The Treasury Inspector General 

for Tax Administration

FY 2013

President’s Budget

Submission
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Table of Contents

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

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

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

1B – Mission Priorities and Context........................................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language............................................. 10

2.1 – Budget Adjustments Table............................................................................................... 10

2A – Budget Increases and Decreases Description................................................................... 10

2.2 – Operating Levels Table.................................................................................................... 12

2B – Appropriations Language and Explanation of Changes................................................... 13

2C – Legislative Proposals........................................................................................................ 13

Section 3 – Budget and Performance Report and Plan........................................................... 14

3A – Audit................................................................................................................................. 14

3.1.1 – Audit Budget and Performance Report and Plan.......................................................... 16

3B – Investigations ................................................................................................................... 16

3.1.2 – Investigations Budget and Performance Report and Plan............................................. 20

Section 4 – Supplemental Information...................................................................................... 21

4A – Capital Investment Strategy............................................................................................. 21
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Section 1 – Purpose

1A – Mission Statement

To provide integrated audit, investigative, and inspection and evaluation services that promote 

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

1.1 – Appropriations Detail Table

Dollars in Thousands

FY 2011 FY 2012 FY 2013 % Change

Resources Available for Obligation Enacted Enacted Request FY 2012 to FY 2013

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

 Audit 349 $57,306 349 $57,306 373 $59,710 6.88% 4.20%

 Investigations 486 94,390 486 94,390 491 94,124 1.03% -0.28%

Subtotal New Appropriated Resources 835 $151,696 835 $151,696 864 $153,834 3.47% 1.41%

Other Resources:

 Reimbursables 2 $1,300 2 $900 2 $900 0.00% 0.00%

Subtotal Other Resources 2 $1,300 2 $900 2 $900 0.00% 0.00%

Total Resources Available for Obligation 837 $152,996 837 $152,596 866 $154,734 3.46% 1.40%

1B – Mission Priorities and Context

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

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

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

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

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

Chief Counsel and the IRS Oversight Board. As one of 73 federal offices of Inspector General, 

TIGTA reviews IRS programs, makes recommendations to improve effectiveness and efficiency, 

and investigates allegations of fraud, waste, and abuse. TIGTA’s Office of Audit (OA) conducts 

audits that advise the American people, the Congress, the Secretary of the Treasury, and IRS 

management of high-risk issues, 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 Office of 

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

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

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

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

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

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

TIGTA ensures that the American taxpayer can have confidence that the IRS collects over $2

trillion in tax revenue in an effective and efficient manner without fraud and abuse.
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TIGTA’s Fiscal Year (FY) 2013 budget request of $153,834,000 represents an increase of 1.4 

percent above the FY 2012 enacted budget. These resources will finance critical audit, 

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

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

priorities include:

 Adapting to the IRS’s continuously evolving operations and mitigating intensified risks 

associated with modernization and security, procurement fraud, addressing the Tax Gap, and 

human capital challenges facing the IRS in domestic and international operations in order to 

increase voluntary tax compliance;

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

threats against its employees, facilities, and systems; 

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

data infrastructure, and sensitive information;

 Improving the integrity of IRS operations by detecting and deterring fraud, waste, abuse or 

misconduct by IRS employees; 

 Conducting comprehensive audits, inspections, and evaluations that include 

recommendations for monetary benefits, addressing erroneous and improper payments, and 

enhancing IRS’s service to taxpayers; 

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

and progress made to resolve them; and

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

Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (ACA).

Additionally, TIGTA’s strategic goals guide FY 2013 programs. These goals are:

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

 Protect the integrity of tax administration; and

 Be an organization that values its people.

These goals contribute to the Department’s strategic goal to “Manage the Government’s 

Finances in a Fiscally Responsible Manner.”

Of all the priorities listed above, the most recent change came in 2010, when the President signed 

into law significant changes to the nation’s health care system under the ACA. The Internal 

Revenue Code plays several key functions in achieving that goal. At least 42 provisions added 

to or amended the Internal Revenue Code, and at least eight required the IRS to build new 

processes that did not exist in tax administration. These provisions provide incentives and tax 

breaks to individuals and small businesses to offset health care expenses. They also impose 

penalties, administered through the tax code, for individuals and businesses that do not obtain 

health coverage for themselves or their employees. Other provisions raise revenue to offset the 

costs of health care reform. TIGTA plays a key role in ensuring these provisions are 

implemented and administered in accordance with the law and the intent of Congress.

For FY 2011 and FY 2012 TIGTA identified a critical need to initiate 16 ACA-related audits to 

oversee the implementation of such significant ACA provisions as:
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 Small business health care tax credit; 

 Indoor tanning excise tax;

 Qualified therapeutic discovery project credits;

 Annual fees assessed on branded prescription pharmaceutical manufacturers and importers;

 Expansion of the adoption credit; and

 Reporting requirements included in the ACA.

TIGTA’s audit results to date illustrate the significant need for continued oversight of these ACA 

provisions. For example, taxpayers erroneously received millions in Adoption Credits; the IRS 

did not require sufficient information to determine if taxpayers claiming Small Business Health 

Care Tax Credits filed required employment taxes when these taxpayers entered into a 

contractual relationship with Professional Employment Organizations to manage human 

resources; and the IRS did not take adequate steps to ensure taxpayers potentially liable for the 

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

filing tanning services excise tax returns was much lower than expected.

FY 2013 will be a significant year for the oversight of ACA provisions. Several key ACA 

provisions take effect in FY 2013 and FY 2014, and many provisions that previously became 

effective will require continued oversight to ensure that appropriate corrective actions are taken 

and to address aspects of the provisions with different implementation dates. TIGTA’s oversight 

of the implementation of these provisions is paramount including:

 Security over information sharing and reporting with ACA stakeholders;

 Integration of ACA provisions into existing tax processing systems;

 Development and testing of new systems to support ACA provisions;

 Requirement to maintain minimum essential coverage and reporting of health insurance 

coverage;

 Additional hospital insurance tax on high-income taxpayers;

 Medicare contribution tax on unearned income; 

 Medical device manufacturers’ excise tax;

 ACA compliance examinations of tax exempt hospitals;

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

small business health care tax credit;

 Financial management information related to ACA; and

 Modification of itemized deduction for medical expenses.

The Office of Investigations (OI) is similarly impacted by the demands of ACA. As the IRS’s 

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

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

the administration of internal revenue laws. To effectively carry out this important oversight 

work, TIGTA must be better positioned to utilize law enforcement and intelligence resources to 

proactively detect and deter efforts impacting the IRS’s implementation of the ACA. 
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TIGTA will review, analyze, and respond to intelligence information relating to potential violent 

acts against IRS employees and facilities and develop proactive leads to investigate and mitigate 

potential threats. Investigators will also respond to violent acts committed against IRS 

employees and facilities, initiate investigations into those incidents, and work towards the arrest, 

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

will utilize OI's technical expertise, including TIGTA’s Forensic Science Laboratory to gather 

and examine intelligence.

The Office of Inspections and Evaluations (I&E) will also provide oversight of the IRS’s 

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

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

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

traditional audit. Evaluations related to ACA will result in recommendations to streamline 

operations, enhance data quality, and minimize inefficient and ineffective programs. Its work is 

not a substitute for audits and investigations; in fact, its findings may result in subsequent audits 

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

and will respond to specific ACA tax administration issues. 

TIGTA’s work requires close coordination among its Audit, Investigations, and Inspections and 

Evaluations functions. Each program office brings unique skills and experience, but the bureau’s 

overall success depends greatly upon these offices’ close collaboration. TIGTA has years of 

experience in overseeing the roll-out of broad changes to tax administration. The success of the 

new ACA program will depend on the government’s ability to assure taxpayers that the new 

changes are properly administered. TIGTA continues to provide comprehensive coverage and 

oversight of all aspects of the IRS’s operations. In FY 2011, TIGTA’s overall accomplishments 

included $9.2 billion in potential increased and/or protected revenue and $7.4 billion in potential 

cost savings.

 

The passage of the American Recovery and Investment Act of 2009 (Recovery Act) provided 

funding for the additional workload that has arisen from overseeing IRS efforts to implement a 

variety of economic stimulus measures. A key component of the Recovery Act is the 

implementation of 56 tax provisions by the IRS. TIGTA’s program plan includes detailed 

information on all ongoing and planned activities. Recovery work allows TIGTA to revise 

coordination procedures with the IRS to make interim reports more readily available to the 

public on TIGTA’s website and Recovery.gov; successful Recovery coordination changes will 

have a positive long-term impact on traditional audit and inspection timelines. In FY 2011, 

TIGTA issued 16 Recovery Act reports in addition to the 15 previously issued in FYs 2009 and 

2010. To date, TIGTA has identified more than $412 million in questionable costs and made 

recommendations for better use of over $643 million in Recovery Act audits, potentially 

affecting 13.5 million taxpayers. Four more Recovery Act audits are in progress. TIGTA 

completed five Recovery Act investigations during FY 2011 and has 29 active Recovery Act 

investigations as of September 30, 2011. 

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

recognized in the Partnership for Public Service’s 2011 Best Places to Work rankings. TIGTA 

placed 16 out of 240 in the overall index score measuring the performance of agency 
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subcomponents related to employee satisfaction and commitment. This ranking is based on the 

Office of Personnel Management’s biennial Federal Human Capital Survey, which federal 

agencies use as benchmarks to measure their performance. Survey results provided valuable 

insight into the challenges agency leaders face in ensuring that TIGTA has an effective civilian 

workforce and how well they are responding. The survey highlights stated that TIGTA 

employees continue to be happy with their jobs and feel their work is important. The vast 

majority believe TIGTA is accomplishing its mission and would recommend it as a good place to 

work. 

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

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

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

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

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

increased use of portable laptop computers) and external factors (such as the volatile threat 

environment resulting from increased terrorist and hacker activity) require strong security 

controls. In FY 2011, Office of Audit (OA) issued a report addressing the need for additional 

security for the Taxpayer Secure E-mail Program.

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

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

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

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

and identity theft. IRS employees who are found to have committed UNAX violations may be 

subject to fines, imprisonment, and loss of their jobs. In FY 2011, TIGTA closed 146 UNAX 

investigations, resulting in 92 adverse personnel actions taken against IRS employees. 

The importance of efforts to detect unauthorized access is often underestimated. Too often, 

UNAX is seen as browsing by bored employees. However, TIGTA’s investigations have 

revealed a far more disturbing trend where, in a significant number of cases, such unauthorized 

access was only the first stage in far more serious crimes, such as falsification of records, fraud, 

embezzlement, and identity theft. 

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

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

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

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

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

proactively detect unauthorized accesses on all computer systems. During FY 2011, TIGTA 

investigators completed 1,858 employee integrity investigations, of which 388 involved UNAX 

allegations. This resulted in 28 criminal prosecutions and 681 administrative disciplinary actions 

against IRS employees. 

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

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

government entities. Increasing compliance with the tax code is at the heart of IRS enforcement 
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programs. The IRS is focusing its casework and enforcement activities to deliver better results 

and to target those corporations and high-income individuals who fail to report or pay what they 

owe. The IRS’s recently updated estimate of the tax gap, which is defined as the difference 

between what taxpayers are supposed to pay and what is actually and timely paid, is $450 billion. 

In FY 2011, OA issued reports addressing the identification, selection, and examination of 

individual tax returns with rental real estate activity; IRS contractors receiving payments while 

owing delinquent taxes; and reducing the number of inaccurate information returns submitted by 

government entities. Enactment of TIGTA’s recommendations in these areas can increase 

compliance.

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

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

and taxpayers. In FY 2011, TIGTA provided 1,262 presentations to more than 36,300 IRS 

employees and educated tax professionals by providing 49 awareness presentations to 5,133 tax 

practitioners and preparers.

Implementing Tax Law Changes: Each filing season tests the IRS’s ability to implement tax 

law changes made by the Congress. It is during the filing season that most individuals file their 

income tax returns and contact the IRS with questions about specific tax laws or filing 

procedures. In FY 2011, TIGTA issued reports addressing erroneous plug-in electric and 

alternative motor vehicle credits, the need for improved controls over refundable credits, and the 

status of the 2011 filing season.

Erroneous and Improper Payments: Erroneous and improper IRS payments generally involve 

improperly paid refunds, tax return filing fraud, or overpayments to vendors and/or contractors. 

In FY 2011, OA issued reports addressing problems related to the IRS’s efforts to identify 

prisoner tax refund fraud as well as establishing targets and strategies to reduce improper Earned 

Income Tax Credit Payments.

Advising the Congress: During FY 2011, TIGTA provided 16 briefings, one statement for the 

record, and three official responses to the Congress regarding audit, investigative, and inspection 

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

Congressional committees on critical issues involving IRS operations. 

Fraud and Electronic Crime: The sensitivity of the data the IRS collects makes it an attractive 

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

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

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

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

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

federal government are part of the nation’s key resources and critical infrastructure. These key 

resources and critical infrastructure provide the essential services that underpin American 

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

compliance and represents a risk to national security. 
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Inspections and Evaluations Outcomes: I&E has a significant role in TIGTA’s Recovery Act 

activities. This includes conducting reviews and serving as TIGTA’s point of contact to the 

Recovery and Transparency Board’s Working Group. Additionally, I&E issued several reports 

in FY 2011 that had recommendations adopted by the programs under review. In one example, 

I&E’s on-site review of IRS facilities and the IRS’s Occupational Safety and Health program 

resulted in IRS managers agreeing to enhance the IRS data system used to document, track, and 

analyze the required quarterly inspections conducted by IRS staff and to develop an action plan 

to improve communication, oversight, and general management of the IRS’s safety inspection 

program. Also, evaluations of selected IRS Criminal Investigation procedures resulted in 

recommendations to improve the quality of the data related to selected fraud referrals. An 

assessment of a reported increase in the number of potential disclosures of personally identifiable 

information revealed that the reported increase was related to the IRS implementation of 

improved reporting procedures. Planned inspections and evaluations will result in 

recommendations to streamline operations, enhance data quality, and improve the efficiency and 

effectiveness of IRS programs.

In accordance with the requirements of Section 6(f)(1) of the Inspector General Act of 1978 (as 

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

information related to its requested budget for FY 2013:

 The aggregate budget request for the operations of TIGTA is $153,834,000; 

 The portion of the request needed for TIGTA training is $2,735,000; and

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

Integrity and Efficiency is $324,000.

The amount requested for training satisfies all TIGTA training needs for fiscal year 2013.
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Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Inspector General for Tax Administration FTE Amount

FY 2012 Enacted 835 $151,696

Changes to Base:

Maintaining Current Levels (MCLs): - $1,522

Maintaining Current Levels - $1,522

Efficiency Savings: - ($3,828)

Program Reductions & Efficiencies - ($2,894)

Reducing RRA 98 Reporting Requirements - ($840)

Telework & Right-sizing - ($94)

Subtotal FY 2013 Changes to Base - ($2,306)

Total FY 2013 Base 835 $149,390

Program Changes:

Program Decreases: - ($56)

Council of the Inspectors General on Integrity & Efficiency - ($56)

Program Increases: 29 $4,500

Oversight of IRS Implementation of Affordable Care Act 29 $4,500

Total FY 2013 Request 864 $153,834

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$1,522,000 / +0 FTE

Funds are requested for inflation adjustments (1.7 percent) in non-labor expenses such as GSA 

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

Employees Retirement System participation.

Efficiency Savings ......................................................................................-$3,828,000 / +0 FTE

Program Reductions & Efficiencies -$2,894,000 / +0 FTE 

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

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

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

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

TIGTA is also lowering its administrative costs by 20 percent compared to FY 2010 levels, as 

outlined in Executive Order 13589, Promoting Efficient Spending.

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

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

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

further discussed in the Legislative Proposals section of this document.

Telework & Right-sizing -$94,000 / +0 FTE 

TIGTA closely scrutinizes opportunities for cost savings. TIGTA has aggressively implemented 

telework and office right-sizing measures in order to reduce its footprint. 
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Program Decreases .........................................................................................-$56,000 / +0 FTE

Council of the Inspectors General on Integrity & Efficiency -$56,000 / +0 FTE 

Decrease in contribution for Council of the Inspectors General on Integrity & Efficiency (CIGIE) 

to support coordinated government-wide activities that identify and review areas of weakness 

and vulnerability in federal programs and operations with respect to fraud, waste, and abuse.

Program Increases ..................................................................................+$4,500,000 / +29 FTE

Oversight of IRS Implementation of Affordable Care Act +$4,500,000 / +29 FTE 

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

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

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

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

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

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

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

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

assure taxpayers that the new changes are properly administered.

 
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2.2 – Operating Levels Table 

Dollars in Thousands

 FY 2011 FY 2012 FY 2013

 Actual President's Enacted Proposed Proposed Request

Inspector General for Tax Administration Budget Reprogra Operating

mmings Level

FTE 822 864 835 0 835 864

Object Classification

11.1 - Full-time permanent 81,916 85,290 81,906 0 81,906 82,778

11.3 - Other than full-time permanent 590 605 590 0 590 590

11.5 - Other personnel compensation 8,530 9,781 8,530 0 8,530 8,530

11.9 Personnel Compensation (Total) $91,036 $95,676 $91,026 $0 $91,026 $91,898

12 - Personnel benefits 29,658 28,761 29,882 0 29,882 30,783

21 - Travel and transportation of persons 3,526 4,964 3,526 0 3,526 3,610

22 - Transportation of things 20 36 20 0 20 36

23.1 - Rental payments to GSA 9,071 9,936 9,071 0 9,071 9,299

23.2 - Rental payments to others 221 292 221 0 221 292

23.3 - Communication, utilities, and misc charges 1,928 2,614 1,928 0 1,928 1,928

24 - Printing and reproduction 10 8 10 0 10 8

25.1 - Advisory and assistance services 815 1,141 815 0 815 815

25.2 - Other services 812 970 812 0 812 869

25.3 - Other purchases of goods and services from Govt. accounts 7,845 7,029 7,844 0 7,844 7,632

25.4 - Operation and maintenance of facilities 413 413 413 0 413 413

25.7 - Operation and maintenance of equip 1,183 1,260 1,183 0 1,183 1,214

26 - Supplies and materials 1,237 1,233 1,237 0 1,237 1,308

31 - Equipment 3,633 3,293 3,633 0 3,633 3,654

42 - Insurance claims and indemnities 1 152 50 0 50 50

43 - Interest and dividends 40 0 0 0 0 0

91.0 - Confidential Expenditures 23 53 25 0 25 25

Total Budget Authority $151,472 $157,831 $151,696 $0 $151,696 $153,834

Budget Activities:

Audit 57,221 62,357 57,306 0 57,306 59,710

Investigations 94,251 95,474 94,390 0 94,390 94,124

Total Budget Authority $151,472 $157,831 $151,696 $0 $151,696 $153,834
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2B – Appropriations Language and Explanation of Changes

Appropriations Language Explanation 

of Changes

DEPARTMENT OF THE TREASURY

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Federal Funds

General and Special Funds:

SALARIES AND EXPENSES

For necessary expenses of the Treasury Inspector General for Tax Administration 

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

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

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

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

[$157,831,000] $153,834,000 of which not to exceed $6,000,000 shall be available 

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

unforeseen emergencies of a confidential nature, to be allocated and expended 

under the direction of the Inspector General for Tax Administration [; and of which 

not to exceed $1,500 shall be available for official reception and representation 

expenses]. (Department of the Treasury Appropriations Act, 2012.)

2C – Legislative Proposals

TIGTA proposes eliminating certain reviews conducted to comply with reporting requirements 

in RRA 98. These statutory reviews yield little in the way of performance measures and are of 

relatively low value. TIGTA would prefer to redirect resources applied to these reviews to 

conducting high-risk audits. TIGTA proposes legislative changes eliminating reporting 

requirements in the following areas:

 

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

Fair Tax Collection Practices violations in one of TIGTA’s Semiannual Reports. This 

pertains to Internal Revenue Code §7803(d)(1)(G). 

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

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

 The requirement to annually report on the IRS’s compliance with Internal Revenue Code 

§§7521(b)(2) and (c) requiring IRS employees to stop a taxpayer interview whenever a 

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

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

unreasonably delayed the completion of an examination or investigation.

 The annual reporting requirement for the remaining RRA 98 provisions should be revised to 

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

3A – Audit

($59,710,000 from direct appropriations, and $500,000 from reimbursable resources): 

OA promotes the sound administration of the nation’s tax laws by completing comprehensive, 

independent performance and financial-related audits of IRS programs and operations. Audit 

resources focus oversight on high priority areas through a recurring process of evaluating the 

status of IRS programs, activities, and functions. OA’s wide range of products and services (1) 

strengthen the economy, efficiency, and effectiveness of IRS operations, and (2) ensure the fair 

and equitable treatment of taxpayers. TIGTA’s Annual Audit Plan establishes and 

communicates audit priorities. Audit planning incorporates both statutory audit requirements 

and specific audits identified through a comprehensive and rigorous risk assessment process. By 

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

identify and recommend improvements that consistently add value while addressing senior 

management’s top priorities.

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

environment, OA must also adapt by continuing to help prevent, detect, and deter fraud, waste, 

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

a preventive focus on reducing costs and preventing or minimizing risks of problems occurring 

while ensuring the long-term effectiveness of IRS programs. TIGTA is targeting Audit resources 

in the important area of procurement fraud detection and deterrence. TIGTA strives to be nimble 

enough to shift limited resources when appropriate to quickly focus on emerging priorities such 

as Affordable Care Act provisions and the globalization of tax issues. 

During FY 2011, TIGTA issued 132 audit reports that included potential financial benefits of 

approximately $16.9 billion (including $7.4 billion in Cost Savings and $9.2 billion in Increased 

Revenue/Revenue Protected) and potentially affected 22.7 million taxpayer accounts in areas 

such as taxpayer burden, taxpayer rights and entitlements, and increased revenue/revenue 

protected. OA’s FY 2011 reports addressed issues that included:

Education Credits – TIGTA identified 1.7 million taxpayers who appear to have erroneously 

received $2.57 billion in education credits. Over a four-year period, the potentially erroneous 

education credits could reach $5.3 billion.

Examination of Returns With Rental Real Estate Activity – Increased examinations through the 

IRS rental real estate Compliance Initiative Programs could increase potential tax assessments by 

$27.3 million over a five-year period. 

Unemployment Trust Fund (UTF) Expenses – TIGTA identified insufficient controls for 

calculating UTF expenses. The IRS overestimated its UTF-related expenses by $63 million from

FY 2005 through FY 2009. As a result, these funds were not available to fund the federal 

government’s share of unemployment benefit payments to eligible taxpayers.

Secure E-mail Program – Additional security is needed for the Taxpayer Secure E-mail 

Program. Although the IRS implemented some controls, additional actions are needed to protect 

taxpayer’s sensitive data and the IRS computer network.

The goal owner for this budget activity is the Deputy Inspector General for Audit.
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Description of Performance: TIGTA’s products are more likely to be used if they are delivered 

when needed to support congressional and IRS decision making. To determine whether products 

are timely, TIGTA tracks the percentage of products that are delivered on or before the date 

promised (contract date).

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

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

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

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

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

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

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

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

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

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

concerns TIGTA identified. 

For FY 2011, the actual percentage of audit products delivered when promised to stakeholders 

was 68 percent against a full year target of 65 percent. TIGTA exceeded this target as a result of 

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

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

implemented was 93 percent against a full year target of 83 percent. TIGTA exceeded its target 

by ten percent as a result of continued discussions throughout the audit process on the findings 

and potential recommended solutions to better ensure feasible alternatives were identified. 

These reports included recommendations impacting over 22.6 million taxpayer accounts. For FY 

2013, the target for percentage of audit products delivered when promised to stakeholders is 70

percent. The percentage of recommendations made that have been implemented is also projected 

to increase for FY 2013. The new target is 85 percent up from a current target of 83 percent. 

TIGTA has revised its targets upwards as a result of ongoing project management training aimed 

at among other things, timely delivery of audit products and services. OA training also reflects 

TIGTA’s commitment to its project management principles. 
TIGTA - 16

3.1.1 – Audit Budget and Performance Report and Plan

Dollars in Thousands

Audit Budget Activity

Resource Level FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

 Appropriated Resources $49,761 $50,260 $52,959 $55,186 $57,421 $57,306 $57,306 $59,710

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

Total Resources $50,286 $50,785 $53,359 $55,586 $57,972 $57,857 $57,806 $60,210

Budget Activity Total $50,286 $50,785 $53,359 $55,586 $57,972 $57,857 $57,806 $60,210

Measure FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Audit Products 

Delivered when Promised to 

Stakeholders 

N/A 68.0 65.0 81.0 76.0 68.0 70.0 70.0

Percentage of 

Recommendations Made that 

Have Been Implemented 

N/A 90.0 85.0 91.0 95.0 93.0 85.0 85.0

Key: DISC - Discontinued and B - Baseline

3B – Investigations

($94,124,000 from direct appropriations, and $400,000 from reimbursable resources): 

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

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

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

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

misconduct committed by IRS employees, ensures IRS employee safety and data and 

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

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

of tax administration.

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

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

be a powerful management tool that focuses on core mission-related objectives to assess 

investigative operations. The model provides reliable statistical data which assist in missioncritical decisions regarding staffing, budgeting, and training. In addition, TIGTA has recently 

recalibrated its resources for more efficient use in a changing environment. The following 

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

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

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

administration is the oversight and investigation of IRS employees and contractors. An 
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estimated 52 percent of TIGTA’s current investigations involve alleged employee misconduct. 

In addition to UNAX integrity lapses, employee integrity investigations include misuse of IRS 

computer systems, extortion, thefts of government property and taxpayer remittances, taxpayer 

abuse, false statements, and financial fraud. 

TIGTA promotes employee integrity by conducting proactive investigative initiatives to detect 

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

2011, TIGTA initiated 91 proactive investigative initiatives to detect systemic weaknesses or 

potential IRS program vulnerabilities. Additionally, TIGTA special agents conduct awareness 

presentations to remind IRS employees of TIGTA’s oversight responsibility, as well as sharing 

information to help identify ways in which they may prevent fraud, waste, and abuse.

During FY 2011, OI processed 8,924 complaints, and opened 3,622 investigations. OI remains 

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

criminal and administrative investigations such as bribery and impersonation. OI also closed 

3,907 investigations, which included 1,499 cases of employee misconduct referred for action and 

237 cases accepted for criminal prosecution during FY 2011. 

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

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

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

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

against IRS employees performing their official duties are assigned to OI. Title 26 U.S.C. §

6103 also specifically gives TIGTA the necessary authority to access taxpayer information in 

support of ongoing investigations, to include tax matters related to assaults and threats involving 

the IRS. 

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

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

challenges to the implementation of a fair and effective system of tax administration. OI places

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

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

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

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

criminal investigative resources to address serious threats to IRS personnel, facilities, and critical 

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

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

senior management. 

OI has also forged new partnerships to deal with current and future threats directed against the 

IRS and its employees. These entities include:

 IRS Office of Physical Security and Emergency Preparedness; 

 IRS Office of Online Fraud Detection and Prevention; 

 IRS Situational Awareness Management Center; 
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 IRS Office of Privacy; 

 IRS Computer Security Incident Response Center; and 

 Treasury Operations Center. 

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

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

and disseminate threat information to IRS stakeholders. The TIRC serves as a focal point for the 

timely and efficient sharing of threat information, thereby allowing the IRS to take appropriate 

mitigation actions, to include coordinating with the Federal Protective Service in extending the 

security perimeter around IRS facilities, shutting down operations, or raising the alert level at 

affected IRS locations. 

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

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

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

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

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

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

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

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

for all threat information developed by the FBI and other law enforcement officials that has the 

potential to directly impact IRS personnel, facilities, or critical infrastructure.

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

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

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

comments towards the IRS in online message boards and various other Internet-based forums. 

An Internet search revealed over 3.2 million “hits” referencing the Austin, Texas incident, a 

number that would take thousands of man-hours to decipher without leveraging the use of 

automated investigative tools. In an effort to combat these types of threats, OI is working to 

identify an automated search capability to aid in identifying threats against the IRS. Preliminary 

tests validate the need for a cyber-search tool and no other agency is combing the Internet for 

potentially violent threats or actions directed at the IRS or its employees.

OI also provides armed escort service for IRS employees in potentially dangerous situations. 

Upon request, TIGTA’s special agents escort IRS employees when they require face to face

contact with a potentially dangerous taxpayer. Using armed escorts, TIGTA is able to provide a 

safe environment for the IRS employee to conduct tax administration functions. 

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

investigate external attempts to corrupt tax administration, which include criminal misconduct by 

non-employees, such as attempted bribes. While all external attempts to corrupt tax 

administration are of concern, a key aspect of protecting tax administration in today’s 

environment is the oversight and investigation of IRS procurement matters. For example, 

TIGTA conducts numerous criminal and civil investigations of fraud involving contracts and 

contractors in support of the IRS’s Business Systems Modernization (BSM) project. In FY 2010, 
TIGTA - 19

TIGTA’s Procurement Fraud Division (PFD) recovered $158 million as a result of these 

investigations. In FY 2011, PFD recovered $47.5 million for the nation’s Treasury through court 

ordered settlements in these cases. 

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

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

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

recoveries to the Treasury. The PFD’s investigative initiative targeting BSM procurements will 

seek to identify fraudulently inflated billings as well as improper business relationships between 

vendors. This initiative is a collaborative effort with OA. However, limited investigative 

resources diminish investigative outcomes. 

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

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

technical expertise nor are they in proximity to properly evaluate contract deliverables. TIGTA 

continues to receive and investigate allegations of potential fraud and misconduct involving these 

contracts. This trend is expected to continue as OI increases its investigations and outreach. The 

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

Description of Performance: Investigative results are a ratio of the number of investigations that 

were prosecuted, IRS employee investigations administratively adjudicated, taxpayers identified 

as potentially dangerous as a result of TIGTA’s investigation, investigations referred to the IRS 

Office of Professional Responsibility for action, and other factors. Examples of the types of 

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

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

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

instruments; and impersonation of IRS officials. In FY 2011, actual performance was 82 

percent, while the target was 79 percent. Throughout FY 2011, OI continued to focus its 

resources on categorizing, prioritizing and responding to threats against IRS employees, 

facilities, and critical infrastructure. OI also refined its communications with IRS management. 

OI and IRS strengthened partnerships to effectively mitigate current and future threats directed 

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

exceeded its FY 2011 target. For FY 2012, OI will continue to use the performance model to 

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

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

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

monitor and redirect its demands to determine future targets.

The FY 2013 target for percentage of results from investigative activities will be 80 percent, an 

increase over TIGTA’s FY 2011 target of 79 percent. OI will continue to focus its existing 

resources to address the increasing demand on cases involving threats, assaults, and protecting 

the integrity of federal tax administration.
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3.1.2 – Investigations Budget and Performance Report and Plan

Dollars in Thousands

Investigations Budget Activity

Resource Level FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

 Appropriated Resources $82,192 $82,601 $87,574 $90,897 $94,579 $94,694 $94,390 $94,124

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

Total Resources $82,867 $83,276 $88,074 $91,397 $95,328 $95,443 $94,790 $94,524

Budget Activity Total $82,867 $83,276 $88,074 $91,397 $95,328 $95,443 $94,790 $94,524

Measure FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Results from 

Investigative Activities 

79.0 81.0 78.0 83.0 86.0 82.0 79.0 80.0

Key: DISC - Discontinued and B - Baseline

Detailed information about each performance measure, including definition, verification and 

validation is available.
TIGTA - 21

Section 4 – Supplemental Information

4A – Capital Investment Strategy

Secured Mobile Computing Capability

As threats against the tax system rise, TIGTA is making strategic investments to increase the 

mobility of TIGTA employees so that they can continue to work effectively wherever the need or 

threat dictates. This is primarily being accomplished through deployment of secure wireless 

computer networking infrastructure. Wireless networking has certain inherent risks, which, 

given the taxpayer privacy issues represented by the data that TIGTA uses and maintains, must 

be carefully managed. With this budget, TIGTA staff will deploy well-proven tools that 

significantly enhance flexibility, responsiveness, collaboration, and effectiveness.

Consolidated Server Infrastructure

TIGTA has been a leader for years in server consolidation and virtualization and “private cloud” 

style computing. Small computing facilities are strategically networked around the country and 

designed to increase effectiveness, continuity of operations and system survivability. 

Strategically consolidated infrastructure also allows a small TIGTA technical staff to maintain 

more computing power at lower cost, including remotely administering facilities in “lights out” 

mode. This budget will allow TIGTA to continue investing in more powerful, less costly, and 

more robust computing infrastructure, providing more capability while maintaining costs.

Refreshed Desktop Computers

By the end of FY 2012, TIGTA plans to refresh its client computing hardware and software 

platforms to use the most efficient power management settings on the most efficient hardware 

platform available. TIGTA has already implemented additional power setting capabilities on the 

existing platforms that deliver lower-power consumption savings and improve user efficiency. 

The new desktop technology is actively maintained by the manufacturers, freeing technical staff 

for more valuable contributions. Active management will strengthen IT security by facilitating 

anti-virus, anti-spam, anti-spy, intrusion detection/prevention, monitoring, and patch 

management. TIGTA desktop computers will be more secure and less susceptible to cyber 

attacks.

IT Governance and Total Cost of Ownership

In FY 2010, TIGTA established its new Information Technology (IT) governance program. All 

new IT requests pass through a Program Management Board (PMB) chaired by the Associate 

Inspector General for Mission Support. Requests must present a total cost picture, a positive 

business case, and high-level work breakdown schedule, adjusted for risks, to gain PMB 

approval to commence work. Projects involving significant financial commitments or high 

mission visibility require approval from the Investment Review Board, composed of TIGTA's 

senior executives. 

By FY 2012, TIGTA plans to extend its new governance process to all TIGTA business units to 

help manage projects and priorities. Under TIGTA’s program-management process, milestones 

for all projects are established and tracked. At any point, projects that have cost overruns, are 

behind schedule, and/or are not delivering at anticipated business performance levels are

analyzed for cause.
TIGTA - 22

Law Enforcement Vehicles

TIGTA’s capital asset strategy is used to manage its fleet of law enforcement vehicles. General 

Services Administration (GSA) guidelines state vehicles should be replaced every three years or 

60,000 miles, whichever may occur earlier. GSA guidelines also state an agency can keep a 

government-owned vehicle longer only if the vehicle can be operated without excessive 

maintenance cost or substantial reduction in resale value. Currently TIGTA’s vehicle fleet 

exceeds GSA fleet guidance, saving substantial taxpayer resources.

A summary of capital investment resources, including major information technology and nontechnology investments is available.