U.S. Department of the Treasury | Fiscal Year 2012

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Insert cover

November 15, 2012
U.S. Department of the Treasury | Fiscal Year 2012

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U.S. Department of the Treasury | Fiscal Year 2012

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TABLE OF CONTENTS

Executive Summary ............................................................................................................................................................................... 2

Organization........................................................................................................................................................................................... 2

Department of the Treasury Organizational Chart............................................................................................................................... 4

Treasury's Fiscal Years 2012 - 2015 Strategic Framework................................................................................................................... 5

Treasury's Fiscal Years 2012 Performance by Strategic Goal................................................................................................................7

Treasury's Fiscal Year 2012 - 2013 Agency Priority Goals and Status............................................................................................... 22

Department's Key Performance Measures for 2012 ........................................................................................................................... 26

Highlights of Management and Performance Challenges ..................................................................................................................28

Condensed Financial Statements........................................................................................................................................................33
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For the online version of this report, please see: 

http://www.treasury.gov

and search for “2012 Citizens’ Report”
U.S. Department of the Treasury | Fiscal Year 2012

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EXECUTIVE SUMMARY 

In fiscal year 2012, the Department of the Treasury 

undertook a multitude of actions that helped strengthen the 

U.S. economy, increase job opportunities, and improve the 

housing market by taking important steps to restore 

confidence in the financial system while reinforcing U.S. 

international competitiveness. The Department continued to 

implement the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (the Dodd-Frank Act); took 

aggressive actions in the fight against financial crimes, 

money laundering, and threats to national security; 

continued its pursuit of comprehensive tax and fiscal reform; 

and strengthened efforts to improve stewardship over the 

U.S. Government’s financial resources. Treasury worked to

encourage lending to small businesses, promote economic

prosperity, and monitor risk in the financial system. 

Treasury has also driven a departmental management agenda 

focused on governing strategically, working smarter, and 

leveraging advances in technology to gain greater cost savings 

for the American public, increase productivity, modernize 

operations, and support the Administration’s management 

agenda. 

ORGANIZATION

The Department of the Treasury is the executive agency responsible for promoting economic prosperity and ensuring the 

financial security of the United States. The Department is organized into the Departmental Offices, eight operating bureaus, and 

three inspectors general. The Departmental Offices are primarily responsible for policy formulation, while the bureaus are 

primarily the operating units of the organization.

DEPARTMENTAL OFFICES

Domestic Finance advises and assists in areas of domestic 

finance, banking, and other related economic matters. In 

addition, this office develops policies and guidance for 

Treasury Department responsibilities in the areas of financial 

institutions, federal debt finance, financial regulation,

financial stability, capital markets, financial management, 

fiscal policy, and cash management decisions. The staff

supporting the Financial Stability Oversight Council, as well 

as the staffs of the Office of Financial Research (OFR) and the 

Federal Insurance Office (FIO), created under the DoddFrank Act, reside within Domestic Finance. Domestic 

Finance also includes the Office of Financial Stability (OFS), 

which is responsible for overseeing the Troubled Asset Relief 

Program (TARP), and the Office of Financial Institutions, 

which oversees the Community Development Financial 

Institutions (CDFI) Fund, the Small Business Lending Fund 

(SBLF), and the State Small Business Credit Initiative 

(SSBCI).

International Affairs works to ensure the most favorable 

external environment for sustained jobs and economic 

growth in the United States. International Affairs economists 

produce international economic and financial policy analysis 

to support policymaking and to inform the office’s diverse but 

interrelated set of activities. These activities help advance

U.S. economic and financial policy priorities around the 

world such as promoting: free trade and open markets; stable 

international financial markets; and a level playing field for 

U.S. businesses and financial institutions internationally.

Terrorism and Financial Intelligence (TFI) marshals 

the Department’s intelligence, enforcement, and economic 

sanction functions with the twin aims of safeguarding the 

financial system against illicit use and combating rogue 

regimes, terrorist facilitators, weapons of mass destruction 

(WMD) proliferators, money launderers, drug kingpins, and 

other national security and foreign policy threats.

Economic Policy reports on current and prospective 

economic developments and assists in the determination of 

appropriate economic policies. The office is responsible for 

the review and analysis of domestic economic issues and 

developments in the financial markets.

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 
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domestic and international tax policy decisions. Tax Policy 

also provides revenue estimates for the President’s Budget.

Treasurer of the United States has direct oversight 

over the United States Mint and the Bureau of Engraving and 

Printing, and is a key liaison with the Federal Reserve. In 

addition, the Treasurer serves as a senior advisor to the 

Secretary in the areas of community development and public 

engagement.

Other Offices

Internally, Treasury’s Departmental Offices are responsible 

for overall management of the Department. The Office of 

Management and the Chief Financial Officer is responsible 

for managing the Department’s financial resources and 

oversees Treasury-wide programs, including human capital, 

information technology (IT), and minority and women 

inclusion.

Other support offices include General Counsel, Legislative 

Affairs, and Public Affairs. Also, three inspectors general—

the Office of the Inspector General (OIG), the Treasury 

Inspector General for Tax Administration (TIGTA), and the 

Special Inspector General for the Troubled Asset Relief 

Program (SIGTARP) — provide independent audits, 

investigations, and oversight of the Department of the 

Treasury and its programs. While SIGTARP is 

organizationally placed in Treasury, it is not under the 

general supervision of the Secretary.

BUREAUS

Bureaus employ 98 percent of Treasury’s workforce and are 

responsible for carrying out specific operations assigned to 

the Department.

The Alcohol and Tobacco Tax and Trade Bureau 

(TTB) collects federal excise taxes on alcohol, tobacco, 

firearms, and ammunition, and assures compliance with 

tobacco permitting and alcohol permitting, labeling, and 

marketing requirements to protect consumers.

The Bureau of Engraving and Printing (BEP)

develops and produces U.S. currency notes that are trusted 

worldwide.

The Bureau of the Public Debt (BPD) borrows the 

money needed to operate the U.S. Government through the 

sale of marketable, savings, and special purpose U.S. 

Treasury securities. It accounts for and services the public 

debt and provides reimbursable administrative support 

services to federal agencies.

The Financial Management Service (FMS) provides 

central payment services to federal program agencies, 

operates the U.S. Government’s collections and deposit 

systems, provides government-wide accounting and 

reporting services, and manages the collection of delinquent 

debt owed to the U.S. Government. 

Effective October 2012, the BPD and FMS operating bureaus 

consolidated to form the Bureau of the Fiscal Service. 

The Financial Crimes Enforcement Network 

(FinCEN) enhances the integrity of the financial system by 

facilitating the detection and deterrence of financial crime.

The Internal Revenue Service (IRS) is the largest of 

the Department’s bureaus and determines, assesses, and 

collects tax revenue for the U.S. Government.

The United States Mint designs, mints, and issues 

circulating and bullion coins, prepares and distributes 

numismatic coins and other items, and strikes Congressional 

Gold Medals and other medals of national significance. The 

United States Mint maintains physical custody and 

protection of most of the nation’s gold and all of its silver 

reserves.

The Office of the Comptroller of the Currency 

(OCC) charters, regulates, and supervises all national banks 

and federal savings associations to help ensure that they 

operate in a safe and sound manner and in compliance with 

laws requiring fair treatment of their customers and fair 

access to credit and financial products. 
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THE DEPARTMENT OF THE TREASURY ORGANIZATIONAL CHART
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TREASURY’S FISCAL YEARS 2012-2015 STRATEGIC FRAMEWORK

The Treasury’s Strategic Framework is a summary of the department’s goals and objectives. This framework provides the basis 

for performance planning and continuous improvement. Economic

Strategic Goals Strategic Objectives Indicators and Measures

Goal 1

Repair and 

Reform the 

Financial System 

and Support the 

Recovery of the 

Housing Market

Lead the Administration’s efforts to 

continue to implement comprehensive 

regulatory reform to increase stability and 

strengthen accountability in the financial 

system

Effectively manage and exit emergency 

programs

Reform and strengthen the housing 

finance system

Help prevent avoidable foreclosures and 

support the availability of affordable 

mortgage credit

TARP lifetime cost estimate

Income received from dividends, interest, warrants, and repayments of 

TARP investments

Rolling percent of investments remaining (overall and bank-only)

Monthly mortgage-backed securities statement

Housing scorecard indicators

Goal 2

Enhance U.S. 

Competitiveness 

and Promote 

International 

Financial Stability 

and Balanced 

Global Growth

Protect global economic and financial 

stability and encourage marketdetermined exchange rates

Promote strong international financial 

standards and a level playing field for 

U.S. financial institutions

Pursue free trade and open markets 

Encourage foreign investment in the U.S. 

economy

Enter into bilateral and multilateral tax 

agreements that encourage cross-border 

trade and investment

Use leadership positions in the 

multilateral development banks and the 

International Monetary Fund to advance 

U.S. national security and economic 

interests

Provide direct assistance to developing 

countries working to improve public 

financial management and strengthen 

their financial systems

Timely review of Committee on Foreign Investment in the United 

States (CFIUS) cases

Percentage of grant and loan proposals containing performance 

measures

Percentage of timely reviews of Multilateral Development Bank (MDB) 

grant and loan proposals

Percentage of timely reviews of International Monetary Fund (IMF) 

lending proposals

Traction and impact of technical assistance
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Security

Strategic Goals Strategic Objectives Indicators and Measures

Goal 3

Protect our 

National Security 

through Targeted 

Financial Actions

Collect, analyze, and disseminate 

financial and other information 

concerning illicit financing and national 

security threats

Disrupt and dismantle the financial 

networks of those who threaten national 

security or engage in illicit financing

Shape policy, laws, and regulations to 

safeguard the U.S. and international 

financial systems

Coordinate with partners, both at home 

and abroad, including the foreign policy, 

law enforcement, and intelligence 

communities, to combat illicit finance 

Assist partner countries in developing 

and implementing anti-money 

laundering and counter terrorist 

financing regimes compliant with 

international standards

Impact of economic sanctions

Impact of policymaking, outreach, and diplomacy

Impact of activities to create safer and more transparent financial 

systems

Ability to effectively collect, disseminate, and analyze financial 

intelligence

Strategic Goals Strategic Objectives Indicators and Measures

Financial

Goal 4

Pursue 

Comprehensive 

Tax and Fiscal 

Reform

Develop comprehensive proposals to 

reform and simplify the tax code

Increase voluntary tax compliance

Promote policies to ensure a sound fiscal 

footing over the medium term

Voluntary tax compliance

Number of tax proposals partially or completely enacted into law

Number of administrative initiatives implemented

Effects of fiscal policy

Goal 5

Manage the 

Government’s 

Finances in a 

Fiscally 

Responsible 

Manner

Optimize the cash and debt portfolio to 

manage the Government’s borrowing 

costs effectively

Expand the use of electronic transactions

Modernize financial systems and 

standardize accounting practices

Continuously improve our operations 

and processes to generate efficiency 

savings

Attract and retain an exceptional 

workforce

Percentage of Treasury payments made electronically

Percentage of vendor invoices processed electronically by Treasury

Percentage of total federal government receipts collected electronically

Percentage of individual tax returns filed electronically

Amount of delinquent debt collected

Mean absolute monthly forecast error on a cumulative basis for budget 

receipts, outlays, and non-marketable debt and mean absolute daily error 

in cash balance projections

Percentage of small business procurement targets met

Best Places to Work ranking

Percentage of new hires retained after two years
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TREASURY’S FISCAL YEAR 2012 PERFORMANCE BY STRATEGIC GOAL

GOAL #1: REPAIR AND REFORM THE 

FINANCIAL SYSTEM AND SUPPORT 

THE RECOVERY OF THE HOUSING 

MARKET 

In late 2008 and early 2009, the Department of the Treasury 

put in place a set of emergency programs to help break the 

back of a historic financial crisis, restore confidence, and 

restart economic growth. 

In 2010, Congress passed and the President signed into law 

comprehensive financial regulatory reform: The Dodd-Frank 

Act. Those reforms led by Treasury are helping to make 

future financial shocks less likely and less damaging by 

addressing key gaps and weaknesses in the pre-crisis 

financial system and helping to better protect consumers 

against fraud and abuse. 

Treasury also worked to support the process of repair and 

recovery of the housing market. The Department has worked 

with the White House and the Department of Housing and 

Urban Development (HUD) on the development of loan 

modification and refinancing programs designed to help 

prevent avoidable foreclosures and reduce mortgage costs for 

responsible homeowners as well as on reforms to help 

transition to a housing market where the private sector is the 

predominant source of mortgage credit.

DODD-FRANK ACT

During fiscal year 2012, Treasury continued to focus on 

building a more efficient, transparent, and stable financial 

system that contributes to the nation’s economic strength 

and enhances its resiliency. The Dodd-Frank Act addressed 

key gaps and weaknesses in the financial regulatory structure 

that contributed to the onset and severity of the financial 

crisis.

These reforms were designed to help better protect taxpayers, 

businesses, and American families by: 

• Constraining excessive risk taking to prevent 

financial instability from threatening the health of 

the economy as a whole

• Restoring investor confidence in the American 

financial system so that it can support savings and 

investment

• Leveling the playing field in the U.S. to permit 

community banks to compete fairly with the 

nation’s largest financial firms

• Promoting and strengthening complementary 

financial regulatory policies with G-20 member 

countries to support the resilience of the 

international financial system, enhance U.S. 

competitiveness and level the playing field 

internationally

• Educating and protecting consumers, through 

authority granted to Treasury and to the new 

Consumer Financial Protection Bureau (whose 

mission is to implement and enforce federal 

consumer financial laws, including the prohibition 

against unfair, deceptive, or abusive practices 

relating to consumer financial products and 

services)

FINANCIAL STABILITY OVERSIGHT COUNCIL

The Dodd-Frank Act established the Financial Stability 

Oversight Council (Council), comprised of federal financial 

regulators, state regulators, and other financial experts, to 

identify risks to the financial stability of the United States,

promote market discipline, and respond to emerging threats 

to the stability of the U.S. financial system. The Council, 

chaired by the Secretary of the Treasury, monitors threats to 

financial stability and facilitates coordination across the 

financial regulatory community. To that end, the 

Department of the Treasury has played an important role in a 

number of Dodd-Frank Act rulemakings.

The Secretary of the Treasury, as Chairperson of the Council, 

is coordinating the federal regulators’ risk retention 

rulemaking process. This rule will help align interests among 

mortgage originators, securitizers (i.e. firms that create and 

sell groups of mortgage loans as securities), and other 

investors that participate in the housing finance market. The 

Secretary is also coordinating the rulemaking to implement 

the Volcker Rule, which prohibits banking entities from 
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engaging in certain proprietary trading activities and limits 

hedge fund and private equity fund investments. . The 

Council has been actively engaged in activities to identify 

risks, promote market discipline, and respond to emerging 

threats to U.S. financial stability, such as identifying 

systematically important entities in the financial markets and

working to designate nonbank financial companies for 

supervision and enhanced prudential standards. 

The Council also actively facilitates information-sharing and 

coordination among its members regarding rulemakings, 

examinations, reporting requirements, and enforcement 

actions. Through meetings among its principals, as well as 

among the deputies and staffs of the Council members and 

their agencies, the Council has served as an important forum 

for increasing coordination among the member agencies.

OFFICE OF FINANCIAL RESEARCH

The Dodd-Frank Act established the Office of Financial 

Research (OFR) within the Treasury Department to serve the

Council, its member agencies, and the public by improving

the quality, transparency, and accessibility of financial data 

and information, conducting and sponsoring research related 

to financial stability, and promoting best practices in risk 

management. The OFR has established five strategic goals as 

part of its Fiscal Year 2012-2014 Strategic Plan:

• Support the Council through the secure provision of 

high-quality financial data and analysis needed to 

monitor threats to financial stability

• Develop and promote data-related standards and 

best practices

• Establish a center of excellence for research on 

financial stability and promote best practices for 

financial risk management

• Provide the public with key data and analysis while 

protecting sensitive information

• Establish the OFR as an efficient organization and

world-class workplace

In fiscal year 2012, the OFR has made significant and 

accelerating progress in meeting its goals and priorities.

Council Support: The OFR is providing data for use by the 

Council for its Annual Report, as well as data and analysis 

relating to the designation of nonbank financial companies 

for supervision by the Federal Reserve Board and enhanced 

prudential standards. The OFR is also continuing to enhance 

its Financial Stability Monitor—a dashboard of financial 

stability metrics and indicators—in collaboration with staff 

from Council members and their agencies. Consistent with 

its objectives to avoid duplicating existing efforts and to 

create new efficiencies, the OFR has completed the first two 

phases of an initial inventory of metadata among Council 

member agencies, and a third phase is underway. The OFR 

has established data sharing agreements with a number of 

Council member agencies and is working on new ones, where 

needed. It is also supporting the Council’s Data Committee, 

which supports data collection and information sharing. 

Standards: The OFR has played a central role in the 

international initiative to establish a global Legal Entity 

Identifier (LEI), a code that uniquely identifies parties to 

financial transactions, with a planned launch of the global 

system in March 2013. 

Center of Excellence for Research: In July 2012, the 

OFR issued its first Annual Report assessing the state of the 

U.S. financial system, the status of the efforts by the OFR to 

meet its mission, and key findings of the OFR’s research and 

analysis. In addition, during fiscal year 2012, the new office 

launched a Research Seminar Series, initiated a Working 

Paper Series, co-sponsored with the Council a December 2011 

conference, “The Macroprudential Toolkit: Measurement and 

Analysis,” and hosted an August 2012 workshop on stresstesting. The Financial Research Advisory Committee has 

been established to provide advice, recommendations, 

analysis, and information to the OFR. 

Public Information: To support transparent, accountable 

operations, the OFR has published key information on its 

website in fiscal year 2012, including its inaugural Annual 

Report, its Strategic Framework, two working papers, and 

broader information about its core outputs and operations.

Building the Institution: The OFR has made substantial 

progress in its hiring (with 120 staff by the end of fiscal year 

2012), building its institutional framework, establishing 

secure IT and business systems needed to carry out its 

mandate, and putting in place policies and procedures to 

support sound and efficient operations. As part of these 
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efforts, the OFR has established, and is continuing to 

enhance, a comprehensive strategic planning and 

performance management system, with a foundational set of 

performance measures to be published as part of the 

President’s fiscal year 2014 Budget.

FEDERAL INSURANCE OFFICE 

Treasury’s Federal Insurance Office (FIO), also established 

by the Dodd-Frank Act, monitors all aspects of the insurance 

industry, including identifying issues or gaps in regulation 

that could contribute to a systemic crisis in the insurance 

industry or financial system. FIO also monitors the 

accessibility and affordability of non-health insurance 

products to traditionally underserved communities; 

coordinates and develops federal policy on prudential aspects 

of international insurance matters; represents the United

States at the International Association of Insurance 

Supervisors (IAIS); serves on and contributes expertise to the 

Council.

Until the establishment of FIO, the United States was not 

represented by a single, unified federal voice in the 

development of international insurance supervisory 

standards. FIO now provides important leadership in 

developing international insurance policy. In fiscal year 

2012, the FIO Director was elected to serve on the IAIS 

Executive Committee and as Chair of its Technical 

Committee. Among other projects, FIO is involved through 

the IAIS in developing the methodology used to identify and 

designate insurers important to the international financial 

system and the process of recommending to the Financial 

Stability Board (FSB), that such firms should be subject to 

enhanced oversight. FIO has also led and participated in the 

E.U. – U.S. insurance project, the goal of which is to increase 

mutual understanding and enhance insurance supervisory 

cooperation between the E.U. and the U.S. in order to 

promote business opportunity, consumer protection, and 

effective supervision. FIO has and will continue to work 

closely and consult with state insurance regulators and other 

federal agencies in its work. Additionally, FIO established 

and has provided necessary leadership in the European 

Union-U.S. insurance dialogue regarding such matters as 

group supervision, capital requirements, reinsurance, and 

financial reporting. FIO has and will continue to work closely 

and consult with state insurance regulators and other federal 

agencies in its work. 

HOUSING FINANCE, GOVERNMENT SPONSORED 

ENTERPRISES (GSES)

Treasury is committed to strengthening the economy, 

including its work with the broader administration on 

housing finance reform to:

• Ensure access to credit

• Strengthen consumer protection

• Increase transparency for investors

• Improve underwriting standards

• Strengthen taxpayer protections

These reforms will help repair fundamental flaws in the 

mortgage market and provide support to creditworthy but 

underserved families who want to own or rent their own 

homes. 

Capital support for the GSEs while those firms are in 

conservatorship has played an important role in preserving 

access to mortgage credit for American families in the wake 

of the financial crisis. However, Treasury also believes it is 

important to responsibly shrink the government’s role in 

housing finance over time. The Administration is committed 

to working with Congress to foster the return of private 

capital to the housing market, subject to stronger oversight 

and standards for consumer and investor protection. 

Treasury has sold its Fannie Mae and Freddie Mac Mortgage 

Backed Securities (MBS) commensurate with improved 

mortgage availability and recovery in the housing market. 

During fiscal year 2012 the Treasury restructured its Senior 

Preferred Stock Purchase Agreements (SPSPAs) to 

accomplish faster wind-down and better protect taxpayer 

interests in the GSEs. Treasury also believes that a reformed 

housing finance market should maintain targeted, 

transparent support for creditworthy lower-income families 

who are underserved by the private market, as well as a range 

of options for the one-third of Americans who are renters. 

Treasury is committed to working with Congress to help 

ensure that all communities and families – including those in 

rural and economically-distressed areas, and those with low 
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or moderate incomes – have access to sustainable mortgage 

credit and adequate rental options. 

TROUBLED ASSET RELIEF PROGRAM 

The actions taken under TARP, along with other emergency 

measures put in place by the Board of Governors of the 

Federal Reserve System and the Federal Deposit Insurance 

Corporation (FDIC) helped prevent the collapse of the U.S. 

financial system and stabilize the broader economy. TARP’s 

direct fiscal cost is also expected to be much lower than many 

had anticipated during the financial crisis. TARP’s authority 

to make new commitments expired on October 3, 2010. 

Today, Treasury is focused on winding down TARP by exiting 

the remaining TARP investments as soon as practicable in a 

manner consistent with the duty to maximize returns to the 

taxpayer and promote financial stability. Treasury is also 

continuing to implement the various housing programs 

under TARP to prevent avoidable foreclosures, primarily by 

helping homeowners achieve mortgage modifications.

Taxpayers have already realized a significant positive return 

on TARP’s investments in banks. As of September 2012, 

taxpayers have recovered more than $267 billion in 

repayments and other income - more than $21.5 billion above 

the total funds that were invested under TARP’s bank 

programs. The number of institutions that are remaining as 

part of the Capital Purchase Program (the largest bank 

program) has been reduced substantially through 

repayments, restructuring transactions, and sales.

Working with the Federal Reserve Bank of New York 

(FRBNY), Treasury made substantial progress winding down 

the investments in American International Group, Inc. (AIG). 

The peak amount of assistance offered to AIG by the FRBNY 

and Treasury was $182 billion, a part of which was later 

cancelled. AIG has fully repaid the FRBNY with proceeds in 

excess of cost of $17.7 billion. In addition, Treasury has sold 

a total of 1.4 billion AIG shares resulting in proceeds in 

excess of costs for non-TARP shares of $15.0 billion and 

proceeds less cost of $11.8 billion for TARP shares and as of 

September 30, 2012 held 15.9 percent of AIG’s outstanding 

common stock of which OFS held 10.5 percent. (Note: On 

December 14, 2012, Treasury sold its remaining 234 million 

shares of AIG common stock for additional proceeds of $7.6 

billion. After this transaction, Treasury owned zero shares of 

AIG common stock.) 

Treasury reduced the overall amount that remains 

outstanding in TARP’s credit market programs by closing the 

SBA 7(a) Securities Purchase Program and making further 

progress winding down both the Term Asset Backed 

Securities Loan Facility (TALF) and the Public-Private 

Investment Program (PPIP). Additionally, OFS continued to 

manage the remaining investments in the Automotive 

Industry Financing Program (AIFP). Finally, using authority 

granted under the Emergency Economic Stabilization Act 

(EESA), Treasury established two central housing programs 

under TARP, the Making Home Affordable (MHA) program 

and the Hardest Hit Fund (HHF). OFS committed $45.6 

billion to fund Treasury’s housing programs under TARP. 

From inception through September 30, 2012, $5.5 billion has 

been disbursed under these programs. More funds are 

expected to be disbursed over time as incentive payments are 

paid out for current participants as well as from new 

homeowners entering into the programs.

• MHA includes the Home Affordable Modification 

Program (HAMP) and several additional programs 

to help homeowners facing foreclosure. While the 

housing market remains fragile, there have been 

more than 1.2 million homeowner assistance actions 

taken through MHA to assist struggling 

homeowners. In addition, TARP’s housing 

programs have helped transform the mortgage 

servicing industry by changing industry standards 

and practices and have helped to make mortgage 

modifications become more sustainable and 

affordable. 

• HHF provides funds to the 18 hardest hit states, 

plus the District of Columbia, to develop locallytailored programs to assist struggling homeowners 

in their communities. HHF had disbursed $1.5 

billion out of $7.6 billion as of September 31, 2012, 

and is expected to continue to disburse funds until 

December 31, 2017.

In addition, Treasury provided support for the Federal 

Housing Administration’s (FHA) Short Refinance Program 

that assists borrowers who are current on their mortgage (or 
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complete a trial payment plan) but owe more than their home 

is worth, to refinance into an FHA-insured loan.

As of September 30, 2012, TARP investment programs 

(including additional Treasury AIG shares) taken as a 

whole—including financial support for banks, the domestic 

auto industry, the targeted initiatives to restart the credit 

markets, and the investments in AIG, and not including the 

housing programs —are expected to result in a positive 

lifetime return of $3.5 billion excluding the cost related to 

housing programs funds disbursed under the housing 

programs were never expected to be returned.) As of 

September 30, 2012, TARP investment programs are 

expected to cost $14.1 billion excluding the cost related to 

housing programs. Additional proceeds from non-TARP 

Treasury AIG shares are expected to more than offset TARP 

investment programs costs as they are projected to total 

$17.6 billion of which $15.0 billion has already been 

collected. The lifetime cost inclusive of TARP housing 

programs and Treasury AIG shares is estimated to be $42.1 

billion.

SMALL BUSINESS LENDING FUND 

Established by the Small Business Jobs Act of 2010, the SBLF 

is a dedicated fund designed to provide capital to qualified 

community banks (banks, thrifts, and bank and thrift holding 

companies with consolidated assets of less than $10 billion) 

and community development loan funds in order to 

encourage small business lending. The purpose of the SBLF 

is to encourage Main Street banks and small businesses to 

work together, help create jobs, and promote economic 

growth in communities across the nation. 

Since capital was disbursed to banks in October 2011, 

Treasury reports in the January 2013SBLF “Use of Funds 

Report” that institutions participating in SBLF have made 

important progress in increasing their small business 

lending, helping to support small businesses and local 

economies across the nation. As of September 30, 2012, 

• In total, SBLF participants have increased their 

small business lending by $7.4 billion over a $36.5

billion baseline. Increases in small business lending 

are widespread across SBLF participants, with 89 

percent of participants having increased their small 

business lending over baseline levels.

• Over three-quarters of SBLF participants (78 

percent) have increased their small business lending 

by 10 percent or more.

• SBLF banks have increased business loans 

outstanding by a median of 32.2 percent over 

baseline levels, versus a 5.7 percent median increase 

for the representative peer group and a 2.1 percent 

median increase for the broader comparison group.

• SBLF banks have increased business lending by 

substantially greater amounts across median 

measures of size, geography, and loan type versus 

the peer and comparison groups.

• SBLF banks that refinanced CPP funding have 

increased business lending by a median of 27.2 

percent since their initial receipt of CPP funding 

from Treasury versus a 14.0 percent increase for the 

peer group and a 6.6 percent increase for the 

comparison group over the same period.

Investments made through the SBLF program are presently 

expected to cost less than the originally projected cost of $1.3 

billion. In addition, Treasury is currently projected to incur 

$23.6 million in fiscal year 2012 operating expenses for the 

SBLF program, $2 million less than the fiscal year 2012 

operating expense estimate of $25.6 million included in the 

President’s Budget for fiscal year 2013.

STATE SMALL BUSINESS CREDIT INITIATIVE 

The Small Business Jobs Act of 2010 also created the SSBCI, 

which was funded with $1.5 billion to strengthen state 

programs that support lending and investing to small 

businesses and small manufacturers. The SSBCI Program is 

expected to help spur up to $15 billion in new lending to and 

investment in small businesses. The SSBCI program builds 

on new and existing models for state small business 

programs, including Capital Access Programs (CAPs), loan 

participation programs, loan guarantee programs, collateral 

support programs, and state-run venture capital programs.
U.S. Department of the Treasury | Fiscal Year 2012

12

GOAL #2: ENHANCE U.S.

COMPETITIVENESS AND PROMOTE 

INTERNATIONAL FINANCIAL 

STABILITY AND BALANCED GLOBAL 

GROWTH 

ENABLING DOMESTIC ECONOMIC GROWTH 

Supporting Distressed Communities

In fiscal year 2012, the Community Development Financial 

Institutions Fund’s core program (the CDFI Program) 

awarded $175.3 million in funding to 177 CDFIs to provide 

loans, investments, financial services, and technical 

assistance to underserved populations and low-income 

communities (LICs), including $23.1 million to 12 Healthy 

Food Financing Initiative awardees and $3 million to 33 

technical assistance awardees. CDFI Program awardees

reported originating 17,547 loans or investments totaling 

nearly $1.3 billion, based on their portfolio of activities in 

2011. In addition, the Native American CDFI Assistance 

(NACA) Program awarded $11.4 million in financial and 

technical assistance to 33 Native CDFIs and other Native 

entities seeking to become or create Native CDFIs. Native 

CDFIs originated 1,170 loans or investments totaling 

$21,701,092 based on their portfolio of activities in 2011. The 

Bank Enterprise Award (BEA) Program, which provides 

monetary awards to CDFIs and banks for increasing their 

investments in LICs, received 71 eligible applications 

requesting a total of approximately $88.5 million.

The fiscal year 2012 performance information provided 

above pertains to each awardee’s performance results for 

program year 2011. It should also be noted that the lag in 

performance reporting reflects the time it takes to deploy 

funds and make investments for which actual and projected 

results can be estimated and are based on information 

reported by CDFI Program awardees.

The New Markets Tax Credit (NMTC) Program, which 

provides tax credit allocation authority to Community 

Development Entities (CDEs) for targeted investments in 

LICs, competitively awarded $3.623 billion based on 2011 tax 

credit allocation authority. 

Supporting Consumers

The Office of Consumer Policy advances developments that 

provide opportunities for the financial well-being of 

American consumers, especially in regard to financial 

products and services, including new and emerging ones. 

The office leads the Department’s work to promote access to 

safe and affordable financial products and services, as well as 

clear information that enables individuals to make sound 

financial decisions. The office is engaged in policy 

development in the areas of consumer financial education 

and capability; emerging payments platforms; technology to 

improve consumers’ financial choices; systems to further 

privacy and data security; and related topics. In support of 

this work, the office provides leadership for the Federal 

Financial Literacy and Education Commission, Federal 

interagency Task Force on Smart Disclosure, and coordinates 

the President’s Advisory Council on Financial Capability.

INTERNATIONAL STABILITY AND GLOBAL GROWTH

The Office of International Affairs monitors and responds to 

evolving risks in the global economic and financial systems to 

prevent financial instability abroad from spreading to the 

U.S. economy. To this end, Treasury engaged one-on-one (or 

bilaterally) with its counterparts in ministries of finance and 

through such forums as the U.S.-China Strategic & Economic 

Dialogue (S&ED) and the U.S. India Economic and Financial

Partnership, and with groups of governments ( or 

multilaterally) through such forums as the G-7, the G-20, the 

FSB, the Basel Committee on Banking Supervision, and 

international financial institutions such as the International 

Monetary Fund (IMF) and the World Bank. 

Continued concerns in fiscal year 2012 about financial 

stability in Europe posed a particular risk to the strength of 

the U.S. and global recoveries. Drawing on lessons learned 

from the U.S. response to the global financial crisis in 2008 

and 2009, Treasury continued to assist and encourage its 

European counterparts to put in place a robust policy 

framework with sufficient firepower to stem the contagion to 

the larger economies in Europe and to restore confidence in 

the European banking system. By fall of 2012, Europe moved 

forward on establishing a stronger and larger firewall that 

supports sovereign access to sustainable market financing. 

The Europeans also made progress on outlining a road map 
U.S. Department of the Treasury | Fiscal Year 2012

13

toward banking union and Spain took important steps to 

repair its banking system.

Going forward, Treasury will continue to engage bilaterally 

and multilaterally to address problems that pose a risk to the 

U.S. economy and its continued growth, wherever and 

whenever they arise.

To support robust global growth, the countries of the G-20 

need to implement economic policies that are consistent with 

the overarching goal of strong, sustainable, and balanced 

global growth. Treasury continues to encourage proactive 

near-term support for stability, growth, and jobs for 

economies with sufficient fiscal space to support the global 

recovery. Treasury also continues to work through the G-20 

to encourage countries with external surpluses to implement 

policies that boost domestic demand. These actions should 

be reinforced by G-20 countries’ commitments to move more 

rapidly toward market-determined exchange rates that better 

reflect underlying economic fundamentals, to avoid 

persistent exchange rate misalignments, to refrain from 

competitive devaluation of currencies, and to refrain from 

excessive foreign reserves accumulation.

These matters are of particular concern in Asia, where 

imbalances are most acute. Through the S&ED and related 

forums, including the Joint Economic Committee, the 

Investment Forum, and the U.S.-China Initiative on CityLevel Economic Cooperation, we will continue to encourage 

China to move from an economy based on exports to one 

driven to a greater degree by domestic demand, and to 

provide a more level playing field for U.S. workers and firms. 

By September 2012, the renminbi had appreciated on real 

bilateral basis over 11 percent against the U.S. dollar since 

June, 2010. Through the S&ED, we secured new financial 

sector commitments to reduce market access barriers, boost 

consumption, reduce the unfair competitive advantage of 

state-owned enterprises, and began to loosen the chokehold 

that state-owned banks have on China’s financial sector.

More broadly, Treasury seeks to promote sound economic 

policies among our trading partners. As chair of the G-7/G8, Treasury led the multilateral Deauville Partnership for 

Arab Countries in Transition to help transitioning countries 

in the Middle East and North Africa maintain economic and 

financial stability, and promote more inclusive economic 

growth—especially for young people and women. We led the 

successful effort to provide Tunisia with a U.S. Government 

loan guarantee and conceived of and launched a Transition 

Fund to provide financing for transformational reforms in 

economic governance in transitioning countries in the Middle 

East and North Africa region. By supporting these political 

and economic transitions in the region, Treasury can support 

U.S. national security goals and boost global growth.

PROMOTING STABLE INTERNATIONAL FINANCIAL 

MARKETS

The United States is best served by the adoption and 

enforcement of high-quality financial standards that protect 

and strengthen our financial system and set an example for 

other nations. We actively engage and take a leading role in 

international discussions and forums, such as the G-20 and 

the FSB, and in negotiations with other major and emerging 

financial centers. Our objectives continue to be to lead a 

“race to the top” in the area of financial regulation that must 

be coordinated globally and to achieve consensus on strong 

and sensible reforms while protecting the competitiveness of 

U.S. firms.

ENCOURAGING FOREIGN INVESTMENT IN THE U.S.

ECONOMY

Foreign investment in the U.S. economy is vital to economic 

growth, job creation, and productivity. Treasury is strongly 

committed to an open investment policy with our 

counterparts around the world. Our objective is for the 

United States to continue to be the most attractive place for 

businesses to locate, invest, grow, and create jobs. At the 

same time, Treasury works to ensure that foreign 

investments in U.S. businesses do not compromise national 

security through our lead role on the CFIUS. We are 

committed to maintaining a CFIUS review process that is 

timely and efficient. 

PURSUING FREE TRADE AND OPEN MARKETS

Treasury continues to work with the U.S. Trade 

Representative and other U.S. Government agencies to 

pursue a strong international trade and investment agenda to 

help the economy grow, increase U.S. exports, and support 

job creation. 
U.S. Department of the Treasury | Fiscal Year 2012

14

In fiscal year 2012, the President signed legislation 

implementing the bilateral trade agreements with Korea, 

Colombia, and Panama, and Congress renewed a strong and 

robust Trade Adjustment Assistance program for American 

workers displaced by trade. The Administration also created 

a new Interagency Trade Enforcement Center to coordinate 

enforcement and focus tirelessly on challenging unfair trade 

practices around the world. This step will open up new 

opportunities for U.S. businesses to compete in the global 

marketplace 

Our current priorities include pursuing normal trade 

relations with Russia as it joins the World Trade 

Organization, continuing to negotiate a high-standard 21st 

century Trans-Pacific Partnership trade agreement, and 

continuing to support the President’s National Export 

Initiative to double exports over five years. In the last year 

alone, exports have reached historic highs and represent an 

increase of nearly 36 percent over the 2009 levels. We also 

will continue efforts to pursue a level playing field with

China, including a focus on aligning export credit practices 

with international best practices standards, and will work to 

ensure that U.S. trade agreements and trade laws are 

enforced rigorously.

ENTERING INTO BILATERAL AND MULTILATERAL TAX 

AGREEMENTS 

Treasury also negotiated international tax agreements that 

promote cross-border trade and investment. Income tax 

treaties and tax information exchange agreements (TIEAs) 

eliminate tax barriers to cross-border trade and investment 

by providing greater certainty to taxpayers regarding foreign 

tax liabilities, and by reducing the risk of double taxation. 

The Department will strengthen its network of tax treaties 

and TIEAs by modernizing existing agreements and by 

negotiating agreements with new treaty partners that will 

foster cross-border trade and investment and facilitate 

enforcement of U.S. tax laws. 

USE LEADERSHIP POSITIONS IN THE MULTILATERAL 

DEVELOPMENT BANKS AND THE IMF TO ADVANCE 

U.S. NATIONAL SECURITY AND ECONOMIC 

INTERESTS

In fiscal year 2012, the United States contributed to general 

capital increases at the multilateral development banks 

(MDBs), which were necessitated by the landmark actions 

taken by the MDBs to help stabilize the global economy 

during the recent economic crisis. These resources reached 

countries representing 31 percent of U.S. export markets. 

The United States continues to use its leadership position in 

the MDBs to: (1) mitigate emerging threats to the U.S. and 

global economies, support trade and investment, and open 

new opportunities for American firms, thus helping to 

promote job creation in the United States; (2) further 

reinforce our national security interests in fragile and wartorn countries, reducing the dangers inherent in economic 

instability; and (3) advocate for MDB assistance in countries 

that are undergoing profound economic and political 

transitions, such as those in the Middle East and North 

Africa, in order to foster freedom, opportunity, and greater 

economic growth, thus fighting global poverty and providing 

critical support. 

We have placed a special focus on addressing the global 

challenges of food security and environmental concerns. 

Treasury plays an important role in addressing food 

insecurity through its leadership in the Global Agriculture 

and Food Security Program (GAFSP), an innovative multidonor food trust fund called for by G-20 leaders. In fiscal 

year 2012, we successfully brought three new donor countries 

into GAFSP and contributed to GAFSP’s new private sector 

lending window. 

In fiscal year 2012, Treasury also held the first annual 

Development Impact Honors competition to recognize and 

promote excellence and effectiveness at the MDBs. 

The United States continues to use its leadership position in 

the IMF to promote global economic and financial stability, 

which supports U.S. economic growth and job creation. The 

IMF’s crisis-response efforts continue to be critical for 

promoting the global and domestic economic recoveries. The 

United States will use its leadership position in the IMF to 

promote consistent IMF surveillance over its members’ 

exchange rate policies and to support our G-20 objectives of 

encouraging flexible, market-determined exchange rates, and 

achieving strong, sustainable, and balanced global growth. 

DIRECT ASSISTANCE TO DEVELOPING COUNTRIES 

The Department of the Treasury’s Technical Assistance 

program (OTA) continues to provide direct assistance to 

developing countries that have demonstrated strong 
U.S. Department of the Treasury | Fiscal Year 2012

15

commitments to reforming their financial systems or public 

financial management. This work encourages prosperity and 

stability in other parts of the world and supports broader U.S. 

Government international objectives — such as increasing 

transparency and accountability, reducing corruption, and 

strengthening the development of market-based policies and 

practices — while helping to create more stable international 

markets for U.S. exports.

In fiscal year 2012, Treasury made special investments 

through technical assistance in Administration priority 

programs such as the Partnership for Growth countries of 

Philippines, El Salvador, and Tanzania, and strengthened its 

engagement with countries in transition in the Middle East 

and North Africa. 

GOAL #3: PROTECT OUR NATIONAL 

SECURITY THROUGH TARGETED 

FINANCIAL ACTIONS 

Treasury is devoted to deploying its full range of financial 

authorities to track, degrade, and disrupt threats to national 

security from state and non-state actors, including terrorists, 

Weapons of Mass Destruction (WMD) proliferators, drug 

traffickers, rogue regimes, and transnational criminal 

organizations. The Office of Terrorism and Financial 

Intelligence (TFI) is Treasury’s program office charged with 

the responsibility of carrying out these efforts. TFI marshals 

the Department’s intelligence, enforcement, and economic 

sanction functions with the twin aims of safeguarding the 

U.S. financial system and combating those who would 

undermine our national security. 

As the Department works to enhance the accessibility of the 

financial system to legitimate users, it also works to prevent 

its exploitation by illicit actors. Financial and other forms of 

intelligence information, whether from the U.S. Government, 

law enforcement, administrative, regulatory, or proprietary 

sources, has been critical to Treasury efforts to stem the flow 

of funding to terrorist groups and disrupt weapons 

proliferation and other illicit networks around the world. 

Money is the common denominator in these networks, and 

hence understanding how it moves and is used to support 

their endeavors creates new opportunities for Treasury 

action.

NEW SECURITY COUNCIL RESOLUTIONS AND 

EXECUTIVE ORDERS

Through the Executive Order on Assignment of National 

Security and Emergency Preparedness Communications 

Functions, the U.S. Government must be able to 

communicate domestically and internationally, at all times 

and under all circumstances, to implement critical and time 

sensitive missions. An Executive Committee was established 

to: 

• Advise and make policy recommendations to the 

President to enhance the survivability, resilience, 

and future architecture of national security and 

emergency preparedness (NS/EP) communications 

• Develop a long-term strategic vision for NS/EP 

communications and propose funding requirements 

and plans to the President and the Director of the 

Office of Management and Budget (OMB)

• Coordinate the planning for, and provision of, 

NS/EP communications for the U.S. Government 

under all hazards

EFFORTS TO COMBAT MORTGAGE FRAUD

FinCEN continues its work to combat mortgage 

fraud. FinCEN closed a gap in the regulatory sector by 

issuing a final rule that made non-bank regulatory mortgage 

lenders and originators (RMLOs) subject to FinCEN's 

reporting and recordkeeping regulations. As of August 13, 

2012, RMLOs must comply with FinCEN’s final rule 

requiring the establishment of anti-money laundering 

programs and the filing of suspicious activity reports 

(SARs). To help RMLOs identify and report suspicious 

activity related to potential mortgage fraud, FinCEN issued 

an advisory on red flags that may signal mortgage fraud, and 

has updated its website with numerous resources for the 

industry. The new requirements for RMLOs will augment the 

information available to law enforcement about suspicious 

activity in this sector.

FinCEN also continues to work with its law enforcement 

partners to combat mortgage fraud. Law enforcement 

authorities used FinCEN reports extensively in an 

investigation that involved a large-scale mortgage fraud 

scheme resulting in major financial losses and numerous 
U.S. Department of the Treasury | Fiscal Year 2012

16

foreclosures. Investigators queried FinCEN data and found 

multiple SARs, which assisted in obtaining search warrants 

and led to multiple interviews with borrowers. Federal and 

local authorities arrested more than a dozen individuals 

linked to mortgage fraud schemes that involved the filing of 

fraudulent loan applications with several banks and other 

lenders, generated millions of dollars in loan fees and real 

estate commissions, and caused millions of dollars in losses 

when homes went into foreclosure.

As a participant in the federal loan modification and 

foreclosure rescue fraud initiative, FinCEN has supported 

more than 150 mortgage fraud cases with more than 1,200 

subjects and has disseminated more than 190 analytical 

reports since April 2009.

E-FILING

FinCEN enhanced data quality and significantly reduced 

costs for the U.S. Government, financial institutions, and U.S. 

taxpayers by requiring mandatory electronic filing of most 

FinCEN forms. This new requirement became effective on 

July 1, 2012. Mandatory E-Filing has enhanced the quality of 

FinCEN’s electronic data, improved its analytical capabilities, 

and ultimately made it quicker and easier for law 

enforcement to track criminal money. 

Several years ago, FinCEN started encouraging financial 

institutions to use its free, Web-based system known as the 

Bank Secrecy Act Electronic Filing System (BSA E-Filing) in 

an attempt to cut down on paper reports. FinCEN is no 

longer accepting most paper filings and has considered 

extensions and exemptions only in certain 

circumstances. Over the past 20 years, banks, casinos, 

brokerages, and many other financial businesses have filed 

millions of paper forms with FinCEN. Last year alone, 

financial institutions and individuals filed more than 17 

million separate reports with FinCEN and more than 2 

million of those were on paper. 

FinCEN reports create a financial trail that law enforcement 

and intelligence agencies use to track criminal and terrorist 

networks and their activities and assets. These reports help 

detect and deter illicit activity, including money laundering, 

the financing of terrorist activity, and many other types of 

fraud. 

Mandatory E-Filing supports Treasury’s flagship initiative of 

moving toward a paperless Treasury. It also allows for 

greater data security and privacy compared with paper forms, 

ensures compatibility with future versions of FinCEN reports, 

and allows quicker access to investigators. E-Filing is 

positively impacting the public by reducing government and 

industry costs and the environmental waste of paper forms, 

potentially saving the U.S. Government millions of dollars 

per year through the reduction of expenditures associated 

with paper processing, in particular the physical intake and 

sorting of incoming reports and the manual keying of 

reported information into FinCEN’s database.

EFFORTS TO COMBAT HEALTH CARE FRAUD

Continuing its successful collaboration with the Department 

of Health & Human Services, the Office of Inspector General, 

and the Department of Justice, FinCEN provided support to 

the Health Care Fraud Prevention and Enforcement Action 

Team (HEAT) Task Force. The Task Force was formed in 

2009 to combat health care fraud abuse in the Medicare and 

Medicaid programs. 

FinCEN researched and analyzed data collected under the 

provisions of the Bank Secrecy Act (BSA) pertaining to 

subjects identified by the Task Force as suspects in health 

care fraud schemes. These schemes have been defrauding 

the U.S. Government of an estimated $98 billion per year. 

FinCEN has provided analytical support to more than 200 

cases and continues to develop intelligence to further disrupt 

and dismantle major health care fraud networks in cities such 

as Miami, Tampa, Brooklyn, Los Angeles, Houston, Detroit, 

and Atlanta. By identifying commonalities and shared 

entities in these cases, FinCEN, the Department of Justice’s 

Criminal Division, and the Federal Bureau of Investigation 

initiated a project to identify third party money launderers 

who service the perpetrators of health care fraud and other 

crimes. Through this initiative, FinCEN will be able to 

provide the investigators with an overall assessment of the 

targeted jurisdictions, individuals, and sophisticated and 

complex organizations that are suspected of being engaged in 

health care fraud schemes.

TREASURY EXECUTIVE OFFICE FOR ASSET 

FORFEITURE 
U.S. Department of the Treasury | Fiscal Year 2012

17

The Treasury Executive Office For Asset Forfeiture (TEOAF)

manages the Treasury Forfeiture Fund (TFF). The mission of 

the TFF is to promote the strategic use of asset forfeiture in 

order to disrupt and dismantle criminal enterprises. TEOAF 

and its member agencies focus on investigations that result in 

high impact forfeitures, disrupting criminal organizations 

that engage in money laundering, financial fraud and a 

myriad of other illegal acts. 

FINANCIAL SANCTIONS (IRAN AND SYRIA)

Treasury exercises a broad range of intelligence, regulatory, 

policy, and enforcement authorities to track and disrupt illicit 

finance networks. Treasury also implements economic 

sanctions against various foreign threats to protect U.S. 

national security and foreign policy interests. Through these 

means, Treasury seeks to degrade the financial and other 

support networks of terrorists, weapons proliferators, drug 

traffickers, rogue regimes, and other illicit actors. The 

Treasury Department’s identification of these networks 

reinforces foreign or domestic efforts against these targets. 

The Department of the Treasury administers and enforces 

economic and trade sanctions based on U.S. foreign policy 

and national security goals through the Office of Foreign 

Assets Control (OFAC). 

The United States is imposing additional sanctions and 

publicly exposing numerous Iranian front companies, in 

order to convince Iran to address the international 

community’s concerns about its nuclear program and to 

prevent the circumvention of international sanctions on Iran. 

Continuing to target Iran’s nuclear and missile proliferation 

activities, the Treasury Department has issued successive 

rounds of aggressive designations under Executive Order 

13382, with significant impact on proliferation networks. 

Treasury is leading efforts to bring an end in Syria to the 

Assad regime’s abhorrent campaign of violence against the 

Syrian people by working to apply sanctions on those 

involved in human rights abuses. Treasury hosted the 

Friends of the Syrian People International Working Group on 

Sanctions, a working session in which countries strove to 

harmonize restrictive measures against the Syrian regime.

GOAL #4: PURSUE COMPREHENSIVE 

TAX AND FISCAL REFORM

The Treasury Department leads the Administration’s efforts 

to create a tax system that is simpler, fairer, and more fiscally 

responsible. Treasury is committed to comprehensive reform 

of the tax laws that lowers rates while broadening the base, 

makes the system fairer, improves incentives for investment 

and production in the United States and helps contribute to a 

balanced deficit reduction plan over the medium-term.

Addressing the nation’s fiscal challenges requires reforms 

and fiscal policies that go beyond streamlining the tax code. 

The Administration has committed to pursuing a balanced 

approach to deficit reduction that strengthens the fiscal 

position of the United States, and helps ensure that there is 

room to invest in education, infrastructure, and other areas 

critical to long term economic growth.

TAX REFORM EFFORTS

Treasury, in conjunction with the White House, has 

developed a framework for business tax reform that reduces 

the statutory tax rate, eliminates provisions that are 

inefficient, increases the incentives for job creation and 

retention in the United States, simplifies the tax system, and 

does this in a fiscally responsible manner. Treasury is also 

committed to utilizing traditional and innovative ways to 

improve communication with policymakers, interested 

parties, and the public about matters related to tax policy.

INCREASE VOLUNTARY TAX COMPLIANCE

The tax gap is the difference between taxes paid and taxes 

owed in any given year. Reliance on a voluntary compliance 

tax system requires effective taxpayer services to enable 

taxpayers to understand and meet their tax obligations as 

well as effective enforcement to ensure that all businesses 

and individuals pay the tax they owe. Improvement of both 

service and enforcement, along with reforms to simplify the 

tax law, are essential to ensure that the U.S. tax system 

remains the most effective and fairest voluntary compliance 

system in the world. This goal is one of Treasury’s two 

Agency Priority Goals (APGs) and is discussed more 

thoroughly later in this report. 
U.S. Department of the Treasury | Fiscal Year 2012

18

To encourage voluntary compliance with the tax laws, 

Treasury has sought to reduce the burden of compliance by 

reducing record keeping requirements and expanding the use 

of simplified “safe harbor” rules that eliminate liability for 

unintentional tax underpayment. Treasury has also 

published administrative guidance that clearly explains the 

tax law and illustrates its application to common situations. 

NEW COLLABORATIONS WITH INTERNATIONAL 

PARTNERS

The Treasury Department has jointly issued statements with 

Japan, Switzerland, the United Kingdom, France, Spain, 

Italy, and Germany expressing mutual intent to pursue a 

framework for intergovernmental cooperation to facilitate the 

implementation of the Foreign Account Tax Compliance Act 

(FATCA) and to improve international tax compliance. The 

Treasury and the United Kingdom have already signed a 

bilateral agreement and the Treasury will continue to work 

with other governments to conclude bilateral agreements. 

FATCA is an important part of the U.S. Government’s effort 

to improve tax compliance. The Treasury and the IRS 

continue to move forward with joint efforts to combat 

offshore tax evasion and make our tax systems more efficient 

and fair by implementing FATCA in a way that is targeted 

and effective.

GOAL 5: MANAGE THE 

GOVERNMENT’S FINANCES IN A 

FISCALLY RESPONSIBLE MANNER

The Treasury Department is responsible for managing the 

finances of the U.S. Government and strives to maintain 

public trust and confidence in U.S. and international 

economic and financial systems. The Department’s ability to 

be efficient, effective, accountable, and transparent enables 

the smooth, continuous operation of essential governmental 

services and meeting the U.S. Government’s financial 

obligations. To that end—and while supporting and 

maintaining governmental operations—during fiscal year 

2012, the Department has focused on achieving greater cost 

savings for the American public, increasing productivity, 

modernizing operations, and supporting the Administration’s 

management agenda. It has done this by developing systems, 

tools, and a culture of governing strategically, working 

smarter, and leveraging technologies.

GOVERNING STRATEGICALLY

Treasury has employed a robust suite of tools and processes 

to perform data-driven, performance-focused, and outcomebased strategic oversight and management of all its 

component organizations. These continually evolving 

processes are embedded in the way the Department does its 

business and within its corporate culture. They serve as the 

foundation for Treasury’s leadership and stewardship 

agenda. 

Treasury’s Quarterly Performance Reviews

Treasury’s management and performance agenda are set by 

the Deputy Secretary serving as the Chief Operating Officer 

who, with the Assistant Secretary for Management and 

Performance Improvement Officer, conducts quarterly 

performance reviews of each bureau. These quarterly reviews 

were recognized by OMB as a best practice and codified in 

law as part of the Government Performance Results Act 

Modernization Act. 

These sessions bring key Treasury leaders together for 

regular, formal discussions with the Deputy Secretary to 

focus on management challenges and priority projects. These 

meetings drive accountability to make and sustain 

improvements, align expectations and priorities across 

Treasury bureaus and offices, and encourage data-driven 

decision-making. The Department has strengthened its 

partnership with OMB and the federal Performance 

Improvement Council through open dialogue and 

consultative problem-solving on numerous government 

performance matters, including Treasury’s two APGs: (1) 

increasing voluntary tax compliance, and (2) increasing 

electronic transactions with the public to improve services, 

prevent fraud, and reduce costs.

An example of a positive outcome from these reviews is that 

Treasury earned an A+ rating from the Small Business 

Administration (SBA) for small business contracting 

achievement in fiscal year 2011. Treasury was the only 

federal agency to achieve and substantially exceed all five 

statutory small business goals—Small Business, Women 

Owned Small Business, Small Disadvantaged Business, 

Service Disabled Veteran Owned Small Business, and 

Historically Underutilized Business (HUB) Zones. By all 

indications, Treasury has exceeded these small business goals 
U.S. Department of the Treasury | Fiscal Year 2012

19

again in fiscal year 2012, demonstrating the continuing 

success of the quarterly performance reviews. 

Shared Services Council

In addition to the quarterly performance reviews, Treasury’s 

“shared services first” approach to managing across 

organizational boundaries has resulted in increased 

transparency, cost savings, and improved operational 

effectiveness as management support services are provided 

by those with demonstrated expertise and Treasury bureaus 

focus on mission accomplishment. The Treasury Shared 

Services Council (SSC) provides a portfolio-wide approach to 

shared services across the Department, optimizing capability 

stewardship and services delivery and driving accountability 

for performance and risk management. 

In addition to providing additional accountability for cost 

and performance issues, the SSC provides a common 

governance structure for Treasury’s multiple shared services 

programs and advocates for and promotes the value of shared 

services. This group has tackled numerous issues, including 

discussing how to reduce Treasury’s office space footprint as 

well as providing insight into the strategic direction of 

Treasury’s various shared services providers—notably the 

Bureau of Public Debt’s Administrative Resource Center 

(ARC) and HR Connect (both government-wide shared 

service providers). 

Cost Savings Guidance

Treasury’s Office of Financial Innovation and Transformation 

(FIT) aims to achieve government-wide financial 

management savings by leveraging new technologies and the 

shared service provider model. For example, the Centralized 

Receivables Service (CRS), an end-to-end billing and 

collections capability for federal agency receivables in the 

pre-delinquency stage (e.g., fees and penalties due to an 

agency) allows agencies to focus on their core mission by 

outsourcing certain receivables collection activities. Once 

fully implemented, CRS will deliver an estimated $350 

million in annual cost savings government-wide from 

increased collections and reduced financial systems costs. 

WORKING SMARTER

Treasury is reducing spending and improving the way 

business is conducted at all levels—from reduction of the 

Department’s real estate footprint to improving how 

information is being managed; and from the employment of 

Treasury’s Procurement Savings Program and strategic 

sourcing efforts, to taking the lead role in implementing the 

President’s initiative to reduce improper payments through 

the Do Not Pay Business Center. 

Improper Payments

Following the President’s June 2010 memorandum directing 

agencies to improve payment accuracy by using a “Do Not 

Pay List,” the Department of the Treasury established the Do 

Not Pay Business Center for use by all federal agencies to 

prevent ineligible recipients from receiving federal payments 

or awards. Do Not Pay uses key data sources to review 

eligibility, including data to verify that the beneficiary is not 

deceased or debarred and meets employment/income 

requirements and provides trend analysis and fraud alert 

capabilities. In the short time since the Do Not Pay Business 

Center was launched in fiscal year 2012, significant progress 

has been made towards providing agencies with a one-stopshop to verify eligibility prior to issuing a payment. To date, 

all 24 Chief Financial Officer (CFO) Act agencies have 

finalized and submitted plans to Treasury and OMB 

specifically describing how they will use Do Not Pay to 

prevent payments from being made to deceased individuals, 

debarred contractors, or incarcerated individuals.

In its ongoing efforts to combat tax refund fraud, the IRS is 

using data analytics to help identify tax preparers who submit 

incorrect or fraudulent tax returns. This year, the IRS 

conducted a pilot which identified tax preparers from the 

previous year that were associated with the most erroneous 

tax returns claiming refundable credits. 

Procurement

The Department has launched multiple initiatives to broaden 

efficiency within its procurement operations. In fiscal year 

2011, Treasury established an enterprise-wide strategic 

sourcing program governed by a Quad Council comprised of 

Department-wide representatives from procurement, IT, 

human resources, and financial organizations and chaired by 

the Assistant Secretary for Management. In fiscal year 2012, 

the Department brought all procurement spending under 

management by designated category leaders. Procurement 

obligations are analyzed, opportunities for consolidation and 
U.S. Department of the Treasury | Fiscal Year 2012

20

leveraging of the Department’s buying power are identified, 

and targeted contract actions are directed to the most 

appropriate strategic sourcing methodology. Approximately 

16 procurement spending categories were targeted for 

improvement and $80 million in savings were achieved 

through the Department’s strategic sourcing efforts. 

Treasury Procurement exceeded its fiscal year 2011 OMBmandated goals for acquisition-related savings and reduction 

of high-risk contracting obligations. The Department 

achieved $326 million in acquisition savings versus its goal of 

$319 million and decreased high risk contracting by 21 

percent, well above the targeted 10 percent reduction. In 

fiscal year 2012, Treasury elected to continue both the 

acquisition savings and high risk contracting reduction 

initiatives in the absence of a continuing OMB mandate. The 

Department exceeded its internal savings goal of $92 million 

by achieving over $240 million in acquisition-related savings 

(including strategic sourcing savings). 

LEVERAGING TECHNOLOGY

Treasury has a long history of identifying and leveraging 

commodity IT opportunities. In 1996, the Administrative 

Resource Center (ARC) began operation, offering commodity 

business services across organizations. Since that time, 

Treasury has launched several enterprise initiatives, 

including: (1) HR Connect, a government HR Line of 

Business; (2) Treasury Enterprise Identity Credential and 

Access Management (TEICAM), which has expanded to other 

departments including Homeland Security; and (3) 

Enterprise Content Management, which has already garnered 

interest from other departments. Other commodity IT 

initiatives are ongoing such as developing an Invoice 

Processing Platform (IPP), formerly known as Internet 

Payment Platform and a Do Not Pay platform as a 

government-wide shared services. 

Information Technology

Implementation of Mobile Treasury, Treasury’s technology 

modernization campaign, has been the key enabler for 

transforming Treasury’s business and services delivery 

systems, resulting in streamlined business processes, costs 

savings, and employee empowerment. Through a 

combination of governance and management oversight 

initiatives, the Department has developed innovative EGovernment enterprise architecture for bridging the gap 

between business processes and their supporting IT. As a 

result, numerous opportunities for performance 

improvement and business transformation have been 

identified, including the elimination of redundant and 

duplicative IT investments. This has focused Treasury’s lines 

of businesses to facilitate better business alignment and 

cross-bureau collaboration in investments. 

Treasury’s investment in leading and planning these efforts 

has already yielded results, both in terms of financial savings 

and operational efficiencies, allowing the Department to 

further leverage other opportunities for improvement. For 

example, the Department’s footprint reduction efforts have 

led to business process redesign, which is leading to 

installation of collaborative office spaces and even greater 

ability to leverage the federal telework program. TTB has 

established one of the most robust telework programs at the 

Department. TTB’s workforce is widely dispersed, with many 

personnel working from home full time and over 80 percent 

of the workforce regularly teleworking. Advancements in 

TTB’s IT network completed in 2012 have both furthered the 

effectiveness of its telework program and contributed to the 

Administration’s goals under the “Bring Your Own Device” 

(BYOD) initiative of improving mobile work capabilities and 

reducing IT costs across government. 

TTB achieved significant savings by reducing the cost of 

refreshing employee IT hardware, such as PCs and laptops. 

Replacing desktop and laptop computers every 3 to 4 years 

costs TTB about $2 million and disrupts the IT program and 

business users for several months. 

TTB determined that the best solution was to create a “virtual 

desktop” by centralizing all computing power, applications, 

user data, and user settings and allow access to TTB 

resources by thin client computing devices. A thin client is a 

computing device or program that relies on another device 

for computational power. Currently about 70 percent of TTB 

personnel use thin client devices to access all TTB 

applications and data. 

In August, TTB’s virtual desktop implementation was cited by 

the White House as a case study for the federal BYOD 

initiative. TTB’s virtual desktop solution is a major 

achievement that resulted in $1.2 million in IT savings, as 
U.S. Department of the Treasury | Fiscal Year 2012

21

well as additional savings in phone and fax lines and 

potential reductions to dedicated office space. Additional 

benefits include enhanced IT security, as the virtual 

desktop/thin client infrastructure eliminates the need to have 

information stored locally on a user’s machine, and reduced 

data loss, as the virtual desktop provides for the 

centralization of information.
U.S. Department of the Treasury | Fiscal Year 2012

22

TREASURY’S FISCAL YEAR 2012-2013 AGENCY PRIORITY GOALS 

AND STATUS

The Treasury Department established two APGs to support 

improvements in near-term outcomes related to the Strategic 

Plan.

INCREASE VOLUNTARY TAX 

COMPLIANCE

Helping taxpayers understand their obligations under the tax 

law is critical to improving compliance and addressing the 

tax gap. Therefore, the IRS is committed to making tax law 

easier to access and understand. The IRS remains committed 

to improving voluntary compliance and reducing the tax gap 

through both taxpayer service and enforcement programs.

The IRS continued to increase the amount of tax information 

and services available to taxpayers online and through social 

media. IRS.gov provides alternative online and self-help 

service options. Through September 30, 2012, taxpayers 

viewed IRS.gov web pages more than 1.7 billion times as they 

used the website to: 

• Get forms and publications. Beginning in fiscal year 

2011, the IRS reduced the number of forms and 

publications that were mailed to taxpayers. For this 

reason, during the fiscal year 2012 filing season, 

more than 347 million tax products were 

downloaded, an increase of 51 percent from fiscal 

year 2011

• Link to the Electronic Federal Tax Payment System 

(EFTPS). EFTPS processed more than 132.4 million 

electronic tax payments totaling $2.1 trillion

• Get answers. More than 1.1 million visits to the 

Interactive Tax Assistant introduction page where 

taxpayers can receive answers to tax law questions

• Use “Where’s My Refund?” Taxpayers used 

“Where’s My Refund?” more than 132.3 million 

times to check on the status of their tax refunds

The IRS is increasing communications with taxpayers who 

may not get their information from traditional sources, such 

as newspapers and broadcast cable news. By employing 

social and new media, such as YouTube, Twitter, and iTunes, 

the IRS can reach these taxpayers and provide important 

service and compliance messages. In February 2012, the IRS 

released a new version of IRS2Go, a Smartphone application 

that lets taxpayers check on the status of their tax refund and 

obtain tax information including requesting their tax return 

or account transcripts. Since its February 2012 release, the 

new features helped attract more than 6.2 million application 

launches from IRS2GO. 

In October 2011, the IRS began a pilot of Virtual Service 

Delivery (VSD) to test a new means of service delivery in 

Taxpayer Assistance Centers (TACs) and partner sites. VSD 

provided face-to-face contact with more than 16,000 

taxpayers at 15 IRS locations using video communication 

technology. Preliminary participant feedback from the 

survey through December 31, 2011 indicated they were very 

satisfied with VSD technology and 92 percent reported they 

would be willing to use video assistance again during a future 

visit. 

During the 2012 filing season, through September 30, 2012, 

the IRS received more than 147.6 million individual returns 

(113.8 million electronically filed) and issued more than 121.6 

million refunds totaling $333 billion.

In fiscal year 2012, the IRS continued to implement its 

Return Preparer Initiative, the foundation of which is 

mandatory registration for all paid tax return 

preparers. Through September 2012, more than 860,000 

preparers requested Preparer Tax Identification Numbers 

(PTINs) using the online registration system. The process 

gives the IRS an important and improved view of the return 

preparer community from which the IRS can leverage 

information to improve communications, analyze trends, 

spot anomalies, and detect potential fraud. The IRS also 

leveraged real time data during the 2012 filing season to 

improve the compliance of more preparers with high 

numbers of Earned Income Tax Credit (EITC) errors.

The IRS also launched the Registered Tax Return Preparer 

(RTRP) competency test in November 2011 for all paid tax 

return preparers except attorneys, certified public 

accountants, and enrolled agents. More than 31,000 tests 

were conducted, and applications from approximately 570 
U.S. Department of the Treasury | Fiscal Year 2012

23

continuing education providers were approved. All RTRPs 

are also required to complete 15 hours of Continuing 

Education (CE) courses annually beginning in 2012. To 

address this requirement, the IRS deployed a registration 

system for CE providers, issued Revenue Procedures 

outlining the IRS standards for CE accreditors and providers, 

and launched a webpage for CE accreditors, providers, and 

preparers. 

In January 2012, the IRS announced a third Offshore 

Voluntary Disclosure Program due to continued interest from 

taxpayers after the closure of the 2011 and 2009 programs. 

As part of an overall strategy to improve offshore compliance, 

taxpayers who voluntarily come forward and file all original 

and amended tax returns and pay taxes, interest, and 

accuracy-related and/or delinquency penalties, can avoid 

criminal prosecution. The offshore voluntary disclosure 

programs have resulted in over 38,000 disclosures and the 

collection of more than $5.5 billion in back taxes, interest, 

and penalties. 

The IRS modernization efforts focus on building and 

deploying advanced IT systems, processes, and tools to 

improve efficiency and productivity. In 2012, the IRS 

delivered the most significant update to its core tax 

processing system in decades with the deployment of the 

initial phase of the Customer Account Data Engine 2 (CADE

2), modernizing tax processing. After more than 50 years of 

posting returns and transactions on a weekly batch cycle, in 

January 2012, CADE 2 moved the IRS to a daily cycle for tax 

processing of individual taxpayer accounts. For the 2012 

filing season, the IRS completed the 3-year migration of the 

1040 form family from the original efile system to the 

Modernized eFile system. With this capability, plus 

significant performance improvements to support the 

anticipated volumes, the IRS will process all electronically 

enabled 1040 forms and schedules through Modernized eFile 

system during filing season 2013.. In the coming years CADE 

2 will provide the IRS with significantly expanded service and 

enforcement capabilities that will drive additional voluntary 

compliance.

INCREASE ELECTRONIC 

TRANSACTIONS WITH THE PUBLIC 

TO IMPROVE SERVICE, PREVENT 

FRAUD, AND REDUCE COSTS

The safety, security, efficiency, and reliability of Treasury 

transactions are paramount to maintaining public trust. 

Billions of transactions, including payments to federal 

benefits recipients, savings bonds purchases, and tax 

collections, are executed by Treasury each year. The paper 

processes associated with these transactions can be slow, 

unsecure, inaccurate, and wasteful. In an effort to improve 

customer service, decrease the public’s vulnerability to fraud, 

and efficiently manage resources, the Secretary of the 

Treasury approved several initiatives to move towards 

electronic transactions, including discontinuing the sale of 

paper savings bonds, increasing electronic benefit payments, 

and increasing electronic tax collection. Treasury has already 

discontinued the issuance of paper savings bonds through 

traditional employer-sponsored payroll savings plans, and 

the sale of over-the-counter paper savings bonds ended on 

December 31, 2011. Treasury will continue to make progress 

toward a fully paperless set of processes by paying benefits 

electronically and encouraging businesses to pay taxes 

electronically rather than by paper coupon. This priority goal 

is related to the strategic goal of “Manage the Government’s 

Finances in a Fiscally Responsible Manner.”

PAYMENTS

In support of the goal to increase electronic payments 

government-wide, the FMS has a number of efforts 

underway. In December 2010, Treasury announced a final 

rule to extend the safety and convenience of electronic 

payments to all Americans receiving federal benefit and nontax payments. Anyone who applied for benefits on or after 

May 1, 2011, was required to begin receiving their payments 

electronically, while those who were already receiving paper 

checks need to switch to electronic payment by March 1, 

2013. This important change will provide significant savings 

to American taxpayers who will no longer incur the price tag 

associated with paper checks. 

As a result of the final rule, the Go Direct® campaign shifted 

from a marketing focus to a national public education effort 
U.S. Department of the Treasury | Fiscal Year 2012

24

building on previous successes to provide federal benefit 

recipients with the tools and resources they need to transition 

to electronic payments. The campaign reaches current check 

recipients as well as people who will apply for federal benefits 

soon. Benefit checks have declined from 10.3 million per 

month in January 2011 to 5.5 million as of August 2012, 

saving millions of dollars for the United States Treasury and 

taxpayers in the years to come. 

A big part of the success of the All-Electronic Treasury is the 

Direct Express® card. The Direct Express® card offers the 

convenience and security of receiving benefit payments 

electronically for those who prefer a debit card or do not have 

a bank account. Instead of receiving a paper check, the 

benefit payment is automatically deposited into the 

recipient’s card account on the payment date. It is currently 

available to Social Security, Supplemental Security Income, 

Veterans, and other federal benefit types. As of December 

2012, more than 4.3 million benefit recipients have signed up 

for the Direct Express® card. 

The U.S. Debit Card Program has expanded to 36 separate 

and distinct uses by federal agencies, including uses in 

criminal investigations, Native American trust 

disbursements, and international student per diem 

reimbursements, since program inception in 2000. At 

present, the program that has delivered the largest savings to 

the taxpayer has been the Department of Transportation’s 

TRANServe debit card for the disbursement of federal transit 

subsidies encouraging federal workers to utilize public 

transportation. Since Program inception (July 2011) 

TRANServe has deployed 60,000 cards and has recouped 

$11.9 million in unspent funds. 

The Stored Value Card (SVC) Program is a joint program by 

the Departments of Treasury and Defense with major goals to 

enhance security, improve processing of financial 

transactions, and reduce the float loss associated with the 

coin and currency in circulation at military bases in the U.S. 

and overseas, on ships at sea, and at other "closed" 

Government locations around the world. SVCs reduce the 

high costs of securing, transporting, and accounting for cash. 

Through fiscal year 2012, SVCs have replaced more than $6 

billion in cash or other paper payment mechanisms used in 

military environments. Additionally, SVCs streamline and 

help automate the otherwise manually intensive back end 

operations that were necessary to support cash and cash 

equivalents. The SVC Program has saved the Government 

more than $48 million in operating costs. 

Treasury is also exploring the feasibility of extending EWallet and mobile payment technology to our payments area. 

As payment technology advances, Treasury is looking to meet 

the expectations of citizens in how they wish to interact with 

the U.S. Government. 

Also in support of President Obama’s “Campaign to Cut 

Waste” across the U.S. Government, Treasury has mandated 

the IPP for all Treasury offices and bureaus. IPP will reduce 

Treasury’s invoice processing costs by 50 percent, saving 

approximately $7 million annually. Implementation by all 

Treasury bureaus will be complete by the end of December

2012. FIT estimates that adopting electronic invoicing across 

the U.S. Government will reduce the cost of entering invoices 

and responding to invoice inquiries by $450 million annually. 

In addition to Treasury, as of December 2012 IPP supports 

52 agencies, with eight additional agencies beginning 

implementation. The program continues to advocate its 

cloud-based shared service government-wide to improve 

government efficiency and cut costs for taxpayers. 

COLLECTIONS

As part of this effort to increase electronic collections, FMS 

has undertaken the Non-Tax Paperless Initiative (NTPI), 

aimed at moving all collections and remittances processed by 

FMS to electronic means, resulting in greater efficiencies for 

FMS and its agency partners and greater convenience for the 

public. FMS is laying the groundwork for NTPI by analyzing 

cash flows (including both collections and remittances, 

processes, and remitter databases) to develop a transition 

strategy as well as investigating best practices in government 

and the private sector and emerging payment technologies 

(online banking, mobile payments, E-Wallets). 

Debt Collections 

FMS collects delinquent Government and child support debt 

by providing centralized debt collection, oversight, and 

operational services to Federal Program Agencies (FPAs) and 

states pursuant to the Debt Collection Improvement Act of 

1996 and related legislation. FMS uses two debt collection 

programs: Treasury Offset Program and Cross Servicing.
U.S. Department of the Treasury | Fiscal Year 2012

25

In fiscal year 2012, FMS increased debt collections by (1) 

repurposing the Austin Payment Center as a debt collection 

center, (2) undertaking three management and 

administrative reforms, which include improving the offset 

match process, improving analytic tools, and expanding 

Administrative Wage Garnishment, (3) enhancing the 

FedDebt system, and (4) expanding offset services by 

increasing debt referral, adding new debt types such as 

unemployment insurance compensation debts and expanding 

the usage to federal agencies and states.

Finally, FMS, in partnership with FIT, is developing a CRS 

Pilot. Treasury’s long-term vision is to provide a centralized 

receivables service to federal agencies that will increase 

collections on current receivables and delinquent debt. 

Government-wide Accounting (GWA) and Reporting 

The GWA Program supports the FMS’s strategic goal to 

produce timely and accurate financial information that 

contributes to the improved quality of financial decision 

making by operating and overseeing the Government’s 

central accounting and reporting system. The GWA Program 

also works with FPAs 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. 

The FMS collects, analyzes, and publishes Government-wide 

financial information, which is used by the U.S. Government 

to establish fiscal and debt management policies and 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 U.S. 

Government.
U.S. Department of the Treasury | Fiscal Year 2012

26

DEPARTMENT’S KEY PERFORMANCE MEASURES FOR 2012

The following table contains key performance metrics providing a representative overview of the department’s performance for 

2012. Discussion of the factors contributing to each measure’s performance results, and plans to improve the measure’s results 

in future years, follows the table.

Performance 

Measure 

Official Title Bureau

2008

Target

2008

Actual

2009

Target

2009

Actual

2010

Target

2010

Actual

2011

Target

2011

Actual

2012 

Target

2012

Actual

Percentage Collected 

Electronically of Total 

Dollar Amount of

Federal Government 

Receipts (%)

FMS 79.0 80.0 80.0 84.0 80.0 85.0 82.0 96.0 96 97

Percentage of Treasury 

Payments and 

Associated Information 

Made Electronically (%)

FMS 79.0 79.0 80.0 81.0 81.0 82.0 83.0 84.0 85 88

Amount of Delinquent 

Debt Collected Through 

All Available Tools

FMS 3.4 4.41 3.9 5.03 4.65 5.45 4.84 6.17 6.67 6.17

Customer Service 

Representative (CSR) 

Level of Service (%)

IRS 82.0 52.8 70.0 70.0 71.0 74.0 71.0 70.1 61.0 67.6

Taxpayer SelfAssistance Rate

IRS 51.5 66.8 64.7 69.3 61.3 64.4 68.7 70.1 72.2 78.5

Percentage of Business 

Returns Processed 

Electronically (%)

IRS 20.8 19.4 21.6 22.8 24.3 25.5 27.0 31.8 32.0 36.7

Percentage of Individual 

Returns Processed 

Electronically (%)

IRS 61.8 57.6 64.0 65.9 70.2 69.3 74.0 76.9 79.0 80.5

Affordable Housing 

Units Created by CDFI 

Fund Programs (data 

starting 2011)

CDFI 

Fund - - - - - - Baseline 19,083 16,419 27,433

OTA Scope and 

Intensity of 

Engagement (Traction)

DO Baseline 3.6 3.6 3.7 3.6 3.5 3.6 3.7 3.6 3.9

Impact of TFI Programs 

and Activities

DO - - Baseline 7.81 7.4 7.4 7.6 8.4 7.8 8.1*

Note: Performance measures were not audited.

*Estimated value.
U.S. Department of the Treasury | Fiscal Year 2012

27

On December 7, 2010, Treasury published a regulation that 

required businesses with an annual tax liability of at least 

$10,000 to pay their taxes electronically. The new 

requirement, combined with FMS’s efforts to transition 

taxpayers to electronic payments, resulted in FMS processing 

over 132.5 million payments electronically during fiscal year 

2012. Accordingly, Treasury significantly exceeded its 

performance target on the measure: “Percentage collected 

electronically of total dollar amount of federal government 

receipts.” With continued emphasis on the All Electronic 

Treasury initiative, FMS has undertaken the NTPI, aimed at 

moving all collections and remittances processed by FMS to 

electronic means, resulting in greater efficiencies for FMS 

and its agency partners and greater convenience for the 

public.

In support of the All Electronic Treasury initiative, FMS also 

continued to expand and market the use of electronic funds 

transfer to deliver federal payments, improve service to 

payment recipients, and reduce government program costs. 

In fiscal year 2012, FMS made 88 percent of payments 

electronically, exceeding its performance goal of 85 percent. 

FMS attributes the performance outcome to considerable 

success in implementing its nationwide Go Direct® 

campaign to encourage beneficiaries that receive their 

payments via check to switch to electronic payment. As a 

result, benefit checks have declined from 10.3 million per 

month in January 2011 to 5.5 million as of August 2012, 

saving millions of dollars for the United States Treasury and 

the taxpayers in the years to come.

In fiscal year 2012, the IRS achieved a 67.6 percent -

“Customer Service Representative Level of Service,” 

exceeding its performance target of 61 percent. The IRS 

answered more than 30 million assistor calls and 59.2 million 

automated calls, with an accuracy rate of 93.2 percent of tax 

law and 95.6 percent of account questions received via the 

telephone. Moving forward, the IRS will staff telephone 

service as effectively as possible to meet anticipated 

telephone demand.

The IRS exceeded its performance target and achieved a 78.5 

percent “Taxpayer Self Assistance Rate,” as a result of the 

increased popularity of IRS web-based applications. The selfassistance rate is expected to increase in future years as more 

taxpayers choose automated customer service methods over 

more traditional methods such as telephone and paper 

correspondence.

The IRS achieved an electronic-filing rate of 36.7 percent for 

business returns, exceeding its performance target by more 

than four percentage points. The IRS also exceeded the target 

on its electronic filing metric, “Percentage of Individual 

Returns Processed Electronically.” Performance in this area 

continues to be driven by increased demand for the overall 

benefits of e-file, such as its accuracy; quick 

acknowledgement of receipt; the ability to file amended, 

and/or prior year returns.

The CDFI Fund programs developed or produced 27,433 

housing units across all programs, reflecting the impact of 

Recovery Act investments in 2012. Targets will be adjusted 

upward for fiscal year 2014 based on the increase in housing 

portfolio loans to reflect the results of new awardee 

reporting.

OTA developed its Traction goal based on project evaluations 

to measure the degree to which financial technical assistance 

programs bring about changes in behavior of counterpart 

countries. In fiscal year 2011, OTA slightly exceeded its 

target. The nature of the OTA program is such that country 

projects that reach performance goals and objectives are 

concluded and new projects are begun where the challenges 

are significant. The effect of this dynamic keeps the target 

goal always challenging but reachable if performance remains 

high across all teams and projects.

TFI created a composite measure that consists of three 

overall program office focus areas related to its mission and 

strategic goals. TFI estimated that it exceeded its 

performance target of 7.81 on its composite measure, “Impact 

of TFI Programs and Activities.” Note that the fiscal year 

2012 outcome is an estimate as of the publication of this 

report because a customer service survey that contributes to 

the composite score has not been fully completed.
U.S. Department of the Treasury | Fiscal Year 2012

28

HIGHLIGHTS OF MANAGEMENT AND PERFORMANCE CHALLENGES

Annually, in accordance with the Reports Consolidation Act 

of 2000, OIG and TIGTA identify the most significant 

management and performance challenges facing the 

Department. These challenges do not necessarily indicate 

deficiencies in performance; rather, some represent inherent 

risks that must be monitored continuously. Treasury made 

much progress on these issues in fiscal year 2012, and will 

continue to focus on resolving them during fiscal year 2013 

and beyond. Refer to Section C of Part 3, Other 

Accompanying Information, of theFY12 Agency Financial 

Report for a detailed discussion of these challenges, listed 

below.

Note: SIGTARP does not provide the Secretary with an 

annual report on management and performance challenges.

TREASURY-WIDE MANAGEMENT CHALLENGES – AS IDENTIFIED BY OIG

• Transformation of Financial Regulation

• Management of Treasury’s Authorities Intended to Support and Improve the Economy

• Anti-Money Laundering and Terrorist Financing/Bank Secrecy Act Enforcement

• Gulf Coast Restoration Trust Fund Administration (new)

IRS MANAGEMENT CHALLENGES – AS IDENTIFIED BY TIGTA

• Security for Taxpayer Data and Employees

• Tax Compliance Initiatives

• Modernization

• Implementing the Affordable Care Act and Other Tax Law Changes

• Fraudulent Claims and Improper Payments

• Providing Quality Taxpayer Service Operations

• Human Capital

• Globalization

• Taxpayer Protection and Rights

• Achieving Program Efficiencies and Cost Savings
U.S. Department of the Treasury | Fiscal Year 2012

29

FINANCIAL HIGHLIGHTS

Figure 1 Figure 2

Figure 3 Figure 4

Figure 5 Figure 6

Figure 7 Figure 8
U.S. Department of the Treasury | Fiscal Year 2012

30

The financial highlights below are an analysis of the 

information included in the Department’s consolidated 

financial statements which appear within the “Annual 

Financial Report” section of this report. The Department’s 

principal financial statements have been prepared to report 

the agency’s financial position and results of operations, 

pursuant to the requirements of 31 USC 3515(b). While these 

financial statements have been prepared from the books and 

records of the Department in accordance with generally 

accepted accounting principles (GAAP) for federal entities 

and the formats prescribed by OMB, the consolidated 

financial statements are in addition to the financial reports 

used to monitor and control budgetary resources, which are 

prepared from the same books and records. The financial 

statements should be read with the realization that they are 

for a component of the U.S. Government, a sovereign entity.

The chart below presents changes in key financial statement 

line items as of and for the fiscal year ended September 30, 

2012 compared to September 30, 2011. 

Summary Financial Information (dollars in billions)

2012 2011

$ 

Change

% 

Change

Total Treasury Assets $ 17,921.9 $ 16,590.2 $ 1,331.7 8.0%

Total Treasury Liabilities $ 17,532.5 $ 16,510.1 $ 1,022.4 6.2%

Net Position $ 389.4 $ 80.1 $ 309.3 386.1%

Net Cost of (Revenue From) Treasury Operations $ (275.2) $ 4.2 $ (279.4) 6652.4%

Net Federal Debt Interest Costs $ 399.3 $ 426.7 $ (27.4) (6.4)%

Total Budgetary Resources $ 816.1 $ 1,089.0 $ (272.9) (25.1)%

Net Agency Outlays $ 241.3 $ 313.4 $ (72.1) (23.0)%

Net Revenue Received (Custodial) $ 2,256.2 $ 2,105.3 $ 150.9 7.2%

Financial Overview. The Department’s financial 

performance as of and for the fiscal year ended September 

30, 2012 reflects several major trends. Most significantly, the 

outstanding federal debt, including interest, rose by $1.3 

trillion to finance the U.S. Government’s budget deficits. 

Additionally, the Department amended its Senior Preferred 

Stock Purchase Agreements (SPSPAs) with the two GSEs in 

2012 which, among other things, changes the basis by which 

quarterly dividends are paid by the GSEs to the U.S. 

Government commencing with the quarter ending March 31, 

2013. This amendment impacted the end-of-year valuation 

of the Department’s senior preferred stock investment and 

contingent liability associated with the GSE program. At the 

end of 2012, the Department reduced its estimated future 

liability to the GSEs over the life of the SPSPA program by 

$307.2 billion, and reduced the fair value of its GSE senior 

preferred stock and other related investment holdings by 

$42.2 billion. This compares to the $22.9 billion reduction in 

the estimated liability and $3.1 billion increase in the fair 

value of the GSE investment holdings recorded at the end of 

2011. The declines in both the asset and liability at the end of 

2012 were primarily due to lower anticipated future draws by 

the GSEs since they will no longer need to make draws to 

fund dividend payments to Treasury as a result of the revised 

dividend provisions of the amended SPSPAs. Future 

dividend payments pursuant to the amendment are expected 

to be lower than previously forecasted.

The Department’s 2012 financial performance also reflects 

the ongoing wind-down of both the GSE MBS and TARP 

credit programs, principally through sales of securities and 

principal repayments of loans made under these programs. 

In fiscal year 2012, the Department completed the sale of its 

entire MBS portfolio; these sales commenced in mid-2011. 

TARP’s wind-down activity included, among other things, 

continued sales of its AIG common stock held. The winddown of the GSE MBS and TARP programs drove significant 

fluctuations in the subsidy costs associated with these 

programs during both fiscal years 2012 and 2011 caused by 

program modifications and end-of-year reestimates. Subsidy 

costs recorded in connection with each credit program 

represent the difference between the projected costs of the 

program and the future cash flows anticipated to be received 

from the program. Reestimates may occur due to changes in 

a program’s estimated future cash flows caused by changes in 

market conditions and actual program performance, thereby 

resulting in an upward or downward reestimate in the credit 
U.S. Department of the Treasury | Fiscal Year 2012

31

program receivable to reflect an increase or decrease, 

respectively, in the estimated total cost of the program.

Total Treasury Assets of $17.9 trillion at September 30, 

2012 consist of a receivable due from the General Fund of the 

U.S. Government of $16.2 trillion, intra-governmental loans 

and interest receivable of $914.3 billion, and fund balance 

and various other assets which totaled $805.4 billion (Figure 

9). The $1.3 trillion (or 8.0 percent) increase in total assets 

at the end of fiscal year 2012 over the prior year is primarily 

due to a $1.3 trillion rise in the federal debt and related 

interest payable, which caused a corresponding rise in the 

“Due from the General Fund of the U.S. Government” 

account. This account represents future funds required from 

the General Fund of the U.S. Government to pay borrowings 

from the public and other federal agencies. 

Intra-governmental loans and interest receivable represent 

loans issued primarily by the BPD to other federal agencies 

for their own use or for the agencies to loan to private sector 

borrowers whose loans are guaranteed by the federal 

agencies. This receivable grew by $185.7 billion (or 25.5 

percent) to $914.3 billion at the end of fiscal year 2012 due to 

increased borrowings by various federal agencies – such as 

the Departments of Education, Agriculture, and Energy – to 

fund their existing programs. 

Other assets include, among other things, TARP and nonTARP credit program receivables due from, and other 

investments in, certain financial institutions for which the 

Department provided financial assistance in an effort to 

stabilize financial markets. Other assets decreased by almost 

$153.5 billion primarily due to the ongoing wind-down of 

these programs through sales of securities or principal 

repayments of loans made under these programs, as well as 

from declines in the fair value of the GSE preferred stock 

investments held principally due to the SPSPA amendment.

Total Treasury Liabilities of $17.5 trillion at September 

30, 2012 principally consist of the federal debt held by the 

public, including interest, of $11.3 trillion which were mainly 

issued as Treasury Notes and Bills (Figure 10). Liabilities 

also include intra-governmental liabilities totaling $6.1 

trillion (of which $4.9 trillion represent principal and interest 

of federal debt in the form of Treasury securities held by 

federal agencies), and various other liabilities totaling $98.4 

Figure 9

billion. The $1.0 trillion (or 6.2 percent) increase in total 

liabilities at the end of fiscal year 2012 over the prior year is 

attributable to a $1.3 trillion increase in federal debt, 

including interest, held by the public and federal agencies 

that was needed to finance the U.S. Government’s budget 

deficits. This was partially offset by a $307.2 billion decrease 

in the estimated future liability to the GSEs.

Figure 10

Net Position of $389.4 billion at September 30, 2012 

represents the combined total of the Department’s 

cumulative results of operations and unexpended 

appropriations at the end of the fiscal year. The $309.3 

billion increase in the net position at the end of fiscal year 

2012 was principally attributable to a$279.4 billion increase 

in net revenue from Treasury operations, combined with a 

$27.4 billion decrease in net federal debt interest costs, as 

discussed below. 

Net Revenue From Treasury Operations, as presented 

on the Department’s Consolidated Statements of Net Cost,

represents the Department’s gross and net costs by strategic 
U.S. Department of the Treasury | Fiscal Year 2012

32

program. There are three main categories of strategic 

programs: financial, economic, and security. The 

Department generated $275.2 billion in total net revenue

from its operations for 2012 compared to a net cost of $4.2 

billion in the prior year, primarily due to increased net 

revenue associated with the Department’s economic 

programs, and lower net costs from its financial programs.

Economic programs generated net revenue of $288.8 billion 

in 2012 compared to $9.9 billion in fiscal year 2011 (Figure 

11). The $278.9 billion increase in economic program net 

revenue in fiscal year 2012 is primarily due to a $307.2 

billion reduction in the Department’s estimated future 

liability to the GSEs in 2012, via a reduction in expense, as a 

result of the SPSPA amendment, as compared to a $22.9 

billion reduction in this liability in 2011. Fiscal year 2012 net 

revenue was also favorably impacted by changes in subsidy 

costs associated with the ongoing wind-down of both the GSE 

MBS and TARP programs, offset by increased foreign 

currency exchange losses incurred by ESF due to the 

strengthening of the U.S. dollar in the world market. 

The net cost of financial programs was $11.8 billion, down 

$1.8 billion from fiscal year 2011. Fiscal year 2012 reflects 

increased interest earnings on higher levels of intragovernmental loans issued to other federal agencies, as 

discussed under the section “Total Treasury Assets” above. 

Figure 11

Net Federal Debt Interest Costs primarily reflect interest 

expense on the federal debt. Federal interest costs declined 

by $27.4 billion (or 6.4 percent) in fiscal year 2012 despite 

the rise in the federal debt, due to a decline in the average 

interest rate on the Treasury debt securities. 

Total Budgetary Resources of $816.1 billion were lower 

in fiscal year 2012 by $272.9 billion (or 25.1 percent) 

primarily due to decreases in both borrowing authority and 

appropriations. Borrowing authority resources decreased 

$146.0 billion principally related to the IMF and TARP 

programs. IMF established two new credit reform programs 

in fiscal year 2011 for which it received $107.5 billion in 

borrowing authority in that year when compared to fiscal 

year 2012. Additionally, TARP’s borrowing authority 

requirement fell by $32.9 billion for fiscal year 2012 due to a 

reduction in downward reestimates of credit reform subsidies 

associated with certain of its programs. Total budgetary 

resources also reflect reduced appropriations of $66.7 billion 

primarily due to less funding needed in fiscal year 2012 to 

service the federal debt.

Net Agency Outlays of $241.3 billion were lower in fiscal 

year 2012 by $72.0 billion (or 23.0 percent) primarily due to 

fewer program disbursements associated with the TARP, GSE 

MBS, and SBLF programs due to the wind-down of certain of 

these programs.

Net Revenue Received (Custodial), representing net 

revenue collected by Treasury on behalf of the U.S. 

Government, includes various taxes, primarily income taxes, 

as well as user fees, fines and penalties, and other revenue. 

Over 90 percent of these revenues are related to income and 

social security taxes. Net revenue received was $2.3 trillion 

for fiscal year 2012, an increase of $150.9 billion (or 7.2 

percent) over the prior fiscal year. This increase is attributed 

mainly to an overall improvement in individual and 

corporate income tax collections, coupled with a reduction in 

tax refunds.

 
U.S. Department of the Treasury | Fiscal Year 2012

33

CONDENSED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets (in millions): 2012 2011

Due From the General Fund $ 16,202,179 $ 14,902,717

Other Intra-governmental Assets 1,293,077 1,154,355

Cash, Foreign Currency, and Other Monetary Assets 145,551 117,121

Gold and Silver Reserves 11,062 11,062

Troubled Asset Relief Program (TARP) - Credit Program Receivables, Net 40,231 80,104

Investments in Government Sponsored Enterprises 109,342 133,043

Non-TARP Investment in American International Group, Inc. 2,611 10,862

Reserve Position in the International Monetary Fund 21,573 20,682

Other Credit Program Receivables, Net 19,888 92,820

Taxes, Interest and Other Receivables, Net 41,463 36,690

Other Assets 34,885 30,770

Total Assets $ 17,921,862 $ 16,590,226 

Federal Debt and Interest Payable $ 16,168,588 $ 14,869,128

Other Intra-governmental Liabilities 1,265,487 1,235,467

Liability to Government Sponsored Enterprises 9,003 316,230

Other Liabilities 89,388 89,263

Total Liabilities 17,532,466 16,510,088

Unexpended Appropriations 317,509 342,978

Cumulative Results of Operations 71,887 (262,840)

Total Net Position 389,396 80,138 

Total Liabilities and Net Position $ 17,921,862 $ 16,590,226 

Condensed Consolidated Statements of Net Cost (in millions): 2012 2011

Net Financial Program Cost $ 11,783 $ 13,554 

Net Economic Program (Revenue)/Cost (288,780) (9,937)

Net Security Program Cost 1,055 355 

Total Net Program Cost (Revenue) before Assumption Changes (275,942) 3,972 

Losses Due To Changes in Actuarial Assumptions 695 195 

Total Net Cost of (Revenue from) Treasury Operations (275,247) 4,167 

Total Net Non-Entity Costs (primarily interest on the Federal Debt) $ 420,428 $ 399,988 

Condensed Consolidated Statements of Changes in Net Position (in millions): 2012 2011

Beginning Balance $ (262,840) $ (299,461)

Budgetary Financing Sources 429,433 553,644 

Other Financing Sources (Uses) 50,475 (112,868)

Total Financing Sources 479,908 440,776 

Net Cost of Operations (145,181) (404,155)

Net Change 334,727 36,621 

Cumulative Results of Operations $ 71,887 $ (262,840)

Beginning Balance $ 342,978 $ 400,557 

Appropriations Received 419,130 498,723 

Appropriations Used (428,479) (548,129)

Other (16,120) (8,173)

Total Budgetary Financing Sources (25,469) (57,579)

Total Unexpended Appropriations 317,509 342,978 

Net Position - Year End $ 389,396 $ 80,138 
U.S. Department of the Treasury | Fiscal Year 2012

34

Condensed Combined Statements of Budgetary Resources (in millions): 2012 2011

Unobligated Balance, Brought Forward $ 368,954 $ 372,243 

Recoveries of Prior Year Unpaid Obligations & Other Changes (27,677) (6,297)

Budget Authority 474,784 723,055 

Total Budgetary Resources $ 816,061 $ 1,089,001 

Obligations Incurred $ 476,463 $ 720,047 

Unobligated Balance, End of Year 339,598 368,954 

Total Status of Budgetary Resources $ 816,061 $ 1,089,001 

Total Unpaid Obligated Balances Net $ 270,983 $ 208,189 

Obligations Incurred 476,463 720,047 

Outlays, Gross (482,094) (663,362)

Recoveries of Prior Year Unpaid Obligations, Actual (13,349) (16,729)

Changes in Uncollected Customer Payments federal sources 166 22,838

Obligated Balance, End of Year $ 252,169 $ 270,983

Agency Outlays, Net (Discretionary and Mandatory) $ 241,318 $ 313,354 

Condensed Statements of Custodial Activity (in millions): 2012 2011

Sources of Custodial Revenue

Individual and FICA Taxes $ 2,159,990 $ 2,102,030 

Corporate Income Taxes 281,462 242,848 

Other Revenues 188,516 176,595 

Total Revenue Received 2,629,968 2,521,473 

Less Refunds (373,752) (416,221)

Net Revenue Received 2,256,216 2,105,252 

Non-Cash Accrual Adjustment 5,543 (150)

Non-TARP Investments in American International Group, Inc.: 

 Cash Proceeds from Sale of Stock 12,992 1,973 

Non-Cash Market Adjustments (8,251) (9,944)

Total Custodial Revenue 2,266,500 2,097,131 

Disposition of Custodial Revenue

Amounts Provided to Fund Non-Federal Entities 386 462 

Amounts Provided to Fund the Federal Government 2,255,830 2,104,790 

Non-Cash Accrual Adjustment:

Amounts to be Provided to the General Fund 4,000 -

Accrual Adjustment 1,543 (150)

Non-TARP Investments in American International Group, Inc.: 

Cash Proceeds from Stock Sales Provided to Fund the Federal Government 12,992 1,973 

Non-Cash Market Adjustments (8,251) (9,944)

Total Disposition of Custodial Revenue 2,266,500 2,097,131 

Net Custodial Revenue $ - $ -