrative investigations, TIGTA’s Office of 

Investigations (OI) ensures the integrity of IRS employees, contractors, and tax professionals; 

provides for infrastructure security; and protects the IRS from internal and external attempts to 

threaten or corrupt the administration of the tax laws. TIGTA’s Office of Inspections and 

Evaluations (I&E) provides responsive, timely, and cost-effective inspections and evaluations of 

IRS challenge areas. Oversight activities are designed to identify high-risk systemic 

inefficiencies in IRS operations and to investigate exploited weaknesses in tax administration. 

TIGTA helps to ensure that the American taxpayer can have confidence that the IRS collects 

over $2 trillion in tax revenue in an effective and efficient manner without fraud and abuse.
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FY 2014 Priorities

TIGTA’s Fiscal Year (FY) 2014 budget request of $149,538,000 represents a decrease of 

1.42 percent below the FY 2012 Enacted budget. These resources will fund critical audit, 

investigative, and inspection and evaluation services to protect the integrity of tax administration 

on behalf of the Nation’s taxpayers. TIGTA’s audit, investigative, and inspection and evaluation 

priorities include:

 Mitigating risks associated with modernization, security over taxpayer data and 

employees, procurement fraud, addressing the Tax Gap, implementing major tax law 

changes, and human capital challenges facing the IRS in domestic and international 

operations in order to identify opportunities to improve administration of the Nation’s tax 

laws;

 Providing the IRS with the investigative coverage and the information necessary to 

mitigate threats against its employees, facilities, and systems; 

 Responding to domestic and foreign threats and attacks against IRS employees, property, 

data infrastructure, and sensitive information;

 Improving the integrity of IRS operations by preventing, detecting and deterring fraud, 

waste, abuse or misconduct by IRS employees; 

 Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for monetary benefits, addressing erroneous and improper payments,

and enhancing IRS service to taxpayers; 

 Informing the American people, the Congress, and the Secretary of the Treasury of 

problems; and

 Overseeing the IRS efforts to administer tax provisions of the Patient Protection and 

Affordable Care Act and the Health Care and Education Reconciliation Act of 2010

(ACA).

Strategic Goals

TIGTA’s Strategic Plan 2009-2014 guides program and budget decisions and supports the 

Department of the Treasury Strategic Plan which includes a goal to “Manage the Government’s 

Finances in a Fiscally Responsible Manner.”

TIGTA’s Strategic Plan goals are to:

 Promote the economy, efficiency, and effectiveness of tax administration;

 Protect the integrity of tax administration; and

 Be an organization that values its people.

TIGTA’s commitment to its strategic goal to be an organization that values its people was 

recognized in the Partnership for Public Service’s 2012 Best Places to Work rankings. TIGTA 

placed 13th out of 292, up from 16th out of 240 in 2011, in the overall index score measuring the 

performance of agency subcomponents related to employee satisfaction and commitment.

TIGTA ranked the highest of all Treasury bureaus. This ranking is based on the Office of 

Personnel Management’s annual Employee Viewpoint Survey, which Federal agencies use as 
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benchmarks to measure their performance. Survey results provided valuable insight into the 

challenges agency leaders face in ensuring that TIGTA has an effective civilian workforce and 

how well they are responding. According to the survey highlights, TIGTA employees continue 

to be happy with their jobs and feel their work is important. The vast majority believe TIGTA is 

accomplishing its mission and would recommend it as a good place to work. 

Audit

In 2010, the President signed into law significant changes to the Nation’s health care system 

under the ACA (Public Law 111-148). The Internal Revenue Code plays several key functions 

in achieving that goal. At least 42 provisions added to or amended the Internal Revenue Code, 

and at least eight required the IRS to build new processes in tax administration. These 

provisions provide incentives and tax breaks to individuals and small businesses to offset health 

care expenses. They also impose penalties, administered through the tax code, for individuals 

and businesses that do not obtain health coverage for themselves or their employees. Other 

provisions raise revenue to offset the costs of health care reform. TIGTA plays a key role in 

ensuring that these provisions are implemented and administered in accordance with the law and 

the intent of the Congress.

TIGTA’s audit results to date illustrate the significant need for continued oversight over many of 

the tax-related ACA provisions. For example:

 Taxpayers erroneously received millions in Adoption Credits; 

 IRS did not require sufficient information to determine if taxpayers claiming Small 

Business Health Care Tax Credits filed required employment taxes when these taxpayers 

entered into a contractual relationship with Professional Employment Organizations to 

manage human resources; and

 IRS did not take adequate steps to ensure taxpayers potentially liable for the indoor 

tanning excise tax were aware of the new law, particularly after the number of taxpayers 

filing returns that included the tanning services excise tax was much lower than 

expected.

TIGTA also found some minor problems related to the IRS updating of publications to reflect 

ACA provisions, and had concerns with the IRS methods for estimating staffing needs related to 

implementation of the ACA.

In FY 2013 and FY 2014, several key ACA provisions will become effective, but FY 2014 will 

be a significant year for the oversight of ACA provisions. Many provisions that previously 

became effective will require continued oversight to ensure that appropriate corrective actions 

are taken and to address aspects of the provisions with different implementation dates.

The following areas will require significant TIGTA oversight:

 Security over information sharing and reporting with ACA stakeholders;

 Integration of ACA provisions into existing tax processing systems;

 Development and testing of new systems to support ACA provisions;
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 Requirement to maintain minimum essential coverage and reporting of health insurance 

coverage;

 Additional hospital insurance tax on high-income taxpayers;

 Medicare contribution tax on unearned income; 

 Medical device manufacturers’ excise tax;

 ACA compliance examinations of tax exempt hospitals;

 Refund controls validation related to tax exempt organizations’ claims for refund for the 

small business health care tax credit;

 Financial management information related to ACA; 

 Modification of itemized deduction for medical expenses;

 Refundable tax credits providing premium assistance for certain individuals and families 

purchasing health insurance through an exchange; and

 Annual fee requirement for health insurance providers.

Investigations

The Office of Investigations is similarly impacted by the demands of the ACA. As the IRS 

efforts to implement new systems and programs to administer the provisions of the ACA 

increase, so will TIGTA’s efforts to protect the IRS from external attempts to corrupt or impede 

the administration of internal revenue laws. Substantial changes to the tax code can create new 

opportunities for crime. To effectively carry out this important oversight work, TIGTA must be 

better positioned to utilize law enforcement and intelligence resources to proactively detect and 

deter efforts impacting the IRS implementation of the ACA. 

Inspections and Evaluations

The Office of Inspections and Evaluations will also provide oversight of the IRS administration 

of the ACA and provide TIGTA with additional flexibility, capacity, and capability to produce 

value-added products and services to improve tax administration. Inspections will usually be 

more limited in scope and will be completed in a more compressed period than a traditional 

audit. Evaluations related to the ACA will result in recommendations to streamline operations, 

enhance data quality, and minimize inefficient and ineffective programs. Its work is not a 

substitute for audits and investigations; in fact, its findings may result in subsequent audits 

and/or investigations. Inspections and evaluations, by their nature, have a short time horizon and 

will respond to specific ACA tax administration issues.

Safeguarding the IRS

TIGTA continues to place a priority on ensuring the safety and security of IRS employees and 

facilities. TIGTA will review, analyze, and respond to intelligence information relating to 

potential violent acts against IRS employees and facilities and develop proactive leads to 

investigate and mitigate potential threats. Investigators will also respond to violent acts 

committed against IRS employees and facilities, initiate investigations into those incidents, and 

work towards the arrest, conviction and sentencing of the perpetrators. To further enhance their 

work, the investigators will utilize OI's technical expertise, including TIGTA’s Forensic Science 
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Laboratory, Digital Forensic and Technical Support functions to gather and examine evidence 

and intelligence.

Providing Comprehensive Coverage and Oversight

TIGTA continues to provide comprehensive coverage and oversight of all aspects of the IRS 

operations. In FY 2012, TIGTA’s overall accomplishments included $388 million in potential 

increased and/or protected revenue and $22.1 billion in potential cost savings. 

Ensuring Taxpayer Privacy and Security: Millions of taxpayers entrust the IRS with their most

sensitive financial and personal data that are processed by and stored on IRS computer systems. 

The risk that taxpayers’ identities could be stolen by exploiting security weaknesses in the IRS

computer systems continues to increase, as does the risk that IRS computer operations could be 

disrupted. Both internal factors (such as the increased connectivity of computer systems and use 

of portable devices) and external factors (such as the volatile threat environment resulting from 

increased terrorist and hacker activity) require strong security controls. In FY 2012, OA issued 

reports noting that insufficient E-Services control may put taxpayer information at risk and that 

the Computer Security Incident Response Center (CSIRC) is effectively performing most of its 

responsibilities, but further improvements were needed.

To prevent the compromise of sensitive taxpayer information, TIGTA proactively identifies IRS 

employees who inappropriately access and/or disclose such private information. These 

violations, known as unauthorized access (UNAX), are often the initial phase of IRS employee 

misconduct and frequently result in the uncovering of other criminal violations, including fraud 

and identity theft. The importance of efforts to detect unauthorized access is often 

underestimated because too often, UNAX is seen as browsing by bored employees. IRS 

employees who are found to have committed UNAX violations may be subject to fines, 

imprisonment, and loss of their jobs. In FY 2012, TIGTA closed 280 UNAX investigations, 

resulting in 232 adjudicative personnel actions for IRS employees.

In FY 2009, TIGTA established a UNAX modernization group to address all computer 

applications the IRS currently uses that contain sensitive information. This group’s work to date 

includes monitoring the IRS efforts to develop and implement an enterprise-wide audit trail 

solution, providing guidance to the IRS on establishing retention policies so that forensic 

investigations can be conducted, and ensuring the IRS expands its automated capability to 

proactively detect unauthorized accesses on all computer systems. During FY 2012, TIGTA 

investigators completed 1,637 employee integrity investigations, of which 395 involved UNAX 

allegations. This resulted in 16 criminal prosecutions and 624 referrals for administrative 

disciplinary actions against IRS employees. 

Identity theft occurs when someone uses the Personally Identifiable Information (PII), e.g., 

name, Social Security Number, or credit card number, of another. TIGTA continues to provide 

investigative resources to combat identity theft.
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In this critical area, TIGTA focuses its resources to:

 IRS employees who are committing identity theft either directly or through active 

participation in a scheme;

 Tax preparers who improperly steal and disclose client information for the purpose of 

committing identity theft (excluding tax preparers who prepare and file fraudulent tax 

returns for the purpose of personally stealing the refund); and 

 Individuals who impersonate an IRS employee in furtherance of committing identity 

theft. 

Tax Compliance: Tax compliance initiatives include administering tax regulations, collecting 

the correct amount of tax from businesses and individuals, and overseeing tax-exempt and 

Government entities. The IRS recently updated estimate of the gross Tax Gap, which is defined 

as the amount of true tax liability that taxpayers do not pay on time, is $450 billion. Increasing 

compliance with the tax code is at the heart of IRS enforcement programs. The IRS is focusing 

its enforcement activities to deliver better results and to target those corporations and 

high income individuals who fail to report or pay what they owe. In FY 2012, OA issued reports 

noting that: opportunities exist to identify more taxpayers who underreport retirement income; 

and actions can be taken to reinforce the importance of recognizing and investigating fraud 

indicators during field audits and a concerted effort should be taken to improve Federal 

Government agency tax compliance. Enactment of TIGTA’s recommendations in these areas 

can increase compliance.

TIGTA continues its outreach efforts to IRS employees and tax practitioners. By doing so, 

TIGTA develops relationships with these groups to assist in identifying crimes against the IRS 

and taxpayers. In FY 2012, TIGTA provided 1,383 presentations to more than 37,911 IRS 

employees and educated tax professionals by providing 38 awareness presentations to 6,016 tax 

practitioners and preparers.

Fraudulent Claims and Improper Payments: The Improper Payments Information Act of 2002 

defines an improper payment as any payment that should not have been made or that was made 

in an incorrect amount (both overpayment and underpayments) under statutory, contractual, 

administrative, or other legally applicable requirements. Erroneous and improper IRS payments 

generally involve improperly paid refunds, tax return filing fraud, or improper payments to 

vendors or contractors. In FY 2012, OA issued reports noting that while the IRS disallowed 

erroneous First-Time Homebuyer Credits totaling $1.6 billion, its examination resources could 

have been used more effectively, potentially disallowing more Credits and increasing 

assessments and that substantial changes were needed to the Individual Taxpayer Identification 

Number Program to detect fraudulent applications. 

Advising the Congress: During FY 2012, TIGTA provided 39 briefings, five testimonies, and 

eight official responses to the Congress regarding audit, investigative, and inspection and 

evaluation activities. Through direct communication, TIGTA aims to address the interest of 

congressional committees on critical issues involving IRS operations. 
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Fraud and Electronic Crime: The sensitivity of the data the IRS collects makes it an attractive 

target for employees, hackers, and others residing throughout the world that could use the 

information for fraud and identity theft. TIGTA’s audit, investigative, and inspection and 

evaluation work provides coverage of this growing national problem, providing proactive 

prevention and detection efforts that are required in this highly vulnerable and ever-evolving 

area. As described in Homeland Security Presidential Directive 7, IRS operations that fund the 

Federal Government are part of the Nation’s key resources and critical infrastructure. These key 

resources and critical infrastructure provide the essential services that underpin American 

society. Degradation of the public’s trust in the tax system would lead to a decline in voluntary 

compliance and represents a risk to national security.

Inspections and Evaluations Outcomes: I&E continue to conduct reviews and will serve as 

TIGTA’s point of contact to the Recovery and Transparency Board’s Working Group through 

FY 2013. During FY 2012, I&E issued a report to determine whether the IRS Contract Security 

Workforce was suitable for employment at IRS facilities and whether responsible IRS personnel are 

qualified to oversee day-to-day operations of their assigned security guard contracts. As a result, 

IRS agreed to initiate process improvement to strengthen oversight and provide assurance that the 

security guards are suitable for employment. In FY 2012, I&E conducted a follow-up inspection of 

the IRS Transportation Subsidy Program (Program). The inspections revealed that the IRS 

implemented only portions of the proposed corrective. In addition, I&E reviewed policies and 

procedures with treaty partners through the international Exchange of Information Program. Several 

recommendations were made and corrective actions were implemented by the IRS. 

During FY 2012, I&E responded to two requests from the Recovery Accountability and 

Transparency Board (RATB). In the American Recovery and Reinvestment Act of 2009 

(Recovery Act) (Lessons Learned Survey (Survey), I&E participated in a multi-agency review of 

lessons learned implementing and executing the Recovery Act. The classified responses from 

15 agencies were consolidated and forwarded to the Office of Inspector General, Department of 

Interior. In the second request, the Recovery Act authorized stimulus funds to be spent within 

very specific timeframes. I&E received a response on behalf of the IRS, and submitted the 

Agency Verification of Recovery Act Funds response to the RATB. The RATB will use the 

collected information to publish a list of Recovery Act appropriations and obligations as reported 

by the agencies.

Promoting Efficient Spending and the Campaign to Cut Waste: TIGTA continues its 

commitment to promoting efficient spending and cutting waste. The FY 2014 budget is 

$2,462,000 below the FY 2010 enacted budget. The majority of this reduction was absorbed by 

increasing efficiency, streamlining operations and reducing costs from non-pay items such as:

 Travel - reduced by 34 percent; 

 Training - reduced by 30 percent;

 Communications/utilities - reduced by 29 percent, and 

 Operations/maintenance of equipment - reduced by 28 percent.

TIGTA will continue to maintain a savings culture to meet future challenges with fewer 

resources, however, additional cuts could erode TIGTA’s ability to carry out its mission. 
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In accordance with the requirements of Section 6(f)(1) of the Inspector General Act of 1978 (as 

amended), the Treasury Inspector General for Tax Administration submits the following 

information related to its FY 2014 Budget Request:

 The aggregate budget request for the operations of TIGTA is $149,538,000; 

 The portion of the request needed for TIGTA training is $1,721,000; and

 The portion of the request needed to support the Council of the Inspectors General on 

Integrity and Efficiency is $324,000.

The amount requested for training supports TIGTA’s training needs for FY 2014.
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Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Treasury Inspector General for Tax Administration FTE Amount

FY 2012 Enacted 835 $151,696

FY 2013 Annualized CR Rate 835 $152,624

Changes to Base:

Adjustment to Request - $1,210

Adjustment to FTE Estimate (29) -

Non-Recur CR Increase - ($928)

Program Reductions & Efficiencies Proposed in FY 2013 - ($2,362)

Oversight of IRS Implementation of Affordable Care Act Proposed in 

FY 2013 29 $4,500

Maintaining Current Levels (MCLs): - $1,602

Pay-Raise - $1,104

Non-Pay - $498

Efficiency Savings: - ($383)

Strategically Replacing Series 1811 Investigators with non-1811 Staff - ($383)

Subtotal Changes to Base - $2,429

Total FY 2014 Base 835 $155,053

Program Changes:

Program Decreases: - ($5,515)

Program Reductions and Efficiencies - ($4,675)

Reducing RRA 98 Reporting Requirements - ($840)

Total FY 2014 Request 835 $149,538

2A – Budget Increases and Decreases Description

Adjustment to Request .............................................................................+$1,210,000 / +0 FTE

Adjustment to FTE Estimate +$0 / -29 FTE 

Adjustment to FTE based on projected utilization.

Non-Recur CR Increase -$928,000 / +0 FTE 

The across-the-board 0.612 percent increase provided in the CR through March 27, 2013.

Program Reductions & Efficiencies Proposed in FY 2013 -$2,362,000 / +0 FTE 

TIGTA has closely scrutinized its budget for cost-saving opportunities. Reaching this savings 

target without impacting the quality of TIGTA’s programs will require a combination of actions. 

All vacancies are examined to determine the impact of delayed back-filling and will strategically 

identify positions where longer lapses will have the smallest impact on mission. TIGTA is also 

lowering its administrative costs by 20 percent compared to FY 2010 levels, as outlined in

Executive Order 13589, Promoting Efficient Spending. Additionally, TIGTA has aggressively 

implemented telework and office right-sizing measures in order to reduce its footprint, and has 

decreased its contribution for Council of the Inspectors General on Integrity & Efficiency 

(CIGIE).
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Oversight of IRS Implementation of Affordable Care Act Proposed in FY 2013 +$4,500,000 / 

+29 FTE 

The IRS components of the new ACA legislation are a cornerstone of the Administration’s plan 

to expand coverage for millions of Americans. TIGTA is in a unique position to ensure that IRS 

implements the law effectively, substantiate the integrity of the program, and reassure lawmakers 

that the program functions properly. TIGTA has often paved the way for new initiatives that are 

administered through the tax code. TIGTA’s work requires close coordination among its Audit, 

Investigations, and Inspections and Evaluation functions. Each program office brings unique 

skills and experience, but the bureau’s overall success depends greatly upon these offices’ close 

collaboration. The success of the new ACA program will depend on the government’s ability to 

assure taxpayers that the new changes are properly administered.

Maintaining Current Levels (MCLs) ......................................................+$1,602,000 / +0 FTE

Pay-Raise +$1,104,000 / +0 FTE 

The President's Budget proposes a 1 percent pay-raise for federal employees in 2014.

Non-Pay +$498,000 / +0 FTE 

Funds are requested for inflation adjustments in non-labor expenses such as GSA rent 

adjustments, postage, supplies, and equipment.

Efficiency Savings .........................................................................................-$383,000 / +0 FTE

Strategically Replacing Series 1811 Investigators with non-1811 Staff -$383,000 / +0 FTE 

TIGTA has reorganized its operations and hiring emphasis so that by FY 2014, a goal of four 

positions currently filled by series 1811 investigators will be replaced by non-1811 staff. This 

will be done by focusing on the requisite career experience and skills of new hires rather than on 

the job series. TIGTA is committed to finding the most efficient staffing pattern to carry out its 

investigative work.

Program Decreases ....................................................................................-$5,515,000 / +0 FTE

Program Reductions and Efficiencies -$4,675,000 / +0 FTE 

TIGTA continues to identify cost-savings in travel, training, contracts, and rent. Further cuts 

will be made in these areas to reduce budget impact on TIGTA’s staffing levels. If necessary, 

TIGTA will examine all vacancies to determine the impact of delayed back filling and will 

strategically identify positions where longer lapses will have the smallest impact on mission. 

Reducing RRA 98 Reporting Requirements -$840,000 / +0 FTE 

Reducing the reporting requirements identified in TIGTA’s charter document, RRA 98 will 

generate $840,000 in savings. However, these reductions would require statutory change and are 

further discussed in the Legislative Proposals section of this document.
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2.2 – Operating Levels Table

Dollars in Thousands

Treasury Inspector General for Tax Administration FY 2012 FY 2013 FY 2014

 Actual Annualized Request

Object Classification CR Rate 

11.1 - Full-time permanent 82,625 82,406 81,779

11.3 - Other than full-time permanent 439 594 584

11.5 - Other personnel compensation 8,377 8,582 8,322

11.9 - Personnel Compensation (Total) 91,441 91,582 90,685

12.0 - Personnel benefits 30,768 30,065 29,750

Total Personnel and Compensation Benefits $122,209 $121,647 $120,435

21.0 - Travel and transportation of persons 3,361 3,548 3,173

22.0 - Transportation of things 26 20 19

23.1 - Rental payments to GSA 9,082 9,127 9,180

23.2 - Rental payments to others 192 222 221

23.3 - Communication, utilities, and misc charges 1,886 1,940 1,832

24.0 - Printing and reproduction 8 10 7

25.1 - Advisory and assistance services 1,066 1,720 1,334

25.2 - Other services 1,627 817 731

25.3 - Other purchases of goods & serv frm Govt accounts 7,059 7,892 7,675

25.4 - Operation and maintenance of facilities 0 416 400

25.7 - Operation and maintenance of equip 970 1,190 892

26.0 - Supplies and materials 1,306 1,245 1,113

31.0 - Equipment 2,896 3,655 3,451

42.0 - Insurance claims and indemnities 1 50 50

91.0 - Confidential Expenditures 11 25 25

Total Non-Personnel 29,491 31,877 30,103

Total Budgetary Resources $151,700 $153,524 $150,538

Budget Activities:

Audit 55,785 58,156 58,790

Investigations 95,915 95,368 91,748

Total Budgetary Resources $151,700 $153,524 $150,538

FTE 807 837 837

This table includes all available resources, including annual and available multi-year appropriations, reimbursable resources,

offsetting collections and user fees.
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2B – Appropriations Language and Explanation of Changes

Appropriations Language Explanation 

of Changes

DEPARTMENT OF THE TREASURY

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

SALARIES AND EXPENSES

For necessary expenses of the Treasury Inspector General for Tax Administration 

in carrying out the Inspector General Act of 1978, as amended, including purchase 

(not to exceed 150 for replacement only for police-type use) and hire of passenger 

motor vehicles (31 U.S.C. 1343(b)); services authorized by 5 U.S.C. 3109, at such 

rates as may be determined by the Inspector General for Tax Administration; 

$149,538,000, of which not to exceed $6,000,000 shall be available for official 

travel expenses; of which not to exceed $500,000 shall be available for unforeseen 

emergencies of a confidential nature, to be allocated and expended under the 

direction of the Inspector General for Tax Administration.

2C – Legislative Proposals

TIGTA proposes eliminating certain reviews required by RRA 98 which add little value to 

mission achievement. Eliminating these statutory reporting requirements will allow TIGTA to 

achieve savings and to reinvest resources to conduct high-risk audits. TIGTA proposal includes 

eliminating reporting requirements in the following areas:

 

 The requirement to report information regarding any administrative or civil actions 

related to Fair Tax Collection Practices violations in one of TIGTA’s Semiannual 

Reports. This pertains to 26 U.S.C. § 7803(d) (1)(G). 

 The requirement to review and certify annually that IRS is complying with the 

requirements of 26 U.S.C. § 6103(e) (8) regarding information on joint filers. 

 The requirement to annually report on the IRS compliance with 26 U.S.C. §§ 7521(b) (2) 

and (c) requiring IRS employees to stop a taxpayer interview whenever a taxpayer 

requests to consult with a representative and to obtain their immediate supervisor’s 

approval to contact the taxpayer instead of the representative if the representative has 

unreasonably delayed the completion of an examination or investigation.

 The annual reporting requirement for the remaining RRA 98 provisions, net of the 

evaluation of the adequacy and security of the technology of the IRS, should be revised to 

a biennial reporting requirement.
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Section 3 – Budget and Performance Plan

3A – Audit

($58,190,000 from direct appropriations, and $600,000 from reimbursable resources): 

OA identifies opportunities to improve the administration of the Nation’s tax laws by completing 

comprehensive and independent performance and financial audits of IRS programs and 

operations. TIGTA’s Annual Audit Plan communicates audit priorities. OA strategically 

evaluates IRS programs, activities, and functions so that resources are expended in the areas of 

highest vulnerability to the Nation’s tax system. The Audit program incorporates both statutory 

audit requirements and specific audits identified through TIGTA’s risk assessment process. By 

focusing on the most critical areas, OA ensures that audits of IRS programs and operations 

identify and recommend improvements that add value while addressing high-risk tax 

administration issues. 

OA’s recommendations:

 Promote the economy, efficiency, and effectiveness of IRS operations, and

 Ensure the fair and equitable treatment of taxpayers. 

As the IRS adapts to, and operates in, an increasingly complex and rapidly changing 

environment, TIGTA is challenged to assess and help prevent, detect, and deter fraud, waste, and 

abuse in IRS programs and operations. TIGTA’s stakeholders encourage early oversight 

involvement with more of a preventive focus to reduce costs, prevent or minimize problems, and 

ultimately be more effective. OA must be nimble enough to focus limited resources, as 

appropriate, on issues such as the effect of major new tax law changes and the increasing 

globalization of tax issues while maintaining the appropriate focus on high-risk assessments and 

stakeholder concerns. TIGTA has begun to focus on broader, cross-cutting audit strategy areas 

such as ACA, procurement fraud, and return preparer regulation. 

During FY 2012, TIGTA issued 117 audit reports that included potential financial benefits of 

approximately $22.7 billion and potentially affected 7.6 million taxpayer accounts. OA’s reports 

for FY 2012 addressed issues that included:

 Computer Security – TIGTA noted that the CSIRC is effectively performing most of its 

responsibilities for preventing, detecting, and responding to computer security incidents. 

However, the CSIRC’s host-based intrusion detection system is not monitoring 34 percent of 

IRS servers, placing the IRS network and data at risk. Also, incident response policies, 

plans, and procedures are either nonexistent or are inaccurate and incomplete. 

 Audit Fraud Indicators – TIGTA identified field audits with fraud indicators that were not 

recognized and investigated in accordance with some key IRS procedures and guidelines. 

TIGTA estimated that the IRS could realize up to $98 million in additional penalty 

assessments over a five year period if the necessary corrective action is taken. 

 Revocation of Tax-Exempt Status – The IRS performed extensive outreach, took actions to 

prepare for automatic revocations, and informed more than 279,500 organizations that their 

tax-exempt status had been automatically revoked. However, TIGTA determined that 
TIGTA - 16

programming changes were incomplete. As a result, more than 15,000 organizations that 

failed to file for three consecutive years were potentially not identified and informed that 

their tax-exempt status had been automatically revoked. 

 First Time Homebuyer Credit –While the IRS properly evaluated the questionable claims 

that were selected for examination, a large number of high-risk claims were not 

examined, and many of the examinations conducted were unproductive. TIGTA 

projected that by following the recommendation to apply resources to more productive 

cases, approximately $92 million in disallowed credits/additional assessments would be 

made.

 Federal Government Agency Tax Compliance - Federal agencies are exempt from paying 

Federal income taxes. However, they are not exempt from meeting their employment tax 

deposits and related reporting requirements. As of December 31, 2011, 70 Federal agencies 

with 126 delinquent tax accounts owed approximately $14 million in unpaid taxes. In 

addition, 18 Federal agencies had not filed, or had been delinquent in filing, 39 employment 

tax returns. 

 Identity Theft - The impact of identity theft on tax administration is significantly greater than 

the amount the IRS detects and prevents. TIGTA’s analysis of tax returns using characteristics of

IRS-confirmed identity theft identified approximately 1.5 million tax returns with potentially 

fraudulent tax refunds totaling in excess of $5.2 billion. TIGTA estimated that the IRS could 

potentially issue $21 billion in fraudulent tax refunds over the next five years as a result of 

identity theft.

The goal owner for this budget activity is the Deputy Inspector General for Audit.

Description of Performance

TIGTA’s products are more likely to be used if they are delivered when needed to support 

congressional and IRS decision making. To determine whether products are timely, TIGTA 

tracks the percentage of products that are delivered on or before the date promised (contract 

date).

Additionally, TIGTA makes recommendations designed to improve administration of the Federal 

tax system. The IRS must implement these recommendations in order to realize the financial or 

non-financial benefits. This second measure assesses TIGTA’s effect on improving the IRS 

accountability, operations, and services. Since the IRS needs time to act on recommendations, 

TIGTA utilizes the Department of the Treasury’s Joint Audit Management Enterprise System to 

track the percentage of recommendations made four years ago that have been implemented, 

rather than the results of the activities during the fiscal year in which the recommendations are 

made. TIGTA tracks recommendations that have not been implemented by the IRS and has a 

formal process with the IRS to close out unimplemented recommendations where circumstances 

may have changed, or when the IRS has taken alternative corrective measures that address 

concerns TIGTA identified. 
TIGTA - 17

For FY 2012, the actual percentage of audit products delivered when promised to stakeholders 

was 71 percent against a full year target of 70 percent. TIGTA exceeded this target as a result of 

monitoring the execution of its audit programs to identify additional ways to deliver timely audit 

products to stakeholders. The actual percentage of recommendations made that have been 

implemented was 94 percent against a full year target of 85 percent. TIGTA exceeded its target 

by nine percent as a result of continued discussions throughout the audit process, both on the 

findings and on potential recommended solutions to better ensure that feasible alternatives were 

identified. For FY 2014, the target for percentage of audit products delivered when promised to 

stakeholders is 65 percent, a six percent decrease from FY 2012 actual. The target for percentage 

of recommendations made that have been implemented is 85 percent, a nine percent decrease 

from FY 2012 actual. TIGTA lowered the FY 2014 targets to reflect increased vacancies and the 

uncertainty resulting from the FY 2013 hiring freeze. The staffing vacancies are a result of 

retirements and job reassignments. The hiring freeze, which has delayed recruitment for key 

audit positions, will require TIGTA to extend acting roles for frontline managers and executive 

level positions. 

3.1.1 – Audit Budget and Performance Plan

Dollars in Thousands

Audit Budget Activity

Resource Level FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Enacted Enacted Enacted Enacted Enacted Enacted Annualized 

CR Rate

Request

 Appropriated Resources $50,260 $52,959 $55,186 $57,421 $57,306 $57,306 $57,656 $58,190

 Reimbursable Resources $525 $400 $400 $551 $551 $500 $500 $600

Budget Activity Total $50,785 $53,359 $55,586 $57,972 $57,857 $57,806 $58,156 $58,790

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Audit Products 

Delivered when Promised to 

Stakeholders 

68.0 65.0 81.0 76.0 68.0 71.0 70.0 65.0

Percentage of 

Recommendations Made that 

Have Been Implemented 

90.0 85.0 91.0 95.0 93.0 94.0 85.0 85.0

Key: N/A - Not in Effect; DISC - Discontinued; B - Baseline

3B – Investigations

($91,348,000 from direct appropriations, and $400,000 from reimbursable resources): 

While most Offices of Inspector General focus primarily on fraud, waste, and abuse, TIGTA’s 

mission is more extensive. TIGTA’s statutory responsibility also includes protecting the 

integrity of tax administration and the ability of the IRS to collect revenue for the Federal

Government. To accomplish this, TIGTA investigates allegations of criminal activity and 

serious misconduct committed by IRS employees, ensures IRS employees’ safety and data and 
TIGTA - 18

infrastructure security, and protects the IRS against external attempts to corrupt tax 

administration. These activities speak directly to TIGTA’s strategic goal to protect the integrity 

of tax administration.

TIGTA has implemented a progressive performance model to focus its investigative efforts on 

these three primary areas of investigative responsibility. The performance model has proven to 

be a powerful management tool that focuses its investigative resources on core mission-related 

objectives to assess investigative operations. The model provides reliable statistical data which 

assist in mission-critical decisions regarding staffing, budgeting, and training. In addition, 

TIGTA has recently recalibrated its resources for more efficient use in a changing environment. 

The following summaries highlight TIGTA’s investigative efforts in these three core areas:

 Employee Integrity: IRS employee misconduct, real or perceived, can erode public trust and 

impede the IRS ability to effectively enforce tax laws. A key aspect of protecting tax 

administration is the oversight and investigation of IRS employees and contractors. An 

estimated 48 percent of TIGTA’s current investigations involve alleged employee 

misconduct. In addition to UNAX integrity lapses, employee integrity investigations include 

misuse of IRS computer systems, extortion, thefts of Government property and taxpayer 

remittances, taxpayer abuse, false statements, and financial fraud. 

TIGTA promotes employee integrity by conducting proactive investigative initiatives to 

detect criminal and serious misconduct in the administration of IRS programs. For example, 

during FY 2012, TIGTA initiated 79 proactive investigative initiatives to detect systemic 

weaknesses or potential IRS program vulnerabilities. Additionally, TIGTA special agents 

conduct awareness presentations to remind IRS employees of TIGTA’s oversight 

responsibility, as well as sharing information to help identify ways in which they may 

prevent fraud, waste, and abuse.

During FY 2012, OI received 8,808 complaints, and opened 3,449 investigations. OI 

remains dedicated to providing effective integrity programs, threat and assault investigations, 

and other criminal and administrative investigations such as bribery and impersonation. OI 

also closed 3,446 investigations, which included 1,459 cases of employee misconduct 

referred for action and 142 cases accepted for criminal prosecution during FY 2012. 

 Employee and Infrastructure Security: TIGTA’s authority to investigate threats, assaults, 

and related matters is derived from the provisions of Title 26 U.S.C. § 7608(b), authority of 

internal revenue enforcement officers, RRA 98, the Inspector General Reform Act of 2008, 

and further summarized in Treasury Order 115-01. All reports of assaults, threats, or forcible 

interference against IRS employees performing their official duties are assigned to OI. Title 

26 U.S.C. § 6103 also specifically gives TIGTA the necessary authority to access taxpayer 

information in support of ongoing investigations, to include tax matters related to assaults 

and threats involving the IRS. 

Today’s threat environment is significantly different than it was ten years ago. Physical 

violence, harassment, and intimidation of IRS employees pose some of the most significant 

challenges to the implementation of a fair and effective system of tax administration. OI 
TIGTA - 19

places high priority on its oversight of IRS employee safety and physical security, protecting 

approximately 100,000 employees and more than 700 facilities throughout the country. 

As a result of the February 2010 attack against the IRS facility in Austin, Texas, which took 

the life of one IRS employee and injured several others, OI undertook a review of how it 

focuses criminal investigative resources to address serious threats to IRS personnel, facilities, 

and critical infrastructure. OI developed an enhanced process of categorizing and prioritizing 

incoming threats against the IRS and refined the coordination of communications between 

TIGTA and IRS senior management. 

To address current and future threats directed against the IRS and its employees, OI has

formed new partnerships with the following entities:

 IRS Office of Physical Security and Emergency Preparedness;

 IRS Office of Online Fraud Detection and Prevention;

 IRS Situational Awareness Management Center;

 IRS Office of Privacy;

 IRS Computer Security Incident Response Center;

 Treasury Operations Center; and 

 Federal Protective Service.

As a result of this coordinated effort, TIGTA was instrumental in the creation and 

development of the IRS Threat Information and Critical Response Initiative (TIRC) to more 

effectively review and disseminate threat information to IRS stakeholders. The TIRC serves 

as a focal point for the timely and efficient sharing of threat information, thereby allowing 

the IRS to take appropriate mitigation actions, to include coordinating with the Federal 

Protective Service in extending the security perimeter around IRS facilities, shutting down 

operations, or raising the alert level at affected IRS locations. 

To complement the TIRC and enhance cyber and intelligence support, OI reconfigured its 

headquarters staff by merging the Criminal Intelligence and Cyber Investigative programs to 

create the Electronic Crimes and Intelligence Division. With this reorganization, OI is better 

able to leverage its limited resources and create synergy between these two critical functions. 

Additionally, OI has established a full-time presence at the Federal Bureau of Investigation’s 

(FBI) National Joint Terrorism Task Force and the Domestic Terrorism Operations Unit to

support proactive threat investigative functions, particularly related to emerging anti-tax and 

anti-government groups. These representatives serve as OI’s criminal intelligence 

coordinators for all threat information developed by the FBI and other law enforcement 

officials that has the potential to directly impact IRS personnel, facilities, or critical 

infrastructure.

The Internet is increasingly a convenient and easily accessible avenue for the public to vent 

their opposition, frustration, or anger against the IRS. Immediately following the Austin, 

Texas incident, almost every breaking news article caused a spike in the level of hostile and 

threatening comments towards the IRS in online message boards and various other Internetbased forums. An Internet search revealed over 3.2 million “hits” referencing the Austin, 
TIGTA - 20

Texas incident, a number that would take thousands of man-hours to decipher without 

leveraging the use of automated investigative tools. In an effort to combat these types of 

threats, OI is working to identify a proactive automated search capability to aid in identifying 

threats against the IRS. Preliminary tests validate the need for a cyber-search tool and no 

other agency is combing the Internet for potentially violent threats or actions directed at the 

IRS or its employees.

 External Attempts to Corrupt Tax Administration: TIGTA is statutorily mandated to 

investigate external attempts to corrupt tax administration, which include criminal 

misconduct by non-employees, such as attempted bribes. While all external attempts to 

corrupt tax administration are of concern, a key aspect of protecting tax administration in 

today’s environment is the oversight and investigation of IRS procurement matters. For 

example, TIGTA conducts numerous criminal and civil investigations of fraud involving 

contracts and contractors in support of the IRS Business Systems Modernization (BSM) 

project. In FY 2010, TIGTA’s Procurement Fraud Division (PFD) recovered $158 million as 

a result of these investigations. In FY 2011, PFD recovered $47.9 million for the Nation’s 

treasury through court ordered settlements in these cases. In FY 2012, PFD recovered 

$64.7 million. 

The PFD’s investigations largely focus on violations of the False Claims Act and associated 

criminal statutes. The majority of these investigations involve alleged claims of inflated 

billings for labor and services. Since 2003, PFD’s investigations have resulted in a steady 

stream of recoveries to the treasury. The PFD’s investigative initiative targeting BSM 

procurements will seek to identify fraudulently inflated billings as well as improper business 

relationships between vendors. This initiative is a collaborative effort with OA. However, 

limited investigative resources diminish investigative outcomes. 

One of the major concerns with the BSM contracts is that the Contracting Officers Technical 

Representatives, the gatekeepers of funds on these contracts, often do not possess the 

required technical expertise nor are they in proximity to properly evaluate contract 

deliverables. TIGTA continues to receive and investigate allegations of potential fraud and 

misconduct involving these contracts. This trend is expected to continue as OI increases its 

investigations and outreach. The goal owner for this budget activity is the Deputy Inspector 

General for Investigations.

Description of Performance 

Investigative results are a ratio of the number of investigations that were prosecuted, IRS 

employee investigations administratively adjudicated, threat related investigations, civil actions 

initiated, and other factors compared to the total number of cases closed. Examples of the types 

of criminal activity investigated are: threats made against IRS employees, facilities or data 

infrastructure; bribes offered or sought to compromise IRS tax administration; manipulation of 

IRS systems and programs through the use of bogus liens and fraudulent IRS financial reporting 

instruments; and impersonation of IRS officials. In FY 2012, actual performance was 

89 percent, while the target was 79 percent. Throughout FY 2012, OI focused its resources on 

categorizing, prioritizing and responding to threats against IRS employees, facilities, and critical 
TIGTA - 21

infrastructure. OI also refined its communications with IRS management. OI and IRS 

strengthened partnerships to effectively investigate and mitigate current and future threats 

directed against the IRS and its employees. Primarily as a result of this program emphasis, 

TIGTA exceeded its FY 2012 target. For FY 2013, OI continues to use the performance model 

to measure its effectiveness, guide activities, and demonstrate its accomplishments to 

stakeholders. The performance model is a valuable tool that allows OI to strategically focus its 

activities around its core mission and redirect its focus when needed. OI will continue to 

monitor and redirect its demands to determine future targets.

OI will continue to focus its existing resources to address the increasing demand on cases 

involving threats, assaults, and protecting the integrity of Federal tax administration. OI’s 

performance metrics are linked to crime patterns which are difficult to prognosticate. As 

pressure on TIGTA’s budget has increased in recent years, future budget cuts will be absorbed 

through staffing. TIGTA’s inability to backfill positions as a result of the FY 2013 hiring freeze, 

and the loss of experienced investigators, would cause the FY 2014 performance target to 

decrease to 77 percent. This is a 12 percent decrease from the FY 2012 actual of 89 percent.

3.1.2 – Investigations Budget and Performance Plan

Dollars in Thousands

Investigations Budget Activity

Resource Level FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Enacted Enacted Enacted Enacted Enacted Enacted Annualized 

CR Rate

Request

 Appropriated Resources $82,601 $87,574 $90,897 $94,579 $94,694 $94,390 $94,968 $91,348

 Reimbursable Resources $675 $500 $500 $749 $749 $400 $400 $400

Budget Activity Total $83,276 $88,074 $91,397 $95,328 $95,443 $94,790 $95,368 $91,748

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Results from 

Investigative Activities 

81.0 78.0 83.0 86.0 82.0 89.0 79.0 77.0

Key: N/A - Not in Effect; DISC - Discontinued; B - Baseline
TIGTA - 22

Section 4 – Supplemental Information

4A – Summary of Capital Investments

The Treasury Inspector General for Tax Administration (TIGTA), Office of Information 

Technology (OIT) provides cost-effective, timely Information Technology (IT) products and 

services that permit successful completion of TIGTA business goals while meeting legislative 

mandates. By developing, providing and supporting a wide variety of IT products and services, 

OIT facilitates the collection, management, analysis and dissemination of information for audit, 

investigative, legal and management services benefit. The OIT Strategic plan provides for IT 

products and services that are critical to fulfilling statutory requirements and mandates. 

TIGTA has no major IT investments based on the OMB and the Department of Treasury criteria. 

Several non-major investments, however, directly support the mission, strategy, and day-to-day 

operations of the bureau. These include:

 Secure Information and Technology (IT) Mobility;

 Server and Storage Infrastructure;

 Refreshed Applications and Collaboration Environment; and

 IT Governance and Total Cost of Ownership. 

TIGTA’s full FY 2014 capital investment plan is available in the Treasury Capital Investment 

Plan report.

A summary of capital investment resources, including major information technology and nontechnology investments, can be viewed/downloaded here: 

http://www.treasury.gov/about/budget-performance/Pages/summary-of-capital-investments.aspx