FY 2012 DEPARTMENTAL SUMMARY 

FY 2012 President's Budget by Function 

(Dollars in Thousands) 

 FY 2010 FY 2011 FY 2012 FY2010 to FY2012 

 

Enacted Annualized 

CR Level 

Request $ Change % Change

Management & Financial 890,192 903,192 369,383 (533,809) -59.1% 

Departmental Offices Salaries and Expenses 304,888 304,888 324,889 20,001 6.6% 

Dept-wide Systems & Capital Invest. Programs 9,544 9,544 0 (9,544) -100.0% 

Office of Inspector General 29,700 29,700 29,855 155 0.5% 

Treasury IG for Tax Administration 152,000 152,000 157,831 5,831 3.8% 

Special IG for TARP 23,300 36,300 47,374 11,074 30.5% 

Community Development Financial Institutions Fund 246,750 246,750 227,259 (19,491) -7.9% 

Financial Crimes Enforcement Network 111,010 111,010 84,297 (26,713) -24.1% 

Transfer from Forfeiture Fund 30,000 

Net, Financial Crimes Enforcement Network 111,010 111,010 114,297 3,287 3.0% 

Alcohol & Tobacco Tax and Trade Bureau 103,000 103,000 97,878 (5,122) -5.0% 

Treasury Forfeiture Fund 1/ (90,000) (90,000) (630,000) (540,000) 600.0% 

Fiscal Service Operations 426,376 426,376 384,440 (41,936) -9.8% 

Financial Management Service 244,132 244,132 218,805 (25,327) -10.4% 

Bureau of the Public Debt 192,244 192,244 173,635 (18,609) -9.7% 

 Less Offsetting Fees (10,000) (10,000) (8,000) 2,000 

Net, BPD 182,244 182,244 165,635 (16,609) -9.1% 

Tax Administration 12,146,123 12,146,123 13,283,907 1,137,784 9.4% 

IRS Taxpayer Services 2,278,830 2,278,830 2,345,133 66,303 2.9% 

IRS Enforcement 5,504,000 5,504,000 5,966,619 462,619 8.4% 

IRS Operations Support 4,083,884 4,083,884 4,620,526 536,642 13.1% 

IRS Business Systems Modernization 263,897 263,897 333,600 69,703 26.4% 

IRS Health Insurance Tax Credit Administration 15,512 15,512 18,029 2,517 16.2% 

Total, Treasury Appropriations Committee 13,462,691 13,475,691 14,037,730 562,039 4.2% 

Treasury International Programs 2,128,670 2,128,670 3,363,934 1,235,264 58.0% 

Poverty Reduction and Economic Growth (MDBs) 1,552,170 1,552,170 2,072,564 520,394 33.5% 

Food Security 30,000 30,000 338,000 308,000 1026.7% 

Combating Climate Change and Environmental Degradation 481,500 481,500 748,750 267,250 55.5% 

Debt Relief 40,000 40,000 174,500 134,500 336.3% 

Technical Assistance 25,000 25,000 30,120 5,120 20.5% 

Total 2/ 15,591,361 15,604,361 17,401,664 1,797,303 11.5% 

1/Includes a $600 million permanent cancellation and a $30 million transfer to FinCEN. 

2/ FY 2010 Enacted excludes supplementals and transfers. 

Overview 

   

The Department of the Treasury serves the 

American people by strengthening the U.S. 

economy, supporting job creation, and 

restoring confidence in the financial system. 

As stewards of the economy, the Department’s 

FY 2012 Budget (the Budget) reflects 

Treasury’s commitment to the significant 

challenges that face our economy while 

Departmental Summary - 1
ensuring every dollar spent addresses the 

nation’s economic challenges. 

The Budget requests $14.038 billion to fund 

priority functions at the Department’s ten 

appropriated bureaus. The Budget also 

proposes $3.364 billion to fund Treasury 

International Programs. The International 

Programs request includes investments for 

reducing poverty and increasing economic 

stability around the world and addressing 

critical global challenges such as climate 

change and food security. Our request affirms 

the Department’s commitment to controlling 

spending with $336 million in cost savings 

and program reductions, $630 million in 

proposed cancellations and transfers of 

Forfeiture Fund balances, and requests well 

below the FY 2010 enacted level in five of our 

bureaus. 

The Budget has been developed in order to 

make significant progress towards the 

Department’s three high priority performance 

goals: 

• Repair and Reform the Financial 

System; 

• Increase Voluntary Tax Compliance; 

and 

• Significantly Increase the Number of 

Paperless Transactions with the Public. 

Goal 1: Repair and Reform the Financial 

System 

   

Regulatory Reform Support – Treasury 

played a prominent role in developing and 

promoting sweeping financial reform 

legislation, culminating in the enactment of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act) in 

July 2010. Implementation of the historic 

reforms contained in the Dodd-Frank Act is an 

important area of focus for the Department. 

Treasury is working to ensure that the new 

rules provide necessary protections against the 

financial excess that contributed to the recent 

financial crisis, while preserving the benefits 

of financial innovation. 

The Department is engaged in a broad array of 

programs to stabilize the financial system and 

develop long-term, comprehensive solutions 

to avoid future economic crises. The 

Department is currently spearheading the 

standup of new independent regulatory bodies 

created by the Dodd-Frank Act, including the 

Consumer Financial Protection Bureau 

(CFPB) and the Financial Stability Oversight 

Council. Under the Act, the Department is 

also creating the Office of Financial Research, 

and the Federal Insurance Office. Reform 

efforts include the closure of the Office of 

Thrift Supervision and its integration into 

Office of the Comptroller of the Currency and 

other existing government functions. Treasury 

will continue working with other government 

agencies to develop new market regulations 

and guidance to more effectively respond to 

current and future financial challenges. The 

Budget provides resources to support the 

successful implementation of new offices and 

activities authorized by the Dodd-Frank Act, 

including the new Federal Insurance Office 

and Office of Minority and Women Inclusion. 

Supporting America’s Small Businesses – To 

help small businesses, Treasury is 

implementing two new programs as part of the 

Small Business Jobs Act of 2010 (the Jobs 

Act): the Small Business Lending Fund 

(SBLF), and the State Small Business Credit 

Initiative (SSBCI). SBLF will increase the 

availability of credit to small businesses by 

providing up to $30 billion in capital to 

community and smaller banks with assets 

under $10 billion, the banks that provide the 

most amount of lending to small businesses. 

SSBCI provides $1.5 billion to strengthen 

state programs that support lending to small 

businesses and small manufacturers. Under 

the Jobs Act, Treasury will continue to 

Departmental Summary - 2
increase support for America’s small 

businesses, as they play a critical role in the 

U.S. economy and are central to creating jobs 

and restoring our economic prosperity. 

Housing Government Sponsored Enterprise

(GSE) Programs – Using authority granted 

under the Housing and Economic Recovery 

Act of 2008 (HERA), the Department has 

sought to stabilize the two largest GSEs, the 

Federal National Mortgage Association 

(Fannie Mae) and Federal Home Loan 

Mortgage Corporation (Freddie Mac), as well 

as the Federal Home Loan Banks (FHLB). 

Under the Preferred Stock Purchase 

Agreements (PSPAs), Treasury has helped to 

ensure the viability of the GSEs by providing 

$131 billion of investment, net of dividends 

the GSEs paid to Treasury. In addition, 

Treasury has helped stabilize the market by 

purchasing over $200 billion in GSE 

mortgage-backed securities and has helped 

state and local housing finance agencies 

obtain needed financing to aid low- and 

moderate-income Americans. 

The Obama Administration is strongly 

committed to reforming our nation’s housing 

finance system in order to protect taxpayers, 

institute tough oversight, restore the long-term 

health of our housing market, and strengthen 

our nation’s economic recovery. The 

Administration is transmitting to Congress a 

framework and principles for making the 

transition to a new housing finance system 

that will end the model of private gains and 

public losses, repair the broken housing 

finance market, and minimize taxpayer 

exposure to financial risks. The framework 

will also seek to make sure that the market 

provides stable and widely available mortgage 

credit, affordable housing options for low and 

middle-income homeowners and renters, and 

has stronger protections for consumers and 

better disclosure as mandated by the financial 

regulatory reform that passed last year. 

Community Development Financial

Institutions (CDFI) Fund – The Budget 

promotes economic and community 

development through investments in and 

assistance to community development banks, 

credit unions, loan funds, and venture capital 

funds through the CDFI Fund's merit-based 

grant programs. These programs expand the 

availability of financial services and 

affordable credit to underserved populations, 

including distressed urban, rural, Native 

American, Native Hawaiian, and Alaska 

Native communities. The Healthy Food 

Financing Initiative (HFFI) provides grants to 

CDFIs to expand the availability of healthy 

food options in distressed communities. Bank 

on USA promotes access to affordable and 

appropriate financial services and basic 

consumer credit products for households 

without access to such products and services. 

Troubled Asset Relief Program (TARP) – As 

a result of improved financial conditions and 

careful stewardship of the TARP, the ultimate 

cost to the taxpayer of TARP investments is 

significantly lower than previously estimated. 

The TARP has allowed participating 

institutions to stabilize their balance sheets 

and avoid further losses, leaving the nation’s 

financial system in a much stronger position 

than it was before the crisis. TARP included 

various consumer and business programs to 

help recapitalize the financial system, restart 

the credit markets, restore confidence, and 

lower borrowing costs for businesses and 

families. The Department’s calculations 

estimate the lifetime cost of the program to be 

$48 billion. 

Goal 2: Increase Voluntary Tax 

Compliance 

   

In 2006, the IRS estimated that the tax gap, or 

difference between the amount owed under 

tax law and the amount paid on time, was 

$345 billion in 2001. Addressing this gap 

Departmental Summary - 3
through improved voluntary compliance is a 

top priority of the Department. The 

Department proposes to improve compliance 

through targeted changes to the tax code and 

further investment in tax enforcement, 

taxpayer services, and IRS systems 

modernization. Furthermore, the Budget 

includes funding for new initiatives critical to 

the IRS in implementing the Affordable Care 

Act (ACA). 

Tax Compliance – The Budget includes a 

number of legislative proposals to improve tax 

collection and increase collections with 

minimum additional burden on taxpayers. 

These proposals expand information reporting, 

improve compliance by businesses, and 

strengthen tax administration. In total, these 

proposals are expected to increase collections 

by more than $10 billion over the next ten 

years. Further information on these proposals 

can be found in the Treasury 2010 Green 

Book (http://www.treasury.gov/resourcecenter/tax-policy/). 

Taxpayer Service – Quality taxpayer service 

is an important complement to enforcement 

efforts. Recent legislation has increased the 

volume of calls to toll-free service lines at the 

IRS, leading to longer wait times and 

unanswered calls. The Budget provides 

funding to improve the level of service for the 

toll-free service lines to 80 percent, up from 

the FY 2011 projection of 71 percent. The 

Budget also includes funding to improve 

IRS.gov to meet the growing demand for more 

electronic services. This multi-year project 

will improve self-service, reduce taxpayer 

burden, increase compliance, reduce costs, 

and continue to position IRS.gov as the 

preferred choice for taxpayer service. 

Tax Enforcement – The Budget includes new 

enforcement initiatives to improve 

compliance. These initiatives are expected to 

produce $1.332 billion in additional annual 

enforcement revenue once the new hires reach 

full potential in FY 2014. In FY 2012, IRS 

will implement enacted legislation such as the 

Foreign Account Tax Compliance Act 

(FATCA), information reporting on merchant 

payment card and third party reimbursements, 

basis reporting on security sales; increase 

compliance by addressing offshore tax 

evasion; expand enforcement efforts on 

noncompliance among corporate and highwealth taxpayers; and enforce return preparer 

compliance. 

Goal 3: Significantly Increase the Number 

of Paperless Transactions with the Public 

   

The Department is committed to moving to 

paperless transactions, including increasing 

the number of payments and collections made 

electronically. The effort to dramatically 

increase the number of electronic transactions 

is expected to save $524 million and 12 

million pounds of paper in the first five years. 

The Department has begun implementing a 

three-pronged initiative to increase electronic 

transactions. Individuals receiving Social 

Security, Supplemental Security Income, 

Veterans Administration, Railroad Retirement 

Board, Office of Personnel Management and 

Department of Labor – Black Lung benefits 

will be required to receive these payments 

electronically, either through direct deposit 

into a bank account or Treasury's Direct 

Express debit card; other non-tax payments 

are also required to be made electronically. 

Second, most businesses currently permitted 

to use paper Federal Tax Deposit coupons will 

have to make those deposits electronically 

beginning in 2011. Finally, Treasury will be 

ending all issuances of paper savings bonds no 

later than December 31, 2011 and instead 

focus on electronic means to issue bonds. 

Increased use of e-Filing for tax returns is 

saving the IRS tens of millions of dollars each 

year. In FY 2012 Treasury Tax and Trade 

Departmental Summary - 4
Bureau will realize savings gained through 

efficiencies from its Permits Online electronic 

filing system due to processing time reduction 

and the streamlining of business processes. 

 

In addition to greatly reducing costs, 

enhancing customer service and minimizing 

Treasury's environmental impact, the move 

from paper to electronic transactions will 

increase reliability, safety and security for 

benefit recipients and taxpayers. The benefits 

of electronic transactions are well 

documented. Aside from the large cost 

savings, electronic transactions provide safety, 

convenience and control for payment 

recipients, taxpayers and savings bond 

holders. These initiatives do not require new 

legislation and can be accomplished by 

changes to Treasury's existing regulations. 

International Programs 

   

The Department’s request includes $3.364 

billion in total funding for International 

Programs to provide resources to sustain 

global economic development, aid 

impoverished countries, address climate 

change, and support our national security 

objectives by strengthening the economies of 

fragile nations. Of the total, $2.073 billion is 

requested for scheduled annual U.S. 

contributions to the multilateral development 

banks (MDBs), including two new 

replenishments to the International 

Development Association and the African 

Development Fund and General Capital 

Increases (GCIs) to the MDBs which faced 

capital depletions after their aggressive and 

necessary response to the global financial 

crisis. Another $175 million will fund the 

U.S. share of the Multilateral Debt Relief 

Initiative at the International Development 

Association (IDA) and the African 

Development Fund (AfDF). 

The Department is also requesting $338 

million for multilateral food security 

initiatives, including the Global Agriculture 

and Food Security Program (GAFSP) which 

will leverage U.S. resources to provide 

increased agriculture investments in poor 

countries. To combat climate change and 

environmental degradation, the request 

includes $749 million for contributions to the 

Clean Technology Fund (CTF), the Strategic 

Climate Funds (SCF), the Global Environment 

Facility (GEF) and Tropical Forest 

Conservation Act. Finally, $30.1 million is 

requested for the Office of Technical 

Assistance (OTA), to strengthen economic 

and financial governance in fragile and 

developing countries around the world 

Terrorism and Financial Intelligence 

   

The Budget includes $92.6 million in direct 

appropriations for the Office of Terrorism and 

Financial Intelligence (TFI) in FY 2012. This 

investment will implement targeted financial 

sanctions with the goal of stopping the flow of 

money to terrorist organizations, drug 

traffickers, money launderers, weapons 

proliferators, rogue regimes, and their support 

networks that constitute a threat to the United 

States to keep the world’s financial systems 

accessible to legitimate users, while excluding 

those who wish to exploit the systems for 

illegal purposes. 

Fiscal Prudence 

   

In recognition of the current fiscal outlook and 

in order to partially offset the cost of high 

priority investments, the Budget includes 

savings of $336 million in Department 

discretionary funding and additional savings 

in mandatory programs. The request also 

focuses on improving tax administration and 

debt collection. The Department is using the 

many employee ideas submitted through the 

Departmental Summary - 5
Administration’s SAVE initiative to explore 

means to reduce costs. 

Administrative and other Efficiency Savings

– The Budget proposes efficiency savings and 

program reductions at all Treasury bureaus, 

including nearly $200 million of 

administrative savings as part of the 

President’s Accountable Government 

Initiative, and savings from a variety of 

program reforms. Examples include $190 

million in process improvement savings for 

the IRS, $10.1 million in administrative and 

data center consolidation savings for the 

Financial Management Service (FMS) and 

$6.6 million in savings for BPD. The Budget 

also identifies $2.6 million in savings from 

certification and accreditation consolidation, 

data center consolidation and managing FTE 

lapses for the Treasury Inspector General for 

Tax Administration and $2.1 million in 

Financial Crimes Enforcement Network 

(FinCEN) staffing efficiency reductions and 

information technology savings. Finally, $15.4 

million in efficiency savings is included for 

the Departmental Offices (DO). Through these 

efforts, the Department will achieve savings, 

while creating a more agile and innovative 

Treasury. 

Paperless Treasury – As discussed above, the 

Department will significantly increase the 

number of paperless transactions with the 

public and anticipates saving of $524 million 

through this effort over the next five years. 

Freedom of Information Act – The 

Department’s current process for responding 

to Freedom of Information Act (FOIA) 

requests is inefficient and outdated and has 

resulted in a significant backlog in request 

fulfillment at the agency. To address this 

issue, Treasury is creating a new FOIA tool 

using existing funding. With this tool, 

Treasury will process FOIA requests rapidly 

and accurately with less cost by leveraging 

modern electronic storage and web based 

application technology to prevent redundant 

work and automate process steps where 

possible. In addition to improvements to how 

FOIA requests are handled internally, the tool 

will feature a public facing component that 

allows citizens to initiate FOIA requests 

online.

IT Consolidation – The Department proposes 

to consolidate information technology 

resources at the Bureau of Public Debt (BPD) 

and Financial Management Service (FMS). As 

part of Treasury’s broader IT strategy to 

achieve efficiencies, BPD and FMS will 

partner to consolidate certain IT resources. 

During 2011, the bureaus are consolidating 

five data centers into two shared data centers. 

This will result in a more sustainable approach 

to IT services and further savings may be 

demonstrated by considering reductions in 

carbon emissions. Further IT consolidation 

efforts include moving from 42 data centers in 

FY 2010 to 29 in FY 2015. 

Debt Collection Legislation – Treasury and 

OMB are improving the management of the 

Federal debt portfolio, which could increase 

collection of delinquent tax and non-tax debt 

by more than $5 billion over the next ten 

years. The Budget incorporates a number of 

these improvements, including debt collection 

legislative proposals to increase levy authority 

to 100 percent for Medicare payments and 

vendor payments, offset tax refunds to collect 

delinquent state income taxes from out-ofstate residents, and other administrative 

improvements, such as expanding the use of 

Administrative Wage Garnishment and 

improving the Treasury Offset Program match 

process. 

Do Not Pay Portal – In June 2010, a 

Presidential Memorandum (Enhancing 

Payment Accuracy Through a “Do Not Pay 

List”) established the creation of a 

comprehensive Do Not Pay List against which 

Departmental Summary - 6
agency payments could be cross-checked to 

prevent ineligible recipients from receiving 

payments from the federal government. To 

make this list more beneficial, the 

Administration created VerifyPayment.Gov to 

serve as a one-stop-shop for agencies. The 

Bureau of the Public Debt will expand and 

maintain this portal. Additionally, Public Debt 

will work with the Recovery Accountability 

and Transparency Board, to support an 

operations center to analyze fraud patterns and 

refer potential issues to agency management. 

Offsetting Cancellations and Transfers – The 

Budget includes a $600 million proposed 

permanent cancellation and a $30 million 

transfer to FinCEN from the unobligated 

balances of the Treasury Forfeiture Fund. 

Departmental Summary - 7
FY 2012 President’s Budget by 

 Goal/Objective 

(Dollars in Thousands) 

Effectively Managed 

US Government 

Finances 

U.S. and World Economies

Perform at Full 

Economic Potential 

Prevented Terrorism & 

Promoted Nation's 

Security 

Management and 

Organizational Excellence Total 

Disc $ 

Reimb./

Mand $ Disc $ 

Reimb./

Mand $ Disc $ 

Reimb./ 

Mand $ Disc $ 

Reimb./

Mand $ Disc $ 

Reimb./

Mand $ 

Management & Financial $115,092 $23,884 $382,456 $24,763 $210,214 $13,894 $291,651 $46,457 $999,413 $108,998 

Departmental Offices Salaries and Expenses 66,153 23,884 106,258 24,763 95,917 10,894 56,561 31,957 324,889 91,498 Dept-wide Systems & Capital Invest. Program 0 0 Office of Inspector General 29,885 13,200 29,885 13,200 Treasury IG for Tax Administration 157,831 1,300 157,831 1,300 Special Inspector General for TARP 47,374 47,374 0 CDFI Fund 227,259 227,259 0 Financial Crimes Enforcement Network 114,297 3,000 114,297 3,000 Alcohol & Tobacco Tax and Trade Bureau 48,939 48,939 97,878 0 

Fiscal Service Operations $384,440 $255,623 $0 $0 $0 $0 $0 $0 $384,440 $255,623 

Financial Management Service 218,805 231,223 218,805 231,223 Bureau of the Public Debt 165,635 24,400 165,635 24,400 

Tax Administration $13,025,396 $118,169 $0 $0 $258,511 $20,103 $0 $0 $13,283,907 $138,272 

IRS Taxpayer Services 2,345,133 22,924 2,345,133 22,924 IRS Enforcement 5,769,388 55,799 197,231 20,103 5,966,619 75,902 IRS Operations Support 4,559,246 39,446 61,280 4,620,526 39,446 Business Systems Modernization 333,600 333,600 0 Health Insurance Tax Credit Administration 18,029 18,029 0 

Total, Treasury Appropriations Committee 1/ $13,524,928 $397,676 $382,456 $24,763 $468,725 $33,997 $291,651 $46,457 $14,667,760 $502,893 

Treasury International Programs 3,363,934 3,363,934 0 

Total, Appropriated Level $13,524,928 $397,676 $3,746,390 $24,763 $468,725 $33,997 $291,651 $46,457 $18,031,694 $502,893 Non Appropriated Bureaus $0 $0 $0 $4,642,375 $0 $0 $0 $0 $0 $4,642,375 

Office of Financial Stability 311,240 0 311,240 Bureau of Engraving and Printing 582,050 0 582,050 U.S. Mint 2,545,885 0 2,545,885 Office of the Comptroller of the Currency 1,040,756 0 1,040,756 Small Business Lending Fund Administration 72,603 0 72,603 OFR and Financial Services Oversight Council 82,353 0 82,353 SSBCI Administration 7,488 0 7,488 

Subtotal, Direct $ $13,524,928 $3,746,390 $468,725 $291,651 $18,031,694 Subtotal, Reimbursable $ $397,676 $4,667,138 $33,997 $46,457 $5,145,268 Total, Treasury Level $13,922,604 $8,413,528 $502,722 $338,108 $23,176,962 1/ Total does not include the proposed $600 million Forfeiture Fund permanent cancellation and the reduction in the Fund's spending resulting from the proposed $30 million transfer to FinCEN. 

Departmental Summary - 8
Fiscal Year Comparison of Full-Time Equivalent (FTE) Staffing 

(Direct and Reimbursable) 

Appropriation FY 2010 Actual 

FY 2011 Annualized CR 

Level FY 2012 President's Budget 

Direct Reimb. Total Direct Reimb. Total Direct Reimb. Total 

Departmental Offices Salaries and Expenses 1,166 150 1,316 1,266 137 1,403 1,341 137 1,478 Administrative Expenses, Recovery Act 1,200 0 1,200 65 0 65 0 0 0 Office of Inspector General 172 0 172 172 0 172 172 0 172 Treasury IG for Tax Administration 817 3 820 835 3 838 864 3 867 Special Inspector General for the TARP 112 0 112 192 0 192 192 0 192 Community Development Financial Institutions Fund 71 0 71 84 0 84 90 0 90 Financial Crimes Enforcement Network 328 1 329 327 1 328 304 1 305 Alcohol & Tobacco Tax and Trade Bureau 502 10 512 535 15 550 502 15 517 Financial Management Service 1,583 248 1,831 1,566 269 1,835 1,492 269 1,761 Bureau of the Public Debt 956 0 956 1,042 0 1,042 987 0 987 Internal Revenue Service 94,766 752 95,518 94,766 659 95,425 99,878 659 100,537 Subtotal, Treasury Appropriated Level 101,640 1,164 102,804 100,832 1,084 101,916 105,822 1,084 106,906 Office of Financial Stability 210 0 210 251 0 251 270 0 270 Small Business Lending Fund Administration 0 0 0 41 0 41 55 0 55 State Small Business Credit Initiative Administration 0 0 0 9 0 9 12 0 12 Financial Stability Oversight Council and Office of Financial Research 

0 0 0 50 0 50 192 0 192

Working Capital Fund 0 195 195 0 200 200 0 222 222 Treasury Franchise Fund 0 973 973 0 1,012 1,012 0 1,190 1,190 Bureau of Engraving and Printing 0 1,889 1,889 0 1,950 1,950 0 1,925 1,925 U.S. Mint 0 1,778 1,778 0 1,873 1,873 0 1,873 1,873 Office of the Comptroller of the Currency 0 3,101 3,101 0 3,140 3,140 0 3,976 3,976 Office of Thrift Supervision 1/ 0 1,016 1,016 0 1,021 1,021 0 0 0 Terrorism Insurance Program 11 0 11 10 0 10 10 0 10 Total 101,861 10,116 111,977 101,193 10,280 111,473 106,361 10,270 116,631 1/ The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (Dodd-Frank Act), abolishes and transfers the

functions of the Office of Thrift Supervision in Fiscal Year 2011. 

Departmental Summary - 9
Summary of FY 2012 Increases and 

Decreases (Dollars in Thousands) 

DO DSCIP OIG TIGTA SIGTARP CDFI FINCEN TTB TEOAF FMS BPD IRS Total 

FY 2011 Annualized CR Level $304,888 $9,544 $29,700 $152,000 $36,300 $246,750 $111,010 $103,000 ($90,000) $244,132 $182,244 $12,146,123 $13,475,691  Adjustment to Meet FY 2011 President's Policy Level 39,707 12,456 351 2,266 13,068 3,144 (11,038) 2,571 0 (10,537) (7,458) 401,665 446,195 FY 2011 President's Policy Level $344,595 $22,000 $30,051 $154,266 $49,368 $249,894 $99,972 $105,571 ($90,000) $233,595 $174,786 $12,547,788 $13,921,886 Maintaining Current Levels $3,215 $0 $183 $1,391 $454 $201 $897 $832 $0 $2,000 $1,234 $85,754 $96,161  Cancellation/Transfer of Balances 0 0 0 0 0 0 30,000 0 (540,000) 0 0 0 (510,000)  Above Base Savings (28,946) (22,000) (392) (3,474) (2,448) (1,830) (13,570) (8,525) 0 (11,690) (20,385) (189,957) (303,217) Adjustments to Base $10,761 ($9,544) ($41) ($1,208) $10,620 $1,314 $5,392 ($5,954) ($540,000) ($22,227) ($27,843) $211,708 ($367,022) FY 2012 Base $318,864 $0 $29,842 $152,183 $47,374 $248,265 $117,299 $97,878 ($630,000) $223,905 $155,635 $12,443,585 $13,204,830  Program Decreases 0 0 0 0 0 (22,706) (3,002) 0 0 (5,100) (2,000) 0 (32,808)  Program Reinvestments 0 0 0 0 0 1,700 0 0 0 0 0 1,486 3,186  Program Increases 6,025 0 13 5,648 0 0 0 0 0 10,000 838,836 860,522  Changes to Offsetting Fees 0 0 0 0 0 0 0 0 0 0 2,000 0 2,000 FY 2012 President's Budget $324,889 $0 $29,855 $157,831 $47,374 $227,259 $114,297 $97,878 ($630,000) $218,805 $165,635 $13,283,907 $14,037,730 

Departmental Summary - 10


DO - 1 

Overview

Mission Statement 

Maintain a strong economy and create economic and job opportunities by promoting the 

conditions that enable economic growth and stability at home and abroad, strengthen national 

security by combating threats and protecting the integrity of the financial system, and manage 

the U.S. Government’s finances and resources effectively.

Program Summary by Budget Activity

Dollars in Thousands 

Appropriation FY 2010 

Enacted*

FY 2011 

Annualized 

CR Level**

FY 2012 

Request**

FY 2010 to FY 2012 

$ Change** % Change**

Executive Direction $21,983 $33,465 $38,098 $16,115 73.3%

International Affairs and Economic Policy $47,249 $70,037 $68,349 $21,100 44.7%

Domestic Finance and Tax Policy $48,580 $71,738 $84,562 $35,982 74.1%

Terrorism and Financial Intelligence $64,611 $96,386 $92,605 $27,994 43.3%

Treasury-wide Management and Programs $22,679 $33,262 $41,275 $18,596 82.0%

Administration Programs $99,786 $0 $0 ($99,786) (100%)

Total Appropriated Resources $304,888 $304,888 $324,889 $20,001 6.6%

Total FTE 1,266 1,266 1,341 75 5.9%

*This does not include funding provided by Public Law 111-212 nor transfers.

**FY 2011/2012, numbers and percentage changes reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

FY 2012 Priorities 

In developing the FY 2011 budget and performance plan, the Department of the Treasury identified 

high priority performance goals that continue to be the focus in FY 2011 and FY 2012. 

Goal 1: Repair and reform the financial system 

Measures and milestones: 

 Implement strong, comprehensive regulatory reform to restore stability and accountability to the 

financial system. 

Goal 2: Increase voluntary tax compliance 

Measures and milestones: 

 Make progress against the Tax Gap through improved service and enhanced enforcement of the 

tax laws 

 Assist Americans in voluntarily meeting their tax obligations 

Goal 3: Significantly increase the number of paperless transactions with the public 

Measures and milestones: 

 Increase electronic payment, collections, and savings bonds transactions by 33 percent by the end 

of FY 2011. 

 Increase individual E-file rate to 80 percent. 
DO - 2 

Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

FY 2012 Priorities ....................................................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

Section 2 – Budget Adjustments and Appropriation Language ............................................. 14

2.1 – Budget Adjustments Table ............................................................................................... 14

2A – Budget Increases and Decreases Description ................................................................... 15

2.2 – Operating Levels Table .................................................................................................... 18

2.3 – Appropriations Detail Table ............................................................................................. 19

2B – Appropriations Language and Explanation of Changes ................................................... 19

2C – Legislative Proposals ........................................................................................................ 20

Section 3 – Budget and Performance Plan ............................................................................... 21

3.1 – Budget by Strategic Outcome .......................................................................................... 21

3.2.1 Executive Direction Budget and Performance Plan ......................................................... 21

3.2.2 International Affairs and Economic Policy Budget and Performance Plan ..................... 23

3.2.3 Domestic Finance and Tax Policy Budget and Performance Plan ................................... 25

3.2.4 Terrorism and Financial Intelligence Budget and Performance Plan .............................. 27

3.2.5 Treasury-wide Management and Programs Budget and Performance Plan ..................... 28

3.2.6 Administration Programs Budget and Performance Plan ................................................ 31

Section 4 – Supporting Materials .............................................................................................. 32

4A – Human Capital Strategy Description ................................................................................ 32

4.1 – Summary of IT Resources Table ...................................................................................... 35

4B – Information Technology Strategy ..................................................................................... 36
DO - 3 

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

Departmental Offices (DO), as the headquarters bureau for the Department of the Treasury, 

provides leadership in economic and financial policy, terrorism and financial intelligence, 

financial crimes, and general management. The Secretary of the Treasury has the primary role of 

formulating and managing the domestic and international tax and financial policies of the federal 

government. Through effective management, policies, and leadership, the Treasury Department 

enables the use of financial tools in the war on terror, promotes the stability of the nation's 

financial markets, and ensures the government's ability to collect revenue. 

The FY 2012 budget request supports DO’s leading role in accomplishing key objectives: 

• Managing the Government’s Finances – The Department of Treasury will improve the 

effectiveness, reliability, security, and transparency of the U.S. financial system. DO forecasts 

receipts and payments, determines borrowing needs, and executes the borrowing strategy to meet 

the financial needs of the federal government. 

• Securing America’s Economic and Financial Future – The Departmental Offices will 

continue to develop and implement policies that promote economic growth as well strengthen 

global financial stability in order to maintain America’s economic strength and prosperity. These 

policies foster innovation, enabling a growth in productivity that will raise America’s standard of 

living. 

• Strengthening National Security – The Departmental Offices leads the U.S. Government’s 

effort to keep the world’s financial systems accessible to legitimate users, while excluding those 

who wish to exploit the systems for illegal purposes. The Department is integral to countering 

terrorist organizations’ financing networks. The Departmental Offices implements targeted 

financial measures in the form of sanctions with the goal of stopping the flow of money to 

terrorist organizations, drug traffickers, money launderers, weapons proliferators, rogue regimes, 

and their support networks that constitute a threat to the United States. 

• Producing Effective Results – The Department is committed to creating the conditions that 

allow its programs and activities to perform efficiently and effectively, while continuing to drive 

results through performance and cost-based decision-making and through ownership of 

administrative costs. 
DO - 4 

1B – Program History and Future Outlook 

Securing America’s Economic and Financial Future and Managing the Government’s 

Finances

Domestic Finance

The Office of Domestic Finance covers policy issues in the U.S. banking and financial systems, 

financial stability, federal government financing, fiscal affairs, and related economic and 

financial matters. The office was at the center of Treasury’s response to the financial crisis, and 

led the effort for financial regulatory reform legislation. Key priorities for Domestic Finance 

include the implementation of that legislation, including the creation of the Federal Insurance 

Office, and the reform of the nation’s housing finance system. 

Office of Financial Institutions

Key areas of recent work and future priorities include: 

Reforming the U.S. financial regulatory system. Treasury took the lead in developing and 

promoting sweeping financial regulatory reform legislation, culminating in the enactment of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Implementation of 

that legislation is now an important focus of the office, including the establishment of a Federal 

Insurance Office within the Office of Financial Institutions; a Financial Stability Oversight 

Council; and the independent Consumer Financial Protection Bureau. 

 

Managing diverse financial institution regulatory issues. The Office of Financial Institutions has 

led Treasury efforts in a diverse range of other financial regulatory matters, including amending 

the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac, supporting the 

Secretary as a board member on the Pension Benefit Guaranty Corporation, and representing 

Treasury on the board of the Securities Investor Protection Corporation. 

Supporting small business and community development, addressing the foreclosure crisis, and 

ensuring strong housing policies going forward. The Office of Small Business, Community 

Development, and Affordable Housing Policy was established in 2010. It focused on legislation 

that would encourage job creation by providing small businesses with access to credit through 

the Small Business Lending Fund and the State Small Business Credit Initiative and will play an 

important part in shaping housing finance policy. The office also coordinates Treasury’s 

involvement in the design and implementation of community development initiatives. Recently, 

the office has helped lead Treasury’s response to reports of errors in foreclosure processing and 

mortgage servicing, including Treasury’s role on the interagency foreclosure task force.

Promoting financial education and access to financial services. The Office of Financial 

Education and Financial Access serves a key leadership role with respect to the President’s 

Advisory Council on Financial Capability and the Financial Literacy and Education 

Commission. The office is helping prepare for the implementation of the Bank on USA 

Initiative, and in partnership with Domestic Finance’s Fiscal Service and the Internal Revenue 

Service, is piloting a program to use the tax refund process to further Treasury’s all electronic 

payment effort and provide financial access to the unbanked. 
DO - 5 

Office of Financial Markets

The Office of Financial Markets is responsible for a broad array of critical national policy 

functions related to financial markets. Key highlights of its work include: 

Financing the federal debt. For FY 2010, the Office of Debt Management conducted 293 

auctions, issuing over $8.3 trillion in marketable securities and raising nearly $1.5 trillion in new 

cash. New cash in FY 2010 was below the record of $1.8 trillion in FY 2009 but still 

substantially above the $760 billion in FY 2008. Treasury auctions in FY 2010 witnessed 

unprecedented demand, and Treasury extended the average maturity of the debt out to its

historical average. 

Reforming the U.S. housing finance system. In FY 2010, the Administration engaged in a policy 

process aimed at reform of the housing finance system and the Government Sponsored 

Enterprises. This process will continue into FY 2011, when the Administration plans to release 

its proposal for housing finance reform.

Promoting interagency coordination. The Office of Financial Markets plays a critical role in 

setting the agenda and managing processes around inter-agency projects on financial markets. 

Recently, the office has undertaken projects on the securitization market, repossession market, 

equity market structure, over-the-counter (OTC) derivatives, credit rating issues, and private 

advisers. With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 

the office will continue to work closely with other agencies and organizations on regulatory, 

infrastructure, and market structure issues, while coordinating with the Financial Stability 

Oversight Council.

Modernizing Treasury’s lending and investments. The Office of Policy and Legislative Review is 

working with the Bureau of the Public Debt and federal agency borrowers on new, 

comprehensive Treasury lending agreements with agency borrowers. 

Office of Research and Quantitative Studies

The Office of Research and Quantitative Studies was created to enhance Treasury’s capacity to 

provide high-quality, time-sensitive research and analysis to inform financial policy development 

and to produce significant long-term, policy-related research. In FY 2011, the office will focus 

on a range of financial research issues, including capital requirements for the financial system, 

public debt management, housing finance reform, and systemic risk. 

Office of Fiscal Service

Key areas of recent work and future priorities for the Office of the Fiscal Assistant Secretary 

include: 

All-Electronic Treasury. The Fiscal Service is making significant changes to increase the use of 

electronic transactions in Treasury operations. This initiative will save more than $500 million 

over five years. Treasury will make many more of its payments electronically, will discontinue 

payroll paper savings bonds, and will eliminate paper coupons as an option for some businesses 

to pay taxes. 
DO - 6 

Promoting financial stability and supporting housing finance. Throughout FY 2010 and early FY 

2011, the Fiscal Service continued to enhance the infrastructure and operating capability needed 

to support investments under the Emergency Economic Stabilization Act. Financial agents were 

employed to conduct auctions for the sale of equity warrants, dispose of large equity 

investments, advise on initial public offerings and corporate restructurings, and to support other 

capital markets transactions to return investment funds to the Treasury. In addition, the Fiscal 

Service implemented a restructuring of the Housing Finance Agency (HFA) Initiative under the 

Housing and Economic Recovery Act, to ensure state and local HFAs could make use of over 

$14 billion in financing for new mortgages to first time homebuyers over the course of 2012. 

Implementing programs under the American Recovery and Reinvestment Act (ARRA). The Fiscal 

Service has implemented two programs of cash payments in lieu of tax credits under ARRA. 

Treasury has made cash awards totaling nearly $5.7 billion to 55 state housing agencies for lowincome housing, and nearly $6 billion to help fund over 5,300 renewable energy projects. 

Consumer protection. In FY 2010, the Fiscal Service led an interagency work group to publish 

proposed regulations to solve the growing problem of garnishment of exempt federal benefits. 

The final rulemaking will be published with an effective date of May 1, 2011. 

Office of Financial Innovations and Transformation. The Office of Financial Innovation and 

Transformation (OFIT) was developed and expanded to share, government-wide financial 

solutions to lower overall financial transaction processing costs, facilitate the resolution of audit 

issues, and increase transparency of financial information. In FY 2011, the first two OFIT 

products will be implemented. They include a portal for the electronic submission of vendor 

invoices and an automated way to settle intra-governmental transactions. OFIT has also 

identified a myriad of actions which could be implemented over the next five years with the 

potential to lower overall financial operational cost up to 20 percent. 

Tax Policy

The Office of Tax Policy develops and implements tax policies and programs, reviews 

regulations and rulings to administer the Internal Revenue Code and the tariff laws, negotiates 

tax treaties, and provides economic and legal policy analysis for domestic and international tax 

policy decisions. Tax Policy also provides revenue estimates for the President’s Budget. 

The Office of Tax Policy continues to provide critical support in implementing the 

Administration’s and Congressional economic recovery programs. Providing policy oversight 

and conducting a review of regulations regarding the American Recovery and Reinvestment Act 

was a major FY 2010 project for the Office. Also, during FY 2010, the Office devoted 

significant resources to support the Administration’s successful efforts to enact the Patient 

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

2010. The Office anticipates substantial work in FY 2011 developing and reviewing regulations 

and administrative guidance regarding this legislation. 
DO - 7 

Economic Policy

The Office of Economic Policy monitors economic developments and trends in the United States 

and assists in the development of policies to stimulate economic growth and job creation. 

Analysis performed by Economic Policy staff enhances policymakers’ understanding of key 

economic issues so that they are better able to formulate policies that will benefit the U.S. 

economy. In the past 18 months the office has concentrated significant resources on policy 

development and implementation related to financial stability, initiatives to create and maintain 

jobs, and health care. 

Key areas of recent work and future priorities for the Office of Economic Policy include: 

Participating in the design and implementation of housing policies. Economic Policy continues 

to participate in the implementation of the Making Home Affordable program, which helps atrisk, responsible homeowners stay in their homes by obtaining affordable loan modifications and 

refinancing. The Office will continue to remain active in the development of housing policies. 

Assisting in the development, evaluation, and tracking of numerous government economic 

incentive programs, including: the development and evaluation of programs to assist small 

business financing; evaluating and tracking the American Recovery and Investment Act Build 

America Bonds; supporting the implementation of the Affordable Care Act through research and 

evaluation; the development and evaluation of initiatives to encourage and support job creation; 

and monitoring and analyzing critical trends and economic developments including the housing 

market and bank lending. 

The Office has also provided expertise on policy development in the areas of climate change, 

energy and infrastructure. The Office produces the corporate bond yield curve as mandated by 

the Pension Protection Act of 2006. In addition, the office will continue to carry out its 

traditional responsibilities in the preparation of the Administration's budget and supporting the 

Secretary of the Treasury in his roles as Chairman and Managing Trustee of the Social Security 

and Medicare Boards of Trustees. 

 

International Affairs

Treasury’s Office of International Affairs protects and supports U.S. economic prosperity by 

strengthening the external environment for U.S. growth and exports, preventing and mitigating 

global financial instability, and managing key global financial challenges. To advance this 

mission, International Affairs has focused on the following five policy priorities. 

Supporting the Global Recovery to Help Promote U.S. Growth.

Treasury has led global efforts to mitigate the impact of the global financial crisis and avert a 

more serious economic depression. Treasury secured strong multilateral support at the G-20 

meetings and ensured a robust, coordinated policy response to reverse the global economic slide 

and take all necessary steps to restore public confidence, economic growth, and job creation for 

the U.S. economy. Treasury worked closely with the International Financial Institutions (IFIs) 

and other U.S. agencies via Treasury's technical assistance program, to rapidly respond to the 

global crisis, encouraging the IFIs to respond quickly with assistance and ensuring that they have 

adequate resources to do so. Treasury also led efforts to strengthen international financial 
DO - 8 

regulation through the Financial Stability Board to ensure high-quality standards around the 

globe. 

Deepening U.S. Engagement with Key Emerging Markets and Priority Countries.

Treasury led efforts to encourage emerging market economies to pursue more balanced and 

sustainable growth patterns, open markets for U.S. exports, and create new job and economic 

opportunities for American workers. To this end, Treasury has expanded strategic dialogues 

with China, India, Russia, Afghanistan, Pakistan, and Iraq. Treasury has focused closely on 

currency adjustment and expanding export opportunities for American businesses to strengthen 

the U.S. economy, specifically working closely with China and other leading emerging markets. 

These engagements will continue in bilateral, regional, and multilateral channels. 

Maintaining Attractiveness of the U.S. Investment and Trade Environment. Through a number of 

priority initiatives and responsibilities, Treasury promotes and reinforces open and transparent 

international trade and investment regimes at home and abroad. As Chair of the Interagency 

Committee on Foreign Investment in the United States (CFIUS), Treasury helps maintain an 

open investment environment by focusing CFIUS reviews of foreign investments solely and 

rigorously on protecting U.S. national security, consistent with statutory authority. Treasury also 

supports trade liberalization and budget discipline through its role in negotiating, implementing, 

and policing international agreements to reduce official export subsidies. Treasury has 

drastically reduced the subsidies that member governments of the Organization for Economic 

Co-operation and Development provide when financing national exports, saving U.S. taxpayers 

$800 million annually. Treasury actively fights to keep markets open by supporting efforts by 

the G-20 leaders to refrain from new protectionist measures during the global economic crisis. 

Supporting Poverty Reduction, Fragile States and Global Public Goods. Treasury is actively 

engaged in managing key global challenges and development objectives, specifically supporting 

multilateral development efforts to help the world’s poorest, combating climate change, and 

strengthening food security. 

The Multilateral Development Banks have been “first responders” in the global response to the 

financial crisis. At the same time, these institutions are responding to increasing calls that they 

deliver public goods, such as intervention in fragile states and efforts to help developing 

countries mitigate or adapt to climate change. 

Treasury, as part of the President’s commitment to address global hunger and food insecurity, is 

working with the World Bank, interested donors, and potential recipient countries to establish a 

new multi-donor trust fund that would provide financial support for poor countries committed to 

addressing their internal food security needs. The fund, which will complement our increased 

bilateral spending on agricultural development and food security, will leverage the expertise and 

experience of the multilateral development banks as well as the financial resources of other 

donors to increase the impact of U.S. food security investments. 

Additionally, Treasury technical assistance helps aid recipients build financial management 

capacity, which improves the likelihood that funding will be used effectively. 
DO - 9 

Supporting Efforts to Confront Global Climate Change. Treasury leads U.S. environment and 

energy finance efforts in the G-20, assists the U.S. negotiating team on finance issues at United 

Nations climate negotiations, and manages U.S. interests and obligations in multilateral financial 

mechanisms that support environmental goals, including the Climate Investment Funds at the 

World Bank and the Global Environmental Facility, as well as the Tropical Forest Conservation 

Act. The Department also works to develop efficient and effective environmental and energy 

policies at the national level. 

Strengthening National Security

Terrorism and Financial Intelligence

The Treasury Department, through its Office of Terrorism and Financial Intelligence (TFI), leads 

the U.S. Government’s effort to keep the world’s financial systems free and open to legitimate 

users, while excluding those who use the financial systems for illegal purposes. 

In FY 2010, in keeping with its efforts to strengthen national security and protect the world’s 

financial system, the Office of Foreign Assets Control (OFAC) engaged in more than 100 

outreach events in the financial, trade, insurance, and securities industries to raise awareness of 

U.S. sanctions and to ensure compliance with those sanctions by U.S. persons. As part of its 

enforcement activities, the office imposed 18 separate civil penalties totaling nearly $780 million 

for violations of the International Emergency Economic Powers and Trading with the Enemy 

Acts. These penalties fell across financial, international shipping, telecommunication, 

hospitality, chemical, maritime, aviation, manufacturing, electrical power, travel, insurance, 

construction, Internet, medical device, and general export industries. Several of these penalties 

involved joint investigations and settlements with other state, federal, and international 

regulatory and investigative authorities. A substantial percentage (in terms of dollar value) of 

these penalties were levied against two foreign financial institutions for egregious violations of 

these sanction programs. 

 

OFAC continued its goal to stem the flow of resources to weapons of mass destruction (WMD) 

proliferators, terrorists, narcotics traffickers, persons contributing to regional violence in Africa 

and those who support these individuals and groups. In FY 2010, Treasury designated 38 

entities and individuals under Executive Order 13382 -- an authority aimed at freezing the assets 

of weapons of mass destruction proliferators and their supporters. These included designations 

against front companies for the Islamic Republic of Iran Shipping Lines (IRISL), Iran’s national 

shipping line, and three Iranian-owned financial institutions. Treasury also targeted six 

individuals pursuant to Executive Order 13413 targeting political or military leaders of foreign 

armed groups operating in African continent. Executive Order 13551 was issued to address the 

situation in North Korea, including an annex that resulted in the designation of one individual 

and three entities. Executive Order 13536 was issued to address the situation in Somalia. It 

included an annex that resulted in the designation of 11 individuals and one entity. Additionally, 

Treasury identified 43 entities were identified as Government of Iran pursuant to the Iran 

Transaction Regulations. 

 

In FY 2010, Treasury designated 23 entities and individuals as Specially Designated Global 

Terrorists pursuant to Executive Order 13224. These actions included the designation of Anwar 
DO - 10 

Al-Aulaqi, a leader of Al-Qaida in the Arabian Peninsula (AQAP) who was responsible for 

focusing AQAP's attention on planning attacks on U.S. interests and two Gaza-based entities 

who provided direct support to Hezbollah. 

Under its counter-narcotics sanctions programs, the office identified numerous individuals and 

their organizations as drug kingpins under the Foreign Narcotics Kingpin Designation Act. 

OFAC designated 98 individuals and 20 entities in Mexico under the Kingpin Act, including key 

leaders, operatives and fronts of Mexico’s Sinaloa, La Familia, Tijuana, and Gulf and Los Zetas 

drug cartels, as well as a drug trafficking network based out of Guatemala. Treasury also 

designated under the Kingpin Act three leaders of the PKK in Turkey as drug traffickers, as well 

as FARC (Revolutionary Armed Forces of Colombia) trafficking associates in Colombia, and a 

major trafficker and associated entities based out of Africa. Additionally, Treasury designated 

42 individuals and 54 entities pursuant to Executive Order 12978 targeting drug trafficking 

centered in Colombia, including a Colombian money service business and a drug trafficking 

organization centered in Medellin, Colombia. 

 

During FY 2010, financial and other institutions examined by supervisors demonstrated a high 

level of awareness of and compliance with OFAC sanctions programs. In support of this claim, 

OFAC notes that 9,643 items were blocked or rejected involving over $970 million in United 

States dollars. 

 

Several European banking regulators cooperated with investigations by OFAC and other U.S. 

Government law enforcement offices to ensure that systemic U.S. sanctions evasion efforts by 

foreign financial institutions were addressed. The cooperation led to more than $750 million in 

civil penalties against foreign financial institutions for violations of U.S. sanctions, increased 

compliance with U.S. sanctions in several jurisdictions outside of the United States and resulted 

in ongoing monitoring by the institutions’ foreign regulators.

The Office of Terrorist Financing and Financial Crimes (TFFC) serves as the lead or co-chair on 

several international working groups within the Financial Action Task Force (FATF) and FATFstyle regional bodies (FSRB). These working groups have produced valuable guidance and 

reports for identifying and addressing vulnerabilities in the international financial system. This 

international outreach effort promotes financial system standards and safeguards through 

bilateral relationships and multilateral organizations. In FY 2010, TFFC participated in or 

reviewed over 65 mutual evaluations or assessments of jurisdictions’ compliance with 

international anti-money laundering, terrorist financing, and counter-terrorist financing 

(AML/CFT) standards. In FY 2011, TFFC is planning to evaluate or review 40 or more mutual 

evaluations or assessments – FATF and FSRB evaluations and assessments are cyclical in nature, 

thus the fluctuation in the norm. Additionally, the office offered training and other technical 

assistance to counterparts abroad working to create effective anti-money laundering frameworks 

and financial regulation and oversight capable of combating terrorist finance. Further, the office 

promulgates policy related to money laundering and related financial crimes, including 

addressing emerging value transfer mechanisms and other challenges to financial transparency. 

Throughout the year and continuing this effort in the next fiscal year, the office will develop 

conduct-based sanctions and executive orders to target illicit actors and will work closely with 

the private sector, both individuals and financial institutions, to amplify these targeted measures. 
DO - 11 

Staff also worked with counterparts in foreign governments to extend U.S. sanctions efforts 

through corresponding sanctions in foreign jurisdictions. In FY 2011, TFFC plans to continue to 

work with foreign counterparts to influence the enactment of AML/CFT laws and craft strategies 

to jointly attack terrorist financing both globally and within specific regions. 

The Office of Intelligence and Analysis (OIA) continues to enhance its efforts to provide timely, 

accurate, actionable, and policy-relevant intelligence analysis by reinforcing its core mission 

areas to keep pace with foreign national and transnational threats and challenges. To confront 

these and other security issues, OIA instituted the Global Finance Initiative (GFI), advancing 

financial intelligence as part of a comprehensive approach to these challenges. The GFI 

promotes international financial stability and protects the integrity of the financial system by 

enhancing intelligence community efforts to address four areas: 

 the financial underpinnings of national security threats 

 foreign leadership’s and adversaries’ plans, intentions, and financial vulnerabilities; 

 the impact of targeted financial measures and other instruments of national power; and 

 threats to the international financial system. 

As the Treasury Department’s national security role has grown, so has its potential as a target for 

foreign intelligence services and non-state actors such as terrorists and criminal groups –

requiring OIA to step up its efforts to address this counterintelligence threat. In meeting its 

customers’ needs, OIA supports the National Intelligence Strategy mission objectives, such as 

combating violent extremism, countering weapons of mass destruction proliferation, and 

integrating counterintelligence. 

Producing Effective Results 

Management and Administration

Departmental Offices continues to provide effective management tools necessary to execute its 

mission. Essential components required for achieving the Departmental Offices mission include 

human resources, emergency planning, information technology, financial services, disclosure 

services, and procurement. 

Treasury Procurement exceeded its FY 2010 goals for competition, performance-based 

acquisitions, and socioeconomic categories of small, woman-owned, service disabled veteranowned and disadvantaged businesses. The Administration issued July 29, 2009 guidance that 

required achieving acquisition-related savings in FY 2010 and 2011 (3.5 and 7 percent per year) 

and 10 percent reduction in high risk contracting obligations in FY 2010. Treasury exceeded 

both goals in FY 2010, documenting $237 million in savings versus the goal of $158 million, and 

achieving $129 million in high risk contracting reductions versus the goal of $48 million. 

Institutionalization of efficiency efforts, particularly strategic sourcing of commodities and 

services, is critical to Treasury’s leveraging of cross-Departmental resources to ensure mission 

accomplishment in more restrictive budgetary environments. Treasury has committed to a multifaceted approach to deep integration of the right processes and capabilities required for a 

comprehensive strategic sourcing program. 
DO - 12 

In April 2010, the Office of the Deputy Assistant Secretary for Privacy, Transparency, and 

Records released the Department’s Open Government plan, in response to OMB guidance 

requiring each major agency to publish an Open Government Plan to include a Flagship 

Initiative. Each plan and Flagship Initiative is unique to the agency that developed it. Treasury’s 

plan provides insight and steps on how the Department would participate, collaborate, and move 

toward transparency both internally and externally and communicate better with the American 

public. An Open Government webpage was also launched and the office is working with all 

Treasury bureaus to proactively post data sets that are of interest to the American public. Part of 

the Treasury Open Government plan included the Flagship initiative “Moving to a Paperless 

Treasury”. Efforts toward a paperless Treasury include Treasury Library Digitization for 

historical and legislative documents and improving the public's experiences when interacting 

with Treasury to obtain publically available information. In partnership with the Office of the 

Chief Information Officer, the office launched a Treasury-wide Enterprise Content Management 

(ECM) project to begin electronic management of digitally created documents, routing, 

correspondence tracking, and Freedom of Information Act requests. 

The Deputy Assistant Secretary for Human Resources and Chief Human Capital Officer 

(DASHR/CHCO) has functional responsibility for Human Capital Strategic Management, 

Diversity and Civil Rights, and Training and Development Department-wide. During FY 2010, 

DASHR/CHCO led a number of Treasury-wide strategic initiatives to implement the 

Administration’s hiring reform agenda, including simplifying the vacancy announcement 

process, ensuring applicant notification of status at the four “touch points”, improving veterans’ 

hiring, and developing a closer partnership with Treasury’s labor unions. The Department 

continued working strategies to improve the hiring of individuals with disabilities, and rolled out 

a Treasury-wide exit survey, based on the results of a pilot survey, to identify systemic causes of 

employee attrition. The Department also focused on leadership by developing a Treasury-wide 

Firstline Leadership Development course for supervisors in concert with the Office of Personnel 

Management, and assessing the succession risk of all key leadership positions Department-wide. 

Leadership, and improving leadership scores, was a major focus of the Department and its 

bureaus in FY 2010. The Department increased its best places to work ranking significantly in 

FY 2010, being the second most improved agency across the government. Planned 

improvements include further implementation of hiring reform, increasing hiring of veterans and 

veterans with disabilities, Treasury-wide program administration and cross-bureau action and 

resolution of low scoring workplace/worklife issues, ensuring effective recruitment, selection, 

hiring, , implementing a Department-wide 360° executive leadership feedback program to 

improve leadership skills across the Department, and support stand-up of the Bureau of 

Consumer Financial Protection and other offices included in the Dodd-Frank Wall Street Reform 

and Consumer Protection Act. 

The Treasury Office of the Chief Information Officer (OCIO) is at the forefront of the federal 

government in implementing cloud solutions. The Department’s flagship site, Treasury.gov, 

recently relaunched on a commercial public-cloud platform, a first for a cabinet-level federal 

agency. Treasury’s decision to move its flagship site to a public cloud infrastructure reflects the 

Administration’s commitment to closing the IT gap between the public and private sectors by 

leveraging the power of technology. Use of cloud computing increases cost effectiveness, 

improves efficiency, and provides greater flexibility, as the private industry sector has proven. 
DO - 13 

The new Treasury.gov website is a major step forward in the Department’s efforts to improve the 

way citizens access the wealth of data and information Treasury produces on a day-to-day basis. 
DO - 14 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Departmental Offices - S & E FTE Amount

FY 2010 Enacted Budget 1,266 $304,888 

FY 2011 Continuing Resolution 1,266 $304,888 

Changes to Base

Adjustment to Reach Policy Level

Adjustment to Reach FY 2011 President's Policy 76 $39,707 

Subtotal, Adjustment to Reach Policy Level 76 $39,707 

Maintaining Current Levels (MCLs)

Non-Pay, Pay & Benefits and Pay Annualizations 0 $3,215 

Subtotal, Maintaining Current Levels (MCLs) 0 $3,215 

Transfers Out

Procurement Transfer to IRS (9) $0 

Subtotal, Transfers Out (9) $0 

Efficiencies, Savings & Base Reductions

Streamlining Management (23) ($6,400)

Administrative Efficiency Savings 0 ($2,635)

Non-recur of Alpha Computers 0 ($2,750)

Non-recur of Domestic Finance Contracts 0 ($1,596)

Federalizing the IT Workforce 20 ($1,000)

Multilateral Meeting Support Savings 0 ($1,974)

Summit Support Representation Funds 0 ($200)

Non-Recur of ODM Information Technology 0 ($1,550)

Non-recur of Program Evaluation 0 ($5,292)

Terrorism and Financial Institutions (TFI) Office Efficiency Savings 0 ($4,349)

TFIN Savings 0 ($1,200)

Subtotal, Efficiencies, Savings & Base Reductions (3) ($28,946)

Subtotal, Changes to Base 64 $13,976 

Total, FY 2012 Base 1,330 $318,864 

Program Changes

Program Increases

Dodd-Frank Implementation 11 $5,525 

Domestic Finance (DF) Recovery Act 0 $500 

Subtotal, Program Increases 11 $6,025 

Subtotal, Program Changes 11 $6,025 

Total, FY 2012 Request 1,341 $324,889 
DO - 15 

2A – Budget Increases and Decreases Description 

Adjustment to Reach FY 2011 President’s Policy Level ..................... +$39,707,000 / +76 FTE

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President’s Policy Level. The President’s Policy Level is equal to the FY 2011 President’s 

Budget as adjusted for the proposed pay freeze.

Maintaining Current Levels (MCLs) ....................................................... +$3,215,000 / +0 FTE

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012.

Transfers Out ............................................................................................................ +$0 / -9 FTE

Procurement Transfer to IRS +$0 / -9 FTE

Transfer the functions of the Departmental Offices Procurement Services Division to the Internal 

Revenue Service. 

Efficiencies, Savings & Base Reductions ................................................. -$28,946,000 / -3 FTE

Streamlining Management -$6,400,000 / -23 FTE 

Savings will be achieved through a number of management initiatives, including the non-recur of 

FY 2011 one-time initiative support costs, consolidation of IT contractor services, reduction of 

overtime, and other services. 

Administrative Efficiency Savings -$2,635,000 / +0 FTE 

Savings will be achieved through a more efficient use of administrative activities and through 

non-recur of one-time costs. 

Non-recur of Alpha Computers -$2,750,000 / +0 FTE 

Non-recur of one-time FY 2011 funds to upgrade the Department’s Alpha computers. Funds 

were requested in FY 2011 to upgrade these computers to replace old servers with 64 bit blade 

processors. These computers support several critical modeling systems, and FY 2011 funds 

should be sufficient to complete the upgrade.

Non-Recur of Domestic Finance Contracts -$1,596,000 / +0 FTE 

Non-recur $1.596 million of a $3.5 million FY 2011 increase to support research activities to 

allow Domestic Finance to obtain high-quality, time-sensitive research, data, and analysis to 

inform policy development. 

Federalizing the IT Workforce -$1,000,000 / +20 FTE 

Net contract savings from converting IT contractors into federal employees while improving 

accountability, efficiency, and customer service within the department. 
DO - 16 

IA Multilateral Meeting Support Savings -$1,974,000 / +0 FTE 

Non-recur of FY 2011 funds to host international meetings, including G-8 meetings, a G-20 

Ministerial and an Asia-Pacific Economic Cooperation (APEC) meeting, plus numerous other 

related meetings and workshops leading up to these events. It is expected that the United States 

will not be the primary host in FY 2012 for APEC or the G-20 meetings, resulting in savings 

from the FY 2011 request for funding. 

Summit Support Representation Funds -$200,000 / +0 FTE

Reduction in the increased FY 2011 financial support for attending annual economic summits 

with the G-7 and G-20 nations. 

Non-Recur of Office of Debt Management (ODM) Information Technology -$1,550,000 / 

+0 FTE 

Non-recur $1.550 million of program funds used to develop and modernize ODM’s information 

technology system. The remaining $1.450 million in the base will cover operations and 

maintenance. 

Non-recur of Program Evaluations -$5,292,000 / +0 FTE 

Non-recur of FY 2011 requested in a government-wide competition to measure program 

effectiveness. Funding was one-time for specifically chosen studies. 

Office of Terrorism and Financial Intelligence (TFI) Efficiency Savings -$4,349,000 / +0 FTE

TFI will realize savings through the prioritization of staff travel; elimination of overseas support 

for its Brussels liaison; targeted procurement spending to save on contracts, IT licenses, 

subscriptions, and supplies; and by eliminating funding for its now completed responsibilities 

under United Nations Security Council Resolution 1822 which required agencies to address 

discrepancies in the terrorist financing designation list. 

Treasury Foreign Intelligence Network -$1,200,000 / +0 FTE 

Remaining base funding will be used to support operations and maintenance expenses in FY 2012 

and beyond. 

Program Increases ................................................................................... +$6,025,000 / +11 FTE

Dodd-Frank Wall Street Reform Act +$5,525,000 / +11 FTE 

Departmental Offices (DO) requests funds in FY 2012 to support Dodd–Frank Wall Street 

Reform and Consumer Protection Act activities. Treasury has taken the lead within the 

Administration in developing and promoting sweeping financial regulatory reform legislation, 

culminating in the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act of 2010. In FY 2011, Treasury’s request focused on its immediate implementation needs 

under the Act. Since passage, the Department has been coordinating with other affected agencies 

to establish timelines for moving forward to set up new offices and begin work on the many 

studies, regulations, and other regulatory actions required by the Dodd-Frank Act. On all fronts, 

the Department is committed to move with speed, transparency, and commitment to ensure that 

the United States financial system remains the most competitive and fair financial system in the 

world. By FY 2012, the work of the new offices will be well underway, and many of the new 

regulations and required studies will have been written. Accordingly, the FY 2012 request is 
DO - 17 

focused on building the expertise necessary to fulfill Treasury’s ongoing responsibilities under 

the Act and to monitor and develop policy in the areas where regulation was greatly expanded 

under the Act. Under the Dodd-Frank Act, the Department will create the Federal Insurance 

Office (FIO). The request includes FIO personnel and contract funding to provide Treasury 

leadership with the expertise needed to support the office in its industry oversight. In addition, 

the initiative includes resources for the build-out of IT systems and for data sources and market 

analysis regarding risks facing the insurance system. Resources are also requested to serve the 

expanded policy needs of Treasury’s Office of Domestic Finance, in particular by expanding its 

capacity to analyze policy questions related to supervision of complex financial institutions, over 

the counter derivatives markets, capital standards, risk management, and accounting policy, and 

to coordinate Treasury responsibilities under the Dodd-Frank Act. This request also includes 

FTE dedicated to the Banking and Finance Office within the Office of General Counsel to 

provide paralegal support required by the expanded work of the Domestic Finance team. The 

Department is also requesting resources to establish the Office of Minority and Women Inclusion 

for Departmental Offices consistent Section 342 of the Dodd-Frank Act.

DF Recovery Act +$500,000 / +0 FTE 

Resources are requested to support Domestic Finance’s implementation of the American 

Recovery and Reinvestment Act (ARRA) Cash Payments for Specified Energy Property in Lieu 

of Tax Credits. Funding will be used to maintain staffing levels for the program and pay the 

contract costs between Treasury and the National Renewable Energy Research Lab for 

processing the applications. Payments under this program continue through 2017. 
DO - 18 

2.2 – Operating Levels Table 

Dollars in Thousands 

Departmental Offices - S & E

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

Proposed 

Reprogrammings

FY 2011 

Proposed 

Operating 

Level

FY 2012 

Request

FTE 1,266 1,266 0 1,266 1,341 

Object Classification:

11.1 Full-Time Permanent Positions $145,562 $145,562 $0 $145,562 $153,116 

11.3 Other than Full-Time Permanent Positions $2,781 $2,781 $0 $2,781 $3,104 

11.5 Other Personnel Compensation $197 $197 $0 $197 $757 

11.8 Special Personal Services Payments $0 $0 $0 $0 $1,162 

Personnel Compensation (Total) $148,540 $148,540 $0 $148,540 $158,139 

12.0 Personnel Benefits $28,861 $28,861 $0 $28,861 $39,939 

13.0 Benefits to Former Personnel $0 $0 $0 $0 $253 

Pay $177,401 $177,401 $0 $177,401 $198,331 

21.0 Travel $5,286 $5,286 $0 $5,286 $9,671 

22.0 Transportation of Things $0 $0 $0 $0 $308 

23.1 Rental Payments to GSA $5,427 $5,427 $0 $5,427 $4,161 

23.2 Rent Payments to Others $0 $0 $0 $0 $174 

23.3 Communications, Utilities, & Misc $14,889 $14,889 $0 $14,889 $8,466 

24.0 Printing and Reproduction $2,715 $2,715 $0 $2,715 $2,737 

25.1 Advisory & Assistance Services $47,213 $47,213 $0 $47,213 $37,531 

25.2 Other Services $19,229 $19,229 $0 $19,229 $19,891 

25.3 Purchase of Goods/Serv. from Govt. Accts $24,749 $24,749 $0 $24,749 $26,675 

25.4 Operation & Maintenance of Facilities $900 $900 $0 $900 $1,233 

25.5 Research & Development Contracts $0 $0 $0 $0 $0 

25.6 Medical Care $0 $0 $0 $0 $0 

25.7 Operation & Maintenance of Equipment $1,000 $1,000 $0 $1,000 $2,915 

25.8 Subsistence & Support of Persons $0 $0 $0 $0 $0 

26.0 Supplies and Materials $3,498 $3,498 $0 $3,498 $10,492 

31.0 Equipment $2,581 $2,581 $0 $2,581 $2,303 

32.0 Lands and Structures $0 $0 $0 $0 $0 

33.0 Investments & Loans $0 $0 $0 $0 $0 

41.0 Grants, Subsidies $0 $0 $0 $0 $0 

42.0 Insurance Claims & Indemnities $0 $0 $0 $0 $0 

43.0 Interest and Dividends $0 $0 $0 $0 $0 

44.0 Refunds $0 $0 $0 $0 $0 

Non-Pay $127,487 $127,487 $0 $127,487 $126,558 

Total Budget Authority $304,888 $304,888 $0 $304,888 $324,889 

Budget Activities:

Executive Direction $21,983 $33,465 $0 $33,465 $38,098 

International Affairs and Economic Policy $47,249 $70,037 $0 $70,037 $68,349 

Domestic Finance and Tax Policy $48,580 $71,738 $0 $71,738 $84,562 

Terrorism and Financial Intelligence $64,611 $96,386 $0 $96,386 $92,605 

Treasury-wide Management and Programs $22,679 $33,262 $0 $33,262 $41,275 

Administration Programs $99,786 $0 $0 $0 $0 

Total Budget Authority $304,888 $304,888 $0 $304,888 $324,889 
DO - 19 

2.3 – Appropriations Detail Table 

Dollars in Thousands 

Resources Available for Obligation

FY 2010 

Obligations 

FY 2010 

Enacted*

 FY 2011 Annualized 

CR Level**

FY 2012 

Request**

% Change 

FY 2010 to 

FY 2012**

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

 Executive Direction 132 $24,709 132 $21,983 154 $33,465 164 $38,098 24.2% 73.3%

 International Affairs and Economic Policy 243 $47,539 243 $47,249 287 $70,037 275 $68,349 13.2% 44.7%

 Domestic Finance and Tax Policy 244 $44,373 244 $48,580 289 $71,738 315 $84,562 29.1% 74.1%

 Terrorism and Financial Intelligence 346 $63,601 346 $64,611 407 $96,386 431 $92,605 24.6% 43.3%

 Treasury-wide Management and Programs 109 $27,193 109 $22,679 129 $33,262 156 $41,275 43.1% 82%

 Administration Programs 192 $93,590 192 $99,786 0 $0 0 $0 (100%) (100%)

 Subtotal New Appropriated Resources 1,266 $301,005 1,266 $304,888 1,266 $304,888 1,341 $324,889 5.9% 6.6%

Other Resources:

 Offsetting Collections - Reimbursable 150 $66,045 150 $66,045 137 $91,498 137 $91,498 (8.7%) 38.5%

 Available multi-year/no-year funds

 Transfers In/Out

 Recoveries

 Subtotal Other Resources 150 $66,045 150 $66,045 137 $91,498 137 $91,498 (8.7%) 38.5%

Total Resources Available for Obligation 1,416 $367,050 1,416 $370,933 1,403 $396,386 1,478 $416,387 4.4% 12.3%

*This does not include funding provided by Public Law 111-212 nor transfers.

**FY 2011/2012, numbers and percentage changes reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENTAL OFFICES

Federal Funds

SALARIES AND EXPENSES

(INCLUDING TRANSFERS OF FUNDS)

For necessary expenses of the Departmental Offices including 

operation and maintenance of the Treasury Building and 

Annex; hire of passenger motor vehicles; maintenance, repairs, 

and improvements of, and purchase of commercial insurance 

policies for real properties leased or owned overseas, when 

necessary for the performance of official business, 

$324,889,000: Provided, That notwithstanding any other 

provision of law, of the amount appropriated under this

heading, up to $1,000,000, may be contributed to the Global 

Forum on Transparency and Exchange of Information for Tax 

Purposes, a Part II Program of the Organization for Economic 

Cooperation and Development, to cover the cost assessed by 

that organization for Treasury's participation therein: Provided 

further, That of the amount appropriated under this heading, 

not to exceed $3,000,000, to remain available until September 

30, 2013, is for information technology modernization 
DO - 20 

requirements; not to exceed $200,000 is for official reception

and representation expenses; $200,000 is to support 

international representation commitments of the Secretary; and 

not to exceed $258,000 is for unforeseen emergencies of a 

confidential nature, to be allocated and expended under the 

direction of the Secretary of the Treasury and to be accounted

for solely on his certificate: Provided further, That of the 

amount appropriated under this heading, $6,787,000, to remain 

available until September 30, 2013, is for the Treasury-wide 

Financial Statement Audit and Internal Control Program, of 

which such amounts as may be necessary may be transferred to 

accounts of the Department's offices and bureaus to conduct 

audits: Provided further, That this transfer authority shall be in 

addition to any other provided in this Act: Provided further, 

That of the amount appropriated under this heading, $500,000, 

to remain available until September 30, 2013, is for secure 

space requirements: Provided further, That of the amount 

appropriated under this heading, up to $3,400,000, to remain 

available until September 30, 2014, is to develop and 

implement programs within the Office of Critical Infrastructure

Protection and Compliance Policy, including entering into 

cooperative agreements : Provided further, That of the funds 

made available under this heading, $2,500,000 is for 

strengthening the Department's acquisition workforce capacity 

and capabilities: Provided further, That with respect to the 

previous proviso, such funds shall be available for training, 

recruitment, retention, and hiring members of the acquisition 

workforce as defined by the Office of Federal Procurement 

Policy Act, as amended (41 U.S.C. 401 et seq.): Provided 

further, That with respect to the seventh proviso, such funds 

shall be available for information technology in support of 

acquisition workforce effectiveness or for management 

solutions to improve acquisition management.

2C – Legislative Proposals 

There are no legislative proposals for the Departmental Offices 
DO - 21 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. For detailed information about the FY 2007-

2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY 2010 to 

FY 2012

Treasury Strategic Outcome

Effectively Managed U.S. Government Finances $68,082 $81,410 $90,037 32.2%

U.S. and World Economies Perform at Full Economic Potential $115,100 $126,586 $131,021 13.8%

Prevented Terrorism and Promoted the Nation’s Security Through 

Strengthened International Financial Systems

$119,688 $109,934 $106,811 (10.8%)

Management and Organizational Excellence $68,063 $78,456 $88,518 30.1%

Total $370,933 $396,386 $416,387 12.3%

3A - Executive Direction ($38,098,000 from direct appropriations, and $3,134,000 from 

reimbursable programs): The Executive Direction program area provides direction and policy 

formulation to the Department and Departmental Offices and interacts with Congress and the 

public on Departmental policy matters. These offices include: Secretary/Deputy Secretary, Chief 

of Staff, Executive Secretariat, General Counsel, Legislative Affairs, Public Affairs, and the 

Treasurer of the United States. 

3.2.1 Executive Direction Budget and Performance Plan 

Dollars in Thousands 

Executive Direction Budget Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $20,273 $21,170 $21,983 $33,465 $38,098 

 Reimbursable Resources $599 $1,188 $1,656 $3,049 $3,134 

Total Resources $20,872 $22,358 $23,639 $36,514 $41,232 

Budget Activity Total $20,872 $22,358 $23,639 $36,514 $41,232 

*FY 2011/2012, Appropriated and Reimbursable Resources reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

No specific performance goals/measures are presented for this budget activity as the work of the 

offices within this budget activity is captured within the other budget activities. 
DO - 22 

3B – International Affairs and Economic Policy ($68,349,000 from direct appropriations, and 

$10,883,000 from reimbursable programs): A major mission of these offices is to promote 

economic growth and security. The Offices pursue this mission by providing economic guidance 

and support to the Secretary in his role as the President’s chief economic adviser. These offices 

play a key role in supporting the Secretary by providing technical analysis, economic 

forecasting, and policy guidance on issues ranging from changes in entitlement policy to 

responding to international financial crises. They provide economic intelligence and support by 

analyzing and reporting on current and prospective economic developments in the U.S. and 

world economies, assisting in the determination of appropriate economic policies, and evaluating 

policy ideas. The offices review and analyze domestic and international economic issues and 

developments in the financial markets. 

Office of International Affairs (IA)

The Office of International Affairs’ (IA) mission is to protect and support U.S. economic 

prosperity by strengthening the external environment for U.S. growth, preventing and mitigating 

global financial instability, and managing key global challenges. 

IA leads the Treasury Department effort in the development of policies and guidance related to 

international monetary affairs, trade and investment policy, international development and debt 

strategy, and the United States participation in international financial institutions. IA also 

coordinates the United States economic policies with the finance ministers of other G-7 and G-20 

nations and prepares the President for annual economic summits. 

Office of Economic Policy (EP)

The Office of Economic Policy (EP) plays a key role in supporting the Secretary by providing 

technical analysis, economic forecasting, and policy guidance. The office provides economic 

intelligence through the analysis and reporting of current and prospective economic 

developments in the U.S. and world economies. EP also provides assistance in the evaluation and 

determination of the appropriate economic approach. 

Economic Policy supports the Secretary of the Treasury in his roles as Chairman and Managing 

Trustee of the Social Security and Medicare Boards of Trustees. EP has proposed and 

implemented significant changes in the Trustees Reports, including perpetuity estimates of 

unfunded liabilities in the Social Security and Medicare reports. EP has developed a set of 

criteria and associated metrics to allow evaluations and analysis of options related to Social 

Security reform. 

Economic Policy also produces the corporate bond yield curve that is mandated by the Pension 

Protection Act of 2006. This yield curve is used to calculate the present values of pension 

liabilities and lump sum distributions. EP has developed the methodology for this curve and 

supplies data every month to the Internal Revenue Service for distribution to the public. 
DO - 23 

3.2.2 International Affairs and Economic Policy Budget and Performance Plan 

Dollars in Thousands 

International Affairs and Economic Policy Budget Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $41,852 $42,714 $47,249 $70,037 $68,349 

 Reimbursable Resources $4,073 $5,277 $5,233 $10,503 $10,883 

Total Resources $45,925 $47,991 $52,482 $80,540 $79,232 

Budget Activity Total $45,925 $47,991 $52,482 $80,540 $79,232 

*FY 2011/2012, Appropriated and Reimbursable Resources reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

Measure

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Actual

FY 2011 

Target

FY 2012 

Target

Number of New Trade and Investment Negotiations Underway or 

Completed (Oe)

14.0 15.0 13.0 6.0 6.0 

Number of Specific New Trade Actions Involving Treasury Interagency 

Participation in Order to Enact, Implement, and Enforce U.S. Trade 

Law and International Agreements (Oe)

N/A 98.0 83.0 50.0 50.0 

Percentage of Grant and Loan Proposals Containing Satisfactory 

Frameworks for Results Measurement (Oe)

94.0 94.0 92.5 90.0 90.0 

Scope and Intensity of Engagement (Traction) (Oe) 3.6 3.7 3.5 3.6 3.6 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, and 

DISC - Discontinued, and B – Baseline

Description of Performance: Managing the economic crisis, instability in financial markets, 

trade flows, climate change, and aid for developing economies can only be accomplished in a 

global context. Rising protectionism and insularity associated with weakened international 

economies have in recent years heightened the challenges associated with managing international 

partnerships. Expanding and improving these partnerships is critical to pursuing U.S. global 

economic objectives, including expanded trade and investment opportunities, and increased job 

opportunities for all Americans. 

Treasury’s Office of International Affairs (IA) advises and assists in the formulation and 

execution of U.S. international economic and financial policy. In FY 2009 and FY 2010, the 

office exceeded its targets for all of its performance measures related to trade and investment. 

To help ensure accountability in the lending of the multilateral development banks (MDBs), 

Treasury monitors the percentage of grant and loan proposals containing satisfactory results 

measurement frameworks. Over the past several years, most of the MDBs have made substantial 

progress towards developing frameworks to measure the results of their development assistance. 

For FY 2010, 92.5 percent of grant and loan proposals contained satisfactory results 

measurement frameworks, exceeding the Department’s target of 90 percent. The Department 
DO - 24 

will continue to encourage the development of robust, transparent performance measurement 

systems at the MDBs to ensure accountability for the resources they utilize. 

The Department is currently engaged in a rigorous effort to re-develop metrics for its 

International Affairs programs that better reflect the mission and goals of the office. 

3C – Domestic Finance and Tax Policy ($84,562,000 from direct appropriations, and 

$36,160,000 from reimbursable programs): Offices within Domestic Finance and Tax Policy 

monitor and provide advice and assistance to the Secretary in the areas of tax policy, domestic 

finance, financial markets, and the regulation of financial institutions. 

Office of Domestic Finance (DF) 

The mission of the Office of Domestic Finance is to advise and assist the Secretary on the 

domestic financial system and fiscal operations, as well as governmental assets and liabilities. 

The office advises the Secretary on regulations and legislation for financial institutions and 

markets, to ensure a resilient and healthy financial sector. The Office of Domestic Finance 

includes the Office of Financial Markets, the Office of Fiscal Service, the Office of Financial 

Institutions, the Office of Financial Stability, and the Office of Research and Quantitative 

Studies. 

Office of Tax Policy (TP) 

The Office of Tax Policy supports the Secretary of the Treasury through the provision of 

technical analysis, economic forecasting, and policy guidance on issues relating to Federal tax 

policy. The office’s analysis also supports the Department’s management of Federal revenues, 

collection of tax revenues due the United States, and Federal debt management; all essential for 

ensuring the integrity of the American financial system. 

The Office of Tax Policy has supported the Administration’s health care initiatives through 

significant and timely analysis of taxation and employee benefits issues underlying many health 

and Medicare reform proposals. The Office is facing two significant, ongoing challenges: to 

improve its analytical capabilities by expanding its data systems and economic modeling 

capabilities and to provide policy oversight for the IRS efforts to maximize voluntary tax 

compliance. 
DO - 25 

3.2.3 Domestic Finance and Tax Policy Budget and Performance Plan 

Dollars in Thousands 

Domestic Finance and Tax Policy Budget Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $29,134 $29,942 $48,580 $71,738 $84,562 

 Reimbursable Resources $4,261 $4,204 $10,889 $37,029 $36,160 

Total Resources $33,395 $34,146 $59,469 $108,767 $120,722 

Budget Activity Total $33,395 $34,146 $59,469 $108,767 $120,722 

*FY 2011/2012, Appropriated and Reimbursable Resources reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

Measure

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Actual

FY 2011 

Target

FY 2012

Target

Variance between estimated and actual receipts (annual 

forecast)(%)(Oe)

4.6 5.5 5.8 5.0 5.0 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, and 

DISC - Discontinued, and B – Baseline

Description of Performance: As part of managing the government’s central operating account 

and cash position, the Office of Fiscal Projections forecasts federal receipts, outlays, and debt 

transactions to ensure that funds are available on a daily basis to cover federal payments. To 

determine its overall effectiveness, the office measures the variance between actual and projected 

government receipts. The actual variance for FY 2010 was 5.8 percent, higher than the 5.0 

percent target for FY 2010. FY 2010 proved very challenging to forecast due to the heavy 

influence of changes in tax law throughout 2009 that affected FY 2010 receipts, and due to 

lingering uncertainty concerning the pace of the economic recovery, including projections of 

GDP and employment. The targets for FY 2011 and FY 2012 remain at 5.0 percent. 

3D - Terrorism and Financial Intelligence ($92,605,000 from direct appropriations, and 

$10,621,000 from reimbursable programs): The Office of Terrorism and Financial Intelligence 

(TFI) oversees the Department's functions that strengthen national security with the twin aims of 

safeguarding financial systems against illicit use and combating rogue nations, terrorist 

facilitators, money launderers, drug kingpins, proliferators of weapons of mass destruction, and 

other national security threats. 

The Office of Foreign Assets Control (OFAC)

The Office of Foreign Assets Control (OFAC) is dedicated to carrying out the complex mission 

of administering and enforcing economic and trade sanctions based on U.S. foreign policy and 

national security goals. OFAC administers approximately 30 economic sanctions programs 

against foreign countries, targeted regimes, and entities and individuals. Although these many 

programs differ in terms of their scope and application, they all involve the exercise of the 

President’s constitutional and statutory wartime and national emergency powers to impose 

controls on transactions and trade and to freeze foreign assets that come within the jurisdiction of 

the United States. 
DO - 26 

Office of Intelligence and Analysis (OIA) 

The Office of Intelligence and Analysis (OIA) is responsible for the receipt, analysis, and 

dissemination of foreign intelligence and foreign counterintelligence information related to the 

operation and responsibilities of the Department of the Treasury. Specifically, OIA (1) 

supports the formulation of Treasury policy and execution of Departmental authorities by 

providing expert intelligence analysis and production on financial and other support networks for 

terrorist groups, proliferators, and other key national security threats; (2) provides timely, 

accurate, and focused intelligence support on the full range of economic, political, and security 

issues; and (3) protects the personnel, programs, and information of the Treasury Department 

from information security and counterintelligence threats. 

The Office of Terrorist Financing and Financial Crimes (TFFC)

The Office of Terrorist Financing and Financial Crimes (TFFC) is the policy and outreach 

apparatus for the Office of Terrorism and Financial Intelligence (TFI) on terrorist financing, 

money laundering, and other threats to the international financial system. It develops and 

implements strategies, policies, and initiatives to identify and address vulnerabilities in the U.S. 

and the international financial system and to disrupt and dismantle terrorist and weapons of mass 

destruction proliferation financial networks. TFFC collaborates with the other elements of TFI 

and other Treasury offices and works closely with the federal law enforcement community – in 

particular, IRS criminal investigators – as well as with the regulatory community, the private 

sector, and its counterparts abroad to identify and address terrorist financing and weapons of 

mass destruction proliferation threats.

More specifically, TFFC leads and coordinates the United States representation at international 

bodies dedicated to fighting terrorist financing and financial crime, such as the Financial Action 

Task Force (FATF), and increases our multilateral and bilateral efforts in this field. The office 

advances international standards, conducts assessments, and applies protective countermeasures 

against high-risk foreign jurisdictions and financial institutions. Bilaterally, TFFC works with 

foreign counterparts to craft strategies to jointly attack terrorist financing both globally and 

within specific regions. 
DO - 27 

3.2.4 Terrorism and Financial Intelligence Budget and Performance Plan 

Dollars in Thousands

Terrorism and Financial Intelligence Budget 

Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $51,904 $58,026 $64,611 $96,386 $92,605 

 Reimbursable Resources $3,866 $4,684 $6,209 $10,373 $10,621 

Total Resources $55,770 $62,710 $70,820 $106,759 $103,226 

Budget Activity Total $55,770 $62,710 $70,820 $106,759 $103,226 

*FY 2011/2012, Appropriated and Reimbursable Resources reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

Measure

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Actual

FY 2011 

Target

FY 2012 

Target

Impact of TFI programs and activities N/A 7.8 8.1 7.4 7.6 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, and 

DISC - Discontinued, and B – Baseline

Description of Performance: In FY 2009, the Department discontinued using all of its 

performance measures that were previously reported. These measures are now used as indicators 

for the new composite measure that was developed. TFI introduced and began to apply a 

composite performance measure in FY 2009 to improve the assessment of its impact. There are 

separate components known as performance goals within the composite measure that align to 

each office within TFI -- each component is linked to its overall performance goals and the 

Department’s strategic outcomes. 

Two TFI offices, OFAC and TFFC, share a combined performance goal. OFAC’s mission is to 

administer and enforce economic and trade sanctions based on U.S. foreign policy and national 

security goals and TFFC serves as the policy and outreach apparatus for TFI on terrorist 

financing, money laundering, financial crime, and sanctions issues. Performance for both of 

these offices is linked to the following performance goal by focusing on the impact of policy 

making, outreach and diplomacy, and the impact of economic sanctions: TFI effectively 

employed tools and authorities to further USG policy objectives and mitigate national security 

threats. 

OIA, TFI’s intelligence office, supports the formulation of policy and execution of Treasury 

authorities by producing expert intelligence analysis and driving collection on support networks 

of terrorists, weapons of mass destruction proliferators, and other key national security threats. 

OIA has two separate performance goals that focus upon the impact of information, intelligence, 

and analysis on senior leadership and the intelligence community. User data surveys are 

conducted with financial intelligence users routinely internally and externally to Treasury to 

gauge the impact and influence OIA has upon those which use their information. Performance 

for this office is linked to the following two performance goals: 1) Support the formulation of 

Treasury policy and the execution of departmental authorities through all-source analysis of the 
DO - 28 

global financial network and 2) Provide Treasury Department decision makers with timely, 

accurate, and relevant intelligence support on the full range of economic, political, and security 

issues. 

Each of these performance goals are a segment of the overall performance measure and 

determine the overall score for TFI as a whole. As mentioned earlier, this performance measure 

was baselined in FY 2009 with a value of 7.8, or medium impact, and achieved results of 8.1 in 

excess of its target of 7.4 for FY 2010. The targets have been set at 7.4 for FY 2011 and 7.6 for 

FY 2012. TFI and the Department will continue to refine how the measure is rated and scored. 

3E - Treasury-wide Management and Programs ($41,275,000 from direct appropriations, 

and $30,700,000 from reimbursable programs): The primary mission of Treasury-wide

Management (TWM) is to provide effective and efficient management of the Department’s 

resources. The vision is to be the office that Treasury turns to for excellent analysis of program 

effectiveness and stewardship of the taxpayer resources. TWM provides strategic planning and 

develops policy direction in the areas of: human resources, emergency management, privacy, 

records management, disclosure services, civil liberties, information technology security, 

procurement, and financial administration (such as the formulation and management of 

Treasury's budget). The Department develops integrated plans to align policy and operations in 

order to produce maximum value for the American people. 

3.2.5 Treasury-wide Management and Programs Budget and Performance Plan 

Dollars in Thousands 

Treasury-wide Management and Programs Budget Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $16,384 $20,157 $22,679 $33,262 $41,275 

 Reimbursable Resources $4,295 $13,838 $18,653 $30,544 $30,700 

Total Resources $20,679 $33,995 $41,332 $63,806 $71,975 

Budget Activity Total $20,679 $33,995 $41,332 $63,806 $71,975 

*FY 2011/2012, Appropriated and Reimbursable Resources reflect the reallocation of the Administration Programs dollars

 to their respective budget activities, resulting in across-the-board increases to other budget activities.

Description of Performance: In FY 2010, and continuing into FY 2011, Treasury-wide 

Management will be revising all of its prior year performance metrics to better reflect the 

performance of the office. In FY 2010, the office created a new vision, mission, and strategic 

goals. It will work over the next few months with each office in Treasury-wide Management, 

including Management and Budget, the Deputy CFO, OCIO, Procurement, Human Resources, 

Privacy, Transparency, and Records, and Departmental Operations to development meaningful 

and impactful performance measures. Some of the primary results of these efforts within the 

Office of the Procurement Executive (OPE) and the Office of the Deputy Assistant Secretary for 

Human Resources and Chief Human Capital Officer (DASHR/CHCO) are outlined below. 

The Office of the Procurement Executive (OPE) promotes and measures Treasury’s procurement 

operations through a broad suite of performance metrics designed to facilitate success in 
DO - 29 

acquisition. FY 2011 Treasury Acquisition Goals include a seven percent acquisition savings, a 

10 percent high risk contract reduction and 50 percent performance-based acquisitions (PBA). 

Socio-Economic Program Goals include ensuring 28.5 percent of bureau dollars go to small 

business, 5 percent of bureau dollars go to small disadvantaged businesses, five percent to 

women-owned businesses, 3 percent to HUBZone businesses, and three percent to service 

disabled veteran-owned small businesses. Customer Satisfaction goals including establishing, 

managing and reporting the percentage of transactions completed for procurement lead time. 

Acquisition Workforce Management Goals include a target of 70 percent of procurement staff 

with Federal Acquisition Certification in Contracting and exceeding the government-wide 

retention average for employees. 

The Office of Management and Budget (OMB) issued in July 2009 a mandate that agencies 

achieve cumulative 3.5 percent acquisition-related savings in Fiscal Year 2010 and seven percent 

savings in 2011 as well as 10 percent reduction in high risk contracting obligations in FY 2010. 

The OPE established and facilitated Treasury’s Acquisition Improvement Program to ensure 

compliance with OMB requirements. Treasury exceeded both goals in FY 2010, documenting 

$237 million in savings vs. the goal of $158 million, and $129 million in high risk contracting 

reduction versus the goal of $48 million. For FY 2011, the Department is actively working to 

achieve a savings goal of $316 million, while maintaining a 10 percent high risk contracting 

reduction goal compared with FY 2010. 

With base resources for FY 2011 and FY 2012, OPE will have the ability to continue oversight 

and facilitation of Treasury’s savings and high risk reduction achievements. While the OMB 

mandates end in FY 2011, Treasury will aggressively continue the initiatives through FY 2012 

and beyond. OPE has initiated action to lead Treasury efforts toward sustainable, structural 

efficiencies within the acquisition environment and is committed to continuance of the effort. 

 

Treasury fully supports the federal socio economic program and places great emphasis on 

achievement of corresponding statutory goals. The Senior Procurement Executive (SPE) is 

responsible for Treasury’s compliance with assigned goals. Treasury’s Office of Small and 

Disadvantaged Business Utilization (OSDBU), separate from OPE, provides advice and 

assistance in support of program utilization and conducts extensive outreach services to facilitate 

identification and utilization of businesses qualifying for the various socio economic preferences. 

The OPE reports goal achievement based on funding activity to be commensurate with the 

OSDBU reporting methodology. Both the SPE and the OSDBU are making a concerted effort to 

facilitate full goal achievement in FY 2011. 

The Deputy Assistant Secretary for Human Resources and Chief Human Capital Officer 

(DASHR/CHCO) has functional responsibility for Human Capital Strategic Management 

(HCSM), Diversity and Civil Rights, and Training and Development Department-wide. Current 

performance efforts include continued hiring reform initiatives; veteran’s employment; making 

Treasury a great place to work; achieving greater accountability through assessment; integrating 

and automating many human capital responsibilities such as individual and organizational 

performance management, succession planning, compensation management, with workforce 

planning; and establishing labor-management forums, and supporting Treasury in standing up the 

Consumer Financial Protection Bureau. 
DO - 30 

Both strategic and tactical efforts supporting hiring reform will continue in FY 2012 as a result 

of the need to modify or establish new processes, technology, and messaging to ensure alignment 

with anticipated changes relating to hiring reform. Hiring reform improvements will be 

monitored by OPM & OMB through OPM-led reviews, results from Manager Satisfaction 

Survey and Applicant Survey, and DASHR/CHCO sponsored human resource program reviews. 

OPM and OMB will give Treasury, as well as other Federal agencies, a specific numeric goal to 

increase their Veteran new hires in FY 2011, and most likely issue a similar numeric goal for FY 

2012. Measures of performance include the number of new hires of Veterans; turnover rate; 

results from Treasury’s exit survey, and new hire survey.

Federal Employment ViewPoint Survey: HCSM annually disseminates survey results to the 

bureaus and provides technical guidance, including providing training for bureau representatives 

and/or identifying additional resources to assist bureaus with addressing low scoring areas. 

Measures of performance include Employee Viewpoint Survey Results and the Partnership for 

Public Service Best Places to Work ranking. 

Labor-Management Forums – HCSM is facilitating Department success of Executive Order 

13522-Creating Labor Management Forums to Improve Delivery of Government Service by 

providing bureau management and labor representatives with training, technical guidance, and 

ongoing monitoring to ensure labor-management forums are active and meeting the “spirit” of 

the Executive Order. 

3F - Administration Programs (Direct appropriations and reimbursable program funding have 

been allocated to operational budget activities): Administration Programs provides operational 

support and shared services to all offices within DO, including activities such as accounting, 

budgeting, human resource management, information technology services, procurement services, 

facilities support, and travel services. Approximately one-third of this budget activity is 

dedicated to information technology support (desktop computers, printers, faxes, copiers, 

helpdesk support, etc.). Another one-third consists of shared services: GSA rent, utilities, 

telecommunications, printing and graphics, public transit subsidy, workers compensation, human 

resources support, and financial system support. The final third consists of employee salaries, 

routine building maintenance, and custodial services. 
DO - 31 

3.2.6 Administration Programs Budget and Performance Plan 

Dollars in Thousands 

Administration Programs Budget Activity

Resource Level

FY2008 

Obligated

FY 2009 

Obligated

FY 2010 

Enacted

FY 2011 

Annualized 

CR Level*

FY 2012 

Request*

 Appropriated Resources $82,630 $93,421 $99,786 $0 $0 

 Reimbursable Resources $3,837 $22,793 $23,405 $0 $0 

Total Resources $86,467 $116,214 $123,191 $0 $0 

Budget Activity Total $86,467 $116,214 $123,191 $0 $0 

*FY 2011/2012, Appropriated and Reimbursable Resources were reallocated to their respective budget activities,

resulting in across-the-board increases to other budget activities.

For FY 2011, Treasury made the decision to allocate administrative expenses for Departmental 

Offices by operational budget activity, instead of maintaining a separate budget activity just for 

administrative expenses. The change will result in a level increase in the funding allocated to 

each budget activity, with this higher level sustained through future years. The administrative 

expenses have been allocated across operational budget activities of the Departmental Office 

budget utilizing various cost-allocation methodologies based upon the type of service which is 

being allocated. 

 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
DO - 32 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The Departmental Offices (DO), Office of Human Resources (OHR) supports the 

accomplishment of DO’s strategic goals through the delivery of Human Resource support to 

Treasury Headquarters’ offices through critical technical and consultative services and policy 

development. Additionally, OHR oversees the delivery of transactional hiring and payroll 

services through a contract with the Bureau of Public Debt’s Administrative Resource Center 

(BPD-ARC). This office provides sound advice and guidance to managers related to EEO, 

employment, retention, recognition, employee and labor relations, benefits, performance 

management and development. 

Fiscal Year 2010 Accomplishments

Hiring Reform 

 In January, 2010 the Deputy Assistant Secretary and Chief Human Capital Officer 

created a new office (Human Capital Services) comprised of the Offices of Equal 

Employment Opportunity, Human Resources, and Training to ensure collaboration, 

coordination and maximum utilization of recruitment and hiring resources. The goal of 

this office is to create a professional pipeline of qualified, diverse candidates for the 

consideration of DO Policy and Assistant Secretary for Management offices.

 The Office of Human Capital Services has worked with BPD/ARC (under contract with 

OHR for hiring transactions) to ensure that time lines and processes are aligned with the 

eighty day (80) day hiring model; that there is a transition to category rating of all 

applications; and that KSAs and Essays are no longer required.

 Outreach sessions with Departmental Offices managers have been held on Hiring Reform 

and the role of the hiring official in ensuring successful recruitment/hiring of qualified 

candidates. These sessions provide in-depth discussion on the importance of crediting 

plans and clear, concise articulation of critical technical qualifications.

Veterans’ Employment

 Provided direct assistance to the Office of Domestic Finance’s hiring initiative and 

enabled a broad recruitment for critical financial analysts, financial economists, and 

economic research skills. Additionally, ensured that print recruitment ads were placed in 

professional journals and newspapers with circulation in highly diverse geographic areas 

and among professional organizations with diverse professional affiliations. There was an 

intensive outreach conducted, including providing the Department’s Veterans’ Office 

Manager with listings of core skills needed. 

 Created a “manager’s desk guide” that includes a listing of tools that can be used by 

managers to bring on qualified Veterans into the Departmental Offices workplace. 
DO - 33 

Employee Engagement 

 Designed a new employee orientation including actions to review materials, presenters 

and information that is provided. This design will be complemented with instructions to 

managers concerning the importance of job orientation, tying the Treasury mission to the 

unique job duties and assignments, and assistance in adapting to the Treasury culture. 

 Refocused the traditional retirement seminar to better reflect today’s workforce profile. 

The Human Capital Services office now offers four seminars each year: two that focus 

upon retirement counseling; one that provides benefits counseling and in-depth 

discussion of the Thrift Savings Plan and FERS to those who are new to government 

service; and one that provides mid-career counseling so employees can assess decisions 

made and project retirement savings and decisions made years earlier. 

 Implemented a series of outreach sessions for managers and supervisors that provide 

basic skills and knowledge on: Merit Principles, Employee and Labor Relations, 

Performance Management, Employee Development, the EEO process, Alternative 

Dispute Resolution and Reasonable Accommodation. This series will be expanded to

provide advanced information and encourage problem solving discussions for each 

session. 

Women and Girls 

 The Associate CHCO and the DO/OHR were strategic business partners in Treasury 

leadership’s strategic discussions on Domestic Finance’s critical hiring initiative. 

Members of the OHR staff remain engaged in all aspects of position management and 

hiring discussions. One area of focus was the need to increase gender representation in 

hiring economists, financial analysts, and other finance related job series. 

 Reinstated meetings with Policy Office liaisons to ensure that OHR, EEO and Training 

aligned their goals and objectives to meet mission critical initiatives. 

 Initiated “workforce trends” discussions with the Assistant Secretary for Management 

(ASM) and many of the policy offices. These trends analyses included disaggregation of 

current workforce by gender, race and national origin (RNO); grade; skill concentration 

and retirement eligibility (providing a sense of future opportunities for hiring). 

Labor Management Forums 

 OHR is currently working with local bargaining unit representatives to finalize forum 

ground rules to begin meetings with the first priority to develop meaningful metrics for 

performance. 

 OHR Business Partners (to the policy offices) provided focused attention on Human 

Resource functions from Labor/Employee Relations to position management and 

consultation on employee development. 

 Ensured that the local bargaining unit representatives had a “seat at the table” for 

discussions on hiring initiatives, re-organization and other issues. 

Hiring of Individuals with Disabilities 

 Appointed Special Emphasis Program managers to assist the EEO staff with the outreach 

of Women, Persons with Disability, Hispanic, Veterans, Black, American Indian/Alaska 

Native, and Asian/Pacific Islander employees. 
DO - 34 

 Focused two manager outreach sessions on the hiring of qualified individuals with 

Disabilities and Reasonable Accommodation; EEO has partnered with HCO to ensure 

that qualified candidates are referred to hiring officials. 

 Funded, managed and proactively marketed intern programs that draw participants from 

the Hispanic Association of Colleges and Universities, Universities National Internship 

Program, Gallaudet University and the Washington Center Internships for Native 

American Students. 

Wellness:

 Initiated new seminars that promote heath and well being, provided information on eye 

protection; vitamins; and life style choices. Ensured broad communication on OPM’s 

efforts and programs on health and wellness. Additionally, OHR sponsored a Health 

Benefits Fair for DO employees. 

 Worked with HR Connect Project staff in the automation of on-boarding processes for 

new employees. This tool provides new hires with links to information on Treasury; 

federal service; and benefit choices. 

Fiscal year 2012 Challenges

A. An overriding challenge is the ability to recruit and retain core, scarce skill sets for 

mission critical positions (economists, intelligence community staff, information 

technology professionals). OHR will focus upon building relationships and a presence 

with local universities and to make Treasury the “employer of choice” for graduates. 

Additionally, HCS will develop a manual that contains a listing of professional 

organizations with large and diverse memberships to encourage attendance at career fairs, 

and HCS will conduct targeted recruitment campaigns in order to build the foundation 

that establishes a pipeline of diverse professionals. 

B. The ongoing loss of institutional knowledge and key leadership through retirement –

the challenge is OHR’s ability to address and support the closing of competency 

gaps. Succession planning activities and identification of key leadership positions and 

skill/competency gaps will be completed in FY 2011. Subsequent steps will be to ensure 

that staff who are designated as key leaders receive the training and developmental 

support to be successful. 

C. Agility in supporting the Regulatory Reform Implementation. HCS support to staff 

implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act will continue throughout the next few fiscal year cycles. The challenge is 

to realign resources within the office to support the stand up of those offices that will 

reside within the Departmental Office structure as well as support the ASM entities with 

Department-wide portfolios that provide direct assistance to the Consumer Financial 

Protection Bureau. HCS will address this challenge by cross training, ensuring enhanced 

(and expedited) technical training of staff, and leverage/enhance the use of automated 

tools. 
DO - 35 

4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Major IT Investments / Funding Source

Budget 

Activity

FY 2009 

Enacted

FY 2010 

Enacted

% Change 

from FY 

2009 to FY 

2010

FY 2011 

Annualized 

CR Level /2

% Change 

from FY 

2010 to FY 

2011

FY 2012 

Request

% Change 

from FY 

2010 to FY 

2012

Treasury Foreign Intelligence Network (TFIN) /1

Departmental Offices Salaries and Expenses Terrorism and $3,060 $4,337 41.7% $4,337 0.0% $3,272 -24.6%

Department-wide Systems Capital Financial

Investments Program (DSCIP) Intelligence $0 $2,000 0.0% $2,000 0.0% $0 -100.0%

Alpha Computers Modeling Systems $0 $0 0.0% $0 $0 0.0%

Enterprise Content Management

Department-wide Systems Capital

Investments Program (DSCIP) $6,000 $0 -100.0% $0 0.0% $0 0.0%

Federal Financial Transformation Program

 Department-wide Systems Capital

 Investments Program (DSCIP) $0 $0 0.0% $0 0.0% $0 0.0%

Subtotal, Major IT Investments $9,060 $6,337 -30.1% $6,337 0% $3,272 -48.4%

Non-Major IT Investments $9,018 $7,514 -16.7% $7,514 0.0% $9,510 26.6%

Infrastructure Investments $0 $0 0.0% $0 0.0% $0 0.0%

Enterprise Architecture $1,000 $0 -100.0% $0 0.0% $70 0.0%

Enterprise Identity and Access Management 0 0 0.0% 0 0.0% $0 0.0%

Total IT Investments $19,078 $13,851 -27.4% $13,851 0.0% $12,852 -7.2%

1/ TFIN Includes funding of $3,000 plus $60 (MCLs) in FY2009; funding of $4,200 plus and $137 (MCLs) in FY2010/FY2011 CR; 

 FY2012 reflects ($1,200) savings and $75 (MCLs) from request of $4,397

2/ FY 2011 IT Resources previously reported by DO in the FY 2011 PB have been adjusted (under the FY 2011 Annualized CR) to FY 2010 levels
DO - 36 

4B – Information Technology Strategy

Information technology (IT) is an essential facilitator of Treasury's business functions. Whether 

managing the nation's debt, collecting revenue, executing our nation's financial transactions, 

establishing economic policy, regulating our nation's banks, manufacturing coin and currency, or 

working with the intelligence community to combat financial crime, Treasury continuously 

leverages information technology. While that pervasiveness is indicative of the value 

information technology provides in support of the Department's mission, it is also representative 

of the underlying scope, scale and complexity within which those platforms operate today. With 

an annual IT budget of well over $3 billion dollars, the Department's IT Strategy is focused on 

enabling much greater innovation in support of the Department's expanding financial and 

economic missions while also increasing the operational efficiency and effectiveness of the IT 

assets. 

Background

Treasury's primary focus is on ensuring our nation’s overall economic stability and future 

prosperity. As the economic events of the past 18 months have shown, Treasury must adopt new 

tools to address emerging economic issues and opportunities. In light of the dynamic 

environment within which Treasury operates, Treasury's IT Strategy is focused on the following 

six goals: 

1. Enable an Information Centric Organization

Whether for the purposes of establishing policy, processing financial transactions or 

identifying nefarious financial activity, information is at the core of Treasury's mission. 

Cornerstones of Treasury's IT strategy are to develop greater competency and capabilities 

in the analysis and usage of large scale data sets, and leverage Internet-based platforms 

like Data.Gov, Treasury.Gov and FinancialStability.Gov to ensure all of our public data 

feeds are readily accessible and in machine readable formats. 

2. Pursue an IT organization that is agile and delivery focused

Information Technology is only as good as the business capabilities it enables. To 

improve the ability to deliver timely and effective solutions, Treasury intends to better 

leverage the IT service capabilities across all bureaus and put into place technical 

capabilities to enable our workforce to be more collaborative and productive. Examples 

of this include Treasury’s efforts to consolidate data centers as well as investments being 

made in collaborative portal platforms for the purposes of bringing together skills and 

talent from across the enterprise. 

3. Control and protect Treasury information assets

Within an enterprise as interconnected as Treasury, security is not only essential for 

protecting information assets, but is more importantly a key enabler for many elements of 

Treasury's business mission. Two of Treasury’s strategic security objectives include the 

Department-wide use of Homeland Security Presidential Directive 12 (HSPD-12) based 
DO - 37 

credentials for the sake of logical access to business applications, and the enterprise wide 

usage of Data Loss Prevention tools to monitor for, and prevent the accidental leakage of 

information. 

4. Provide reliable and robust computing, information and communication services

Treasury's operates one of the largest civilian wide area networks in the United States, 

and with a significant percentage of the workforce that is mobile, Treasury demands a 

ubiquitous, full featured and cost effective communications service. Treasury will 

continue to provide high performance, elastic, data agnostic services by building on our 

successes in migrating in FY 2010 to a common, more cost effective, MPLS based wide 

area network. 

5. Demonstrate measurable excellence in IT Leadership

The rapid pace of innovation in information technology demands a high degree of 

management rigor if IT investments are to be leveraged across an organization. Treasury 

is revamping IT governance processes to ensure that investments such as Data Center 

Consolidation, Enterprise Content Management, IRS Customer Account Data Engine II, 

and FinCEN's Bank Secrecy Act IT Modernization are demonstrably focused on 

facilitating mission performance. Treasury is actively using the Federal IT Dashboard to 

monitor and assess its key IT investments. Furthermore, Treasury senior management 

actively participates in the direction and oversight of key technical initiatives through a 

metrics-driven program management review process. 

6. Make Treasury a place where IT professionals want to work

The success of Treasury IT investments is dependent on the ability for Treasury to attract 

and retain IT talent. Fostering a culture of innovation is critical to ensuring Treasury is a 

place where IT people want to work. To that end, Treasury is actively assessing the 

utilization of more emergent technologies like Cloud Computing, Massively Parallel 

Databases, Open Source, and Web 2.0 platforms as new investments are being planned. 

Measuring and Managing our Progress

No strategy is useful without a means for measuring progress against that strategy and for 

assessing the overall impact the strategy is achieving. Using a combination of vehicles including 

CIO monthly project assessments, Departmental “Stat” sessions, and the Federal IT Dashboard, 

Treasury is actively monitoring, assessing and managing its key IT investments. Some of the 

key metrics we are using to assess progress against our IT Strategy include: 

 Customer satisfaction 

 Adoption rate of collaborative technologies 

 Quality 

 Accuracy/Timeliness of information 

 Percentage of IT spend allocated to Operations and Maintenance versus Development, 

Modernization, and Enhancement 

DSCIP - 1

Overview

Mission Statement

The Department-wide Systems and Capital Investments Program (DSCIP) is authorized to be 

used by or on behalf of the Treasury Department’s bureaus, at the Secretary’s discretion, to 

improve infrastructure, modernize business processes and increase efficiency through technology 

investments.

Program Summary by Budget Activity

Dollars in Thousands

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 Department-wide Systems and Capital Investments Program $9,544 $9,544 $0 ($9,544) (100.0%)

Total Appropriated Resources $9,544 $9,544 $0 ($9,544) (100.0%)

Total FTE - - - - -

FY 2012 Priorities

• To continue the program management and initial deployment of the Department-wide 

Enterprise Content Management (ECM) Program

• To implement the government-wide expansion of common solutions for processing 

financial transactions through the Financial Innovation and Transformation Program

• To correct life and safety issues and reduce building systems risks by upgrading a number 

of outdated systems, and to complete energy efficiency upgrades to the Treasury Annex 

Building
DSCIP - 2

Table of Contents

Overview........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 3

Section 2 – Budget Adjustments and Appropriation Language............................................... 6

2.1 – Budget Adjustments Table ................................................................................................. 6

2A – Budget Increases and Decreases Description..................................................................... 6

2.2 – Operating Levels Table ...................................................................................................... 7

2.3 – Appropriations Detail Table............................................................................................... 8

2B – Appropriations Language and Explanation of Changes..................................................... 8

2C – Legislative Proposals.......................................................................................................... 8

Section 3 – Budget and Performance Plan ................................................................................. 9

3.1 – Budget by Strategic Outcome ............................................................................................ 9
DSCIP - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

DSCIP funding is authorized to be used by or on behalf of Treasury Department bureaus, at the 

Secretary’s discretion, to modernize business processes and increase efficiency through 

technology investments. 

Top Priorities for FY 2012

The Department is currently implementing a number of key investments further outlined below. 

These programs will allow Treasury to efficiently and effectively execute its role as the steward 

of U.S. economic and financial systems, and as an influential participant in the global economy. 

Current investments include:

Enterprise Content Management (ECM) – Treasury set in motion an initiative to reduce 

paper-based processes and transactions. The ECM program is an essential element of this 

initiative and makes it possible for Treasury to have a standardized approach to modernizing 

paper-based business processes. Prior years’ funding will allow the program to continue to 

enhance mission effectiveness. Once fully implemented, ECM implementation savings will 

reduce total cost of ownership by promoting economies of scale and enable all Treasury bureaus 

to progress toward a paperless environment.

Financial Innovation and Transformation (FIT) – Treasury continues to support the Office of 

Financial Innovation and Transformation’s development of government-wide solutions for 

processing financial transactions. Through the FIT program, Treasury is working to resolve the 

disparate financial methods used by government agencies by developing a standard electronic 

invoicing platform and intra-governmental transaction processing. FIT’s work comes at a critical 

time as agencies are looking for a better solution and current procedures for conducting financial 

transactions are inefficient, fragmented, and expensive.

Treasury Annex Repair and Renovation – Treasury is fixing life safety issues, upgrading a 

number of outdated systems, and replacing inefficient, single paned windows, which will make 

the building more energy efficient.

1B – Program History and Future Outlook

In previous years, the Treasury Department has utilized DSCIP to fund enhancements of the 

Treasury Secure Data Network; meet Department wireless communications requirements;

upgrade the capabilities of the Treasury Foreign Intelligence Network and the infrastructure for 

Treasury’s Back-up Disaster Recovery Capacity; and to develop Treasury’s automated Personnel 

System, HR Connect. Additionally, DSCIP funding has strengthened Treasury’s Cyber Security 

program, allowing the Department to approve performance in meeting the requirements of the 

Federal Information Security Management Act (FISMA) and other government-wide security 

initiatives. Current modernization and capital investments include Enterprise Content 

Management, Financial Innovation and Transformation, and upgrading and repairing the 

Treasury Annex.
DSCIP - 4

During FY 2010, Treasury transformed its ECM strategy from the initial large-scale approach to 

a lean-scaled approach that will produce faster, more cost-efficient results. The scope of the 

ECM effort now provides for a Basic Content Services (BCS) technology platform, foundational 

requirements (Records Management, Center of Excellence, and Training) and business 

functionality (to include Correspondence Tracking, Freedom of Information Act (FOIA)/ eDiscovery, Evidence Management, Collaboration, Case Management, and Paper Reduction) that 

will be scaled across Treasury organizations. 

In FY 2010 the department used DSCIP funds to conduct an independent industry assessment 

that resulted in the transformation strategy and award of multiple contracts to develop and deploy 

the BCS platform, establish these foundational requirements and initial business functionalities. 

Continuing through FY2012, Treasury will use its remaining ECM funding to complete 

development and deployment of the remaining business capabilities. Bureau and office content 

management needs will be continually reviewed for provisioning on the technologically evolving 

ECM platform, and existing systems that continue to possess useful life will be analyzed for 

eventual migration and/or retirement.

Treasury will also use DSCIP funds, subject to 2011 appropriations, to implement new financial 

management solutions through the Financial Innovation and Transformation (FIT) Program. FIT 

will create a web-based common platform for transaction processing and financial report 

production. These systems will streamline financial reporting and eliminate the many layers of 

unnecessary complexity within current reporting systems. Current financial systems require 

agencies to build and maintain multiple systems. This new program will create options that will 

allow agencies to perform essential financial transaction processing, such as invoice processing, 

within a single source. These automated solutions would be web-based; require automated data 

and payments; have complete financial information; enable agencies and customers to append

data; provide performance information; and, as appropriate, provide public access to information. 

DSCIP funding has been used in the repair and renovation of Treasury’s historic Annex. The 

Annex building was constructed from 1917 to 1919 and is a Treasury owned facility located the 

Lafayette Square National Register Historic District across from the Main Treasury building.

The building is physically linked by a sub-grade pedestrian tunnel to the Main Treasury building, 

and together these buildings provide the work environment and infrastructure required to support 

the mission of the Department of the Treasury.

Previous funding supported various major building repairs and replacements, including 

emergency generator, fire alarm system, sprinkler system, & new electrical service, along with a 

reserve for potential emergency repairs. Funding has also supported a number of smaller projects 

needed to keep building systems functional. These include repairs to the building steam station 

to correct leaks, replacement of a hot water heater, repairs to failed air conditioning and air 

handling units, repair of a failed steam condensate return, and several repair efforts due to 

elevator failures. 

The Department uses DSCIP funds to make investments necessary to facilitate achievement of 

Treasury’s four strategic goals:
DSCIP - 5

• Effectively manage U.S. government finances

• Ensure U.S. and world economies perform at full economic potential

• Prevent terrorism and promote the nation’s security through strengthened international 

financial systems

• Ensure management and organizational excellence
DSCIP - 6

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Department-wide Systems and Capital Investments Program FTE Amount

FY 2010 Enacted - $9,544

FY 2011 Annualized CR Level - $9,544

Changes to Base:

Adjustment to Reach Policy Level: - $12,456

Adjustment to Reach FY 2011 President's Policy - $12,456

Non-Recurring Costs: - ($22,000)

Zero Base DSCIP - ($22,000)

Subtotal FY 2012 Changes to Base - ($9,544)

Total FY 2012 Base - $0

Total FY 2012 Request - $0

2A – Budget Increases and Decreases Description

Adjustment to Reach Policy Level .........................................................+$12,456,000 / +0 FTE

Adjustment to Reach FY 2011 President's Policy +$12,456,000 / +0 FTE 

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President’s Policy Level. The President’s Policy Level is equal to the FY 2011 President’s 

Budget as adjusted for the proposed pay freeze.

Non-Recurring Costs ...............................................................................-$22,000,000 / +0 FTE

Zero Base DSCIP -$22,000,000 / +0 FTE 

DSCIP appropriations are one-time funding and do not recur.
DSCIP - 7

2.2 – Operating Levels Table

Dollars in Thousands

Department-wide Systems and 

Capital Investments Program

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE - - - - -

Object Classification

25.1 - Advisory and assistance 

services $5,000 $5,000 $0 $5,000 $0

32 - Land and structures $4,544 $4,544 $0 $4,544 $0

Total Budget Authority $9,544 $9,544 $0 $9,544 $0

Budget Activities

Department-wide Systems and Capital 

Investments Program $9,544 $9,544 $0 $9,544 $0

Total Budget Authority $9,544 $9,544 $0 $9,544 $0
DSCIP - 8

2.3 – Appropriations Detail Table

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

Investment Programs 0 $9,544 0 $9,544 0 $9,544 0 $0 0.00% -100.00%

Subtotal New Appropriated Resources 0 $9,544 0 $9,544 0 $9,544 0 $0 0.00% -100.00%

Other Resources:

Subtotal Other Resources 0 $0 0 $0 0 $0 0 $0 0.00% 0.00%

Total Resources Available for Obligation 0 $9,544 0 $9,544 0 $9,544 0 $0 0.00% -100.00%

Resources Available for Obligation FY 2010 

Obligations

FY 2010 

Enacted

 FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY 2010 to 

FY 2012

2B – Appropriations Language and Explanation of Changes 

No appropriation is requested for DSCIP in FY 2012.

2C – Legislative Proposals

DSCIP has no legislative proposals in FY 2012.
DSCIP - 9

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change

FY10 to FY12

 Removed or reduced threats to national security from 

terrorism, proliferation of weapons of mass destruction, 

drug trafficking and other criminal activity on the part of 

rogue regimes, individuals, and their support networks 2,000 2,000 - -100.00%

 A citizen-centered, results-oriented and strategically 

aligned organization 4,544 4,544 - -100.00%

 Safer and more transparent U.S. and international 

financial systems 3,000 3,000 - -100.00%

Total $9,544 $9,544 $0 -100.00%

3A - Department-wide Systems and Capital Investments Program (No funding): The 

purpose of DSCIP funds is to modernize business processes and increase efficiencies through 

capital investment. All of the DSCIP efforts provide tangible benefits in their specific areas to 

produce an improved overall IT and work environment for the Department of the Treasury. The 

following section describes what the Treasury Department expects to accomplish with the 

DSCIP funding and the specific benefits each program will provide at the completion of FY 

2012.

Enterprise Content Management – ECM encourages critical information sharing in support of 

the counter-terrorism, law enforcement, financial stability, and regulatory responsibilities of the 

Treasury Department. ECM will support Treasury's IT goals by reducing the cost of 

infrastructure operations and increasing bureau productivity and collaboration. The enterprisewide approach will provide the technology foundation and core capabilities to ensure that all 

Treasury ECM efforts map to consistent standards, are aligned with related government-wide 

initiatives, and leverage tools, technologies, licenses, standards, processes, lessons learned, and 

commonalities in requirements among Departmental components, thereby achieving economies 

of scale and efficiencies in information sharing. Positive results will be achieved in the following 

business areas that are aligned with the Treasury’s and the Administration’s priorities for IT 

investments: 

Transparency – Through ECM Treasury will be able to process FOIA requests from taxpayers 

and businesses with a faster turnaround time. The majority of the processing time is currently 
DSCIP - 10

dedicated to manual searches for both paper and scanned documents and to review and redaction 

processes that are manually and paper intensive. Instituting automated workflows and 

establishing records repositories that are compliant with federal regulations will streamline the 

processes for reviewers and attorneys and make the results more readily available to the public.

Litigation Efficiencies through Paper Reduction – Implementing a NARA/DOD 5015.2 

compliant database will allow Treasury to store official records electronically, rather than just in 

paper form. The ECM Program will ensure compliance with regulations, eliminate the time spent 

filing and copying paper documents, and automate the workflow process. The paper intensity of 

the current workflow process not only involves human resources, but also requires storage space 

to warehouse multiple working copies and originals of cases.

Collaboration in Sanctions Programs – Applications for exceptions to sanctions (an instrument 

of national security and economic power) are currently handled via paper processes. This laborintensive process delays sanction licensing and has the potential to adversely impact U.S. foreign 

policy. With a public-facing, customer-driven licensing application for specific programs, the 

sanctions process would become electronic, thus reducing licensing time, improving

relationships with external stakeholders (e.g., the Commerce and State Departments), and 

fostering transparency, accountability, and effectiveness in sanctions processing.

Intelligence Reform and Terrorism Prevention - Law Enforcement – Implementation of ECM 

will provide the information infrastructure to comply with the Intelligence Reform and Terrorism 

Prevention Act, Section 1016(e) requirement by facilitating information sharing between 

Treasury, federal agencies, and foreign partners using industry and government standards.

End-User Benefits – End-user benefits include time savings and increases to productivity, 

allowing Treasury employees to focus on their core business activities. Information sharing will 

be improved, and accessibility to information will be expedited by providing online access to 

information that was formerly available only on paper, microfilm, or microfiche. ECM will 

achieve greater organizational accountability by: improved control over documents and 

document-oriented processes; security over document access and modification; reliable and 

accurate audit trails; reduction of paper handling, storage, lost documents, and error-prone 

manual processes.

Performance outcomes to be achieved include:

• Faster production of documents/responses to requesters

• Achieve “green” + operational efficiency goals through paperless environment

• Increase information sharing, utilization, and transparency with outside partners

• Enable electronic collaboration w/in Treasury

• Reduce total cost of ownership of document-centric IT

There are a number of benefits to the bureaus and government at large to be realized:

• Enhanced security for records and documents

• Improved regulatory compliance

• Improved data collection and quality

• Improved information sharing
DSCIP - 11

• Quicker and more accurate management reporting

• Development of Treasury-wide standards for enterprise content management

Financial Innovation and Transformation Program – The FIT program is to be a catalyst in 

the transformation of Federal financial management by identifying, testing, and facilitating the 

development and deployment of innovative, common, and cost effective solutions that improve 

data quality and create efficiencies.

The FIT office has begun to improve Federal financial management in three areas: 

1. By developing a centralized solution for capturing and processing electronic invoices for 

payment; 

2. Through reducing intra-governmental differences using a centralized solution for 

processing and settling intra-governmental orders; and,

3. By increasing the transparency of payment information.

Positive results will be achieved in the following business areas that are aligned with the 

priorities of the Treasury and the Administration for IT investments: 

Improved Data Quality & Transparency – FIT, in partnership with Treasury’s Financial 

Management Service, will create a repository of payment information (the “data mart”) that links 

agency payment data with Treasury disbursement data. This initiative comes at a critical moment 

when the demands placed on agencies for reliable data and greater transparency has never been 

greater. With disbursement information coming directly from Treasury’s central accounting 

systems, the data repository will serve as the central authoritative source for payment 

information. A critical success factor for implementation is the creation of standard definitions 

for payment data in the Federal Government. FIT will work closely with Federal agencies to 

establish these standards as part of a broader initiative to standardize financial terms and 

definitions across the Federal government. 

Cost Savings – The Federal government spends hundreds of millions of dollars annually by 

keying in information that it could receive electronically. Further, manual processes erode the 

quality of the information and cost more because they are prone to human error. FIT is 

spearheading this program to automate the process of receiving and processing vendor invoices 

for payment and the process of performing intra-governmental business between two Federal 

agencies. FIT is facilitating the planning, design, and implementation of an electronic invoicing 

solution based on solutions available within the Federal government today or deployed

successfully in the private sector. In addition, FIT will assist in standing up an intragovernmental transaction processing solution that will automate a process that currently requires 

agencies to invest scarce resources in reconciling accounting differences that cumulatively total 

billions of dollars annually.

Performance will be measured by assessing the costs and performance of the government’s 

current financial management. Expected results are:

• Reduced costs and elimination of duplicative efforts

• Streamlined processes between vendors and government agencies

• Improvements in agency and government-wide financial data
DSCIP - 12

• Financial reports that support policy making and management decision making

• Transparency of information

3.2.1 Department-wide Systems and Capital Investments Program Budget and 

Performance Plan

Department-wide Systems and Capital Investments Program Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $10,546 $26,975 $9,544 $9,544 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $10,546 $26,975 $9,544 $9,544 $0

Budget Activity Total $10,546 $26,975 $9,544 $9,544 $0

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/

OIG - 1

Overview

Mission Statement

The mission of the Office of the Inspector General is to (1) conduct and supervise audits and 

investigations of Treasury programs and operations; (2) provide leadership and coordination and 

recommend policies for activities designed to (a) promote economy, efficiency, and effectiveness 

in the administration of Treasury programs and operations, and (b) prevent and detect fraud, 

waste, and abuse in Treasury programs and operations; and (3) keep the Secretary and the 

Congress fully and currently informed about problems, abuses, and deficiencies in Treasury 

programs and operations.

Program Summary by Budget Activity

Dollars in Thousands

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 Audit $22,869 $22,869 $22,897 $28 0.1%

 Investigations $6,831 $6,831 $6,958 $127 1.9%

Total Appropriated Resources $29,700 $29,700 $29,855 $155 0.5%

Total FTE 172 172 172 - -

*Does not include the FY 2010 Supplemental (P.L. 111-212) $1.8 million rescission

FY 2012 Priorities

Ensure the effectiveness and integrity of Treasury programs: 

 Complete 100 percent of mandated audits on time, including requirements related to 

financial statements, information security, and failed financial institutions;

 To the extent resources are available after addressing mandated work, focus on programs 

of high risk, to include those that address the American Recovery and Reinvestment Act 

of 2009 (Recovery Act), the safety and soundness of the Nation’s financial markets, 

terrorist financing and money laundering, and capital investments;

 Investigate allegations of fraud, waste, abuse, and employee misconduct; and

 Conduct proactive efforts to detect, deter, and investigate electronic crimes and threats to 

Treasury’s physical and cyber infrastructure. 
OIG - 2

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 6

Section 2 – Budget Adjustments and Appropriation Language............................................... 7

2.1 – Budget Adjustments Table ................................................................................................. 7

2A – Budget Increases and Decreases Description..................................................................... 7

2.2 – Operating Levels Table ...................................................................................................... 8

2.3 – Appropriations Detail Table............................................................................................... 9

2B – Appropriations Language and Explanation of Changes..................................................... 9

2C – Legislative Proposals.......................................................................................................... 9

Section 3 – Budget and Performance Plan ............................................................................... 10

3.1 – Budget by Strategic Outcome .......................................................................................... 10

Section 4 – Supporting Materials .............................................................................................. 14

4A – Human Capital Strategy Description................................................................................ 14

4.1 – Summary of IT Resources Table...................................................................................... 16

4B – Information Technology Strategy.................................................................................... 17
OIG - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The Treasury Office of Inspector General (OIG) provides independent oversight of the 

Department of the Treasury and all of its bureaus except the Internal Revenue Service (IRS) and 

activities related to the Troubled Asset Relief Program (TARP). The OIG has two mission 

offices: the Office of Audit and the Office of Investigations. 

The Fiscal Year (FY) 2012 President’s Budget request for the Office of Inspector General (OIG) 

will be used for critical audit and investigative resources. The OIG will continue to address its 

traditional mandates related to audits of (1) the Department’s financial statements, (2) the 

Department’s implementation of the Federal Information Security Management Act (FISMA), 

and (3) failed national banks and thrift institutions regulated by Treasury. In addition to these 

traditional mandates, the OIG is also responsible for mandates related to the Dodd-Frank Wall 

Street Reform and Consumer Protection Act and the Small Business Jobs Act of 2010, as 

discussed below.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Inspector 

General to (1) function as the Chair of the Council of Inspectors General on Financial Oversight 

which includes periodic reporting on the Council’s audits and investigations along with views on 

regulatory matters, (2) monitor the transfer of functions of the Office of Thrift Supervision with 

periodic reporting to the Congress, and (3) perform reviews of systemically significant failed 

financial institutions that had been regulated by Treasury. The Small Business Jobs Act of 2010

charges the OIG with overseeing the Small Business Lending Fund and the $1.5 billion State 

Small Business Credit Initiative. 

Furthermore, the July 2010 U.S. agreement with the European Union on the processing and 

transfer of financial messaging data for the purposes of the Department's Terrorist Finance 

Tracking Program specifically provides for the OIG’s oversight to ensure safeguards over 

sensitive information are followed.

With the resources available after mandated requirements are met, the OIG will conduct audits of 

the Department’s highest risk programs and operations. Four such programs or operations are 

discussed below. It should be noted that this list is not comprehensive and that risks change over 

time and circumstance.

Programs to Ensure the Safety and Soundness of the Nation’s Financial Markets – The wave of 

bank failures beginning in calendar year 2007 underscores the need for ongoing and proactive 

audit coverage. While mandated reviews of failed banks are a retrospective look at the quality of 

bank supervision, and are useful to identify and correct weaknesses in the supervisory process, 

OIG must also determine the effectiveness of regulators in addressing emerging financial risks 

prospectively and in real time. 

Programs to Promote Economic Recovery - The Recovery Act provided Treasury with over $20 

billion in non-IRS funding for low-income housing projects and specified energy properties for 

which the OIG must provide oversight. Additionally, the Community Development Financial 
OIG - 4

Institutions (CDFI) Fund received $100 million to supplement funding for qualified program 

applicants and an additional $3 billion in authority for the New Markets Tax Credit (NMTC) 

program. While the funds through the Recovery Act are available through FY 2010 and possibly 

beyond, oversight is necessary into future years. The OIG initiated work at Departmental Offices 

and the CDFI Fund to review controls over non-IRS Recovery Act funding. The OIG will 

continue this work and determine whether the funds were spent as intended. 

Another area that requires vigorous oversight by the OIG is Treasury’s responsibilities under the 

Housing and Economic Recovery Act of 2008 (HERA). Under HERA, Treasury purchases 

senior preferred stock in Fannie Mae and Freddie Mac, which were placed into federal 

conservatorship in September 2008, as necessary to ensure they maintain a positive net worth. 

The maximum amount available to each entity was originally $100 billion. In May 2009 that 

amount was raised to $200 billion. In December 2009, the Department amended the agreements 

to replace the $200 billion per entity funding commitment cap with a formulaic cap. That 

formulaic cap will allow continued draws for 3 years at amounts that will automatically adjust 

upward quarterly by the cumulative amount of any losses realized by either entity and downward 

by the cumulative amount of any gains, but not below $200 billion. At the conclusion of the 3-

year period, the amount will become fixed and the remaining commitment will be available to be 

drawn per the terms of the agreements. As of September 30, 2010, Treasury’s payments to 

Fannie Mae and Freddie Mac were $85.9 billion and $63.9 billion, respectively. Also under 

HERA, Treasury initiated a temporary program to purchase new mortgage backed securities 

issued by Fannie Mae and Freddie Mac. That program expired on December 31, 2009. In total 

Treasury purchased approximately $225.5 billion in Fannie Mae and Freddie Mac mortgage 

backed securities. Treasury continues to manage those securities.

Programs to Combat Terrorist Financing and Money Laundering – Treasury faces unique 

challenges in carrying out its responsibilities under the Bank Secrecy Act (BSA) and the USA 

Patriot Act to prevent and detect money laundering and terrorist financing. While FinCEN is the 

Treasury bureau responsible for administering BSA, it relies on other Treasury and non-Treasury 

agencies to enforce compliance with the Act’s requirements. Similarly, the Office of Foreign 

Assets Control (OFAC), the Treasury office responsible for administering U.S. foreign sanction 

programs, also relies on other Treasury and non-Treasury agencies to ensure compliance with 

OFAC requirements. Past audits and Congressional hearings have surfaced serious regulatory 

gaps in the detection of and/or timely enforcement action against financial institutions for BSA 

and OFAC violations. Moreover, with continued distress in many financial institutions both 

domestically and globally, there is an increased risk that compliance with BSA and OFAC 

requirements may have deteriorated even further. For these reasons, this will continue to be a 

major focus of the OIG’s audit program.

Treasury’s Management of Capital Investments – Treasury needs to ensure that the hundreds of 

millions of dollars being expended on large acquisitions of systems and other capital investments 

are properly managed. The Department’s record in this regard has been mixed, at best. It is 

critical the OIG continue its oversight of FinCEN’s BSA Information Technology Modernization 

program; the Department’s Enterprise Content Management (ECM) system development; and 

the Treasury Network (TNet). 
OIG - 5

In addition to audit responsibilities, upcoming investigative priorities for FY 2012 include:

 Investigating complaints of alleged criminal and serious misconduct by Department 

employees and contract employees; 

 Investigating allegations of fraud and other crimes involving Treasury contracts, 

procurements, grants, guarantees (fictitious instruments), and federal funds with an 

emphasis on Treasury Recovery Act funds and the Check Forgery Insurance Fund ; 

 Investigating allegations of criminal conduct stemming from the OIG’s review of failed 

banks; 

 Investigating unlicensed and unregistered Money Services Businesses

 Proactive efforts in detecting, investigating, and deterring electronic crimes and other 

threats to the Department’s physical and cyber critical infrastructure; 

 Increasing awareness both internally and externally regarding the Office of Investigations 

investigative areas of responsibility.

As referenced above under new mandated audit work, over the next several years the OIG will 

provide audit and investigative oversight over two new Treasury programs—the Small Business 

Lending Fund (SBLF) and State Small Business Credit Initiative (SSBCI). The SBLF is a fund 

that will be used by Treasury to inject capital into small and medium banks with incentives to 

encourage them to increase their lending. The SSBCI provides Treasury with $1.5 billion to 

support state programs designed to increase access to credit for small businesses. To ensure 

proper oversight of the SBLF, Congress directed the OIG to establish an SBLF Program 

Oversight Office with responsibility for all audit and investigative activities relating to the 

program and for recommending program improvements. Congress also directed the OIG to audit 

participating states’ uses of SSBCI funds and required Treasury to recoup any misused funds 

identified by such audits. To comply with these mandates, the OIG will assess Treasury’s 

implementation of the two programs, continually monitor recipient compliance with program 

requirements and use of funds, and evaluate the impact of these programs on small business 

lending. 

Resources required to support OIG operations for FY 2012 are $29,855,000 from direct 

appropriations, and $13,200,000 from reimbursable agreements for (1) contract audits of other 

Treasury bureaus, and (2) OIG oversight of the SBLF and SSBCI.

Office of Inspector General’s Fiscal Year 2012 Budget Request

In accordance with the Inspector General Act, the Treasury Inspector General submits the 

following information relating to the OIG’s requested budget for FY 2012:

 the aggregate budget request for the operations of the OIG is $29,855,000,

 the portion of this amount needed for OIG training is $600,000, and

 the portion of this amount needed to support the Council of Inspectors General on 

Integrity and Efficiency (CIGIE) is $75,000.

The amount requested for training satisfies all OIG training needs for fiscal year 2012.
OIG - 6

1B – Program History and Future Outlook

In FY 2010, the OIG completed 68 audit products, opened 100 new investigations and closed 74 

investigations. OIG also referred 100 % of investigations that substantiated administrative 

violations against a Treasury employee to the appropriate regulated bureau for action. In 

addition, the OIG referred 19 investigations for criminal prosecution to the Department of 

Justice. As the result of a high number of bank failures, the OIG has been required to dedicate 

significant resources to conduct mandated material loss reviews (MLR). Because of the 

unprecedented numbers of failures, the OIG completed some MLRs after the 6-month timeframe 

prescribed in statute but the missed dates are not considered significant. The OIG also informed 

Treasury’s Congressional oversight committees by letter that some MLRs would be late due to 

the numbers of banks that failed. The OIG also dedicated resources to conduct oversight of 

Treasury’s Recovery Act funds.

The OIG, as a result of MLRs performed, received referrals regarding potential criminal 

misconduct that occurred prior to or during bank failures, and is currently working criminal 

investigations with the FDIC Office of Inspector General (FDIC OIG) and the OIG Office of 

Audit regarding potential prosecution of acts which may have contributed to the bank failures. 

The Recovery Act provided Treasury with approximately $4 billion for low-income housing 

projects and specified energy properties/projects. OIG’s Cyber Investigations Unit (CIU)

conducts cyber investigations to identify, locate and prosecute individuals who utilize the 

Internet in attempts to defraud Treasury. In addition, the CIU provides incident response 

capability for cyber-attacks against Treasury critical infrastructure and supports initiatives and 

efforts by other government agencies to remediate the ongoing threat. In support of OI 

traditional investigations, the CIU provides the full suite of digital forensic support, to include 

digital media acquisition, examination, and technical investigative consultation. In FY 2012 the 

OIG expects to complete 70 audit products, and meet or exceed the investigative measures.

The OIG has used two investigative measures: 70 percent of all cases closed during the fiscal 

year are to be referred for criminal/civil prosecution or Treasury administrative action; and 70 

percent of all cases accepted by prosecutors, referred for agency action, or closed during the 

fiscal year and are to be completed within 18 months of case initiation. After senior leadership 

review, the OIG determined that these measures do not accurately reflect investigative 

performance, and are being replaced with a single measure. Starting with FY 2011, the measure, 

―Percentage (%) of investigations that were referred for criminal/civil or Treasury administrative 

action,‖ will have an initial goal of 80%. 
OIG - 7

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Office of Inspector General FTE Amount

FY 2010 Enacted 172 $29,700

FY 2011 Annualized CR Level 172 $29,700

Changes to Base:

Adjustment to Reach Policy Level: - $351

Adjustment to Reach FY 2011 President's Policy - $351

Maintaining Current Levels (MCLs): - $183

Maintaining Current Levels - $183

Efficiencies, Savings & Base Reductions: - ($392)

MLRs - ($392)

Subtotal FY 2012 Changes to Base - $142

Total FY 2012 Base 172 $29,842

Program Changes:

Program Increases: - $13

CIGIE Contribution - $13

Subtotal FY 2012 Program Changes - $13

Total FY 2012 Request 172 $29,855

2A – Budget Increases and Decreases Description

Adjustment to Reach Policy Level ..............................................................+$351,000 / +0 FTE

Adjustment to Reach FY 2011 President's Policy +$351,000 / +0 FTE 

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President's Policy Level. The President's Policy Level is equal to the FY 2011 President's 

Budget as adjusted for the proposed pay freeze.

Maintaining Current Levels (MCLs) .........................................................+$183,000 / +0 FTE

Maintaining Current Levels +$183,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012.

Efficiencies, Savings & Base Reductions ....................................................-$392,000 / +0 FTE

MLRs -$392,000 / +0 FTE 

Savings from anticipated reductions in Material Loss Review work. The savings are anticipated 

due to regulatory reform and economic recovery.

Program Increases .........................................................................................+$13,000 / +0 FTE

CIGIE Contribution +$13,000 / +0 FTE 

Contribution to the Council of Inspectors General on Integrity and Efficiency
OIG - 8

2.2 – Operating Levels Table

Dollars in Thousands

Office of Inspector General

FY 2010

Enacted

FY 2011

Annualized 

CR Level

Proposed 

Reprogram

mings

FY 2011

Proposed 

Operating 

Level

FY 2012 

Request

FTE 172 172 - 172 172

Object Classification

11.1 - Full-time permanent $17,000 $17,000 $0 $16,750 $16,971

11.3 - Other than full-time permanent $100 $100 $0 $100 $105

11.5 - Other personnel compensation $550 $1,049 $0 $550 $560

11.8 - Special personal services payments $765 $744 $0 $795 $765

12 - Personnel benefits $4,800 $4,800 $0 $4,812 $4,819

21 - Travel and transportation of persons $625 $500 $0 $650 $650

23.1 - Rental payments to GSA $1,325 $1,412 $0 $1,310 $1,365

23.2 - Rental payments to others $320 $450 $0 $453 $405

23.3 - Communication, utilities, and misc charges $725 $800 $0 $750 $800

24 - Printing and reproduction $20 $10 $0 $20 $20

25.2 - Other services $895 $450 $0 $950 $1,000

25.3 - Other purchases of goods and services from Govt. accounts $1,400 $1,450 $0 $1,450 $1,500

25.6 - Medical care $25 $35 $0 $60 $45

25.7 - Operation and maintenance of equip $400 $200 $0 $400 $350

26 - Supplies and materials $300 $300 $0 $250 $200

31 - Equipment $450 $400 $0 $400 $300

Total Budget Authority $29,700 $29,700 $0 $29,700 $29,855

Budget Activities

Audit $22,869 $22,869 $0 $22,869 $22,898

Investigations $6,831 $6,831 $0 $6,831 $6,957

Total Budget Authority $29,700 $29,700 $0 $29,700 $29,855

*Does not include the FY 2010 Supplemental (P.L. 111-212) $1.8 million rescission
OIG - 9

2.3 – Appropriations Detail Table

Dollars in Thousands

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

OFFICE OF INSPECTOR GENERAL

Federal Funds

SALARIES AND EXPENSES:

For necessary expenses of the Office of Inspector General in 

carrying out the provisions of the Inspector General Act of 

1978, as amended, $29,855,000 of which not to exceed 

$2,000,000 for official travel expenses, including hire of 

passenger motor vehicles; of which not to exceed $100,000 for 

unforeseen emergencies of a confidential nature, to be allocated 

and expended under the direction of the Inspector General of the 

Treasury.

2C – Legislative Proposals

The OIG has no legislative proposals.

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

Audit 110 $20,445 130 $22,869 130 $22,869 130 $22,898 0.00% 0.13%

Investigations 29 6,107 42 6,831 42 6,831 42 6,957 0.00% 1.84%

Subtotal New Appropriated Resources 139 $26,552 172 $29,700 172 $29,700 172 $29,855 0.00% 0.52%

Other Resources:

Offsetting Collections - Reimbursable 8,366 8,000 10,000 13,200 65.00%

Recission (Haiti Relief) (1,800)

Transfers In/Out (FY 2009 Carryover) 447 1,100

Subtotal Other Resources 0 $8,813 0 $7,300 0 $10,000 0 $13,200 80.82%

Total Resources Available for Obligation 139 $35,365 172 $37,000 172 $39,700 172 $43,055 0.00% 16.36%

Resources Available for Obligation FY 2010 

Obligations

FY 2010 

Enacted

 FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY 2010 to 

FY 2012
OIG - 10

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change

FY10 to FY12

 Exceptional accountability and transparency 37,700 39,700 43,055 14.20%

Total $37,700 $39,700 $43,055 14.20%

3A - Audit ($22,897,000 from direct appropriations, and $13,200,000 from reimbursable 

programs): The Office of Audit (OA) conducts audits, provides firsthand, unbiased perspectives 

and recommendations for improving the economy, efficiency, and effectiveness of Treasury 

programs and operations under its jurisdiction. The OA produces more than 60 products 

annually. The OA has recently been challenged to keep up with an increasing number of bank 

failures that require dedicated resources to conduct mandated material loss reviews. For FY 2009 

and FY 2010, the OA received additional funding to meet this requirement. The requested 

funding for FY 2012 is necessary to maintain a proper level of oversight of Treasury programs 

and operations, and to enable the OIG to continue to meet statutory timeframes for completing 

the increasing number of material loss reviews due to financial institution failures. The OIG also 

responds to requests by Treasury officials and the Congress for specific work. Reimbursable 

funding supports agreements for contract audits of other Treasury bureaus, as well as oversight 

of the Small Business Lending Fund (SBLF) and the State Small Business Credit Initiative 

(SSBCI) programs.
OIG - 11

3.2.1 Audit Budget and Performance Plan

Audit Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $12,658 $20,116 $22,869 $22,869 $22,897

 Reimbursable Resources $6,498 $7,381 $8,000 $10,000 $13,200

Total Resources $19,156 $27,497 $30,869 $32,869 $36,097

Budget Activity Total $19,156 $27,497 $30,869 $32,869 $36,097

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Number of Completed Audit Products (Ot) 64 68 68 62 70

Percent of Statutory Audits Completed by the Required Date (E) 100.0 100.0 50.0 100.0 100.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC -

Discontinued, and B - Baseline

Description of Performance: In FY 2010, the Office of Audit completed a total of 68 audit 

products. As the result of the unprecedented number of bank failures, the OIG has been required 

to dedicate significant resources to conduct mandated material loss reviews. Also as a 

consequence of the high number of failures requiring a material loss review, the OIG completed 

some of the reviews after the 6-month timeframe prescribed in statute, but the missed dates were 

not considered significant. The appropriate Congressional oversight committees were informed 

of this situation. The Office of Audit plans to complete 70 in FY 2012, though the number of 

required material loss reviews and other anticipated mandates may impact the ability to meet the 

target. In FY 2009, the Office of Audit met its mandated audit requirements.

3B - Investigations ($6,958,000 from direct appropriations): The Office of Investigations 

prevents, detects and investigates complaints of fraud, waste and abuse. This includes the 

detection and prevention or deterrence of employee misconduct and fraud, or related financial 

crimes within or directed against Treasury. The Office refers its cases to the Department of 

Justice, state or local prosecutors for criminal prosecution or civil litigation, or to agency 

officials for corrective administrative action. Additionally, investigative oversight also extends to 

that of performing quality assurance reviews of the Treasury’s police operations at BEP and the 

U.S. Mint.

With the increased risk of the Recovery Act grant programs for low-income housing and specific 

energy properties, the Office of Investigations faces greater challenges and anticipated increases 

in grant fraud and the need to identify strengths and weaknesses in Community Development 

Financial Institutions (CDFI) Fund. Compliance and oversight of dispersed grant funds to ensure 

that CDFI funds provided are being used in accordance with the grant award. 
OIG - 12

The Office of Inspector General (OIG) is actively investigating numerous allegations received 

from the OIG’s, Office of Audit related to their Material Loss Reviews (MLR). With increasing 

frequency, the Office of Audit is discovering instances of suspected fraud by bank officials 

during MLRs of Office of the Comptroller of the Currency (OCC) and Office of Thrift 

Supervision (OTS) regulated banks. As such, these alleged criminal violations, which affected 

the ability of the OCC and OTS to properly oversee these banking institutions, are being referred 

to the Office of Investigations for investigation.

3.2.2 Investigations Budget and Performance Plan

Investigations Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $5,792 $6,009 $6,831 $6,831 $6,958

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $5,792 $6,009 $6,831 $6,831 $6,958

Budget Activity Total $5,792 $6,009 $6,831 $6,831 $6,958

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage (%) of Investigations that were referred for Criminal, 

Civil or Treasury administrative action

N/A N/A N/A B 80.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC -

Discontinued, and B - Baseline

Description of Performance: In FY 2010 OIG met or exceeded both Investigative Performance 

Measure targets, opened 100 new investigations and closed 74 investigations. OIG also referred 

100 % of investigations that substantiated administrative violations against a Treasury employee to 

the appropriate regulated bureau for action. In addition, the OIG referred 19 investigations for 

criminal prosecution to the Department of Justice. OIG received investigative referrals regarding 

potential criminal misconduct that occurred prior to or during bank failures, and has worked 

criminal investigations with the FDIC Office of Inspector General (FDIC OIG) and the OIG Office 

of Audit regarding potential prosecution of acts which may have contributed to the bank failures. 

As additional financial institutions fail over the next several years, OIG expects an associated 

increase in investigative work. The Recovery Act provided Treasury with approximately $4 billion 

for low-income housing projects and specified energy properties/projects. OIG anticipates a 

significant increase of related criminal investigations as Treasury continues to disburse these funds. 

After senior leadership review, the OIG determined that the current two performance measures do 

not accurately reflect investigative performance, and will be replaced with a single measure. 

Starting with FY 2011, the measure, ―Percentage (%) of investigations that were referred for 
OIG - 13

criminal/civil or Treasury administrative action,‖ will have an initial goal of 80%. It is expected 

that the performance measure will be met or exceeded in FYs 2011 and 2012.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
OIG - 14

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

The OIG previously identified two mission critical occupations that closely align to its two 

budget activities, audit and investigations, and has integrated workforce plans for these 

specialized professionals (auditors, criminal investigators) with strategic and annual plan goals 

and objectives.

Over the past several years, the OIG has had exceptional recruitment success using automated 

tools to re-establish and then maintain its human capital pipeline. OIG job announcements 

sometimes attract up to 1,000 applicants, and selections are made and positions offered within 

30-days, on average. 

The ongoing financial crisis, however, and the resulting failure of a startling number of 

financial institutions placed increased pressures on the standard OIG hiring processes. By 

law, when a Treasury supervised bank or thrift fails, and meets statutory loss thresholds, 

Treasury OIG is required to complete a material loss review (MLR) within six months to 

determine the causes of the failure. In FY 2009 and FY 2010, Congress provided additional 

budgetary resources to hire the staff needed for these MLRs. OIG then embarked on an 

aggressive initiative to recruit and hire qualified staff to meet the rapidly growing workload, 

and had to defer all other audit work to devote existing staff to the MLR effort. From the 

latter half of FY 2009 to the present, OIG brought 67 qualified staff on board, has selected 11

others, and has an additional 13 positions in various stages of the hiring process. This was 

accomplished despite the dramatic increase in the number of applicants for each position, 

which in turn increased the time required to carefully review applications, conduct interviews 

and make selections to ensure OIG hires qualified and competent candidates. 

OIG is aware of the critical importance to its mission of developing and maintaining a highly 

skilled staff. OIG continues to ensure that employees have a variety of opportunities for required 

developmental and professional training and education. This ensures full confidence in the 

expertise and integrity of our staff.

In addition, the following section outlines OIG’s ongoing efforts in several important programs.

Hiring Reform – OIG currently uses the Bureau of Public Debt (ARC) services for recruitment. 

ARC staff work directly with hiring managers in developing job analysis that are specific to their 

needs, and uses the same standard vacancy announcement template used Department-wide to 

ensure that language and requirements are clear and easy to understand. ARC is also responsible

for providing feedback to the applicants regarding their application. ARC and OIG are working 

together ensure OIG meets the recruitment requirements under the End to End (E2E) initiative. 

Additionally, one of the mandates for hiring reform is that agencies only use category rating. 

Fortunately, OIG has been using category rating for a number of years. In an effort to improve 

public understanding of the hiring process, the Department has been working on a website, 

Entrance-on-Duty System (EODS), that will provide general information about the on-boarding 

process. Once hired, the applicant will be granted access to EODs to learn more about Treasury 

and the OIG, input required information, and complete benefit election forms.
OIG - 15

The OIG is developing training for managers and supervisors as well as informal ―brown bag‖

sessions for employees on a number of human resources issues.

Veterans’ Employment – OIG is processing a number of recruitment actions that are open to all 

qualified applicants. As part of that process, OIG is working with organizations like the 

Veteran’s Employment Program Office (VEPO). Established by the Internal Revenue Service, 

VEPO helps connect veteran’s programs with Treasury employment opportunities. Training and 

assistance is offered to help veterans successfully transition into the federal government. The 

OIG human resources staff will continue partnering with VEPO on the various programs that are 

being offered and will ensure that all hiring managers get the training and support needed to aid 

them in their recruitment efforts.

Hiring of Individuals with Disabilities – OIG participated in career fairs whose targeted 

audience is individuals with disabilities. In addition, the OIG EEO Manager receives 

applications from individuals with disabilities and forwards them to the hiring managers for 

consideration. OIG is planning to develop a system with the EEO Manager to enhance 

recruitment efforts for targeted populations, including programs and facilities for individuals 

with disabilities. OIG also provides a wide range of resources to assist employees as well as 

their managers/peers (e.g. special equipment, translators, etc.)

Labor-Management Forums – OIG is not covered under any union agreements.

Employee Engagement - The OIG is developing an intranet for OIG employees to disseminate

information and enable collaboration. Among other things, the intranet will be used to share 

announcements about the work of OIG being recognized through awards and other means. The 

goal will be to foster pride by acknowledging the accomplishments of OIG staff.

Also, OIG has an employee suggestion box which allows employees to voice their concerns 

and/or provide alternative operating procedures that will help OIG work more effectively.

Wellness - The OIG promotes wellness by ensuring employees have the resources and flexibility 

to maintain a balanced work and family life. The OIG has an onsite fitness center and the health 

unit provides health screenings and flu shots. The OIG encourages employees to use services 

provide by the Employee Assistance Program (EAP), including attending workshops or seminars

on wellness. The OIG has a supportive atmosphere that encourages a healthy lifestyle and a 

sustainable worklife balance.

Women and Girls – The OIG provides workplace flexibility which focuses on balancing family 

and work. We offer alternative work schedules, teleworking, and other programs to provide 

employees the flexibility they need to remain productive while attending to their family and 

other responsibilities.
OIG - 16

4.1 – Summary of IT Resources Table

Dollars in Thousands

Major IT Investments / Funding Source Budget Activity

FY 2009 

Enacted

FY 2010 

Enacted

% Change 

from FY 2009 

to FY 2010

FY 2011 

Annualized

CR Level

FY 2012 

Request

% Change 

from FY 2010 

to FY 2012

No Major Investments $ 0 $ 0 N/A $ 0 $ 0 N/A

Subtotal, Major IT Investments

Collect the 

Revenue/Protect the 

Public $ 0 $ 0 N/A $ 0 $ 0 N/A

Non-Major IT Investments

Collect the 

Revenue/Protect the 

Public

Infrastructure Investments

Collect the 

Revenue/Protect the 

Public

Enterprise Architecture

Collect the 

Revenue/Protect the 

Public $650 $600 -7.7% $1,434 $1,800 200.0%

Enterprise Identity and Access Management

Collect the 

Revenue/Protect the 

Public N/A N/A N/A N/A N/A N/A

Total IT Investments

Collect the 

Revenue/Protect the 

Public $650 -100.0% $1,434 $1,800 100.0%
OIG - 17

4B – Information Technology Strategy

OIG must keep pace with and adapt to technological advancements including those in the areas 

of auditing, computer forensics and security. The OIG must design and/or adapt information 

technology that is flexible and allows for rapid response to a constantly changing environment. 

OIG uses standard project management methodologies to track all IT projects. This ensures that 

projects stay within budget, meet milestones and performance goals. 

IT funding has been critical in enabling OIG to make significant progress in providing 

technology refreshment that allows our auditors, investigators, and support personnel to use 

hardware and software actively maintained by the manufacturers. IT funding also strengthens 

OIG’s entity-wide IT security program, with hardware and software designed for anti-virus 

detection/protection, anti-spam detection, anti-spy detection, intrusion detection/prevention, 

monitoring and patch management, and disaster recovery. This ensures that the OIG IT 

infrastructure operates in a secure manner and that the information collected during audits and 

investigations of the Department’s operations and resources are not susceptible to computer 

attacks and terrorist activities. Maintaining the OIG IT infrastructure and its IT security program 

at an acceptable level requires on-going upgrades of tools and technologies.

IT funding has also enhanced OIG’s ability to perform computer forensics during investigations 

and computer vulnerability scanning during audits of the Department’s IT operations and 

resources. Maintaining these capabilities requires on-going upgrades of tools and technologies.

Due to increasing workloads, new responsibilities, and the expansion of OIG staffing over the 

past two fiscal years (approximately 50%), IT operating costs are not likely to decrease in the 

near future. Workloads continue to increase significantly in both audit and investigations, and 

new responsibilities are being given to OIG to address emerging initiatives (e.g., IG Council 

under Financial Reform, oversight of the new Consumer Financial Protection Bureau, etc.).

Overview 

Mission Statement

To advance economic stability by promoting the efficiency and effectiveness of the management 

of the Troubled Asset Relief Program (TARP), through transparency, through coordinated 

oversight, and through robust enforcement against those persons and entities, whether inside or 

outside of government, who waste, steal, or abuse TARP funds. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 FY2010 to FY2012

Actual Annualized

CR Level

Request $ Change % Change

 Audit $9,900 $15,609 $20,371 $10,471 105.8%

 Investigations $13,400 $20,691 $27,003 $13,603 101.5%

Total Appropriated Resources $23,300 $36,300 $47,374 $24,074 103.3%

Total FTE 133 192 192 59 44.4%

In addition to SIGTARP’s FY 2012 request for $47,374, section 402(c)(1) of the Helping Families Save Their 

Homes Act of 2009, P.L. 111-22, provided SIGTARP $15 million in supplemental funding. However, section 

402(c)(2) requires SIGTARP, in the use of these funds, to “prioritize the performance of audits or investigations of 

recipients of non-recourse Federal loans made under any” Emergency Economic Stabilization Act of 2008, P.L. 

110-343 (EESA) program. This supplemental funding is not available for SIGTARP general operations. 

FY 2012 Priorities 

• Promote transparency in the management and operation of TARP, ensuring the satisfaction 

of the public’s right to know how Treasury decides to invest the public’s money, how it 

manages the investments it makes, and how TARP recipients use the investments. 

• Coordinate oversight: 

o Prospectively advise Treasury concerning issues relating to compliance, internal 

controls and fraud prevention. 

o Retrospectively assess the effectiveness of Treasury’s activities, recommend 

improvements, and evaluate whether TARP recipients are satisfying their legal 

obligations. 

• Prevent, detect, investigate and refer for prosecution cases of fraud, waste and abuse 

involving TARP funds or programs. 

SIGTARP - 1 
Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

Section 2 – Budget Adjustments and Appropriation Language ............................................. 12

2.1 – Budget Adjustments Table ............................................................................................... 12

2A – Budget Increases and Decreases Description ................................................................... 12

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

2.3 – Appropriations Detail Table ............................................................................................. 14

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

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

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

3.1 – Budget by Strategic Outcome .......................................................................................... 15

3.2.1 Audit Budget and Performance Plan ................................................................................ 16

3.2.2 Investigations Budget and Performance Plan ................................................................... 17

Section 4 – Supporting Materials .............................................................................................. 19

4A – Human Capital Strategy Description ................................................................................ 19

4B – Information Technology Strategy ..................................................................................... 21

SIGTARP - 2 
Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities

SIGTARP supports and complements Treasury’s strategic goal of effectively managing the U.S. 

Government’s Finances as they relate to TARP and TARP-related funds, through the 

implementation of SIGTARP’s priorities: 

Transparency - Promoting transparency in the management and operation of TARP programs; 

Coordinating Oversight: 

• Prospectively advising Treasury concerning issues relating to compliance, internal controls 

and fraud prevention; 

• Retrospectively assessing the effectiveness of Treasury’s activities and evaluating whether 

TARP recipients are satisfying their legal obligations; and 

Robust Enforcement - Preventing, detecting, investigating and referring for prosecution cases 

of fraud, waste and abuse involving TARP funds or programs. 

Promoting transparency in the management and operations of TARP programs is vital. Through 

the Emergency Economic Stabilization Act of 2008, P.L. 110-343 (EESA), the American 

taxpayer has been asked to fund an unprecedented effort to stabilize the financial system and 

foster economic recovery. In this context, the public has a right to know how Treasury decides 

to invest its money, how it manages the assets it acquires, and how TARP recipients use the 

funds. Transparency is a powerful tool to ensure accountability and that all those managing and 

receiving TARP funds will act appropriately and in the best interest of the country. 

SIGTARP views its oversight role prospectively, retrospectively, internally, and externally. 

Prospectively, SIGTARP, among other things, advises Treasury on issues relating to compliance, 

internal controls and fraud prevention. Retrospectively, SIGTARP assesses the effectiveness of 

TARP activities over time and suggests improvements. Internally, SIGTARP’s oversight role 

reaches to Treasury officials and to other government employees who manage TARP-related 

programs. Externally, it reaches to the recipients of TARP funds, the other private participants in 

TARP-related programs and to vendors that have been retained to assist Treasury in 

implementing TARP. SIGTARP also plays a significant external coordinating role among 

TARP oversight bodies both to ensure maximum oversight coverage and to avoid redundant and 

unduly burdensome requests on Treasury personnel who manage the programs. 

Robust criminal and civil law enforcement involves the prevention, detection, and investigation 

of instances of fraud, waste, and abuse relating to TARP funds or operations. Through audit and 

investigative resources, and partnerships with other relevant law enforcement agencies, 

SIGTARP is committed to deterring, detecting, and investigating and referring for prosecution 

those persons and entities, inside or outside of the government, who waste, steal, or abuse TARP 

funds. 

SIGTARP - 3 
 In accordance with the requirements of Section 6(f)(1) of the Inspector General Act of 1978 (as 

amended), the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) 

submits the following information related to its requested budget for FY 2012: 

• The aggregate budget request for the operations of SIGTARP is $47,374,000 

• The portion of this amount needed for SIGTARP training is $516,000; 

• The portion of this amount needed to support the Council of the Inspectors General on 

Integrity and Efficiency (CIGIE) is estimated at $51,039; and 

• The amount requested for training satisfies all SIGTARP training needs for fiscal year 2012. 

1B – Program History and Future Outlook

Background: TARP consists of 13 programs all of which have been implemented. Six are 

closing or have already been wound down. As of October 3, 2010, Treasury had obligated 

$474.8 billion for TARP. Of this amount, Treasury had expended or committed to expend 

approximately $469.8 billion through the 13 implemented programs to provide support for U.S. 

financial institutions, the automobile industry, the markets in certain types of asset-backed 

securities and homeowners. The focus of TARP has begun to shift as the early TARP programs 

that invested huge sums in banks are now closed to further investments and most of the largest 

bank recipients have repaid their TARP funds. Treasury has stated that, going forward, TARP 

will focus on foreclosure mitigation efforts, small-business lending, and a continuation of 

support for the Asset-Backed securities (ABS) markets. 

General Management: Section 121 of the EESA created SIGTARP as an independent agency 

within Treasury responsible for conducting, supervising, and coordinating audits and 

investigations of any actions taken under EESA. Of the four primary oversight bodies 

referenced in EESA, (i.e., SIGTARP, the Financial Stability Oversight Board, the Congressional 

Oversight Panel, and the Government Accountability Office), SIGTARP stands as the sole 

TARP oversight body charged with criminal law enforcement responsibility. SIGTARP 

commenced operations on December 15, 2008, with the swearing in of the Special Inspector 

General (SIG). 

Between its commencement in December of 2008 and January 2011, SIGTARP has been 

extraordinarily productive: publishing nine comprehensive quarterly reports to Congress 

concerning TARP, opening 142 investigations, initiating 26 audits, issuing 13 audit reports, 

leveraging oversight resources, testifying at more than 20 Congressional hearings or briefings, 

building infrastructure, and hiring staff. In the latter regards, SIGTARP has secured permanent 

office space and equipment for staff; has contracted with public and private vendors for 

personnel services, procurement assistance, publication consulting, data processing and analysis, 

and office equipment and services. SIGTARP has completed the move into its permanent space. 

Further, SIGTARP has hired 141 managers, lawyers, auditors, investigators, and other 

professionals with a wealth of experience in program auditing, criminal law enforcement, 

securities enforcement, and other relevant curricula. In FY 2011 SIGTARP anticipates increasing 

its FTE level to 192 to address field operations established in four sites and work load 

requirements of audit and investigation cases that are pending due to insufficient staffing. To 

successfully accomplish this hiring challenge, SIGTARP relied on direct hire authority and dual 

SIGTARP - 4 
compensation authority waiver delegated by the Office of Personnel Management, as well as 

authority provided by the Special Inspector General for the Troubled Asset Relief Program Act 

of 2009, P.L. 111-15. 

Quarterly Reports to Congress: SIGTARP has issued nine wide-ranging quarterly reports to 

Congress, describing the activities and plans of SIGTARP; explaining and evaluating the various 

TARP programs (both implemented and announced); reviewing the operations of the Office of 

Financial Stability (OFS), which administers TARP; and recommending changes to TARP 

programs and procedures to increase transparency and effective oversight and decrease the 

potential for fraud, waste and abuse. SIGTARP expends substantial time and resources on its 

reports to Congress, which are designed to be the comprehensive reference concerning TARP 

activities for policy makers, Congress and the American people. SIGTARP’s reports satisfy the 

requisite reporting requirements of SIGTARP’s authorizing statute by detailing its operations; 

describing the categories of troubled assets purchased or otherwise procured by Treasury; 

explaining the reasons Treasury deemed it necessary to purchase each troubled asset; listing each 

financial institution from which such troubled assets were purchased; listing and detailing 

biographical information on each person or entity hired to manage such troubled assets; 

estimating the total amount of troubled assets purchased, the amount of troubled assets held, the 

amount of troubled assets sold, and the profit or loss incurred on each sale or disposition of each 

such troubled asset; and listing the insurance contracts issued. These quarterly reports are 

available at http://www.sigtarp.gov/reports.shtml. 

To date, SIGTARP’s quarterly reports include 66 detailed recommendations to improve TARP 

programs and procedures. Treasury has adopted many of these recommendations, and Congress 

has effectively required OFS to implement several that it has rejected. For example, 

recommendations included in SIGTARP’s April 21, 2009 Quarterly Report to Congress were 

largely adopted and enacted into law by section 402 of P.L. 111-22. SIGTARP’s January 2011 

Quarterly Report to Congress includes a series of recommendations concerning, among other 

things, enhancing transparency, promoting effectiveness and the prevention and detection of 

fraud in connection with TARP and its components. 

Investigative Activities: SIGTARP’s Investigations Division (ID) has developed into a 

sophisticated white-collar law enforcement agency. Currently, ID has 142 open criminal and 

civil investigations, which concern suspected TARP fraud, accounting fraud, securities fraud, 

insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advancefee schemes, public corruption, false statements, obstruction of justice, theft of trade secrets, 

money laundering, and tax-related investigations. Although the majority of SIGTARP’s 

investigative activities remain confidential, highlights from several cases that have been brought 

as the result of SIGTARP’s investigations include the following. 

• Colonial Bancgroup/Taylor, Bean & Whitaker: On June 15, 2010, SIGTARP, the Federal 

Bureau of Investigation (FBI), the Office of the Inspector General for the Federal Deposit 

Insurance Corporation (FDIC OIG), Office of Inspector General (OIG), and the Department 

of Housing and Urban Development (OIG) executed an arrest warrant for Lee Bentley 

Farkas, the former chairman of Taylor, Bean & Whitaker (TBW), a private mortgage lending 

SIGTARP - 5 
company, in connection with a scheme involving Colonial Bancgroup (Colonial), a large 

regional bank that was, until its demise in the fall of 2009, TBW’s largest lender. 

In the fall of 2008, Colonial applied for $570 million in taxpayer funding through the 

TARP’s Capital Purchase Program (CPP). As with all CPP applications, Colonial submitted 

financial data and filings to Federal bank regulators. Based on these representations, 

Treasury conditionally approved Colonial’s TARP application for $553 million, contingent 

on, among other things, Colonial’s raising $300 million in private capital. A review of the 

circumstances of Colonial’s application and its announcement that it had received TARP 

approval led SIGTARP to open an investigation in concert with the Securities and Exchange 

Commission (SEC). In April 2009, in a filing with the SEC, Colonial announced that it had 

met its final condition to receive funding based on Farkas’ representation that he led an 

investment group that had raised $300 million to invest in Colonial. 

Within days of this announcement, SIGTARP issued subpoenas to both Colonial and TBW, 

and, over the course of the next several months, SIGTARP and its partners uncovered the 

massive alleged fraud at both Colonial and TBW, despite attempts by members of the 

conspiracy to destroy documents called for by SIGTARP’s subpoena. SIGTARP alerted 

Treasury of its investigation to assure that no TARP funds would be disbursed to Colonial, 

and referred the case to the Department of Justice (DOJ) for prosecution. Farkas was 

charged in the Eastern District of Virginia in a 16-count indictment, including conspiracy to 

commit bank, wire and securities fraud; bank fraud; wire fraud; and securities fraud. Among 

other things, Farkas is charged for his role in attempting to steal $553 million in TARP funds 

through Colonial’s fraudulent CPP application. Ultimately, Colonial did not receive any 

TARP funds. 

• The Park Avenue Bank: On March 15, 2010, Charles Antonucci, the former President and 

Chief Executive Officer of The Park Avenue Bank, was charged by the United States 

Attorney’s Office for the Southern District of New York with offenses including self-dealing, 

bank bribery, embezzlement of bank funds, and bank, mail and wire fraud, among others. In 

particular, Antonucci allegedly attempted to steal $11 million of TARP funds by, among 

other things, making fraudulent claims about the bank’s capital position. These charges mark 

the first time an individual has been criminally charged with attempting to steal TARP funds. 

According to the allegations, Antonucci falsely represented that he had personally invested 

$6.5 million in The Park Avenue Bank to improve its capital position. As set forth in the 

charges, however, the funds were actually borrowed from the Park Avenue Bank itself and 

reinvested as part of an undisclosed “round-trip” transaction. The complaint further alleges 

that this fraudulent transaction was touted by The Park Avenue Bank in support of its 

application for TARP funds as evidence of its supposedly improving capital position. 

• Bank of America: On February 4, 2010, the New York Attorney General charged Bank of 

America, its former Chief Executive Officer Kenneth D. Lewis, and its former Chief 

Financial Officer Joseph L. Price with civil securities fraud. According to the allegations, in 

order to complete a merger between Bank of America and Merrill Lynch & Co., Inc. (Merrill 

Lynch), the defendants failed to disclose to shareholders spiraling losses at Merrill Lynch. 

Additionally, after the merger was approved, it is alleged that Bank of America made 

misrepresentations to the Federal Government in order to obtain tens of billions of dollars in 

SIGTARP - 6 
TARP funds. The investigation was conducted jointly by the New York Attorney General’s 

Office and SIGTARP, and the case remains pending in New York state court. 

SIGTARP also assisted the SEC with its Bank of America investigation. On February 22, 

2010, the Honorable Jed S. Rakoff, United States District Judge for the Southern District of 

New York, approved a $150 million civil settlement between the SEC and Bank of America 

to settle all outstanding SEC actions against the firm. 

• Nations Housing Modification Center: On March 19, 2010, Glenn Steven Rosofsky was 

arrested by agents from SIGTARP and the Internal Revenue Service, Criminal Investigation 

Division and charged by the U.S. Attorney’s Office for the Southern District of California 

with one count of conspiracy to commit wire fraud and money laundering and one count of 

money laundering. Separate information the same day charged Michael Trap with conspiracy 

to commit fraud and money laundering. As set forth in the charges, Rosofsky, Trap, and 

others operated a telemarketing firm, ostensibly to assist delinquent homeowners with loan 

modification services. Operating under the names “Nations Housing Modification Center” 

and “Federal Housing Modification Department,” Rosofsky and Trap took advantage of the 

publicity surrounding the Administration’s mortgage modification efforts under the TARPsupported Making Home Affordable program and are alleged to have used fraudulent 

statements to induce customers to pay $2,500 – $3,000 each to purchase loan modification 

services that were not actually provided. It is alleged in court documents that the fraud 

grossed more than $1 million. Trap pled guilty to the charges listed in his March 19 

information the following day. The case against Rosofsky is pending. 

• Mount Vernon Money Center: On March 11, 2010, the U.S. Attorney’s Office for the 

Southern District of New York indicted Robert Egan, president, and Bernard McGarry, chief 

operating officer, of the Mount Vernon Money Center (MVMC) with bank fraud for 

allegedly stealing $50 million entrusted to their company. MVMC engaged in various cash 

management businesses, including replenishing cash in more than 5,300 automated teller 

machines owned by banks and other financial institutions. According to the charges, from 

2005 through February 2010, Egan and McGarry solicited and collected hundreds of millions 

of dollars from MVMC’s clients on the false representations that they would not commingle 

clients’ funds or use the money for purposes other than those specified in the various 

contracts with their clients. Egan and McGarry misappropriated their clients’ money — 

including the funds of several institutions in which the American taxpayer was an investor 

through TARP — to fund tens of millions of dollars in operating losses in MVMC’s 

businesses, to repay outstanding client obligations, and to enrich themselves at their clients’ 

expense. SIGTARP agents assisted with the investigation. A trial date remains to be set. 

Audit Activities: SIGTARP’s Audit Division (AD) conducts, supervises, and coordinates 

programmatic audits with respect to Office of Financial Stability operation of TARP and 

recipients’ compliance with their obligations under relevant law and contracts; evaluates TARP 

policies and procedures; and provides technical assistance to Treasury. With respect to auditing, 

AD is designed to provide SIGTARP with maximum flexibility in the size, timing, and scope of 

audits so that, without sacrificing the rigor of the methodology audit results, whenever possible, 

can be generated rapidly both for general transparency’s sake and so that the resulting data can 

SIGTARP - 7 
be used to improve the operations of the fast-evolving TARP. To date, AD has issued thirteen 

audit reports; highlights from FY 2010 reports are as follows: 

• Original CPP and Bank of America Investments: In October of 2009, SIGTARP released an 

audit examining the review and approval process associated with TARP assistance to the first 

nine CPP recipients, with emphasis on additional assistance to Bank of America 

subsequently authorized under Targeted Investment Program and the Asset Guarantee 

Program. The audit concluded that Treasury, the Federal Reserve, and the FDIC 

implemented programs designed to help prevent a further deterioration of the economy and a 

significant risk of financial market collapse. The audit also found that Treasury and other 

regulators’ descriptions of the financial conditions of the first nine institutions as “healthy” 

were inconsistent with the private beliefs of decision makers at Treasury and the Federal 

Reserve, and later proved to be inaccurate. In addition to the basic transparency concern that 

this inconsistency raises, by stating expressly that the “healthy” institutions would be able to 

increase overall lending, Treasury created unrealistic expectations about the institutions’ 

conditions and their ability to increase lending. Treasury lost credibility when lending at 

those institutions did not in fact increase and when subsequent events — the further 

assistance needed by Citigroup and Bank of America being the most significant examples — 

demonstrated that at least some of those institutions were not in fact healthy. 

• Federal Agencies Oversight of American International Group, Inc. Executive Compensation: 

SIGTARP also released in October of 2009, an audit report that examined the extent of the 

knowledge of and oversight by officials from the Federal Reserve, New York (FRBNY), and 

Treasury over compensation programs at AIG, and, specifically, $168 million in retention 

award payments made to employees of AIG Financial Products Corp. (AIGFP) in March 

2009. The audit concluded, among other things, that Treasury officials effectively 

outsourced oversight of AIG’s compensation systems to the Federal Reserve, failing to take 

any independent steps to assess broadly the amount or scope of AIG’s compensation 

obligations despite the $40 billion TARP investment in November 2008. As a result, senior 

Treasury officials were apparently not aware of the details of the March 2009 AIGFP 

payments until February 28, 2009. This meant that Treasury invested tens of billions of 

taxpayer dollars in AIG, designed AIG’s contractual executive compensation restrictions, and 

helped manage the Government’s majority stake in AIG for several months, all without 

having any detailed information about the scope of AIG’s very substantial, and very 

controversial, executive compensation obligations. Treasury’s failure in oversight potentially 

resulted in a missed opportunity to avoid the explosively controversial events surrounding the 

AIGFP retention payments that followed and created such considerable public and 

Congressional concern. 

• AIG Counterparty Payments: On November 10, 2008, the Federal Reserve and Treasury 

announced the restructuring of the Government’s financial support to AIG. As part of this 

restructuring, a special purpose vehicle, Maiden Lane III, purchased certain assets underlying 

AIGFP’s Credit Default Swap (CDS) contracts from its counterparties using $24.3 billion of 

FRBNY financing in combination with a $5.0 billion equity investment from AIG. In 

exchange for this payment and being permitted to retain $35 billion in collateral payments 

already made (thus effectively being paid par or face value for the underlying assets), the 

SIGTARP - 8 
counterparties agreed to terminate their CDS contracts with AIGFP. SIGTARP’s audit, 

which was issued in November of 2009, found, among other things, that the terms of the 

original FRBNY financing did not result from independent analysis, but were simply an 

adoption of the term sheet from an aborted private financing discussion, and those terms, 

which included an onerous effective interest rate of 11 percent, made modification of the 

terms and further Government action inevitable. The audit also found that, in structuring 

Maiden Lane III, FRBNY attempted to obtain concessions, or “haircuts” from the CDS 

counterparties — and one counterparty was prepared to take a modest haircut — but the 

FRBNY’s negotiating strategy was hampered by a series of policy decisions that severely 

limited its ability to obtain concessions, including its decision not to accept concessions 

unless concessions could be obtained from all of the counterparties, its refusal to use its 

leverage as regulator to some of the institutions involved, and its basic discomfort with 

interfering with the sanctity of the counterparties’ contractual rights. These policy choices 

led directly to a negotiating strategy with the counterparties that even then-FRBNY President 

Geithner acknowledged had little likelihood of success. The audit further noted that although 

Mr. Geithner has denied that his intent was to benefit the counterparties, the overall structure 

of the AIG bailout resulted in AIG’s counterparties receiving tens of billions of dollars they 

likely would not have otherwise received had AIG gone into bankruptcy. 

• Additional Insights on Use of TARP Funds: In December of 2009, SIGTARP issued an audit 

conducted as a follow-up to SIGTARP’s earlier audit on TARP recipients’ use of TARP 

funds. The follow-up audit examined the use of TARP funds by six institutions — two 

automobile manufacturers (GM and Chrysler), two automobile financing firms (GMAC Inc. 

and Chrysler Financial Services Americas LLC), and two life insurance companies (The 

Hartford Financial Services Group, Inc. and Lincoln National Corporation). The six 

companies were able to provide useful insight on their actual or planned use of TARP funds. 

• HAMP: A SIGTARP audit report published in March of 2010, examined the design and 

operation of HAMP in detail. The audit first found that Treasury’s publicly touted measure of 

success, the number of short-term trial modification offers that have been made to struggling 

homeowners, was largely meaningless, and that Treasury needs to clearly identify the total 

number of homeowners it actually intends to help stay in their homes through sustainable 

permanent mortgage modifications. The audit also found that the limited results to date 

stemmed from, among other things, flaws in HAMP’s design, rollout, and marketing that 

diminished the program’s effectiveness in providing sustainable relief to at-risk homeowners. 

In its original version, HAMP involved frequent and time-consuming revisions of guidelines 

that created confusion and delay; permitted reliance on unverified verbal borrower data that 

slowed down conversions to permanent modifications; suffered from insufficient outreach to 

the American public about eligibility and benefits; and did not fully address risk factors for 

re-defaults among participating borrowers, including negative equity and high total debt 

levels even after modification. Without addressing the dangers of re-default, HAMP risks 

merely spreading out the foreclosure crisis at significant taxpayer expense. While this may 

benefit financial institutions that would not have to recognize the losses from immediate 

foreclosures, it would do little to accomplish EESA’s explicit purpose to “help families keep 

their homes.” 

SIGTARP - 9 
• Warrants Sales: In May of 2010, SIGTARP released an audit that analyzed the processes and 

procedures Treasury has established to ensure that the Federal Government receives fair 

market value for the warrants it received in connection with TARP investments and the 

extent to which Treasury has controls in place to facilitate a transparent and well-documented 

decision-making process. The audit found that Treasury’s warrants disposition process 

generally has been successful, albeit after a somewhat difficult start. However, there are two 

areas where Treasury could improve its procedures to ensure more consistent, transparent 

decision-making. First, Treasury lacks detailed documentation supporting the decisionmaking process of its Warrant Committee, and SIGTARP recommended that Treasury 

enhance the detail captured in the meeting minutes of its Warrant Committee. Second, 

Treasury does not document conversations with its counterparties, nor does Treasury have 

procedures in place to control the amount of information shared with them. 

• Monitoring Compliance: In June 2010, SIGTARP issued an audit that examined the extent 

to which Treasury follows a clear, consistent, and effective process to ensure that companies 

receiving exceptional assistance under TARP adhere to applicable requirements. SIGTARP 

found that, although some progress has been made since an earlier review of internal 

controls, Treasury’s implementation of its compliance strategy has been too slow, Treasury 

relies too heavily on the companies to gauge their compliance, and Treasury has been 

inadequately staffed. 

• Automobile Dealership Closures: In July 2010, SIGTARP published an audit, as requested 

by Senator Jay Rockefeller and Representative David Obey, that evaluated the role of 

Treasury’s Auto Team in the decision to reduce dealership networks, the extent to which GM 

and Chrysler developed and documented processes for deciding which dealership to 

terminate and which to retain, and to what extent the dealership reductions are expected to 

lead to cost savings to GM and Chrysler. SIGTARP found that although there was broad 

consensus concerning the need to close dealerships, there were dissenting expert opinions 

concerning the timing and location of the reductions; that job losses were not a significant 

factor in the Auto Team’s decision-making; and cost savings were not considered. 

These audits may be reviewed in their entirety at http://www.sigtarp.gov/audits.shtml. 

Leveraged Oversight Resources: SIGTARP actively coordinates its activities with other 

oversight and law enforcement bodies. In addition to meeting extensively with Treasury and the 

Federal Reserve concerning program proposals, SIGTARP regularly and continually coordinates 

with the Financial Stability Oversight Board, the Congressional Oversight Panel, and the 

Government Accountability Office concerning our overlapping oversight responsibilities under 

EESA. Additionally, SIGTARP has initiated several efforts designed to augment audit and 

investigative resources. For example, SIGTARP founded the TARP Inspector General Council 

(TARP-IG Council), which includes the Comptroller General, the Inspector General for 

Treasury, the Federal Reserve Board, the FDIC, SEC, the Federal Housing Finance Agency, 

HUD, the Small Business Administration, and the Treasury Inspector General for Tax 

Administration. The TARP-IG Council meets regularly to discuss developments in TARP and 

coordinate interconnected audit and investigative issues. Similarly, SIGTARP organized and 

chairs the Term Asset-Based Securities Loan Facility/Public-Private Investment Program 

SIGTARP - 10 
(TALF/PPIP) Task Force, which includes the Inspector General for the Federal Reserve Board, 

the Federal Bureau of Investigation (FBI), the Financial Crimes Enforcement Network 

(FinCEN), U.S. Immigration and Customs Enforcement, the Internal Revenue Service Criminal 

Investigation Division (IRS-CID), the SEC, and the United States Postal Inspection Service 

(USPIS). The task force members participate in regular briefings about the TALF/PPIP, 

collectively identify areas of fraud vulnerability, engage in training exercises, and coordinate 

audit and investigative efforts. SIGTARP has also forged partnerships and launched joint 

investigations with the FBI, the SEC, IRS-CID, and the Federal Trade Commission, among 

others. 

On February 24, 2010, SIGTARP hosted the inaugural meeting of the Rescue Fraud Working 

Group. President Obama established the Financial Fraud Enforcement Task Force (“FFETF”) 

“to investigate and prosecute significant financial crimes and other violations relating to the 

current financial crisis and economic recovery efforts, recover the proceeds of such crimes and 

violations, and ensure just and effective punishment of those who perpetrate financial crimes and 

violations.” A component of FFETF is the Rescue Fraud Working Group, co-chaired by Special 

Inspector General Neil M. Barofsky, Assistant Attorney General Lanny A. Breuer of the 

Criminal Division of the DOJ, and Timothy G. Massad, chief counsel of OFS. Attendees at the 

inaugural meeting included officials from agencies across the Federal Government, including 

OFS; DOJ (Civil, Criminal, and Tax Divisions); the U.S. Attorneys’ Offices for the Northern and 

Central Districts of California, the Eastern District of Virginia, the Eastern and Southern 

Districts of New York, and the District of New Jersey; the Office of the Comptroller of the 

Currency; the Office of Thrift Supervision; the FinCEN; USPIS; the Board of Governors of the 

Federal Reserve; the SEC; and the FBI. 

 

SIGTARP - 11 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Special IG for TARP FTE Amount

FY 2010 Enacted 133 $23,300

FY 2011 Annualized CR Level 192 $36,300

Changes to Base: 

Adjustment to Reach Policy Level: - $13,068 

Adjustment to Reach FY 2011 President's Policy - $13,068 

Maintaining Current Levels (MCLs): - $454 

Maintaining Current Levels - $454 

Efficiencies, Savings & Base Reductions: - ($2,448) 

Efficiencies, Savings and Reductions - ($2,448) 

Subtotal FY 2012 Changes to Base - $11,074 

Total FY 2012 Base 192 $47,374

Total FY 2012 Request 192 $47,374

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level 

Adjustment to Reach FY 2011 President's Policy +$13,068,000 / +0 FTE 

Adjustment to Reach FY 2011 President's Policy 

Maintaining Current Levels (MCLs) 

Maintaining Current Levels +$454,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012. 

Efficiencies, Savings & Base Reductions 

Efficiencies, Savings and Reductions -$2,448,000 / +0 FTE 

A reduction from the base level will be absorbed through general operating costs. 

 

SIGTARP - 12 
2.2 – Operating Levels Table 

Dollars in Thousands 

Special IG for TARP

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE 133 192 - 192 192

Object Classification

11.1 - Full-time permanent $9,591 $14,782 $0 $14,782 $17,339

11.3 - Other than full-time permanent $1,903 $1,682 $0 $1,682 $1,766

11.5 - Other personnel compensation $0 $0 $0 $1,416 $1,741

11.6 - Overtime $0 $1,416 $0 $0 $0

11.7 - Other Personnel Compensation $1,047 $449 $0 $449 $413

12 - Personnel benefits $3,454 $4,734 $0 $4,734 $5,346

21 - Travel and transportation of 

persons $0 $963 $0 $963 $1,000

23 - Rent, Communications and 

Utilities $1,425 $0 $0 $0 $0

23.3 - Communication, utilities, and 

misc charges $0 $0 $0 $0 $172

24 - Printing and reproduction $0 $0 $0 $0 $195

25.1 - Advisory and assistance 

services $4,321 $5,115 $0 $5,115 $7,254

25.2 - Other services $0 $0 $0 $0 $741

25.3 - Other purchases of goods and 

services from Govt. accounts $1,559 $7,159 $0 $7,159 $9,674

26 - Supplies and materials $0 $0 $0 $0 $410

31 - Equipment $0 $0 $0 $0 $1,223

42 - Insurance claims and indemnities $0 $0 $0 $0 $100

Total Budget Authority $23,300 $36,300 $0 $36,300 $47,374

Budget Activities

Audit $9,900 $15,609 $0 $15,609 $20,371

Investigations $13,400 $20,691 $0 $20,691 $27,003

Total Budget Authority $23,300 $36,300 $0 $36,300 $47,374

 

SIGTARP - 13 
2.3 – Appropriations Detail Table 

Dollars in Thousands 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

Audit 48 $9,900 61 $9,900 78 $15,609 78 $20,371 27.87% 105.77%

Investigations 64 13,339 72 13,400 114 20,691 114 27,003 58.33% 101.51%

Subtotal New Appropriated Resources 112 $23,239 133 $23,300 192 $36,300 192 $47,374 44.36% 103.32%

Other Resources:

Available multi-year/no-year funds 9,007 20,000 13,068 

Available multi-year PPIP funds 1,238 5,000 1,671 1,708

Subtotal Other Resources 0 $10,245 0 $25,000 0 $14,739 0 $1,708 -93.17%

Total Resources Available for Obligation 112 $33,484 133 $48,300 192 $51,039 192 $49,082 44.36% 1.62%

Resources Available for Obligation FY 2010 

Obligations

FY 2010 

Enacted

 FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY 2010 to 

FY 2012

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

SPECIAL INSPECTOR GENERAL FOR THE TROUBLED 

ASSET RELIEF PROGRAM 

Federal funds 

SALARIES AND EXPENSES 

For necessary expenses of the Office of the Special Inspector 

General in carrying out the provisions of the Emergency 

Economic Stabilization Act of 2008 (Public Law 110-343), as 

amended, $47,374,000. 

 

2C – Legislative Proposals 

SIGTARP does not have any legislative proposals for FY 2012. 

SIGTARP - 14 
Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go 

to: http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY10 to FY12

 Exceptional accountability and transparency 23,300 36,300 $47,374 103.32% 

Total $23,300 $36,300 $47,374 103.32%

3A - Audit ($20,371,000 from direct appropriations) 1

 The Audit Division (AD) conducts, 

supervises, and coordinates programmatic audits with respect to Treasury’s operation of TARP 

and the recipients’ compliance with their obligations under relevant law and contracts; evaluates 

TARP policies and procedures; and provides technical assistance to Treasury. With respect to 

auditing, the division is designed to provide SIGTARP with maximum flexibility in the size, 

timing, and scope of audits so that, without sacrificing the rigor of the methodology, audit 

results, whenever possible, can be generated rapidly both for general transparency’s sake and so 

that the resulting data can be used to improve the operations of the fast-evolving TARP. For FY 

2012, AD expects to initiate an average of four audits per quarter. 

Regarding policy review and technical assistance, a particular focus of AD is ensuring that 

appropriate internal controls are in place and are complied with, both by Treasury in its 

management of TARP and by the recipients of TARP funds, including vendors and the entities in 

which money is invested. Where controls or compliance are found to be lacking, or where 

particular aspects or policies are found ineffective at reaching TARP’s goals, AD assists the SIG 

to fashion recommendations to resolve such issues. 

 

1

 In addition to the SIG and his central office staff (“CO”), SIGTARP is comprised of the AD, the ID, the 

Operations Division (“OD”), and the Office of General Counsel. The basic statutory mission of SIGTARP (i.e., 

audit and investigation) is largely carried out by AD and ID. The CO, OD, and DGC lend support AD and ID as they 

fulfill the mission, and, thus, CO, OD and DGC costs have been apportioned among AD and ID. 

SIGTARP - 15 
3.2.1 Audit Budget and Performance Plan 

Audit Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $9,900 $15,609 $20,371

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $9,900 $15,609 $20,371

Budget Activity Total $0 $0 $9,900 $15,609 $20,371

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Congressional Requests for Testimony Completed (Ot)(Units) N/A N/A 7.0 4.0 4.0

Number of Completed Audit Products (Ot)(Units) N/A 3.0 9.0 12.0 12.0

Percent of Recommendations Implemented (Oe)(%) N/A 100.0 43.0 70.0 70.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: As discussed in section 1B, AD has issued 13 audit projects and 

initiated 26 audits. SIGTARP’s audit team was not fully staffed for fiscal year 2010 and yet the 

audit work increased, requiring more in-depth analysis. As SIGTARP’s audit division staffs to 

full capacity, the production of a greater number of audit reports in anticipated in FY 2011 and 

FY 2012. SIGTARP also anticipated a higher rate of implementation from OFS in FY 2010. 

SIGTARP will continue to make recommendations to improve the efficiency and effectiveness 

of TARP and will continue to work with OFS to implement these recommendations. In addition, 

SIGTARP anticipates that Congress will continue to have interest in SIGTARP’s work and will 

continue to request testimonies in FY 2011 and FY 2012. 

3B - Investigations ($27,003,000 from direct appropriations): Investigations Division (ID) 

supervises and conducts criminal and civil investigations into those persons and entities, whether 

inside or outside of government, who waste, steal, or abuse TARP funds. The division is 

comprised of experienced financial and corporate fraud investigators, including not only special 

agents, but also forensic analysts and, critically, attorney advisors. This structure provides 

SIGTARP with a broad array of expertise and perspectives in developing even the most 

sophisticated investigations. In the interests of maximizing criminal and civil enforcement, ID 

coordinates closely with other law enforcement agencies with the goal of forming law 

enforcement partnerships, including task force relationships, across the Federal government to 

leverage SIGTARP’s expertise and unique position. 

ID also implements SIGTARPs Hotline which accepts and processes telephone, e-mail, website, 

and in-person complaints. One of SIGTARP's primary investigative priorities is to operate the 

SIGTARP Hotline, thus providing a simple, accessible way for the American public to report 

SIGTARP - 16 
concerns, allegations, information, and evidence of violations of criminal and civil laws in 

connection with TARP. From its inception in February 2009 through December 31, 2010, the 

SIGTARP Hotline has received and analyzed more than 24,000 Hotline contacts. A substantial 

number of SIGTARP’s investigations were generated in connection with Hotline tips. The 

SISTARP Hotline can receive information anonymously, and the confidentiality of 

whistleblowers is protected to the fullest extent possible. 

3.2.2 Investigations Budget and Performance Plan 

Investigations Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $13,400 $20,691 $27,003

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $13,400 $20,691 $27,003

Budget Activity Total $0 $0 $13,400 $20,691 $19,703

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Hotline Complaints Referred for Investigation or to 

OFS within 14 days of Receipt (E)(%)

N/A 77.0 74.0 65.0 70.0

Percentage of Investigations Accepted by Prosecutors (Oe)(%) N/A 95.0 100.0 55.0 55.0

Percentage of Preliminary Investigations Converted to Full 

Investigations (Oe)(%)

N/A 50.0 80.0 40.0 N/A

Percentage of cases that are joint agency/task force 

investigations (Oe)(%)

N/A 60.0 50.0 35.0 40.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: In FY 2010, the Investigations Division opened 117 investigations 

and closed 41 cases. There are 142 active investigations as of the end of December 31, 2010. 

For FY 2012, although it is difficult to forecast for a variety of reasons, SIGTARP anticipates 

opening 95 new investigations. These investigations concern suspected TARP fraud, accounting 

fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage-servicer 

misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of 

justice, trade secrets theft, money laundering, and tax-related investigations. 

The division expects to have grown to 82 FTE’s by the end of the fiscal year. These FTEs hail 

from many Federal agencies including the Department of Justice, FBI, IRS-Criminal 

Investigations, Department of Energy-OIG, US Postal Inspections, HUD-OIG, Air Force Office 

of Special Investigations, US Secret Service, FDIC-OIG, US Army Criminal Investigations 

SIGTARP - 17 
SIGTARP - 18 

Command, Navy Criminal Investigations Service, Treasury-OIG and the Securities and 

Exchange Commission. 

As the Division has expanded so has the depth and complexity of the cases under investigation. 

Consequently these highly complex cases require considerable investment in investigative 

resources. Accordingly, the performance measures for FY2012 may need to be adjusted to 

reflect that some preliminary cases may sit longer prior to closure or conversion to a full 

investigation depending on available investigative resources. While the FY2010 percentage of 

80 percent is an improvement on the last fiscal year the impact on our performance measure of 

some highly significant cases is difficult to quantify at this time. 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The SIGTARP’s strategic management of human capital is consistent with its mission, vision 

and priorities and supports Treasury’s strategic goal of managing the U.S. Government’s 

Finances as they relate to the TARP program effectively. SIGTARP anticipates that it will reach 

steady state (i.e., full staffing level, permanent office space, and most critical contracts in place) 

in the third quarter of FY 2011. Moreover, SIGTARP, pursuant to section 121(k) of EESA, as 

amended, is a temporary organization that is scheduled to cease operations on the date that the 

last troubled asset is disposed or the last guarantee contract expires, whichever is later. 

SIGTARP uses various hiring flexibilities such as Direct Hiring Authority and dual 

compensation reduction (salary offset) for re-employed annuitants. Direct Hiring Authority and 

the authority to re-employ retired annuitants without a salary offset has aided SIGTARP in 

aggressively recruiting the highly skilled, qualified applicants critical to SIGTARP meeting 

Congressional mandates. 

SIGTARP continues to find ways to strengthen recruitment efforts through its continual 

development of a proactive working relationship with managers and supervisors. HR Specialist 

consults with managers/supervisors frequently to discuss position management and position 

classification issues; recruitment strategies; and provide information on hiring flexibilities and 

incentives that are available. 

SIGTARP recognizes that improvements in the hiring processes are an on-going effort, and 

while much progress has been made – emphasis on achieving greater efficiencies and 

improvements continue. This effort includes working with minority schools and institutions to 

develop relationships; posting job vacancies in various professional magazines; focusing on 

Schedule A, Persons with Disability appointing authority, and increasing its veterans 

employment efforts by partnering with the Department of Treasury’s Veterans Employment 

Program Office (VEPO). This program offers assistance with locating interns as well as 

conducting veteran’s workshops for managers and supervisors. The workshops will meet the 

mandatory hiring manager training requirements. 

In addition, SIGTARP participates in the “Take Your Child to Work Program” as a means to 

support the objectives of the White House Council on Women and Girls (CWG). 

SIGTARP - 19 
4.1 - Summary of IT Resources Table

Major IT Investments / Funding Source Budget Activity

FY 2009 

Enacted

FY 2010 

Enacted

% Change 

from FY 2009 

to FY 2010

FY 2011 

Annualized

CR Level

FY 20

Reque

Audit and 

Investigations $0 $457 100.0% $1,860 $1,26

Subtotal, Major IT Investments $0 $457 100.0% $1,860 $1,26Continuing Operating Costs

Audit and 

Investigations $0 $478 100.0% $700 $700 

Other Non-Major Costs

Audit and 

Investigations $0 $322 100.0% $342 $342 

Non-Major IT Investments $0 $800 100.0% $1,042 $1,04Infrastructure Investments $0 $2,678 100.0% $3,838 $2,98Enterprise Architecture $0 $0 0.0% $0 $0 Enterprise Identity and Access Management $0 $0 0.0% $0 $0 Total IT Investments $0 $3,935 100.0% $6,740 $5,29(Dollars in Thousands)

SIGTARP - 20 
4B – Information Technology Strategy 

IT funding has been critical in enabling SIGTARP to fulfill its mission of transparency, 

coordinated oversight, and robust enforcement. Presently, SIGTARP is utilizing the services 

provided by Treasury Departmental Offices as part of Treasury’s headquarters operations. 

SIGTARP relies on the Treasury’s Office of the CIO and Departmental Offices Operations to 

provide a secure, independent infrastructure that is fully capable of supporting the mission and 

administrative requirements of a completely functional, bureau-level government agency with 

the technology requirements appropriate to an audit and investigative organization. SIGTARP is 

reviewing those requirements with Treasury Departmental Offices and other government 

agencies to determine best course of action to complete those requirements. The major IT 

investments are for acquisition, installation, integration, training and modifications of mission 

systems such as Hotline information management, investigative case management, forensic 

system management, audit management, records management, asset management and training 

management which are not normally provided by Treasury’s shared services operations. As a 

temporary agency, SIGTARP expects only maintenance and routine enhancements and 

modifications to be required on an ongoing basis after a steady state of IT systems and operations 

is intended to be achieved in FY 2011. The significant infrastructure investments deferred in FY 

2010 are expected to be expended in FY 2011 and FY 2012. These investments support the 

continued establishment of SIGTARP’s capabilities, including infrastructure planning, 

installation of cabling to desktops, computer facility, telephone facility data storage, wireless 

antenna system, additional cooling and backup power and the connections for one or more 

external voice and data providers for its headquarters and remote office structure. After these 

initial start-up years, funds are budgeted for standard upgrades in capacity and functionality for 

headquarters and for remote office operations. 

Accordingly, SIGTARP’s IT strategy is to establish its mission systems and IT infrastructure in 

the initial years of its operation, then maintain its IT investment beginning in FY 2012 to 

updates, modifications, maintenance and equipment refreshment consistent with the priorities of 

the mission and its role as a temporary agency. 

SIGTARP - 21 

TIGTA - 1 

Overview 

Mission Statement

To provide integrated audit, investigative, and inspection and evaluation services that promote 

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

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 Audit $57,421 $57,421 $62,357 $4,936 8.6%

 Investigations $94,579 $94,579 $95,474 $895 0.9%

Total Appropriated Resources $152,000 $152,000 $157,831 $5,831 3.8%

Total FTE 835 835 864 29 3.5%

FY 2012 Priorities 

 Adapting to the Internal Revenue Service’s (IRS) continuously evolving operations and 

mitigating intensified risks associated with modernization, security, addressing the Tax Gap, 

and human capital challenges facing the IRS in domestic and international operations in 

order to increase voluntary tax compliance; 

 Responding to domestic and international threats and attacks against IRS employees, 

property, and sensitive information; 

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

misconduct by IRS employees; 

 Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for monetary benefits and enhancing IRS’s service to taxpayers; 

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

and progress made to resolve them; and 

 Overseeing the IRS’s efforts to administer the tax provisions of the American Recovery and 

Reinvestment Act of 2009 (Recovery Act), the Patient Protection and Affordable Care Act, 

and the Health Care and Education Reconciliation Act of 2010. These two pieces of 

legislation are referred to as the Affordable Care Act (ACA). 
TIGTA - 2 

Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

FY 2012 Priorities ....................................................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

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

2.3 – Appropriations Detail Table ............................................................................................. 14

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

2C – Legislative Proposals ........................................................................................................ 15

Section 3 – Budget and Performance Plan ............................................................................... 16

3.1 – Budget by Strategic Outcome .......................................................................................... 16

3.2.1 Audit Budget and Performance Plan ................................................................................ 19

3.2.2 Investigations Budget and Performance Plan ................................................................... 22

Section 4 – Supporting Materials .............................................................................................. 23

4A – Human Capital Strategy Description ................................................................................ 23

4.1 – Summary of IT Resources Table ...................................................................................... 26

4B – Information Technology Strategy ..................................................................................... 27
TIGTA - 3 

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities

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’s work is devoted to all aspects of activity related to the federal tax system as 

administered by the Internal Revenue Service (IRS). As one of 69 federal offices of Inspector 

General, TIGTA reviews IRS programs, makes recommendations to improve their effectiveness 

and efficiency, and investigates allegations of fraud, waste, and abuse. TIGTA conducts audits 

that advise the American people, the Congress, the Secretary of the Treasury, and IRS’s 

management of high-risk issues, problems, and deficiencies related to the administration of IRS 

programs and operations. TIGTA’s audit recommendations aim to improve IRS systems and 

operations, while maintaining fair and equitable treatment of taxpayers. TIGTA’s investigations 

ensure the integrity of IRS employees, contractors, and tax professionals; provide for 

infrastructure security; and protect the IRS from 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. 

TIGTA’s oversight is essential to the efficiency and equity of the federal tax administration 

system. TIGTA ensures 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. 

TIGTA’s FY 2012 budget request of $157,831,000 represents an increase of 3.8 percent above 

the FY 2010 budget. These resources will finance 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: 

 Adapting to the Internal Revenue Service’s (IRS) continuously evolving operations and 

mitigating intensified risks associated with modernization and security, addressing the Tax 

Gap, and human capital challenges facing the IRS in domestic and international operations in 

order to increase voluntary tax compliance; 

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

sensitive information; 

 Improving the integrity of IRS operations by detecting and deterring fraud, waste, abuse or 

misconduct by IRS employees; 

 Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for monetary benefits and enhancing IRS’s service to taxpayers; 

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

and progress made to resolve them; and 

 Overseeing the IRS’s efforts to administer tax provisions of the American Recovery and 

Reinvestment Act of 2009 (Recovery Act), the Patient Protection and Affordable Care Act, 

and the Health Care and Education Reconciliation Act of 2010 (ACA). 

 Additionally, TIGTA’s strategic goals contribute to the Department’s priority performance goal 

to significantly increase voluntary tax compliance. 
TIGTA - 4 

TIGTA’s commitment to valuing its people was recognized in the Partnership for Public 

Service’s 2010 Best Places to Work rankings. TIGTA placed 18 out of 224 in the overall index 

score measuring the performance of agency subcomponents related to employee satisfaction and 

commitment. This ranking is based on the Office of Personnel Management’s (OPM) biennial 

Federal Human Capital Survey, which federal agencies use as benchmarks to measure their 

performance. The 2010 survey was renamed the “Federal Employee Viewpoint Survey (EVS).” 

TIGTA’s response rate of 79 percent was second place among the Treasury bureaus and higher 

than the government average. 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. The survey highlights stated that 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. 

In FY 2012, TIGTA will face the challenge of adapting its oversight activities to address the 

complex and high-risk issues associated with IRS implementation of ACA legislation. TIGTA 

requests $5,600,000 to provide oversight of the IRS implementation of ACA. This effort will be 

in addition to TIGTA’s continuing work including assessing IRS tax compliance initiatives, 

evaluating the IRS’s efforts to administer tax provisions in the Recovery Act, detecting and 

investigating fraud and electronic crime, reviewing procurement activities, safeguarding taxpayer 

privacy, evaluating IRS Human Capital activities, and addressing requests for IRS program 

reviews from the Congress and other IRS stakeholders. Each of these issues presents significant 

challenges for both TIGTA and the IRS. 

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 requested budget for FY 2012: 

 The aggregate budget request for the operations of TIGTA is $157,831,000; 

 The portion of the request needed for TIGTA training is $2,692,000; and 

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

Integrity and Efficiency (CIGIE) is $380,000. 

The amount requested for training satisfies all TIGTA training needs for fiscal year 2012. 

1B – Program History and Future Outlook

Previously a longstanding oversight office within the IRS, TIGTA was established as an 

independent office in January 1999 in accordance with 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’s audits, investigations, and inspections and evaluations are 

integral to the equitable treatment of taxpayers by the IRS, and in ensuring that collection of 

federal revenue is completed in a fair, efficient and effective manner that is secure from internal 

and external threats. Oversight activities are explicitly designed to identify high-risk systemic 

inefficiencies in IRS operations and to investigate exploited weaknesses in tax administration. 
TIGTA - 5 

In FY 2008, TIGTA’s Office of I&E began its first year of operation as a separate office after a 

successful pilot project during FY 2006 and FY 2007. I&E complements the work of the audit 

and investigative functions and provides TIGTA with additional flexibilities and capabilities to 

meet its mission and address increasing requests for IRS program reviews from the Congress and 

other IRS stakeholders. The scope of the group’s efforts ranges from answering Congressional 

concerns to evaluating IRS’s ability to administer the tax laws. I&E will continue to provide 

TIGTA the ability to conduct in-depth evaluations of major IRS functions, activities, and 

programs. I&E has positioned TIGTA well to respond to external stakeholders in a rapid 

response mode. As the group continues its work, I&E expects its influence in overseeing tax 

administration to grow and its service of informing interested parties to expand. 

The passage of the Recovery Act provided funding for the additional workload that has arisen 

from overseeing IRS efforts to implement a variety of economic stimulus measures. A key 

component of the Recovery Act is the implementation of 56 tax provisions by the IRS. TIGTA’s 

program plan includes detailed information on all ongoing and planned activities. Recovery 

work is allowing TIGTA to revise coordination procedures with the IRS to make interim reports 

more readily available to the public on TIGTA’s website and Recovery.gov; successful Recovery 

coordination changes will have a positive long-term impact on traditional audit and inspection 

timelines. During FY 2010, TIGTA issued 14 Recovery Act reports. Another 17 reviews are 

ongoing. 

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

under the ACA. Changes to tax administration that IRS will be responsible for implementing 

include: 

 Delivering tax credits to businesses and individuals to assist in covering the cost of health 

coverage; 

 Administering the mandate for individuals to purchase health coverage (only for those 

who are deemed able to afford such coverage) or be subject to a penalty on their 

individual federal tax returns; and 

 Administering multiple tax provisions designed to raise revenues to offset the cost of 

ACA. 

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 allay concerns 

about IRS overreach, assure citizens about the integrity of the program, and give lawmakers the 

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

initiatives that are administered through the tax code. The most recent example was TIGTA’s 

audit recommendations on the First-Time Homebuyers Tax Credit. All recommendations were 

quickly embraced by the IRS, and taxpayers were quickly assured that this was not a loophole 

for tax cheats. The roll-out of the Earned Income Tax Credit (EITC) was another initiative that 

touched millions of tax payers. Similarly, auditors at TIGTA’s predecessor, IRS Inspections, 

were able to identify problems before they had an impact on the public’s perception of the 

program. 
TIGTA - 6 

FY 2012 stands to be a crucial year in the IRS’s efforts to implement new systems and programs 

to administer these provisions. As IRS leadership lays the groundwork for administering these 

initiatives, TIGTA executives will monitor these plans and allocate staff and resources that best 

align with IRS decisions. TIGTA has already identified a critical need to conduct 16 separate 

ACA-related audits that will require 5,125 staff days, or 23 auditor full time equivalents (FTE), 

during FY 2012 alone. 

ACA will engage almost every component of TIGTA. Within the Office of Audit (OA), the 

Returns Processing and Account Services group will assess the integrity of new IRS forms and 

make sure that IRS systems are capable of directing the many calls from taxpayers. One 

example is a planned audit of the administration of section 9002 of the ACA that requires 

inclusion of employer sponsored health coverage on the Wage and Tax Statement (IRS form W2). 

The Security and Information Technology Services division will expand its audits of IRS 

computer systems to ensure that health care information is safeguarded and secure. Sharing 

sensitive health care information will be new for most taxpayers and TIGTA’s review of the 

implementation of section 1411 of the ACA legislation will assure that information shared 

between the U.S. Department of Health and Human Services and TIGTA is secure. 

Another example is the Compliance and Enforcement Operations group, which will expand 

audit coverage to include oversight of section 10907 of the ACA that creates a new 10 percent 

excise tax on indoor tanning services. Industry experts estimate that as many as 30 million 

Americans use indoor tanning services. This is just one of the 16 audits already identified that 

will be required to provide proper oversight of IRS’s expanded mission. 

The Office of Investigations (OI) is similarly impacted by the demands of ACA. As the IRS’s 

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. 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’s implementation of the ACA. TIGTA 

estimates that five series-1811 investigators will be required to discharge its increased duties 

associated with ACA. 

The five investigators will review and analyze intelligence information relating to potential 

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

mitigate potential threats. The 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 

Laboratory to help gather intelligence and investigate violent acts. 

The Office of Inspections and Evaluations (I&E) will also provide oversight of the IRS’s 

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

produce value-added products and services to improve tax administration. Inspections will 
TIGTA - 7 

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

traditional audit. Evaluations related to 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. I&E is requesting only one FTE at this time. Inspections and Evaluations, 

by their nature, have a short time horizon and will respond to specific ACA tax administration 

issues. 

TIGTA’s work requires close coordination among its Audit, Investigations, Inspections and 

Evaluations functions. Each program office brings unique skills and experience, but the bureau’s 

overall success depends greatly upon these offices’ close collaboration. TIGTA has years of 

experience in overseeing the roll-out of broad changes to tax administration. The success of the 

new ACA program will depend on the government’s ability to assure taxpayers that the new 

changes are properly administered. 

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

operations. In FY 2010, TIGTA’s overall accomplishments included, $8.61 billion in potential 

increased and/or protected revenue and $2.82 billion in potential cost savings. 

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

financial and personal data that are stored in and processed on IRS computer systems. The risk 

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

information technology 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 greater use of portable laptop computers) and external factors (such as the 

volatile threat environment resulting from increased terrorist and hacker activity) require strong 

security controls. In FY 2010, OA issued reports that included addressing the protection of 

federal tax information at state government agencies and security controls over the Automated 

Collection System. 

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. IRS employees who are found to have committed UNAX violations may be 

subject to fines, prison terms, and loss of their jobs. Since enactment of the Taxpayer Browsing 

Protection Act in August 1998, TIGTA investigations have resulted in more than 6,908 adverse 

personnel actions taken by the IRS and 367 criminal prosecutions for UNAX violations through 

FY 2010. 

The importance of efforts to detect unauthorized access is often underestimated. Too often, 

UNAX is seen as browsing by bored employees. However, TIGTA’s investigations have 

revealed a far more disturbing trend where, in a significant number of cases, such unauthorized 

access was only the first stage in far more serious crimes such as falsification of records, fraud, 

embezzlement, and identity theft. 
TIGTA - 8 

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’s 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 2010, TIGTA 

investigators completed 1,796 employee integrity investigations, of which 405 involved UNAX 

allegations. This resulted in 42 criminal prosecutions and 737 administrative disciplinary actions 

against IRS employees. 

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 for compliance. Increasing voluntary compliance and reducing the $345 

billion Tax Gap (the IRS defines the Tax Gap as the difference between the estimated amount 

taxpayers owe and the amount they voluntarily and timely paid for a tax year) are currently the 

focus of many IRS initiatives. In FY 2010, OA issued reports addressing collection alternatives 

for economically distressed taxpayers, lien determinations, and sole proprietor correspondence 

audits. 

 

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 2010, TIGTA provided 1,427 presentations to more than 52,000 IRS 

employees and educated tax professionals by providing 118 awareness presentations to 8,068 tax 

practitioners and preparers. 

Leveraging Data to Improve Program Effectiveness and Reduce Costs: While the IRS has 

made some progress in using its data to improve program effectiveness and reduce costs, this 

area continues to be a major challenge. The IRS lacks a comprehensive, integrated system that 

provides accurate, relevant, and timely financial and operating data describing performance 

measures, productivity, and associated costs of IRS programs. In FY 2010, OA issued a report 

addressing the IRS’s methodology for calculating the cost of Unemployment Trust Fund 

administrative expenses. 

Implementing Tax Law Changes: Each filing season tests the ability of the IRS to implement 

tax law changes made by the Congress. The correct implementation of tax law changes is a 

continuing challenge because the IRS must identify the tax law changes; revise the various tax 

forms, instructions, and publications; and reprogram computer systems used to process returns. 

In FY 2010, TIGTA issued a report on how the IRS can enhance taxpayer awareness of the 

benefits of the qualified joint-venture filing option. 

Department-wide Priority – Electronic Stewardship and Data Centers: Federal agencies have 

been directed to improve their energy efficiency and reduce greenhouse gas emissions. In FY 

2010, OA issued a report regarding the improvement of data center energy efficiency that could 

save the IRS millions of dollars in energy costs. 
TIGTA - 9 

Advising the Congress: During FY 2010, TIGTA provided one Congressional testimony, 18 

briefings, one Statement for the Record, and 39 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. 

Going Green Initiatives: TIGTA has identified several ways to make its operations more 

environmentally friendly. TIGTA’s audits, inspections, and evaluations also have the potential 

to reduce the environmental impact of IRS’s operations. During FY 2010, OI’s Complaints 

Management Team began to process all complaints electronically, saving paper, ink, and storage 

costs. TIGTA has also conducted audits of IRS’s operations to ensure that both data centers and 

desktop computer equipment are energy efficient. Given the size of IRS’s workforce, any 

incremental improvement can make a significant difference. 

Fraud and Electronic Crime: The sensitivity of the data the IRS collects makes it an attractive 

target for employees, hackers, and others who could use the information for fraud and identity 

theft. TIGTA’s audit, investigative, 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 Presidential Decision 

Directive NSC-63, IRS operations, that fund the federal government are part of the nation’s 

critical infrastructure. 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. 

Audit Outcomes: TIGTA strives to protect the integrity of America’s tax system. TIGTA’s 

audits focus on the economy, efficiency, and effectiveness of tax administration. TIGTA 

provides recommendations to improve IRS systems and operations while ensuring fair and 

equitable treatment of taxpayers. During FY 2010, TIGTA issued 129 reports identifying 

approximately $11.46 billion in potential financial benefits. These reports also impacted 

approximately 2.03 million taxpayer accounts in areas such as taxpayer burden, taxpayer rights 

and entitlements, taxpayer privacy and security, and increased revenue/revenue protected. These 

audits could return $74 for each $1 invested in FY 2010. 

Investigative Outcomes: OI investigates threats to America’s tax system, which could impede 

collection of tax revenue and reduce public confidence. In FY 2010, 86 percent of TIGTA’s 

closed investigations generated results, including 1,635 cases of employee misconduct referred 

to the IRS for administrative action and 235 cases accepted for prosecution. Even though the 

IRS is committed to “stopping UNAX in its tracks,” unauthorized access to confidential tax 

information remains a significant problem. During the same period, TIGTA closed 611 UNAX 

cases, resulting in 546 adverse personnel actions against IRS employees. Altogether, the 118 

employees under investigation for UNAX and other violations resigned during the investigation 

or before any personnel action could be taken. 

Inspections and Evaluations Outcomes: I&E took the lead in programming TIGTA’s Recovery 

Act activities. Additionally, I&E has reported on several pertinent issues including IRS’s 

preparedness to respond to a pandemic, as detailed in the IRS Pandemic Influenza Preparedness 
TIGTA - 10 

Plan – Phase I. Planned evaluations will result in recommendations to streamline operations, 

enhance data quality, and improve the efficiency and effectiveness of IRS programs. 

 
TIGTA - 11 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Inspector General for Tax Administration FTE Amount

FY 2010 Enacted 835 $152,000

FY 2011 Annualized CR Level 835 $152,000

Changes to Base: 

Adjustment to Reach Policy Level: - $2,266 

Adjustment to Reach FY 2011 President's Policy - $2,266 

Maintaining Current Levels (MCLs): - $1,391 

Maintaining Current Levels (MCLs) - $1,391 

Efficiencies, Savings & Base Reductions: - ($3,474) 

Program Reductions and Efficiencies - ($3,474) 

Subtotal FY 2012 Changes to Base - $183 

Total FY 2012 Base 835 $152,183

Program Changes: 

Program Increases: 29 $5,648 

Oversight of IRS Implementation of the Affordable Care Act 29 $5,600 

CIGIE Payment - $48 

Subtotal FY 2012 Program Changes 29 $5,648 

Total FY 2012 Request 864 $157,831

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level ........................................................... +$2,266,000 / +0 FTE

Adjustment to Reach FY 2011 President's Policy +$2,266,000 / +0 FTE 

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President's Policy Level. The President’s Policy Level is equal to the FY 2011 President's 

Budget as adjusted for the proposed pay freeze. 

Maintaining Current Levels (MCLs) ...................................................... +$1,391,000 / +0 FTE

Maintaining Current Levels (MCLs) +$1,391,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012. 

Efficiencies, Savings & Base Reductions ................................................. -$3,474,000 / +0 FTE

Program Reductions and Efficiencies -$3,474,000 / +0 FTE 

TIGTA continuously seeks to reduce programs that are non-critical and find efficiencies in its 

operations. Reaching a savings target of $3,474,000 without impacting the quality of TIGTA’s 

programs will require a combination of actions. TIGTA examines all vacancies to determine the 

impact of delayed back-filling and will strategically identify positions where longer lapses would 

have the smallest impact on mission. 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. Further savings will be realized in data center and certification and accreditation 

consolidation. 
TIGTA - 12 

Program Increases .................................................................................. +$5,648,000 / +29 FTE

Oversight of IRS Implementation of the Affordable Care Act +$5,600,000 / +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, assure citizens about the integrity of the program, and give 

lawmakers the assurance that the program functions properly. TIGTA has often paved the way 

for new initiatives that are administered through the tax code. Funding will support 23 auditors, 

five investigators, and one inspections and evaluations specialist. TIGTA's work requires close 

coordination among its Audit, Investigations, 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. 

CIGIE Payment +$48,000 / +0 FTE 

Funds for Council of Inspectors General on Integrity and Efficiency (CIGIE) will specifically 

support coordinated government-wide activities that identity and review areas of weakness and 

vulnerability in federal programs and operations with respect to fraud, waste and abuse. This 

increase raises TIGTA’s CIGIE contribution to $380,000. 

 
TIGTA - 13 

2.2 – Operating Levels Table 

Dollars in Thousands 

Inspector General for Tax 

Administration

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE 835 835 - 835 864

Object Classification

11.1 - Full-time permanent $82,553 $82,553 $0 $82,553 $85,290

11.3 - Other than full-time permanent $593 $593 $0 $593 $605

11.5 - Other personnel compensation $9,656 $9,656 $0 $9,656 $9,781

12 - Personnel benefits $27,796 $27,796 $0 $27,796 $28,761

21 - Travel and transportation of 

persons $4,823 $4,823 $0 $4,823 $4,964

22 - Transportation of things $24 $24 $0 $24 $36

23.1 - Rental payments to GSA $9,143 $9,143 $0 $9,143 $9,936

23.2 - Rental payments to others $288 $288 $0 $288 $292

23.3 - Communication, utilities, and 

misc charges $2,570 $2,570 $0 $2,570 $2,614

24 - Printing and reproduction $8 $8 $0 $8 $8

25.1 - Advisory and assistance 

services $1,135 $1,135 $0 $1,135 $1,141

25.2 - Other services $921 $921 $0 $921 $970

25.3 - Other purchases of goods and 

services from Govt. accounts $6,710 $6,710 $0 $6,710 $7,029

25.4 - Operation and maintenance of 

facilities $407 $407 $0 $407 $413

25.7 - Operation and maintenance of 

equip $1,232 $1,232 $0 $1,232 $1,260

26 - Supplies and materials $1,206 $1,206 $0 $1,206 $1,233

31 - Equipment $2,732 $2,732 $0 $2,732 $3,293

42 - Insurance claims and indemnities $150 $150 $0 $150 $152

91.0 - Confidential Expenditures $53 $53 $0 $53 $53

Total Budget Authority $152,000 $152,000 $0 $152,000 $157,831

Budget Activities

Audit $57,421 $57,421 $0 $57,421 $62,357

Investigations $94,579 $94,579 $0 $94,579 $95,474

Total Budget Authority $152,000 $152,000 $0 $152,000 $157,831

 
TIGTA - 14 

2.3 – Appropriations Detail Table 

Dollars in Thousands 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Audit 0 $57,237 349 $57,421 349 $57,421 373 $62,357 6.88% 8.60%

Investigations 0 94,275 486 94,579 486 94,579 491 95,474 1.03% 0.95%

Subtotal New Appropriated Resources 0 $151,512 835 $152,000 835 $152,000 864 $157,831 3.47% 3.84%

Other Resources:

Offsetting Collections - Reimbursable 2 2,113 3 1,300 3 1,300 3 1,300 0.00% 0.00%

Available multi-year/no-year funds 27 2,900 6,196

Subtotal Other Resources 29 $5,013 3 $7,496 3 $1,300 3 $1,300 0.00% -82.66%

Total Resources Available for Obligation 29 $156,525 838 $159,496 838 $153,300 867 $159,131 3.46% -0.23%

FY 2010 

Obligations

FY 2010 

to FY 2012 Resources Available for Obligation FY 2010 Enacted

FY 2012 

Request

 FY 2011 % Change

Annualized 

CR Level

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of 

Changes 

 

DEPARTMENT OF THE TREASURY 

TREASURY INSPECTOR GENERAL FOR TAX 

ADMINISTRATION 

 

 

Federal Funds 

 

General and Special Funds: 

 

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; $157,831,000 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. 

 
TIGTA - 15 

2C – Legislative Proposals 

TIGTA proposes eliminating certain reviews conducted to comply with reporting requirements 

in the IRS Restructuring and Reform Act of 1998. These statutory reviews yield little in the way 

of improving performance measures and are of relatively low value. TIGTA would prefer to 

redirect resources applied to these reviews to conducting high-risk audits. TIGTA recommends 

legislative changes 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 Internal Revenue Code Section 7803 (d)(1)(G). 

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

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

 The requirement to annually report on the IRS’s compliance with Internal Revenue Code 

Sections 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 should be revised to 

a biennial reporting requirement. 
TIGTA - 16 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY10 to FY12

 Exceptional accountability and transparency 153,300 153,300 159,131 3.80% 

Total $153,300 $153,300 $159,131 3.80%

3A - Audit ($62,357,000 from direct appropriations, and $551,000 from reimbursable 

programs): OA’s mission is to promote the sound administration of the nation’s tax laws by 

conducting comprehensive, independent performance and financial related audits of IRS 

programs. Audits will not only focus on the economy and efficiency of IRS functions but also 

ensure that taxpayers’ rights are protected and the taxpaying public is adequately served. 

 

OA strategically evaluates IRS programs and operations so that TIGTA resources are expended 

in the areas of highest vulnerability. To carry out this goal, OA develops an annual audit plan 

that communicates its priorities and incorporates both statutory audit coverage, high-risk audit 

work identified through an annual risk assessment process and stakeholder requests. By focusing 

on critical areas, OA ensures that TIGTA audits identify and recommend improvements in the 

most vulnerable IRS programs. 

During FY 2010, TIGTA issued 129 audit reports that included potential financial benefits of 

approximately $11.46 billion and potentially impacted approximately 2.03 million taxpayer 

accounts in areas such as taxpayer burden, taxpayer rights and entitlements, taxpayer privacy and 

security, and increased revenue/revenue protected. 

American Recovery and Reinvestment Act of 2009 (Recovery Act): The American Recovery 

and Reinvestment Act of 2009 includes multiple tax law provisions the IRS must implement. 

TIGTA received $7 million for oversight and audits of IRS activities related to the Making Work 

Pay Credit and Economic Recovery Payments. This funding is available through September 30, 

2013. While TIGTA received funding to cover the costs of its efforts under the Recovery Act, 

current estimates indicate that this funding will run out during FY 2012. At that time, the cost of 

these important audit activities will be absorbed in TIGTA’s regular appropriation. 

In FY 2010, OA issued a report noting that millions of taxpayers may be negatively affected by 

the reduced withholding associated with the Making Work Pay Credit. Taxpayers receive the 

Making Work Pay Credit by means of a decrease in federal income tax withholding. This 

creates the vulnerability that some taxpayers may have their taxes under withheld at the end of 
TIGTA - 17 

Tax Years 2009 and 2010. If taxpayers received more of the Making Work Pay Credit than they 

are entitled to, they may ultimately owe taxes when filing their Tax Years 2009 and 2010 tax 

returns and may be assessed estimated tax penalties. 

In another review, OA found that initial published guidance for Recovery Act bonds was 

complete, accurate, and consistent. The Recovery Act authorizes new and expanded bond 

financing subsidies of more than $57.8 billion. However, this figure could be much higher 

because one type of tax credit bond, known as Build America Bonds, was not given a limit. 

These financing subsidies enable state and local governments to borrow at lower costs for capital 

projects and also target programs for energy projects and schools. The IRS quickly published 

guidance to help bond issuers understand how to issue tax-exempt and tax credit bonds intended 

to stimulate the economy by preserving and creating jobs. 

Ensuring Taxpayer Privacy and Security: The IRS’s Safeguards Program is tasked with 

ensuring that state government agencies receiving federal tax information maintain adequate 

safeguards to protect the data from unauthorized disclosure. This audit was initiated as a followup to a prior audit report to determine whether the IRS’s Safeguards Program implemented 

sufficient policies and procedures to ensure that state government agencies adequately protect 

federal tax information from the IRS. TIGTA found that two of four previously reported 

conditions, the use of Plans of Actions and Milestones (POA&Ms) and the timeliness of 

reporting results continue to require management attention. TIGTA identified 45 state 

government agencies in the POA&M tool that had 1,094 security weaknesses which were not 

corrected by the targeted milestone dates. Also, safeguard review reports continue to be issued 

late.

In another review, TIGTA found that the IRS needs to implement additional security controls to 

protect the Automated Collection System (ACS) and sensitive taxpayer data. The ACS is a 

telephone contact system used by IRS employees to perform critical IRS processes such as 

collecting tax revenues and helping taxpayers resolve their tax issues. The lack of complete 

security controls increases the risks that taxpayer data could be stolen or computer operations 

could be disrupted. 

Tax Compliance: Estimates by the IRS show that sole proprietors who underreported their 

income caused $68 billion of the $345 billion Tax Gap in 2001. This creates an unfair burden on 

honest taxpayers and diminishes the public’s respect for the tax system. TIGTA evaluated closed 

correspondence audits of individual sole-proprietor returns and found significant tax issues were 

not addressed during these audits. TIGTA estimates the IRS could realize $82.6 million in 

additional taxes and interest over five years if the recommendations are implemented. TIGTA’s 

calculation assumes that all estimated taxes and interest would be owed based upon audits of the 

taxpayers’ records and that conditions such as tax rates and IRS audit coverage remain the same. The 

amount does not take into consideration implementation costs those associated with training and lost 

opportunities. 

 

A separate review concluded that lien determinations were not appropriately made or were made 

late for more than $1.4 billion in delinquent taxes. The IRS protects its claims against taxpayers 

who owe delinquent taxes by filing federal tax liens (liens), which establish the IRS’s priority 

among secured creditors for the taxpayers’ equity. Failure to protect the government’s interest 
TIGTA - 18 

on taxes that are owed creates an unfair burden on taxpayers who properly pay their taxes in full 

and on time. TIGTA estimated the IRS could realize $657.6 million in increased revenue over 

five years if the recommendation was implemented. 

TIGTA also conducted a review to determine whether the IRS effectively implemented 

provisions identified to assist economically distressed taxpayers having difficulties paying their 

balance-due accounts. Collection provisions offer many viable alternatives to help resolve 

taxpayers’ balance-due accounts. When the economy weakened, the IRS proactively 

implemented or re-emphasized provisions to help economically distressed taxpayers. However, 

some of the actions could jeopardize collections and, at times, some taxpayers may have had 

difficulty identifying the alternatives if they were unfamiliar with IRS resources. 

Leveraging Data to Improve Program Effectiveness and Reduce Costs: TIGTA conducted a 

review to determine whether the IRS developed and implemented a methodology to reasonably 

and accurately calculate the cost of Unemployment Trust Fund administrative expenses. The 

review found that while additional procedures and controls have been implemented, there are 

still insufficient controls to ensure that expenses associated with the administration of the 

Unemployment Trust Fund are accurately calculated. For example, the IRS overestimated its 

trust-fund-related expenses by $63 million during FYs 2005 through 2009. As a result, these 

funds were not available during this period to fund the federal government’s share of 

unemployment benefit payments to eligible taxpayers.

Department-wide Priority – Electronic Stewardship and Data Centers: The IRS has 

implemented programs and processes to improve energy efficiency. For example, some facilities 

fully implemented an Environmental Management System and/or were awarded the ENERGY 

STAR® designation. In addition, the IRS has a training program to ensure that employees have 

access to applicable courses and that training completion is documented. However, the IRS does 

not have policies and procedures for improving energy efficiency in the data centers or for 

implementing data center energy-efficiency best practices. The IRS could potentially realize 

savings of $3.2 million over four years, at two sites, by implementing best practices to improve 

airflow management. 

Implementing Tax Law Changes: OA conducted an audit to determine whether taxpayers who 

potentially qualified for the Qualified Joint Venture (QJV) filing option were adequately 

informed of the election and its potential benefits. Many potentially qualified individuals were 

not aware of the QJV filing option for two reasons: first, the IRS did not clearly present the new 

tax law provision and its associated benefits in some of its publications or provide sufficient 

outreach to emphasize the new tax law change to the paid-preparer community; and second, the 

tax preparation software packages used by taxpayers and paid preparers did not adequately 

prompt or notify users of the new provision. 
TIGTA - 19 

3.2.1 Audit Budget and Performance Plan 

Audit Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $50,852 $53,797 $57,421 $57,421 $62,357

 Reimbursable Resources $539 $361 $551 $551 $551

Total Resources $51,391 $54,158 $57,972 $57,972 $62,908

Budget Activity Total $51,391 $54,158 $57,972 $57,972 $62,908

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Audit Products Delivered when Promised to 

Stakeholders (Oe)

65.0 81.0 76.0 65.0 70.0

Percentage of Recommendations Made that Have Been 

Implemented (Oe)

85.0 91.0 95.0 83.0 85.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC - 

Discontinued, and B - Baseline

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. The second measure assesses TIGTA’s effect on improving 

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

recommendations, TIGTA utilizes the Department’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. 

For FY 2010, actual performance has exceeded expectations on both measures. The actual 

percentage of audit products delivered when promised to stakeholders was 76 percent against a 

target of 65 percent. The actual percentage of recommendations made that have been 

implemented was 95 percent against a target of 83 percent. 
TIGTA - 20 

3B - Investigations ($95,474,000 from direct appropriations, and $749,000 from reimbursable 

programs): While most Offices of Inspectors General focus primarily on fraud, waste, and 

abuse, TIGTA’s mission is more extensive. TIGTA has the statutory responsibility to protect the 

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

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

administrative misconduct by IRS employees, protects the IRS against external attempts to 

corrupt tax administration, and ensures IRS employee safety and data and infrastructure security. 

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

Employee Integrity: IRS employee misconduct can hinder the IRS’s ability to collect revenue 

for the federal government. An estimated 47 percent of TIGTA’s current investigations involve 

alleged employee misconduct. In addition to UNAX investigations, employee misconduct 

investigations include allegations of extortion, theft, false statements, and financial fraud. 

TIGTA also administers a proactive integrity program to help detect possible fraud and other 

misconduct by IRS employees. During FY 2010, TIGTA initiated 70 proactive investigative 

initiatives. 

Employee and Infrastructure Security: TIGTA is statutorily mandated to ensure that the IRS 

operates in an environment free from any and all threats on employees, facilities, and data 

infrastructure. To meet this mandate, TIGTA conducts investigations of individuals or groups 

who threaten or assault IRS employees, facilities, or IRS data infrastructure. In an era of 

increasing threats to the nation, the protection of IRS personnel, facilities, and data is of the 

utmost importance. 

According to the Anti-Defamation League, the militia movement has almost quadrupled in size 

in the past two years, growing to more than 200 groups across the United States. Antigovernment and hate groups have grown from 149 groups in 2008, to 512 groups in 2009 -- a 

244 percent increase. Each year, OI investigates approximately 900 individuals to determine if 

they pose a legitimate threat to IRS employees and facilities. Additionally, over 5,000 

individuals are currently identified as having the potential to harm the IRS or its employees. 

During FY 2010, OI closed 1,425 investigations of assaults and/or threats made against IRS 

employees and facilities. 

In addition to the reactive investigations that OI conducts related to threats and assaults, OI 

investigative analysts monitor the IRS.gov website for any potential threats against IRS 

employees or facilities that would warrant further investigation. In FY 2010, the investigative 

analysts have reviewed nearly 39,000 IRS or anti-government related e-mail communications 

containing key words that could be interpreted as threats. Due to a lack of resources, the 

investigative analysts have only been able to comprehensively research, analyze, and act on less 

than one percent of these communications. The inability to identify, monitor, and follow-up on 

potentially threatening communications made directly to the IRS presents a significant risk. 

OI’s Electronic Crimes and Intelligence Division (ECID) investigates electronic attacks on the 

IRS. In calendar year 2010, the IRS Computer Security Incident Response Team (CSIRC) 

documented almost 22 million external attacks against the IRS network. During this time period, 

IRS CyberSecurity identified and reported to TIGTA 4,941 “Cyber and Disclosure Incidents” 
TIGTA - 21 

involving the IRS network. CSIRC also reported 1,006 incidents involving the identification of 

malware (malicious programs) against the 235,000 devices connected to the IRS enterprise 

network. The Electronic Tax Administration (ETA) program was mandated by the Congress 

with a goal that 80 percent of all tax returns would be filed electronically. A successful attack on 

the ETA program would cause the public to lose confidence in the IRS and could set the entire 

ETA initiative back many years. 

TIGTA maintains IRS employee and infrastructure security by conducting investigations into 

incidents that threaten IRS employees, facilities, and infrastructure. TIGTA’s highest priority 

complaints involve threats and assaults against IRS employees. TIGTA works aggressively and 

takes swift action to protect IRS employees, including providing armed escorts. In October 

2008, the Inspector General Reform Act of 2008 was signed into law, which allows TIGTA to 

provide physical security to protect IRS employees against external threats. TIGTA also 

operates a Criminal Intelligence Program that develops and facilitates pertinent information 

regarding potential threats to IRS employees and operations. This program includes 

participation in the Federal Bureau of Investigation-sponsored Joint Terrorism Task Forces 

nationwide. In addition, TIGTA has a System Intrusion and Network Attack Response Team to 

defend against hackers who attempt to compromise the data integrity of taxpayer information 

stored in IRS computer systems. 

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

investigate external attempts to corrupt tax administration, which includes criminal misconduct 

by non-employees, such as, impersonation of IRS employees; interference with the 

administration of internal revenue laws, bribery, misuse of Treasury names, symbols, etc.; 

contract fraud; as well as tax practitioner fraud relating to thefts of taxpayer remittances and 

refunds. 

In FY 2012, OI foresees continued risks in IRS programs that will require more oversight. 

Phishing scams that falsely depict e-mails from the IRS are of great interest and risk. (“Phishing” 

involves sending e-mails to users falsely claiming to be established, legitimate enterprises in 

order to solicit private information for the purpose of identity theft.) These schemes attempt to 

retrieve a user’s Social Security Number (SSN) and banking information by replicating an 

official IRS seal and/or requesting information required for depositing tax refunds. The IRS, in 

coordination with OI, has identified 11,546 phishing sites since November 2005 through 

December 2010. Oversight in this area is necessary to ensure that misuse of the IRS name, 

impersonation of an IRS employee, and identity theft incidents are resolved expeditiously. 

With the IRS focusing on increased revenue collection from delinquent taxpayers, OI anticipates 

a rise in attempts to bribe IRS employees involved in those collection activities. TIGTA 

educates IRS employees on how to recognize bribe overtures and their responsibility to report 

bribery attempts to TIGTA. During FY 2010, OI closed 59 investigations into bribery of IRS 

employees by taxpayers. 

Another area of concern that poses risks to tax administration is IRS contract improprieties. 

TIGTA is committed to conducting procurement investigations that ensure the highest degree of 

integrity, economy, and efficiency in IRS contracts. TIGTA conducts proactive and reactive 
TIGTA - 22 

investigations to detect and deter criminal activity by contractors and IRS employees. TIGTA’s 

contract fraud work has produced significant results, including over $158 million in recovered 

penalties during FY 2010. 

 

Investigative work in these three core areas is imperative to protect the integrity of tax 

administration. The results of this work help ensure that the public has confidence in its dealings 

with the IRS. 

3.2.2 Investigations Budget and Performance Plan 

Investigations Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $89,161 $91,979 $94,579 $94,579 $95,474

 Reimbursable Resources $727 $582 $749 $749 $749

Total Resources $89,888 $92,561 $95,328 $95,328 $96,223

Budget Activity Total $89,888 $92,561 $95,328 $95,328 $96,223

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Results from Investigative Activities (Oe) 78.0 83.0 86.0 79.0 80.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC - 

Discontinued, and B - Baseline

Description of Performance: Investigative results include cases referred for prosecution, arrests, 

indictments, and convictions. Examples of the types of criminal activity investigated are: bribes 

offered by taxpayers to compromise IRS employees; manipulation of IRS systems and programs 

through the use of bogus liens and IRS financial reporting instruments; and impersonation of IRS 

officials. For FY 2010, actual performance has exceeded expectations (actual performance was 

86 percent, while the target was 79 percent). These results are indicative of OI’s continuous 

focus on quality investigative activities. 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
TIGTA - 23 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Hiring Reform

TIGTA is revamping its hiring process to comply with the President’s ambitious recruitment and 

hiring initiative. TIGTA has identified potential barriers, one of which is training. Training 

opportunities will be available to educate hiring managers/supervisors on improvements to the 

federal hiring process. TIGTA will also address recruiting and hiring highly qualified veterans 

and assist hiring officials in finding the best talent. 

Furthermore, TIGTA has revised its vacancy announcement wording to meet the five- page 

length requirement; updated its tracking system for recruiting actions to include new date fields 

for tracking the 80-day model; created 80-day tracking reports; and are considering the use of 

category rating. 

Veterans’ Employment

To enhance recruitment of and promote employment opportunities for veterans, TIGTA supports 

the Wounded Warriors Program by providing employment assistance for program participants. 

On February 24, 2010, TIGTA presented an informational session at the National Naval Medical 

Center in Bethesda, Maryland. The informational session was designed to educate 

soldiers/veterans on TIGTA’s mission and assistance with job placement for soldiers/veterans 

with disabilities. 

TIGTA also plans to provide detailed resume writing workshops, mock interviews, and tips on 

how to navigate the government hiring process. TIGTA continually solicits resumes from 

qualified soldiers and veterans interested in becoming part of the TIGTA Wounded Warrior 

Intern Program. 

To provide annual mandatory training to hiring managers/supervisors on veterans’ preference 

and special authorities for the hiring of veterans, TIGTA is coordinating with Treasury’s 

Veterans Employment Office. This will provide hiring managers/supervisors training on 

effective, efficient, and timely ways to recruit and hire well-qualified individuals. TIGTA is also 

preparing a Leadership and Manager Supervisor Training manual that outlines each manager’s 

responsibility to ensure training on veteran hiring. 

Hiring of Individuals with Disabilities

TIGTA actively participates in The Treasury’s disABILITY and IT Accessibility Summit and 

Career Fairs. Participation in the Summit emphasizes TIGTA’s commitment to a diverse 

workforce, increases recruiting efforts to employ persons with disabilities, and supports 

TIGTA’s leadership role to reach an underrepresented group in the federal government. TIGTA 

also conducts outreach activities targeted at recruitment of groups identified as under-represented 

and makes direct hire appointments under non-competitive authorities for individuals with 

disabilities. 

 
TIGTA - 24 

Employee Engagement 

TIGTA relies on the results from OPM’s Employee Viewpoint Survey (EVS) to measure 

employee engagement. The EVS focuses on employee perceptions regarding critical areas of 

their work life, areas which drive employee satisfaction, commitment, and ultimately retention in 

the workforce. 

TIGTA’s response rate for 2010 was 79 percent, higher than the overall government average and 

second place among Treasury bureaus. The survey is distributed to all TIGTA permanent 

employees. The survey found that TIGTA employees continue to be happy with their jobs and 

feel their work is important; in addition, employees are satisfied with the Telework program at 

TIGTA. The vast majority believe TIGTA is accomplishing its mission and would recommend it 

as a good place to work. 

TIGTA’s EVS trends for 2006, 2008 and 2010

TIGTA’s leaders have taken the survey results very seriously. From the Department-wide report 

provided by OPM, TIGTA completed a more thorough analysis and developed individual reports 

specifically for each of the functions. TIGTA uses the survey results to continually improve how 

the workforce is managed and to meet its strategic human capital management goals. The below 

snapshot shows overview of TIGTA’s survey findings: 

 0 items increased by 5 percentage points since 2008; 

 4 items decreased by 5 percentage points since 2008; 

 53 items had positive ratings of 65% or greater (strengths); and 

 24 items had positive ratings of 35% or less (weaknesses). 

Action plans for continued employee satisfaction and increased employee engagement are in the 

process of being developed for FY 2011. 

Action plans for FY 2010 centered on two broad themes of communication and training: 

Improved Communication 

 Formalize employee suggestion programs and create mechanism for feedback. 

83%

81%

76%

75%

86%

82%

76%

77%

86%

84%

80%

87%

79%

(13) The work I do is

important.

(5) I like the kind of

work I do.

(73) How satisfied

are you with the

Telework program in

your agency?

(39) My agency is

successful at

accomplishing its

mission.

(40) I recommend

my organization as

a good place to

work.

FHCS 

2006

FHCS 

2008

EVS 

2010

N/A N/A
TIGTA - 25 

 Utilize electronic medium to facilitate electronic discussion threads and a voluntary photo 

directory. These improvements are important given the geographic dispersion of TIGTA 

staff. 

 Develop succession plans that emphasize leadership competencies. 

 Hold regular town-hall style meetings so that employees can be certain they will be given 

an opportunity to publically raise concerns. 

 Initiate new employee orientation curriculum so that new employees can learn that 

TIGTA is committed to maintaining diversity, flexibility and integrity in its workforce. 

 Hold conferences when necessary to communicate decisions and solicit input from staff 

working in remote field offices. 

Targeted Training 

 Develop a staff-wide training plan that identifies core training needs as well as continued 

development Improve new employees’ understanding of TIGTA’s critical mission 

through the new employee orientation program. 

 Train managers in leadership skills designed to develop, improve, build and maintain 

trust in working relationships. 

 Conduct 360 self-assessments that provide managers with insight on their strengths and 

weaknesses. 

 Implement employee rotation program that allows employees an opportunity to diversify 

their experience, discover their strengths and explore new areas of interest. 

 Develop a skills assessment program that allows employees an opportunity to identify 

competency gaps and needed development opportunities designed to close those gaps. 

 Empower staff who identify technical training needs to work on related projects in order 

to develop the needed skills. This allows staff to assume leadership and direction roles 

outside the normal manager/staff relationship. 

Wellness

TIGTA’s Wellness Program Initiative reflects aspects of the framework provided in the 

“Elements of a Comprehensive Worksite Wellness Program” and “Healthy People Guidelines.” 

TIGTA has also integrated federal government requirements from OPM. Specifically, the plan 

incorporates and highlights the five elements for an effective worksite wellness program: 

 Health and Wellness Education Programs; 

 Social, Physical and Environment Support; 

 Integration of Worksite Wellness Program into Organizational Structure; 

 Linkages with Related Programs; and 

 Screenings. 

TIGTA is an organization that values its workforce and the wellness initiative will complement 

its renowned work-life balance program. TIGTA's leadership and management support this 

program and are committed to providing the resources necessary to promote health and enhance 

the lives of its talented and dedicated team. 
TIGTA - 26 

4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Major IT Investments / Funding Source Budget Activity

FY 2009 

Enacted

FY 

2010 

Enacted

% Change 

from FY09 to 

FY10

FY 2011 

CR

% Change 

from FY10 

to FY11

FY 20

Requ

Subtotal, Major IT Investments NA NA NA NA NA NA Performance and Results Information System (PARIS)

TIGTA: Audit and Investigations Activity $1,000 $574 -42.6% $574 0.0% $

PARIS Property Module 

(PPM)

TIGTA: Audit and Investigations Activity $500 $149 -70.2% $149 0.0% $

Non-Major IT Investments $1,500 $723 -51.8% $723 0.0% $TIGTA End User Systems and Services 

TIGTA: Audit and Investigations Activity $8,293 $2,678 -67.7% $2,678 0.0% $2

Telecommunications Systems and Services

TIGTA: Audit and Investigations Activity $3,300 $2,465 -25.3% $2,465 0.0% $2

Data Center Systems and Services 

TIGTA: Audit and Investigations Activity $1,000 $4,003 300.3% $4,003 0.0% $4

Infrastructure Investments

TIGTA: Audit and Investigations Activity $12,593 $9,146 -27.4% $9,146 0.0% $9

Consolidated Enterprise Content Management 

TIGTA: Audit and Investigations Activity $129 $0 -100.0% $0 0.0% 

Consolidated Identity Management 

TIGTA: Audit and Investigations Activity $128 $0 -100.0% $0 0.0% 

Enterprise Architecture

TIGTA: Audit and Investigations Activity $250 $275 10.0% $275 0.0% $

Total IT Investments $14,600 $10,144 -30.5% $10,144 0.0% $10
TIGTA - 27 

4B – Information Technology Strategy 

TIGTA's IT Strategy is to: 

 Deliver a full set of IT Infrastructure services commensurate with TIGTA's independence 

requirements to allow employee access to TIGTA resources wherever they may be working; 

 Work with the IRS to maintain a secure pathway for TIGTA employees to access IRS 

systems that meets TIGTA's needs and expectations and supports IRS's responsibility to 

maintain system security; 

 Provide and maintain application systems to support the creation, management, and 

improvement of products related to TIGTA business mission; 

 Maintain technology competencies needed to adapt to changes in the internal and external 

environments of U.S. tax administration; 

 Deploy IT securely to assure the privacy of the vast amounts of taxpayer and law 

enforcement information in TIGTA's possession; 

 Work with the rest of the Department to deploy and maintain IT infrastructure in an efficient, 

effective, sustainable manner. 

By the end of Fiscal Year 2012, TIGTA plans to refresh its client computing hardware and 

software platforms to use the most efficient power management settings on the most efficient 

hardware platform available during the refreshment acquisition period. 

With changes and improvements in information technology, TIGTA is faced with the constant 

challenge to maintain IT operational capability and make progress on new IT investment. In FY 

2009, TIGTA committed to improving its governance of IT investments by establishing a 

Program Management directorate to support selection of IT investment on total cost and positive 

organizational impact and assure selected IT investments are delivered within cost, on schedule, 

and deliver the expected business performance. 

In FY 2010, TIGTA stood up its new IT governance program. All new IT requests pass through 

a Program Management Board (PMB) chaired by the Associate Inspector General for Mission 

Support. Requests must present a total cost picture, a positive business case and high-level work 

breakdown schedule adjusted for risks, especially TIGTA’s pervasive IT resource risks, to gain 

PMB approval to commence work. Projects involving significant financial commitments or high 

mission visibility to TIGTA require approval from the Investment Review Board, composed of 

TIGTA's senior executives. 

By the end of FY 2010, TIGTA plans to undertake one or more performance reviews of existing 

business application investments to determine if reinvestment is in order. 

By FY 2012, TIGTA plans to extend its new governance process to all TIGTA business units to 

help them manage projects and priorities. 

Under TIGTA’s program-management process, milestones for all projects are established and 

tracked. At any point, projects that have cost overruns, are behind schedule and/or are not 

delivering at anticipated business performance levels will be analyzed for cause, to be followed 

by an appropriate continue or stop governance action. 

CDFI-1 

Overview 

Mission Statement 

Increase economic opportunity and promote community development investments for 

underserved populations and in distressed communities in the United States. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 Change 

FY10 to FY12

Enacted Annualized

CR Level

Request $ Change % Change

 Community Development Financial Institutions Program $107,600 $107,600 $125,869 $18,269 16.98% 

 Bank Enterprise Award Program $25,000 $25,000 $0 ($25,000) (100.0%)

 Native Initiatives $12,000 $12,000 $12,000 $0 -

 Capital Magnet Fund $80,000 $80,000 $0 ($80,000) (100.0%)

 Administration* $18,000 $18,000 $22,965 $4,965 27.58%

 Financial Education and Counseling $1,000 $1,000 $0 ($1,000) (100.0%)

 Hawaii Financial Ed and Counseling $3,150 $3,150 $0 ($3,150) (100.0%)

 Bank on USA Initiative N/A N/A $41,425 $41,425 100.0%

 Healthy Food Financing Initiative N/A N/A $25,000 $25,000 100.0%

Total Appropriated Resources $246,750 $246,750 $227,259 ($19,491) (7.9%)

Total FTE 84 84 90 6 7.14%

* NMTC Program Administration is included in the Administration budget activity for the FY 2012 Budget request. 

** In addition, $13.5 million is available for the administration of the Bond Guarantee Program provided in PL 111-

240. 

FY 2012 Priorities 

In accordance with the Department of the Treasury’s Strategic Goal of Ensuring that the 

U.S. and World Economies Perform at Full Economic Potential, the Strategic Objective 

of Improved Economic Opportunity, Mobility and Security with Robust, Real, Sustainable 

Economic Growth at Home and Abroad, and the Strategic Outcome of Strong U.S. 

Economic Competitiveness, the CDFI Fund’s FY 2012 priorities are:

 To administer all award and certification programs and initiatives effectively, 

efficiently, and in a timely manner; improve management processes through 

continuous assessment of policies and procedures; and align administrative resources 

to address programmatic growth. 

 To implement the Healthy Food Financing Initiative that will support CDFIs to 

increase the availability of affordable, healthy foods in underserved urban and rural 

communities. 

 To support human capital investment to develop staff skills and expertise. To 

significantly upgrade award management and information technology systems to 

more cost effectively administer an increased application workload, increased 

compliance monitoring activities, and new research initiatives. 
CDFI-2 

Table of Contents

Overview ............................................................................................................................ 1

Mission Statement ........................................................................................................... 1

Program Summary by Budget Activity........................................................................... 1

FY 2012 Priorities ........................................................................................................... 1

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

1A – Description of Bureau Vision and Priorities .......................................................... 3

1B – Program History and Future Outlook ..................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language ................................... 6

2.1 – Budget Adjustments Table ..................................................................................... 6

2A – Budget Increases and Decreases Description ......................................................... 6

2.3 – Appropriations Detail ............................................................................................. 9

2B – Appropriations Language and Explanation of Changes ....................................... 10

Section 3 – Budget and Performance Plan ................................................................... 11

3.1 – Budget by Strategic Outcome .............................................................................. 11

3.2.1 – CDFI Program Budget and Performance Plan .................................................. 11

3.2.2 – New Markets Tax Credit Program Budget and Performance Plan ................... 12

3.2.3 – Bank Enterprise Award Program Budget and Performance Plan ..................... 13

3.2.4 – Native Initiatives Budget and Performance Plan .............................................. 14

3.2.5 – Capital Magnet Fund Budget and Performance Plan ........................................ 15

3.2.6 – Administration Budget and Performance Plan ................................................. 16

3.2.7 – Healthy Food Financing Initiative Budget and Performance Plan ................... 17

3.2.8 - Bank on USA Initiative Budget and Performance Plan .................................... 18

3.2.9 – Financial Education and Counseling Pilot Program Budget and Performance 

Plan ............................................................................................................................... 19

3.2.10 – Financial Education and Counseling Pilot Program (Hawaii) Budget and 

Performance Plan .......................................................................................................... 19

Section 4 – Supporting Materials .................................................................................. 20

4A-- Human Capital Strategy ....................................................................................... 20
CDFI-3 

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The mission of the Community Development Financial Institutions Fund (CDFI Fund) is 

to increase economic opportunity and promote community development investments for 

underserved populations and in distressed communities in the United States. 

In accordance with the Department of the Treasury’s goal of repairing and reforming the 

financial system, the CDFI Fund’s FY 2012 priorities are:

Priority 1: To administer all award and certification programs and initiatives effectively, 

efficiently, and in a timely manner; improving management processes through continuous 

assessment of policies and procedures and aligning administrative resources to address 

programmatic growth. The CDFI Fund will develop and implement new initiatives in 

FY 2012; administer existing programs efficiently, effectively and in a timely manner; 

address increased programmatic requirements; and position the CDFI Fund to undertake 

new initiatives beyond FY 2012, as needed. 

Priority 2: To implement the Healthy Food Financing Initiative that will support CDFIs 

to increase the availability of affordable, healthy foods in underserved urban and rural 

communities. 

Priority 3: To support human capital investment to develop staff skills and expertise. 

The CDFI Fund will undertake activities to develop and maintain staff skills and 

expertise in order to be responsive to the latest trends in the fields of community 

development finance, economic development and federal agency policies and practices. 

Priority 4: To significantly upgrade award management and information technology 

systems to more cost effectively administer an increased application workload, increased 

compliance monitoring activities, and new research initiatives. The CDFI Fund will 

enhance its information technology systems, including hardware and applications, in 

order to support significant programmatic growth. 

1B – Program History and Future Outlook 

Fiscal Year 2010: In FY 2010, in addition to the CDFI and Native award programs, the 

CDFI Fund implemented two new initiatives: the Capital Magnet Fund (CMF) and the 

Financial Education and Counseling (FEC) Pilot Program. During this time the CDFI 

Fund processed: 

 322 Financial Assistance (FA) applications and made 147 FA awards totaling 

$102 million under the FA component of the CDFI Program; 

 86 Technical Assistance (TA) applications and made 32 TA awards totaling 

$2.9 million under the TA component of the CDFI Program; 

 61 applications and made 45 awards totaling $10.3 million under its Native 

Initiatives; 
CDFI-4 

 76 applications and made 69 awards totaling $25 million under the BEA Program; 

 233 applications and made 9 awards totaling $6.15 million under the FEC Program 

(FY 2009 and FY 2010 funding); 

 250 applications under the New Markets Tax Credit Program, which will be awarded 

in February 2011; 

 1,595 compliance reviews by the Certification, Compliance, Monitoring, and 

Evaluation office during FY 2009 and FY 2010. 

In addition, in FY 2010, the CDFI Fund launched a multi-year capacity building initiative 

through which it has entered into vendor contracts to provide technical assistance and 

capacity building services to CDFIs. Moreover, the CDFI Fund launched a multi-year 

effort to re-certify all CDFIs whose certification determinations are at least three years 

old (encompassing approximately 600 CDFIs). The CDFI Fund also certified 142 new 

institutions as CDFIs, and re-certified an additional 56 organizations as CDFIs. 

Fiscal Year 2011: During the first quarter of FY 2011, the CDFI Fund processed a total 

of 230 applications and made 23 awards totaling $80 million under the CMF Program. 

During FY 2011, the CDFI Fund will implement a new initiative and assist in the 

implementation of another that were authorized and funded under the Small Business 

Jobs Act of 2010 (P.L. 111-240): 

 The CDFI Bond Guarantee Program (Sec. 1134); and 

 The Small Business Lending Fund Program related to Community Development 

Loan Funds (Sec. 4102), in support of Treasury’s Office of Financial Institutions. 

In addition, , the CDFI Fund is preparing to implement a new initiative authorized in 

Title 12 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(P.L. 111-203): 

 The Bank on USA Program (Section 1204) in conjunction with Treasury’s Office 

of Financial Education and Financial Access. 

 

Finally, in FY 2011, the CDFI Fund is also prepared to administer the Healthy Food 

Financing Initiative through its CDFI Program as well as through the NMTC Program. 

Fiscal Year 2012 (proposed): During FY 2012, the CDFI Fund will continue to execute 

its core programs and administer the new programs that were implemented during 

FY 2011. With the introduction of new programs, the CDFI Fund will use its resources 

to: engage in program outreach, develop application materials, establish application 

review policies and procedures, and establish reporting requirements and compliance 

monitoring protocols. The introduction of new programs, as well as the increase in 

awards made under its existing programs, will also add to the CDFI Fund’s growing 

portfolio of awardees. 

The CDFI Fund is requesting $125.9 million for the Community Development Financial 

Institutions (CDFI) Program. The CDFI Program uses federal resources to invest in and 
CDFI-5 

build the capacity of CDFIs to serve low-income people and communities lacking adequate 

access to affordable financial products and services. The FY 2012 funding request will 

provide monetary awards for Financial Assistance (FA) and Technical Assistance (TA) to 

CDFIs to further goals such as: 

 Economic development (job creation, business development, and commercial real 

estate development); 

 Affordable housing (housing development and homeownership); and 

 Community development financial services (provision of basic banking services 

to underserved communities and financial literacy training). 

The CDFI Fund will also provide critical support to the Healthy Food Financing Initiative 

(HFFI), including $25 million in grant funding to CDFIs in order to expand the offering 

of affordable financing for healthy food retail options in distressed communities, and 

$250 million of New Markets Tax Credit allocation authority. HFFI is a multi-year effort 

to increase the availability of affordable, healthy foods in underserved urban and rural 

communities, particularly through the development or equipping of grocery stores and 

other healthy food retailers. 

In 2012, the Departments of Agriculture, Health and Human Services, and Treasury have 

partnered to make available over $400 million in financing to community development 

financial institutions, other nonprofits, public agencies, and businesses with sound 

strategies for addressing the healthy food needs of communities. These organizations will 

use federal grants, below-market rate loans, loan guarantees and tax credits to attract 

private sector capital for an even greater investment in projects that increase access to 

fresh produce and other healthy foods. The goal is to eliminate food deserts in our nation 

over seven years. 

The CDFI Fund is also requesting $12 million to continue its effort for the Native 

Initiatives Program. The objective of the Native Initiatives Program is to increase 

opportunities and to provide access to credit, capital, and financial services to Native 

CDFIs that are primarily serving Native Communities. 

The CDFI Fund requests $22.9 million in administrative funding for FY 2012. These 

administrative resources will be used to, among other things: 

 Accommodate the staffing and resource demands created by the unprecedented 

growth in existing programs and new programs; 

 Address significantly increased compliance monitoring requirements; and 

 Provide research and program evaluation efforts. 

The CDFI Fund requests $41.4 million for its Bank on USA initiative. The Bank on USA 

Initiative will promote access to affordable and appropriate financial services and basic 

consumer credit products for households without access to such products and services. 
CDFI-6 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands Community Development Financial Institutions Fund FTE Amount

FY 2010 Enacted 84 $246,750

FY 2011 Annualized CR Level 84 $246,750

Changes to Base: 

Adjustment to Reach Policy Level: 6 $3,144

Adjustment to Reach FY 2011 President's Policy 6 $3,144

Maintaining Current Levels (MCLs): - $201

Maintaining Current Levels - $201

Efficiencies, Savings & Base Reductions: - ($1,830)

Office Relocation - ($1,700)

Procurement Savings - ($130)

Subtotal FY 2012 Changes to Base 6 $1,515

Total FY 2012 Base 90 $248,265

Program Changes: 

Program Decreases: - ($22,706)

Community Development Financial Institutions Program - ($14,131)

Bank on USA Initiative - ($8,575)

Program Reinvestment: - $1,700

Adjustment to Support New Programs - $1,700

Subtotal FY 2012 Program Changes - ($21,006)

Total FY 2012 Request 90 $227,259

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level.......................................+3,144,000/ +0FTE 

Adjustment to Reach FY 2011 President’s Policy +3,144,000/ +0 FTE 

Adjustment to reach the FY 2011 President’s Policy Level

Maintaining Current Levels (MCLs) .............................................. +$201,000 / +0 FTE 

Maintain Current Levels +201,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in 

Federal Employee Retirement System participation. No inflation adjustment is requested 

for pay in FY 2012. 

Efficiencies Savings and Base Reductions ...................................... -$1,830,000 / -0 FTE 

Procurement Savings -$130,000 / +0 FTE 

Reducing non-competitive and high-risk contract actions and implementing the use of 

socio-economic programs such as 8(a) and small business set-asides can achieve 

procurement savings. Other methods to achieve savings include strategic sourcing, 

advanced acquisition planning, and GSA discount savings. 

Office Relocation – 1,700,000 / -0 FTE 

This is a one-time cost in the administrative account which is associated with the CDFI 

Fund’s FY 2011 office relocation. 
CDFI-7 

Program Decreases.......................................................-$22,706,000 / -0 FTE 

Community Development Financial Institutions Program - $14,131,000 / -0 FTE

The CDFI Fund will reduce the amount and number of Financial Assistance and 

Technical Assistance awards and the funding level for the capacity building initiative, 

which complements existing funding for technical assistance and capacity building 

services to CDFIs. However, the impact of the reduction in funding is mitigated by 

additional financial support to CDFIs from other Treasury programs, including the more 

than $500 million that has been made available to CDFIs under the Community 

Development Capital Initiative (CDCI) in FY 2010, and the up to $300 million that is 

authorized under Small Business Lending Fund (SBLF) in FY 2011. 

Bank on USA Initiative - $8,575,000 / -0 FTE

The FY 2012 request is reduced because certain one-time fixed costs incurred in FY 2011 

will not be incurred in FY 2012 (technical assistance to local Bank on USA programs, 

research contracts, and start-up and related administrative costs). 

Program Reinvestment....................................................+1,700,000 / +0 FTE 

Administration Resources to Support New Programs +$1,700,000 / +0 FTE 

The CDFI Fund will redirect reinvestment of non-recurring cost from the office relocation to 

cover the additional administrative support costs resulting from the implementation of 

two high-priority initiatives—the Bank on USA Initiative and the Healthy Food 

Financing Initiative. 
CDFI-8 

2.2 – Operating Levels Table 

Dollars in Thousands 

Community Development Financial Institutions Fund

FY 2010

Enacted

FY 2011

Annualized 

CR Level

Proposed 

Reprogrammings

FY 2011

Proposed 

Operating 

Level

FY 2012 

Request

FTE 84 84 - 84 90

Object Classification

11.1 - Full-time permanent $8,223 $6,965 $0 $6,965 $8,655

12 - Personnel benefits $2,060 $1,786 $0 $1,786 $2,313

21 - Travel and transportation of persons $119 $167 $0 $167 $119

22 - Transportation of things $20 $6 $0 $6 $20

23.1 - Rental payments to GSA $1,553 $1,470 $0 $1,470 $1,553

23.2 - Rental payments to others $190 $0 $0 $0 $190

23.3 - Communication, utilities, and misc charges $368 $0 $0 $0 $368

24 - Printing and reproduction $20 $84 $0 $84 $20

25.1 - Advisory and assistance services $1,023 $3 $0 $3 $0

25.2 - Other services $1,035 $4,941 $0 $4,941 $4,671

25.3 - Other purchases of goods and services from 

Govt. accounts $867 $2,481 $0 $2,481 $3,334

25.5 - Research and development contracts $1,500 $0 $0 $0 $1,500

26 - Supplies and materials $111 $70 $0 $70 $111

31 - Equipment $111 $27 $0 $27 $111

33 - Investments and loans $800 $0 $0 $0 $0

41 - Grants, subsidies, and contributions $228,750 $228,750 $0 $228,750 $204,294

Total Budget Authority $246,750 $246,750 $0 $246,750 $227,259

Budget Activities

Community Development Financial Institutions Program $107,600 $107,600 $0 $107,600 $125,869

Bank Enterprise Award Program $25,000 $25,000 $0 $25,000 $0

Native Initiatives $12,000 $12,000 $0 $12,000 $12,000

Capital Magnet Fund $80,000 $80,000 $0 $80,000 $0

Administration $18,000 $18,000 $0 $18,000 $22,965

Financial Education and Counseling $1,000 $1,000 $0 $1,000 $0

Hawaii Financial Ed and Counseling $3,150 $3,150 $0 $3,150 $0

Bank on USA Initiative $0 $0 $0 $0 $41,425

Healthy Food Financing Initiative $0 $0 $0 $0 $25,000

Total Budget Authority $246,750 $246,750 $0 $246,750 $227,259

 
CDFI-9 

2.3 – Appropriations Detail (Dollars in Thousands) 

FY 2012

Budget 

Request

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Community Development Financial 

Institutions Program $102,987 $107,600 $107,600 $125,869

Bank Enterprise Award $24,715 $25,000 $25,000 $0

Native Initiatives $10,909 $12,000 $12,000 $12,000

Capital Magnet Fund $0 $80,000 $80,000 $0

Administration 1, 2 84 $17,535 84 $18,000 84 $18,000 90 $22,965

Financial Education and Counseling 

Pilot Program $0 $1,000 $1,000 $0

Financial Education and Counseling 

Pilot Program (Hawaii) $0 $3,150 $3,150 $0

Bank on USA Initiative $0 $0 $0 $41,425

Healthy Food Financing Initiative $0 $0 $0 $25,000

Subtotal New Appropriated Resource 84 $156,146 84 $246,750 84 $246,750 90 $227,259

Other Resources:

Recoveries 154 154 194 194

Unobligated Balance 104,111 8,591 24,000 14,000

Offsetting Collections - Reimbursables 1,000 1,000 1,160 1,160

Available multi-year/no-year funds 3,976 2,587 3,976 400

Subtotal Other Resources 0 $109,241 0 $12,332 0 $29,330 0 $15,754

Total Resources Available for Obligatio 84 $265,387 84 $259,082 84 $276,080 90 $243,013 1

/ NMTC Program Administration is included in the Administration budget activity for the FY 2012 Budget request.

FY 2011

FY 2010 

Obligations

Annualized CR 

Level Resources Available for Obligation FY 2010 

Enacted

2

/ In addition, $13.5 million is available for administration of the Bond Guarantee Program provided in PL 111-240
CDFI-10 

2B – Appropriations Language and Explanation of Changes 

DEPARTMENT OF THE TREASURY 

COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS 

FUND 

To carry out the Community Development Banking and Financial 

Institutions Act of 1994 (Public Law 103-325), including services 

authorized by 5 U.S.C. 3109, but at rates for individuals not to 

exceed the per diem rate equivalent to the rate for ES-3, 

227,259,000, to remain available until September 30, 2013; of 

which $12,000,000 shall be for financial assistance, technical 

assistance, training and outreach programs, under sections 105 

through 109 of the Community Development Banking and Financial 

Institutions Act of 1994 (12 U.S.C. 4704-4708), designed to benefit 

Native communities and provided primarily through qualified 

community development lender organizations with experience and 

expertise in community development banking and lending in Indian 

country, Native American organizations, tribes and tribal 

organizations and other suitable providers; of which, 

notwithstanding section 108(d) of such Act, up to $25,000,000 shall 

be for a Healthy Food Financing Initiative to provide grants and 

loans to community development financial institutions for the 

purpose of offering affordable financing and technical assistance to 

expand the availability of healthy food options in distressed 

communities; of which $41,425,000 shall be for initiatives to 

establish bank accounts for low and moderate-income persons who 

do not have bank accounts with financial institutions and to improve 

access to the provision of bank accounts as authorized by section 

1204 of Public Law 111-203; of which up to $22,965,000 may be 

used for administrative expenses, including administration of the 

New Markets Tax Credit; of which up to $10,315,000 may be used 

for the cost of direct loans; and of which up to $250,000 may be 

used for administrative expenses to carry out the direct loan 

program: Provided, That the cost of direct loans, including the cost 

of modifying such loans, shall be as defined in section 502 of the 

Congressional Budget Act of 1974: Provided further, That these 

funds are available to subsidize gross obligations for the principal 

amount of direct loans not to exceed $25,000,000.

Restores waiving the 

match for HFFI 

2C - Legislative Proposals 

The CDFI Fund does not recommend any legislative changes for FY 2012. 
CDFI-11 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan 

provides a description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

(Dollars in Thousands) 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY10 to FY12

 Strong U.S. economic competitiveness 246,750 246,750 227,259 -7.89% 

Total $246,750 $246,750 $227,259 -7.89%

3A – Community Development Financial Institutions Program ($125,869,000 from 

direct appropriations): Through the CDFI Program, the CDFI Fund makes Financial 

Assistance (FA) awards to CDFIs that have comprehensive business plans for creating 

community development impact and that demonstrate the ability to leverage private 

sector sources of capital, and Technical Assistance (TA) grants to CDFIs and entities 

proposing to become CDFIs in order to build their capacity to advance community 

development and meet capital access needs in their target markets. 

3.2.1 – CDFI Program Budget and Performance Plan 

 (Dollars in Thousands) 

Community Development Financial Institutions Program Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $50,941 $149,750 $107,600 $107,600 $125,869

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $50,941 $149,750 $107,600 $107,600 $125,869

Budget Activity Total $50,941 $149,750 $107,600 $107,600 $125,869

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

ALL - Award Cycle Time N/A N/A B 7.5 7.5

ALL - Disbursement Cycle Time N/A N/A B 2.0 2.0

ALL - Jobs Created/Maintained N/A N/A B 51,312 48,991

CDFI - Amount of Loans/Investments Originated (Annual) N/A N/A N/A B B

CDFI - Number of Loans/Investments Originated (Annual) N/A N/A N/A B B

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline
CDFI-12 

Description of Performance: In FY 2010, CDFIs reported leveraging private investment 

in the prior year of over $1.9 billion (based on reporting from program year 2009 results), 

more than triple the target of $600 million; this success was largely due to increased 

CDFI Program funding which was met by private sector commitments despite the effects 

of the financial crisis. In FY 2011, the leveraged private investment measure is being 

replaced by two new measures on the number and amount of loans originated by CDFI 

awardees. These two new measures will be baselined in FY 2011. In addition, in 

FY 2011 the FTE job creation/maintenance measures and the two administrative cycle 

time measures will be consolidated into CDFI Fund-wide measures reflecting the 

outcomes of all programs. 

3B – New Markets Tax Credit Program: Through the NMTC Program, the CDFI 

Fund spurs the investment of new private sector capital into low-income areas through 

Community Development Entities (CDEs), which in turn use the privately managed 

investment vehicles to make loans and equity investments in businesses and real estate 

projects in low-income communities. By making an equity investment in CDEs, 

individual and corporate investors can receive a tax credit against their federal income 

taxes worth 39 percent of the value of the amount invested in the CDE over seven years. 

3.2.2 – New Markets Tax Credit Program Budget and Performance Plan 

(Dollars in Thousands) 

New Markets Tax Credit Program Administration* Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $4,120 $4,267 $4,203 $4,203 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $4,120 $4,267 $4,203 $4,203 $0

Budget Activity Total $4,120 $4,267 $4,203 $4,203 $0

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

ALL - Award Cycle Time N/A N/A B 7.5 7.5

ALL - Disbursement Cycle Time N/A N/A B 2.0 2.0

ALL - Jobs Created/Maintained N/A N/A B 51,312 48,991

Community Development Entities' Annual 

Investments In Low-Income Communities ($ 

billions) (Oe)

3.3 3.6 3.1 3.0 3.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B – Baseline 

* NMTC Program Administration is included in the Administration budget activity for the FY 2012 Budget request. 

Description of Performance: In FY 2010, the NMTC Program competitively awarded 

$5 billion in NMTC allocation authority to CDEs, including $1.5 billion in Recovery Act 
CDFI-13 

authority, providing tax credit allocation authority to CDEs for targeted investments in 

low-income communities. As reported in FY 2010 (based on reporting from program 

year 2009 results), cumulative investments in low-income communities by CDEs rose to 

$15.8 billion (exceeding the performance target) and amounted to an annual increase of 

$3.1 billion over the prior year (exceeding the annual target by $600 million). In 

FY 2011 the FTE job creation/maintenance measures and the two administrative cycle 

time measures will be consolidated into CDFI Fund-wide measures reflecting the 

outcomes of all programs. 

3C – Bank Enterprise Award Program ($0 from direct appropriations): Through the 

BEA Program, the CDFI Fund encourages insured depository institutions to increase 

investments and services in distressed communities and financial assistance to CDFIs. 

The CDFI Fund does not propose to fund the BEA Program in FY 2012. 

3.2.3 – Bank Enterprise Award Program Budget and Performance Plan 

(Dollars in Thousands) 

Bank Enterprise Award Program Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $19,924 $22,000 $25,000 $25,000 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $19,924 $22,000 $25,000 $25,000 $0

Budget Activity Total $19,924 $22,000 $25,000 $25,000 $0

Description of Performance: In FY 2010, the CDFI Fund received 76 applications 

requesting a total of $94 million compared to 58 applications requesting approximately 

$57 million in FY 2009. The CDFI Fund selected 69 FDIC-insured institutions to receive 

approximately $25 million in awards. FY 2010 applicants were headquartered in 

20 states and the District of Columbia. In the FY 2010 funding round (based on the 2009 

Assessment Period), awardees provided $373.9 million in qualified loans or investments 

in distressed communities, $53.9 million in qualified loans, deposits and technical 

assistance to CDFIs, and $233.3 million in qualified financial services in distressed 

communities. The CDFI Fund does not propose to fund the BEA in FY 2012. 

3D – Native Initiatives: ($12,000,000 from direct appropriations): Through the Native 

Initiatives, the CDFI Fund assists entities in overcoming barriers that prevent access to 

credit, capital and financial services in American Indian, Alaska Native, and Native 

Hawaiian communities. The Native Initiatives’ central program is the Native American 

CDFI Assistance Program (NACA Program), through which the CDFI Fund makes 

monetary awards to increase the number and capacity of existing or new CDFIs serving 
CDFI-14 

Native Communities. In addition, the Native Initiatives provide training to help 

strengthen and develop Native CDFIs. 

3.2.4 – Native Initiatives Budget and Performance Plan 

(Dollars in Thousands) 

Native Initiatives Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $7,979 $16,500 $12,000 $12,000 $12,000

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $7,979 $16,500 $12,000 $12,000 $12,000

Budget Activity Total $7,979 $16,500 $12,000 $12,000 $12,000

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

ALL - Award Cycle Time N/A N/A B 7.5 7.5

ALL - Disbursement Cycle Time N/A N/A B 2.0 2.0

ALL - Jobs Created/Maintained N/A N/A B 51,312 48,991

NACA - Amount of Loans/Investments Originated 

(Annual)

N/A N/A N/A B B

NACA - Number of Loans/Investments Originated 

(Annual)

N/A N/A N/A B B

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: In FY 2010, the NACA Program received 61 applications 

requesting a total of $23.7 million. The CDFI Fund awarded 45 organizations a total of 

$10.3 million for both FA and TA funding in FY 2010. In FY 2010, the Native Initiatives 

registered a 26 percent increase in the total assets of Native CDFIs. In FY 2011, the total 

assets measure is being replaced by two new measures on the number and amount of 

loans originated by NACA Program awardees. These two new measures will be baselined 

in FY 2011. In addition, in FY 2011 the FTE job creation/maintenance measures and the 

two administrative cycle time measures will be consolidated into CDFI Fund-wide 

measures reflecting the outcomes of all programs. 

3E – Capital Magnet Fund ($0 from direct appropriations): Through the CMF the 

CDFI Fund increases capital investment for the development, preservation, rehabilitation, 

and purchase of affordable housing for low-, very low-, and extremely low-income 

families, and related economic development activities. As initially conceived, the CMF 

was to be capitalized through proceeds from Fannie Mae and Freddie Mac. The CDFI 

Fund does not propose to fund the CMF in FY 2012. 
CDFI-15 

3.2.5 – Capital Magnet Fund Budget and Performance Plan 

(Dollars in Thousands) 

Capital Magnet Fund Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $80,000 $80,000 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $80,000 $80,000 $0

Budget Activity Total $0 $0 $80,000 $80,000 $0

Description of Performance: In its inaugural FY 2010 Capital Magnet Fund (CMF) 

funding round, the CDFI Fund announced $80 million in competitively awarded grants to 

23 CDFIs and qualified nonprofit housing organizations serving 38 states. The CDFI 

Fund received a total of 230 applications for the FY 2010 CMF funding round. In 

FY 2011, the CDFI Fund will baseline awardees' performance reporting. Awardees will 

be required to report annually: number of affordable housing units developed or 

produced; number/percentage of low-income renters/owners; number/percentage of very 

low-income renters/owners; number of jobs produced; leverage ratio; and deployment 

rate. In addition, in FY 2011 the FTE job creation/maintenance measures and the two 

administrative cycle time measures will be consolidated into CDFI Fund-wide measures 

reflecting the outcomes of all programs. 

3F – Administration ($22,965,000 from direct appropriations): This budget activity 

encompasses the CDFI Fund’s operational support and management activities for each of 

its award programs. This includes, among other activities: developing regulations, Notice 

of Funds Availability (NOFAs) and application materials; reviewing and evaluating 

certification and funding applications; selecting awardees; finalizing the terms of award 

agreements; making disbursements; collecting and evaluating performance data; and 

monitoring awardees’ compliance. 

During FY 2011, the CDFI Fund will incur one-time cost in the administrative account, 

which is associated with the CDFI Fund’s FY 2011 office relocation. The CDFI Fund 

will redirect the non-recurring savings from the office relocation to cover the additional 

administrative support costs resulting from the implementation of two high-priority 

initiatives—the Bank on USA Initiative and the Healthy Food Financing Initiative. 

In FY 2012, the CDFI Fund will continue to enhance compliance monitoring of all 

awardees. The CDFI Fund has developed IT systems that allow awardees to report 

information to the CDFI Fund through on-line reporting tools, as well as IT systems that 

compare the report submissions to the awardees’ assistance agreements to flag any 

incidences of non-compliance. CDFI Fund staff engages in compliance desk reviews and 

site visits to monitor further the activities and record keeping of CDFIs and CDEs. 
CDFI-16 

Since the CDFI Fund’s inception in 1994, its business processes and types of programs 

have evolved and undergone substantial changes and modifications. However, the 

corresponding changes in the IT systems and applications used to manage the awards 

process have not been made based on a unified architecture and/or a common technology 

platform. Instead, the IT system has been subjected to recurrent modifications with 

varying business requirements, often resulting in stove-piped designs. The management 

information system is being replaced with a more efficient, reliable, scalable, and cost 

effective system that fully integrates all phases of the information system lifecycle. 

3.2.6 – Administration Budget and Performance Plan 

(Dollars in Thousands) 

Administration Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $9,492 $11,883 $18,000 $18,000 $22,965

 Reimbursable Resources $0 $0 $0 $260 $0

Total Resources $9,492 $11,883 $18,000 $18,260 $22,965

Budget Activity Total $9,492 $11,883 $18,000 $18,260 $22,965

Description of Performance: The CDFI Fund has made significant progress enhancing 

program administrative business processes, enabling quicker award disbursements. New 

administrative productivity measures were implemented beginning in FY 2010. These 

measures replace the old administrative efficiency measure, which was intrinsically 

difficult to compute because it required allocating a share of organizational overhead to 

each program. The new program-level measure has two components: cycle time from the 

date when applications are received to the date of award announcement; and time from 

the date of award announcement to date of disbursement. 

These new administrative measures were initially deployed for each of the CDFI Fund’s 

programs. These measures were first tested through the deployment of the CDFI Fund’s 

Recovery Act funding rounds. In FY 2009, two months after Recovery Act grant awards 

were announced, the CDFI Fund disbursed all $98 million to 59 CDFIs and 10 Native 

CDFIs. In addition, the CDFI Fund entered into allocation agreements with CDEs for 

$1.5 billion in Recovery Act NMTC authority within 60 days of award announcement. 

In FY 2010, these two program efficiency measures (application-award and awarddisbursement cycle times) were analyzed across all programs to formulate a composite, 

CDFI-Fund-wide efficiency measure based on the weighted average of the number of 

awards per program. 

In FY 2011, these two administrative efficiency measures will be baselined for 

performance reporting in FY 2012. In addition, a performance indicator was formulated 

for tracking the cycle time from the date when Notice of Funding Availability (NOFA) is 
CDFI-17 

posted to the date when applications are received (in months). Cycle time is calculated as 

a weighted average across all CDFI Fund programs, weighted by the number of 

applications per program in each round. In conjunction with the two cycle time 

performance measures, this new indicator will allow the CDFI Fund to monitor and 

adjust the NOFA-application cycle time to accommodate the deployment of additional 

program application rounds; thus, this indicator is intrinsically meant to be a management 

tool to gauge overall program deployment cycle time, rather than as a performance 

measure. 

3G – Healthy Food Financing Initiative ($25,000,000 from direct appropriations): 

Through the HFFI, the CDFI Fund will make CDFI Program awards and NMTC 

allocation authority to CDFIs and CDEs that will finance healthy food alternatives in 

food deserts and low-income neighborhoods. 

3.2.7 – Healthy Food Financing Initiative Budget and Performance Plan

(Dollars in Thousands) 

Healthy Food Financing Initiative Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $0 $0 $25,000

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $0 $0 $25,000

Budget Activity Total $0 $0 $0 $0 $25,000

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

HFFI - Retail Outlets Created/Preserved N/A N/A N/A B B

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

 

Description of Performance: Proposed HFFI performance metrics include square footage 

of new retail food outlets created; jobs created at food outlets; and the total number of 

healthy food retail outlets financed. Performance measures will be implemented in 

FY 2011, with reporting slated to begin in FY 2012. 

3H – Bank on USA Initiative ($41,425,000 from direct appropriations): Through the 

Bank on USA Initiative, the CDFI Fund will work in partnership with Treasury’s Office 

of Financial Education and Financial Access to promote access to and innovations in 
CDFI-18 

affordable and appropriate financial services, basic consumer credit products and 

financial education for households without access to such products and services. 

3.2.8 - Bank on USA Initiative Budget and Performance Plan

(Dollars in Thousands) Bank on USA Initiative Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $0 $0 $41,425

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $0 $0 $41,425

Budget Activity Total $0 $0 $0 $0 $41,425

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Bank on - Number of Accounts Opened N/A N/A N/A B B

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: The Bank on USA Initiative will measure performance 

based on the number of new accounts opened. This measures whether institutions are 

providing un- and under-banked consumers access to affordable and appropriate financial 

products and services. This measure will be baselined in FY 2011. Additional 

performance indicators will be collected by the CDFI Fund from Bank on awardees to 

more accurately evaluate awardee performance and overall program effectiveness. 

3J – Financial Education and Counseling Pilot Program ($0 from direct 

appropriations): Through the FEC Pilot Program, the CDFI Fund makes grants to 

eligible organizations to provide a range of financial education and counseling services to 

prospective homebuyers. The CDFI Fund does not propose to fund the FEC Pilot 

Program in FY 2012. 
CDFI-19 

3.2.9 – Financial Education and Counseling Pilot Program Budget and Performance 

Plan

(Dollars in Thousands) 

Financial Education and Counseling Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $0 $2,000 $1,000 $1,000 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $2,000 $1,000 $1,000 $0

Budget Activity Total $0 $2,000 $1,000 $1,000 $0

3K – Financial Education and Counseling Pilot Program (Hawaii) ($0 from direct 

appropriations): Through the FEC Pilot Program (Hawaii), the CDFI Fund makes grants 

to eligible organizations to provide a range of financial education and counseling services 

to prospective homebuyers in the State of Hawaii. The CDFI Fund does not propose to 

fund the FEC Pilot Program (Hawaii) in FY 2012. 

3.2.10 – Financial Education and Counseling Pilot Program (Hawaii) Budget and 

Performance Plan 

(Dollars in Thousands) 

Hawaii Financial Ed and Counseling Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $3,150 $3,150 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $3,150 $3,150 $0

Budget Activity Total $0 $0 $3,150 $3,150 $0

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treasury.gov/offices/management/dcfo/accountability-reports/

 
CDFI-20 

Section 4 – Supporting Materials 

4A-- Human Capital Strategy 

The CDFI Fund’s Human Capital strategy is designed to further the CDFI Fund’s mission 

and operations by developing a Five-Year Human Capital Plan, identifying 

organizational effectiveness, improving employee training and development, enhancing 

the CDFI Fund’s recruitment and diversity strategies, and improving employee retention 

and satisfaction. 

Five-Year Human Capital Plan: Currently, the CDFI Fund is developing a five-year 

strategic plan that aligns with the growing needs of the CDFI community. 

As part of the strategic planning process, the CDFI is outlining a five-year human capital 

plan to coincide with the five-year strategic plan. The human capital plan will serve as a 

roadmap to ensure that the CDFI Fund is able to close employee skill gaps that have been 

identified. Areas of focus will be within the compliance and research divisions, which 

will be heavily relied on to monitor compliance and track performance of awardees. The 

human capital plan will also identify ways to address attrition, as it is critical to the 

success of the CDFI Fund to have a plan of action to recruit and retain high performers. 

Organizational Effectiveness: From FY 2008 through FY 2010, the CDFI Fund 

underwent an evaluation of the efficiency and effectiveness of its operations. This 

involved extensive internal assessments of every business unit to determine what was 

working well, what areas needed improvement and where the organization was 

duplicating services and/or costs. Managers and staff served an active role by working 

with contractors to capture pertinent business processes and by evaluating standard 

operating procedures. 

Training & Development: To ensure mission success into the future, the CDFI Fund 

needs a talented group of employees and leaders able to produce results and able to 

inspire, motivate, and guide others to produce. 

During the second quarter of FY 2010, the CDFI Fund launched the CDFI Fund 

Academy, training, development and succession-planning tool designed to ensure that the 

CDFI Fund staff have the skills they need to achieve mission success. The CDFI Fund 

Academy prepares staff to take on more challenging and broader roles, as well as more 

responsibilities, within their area of technical responsibility; provides opportunities to 

understand customer and industry issues; enhances staff understanding, effectiveness and 

mobility across programs and business units; and creates a culture of current and future 

leaders who value people and focus on achieving valuable results that matter to the 

communities we serve. Through the CDFI Fund Academy, each employee has access to a 

coach to assist with career and/or personal development. 

Recruitment and Diversity: During FY 2009 and FY 2010, the CDFI Fund has 

aggressively staffed vacant positions using its established recruitment strategies. The 

CDFI Fund is dedicated to recruiting a diverse pool of applicants to reflect its diverse 
CDFI-21 

constituents. During FY 2011 and FY 2012, the CDFI Fund will continue the Director’s 

outreach initiative to organizations such as the Hispanic National Internship Program, the 

Washington Internships for Native American Students, Historical Black Colleges and 

Universities, and to organizations that represent persons with disabilities. Given the 

current economic challenges in the CDFI community, the CDFI Fund will also target 

individuals from the community and economic development finance industries. This will 

help bring years of specialized experience to enhance the CDFI Fund’s mission. 

Employee Retention and Satisfaction: In FY 2012, the CDFI Fund will continue 

surveying its employees to measure employment satisfaction and identify opportunities 

for improvement. The Director will continue regular informal outreach meetings 

(including “Brown Bag” lunches) with line staff in order to stay connected to their needs 

and concerns. The meetings help employees to understand policy, program decisions, 

and provide an opportunity to share ideas with the Director. In FY 2010, the CDFI Fund 

developed a group of Change Champions; these business unit liaisons serve as change 

communicators between management and staff. The Change Champions will continue 

into FY 2012 to assist with future changes to programs and operations. In order to 

promote a fully engaged workforce, senior management will ensure that employee ideas 

and recommendations are captured early through meetings, working groups, policy 

discussions, and other methods. 

Through the Employee Recognition and Award Program, managers and staff 

acknowledge employee contributions over and above what is expected with “Quality” 

performance. The award program is designed to establish continual improvement of the 

CDFI Fund’s programs and operations through motivation and reward of employees. 

Awards include Special Act Awards, On-the-Spot Awards, Time off Awards, and nonmonetary awards (such as certificates and tours of historical landmarks in the 

Washington, D.C. area). 
CDFI-22 

4.1 - Sum m ary of IT Resources T able(Dollars in Thousands)

Budget Activity

FY 2009

Enacted

FY 2010

Enacted

FY 

Req

None $0 $0 0.0% $0 $Sub total, M ajo r IT Investm en ts $0 $0 0.0% $0 $C DF I N o n -M a jo r In ve stm e n ts

CIIS is a w e b -b a se d d a ta co lle ctio n syste m th a t CD F Is a n d CDEs u se to su b m it th e ir In stitu tio n -L e ve l Re p o rts a n d Tra n sa ctio n -L e ve l Re p o rts to th e F u n d . CD F I L AN su p p o rts e m a il, g ra n ts p ro ce ssin g a n d a ll b u sin e ss a re a s with in th e F u n d . CD F I F u n d W e b site C $ 4 2 7 $ 4 5 0 5 .3 % $ 4 5 0 $ 2 

Non -M ajor IT In vestm ents $427 $450 5.3% $450 $2C DF I In fra stru ctu re (En d Use r)

Th e CDF I F u n d 's a n n u a l o ffice a u to m a tio n b u d g e t to su p p o rt th e G ra n ts M a n a g e m e n t syste m . $ 2 ,1 7 9 $ 2 ,5 8 4 1 1 8 .6 % $ 2 ,5 8 4 $ 1 

C DF I In fra stru ctu re (M a in fra m e s a n d Se rve rs)

CDF I F u n d in fra stru ctu re co sts fo r h a rd wa re a n d syste m a d m in istra tio n se rvice s fo r G ra n t p ro ce ssin g re q u ire m e n ts. $ 0 $ 8 0 1 0 0 .0 % $ 8 0 $ 4 

C DF I In fra stru ctu re (Te le co m m u n ica tio n s)

Te le co m m u n ica tio n s a n d we b h o stin g se rvice s fo r th e CDF I F u n d in clu d in g we b h o stin g se rvice s fro m TTB. $ 3 3 5 $ 3 5 5 5 .9 % $ 3 5 5 $ 3 

Infrastructu re Investm ents $2,514 $3,019 20.1% $3,019 $2NoneEnterp rise Arch itectureT otal IT In vestm en ts $2,941 $3,469 18.0% $3,469 $4M ajo r IT Investm ents / Fu nd ing Sou rce

FY 2011 

An nualized 

CR Level

% Change 

from FY 2009 

to FY 2010
CDFI-23 

4B – Information Technology Strategy 

The CDFI Fund does not have any Major IT investments, as the term is defined by 

Treasury guidelines for defining Major IT investments. As such, the CDFI Fund is not 

required to submit an OMB 300, and instead submits Exhibit 53 for No Major IT 

investments. However, the CDFI Fund’s Chief Operations Officer (COO) ensures that all 

decision-making is integrated into the organization’s planning, operations, and budgeting 

processes. The Supervisory IT Specialist assists the COO in ensuring that existing 

processes and structures supporting IT investments are tied to the strategic plan, support 

the mission, and remain within the approved budget. 

The IT unit is responsible for ensuring that the CDFI Fund’s IT strategic goals conform 

to legislative requirements, the goals of Treasury and the Administration, the Federal 

Information Security Management Act (FISMA), Grants.gov, and the Information 

Technology Infrastructure Line of Business (ITILoB). This information, as well as 

budget and project management information for the Capital Planning and Investment 

Control process is coordinated with Treasury’s Office of the Chief Information Officer as 

part of the Department’s IT management process. 

The FY 2012 budget request includes the costs associated with new investments that will 

allow the CDFI Fund to better support its award programs. The CDFI Fund must create a 

more stable IT infrastructure to improve operational efficiency, research capabilities, and 

to enhance compliance monitoring for all awards. The CDFI Fund also proposes to form 

a new formal IT Governance/Compliance framework that will monitor measurable 

objectives and the overall performance of IT resources and to implement a Grants 

Management Information System Modernization Plan. 

The CDFI Fund has analyzed its business processes and is developing a single, 

comprehensive, enterprise-wide to-be target architecture for its grant’s management 

system that optimizes business processes by streamlining and eliminating unnecessary 

redundancies, removing stove-piped and program-specific procedures, and leveraging 

automation and technology. The benefits associated with this transition are enterprisewide and will result in a more efficient, flexible, and scalable organization that can 

handle the larger volume of awards that are managed by the CDFI Fund. This 

modernization initiative will enable the CDFI Fund to provide more transparency, better 

data quality, and improve governance within the organization, all resulting in a better 

value to customers. 
CDFI-24 

4C – Place-Based Policies and Programs 

Summary of CDFI Fund Programs: The following programs have requested funding 

and/or authorization in the FY 2012 budget request: 

CDFI Program: Provides Financial Assistance awards to institutions that are certified as 

CDFIs, which in turn provide loans, investments, financial services (including financial 

education) and technical assistance to underserved populations and low-income 

communities; and Technical Assistance grants to certified CDFIs and entities that will 

become certified as CDFIs within three years. 

Native Initiatives: Provides Financial Assistance awards, Technical Assistance grants, 

and training to Native CDFIs and other Native entities proposing to become or create 

Native CDFIs. 

NMTC Program: Provides tax allocation authority to certified CDEs, enabling investors 

to claim tax credits against their Federal income taxes; the CDEs, in turn, use the capital 

raised to make investments in low-income communities. 

Bank on USA Initiative: Provides competitive grants to a variety of entities, including 

financial service providers, community-based organizations and governmental entities, 

for use in promoting access to and innovations in affordable and appropriate financial 

services, basic consumer credit products and financial education unbanked and underbanked households. 

Healthy Foods Financing Initiative: Through the HFFI, the CDFI Fund will make CDFI 

Program awards and NMTC allocation authority to CDFIs and CDEs, respectively, for 

the purpose of financing projects that will increase the availability of healthy food 

alternatives in food deserts and other areas that currently lack access to healthy and 

nutritious food options. 

Applicability of Place-Based Policies and Programs: The CDFI Fund programs do not 

fit neatly into the concept of “place-based” initiatives. Each of these programs, to a 

varying degree, could be considered “place-based” given their goals of improving 

communities and promoting economic growth. However, the programs are not focused 

on specific geographic areas. Some program awardees may be serving a local area, but 

many have a nationwide footprint and/or focus on delivering services to low-income 

individuals, without a dedicated focus to a particular community. Furthermore, requiring 

CDFIs to limit their investments to certain geographies may impact their ability to serve 

low-income persons, diversify their loan pool, mitigate risks, and achieve financial 

sustainability. Similarly, by limiting NMTC investments to more narrowly defined 

geographical areas, CDEs may be challenged to achieve balanced portfolios and 

acceptable financial returns that meet both the financial goals of investors and the social 

goals of the program. 

FinCEN – 1 

Overview 

Mission Statement

To enhance U.S. national security, deter and detect criminal activity, and safeguard financial 

systems from abuse by promoting transparency in the U.S. and international financial systems. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 BSA Administration and Analysis $101,694 $101,694 $84,297 ($17,397) (17.1%)

 Regulatory Support Programs $9,316 $9,316 $0 ($9,316) (100.0%)

Total Appropriated Resources $111,010 $111,010 $84,297 ($26,713) (24.1%)

Transfers $0 $0 $30,000 $30,000 -

Total Program Operating Level $111,010 $111,010 $114,297 $3,287 3.0%

Total FTE 331 327 304 (27) (8.2%)

In FY 2012, the Regulatory Support Program budget activity is merged into the BSA Administration and Analysis budget 

activity. 

FY 2012 Priorities 

The following priorities support the Presidential goal of encouraging economic growth by 

safeguarding the financial systems from abuse and promoting transparency in the U.S. and 

international financial systems. 

• Implement the BSA IT Modernization Program, using funds transferred from the 

Treasury Forfeiture Fund (see Administrative Provisions Sec. 125); 

• Lead efforts to coordinate federal, state, and local efforts to combat fraud; 

• Enhance the BSA regulatory compliance and enforcement strategy based on risks 

informed by analysis and law enforcement; and 

• Engage with priority countries and international bodies to strengthen mechanisms for 

global information exchange. 
FinCEN - 2 

Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 3

Section 2 – Budget Adjustments and Appropriation Language ............................................... 8

2.1 – Budget Adjustments Table ................................................................................................. 8

2A – Budget Increases and Decreases Description ..................................................................... 8

2.2 – Operating Levels Table .................................................................................................... 11

2.3 – Appropriations Detail Table ............................................................................................. 12

2B – Appropriations Language and Explanation of Changes ................................................... 12

2C – Legislative Proposals ........................................................................................................ 12

Section 3 – Budget and Performance Plan ............................................................................... 14

3.1 – Budget by Strategic Outcome .......................................................................................... 14

3.2.1 BSA Administration and Analysis Budget and Performance Plan .................................. 15

3.2.2 Regulatory Support Programs Budget and Performance Plan ......................................... 17

Section 4 – Supporting Materials .............................................................................................. 18

4A – Human Capital Strategy Description ................................................................................ 18

4.1 – Summary of IT Resources Table ...................................................................................... 22

4B – Information Technology Strategy ..................................................................................... 23
FinCEN - 3 

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities

The Financial Crimes Enforcement Network (FinCEN), a Treasury Department bureau reporting 

to the Under Secretary of the Office of Terrorism and Financial Intelligence, plays a key role in 

supporting the Department’s strategic goal to prevent terrorism and promote the nation’s security 

through strengthened international financial systems. This role includes ensuring safer and more 

transparent U.S. and international financial systems through the administration of the Bank 

Secrecy Act (BSA). 

The BSA requires financial institutions to file reports and maintain records on certain types of 

financial activity and to establish appropriate internal controls to guard against financial fraud, 

money laundering, terrorist financing, and other types of illicit finance. These reports and 

records have a high degree of usefulness in criminal, tax, and regulatory matters. Documents 

filed by businesses pursuant to the BSA requirements are heavily used by law enforcement 

agencies, both domestically and internationally, to identify, detect and deter financial fraud and 

money laundering, whether it is in furtherance of a criminal enterprise, terrorism, tax evasion or 

other unlawful activity. Acts of fraud and acts of money laundering are interconnected: the 

financial gain of the fraudulent activity ultimately needs to be integrated into the financial 

system. Money laundering is often a malignant and pernicious product of fraud. FinCEN also 

serves as the nation’s financial intelligence unit (FIU). An FIU serves as a national center to 

collect, analyze, disseminate, and exchange information pursuant to a country’s anti-money 

laundering/counter-terrorist financing (AML/CFT) legislation and regulations. This includes 

information about suspicious or unusual financial activity reported by the financial sector. FIUs 

have specific authority to share lead information with their foreign counterparts to combat crossborder financial crime. 

FinCEN’s activities and efforts are developed in coordination with federal, state, and 

international partners. These bureau efforts are linked to the following strategic goals: 

 Financial systems resistant to abuse by money launders, terrorists, and their financial 

supporters, and other perpetrators of financial crime; 

 Detection and deterrence of money laundering, terrorism financing, and other illicit 

activity; and 

 Efficient management, safeguarding, and use of BSA information. 

The total resources required to support FinCEN for FY 2012 are $117,297,000 including 

$84,297,000 for direct appropriation, $3,000,000 from offsetting collections and $30,000,000 

transferred from the Treasury Forfeiture Fund (see Administrative Provisions Sec. 125) to continue 

development and maintenance of the BSA Information Technology (IT) modernization program. 

1B – Program History and Future Outlook

FinCEN fulfills its mission, goals and priorities by: administering the BSA; supporting law 

enforcement, intelligence, and regulatory agencies through sharing and analysis of financial 

intelligence; enhancing financial anti-fraud efforts; international anti-money laundering and 
FinCEN - 4 

counter terrorist financing efforts and cooperation; and networking people, entities, ideas, and 

information. 

In the regulatory area, FinCEN’s policy efforts focus on efficient and effective administration of 

the BSA. This includes improving the consistency in the application of BSA regulations to 

regulated financial institutions, providing guidance regarding regulatory expectations, 

conducting studies to provide feedback to stakeholders, and initiating enforcement actions when 

appropriate. 

In FY 2010, FinCEN: 

 Continued an extensive financial institution outreach initiative, focusing in FY 2010 on 

outreach to small depository institutions, such as community banks and credit unions. 

FinCEN completed this outreach through visits to individual institutions and participation 

in several “town hall” events for larger groups. Direct financial institution outreach 

enables FinCEN to carry out its mission as BSA administrator in the most efficient and 

effective manner possible and enhances FinCEN’s understanding of the operations of and 

challenges facing the institutions it regulates; 

 Enhanced collaboration with law enforcement to identify sources of lead information and 

is developing analysis criteria to more effectively leverage BSA data to identify potential 

non-compliant institutions. This strategy should enable FinCEN to become even more 

proactive in identifying and taking action against non-compliant institutions as 

warranted. In addition, FinCEN continues to work closely with the Department of Justice 

to coordinate investigations in order to proceed concurrently on both civil and criminal 

actions, where appropriate; 

 Continued to participate in the U.S. Government’s coordinated attack on mortgage fraud 

by updating analyses of Suspicious Activity Reports (SARs) to highlight current trends in 

mortgage loan fraud, and in loan modification and foreclosure rescue scams. FinCEN 

reports showed that mortgage loan fraud SAR filings continued to increase through 

2009. FinCEN also issued a report showing that after FinCEN issued an Advisory on 

loan modification scams, sampled SAR filings reporting such activity in every covered 

industry more than doubled over the entire preceding five-year period. FinCEN issued 

additional advisories to highlight updated scam techniques and reverse mortgage fraud 

schemes potentially related to the Federal Housing Administration (FHA) Home Equity 

Conversion Mortgage program; and 

 Finalized or advanced several significant rulemakings to further strengthen the financial 

system’s resistance to financial crime. FinCEN issued a final rule enhancing domestic 

and international information sharing to thwart money laundering and terrorist finance by 

expanding access to FinCEN’s successful 314(a) program. FinCEN also issued Notices 

of Proposed Rulemaking that would establish a more comprehensive BSA regulatory 

framework to providers and sellers of prepaid access; require banks and money services 

businesses to report certain cross-border electronic transmittals of funds to FinCEN; and 

clarify foreign bank account reporting requirements. 

FinCEN’s future plans in the regulatory area will improve its ability to strengthen financial 

system security and enhance U.S. national security. To ensure financial systems are resistant to 
FinCEN - 5 

abuse by money launderers, terrorists and other perpetrators of financial fraud and crime, 

FinCEN will: 

 Continue to advance regulatory initiatives designed to further protect the U.S. financial 

system from abuse while balancing their impact on the financial industry. This would 

include carefully considering public comment on and weighing changes to proposed rules 

as appropriate; 

 Continue to conduct analysis in support of regulatory initiatives (such as identity theft) 

and further efforts to combat mortgage loan fraud, building off prior analysis efforts to 

identify emerging trends (such as commercial real estate fraud), and continue to consider 

advisories to financial institutions highlighting emerging risks or other appropriate 

regulatory options; and 

 Continue to enhance proactive compliance and enforcement efforts by implementing 

further steps based on risks informed by analysis and law enforcement, including targeted 

steps to increase money transmitter registration. FinCEN will also continue to strengthen 

oversight of recently-covered industries under the BSA, by signing additional 

information sharing agreements with state insurance regulators and working 

cooperatively with the Internal Revenue Service and state regulators on consistent, riskbased examination procedures. 

FinCEN’s efforts in the analytical area focus on developing products and services to enhance law 

enforcement’s detection and deterrence of domestic and international financial fraud, money 

laundering, terrorism financing, and other illicit activity. FinCEN intends to improve its expert 

analysis of BSA data to provide early warning of emerging trends of fraud and other criminal 

abuse. This includes information exchange with counterpart FIUs in 120 jurisdictions that are 

members of the Egmont Group. 

In FY 2010, FinCEN: 

 Leveraged the relationships and techniques developed in the mortgage fraud context to 

initiate similar efforts in the areas of health care fraud and securities fraud through its 

involvement in the Financial Fraud Enforcement Task Force. FinCEN also undertook 

efforts to expand information sharing across the U.S. Government in a coordinated 

manner, worked to enhance understanding of the value and utilization of BSA data for 

investigative purposes, and supported task force summit tour events with analytical 

targeting packages/demonstrations, through participation in committees and other 

working groups of the Financial Fraud Enforcement Task Force, including acting, along 

with the Executive Office for the U.S. Attorneys, as co-chair of the Task Force’s Training 

and Information Sharing Committee; 

 Completed a joint study with the Mexican FIU of currency flows between the U.S and 

Mexico. The study provides a more accurate baseline of U.S. dollar currency activity in 

Mexico from which the U.S. and Mexico can more effectively measure the scope of bulk 

cash smuggling into Mexico and the effectiveness of future AML and cash interdiction 

efforts. The study also developed suspected Mexican money laundering targets and 

referred them to U.S. and Mexican law enforcement. FinCEN continues to coordinate 

investigative follow-up of these targets with U.S. law enforcement and develop plans for 

future targeting efforts. Completion of the study has positioned FinCEN well to respond 
FinCEN - 6 

to new Mexican regulations related to U.S. dollar transactions. FinCEN dedicated a staff 

member to work with the Mexican FIU to deepen cooperation; 

 Created and disseminated tactical financial intelligence reports to Egmont Group FIUs 

and managed case exchange with FIUs on behalf of U.S. law enforcement and regulatory 

agencies. These intelligence products are integral to domestic and foreign investigations 

of money laundering, financial fraud, and terrorist financing around the world; and 

 Worked closely with developing the FIU in Afghanistan, FinTRACA. As a result of 

FinCEN’s efforts within the Egmont Group, FinTRACA was admitted to the Egmont 

Group in June 2010. Egmont Group membership is expected to lead to a considerably 

greater flow of financial intelligence between FinTRACA and other FIUs, including 

FinCEN. FinCEN also placed a staff member to work with the Afghanistan FIU to foster 

tactical information sharing between the FIU and U.S. law enforcement. 

FinCEN’s future plans in the analytical area will improve its ability to strengthen financial 

system security and enhance U.S. national security. To detect and deter financial fraud, money 

laundering, terrorism financing, and other illicit activity, FinCEN will: 

 Continue to work with law enforcement, financial and international partners to combat 

Mexican cartel-related drug, gun and human smuggling operations in Mexico and along 

the Southwest Border by increasing and improving the sharing and analysis of related 

financial information; 

 Support federal law enforcement efforts to combat health care fraud by initiating an 

advanced targeting process to identify potential health care fraud perpetrators and to 

provide analytical support to investigations and prosecutions; 

 Expand the range of analytical products and identify more efficiencies in case 

management to respond to foreign FIU requests. FinCEN intends to increase the number 

of proactive intelligence reports sent to foreign counterpart FIUs. Proactive intelligence 

reports will enable foreign law enforcement agencies, to develop new cases or enhance 

existing ones; and 

 Increase joint analytical projects with foreign FIU counterparts through intensified 

operational engagements with key strategic partner FIUs. FinCEN plans to replicate with 

other foreign FIUs a current analytical initiative involving FinCEN, the Mexican FIU, 

and the Internal Revenue Service’s Criminal Investigation Division (IRS-CI).

FinCEN’s efforts related to the efficient management, safeguarding, and use of BSA information 

focus on maximizing utilization by improving the overall information infrastructure and 

enhancing information technology management capabilities. In the past year, both currency 

transaction reports and SAR filings decreased for the first time ever, reflecting efforts to focus on 

data most needed, while data quality continues to increase. Improving data quality remains a 

priority for FinCEN. 

In FY 2010, FinCEN: 

 Introduced additional field and business rule validations to batch data at E-Filing 

submission to improve data quality and provide faster error notification for SARs. Filers 

receive an e-mail if their submitted file has errors and they are directed to a designated 

error page to view batch validation error details; 
FinCEN - 7 

 Completed all of the project-level documentation defined in FinCEN’s System 

Development Life Cycle for the BSA IT Modernization initiative. This documentation 

provides the necessary business requirements and architectural foundational elements to 

enable FinCEN to proceed to the Design phase of the Program; and 

 Implemented the E-Filing Work-In-Process (WIP) database to provide additional data 

validations and provide feedback to financial institutions. 

FinCEN’s future plans will improve its ability to strengthen financial system security and 

enhance U.S. national security. To ensure efficient management, safeguarding and use of BSA 

information, FinCEN will: 

 Continue to modernize BSA information management and analysis to equip law 

enforcement and financial industry regulators with better decision-making abilities, 

increase the value of BSA information through increased data integrity and analytical 

tools, and move Treasury to the ultimate goal of being a “paperless” agency. FinCEN 

plans to continue to utilize the Bureau of Public Debt (BPD) for IT modernization hosting 

to achieve data center efficiencies. 

 This multi-year program will: 

- Establish the production and disaster recovery infrastructure; 

- Deploy the Registered User Portal, which will provide a common user interface and 

authentication process for accessing BSA data; 

- Begin the development efforts to build the BSA new system of record and basic query 

capabilities; and 

- Implement ability to discretely enter those select forms that are only currently 

accepted via paper filing. 

In FY 2012, FinCEN and the Administration propose a transfer of $30M from the Treasury 

Forfeiture Fund (see Administrative Provisions Sec. 125) to continue development and 

maintenance of the BSA Information Technology (IT) modernization program. 

 

Going Green Goals 

FinCEN supports the Administration’s Going Green goals. Additionally, FinCEN has a 

committee that routinely provides tips and suggestions to employees related to energy 

conservation. To improve Greenhouse Gas Reduction (GHG); FinCEN will reduce its Fleet size 

from four to three vehicles in FY 2011, and all vehicles are currently alternative-fuel vehicles. 

Further efforts include increased use of conference calls, video conferences and webinars, 

telework, and alternative work schedules. In addition, FinCEN has a very active and effective 

recycling program for paper, plastic, and aluminum, and procures paper that contains at least 30 

percent postconsumer fiber. Additionally, the bureau donated over 3,900 lbs of old computer 

equipment to UNICOR for recycling, and donated 61 LCD monitors and 15 laptop notebook 

computers to Computers for Learning (CFL). Finally, FinCEN implemented a Power 

Management Program on all computers to save energy; purchased 100 EPEAT- Register Gold 

Desktop Computers, 130 LCD Monitors, and 20 Laptop Notebook computers; transferred 183 

Blackberry Cell Phones to Treasury for reuse; and set up all printers for duplex printing. 

 
FinCEN - 8 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Financial Crimes Enforcement Network FTE Amount

FY 2010 Enacted 331 $111,010

FY 2011 Annualized CR Level 327 $111,010

Changes to Base: 

Adjustment to Reach Policy Level: - ($11,038) 

Adjustment to Reach FY 2011 President's Policy Level - ($11,038) 

Maintaining Current Levels (MCLs): - $897 

Maintaining Current Levels (MCLs) - $897 

Efficiencies, Savings & Base Reductions: (5) ($13,570) 

Base Reduction to BSA IT Modernization - ($10,250) 

Regulatory Support Efficiency Savings - ($1,017) 

Information Technology Efficiency Savings - ($1,636) 

Staffing Reduction from Attrition (5) ($667) 

Subtotal FY 2012 Changes to Base (5) ($23,711) 

Total FY 2012 Base 322 $87,299

Program Changes: 

Program Decreases: (18) ($3,002) 

Reduce Field Law Enforcement Support (3) ($683) 

Reduce Intelligence Support to External Agencies (6) ($968) 

Consolidate State and Local Access to BSA Data (9) ($1,351) 

Subtotal FY 2012 Program Changes (18) ($3,002) 

Total FY 2012 Request 304 $84,297

Transfers - $30,000 

Total FY 2012 Request (Net) 304 $114,297

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level .......................................................... -$11,038,000 / +0 FTE

Adjustment to Reach FY 2011 President's Policy Level -$11,038,000 / +0 FTE 

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President's Policy Level. The President's Policy Level is equal to the FY 2011 President's 

Budget as adjusted for the proposed pay freeze. 

Maintaining Current Levels (MCLs) ......................................................... +$897,000 / +0 FTE

Maintaining Current Levels (MCLs) +$897,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012. 

Efficiencies, Savings & Base Reductions ................................................ -$13,570,000 / -5 FTE

Base Reduction to BSA IT Modernization -$10,250,000 / +0 FTE 

BSA IT Modernization program will be funded with Forfeiture Fund surplus in FY 2012, thereby 

reducing the discretionary request by an additional $10.250 million. Total project funding 

remains the same. 
FinCEN - 9 

Regulatory Support Efficiency Savings -$1,017,000 / +0 FTE 

FinCEN will achieve efficiency savings through targeted regulatory support efforts, 

centralization of money services business (MSB) outreach activities, and change in distribution 

methodology for MSB brochure materials. The impact of these reductions will be mitigated 

through future consolidation of call centers; centralization of outreach activities; additional 

outreach support by FinCEN staff; and greater reliance on FinCEN's public website to distribute 

MSB materials, supporting Treasury's paperless initiative. 

Information Technology Efficiency Savings -$1,636,000 / +0 FTE 

In FY 2012, the BSA IT Modernization program will roll out new capabilities for BSA E-Filing 

and a new analytical tool. Therefore, FinCEN proposes to eliminate development funding for 

stand-alone system enhancements that could be rolled into the BSA IT Modernization umbrella 

during FY 2012. FinCEN will also achieve efficiencies through consolidation of information 

technology contracts, leveraging Treasury strategic sourcing initiatives, and other related 

efficiencies. 

Staffing Reduction from Attrition -$667,000 / -5 FTE 

Reductions were identified from efficiencies achieved in administrative staffing support and 

absorption of workload associated with positions lost through attrition. 

Program Decreases ................................................................................... -$3,002,000 / -18 FTE

Reduce Field Law Enforcement Support -$683,000 / -3 FTE 

Reductions are identified from discontinuance of a liaison position at the Federal Law 

Enforcement Training Center (FLETC), and from decreases in field positions located in High 

Intensity Financial Crime Areas (HIFCAs). FinCEN will continue to support law enforcement 

from its headquarters. 

Reduce Intelligence Support to External Agencies -$968,000 / -6 FTE 

This reduction will reduce analytical support to external customers in support of their national 

security, counter terrorism financing, and law enforcement matters. FinCEN will continue to 

carry-out limited case support and support to FinCEN's analytical initiatives that require national 

security information. FinCEN will also provide access to BSA information for external agencies 

through appropriate information sharing protocols. 

Consolidate State and Local Access to BSA Data -$1,351,000 / -9 FTE 

This reduction will limit direct access to BSA data to only state coordinators, canceling 142 

current state and local BSA direct access agreements for law enforcement and regulators. The 

state coordinators and FinCEN analysts would then be asked to provide access to the BSA by 

fulfilling query requests from those customers that previously had direct access. These actions 

allow FinCEN to reduce training, investigative and administrative support to state and local 

users, and inspections and monitoring of BSA data for appropriate use. 

Transfers .................................................................................................. +$30,000,000 / +0 FTE

Proposed Transfer from TFF to Support BSA IT Modernization Continuing Efforts 

+$30,000,000 / +0 FTE 

The BSA IT Modernization will be funded using a transfer from Treasury Forfeiture Fund (see 
FinCEN - 10 

Administrative Provisions Sec. 125) to support continuing development and maintenance. This 

transfer allows Treasury to use asset forfeiture to support the development of a tool that will 

support law enforcement's anti-money laundering and counter-terrorism financing efforts. 

 
FinCEN - 11 

2.2 – Operating Levels Table 

Dollars in Thousands 

Financial Crimes Enforcement 

Network

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE 331 327 - 327 304

Object Classification

11.1 - Full-time permanent $36,108 $37,130 $0 $37,130 $34,314

11.3 - Other than full-time permanent $294 $304 $0 $304 $287

11.5 - Other personnel 

compensation $545 $564 $0 $564 $526

12 - Personnel benefits $9,420 $9,597 $0 $9,597 $8,986

21 - Travel and transportation of 

persons $1,153 $844 $0 $844 $758

23.1 - Rental payments to GSA $5,380 $5,379 $0 $5,379 $5,424

23.2 - Rental payments to others $71 $71 $0 $71 $71

23.3 - Communication, utilities, and 

misc charges $1,399 $1,415 $0 $1,415 $1,313

24 - Printing and reproduction $454 $459 $0 $459 $263

25.1 - Advisory and assistance 

services $1,829 $1,849 $0 $1,849 $1,865

25.2 - Other services $13,178 $13,064 $0 $13,064 $7,969

25.3 - Other purchases of goods and 

services from Govt. accounts $14,545 $14,595 $0 $14,595 $14,415

25.4 - Operation and maintenance of 

facilities $968 $737 $0 $737 $0

25.6 - Medical care $155 $156 $0 $156 $158

25.7 - Operation and maintenance of 

equip $5,056 $5,118 $0 $5,118 $5,166

26 - Supplies and materials $449 $450 $0 $450 $431

31 - Equipment $20,006 $19,278 $0 $19,278 $2,351

Total Budget Authority $111,010 $111,010 $0 $111,010 $84,297

Budget Activities

BSA Administration and Analysis $101,694 $111,010 $0 $101,694 $84,297

Regulatory Support Programs $9,316 $0 $0 $9,316 $0

Total Budget Authority $111,010 $111,010 $0 $111,010 $84,297

 
FinCEN - 12 

2.3 – Appropriations Detail Table 

Dollars in Thousands 

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

FINANCIAL CRIMES ENFORCEMENT NETWORK

Federal Funds

SALARIES AND EXPENSES:

For necessary expenses of the Financial Crimes Enforcement 

Network, including hire of passenger motor vehicles; travel and 

training expenses, including for course development, of nonFederal and foreign government personnel to attend meetings 

and training concerned with domestic and foreign financial 

intelligence activities, law enforcement, and financial 

regulation; not to exceed $14,000 for official reception and 

representation expenses; and for assistance to Federal law 

enforcement agencies, with or without reimbursement, 

$84,297,000 of which not to exceed $15,835,000 shall remain 

available until September 30, 2014: Provided, that funds 

appropriated in this account may be used to procure personal 

services contracts. 

To simplify the fund 

availability structure, 

FinCEN is proposing to 

eliminate the two-year 

fund. The funding 

available for three years 

(i.e., until September 30, 

2014) is required due to the 

longer lead-time needed to 

execute information 

technology efforts and 

special analytical, 

regulatory, or international 

partnership efforts. This 

allows these projects to be 

executed in a single 

appropriation regardless of 

lead-time for acquisition.

2C – Legislative Proposals 

FinCEN is proposing five technical amendments to Titles 31 and 12 that would make 

improvements in four important areas. The first amendment provides authority to rely on 

examinations conducted by state supervisory agencies for nonbank financial institutions lacking 

a Federal regulator, which would capture most nonbank financial institutions currently subject to 

Internal Revenue Service (IRS) examination as delegated through a memorandum of 

understanding. The second amendment increases information sharing between FinCEN and 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

Collect the Revenue 329 $93,494 331 $101,694 327 $101,694 304 $84,297 -8.16% -17.11%

Protect the Public 8,716 9,316 9,316 -100.00%

Subtotal New Appropriated Resources 329 $102,210 331 $111,010 327 $111,010 304 $84,297 -8.16% -24.06%

Other Resources:

Offsetting Collections - Reimbursable 2 14,200 1 20,000 1 20,000 1 3,000 0.00% -85.00%

Available multi-year/no-year funds 15,526 20,526 25,420 15,000 -26.92%

Transfers In/Out 30,000

Recoveries 20 500 500 500 0.00%

Subtotal Other Resources 2 29,746 1 41,026 1 45,920 1 48,500 0.00% 18.22%

Total Resources Available for Obligation 331 $131,956 332 $152,036 328 $156,930 305 $132,797 -8.13% -12.65%

Resources Available for Obligation FY 2010 

Obligations

FY 2010 

Enacted

 FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY 2010 

to FY 2012
FinCEN - 13 

counterpart anti-money laundering/counter-terrorist financing regulators. Specifically, this 

amendment provides consistency between how FinCEN shares information in its capacity as a 

regulator and information sharing that currently exists between federal financial regulators and 

their foreign counterparts. The remaining amendments expand the universe of individuals 

covered by the prohibition on SAR disclosures and explicitly exempt all BSA data from 

disclosure under any state law or regulation providing public access to information. The specific 

changes to the amendment language are outlined below. 

Sec. 120. Section 5318(a)(1) of Title 31, United States Code (relating to compliance, exemptions, 

and summons authority), is amended by - (1) Inserting after "appropriate" "federal or (in the 

case of financial institutions without a federal supervisor) state"; and (2) Inserting after 

"Service." , "In lieu of delegating such authority to a state supervisory agency, the Secretary is 

also authorized to rely on examinations conducted by a state supervisory agency of a category of 

financial institution. The Secretary may only rely on such state examinations if the Secretary 

determines that under the laws of the state, the category of financial institution is required to 

comply with this subchapter and regulations prescribed under this subchapter, or the state 

supervisory agency is authorized to ensure that the category of financial institution complies 

with this subchapter and regulations prescribed under this subchapter." 

Sec. 121. Public Law 91-508, as amended (12 U.S.C. 1958 et seq.) is amended in section 128, by 

(1) Striking "sections 1730d (1) and" inserting in lieu thereof “section”; (2) Striking "bank 

supervisory agency, or other"; (3) Inserting after "appropriate" , "federal or (in the case of 

financial institutions without a federal supervisor) state"; and (4) Inserting after "agency." "In 

lieu of delegating such responsibility to a state supervisory agency, the Secretary is also 

authorized to rely on examinations conducted by a state supervisory agency of a category of 

financial institution. The Secretary may only rely on such state examinations if the Secretary 

determines that under the laws of the state, the category of financial institution is required to 

comply with this chapter and section 1829b (and regulations prescribed under this chapter and 

section 1829b), or the state supervisory agency is authorized to ensure that the category of 

financial institution complies with this chapter and section 1829b (and regulations prescribed 

under this chapter and section 1829b)." 

Sec. 122. Section 310(b)(2)(E) of Title 31, United States Code (relating to the Financial Crimes 

Enforcement Network), is amended by inserting after "Federal" the first time that it appears, 

"and foreign". 

Sec. 123. Section 5318(g)(2)(A) of Title 31, United States Code (relating to reporting of 

suspicious transactions), is amended by - (1) Inserting after "employee." at the end of paragraph 

(ii) "; and"; and (2) Inserting after "; and" "(iii) no other person that the Secretary may 

prescribe by regulation, who has knowledge that such report was made, may disclose to any 

person involved in the transaction that the transaction has been reported." 

Sec. 124. Section 5319 of Title 31, United States Code (relating to availability of reports), is 

amended by inserting after "title 5", ", or any State law having or intended to have a similar 

effect."
FinCEN - 14 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY10 to FY12

 Safer and more transparent U.S. and international 

financial systems 131,010 131,010 117,297 -10.47% 

Total $131,010 $131,010 $117,297 -10.47%

3A - BSA Administration and Analysis ($84,297,000 from direct appropriations, $30,000,000 

from transfers, and $3,000,000 from reimbursable programs): This activity comprises 

FinCEN’s efforts to administer the BSA, including promulgating regulations, providing outreach 

and issuing guidance to the regulated industries, providing oversight of BSA compliance, 

initiating enforcement actions, and, with the IRS, managing the information reported by the 

regulated industries, as well BSA compliance of non-bank financial institutions. Analytical 

programs include support to U.S. law enforcement and international FIUs in combating financial 

fraud and crime by facilitating the exchange of investigative information, including with foreign 

counterpart FIUs; identifying foreign and domestic financial fraud, money laundering, and 

terrorist financing trends, patterns, and techniques; and liaison with and support of intelligence 

initiatives within the intelligence community and within Treasury. This activity also 

incorporates efforts to support large-scale, complex law enforcement investigations involving 

financial fraud, terrorist financing, money laundering, and other financial crimes. 

FinCEN works closely with federal and state regulatory agencies that examine financial 

institutions for BSA compliance to ensure consistency across regulated industries. Through 

these efforts and direct outreach, FinCEN also assists regulated financial institutions in 

establishing risk-based anti-money laundering programs with appropriate policies, procedures, 

and internal controls and maintaining records and filing reports on certain types of financial 

activity pursuant to the BSA. As appropriate, FinCEN investigates alleged violations by 

financial institutions, issues letters of caution or warning, and seeks injunctions; additionally, 

when required, FinCEN imposes civil monetary penalties for egregious BSA violations, typically 

in conjunction with partner federal and state agencies. 

FinCEN supports law enforcement agencies, intelligence agencies, and foreign FIUs 

investigating financial fraud and crimes by providing specialized and unique analysis of BSA 

data along with information from law enforcement, intelligence, and commercial sources. 

FinCEN’s analysis also supports regulatory and other policy decisions. The analysis includes 

development of threat assessments, industry reports, and technical guides describing financial 
FinCEN - 15 

transaction mechanisms. Additionally, FinCEN identifies individuals and networks involved in 

suspicious financial activity, referring that information to appropriate law enforcement agencies. 

In the global arena, FinCEN’s activities include: supporting international initiatives to educate 

other jurisdictions about the BSA regulatory regime; working to establish international antimoney laundering/counter-terrorist financing regulatory standards and norms; and improving 

information exchange among FIUs through substantial engagement with the Egmont Group. 

As administrator of the BSA, FinCEN must ensure the effective management, accessibility, 

dissemination, and use of the highly sensitive confidential information collected under the Act. 

FinCEN provides authorized law enforcement, regulatory, and intelligence agencies direct access 

to BSA information. 

Other Resources: Offsetting collections totaling $3,000,000 are collected to support joint 

activities with other agencies. In addition, $30,000,000 will be transferred from Treasury 

Forfeiture Fund (TFF) (see Administrative Provisions Sec. 125) to continue development and 

maintenance of the BSA IT modernization program. 

3.2.1 BSA Administration and Analysis Budget and Performance Plan 

BSA Administration and Analysis Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $68,606 $82,287 $101,694 $101,694 $84,297

 Reimbursable Resources $4,310 $6,000 $20,000 $20,000 $3,000

Total Resources $72,916 $88,287 $121,694 $121,694 $87,297

Transfers $0 $0 $0 $0 $30,000

Total $72,916 $88,287 $121,694 $121,694 $117,297

Budget Activity Total $72,916 $88,287 $121,694 $121,694 $117,297

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Customers Satisfied with the BSA E-Filing (Oe) 93.0 94.0 96.0 90.0 92.0

Percentage of Domestic Law Enforcement and Foreign Financial 

Intelligence Units Finding FinCEN's Analytical Reports Highly 

Valuable

83.0 81.0 80.0 80.0 80.0

Percentage of Federal and State Regulatory Agencies with 

Memoranda of Understanding/Information Sharing Agreements 

(Ot)

41.0 43.0 46.0 46.0 50.0

Percentage of FinCEN's Compliance MOU Holders Finding 

FinCEN's Information Exchange Valuable to Improve the BSA 

Consistency and Compliance of the Financial System (Oe)

64.0 82.0 86.0 86.0 86.0

Percentage of FinCEN's Regulatory Resource Center Customers 

Rating the Guidance Received as Understandable (Oe)

94.0 94.0 92.0 90.0 90.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC - 

Discontinued, and B - Baseline
FinCEN - 16 

Description of Performance: In the regulatory area, FinCEN continues to increase activities to 

monitor financial institutions examined for BSA compliance by state and federal regulators 

through the establishment of MOUs to exchange compliance information. In 2010, FinCEN met 

its target of 46 percent of federal and state regulatory agencies with MOU/information sharing 

agreements. FinCEN achieved its target by finalizing four additional MOUs with state regulatory 

agencies. FinCEN will continue collaborating with state insurance agencies and other regulatory 

agencies to sign additional agreements to meet future targets. In FY 2012, FinCEN expects to 

meet the target of 50 percent. 

FinCEN surveys its compliance MOU holders to determine the impact of the information 

exchange to improve the BSA consistency and compliance of the financial system. In FY 2010 

FinCEN surpassed its target of 68 percent rating the information exchange valuable with 86 

percent. FinCEN attributes a portion of this success to the distribution of analytic information to 

the MOU holders throughout the fiscal year. To achieve future targets, FinCEN will continue to 

facilitate routine discussions with the MOU holders. In FY 2012, FinCEN expects to meet the 

target of 86 percent. 

FinCEN’s goal to provide financial institutions with understandable guidance through the BSA 

Resource Center is critical to institutions establishing anti-money laundering programs that 

comply with the BSA. The FY 2010 goal was to maintain a 90 percent satisfaction level for 

customers rating the guidance as “understandable,” and FinCEN surpassed its goal with 92 

percent. FinCEN attainted this success by responding timely (within 24 hours of the inquiry), 

providing a high level of service. In order to achieve future targets, FinCEN will continue to 

make guidance available on the Internet, accept and analyze customer feedback, and conduct 

surveys to measure customer satisfaction. In FY 2012, FinCEN expects to continue to meet the 

target maintaining a consistently high satisfaction level of at least 90 percent. 

FinCEN also works closely with its regulatory partners to take enforcement action against 

financial institutions that systemically and egregiously violate the provisions of the BSA, 

including through imposition of civil money penalties when appropriate. Timely enforcement 

action is essential to deter non-compliance with the BSA. In fiscal year 2010, FinCEN met its 

target for the average time to process enforcement matters in one year with an average time of 

0.8 year. FinCEN will continue to actively manage casework to meet future targets. In FY 

2012, FinCEN expects to continue to meet the target of 1.0 years. 

In the analytical area, FinCEN supports domestic law enforcement and international FIU partners 

by providing analyses of BSA information, and measures the percentage of customers finding 

FinCEN’s analytic reports highly valuable. The measure closely ties to how BSA information is 

used by law enforcement and international FIUs to identify, investigate, and prevent abuse of the 

financial system. In FY 2010, 80 percent of the respondents rated the analytic products as highly 

valuable. FinCEN narrowly missed its target of 81 percent. FinCEN attributes this to a need to 

enhance communication with and understanding of law enforcement partners’ needs. FinCEN 

has developed a strategy to increase communication with law enforcement partners and will 

continue efforts to ensure its products and services meet those needs. In FY 2012, FinCEN 

expects to meet its target of 80 percent. 
FinCEN - 17 

In the efficient management, safeguarding, and use of BSA information, FinCEN conducts a 

survey of the users of the BSA E-Filing system to determine the overall satisfaction level and to 

identify where improvements are needed. The FY 2010 target was to maintain at least a 90 

percent satisfaction level, and FinCEN exceeded its target with 96 percent. FinCEN attributes 

this to a result of continued outreach, the implementation of a more industry-friendly forms 

submission software (Adobe), and the receipt/acknowledgements and data validations specific to 

Suspicious Activity Reports now available to the filing community. FinCEN will continue 

outreach to E-Filers and ensure the technology supports the demand to achieve future targets. In 

FY 2012, FinCEN expects to meet the target of 92 percent. 

FinCEN also began tracking the value of the BSA information to law enforcement and regulatory 

agency users with direct access to the BSA data. This is a composite measure compiled from 

survey results. The survey looks at the value of BSA data, such as whether the data provided 

unknown information, supplemented or expanded known information, verified information, 

helped identify new leads, opened a new investigation or examination, supported an existing 

investigation or examination, and provided information for an investigative or examination 

report. The FY 2010 baseline for the percentage of direct access users finding the BSA data 

provides valuable information toward the detection and deterrence of financial crime and the 

transparency and protection of the financial systems was 87 percent. 

3B - Regulatory Support Programs (No funding): FinCEN is proposing to eliminate the 

Regulatory Support Program budget activity along with the related two year fund availability. This 

program has matured and is now an integrated part of FinCEN’s activities, thus the separate 

identification and extended funding availability is no longer required.

3.2.2 Regulatory Support Programs Budget and Performance Plan 

Regulatory Support Programs Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $8,941 $9,178 $9,316 $9,316 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $8,941 $9,178 $9,316 $9,316 $0

Budget Activity Total $8,941 $9,178 $9,316 $9,316 $0

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
FinCEN - 18 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

FinCEN’s Human Capital Strategy is best described by its organizational vision outlined in the 

2008-2012 Strategic Plan (http://www.fincen.gov/about_fincen/wwd/strategic.html). That vision 

is to have a well-managed environment where expert staff act swiftly, creatively, and 

collaboratively to address the threats posed to the domestic and international financial system by 

money launders, terrorists and their financial supporters, other threats to national security and 

perpetrators of financial crime. 

FinCEN continues to work to improve its employee satisfaction results. The bureau recently 

received the results of the 2010 Employee Viewpoint Survey and found that its scores have 

continued to improve, resulting in an overall Bureau rating above the government average. 

FinCEN realized significant improvement in those areas where it most focused attention (i.e., 

performance management, communication, training, telework and leadership) in terms of steps 

for improvement from the 2008 survey. The bureau is finalizing its 2010 – 2011 action plan for 

improvement from the 2010 survey. 

In FY 2010, FinCEN continued several successful work life programs to improve employee 

morale including: Fitness Center Reimbursement, Student Loan Repayment, Alternate Work 

Schedule, and telework. Participation in the Fitness Center Reimbursement Program increased 

from 70 employees (22 percent) to 84 employees (26 percent). Twenty-nine employees have 

participated in the Student Loan Repayment Program since its implementation and FinCEN has 

facilitated the repayment of six employee loans in full. Informal feedback showed increased 

employee satisfaction and retention since a three year service agreement is completed upon 

entering the program. FinCEN offers employees flexibility with both Alternate Work Schedules 

(AWS) and telework programs. Currently, 56 percent of FinCEN employees participate in the 

telework program. To round out work life program offerings, FinCEN promotes the Employee 

Assistance Program (EAP) and Worklife4You, a Resources and Referral Service. Both EAP and 

WorkLife4You offer free services to employees, informational emails, and seminars on physical 

and mental health and wellness issues. 

FinCEN’s continued focus on work life programs netted improved results when comparing 

surveys across years. In the 2010 survey, 85 percent of FinCEN of employees indicated 

satisfaction with AWS and 80 percent felt that their manager supported their need to balance 

work and other life issues. Further, 58 percent felt that senior leaders demonstrate support for 

the Worklife Program. Specifically, 63 percent were satisfied with the telework program, up 

from 30 percent in 2008. Seventy six percent of the workforce is satisfied with the Health and 

Wellness programs offered and 60 percent with the EAP program. In addition, the FinCEN 

Worklife Coordinator is a Certified Worklife Professional. Currently, there are only 13 of these 

individuals in Federal Government and two are employed by Treasury. 

FinCEN continues to build a results-oriented, high performing workforce. FinCEN’s current five 

tier performance management system requires that each manager place employees on 

performance standards that include individual commitments linked directly to the strategic plan. 

This performance management system enables managers to differentiate performance levels 
FinCEN - 19 

among employees and establish employee’s expectations and accountability for meeting 

specified performance goals and targets. To further develop each employee, managers and 

employees collaboratively develop and agree upon an annual individual development plan to 

identify areas for career growth and development. 

Based upon OPM and employee feedback, FinCEN developed a new Performance Management 

Program and Awards and Recognition System for implementation in FY 2011. In the first two 

quarters of FY 2010, FinCEN reviewed the current policy, surveyed employees, launched an 

employee feedback/steering group, identified themes and areas requiring adjustment, and drafted 

a policy and supporting handbook that capture these themes combined with OPM input. This 

new policy has been approved and training was provided. Any award program developed will 

feature the extremely popular Annual Director’s Awards and Recognition Program. This 

program celebrates FinCEN employee achievements in leadership, visionary, customer service, 

team work, and diversity and is a highlight of the fall season. 

FinCEN continues to offer a comprehensive leadership development program, expand leader 

programs/resources, implement strategic on-boarding, review retention data, expand rotational 

assignments, build upon inter and intra divisional activities, and improve communication. 

The Associate Directors who lead FinCEN’s five divisions have fostered team building and 

expanded cross-divisional activities. The 2008 Human Capital Survey results were the first time 

that the data was available by division, and FinCEN was able to develop division specific 

initiatives. Analysts across the bureau now meet periodically to build and strengthen 

relationships, and share analytical tips and processes. This team building effort continues and 

the organization continues to benefit from the sharing of information and the fostering of a 

greater understanding of incoming data and its impact on further analysis. 

Leadership and Workforce Planning

Although the bureau’s overall average age and average years of service is low as compared to 

other Treasury bureaus and the federal government, FinCEN continues to assess and develop its 

future workforce. FinCEN offers a wealth of leadership opportunities, both formal and informal, 

extensive leader resources, a formal mentoring program, a formal rotational assignment program, 

and extensive skill assessments and training development planning to engage employees. 

In FY 2010, FinCEN continued its aggressive leadership development plan to strengthen the 

skills of its current leaders and promote leadership skills at all levels. Implementation included 

360 assessments for executives and supervisors, mandatory training for new supervisors, and 

annual completion of 24 hours of supervisory or leadership-focused continuing education. To 

meet these goals, FinCEN conducted in-house training for supervisors that included coaching 

and mentoring skills, relationship building, performance management, and change management. 

In FY 2010, FinCEN’s executive team started receiving individual and team executive coaching. 

To serve both supervisors and potential leaders, FinCEN’s new Leadership Webinar Series made 

a range of topics available to all employees on a biweekly basis. In FY 2010, FinCEN launched 

a Mentoring Program, pairing twenty individuals together for a year-long plan for training and 

development. FinCEN also initiated its Thought Leader Series. The goal of the series is to bring 
FinCEN - 20 

acclaimed authors to FinCEN to provoke employees’ thinking and offer new perspectives on 

leadership. FinCEN also delivered in-house instruction to develop leadership skills in nonsupervisors and to empower all employees in accomplishing the bureau’s mission. 

FinCEN expanded resources to all leaders by creating a Supervisor’s Toolkit designed for both 

new and experienced supervisors to facilitate understanding of non-HR topics. This on-line 

resource is a fresh approach and shortcut to specific information supervisors need to perform 

their jobs and includes checklists, summary charts, explanations, and links. 

FinCEN continues to monitor its skills mix and perform comprehensive skill assessments to 

design training programs. FinCEN is committed to ensuring that employees possess the skills 

and knowledge needed to perform their jobs, keep their skills current and prepare for 

advancement. FinCEN continues to assess skills for its mission critical occupations: Intelligence 

Research Specialists, Regulatory Specialists, and Law Enforcement Liaison Specialists. In FY 

2009, results of those skills gap assessments prompted revisions to the corresponding training 

development plans, identified and prompted delivery of essential in-house training to close skill 

gaps, accelerated the frequency at which FinCEN’s BSA Training Program is offered, and 

identified the need for a new Advanced Strategic and Complex Analysis training course, which 

is scheduled to start at the end of FY 2010. In FY 2010, technical skills training courses were 

brought in-house for FinCEN’s analysts and regulatory specialists. Those courses focused on 

high level analysis, writing, communication and assessment of written products. 

FinCEN’s Rotational Assignment Program is another important method for skills enhancement 

and sharing expertise within and outside the bureau. Since its launch in FY 2009, qualified and 

motivated employees have continued to further their own learning and career development, while 

elevating communication and knowledge in their own rotational destinations. Several FinCEN 

rotational assignments were posted on Treasury’s Virtual Career Center portal and two Treasury 

employees accepted rotations into FinCEN. 

Recruitment and Diversity 

FinCEN utilizes various hiring authorities and flexibilities. Annually, FinCEN hires a number of 

students under the Student Temporary Employment Program (STEP). In addition, FinCEN often 

utilizes the Veterans Employment Opportunity Act (VEOA) and Schedule A Disability 

Appointment authority. FinCEN continued to reduce the amount of time it takes to hire 

employees from 45 days to less than 32 days during the last four quarters. 

FinCEN continued to take steps to attract a diverse workforce, which included partnering with 

diverse academic groups to attract student interns of diverse background and establishing 

contacts with special interest groups to attract applicants from diverse populations. FinCEN 

continued a mandatory Equal Employment Opportunity (EEO)/Diversity element in all 

supervisory performance plans to address EEO principles, workplace conflict, EEO plans, and 

diversity hiring requirements. 

FinCEN continues to offer a Diversity Day Training conference for all employees. The 2009 

activities focused on “Communicating Across Differences.” Noted leadership expert Warren 

Blank led a workshop on personal responsibility and leadership. In 2010, FinCEN held its 9th 
FinCEN - 21 

Diversity Day and featured a workshop led by Mr. Howard Ross. Mr. Ross is an expert in 

diversity, inclusion and unconscious bias, and helps organizations understand how individuals 

and organizations must develop strategies to unmask unconscious preconceptions regarding team 

members. 
FinCEN - 22 

4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Major IT Investments / Funding Source Budget Activity

FY 2009 

Enacted

FY 2010 

Enacted

% Change 

from FY 2009 

to FY 2010

FY 2011 

Annualized

CR Level

FY 20

Requ

BSA Information Technology Modernization* BSA Administration and Analysis $0 $31,487 N/A $32,200 $32,2

Subtotal, Major IT Investments

BSA Administration 

and Analysis $0 $31,487 N/A $32,200 $32,2

Non-Major IT Investments

BSA Administration 

and Analysis $18,108 $12,535 -30.8% $11,290 $9,7

Infrastructure Investments

BSA Administration 

and Analysis $9,800 $11,374 16.1% $10,621 $10,6

Enterprise Architecture

BSA Administration 

and Analysis $385 $250 -35.1% $453 $45

Enterprise Identity and Access Management

BSA Administration 

and Analysis $299 $30

Total IT Investments

BSA Administration 

and Analysis $28,293 $55,646 96.7% $54,863 $53,3

* BSA IT Modernization project includes a transfer of $30 million funding from Treasury Forfeiture Fund.
FinCEN - 23 

4B – Information Technology Strategy 

As the administrator of the BSA, FinCEN receives valuable information reported and collected 

under BSA requirements, which totaled approximately 17 million filings in FY 2009. The 

bureau’s mission is to enhance U.S. national security, deter and detect criminal activity, and 

safeguard financial systems from abuse by promoting transparency in the U.S. and international 

financial systems. FinCEN’s mission supports Treasury’s strategic goal to prevent terrorism and 

promote the nation’s security through strengthened financial systems. To successfully fulfill its 

mission, FinCEN relies on secure, advanced information technology (IT) to manage the 

collection, processing, storage, and dissemination of BSA information that contributes to the 

soundness and confidence in America’s financial system. 

FinCEN’s IT Strategy takes into account the growing need for financial institutions to meet 

obligations as efficiently as possible, while ensuring that national and global law enforcement 

agencies receive accurate, timely, and reliable BSA information to track money trails, identify 

money laundering, and unravel terrorist financing networks. FinCEN’s IT Strategy focuses on 

the critical need to improve the quality and accessibility of its data and increase responsiveness 

to stakeholders by introducing flexible and innovative technical solutions. 

A major component of FinCEN’s IT Strategy is the bureau’s information technology 

modernization vision and strategy (IT MV&S) and resulting Enterprise Transition Strategy, 

which serves as the roadmap for aligning its IT portfolio with its business objectives and 

processes and has resulted in the multi-year BSA IT Modernization program. By establishing an 

enterprise-wide information management and analysis framework, law enforcement and financial 

industry regulators will be equipped with better decision-making abilities and increased value of 

BSA information through enhanced data integrity and analytical tools. BSA IT Modernization 

will help FinCEN move away from custom coded legacy applications which are complex and 

difficult to maintain to a more modern environment based on Commercial Off the Shelf (COTS) 

products and standardized data formats. FinCEN is supporting Treasury/OMB’s goal of data 

center consolidation by hosting its production environments at the Bureau of Public Debt (BPD). 

In addition, FinCEN is working with OMB to develop National Information Exchange Model 

standards for data exchange with law enforcement and intelligence communities. 

The BSA IT Modernization effort helps move Treasury towards a “paperless” environment by 

increasing electronic filing and enabling future Treasury savings in paper-processing costs, while 

enabling industry savings due to the reduction of filing complexity. Increasing the automated 

collection of BSA data also decreases the amount of time it takes to make critical information 

available to FinCEN’s stakeholders. Providing more reliable and valid data in pre-defined 

formats enables a higher confidence in the data and reduces the time to decipher and interpret 

data. 

FinCEN is employing a System Development Life Cycle (SDLC) methodology and proven 

Program Management methodologies, such as the Project Management Body of Knowledge, to 

manage the BSA IT Modernization program. Before FinCEN can proceed through each phase of 

the program, it must demonstrate completion of all requisite activities and receive approval from 

the Modernization Executive Group, the highest level of Governance comprised of the Treasury 

CIO, FinCEN Director, and IRS Deputy Commissioner for Operations and Maintenance. 
FinCEN - 24 

FinCEN utilizes an Integrated Master Schedule (IMS) to depict all project activities, including 

cross project dependencies and resource loading. The IMS also serve as the foundation for 

conducting Earned Value Management, which effectively integrates the program’s scope of work 

with schedule and cost elements for optimum project planning and control. The IMS will allow 

FinCEN to perform wellness analysis to help ensure adherence to “best practices”, qualitative 

analysis to help ensure appropriate content, and performance analysis, such as critical path, 

schedule variance, and schedule trend analysis. These various analysis tools will help the bureau 

stay abreast at any given time of the cost and schedule for the program and take timely remedial 

actions as necessary. 

In FY 2010, FinCEN completed the project-level work to base-line the requirements and 

technical architecture. FinCEN obtained approval from the Modernization Executive Group to 

begin the design phase in May 2010. FinCEN has subsequently awarded the necessary task 

orders under the Indefinite Delivery/Indefinite Quantity contract for IT services support and 

launched the design effort. 

Overview 

Mission Statement

Collect the Federal excise taxes on alcohol, tobacco, firearms, and ammunition, and assure 

compliance with Federal tobacco permitting and alcohol permitting, labeling, and marketing 

requirements to protect consumers. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 Collect the Revenue $53,000 $53,000 $48,939 ($4,061) (7.7%)

 Protect the Public $50,000 $50,000 $48,939 ($1,061) (2.1%)

Total Appropriated Resources $103,000 $103,000 $97,878 ($5,122) (5.0%)

Total FTE 535 535 502 (33) (6.2%)

Note: In FY 2010, Congress appropriated $3 million in two-year funds for the hiring, training, and equipping of 

special agents and related support personnel. This funding expires September 30, 2011. 

FY 2012 Priorities 

• Collect roughly $24 billion in annual excise tax revenues due to the federal government; 

• Reduce the burden of compliance by expanding and promoting electronic filing options for 

industry members, including the online system that will allow industry members to apply for 

an original permit to start a new alcohol or tobacco business or file for an amended permit for 

an existing business;

• Promote voluntary compliance through industry outreach and education programs;

• Complete audits and investigations of TTB taxpayers based upon risk and random selection 

to ensure lawful operations and tax reporting and payment compliance; 

• Assure compliance with federal alcohol beverage production, labeling, and marketing 

requirements; 

• Detect criminal diversion activity, including counterfeit alcohol and tobacco products, to 

protect the federal revenue stream, U.S. consumers, and industry by even enforcement of 

laws and addressing criminal activity in the fair market; 

• Conduct statistically valid marketplace sampling programs to determine industry-wide 

compliance with advertising, labeling, and formulation regulations for alcohol beverages; 

• Enhance TTB product safety activities focusing on the integrity and safety of domestic and 

imported alcohol beverage products; and 

• Promote U.S. exports by facilitating industry compliance with foreign requirements and by 

working with foreign regulators to reduce barriers to trade. 

TTB - 1 
Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 5

Section 2 – Budget Adjustments and Appropriation Language ............................................. 13

2.1 – Budget Adjustments Table ............................................................................................... 13

2A – Budget Increases and Decreases Description ................................................................... 13

2.2 – Operating Levels Table .................................................................................................... 15

2.3 – Appropriations Detail Table ............................................................................................. 16

2B – Appropriations Language and Explanation of Changes ................................................... 16

2C – Legislative Proposals ........................................................................................................ 16

Section 3 – Budget and Performance Plan ............................................................................... 18

3.1 – Budget by Strategic Outcome .......................................................................................... 18

3.2.1 Collect the Revenue Budget and Performance Plan ......................................................... 19

3.2.2 Protect the Public Budget and Performance Plan ............................................................. 21

Section 4 – Supporting Materials .............................................................................................. 23

4A – Human Capital Strategy Description ................................................................................ 23

4.1 – Summary of IT Resources Table ...................................................................................... 25

4B – Information Technology Strategy ..................................................................................... 26

TTB - 2 
Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities

TTB is responsible for the administration and enforcement of those sections of the Internal 

Revenue Code of 1986 (IRC) associated with the collection of excise taxes on alcohol, tobacco, 

firearms, and ammunition, and the Federal Alcohol Administration Act, which provides for the 

regulation of the alcohol beverage industry and the protection of consumers of alcohol 

beverages. The bureau also administers the Webb-Kenyon Act, which prohibits the shipment of 

alcohol beverages into a state in violation of state law. 

In Fiscal Year (FY) 2012, TTB will continue to focus its efforts on helping industry members 

comply with federal alcohol, tobacco, firearms, and ammunition laws and regulations, in the 

interest of collecting excise taxes due upon those commodities, and enforcing the tax code by 

addressing tax evasion and the illicit trade in alcohol and tobacco products. The bureau will also 

transition from a pre-market review to a post-market evaluation of alcohol beverage products, 

which will promote a marketplace for alcohol beverages that complies fully with federal 

production, labeling, advertising, and marketing requirements. 

TTB’s priorities are directly linked to the following key strategic objectives: 

Collect All Revenue Due to the Federal Government--

Tax Verification and Validation: 

• Ensure correct payment of federal excise taxes, focusing on audits of large and high risk 

taxpayers; and 

• Identify and address tax evasion and other criminal violations of the IRC in the regulated 

industries, including diversion and smuggling of taxable commodities.

Voluntary Compliance: 

• Develop methods of promoting voluntary tax compliance through partnerships with 

industry, states, and other federal agencies; and 

• Participate in industry seminars and provide web-based education seminars to instruct 

industry members regarding federal compliance requirements. 

Effective and Efficient Tax Collection Systems: 

• Reduce the taxpayer paperwork burden associated with filing tax payments by creating 

alternative electronic filing methods. 

Protect the Public Through Education, Product Testing, and Investigation--

Business Integrity: 

• Ensure that only qualified permit applicants operate in the alcohol beverage and tobacco 

products industries. 

Product Integrity: 

• Enforce compliance with federal laws related to the production of alcohol beverage 

products; 

• Perform appropriate sampling, evaluation, and laboratory analyses of regulated 

commodities to ensure the integrity and safety of alcohol beverage products in the 

marketplace; 

TTB - 3 
• Review and act on labels, formulas, and advertising for domestic and imported beverage 

alcohol products to ensure consumers have complete and accurate product information; 

and 

• Respond to industry and consumer complaints regarding the regulated commodities by 

investigating incidents and allegations of product contamination and adulteration. 

Market Integrity: 

• Investigate cases of unfair trade practices and violations of labeling and advertising 

standards in the alcohol beverage industry; 

• Regulate the international import/export trade in beverage and industrial alcohol; and 

• Facilitate growth in U.S. exports by working with foreign regulators to reduce barriers to 

trade and by facilitating industry compliance with foreign trade requirements. 

Effective and Efficient Regulatory Systems to Facilitate Economic Growth: 

• Use electronic government solutions to reduce taxpayer burden and improve service 

through online filing solutions for permit applications, COLA applications, formula 

submissions, and other required information. 

The total resources required to support TTB activities for FY 2012 are $100,875,000, including 

$97,878,000 from direct appropriations and $2,997,000 from reimbursable activities (offsetting 

collections), mainly from the Puerto Rico cover-over program. 

Treasury High Priority Performance Goals 

TTB expects to accomplish the following in FY 2012 in support of Treasury’s high priority 

performance goals: 

Increase Voluntary Tax Compliance 

TTB’s outreach and education programs help taxpayers understand and comply with federal tax 

requirements. The bureau will: 

• Participate in industry seminars and provide training to educate taxpayers, especially 

small business owners, regarding federal compliance issues; and 

• Continue the Customer Care program, implemented in FY 2010, to monitor, evaluate, 

and assist newly permitted industry members with their required tax returns and 

operational report filings. Under this program, TTB specialists review the tax returns and 

operational reports of new industry members within the first 90 to 180 days of operation 

for accuracy and common errors, and follow up when necessary in order to bring industry 

members into compliance and ensure an understanding of federal requirements. 

Significantly Increase the Number of Paperless Transactions with the Public 

TTB has made progress in automating its tax and regulatory filing processes to reduce the 

paperwork burden and enable members of the alcohol and tobacco industries to submit 

mandatory applications and requests in an online environment. Through outreach efforts to 

industry, the bureau expects to: 

• Increase the electronic filing rate for alcohol beverage label applications to above 

80 percent; 

• Increase electronic filings of permit applications. Permits Online is an e-filing solution 

introduced in FY 2011 for original and amended permit applications; and 

TTB - 4 
• Increase Pay.gov registrations to enable taxpayers to file operational reports and tax 

returns online by continuing to register and educate new permittees. 

“Going Green” Goals 

TTB will support the continuation of environmentally sound policies and practices in the 

management of Information Technology (IT) equipment, fleet management, and in the 

acquisitions process. 

Increased Energy Efficiency 

TTB currently leverages technologies to ensure that electronic equipment uses efficient power 

management settings. The power management settings on work stations include powering down 

computer monitors, hard drives, and machines during periods of inactivity. TTB also has the 

capability to audit machines to assure use of the assigned power management settings. 

In addition, the policies that govern the bureau acquisition process assure that energy efficiency 

is a consideration in all equipment purchases. 

Electronic Stewardship and Data Centers 

TTB extensively employs green technologies to reduce its energy consumption. Through the 

success of the server virtualization program, TTB has targeted a 50 percent reduction in the 

physical server footprint. In addition, TTB deploys highly efficient computer room air 

conditioning, programmable thermostats, and Energy Star servers are procured when possible. 

Pollution Prevention & Waste Elimination 

TTB uses environmentally sound management practices in disposing of its assets. In FY 2010, 

TTB recycled 23,574 pounds of electronics and reused or recycled 100 percent of its surplus or 

End-of-Life electronics by working with UNICOR and qualified vendors. TTB also purchases 

office supplies made from post-consumer materials. Finally, TTB laboratories operate an 

Ethanol Waste Recycling Program that recycles pure ethanol from samples submitted to the 

National Laboratory Center and uses the recycled denatured alcohol as a fuel mix for the 

building’s power generator. 

1B – Program History and Future Outlook

TTB has two budget activities that focus on collecting the revenue rightfully due the federal 

government and ensuring alcohol beverage products meet regulatory standards. 

Collect the Revenue - This activity collects alcohol, tobacco, firearms, and ammunition excise 

taxes. These products generate nearly $24 billion in tax revenue annually, making TTB the third 

largest tax collection agency in the federal government. 

The excise taxes collected by TTB come from roughly 7,100 businesses that had operations 

resulting in tax payments in a given year. Members of the regulated industries paying excise 

taxes are distilleries, breweries, bonded wineries, bonded wine cellars, manufacturers of cigarette 

papers and tubes, manufacturers of tobacco products, and manufacturers and importers of 

firearms and ammunition. Approximately 200 of the largest taxpayers account for about 98 

percent of the annual excise tax collected. 

TTB - 5 
Fostering voluntary compliance is a primary tax administration strategy and, to support this 

objective, the bureau is working toward allowing TTB permittees and taxpayers to file all 

payments, returns, and applications online with TTB’s National Revenue Center. The FY 2012 

President’s Budget enables the continuation of efforts to provide the most effective and efficient 

system for the collection of all revenue that is rightfully due, eliminate or prevent tax evasion 

and other criminal conduct, and provide high quality service while imposing the least regulatory 

burden.

The investments in this activity resulted in the following performance highlights and 

accomplishments during FY 2010: 

• Collected approximately $24 billion in excise taxes, interest, and other revenues from 

alcohol, tobacco, firearms, and ammunition industries. The bureau collected $478 for every 

$1 expended on collection activities; 

• Collected roughly $9 million in additional floor stocks tax due from the manufacturers, 

importers, wholesalers, and retailers of tobacco products as a result of the tax rate increase 

passed under the Children’s Health Insurance Program Reauthorization Act of 2009 

(CHIPRA); 

• Achieved a 94 percent voluntary compliance rate among taxpayers who paid greater than 

$50,000 in annual excise taxes, measured in terms of timely remittance of tax payments. 

TTB’s educational outreach efforts at industry seminars and premises, and improvements in 

online filing options, assisted in this effort; 

• Processed $387 million in cover-over payments to Puerto Rico and the U.S. Virgin Islands. 

Federal excise taxes collected on all imported rum, and on rum produced in Puerto Rico and 

the Virgin Islands and subsequently brought into the United States, are “covered-over” (or 

paid into) the treasuries of Puerto Rico and the Virgin Islands; 

• Processed $298 million in drawback claims. Under current law, persons who use 

nonbeverage alcohol in the manufacture of medicines, food products, flavors, extracts, or 

perfume and other non-potable products may be eligible to claim drawback of excise taxes 

paid on distilled spirits used in their products; 

• Analyzed beverage alcohol and tobacco product samples to assign or verify a tax 

classification. For this purpose, TTB analyzed roughly 1,000 beverage alcohol samples 

associated with pre-import evaluations, the 5010 tax credit, and enforcement activities. 

Another 375 tobacco product samples were analyzed to ensure products were appropriately 

classified for tax purposes; and 

• Completed targeted field work of 145 audits and roughly 340 revenue-related investigations 

that resulted in the identification of $8 million in additional tax, penalties, and interest. 

TTB’s field presence also has a deterrent effect that promotes voluntary tax compliance from 

industry members. 

 

TTB - 6 
The following displays the historical collections at TTB from FY 2001 to 2010 by revenue type: 

Excise Tax and Other Collections by Fiscal Year

Dollars in Thousands 

Fiscal

Year Alcohol Tobacco FAET SOT FST Other Total

2001 6,674,425 $ $ 7,119,726 $ 175,959 $ 103,610 $ 528 $ 168 $ 14,074,416

2002 6,889,401 7,763,652 205,027 101,893 115,609 159 15,075,741

2003 6,910,631 7,380,807 193,414 103,781 1,628 - 14,590,261

2004 6,995,366 7,433,852 216,006 100,562 - 359 14,746,145

2005 7,074,076 7,409,608 225,818 10,190 9 141 14,719,842

2006 7,182,940 7,350,058 249,578 2,895 638 146 14,786,255

2007 7,232,138 7,194,081 287,835 2,808 - 32 14,716,894

2008 7,420,576 6,851,705 312,622 448 - 634 14,585,985

2009 7,424,292 11,548,504 452,693 1,192,375 272 970 20,619,106

2010 7,476,789 15,913,479 360,813 300 8,558 180 23,760,119

Average $ 7,128,063 $ 8,596,547 $ 267,977 $ 42,676 $ 131,935 $ 16,167,476 279 $ 

FAET - Firearms and Ammunition Excise Tax SOT - Special Occupational Tax FST - Floor Stock Tax Other - Suspense Account

Note: Tobacco revenue increased in 2009 as a result of the passage of the Chidren’s Health Insurance Program 

Reauthorization Act (CHIPRA) legislation, which increased the tax rate on tobacco products. Also, legislation was 

enacted in July 2005 that repealed the SOT for all alcohol taxpayers. The SOT for tobacco permitees remains intact. 

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2005 2006 2007 2008 2009 2010

Dollars (In Millions)

Tax Collections by Commodity

Tobacco Alcohol Firearms

67%

31%

2%

TTB - 7 
Alcohol Beverage Tax Collections 

The alcohol beverage industry in the United States pays $7.5 billion in federal excise taxes each 

year and also provides a source of tax revenue for state and local governments. Economic 

forecasts predict continued modest growth in the alcohol industry, and taxes collected on alcohol 

beverages are expected to continue to rise throughout the period of FY 2011 – FY 2012. TTB 

expects that the increase in new alcohol businesses will be most prominent in the number of 

wineries, craft breweries, and craft distilleries. 

Tobacco Tax Collections and Floor Stocks Tax 

In FY 2010, TTB tobacco excise tax collections spiked to an historic high of $15.9 billion as a 

result of a full year of collections under the increased tax rate imposed by the Children’s Health 

Insurance Program Reauthorization Act of 2009 (CHIPRA). This legislation provided for a tax 

increase on all tobacco products (except large cigars), and cigarette papers and cigarette tubes, 

effective April 1, 2009. 

CHIPRA also imposed a floor stocks tax on tobacco products, a one-time excise tax placed on 

commodities subject to a tax increase that is equal to the difference between the new tax rate and 

the previous rate. The last floor stocks tax on tobacco enacted by Congress was in 2002. Floor 

stocks tax collections for FY 2009 totaled $1.2 billion and represent collections from hundreds of 

thousands of wholesaler and retailer dealers (who do not hold a permit with TTB) and 

manufacturers and importers (who are required to hold a TTB permit). In FY 2010, TTB 

continued its enforcement of the floor stocks tax, identifying tobacco wholesalers and retailers 

that did not file and/or pay floor stocks tax or significantly underpaid this tax. TTB collected 

nearly $9 million of additional floor stocks tax plus penalties and interest. TTB continues its 

floor stocks tax enforcement efforts and is finding many wholesalers that appear to be willfully 

not reporting or underreporting their tobacco inventory and associated tax payments. TTB will 

continue to audit high risk non-filers and under-filers of floor stocks tax. 

Firearms and Ammunition Excise Tax (FAET) Collections 

Firearms and ammunition excise taxes are remitted to the Fish and Wildlife Restoration Fund 

under provisions of the Pittman-Robertson Act of 1937. The U.S. Fish and Wildlife Service, 

which oversees the fund, apportions the money to state governments for wildlife restoration and 

research, and hunter education programs. Federal excise tax collections on firearms and 

ammunition have increased from $193 million in FY 2003 to $361 million in FY 2010, an 

increase of $168 million over the past seven years, or an 87 percent growth in federal FAET 

revenues. The increase in reported tax revenue can be attributed to industry growth, effective 

outreach and collection initiatives at the bureau, and the field presence of TTB’s auditors, which 

continues to promote voluntary taxpayer compliance. 

Protect the Public - This activity ensures the integrity of the alcohol and tobacco industries and 

of beverage alcohol products found in the marketplace, and regulates roughly 53,000 alcohol and 

tobacco businesses. TTB enforces federal laws related to the issuance of permits to industry 

members and the production, importation, exportation, labeling, advertising, and marketing of 

alcohol products. 

TTB - 8 
The investments in this budget activity have resulted in the following performance highlights and 

accomplishments during FY 2010: 

• Approved 102,500 of the 132,600 COLA applications received; the remaining 30,100 (23 

percent) were rejected, returned for correction, withdrawn, or expired. About 79 percent of 

COLA applications were filed electronically through COLAs Online. This proprietary TTB 

system has been in operation since 2003; 

• Processed 5,770 original and 18,230 amended permits. TTB averaged 65 days to process 

original permit applications. TTB protects consumers by screening permit applicants to 

ensure only qualified persons engage in operations in the regulated industries; 

• Evaluated about 6,700 beverage alcohol formulas and analyzed about 2,300 alcohol beverage 

samples in support of audits and investigations, as well as the product integrity, pre-import, 

Alcohol Beverage Sampling Program, 5010 tax credit, and consumer complaints programs; 

• Issued 190 cease and desist letters to tobacco importers operating without permits. Through 

its effective information sharing relationship with U.S. Customs and Border Protection, TTB 

was able to compare import data in the customs International Trade Data System with permit 

information in TTB’s Integrated Revenue Information System and determined that 15 

percent of entities reporting importations of tobacco products had done so without a 

permit. TTB’s issuance of cease and desist letters, and appropriate follow up activities, 

ensured that the responsible parties ended operations or obtained a permit; and 

• Initiated more than 700 field investigations of industry members regarding permit 

applications, consumer complaints, trade practice violations, and product integrity 

verifications. Included are high-risk permit applications to meet TTB’s public protection 

objectives.

TTB Permitting Process

TTB’s vision for the Permits Online investment is to provide a secure, web-based solution that 

allows members of the alcohol and tobacco industries to electronically submit applications for 

permits to operate. Applicants who plan to produce finished distilled spirits, wines, malt 

beverages, and tobacco products, and persons wishing to operate businesses such as alcohol 

wholesalers, alcohol importers, tobacco importers, specially denatured spirits users and dealers, 

tax-free alcohol users, alcohol fuel plants, tobacco processors, and tobacco export warehouses, 

must submit original and amended permit applications. The National Revenue Center currently 

processes original application packets for 23 types of permits/registrations. 

New or existing industry members file these application packets to request permission to 

commence a new regulated industry operation, or to update critical industry member information 

such as trade names and changes in control. Over the past several years, the volume of paper 

applications has increased making it difficult to maintain current service levels. The bureau 

purchased a commercial off-the-shelf software package that will be the core of the electronic 

system to automate the submission process for all permit applications. TTB engaged in an 

intensive development effort in FY 2010, and devised a schedule for the phased release of the 

Permits Online system. The system will be deployed in stages, with the initial release targeted 

for FY 2011, and subsequent releases scheduled through FY 2012. Once the commercial product 

is fully implemented, industry can expect reduced processing time, electronically guided 

assistance through the application process, improved communications with TTB, and an overall 

TTB - 9 
reduction in mailing and materials costs. The FY 2012 President’s Budget includes a staff 

reduction of 3 FTE as a result of the efficiencies gained by the introduction of this technology. 

Specific Challenges in FY 2012 

Tobacco Product Diversion 

Given the increased rate of tax (since 2009) upon tobacco products, there is an increased 

incentive to evade the tax to gain an illegal profit. Tobacco diversion refers broadly to the 

movement of tobacco products into domestic commerce without the payment of taxes due. 

Diversion schemes include: 

• Tobacco products are removed from the manufacturer’s premises in excess of the quantity 

reported to TTB, thus evading the tax on the unreported quantity of products removed; 

• Tobacco products are removed from the manufacturer’s premises for export (which is a 

removal not subject to federal excise tax) and either the manufacturer or an export warehouse 

proprietor diverts the products into domestic commerce before export, thus illegally avoiding 

tax payment; 

• Tobacco products are removed from the manufacturer’s premises without tax payment for 

export, are exported, and are smuggled back into the United States without the required 

importation entry and associated tax payment; 

• Tobacco products are smuggled from abroad into the United States, disguised and declared as 

something other than tobacco products, or are declared as a smaller quantity than actually 

imported, thus illegally evading the applicable tax payment requirements; 

• Tobacco products are sold by mail order, phone, and over the Internet from domestic and 

foreign vendors and are delivered directly to the consumer, thus bypassing applicable federal 

and/or state tax payment requirements; and 

• Tobacco products are produced by a manufacturer operating without a permit and are 

removed for domestic consumption without the payment of applicable taxes. 

TTB has been involved with cases that touch on each of these diversion schemes and has either 

addressed them administratively (where permittees have been involved) or worked with state or 

other federal agencies to address the unlawful conduct and to collect the tax due. 

The Department of the Treasury Report to Congress on Federal Tax Receipts Lost Due to Illicit 

Trade and Recommendations for Increased Enforcement (“Report”), dated February 4, 2010, 

presented a study estimating the amount of federal tax receipts lost as a result of tobacco 

diversion. The Report also made several recommendations that, taken together and assuming 

appropriate resources to implement, TTB believes would reasonably be expected to limit tobacco 

diversion. The study emphasized that the substantial uncertainty surrounding the degree of 

underreporting of cigarette consumption in survey data necessarily results in uncertainty about 

the magnitude of the federal tax receipts lost due to cigarette diversion. The Bureau will 

continue to conduct this study to analyze post-CHIPRA revenue loss once data regarding 

cigarette consumption rates for 2009 and 2010 become available. 

Additionally, since the enactment of CHIPRA, TTB has seen a number of changes in the tobacco 

products industry, apparently in response to the new incentives created by the different tax rates 

TTB - 10 
imposed on the tobacco product categories. Those industry trends have included shifts within 

the industry in terms of the types of tobacco products removed from manufacturing premises for 

commercial distribution, specifically in regard to small and large cigars, and pipe tobacco and 

roll-your-own tobacco products. This shift can be attributed to consumers consciously 

purchasing lower-tax tobacco products. 

In FY 2010, TTB was provided $3 million in two-year (FY 2010-2011) funding that will expire 

on September 30, 2011. Congress specified that the funds would be for the hiring, equipping, 

and training of special agents and related support personnel. To assist the bureau with enforcing 

its criminal jurisdiction, TTB entered into an interagency agreement for the services of law 

enforcement agents on a reimbursable basis from the Internal Revenue Service Criminal 

Investigation division. The TTB criminal cases involving alcohol and tobacco diversion activity 

are in the investigative stage and, due to their complex nature, will take time to develop and 

bring to closure. TTB expects measurable results from the current caseload, and has identified 

additional leads for potential criminal referrals. 

Alcohol Fuel Plants 

TTB has issued approximately 1,700 alcohol fuel plant permits, which it regulates as distilled 

spirits plants. The establishment of these new plants creates new challenges because of the 

possibility for significant revenue losses due to the unlawful diversion of alcohol. The Energy 

Independence and Security Act of 2007 mandates the use of 36 billion gallons of renewable fuel 

per year by 2022. In comparison, total U.S. consumption of beverage distilled spirits is about 

420 million gallons per year – and beverage spirits contain less than half the ethanol that is in 

alcohol fuel. Most alcohol fuel production comes from fewer than 150 large plants, but hundreds 

of smaller plants have applied for TTB permits in each of the last few years. 

Succession Planning 

Succession planning is high on the list of TTB’s strategic priorities. TTB could lose 

approximately 30 percent of its workforce by 2012 due to retirements and other attrition. To 

mitigate these losses, TTB continues to use the personnel interventions identified in the Pay 

Demonstration Project to enable the bureau to improve its capacity to recruit, develop, and retain 

high-caliber employees. Continuation of this authority is key to closing skill gaps in mission 

critical occupations and is requested for an additional year in the FY 2012 budget. 

Rulemaking 

TTB’s regulatory actions will support its mission objectives to collect the revenue and protect the 

public. The bureau will work on a number of regulatory projects in FY 2012, and several key 

regulatory initiatives are detailed below. 

Key Regulatory Initiatives

Collect the Revenue and Protect the Public - Modernization of Title 27, Code of Federal 

Regulations. In FY 2012, TTB will continue to pursue its multi-year program of 

modernizing its regulations in title 27 of the Code of Federal Regulations. This program 

involves updating and revising the regulations to be more clear, current, and concise, with an 

emphasis on the application of plain language principles. Modernizing the regulations will 

ultimately result in greater compliance by industry members, thus protecting both the 

TTB - 11 
revenue and the public, as well as cost savings to TTB through the use of more efficient 

regulatory processes. In FY 2010, TTB drafted an advance notice of proposed rulemaking on 

Part 25, Beer regulations and expects to publish it in early FY 2011. 

Collect the Revenue--Alcohol Fuel Plants. In FY 2012, TTB intends to publish amendments 

to the alcohol fuel plant regulations, in recognition of the significant growth in this industry 

segment. TTB anticipates these changes would include updated procedures for producers of 

distilled spirits intended for fuel use that will provide TTB with improved methods to protect 

the revenue, and also clarify or ease certain operational requirements.

The regulatory proposal will provide for more frequent reporting to TTB by larger alcohol 

fuel plants to enable TTB to better protect the revenue. TTB will also propose to remove the 

recordkeeping requirement for samples used at the alcohol fuel plant, and will provide 

clarification as to the disposition of distiller’s grain and other bi-products that result from 

ethanol production. 

Collect the Revenue - Simplify Reporting Requirements for Distilled Spirits Plants. TTB will 

need to undertake a rulemaking project to revise its regulations related to reporting 

requirements for distilled spirits plants (DSP). In order to realize the anticipated savings 

from staff reductions, as incorporated into the FY 2012 budget request, TTB must publish a 

final rule that updates the regulations to consolidate the required monthly operations reports 

for non-industrial DSP.

 

TTB - 12 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Alcohol and Tobacco Tax and Trade Bureau FTE Amount

FY 2010 Enacted 535 $103,000

FY 2011 Annualized CR Level 535 $103,000

Changes to Base: 

Adjustment to Reach Policy Level: 12 $2,571 

Adjustment to Reach FY 2011 President's Policy 12 $2,571 

Maintaining Current Levels (MCLs): - $832 

Maintaining Current Levels - $832 

Efficiencies, Savings & Base Reductions: (45) ($8,525) 

Audits, Investigations, Outreach & Trade Facilitation (15) ($1,584) 

Law Enforcement/Special Agents (10) $0 

Licensing and Registration Fees Initiative (12) ($5,500) 

New Regulations to Simplify Reporting Requirements (3) ($300) 

Overhead/Operating (Reduced Staffing/Overtime/Travel/Contracts, etc.) (2) ($841) 

Paperless Initiative (Permits Online) (3) ($300) 

Subtotal FY 2012 Changes to Base (33) ($5,122) 

Total FY 2012 Base 502 $97,878

Total FY 2012 Request 502 $97,878

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level ......................................................... +$2,571,000 / +12 FTE

Adjustment to Reach FY 2011 President's Policy +$2,571,000 / +12 FTE 

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President's Policy Level. The President's Policy Level is equal to the FY 2011 President's 

Budget as adjusted for the proposed pay freeze. 

Maintaining Current Levels (MCLs) ......................................................... +$832,000 / +0 FTE

Maintaining Current Levels +$832,000 / +0 FTE 

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

adjustments, postage, supplies and equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012. 

Efficiencies, Savings & Base Reductions ................................................ -$8,525,000 / -45 FTE

Audits, Investigations, Outreach & Trade Facilitation -$1,584,000 / -15 FTE 

Savings realized from a reduction of staff, combined with an improved strategy for tax and 

regulatory enforcement that focuses on the areas that present the highest revenue risk, and a 

reinvented approach to industry outreach and international trade activities. 

Law Enforcement/Special Agents +$0 / -10 FTE 

Reduction of 10 FTE due to the expiration of two-year funding (FY 2010-2011) for law 

enforcement agents and related support personnel whose focus was on criminal activities 

surrounding the alcohol and tobacco commodities. 

TTB - 13 
Licensing and Registration Fees Initiative -$5,500,000 / -12 FTE 

Reduction due to the exclusion from the FY 2012 Presidents Budget of a licensing and 

registration fee program, which would have required the collection of annual fees from alcohol 

and tobacco industry members to fund TTB operations. 

New Regulations to Simplify Reporting Requirements -$300,000 / -3 FTE 

Savings realized from simplifying the reporting requirements for distilled spirits plants (DSP) by 

updating the regulations to consolidate the required monthly operations reports for non-industrial 

DSP. 

Overhead/Operating (Reduced Staffing/Overtime/Travel/Contracts, etc.) -$841,000 / -2 FTE 

Savings realized from the reduction of operating costs such as overtime, travel, supplies, GSA 

rent, equipment, software, and the reduction of management staff. 

Paperless Initiative (Permits Online) -$300,000 / -3 FTE 

Savings realized from staffing reduction enabled by efficiencies gained from the Permits Online 

electronic filing system due to processing time reduction and the streamlining of business 

processes. 

 

TTB - 14 
2.2 – Operating Levels Table 

Dollars in Thousands 

Alcohol and Tobacco Tax and Trade 

Bureau

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE 535 535 - 535 502

Object Classification

11.1 - Full-time permanent $47,375 $47,375 $0 $47,375 $45,389

11.5 - Other personnel compensation $794 $794 $0 $794 $785

12 - Personnel benefits $11,706 $11,706 $0 $11,706 $11,582

21 - Travel and transportation of 

persons $3,508 $3,508 $0 $3,508 $2,990

22 - Transportation of things $102 $102 $0 $102 $96

23.1 - Rental payments to GSA $4,796 $4,796 $0 $4,796 $4,763

23.3 - Communication, utilities, and 

misc charges $5,132 $5,132 $0 $5,132 $5,178

24 - Printing and reproduction $388 $388 $0 $388 $393

25.2 - Other services $16,628 $16,628 $0 $16,628 $16,548

25.3 - Other purchases of goods and 

services from Govt. accounts $7,159 $7,159 $0 $7,159 $6,420

26 - Supplies and materials $740 $740 $0 $740 $636

31 - Equipment $4,645 $4,645 $0 $4,645 $3,071

42 - Insurance claims and indemnities $27 $27 $0 $27 $27

Total Budget Authority $103,000 $103,000 $0 $103,000 $97,878

Budget Activities

Collect the Revenue $53,000 $53,000 $0 $53,000 $48,939

Protect the Public $50,000 $50,000 $0 $50,000 $48,939

Total Budget Authority $103,000 $103,000 $0 $103,000 $97,878

 

TTB - 15 
2.3 – Appropriations Detail Table 

Dollars in Thousands 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Appropriated Resources:

Collect the Revenue 268 $49,553 268 $53,000 268 $53,000 251 $48,939 -6.34% -7.66%

Protect the Public 267 50,190 267 50,000 267 50,000 251 48,939 -5.99% -2.12%

Subtotal New Appropriated Resources 535 $99,743 535 $103,000 535 $103,000 502 $97,878 -6.17% -4.97%

Other Resources:

Offsetting Collections - Reimbursable 15 4,234 15 4,234 15 3,050 15 2,997 0.00% -29.23%

Subtotal Other Resources 15 $4,234 15 $4,234 15 $3,050 15 $2,997 0.00% -29.23%

Total Resources Available for Obligation 550 $103,977 550 $107,234 550 $106,050 517 $100,875 -6.00% -5.93%

Note: The obligations related to the 2-year FY 2010/2011 funding in the amount of $3 million for the hiring, training and equipping of special agents and related support 

personnel was outsourced in the first quarter of FY 2011 with another government agency.

% Change 

FY 2010 to FY 2012

FY 2012 

Request

Resources Available for Obligation FY 2010 

Obligations

FY 2010 

Enacted

 FY 2011 

Annualized CR 

Level

2B – Appropriations Language and Explanation of Changes 

DEPARTMENT OF THE TREASURY 

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU 

Federal Funds 

SALARIES AND EXPENSES:

For necessary expenses of carrying out section 1111 of the Homeland 

Security Act of 2002, including hire of passenger motor vehicles, 

$97,878,000; of which not to exceed $6,000 for official reception and 

representation expenses; not to exceed $50,000 for cooperative 

research and development programs for laboratory services; and 

provision of laboratory assistance to State and local agencies with or 

without reimbursement. 

Treasury Administrative Provisions:

Section 122(g)(1) of Public Law 105–119 (5 U.S.C. 3104 note), is 

further amended by striking " 12 years'' and inserting " 14 years''.

TTB proposes to 

continue the Pay 

Demonstration 

Project by amending 

the language to 

extend the program 

for one additional 

year. 

2C – Legislative Proposals 

Extend Pay Demonstration Project

TTB proposes to continue the Pay Demonstration Project (Pay Demo) by amending the General 

Provision language to extend the project for one additional year. This project was established to 

enhance Treasury’s ability to effectively recruit and retain highly qualified employees. Pay 

Demo has been extended every year since it was first established in FY 1999, and has been a 

successful intervention tool in the recruitment and retention of critical staff positions. 

• The continuation of the Pay Demo authority has proven to be an effective recruitment 

strategy that enables the bureau to timely fill its positions with the right people, with the right 

skills, minimizing loss and skill gaps caused by an aging workforce and employee turnover; 

TTB - 16 
• The Pay Demo authority fosters a results-oriented organizational culture since the 

employees’ compensation is based upon the level of performance, therefore, improving the 

bureau’s overall performance; 

• The Pay Demo authority has resulted in a more diverse workforce, with increased 

representation of various groups (e.g., women, persons with disabilities, veterans, and 

persons from different age groups) across all occupations and band/grade groupings under 

the authority. 

TTB - 17 
Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go 

to: http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change 

FY10 to FY12

 Strong U.S. economic competitiveness 55,117 54,525 50,437 -8.49% 

 Revenue collected when due through a fair and uniform 

application of the law 52,117 51,525 50,438 -3.22% 

Total $107,234 $106,050 $100,875 -5.93%

3A - Collect the Revenue ($48,939,000 from direct appropriations, and $1,499,000 from 

reimbursable programs): This budget activity includes all tax processing, verification, 

enforcement, and outreach efforts related to tax administration performed by TTB. Collect the 

Revenue includes three programs: 1) Alcohol and Tobacco Tax Collections, 2) Firearms and 

Ammunition Excise Tax Collections, and 3) Outreach and Voluntary Compliance. Principal 

business activities within these programs include: 

• Tax Collection, Claims, Refunds, and Classification, which involves preparing taxpayer 

notices and assessments, processing claims and settlement agreements, and assigning a tax 

classification to a product based on regulatory standards; 

• Tax Verification, Audits, and Investigations, which includes the reconciling and auditing of 

tax returns and reports of business operations; on-site audits of alcohol, tobacco, firearms, 

and ammunition industry members; investigating criminal allegations or indications of tax 

fraud; conducting compliance investigations of permittees who have substantial potential for 

tax liability; and initiating adverse actions for willful violations of the Internal Revenue 

Code; and 

• Voluntary Compliance, which supports outreach and education efforts for members of the 

regulated industries, and includes preparing regulatory guidance, web site postings, and 

newsletters; participating in and/or hosting conferences and seminars; and industry and state 

liaison activities. 

Strategies used to collect the revenue rightfully due the federal government focus on identifying 

any gaps in tax payment from illegal entities and individuals operating outside the excise tax 

system; developing a balanced field approach of audits and investigations that targets noncompliant industry members; and establishing an identifiable presence within the industry that 

encourages voluntary compliance. TTB uses an interagency approach in applying these 

enforcement strategies that involves cooperation with local, state, federal, and foreign 

government counterpart agencies to maximize the deterrent impact of enforcement actions. 

TTB - 18 
Offsetting Collections............................................................Total $1,499,000 

Non-Federal Sources (Puerto Rico).........................................$1,450,000 

Federal Sources (Laboratory Services).........................................$17,000 

Federal Sources (IT Network Services)........................................$32,000 

The non-federal reimbursable funds cover the costs associated with the functioning and support 

of the Puerto Rico office, and are paid from the “cover-over” (return), which is offset from the 

cover-over taxes collected in the United States. The bureau collects a nominal amount of 

reimbursable funding for lab services performed to support criminal investigations at the Bureau 

of Alcohol, Tobacco, Firearms, and Explosives. Also, the bureau collects reimbursable funding 

for the cost of providing information technology network services for the Community 

Development Financial Institutions Fund. 

3.2.1 Collect the Revenue Budget and Performance Plan 

Collect the Revenue Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized 

CR Level

Request

 Appropriated Resources $46,758 $50,524 $53,000 $53,000 $48,939

 Reimbursable Resources $1,878 $2,576 $2,117 $1,525 $1,499

Total Resources $48,636 $53,100 $55,117 $54,525 $50,438

Budget Activity Total $48,636 $53,100 $55,117 $54,525 $50,438

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Amount of Revenue Collected Per Program Dollar (E) 313.0 427.0 478.0 400.0 410.0

Percent of Voluntary Compliance from Large Taxpayers in Filing 

Tax Payments Timely and Accurately (In Terms of Revenue) (Oe)

94.0 94.0 94.0 92.0 94.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: In FY 2010, TTB met all of its performance measures under the 

Collect the Revenue budget activity, and showed continued improvements in performance levels. 

The amount of revenue collected per program dollar measure quantifies the efficiency of the tax 

collection program and, in FY 2010, TTB reported a return on investment of $478 for every 

dollar spent on collection activities. In just two years, the return on investment for the Collect 

the Revenue program increased by more than 50 percent, principally because of the higher 

federal excise tax rate imposed on tobacco products under the February 2009 CHIPRA 

legislation. The bureau used Congressional Budget Office revenue projections for increased 

tobacco excise tax collections to determine its targeted performance levels for fiscal years 2010 - 

2012 and, due to ongoing and successful compliance audit and investigation efforts, exceeded 

TTB - 19 
the performance target for FY 2010 by 20 percent. Additionally, through on premises visits to 

industry and targeted post-audit verifications, TTB auditors continued to enforce the collection 

of the tobacco floor stocks tax from the manufacturers, importers, wholesalers, and retailers who 

held tobacco products in inventory at the time of the tax rate increase. This field work resulted in 

nearly $9 million in additional floor stocks tax collections in FY 2010. 

TTB collected nearly $24 billion in federal excise taxes in a highly efficient manner. Key 

performance metrics show that 94 percent of industry members voluntarily file their tax 

payments on or before the scheduled due date. During an economic downturn, this compliance 

rate from business is especially notable, and is a function of TTB’s enforcement presence and the 

service and outreach TTB provides to its industry members. 

3B - Protect the Public ($48,939,000 from direct appropriations, and $1,498,000 from 

reimbursable programs): This budget activity funds the programs that ensure the integrity of 

products and industry members in the marketplace, promote compliance with laws and 

regulations by TTB-regulated businesses, and provide information to the public as a means to 

prevent consumer deception. Protect the Public includes four programs: 1) Permits and Business 

Assurance; 2) Advertising, Labeling, and Product Safety; 3) Trade Facilitation; and 4) Outreach 

and Voluntary Compliance. Principle business activities within these programs include: 

• Business Integrity, which involves enforcing compliance with federal laws related to the 

issuance of permits to those who wish to operate in the alcohol, tobacco, firearms, and 

ammunition industries; 

• Product Integrity, which includes reviewing alcohol beverage label applications; evaluating 

alcohol beverage product advertisements; reviewing alcohol beverage formula submissions; 

evaluating specially denatured alcohol and other nonbeverage alcohol formulas to verify the 

tax drawback claim of the applicant; investigating incidents of suspected unsafe conditions or 

product deficiencies related to the production and labeling of alcohol beverages; and testing 

samples of beverage alcohol sold at the retail and producer levels to ensure that these 

products meet formulation and labeling requirements, do not contain unauthorized substances 

or contaminants, and are properly classified for tax purposes; and 

• Market Integrity, which includes monitoring the trade practices of the alcohol industry and 

taking enforcement actions on violations, monitoring and reviewing international trade in 

alcohol beverages to identify trade barriers and incidents of international fraud and 

contaminated products, and promoting international agreements on product integrity. 

TTB works with industry, foreign and state governments, and other interested parties to reduce 

the burden of compliance with regulatory requirements and to maintain the appropriate level of 

oversight to ensure public safety. Industry education, interagency partnerships, international 

cooperation, and open communication are paramount strategies in facilitating compliance with 

regulatory product and trade requirements. 

U.S. exports of alcohol beverages totaled more than $2 billion in 2009. TTB seeks to promote 

U.S. exports by facilitating industry compliance with foreign requirements and by working with 

foreign regulators to reduce barriers to trade. In FY 2010, TTB issued over 10,000 export 

TTB - 20 
certificates for beer, wine, and distilled spirits. Without these certificates, which are only issued 

by TTB, U.S. producers of alcohol beverages cannot sell their products in major markets 

abroad. Further, through its international outreach, TTB has arranged for the elimination or 

reduction of certification requirements for wine exported to the European Union, Argentina, 

Australia, Canada, Chile, Georgia, New Zealand, and South Africa. 

Offsetting Collections..........................................................Total $1,498,000 

Non-Federal Sources (Puerto Rico)........................................$1,450,000 

Federal Sources (Laboratory Services)........................................$17,000 

Federal Sources (IT Network Services)........................................$31,000 

The non-federal reimbursable funds cover the costs associated with the functioning and support 

of the Puerto Rico office, and are offset from the cover-over taxes collected in the United States. 

Also, the bureau collects a nominal amount of reimbursable funding for lab services performed 

to support criminal investigations being conducted at the Bureau of Alcohol, Tobacco, Firearms, 

and Explosives. Also, the bureau collects reimbursable funding for the cost of providing 

information technology network services for the Community Development Financial Institutions 

Fund. 

3.2.2 Protect the Public Budget and Performance Plan 

Protect the Public Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized 

CR Level

Request

 Appropriated Resources $46,758 $48,541 $50,000 $50,000 $48,939

 Reimbursable Resources $1,878 $2,578 $2,117 $1,525 $1,498

Total Resources $48,636 $51,119 $52,117 $51,525 $50,437

Budget Activity Total $48,636 $51,119 $52,117 $51,525 $50,437

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Average Number of Days to Process an Original Permit 

Application at the National Revenue Center (E)

64.0 64.0 65.0 72.0 65.0

National Revenue Center (NRC) Customer Satisfaction Survey 

Results (%) (Oe)

90.0 89.0 89.0 85.0 85.0

Percent of Electronically Filed Certificate of Label Approval 

Applications (E)

62.0 74.0 79.0 81.0 83.0

Percentage of Importers Identified by TTB as Illegally Operating 

without a Federal Permit (%) (Oe)

22.0 15.0 15.0 19.0 14.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

TTB - 21 
TTB - 22 

Description of Performance: In FY 2010, TTB met or exceeded its targeted performance for 

each of its Protect the Public measures. 

The bureau reported increases in the percent of electronically filed COLA applications, which in 

FY 2010 reached 79 percent of all applications. The ongoing rise in electronic filing is due to 

successful industry outreach events sponsored by the bureau, and system enhancements that 

simplify the filing process for industry members. TTB has set aggressive performance targets 

for fiscal years 2011 and 2012 and will effectively deploy its resources to meet these 

performance goals. 

The NRC customer survey measures satisfaction with application and claims processing times 

and the level of service provided to the industry. The survey solicits feedback on the level of 

service provided to applicants for an original or amended permit, and those industry members 

who file a claim to recover taxes paid on nonbeverage alcohol or overpayments of tax. TTB 

exceeded its target of a sustained score of 85 percent on customer satisfaction for permit 

application and claims processing, and achieved a composite score of 89 percent in FY 2010. 

Planned service enhancements, including the online filing solution for original and amended 

permit applications which will be released in FY 2011, will contribute to the bureau continuing 

to meet its targeted performance level. This target factors in anticipated efficiencies from 

realignments to staff and improvements to technology and business processes. 

TTB expects automation efforts that commenced in FY 2011 to expedite permit processing 

times. With full system functionality for Permits Online slated for deployment in 2012, and 

considering the requisite transition and training period for industry members, TTB anticipates 

achieving considerable improvements in processing times beginning in the latter quarters of FY 

2012. Once this process improvement is implemented, and with resources directed toward 

promoting Permits Online and training industry on its use, the bureau expects to achieve and 

sustain a 65-day average turnaround time in permit processing in FY 2012. This will support the 

government’s efforts in facilitating economic growth, as permits must be issued before new 

businesses can commence operations. 

TTB continues its enforcement of federal permit requirements, targeting entities identified as 

importing cigarettes and other tobacco products without a TTB permit. By monitoring the U.S. 

Customs and Border Protection’s International Trade Data System, and comparing import data 

against the permittees on file with TTB, the bureau is able to identify and take action against 

those entities engaging in unlawful operations. The bureau exceeded its targeted performance 

level for FY 2010. 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The TTB Human Capital Strategic Plan aligns with the TTB Strategic Plan and Treasury Human 

Capital Strategic Plan, and documents strategies to improve skill and competency gaps, 

workplace demographics, succession planning, workforce management, and performance 

measurement efforts. The model for strategically assessing the skills gap for future years is 

predicated on assumptions regarding future changes in the workforce, including retirement 

eligibility rules and rates of attrition. 

One of TTB’s key indicators of how successfully it manages human capital declined compared to 

prior year results. Expanding mission requirements from the CHIPRA legislation, with short 

timeframes for implementation, and increased workloads contributed to declines in employee 

satisfaction, as evidenced by the OPM employee survey, FedView. TTB ranked 83rd out of 224 

sub-component agencies on the FY 2010 Best Places to Work in the Federal Government 

rankings, a decline from its 2008 ranking of 7th out of 216. In response to this government-wide 

employee survey, TTB spearheaded an effort to solicit feedback from both employees and 

managers which involved creating processes for feedback loops, engaging employees in the 

decision making process, and leveraging employee talents to meet the bureau’s programmatic 

needs. 

While TTB’s ranking decreased from the prior year survey, the positive response rate on the 

FedView survey compares favorably to the Department of the Treasury and government overall. 

The positive response rate for TTB in all survey categories, with one exception, remained at or 

above the government-wide average. These results can be attributed, in part, to TTB’s use of its 

Pay Demonstration Project (Pay Demo) authority, which provides a number of human capital 

management and compensation flexibilities, and the promotion of telework and alternative work 

schedules. Currently, 56 percent of employees telework on a regular recurring schedule, and 74 

percent of the workforce telework at least on an occasional basis. 

By properly managing its human capital needs, TTB supports the Department of the Treasury’s 

strategic goals of: 

 

• Effectively Managed U.S. Government Finances; and 

• U.S. and World Economies Perform at Full Economic Potential. 

Succession planning is a strategic priority for TTB, especially as it relates to the bureau’s 

mission-critical positions. The bureau could lose approximately 30 percent of its workforce 

between FY 2010 and FY 2012 due to retirements and other attrition. Many of these positions 

are auditors and investigators who enforce compliance from permittees and taxpayers. To 

mitigate these losses, it is vital that the personnel interventions identified in the Pay Demo 

project are available to improve its ability to recruit, develop, and retain high-caliber employees 

in mission-critical positions. The bureau has roughly 130 participants in this project in positions 

such as chemists, industry analysts, auditors, and information technology specialists. The bureau 

also extensively uses federal programs to recruit new employees and increase skill levels such as 

the Presidential Management Fellows Program and other special emphasis hiring. TTB 

TTB - 23 
TTB - 24 

emphasizes employee development through training programs such as the Emerging Leaders 

Program and supports specialized training through TTB-sponsored courses like the Integrated 

Field Operations (InFO) course, which trains new auditors and investigators on legal authorities, 

policies, and specific industry knowledge. 

Interagency and Contract Services

TTB uses the Bureau of Public Debt Administrative Resource Center (BPD ARC), a government 

shared service provider, for the majority of its administrative functions, including financial 

services, human resources, travel, procurement, and timekeeping functions. Outsourcing these 

functions provides a cost savings from economies of scale and allows the bureau to better focus 

resources on its core mission. With this very low rate of administrative overhead, the bureau 

directly hires only those positions necessary to administer policy and provide appropriate 

oversight of the shared service provider. In addition, TTB outsources all IT functions to a 

commercial service provider, directly hiring only positions necessary to administer policy and 

provide appropriate oversight of the IT contractor. 

Wellness

TTB maintains contracts with Federal Occupational Health and with the BPD ARC for employee 

assistance programs and medical services. TTB has a Health Improvement Program that allows 

time for exercise. A multitude of health and wellness services and opportunities are offered to 

employees, including “heart healthy” choices in snack machines; extensive Employee 

Assistance Program services (e.g., substance abuse counseling, smoking cessation programs, 

grief counseling, and stress management); occupational health services (such as immunizations) 

through the Federal Occupational Health program; and participation in federal government 

programs such as FedsGetFit, HealthierFeds, and Health Care Flexible Spending Accounts. TTB 

also publishes a monthly informational bulletin about health and wellness programs. Bureau 

managers coordinate voluntary wellness activities such as creating teams for charity walks. 

Plans are in development to reach the Administration’s goal of 75 percent employee participation 

in wellness programs. 
4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Major IT Investments / Funding Source Budget Activity

FY 2009 

Enacted

FY 2010 

Enacted

% Change 

from FY09 to 

FY10

FY 2011 

Annualized 

CR Level

FY 2012 

Request

No Major Investments $0 $0 N/A $0 $0 Subtotal, Major IT Investments

Collect the 

Revenue/Protect the 

Public $0 $0 N/A $0 $0 

Non-Major IT Investments

Collect the 

Revenue/Protect the 

Public $4,480 $4,480 0.0% $4,480 $5,780 

Infrastructure Investments

Collect the 

Revenue/Protect the 

Public $17,258 $16,260 -5.8% $16,260 $15,128 

Enterprise Architecture

Collect the 

Revenue/Protect the 

Public $644 $644 0.0% $644 $513 

Enterprise Identity and Access Management

Collect the 

Revenue/Protect the 

Public N/A N/A N/A N/A $172 

Total IT Investments

Collect the 

Revenue/Protect the 

Public $22,382 $21,384 -4.5% $21,384 $21,593 

Note: In past budget submissions (FY 2011 and prior), TTB’s Enterprise Identity and Access Management (EIdAM) funding was spread across the entirinvestments and was not depicted as a standalone investment/line item within the Table 4.1 as it was not a requirement to do so. As part of the FY 2012 (per OMB and Treasury CPIC guidance), TTB’s Table 4.1 now includes the EIdAM investment as a separate line item with associated projected costs i

TTB - 25 
4B – Information Technology Strategy 

TTB’s Strategic Plan establishes the vision and objectives for the bureau in the business 

context. TTB’s Information Technology (IT) Strategic Plan is a five-year plan based on the 

business strategy, which includes the bureau’s mission, vision, goals, and objectives from the IT 

perspective. This plan charts the course the bureau will follow in the coming years to develop 

and implement IT solutions that are aimed at streamlining the collection of data, leveraging web 

technologies, and making the Internet the method of choice for the reporting and exchanging of 

information. By aligning business and technical strategy, the bureau is able to leverage 

technology to enable the bureau to meet its objectives in the most efficient and cost-effective 

manner while identifying ways to minimize system redundancy. 

TTB 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: 

TTB Tax System – This investment consists of several component applications that ensure fair 

and proper collection of revenue from the industry members for alcohol, tobacco, firearms, and 

ammunition excise taxes and ensures compliance with the excise tax regulations. 

TTB Regulatory System – This investment includes applications that streamline the beverage 

and non-beverage alcohol formula approval process and COLA issuance for tax and regulatory 

compliance. 

TTB General Support Services – This investment provides TTB users with the infrastructure 

applications necessary to conduct daily business. 

TTB Enterprise Architecture – This investment is integrated with the strategic planning, 

portfolio management, and capital planning processes. 

In addition to leveraging IT to support the mission, strategy, and day-to-day operations of the 

bureau, TTB supports and maintains strategy alignment with OMB and Treasury through 

enterprise wide IT initiatives. These include: Cyber Security; IT Infrastructure; Electronic 

Identity and Access Management (HSPD-12); Enterprise-wide Contracts and Services; and 

Program Metrics and Milestones. 

TTB - 26 

FMS - 1

Overview

Mission Statement

To provide central payment services to Federal Program Agencies (FPAs), operate the federal 

government’s collections and deposit systems, provide government-wide accounting and 

reporting services, and manage the collection of delinquent debt owed to the government.

Program Summary by Budget Activity

Dollars in Thousands

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized

CR Level

Request $ Change % Change

 Payments $150,395 $142,537 $132,868 ($17,527) (11.7%)

 Collections $21,911 $24,267 $21,265 ($646) (2.9%)

 Government-wide Accounting and Reporting $71,826 $77,328 $64,672 ($7,154) (10.0%)

Total Appropriated Resources $244,132 $244,132 $218,805 ($25,327) (10.4%)

Total FTE 1,500 1,500 1,200 (300) (20.0%)

FY 2012 Priorities

 Provide timely, accurate, and efficient disbursement of federal government payments.

 Provide timely, accurate, and efficient collection of federal government receipts.

 Maximize collection of delinquent debt owed to the government.

 Produce timely and accurate financial information that contributes to the improved

quality of financial decision making.

 Emphasize conversion from paper to electronic transactions.

 Be a great place to work.
FMS - 2

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

Section 2 – Budget Adjustments and Appropriation Language............................................... 9

2.1 – Budget Adjustments Table ................................................................................................. 9

2A – Budget Increases and Decreases Description..................................................................... 9

2.2 – Operating Levels Table .................................................................................................... 11

2.3 – Appropriations Detail Table............................................................................................. 12

2B – Appropriations Language and Explanation of Changes................................................... 12

Exhibit 2B – Permanent, Indefinite Appropriations.................................................................. 12

2C – Legislative Proposals........................................................................................................ 13

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

3.1 – Budget by Strategic Outcome .......................................................................................... 15

3.2.1 Payments Budget and Performance Plan ......................................................................... 17

3.2.2 – Collections Budget and Performance Plan.................................................................... 19

3.2.3 Debt Collection Budget and Performance Plan................................................................ 21

3.2.4 Government-wide Accounting and Reporting Budget and Performance Plan ................ 23

Section 4 – Supporting Materials .............................................................................................. 24

4A – Human Capital Strategy Description................................................................................ 24

4.1 – Summary of IT Resources Table...................................................................................... 26

4B – Information Technology Strategy..................................................................................... 27
FMS - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

FMS provides critical and essential payment, collections, debt collection and government-wide 

accounting and reporting functions essential to the successful operation of the federal 

government. These functions are far reaching. This includes issuing over 70 million benefit 

payments distributed monthly to the American public, the collection of all federal revenues that 

fund government operations and programs, processing and collecting of delinquent debts owed 

to the federal government including collection of past due child support, and providing financial 

reports to varied stakeholders. FMS touches almost every American and federal agency 

providing these very important and essential services.

FMS’ vision is to be characterized by three real and recognized qualities in everything we do -

exceptional integrity, quality, and responsiveness. 

FMS plays a key role in supporting the Department of the Treasury’s strategic goal of managing 

the United States Government’s finances effectively by operating as the financial manager and 

principal fiscal agent for the federal government. In ensuring confidence in the nation’s financial 

system, FMS executes its role of managing the nation’s finances by collecting money due to the 

United States, making its payments, and performing central accounting functions. 

FMS’ Strategic Goals, as reflected in the FY 2012 priorities, are to: 

 Provide timely, accurate, and efficient disbursement of federal government payments.

 Provide timely, accurate, and efficient collection of federal government receipts.

 Maximize collection of delinquent debt owed to the government.

 Produce timely and accurate financial information that contributes to the improved quality of 

financial decision making.

 Be a great place to work

FMS is responsible for certain key governmentally controlled resources which are essential to 

the operation of the economy and government. While 100 percent of FMS’ operational 

functionality comprises the processing and safeguarding of public funds, FMS devotes 

approximately 75 percent of its direct salary and expense appropriation to ensuring the viability 

of the National Financial Critical Infrastructure. Specifically, three FMS programs – payments, 

collections, and cash reporting, which are part of the infrastructure. FMS is required to ensure 

these activities are fully operational at all times. 

The National Critical Infrastructure was established as a result of the Homeland Security Act of 

2002. Critical Infrastructure are the assets, systems, and networks, whether physical or virtual, 

so vital to the United States that their incapacitation or destruction would have a debilitating 
FMS - 4

effect on security, national economic security, public health or safety, or any combination 

thereof. Under the Homeland Security Presidential Directive 7, the Department of the Treasury 

was identified as a key sector-specific area for the Banking and Finance Sector. As part of the 

National Financial Critical Infrastructure, FMS provides critical services to millions of United 

States taxpayers, FPAs, and other customers. It embodies Treasury’s leadership strategy to 

create value for the American people, provides responsible and effective stewardship over the 

government’s finances, and focuses on quality service, results and innovation. FMS operates the 

largest tax collection system in the world and issues more than one billion payments annually; 

therefore, the impact of its programs on the economy and the public is significant. FMS’ 

activities touch millions of citizens and virtually every FPA and state government across the 

country. 

As the government’s financial manager, FMS oversees a daily cash flow in excess of $94 billion, 

disbursing over $2.3 trillion in non-defense payments to more than 100 million people. These 

payments include income tax refunds, Social Security benefits, veterans’ benefits and other 

federal payments to individuals and businesses. FMS also administers the world’s largest 

collection system, collecting $2.94 trillion in FY 2010. FMS provides cash management 

guidance to FPA’s, maintains the government’s accounts, and compiles and publishes 

government-wide financial information used to monitor the government’s financial status. 

Finally, FMS serves as the government’s central delinquent debt collection agency.

1B – Program History and Future Outlook

FMS’ budget reflects a strong commitment to fiscal stewardship of taxpayers funding. Even 

though the FY 2011 and FY 2012 budgets represent a 10% reduction from FY 2010 levels, FMS 

is committed to providing continued high service levels to our customers. We will fulfill this 

objective due to FMS’ innovative modernization efforts which have been implemented and 

finalized over the past years.

FMS’ FY 2012 budget directly addresses the Department’s high priority performance goal of 

significantly increasing the number of paperless transactions with the public. It also addresses 

the Administration’s priority of “going green” and consolidating data centers.

FMS supports Treasury’s paperless initiative, which requires all new enrollees in federal benefit 

programs (e.g., Social Security Administration) to receive payments electronically by May 1, 

2011. Anyone currently receiving checks would be required to switch to electronic payment by 

March 1, 2013. A second important component of the all-electronic Treasury initiative requires 

all businesses currently required to use a Federal Tax Deposit (FTD) coupon to pay 

electronically beginning January 1, 2011.

In response to a request from the Office of the Fiscal Assistant Secretary, the Commissioners of 

FMS and the Bureau of the Public Debt (BPD) determined that they could improve the efficiency 

and effectiveness of their collective information technology (IT) infrastructures. As a result, 

FMS, in partnership with BPD, initiated a project to consolidate the data centers across the two 

bureaus to help achieve the Secretary’s objective of increasing the utilization and efficiency of 

combined IT assets, while reducing technology costs. This effort also conforms to the Office of 

Management and Budget’s (OMB) Data Center Consolidation Directive which requests that all 
FMS - 5

federal agencies review IT spending, placing emphasis on consolidating and sharing IT services 

to reduce expenditures. Five data centers will be consolidated into two shared by both bureaus 

with one acting as a back-up to the other. This effort also includes the creation of a single 

corporate governing body, in-sourcing of select contractor functions, and consolidation of 

application development methodologies and associated infrastructure; resulting in a more 

“green” approach to the delivery of IT services. 

FMS continues to work toward increasing operational efficiencies that streamline our four main 

activities of payments, collections, government-wide accounting and reporting, and debt 

collection. Given FMS’ recent history of cost reduction, it is clear that FMS is a conscientious 

steward of taxpayer money. These cost saving measures do not inhibit our ability to deliver the 

products and services that are vital to our nation’s economic security. 

FMS continues to work toward increasing operational efficiencies and by implementing these 

initiatives will greatly facilitate the ongoing effort to modernize the Federal government’s 

payment, collections, debt collection and central accounting and reporting systems. The end 

result will be greater efficiency, cost savings, and data quality improvements throughout 

government. 

Payments

The Payments program, a component of the National Financial Critical Infrastructure, develops 

and implements federal payment policies and procedures, issues and distributes payments, 

encourages check recipients to convert to electronic payments, and assists agencies in converting 

payments from paper checks to Electronic Funds Transfer (EFT). This includes controlling and 

providing financial integrity to the payments process through reconciliation, accounting, and 

claims activities. It also includes special payments such as Federal Emergency Management 

Agency payments. In FY 2010, FMS issued more than one billion non-Defense payments worth 

over $2.3 trillion to a wide variety of recipients, such as those who receive Social Security 

benefits, veteran’s benefits, and tax refunds. Eighty-two percent of all payments disbursed were 

issued via EFT. 

Streamlining the payments processes while continually investing in state-of-the-art technology is 

integral to processing payments accurately, timely, and more safely and securely for the 

taxpayer. The Payment Application Modernization (PAM) project is an effort to replace the 

current mainframe-based software applications that are used to disburse over one billion federal 

payments annually. Ultimately, PAM will be a single application that will generate check, wire 

transfer, and ACH payments for FPAs, including the Social Security Administration, Internal 

Revenue Service, the Department of Veterans Affairs, and others. 

In FY 2012, FMS will continue to expand the use of electronic media to deliver federal 

payments. Electronic payments are safer, more secure, and more reliable than paper checks. In 

addition, electronic payments decrease the number of paper checks issued, minimizing costs and 

inefficiencies associated with the delivery of non-electronic benefits. As FMS continues to move 

to an all-electronic Treasury, the bureau will realize savings.
FMS - 6

Collections

The Collections program, also part of the nation’s Financial Critical Infrastructure, collects 

revenues needed to operate the federal government. In FY 2010, FMS collected $2.94 trillion, of 

which slightly more than 85 percent was collected electronically, through a network of more than 

8,000 financial institutions. A major component supporting electronic collections is the 

Electronic Federal Tax Payment System (EFTPS). EFTPS is a tax payment system that offers all 

businesses and individuals the convenience of making their federal tax payments electronically 

24 hours a day, seven days a week. Under the Paperless Treasury Initiative, all businesses 

currently using a FTD coupon will be required to pay electronically effective January 1, 2011.

FMS is in the middle of a comprehensive effort to streamline, modernize, and improve the 

processes and systems supporting Treasury’s collections and cash management program. This 

effort, Collections and Cash Management Modernization (CCMM), will improve financial 

performance by enabling FMS and government agencies to more effectively manage financial 

transaction information and improve the efficiency of the collections information reporting 

processes.

In FY 2012, FMS will continue to expand the use of electronic collection mechanisms using the 

most advanced and secure collection technologies that are flexible enough to accommodate the 

varying needs and technical sophistication of all taxpayers and FPAs. In addition, FMS will 

work to streamline, modernize and improve the processes and systems supporting Treasury’s 

collections and cash management program. 

FMS will improve collections reporting, supplying the latest information on deposits and the 

details of collection transactions to federal agencies via a single system. As a transaction broker, 

data repository, and reporting solution, this single system will greatly improve the way agencies 

collect, analyze, and redistribute financial transaction information. The system will eliminate 

redundancies and disconnects in the government’s current collections reporting processes. 

FMS will also continue to focus on security oversight efforts at financial agent processing 

facilities and banking institutions as a way to proactively identify security control weaknesses 

and detect and deter fraud, waste, theft and unauthorized access associated with the collection of 

government remittances and protection of sensitive information. 

Government-wide Accounting

The Government-wide Accounting and Reporting program maintains the federal government’s 

accounts for its monetary assets and liabilities by operating and overseeing the government’s 

central accounting and reporting system. This includes daily cash forecasting and reporting 

(daily treasury Statement), which are components of the Nation’s Financial Critical 

Infrastructure. On a monthly basis, FMS reports the budget surplus/deficit through the release of 

the Monthly Treasury Statement (MTS – the monthly public source of budgetary results). FMS 

releases the Financial Report of the United States Government (FR), which reports the financial 

condition of the government using the accrual basis of accounting. The information in the FR 

complements the traditional cash basis budget reporting done at FMS that provides the 

authoritative information on the government’s budget surplus/deficit.
FMS - 7

In FY 2012, FMS in conjunction with the Office of the Fiscal Assistant Secretary, will migrate 

the legacy system that captures data related to the daily operating cash accounting function 

(CASH TRACK), to a more efficient web-based system. In addition, the two organizations are 

developing a more robust and integrated Future Forecasting System (FFS) to replace the current 

spreadsheet driven cash forecasting system.

Currently, FMS requires the agencies to classify their transactions on a monthly basis to the 

proper Treasury Account. That data is used to update the central records for fund balance with 

treasury, and to compile the MTS report in the printed form. FMS initiated a modernization 

effort (Government-wide Accounting Modernization Project (GWAMP) to classify transactions 

in real-time and leverage technology to implement a central accounting system that would 

accommodate the real-time classification of transactions. In FY 2010, FMS completed the build 

out of its central accounting infrastructure through GWAMP. The completion of this Program 

provides for improved exchange of financial information among FMS, Federal Agencies, and 

OMB. The infrastructure allows for more efficient government-wide accounting functions and 

processes that are both internal and external to FMS. The new process, will improve the 

reliability, usefulness, and timeliness of the government’s financial information, provide 

agencies and other users with better access to that information, and eliminate duplicate reporting 

and reconciliation burdens on agencies. In addition, agencies will have better tools for reporting 

financial information and access to daily account statements for monitoring the status of their 

financial information in Treasury’s central accounting system. While FMS will realize modest 

savings from this program, the most significant savings will be government-wide as agencies 

will no longer have to prepare month-end reports classifying all of their disbursement and 

collection transactions or perform reconciliations on statements of differences associated with 

month-end reporting.

With the infrastructure complete, FMS has ended the GWAMP. However, before FMS can 

decommission the legacy central accounting system (STAR) and other supporting applications, 

FMS has to migrate the reporting capabilities (MTS and Combined Statement) and the General 

Ledger from STAR to the new Central Accounting System. Part of the General Ledger initiative 

is an effort to implement the accounting entity for the General Fund (a distinct subset of the 

General Ledger Transactions) for Financial Reporting and FR compilation purposes. These 

efforts have been reconstituted as individual projects under a blanket name of STAR Transition, 

and are scheduled to be complete in FY 2012.

The Financial Information Reporting Standardization (FIRST) initiative will also leverage 

technology to replace inefficient reporting processes with a streamlined reporting process that 

will reduce the overall footprint for Financial Reporting across the Federal Government. The 

FIRST initiative is comprised of two financial reporting systems. One of those systems, the 

Government-wide Financial Report System (GFRS) is complete and is used in the FR 

compilation process. The other system, the Government-wide Treasury Account Symbol 

(GTAS) is currently being developed. GTAS will replace legacy systems (FACTS I, FACTS II, 

IFCS, IRAS data collection) that require agencies to submit four (4) different subsets of Trial 

Balance Data to FMS. GTAS will require a single set of Trial Balance data for each Treasury 
FMS - 8

account reported on a quarterly basis. FIRST is scheduled to be completed and go live in January 

of 2013.

These initiatives will allow us to decommission obsolete legacy systems and will address two 

material weakness regarding intra-governmental eliminations and the compilation of the 

Financial Report of the United States Government. The general fund/general ledger initiative 

will directly impact the material weaknesses associated with intra-governmental eliminations and 

compilation of the Financial Report of the United States Government.

Debt Collection

The Debt Collection program recovers delinquent government and child support debt by 

providing centralized debt collection, oversight, and operational services to FPAs and states as 

required by the Debt Collection Improvement Act of 1996 (DCIA), as amended, and related 

legislation. In FY 2010, FMS collected $5.45 billion in delinquent debt. Debt referrals from 

creditor agencies were at 100 percent of eligible debt at the end of FY 2010. As a result of FMS’ 

continued program improvements, cumulative debt collections since the enactment of the DCIA 

are $48.2 billion through FY 2010.

In FY 2012, FMS will continue to enhance FedDebt, a comprehensive system that integrated 

FMS’ existing collection programs: the Treasury Offset Program (TOP) and Cross-Servicing. 

TOP compares the names and Taxpayer Identifying Numbers (TINs) of debtors with the names 

and TINs on state and federal payment files. If there is a match, the federal payment is reduced, 

or “offset,” to satisfy the overdue debt. Cross-Servicing includes the use of various collection 

tools such as offset, demand letters to debtors, repayment agreements, administrative wage 

garnishment, referrals to the Department of Justice, credit bureau reporting, reporting discharged 

debts to the Internal Revenue Service (IRS), and use of private collection agencies. FMS will 

continue developing FedDebt by implementing a centralized debt data repository. In addition, in 

an effort to more aggressively pursue delinquent debt, FMS is investing in technology that will 

provide better analytics, debt scoring, and skip tracing tools. Finally, FMS is converting its 

Austin facility from a payments processing center to a debt collection call center. These 

investments will allow FMS to realize additional opportunities to increase debt collection and 

improve efficiencies.
FMS - 9

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Financial Management Service FTE Amount

FY 2010 Enacted 1,500 $244,132

FY 2011 Annualized CR Level 1,500 $244,132

Changes to Base:

Adjustment to Reach Policy Level: (125) ($10,537)

Adjustment to Reach FY 2011 President's Policy (125) ($10,537)

Maintaining Current Levels (MCLs): - $2,000

Maintaining Current Levels - $2,000

Efficiencies, Savings & Base Reductions: (175) ($11,690)

Elimination of Bureau of Economic Analysis Interagency Agreement - ($175)

Reduce Systems Development - ($1,400)

Paperless Treasury / Payment Center Repurposing (49) ($6,297)

Data Center Consolidation (121) ($685)

Migration of Human Resources Operations to Shared Service Provider (5) ($533)

Operational Efficiencies & Space Consolidation - ($2,600)

Subtotal FY 2012 Changes to Base (300) ($20,227)

Total FY 2012 Base 1,200 $223,905

Program Changes:

Program Decreases: - ($5,100)

FIRST and GWAMP Project Savings - ($5,100)

Subtotal FY 2012 Program Changes - ($5,100)

Total FY 2012 Request 1,200 $218,805

2A – Budget Increases and Decreases Description

Adjustment to Reach FY 2011 President’s Policy Level...........+$10,537,000 / +125 FTE 

Funds are adjusted from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the FY 

2011 President’s Policy Level. The President’s Policy Level is equal to the FY 2011 President’s Budget 

as adjusted for the proposed pay freeze.

Maintaining Current Levels (MCLs) ...........................................+$2,000,000 / +0 FTE 

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

adjustments, postage, supplies, equipment and health benefits and the increase in Federal 

Employee Retirement System participation. No inflation adjustment is requested for pay in FY 

2012.

Efficiencies, Savings, and Reductions ......................................-$11,690,000 / -175 FTE 

Paperless / Payment Center Repurposing -$6,297,000/ -49 FTE 

In FY 2012, the Paperless Treasury Initiative will not only save the government money through 

consumable savings, but will also allow FMS to move from four payment centers to three. The 

repurposing of the Austin Financial Center provides FMS the opportunity to expand its 

delinquent debt activity by targeting more of the delinquent debt referred to FMS for collection.

Data Center Consolidation -$685,000 / -121 FTE 

FMS, along with BPD, will consolidate five IT data centers to two that will produce savings as a 

result of reductions in energy consumption, equipment, software, and staff. The consolidation of 

Fiscal Service data centers includes the transferring of staff from FMS to the Treasury Franchise 
FMS - 10

Fund. The salary and benefit costs of those FTE will be used to pay for the resulting new 

contract with the Treasury Franchise Fund.

Migration of Human Resources Operations to Shared Service Provider -$533,000 / -5 FTE 

FMS examined the feasibility of migrating its human resources program to a shared service 

provider. Based on the analysis, FMS elected to transition its HR operational functions to the 

Administrative Resource Center of the Bureau of the Public Debt. This migration is expected to 

improve the quality and cost-effectiveness of FMS’ HR operational processes. This reduction 

will offset the full cost of the shared services agreement with full implementation in 2012. 

Elimination of Bureau of Economic Analysis Interagency Agreement -$175,000 / +0 FTE

FMS has an interagency agreement with the Department of Commerce’s Bureau of Economic 

Analysis for statistical analysis required each year for the International Monetary Fund. 

However, FMS no longer has programs or activities that benefit from this expense. Elimination 

of this service would not hamper FMS efforts.

Reduce Systems Development -$1,400,000 / +0 FTE 

FMS will reduce funding related to low priority program system development and maintenance.

Operational Efficiencies & Space Consolidation -$2,600,000 / +0 FTE

FMS will identify operational efficiencies gained through improved process and modernization 

efforts. Additionally, in coordination with GSA, FMS will work to consolidate space and reduce 

the FMS' footprint in the Hyattsville Center to accommodate changes in staffing and Data Center 

consolidation.

FIRST and GWAMP Project Savings -$5,100,000 / +0 FTE

In accordance with the principles for the acquisition and management of new financial systems 

outlined in OMB Memorandum 10-26, FMS at the direction of OMB, will not proceed with new 

development on these projects in FY 2012. FMS will use this as an opportunity to recast and 

reframe these modernization efforts which will allow for the time necessary to consider the best 

path forward for GWAR modernization.
FMS - 11

2.2 – Operating Levels Table

Dollars in Thousands

Financial Management Service

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating 

Level

FY 2012 

Request

FTE 1,500 1,500 - 1,500 1,200

Object Classification

11.1 - Full-time permanent $127,561 $121,605 $0 $121,605 $106,725

11.3 - Other than full-time permanent $1,540 $1,540 $0 $1,540 $1,540

11.5 - Other personnel compensation $3,081 $5,081 $0 $5,081 $5,081

11.8 - Special personal services 

payments $3,603 $3,603 $0 $3,603 $3,603

12 - Personnel benefits $31,703 $29,999 $0 $29,999 $26,289

13 - Benefits for former personnel $180 $180 $0 $180 $180

21 - Travel and transportation of 

persons $1,511 $1,511 $0 $1,511 $1,511

22 - Transportation of things $278 $278 $0 $278 $278

23.1 - Rental payments to GSA $13,635 $14,708 $0 $14,708 $12,313

23.2 - Rental payments to others $677 $677 $0 $677 $677

23.3 - Communication, utilities, and 

misc charges $10,455 $9,942 $0 $9,942 $9,942

24 - Printing and reproduction $505 $505 $0 $505 $505

25.1 - Advisory and assistance 

services $6,062 $6,062 $0 $6,062 $6,062

25.2 - Other services $18,574 $23,674 $0 $23,674 $10,109

25.3 - Other purchases of goods and 

services from Govt. accounts $2,795 $2,795 $0 $2,795 $15,080

25.4 - Operation and maintenance of 

facilities $505 $505 $0 $505 $405

25.7 - Operation and maintenance of 

equip $8,085 $8,085 $0 $8,085 $8,085

26 - Supplies and materials $3,636 $3,636 $0 $3,636 $2,794

31 - Equipment $9,191 $9,191 $0 $9,191 $7,071

32 - Land and structures $505 $505 $0 $505 $505

42 - Insurance claims and indemnities $50 $50 $0 $50 $50

Total Budget Authority $244,132 $244,132 $0 $244,132 $218,805

Budget Activities

Payments $150,395 $142,537 $0 $142,537 $132,868

Collections $21,911 $25,267 $0 $25,267 $21,265

Government-wide Accounting and 

Reporting $71,826 $76,328 $0 $76,328 $64,672

Total Budget Authority $244,132 $244,132 $0 $244,132 $218,805
FMS - 12

2.3 – Appropriations Detail Table

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Payments 963 $150,395 963 $142,537 713 $132,868 -25.93% -11.65%

Collections 135 21,911 135 24,267 127 21,265 -6.16% -2.95%

Gov. Accounting and Reporting 402 71,826 402 77,328 360 64,672 -10.45% -9.96%

Subtotal New Appropriated Resources 0 $0 1,500 $244,132 1,500 $244,132 1,200 $218,805 -20.00% -10.37%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 483 234,690 460 216,730 561 231,223 16.15% -1.48%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 0 $0 483 $234,690 460 $216,730 561 $231,223 16.15% -1.48%

Total Resources Available for Obligation 0 $0 1,983 $478,822 1,960 $460,862 1,761 $450,028 -11.20% -6.01%

FY 2012 

Request

% Change

FY 2010 

Obligations

Resources Available for Obligation FY 2011 Annualized 

CR Level

FY 2010 

Enacted

FY 2010

to FY 2012

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

FINANCIAL MANAGEMENT SERVICE

Federal Funds

SALARIES AND EXPENSES:

For necessary expenses of the Financial Management 

Service, $218,805,000 of which not to exceed $4,210,000 

shall remain available until September 30, 2014, for 

information systems modernization initiatives, and of 

which not to exceed $2,500 shall be available for official 

reception and representation expenses.

Exhibit 2B – Permanent, Indefinite Appropriations

Financial Agent Services Permanent, Indefinite Appropriation

Congress has given the Secretary of the Treasury broad discretion to deposit money in financial 

institutions and to obtain banking services by designating financial institutions to act/serve as 

Financial Agents (FA) of the United States. The services support many FMS programs such as 

Electronic Federal Tax Payment System (EFTPS), the Lockbox Networks, E-Commerce 

systems, and the deposit reporting and cash concentration system called CA$HLINK II. These 

and other programs are vital to FMS’ strategic goals, the National Financial Critical 

Infrastructure, and the expanding E-Government. The services provided by the FAs are 
FMS - 13

authorized under numerous statutes including, but not limited to, 12 United States Code (U.S.C.) 

90 and 265. In FY 2004, Treasury received a Permanent Indefinite appropriation to pay for these 

services. FMS estimates that the cost of FA services for FY 2012 will be approximately $623 

million, which includes $20 million for Government Sponsored Enterprise - Mortgage Backed 

Securities (GSE-MBS) administrative costs. Of this amount, approximately $80 million will be 

reimbursed from other government agencies and deposited into the General Fund.

Federal Reserve Bank Permanent, Indefinite Appropriation

The Federal Reserve Banks (FRBs) act as fiscal agents of the United States when directed by the 

Secretary of the Treasury in accordance with 12 U.S.C. 391. The FRBs support the fiscal 

operations and provide banking and financial services on behalf of the Treasury of the United 

States. Since the FRBs support many FMS program activities, the performance measures listed 

in the Salaries and Expense section of this budget apply to the work done by the FRBs. FMS 

estimates that the cost of FRB services for FY 2012 will be approximately $329 million.

Table 2.4 – Permanent, Indefinite Appropriations

2010 2011 2012

Enacted Request Request

Federal Reserve Bank $321,000 $321,000 $329,000

Financial Agent Services* $633,000 $625,000 $623,000

Note: Approximately $80M is reimbursed from other government agencies and deposited into the General 

Fund each year. 

* FY 2010, FY 2011, and FY 2012 include costs for the Government Sponsored Enterprise - Mortgage Backed 

Securities administrative costs of $36M, $20M, and $20M, respectively. 

(Dollars in Thousands)

Permanent, Indefinite Appropriation

2C – Legislative Proposals

Debt Collection

Debt Collection – For further details on these proposals please see the Treasury Green 

book summarizing the Administration’s tax legislative proposals.

Increase Levy Authority for Payments to Federal vendors with Delinquent Tax Debt

The Budget proposes a change to the Department of the Treasury’s debt collection procedures 

that will increase the amount of delinquent taxes collected from Federal contractors. Through 

the Federal Payment Levy Program, the Treasury deducts (levies) a portion of a Government 

payment to an individual or business in order to collect unpaid taxes. Pursuant to the American 

Jobs Creation Act of 2004, Treasury is authorized to continuously levy up to 100 percent of 

payments to a Federal vendor for goods or services sold or leased to the Federal government if 

the vendor has an unpaid tax liability. However, the language contains a technical imperfection 

that has the unintended effect of limiting the levy to 15 percent for vendor payments made for 

the sale or lease of real estate or other types of property. The Budget proposal will allow 

Treasury to levy up to 100 percent of any payment due to a Federal vendor with unpaid tax 

liabilities. 
FMS - 14

Allow Offset of Federal Income Tax Refunds to Collect Delinquent State Income Taxes for 

Debtors Who Currently Reside in Other States

Under current law, federal tax refunds may be offset to collect delinquent state income tax 

obligations only if the delinquent taxpayer resides in the state collecting the tax. This proposal 

will allow FMS to offset federal income tax refunds to collect delinquent state tax obligations 

regardless of where the debtor resides.

Increase Levy Authority for Payments to Medicare Providers with Delinquent Tax Debt

The Budget proposes a change to the Department of the Treasury's debt collection procedures 

that will increase the amount of delinquent taxes collected from Medicare providers. Through 

the Federal Payment Levy Program, Treasury deducts (levies) a portion of a Government 

payment to an individual or business in order to collect unpaid taxes. Pursuant to the Medicare 

Improvements for Patients and Providers Act of 2008, Treasury is authorized to continuously 

levy up to 15 percent of a payment to a Medicare provider in order to collect delinquent tax debt. 

The Budget proposal will allow Treasury to levy up to 100 percent of a payment to a Medicare 

provider to collect unpaid taxes. 
FMS - 15

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change

FY10 to FY12

Financial Information 75,949 81,543 69,084 -9.04%

Revenue Collected 115,421 105,722 118,515 2.68%

Payments 287,452 273,597 262,429 -8.71%

Total $478,822 $460,862 $450,028 -6.01%

3A – Payments ($132,868,000 from direct appropriations and $129,561,000 from reimbursable 

programs): FMS is responsible for managing and operating federal payment systems and for 

disbursing approximately 85 percent of all federal payments. It is comprised of a headquarters 

staff and Regional Financial Centers (RFCs). Major payments include: social security benefits, 

supplemental security income, federal pension benefits, veterans’ compensation, railroad 

retirement pensions, and tax refunds. An electronic payment is an electronic funds transfer made 

by direct deposit via the Federal Reserve Bank’s Automated Clearing House system to more than

28,000 member financial institutions nationwide. In FY 2010, the centers disbursed over one 

billion payments, totaling over $2.3 trillion dollars.

This activity also includes controlling and providing financial integrity to the payments process 

through reconciliation, accounting, and claims activities. The claims activity settles claims 

against the United States resulting from federal government checks that have been forged, lost, 

stolen, or destroyed. FMS collects monies from those parties liable for fraudulent or otherwise 

improper negotiation of government checks. It also includes processing claims and reclamations 

for EFT payments. It is important to note that 100 percent of funds devoted to the payments 

activity support the National Financial Critical Infrastructure.

FMS continues, through its Paperless Treasury Initiative, to encourage recipients to convert to 

electronic payment methods through public education programs, improve service to payment 

recipients, and reduce government program costs. This helps decrease the number of paper 

checks issued and minimize costs associated with postage, the re-issuance of lost, stolen and 

misplaced checks, and inefficiencies associated with the non-electronic delivery of benefits. 

To help with this endeavor, FMS continues with a nationwide campaign called “Go Direct” to 

encourage current check recipients to switch to direct deposit. In five extremely successful 

years, the Go Direct Campaign has reached 5 million conversions, saving millions of dollars for 

the U.S. Treasury in years to come. 
FMS - 16

Direct deposit offers federal benefit payment recipients ease and convenience, and protects 

against fraud and identity theft. Direct deposit also generates significant cost savings to the 

government over paper checks. This is attributable to consumable inventory and postage costs 

which are mitigated with each EFT payment. These programs are especially important as the 

government prepares for the huge increase in retiring baby boomers in the near future, and it is 

thus critical that FMS dramatically increase use of direct deposit for issuing benefit payments.

 Direct Express® Debit MasterCard®card offers the convenience and security of receiving 

benefit payments electronically for those who prefer a prepaid debit card or those who do not 

have a bank account. Instead of receiving a paper check, the benefit payment is 

automatically deposited into the recipient’s Direct Express®card account on payment date. 

The card is currently available to Social Security, SSI, Veterans’ Compensation and Pension, 

and Railroad Retirement Board benefit recipients, and FMS is optimistic that other benefit 

payments will be implemented in CY 2011. As of December 2010, more than 1.5 million 

beneficiaries signed up for the Direct Express®card.

In support of its payments function, FMS has also undertaken considerable efforts to modernize 

its payment systems, incorporating new technologies and the internet. Some programs that will 

continue to be in focus are:

 Stored Value Card (SVC): This smartcard is similar to a credit/debit card, using an encrypted 

computer chip to process "electronic money" stored on the card. This program is aimed at 

reducing the float-loss and reducing risk associated with the more than $2 billion in coin and 

currency in circulation at military bases, ships at sea, and other closed government locations 

around the world. From 1997 through FY 2010, over 27 million EFT transactions with a 

dollar value in excess of $4.2 billion were processed via the SVC programs. In FY 2010 

alone, the SVC programs collected over $1 billion through the processing of over 7.5 million 

EFT transactions.

 Internet Payment Platform (IPP): The IPP is a centralized, secure, Web-based application 

service that accepts, processes, and presents data from agencies and supplier systems related 

to all stages of electronic order-to-payment transactions: purchase orders, invoices, 

approvals, and ACH payment information, including aftermath activity such as partial 

payments, debt offsets and returns.

 Payment Application Modernization (PAM): The PAM project is an effort to replace the 

current mainframe-based software applications that are used to disburse approximately one

billion federal payments annually. PAM is a single application that generates check, wire 

transfer, and ACH payments for FPAs, including Social Security, IRS, Veterans Affairs, and 

others. In addition to standardization, FMS is modernizing the technologies employed in the 

development of the system, using commercial software products where feasible. 

Additionally, the project incorporates new and enhanced functionality to support 

improvements in the payment process. In FY 2012, PAM will deploy an architecture refresh 

and data stage upgrade, continue converting FPAs to the PAM standard format, begin 

transition of remaining legacy applications who have not converted to the PAM standard 

format, and enhance usability and performance.
FMS - 17

3.2.1 Payments Budget and Performance Plan

Payments Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $171,686 $147,717 $150,395 $142,537 $132,868

 Reimbursable Resources $130,853 $138,584 $137,057 $131,060 $129,561

Total Resources $302,539 $286,301 $287,452 $273,597 $262,429

Budget Activity Total $302,539 $286,301 $287,452 $273,597 $262,429

Description of Performance: FMS disburses payments to a wide variety of recipients, such as 

those who receive Social Security Administration payments, Internal Revenue Service tax 

refunds, and the Department of Veterans Affairs benefits. In FY 2010, FMS issued more than 

one billion non-Defense payments, with a dollar value of over $2.34 trillion. More than 82 

percent of these transactions were issued by Electronic Funds Transfer (EFT). In FY 2012, FMS 

is projecting the percentage of electronic payments to be 85 percent.

3B – Collections ($21,265,000 from direct appropriations and $198,000 from reimbursable 

programs): FMS collects revenues needed to operate the federal government through the 

management of the federal government’s collections infrastructure. The collections activity is 

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Paper Check and 

Electronic Funds Transfer (EFT) 

Payments Made Accurately And 

On-Time (Oe)

100.0 100.0 100.0 100.0 100.0

Percentage of Treasury Payments 

and Associated Information Made 

Electronically (Oe)

79.0 81.0 82.0 83.0 85.0

Unit Cost For Federal Government 

Payments (E)

0.39 0.37 0.36 0.40 0.37

Number of Electron Payments 

(Thousands) (Ot)

793,832 827,643 801,576 867,215 938,168

Number of Check Payments 

(Thousands) (Ot)

205,604 196,686 175,920 186,442 173,761

Number of Check Claims 

Submitted (Thousands) (Ot)

1,461 1,219 1,109 1,200 N/A

Average Number of Days to Settle 

a Claim (Ot)

N/A N/A N/A N/A 30

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline
FMS - 18

also part of the nation’s critical infrastructure. FMS collected nearly $2.94 trillion in FY 2010 

through a network of more than 8,000 financial institutions. It also manages the collection of 

federal revenues such as individual and corporate income tax deposits, customs duties, loan 

repayments, fines and proceeds from leases. FMS establishes and implements collection 

policies, regulations, standards and procedures for the federal government. The majority of 

dollar collections are made electronically. While 85 percent of federal revenue was collected 

electronically in FY 2010, the Paperless Treasury Initiative will help FMS improve the 

percentage of tax revenue collected electronically by requiring all businesses currently required 

to use a FTD coupon to pay electronically effective January 1, 2011.

FMS develops and operates a variety of collection mechanisms and systems to meet program 

agency needs. It has initiated a comprehensive effort, CCMM, to streamline, modernize and 

improve the processes and systems supporting Treasury’s collections and cash management 

program. This effort will improve financial performance by enabling FMS and government 

agencies to more effectively manage financial transaction information and improve the 

efficiency of the collections information reporting processes. Additionally, it will improve 

timeliness by providing FPAs with the ability to predefine accounting rules to facilitate timely 

processing of financial transactions through the re-engineering of reporting processes. It will 

also reduce the number of collections and cash management systems and processes and eliminate 

the duplication of data, products, interfaces, and technologies. This effort will simplify and 

standardize systems and processes that have accumulated over 30 years.

FMS continues to promote the use of electronic systems in the collections process and assist 

agencies in converting collections from paper to electronic media with programs such as:

 Electronic Federal Tax Payment System (EFTPS): EFTPS collects approximately 82

percent of United States tax dollars and is required for businesses with annual federal tax 

obligations above $200,000. Starting in 2011, in support of the Paperless Treasury 

Initiative, businesses using paper FTD coupons will be instructed to use EFTPS. IRS 

research has shown that businesses using EFTPS are 31 times less likely to make an 

error. FMS has been working to communicate the benefits of EFTPS – accuracy, 

security, simplicity, and flexibility – to financial institutions, small businesses and tax 

practitioners. The goal is to encourage businesses and individuals to pay their federal 

taxes electronically through EFTPS rather than by using paper FTD coupons, which were 

reduced in FY 2010 by 24 percent over FY 2009. FMS will direct its EFTPS efforts to 

financial institutions that process paper tax coupons as well as the tax practitioner 

community and small businesses to further expand the use of EFTPS. Additionally, FMS 

has implemented a new on-line interface that will allow financial institutions and other 

third parties to remit tax payments to EFTPS on behalf of their customers. In FY 2010, 

more than 108 million payments were processed through EFTPS totaling more than $1.98 

trillion.

 Pay.gov: Pay.gov is a system allowing individuals and businesses to make nontax 

payments to federal agencies over the internet. Pay.gov provides collections, form 

submittal, and bill presentment. Pay.gov meets the increasing demands of consumers 

and businesses for electronic alternatives by providing the opportunity to complete forms 
FMS - 19

and applications, make payments, and submit queries online 24 hours a day, seven days a 

week. Pay.gov, currently serves 153 federal agencies representing 667 cash flows. In FY 

2010 Pay.Gov processed over 49 million transactions and collected over $80 billion. 

New developments will focus on interfaces with new systems within the new Collections 

Business Line Enterprise Architecture, improved interfaces with federal agencies, and 

enhanced functionality to take advantage of same-day ACH transactions.

 Check Conversion and Truncation: Paper Check Conversion Over-The-Counter (PCC 

OTC) and Electronic Check Processing (ECP) are programs utilized to convert paper 

checks received at federal agency and lockbox sites into electronic debits to the check 

writer's account through the Automated Clearing House (ACH) system, or into a 

substitute check image that is truncated and cleared under the authority of Check 21. The 

funds are deposited into Treasury's account at the Federal Reserve Bank. These 

programs leverage image technology and eliminate the need to photocopy checks, 

safeguard checks, or process paper by providing a complete electronic record of all check 

images and related financial data accessible via a web-based archive. In FY 2010, more 

than 10.6 million items were received over-the-counter, representing more than $17.1 

billion, and processed through check conversion or truncation. Additionally, more than 

43.8 million items received through the mail at lockboxes, representing $20.5 billion, 

were similarly processed. FMS's target is that all paper checks remitted to the federal 

government will be converted or truncated and processed electronically.

3.2.2 – Collections Budget and Performance Plan

Collections Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Enacted Annualized CR 

Level

Request

 Appropriated Resources $23,103 $21,521 $21,911 $24,267 $21,265

 Reimbursable Resources $141 $0 $113 $1,419 $198

Total Resources $23,244 $21,521 $22,024 $25,686 $21,463

Budget Activity Total $23,244 $21,521 $22,024 $25,686 $21,463

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage Collected Electronically of Total Dollar Amount of 

Federal Government Receipts (Oe)

80.0 84.0 86.0 86.0 88.0

Unit Cost to Process a Federal Revenue Collection Transaction 

(E)

1.47 1.57 1.67 1.70 1.70

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline
FMS - 20

Description of Performance: In FY 2010, FMS collected $2.94 trillion through a network of more 

than 9,000 financial institutions. Slightly more than 85 percent of the funds was collected 

electronically. While FMS continued to promote and convert collections from paper to the more 

efficient electronic media in FY 2010, there are a number of factors that have adversely affected 

the unit cost metric. It is projected that the unit cost metric for collections will increase over the 

next three years due to two primary factors: 1) The current economic conditions; and 2) 

Increased expenses during the transition to a fully implemented Collections and Cash 

Management Modernization (CCMM) initiative.

The economic climate has had a major influence on the unit cost for collections. Recessionary 

business failures and job losses have caused fewer employers to report withholding transactions 

to the Electronic Federal Tax Payment System (EFTPS). Similarly, small business failures and 

job losses reduced the number of tax filers using the IRS Lockbox Network. For example, 

during the Spring 2009 tax season, tax transaction receipts were down by 22 percent. Since 

some of the costs of EFTPS and the IRS Lockbox Network are fixed, the unit cost per item 

increased. 

In addition, FMS has embarked on a multi-year initiative that will streamline, modernize, and 

improve the processes and systems supporting Treasury’s collections and cash management 

program. FMS is building a number of new systems that will fulfill its enterprise architecture 

goals. When this initiative is fully implemented, FMS will operate only 13 collection and cash 

management systems or services, decommissioning 20 other systems or services. The CCMM 

initiative will make it much more efficient for FMS to collect government receipts. Full 

implementation of this initiative includes new systems deployment and agency conversions to 

these new systems. Until full implementation is realized, FMS must continue to maintain legacy 

systems and processes, and incur the costs to maintain those systems as well.

3C – Debt Collection ($97,052,000 from reimbursable programs): FMS collects delinquent 

government and child support debt by providing centralized debt collection, oversight and 

operational services to FPAs and states pursuant to the Debt Collection Improvement Act of 

1996 and related legislation. The services include, but are not limited to, collecting delinquent 

debts through Cross-Servicing and offsetting federal payments, providing a database for use as a 

tool for barring delinquent debtors, providing post-judgment collection, advising and educating 

agencies on improving debt management, and referrals to the Department of Justice. 

To better utilize internal resources for increased debt collection activity, especially in the crossservicing of existing debt, resulting in the collection of additional delinquent debt, FMS was able 

to begin re-purposing the Austin payments facility to a debt collection call center in FY 2011; 

this effort should be finalized in FY 2012.

Additionally, FMS will continue to enhance FedDebt, a comprehensive system that integrated 

FMS’ existing collection programs: Cross-Servicing and the Treasury Offset Program (TOP). 

TOP compares the names and Taxpayer Identifying Numbers (TINs) of debtors with the names 

and TINs on state and federal payment files. If there is a match, the federal payment is reduced, 

or “offset,” to satisfy the overdue debt. Cross-Servicing includes the use of various collection 

tools such as offset, demand letters to debtors, repayment agreements, administrative wage 
FMS - 21

garnishment, referrals to the Department of Justice, credit bureau reporting, reporting discharged 

debts to the Internal Revenue Service (IRS), and use of private collection agencies.

FedDebt provides FPAs with batch and online capabilities for all users, via a single sign-on 

interface and will employ a common file format for submitting debts to either Cross-Servicing or 

TOP. FedDebt provides a single platform for debt business applications, a single entry portal, a 

web-based customer interface, and a single database for reporting. FedDebt eliminates many 

labor-intensive processes and hard-copy data exchanges for federal and state agency customers 

and service partners. FMS will continue developing FedDebt by implementing a centralized debt 

data repository. 

FMS is working to incorporate additional payment types into the payment offset and levy 

programs. This effort is directed primarily at increasing collections of debt, especially tax debt 

owed by contractors and vendors. The Defense Finance and Accounting Service is currently in 

the process of levying civilian salaries. In addition, the Centers for Medicare and Medicaid 

Services (CMS) offset program began in 2009, as did the Railroad Retirement Board levy 

program. The Postal Service began taking vendor payment offsets and levies in late 2009. 

Finally, enhancements of collection tools such as administrative wage garnishment and Debt 

Check, an online database used to assist agencies in barring delinquent debtors from obtaining 

new loans or loan guarantees, will improve program performance.

3.2.3 Debt Collection Budget and Performance Plan

Debt Collection Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $74,705 $86,247 $93,397 $80,036 $97,052

Total Resources $74,705 $86,247 $93,397 $80,036 $97,052

Budget Activity Total $74,705 $86,247 $93,397 $80,036 $97,052

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Amount of Delinquent Debt Collected Per $1 Spent (E) 54.76 53.76 54.54 43.0 45.0

Amount of Delinquent Debt Collected Through All Available Tools 

($ billions) (Ot)

4.41 5.03 5.50 5.50 5.80

Percentage of Delinquent Debt Referred to FMS for Collection 

Compared To Amount Eligible For Referral (Ot)

99.0 100.0 100.0 97.0 98.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline
FMS - 22

Description of Performance: In FY 2010, FMS collected $5.45 billion in delinquent debt 

including $12.8 million from Economic Recovery Payments. The amount collected includes 

$2.10 billion in past due child support, $2.30 billion in federal nontax debt, and over $1.05

billion in federal tax levies and state tax debt offsets. Debt referrals from creditor agencies were 

at 100 percent of eligible debt at the end of FY 2010. As a result of the continued program 

improvements, cumulative collections since enactment of the Debt Collection Improvement Act 

of 1996 are $48.2 billion. In calendar year 2010, the Internal Revenue Service referred an 

additional $54 billion of tax debts for continuous levy, a 15 percent increase over calendar year 

2009.

3D – Government-wide Accounting and Reporting ($64,672,000 from direct appropriations

and $4,412,000 from reimbursable programs): The Government-wide Accounting and Reporting 

(GWA) activity maintains the federal government’s accounts for its monetary assets and 

liabilities by operating and overseeing the government’s central accounting and reporting system. 

It also works with federal agencies to adopt uniform accounting and reporting standards and 

systems. It provides support, guidance, and training to assist FPAs in improving their 

government-wide accounting and reporting responsibilities. FMS collects, analyzes, and 

publishes government-wide financial information which is used in establishing fiscal and debt 

management policies and is also used by the public and private sectors to monitor the 

government’s financial status. Publications include the Daily Treasury Statement, the Monthly 

Treasury Statement, the Treasury Bulletin, the Combined Statement of the United States 

Government, and the Financial Report of the United States Government (FR). It is important to 

note, the cash reporting function of GWA supports the National Financial Critical Infrastructure. 

FMS is taking other significant steps to address the material weaknesses found in the compilation 

process of the FR including: 

 Requiring comprehensive accounting data from agencies on a quarterly basis that will 

allow FMS to better analyze the data for consistency and completeness.

 Providing agencies with authoritative data to reconcile inter-agency transfers and other 

transactions that agencies report to the central accounting system.

 Using the Chief Financial Officers (CFO) Council, Central Reporting Team as a forum to 

discuss accounting and reporting issues that affect the FR.

 Working with the CFO Council and OMB to develop more consistent business rules for 

intra-governmental transactions.

 Reconciling the agency data to central accounting data which FMS uses to prepare the 

Reconciliations of Net Cost and Unified Budget Deficit Statement and the Statement of 

Changes in Cash Balance from Unified Budget and Other Activities.

 Strengthening internal controls over the process for preparing the FR.
FMS - 23

The goal of these actions is to remove the compilation process as a barrier to a clean audit 

opinion for the FR.

3.2.4 Government-wide Accounting and Reporting Budget and Performance Plan

Government-wide Accounting and Reporting Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $72,420 $70,547 $71,826 $77,328 $64,672

 Reimbursable Resources $726 $3,179 $4,123 $4,215 $4,412

Total Resources $73,146 $73,726 $75,949 $81,543 $69,084

Budget Activity Total $73,146 $73,726 $75,949 $81,543 $69,084

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Government-Wide Accounting Reports Issued 

Accurately (%) (Oe)

100.0 100.0 100.0 100.0 100.0

Percentage of Government-Wide Accounting Reports Issued 

Timely (E)

100.0 100.0 100.0 100.0 100.0

Unit Cost to Manage $1 Million Dollars of Cash Flow (E) 8.96 7.08 7.36 10.15 8.90

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: FMS issues 100 percent of its government-wide accounting reports 

accurately and timely. Annually, FMS releases the Financial Report of the United States 

Government (FR). The FR has been audited by the Government Accountability Office (GAO) 

since 1997, and has received a disclaimer of opinion each year. Treasury continues to take steps 

to help resolve differences in intragovernmental activity and balances; and during fiscal year 

2010, Treasury, in coordination with the Office of Management and Budget, continued 

implementing corrective action plans and made progress addressing certain internal control 

deficiencies that they have previously reported.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
FMS - 24

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

FMS’ strategic management of human capital is consistent with its mission, vision, and priorities 

supporting Treasury’s strategic goal to manage the United States government’s finances 

effectively.

FMS is on the technology forefront in the performance of its mission and has taken steps to 

improve the quality of its professional workforce. A Human Capital Strategic Plan has been 

developed to identify opportunities and build upon our strengths. Achieving the following 

objectives will support and strengthen its work force:

 Strategic Alignment: A human capital strategy is aligned with FMS’ mission, goals, 

organizational objectives, and is integrated into the strategic plans, performance plans,

and budgets.

 Critical Success Factors: Recognizing that an organization’s mission, vision, and values 

provide an insight into why the organization exists, where the organization is heading, 

and how it will conduct its business, FMS has embarked on a rigorous enterprise-wide 

activity to crisply define our mission, vision, and values, as well as to define and draw 

attention to the essential elements – the Critical Success Factors – that are key to our 

continued success.

 Workforce Planning & Deployment: FMS is citizen-centered and mission-focused. It 

leverages E-Government and competitive sourcing.

 Leadership & Knowledge Management: Leaders and managers effectively manage 

people, ensure continuity of leadership, and sustain a learning environment that drives 

continuous improvement in performance. Succession strategies result in a diverse 

leadership talent pool that is continually updated.

 Results-Oriented Performance Culture: FMS has a diverse, results-oriented, high 

performance workforce. It has a performance management system and awards program 

that effectively holds employees accountable, links individual/team/unit performance to 

organizational goals and desired results.

 Diversity: FMS demonstrates its commitment to diversity by recognizing the 

contributions of all employees and by understanding the strengths that arise from the 

broad range of backgrounds, cultures, customs, and beliefs. FMS has processes in place 

to sustain diversity and to address under-representation particularly in mission-critical 

occupations and leadership positions.

 Talent: FMS has significantly reduced gaps in mission-critical skills, knowledge and 

competency. FMS is making significant progress and demonstrates continued 

improvement in meeting agreed-upon hiring timeline goals, i.e., the 45-day hiring model.

 Accountability: Human capital decisions are guided by a data-driven results-oriented 

planning and accountability system.
FMS - 25

Through these objectives FMS has strengthened its human capital position. Proactive 

identification and filling of vacant positions is a part of recruiting and retaining new talent. FMS 

utilizes all intern program authorities, to the extent possible, in order to attract talent from some 

of the best colleges and universities. 

FMS has action plans to obtain and maintain the right number of people with the right skills to 

accomplish the mission. It continually manages the ongoing challenge of recruiting and 

retaining highly skilled individuals in critical areas, including Accountants (with strong 

analytical skills) and IT Specialists. These challenges have increased with heightened 

competition from the private sector. In addition, there is ongoing position management and 

assessment of FTE distribution. As vacancies occur, they are reviewed to determine whether the 

position should be back-filled, redirected as appropriate, or eliminated. This is one way FMS 

counters the possibility of either a surplus or deficiency of staff in certain job occupations. 

Through FY 2010, 22 percent of FMS’ current employees are eligible for Optional Retirement 

and 41 percent are eligible for Discontinued Service or Early Retirement. Strategies are in place 

to close skill-gaps and fill staffing requirements in mission-critical occupations. This includes 

use of all pay incentives within budget constraints (e.g., recruitment and retention incentives) and 

specialized employee development programs such as: SES Candidate Development, Project 

Management Certification, Management Preparatory Development, Federal Career Intern 

Program, Leadership, and Mentoring. 

FMS believes that maintaining a diverse workforce is vital to its mission. It monitors 

recruitment and diversity goals to improve areas of under-representation and actively supports 

programs and initiatives to recruit minority college students. The following programs have been 

established to ensure a diverse workforce: 

 SES Candidate Program was developed to create a diverse group of future senior 

executives.

 Special emphasis programs were expanded and Equal Employment Opportunity and 

diversity awareness training was instituted.

 Hispanic recruitment was enhanced through the increased use of Hispanic Associations 

of Colleges and Universities interns, which created a gateway for new Hispanic 

employees.

In addition, FMS has increased participation in the Washington Internship for Native Students 

Program and the Department of Labor’s Workforce Recruitment Program for students with 

disabilities.
FMS - 26

4.1 – Summary of IT Resources Table

Dollars in Thousands

Major IT Investments / Funding Source Budget Activity FY 2009 

Enacted

FY 2010 

Enacted

FY 2011 

AnnualizedC

R Level

FY 2012 

Request 

Automated Standard Application for Payments (ASAP) Payments 2,398 2,165 -9.72% 1,771 1,843 -14.87%

Debit Gateway Collections - 300 N/A 300 300 0.00%

Deposit and Data Management (DDM) Collections 1,120 1,146 2.32% 1,194 1,194 4.19%

FMS EFTPS (Electronic Federal Tax Payment System) Collections 659 682 3.49% 705 729 6.89%

FedDebt Debt Collection - - N/A - - N/A

Financial Information and Reporting Standardization (FIRST) Government-wide Accounting 7,098 7,501 5.68% 6,649 3,623 -51.70%

Government-Wide Accounting and Reporting Modernization (GWAMP) Government-wide Accounting 9,787 9,983 2.00% 10,186 8,323 -16.63%

International Treasury Services (ITS.gov) 1/ Payments 341 351 2.93% 362 372 5.98%

Internet Payment Platform (IPP) Payments 308 318 3.25% 329 338 6.29%

Intra-Governmental Payment and Collection (IPAC) Government-wide Accounting 552 638 15.58% 660 673 5.49%

Over the Counter Channel Application (OTCnet) Collections 403 305 -24.32% 459 390 27.87%

PACER Payments 2,631 2,744 4.29% 2,800 2,889 5.28%

Pay.gov Collections 569 480 -15.64% 497 515 7.29%

Payment Application Modernization (PAM) Payments 12,123 13,906 14.71% 16,937 16,793 20.76%

Print and Check Enclosing (PrinCE) Payments - 3,613 N/A 1,173 1,108 -69.33%

Secure Payment System (SPS) Payments 3,717 3,403 -8.45% 3,716 3,822 12.31%

Treasury Check Information System (TCIS) Payments 996 1,154 15.86% 1,443 1,248 8.15%

Treasury Collateral Management and Monitoring (TCMM) Collections - 134 N/A 96 282 110.44%

Subtotal, Major IT Investments 42,702 48,823 14.33% 49,277 44,442 -8.97%

non-major IT Investments 2/ 5,912 12,355 108.99% 8,689 6,997 -43.37%

Infrastructure Investments 3/ 23,200 154,696 566.79% 158,314 158,662 2.56%

Enterprise Architecture 5,493 3,655 -33.46% 3,655 2,799 -23.42%

Total IT Investments 4/ 77,307 219,529 183.97% 219,935 212,900 -3.02%

1/ ITS.gov was changed from a non-major to a major investment in FY 2009.

2/ PrinCE was changed from a non-major to a Major in FY2009.

* Infrastructure reporting requirements changed in FY 2009, which resulted in changes to FY 2010 and FY 2011 figures.

4/ Figures provided for FY 2009 include funding amounts for the Treasury Web Application Infrastructure (TWAI) platform that were not included in previous years. 

3/ In FY 2009, the number of non-majors reporting increased to 17 investments. 

% Change from 

FY 2009 to FY 

2010

% Change from 

FY 2010 to FY 

2012
FMS - 27

4B – Information Technology Strategy

The FMS IT Strategy addresses all bureau information resource management. It focuses on 

technology and how it supports FMS’ Strategic Plan which is a long-range plan that supports the 

economic policies and mission of the Department of the Treasury for payments, collections, 

government-wide accounting and reporting, and collection of delinquent debt.

Governance Process

FMS has an established governance process that selects, evaluates, and monitors new and 

existing IT investments. FMS’ IT Governance Process complies with Department of the 

Treasury and OMB requirements for Capital Planning and Investment Control, and Enterprise 

Architecture. Before projects are started or a major change implemented, there is a formal 

review process beginning with the FMS Division Information Officer (DIO) Council. Each 

project provides the DIO Council with project business case documentation, which describes the 

project, documents benefits, and shows start-up costs, full life-cycle costs, other systems 

impacted, programmatic impact, and platforms that will be used. Costs include all project costs 

including contracts, FTE, hardware, and software. The FMS governing bodies, including the 

DIO Council and Architecture Review Board (ARB), review each investment to ensure 

compliance with FMS’ target architecture, use of existing infrastructure, and shared resources 

(e.g., document imaging and Single-Sign On). At least once a year, each FMS project is 

presented to the DIO Council. Current cost, schedule, and performance goals status for the 

project are presented. Any project that is not within acceptable cost, schedule, and performance 

goals must provide the DIO Council with a project remediation plan detailing the steps it plans to 

implement to get the investment back within acceptable ranges. The project is also required to 

provide the DIO Council with quarterly cost, schedule, and performance updates. The FMS 

governance process includes recommendations by the DIO Council for approval/disapproval of 

all IT investments and major enhancements. The FMS executive board must also approve all 

large scale IT projects and it conducts quarterly reviews of all major FMS investments.

Fiscal IT

FMS, in partnership with BPD, initiated a project to consolidate the data centers across the two 

bureaus to help achieve the Secretary’s objective of increasing the utilization and efficiency of 

combined IT assets, while reducing technology costs. This effort also conforms to the Office of 

Management and Budget’s Data Center Consolidation directive which requests that all federal 

agencies review IT spending, placing emphasis on consolidating and sharing IT services to 

reduce expenditures. This effort includes consolidation of five data centers into two shared by 

both bureaus with one acting as a back-up to the other, creation of a single corporate governing 

body, in-sourcing of select contractor functions, and consolidation of application development 

methodologies and associated infrastructure while resulting in a more “green” approach to 

delivery of IT services.

BPD - 1 

Overview

Mission Statement 

To borrow the money needed to operate the federal government, account for the resulting debt 

and provide reimbursable support services to federal agencies. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2010 FY 2011 FY 2012 FY10 to FY12

Enacted Annualized

CR Level

Request $ Change % Change

 Wholesale Securities Services $24,396 $25,049 $23,120 ($1,276) (5.2%)

 Government Agency Investment Services $18,013 $16,706 $15,419 ($2,594) (14.4%)

 Retail Securities Services $139,569 $140,915 $116,260 ($23,309) (16.7%)

 Summary Debt Accounting $10,266 $9,574 $8,836 ($1,430) (13.9%)

 Do Not Pay Implementation $0 $0 $10,000 $10,000 100.0%

Total Appropriated Resources $192,244 $192,244 $173,635 ($18,609) (9.7%)

Total FTE 1,042 1,042 987 (55) (5.3%)

Total Appropriated Resources for FY 2010 and FY 2011 include $10,000,000 in projected user fee collections. 

Total Appropriated Resources for FY 2012 include $8,000,000 in projected user fee collections. 

FY 2012 Priorities 

 Protect and strengthen Treasury’s borrowing capabilities.

 Enhance, when appropriate, government securities market regulation, while maintaining 

market liquidity and efficiency. 

 Eliminate new issues of over-the-counter paper savings bonds. 

 With the elimination of new issues of paper savings bonds, position Treasury to provide 

other simple, safe, and affordable ways for Americans to save. 

 Deliver a high-quality retail customer experience through traditional and emerging 

technologies, opportunities for self-service, and easy-to-use communication channels. 

 Continually demonstrate accounting excellence by producing daily financial statements and 

receiving unqualified opinions on the annual audits of the Schedules of Federal Debt. 

 Gain efficiencies and strengthen controls by reducing the number of common business 

processes that serve federal investments, special purpose securities and federal borrowings 

from eight to six. 

 Consolidate data centers across the Financial Management Service and Public Debt. 

 Continue to adopt technological advances to ensure Public Debt’s various information 

technology systems remain secure. 

 Expand the Do Not Pay List and enhance analytical capabilities to support agency detection 

of fraud patterns and reduce improper payments. 
BPD - 2 

Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

FY 2012 Priorities ....................................................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

Section 2 – Budget Adjustments and Appropriation Language ............................................... 7

2.1 – Budget Adjustments Table ................................................................................................. 7

2A – Budget Increases and Decreases Description ..................................................................... 7

2.2 – Operating Levels Table ...................................................................................................... 9

2.3 – Appropriations Detail Table ............................................................................................. 10

2B – Appropriations Language and Explanation of Changes ................................................... 10

2C – Legislative Proposals ........................................................................................................ 11

Section 3 – Budget and Performance Plan ............................................................................... 12

3.1 – Budget by Strategic Outcome .......................................................................................... 12

3.2.1 Wholesale Securities Services Budget and Performance Plan ......................................... 13

3.2.2 Government Agency Investment Services Budget and Performance Plan ...................... 15

3.2.3 Retail Securities Services Budget and Performance Plan ................................................ 17

3.2.4 Summary Debt Accounting Budget and Performance Plan ............................................. 19

3.2.5 Do Not Pay Implementation Budget and Performance Plan ............................................ 20

Section 4 – Supporting Materials .............................................................................................. 21

4A – Human Capital Strategy Description ................................................................................ 21

4.1 – Summary of IT Resources Table ...................................................................................... 22

4B – Information Technology Strategy ..................................................................................... 23
BPD - 3 

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

The Bureau of the Public Debt’s (Public Debt) vision is to lead the way for responsible, effective 

government through commitment to service, efficient operations, openness to change and 

values-based behavior. In carrying out its mission and vision, Public Debt annually auctions and 

issues more than $8 trillion in Treasury bills, notes, bonds and Treasury Inflation-Protected 

Securities (TIPS); administers on Treasury's behalf its regulatory responsibilities for the 

government securities market; ensures reliable systems and processes are in place for issuing, 

transferring, paying interest on and redeeming Treasury securities; issues and redeems about 

50 million paper savings bonds each year; administers in excess of $4 trillion in investments for 

more than 230 federal trust funds; and provides timely and accurate information on the public 

debt. 

In support of Treasury’s strategic outcome of government financing at the lowest possible cost 

over time, Public Debt’s top priority is to guarantee operational readiness to meet the 

government's critical financing needs by ensuring the most efficient systems are in place to 

conduct borrowing operations and deliver securities services to investors. To that end, the 

bureau continues to enhance its auction process. The Treasury Automated Auction Processing 

System (TAAPS) provides simple bid-entry, quick and easy access to data and superior 

reliability and security. 

A major operational initiative for Public Debt is to consolidate all Government Agency 

Investment Services (GAIS) functions into a single integrated control environment by FY 2012. 

This will result in lower operational risks, stronger internal controls, more timely and accurate 

data and standardized system, business and data elements. To date, the federal investments, 

federal borrowings and Special Purpose Securities functions are operating from the same 

automated platform. 

Public Debt will stop the issuance of paper savings bonds sold over-the-counter at financial 

institutions no later than December 31, 2011 as part of the overall Paperless Treasury initiative. 

This also supports the Department's High Priority Performance Goal to significantly increase the 

number of paperless transactions with the public. The strategy to accomplish Public Debt's 

portion of the goal centers on TreasuryDirect and electronic bonds, which are more efficient to 

issue and service over the long term than paper savings bonds. Public Debt will enhance its 

system and processes to attract investors to TreasuryDirect as their preferred way to buy and 

hold savings bonds. 

In placing a high priority on delivering a high-quality customer experience, Public Debt plans to 

implement a business and technical architecture for customer service known as Treasury Retail 

E-Services (TRES). TRES is an initiative to provide Public Debt and the consolidated Treasury 

Retail Securities (TRS) site with a fully integrated view of customer interactions that will allow 

customer service representatives to quickly identify customers and evaluate their needs. 
BPD - 4 

In support of Treasury's sustainability program, Public Debt developed a strategy that will 

incorporate all areas within the sustainability efficiency goals, including greenhouse gas 

emissions, increased energy efficiency and high performance sustainable design. By FY 2020, 

Public Debt has set a goal of reducing greenhouse gas emissions by 33 percent from FY 2008 

levels. Public Debt's FY 2012 budget includes projects that increase the overall efficiency of its 

data center operations by lowering energy levels and greenhouse gas emissions. In addition, 

energy initiatives for Public Debt facilities, such as replacing constant speed motors with 

variable frequency drive motors and water conservation projects, are also under consideration. 

Another priority receiving attention at Public Debt is telework. The current program is 

undergoing significant changes. Only a small number of employees currently participate in 

telework and the degree to which those employees work from home is minimal. Policy and 

process changes will be implemented to increase participation and improve the quality of the 

program. A greater variety of telework schedules will be offered based on job duties and needs. 

By expanding the use of telework, Public Debt will gain several advantages including increased 

employee morale and satisfaction and a greater ability to operate during an emergency or other 

office closure. In addition, Public Debt hopes to avoid the costs associated with increased space 

requirements. Under consideration is the concept that teleworkers on expanded or full schedules 

will not have dedicated workstations, thus reducing the amount of space needed. 

Overall, the total resources required to support Public Debt activities in FY 2012 are 

$198,035,000, including $173,635,000 from direct appropriations, of which $8,000,000 are user 

fees, and $24,400,000 are from offsetting collections. 

With its resources, Public Debt: 

 Conducts more than 290 marketable securities auctions annually, resulting in the issuance of 

approximately $8.5 trillion in Treasury bills, notes, bonds and TIPS; 

 Administers 233 funds in excess of $4 trillion in Government Account Series investments, 

which amounts to approximately 37 percent of the public debt; 

 Manages some 5,000 active SLGS securities accounts valued at nearly $195 billion; 

 Serves more than 50 million retail customers holding marketable and savings securities, 

including over 300,000 funded investor accounts in the internet-accessed TreasuryDirect 

system; 

 Accounts for and reports on $972 billion in federal agency borrowings from Treasury in 86 

funds; 

 Accounts for and reports on the balance and composition of more than $13 trillion in public 

debt, the single largest liability on the federal government’s balance sheet, and reconciles 

more than $107 trillion annually in securities transactions reported from numerous systems to 

cash flowing in and out of the federal government each year; and 

 Receives unqualified audit opinions on the Schedules of Federal Debt annually. 

1B – Program History and Future Outlook 

Public Debt continues to enhance the mechanisms for participation by a wide range of investors 

in its wholesale, government agency investment services and retail programs. 
BPD - 5 

Over the years, the bureau has dramatically reduced the time required to complete marketable 

securities auctions. Results are consistently released within two minutes, plus or minus 

30 seconds, of the closing of the competitive auction. In addition, non-competitive results are 

released 15 minutes prior to competitive close. Treasury has effectively reduced the time that 

bidders are exposed to market risk or adverse market movements by consistently releasing 

flawless auction results within the two minute window. 

TAAPS fully automates the announcement, auction, and issuance of marketable securities. At 

the same time, TAAPS provides speed and flexibility to Treasury debt managers in bringing new 

types of securities to market (e.g., the 30-year TIPS bond) and implementing policy changes in a 

timely manner. By eliminating manual processes, the system supports error-free auction results 

and greatly reduces operational risk. Public Debt continues to upgrade TAAPS to keep pace 

with changes in technology and security requirements. 

By reducing the number of common business processes, Public Debt continues its commitment 

to provide efficient mechanisms for federal investments, special purpose securities and federal 

borrowings. Common business processes supporting GAIS are funds management, investment 

accounting, standard reporting, customer interface, enhanced reporting and account maintenance. 

Public Debt will provide its customers with the assistance they need to manage their federal 

investments, special purpose securities and federal borrowings effectively and efficiently as 

possible. One of the ways this will be accomplished is through education, periodic seminars and 

orientation for new customers to ensure they understand and can take full advantage of 

Public Debt’s systems and services. 

Additionally, when Treasury introduces new instruments or changes existing instruments 

available for federal agency investment, Public Debt will assist its customer agencies in 

understanding these changes. As new legislation is enacted or business processes change, the 

bureau will support federal agencies’ implementation of these modifications. 

Public Debt will also support Treasury’s initiative to standardize legislation for all new 

investment funds by actively promoting Treasury’s preferred language to drafters of proposed 

investment legislation. This effort will eliminate operational challenges when legislation 

establishing investment authority for a new fund is vague or inconsistent. 

The retail program supports Treasury's High Priority Performance Goal to significantly increase 

the number of paperless transactions with the public by ending the sale of paper savings bonds 

through employer-sponsored payroll savings plans by January 1, 2011 and eliminating new 

issues of paper savings bonds sold over-the-counter financial institutions. This will virtually 

eliminate new issues of paper savings bonds. Public Debt will encourage investors to use 

TreasuryDirect as their preferred way of buying and holding savings bonds. 

Delivering a high-quality customer experience through efficient and effective processes remains 

a key goal for the retail program. In FY 2012, Public Debt will streamline how it processes 

customer service correspondence (i.e., printed forms and letters) by centralizing print and mail 

functions and by using intelligent barcodes. At the same time, using intelligent barcodes along 
BPD - 6 

with existing scanning capabilities will create efficiencies in routing correspondence returned by 

customers to appropriate service representatives. Public Debt will also enhance its telephone 

access and interactive voice response architecture. 

The retail program also strives to efficiently maintain Public Debt's legacy retail systems. In the 

next few years, the Federal Reserve will move away from mainframe application hosting. To 

avoid substantial hosting costs, Public Debt will decommission its Legacy Treasury Direct 

application, and it will no longer exist in its current mainframe environment. Public Debt will 

implement a solution that makes technical as well as business and financial sense. 

Public Debt continues to work to improve the clarity, usefulness and availability of federal debt 

information. The bureau will work to modernize its system used for public debt accounting by 

migrating common financial information to a shared service solution and continuing to define 

requirements to reengineer business processes that best support the needs of the Summary Debt 

Accounting program. This approach will offer many benefits in terms of a faster migration of 

new or modified functionality and reduced operational risks, while standardizing system, 

business and data elements. 

Although not supported by appropriated funding, Public Debt’s franchise program represents a 

significant part of the business and staff resources of the organization. As a recognized Shared 

Service Provider (SSP) in several business lines, the Administrative Resource Center (ARC) 

provides financial management, administrative support and information technology services to 

federal agencies, generating revenue to pay all organizational expenses. Because of the quality 

of the services provided, the depth and breadth of services provided to customers has grown. 

The vision of allowing agencies to focus on mission-related activities, while gaining efficiencies 

and increasing standardization through the use of SSPs is being realized. During FY 2011, ARC 

expects to use 1,012 FTE to service more than 70 customers and generate $165 million in 

offsetting collections. In FY 2012, ARC projects offsetting collections of $245 million.
BPD - 7 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Bureau of the Public Debt FTE Amount

FY 2010 Enacted 1,042 $192,244

FY 2011 Annualized CR Level 1,042 $192,244

Changes to Base:

Adjustment to Reach Policy Level: (33) ($7,458)

Adjustment to Reach FY 2011 President's Policy (33) ($7,458)

Maintaining Current Levels (MCLs): - $1,234

Maintaining Current Levels - $1,234

Efficiencies, Savings & Base Reductions: (42) ($20,385)

Eliminate Paper Savings Bonds Sold Over-the-Counter at Financial 

Institutions

- ($6,451)

Eliminate new issues of paper payroll savings bonds by 1/1/2011 (12) ($5,700)

Program and Support Services Efficiencies (18) ($5,464)

Data Centers Consolidation - ($470)

Decommission Legacy Treasury Direct System (12) ($1,650)

Procurement Savings - ($650)

Subtotal FY 2012 Changes to Base (75) ($26,609)

Total FY 2012 Base 967 $165,635

Program Changes:

Program Decreases: - ($2,000)

Reduction to Systems Modernization Fund - ($2,000)

Program Increases: 20 $10,000

Do Not Pay Implementation 20 $10,000

Subtotal FY 2012 Program Changes 20 $8,000

Total FY 2012 Request 987 $173,635

User Fees - ($8,000)

Total FY 2012 Request (Net) 987 $165,635

2A – Budget Increases and Decreases Description 

Adjustment to Reach Policy Level ........................................................... -$7,458,000 / -33 FTE

Adjustment to Reach FY 2011 President's Policy -$7,458,000 / -33 FTE 

Adjustment to Reach FY 2011 President's Policy 

Maintaining Current Levels (MCLs) ...................................................... +$1,234,000 / +0 FTE

Maintaining Current Levels +$1,234,000 / +0 FTE 

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

supplies and equipment and health benefits and the increase in Federal Employee Retirement 

System participation. No inflation adjustment is requested for pay in FY 2012. 

Efficiencies, Savings & Base Reductions .............................................. -$20,385,000 / -42 FTE

Eliminate Paper Savings Bonds Sold Over-the-Counter at Financial Institutions no later than 

December 31, 2011 -$6,451,000 / +0 FTE 

Eliminate new issues of paper savings bonds. Savings of agent fees, postage and printing by 

eliminating new issues of over-the-counter paper savings bonds. 

Eliminate new issues of paper payroll savings bonds by 1/1/2011 -$5,700,000 / -12 FTE 

Savings of agent fees, postage and printing by eliminating new issues of paper payroll savings 
BPD - 8 

bonds and FTE savings from a decline in customer service transactions after new issues of paper 

payroll bonds are eliminated. 

Program and Support Services Efficiencies -$5,464,000 / -18 FTE 

Savings realized from reductions in funded positions across all Public Debt programs and in 

administrative and IT support services. In addition, to increase operational efficiencies and 

reduce operating expenses, Public Debt will centralize its printing, duplicating and scanning 

activities. 

Data Center Consolidation -$470,000 / +0 FTE 

Public Debt, along with the Financial Management Service, will consolidate five data centers to 

two, which will produce savings due to reductions in energy consumption, equipment, software, 

and staff. As a result of the Data Center Consolidation, Public Debt projects savings of 

$470,000. 

Decommission Legacy Treasury Direct System -$1,650,000 / -12 FTE 

Established in 1986, Legacy Treasury Direct allows marketable securities investors to do 

business by mail and, to a certain extent, through an automated phone system or online. Now 

that marketable securities are available in TreasuryDirect, an online account system, Public Debt 

can decommission the aging Legacy system. 

Procurement Savings -$650,000 / +0 FTE 

Cost savings by streamlining procurement operations and reducing procurement spending. 

Program Decreases .................................................................................... -$2,000,000 / +0 FTE

Reduction to Systems Modernization Fund -$2,000,000 / +0 FTE 

Savings due to elimination of BPD's Systems Modernization fund. 

Program Increases ................................................................................ +$10,000,000 / +20 FTE

Do Not Pay Implementation +$10,000,000 / +20 FTE 

Expand the Do Not Pay Portal and increase analytical capabilities to detect fraud patterns and 

reduce improper payments. 

Adjustments to Request User Fee ............................................................. -$8,000,000 / +0 FTE

User Fees -$8,000,000 / +0 FTE 

For $100 account maintenance fees that Public Debt charges to account holders in the Legacy 

Treasury Direct system with an account balance of more than $100,000 in par value. 

Public Debt projects that in FY 2012 there will be fewer users of this system that will be subject 

to maintenance fees. 
BPD - 9 

2.2 – Operating Levels Table 

Dollars in Thousands 

Bureau of the Public Debt

FY 2010

Enacted

FY 2011

Annualized CR 

Level

Proposed 

Reprogram

mings

FY 2011

Proposed Operating

Level

FY 2012 

Request

FTE 1,042 1,042 - 1,042 987

Object Classification

11.1 - Full-time permanent $71,974 $65,981 $0 $65,981 $64,595

11.3 - Other than full-time permanent $525 $533 $0 $533 $533

11.5 - Other personnel compensation $2,474 $2,151 $0 $2,151 $2,151

11.8 - Special personal services 

payments $0 $32,956 $0 $32,956 $32,956

12 - Personnel benefits $18,874 $19,984 $0 $19,984 $19,950

13 - Benefits for former personnel $40 $30 $0 $30 $30

21 - Travel and transportation of 

persons $1,278 $1,017 $0 $1,017 $1,132

22 - Transportation of things $79 $86 $0 $86 $91

23.1 - Rental payments to GSA $10,605 $9,452 $0 $9,452 $15,299

23.2 - Rental payments to others $7 $2 $0 $2 $2

23.3 - Communication, utilities, and 

misc charges $9,946 $10,010 $0 $10,010 $4,952

24 - Printing and reproduction $1,508 $1,859 $0 $1,859 $935

25.1 - Advisory and assistance 

services $94 $95 $0 $95 $1,987

25.2 - Other services $15,153 $15,332 $0 $15,332 $11,844

25.3 - Other purchases of goods and 

services from Govt. accounts $55,941 $28,609 $0 $28,609 $13,417

25.4 - Operation and maintenance of 

facilities $979 $991 $0 $991 $896

25.6 - Medical care $15 $15 $0 $15 $13

25.7 - Operation and maintenance of 

equip $355 $360 $0 $360 $265

26 - Supplies and materials $1,683 $1,818 $0 $1,818 $1,757

31 - Equipment $576 $813 $0 $813 $687

32 - Land and structures $138 $148 $0 $148 $143

42 - Insurance claims and indemnities $0 $2 $0 $2 $0

Total Budget Authority $192,244 $192,244 $0 $192,244 $173,635

Budget Activities

Wholesale Securities Services $24,396 $25,049 $0 $25,049 $23,120

Government Agency Investment 

Services $18,013 $16,706 $0 $16,706 $15,419

Retail Securities Services $139,569 $140,915 $0 $140,915 $116,260

Summary Debt Accounting $10,266 $9,574 $0 $9,574 $8,836

Do Not Pay Implementation $0 $0 $0 $0 $10,000

Total Budget Authority $192,244 $192,244 $0 $192,244 $173,635
BPD - 10 

2.3 – Appropriations Detail Table 

Dollars in Thousands 

New Appropriated Resources for FY 2010 and FY 2011 include $10,000,000 in projected user fee collections. 

New Appropriated Resources for FY 2012 include $8,000,000 in projected user fee collections. 

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

BUREAU OF THE PUBLIC DEBT

 Federal Funds

Administering the Public Debt

For necessary expenses connected with any public-debt 

issues of the United States, $173,635,000, of which not to 

exceed $2,500 shall be available for official reception and 

representation expenses, and of which $10,000,000 shall 

remain available until September 30, 2014, for the Do Not 

Pay portal initiative: Provided, That the sum appropriated 

herein from the general fund for fiscal year 2012 shall be 

reduced by not more than $8,000,000 as definitive security 

issue fees and Legacy Treasury Direct Investor Account 

Maintenance fees are collected, so as to result in a final 

fiscal year 2012 appropriation from the general fund 

estimated at $165,635,000. In addition, $165,000 to be 

derived from the Oil Spill Liability Trust Fund to reimburse 

the Bureau for administrative and personnel expenses for 

financial management of the Fund, as authorized by section 

1012 of Public Law 101-380. 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Wholesale Securities Services 133 $24,912 132 $24,396 136 $25,049 129 $23,120 -2.27% -5.23%

Government Agency Investment Services 91 17,058 98 18,013 91 16,706 86 15,419 -12.24% -14.40%

Retail Securities Services 680 127,940 756 139,569 763 140,915 703 116,260 -7.01% -16.70%

Summary Debt Accounting 52 9,832 56 10,266 52 9,574 49 8,836 -12.50% -13.93%

Do Not Pay Implementation 20 10,000 100.00% 100.00%

Subtotal New Appropriated Resources 956 $179,742 1,042 $192,244 1,042 $192,244 987 $173,635 -5.28% -9.68%

Other Resources:

Offsetting Collections - Reimbursable 21,425 21,425 20,815 24,400 0.00% 13.89%

User Fees 6,441

Available multi-year/no-year funds 968 2,988 4,000

Subtotal Other Resources 0 $28,834 0 $24,413 0 $24,815 0 $24,400 0.00% -0.05%

Total Resources Available for Obligation 956 $208,576 1,042 $216,657 1,042 $217,059 987 $198,035 -5.28% -8.60%

Resources Available for Obligation FY 2010 

Enacted

FY 2012 

Request

FY 2010 

Obligations

FY 2011 

Annualized 

CR Level

% Change 

FY 2010 

to FY 2012
BPD - 11 

2B – Permanent, Indefinite Appropriations 

Reimbursements to the Federal Reserve Banks

Public Law 101-509, 104 Stat. 1389, 1394 (1990), established a permanent indefinite 

appropriation to pay such sums as necessary to reimburse the Federal Reserve Banks for acting 

as fiscal agents. A permanent indefinite account was established in FY 1992. Claims for 

reimbursements are closely monitored for compliance with the Instructions for Filing 

Reimbursement Claims for Fiscal Agency Services Provided to the Bureau of the Public Debt 

(current edition). Funding for FY 2012 is estimated at $126,100,000. 

Government Losses in Shipment

Public Law 103-329 established a permanent indefinite appropriation to pay such sums as 

necessary to make payments for the replacement of valuables, or the value thereof, lost, 

destroyed, or damaged in the course of United States government shipments. The Government 

Losses in Shipment Act was approved July 8, 1937, to dispense with the necessity for insurance 

by the government against loss or damage to valuables in shipment and for other purposes. The 

Act was amended in 1943 to cover losses resulting from the redemption of savings bonds (for 

example, stolen bonds which were fraudulently negotiated even though the paying agent 

followed identification guidelines established by the Treasury). All authority of the Treasury 

under the Act has been delegated to the Commissioner of the Bureau of the Public Debt. In 

FY 2012, the funding estimated to support payments for the replacement of valuables is 

$800,000. 

2C – Legislative Proposals 

Public Debt has no legislative proposals for FY 2012. 
BPD - 12 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the 

FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treas.gov/offices/management/budget/strategic-plan/

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Annualized 

CR Level

FY 2012 

Request

% Change

FY10 to FY12

 Accurate, timely, useful, transparent and accessible 

financial information 11,410 10,611 10,052 -11.90%

 Government financing at the lowest possible cost over 

time 202,259 202,448 187,983 -7.06%

Total $213,669 $213,059 $198,035 -7.32%

FY 2010 and FY 2011 total includes $10,000,000 in projected user fee collections. 

FY 2012 total includes $8,000,000 in projected user fee collections. 

3A - Wholesale Securities Services ($23,120,000 from direct appropriations, and $3,179,000 

from reimbursable programs): The Wholesale Securities Services (WSS) program is responsible 

for the announcement, auction, issuance and settlement of marketable Treasury bills, notes, 

bonds and TIPS. In FY 2010, Public Debt conducted more than 290 auctions resulting in the 

issuance of more than $8 trillion in marketable securities. WSS also oversees that portion of the 

Fedwire Securities Services infrastructure that provides for the transfer, custody and redemption 

of all Treasury marketable securities, which are purchased mostly by commercial market 

participants. 

As one of the federal government's Primary Mission Essential Functions, Wholesale Securities 

Services ensures communications, systems, processes and contingency plans provide for high 

level performance and business continuity for wholesale auction operations. The program is an 

essential function which enables the federal government to finance government operations and 

programs, including the Financial Stability Plan. 

In February 2010, Public Debt resumed debt issuance for the Federal Reserve's Supplementary 

Financing Program (SFP), to restore the balance to levels maintained between February and 

September 2009. The SFP is one of the programs developed in the midst of the economic 

disruption of 2008. Designed to support Federal Reserve initiatives to address liquidity pressures 

in the financial market, the program consists of a series of Treasury bills, in addition to 

Treasury's borrowing program. 

Another major component of this program is the commercial book entry system, which holds 

approximately $7.2 trillion, or 99 percent, of Treasury marketable securities. Treasury uses this 

system to issue most of its marketable debt, make principal and interest payments and support 

the active secondary market in Treasury securities. It is estimated that about $1 trillion per day 
BPD - 13 

in Treasury securities are transferred among account holders in the commercial book-entry 

system. 

On behalf of Treasury, Public Debt administers regulations that provide investor protection and 

maintain the integrity, liquidity and efficiency of the secondary market for government securities 

under the Government Securities Act of 1986, as amended. Public Debt also administers 

Treasury's auction and buyback regulations, and monitors for compliance with Treasury’s 

auction rules. As part of this program, the bureau identifies collateral that can be pledged to the 

federal government to secure public monies on deposit at financial institutions and ensure that 

this collateral is valued appropriately. 

Public Debt also evaluates its business processes for ways to enhance reporting capabilities, 

strengthen system security and contingency plans that are aimed at mitigating risk for the 

Treasury and its auction participants. Such safeguards effectively guarantee continuous 

operational readiness in order to meet its primary objective of borrowing at the lowest cost over 

time. Treasury will continue to seek opportunities in U.S. and global markets, to better serve 

holders of its securities and share information to further the understanding of the Treasury 

auction process, debt financing policies and securities. 

Other Resources: 

Reimbursements totaling $3,179,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation.

3.2.1 Wholesale Securities Services Budget and Performance Plan 

Wholesale Securities Services Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $21,350 $23,444 $24,396 $25,049 $23,120

 Reimbursable Resources $1,494 $2,821 $2,719 $2,712 $3,179

Total Resources $22,844 $26,265 $27,115 $27,761 $26,299

Budget Activity Total $22,844 $26,265 $27,115 $27,761 $26,299

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Cost Per Debt Financing Operation ($) (E) 220,732 170,214 162,378 161,726 172,979

Percent of Auction Results Released in Two Minutes +/- 30 

Seconds (%) (Oe)

100.0 100.0 100.0 100.0 100.0

Percent of Primary Dealers that submit live bids from their 

disaster recovery site on two separate auction dates (%) (Ot)

N/A N/A 78.0 70.0 90.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline
BPD - 14 

Description of Performance: The cost per debt financing operation is estimated at $161,726 in 

FY 2011 and $172,979 in FY 2012. For FY 2012, the new calculation of the cost per item is 

based upon a five-year rolling average volume to limit exogenous factors impacting this measure 

and establish more meaningful reporting. Cost increases in the cost per debt financing operation 

are primarily due to scheduled upgrades to the TAAPS system to keep pace with changes in 

technology that will ensure financing operations are conducted timely and with 100 percent 

accuracy and to improve the availability of auction-related data for Treasury's debt managers. 

Public Debt continues to achieve its target of releasing auction results within two minutes, plus 

or minus 30 seconds, 100 percent of the time. 

Public Debt has implemented a strategic plan with primary dealers for contingency auction 

processing. The plan outlines various operational tests and events that strengthen overall 

readiness to deal with contingencies and ensure the continuity of the auction process. In 

FY 2009, the bureau exceeded its target of 10 percent of all primary dealers participating in a 

live auction from their respective disaster recovery sites. To further improve performance, 

Public Debt developed a new long-term goal which states that 90 percent of primary dealers will 

submit live bids from their disaster recovery sites on two separate auction dates in FY 2012. 

3B - Government Agency Investment Services ($15,419,000 from direct appropriations, and 

$2,121,000 from reimbursable programs): The Government Agency Investment Services 

(GAIS) program includes the offering of specialized investments for government entities at the 

federal, state and local levels, as well as borrowings by federal agencies. This program consists 

of three distinct components: Federal Investments, Special Purpose Securities and Federal 

Borrowings. 

The Federal Investments component includes issuing, servicing and redeeming Government 

Account Series securities for federal agencies that have specific statutory authority to invest. 

Federal agencies hold 233 trust and investment funds that total more than $4 trillion in 

investments, which is over one third of the total public debt outstanding. These special, 

nonmarketable Treasury securities include such items as the 18 trust funds in which the Secretary 

of the Treasury, designated by statute, is the managing trustee. Some of the more recognizable 

federal trust funds are the four Social Security and Medicare Funds, as well as the 

Unemployment and Highway Trust Funds. 

Special Purpose Securities include issuing, servicing and redeeming a variety of special purpose 

securities including Treasury's State and Local Government Series (SLGS) securities, which 

offer a flexible investment alternative for state and local governments to refinance their 

outstanding, tax-exempt debt. At nearly $195 billion, the SLGS program is critical for the more 

than 5,000 state and local government entities that use these securities to help comply with 

provisions of the Internal Revenue Code. 

Federal Borrowings accounts for and reports on the principal borrowings from and repayments to 

Treasury for 86 funds managed by other federal agencies, as well as the related interest due to 

Treasury. These agencies are statutorily authorized to borrow from Treasury to make loans for a 
BPD - 15 

broad range of purposes, such as education, housing, farming and small business support. The 

funds hold approximately $972 billion in loans and loan guarantees. 

Public Debt's services in the GAIS program directly help customers produce timely and accurate 

financial information contributing to the reliability and usefulness of the government-wide 

financial statements. Instant access to account information has significantly simplified 

reconciliation and audit confirmation efforts across the country and assisted SLGS purchasers in 

complying with Internal Revenue Service requirements related to the issuance of tax-exempt 

securities. 

Other Resources: 

Reimbursements totaling $2,121,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation. 

3.2.2 Government Agency Investment Services Budget and Performance Plan 

Government Agency Investment Services Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $15,445 $17,702 $18,013 $16,706 $15,419

 Reimbursable Resources $4,279 $2,130 $2,008 $1,809 $2,121

Total Resources $19,724 $19,832 $20,021 $18,515 $17,540

Budget Activity Total $19,724 $19,832 $20,021 $18,515 $17,540

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Cost Per Government Agency Investment Services Transaction 

($) (E)

64.98 41.71 82.08 86.18 33.31

Number of Government Agency Investment Services Control 

Processes Consolidated (Oe)

2.0 0.0 5.0 0.0 2.0

Percent of Respondents Selecting the Highest Rating of 

Customer Satisfaction with Government Agency Investment 

Services (%) (Oe)

N/A N/A 55.0 56.0 57.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: Public Debt established a long-term goal to reduce the number of 

systems used to support GAIS. This will streamline the diversity of technology and allow the 

bureau to consolidate and standardize internal controls over GAIS processes. The control 

environment originally consisted of 18 processes in 2006 that will be transformed into six 

standardized processes by FY 2012. The six processes include funds management, investment 

accounting, standard reporting, customer interface, enhanced reporting and account maintenance. 

Consolidating the systems that house GAIS data into a single, integrated control environment 
BPD - 16 

now provides one location for all investment activities, which will reduce operational risks, 

while standardizing system, business and data elements. In FY 2012, the eight remaining 

processes will be reduced to six standardized processes. 

The cost per GAIS transaction was projected to be $86.18 for FY 2011. For FY 2012, the 

calculation of the cost per item volumes will change to a summary level indicator that better 

presents all of Government Agency Investment Services and is based upon a five- year rolling 

average volume. This new measure is a direct result of the GAIS program recognizing the 

benefit of streamlining and standardizing common business processes for all components of the 

proposed measure. Even though Federal Funds Investments is the largest component of GAIS, 

from a "unified" program perspective, it is more meaningful to the program managers to include 

all components of GAIS into the reported cost per item calculation. The new consolidated GAIS 

cost per transaction for FY 2012 is $33.31. 

Public Debt established a goal to provide high quality customer satisfaction for GAIS. 

In FY 2010, the bureau conducted an initial customer survey to focus on program and system 

satisfaction, set a baseline, and identified opportunities for improvement in the future. This 

GAIS measurement supports an objective to provide quality customer service, transaction 

processing, and accurate and timely payments to investors. 

3C - Retail Securities Services ($116,260,000 from direct appropriations, including $8,000,000 

from user fee collections, and $17,884,000 from reimbursable programs): Public Debt’s Retail 

Securities program serves more than 50 million retail customers who have invested in 

marketable and savings securities directly with Treasury. Investors may hold these securities in 

book-entry or paper form. 

The retail program will eliminate new issues of paper savings bonds sold over-the-counter at 

financial institutions no later than December 31, 2011. By January 1, 2011, new issuance of 

paper payroll bonds will have ended. Public Debt will continue to encourage investors to move 

to TreasuryDirect as their preferred way of buying and holding savings bonds. Efforts to 

transition customers will be educational, such as financial literacy programs that target customers 

not yet accustomed to conducting financial transactions online. 

In FY 2012, the retail program will continue focusing on delivering a high-quality customer 

experience. Public Debt will streamline how it processes customer service correspondence (i.e., 

printed forms and letters) by centralizing print and mail functions and by using intelligent 

barcodes. Centralized printing and mailing of outgoing correspondence will take advantage of 

postal presort rates. At the same time, using intelligent barcodes along with existing scanning 

capabilities will create efficiencies in routing correspondence returned by customers to 

appropriate service representatives. Public Debt will also enhance its telephone access and 

interactive voice response architecture. Through these changes, Public Debt will be able to 

respond to retail securities customers more quickly and thoroughly. 
BPD - 17 

Other Resources: 

Offsetting collections totaling $8,000,000 are collected for Legacy Treasury Direct Investor 

Account maintenance fees. In addition, $17,884,000 in reimbursements are allocated to this 

program for providing administrative support to Public Debt’s franchise operation. 

3.2.3 Retail Securities Services Budget and Performance Plan 

Retail Securities Services Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $127,079 $127,909 $139,569 $140,915 $116,260

 Reimbursable Resources $9,006 $15,393 $15,554 $15,257 $17,884

Total Resources $136,085 $143,302 $155,123 $156,172 $134,144

Budget Activity Total $136,085 $143,302 $155,123 $156,172 $134,144

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Cost Per TreasuryDirect Assisted Transaction ($) (E) 8.19 8.72 8.23 7.95 6.86

Cost Per TreasuryDirect Online Transaction ($) (E) 4.34 5.21 6.12 5.46 4.16

Percentage of Retail Customer Service Transactions Completed 

within 5 Business Days (%) (Ot)

N/A 86.0 92.7 87.0 87.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: Although TreasuryDirect promotes investor self-sufficiency, there 

are times when assistance from a customer service representative is necessary. Representatives 

handle phone and email inquiries, offline authentication forms processing, conversions, changes 

in bank information and transactions requiring legal evidence. One of the performance measures 

of the retail program is the cost per TreasuryDirect assisted transaction, which is projected at 

$7.95 in FY 2011 and $6.86 in FY 2012. 

 

In the internet-accessed TreasuryDirect system, investors can set up accounts, purchase 

electronic securities, and manage their holdings, without customer assistance. Since investors 

have self-service capability, Public Debt also tracks the cost of online transactions. The cost per 

TreasuryDirect online transaction is projected at $5.46 in FY 2011 and $4.16 in FY 2012. 

The drop in the cost per transaction in FY 2012 for assisted and online transactions is a result of 

an increase in projected volumes as customers are expected to transition to TreasuryDirect from 

employer-sponsored paper savings bond payroll plans and from the Legacy Treasury Direct 

system. 
BPD - 18 

Public Debt projects to complete 87 percent of time-sensitive retail customer service transactions 

within five business days in FY 2012. Transactions include answering phone and email 

inquiries, processing payments or changes to payment instructions, and handling TreasuryDirect 

requests. The goal will be achieved by continually streamlining work processes and increasing 

the volume of electronic business transactions. 

3D - Summary Debt Accounting ($8,836,000 from direct appropriations, and $1,216,000 from 

reimbursable programs): The Summary Debt Accounting program is key to meeting 

Public Debt's responsibility to annually account for more than $13 trillion of public debt and 

nearly $400 billion in related interest expense incurred to finance the operations of the federal 

government. This program provides the overarching control structure for dozens of subordinate 

securities systems and reconciles more than $107 trillion annually of securities transactions and 

related cash flows handled by these subsystems. These cash flows represent funds received from 

the sale of securities and funds disbursed as interest and principal payments. 

The program produces daily reports on the balances and composition of the public debt, the 

Monthly Statement of the Public Debt, and the annual, audited Schedules of Federal Debt, which 

reports on the single largest liability in the annual Financial Report of the United States 

Government. For each year an audit has been conducted, Public Debt has received an 

unqualified opinion on the Schedules of Federal Debt. 

Public Debt is currently engaging in a thorough reengineering of Summary Debt Accounting 

business processes. This effort will redefine many reporting requirements, responsibilities and 

informational needs, produce more consistent processes across the board, drive improvements in 

the subsidiary reporting systems and ultimately create greater efficiency within the debt 

accounting programs at the summary and subsidiary levels. 

While the Public Debt Accounting and Reporting System currently accounts for the public debt 

of the United States, this investment is nearing the end of its useful life. In response, the bureau 

is seeking a shared-service solution to meet its current and future accounting responsibilities for 

the Summary Debt Accounting program. This approach offers many benefits including faster 

migrations of new or modified functionality and reduced operational risks. 

Other Resources: 

Reimbursements totaling $1,216,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation. 
BPD - 19 

3.2.4 Summary Debt Accounting Budget and Performance Plan 

Summary Debt Accounting Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $6,793 $7,081 $10,266 $9,574 $8,836

 Reimbursable Resources $475 $852 $1,144 $1,037 $1,216

Total Resources $7,268 $7,933 $11,410 $10,611 $10,052

Budget Activity Total $7,268 $7,933 $11,410 $10,611 $10,052

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Cost Per Summary Debt Accounting Transaction ($) (E) 9.11 8.66 11.28 15.50 14.95

Percent of Summary Debt Accounting business processes 

restructured or eliminated (%) (Oe)

N/A N/A 6.0 6.0 6.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: Public Debt tracks the cost per transaction of performing summary 

debt accounting, which includes reporting all financial activity related to the public debt of the 

United States. Issues, redemptions and interest payments on the public debt must be accounted 

for to calculate the amount of debt outstanding and interest paid. The bureau projects the cost 

per summary debt accounting transaction to be $15.50 in FY 2011 and $14.95 in FY 2012. For 

FY 2012, the calculation of the cost per item is based upon a five-year rolling average volume in 

order to limit exogenous factors impacting this measure and establish more meaningful 

reporting. The projected cost per summary debt accounting transaction is escalating over 

FY 2010 as a result of inflation, increased support charges and the development costs to redefine 

and modernize the Summary Debt Accounting environment. In FY 2012, the bureau will 

restructure or eliminate six percent of the business processes that support Summary Debt 

Accounting. 

Public Debt established a long term goal to migrate Summary Debt Accounting to a shared 

service solution by FY 2013. The measurement of this goal is the percent of Summary Debt 

Accounting business processes restructured or eliminated. 

3E - Do Not Pay Implementation ($10,000,000 from direct appropriations): In June 2010, a 

Presidential Memorandum (Enhancing Payment Accuracy Through a “Do Not Pay List”) 

established the creation of a comprehensive Do Not Pay List against which agency payments 

could be cross-checked to prevent ineligible recipients from receiving payments from the federal 

government. To make this list more beneficial, VerifyPayment.Gov has been created to serve as 

a one-stop-shop for agencies. The Bureau of the Public Debt has been given responsibility for 

maintaining and expanding VerifyPayment.Gov. Additionally, Public Debt will work with the 
BPD - 20 

Recovery Accountability and Transparency Board, to support an operations center to analyze 

fraud patterns and refer potential issues to agency management. 

3.2.5 Do Not Pay Implementation Budget and Performance Plan 

Do Not Pay Implementation Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Obligated Obligated Obligated Annualized CR 

Level

Request

 Appropriated Resources $0 $0 $0 $0 $10,000

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $0 $0 $0 $10,000

Budget Activity Total $0 $0 $0 $0 $10,000

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Performance Measures Not Yet Created N/A N/A N/A N/A N/A

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
BPD - 21 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Public Debt's employees are its greatest asset and investment in the workforce is crucial. The 

bureau is recognized throughout the local and surrounding communities as a values-based 

employer where candidates want to work and employees want to stay. According to the report, 

Best Places to Work in the Federal Government 2010, the bureau ranked 6thth out of 224 federal 

agencies subcomponents. Additionally, Public Debt has consistently improved its overall score 

in every Best Places to Work in the Federal Government survey over the last five years. 

 

As a values-based organization, Public Debt understands the benefits telework provides for 

enhancing employee morale. Telework has the potential to increase employee productivity and 

provides employees an additional method for balancing work and home life. Moreover, it has 

the added benefits of increasing the recruitment of new employees, retaining the current 

workforce and potentially cutting down on employee absences. 

To ensure essential business functions are maintained during office closures due to 

weather-related situations or other emergency events, telework will be integrated into continuity 

of operations plans as an alternative way of conducting business. Several offices are piloting 

telework on a trial basis to ensure functionality of systems in the event of a real-world disaster. 

Public Debt moved to a performance-based management system for non-supervisory, nonbargaining unit employees at the end of December 2008. The new appraisal system is aligned 

with Public Debt's strategic and annual performance plans. In December 2009, the bureau 

successfully completed the bargaining process to move the remaining non-supervisory 

employees to the same system. The date to transition bargaining unit employees is pending. 

The use of statistical analysis continues to be a crucial part of workforce planning and 

deployment. Through FY 2015, 37 percent of Public Debt's permanent employees will be 

eligible for optional retirement. Thanks to the bureau's standing as an employer of choice and 

the large pool of highly qualified candidates in the local community, Public Debt can address the 

anticipated retirements successfully. 

A closer analysis of the retirement data reveals 62 percent of Senior Executive Services (SES) 

level employee will be eligible to retire during the same period. Public Debt's SES Candidate 

Development Program concluded in March 2010, at which time, candidates applied for SES 

certification. The candidates, once certified, will be eligible for noncompetitive appointments in 

the Senior Executive Service. By planning ahead, the bureau will be able to counteract the 

potential impact of future SES retirements. 
BPD - 22 

4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Information Technology Investments

Major IT Investments / Funding Source Budget Activity

Restated 2/ 

FY 2009 

Enacted

Restated 2/ 

FY 2010 

Enacted

FY 2011 

Annualized CR 

Level

FY 2012 

Request

Government Agency Investment Services Government Agency Investment Services $5,493 $3,759 -31.6% $4,269 13.6% $4,338 15.4%

Summary Debt Accounting Services Summary Debt Accounting $2,030 $2,091 3.0% $5,537 164.8% 3/ $5,721 173.6%

Wholesale Securities Services Wholesale Securities Services $31,725 $34,664 9.3% $29,344 -15.3% $29,152 -15.9%

 Subtotal: Administering the Public Debt $11,562 $12,252 6.0% $6,520 -46.8% 4/ $5,022 -59.0% 4/

 Subtotal: Reimbursements to Federal Reserve Banks $20,163 $22,412 11.2% $22,824 1.8% $24,130 7.7%

Retail Securities Services Retail Securities Services $18,698 $19,108 2.2% $57,518 201.0% $59,082 209.2%

 Subtotal: Administering the Public Debt $18,698 $19,108 2.2% $24,139 26.3% $24,236 26.8%

 Subtotal: Reimbursements to Federal Reserve Banks $0 $0 0.0% $33,379 5/ 100.0% $34,846 5/ 100.0%

Subtotal, Major IT Investments $57,946 $59,622 2.9% $96,668 62.1% $98,293 64.9%

Non-Major IT Investments $1,784 $1,840 3.1% $1,945 5.7% $2,094 13.8%

Infrastructure Investments $0 $0 0.0% $0 0.0% $0 0.0%

Enterprise Architecture $0 $0 0.0% $0 0.0% $0 0.0%

Total IT Investments $59,730 $61,462 2.9% $98,613 60.4% $100,387 63.3%

Prior Year Submissions

Government Agency Investment Services System (GAISS) Renamed. . . 

Public Debt Accounting and Reporting System (PARS) Renamed. . . 

SaBRe Consolidated to . . . 

Treasury Automated Auction Processing System (TAAPS) Renamed. . . 

TreasuryDirect Consolidated to . . . 

Non-Majors IT Investments (Admin Support, Transaction 

Support, Program & Mgmt Support) Consolidated to . . . 

Retail Securities Services and Bureau-wide Services

Infrastructure Investments Moved to. . . Treasury Franchise Fund Budget Submission

Enterprise Architecture Moved to. . . Treasury Franchise Fund Budget Submission

2/ Prior years restated for comparison to FY 2012.

Summary Debt Accounting Services

Retail Securities Services

Wholesale Securities Services

Retail Securities Services

3/ SDAS investment increase represents development work to redefine and modernize the debt accounting environment to ensure the collection, verification, and dissemination of all debt accounting information is accurate, appropriate, 

flexible, and standardized. While increasing governance, the project will maintain SDA's ability to account for and report on the public debt and related interest costs, and to establish and maintain reporting requirements and accounting 

procedures and controls.

4/ WSS investment reduction does not result in WSS program savings. Program operations costs were included as investment costs in prior years. In FY 2011 and 2012, program operations costs are removed from the investment baseline, but 

are still incurred as program operations costs.

5/ Represents share of reimbursements to Federal Reserve Banks for IT systems and services performed. Formerly recognized as program costs, starting in FY 2011, they are appropriately captured as IT costs.

Additional Note: The Oracle e-Business Suite is captured in the Franchise Financial and Administrative Services (FFAS) investment and is included in the Treasury Franchise Fund Budget Submission.

1/ Crosswalk of Portfolio Changes:

2012 Submission

Government Agency Investment Services

% Change 

from FY09 to 

FY10

% Change 

from FY10 to 

FY11

% Change 

from FY10 to 

FY12
BPD - 23 

4B – Information Technology Strategy 

 

Information Technology (IT) Resource Planning and Strategic Alignment 

To ensure the success of Public Debt's mission at the lowest cost to the taxpayer, the bureau 

continues to strengthen its strategic planning processes to make the best possible use of 

resources, including IT. Public Debt created its Enterprise Architecture Group to promote 

strategic alignment across the Public Debt enterprise, optimize business processes by promoting 

an appropriate diversity and reuse of technology solutions and expose strategic planners to 

information that enables informed decisions. 

With this budget submission, Public Debt unveiled a completely restructured IT investment 

portfolio, better aligning budget activities and programs. By aligning with budget activities and 

Enterprise Architecture, the Capital Planning and Investment Control and budget process 

integration provided a structured approach for long-range strategic planning and efficient 

management of the IT portfolio and its resources. Managers will have complete visibility into 

and greater control over IT spending within their respective programs. 

Modern and Secure Technical Environment 

The IT strategy embraces a modern and secure technical environment to support Public Debt’s 

programs, workforce, and customers. Public Debt's software engineering framework will 

leverage open source technologies. Public Debt will expand its virtual infrastructure and will 

leverage virtual technologies in the delivery of end user services. Furthermore, social media 

technologies and data services (for both structured and unstructured data) will be available for 

use in a secure manner as a productive means of business collaboration. 

Data Centers Consolidation 

In late 2009, the Office of the Fiscal Assistant Secretary asked the Commissioners of the 

Financial Management Service (FMS) and the Bureau of the Public Debt to assess where 

improvements could be made in the efficiency and effectiveness of IT infrastructures. As a 

result, FMS in partnership with Public Debt initiated a project to consolidate the data centers 

across the two bureaus to help achieve the Secretary’s objective of increasing the utilization and 

efficiency of combined IT assets, while reducing technology costs. This effort includes 

consolidation of five data centers into two shared by both bureaus with one acting as a back-up 

to the other, creation of a single corporate governing body, in-sourcing of select contractor 

functions, consolidation of application development methodologies and associated infrastructure, 

and importantly results in a more “green” approach to delivery of IT services. In FY 2012, 

Public Debt expects total net cost savings of $470,000. 

Internal Revenue Service

Mission Statement

Provide America’s taxpayers top-quality service by helping them understand and meet 

their tax responsibilities and enforce the law with integrity and fairness to all.

Program Summary by Appropriations Account 

Dollars in Thousands 

FY 2011

Appropriations FY 2010

Internal Revenue Service Enacted1 Request $ Change % 

Taxpayer Services $2,278,830 $2,278,830 $2,345,133 $66,303 2.91%

Enforcement 5,504,000 5,504,000 5,966,619 462,619 8.41%

Operations Support 4,083,884 4,083,884 4,620,526 536,642 13.14%

Business Systems Modernization 263,897 263,897 333,600 69,703 26.41%

Health Insurance Tax Credit Administration 15,512 15,512 18,029 2,517 16.23%

Total Appropriated Resources $12,146,123 $12,146,123 $13,283,907 $1,137,784 9.37%

Offsetting Collections - Reimbursable $137,758 $137,279 $138,272 993 0.72%

Mandatory Appropriation - User Fees $175,529 $204,428 $204,428

Total Program Operating Level $12,459,410 $12,487,830 $13,626,607 $1,138,777 9.12%

Direct FTE 94,766 94,766 99,878 5,112 5.39%

Reimbursable FTE 659 659 659

User Fees FTE 93

Total FTE 95,518 95,425 100,537 5,112 5.36%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Annualized 

CR Level

FY 2012

FY 2012 Priorities

The IRS collects the revenue that funds the government and administers the nation’s tax 

laws. In FY 2010, the IRS collected $2.345 trillion in taxes (gross receipts before tax 

refunds), 93 percent of federal government receipts. To protect the flow of revenue to the 

government, the IRS pursues a robust service and enforcement agenda. The service 

agenda supports and protects the trillions in revenue that come into the Treasury each 

year voluntarily from taxpayers. The enforcement agenda vigorously pursues those who 

evade their responsibility to pay the taxes they owe. The IRS collected $57.6 billion in 

revenue in FY 2010, $8.7 billion, or 18 percent, more than FY 2009. This increase in 

enforcement revenue demonstrates that the substantial investment in the IRS over the past 

two years is producing a significant return on investment. 

In the FY 2012 request, the IRS seeks additional funding for:

 Taxpayer Service – Improve taxpayer service and the IRS.gov website;

 Enforcement – Implement legislative mandates, handle new information 

reporting requirements, increase compliance efforts to address offshore tax 

evasion, focus on corporate and high-wealth returns, increase examination and 

collection coverage, and enforce tax return preparer compliance;
 Infrastructure – Enhance employee security, develop disaster recovery systems

capability, and develop the information technology, infrastructure, and systems to 

implement the various ACA provisions; and

 Business Systems Modernization – Continue migration of applications to 

CADE 2 and the expansion of Modernized e-File.
IRS-i

Table of Contents

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

1A – Description of Bureau Vision and Priorities ..................................................... 1

1B – Program History and Future Outlook ............................................................... 7

Section 2 – Budget Adjustments – Internal Revenue Service..................................... 15

Program Summary by Appropriations Account and Budget Activity .................. 15

2.1 – Budget Adjustments Table................................................................................ 16

2A – Budget Increases and Decreases Description .................................................. 17

Efficiencies and Savings ............................................................................................. 18

Non-Recur Savings................................................................................................ 18

Increase e-File Savings......................................................................................... 19

Reduce IT Infrastructure....................................................................................... 19

Reduce Contracts.................................................................................................. 19

Reduce Administrative Expenses .......................................................................... 19

Eliminate Lockbox Fees........................................................................................ 19

Reduce Certain Mailings ...................................................................................... 20

Reduce Training, Travel and Programs ............................................................... 20

Program Reinvestment............................................................................................... 20

Consolidate Submission Processing Site (Atlanta)............................................... 20

Program Increases...................................................................................................... 21

Improve Taxpayer Service .................................................................................... 21

Expand Online Options through IRS.gov Improvements...................................... 23

Increase International Service and Enforcement ................................................. 26

Increase Collection Coverage............................................................................... 35

Implement Merchant Card and Basis Reporting .................................................. 38

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 41

Ensure Accurate Delivery of Tax Credits............................................................. 46

Administer New Statutory Reporting Requirements............................................. 50

Leverage Return Preparer Program to Reduce Noncompliance.......................... 52

Address Appeals Workload Growth...................................................................... 54

Implement Uncertain Tax Position Reporting Requirements............................... 56

Enhance Security and Disaster Recovery Systems Capability ............................. 58

Update Integrated Financial System (IFS)........................................................... 61

Leveraging Data to Improve Compliance............................................................. 63

Enhance Physical Security for Federal Employees.............................................. 64

Implement Individual Coverage Requirement and Employer Responsibility 

Payments............................................................................................................... 66

Continue Migration from Aging Tax Administration System ............................... 67

2.2 – Operating Levels Table ..................................................................................... 74

2.3 – Appropriation Detail Table............................................................................... 75

2B – Appropriation Language and Explanation of Changes.................................. 76

2C – Legislative Proposals.......................................................................................... 80
IRS-ii

Section 3 – Budget and Performance Plan ................................................................... 82

Taxpayer Services....................................................................................................... 82

2.1 – Budget Adjustments Table............................................................................... 83

2.2 – Operating Levels Table.................................................................................... 84

2.3 – Appropriation Detail Table .............................................................................. 85

3A – Pre-Filing Taxpayer Assistance and Education ............................................... 85

3.2.1 – Budget and Performance Plan....................................................................... 86

3B – Filing and Account Services ............................................................................ 88

3.2.2 – Budget and Performance Plan....................................................................... 90

Enforcement ................................................................................................................ 92

2.1 – Budget Adjustments Table............................................................................... 93

2.2 – Operating Levels Table.................................................................................... 94

2.3 – Appropriation Detail Table .............................................................................. 95

3C – Investigations ................................................................................................... 95

3.2.3 – Budget and Performance Plan....................................................................... 96

3D – Exam and Collections ...................................................................................... 97

3.2.4 – Budget and Performance Plan..................................................................... 100

3E – Regulatory ...................................................................................................... 103

3.2.5 – Budget and Performance Plan..................................................................... 104

Operations Support .................................................................................................. 106

2.1 – Budget Adjustments Table............................................................................. 107

2.2 – Operating Levels Table.................................................................................. 108

2.3 – Appropriation Detail Table ............................................................................ 109

3F – Infrastructure................................................................................................... 109

3.2.6 – Budget and Performance Plan..................................................................... 110

3G – Shared Services and Support.......................................................................... 111

3.2.7 – Budget and Performance Plan..................................................................... 113

3H – Information Services...................................................................................... 115

3.2.8 – Budget and Performance Plan..................................................................... 118

Business Systems Modernization............................................................................. 120

2.1 – Budget Adjustments Table............................................................................. 121

2.2 – Operating Levels Table.................................................................................. 122

2.3 – Appropriation Detail Table ............................................................................ 123

3I – Business Systems Modernization .................................................................... 123

3.2.9 – Budget and Performance Plan..................................................................... 128

Health Insurance Tax Credit Administration........................................................ 130

2.1 – Budget Adjustments Table............................................................................. 131

2.2 – Operating Levels Table.................................................................................. 132

2.3 – Appropriation Detail Table ............................................................................ 133

3J – Health Insurance Tax Credit Administration .................................................. 133

3.2.10 – Budget and Performance Plan................................................................... 133
IRS-iii

Section 4 – Supporting Materials................................................................................ 135

4A – Human Capital Strategy.................................................................................. 135

4B – Information Technology (IT) Strategy........................................................... 145

4C – Government Wide Initiatives.......................................................................... 150

4D – Summary of FY 2010 Savings Realized ......................................................... 152

4.1 – Summary of IT Resources Table .................................................................... 154

4.3 – IRS Performance Measure Table ................................................................... 156

4.4 – Cost of IRS Operating Activities.................................................................... 158

4.5 – Summary of IRS FY 2012 Budget Request ................................................... 159
IRS-1

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The IRS Strategic Plan 2009-2013 guides program and budget decisions and supports the 

Department of the Treasury Strategic Plan and High Priority Performance Goals. The 

IRS Strategic Plan recognizes the increasing complexity of tax laws, changing business 

models, expanding use of electronic data and related security risks, accelerating growth in 

international tax activities, and growing human capital challenges. 

The IRS Strategic Plan goals and objectives are:

To improve service to and make voluntary compliance easier, the IRS must:

 Incorporate taxpayer perspectives to improve all service interactions;

 Expedite and improve issue resolution across all interactions with taxpayers, 

making it easier to navigate the IRS;

 Provide taxpayers with targeted, timely guidance and outreach; and

 Strengthen partnerships with tax practitioners, tax preparers, and other third 

parties to ensure effective tax administration.

To enforce the law to ensure everyone meets their obligation to pay taxes, the IRS must:

 Enforce the law proactively in a timely manner while respecting taxpayer rights 

and minimizing taxpayer burden;

 Expand enforcement approaches and tools;

 Meet the challenges of international tax administration;

 Allocate compliance resources using a data-driven approach to target existing and 

emerging high-risk areas;

 Continue focused oversight of the tax-exempt sector; and

IRS Strategic Goals

Improve Service to Make Voluntary Compliance Easier

Enforce the Law to Ensure Everyone Meets Their Obligation to Pay Taxes
IRS-2

 Ensure that all tax practitioners, tax preparers, and other third parties in the tax 

system adhere to professional standards and follow the law.

To achieve the service and enforcement goals, the IRS must:

 Make the IRS the best place to work in government;

 Build and deploy advanced information technology systems, processes, and tools 

to improve IRS efficiency and productivity; 

 Use data and research across the organization to make informed decisions and to 

allocate resources; and 

 Ensure the privacy and security of data and the safety and security of employees. 

Treasury High Priority Performance Goals

The IRS budget request includes resources to achieve the following Treasury High 

Priority Performance Goals. 

Increase voluntary tax compliance

 Make progress against the Tax Gap through improved service and enhanced 

enforcement of the tax laws:

o Achieve 4.5 million document matching closures in FY 2012 (where IRS 

information does not match taxpayer reported information); and

o Achieve 80 percent of individual taxpayers receiving refunds on a 5-day 

cycle in the new Customer Account Engine database in FY 2012.

 Assist Americans in voluntarily meeting their tax obligations:

o Achieve individual income tax filers’ American Customer Satisfaction 

Index score of 70 percent; and

o Improve telephone level of service to 80 percent by the end of FY 2012.

Significantly increase the number of paperless transactions with the public

 Achieve individual e-File rate of 76 percent and report performance.
IRS-3

FY 2012 Budget Request

The IRS FY 2012 President’s Budget request is $13,283.9 million, $1,137.8 million,

9.37 percent, more than the FY 2010 enacted level. 

Appropriation Account ($ in Millions)

Taxpayer Services $2,345.1

Enforcement 5,966.6

Operations Support 4,620.6

Business Systems Modernization 333.6

Health Insurance Tax Credit Administration 18.0

Total Appropriated Resources $13,283.9

The $1,137.8 million increase consists of:

 +$299.0 million for changes to the base:

o +$401.7 million adjustment to reach the FY 2011 President’s policy level; 

o +$85.7 million to fund the non-pay inflation adjustment and retirement 

contribution;

o -$189.9 million for efficiency savings and non-recur activities; and

o +$1.5 million for a submission processing consolidation reinvestment.

 +$838.8 million for program changes:

o +$114.3 million to improve taxpayer service and the IRS.gov website;

o +$605.7 million to implement legislative mandates, handle new 

information reporting requirements; increase compliance efforts to address 

offshore tax evasion, focus on corporate and high-wealth returns, increase 

examination and collection coverage, enforce tax return preparer 

compliance, and address workload growth in Appeals and Counsel; and

o +$118.8 million to enhance employee security, develop disaster recovery 

systems capability, and develop the information technology, infrastructure, 

and systems to implement the various Affordable Care Act (ACA)

provisions.

Reducing the Tax Gap

Recent investments in IRS enforcement programs have yielded significant increases in 

enforcement revenue. Enforcement revenue was $57.6 billion in FY 2010 for a total 

IRS-wide return on investment (ROI) of 4.7 to 1. The return on investment estimate does 

not include the revenue effect of the deterrence value of these investments and other IRS

enforcement programs, which is conservatively estimated to be at least three times the 

direct revenue impact.
IRS-4

TAX GAP MAP for Tax Year 2001 (in $ Billions)

* IRS will continue to collect late payments 

for TY01 for years to come. This category 

includes tax paid late by taxpayers 

without IRS enforcement action. For 

comparison, $24.3B of tax was collected 

solely through enforcement in FY2001.

† Updated using Census tabulations

# No estimates available

Actual Amounts 

Reasonable Estimates

Weaker Estimates

Certainty of the Estimates

Estimates in Bold Boxes 

Have Been Updated 

Based on Detailed TY01 

NRP Results

Nonfiling †

$27

Individual

Income Tax †

$25

Corporation

Income Tax

#

Employment

Tax

#

Excise

Tax

#

Estate

Tax

$2

Underpayment

$33.3

Individual

Income Tax

$23.4

Corporation

Income Tax

$2.3

Employment

Tax

$5.0

Estate

Tax

$2.1

Excise

Tax

$0.5

Tax Paid Voluntarily & Timely

$1,767

(Voluntary Compliance Rate: VCR = 83.7%)

Gross Tax Gap: $345

(Noncompliance Rate: NCR = 16.3%)

Total Tax

Liability

$2,112

FICA

$14

Unemployment

Tax

$1 

Individual

Income Tax

$197

Non-Business

Income

$30.6

Business

Income

$65.3 

Corporation

Income Tax

$30

Estate

Tax

$4

Excise

Tax

#

Business

Income

$109

Large 

Corporations 

(Over $10M)

$25

Self-Employment

Tax

$39

Non-Business

Income

$56

Small 

Corporations

(Under $10M)

$5

Credits

$17

Adjustments,

Deductions,

Exemptions

$15

Underreporting

$285

Employment

Tax

$54

Enforced

& Other Late 

Payments

$55 *

Net Tax Gap

(Tax Not Collected)

$290

TAX GAP MAP for Tax Year 2001 (in $ Billions)

* IRS will continue to collect late payments 

for TY01 for years to come. This category 

includes tax paid late by taxpayers 

without IRS enforcement action. For 

comparison, $24.3B of tax was collected 

solely through enforcement in FY2001.

† Updated using Census tabulations

# No estimates available

Actual Amounts 

Reasonable Estimates

Weaker Estimates

Certainty of the Estimates

* IRS will continue to collect late payments 

for TY01 for years to come. This category 

includes tax paid late by taxpayers 

without IRS enforcement action. For 

comparison, $24.3B of tax was collected 

solely through enforcement in FY2001.

† Updated using Census tabulations

# No estimates available

Actual Amounts 

Reasonable Estimates

Weaker Estimates

Certainty of the Estimates

Estimates in Bold Boxes 

Have Been Updated 

Based on Detailed TY01 

NRP Results

Nonfiling †

$27

Individual

Income Tax †

$25

Corporation

Income Tax

#

Employment

Tax

#

Excise

Tax

#

Estate

Tax

$2

Nonfiling †

$27

Individual

Income Tax †

$25

Corporation

Income Tax

#

Employment

Tax

#

Excise

Tax

#

Estate

Tax

$2

Underpayment

$33.3

Individual

Income Tax

$23.4

Corporation

Income Tax

$2.3

Employment

Tax

$5.0

Estate

Tax

$2.1

Excise

Tax

$0.5

Underpayment

$33.3

Individual

Income Tax

$23.4

Corporation

Income Tax

$2.3

Employment

Tax

$5.0

Estate

Tax

$2.1

Excise

Tax

$0.5

Tax Paid Voluntarily & Timely

$1,767

(Voluntary Compliance Rate: VCR = 83.7%)

Gross Tax Gap: $345

(Noncompliance Rate: NCR = 16.3%)

Total Tax

Liability

$2,112

FICA

$14

Unemployment

Tax

$1 

Individual

Income Tax

$197

Non-Business

Income

$30.6

Business

Income

$65.3 

Corporation

Income Tax

$30

Estate

Tax

$4

Excise

Tax

#

Business

Income

$109

Large 

Corporations 

(Over $10M)

$25

Self-Employment

Tax

$39

Non-Business

Income

$56

Small 

Corporations

(Under $10M)

$5

Credits

$17

Adjustments,

Deductions,

Exemptions

$15

Underreporting

$285

Employment

Tax

$54

FICA

$14

Unemployment

Tax

$1 

Individual

Income Tax

$197

Non-Business

Income

$30.6

Business

Income

$65.3 

Corporation

Income Tax

$30

Estate

Tax

$4

Excise

Tax

#

Business

Income

$109

Large 

Corporations 

(Over $10M)

$25

Self-Employment

Tax

$39

Non-Business

Income

$56

Small 

Corporations

(Under $10M)

$5

Credits

$17

Adjustments,

Deductions,

Exemptions

$15

Underreporting

$285

Employment

Tax

$54

Enforced

& Other Late 

Payments

$55 *

Net Tax Gap

(Tax Not Collected)

$290

Enforced

& Other Late 

Payments

$55 *

Net Tax Gap

(Tax Not Collected)

$290

Enforced

& Other Late 

Payments

$55 *

Net Tax Gap

(Tax Not Collected)

$290

In 2006, the IRS released updated results of its first study in two decades of the 

difference between taxes owed and taxes actually paid on a timely basis – the ―tax gap.‖ 

The IRS estimated that taxpayers initially underpaid by $345 billion in 2001 (see Tax 

Gap Map for Tax Year 2001, below). This equates to a voluntary compliance rate of 

almost 84 percent. Late payments and IRS enforcement action reduced this to a net tax 

gap of $290 billion. 

As a result of an increase in funding included in the IRS FY 2009 budget, the Department 

of the Treasury and the IRS have initiated intensive efforts to update the estimate of the 

tax gap on an ongoing basis, which will permit more regular and effective assessments. 

Starting in 2011, ongoing updates of the tax gap estimate will form the basis for assessing 

progress towards that goal on a regular basis.

The three components of the tax gap are:

 Underreporting – Not reporting one’s full tax liability on a timely-filed return;

 Nonfiling – Not filing required returns on time; and

 Underpayment – Not timely paying the full amount of tax reported on a timely 

return.
IRS-5

Underreporting tax liability ($285 billion) comprises 

82 percent of the gross tax gap ($345 billion). The 

remainder is almost evenly divided between 

nonfiling ($27 billion, 8 percent) and underpaying 

($33 billion, 10 percent). The IRS remains 

committed to finding ways to increase compliance 

and reduce the tax gap, while minimizing the burden 

on the vast majority of taxpayers who pay their taxes 

accurately and on time.

Taxpayer Service and Enforcement Programs Complement Each Other

The IRS serves individuals, businesses, non-profit organizations, and processed more 

than 230 million tax returns in 2010. The system of voluntary tax compliance requires 

the IRS to excel in taxpayer service for those who are trying to meet their obligations 

under the law and provide a robust enforcement program for those who shirk their 

responsibilities to their fellow citizens. Most taxpayers comply with the law by filing 

returns and paying their taxes on time, but some do not comply because they do not 

understand their obligations under the complex tax laws. Noncompliance can stem from 

a wide range of causes, including lack of knowledge, confusion, poor recordkeeping, 

differing legal interpretations, unexpected personal emergencies, and temporary 

cash-flow problems. 

Taxpayer Service

Providing quality taxpayer service is especially important to help taxpayers avoid making 

unintentional errors. Assisting taxpayers with their tax questions before they file their 

returns prevents inadvertent noncompliance and reduces burdensome post-filing notices 

and other correspondence from the IRS. Accordingly, the IRS provides year-round 

assistance to millions of taxpayers through many sources, including outreach and 

education programs, issuance of tax forms and publications, rulings and regulations, 

toll-free call centers, IRS.gov, Taxpayer Assistance Centers (TAC), Volunteer Income 

Tax Assistance (VITA) sites, and Tax Counseling for the Elderly (TCE) sites. Many of 

these sites provide information in Spanish as well as in English.

Helping taxpayers understand their obligations under the tax law is critical to improving 

compliance and addressing the tax gap. To this end, the IRS remains committed to a 

balanced program of assisting taxpayers to understand the tax law and remit the proper 

amount of tax. The IRS remains committed to improving voluntary compliance and 

reducing the tax gap through both taxpayer service and enforcement programs.

Enforcement

Vigorous enforcement encourages voluntary compliance for those taxpayers who seek to 

avoid meeting their tax obligations under the law, further increasing revenue. Increased 

resources for IRS compliance programs yield direct, measurable results through high 

return on investment activities. As shown in the table below, the proposed IRS FY 2012 

Underreporting

82%

Underpayment

10%

Nonfiling

8%
IRS-6

enforcement initiatives will generate $1,332.1 million annually, an ROI of 6.4 to 1, in 

additional annual enforcement revenue once the new hires reach full potential in 

FY 2014. 

Return on Investment for FY 2012 Enforcement Initiatives

Dollars in Millions

FY 2012 Enforcement Investment1 Cost Revenue ROI Cost Revenue ROI

All Enforcement Initiatives $339.3 $646.2 1.9 $296.4 $1,332.1 4.5

Direct Revenue Producing Program Integrity Initiatives $243.8 $646.2 2.7 $207.8 $1,332.1 6.4

Increase International Service and Enforcement 72.6 234.0 3.2 57.1 467.1 8.2

Increase Collection Coverage 52.0 177.3 3.4 45.2 398.3 8.8

Implement Merchant Card and Basis Reporting 35.8 72.4 2.0 30.8 185.7 6.0

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 29.8 42.7 1.4 27.3 80.8 3.0

Ensure Accurate Delivery of Tax Credits 51.0 110.2 2.2 45.0 183.3 4.1

Administer New Statutory Reporting Requirements 2.6 9.6 3.7 2.4 16.9 7.0

Other Enforcement Initiatives $95.5 $0.0 0.0 $88.6 $0.0 0.0

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 24.5 0.0 0.0 23.2 0.0 0.0

Ensure Accurate Delivery of Tax Credits 33.6 0.0 0.0 33.5 0.0 0.0

Administer New Statutory Reporting Requirements 7.6 0.0 0.0 7.5 0.0 0.0

Leverage Return Preparer Program to Reduce Noncompliance 16.6 0.0 0.0 12.6 0.0 0.0

Address Appeals Workload Growth 9.1 0.0 0.0 7.9 0.0 0.0

Implement Uncertain Tax Position Reporting Requirements 4.1 0.0 0.0 3.9 0.0 0.0

First Year (FY 2012) Full Performance (FY 2014)

1For the purpose of ROI calculation, capital IT expenses related to the IRS implementation of ACA have been excluded.

The Affordable Care Act (ACA): The FY 2012 request includes funding for ACA 

(Public Law 111-148) to administer a premium credit to subsidize the cost of health 

insurance for Americans who do not have access to affordable coverage; a small business 

tax credit to encourage employers to provide health insurance coverage for their 

employees; new information reporting and sharing requirements; an excise tax on tanning 

services; a new aggregate annual fee on businesses engaged in manufacturing and 

importing branded prescription drugs sold to specified government programs; new 

reporting requirements for tax-exempt hospitals; and an individual coverage requirement 

for employees who can afford health insurance, but fail to obtain minimum essential 

coverage. These and other provisions of the ACA will require additional resources to 

build new IT systems; modify existing tax processing systems; provide taxpayer outreach 

and assistance services; make enhancements to notices, collections, and case management 

systems to address and resolve taxpayer issues timely and accurately; and conduct 

focused examinations to encourage compliance. While these activities are spread across 

the three primary IRS appropriations, the vast majority of the funding request is in the 

Operations Support account that funds information technology and infrastructure.

Further information is provided in Section 2A, Budget Increases and Decreases 

Description.
IRS-7

1B – Program History and Future Outlook 

The IRS administers America’s tax laws and collects 93 percent of the revenues that fund 

most government operations and public services. Performance in FY 2010 confirms that 

the IRS is making significant progress in achieving its goals of providing service to 

taxpayers and enforcing the tax laws in a balanced manner while continuing to make 

steady gains in better serving America’s taxpayers.

Taxpayer Service 

The IRS website has become the preferred source of information for millions of 

taxpayers to get answers to their tax questions, to questions about economic recovery 

legislation, and about how to prepare and file a federal tax return accurately and on time. 

IRS.gov/Español offers many of the same services and information in Spanish. 

To improve service to taxpayers during the 2010 filing season, the IRS enhanced IRS.gov 

by providing a rotating spotlight feature on the front page. The spotlight, which changes 

every few seconds, highlights important taxpayer information by identifying how tax law 

changes such as the Making Work Pay and First-Time Homebuyer Credit can benefit 

different types of taxpayers; and how to access on-line applications such as Where’s My 

Refund?, an online tool for taxpayers to check on the status of their refund, and What If?,

a list of questions and answers to assist taxpayers who are having difficult times

financially handle various scenarios related to payment of taxes and other financial 

problems. In 2010, there were 304.8 million visits to the website and more than 

66.9 million taxpayers accessed the popular application, Where’s My Refund?, to find out 

the status and anticipated receipt of their tax refund. Taxpayers also can use electronic 

tools such as the EITC Assistant to determine if they qualify for the refundable tax credit.

The IRS also is committed to continuing efforts to redesign IRS correspondence to improve 

clarity, accuracy, and effectiveness. In FY 2010, the IRS:

 Completed the redesign of 115 notices (25 in Spanish) to provide clear and simple 

explanations of the notice purpose and required taxpayer actions;

 Redesigned the area of IRS.gov that provides information on locating specific 

notices and an explanation of the redesign process; and

 Released the first group of nine new notices. These notices account for 

approximately two million pieces of correspondence with individuals, businesses 

and exempt organizations.

The IRS completed a successful 2010 filing season, rising to challenges posed by the 

implementation of provisions in the American Reinvestment and Recovery Act of 2009 

(Recovery Act), the Worker, Homeownership, and Business Assistance Act of 2009 

(WHBAA), and increased telephone demand for Economic Recovery Payment inquiries. 

The IRS received more than 141.9 million individual returns, of which 69.3 percent were 

e-filed. The number of taxpayers e-filing their returns from a home computer continued 
IRS-8

to grow. More than 34.6 million taxpayers prepared their own e-file return, a 7.5 percent 

increase over 2009. 

The IRS issued 109.5 million refunds to individual taxpayers totaling $366 billion. The 

average dollar refund was $3,048 compared to $2,682 in 2009, an increase of almost 

14 percent. IRS also direct-deposited more than 73 million refunds compared to 

72.4 million in 2009. 

Beginning in the 2010 filing season, taxpayers could purchase up to $5,000 of Series I 

U.S. Savings Bonds using their federal tax refund. More than 22,300 taxpayers took 

advantage of this opportunity, requesting more than 98,000 bonds totaling approximately 

$11.1 million.

In FY 2010, the IRS expanded outreach and educational services to improve information, 

news, and taxpayer interaction through social media networks (Facebook, Twitter, 

YouTube, etc.). For the first time, the IRS produced a number of podcasts that were 

available on IRS.gov and iTunes. In addition, the IRS created more than a dozen 

YouTube videos on a variety of subjects including the Education Tax Credit, Making 

Work Pay, and the New Homebuyer Credit. These videos attracted more than 

963,800 upload views and were available in English, American Sign Language, and 

Spanish.

As always, providing high-quality, toll-free telephone service is important in helping 

taxpayers navigate the complex tax code. IRS telephone assistors answered 36.7 million 

calls, 6.3 percent fewer than in 2009 while at the same time the IRS received 35.1 million

automated calls, 21 percent more than in 2009, reflecting the growing taxpayer demand 

for self-service options. Telephone level of service (LOS) increased to 74 percent from 

the FY 2009 LOS of 70 percent. This reflects the success rate of taxpayers who call the 

IRS for live telephone assistance on the 1-800 help lines. In 2010, the IRS added an 

estimated wait time feature so taxpayers could make informed choices about whether to 

wait for a live assistor or use another service channel (i.e., self-assisted automated 

telephone services or IRS.gov) to answer their questions. Accuracy rates for both 

customer tax law and account questions remain above 92 percent.

The IRS also provides in-person service at its Taxpayer Assistance Centers (TACs), for 

taxpayers to resolve tax issues and receive help to prepare their tax returns. Approximately 

6.4 million taxpayers visited a TAC, three percent more than in 2009. Walk-in service 

remains popular among elderly taxpayers, those with limited English and computer 

proficiency, and taxpayers without internet access. 

During the 2010 filing season, the IRS expanded hours of service at 16 geographically 

dispersed TACs, and seven were open every Saturday. In 27 locations, low-income 

taxpayers took advantage of IRS help in the preparation of both their state and federal tax 

returns. The IRS held Open House events at 200 TACs and partner sites nationwide to 

help taxpayers prepare their returns and resolve their tax issues. As a result, more than 

31,400 taxpayers were served and over 7,700 returns were prepared at these events. 
IRS-9

37.6

43.1

47.3

48.7

59.2

56.4

48.9

 57.6

9.8 10.2 10.2 10.6 10.6 10.9

11.5

12.1

9.6 9.7 9.5 9.5 9.3 9.3 9.6

10.4

0

10

20

30

40

50

60 Revenue (in Billions)

0

5

10

15

20

25

30 Appropriations (in Billions)

TOTAL Enforcement Revenue Appropriated Adjusted for Inflation

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

5.60 5.20 4.20 4.70

5.54

ROI 3.80 4.20 4.60 4.60

Enforcement

In FY 2010, revenue from all enforcement sources reached $57.6 billion, 18 percent more 

than in FY 2009. This increase in enforcement revenue demonstrates that the investment 

in the IRS over the past two years is producing a significant return. 

In FY 2010 the IRS expanded its enforcement presence in the international field, 

continued to pursue high-wealth/high-income noncompliant taxpayers, and audited more 

charities and other tax-exempt organizations. As a result, the IRS made improvements 

compared with FY 2009 in these key areas: 

 Examined more than 1.58 million individual returns, an increase of 11 percent, 

reaching the highest rate in the past decade;

 Increased high-income/high-wealth audits on taxpayers with income greater 

than $200,000 by 5.5 percent and audits for those with income greater than

$1 million by more than 8 percent;

 Increased automated underreporter contact closures by 19.8 percent, surpassing 

the four million mark for the first time, with more than 4.3 million; 

 Increased collection case closures by 6.3 percent and criminal investigations by 

12.4 percent;
IRS-10

 Increased large corporate audits by 8.1 percent, a significant achievement given 

the size (assets greater than $10 million) and complexity of these corporate 

entities and audits of foreign corporations by almost 48 percent; and

 Increased tax exempt and government entities compliance contacts by roughly 

20 percent.

As part of an overall strategy to improve offshore compliance, in FY 2010 the IRS 

continued to take aggressive steps to track tax evaders that hide their wealth by engaging 

in offshore tax evasion schemes. The IRS realigned and renamed its Large and Mid-Size 

Business Division to Large Business and International as part of its continuing strategy to 

improve international tax administration. The organizational realignment will allow the

IRS to focus its expertise on the most pressing international issues. In addition, the IRS

more than doubled its offshore presence by opening new offices in Asia and Central 

America, placed additional law enforcement personnel at its existing offices throughout 

the world, and expanded its interaction with key international organizations involved in 

tax and financial law compliance. All of these steps are designed to develop new leads in 

ongoing criminal tax and financial crime investigations. 

Other notable accomplishments include:

 Expanding international presence and coordination with treaty partners and 

international organizations to improve offshore compliance;

 Establishing a global illicit financial unit to identify and investigate large 

multinational tax and financial crime cases generally perpetrated by organized 

crime syndicates; and

 Identifying and examining 17,888 foreign resident tax returns with tax 

deficiencies totaling more than $1.64 billion.

In addition, the IRS Voluntary Disclosure Program (VDP) provided information on banks 

and professionals, including foreign professionals, who facilitate tax evasion. More than 

15,000 Americans with offshore accounts, some holding hundreds of millions of dollars, 

came forward during a voluntary disclosure period that ended in October 2009 to disclose 

information, bringing them back into the U.S. tax system. An additional 3,000 

Americans came forward with accounts at various banks since October 2009, with the 

total disclosures over the period expected to reach 20,000. In FY 2010, the IRS began 

reviewing the information from program participants to identify financial institutions, 

advisors, and others who promoted or otherwise helped Americans hide assets and 

income offshore. 

The IRS continues to ensure that the largest corporate taxpayers are in compliance using 

strategies that are less time and resource intensive. The Compliance Assurance Process 

(CAP) program resolves issues early and ensures the filing of accurate returns. The CAP 

program allows taxpayers who identify their tax issues to get certainty with respect to 

their tax obligations at the time the return is filed, rather than waiting for the IRS to 

examine issues during an audit. In FY 2010, participation increased to 112 corporate 
IRS-11

taxpayers, with all 102 from 2009 returning. The IRS plans to issue guidance that will 

make CAP permanent and available to a greater number of taxpayers.

Research improves service to taxpayers and helps in the development of better ways to 

identify noncompliance and reduce the tax gap. The FY 2010 National Research 

Program (NRP) included a study to assess the reporting compliance of employment taxes.

The study spanned three tax years, from 2008 through 2010, examining approximately 

2,200 randomly-selected taxpayers each year. The new study complements the ongoing 

study of individual reporting compliance. 

Beginning in FY 2010, the IRS launched a number of important changes to its oversight 

of the tax return preparer community to improve tax administration and tax compliance. 

The IRS and external stakeholders agree that setting higher standards for the tax return 

preparer community will significantly enhance protections and services for taxpayers, 

increase confidence in the tax system and result in greater compliance with the tax laws.

Important changes included:

 Requiring registration and the assignment of a preparer tax identification number 

(PTIN) for all paid tax return preparers (through December 31, 2010, more than

523,000 return preparers received PTINs utilizing the new application system);

 Establishing mandatory testing and continuing education for paid tax return 

preparers who are not an attorney, certified public accountant, or enrolled agent;

 Developing a public database so that the public can ensure that their tax return 

preparer is registered with the IRS; and

 Making all return preparers subject to the ethical standards of Treasury 

Circular 230 and subject to discipline by the IRS.

Business System Modernization

IRS modernization efforts continue to focus on core tax administration systems designed 

to provide more sophisticated tools to taxpayers and to IRS employees. The following 

highlights IRS accomplishments: 

 Customer Account Data Engine (CADE) posted more than 41.2 million returns, 

generated more than 35.8 million refunds and, for the first time, accepted more 

than seven million payments submitted with taxpayer returns. In FY 2010, the 

IRS revised its CADE strategy to implement a new taxpayer account database for 

the 2012 filing season. This new database will accelerate the refund processing 

time for most taxpayers.

 Modernized e-File (MeF) deployed an additional release that allowed for the 

acceptance of Form 1040 and 22 supporting forms and schedules. This new 

functionality is designed to reach 61 percent of the e-File population, or 

approximately 55.1 million filers.
IRS-12

 Account Management Services (AMS) final release provided IRS employees with 

the ability to view taxpayer correspondence images online and on demand, 

eliminating reliance on a manual process to obtain copies of images. This direct 

access reduced the case cycle time from 10 to 14 days to zero.

Future Outlook 

In FY 2012, the IRS will continue to seek less costly ways of improving taxpayer service 

and bolstering enforcement. 

The service and enforcement agenda supports the Administration’s goals to reduce the 

federal deficit by increasing tax receipts. Delivering cost-effective and efficient services 

to meet taxpayer demands within a constrained budget environment will continue to be a 

challenge for the IRS. With this in mind, the IRS will focus efforts on the following 

priorities in FY 2012.

Taxpayer Service – Increase the telephone level of service and improve the IRS website 

where an increasing percentage of taxpayers find the help they need.

Assisting taxpayers with their tax questions before they file prevents inadvertent 

noncompliance and reduces burdensome post-filing notices and other correspondence 

from the IRS. In FY 2012, the IRS plans to increase level of service by adding resources 

to meet the ever-increasing demand and continuing to make efficiency improvements 

such as automated self-service applications that allow taxpayers to obtain information on 

less complex issues such as refund inquiries. These improvements will free up staff to 

deal with the more complex tax law issues stemming from the passage of new legislation. 

In addition, the IRS continues to study the effects of services it offers to taxpayers on the 

internet, at walk-in sites, and on its toll-free telephone lines as well as exploring the 

relationships between taxpayer errors and unclear correspondence to aid in the 

development of new approaches to service.

Provisions that become effective in later years, when new options for buying health 

insurance through state-sponsored exchanges go into effect, place significant new 

administrative responsibilities on the IRS that require the design and development of new 

IT systems and business processes along with substantial coordination with other federal 

and state entities.

Enforcement – Implement legislative mandates, handle new information reporting 

requirements, increase compliance efforts to address offshore tax evasion, focus on 

corporate and high-wealth returns, increase examination and collection coverage, develop 

initiatives to improve issue resolution with large business taxpayers, and enforce tax 

return preparer compliance.

In FY 2012, the IRS will implement changes required by enactment of various legislative 

mandates such as the Foreign Account Tax Compliance Act (FATCA) included in the 

Hiring to Restore Employment (HIRE) Act of 2010 (Public Law 111-147), the merchant 

payment card and third party reimbursements enacted in the Housing and Economic 
IRS-13

Recovery Act of 2008 (Public Law 110-289) and basis reporting on security sales enacted 

in the Emergency Economic Stabilization Act of 2008 (Public Law 110-343). These 

legislative mandates include new information reporting requirements for individuals and 

businesses.

The IRS will continue to invest in strong compliance programs, including robust 

international enforcement initiatives to address offshore tax evasion. Enforcement 

initiatives will address underreporting of income associated with international activities 

and expand enforcement efforts on noncompliance among corporate and high-wealth 

taxpayers and the complex business enterprises they control (including corporations, 

partnerships, and trusts). The IRS will use audit results and intelligence from ongoing 

offshore initiatives to refine case identification and selection methods to identify 

promoters, facilitators, and participants in abusive offshore arrangements.

The IRS also will improve the way compliance risks are identified and addressed in large, 

complex global businesses and high-wealth individuals.

In addition, the IRS will continue to pursue other important initiatives, such as the CAP 

program, industry issue resolution projects, and fast track settlements, aimed at earlier 

and speedier issue resolution and greater efficiency and certainty. These initiatives are a 

major part of the overall retooling of IRS’s relationships with large corporate taxpayers. 

The IRS will continue to implement the recommendations of the Tax Return Preparer 

Strategy by addressing the challenges associated with the implementation of registration, 

continuing education, and testing requirements for tax return preparers that are scheduled 

to go into effect in FY 2011. The IRS took a major step forward in launching the new 

PTIN online registration process. The process gives the IRS an important and improved

line of sight into the return preparer community. The IRS will use the information to 

analyze trends, spot anomalies, and potentially detect fraud. In addition, the IRS will 

continue to develop and implement legislation to increase electronic filing among 

the paid preparer community.

Business Systems Modernization – Continue the development of the new taxpayer 

account database. 

Data and technology are central to the future of tax administration. For the 2012 filing 

season, the IRS will complete the new taxpayer account database and continue to make

investments in the electronic filing systems. Completion of the core taxpayer account 

database is the cornerstone of IRS IT modernization that will expedite refunds to millions 

of individual taxpayers. It is also a prerequisite for other major initiatives, such as 

expansion of online paperless services. The ability of the IRS to support increasingly 

complex taxpayer service and compliance initiatives will be severely limited until the 

new taxpayer account database is completed. 
IRS-14

Implement the Affordable Care (ACA) Act.

Implementation of the Affordable Care Act (ACA) of 2010 presents a major challenge to 

the IRS. ACA represents the largest set of tax law changes in more than 20 years, with 

more than 40 provisions that amend the tax laws. Although the new law goes into effect 

gradually over many years, many provisions required immediate action, including the 

Small Business Health Care Tax Credit, the Qualifying Therapeutic Discovery Credit, 

and the expanded Adoption Credit. 

To enact the range of provisions that were retroactive to 2009 and immediately effective 

for calendar year 2010, the IRS focused on: developing new systems and business 

processes for near-term provisions; conducting initial planning for longer-term 

provisions; and defining appropriate outreach activities for each affected group.
IRS-15

Section 2 – Budget Adjustments – Internal Revenue Service

The IRS Budget Request for FY 2012 is $13,283,907,000 in direct appropriations and 

99,878 FTE. This is an increase of $1,137,784 or 9.37 percent and 5,112 FTE more than 

the FY 2010 enacted level of $12,146,123,000 and 94,766 FTE.

Program Summary by Appropriations Account and Budget Activity

Dollars in Thousands

FY 2011

Appropriations / Budget Activity FY 2010

Internal Revenue Service Enacted1 Request $ Change % Change 

Taxpayer Services $2,278,830 $2,278,830 $2,345,133 $66,303 2.91%

 Pre-filing Taxpayer Assistance and Education 679,924 679,924 701,035 21,111 3.10%

 Filing and Account Services 1,598,906 1,598,906 1,644,098 45,192 2.83%

Enforcement $5,504,000 $5,504,000 $5,966,619 $462,619 8.41%

 Investigations 639,363 639,363 678,849 39,486 6.18%

 Exam and Collections 4,700,345 4,700,345 5,103,420 403,075 8.58%

 Regulatory 164,292 164,292 184,350 20,058 12.21%

Operations Support $4,083,884 $4,083,884 $4,620,526 $536,642 13.14%

 Infrastructure 895,202 895,202 986,045 90,843 10.15%

 Shared Services and Support 1,311,127 1,311,127 1,313,050 1,923 0.15%

 Information Services 1,877,555 1,877,555 2,321,431 443,876 23.64%

Business Systems Modernization $263,897 $263,897 $333,600 $69,703 26.41%

Health Insurance Tax Credit Administration $15,512 $15,512 $18,029 $2,517 16.23%

Total Appropriated Resources $12,146,123 $12,146,123 $13,283,907 $1,137,784 9.37%

Offsetting Collections - Reimbursable $137,758 $137,279 $138,272 $993 0.72%

Mandatory Appropriation - User Fees $175,529 $204,428 $204,428

Total Program Operating Level $12,459,410 $12,487,830 $13,626,607 $1,138,777 9.12%

Direct FTE 94,766 94,766 99,878 5,112 5.39%

Reimbursable FTE 659 659 659

User Fees FTE 93

Total FTE 95,518 95,425 100,537 5,112 5.36%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Annualized 

CR Level

FY 2012
IRS-16

2.1 – Budget Adjustments Table

Dollars in Thousands

Internal Revenue Service 

FTE Amount

FY 2010 Enacted Budget1 94,766 $12,146,123

FY 2011 Annualized CR Level 94,766 $12,146,123

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level 1,653 $401,665

Maintaining Current Levels $85,754

Other Adjustments 501

Technical FTE Adjustments 501

Efficiencies/Savings (523) ($189,957)

Non-Recur Savings (22,090)

Increase e-File Savings (416) (22,444)

Reduce IT Infrastructure (75,000)

Reduce Contracts (20,754)

Reduce Administrative Expenses (66) (14,331)

Eliminate Lockbox Fees (4,000)

Reduce Certain Mailings (4,000)

Reduce Training, Travel and Programs (41) (27,338)

Reinvestment $1,486

Consolidate Submission Processing Site (Atlanta) 1,486

Subtotal Changes to Base 1,631 $298,948

Total FY 2012 Base 96,397 $12,445,071

Program Changes:

Program Increases:

Taxpayer Service Initiatives 534 $114,307

Improve Taxpayer Service 519 81,307

Expand Online Options through IRS.gov Improvements 15 33,000

Enforcement Initiatives 2,917 $605,671

Increase International Service and Enforcement 377 72,596

Increase Collection Coverage 413 52,000

Implement Merchant Card and Basis Reporting 415 35,730

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 497 96,718

Ensure Accurate Delivery of Tax Credits 834 260,293

Administer New Statutory Reporting Requirements 187 58,505

Leverage Return Preparer Program to Reduce Noncompliance 108 16,600

Address Appeals Workload Growth 66 9,100

Implement Uncertain Tax Position Reporting Requirements 20 4,129

Infrastructure Initiatives 90 $118,858

Enhance Security and Disaster Recovery Systems Capability 5 12,000

Update Integrated Financial System (IFS) 5 27,500

Leveraging Data to Improve Compliance 5 1,400

Enhance Physical Security for Federal Employees 10 15,481

Implement Individual Coverage Requirement and Employer Responsibility Payments 65 62,477

Business Systems Modernization (BSM) Initiative (60)

Continue Migration from Aging Tax Administration System (60)

Subtotal Program Changes 3,481 $838,836

Total FY 2012 Request 99,878 $13,283,907

Adjustments to Request

User Fees 204,428

Total FY 2012 Request 99,878 $13,488,335

1FY 2010 Enacted represents the approved FY 2010 Operating Plan

Internal Revenue Service
IRS-17

2A – Budget Increases and Decreases Description

Treasury Strategic Goals and Outcome

The IRS FY 2012 initiatives support the Treasury Strategic Goal: ―Effectively Managed 

U.S. Government Finances‖ and the Treasury Strategic Outcome: ―Revenue collected 

when due through a fair and uniform application of the law‖ and the Treasury Strategic 

Goal: ―Prevented Terrorism and Promoted the Nation’s Security Through Strengthened 

International Financial Systems‖ and Treasury Strategic Outcome: ―Removed or reduced 

threats to national security from terrorism, proliferation of weapons of mass destruction, 

drug trafficking, and other criminal activity on the part of rogue regimes, individuals, and 

their support networks.‖ 

The table that follows lists FY 2012 resources by Strategic Goal, Objective and Outcome 

outlined in the FY 2007-2012 Treasury Strategic Plan. The Treasury Strategic Plan is a 

corporate-level plan for the Department that provides a description of what the agency 

intends to accomplish over the five-year period.

Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome

FY 2010

Enacted1 CR Level Change

Revenue collected when due through a fair and uniform application of the law 11,908,430 11,908,050 13,025,396 9.4%

Removed and reduced threats to national security from terrorism, proliferation of 

weapons of mass destruction, drug trafficking, and other criminal activity on the 

part of rogue regimes, individuals, and their support networks

237,693 238,073 258,511 8.6%

Total Request $12,146,123 $12,146,123 $13,283,907 9.4%

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Annualized

Request

Percent 

FY 2011

FY 2012

Initiative Costing Methodology

The IRS uses a variety of methods to cost its initiatives. Costs for initiatives that require 

labor funding are calculated by converting the workload to the number and type of staff 

(e.g., Revenue Agents, Revenue Officers, or Special Agents) needed to deliver targeted 

performance goals. Once the number of full-time equivalents (FTE) and type of staff are 

determined, the cost of the FTE is estimated using a Unit Cost Rate (UCR) calculator, a 

tool for projecting FTE salary and non-salary support cost and/or savings. The UCR 

calculator fully costs the salary, benefits, and support costs needed for each FTE.
IRS-18

Total Changes to Base

+$298,948,000 / +1,631 FTE

Adjustment to Reach FY 2011 President’s Policy Level

+$401,665,000 / +1,653 FTE

Adjustment from the FY 2011 Annualized Continuing Resolution (CR) Rate to reach the 

FY 2011 President’s Policy Level. The President’s Policy Level is equal to the FY 2011 

President’s Budget as adjusted for the proposed pay freeze.

Maintaining Current Levels (MCLs)

+$85,754,000 / 0 FTE 

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

adjustments, postage, supplies and equipment, and health benefits and the increase in 

Federal Employee Retirement System participation. No inflation adjustment is requested 

for pay in FY 2012.

Other Adjustments

$0 / +501 FTE

Technical FTE Adjustments

$0 / 501 FTE

This adjustment reflects permanent changes made to ensure FTE levels are fully funded 

in the base budget and to add FTEs where activities are now funded in-house instead of 

through contractor services.

Efficiencies and Savings

-$189,957,000 / -523 FTE

Non-Recur Savings

-$22,090,000 / 0 FTE

This is the net reduction of non-recurring, one-time costs associated with the FY 2011 

enforcement initiatives (e.g., IT equipment and training).
IRS-19

Increase e-File Savings 

-$22,444,000 / -416 FTE

This decrease is a result of savings from increased electronic filing (e-File). Savings are 

based on e-File projected growth, modernization, and the completion of the phased 

implementation of the Worker, Homeowner, and Business Assistance Act of 2009 

(Public Law 111-92), which requires electronic filing by tax return preparers. As a result, 

the IRS needs 416 fewer FTE in submission processing, generating a savings of 

$22.4 million.

Reduce IT Infrastructure

-$75,000,000 / 0 FTE

The IRS will reduce the unit costs of infrastructure through use of the Capability Maturity 

Model (i.e., a process improvement approach that yields efficiencies in software 

engineering); the Information Technology Infrastructure Library (ITIL) that will allow 

the IRS to improve the quality of IT services; and the further consolidation of security 

activities in the Cybersecurity organization to leverage security best practices.

Reduce Contracts

-$20,754,000 / 0 FTE

In accordance with the 2009 Presidential guidance on controlling contracting costs, the 

IRS will achieve targeted savings through reduced contracting expenses. The FY 2012 

Budget saves $20.8 million through better acquisition and acquisition-related program 

practices in project support, web learning, equipment, marketing, technical support 

contracts and, as a result of implementing the e-file requirement for tax return preparers, 

lower marketing expenses associated with promoting e-filing.

Reduce Administrative Expenses

-$14,331,000 / -66 FTE

The IRS will reduce administrative expenses, including targeted attrition through hiring 

freezes. 

Eliminate Lockbox Fees 

-$4,000,000 / 0 FTE

The IRS will eliminate lockbox fees that now will be paid by taxpayers in installment 

agreements. 
IRS-20

Reduce Certain Mailings 

-$4,000,000 / 0 FTE

The IRS will eliminate printing and mailing of certain forms and publications and reduce 

the number of inserts in mailings. 

Reduce Training, Travel and Programs

-$27,338,000 / -41 FTE

The IRS will reduce agency-wide non-technical training and non-case related travel; and 

will implement various program efficiencies. Reductions in training costs will be 

achieved by reducing out-of-town training and the length of training, as well as by

leveraging technology. The IRS will reduce travel expenses by making greater use of 

technology, increasing the use of hoteling, and eliminating/reducing travel 

reimbursements to field-based employees reporting to duty stations. The IRS will 

achieve program efficiencies in the Business Systems Modernization (BSM) 

($1.0 million), Health Insurance Tax Credit Administration (HITCA) ($1.1 million), and 

the taxpayer communication and education programs ($4.3 million and 41 FTE).

Program Reinvestment

+$1,486,000 / 0 FTE

Consolidate Submission Processing Site (Atlanta)

+$1,486,000 / 0 FTE

Increased use of electronic filing has led to a consolidation of individual return 

processing sites. A portion of the Increase e-File Savings will be reinvested to fund 

one-time separation costs associated with the September 30, 2011, closure of the Atlanta 

submission processing site. As the Atlanta consolidation approaches, the IRS will 

continue to assist employees to find employment either inside or outside of the 

organization. The funding will allow the IRS to provide Voluntary Separation Incentive 

Payments (VSIP) and severance pay to affected Atlanta employees.
IRS-21

Program Increases

+$838,836,000 / +3,481 FTE

Improve Taxpayer Service

+$81,307,000 / +519 FTE

Funding for Improve Taxpayer Service

and the $25.9 million increase included 

in the FY 2011 President’s Policy level 

will provide staffing to address rising 

demand and increase the Customer 

Service Representative Level of Service 

(LOS) from the planned target of 

71 percent in FY 2010 to 80 percent in 

FY 2012 while maintaining a 93 percent 

customer satisfaction rate for toll-free 

telephone services. This initiative also includes funding to help taxpayers understand the

new tax law provisions and to make related call center and infrastructure changes to 

handle anticipated inquiries, including ACA-related service questions.

Increase Customer LOS (+$30.0 million / +369 FTE)

From FY 2006 to FY 2009, taxpayer demand for IRS toll-free assistor services increased 

by more than 30 percent from 46 million to more than 60 million. In 2009, the National 

Taxpayer Advocate identified access to the IRS toll-free service as the most serious 

problem for taxpayers. The IRS has been aggressively pursuing strategies to mitigate 

telephone demand, including a restructuring of telephone routing systems and creating 

internet applications to divert telephone traffic to IRS.gov. 

Taxpayers need effective service to understand their tax obligations and pay their taxes in 

a timely manner. In addition, increased enforcement activities have caused a significant 

increase in telephone inquiries to address balance-due accounts and establish installment 

agreements. Working with these taxpayers earlier in the process allows the IRS to 

resolve inquiries quickly in a more cost-effective manner and thereby increase taxpayer 

satisfaction.

This initiative also requests $0.1 million for Information Resources Accessibility 

Program equipment to evaluate the needs of new hires with disabilities; evaluate new 

assistive technologies for potential use within the IRS; determine the appropriate assistive 

technology to accommodate functional limitations; purchase assistive technology,

maintenance, and training, if required; and assist customers with assistive technology 

features and functions. 

Position Type/Other Costs FTE $000

Increase LOS 369 $30,000

Customer Service Representative 369 30,000

Implement Affordable Care Act (ACA) 150 $51,307

Assisting Taxpayers in Understanding New 

Provisions 150 $22,170

Customer Service Representative 143 13,158

Media & Pubs Program Analysts 5 8,739

Customer Account Specialists 2 273

Call Center Changes $15,300

Infrastructure $13,837

Total 519 $81,307
IRS-22

Implement Taxpayer Service Programs for New Tax Law Provisions

(+$51.3 million / +150 FTE)

 Assisting Taxpayers in Understanding New Provisions 

(+$22.2 million / +150 FTE)

This request further incorporates additional resources to help taxpayers 

understand new ACA provisions. Proactive outreach, education, and educational 

tools will be critical to ensuring that individuals and employers understand the 

changes to the tax law that come into effect starting in 2014. In addition, various 

provisions in the law already are effective (e.g., small employer tax credits and 

the excise tax on tanning services) which require IRS taxpayer service resources. 

IRS requests resources to develop and deliver new publications and informational 

tools to help taxpayers understand their obligations. In addition, to meet 

immediate customer service needs, the IRS requests additional customer service 

staffing for its toll-free service operation to help maintain LOS at 80 percent. 

 Call Center Changes (+$15.3 million)

The IRS operates one of the largest and most complex phone support operations 

in the world. In order to prepare for a number of ACA provisions coming into 

effect in 2014 for individuals and employers, a number of changes must be made 

to the existing IRS call center systems. The IRS must update its call center 

applications and make enhancements to notices, collections, and case 

management systems to address and resolve taxpayer issues promptly and 

accurately.

 Infrastructure Costs to Support Recently-Enacted Law Service Inquiries

(+$13.8 million)

Existing call sites are operating at capacity. In order to absorb the requested 

additional staffing needed to deliver an acceptable level of service to taxpayers, 

the IRS needs infrastructure resources to ensure adequate space and technology 

to support ACA-related service inquires.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-23

Expand Online Options through IRS.gov Improvements

+$33,000,000 / +15 FTE

Funding for Expand Online Options 

through IRS.gov Improvements will 

continue the multi-year effort to replace

the outdated web portal environment and 

provide additional online services to 

taxpayers. The Taxpayer Assistance 

Blueprint, Phase 2, targeted migration to the electronic channel and services as one of the 

five areas for improvement of IRS service delivery. 

This initiative will allow the IRS to:

 Continue the replacement of an outdated web portal environment that has reached 

the end of its useful life; and

 Implement e-Notices enhancements.

Completion of these activities will allow the IRS to achieve efficiencies by moving 

high-volume transactions to IRS.gov, thereby improving self-service, reducing taxpayer 

burden, increasing compliance, reducing costs, and improving security. These 

improvements will position IRS.gov as the preferred delivery channel of choice for 

taxpayer service. Taxpayer satisfaction with IRS.gov also will be improved by better

integrating access to information and transaction services, improving IRS.gov navigation,

enriching content quality, and enhancing IRS.gov search capabilities.

IRS.gov – Registered User Portal (RUP) and Employee User Portal (EUP) Migration

(+$25.0 million / +15 FTE)

This initiative funds the second year of a 

three-year effort to replace the aging 

infrastructure of the portals and complete 

the migration of the RUP/EUP by the end 

of FY 2013. This initiative will 

re-engineer the portal and migrate the 

RUP/EUP applications that interface with

core IRS systems, resulting in an overall 

improvement and in significant enhancements to online capabilities for tax preparers and 

other registered users. This request is driven by the need to complete the transition of the 

RUP/EUP to the new web environment by August 2013 when the existing RUP and EUP 

contracts expire. Failure to complete the portal migration by August 2013 will result in 

increased portal operating costs and increased risk under existing sole source contracts. 

In addition, taxpayer and tax practitioners will continue to use more expensive, labor 

intensive service delivery channels such as calling the 1-800 number or visiting an IRS 

taxpayer assistance center. 

Fiscal Years

2011 2012 2013

Public User Portal (IRS.gov)

Registered User Portal (RUP)

Employee User Portal (EUP)

Completion

IRS Portal Migration Implementation Schedule

Fiscal Years

2011 2012 2013

Public User Portal (IRS.gov)

Registered User Portal (RUP)

Employee User Portal (EUP)

Completion

IRS Portal Migration Implementation Schedule Position Type/Other Costs FTE $000

 IRS.gov RUP/EUP Portal Migration 15 $25,000

IT Project Specialist 15 2,277

Contractor Service 22,723

Taxpayer and Tax Practitioner Applications 0 $8,000

Contractor Service 8,000

Total 15 $33,000
IRS-24

The additional FY 2012 resources will allow the IRS to complete the build-out of the 

consolidated web environment and migrate the RUP transactional applications and 

integrate them with the tax information on IRS.gov by the end of FY 2013. Some of the 

RUP applications that the IRS plans to migrate include:

 Where’s My Refund? – Allows authorized users to look up the status of refunds 

reported on their tax returns; 

 Online Employer Identification Number (EIN) – Allows users to apply online for 

a new EIN and, in most cases, receive the new number immediately;

 Preparer Taxpayer Identification Number (PTIN) Application – Allows tax 

professionals to apply online for a PTIN without submitting a paper application 

form and existing users to look up a forgotten PTIN; and

 Online e-File – Allows tax professionals to apply online to become an authorized 

e-File Electronic Return Originator (ERO).

Activities to migrate the EUP will begin in FY 2012 and be completed in FY 2013. EUP 

migration activities will complete the build-out of the consolidated web environment for 

the secure employee-facing applications and move the applications from the existing 

EUP. Transitioning these applications to the new environment will allow IRS employees 

to process, update and analyze taxpayer returns and information online. Some of the 

applications to be migrated in FY 2012-FY 2013 include:

 Modernized e-File (MeF) – Provides authorized IRS employees the capability to 

view MeF return data and run reports on taxpayer information; and

 Integrated Financial System (IFS) - Provides authorized IRS employees with 

timely and detailed financial, cost accounting, property accounting and 

procurement data.

Online Service Applications – e-Notices (Installment Agreement Reminder Notice) 

(+$8.0 million / +0 FTE)

This initiative funds implementation of new online functionality for e-Notices that will 

deliver cost-effective services to the taxpayer while reducing the taxpayer burden. 

E-Notices will securely deliver taxpayer correspondence electronically through an 

integrated, web-based system. Development of the e-Notice concept could result in 

significant cost savings to the IRS if expanded to other higher volume notices. The 

development of the e-Notices Installment Agreement Reminder will provide taxpayers 

who have entered into an installment agreement to opt for monthly electronic payment 

reminders by logging into the IRS Registered User Portal (RUP) to define their 

preference. 
IRS-25

Implementation of e-Notices will provide specific benefits such as:

 Reduced taxpayer burden in both time and cost;

 Electronic delivery option to meet taxpayer preferences;

 Reduced risk of taxpayer social security number exposure through mail delivery; 

and

 Expedited communications that may result in quicker receipt of payment.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-26

Increase International Service and Enforcement

+$72,596,000 / +377 FTE 

Funding for Increase International 

Service and Enforcement will 

implement changes required by 

enactment of the Foreign Account Tax 

Compliance Act (FATCA) included in 

The Hiring Incentives to Restore 

Employment (HIRE) Act of 2010, 

(Public Law 111-147). The IRS will 

implement the reporting, disclosure and 

withholding requirements and expand 

coverage of international filings, 

conduct more in-depth international 

compliance work, strengthen 

compliance efforts related to offshore 

activity and expand the Global 

High-Wealth compliance group, 

producing additional annual 

enforcement revenue of $467.1 million 

with an ROI of 8.2 to 1 once the new 

hires reach full potential in FY 2014. 

Position Type/Other Costs FTE $000

Implement FATCA Legislation 186 $35,000

Revenue Agent 75 14,349

Tax Examiner 43 3,749

Special Agent 4 923

Customer Service Representative 40 3,260

Attorney 8 1,414

Support Staff 16 1,305

IT Equipment 10,000

Increase International Coverage 107 $15,777

Revenue Agent 58 10,539

Tax Technician 15 2,131

Tax Examiner 8 699

Other Support 26 2,408

Criminal Investigation International Expansion 36 $8,552

Special Agent 29 7,471

Other Support 7 1,063

IT Equipment 18

International Data Analysis 19 $8,784

Revenue Agent 4 705

Other Support 11 1,269

Research Analyst 4 780

Contractor Services and Equipment 6,030

Other Costs 29 $4,483

Appeals Officer 10 1,484

Attorney 15 2,492

Support Staff 4 507

Total 377 $72,596

Major Activities

Projected

Revenue

$M

Individual

Audits

Cases

Completed

Business

Audits

Specialty

Program

Audits

Implement FATCA Legislation

Address Foreign Withholding Compliance $171.6 117 

Expand Coverage of Int'l Tax Return Filings $32.4 21,540 

International Compliance Field Operations $83.0 614 155 

Criminal Investigation 7 

Increase International Coverage and 

Compliance

Expand Global High-Wealth Coverage $180.1 25 274 

Criminal Investigation International

Expansion 21 

Total $467.1 22,179 28 429 117 

ROI 

$72.6 $59.8 $57.1

$234.0

$315.7

$467.1

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

1 2 3

in millions

Costs Enforcement Revenue

3.2 to 1

8.2 to 1

5.3 to 1
IRS-27

Implement Foreign Account Tax Compliance Act (FATCA) Legislation

(+$35.0 million / +186 FTE)

The number of business and individual returns with international activity continues to 

increase. According to the Department of the Treasury Report on Foreign Portfolio 

Holdings of U.S. Securities dated June 30, 2009, the total long-term and short-term 

foreign holdings of U.S. securities grew from $4.3 billion in June 2002 to $9.6 billion in 

June 2009 (Filings of Form 1042-S, Foreign Person’s U.S. Source Income Subject to 

Withholding). The total U.S. source income, income where the activity for which the 

payment is being made is in the U.S., was $139.6 million in tax year 2000 and 

$646.5 million in tax year 2007, an increase of 363 percent. This growth creates two 

areas of concern for tax administration: (1) U.S. taxpayers avoiding taxation by shielding 

their identity using foreign accounts; and (2) foreign citizens benefiting from withholding 

rates that they are not entitled to use. 

This initiative will allow IRS to:

 Address Foreign Withholding Compliance 

IRS implementation of the reporting, disclosure and withholding requirements 

mandated by FATCA for international investors and financial institutions will 

augment IRS activities to address international noncompliance. 

Every person who earns income subject to U.S. withholding or reporting 

generally must identify himself or herself to both the U.S. government and all 

intermediaries (e.g., banks, brokers, and custodians) through whose hands that 

income passes. The Qualified Intermediary Program (QIP) is responsible for the 

withholding and related documentation requirements for foreign banks, foreign 

branches of U.S. banks, and other non-U.S. financial institutions that must comply 

with withholding tax laws. In general, a Qualified Intermediary (QI) is a foreign 

financial institution or foreign branch of a U.S. financial institution that enters 

into an agreement with the IRS. The QIP will implement the FATCA 

withholding requirements and ultimately the reporting of U.S.-source income sent 

offshore. 

In addition, the Withholding Tax Refund Program will be updated to create new 

electronic forms and reports to support the HIRE Act filing and disclosure 

requirements, handle the thousands of expected claims, provide data storage and 

analysis, and ensure proper and timely processing of returns and cases. The 

number of entities applying to become QIs will increase significantly from the 

current 5,014 QIs to approximately 20,000 to 100,000 entities. As a result, the

IRS expects a high volume of customer inquiries in response to the influx of new 

QIs. The IRS will not enter into a QI withholding that provides for the use of 

documentary evidence obtained under a country’s know-your-customer (KYC) 

rules if it has not received the KYC practices and procedures for opening accounts 

and responses to specific questions. The additional staffing will approve KYC 

rules of these additional jurisdictions and perform outreach where needed. 
IRS-28

Automatic matching of payments to annual income tax return data is the most 

efficient and effective tool that the IRS uses to ensure compliance. The Form 

1042-S will be used to determine whether tax is owed on U.S. source income 

flowing to an offshore locality by determining the identity of the recipients. The 

enhancement of systems to reconcile Form 1042, Annual Withholding Tax Return 

for U.S. Source Income of Foreign Persons, 1041-T, Allocation of Estimated Tax 

Payments to Beneficiaries, with Form 1042-S will provide significant steps 

toward achieving international compliance in an efficient manner.

With passage of the HIRE Act, the U.S. Withholding Agent will be responsible 

for establishing the Form 1042 Advanced Review Program (ARP). Additional 

resources will allow IRS to establish this program to work with taxpayers to 

resolve issues before filing their 1042 withholding tax return. 

Withholding taxes on payments to foreign financial institutions and non-financial 

foreign entities that do not agree to make the disclosures are intended to function 

like a back-up withholding tax, so that beneficial owners would be eligible to 

claim a refund or credit for any withholding in excess of their tax liabilities. As a 

result of the enacted legislation and the need for increased withholding of income 

taxes on payments to foreign persons, the IRS will implement revenue protection 

systems that will check for erroneous tax refund claims. As in prior years, 

thousands of claims for a refund of taxes withheld or paid are likely. The 

legislation will add to the number of withholding returns as well as claims, and 

the IRS must increase the capabilities of the Withholding Tax Refund System to 

respond to these additional claims to protect revenue. 

FATCA also imposes significant tax withholding penalties on foreign financial 

institutions that do not disclose holdings by U.S. individuals or firms and creates

new information reporting requirements. To avoid the withholding requirements, 

the foreign financial institutions must enter into an agreement with the 

Department of the Treasury to identify all U.S. accounts held by it or its affiliates 

and report annually to Treasury on each account. Further, the foreign financial 

institution must comply with requests by Treasury for additional information 

regarding each U.S. account and must attempt to obtain from each holder of a 

U.S. account a waiver of any bank secrecy law that would otherwise prevent such 

a report. If a waiver is not obtained from each holder of a U.S. account, the 

account will be closed. This initiative funds enforcement of the reporting 

requirements through new administrative and compliance activities.

This initiative will allow IRS to conduct 117 more specialty program audits.

 Development and Improvement of IT Systems and Specialized Tools

The funding also will allow for the development and improvement of systems to 

carry out key areas of the FATCA legislation and for the development of 

specialized tools to detect abuses and trends in international taxpayer data and the 
IRS-29

linking of international data to tax return data. This includes system capabilities 

to:

o Enable secure Web-based interactivity to implement provisions that 

require the creation of formal working agreements between the IRS and 

Foreign Financial Institutions (FFI); 

o Accept, store and retrieve FFI information such as FFI agreements, annual 

account reporting, and certifications;

o Automate the interface between the data secured via the Web-based Portal 

and the IRS Master File (MF) stored data; 

o Perform document matching on IRC sections 1471 (imposes a 30 percent 

tax on foreign financial institutions who do not meet certain reporting 

requirements) and 6038D (requires U.S. persons to report foreign 

investments) and Report of Foreign Bank and Financial Accounts (FBAR) 

account data;

o Generate reports on FATCA Audit and Registration certifications; and 

o Provide public access to published FFI information.

Automatic matching of payments to annual income tax return data is the most 

efficient and effective tool that the IRS uses to ensure compliance. The Form

1042-S will be used to determine whether tax is owed on U.S. source income 

flowing to an offshore locality by determining the identity of the recipients. The 

enhancement of systems to reconcile Forms 1042, 1041-T, with Forms 1042-S will 

provide significant steps toward achieving international compliance in an efficient 

manner.

 Expand Coverage of International Tax Return Filings 

With the increased reporting of withholding requirements required by FATCA 

legislation, this initiative funds withholding compliance activities. It provides 

new coverage for discrepancies identified through third-party correlations based 

on FATCA and will enhance and centralize coverage for non-filer taxpayers and 

those with withholding-related issues. The funding also will allow IRS to handle 

the calls/communications resulting from notices sent to taxpayers for resolution 

by the Campus Compliance Unit (CCU) that will identify emerging issues with 

FATCA compliance with respect to international tax filings or other international 

tax issues. IRS will compile data and reports that will provide more complete 

background information during the initial set up of related audit case files. The 

building of these case files will create increased efficiencies during the 

examination process by highlighting the FATCA non-compliance areas for 

examiners relative to the unique needs of this compliance initiative. 

These additional resources will increase the number of correspondence 

examinations by 21,540 individual audits. 
IRS-30

 International Compliance Field Operations 

Offshore financial centers offer strict financial secrecy and low tax rates or no 

taxes to non-residents who maintain bank accounts, investments, and/or other 

financial assets or structures within their jurisdiction. They also allow for the 

formation of non-resident entities such as international business corporations, 

personal investment corporations, and foreign trusts to act as de facto holding 

companies to shield the beneficial ownership of those financial assets. This lack 

of transparency makes offshore financial centers a haven for U.S. taxpayers to 

divert income and shield assets. Further, revenue is lost because of weaknesses 

in compliance involving Chapter 3 withholding issues. FATCA will strengthen 

compliance efforts in this area.

With the increased mobility of people and transactions, the chances for 

non-compliance increase because of the lack of understanding of filing and 

reporting compliance for individuals living or working abroad. In addition, the 

internet has made it easier for more U.S. citizens to have investments in foreign 

countries, resulting in more complex tax situations. An indicator of this growth 

is the 133 percent increase in individual Americans claiming foreign tax credits 

from 2000 to 2007. 

This funding also will ensure proper coverage of the increasing number of small 

businesses with assets of less than $10 million that have expanded into the 

international markets. 

This initiative will allow the IRS to:

o Increase resources needed to identify and audit schemes to avoid FATCA 

compliance involving offshore financial centers;

o Increase audit coverage for U.S. taxpayers living abroad, non-resident 

aliens and small businesses operating overseas; and

o Ensure proper application of treaty benefits, foreign tax credits and foreign 

earned income exclusion.

Once the new hires reach full potential in FY 2014, the IRS will increase the 

number of examinations by 769 (614 individuals and 155 businesses). 

 Criminal Investigation

This initiative also will fund the expansion of criminal investigation efforts to 

identify and investigate U.S. citizens and residents that hold substantial funds in 

financial institutions in foreign countries and fail to disclose the holdings to the 

IRS or fail to follow FATCA reporting and withholding requirements. The IRS 

and the Financial Crimes Enforcement Network plan to expand the Suspicious 

Activity Report/Report of Foreign Bank and Financial Accounts (SAR/FBAR) 

project to countries beyond Mexico. 
IRS-31

Once the new hires reach full potential in FY 2014, the IRS will increase the 

number of cases completed by seven cases.

Increase International Coverage (+$15.8 million / +107 FTE)

 Expand Global High-Wealth Coverage 

High-wealth individuals frequently operate complex enterprises consisting of 

multiple, interrelated businesses and flow-through entities that often have 

international components. The complex interrelationships and ownership patterns 

within these enterprises often mimic those of large corporations and pose 

significant challenges to effective tax administration. This initiative continues 

IRS’s efforts to focus on Global High-Wealth (GHW) taxpayers by increasing 

risk identification, case building, and examination capabilities.

The IRS will take a unified look at the entire web of business entities controlled 

by high-wealth individuals to better assess the risks. Addressing the high-wealth 

population holistically will allow the IRS to better align and coordinate its 

resources toward this higher compliance risk population and develop better 

approaches in accordance with identified risk factors. The goal is to identify 

alternative treatment and engagement options to encourage greater voluntary 

compliance. Additional benefits include addressing a concern that traditional 

methods of assessing high-wealth compliance risk, done largely on a 

return-by-return, year-by-year basis, may have overlooked aspects of complex 

enterprise structures frequently employed by high-wealth individuals. 

This initiative will allow the IRS to:

o Conduct examinations of GHW individuals and related entities;

o Refine a risk assessment process for GHW enterprises;

o Examine highly-complex returns to address the non-compliant entities;

o Address non-compliance stemming from multi-jurisdictional tax evasion 

schemes; and 

o Improve existing methods of capturing data to allow better and quicker 

identification of abusive transactions related to complex enterprises and 

structures.

Once the new hires reach full potential in FY 2014, the IRS will conduct 25 more 

individual and 274 business examinations. 

 International Central Withholding Agreements

Non-resident aliens (NRAs) who earn income also can be subject to U.S. 

taxation. Increased coverage will ensure that the filed returns of foreign athletes 

and entertainers, who have entered into Central Withholding Agreements (CWA), 

properly reflect income and deductions. A CWA is an agreement between the 
IRS-32

IRS and a NRA, usually an athlete or entertainer, and their withholding agent 

and/or promoter based on the net compensation the nonresident alien expects to 

earn in the United States. From 2004 through 2006, visas issued to foreign 

athletes and entertainers rose 9 percent each year. There were 78,000 of this type 

of visa issued in 2006 (most current figure available and does not include 

residents of Canada and Mexico). At a projected coverage of 70 percent, there 

are a possible 54,600 CWA candidates. 

Criminal Investigation International Expansion (+$8.5 million / +36 FTE) 

The additional resources for Criminal Investigation (CI) will add special agents and 

support staff to maximize the deterrent effect of CI activities, increase voluntary 

disclosure, increase the number of potential tax evaders identified, and increase the tax 

revenue collected. This increased revenue applies not only to the years under 

investigation but to subsequent years after the taxpayer re-enters the tax system. 

Similarly, the IRS will expand cooperation with the Department of Homeland Security 

(DHS), Immigration and Customs Enforcement (ICE) and Trade Transparency Unit 

(TTU) to identify import/export businesses involved in trade and transfer pricing 

transactions designed to facilitate tax evasion and money laundering activities. These 

programs will enhance IRS’s ability to identify and develop leads for criminal 

investigations within domestic field offices. 

The IRS has committed to the Attorney General to support the International Organized 

Crime (IOC) strategy and agreed to place staff at the International Organized Crime 

Intelligence and Operations Center (IOC-2) in support of intelligence gathering on 

international organized crime. While the IOC-2 will generate leads and support case 

agents, the Global Illicit Finance Team (GIFT) will address the financial investigations at 

the working agent level. The establishment of a West Coast GIFT and an expansion of 

the East Coast GIFT will enhance IRS efforts to respond effectively to the escalating 

demand for special agents to investigate illicit financial transactions on a national and 

international level. The operations of both IOC-2 and GIFT also will involve substantial 

coordination with IRS foreign attachés, as well as other federal attachés and other foreign 

law enforcement agencies. 

This initiative will allow the IRS to:

 Further its global presence and its pursuit of offshore tax and financial crimes; 

and

 Support the Department of Justice Law Enforcement Strategy to combat 

international organized crime.

Once the new hires reach full potential in FY 2014, the IRS will increase the number of 

cases completed by 21 cases.
IRS-33

International Data Analysis (+$8.8 million / +19 FTE) 

This initiative provides funding to perform international data analysis to detect abuses 

and trends. 

The IRS receives annual submissions from tax treaty partners with income and 

withholding statements for U.S. taxpayers in foreign countries for a variety of income 

types, including interest, dividends, royalties and capital gains. The IRS also forwards to 

treaty partners similar information taken from the submissions of Form 1042-S for 

foreign taxpayers earning income in the U.S. Data are received in various formats by 

multiple recipients throughout the IRS, but not all business users with a need have access 

nor is it available in forms that facilitate full usage for tax purposes. For much of the 

data, effective electronic analysis has not occurred. The initiative would build on the 

prototype already developed that provides the means for electronically analyzing passport 

renewal data, security and exchange commission forms, routine exchange data from 

treaty partners and other data as identified. Currently, the IRS is not incorporating this 

tax information into information matching programs, and only rarely is this information 

incorporated into ongoing compliance efforts. This solution will:

 Provide inclusion of foreign income into information matching programs reducing

a serious tax gap related to these types of returns; 

 Make the data available for compliance research for modeling taxpayer behavior 

and for the identification of high-risk returns; and

 Strengthen partnerships with tax treaty partners by providing a more effective 

means of exchanging information in a timely way.

Similarly, the IRS currently has no way to link individual filers with complex 

international financial transactions to related businesses and other entities to which they 

have significant or controlling interests. This solution provides the overall approach for 

providing technology capabilities to support international risk assessments and tax 

compliance across the IRS and to support several new initiatives, such as the GHW 

Industry and Transfer Pricing Practice. 

To address current limitations of international tax compliance, the IRS seeks additional 

resources to: 

 Increase acquisition, utilization and availability of information on international 

tax issues such as passport renewal data, security and exchange commission 

forms, routine exchange data from treaty partners, and any additional data that 

might be identified; 

 Increase international compliance risk assessment (i.e., link GHW industry 

individual taxpayer behaviors to businesses or tax-exempt organizations); 

 Leverage insights into international compliance risks across all international 

taxpayer segments;
IRS-34

 Improve international compliance workload identification across IRS 

organizations to assess the total volume of workload exhibiting specific 

compliance risks; and

 Create an enterprise-wide database with tools and technologies that can be used 

throughout IRS to:

o Promote collaborations for cases that cut across the IRS organization; 

o Centralize disparate datasets into a cohesive data sharing strategy; 

o Analyze complex international and offshore cases; and 

o Identify abusive transactions and emerging trends. 

Other Direct Costs (+$4.5 million / +29 FTE)

IRS Activity Cost FTE Explanation

Appeals $1.5 10 Ensure proper handling of cases, fair enforcement of laws, 

and – when appropriate – equitable application of taxes and penalties.

Chief Counsel $3.0 19 Support examinations of Forms 1042 and 1042S and assist audit teams 

in addressing complicated withholding issues. 

Total $4.5 29

Dollars in Millions
IRS-35

Increase Collection Coverage

+$52,000,000 / +413 FTE

Funding for Increase Collection 

Coverage will expand work on the 

collection inventory and improve 

collection processes to bring taxpayers 

who fail to pay their tax debt into 

compliance and produce additional 

annual enforcement revenue of 

$398.3 million with an ROI of 

8.8 to 1 once the new hires reach full 

potential in FY 2014. 

Nonfiling/Underpayment Compliance (+$26.3 million / +282 FTE)

This initiative funds the expansion of the Automated Collection Systems (ACS) program 

to address nonfiling and underpayment compliance more effectively. The increase will 

allow the IRS to address growing collection case inventories and call volumes. This 

effort will help reduce the nonfiling tax gap, estimated at $27 billion (approximately 

8 percent), and the underpayment tax gap, estimated at $33 billion (approximately 

10 percent). 

The ACS is a call-site operation and is the most productive IRS program for revenue 

collection. In FY 2010, ACS call volume was 11 percent more than in 2009. Significant 

increases in phone volume occurred after IRS representatives began leaving messages 

identifying IRS as the caller. ACS support staff will be increased in Atlanta to help place 

Position Type/Other Costs FTE $000

Nonfiling/Underpayment Compliance 282 $26,300

Customer Service Representative Account Management Non-Technical and 254 22,737

Support Staff 28 3,202

Safeguard Travel 361

Offers-In-Compromise (OIC) 75 $7,920

Revenue Officer 25 4,127

Tax Examiner 17 1,493

Support Staff 33 2,300

Other Costs 56 $5,755

Appeals Officer 5 750

Revenue Agent 1 137

Attorney 10 1,773

Customer Service Representative 35 2,618

Support Staff 5 477

IT Projects 0 $12,025

Electronic Lien (e-Lien) 3,000

Business Masterfile CCNIP 3,025

Integrated Collection System (ICS) 2,000

Consolidated Decision Analytics (CDA) 3,000

Online Offer-in-Compromise (OIC) 1,000

Total 413 $52,000

Major Activities

Projected

Revenue

$M

TDI

Closures

TDA

Closures

Nonfiling/Underpayment Compliance $398.3 25,200 144,300 

ROI 

$52.0 $48.2 $45.2

$177.3

$318.6

$398.3

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

FY 2012 FY 2013 FY 2014

in millions

Cost Enforcement Revenue

3.4 to 1

8.8 to 1

6.6 to 1
IRS-36

employees who will be effected by the closing of the Atlanta Submission Processing 

Center scheduled for the end of FY 2011. These ACS resources will address the 

workload generated by increased balance due and delinquent return notices and the 

expansion of the international examination program, which resulted in a significant 

increase in workload. 

Offers In Compromise (OIC) (+$7.9 million / +75 FTE)

The OIC program processes taxpayer requests to reduce or eliminate their tax liabilities 

because of extreme circumstances and/or hardship. In FY 2010, the requests for OIC 

services was 8.5 percent more than in 2009. The funding will address the increased 

workload attributable to more taxpayers experiencing economic hardship and the IRS 

focus on assisting unemployed taxpayers. Even with the additional resources requested 

in the FY 2011 budget request, current submission levels will overwhelm the program 

and will result in case processing delays.

Collection IT Requirements (+$12.0 million)

The IRS cannot pursue a large portion of its collection inventory because of resource 

constraints and is developing innovative approaches to inventory selection. The 

following projects will allow the IRS to innovate and improve the collection process:

 Consolidated Decision Analytics (CDA) – Improve the selection, prioritization, 

and assignment of collection cases. The initiative supports the enhancement of 

workload prediction and selection models, allowing the IRS to allocate collection 

resources more effectively to reduce the tax gap and address the inventory of 

unpaid assessments. 

 Integrated Collection System (ICS) – Continue the modernization of ICS through 

automation of manual processes, improving employee efficiency and productivity, 

and providing a streamlined process for capturing financial data. 

 Business Masterfile Case Creation Non-filer Identification – Identify business 

return non-filers, including unknown non-filers who may be delinquent in filing 

their tax returns. Expand current algorithms and data sets and incorporate 

available state return data to improve the quality of case selection and allow the 

system to become the primary repository where cases are created, prioritized, 

selected and maintained. 

 Electronic Lien (eLien) System – Develop an eLien system to deliver liens 

electronically. More than one million federal tax lien documents are mailed each 

year to more than 4,000 state and local jurisdictions. This system will eliminate 

GAO findings by reducing the time to file lien releases and resolve lost liens. 

Tax liens are a significant tool in the IRS collection program, resulting in the 

filing of over 450,000 liens annually. 
IRS-37

Other Costs (+$5.8 million / +56 FTE)

IRS Activity Cost FTE Explanation

Appeals $1.0 7

Support examination efforts on key compliance areas focused on 

improving voluntary compliance. 

Chief Counsel $2.0 12

Provide advice related to refundable credits and assist in litigation 

against promoters of schemes to fraudulently claim these credits and any 

cases resulting from denial of refunds. Advise examiners hired to do 

employment tax audits.

Taxpayer Advocate Service $0.3 3

Ensure the IRS follows appropriate procedures and does not create 

unnecessary burdens or compromise taxpayers' rights.

Wage & Investment $2.5 34

Support examination efforts by ensuring staffing available to handle 

downstream impact in collection, accounts management and submission 

processing operations. 

Total $5.8 56

Dollars in Millions
IRS-38

Implement Merchant Card and Basis Reporting

+$35,730,000 / +415 FTE

Funding for Implement Merchant 

Card and Basis Reporting will staff 

programs to implement information 

reporting on merchant payment card 

and third party reimbursements

enacted in the Housing and Economic 

Recovery Act of 2008 (Public Law 

110-289) and basis reporting on 

security sales enacted in the

Emergency Economic Stabilization 

Act of 2008 (Public Law 110-343), 

producing additional annual 

enforcement revenue of $185.7 million

with an ROI of 6.0 to 1 once the new 

hires reach full potential in FY 2014. 

The IRS is building new IT systems and modifying existing systems to create the 

Business Master File Automated Underreporting Program (BMF AUR) to implement 

document matching for merchant card payment transactions. In FY 2011, the IRS 

requested resources to pilot the Business Master File AUR program and test new 

procedures. The FY 2012 initiative will allow the IRS to implement additional document 

matching for merchant payment card and third party entities that transfer payments and 

money between banks and merchants to report the amount of the transaction, and the 

name, address, and taxpayer identification number (TIN) of each payee receiving 

payments from reportable transactions on Form 1099-K, Merchant Card and Third Party 

Payments.

Position Type/Other Costs FTE $000

Information Reporting on Merchant Card 

Reimbursements AUR 327 $27,456

Tax Examiner 185 17,529

Data Transcriber 126 8,291

Support Staff 16 1,142

IT Equipment 494

Basis Reporting on Security Sales 20 $1,316

Data Transcriber 20 1,316

Other Costs 68 $6,958

Revenue Officer 13 1,763

Revenue Agent 1 137

Customer Service Representative 28 2,099

Attorney 4 725

Paralegal 3 265

Support Staff 19 1,969

Total 415 $35,730

Major Activities

Individual 

and 

Business 

Return 

Audits

Information Reporting on Merchant Card 

Reimbursements 325,000 

ROI 

$35.8 $31.8 $30.8

$72.4

$129.5

$185.7

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

FY 2012 FY 2013 FY 2014

in millions

Cost Enforcement Revenue

2.0 to 1

6.0 to 1

4.1 to 1
IRS-39

Information Reporting on Merchant Payment Card Reimbursements – Underreporter 

(+$27.5 million / + 327 FTE)

Underreported business income accounts for a significant portion of the individual 

income tax gap. A business receives payments for goods or services through a consumer 

payment card or through third party entities. These receipts can go unreported by 

businesses, thereby significantly contributing to the tax gap.

The enacted legislation allows the IRS to validate income reported by businesses with 

their payment card receipts and third party transactions through additional information 

reporting:

 Payment card processors will report total payments made to a business; and 

 Third party settlement organizations will report network transactions settled 

among participating payees. 

The legislation will help reduce the tax gap in three ways:

 A business could reconcile merchant card payments and third party network 

transactions to an official year-end statement; 

 A business could avoid underreporting knowing the IRS performs income 

validation through document matching; and 

 A business that evades its tax obligations by not filing or understating its income

would be easier for the IRS to identify. 

To implement the document matching of Merchant Payment Card reimbursements, this 

initiative funds 126 FTE for data transcribing to capture payment information and new 

line items from income tax forms and 185 FTE (AUR tax examiners) to reconcile 

approximately 242,000 additional tax returns beginning in FY 2012. Once new hires 

reach full potential in FY 2014, this investment will produce 325,000 more individual 

and business return reconciliations.

Basis Reporting on Security Sales (+$1.3 million / +20 FTE)

GAO estimated that 36 percent of individual taxpayers misreported their securities capital 

gains or losses in tax year 2001. The estimated capital gains tax gap for Tax Year 2001 is 

$11 billion. The enacted legislation requires investment brokers to report the adjusted 

basis of publicly traded securities owned by customers. The Basis Reporting on Security 

Sales program audit workload levels would remain the same. However, the additional 

information would improve productivity, case selection, and greatly reduce the ―no 

change‖ rate. 

This initiative includes 20 FTE to transcribe basis information from Form 1099-B, 

Proceeds From Broker and Barter Exchange Transactions, and related income tax line 

items on Form 1040 Schedule D, Capital Gains and Losses. This information will 

capture basis reporting on securities sales to improve document matching.
IRS-40

Other Direct Costs (+$6.9 million / +68 FTE)

IRS Activity Cost FTE Explanation

Appeals $2.0 15 Support examination efforts on key compliance areas focused on 

improving voluntary compliance. 

Chief Counsel $1.1 9 Litigate those cases that are not resolved at the audit or appeals stages.

Taxpayer Advocate Service $1.7 16 Ensure the IRS follows appropriate procedures and does not create 

unnecessary burdens or compromise taxpayers' rights.

HCO $0.1 1 Handle increased workload to hire and support staff. 

Wage & Investment $2.0 27

Support examination efforts by ensuring staffing available to handle 

downstream impact in collection, accounts management and submission 

processing operations. 

Total $6.9 68

Dollars in Millions
IRS-41

Increase Coverage to Address Tax Law Changes and Other Compliance Issues

+$96,718,000 / +497 FTE

The Increase Coverage to Address Tax 

Law Changes and Other Compliance 

Issues initiative addresses compliance 

issues and new responsibilities arising 

from recent tax law changes included in 

major legislation such as the American 

Recovery and Reinvestment Act of 2009 

(Recovery Act) (Public Law 111-5) and 

the Affordable Care Act (ACA) (Public 

Law 111-148). This initiative will fund 

compliance programs needed for new 

provisions such as direct-pay bonds, new 

requirements on tax-exempt hospitals, a 

new fee on manufacturers and importers 

of branded prescription drugs, the excise 

tax on indoor tanning, and also will 

increase specialty programs (i.e., 

employment tax, excise tax, and estate 

and gift tax) audits. These resources 

would produce additional annual 

enforcement revenue of $80.8 million 

with an ROI of 3.0 to 1 once the new 

hires reach full potential in FY 2014. 

Major Activities

Projected 

Revenue

$M

Specialty 

Program 

Audits Exams

Specialty Programs $43.0 2,210 

IRS Bond Enforcement Activities 675 

Affordable Care Act

Promote Compliance with New Excise Tax $37.8 1,000 

Strengthen Oversight of Exempt Hospitals 1,700 

Total $80.8 3,210 2,375 

ROI 

$29.8 $27.7 $27.3

$42.7

$61.7

$80.8

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

FY 2012 FY 2013 FY 2014

in millions

Cost Enforcement Revenue

1.4 to 1

3.0 to 1

2.2 to 1

Position Type/Other Costs FTE $000

Expand Coverage of Specialty Taxes 45 $6,730

Revenue Agent 32 4,408

Attorney 11 1,642

Support Staff 2 180

Contractor Service 500

Support Expansion of Direct-Pay Bonds 16 $2,550

Revenue Agent 8 1,093

Tax Law Specialist 4 825

Program Manager 2 460

Clerk 2 164

Support Services 8

Taxpayer Service Support for AUR Soft Notices 36 2,742

Customer Service Representative 23 1,707

Tax Examiner 13 855

Additional Postage for Soft Notices 180

Examination IT Requirements $5,975

Correspondence Imaging Compliance (CIC) 5,975

Other Costs 37 $5,106

Revenue Agent 3 410

Appeals Officer 23 3,446

Attorney 2 402

Customer Service Representative 3 287

Taxpayer Advocacy Specialist 2 209

Manager, Analyst, and Support Staff 4 352

Implement Affordable Care Act (ACA) 312 $65,606

Promote Compliance with New Excise Tax 81 $11,506

Revenue Agent 58 9,166

Tax Examiner 8 687

Tax Technician 2 181

Manager, Analyst, and Support Staff 13 1,472

Administer New Fees on Drug Manufacturer 

and Health Insurers 76 $29,278

Revenue Agent 5 1,025

IT Project Specialist 67 10,747

Manager, Analyst, and Support Staff 4 764

Contractor Service 12,092

Software 750

Computer Equipment 3,900

Strengthen Oversight of Exempt Hospitals 84 $9,861

Revenue Agent 35 3,965

Tax Law Specialist 22 3,433

Manager, Analyst, and Support Staff 27 2,463

Update Existing IT Systems for Tax Law 

Changes 71 $14,961

IT Project Specialist 71 11,361

Computer Equipment 3,600

Other ACA Costs 51 $8,009

Appeals Officer 10 1,879

Attorney 8 1,501

Taxpayer Advocacy Specialist 17 1,641

Manager, Analyst, and Support Staff 16 2,988

Total 497 $96,718
IRS-42

Expand Coverage of Specialty Taxes (+$6.7 million / +45 FTE)

This initiative increases compliance activities in the Employment, Excise, and Estate and 

Gift Tax Programs:

 The Employment Tax program would focus on misclassification of employees as 

independent contractors through an increase in worker classification audits. It 

also would focus on tip compliance by assessing the employer share of FICA 

taxes on unreported tip income and expanding the Voluntary Compliance 

Agreement process for governmental employers.

 The Excise Tax program would focus on the increased workload involving 

international issues of foreign entities such as insurance brokers and foreign 

airlines, referrals from large business audits, and non-filers. 

 The Estate and Gift Tax program would focus on changes in the estate tax law 

and on expanding non-filer work in both programs. IRS non-filer work has 

improved using data from state agencies and new research to develop and refine 

both estate and gift non-filer models. The expansion of efforts to address 

non-filers is critical to achieving a higher level of voluntary compliance with 

estate and gift laws.

Once the new hires reach full potential in FY 2014, this investment will produce 

2,210 more specialty program return audits and generate $43 million in revenue. 

Support Expansion of Direct-Pay Bonds (+$2.6 million / +16 FTE)

Build America Bonds (BABs) are tax-credit bonds created by the Recovery Act, which 

were extended and expanded by the Hiring Incentives to Restore Employment Act 

(Public Law 111-147). The requested resources would allow IRS enforcement to keep 

pace with the projected growth in these and similar refundable credit bonds by:

 Performing critical pre-payment and post-issuance compliance checks on direct 

payment bonds;

 Regulating the volume cap limitations; 

 Preventing the risk of lost revenue by maintaining a strong examination program

to address both traditional tax exempt bonds and new tax advantaged issuances 

such as BABs; and

 Meeting the demand for new bond issuances.

The direct payment feature of BABs and other refundable tax credit bonds introduces 

new risks to the Treasury. Through November 2010, state and local governments issued 

more than 2,000 direct-pay bonds worth $165 billion. Since enactment of the Recovery 

Act, the IRS has completed pre-payment compliance reviews for more than $2.5 billion 

in refundable credit payments. Without the requested resources, the risk of fraudulent 

credit payments made to BABs and other direct-pay bonds (potentially in the millions of 

dollars) would increase, and the ability of the IRS to prevent, detect, and remedy 
IRS-43

noncompliant bond transactions would decrease. Additionally, many of these new bond 

arrangements are subject to volume cap limitations that restrict the aggregate value of 

bond issuances. 

These staffing resources would be dedicated to monitoring the dollar limitations for 

tax-preferred bonds, would strengthen IRS’s ability to ensure compliance with the 

volume cap rules, would allow the IRS to conduct pre-payment reviews for each related 

bond return, and would ensure that direct-pay bonds meet compliance requirements 

throughout their life cycle. Without this staffing, BAB and direct-pay bond compliance 

activities would strain existing enforcement resources and would decrease the number of 

completed exams in the Tax Exempt Bond examination program. 

Taxpayer Service Support for AUR Soft Notices (+$2.7 million / +36 FTE)

The IRS Strategic Plan includes the expansion of enforcement tools such as soft notices. 

A soft notice asks the taxpayer to self-correct to avoid the traditional compliance 

treatment resulting in additional phone calls and an increase in the number of amended 

returns filed. The AUR program minimizes revenue loss through document matching of 

taxpayer account information. Approximately 12 million taxpayers each year misreport 

income based on matching with third-party information returns. Of these taxpayers, the 

AUR program processes about four million cases. This initiative allows the IRS to issue 

notices to more non-compliant taxpayers. 

Examination Information Technology (IT) Requirements (+$6.0 million)

The IRS requests resources to make the exam process more efficient through the 

following technology initiatives:

 Correspondence Imaging Compliance (CIC) – Campus Compliance annually 

receives about 16 million pieces of correspondence averaging 10 pages each. The 

current manual process causes lengthy delays between receipt and disposition, 

resulting in increased telephone calls and resubmissions. CIC would replace the 

manual process with an electronic imaging system that would use existing 

technology. This investment:

o Allows real-time access to documents when taxpayers contact the IRS; 

o Provides better management of correspondence inventory; 

o Allows correspondence to be available within one to three days, versus 

weeks;

o Reduces cycle time or days in inventory; and

o Reduces call volumes and duplicative mail receipts.

Hard copy document storage at the Federal Records Center and transshipments 

cost savings of $12.1 million also would be realized during the project life cycle.
IRS-44

Implement Tax Code Changes (+$65.6 million / +312 FTE)

 Promote Compliance with New Excise Tax (+$11.5 million / +81 FTE)

The ACA imposes a new 10 percent excise tax on indoor tanning services 

provided on or after July 1, 2010. As many as 25,000 businesses provide indoor 

tanning services, including about 10,000 businesses that offer tanning services 

along with other services, such as spas, health clubs, and beauty salons. These 

entities typically do not have experience filing federal excise tax returns. This tax 

is expected to nearly double the number of Form 720, Quarterly Federal Excise 

Tax Return, that the IRS receives each quarter, from about 25,000 to more than 

45,000.

To promote compliance with this new tax, the IRS has developed a 

comprehensive strategy to identify the affected population and reduce non-filing 

through the use of notices sent before initiating compliance activity. The IRS 

would select entities for examination based on risk, with an emphasis on 

non-filers. The IRS expects to close about 1,000 excise tax cases annually by 

FY 2013.

 Administer New Fees on Drug Manufacturers and Health Insurers

(+$29.3 million / +76 FTE)

The IRS must administer a new aggregate annual fee on businesses engaged in 

manufacturing and importing branded prescription drugs sold to specified 

government programs. The fee, set at $2.8 billion for 2012 and 2013, represents a 

significant new source of revenue and requires the development of new systems 

and new processes for interacting with the affected business community. The IRS 

will receive and process information from manufacturers/importers and specific 

government programs (Veterans Affairs, Medicare Parts D and B, Medicaid, 

Department of Defense and TriCare) to determine each manufacturer’s fee 

assessment. Continuing administration includes IRS collection of data, 

computation of each entity’s fee amount, and notification of payment due. This 

system also would provide a technology platform for administering fees on health 

insurance policies and self-insured health plans, which become effective after 

September 30, 2012.

 Strengthen Oversight of Exempt Hospitals (+$9.9 million / +84 FTE)

The ACA establishes new requirements for tax-exempt hospitals, which include a 

majority of the hospitals in the United States. IRS submission processing 

operations will need additional staff to process these new reporting requirements. 

In addition, the IRS is required to review, at least once every three years, the 

community benefit activities of tax-exempt hospital organizations to which new 

Section 501(r) applies (estimated at more than 5,100 entities). This initiative will 

increase the number of compliance reviews of tax-exempt hospitals by 1,700. 
IRS-45

The first cycle of compliance reviews is scheduled to be completed by

September 2013. 

Additionally, the IRS (in consultation with the HHS) must develop and deliver a 

new annual report to Congress on levels of charity care in the hospital sector. 

These are substantial new requirements and additional resources are required to 

ensure the legislative intent of these changes is satisfied.

 Update Existing IT Systems for Tax Law Changes (+$14.9 million / +71 FTE)

In the last few years recent tax law changes have required not only the design of 

new systems, but also have necessitated changes and upgrades to existing IRS 

systems to ensure that they accurately reflect the new requirements and can 

interact with other new systems. These changes allow the IRS to keep pace with 

new tax law, avoid the development of costly manual procedures to counteract 

unanticipated problems, and maintain the efficiency of IRS programs. It is critical 

that IRS systems reflect current law and exchange data and information reliably. 

These additional resources would help the IRS meet its tax administration 

responsibilities by keeping existing IT systems current with recent tax law

changes that require the IRS to integrate new information reporting data, calculate 

and assess new taxes, administer new taxes (e.g., update tax accounts, send 

notices, provide updates to customer service), and assess penalties for incorrect 

reporting, failure to pay, etc.

Other Direct Costs (+$13.1 million / +88 FTE)

IRS Activity Cost FTE Explanation

Appeals $6.0 39 Support examination efforts on key compliance areas focused on 

improving voluntary compliance. 

Chief Counsel $2.0 12

Provide advice related to refundable credits and assist in litigation 

against promoters of schemes to fraudulently claim these credits and any 

cases resulting from denial or refunds. Advise examiners hired to do 

employment tax audits.

Taxpayer Advocate Service $1.0 19 Ensure the IRS follows appropriate procedures and does not create 

unnecessary burdens or compromise taxpayers' rights.

Wage & Investment $2.0 3

Support examination efforts by ensuring staffing available to handle 

downstream impact in collection, accounts management and submission 

processing operations. 

HCO $0.1 1 Handle increased workload to hire and support staff. 

ACA Program Management

(CFO/NHQM/WAGE) $2.0 14 Overall program management and administration of ACA tax law 

changes.

Total $13.1 88

Dollars in Millions
IRS-46

Ensure Accurate Delivery of Tax Credits

+$260,293,000 / +834 FTE

Recognizing IRS’s important role in 

delivering economic incentives through 

tax credits, the Ensure Accurate 

Delivery of Tax Credits initiative will 

improve the delivery of existing credits 

through a combination of improved 

technology tools and increased 

enforcement staffing. The initiative also 

funds the information technology and 

other systems required to implement the 

new ACA premium assistance tax credit, 

which becomes effective in 2014. The 

IRS must build new systems to support 

eligibility determinations based on 

household income, and modify existing 

tax processing systems to support 

reconciliation of advance payments of 

the credit. The initiative also funds the 

appropriate compliance resources for the 

small employer tax credit, which came 

into effect in 2010. The resources 

devoted to improving administration of existing credits would produce additional annual 

enforcement revenue of $183.3 million with an ROI of 4.1 to 1 once the new hires reach 

full potential in FY 2014. 

Major Activities

Projected 

Revenue

$M

Protected

Revenue

$M

Individual

Audit

Business

Audits Exams

Refundable Credit Compliance Office $128.9 $128.9 75,700 

Affordable Care Act $54.4 5,000 9,000 1,000 

Total $183.3 $128.9 80,700 9,000 1,000 

ROI 

$51.0 $46.4 $45.0

$110.2

$163.3

$183.3

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

FY 2012 FY 2013 FY 2014

in millions

Cost Enforcement Revenue

2.2 to 1

4.1 to 1

3.5 to 1

Position Type/Other Costs FTE $000

Establish Refundable Credit Compliance Office 314 $30,176

Revenue Agent 5 605

Tax Compliance Officer 35 3,606

Tax Examiner 220 20,097

Manager, Analyst, and Support Staff 54 5,868

Other Costs 16 $2,621

Attorney 13 2,376

Manager, Analyst, and Support Staff 3 245

Implement Affordable Care Act (ACA) 453 $213,459

Provide Coverage for New Health Care Tax 

Credits 234 $23,927

Revenue Agent 193 20,113

Customer Service Representative 2 167

Tax Examiner 8 708

Manager, Analyst, and Support Staff 31 2,939

Provide Facilities and Infrastructure for New 

Compliance Staffing $13,837

Expand IT Infrastructure for New Tax Credits 

219 $175,695

IT Project Analyst 219 35,885

Contractor Service 111,960

Software 10,850

Computer Equipment 17,000

Other ACA Costs 51 $14,037

Appeals Officer 10 1,858

Attorney 7 1,322

Taxpayer Advocacy Specialist 16 1,550

Manager, Analyst, and Support Staff 18 9,307

Total 834 $260,293
IRS-47

Establish Refundable Credit Compliance Office (+$30.2 million / +314 FTE)

The Refundable Credit Compliance Office will develop a comprehensive and integrated 

compliance strategy for administering refundable credits and rapidly addressing refund 

schemes. 

A refundable tax credit is a credit that can reduce tax liability below zero and can result 

in a negative tax liability. If the credit exceeds the total tax liability, the excess is 

refundable and the government incurs an outlay. Examples of refundable credits are the 

Earned Income Tax Credit (EITC) and the Child Tax Credit.

Establishing an office dedicated to refundable credit work allows the IRS to address 

non-compliance and fraud trends that emerge from existing and future refundable credits. 

Once the new hires reach full performance in 2014, the IRS will complete 37,850 more 

post-refund audits, generating annual enforcement revenue of $128.9 million. The 

additional 37,850 pre-refund audits will protect an additional $128.9 million in revenue.

The additional staffing would allow the IRS to maintain broad exam coverage by meeting

the challenges of new credits without reducing its coverage of existing returns. The IRS 

would work both individual and small business cases produced by the new refundable 

credits.

The initiative funding:

 Expedites pre-refund credit review and processing;

 Reduces the time to notify taxpayers of their eligibility for the credit; and

 Increases the number of post-refund audits. 

Implement New Legislative Provisions (+213.4 million / +453 FTE)

 Provide Coverage for New Health Care Tax Credits

 (+$23.9 million / +234 FTE)

The ACA created a significant new credit for small employers to encourage these 

employers to provide health insurance coverage for their employees. This credit 

is equivalent to 35 percent of the employer’s health care premium expenses 

(25 percent refundable credit for tax-exempt employers). The credit percentage 

increases to 50 percent (35 percent for tax-exempt organizations) for tax year 

2014 and beyond. The IRS has identified and communicated with more than four 

million small businesses potentially eligible for this credit. These additional 

resources will allow the IRS to conduct focused examinations to encourage 

compliance with this credit and would allow the IRS to include this issue in 

routine examinations of small employer tax returns without reducing coverage of 

other tax compliance issues. This initiative also provides resources to address the 

expanded adoption tax credit.
IRS-48

 Provide Facilities and Infrastructure for New Compliance Staffing 

(+$13.8 million)

Administration of various credits established by the ACA (especially the Premium 

Assistance Tax Credit) requires additional IRS campus staffing. Although the 

premium credit does not become effective until 2014, the IRS must begin the 

process of acquiring and building out new facilities in 2012 so that they will be 

available and functioning when these new employees are hired. This request 

includes funds for acquiring space and equipping facilities with the 

telecommunications and networking infrastructure needed for enforcement staff to 

perform their job duties effectively.

 Expand IT Infrastructure for New Tax Credits (+$175.7 million / +219 FTE)

The ACA establishes a new premium credit to subsidize the cost of health 

insurance for millions of Americans who do not have access to affordable 

coverage. For a number of reasons, administering this credit will require a 

significant investment in new technology. First, the eligibility for the credit is 

based on household-level income information that is not currently maintained. 

This initiative would create a new tax data repository to support the eligibility 

determination for this new credit. 

In addition, a new accounting and payment system would be needed to administer 

this benefit. The system would aggregate payments to insurers on the 

participants’ behalf and track payments by insurer and participant. 

Furthermore, individuals must reconcile any advance payments received 

throughout the year with the actual income reported on the tax return. IRS must 

modify systems, forms and instructions to support this process. 

Finally, the IRS will build the infrastructure needed to perform document 

matching and other decision analytics to detect fraud and other non-compliance. 

Together, these systems ensure prompt and accurate delivery of the premium 

credit to eligible taxpayers while ensuring that this subsidy is not abused.
IRS-49

Other Direct Costs (+$16.7 million / +67 FTE)

IRS Activity Cost FTE Explanation

Appeals $1.9 10 Staffing for increased receipts.

Chief Counsel $4.3 26 Counsel providing legal support for compliance activities.

Taxpayer Advocate Service $1.5 16 Staffing to handle additional case receipts.

ACA Program Management $9.0 15 Overall program management and administration of ACA tax law 

changes.

Total $16.7 67

Dollars in Millions
IRS-50

Administer New Statutory Reporting Requirements

+$58,505,000 / +187 FTE

Recent legislation established significant 

new information reporting and sharing 

requirements from third parties (such as 

employers, health insurance providers), 

and the exchanges to administer the 

ACA’s premium assistance tax credit, 

the individual coverage requirement, and 

the employer responsibility payment. 

Effective implementation requires 

significant enhancements to existing 

information returns systems to handle 

the additional volumes and new 

information reporting categories. This 

initiative also includes resources to 

implement provisions that allow IRS to 

share tax data with state and federal entities to determine eligibility for the advance 

premium credit. This request also includes resources to ensure secure exchange of 

information.

In addition, the ACA, as enacted, also amends Section 6041 of the Internal Revenue 

Code to require businesses to file Form 1099 information returns starting in 2012 for all 

aggregate purchases of services or property greater than $600. The initial campus staff 

included in this initiative to handle the inventory resulting from this provision will 

produce additional annual enforcement revenue of $16.9 million with an ROI of 

7.0 to 1 once the new hires reach full potential in FY 2014. 

Major Activities

Projected 

Revenue

$M

TDA/TDI

Closures

Affordable Care Act

Nonfiler Compliance $16.9 70,000 

Total $16.9 0 

ROI 

$2.6 $2.5 $2.4

$9.6

$13.5

$16.9

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

FY 2012 FY 2013 FY 2014

in millions

Cost Enforcement Revenue

3.7 to 1

7.0 to 1

5.4 to 1

Position Type/Other Costs FTE $000

Implement Affordable Care Act (ACA) 182 $57,676

Implement New 1099 Reporting Requirements 82 $23,286

Tax Examiners 29 2,627

IT Project Specialist 53 9,659

Contractor Services 6,000

Software 2,000

Computer Equipment 3,000

Implement New Health Coverage Information 

Reporting 100 $34,390

Tax Technician 7 1,121

Manager, Analyst, and Support Staff 28 5,676

IT Project Specialist 65 10,480

Contractor Services 13,888

Software 1,225

Computer Equipment 2,000

Other ACA Costs 5 $829

Attorney 4 751

Support Staff 1 78

Total 187 $58,505
IRS-51

Implement New 1099 Reporting Requirements (+$23.3 million / +82 FTE)

Under ACA, the Form 1099 reporting requirement for a taxpayer making payments to a 

recipient aggregating $600 or more for services or determinable gains in the course of a 

trade or business in a calendar year was expanded to include payments to corporations 

and payments for property. The IRS will need resources to hire additional campus staff 

and upgrade the Filing Information Returns Electronically (FIRE) system. The FIRE 

system provides the capability for businesses and others to file required information 

returns with the IRS in a cost-effective, electronic manner. In order to manage the 

additional workload from this provision, the IRS will need to upgrade the current system 

that is unable to handle the increased volume of submissions. This initiative also will 

provide the initial campus compliance staffing (29 FTE) to establish the program, 

including hiring and training of enforcement resources, to handle the additional inventory 

of non-filer assessments expected because of the expanded Form 1099 information 

reporting requirements from this enacted provision.

Note: The Administration has proposed to repeal this provision based on the burden it 

places on small businesses. Should this provision be repealed, the IRS would adjust its 

initiative needs accordingly.

Implement New Health Coverage Information Reporting 

(+$34.4 million / +100 FTE)

The ACA establishes new requirements for employers and health insurance providers to 

report information to the IRS. It also creates new information sharing needs among the 

IRS, the HHS, and state health insurance exchanges. These requirements require the IRS 

to modify existing systems and develop new systems to accept, validate, process, 

aggregate, and store new information. This initiative includes IT resources to develop 

these systems and new staffing (35 FTE) to expand IRS safeguards and data protection. 

Other Direct Costs (+$0.8 million / +5 FTE 

IRS Activity Cost FTE Explanation

Chief Counsel $0.8 5

Develop policy for new reporting requirements and issue appropriate 

guidance to clarify requirements.

Total $0.8 5

Dollars in Millions
IRS-52

Leverage Return Preparer Program to Reduce Noncompliance

+$16,600,000 / +108 FTE

Funding for Leverage Return Preparer 

Program to Reduce Noncompliance will

increase tax return oversight to ensure 

that tax return preparers are competent 

and that the IRS collects the right 

amount of taxes. This initiative will 

ensure uniform and high ethical 

standards of conduct for tax return 

preparers by enforcing preparer 

compliance with IRS rules, increasing 

preparer examinations, and monitoring 

and pursuing preparers engaged in fraudulent activities. This initiative is core to the 

IRS’s tax gap strategy and will increase government revenue.

Competent tax return preparers who are well educated in the rules and subject matter of 

their field can prevent costly errors, potentially saving a taxpayer from unwanted 

problems later on and relieving the IRS from expending valuable examination and 

collection resources. Given the important role that tax return preparers play in federal tax 

administration, the IRS has a significant interest in being able to identify tax return 

preparers and monitor their tax return preparation activities. This effort also will support 

the Department’s High Priority Performance Goal of increasing voluntary compliance. 

This initiative provides funding to ensure preparers are compliant with IRS rules and to 

design a preparer activity-monitoring program that will allow the IRS to:

 Match preparer information to the filed returns; 

 Ensure return preparers are adhering to professional standards and the law; 

 Ensure return preparers are compliant with their own tax returns; and

 Provide assurances to the taxpaying public that paid preparers are competent. 

This initiative will deploy a coordinated return preparer compliance strategy by 

conducting visits and investigating suspicious activity, especially of abusive return 

preparers. The IRS plans to use undercover shopping, where appropriate, in the 

investigation of suspicious return preparer activity. The planning and synchronizing of 

shopping activities is a labor-intensive investigative tool. In an effort to enhance 

enforcement activities to identify unscrupulous return preparers, the IRS is requesting 

funding that will support the expansion of investigative efforts to include approximately 

300 undercover shops each year. 

To increase enforcement presence, the IRS will establish multi-agency tax administration 

taskforces to seek prosecution where appropriate with a focus on eliminating fraudulently 

obtained tax refunds. Special Agents will conduct outreach efforts that address return 

Position Type/Other Costs FTE $000

Enforcement Support of the Return

Preparer Program 108 $16,600

Revenue Agent 46 7,430

Revenue Officer 3 346

Tax Technician 22 2,429

Program Analyst 1 195

Special Agent 18 4,225

Appeals Officer 1 146

Attorney 1 162

Support Staff 16 1,667

Total 108 $16,600
IRS-53

preparer concerns year round while working with the various state taxing agencies to

leverage resources and collaborate in prosecution efforts. 

This initiative establishes a Scheme Development Center (SDC) that will focus on 

detecting international tax avoidance schemes. The SDC will develop proactive 

approaches to protect the integrity of the U.S. tax system by:

 Developing and implementing procedures for compliance checks of international 

return preparers who specialize in preparing returns for U.S. citizens living abroad 

(expatriates) and foreign persons subject to U.S. tax on U.S. earned income;

 Developing leads received by attachés involving abusive promoters preparing bad 

returns for citizens abroad;

 Identifying taxpayers abusing the foreign tax credit; and

 Analyzing data received as a result of the voluntary disclosure process. 

A one-visit comprehensive return preparer compliance check will be used to verify 

compliance of a return preparer. This approach will increase direct compliance time by 

eliminating administrative redundancies of operating individual programs and shifting 

resources to a more holistic review of the preparer. While providing a full treatment 

strategy to the highest risk preparers, this approach also will support any specialized 

emphasis that might occur (e.g., greater weight to monitoring of new tax law provisions, 

in particular refundable credits that provide unique opportunities for abuse). 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-54

Address Appeals Workload Growth

+$9,100,000 / +66 FTE

Funding for Address Appeals 

Workload Growth will allow the IRS to 

increase Appeals staffing. Despite 

improvements in cycle time and 

increased efficiency in working cases, 

Appeals continues to experience rising 

inventories, and because of the nature of Appeals work, the cases are processed manually. 

Increased Appeals settlements lead to increased revenue. 

From FY 2000 through 2009, Appeals experienced significant workload growth. Case 

receipts increased by almost 126 percent, from 55,000 cases to more than 125,000 cases.

However, Appeals staffing levels remained relatively constant. In FY 2000, Appeals had 

977 case-working staff. After years of decline in staffing levels and recent hiring, 

staffing levels reached 1,074 case-working staff in FY 2009. Although Appeals case 

workload grew 126 percent, Appeals case work staffing levels grew by less than 

10 percent. As a result, the average case inventory per Appeals caseworker increased 

from 36 cases in FY 2000 to 70 cases in FY 2010.

The chart below illustrates the relationship between Appeals workload and staffing over 

the past decade: 

Over the next several years, Appeals workload will continue to grow. Current 

projections indicate that by FY 2012 case receipts will exceed 152,000, an increase of 

nearly 22 percent. Growth will continue beyond FY 2012 as well, reaching a projected 

181,000 case receipts in FY 2015, a 38 percent increase above current levels and a 

227 percent increase since FY 2000.

Receipts and Technical Staffing by Fiscal Year

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fiscal Year Receipts

0

200

400

600

800

1,000

1,200

1,400

Technical Staffing

Receipts Technical Staffing

Position Type/Other Costs FTE $000

Appeals Workload Growth 66 $9,100

Appeals Officer 20 2,902

Revenue Officer 46 6,198

Total 66 $9,100
IRS-55

To meet the challenges posed by the growing number of receipts, Appeals needs 

additional technical staff to handle the large number of cases it receives:

 Appeals Officers are highly trained tax specialists capable of adjudicating both 

examination and collection cases at all levels of complexity. The additional 

Appeals Officer staff will meet the need for additional teams throughout the 

country.

 Settlement Officers are specialized case-working staff trained to handle collection 

receipts. Due to the substantial growth in these cases over the past several years, 

Appeals needs additional Settlement Officers throughout the country to help 

resolve this work efficiently and effectively.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-56

Implement Uncertain Tax Position Reporting Requirements 

+$4,129,000 / +20 FTE

Funding to Implement Uncertain Tax 

Position Reporting Requirements will 

allow the IRS to provide guidance and 

certainty on tax positions and meet 

increasing taxpayer demands for this 

service. This increased workload is expected as a result of changes the IRS has proposed 

(Announcement 2010-9, Uncertain Tax Positions – Policy of Restraint) that require

certain large business taxpayers to report information about their uncertain tax positions 

that could affect their U.S. federal income tax liability. It is a critical part of IRS’s work 

to gain greater transparency into large corporate tax returns. 

The IRS expects both the volume and complexity of workload to increase in areas listed 

below as taxpayers seek certainty on the most complex issues facing their organizations 

and tax administration.

 Advanced Pricing Agreements (APA);

 Private Letter Rulings (PLR);

 Non-PLR Closing Agreements (CLAG);

 Actions on Decisions (AOD);

 Published guidance of all types;

 Legal advice (Pre-Filing); and

 Inquiries and general information letters (as part of training).

Taxpayers subject to this requirement will provide a concise description of each uncertain 

tax position for which the taxpayer or a related entity has recorded a reserve for U.S.

federal income tax in its financial statements. As proposed, a taxpayer also would be 

required to report those positions for which no reserve was established because the 

taxpayer expects to litigate the position and prevail in litigation. 

The requirement will apply to business taxpayers with assets of more than $10 million 

and a financial statement prepared under FIN 48 (i.e, a standard for accounting for 

uncertainty in income taxes recognized in an enterprise’s financial statements) or other 

similar accounting standard, such as International Financial Reporting Standards (IFRS),

that reflects uncertain tax positions. Under this proposal, for each uncertain tax position 

identified, the taxpayer will be required to:

 Use a new schedule to disclose their uncertain tax positions and file it with the 

taxpayer’s Form 1120, U.S. Corporation Income Tax Return, or other business tax 

returns; and

Position Type/Other Costs FTE $000

Implement New Reporting Requirements 20 $4,129

Attorney 20 4,129

Total 20 $4,129
IRS-57

 Rank their uncertain positions from highest to lowest based on the size of the 

position (based on U.S. federal income tax reserve amounts).

The schedule was implemented in 2010 for corporations filing Form 1120, Form 1120F, 

U.S. Income Tax Return of a Foreign Corporation, Form 1120L, U.S. Life Insurance 

Company Income Tax Return, and Form 1120PC, U.S. Property and Casualty Insurance 

Company Income Tax Return.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-58

Enhance Security and Disaster Recovery Systems Capability

+$12,000,000 / +5 FTE 

Funding for Enhance Security and 

Disaster Recovery Systems Capability is 

part of a multi-year improvement 

strategy to support the continued 

deployment of critical disaster recovery 

capabilities. It would improve the 

resiliency of two critical business 

processes: Processing Remittances and

Processing Tax Returns.

This initiative enhances the resiliency of existing architectures by deploying systemic 

improvements to build a more fault-tolerant infrastructure designed to reduce the 

recovery time dramatically for critical applications supporting remittance and tax return 

processing. The improvements include: 

 Enhancing mainframe and mid-tier system processing; 

 Building test and development environments; 

 Increasing network and data storage capacities;

 Deploying high-availability and geographically-dispersed data replication 

architectures; 

 Leveraging virtualized infrastructures; and

 Evaluating alternative IT architectures, such as cloud-based computing, that can 

facilitate the provisioning and scalability of IT resources for disaster recovery 

requirements.

This initiative also will ensure IRS compliance with government mandates as directed by 

Critical Infrastructure Protection and Homeland Security Presidential directives. 

Enhance Security and Disaster Recovery Systems Capability (+$12.0 million / +5 FTE)

Recent business impact and technical assessments confirmed that the IRS does not have 

adequate redundancy capabilities for critical tax processing systems. In the event of a 

disaster, the IRS would not be able to continue processing revenue, returns, and taxpayer 

refunds efficiently and provide customer service in a timely manner. 

The IRS needs to maintain the capabilities that support its critical business processes. 

The two processes covered in this initiative represent the highest priority critical business 

processes in need of disaster recovery capabilities. In addition, Homeland Security 

Presidential Directive 7 has resulted in designating several IRS core tax processing 

systems that directly support Processing Remittances and Processing Tax Returns as an 

essential part of the national Critical Infrastructure Protection (CIP) Program. 

Position Type/Other Costs FTE $000

Develop Security and Disaster Recovery

System Capability 5 $12,000

IT Project Specialist 5 619

IT Equipment 8,381

Software 1,000

Telecommunication Equipment 1,250

Contractor Services 750

Total 5 $12,000
IRS-59

The IRS CIP assets are part of the overall federal government continuity program that 

supports the requirements for maintaining national economic stability, national security, 

public morale, and confidence in government. To meet these requirements, these critical 

assets must have sustained systems architectures that ensure availability through 

resiliency and redundancy. 

The IRS needs a recovery time of 12 to 36 hours to allow continued processing of 

revenue and taxpayer refunds. With the current infrastructure, the recovery of the 

supporting systems will likely take several days, and in some cases weeks. Both internal 

and external assessments confirm inadequate disaster recovery capabilities for major 

mainframe-based legacy remittance and tax processing systems. These inadequacies 

range from no disaster recovery infrastructure to insufficient infrastructure operating at 

decreased capacity resulting in an inability to meet acceptable recovery time objectives, 

degraded user capabilities, and extended processing times. Key applications, such as 

e-Services, which support tax return processing are currently unrecoverable. The profile 

also shows that other applications (such as the Master File) that support remittance 

processing and several other critical business processes can be recovered fully only after 

five days.

The IRS estimates that each hour of unavailability of the Electronic Filing (e-File) system

could potentially affect $199 million in refunds. Moreover, 83 percent of the systems 

that support the critical processes, Processing Remittances and Processing Tax Returns,

are either currently unrecoverable or have recovery times that exceed 36 hours. 

Recent analysis of IRS remittance and tax return processing workloads indicate that 

extended application recovery times would affect the ability of the IRS to deposit federal 

tax receipts. In April, deposits were estimated at $814 million per day representing 

approximately $43.4 million in interest revenue. These figures do not include electronic, 

bank lockboxes or federal tax deposit coupons, which, if added, would significantly 

increase the daily tax receipts. In addition, a major outage would affect an estimated 

$952 million in refund processing for each day of downtime. 

Some of the specific improvements include:

 Implementing an automated data replication solution ($8.7 million). This would

reduce the recovery window for major legacy mainframe applications. The 

potential reduction of the recovery window for Master File would be from 

five days to nine hours;

 Upgrading disk storage capacity to recover the application development and 

testing environment ($1.8 million). This upgrade would significantly reduce the 

current 60-day window to recover this environment. This is critical for 

applications such as Master File; and

 Upgrading the network capacity ($1.5 million). The upgrades would expand 

IRS’s bandwidth, which determines the amount of data that can be carried from 

one point to another in a given time period (usually a second). Expanding the 
IRS-60

bandwidth would provide the capacity necessary to support and fully realize the 

benefits of automated data replication initiatives. 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-61

Update Integrated Financial System (IFS)

+$27,500,000 / +5 FTE

Funding for Update Integrated Financial 

System will complete the first phase of 

an initiative to update IFS.

Updating to SAP ERP 6.0 software 

provides the following benefits:

 Ensures compliance with future federal accounting requirements, including 

Government-Wide Accounting (GWA) standards and Common Government-wide 

Accounting Classification (CGAC) requirements;

 Moves to an open-services technology platform to allow implementation of 

standardized interfaces and communication with other federal systems with 

minimal configuration;

 Allows automatic functional updates to implement SAP enhancements without 

costly upgrades;

 Provides standardized federal accounting functionality in compliance with federal 

financial management requirements;

 Eliminates current work-around processes necessary to support adjustments and 

reimbursable receivables activities not provided in the current system;

 Eliminates the year-end blackout period and multiple budget versions; and

 Eliminates the month-end accrual process because liabilities would post upon 

receipt.

IFS runs on SAP 4.6C, which is more than ten years old, and the IRS is the only federal 

agency using this old software. Since January 2007, SAP no longer provides functional 

updates for Version 4.6C and will not make changes to accommodate new legislative or 

other federal accounting requirements, including CGAC and GWA standards. SAP 

provided support through an extended maintenance contract through December 2010. 

Beginning in 2011, SAP is providing only customer-specific support, charging 

maintenance plus time and materials to keep 4.6C operational. Thus, IRS is paying a 

premium to maintain the current level of maintenance support. Upgrade implementation 

will take approximately 18 months, and therefore, FY 2012 funding would result in 

implementation in FY 2014. 

If the IRS cannot implement subsequent new federal accounting requirements, such as 

CGAC or changes to existing standards, IRS compliance with federal financial 

management standards will be jeopardized. Attempts to change the base code of the 

unsupported software could increase upgrade costs or be so invasive as to prohibit future 

upgrades, as occurred with the IRS legacy accounting system. 

The risks of moving to SAP ERP 6.0 are low because it requires limited data conversion,

limited configuration management, and minimal changes to business processes, 

Position Type/Other Costs FTE $000

Integrated Financial System (IFS) 5 $27,500

IT Project Specialist 5 770

Contractor Services 26,730

Total 5 $27,500
IRS-62

interfaces, and reports. Over the past five years, 13 federal agencies successfully moved 

from SAP 4.6C to 6.0, thus demonstrating the low-risk nature of the move. This was 

validated by a contractor study that indicated that updating to SAP ERP 6.0 was the best 

option for IRS.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-63

Leveraging Data to Improve Compliance

+$1,400,000 / +5 FTE

Funding for Leveraging Data to Improve 

Compliance will capitalize on the recent 

significant increase in data reported to 

the IRS, with the goal of increasing 

compliance.

The IRS is focused on using a data-driven approach to continually innovate and improve 

its programs. This investment will capitalize on the recent significant increase in data 

reported to the IRS, with the goal of increasing compliance and evaluating 

IRS-administered programs. The IRS is administering multiple new tax provisions and 

programs in an increasingly complex tax system. Inadequate analysis of the information 

generated by these new activities will hamper improvements in compliance and tax 

administration. 

While the IRS has robust analytical programs and capabilities, they align with existing 

organizational structures and address tactical performance targets. The existing programs 

have difficulty merging and mining the increased amount of data now reported to the 

IRS. 

This initiative will use advances in analytical techniques, such as machine learning, 

neural networks, and data mining, to integrate business and technology aspects to 

improve core business operations and tax programs. The IRS will establish an office 

dedicated to new methods of analysis not tied to annual performance targets with a goal 

of achieving breakthrough insights into compliance. 

To facilitate this effort, the IRS must merge large volumes of disparate data elements into 

a format usable by advanced business analytics. This initiative will:

 Identify emerging areas of non-compliance;

 Promote the use of advanced modeling techniques that, in combination with IRS 

databases, will provide new insights into taxpayer behavior and into how different 

types of tax-related provisions affect compliance rates among taxpayers; and

 Address the changing nature of IRS’s workload and result in improvements in 

current analytical techniques to support existing programs. For example, current 

machine-learning algorithms developed for workload selection for high-income 

audits would be improved through new techniques.

Other Direct Costs

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE $000

Office of Research Analysis & Statistics 5 $1,400

Computer Scientist 5 965

Contractor Services 435

Total 5 $1,400
IRS-64

Enhance Physical Security for Federal Employees

+$15,481,000 / +10 FTE

The February 2010 attack against the 

IRS in Austin, Texas, killed one IRS 

employee and injured several others. 

Funding for Enhance Physical Security 

for Federal Employees will provide the 

investments needed to update and/or 

upgrade the physical security of IRS 

facilities. The investments enhance the 

overall security of IRS employees in the 

work place, while maintaining open 

access for the taxpayers that they serve.

Enhance Security Guard Services (+$10.0 million)

The additional resources will enhance security by providing guard presence in Taxpayer 

Assistance Centers (TACs) during the filing season. IRS employees are more exposed to 

irate or disgruntled taxpayers in TACs. The presence of a security guard can assist in 

preventing or defusing dangerous situations. 

The IRS currently operates 401 TACs of which 26 sites have a permanent guard presence 

and an additional 36 sites have guards during the January 1 through April 15 filing season

only. The IRS developed criteria to identify the TAC sites with the greatest risk. These 

criteria considered the following:

 The number of incidents;

 Presence of Criminal Investigation (CI) at the site;

 Potentially dangerous taxpayers among contact taxpayer population; and

 Neighborhood crime statistics. 

The requested resources fund expanded guard services at those sites with the greatest

risk. 

Improve Facility Security (+$1.6 million)

As a result of the Austin attack, the IRS is conducting a security reassessment of all

facilities to identify vulnerabilities to employees, information, equipment, and structures.

Risk assessments address all layers of security measures, including geography, 

demographics, crime statistics, effectiveness of existing security, and the age and types of 

security equipment in place. The resources will be used to purchase and install 

equipment to address vulnerabilities identified through the reassessment process.

Position Type/Other Costs FTE $000

Enhance Security Guard Services $10,000

Improve Security Facility $1,569

Address Security Threats 10 $3,912

Special Agent 8 1,852

Attorney 1 196

Support Staff 1 152

IT Equipment 1,712

Total 10 $15,481
IRS-65

Address Security Threats (+$3.9 million / +10 FTE)

There has been an increase in threats against the U.S. Government in general, and the IRS 

is one of the most public faces of government. The IRS must ensure that its contacts with 

individuals whose intention may be to incite violence are identified, evaluated, and dealt 

with quickly and appropriately. CI works closely with partners at Treasury Inspector 

General for Tax Administration (TIGTA) involved in the domestic terrorism arena to 

address external security risks and protect against external threats to the IRS. This 

initiative not only addresses threats to the IRS, but also encompasses all domestic 

terrorism.

This initiative will provide additional resources to identify and investigate individuals or 

entities whose anti-government or anti-tax rhetoric exhibit behavioral traits associated 

with domestic terrorism. CI will focus on the recognition of potential threats or activities 

that imperil the safety of IRS and other government employees or the physical security of 

their facilities.

This initiative will allow the IRS to evaluate leads on potential targets and threats;

develop financial investigations that detect and disrupt domestic terrorist fundraising and 

support networks; work with other law enforcement partners to identify and investigate 

individuals and groups that violate criminal charges within IRS’s jurisdiction; and 

support the following activities:

 Staff fully the Joint Terrorism Task Forces (JTTFs) and the Attorney General’s 

Advisory Counsels (AGACs) nationwide;

 Train and develop agents with the skill sets necessary to carry out assignments, 

rapidly follow-up on leads developed by the Garden City Counterterrorism Lead 

Development Center (LDC) in Garden City, New York; and

 Obtain secure network computers that will allow the IRS to communicate 

securely and efficiently with the intelligence and law enforcement communities, 

as well as allow Special Agents to communicate classified information within the 

IRS.

Funding for 29 Treasury Secure Data Network (TSDN) computers will allow the secure 

and efficient communication of classified information within the IRS and between IRS 

and other intelligence and law enforcement communities. The new computer and 

network infrastructure system will provide access to Secret Internet Protocol Router 

Network (SIPRNet) and the Department of Defense classified communications network. 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-66

Implement Individual Coverage Requirement and Employer Responsibility Payments

+$62,477,000 / +65 FTE

This initiative will fund the development 

of the information technology, 

infrastructure, and systems to implement 

the provisions of Subtitle F of Title I of 

the Affordable Care Act (ACA) (Public 

Law 111-148) that establish shared 

responsibility payments for both 

individuals and employers. 

Beginning in 2014, the ACA requires individuals who are able to afford health insurance 

to obtain minimum essential coverage or pay a penalty. If affordable coverage is not 

available, they will be eligible for an exemption. Other exemptions also may apply.

Also beginning in 2014, the ACA requires large employers – those with 50 or more 

full-time employees – to make a shared responsibility payment if they do not provide 

affordable coverage to their employees, and at least one of their employees has enrolled 

in an qualified health plan on an exchange with respect to which a premium assistance 

tax credit is allowed or paid. 

This initiative will fund the significant revisions to existing tax administration 

information technology systems, as well as development of new systems to administer 

these provisions. For example, the IRS must make modifications to existing tax systems 

as well as forms and publications to administer these provisions. Additionally, both 

provisions involve new information reporting that will streamline IRS verification and 

compliance efforts. Finally, the IRS must implement appropriate business rules for 

document matching, conduct penalty calculations and send notices to individuals and 

employers, and integrate ACA requirements into current collection, case management, 

and fraud detection systems.

Other Direct Costs

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE $000

Implement Affordable Care Act (ACA) 65 $62,477

Administer Individual Coverage Requirement 

and Employer Responsibility Payments

IT Project Specialist 62 10,823

Program Management 3 600

Contractor Services 42,980

Computer Equipment 7,033

Software 1,041

Total 65 $62,477
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Continue Migration from Aging Tax Administration System 

The FY 2012 BSM request of $333.6 million and 453 FTE will fund the activities of the 

BSM projects as described in the table below. 

This funding will improve taxpayer service and enforcement, and reduce the costs and 

risks of operating parallel tax processing systems. The IRS will update and settle 

individual taxpayer accounts in 24 to 48 hours with current, complete and authoritative 

data, and will facilitate expanded opportunities for compliance, increase analytical 

capabilities and accelerate the identification of fraudulent trends.

BSM FY 2012 funding allocation is as follows:

Business Systems Modernization Projects/Initiatives FY 2010 

Enacted 

FY 2011

Annualized

CR Level

FY 2011 

President's 

Budget 

Request 

FY 2012 

Request1,2 

$ Change

FY 2011 

President's

Budget to

FY 2012 

Request 

$ Change

FY 2011 

Annualized

CR Level to

FY 2012 

Request 

Application Migration to CADE 2 (Taxpayer Account Database)

 • Address Federal Financial Management System Requirements

 (FFMSR) compliance for most individual taxpayer accounts.

• Implement a modular application platform for Penalty and Interest (P&I)

 calculation with documented standard posting rules to be used by all

 systems.

• Replace portions of current CADE 2 applications with state-of-the-art

 modular applications using a modern programming language 

 (e.g., Java) and tools.

Current CADE

Implement tax law changes and enhance the overall security posture.

Modernized e-File

Continue the development of Form 94X family of forms, Employment/ 

Unemployment Tax and begin the logical design of Form 1041, U.S. 

Income Tax Return for Estates and Trusts .

50,000 39,100 39,100 20,500 (18,600) ($18,600)

Core Infrastructure

Provide services in architecture, engineering and deployment of 

standardized, consolidated, virtual and secure modernized development 

environments (DITE) and shared infrastructure components (Employee 

User Portal, Registered User Portal, and Security) of the production 

environments.

Architecture, Integration and Management

Provide system engineering management capabilities including systems 

strategy, architecture, and engineering capabilities across IT Infrastructure, 

Business Applications, Data Management and IT Security. Provide 

portfolio control and management processes and tools including 

governance, enterprise lifecycle support, tiered program management, 

business rules and requirements, transition management, cost estimation, 

configuration/change management and risk management.

Management Reserve 11,712 10,000 10,000 2,622 (7,378) (7,378)

Subtotal Capital Investments $217,897 $217,193 $316,719 $264,267 ($52,452) $47,074

BSM Labor3 46,000 46,704 70,189 69,333 (856) 22,629

Total BSM $263,897 $263,897 $386,908 $333,600 ($53,308) $69,703

2The BSM appropriation includes a $1,026,000 program efficiency reduction. 

3The BSM appropriation includes a $450,000 decrease to reflect the FY 2011 pay freeze and a $168,000 increase for the FY 2012 inflation adjustment for health benefits and FERS.

32,000 38,500 37,700 (800)

40,000 19,000 (21,000) (19,000)

FY 2012 BSM Project Activities

Dollars in Thousands

38,000 38,000

$58,100 $70,008 $152,119 $156,800 $4,681 $86,792

1The BSM appropriation excludes $52,000,000 for the operations and maintenance of deployed modernization project releases. These costs are included in the Operations Support appropriation.

5,700

28,085 28,085 37,000 27,645 (9,355) ($440)

32,000
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Customer Account Data Engine 2 (CADE 2) ($156.8 million)

The IRS request will continue the development of the CADE 2 Program. The CADE 2 

Program will provide an authoritative database with daily processing capabilities for all 

individual taxpayers and build the foundation for a more efficient and effective tax 

administration program. An analytical data store will provide business users with tools to 

use the CADE 2 authoritative database more effectively for improved compliance and 

customer service. 

CADE 2 establishes a set of capabilities that will allow the IRS to achieve business 

benefits across the tax processing lifecycle:

 Daily processing/posting of individual taxpayer returns filed and other 

transactions to provide faster processing of taxpayer refunds and payments and 

prompt adjustments to taxpayer accounts reducing the credit interest paid by 

government;

 Exception processing/posting of individual taxpayer returns filed to prevent or 

reduce erroneous refunds;

 Operational database that supports enterprise-wide data access strategy to provide 

efficiencies, multiple account analysis, and more current and timely account 

balance information;

 Analytical data store, Integrated Production Model (IPM), to support the 

enterprise-wide data access strategy; fraud detection through data analytics and 

filtering (i.e., expanding capabilities to analyze data and establish patterns against 

which all individual taxpayer data can be compared); enhanced compliance 

workload selection and resource allocation; and advanced data analytics and data 

mining (i.e., expanding capabilities to more timely and effectively analyze 

taxpayer data from different perspectives and summarize it into useful 

information); and

 Integrated, state-of-the-art processing and data infrastructure to improve service 

and reduce risk, providing:

o A single set of authoritative, modular applications that will facilitate 

system maintenance and allow for greater flexibility and faster response to 

legislative changes; 

o A common module for a single, authoritative penalty and interest 

computation resulting in consistent and accurate calculations that allow 

daily updates to the Integrated Data Retrieval System (IDRS) for early 

viewing of posted information;

o Enhanced security capabilities to guard from threats and violations of 

system data; and

o Comprehensive disaster recovery capabilities.
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The CADE 2 Program will be implemented in two stages:

 Transition State 1 (TS 1) – In January 2012, the IRS will deliver a database that 

will house all individual taxpayer accounts and update daily from the individual 

taxpayer account core-processing applications, resulting in faster refunds for 

millions of individual taxpayers. The key IRS customer service operational 

database, IDRS, will have the benefit of more timely posted data. 

The solution will populate the IPM analytical data store and provide business 

users with enhanced tools to more effectively use the data from compliance and 

customer service. 

The TS1 solution will:

o Implement required security controls;

o Leverage security capabilities that are available in the Security and 

Communications System (SACS) for account viewing; 

o Improve information security; and

o Provide analytical access to the CADE 2 data residing in the analytical 

data store and enhanced tools to access the data and provide opportunities 

for enhanced compliance and improved service.

 Transition State 2 (TS 2) – In FY 2012, the IRS will build upon the foundation 

established in TS 1 and begin the development of TS 2. TS 2 will focus on 

resolving financial material weaknesses and building or modifying existing 

applications for direct interaction with the target database. This solution will 

leverage elements of the current Individual Master File and current CADE for 

some functions. A combination of current state and transitional components will 

be used to fill the function needs of individual taxpayer account processing.

Key elements of Transition State 2 will:

o Incorporate Federal Financial Management Systems Requirements 

(FFMSR) compliance for most individual taxpayer accounts;

o Implement a modular application platform for Penalty and Interest (P&I) 

calculation with documented standard posting rules to be used by all 

systems, to ensure integrity of financial data and more consistent treatment 

of taxpayers; 

o Replace portions of current CADE 2 applications with state-of-the-art, 

modular applications using a modern programming language (e.g., Java) 

and tools;

o Establish a standardized, integrated platform and environments for 

development, integration, testing, and production; and

o Implement essential changes to downstream systems required to support 

TS 2, with limited capabilities for enhanced data analytics leveraging 

individual taxpayer account database for improved compliance.
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Current Customer Account Data Engine ($19.0 million)

The IRS request will implement the necessary tax law changes for deployment during the 

2012 Filing Season and begin the shutdown process for the eventual retirement of this 

system.

Modernized e-File (MeF) ($20.5 million)

The IRS request will complete the final phase (Release 7) of a three-phased 

implementation of the 1040 family of forms. This includes the 125 remaining

1040-related forms and schedules, including Forms 1040A and 1040EZ. MeF provides a 

standard filing structure for all IRS return types, a robust platform that can meet 

performance and capacity needs, enhanced and up-to-date technologies, and service 

benefits to external stakeholders. With MeF, the IRS stores all tax return data in an XML 

format in a modernized Tax Return Database (MTRDB) so authorized viewers see an 

entire tax return online. 

The $20.5 million request for MeF will:

 Complete Release 8 physical design and development of Forms 94X, Employment 

/ Unemployment Tax, to the MeF platform ($10.5 million). Forms that would be

implemented include Form 940, Employer’s Annual Federal Unemployment 

(FUTA) Tax Return, Form 941, Employer’s Quarterly Federal Tax Return, Form 

943, Employer’s Annual Federal Tax Return for Agricultural Employees, Form 

944, Employer’s Annual Federal Tax Return, and Form 945, Annual Return of 

Withheld Federal Income Tax. 

 Complete Release 9, logical design implementation of Form 1041, U.S. Income 

Tax Return for Estates and Trusts, ($10 million).

By adding Form 94X and Form 1041 to the MeF platform, the trading partners and 

taxpayers realize the following benefits:

 Extensive business rule validation and error checking to help ensure the accuracy 

of the tax return;

 Sophisticated math error validation to increase the likelihood that the tax return 

will be successfully processed;

 Ability to attach all documents supporting the data on the tax returns; and

 Ability to provide a justification to the taxpayer/trading partner when the IRS 

rejects the tax return.

Productivity and efficiency gains include: 

 Improving Taxpayer Service – IRS customer service representatives will provide 

responses to taxpayers more quickly by viewing the original Forms 94X and 

1041 online and in real-time, eliminating back-end rekeying and data entry. 
IRS-71

Without MeF, only a limited subset of these documents would be available and 

would result in a time-consuming process of source document retrieval.

 Enhancing Compliance and Enforcement Operations – Online capabilities and 

100 percent data access to 94X and 1041 forms enhance compliance and 

enforcement activities by allowing access to taxpayer data in a timely and 

accurate manner.

 Increasing the Production Volumes – A return submitted through the MeF 

encounters fewer processing errors than do paper returns.

 Eliminating the need for the legacy 94X e-File system – The IRS will be able to 

disable the capability for the legacy Electronic Management System to accept this 

family of returns.

Core Infrastructure ($37.7 million)

The request will continue to support Core Infrastructure in providing mission critical 

services in designing, engineering, testing and deploying standardized, consolidated, 

virtual and secure modernized development and production environments for use by 

BSM projects. 

The IRS is modernizing taxpayer applications to take advantage of web-based 

technologies that allow taxpayers to communicate with the IRS through the internet using 

commercially available technology. The modernized infrastructure provides a complete 

environment (hardware, software, processes, and management) for developing, testing, 

deploying, operating and monitoring both customer and internal applications in support 

of business practices. This includes updating the access portals and standardizing 

telecommunication services, security, and operations management. 

This approach facilitates IRS’s ability to develop shared infrastructure and common 

business service solutions that are usable across multiple BSM projects. The core 

infrastructure consists of two primary program elements – Infrastructure Shared Services 

(ISS), and the Development, Integration and Testing Environment (DITE):

 ISS provides integrated architectural and engineering services required to deploy 

and deliver the BSM projects, including infrastructure requirements identification 

and management, security engineering, systems engineering, performance 

engineering, capacity planning, transition management support, and configuration 

management. The continued development and management of this infrastructure 

incorporates the identification and development of common infrastructure, 

security, and application integration services for use and reuse by the BSM 

projects and reduces delivery time, application development, and operations and 

maintenance costs.

In FY 2012, ISS will place increased emphasis on effectively engineered common 

IT infrastructure services, security, and infrastructure enhancement initiatives that 

affect the BSM projects, while continuing to support efforts begun in FY 2010

related to enhanced availability and portal improvements. ISS will continue to 
IRS-72

provide capacity planning and performance engineering services for BSM 

projects to address their effect on the modernized infrastructure environments 

because of an increase in the number of electronic documents, on-line 

transactions, and on-line tax filers.

 DITE is comprised of a Virtual Development Environment (VDE) and an 

Enterprise Integration and Test Environment (EITE). The VDE provides a 

software development environment for modernization projects such as MeF, 

CADE, and CADE2 that allows geographically distributed developers access to 

standardized tools, information, and services. EITE provides a more structured, 

production-like, comprehensive integration and testing environment necessary to 

rigorously test end-to-end system capabilities and performance before release into 

the BSM production environment.

In FY 2012, DITE will continue to support the BSM projects through deployment 

and acceptance in the production environment; improve the efficiency of server 

administration; and engineer, install, maintain and support core DITE 

infrastructure to include web portals and common IT infrastructure services. It 

also will provide a mechanism for remote access to core DITE data by authorized 

users; and provide maintenance of a suite of standard software development and 

testing tools for use on BSM projects.

Architecture, Integration and Management ($27.7 million)

The IRS request will provide continued support to the AI&M program. This program 

provides the engineering management capabilities essential to delivering a program of the 

magnitude, nature, and complexity of BSM and delivers essential IRS systems strategy, 

architecture, and engineering capabilities to the major modernization projects across all 

technology platforms: IT Infrastructure, Business Applications, Data Management, and 

IT Security. AI&M translates enterprise and project objectives into targeted, actionable 

investments to provide the necessary enterprise technical framework and direction for 

cohesive and successful modernization. 

Management Reserve ($2.6 million)

The IRS request provides funds for the management reserve to cover unanticipated cost 

adjustments and fluctuates from year to year to accommodate changes in funding levels.

Labor ($69.3 million / 453 FTE)

The IRS requests a total of $69.3 million ($69.2 million for BSM labor and $0.1 million 

for inflation costs) to provide the government labor costs associated with the 

development of projects within the BSM portfolio. 
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O&M of Deployed Modernization Systems (+$52.0 million / +5 FTE)

This increase provides funding in the Operations Support appropriation for the operations 

and maintenance (O&M) costs of deployed modernization systems. BSM systems are 

developed and deployed incrementally. The IRS will use these funds to pay for the O&M 

costs of the deployed BSM systems. 
IRS-74

2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Internal Revenue Service FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% 

Change 

FY 2011 

to 

FY 2012

FTE 94,766 96,419 0 94,766 0 94,766 99,878 5.4%

Object Classification:

11.1 Full-Time Permanent Positions $6,402,855 $6,394,057 $0 $6,402,855 $0 $6,402,855 6,893,278 7.7%

11.3 Other than Full-Time Permanent Positions 103,681 423,013 0 103,681 0 103,681 126,721 22.2%

11.5 Other Personnel Compensation 286,434 308,396 0 286,434 0 286,434 316,749 10.6%

11.8 Special Personal Services Payments 18,173 18,445 0 18,173 0 18,173 18,264 0.5%

11.9 Personnel Compensation (Total) $6,811,143 $7,143,911 $0 $6,811,143 $0 $6,811,143 $7,355,012 8.0%

12.0 Personnel Benefits 1,814,796 1,937,543 0 1,814,796 0 1,814,796 2,034,508 12.1%

13.0 Benefits to Former Personnel 55,579 57,106 0 55,579 0 55,579 51,392 -7.5%

21.0 Travel 284,016 255,980 0 284,016 0 284,016 259,269 -8.7%

22.0 Transportation of Things 31,517 33,170 0 31,517 0 31,517 33,144 5.2%

23.1 Rental Payments to GSA 646,393 676,738 0 646,393 0 646,393 685,010 6.0%

23.2 Rent Payments to Others 16,039 592 0 16,039 0 16,039 15,569 -2.9%

23.3 Communications, Utilities, & Misc 482,440 434,883 0 482,440 0 482,440 461,617 -4.3%

24.0 Printing & Reproduction 72,030 67,503 0 72,030 0 72,030 64,063 -11.1%

25.1 Advisory & Assistance Services 175,611 126,385 0 175,611 0 175,611 119,869 -31.7%

25.2 Other Services 649,390 718,802 0 649,390 0 649,390 1,028,350 58.4%

25.3 Purchase of Goods & Services from Govt. Accounts 190,552 204,826 0 190,552 0 190,552 174,263 -8.5%

25.4 Operation & Maintenance of Facilities 157,258 217,899 0 157,258 0 157,258 168,478 7.1%

25.5 Research & Development Contracts 8,506 8,478 0 8,506 0 8,506 8,482 -0.3%

25.6 Medical Care 18,716 12,616 0 18,716 0 18,716 13,498 -27.9%

25.7 Operation & Maintenance of Equipment 89,245 129,660 0 89,245 0 89,245 157,566 76.6%

25.8 Subsistence & Support of Persons 6,644 6,500 0 6,644 0 6,644 6,788 2.2%

26.0 Supplies and Materials 96,145 70,555 0 96,145 0 96,145 84,092 -12.5%

31.0 Equipment 456,779 476,244 0 456,779 0 456,779 444,096 -2.8%

32.0 Lands and Structures 47,569 17,857 0 47,569 0 47,569 88,141 85.3%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 28,100 28,105 0 28,100 0 28,100 22,605 -19.6%

42.0 Insurance Claims & Indemn 2,737 2,712 0 2,737 0 2,737 2,746 0.3%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 4,918 5,205 0 4,918 0 4,918 5,349 8.8%

Total Budget Authority $12,146,123 $12,633,270 $0 $12,146,123 $0 $12,146,123 $13,283,907 9.4%

Appropriations:

Taxpayer Services $2,278,830 $2,321,975 $0 $2,278,830 $0 $2,278,830 $2,345,133 2.9%

Enforcement 5,504,000 5,797,400 0 5,504,000 0 5,504,000 5,966,619 8.4%

Operations Support 4,083,884 4,108,000 0 4,083,884 0 4,083,884 4,620,526 13.1%

Business Systems Modernization 263,897 386,908 0 263,897 0 263,897 333,600 26.4%

Health Insurance Tax Credit Administration 15,512 18,987 0 15,512 0 15,512 18,029 16.2%

Total Budget Authority $12,146,123 $12,633,270 $0 $12,146,123 $0 $12,146,123 $13,283,907 9.4%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class definitions. 
IRS-75

2.3 – Appropriation Detail Table

Dollars in Thousands

Internal Revenue Service

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Taxpayer Services 31,607 $2,258,882 31,063 $2,278,830 31,063 $2,278,830 31,686 $2,345,133 2.01% 2.91%

Enforcement 50,400 5,492,985 50,983 5,504,000 50,983 5,504,000 54,582 5,966,619 7.06% 8.41%

Operations Support 12,262 4,008,115 12,372 4,083,884 12,372 4,083,884 13,142 4,620,526 6.22% 13.14%

Business Systems Modernization 337 177,208 333 263,897 333 263,897 453 333,600 36.04% 26.41%

Health Insurance Tax Credit Administration 12 15,478 15 15,512 15 15,512 15 18,029 0.00% 16.23%

Subtotal New Appropriated Resources 94,618 $11,952,668 94,766 $12,146,123 94,766 $12,146,123 99,878 $13,283,907 5.39% 9.37%

Other Resources:

Recoveries 6,338

Offsetting Collections - Reimbursable 659 135,505 659 137,758 659 137,279 659 138,272 0.72%

Available multi-year/no-year funds 164,836 196,181 184,630 41,248 -77.66%

50% Carryover 33,767 35,947

Transfers In/Out (12,371)

Mandatory Appropriations - User Fees 93 175,529 93 175,529 204,428 204,428

Subtotal Other Resources 752 $509,637 752 $539,382 659 $526,337 659 $383,948 0.00% -27.05%

Total Resources Available for Obligation 95,370 $12,462,305 95,518 $12,685,505 95,425 $12,672,460 100,537 $13,667,855 5.36% 7.85%

% Change

Enacted1to FY 2012

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

FY 2011

Resources Available for Obligation

FY 2010 FY 2012

Request

FY 2010 FY 2011

Obligations Annualized CR Level
IRS-76

2B – Appropriation Language and Explanation of Changes

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

TAXPAYER SERVICES

(including transfer of funds)

For necessary expenses of the Internal Revenue Service 

to provide taxpayer services, including pre-filing 

assistance and education, filing and account services, 

taxpayer advocacy services, and other services as 

authorized by 5 U.S.C. 3109, at such rates as may be 

determined by the Commissioner, $2,345,133,000, of 

which not less than $5,100,000 shall be for the Tax 

Counseling for the Elderly Program, of which not less 

than $9,500,000 shall be available for low-income 

taxpayer clinic grants, of which not less than 

$8,000,000, to remain available until September 30, 

2013, shall be available for a Community Volunteer 

Income Tax Assistance matching grants program for tax 

return preparation assistance, and of which up to 

$6,000,000 may be transferred as necessary from this 

account to “Health Insurance Tax Credit 

Administration” upon advance notification of the 

Committees on Appropriations: Provided, That this 

transfer of authority shall be in addition to any other 

transfer authority provided in this Act.

ENFORCEMENT

(including transfer of funds)

For necessary expenses for tax enforcement activities of 

the Internal Revenue Service to determine and collect 

owed taxes, to provide legal and litigation support, to 

conduct criminal investigations, to enforce criminal 

statutes related to violations of internal revenue laws 

and other financial crimes, to purchase (for police-type 

use, not to exceed 850) and hire passenger motor 

vehicles (31 U.S.C. 1343(b)), and to provide other 

services as authorized by 5 U.S.C. 3109, at such rates as 

may be determined by the Commissioner, 

$5,966,619,000, of which not less than $60,257,000 

The IRS supports adequate 

funding for the Taxpayer 

Advocate Service. Specifying 

the TAS funding level in law 

prevents the IRS from 

proposing an operating plan 

that allocates resources in the 

best interest of taxpayers.

Several subsequent laws have 

extended this program, 

provided additional funding to 

implement and administer the 

program, and increased the 

amount of the subsidy to 80 

percent of premium costs, the 

most recent being the 

Omnibus Trade Act of 2010 

(Public Law 111-344).

This change represents a 

contingency in case the 

increased workload continues 

in FY 2012. 
IRS-77

shall be for the Interagency Crime and Drug 

Enforcement program: Provided, That of the amount 

provided under this heading, not less than $936,000,000 

shall be for the additional appropriation for Internal 

Revenue Service tax compliance activities included as 

an adjustment to the discretionary spending limits 

pursuant to the Concurrent Resolution on the Budget.

OPERATIONS SUPPORT

(including transfer of funds)

For necessary expenses of the Internal Revenue Service 

to support taxpayer services and enforcement programs, 

including rent payments; facilities services; printing; 

postage; physical security; headquarters and other IRSwide administration activities; research and statistics of 

income; telecommunications; information technology 

development, enhancement, operations, maintenance, 

and security; the hire of passenger motor vehicles

(31 U.S.C. 1343(b)); and other services as authorized by 

5 U.S.C. 3109, at such rates as may be determined by 

the Commissioner; $4,620,526,000, of which up to 

$250,000,000 shall remain available until September 

30, 2013, for information technology support; of which 

up to $65,000,000 shall remain available until expended 

for acquisition of real property, equipment, construction 

and renovation of facilities; of which not to exceed 

$1,000,000 shall remain available until September 30, 

2014, for research; of which not to exceed $2,000,000 

shall be for the Internal Revenue Service Oversight 

Board; of which not to exceed $25,000 shall be for 

official reception and representation: Provided, That of 

the amounts provided under this heading, such sums as 

are necessary shall be available to fully support tax 

enforcement activities, including not less than 

$321,000,000 for the additional appropriation for

Internal Revenue Service tax compliance activities 

included as an adjustment to the discretionary spending 

limits pursuant to the Concurrent Resolution on the 

Budget.

BUSINESS SYSTEMS MODERNIZATION

(including transfer of funds)

For necessary expenses of the Internal Revenue 

Service's business systems modernization program, 

This FY 2012 two-year 

authority increase for 

information technology will 

ensure IRS’s ability to 

obligate funds for the IT 

projects needed to implement 

the Affordable Care Act of 

2010.
IRS-78

$333,600,000, to remain available until September 30, 

2014, for the capital asset acquisition of information 

technology systems, including management and related 

contractual costs of said acquisitions, including related 

Internal Revenue Service labor costs, and contractual 

costs associated with operations authorized by 5 U.S.C. 

3109: Provided, That, with the exception of labor costs, 

none of these funds may be obligated until the Internal 

Revenue Service submits to the Committees on 

Appropriations a plan for expenditure that: (1) meets 

the capital planning and investment control review 

requirements established by the Office of Management 

and Budget, including Circular A-11; (2) complies with 

the Internal Revenue Service's enterprise architecture, 

including the modernization blueprint; (3) conforms 

with the Internal Revenue Service's enterprise life cycle 

methodology; (4) is approved by the Internal Revenue 

Service, the Department of the Treasury, and the Office 

of Management and Budget; (5) has been received by 

the Government Accountability Office; and (6) complies 

with the acquisition rules, requirements, guidelines, and 

systems acquisition management practices of the 

Federal Government. 

HEALTH INSURANCE TAX CREDIT 

ADMINISTRATION

(including transfer of funds)

For expenses necessary to implement the health 

insurance tax credit included in the Trade Act of 2002 

(Public Law 107-210), $18,029,000.

ADMINISTRATIVE PROVISIONS - INTERNAL 

REVENUE SERVICE

(including transfer of funds)

Sec. 101. Not to exceed 5 percent of any appropriation 

made available in this Act to the Internal Revenue 

Service or not to exceed 3 percent of appropriations 

under the heading “Enforcement” may be transferred to 

any other Internal Revenue Service appropriation upon 

the advance notification of the Committees on 

Appropriations.

Sec. 102. The Internal Revenue Service shall maintain a 

training program to ensure that Internal Revenue 

Service employees are trained in taxpayers' rights, in 
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dealing courteously with taxpayers, and in crosscultural relations.

Sec. 103. The Internal Revenue Service shall institute 

and enforce policies and procedures that will safeguard 

the confidentiality of taxpayer information.

Sec. 104. Funds made available by this or any other Act 

to the Internal Revenue Service shall be available for 

improved facilities and increased staffing to provide 

sufficient and effective 1-800 help line service for 

taxpayers. The Commissioner shall continue to make the 

improvement of the Internal Revenue Service 1-800 help 

line service a priority and allocate resources necessary 

to increase phone lines and staff to improve the Internal 

Revenue Service 1-800 help line service.

Sec. 105. Of the funds made available by this Act to the 

Internal Revenue Service, not less than $8,490,000,000 

shall be available only for tax compliance, of which not 

less than $1,257,000,000 shall be available for the 

additional appropriation for Internal Revenue Service 

tax compliance activities included as an adjustment to 

the discretionary spending limits in the Concurrent 

Resolution on the Budget.
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2C – Legislative Proposals 

The FY 2012 Budget Request includes a number of legislative proposals intended to 

improve tax compliance with minimum taxpayer burden. These proposals will 

specifically target the tax gap and generate more than $10 billion over the next ten years. 

The implementation cost for the proposals included in the FY 2011 President’s Budget is 

estimated to be $50.4 million over three years and includes the initial startup, processing 

and compliance operational costs. Among other proposals, the Administration proposes 

to expand information reporting, improve compliance by businesses, strengthen tax 

administration, and expand penalties.

Expand information reporting – Compliance with the tax laws is highest when payments 

are subject to information reporting to the IRS. Specific information reporting proposals 

would:

 Require information reporting for private separate accounts of life insurance 

companies; and

 Require a certified Taxpayer Identification Number (TIN) from contractors and 

allow certain withholding.

Improve compliance by businesses – Improving compliance by businesses of all sizes is 

important. Specific proposals to improve compliance by businesses would:

 Provide Treasury with the regulatory authority to require that information returns 

be filed electronically;

 Require corporations and partnerships with assets of $10 million or more that are 

required to file Schedule M-3 to file their tax returns electronically; 

 Provide Treasury with the regulatory authority to reduce the current threshold of

filing 250 or more returns during a calendar year to require electronic filing of 

certain other large taxpayers not required to file Schedule M-3 (such as exempt 

organizations); 

 Provide Treasury with the regulatory authority to require electronic filing of all 

Form 5500 Annual Report information (new in FY 2012); 

 Implement standards that clarify when employee leasing companies can be held 

liable for their clients’ federal employment taxes; 

 Increase certainty about the rules pertaining to classification of employees as 

independent contractors;

 Repeal special estimated tax payment provision for certain insurance companies

(new in FY 2012); and 

 Eliminate special rules modifying the amount of estimated tax payments by 

corporations (new in FY 2012). 
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Strengthen tax administration – The IRS has taken a number of steps under existing law 

to improve compliance. These efforts would be enhanced by specific tax administration 

proposals that would:

 Expand IRS access to information in the National Directory of New Hires for tax 

administration purposes;

 Make repeated willful failure to file a tax return a felony;

 Facilitate tax compliance with local jurisdictions;

 Extend statutes of limitations where state tax adjustments affect federal tax 

liability; 

 Improve the investigative disclosure statute;

 Require taxpayers who prepare their returns electronically but file their returns on 

paper to print their returns with a 2-D bar code (new in FY 2012); 

 Allow the IRS to collect information from the U.S. Bureau of Prisons to reduce 

fraudulent claims (new in FY 2012); 

 Allow the IRS to absorb credit and debit card processing fees for certain tax 

payments (new in FY 2012); and 

 Repeal the requirement of a partial payment with an application for an 

offer-in-compromise.

Expand penalties – Penalties play an important role in discouraging intentional 

noncompliance. A specific proposal to expand penalties would:

 Impose a penalty on failure to comply with electronic filing requirements; and

 Increase the penalty imposed on paid preparers who fail to comply with EITC due 

diligence requirements. (new in FY 2012)

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Section 3 – Budget and Performance Plan

Taxpayer Services 

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and 

programs. This includes printing forms and publications, processing tax returns and 

related documents, offering filing and account services, ensuring the availability of 

taxpayer assistance, and providing taxpayer advocacy services.

The Taxpayer Services Budget Request for FY 2012 is $2,345,133,000 in direct 

appropriations and 31,686 FTE. This is an increase of $66,303,000, or 2.91 percent, and 

623 FTE more than the FY 2010 enacted level of $2,278,830,000 and 31,063 FTE.
IRS-83

2.1 – Budget Adjustments Table 

Dollars in Thousands

FTE Amount

FY 2010 Enacted Budget1 31,063 $2,278,830

FY 2011 Annualized CR Level 31,063 $2,278,830

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level (395) $23,254

Maintaining Current Levels $12,908

Other Adjustments 614

Technical FTE Adjustments 614

Efficiencies/Savings (483) ($41,333)

Increase e-File Savings (416) (21,404)

Reduce Contracts (4,522)

Reduce Administrative Expenses (26) (5,557)

Reduce Training, Travel and Programs (41) (9,850)

Reinvestment $1,486

Consolidate Submission Processing Site (Atlanta) 1,486

Subtotal Changes to Base (264) ($3,685)

Total FY 2012 Base 30,799 $2,275,145

Program Changes:

Program Increases:

Taxpayer Service Initiatives 518 $44,078

Improve Taxpayer Service 518 44,078

Enforcement Initiatives 369 $25,910

Increase Collection Coverage 37 2,201

Implement Merchant Card and Basis Reporting 189 10,475

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 87 7,229

Ensure Accurate Delivery of Tax Credits 49 4,946

Administer New Statutory Reporting Requirements 7 1,059

Subtotal Program Changes 887 $69,988

Total FY 2012 Request 31,686 $2,345,133

Adjustments to Request

User Fees 130,962

Total FY 2012 Request 31,686 $2,476,095

1FY 2010 Enacted represents the approved FY 2010 Operating Plan

Taxpayer Services 
IRS-84

2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Taxpayer Services FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% 

Change 

FY 2011 

to 

FY 2012

FTE 31,063 30,668 31,063 31,063 31,686 2.0%

Object Classification:

11.1 Full-Time Permanent Positions $1,549,331 $1,309,132 $0 $1,549,331 $0 $1,549,331 $1,574,187 1.6%

11.3 Other than Full-Time Permanent Positions 37,423 304,283 0 37,423 0 37,423 56,752 51.7%

11.5 Other Personnel Compensation 87,129 98,503 0 87,129 0 87,129 110,851 27.2%

11.8 Special Personal Services Payments 0 0 0 0 0 0 0 0.0%

11.9 Personnel Compensation (Total) $1,673,883 $1,711,918 $0 $1,673,883 $0 $1,673,883 $1,741,790 4.1%

12.0 Personnel Benefits 372,622 391,504 0 372,622 0 372,622 399,278 7.2%

13.0 Benefits to Former Personnel 7,362 8,199 0 7,362 0 7,362 1,603 -78.2%

21.0 Travel 39,267 31,269 0 39,267 0 39,267 27,452 -30.1%

22.0 Transportation of Things 1,871 5,564 0 1,871 0 1,871 1,988 6.3%

23.1 Rental Payments to GSA 0 0 0 0 0 0 0 0.0%

23.2 Rent Payments to Others 37 46 0 37 0 37 172 364.9%

23.3 Communications, Utilities, & Misc 2,457 3,607 0 2,457 0 2,457 7,526 206.3%

24.0 Printing & Reproduction 9,117 9,091 0 9,117 0 9,117 12,468 36.8%

25.1 Advisory & Assistance Services 20,275 3,923 0 20,275 0 20,275 19,590 -3.4%

25.2 Other Services 27,428 46,993 0 27,428 0 27,428 23,703 -13.6%

25.3 Purchase of Goods & Services from Govt. Accounts 68,337 67,939 0 68,337 0 68,337 67,123 -1.8%

25.4 Operation & Maintenance of Facilities 29 95 0 29 0 29 0 -100.0%

25.5 Research & Development Contracts 0 0 0 0 0 0 0 0.0%

25.6 Medical Care 2 0 0 2 0 2 0 0.0%

25.7 Operation & Maintenance of Equipment 0 673 0 0 0 0 10 0.0%

25.8 Subsistence & Support of Persons 1,628 1,487 0 1,628 0 1,628 1,509 -7.3%

26.0 Supplies and Materials 25,227 10,899 0 25,227 0 25,227 16,605 -34.2%

31.0 Equipment 525 587 0 525 0 525 290 -44.8%

32.0 Lands and Structures 183 0 0 183 0 183 1,341 632.8%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 28,100 28,100 0 28,100 0 28,100 22,600 -19.6%

42.0 Insurance Claims & Indemn 480 81 0 480 0 480 85 -82.3%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 0 0 0 0 0 0 0 0.0%

Total Budget Authority $2,278,830 $2,321,975 $0 $2,278,830 $0 $2,278,830 $2,345,133 2.9%

Budget Activities:

Pre-filing Taxpayer Assistance & Education $679,924 $693,753 $0 $679,924 $0 $679,924 $701,035 3.1%

Filing & Account Services 1,598,906 1,628,222 0 1,598,906 0 1,598,906 1,644,098 2.8%

Total Budget Authority $2,278,830 $2,321,975 $0 $2,278,830 $0 $2,278,830 $2,345,133 2.9%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class 

definitions. 
IRS-85

2.3 – Appropriation Detail Table

Dollars in Thousands

Taxpayer Services

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 25,592 $667,840 6,189 $679,924 6,189 $679,924 6,375 $701,035 3.01% 3.10%

Filing and Account Services 6,015 1,591,042 24,874 1,598,906 24,874 1,598,906 25,311 1,644,098 1.76% 2.83%

Subtotal New Appropriated Resources 31,607 $2,258,882 31,063 $2,278,830 31,063 $2,278,830 31,686 $2,345,133 2.01% 2.91%

Other Resources:

Recoveries 781

Offsetting Collections - Reimbursable 444 22,855 444 22,855 444 22,889 444 22,924 0.00% 0.15%

Available multi-year/no-year funds 8,000 8,011 12,786 8,792 -31.24%

50% Carryover 19,993 20,000

Transfers In/Out

Mandatory Appropriations - User Fees 61 121,512 61 121,512 128,966 130,962 1.55%

Subtotal Other Resources 505 $172,360 505 $173,159 444 $164,641 444 $162,678 0.00% -1.19%

Total Resources Available for Obligation 32,112 $2,431,242 31,568 $2,451,989 31,507 $2,443,471 32,130 $2,507,811 1.98% 2.63%

FY 2010

% Change

FY 2010 FY 2011 FY 2012 FY 2011

Enacted1to FY 2012

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

Resources Available for Obligation Obligations Annualized CR Level Request

3A – Pre-Filing Taxpayer Assistance and Education ($701,035,000 in direct 

appropriations and an estimated $863,000 from reimbursable programs): This budget 

activity funds services to assist with tax return preparation, including tax law 

interpretation, publication production, and advocate services. This includes the following 

program activities:

 Pre-Filing Services Management supports headquarters management associated 

with Customer Assistance Relationship and Education (CARE). CARE provides 

pre-filing taxpayer assistance and education.

 Taxpayer Communication and Education researches customer needs; prepares tax 

forms and publications; develops and manages educational programs; establishes 

partnerships with stakeholder groups; and disseminates tax information to 

taxpayers and the general public through a variety of media, including 

publications and mailings, websites, broadcasting, and advertising.

 Media and Publications develops and produces notices, forms, and publications 

for printed and electronic tax materials, and provides media production services to 

taxpayers.

 Taxpayer Advocacy provides advocate services to taxpayers by identifying the 

underlying causes of taxpayer problems and participating in the development of 

systematic and/or procedural remedies.

 Account Management and Assistance – Field Assistance provides face-to-face 

assistance, education, and compliance services to taxpayers. It includes return 

preparation, answering tax questions, resolving account and notice inquiries, and 

supplying forms and publications to taxpayers.

 Taxpayer Advocate Case Processing provides advocate services to taxpayers to 

resolve taxpayer problems through prompt identification, referral, and settlement.

 W&I HQ Management and Administration provides staffing, training, and direct 

support for Wage and Investment management activities of strategic planning, 
IRS-86

communications and liaison, finance, human resources, EEO and diversity, 

business modernization, and embedded training.

 National Distribution Center processes orders for IRS forms and publications 

received from individual taxpayers, tax practitioners, and IRS tax return 

preparation partners.

FY 2012 Program Changes by Budget Activity

FTE Amount

Taxpayer Service Initiatives 15 $10,552

Improve Taxpayer Service 15 10,552

Enforcement Initiatives 87 $10,607

Increase Collection Coverage 3 270

Implement Merchant Card and Basis Reporting 16 1,437

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 33 4,172

Ensure Accurate Delivery of Tax Credits 28 3,669

Administer New Statutory Reporting Requirements 7 1,059

Total FY 2012 Request 102 $21,159

Dollars in Thousands

Taxpayer Services

Pre-filing Taxpayer Assistance and Education

3.2.1 – Budget and Performance Plan

Pre-Filing Taxpayer Assistance & Education Budget Activity FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $628,286 $648,685 $667,840 $679,924 $679,924 $701,035

Reimbursable Resources 774 876 862 862 862 863

Mandatory Appropriations - User Fees 12,827 18,703 5,514 5,514

Total Resources $641,887 $668,264 $674,216 $686,300 $680,786 $701,898

Budget Activity Total $641,887 $668,264 $674,216 $686,300 $680,786 $701,898

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Pre-Filing Taxpayer Assistance & Education Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

Timeliness of Critical Filing Season Tax Products to the Public (Ot) 92.4% 96.8% 95.3% 94.0% 94.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to the Public (Ot) 89.5% 95.2% 97.7% 90.0% 91.0% 93.0%

Taxpayer Self Assistance Rate (E) (L) 66.8% 69.3% 64.4% 61.3% 68.7% 68.7%

Percent of Eligible Taxpayers Who File for EITC (Oe) * * * 75-80% 75-80% 75-80%

Dollars in Thousands

*The methodology for estimating the eligibility rate is being revised. Data not available.

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - 
IRS-87

Description of Performance

The IRS partners with state taxing authorities, volunteer groups, and other organizations 

to enhance taxpayer outreach and education. The IRS and its partners provide free tax

assistance to the elderly, disabled, and limited English proficient individuals and families 

at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) 

sites. The IRS also provides grants to support low-income taxpayer clinics to help 

individuals who need assistance on tax-related issues. In FY 2010, the IRS awarded 

more than $13.5 million in VITA and TCE Grants to 171 organizations, 17 percent more 

than the number of organizations in 2009. Consequently, assistors at the more than 

12,000 VITA and TCE sites throughout the nation prepared more than 3.1 million 

returns, including 360,500 returns for individuals with disabilities and/or families with 

disabled dependents. 

The IRS and its partners hosted five Open House events at more than 200 IRS Tax 

Assistance Centers (TACs) and partner sites nationwide to help taxpayers prepare returns 

and resolve tax issues. The IRS assisted more than 31,400 taxpayers and prepared more 

than 7,700 returns. The IRS also:

 Held two special Saturday events assisting more than 9,500 taxpayers and 

preparing more than 4,000 returns;

 Created a system that allows taxpayers to self-screen and make on-line 

appointments for return preparation in the TACs;

 Provided a dedicated toll-free telephone line and hosted a Gulf Coast Assistance 

Day at seven TACs in the Gulf region to provide guidance to taxpayers affected 

by the oil spill in the Gulf of Mexico; and

 Expanded the state income tax return preparation service for low-income 

taxpayers from 20 to 27 states, contributing to more than 57,000 returns being 

prepared.

During the FY 2010 filing season, taxpayers used IRS.gov to get current filing 

information:

 More than 1.7 billion web pages were viewed; 

 More than 66.9 million taxpayers used Where’s My Refund?, a 23.8 percent

increase from 2009; 

 More than 213.3 million downloads of various tax products by taxpayers, an 

increase of almost 12 percent; and

 More than 108.8 million electronic payments totaling over $1.9 trillion were 

processed through the Electronic Federal Tax Payment System.
IRS-88

The IRS also expanded outreach and educational services to improve information, news 

and taxpayer interaction through social media networks (Facebook, Twitter, and 

YouTube, etc.). The IRS produced and posted 258 YouTube videos on a variety of 

subjects including the Education Tax Credit, Making Work Pay, Health Care, Return 

Preparer, and the Homebuyer Credit. These videos attracted more than 963,800 upload 

views and were available in English, Spanish, and American Sign Language.

The Earned Income Tax Credit (EITC) is one of the federal government’s largest benefit 

programs for working families and individuals. In FY 2010, the IRS conducted itsfourth 

annual EITC Awareness Day to educate the public on the availability and benefits of this 

important tax credit. As part of a national outreach strategy, the IRS reached out to 

qualifying taxpayers by communicating the benefits of EITC through: 

 Interviews in prominent newspapers with nationwide audience bases;

 More than 50 satellite television media tours in English and Spanish;

 Interviews with radio networks reaching more than 1,000 radio stations; and

 72 news conferences held around the country.

3B – Filing and Account Services ($1,644,098,000 in direct appropriations, an 

estimated $22,061,000 from reimbursable programs, and an estimated 

$130,962,000 from user fees): This budget activity funds programs that provide filing 

and account services to taxpayers, processes paper and electronically-submitted tax 

returns, issues refunds, and maintains taxpayer accounts. This includes the following 

program activities:

 Filing and Account Services Management administers filing and account services 

programs.

 Submission Processing processes paper and electronically-submitted tax returns 

and supplemental documents, accounts for tax revenue, processes information 

documents, and issues refunds and tax notices.

 Account Management and Assistance – Electronic/Correspondence Assistance

provides education and assistance to taxpayers through telephone, paper, and 

internet correspondence to resolve account and notice inquiries.

 Electronic Products and Services Support provides centralized operations and 

support capabilities for the IRS suite of electronic products, including e-help desk, 

technology support, and operations support.

 Electronic Tax Administration (ETA) markets and administers electronic tax 

administration products and services.

 Pre-Refund provides coordination support for the pre-refund activities to ensure 

timely issuance of refunds and credits that are legally due to taxpayers.

 Joint Operations Center (JOC) provides service, support, and technology for 

telephone, correspondence, and electronic media inquiries; real time monitoring 
IRS-89

and routing of inbound calls; monitoring of Customer Service Representative 

accuracy; and management of the enterprise telephone database.

 Files Most Efficient Organization (MEO) provides staffing, training, and direct 

support for the management associated with the MEO for files in Submission 

Processing. This organization stores the administrative files and the most recent 

tax returns in process, which are the returns most often requested for research by 

various IRS organizations before forwarding to federal records centers.

FY 2012 Program Changes by Budget Activity

FTE Amount

Taxpayer Service Initiatives 503 $33,526

Improve Taxpayer Service 503 33,526

Enforcement Initiatives 282 $15,303

Increase Collection Coverage 34 1,931

Implement Merchant Card and Basis Reporting 173 9,038

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 54 3,057

Ensure Accurate Delivery of Tax Credits 21 1,277

Total FY 2012 Request 785 $48,829

Dollars in Thousands

Internal Revenue Service

Filing and Account Services
IRS-90

3.2.2 – Budget and Performance Plan

Filing and Account Services FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $1,545,478 $1,631,121 $1,591,042 $1,598,906 $1,598,906 $1,644,098

Reimbursable Resources 36,037 23,578 21,993 21,993 22,027 22,061

Mandatory Appropriations - User Fees 139,109 104,297 115,998 115,998 128,966 130,962

Total Resources $1,720,624 $1,758,996 $1,729,033 $1,736,897 $1,749,899 $1,797,121

Budget Activity Total $1,720,624 $1,758,996 $1,729,033 $1,736,897 $1,749,899 $1,797,121

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Filing and Account Services FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measures Actual Actual Actual Target Target Target

Percent Individual Returns Processed Electronically (Oe) (L) 57.6% 65.9% 69.3% 70.2% 74.0% 76.0%

Percent of Business Returns Processed Electronically (Oe) (L) 19.4% 22.8% 25.5% 24.3% 27.0% 28.0%

Customer Accuracy - Tax Law Phones (Ot) 91.2% 92.9% 92.7% 91.2% 92.7% 92.7%

Customer Accuracy - Accounts (Phones) (Ot) 93.7% 94.9% 95.7% 93.7% 95.0% 95.0%

Customer Contacts Resolved per Staff year (E) 12,634 12,918 10,744 9,398 12,074 12,061

Customer Service Representative Level of Service (Oe) (L) 52.8% 70.0% 74.0% 71.0% 71.0% 80.0%

Refund Timeliness - Individual (paper) (Ot) 99.1% 99.2% 96.1% 98.4% 97.0% 97.5%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal

Dollars in Thousands

Description of Performance

The IRS delivered a successful 2010 filing season, rising to challenges posed by the 

implementation of provisions in the American Reinvestment and Recovery Act of 2009 

(Recovery Act), the Worker, Homeownership, and Business Assistance Act of 2009 

(WHBAA), and increased telephone demand for Economic Recovery Payment inquiries.

Results of the 2010 filing season include:

 Processed 141.9 million individual returns and issued more than 109.5 million 

refunds totaling $366 billion compared to 144.4 million returns resulting in 

111.4 million refunds totaling over $339.6 billion in 2009;

 Achieved a 74.0 percent telephone level of service, an increase from 70.0 percent

in 2009, while answering 36.7 million assistor calls;

 Answered 35.1 million automated calls, a 21 percent increase from 2009, 

reflecting a growing public appetite for quality self-service options;
IRS-91

 Responded correctly to 92.7 percent of tax law questions and 95.7 percent of 

account questions; and

 Processed more than 2.9 million Free File returns.

Millions of taxpayers continue to file their returns electronically using both paid 

preparers and home computers. As a result: 

 Home computer filing increased to 34.6 million returns, 2.4 million more than in 

2009; 

 Individual returns filed electronically increased to 69.3 percent, 3.4 percent more 

than in 2009, with the total number of individual returns filed electronically 

reaching 98.4 million;

 Business returns filed electronically reached 25.5 percent, 11.9 percent more than 

in 2009; and 

 Tax professionals filed 62.3 million returns electronically.

IRS-92

Enforcement 

Appropriation Description

The Enforcement appropriation provides funding for the examination of tax returns, both 

domestic and international; administrative and judicial settlement of taxpayer appeals of 

examination findings; technical rulings; monitoring of employee pension plans; 

determination of qualifications of organizations seeking tax-exempt status; examination 

of tax returns of exempt organizations; enforcement of statutes relating to detection and 

investigation of criminal violations of the internal revenue laws; identification of 

underreporting of tax obligations; securing of unfiled tax returns; and collecting unpaid 

accounts.

The Enforcement Budget Request for FY 2012 is $5,966,619,000 in direct appropriations 

and 54,582 FTE. This is an increase of $462,619,000, or 8.41 percent, and 3,599 FTE

more than the FY 2010 enacted level of $5,504,000,000 and 50,983 FTE.
IRS-93

2.1 – Budget Adjustments Table

Dollars in Thousands

FTE Amount

FY 2010 Enacted Budget1 50,983 $5,504,000

FY 2011 Annualized CR Level 50,983 $5,504,000

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level 1,880 $242,275

Maintaining Current Levels $30,691

Other Adjustments (296)

Technical FTE Adjustments (296)

Efficiencies/Savings (35) ($21,996)

Reduce Contracts (325)

Reduce Administrative Expenses (35) (8,271)

Eliminate Lockbox Fees (4,000)

Reduce Training, Travel and Programs (9,400)

Subtotal Changes to Base 1,549 $250,970

Total FY 2012 Base 52,532 $5,754,970

Program Changes:

Program Increases:

Enforcement Initiatives 2,040 $209,668

Increase International Service and Enforcement 373 48,363

Increase Collection Coverage 372 30,275

Implement Merchant Card and Basis Reporting 225 17,495

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 266 33,936

Ensure Accurate Delivery of Tax Credits 563 49,083

Administer New Statutory Reporting Requirements 48 5,061

Leverage Return Preparer Program to Reduce Noncompliance 107 14,240

Address Appeals Workload Growth 66 7,450

Implement Uncertain Tax Position Reporting Requirements 20 3,765

Infrastructure Initiatives 10 $1,981

Enhance Physical Security for Federal Employees 10 1,981

Subtotal Program Changes 2,050 $211,649

Total FY 2012 Request 54,582 $5,966,619

Adjustments to Request

User Fees

Total FY 2012 Request 54,582 $5,966,619

1FY 2010 Enacted represents the approved FY 2010 Operating Plan

Enforcement 
IRS-94

2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Enforcement FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% 

Change 

FY 2011 

to 

FY 2012

FTE 50,983 52,863 50,983 50,983 54,582 7.1%

Object Classification:

11.1 Full-Time Permanent Positions $3,744,545 $3,938,661 $0 $3,744,545 $0 $3,744,545 $4,084,707 9.1%

11.3 Other than Full-Time Permanent Positions 52,993 91,365 0 52,993 0 52,993 57,151 7.8%

11.5 Other Personnel Compensation 164,191 173,549 0 164,191 0 164,191 170,898 4.1%

11.8 Special Personal Services Payments 18,173 18,445 0 18,173 0 18,173 18,264 0.5%

11.9 Personnel Compensation (Total) $3,979,902 $4,222,020 $0 $3,979,902 $0 $3,979,902 $4,331,020 8.8%

12.0 Personnel Benefits 1,084,382 1,173,634 0 1,084,382 0 1,084,382 1,231,973 13.6%

13.0 Benefits to Former Personnel 0 0 0 0 0 0 0 0.0%

21.0 Travel 197,877 181,570 0 197,877 0 197,877 184,863 -6.6%

22.0 Transportation of Things 5,824 6,607 0 5,824 0 5,824 8,808 51.2%

23.1 Rental Payments to GSA 30 0 0 30 0 30 0 -100.0%

23.2 Rent Payments to Others 1,003 502 0 1,003 0 1,003 496 -50.5%

23.3 Communications, Utilities, & Misc 5,818 4,131 0 5,818 0 5,818 4,402 -24.3%

24.0 Printing & Reproduction 6,530 6,546 0 6,530 0 6,530 6,848 4.9%

25.1 Advisory & Assistance Services 56,970 25,464 0 56,970 0 56,970 21,238 -62.7%

25.2 Other Services 62,489 72,609 0 62,489 0 62,489 72,197 15.5%

25.3 Purchase of Goods & Services from Govt. Accounts 49,243 49,902 0 49,243 0 49,243 42,792 -13.1%

25.4 Operation & Maintenance of Facilities 193 196 0 193 0 193 195 1.0%

25.5 Research & Development Contracts 3,124 3,007 0 3,124 0 3,124 3,049 -2.4%

25.6 Medical Care 123 78 0 123 0 123 79 -35.8%

25.7 Operation & Maintenance of Equipment 1,421 2,110 0 1,421 0 1,421 2,185 53.8%

25.8 Subsistence & Support of Persons 4,716 4,692 0 4,716 0 4,716 4,966 5.3%

26.0 Supplies and Materials 32,862 29,733 0 32,862 0 32,862 34,963 6.4%

31.0 Equipment 4,414 7,301 0 4,414 0 4,414 8,134 84.3%

32.0 Lands and Structures 425 0 0 425 0 425 934 119.8%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 0 5 0 0 0 0 5 100.0%

42.0 Insurance Claims & Indemn 1,736 2,088 0 1,736 0 1,736 2,123 22.3%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 4,918 5,205 0 4,918 0 4,918 5,349 8.8%

Total Budget Authority $5,504,000 $5,797,400 $0 $5,504,000 $0 $5,504,000 $5,966,619 8.4%

Budget Activities:

Investigations $639,363 $651,966 0 $639,363 $0 $639,363 $678,849 6.2%

Exam & Collections 4,700,345 4,974,618 0 4,700,345 0 4,700,345 5,103,420 8.6%

Regulatory 164,292 170,816 0 164,292 0 164,292 184,350 12.2%

Total Budget Authority $5,504,000 $5,797,400 $0 $5,504,000 $0 $5,504,000 $5,966,619 8.4%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class 

definitions. 
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2.3 – Appropriation Detail Table

Dollars in Thousands

Enforcement

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Investigations 4,364 $644,061 4,170 $639,363 4,170 $639,363 4,442 $678,849 6.52% 6.18%

Exam and Collections 44,802 4,683,200 45,424 4,700,345 45,424 4,700,345 48,772 5,103,420 7.37% 8.58%

Regulatory 1,234 165,724 1,389 164,292 1,389 164,292 1,368 184,350 -1.51% 12.21%

Subtotal New Appropriated Resources 50,400 $5,492,985 50,983 $5,504,000 50,983 $5,504,000 54,582 $5,966,619 7.06% 8.41%

Other Resources:

Recoveries 537

Offsetting Collections - Reimbursable 124 74,599 124 76,852 124 75,247 124 75,902 0.87%

Available multi-year/no-year funds 944 3,462 3,196 3,054 -4.44%

50% Carryover 3,498 5,600

Transfers In/Out 172

Mandatory Appropriations - User Fees 49 49

Subtotal Other Resources 124 $79,090 124 $86,672 124 $78,443 124 $78,956 0.65%

Total Resources Available for Obligation 50,524 $5,572,075 51,107 $5,590,672 51,107 $5,582,443 54,706 $6,045,575 7.04% 8.30%

FY 2010

Obligations Enacted Annualized CR Level 1 Resources Available for Obligation Request to FY 2012

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

% Change

FY 2010 FY 2011 FY 2012 FY 2011

3C – Investigations ($678,849,000 in direct appropriations and an estimated

$66,567,000 from reimbursable programs): This budget activity funds the Criminal 

Investigation (CI) programs that explore potential criminal and civil violations of tax 

laws, enforce criminal statutes relating to violations of tax laws and other financial 

crimes, and recommend prosecution as warranted and campus support of the

Questionable Refund program. This includes the following program activities:

 General Management and Administration supports the headquarters management 

activities of strategic planning, communications, finance, and human resources for 

CI activities.

 Criminal Investigations supports the enforcement of criminal statutes relating to 

violations of internal revenue laws and other financial crimes. CI investigates 

cases of suspected intent to defraud that involve both legal and illegal sources of 

income and recommends prosecution as warranted. This activity includes the 

investigation and prosecution of tax and money laundering violations associated 

with narcotics organizations.

 Criminal Tax Legal Support provides staffing, training, and direct support to 

Counsel and CI.

 International Investigations supports international investigations involving U.S. 

citizens residing abroad, non-resident aliens, expatriates, and investigations 

involving other international issues including legal support (e.g., Foreign Tax 

Credit and Foreign Earned Income Exclusion).

 Accounts Management Taxpayer Assurance Program provides support to 

Accounts Management for the review of questionable refunds.
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FY 2012 Program Changes by Budget Activity

FTE Amount

Enforcement Initiatives 66 $13,423

Increase International Service and Enforcement 43 8,999

Leverage Return Preparer Program to Reduce Noncompliance 23 4,424

Infrastructure Initiatives 10 $1,981

Enhance Physical Security for Federal Employees 10 1,981

Total FY 2012 Request 76 $15,404

Dollars in Thousands

Internal Revenue Service

Investigations

3.2.3 – Budget and Performance Plan

Investigations Budget Activity FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $601,436 $615,544 $644,061 $639,363 $639,363 $678,849

Reimbursable Resources 49,404 39,639 65,296 67,549 65,928 66,567

Mandatory Appropriations - User Fees

Total Resources $650,840 $655,183 $709,357 $706,912 $705,291 $745,416

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Investigations Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

Criminal Investigations Completed (Ot) (L) 4,044 3,848 4,325 3,900 3,900 3,880

Number of Convictions (Oe) (L) 2,144 2,105 2,184 2,135 2,135 2,135

Conviction Rate (Oe) (L) 92.3% 87.2% 90.2% 92.0% 92.0% 92.0%

Conviction Efficiency Rate ($) (E) (L) $315,751 $327,328 $324,776 $331,000 $350,000 $360,000

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long Term Goal

Dollars in Thousands

Description of Performance

The IRS continues to investigate tax, money laundering, and other financial crimes that

adversely affect tax administration. Improved case development and selection methods, 

coupled with heightened fraud awareness resulted in the successful prosecution of 

taxpayers involved in significant abusive tax schemes, high-income non-filers, 

employment tax evasion cases, and other flagrant forms of tax evasion. Using its unique 

statutory jurisdiction and financial expertise, the IRS made significant contributions to 

important national law enforcement priorities. Performance levels for the CI program

remained high in FY 2010:

 Completed more than 4,300 criminal investigations, 12 percent more than in

2009; 
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 Maintained a Department of Justice acceptance rate of 93.9 percent, with a U.S. 

Attorney acceptance rate of 91.8 percent, which compares favorably with other 

Federal law enforcement agencies;

 Achieved a conviction rate of more than 90 percent; and

 Obtained 2,184 convictions.

In an effort to deter financial crime and enhance voluntary tax compliance, the IRS uses 

media and other outreach opportunities to maximize publicity of investigations. Publicity 

focuses on informing the American public about enforcement efforts and educating the 

public about fraud schemes and scams that they should avoid.

In FY 2010, IRS representatives participated in more than 500 outreach events.

Audiences included tax and accounting professionals, representatives from financial 

institutions, business and industry managers, government representatives, educational 

institutions, and the public. Topics included general fraud awareness, tax and accounting 

fraud, money laundering, Bank Secrecy Act, and other financial fraud. These outreach 

events were attended by more than 27,800 individuals and businesses.

3D – Exam and Collections ($5,103,420,000 in direct appropriations and an estimated 

$8,761,000 from reimbursable programs): This budget activity funds programs that 

enforce tax laws through examination and collection programs that ensure proper 

payment and tax reporting. This budget activity also supports appeals and litigation 

activities associated with exam and collection. This includes the following program 

activities:

 Compliance Services Management supports management associated with 

compliance program activities.

 Payment Compliance – Correspondence Collection supports IRS collection 

activities by initiating contact and collecting delinquent taxpayer liabilities 

through written notices and other means.

 Automated Collections and Support provides support to the centralized 

Automated Collection System (ACS) by initiating contact and collecting 

delinquent taxpayer liabilities through automated means.

 Payment Compliance – Field Collection conducts field investigations and 

collection efforts associated with delinquent taxpayer and business entity 

liabilities, including direct taxpayer contact and outreach programs to protect the 

interest of the federal government in delinquent tax liability situations.

 Tax Reporting Compliance – Document Matching supports the Automated 

Underreporter (AUR), Combined Annual Wage Reporting (CAWR), Federal 

Unemployment Tax Act (FUTA), and other Document Matching Programs.

 Tax Reporting Compliance – Electronic/Correspondence Exam initiates written 

correspondence with taxpayers related to tax issues arising from claims on their 

tax returns.
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 Tax Reporting Compliance – Field Exam compares taxpayer income levels and 

corresponding tax liabilities to ensure the accuracy of taxpayer returns.

 Fraud/Bank Secrecy Act enforces the anti-money laundering provisions of the 

Bank Secrecy Act of 1970 (BSA) and the USA Patriot Act of 2001. It examines 

non bank financial institutions for compliance with these laws, receives and 

processes more than 15 million financial reports annually, and manages a 

centralized database of that information for the Financial Crimes Enforcement 

Network (FinCEN). The Fraud program follows the ―money trail‖ to support the 

criminal investigation of tax evasion operations. Fraud Technical Advisors and 

Revenue Agents provide investigative leads and referrals to federal, state, and 

local law enforcement agencies.

 Appeals provides an administrative review process that provides a channel for 

impartial case settlement before a case is docketed in a court of law.

 Litigation provides legal support for the IRS in litigation of cases, including 

interpretation of the tax law.

 Specialty Programs – Exams examines federal tax returns of businesses and 

individuals responsible for the filing and payment of employment, excise, estate 

and gift taxes.

 International Collection supports international field collection efforts associated 

with delinquent taxpayer and business entity liabilities from U.S. citizens residing 

abroad, non-resident aliens, expatriates, and those involving other international 

issues (e.g., Foreign Tax Credit and Foreign Earned Income Exclusion).

 International Exams supports the international exam program involving U.S. 

citizens residing abroad, non-resident aliens, expatriates and other examinations 

involving other international issues including legal support (e.g., Foreign Tax 

Credit and Foreign Earned Income Exclusion).

 Unit General Management and Administration provides staffing, training, and 

direct support for headquarters management activities of strategic planning, 

communication and liaison, finance, human resources, EEO and diversity, 

business system planning, and embedded training.

 EITC Management and Administration supports headquarters management 

associated with administering the EITC program service-wide.

 Whistleblower provides staffing, training, and direct support to process, assess, 

and analyze tips from individuals who identify tax problems in the course of their 

daily personal business, regardless of where encountered (including the 

workplace).

 Communications and Liaison coordinates local government and liaison 

relationships; manages congressional, state, and national stakeholder relationships 

and issues; coordinates crosscutting issues, including audit management and 

legislative implementation; manages national media contacts and local media 

relationships; and ensures IRS compliance with disclosure and privacy laws.
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FY 2012 Program Changes by Budget Activity

FTE Amount

Enforcement Initiatives 1,878 $182,682

Increase International Service and Enforcement 322 37,980

Increase Collection Coverage 372 30,275

Implement Merchant Card and Basis Reporting 225 17,495

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 213 27,809

Ensure Accurate Delivery of Tax Credits 553 47,566

Administer New Statutory Reporting Requirements 43 4,291

Leverage Return Preparer Program to Reduce Noncompliance 84 9,816

Address Appeals Workload Growth 66 7,450

Total FY 2012 Request 1,878 $182,682

Dollars in Thousands

Internal Revenue Service

Exam and Collections
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3.2.4 – Budget and Performance Plan

Exam and Collections FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $4,030,648 $4,342,021 $4,683,200 $4,700,345 $4,700,345 $5,103,420

Reimbursable Resources 8,302 8,970 8,729 8,729 8,745 8,761

Mandatory Appropriations - User Fees 12,679 3,103 49 49

Total Resources $4,051,629 $4,354,094 $4,691,978 $4,709,123 $4,709,090 $5,112,181

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Exam and Collections Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

Examination Coverage - Individual (Oe) (L) 1.01% 1.0% 1.1% 1.1% 1.1% 1.1%

Field Exam National Quality Review Score (Oe) (L) 86.0% 85.1% 84.9% 86.3% 83.7% 84.9%

Office Exam National Quality Review Score (Oe) (L) 90.0% 92.1% 91.6% 90.9% 90.4% 90.9%

Examination Quality - Industry (Oe) (L) 88.0% 88.0% 87.0% 89.0% 89.0% 89.0%

Examination Quality - Coordinated Industry (Oe) (L) 97.0% 95.0% 95.0% 96.0% 96.0% 96.0%

Examination Coverage - Business (Oe) (L) 6.1% 5.6% 5.7% 5.1% 5.3% 5.2%

AUR Efficiency (E) (L) 1,982 1,905 1,924 1,868 1,980 2,017

AUR Coverage (E) (L) 2.55% 2.6% 3.0% 3.0% 3.3% 4.0%

Examination Efficiency - Individual (E) (L) 138 138 140 132 134 126

Collection Coverage - Units (Ot) (L) 55.2% 54.2% 50.1% 50.5% 49.1% 47.9%

Collection Efficiency - Units (E) (L) 1,926 1,845 1,822 1,898 1,824 1,752

Field Collection National Quality Review Score (Ot) (L) 79.0% 80.5% 80.6% 81.0% 81.0% 81.0%

Automated Collection System (ACS) Accuracy (Oe) 95.3% 94.3% 95.9% 92.5% 94.0% 94.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, L - Long Term Goal, Ot - 

Dollars in Thousands
IRS-101

Description of Performance

Enforcement of the tax laws is an integral component of the IRS effort to enhance 

voluntary compliance. IRS enforcement activities, such as examination and collection, 

target elements of the tax gap and will always remain a high priority. In FY 2010, the 

IRS placed extraordinary focus on detecting and bringing to justice those who hide assets 

overseas to avoid paying tax. The IRS also continued its pursuit of high-wealth 

noncompliant taxpayers and initiated actions to implement the return preparer strategy.

The IRS collected $57.6 billion in revenue in FY 2010, $8.7 billion, or 18 percent, more 

than in FY 2009. The IRS showed steady progress, building on its FY 2009 successes in 

key enforcement programs:

 Total individual audits increased 11 percent to 1.58 million;

 Automated underreporter contact closures increased 19.8 percent to 4.3 million;

 Collection case closures increased 6 percent to 3 million;

 High income audits increased to more than 5 percent to 153,000; and 

 Large corporate audits increased 8.1 percent to almost 15,000, a significant 

achievement given the size (more than $10 million) and complexity of these 

corporate entities.

As part of an overall strategy to improve offshore compliance, the IRS continued to take 

aggressive steps to track tax evaders who hide their wealth by engaging in tax evasion 

schemes using offshore accounts. 

The IRS voluntary disclosure program (VDP), offered in 2009, combined with powerful 

whistle-blower initiatives, yielded information on banks and professionals, including 

foreign professionals, who facilitate tax evasion. Thousands of taxpayers with offshore 

accounts voluntarily came forward during the VDP partial amnesty period to disclose 

information as the result of the initiative. 

The pressure on offshore financial institutions known to facilitate concealment of income 

by U.S. citizens resulted in:

 A large Swiss bank entering into a deferred prosecution agreement on charges of 

conspiring to defraud the United States. Investigations resulted in indictments or 

guilty pleas of clients and bankers on federal income tax related charges,

including filing false income tax returns, failing to report foreign bank accounts, 

and concealing millions in income subject to taxation.

 A bank in Scotland agreeing to forfeit $500 million as part of a deferred 

prosecution agreement. The bank violated the Bank Secrecy Act (BSA) and 

conspired to defraud the U.S. Certain offices, branches, affiliates, and 

subsidiaries altered or removed names and references from payment messages to 
IRS-102

sanctioned countries thereby allowing these entities to move hundreds of millions 

of dollars through the U.S. financial system without identification. 

 A Swiss corporation agreeing to forfeit $536 million to the United States. The 

violations relate to transactions illegally conducted on behalf of customers and 

other countries sanctioned in programs administered by the Department of the 

Treasury. The corporation deliberately removed material information from 

payment messages so that wire transfers would pass undetected through filters at 

U.S. financial institutions. 

Through the offshore voluntary disclosure program, the IRS identified previously 

unreported foreign bank accounts from every continent except Antarctica.

Additionally, the Accounts Management Taxpayer Assurance Program (AMTAP) and 

Questionable Refund Program (QRP) identify fraudulent returns and stop payment of 

fraudulent refunds. In FY 2010, the IRS:

 Identified 807,898 potentially fraudulent returns claiming more than $5.2 billion 

in fraudulent refunds through the AMTAP; and

 Identified 1,576 schemes in potentially fraudulent refund claims through the QRP.

o Initiated 504 investigations, achieved a 92.4 percent conviction rate, an 

83.8 percent incarceration rate, and an 84.6 percent publicity rate on 

adjudicated cases.

Setting higher standards for the tax return preparer community will significantly enhance 

protections and services for taxpayers, increase confidence in the tax system and result in 

greater compliance with tax laws. In FY 2010, as part of a Tax Return Preparer Strategy 

developed in FY 2009, the IRS began implementing a number of the recommendations to 

ensure that more than one million tax return preparers are competent. Key elements of 

the strategy include: 

 Requiring registration for all paid tax return preparers (through 

December 31, 2010, more than 523,000 return preparers received PTINs utilizing 

the new application system); 

 Establishing mandatory testing and continuing education;

 Developing a public database for tax return preparer registration with the IRS; 

 Making all tax return preparers subject to ethical standards; and

 Increasing the IRS enforcement presence in the tax return preparer community. 

In FY 2010, the IRS made a number of due diligence visits to tax return preparers 

and conducted more than 5,000 field visits to ensure compliance with the tax 

laws. The IRS also conducted 265 undercover visits to tax return preparers. 

During these visits, IRS agents posed as taxpayers to seek out and stop 

unscrupulous preparers from filing inaccurate returns. 
IRS-103

3E – Regulatory ($184,350,000 in direct appropriations and an estimated

$574,000 from reimbursable programs): This budget activity funds the development and 

printing of published IRS guidance materials; interpretation of tax laws; advice on 

general legal servicing, ruling and agreements; enforcement of regulatory rules, laws, and 

approved business practices; and support for taxpayers in the areas of pre-filing 

agreements, determination letters, and advance pricing agreements. This includes the 

following program activities:

 Tax Law Interpretation and Published Guidance interprets the tax law through 

published guidance, technical advice, and other technical legal services.

 General Legal Services provides advice to the IRS on non-tax legal issues, 

including procurement, personnel, labor relations, equal employment opportunity, 

fiscal law, tort claims and damages, ethics, and conflict of interest.

 Rulings and Agreements applies the tax law to specific taxpayers in the form of

pre-filing agreements, determination letters, advance pricing agreements, and 

other pre-filing determinations and advice.

 International Regulatory Legal Support supports Counsel’s work in tax law 

interpretation and rulings and agreements related to international issues.

 Return Preparer Strategy provides staffing, training, and direct support associated 

with the Return Preparer Strategy initiative.

 Office of Professional Responsibility identifies, communicates, and enforces 

Treasury Circular 230 standards of competence, integrity, and conduct of those 

who represent taxpayers before the IRS, including attorneys, Certified Public 

Accountants (CPAs), enrolled agents, enrolled actuaries and appraisers, and other 

professionals.

FY 2012 Program Changes by Budget Activity

FTE Amount

Enforcement Initiatives 96 $13,563

Increase International Service and Enforcement 8 1,384

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 53 6,127

Ensure Accurate Delivery of Tax Credits 10 1,517

Administer New Statutory Reporting Requirements 5 770

Implement Uncertain Tax Position Reporting Requirements 20 3,765

Total FY 2012 Request 96 $13,563

Dollars in Thousands

Internal Revenue Service

Regulatory
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3.2.5 – Budget and Performance Plan

Regulatory FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $145,036 $152,115 $165,724 $164,292 $164,292 $184,350

Reimbursable Resources 435 469 574 574 574 574

Mandatory Appropriations - User Fees 168

Total Resources $145,639 $152,584 $166,298 $164,866 $164,866 $184,924

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Regulatory Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

TE/GE Determination Case Closures (Ot) 100,050 96,246 105,247 140,465 97,151 85,471

Dollars in Thousands

Key: Ot - Output/Workload Measure

Description of Performance

In 2010, the IRS continued to help pension plans, exempt organizations, and government 

entities comply with the tax law by:

 Developing an Indian Tribal consultation policy with the Department of the 

Treasury, pursuant to a November 2009 Presidential Memorandum. The IRS held 

consultation meetings with stakeholder groups to allow tribes an opportunity to 

discuss the consultation policy and a new section on Tribal Policy was developed 

and added to the Treasury website. In addition, the IRS piloted a specialty course 

designed to ensure that IRS employees will have the necessary skills to interact 

effectively with Tribal governments on a government-to-government basis. 

 Releasing an interim report on compliance of college and universities for 

unrelated business taxable income and compensation. Based on responses from 

the surveys received from the colleges/universities, IRS opened examinations 

focusing on unrelated business income and executive compensation.

 Implementing Section 301 of the Small Business and Infrastructure Jobs Tax Act 

of 2010 that expanded the Build America Bond (BAB) direct payment regime to 

include four types of specified tax credit bonds. This initiative included:

o Expeditious issuance of formal guidance and educational materials related 

to the new bond provisions;

o Issuance of a new return, Form 8038-TC, Information Return for Tax 

Credit Bonds and Specified Tax Credit Bonds, and instructions, and 

revision and reissuance of the Form 8038-CP, Return for Credit Payments 

to Issuers of Qualified Bonds, and instructions;

o Implementation of new programming to ensure direct payments are made 

contemporaneously with the bonds’ interest payment dates; and

o Conducting several HIRE Act related outreach presentations. 
IRS-105

In FY 2010, IRS closed more than 41,400 tax-exempt compliance contacts, 19 percent 

more than in 2009. 

General Legal Services (GLS) worked on promulgation of guidance in connection with 

the administration of the whistleblower program and was responsible for litigating cases 

before the Tax Court filed by whistleblowers challenging the IRS award determination. 

In FY 2010, GLS handled 20 cases before the Tax Court and expects this number will 

increase substantially as the IRS completes the investigation of whistleblower claims and 

the Whistleblower Office begins to make award determinations. GLS has litigated and 

provided advice with respect to protection of taxpayers regarding tax practitioners, tax 

preparers and various novel personnel issues implicating both individuals and groups of 

employees. GLS provided advice on the implementation of the Affordable Care Act 

(ACA) legislation regarding such matters as funding and authority; and advice on 

numerous matters arising from the Austin tragedy and the IRS efforts to provide the best 

relief appropriate for affected IRS employees and taxpayers.

IRS-106

Operations Support 

Appropriation Description

The Operations Support appropriation provides funding for overall planning, direction, 

and support for the IRS, including shared service support related to facilities services, 

rent payments, printing, postage, and security. This appropriation funds headquarters 

policy and management activities such as corporate support for strategic planning, 

communications and liaison, finance, human resources, Equal Employment Opportunity 

(EEO) and diversity; research and statistics of income; and necessary expenses for 

information systems and telecommunication support, including development, security, 

and maintenance of IRS’s information systems.

The Operations Support Budget Request for FY 2012 is $4,620,526,000 in direct 

appropriations and 13,142 FTE. This is an increase of $536,642,000, or 13.14 percent,

and 770 FTE more than the FY 2010 enacted level of $4,083,884,000 and 12,372 FTE.
IRS-107

2.1 – Budget Adjustments Table

Dollars in Thousands

FTE Amount

FY 2010 Enacted Budget1 12,372 $4,083,884

FY 2011 Annualized CR Level 12,372 $4,083,884

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level 12 $10,128

Maintaining Current Levels $41,755

Other Adjustments 154

Technical FTE Adjustments 154

Efficiencies/Savings (5) ($124,440)

Non-Recur Savings (22,090)

Increase e-File Savings (1,040)

Reduce IT Infrastructure (75,000)

Reduce Contracts (15,907)

Reduce Administrative Expenses (5) (503)

Reduce Certain Mailings (4,000)

Reduce Training, Travel and Programs (5,900)

Subtotal Changes to Base 161 ($72,557)

Total FY 2012 Base 12,533 $4,011,327

Program Changes:

Program Increases:

Taxpayer Service Initiatives 16 $70,229

Improve Taxpayer Service 1 37,229

Expand Online Options through IRS.gov Improvements 15 33,000

Enforcement Initiatives 508 $370,093

Increase International Service and Enforcement 4 24,233

Increase Collection Coverage 4 19,524

Implement Merchant Card and Basis Reporting 1 7,760

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 144 55,553

Ensure Accurate Delivery of Tax Credits 222 206,264

Administer New Statutory Reporting Requirements 132 52,385

Leverage Return Preparer Program to Reduce Noncompliance 1 2,360

Address Appeals Workload Growth 1,650

Implement Uncertain Tax Position Reporting Requirements 364

Infrastructure Initiatives 80 $116,877

Enhance Security and Disaster Recovery Systems Capability 5 12,000

Update Integrated Financial System (IFS) 5 27,500

Leveraging Data to Improve Compliance 5 1,400

Enhance Physical Security for Federal Employees 13,500

Implement Individual Coverage Requirement and Employer Responsibility Payments 65 62,477

Business Systems Modernization (BSM) Initiative 5 $52,000

Continue Migration from Aging Tax Administration System 5 52,000

Subtotal Program Changes 609 $609,199

Total FY 2012 Request 13,142 $4,620,526

Adjustments to Request

User Fees 73,466

Total FY 2012 Request 13,142 $4,693,992

1FY 2010 Enacted represents the approved FY 2010 Operating Plan

Operations Support
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2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Operations Support FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% Change 

FY 2011 to 

FY 2012

FTE 12,372 12,384 12,372 12,372 13,142 6.2%

Object Classification:

11.1 Full-Time Permanent Positions $1,072,547 $1,089,960 $0 $1,072,547 $0 $1,072,547 $1,182,167 10.2%

11.3 Other than Full-Time Permanent Positions 12,480 26,496 0 12,480 0 12,480 11,693 -6.3%

11.5 Other Personnel Compensation 34,437 35,147 0 34,437 0 34,437 33,586 -2.5%

11.8 Special Personal Services Payments 0 0 0 0 0 0 0 0.0%

11.9 Personnel Compensation (Total) $1,119,464 $1,151,603 $0 $1,119,464 $0 $1,119,464 $1,227,446 9.6%

12.0 Personnel Benefits 346,939 357,973 0 346,939 0 346,939 387,046 11.6%

13.0 Benefits to Former Personnel 48,217 48,907 0 48,217 0 48,217 49,789 3.3%

21.0 Travel 46,639 42,852 0 46,639 0 46,639 46,282 -0.8%

22.0 Transportation of Things 23,822 20,999 0 23,822 0 23,822 22,348 -6.2%

23.1 Rental Payments to GSA 646,363 676,738 0 646,363 0 646,363 685,010 6.0%

23.2 Rent Payments to Others 14,999 44 0 14,999 0 14,999 14,901 -0.7%

23.3 Communications, Utilities, & Misc 474,165 426,745 0 474,165 0 474,165 449,668 -5.2%

24.0 Printing & Reproduction 56,383 51,666 0 56,383 0 56,383 44,544 -21.0%

25.1 Advisory & Assistance Services 98,366 96,998 0 98,366 0 98,366 79,041 -19.6%

25.2 Other Services 411,244 390,480 0 411,244 0 411,244 740,967 80.2%

25.3 Purchase of Goods & Services from Govt. Accounts 72,972 86,985 0 72,972 0 72,972 64,348 -11.8%

25.4 Operation & Maintenance of Facilities 157,036 217,608 0 157,036 0 157,036 168,283 7.2%

25.5 Research & Development Contracts 5,382 5,471 0 5,382 0 5,382 5,433 0.9%

25.6 Medical Care 18,591 12,538 0 18,591 0 18,591 13,419 -27.8%

25.7 Operation & Maintenance of Equipment 77,246 110,905 0 77,246 0 77,246 94,389 22.2%

25.8 Subsistence & Support of Persons 300 321 0 300 0 300 313 4.3%

26.0 Supplies and Materials 38,048 29,916 0 38,048 0 38,048 32,453 -14.7%

31.0 Equipment 380,226 360,851 0 380,226 0 380,226 408,472 7.4%

32.0 Lands and Structures 46,961 17,857 0 46,961 0 46,961 85,836 82.8%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 0 0 0 0 0 0 0 0.0%

42.0 Insurance Claims & Indemn 521 543 0 521 0 521 538 3.3%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 0 0 0 0 0 0 0 0.0%

Total Budget Authority $4,083,884 $4,108,000 $0 $4,083,884 $0 $4,083,884 $4,620,526 13.1%

Budget Activities:

Infrastructure $895,202 $889,929 0 $895,202 $0 $895,202 $986,045 10.1%

Shared Services & Support 1,311,127 1,337,776 0 1,311,127 0 1,311,127 1,313,050 0.1%

Information Services 1,877,555 1,880,295 0 1,877,555 0 1,877,555 2,321,431 23.6%

Total Budget Authority $4,083,884 $4,108,000 $0 $4,083,884 $0 $4,083,884 $4,620,526 13.1%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class 

definitions. 
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2.3 – Appropriation Detail Table

Dollars in Thousands

Operations Support

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Infrastructure $894,288 $895,202 $895,202 $986,045 10.15%

Shared Services and Support 5,830 $1,299,008 5,992 1,311,127 5,992 1,311,127 6,082 1,313,050 1.50% 0.15%

Information Services 6,432 $1,814,819 6,380 1,877,555 6,380 1,877,555 7,060 2,321,431 10.66% 23.64%

Subtotal New Appropriated Resources 12,262 $4,008,115 12,372 $4,083,884 12,372 $4,083,884 13,142 $4,620,526 6.22% 13.14%

Other Resources:

Recoveries 863

Offsetting Collections - Reimbursable 91 38,051 91 38,051 91 39,143 91 39,446 0.77%

Available multi-year/no-year funds 48,697 68,454 70,629 7,738 -89.04%

50% Carryover 10,276 10,347

Transfers In/Out (12,543)

Mandatory Appropriations - User Fees 32 53,968 32 53,968 75,462 73,466 -2.65%

Subtotal Other Resources 123 $150,992 123 $159,140 91 $185,234 91 $120,650 -34.87%

Total Resources Available for Obligation 12,385 $4,159,107 12,495 $4,243,024 12,463 $4,269,118 13,233 $4,741,176 6.18% 11.06%

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

% Change

Obligations Enacted Annualized CR Level 1to FY 2012

FY 2011

Resources Available for Obligation

FY 2010 FY 2012

Request

FY 2010 FY 2011

3F – Infrastructure ($986,045,000 in direct appropriations, an estimated $516,000 from 

reimbursable programs and an estimated $22,095,000 from user fees): This budget 

activity funds administrative services related to space and housing, rent and space 

alterations, building services, maintenance, guard services, and non-IT equipment. This 

includes the following program activities:

 Building Delegation oversees and manages the IRS GSA-delegated buildings, 

including cleaning, maintenance, utilities, protection, administrative, and 

recurring and one-time repair costs.

 Rent provides resources for all IRS rent needs.

 Space and Housing/Non-IT Equipment provides management of all IRS building 

services, maintenance, space alterations, guard services, custodial overtime, utility 

services needs, and non-IT equipment.

 Security covers building security costs related to contract guard services.
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FY 2012 Program Changes by Budget Activity

FTE Amount

Taxpayer Service Initiatives $11,775

Improve Taxpayer Service 11,682

Expand Online Options through IRS.gov Improvements 93

Enforcement Initiatives $23,062

Increase International Service and Enforcement 2,337

Increase Collection Coverage 2,560

Implement Merchant Card and Basis Reporting 2,241

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 1,855

Ensure Accurate Delivery of Tax Credits 12,404

Administer New Statutory Reporting Requirements 618

Leverage Return Preparer Program to Reduce Noncompliance 583

Address Appeals Workload Growth 356

Implement Uncertain Tax Position Reporting Requirements 108

Infrastructure Initiatives $10,426

Enhance Security and Disaster Recovery Systems Capability 31

Update Integrated Financial System (IFS) 31

Leveraging Data to Improve Compliance 27

Enhance Physical Security for Federal Employees 10,070

Implement Individual Coverage Requirement and Employer Responsibility Payments 267

Business Systems Modernization (BSM) Initiative $56

Continue Migration from Aging Tax Administration System 56

Total FY 2012 Request $45,319

Dollars in Thousands

Internal Revenue Service

Infrastructure

3.2.6 – Budget and Performance Plan

Infrastructure FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $809,039 $859,093 $894,288 $895,202 $895,202 $986,045

Reimbursable Resources 149 14,120 505 505 511 516

Mandatory Appropriations - User Fees 13,049 24,277 22,095

Total Resources $822,237 $873,213 $894,793 $895,707 $919,990 $1,008,656

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Dollars in Thousands

Description of Performance

The IRS achieved cost savings in FY 2010 by completing nine space reduction projects, 

releasing a total of 22,370 square feet with an annualized savings of $429,910. 

The FY 2010 savings, coupled with those from previous years, have helped to offset the 

increased costs associated with GSA rate increases, as well as infrastructure improvement 

initiatives such as the consolidation of the Philadelphia campus operations. Workstation 

utilization continued to increase in 2010 as the IRS placed most new employees into 

existing space.
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For FY 2011, 26 space reduction projects are planned with a projected release of an 

additional 111,338 square feet. The IRS plans to place any new hires in existing space 

and renew leases at existing sites rather than moving to new locations. These and other 

actions will help IRS absorb projected FY 2011 rent increases.

3G – Shared Services and Support ($1,313,050,000 in direct appropriations and an 

estimated $20,577,000 from reimbursable programs): This budget activity funds policy 

and management, IRS-wide support for research, strategic planning, communications and 

liaison, finance, human resources, and equal employment opportunity and diversity 

services and programs. It also funds printing and postage, business systems planning, 

security, corporate training, legal services, procurement, and employee benefits 

programs. This includes the following program activities:

 National Headquarters Management and Administration directs the management 

activities of strategic planning, communications and liaison, finance, human 

resources, EEO and diversity, and business systems planning and embedded 

training. This activity sets policies and goals, provides leadership and direction 

for the IRS and builds partner relationships with key stakeholders (Congress, 

GAO, OMB). It provides policy guidance for conducting IRS planning and 

budgeting strategies, conducting analysis of programs and investments to support 

strategic decision-making, and developing and managing human resources. It 

also includes official reception and representation expenses.

 Real Estate and Facilities Management provides services and supplies required to 

manage IRS facilities.

 Procurement supports the procurement function of the IRS.

 EEO and Diversity Field Services plans and manages the IRS EEO and Diversity 

Program.

 Communications and Liaison coordinates local government and liaison 

relationships; handles congressional, state, and national stakeholder relationships 

and issues; coordinates cross-cutting issues, including managing audits and 

legislative implementation; handles national media contacts and local media 

relationships; and ensures IRS-wide compliance with disclosure and privacy laws.

 Employee Support Services plans and manages financial services, including 

relocation, travel, imprest fund, purchase cards, corporate express, and employee 

clearances.

 Treasury Complaint Centers plan and manage the Treasury Complaint Centers.

 Shared Support not provided by Agency-Wide Shared Services provides resources 

for shared cross-functional support such as copiers, postage meters, shredders, 

courier services, and post office boxes.

 Printing and Postage – Media and Publications provides operating divisions with 

printing and postage, including shipping of taxpayer and internal use materials.
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 Statistics of Income provides resources for researching annual income, financial, 

and tax data from tax returns filed by individuals, corporations, and tax-exempt 

organizations.

 Research provides resources for market-based research to identify compliance 

issues, for conducting tests of treatments to address noncompliance, and for the 

implementation of successful treatments of taxpayer non-compliant behavior.

 Security Administration and Management manages and oversees the staffing, 

training, equipment, and direct support for the protection of IRS employees, 

facilities, assets, and the availability of taxpayer services.

 Wage and Investment (W&I) Business Modernization Support provides staffing, 

training, and direct support for W&I’s enterprise-wide business modernization 

efforts including Customer Account Data Engine (CADE), and Account 

Management Services (AMS) technology solutions, and re-engineered business 

processes.

 Benefit Payments provides resources to fund Workers’ Compensation benefits and 

Unemployment Compensation for federal employee payments.

 Shared Services provides additional services such as Public Transit Subsidy and 

Career Counselor Contract.

FY 2012 Program Changes by Budget Activity

FTE Amount

Taxpayer Service Initiatives 1 $3,339

Improve Taxpayer Service 1 3,252

Expand Online Options through IRS.gov Improvements 87

Enforcement Initiatives 29 $40,652

Increase International Service and Enforcement 4 6,824

Increase Collection Coverage 4,185

Implement Merchant Card and Basis Reporting 1 3,664

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 6 5,297

Ensure Accurate Delivery of Tax Credits 3 13,910

Administer New Statutory Reporting Requirements 14 4,318

Leverage Return Preparer Program to Reduce Noncompliance 1 1,400

Address Appeals Workload Growth 878

Implement Uncertain Tax Position Reporting Requirements 176

Infrastructure Initiatives 8 $4,136

Enhance Security and Disaster Recovery Systems Capability 29

Update Integrated Financial System (IFS) 29

Leveraging Data to Improve Compliance 5 1,359

Enhance Physical Security for Federal Employees 1,695

Implement Individual Coverage Requirement and Employer Responsibility Payments 3 1,024

Business Systems Modernization (BSM) Initiative $50

Continue Migration from Aging Tax Administration System 50

Total FY 2012 Request 38 $48,177

Dollars in Thousands

Internal Revenue Service

Shared Services and Support
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3.2.7 – Budget and Performance Plan

Shared Services and Support FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $1,279,800 $1,257,040 $1,299,008 $1,311,127 $1,311,127 $1,313,050

Reimbursable Resources 30,796 20,763 20,315 20,315 20,445 20,577

Mandatory Appropriations - User Fees 19,114 2 17,887 17,887

Total Resources $1,329,710 $1,277,805 $1,337,210 $1,349,329 $1,331,572 $1,333,627

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Dollars in Thousands

Description of Performance

Through support activities that include management and administration of human 

resources, security, and research, the IRS provides shared services to all IRS tax 

administration programs.

Human Capital

In FY 2010, the IRS continued its focus on attracting, retaining, and developing a quality 

workforce to support workforce management activities that contribute to making the IRS 

one of the best places to work in government. To attract the best and increase the number 

of qualified and diverse applicants, the IRS enhanced its recruitment programs and 

introduced a new recruitment brand, ―Count on Me!‖ on print materials, USAjobs.gov, 

IRS Careers website, Internet advertisements, and social media. 

One of the key initiatives that contribute to making the IRS the best place to work was 

the establishment of the Workforce of Tomorrow (WOT) group. In FY 2010, the IRS 

completed 41 of 58 recommendations outlined in the 2009 WOT report. The 

recommendations address the most significant challenges facing current employees and 

managers. Implementation included the recognition of employee successes through the 

web, issuing anniversary congratulations messages, enhancing the Career Management 

Resource Center website, and developing a comprehensive on-boarding strategy for new 

IRS employees, which includes providing forms and benefit information, as well as 

orientation information. 

Results of the annual IRS employee engagement survey are used to improve the 

workplace. The level of employee engagement affects the overall ability of the 

organization to meet goals, minimize attrition, and increase productivity. In FY 2010, a 

record 79 percent of employees participated in the annual survey, with overall employee 

satisfaction increasing from 73.7 percent in FY 2009 to 74.4 percent in FY 2010. In 

addition, the IRS also improved its Federal Employee Viewpoint scores ranking from 

79 out of 224 government agencies compared to 127 out of 216 agencies in 2008. 

Leadership competencies are the foundation for hiring, promoting, developing, and 

evaluating IRS leaders. The IRS uses leadership competencies to assess employee skills, 

abilities, and knowledge to determine their readiness for leadership in the IRS. For 2010, 
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the IRS phased in a new and improved leadership competency model that comprises four 

leadership competencies, each of which has three or more supporting behaviors. The 

new model replaces the old model that had 21 competencies, reducing managerial burden 

associated with employee assessment, and making the overall process easier to use. 

Security

The IRS collects a tremendous amount of sensitive information, and protecting this 

information is vital to maintaining the public trust. The IRS takes the issue of identity 

theft very seriously. In FY 2010, to preserve and enhance public confidence, the IRS 

advocated the protection and proper use of identity information by: 

 Placing markers on more than 284,000 taxpayer accounts to alert employees that

the account belongs to a substantiated identity theft victim; and

 Ensuring identity theft indicators and business rules isolate returns for additional 

screening to validate whether the true taxpayer filed the return. More than 

82,000 returns were selected for additional screening and closed, and 

$245 million was protected from being refunded to perpetrators on more than 

48,000 fraudulent returns.

The IRS also protects its systems and taxpayers from increasing and evolving online 

threats. By monitoring, identifying, and mitigating fraudulent sites and phishing scams, 

the IRS helps to reduce the number of taxpayers who fall victim to online fraud schemes. 

During FY 2010, the IRS shut down 4,109 phishing sites (899 domestic and 

3,210 international) compared to 3,444 sites shut down through all of 2009.

Research

The IRS remains committed to finding ways to increase compliance and reduce the tax 

gap. In FY 2010, the IRS began developing new methodologies for estimating the 

corporate income tax gap, updating the estate and gift tax nonfiling and underreporting 

tax gap estimates, and developing a new basis for estimating the individual income tax 

non-filer gap. Updated tax gap estimates will be released in 2011 based on new National 

Research Program (NRP) data, including reporting compliance estimates using tax year 

(TY) 2006 and TY 2007 NRP data. Tax gap estimates will also incorporate updated 

filing and payment estimates. Updated methodologies to detect non-compliance will be 

used.

The IRS NRP allows the IRS to target specific areas of noncompliance to improve 

voluntary compliance and allocate resources more effectively to reduce the tax gap. In 

FY 2010, NRP efforts included a study to assess the reporting compliance of employment 

taxes. The study will span three tax years, from 2008 through 2010, examining 

approximately 2,200 randomly selected taxpayers each year. This new study 

complements the ongoing study of individual reporting compliance. 
IRS-115

The IRS continues to study the effects of services it offers to taxpayers on the internet, at 

walk-in sites, and on its toll-free telephone lines as well as exploring the relationships 

between taxpayer errors and unclear correspondence. As part of this effort, the IRS is 

testing the effect of on-line assistance and instruction and service quality to aid in the 

development of new approaches to service.

3H – Information Services ($2,321,431,000 in direct appropriations, an 

estimated $18,353,000 from reimbursable programs and an estimated $51,371,000 from 

user fees): This budget activity funds staffing, equipment, and related costs to manage, 

maintain, and operate the information systems critical to the support of tax administration 

programs. This includes the design and operation of security controls and disaster 

recovery planning. This budget activity funds the development and maintenance of 

the millions of lines of programming code that support all aspects and phases of tax 

processing and the operation and administration of the mainframes, servers, personal 

computers, networks, and a variety of management information systems. 

Modernization and Information Technology Services (MITS) is responsible for 

information systems and technology, ranging from cyber security and networks to 

applications development and end user equipment and services. This includes the 

following program activities:

 Security Services ensures effective security policies and programs to safeguard 

taxpayer records, IRS employees, facilities, business processes, systems and other 

resources. The program is responsible for corrective action efforts to establish 

adequate service-wide security, including Security Policy Support and Oversight, 

Mission Assurance, and Modernization Security. Policies are set using a 

governance process including executive steering committees. Compliance review 

teams perform vulnerability assessments. Mission assurance activities include 

operation of the Computer Systems Incident Response and Situation Awareness 

and Management Centers, as well as coordination of service-wide disaster 

recovery and business continuity planning. Operational programs include security 

training and awareness, sensitive system certification and accreditation with 

Treasury on the federal Critical Infrastructure Protection Program.

 Tier B provides support to single-owner, small to medium investment projects 

using core data to support specialized functions.

 Management Services provides for the design, development, delivery, and 

evaluation of a wide range of human resource programs for the MITS 

organization. These programs include workforce planning, recruitment and 

retention, career management, performance management, labor/employee 

relations, position management, workplace improvement, succession management 

and service-wide IT training and education.

 National Headquarters (NHQ) IT Management provides for the management and 

oversight of investments in IT for the Chief of Staff and Research, Analysis and 

Statistics (RAS). The program allows NHQ to manage and leverage IT solutions 

that are responsive to IRS-wide management, tax compliance, enforcement, and 

strategic and tactical research projects.
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 Affordable Care Act Project Management Office will manage the strategic 

planning, development, and implementation of new information systems in 

support of business requirements with regard to the healthcare reform initiative.

 MITS Executive Oversight provides support to the immediate office of the Chief 

Technology Officer, as well as the direct reports for EEO and Diversity, and the 

Director, Stakeholder Management (including Communications Services and 

Program Oversight). The program provides executive direction for the MITS 

organization, enabling MITS to be a customer-focused supplier of IT solutions 

that are responsive to customer business priorities and effectively meet functional 

and operational needs.

 Application Development performs the analysis, design, development, testing, and 

implementation of approximately 85,000 application programs supporting critical 

tax processing, management information reporting and financial management 

support systems for the IRS. This program also supports external trading partner 

data exchanges with federal government agencies, state and local governments, 

and other third-party entities. The program controls application source code and 

deploys applications to the production environment.

 Enterprise Operations designs, develops, and maintains IT that supports critical 

tax processing, management information reporting and financial management 

support systems for the IRS. The program supports data exchanges with external 

organizations, such as other federal agencies, state and local governments, and 

external entities (e.g., employers and banks), and includes a comprehensive 

disaster recovery capability to ensure continued operations in the event of a major 

interruption of service.

 Enterprise Network provides telecommunications service delivery to all customer 

segments, including management of day-to-day operations of the 

telecommunications environment. This includes the operation of equipment and 

services to meet business user needs and the execution of routine changes for 

scheduled and unscheduled modifications to the telecommunications 

infrastructure and applications. It addresses all phases of engineering, acquisition, 

implementation, and operation of telecommunications systems and services, 

including voice, video, and data communications.

 Enterprise Services plans and manages service and delivery methods used across 

the MITS organization, including demand analysis, enterprise architecture, 

configuration management, project reporting, enterprise life cycle management, 

release management, systems engineering, dashboard reporting, and internal 

management.

 End User Equipment and Services maintains the IRS automated business 

processes at headquarters and field sites, effectively allowing the IRS to fulfill its 

missions. The support includes technical systems and applications software 

support to end users, maintaining legacy operations, local and corporate systems 

administration activities, email and domain user account maintenance. This 

activity monitors IRS network and systems administration by utilizing automated 
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management tools. It performs asset management activities, and maintenance of 

the voice and data infrastructure at the territory offices. 

 Strategy and Planning provides the management and oversight of investments in 

IT, demand analysis, project reporting, portfolio management and other MITS 

operational priorities. 

 IT Security Certification and Accreditation provides design and operations of 

security controls and the technical mechanisms used by the IRS systems and 

applications as part of the development of the system security plan, system risk 

assessment, and IT contingency plan. It also supports security testing and 

evaluation as part of the certification process, including time preparing system 

documentation, interviewing with contractors, and responding to information 

requests. 

 Disaster Recovery supports activities related to Enterprise Disaster Recovery 

planning, including testing, evaluations, plan development, and technical and 

business impact assessments.

 IT Security Training provides training for FISMA reporting purposes.

 IT Homeland Security Presidential Directive-12 oversees the use of Personal 

Identity Verification (PIV) technology for physical access to federally-controlled 

facilities and logical access to information systems for all federal employees and 

contractors who require long-term access.

 IT Infrastructure funds the replacement of IRS IT infrastructure that has reached 

or surpassed its useful life cycle. The resources achieved through efficiencies in 

various parts of MITS are centralized to ensure that replacement of the aging 

infrastructure is addressed corporately. 

 Treasury Working Capital Fund is a centralized functional area for separating 

from the Information Services base budget the resources required to pay Treasury 

billings for services provided through the working capital fund.

 Integrated Document Solutions Enterprise (IDSE) Campus Operations Most 

Efficient Organization (MEO) captures savings resulting from IDSE MEO 

activities.
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FY 2012 Program Changes by Budget Activity

FTE Amount

Taxpayer Service Initiatives 15 $55,115

Improve Taxpayer Service 22,295

Expand Online Options through IRS.gov Improvements 15 32,820

Enforcement Initiatives 479 $306,379

Increase International Service and Enforcement 15,072

Increase Collection Coverage 4 12,779

Implement Merchant Card and Basis Reporting 1,855

Increase Coverage to Address Tax Law Changes and Other Compliance Issues 138 48,401

Ensure Accurate Delivery of Tax Credits 219 179,950

Administer New Statutory Reporting Requirements 118 47,449

Leverage Return Preparer Program to Reduce Noncompliance 377

Address Appeals Workload Growth 416

Implement Uncertain Tax Position Reporting Requirements 80

Infrastructure Initiatives 72 $102,315

Enhance Security and Disaster Recovery Systems Capability 5 11,940

Update Integrated Financial System (IFS) 5 27,440

Leveraging Data to Improve Compliance 14

Enhance Physical Security for Federal Employees 1,735

Implement Individual Coverage Requirement and Employer Responsibility Payments 62 61,186

Business Systems Modernization (BSM) Initiative 5 $51,894

Continue Migration from Aging Tax Administration System 5 51,894

Total FY 2012 Request 571 $515,703

Dollars in Thousands

Internal Revenue Service

Information Services

3.2.8 – Budget and Performance Plan

Information Services FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $1,678,744 $1,680,279 $1,814,819 $1,877,555 $1,877,555 $2,321,431

Reimbursable Resources 14,310 5,481 17,231 17,231 18,187 18,353

Mandatory Appropriations - User Fees 50,000 9,543 36,081 36,081 51,185 51,371

Total Resources $1,743,054 $1,695,303 $1,868,131 $1,930,867 $1,946,927 $2,391,155

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Dollars in Thousands

Description of Performance

The IRS continues to replace its IT infrastructure using an ongoing review process that 

prioritizes funding of business unit needs using a risk assessment framework. In 

FY 2010, IRS reduced the quantity of aged IT hardware assets by 17 percent, from 

42 percent on October 1, 2009 to 25 percent on September 30, 2010. During FY 2010, 

the IRS spent more than $117 million to replace 38,346 of these aged assets, which 

include network equipment, end-user equipment, and servers and storage equipment.

Future funding will be used to replace aging IT and telecommunication equipment in line

with current business standards. Without investment in an ongoing replacement program
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for the backlog of aged and outdated IT and telecommunication equipment, the IRS runs 

the risk of increased maintenance costs, an inability to meet increased demand for 

interaction and information exchange with taxpayers and tax preparers, and failure to 

comply with government-wide standards and industry best practices. 

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Business Systems Modernization

Appropriation Description

The Business Systems Modernization (BSM) appropriation provides resources for the 

planning and capital asset acquisition of IT to modernize the IRS business systems.

The BSM Budget Request for FY 2012 is $333,600,000 in direct appropriations and 

453 FTE. This is an increase of $69,703,000, or 26.4 percent, and 120 FTE more than

the FY 2010 enacted level of $263,897,000 and 333 FTE.
IRS-121

2.1 – Budget Adjustments Table 

Dollars in Thousands

FTE Amount

FY 2010 Enacted Budget1 333 $263,897

FY 2011 Annualized CR Level 333 $263,897

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level 156 $122,561

Maintaining Current Levels $168

Other Adjustments 29

Technical FTE Adjustments 29

Efficiencies/Savings ($1,026)

Reduce Training, Travel and Programs (1,026)

Subtotal Changes to Base 185 $121,703

Total FY 2012 Base 518 $385,600

Program Changes:

Program Increases:

Business Systems Modernization (BSM) Initiative (65) ($52,000)

Continue Migration from Aging Tax Administration System (65) (52,000)

Subtotal Program Changes (65) ($52,000)

Total FY 2012 Request 453 $333,600

Adjustments to Request

User Fees

Total FY 2012 Request 453 $333,600

Business Systems Modernization 

1FY 2010 Enacted represents the approved FY 2010 Operating Plan
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2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Business Systems Modernization FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% 

Change 

FY 2011 

to 

FY 2012

FTE 333 489 333 333 453 36.0%

Object Classification:

11.1 Full-Time Permanent Positions $34,079 $53,905 $0 $34,079 $0 $34,079 $49,843 46.3%

11.3 Other than Full-Time Permanent Positions 785 869 0 785 0 785 1,125 43.3%

11.5 Other Personnel Compensation 643 1,173 0 643 0 643 1,390 116.2%

11.8 Special Personal Services Payments 0 0 0 0 0 0 0 0.0%

11.9 Personnel Compensation (Total) $35,507 $55,947 $0 $35,507 $0 $35,507 $52,358 47.5%

12.0 Personnel Benefits 10,493 14,058 0 10,493 0 10,493 15,835 50.9%

13.0 Benefits to Former Personnel 0 0 0 0 0 0 0 0.0%

21.0 Travel 100 78 0 100 0 100 469 369.0%

22.0 Transportation of Things 0 0 0 0 0 0 0 0.0%

23.1 Rental Payments to GSA 0 0 0 0 0 0 0 0.0%

23.2 Rent Payments to Others 0 0 0 0 0 0 0 0.0%

23.3 Communications, Utilities, & Misc 0 0 0 0 0 0 0 0.0%

24.0 Printing & Reproduction 0 0 0 0 0 0 0 0.0%

25.1 Advisory & Assistance Services 0 0 0 0 0 0 0 0.0%

25.2 Other Services 135,605 193,348 0 135,605 0 135,605 176,700 30.3%

25.3 Purchase of Goods & Services from Govt. Accounts 0 0 0 0 0 0 0 0.0%

25.4 Operation & Maintenance of Facilities 0 0 0 0 0 0 0 0.0%

25.5 Research & Development Contracts 0 0 0 0 0 0 0 0.0%

25.6 Medical Care 0 0 0 0 0 0 0 0.0%

25.7 Operation & Maintenance of Equipment 10,578 15,972 0 10,578 0 10,578 60,982 476.5%

25.8 Subsistence & Support of Persons 0 0 0 0 0 0 0 0.0%

26.0 Supplies and Materials 0 0 0 0 0 0 56 0.0%

31.0 Equipment 71,614 107,505 0 71,614 0 71,614 27,200 -62.0%

32.0 Lands and Structures 0 0 0 0 0 0 0 0.0%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 0 0 0 0 0 0 0 0.0%

42.0 Insurance Claims & Indemn 0 0 0 0 0 0 0 0.0%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 0 0 0 0 0 0 0 0.0%

Total Budget Authority $263,897 $386,908 $0 $263,897 $0 $263,897 $333,600 26.4%

Budget Activities:

IT Investments $263,897 $386,908 $0 $263,897 $0 $263,897 $333,600 26.4%

Total Budget Authority $263,897 $386,908 $0 $263,897 $0 $263,897 $333,600 26.4%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class 

definitions. 
IRS-123

2.3 – Appropriation Detail Table 

Dollars in Thousands

Business Systems Modernization

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 337 $177,208 333 $263,897 333 $263,897 453 $333,600 36.04% 26.41%

Subtotal New Appropriated Resources 337 $177,208 333 $263,897 333 $263,897 453 $333,600 36.04% 26.41%

Other Resources:

Recoveries 2,980

Offsetting Collections - Reimbursable

Available multi-year/no-year funds 107,195 116,254 98,019 21,664 -77.90%

50% Carryover

Transfers In/Out

Mandatory Appropriations - User Fees

Subtotal Other Resources $107,195 $119,234 $98,019 $21,664 -77.90%

Total Resources Available for Obligation 337 $284,403 333 $383,131 333 $361,916 453 $355,264 36.04% -1.84%

% Change

Enacted1to FY 2012

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

FY 2011

Resources Available for Obligation

FY 2010 FY 2012

Request

FY 2010 FY 2011

Obligations Annualized CR Level

3I – Business Systems Modernization ($333,600,000 in direct appropriations): This 

budget activity funds the planning and capital asset acquisition of IT to modernize IRS 

business systems, including labor and related contractural costs. The IRS is required to 

submit an annual BSM expenditure plan that justifies the projects for which resources are 

requested. 

BSM uses best practices and expertise in business solutions and internal management 

from the IRS, businesses, and technology sectors to develop a world-class tax 

administration system. The program provides value to taxpayers, the business 

community, and government and it plays an integral role in reducing the tax gap. This 

program has delivered improved taxpayer service, electronic filing capacity, and data 

analysis capability and it has maintained successful performance in delivering projects 

within acceptable cost, schedule and performance estimates. 

The FY 2012 BSM request of $333.6 million funds the projects listed in the table below:

Project

FY 2012 

Budget 

Request

Customer Account Data Engine 2 $156.8

Current Customer Account Data Engine 19.0

Modernized e-File 20.5

Core Infrastructure 37.7

Architecture, Integration and Management 27.6

Management Reserve 2.6

Labor 69.3

Total $333.6
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Customer Account Data Engine 2 (CADE 2) (Taxpayer Account Database): The CADE 

2 Program will implement an authoritative database for all individual taxpayers and 

provides the foundation for more efficient and effective tax administration. An analytical 

data store will provide business users with tools to use taxpayer data more effectively for 

enhanced compliance and taxpayer service. 

The primary purpose of the CADE 2 Program is to implement a data-centric solution that

provides daily processing of taxpayer accounts. The CADE 2 Program will move from 

the current-state solution to the target-state solution through multiple major transition 

states. The transition states allow the IRS to make marked progress towards the target 

state in an incremental manner.

The target state of CADE 2 will focus on completing the transition of all applications and 

eliminating transitional components that were required during the transition states and 

achieving the business benefits allowed by the target solution. This final step will 

enhance the long-term viability of the CADE 2 platform.

Current Customer Account Data Engine(CADE): Current CADE allows for the 

replacement of the IRS’s current master files and serves as the repository of all taxpayer 

information. 

Modernized e-File (MeF): MeF provides a standard filing structure for all IRS return 

types, a robust platform that can meet performance and capacity needs, enhanced and 

up-to-date technologies, and customer service benefits that are of great appeal to external 

customers and stakeholders. With MeF, the IRS stores all tax return data in XML format 

in a Modernized Tax Return Database (MTRDB) allowing all authorized viewers of the 

data to see an entire tax return online over the internet. Once fully implemented, all tax 

returns and transmission files will adhere to IRS rules/schemas.

The first release of MeF went into production in February 2004, when Form 1120, U.S. 

Corporation Income Tax Return, Form 1120-S, U.S. Income Tax Return for an S 

corporation, and Form 990, Return of Organization Exempt from Income Tax were 

accepted on the modernized platform. Subsequent releases added Form 1065, U.S. 

Return of Partnership Income, Form 1120-F, U.S. Income Tax Return of a Foreign 

Corporation, and Federal Form 990 N, Electronic Notice (e-Postcard) for Tax-Exempt 

Organizations Not Required to File Form 990 or 990-EZ. 

The first phase of the implementation of Form 1040, U.S. Individual Income Tax Return, 

onto the MeF platform took place in January 2010. In FY 2011, the IRS will implement 

the second phase by providing enhanced Disaster Recovery capabilities to ensure 

appropriate management of operational risk and the optimization code necessary to 

support the anticipated volume of returns in 2012. The third and final phase will take 

place in FY 2012 by migrating the 125 remaining 1040 family forms and schedules, 

including Forms 1040A, Making Work Pay and Government Retiree Credits, and 

1040EZ, Income Tax Return for Single and Joint Filers With No Dependents. This phase 
IRS-125

will expand the reach of MeF to all of the e-File population, or approximately 

98.3 million filers by January 2012.

Core Infrastructure: The Core Infrastructure will provide mission-critical services to 

BSM projects and consists of two primary program elements – Infrastructure Shared 

Services (ISS), and the Development, Integration and Testing Environment (DITE).

 ISS provides mission-critical services in designing, engineering, developing, and 

deploying a standardized, consolidated, virtual, and secure modernized production 

environment for use by BSM projects. The continued development and 

management of this infrastructure incorporates (1) the identification and 

development of common architecture, infrastructure, and security; 

(2) virtualization; and (3) application integration services for use and reuse by 

BSM projects—thus reducing delivery time as well as application development 

and operations and maintenance costs.

 DITE is a standardized environment composed of all modernized infrastructure 

components and applications needed by projects that plan to use and integrate into 

the modernized production environment. DITE uses streamlined processes and 

standard tools that allow thorough development and testing in a controlled 

environment, ensuring projects work effectively and seamlessly within the 

modernized production environment. DITE provides ongoing infrastructure 

support to all BSM projects on Level of Effort (LOE) basis and supports the 

development, test, integration, and deployment of each project on a 

release-by-release basis. 

DITE is an integral part of the approved IRS Enterprise Architecture (EA). Use 

of this modernized, enterprise-level component allows modernized systems to 

comply with IRS standards.

Architecture, Integration and Management (AI&M): AI&M activities ensure that systems 

solutions meet IRS business needs and effectively integrate modernization 

projects/programs (current CADE, Customer Account Data Engine (CADE 2), and MeF). 

To ensure the success of the planned business change, AI&M provides a single 

authoritative source of guidance for integrating each project as it moves from the 

development environment to the business environment. Major AI&M components are: 

 Architecture and Integration (A&I) – The A&I activities ensure systems solutions 

meet business needs and provide a single authoritative source of guidance for 

effectively integrating each project as it moves from the development to the 

business environment. This program produces the principles, strategies, and 

standards to guide the construction and delivery of coherent and integrated 

enterprise systems.

 Enterprise Architecture (EA) – EA ensures that the IRS follows mandated 

requirements in developing its EA. This includes business and technical 

architecture, enterprise data management/architecture, enterprise transition 

strategy, release architecture and security architecture. 
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 Systems Architecture and Engineering (SAE) – SAE supports the BSM projects 

in the conceptual design of the architectures to ensure that they comply with 

EA-mandated Guidelines. SAE also is responsible for providing systems 

architecture and engineering support, which includes outlining the design and 

ensuring performance metrics are established.

 Enterprise Data Management (EDM) – The EDM manages the XML vocabulary 

along with the naming and design rules used on all BSM projects. This is 

accomplished through the development of Enterprise Data Models and the 

Enterprise Data Architecture. In addition, the EDM defines the data strategy and 

supports the data components and activities that in part define the IRS Enterprise

Architecture. EDM documents this process through the publication and 

enforcement of data management policies, standards (including XML standards) 

and procedures at both the enterprise and project levels. 

 Integrated Process Management (IPM) – IPM supports the continued 

implementation of an end-to-end process management framework, through 

refinement of the Process Asset Library (PAL) and Integrated Process Framework 

(IPF) to support implementation of the Capability Maturity Model Integration 

(CMMI) and Information Technology Information Library (ITIL) disciplines. 

The IRS plans to implement a three-phased migration (process centralization, 

process integration, and process analysis) to an IPM framework. It is responsible 

for leveraging the research and development expertise of industry experts to 

implement the plan to transition from the current fragmented state to the 

integrated framework.

 Change and Configuration Management (CCM) – CCM provides program 

support and oversight to key information technology projects and is responsible 

for developing and implementing IT Service Management in accordance with 

MITS direction and ITIL best practices. In addition, CCM develops and conducts 

configuration management (CM) training for program management, project 

managers, and CM representatives MITS-wide; conducts CM compliance 

assessments and oversight on all CM practitioners; assists PRIME modernization 

projects in planning, developing and integrating reasonable, manageable, and 

attainable release schedules and release packages; and tracks and facilitates 

resolution of risks, issues, schedule, and resource conflicts.

 Portfolio Governance and Control (PG&C) – PG&C processes and standards 

allow the IRS to define, manage, and deliver its IT portfolio successfully. 

Activities include IT portfolio investment management, cost estimation, transition 

management and risk management. The IRS will develop an IT risk management 

strategy to establish a consistent enterprise approach for identification and 

mitigation of risks for BSM projects and releases. PG&C also will provide an 

integrated IT portfolio assessment of organizational capacity for delivering BSM 

capabilities. This IT portfolio assessment is critical to ensure the technical impact 

of BSM program decisions on the current production environment are understood 

and considered fully. Engineering analyses and resource estimates are integral to 

ensuring organizational capacity needs are incorporated into both plans and 

budgets to deliver an integrated portfolio, including maintaining current 
IRS-127

operations, delivering filing season readiness, addressing significant legislative 

proposals, and supporting BSM initiatives.

 Requirements Management (RM) – RM improves the conduct of business 

analysis, process redesign, business rules harvesting and management, and 

business requirements elicitation, definition and management. RM standards and 

expertise allow the IRS to incorporate requirements engineering industry best 

practices into the Enterprise Life Cycle for consistent systems development 

processes; apply business rules methods, tools and processes to BSM projects;

and develop enterprise policy and standards for requirements and business rules 

management. 

RM provides requirements planning and management support, business process

redesign, rules and requirements development, business modeling, requirements 

training and outreach, requirements baseline management, and solution 

development support. In addition, RM allows for integrating the technical 

requirements engineering process into requirements management methodology. 

 Management Processes (MP) – MP provides management disciplines leading to 

consistent quality, managed risk, increased stakeholder satisfaction, and delivery 

of modernized business systems within established cost and schedule parameters. 

The IRS is continually working to strengthen its management processes through 

the development and deployment of processes and procedures such as Earned 

Value Management (EVM) and Enterprise Life Cycle (ELC). The dynamic 

nature of modernization drives BSM to continually assess its operation and 

implement continuous improvements.

 Program Management (PM) – PM provides centralized services for the PRIME 

task orders to ensure consistency and quality of the products delivered to the IRS 

and to assist PRIME staff in providing timely and efficient services to the IRS. 

The PRIME contractor will continue to provide overall executive and contractual 

support for the task orders, with the IRS integrating the task orders’ results and 

measuring program-critical success factors. The PRIME task order provides the 

management data and IT infrastructure that supports risk management activities, 

high-level project cost and schedule estimates, contracts and procurement 

management, and security services for the PRIME contract and associated task 

orders. This funding will provide the IRS with the high quality, timely data 

necessary to evaluate and report overall contract performance from a perspective 

that balances cost, schedule, technical requirements, and customer satisfaction.

 Federally Funded Research and Development (FFRDC) – The IRS has undertaken 

a complete redesign and modernization of its computer-based information 

processing system through its modernization program. The IRS must improve its 

procedures and practices through the injection of public and private sector 

expertise. The FFRDC provides national experts in systems engineering, 

architectural design and development, information technology, security, and other 

technical disciplines that are critical to the modernization success. The FFRDC 

also provides support services to promote consistency with enterprise goals and 

objectives to ensure efficient operations. Areas of support include Security 
IRS-128

Architecture; Data Strategy; System Architecture and Engineering; IRS Enterprise 

Architecture, consisting of the Enterprise Architecture, Enterprise Requirements, 

and Enterprise Transition components. 

Management Reserve: The management reserve funds are not designated for specific 

projects or programs and allow the IRS flexibility to cover unanticipated cost 

adjustments.

Labor: This activity provides the labor costs associated with the development of projects 

within the BSM portfolio.

FY 2012 Program Changes by Budget Activity

FTE Amount

Business Systems Modernization (BSM) Initiative (65) ($52,000)

Continue Migration from Aging Tax Administration System (65) (52,000)

Total FY 2012 Request (65) ($52,000)

Dollars in Thousands

Internal Revenue Service

Information Technology Investments

3.2.9 – Budget and Performance Plan

Business Systems Modernization FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $170,576 $131,138 $177,208 $263,897 $263,897 $333,600

Reimbursable Resources

Mandatory Appropriations - User Fees

Total Resources $170,576 $131,138 $177,208 $263,897 $263,897 $333,600

Budget Activity Total $170,576 $131,138 $177,208 $263,897 $263,897 $333,600

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Business Systems Modernization Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

Percent of BSM Projects within +/- 10% Cost Variance (E) 92.0% 60.0% 40.0% 90.0% 90.0% 90.0%

Percent of BSM Projects within +/- 10% Schedule Variance (E) 92.0% 90.0% 100.0% 90.0% 90.0% 90.0%

Key: E - Efficiency Measure

Dollars in Thousands

Description of Performance

IRS modernization efforts continue to focus on core tax administration systems designed 

to provide more sophisticated tools to taxpayers and IRS employees. The following 

highlights IRS accomplishments in FY 2010: 

 Customer Account Data Engine (CADE) – CADE posted more than 41.2 million 

tax returns and processed more than 35.8 million refunds. For the first time, 
IRS-129

CADE posted more than 7.2 million payments submitted with taxpayer returns 

and, at the taxpayers’ request, issued 8,128 U.S. Savings Bonds using their federal 

tax refund. 

 Modernized e-File (MeF) – The IRS deployed an additional release that allowed 

for filing of individual Forms 1040 (federal and state returns), Form 4868, 

Application for Automatic Extensions of Time to File U.S. Individual Income Tax 

Return, extensions, and 21 other supporting 1040 forms and schedules. In 

FY 2010, MeF accepted more than 6.9 million returns. 

 Accounts Management Services (AMS) – The final AMS Release provided all 

users with the ability to view correspondence images online in real-time,

eliminating reliance on the manual processes to obtain copies. Direct access to 

images reduced the case cycle time from 10 to 14 days to zero. In 2010, over 

1.3 million images were viewed. 

CADE to CADE2

The IRS launched the Customer Account Data Engine (CADE) in 2000 as one of the 

cornerstones of the Business Systems Modernization (BSM) programs. Since its 

inception, CADE has made significant progress towards replacing the IRS aged master 

file processing system. It has delivered increased value to taxpayers as well as 

operational efficiencies for the IRS.

An assessment conducted by IRS senior technologists and respected external advisors 

resulted in a revised path forward for CADE, leveraging existing systems as well as new 

development and focusing on the end state – ―getting to done.‖

As a result, CADE 2 was commissioned to execute a revised plan to modernize IRS’s

core taxpayer account processing systems that would build on the substantial progress 

that the current CADE processing platform had created. The CADE 2 solution will 

provide daily processing capability, timely access to authoritative individual taxpayer 

account information, an enhanced ability to address technology security and IRS financial 

material weaknesses, and long-term architecture planning and viability.

Completion of a taxpayer account database under CADE 2 is the prerequisite for other 

major initiatives, including significant expansion of online services and transactions and 

the next generation of enforcement technologies.

IRS-130

Health Insurance Tax Credit Administration 

Appropriation Description

The Health Insurance Tax Credit Administration (HITCA) appropriation provides 

funding for contractor support to develop and administer the advance payment option for 

the Health Coverage Tax Credit (HCTC) included in the Trade Adjustment Assistance 

Act (Trade Act of 2002) (Public Law 107-210). 

The IRS administers the enrollment, payment, and compliance components of this credit. 

The Department of Labor, state workforce agencies, and the Pension Benefit Guaranty 

Corporation determine who might be eligible for HCTC. This credit was expanded by 

the Recovery Act and is proposed for extension in the FY 2012 Budget.

The HITCA Budget Request for FY 2012 is $18,029,000 in direct appropriations and 

15 FTE. This is an increase of $2,517,000, or 16.23 percent, more than the FY 2010

enacted level of $15,512,000 and 15 FTE. 
IRS-131

2.1 – Budget Adjustments Table 

Dollars in Thousands

FTE Amount

FY 2010 Enacted Budget1 15 $15,512

FY 2011 Annualized CR Level 15 $15,512

Changes to Base:

Adjustment to Reach FY 2011 President's Policy Level $3,447

Maintaining Current Levels $232

Other Adjustments

Technical FTE Adjustments

Efficiencies/Savings ($1,162)

Reduce Training, Travel and Programs (1,162)

Subtotal Changes to Base $2,517

Total FY 2012 Base 15 $18,029

Program Changes:

Subtotal Program Changes

Total FY 2012 Request 15 $18,029

Adjustments to Request

User Fees

Total FY 2012 Request 15 $18,029

Health Insurance Tax Credit Administration

1FY 2010 Enacted represents the approved FY 2010 Operating Plan
IRS-132

2.2 – Operating Levels Table

Dollars in Thousands

Appropriation Title: Health Insurance Tax Credit 

Administration

FY 2010

Enacted 

Level 1,2

FY 2011

President's 

Budget

Congressional 

Action 

including 

Rescission

FY 2011

Annualized 

CR Level 2 

Proposed 

Reprogram.

FY 2011 

Proposed 

Operating 

Level

FY 2012

Request 

Level 2

% 

Change 

FY 2011 

to 

FY 2012

FTE 15 15 15 15 15 0.0%

Object Classification:

11.1 Full-Time Permanent Positions $2,353 $2,399 $0 $2,353 $0 $2,353 $2,374 0.9%

11.3 Other than Full-Time Permanent Positions 0 0 0 0 0 0 0 0.0%

11.5 Other Personnel Compensation 34 24 0 34 0 34 24 -29.4%

11.8 Special Personal Services Payments 0 0 0 0 0 0 0 0.0%

11.9 Personnel Compensation (Total) $2,387 $2,423 $0 $2,387 $0 $2,387 $2,398 0.5%

12.0 Personnel Benefits 360 374 0 360 0 360 376 4.4%

13.0 Benefits to Former Personnel 0 0 0 0 0 0 0 0.0%

21.0 Travel 133 211 0 133 0 133 203 52.6%

22.0 Transportation of Things 0 0 0 0 0 0 0 0.0%

23.1 Rental Payments to GSA 0 0 0 0 0 0 0 0.0%

23.2 Rent Payments to Others 0 0 0 0 0 0 0 0.0%

23.3 Communications, Utilities, & Misc 0 400 0 0 0 0 21 100.0%

24.0 Printing & Reproduction 0 200 0 0 0 0 203 100.0%

25.1 Advisory & Assistance Services 0 0 0 0 0 0 0 0.0%

25.2 Other Services 12,624 15,372 0 12,624 0 12,624 14,783 17.1%

25.3 Purchase of Goods & Services from Govt. Accounts 0 0 0 0 0 0 0 0.0%

25.4 Operation & Maintenance of Facilities 0 0 0 0 0 0 0 0.0%

25.5 Research & Development Contracts 0 0 0 0 0 0 0 0.0%

25.6 Medical Care 0 0 0 0 0 0 0 0.0%

25.7 Operation & Maintenance of Equipment 0 0 0 0 0 0 0 0.0%

25.8 Subsistence & Support of Persons 0 0 0 0 0 0 0 0.0%

26.0 Supplies and Materials 8 7 0 8 0 8 15 87.5%

31.0 Equipment 0 0 0 0 0 0 0 0.0%

32.0 Lands and Structures 0 0 0 0 0 0 30 100.0%

33.0 Investments & Loans 0 0 0 0 0 0 0 0.0%

41.0 Grants, Subsidies 0 0 0 0 0 0 0 0.0%

42.0 Insurance Claims & Indemn 0 0 0 0 0 0 0 0.0%

43.0 Interest and Dividends 0 0 0 0 0 0 0 0.0%

44.0 Refunds 0 0 0 0 0 0 0 0.0%

91.0 Unvouchered 0 0 0 0 0 0 0 0.0%

Total Budget Authority $15,512 $18,987 $0 $15,512 $0 $15,512 $18,029 16.2%

Budget Activities:

Health Insurance Tax Credit Administration $15,512 $18,987 $0 $15,512 $0 $15,512 $18,029 16.2%

Total Budget Authority $15,512 $18,987 $0 $15,512 $0 $15,512 $18,029 16.2%

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.

2 Reflects implementation of the IRS Material Group Code project. This project realigned costs to more closely conform to general ledger account and OMB object class 

definitions. 
IRS-133

2.3 – Appropriation Detail Table

Dollars in Thousands

Health Insurance Tax Credit Administration

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Health Insurance Tax Credit Administration 12 $15,478 15 $15,512 15 $15,512 15 $18,029 16.23%

Subtotal New Appropriated Resources 12 $15,478 15 $15,512 15 $15,512 15 $18,029 16.23%

Other Resources:

Recoveries 1,177

Offsetting Collections - Reimbursable

Available multi-year/no-year funds

50% Carryover

Transfers In/Out

Mandatory Appropriations - User Fees

Subtotal Other Resources $1,177

Total Resources Available for Obligation 12 $15,478 15 $16,689 15 $15,512 15 $18,029 16.23%

FY 2010

Obligations Enacted Annualized CR Level 1to FY 2012

1 The FY 2010 Enacted column represents the approved FY 2010 Operating Plan.

Resources Available for Obligation Request

% Change

FY 2010 FY 2011 FY 2012 FY 2011

3J – Health Insurance Tax Credit Administration ($18,029,000 in direct 

appropriations): The HITCA budget activity funds costs to administer a refundable tax 

credit created by the Trade Act of 2002 to purchase health insurance for eligible 

taxpayers. This activity maintains the administrative and direct support for the HITCA 

program office and the staff charged with managing the program for the IRS.

3.2.10 – Budget and Performance Plan

Health Insurance Tax Credit Administration FY 2011

FY 2008 FY 2009 FY 2010 FY 2010 Annualized FY 2012

Resource Level Obligated Obligated Obligated Enacted1 CR Level Request

Appropriated Resources $15,223 $15,374 $15,478 $15,512 $15,512 $18,029

Reimbursable Resources

Mandatory Appropriations - User Fees

Total Resources $15,223 $15,374 $15,478 $15,512 $15,512 $18,029

1The FY 2010 Enacted represents the approved FY 2010 Operating Plan.

Health Insurance Tax Credit Administration Budget Activity FY 2008 FY 2009 FY 2010 FY 2010 FY 2011 FY 2012

Measure Actual Actual Actual Target Target Target

Cost per Taxpayer Served ($) (E) $16.94 $13.79 $9.52 Baseline1 $10.00 $11.00

Sign-up Time (days) - Customer Engagement (Ot) 94.0 91.3 124.0 Baseline1 124.0 137.0

Key: E - Efficiency Measure, Ot - Output/Workload Measure

1An increase in participation occurred due to the Recovery Act. IRS established a new baseline in FY 2010.

Dollars in Thousands

Description of Performance

The IRS administers the HCTC by working with health plan administrators to arrange for 

direct payment of health plan premiums on behalf of taxpayers and is dependent upon the 

Department of Labor, state workforce agencies, and the Pension Benefit Guaranty 

Corporation who determine HCTC candidates. 
IRS-134

Over the past two years, the HCTC program has undergone several changes. The 

economic downturn led to an increased number of candidates and increased operational 

volumes while the ARRA provisions improved the accessibility and affordability of the 

HCTC program. 

In FY 2010, the IRS promoted communication of program changes, expanding outreach 

with special mailings and targeted presentations to educate participants and to encourage 

them to enroll. The IRS also worked closely with other agencies to ensure eligible 

candidates receive the HCTC. 

In FY 2010, the IRS processed almost 11 million HCTC eligibility records, made more 

than 279,000 HCTC payments (60 percent more than in 2009) on behalf of taxpayers, 

handled approximately 233,000 (77 percent more than in 2009) HCTC telephone calls, 

and mailed more than 1.1 million (72 percent more than in 2009) pieces of 

correspondence. While volumes were significantly higher than in FY 2009, the IRS 

maintained a customer satisfaction level of 90 percent. 

In addition, the Cost per Taxpayer Served (CPTS) decreased from $13.79 in 2009 to 

$9.52 in 2010 because of the significant increase in the number of new candidates, 

enrollees and people contacting the program. While the CPTS decreased, sign-up time (the 

median number of days between the first program kit mailing and the first payment 

received from the participant) increased 36 percent from 91 days to 124 days as a result of 

the additional time needed to process more registrations because of the increased numbers 

of eligible taxpayers.

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Section 4 – Supporting Materials

4A – Human Capital Strategy 

In FY 2010 the IRS completed the IRS Human Capital Business Plan (HCBP) for 

2010-2014. This plan expands upon the IRS Strategic Plan and outlines IRS’s dedication 

to make effective investments in the IRS workforce. The HCBP highlights the strategic 

vision and direction to achieve IRS’s FY 2012 goals and objectives with collaboration, 

leadership, connectivity, and delivery of a cutting-edge workforce with measured results 

to showcase IRS as the ―best place to work in government.‖

To achieve the strategic goals and objectives, the IRS is faced with the following 

business challenges: 

 Increasing complexity of tax administration that requires new and enhanced 

employee competencies;

 Growing numbers of employees eligible for retirement; and

 Managing an increasingly diverse and mobile workforce.

To address the challenges, the IRS must:

 Recruit, Hire, and Onboard – Supports the IRS priority to achieve both the 

optimum mix of employee skill sets and diversity by continuing efforts to improve 

recruiting, hiring transition, and other processes to ensure the right person is in the 

right job. 

 Engage, Develop, and Retain – Supports the IRS commitment to improve 

employee skills, address retention efforts, and increase employee engagement. It 

also reflects a commitment to support top quality managers with effective 

resources, recognition, and tools to lead an engaged workforce. 

 Develop and Promote Leaders – Addresses the crucial support needed to 

provide leadership with effective resources, recognition, and tools to lead the IRS 

workforce. Without a stable, knowledgeable managerial infrastructure, IRS’s

ability to carry out its mission is compromised.

 Facilitate Collaborative Environment – Fosters an open exchange of innovative 

ideas and leveraging relationships to ensure that human capital plans and 

implementation efforts are fully integrated with the IRS mission, strategies and 

program goals. 

The FY 2012 IRS key objectives are:

 Enhance productivity through expanded use of technology; 

 Continue process improvements to simplify hiring; 

 Close skill and competency gaps in critical occupations; 

 Implement recommendations from annual workforce summits;
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 Focus recruitment on the most critical hiring needs by using a more targeted 

approach to college recruiting and leveraging partnerships with external 

organizations and internal affinity groups; and 

 Create new ways for candidates to learn about and apply for IRS jobs through the 

use of an employee referral program and electronic media.

Mission Critical Occupations Facing Critical Deficiencies

Leadership continuity continues to be one of the IRS key areas of focus because of the 

growing numbers of employees in leadership positions who are eligible to retire. 

Retirement eligibility among experienced employees who would otherwise be candidates 

for leadership positions also is growing. 

Management 

Level

Number of 

Employees

FY 2010 FY 2011 FY 2012 FY 2013

Executive 297 19 109 130 149 170 57.2%

Senior 1,677 94 522 626 748 857 51.1%

Department 363 13 54 74 88 113 31.1%

Front Line 6,639 241 1,542 1,863 2,185 2,558 38.5%

Non-Management 99,200 2,577 15,982 19,286 22,803 26,634 26.8%

Total 108,176 2,944 18,209 21,979 25,973 30,332 28.0%

1

Based on retirement eligibility statistics as of November 30, 2010

Retirement Eligibility1

FY 2014

To address this challenge, the IRS identifies potential leaders through competency 

assessments, leadership succession review, and leadership development programs such as 

Frontline, Senior, and Executive Readiness Programs. 

The IRS has no major hiring gaps with non-management positions. To ensure this trend 

continues, the Recruitment Office will:

 Continue to ensure that mission critical occupation, geography, and diversity 

needs are met;

 Maintain candidate relationships from the beginning to the end of the recruiting 

process using a data tracking system;

 Continue to standardize materials and messages, tailored to candidate segments;

 Use diverse hiring sources to increase employment of disabled, veteran, and 

student applicants; and

 Develop a strong online presence at relevant social media sites.
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Closing Competency Gaps in Mission Critical Positions

The IRS completed its pilot of a skills assessment process called Assess 4 Success (A4S).

A draft report was completed and will be presented to leadership for review.

Human Capital Occupations/Functions Contracted 

The IRS uses contractor employees to fill short-term needs and obtain technical and 

expert information technology skills that are not available within the current workforce. 

To support surges in hiring workload, the IRS plans to continue to leverage temporary 

contractor support and re-employed annuitants.

Organizational Changes

The Large and Mid-Size Business Division completed an organizational change initiative 

to consolidate international expertise and staffing into one organization to enhance 

efficiencies and effectiveness by creating direct line authority, and facilitating 

consistency of treatment of issues and employee training. The organizational changes 

were accomplished within available resources and resulted in the new Large Business and 

International (LB&I) Division. 

The End User Equipment & Services organization is reorganizing to meet Federal 

Information Technology Infrastructure Line-of-Business target levels. Full transition is 

expected to continue through September 30, 2012. The new organization structure will:

 Reduce cost and increase service delivery performance by changing the support 

model to a leaner model focused on a centralized service desk;

 Consolidate onsite support in high-density customer locations; and

 Allow for contracted support for low-density customer locations. 

Best Place to Work in Government 

Several key initiatives helped IRS make significant progress toward becoming the ―best 

place to work in government.‖ For example, a strategic business relationship was 

developed with the Partnership for Public Service to advise the IRS on strategies to 

increase its stature as the ―best place to work in government.‖ In addition, an Action 

Planning Team (HCO, Business Unit, and NTEU representatives) was formed to focus on 

three key areas for organizational improvement: 

 Effective Leadership;

 Family-Friendly Culture and Benefits; and 

 Employee Skills/Mission Match. 
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The results from the Federal Employee Viewpoint Survey, used to rank agencies across 

the federal government and encourage ―the best and brightest‖ to work in government, 

ranked the Department of the Treasury, with the IRS as the key driver, as one of the top 

10 most improved agencies in government in all four of the survey indices. The IRS was 

ranked 79th among the 224 federal agencies. 

Employee Engagement

Based on key initiatives recommended by the Workforce of Tomorrow, the IRS annual 

employee satisfaction survey (ESS) results, and the Federal Human Capital Survey 

(FHCS) results, IRS is taking the following steps to increase employee satisfaction:

 Reduction of Managerial Burden – IRS has taken the following steps to allow 

managers to spend more time developing their employees: 

o Established a Managers Resource Center to answer manager questions 

and provide information. IRS is piloting an iManage website with over 

2,800 managers that provides information, advice, and interactive features. 

Implementation of the iManage website is scheduled for early 2011. IRS 

also is pursuing technology such as instant messaging and online help to 

reduce wait times for issue resolution. An online Hotline service, ―Direct 

Connect‖ will be a pilot project in FY 2011.

o Completed a Recognition Toolkit in April 2010 to provide the options 

and instructions for monetary and non-monetary recognition and 

recognition ceremonies. 

o Developing Managerial Training Enhancements, including the 

following improvements in training for readiness program participants, 

new managers, existing managers, and administrative professionals:

 Redesigned the Front Line Readiness Program;

 Developed the New Managers Orientation course;

 Developed Fundamental Management Skills course; and

 Redesigned Front Line Managers course. 

The next phase will focus on training for managers after they have been in 

their positions with completion planned in FY 2011. 

o Established a Service-wide Managerial Burden Council in April 2010, 

which is currently working on developing solutions to managerial burdens.

o Designed and conducted a Managerial Burden Survey (July 2010) to 

identify ways to reduce burden to ensure measurable progress in reducing 

burden so managers can instruct and coach employees on job performance 

and career goals. Reducing burden also will affect how employees view 

the prospect of becoming a manager. Approximately 20 percent of 

managers completed the survey and an analysis of the results is underway.
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 Increase Communications to Employees – IRS is taking steps to better inform 

employees of IRS and division level initiatives. Senior leaders use town halls, 

blogs, streaming videos and all-employee messages to reach staff. Leaders also 

share best practices and success stories on their internal websites and recognize 

those who are achieving IRS goals and objectives. 

 Improve Employee Recognition – The IRS is revising the awards and 

recognition program to reach more employees and to create a standard protocol 

for employee recognition. Recognition activities such as using the web to 

recognize employee successes were implemented throughout FY 2010. 

 Improve Training for New Employees – The IRS is improving its new 

employee training. The IRS is updating its on-boarding program for new 

employees from a one-day orientation to a 12-month corporate on-boarding 

strategy. In addition, IRS is initiating an ambassador program to help familiarize 

new employees with their job. Many of these programs were created with input 

from the National Treasury Employees Union (NTEU). In May 2010, the IRS 

completed a redesign of the Career Management Resource Center to support and 

enhance employees’ career development process. 

 Address Results of the IRS Annual Employee Survey – The IRS received its 

2010 survey results with a record 79 percent employee participation and overall 

employee satisfaction increased from 73.7 percent in FY 2009 to 74.4 percent in 

FY 2010. Each division within the agency conducted meetings with their 

workgroups to discuss results and devise specific plans for addressing any issues. 

The IRS also is working with the Partnership for Public Service to further 

enhance its service-wide action planning process. 

Wellness Program 

The IRS wellness initiative links to and supports the goals of the President’s Federal 

Employee Worksite Wellness Initiative and Office of Personnel Management (OPM) and 

Office of Management and Budget directives requiring agencies to inventory current 

wellness activities, initiate plans to enhance wellness programs, and establish health and 

wellness performance targets.

The wellness initiative supports employee health and wellness through education and 

awareness programs, encourages healthy lifestyle choices, and raises awareness and 

commitment to health and wellness as part of work-life balance. Benefits to employees

include fewer work-related injuries, improved attendance, reduced turnover, and 

increased morale. 

To meet the FY 2011 performance target, the IRS completed an inventory of current 

wellness and health services/activities; researched external health resources and tools to 

supplement internal wellness activities; and developed a detailed communication strategy 

and wellness website that highlights the availability and benefits of wellness services.
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In FY 2012, the IRS will continue to build upon its education and awareness efforts. 

New wellness activities include: 

 Continuing and expanding efforts to increase employee awareness of internal and 

external services and resources;

 Maximizing use of services and resources available under the Federal 

Occupational Health and Employee Assistance Program contracts;

 Participating in OPM-sponsored government-wide wellness activities 

(e.g., FedsGetFit challenges and events);

 Developing a more robust and interactive wellness website for use by managers 

and employees upon implementation of IConnect, the new IRS employee portal;

 Partnering with specific demographic groups and employee organizations to 

promote wellness programs and services; and

 Promoting extended (4 to 6 weeks) physical activity campaigns (link to events 

such as President's Physical Challenge and National Employee Health and Fitness 

Day) and campaigns that focus on healthy eating and weight management (link to 

events such as Healthy Weight Week and National Nutrition Month).

To evaluate the progress of the IRS Wellness Initiative, the IRS will measure and track 

use of Federal Occupational Health and Employee Assistance Program services. The 

OPM Employee Viewpoint Survey results, Best Place to Work in Government and, if 

feasible, the IRS Employee Engagement Survey also will be used to collect data and 

assess the effectiveness of the IRS Wellness.

Hiring Reform 

The IRS Hiring Reform initiative is directly linked to and fully supports the goals of the 

Presidential Budget and Performance Plans (June 2009) and Presidential Improving the

Federal Recruitment and Hiring Process (May 2010) directives. This initiative will 

include:

 Development/enhancement of assessment tools 

Key activities for developing and enhancing assessment tools include:

o Development of automated ranking templates for 75 percent of the hiring 

volume in FY 2011.

o Implementation of more than 200 CareerConnector templates to improve the 

hiring process using the Treasury CareerConnector recruitment system. 

o Implementation of the Presidential Improving the Federal Recruitment and 

Hiring Process directives by November 1, 2010, as mandated. 

 Deployment of CareerConnector templates to eliminate KSA/Essay 

questions and revision of instructions so applicants can apply using 

resumes and cover letters. 
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 Expanding use of category ratings on CareerConnector 

announcements. Category ratings increases the number of qualified 

applicants while preserving veterans’ preference rights. 

o Development of a process to convert manual external announcements to 

category ratings. 

o Implementation of an experience calculator to assist applicants in determining 

basic and specialized experience qualifications. 

o Continued use of the OPM hiring survey for internal and external 

announcements to measure the quality of the recruitment actions. 

 Education/Training of HR Specialists and Hiring Managers

The IRS began training human resources specialists and assistants on hiring 

reform and key aspects of the hiring process to improve technical knowledge and 

skills. The IRS completed the development of manager training on the hiring 

process in October 2010. The ―just in time‖ online training can be taken at the 

time managers begin the recruitment process. Early involvement ensures 

accountability and participation in every facet of the hiring process. 

 Outreach/Communications to Applicants

IRS is developing a Hiring Reform Alert document share within and outside of 

the IRS Human Capital Office and a communications plan that includes web 

notices and alerts to educate and communicate with employees. 

 Workforce Planning

IRS also is analyzing its collective workforce needs by developing a corporate 

approach with appropriate measures to integrate the planning function with other 

core workforce management functions, including recruitment, hiring, retention, 

development, and succession planning. The IRS is developing common 

guidelines and processes for collecting and analyzing workforce data, identifying 

and prioritizing workforce gaps and developing strategies to address gaps and 

prepare for future workforce needs.

Veterans’ Employment

The IRS Veterans Employment and Recruitment Operational Plan supports key aspects 

of the Veterans Employment Initiative. Current and planned initiatives in support of 

promoting employment opportunities for veterans include:

 Recruitment and increased hiring of veterans 

o Continue outreach efforts by organizing and coordinating recruitment 

opportunities throughout the U.S. for wounded service members, veterans, 

and their spouses; 
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o Provide one-on-one resume writing assistance, interviewing skills and 

other career search services through corporate immersion workshops and 

various information sessions; 

o Design a professional development/career-building intern program for 

veterans to meet mission critical needs; 

o Contribute to the development of an interactive program to translate 

military skills to civilian occupations; 

o Develop a transitioning service member and veteran resume 

database/skills inventory with appropriate business partners; 

o Develop an IRS marketing campaign highlighting veteran and 

transitioning service member skills, leadership, dedication and how these 

attributes support the IRS in meeting mission objectives; and

o Integrate IRS marketing efforts with transition assistance program offices 

on military installations and other targeted marketing efforts underway at 

Treasury and Veterans Affairs.

 Retention to include veteran training, mentoring and job counseling 

o Maximize career counseling opportunities and career search activities for 

veterans and transitioning service members through social network 

platforms; 

o Train and educate veterans and transitioning service members to meet the 

staffing needs of IRS’s high-demand occupations; 

o Validate programs and policies that ensure veterans and transitioning 

service members are trained, educated and informed on hiring authorities, 

veterans preferences and employment opportunities; 

o Design an IRS Veterans website to better provide information on 

employment opportunities, veterans’ preference, Q&As, hiring authorities 

as well as a calendar of recruitment events for veterans, transitioning 

service members and hiring managers; and 

o Provide interaction via email to transitioning service members/veterans for 

job search assistance.

 Fulfillment of mandatory annual training of hiring managers and human 

resource specialists 

o Conduct training incorporating Treasury training module (under 

development) for HR professionals and hiring officials on veterans' 

employment, including the strategic use of special hiring authorities, 

employment of military spouses, and reasonable accommodations for 

disabled veterans. 
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Hiring Individuals with Disabilities

The IRS uses specific recruitment efforts to reach individuals with disabilities, including 

targeted disabilities through partnerships with the National Federation for the Blind, 

American Council for the Blind; National Federation for the Blind; Association for 

Higher Education and Disabilities; Jobs Accommodations Network and Employee 

Assistance Resource Network. IRS Affinity Groups also are a way to increase 

opportunities to recruit and hire a diverse applicant pool. Some specific activities 

include:

 Job counseling to facilitate successful matching of applicants to jobs in the IRS;

 Working with the Workforce Recruitment Program that connects federal and 

private sector employers nationwide with postsecondary students and recent 

graduates with disabilities;

 Partnering with a university to develop a new ―feeder program‖ for hiring 

employees with disabilities, emulating some of the aspects of the Lions World 

Services for the Blind Model; and

 Incorporating a mentoring program component for employees with disabilities 

and establishing a cadre of formally trained mentors. The mentors will help 

develop employee skills and experience levels to promote career growth and 

improve networking and communications for employees with disabilities. 

The IRS continues to take steps to educate managers and employees on the hiring and 

retention of individuals with disabilities. The IRS is using different communications 

channels such as town halls, the internal website, streaming videos, and all employee 

emails to reach the IRS workforce. 

Labor-Management Forums

IRS and NTEU senior leadership continue discussions regarding formulation of a 

collaborative forum with senior leadership participation. Associated with the 

development of this forum is identifying a more progressive approach to obtain 

pre-decisional input from IRS employees through their elected representatives on all 

workplace issues. Once these determinations have been made, the IRS will provide 

appropriate training to managers and other participants in the processes. Evaluative 

metrics will be developed to allow for review of processes and modifications as 

appropriate.

Long-standing labor relations management committees continue to operate within the 

provisions of the IRS National Agreement II, Article 46. These forums provide a venue 

for addressing matters of concern or interest regarding personnel policies, practices and 

working conditions as well as building and strengthening relationships between the union 

and the IRS. Issues identified at the local level that may have IRS-wide impact are 

reviewed at the national level.
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Finally, the IRS and NTEU have sponsored two on-going national collaborative 

initiatives for the purpose of program review and have identified opportunities for 

process improvement. 
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4B – Information Technology (IT) Strategy

The IRS information systems support all aspects of tax administration and are essential 

tools for taxpayer communications and transactions within the IRS. Major IT activities 

address both internal and external priorities, through a balanced investment portfolio that 

is fully aligned with the IRS Strategic Plan 2009-2013. IRS strategic priorities are 

determined by the IRS Senior Executive Team (SET) and are expected to provide the 

foundation for making sound decisions to meet both IRS and business IT needs. 

Information Technology Process Improvement

The IRS plans to direct resources to the enrichment of specific business processes. This 

will enable the standardization of program management and service delivery methods 

according to industry best practices and move the IRS closer to its goal of managing its 

IT processes and infrastructure more efficiently.

A few of these processes include:

 Capability Maturity Model Integration (CMMI) – An approach that provides 

organizations with the essential elements of effective software engineering 

processes. CMMI is being used to guide process improvement across projects to: 

o Produce quality products or services;

o Create value for the business stakeholders;

o Enhance customer satisfaction; and

o Gain an industry-wide recognition for excellence.

 Information Technology Infrastructure Library (ITIL) – A proven method based 

on industry standards for planning common processes, roles and activities with 

appropriate references to each other defining how communication lines should 

exist between processes. Benefits include:

o Improved quality service provisioning;

o Cost-justified service quality;

o Integrated centralized processes; and

o Demonstrated performance indicators.

 Project Management Institute (PMI) – PMI sets the project management standard 

for how projects are planned and executed. The PMI organization certifies 

individuals who understand and practice these standards. The benefits of 

PMI-certified project management include:

o Common method to manage risk across projects;

o Better decision making by evaluating a project’s triple constraints – cost, 

time, and scope; and

o Enhanced and more comprehensive project planning.
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CyberSecurity 

The IRS, through the CyberSecurity organization, offers a robust organizational structure 

with associated tools and processes to ensure annual compliance with FISMA 

requirements. Specific tracking of required deliverables and year-to-date progress is 

communicated to management decision-makers on a monthly basis via the FISMA 

Dashboard product. This dashboard tracks FISMA progress in the following program 

areas:

 Security Assessment & Authorization

 Information Technology Contingency Plans (ITCP) Testing

 Security Controls Testing (Continuous Monitoring/SCAs)

 Plan of Action and Milestones (POA&M) Mitigation

 Privacy Impact Assessments (PIA)

 System of Record Notices (SORN)

 FISMA Contractor System Reviews

 Employee Awareness Training

 Contractor Awareness Training

 Specialized IT Security Training

 Security Configuration Management

Executive review of the dashboard and management of follow-up actions ensures that 

sufficient year-to-date progress is made and to implement mitigation strategies to address 

documented areas of shortcoming.

IT Infrastructure 

The IRS Data Center Consolidation Plan was prepared in response to the Office of 

OMB’s Federal Data Center Consolidation Initiative (FDCCI). Additionally, the FDCCI 

is a key component to achieve Goal 9 - Electronic Stewardship - of the IRS Sustainability 

plan. The IRS is committed to ensuring policies and practices reduce the environmental 

impact of IRS operations and are critical for long‐term economic fiscal responsibility to 

reduce operating costs. Adopting Green IT and migrating to more efficient infrastructure 

operations are key focus areas for the IRS in the coming years. 

The IRS Data Center Consolidation Initiative (DCCI) approach is to centralize, virtualize, 

and decommission server resources to meet the following goals: 

 Consolidate the governance of all servers;

 Reduce the IRS Data Center footprint;

 Enhance the IRS Disaster Recovery capabilities; and 

 Streamline IRS processes to reach a more mature level of ITIL.
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The IRS will perform a business case study to determine the most cost effective approach 

to meet the goal of doubling the effective use of the available Data Center raised floor 

over the next five years. Essentially, the IRS will reduce the Data Center square footage 

by 50 percent over a five-year period and make that capacity available for other uses. As 

a long-term approach, after reviewing the business case, the IRS will be able to better 

identify the 10 year goals for efficient use of available raised floor resources. 

The IRS will, through a business case study, determine a cost effective approach to 

reducing Data Center square footage and allow Treasury to consolidate its Bureaus Data 

Center needs inside of IRS Data Centers. The business study will focus on two major 

approaches – a reduction in the number of data centers and/or a reduction in the current 

data center footprints. Both methods will allow the IRS to reach its goal of operating 

more efficiently through better utilization of resources.

The FDCCI serves as a foundation for expanding the use of shared services. The IRS is 

building a foundation to Centralize Information, Improve Platform Portability, and 

Improve User Mobility. The IRS goal to have ―All applications run on all systems and 

all systems see all the data with integrity‖ will be achieved by implementing a scalable 

Service-Oriented Infrastructure with information portability and manual workload 

distribution across services. The IRS is evaluating Cloud Computing technology, 

including Infrastructure as a Service, Platform as a Service, and Software as a Service. 

IRS is continuously evaluating utilization of this technology for various tax 

administration and employee productivity tools. 

Another initiative is the Enterprise Storage Strategy with a goal to move from a project 

based allocation to a "storage-as-a-service" model. The Enterprise Storage Strategy is a 

utility-on-premise storage model where storage will be procured based on a usage model 

meeting IRS performance and operational service level agreements. The goal is to save 

20 to 30 percent of the annual IT budget for storage acquisition and maintenance, reduce 

reliance on vendors and manage data as a valued asset. The objective is to consolidate a

majority of storage to the three IRS data centers, Martinsburg/Memphis/Detroit, and 

reduce the necessary footprint through consolidation and virtualization of IRS storage 

pools. In FY 2011, the contract will be awarded and implementation will begin with 

completion scheduled in FY 2012.

IT Project Management 

The IRS MITS Strategy and Capital Planning Office is responsible for prioritizing the IT 

investment portfolio according to the Senior Executive Team strategic priorities. This is 

accomplished by utilizing a Pre-Select/Select process that considers available resources. 

This process provides a level playing field when evaluating investment proposals by 

using a business case approach and driving IT investment decisions from the top down to 

ensure that investments deliver strategic benefits for the organization. 
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 The Pre-Select/Select process requires that each IT investment proposal:

o Maintain executive sponsorship; 

o Include an executive synopsis (business case) that states the business 

problem to be solved, identifies alternative solutions to solving the 

problem, reflects a cost analysis with a documented basis of estimate for 

the lifecycle, identifies known risks, applicable benefits and return on 

investment; and

o Align to the SET investment priorities.

 Governance Process 

The IRS uses an integrated governance model that reflects industry best practices. 

IT projects are assigned to an appropriate governance body for oversight. The 

enterprise governance model:

o Considers IT projects or systems, from selection through retirement, 

regardless of dollar value or life cycle phase;

o Empowers governance bodies to make project cost, schedule, and scope 

decisions for ―at risk‖ projects that require escalation within the tiered 

governance model to boards with greater authority to intervene for 

corrective actions; and

o Promotes accountability and decision-making at the enterprise and project 

level, specifying the appropriate thresholds and governance bodies for 

elevating issues.

 Health Assessments 

The IRS has implemented a standardized health assessment process as a key 

component of the governance framework. The health assessment process uses:

o Common criteria or Enterprise Key Performance Indicators (KPIs) to rate 

project performance and identify potential risks; 

o A color-coded rating for EKPIs to rate projects in the areas of cost, 

schedule, risk, scope, technical, organizational readiness, and overall 

performance; and

o Control and governance organizations to review the EKPPI rating and take 

corrective actions as appropriate. 

Potential issues are identified for remediation through the analysis of project specific 

data. IRS governance and control organizations guide project managers in remediation 

activities to assess the issues at hand and determine the appropriate actions to be taken.

Project assistance teams are formed, as needed, to identify and remediate those project 
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issues. Metrics regarding cost and schedule variances are reported both internally and 

externally to oversight organizations. As of the October 2010 Oversight Reporting cycle, 

100 percent of the non-BSM IT Portfolio had risk and contingency management plans; 

and, approximately 98 percent of non-BSM projects are within established thresholds for 

cost variance and schedule slippage. For those projects exceeding established thresholds, 

mitigation strategies are underway as appropriate. In addition, IRS IT organizations 

conduct quality assurance reviews of project data to monitor compliance with 

methodologies and assist project managers in implementing components of the 

IRS Enterprise Lifecycle methodology.
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4C – Government Wide Initiatives

Improper Payments Reductions

The IRS has made a number of improvements to the Earned Income Tax Credit (EITC)

program. The IRS strategy with respect to EITC improper payments is to intervene early 

to ensure compliance with the rules. Thus, the IRS has expanded outreach and education 

to taxpayers and preparers so that they are aware of the legal requirements for EITC 

eligibility. Efforts also include improved examination selection processes and data 

matching using third-party data, reducing taxpayer burden while increasing revenue 

protected. Most recently, the IRS has begun to concentrate more on regulating the 

preparer community.

In January 2010, the IRS announced a plan that will register, license and create 

enforcement tools that affect the paid return preparer community more broadly. The IRS 

believes new regulation of tax return preparers will drive increased EITC compliance, 

decrease fraud and affect the improper payment rate. Currently, tax preparers complete 

66 percent of EITC returns and by focusing on this area, compliance and payment 

accuracy is expected to improve. As part of the EITC focused paid return preparer effort, 

the IRS developed a risked-based scoring and selection system to identify preparers for 

several types of enforcement treatment based on a preparer’s level of egregiousness such 

as Due Diligence Visits, Knock and Talk Visits, Streamline Injunctions, Notices, 

Undercover Shopping, and Expanded Contact Approach. These activities will continue 

and expand in FY 2012.

In addition, the Department of the Treasury is conducting a pilot project using funds from 

the Partnership Fund for Program Integrity Innovation to test how fraud and error in 

EITC might be significantly improved by sharing information with state-based programs 

to better determine eligibility up front. This pilot, which will conclude in the second 

quarter of FY 2012, simulates the benefits of data sharing in order to inform whether 

additional authority to implement such data sharing may be warranted.

Efficient Use of Energy

The IRS is promoting the sustainable use of energy resources by increasing the efficiency 

of facilities to reduce greenhouse gas emissions. The IRS is conducting energy and water 

audits of delegated facilities, as directed by the Energy Independence and Security Act of 

2007 (Public Law 110-140). These audits identify energy efficiency improvements 

called actionable Energy Conservation Measures (ECMs). At multiple IRS campuses, 

IRS implemented ECM improvements such as data center support equipment upgrades. 

These energy program improvements reduced energy use by 12.3 percent from the 

2003 baseline. 
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The IRS also improved building water efficiency by implementing water management 

best practices to reduce potable water consumption that decreased water consumption by 

17 percent from FY 2007 to FY 2009. The IRS continues to meet renewable energy 

utilization goals by purchasing Renewable Energy Credits on an annual basis. 

Furthermore, the IRS is working to reduce emissions through fleet initiatives. In 

FY 2009, the IRS decreased the general fleet by 6 percent. 

IRS strives to improve agency facilities and foster high-performing buildings. To meet 

the Guiding Principles for Federal Leadership in High Performance and Sustainable 

Buildings as required by Executive Order 13514 (―Federal Leadership in Environmental, 

Energy, and Economic Performance‖), the IRS is developing a sustainable buildings 

implementation strategy and has achieved Leadership in Energy and Environmental 

Design (LEED) certification at three facilities. IRS is exploring pursuing the LEED 

certification at additional facilities. To use space more efficiently and realize associated 

gains, the IRS is developing a Data Center Consolidation Plan and examining 

opportunities in underused space. 

Through acquisition policies, IRS also is improving the sustainability of procured goods 

and services. IRS is using the Green Procurement Plan and Buying Green Program and

environmental workshops and training to ensure that 95 percent of new contracts for 

products and services are energy and water efficient, environmentally preferable, and 

generally more sustainable. Finally, three IRS facilities comply with Environmental 

Management Systems (EMS), which meet or exceed the International Organization for 

Standardization’s ―ISO 14001‖ requirements for environmental management. IRS is 

pursuing the EMS or Compliance Management Program designation at facilities 

nationwide to promote environmentally favorable, sustainable buildings and practices. 
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4D – Summary of FY 2010 Savings Realized

In FY 2010 the IRS President’s Budget identified $118.1 million and 1,504 FTE in 

reductions to the IRS base budget as a result of increased electronic filing (e-File) and 

non-recurring and one-time costs associated with the FY 2009 enforcement initiatives 

and the Economic Stimulus Act of 2008 (Public Law 110-185). In addition, the IRS 

identified in the FY 2011 President’s Budget $58.3 million in savings to be realized in 

FY 2010 (generated from the Reduce Procurement/Contracting and a portion of 

Information Technology (IT) Infrastructure and Process Improvements savings 

initiatives). 

During the preparation of the budget request, the IRS reduced the requested level by the 

amount of the presented savings, and if the enacted budget level includes those 

reductions, the IRS operates at the reduced level. Thus, projected savings become actual 

savings upon enactment. 

FY 2010 Savings

Increase e-File Savings -$8,360,000 / -182 FTE

The IRS projected to generate this savings by receiving 4.6 million fewer returns filed on 

paper (2.9 million individual and 1.7 million business) in FY 2010. For FY 2010, the

IRS received 6.3 million (4.9 million individual and 1.4 million business) fewer returns in 

FY 2010 compared to FY 2009. The actual savings was $10,078,050 and 223 FTE. 

Non-Recur Savings -$27,074,000 / 0 FTE 

The IRS base budget was reduced by the $27 million in non-recurring, one-time

(e.g., ADP equipment and training) costs associated with the hiring of over 

3,000 enforcement employees funded by the FY 2009 enforcement initiatives.

Non-Recur Stimulus Savings -$67,900,000 / -1,322 FTE

The non-recur Stimulus funds received in FY 2009 were removed from the FY 2010 

budget. The dedicated toll free line added to handle Stimulus-related calls is now being 

used for the new Recovery Act legislation issues. The line added to the 2008 tax year tax 

return to facilitate reconciliation of the payment was removed from the 2009 tax year 

return.

Non-Recur FY 2009 Reduction Adjustment/Correspondence Inventory

-13,439,000 / 0 FTE

The non-recur funds received in FY 2009 to handle the increased adjustment/

correspondence workload that resulted from diverting staff from paper correspondence to 

telephone service to meet the requirements of the Stimulus Act was removed from the 

FY 2010 budget. The IRS correspondence inventory, comparing August 2009 to 
IRS-153

August 2010 dropped 1,254,796 to 775,960, a decrease of 478,836. Note: these 

adjustment/ correspondence inventory levels do not include First Time Homebuyer 

Credit, Worker Homeownership and Business Assistance Act, and Recovery Act 

inventory. 

Non-Recur Pension Plan -$1,352,000 / 0 FTE

The non-recur funds received in FY 2009 to fund one-time, non-recurring costs 

associated with testing the IRS ERISA (Employee Retirement Income Security Act of 

1974) Residual Solution (IERS) system were removed from the FY 2010 budget. The 

IRS ERISA Residual Solution (IERS) allows the IRS to receive and audit pension benefit 

data (Form 5500 series) for compliance purposes. Testing was successful, and the system 

became operational to receive and process returns on December 30, 2009. 

Reduce Procurement/Contracting (Reduction was taken in the FY 2011 President’s 

Budget)

Information Technology (IT) Infrastructure and Process Improvements

FY 2010 Projected Savings -$58,300,000 / 0 FTE

In accordance with Presidential guidance on controlling contract costs, the IRS planned 

to generate $58.3 million in savings in FY 2010. In FY 2010, the IRS realized savings of 

$61.6 million by renegotiating contracts for more favorable pricing and changing contract 

vehicles to firm fixed price type contracts. Most of this savings was generated from IT 

hardware, software licensing and maintenance, and telecommunication contracts. 
IRS-154

4.1 – Summary of IT Resources Table

Dollars in Millions

Major IT Investments /

Funding Source Budget Activity

FY 2009 

Actuals

FY 2010 

Actuals 

% Change 

from FY09 

to FY10

FY 2011 CR 

Rate

(FY 2010 

Enacted)

% Change 

from FY10 

to FY11

FY 2012 

Request

FY 2012 

Innovation 

Investments

% Change 

from FY11 

to FY12

Account Management Services (AMS) IT Investments $22,807 $27,988 22.7% $17,037 -39.1% $15,107 $15,107 -11.3%

IRS BSM 20-0921-0-1-803 IT Investments 10,650 6,688 -37.2% 000 -100.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 12,157 21,300 75.2% 17,037 -20.0% 15,107 15,107 -11.3%

Automated Collection System (ACS) - Major Information Services $6,892 $7,872 14.2% $10,145 28.9% $7,885 $7,885 -22.3%

Business Master File (BMF) Information Services $12,259 $7,287 -40.6% $8,410 15.4% $8,267 $8,267 -1.7%

IRS Operations Support 20-0919-0-1-803 Information Services 12,259 7,189 -41.4% 8,410 17.0% 8,267 8,267 -1.7%

External Funding (incl. Reimbursable Agreements) * Information Services 000 097 100.0% 000 -100.0% 000 000 0.0%

Counsel Automated Systems Environment (CASE) Information Services $26,513 $22,742 -14.2% $27,951 22.9% $27,951 $27,951 0.0%

Criminal Investigation Management Information 

System (CIMIS) - Major Information Services $3,776 $1,159 -69.3% $4,273 268.8% $1,169 $1,169 -72.7%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 1,009 1,000 -0.9% 1,626 62.6% 1,000 1,000 -38.5%

IRS Operations Support 20-0919-0-1-803 Information Services 2,767 159 -94.3% 2,647 1569.6% 169 169 -93.6%

Current CADE (previously known as Customer 

Account Data Engine (CADE)) IT Investments $61,430 $68,569 11.6% $46,356 -32.4% $24,223 $24,223 -47.7%

IRS BSM 20-0921-0-1-803 IT Investments 58,100 67,810 16.7% 45,937 -32.3% 23,460 23,460 -48.9%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 000 0.0% 000 0.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 3,330 758 -77.2% 419 -44.7% 763 763 82.1%

Customer Account Data Engine (MTA) / CADE 2 IT Investments $33,150 $77,687 134.3% $85,733 10.4% $198,832 $198,832 131.9%

IRS BSM 20-0921-0-1-803 IT Investments 33,150 77,524 133.9% 85,733 10.6% 198,451 198,451 131.5%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 000 0.0% 000 0.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 000 163 0.0% 000 -100.0% 381 381 0.0%

e-Services Information Services $14,648 $16,518 12.8% $14,007 -15.2% $8,666 $8,666 -38.1%

IRS BSM 20-0921-0-1-803 IT Investments 000 005 100.0% 000 -100.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 14,648 16,513 12.7% 14,007 -15.2% 8,666 8,666 -38.1%

Electronic Fraud Detection System (EFDS) Information Services $12,392 $13,737 10.9% $12,251 -10.8% $14,341 $14,341 17.1%

IRS Operations Support 20-0919-0-1-803 Information Services 8,754 10,021 14.5% 8,594 -14.2% 10,632 10,632 23.7%

IRS Operations Support (EITC) 20-09E9 Information Services 3,639 3,657 0.5% 3,657 0.0% 3,709 3,709 1.4%

IRS BSM 20-0921-0-1-803 IT Investments 000 010 100.0% 000 -100.0% 000 000 0.0%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 050 100.0% 000 -100.0% 000 000 0.0%

Electronic Management System (EMS) Information Services $4,742 $4,282 -9.7% $5,761 34.5% $4,318 $4,318 -25.0%

Enterprise Data Access Strategy (EDAS)

(Formerly:Enterprise Data Warehouse) Information Services $8,369 $8,086 -3.4% $6,995 -13.5% $7,367 $7,367 5.3%

IRS BSM 20-0921-0-1-803 IT Investments 000 014 100.0% 000 -100.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 8,369 8,072 -3.5% 6,995 -13.3% 7,367 7,367 5.3%

Excise Files Information Retrieval System (ExFIRS) - 

Major / Externally Funded Information Services $13,022 $1,145 -91.2% $6,632 479.0% $097 $097 -98.5%

External Funding (incl. Reimbursable Agreements) * Information Services 13,018 000 -100.0% 6,139 100.0% 000 000 -100.0%

IRS Operations Support 20-0919-0-1-803 Information Services 004 1,145 28075.7% 493 -57.0% 097 097 -80.3%

Financial Management Information System (FMIS) Information Services $6,801 $5,825 -14.3% $5,186 -11.0% $6,069 $6,069 17.0%

Implement RRP (incorporates EFDS replacement) Information Services $0,000 $18,383 100.0% $17,947 -2.4% $20,905 $20,905 16.5%

Individual Master File (IMF) Information Services $13,357 $8,995 -32.7% $10,982 22.1% $11,393 $11,393 3.7%

IRS Operations Support (EITC) 20-09E9 Information Services 142 000 -100.0% 000 0.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 13,215 8,923 -32.5% 10,982 23.1% 11,393 11,393 3.7%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 072 100.0% 000 -100.0% 000 000 0.0%

Information Reporting and Document Matching (IRDM) Information Services $5,119 $18,824 267.7% $23,000 22.2% $23,255 $23,255 1.1%

IRS Operations Support 20-0919-0-1-803 Information Services 5,119 15,905 210.7% 23,000 44.6% 23,255 23,255 1.1%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 2,920 100.0% 000 -100.0% 000 000 0.0%

Information Returns Processing (IRP) Information Services $7,654 $6,402 -16.4% $6,775 5.8% $5,976 $5,976 -11.8%

IRS Operations Support 20-0919-0-1-803 Information Services 7,654 6,388 -16.5% 6,775 6.1% 5,976 5,976 -11.8%

External Funding (incl. Reimbursable Agreements) * Information Services 000 014 100.0% 000 -100.0% 000 000 0.0%
IRS-155

Major IT Investments /

Funding Source Budget Activity

FY 2009 

Actuals

FY 2010 

Actuals 

% Change 

from FY09 

to FY10

FY 2011 CR 

Rate

(FY 2010 

Enacted)

% Change 

from FY10 

to FY11

FY 2012 

Request

FY 2012 

Innovation 

Investments

% Change 

from FY11 

to FY12

Integrated Collection System (ICS) Information Services $7,484 $9,823 31.3% $9,854 0.3% $10,173 $10,173 3.2%

IRS Operations Support 20-0919-0-1-803 Information Services 7,484 9,823 31.3% 9,104 -7.3% 10,173 10,173 11.7%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 000 0.0% 750 100.0% 000 000 -100.0%

Integrated Customer Communications Environment 

(ICCE) Information Services $12,082 $16,752 38.6% $16,618 -0.8% $14,892 $14,892 -10.4%

IRS Operations Support 20-0919-0-1-803 Information Services 12,082 16,680 38.1% 16,618 -0.4% 14,892 14,892 -10.4%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 072 100.0% 000 -100.0% 000 000 0.0%

Integrated Data Retrieval Systems (IDRS) Information Services $20,231 $20,351 0.6% $19,550 -3.9% $20,795 $20,795 6.4%

Integrated Financial System/CORE Financial System 

(IFS)

IRS Business Systems 

Modernization $18,167 $18,357 1.0% $17,449 -4.9% $44,798 $44,798 156.7%

IRS BSM 20-0921-0-1-803 IT Investments 000 000 0.0% 000 -100.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 18,167 18,051 -0.6% 17,449 -3.3% 44,798 44,798 156.7%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 306 100.0% 000 -100.0% 000 000 0.0%

Integrated Submission and Remittance Processing 

System (ISRP) Information Services $18,981 $17,311 -8.8% $17,939 3.6% $17,098 $17,098 -4.7%

Internal Revenue Service.gov (IRS.gov) Information Services $56,479 $51,825 -8.2% $55,380 6.9% $113,380 $113,380 104.7%

IRS Operations Support 20-0919-0-1-803 Information Services 56,479 39,779 -29.6% 55,380 39.2% 113,380 113,380 104.7%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 12,046 100.0% 000 -100.0% 000 000 0.0%

Redesign Revenue Accounting Control System 

(RRACS) - formerly Interim Revenue Accounting Cost 

System (IRACS) (Includes "Redesign IRACS" Tier B 

initiative) Information Services $5,137 $4,198 -18.3% $1,495 -64.4% $2,618 $2,618 75.1%

Modernized e-File (MeF) IT Investments $47,117 $89,127 89.2% $61,143 -31.4% $33,851 $33,851 -44.6%

IRS BSM 20-0921-0-1-803 IT Investments 29,500 70,585 139.3% 46,489 -34.1% 27,939 27,939 -39.9%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 000 364 100.0% 000 -100.0% 000 000 0.0%

IRS Operations Support 20-0919-0-1-803 Information Services 17,617 18,178 3.2% 14,654 -19.4% 5,912 5,912 -59.7%

Report Generation Software (RGS) Information Services $7,961 $8,260 3.8% $7,709 -6.7% $7,780 $7,780 0.9%

IRS Operations Support (EITC) 20-09E9 Information Services 3,384 2,798 -17.3% 2,785 -0.5% 2,825 2,825 1.5%

IRS Operations Support 20-0919-0-1-803 Information Services 4,578 5,462 19.3% 4,924 -9.9% 4,955 4,955 0.6%

Reporting Compliance Case Management System 

(RCCMS) (Formerly TE/GE Reporting and Electronic 

Exmaination System (TREES) Information Services $2,140 $4,175 95.1% $4,030 -3.5% $4,340 $4,340 7.7%

Service Center Recognition/Image Processing System 

(SCRIPS) Information Services $16,632 $19,693 18.4% $16,818 -14.6% $15,385 $15,385 -8.5%

Tax Return Database (TRDB) - BAC 99 Information Services $4,250 $4,759 12.0% $5,212 9.5% $2,565 $2,565 -50.8%

IRS Operations Support 20-0919-0-1-803 Information Services 4,250 4,383 3.1% 5,212 18.9% 2,565 2,565 -50.8%

External Funding (incl. Reimbursable Agreements) * Information Services 000 376 100.0% 000 -100.0% 000 000 0.0%

Travel Reimbursement and Accounting System 

(TRAS) - BAC 99 Information Services $000 $000 0.0% $000 0.0% $000 $000 0.0%

Web Currency and Banking Retrieval System 

(WebCBRS) Information Services $7,550 $6,372 -15.6% $7,756 21.7% $6,853 $6,853 -11.7%

IRS Operations Support 20-0919-0-1-803 Information Services 1,029 1,365 32.6% 2,009 47.2% 1,685 1,685 -16.1%

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health 

Care/ACA(09A9), Rcvry., Asset Forfieture Information Services 6,521 5,007 -23.2% 5,747 14.8% 5,167 5,167 -10.1%

Web Requisition Tracking System /Integrated 

Procurement System (WebRTS/IPS) Information Services $5,246 $6,074 15.8% $5,770 -5.0% $1,895 $1,895 -67.2%

Subtotal, Major IT Investments $482,390 $592,578 22.8% $556,165 -6.1% $682,245 $682,245 22.7%

Non-Major IT Investments $500,340 $580,145 16.0% $569,598 -1.8% $994,198 $994,198 74.5%

Infrastructure Investments

- Total (FY 10 includes $3.553 of external funding) $986,392 $1,079,565 9.4% $1,053,699 -2.4% $997,187 $997,187 -5.4%

Enterprise Architecture $2,443 $000 -100.0% $2,491 100.0% $000 $000 -100.0%

Sub-Total IT Investments $1,971,564 $2,252,288 14.2% $2,181,954 -3.1% $2,673,629 $2,673,629 22.5%

* MINUS Externally Funded Major Investments $13,018 $4,041 -69.0% $6,139 51.9% $000 $000 0.0%

TOTAL IT Investments $1,958,546 $2,248,247 14.8% $2,175,815 -3.2% $2,673,629 $2,673,629 22.9%
IRS-156

4.3 – IRS Performance Measure Table

The following table shows IRS performance measures achieved and projected from 

FY 2010 through FY 2012.

Performance Measures Type of 

Measure

FY 2010 

Target

FY 2010 

Actual

FY 2011 

Planned

FY 2012 

Planned

Customer Service Representative Level of Service Oe, L 71.0% 74.0% 71.0% 80.0%

Customer Contacts Resolved per Staff Year E 9,398 10,744 12,074 12,061

Percent of Eligible Taxpayers Who File for EITC Oe 75% - 80% NA 75% - 80% 75% - 80%

Customer Accuracy - Tax Law (Phones) Ot 91.2% 92.7% 92.7% 92.7%

Customer Accuracy - Accounts (Phones) Ot 93.7% 95.7% 95.0% 95.0%

Timeliness of Critical Filing Season Tax Products to the Public Ot 94.0% 95.3% 94.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to the 

Public Ot 90.0% 97.7% 91.0% 93.0%

Percent Individual Returns Processed Electronically Oe, L 70.2% 69.3% 74.0% 76.0%

Cost per Taxpayer Served ($) (HCTC) E Baseline1 $9.52 $10.00 $11.00

Sign-Up Time (Days) - Customer Engagement (HCTC) Ot Baseline1 124.0 124.0 137.0

Percent of Business Returns Processed Electronically Oe, L 24.3% 25.5% 27.0% 28.0%

Refund Timeliness - Individual (Paper) Ot 98.4% 96.1% 97.0% 97.5%

Taxpayer Self-Assistance Rate E, L 61.3% 64.4% 68.7% 68.7%

Examination Coverage - Individual Oe, L 1.1% 1.1% 1.1% 1.1%

Field Exam Nat'l Quality Review Score Oe, L 86.3% 84.9% 83.7% 84.9%

Office Exam Nat'l Quality Review Score Oe, L 90.9% 91.6% 90.4% 90.9%

Examination Quality - Industry Oe, L 89.0% 87.0% 89.0% 89.0%

Examination Quality - Coordinated Industry Oe, L 96.0% 95.0% 96.0% 96.0%

Examination Coverage - Business Oe, L 5.1% 5.7% 5.3% 5.2%

Examination Efficiency - Individual E, L 132 140 134 126

Automated Underreporter Efficiency E, L 1,868 1,924 1,980 2,017

Automated Underreporter Coverage E, L 3.0% 3.0% 3.3% 4.0%

Collection Coverage (Units) Ot, L 50.5% 50.1% 49.1% 47.9%

Collection Efficiency (Units) E, L 1,898 1,822 1,824 1,752

Field Collection Nat'l Quality Review Score Ot, L 81.0% 80.6% 81.0% 81.0%

Automated Collection System Accuracy Oe 92.5% 95.9% 94.0% 94.0%

Criminal Investigations Completed Ot, L 3,900 4,325 3,900 3,880

Number of Convictions Oe, L 2,135 2,184 2,135 2,135

Conviction Rate Oe, L 92.0% 90.2% 92.0% 92.0%

Conviction Efficiency Rate ($) E, L $331,000 $324,776 $350,000 $360,000

TE/GE Determination Case Closures Ot 140,465 105,247 97,151 85,471

Percent of BSM Projects within +/- 10% Cost Variance E 90.0% 40.0% 90.0% 90.0%

Percent of BSM Projects within +/- 10% Schedule Variance E 90.0% 100.0% 90.0% 90.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long-Term Goal

1 An increase in participation occurred due to the Recovery Act. IRS established a new baseline in FY 2010.
IRS-157

Customer Service Representative (CSR) Level of Service The number of toll free callers that either speak to a Customer Service Representative or 

receive informational messages divided by the total number of attempted calls.

Customer Contacts Resolved per Staff Year The number of Customer Contacts resolved in relation to staff years expended. 

Percent of Eligible Taxpayers Who File for EITC The number of taxpayers who claim the Earned Income Tax Credit (EITC) compared to the 

number of taxpayers who appear to be eligible for the EITC.

Customer Accuracy – Tax Law Phones The percentage of correct answers given by a live assistor on Toll-free tax law inquiries.

Customer Accuracy – Customer Accounts (Phones) The percentage of correct answers given by a live assistor on Toll-free account inquiries.

Timeliness of Critical Individual Filing Season Tax Products to the Public

The percentage of critical individual filing season tax products (tax forms, schedules, 

instructions, publications, tax packages, and certain notices required by a large number of filers 

to prepare a complete and accurate tax return) available to the public in a timely fashion.

Timeliness of Critical TE/GE & Business Tax Products to the Public Percentage of critical other tax products, paper and electronic, available to the public in a timely 

fashion. 

Percent Individual Returns Processed Electronically The percentage of electronically filed individual tax returns divided by the total individual returns 

filed.

Cost per Taxpayer Served ($) (HCTC) The costs associated with serving the taxpayers including program kit correspondence, 

registration and program participation.

Sign-Up Time (Days) – Customer Engagement (HCTC) The length of time between the first Program Kit mailing and first payment received.

Percent Business Returns Processed Electronically The percentage of electronically filed business tax returns divided by the total business returns 

filed.

Refund Timeliness – Individual (Paper) The percentage of refunds resulting from processing Individual Master File paper returns issued 

within 40 days or less. 

Taxpayer Self Assistance Rate The percentage of taxpayer assistance requests resolved using self-assisted automated 

services.

Examination Coverage – Individual (1040)

The sum of all individual 1040 returns closed by Small Business/Self Employed (SB/SE), Wage 

& Investment (W&I), and Large and Mid-Sized Business (LMSB) (Field Exam and 

Correspondence Exam programs) divided by the total individual return filings for the prior 

calendar year.

Field Exam Nat'l Quality Review Score The score awarded to a reviewed field examination case by a Quality Reviewer using the 

National Quality Review System (NQRS) quality attributes.

Office Exam Nat'l Quality Review Score The score awarded to a reviewed office examination case by a Quality Reviewer using the 

NQRS quality attributes.

Examination Quality – Industry Average of the scores of Industry Cases reviewed. Case scores are based on the percentage 

of elements passed within each auditing standard.

Examination Quality – Coordinated Industry Average of the scores of Coordinated Industry Cases reviewed. Case scores are based on the 

percentage of elements passed within each auditing standard. 

Examination Coverage – Business (Corps. >$10M)

The number of LMSB “customer base” returns (C and S Corporations with assets over $10 

million and all partnerships) examined and closed by LMSB during the current fiscal year 

divided by the number of filings for the preceding calendar year.

Examination Efficiency – Individual (1040)

The sum of all individual 1040 returns closed by SB/SE, W&I, and LMSB (Field Exam and 

Correspondence Exam programs) divided by the total Full-Time Equivalent (FTE) expended in 

relation to those individual returns.

Automated Underreporter (AUR) Efficiency The total number of W&I and SB/SE contact closures (a closure resulting from a case where we 

made contact) divided by the total FTE, including overtime.

Automated Underreporter (AUR) Coverage

A percentage representing the total number of W&I and SB/SE contact closures (a closure 

resulting from a case where SBSE and W&I made contact) divided by the total return filings for 

the prior year.

Collection Coverage – Units The volume of collection work disposed compared to the volume of collection work available.

Collection Efficiency – Units The sum of all modules disposed by Automated Collection System (ACS) (SB/SE & W&I) and 

by SB/SE Field Collection divided by the total collection FTE.

Field Collection Nat'l Quality Review Score The score awarded to a reviewed collection cases by a Quality Reviewer using the NQRS 

quality attributes.

Automated Collection System (ACS) Accuracy The percent of taxpayers who receive the correct answer to their ACS question.

Criminal Investigations Completed

The total number of subject criminal investigations completed during the fiscal year, including 

those that resulted in prosecution recommendations to the Department of Justice as well as 

those discontinued due to a lack of prosecution potential. 

Number of Convictions The number of criminal convictions.

Conviction Rate The percent of adjudicated criminal cases that result in convictions.

Conviction Efficiency Rate ($)

The cost of Criminal Investigation’s (CI's) program divided by the number of convictions. The 

number of convictions is the total number of cases with the following statuses: guilty plea, nolo 

contendere, judge guilty or jury guilty. The CI financial plan includes direct and reimbursable 

costs, including employees’ salaries, benefits, and investigative expenses, as well as facility 

costs (office space, heating, cleaning, computers, security, etc.), and other overhead costs.

TE/GE Determination Case Closures The number of cases closed in the Employee Plans or Exempt Organizations Determination 

programs, regardless of type of case or type of closing.

Percent of BSM Projects within +/- 10% Cost Variance The percentage of BSM projects that are within the +/-10% threshold for cost. The cost 

variance is measured from the initial cost estimate versus current cost estimate.

Percent of BSM Projects within +/- 10% Schedule Variance 

The percentage of BSM projects that are within the +/-10% threshold for schedule. The 

schedule variance is measured from the initial schedule estimate to the current schedule 

estimate.

Budget Level Performance Measurement Descriptions
IRS-158

4.4 – Cost of IRS Operating Activities 

FY 2010 Cost of IRS Operating Activities

The following charts provide the FY 2010 cost of IRS operating activities by 

appropriation and by major expense category. The charts include all expenditures, 

regardless of the fiscal year the funds were appropriated, that occurred in FY 2010 except 

for imputed costs (i.e., costs associated with services obtained by other agencies such as 

the Department of the Treasury and the Office of Personnel Management that are 

provided to the IRS, but are not reimbursed).

The second chart shows the FY 2010 actual costs by major expense category.

Notes:

1Other includes Contractual Services, Supplies, Printing, Postage, Travel, and Training

2Enforcement includes Non-Labor Enforcement Expense of $306M (2.5%)

3Labor Costs represent 74.13 % of total expenses and include Taxpayer Service, Operations Support, Enforcement, BSM, and HCTC

FY 2010 Expenses by Appropriation

(Excluding Imputed Costs)

Operations Support, 

35.21%

Health Insurance Tax 

Credit Administraton, 

0.57%

Taxpayer Services, 

20.00%

Business System 

Modernization, 1.24%

Enforcement, 42.97%

FY 2010 Expenses by Category

(Excluding Imputed Costs)

Taxpayer Service

18.93%

Health Care Tax Credit 

(HCTC)

0.01%

Enforcement**

44.42%

Other Operations 

Support

12.91%

Business Systems 

Modernization (BSM)

0.40%

IT & Telecommunications

7.70%

Other*

9.00%

Rent

6.63%
IRS-159

4.5 – Summary of IRS FY 2012 Budget Request

Bureau: Internal Revenue Service Summary of Proposed FY 2012 Budget Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2010 Enacted1 $2,278,830 31,063 $5,504,000 50,983 $4,083,884 12,372 $263,897 333 $15,512 15 $12,146,123 94,766Total FY 2011 Annualized CR Level $2,278,830 31,063 $5,504,000 50,983 $4,083,884 12,372 $263,897 333 $15,512 15 $12,146,123 94,766Changes to Base

Adjustment to Reach FY 2011 President's Policy Level $23,254 (395) $242,275 1,880 $10,128 12 $122,561 156 $3,447 $401,665 1,653Maintaining Current Levels (MCLs) $12,908 $30,691 $41,755 $168 $232 $85,754

Workers Compensation/Health Benefits/FERS 10,242 25,067 5,482 168 5 40,964Non-Pay Inflation Adjustment (1.4%) 2,666 5,624 36,273 227 44,790

Other Adjustments 614 (296) 154 29 501

Technical FTE Adjustments2 614 (296) 154 29 501

Efficiencies/Savings ($41,333) (483) ($21,996) (35) ($124,440) (5) ($1,026) ($1,162) ($189,957) (523)

Non-Recur Savings (22,090) (22,090)Increase e-File Savings (21,404) (416) (1,040) (22,444) (416)Reduce IT Infrastructure (75,000) (75,000)Reduce Contracts (4,522) (325) (15,907) (20,754)Reduce Administrative Expenses (5,557) (26) (8,271) (35) (503) (5) (14,331) (66)Eliminate Lockbox Fees (4,000) (4,000)Reduce Certain Mailings (4,000) (4,000)Reduce Training, Travel and Programs (9,850) (41) (9,400) (5,900) (1,026) (1,162) (27,338) (41)

Reinvestment 1,486 $1,486

Consolidate Submission Processing Site (Atlanta) 1,486 1,486

Subtotal, FY 2012 Changes to the Base ($3,685) (264) $250,970 1,549 ($72,557) 161 $121,703 185 $2,517 $298,948 1,631FY 2012 Current Services (Base) $2,275,145 30,799 $5,754,970 52,532 $4,011,327 12,533 $385,600 518 $18,029 15 $12,445,071 96,397Program Changes 

Program Increases

Taxpayer Service Initiatives

Improve Taxpayer Service 44,078 518 37,229 1 81,307 519Expand Online Options through IRS.gov Improvements 33,000 15 33,000 15

Subtotal, Taxpayer Service Initiatives $44,078 518 $70,229 16 $114,307 534

Enforcement Initiatives

Increase International Service and Enforcement 48,363 373 24,233 4 72,596 377Increase Collection Coverage 2,201 37 30,275 372 19,524 4 52,000 413Implement Merchant Card and Basis Reporting 10,475 189 17,495 225 7,760 1 35,730 415Increase Coverage to Address Tax Law Changes and Other Compliance Issues 7,229 87 33,936 266 55,553 144 96,718 497Ensure Accurate Delivery of Tax Credits 4,946 49 49,083 563 206,264 222 260,293 834Administer New Statutory Reporting Requirements 1,059 7 5,061 48 52,385 132 58,505 187Leverage Return Preparer Program to Reduce Noncompliance 14,240 107 2,360 1 16,600 108Address Appeals Workload Growth 7,450 66 1,650 9,100 66Implement Uncertain Tax Position Reporting Requirements 3,765 20 364 4,129 20

Subtotal, Enforcement Initiatives $25,910 369 $209,668 2,040 $370,093 508 $605,671 2,917

Infrastructure Initiatives

Enhance Security and Disaster Recovery Systems Capability 12,000 5 12,000 5Update Integrated Financial System (IFS) 27,500 5 27,500 5Leveraging Data to Improve Compliance 1,400 5 1,400 5Enhance Physical Security for Federal Employees 1,981 10 13,500 15,481 10Implement Individual Coverage Requirement and Employer Responsibility Payments 62,477 65 62,477 65

Subtotal, Infrastructure Initiatives $1,981 10 $116,877 80 $118,858 90

Business Systems Modernization (BSM) Initiative

Continue Migration from Aging Tax Administration System 52,000 5 (52,000) (65) (60)

Subtotal, BSM $52,000 5 ($52,000) (65) (60)

Subtotal, FY 2012 Program Changes $69,988 887 $211,649 2,050 $609,199 609 ($52,000) (65) $838,836 3,481Total FY 2012 Budget Request $2,345,133 31,686 $5,966,619 54,582 $4,620,526 13,142 $333,600 453 $18,029 15 $13,283,907 99,878

1 FY 2010 Enacted represents the approved FY 2010 Operating Plan.2

 Technical FTE adjustments to ensure FTE levels are fully funded in the base budget. 

Dollar/FTE Change $66,303 623 $462,619 3,599 $536,642 770 $69,703 120 $2,517 $1,137,784 5,112

Percent Change 2.91% 2.0% 8.41% 7.1% 13.14% 6.2% 26.41% 36.0% 16.23% 9.37% 5.39%

HITCA TOTAL OPERATIONS SUPPORT TAXPAYER SERVICES ENFORCEMENT BSM


EESA - 1

Overview

Mission Statement

The mission of the Office of Financial Stability (OFS) is to carry out the authorities granted to

the Secretary of the Treasury to implement the Troubled Assets Relief Program (TARP). These

authorities were vested to the Treasury Secretary by the Emergency Economic Stabilization Act

of 2008 (EESA), which authorized the Secretary of the Treasury to establish the TARP to

purchase, and to make and fund commitments to purchase, and guarantee troubled assets from

any financial institution, on terms and conditions as are determined by the Secretary.

The purposes of the EESA are to—

(1) immediately provide authority and facilities that the Secretary of the Treasury can use to

restore liquidity and stability to the financial system of the United States; and

(2) ensure that such authority and such facilities are used in a manner that —

(A) protects home values, college funds, retirement accounts, and life savings;

(B) preserves homeownership and promotes jobs and economic growth;

(C) maximizes overall returns to the taxpayers of the United States; and

(D) provides public accountability for the exercise of such authority.

TARP ON-BUDGET ACCOUNTS

Dollars in Thousands

Total TARP

Program Summary by Budget Activity

2010

Actual

2011

Estimated

2012

Estimated $ Change % Change

Obligations:

Housing Account $18,560,000 $0 $0 $0 0%

Equity Program Account $4,457,016 $329,228 $0 ($329,228) -100%

TARP Account $23,048 $1,556,633 $0 ($1,556,633) -100%

TARP Negative Receipt Account ($116,556,538) ($43,473,633) $0 $43,473,633 -100%

TARP Administrative Account $365,044 $393,449 $311,241 ($82,208) -21%

Total Obligations ($93,151,431) ($41,194,323) $311,241 $41,505,564 -101%

Budget Authority:

Housing Account $18,560,000 $0 $0 $0 0%

Equity Program Account $4,457,907 $329,228 $0 ($329,228) -100%

TARP Account $23,048 $1,566,633 $0 $0 0%

TARP Negative Receipt Account ($116,556,538) ($43,473,633) $0 $0 0%

TARP Administrative Account $365,044 $393,449 $311,241 ($82,208) -21%

Total Budgetary Authority ($93,150,540) ($41,184,323) $311,241 ($411,436) 1%

Outlays:

Housing Account $543,000 $9,813,000 $13,230,000 $3,417,000 35%

Equity Program Account $8,450,887 $4,634,144 $0 ($4,634,144) -100%

TARP Account $22,380 $2,366,712 $0 ($2,366,712) -100%

TARP Negative Receipt Account ($116,904,810) ($43,343,632) $0 $0 0

TARP Administrative Account $238,998 $536,000 $327,683 ($208,317) -39%

Total Outlays ($107,649,545) ($25,993,776) $13,557,683 ($3,792,174) 15%
EESA - 2

PROGRAM DISBURSEMENTS AND COST/SAVINGS

Dollars in Thousands

FY 2009 FY 2010 Total Disbursements1 Cost/(Savings)

BA Outlays2

Capital Purchase

Program

$204,617,573 $277,153 $204,894,726 ($12,424,572)

Public-Private

Investment Program

$3,689,583 $18,716,901 $22,406,484 ($212,771)

AIG Investment

Program

$69,835,000 $0 $69,835,000 $8,038,208

Consumer and

Business Lending

Initiative

$4,300,000 $939,581 $5,239,581 ($39,186)

Home Affordable

Modification Program

$27,065,760 $18,560,021 $45,625,781 $45,625,781

Targeted Investment

Program

$40,000,000 $0 $40,000,000 ($3,805,048)

Automotive Industry

Financing Program

$77,968,009 $3,790,000 $81,758,009 $14,800,582

Asset Guarantee

Program3

$5,000,000 $0 $5,000,000 ($3,707,147)

Total $432,475,926 $42,283,655 $474,759,581 $48,275,847

1Amount applied to the Section 115 Purchase Cap (i.e., the portion of the $475 billion cap expected to be disbursed).

2 Estimated lifetime program costs or savings (-) including interest effects, but excluding administrative costs.

3 Treasury guaranteed up to $5 billion of potential losses incurred on a $301 billion portfolio of loans.

FY 2012 Priorities

During FY 2012, the Office of Financial Stability will be primarily in the maintenance phase of

the TARP; which includes managing assets, repayments, repurchases, warrant liquidation,

dividend collection, corporate actions, collateral management, exchanges, etc. Under the terms of

EESA, Treasury’s authority to enter into new commitments to purchase troubled assets expired

October 3, 2010. While Treasury is now unable to implement new TARP programs in FY 2012,

disbursements for a limited number of programs will continue to occur based upon existing

commitments.
EESA - 3

Table of Contents

Overview ............................................................................................................................ 1

Mission Statement........................................................................................................... 1

TARP On-Budget Accounts ........................................................................................... 1

Program Disbursements and Cost/Savings ..................................................................... 2

Section 1 – Purpose ........................................................................................................... 4

1A – Description of Office Vision and Priorities ........................................................... 4

1B – Program History and Future Outlook..................................................................... 4

1C – Credit Reform....................................................................................................... 16

Section 2 – Budget Adjustments and Appropriation Language................................. 18

2.1 – Budget Adjustments Table................................................................................... 18

2A – Budget Increases and Decreases Description....................................................... 18

2.2 – Operating Levels Table........................................................................................ 19

2.3 – Financing Accounts - Non-Budgetary Summary................................................. 20

2.4 – TARP Summary................................................................................................... 20

2B – Enacting Legislation............................................................................................. 21

2C – Legislative Proposals............................................................................................ 21

Section 3 – Budget and Performance Plan ................................................................... 22

3.1 – Budget by Operational Goal ................................................................................ 22

Section 4 – Supporting Materials .................................................................................. 27

4A – Human Capital Strategy Description ................................................................... 27

4B – Summary of IT Resources and Information Technology Strategy ...................... 30
EESA – 4

Section 1 – Purpose

1A – Description of Office Vision and Priorities

Section 101 of the Emergency Economic Stabilization Act of 2008 (EESA) authorized

the Secretary of the Treasury to establish the Troubled Assets Relief Program (TARP) to

“purchase, and to make and fund commitments to purchase, troubled assets from any

financial institution, on terms and conditions as are determined by the Secretary.” The

EESA further authorized that the Secretary implement the programs under section 101

through an Office of Financial Stability (OFS). Section 102 also provided the Secretary

authority to guarantee troubled assets.

In light of this statutory direction, OFS established the following as its operational goals:

1. Ensure the overall stability and liquidity of the financial system.

a. Make capital available to viable institutions.

b. Provide targeted assistance as needed.

c. Increase liquidity and volume in securitization markets.

2. Prevent avoidable foreclosures and preserve homeownership.

3. Protect taxpayers’ interests.

4. Promote transparency.

1B – Program History and Future Outlook

To administer the programs under TARP, the EESA established the OFS in October

2008, which is designed to be temporary in nature, but highly skilled and well equipped

to handle the complexity of TARP initiatives. EESA was originally proposed as a means

to buying mortgage loans, mortgage-backed securities and certain other assets from

financial institutions. However, the authorities granted under EESA were broadened in

the legislative process to cover any financial instrument whose purchase the Secretary of

the Treasury, after consultation with the Chairman of the Federal Reserve, determined

necessary to promote financial market stability.

The OFS was established in response to the financial crisis faced by the nation in 2007

and 2008. At that time, the nation was in the midst of one of the worst financial crises in

our history and for the first time in 80 years, the U.S. financial system was at risk of

collapse. To address these problems, Treasury created programs under the TARP. These

programs have provided much needed capital to the financial system, helped struggling

homeowners stay in their homes, initiated the recovery of the markets for consumer and

business lending and provided a mechanism for removing legacy toxic assets from the

balance sheets of financial institutions.

Through January 31, 2010, the OFS disbursed $410 billion of the authorized $700 billion,

most of it in the form of investments. The Dodd-Frank Wall Street Reform and Consumer
EESA – 5

Protection Act (the Dodd-Frank Act) was enacted on July 21, 2010. The Dodd-Frank Act

reduced the TARP authority to purchase troubled assets from $700 billion to $475

billion; requires that repayments of amounts invested under TARP cannot be used to

increase the purchase authority and are dedicated to reducing the Federal debt; and

prohibits new obligations for any program or initiative that was not already initiated prior

to June 25, 2010.

Over the past two years, emergency actions taken through TARP and other financial

stability initiatives have helped prevent catastrophe by unfreezing the markets for credit

and capital; bringing down the cost of borrowing for businesses, individuals, and state

and local governments; restoring confidence in the financial system; and restarting

economic growth. The conditions of most security markets and large financial

institutions have improved substantially. Borrowing costs for large banks, nonfinancial

businesses, and state and local governments have returned to near normal levels. Frozen

securities markets have reopened. Prices for legacy securities have improved. Large

banks are better capitalized than they were before the crisis and restructuring in the

financial industry is well underway.

Further, as a result of improved financial conditions and careful stewardship of the

program, the ultimate cost to the taxpayer of TARP investments is estimated to be

significantly lower than initially expected. The FY 2010 MSR budget total impact of the

program on the deficit was projected to be $341 billion, but it is now expected to total

only $48.3 billion (see Program Caps and Obligations table above) as of November 30,

2010. The authority for the administrative budget for OFS is provided in Section 118 of

EESA. In FY 2011 OFS plans to obligate almost $394 million and use 251 FTE, an

increase of $29 million and 41 FTE from the FY 2010 estimates. The increases are

primarily due to the continued staffing of OFS’ compliance and legal departments and a

$35 million increase in funding of the Making Home Affordable (MHA) Program

Administrator. The potential accelerated disposition of assets requires additional legal

support and OFS is still fully staffing its compliance department to ensure that recipients

of TARP funds comply with program requirements. These increases are offset by savings

in other outside contracts as OFS matures as an organization that no longer has the

authority to make new commitments. Further, the FY 2011 increase in outlays is

primarily due to the payment of prior year obligations, most notably for FY 2010 services

received from the MHA Program Administrator and Compliance Agent. In FY 2012

OFS plans to obligate almost $311 million and use 270 FTE, a decrease of $83 million

and an increase of 19 FTE from the FY 2011 estimates. The increase in FTE reflects the

assumption that the newly hired individuals will be on-board for a full fiscal year while

the outside contracts continue to decrease primarily due to the reduction of the MHA

Program Administrator’s budget.
EESA – 6

Troubled Asset Relief Programs

Capital Purchase Program

OFS launched the Capital Purchase Program (CPP), its largest program under EESA, on

October 14, 2008 to stabilize the financial system by providing capital to viable banks

through the purchase of preferred shares from qualifying financial institutions and

subordinated debentures from Subchapter S corporations. The CPP was designed to

bolster the capital position of viable institutions and, in doing so, build confidence in

these institutions and the financial system as a whole. With the additional capital, CPP

participants were better equipped to undertake new lending, even while absorbing write

downs and charge-offs on loans that were not performing.

Of the initial $250 billion commitment to CPP, OFS invested $125 billion in eight of the

country’s largest financial institutions. The remaining $125 billion was made available to

qualifying financial institutions (QFIs) of all sizes and types across the country, including

banks, savings associations, bank holding companies and savings and loan holding

companies. QFIs interested in participating in the program had to submit an application

to their primary federal banking regulator. The minimum subscription amount available

to a participating institution was 1 percent of risk-weighted assets. The maximum

subscription amount was the lesser of $25 billion or 3 percent of risk-weighted assets.

OFS ultimately provided a total of $205 billion in capital to 707 institutions in 48 states,

including more than 300 small and community banks, enabling them to absorb losses

from bad assets while continuing to lend to consumers and businesses. The largest

investment was $25 billion while the smallest was $301,000. To encourage continued

participation by small and community banks, the application window for CPP was

reopened during the period from May 13, 2009 to November 21, 2009, for banks with

less than $500 million in assets.

OFS purchased senior preferred stock from most banks that participated in the CPP,

receiving a dividend rate of 5 percent per year which will increase to 9 percent per year

after the first five years. In the case of S-corporations, OFS acquired 30 year maturity

subordinated debentures yielding 7.7 percent per year, which will increase to 13.8 percent

after the first five years.

In addition to the senior preferred stock, OFS received warrants from public QFIs to

purchase a number of shares of common stock, as required by EESA. These warrants

include customary anti-dilution provisions. OFS may exercise any warrants held in

whole or in part at any time.

OFS received warrants from non-public QFIs for the purchase of additional senior

preferred stock (or subordinated debentures if appropriate) with a stated dividend rate of

9.0 percent (13.8 percent interest rate for subordinate debentures) and a liquidation value

equal to 5.0 percent of the total senior preferred stock (additional subordinate debenture)
EESA – 7

investment. These warrants were immediately exercised and resulted in OFS holding

additional senior preferred stock (subordinated debentures collectively referred to as

“warrant preferred stock”) of non-public QFIs.

The EESA Amendments also allow the Secretary to liquidate warrants associated with

repurchased senior preferred stock at the market price. In addition, a QFI, upon the

repurchase of its senior preferred stock, has the contractual right to repurchase the

common stock warrants at the market price.

On December 31, 2009, the CPP was closed as part of Treasury’s winding down of

TARP. As of September 30, 2010, CPP participants (i.e. financial institutions) have

redeemed almost $153 billion in principal repayments and paid over $20 billion in

dividends, interest, warrants and fees.

American International Group, Inc. (AIG) Investment Program

OFS provided assistance to certain systemically significant financial institutions that were

at substantial risk of failure on a case by case basis in order to provide stability to

institutions that are critical to a functioning financial system and prevent broader

disruption to financial markets. Starting in September 2008, the Federal Reserve and

OFS took a series of actions related to AIG in order to prevent AIG’s disorderly failure

and mitigate systemic risks. These actions addressed the liquidity and capital needs of

AIG, helping to stabilize the company. OFS provided this assistance by purchasing

preferred shares in AIG and also received warrants to purchase common shares in the

institution. The assistance provided to AIG was deemed “exceptional assistance” which

means that the recipient is subject to greater restrictions under the rules relating to

executive compensation.

The Federal Reserve Board, through the Federal Reserve Bank of New York (FRBNY),

provided an $85 billion credit facility in the form of secured loans to AIG on

September 16, 2008 to contain the financial panic at minimal cost to the American

taxpayer. The FRBNY has also provided additional assistance to AIG by funding special

purpose entities which purchased certain derivative contracts from AIG. In connection

with its assistance to AIG, the FRBNY received convertible preferred stock representing

approximately 79.77 percent of the fully diluted voting power of the AIG common stock.

This preferred stock was deposited in a trust, which exists for the benefit of the U.S.

taxpayers. The FRBNY has appointed three independent trustees who have the power to

vote the stock and dispose of the stock with prior approval of FRBNY and after

consultation with Treasury. The Department of the Treasury does not control the trust

and cannot direct the trustees.

In November 2008, this assistance was restructured so that AIG had more equity and less

debt. OFS purchased $40 billion in cumulative preferred stock from AIG under the

TARP, the proceeds of which were used to repay the Federal Reserve loan in part. In

April 2009, OFS exchanged the $40 billion in cumulative preferred stock for $41.6

billion in non-cumulative preferred stock and created an additional equity capital facility,

under which AIG may draw up to $29.8 billion as needed in exchange for issuing
EESA – 8

additional preferred stock to OFS. As of September 30, 2010, AIG had drawn

approximately $7.5 billion from the additional facility. The preferred stock pays a

noncumulative quarterly dividend, if declared, of 10 percent per annum.

On September 30, 2010, the OFS, Federal Reserve Bank of New York and AIG

announced plans for a restructuring of the Federal Government’s investments in AIG.

The restructuring plan provided for, among other items, the conversion of outstanding

Series E & F preferred stock to 1.092 billion shares of AIG common stock. Under the

plan, the undrawn portion of Series F was made available to AIG for the repayment of

certain amounts owed to the Federal Reserve Bank of New York and for general

corporate liquidity. The plan was subject to a number of conditions which had to be met

in order to close. OFS management believed that the restructuring plan, if completed as

announced, would accelerate the timeline for the federal government’s recovery of its

investment in AIG and would put Treasury in a considerably stronger position to recoup

Treasury’s investment in the company. On December 8, 2010 the parties entered into a

master transaction agreement that supersedes, but does not represent a significant

departure from, the September 30, 2010 agreement in principle. On January 14, 2011

AIG drew down $20.3 billion from the Series F credit facility and AIG repaid the Federal

Reserve Bank of New York a total of $47 billion, including the outstanding balance on

the original $85 billion credit facility provided to AIG in September 2008 at the height of

the financial crisis, fully repaying all AIG borrowings from the FRBNY. In exchange for

the $20.3 billion OFS received interest in two Special Purpose Vehicles valued at

significantly more than $20.3 billion. OFS converted the Series E and F preferred stock

to 1.092 million shares of AIG common stock the Trust that had been established for the

benefit of the taxpayers was terminated and the Department of the Treasury received

562.9 million shares of AIG common stock not discussed in this chapter. These actions

provide the Treasury ownership of 92% of the common stock of AIG. AIG also issued

$2 billion of Series G preferred stock that remains available for AIG to draw upon.

Treasury will continue to evaluate its options for an exit of the investment in AIG as soon

as practical while protecting taxpayers.

Targeted Investment Program

OFS established the Targeted Investment Program (TIP) under the TARP in December

2008. Through TIP, OFS sought to prevent a loss of confidence, which could have

resulted in significant financial market disruptions, threatened the financial strength of

similarly situated financial institutions, impaired broader financial markets, and

undermined the overall economy, by providing additional or new funding to financial

institutions.

OFS invested $20.0 billion in each of Bank of America and Citigroup under the TIP.

Under each agreement, OFS purchased $20.0 billion of cumulative perpetual preferred

stock and received a warrant for the purchase of common stock. The preferred stock

purchased contained a stated annual dividend rate of 8 percent, payable quarterly if

declared, and imposed greater reporting requirements and harsher restrictions on the

companies than under the CPP terms. In June 2009, OFS and Citigroup agreed to
EESA – 9

exchange the cumulative perpetual preferred stock issued under the TIP for a new series

of trust preferred securities. Both Bank of America and Citigroup repaid the amounts

invested by OFS along with dividends through December 2009. The amounts remaining

represent the value of the Citigroup warrants still held by the program.

As of December 31, 2009, the TIP was closed as part of Treasury’s winding down of

TARP. The Budget reflects that both Citigroup and Bank of America fully redeemed the

Government's TIP investments of $40 billion during 2010. During FY 2010, and FY

2009, the OFS received approximately $1.2 and $1.9 billion in dividends under the TIP,

respectively. In addition, the OFS received proceeds of approximately $1.2 billion from

the auction of the Bank of America warrants.

Automotive Industry Financing Program

OFS established the Automotive Industry Financing Program (AIFP) on December 19,

2008, to help prevent a significant disruption to the American automotive industry, which

would have posed a substantial disruption to financial market stability and had a negative

effect on the economy. Under the AIFP, OFS made emergency loans to General Motors

Corporation (GM) and Chrysler LLC (Chrysler) to provide a path for these companies to

go through orderly restructurings and achieve viability.

OFS’ investments in the auto companies were determined to be consistent with both the

purpose and specific requirements of EESA. OFS determined that the auto companies

were and are interrelated with entities extending credit to consumers and dealers because

of their financing subsidiaries and other operations, and that a disruption in the industry

or an uncontrolled liquidation would have had serious effects on financial market

stability, employment, and the economy as a whole. In addition, Congress provided the

Secretary of the Treasury broad authority by defining “financial institutions” in EESA

flexibly so as not to be limited to banks, savings institutions, insurance companies and

similar entities. The auto companies, as well as their respective financing entities,

qualified as "financial institutions" under EESA.

OFS initially provided loans of $13.4 billion to GM and $4 billion to Chrysler under the

AIFP to give the companies time to negotiate with creditors and other stakeholders in

order to prevent disorderly bankruptcies. This short-term funding was initially provided

to GM and Chrysler on the condition that they develop plans to achieve long-term

viability. In cooperation with the Administration, GM and Chrysler developed

satisfactory viability plans and successfully conducted sales of their assets to new entities

in bankruptcy proceedings. Chrysler completed its sale process in 42 days and GM in 40

days. Treasury provided additional assistance during these periods.

Under the terms of the loans, each company was required to prepare a restructuring plan

that included specific actions aimed at assuring: (i) the repayment of the loan extended by

TARP; (ii) the ability of the company to comply with applicable federal fuel efficiency

and emissions requirements and commence the domestic manufacturing of advanced

technology vehicles in accordance with federal law; (iii) achievement of a positive net
EESA – 10

present value; (iv) rationalization of costs, capitalization, and capacity with respect to the

manufacturing workforce, suppliers and dealerships of the company; and (v) a product

mix and cost structure that is competitive in the U.S. marketplace. On March 31, 2009,

the Administration determined that each company’s initial restructuring plans failed to

meet requirements for long term funding. Ultimately, Chrysler and GM worked to obtain

more fundamental restructurings in plans resubmitted on April 30, 2009 and May 31,

2009, respectively.

To date, the OFS has provided approximately $82 billion in loans and equity investments

to GM, Chrysler, and their respective financing entities. In August 2010, GM filed a

registration statement with the U.S. Securities and Exchange Commission for a proposed

IPO consisting of common stock to be sold by certain of its stockholders, including

Treasury. In November and December 2010, Treasury received $13.5 billion for the sale

of over 400 million shares of GM, reducing Treasury’s ownership percentage of GM

common stock from 60.8% to 33.3%. Treasury also accepted an offer from GM to

repurchase $2.1 billion of preferred stock, a deal which was closed in December 2010.

Auto Supplier Support Program

Because of the credit crisis and the rapid decline in auto sales, many of the nation's auto

parts suppliers were struggling to access credit and faced uncertainty about the prospects

for their businesses. On March 19, 2009, OFS announced the Auto Supplier Support

Program (ASSP) to help address this problem by providing up to $5 billion, which was

later decreased to $413 million, to domestic auto manufacturers to purchase supplier

receivables. This program was closed with OFS funding $413 million under the ASSP.

The full $413 million was repaid in FY 2010 along with approximately $9 million in

interest and $101 million in fees and other income.

Warranty Commitment Program

On March 30, 2009, OFS announced an Auto Warranty Program designed to give

consumers considering new car purchases from domestic manufacturers the confidence

that warranties on those cars would be honored regardless of the outcome of the

restructuring process. The $640 million advanced to GM and Chrysler under the program

has been repaid to OFS; Chrysler repaid the full amount with $3.1 million in interest

while GM repaid only principal.

The AIFP is now closed.

Asset Guarantee Program

Pursuant to section 102 of EESA, OFS established the Asset Guarantee Program (AGP)

with the same objective as the TIP of preserving financial market stability. The AGP was

to provide protection against the risk of significant loss in a pool of assets held by a

systemically significant financial institution that faces a risk of losing market confidence

due in large part to its holdings of distressed or illiquid assets. By helping limit the

institution’s exposure to losses on illiquid or distressed assets, the AGP helped the
EESA – 11

institution maintain the confidence of its depositors and other funding sources and

continue to meet the credit needs of households and businesses. The AGP involved

participation with the Federal Reserve Bank of New York and the FDIC.

The AGP was applied with extreme discretion before being closed in December 2009.

OFS used this program to assist Citigroup and began negotiations with Bank of America

(BofA), which BofA subsequently terminated.

Citigroup

As a premium for the guarantee, Citigroup issued $7.0 billion of cumulative perpetual

preferred stock (subsequently converted to Trust Preferred Securities with similar terms)

with an 8.0 percent stated dividend rate and a warrant for the purchase of common stock;

approximately $4.0 billion and the warrants were issued to the OFS, and approximately

$3.0 billion was issued to the FDIC. The OFS has received approximately $298.8 million

in dividends on the preferred stock received as compensation for this arrangement.

On December 22, 2009, the U.S. Government Parties and Citigroup terminated the

guarantee agreement. Under the terms of the termination agreement the OFS cancelled

approximately $1.8 billion of the previously issued preferred stock. The U.S.

government parties did not pay any losses under the agreement, and kept $5.2 billion of

$7.0 billion in trust preferred securities as well as warrants for common shares that were

issued by Citigroup as consideration for the guarantee. On September 30, 2010, OFS

agreed to sell the trust preferred securities for approximately $2.25 billion and on October

5, 2010, the transaction was consummated.

Bank of America

In January 2009, the U.S. government parties and Bank of America entered into a term

sheet pursuant to which the U.S. government parties contemplated guaranteeing or

lending against a pool of up to $118.0 billion of financial instruments consisting of

securities backed by residential and commercial real estate loans and corporate debt and

related derivatives. In May 2009, prior to completing definitive documentation, Bank of

America announced its intention to terminate negotiations with respect to the guarantee.

All parties agreed that Bank of America received value for entering into the term sheet

and that the U.S. government parties should be compensated for out-of-pocket expenses

and a fee equal to the amount Bank of America would have paid for the guarantee from

the date of the signing of the term sheet through the termination date. Under the terms of

the settlement, OFS received $276.0 million of the $425.0 million termination fee.

The AGP is closed for new guarantees.

The Consumer and Business Lending Initiative (CBLI)

The Consumer and Business Lending Initiative was intended to help unlock the flow of

credit to consumers and small businesses. Three programs were established to help
EESA – 12

accomplish this: The Term Assets-Backed Securities Loan Facility was created to help

jump-start the market for securitized consumer, commercial and small business loans.

The Community Development Capital Initiative was created to provide additional low

cost capital to small banks to encourage more lending to small businesses. The SBA 7(a)

Securities Purchase Program was created to provide additional liquidity to the SBA 7(a)

market so that banks are able to make more small business loans. Each program is

discussed in more detail below.

Term Asset-Backed Securities Loan Facility

The Term Asset-Backed Securities Loan Facility (TALF) was created by the Federal

Reserve Board (FRB) to provide low cost funding to investors in certain classes of Asset

Backed Securities (ABS). The TALF’s objective was to stimulate investor demand for

certain types of eligible ABS, specifically those backed by loans to consumers and small

businesses, and ultimately to bring down the cost and increase the availability of new

credit to consumers and businesses. The OFS agreed to participate in the program by

providing up to $20 billion of TARP funds in liquidity and credit protection to the FRB

for losses arising under TALF loans. On July 20, 2010, OFS’ commitment was reduced

to $4.3 billion.

The program was terminated on June 30, 2010. As such, no additional loans will be

granted by the FRBNY. At the time of termination, there were approximately $43 billion

of loans outstanding. As of September 30, 2010 $29.7 billion of loans remain

outstanding.

Community Development Capital Initiative

In February 2010, the OFS announced the Community Development Capital Initiative

(CDCI) to invest lower cost capital in Community Development Financial Institutions

(CDFI) that lend to small businesses in the country’s hardest-hit communities. Under the

terms of the program, CDFI banks and thrifts, which must be certified by Treasury as

targeting more than 60 percent of their small business lending and other economic

development activities to underserved communities, are eligible to receive investments of

capital with an initial dividend rate of 2 percent. CDFIs may apply to receive capital up

to 5 percent of risk-weighted assets. To encourage repayment while recognizing the

unique circumstances facing CDFIs, the dividend rate will increase to 9 percent after

eight years.

CDFI credit unions may apply for subordinated debt at rates equivalent to those offered

to CDFI banks and thrifts and with similar terms. These institutions may apply for up to

3.5 percent of total assets - an amount approximately equivalent to the 5 percent of riskweighted assets available to banks and thrifts. In cases where an institution might not

otherwise be approved by its regulator, it will be eligible to participate so long as it can

raise sufficient private capital that - when matched with Treasury capital up to 5 percent

of risk-weighted assets (RWA) - it can reach viability. The private capital must be junior
EESA – 13

to Treasury's investment and the CDFI must be in compliance with any other regulatory

mandates.

CDFIs that participated in CPP and were in good standing were eligible to exchange

those investments into this program. As of September 30, 2010, the OFS invested $570

million in 84 CDFI’s ($363 million a result of exchanges from CPP).

SBA 7(a) Security Purchase Program

In March 2010, Treasury announced the SBA 7(a) Securities Purchase Program to help

restore the confidence needed for financial institutions to increase lending to small

business, and to ensure that credit flows again to entrepreneurs and small business

owners. The OFS began the purchase of securities backed by the Small Business

Administration 7(a) loans (7(a) Securities), which is SBA’s most widely used loan

program, as part of the Unlocking Credit for Small Business Initiative. Under this

program OFS purchased 7(a) securities collateralized with 7(a) loans packaged on or after

July 1, 2008. As of December 30, 2010, OFS had purchased and settled $368.1 million

of these securities.

Public-Private Investment Program

OFS, in conjunction with the Federal Reserve and the FDIC, announced the PublicPrivate Investment Program (PPIP) on March 23, 2009, as a part of the Financial Stability

Plan. The Public-Private Investment Program (PPIP) is part of the OFS’s efforts to help

restart the market by enabling financial institutions to make new loans available to

households and businesses, and by providing liquidity for legacy securities.

Under this program, the OFS makes equity and debt investments in newly-formed

investment vehicles (referred to as Public Private Investment Funds or “PPIFs”)

established by private investment managers for the purpose of purchasing legacy

securities. By providing this financing, PPIP was designed to help restart the market for

these securities, thereby helping financial institutions begin to remove these assets from

their balance sheets and allowing for a general increase in credit availability to consumers

and small businesses. The program has facilitated price discovery in the markets for

mortgage-backed securities, which has reduced uncertainty regarding the value of such

securities among the banks and other financial institutions holding them and enabled

these financial institutions to sell such assets and raise new private capital. The equity

investments have been used to match private capital and will not equal more than 50.0

percent of the total equity invested. The debt investment can be, at the option of the

investment manager, equal to 50.0 percent or 100.0 percent of the total equity (including

private equity). As of June 30, 2010, all PPIFs have elected to receive debt equal to 100

percent of total equity. The debt investments bear interest at 1 Month Libor, plus 1.5

percent and mature at the termination of the PPIF, which is 10 years, subject to a 2 year

extension. The loan agreement also requires cash flows into the PPIFs to be distributed

in accordance with a priority of payments schedule (waterfall) designed to ensure secured

parties are paid before equity holders. As a condition of its investment, the OFS also
EESA – 14

received a warrant from the PPIFs providing it with the right to receive additional

compensation upon satisfaction of certain requirements set out in the PPIF agreements.

The PPIFs are only allowed to purchase commercial mortgage-backed securities and nonagency residential mortgage-backed securities issued prior to January 1, 2009 that were

originally rated AAA or an equivalent rating by two or more nationally recognized

statistical rating organizations without external credit enhancement and that are secured

directly by the actual mortgage loans, leases or other assets and not other securities

(eligible assets). The PPIFs may invest in the aforementioned securities for a period of 3

years using proceeds from capital contributions, debt investments and amounts generated

by previously purchased investments (subject to the requirements of the waterfall). The

PPIFs are also permitted to invest in certain temporary securities, including bank

deposits, U.S. Treasury securities, and certain money market mutual funds. At least 90

percent of the assets underlying any eligible asset must be situated in the United States.

As of June 30, 2010, the OFS signed definitive limited partnership and loan agreements

with 9 investment managers, committing to potentially disburse up to $30.4 billion. The

program was closed to new closings as of July 30, 2010 with its commitment reduced to a

maximum of $22.4 billion. As of September 30, 2010, approximately $4.9 billion has

been disbursed by OFS in the form of equity and $9.2 billion in the form of debt.

Treasury Housing Programs Under TARP

Fiscal year 2010 has seen an expansion of programs designed to provide stability for both

the housing market and homeowners. These programs assist homeowners who are

experiencing financial hardships to remain in their homes while they get back on their

feet or relocate to a more sustainable living situation. These programs fall into three

initiatives:

1) Making Home Affordable Program (MHA);

2) Housing Finance Agency (HFA) Hardest-Hit Fund; and

3) Federal Housing Administration (FHA)-Refinance Program.

Under MHA, the initial programs rolled out in the period ended September 30, 2009 were

the Home Affordable Modification Program (HAMP) including the Home Price Decline

Protection Program (HPDP).

MHA includes HAMP, FHA-HAMP, Second Lien Program (2MP), Treasury/FHA

Second Lien Program (FHA 2LP) (extinguishment of 2nd lien portion of the program),

and Rural Development (RD-HAMP). The HAMP includes first lien modifications, the

HPDP, the Principal Reduction Alternative Waterfall Program (PRA), the

Unemployment Program (UP), and the Home Affordable Foreclosure Alternatives

Program (HAFA). The HAMP first lien modification program provides incentive

payments to servicers, borrowers, and investors who participate in the program, whereby

the investor and OFS share the costs of modifying qualified first liens. The HPDP

provides incentives to investors to partially offset losses from home price declines. In
EESA – 15

fiscal year 2010, additional programs have been introduced under HAMP to complement

the first lien modification program and HPDP. The Principal Reduction Alternative

Waterfall Program (PRA) offers mortgage relief to eligible homeowners whose homes

are worth significantly less than the remaining amounts outstanding under their first-lien

mortgage. The Unemployment Program (UP) offers assistance to unemployed

homeowners through temporary forbearance of a portion of their mortgage payments.

The UP will not have a financial impact on the OFS because no incentives are paid by

OFS. Finally, the Home Affordable Foreclosure Alternatives Program (HAFA) is

designed to assist eligible borrowers unable to retain their homes through a HAMP

modification by simplifying and streamlining the short sale and deed in lieu of

foreclosure processes and providing incentives to borrowers, servicers and investors to

pursue short sales and deeds in lieu.

Fiscal year 2010 has also seen the introduction of additional programs under MHA.

These programs include the FHA-HAMP which provides the same incentives as HAMP

for Federal Housing Administration (FHA) guaranteed loans. The 2MP provides

additional incentives to servicers to extinguish second liens on first lien loans modified

under HAMP. The FHA 2LP provides for incentives to servicers for extinguishment of

second liens for borrowers who refinance their FHA-insured first lien mortgages under

the FHA-Refinance Program. The RD-HAMP Program provides HAMP incentives for

USDA guaranteed mortgages.

All MHA disbursements are made to servicers either for themselves or for the benefit of

borrowers and investors. Furthermore, all payments are contingent on borrowers

remaining current on their mortgage payments. Servicers have until December 31, 2012

to enter into mortgage modifications with borrowers. As of September 30, 2010, the OFS

had entered into agreements with 144 active servicers to provide approximately $29.9

billion for the MHA program. Nearly 500,000 borrowers, of which over 220,000 are

non-GSE, have been awarded official modifications. One hundred forty-four active

non-GSE servicers have received $483.9 million in OFS incentive payments under the

program.

The Housing Finance Agency (HFA) Hardest-Hit Fund was implemented in 2010 and

provides targeted aid to families in the states hit hardest by the housing market downturn

and unemployment. States and districts that meet the criteria for this program consist of

Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan,

Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South

Carolina, Tennessee, and Washington D.C. Approved states develop and roll out their

own programs targeting the specific needs and economic conditions of their state. States

have until December 31, 2017 to enter into agreements with borrowers. As of September

30, 2010, $7.6 billion has been allocated to the Hardest-Hit Fund and a total of $56.12

million has been disbursed to eligible entities of the participating HFAs.

The FHA-Refinance Program is a joint initiative with the Department of Housing and

Urban Development (HUD) and is intended to encourage refinancing of existing

underwater (i.e. the borrower owes more than the home is worth) mortgage loans not
EESA – 16

currently insured by FHA into FHA-insured mortgages. In order to be eligible, the lender

must write-down the principal balance of the original first lien by at least 10 percent and

down to 97.75 percent of the current loan-to-value. Additionally, the cumulative loan-tovalue (including any subordinate loans) cannot exceed 115 of the current market value of

the home. OFS established an $8.1 billion Letter of Credit with Citigroup to fund the

OFS portion of any claims associated with the FHA Refinance insured mortgages.

Homeowners can refinance into FHA-guaranteed mortgages through December 31, 2012

and OFS will honor its share of claims against the Letter of Credit through 2020. As of

September 30, 2010, no loans had been refinanced under this program as the joint

initiative was entered into late in the fiscal year. However, in fiscal year 2010, OFS paid

$3 million in administrative fees to establish the Letter of Credit.

1C – Credit Reform

Section 123 of EESA requires the cost of TARP programs to be calculated using the

methods required by the Federal Credit Reform Act of 1990 ("credit reform"). Under

credit reform, the net present value expected cost of a loan or loan guaranty is budgeted

for at the time of obligation. Under EESA Section 101(a)(1), Treasury is authorized to

"purchase, and to make and fund commitments to purchase, troubled assets from any

financial institution, on such terms and conditions as are determined by the Secretary..."

Under this authority, Treasury can enter into equity investments and other financial

transactions in addition to loans and loan guarantees. Based on Section 123 of EESA,

Treasury is budgeting for its equity investments under credit reform.

To comply with the credit reform requirements, Treasury has established seven credit

program accounts: TARP Equity Purchase Program Account, TARP Equity Purchase

Financing Account, TARP Home Affordable Modification Program Account, TARP

Home Affordable Modification Financing Account, TARP Program Account, Troubled

Assets Insurance Financing Fund Guaranteed Loan Financing Account, and TARP Direct

Loan Financing Account.

Credit Reform Accounts Descriptions

TARP Equity Purchase Program Account

The TARP Equity Purchase Program Account records the subsidy costs (cost to the

government) associated with Federal equity injections into qualifying financial

institutions. Subsidy costs are calculated on a net present value basis.

TARP Equity Purchase Financing Account

The TARP Equity Purchase Financing Account (EPFA) is a non-budgetary account that

records all financial transactions to and from the government resulting from equity

purchases. The EPFA primarily tracks each cohort year’s purchase activity (dividend

payments, the exercise of warrants, Treasury borrowings, interest paid to or received
EESA – 17

from Treasury, etc.) and is not included in the budget totals when calculating total

government spending.

TARP Home Affordable Modification Program Account

The TARP Home Affordable Modification Program Account records the subsidy costs

(cost to the government) and cash outlays associated with Treasury’s housing programs.

The MHA and Hardest Hit housing programs are recorded on a cash basis and the FHARefinance Program is subject to the Federal Credit Reform Act of 1990 whereby its

subsidy cost is calculated on a net present value basis.

TARP Home Affordable Modification Program Financing Account

The TARP Home Affordable Modification Financing Account is a non-budgetary

account that records all financial transactions to and from the government resulting from

Treasury’s FHA Short Refinance Program. Like other financing accounts, its primary

purpose is the financial tracking of each cohort year’s loan activity and is not included in

the budget totals.

TARP Program Account

The TARP Account records the subsidy costs (cost to the government) associated with

direct loans obligated and guaranteed loans committed to qualifying institutions. Subsidy

costs are calculated on a net present value basis.

Troubled Assets Insurance Financing Fund Guaranteed Loan Financing Account

The Troubled Assets Insurance Financing Fund Guaranteed Loan Financing Account

(GLFA) is a non-budgetary account that records all financial transactions to and from the

government resulting from guarantees committed. Like EPFA, its primary purpose is the

financial tracking of each cohort year’s loan activity and is not included in the budget

totals.

TARP Direct Loan Financing Account

The TARP Direct Loan Financing Account (DLFA) is a non-budgetary account that

records all financial transactions to and from the government resulting from direct loans.

Like EPFA and GLFA, its primary purpose is the financial tracking of each cohort year’s

loan activity and is not included in the budget totals.

Office of Financial Stability Administrative Account

This account provides for the administrative costs for the OFS.
EESA – 18

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Office of Financial Stability FTE Amount

FY 2011 Estimate 251 $393,449

Changes to Base:

Maintaining Current Levels (MCLs): $4,179

Maintaining Current Levels $4,179

FTE Adjustment 19 0

Efficiency Savings: ($86,388)

Procurement and Other Savings - ($86,388)

Subtotal FY 2011 Changes to Base 19 ($82,209)

Total FY 2012 Base 270 $311,240

Total FY 2012 Budget Estimated 270 $311,240

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ...........................................+$4,179,000 / +0 FTE

Non-Pay Inflation Adjustment +$4,179,000 / +0 FTE

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

adjustments, postage, supplies and equipment and health benefits and the increase in

Federal Employee Retirement System participation. No inflation adjustment is requested

for pay in FY 2012.

FTE Adjustment.......................................................................$0 / +19 FTE

FTE Adjustment -$0/+19FTE

The FTE adjustment is due to increased compliance and legal activities associated with

all OFS programs.

Efficiencies Savings .......................................................................-$86,388,000 / +0 FTE

Procurement Savings -$86,388,000 / +0 FTE

Savings were identified primarily from reductions of contractual services associated with

the development of the MHA Housing Program’s system of record and compliance, asset

managers, legal counsel, accounting and internal controls.
EESA – 19

2.2 Operating Levels Table

(Dollars in Thousands)

2010 2011 2012 Increase (+)

Office of Financial Stability

Account

Obligations Estimated Estimated Decrease (-)

FTE 210 251 270 19

Object Classification:

11/12 Salary & Benefits $30,120 $37,594 $41,266 $3,672

21 Travel $551 $831 $899 $68

22 Transportation $0 $0 $0 $0

23 Rent, Communications,

Utilities

$556 $566 $545 ($21)

24 Printing $0 $0 $0 $0

25 Contracts and Other Misc.

Services

$333,468 $354,094 $268,170 ($85,924)

26 Supplies $348 $351 $360 $9

31 Equipment $0 $13 $0 ($13)

43 Interest and Dividends $0 $0 $0 $0

Total $365,043 $393,449 $311,240 ($82,209)

2.2.1 Operating Levels Table by Treasury Reimbursements

(Dollars in Thousands)

Office of Financial Stability

Account 2010 2011 2012 Increase (+)

Direct Program Activity $320,938 $363,648 $290,301 ($73,347)

Reimbursements:

Congressional Oversight Panel $4,800 $5,200 $0 ($5,200)

GAO $7,305 $7,600 $6,000 ($1,600)

Treasury and non-Treasury

Agencies

$32,000 $17,001 $14,939 ($2,062)

Total $365,043 $393,449 $311,240 ($82,209)
EESA – 20

2.3 Financing Accounts - Non-Budgetary Summary

Financing Accounts – Non-Budgetary Financial Summary

Dollars in Thousands

2010

Actual

2011

Estimate

2012

Estimate

$ Increase

(+)

% Increase

(+)

Decrease (-) Decrease (-)

TARP Guaranteed

Loans:

Obligations $2,057,622 $702,286 $2,384 ($699,902) -100%

Collections $285,557 $2,250,401 $0 ($2,250,401) -100%

Financing Authority (net) $1,658,403 ($1,617,041) $2,384 $1,619,425 0%

Financing Disbursements

(net) $1,772,064 ($1,548,115) $2,384 $1,550,499 -100%

TARP Direct Loans:

Obligations $34,306,025 $14,400,772 $5,716,585 ($8,684,187) -60%

Collections $10,744,134 $20,959,739 $5,572,339 ($15,387,400) -73%

Financing Authority (net) $23,296,562 $1,205,681 $144,247 ($1,061,434) -88%

Financing Disbursements

(net) $18,822,226 $1,205,681 $144,247 ($1,061,434) -88%

Equity Purchases:

Obligations $113,894,118 $48,780,101 $9,052,653 ($39,727,448) -81%

Collections $145,082,240 $57,551,218 $28,186,127 ($29,365,091) -51%

Financing Authority (net) ($25,509,474) $7,652,074 ($21,241,531) ($28,893,605) -378%

Financing Disbursements

(net) ($28,528,088) $15,566,547 ($19,133,474) ($34,700,021) -223%

Housing:

Obligations $0 $8,000 $166,000 $158,000 1975%

Collections $0 $2,621,000 $4,103,000 $1,482,000 57%

Financing Authority (net) $0 ($2,613,000) ($3,948,000) ($1,335,000) 51%

Financing Disbursements

(net) $0 ($2,613,000) ($3,948,000) ($1,335,000) 51%

TARP Financing Accounts Totals:

Obligations $150,257,765 $63,891,159 $14,937,622 ($49,111,537) -77%

Collections $156,111,931 $83,382,358 $37,861,466 ($47,002,892) -56%

Financing Authority (net) ($554,509) $4,627,714 ($25,042,900) ($28,335,614) -612%

Financing Disbursements

(net) ($7,933,798) $12,611,113 ($22,934,843) ($34,210,956) -271%

2.4 TARP Summary

Summary of TARP Activity

Dollars in Thousands

Amount towards $475B

purchase limit Net impact on the deficit

Total Equity Transactions $339,096,127 ($6,145,183)

Total Direct Loans $85,037,673 $12,502,396

Guaranteed Loans: $5,000,000 ($3,707,147)

Home Affordable Modification Program $45,625,781 $45,625,781

Total Amount of TARP Activity $474,759,581 $48,275,847
EESA – 21

2B – Enacting Legislation

Public Law 110-343, Emergency Economic Stabilization Act of 2008, provides such

sums as necessary, including administrative expenses, for the cost to purchase and insure

certain types of troubled assets for the purposes of providing stability to and preventing

disruption in the economy and financial system. The Dodd-Frank Wall Street Reform

and Consumer Protection Act (the Dodd-Frank Act), which was enacted on July 21,

2010, reduced the TARP authority to purchase troubled assets from $700 billion to $475

billion; required that repayments of amounts invested under TARP cannot be used to

increase the purchase authority and are dedicated to reducing the Federal debt; and

prohibited new obligations for any program or initiative that was not already initiated

prior to June 25, 2010.

2C –Legislative Proposals

OFS has no legislative proposals.
EESA – 22

Section 3 – Budget and Performance Plan

This table lists all FY 2010 resources by strategic goal, objective and outcome.

3.1 – Budget by Operational Goal

Treasury Operational Goals

(dollars in thousands)

FY 2009/2010

Estimated

AMOUNT

FY 2011

Estimated

AMOUNT

Percent

Change

AMOUNT

Ensure the Overall Stability and Liquidity of the Financial

System $429.4B $ 0 -100 %

Prevent Avoidable Foreclosures by Providing and

Preserving Homeownership $ 45.6B $ 0 -100 %

Ensure the Overall Stability and Liquidity of the Financial System

The primary objective of the EESA is to ensure the overall stability and liquidity of the

financial system. To achieve that objective, OFS developed several programs under the

TARP that were broadly available to financial institutions. Under the Capital Purchase

Program (CPP), OFS provided capital infusions directly to financial institutions and

insurance companies deemed viable by their Federal regulators. This program is now

closed, and of the $205 billion invested, approximately $153 billion was repaid as of

September 30, 2010. Treasury projects that the CPP program will result in a positive

return for taxpayers. The Capital Assistance Program (CAP) was developed to

supplement the Supervisory Capital Assessment Program (SCAP), or "stress test" of the

largest U.S. financial institutions. On November 9, 2009, the CAP closed with no

investments having been made. 18 of the 19 banks participating in the SCAP were

shown to be adequately capitalized or fulfilled their capital needs through the private

market. Only one institution, GMAC (now Ally Financial), indicated a need for capital

from Treasury, and GMAC accessed the Automotive Industry Financing Program to meet

its capital need.

In addition, OFS provided direct aid to certain financial industry participants through the

Targeted Investment Program (TIP), the Asset Guarantee Program (AGP), and the

American International Group, Inc. (AIG) Program [originally known as the Systemically

Significant Failing Institutions (SSFI) program]. These programs were designed to

mitigate the potential risks to the system as a whole from the difficulties facing these

firms.

Similarly, the Automotive Industry Financing Program (AIFP) provided funding for

General Motors Corporation (GM) and Chrysler LLC (Chrysler), as well as their

financing affiliates, in order to prevent a significant disruption of the automotive industry

that would have posed a systemic risk to financial markets and negatively affected the

real economy. OFS’ actions helped GM and Chrysler undertake massive and orderly

restructurings through the bankruptcy courts that have resulted in leaner and stronger

companies.
EESA – 23

The Legacy Securities Public Private Investment Program (PPIP), another key

component of the Financial Stability Plan, was designed to purchase troubled legacy

securities (i.e., non-agency residential mortgage-backed securities (“RMBS”) and

commercial mortgage-backed securities (“CMBS”)) that were central to the problems

facing the U.S. financial system, and thereby driving the U.S. toward economic recovery.

The purpose of PPIP was to draw new private capital into the market for legacy RMBS

and CMBS by providing financing at attractive terms, as well as a matching equity

investment made by the Treasury Department. By providing this financing, PPIP was

designed to help restart the market for these securities, thereby helping financial

institutions begin to remove these assets from their balance sheets and allowing for a

general increase in credit availability to consumers and small businesses. The profits

generated by a PPIF, net of expenses, will be distributed to the investors, including

Treasury, in proportion to their equity capital investments. Treasury also receives

warrants from the PPIFs, which gives Treasury the right to receive a percentage of the

profits that would otherwise be distributed to the private partners that are in excess of

their contributed capital. The program structure spreads risk between the private investors

and Treasury, and provides taxpayers with the opportunity for substantial gain.

In addition to these initiatives, OFS implemented the Consumer and Business Lending

Initiative (CBLI) to enhance liquidity and restore the flow of credit to consumers and

small businesses. The primary program through which the CBLI operated in 2009 was

the Term Asset-Backed Securities Loan Facility (TALF). TALF was designed to provide

borrowers with term loans of up to five years against AAA rated securities, which are

forfeited in the event of default. TALF is widely credited for achieving its purpose of

encouraging lending to consumers and businesses while operating under a conservative

structure that protects taxpayer interests. The facility has ceased making new loans as

noted above. By improving credit market functioning and adding liquidity to the system,

TALF has provided critical support to the financial system. This has allowed lenders to

meet the credit needs of consumers and small businesses, and has strengthened the

overall economy. The CBLI also includes the Community Development Capital

Initiative (CDCI) and the SBA 7(a) Securities Purchase Program. Treasury launched the

CDCI to help viable certified Community Development Financial Institutions (CDFI) and

the communities they serve cope with the effects of the financial crisis. Under this

program, CDFI banks and thrifts received investments of capital with an initial dividend

or interest rate of 2 percent, compared to the 5 percent rate offered under the CPP. CDFI

banks and thrifts applied to receive capital up to 5 percent of risk-weighted assets. To

encourage repayment while recognizing the unique circumstances facing CDFIs, the

dividend rate will increase to 9 percent after eight years, compared to five years under

CPP. Treasury completed funding under this program in September 2010. The total

investment amount for the CDCI program under TARP is approximately $570 million for

84 institutions. Of this amount, approximately $363.3 million from 28 banks was

exchanged from investments under the CPP into the CDCI. Treasury developed the

SBA 7(a) Securities Purchase Program to purchase SBA guaranteed securities from pool

assemblers. By purchasing these securities in the open market, Treasury injected liquidity

- providing cash to pool assemblers - to the market enabling those entities to purchase

additional loans from loan originators. In this manner, Treasury acted as a patient
EESA – 24

provider of incremental liquidity to foster a fluid secondary market, which in turn

benefits small business lending. As of December 30, 2010, OFS had purchased and

settled $368.1 million of these securities.

Prevent Avoidable Foreclosures and Preserve Homeownership

To prevent avoidable foreclosures and preserve homeownership, Treasury used authority

granted under EESA to establish Treasury Housing Programs starting in February 2009.

Other government policies have helped keep home mortgage rates at historic lows and

allowed millions of Americans to refinance and stay in their homes. But because of

falling housing prices, many responsible homeowners are unable to refinance.

Meanwhile, job losses and reductions in working hours and benefits are making it harder

for Americans to pay their mortgages. The Home Affordable Modification Program

(HAMP) provides incentives to mortgage servicers, investors, and eligible homeowners

to work together to reduce an eligible homeowner’s monthly payments to levels that are

affordable in light of the homeowner’s current income. As of December 31, 2010,

1,711,002 HAMP trial period plans have been extended to borrowers. And 1,466,448

borrowers have started trial mortgage modifications. Of this number, nearly 600,000

borrowers have been granted permanent mortgage modifications through HAMP. This

plan also aims to help stabilize home prices for homeowners in neighborhoods hardest hit

by the recession. To track the success of these programs OFS is tracking the following

measures and indicators.

1

Items in italics are indicators.

Performance metrics (includes GSE and non-GSE

modifications)1 FY 2009

Result

FY 2010

Result

Reduction in median payment for homeowners in permanent modifications

*Includes Trial and Permanent for FY2009 only

$497* $521

Number of modifications entered into

 Trial

 Permanent

902,620

66,465

466,794

429,433

9-month re-default rate for Permanent Modifications (60+ days delinquency

rate for loans seasoned 9 months)

NA 15.6%

Number of trial period plans extended to borrowers 1,164,507 439,529
EESA – 25

Protect Taxpayer Interests

Government financial programs, including TARP, helped prevent the U.S. financial

system from collapse, which could have resulted in a much more severe contraction in

employment and production. The manner in which TARP was implemented is also

designed to protect taxpayers and to compensate them for the market risk. For example,

in exchange for capital injections, recipients of TARP funds have to adhere to corporate

governance standards, limit executive pay, and provide additional reporting on lending

activity. In addition, for the majority of TARP investments, OFS received preferred

equity shares, which provides additional dividend income. The dividend rates generally

increase over time to encourage repayment.

Further, EESA stipulated that the taxpayer should benefit as the institutions which

received TARP funds recovered. Therefore, in connection with most investments, OFS

receives warrants for additional securities in the institutions. This gives taxpayers the

ability to share in the potential upside along with existing shareholders.

Finally, OFS seeks to achieve the goal of protecting the taxpayer through the effective

management and disposition of all TARP investments. To evaluate the success of these

efforts OFS tracks the following measures and indicators.

1

Items in italics are indicators; those underlined are measures.

Promote Transparency

EESA requires transparency and accountability. Specifically, EESA requires OFS to

provide Congress with a variety of reports. These include a monthly report to Congress

on TARP activity and transaction reports posted within two days detailing every TARP

transaction. In carrying out its operations, the OFS has sought to not only meet the

statutory requirements but also to be creative and flexible with respect to additional

transparency initiatives. The OFS proactively provided to the public Dividends and

Interest Reports reflecting dividends and interest paid to OFS from TARP investments,

Performance metrics1 FY 2009

Result

FY 2010

Results

FY 2011

Target

FY2012

Target

Number of public CPP banks that repurchased

warrants from Treasury during period (excludes

warrants auctioned by Treasury)

21 37 N/A N/A

Proceeds from warrant repurchases as percent

of aggregate CPP preferred investment amount

(plus median for the selected banks)

7.1%

(3.0%)

4.1%

(3.5%)

N/A N/A

Clean audit opinion on TARP financials Yes Yes Yes Yes

Percentage of SIGTARP and GAO oversight

recommendations responded to on time 100% 93% 100% 100%
EESA – 26

loans, and asset guarantees, as well as monthly reports detailing the lending activity of

participants in the Capital Purchase Program. All of these reports are publicly available

on www.FinancialStability.gov.

EESA also provided for extensive oversight of the TARP, including by the Congressional

Oversight Panel, the Special Inspector General for the TARP, the Financial Stability

Oversight Board, and the Government Accountability Office. In addition, OFS officials

frequently testify before Congress on the progress of TARP programs, and OFS staff

provides briefings to Congressional staff on programmatic developments. OFS is

tracking its performance using several measures related to this Transparency objective.

1

Items are measures. Targets are provided only for measures.

Performance metrics1 FY 2010

Result

FY 2011

Target

FY 2012

Target

On time reporting percentage 100 % 100% 100%

Website satisfaction 63% 65% 71%

Timeliness of responses

 Average business days to close a FOIA case

 Percentage of Congressional correspondence

responses drafted within 48 hours

95 days

97%

80 days

93%

70 days

90%
EESA – 27

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

Human Capital Strategy is designed to position the Office of Financial Stability to meet

the human capital management challenges necessary to support its mission. The key

aspects of OFS's FY 2011 human capital strategy include using:

 Office of Personnel Management HR flexibilities and authorities to recruit new

employees for short and long term assignments and to retain needed current

employees

 Experts, consultants, or detailees for temporary or intermittent employment

 Training and development interventions to ensure existing staff is engaged and

possesses the requisite skill set and want to continue with OFS

 Regularly scheduled strategic workforce assessments designed to refine the

organization and identify and eliminate competency gaps of its workforce needed

to achieve OFS's mission

The OFS organization required a rapid ramp up in staffing during its first year of

operation in FY 2009 and utilized term employees and detailees where possible.

Additionally, as diverse legal and financial asset management expertise, which was not

available within the government, became essential to support some programs, it became

necessary to contract with outside organizations to supplement Treasury’s in-house

counsel. This was required because it is not practicable or economical for OFS to employ

the staff of full-time legal practitioners and support personnel with the necessary required

technical expertise to advise on and address the complex legal issues that arise under

programs authorized by the EESA.

The Treasury also issued an open notice soliciting financial institutions to provide asset

management services needed for its portfolio of securities issued by Financial Institutions

participating in programs under EESA. Those services included but were not limited to

valuing of the assets issued by those Financial Institutions; analyzing the on-going

financial condition, capital structure, and risks of those Financial Institutions; advising on

the optimal disposition of Treasury's assets; and providing Treasury with analysis and

recommendations on other business events connected with those Financial Institutions

that could impact Treasury's ownership stake. These services required outside entities

who were capable of gathering and analyzing market inputs, trends, and transactions that

are relevant when determining the market value and market impact of Treasury's

investments and decisions. Due to the potential impact of Treasury's investments in the

Financial Institutions and the broader market, this is an additional area where the

Government does not possess the depth and breadth, or the in-house personnel resources,

to provide the type of analysis required to fully monitor the value and risks of such

investments.
EESA – 28

OFS is headed by an Assistant Secretary of the Treasury, appointed by the

President with the advice and consent of the Senate. Reporting to the Assistant

Secretary for Financial Stability are six major entities: the Offices of the Chief

Investment Officer, Chief Financial Officer, Chief Homeownership Preservation

Officer, Chief of Operations, Chief Reporting Officer, and Chief for OFS Internal

Review. The Chief Counsel’s Office reports to the Office of the General Counsel

in the Department of Treasury.

The OFS organization chart is shown below:

Description of OFS Structure

As of December 16, 2010, OFS had 218 full-time employees (97 career civil servants,

121 term appointments, and 1 detailee) who support the TARP. These employees include

15 employees who report through the Department of the Treasury’s Office of General

Counsel and 40 others outside of OFS who continue to provide support to the office on an

as-needed basis. OFS continues to use the Direct Hire Authority and other appointments

to expedite hiring of highly-qualified candidates, which has enabled OFS to reduce the

number of temporary and contract staff and strengthen the continuity and institutional

knowledge of the workforce.

OFS is made up of six entities:

The Chief Investment Office (CIO) is responsible for program development and

the execution and management of all investments made pursuant to EESA. The

CIO relies on contracted asset managers and a custodian to assist in the

management of acquired or insured assets.

The Office of the Chief Financial Officer (CFO) manages the OFS budget, cash flow

requirements and accounting support activities for all of OFS concentrating on

accounting and reporting activities required by the Federal Credit Reform Act to include

modeling of cash flows and all required re-estimates. The Office serves as liaison with

Chief Counsel

Assistant Secretary Financial Agents

for

Financial Stability

Chief

OFS Internal

Review

Chief

Reporting

Officer

Chief of

Operations

Chief

Homeownership

Preservation Officer

Chief

Investment

Officer

Chief

Financial

Officer
EESA – 29

Government Accountability Office (GAO) staff for financial statement reporting and

internal controls.

The Office of the Chief of Homeownership Preservation is responsible for

identifying opportunities to help homeowners while also protecting taxpayers.

The priorities of the Office are to: implement the Administration’s loss mitigation

program; develop and implement a robust outreach program targeted to at-risk

homeowners; outline and implement strategies to regularly update the

Administration, Congress, the public, and other key stakeholders, on results; and

monitor, analyze and report on the results of the loan modification program.

The Office of the Chief of Operations (OCoO) is responsible for developing an

office infrastructure and managing internal operations in OFS. The OCoO works

with each OFS organizational entity to effectively manage facilities, information

technology (IT), acquisition management oversight, document flows, physical

security and privacy, and workforce planning.

The Office of Reporting is responsible for coordinating OFS’ work with the

external oversight entities including the GAO, Special Inspector General for

TARP, Financial Stability Oversight Board and the Congressional Oversight

Panel. The Office also prepares periodic, statutory reports to the Congress under

EESA.

The Office of Internal Review (OIR) is responsible for management controls such as

program compliance, policies and procedures designed to help program and financial

managers achieve results, mitigate risk, and safeguard the integrity of TARP programs.

The Office of the Chief Counsel provides legal advice to the Assistant Secretary for

Financial Stability.

Office

ES/SL/

EF 15 14 13 12 11 09 07 06

Grand

Total

A/S 1 1 1 1 1 5

CFO 2 10 11 3 1 1 2 30

CIO 3 8 11 3 1 4 2 32

COO 2 5 18 8 8 2 1 1 45

CRO 4 4 2 1 1 4 16

HPO 1 5 8 4 4 3 2 27

OCC 7 2 5 1 15

OFA 2 3 2 4 11

OIR 2 9 17 3 1 1 2 2 37

Grand Total 11 51 75 26 22 14 14 4 1 218

OFS STAFF AS OF DECEMBER 16, 2010
EESA – 30

4B – Summary of IT Resources and Information Technology Strategy

The Office of Financial Stability uses Departmental Offices systems, and is part of DO’s

information technology strategy. As an organization embedded in Domestic Finance,

OFS has leveraged technologies and services provided by the Treasury Department

Office of the Chief Information Officer (OCIO) as much as possible. In its second year

of operation, OFS continued to utilize OCIO-provided infrastructure/applications (e.g.,

LAN, WAN, telephones) and contractor personnel to develop and support the current

infrastructure and applications. In addition, OFS focused on seven core activities:

• Developed a governance structure (program and project management)

• Developed fundamental transaction records and ledgers to better support the

Middle Office and Chief Financial Officer’s Office

• Built a robust data warehouse to support end user questions, reporting and

analysis

• Enhanced unstructured document management capabilities

• Managed a variety of IT operational issues supported by either OFS or OCIO

• Implemented a portfolio analytics platform

• Built out a shared portal for collaborative work and information sharing

To successfully achieve these objectives, OFS has expanded its on-board IT staff to

include a Chief Technology Officer and other key personnel. In addition external

contractors/consultants have been sourced to provide short-term/specialized skills.

During FY 2011 and FY 2012, OFS will continue to refine its shared portal initiative to

improve productivity across all business areas using collaboration, workflow and

document management capabilities. In addition, OFS has evaluated additional hardware

and software needed to ensure continued performance of all OFS IT functions. These

new requirements will be implemented throughout FY 2012. All OFS support

technologies are in concert with the Treasury Optimized Enterprise IT Infrastructure.

GSE-1

Housing Government Sponsored Enterprise Programs

Mission Statement

To provide stability to financial markets and promote mortgage affordability while at the 

same time protecting the taxpayer, Treasury has implemented five programs with respect 

to two Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, as well 

as the Federal Home Loan Banks (FHLBs). These programs include Preferred Stock 

Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac, a Mortgage-Backed 

Securities (MBS) Purchase Program limited to such securities issued by Fannie Mae and 

Freddie Mac, and a credit facility for all three entities. In addition to these programs, 

Treasury has purchased securities of Fannie Mae and Freddie Mac backed by new 

housing bonds issued by the Housing Finance Agencies (HFAs), through the New Issue 

Bond Program (“NIBP”). Treasury also purchased participation interests in temporary 

credit and liquidity facilities which are obligations of Fannie Mae and Freddie Mac as 

part of the Temporary Credit and Liquidity Program (“TCLP”) to provide backstop 

liquidity and credit for state and local HFAs. Together, the TCLP and the NIBP 

comprise the Housing Finance Agencies Initiative (“HFA Initiative”).

Program Summary by Budget Activity

(Dollars in Thousands)

FY 2010 FY 2011 FY 2012 Change FY10 to FY12

Housing GSEs Enacted Estimated Estimated $ Change % Change

Preferred Stock Purchase Agreements $52,600,000 $47,500,000 $28,700,000 ($18,800,000) -39.58%

GSE MBS Purchase Program $29,877,874 $0 $0 $0 0%

GSE Credit Facility $0 $0 $0 $0 0%

New Issue Bond Purchase Program $15,308,598 $0 $0 $0 0%

Temporary Credit and Liquidity Program $8,209,840 $0 $0 $0 0%

FY 2012 Priorities

 To provide stability to financial markets.

 To prevent disruptions to the availability of mortgage credit to American 

homebuyers.

 To maintain investor confidence in the GSEs and in state and local HFAs.

 To restore the capacity of state and local HFAs to provide affordable housing 

resources to working families at the state and local level. 
GSE-2

Table of Contents

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

1A-Description of Bureau Vision and Priorities............................................................. 3

1B – Program History and Future Outlook..................................................................... 4

Section 2 – Budget Adjustments and Appropriation Language............................. 13

2.1 Summary of Appropriation Highlights................................................................... 13

2.2 Financing Accounts- Non-Budgetary Summary..................................................... 13

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

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

2D – Probability of Repayment .................................................................................... 14

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

3.1 – Budget by Strategic Outcome .............................................................................. 16

3A – Preferred Stock Purchase Agreements................................................................ 16

3.2.1 – Preferred Stock Purchase Agreement Budget and Performance Plan .............. 16

3B – GSE MBS Purchase Program.............................................................................. 16

3.2.2 – GSE MBS Purchase Program Budget and Performance Plan .......................... 17

3C – GSE Credit Facility ............................................................................................. 18

3.2.3 – GSE Credit Facility Budget and Performance Plan.......................................... 18

3D – New Issue Bond Program .................................................................................... 18

3.2.4 – New Issue Bond Program Budget and Performance Plan ................................ 19

3E – Temporary Credit and Liquidity Program............................................................ 19

3.2.5 – Temporary Credit and Liquidity Program Budget and Performance Plan ....... 20
GSE-3

Section 1 – Purpose

1A-Description of Bureau Vision and Priorities

Preferred Stock Purchase Agreements

The PSPAs were created to instill confidence in investors that Fannie Mae and Freddie 

Mac would remain viable entities critical to the functioning of the housing and mortgage 

markets. Investors have purchased securities issued or guaranteed by Fannie Mae and 

Freddie Mac in part because ambiguities in their Congressional charters created a 

perception of government backing. These ambiguities fostered enormous growth in the 

obligations issued or guaranteed by the two housing GSEs and the breadth of these 

holdings posed a systemic risk to global financial markets. 

Vision: The function of the PSPAs is to enhance market stability by providing additional 

confidence to holders of Fannie Mae and Freddie Mac securities that the GSEs will 

remain viable entities, which, in turn, leads to increased mortgage affordability. This 

commitment also eliminates any mandatory triggering of receivership. To this end, the 

PSPAs are an effective means of averting systemic risk while at the same time protecting 

the taxpayer. 

Priorities: Market stability is a priority for the Department of the Treasury. In this regard, 

Treasury has identified the following priorities for mission success:

 To provide stability to the GSE securities market.

 To maintain the viability of the GSEs.

GSE MBS Purchase Program

The GSE MBS Purchase Program was created to help support the availability of 

mortgage credit by temporarily providing additional capital to the mortgage market.

Vision: Treasury’s investment in GSE MBS, with the size and timing subject to the 

discretion of the Secretary of the Treasury, was another element of its comprehensive 

plan to address challenges in the housing markets. By purchasing these credit-guaranteed 

securities, Treasury sought to broaden access to mortgage funding for current and 

prospective homeowners as well as to promote secondary market stability. The scale of 

the program was based on developments in the capital markets and housing markets. 

Given that Treasury can hold these securities to maturity, the spreads between Treasury’s

cost of funds and GSE MBS yield should result in a positive return to the taxpayer.

Priorities:

 To prevent disruptions to the availability of mortgage credit to American 

homebuyers.

 To mitigate pressures in mortgage markets.

 To provide stability to the mortgage market.
GSE-4

GSE Credit Facility

The GSE Credit Facility was created to ensure credit availability to Fannie Mae, Freddie 

Mac, and the FHLBs by providing secured funding on an as-needed basis under terms 

and conditions established by the Treasury Secretary.

Vision: The funding was to be provided directly by Treasury from its general fund held at 

the Federal Reserve Bank of New York in exchange for eligible collateral which was

limited to guaranteed MBS issued by Fannie Mae and Freddie Mac as well as advances 

made by the FHLBs. All such assets pledged against loans were to be accepted with 

appropriate collateral margins as determined by Treasury. Loans were to be for shortterm durations and would in general be expected to be for less than one month, but no 

shorter than one week. The fee, if the GSE Credit Facility was used, was to be LIBOR + 

50 basis points.

Priorities:

 To maintain credit availability to the GSEs.

 To instill confidence in investors that these entities can finance themselves.

Housing Finance Agencies Initiative

State and local Housing Finance Agencies (collectively, the “HFAs”) are agencies or 

authorities created by state law that are charged with helping persons and families of low 

or moderate income attain affordable housing. State and local HFAs operate in all 50 

states and many cities across the country. HFAs also provide refinancing and 

modification opportunities to homeowners at risk of foreclosure, to enable them to 

convert to more affordable and sustainable mortgages. In addition, HFAs serve other 

functions related to providing affordable housing resources, such as providing 

homeownership education and allocating low income housing tax credits. 

HFAs have historically played a central role in providing a safe, sustainable path to 

homeownership for working families across the country. State and local HFAs have 

experienced a number of challenges in the course of the housing downturn, including a 

lack of liquidity support for existing variable rate bonds, credit and cash flow concerns 

stemming from losses on mortgages and downgrades of re-insurance providers, and an 

inability to issue new bonds to fund single-family and multi-family loans. Historically, 

HFAs have funded their activities by issuing tax-exempt mortgage revenue bonds 

(MRBs), keeping the associated mortgage collateral produced on HFA balance sheets. 

The bond performance of HFAs has generally been strong. However, due to the 

uncertainties and strain throughout the housing sector and the widening of spreads in the 

tax-exempt market, HFAs have experienced challenges in issuing new bonds to fund new 

mortgage lending. They have also faced difficulties in renewing required liquidity 

facilities on non-punitive terms. 
GSE-5

Overall, market conditions have undermined the ability of the HFAs to maintain their 

important, Congressionally supported role in the housing market, providing access to 

affordable mortgage credit for low and moderate-income Americans. 

To provide stability to the financial markets and promote mortgage affordability while at 

the same time protecting the taxpayer, Treasury has implemented two programs as part of 

the Housing Finance Agencies Initiative – the New Issue Bond Purchase Program (NIBP) 

and the Temporary Credit and Liquidity Program (TCLP). 

New Issue Bond Program

The New Issue Bond Program (NIBP) provides temporary financing for HFAs to issue 

new housing bonds. Treasury purchased securities of Fannie Mae and Freddie Mac 

backed housing bonds and escrowed funds that may be converted to housing bonds prior 

to the end of calendar year 2011. This temporarily allows the HFAs to issue an amount of 

new housing bonds equal to what they would ordinarily have been able to issue with the 

allocations provided them by Congress but are unable to issue given the challenges in 

housing and related markets. The program is sized to support several hundred thousand 

new mortgages to first time homebuyers, as well as refinancing opportunities to put atrisk, but responsible and performing, borrowers into more sustainable mortgages. The 

NIBP also supports development of tens of thousands of new rental housing units for 

working families. 

Vision: The NIBP provided stability to financial markets and prevent disruptions in 

mortgage finance availability by providing a temporary supplemental market for newly 

issued HFA housing bonds. By temporarily supplementing private demand for HFA 

production until the market recovered, the NIBP enables HFAs to keep their lending 

programs active while they adapted to changing market conditions. The program 

supports the availability of mortgage credit and affordable rental properties for low and 

moderate income Americans. Facilitating supply and demand in the housing markets

helps to stabilize the housing markets, thereby reducing losses to the Housing GSEs.

Priorities: 

 To provide stability to the housing market.

 To maintain the viability of the GSEs and state and local Housing Finance Agencies.

 To promote availability and affordability of housing resources for low and moderate 

income Americans.
GSE-6

Temporary Credit and Liquidity Program

Fannie Mae and Freddie Mac administer a Temporary Credit and Liquidity Program 

(TCLP) for HFAs to help relieve financial strains and enable them to continue to serve 

their important role in providing housing resources to working families. Treasury

purchased a participation interest in the Temporary Credit and Liquidity Facilities 

(TCLFs) provided to HFAs under the program, providing a credit and liquidity backstop. 

These temporary credit and liquidity facilities will help the HFAs maintain their financial 

health and preserve the viability of the HFA infrastructure so that that HFAs can continue 

their Congressionally supported role in helping provide affordable mortgage credit to low 

and moderate income Americans, as well as continue their other important activities in 

communities. 

Vision: The TCLP provides stability to financial markets and prevent disruptions in 

mortgage finance availability by helping HFAs relieve financial strains and enabling 

them to continue to serve their important role in providing housing resources to working 

families. The TCLP supports the HFAs through the downturn and gives them time to 

develop and implement more sustainable financing structures that preserve their critical 

role in extending mortgage credit to low- and moderate-income Americans.

Priorities:

 To provide stability to the housing market.

 To maintain the viability of the GSEs and state and local Housing Finance Agencies.

 To promote availability and affordability of housing resources for low and moderate 

income Americans.

1B – Program History and Future Outlook

Section 1117 of the Housing and Economic Recovery Act of 2008 (Act) authorizes the 

Treasury to purchase any obligations and other securities issued by Fannie Mae, Freddie 

Mac, and any Federal Home Loan Bank on such terms and conditions as the Treasury 

may determine and in such amounts as the Treasury may determine. On September 7, 

2008, the Secretary of the Treasury made the determination that the Treasury’s exercise 

of its purchase authority under the Act was necessary to provide stability to the financial 

markets, prevent disruptions in the availability of mortgage finance, and protect 

taxpayers.

Prior to Treasury’s exercise of authority, the overall conditions in the mortgage and 

housing markets were challenging for many market participants. Both Fannie Mae and 

Freddie Mac were exposed to these markets through their guarantees of mortgage backed 

securities and mortgage investments in their portfolios. As the assets supporting Fannie 

Mae’s and Freddie Mac’s guarantee and investment portfolios deteriorated, the costs of 

raising additional capital and funding themselves had increased, and both companies had 

experienced challenges in raising capital under these conditions. In addition to the 

challenges experienced by Fannie Mae and Freddie Mac, the FHLBs’ borrowing costs 
GSE-7

were also affected, which had repercussions on the availability of mortgage credit in the 

overall economy.

As noted above, investors have purchased securities issued or guaranteed by Fannie Mae 

and Freddie Mac in part because ambiguities in their Congressional charters created a 

perception of government backing, which fostered enormous growth by these two 

housing GSEs. Fannie Mae and Freddie Mac were so large and so interwoven in the U.S. 

financial system that a failure of either of them would have caused significant turmoil in 

U.S. financial markets and financial markets around the globe. Thus, Treasury exercised 

its purchase authority under this Act, and created the first three programs described above 

to avoid the negative impact that the failure of Fannie Mae and Freddie Mac (and the 

diminished role of the FHLBs) would have on financial markets and the U.S. economy. 

In order to further provide stability to financial markets, prevent disruptions in mortgage 

finance availability, and protect the taxpayers, Treasury exercised its authority under the 

Act in December 2009 by amending the PSPAs in three ways. First, Treasury replaced

the existing fixed $200 billion cap on Treasury advances with a formulaic cap for the 

next two years that will automatically adjust upwards quarterly by the cumulative amount 

of any losses realized by either GSE and downward by the cumulative amount of any 

gains, but not below $200 billion, and will become fixed at the end of two years. Second, 

Treasury adjusted the retained portfolio runoff requirements such that any reduction will 

be measured from the $900 billion total permitted portfolio size for each GSE and the 

target date for the first 10% reduction was postponed to December 31, 2010. Third, 

Treasury delayed the periodic commitment fee setting process to December 10, 2010.

The PSPAs provide for purchases in senior preferred stock from each GSE to help ensure 

that they each maintain a positive net worth. The three changes to the PSPAs described 

above will further provide market stability by providing additional confidence to GSE 

debt holders and will further prevent disruptions in mortgage availability by providing 

additional confidence to investors in GSE mortgage-backed securities.

In designing these three changes to the PSPAs, specific steps were taken to protect the 

taxpayer. In particular, consideration was given to the six factors set forth in the Act. 

The need for preferences or priorities – The PSPAs continue to protect the taxpayer by 

providing the Treasury with senior preferred stock that has a liquidation preference over 

all other classes of equity, including existing preferred stock. The PSPAs also continue to 

protect the taxpayer by: (i) prohibiting Fannie Mae and Freddie Mac from issuing any 

additional subordinated debt; and (ii) restricting Fannie Mae and Freddie Mac from 

increasing the aggregate amount of their indebtedness to more than 120% of the amount 

of their permitted mortgage portfolio size as of December 31, 2010. In addition, the 

terms of the PSPAs require Fannie Mae and Freddie Mac to remit to Treasury the net 

proceeds from the issuance of any equity which is to be applied to redeem amounts 

outstanding under the liquidation preference (and which shall be applied first against any 

accrued and unpaid dividends).
GSE-8

Limits on maturity or disposition of obligations or securities – In considering the 

appropriate limits on the duration of the PSPAs, it was determined that, in order to 

facilitate market stability, the PSPAs should continue until the earlier of reaching a 

formulaic cap that will automatically adjust upwards quarterly by the cumulative amount 

of any losses realized by either GSE and downward by the cumulative amount of any 

gains, but not below $200 billion or until all liabilities of Fannie Mae and Freddie Mac 

have been satisfied. In addition, beginning in 2011 the Treasury will charge the GSEs a 

periodic commitment fee that is payable quarterly to compensate the taxpayers for the 

ongoing support provided to the GSEs under the terms of the PSPAs. 

Enterprise plans for orderly resumption of private market funding or capital market 

access – Under conservatorship, the PSPAs allow for Fannie Mae and Freddie Mac to 

continue operating as going concerns by maintaining a positive net worth in each 

company, which allows for continued access to debt markets and preserves potential 

future capital market access. 

Probability of the Enterprises and the FHLBs fulfilling the terms of their obligations –

The structure of the PSPAs, with their liquidation preference over all other equity, 

including preferred equity, combined with the PSPAs’ restrictions on debt issuance, 

enhance the probability of both Fannie Mae and Freddie Mac ultimately repaying 

amounts owed. 

Need to maintain the Enterprises’ and the FHLBs’ status as private shareholder-owned 

companies – Fannie Mae and Freddie Mac may emerge from conservatorship to resume 

independent operations, or they may emerge in some other form reflecting legislative 

changes to their congressional charters. Conservatorship preserves the status and claims 

of the preferred and common shareholders. The value of the warrants issued to the 

government under the terms of the PSPAs could potentially increase, thereby providing 

enhanced value to the taxpayers. Upon the government’s exercise of the warrants, the 

GSEs would be required under the terms of the PSPAs to apply the net cash proceeds to 

pay-down the liquidation preference of the senior preferred stock.

Restrictions on the use of corporation resources – The terms of the PSPAs prohibit 

Fannie Mae and Freddie Mac from declaring any dividends on outstanding preferred or 

common stock until the senior preferred stock has been fully redeemed. The PSPAs also 

prohibit the redemption of any outstanding preferred or common stock without the prior 

consent of the Treasury until the senior preferred stock has been fully redeemed. The 

PSPAs require that the Director of FHFA consult with the Treasury before entering into 

any new compensation arrangements or increasing amounts or benefits payable under 

existing compensation agreements with certain executive officers. 
GSE-9

Preferred Stock Purchase Agreements

Program History: During FY 2008, the Department of the Treasury entered into 

agreements with Fannie Mae and Freddie Mac. The agreements are indefinite in duration 

and have a funding commitment limit of $100 billion each. These agreements were 

subsequently amended to have a funding commit limit of $200 billion each, and further 

amended in December, 2009, to replace the fixed-dollar-amount funding commitment 

limit with a formulaic limit that will automatically adjust upward quarterly by the amount 

of any cumulative reduction in net worth over the next three years. In exchange for 

entering into these agreements with these two GSEs, Treasury immediately received $1 

billion of senior preferred stock in each GSE and warrants for the purchase of common 

stock of each GSE representing 79.9 percent of the common stock of each GSE on a 

fully-diluted basis at a nominal price. No taxpayer money was spent to receive the senior 

preferred stock.

Program Outlook: Treasury estimates that it will make $47.5 billion in payments under 

its funding commitment in FY 2011 and $28.7 billion in FY 2012.

GSE MBS Purchase Program

Program History: During September 2008, Treasury designated private sector firms as 

its financial agents to act as asset managers and custodian. Treasury began to fund the 

GSE MBS purchase program in September 2008, and the first purchases were made by 

Treasury’s agents in the third week of September 2008. Program activity was initially 

reported in the Monthly Treasury Statement but is now also published in a more detailed 

form on FinancialStability.gov.

Program Outlook: Treasury purchased nearly $29.9 billion under its authority for this 

program in FY 2010 which was the last fiscal year in which purchase authority was 

available. Treasury’s authority to purchase securities under the program expired on 

December 31, 2009.

GSE Credit Facility

Program History: This program would have provided liquidity if needed until 

December 31, 2009, but it was not been needed.

Program Outlook: Treasury did not use this program in FY 2011 as Treasury’s

authority to originate loans under the program expired on December 31, 2009.
GSE-10

Housing Finance Agencies Initiative

The Housing and Economic Recovery Act of 2008 signed into law on July 30, 2008, 

included authority for the Secretary of the Treasury to purchase obligations of the 

Housing GSEs. These entities include: Fannie Mae, Freddie Mac, and the FHLBs. On 

October 19, 2009, Treasury announced the Housing Finance Agencies Initiative, 

including the New Issue Bond Program and the Temporary Credit and Liquidity 

Program.

In designing these two initiatives, specific steps were taken to protect the taxpayer. In 

particular, consideration was given to the six factors set forth in the Act as discussed 

below.

The need for preferences or priorities – The Housing GSEs are participating in the TCLP 

and NIBP based on an assessment by the Housing GSEs and the FHFA that these are 

commercially reasonable transactions for the Housing GSEs to undertake. Under both 

the TCLP and the NIBP, participating HFAs pay the Housing GSEs and Treasury a fee 

designed to credit cover risk posed by the HFA. In addition, both the TCLP and the 

NIBP are designed to maintain the health of the HFAs while still protecting the taxpayer. 

The fee for HFAs to use the TCLP increases over time. This increasing cost to the HFAs 

will encourage the HFAs to transition from the TCLP to private market financing 

alternatives as quickly as possible. Before the HFAs can use the NIBP to issue bonds 

purchased by the GSEs, they are required to sell to the private market an amount of 

shorter-term bonds in a ratio equal to 40 percent of aggregate bond proceeds, with the 

other 60 percent of bonds represented by the bonds purchased through NIBP. 

Limits on maturity or disposition of obligations or securities – The duration and 

maturities of the obligations undertaken by the Housing GSEs have been set in a manner 

that is consistent with commercially reasonable practices. Treasury can at any time, e.g., 

when the secondary market for HFA housing bonds recovers, instruct the issuing 

Housing GSE to dissolve any GSE security that Treasury has purchased, at which time 

the Housing GSE will deliver the underlying HFA housing bonds to Treasury’s designee 

for resale.

Housing GSEs’ plans for orderly resumption of private market funding or capital market 

access – Under conservatorship, Fannie Mae and Freddie Mac continue to operate as 

going concerns, and the issuance of the Senior Preferred Stock Purchase Agreement, and 

Treasury’s corresponding commitment of funding for the next two years so that each 

Housing GSE maintains a positive net worth, should continue to strengthen their ability 

to secure financing in the capital markets. The Housing GSEs and FHFA have assessed 

the NIBP and TCLP programs as being commercially reasonable, so the Housing GSEs 

will be executing these programs through commercially reasonable capital markets 

transactions. We don’t envision any negative impact on the Housing GSEs’ resumption 

of private market funding or capital market access from executing the HFA Initiative.

Probability of the Housing GSEs fulfilling the terms of their obligations - The pricing and 

fee structure of the TCLP and NIBP were designed to be commercially reasonable, and 
GSE-11

allow the Housing GSEs to fully cover all costs of the programs. Therefore, it is 

expected that the Housing GSEs will be able to fulfill all of their obligations under the 

HFA Initiative. The HFA Initiative will be funded by fees paid by the HFAs to the 

Housing GSEs. 

Need to maintain the Housing GSEs’ status as private shareholder-owned companies –

Both the TCLP and NIBP have been entered into by the Housing GSEs with the approval 

of FHFA on commercially reasonable terms. Based on pricing and the fee schedule for 

both programs, the Housing GSEs expect a commercially reasonable return from 

participating in these programs. We don’t envision any negative impact to the Housing 

GSEs or shareholders from executing the HFA Initiative.

Restrictions on the use of corporation resources – Fannie Mae and Freddie Mac have 

already been made subject to executive compensation restrictions. The TCLP and NIBP 

do not place additional restrictions on the use of corporation resources.

New Issue Bond Program

Program History: During FY 2009, the Department of the Treasury entered into a 

Memorandum of Understanding with Fannie Mae, Freddie Mac and the Federal Housing 

Finance Agency (FHFA) outlining the obligations of each party with regard to the HFA 

Initiative transactions. The Housing GSEs are participating in the NIBP based on an 

assessment by the Housing GSEs and the FHFA that these are commercially reasonable 

transactions for the Housing GSEs to undertake. Under the terms of the NIBP, Treasury 

has purchased GSE securities backed by housing bonds issued by the state and local 

HFAs as well as some proceeds which are in escrow pending the issuance of additional 

HFA housing bonds. 

Program Outlook: Treasury purchased approximately $15.3 billion under its authority 

for this program in FY 2010. Treasury’s authority to enter additional purchase 

commitments under the program expired on December 31, 2009, however the funds 

remaining in escrow may continue to be used for the issuance of new housing bonds 

through December 31, 2011.
GSE-12

Temporary Credit and Liquidity Program

Program History: During FY 2009, the Department of the Treasury entered into a

Memorandum of Understanding with Fannie Mae, Freddie Mac and the Federal Housing 

Finance Agency (FHFA) outlining the obligations of each party with regard to the HFA 

Initiative transactions. The Housing GSEs are participating in the TCLP based on an 

assessment by the Housing GSEs and the FHFA that these are commercially reasonable 

transactions for the Housing GSEs to undertake. Under the terms of the TCLP, Treasury 

purchased participation interests in GSE liquidity facilities available for outstanding 

housing bonds issued by state and local HFAs. $8.2 billion has been allocated to state 

and local HFAs through the TCLP to use the credit and liquidity facilities.

Program Outlook: Treasury incurred nearly $8.2 billion in obligations in FY 2010 that 

will remain open in FY 2011 and FY 2012. However, this obligation will diminish over 

time as HFAs redeem the bonds in the program or transition to private market liquidity 

providers. Treasury’s authority to enter additional obligations under the program expired 

on December 31, 2009.
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Section 2 – Budget Adjustments and Appropriation Language

2.1 Summary of Appropriation Highlights

Total Housing GSE Assistance Program

Summary of Appropriation Highlights

(dollars in thousands)

Preferred Stock and Program 

Accounts

2010

Actual

2011

Estimate

2012

Estimate

Obligations:

 Preferred Stock Purchase Account

 HFA Initiative and GSE MBS Purchase 

 Program Account

Total Obligations

$52,600,000

$21,000

$52,821,000

$47,500,000

$27,920

$47,527,920

$28,700,000

$17,000

$28,717,000

Budget Resources:

 Preferred Stock Purchase Account

 HFA Initiative and GSE MBS Purchase 

 Program Account

Total Budgetary Authority

$304,400,000 

 

 $29,000

$304,429,000

$251,800,000

 

 $27,920

$251,827,920

$204,300,000

 

 $17,000

$204,317,000

Outlays:

 Preferred Stock Purchase Account

 HFA Initiative and GSE MBS Purchase 

 Program Account

Total Outlays

$52,600,000

$29,000

$52,689,000

$47,500,000

$27,920

$47,527,920

 

$28,700,000

 

 $17,000 

$28,717,000

2.2 Financing Accounts- Non-Budgetary Summary

Financing Accounts – Non-Budgetary Financial Summary

(dollars in thousands)

2010

Actual

2011

Estimate

2012

Estimate

GSE MBS Direct Loans:

 Obligations

 Collections

 Financing Authority(net)

 Financing Disbursements(net)

$45,292,000

$48,602,000

$8,791,000

-$3,310,000

$5,336,000

$41,397,000

-$33,742,000

-$39,270,000

$6,512,000

$39,201,000

-$35,008,000

-$32,229,000

HFA Initiative:

 Obligations

 Collections

 Financing Authority(net)

 Financing Disbursements(net)

$23,739,000

$223,000

$24,684,000

$15,943,000

$225,000

$1,976,000

-$1,976,000

$1,373,000

$261,000

$3,097,000

-$2,836,000

-$2,836,000
GSE-14

2B – Appropriations Language and Explanation of Changes

The Housing Government Sponsored Enterprise Programs and the Housing Finance 

Agencies Initiative Programs do not receive any discretionary appropriation authority 

from the Congress. Therefore, no appropriations language is proposed.

2C – Legislative Proposals

There are no current proposals for amending the enacting legislation.

2D – Probability of Repayment

At the end of December, 2009, Treasury closed on all GSE MBS, NIBP and TCLP 

transactions. All three programs had a negative subsidy estimate at the time of 

purchase/obligation meaning anticipated net receipts for the government is in excess of 

outlays. Subsequent re-estimates have led to a positive subsidy estimate for the NIBP. 

Such changes in the NIBP estimate were a result of cash flows on actual bond issuances 

being timed in a manner different from the timing originally modeled as well as the fact 

that the present value factors used to model Treasury’s cost of capital changed. Future

re-estimates pending the formulation of a disposition strategy may cause the subsidy to 

return to being negative. The subsidy estimates for the TCLP and MBS Purchase 

program, however, remain negative.
GSE-15

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a 

corporate level plan for the Department that provides a description of what the agency 

intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome

(Dollars in Thousands)

Treasury Strategic Outcome FY 2010 

Actual

FY 2011 

Estimate

FY 2012 

Estimate

% Change

FY11 to FY12

 Stabilizing Economy- PSPA $52,600,000 $47,500,000 $28,700,000 -39.58%

 Stabilizing Economy- MBS 0 0 0 0%

 Stabilizing Economy- Credit Facility 0 0 0 0%

 Stabilizing Economy- NIBP 0 0 0 0%

 Stabilizing Economy- TCLP 0 0 0 0%

 

3A – Preferred Stock Purchase Agreements (No funding): The function of the PSPAs 

is to instill confidence in investors that Fannie Mae and Freddie Mac will remain viable 

entities critical to the functioning of the housing and mortgage markets. Treasury entered 

into a PSPA with each GSE to ensure that each enterprise maintains a positive net worth. 

This measure enhances market stability by providing additional confidence to holders of 

Fannie Mae and Freddie Mac securities, which, in turn, leads to increased mortgage 

affordability. This commitment also eliminates any mandatory triggering of receivership. 

To this end, the PSPAs are an effective means of averting systemic risk while at the same 

time protecting the taxpayer. They are more efficient than a one-time equity injection, in 

that Treasury will use them only as needed and on terms that the Treasury deems 

appropriate.

In exchange for entering into these agreements with the GSEs, Treasury received $1 

billion on senior preferred stock in each GSE and warrants for the purchase of common 

stock of each GSE representing 79.9 percent of the common stock of each GSE on a 

fully-diluted basis at a nominal price. The senior preferred stock accrues dividends at 10 

percent per year. The rate will increase to 12 percent if, in any quarter, the dividends are 

not paid in cash, until all accrued dividends have been paid in cash.

Beginning March 31, 2011, the GSEs shall pay the Treasury on a quarterly basis a 

periodic commitment fee that will compensate the Treasury for the explicit support 
GSE-16

provided by the agreement. The Secretary of the Treasury and the Conservator shall 

determine the periodic commitment fee in consultations with the Chairman of the Federal 

Reserve. This fee may be paid in cash or may be added to the senior preferred stock.

3.2.1 – Preferred Stock Purchase Agreement Budget and Performance Plan

Description of Performance:

PSPA program offices track metrics to assess Fannie Mae and Freddie Mac’s health and 

contribution to mortgage market stability. To assess the contribution of Fannie Mae and 

Freddie Mac to mortgage availability, the Housing GSE program tracks the percentage of 

agency MBS issuance of total MBS issuance and the dollar volume of mortgage 

purchases by the GSEs. During FY 2009, the majority of MBS were originated by the 

GSEs, contributing substantially to the stabilization of housing markets. To assess 

program management and ensure the stability of the GSEs, the program tracks the 

condition of the GSEs in coordination with the FHFA and makes PSPA disbursements as 

necessary. Increasing stability in the housing market has resulted in declining 

disbursements to the GSEs in recent quarters. Projected disbursements for FY 2011 and 

FY 2012 are $47.5 billion and $28.7 billion, respectively. 

3B – GSE MBS Purchase Program (No funding): The function of the GSE MBS 

Purchase Program was to help improve the availability of mortgage credit to American 

homebuyers and mitigate pressures on mortgage rates. To promote the stability of the 

mortgage market, Treasury purchased GSE MBS in the open market. By purchasing 

these guaranteed securities, Treasury sought to broaden access to mortgage funding for 

current and prospective homeowners as well as to promote market stability.

The size and timing of this program was subject to the discretion of the Secretary of the 

Treasury. The scale of the program was based on developments in the capital markets 

and housing markets. Given that Treasury can hold these securities to maturity, the 

spreads between Treasury issuances and GSE MBS should result in a positive return to 

the Taxpayer.

Treasury has designated independent asset managers as financial agents to undertake the 

purchase and management of portfolio of GSE MBS on behalf of Treasury. The 

portfolios are managed with clear investment guidelines and investment objectives. The 

primary objectives of this portfolio are to promote market stability, ensure mortgage 

availability, and protect the taxpayer. 

Treasury purchases of GSE MBS were deemed as outlays, and the debt incurred to fund 

the purchases is subject to the statutory debt limit. However, Treasury is receiving an 

income producing asset in return for its invested funds. 

Treasury does not have the authority to purchase GSE MBS beyond December 31, 2009. 
GSE-17

3.2.2 – GSE MBS Purchase Program Budget and Performance Plan

Description of Performance:

The MBS Purchase Program utilizes a broad range of market indicators in daily

operations to ensure funds support mortgage availability for both current and prospective 

homeowners and promote secondary market stability. The program also utilizes risk 

assessment techniques, including scenario analysis and cash flow forecasts, to ensure 

zero principal loss on outlays. Risk management practices will constitute the bulk of 

program operations in FY 2012, as no additional purchases beyond December 31, 2009 

are currently permitted under law.

3C – GSE Credit Facility (No funding): The function of the GSE Credit Facility was to

maintain credit availability to the housing GSEs by providing secured funding on an as 

needed basis under terms and conditions established by the Secretary of the Treasury to 

protect taxpayers. Fannie Mae, Freddie Mac, and FHLBs were eligible to borrow under 

this program if needed. This facility offered liquidity if needed until December 31, 2009. 

Treasury did not use this program in FY 2010.

Funding was to be provided directly by Treasury from its general fund held at the Federal 

Reserve Bank of New York in exchange for eligible collateral from the GSEs which was

limited to guaranteed mortgage backed securities issued by Freddie Mac and Fannie Mae 

as well as advances made by the FHLBs. All such assets pledged against loans were to be 

accepted with appropriate collateral margins as determined by Treasury.

Loans were to be for short-term durations and were in general expected to have been for 

less than one month but no shorter than one week. The rate on a loan request ordinarily 

was to be based on the daily LIBOR fix for a similar term of the loan plus 50 basis points. 

The rate was to be set at the discretion of the Secretary of the Treasury with the objective 

of protecting the taxpayer, and was to be subject to change. All loans were to be

collateralized and collateral was limited to mortgage backed securities issued by Freddie 

Mac and Fannie Mae and advances made by the FHLBs. Loans were not to have been 

made with a maturity date beyond December 31, 2009.

3.2.3 – GSE Credit Facility Budget and Performance Plan

Description of Performance:

As the Credit Facility has been terminated, there are no related performance metrics for 

this program.
GSE-18

3D – New Issue Bond Program (No funding): The function of the NIBP is to provide 

stability to financial markets and prevent disruptions in mortgage finance availability by 

providing a temporary supplemental market for newly issued HFA housing bonds. By 

temporarily supplementing private demand for HFA production until the market can 

recover, the NIBP enables HFAs to keep their lending programs active while they adapt 

to changing market conditions. The program will support the availability of mortgage 

credit and affordable rental properties for low and moderate income Americans. 

Program sized to meet demand. HFAs submitted detailed program participation requests 

to Treasury’s financial agents. In order to haircut the NIBP requests to an acceptable 

level that could be recommended for adoption, a methodology was developed and applied 

to arrive at final allocation recommendations under the program for state and local HFAs. 

The allocation methodology was based primarily on the 2008 HERA allocations to HFAs 

and historical HFA issuance.

Support for both single-family and multi-family bonds. HFAs were able to request that a 

portion or all of their NIBP allocation be used to issue single or multi-family bonds. The 

amount of multi-family bond issuance is subject to a cap at the program level. Two types 

of multi-family bonds are allowed under the program: bonds that finance single-projects 

and bonds where proceeds can be used to finance multiple-projects that are approved or 

guaranteed by Fannie Mae, Freddie Mac, or the Federal Housing Administration. Both 

single-family and multi-family bond issuance are also subject to additional requirements. 

Protecting taxpayers. HFAs pay the GSEs and Treasury an amount intended to cover 

both the cost of financing the newly issued bonds as well as a fee designed to cover risk 

posed by the HFA. Generally speaking, the interest rate on newly issued HFA bonds will 

be set to equal a short-term Treasury interest rate for the period in which the proceeds are 

held in reserve before being drawn down by the HFAs to originate mortgages. Within 60

days of the proceeds being drawn down, the interest rate on the bond will increase to 

cover Treasury’s cost of financing (set at the 10-year Treasury rate) plus the additional 

fee designed to offset risk to the taxpayer. 

Required sale of bonds to private market to impose market discipline and further 

leverage investment. The proceeds from issued bonds were placed in escrow until used 

by the HFAs to fund new mortgages in 2010 or 2011. Before the HFAs can use the 

proceeds, they are required to sell to the private market an amount of shorter-term bonds 

in a ratio equal to 40 percent of aggregate bond proceeds, with the other 60 percent of 

bonds represented by the bonds purchased through NIBP. This means that our temporary 

investment will be leveraged to create even more low-rate mortgages for working 

families, while at the same time using market discipline to help mitigate risk to the 

taxpayer.
GSE-19

3.2.4 – New Issue Bond Program Budget and Performance Plan

Description of Performance:

Treasury and its financial agents continue to monitor the housing markets as well as other 

indicators which have an impact on the HFAs. Through monitoring these indicators, as 

well as the performance of the HFAs, Treasury will assess the relative health of the HFAs 

in FY 2012. No additional assistance beyond December 31, 2009 is currently permitted 

under law.

3E – Temporary Credit and Liquidity Program (No funding): The function of the 

TCLP is to help relieve current financial strains for HFAs and enable them to continue to 

serve their important role in providing housing resources to working families. The TCLP 

provides HFAs with temporary credit and liquidity facilities to preserve the viability of 

the HFA infrastructure so that HFAs can continue their Congressionally supported role in 

helping provide affordable mortgage credit to low and moderate income Americans, as 

well as continue their other important activities in communities. 

Reducing costs of maintaining existing financing for HFAs. Through Fannie Mae and 

Freddie Mac, the TCLP provides replacement credit and liquidity facilities to HFAs that 

will help reduce the costs of maintaining existing financing for the HFAs. Treasury 

backstops the replacement liquidity by purchasing a participation interest in the GSE 

temporary credit and liquidity facilities for the HFAs using HERA authority. 

Program sized to meet demand. HFAs submitted detailed program participation requests 

to Treasury’s financial agents for the Temporary Credit and Liquidity Program (TCLP). 

No allocation process was required because requests came in at a total below the program 

cap.

Protecting Taxpayers. The HFAs pay the GSEs and Treasury a fee designed to cover risk 

posed by the HFA. Other specific features of the program are also designed to maintain 

the health of the HFAs while still protecting the taxpayer, such as limiting the 

requirement for accelerated amortization of principal for bonds that end up being put to 

the GSEs under the program. 

Temporary solution, with incentives for HFAs to quickly transition back to market 

financing. The fee for HFAs to use the TCLP increases over time. This increasing cost to 

the HFAs encourages the HFAs to transition from the TCLF to private market financing 

alternatives as quickly as possible. 

Terms designed to facilitate sustainable business models for housing agencies. The 

liquidity facilities under the TCLP program are only available for outstanding bonds.
GSE-20

3.2.5 – Temporary Credit and Liquidity Program Budget and Performance Plan

Description of Performance:

Treasury and its financial agents continue to monitor the housing markets as well as other 

indicators which have an impact on the HFAs. Through monitoring these indicators, as 

well as the performance of the HFAs, Treasury will assess the relative health of the HFAs 

in FY 2012. No additional assistance beyond December 31, 2009 is currently permitted 

under law.

Financial Stability Oversight Council and Office of Financial Research

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012

Actual Estimated Estimated $ Change % Change

 Financial Stability Oversight Council $0 $7,435 $7,885 $450 6%

 Office of Financial Research $0 $33,890 $74,468 $40,578 120%

Total Resources $0 $41,325 $82,353 $41,028 99%

Total FTE 0 50 192 142 284%
OFR - 2

Table of Contents

Overview ...................................................................................................................................1

 Program Summary by Budget Activity..................................................................................1

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

 1A – Description of Bureau Vision and Priorities.................................................................3

 1B – Program History and Future Outlook............................................................................6

Section 2 – Budget Adjustments and Appropriation Language..........................................7

 2.2 – Operating Levels Table.................................................................................................7

 2.3 – Resource Detail Table...................................................................................................7

 2B – Appropriations Language and Explanation of Changes................................................8

Section 3 – Budget and Performance Plan ............................................................................9

 3.1 – Budget by Strategic Outcome .......................................................................................9

 3A – Financial Stability Oversight Council..........................................................................9

 3.2.1 – Financial Stability Oversight Council Budget and Performance Plan.......................9

 3B – Office of Financial Research........................................................................................9

 3.2.2 – Office of Financial Research Budget and Performance Plan.....................................9
OFR - 3

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

Financial Stability Oversight Council

Prior to the financial crisis of 2008-2009, the existing regulatory framework focused narrowly on 

individual institutions and markets, which allowed supervisory gaps to grow and regulatory 

inconsistencies to emerge – in turn, allowing arbitrage and weakened standards. The DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) established 

the Financial Stability Oversight Council (FSOC) with a clear statutory mandate that created for 

the first time collective accountability for identifying and responding to emerging threats to 

financial stability. FSOC is a collaborative body chaired by the Secretary of the Treasury that 

brings together the expertise of the federal financial regulators, an insurance expert appointed by 

the President, and state regulators. 

The FSOC has important new authorities under the Dodd-Frank Act to:

 Collect information across the system: The FSOC has a duty to collect information 

across the U.S. financial system, drawing first from its member agencies, and to direct the 

Office of Financial Research (OFR) to collect additional information to assess risks to the 

financial system. The collection and analysis of that information will aid the FSOC and 

OFR in their shared goal of removing blind spots in the financial system so that 

regulators will be better able to see the entire landscape and be better equipped to identify 

systemic risks and other emerging threats.

 Designate nonbank financial companies for consolidated supervision: In the run-up to 

the financial crisis, some of the firms that posed the greatest risk to the financial system 

were not subject to tough consolidated supervision. The Dodd-Frank Act gives the FSOC 

the authority to require consolidated supervision of nonbank financial companies, 

regardless of their corporate form.

 Designate systemic financial market utilities and systemic payment, clearing, or 

settlement activities: The Dodd-Frank Act authorizes the FSOC to designate certain 

financial market utilities and payment, clearing, or settlement activities as systemically 

important, requiring them to meet prescribed risk management standards and submit to 

heightened oversight by the Federal Reserve, the Securities and Exchange Commission, 

or the Commodities Futures Trading Commission.

 Recommend stricter standards: The FSOC has the authority to recommend stricter 

standards for the largest, most interconnected firms, including nonbank financial 

institutions designated by the FSOC for Federal Reserve supervision. Moreover, where 

the FSOC determines that certain practices or activities pose a threat to financial stability, 

the FSOC may make recommendations to the primary federal financial regulatory agency 

to establish new or heightened standards.
OFR - 4

 Limit the activities of firms that pose a “grave threat” to financial stability: The FSOC 

has a significant role in determining whether action should be taken to break up those 

firms that pose a “grave threat” to the financial stability of the United States.

 Facilitate regulatory coordination: The FSOC has a statutory duty to facilitate 

information sharing and coordination among the member agencies regarding domestic 

financial services policy development, rulemaking, examinations, reporting requirements, 

and enforcement actions. Through this role, the FSOC will help eliminate gaps and 

weaknesses within the regulatory structure, to promote a safer and more stable system.

The FSOC is an executive agency of Government and is not an office or bureau of the 

Department of the Treasury. However, under the Dodd-Frank Act, FSOC administrative 

expenses are considered expenses of the OFR and are paid for by the OFR’s Financial Research 

Fund. The OFR is an office within the Department of the Treasury.

Office of Financial Research

The Office of Financial Research (OFR) was established by the Dodd-Frank Act to support the 

FSOC and its members in its identification and analysis of risks in the financial system. To 

accomplish this, OFR will collect and standardize financial data, develop and publish key 

reference databases, and conduct research on financial market activities to identify potential 

sources of systemic risk. OFR’s principal tasks are to:

 Standardize the types and formats of data reported and collected by the OFR to assist the 

FSOC in analyzing systemic risk;

 Develop data collection, processing, and distribution capabilities to ensure that the Federal 

Government has the information it needs to identify risks in the financial system, being 

mindful to coordinate with regulators, mitigate reporting burden by utilizing existing data 

where possible, seek input from industry, and protect confidentiality and privacy rights;

 Develop and publish reference databases of financial companies and instruments, which can 

be used by regulators, private firms, and academics to assess risk, inform policy, and promote 

market discipline;

 Conduct analysis for FSOC and its member agencies to help identify concentrations of risk in 

the financial system and enable appropriate and timely Government response to emerging 

threats;

 Submit to Congress regular reports on significant market developments and potential 

emerging threats to financial stability; and

 Provide certain data to financial industry participants and to the general public to increase 

market transparency and facilitate research on the financial system, being mindful to respect 

intellectual property rights and to protect business confidential information, privacy rights, 

and the stability of the U.S. financial system.
OFR - 5

OFR has two primary divisions: a Data Center and a Research and Analysis Center. The Data 

Center will in part set standards for financial reporting and work to improve the quality of 

financial data that is collected so it can be organized in ways that are more meaningful for 

identifying vulnerabilities in the system as a whole. The Research and Analysis Center will in 

part monitor, investigate, and report on systemic risk.

One of the OFR’s first priorities is improving data standards. The problem of monitoring 

systemic risk is closely related to the risk management challenges that individual firms face. To 

monitor systemic risk, positions in thousands of diverse financial products, involving thousands 

of individual financial firms, have to be aggregated across the entire financial system. 

Standardizing the way financial transactions are reported, and the consistent use of robust 

reference data, can greatly facilitate this process for regulators and individual firms. The OFR 

will, in consultation with relevant stakeholders, develop standards for financial data and publish 

reference databases of financial entities and instruments that will be made available to the public. 

These industry-wide standards will help FSOC monitor systemic risk and improve risk 

management, reporting and other business functions at individual financial firms.
OFR - 6

1B – Program History and Future Outlook 

Financial Stability Oversight Council

The FSOC held its first meeting on October 1, 2010, and successive meetings on November 23, 

2010 and January 18, 2011. Future meetings will be held on at least a quarterly basis. An 

integrated roadmap was released following the first meeting combining member agencies

internal implementation plans, including timeframes for key deliverables. Over the next year, 

the FSOC is working to establish processes for designating nonbank financial companies and 

financial market utilities, to develop recommendations for stricter standards for monitoring and 

reporting on systemic risk, and to develop tools for monitoring the financial system for emerging 

risks. In the near term, the staffs of FSOC member agencies are focused on fulfilling its 

statutory mandate to complete required reports related to the impact of regulatory policy 

changes. Transparency on FSOC decisions will be provided through annual reports to Congress 

and the public and testimony by the Chairperson on FSOC activities and emerging threats to 

financial stability. 

Office of Financial Research

The OFR’s initial efforts have focused on facilitating development of data standards. OFR 

published its first policy statement in the Federal Register related to legal entity identifiers on 

November 30, 2010. The intent of the policy statement was to promote industry to develop by 

consensus a universal standard for identifying parties to financial contracts. Defining a common 

legal entity identifier for financial transactions will not only improve financial regulators’ ability 

to track market activity and an individual financial firm’s ability to manage market information, 

but will also provide market participants greater visibility into the risks that individual firms 

take.
OFR - 7

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

FTE 

- 

 

50 

 

192 

Object Classification:

11.1 Full-Time Permanent Positions..................................... $0 $6,284 $21,549 

12.0 Personnel Benefits......................................................... 0 3,042 11,190 

21.0 Travel............................................................................. 0 260 773 

23.1 Rental Payments to GSA............................................... 0 4,672 4,772 

23.3 Communications, Utilities, & Mi.................................. 0 1,260 3,262 

25.0 Contractual Services...................................................... 0 14,671 25,167

26.0 Supplies and Materials.................................................. 0 7,049 14,111 

31.0 Equipment..................................................................... 0 4,087 1,529 

Total Operating......................................................... $0 $41,325 $82,353

Budget Activities:

Financial Stability Oversight Council 0 7,435 7,885

Office of Financial Research 0 33,890 74,468

Total Budget Authority................................................ $0 $41,325 $82,353
OFR - 8

2.3 – Resource Detail Table

Dollars in Thousands

% Change

FY 2010 FY 2011 FY 2012 FY 2011

Estimated Estimated Estimated to FY 2012

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting 

Collections

Assessments $0 $0 $20,588 N/A

Transfers-in $0 $41,325 $61,765 49.46%

Total Revenue / Offsetting Collections $0 $41,325 $82,353 99.28%

Unobligated balances, Start of year $0 $0 $0 0.00%

Recoveries of prior year obligations 0 0 0 0.00%

Net transfers (includes capital transfers) 0 0 0 0.00%

Total Budgetary Resources Available $0 $41,325 $82,353 99.28%

Expenses/Obligations

Financial Stability Oversight 

Council 0 $0 17 $7,435 24 $7,885 41.18% 6.05%

Office of Financial Research 0 $0 33 $33,890 168 $74,468 409.09% 119.73%

Total Expenses / Obligations 0 $0 50 $41,325 192 $82,353 284.00% 99.28%
OFR - 9

Section 3 – Budget and Performance Plan

This table lists FYs 2011-2012 resources by strategic goal, objective and outcome outlined in the 

FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a corporate 

level plan for the Department that provides a description of what the agency intends to 

accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Goal FY 2011 FY 2012 Percent 

Estimated Estimated Change

 U.S. and World Economies Perform at Full Economic

Potential $41,325 $82,353 99.28%

Total $41,325 $82,353 99.28%

3A – Financial Stability Oversight Council ($7,885,000 from mandatory programs): FSOC 

has a clear statutory mandate to improve coordination among financial regulators and identify 

risks and respond to emerging threats to financial stability. FSOC has ten voting members, 

including nine federal financial regulatory agencies and an independent member with insurance 

expertise, and five non-voting members. As a coordinative body, FSOC is an executive agency 

of the Federal Government and is not a bureau or office of the Department of the Treasury. 

There are no measures specified for managing FSOC performance at this time. Information on 

FSOC is provided on www.treasury.gov, www.financialstability.gov, and member agency 

websites to provide transparency and accountability.

3B – Office of Financial Research ($74,468,000 from mandatory programs): The Dodd-Frank 

Act established OFR within the Treasury Department to support the FSOC and its members by 

improving the quality of financial data available to policymakers and by facilitating more robust 

and sophisticated analysis of the financial system. The data and analysis provided by OFR will 

enhance the FSOC’s ability to identify emerging threats in financial markets.

There are no measures specified for managing OFR operations at this time. OFR is currently 

working on developing a performance plan for office operations.

Small Business Lending Fund

Mission Statement

Public Law 111-240, also known as the Small Business Jobs Act (hereafter “the Act”),

established the Small Business Lending Fund (SBLF). The SBLF is a program designed to 

increase the availability of credit to small businesses by providing capital to eligible institutions 

with assets of less than $10 billion.

Program Summary 

Section 4108 of the Act provides that the cost of purchases of preferred stock and other financial 

instruments made as capital investments shall be determined as provided under the Federal 

Credit Reform Act (FCRA) of 1990 (2 U.S.C. 661 et seq.). Per the terms of the Act, all 

investment activity will occur in FY 2011. After analysis of demand for the program and 

anticipated uptake by eligible institutions, the program is expected to provide $17.4 billion in 

investments designed to increase the availability of credit to small business. Treasury has 

calculated that, using FCRA methodology, the program’s subsidy cost will be $1.26 billion.

FY 2011 Estimates

(in millions)

Program Level Subsidy Amount Subsidy Rate

$17,399 $1,260 7.24%

The Act also provides for the reasonable costs of administering the program, including making, 

holding, managing, and selling the capital investments. These activities will occur in FY 2011 

and beyond.

FY 2011 and 2012 Priorities

 Process all received applications by September 27, 2011 in strict adherence to the 

eligibility requirements of the legislation

 Execute a compliance regimen to ensure that all Fund participants abide with the terms of 

the program

 Install an asset management capability to effectively monitor the Fund and minimize risk 

to Treasury.

FY 2010 FY 2011 

SBLF Estimated Estimated Estimated $ Change % Change

Program* 0 1,260,000 0 (1,260,000) -100.00%

Administration 0 54,649 72,603 17,954 32.85%

Total Outlays $0 $1,314,649 $72,603 ($1,242,046) -94.48%

Total FTE 0 41 55 14 34.15%

* Reflects only on-budget amounts.

FY 2012
SBLF - 2

Table of Contents

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

1A – Description of Vision and Priorities ...................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language..........................................5

2.3 – SBLF Financing Account Summary...................................................................... 5

2.4 – SBLF Investment Level Summary ........................................................................ 5

Section 3 – Budget and Performance Plan ............................................................................7

3.1 – Budget by Strategic Outcome ................................................................................ 7

3.2.1 – SBLF Program Budget and Performance Plan ................................................... 7

3.2.2 – SBLF Administration Budget and Performance Plan......................................... 8
SBLF - 3

Section 1 – Purpose 

1A – Description of Vision and Priorities 

Enacted into law as part of the Small Business Jobs Act (P.L. 111-240), the Small Business 

Lending Fund (SBLF) encourages lending to small businesses by providing Tier 1 capital to 

qualified community banks with assets of less than $10 billion. Through the SBLF, Main Street 

banks and small businesses can work together to help create jobs and promote economic growth 

in local communities across the nation.

1B – Program Description and Future Outlook 

The SBLF is intended to increase the availability of credit to small businesses by providing 

capital to eligible institutions with assets of less than $10 billion. The dividend or interest rate a 

bank pays for SBLF funding will be reduced as the institution’s qualified small business lending 

increases, relative to the bank’s baseline small business lending established at the time the 

applicant is awarded SBLF funding by the Treasury. Because banks leverage their capital, the 

SBLF could help increase lending to small businesses in an amount that is multiples of the total 

capital provided to participating institutions. These new loans will help small businesses grow 

and create new jobs.

An insured depository institution is eligible if it has assets of less than $10 billion and it meets 

the other requirements for participation. If the institution is controlled by a holding company, the 

combined assets of the holding company determine eligibility. Community development loan 

funds are also eligible. 

Banks that have total assets of $1 billion or less may apply for SBLF funding that equals up to 

5% of risk-weighted assets. Banks that have assets of more than $1 billion, but less than $10 

billion, may apply for SBLF funding that equals up to 3% of risk-weighted assets. 

The Small Business Lending Fund also provides an option for eligible community banks to 

refinance preferred stock issued to the Treasury through the Capital Purchase Program (CPP) or 

the Community Development Capital Initiative (CDCI) under certain conditions. 

An institution is not eligible if it is on the Federal Deposit Insurance Corporation’s problem bank 

list (or similar list) or has been removed from that list in the previous 90 days. 

With the approval of its regulator, an institution may exit the Small Business Lending Fund at 

any time simply by repaying the funding provided along with any accrued dividends.

Pursuant to the Act, all funds received by the Treasury in connection with purchases made, 

including interest payments, dividend payments, and proceeds from the sale of any financial 

instrument, will be used to pay down the public debt. 

Though all investments will be occurring in FY 2011, the holding, managing, and selling the 

capital investments will require a staff presence in future years. The SBLF program office has 
SBLF - 4

been designed to ensure that strong internal controls are in place and that costs are minimized by 

leveraging existing Treasury infrastructure whenever possible.
SBLF - 5

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table – Administration Costs

Dollars in Thousands

2.3 – SBLF Financing Account Summary

2.4 – SBLF Investment Level Summary

FY 2011 Estimates

(in millions)

Program Level Subsidy Amount Subsidy Rate

$17,399 $1,260 7.24%

2A – Enacting Legislation

Small Business Jobs Act of 2010 (P.L. 111-240).

Small Business Lending Fund FY 2010 

Obligated

FY 2011 

Estimated

F

Y 

2

FY 2012 

Estimated

FTE - 41 55

Object Classification:

11.1 Full-Time Permanent Positions..................................... $0 $5,488 $7,435

12.0 Personnel Benefits...................................................................... 0 1,537 2,509

21.0 Travel.................................................................................. 0 187 187

25.1 Advisory & Assistance Services.................................................... 0 38,812 51,645

25.3 Purchase of Goods/Serv. from Govt. Accts...... 0 8,625 10,827

Total................................................ $0 $54,649 $72,603

Activities:

Administration 0 54,649 72,603

Total................................................ $0 $54,649 $72,603

2010 2011 2012

Obligations $0 $17,724 $628

Collections $0 $2,162 $1,979

Financing Authority (net) $0 $15,562 -$1,351

Financing Disbursements (net) $0 $15,562 -$1,351

Financing Accounts – Non-Budgetary Financial Summary 

(dollars in millions)
SBLF - 6

2B – Legislative Proposals

There are no current proposals for amending the enacting legislation.
SBLF - 7

Section 3 – Budget and Performance Plan

This table lists FYs 2011-2012 resources by strategic goal, objective and outcome outlined in the 

FY 2007-2012 Treasury Department Strategic Plan. For detailed information about the FY 

2007-2012 Treasury Strategic Plan, please go to: http://www.treasury.gov/about/budgetperformance/strategic-plan/Documents/strategic-plan2007-2012.pdf

3.1 – Budget by Strategic Outcome

Dollars in Thousands

3A – SBLF Program ($1,260,000,000 on-budget in FY 2011; $0 in FY 2012): Pursuant to the 

Act, all investment activity will occur in FY 2011. The Act also requires that the cost of 

purchases of preferred stock and other financial instruments made as capital investments shall be 

determined as provided under the Federal Credit Reform Act of 1990. 

After careful analysis and credit modeling, Treasury estimates a total program volume of $17.4 

billion. Treasury credit modeling also indicates a projected subsidy rate of 7.24% and a budget 

cost of $1.26 billion for SBLF. 

The total program volume and anticipated repayments are reflected in the SBLF financing 

account. This non-budgetary account records all cash flows to and from the Government 

resulting from direct capital obligated in 2011 and beyond. The amounts in this account are a 

means of financing and are not included in the budget totals.

3.2.1 – SBLF Program Budget and Performance Plan

Performance metrics are currently in development for the SBLF program and will be finalized in 

2011. 

3B – SBLF Administration ($54,649,000 in FY 2011; $72,603,000 in FY 2012): The authority 

to pay administrative expenses is provided by Section 4108(b) of the Act. Administrative 

expenses will include the costs of government employee salaries, contract support, and

reimbursement to the Treasury Office of Inspector General for program audits. Pursuant to the 

Act, Treasury will be submitting semi-annual reports to the appropriate committees of Congress 

detailing administrative expenses.

Treasury Strategic Outcome* FY 2011 

Estimated

FY 2012 

Estimated

Prevented or mitigated financial and economic crises $1,314,649 $72,603 -94.5%

Total $1,314,649 $72,603 -94.5%

* Reflects only on-budget amounts.

Percent 

Change SBLF Program

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

SBLF Program Outlay Levels* $0 $0 $0 $1,260,000 $0

Total Program Outlay Levels $0 $0 $0 $1,260,000 $0 

* Reflects only on-budget amounts.
SBLF - 8

3.2.2 – SBLF Administration Budget and Performance Plan

Performance metrics are currently in development for the SBLF program and will be finalized in 

2011. 

Administration

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

Administration Outlay Levels $0 $0 $0 $54,649 $72,603

Total Administration Outlay Levels $0 $0 $0 $54,649 $72,603 
State Small Business Credit Initiative

Mission Statement

To increase the availability of credit for small business, to generate jobs and other economic 

development benefits for states, Treasury has implemented the State Small Business Credit 

Initiative. 

Program Summary by Budget Activity

Dollars in Thousands

FY 2011 and 2012 Priorities

 To provide direct funding support to states for use in programs designed to increase 

access to credit for small businesses.

 To support state capital access programs (CAPs) and other credit support programs 

(OCSP) that support lending to small businesses and small manufacturers.

FY 2010 FY 2011 

Outlays Estimated Estimated Estimated $ Change % Change

SSBCI Program $0 $487,000 $732,000 $245,000 50.31%

Administration 0 6,410 7,488 $1,078 16.82%

Total Outlays $0 $493,410 $739,488 $246,078 49.87%

Total FTE 0 9 12 3 33.33%

FY 2012
SSBCI - 2

Table of Contents

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

1A – Description of Vision and Priorities ...................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language..........................................5

Section 3 – Budget and Performance Plan ............................................................................6

3.1 – Budget by Strategic Outcome ................................................................................ 6

3.2.1 – State Small Business Credit Initiative Program Budget and Performance Plan. 7

3.2.2 – State Small Business Credit Initiative Administration Budget and Perf. Plan ... 7
SSBCI - 3

Section 1 – Purpose 

1A – Description of Vision and Priorities 

The State Small Business Credit Initiative was created to fund new and existing state programs 

that support lending to small business in order to stimulate economic growth and new jobs.

Vision: Under the State Small Business Credit Initiative, participating states will use the federal 

funds for programs that leverage private lending to help finance small businesses and 

manufacturers that are creditworthy, but are not getting the loans they need to expand and create 

jobs. The State Small Business Credit Initiative will allow states to build on successful models 

for state small business programs, including CAPs, collateral support programs, and loan 

guarantee programs. 

Priorities: 

 

 To provide direct funding support to states for use in programs designed to increase 

access to credit for small businesses.

 To support state CAPs and other credit support programs (OCSP) that support lending to 

small businesses and small manufacturers.

1B – Program History and Future Outlook 

On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 

(the "Act"). Section 3003 of the Act authorizes and directs the Secretary of Treasury to establish 

a seven-year State Small Business Credit Initiative, which was funded with $1.5 billion to 

support state programs that support lending to small businesses and small manufacturers. The 

State Small Business Credit Initiative is expected to support new small business lending through 

local programs that help entrepreneurs expand their businesses and create new jobs. 

Under the State Small Business Credit Initiative, states are offered the opportunity to apply for 

federal funds for programs that partner with private lenders to extend greater credit to small 

businesses. States are required to demonstrate a reasonable expectation that a minimum of $10 in 

new private lending will result from every $1 in federal funding. Accordingly, the $1.5 billion 

funding commitment that the federal government will make for this program is expected to result 

in $15 billion in additional private lending. 

The State Small Business Credit Initiative allows states to build upon existing, successful statelevel small business lending programs, including examples such as CAPs, collateral support 

programs, and loan guarantee programs. 

 Capital Access Programs: CAPs, which are already up and running in over 20 states, are 

loan portfolio insurance programs in which states provide a matching contribution to 

bank loan loss reserves when lenders extend credit to qualified small businesses. These 

reserve enhancements allow lenders to expand credit to new borrowers at a time when 

many of these lenders might otherwise pull back. 
SSBCI - 4

 Collateral Support Programs for Small Manufacturers: Collateral support programs help 

viable businesses that are struggling to get credit because the value of the collateral they 

hold has fallen, often due to the decline in commercial real estate values. These programs 

– which set aside funds to augment collateral the borrower already holds – provide banks 

greater confidence in extending credit to these borrowers, particularly in some of the 

communities hardest hit by the economic downturn. 

 Loan Guarantee Programs: Under loan guarantee programs, states provide partial 

guarantees on small business loans to give lenders greater confidence to extend credit. 

If a state does not have an existing small business lending program, officials can establish one in 

order to access this funding. 

The funding a state is eligible to apply for is determined based on formulas in the Small Business 

Jobs Act that take into account each state's unemployment rate and decline in employment 

relative to other states. Pursuant to the Act, funds are allocated to all fifty States along with the 

District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of Northern 

Mariana Islands, Guam, American Samoa, and the United States Virgin Islands. If a State did 

not file a timely Notice of Intent or fails to meet the application deadline, municipalities within 

that State may apply for their pro rata share of the State's allocation, provided that such 

municipalities can meet all the program criteria. Up to three municipalities within a State may be 

eligible to receive SSBCI funds.

Treasury estimates that it will make at least one-third of the total $1.5 billion in payments in FY 

2011 and most of the remaining funds in FYs 2012 and 2013. In addition, less than 3% of the 

appropriation has been allocated to administrative expenses. The administrative costs will be 

expended over the seven-year life of the program.
SSBCI - 5

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

2A – Enacting Legislation

The Small Business Jobs Act of 2010 (P.L. 111-240).

2B – Legislative Proposals

There are no current proposals for amending the enacting legislation.

State Small Business Credit Initiative FY 2010 

Obligated

FY 2011 

Estimated

F

Y 

2

FY 2012 

Estimated

FTE - 9 12

Object Classification:

11.1 Full-Time Permanent Positions..................................... $0 $1,077 $1,498

12.0 Personnel Benefits...................................................................... 0 378 526

21.0 Travel.................................................................................. 0 155 155

25.1 Advisory & Assistance Services.................................................... 0 3,100 3,566

25.3 Purchase of Goods/Serv. from Govt. Accts...... 0 1,700 1,743

41.0 Grants, Subsidies........................................................... 0 487,000 732,000

Total................................................ $0 $493,410 $739,488

Activities:

SSBCI Program 0 487,000 732,000

Administration 0 6,410 7,488

Total................................................ $0 $493,410 $739,488
SSBCI - 6

Section 3 – Budget and Performance Plan

This table lists FYs 2011-2012 resources by strategic goal, objective and outcome outlined in the 

FY 2007-2012 Treasury Department Strategic Plan. For detailed information about the FY 

2007-2012 Treasury Strategic Plan, please go to: http://www.treasury.gov/about/budgetperformance/strategic-plan/Documents/strategic-plan2007-2012.pdf

3.1 – Budget by Strategic Outcome

Dollars in Thousands

3A – State Small Business Credit Initiative Program ($732,000,000 in FY 2012): On 

September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 (the 

"Act"). Section 3003 of the Act authorizes and directs the Secretary of Treasury to establish a 

seven-year State Small Business Credit Initiative, which was funded with $1.5 billion to support

state programs that support lending to small businesses and small manufacturers. The State 

Small Business Credit Initiative is expected to support new small business lending through 

innovative local programs that help entrepreneurs expand their businesses and create new jobs. 

Under the State Small Business Credit Initiative, participating states will use the federal funds 

for programs that leverage private lending to help finance small businesses and manufacturers 

that are creditworthy, but are not getting the loans they need to expand and create jobs. The 

State Small Business Credit Initiative will allow states to build on successful models for state 

small business programs, including CAPS, collateral support programs, and loan guarantee 

programs. Existing and new state programs are eligible for support under the State Small 

Business Credit Initiative.

The funding a state is eligible to apply for is determined based on formulas in the Small Business 

Jobs Act that take into account each state's unemployment rate and decline in employment 

relative to other states. Pursuant to the Act, funds are allocated to all fifty States along with the 

District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of Northern 

Mariana Islands, Guam, American Samoa, and the United States Virgin Islands. If a State did 

not file a timely Notice of Intent or fails to meet the application deadline, municipalities within 

that State may apply for their pro rata share of the State's allocation, provided that such 

municipalities can meet all the program criteria. Up to three municipalities within a State may be 

eligible to receive SSBCI funds.

Treasury Strategic Outcome FY 2011 

Estimated

FY 2012 

Estimated

Prevented or mitigated financial and economic crises $493,410 $739,488 49.9%

Total $493,410 $739,488 49.9%

Percent 

Change
SSBCI - 7

3.2.1 – State Small Business Credit Initiative Program Budget and Performance Plan

Performance metrics are currently in development for the State Small Business Credit Initiative 

and will be finalized in 2011. 

3B – Administration ($7,488,000 in FY 2012): The authority to pay administrative expenses is 

provided by Section 3009 (b) of the Act which appropriates $1.5B to carry out the state small 

business credit program "including to pay reasonable costs of administering the program." 

Administrative expenses include the costs of government employee salaries, contract support,

and reimbursement to the Treasury Office of Inspector General for program audits.

3.2.2 – State Small Business Credit Initiative Administration Budget and Performance Plan

Performance metrics are currently in development for the State Small Business Credit Initiative 

and will be finalized in 2011. 

SSBCI Program

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

SSBCI Program Outlay Levels $0 $0 $0 $487,000 $732,000

Total Program Outlay Levels $0 $0 $0 $487,000 $732,000 

(Dollars in Thousands)

Administration

FY 2008 

Actual

FY 2009 

Actual

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

Administration Outlay Levels $0 $0 $0 $6,410 $7,488

Total Administration Outlay Levels $0 $0 $0 $6,410 $7,488 

(Dollars in Thousands)

TEOAF - 1 

Overview 

Mission Statement

The mission of the Treasury Forfeiture Fund is to affirmatively influence the consistent and 

strategic use of asset forfeiture by law enforcement bureaus participating in the Treasury 

Forfeiture Fund to disrupt and dismantle criminal enterprises. 

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Actual Estimated Estimated $ Change % Change

 Asset Forfeiture Fund $852,078 $750,520 $905,209 $53,131 6.2%

Total Resources $852,078 $750,520 $905,209 $53,131 6.2%

Total FTE 24 24 24 - -

Please note that the above table reflects obligations. 

FY 2012 Priorities 

The Treasury Forfeiture Fund will use high impact forfeiture to dismantle criminal enterprise by: 

 Continuing to cultivate and strengthen relationships at the federal, state and local levels to 

use high impact asset forfeiture to disrupt and dismantle criminal enterprise. 

 Educating and focusing stakeholders and others on the vision and mission of Treasury’s 

multi-Departmental asset forfeiture program. 

 Focusing resources in a high impact manner that enhances enforcement against terrorist 

financing, illegal immigration, bulk cash smuggling, and money laundering; and that 

provides support to the National Money Laundering and Southwest Border Strategies. 

 Fostering and supporting the investment of forfeiture resources in the needs of our 

participating law enforcement bureaus, including new technologies and data collection, in 

order to promote program excellence and strengthen the overall quality of high impact 

criminal investigations. 

 Reinforcing relationships with member bureaus that extend across Departmental boundaries 

and with state, local and foreign law enforcement agencies that extend the reach of federal 

law enforcement. 

 Developing and modifying forfeiture training and awareness programs that are responsive to 

today’s needs and continually re-evaluate such training initiatives for best practices. 
TEOAF - 1 

Table of Contents 

Overview ........................................................................................................................................ 1

Mission Statement ....................................................................................................................... 1

Program Summary by Budget Activity ....................................................................................... 1

FY 2012 Priorities ....................................................................................................................... 1

Section 1 – Purpose ....................................................................................................................... 2

1A – Description of Bureau Vision and Priorities ...................................................................... 2

1B – Program History and Future Outlook ................................................................................. 2

Section 2 – Budget Adjustments and Appropriation Language ............................................... 5

2.2 – Operating Levels Table ...................................................................................................... 5

2.3 – Resource Detail Table ........................................................................................................ 5

2B – Appropriations Language and Explanation of Changes ..................................................... 6

2C – Legislative Proposals .......................................................................................................... 6

Section 3 – Budget and Performance Plan ................................................................................. 7

3.1 – Budget by Strategic Outcome ............................................................................................ 7

3.2.1 Asset Forfeiture Fund Budget and Performance Plan ........................................................ 8

Section 4 – Supporting Materials .............................................................................................. 10

4A – Human Capital Strategy Description ................................................................................ 10

4B – Information Technology Strategy ..................................................................................... 10

 
TEOAF - 2 

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities

The Treasury Forfeiture Fund (the Fund) is the receipt account for the deposit of non-tax 

forfeitures made pursuant to laws enforced or administered by bureaus participating in the 

Treasury Forfeiture Fund. The principal revenue-producing member bureaus include the Internal 

Revenue Service’s Criminal Investigation (IRS-CI), Customs and Border Protection (CBP), 

Immigration and Customs Enforcement (ICE), and the U.S. Secret Service (Secret Service.) The 

latter three bureaus are part of the Department of Homeland Security, transferred as part of the 

Homeland Security Act of 2002. These member bureaus are joined by the U.S. Coast Guard, 

Department of Homeland Security, as the result of a long-standing close law enforcement 

relationship with CBP and ICE. 

Vision: The focus of Fund management is on strategic cases and investigations that result in 

high impact forfeitures. This approach will have the greatest impact on criminal organizations 

and thus will accomplish the ultimate mission of the Fund to disrupt and dismantle criminal 

enterprises. The enhancement of forfeiture activity requires longer, more in-depth investigations. 

To this end, Fund management emphasizes the use of mandatory funding authorities that support 

large case initiatives including the purchase of evidence and information, joint operations 

expenses, investigative expenses leading to seizure, and asset identification and removal teams. 

In addition, it is also a priority to fund revenue-enhancing projects such as major case funding, 

database development and computer forensics through the use of the Secretary’s Enforcement 

Fund or Super Surplus funds when available. 

Priorities: Asset seizure and forfeiture is a priority for the Fund’s participating law 

enforcement organizations, as well as the Department of the Treasury, and is linked directly to 

the National Money Laundering and Southwest Border Strategies. In this regard, management 

has identified the following priorities for mission success: 

 Continue to educate and focus stakeholders, and others, on the vision and mission of 

Treasury’s multi-Departmental asset forfeiture program (i.e., affirmatively influence the 

consistent and strategic use of asset forfeiture by law enforcement bureaus participating in 

the Treasury Forfeiture Fund to disrupt and dismantle criminal enterprises); 

 Focus resources in a manner that enhances support of law enforcement’s National Money 

Laundering Strategy, Southwest Border Strategy and anti-terrorism financing efforts; and 

 Foster and support the investment of forfeiture resources in the needs of our participating law 

enforcement bureaus in order to promote program excellence and strengthen the overall 

quality of criminal investigations. 

1B – Program History and Future Outlook

Program History: The Treasury Forfeiture Fund continued in its capacity as a multiDepartmental Fund in FY 2010, representing the forfeiture interests of law enforcement 

components of the Departments of the Treasury and Homeland Security. In the midst of this 

period of growth and change, the Fund’s law enforcement bureaus continued their hard work of 
TEOAF - 3 

federal law enforcement and the application of asset forfeiture as a sanction to bring criminals to 

justice. 

FY 2010 was an exceptional revenue year for the Treasury Forfeiture Fund with income from 

forfeitures and recoveries totaling $1.193 billion. Among the FY 2010 major case forfeiture 

deposits was $500 million forfeited by the former ABN AMRO Bank N.V., now named the 

Royal Bank of Scotland N.V., as part of a Deferred Prosecution Agreement. ABN AMRO 

agreed to forfeit $500 million to the United States in connection with a conspiracy to defraud the 

United States, to violate the International Emergency Economic Powers Act (IEEPA) and to 

violate the Trading with the Enemy Act (TWEA), as well as a violation of the Bank Secrecy Act 

(BSA). Fifty percent of the revenue will be shared with the Department of Justice Assets 

Forfeiture Fund representing the joint investigative efforts of the Federal Bureau of Investigation 

(FBI) that lead to forfeiture in this case. 

Another FY 2010 major case forfeiture deposit was an equitable share received from the 

Department of Justice Assets Forfeiture Fund in the amount of $134 million pursuant to a 

Deferred Prosecution Agreement (DPA) with Credit Suisse AG (Credit Suisse). Credit Suisse 

waived indictment and agreed to the filing of a one count criminal information charging that 

Credit Suisse knowingly and willfully violated and attempted to violate regulations issued under 

the International Emergency Economic Powers Act (IEEPA) in violation of Title 50 U.S.C. 

§1705. Pursuant to the signed DPA, Credit Suisse agreed to forfeit $268 million to the U.S. 

Government and pursuant to a separate DPA, forfeited another $268 million to the District 

Attorney of the County of New York, for total forfeitures for the violation of $536 million. The 

Treasury Forfeiture Fund’s equitable share from the Department of Justice, the lead agency in 

this case, was $134 million. Forfeiture revenue from these two major cases alone totaled $634 

million in FY 2010. 

Future Outlook: Management forecasts a continued robust program for FY 2011 and FY 2012 

with forfeiture revenue and recoveries estimated at $927 million and $1.124 billion, respectively. 

In FY 2010, the Treasury Forfeiture Fund experienced higher than usual revenues as a result of 

some unusually large forfeiture cases and that pattern is expected to continue into FY 2012. 

However, past that time frame, it is difficult to predict forfeiture revenue for the program. Much 

depends on the staffing and workload priorities of member bureaus. Fund management 

continues to monitor the status of high impact cases through performance measurement and 

monthly reporting by member bureaus. 

FY 2011: For FY 2011, Fund management will remain focused on support for strategic 

investigative initiatives that will have the greatest impact on national and international criminal 

enterprise including valuable training and investigative expense funding that emphasizes high 

impact forfeiture cases. Fund management plans to continue investment in technologies and 

data collection and to further develop and modify forfeiture training and forfeiture awareness 

programs that are responsive to today’s needs and designed to foster the understanding and 

application of asset forfeiture; and to continually evaluate our basic method of operation to 

ensure that this methodology is the best one. Fund management will continue its work to 

reinforce relationships with member bureaus that extend across Departmental boundaries to 

ensure that the vision, mission, and operating strategies and policies of the Treasury Forfeiture 
TEOAF - 4 

Fund continue to be recognized by the various Departments. As the result of pending major 

cases, the Fund will experience higher than average forfeiture revenue deposits during FY 2011. 

The Fund has allocated Super Surplus funds in the amount of $140 million during FY 2011. 

FY 2012: The Treasury Forfeiture Fund is a vital, continuing, business enterprise that is 

essential in its importance to our member law enforcement bureaus. Given the priorities of the 

National Money Laundering and Southwest Border Strategies and the law enforcement priorities 

of our member bureaus, the outlook for FY 2012 is similar to FY 2011; management intends to 

maintain a dynamic and evolving asset forfeiture program that is responsive to the needs of 

member law enforcement bureaus. 

The FY 2012 President’s Budget proposes to permanently cancel $600 million in unobligated 

balances from the Treasury Forfeiture Fund, and to transfer an additional $30 million in 

unobligated balances to FinCEN for Bank Secrecy Act IT Modernization to remain available for 

3 years after which any unobligated balances will be transferred back to the Treasury Forfeiture 

Fund (see Administrative Provision 125) to support continuing development and 

maintenance. This transfer allows Treasury to use asset forfeiture to support the development of 

a tool that will support law enforcement’s anti-money laundering and counter-terrorism 

financing efforts. 

 
TEOAF - 5 

Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands 

Treasury Forfeiture Fund FY 2010 Obligated FY 2011 Estimated FY 2012 Estimated

FTE 24 24 24

Object Classification

25.2 - Other services $198,983 $366,596 $185,136

25.3 - Other purchases of goods and 

services from Govt. accounts $235,912 $236,124 $222,273

41 - Grants, subsidies, and 

contributions $417,183 $147,800 $497,800

Total Budget Authority $852,078 $750,520 $905,209

Budget Activities

Asset Forfeiture Fund $852,078 $750,520 $905,209

Total Budget Authority $852,078 $750,520 $905,209

2.3 – Resource Detail Table 

Dollars in Thousands % Change

The Fund has no direct FTE. FY 2010 FY 2011 FY 2012 FY 2011

Obligated Estimated Estimated to FY 2012

Revenue:

Sources:

 Carryover from prior year $299,970 $580,785 $757,265 30.39%

 Restoration of temporary rescission $30,000 $90,000 $90,000

 Current year forfeiture revenue 1,192,893 927,000 1,124,000 21.25%

 Total Revenue 1,522,863 1,597,785 1,971,265 23.37%

Uses:

 Permanent Authority (Obligations) 852,078 750,520 905,209 20.61%

 Total Obligations 852,078 750,520 905,209 20.61%

Rescission of Unobligated Balances:

 1. Public Law 111-117 Consolidated Appropriations Act, 2010 -90,000

 2. Continuing Appropriations Act, 2011 (to March 4, 2011) -90,000

Reduction to Unobligated balances:

 Transfer of Unobligated Balances to FinCEN

 1. BSA IT Modernization, available for 3 years -30,000

 Cancellation of Unobligated Balances:

 1. Proposed Cancellation of Unobligated Balances -600,000

 Subtotal, Reduction to Unobligated Balances -90,000 -90,000 -630,000 600.00%

Carryover to next year 1

/ 580,785 757,265 436,056 -42.42%

1/ The Fund incurs expenses immediately upon the start of the new year, including costs of an extensive array of property contracts

which must be funded without delay. Therefore, a carryover is required each year.
TEOAF - 6 

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

TREASURY FORFEITURE FUND 

Of the unobligated balances available under 

this heading, $600,000,000 are hereby permanently 

cancelled.

For FY 2012, $600,000,000 of 

unobligated balances is 

proposed for permanent 

cancellation. 

2C – Legislative Proposals 

The Treasury Forfeiture Fund has no legislative proposals for FY 2012. 
TEOAF - 7 

Section 3 – Budget and Performance Plan 

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Actual

FY 2011 

Estimated

FY 2012 

Estimated

% Change 

FY10 to FY12

 Removed or reduced threats to national security from 

terrorism, proliferation of weapons of mass destruction, 

drug trafficking and other criminal activity on the part of 

rogue regimes, individuals, and their support networks 852,078 750,520 905,209 20.61% 

Total $852,078 $750,520 $905,209 20.61%

3A - Asset Forfeiture Fund ($905,209,000 from reimbursable programs): The function of the 

Treasury Forfeiture Fund (the Fund) is to ensure resources are managed to cover the costs of an 

effective asset seizure and forfeiture program, including the costs of seizing, evaluating, 

inventorying, maintaining, protecting, advertising, forfeiting and disposing of property. Asset 

forfeiture is used by federal law enforcement to disrupt and dismantle criminal enterprises. 

Summary of Treasury Forfeiture Fund Authorities: The Treasury Forfeiture Fund is a special 

fund with permanent, indefinite authority. Special funds are federal fund collections that are 

earmarked by law for a specific purpose, and which consist of separate receipt and expenditure 

accounts. The enabling legislation for the Treasury Forfeiture Fund (31 U.S.C. § 9703) defines 

those purposes for which the Fund’s revenue may be used. Forfeiture revenue on deposit in the 

Fund can be allocated and used as the result of a permanent indefinite appropriation provided by 

Congress. 

A forfeiture process begins once property or cash is seized. Upon forfeiture, seized currency, 

initially deposited into a suspense, or holding account, is transferred to the Fund as forfeited 

revenue. Once forfeited, physical properties are sold and the proceeds are deposited into the 

Fund as forfeited revenue. It is forfeiture revenue that composes the budget authority for 

meeting expenses of running the Treasury Forfeiture Fund program. 

Expenses of the Fund are set in a relative priority so that operating costs are met first. Expenses 

may not exceed revenue in the Fund. 

Types of spending authority of the Fund: 

The mandatory authority items are generally used to meet the operating costs of the Fund, 

including expenses of storing and maintaining seized and forfeited assets, valid liens and 

mortgages, investigative expenses incurred in pursuing a seizure, information and inventory 

systems, and certain costs of local police agencies incurred in joint law enforcement operations. 
TEOAF - 8 

Following seizure, equitable shares are paid to state and local law enforcement agencies that 

contributed to the seizure activity at a level proportionate to their involvement. 

Secretary’s Enforcement Fund (SEF) is derived from equitable shares received from the 

Department of Justice or U.S. Postal Service (USPS) forfeitures. These shares represent 

Treasury’s portion in the overall investigative effort that lead to a Justice or USPS forfeiture. 

SEF revenue is available for Federal law enforcement purposes of any law enforcement 

organization participating in the Treasury Forfeiture Fund. 

Super Surplus represents the remaining unobligated balance at the close of the fiscal year after 

an amount is reserved for Fund operations in the next fiscal year. Super Surplus can be used for 

any federal law enforcement purpose. 

3.2.1 Asset Forfeiture Fund Budget and Performance Plan 

Asset Forfeiture Fund Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $597,287 $483,586 $852,078 $750,520 $905,209

Total Resources $597,287 $483,586 $852,078 $750,520 $905,209

Budget Activity Total $597,287 $483,586 $852,078 $750,520 $905,209

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percent of Forfeited Cash Proceeds Resulting from High-Impact 

Cases (%) (Oe)

86.91 87.65 93.11 80.0 80.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance: For FY 2012, the Fund will continue to measure the performance 

of the participating law enforcement bureaus through the use of the performance measure: 

percent of forfeited cash proceeds resulting from high impact cases. This measures the 

percentage of forfeited cash proceeds resulting from high impact cases, which includes those 

with currency forfeitures in excess of $100,000. Focusing on strategic case and investigations 

that result in high impact forfeitures will do the greatest damage to criminal organizations while 

accomplishing the ultimate objective which is to disrupt and dismantle criminal activity. 

Target: A target of 80 percent has been set for this performance measure. The target allows for 

those cases that may not be high impact in nature but are important to the exercise of law 

enforcement. The measure is calculated by dividing the total amount of forfeited cash proceeds 

from cases that are equal to or greater than $100,000 by the total amount of cash proceeds from 

all cash forfeiture cases. The data is regularly available to Fund management and provided 
TEOAF - 9 

through accounting systems that record the data and is audited annually as part of the annual 

financial statement audit process. 

Performance Exceeds Target: Member law enforcement bureaus participating in the Treasury 

Forfeiture Fund have met or exceeded the performance target in seven of the nine fiscal years 

since inception of the measure in FY 2002. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please visit the 

Resources Tab of the following Link, and from there, select the Strategic Plan link. 

http://www.treasury.gov/about/budget‐performance/strategic‐plan/Pages/index.aspx
TEOAF - 10 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The Treasury Forfeiture Fund is managed by the Treasury Executive Office for Asset Forfeiture 

(TEOAF), a policy office that reports to the Assistant Secretary for Terrorist Financing. 

TEOAF will reimburse Treasury’s Departmental Offices covering the salaries and benefits of 

TEOAF staff, General Counsel positions, and Procurement Services Division positions. 

The Departmental Offices (DO) Office of Human Resources (OHR) ensures the availability of 

tools required to manage the human capital that supports accomplishment of DO’s strategic goals 

and mission. OHR does this through the provision of sound advice and guidance to managers 

and execution of processes related to staff employment, retention, recognition, employee and 

labor relations, benefits, performance management and development. 

4B – Information Technology Strategy 

The Treasury Forfeiture Fund uses Departmental Offices systems and is part of their information 

technology strategy. The Department is extremely reliant on its Information Technology 

infrastructure. The cost associated with this infrastructure represents one of the greatest 

opportunities the Department has for parlaying the savings from greater efficiency to the 

deployment of new capabilities. In light of this, the Treasury E-Board has endorsed the 

following multi-faceted strategy for assessing and executing against the opportunities that exist 

for reducing the cost of the Department’s IT infrastructure: 

 Converge our voice and data networks to a more capable and cost effective platform; 

 Expand the usage of virtualization technologies to further improve the cost efficiency of 

our computing centers; 

 Promote greater leverage of either Department-wide or multi-bureau IT capabilities (i.e., 

data centers, enterprise content management, etc.); and 

 Ensure the usage of cross enterprise licensing for commodity software and hardware. 

TFF - 1

Overview

Mission Statement

To assist customer agencies in meeting their mission by providing responsive, customer-focused, 

cost-effective financial management and administrative support services.

Program Summary by Budget Activity

Dollars in Thousands

Budget Activity FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Actual Estimated Estimated $ Change % Change

 Financial Management Administrative Support Services $93,046 $94,592 $98,732 $5,686 6.1%

 Information Technology Services $73,858 $74,006 $146,600 $72,742 98.5%

Total Resources $166,904 $168,598 $245,332 $78,428 47.0%

Total FTE 973 1,012 1,190 217 22.3%

* The increase in Information Technology Services is due to the FMS-BPD data center consolidation (Fiscal IT). 

FY 2012 Priorities

 Maintain outstanding operational service to customer agencies.

 Continue to identify and implement operational efficiencies with the goal of achieving subinflationary price increases.

 Promote and maximize shared services benefits in support of Treasury and government-wide 

initiatives.

 Consolidate data center operations with the Financial Management Service (FMS) to increase 

efficiency of combined IT assets.

 

 Participate in government-wide forums and support good government through maintaining 

and enhancing compliance and accountability.

 Continue to assess and report our performance and provide timely feedback to customers.

 Enhance human capital strategies to recruit, develop and provide for a challenging, rewarding 

and values based work environment.
TFF - 1

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

FY 2012 Priorities....................................................................................................................... 1

Section 1 – Purpose ....................................................................................................................... 2

1A – Description of Bureau Vision and Priorities...................................................................... 2

1B – Program History and Future Outlook ................................................................................. 3

Section 2 – Budget Adjustments and Appropriation Language............................................... 6

2.1 – Budget Adjustments Table ................................................................................................. 6

2A – Budget Increases and Decreases Description..................................................................... 6

Section 2 – Budget Adjustments and Appropriation Language............................................... 7

2.2 – Operating Levels Table ...................................................................................................... 7

2.3 – Resource Detail Table ........................................................................................................ 8

2B – Appropriations Language and Explanation of Changes..................................................... 8

2C – Legislative Proposals.......................................................................................................... 8

Section 3 – Budget and Performance Plan ................................................................................. 9

3.1 – Budget by Strategic Outcome ............................................................................................ 9

3.2.1 Financial Management Administrative Support Services Budget and Performance Plan . 9

3.2.2 Information Technology Services Budget and Performance Plan ................................... 11

Section 4 – Supporting Materials .............................................................................................. 12

4A – Human Capital Strategy Description................................................................................ 12

4.1 – Summary of IT Resources Table...................................................................................... 13

4B – Information Technology Strategy..................................................................................... 14
TFF - 2

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The Treasury Franchise Fund’s (The Fund) vision is to be a leader in providing responsible, 

effective administrative support services through commitment to service, efficient operations, 

openness to change and values based behavior. The Fund provides accounting, procurement, 

travel, human resources, and information technology (IT) services through the Bureau of the 

Public Debt (Public Debt), Administrative Resource Center (ARC). Services are provided to 

more than 70 federal customers, including most of the Department of the Treasury, on a 

reimbursable, fee-for-service basis. In FY 2010, 971 FTE are dedicated to servicing customers 

and are expected to generate over $180 million in earned revenue.

A major focus of The Fund is achieving sub-inflationary price increases for customers. The 

Fund leverages customer base expansion to help achieve economies of scale that support this 

priority. In addition, The Fund continues to identify and implement process improvement 

initiatives ranging from technology to staffing. Finally, other service efficiencies have resulted 

from changes such as implementing standard service level agreements that include a minimum of 

one year notice of service cessation clause. This extended notice period reduces the risk 

associated with loss of business, thus reducing reserve requirements and reserve charges to 

customers. 

Another Fund priority is to support Treasury and government-wide initiatives by providing 

timely, high quality, cost effective, and value added administrative support services. This 

requires continual assessment of services offered to market demands and adherence to The 

Fund’s “good government” vision. This vision ensures compliance with applicable rules and 

regulations, promotes cost savings through efficient and standardized service delivery while 

maintaining high customer satisfaction. Standardized internal business processes, and 

implementing customers consistent with the defined target are two specific means used by The 

Fund to support the vision. Specifically, during FY 2012, The Fund plans to consolidate data 

center operations with those of the FMS to increase utilization and efficiency of the combined IT 

assets. This consolidation supports the Office of Management and Budget's (OMB) E-gov data 

center consolidation guidance.

A major operational priority is to assess and report on service delivery performance and provide 

customers with timely performance feedback in areas in which The Fund and customers must 

work together to successfully perform administrative services. This includes improving and 

creating new Shared Service Provider (SSP) performance metrics and benchmarks and providing 

standardized feedback to customers on performance. The Fund will place additional focus in FY 

2011 on establishing cost metrics. Performance feedback is critical to customers’ ability to 

improve the efficiency of their own operations, which will lower the level of effort required to 

support them and maximize the benefits achieved through shared services.

Another operational priority is enhancing its shared service solution to better support customers 

in a SSP role. The Fund continues efforts to improve shared solutions including:

 Upgrade of Oracle E-Business Suite to Release 12 (FY 2012)
TFF - 3

 Upgrade of E-Travel Solution – GovTrip – to version 2.0 (FY 2010)

 Upgrade of E-Procurement Solution – Procurement Request Information Systems 

Management (PRISM) – to version 6.5 (FY 2010)

In addition, the information technology business line implemented infrastructure changes 

necessary to serve the role of a Trusted Internet Connection Access Provider (TICAP) for 

Treasury. The Fund received authority to operate the upgraded infrastructure in January 2010 

and was designated as Treasury's TICAP in May 2010. Application migrations into the upgraded 

infrastructure were completed in FY 2010. Through completion of these enhancements, The 

Fund will continue to work with customers to identify additional platform and service 

improvements in FY 2012. 

As significant budgetary resources are used for salaries and benefits, human capital strategies 

such as recruiting and retention efforts are always a high priority. Our goal is to recruit high 

quality, dedicated employees that care about the success of The Fund and its customers. 

Additionally, The Fund focuses on development processes to educate and train staff on new 

responsibilities as federal stewards, and providing a challenging, rewarding and values based 

work environment. Emphasis is placed on information sharing demonstrated by regular town 

hall meetings and the presentation of customer feedback to employees.

1B – Program History and Future Outlook

Program History 

The Government Management Reform Act of 1994 (GMRA) authorized the establishment of six 

Franchise Fund programs within the Federal Government. The franchise concept was built on 

OMB’s twelve operating principles for business-like organizations, including provider 

competition, customer’s voluntary exit, full cost recovery, initial capitalization and performance 

measurement and benchmarking.

In 1996, OMB designated the Department of the Treasury as one of the six Executive Branch 

agencies authorized to establish a franchise fund program. The Fund began operations in 1997 

with six Franchise Business Activities (FBA), less than 80 FTE and earned revenue of $38 

million.

In FY 2009, The Fund worked with FMS to migrate Treasury Agency Services (TAS) from The 

Fund, successfully transitioned Federal Consulting Group (FCG) to another federal host and 

substantially closed out the FedSource business activity. In FY 2010 and thereafter, 

administrative and IT support are the only services that are provided by The Fund. 

During FY 2009 and FY 2010 The Fund enhanced its infrastructure by migrating Oracle EBusiness Suite platforms to a commercial hosting provider. As planned, two of the platforms 

were successfully migrated in FY 2009, and the final platform was migrated in FY 2010. 

Overall, The Fund was able to hold FY 2011 costs at levels commensurate with FY 2010, thus 

resulting in true cost reductions for its customers. These economies were the result of 

transitioning hosting of Oracle E-Business Suite to a commercial provider and further 

implementation of standardized business practices. 
TFF - 4

The Fund's key challenge is maintaining high service and customer satisfaction levels while 

pursuing cost reduction and containment initiatives such as transitioning customers to the 

standardized service delivery model. 

Future Outlook

In FY 2012, The Fund will maintain its commitment to excellence and continue to meet all 

strategic goals and benchmarks. The Fund continues to look for measured and controlled growth 

opportunities to expand existing service lines or add other value added, in-demand administrative 

services.

As a SSP, The Fund plays an important role in achieving the current administration’s goals of 

improving efficiency, cost effectiveness, and accountability within the federal sector. This is 

attributable to demonstrated successes in reducing duplication, providing accurate and timely 

financial management information and providing responsive support for government-wide 

initiatives.

The Fund’s estimated FY 2012 FTE and earned revenue are 1,190 and $245 million, 

respectively.

Demonstrated Success – Eliminating Duplication

Shared Platform and Services

The Fund reduces the number of federal administrative systems by providing access to an 

integrated system platform for accounting, travel, procurement, human resources, and 

information technology services. In addition, as a SSP, The Fund provides many customers with 

value added services, such as transaction processing and financial reporting.

The Fund was designated by the Office of Management and Budget (OMB) as a Center of 

Excellence for Financial Management Line of Business (FMLoB) and a Shared Services Center 

for Information Systems Security Line of Business (ISSLoB). In addition, The Fund has critical 

supporting roles in the Human Resources Line of Business (HRLoB) and Public Key 

Infrastructure (PKI) SSP designations of the Department of Treasury.

The Fund currently provides:

 31 organizations with accounting services

 35 organizations with travel services

 36 organizations with procurement services

 32 organizations with human resource services

 17 organizations with information technology services

Providing shared services to federal customers results in cost savings and improved quality and 

compliance. Savings are achieved through consolidated buying power and cost sharing 

opportunities in the areas of operations and maintenance, enhancements and upgrades. Improved 

quality and compliance is achieved through The Fund’s service model and standardized business 

processes that align with applicable laws, rules and regulations.
TFF - 5

Specifically, during FY 2012, The Fund plans to consolidate data center operations with those of

the FMS to increase utilization and efficiency of the combined IT assets. This consolidation 

supports the Office of Management and Budget's (OMB) E-gov data center consolidation 

guidance. Furthermore, in FY 2011, The Fund plans to consolidate two Oracle E-Business Suite 

environments. This consolidation is expected to result in further annual system hosting and 

maintenance cost savings. 

Demonstrated success –Timeliness and Accuracy

The Fund provides timely and high quality services in the area of financial reporting. Using The 

Fund’s Oracle E-Business Suite platform, federal managers have timely financial management 

information available for decision-making. 

Internally, there is no better test for the accuracy and quality than annual financial statement and 

internal control audits. The Fund has received 14 consecutive unqualified audit opinions. In 

addition, The Fund undergoes a Type II SAS-70 audit annually and has received 8 consecutive 

unqualified opinions. The SAS-70 results enhances customer confidence in The Fund’s systems 

and services and reduces agencies annual financial statement audit costs. 

Demonstrated Success – Responsiveness

The Fund has demonstrated the ability to respond timely to government-wide priorities. For 

example, increased emphasis on information security led The Fund’s information technology 

service line to become a leader in the federal government. On behalf of Treasury, The Fund 

hosts and maintains PKI SSP infrastructure and is an OMB designated shared service center for 

the ISSLoB. 

During FY 2010, The Fund completed infrastructure changes necessary to serve the role of a 

Trusted Internet Connection Access Provider (TICAP) for Treasury in response to OMB's 

government-wide internet security initiative.

1C – Industry Outlook

There is a positive outlook for shared services in the federal government. The Fund anticipates 

further growth in this sector due to OMB’s Line of Business (LoB) initiatives and increased 

budget constraints.

There is tremendous synergy between the business model established by the Treasury several 

years ago and recent OMB initiatives. Each model supports the concept of sharing costs across 

agencies to reduce each entity’s cost burden, especially capital investments in systems. In 

addition, most of the Lines of Business use competition to keep the costs of service providers to 

a minimum and to allow customer agencies to shop around for the service provider that best 

satisfies their needs.
TFF - 6

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Treasury Franchise Fund FTE Amount

FY 2010 Actual 973 $166,904

FY 2011 Estimated 1,012 $168,598

Changes to Base:

Maintaining Current Levels (MCLs): - $2,877

Maintaining Current Levels - $2,877

Efficiencies, Savings & Base Reductions: - ($1,732)

Efficiency Savings - Productivity Improvements - ($1,732)

Subtotal FY 2012 Changes to Base - $1,145

Total FY 2012 Base 1,012 $169,743

Program Changes:

Program Decreases: - ($499)

Business Alignment - ($499)

Program Increases: 178 $76,088

IT Consolidation Growth 178 $76,088

Subtotal FY 2012 Program Changes 178 $75,589

Total FY 2012 Estimated 1,190 $245,332

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$2,877,000 / +0 FTE

Maintaining Current Levels +$2,877,000 / +0 FTE 

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

supplies and equipment and health benefits and the increase in Federal Employee Retirement 

System participation. No inflation adjustment is requested for pay in FY 2012.

Efficiencies, Savings & Base Reductions .................................................-$1,732,000 / +0 FTE

Efficiency Savings - Productivity Improvements -$1,732,000 / +0 FTE 

The Franchise Fund will realize efficiency savings from productivity improvements.

Program Decreases .......................................................................................-$499,000 / +0 FTE

Business Alignment -$499,000 / +0 FTE

Business Alignment

Program Increases ..............................................................................+$76,088,000 / +178 FTE

IT Consolidation Growth +$76,088,000 / +178 FTE 

During FY 2012, The Fund plans to consolidate data center operations with those of the FMS to 

increase utilization and efficiency of the combined IT assets.
TFF - 7

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

Treasury Franchise Fund FY 2010 Obligated FY 2011 Estimated FY 2012 Estimated

FTE 973 1,012 1,190

Object Classification

11.1 - Full-time permanent $66,909 $72,259 $89,426

11.3 - Other than full-time permanent $596 $0 $0

11.5 - Other personnel compensation $94 $0 $0

11.6 - Overtime $1,255 $1,058 $1,393

11.7 - Other Personnel Compensation $1,490 $1,879 $2,329

12 - Personnel benefits $20,421 $21,756 $29,528

13 - Benefits for former personnel $168 $0 $0

21 - Travel and transportation of persons $1,129 $1,421 $1,774

22 - Transportation of things $9 $37 $38

23.2 - Rental payments to others $56 $0 $0

23.3 - Communication, utilities, and misc 

charges $933 $3,157 $5,183

25.2 - Other services $6,527 $18,561 $47,826

25.3 - Other purchases of goods and 

services from Govt. accounts $38,819 $28,822 $29,605

25.4 - Operation and maintenance of 

facilities $79 $0 $0

25.7 - Operation and maintenance of 

equip $12,126 $9,453 $20,732

26 - Supplies and materials $488 $1,359 $1,691

31 - Equipment $12,852 $7,237 $9,043

32 - Land and structures $0 $0 $5,457

Total Budget Authority $166,904 $168,598 $245,332

Budget Activities:

Financial Management Administrative 

Support Services $93,046 $94,592 $98,732

Information Technology Services $73,858 $74,006 $146,600

Total Budget Authority $166,904 $168,598 $245,332
TFF - 8

2.3 – Resource Detail Table

Dollars in Thousands

2B – Appropriations Language and Explanation of Changes 

The Fund receives no appropriated funds from Congress.

2C – Legislative Proposals

The Fund has no legislative proposals for FY 2012.

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Administrative Services $85,045 $99,742 $93,799 $98,732 -1.01%

Information Technology Services $63,398 $75,903 $71,443 $146,600 93.14%

Total Revenue / Offsetting Collections 0 $148,443 0 $175,645 0 $165,242 0 $245,332 0.00% 39.67%

 Unobligated balances, Start of year 51,521 61,722 77,766 81,086 31.37%

 Recoveries of prior year obligations 4,410 7,303 6,676 6,744 -7.65%

 Net transfers (includes capital transfers) 3,748 0 0 0 0.00%

Total budgetary resources available 0 $208,122 0 $244,670 0 $249,684 0 $333,162 0.00% 36.17%

Expenses/Obligations

Administrative Services 605 89,933 628 93,046 644 94,592 670 98,732 6.69% 6.11%

Information Technology Services 326 56,467 345 73,858 368 74,006 520 146,600 50.72% 98.49%

Total Expenses / Obligations 931 $146,400 973 $166,904 1,012 $168,598 1,190 $245,332 22.30% 46.99%

Net Results $2,043 $8,741 ($3,356) $0 -100.00%

FY 2011 FY 2010

Actual Actual Estimated FY 2012 Estimated to FY 2012

% Change

FY 2009 FY 2010
TFF - 9

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treas.gov/offices/management/budget/strategic-plan/

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2011 

Estimated

FY 2012 

Estimated

Percent 

Change

 A citizen-centered, results-oriented and strategically aligned 

organization 168,598 245,332 45.51%

Total $168,598 $245,332 45.51%

3A - Financial Management Administrative Support Services ($98,731,720 from 

reimbursable programs): The Administrative Services Activity supports OMB’s shared services 

concept and furthers “good government” by standardizing the administrative financial systems 

and processes required to operate federal organizations. 

Value is provided through cost sharing opportunities in systems capital investments as well as 

reduced operating costs through providing consolidated high quality, value added services. The 

Fund, a Center of Excellence for the FMLoB and a support organization for Treasury's HRLoB 

designation, provides administrative support functions with a focus on financial management, 

procurement, travel and human resources. The program has been very successful in meeting its 

mission goals as evidenced by the increasing demand for services and the level of satisfaction 

expressed by customers.

3.2.1 Financial Management Administrative Support Services Budget and Performance 

Plan

Financial Management Administrative Support Services Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $96,952 $89,933 $93,046 $94,592 $98,732

Total Resources $96,952 $89,933 $93,046 $94,592 $98,732

Budget Activity Total $96,952 $89.933 $93,046 $94,592 $98,732
TFF - 10

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Target Actual Target Target

Cust. Satisfaction Index - Financial Mgmt 

Admin 

97.0 89.0 80.0 81.0 80.0 80.0

Operating Expense % (E) NA 7% 8% 8% 8% 8%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. 

Satisfaction, DISC - Discontinued, and B - Baseline, and B - Baseline

Description of Performance:

Administrative Services established an outcome measure and target of 80 percent to determine 

performance in satisfying the needs of customer agencies. Annually, The Fund conducts a 

customer satisfaction survey to assess performance within all service lines. For FY 2010, two 

thirds of The Fund’s customers responded to the survey, and an overall customer satisfaction 

rating of 81 percent was achieved. 

Administrative Services has reduced the target for operating expenses as a percentage of total 

expenses from 12 percent to 8 percent due to efficiencies realized in operations. This provides 

franchise management with a measure that encourages efficiency in administrative operations 

and helps to assure services are provided at the lowest possible cost. Administrative Services 

again met this performance measure in FY 2010 with an 8 percent operating expense ratio.

3B - Information Technology Services ($146,600,280 from reimbursable programs): The IT 

Services Activity provides low-cost, shared services to a diverse portfolio of federal customers: 

Treasury bureaus, independent agencies, boards and commissions, and Inspectors General 

organizations. Value is provided through IT infrastructure consolidation and standardized IT 

service delivery in a modern, technically innovative, and secure environment. Customers avoid 

costly, long-term development projects when they take advantage of our shared services and 

environments. Services include information systems security, hosting, and software engineering. 

Additionally, end-user support and professional services are provided to Public Debt and The 

Fund.

The Fund, designated by the OMB as a SSC for Information Systems Security Line of Business 

(ISSLoB), provides agencies with proven Certification and Accreditation (C&A) and Continuous 

Monitoring (CM) services. The Fund delivers information security support to other federal 

agencies, while improving quality, accelerating delivery, and reducing customer costs.

Secure hosting services are provided for production, contingency, and disaster recovery systems, 

and development/and test regions. The Fund has critical supporting roles in the PKI SSP 

designation of the Department of Treasury. The Fund's PKI and directory experience makes 

end-to-end identity management solutions available to customers.
TFF - 11

Rapid Application Development (RAD) techniques and a demonstrated ability to integrate 

commercially available solutions combine to provide high quality software engineering services 

at a competitive price. 

3.2.2 Information Technology Services Budget and Performance Plan

Information Technology Services Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $0 $56,467 $73,858 $74,006 $146,600

Total Resources $0 $56,467 $73,858 $74,006 $146,600

Budget Activity Total $0 $56,467 $73,858 $74,006 $146,600

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Target Actual Target Target

Cust. Satisfaction Index - Financial Mgmt Admin NA 84.0 80.0 81.0 80.0 80.0

Operating Expense % (E) NA 5% 8% 8% 8% 8%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline, and B – Baseline

Information Technology established a management/customer service measure and target of 80 

percent to determine performance in satisfying the needs of customer agencies. Annually, The 

Fund conducts a customer satisfaction survey to assess performance within all service lines. For 

FY 2010, two thirds of The Fund’s customers responded to the survey, and an overall customer 

satisfaction rating of 81 percent was achieved.

Information Technology has reduced the target for operating expenses as a percentage of total 

expenses from 12 percent to 8 percent due to efficiencies realized in operations. Viewed over 

time, this measure shows that operations can be expanded without dramatically increasing 

expenses.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
TFF - 12

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

The Fund follows the human capital strategy of Public Debt, it's host organization. Public Debt's 

employees are its greatest asset and investment in the workforce is crucial. The bureau is 

recognized throughout the local and surrounding communities as a values-based employer where 

candidates want to work and employees want to stay. According to the report, Best Places to 

Work in the Federal Government 20010, the bureau ranked 6thth out of 224 federal 

agencies. Additionally, Public Debt has consistently improved its overall score in every Best 

Places to Work in the Federal Government survey over the last five years.

As a values-based organization, Public Debt also understands the benefits telework provides for 

enhancing employee morale. Telework has the potential to increase employee productivity and 

provides employees an additional method for balancing work and home life. Moreover, it has 

the added benefits of increasing the recruitment of new employees, retaining the current 

workforce and potentially cutting down on employee absences.

To ensure essential business functions are maintained during office closures due to weatherrelated situations or other emergency events, telework will be integrated into continuity of 

operations plans as an alternative way of conducting business. Several offices are piloting 

telework on a trial basis to ensure functionality of systems in the event of a real-world disaster.

 

Public Debt moved to a performance-based management system for non-supervisory, nonbargaining unit employees at the end of December 2008. The new appraisal system is aligned 

with Public Debt's strategic and annual performance plans. In December 2009, the bureau 

successfully completed the bargaining process to move the remaining non-supervisory 

employees to the same system. The date to transition bargaining unit employees is pending.

The use of statistical analysis continues to be a crucial part of workforce planning and 

deployment. Through FY 2015, 37 percent of Public Debt's permanent employees will be 

eligible for optional retirement. Thanks to the bureau's standing as an employer of choice and 

the large pool of highly qualified candidates in the local community, Public Debt can address the 

anticipated retirements successfully.

A closer analysis of the retirement data reveals 62 percent of Senior Executive Services (SES) 

level employee will be eligible to retire during the same period. Public Debt's SES Candidate 

Development Program concluded in March 2010, at which time, candidates applied for SES 

certification. The candidates, once certified, will be eligible for noncompetitive appointments in 

the Senior Executive Service. By planning ahead, the bureau will be able to counteract the 

potential impact of future SES retirements.
TFF - 13

4.1 – Summary of IT Resources Table

Dollars in Thousands

Information Technology 

Investments % 

Change 

FY 09 to 

10

% Change 

FY10 to 11

% Change 

FY10 to 12

Major IT Investments (Self 

Funded) Budget Activity

FY 2009 

Enacted

FY 

2010 

Actual

FY 2011 

Estimated

FY 2012 

Estimated

Franchise Financial and 

Administrative Services (FFAS)

Administrative 

Services $19,468 $18,626 -4.3% $23,568 26.5% $23,859 28.1%

Government Agency 

Investment Service (GAIS)

Administrative 

Services $0 $0 0.0% $1,508 1/ 100.0% $1,531 1/ 100.0%

Subtotal, Major IT Investments $19,468 $18,626 -4.3% $25,076 34.6% $25,390 1.3%

Non-Major IT Investments $0 $0 0.0% $0 0.0% $0 0.0%

Infrastructure Investments 2/ $31,767 3/ $45,948 44.6% $41,134 -10.5% $43,001 -6.4%

Enterprise Architecture $1,899 4/ $2,503 31.8% $2,861 14.3% $2,947 17.7%

Total IT Investments $53,134 $67,077 26.2% $69,071 3.0% $71,338 6.4%

1/ Represents costs incurred by The Fund that contribute to the GAIS investment managed by the Bureau of the Public Debt (BPD). 

2/ Infrastructure Investments represent Treasury enterprise-wide investment in end user, mainframe and servers, telecommunications, and identity management services. 

3/ Includes Infrastructure Investments of $16,621 previously reported in Bureau of the Public Debt (BPD) budget submission, Table 4.1 - Summary of IT Resources.

4/ Includes Enterprise Architecture Investments of $352 previously reported in Bureau of the Public Debt (BPD) budget submission, Table 4.1 - Summary of IT Resources.
TFF - 14

4B – Information Technology Strategy

The Fund follows the information technology strategy of Public Debt, the host organization. To 

ensure the success of Public Debt's mission at the lowest cost to the taxpayer, the bureau 

continues to strengthen its strategic planning processes to make the best possible use of resources

across all business lines and budget activities, including The Fund's Administrative Support and 

IT Administrative Support Services. Public Debt created the Enterprise Architecture Group 

(EAG) to promote strategic alignment across the Public Debt enterprise, optimize business 

processes by promoting an appropriate diversity and reuse of technology solutions and expose 

strategic planners to information that enables informed decisions. The EAG is charged with the 

following responsibilities:

 Evaluate program and support organization transition activities, focusing on need, 

enterprise alignment, impact, and constraints.

 Determine the most effective course of action for each presented transition activity.

 Develop and prioritize the Public Debt transition plan.

 Maintain Public Debt’s business-related enterprise architecture models.

 Publish Enterprise Architecture information.

 Review and approve/disapprove capital planning investment documents.

During FY 2012, as The Fund consolidates data center operations with those of the FMS, 

additional governance processes will be established to ensure effective use of common 

information technology resources.

With this budget submission, The Fund unveils a restructured IT investment portfolio, further 

aligning budget activities and programs of Public Debt. The restructuring includes the 

movement of IT Infrastructure reporting to The Fund. 

Modern and Secure Technical Environment

The IT strategy embraces a modern and secure technical environment to support The Fund's

programs, workforce, and customers. The Fund's software engineering framework will leverage 

open source technologies. The Fund will expand its virtual infrastructure and will leverage 

virtual technologies in the delivery of end user services. Furthermore, social media technologies 

and data services (for both structured and unstructured data) will be available for use in a secure 

manner as a productive means of business collaboration.

As federal budget dollars shrink, federal program managers require cost effective IT services that 

align with business needs. The Funds Information Technology Services Activity must meet 

customers' requirements for quality and cost. The Fund adopts the principles of continuous 

service improvement (CSI) to find where improvements in the efficiency and effectiveness of IT 

infrastructures can be made. The goal is to increase the use and efficiency (optimization) of IT 

assets, while reducing IT service costs for customers.
TFF - 15

Fiscal IT

In late 2009, the Office of the Fiscal Assistant Secretary asked the Commissioners of FMS and 

the Public Debt to assess where improvements could be made in the efficiency and effectiveness 

of IT infrastructures. As a result, FMS in partnership with Public Debt initiated a project to 

consolidate the data centers across the two bureaus to help achieve the Secretary’s objective of 

increasing the utilization and efficiency of combined IT assets, while reducing technology costs. 

This effort also conforms to the Office of Management and Budget’s Data Center Consolidation 

directive that all federal agencies review IT spending, placing emphasis on consolidating and 

sharing IT services to reduce expenditures. The Fiscal IT effort includes consolidation of five 

data centers into two shared by both bureaus, creation of a single corporate governing body, insourcing of select contracted functions, consolidation of application development methodologies 

and associated infrastructure, and importantly results in a more “green” approach to delivery of 

IT services. Both FMS and Public Debt anticipate savings due to reductions in energy 

consumption, equipment, software, and staff.

BEP - 1

Overview

Mission Statement

The mission of the Bureau of Engraving and Printing (BEP) is to develop and produce United 

States currency notes, trusted worldwide.

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012 FY10 to FY12

Actual Estimated Estimated $ Change % Change

 Manufacturing $555,000 $527,000 $582,050 $27,050 4.9%

 Protection and Accountability of Assets $61,000 $61,000 $0 ($61,000) (100.0%)

Total Resources $616,000 $588,000 $582,050 ($33,950) (5.5%)

Total FTE 1,889 1,950 1,925 36 1.9%

BEP operations are financed by reimbursements to a revolving fund and as such the BEP is unaffected by a 

continuing resolution.

The Bureau of Engraving and Printing Protection and Accountability budget activity is being eliminated and 

consolidated into the Manufacturing budget activity beginning in FY 2012.

FY 2012 Priorities

 Efficiently and effectively produce and deliver the most secure currency for the nation. 

 Continued production of the redesigned $100 note.

 Redesign the nation’s currency to better serve the needs of Americans and others around the 

world, including the blind and visually impaired.

 To research and develop state-of-the-art counterfeit deterrent features that will enhance and 

protect future generations of currency notes.

 Acquire equipment that will enable the addition of tactile features to U.S. currency.

 Provide hand-held assistive devices to denominate currency (or financial assistance to 

acquire such devices) to blind and visually impaired citizens. 

 Train and prepare BEP’s workforce for increasingly sophisticated technology that will be 

integrated into future manufacturing processes.

 Continue process improvements as required of an ISO 9001 certified organization, a

designation that indicates to current and prospective customers that the Bureau employs a 

rigorous quality management program.

 Reduce the Bureau’s environmental impact through targeted investments in more efficient 

systems and waste reduction. The most significant project will enable waste water recycling, 

which will reduce water usage by several million gallons per year.
BEP - 2

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 4

Section 2 – Budget Adjustments and Appropriation Language............................................... 7

2.1 – Budget Adjustments Table ................................................................................................. 7

2A – Budget Increases and Decreases Description..................................................................... 7

2.2 – Operating Levels Table ...................................................................................................... 9

2.3 – Resource Detail Table ...................................................................................................... 10

2B – Appropriations Language and Explanation of Changes................................................... 10

2C – Legislative Proposals........................................................................................................ 10

Section 3 – Budget and Performance Plan ............................................................................... 11

3.1 – Budget by Strategic Outcome .......................................................................................... 11

3.2.1 Manufacturing Budget and Performance Plan ................................................................. 12

3.2.2 Protection and Accountability of Assets Budget and Performance Plan ......................... 13

Section 4 – Supporting Materials .............................................................................................. 15

4A – Human Capital Strategy Description................................................................................ 15

4.1 – Summary of IT Resources Table...................................................................................... 18

4B – Information Technology Strategy..................................................................................... 19
BEP - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The mission of the Bureau of Engraving and Printing (BEP) is to develop and produce United 

States currency notes, trusted worldwide. 

The Bureau of Engraving and Printing began printing currency in 1862. The Bureau operates on 

the basis of authority conferred upon the Secretary of the Treasury by 31 U.S.C. 321(a) (4) to 

engrave and print currency and other security documents. Operations are financed through a 

revolving fund established in 1950 in accordance with Public Law 81-656. This fund is 

reimbursed for direct and indirect costs of operations, including administrative expenses, through 

product sales. In 1977, Public Law 95-81 authorized the Bureau to include an amount sufficient 

to fund capital investment and to meet working capital requirements in the prices charged for 

products, eliminating the need for appropriations from Congress.

The Bureau’s vision is to maintain its position as a world-class securities printer providing its 

customers and the public superior products through excellence in manufacturing and 

technological innovation. BEP strives to produce U.S. currency of the highest quality and also 

designs and produces security documents required by other Federal agencies. Other activities at 

the Bureau include engraving plates and dies; manufacturing inks used to print security products; 

purchasing materials, supplies and equipment; and storing and delivering products in accordance 

with the requirements of customers. In addition, the Bureau provides technical assistance and 

advice to other Federal agencies in the design and production of documents which, because of 

their innate value or other characteristics, require counterfeit deterrent features.

During FY 2012, BEP expects to produce and deliver 7.0 billion notes to the Federal Reserve 

Board to meet currency demand, a decrease of seven percent from the anticipated FY 2011 

program.

Over the last ten years, the research and development of new technologies for possible use in 

currency production has become a priority at the Bureau as more sophisticated counterfeit 

deterrent features are needed to protect future generations of currency notes. Via its website, 

www.bep.gov, BEP is currently seeking information on technologies that would enhance the 

longevity and durability of currency notes in circulation, as well as new technologies or materials 

that could be developed for future use in counterfeit deterrence. BEP is also interested in 

products, materials and technologies to address all types of currency usage needs such as 

authentication and denomination.

The prevalent use of the $100 note throughout the world will require the production of the new 

$100 note to continue at increased levels through 2012. Production of the $100 note is in support 

of the transition from old note designs to new designs and to meet demand in the U.S. and 

abroad. It is estimated that as many as two-thirds of all $100 notes circulate outside the United 

States. The redesign of the $100 note marked the completion of a multi-year initiative to 

implement the most ambitious currency redesign in United States history. 
BEP - 4

Another initiative for FY 2012 is to continue efforts to produce tactile features that will enhance 

future note designs and serve the needs of currency users with visual impairments. A research 

group from the Bureau visited several foreign bank note printers to gather information on their 

progress in developing tactile features. Further testing is being conducted to determine which 

processes and features would work best at the production volumes needed for U.S. currency. 

While no timetable has been set for the introduction of this currency, the next redesign will 

incorporate changes to make U.S. currency more accessible to those who are blind and visually 

impaired. 

In addition, because aggressive law enforcement, effective note design, and public education are 

all essential components in an effective anti-counterfeiting program, the Bureau will continue its 

work in 2012 with the Advanced Counterfeit Deterrent (ACD) Steering Committee to research 

and develop future currency designs that will enhance and protect U.S. currency notes. The 

ACD Committee includes representatives from BEP, the Department of the Treasury, the U.S. 

Secret Service, and the Federal Reserve Board.

Manufacturing – The Bureau of Engraving and Printing manufactures high quality security 

documents that deter counterfeiting while supporting commerce through safe and secure 

currency. These products are grouped into two programs: Federal Reserve notes, and other 

security documents. Over 98 percent of Bureau revenues are derived from the sale of Federal 

Reserve notes.

1B – Program History and Future Outlook

Redesigned Federal Reserve Notes: The Bureau of Engraving and Printing has a long-term 

commitment to develop state-of-the-art counterfeit deterrent features for use in future currency 

notes through new innovative technologies. The U.S. Government expects to redesign United 

States currency every seven to ten years in an effort to stay ahead of counterfeiters as advances 

in technology make counterfeiting of currency less difficult. The ACD Committee continually 

researches counterfeit deterrent features and systems for possible use in future currency designs 

to enhance and protect notes from counterfeiting. The United States government continues to 

enhance the security of U.S. currency in an effort to build public confidence and enable 

commerce by providing the public with safe secure notes and the information needed to 

authenticate them. 

The new design for the $100 note made its debut on April 21, 2010 during a ceremony at the 

Department of the Treasury's Cash Room. The innovative security features in the new note are 

the fruit of more than a decade of research and development to protect U.S. currency from 

counterfeiting. The unveiling of the $100 note was the first step in a global public education 

program implemented by the Department of the Treasury, the Federal Reserve Board and the 

U.S. Secret Service to educate those who use the $100 note about its changes before it begins 

circulating in early 2011. 

The redesign of the $100 note marked the completion of a multi-year initiative to implement the 

most ambitious currency redesign in United States history. The redesigned notes remain the 

same size and use the same portraits and historical images, which have been enhanced. U.S. 
BEP - 5

currency users will continue to recognize the redesigned notes as quintessentially American. The 

redesign adds complexity to the notes to make counterfeiting more difficult, and also includes an 

enlarged, high-contrast numeral to help the public, including persons with visual impairments, 

distinguish the denomination. The new notes feature enhanced, overt counterfeit deterrent 

features including a “3-D Security Ribbon” with shifting images and a “Bell in the Well” that 

disappears and reappears when the note is tilted.

Public Education: Effective combat against counterfeiting requires consumer education that 

urges merchants and consumers to examine the security features on the currency notes they 

receive. In collaboration with, and paid for by the Federal Reserve Board, BEP administers a 

broad public education program to support the introduction of new currency designs. Successful 

public education is crucial to the anti-counterfeiting effort; the current program offers education 

and training materials to the public to inform them about the latest currency designs and how to 

authenticate their currency. These materials are available on-line and can be downloaded from

http://www.moneyfactory.gov/newmoney. The public education program is designed to build an 

adequate threshold of awareness to support commerce and ensure seamless "business as usual" 

transitions as new currency designs are introduced to the public. 

Overall, counterfeiting of U.S. currency remains at low levels – due primarily to a combination 

of improvements in the notes’ security features, aggressive law enforcement and public 

education efforts. An international education program is being conducted for the new $100 notes 

following successful programs for the redesigned $5, $10, $20, and $50 notes. No domestic paid 

advertising will be used to introduce the new notes, but paid media has been requested in certain 

foreign markets. The Federal Reserve Board reports that up to two-thirds of the seven billion 

$100 notes currently in circulation are outside the U.S. Even though statistics continue to

indicate that the amount of counterfeit U.S. currency worldwide is less than 1/100th of one 

percent of genuine U.S. currency in circulation, the $100 note is the most widely circulated and 

most often counterfeited denomination outside the U.S. This international public education 

program ensures that people all over the world continue to accept, recognize, trust and use the 

new and enhanced security features of the new U.S. currency.

Quality: BEP will maintain its focus on producing high quality security products in the most 

cost effective manner possible. It will continue to pursue continuous process improvements as 

the catalyst for world class quality and improved cost performance through streamlined 

processes and low spoilage. In addition to quality certification, the BEP attained ISO 14001 

certification in 2007 for environmental management systems, institutionalizing the Bureau’s 

commitment to sound environmental stewardship.

Cost Efficiency and Capital Investment Efforts: The Bureau strives to provide its customers with 

superior products for the lowest possible price. BEP constantly seeks ways to cut costs without 

compromising quality. BEP has put workload-based staffing plans in place which have enabled 

an overall FTE reduction of 10.5 percent over the past three years. In order to continue staffing 

reductions in selected areas, during 2010 BEP offered targeted employee buyouts as incentives 

for early retirement and separation from service. Capital investments are being implemented that 

will enhance productivity and lessen the environmental impact of BEP’s operations on air 

emissions, wastewater discharge, and solid waste. An investment in a new manufacturing 
BEP - 6

support system to enable the integration, consolidation, and analysis of data from the systems 

used in existing and new manufacturing equipment has been initiated. This initiative provides an 

integrated platform to simplify and standardize the collection of data across disparate systems, 

sensors and applications that the Bureau uses in manufacturing. 

The age of BEP’s Washington, DC facility poses some infrastructure challenges. Based on an 

earlier condition assessment, it was estimated that an investment of $250-$500 million would be 

needed to upgrade the Washington, DC main and annex buildings over the next 10 years. A 

feasibility study on the condition of the Washington DC facility was completed at the end of July 

2010, and is currently under executive review. The outcome will allow BEP and the Department 

of the Treasury to strategically address facility issues going forward.

During the past several years the Bureau has streamlined its organization and has redeployed 

employees in overstaffed areas by matching employee competencies with organizational needs 

and expanding opportunities for cross-training, detail assignments and reassignment. BEP’s 

intent is to optimize human resource utilization, as it reduces staffing levels to reflect decreasing 

demand for currency notes and the impact of increased productivity from new equipment and 

improved work practices. These efforts have improved efficiency, reduced response time, and 

facilitated currency redesign efforts. Although some efficiencies have been gained from the 

procurement of human resource and acquisition support services from the Bureau of Public 

Debt’s Administrative Resource Center (ARC) for BEP’s Fort Worth, Texas manufacturing 

facility, to date BEP has not realized any cost savings from this initiative. The Bureau will 

expand the scope of its Inter-Agency Agreement (IAA) with ARC when cost effective or when 

necessary for mission support.

Developments in image inspection technology have led to the installation of sophisticated 

inspection systems that BEP uses in its currency manufacturing processes. These systems use a 

proprietary software package to provide real time inspection of printed work. The Bureau’s 

investment in automated inspection systems has proven to be more cost effective than the system 

it replaced. It has also afforded BEP some flexibility in redeploying resources to other areas 

while enhancing its capability of delivering a high quality product.

BEP’s success would not be possible without the contributions of its people. The Bureau 

remains strongly committed to the development of its workforce through an array of career 

development programs tailored to the demand and skill requirements of a high-technology 

workplace. In FY 2012, BEP plans to focus on talent management that will enhance the 

effectiveness of recruitment and retention programs. BEP will also promote a continuous 

learning environment to develop employees and leaders at all organizational levels and foster a 

high level of individual and collective competence. BEP will also continue to foster labormanagement coalitions to maintain a cooperative relationship between management and the 

Bureau’s 15 unions (representing 19 bargaining units) in order to support a dynamic and 

progressive workplace for employees. Strategic investments in people and technology will 

continue to be critical in maintaining the Bureau’s status as a world-class securities 

manufacturer.
BEP - 7

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Bureau of Engraving and Printing FTE Amount

FY 2010 Actual 1,889 $616,000

FY 2011 Estimated 1,950 $588,000

Changes to Base:

Maintaining Current Levels (MCLs): - $4,850

Maintain Current Levels - $4,850

Efficiencies, Savings & Base Reductions: (25) ($11,800)

Energy Savings - ($2,200)

IT Process Streamlining - ($200)

Improved Business Practices (15) ($5,000)

Replace Mainframe - ($2,400)

Spoilage Reduction Savings - ($1,000)

Visual Inspection Systems (10) ($1,000)

Subtotal FY 2012 Changes to Base (25) ($6,950)

Total FY 2012 Base 1,925 $581,050

Program Changes:

Program Increases: - $1,000

R&D Equipment - Tactile Features - $1,000

Subtotal FY 2012 Program Changes - $1,000

Total FY 2012 Estimated 1,925 $582,050

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$4,850,000 / +0 FTE

Maintain Current Levels +$4,850,000 / +0 FTE 

Funds are required for inflation adjustments in non-labor expenses such as rent adjustments, 

postage, raw materials and inventories, supplies and equipment, health benefits and the increase 

in Federal Employee Retirement System participation. No inflation adjustment is requested for 

pay in FY 2012.

Efficiencies, Savings & Base Reductions ..............................................-$11,800,000 / -25 FTE

Energy Savings -$2,200,000 / +0 FTE 

Energy Savings - improvements in energy efficiency through replacement and/or upgrade of 

older assets with more energy efficient and environmentally responsible assets.

IT Process Streamlining -$200,000 / +0 FTE 

Savings from data center efficiency and consolidation, increased server virtualization, and 

decreased energy usage and IT operation costs. 

Improved Business Practices -$5,000,000 / -15 FTE 

Improved Business Practices - Current manual administrative processes will be eliminated with 

the completion of BEP’s Manufacturing Support Suite. Reductions of 25 FTE will be achieved 

through proposed buy-outs and attrition.
BEP - 8

Replace Mainframe -$2,400,000 / +0 FTE 

Replace BEP Mainframe computer with offsite Oracle On-Demand Computer Hosting Service -

Switching from BEP’s mainframe computer to Oracle On-Demand hosting service will result in 

operation and maintenance cost savings.

Spoilage Reduction Savings -$1,000,000 / +0 FTE 

Spoilage Reduction Savings - reduced material spoilage during currency note production process 

should enable reduced purchases of currency paper and other materials used in manufacturing 

currency notes.

Visual Inspection Systems -$1,000,000 / -10 FTE 

Productivity Improvements from new Visual Currency Inspection Systems - Completed 

installation of new Visual Currency Inspection System to improve inspection quality and 

automate work currently performed by FTEs, resulting in personnel cost savings. 

Program Increases ....................................................................................+$1,000,000 / +0 FTE

R&D Equipment - Tactile Features +$1,000,000 / +0 FTE 

Represents the purchase of lab equipment for research and development, needed to develop and 

test new tactile feature for the visually impaired in future currency redesigns.
BEP - 9

2.2 – Operating Levels Table

Dollars in Thousands

Bureau of Engraving and Printing FY 2010 Obligated FY 2011 Estimated FY 2012 Estimated

FTE 1,889 1,950 1,925

Object Classification

11.1 - Full-time permanent $152,000 $172,000 $179,000

11.3 - Other than full-time permanent $5,000 $5,000 $0

11.5 - Other personnel compensation $2,000 $2,000 $800

11.6 - Overtime $28,000 $8,000 $11,000

12 - Personnel benefits $49,000 $50,000 $50,000

21 - Travel and transportation of 

persons $2,000 $2,000 $2,000

22 - Transportation of things $300 $250 $250

23.1 - Rental payments to GSA $2,000 $2,000 $2,000

23.2 - Rental payments to others $1,000 $1,000 $1,000

23.3 - Communication, utilities, and 

misc charges $13,000 $15,000 $14,000

24 - Printing and reproduction $1,000 $1,000 $750

25.1 - Advisory and assistance 

services $4,000 $4,000 $4,000

25.2 - Other services $66,000 $45,000 $45,000

25.4 - Operation and maintenance of 

facilities $10,000 $10,000 $10,000

25.5 - Research and development 

contracts $4,700 $4,000 $3,500

25.7 - Operation and maintenance of 

equip $9,800 $9,000 $9,500

26 - Supplies and materials $182,000 $192,500 $189,000

31 - Equipment $84,000 $65,000 $60,000

42 - Insurance claims and indemnities $200 $250 $250

Total Budget Authority $616,000 $588,000 $582,050

Budget Activities

Manufacturing $555,000 $527,000 $582,050

Protection and Accountability of 

Assets $61,000 $61,000 $0

Total Budget Authority $616,000 $588,000 $582,050
BEP - 10

2.3 – Resource Detail Table

Dollars in Thousands

2B – Appropriations Language and Explanation of Changes 

The Bureau of Engraving and Printing receives no appropriated funds from Congress. 

2C – Legislative Proposals

BEP requests legislation to repeal that portion of 31 USC Sec. 5114(c), which limits a contract 

term for the manufacture of distinctive currency paper to four years. Proposed Amendment: 

Section 5114(c) of Title 31, United States Code (relating to engraving and printing currency and 

security documents), is amended by striking "for a period of not more than 4 years". By 

repealing this limit, the contract term for the manufacture of distinctive currency paper will 

match all other federal contracts which allow five years. This proposal may open up the supply 

of U.S. currency paper to competition by ending the four year contract limitation. Potential 

suppliers consider four years too short of a payback period for production of this unique product,

which GAO identified as a barrier to competition.

To prevent money laundering, BEP requests legislation to require, in the current fiscal year and 

hereafter, any person who forwards to the Bureau of Engraving and Printing (BEP) a mutilated 

paper currency claim equal to or exceeding $10,000 for redemption shall be required to provide 

BEP their taxpayer identifying number.

% Change

FY 2011

Description to FY 2012

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources: 

Revenue/Offsetting Collections:

Federal Reserve Notes $524,000 $609,000 $581,000 $575,050 -1.02%

Other Security Products 7,000 7,000 7,000 7,000 0.00%

Total Revenue/Offsetting Collections $531,000 $616,000 $588,000 $582,050 -1.01%

Unobligated balances, Start of year

 Recoveries of prior year obligations $0 $0 $0 $0 0.00%

 Net tranfers (includes capital transfers) $0 $0 $0 $0 0.00%

Total budgetary resources available $0 $0 $0 $0 0.00%

Expenses/Obligations:

Direct Manufacturing

Paper and Ink $163,000 $182,000 $192,500 $181,000 -5.97%

Direct Labor 750 90,000 725 94,500 725 94,500 725 94,050 0.00% -0.48%

Other Direct Mfg Costs 7,000 7,500 7,500 7,500 0.00%

Subtotal Direct Manufacturing Costs 260,000 284,000 294,500 282,550 -4.06%

 Indirect Manufacturing Support 1,194 271,000 1,164 332,000 1,225 293,500 1,200 299,500 -2.04% 2.04%

 Total Manufacturing Activity Costs 531,000 616,000 588,000 582,050 -1.01%

Total Expenses/Obligations 1,944 $531,000 1,889 $616,000 1,950 $588,000 1,925 $582,050 -1.28% -1.01%

Net Results $0 $0 $0 $0 0.00%

Federal Reserve Notes Manufactured (in Billions) 6.8 6.4 7.5 7.0 

Capital Investments $57,000 $84,000 $65,000 $60,000

Estimated

FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Estimated
BEP - 11

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Actual

FY 2011 

Estimated

FY 2012 

Estimated

% Change

FY10 to FY12

Commerce enabled through safe, secure U.S. notes and 

coins 616,000 588,000 582,050 -1.01%

Total $616,000 $588,000 $582,050 -1.01%

3A - Manufacturing ($582,050,000 from reimbursable programs): BEP manufactures high 

quality Federal Reserve notes and security documents that deter counterfeiting. The Bureau’s 

manufacturing activity supports Treasury’s strategic objective “Trust and confidence in U.S. 

currency worldwide”. 

BEP uses the latest technologies for security printing and processing, including automated 

inspection equipment used in the production of the nation’s currency. The Bureau’s production 

equipment is operated by highly skilled craft personnel who have developed unique skills 

through multi-year apprenticeship programs. 

The manufacturing of state-of-the-art currency deters counterfeiting, contributes to public 

confidence, and facilitates daily commerce ensuring seamless "business as usual" transitions as 

new currency designs are introduced to the public.

In FY 2010, the Bureau delivered 6.4 billion Federal Reserve Notes to the Federal Reserve 

Board. The estimated Federal Reserve Board’s order for FY 2011 and FY 2012 is 7.5 and 7.0 

billion notes, respectively.
BEP - 12

3.2.1 Manufacturing Budget and Performance Plan

Manufacturing Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $476,700 $469,000 $555,000 $527,000 $582,050

Total Resources $476,700 $469,000 $555,000 $527,000 $582,050

Budget Activity Total $476,700 $469,000 $555,000 $527,000 $582,050

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Manufacturing Costs For Currency (Dollar Costs Per Thousand 

Notes Produced) ($) (E)

29.47 32.77 44.85 48.0 48.0

Percent of Currency Notes Delivered to the Federal Reserve that 

Meet Customer Quality and Requirements (%) (Oe)

100.0 99.9 97.5 99.9 99.9

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance

Manufacturing Costs for Currency (dollar cost per 1,000 notes produced) is an indicator of 

manufacturing efficiency and effectiveness of program management. This measure is based on 

contracted price factors, and anticipated productivity improvements, as well as the mix of 

denominations ordered year to year. As more sophisticated counterfeit deterrent design features 

are produced, paper and ink costs increase, resulting in increased total manufacturing costs. 

Actual performance against standard depends on BEP’s ability to meet annual spoilage, 

efficiency, and capacity utilization goals. This measure has performed at or better than its annual 

targets for the past seven years.

Percent of currency notes delivered to the Federal Reserve that meet customer quality and 

requirements is a qualitative indicator reflecting the Bureau’s ability to provide a quality product. 

All notes delivered to the Federal Reserve go through rigorous quality inspections. These 

inspections ensure that all counterfeit deterrent features, both overt and covert, are functioning as 

designed.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
BEP - 13

3B - Protection and Accountability of Assets (No funding): The Department of the Treasury 

proposes to eliminate the Protection and Accountability budget activity, and consolidate it into 

the Manufacturing budget activity beginning in FY 2012. During the past eight years since the 

Protection and Accountability of Assets budget activity was created, the Department has 

determined that it fails to serve a meaningful purpose on a standalone basis and unnecessarily 

complicates budgetary and other financial reporting.

3.2.2 Protection and Accountability of Assets Budget and Performance Plan

Protection and Accountability of Assets Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $61,500 $62,000 $61,000 $61,000 $0

Total Resources $61,500 $62,000 $61,000 $61,000 $0

Budget Activity Total $61,500 $62,000 $61,000 $61,000 $0

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Currency Shipment Discrepancies Per Million Notes (%) (Ot) 0.01 0.0 0.0 0.01 0.01

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance

Currency Shipment Discrepancies is an indicator of the Bureau’s ability to provide effective 

product security and accountability. This measure refers to product overages or underages of as 

little as a single currency note in shipments of finished notes to the Federal Reserve Banks. This 

target is very difficult to achieve, given the number of currency notes produced and the speed at 

which the notes are processed. However, BEP continually strives to meet its long term goal of 

zero percent, and has been able to do so several times. For several years, this measure has had an 

annual target of .01 percent. The Bureau has been able to meet or exceed this target on a regular 

basis.

The measure security cost per 1000 notes delivered reflects the cost of providing product 

security. The measure is kept at the lowest level possible without compromising the security 

posture of the Bureau. BEP strives to reduce the target on an annual basis through a combination 

of competitive sourcing initiatives, leveraging of the best practices of other federal law 

enforcement agencies, targeted system investments, and improvements in facility design that 

incorporate security attributes. This measure is discontinued in FY 2010 because over time, the 

Department of the Treasury has found it to be of limited usefulness.
BEP - 14

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
BEP - 15

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

Regardless of mission, size or nature of business, all organizations must have three important 

ingredients to perform successfully: a viable and progressive operating plan; an accompanying 

organizational infrastructure to support the plan; and most important, the human capital to make 

it happen. The BEP’s Office of Human Resources (OHR) is the hub of the Bureau’s human 

capital program. OHR develops, administers and implements programs that support employee 

work life. Its role is integral to the Bureau’s ability to meet its mission. Consequently, human 

capital planning and strategic investments in employee development represent an important link 

in the Bureau’s, Department of the Treasury’s and federal government’s strategic business plan.

The BEP’s Human Capital Strategic Plan provides a window into the future by mapping how 

OHR will create an environment that supports, nurtures, and sustains a high caliber workforce 

that will be up to any challenge. That is why the theme for the Bureau’s plan is appropriately 

titled, “Turning Ideas into Action: A Blueprint for the Future.” 

The FY 2012 human capital strategy includes:

 Talent Management - Enhance the effectiveness of recruitment and retention programs to 

ensure the Bureau continues to meet its critical mission requirements and establishes itself as 

an employer of choice. It is a Bureau goal to move BEP into the top 50 percent of Best 

Places to Work in Government by the end of FY 2014.

 Workforce Planning and Deployment - Establish an infrastructure that ensures a ready, 

deployable and adaptable talent reservoir to meet the Bureau’s current and future challenges 

and ensures continuity of function.

 Continuous Learning Environment - Develop employees and leaders at all organizational 

levels to foster a high level of individual and collective competence.

 Results-Oriented Performance Culture - Implement a goal-based performance management 

system Bureau-wide that links individual and organizational results to the Bureau’s 

performance goals, and which is supported by a dynamic, continuous learning environment.

 Human Capital Business solutions - Develop and implement effective human capital 

processes, tools and technologies that will provide the highest quality programs, operational 

support and service delivery to customers.

 Labor-Management Coalitions - Maintain a cooperative relationship between management 

and the 15 Unions representing 19 bargaining units to support a dynamic and progressive 

workplace for employees to realize high levels of performance achievement and job 

satisfaction
BEP - 16

BEP’s workforce is aging. The average age of BEP staff in FY 2010 is 50.32 years of age. 

Within 10 years, 59 percent of the bureau's workforce will be eligible to retire. In addition, in 

2010 a total of 70 employees, or 3.6 percent of BEP’s total workforce is eligible for regular and 

early out retirement. Between 2011 and 2014, an additional 294 employees will be eligible for 

regular retirement. These figures do not include normal attrition rates as a result of resignations 

and terminations.

BEP staff levels have continued to decline through a less than average attrition rate but it is 

anticipated that BEP’s attrition rate will increase. During the period October 2009 to March 

2010, BEP witnessed a loss of 78 employees which represented a 3.9 percent reduction of staff 

for that period. BEP achieved this high percentage of reduction as the result of a targeted early 

retirement and voluntary separation incentive program.

BEP faces deficiencies in some human capital areas. It is particularly difficult to attract and 

retain qualified senior contract specialists, and to find printing and production specialists with 

new technology skills. On the other hand, BEP anticipates that some positions may have staffing 

surpluses in the future. 

BEP is planning for the loss of staff in mission critical occupations, frontline leadership, and 

Senior Executive Service (SES) positions. Departures of individuals in these positions could 

leave BEP vulnerable to key knowledge gaps. While 18 percent of BEP’s current staff is eligible 

for retirement by FY 2014, apprenticeship and trainee programs and on the job training are in 

place and will help to close this potential skills gap. Furthermore, services such as information 

technology, contracting, and human resources are provided by a mix of in-house and outsourced 

staff to provide for future flexibility.

Hiring Reform – BEP is working to improve communication with applicants to each vacancy 

announcement by issuing timely letters of receipt, status, and results. OHR assigns staffing 

specialists (a primary and a backup) to service the needs of each BEP division. This has resulted 

in improved OHR working relationships with hiring managers. OHR holds monthly meetings to 

discuss government-wide and agency specific hiring initiatives, current and upcoming hiring 

strategies and feedback OHR receives on the hiring process. 

Veterans’ Employment – BEP participates in targeted Veterans’ hiring initiatives such as the 

Department of the Treasury Veterans Employment Summit. All job vacancy announcements 

include a link to OPM’s Veterans Employment website. Additionally, BEP is continuing 

outreach efforts through programs such as Wounded Warriors.

Hiring of Individuals with Disabilities – BEP’s Office of Equal Opportunity & Diversity 

Management works with OHR to promote, identify and facilitate the hiring of individuals with 

disabilities. BEP has effectively used direct hiring authority to streamline the appointment of 

individuals with disabilities. OHR actively communicates with BEP hiring managers about this 

program’s usefulness when there is a need to quickly fill vacant positions.

Labor-Management Forums – BEP will establish Labor-Management Forums in accordance 

with Executive Order 13522 “Creating Labor-Management Forums to Improve Delivery of 
BEP - 17

Government Services”. This should provide a vehicle to help BEP improve low-scoring areas in 

BEP’s FY 2010 Employee Viewpoint Survey such as leadership and communication. BEP has 

also sent nine union leaders and eight management representatives to joint training held by the 

Federal Labor Relations Authority and Federal Mediation and Conciliation Service on 

implementation of Executive Order 13522.

Employee Engagement – During 2010 the Director of BEP began holding regularly scheduled 

“lunch time chats” open to all BEP employees in order to provide greater opportunities for 

employees to engage with management. BEP management has also revised its telework policy 

to encourage increased telework by BEP employees.

Women and Minorities – BEP strives to increase representation by women and minorities in 

higher level positions. The Bureau has developed a succession plan to address gaps in leadership 

skills and competencies. BEP reaches out to colleges, universities, communities, and 

organizations using recruitment strategies intended to attract a more diverse pool of potential job 

applicants. 

Federal Employee Viewpoint Survey – During 2010, BEP hired an independent contractor to 

conduct employee focus groups to collect further information on areas of employee concern 

identified through the 2010 Employee Viewpoint Survey. BEP management held town hall 

meetings to discuss the focus group findings and established priorities for follow up action. BEP 

is currently working on an updated action plan in response to the 2010 Employee Viewpoint 

Survey results.

Wellness – BEP offers a variety of health, wellness, and fitness programs to its employees. 

During FY 2011, BEP plans to establish a baseline measurement of employee participation in 

these programs. Based on the results, BEP plans to develop a comprehensive written Wellness 

program with targeted bureau-wide goals, including the establishment of employee participation 

incentives and a target rate of 75 percent employee participation. This program will be designed 

to be consistent with the “four pillars” of OPM’s “Healthier Feds” Initiative, and will be split 

into four general categories: Physical activity, prevention, healthy choices, and nutrition.
BEP - 18

4.1 – Summary of IT Resources Table

Dollars in Thousands

Information Technology Investments 

2010 FY 2011 FY 2012

% Change from % Change from % Change from

Major IT Investments/Funding Source Budget Activity Obligated FY09 to FY10 Estimated FY10 to FY11 Estimated FY11 to FY12

Manufacturing Support Suite Manufacturing $18,000 100.00% $1,100 -93.89% $1,100 0.00%

Subtotal, Major IT Investments $18,000 100.00% $1,100 -93.89% $1,100 0.00%

 

Non-Major IT Investments Technology1

Manufacturing Support Systems Manufacturing $1,710 6.88% $1,800 5.26% $380 -78.89%

Public Sales System Manufacturing $0 -100.00% $0 0.00% $0 0.00%

WebTA Manufacturing $20 -75.00% $100 400.00% $120 20.00%

Subtotal, Non-Major IT Investments $1,730 -37.77% $1,900 9.83% $500 -73.68%

Infrastructure Investments

BEP Mainframe & Serv. Services (for Consolidation) Manufacturing $21,800 263.33% $22,300 2.29% $17,200 -22.87%

BEP End User Sys. & Serv. (for Consolidation) Manufacturing $7,836 20.55% $7,850 0.18% $8,100 3.18%

BEP Telecommunications (for Consolidation) Manufacturing $1,090 62.69% $1,310 20.18% $1,340 2.29%

Subtotal, Infrastructure Investments $30,726 133.30% $31,460 2.39% $26,640 -15.32%

Enterprise Architecture N/A $0 0.00% $0 0.00% $0 0.00%

Subtotal, Enterprise Architecture Investments $0 0.00% $0 0.00% $0 0.00%

IT Investments $50,456 216.34% $34,460 -31.70% $28,240 -18.05%

Note1: In FY 2005 and prior years, costs for these systems were included in BEP's Infrastructure and Office Automation programs. 

Note2: Infrastructure funding is consolidated into the Treasury Departmental Integrated IT Infrastructure Exhibit 300.
BEP - 19

4B – Information Technology Strategy

BEP’s information technology (IT) and IT-embedded investments (i.e. sophisticated 

manufacturing and inspection equipment) are fully aligned with the Department of the 

Treasury’s and BEP’s Strategic Plans and goals to support the technical development and 

manufacturing of Federal Reserve notes. The Bureau implements and complies with statutory 

and regulatory requirements.

BEP participates as a partner in significant Treasury-wide enterprise level investments such as 

TNet (a Department-wide network to allow bureaus to leverage shared services), Homeland 

Security Presidential Directive-12, HRConnect (a Human Resources Line of Business service 

provider) and the Treasury Learning Management System (TLMS).

BEP’s IT portfolio includes the estimated $18 million cost to implement the Oracle eBusiness 

integrated manufacturing suite which will run at the Oracle Corporation’s “Federal on Demand” 

Shared Service Center in Austin, Texas. After implementation, BEP anticipates annual operating 

and maintenance cost savings of $2.4M compared to continued usage of the current BEPoperated mainframe. Due to this modernization, BEP anticipates productivity improvements of 

five percent by revising work practices in administrative and support areas for a savings of an 

additional $5M annually. This savings estimate was developed as a result of BEP’s discussion 

with other manufacturing entities that implemented the Oracle E-Business Suite, reviewing best 

practices supported by the software, and completing an initial requirements definition process.

Mint - 1

Overview

Mission Statement

The mission of the United States Mint is to manufacture and distribute circulating coins, precious 

metal and collectible coins, and national medals to meet the needs of the United States.

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012 Change FY10 to FY12

Actual Estimated Estimated $ Change % Change

 Manufacturing $3,602,988 $2,457,862 $2,515,589 ($1,087,399) (30.2%)

 Protection $43,979 $51,016 $0 ($43,979) (100.0%)

Total Operating Resources $3,646,967 $2,508,878 $2,515,589 ($1,131,378) (31.0%)

Capital Investments $23,794 $30,830 $30,296 $6,502 27.3%

Total Resources $3,670,761 $2,539,708 $2,545,885 ($1,124,876) (30.6%)

Total FTE 1,778 1,873 1,873 95 5.3%

The Department of the Treasury is eliminating the Protection budget activity and consolidating it into the 

Manufacturing budget activity beginning in FY 2012.

FY 2012 Priorities

 Circulating - Efficiently and effectively produce and distribute approximately 9.6 billion 

circulating coins in FY 2012 to meet the needs of commerce, an important strategic objective 

for the Department of the Treasury. Honor national parks and other national sites through 

effective administration of the United States Mint America the Beautiful Quarters Program in 

compliance with the America’s Beautiful National Parks Quarter Dollar Coin Act of 2008. 

 Bullion - Prepare and distribute bullion coins while employing precious metal purchasing 

strategies that minimize or eliminate the financial risk that can arise from adverse market 

price fluctuations. 

 Numismatic - Prepare and distribute numismatic products in sufficient quantities to make 

them accessible, available, and affordable to people who choose to purchase them. Design, 

strike and prepare for presentation Congressional gold medals and commemorative coins as 

required by law.

 Protection - Continue to secure over $320 billion in market value of the nation’s gold 

reserves, silver and other assets.
Mint - 2

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

1B – Program History and Future Outlook ................................................................................. 5

1C – Industry Outlook................................................................................................................. 8

Section 2 – Budget Adjustments and Appropriation Language............................................... 9

2.1 – Budget Adjustments Table ................................................................................................. 9

2A – Budget Increases and Decreases Description..................................................................... 9

2.2 – Operating Levels Table .................................................................................................... 11

2.3 – Resource Detail Table ...................................................................................................... 12

2B – Appropriations Language and Explanation of Changes................................................... 13

2C – Legislative Proposals........................................................................................................ 13

Section 3 – Budget and Performance Plan ............................................................................... 14

3.1 – Budget by Strategic Outcome .......................................................................................... 14

3.2.1 Manufacturing Budget and Performance Plan ................................................................. 16

3.2.2 Protection Budget and Performance Plan......................................................................... 18

Section 4 – Supporting Materials .............................................................................................. 19

4A – Human Capital Strategy Description................................................................................ 19

4.1 – Summary of IT Resources Table...................................................................................... 22

4B – Information Technology Strategy..................................................................................... 23

Capital Investments................................................................................................................... 24
Mint - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The United States Mint supports the Department of the Treasury’s strategic objective to promote 

trust and confidence in U.S. currency worldwide by enabling commerce through safe, secure 

U.S. notes and coins. To do this, the United States Mint manufactures and delivers domestic 

circulating coinage, bullion coin products, numismatic coinage and national medals. The United 

States Mint provides security for assets, including the government’s reserves of gold bullion, 

silver bullion, coins and coinage metals.

The United States Mint is the world’s largest coin manufacturer with operations in California, 

Colorado, Kentucky, New York, Pennsylvania and Washington, D.C. The United States Mint is 

committed to achieving efficient operations and providing value to the American people. Its 

vision is “to be recognized as the finest mint organization in the world, through excellence in our 

people, products, customer service and workplace.” 

Priorities

The priorities for the United States Mint are organized around three primary responsibilities: 

enabling commerce by minting and issuing circulating coinage; manufacturing, marketing and 

selling bullion products; and manufacturing, marketing and selling numismatic products. The 

United States Mint is also responsible for protecting and safeguarding the Nation’s gold reserves, 

silver and other assets held in United States Mint custody.

During its annual strategic planning cycle, the United States Mint establishes annual action 

items, and implements work plans to make continuous progress in achieving objectives and 

goals. This approach allows budgets, employees’ work objectives, and performance plans to be 

linked to desired outcomes. Employing this strategic framework, the United States Mint gauges

its progress more effectively and communicates the results to the American public. Strategic 

priorities include multi-year initiatives to ensure long-term operational goals are efficiently and 

effectively achieved. The United States Mint’s strategic priorities for FY 2012 include 

implementation of employee development training to further develop employee skills while also 

appropriately rewarding individual and collective accomplishments.

 

Circulating

The United States Mint is the Nation’s sole manufacturer of legal tender coinage. The efficient 

and effective production and distribution of circulating coinage for the Nation to conduct trade 

and commerce is the United States Mint’s highest priority.

In April 2010, the United States Mint launched the America the Beautiful Quarters Program, a 

12-year initiative to honor national parks and other national sites from all 50 states, the District 

of Columbia and U.S. territories. In accordance with the America’s Beautiful National Parks 

Quarter Dollar Coin Act of 2008 (P. L. 110-456), the United States Mint will issue five quarters 

each year with different national sites depicted on the reverse, in the order which the selected 

locations were first established as national sites. The United States Mint is committed to 
Mint - 4

effective administration of the America the Beautiful Quarters Program with the goal of 

generating similar results to its successful predecessor, the 50 State Quarters®Program.

Bullion

The United States Mint, the world’s largest producer of gold and silver bullion coins, is 

committed to producing and distributing bullion coins and employing precious metal purchasing 

strategies that minimize or eliminate the financial risk that can arise from adverse market price 

fluctuations. In particular, gold prices have steadily climbed over time, recently peaking at over 

$1,400 per ounce. This reflects the volatility of precious metal prices, which tend to rise during 

unstable economic conditions, and decline in steadier, healthier economic environments. 

Numismatic

The United States Mint prepares and distributes numismatic products for collectors and other 

members of the public who desire high-quality versions of the Nation’s coinage. Making

numismatic products accessible, available, and affordable to people who choose to purchase 

them is the highest priority of the United States Mint’s numismatic operations. 

As required by legislation, the United States Mint designs, strikes and prepares for presentation 

Congressional gold medals and commemorative coins to officially honor people, places and 

events. In FY 2012, the United States Mint will produce the United States Army 

Commemorative Coin (P.L. 110-450).

Going Green

Producing circulating, bullion, and numismatic coins and medals is an energy intensive process. 

The United States Mint is in full support of the Department of the Treasury’s commitment to 

comply with environmental and energy statutes, regulations, and executive orders. Accordingly, 

the United States Mint plans the following “Green” initiatives: 

 Comprehensive energy audits and retro-commissioning of its manufacturing facilities;

 Energy reduction projects;

 Increased use of renewable energy where possible; and 

 Undertaking Leadership in Energy and Environmental Design (LEED) and Energy Star 

certification for leased building and owned property where feasible.

The United States Mint headquarters in Washington, D.C. is working to achieve Energy Star

Certification. By making small changes like replacing light switches with motion sensors and 

converting to automatic paper towel dispensers (which halved paper towel usage), the 

headquarters building is experiencing significant savings. The headquarters building’s cleaning 

contractor only uses “green” materials (such as recycled paper products and environmentally 

friendly cleaning products), and its construction contractors are required to use green products 

when feasible. By adding weather stripping, insulation and energy efficient light bulbs, the 

United States Mint saves money and is reducing its carbon footprint. In FY 2010, the 

headquarters building total savings from “Green” initiatives totaled $196,000.
Mint - 5

The United States Mint is making a concerted effort to convert its Denver facility to greener 

energy by contracting with an energy provider that employs wind and solar energy rather than 

fossil fuels. When fully implemented, this 100 percent renewable energy purchase is targeted to 

reduce greenhouse gas (GHG) emissions by 14.72 percent.

The Denver and Philadelphia field sites are implementing an energy retrofit to install low 

pressure steam boilers. These are targeted to reduce costs and provide cleaner energy output. 

Conversion from purchased steam to site generated steam reduces GHG emissions by 12.23 

percent.

After completing a study of the West Point facility, the United States Mint is working to bring 

the West Point building into compliance with LEED certification standards. The LEED system 

helps building owners measure operations, improvements and maintenance on a consistent scale, 

with the goal of maximizing operational efficiency while minimizing environmental impacts. 

LEED standards also address whole-building cleaning and maintenance issues (including 

chemical use), recycling programs, exterior maintenance programs and systems upgrades. 

1B – Program History and Future Outlook

Since FY 1996, the United States Mint has operated under the United States Mint Public 

Enterprise Fund (PEF). As authorized by Public Law 104-52 (codified at 31 U.S.C. § 5136), the 

PEF eliminates the need for appropriations. Proceeds from the sales of circulating coins to the 

Federal Reserve Banks (FRB), bullion coins to authorized purchasers, and numismatic items to 

the public are paid into the PEF, providing a continuous source of funding. All operating 

expenses and capital investments incurred for the United States Mint’s operations and programs 

are paid out of the PEF. By law, all funds in the PEF are available without fiscal year limitation. 

Revenues over and above costs are transferred to the United States Treasury General Fund as 

off-budget and on-budget receipts. Off-budget receipts consist of seigniorage, the net return 

from circulating operations, which in the federal budget is used to reduce needed borrowing by 

the government, resulting in a reduction in interest on the federal debt from the borrowing it 

displaces. The net return from bullion and numismatic program operations are recorded as onbudget receipts in the federal budget, and are used to fund Federal Government operations and 

programs.

The United States Mint’s budget receipts and outlays reflect the demand for and sales of 

circulating, bullion and numismatic coin products. In accordance with the PEF legislation, 

proceeds from sales provide the United States Mint’s funding source, fully covering budget 

outlays, which adjust as the necessary resources are engaged to fulfill prevailing demand. The 

vast majority (approximately 88 percent in FY 2010) of budget outlays are for procurement of 

metals and materials for conversion into finished goods. Accordingly, the value of each fiscal 

year’s budget outlays principally reflects the production volumes that correspond to prevailing 

demand as well as prevailing raw material purchase costs driven by prices on open commodities 

markets. The economic environment can significantly impact the United States Mint’s budget 

outlays by affecting these two external factors. 

Circulating: Beginning in FY 2009, slowing economic activity considerably reduced demand for 

circulating coins. Commercial banks and other financial institutions curtailed orders for coins 
Mint - 6

and returned excess coins to the FRB. The FRB decreased orders for newly minted coins in 

response to these conditions. As a result, circulating coin volumes fell sharply in FY 2009 and 

remained low in the first half of FY 2010. In response, the United States Mint opted not to 

renew appointments for temporary personnel and instituted a hiring freeze which resulted in a 

reduction of 53 personnel through attrition and approximately $5 million in cost savings. 

However, reductions in labor expenses only slightly offset rising metal expenses. FRB orders 

rebounded in the second half of FY 2010 and as a result the United States Mint began rehiring 

some temporary employees to meet demand. Total circulating revenue declined 20.5 percent to 

$618.2 million in FY 2010 from $777.6 million in FY 2009. 

While circulating volumes and revenue declined, market prices for base metals (copper, nickel 

and zinc) climbed from five-year lows in FY 2009 to levels near the high price ranges 

experienced in FY 2007. This increased expenses for fabricated blanks and strip for circulating 

coin production, eroded seigniorage and drove up unit costs for all denominations. The average 

daily spot price for copper and zinc increased 56.9 percent and 52.4 percent, respectively, from 

FY 2009 to FY 2010. The average daily spot price for nickel rose 55.8 percent over the same 

time period. Seigniorage per dollar issued fell nearly 11 percent to $0.49 in FY 2010 from $0.55

in FY 2009. Base metal expenses and the mix of circulating coin denominations ordered by the 

FRB largely determine seigniorage per dollar issued. The total unit cost for all denominations 

increased from FY 2009. The unit cost to produce the one-cent coin (penny) and 5-cent coin 

(nickel) denominations were $0.0162 and $0.0603 respectively in FY 2009. In FY 2010, onecent coin unit costs were $0.0179 and the 5-cent coin unit costs were $0.0922, remaining above 

face value for the fifth consecutive fiscal year.

Improving economic conditions, particularly strong growth in retail sales activity, prompted 

stronger demand for circulating coins beginning in mid-FY 2010. Shipments to the FRB in the 

second half of FY 2010 were three times those in the first half of the fiscal year. While 

beneficial to the United States Mint’s financial position, such extreme shifts in orders for coins 

present challenges to the United States Mint’s circulating production operations. The United 

States Mint attempts to smooth out production as much as possible, but the volatile nature of 

coin demand often impedes level-loaded production. Over the past five fiscal years, monthly 

shipments have ranged from an average low of 650 million coins to an average high of nearly 1.5 

billion coins. This is equivalent to going from a 7.8 billion coin annual run rate to a nearly 17.6 

billion coin run rate. Fluctuations in coin demand are also unpredictable and can occur with little 

notice. This was particularly apparent in FY 2010 as the FRB’s 12-month orders forecast 

fluctuated between a low of 2.7 billion coins and a high of 7.3 billion coins. To mitigate 

volatility in coin demand and the burden it imposes on labor and equipment, the United States 

Mint is focused on developing a more flexible workforce, increasing automation, equipment 

standardization and application of Lean Manufacturing principles.

Based on the FY 2011 OMB President’s Budget estimates for economic indicators, the United 

States Mint projects circulating shipments to the FRB will increase slightly to 6.6 billion coins in 

FY 2011 and 9.6 billion coins in FY 2012. However, most of the volume increase will consist of 

lower denomination coins as the FRB has accumulated inventories of higher denominations 

sufficient to fulfill the majority of demand in upcoming years. This shift in the composition of 

circulating shipments toward lower denominations weakens the financial impact of improving 
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demand conditions because lower denominations generate less seigniorage. Higher penny and 

nickel volumes reduce seigniorage as these coins will continue to be manufactured at costs above 

face value. 

Metal market prices are expected to hold at higher levels as the global economy improves. A 

strategy to mitigate the challenge of rising metal prices is to change the composition of all 

circulating coinage to less expensive materials. Accordingly, as a result of the passage of The 

Coin Modernization, Oversight, and Continuity Act of 2010 (P.L. 111-302), the Department of 

the Treasury has been granted legislative authority to examine options for alternative materials 

that would ultimately result in significant taxpayer savings without compromising the utility of 

coins. This legislation authorizes the Secretary to conduct, explore, analyze, and recommend to 

Congress new, less expensive materials for all circulating coins. Specifically, the Secretary is 

granted authority to conduct research and development into new, less expensive materials based 

on factors that he determines to be appropriate. These factors include, but are not limited to, the 

physical, chemical, metallurgical and technical characteristics of the coins, as well as any other 

factors necessary to ensure coinage utility and integrity. 

Shipments of quarter and $1 coin denominations will remain at lower levels to support the 

America the Beautiful Quarters, Presidential $1 Coin and Native American $1 Coin programs. 

Even at relatively small quantities, shipments of the $1 coin highly influence total circulating 

revenue and seigniorage. The $1 coin generated 67 percent of total circulating revenue in FY 

2010. The United States Mint’s $1 Coin Direct Ship and Bulk Bag Programs contributed to 

these results by providing alternative channels for banks, small retailers and the public to obtain 

$1 coins. These two programs generated $92.8 million of revenue in FY 2010.

Bullion: In FY 2010, demand for the United States Mint’s gold and silver bullion coins reached a 

new high, surpassing the unprecedented demand of FY 2009. Bullion sales totaled 35.8 million 

ounces in FY 2010, up 29.7 percent from 27.6 million total ounces in FY 2009. The United 

States Mint achieved record sales by working extensively with suppliers to significantly expand 

precious metal planchet supply. Accordingly, bullion revenue reached a record high of $2,855.4

million, a $1,160.6 million (68.5 percent) increase over FY 2009 total bullion revenue of 

$1,694.8 million. Efficient use of production capacity allowed the United States Mint to achieve 

significant bullion production volume without incurring additional operating costs. The United 

States Mint expects demand for bullion coins to remain strong for a sustained period until 

economic conditions stabilize and investors are drawn toward alternative investments.

The United States Mint was mandated to mint and issue American Eagle gold and silver bullion 

coins in quantities sufficient to meet public demand. When demand soared to unprecedented 

levels, the bureau worked extensively with suppliers and maximized production capacity to 

fulfill this mandate. While enabling the United States Mint to achieve record bullion coin sales, 

these efforts negatively affected numismatic sales and customer satisfaction levels. To mitigate 

this challenge, the bureau sought and has been granted legislative authority through passage of 

The Coin Modernization, Oversight, and Continuity Act of 2010 (P.L. 111-302), which permits 

the Secretary of the Treasury to mint and issue proof and uncirculated versions of the American 

Eagle coins in qualities and quantities the Secretary determines are appropriate to meet demand. 
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Offering for sale the full range of numismatic products fosters the health of the marketplace for 

numismatic customers in the United States.

Numismatic: In FY 2010, numismatic revenue totaled $413.1 million, down 6 percent from 

$440.0 million in FY 2009. The slight decline in revenue reflects that fewer product lines were 

available for sale in each year. Additionally, poor economic conditions may have suppressed 

consumer spending on collectibles as sales of available products declined from prior years. 

Despite reduced revenue, numismatic program net income and seigniorage increased by more 

than 21 percent to $49.8 million in FY 2010 from $41.1 million in FY 2009. This growth 

resulted from a shift in sales toward high margin products.

1C – Industry Outlook

The United States Mint’s future outlook is impacted by a variety of factors including the price of 

metals, circulating coin demand, customers’ interest in numismatic and bullion products, and 

economic trends. The enactment of legislation in recent years has allowed the United States 

Mint to expand product lines in both numismatic and circulating segments. While sales of new 

and core recurring products continue, the United States Mint recognizes the need to continually 

improve its portfolio of products. This includes utilizing more efficient production capacity, 

developing additional production techniques and accommodating new designs and products, 

while analyzing the market and communicating with the public.

The United States Mint has established four strategic goals as its underlying foundation to 

address these challenges, today and into the future:

 Effectively met all circulating demand;

 Effectively managed bullion and numismatic programs;

 A safe, engaged, productive, and valued workforce;

 Leadership and organizational excellence.
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Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

United States Mint FTE Amount

FY 2010 Actual 1,778 $3,646,967

FY 2011 Estimated 1,873 $2,539,708

Changes to Base:

Maintaining Current Levels (MCLs): - $26,277

Maintain Current Levels - $26,277

Efficiencies, Savings & Base Reductions: - ($20,100)

Postpone Low Priority Capital Projects - ($12,900)

Procurement Efficiencies and IT Savings - ($7,200)

Subtotal FY 2012 Changes to Base - $6,177

Total FY 2012 Base 1,873 $2,545,885

Total FY 2012 Estimated 1,873 $2,545,885

Totals include capital investments since a FY 2012 savings proposal involves capital investment savings.

2A – Budget Increases and Decreases Description

 

Maintaining Current Levels (MCLs) ....................................................+$26,277,000 / +0 FTE

Maintain Current Levels +$26,277,000 / +0 FTE 

Funds are required for inflation adjustments in non-labor expenses such as rent adjustments, 

postage, raw materials and inventories, supplies and equipment, health benefits and the increase 

in Federal Employee Retirement System participation. No inflation adjustment is requested for 

pay in FY 2012.

Efficiencies, Savings & Base Reductions ...............................................-$20,100,000 / +0 FTE

The United States Mint is committed to minimizing costs while keeping product quality and 

customer service at peak levels. To support efforts to reduce operational funding requirements, 

the United States Mint puts forward the following cost savings proposals:

Capital Projects Postponed to Out-years -$12,900,000 / +0 FTE 

The United States Mint reduced its FY 2012 capital budget $12.9 million by delaying several 

capital projects to out-years. The agency’s capital plan includes funding for various equipment 

replacement, building maintenance and safety projects. The plans are developed based on 

factors such as equipment lifecycle, production needs and facility assessments. Careful 

consideration is given to each project and projects are then prioritized. The capital projects given 

a lesser priority were identified as those to be postponed to subsequent years with little or no 

impact to equipment life or employee safety. Examples of projects of a lesser priority that were 

removed from FY 2012 include electrical switchboard upgrades at San Francisco and pedestrian 

and parking improvements at West Point.

Contract Savings – Procurement/IT -$7,200,000 / +0 FTE 

Procurement Savings: In FY 2010, the United States Mint achieved $47.6 million in non-metal 

procurement savings through acquisition improvement plans. The United States Mint will 

continue efforts to achieve procurement savings by combining multiple contracts, renegotiating 

current contract terms and ensuring greater competition where possible through FY 2012. 
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Through these efforts, United States Mint expects to achieve an estimated $5.7 million in 

procurement savings in FY 2012.

Information Technology (IT) Savings: The United States Mint has employed improved 

Information Technology strategies that are yielding cost savings in IT consulting 

services/systems support services, IT maintenance contract consolidation, and IT 

telecommunications consolidation. These initiatives are projected to save over $1.5 million in 

FY 2012.

Efficiency Savings / 

Productivity Improvements

Brief Description FY 2012 

Projected Savings 

Efficiency Savings Capital projects postponed to outyears $12.9 million

Efficiency Savings Contract Savings - Procurement/IT $7.2 million
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2.2 – Operating Levels Table

Dollars in Thousands

United States Mint FY 2010 Obligated FY 2011 Estimated FY 2012 Estimated

FTE 1,778 1,873 1,873

Object Classification

11.1 - Full-time permanent $141,336 $146,405 $146,405

11.1 - Other than Full-Time Permanent $741 $781 $781

11.5 - Other personnel compensation $12,342 $11,132 $11,132

11.9 - Personnel Compensation (Total) $154,419 $158,318 $158,318

12 - Personnel benefits $43,564 $44,661 $44,661

13 - Benefits for former personnel $800 $1,050 $1,050

21 - Travel and transportation of persons $2,648 $3,630 $3,703

22 - Transportation of things $29,889 $33,310 $33,976

23.1 - Rental payments to GSA $389 $394 $402

23.2 - Rental payments to others $22,170 $26,634 $27,167

23.3 - Communication, utilities, and misc 

charges $13,188 $11,392 $11,620

24 - Printing and reproduction $1,941 $2,424 $2,472

25.1 - Advisory and assistance services $49,009 $47,081 $48,023

25.2 - Other services $59,081 $60,516 $61,726

25.3 - Other purchases of goods and 

services from Govt. accounts $23,680 $21,994 $22,434

25.5 - Research and development 

contracts $2,500 $2,260 $2,305

25.7 - Operation and maintenance of 

equip $9,311 $11,295 $11,521

26 - Supplies and materials $10,663 $16,454 $16,783

26.7 - Raw Materials $3,221,125 $2,064,623 $2,066,759

31 - Equipment $2,559 $2,835 $2,662

42 - Insurance claims and indemnities $31 $7 $7

Total Budget Authority $3,646,967 $2,508,878 $2,515,589

Capital Investments $23,794 $30,830 $30,296

Total Budget Authority including Capital $3,670,761 $2,539,708 $2,545,885

Budget Activities

Manufacturing $3,602,988 $2,457,862 $2,515,589

Protection $43,979 $51,016 $0

Total Budget Authority $3,646,967 $2,508,878 $2,515,589
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2.3 – Resource Detail Table

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Circulating $ 777,600 $ 618,200 $ 638,100 $ 787,300 23.4%

Numismatic/Bullion $ 2,134,800 $ 3,268,500 $ 2,090,200 $ 1,958,400 -6.3%

Total Revenue / Offsetting Collections $ 2,912,400 $ 3,886,700 $ 2,728,300 $ 2,745,700 0.6%

 Unobligated balances, Start of year - - - - 0.0%

 Recoveries of prior year obligations - - - - 0.0%

 Net transfers (includes capital transfers) - - - - 0.0%

Total budgetary resources available $ 2,912,400 $ 3,886,700 $ 2,728,300 $ 2,745,700 0.6%

Expenses/Obligations

Circulating 671 $ 154,183 648 $ 439,488 693 $ 589,887 828 $ 612,067 19.5% 3.8%

Numismatic/Bullion 815 $ 2,061,000 792 $ 3,163,500 843 $ 1,867,975 1,045 $ 1,903,522 24.0% 1.9%

Protection 326 $ 43,318 338 $ 43,979 337 $ 51,016 - $ - -100.0% -100.0%

Total Expenses / Obligations 1,812 $ 2,258,501 1,778 $ 3,646,967 1,873 $ 2,508,878 1,873 $ 2,515,589 0.00% 0.3%

Net Operating Results $ 653,899 $ 239,733 $ 219,422 $ 230,111 4.9%

Capital Investments $ 23,996 $ 23,794 $ 30,830 $ 30,296 -1.7%

Coin Shipments (In Millions)

 Circulating:

One Cent 3,218 3,487 4,139 5,497

5-Cent 207 359 657 1,138

Dime 358 886 1,214 2,329

Quarter 965 253 250 250

Half-Dollar - - - -

Dollar 459 414 380 380

Total Circulating 5,207 5,399 6,640 9,594

to FY 2012

FY 2012 

Actual Actual Estimated Estimated

% Change

FY 2009 FY 2010 FY 2011 FY 2011
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2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of 

Changes

DEPARTMENT OF THE TREASURY

UNITED STATES MINT PUBLIC ENTERPRISE FUND

Federal Funds

Pursuant to section 5136 of title 31, United States Code, the 

United States Mint is provided funding through the United States 

Mint Public Enterprise Fund for costs associated with the 

production of circulating coins, numismatic coins, and protective 

services, including both operating expenses and capital 

investments. The aggregate amount of new liabilities and 

obligations incurred during fiscal year [2011] 2012 under such 

section 5136 for circulating coinage and protective service capital 

investments of the United States Mint shall not exceed 

[$25,000,000] $20,000,000.

2C – Legislative Proposals

Eliminate the 20 percent requirement in the Native American $1 Coin Act

This legislative proposal seeks to eliminate the requirement that the number of $1 coins minted 

and issued in a year with the Sacagawea-design on the obverse be not less than 20 percent of the 

total number of $1 coins minted and issued in a year. Proposed amendment: Section 5112(r) of 

title 31, United States Code, is amended by striking paragraph (5). Approval of this proposal 

would allow the United States Mint to mint and issue all $1 coins in amounts necessary to meet 

public demand for coins of each particular design. It would also eliminate the excessive expense 

of minting and issuing Native American $1 Coins in amounts that exceed the public demand for 

them.
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Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Actual

FY 2011 

Estimated

FY 2012 

Estimated

% Change

FY10 to FY12

Commerce enabled through safe, secure U.S. notes and 

coins 3,670,761 2,539,708 2,545,885 -30.6%

Total $3,670,761 $2,539,708 $2,545,885 -30.6%

Totals include capital investments since a FY 2012 savings proposal involves capital investment savings.

3A - Manufacturing ($2,515,589,000 from reimbursable programs, not including capital): 

The United States Mint manufactures and sells coin products. For budget reporting purposes, 

these products are grouped into two programs: Circulating Coinage and Numismatic Programs.

Circulating Coinage

The United States Mint enables commerce by minting and issuing circulating coinage to meet the 

needs of the United States. Circulating coinage includes the penny (one-cent), nickel (five-cent), 

dime (ten cent), quarter-dollar, half-dollar and dollar denominations. The United States Mint 

delivers the circulating coinage to the Federal Reserve Banks, at face value, for distribution as 

demanded by commerce.

The current FY 2012 budget estimate includes resource needs of $612.1 million to produce and 

ship 9.6 billion coins and generate receipts of $787.3 million in face value.

Beginning in 2010 through 2020, the United States Mint will mint and issue commemorative 

quarter-dollar coins honoring national parks and other national sites, in accordance with the 

America’s Beautiful National Parks Quarter Dollar Coin Act of 2008 (Public Law 110-456). 

This program honors national parks and sites in the order in which they were first established as 

a national park or site. Similar to the issuance of coins under the 50 State Quarters Program, 

quarter-dollar coins featuring five different coin designs will be issued each year of this program.

In 2011, the United States Mint will release quarters honoring Gettysburg National Military Park 

in Pennsylvania, Glacier National Park in Montana, Olympic National Park in Washington, 

Vicksburg National Military Park in Mississippi, and Chickasaw National Recreation Area in 

Oklahoma. In 2012, the United States Mint will release quarters honoring El Yunque National 

Forest in Puerto Rico, Chaco Culture National Historical Park in New Mexico, Acadia National 

Park in Maine, Hawaii Volcanoes National Park in Hawaii, and Denali National Park in Alaska. 
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Numismatic Program

For budget reporting purposes, the Numismatic program includes numismatic and bullion 

products. The current FY 2012 budget estimate for numismatic and bullion products includes 

resource needs of $1,903.5 million to generate $1,958.4 million in revenues from the sale of 

these products.

The United States Mint prepares and distributes numismatic products, including proof and 

uncirculated versions of coins, directly to the public. For some numismatic products, authorizing 

legislation specifies program requirements, such as design theme, mintage level and duration of 

product availability. Other programs are structured by law to grant the Secretary of the Treasury 

discretion in determining product specifications. The Numismatic Program includes the 

American Eagle Program, the American Buffalo Program, the America the Beautiful Program, 

the recurring product programs, commemorative coins, and medals.

Recurring numismatic product programs include high quality, specially presented products based 

on circulating coinage. These products include proof sets, uncirculated sets, quarter-dollar coin 

sets, and $1 Coin sets for the public. 

Commemorative coins are authorized by Congress to celebrate and honor American people, 

places, events and institutions. Each is minted and issued by the United States Mint in limited 

quantity and is available only for a limited time. Included in the price is a surcharge that is 

authorized to be paid to designated recipient organizations for projects that benefit the 

community. In FY 2012, the United States Mint will produce the United States Army 

Commemorative Coin (P.L. 110-450). Surcharges from the sale of each coin are authorized to be 

paid to the Army Historical Foundation to support the construction of the National Museum of 

the United States Army at Fort Belvoir, VA.

The United States Mint also produces bullion coins under American Eagle and American Buffalo 

Programs to fulfill investor demand. 

The American Eagle Program consists of the United States Mint’s premier collectible products. 

These coins contain platinum, gold, and silver and are issued in proof or uncirculated quality. 

Gold proof coins are issued with one-tenth, one-quarter, one-half or one ounce of gold content.

Gold uncirculated coins are issued with one ounce of gold content. Silver proof and uncirculated 

coins are issued with one ounce of silver content. Platinum proof coins are issued with one 

ounce of platinum content. 

Bullion coins are largely bought by precious metal dealers and sold to consumers who desire 

precious metals as part of an investment portfolio. The demand for bullion coins is greatly 

influenced by the performance of other investment options such as equities markets or currency 

markets and therefore is highly unpredictable. The content and purity of bullion coins are 

backed by the United States Government.
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3.2.1 Manufacturing Budget and Performance Plan

Manufacturing Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $2,014,698 $2,215,903 $3,602,988 $2,457,862 $2,515,589

Total Resources $2,014,698 $2,215,903 $3,602,988 $2,457,862 $2,515,589

Budget Activity Total $2,014,698 $2,215,903 $3,602,988 $2,457,862 $2,515,589

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Circulating On-Time Delivery N/A N/A 99.8 97.5 97.5

Customer Satisfaction Index (%) (Oe) 87.5 88.3 86.1 88.0 88.0

Numismatic Customer Base (Units)(Ot) 1.27 1.06 0.799 0.976 0.976

Safety Incident Recordable Rate N/A N/A 2.29 3.34 3.34

Seigniorage per Dollar Issued ($) (E) 0.55 0.55 0.49 0.41 0.41

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance

The United States Mint developed several key performance measures to gauge the progress of 

achieving each of its strategic goals. The following performance measures are monitored to 

assess the United States Mint’s performance for Manufacturing and Sales.

Customer Satisfaction Index (CSI)

A United States Mint contractor conducts a quarterly Customer Satisfaction Measure (CSM) 

Tracking Survey among a random sample of active customers. The CSM Survey is intended to 

capture customer satisfaction with the United States Mint’s performance as a coin supplier and 

the quality of specific products. The CSI is a single quantitative score of CSM Survey results. 

In FY 2010, the United States Mint’s results were 86.1 percent, below the target of 88 percent 

and down from the FY 2009 year-end result of 88.3 percent. Survey results indicate that

customer satisfaction declined largely because of the unavailability of American Eagle 

numismatic precious metal products as well as weakening satisfaction with the United States 

Mint’s communication with customers. In accordance with legislative mandates, the United 

States Mint suspended sales of these products in calendar year 2009 to allocate planchet supply 

to bullion coin production. CSI results are likely to improve upon the availability of these 

products for sale. The Coinage Modernization, Oversight and Continuity Act of 2010 (P. L. 111-

302) now permits the Secretary of the Treasury to mint and issue proof and uncirculated versions 

of the American Eagle coins in qualities and quantities the Secretary determines are appropriate 

to meet numismatic product demand even if all demand for bullion is not satisfied. Also, the 
Mint - 17

United States Mint has increased communication channels to communicate with customers in 

order to improve quality, consistency, timeliness and responsiveness to customer needs.

Numismatic Customer Base

The numismatic customer base consists of the total number of unique purchasers (in millions) 

with a purchase of at least one numismatic product during the fiscal year. The numismatic 

customer base measure provides information on the continued and new demand for numismatic 

products. The numismatic customer base totaled 798,515 in FY 2010, below the target of 

976,000. By the close of FY 2010, the United States Mint had sufficiently expanded gold and 

silver planchet supply to fulfill bullion demand and redirect a portion of blanks for numismatic 

products. Releasing popular gold and silver numismatic products is expected to improve 

customer retention and acquisition as well as customer satisfaction in FY 2011 and beyond. This 

measure is currently being reexamined for its usefulness.

Seigniorage per Dollar Issued

Seigniorage per dollar issued is the return to circulating operations, calculated as seigniorage 

divided by the total face value of circulated coinage shipped to Federal Reserve Banks. 

Seigniorage per $1 issued was $0.49 in FY 2010, below the performance target of $0.53. Base 

metal expenses and the mix of circulating coin ordered by the FRB largely determine seigniorage 

per dollar issued performance. To mitigate the challenge of rising metal prices, the United States 

Mint and the Department of the Treasury have been granted legislative authority to examine 

options for changing the composition of circulating coinage to less expensive materials. 

Circulating On-Time Delivery

On-time delivery to the Federal Reserve Banks (FRB) is the percentage of total scheduled orders 

shipped on time to the FRB. The United States Mint is responsible for providing the Nation’s 

coinage in sufficient quantity to meet the needs of commerce. To accomplish this mission, the 

United States Mint must supply coinage in the quantities and timelines specified by the FRB. 

The FRB is then responsible for distributing coinage to the commercial banking sector. The 

United States Mint’s shipped 99.8 percent of scheduled orders on time to the FRB in FY 2010. 

This was a baseline year for the performance measure, thus there was no target in FY 2010. The 

bureau continuously monitors the circulating supply chain to ensure circulating coins are timely 

and accurately provided to the FRB. This measure is currently being reexamined for its 

usefulness.

Safety Incident Recordable Rate

The Safety incident recordable rate is the number of injuries and illnesses meeting the 

Occupational Safety and Health Administration recording criteria per 100 full-time workers. It 

measures the occurrence of work-related incidents involving death, lost time and restricted work, 

loss of consciousness, and medical treatment. This definition follows Part 1904 of Title 29, Code 

of Federal Register (29 CFR 1904). The safety incident recordable rate fell to 2.29 in FY 2010, 

below the target of 3.86. The United States Mint will continue to place a high priority on 

ensuring employee safety.
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3B - Protection (No funding): 

The Department of the Treasury is eliminating the Protection budget activity, and consolidating 

it into the Manufacturing budget activity beginning in FY 2012. During the past 13 years since 

the Protection budget activity was created, the Department has determined that it fails to serve a 

meaningful purpose on a standalone basis and unnecessarily complicates budgetary and other 

financial reporting.

3.2.2 Protection Budget and Performance Plan

Protection Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $42,598 $43,318 $43,979 $51,016 $0

Total Resources $42,598 $43,318 $43,979 $51,016 $0

Budget Activity Total $42,598 $43,318 $43,979 $51,016 $0

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Protection Cost per Square Foot ($)(E) 31.76 31.57 32.26 DISC DISC

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

Description of Performance

Protection Cost per Square Foot

Protection cost per square foot is the Protection Department’s total operating cost divided by the 

area of usable space of the United States Mint. Usable space is defined as 90 percent of total 

square footage. Operating costs exclude depreciation. Total square footage of usable space is 

relatively constant and only changes with major events such as the addition or removal of a 

facility. The measure indicates the Protection Department’s cost efficiency in safeguarding the 

United States Mint facilities, employees and over $320 billion in market value of the nation’s 

gold reserves, silver and other assets. Protection cost per square foot was $32.26 in FY 2010, 

$0.51 above the target of $31.75. This measure is discontinued in FY 2011 because it has proven 

to have limited usefulness. 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
Mint - 19

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

In response to the President’s government-wide focus on human capital strategies and 

procedures, the United States Mint’s Human Capital Strategy addresses various components, 

including improving employee engagement, current and future staffing issues and wellness 

requirements. The United States Mint is creating goals and objectives for these initiatives in 

close coordination with the Department of the Treasury’s Office of the Deputy Assistant 

Secretary for Human Resources and Chief Human Capital Officer (DASHR/CHCO), and with its 

shared human resources (HR) service provider, the Bureau of Public Debt (BPD) Administrative 

Resource Center (ARC). 

Hiring Reform

The United States Mint fully supports the Administration’s hiring reform goals and is actively 

working to streamline the recruitment and selection process to recruit and retain highly qualified 

individuals. As the United States Mint implements changes in support of those goals, it will 

continue to evaluate a variety of metrics and adjust implementation plans as necessary. The 

United States Mint will continue to increase consistency in the hiring and selection process 

across field sites, and provide training for hiring managers.

Hiring of Individuals with Disabilities

The United States Mint is committed to recruiting, hiring, and retaining talented individuals with 

disabilities and targeted disabilities. The United States Mint is also committed to increasing 

representation of people with disabilities in all levels of its workforce. To achieve this goal, the 

United States Mint plans to:

1. Train managers and supervisors on the Schedule A hiring authority for persons with 

disabilities. 

2. Issue a memorandum from the Director or Deputy Director to managers and supervisors, 

encouraging them to increase the use of Schedule A in filling vacancies. 

3. Participate in a minimum of one job fair that has a focus on employment of people with 

disabilities.

Based upon the new Presidential Executive Order (13548) dated July 26, 2010, the United States 

Mint plans to implement requirements as appropriate to achieve a model workplace.
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Veterans’ Employment

The United States Mint's FY 2010 Disabled Veterans Affirmative Action Plan (DVAAP) 

establishes a list of resources to recruit disabled veterans and attend career fairs and similar 

events focused on recruitment of disabled veterans. The United States Mint has also 

taken advantage of the Department of Defense “Operation Warfighter” Program to 

provide service members with volunteer work assignments. The United States Mint has a 

DVAAP Program Manager and Selective Placement Coordinator who provide outreach for 

disabled veterans. As a result of these efforts 36 percent of all individuals hired during FY 2010 

had veteran’s preference. 

Improving Employee Engagement and Satisfaction

Employee satisfaction is critical to the execution of circulating, bullion and numismatic 

operations and the overall success of the United States Mint. Recent external and internal 

surveys indicate that employees perceive significant deficiencies in the United States Mint’s 

work environment and leadership. To counter declining employee satisfaction, the United States 

Mint has implemented a comprehensive human capital plan that encompasses the root causes for 

employee dissatisfaction; enhancing leadership skills through required annual training programs; 

establishment of a “Total Rewards System” to institute performance as the driving force in 

determining rewards and recognition; formation of employee engagement teams to identify, 

address, and remedy sources of dissatisfaction within workgroups; proactive emphasis on the 

communication of goals, priorities and results throughout the organization; and establishment of 

a coaching culture to improve performance and employee development, to create high-trust work 

relationships and continually improve job performance. 

The United States Mint measures employee satisfaction by surveying its workforce. Typically, 

employees participate in three surveys each year: The Employee Viewpoint Survey (EVS) 

administered by the Office of Personnel Management, and two Employee Pulse-Check Surveys, 

which are internally administered by the United States Mint. 

All of the United States Mint’s FY 2009 survey results identified areas for improvement, 

including employee engagement and employee satisfaction. Employee satisfaction and positive 

perceptions of the workplace varied greatly across departments and locations.

To address these areas, the United States Mint has embarked on a process to involve more 

employees with identification of concerns and development of ways to remedy the three major 

concerns identified by the surveys: Communication between employees, supervisors and 

management; recognition for a job well done; and teamwork. The “Top Three Engagement 

Process” was created to address these concerns. The process will foster employee-driven 

solutions and improvements in the three areas through employee teams gathering suggestions 

and feedback from coworkers and developing plans of action, in conjunction with management, 

to improve the workplace at headquarters and field sites. Best practices and most effective 

tactics will be shared throughout the United States Mint.
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To improve communication, the United States Mint’s Director and Deputy Director conduct 

open question-and-answer sessions during quarterly “town hall” meetings. The Deputy Director 

holds “stand-up” meetings with the many department workgroups at headquarters and each shift 

at the manufacturing facilities to share organizational progress and challenges. Periodic 

newsletters communicate news topics to employees, and supervisors are required to hold regular 

staff meetings and conduct individual “coaching” sessions every 4-5 weeks with each employee 

to further promote communication and transparency.

A “Total Rewards System” for all employees is being developed to further improve employee 

engagement and satisfaction. In the past, the United States Mint relied on its “Goalsharing”

Program to recognize achievement. While the Goalsharing Program proved effective, it only 

partially addressed employee recognition. To effect more comprehensive employee recognition, 

the United States Mint management, employees and its labor union are working together to 

design and implement a Total Rewards System which will provide managers with multiple tools 

for attracting, motivating and retaining its employees. These tools will include both monetary 

and non-monetary incentives, and are intended to reward employees’ time, talents and efforts to 

help achieve business results. 

Improving Employee Wellness

As a manufacturing entity, the United States Mint focuses on ensuring employee wellness and 

safety. From 2005 through 2008, The United States Mint’s recordable accident case rate 

increased each year. To reverse this upward trend, in FY 2009 the United States Mint began 

emphasizing safety performance and communicating preventative information at each facility. 

As a result the United States Mint reduced its number of work-related injuries or illnesses and 

the number of lost workdays. Lost time accidents fell by 45 percent from 20 cases in FY 2008 to 

13 in FY 2009 to 11 in FY 2010. As a result of these efforts, the safety incident recordable rate 

achieved was 2.29 in FY 2010, notably better than the FY 2010 performance target of 3.86. The 

United States Mint also initiated processes to control exposure to severe hazards and conducted 

extensive safety compliance audits. The United States Mint’s senior leadership is committed to 

increased employee participation in telework, work/life balance and wellness programs.

Labor Management Forums

Some provisions of the current United States Mint collective bargaining agreement are being 

renegotiated. Once these are resolved, United States Mint management will work with the labor 

union to establish a United States Mint labor-management forum.
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4.1 – Summary of IT Resources Table

Dollars in Thousands

Information Technology Investments

FY 2010

Major IT Investments / Funding Source Budget Activity Obligations

FY 2011 

Estimated

 FY 2012 

Estimated

Retail Sales System Manufacturing $10,453 -41.2% $14,506 38.8% $14,520 0.1%

Subtotal, Major IT Investments $10,453 -41.2% $14,506 38.8% $14,520 0.1%

Non-Major IT Investments $2,570 -16.2% $5,428 111.2% $4,700 -13.4%

Infrastructure Investments* $34,734 -15.8% $51,633 48.7% $54,823 6.2%

Enterprise Architecture $1,134 -38.4% $1,093 -3.6% $1,121 2.6%

Total IT Investments $48,891 -23.5% $72,660 48.6% $75,164 3.4%

% Change from 

FY10 to FY11

% Change from 

FY11 to FY12

% Change from 

FY09 to FY10
Mint - 23

4B – Information Technology Strategy

In February 2010, the Department of Treasury launched “One Treasury” IT Services, which will 

provide a consistent standard for IT services across the Department of the Treasury. This effort 

focuses on the simplification of IT solutions, reduction of IT costs, and the implementation of 

“cloud” computing. “One Treasury” IT Service promotes data center consolidation, web

integration, intranet migration to SharePoint Service, and sharing of common data analysis tools. 

The United States Mint’s overall IT strategy is tightly aligned with that of the Department of the 

Treasury and emphasizes technological advancement with reduced system redundancy. In early 

2010, the United States Mint conducted a comprehensive IT assessment and analysis to 

determine current and future business and IT needs. Based on this assessment, the United States 

Mint enhanced its IT strategic plan and IT roadmap to be executed over the next five years. The 

United States Mint’s current technology environment contains many applications that are 

redundant or not used effectively. The IT roadmap will transition the United States Mint’s 

environment from disparate technologies and silo applications to a single Oracle Enterprise 

Resource Planning (ERP) system. This will integrate multiple technologies and generate 

substantial annual savings by eliminating costs necessary to maintain redundant applications in 

the current environment and integrating all necessary modules into one system that draws data 

from a common source.. 

The IT roadmap will also involve web site integration, sales channel unification and data center 

consolidation. The United States Mint’s external Web presence is divided between commerce 

and non-commerce sites, which create an inconsistent and inconvenient customer experience. 

Web site integration will create a unified internet presence and a seamless browsing experience 

for visitors seeking to purchase numismatic products or obtain public information about the 

United States Mint. The need for an integrated web presence is supported by ongoing feedback 

from the public and the results of usability studies conducted on the United States Mint’s web 

sites. The United States Mint expects web integration to generate cost savings of $5.1 million 

over five years by eliminating one of two vendors that currently provide operations support for 

web sites, and by removing redundant hardware and infrastructure services. 

Information about the United States Mint’s numismatic customers is not integrated. Each sales 

channel is maintained separately, which prevents the United States Mint from cohesively 

identifying, tracking and communicating with customers. Unifying sales channels and 

consolidating data into one information repository (the United States Mint’s enterprise data 

warehouse) will provide for better tracking of customer behavior, improve communication with 

customers and ultimately augment sales and customer service. Data consolidation will also 

provide for better information sharing and transparency. 

In FY 2012, the United States Mint will focus its ongoing data center consolidation activities on 

creating an in-house disaster recovery capability; and on continuing its use of virtualization to 

reduce the overall physical footprint of its infrastructure assets.

The United States Mint utilizes the Prosight IT Portfolio Tracking System provided and hosted 

by the Department of the Treasury to manage its IT investments. Prosight tracks schedule, cost, 

goals and performance of all IT investments. The United States Mint examines the status of each 

investment based on cost, schedule and budget on an ongoing basis, and provides mothly reports 
Mint - 24

on results to Treasury. Any significant variance triggers a required corrective action plan to bring 

the investment back into compliance. IT Investments and Projects are reviewed on a weekly 

basis by the United States Mint’s Chief Information Officer to ensure they are within cost, on 

schedule and meeting established performance metrics. During this review, any high risk 

investments or projects which are underperforming, over budget and behind schedule are

identified. Decisions to terminate an investment require a mutually agreed decision by the 

customer, the IT Department (ITD) and United States Mint senior executives. The United States 

Mint also maintains a project status application for all internal projects. The application is

available on the United States Mint’s intranet, where the application reports monthly progress,

and shows whether a project is on schedule. All of the United States Mint’s investments are 

currently meeting cost, schedule and performance goals.

Capital Investments

The United States Mint’s capital investment projects focus on manufacturing improvements such 

as development of new coin designs, automation of packaging lines, and expanded information 

handling. These investments are designed to reduce costs, shorten the cycle time from product 

concept to production, and increase flexible response to shifts in market demand. The following 

major investments are planned for 2012:

FY 2010 

Obligated

FY 2011 

Estimated

FY 2012 

Estimated

Circulating Capital Investments (Including Protection)

Circulating Information Technology 306.8 2,250.0 2,250.0

Circulating Building Improvements 5,251.1 6,050.0 5,408.0

Circulating Equipment 7,556.8 15,990.0 12,335.0

Total Circulating (Including Protection) 13,114.7 24,290.0 19,993.0 

Numismatic Capital Investments

Numismatic Information Technology 102.3 750.0 750.0

Numismatic Building Improvements 4,372.2 2,290.0 4,603.0

Numismatic Equipment 6,204.5 3,500.0 4,950.0

Total Numismatic 10,679.0 6,540.0 10,303.0 

Total Capital Investments 23,793.7 30,830.0 30,296.0 

Capital Investments

(Dollars in Thousands)

Major Investments

The United States Mint’s FY 2012 circulating and protection capital budget request is $20.0 

million. The United States Mint invests in capital projects to maintain, upgrade or acquire 

physical structures, equipment, physical security, and to implement its information technology 

roadmap. Total capital projects are estimated to be $30.3 million in FY 2012. This includes 

approximately $12.3 million for circulating projects, $7.7 million for security improvement 

projects, and $10.3 million for numismatic projects.

OCC - 1

Overview

Mission Statement

To ensure a safe and sound system of national banks and Federal savings associations for all 

Americans.

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Actual Estimated 1/ Estimated 2/ $ Change % Change

 Supervise $618,254 $680,090 $900,836 $282,582 45.7%

 Regulate $97,735 $107,511 $111,936 $14,201 14.5%

 Charter $24,434 $26,878 $27,984 $3,550 14.5%

Total Resources $740,423 $814,479 $1,040,756 $300,333 40.6%

Total FTE 3,101 3,140 3,976 875 28.2%

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

FY 2011 Priorities

The Office of the Comptroller of the Currency’s (OCC) priorities for fiscal years (FYs) 2011 and 

2012 are directly tied to the goal of repairing and reforming the financial system. The priorities 

and activities discussed below refer to national banks for FY 2011 and to both national banks and 

Federal savings associations for FY 2012. Under the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act) the transition period to transfer functions of the 

Office of Thrift Supervision (OTS) to the OCC approximately coincides with FY 2011. 

Priorities and activities to achieve these goals include the following:

 Regulate and supervise 1,487 national bank charters and 51 federal branches of foreign banks 

with total assets of approximately $8.6 trillion, as of September 30, 2010. As a result of the 

Dodd-Frank Act, in FY 2012 the OCC anticipates supervising approximately 700 Federal 

savings associations with assets currently totaling approximately $0.9 trillion;

 Conduct examinations based on the risk profile of individual national banks and Federal 

savings associations to ensure they are safe and sound, sufficiently capitalized, and comply 

with consumer protection laws and regulations1;

 

1 Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Bureau of Consumer Financial 

Protection is given the authority to supervise and examine insured depository institutions of over $10 billion in asset 

size for compliance with enumerated federal consumer financial laws. The OCC will continue to conduct

examinations to assess compliance of consumer protection issues for national banks and Federal savings 

associations with $10 billion or less in assets, and to examine all national banks for compliance with the Bank 

Secrecy Act, flood insurance regulations, and the Community Reinvestment Act.
OCC - 2

 Assess the adequacy of national banks’ and Federal savings associations’ credit, liquidity, 

internal controls, compliance, and corporate governance processes and require corrective 

action when deficiencies or undue risk concentrations are found;

 Continue to monitor and assess the effectiveness of national bank mortgage servicers’ loan 

modification and foreclosure actions, including needed actions to improve the corporate 

governance of their processes;

 Resolve problem national bank and Federal savings association situations effectively by 

identifying problems at the earliest possible stage, clearly communicating concerns and 

expectations to bank management through appropriate enforcement actions, and ensuring 

timely follow-up on needed corrective actions; 

 Strengthen the credit culture across the national banking and Federal savings association 

system to ensure prudent underwriting standards are maintained;

 Develop and implement policies to ensure that national banks and Federal savings 

associations establish and maintain incentive compensation policies that are consistent with 

the safety and soundness of the bank and do not encourage imprudent risk-taking; 

 Work with other domestic and international supervisors to implement stronger capital and 

liquidity requirements and more robust risk management standards for large financial 

institutions; 

 Enhance our ability to anticipate, identify, and respond to build-ups in risk and emerging 

issues through improved supervisory analytical tools, stress testing, and market intelligence 

capabilities; 

 Maintain a highly skilled and experienced workforce by continuing efforts to identify and 

develop the next generation of bank supervision leadership, strengthen the breadth and depth 

of examiner specialty skills, and recruit and retain entry-level examiners;

 Combat fraud and money laundering, and protect the integrity of the financial system through 

national banks’ compliance with the Bank Secrecy Act/Anti-money laundering (BSA/AML), 

and the Uniting and Strengthening America by Providing Appropriate Tools Required to 

Intercept and Obstruct Terrorism (USA PATRIOT) Act laws and regulations;

 Work with the Department of Treasury and other federal financial regulators to implement 

the Dodd-Frank Act, which includes the transfer from OCC of certain supervisory 

responsibilities and personnel associated with consumer compliance activities to the 

Consumer Financial Protection Bureau (CFPB), and the integration of the OTS functions 

relating to Federal savings associations into the OCC; and

 Continue to support a competitive national banking and Federal savings association system 

through entry of new charters, other bank and thrift structure transactions, and expansion of 

bank and thrift services and products in a safe and sound manner.
OCC - 3

Table of Contents

Overview ........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

Section 1 – Purpose ....................................................................................................................... 4

1A – Description of Bureau Vision and Priorities ...................................................................... 4

1B – Program History and Future Outlook ................................................................................. 5

1C – Industry Outlook............................................................................................................... 18

Section 2 – Budget Adjustments and Appropriation Language............................................. 20

2.1 – Budget Adjustments Table ............................................................................................... 20

2A – Budget Increases and Decreases Description................................................................... 20

2.2 – Operating Levels Table .................................................................................................... 21

2.3 – Resource Detail Table ...................................................................................................... 22

2B – Appropriations Language and Explanation of Changes................................................... 22

2C – Legislative Proposals........................................................................................................ 22

Section 3 – Budget and Performance Plan ............................................................................... 23

3.1 – Budget by Strategic Outcome .......................................................................................... 23

3.2.1 Supervise Budget and Performance Plan ......................................................................... 24

3.2.2 Regulate Budget and Performance Plan........................................................................... 26

3.2.3 Charter Budget and Performance Plan ............................................................................. 27

Section 4 – Supporting Materials .............................................................................................. 28

4A – Human Capital Strategy Description................................................................................ 28

4.1 – Summary of IT Resources Table...................................................................................... 30

4B – Information Technology Strategy..................................................................................... 31
OCC - 4

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The OCC was created by Congress to charter national banks, oversee a nationwide system of 

banking institutions, and ensure national banks are safe and sound, competitive and profitable, 

and capable of serving in the best possible manner the banking needs of their customers. With 

the enactment of the Dodd-Frank Act in July of 2010, the OCC will also be responsible for the 

supervision of Federal savings associations and rulemaking authority for all savings associations. 

The OCC supervises 1,487 national bank charters and 51 federal branches of foreign banks in the 

United States. Total assets under the OCC supervision are approximately $8.6 trillion or 

approximately 70 percent of total United States commercial banking assets. As a result of the 

Dodd-Frank Act, in FY 2012 the OCC anticipates supervising approximately 700 Federal 

savings associations with assets currently totaling approximately $0.9 trillion. The average size 

and complexity of the institutions in the national banking system continue to grow. This, 

combined with OCC’s supervision of Federal savings associations and responsibility for the 

Home Owners’ Loan Act creates increasing and diverse challenges for the OCC. 

As the regulator of national banks, the OCC has established four strategic goals outlined in its 

strategic plan that help support a strong economy for the American public: 1) assuring the safety 

and soundness of the institutions subject to its jurisdiction; 2) fair access to financial services and 

fair treatment of bank customers; 3) a flexible legal and regulatory framework that enables the 

institutions subject to its jurisdiction to provide a full competitive array of financial services; and 

4) an expert, highly motivated, and diverse workforce that makes effective use of OCC 

resources. The OCC organizes its activities under three programs: (1) Supervise, (2) Regulate, 

and (3) Charter, to achieve the goals and objectives.

The OCC’s priorities focus on strengthening the resiliency of the institutions subject to its 

jurisdiction through our supervisory and regulatory programs and activities. Through on-site 

examinations, OCC will work to ensure that national banks and Federal savings associations 

appropriately identify, account for, and follow prudent strategies for problem assets; instill a 

strong corporate governance culture that fosters sound loan underwriting standards, properly 

aligned incentive compensation structures, and strong internal controls, risk management, and 

compliance functions. Other supervisory priorities will be identifying and resolving potential 

problem banks at the earliest possible stage; encouraging national banks and Federal savings 

associations to meet the needs of credit worthy borrowers, including appropriate and effective 

residential mortgage modification programs, and ensuring that they comply with the Community 

Reinvestment Act (CRA) and the BSA/AML and USA PATRIOT Act requirements; and further 

enhancing OCC’s supervisory analytical tools. 

A major focus of the OCC’s supervisory, regulatory, and administrative programs in FYs 2011-

2012 will be implementing applicable provisions of the Dodd-Frank Act. The OCC will work 

closely with the Treasury and other federal regulatory agencies on these initiatives, including 

developing and issuing implementing rulemakings on a broad range of topics, including 

regulatory capital; permissible proprietary trading, hedge fund, and private equity fund 

investments (the so-called Volcker rule); derivative margin requirements; executive 
OCC - 5

compensation; risk retention standards for securitizations; and real estate appraisals. Similarly, 

the OCC is working to provide smooth transitions for the transfer and integration of various 

regulatory and supervisory functions across and among the agencies. These efforts will include 

the transfer of certain supervisory responsibilities and personnel associated with consumer 

compliance activities to the CFPB and the integration of the OTS functions and personnel into 

the OCC. 

The FY 2012 budget is based on initial estimates prepared by the OCC and the OTS. These

estimates are subject to revision based on the financial impact of certain events which include,

but are not limited to, the number of OTS personnel that transfer to either the OCC or the Federal 

Deposit Insurance Corporation (FDIC), the number of OCC and OTS staff that transfer to the 

newly established CFPB, and the final distribution of assets between the banking agencies upon 

the dissolution of the OTS. The exhibits have been footnoted accordingly to reflect these 

uncertainties.

1B – Program History and Future Outlook

The OCC has its headquarters in Washington, D.C., and operates four district offices in Chicago, 

Dallas, Denver, and New York, and field and satellite offices throughout the United States. 

Resident examiner teams are located in the largest banking companies, and there is an examining 

office in London, England.

Operations are funded primarily (approximately 97 percent) from semiannual assessments levied 

on national banks, and for FY 2012, national banks and Federal savings associations. Revenue 

from investments in Treasury securities and other income comprise the remaining three percent 

of the OCC’s funding. The OCC does not receive congressional appropriations to fund any 

portion of its operations. 

The OCC and the banking industry continue to operate in a highly challenging and volatile 

environment. While economic conditions are expected to continue to improve in FY 2011, 

global markets and events may continue to threaten economic recovery and stability. Many 

national banks and Federal savings associations will continue to have substantial volumes of 

troubled loans and borrowers that will consume resources, strain earnings, and, in some cases, 

may require continued growth in loss reserves. National banks and Federal savings associations 

will face heightened compliance, reputation, and strategic risks as a result of significant changes 

in the statutory, regulatory, and accounting requirements for various bank and thrift products, 

services, and transaction structures. Banks and Federal savings associations will need to 

successfully integrate these changes into their operations and it is likely that some of these 

changes will foster fundamental shifts in some banks’ and thrifts’ business models and strategic 

plans. Increasingly, the OCC will need to coordinate many of its supervisory regulations, 

policies and actions with other supervisors, both domestically and internationally. 

To address these challenges, the OCC will need to conduct ongoing assessments of emerging 

risks and the underlying condition of national banks and Federal savings associations, and to 

prioritize and allocate resources to the areas and institutions of highest risks. 
OCC - 6

The following are highlights of the OCC’s FY 2010 accomplishments and specific FYs 2011-

2012 challenges.

Supervisory Activities

As the supervisor of national banks, the OCC has various ways to influence the national banking 

system: 

1. policy guidance and regulations that set forth standards for sound banking practices; 

2. on-site examinations and ongoing off-site monitoring that enable the OCC to assess 

compliance with those standards and to identify emerging risks or trends; and 

3. a variety of supervisory and enforcement tools – ranging from matters requiring board’s and 

management’s attention to informal and formal enforcement actions – that are used to obtain 

corrective action to remedy weaknesses, deficiencies, or violations. 

Upon the transfer of OTS functions, the OCC will incorporate similar supervisory activities to 

influence Federal savings associations.

Federal banking agencies regularly share supervisory information and undertake coordinated 

enforcement actions. As an example, when the OCC issues a remedial enforcement action 

against a national bank, the Board of Governors of the Federal Reserve System (FRB) will often 

take a complementary action with respect to the bank’s holding company. Pursuant to an 

interagency sharing agreement, the federal banking agencies regularly exchange documents and 

information concerning fraudulent activities, including suspicious activity reports that involve 

suspected illegal activities at multiple financial institutions, and notify each other of enforcement 

actions against depository institutions and individuals. 

The OCC also coordinates extensively with other regulatory agencies and with law enforcement 

authorities. It has entered into similar information sharing agreements with most state banking 

agencies, and all 50 state insurance departments, and regularly shares information with the 

Securities and Exchange Commission (SEC). The agency makes enforcement referrals to all of 

these regulators, as well as to state licensing boards and state professional ethics and 

responsibility boards, with respect to misconduct by attorneys, accountants, real estate agents, 

appraisers, and other professionals. The agency also makes enforcement referrals and cooperates 

in investigations conducted by several federal agencies, including, the Financial Crime 

Enforcement Network (FinCEN), the Department of Labor, the Internal Revenue Service, the 

Department of Housing and Urban Development (HUD), the Federal Election Commission, and 

the Federal Trade Commission (FTC). Suspected criminal violations, including evidence of 

fraud, are referred to the Department of Justice (DOJ). The OCC assists the DOJ, the Federal 

Bureau of Investigation, and the United States Secret Service in their investigations and 

prosecutions of fraud, as appropriate, by providing the OCC examiners to serve as special agents 

to the grand jury and as expert banking witnesses for the prosecution at trial. The OCC is a 

member of the National Interagency Bank Fraud Working Group and the President’s Corporate 

Fraud Task Force. 

The OCC continuously supervises banks through examination in its community bank, midsize 

and credit card bank, and large bank programs. A supervisory strategy is developed based on 

each banking institution’s risk profile and condition. Examination activities focus on safety and 
OCC - 7

soundness, consumer compliance, BSA/AML, USA PATRIOT Act, fair lending, asset 

management, bank information technology, and the CRA. 

The OCC monitors and alerts the industry to emerging risks and practices that could adversely 

affect a bank’s safety and soundness or compliance with banking laws and regulations through 

policy programs. Over the last several years, the OCC issued a series of supervisory guidelines

to address weaknesses in bank underwriting standards and credit practices. These guidelines 

addressed credit card account management; loss allowance practices; sound risk management 

practices for concentration loans in Commercial Real Estate (CRE) lending; credit risk 

management for home equity lending; and nontraditional and subprime mortgage products. 

More recently, the OCC has issued guidance on the need for sound interest rate risk and liquidity 

risk management practices and the risks associated with funding and credit concentrations arising 

from correspondent relationships.

In FY 2010, the OCC conducted a survey of national banks to assess the effectiveness of 

supervisory policies. The OCC requested feedback from bankers on how effectively the agency

conveys and might improve: the reasons behind the issuance of new supervisory guidance; the 

intended audience for new supervisory guidance (all banks, only banks with a specific product 

line or service, only banks of a certain asset size, etc.); specific actions OCC expects bank 

management to take in response to new supervisory guidance; the risks to the bank if supervisory 

guidance is not implemented, such as legal, regulatory, reputation, or safety and soundness risk; 

and the expected timing of bank management's implementation of supervisory guidance. Over 

75 percent of those who responded said they were receiving the right amount of information for 

all subject areas. Bankers were also generally pleased with the overall quality of OCC bulletins 

and handbooks (clarity, conciseness, usefulness, and completeness).

The OCC supervisory activities in FY 2010 centered on monitoring and responding to adverse 

conditions in the credit and financial markets, and national banks’ loan portfolios. A primary 

focus of on-site supervisory activities was the quality of national banks’ credit risk management 

practices, as evidenced by effective credit risk rating systems and problem loan identification, 

adequate loan loss reserves in light of deteroriating credit quality, and effective loan work-out 

strategies. The OCC continues to encourage bankers to work with creditworthy borrowers who 

may be facing financial difficulties. Other areas of emphasis were sound liquidity risk 

management, with diversified funding sources and realistic contingency funding plans, and 

strengthening capital buffers to weather further earnings pressures and asset quality deterioration. 

While assessing credit quality, adequacy of loan loss reserves, liquidity, capital, and risk 

management practices have been and continue to be the OCC’s primary focus. The OCC is

cognizant of the continuing need to address supervisory issues in the areas of fair lending, 

consumer protection, BSA/AML, and information security. 

In the wake of the reported improprieties in the foreclosure processes used by several large 

mortgage servicers in the fall of 2010, the OCC initiated a horizontal, on-site review at the eight 

largest national bank mortgage servicers. A key objective of these examinations was to 

independently test and verify the adequacy and effectiveness of governance over the foreclosure 

process. The FRB and FDIC are participating in these examinations. For the most part, these 

examinations are complete. During the second quarter of FY 2011, the agency anticipates 
OCC - 8

completing the analysis of the examinations conducted to determine what additional supervisory 

or regulatory action may be needed.

Legislative changes will significantly affect the scope of the OCC’s supervisory activities, by, 

for example, transferring the functions formerly performed by the OTS for Federal savings 

associations into the OCC, and transferring designated consumer compliance functions to the 

CFPB. Executing these transfers will be a major initiative for the agency that will likely require 

substantial resources. The OCC is committed to working closely with its regulatory partners in 

ensuring a smooth transition, while continuing to maintain a focus on ensuring the safety and 

soundness of national banks and beginning to focus on ensuring the safety and soundness of 

Federal savings associations.

Monitoring Credit Quality

Monitoring and evaluating the quality of the loans and investments made by national banks are a 

fundamental component of the OCC’s supervision program. Examiners evaluate asset quality 

and the adequacy of bank’s credit and investment risk management and controls through on-site 

examination activities. They also ensure the bank has properly recorded any losses that have 

occurred in their loans or investments, and that the banks maintain adequate reserves for inherent 

losses in their loan portfolios.

In addition to individual bank examinations, the OCC conducts a variety of other activities aimed 

at identifying and responding to systemic trends and emerging risks that could adversely affect 

asset quality or the availability of credit at national banks and in the banking system. Fiscal year

2010 activities included:

 Annual Survey of Credit Underwriting Practices - This annual survey, conducted by the OCC 

examiners and Credit Risk staff, identifies trends in lending standards and credit risk for the 

most common types of commercial and retail credit products offered by national banks. It 

provides an aggregate snapshot of how various factors, such as competition, are affecting 

how banks price and underwrite loans and whether the OCC believes the inherent credit risk 

in bank portfolios are increasing or decreasing. The 2010 survey included 51 of the largest 

national banks and covered the 12-month period ending March 31, 2010. The aggregate total 

of loans was $4 trillion, which represented over 93 percent of all outstanding loans in the 

national banking system. The survey results, published in August 2010, indicated that 

underwriting standards continued to tighten during the survey period (March 2009 – March 

2010) for both commercial and retail loans, but at a lower rate than the 2009 survey. In 

certain products, OCC examiners saw some evidence of banks once again loosening 

standards in response to competition and a modest improvement in credit market liquidity. 

However, examiners reported that the overall level of credit risk increased in retail and 

commercial portfolios during the survey period, and they expect the level of risk to continue 

to increase over the next 12 months. 

 Shared National Credit Review - The annual Shared National Credit (SNC) review is a joint 

program conducted by the OCC, the FRB, the FDIC, and the OTS. The SNC review 

addresses large syndicated loans held by multiple financial institutions. The 2010 review 

covered approximately 8,300 credit facilities with commitments totaling $2.5 trillion. A 
OCC - 9

SNC Press Release with results of 2010 SNC review was issued September 28, 2010. Credit 

quality of large loan commitments remained weak in 2010, but improved from 2009, 

according to the results of the 2010 SNC review. The OCC continued work on an 

interagency project to modernize the collection and analysis of SNC data and to improve the 

program’s efficiency and effectiveness. The interagency SNC central information data 

repository was put into production in December 2009. The first development phase of the 

examination application will be implemented for use during the 2011 SNC examination. 

This application will be enhanced with a final release for the 2012 SNC examination, in 

addition to completion of analytical tools and reports. This development work is scheduled 

to be completed in calendar year 2011 and 2012.

 Risk Concentrations - The market turmoil and subsequent economic downturn highlighted 

the risks posed by undue asset or liability concentrations in bank portfolios. Community 

banks can be especially prone to such concentrations as their lending portfolios tend to be 

highly concentrated in their local markets. As noted above, the OCC and other federal 

banking agencies warned financial institutions of the risks that were accumulating in many 

financial institutions’ CRE loan portfolios. In addition, the OCC developed several 

diagnostic tools that bankers can use to help assess the risk in their CRE portfolios. 

The OCC conducted asset quality reviews of all the OCC community and mid-size banks that 

have significant CRE concentrations to assess the adequacy of credit underwriting, problem 

loan identification, and loan loss reserves for these portfolios. These efforts included a stress 

test of CRE portfolios at a number of midsize regional banks that have significant CRE 

concentrations. Monitoring national banks [and Federal savings associations] with 

significant CRE concentrations will be a primary focus of the OCC’s supervisory strategies 

in FYs 2011 and 2012. 

 Enhanced Credit Data Analytics - To improve the OCC’s ability to monitor credit quality 

trends at the largest national banks and to identify potential trends that could pose systemic 

risks to the industry as a whole, the OCC has worked with several data aggregators to collect

and validate data on home equity, credit card, CRE, and large corporate syndicated credits at 

the largest national banks. These efforts build off of the highly successful mortgage metrics 

project that the OCC initiated in FY 2008. All loan-level data collections are in production. 

During FYs 2011-2012, work will continue to integrate and further develop analytical and 

reporting tools applicable to both national banks and Federal savings associations. 

Promoting Credit Availability to Creditworthy Borrowers

Throughout the economic turmoil, the OCC encouraged national banks to work constructively 

with borrowers who may be facing financial difficulty and to extend credit in a responsible and 

prudent manner. This is especially important to the restoration of a healthy financial sector that 

can support the credit needs vital to the nation’s economy. 

 Small Business Lending - To help promote increased small business lending, the OCC and 

other federal banking agencies partnered with the Small Business Administration (SBA) and 

held seminars for bankers on small business lending issues and the SBA’s loan programs. In 

February 2010, the OCC and other banking agencies issued an interagency statement on 
OCC - 10

meeting the credit needs of creditworthy small business borrowers. The statement reiterates 

the agencies’ policy that financial institutions that engage in prudent small business lending 

after performing a comprehensive review of a borrower’s financial condition will not be 

subject to criticism for loans made on that basis. 

The OCC is also working with Treasury and the other federal banking agencies to implement 

the provisions of the Small Business Lending Fund (SBLF) pursuant to the Small Business 

Jobs Act of 2010. As mandated by the statute, the OCC and other banking agencies have 

issued guidance regarding prudent underwriting standards for small business loans that 

participating institutions make with SBLF funds. 

To improve the agencies’ ability to monitor the credit available to households and businesses, 

the OCC and other federal banking agencies made several changes to the information that 

banks and thrifts must report in their Consolidated Reports of Condition and Income (Call 

Reports) and Thrift Financial Reports (TFR). Effective with their March 2010 filings, 

institutions began reporting small business loan data on a quarterly, rather than annual basis. 

Institutions with $300 million or more in total assets or unused credit card commitments also 

are providing separately the amount of unused credit card lines for consumers and for other 

credit card borrowers. Additional breakdowns of other unused loan commitments also are 

being collected. This information will allow the agencies to better monitor credit flows 

throughout a business cycle. 

 Residential Mortgage Modifications and CRE Loan Work Outs - The OCC also worked 

closely with Treasury on its various mortgage modification programs and efforts to help 

homeowners facing financial difficulty. The OCC provided technical assistance on program 

design and implementation and encouraged national banks to participate in those programs.

In an effort to make key aspects of mortgage loan data more transparent and publicly 

available, the OCC and OTS in September 2008 began to publish joint quarterly reports on 

loan performance, delinquencies and foreclosures. The “Mortgage Metrics Report” presents 

data from eight national banks and one thrift with the largest mortgage portfolios (about 65

percent of all mortgages in the country) and can be used by examiners to assess emerging 

trends, evaluate asset quality and loan loss reserve needs, identify anomalies, and evaluate 

loss mitigation actions. In early 2009, Congress adopted the Helping Families Save Their 

Homes Act of 2009. Section 104 of this Act requires the OCC and OTS to submit the 

Mortgage Metrics Report to Congress on a quarterly basis and specifically requires 

information relating to the number of mortgage modifications made, the number of these that 

resulted in lower payments, and the number of modified mortgages that went into default 

again. The Dodd-Frank Act amended Section 104 of the Helping Families Save Their 

Homes Act of 2009 to require the OCC and OTS to provide Mortgage Metrics data to 

Congress broken down by state.

In response to the growing number of residential mortgage modifications and CRE workouts, in FY 2010 the OCC provided additional supervisory guidance on accounting and 

classification issues associated with such activities. The OCC supervisory guidance to 

examiners on residential mortgage modifications stressed that the OCC expects mortgage 

modifications to be undertaken in a manner that improves the likelihood that a borrower can 
OCC - 11

repay the restructured credit under the modified terms and in accordance with a reasonable 

repayment schedule. In October 2009, the OCC and other banking agencies issued a joint 

policy statement on prudent CRE workout programs. The statement is intended to promote 

supervisory consistency, enhance the transparency of CRE workout transactions, and ensure 

that supervisory policies and actions do not inadvertently curtail the availability of credit to 

creditworthy borrowers. The statement includes a variety of examples to illustrate how 

examiners will apply the principles outlined in the guidance. The agencies hosted a seminar 

for the banking industry on the guidance in December 2009.

Restoring Financial Stability, Enhancing Risk Management Practices, and Strengthening 

Prudential Supervision

The OCC continues to actively support the administration’s efforts to restore stability to the U.S. 

financial sector and overall economy. The OCC is also working closely with other domestic and 

international supervisors, including the newly formed Financial Stability Oversight Council 

(FSOC), the Basel Committee on Banking Supervision, the Financial Stability Board (FSB) and 

the Senior Supervisors’ Group (SSG), to identify and coordinate actions aimed at both restoring 

functioning markets and strengthening risk management practices. 

Key initiatives related to these efforts are: 

 Enhanced Liquidity Risk Management and Liquidity Buffers - Failure to maintain adequate 

liquidity was a significant factor contributing to the turmoil in 2008, highlighting the 

importance of liquidity risk management for the safety and soundness of financial 

institutions. In March 2010, the OCC along with the Federal Financial Institutions 

Examination Council (FFIEC) member agencies and the Conference of State Banking 

Supervisors issued Interagency Guidance on Funding and Liquidity Risk Management. 

This summarizes the principles of sound liquidity risk management issued in previous 

guidance, and brings them into conformity with the Principles for Sound Liquidity Risk 

Management and Supervision, issued by the Basel Committee on Banking Supervision in 

September 2008. The guidance emphasizes the central elements of liquidity risk 

management, including the importance of cash flow projections, diversified funding sources, 

stress testing, a cushion of liquid assets, and a formal, well-developed contingency funding 

plan for measuring, monitoring, and managing liquidity risk.

In December 2009, the Basel Committee issued a proposed international framework for 

liquidity risk measurement that would, among other things, establish minimum liquidity 

standards for internationally active banks, a 30-day liquidity coverage ratio requirement 

underpinned by a longer-term structural liquidity ratio. In September 2010, the Group of 

Governors and Heads of Supervision, the oversight body of the Basel Committee, announced 

that after an observation period beginning in 2011, the liquidity coverage ratio will be 

introduced in 2015. The longer-term structural liquidity ratio will become a minimum 

standard in 2018. 

 Enhanced Capital Standards - The financial crisis highlighted areas where the current Basel 

II capital framework requires strengthening. The OCC, with other Basel Committee 

members, provided recommendations for revisions, which were finalized and approved by 
OCC - 12

the Basel Committee in July 2009. The enhancements also require that banks conduct more 

rigorous credit analyses of externally rated securitization exposures. The Basel Committee 

also announced substantial revisions to the 1996 rules governing the capital required for 

trading activities. These changes will result in higher capital requirements to capture the 

credit risk of complex trading activities. The OCC and other federal banking agencies are

evaluating how to move forward with the implementation of these proposals and a proposed 

Basel II standardized approach for U.S. banking companies. This enhances the risk 

sensitivity of the current Basel I capital requirements that applies to most U.S. financial 

institutions to address provisions of the Dodd-Frank Act that prohibit the use of credit ratings 

in the agencies’ regulations. The agencies anticipate issuing notices of proposed rulemakings 

on these proposals in 2011. 

In December 2009, the Basel Committee issued proposals to further enhance the level and 

quality of capital held by banking institutions. The proposals would strengthen capital by: 

1) establishing capital buffers that can be drawn down in periods of stress; 2) strengthening

the quality of bank capital; and 3) introducing a leverage ratio for countries that currently do 

not have a leverage-based capital ratio. The Group of Governors and Heads of Supervision 

announced final agreements on these proposals in September 2010. These heightened capital 

standards will be phased in, with full implementation to be effective on January 2019. 

 Correspondent Banking Concentrations - In April 2010, the OCC and other federal banking 

agencies issued guidance to address risks associated with funding and credit concentrations 

arising from correspondent relationships. The guidance outlines the agencies’ expectations 

for financial institutions with respect to identifying, monitoring, and managing correspondent 

concentration risks between financial institutions, as well as performing appropriate due 

diligence on credit exposures to, and funding transactions with, other financial institutions. 

 Interest Rate Risk - In January 2010, the OCC, the other federal banking agencies, and the 

Conference of State Bank Supervisors issued a joint advisory to remind institutions of 

supervisory expectations regarding sound practices for managing interest rate risk. In the 

current environment of historically low short-term interest rates, it is important for 

institutions to have robust processes for measuring and, where necessary, mitigating the 

exposure to unexpected or substantial increases in interest rates.

 Incentive Compensation Structures - In FY 2010, the OCC participated with the FRB in a 

horizontal review of incentive compensation structures and practices across the largest 

financial institutions. Follow up work is being conducted by the agencies’ examination 

teams and will continue in FY 2011. As announced in June 2010, the OCC along with the 

FRB, the FDIC, and OTS has issued guidance on incentive compensation policies to ensure 

that such practices take into account risk and are consistent with safe and sound practices. 

The guidance directs that incentive compensation arrangements at a banking organization 

comply with the following principles:

1. Provide employees incentives that appropriately balance risk and reward;

2. Be compatible with effective controls and risk management; and 
OCC - 13

3. Be supported by strong corporate governance, including active and effective oversight by 

the organization’s board of directors.

The OCC is also working with the other federal financial agencies to implement section 956 

of the Dodd-Frank Act that requires disclosure and reporting of incentive-based 

compensation arrangements by covered financial institutions and prohibits incentive-based 

compensation arrangements that are excessive or that could expose institutions to 

inappropriate risks that could lead to a material financial loss. 

 Addressing Off-Balance Sheet Risks - In January 2010, the OCC and other federal banking 

agencies amended their risk based capital rules to eliminate the exclusion of certain 

consolidated asset-backed commercial paper programs from risk-weighted assets and to 

permit the agencies to require banking organizations to treat entities that are not consolidated 

under accounting standards as if they were consolidated for risk-based capital purposes. This 

rule is in response to changes in the accounting for certain off-balance sheet structures that 

went into effect in January 2010. In response to public comments about continued 

uncertainty regarding the scope of these accounting changes and the potential impact the rule 

could have on credit availability, the agencies provided a transition process for the full 

implementation of this rule. 

As previously noted, the OCC is working with the other federal financial agencies to 

implement the various provisions of the Dodd-Frank Act related to proprietary trading and 

various off-balance sheet instruments and activities.

 Accounting and Financial Disclosure Issues - The OCC and other federal banking agencies 

continue to work closely with the SEC and the Financial Accounting Standards Board 

(FASB) and the International Accounting Standards Board (IASB) on various accounting and 

disclosure issues and proposals. Under Comptroller Dugan’s chairmanship of the Financial 

Stability Board’s Working Group on Provisioning, the OCC has also been actively involved 

with banking supervisors and accounting standard setters world-wide to ensure that banks 

have the ability to strengthen their loan loss reserves at an appropriate time in the credit 

cycle, as their potential future loan losses are increasing. 

A major issue that the OCC has been closely monitoring is the FASB’s Exposure Draft on 

Financial Instruments. The OCC is particularly concerned about expansion of fair value to 

bank loan portfolios and the resulting volatility this could create on bank balance sheet 

positions, and their capital and funding requirements. One of the lessons learned from the 

crisis was the lack of reliability and relevance of fair value measurements. The OCC 

organized a series of outreach meetings with investors to explore the potential implications of 

the FASB’s proposal, and worked with the other federal banking agencies to submit 

comments to the FASB on the proposal. 

Resolving Problem Banks 

The goal of the OCC’s supervision is to identify and correct potential issues at an early stage, 

before they adversely affect the safety and soundness of the banking system or the viability of an 

individual bank. Despite these efforts, given current market conditions, the OCC expects to see 
OCC - 14

an increase in problem banks that will require more in-depth supervisory attention. As a bank 

reaches this stage, the OCC’s efforts focus on developing a specific plan that takes into 

consideration the ability and willingness of management and the board of directors to correct 

deficiencies in a timely manner and return the bank to a safe and sound condition. In most 

instances these efforts, coupled with the commitment of bank management, result in a successful 

rehabilitation of the bank. 

The OCC makes every effort to address and seek correction of bank problems through its 

examination program. However, when problems are serious and well-documented, enforcement 

action may be warranted to address violations of laws, rules, and regulations; unsafe or unsound 

banking practices and breaches of fiduciary duty; and noncompliance with the OCC directives or 

orders by national banks, their insiders, and other affiliated parties. 

The OCC has a variety of tools to deal with the industry-wide increase in problems and troubled 

institutions in FY 2010, including statutory Prompt Corrective Action determinations when a 

bank’s capital deteriorates below specified thresholds, requirements for increased capital and 

liquidity sources, required changes in bank management, and prior OCC approval of changes in 

business plans. 

In addressing mismanagement during FY 2010, the OCC took such formal enforcement actions 

as final cease and desist orders, removal or prohibition orders, Civil Money Penalties, and formal 

agreements. Documents relating to the OCC enforcement actions can be found on the OCC’s 

Web site at (www.occ.gov).

There will be cases, however, where the situation is of such significance that the OCC will 

require the sale, merger, or liquidation of the bank, if possible. Where that is not possible, the 

FDIC may be appointed as receiver. The OCC works closely with the FDIC in these cases to 

affect least cost resolution, consistent with the provisions of the Federal Deposit Insurance 

Corporation Improvement Act. In FY 2010, 30 national banks failed where the OCC appointed 

the FDIC as receiver. It is likely that there will be additional failures during FY 2011. 

Bank Secrecy Act/Anti-Money Laundering (BSA/AML) 

Through on-site examination activities, the OCC examiners evaluate banks’ compliance with 

BSA/AML requirements and, where weaknesses are noted, seek corrective action. The OCC has 

also developed a Money Laundering Risk System (MLRS) that provides the national community 

bank charters with succinct BSA/AML risk assessment information. This information also 

enhances the OCC’s effectiveness in BSA/AML supervision. In March 2010, the OCC along 

with the other federal banking agencies, FinCEN, SEC, and Commodity Futures Trading 

Commission (CFTC) issued interagency guidance on obtaining and retaining beneficial 

ownership information. The guidance clarifies and consolidates existing regulatory expectations 

for financial institutions obtaining beneficial ownership information for certain accounts and 

customer relationships. The OCC and other FFIEC member agencies issued the revised FFIEC 

BSA/AML Examination manual in April 2010 to incorporate regulatory changes and new 

supervisory guidance.
OCC - 15

Fair Access to Financial Services and Fair Treatment of Bank Customers 

The OCC fulfills its strategic goal of fair access to financial services and fair treatment of bank 

customers through its ongoing supervisory programs for national banks and their operating 

subsidiaries. These programs include ongoing supervisory examinations to ensure compliance 

with fair lending laws, the CRA, section 5 of the Federal Trade Commission Act (prohibiting 

unfair or deceptive acts and practices), and other consumer laws and regulations. In addition to 

supervisory activities, the OCC issues guidance and handbooks, and offers training to bankers 

and bank directors to help them understand and meet their compliance and CRA obligations. 

The Dodd-Frank Act requires that certain functions of the OCC relating to consumer protection 

and fair lending be transferred to the CFPB. The OCC is committed to work with the CFPB to 

ensure a smooth transition of any transfer of functions or personnel. 

Fair Lending 

The OCC’s fair lending supervisory process is designed to assess and monitor the level of fair 

lending risk in every national bank. The OCC assesses compliance with fair lending laws and 

regulations; obtains corrective action when significant weaknesses or deficiencies are found in a 

bank’s policies, procedures, and controls relating to fair lending; and ensures enforcement action 

is taken when warranted. This includes referrals to the DOJ and notifications to the HUD.

As described in more detail in the Supervision section, the OCC responded to the mortgage crisis 

by encouraging national banks to work with consumers, supporting private and public sector 

initiatives and programs that seek to assist these borrowers, and collecting and analyzing 

extensive mortgage lending and workout data from the largest national banks. In January 2010, 

the OCC updated its Fair Lending examination handbook to more effectively address disparate 

treatment in loan pricing, broker activity redlining, and steering borrowers to higher cost loans. 

These updates were coordinated with the other federal banking agencies. 

Community Development

The OCC actively supports the efforts of national banks to engage in sound and successful 

community development activities and processes community development investment notices 

and proposals under title 12, Code of Federal Regulations Part 24. The OCC was a co-sponsor 

of the 2010 National Interagency Community Reinvestment Conference. During FY 2010, 

national banks made $6.2 billion in community development investments. 

The OCC also conducts outreach with a variety of organizations, including advocacy groups, 

research organizations, community development practitioners, and community development 

membership organizations whose constituencies include or affect low- and moderate-income 

consumers, distressed communities, and small and minority-owned businesses. During FY 2010, 

the OCC identified and publicized strategies for stabilizing communities affected by foreclosure 

and resulting property vacancies, and continued its support of financial literacy programs. The 

agency issued publications and partnered with the SBA to promote bank involvement in 

economic stimulus and recovery measures.
OCC - 16

Consumer Protection

During FY 2010, the OCC continued its work with the other federal banking agencies to improve 

consumer protection. These efforts included an interagency initiative to design and test a 

financial privacy notice that is clear and that consumers can better understand and use to exercise 

their preferences for information sharing. After conducting both quantitative and qualitative 

consumer research, the OCC and other federal agencies (including the CFTC, FTC, and SEC)

finalized model privacy notice forms. In November 2009, the forms were provided to the 

industry through amendments to the rules that implement the financial privacy requirements of 

the Gramm-Leach-Bliley Act. In April 2010, the eight federal regulators released an Online 

Form Builder that financial institutions can download and use to develop and print customized 

versions of a model consumer privacy notice. 

In December 2009, the OCC and other federal banking agencies issued for public comment 

proposed supervisory guidance on managing consumer compliance and reputation issues 

involved with reverse mortgages. The guidance discusses legal questions raised by reverse 

mortgages, stresses the need to provide adequate information to consumers about these products, 

to provide qualified independent counseling to consumers considering them, and to avoid 

potential conflicts of interest. The guidance also addresses related policies, procedures, internal 

controls, and third party risk management. The final guidance was issued on August 16, 2010. 

Effective with the December 31, 2010, Call Report and TFR filings, financial institutions will be 

required to provide information on the volume of reverse mortgages that they hold or have 

originated and sold during the year and on the volume of referrals they made to other lenders for 

a fee for such products.

The OCC is leading the interagency effort to implement the registration requirements of the 

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act). In July 2010, 

the agencies issued a joint final rule that establishes the registration requirements for mortgage 

loan originators employed by agency-regulated institutions as well as requirements for these 

institutions, including the adoption of policies and procedures to ensure compliance with the 

S.A.F.E Act and final rule. As required by the law, the final rule also requires these mortgage 

loan originators to obtain a unique identifier through the Nationwide Mortgage Licensing System 

and Registry (Registry) that will remain with that originator, regardless of changes in 

employment. When the system is fully operational, consumers will be able to use the unique 

identifiers to access employment and other background information of registered mortgage loan 

originators. Substantial progress has been made in modifying the Registry to accommodate the 

registration of employees of agency-regulated institutions. The Registry is expected to be 

capable of accepting these and federal registrations in January 2011 at the earliest. The DoddFrank Act will transfer the agencies’ responsibilities under the S.A.F.E. Act to the CFPB on a 

transfer date that is no earlier than January 2011 and, subject to a six-month extension, no later 

than July 2011.

The OCC also worked with the other federal banking agencies to develop and issue examination 

procedures related to the Unlawful Internet Gambling Enforcement Act of 2006 and the 

Protecting Tenants at Foreclosure Act of 2009. 
OCC - 17

In addition to these interagency efforts, in FY 2010 the OCC issued guidance on consumer 

protection and safety and soundness issues associated with tax refund anticipation loans, and 

guidance to national banks on complying with provisions of the new opt-in requirements relating 

to overdraft protection programs and provisions of the Credit CARD Act of 2009.

Enforcement

As needed, the OCC uses its enforcement authority to address safety and soundness violations 

and noncompliance with laws and regulations. During FY 2010, the OCC issued 364 

enforcement actions against national banks and 236 against institution-affiliated parties. 

The OCC assessed a $50 million Civil Money Penalty against a national bank for violations of 

the Bank Secrecy Act as part of a coordinated action with the DOJ, FinCEN and other federal 

agencies. The bank also agreed to forfeit $110 million to the U.S. under a deferred prosecution 

agreement with the U.S Attorney’s Office in the Southern District of Florida and the DOJ. The 

OCC also entered into a Formal Agreement with a national bank to reimburse consumers harmed 

by the bank’s credit card account closing practices. Agreed-upon reimbursement totaled 

$775,000. In another action, a national bank was directed to make $5.1 million in restitution to 

over 60,000 consumers adversely affected by its relationships with a third party payment 

processor. The bank also received a $100,000 civil money penalty. 

The OCC expects the level of enforcement actions associated with problem banks and bank 

failures to continue through the next fiscal year. 

Regulatory Activities

As one of its four strategic goals, the OCC strives to maintain a flexible legal and regulatory 

framework that enables the national banking system to provide a full, competitive array of 

financial services. The agency devoted a significant amount of resources in FY 2010 to 

performing analysis of and providing technical assistance for legislative proposals to reform the 

U.S. financial regulatory structure. 

The OCC and other financial regulatory agencies issued a final rule providing that mortgage 

loans modified under the U.S. Department of the Treasury’s Home Affordable Mortgage 

Program generally will retain the risk-based capital risk weight appropriate to the loan prior to 

modification. Mortgages in the trial period also qualify. 

The OCC’s strategic objectives emphasize regulatory oversight practices that support national 

banks’ ability to compete while maintaining safety and soundness. The OCC will continue its 

legal work of analysis and interpretation of national bank powers and authorities during FY 

2011. This work will be carried forward to include the thrift industry when OCC assumes OTS’s

functions relating to Federal savings associations in accordance with the Dodd-Frank Act. The 

FY 2010 determinations included confirming that a national bank may purchase and hold auction 

rate preferred securities for its own account subject to certain representations and conditions. 

The OCC issued its calendar year publication, “2009 Significant Legal, Licensing, and 

Community Development Precedents for National Banks” as well as the cumulative companion 

edition of “Permissible Activities for a National Bank.” The OCC will also continue to provide 
OCC - 18

case-by-case analysis, consistent with the law and as appropriate, with respect to the enforcement 

of state law in cases involving national banks and their subsidiaries. 

Charter Activities 

For the first half of FY 2010, the OCC issued 1,344 corporate licensing decisions, with a 96

percent on time rate. Bank branch and relocation application volume declined somewhat 

compared to the same period in the prior year. In order to address potential safety and soundness 

problems before they arise, the OCC may impose conditions upon bank transaction approvals 

covering, for example, capital and liquidity arrangements and deviations from business plans. In 

FY 2010, the OCC responded quickly and effectively in reviewing and making decisions on 

applications related to resolving problem conditions. Proposed restructurings that may avoid 

bank failures and their associated costs can include mergers, purchases and assumptions, and 

temporary bridge banks.

In FY 2010, the agency continued conditional approvals of “shelf charters” to expand the pool of 

qualified bidders for troubled institutions. The relatively new mechanism involves the granting 

of preliminary approval to investors for a national bank charter. A shelf charter remains inactive 

until an investor group holding the charter is in a position to acquire a troubled institution. This 

process expands the pool of potential buyers available to purchase troubled institutions. In 

January of 2010, the OCC approved the first use of a shelf charter for the acquisition of a failed 

bank, and in July, a shelf charter was used to acquire three failed banks.

1C – Industry Outlook

Turmoil in the financial markets, the mortgage and foreclosure crises, and the long and deep 

recession has added to the challenges facing the banking system. Past experience suggests that 

growth in the banking system is likely to be slow in the immediate aftermath of the recession, but 

that it will increase later in the cycle. Further, the long-term trend of bank consolidation is likely 

to continue and will accelerate in the near term, as the credit cycle culls out weaker performers.

If bank assets continue to grow at the rate of nominal Gross Domestic Product (GDP), and if 

GDP growth returns to its historical average over the next five years, assets could grow and the 

number of banks could shrink, as shown in the following table (1).

Assets ($t) Number Assets ($t) Number

2009 11.8 6,939 8.2 1,462 82.1%

2014 (2) 15.1 6,400 10.5 1,100 85.0%

in Banks over $10 Billion

Commercial Banks National Banks Share of Total System Assets

 (1) This table does not include assets currently supervised by the OTS.

 (2) Estimated.

But the depth, breadth, and duration of this downturn suggests that over the next year or two, 

bank assets and loans could grow more slowly than before the recession. The combination of 

recession and financial crisis has already caused widespread deleveraging among both 

households and firms. Moreover, corporations are likely to be able to fund more of their 

operations from internal cash flow, dampening growth in business lending. Most observers

expect this to continue, reducing the rate of credit growth throughout the economy. This could 
OCC - 19

limit the pace of bank lending and asset growth as the economy begins to recover, as happened 

after the 1990-91 recession. 

Large banks will continue to dominate the industry. Banks with over $10 billion in assets now 

account for over 80 percent of commercial bank system assets; this share has been increasing, 

and the trend is expected to continue. The financial crisis could increase consolidation among 

these large banks, thinning their ranks from the 87 that exist now. Until about six years ago, 

national banks consistently accounted for about 56 percent of all commercial bank assets. Since 

then, a series of mergers and conversions have increased the national bank share to 

approximately 70 percent of commercial bank assets. The OCC’s projections assume that share 

remains steady over the next five years.

Risks to the banking system include continued problems in the credit markets, and a slow 

recovery from the recession.
OCC - 20

Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Office of Comptroller of the Currency FTE Amount

FY 2010 Actual 3,101 $740,423

FY 2011 Estimated 3,140 $814,479

Changes to Base:

Maintaining Current Levels (MCLs): - $4,564

Maintaining Current Levels - $4,564

Subtotal FY 2012 Changes to Base - $4,564

Total FY 2012 Base 3,140 $819,043

Program Changes:

Program Increases: 836 $221,713

Adjustment 836 $221,713

Subtotal FY 2012 Program Changes 836 $221,713

Total FY 2012 Estimated 3,976 $1,040,756

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$4,564,000 / +0 FTE

Maintaining Current Levels +$4,564,000 / +0 FTE Funds are required for inflation adjustments 

in non-labor expenses such as GSA rent adjustments, postage, supplies and equipment and health 

benefits and the increase in Federal Employee Retirement System participation. No inflation 

adjustment is requested for pay in FY 2012.

Program Increases ............................................................................+$221,713,000 / +836 FTE

Adjustment +$221,713,000 / +836 FTE Includes regulation of the National Banking System and 

Federal Savings Associations. This estimate is subject to revision once the personnel 

realignment or the Dodd-Frank Act are implemented.
OCC - 21

2.2 – Operating Levels Table

Dollars in Thousands

Office of Comptroller of the Currency FY 2010 Obligated FY 2011 Estimated 1/ FY 2012 Estimated 2/

FTE 3,101 3,140 3,976

Object Classification

11.1 - Full-time permanent $361,693 $372,600 $519,857

11.3 - Other than full-time permanent $9,799 $0 $0

11.5 - Other personnel compensation $1,938 $2,102 $3,138

12 - Personnel benefits $133,668 $147,091 $188,377

13 - Benefits for former personnel $103 $195 $0

21 - Travel and transportation of 

persons $46,821 $53,776 $67,374

22 - Transportation of things $2,663 $1,838 $3,743

23.1 - Rental payments to GSA $2,668 $2,743 $3,750

23.2 - Rental payments to others $37,470 $39,903 $52,669

23.3 - Communication, utilities, and 

misc charges $10,844 $9,004 $15,243

24 - Printing and reproduction $802 $831 $1,127

25.1 - Advisory and assistance 

services $26,369 $27,277 $37,065

25.2 - Other services $15,916 $50,713 $22,372

25.3 - Other purchases of goods and 

services from Govt. accounts $6,331 $10,428 $8,899

25.4 - Operation and maintenance of 

facilities $4,634 $5,949 $6,514

25.7 - Operation and maintenance of 

equip $52,363 $61,762 $73,603

26 - Supplies and materials $5,173 $11,118 $7,271

31 - Equipment $16,726 $13,903 $23,510

32 - Land and structures $4,311 $3,016 $6,060

42 - Insurance claims and indemnities $131 $230 $184

Total Budget Authority $740,423 $814,479 $1,040,756

Budget Activities

Supervise $618,254 $680,090 $900,836

Regulate $97,735 $107,511 $111,936

Charter $24,434 $26,878 $27,984

Total Budget Authority $740,423 $814,479 $1,040,756

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures 

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.
OCC - 22

2.3 – Resource Detail Table

Dollars in Thousands

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

2B – Appropriations Language and Explanation of Changes 

The OCC receives no appropriations from Congress.

2C – Legislative Proposals

OCC currently has no legislative proposals.

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Assessments $764,410 $795,300 $1,011,100 27.13%

Interest $20,502 $23,700 $24,275 2.43%

Other Income 1,805 1,200 7,425 518.75%

Total Revenue / Offsetting Collections 0 $786,717 0 $820,200 0 $1,042,800 0.00% 27.14%

 Unobligated balances, Start of year 793,371 847,259 864,204 2.00%

 Recoveries of prior year obligations 0 0 0 0.00%

 Net transfers (includes capital transfers) 0 0 0 0.00%

Total budgetary resources available 0 $1,580,088 0 $1,667,459 0 $1,907,004 0.00% 14.37%

Expenses/Obligations

Supervision 2,700 621,695 2,729 680,090 3,412 900,836 1.07% 32.46%

Regulate 329 98,279 337 107,511 463 111,936 2.43% 4.12%

Charter 72 24,570 74 26,878 101 27,894 2.78% 3.78%

Total Expenses / Obligations 3,101 $744,544 3,140 $814,479 3,976 $1,040,666 26.62% 27.77%

FY 2011 FY 2012 Estimated FY 2011

Actual Estimated (1) (2) to FY 2012

% Change

FY 2010
OCC - 23

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Actual

FY 2011 

Estimated 1/

FY 2012 

Estimated 2/

% Change

FY10 to FY12

 Strong U.S. economic competitiveness 79,384 134,389 356,102 164.98%

 Prevented or mitigated financial and economic crises 661,039 680,090 684,654 0.67%

Total $740,423 $814,479 $1,040,756 27.78%

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

3A - Supervise ($680,090,000 from reimbursable programs): The Supervise program consists 

of ongoing supervision and enforcement activities undertaken to ensure that each national bank 

is operating in a safe and sound manner and is complying with applicable laws, rules, and 

regulations relative to the bank and the customers and communities it serves. This program 

includes bank examinations and enforcement activities; resolution of disputes through the 

National Bank Appeals process; ongoing monitoring of banks; and analysis of systemic risks and 

market trends in the national banking system or groups of national banks, the financial services 

industry, and the economic and regulatory environment.
OCC - 24

3.2.1 Supervise Budget and Performance Plan

Supervise Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated 1/ Estimated 2/

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $565,921 $597,859 $618,254 $680,090 $900,836

Total Resources $565,921 $597,859 $618,254 $680,090 $900,836

Budget Activity Total $565,921 $597,859 $618,254 $680,090 $900,836

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target 3/

Percent of National Banks With Composite CAMELS Rating 1 or 2 

(Oe)

92.0 82.0 70.0 90.0 90.0

Percentage of National Banks that are Categorized as Well 

Capitalized (Oe)

99.0 86.0 90.0 95.0 95.0

Percentage of National Banks with Consumer Compliance Rating of 

1 or 2 (Oe)

97.0 97.0 95.0 94.0 94.0

Rehabilitated National Banks as a Percentage of Problem National 

Banks One Year Ago (CAMEL 3,4, or 5) (Oe)

47.0 29.0 23.0 40.0 40.0

Total OCC Costs Relative to Every $100,000 in Bank Assets 

Regulated ($) (E)

8.39 8.81 9.28 9.22 9.22

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC -

Discontinued, and B - Baseline

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures 

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(3) FY 2012 targets are subject to revision based on the impact of integrating OTS functions relating to Federal savings 

associations into the OCC and the transfer of designated OCC functions to the CFPB.

Well Capitalized National Banks

The Federal Deposit Insurance Act established a system that classifies insured depository 

institutions into five categories (well capitalized, adequately capitalized, undercapitalized, 

significantly undercapitalized, and critically undercapitalized) based on their capital levels 

relative to their risks. Through September 30, 2010, 90 percent of national banks were classified 

as well capitalized. The OCC works closely with problem banks to develop rehabilitation plans. 

Such plans typically include directives to improve or restore capital levels. More broadly, the 

OCC is working with other regulators both domestically and internationally to strengthen capital 

standards and improve credit risk management practices.
OCC - 25

National Banks with Composite CAMELS Rating of 1 or 2

The composite CAMELS (Capital adequacy, Asset quality, Management, Earnings, Liquidity, 

and Sensitivity to market risk) rating reflects the overall condition of a bank. Bank regulatory 

agencies use the Uniform Financial Institutions Rating System, CAMELS, to provide a general 

framework for evaluating all significant financial, operational, and compliance factors inherent 

in a bank. The rating scale is 1 through 5 of which 1 is the highest rating granted. CAMELS 

ratings are assigned at the completion of every supervisory cycle or when there is a significant 

event leading to a change in CAMELS. Through September 30, 2010, 70 percent of national 

banks earned composite CAMELS ratings of either 1 or 2. The increase in the number of banks 

with lower composite CAMELS ratings is not unexpected at this stage of the credit cycle and 

reflects impaired asset quality and earnings that is affecting many banks. The OCC’s primary 

focus is to ensure that CAMELS ratings are an accurate reflection of each bank's current 

financial position and thus the OCC would not take action to prematurely restore a favorable 

CAMELS rating even though the current distribution of ratings is below our target. As bank 

performance and asset quality improves, the OCC would expect CAMELS ratings to adjust 

accordingly.

Rehabilitated National Banks

Problem banks ultimately can reach a point at which rehabilitation is no longer feasible. The 

OCC’s early identification and intervention with problem banks can lead to successful 

remediation of these banks. Through September 30, 2010, 23 percent of banks with composite 

CAMELS ratings of 3, 4, or 5 one year ago have improved their ratings to either 1 or 2 this year. 

As with the other measures, this target benchmark has been adversely affected by the underlying 

economic conditions facing the banking industry. The number of serious problem banks, where 

successful resolution is more difficult, has increased. In addition, the sharp contraction in certain 

segments of the economy, including the real estate sector, has resulted in a more rapid 

deterioration in some banks' financial condition.

National Banks with Consumer Compliance Rating of 1 or 2

To ensure fair access to financial services and fair treatment of bank customers, the OCC 

evaluates a bank’s compliance with consumer laws and regulations. Bank regulatory agencies 

use the Uniform Financial Institutions Rating System, Interagency Consumer Compliance 

Rating, to provide a general framework for assimilating and evaluating significant consumer 

compliance factors inherent in a bank. Each bank is assigned a consumer compliance rating 

based on an evaluation of its present compliance with consumer protection and civil rights 

statutes and regulations, and the adequacy of its operating systems designed to ensure continuing 

compliance. Ratings are on a scale of 1 through 5 in increasing order of supervisory concern. 

National banks continue to show strong compliance with consumer protection regulations with 

95 percent earning a consumer compliance rating of either 1 or 2 through September 30, 2010.

Total OCC Costs Relative to Every $100,000 in Bank Assets Regulated

Beginning in FY 2006, the OCC implemented a performance measure, Total OCC Costs Relative 

to Every $100,000 in Bank Assets Regulated, that reflects the efficiency of its operations while 

meeting the increasing supervisory demands of a growing and more complex national banking 

system. The OCC costs are those reported as total program costs on the annual audited 

Statement of Net Cost. Bank assets are those reported quarterly by national banks on their 
OCC - 26

Reports of Condition and Income. Total national bank assets represent the growth and 

complexity of the national banking system. This measure supports the OCC’s strategic goal of 

efficient use of agency resources. The OCC’s ability to control its costs while ensuring the 

safety and soundness of the national banking system benefits all national bank customers.

3B - Regulate ($107,511,000 from reimbursable programs): The Regulate program consists of 

ongoing activities that result in the establishment of regulations, policies, operating guidance, 

and interpretations of general applicability to national banks. These regulations, policies, and 

interpretations may establish system-wide standards, define acceptable banking practices, 

provide guidance on risks and responsibilities facing national banks, or prohibit (or restrict) 

banking practices deemed to be imprudent or unsafe. This program includes the establishment of 

examination policies, handbooks, and interpretations for examiners as well as representation of 

the OCC’s regulatory authorities and interpretations in administrative, judicial, and congressional 

hearings.

3.2.2 Regulate Budget and Performance Plan

Regulate Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated 1/ Estimated 2/

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $87,583 $94,511 $97,735 $107,511 $111,936

Total Resources $87,583 $94,511 $97,735 $107,511 $111,936

Budget Activity Total $87,583 $94,511 $97,735 $107,511 $111,936

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

There are no measures are specified at this time. 

3C - Charter ($26,878,000 from reimbursable programs): The Regulate program consists of 

ongoing activities that result in the establishment of regulations, policies, operating guidance, 

and interpretations of general applicability to national banks. These regulations, policies, and 

interpretations may establish system-wide standards, define acceptable banking practices, 

provide guidance on risks and responsibilities facing national banks, or prohibit (or restrict) 

banking practices deemed to be imprudent or unsafe. This program includes the establishment of 

examination policies, handbooks, and interpretations for examiners as well as representation of 

the OCC’s regulatory authorities and interpretations in administrative, judicial, and congressional 

hearings.
OCC - 27

3.2.3 Charter Budget and Performance Plan

Charter Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated 1/ Estimated 2/

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $20,212 $23,628 $24,434 $26,878 $27,984

Total Resources $20,212 $23,628 $24,434 $26,878 $27,984

Budget Activity Total $20,212 $23,628 $24,434 $26,878 $27,984

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percentage of Licensing Applications and Notices Completed within 

Established Timeframes (Oe)

95.0 95.0 96.0 95.0 95.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, DISC -

Discontinued, and B - Baseline

1) It is anticipated that for the majority of FY 2011, the OCC will not be regulating the Federal savings associations; 

accordingly, the FY 2011 estimates only reflect the cost of regulating the National Banking System. Figures are subject to 

revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(2) FY 2012 estimates include the cost of regulating the National Banking System and Federal savings associations. Figures

are subject to revision once the personnel realignment provisions of the Dodd-Frank Act are implemented.

(3) FY 2012 targets are subject to revision based on the impact of integrating OTS functions relating to Federal savings 

associations into the OCC and the transfer of designated OCC functions to the CFPB.

Licensing Applications and Notices Completed within Time Frames

The OCC’s timely and effective approval of corporate applications contributes to the nation’s 

economy by enabling national banks to complete various corporate transactions and introduce 

new financial products and services. Delays in providing prompt decisions on applications and 

notices can deprive a bank of a competitive or business opportunity, create business 

uncertainties, or diminish financial results. Time frames have been established for completing 

each type of application and notice. The OCC completed 96 percent of applications and notices 

within the time standard through September 30, 2010.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
OCC - 28

Section 4 – Supporting Materials

4A – Human Capital Strategy Description

The OCC developed bureau-specific human capital goals to meet its overall strategic goals of 

ensuring the safety and soundness of national banks and maintaining an expert, highly motivated, 

and diverse workforce. The first goal is to align and employ the OCC workforce resources 

consistent with current and projected agency priorities. To help achieve this goal, on an annual 

basis, the OCC identifies business changes and imperatives, and assesses its current staffing 

structure to identify potential recruitment challenges and skill imbalances/gaps. The agency then 

develops strategies to meet these challenges and approve incentives specifically designed to 

address them. Other strategies include: 

1. using all qualified personnel on priority assignments, realizing the increasing dependence 

and need for “fungibility” among and within various disciplines; 

2. using the midsize/community banks area as the primary entry-level recruitment, training, 

and development vehicle to provide a diverse bank examiner selection pool for many 

departments and divisions in the bureau; and 

3. identifying skill gaps and using them to establish recruitment and training priorities as part 

of ongoing strategic staffing discussions.

The OCC has implemented several programs to increase and strengthen its examiner and 

leadership pools. The OCC has a highly-successful college hiring and training team program to 

ensure a steady pipeline of entry-level bank examiners. Since the program’s inception in FY 

2003, 911 examiners have been hired, including 82 in FY 2010. While the OCC expects hiring 

generally to continue at current levels, strategies are being reviewed to ensure that the OCC has 

an integrated staffing process that allows supervision resources to be deployed to their highest 

and best use and maximizes staff development opportunities in alignment with the OCC’s 

national priorities. 

The OCC has focused heavily on recruiting the expertise needed to fill positions in the agency’s 

Chief National Bank Examiner’s office and Large Bank Supervision line of business. The OCC 

has also recognized the challenge of ensuring that it has the skill sets needed now and in the 

future to supervise the increasingly complex array of activities and businesses found in the 

national banking system. As a result, the OCC uses a framework to assess where and when 

specialized skills are needed and to ensure it has the staffing necessary to meet those needs. This 

framework, the Specialty Skills Assessment, allows the OCC to measure gaps in its current skill 

levels in eight critical business areas (Asset Management, Bank Information Technology, Capital 

Markets, Compliance, Commercial Lending, Retail Lending, Mortgage Banking, and 

Operational Risk) and to develop strategic plans to fill those gaps. It establishes a standard 

process to identify an individual’s specialty skills, and the levels of those skills, which can be 

compared to actual examination resources necessary for the effective supervision of national 

banks. These skill level designations are made on an annual basis. Also, on an annual basis, 

there is a review of the policy to ensure that the criteria used to determine assignment complexity 

and assess examiner skill levels in each specialty remain current and relevant as the industry 

evolves. Assessment results aid examination staffing and recruiting initiatives, and provide 
OCC - 29

employees and managers with a valuable tool that can be used to identify developmental 

opportunities to further an individual’s career objectives. 

In further recognition of the need to provide expert-level support related to the current financial 

and housing market situations, the OCC requested and was granted authority to waive the dual 

compensation reduction to reemploy certain annuitants. The extensive knowledge and superior 

skills reemployed annuitants have developed in specific specialty areas are an invaluable 

resource. Since being granted this authority by the Office of Personnel Management, the OCC 

has reemployed 21 annuitants. In October 2010, the OCC used the government-wide authority to 

extend this program. 

In 2004, the agency focused attention on bringing back to the OCC, diverse talent that had 

separated for reasons other than retirement. These individuals leave the OCC, then return, 

bringing new knowledge, skills and experiences. In 2009, 54 percent of the hires were

“experienced” re-hires, up from 44 percent in 2008. In the last two fiscal years, women and 

minorities accounted for 58 percent of the re-hires, up from 52 percent in FY 2005-2007. 

A second human capital goal is to develop current and future leaders who demonstrate strong 

strategic, people management, and technical skills. To achieve this goal, the OCC has 

implemented a leadership development program, LeaderTRACK, based on identified 

competencies. The program, which began in FY 2007, offers participants three six-month 

assignments, with significant managerial and supervisory roles, that will develop leadership 

skills rather than prepare them for a specific position. The OCC continues to focus on aligning 

leadership performance expectations with organizational goals and preparing leaders to create 

and sustain a productive work environment and assume responsibility for developing staff. 

A third human capital goal is to maintain strategic compensation and benefit programs and 

performance systems that link with organizational goals and mission accomplishment, which 

enables the OCC to recruit and retain critical positions, and reward high performers. The OCC 

operates under a merit-based pay and performance system. Annual across-the-board increases 

are not granted. Salary increases are awarded based on merit to reward employee performance, 

employee development that is relevant to the OCC’s needs, and employee contributions to the 

OCC’s priorities. 

To assure the agency accomplishes this goal, the OCC is nearing completion of a study of its 

compensation program to assess the appropriateness of the pay bands, evaluate the relationship 

between performance management and merit pay systems, and evaluate the current 

compensation policies and programs to ensure they support the OCC in attracting, retaining, and 

motivating a high-caliber workforce. 

The OCC’s human capital goals for FY 2011 and FY2012 will focus on strategies and initiatives 

to effectively and efficiently transition resources transferring from the OTS to OCC.

The OCC is confident these strategies will address any deficiencies in staffing and skills, 

ensuring its ability to have the right number of people with the right skills to accomplish its 

critical mission.
OCC - 30

4.1 – Summary of IT Resources Table

Dollars in Thousands

Major IT Investments / Funding Source Budget Activity

FY 2009 

Actual

FY 2010 

Actual

% Change 

from FY 2009 

to FY 2010

FY 2011 

Estimated

FY 2012 

Estimated

% Change 

from FY 2010 

to FY 2012

Fiscal Management $1,920 $1,817 -5.4% $1,880 $1,937 6.6%

Subtotal, Major IT Investments

Supervise/Regulate/

Charter $1,920 $1,817 -5.4% $1,880 $1,937 6.6%

$51,718 $49,473 -4.3% $57,442 $59,165 19.6%

Non-Major IT Investments

Supervise/Regulate/

Charter $51,718 $49,473 -4.3% $57,442 $57,442 16.1%

$34,942 $35,623 1.9% $34,316 $35,346 -0.8%

Infrastructure Investments

Supervise/Regulate/

Charter $34,942 $35,623 1.9% $34,316 $35,346 -0.8%

Enterprise Architecture

Supervise/Regulate/

Charter $ 0 0 0 0 0 0

Enterprise Identity and Access Management

Supervise/Regulate/

Charter N/A 0 0 0 0 0

Total IT Investments

Supervise/Regulate/

Charter $88,580 $86,913 -1.9% $93,638 $92,788 6.8%
OCC - 31

4B – Information Technology Strategy

The OCC’s Information Technology (IT) strategic plan is embodied within its Technology 

Vision 2012 Roadmap that aligns to the agency’s core mission to ensure a safe and sound 

national banking system for all Americans. In addition, in FY 2010, the OCC established specific 

IT goals to leverage IT as a strategic business enabler to support the OCC’s strategic goals. 

The IT Strategic plan is implemented through OCC’s capital planning process which ensures that 

all IT investments are aligned with its mission, goals, and objectives, and target architecture 

before a project is selected for funding. The capital planning process ensures business cases are 

reviewed to leverage opportunities to use existing technology, to capitalize on enterprise 

opportunities as well as ensure there are no redundancies in IT systems that are considered for 

the portfolio. 

The overall strategy to effectively use technology to support the mission, goals, and objectives of 

the agency is enforced by the Investment Review Board (IRB), comprised of business unit and 

IT representatives from across the agency. The IRB makes recommendations to the OCC’s 

Technology and Systems Subcommittee (TSS). Both the IRB and TSS meet regularly to select, 

monitor, and control IT investments. This process ensures that the overall IT strategy has 

adequate funding, resources, and prioritization, and provides risk mitigation for IT investments 

that are not meeting stated cost, time and performance goals. 

Linkage to the OCC programs and strategic goals are documented in each project business case 

and prioritized by the IRB and TSS. Performance metrics are linked to the delivery, alignment, 

and achievement of the OCC strategic program objectives. The OCC employs project 

management methodologies that are based on risk management and mitigation. The risks are 

actively monitored at both IRB and TSS meetings. 

The OCC’s technology strategy in FY 2011 and FY 2012 will include the integration of the OTS 

legacy systems.

FYs 2011-2012 Plans

The OCC has two new major IT initiatives planned in FYs 2011-2012. 

Central Application Tracking System (CATS) - This initiative will significantly improve the 

accuracy, tracking, monitoring, recording, and reporting of the applications and notices by the 

Licensing and Community Affairs Departments. The overall objective is to: 1) develop a 

workflow and business processing system that will provide the ability to electronically capture 

and effectively monitor and report on the processing of applications and notifications filed with 

the Licensing and Community Affairs Departments, and 2) take advantage of innovative 

technologies to create process efficiencies.

Personnel Administration and Security System (PASS) - This initiative will improve and 

automate core personnel security processes, including on-boarding and off-boarding. The PASS 
OCC - 32

initiative will bring the OCC into compliance with audit and Homeland Security Presidential 

Directive 12 (HSPD-12) requirements. 

Homeland Security Presidential Directive-12 (HSPD-12)

In FY 2010, the OCC continued to install and upgrade HSPD-12 compliant Physical Access 

Control Systems (PACS) nationwide. In addition, the OCC continued to phase out existing 

proximity security cards with the goal of transitioning exclusively to HSPD-12 SmartID cards 

for all OCC employees and contractors. The OCC also began to integrate HSPD-12 policy, 

procedures and SmartID card usage into other existing agency processes moving towards full 

HSPD-12 compliance by the established Treasury and Federal milestones.

During FY 2011, the OCC will install 33 new HSPD-12 compliant PACS systems and upgrade 

four non-compliant PACS systems, currently in place at the OCC facilities. In addition to these 

upgrades, the OCC will also start installing systems which will allow the checking and 

verification of personal identity verification (PIV) certificates and the provisioning of PIV cards 

directly into the OCC PACS. The OCC will continue to issue PIV cards to all employee and 

contractor personnel, which will eliminate all agency produced access control cards.

During FY 2012, the OCC will complete all remaining PACS installations and complete the full 

integration of the HSPD-12 program for physical access. One of the major goals is to ensure all 

new employees and contractors receive their PIV card on their first day of work. The OCC has 

taken steps and continues to put procedures in place through existing programs to ensure this 

goal is achieved. The OCC anticipates being able to provide all new employees and contractors 

with an activated PIV card on their first day of employment during FY 2012.

OTS - 1

Overview

Mission Statement

To supervise savings associations and their holding companies in order to maintain their safety 

and soundness and compliance with consumer laws and to encourage a competitive industry that 

meets America’s financial services needs.

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012 Change FY10 to FY12

Actual Estimated 1/ Estimated $ Change % Change

 Supervision of the Thrift Industry $232,047 $253,605 $0 ($232,047) (100.0%)

Total Resources $232,047 $253,605 $0 ($232,047) (100.0%)

Total FTE 1,016 1,021 0 (1,016) (100.0%)

FY 2011 Priorities

• Maintain a focus on the mission of examining, supervising, and regulating thrifts and 

their holding companies and service providers:

o Provide regulatory guidance to thrifts and holding companies.

o Resolve any outstanding issues and complete projects (in preparation for 

transition).

o Streamline internal processes (in preparation for transition and consideration of 

limited resources).

• Continue to have appropriate communications with OTS staff and OTS-regulated 

institutions regarding the future.

• Effectively manage OTS property, people, information, and monetary resources.

• Provide OTS staff with opportunities to succeed in the post transition environment.

• Partner with the other financial regulators to coordinate a seamless transition of 

institutions, and resources to the future regulatory agency structures.

• Manage internal processes to provide an orderly transition of institutions and resources, 

in a manner that ensures equitable treatment of staff.

(1) The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (Dodd-Frank Act), abolishes and 

transfers the functions of the Office of Thrift Supervision in Fiscal Year 2011. 
OTS - 2

Table of Contents

Overview........................................................................................................................................ 1

Mission Statement....................................................................................................................... 1

Program Summary by Budget Activity....................................................................................... 1

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

1A – Description of Bureau Vision and Priorities ...................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language............................................... 4

2.2 – Operating Levels Table ...................................................................................................... 4

Section 3 – Budget and Performance Plan ................................................................................. 5

3.1 – Budget by Strategic Outcome ............................................................................................ 5

3.2.1 Supervision of the Thrift Industry Budget and Performance Plan..................................... 6
OTS - 3

Section 1 – Purpose

1A – Description of Bureau Vision and Priorities

The Office of Thrift Supervision (OTS) was established by Congress as a bureau of the 

Department of the Treasury pursuant to the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989, Public Law 101-73. In July 2010, Congress passed and the President 

signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 

(Dodd-Frank Act), abolishing and transferring the functions of the Office of Thrift Supervision 

in Fiscal Year 2011.

OTS charters, examines, supervises, and regulates federal savings associations insured by the 

Federal Deposit Insurance Corporation (FDIC). OTS also examines, supervises, and regulates 

state-chartered, FDIC-insured savings associations and provides for the registration, 

examination, and supervision of savings association affiliates and holding companies. OTS sets 

capital standards for Federal and State savings associations and reviews applications of statechartered savings associations for conversion to federal thrifts. Under the Dodd-Frank Act, the 

supervision of federal savings associations is transferred to the Office of the Comptroller of the 

Currency (OCC), supervision of savings association holding companies is transferred to the 

Federal Reserve, and supervision of state charted savings associations is transferred to the FDIC 

and its consumer financial protection function to the Bureau of Consumer Financial Protection 

(CFPB).

OTS receives no appropriated funds from Congress. Income of the bureau is derived principally 

from assessments on savings associations and their holding companies, examination fees, and 

interest on investments in U.S. Government obligations. As of September 30, 2010, the OTS 

regulated 741 thrifts with total assets of $928 billion. The OTS also supervises 436 holding 

company enterprises with approximately $4.2 trillion in U.S. domiciled consolidated assets. 

These enterprises owned 398 thrifts with total assets of $717 billion or 77 percent of total thrift 

industry assets.
OTS - 4

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

Office of Thrift Supervision FY 2010 Obligated FY 2011 Estimated 1/ FY 2012 Estimated

FTE 1,016 1,021 -

Object Classification

11.1 - Full-time permanent $119,225 $117,711 $0

11.3 - Other than full-time permanent $947 $8,906 $0

11.8 - Special personal services 

payments $18,756 $1,497 $0

12 - Personnel benefits $62,206 $73,636 $0

13 - Benefits for former personnel $300 $213 $0

21 - Travel and transportation of 

persons $16,943 $16,998 $0

22 - Transportation of things $238 $339 $0

23.2 - Rental payments to others $4,405 $4,945 $0

23.3 - Communication, utilities, and 

misc charges $3,296 $4,313 $0

24 - Printing and reproduction $159 $216 $0

25.1 - Advisory and assistance 

services $2,218 $2,981 $0

25.2 - Other services $2,724 $3,000 $0

25.3 - Other purchases of goods and 

services from Govt. accounts $5,986 $5,668 $0

25.4 - Operation and maintenance of

facilities $5,725 $5,851 $0

25.7 - Operation and maintenance of 

equip $454 $622 $0

25.8 - Subsistence and support of 

persons $0 $35 $0

26 - Supplies and materials $2,019 $2,155 $0

31 - Equipment $3,048 $3,324 $0

32 - Land and structures $1,193 $1,195 $0

Total Budget Authority $232,047 $253,605 $0

Budget Activities

Supervision of the Thrift Industry $232,047 $253,605 $0

Total Budget Authority $232,047 $253,605 $0

(1) The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (Dodd-Frank Act), abolishes and 

transfers the functions of the Office of Thrift Supervision in Fiscal Year 2011. 
OTS - 5

Section 3 – Budget and Performance Plan

This table lists all FY 2012 resources by strategic goal, objective and outcome outlined in the FY 

2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan provides a 

description of what the agency intends to accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/about/budget-performance/strategic-plan/Pages/index.aspx

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Outcome FY 2010 

Enacted

FY 2011 

Estimated 1/

FY 2012 

Estimated

Percent 

Change

 Strong U.S. economic competitiveness 23,205 25,360 - -100.00%

 Prevented or mitigated financial and economic crises 208,042 228,245 - -100.00%

Total $232,047 $253,605 $0 -100.00%

3A - Supervision of the Thrift Industry ($253,605): On December 9, 1996, the FFIEC 

adopted the CAMELS rating system (Capital adequacy, Asset quality, Management, Earnings, 

Liquidity and Sensitivity to market risk) as the internal rating system to be used by the federal 

and state regulators for assessing the safety and soundness of financial institutions on a uniform 

basis. The CAMELS rating system puts increased emphasis on the quality of risk management 

practices. OTS assigns a composite CAMELS rating to savings associations at each 

examination. OTS adjusts the level of supervisory resources devoted to an association based on 

the composite rating. The CAMELS rating is based upon a scale of 1 through 5 in increasing 

order of supervisory concern.

The FFIEC first approved a uniform, interagency compliance rating system in 1980. The rating 

system reflects, in a comprehensive and uniform fashion, the nature and extent of a savings 

association’s compliance with consumer protection statutes, regulations and requirements. The 

Compliance Rating System is based upon a scale of 1 through 5 in increasing order of 

supervisory concern.

OTS elected to combine safety and soundness and compliance examinations to attain exam 

efficiencies and to improve risk assessment. Using comprehensive exam procedures, compliance 

with consumer protection laws is reviewed at more frequent intervals, which has improved the 

quality of the examination process.

Capital absorbs losses, promotes public confidence and provides protection to depositors and the 

FDIC insurance fund. Capital provides a financial cushion that can allow a savings association 

to continue operating during periods of loss or other adverse conditions. The Federal Deposit 

Insurance Act established a system of prompt corrective action (PCA) that classifies insured 

depository institutions into five categories (well-capitalized; adequately capitalized; 

undercapitalized, significantly undercapitalized; and critically undercapitalized) based on their 

relative capital levels. The purpose of PCA is to resolve the problems of insured depository 

institutions at the least possible long-term cost to the deposit insurance fund.

(1) The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (Dodd-Frank Act), abolishes and 

transfers the functions of the Office of Thrift Supervision in Fiscal Year 2011. 
OTS - 6

OTS examines savings associations every 12-18 months for safety and soundness, and 

compliance with consumer protection laws. OTS performs safety and soundness examinations 

of its regulated savings associations consistent with statutory authority. When OTS identifies 

safety and soundness or compliance issues during its risk-focused examinations, it acts promptly 

to ensure association management and directors institute corrective actions to address 

supervisory concerns. OTS staff often meets with the savings association’s board of directors 

after delivery of the Report of Examination to discuss findings and recommendations.

Beginning in FY 2006, OTS included a performance measure that reflects the efficiency of its 

operations while meeting the increasing supervisory demands of a growing and more complex 

thrift industry. This measure supports OTS’ ongoing efforts to efficiently use agency resources. 

The efficiency measure is impacted by the relative size of the savings associations regulated. 

Approximately 60 percent of all savings associations have total assets of less than $250 million 

and are generally community-based organizations that provide retail financial services in their 

local markets. The measure does not include the assets of the holding company enterprises 

regulated by OTS.

3.2.1 Supervision of the Thrift Industry Budget and Performance Plan

Supervision of the Thrift Industry Budget Activity

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Estimated 1/ Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $245,699 $233,571 $232,047 $253,605 $0

Total Resources $245,699 $233,571 $232,047 $253,605 $0

Budget Activity Total $245,699 $233,571 $232,047 $253,605 $0

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Percent of Safety and Soundness Exams Started as 

Scheduled (Ot)

94.0 94.0 97.0 90.0 Disc

Percent of Thrifts that are Well Capitalized (Oe) 98.4 97.0 95.0 95.0 Disc

Percent of Thrifts with Composite CAMELS Ratings of 1 or 2 

(%) (Oe)

90.0 84.0 77.0 80.0 Disc

Percent of Thrifts with a Compliance Examination Ratings of 

1 or 2 (Oe)

95.8 95.0 92.0 90.0 Disc

Total OTS Costs Relative to Every $100,000 in Savings 

Association Assets Regulated (E)

15.1 19.88 24.01 24.0 Disc

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. Satisfaction, 

DISC - Discontinued, and B - Baseline

(1) The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (Dodd-Frank Act), abolishes and 

transfers the functions of the Office of Thrift Supervision in Fiscal Year 2011. 
OTS - 7

Percent of Safety and Soundness Exams Started as Scheduled - OTS examines savings 

associations every 12-18 months for safety and soundness, and compliance with consumer 

protection laws. OTS performs safety and soundness examinations of its regulated savings 

associations consistent with statutory authority. When OTS identifies safety and soundness or 

compliance issues during its risk-focused examinations, it acts promptly to ensure association 

management and directors institute corrective actions to address supervisory concerns. OTS 

staff often meets with the savings association’s board of directors after delivery of the Report of 

Examination to discuss findings and recommendations.

Percent of Thrifts That Are Well Capitalized - Capital absorbs losses, promotes public 

confidence and provides protection to depositors and the FDIC insurance fund. Capital provides 

a financial cushion that can allow a savings association to continue operating during periods of 

loss or other adverse conditions. The Federal Deposit Insurance Act established a system of 

prompt corrective action (PCA) that classifies insured depository institutions into five categories 

(well-capitalized; adequately capitalized; undercapitalized, significantly undercapitalized; and 

critically undercapitalized) based on their relative capital levels. The purpose of PCA is to 

resolve the problems of insured depository institutions at the least possible long-term cost to the 

deposit insurance fund.

Percent of Thrifts With Compliance Examination Ratings of 1 or 2 - The FFIEC first approved a 

uniform, interagency compliance rating system in 1980. The rating system reflects, in a 

comprehensive and uniform fashion, the nature and extent of a savings association’s compliance 

with consumer protection statutes, regulations and requirements. The Compliance Rating 

System is based upon a scale of 1 through 5 in increasing order of supervisory concern. OTS 

combines safety and soundness and compliance examinations to attain exam efficiencies and to 

improve risk assessment.

Percent of Thrifts With Composite CAMELS Ratings of 1 or 2 - On December 9, 1996, the 

FFIEC adopted the CAMELS rating system (Capital adequacy, Asset quality, Management, 

Earnings, Liquidity and Sensitivity to market risk) as the internal rating system to be used by the 

federal and state regulators for assessing the safety and soundness of financial institutions on a 

uniform basis. The CAMELS rating system puts increased emphasis on the quality of risk 

management practices. OTS assigns a composite CAMELS rating to savings associations at 

each examination. OTS adjusts the level of supervisory resources devoted to an association 

based on the composite rating. The CAMELS rating is based upon a scale of 1 through 5 in 

increasing order of supervisory concern.

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/

WCF - 1

Overview

Introduction

The Department of the Treasury Working Capital Fund (WCF) was established by the 

Excise, Estate, and Gift Tax Adjustment Act of 1970 (P.L. 91-614 § 401). As codified in 

31 USC §322, “Amounts in the fund are available for expenses of operating and 

maintaining common administrative services of the Department that the Secretary of the 

Treasury, with the approval of the Director of the Office of Management and Budget, 

decides may be carried out more advantageously and more economically as central 

services.”

Program Summary by Bureau Type

Dollars in Thousands

*The decrease in funding level from FY 2010 to 2011 is primarily due to the elimination of the Treasury 

Communications System (TCS) program. Treasury’s network is now funded outside of the Working 

Capital Fund.

FY 2010 FY 2011 FY 2012 $ Change % Change

Funding Source Enacted Estimate Estimate FY 2011 FY 2011

To FY 2012 To FY 2012

Treasury Appropriated Bureaus $186,210 $131,728 $122,509 ($9,219) -7.00%

Treasury non-Appropriated Bureaus $15,495 $15,616 $14,357 ($1,259) -8.06%

Non-Treasury $6,153 $5,306 $5,000 ($306) -5.77%

Grand Total Financial Plan Requirements $207,859 $152,650 $141,866 ($10,784) -7.06%
WCF - 2

Table of Contents

SECTION 1 – PURPOSE................................................................................................. 3

SECTION 2 - PROGRAM ACTIVITIES AND SERVICES........................................ 3

2A - Intelligence and Security ............................................................................................ 3

Security Programs .............................................................................................................................. 3

2B – Deputy Assistant Secretary, Human Resources/Chief Human Capital Officer ......... 3

Human Capital Strategic Management ............................................................................................ 3

Civil Rights and Diversity .................................................................................................................. 4

2C – Deputy Assistant Secretary, Information Systems/Chief Information Officer .......... 4

HR Connect ......................................................................................................................................... 4

NFC/Employee Express...................................................................................................................... 4

Telecommunications ........................................................................................................................... 5

Cyber Security..................................................................................................................................... 6

Capital Planning and Information Management ............................................................................. 6

HSPD-12 .............................................................................................................................................. 7

2D – Other Management & CFO Programs ....................................................................... 7

Financial Systems Integration............................................................................................................ 7

Emergency Programs ......................................................................................................................... 7

Small and Disadvantaged Business Utilization................................................................................. 8

Procurement........................................................................................................................................ 8

Government-wide Council Payments................................................................................................ 8

Treasury Operations Excellence........................................................................................................ 8

Privacy, Transparency & Records .................................................................................................... 8

Environment, Safety, and Health ...................................................................................................... 9

Printing and Graphics Services ......................................................................................................... 9

Communications, Information, and Locator Center ....................................................................... 9

2F – Support Services....................................................................................................... 10

2.1 – Funding Detail by Program...................................................................................... 11

2.2 – Full-Time Equivalents by Program.......................................................................... 12

2.3 – Funding Detail by Bureau........................................................................................ 13

2.4 – Funding Detail by Operating Levels........................................................................ 14
WCF - 3

Section 1 – Purpose

The WCF exists to (1) promote economies of scale, (2) reduce overhead costs, (3) 

promote central management, (4) avoid duplication among those who might provide the 

service, (5) improve service quality, (6) make available goods and services to those users 

who could not afford them except on a centralized basis, (7) provide flexibility in the 

timing of purchases, and (8) allow for replacement of equipment and other assets on a 

long-term basis through the use of depreciation charges to users, as a means of recovering 

those costs.

Section 2 - Program Activities and Services

The majority of the service providers under the WCF program are organizational 

components of the Assistant Secretary for Management and Chief Financial Officer 

(ASM/CFO) in the Departmental Offices. The three exceptions are the Security Program 

which is located in the Office of Terrorism and Financial Intelligence, the Office of Small 

and Disadvantaged Business Utilization which is located in the Office of the Deputy 

Secretary and the Homeland Security Presidential Directive – 12 program which the 

Internal Revenue Service serves as the Executive Agent. The programs in the WCF for 

FY 2012 are as follows:

2A - Intelligence and Security

Security Programs

Resource Level: $811,030 and 3 FTE

Description: Security Programs develop guidance and provide operational assistance and 

direction on security of information, contracts, systems, facilities, critical infrastructure, 

and personnel; and provides training.

2B – Deputy Assistant Secretary, Human Resources/Chief Human Capital Officer

(CHCO)

Human Capital Strategic Management

Resource Level: $962,640 and 5 FTE

Description: This program plays a critical role in facilitating the responsibilities of the 

CHCO office from a Treasury-wide perspective. It ensures compliance with the CHCO 

Act, and develops and implements programs and guidance on staffing and recruitment, 

pay and leave administration, and performance management.
WCF - 4

Civil Rights and Diversity 

Resource Level: $1,898,306 and 10 FTE

Description: The Civil Rights and Diversity program administers the Department’s 

Equal Opportunity Program, mandated by 29 CFR 1614, to provide equal opportunity in 

employment for all persons and to prohibit discrimination in employment, including 

providing prompt, fair and impartial processing of complaints. It also provides

enterprise-wide solutions to address equal opportunity and civil rights concerns and 

opportunities that cross bureau lines.

2C – Deputy Assistant Secretary, Information Systems/Chief Information Officer

HR Connect

Resource Level: $27,109,188 and 38 FTEs

Description: HR Connect is Treasury’s enterprise system, a web-based solution built on 

PeopleSoft commercial-off-the-shelf (COTS) software. HR Connect transforms core 

back-office HR functions, moving them from a processing-centric capability, supported 

by Treasury and National Finance Center (NFC) legacy systems, to a strategic-centric 

capability enabled through its commercial software underpinning. Additionally, selfservice components of the software fundamentally transform the standard government 

HR service delivery model, putting additional information, services and processes (i.e., 

personal data, position management, requests for personnel action, recruitment, reporting, 

etc.) directly in the hands of managers and employees allowing better and more efficient 

decision making.

HR Connect supports the OPM mandate that requires all federal agencies to use a 

learning management system to fully account for federal professional development 

activity; reduces training costs through competitive and consolidated course purchases; 

enables comprehensive and reliable reporting to leadership and OPM; and offers a onestop-shop, twenty-four hour access to over 3,000 online courses and more than 18,000 

professional books.

NFC/Employee Express

Resource Level: $22,853,201 and 16 FTEs

Description: Treasury’s HR Connect system interfaces with the National Finance Center 

(NFC) for payroll processing and administration providing integration and process 

support as well as Employee Express. Employee Express is an application which feeds 

into the NFC database to allow employees to perform various self-service activities such 

as updating taxes, allotments, health insurance, savings bonds, and thrift savings 

contributions.
WCF - 5

HR Connect E-Government - Funds interagency agreements between Treasury and OPM 

to implement OPM’s E-Government initiatives. The specific initiatives funded are 

Enterprise Human Resources Integration, Human Resources Line of Business, and 

USAJOBS.

Telecommunications

Resource Level: $32,236,387 and 24 FTEs

Description: The Operations Office provides oversight and management of all 

telecommunications programs within the OCIO. It provides strategic direction to the

telecommunications programs, ensures that they are managing costs according to best 

practices, and reduces costs where possible.

The Digital Telecommunications System provides telecommunications capabilities to 

Treasury bureaus nationwide. The three core programs are Digital Telecommunications 

System, Treasury Local Access Transport Area, and SONET (Synchronous Optical 

Network). The Digital Telecommunications System provides digital voice, data, and 

Voice over Internet (VoIP) telecommunications to the following bureaus in the 

Washington, DC metropolitan area: BEP, CDFI, Departmental Offices, IRS, TIGTA, 

FMS, OCC, and OIG. These services include local and long distance calling, Audio and 

Video Conferencing, Automatic Call Distribution services, voice mail, E911, and related 

support and maintenance. The Treasury Local Access Transport Area provides for local 

voice and data circuitry and connectivity to all DTS users, as well as for local 

connectivity outside of the DTS network. SONET provides for high speed transport and 

redundant connectivity between remote local DTS switches at Bureau facilities, and the 

host switch (5ESS Central Office) located at 30 E St., SW, Washington, DC.

The Government Secure Operations Center serves as the focal point for management of 

cyber incidents and is responsible for security detection, analysis and incident 

management lifecycle practices to improve the Department’s overall security posture. 

The Center ensures adherence to Departmental and Federal security standards; and 

improve cyber threat awareness across Treasury bureaus.

The Wireless Program provides centralized management of, and guidance for, all 

wireless activities and spectrum usage across Treasury.

The Web Hosting Program provides web services functions for the Treasury public 

websites and the Treasury-wide intranet including website design; content management; 

Treasury-wide team collaboration sites; survey creation; and support for bureau/office 

webmasters and content managers. It provides web hosting functions to include common 

infrastructure, support, and management for hosting Treasury’s enterprise applications.
WCF - 6

Cyber Security

Resource Level: $1,200,681 and 6 FTE

Description: Critical Infrastructure Protection and Information Security services support 

the direct protection of designated Treasury Critical Infrastructure/Key Resources against 

terrorist activity. They also support the protection (confidentiality, integrity, and 

availability) of the Department’s unclassified and classified systems, and the information 

they process. Finally, they coordinate the Department’s overall activities to implement 

the Federal Information Security Management Act (FISMA) of 2002.

E-Government

Resource Level: $9,207,944 and 20 FTEs

Description: E-Government Payments services include IT Infrastructure Operations, 

Grants Management, Geo Spatial, Budget Formulation and Execution, Disaster 

Assistance Improvement Plan (DAIP) Systems, Financial Management Line of Business, 

and E-Rule Making.

Enterprise Architecture services develop an IT Strategy and Transition Plan to meet 

Treasury’s mission requirements and strategic goals. The office collaborates with 

bureaus and partners with CPIC to ensure management of IT portfolios align with IT 

transition plans. The office also prepares business and technical analysis that identifies

opportunities for shared services and emerging technologies, recommends initial budget 

and procurement actions, and collects OMB compliance data.

Enterprise Solutions leverage and optimize innovative information technology (IT) 

solutions to modernize and web-enable government services to eliminate redundant IT 

investments. These services also look for enterprise-wide procurements for improving 

the overall efficiency of IT resources through bulk buy hardware purchases, software, and 

licensing agreements. Finally they serve as the Public Key Infrastructure (PKI) PMO for 

the Department and coordinate all e-Government activities for the Department.

Capital Planning and Information Management

Resource Level: $3,160,373 and 10 FTE

Capital Planning and Investment Control develops procedures and policies to manage 

Treasury’s IT portfolio, collaborates with bureaus and partners with Enterprise 

Architecture so management of IT portfolios aligns with IT transition plans, evaluates 

progress of IT investments against transition plans and makes corresponding on-going 

recommendations for budget and procurement actions, and collects OMB compliance 

data.
WCF - 7

Information Management implements the Office of the Chief Information Officer’s 

(OCIO) statutory and regulatory programs which include Section 508 (accessibility), 

computer matching activities, forms management, Paperwork Reduction Act information 

collection activities, external directories, data mining, and information quality.

HSPD-12

Resource Level: $17,257,073 and 13 FTE

Description: The HSPD-12 program provides guidance, coordination, management 

processes, technical coordination for personal identity verification, credential and access 

management compliance, and establishes the Identity and Access Management (IdAM) 

capabilities Treasury-wide.

2D – Other Management & CFO Programs

Financial Systems Integration

Resource Level: $2,884,685 and 2 FTE

Description: The Financial Systems Integration program develops and maintains the 

Financial Analysis and Reporting System (FARS) which perform analysis and reporting 

functions for proprietary and budgetary accounting, management control, and audit 

follow-up. It ensures that FARS applications are enhanced to meet government-wide, 

departmental, and bureau data standards and reporting requirements. FARS applications 

include the Treasury Information Executive Repository, CFO Vision, and the Joint Audit 

Management Enterprise System. 

Emergency Programs

Resource Level: $3,667,269 and 8 FTE

Description: Emergency Programs ensures continuity of the Treasury Department’s 

essential functions during disasters. The focus of the WCF funded component is the 

maintenance of facilities and communications between the Department of the Treasury’s

bureaus and senior officials in a state of emergency.

The staff administers and maintains the Treasury Emergency Management program. The 

program ensures that the Department of the Treasury is fully prepared for natural and 

man-made disasters by executing major operational items contained in National 

Continuity Policy / National Security Presidential Directive 51 / Homeland Security 

Presidential Directive 20 (NSPD-51/HSPD-20); National Continuity Policy 

Implementation Plan; and FCD-1 and FCD-2 during White House or Department of 

Homeland Security sponsored Continuity of Operations activation and training scenarios.
WCF - 8

Small and Disadvantaged Business Utilization

Resource Level: $794,943 and 4 FTE

Description: The Office of Small and Disadvantaged Business Utilization advises the 

Secretary, Deputy Secretary, and Bureau Heads on small business policies and initiatives; 

training and advising small businesses on how to do business with the Department of the 

Treasury; and advising and training procurement officials on small business matters.

Procurement

Resource Level: $893,124 and 2 FTEs

Description: The procurement program contributes to the governance decisions for 

Integrated Acquisition Environment (IAE) e-government systems and acts as the system 

administrator for five systems. The program administers access, passwords and user 

names, coordinates complaint resolution, and provides training for users; it manages the 

purchase card program and through career management initiatives ensures consistent 

application of federal acquisition workforce requirements across the bureaus. It includes 

Treasury’s share of costs to maintain and develop government-wide IAE systems.

Government-wide Council Payments

Resource Level: $496,359 and 0 FTE

Description: The Government-wide Council Payments support Treasury’s participation 

in Government-wide Councils. These councils are: Chief Financial Officer’s Council, 

Chief Information Officer’s Council, Chief Acquisitions Officer’s Council, Chief Human 

Capital Officer’s Council and President’s Management Council.

Treasury Operations Excellence

Resource Level: $1,240,554 and 5 FTE

Description: Treasury Operations Excellence provides services to help Treasury use 

entrusted resources more effectively and efficiently. Areas of support include strategic 

development, organizational development & design, operational analysis, process 

development & improvement, project management, facilitation and consultation.

Privacy, Transparency, & Records

Resource Level: $684,695 and 4 FTE

Description: Privacy Transparency & Records provides procedural and technical 

guidance and services to Treasury employees for information privacy and records 

management. The program develops strategies to implement these programs; works with 
WCF - 9

bureaus and offices to develop and apply technology; coordinates programs within the 

bureaus and oversight organizations; conducts and/or facilitates training; and provides

advice and technical expertise across the Department.

Environment, Safety, and Health

Resource Level: $993,950 and 2 FTE

Description: The Environmental Health and Safety program manages and maintains the 

Safety and Health Information Management System, which allows bureaus to track 

worker’s compensation claim status and costs, and review data on injuries and illnesses to 

determine trends and identify possible prevention strategies.

Printing and Graphics Services

Resource Level: $4,018,613 and 27 FTE

Description: The Printing and Graphics program provides contract printing services to 

Treasury bureaus, and assist customers in planning and designing printed publications. It 

coordinates all printing procurement activity with the Government Printing Office and 

worked to develop “term contracts” for specific product lines or product types. The 

program functions as a central point for all printing and digital duplicating requests to 

determine the most cost effective method of obtaining printed materials.

Printing and Graphics provides quick-turn-around digital printing of black and white and 

color copying, document scanning, and bindery services to Treasury bureaus. It provides

a web-based, on-line print job submission and workflow automation system, via 

networked digital copiers, which offers customer convenience and reduced lead time.

Finally expert design services are provided to create and reproduce the highest quality 

digital graphics for presentations, special event displays, and print and electronic 

publications. Products include power point presentations, website design and web 

graphics, electronic (508 Compliant) files for posting to the Treasury website, color 

posters, laminated tags or credentials, tent cards, fabric banners, special event support 

requiring a consistent branding of an event or theme, on-site calligraphy services, and 

award-winning digital photographic services.

Communications, Information, and Locator Center

Resource Level: $799,840 and 7 FTE

Description: The Communications, Information, and Locator Center program provides

after hours executive telephone answering/messaging/ conferencing services; provides

connectivity to employees home, cell, emergency contact, pager, blackberries and any 

available contact numbers on file; provides continuous communication services in an 
WCF - 10

emergency or crisis event; and maintains the Treasury employees’ emergency after 

hour’s locator information system.

2F – Support Services

Resource Level: $8,694,837 and 19 FTE

Description: The Support Services program captures centralized administrative support

costs for all WCF funded personnel that is not reflected in each WCF program’s budget. 

It also captures the costs of the administrative personnel who serve the WCF programs in 

the following areas: legal counsel, financial management, facilities, personnel, 

procurement, and fund management.
WCF - 11

2.1 – Funding Detail by Program

Dollars in Thousands

*The decrease in ACIO Telecommunications funding level from FY 2010 to 2011 is primarily due to the 

elimination of the Treasury Communications System (TCS) program. Treasury’s network is now funded 

outside of the Working Capital Fund.

FY 2010 FY 2011 FY 2012

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

INTELLIGENCE & SECURITY

Security Programs $1,294 $806 $811

Intelligence & Security (Total) $1,294 $806 $811

DAS, HUMAN RESOURCES/CHCO

Human Capital Strategic Management $918 $958 $963

Civil Rights & Diversity $1,448 $2,261 $1,898

Human Resources (Total) $2,366 $3,219 $2,861

DAS, INFORMATION SYSTEMS & CIO

ACIO HRConnect Operations & Maintenance $28,992 $29,892 $27,109

ACIO NFC Payroll/Employee Express $24,057 $24,667 $22,853

HR Connect (Subtotal) $53,049 $54,559 $49,962

CIO Resource Management 1/ $3,209 $0 $0

ACIO Telecommunications $89,033 $35,610 $32,236

ACIO Cyber Security $1,503 $1,197 $1,201

ACIO E-Government $9,943 $9,437 $9,208

ACIO Capital Planning & Information Management $3,979 $3,264 $3,160

HSPD-12 $18,738 $17,865 $17,257

Information Systems (Subtotal) $126,404 $67,371 $63,062

DAS, Information Systems (Total) $179,452 $121,930 $113,025

OTHER MANAGEMENT & CFO

Financial Systems Integration $2,986 $3,122 $2,885

Emergency Programs N/A $4,238 $3,667

Small & Disadvantaged Business Utilization $780 $791 $795

Procurement Program $894 $906 $893

Government-w ide Council Payments $483 $490 $496

Treasury Operations Excellence $1,500 $1,678 $1,241

Privacy, Transparence, & Records $700 $710 $685

Environment, Safety, & Health $970 $984 $994

Printing Procurement, Reproduction & Graphics Services $4,087 $3,998 $4,019

Communications, Information, & Locator Center $786 $793 $800

Headquarters Operations (Total) $16,922 $17,710 $16,474

Centralized Support Services $7,825 $8,984 $8,695

Grand Total $207,859 $152,650 $141,866

1/ Merged w ith Centralized Support Services in FY 2010.
WCF - 12

2.2 – Full-Time Equivalents by Program

Dollars in Thousands

Federal & Contractor Staff

Fed. Cont. Fed. Cont. Fed. Cont.

Intelligency & Security

Security Programs 3 - 3 - 3 -

Intelligence & Security (Total) 3 - 3 - 3 -

DAS, HUMAN RESOURCES/CHCO

Human Capital Strategic Management 5 - 5 - 5 -

Civil Rights & Diversity 9 - 10 - 10 -

Human Resources (Total) 14 - 15 - 15 -

DAS, INFORMATION SYSTEMS & CIO

ACIO HRConnect Operations & Maintenance 36 25 38 25 38 25

ACIO NFC Payroll/Employee Express 16 - 16 - 16 -

HR Connect (Subtotal) 52 25 54 25 54 25

CIO Resource Management 1/ 8 10 - - - -

ACIO Telecommunications 25 175 24 57 24 57

ACIO Cyber Security - Information Security 6 - 6 - 6 -

ACIO E-Government 16 17 20 11 20 11

ACIO Capital Planning & Information Management 10 8 10 2 10 2

HSPD-12 14 - 13 - 13 -

Information Systems (Subtotal) 79 210 73 70 73 70

CIO/Information Systems (Total) 131 235 127 95 127 95

OTHER MANAGEMENT & CFO

Financial Systems Integration 2 8 2 8 2 8

Emergency Programs 7 3 8 3 8 3

Small & Disadvantaged Business Utilization 4 - 4 - 4 -

Procurement Program 2 - 2 - 2 -

Government-w ide Council Payments - - - - - -

Treasury Operations Excellence 2 - 5 - 5 -

Privacy, Transparency, & Records 4 - 4 - 4 -

Environment, Safety, & Health 2 - 2 - 2 -

Printing Procurement, Reproduction, & Graphics 28 1 27 1 27 1

Communications, Information, & Locator Center 7 - 7 - 7 -

Headquarters Operations (Total) 58 12 61 12 61 12

Centralized Support Services 22 3 19 5 19 5

Grand Total 228 250 225 112 225 112

1/ Merged w ith Centralized Support Services in FY 2010.

The Terms "Fed" and "Cont" in the column headers refers to "Federal Employees" and "Contractors," respectively. 

Plan Estimate Estimate

FY 2010 FY 2011 FY 2012

Initial Initial Plan Budget
WCF - 13

2.3 – Funding Detail by Bureau

Dollars in Thousands

FY 2010 FY 2011 FY 2012

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

Alcohol & Tobacco Tax & Trade Bureau $1,492 $850 $825

Community Development Financial Institutions Fund $343 $358 $338

Departmental Offices (OTA) $81 $84 $85

Departmental Offices (S&E) $15,119 $13,573 $11,525

Departmental Offices (OFS) $672 $711 $663

Departmental Offices (DSCIP) $656 $0 $0

Financial Crimes Enforcement Network $1,566 $507 $490

Financial Management Service $6,128 $6,095 $5,767

Internal Revenue Service $156,509 $105,460 $98,911

Treasury Inspector General for Tax Administration $1,271 $1,855 $1,745

Office of the Inspector General $385 $335 $320

Special Inspector General for TARP $321 $274 $255

Bureau of the Public Debt $1,668 $1,628 $1,586

Subtotal (Treasury Appropriated Bureaus) $186,210 $131,728 $122,509

Comptroller of the Currency $5,037 $5,272 $4,633

DC Pensions $64 $66 $63

Departmental Offices (WCF) $170 $169 $166

Bureau of Engraving and Printing $4,763 $4,496 $4,188

Executive Office for Asset Forfeiture $70 $34 $32

Federal Financing Bank $33 $29 $27

Office of Thrift Supervision $1,749 $1,740 $1,685

FF - BPD Administrative Resource Center (ARC) $1,023 $1,217 $1,087

U.S. MINT $2,586 $2,593 $2,475

Subtotal (Treasury non-Appropriated Bureaus) $15,495 $15,616 $14,357

Alcohol, Tobacco, Firearms, & Explosives $1,289 $1,196 $1,234

Department of Commerce $0 $356 $0

DHS - U.S. Secret Service $1,524 $1,407 $1,440

General Accountability Office $1,777 $624 $659

Department of Housing and Urban Development $1,564 $1,723 $1,667

Subtotal (Non-Treasury) $6,153 $5,306 $5,000

Grand Total Financial Plan Requirements $207,859 $152,650 $141,866

Note: Non-Treasury customers purchase services from the HR Connect Program.
WCF - 14

2.4 – Funding Detail by Operating Levels

Dollars in Thousands

FY 2010 FY 2011 FY 2012

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

Object Classification:

11.1 Full-Time Permanent Positions $26,305 $25,915 $25,915

11.1 Other than Full-Time Permanent Positions 0 0 0

11.5 Other Personnel Compensation 544 615 615

11.8 Special Personal Services Payments 0 0 0

11.9 Personnel Compensation (Total) $26,849 $26,531 $26,531

12.0 Personnel Benefits 5,170 5,288 5,353

13.0 Benefits to Former Personnel 0 0 0

21.0 Travel 406 393 398

22.0 Transportation of Things 0 2 2

23.1 Rental Payments to GSA 0 0 0

23.2 Rent Payments to Others 0 0 0

23.3 Communications, Utilities, & Misc 3,590 4,373 4,435

24.0 Printing and Reproduction 75 54 55

25.1 Advisory & Assistance Services 0 0 0

25.2 Other Services 162,763 113,366 102,443

25.3 Purchase of Goods/Serv. from Govt. Accts 0 0 0

25.4 Operation & Maintenance of Facilities 0 0 0

25.5 Research & Development Contracts 0 0 0

25.6 Medical Care 0 0 0

25.7 Operation & Maintenance of Equipment 0 0 0

25.8 Subsistence & Support of Persons 0 0 0

26.0 Supplies and Materials 3,100 182 185

31.0 Equipment 5,906 2,461 2,464

32.0 Lands and Structures 0 0 0

33.0 Investments & Loans 0 0 0

41.0 Grants, Subsidies 0 0 0

42.0 Insurance Claims & Indemn 0 0 0

43.0 Interest and Dividends 0 0 0

44.0 Refunds 0 0 0

Total Budget Authority $207,859 $152,650 $141,866

International Programs

The Department of the Treasury’s FY 2012 budget request for International Programs is included 

in the State, Foreign Operations, and Other Related Programs Appropriation. 

CFPB - 1

Overview

Mission Statement

To make markets for consumer financial products and services work for Americans by

promoting transparency and consumer choice and preventing abusive and deceptive financial 

practices.

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012 Change FY10 to FY12

Actual Estimated Estimated $ Change % Change

 Consumer Financial Protection Bureau $9,200 $142,825 $329,045 $186,220 130%

Total Resources $9,200 $142,825 $329,045 $186,220 130%

Total FTE 0 342 1,225 883 258%
CFPB-2

Table of Contents

Overview ...................................................................................................................................1

 Mission Statement..................................................................................................................1

 Program Summary by Budget Activity..................................................................................1

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

 1A – Description of Bureau Vision and Priorities.................................................................3

 1B – Program History and Future Outlook............................................................................4

Section 2 – Budget Adjustments and Appropriation Language..........................................5

 2.2 – Operating Levels Table.................................................................................................5

 2.3 – Resource Detail Table...................................................................................................5

 2B – Appropriations Language and Explanation of Changes................................................6

Section 3 – Budget and Performance Plan ............................................................................7
CFPB-3

Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) 

established the Bureau of Consumer Financial Protection (CFPB or Bureau) as an independent 

bureau within the Federal Reserve System and made it responsible for protecting consumers 

from abusive financial services practices. The Secretary of the Treasury is authorized to perform 

certain functions of the Bureau until the Director of the Bureau is appointed. On the designated 

transfer date, July 21, 2011, certain consumer protection authorities will transfer to the Bureau 

from seven existing federal agencies. 

Once fully established, the CFPB will have important authorities under the Dodd-Frank Act and 

other consumer laws to look out for consumers as they borrow money or use other financial 

services. Among other things, the new consumer agency will: 

 Conduct rule-making, supervision, and enforcement for Federal consumer financial 

protection laws;

 Restrict unfair, deceptive, or abusive acts or practices;

 Create a center to take consumer complaints; 

 Promote financial education;

 Research consumer behavior;

 Monitor financial markets for new risks to consumers; and

 Enforce laws that outlaw discrimination and other unfair treatment in consumer finance.

The CFPB plans to have six primary divisions: Supervision and Enforcement; Consumer 

Engagement and Education; Research, Markets, and Regulations; External Affairs; General 

Counsel; and Chief Operating Officer.

The CFPB is funded by authorized transfers from the Federal Reserve System, subject to limits

established in the Dodd-Frank Act. The CFPB is also authorized to request up to $200 million in 

discretionary appropriations if the amount transferred by the Federal Reserve System is not 

sufficient. The CFPB is not requesting a discretionary appropriation in FY 2011 or FY 2012.
CFPB-4

1B – Program History and Future Outlook 

Consumer Financial Protection Bureau

The Department of the Treasury is responsible for setting up the new agency, and, on September 

17, 2010, President Obama and Treasury Secretary Geithner named Elizabeth Warren as 

Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB. 

The CFPB implementation team includes full-time Treasury employees and detailees from 

Treasury bureaus and other federal agencies.

Leading up to the July 21, 2011 transfer date, the CFPB implementation team is: 

 Meeting with consumer groups and financial services companies to ensure the Bureau’s

work targets real problems people encounter in the marketplace;

 Setting up and training the teams that will be responsible for supervising and enforcing 

Federal consumer financial laws;

 Laying the groundwork for the Bureau to write new rules required by the Dodd-Frank 

Act; 

 Developing a website and toll-free hotline for consumers; and

 Preparing to open offices to assist specific groups of consumers, including offices for 

Service member Affairs and Financial Protection for Older Americans, as specifically 

required under the Dodd-Frank Act.
CFPB-5

Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

Consumer Financial Protection Bureau FY 2010 Actual FY 2011 Estimated FY 2012 Estimated

FTE - 342 1,225

Object Classification

11.1 Full-Time Permanent Positions $0 $44,027 $167,549

12.0 Personnel Benefits $0 $14,601 $58,642

21.0 Travel. $0 $3,422 $12,273

22.0 Transportation of things $0 $1,000 $875

23.1 Rental Payments to GSA. $0 $7,360 $22,080

23.3 Communications, Utilities, & Mi $0 $2,896 $8,688

25.0 Contractual Services $0 $56,059 $48,907

26.0 Supplies and Materials $0 $766 $2,510

31.0 Equipment $0 $4,593 $7,522

225.1 Reimbursable Obligations $9,200 $8,101 $0

Total Budget Authority $9,200 $142,825 $329,045

Budget Activities:

Consumer Financial Protection Bureau $9,200 $142,825 $329,045

Total Budget Authority $9,200 $142,825 $329,045

2.3 – Resource Detail Table

Dollars in Thousands

% Change

FY 2010 FY 2011 FY 2012 FY 2011

Actual Estimated Estimated to FY 2012

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Transfers-in $18,400 $133,625 $329,045 146%

Total Revenue / Offsetting Collections $18,400 $133,625 $329,045 146%

Unobligated balances, Start of year $0 $9,200 $0 -100%

Recoveries of prior year obligations 0 0 0 0%

Net transfers (includes capital transfers) 0 0 0 0%

Total Budgetary Resources Available $18,400 $142,825 $329,045 130%

Expenses/Obligations

Consumer Financial Protection 

Bureau 0 $9,200 342 $142,825 1,225 $329,045 258 130%

Total Expenses / Obligations 0 $9,200 342 $142,825 1,225 $329,045 258 130%
CFPB-6

The CFPB budget estimates are based on the best available information at the time the Budget 

was prepared. As planning continues on the design and operations of the CFPB, predicting 

future costs is challenging. Nevertheless, the Bureau is focused on measured and deliberate 

growth over 2011 and 2012 as it judiciously deploys resources during the implementation

process. 

One of the largest cost elements in the CFPB budget is personnel costs, constituting 44 percent 

of the estimated budget in FY 2011 and 69 percent of total costs by the end of FY 2012. Another 

significant cost is contracted services needed for key systems and services to create and support 

the Bureau as it grows. The budget consists of several other types of expenses that are consistent 

with running a federal financial regulatory agency, such as rent, travel costs, and reimbursable 

detailed staff. For some of these estimates, CFPB has predicted specific future costs. In other 

areas, benchmarks from other Federal financial regulators have been used.

2B – Appropriations Language and Explanation of Changes

CFPB is not requesting any appropriations from Congress.
CFPB-7

Section 3 – Budget and Performance Plan

CFPB is currently working on developing a strategic plan for agency operations. There are no 

specific measures for managing CFPB performance at this time. Additional information on 

CFPB is available on www.treasury.gov and www.consumerfinance.gov.