Inspector General for Tax Administration

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

 Audit $57,421 $57,421 $62,357 $4,936 8.6%

 Investigations $94,579 $94,579 $95,474 $895 0.9%

Subtotal, Inspector General for Tax Administration $152,000 $152,000 $157,831 $5,831 3.8%

Offsetting Collections - Reimbursables $1,300 $1,300 $1,300 $0 -

Total Program Operating Level $153,300 $153,300 $159,131 $5,831 3.8%

Direct FTE 835 835 864 29 3.5%

Reimbursable FTE 3 3 3 - -

Total FTE 838 838 867 29 3.5%

Summary

The FY 2012 President’s Budget request for 

Treasury Inspector General for Tax 

Administration (TIGTA) will be used to 

continue to provide critical audit, 

investigative, and inspection and evaluation 

services, ensuring the integrity of tax 

administration on behalf of the nation’s 

taxpayers. While there are a number of critical 

areas where TIGTA will provide oversight, 

highlights of TIGTA’s investigative and audit 

priorities include: 

• 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;

• Responding to 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, Congress, 

and the Secretary of the Treasury of 

problems and progress made to resolve 

them; and. 

• Overseeing IRS 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).

TIGTA was created by Congress as a part of 

the Internal Revenue Service Restructuring 

and Reform Act of 1998 (RRA 98). TIGTA’s 

audits, investigations, inspections and 

evaluations protect and promote the fair 

administration of the American tax system. 

TIGTA conducts audits that advise the 

American people, Congress, the Secretary of 

the Treasury, and IRS management of highrisk issues, problems, and deficiencies related 

to the administration of IRS programs and 

operations. TIGTA’s audit recommendations 

improve IRS systems and operations, while 

maintaining fair and equitable treatment of 

taxpayers. TIGTA’s investigations ensure the 

integrity of IRS employees, contractors, and 
other 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 IRS’s tax 

administration system. TIGTA ensures that 

taxpayers can have confidence that the IRS 

collects more than $2 trillion in tax revenue in 

an effective and efficient manner.

Total resources required to support TIGTA 

activities for FY 2012 are $159,131,000, 

including $157,831,000 from direct 

appropriation and $1,300,000 from offsetting 

collections and reimbursable programs.

TIGTA FY 2012 Budget Highlights

(Dollars in thousands)

Appropriation Amount

FY 2010 Enacted $152,000

FY 2011 Annualized CR Level $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 $152,183

Program Changes:

Program Increases: $5,648

Oversight of IRS Implementation of the 

Affordable Care Act

$5,600

CIGIE Payment $48

Subtotal FY 2012 Program Changes $5,648

Total FY 2012 Request $157,831

FY 2012 Budget Adjustments

FY 2011 Annualized CR Level

The FY 2011 Annualized CR Level for 

TIGTA is $152,000,000.

Adjustment to Reach Policy Level 

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 

Presidents Policy Level is equal to the FY 

2011 President's Budget as adjusted for the 

proposed pay freeze.

Maintaining Current Levels (MCLs) 

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 

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.
Program Increases 

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 governmentwide 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 

TIGTAs CIGIE contribution to $380,000.

Explanation of Budget Activities

Salaries and Expenses

Audit ($62,357,000 from direct 

appropriations, and $551,000 from 

reimbursable programs)

The Office of Audit’s (OA) mission is to 

provide comprehensive coverage and oversight 

of all aspects of the IRS’s daily operations. 

Audits 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. In FY 

2010, audit reports produced potential 

financial benefits of approximately $11.46

billion, and potentially impacted

approximately 2.03 million taxpayer accounts

in areas such as taxpayer burden, rights and 

entitlements, taxpayer privacy and security, 

protection/use of resources, reliability of 

information, and increased revenue/revenue 

protected. Each fiscal year, OA develops an 

annual audit plan that communicates oversight 

priorities to Congress, the Department of the 

Treasury, and the IRS. This plan strikes a 

balance between statutory audit coverage and 

high risk audit work. The statutory coverage 

includes audits mandated by the IRS 

Restructuring and Reform Act of 1998, as well 

as reviews that address computer security and 

financial management. The high-risk 

workload includes issues pertaining to the 

IRS's modernization efforts, its major 

management challenges, its progress in 

achieving its strategic goals, as well as 

Congressional and other stakeholder requests 

for audit coverage.

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 

violations and administrative misconduct by 

IRS employees, protects the IRS against 

external attempts to corrupt tax administration, 

and ensures IRS employee safety and IRS 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. 

Fifty percent of TIGTA’s current 

investigations involve alleged employee 

misconduct. In addition to unauthorized 

access (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 IRS 

employees who might be committing fraud 

and other misconduct. During FY 2010, 

TIGTA initiated 70 proactive investigative 

initiatives.

Employee and Infrastructure Security: 

Congressional concern regarding the 

magnitude of uncollected revenue has 

prompted the IRS to intensify enforcement 

activities. Heightened enforcement is likely to 

cause a rise in external threats to IRS 

employees and infrastructure. Both TIGTA’s 

proactive and reactive investigations are 

critical to mitigating future risks. 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, to include the providing of 

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 FBI 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. In FY 2010, 

OI closed 1,425 investigations of assaults 

and/or threats made against IRS employees 

and facilities.

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, and tax 

practitioner fraud relating to thefts of taxpayer 

remittances and refunds.

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 Performance by Budget Activity

Budget Activity Performance Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Exceptional accountability and

transparency

Percentage of Audit Products 

Delivered when Promised to 

Stakeholders (Oe)

65.0 81.0 76.0 65.0 70.0

Exceptional accountability and 

transparency

Percentage of Recommendations 

Made that Have Been 

Implemented (Oe)

85.0 91.0 95.0 83.0 85.0

Exceptional accountability and 

transparency

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

• Issued 135 audit, inspection, and 

evaluation reports, identifying 

approximately $11.46 billion in potential 

financial benefits (i.e., costs savings, 

increased or protected revenue, taxpayer 

rights and entitlements, and inefficient use 

of resources). 

• Closed 86 percent of the 3,743 final closed 

investigations which generated results, 

including 1,635 cases of employee 

misconduct referred to the IRS for action 

and 235 cases accepted for prosecution.

• Note that FY 2011 performance targets 

were reduced to FY 2010 levels to align 

performance targets and funding levels 

based on FY 2010.