Treasury Inspector General for Tax Administration 

Mission Statement 

To provide audit and investigative services that promote economy, efficiency, and 

integrity in the administration of the internal revenue laws. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

Audit $50,260 $52,959 $55,055 $2,096 3.96%

Investigations 82,601 87,574 90,681 3,107 3.55%

Total Appropriated Resources $132,861 $140,533 $145,736 $5,203 3.70%

Total FTE 817 835 835 0 0.00%

FY 2009 Priorities 

• Adapting to the Internal Revenue Service’s (IRS) continuously evolving operations 

and mitigating intensified risks associated with modernization, addressing the tax gap, 

and enforcement efforts; 

• Responding to threats and attacks against IRS employees, property, and sensitive 

information; 

• Improving the integrity of IRS operations by detecting and deterring fraud, waste, 

abuse or misconduct by IRS employees; 

• Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for cost savings and enhancing IRS’ service to taxpayers; and 

• Informing Congress and the Secretary of the Treasury of problems and progress made 

to resolve them. 
Table of Contents 

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

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

1B – Program History and Future Outlook..................................................................... 2 

Section 2 – Budget Adjustments and Appropriation Language................................... 5

2.1 – Budget Adjustments Table..................................................................................... 5 

2A – Budget Increases and Decreases Description ........................................................ 5 

2.2 – Operating Levels Table.......................................................................................... 6 

2.3 – Appropriations Detail Table .................................................................................. 7 

2B – Appropriations Language and Explanation of Changes......................................... 8 

2C – Legislative Proposals ............................................................................................. 8 

Section 3 – Budget and Performance Plan ..................................................................... 9

3.1 – Budget by Strategic Outcome ................................................................................ 9 

3A – Audit ..................................................................................................................... 9 

3.2.1 – Audit Budget and Performance Plan ................................................................ 13 

3B – Investigations ...................................................................................................... 14 

3.2.2 – Investigations Budget and Performance Plan ................................................... 16 

Section 4 – Supporting Materials.................................................................................. 17

4A – Human Capital Strategy Description ................................................................... 17 

4.1 – Summary of IT Resources Table ......................................................................... 19 

4B – Information Technology Strategy ........................................................................ 20 

4.2 – PART Evaluation Table....................................................................................... 22 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Treasury Inspector General for Tax Administration (TIGTA) was created by 

Congress to provide independent oversight of the IRS. TIGTA’s investigations and 

audits protect and promote the fair administration of the American tax system. Its 

responsibilities include ensuring that the IRS is accountable for more than $2 trillion in 

tax revenue received each year. TIGTA’s investigations ensure the integrity of IRS 

employees, contractors, and other tax professionals; provide for infrastructure security; 

and protect the IRS from external attempts to threaten or corrupt the administration of the 

tax laws. TIGTA conducts audits that advise Congress, the Secretary of the Treasury, 

and IRS management of high-risk issues, problems, and deficiencies related to the 

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

improve IRS systems and operations, while maintaining fair and equitable treatment of

taxpayers. TIGTA’s oversight is essential to the efficiency and equity of the federal tax 

administration system. 

 

TIGTA’s FY 2009 budget request is $145,736,000, an increase of 3.7 percent above the 

2008 enacted level. These requested resources will finance critical investigative and 

audit services, ensuring the integrity of tax administration on behalf of the nation’s 

taxpayers. TIGTA’s investigative and audit priorities include: 

• Adapting to the IRS' continuously evolving operations and mitigating intensified risks 

associated with modernization, addressing the tax gap, and enforcement efforts; 

• Responding to threats and attacks against IRS employees, property, and sensitive 

information; 

• Improving the integrity of IRS operations by detecting and deterring fraud, waste, 

abuse or misconduct by IRS employees; 

• Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for cost savings and enhancing the IRS service to taxpayers; and 

• Informing Congress and the Secretary of the Treasury of problems and progress made 

to resolve them. 

 

Additionally, TIGTA’s strategic goals contribute to the Department goals and objectives. 

These strategic goals are to: 

 

• Promote the Economy, Efficiency, and Effectiveness of Tax Administration; 

• Protect the Integrity of Tax Administration and; 

• Be an Organization that Values Its People. 

TIGTA – 1 
1B – Program History and Future Outlook 

Previously a longstanding enforcement office within the IRS, TIGTA was established as 

an independent office in January 1999 in accordance with the Internal Revenue Service 

Restructuring and Reform Act of 1998 (RRA 98). TIGTA is mandated to provide 

independent audit and investigative services necessary to improve the quality and 

credibility of IRS oversight. TIGTA’s investigations and audits are integral to the 

efficient and equitable application of the nation’s tax laws and thereby ensure that this 

critical source of federal revenue is prudently and fairly administered and secure from

internal and external threats. Oversight activities are explicitly designed to identify highrisk systemic inefficiencies in IRS operations and investigate exploited weaknesses in tax 

administration. 

 

In FY 2007, TIGTA’s accomplishments included: 

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

sensitive financial and personal data, which is processed and stored by IRS computer 

systems. This trust is the cornerstone of the nation’s voluntary tax compliance system. 

However, increased reports of identity theft from both the private and public sectors 

emphasize the importance of protecting taxpayer data. In response to increased reports of 

theft of government-owned computers over the past year, TIGTA and the IRS Computer 

Security Incident Response Center (CSIRC) worked together to mitigate any adverse 

impact on tax administration resulting from these computer or data thefts. Specifically, 

TIGTA and CSIRC signed a Memorandum of Understanding that included a process to 

accurately report and document lost and/or stolen IRS information technology assets. 

This immediate notification process will promote a swift response, and preemptive 

measures to protect sensitive information maintained by the IRS. 

Tax Compliance: TIGTA’s increased community outreach efforts have helped the IRS to 

deliver quality customer service to taxpayers and the tax practitioner community. TIGTA 

worked diligently to make contact with large segments of the IRS workforce and other 

external entities. By doing so, TIGTA developed relationships with these groups that 

assist in identifying crimes against the IRS and taxpayers. The outreach efforts resulted 

in increased reports of bribery, unauthorized access and disclosure of private taxpayer 

information (UNAX) violations, and other offenses that undermine effective tax 

administration. Between October 2006 and September 2007, TIGTA provided 

presentations to more than 52,000 IRS employees and external entities. Specifically, 

TIGTA’s Office of Investigations (OI) provided integrity and fraud awareness 

presentations to revenue officers and revenue agents at their continuing professional 

education conferences. During this same period, OI worked to educate tax professionals 

by providing 101 awareness presentations to 8,784 tax practitioners and preparers at 

professional conferences. 

Additionally, TIGTA continues to provide comprehensive coverage and oversight of all 

aspects of the IRS’ daily operations. TIGTA’s Office of Audit (OA) not only focuses on 

the economy and efficiency of IRS functions, but also works to ensure that taxpayers’ 

rights are protected and the taxpaying public is adequately served. Overall, as of 

TIGTA – 2 
September 30, 2007, audit reports potentially produced financial benefits of 

approximately $3.55 billion, and potentially impacted approximately 5.7 million 

taxpayers’ accounts in areas such as taxpayer burden, rights, and entitlements, taxpayer 

privacy and security, protection of resources/reliability of information, and increased 

revenue/revenue protected. TIGTA’s audits have identified potential unsubstantiated 

noncash contributions as well as opportunities to assess additional Social Security and

Medicare taxes on wages. TIGTA’s investigative and audit compliance efforts helped the 

IRS deliver quality service, ensure equitable treatment of taxpayers, and identify the 

potential loss of revenue to the federal government. 

Advising Congress: As of September 30, 2007, TIGTA provided 5 testimonies, 

18 briefings, and 250 responses to Congress and its professional staff regarding 

investigative and audit activities. Through direct communication, TIGTA aims to 

address the interest of congressional committees on critical issues, thus avoiding 

unsubstantiated concerns that may needlessly impede IRS operations. Accordingly, 

TIGTA’s Inspections and Evaluations (I&E) group began its first year of operation after a 

successful pilot project during FY 2006. The I&E group complements the work of our 

audit and investigative functions and provides TIGTA with additional flexibilities and 

capabilities to meet its mission and address increasing requests for IRS program reviews 

from Congress and other IRS stakeholders. The scope of the group’s efforts ranges from

answering congressional concerns to evaluating tax issues in regard to the IRS’ ability to 

administer the tax laws. 

The I&E group has positioned TIGTA well to respond to external stakeholders promptly. 

To meet the challenge in FY 2007, TIGTA reallocated resources. As the group continues 

its work, we expect its influence in overseeing tax administration to grow and its service 

of informing interested parties to expand. 

Overall Investigative Outcomes: Between October 1, 2006, and September 30, 2007, 

81 percent of the 3,597 final closed investigations generated results, including 1,663 

cases of employee misconduct referred for action and 206 cases accepted for prosecution 

with final legal action. Specifically, unauthorized access to confidential tax information 

remains a significant problem for the IRS. During the same period, TIGTA opened 

521 new UNAX cases and closed 621 cases, 594 of which resulted in personnel action 

against IRS employees. 

Overall Audit Outcomes: TIGTA issued a total of 180 audit, inspection, and evaluation 

reports between October 1, 2006, and September 30, 2007, identifying approximately 

$3.55 billion in potential financial benefits (i.e., costs savings, increased/protected 

revenue, taxpayer rights and entitlements, and inefficient use of resources). These audits 

returned $52 for each $1 invested this fiscal year. 

In FY 2008, as the IRS evolves, TIGTA faces the challenge of adapting its oversight

activities to address increasingly complex and high-risk issues associated with IRS 

operations. Some of these issues include detection and investigation of fraud and 

electronic crime, procurement activities, taxpayer privacy, and an increasing number of 

TIGTA – 3 
requests for IRS program reviews from Congress and other IRS stakeholders. Each of 

these areas presents significant challenges for TIGTA and the IRS. The following are 

highlights of these issues and their challenges: 

Fraud and Electronic Crime: TIGTA’s reviews have identified persistent IRS computer 

weaknesses that could jeopardize the security of personally identifiable information. The 

sensitivity of the data makes the IRS an attractive target for employees, hackers, and 

others who could use the information for fraud and identity theft. TIGTA’s audit and 

investigative work provides for coverage of this growing national problem, providing 

proactive prevention and detection efforts that are required of this highly vulnerable and 

ever-evolving area. As described in Presidential Decision Directive NSC-63, IRS 

operations that fund the federal government are part of the nation’s critical infrastructure. 

Degradation of the public’s trust in the tax system leading to a decline in voluntary 

compliance represents a potential risk to national security. 

Taxpayer Privacy: The protection of confidential taxpayer information is of critical 

importance to Congress and the taxpaying public. In August 1997, the Taxpayer 

Browsing Protection Act rendered the willful inspection and/or disclosure of federal tax 

information without proper approval, known as unauthorized access by IRS employees, 

state and other federal employees, and contractors, a criminal offense. As the IRS 

continues its modernization effort, TIGTA faces the challenge of keeping pace with the 

increased risk of UNAX violations expected to result from IRS’ plans to install 261 new 

records systems. Uninvestigated, UNAX violations undermine the taxpaying public’s 

trust in the federal tax system to safeguard confidential tax information. In addition, they 

erode voluntary compliance, facilitate criminal violations, and enable potentially 

hazardous security breaches of IRS computer systems. 

TIGTA – 4 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 835 $140,533

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 615

 Pay Annualization 799

 Pay Inflation Adjustment 2,419

Transfers In:

 Transfer from IRS for building operations 1,370

Total FY 2009 Base 835 $145,736

Total FY 2009 President's Budget Request 835 $145,736

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ...........................................+$3,833,000 / +0 FTE 

Non-Pay Inflation Adjustment +$615,000 / +0 FTE 

Funds are requested for the other non-labor related items such as contracts, travel, 

supplies, equipment, and GSA rent. 

Pay Annualization +$799,000 / +0 FTE 

Funds are requested for FY 2009 costs of January 2008 pay raise. 

Pay Inflation Adjustment +$2,419,000 / +0 FTE 

Funds are requested for the FY 2009 pay raise. 

Transfers In ....................................................................................+$1,370,000 / +0 FTE 

Transfer from IRS for building operations +$1,370,000 / +0 FTE 

Transfer of $1,370,000 from IRS to fund expenses for building operations and selected 

support services currently provided by IRS on behalf of TIGTA. 

TIGTA – 5 
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 817 835 835 835

Object Classification:

 11.1 - Full-time permanent 74,148 75,901 0 75,901 78,314

 11.3 - Other than full-time permanent 463 576 0 576 576

 11.5 - Other personnel compensation 8,109 9,398 0 9,398 9,131

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 25,289 25,226 0 25,226 26,298

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 3,616 4,552 0 4,552 4,834

 22 - Transportation of things 57 24 0 24 24

 23.1 - Rental payments to GSA 7,853 8,024 0 8,024 8,952

 23.2 - Rental payments to others 272 282 0 282 288

 23.3 - Comm, utilities, and misc charges 2,609 8,688 0 8,688 2,570

 24 - Printing and reproduction 19 8 0 8 8

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 424 1,152 0 1,152 1,175

 25.2 - Other services 659 921 0 921 986

 25.3 - Other purchases of goods and services from Govt.

accounts 

3,941 0 0 0 6,695

 25.4 - Operation and maintenance of facilities 225 407 0 407 407

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 1,154 1,252 0 1,252 1,277

 25.8 - Subsistence and support of persons 0 0 0 0 0

 26 - Supplies and materials 1,030 1,170 0 1,170 1,193

 31 - Equipment 2,809 2,750 0 2,750 2,805

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0 0 0

 42 - Insurance claims and indemnities 130 150 0 150 150

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

 91.0 - Confidential Expenditures 54 52 0 52 53

Total Budget Authority $132,861 $140,533 $0 $140,533 $145,736

Budget Activities:

 Audit 50,260 52,959 0 52,959 55,055

 Investigations 82,601 87,574 0 87,574 90,681

Total Budget Authority $132,861 $140,533 $0 $140,533 $145,736

TIGTA – 6 
2.3 – Appropriations Detail Table 

Dollars in Thousands

Appropriation Detail Table

(Dollars in Thousands)

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Audit 325 $49,087 341 $50,260 349 $52,959 349 $55,055 0.00% 3.96%

Investigations 467 83,427 476 82,601 486 87,574 486 90,681 0.00% 3.55%

Subtotal New Appropriated Resources 792 $132,514 817 $132,861 835 $140,533 835 $145,736 0.00% 3.70%

Other Resources:

Offsetting Collections - Reimbursable 3 927 3 1,200 3 900 3 900 0.00% 0.00%

Subtotal Other Resources 3 $927 3 $1,200 3 $900 3 $900 0.00% 0.00%

Total Resources Available for Obligation 795 $133,441 820 $134,061 838 $141,433 838 $146,636 0.00% 3.68%

% Change

FY 2009 FY 2008

Resources Available for Obligation Obligations Enacted Enacted Request to FY 2009

FY 2007 FY 2007 FY 2008

TIGTA - 7 
2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

TREASURY INSPECTOR GENERAL FOR TAX 

ADMINISTRATION 

Federal Funds 

General and Special Funds: 

SALARIES AND EXPENSES

For necessary expenses of the Treasury Inspector General 

for Tax Administration, in carrying out the Inspector 

General Act of 1978, as amended, including purchase (not 

to exceed 150 for replacement only for police-type use) 

and hire of passenger motor vehicles (31 U.S.C. 1343 (b)); 

services authorized by 5 U.S.C. 3109, at such rates as may 

be determined by the Inspector General for Tax 

Administration, not to exceed $6,000,000 for official 

travel expenses; and not to exceed $500,000 for 

unforeseen emergencies of a confidential nature, to be 

allocated and expended under the direction of the 

Inspector General for Tax Administration [$140,533,000] 

$145,736,000; and of which not to exceed $1,500 shall be

available for official reception and representation 

expenses. (Department of the Treasury Appropriations 

Act, 2008)

2C – Legislative Proposals 

TIGTA does not have any legislative proposals for FY 2009. 

TIGTA - 8 
Section 3 – Budget and Performance Plan

This table lists all FY 2009 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a 

corporate level plan for the Department that provides a description of what the agency 

intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treas.gov/offices/management/budget/strategic-plan/

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 Accountability & trans 141,433 146,636 3.7%

Total $141,433 $146,636 3.7%

3A – Audit ($55,055,000 from direct appropriations and $500,000 from reimbursable 

programs): The Office of Audit’s (OA) mission is to provide comprehensive coverage 

and oversight of all aspects of the IRS’ daily operations. Audits, inspections, and 

evaluations not only focus on the economy and efficiency of IRS functions but also 

ensure that taxpayers’ rights are protected and the taxpaying public is adequately served. 

Moreover, IRS implementation of audit recommendations results in: cost savings and 

increased or protected revenue; reduction of taxpayer burden; protection of taxpayer 

rights and entitlements, taxpayer privacy and security; and protection of IRS resources. 

Overall, as of September 30, 2007, audit reports produced potential financial benefits of 

approximately $3.55 billion, and potentially impacted approximately 5.7 million taxpayer 

accounts in areas such as taxpayer burden, rights and entitlements, taxpayer privacy and 

security, protection of resources/reliability of information, and increased revenue/revenue 

protected. 

Each fiscal year, OA develops an annual audit plan that communicates oversight 

priorities to Congress, the Department of the Treasury, and the IRS. This plan includes 

statutory audit coverage and high risk audit work. The statutory coverage includes audits 

mandated by the IRS Restructuring and Reform Act of 1998, as well as reviews that 

address computer security and financial management. The high-risk workload includes 

issues pertaining to the IRS' modernization efforts, major management challenges, 

response to the President's Management Agenda, progress in achieving its strategic goals, 

as well as Congressional and other stakeholder requests for audit coverage. By focusing 

on these critical areas, OA ensures that TIGTA audits identify and recommend 

improvements in IRS programs, including: 

Tax Compliance: The tax gap exemplifies the considerable challenges the IRS faces in 

collecting sufficient revenue and the federal tax system’s critical dependence on 

TIGTA - 9 
voluntary compliance. In February 2006, the IRS estimated the gross tax gap, defined as 

the difference between the estimated amount taxpayers owe and the amount they 

voluntarily and timely pay for a tax year, to be $345 billion for Tax Year 2001. TIGTA 

evaluated the reliability of the IRS-developed tax gap figures and concluded that the IRS 

lacked sufficient information to completely and accurately assess the tax gap and 

voluntary compliance rate. A reliable estimate of the overall tax gap and its components 

is critical to tax administration and tax policy decision-makers. TIGTA recommended 

that the IRS continue to conduct reviews on a regular basis for major segments of the tax 

gap and that it consider establishing a tax gap advisory panel that includes tax and 

economic experts to identify ways to improve the methods to measure voluntary 

compliance. IRS management agreed with the recommendations. Continued TIGTA 

oversight of tax gap issues, including data reliability, enforcement of laws, and taxpayer 

assistance, is necessary to ensure that the IRS enhances voluntary compliance by 

balancing taxpayer services and enforcement without jeopardizing taxpayer rights. 

In FY 2007, TIGTA completed a review that included an assessment of the processing of 

individual income tax returns reporting deductions for noncash charitable contributions, 

and estimated that 101,236 taxpayers could have claimed unsubstantiated noncash 

contributions totaling approximately $1.8 billion for the period of January 15 through 

September 21, 2006. The IRS agreed to implement a number of corrective actions in this 

area. TIGTA plans to do follow-up work and will test the effectiveness of these 

corrective actions once they have been implemented. 

Further, as the tax collectors for the Social Security program, the IRS must help taxpayers 

meet their tax responsibilities by assessing and collecting the proper amount of 

employment taxes in this area. Based on the results of an audit addressing the IRS’ 

processing of Form 4137, Social Security and Medicare Tax on Unreported Tip Income, 

TIGTA estimated that the IRS could assess an additional $108 million1

 in Social Security 

and Medicare taxes each year. The IRS agreed to revise Form 4137 to capture the data 

necessary to assess the employer's share of Social Security and Medicare taxes on 

unreported tip income and to create a new form for reporting the employee's share of 

these taxes on wage income. Once these corrective actions have been implemented, 

TIGTA will reevaluate the IRS' improvements in this area. 

Regarding the 2007 filing season, one of TIGTA’s concerns was the IRS’ Telephone 

Excise Tax Refund (TETR) program. The refund is the most wide-reaching refund in the 

history of the IRS. The IRS estimated that between 145 million and 165 million 

individual taxpayers would be eligible to claim this one-time refund, including many 

without a filing requirement. Because the IRS had collected approximately $8 billion 

from individual taxpayers for the applicable period, it had a goal to return as close to this 

amount as possible while minimizing the total refunds made above this amount. To 

minimize the number of overstated refund requests and administrative burden on 

individual taxpayers, the IRS offered individuals standard refund amounts. TIGTA 

pointed out that a significant amount of the telephone excise tax may never be refunded. 

 

1

 This is comprised of approximately $20 million in Social Security and Medicare taxes on tips and 

approximately $88 million in Social Security and Medicare taxes on wages.

TIGTA - 10 
TIGTA attributed this to the success of the standard refund amounts and to the fact that 

many taxpayers were simply unaware of the refund despite the IRS' efforts. Early in the 

filing season, TIGTA found that certain processing controls needed strengthening to 

ensure taxpayers claiming amounts greater than one of the standard amounts included 

required documentation. Upon notification, the IRS took action to address this issue. 

TIGTA also found that more than 26,000 taxpayers would unnecessarily receive a Tax

Year 2007 Tax Package as a result of their TETR program claim. The unnecessary 

packages would cost the IRS additional resources to send and cause taxpayers burden. 

IRS is using TIGTA's data to suppress the mailing of unnecessary tax packages to 

taxpayers. 

TIGTA also raised concerns that erroneous claims often went unchallenged by the IRS. 

Many taxpayers, possibly due to misunderstanding the Form 8913 (Credit for Federal 

Telephone Excise Tax Paid), may have claimed refunds of the total amounts of their 

telephone bills. (Form 8913 was not focus tested to ensure taxpayers understood it.) 

Other taxpayers and preparers may have intentionally overstated their claims. As of June 

2007, over 52,000 potentially egregious claims had been received that did not meet the 

IRS’ criteria for review. The amount of telephone excise tax on these claims totaled 

more than $43 million. Over 38,000 of these claims were on tax returns with no 

Schedules C (Profit or Loss From Business), E (Supplemental Income and Loss) or 

F (Profit or Loss From Farming), which makes the claimed amounts even more 

questionable. If each of the 38,000 returns claimed the standard excise tax refund amount 

of $60, the total refunds would equal approximately $2.3 million. Because the refunds 

have been issued for these returns and because any incorrect or abusive refunds would 

have to be recovered through court proceedings, TIGTA's recommendations only act as a 

lessons learned for similar future refund programs. However, TIGTA believes the IRS 

could have reduced the number of incorrect or abusive refunds if it had reexplored all its 

options during the filing season. These options included sending notices (prior to refunds 

being issued) that offered taxpayers the opportunity to self-correct their returns; the 

postponement of some Examination function work; and the working (or partial working) 

of some of the simpler TETR cases by non-Examination function employees.

Quality of Taxpayer Services: The IRS has experienced a steady growth in electronic 

filing (e-filing) of income tax returns over the past several years. However, while the 

number of e-filed returns increased 9.18 percent in 2007, the total volume of e-filed 

returns was less than projected, and OA has expressed concern regarding the projected 

slowing of the growth of e-filed returns. The slower growth rate will extend the time

period needed to achieve the goal of 80 percent e-filed returns and delays associated cost 

savings. Current IRS projections show that by 2013, about 72 percent of individual 

income tax returns will be e-filed. A contributing factor to the slowing growth of e-filed 

returns is the disappointingly low use of the Free File Program, and the IRS' decision to 

eliminate the Telefile Program in 2005. Of the 93 million taxpayers eligible for the Free 

File Program in 2006, only 3.9 million (4.2 percent) used it. The number of Free File 

users declined even more in 2007 to 3.8 million. OA raised concerns regarding the 

quality and accessibility of the free e-filing services offered by the IRS. TIGTA also 

plans to audit the IRS strategy to modernize submission processing. The IRS strategy 

TIGTA - 11 
includes implementing Modernized e-File and Web Direct filing to increase electronic 

filings and employing technology and operational improvements to process returns, 

payments, and refunds more accurately and efficiently by 2011. The strategy also 

includes a redesign of the form 1040 and implementation of 2-D barcoding. 

Correspondingly, the Subcommittee on Oversight of the House Committee on Ways and 

Means requested that OA review recent amendments made to the IRS’ Free File Alliance 

Agreement in order to evaluate the differences from the previous agreement and to assess 

the impact on electronic filing and taxpayer services. OA’s review showed that the 

amended agreement substantially reduced the number of taxpayers eligible to use the 

program and that Free File services are often inaccessible, time-consuming and difficult 

to use for eligible taxpayers. In addition, the Free File Program software did not always 

accurately compute taxes due, and the “Guide Me To A Company” feature that helps 

taxpayers select a program vendor was not always complete or accurate. Errors and 

omissions in the tax preparation software and the tools provided by the IRS to aid 

taxpayers when using the program could undermine taxpayers’ confidence in the program

and negatively affect the IRS’ efforts to reach its goal of increasing the use of electronic 

filing. OA's recommendations will help ensure that the free filing options provided by 

the IRS contribute to the growth rate of e-filing. 

Additionally, TIGTA completed a review aimed at determining whether the IRS E-Help 

Desk is providing quality customer service. The E-Help Desk provides assistance to 

users of IRS electronic products and services. TIGTA determined that improvements to 

the E-Help Desk are needed to support the IRS’ expanding e-services. As a result, 

TIGTA had several concerns about the E-Help Desk Program. The IRS recognizes the 

need to provide customers of its electronic products and services with the ability to obtain 

the assistance needed to successfully use these products. Since the inception of the 

E-Help Desk in 2002, the IRS has continued to identify ways to improve program

efficiency and customer service. Continued expansion in the availability and use of 

electronic products and services requires that improvements are made to ensure that the 

program can continue to provide effective customer service.

Privacy and Security: Millions of taxpayers entrust the IRS with sensitive financial and 

personal data stored in and processed by IRS computer systems. Recent reports of 

identity theft from both the private and public sectors have heightened awareness of the 

need to protect this data. The risks that sensitive data or computer systems could be 

compromised and computer operations disrupted continue to increase. These risks are 

caused by: internal factors, such as increased connectivity of computer systems and 

increased use of portable laptop computers; and external factors, such as the volatile 

threat environment related to increased terrorist and hacker activity. 

The IRS annually processes more than 220 million tax returns containing personal 

financial information and personally identifiable information such as Social Security 

numbers. A TIGTA audit found that IRS employees lost at least 490 computers between 

January 2, 2003, and June 13, 2006. Also, employees did not properly encrypt data on 

computer devices, and password controls over laptop computers were not adequate. As a 

TIGTA - 12 
TIGTA made several recommendations to improve the privacy of personally identifiable 

information. The IRS agreed with the recommendations and provided adequate 

corrective actions. TIGTA is planning an audit in FY 2008 to evaluate the effectiveness 

of the IRS' corrective actions. 

In another review, TIGTA noted that: the IRS’ process for prescreening its employees 

prior to conducting background investigations on employees was appropriate and 

effective; and IRS employee background investigations were appropriate for the level of 

risk associated with the positions. However, background investigations were not 

completed timely for IRS and contractor employees. Of the background investigations 

TIGTA sampled, the IRS did not complete 77 percent of the IRS employee investigations 

and 72 percent of the contractor employee investigations within established IRS 

baselines. Delays in processing background investigations increase the risk that the IRS 

may be hiring unsuitable employees that could compromise sensitive taxpayer 

information, physically harm employees, and disrupt operations. TIGTA made 

recommendations to improve the background investigation process. The IRS agreed with 

the findings and provided corrective actions to use available management information to 

track background investigations and to periodically advise appropriate IRS employees to 

ensure that contractors have been prescreened before providing them access to computer 

systems. 

The value of TIGTA’s mission and the effectiveness of its oversight are demonstrated by 

the increased number of requests for audits TIGTA receives. OA faces the challenge of 

addressing increasing demands from Congress and other IRS stakeholders in a timely and 

efficient manner. TIGTA expects the trend of increased congressional interest and 

requests for action to continue into future fiscal years. 

Other Resources: TIGTA receives $500,000 in offsetting collections and 

reimbursements to support activity related to DCAA audits conducted on behalf of the 

IRS and other activity conducted on behalf of the Department of the Treasury. 

3.2.1 – Audit Budget and Performance Plan 

Audit Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $48,919 $48,916 $49,087 $52,959 $55,055

 Reimbursable Resources $1,093 $915 $300 $500 $500

Total Resources $50,012 $49,831 $49,387 $53,459 $55,555

Budget Activity Total $50,012 $49,831 $49,387 $53,459 $55,555

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Audit Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Audit Products Delivered When 

Promised to Stakeholders 

 N/A N/A 68.00% 60.00% 65.00%

Percentage of Recommendations Made That 

Have Been Implemented 

N/A N/A 90.00% 80.00% 83.00%

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

Description of Performance: The likelihood that TIGTA’s products will be used is 

enhanced if they are delivered when needed to support congressional and IRS decisionmaking. To determine whether products are timely, TIGTA tracks the percentage of 

products that are delivered on or before the date promised (contract date). 

Additionally, TIGTA makes recommendations designed to improve administration of the 

federal tax system. The IRS must implement these recommendations in order for our 

work to produce financial or non-financial benefits. This measure assesses TIGTA’s 

effect on improving the IRS’ accountability, operations, and services. Since the IRS 

needs time to act on recommendations, TIGTA utilizes the Department’s Joint Audit 

Management Enterprise System to track the percentage of recommendations made four 

(4) years ago that have been implemented, rather than the results of our activities during 

the fiscal year in which the recommendations are made. TIGTA is able to track its 

recommendations that have not been implemented by the IRS. TIGTA also has a formal 

process with the IRS for closing out unimplemented recommendations for which 

circumstances may have changed, or for when the IRS has taken alternative corrective

measures that address concerns identified by TIGTA. 

3B – Investigations ($90,681,000 from direct appropriations and $400,000 from 

reimbursable programs): While most Offices of Inspector General focus primarily on 

fraud, waste and abuse, TIGTA’s mission is more extensive. TIGTA has the statutory 

responsibility to protect the integrity of tax administration and to protect the ability of the 

IRS to collect revenue for the federal government. To accomplish this, TIGTA 

investigates allegations of criminal violations and administrative misconduct by IRS 

employees, protects the IRS against external attempts to corrupt tax administration, and 

ensures IRS employee safety and IRS data and infrastructure security. The following 

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

Employee Integrity: The IRS’ ability to deliver taxpayer service, enforce tax laws 

effectively, and collect the proper amount of taxes can be undermined by employee 

misconduct. Over 50 percent of TIGTA’s current investigations involve alleged 

employee misconduct. These investigations of employee misconduct allegations include 

extortion, theft, taxpayer abuse, false statements, and financial fraud. In addition, an 

integral part of the employee integrity program involves investigations of unauthorized 

access to confidential taxpayer records by IRS employees. 

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Employee and Infrastructure Security: In 1998, The President of the United States 

designated IRS operations as a critical infrastructure.2

 TIGTA meets the challenge of 

maintaining IRS employee and infrastructure security by conducting investigations in 

reaction to incidents in which IRS employees, facilities, and infrastructure are sabotaged, 

threatened, or assaulted. Potential threats to tax administration are identified by TIGTA’s 

administration of a Criminal Intelligence Program that utilizes law enforcement and 

intelligence resources to proactively identify individuals and groups who may pose a 

threat to tax administration. 

External Attempts to Corrupt Tax Administration: External attempts to corrupt tax 

administration impede the IRS’ ability to collect revenue. TIGTA’s investigations of

external attempts to corrupt or interfere with tax administration include: bribes offered by 

taxpayers to compromise IRS employees; the use of fraudulent IRS documentation to 

commit crimes; taxpayer abuse by tax practitioners; impersonation of IRS employees; 

and the corruption of IRS programs through procurement fraud. 

In FY 2009, OI expects major IRS programs to be highly at risk to corruption of federal 

tax administration and thus require intensified oversight. Particularly important to 

TIGTA are phishing scams that falsely depict e-mails from the IRS.3

 Such schemes 

attempt to retrieve a user’s Social Security number and banking information by 

replicating an official IRS seal and/or requesting information required for depositing tax 

refunds. Since November 2005, TIGTA and the IRS received a total of 32,576 (as of 

September 30, 2007) complaints or inquiries regarding these internet schemes. Oversight 

in this area is necessary to ensure that misuse of the IRS name, impersonation of an IRS 

employee, and identity theft incidents are resolved properly. 

Congressional concern regarding the magnitude of uncollected revenue has prompted the 

IRS to intensify enforcement activities. If effective, heightened enforcement is likely to 

cause a rise in external threats to IRS employees and infrastructure. Both TIGTA’s 

proactive and reactive initiatives are critical to mitigating such future risks. OI currently 

participates on the Federal Bureau of Investigation (FBI) Joint Terrorism Task Forces and 

conducts criminal intelligence gathering to uncover and track external threats to tax 

administration from individuals, anti-government groups, and terrorists. From FY 2005 

through the end of FY 2007, OI initiated 1,005 investigations of assaults and/or threats 

made against IRS employees, and 97 investigations of assaults and/or threats made 

against IRS facilities. 

Current resources committed to addressing external security risks include six special 

agents working full-time and 32 special agents working part-time on domestic terrorism. 

The office also includes one intelligence analyst gathering information to protect against 

external threats. OI presently oversees security for the top 15 at-risk IRS locations, as 

identified by the IRS Mission Assurance Office. Proactive measures in this area are 

critical to preventing breaches of security and deterring threats in future years. 

 

2 Presidential Decision Directive NSC-63. 3

 Phishing involves sending e-mails to users falsely claiming to be established, legitimate enterprises in

order to solicit private information for the purpose of identity theft. 

TIGTA - 15 
Investigative work in these three core areas is imperative for protecting the integrity of

tax administration. The results of this work help ensure that the public has confidence in 

its dealings with the IRS, thereby promoting voluntary compliance with federal tax laws. 

Other Resources: TIGTA receives $400,000 in offsetting collections and 

reimbursements to support activity related to the Inspector General Academy and other 

activity conducted on behalf of the Department of the Treasury. 

3.2.2 – Investigations Budget and Performance Plan 

Investigations Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $79,368 $82,686 $83,427 $87,574 $90,681

 Reimbursable Resources $1,783 $711 $627 $400 $400

Total Resources $81,151 $83,397 $84,054 $87,974 $91,081

Budget Activity Total $81,151 $83,397 $84,054 $87,974 $91,081

Investigations Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Results from Investigative 

Activities (%) (Oe) 

 82.00% 79.00% 81.00% 76.00% 76.00%

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

Description of Performance: Examples of the types of results generated from

investigative activities include: bribes offered by taxpayers to compromise IRS 

employees; manipulation of IRS systems and programs through the use of bogus liens 

and IRS financial reporting instruments; and impersonation of IRS officials. As of 

September 30, 2007, actual performance has exceeded expectations (actual performance 

was 81 percent, while the target was 73 percent). These results are indicative of 

TIGTA’s continuous focus on quality investigative activities. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treasury.gov/offices/management/dcfo/accountability-reports/2007-par.shtml

TIGTA - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

TIGTA’s human capital strategy is consistent with the goals, vision, and priorities of the 

Department. One of the major goals of the Department is to “be an organization that 

values its people.” The objective associated with this goal is to “ensure a high-quality, 

diverse, and motivated workforce with the knowledge, skills, and abilities needed to 

produce quality products in an efficient and effective manner.” To support this goal, 

TIGTA’s performance management program differentiates levels of employee 

performance, incorporates TIGTA’s strategic goals and objectives, and holds employees 

accountable for performance. During FY 2009, TIGTA will update its Strategic Human 

Capital Plan to support a revised TIGTA Strategic Plan. 

In recent years, TIGTA’s overall employee population has declined 12 percent from 

FY 2001 through FY 2006 (a decrease from 938 in FY 2001 to 825 at the end of 

FY 2006) and is expected to decline over the foreseeable future. In addition, 

approximately 38 percent of all TIGTA employees will be retirement eligible by 

September 30, 2011. More dramatic are the percentages of retirement eligibility in 

certain TIGTA occupations. Approximately 41.5 percent of GS-0511 auditors and 

GS-2210 information technology specialists, and 33 percent of TIGTA’s GS-1811 

criminal investigators will be retirement eligible by then. This threatens TIGTA’s overall 

ability to effectively fulfill its core mission. 

Labor reductions will also reduce TIGTA’s enforcement capacity and circumscribe 

efforts to combat IRS employee misconduct and external threats to the security and 

integrity of IRS personnel and infrastructure. FTE losses further reduce opportunities to 

examine high-risk areas and thereby reduce financial benefits from audit 

recommendations and impact fewer taxpayer accounts. The loss would also require 

TIGTA to curtail, delay, and/or fail to initiate reviews of high-risk areas and/or eliminate 

entire programs. 

TIGTA must also address critical staffing deficiencies in terms of having the right 

number of people with the right skills to accomplish its mission. Because of the IRS’ 

modernization effort and its increasingly computerized operating systems and 

environment, TIGTA faces critical skill gaps. Auditors and criminal investigators with

strong analytical skills and experience using business intelligence tools to identify fraud 

and other improprieties in IRS computer systems are needed. 

To help address these challenges, in FY 2008 TIGTA will implement a bureau-wide 

electronic learning management system containing a skills assessment program that 

identifies the critical skills needed for each of TIGTA’s major occupations and provides a 

means to assess resident skill levels. TIGTA will also develop a strategic recruitment 

program to fill critical vacancies and align future hiring in geographic areas where most 

of TIGTA’s workload is located. 

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While the TIGTA workforce is not being supplemented by on-site contractors, most of 

the human resources, accounting, travel, and acquisitions work is outsourced to the 

Bureau of the Public Debt’s Administrative Resource Center. Additionally, TIGTA is 

considering supplementing the federal workforce with contract support in the areas of 

physical security, telecommunications, and employee performance management policy. 
TIGTA - 19 

4.1 – Summary of IT Resources Table 

Dollars in Thousands
4B – Information Technology Strategy 

The Office of Information Technology (OIT) provides a full suite of information 

technology products and services on behalf of TIGTA. All OIT activities are focused on 

providing effective and secure access to data sources that are critical to the successful 

completion of TIGTA’s mission. OIT personnel routinely work with investigators and 

auditors, providing integrated support and/or data analysis services to foster the 

independence of TIGTA oversight and the integrity of its investigative and audit findings. 

End User Systems and Services: OIT provides traditional end user systems services for 

all TIGTA employees. This includes the provisioning of personal computers, 

productivity software, electronic mail and other local area network services, such as 

network storage for effective data backup and recovery. OIT end user systems and 

services are based on a standardized tool suite for internal TIGTA business operations. 

This tool suite is augmented to provide specialized software tools that permit 

investigators and auditors to access and analyze data residing on a wide variety of IRS 

and other governmental information systems. OIT monitors these tools to ensure security 

and availability, and to determine when technology maintenance and refreshment 

activities are needed for effective protection of TIGTA-accessed data. 

Telecommunications Systems and Services: OIT supports a wide area network (WAN) 

with access points throughout the United States and Puerto Rico in direct support of a 

geographically distributed investigative and audit workforce. The WAN provides 

adequate bandwidth for internal and external data transmissions while providing secure 

access to TIGTA resources, and other governmental computer networks and entities. For 

example, the WAN provides a secure interconnection between TIGTA and the IRS that is 

used for electronic data exchange as well as for cost-effective access to IRS information 

systems. The WAN also enables secure, remote access from alternative work locations, 

supporting an award-winning telework program. TIGTA also operates a Land Mobile 

Radio (LMR) system that permits investigators to safely conduct field operations with 

reliable wireless communication devices. 

Data Center Systems and Services: OIT operates information systems at various offices. 

In accordance with the OIT Strategic Plan and continuing cost containment measures, 

OIT is consolidating information technology services, where feasible, into data center 

facilities. The consolidation effort is designed to increase information system and 

resource utilization, and eliminate unneeded redundancies while improving TIGTA’s 

ability to support core investigative and audit activities. As part of a TIGTA data center, 

OIT provides extensive data analysis services in direct support of investigative and audit 

activities. For example, these services permit TIGTA to meet its responsibilities under 

the Taxpayer Browsing Protection Act of 1997. Specifically, the services are designed to 

analyze large volumes of data so that potential UNAX violations may be identified. 

Enterprise Architecture: TIGTA operates several programs to comply with various 

legislative mandates and to improve the reliability, availability and effectiveness of its 

information technology. TIGTA’s enterprise architecture initiative responds to the 

TIGTA - 20 
Clinger-Cohen Act’s requirement to align business practices with technology needs. By 

doing so, enterprise architecture will provide for better decision-making ability on 

information technology investment and related resource allocation decisions. 

Identity Management: Although OIT prides itself on delivering a full set of IT support 

and services to TIGTA auditors and investigators, some administrative applications and 

services are better delivered at departmental and governmental levels. To support future 

authentication demands of those applications, TIGTA intends to manage the TIGTA 

aspect of identity management in concert with the IRS, the Department and the federal 

government. TIGTA currently maintains the production of its own non-Homeland 

Security Presidential Directive-12 (HSPD-12) credentials using HSPD-12 processes and 

procedures and will migrate to departmental HSPD-12 solutions as they become

available. 

Enterprise Content Management: TIGTA continues to use Microsoft Share Point as an 

internal content delivery service to our auditors and investigators. There are a number of 

other applications TIGTA uses that contain Enterprise Content Management (ECM) 

functionality, but the functionality is minor to the business processes the applications

serve. As a result, these investments are not included in TIGTA ECM, but remain with 

their associated IT infrastructure. As the Department ECM initiative presents 

opportunities, TIGTA will evaluate transition to those document, record, content and 

tracking, and workflow management functions. 

Non-Major Investments: OIT maintains two internal management information systems 

classified as non-major investments under Capital Planning and Investment Control 

guidelines. The Performance and Results Information System (PARIS) supports 

investigative compliance with the Government Performance and Results Act (GPRA).

The system facilitates GPRA compliance by collecting data needed to measure 

performance of investigative activities, specifically as it pertains to complaint 

management and investigating cases. The PARIS Property Module (PPM) is a custodial 

accounting system used to support the bureau’s Personal Property Management Program. 

PPM is used to track capitalized and expensed assets used in support of investigative and 

audit activities and to track assets seized during law enforcement actions. 

TIGTA - 21 
4.2 – PART Evaluation Table 

Not applicable to TIGTA. 

TIGTA - 22