AGENCY 

FINANCIAL 

REPORT 
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FY 2023 AGENCY FINANCIAL REPORT 

ABOUT THIS REPORT

Our Agency Financial Report

(AFR) for Fiscal Year (FY) 2023 

presents the Department of the 

Treasury’s (Treasury, 

Department, or our) financial 

information in relation to our 

mission and the resources 

entrusted to us. The AFR also 

highlights our priorities, 

accomplishments, and challenges implementing programs 

that promote conditions for sustaining economic growth 

and stability at home and abroad, protecting the integrity 

of our nation’s financial system, and effectively managing 

the United States (U.S.) government’s finances and 

resources. In accordance with the Office of Management 

and Budget’s (OMB) Circular A-136, Financial Reporting 

Requirements, we produce the following reports: (i) an

AFR issued on November 15, 2023, and (ii) an Annual 

Performance Report (APR) submitted with Treasury’s

congressional budget justification, to be issued by

February 1, 2024. The AFR will be available online at

https://home.treasury.gov/about/budget-financial-reportingplanning-and-performance/agency-financial-report. The APR 

will be available online at

https://www.treasury.gov/about/budget-performance/Pages/cjindex.aspx.

HOW THIS REPORT IS ORGANIZED

Our AFR provides financial and performance information 

for the FY beginning October 1, 2022, and ending on

September 30, 2023, with comparative prior year data, 

where appropriate. The AFR demonstrates our 

commitment to our mission and accountability to

Congress and the American people. This report presents 

Treasury’s operations, accomplishments, and challenges. 

The AFR begins with a message from the Secretary of the 

Treasury, Janet L. Yellen. This introduction is followed 

by three main sections. 

Part 1: Management’s 

Discussion and Analysis 

Provides a high-level overview of

our organizational structure, 

strategic framework, 

programmatic and financial 

performance, and management 

assurances related to Treasury’s

internal controls. 

Part 2: Financial Section

Begins with a message from the 

Assistant Secretary for 

Management and Deputy Chief 

Financial Officer, followed by

the Independent Auditors’

Report, audited financial 

statements and notes, and 

supplementary information.

Part 3: Other Information 

Contains various information 

including Management and 

Performance Challenges 

identified by the Inspectors 

General and Management’s

response, along with 

information related to tax gap 

and tax burden, improper 

payments, and other relevant 

information. 
FY 2023 AGENCY FINANCIAL REPORT 

TABLE OF CONTENTS

MESSAGE FROM THE SECRETARY OF THE TREASURY ..................................................................................................................................... 4 

PART 1: MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 

TREASURY AT A GLANCE............................................................................................................................................................................... 9 

ORGANIZATION ........................................................................................................................................................................................... 11

TREASURY STRATEGIC MANAGEMENT.................................................................................................................................................... 14

PERFORMANCE OVERVIEW ....................................................................................................................................................................... 17

ENTERPRISE RISK MANAGEMENT............................................................................................................................................................ 37

CLIMATE-RELATED RISKS AND CHALLENGES........................................................................................................................................ 38

FY 2024 STRATEGIC OUTLOOK .............................................................................................................................................................. 39

FINANCIAL HIGHLIGHTS – FINANCIAL OVERVIEW................................................................................................................................ 40 

MANAGEMENT ASSURANCES .................................................................................................................................................................... 46

SYSTEMS, CONTROLS AND LEGAL COMPLIANCE.................................................................................................................................... 47

PART 2: FINANCIAL SECTION

MESSAGE FROM THE ASSISTANT SECRETARY FOR MANAGEMENT AND DEPUTY CHIEF FINANCIAL OFFICER............................ 53

INSPECTOR GENERAL’S TRANSMITTAL LETTER.................................................................................................................................... 55

INDEPENDENT AUDITORS’ REPORT......................................................................................................................................................... 57

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT ................................................................................................. 63 

FINANCIAL STATEMENTS........................................................................................................................................................................... 64

NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................................................... 72 

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) ............................................................................................................. 176

PART 3: OTHER INFORMATION (UNAUDITED) 

SECTION A: SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES ..................................................185

SECTION B: TAX GAP AND TAX BURDEN.............................................................................................................................................187

SECTION C: MANAGEMENT AND PERFORMANCE CHALLENGES AND TREASURY RESPONSE.......................................................197

SECTION D: PAYMENT INTEGRITY........................................................................................................................................................ 256

SECTION E: CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT............................................................................................. 261

SECTION F: GRANTS PROGRAMS ...........................................................................................................................................................268

APPENDIX: GLOSSARY OF ACRONYMS ..................................................................................................................................................269
4 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MESSAGE FROM THE SECRETARY OF THE TREASURY 

MESSAGE FROM THE SECRETARY OF THE TREASURY

M I S S I O N ST A T E M E N T

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

that enable economic growth and stability at home and abroad; strengthen national security by

combating threats and protecting the integrity of the financial system; and manage the U.S. 

government’s finances and resources effectively. 

This year’s Agency Financial Report provides an

opportunity to reflect on the Treasury Department’s

progress in achieving our mission as we look ahead to the 

new fiscal year.

In 2021, when President Biden assumed office, we faced a 

pandemic for which our country and our world were 

unprepared. Each week, we lost thousands of lives to 

COVID-19. So were livelihoods, with the unemployment 

rate reaching almost 15 percent in April 2020. Low-wage 

workers were hit hardest: The bottom quartile of wage 

earners accounted for 80 percent of job losses. We faced 

high uncertainty on the course of the pandemic and the 

economy. 

The Administration acted quickly to confront the public 

health emergency. By November 2021, 70 percent of

adult Americans were vaccinated. We also responded 

with historic support for the economy. As I detailed in my

Message for the FY 2021 Agency Financial Report, the 

American Rescue Plan provided direct financial support 

to households and fiscal relief to local, state, tribal, and 

territorial governments. It helped families with children, 

lowered healthcare costs for millions of Americans, and 

made sure those unemployed had extra support until the 

full vaccination campaign could begin to normalize the 

labor market. We also worked through other 

mechanisms, such as the Supply Chain Disruptions Task 

Force, formed to address short-term supply bottlenecks 

that had squeezed the pocketbooks of American families. 

Our efforts worked. We successfully prevented a 

prolonged economic recession. Unemployment was at

6.1 percent when the American Rescue Plan was passed. 

It’s now near historic lows, with a larger share of those 

between 25 and 54 years old employed than we’ve seen in

20 years. Inflation remains too high, but it has declined 

considerably from its peak.
DEPARTMENT OF THE TREASURY 5 

MESSAGE FROM THE SECRETARY OF THE TREASURY | FY 2023 AGENCY FINANCIAL REPORT 

Following the passage of the American Rescue Plan, we

continued our focus on the long term. As I detailed in my

Message for the FY 2022 Agency Financial Report, the 

Administration’s long-term actions tackle structural 

issues, which have posed challenges for decades, including 

slow productivity growth and entrenched income 

inequality, as well as regional divergences: the fact that 

some regions had experienced economic stagnation while 

others had prospered. We passed a trifecta of historic 

legislation: the Bipartisan Infrastructure Law in

November 2021, followed by the CHIPS and Science Act

and Inflation Reduction Act in August 2022. This 

legislation and President Biden’s economic agenda more 

generally reflects what I call modern supply-side 

economics: expanding our economy’s long-term productive 

capacity while reducing inequality and environmental 

damage.

In FY 2023, the Treasury Department has been hard at

work implementing this agenda, and we are seeing its 

significant impacts. The Bipartisan Infrastructure Law is

funding investments from roads, to ports, to broadband, 

and they are happening at a fast pace across the country. 

Thanks in part to the CHIPS and Science Act, 

manufacturing construction has doubled since the end of

2021, as more private companies are investing their own 

capital in building up supply-side capacity. The Inflation 

Reduction Act has led to a battery belt of electric vehicle 

battery factories emerging across the Midwest and South. 

These investments are creating good-paying, middle-class 

jobs, including for those who do not have college degrees, 

and they are building our country’s economic strength 

and resilience.

As for our financial performance, I am very pleased to

report that Treasury has received an unmodified audit 

opinion of its consolidated financial statements for Fiscal 

Year 2023. Based on our internal evaluation, our 

financial and performance data have been validated as

complete and reliable.

I am very proud of all the Treasury Department has 

accomplished, and I am glad to have this opportunity to

share more information on the past fiscal year. 

Janet L. Yellen

Secretary of the Treasury

November 15, 2023
 

 

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PART 1: 

MANAGEMENT'S DISCUSSION 

AND ANALYSIS 

(UNAUDITED)

Treasury at a Glance................................................................. 9 

Organization ........................................................................... 11

Treasury Strategic Management ............................................ 14

Performance Overview........................................................... 17

Enterprise Risk Management ................................................. 37

Climate-Related Risks and Challenges .................................... 38

FY 2024 Strategic Outlook ...................................................... 39 

Financial Highlights – Financial Overview............................... 40 

Management Assurances ....................................................... 46

Systems, Controls and Legal Compliance ............................... 47
 

 
DEPARTMENT OF THE TREASURY 9 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

TREASURY AT A GLANCE

FOUNDATION

After the American Revolution, Congress realized that 

funding a war without proper infrastructure and financial 

discipline presented an enormous challenge to our 

country’s economic stability. Out of the necessity to levy 

and collect taxes and manage the U.S. government’s

finances, Congress established the Department of the 

Treasury on September 2, 1789. President George 

Washington appointed Alexander Hamilton as Treasury’s

first Secretary. Since then, more than 70 Secretaries 

have led the Department.

Throughout its history, Treasury served as the foundation 

for other federal agencies. For example, the U.S. Postal 

Service, U.S. Customs Service, Secret Service, Federal 

Law Enforcement Training Center, and U.S. Coast Guard 

were all, at one time, under our jurisdiction. 

The Treasury building in the late 1800s. The Treasury 

building colonnade from the southeast side shows the bustle 

of traffic on 15th Street as bicyclists passed in front of the 

Treasury building. 

U.S. Department of the Treasury building, Washington, D.C. 

TODAY’S TREASURY AND HOW WE SERVE THE 

NATION

Treasury is responsible for the nation’s debt 

management, cash production, disbursement of Social 

Security benefit payments, tax collection, and federal 

agency financing. We are a trusted policy advisor to the 

President, formulating and recommending domestic and 

international financial, economic, and tax policies. Our 

contributions to policy development shape America’s

economic health and security.

We also perform a critical and far-reaching role in

enhancing national security by targeting rogue regimes, 

terrorist networks, and other illicit actors. We do this by

deploying our national security tools and authorities—

including sanctions—to identify, disrupt, and dismantle 

national security and foreign policy threats, while also 

protecting the U.S. and international financial system 

from abuse by illicit actors.
10 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

We also leverage our relationships with our federal 

partners and work closely with the private sector to

develop strategies to identify, detect, and prevent threats 

to our economic stability.

Furthermore, we work to increase opportunities for small 

businesses, which are the backbone of our economy. 

Through our efforts to enhance economic growth and 

promote access to credit, we support job creation to

improve the well-being of U.S. citizens and to safeguard 

and grow our national economy. We also continue to play 

a key and influential role in the government’s service to

the American people, adapting to meet the nation’s needs.

Globally, Treasury represents the U.S. in important 

economic forums and international financial institutions, 

including the Group of Seven (G7) and the Group of

Twenty (G20), which hold annual summits with heads of

state to discuss global economic and foreign policy issues. 

We hold significant responsibility promoting stability and 

growth in the global economy via our leadership roles in

the International Monetary Fund, the World Bank, 

regional development banks, and other multilateral 

organizations, such as the Financial Stability Board and 

the Financial Action Task Force. 

While Treasury adapts to meet the changing needs of our 

nation, our core mission remains unchanged since 1789. 

Today, with approximately 100,000 employees, we remain 

steadfast in our commitment to promote conditions that 

enable economic growth and stability at home and abroad, 

to protect the integrity of the financial system, and to

effectively manage the U.S. government’s finances and 

resources. We remain the principal steward of the U.S. 

economy by collecting revenue, meeting financial 

obligations, and financing government operations.
DEPARTMENT OF THE TREASURY 11 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

ORGANIZATION

Treasury is organized into the Departmental Offices, seven bureaus, and four offices of the Inspectors General. The 

Departmental Offices are primarily responsible for headquarters operations and formulating policy, while the bureaus are 

the operating divisions within the organization. 
12 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

DEPARTMENTAL OFFICES

Domestic Finance works to support equitable and 

sustainable economic growth and financial stability 

through policies that increase the resilience of financial 

institutions and markets, and which increase access to

credit for small businesses and low-to-moderate income 

communities. It focuses on Treasury Department activities 

in the areas of financial institutions, federal and municipal 

debt finance, financial regulation, and capital markets.

Terrorism and Financial Intelligence uses unique policy, 

intelligence, enforcement, and regulatory tools and 

authorities to disrupt and disable terrorists, criminals, 

and other national security threats while also 

safeguarding the financial system against abuse by illicit 

actors.

International Affairs protects economic prosperity and 

national security by working to foster a most favorable 

external environment for sustained jobs and economic 

growth.

Tax Policy develops and implements tax policies and 

programs, reviews regulations and rulings to administer 

the Internal Revenue Code, and provides revenue 

estimates for proposals and receipt estimates for the 

President’s Budget.

Economic Policy reports on economic developments and 

assists in the determination of appropriate economic 

policies. It also reviews and analyzes domestic economic 

issues and financial market developments.

The Treasurer of the United States serves as a principal 

advisor to the Secretary, including coordinating Tribal 

relations across the Department, directly overseeing the 

U.S. Mint and the Bureau of Engraving and Printing, and 

liaising with the Federal Reserve.

The Office of Management and Chief Financial Officer

manages the Department’s financial resources and 

oversees Treasury-wide programs, including human 

capital, organizational performance, enterprise risk 

management, information technology, acquisition, and 

data.

The Office of Recovery Programs principally focuses on

efficiently administering Treasury’s programs to support 

an equitable and swift recovery from the economic 

challenges precipitated by the COVID-19 pandemic. 

The Office of Diversity, Equity, Inclusion, and Accessibility

serves as a center of excellence to modernize the 

Department's overall diversity, equity, inclusion, and 

accessibility (DEIA) strategy, and drives cohesive 

implementation and accountability across the 

Department. 

 

 

Other offices within Departmental Offices include 

General Counsel, Legislative Affairs, and Public Affairs.
DEPARTMENT OF THE TREASURY 13 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

INSPECTORS GENERAL

 

Four Inspectors General—the Office of Inspector General 

(OIG), the Treasury Inspector General for Tax Administration

(TIGTA), the Special Inspector General for the Troubled Asset 

Relief Program (SIGTARP), and the Special Inspector General 

for Pandemic Recovery—provide independent audits, 

investigations, and oversight of Treasury and our 

programs. 

BUREAUS 

The Alcohol and Tobacco Tax and Trade Bureau (TTB)

collects federal excise taxes on alcohol, tobacco, firearms, 

and ammunition, while enforcing and administering laws 

covering the production, use, and distribution of alcohol 

and tobacco products. 

The Bureau of Engraving and Printing (BEP) develops and 

produces U.S. currency notes, as well as secure 

documents for government use. 

The Financial Crimes Enforcement Network (FinCEN)

safeguards the financial system from illicit use, combats 

money laundering and its related crimes—including 

terrorism—and promotes national security through the 

strategic use of financial authorities and the collection, 

analysis, and dissemination of financial intelligence.

The Bureau of the Fiscal Service (Fiscal Service) promotes 

financial integrity and operational efficiency by operating 

the U.S. government’s collections and deposit systems and 

providing central payment services to the American public 

on behalf of federal agencies. It also manages the 

collection of delinquent debt, borrows funds needed to

operate the U.S. government through the sale of

marketable and special-purpose U.S. Treasury securities, 

and accounts for the resulting debt. Additionally, it

delivers administrative shared services to federal agencies 

and conducts government-wide accounting and reporting. 

The Internal Revenue Service (IRS) determines, assesses, 

and collects U.S. tax revenue and helps taxpayers 

understand their tax responsibilities, while aiming to

prevent tax-related fraud.

The United States Mint (U.S. Mint) designs, mints, and 

issues U.S. circulating coins, as well as numismatic and 

bullion coins and strikes, Congressional gold medals and 

other medals of national significance. It maintains 

physical custody and protection of most of the nation’s

gold and silver assets.

The Office of the Comptroller of the Currency (OCC)

charters, regulates, and supervises national banks and 

federal savings associations, as well as federal branches 

and agencies of foreign banks, to ensure that they operate 

in a safe and sound manner, provide fair access to

financial services, treat customers fairly, and comply with 

applicable laws and regulations.
14 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

TREASURY STRATEGIC MANAGEMENT

FRAMEWORK

The Government Performance and Results Act (GPRA) 

and the GPRA Modernization Act of 2010 require 

agencies to identify goals, report progress against targets, 

and conduct data-driven reviews. These practices allow 

stakeholders within and outside the organization to

assess the organization’s health and impact, while 

promoting effective decision-making, and improving the 

execution of its strategies and resource allocations. In

this spirit, we developed a framework using best-in-class 

organizational performance practices to help achieve our 

strategic goals and objectives. 

ORGANIZATIONAL PERFORMANCE REVIEW CYCLE

Our organizational performance reviews provide a regular 

forum for open dialogue and coordination between the 

bureaus and the Departmental Offices’ management and 

leadership. We bring together different perspectives to

set and align priorities, identify and solve problems, 

review agency performance, and drive results. We review 

agency results quarterly to measure progress on our 

goals. Also, as required by the Program Management 

Improvement Accountability Act, we integrate portfolio 

reviews of programs within our performance review cycle 

activities. Through our Strategic Objective Annual 

Review (SOAR) process, we conduct an annual exercise to

validate our supporting objectives as well as analyze 

performance results across Treasury components to

identify a set of strategic objectives as priority focus areas 

for the following year. The Foundation for EvidenceBased Policy Act further advances the U.S. government’s

evidence-building functions. In this past fiscal year, we

continued to implement the evidence-building 

requirements by leveraging our strategic management 

framework, including the SOAR, and to discuss our 

evidence-building efforts and learning agenda. 

At designated points throughout the fiscal year, we assess 

annual priorities, evaluate progress against goals and 

objectives, discuss new strategies to improve program 

outcomes, and align our available funding to maximize 

results for the agency. We describe our process and 

framework for managing our strategic objectives and 

performance outcomes in Table 1 on the following page. 
DEPARTMENT OF THE TREASURY 15 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

TABLE 1: TREASURY ANNUAL ORGANIZATIONAL PERFORMANCE REVIEW CYCLE Sessions

Fall 

(October – November)

Winter

(February – March)

Spring

(April – May)

Summer

(June – July)

Focus

Bureau Organizational 

Health & Priorities 

Strategic Objective Annual 

Review (SOAR) 

Cross-cutting Risks/Challenges; 

Critical Programs and Projects 

Budget; Check-In for 

Critical Program and 

Projects 

Chair

Deputy Secretary, Assistant 

Secretary for 

Management/Performance 

Improvement Officer 

(ASM/PIO); Strategic Goal 

Leads 

Strategic Goal Leads ASM/PIO ASM/PIO and Budget 

Officer, Strategic Goal 

Leads 

Goals/Outcomes

• Review prior year’s

performance at the 

bureau/office level

• Recognize successes

• Set priorities for year 

ahead

• Identify shortfalls and 

risks; accountability

• Assess organizational 

health

• Evaluate cross-agency 

progress toward 

strategic objectives 

(including progress of

critical programs and 

projects)

• Identify/validate 

Treasury priorities 

and/or strategic shifts

• Outline potential topics 

for annual review with 

OMB

• Issue-based sessions: Dive 

deep on cross-cutting 

issues identified in the 

SOAR, identify near-term 

improvement strategies 

• Program-based sessions: 

check in on critical 

programs and identified in

the SOAR that need 

Treasury Leadership 

attention 

• Align funding to

performance 

impacts and risk 

mitigation

• Strengthen IT

acquisition, 

budgeting, and 

accountability

• Check-in on critical 

program and 

project health and 

review list of

critical programs 

and projects
16 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

FY 2022 – 2026 STRATEGIC FRAMEWORK

The strategic framework provides the foundation for the Department’s FY 2022 – 2026 strategic goals and objectives and 

FY 2022 – 2023 Agency Priority Goals (APGs), which align to specific objectives. All bureaus and offices align their 

programs and performance within this framework. Our updated goals and objectives are reflected below.

Strategic Goals Strategic Objectives/APGs 

Contributing 

Bureaus/Offices 

Goal 1: Promote 

Equitable Economic 

Growth and 

Recovery 

1.1: Tax Administration and Policy 

1.2: Global Economic Leadership 

1.3: Economically Resilient Communities 

1.4: Resilient Housing Market 

IRS 

Tax Policy 

TTB

Economic Policy 

International Affairs 

Office of Small and 

Disadvantaged 

Business Utilization 

Office of

Management 

ORP

Domestic Finance 

Goal 2: Enhance 

National Security 

2.1: Cyber Resiliency of Financial Systems and Institutions 

2.2: Economic Measures to Advance National Security 

2.3: Modernize Sanctions Regime 

2.4: Transparency in the Financial System 

Aligned APG: Promoting Transparency in the Financial System 

Office of

Management 

All Bureaus/Offices 

Goal 3: Protect 

Financial Stability 

and Resiliency 

3.1: Financial System Vulnerabilities 

3.2: Resilient Treasury and Municipal Securities Markets 

3.3: Financial Innovation 

Aligned APG: Improving the Payment Experience 

Domestic Finance 

International Affairs 

Economic Policy 

OCC 

TFI 

FinCEN 

Fiscal Service 

U.S. Mint 

BEP 

IRS 

Tax Policy 

Goal 4: Combat 

Climate Change 

4.1: Global Climate Commitment and Leadership 

4.2: Climate Incentives and Investment 

4.3: Climate-Related Financial Risks 

4.4: Sustainable Treasury Operations 

Aligned APG: Increasing Treasury Sustainability 

Office of

Management 

OCC 

All Bureaus/Offices 

Goal 5: Modernize 

Treasury Operations

5.1: Recruit and Retain a Diverse and Inclusive Workforce 

5.2: Future Work Routines 

5.3: Better Use of Data 

5.4: Customer Experience Practices 

All Office and 

Bureaus, led by the 

Office of

Management 
DEPARTMENT OF THE TREASURY 17 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

PERFORMANCE OVERVIEW 

We carry great responsibility for fostering prosperity and security for the American people. We play a critical role both in

the U.S. economy and globally to meet the needs of the nation. The Treasury Strategic Plan 2022 – 2026 charts a course to

guide our responsibilities to the public. The following performance overview reflects our accomplishments and challenges in

the goal areas of strengthening equitable economic growth, enhancing national security, protecting financial stability, 

combatting climate change, and modernizing our operations in service to the country.

Goal 1: Promote Equitable Economic Growth and Recovery 

Treasury plays a central role in addressing systemic 

issues in the financial system and strengthening economic 

resiliency for all Americans, while taking the lead in

partnering with foreign countries to promote global 

recovery and sustainable growth. In the past year, we

dramatically improved service in tax filing season, led 

global efforts to establish a Global Minimum Tax, and 

supported compliance and evidence-building efforts for 

recovery programs. 

Under this goal, our first strategic objective—identified as

an area of noteworthy progress and focus area for 

improvement in our FY 2023 SOAR process—focuses on

developing a more efficient tax system that ensures we

administer the tax code fairly and impartially for all 

Americans. Our second strategic objective under this goal 

relates to global economic leadership, which aims to

restore confidence in U.S. economic policy leadership and 

promote inclusive global economic growth. Our third 

strategic objective focuses on addressing systemic

inequities in the economy, catalyzing equitable growth 

through increased access to capital and resources for 

small businesses, households, and underserved 

communities. Our fourth strategic objective under this 

goal relates to promoting the long-term stability of the 

U.S. housing market in collaboration with the 

Department of Housing and Urban Development and 

other federal agencies. 

TAX ADMINISTRATION AND POLICY

We took steps in FY 2023 to improve taxpayer experience 

with the IRS and address compliance among certain 

taxpayer groups. 

In FY 2023, the IRS accomplished a range of actions to

assist taxpayers and improve the taxpayer experience on

the phones and in person. With additional funding from 

the Inflation Reduction Act (IRA), the IRS hired an

additional 5,000 Customer Service Representatives to

answer taxpayer calls. During the filing season, the IRS 

answered more calls from taxpayers seeking help than 

last year and significantly reduced phone wait times. 

This allowed the IRS to achieve a filing season 

(January 23 through April 21) Level of Service of

87 percent, compared to 15 percent in the prior year, 

including an average taxpayer telephone wait time of

approximately three minutes. This was a big

improvement compared to 28 minutes in tax season 2022. 

The IRS also announced the expansion of the customer 

callback option (having the option to get a call back 

Source: Adobe Stock

IRS Audits 

The IRS has announced new initiatives as part of a 

historic effort to restore fairness in tax compliance by

shifting more attention onto non-filers, high-income 

earners, partnerships, large corporations and 

promoters abusing the nation's tax laws. 
18 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

instead of waiting on hold) to cover 95 percent of all

taxpayers seeking live assistance. Additionally, the IRS 

provided more in-person assistance through the 

363 Taxpayer Assistance Centers (TACs) open for 

business. We opened TACs on select Saturdays and in

May we offered walk-in services, and conducted outreach 

events in underserved and rural communities to provide 

direct assistance to taxpayers who do not have convenient 

access to a live assistor. 

The IRS has announced new initiatives as part of a 

historic effort to restore fairness in tax compliance by

shifting more attention onto non-filers, high-income 

earners, partnerships, large corporations and promoters 

abusing the nation's tax laws. The IRS published an

Interim Guidance Memorandum setting forth guidance 

for considering Advance Pricing Agreement submissions 

from taxpayers to increase awareness of tax certainty 

programs and their benefits to taxpayers with complex 

issues. As part of its initiative to offer proactive debt 

resolution, the IRS updated the self-service payment plan 

functionality in Online Account for individual taxpayers. 

The IRS also worked to expand engagement with nonfilers by developing notices for the IRS core tax processing 

systems for the Case Creation Non-Filer Identification 

Process and launched a pilot program to address new nonfilers. Finally, the IRS announced its increased focus on

taxpayers with complex returns—in which audit rates are 

minimal today—such as those related to large 

partnerships, large corporations, and high-income and 

high-wealth individuals. 

The TTB also focused on compliance by large alcohol and 

tobacco companies and increased filing compliance rates 

for these taxpayers from 94.0 percent in FY 2018 to

98.2 percent in FY 2023 through the use of enhanced 

analytical tools. Further, to facilitate voluntary 

compliance by all taxpayers, the TTB piloted new tax 

forms, starting with brewers, which will reduce total 

filing burden while improving the utility of data for tax 

administration and enforcement. 

To support equitable economic growth and recovery, in

FY 2023, the Office of Tax Policy implemented changes to

the tax code through recent legislation, including the IRA 

and CHIPS and Science Act (CHIPS Act). The office 

published several regulations addressing credits for new 

clean vehicles, low-income communities, and prevailing 

wage and apprenticeship requirements. The office 

pursued new research on equity and taxation, including 

the development of a methodology to impute race and 

ethnicity in tax data, and the evaluation of how tax 

expenditures are distributed across different racial and 

ethnic groups, and a collaborative effort with the IRS and 

the United States Census Bureau to investigate the 

demographics of recipients of the initial round of

Economic Impact Payments in 2020.

Source: 

Source: Adobe Stock 

Global Minimum Tax 

 

In FY 2023, the Office of Tax Policy led global 

negotiations to establish a Global Minimum Tax to

ensure that large multinational businesses pay a 

minimum effective tax rate in every jurisdiction in

which they operate, which led many of the U.S.’s

largest trading partners to implement the Global 

Minimum Tax starting in 2024. 
DEPARTMENT OF THE TREASURY 19

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT

GLOBAL ECONOMIC LEADERSHIP

In FY 2023, the Office of Tax Policy led global

negotiations to establish a Global Minimum Tax to ensure

that large multinational businesses pay a minimum

effective tax rate in every jurisdiction in which they

operate, which led many of the U.S.’s largest trading

partners to implement the Global Minimum Tax starting

in 2024. The Office of Tax Policy negotiators also secured

multilateral guidance to coordinate the Global Minimum

Tax with the U.S. tax system, thereby ensuring a level

playing field for U.S. businesses and workers.

To prevent technical barriers to trade for U.S. alcoholic

beverage products, the TTB continued to monitor World

Trade Organization notifications on foreign trade

measures that could adversely affect U.S. exports. 

Additionally, the TTB improved service delivery for

export certificates to ensure U.S. industry access to

foreign markets—issuing more than 12,000 certificates to

U.S. alcohol exporters in an average of three days. The

TTB also improved the filing experience by launching a

new myTTB online option for customers to obtain export

certificates.

In the wake of major disruptions such as Russia’s illegal

invasion of Ukraine, the offices of Economic Policy,

Terrorist Financing and Financial Crimes, International

Affairs (IA), and the Office of Foreign Assets Control laid

the foundation for developing, organizing, and

implementing the price cap on Russian seaborne oil—

which went into effect December 2022—and the price

caps on Russian seaborne petroleum products—which

went into effect February 2023. We coordinated with the

Price Cap Coalition (G7, European Union, and Australia)

to implement the price cap policy and continue to

evaluate and review the policy with our Coalition

partners. Since its implementation, the price cap policy

has helped to reduce Russian revenues while maintaining

global oil supply.

ECONOMICALLY RESILIENT COMMUNITIES

We supported financially underserved communities and

bolstered economic resiliency for households that were

disproportionately impacted by the economic

repercussions of the Coronavirus Disease of 2019

(COVID-19) pandemic. In part through stewardship of

over $1 trillion of funds within Treasury, the American

Rescue Plan Act of 2021 (ARP) has helped to power one of

the strongest and most equitable recoveries on record

while making investments that position our nation for

economic success in the coming decades.

We supported economic recovery programs for state, local,

territorial, and Tribal governments across the country. 

To date, we have delivered over 99 percent of all available

State and Local Fiscal Recovery Funds (SLFRF) to state,

local, territorial, and Tribal governments across the

country to support their response to and recovery from

the COVID-19 pandemic. SLFRF recipients have

budgeted $12.1 billion for public health projects,

$17.7 billion for housing-related purposes, $12.8 billion

for workforce support, $5 billion for small business

support, and $31.2 billion for critical investments in

broadband, water, and sewer infrastructure. 

In FY 2023, we increased investments in financially

underserved communities through lending and

investment programs. Our Emergency Capital

Investment Program (ECIP) funded approximately

$285 million in investments in eligible depository

institutions that were certified as Community

Development Financial Institutions (CDFIs) or

designated as Minority Depository Institutions (MDIs) for

the purpose of increasing lending in financially

underserved communities, bringing our total ECIP

investment in CDFIs and MDIs to over $8.5 billion. In

addition, the CDFI Fund has provided resources to

counteract the economic effects of the COVID-19

pandemic. During FY 2022, CDFI Program award

recipients originated more than $38 billion in loans and

investments in distressed and underserved areas. 

Cumulatively, CDFI Program award recipients have

provided more than $170 billion in loans and investments

to counteract disinvestment in these areas. In addition,

the CDFI Fund announced and began disbursing over

$1.73 billion in awards under the CDFI Equitable

Recovery Program to strengthen the ability of CDFIs to

help low- and moderate-income communities recover from

the COVID-19 pandemic and invest in long-term

prosperity. Rapid Response Program award recipients

reported making loans and investments of more than
20 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

$14.8 billion to help distressed and underserved 

communities recover from the pandemic.

Our bureaus increased recovery, growth, and startup of

small and disadvantaged businesses through supplier 

diversity efforts, meeting our socio-economic goals and 

sending millions of dollars to small and minority 

businesses. In FY 2023, the bureaus awarded over 

$10.1 billion in eligible small business dollars and 

obligated over $3.6 billion to small businesses, totaling 

over 36 percent awarded to small businesses. Also, the 

bureaus awarded over $1.2 billion to small, 

disadvantaged businesses (over 11 percent) and over 

$976 million to women-owned small businesses (over nine 

percent). 

We also improved services for the alcohol and tobacco 

industries that we regulate to promote fair competition 

and growth. TTB continued to prioritize timely federal 

permit approvals for new producers, wholesalers, and 

importers to facilitate economic growth, particularly in

new small businesses, and aims to improve service by

simplifying the application requirements through phased 

rulemaking to reflect current industry operations and 

statutory requirements. TTB also continued phased 

rulemaking to modernize alcohol beverage labeling 

requirements, which will consolidate and clarify rules and 

help alcohol producers and importers obtain label 

approval quickly by correctly filing the first time. 

RESILIENT HOUSING MARKET

Throughout the COVID-19 pandemic and FY 2023, we

successfully distributed assistance to renters and 

homeowners to mitigate the effects of the pandemic, 

through the Emergency Rental Assistance (ERA) and 

Homeowner Assistance Fund (HAF) programs. 

The ERA program delivered nearly 10.8 million 

assistance payments to families at risk of eviction. While 

eviction diversion programs were uncommon before the 

pandemic, at least 180 jurisdictions across 36 states have 

now launched or strengthened eviction diversion 

programs with the ERA funding, which have significantly 

limited eviction rates. 

More than 230,000 families at risk of foreclosure received 

assistance in 2022 through the HAF program. Despite 

the economic disruptions COVID-19 caused, foreclosure 

proceedings remain significantly below pre-pandemic 

levels. 
DEPARTMENT OF THE TREASURY 21 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

GOAL 1: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure 

(Responsible Bureau/Office)

FY 20 FY 21 FY 22 FY 23 FY 23

Target

Result vs Target

Customer Service Representative Level of

Service (CSR LOS) (IRS)1

53.1% 18.5% 17.4% 51.8% 60.0% Unmet 

Timeliness of Critical Individual Filing Season 

Tax Products (IRS)2

78.4% 92% 96.4% 96.4% 83.0% Exceeded 

Percentage of Permit Applications Processed 

within Service Standards (TTB)3

84.1% 92.2% 91.2% 86.3% 85% Exceeded 

Engagement of Partner Countries in

Programs – 5 point scale (International 

Affairs) 4

3.3 3.6 3.5 TBD 3.6 TBD 

Enterprise Self-Assistance Participation Rate 

(ESAPR) (IRS)5

90.6% 92.3% 93.9% 94.2% 94.0% Met 

Percent of Procurement Dollars Spent on

Small Business (Management)6

45.0% 39.9% 37.6% 36.2% 40.0% Unmet 

Number of governments using funds to

support workers and develop the workforce 

(ORP)7

N/A 676 903 1023 975 Exceeded 

Number of unique homeowners receiving 

assistance (cumulative) (ORP)8

N/A N/A 162,102 425,000 

(est) 

300,000 Exceeded 
22 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

Explanation of Results 

1CSR LOS was 51.8 percent which was 13.6 percent below the target of 60 percent, and an increase of 197.8 percent over the prior 

year actual level of service of 17.4 percent. The level of service for the filing season (from January 23 through April 21) was 

87 percent. The IRS allocated employees in October through December, from accounts management that answer phone calls, to

assist in processing correspondence. This resulted in delivering a lower level of service. Customer service representatives 

answered around 17.9 million calls in FY 2023 while accounts management demand fell 52.3 percent to 38.8 million in FY 2023

from 81.3 million in FY 2022. Average wait time was 10.1 minutes, which was less than half the average from the prior fiscal year 

of 26.0 minutes. In FY 2023, around 8.5 million taxpayers were offered a callback and 64 percent accepted. This resulted in

around 2.4 million hours saved for the taxpayer, providing a better experience. To meet service goals in FY 2024, the IRS will 

continue to monitor demand in real time and the resources allocated down to the half hour enabling us to regularly shift people 

between telephones and paper.

2Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the Public of 96.4 percent is 16 percent above the plan of

83 percent. Eighty of 83 CIFS tax products were available to the public seven calendar days before the official IRS start of the 

(individual) filing season. Filing season 2023 tax products were significantly impacted by the enactment of the Inflation Reduction 

Act of 2022 and the CHIPS Act of 2022. The IRS assessed legislation quickly and prioritized work on the impacted products; 

prioritized work on the release of critical products, especially forms and instructions, over other products; and utilized overtime, 

credit, and compensatory time during workdays, weekends, and holidays. 

3This measure represents the overall rate at which the TTB is meeting its annual service standard (75 days for FYs 2020 – 2023) for 

all original permit applications and registrations. The measure reflects the efficiency and consistency of the TTB’s permitting 

process and supports effective communication with industry members regarding the TTB’s level of service. In FY 2023, the TTB 

issued nearly 87 percent of applications within its 75-day service standard, surpassing its 85 percent target. With sustained high

application volume, to maintain performance at target, the TTB is undertaking process and system enhancements, including an 

effort to streamline permit application requirements. 

4Measures the degree to which foreign counterparts are engaging proactively and constructively with Office of Technical 

Assistance (OTA) advisors, at the working and policy levels. Counterpart engagement is both a key outcome of OTA efforts to

structure and execute effective technical assistance projects that support host country ownership. The result for FY 2022 is 3.5, a 

reduction of 0.1 from FY 2022 target of 3.6. 

5The Enterprise Taxpayer Self-Assistance Participation Rate of 94.2 percent was slightly above the fiscal year plan of 94 percent. In

FY 2023 total Self -Assisted services were 1.62 billion which is 7.6 percent higher than 1.51 billion in FY 2022, assisted services were 

99.41 million which is 2 percent higher than FY 97.5 million in FY 2022, and total FY 2023 Services rose to 1.72 billion which is

7.3 percent higher than 1.6 billion in FY 2022. Using the self-assistance services, taxpayers received more than 970 million 

transcripts, made around 212 million electronic payments, set up 1.6 million online installment agreements, received almost 

2.3 million IP Pins, and accessed nearly 64.4 million Online Accounts sessions.

6This goal measures the percentage of procurement dollars obligated toward small businesses (or Treasury’s overall small business 

goal) and highlights Treasury’s efforts to ensure that small businesses have the maximum practicable opportunity to provide goods 

and services to the federal government. Treasury fell short of meeting its FY 2023 small business goal of 40 percent. However, 

Treasury overperformed and exceeded the socio-economic small business goals. Treasury awarded $685 million more to small 

business over last year.

7

In May 2022, recipients received a letter from the Deputy Secretary that encouraged recipients to use SLFRF funds for 

investments in priority areas, including to expand the workforce and provide competitive wages. Since then, Treasury has 

continued to emphasize and uplift examples of how recipients are using SLFRF funds to support the workforce.

8Treasury worked with programs to identify and address program design challenges and applicant barriers, increasing eligible 

homeowners’ access to HAF assistance. HAF programs addressed the needs of a broader set of homeowners than prior housing 

programs, such as providing the flexibility to serve homeowners living in manufactured housing and those with land contracts, 

resulting in a broader reach of HAF assistance.
DEPARTMENT OF THE TREASURY 23

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT

Goal 2: Enhance National Security

We continue to play a key role in promoting and

enhancing our national security. In FY 2023, we

increased cyber resiliency in the financial sector and

engaged key allies to effectively target the application of

tools and authorities to dismantle bad actors. We also

made progress implementing recommendations from the

2021 Sanctions Review and preparing for the

implementation of Anti-Money Laundering Act of 2020

(AMLA). 

Under this goal, our first strategic objective—identified as

an area of noteworthy progress and focus area for

improvement in our FY 2023 SOAR—centers on ensuring

that we harden the U.S. and global financial systems

against cyber incidents and counter malicious cyber

actions. Our second strategic objective—identified as an

area of noteworthy progress and focus area for

improvement in our FY 2023 SOAR—is to address threats

that criminal elements, foreign adversaries, and certain

foreign investments pose to U.S. national security and

strategic interests using our policy, intelligence,

regulatory and enforcement authorities, and tools. Our

third strategic objective focuses on updating the

authorities and processes we use to deploy sanctions to

effectively address emerging challenges. Our fourth

strategic objective—identified as a focus area for

improvement in our FY 2023 SOAR process—focuses on

strengthening transparency in the domestic and

international financial systems to aid in the detection of

illicit financial activity to protect the integrity of markets

and the global financial framework.

CYBER RESILIENCY OF FINANCIAL SYSTEMS AND

INSTITUTIONS

We continue to refine our ability to respond to cyber and

noncyber incidents, including cybersecurity attacks that

stem from the U.S.’s role in the Russian-Ukraine War. 

We have responded by accelerating the implementation of

protective and detective controls and expanding our

information sharing, seeking to prevent these types of

incidents while also preparing for the impact if they

occur. This also includes streamlining the mechanism to

coordinate public messaging with public and private

partners, which is an essential element of a mature

incident response process.

Through regular engagement with international partners,

we are coordinating efforts to address operational

vulnerabilities and enhance sector cyber hygiene to

maintain system health and improve online security. We,

along with the Bank of England, serve as co-chairs of the

G7 Cyber Expert Group (CEG) and are working to

continually improve the volume and timeliness of relevant

threat information as well as develop a collective incident

response capability. The G7 CEG made several

significant advancements in 2023. For example, the

group restructured and formalized its relationship with

its private sector participants to fully use the breadth of

experiences and skills in our sector. In addition, the CEG

launched a website in 2023 to provide an enduring

platform for the group’s public work. Along with these

achievements, the CEG has continued to produce

Fundamental Elements documents that incorporate

expertise and good practice from group members for

cybersecurity practitioners worldwide. The resources are

now available publicly through the new website.

Beyond our work with the G7, we continue to engage

bilaterally with key international partners, including

Singapore and Israel, with which we held exercises in

2023. We are also helping to develop the capacity of

countries, including Ukraine, to improve the

cybersecurity and resilience of their financial sectors. 

To address technology vulnerabilities and facilitate

stronger security operations and management posture, we

have implemented increased controls to better meet the

requirements of the Federal Information Security

Modernization Act of 2014 (FISMA). Fiscal Service’s

FISMA systems have achieved the following: 84 percent

has implemented multifactor authentication for

enterprise and public users; 90 percent has implemented

encryption for data at rest; and 63 percent has encrypted

data in transit. While the multifactor authentication

solution for Modernized e-File is currently available, we

continue to enhance and upgrade the systems to achieve

our goals. Additionally, the IRS will enable multifactor
24 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

authentication on all FISMA systems by the end of the 

calendar year.

We have enhanced vulnerability and threat management 

capabilities in key areas. The IRS continues to deliver 

analytics tools that leverage machine learning to

proactively identify and respond to emerging insider 

threats and fraudulent behavior. The IRS also continues 

High Value Asset continuous monitoring to protect 

systems that are segmented from the agency's enterprise 

network. Fiscal Service continues to optimize, secure, 

and scale technology resources—including prioritizing 

resources to adopt cloud technology—to effectively 

support our role in national security and to implement 

the requirements of the Cybersecurity Executive Order 

(EO) 14028, Improving the Nation's Cybersecurity. To

comply with the Cybersecurity EO, Fiscal Service will 

continue implementing Zero Trust cloud solutions and 

Enterprise Log Management as it moves toward Zero 

Trust Architecture compliant platform services.

We and our partners in the Financial and Banking 

Information Infrastructure Committee (FBIIC) assessed 

how trends in technology usage could affect the 

operational resilience of the U.S. financial services sector, 

and released a report, “The Financial Services Sector’s

Adoption of Cloud Services,” in February 2023. This 

report shares our findings on core issues related to the 

current state of cloud adoption in the sector, including 

potential benefits and challenges associated with 

increased adoption, which we have been working closely 

with the FBIIC and the Financial Services Sector 

Coordinating Council to address. 

ECONOMIC MEASURES TO ADVANCE NATIONAL 

SECURITY

Since Russia invaded Ukraine in February 2022, we, 

working alongside a global coalition of more than 

30 countries, implemented a historic economic pressure 

campaign to deprive Russia of the revenue it uses to wage 

war. These targeted economic measures are enhancing 

and protecting U.S. national security interests. We

issued more than 2,500 Russia-related sanctions 

designations and, together with international partners, 

immobilized at least $280 billion of Russian sovereign 

assets. The combined effects of these measures have 

contributed to significant economic difficulties for Russia’s

financial, energy, and manufacturing sectors, including 

Russia’s military supply chain. In collaboration with the 

Department of Commerce and international partners, we

are working to maintain the pressure on Russia by

monitoring for and countering Russia’s attempts to evade 

our sanctions and other economic controls. 

We continue to share information with our global 

partners to address threats to U.S. national security and 

strategic interests. Through participation in the Egmont 

Group of Financial Intelligence Units (FIUs), FinCEN 

strives to share high-value and impactful financial 

intelligence quickly and securely with trusted foreign 

partners. FinCEN regularly evaluates its processes for 

sharing information to gain efficiencies and takes a riskbased approach to ensure it appropriately prioritizes 

requests from foreign FIUs. 

Source: Adobe Stock

U.S. Issued Russian-Related Sanctions 

We issued more than 2,500 Russia-related sanctions 

designations, and, together with international 

partners, immobilized at least $280 billion of Russian 

sovereign assets. 
DEPARTMENT OF THE TREASURY 25

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT

In March 2022, FinCEN established the Russia-Related

Illicit Finance and Sanctions FIU Working Group with

nine of our closest FIU partner countries, in part to

further expedite and increase sharing of financial

intelligence related to Russian illicit finance, including

sanctions evasion. FinCEN issued a number of Russiarelated alerts and advisories (including two joint alerts

with the Department of Commerce’s Bureau of Industry

and Security) to draw attention to, and generate reporting

by, U.S. financial institutions on Russian sanctions and

export control evasion, as well as other illicit financial

activity tied to Russian oligarchs and sanction Russian

elites. These actions have helped drive the filing of

Suspicious Activity Reports (SARs) with FinCEN; SARs

play an important role in sanctions designations and law

enforcement efforts to counter Russian illicit activity.

To ensure that covered foreign investments do not give

rise to unresolved national security risks, we released the

first ever Committee on Foreign Investment in the United

States (CFIUS) Enforcement and Penalty Guidelines,

which provide the public with information about how

CFIUS assesses violations of the laws and regulations

that govern transaction parties, including potential

breaches of CFIUS mitigation agreements. Transaction

parties’ compliance is critical to ensuring we protect

national security against transnational risks certain

foreign investments pose. We are also implementing the

provisions of the IRA that bolster energy security by

strengthening and diversifying vital supply chains in

partnership with allies.

MODERNIZE SANCTIONS REGIME

We made considerable progress toward modernizing the

sanctions regime by implementing recommendations from

the Treasury 2021 Sanctions Review, executing the

Sanctions Modernization Action Plan, and working with

interagency partners to re-evaluate the interagency

sanctions framework. This includes creating the

Sanctions Economic Analysis Unit led by a Chief

Sanctions Economist to serve as a center of excellence for

analyses on the effectiveness of sanctions. This unit

provides economic and financial policy analyses that

better inform the design and implementation of sanctions

policy and targeting options under existing or proposed

authorities. This unit is also responsible for

standardizing a consistent approach to economic and

financial policy analyses that better inform policy

decisions. This includes analyses of potential collateral

effects of proposed sanctions to identify issues that may

be mitigated. 

In April 2023, we launched the Sanctions Economic

Analysis Division, a cross-functional team working with

IA, the Office of Terrorism and Financial Intelligence

(TFI), and others to develop economic and financial

analysis to inform the design and implementation of

sanctions options. Finally, we improved our

communication and transparency on sanctions by

modernizing our Information Technology (IT) and

website, enhancing case management, and other related

efforts. 

TRANSPARENCY IN THE FINANCIAL SYSTEM

Our work to increase transparency in the domestic and

international financial systems is aiding the detection of

illicit financial activity and positioning the U.S. and

international financial system to better detect, disrupt,

and deter illicit financial activities.

Our work addressing the illicit finance risks of digital

assets from the 2022 National Strategy for Combatting

Terrorist and Other Illicit Financing included the April

2023 publication of the 2023 DeFi Illicit Finance Risk

Assessment, the first such risk assessment conducted on

decentralized finance in the world, as well as extensive

ongoing work with interagency and international

partners to better understand digital asset gaps in the

U.S. and global Anti-Money Laundering / Countering the

Financing of Terrorism (AML/CFT) frameworks.

We are finalizing development and implementation of a

Beneficial Ownership Secure System to crack down on the

use of anonymous shell companies by malicious actors. 

FinCEN’s rulemaking on beneficial ownership

information and efforts to increase transparency in the

real estate sector are enabling us to address emerging

challenges.
26 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

We made significant progress implementing new 

beneficial ownership information reporting requirements 

as part of ongoing efforts to carry out the Corporate 

Transparency Act (part of the AMLA). Specifically, 

FinCEN issued a notice of proposed rulemaking proposing 

regulations that would govern the access to and 

protection of beneficial ownership 

information. Additionally, FinCEN launched a new 

beneficial ownership information reporting page on its 

website containing information related to the new 

reporting requirements, including frequently asked

questions and informational videos. FinCEN continues to

develop additional public guidance for entities that will 

need to report their beneficial ownership 

information. FinCEN also completed initial development 

and began testing and assessing the security of an IT

system to receive and store beneficial ownership 

information. 

Additionally, we made progress developing a notice of

proposed rulemaking to address money laundering 

threats in the U.S. residential real estate sector. 

GOAL 2: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure 

(Responsible Bureau/Office)

FY 20 FY 21 FY 22 FY 23 FY 23

Target Result vs Target

Percentage of CFIUS Cases Reviewed within 

Statutory Timeframes, reported by calendar 

year (International Affairs)1

100% 100% 100% TBD 100% TBD 

Number of New or Modified Sanctions 

Programs Established by Executive Order or

Congressional Mandate (TFI)2

7 8 11 2 N/A TBD 

Explanation of Results 

1This measure tracks compliance with statutory deadlines for completing national security reviews of transactions notified to the 

CFIUS to ensure that the CFIUS process is timely and efficient. We report results on a calendar year basis, at which time the 

comparison can be made of actual results versus target. 

2This indicator tracks the number of new or modified sanctions programs that we must implement and enforce. However, the 

indicator does not capture the levels of relative complexity for each sanction program or the complexity of individual national 

security objectives that sanctions attempt to achieve. We do not set targets for new or modified sanctions programs since the 

existence of a sanctions program is not itself a measure of success. 

 

Source: Adobe Stock

2023 DeFi Illicit Finance Risk Assessment 

Our work addressing the illicit finance risks of digital 

assets from the 2022 National Strategy for 

Combatting Terrorist and Other Illicit Financing 

included the April 2023 publication of the 2023 DeFi 

Illicit Finance Risk Assessment, the first such risk 

assessment conducted on decentralized finance in

the world, as well as extensive ongoing work with 

interagency and international partners to better 

understand digital asset gaps in the U.S. and global 

(AML/CFT) frameworks. 
DEPARTMENT OF THE TREASURY 27 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Goal 3: Protect Financial Stability and Resiliency 

We play a critical role in improving financial resiliency 

and addressing vulnerabilities in core financial markets. 

We continued to promote a more resilient financial 

system, as demonstrated through the improved resiliency 

of Treasury security markets. The Financial Stability 

Oversight Council (FSOC), which is chaired by Secretary 

Yellen and charged with identifying risks to the financial 

stability of the U.S., has seen its capacity grow over the 

past year. We were also heavily involved in developing 

policy and engaging on digital assets and made significant 

progress in facilitating financial innovation. 

Under this goal, our first strategic objective focuses on

monitoring and coordinating responses to threats to

financial stability both domestically and globally. Our 

second objective is to mitigate vulnerabilities in Treasury 

and municipal securities markets, keeping pace with 

changes in the industry, regulatory environment, trading 

practices, and investor demands. Our third strategic 

objective—identified as a focus area for improvement in

our FY 2023 SOAR process—focuses on encouraging the 

responsible use of innovative financial technology, both 

across the financial sector and within Treasury.

FINANCIAL SYSTEM VULNERABILITIES

Through our work to rebuild FSOC’s capacity, we are 

strengthening our ability to coordinate and improve 

collective actions to mitigate threats to financial stability. 

The FSOC continued its work to identify emerging 

vulnerabilities to the financial system through its 

monthly interagency Systemic Risk Committee meetings, 

as well as through recommendations to address those 

vulnerabilities in its Annual Report in December 2022. 

Identifying, assessing, and responding to systemic risks 

are among FSOC’s core functions, and the Council has 

taken recent action to strengthen and provide greater 

transparency into how it performs these duties. On

April 21, 2023, the FSOC issued its Proposed Analytic

Framework for Financial Stability Risk Identification, 

Assessment, and Response, which is intended to inform 

the public how the Council engages with risks to the 

financial system. At the same time, the Council issued 

proposed interpretive guidance on its authority to

designate nonbank financial companies for Federal 

Reserve supervision and prudential standards.

In FY 2023, the Office of Financial Research (OFR) 

proposed a rule to establish an ongoing collection of

noncentrally cleared bilateral repurchase agreement data 

to improve transparency in short-term funding markets. 

The sound functioning of such markets is critical to

financial stability, and the OFR will continue working to

finalize and launch this daily financial data collection. 

The OFR also made substantial progress building its 

capability to collect data directly from financial 

companies, which it will leverage for the planned new 

noncentrally cleared bilateral repurchase agreement data 

collection and for future FSOC data collection needs. 

Additionally, OFR launched the Joint Analysis Data 

Environment (JADE), designed to enhance FSOC member 

agencies’ access to data, high-performance computing, 

and tools for research and analysis on financial stability 

and vulnerabilities. 

Source: Adobe Stock

Financial Stability Oversight Council 

FSOC, which is chaired by Secretary Yellen and 

charged with identifying risks to the financial stability 

of the U.S., has seen its capacity grow over the past 

year. 
28 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

RESILIENT TREASURY AND MUNICIPAL

SECURITIES MARKETS

The Treasury security markets have withstood multiple

shocks this year, demonstrating their improved resiliency. 

The Inter-Agency Working Group on Treasury Market

Surveillance, which consists of Treasury, the Federal

Reserve Board, the Federal Reserve Bank of New York,

the U.S. Securities and Exchange Commission, and the

Commodity Futures Trading Commission, continues to

focus on improving the resilience of market

intermediation, improving data quality and availability,

evaluating expanded central clearing, enhancing trading

venue transparency and oversight, and examining the

effects of leverage and fund liquidity risk management

practices. Additionally, we continue to make progress

toward beginning a Treasury marketable securities

buyback program in 2024. Our buybacks will have two

debt management objectives—liquidity support and case

management.

In 2023, the Office of Economic Policy developed and

implemented important enhancements to the high-quality

market corporate bond (HQM) yield curve methodology

that significantly expanded market coverage of the HQM

yield curve and improved the ability of the curve to

capture market movements. The enhancements also

enabled the HQM yield curve to be better used in

combination with the Treasury securities yield curves.

Increasing market monitoring to understand the causes

and effects of changes in municipal bondholder

composition and municipal bond market volatility and

liquidity is crucial for promoting greater efficiency,

liquidity, and transparency in the market. For these

reasons, we developed internal monitoring tools for

variable rate and high-yield municipal debt and engaged

with municipal market regulators and federal agencies on

implementation of market transparency measures

including voluntary disclosure of climate-risk and impact

information. We also convened municipal issuer groups

to improve disclosures by disseminating best practices for

financing resilient infrastructure.

FINANCIAL INNOVATION

In FY 2023, we continued to modernize financial

management processes through increased federal

electronic payments and collections, and reduced use of

paper checks with federal agencies. In February, the IRS

implemented the capability for taxpayers who

electronically filed Form 1040-X (Individual Amended

Return) to receive electronic funds transfer (EFT)

refunds. We are monitoring the impact on tax refund

EFT percentages for the remainder of 2024. In FY 2023,

the overall EFT rate was 96.5 percent. Additionally,

Fiscal Service and the Federal Emergency Management

Agency signed a Memorandum of Understanding to pilot

emerging digital payments for faster assistance to

disaster victims.

To better diversify representation on our national

currency, the U.S. Mint developed and delivered to the

Secretary design options for the five 2024 American

Women Quarters, the 2024 American Innovation $1 Coin

for Missouri, and the Liberty & Britannia 24k Gold Coin

and Silver Medal. The U.S. Mint also conducted design

development for the final five 2025 American Women

Quarters, the 2025 Native American $1 Coin, and the

2025 American Innovation $1 Coins for Michigan and

Arkansas. In addition, the U.S. Mint created a crossfunctional team to increase awareness of the American

Women QuartersTM Program, and, through extensive

stakeholder outreach to previously untapped audiences,

stimulated new interest in coin collecting.

The U.S. Mint is planning to strengthen its anticounterfeit processes by leveraging new technologies,

including advanced detection methods for authenticating

bullion and circulating coinage. The advanced technology

will also ease manufacturing burdens. The U.S. Mint will

continue to support other federal agencies with

circulating coin authentication.
DEPARTMENT OF THE TREASURY 29 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Fiscal Service established the Office of Payment Integrity 

by merging the Do Not Pay Business Center and Payment 

Integrity Center of Excellence. This office manages a 

portfolio of payment integrity tools, services, and data 

sources to focus on access to data and data sharing, data 

analytics, and government-wide and agency-specific 

solutions. In FY 2023, we identified, prevented, or

recovered $652.7 million in improper payments as a direct 

result of Fiscal Service Payment Integrity services and 

solutions. In FY 2024, Fiscal Service will advance a 

payment integrity vision and will evaluate the bureau’s

role in stopping improper payments. 

Additionally, in FY 2023, BEP made notable progress on

development activities for the newly redesigned family of

banknotes. BEP implemented multiple high-volume print 

trials integrating public, machine readable, and covert 

security features, along with a raised tactile feature that 

will be appearing on U.S. currency for the first time. 

Currency redesigns are a multi-year process to ensure 

security and their successful adoption in domestic and 

international markets, and they play a vital role in

maintaining end-user trust and confidence in U.S. 

currency.

GOAL 3: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure 

(Responsible Bureau/Office)

FY 20 FY 21 FY 22 FY 23 FY 23

Target Result vs Target

Percentage of Treasury Payments Made 

Electronically (Fiscal Service)1

96.0% 96.2% 96.4% 96.5% 96.6% Unmet

Percentage of Total Federal Government 

Receipts Initiated Electronically (Fiscal 

Service)2

84.1% 83.0% 83.2% 84.8% 84.0% Met 

Explanation of Results 

1This measure provides the percentage of the total volume of electronic payments that are disbursed electronically. FY 2020,

FY 2021, and FY 2022 data does not include pandemic-related relief payments such as economic impact payments and advance 

child tax credit payments. 

2This measure provides the percentage of total federal government revenue collection dollars initiated electronically. 

Source: Adobe Stock

BEP’s New Developments 

BEP’s development activities for the newly 

redesigned family of banknotes made notable 

progress during FY 2023. BEP implemented multiple 

high-volume print trials integrating machine 

readable, and covert security features, along with a 

raised tactile feature that will be appearing on U.S. 

currency for the first time. 
30 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

Goal 4: Combat Climate Change 

We continue to work with domestic and international 

partners to emphatically respond to the challenges of

climate change, including taking action to adapt to an

already changing climate. With our partners, we work on

mitigating risks associated with climate change and 

strive toward positioning the global economy for a clean 

and sustainable future. Our work in this area will 

strengthen the nation’s energy security and enhance its 

competitiveness in the clean energy economy. This year, 

we established foundations to strengthen finance for 

emerging markets and climate adaptation through 

leadership in a variety of international forums, including 

co-chairing the Green Climate Fund (GCF), co-chairing 

the G20 Sustainable Finance Working Group, and cochairing the Trust Fund Committee of the Climate 

Investment Funds. Additionally, the IRA has positioned 

our Department as a prominent leader in the climate 

space, and its implementation will be key in advancing 

progress towards U.S. climate goals. 

Under this goal, our first strategic objective focuses on

using U.S. leadership to re-engage with international 

partners to enhance global action and mobilize and align 

financial flows to combat climate change. Our second 

strategic objective—identified as an area of noteworthy 

progress and a focus area of improvement in our FY 2023 

SOAR process—aims to promote incentives and policies to

encourage the private sector’s investment in climatefriendly projects. Our third strategic objective focuses on

developing and executing approaches to measure and 

monitor climate risks to the financial sector, government, 

businesses, and households. Our fourth strategic 

objective focuses on our efforts to invest in adaptation and 

resiliency efforts to address climate change impacts on

our operations and services. 

GLOBAL CLIMATE COMMITMENT AND 

LEADERSHIP

In FY 2023, we made strides to advance global 

commitments in combating climate change, including 

setting foundations to strengthen finance for emerging 

markets, helping developing economies adapt to a 

changing climate, and demonstrating leadership in

several multilateral forums. 

IA implemented programs to improve its oversight of key 

climate funds to ease access to finance for beneficiary 

countries, make more financing available to the most 

vulnerable countries, including small island states, and 

improve effectiveness of climate finance. In April, 

President Biden announced a $1 billion contribution to

the GCF, which IA co-chairs. IA also co-chaired the G20 

Sustainable Finance Working Group with China and led 

the Administration’s work to implement the Just Energy 

Transition Partnerships, multilateral funding agreements 

that aim to bridge the gap between developed and 

developing nations in moving towards clean energy. In

addition, IA initiated a review of the global climate 

finance architecture culminating in broad agreement at

the June Paris Summit. 

 

Source: Adobe Stock

Climate Change and the Global Economy 

With our partners, we work on mitigating risks 

associated with climate change and strive toward 

positioning the global economy for a clean and 

sustainable future. 
DEPARTMENT OF THE TREASURY 31 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

CLIMATE INCENTIVES AND INVESTMENT

The IRA is the most significant investment in climate and 

clean energy in U.S. history. As tax incentives deliver 

most of the law’s investment, we are playing a leading 

role in implementing the law. The IRA established or

modified approximately 20 clean energy-related tax 

incentives that will be critical in advancing the nation’s

climate goals while lowering costs for consumers and 

creating good-paying jobs. We are focused on

implementing the clean energy tax provisions as quickly 

and effectively as possible, with a commitment to

ensuring that IRA implementation maximizes the law’s

economic, energy security, and climate impacts in the 

years to come. 

Our implementation efforts have stretched across the 

Department—including the Office of Tax Policy, Climate

Hub, IRA Program Office, Office of the Deputy Assistant 

Secretary for Management and Budget, and the IRS—and 

involved extensive collaboration with other federal agency 

partners. Since the law was enacted, we and the IRS 

have issued over 40 pieces of guidance on the law’s clean 

energy provisions, while engaging with hundreds of

stakeholders and reviewing thousands of written 

comments. We are also modernizing the IRS’s customer 

service and technology to ensure that we deliver the IRA’s

clean energy tax incentives accurately and seamlessly.

The Office of Financial Markets (OFM) is working with 

OMB to update Federal credit policies to integrate 

climate-related financial risk into financial management 

and reporting for federal credit programs. This effort 

includes proposed disclosures to facilitate public reporting 

of climate risk and impacts. The OFM will work with 

agencies to develop a standardized reporting framework 

across federal programs. We are also working in other 

ways to encourage private sector investment in companies 

and activities that will underpin the clean energy 

economy of the future. This includes releasing the NetZero Principles for Financing & Investment and working 

to better understand the challenges and opportunities 

associated with voluntary carbon markets. 

CLIMATE-RELATED FINANCIAL RISKS

We made progress toward incorporating climate-related 

risks into assessments of financial stability risk. 

Following FY 2022’s successful climate-related financial 

data and analytics hub pilot, the OFR developed an

expanded and enhanced platform, JADE. This platform 

is designed for FSOC member agencies to jointly analyze 

financial-stability risks and currently provides access to

publicly available climate and financial data. While 

JADE can support research on a variety of financial 

stability topics, climate-related financial risk is the first 

research topic the FSOC is exploring within JADE. 

Further, the FSOC continued its work to assess climaterelated financial risk. It held multiple convenings of the 

Climate-related Financial Risk Advisory Committee 

(CFRAC) and, in July 2023, the FSOC published a staff 

progress report highlighting the FSOC and its member 

agencies’ progress to better assess and address climaterelated financial risk.

Source: Adobe Stock

Consumer Climate Based Tax Incentives 

The IRA established or modified approximately 

20 clean energy-related tax incentives that will be

critical in advancing the nation’s climate goals while 

lowering costs for consumers and creating goodpaying jobs. 
32 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

SUSTAINABLE TREASURY OPERATIONS

We have met one of two objectives in our “Sustainable

Treasury Operations” APG, specifically in our progress 

converting our fleet to electronic vehicles. We are on

track to disseminate a climate literacy program for our 

targeted audience. 

We developed strategies and standardized processes to

acquire carbon-free electricity (CFE) to meet our goal of

100 percent usage across our “Energy Goal Facilities” by

2030, with up to 50 percent generated on a 24/7 basis. We

identified new and additional actionable CFE 

opportunities, including initiatives at the Denver Mint 

and the BEP’s Western Currency Facility. The Denver 

Mint uses 100 percent clean energy by purchasing its 

electricity through Xcel Energy's wind energy program, 

Windsource. The U.S. Mint is also installing electric 

vehicle charging stations at all plants. In addition, the 

Climate Literacy Working Group partnered with the 

National Oceanic and Atmospheric Administration and 

successfully published a Climate 101 training for all staff. 

Additionally, Treasury published a Climate and 

Sustainability SharePoint site, which offers additional 

resources and references to all stakeholders.

GOAL 4: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure 

(Responsible Bureau/Office)

FY 20 FY 21 FY 22 FY 23 FY 23

Target Result vs Target

Treasury-wide Footprint (Thousands of

Square Feet) (Management)1

32,517 32,006 31,691 TBD 31,734 TBD 

Explanation of Results 

1The actual FY 2023 square footage of Treasury-wide real property is not available until December 2023, at which time the 

comparison can be made of actual results versus target.
DEPARTMENT OF THE TREASURY 33 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Goal 5: Modernize Treasury Operations 

We made progress in filling critical Diversity, Equity, 

Inclusion, and Accessibility (DEIA) leadership positions, 

expanding efforts to increase diversity in our talent 

pipeline and create a more inclusive workplace culture, 

and adjusting work routines to support a hybrid 

workforce. We also clarified our priorities regarding how 

we use data, beginning with building data capacity across 

the Department. Additionally, we issued an agency vision 

statement for customer experience, which is a key 

deliverable of our FY 2022 – 2026 Strategic Objective 5.4, 

to mature and embed strong customer experience 

practices across the Department.

Under this goal, our first strategic objective—identified as

a focus area for improvement in our FY 2023 SOAR 

process—focuses on developing a diverse pipeline for 

hiring and promotions, and investing in training and 

development opportunities to improve retention and 

inclusion in our workforce. Our second strategic 

objective—assessed as a focus area for improvement in

our FY 2023 SOAR process—focuses on modernizing our 

workplace infrastructure and work routines to enable an

engaged and inclusive workforce of the future. Our third 

strategic objective centers on strengthening our data 

infrastructure, data governance, and analytic capabilities 

within the workforce. Our fourth strategic objective is to

mature customer experience practices across the 

Department, while increasing American’s trust in

government.

RECRUIT AND RETAIN A DIVERSE AND INCLUSIVE 

WORKFORCE

We established the Office of Diversity, Equity, Inclusion, 

And Accessibility (ODEIA) to serve as a center of

excellence to modernize the Department’s overall DEIA 

strategy and drive cohesive implementation and 

accountability across the departmental offices and 

bureaus. The new structure allows for greater, more 

concentrated, and dedicated focus on civil rights 

compliance and mitigation, as well as DEIA 

accountability, competencies, and transparency.

The newly centralized ODEIA is responsible for four 

essential functions:

• carrying out policy analysis on racial and economic 

issues; 

• developing a workforce that reflects the diversity of

the nation; 

• ensuring fair and equitable business utilization; and 

• guaranteeing compliance with civil rights laws and 

regulations. 

To improve our ability to implement these key functions, 

we expanded our Office of Minority and Women Inclusion 

(OMWI) Treasury-wide and aligned OMWI with our 

Office of Civil Rights and Equal Employment 

Opportunity (OCRE), formerly known as the 

Departmental Office's Office of Civil Rights and 

Diversity. In addition, ODEIA added a new component, 

the Treasury Equity Hub. This new office focuses on

economic analysis and public policy to ensure DEIA is

Source: Adobe Stock

Newly Centralized ODEIA 

The newly centralized ODEIA is responsible for four 

essential functions: carrying out policy analysis on

racial and economic issues; advancing efforts to

develop a workforce that reflects the diversity of the 

nation; ensuring fair and equitable business 

utilization; and guaranteeing compliance with civil 

rights laws and regulations. 
34 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

central to our efforts of reaching and providing services 

and resources to the public. 

In FY 2022, ODEIA began recruiting for key senior 

leadership positions, including the Chief of the ODEIA, 

the OCRE Director, and the Director of the Equity Hub. 

In FY 2023, we appointed Directors of the OCRE and the 

Equity Hub, and we will continue recruiting for the 

ODEIA Chief position in FY 2024. 

Bureaus have expanded their critical leadership in DEIA 

efforts as well. For example, the U.S. Mint, BEP, and 

Fiscal Service have each hired Chief Diversity or Equity 

Hub Officers. Other bureaus have expanded the role of

their Equal Employment Opportunity Officers to include 

DEIA efforts.

To ensure we develop a workforce that reflects the 

diversity of the nation, Fiscal Service began posting 

vacant positions in all its locations, where appropriate. 

Fiscal Service plans to increase partnerships with 

minority-serving institutions, improve inclusive and 

accessible language in recruitment and public-facing 

materials, expand outreach to minority-serving networks, 

and use alternative job listing sites. In addition, Fiscal 

Service continued quarterly rotational leadership 

development opportunities for Director-level employees in

FY 2023. 

TTB continued efforts to increase diversity in its talent 

pipeline and to create a more inclusive workplace culture. 

TTB established an Inclusion, Diversity, Engagement, 

Equity and Accessibility Council comprised of a crosssection of bureau volunteers to generate input for TTB

workforce engagement and diversity strategies. TTB is

also continuing a multi-year initiative to develop career 

development models by TTB job series based on

competency and proficiency level. These tools provide 

transparent expectations on capabilities employees must 

demonstrate to advance by job series and grade, and are 

an important part of TTB’s plans to prepare candidates 

for leadership positions.

In addition, FinCEN actively participates in virtual 

Historically Black Colleges and Universities (HBCU) 

recruiting events, in part through our ongoing outreach to

HBCU students and alumni. FinCEN also participates in

the Annual National HBCU Week Conference, planned 

under the leadership of the White House Initiative on

HBCUs and coordinated by the Department of Education. 

FinCEN engages with the HBCU Museum and the Black 

Scholarship Fund on career opportunities.

Additionally, in FY 2023, we established an agency-wide 

recruitment program. The new program, which includes 

a council with diverse representatives from across the 

agency, will establish an employee value proposition and 

foster new talent partnerships both internally and 

externally. 

FUTURE WORK ROUTINES

We are committed to an evidence-based approach to

developing the future of work, including adjusting work 

routines, and are rightsizing and equipping office spaces 

to support a hybrid workforce. Future efforts will focus 

on creating an equitable experience by enabling leaders 

and teams to use available tools and facilities effectively 

to build and maintain strong relationships and avoid 

proximity and in-group biases. 

In FY 2023, we established agency and component Work 

Environment Plans in accordance with OMB 

Source: Adobe Stock

Future of Work 

We are committed to an inclusive and evidence-based 

approach to developing the future of work, including 

adjusting work routines, and are rightsizing and 

equipping office spaces to support a hybrid workforce. 
DEPARTMENT OF THE TREASURY 35 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Memorandum M-23-15, Measuring, Monitoring, and 

Improving Organizational Health and Organizational 

Performance in the Context of Evolving Agency Work 

Environments. We continue to increase the amount of

meaningful in-person interactions across the 

organization. In addition, our bureaus have 

experimented with innovative, flexible work 

arrangements to fill critical talent gaps and improve 

retention, such as piloting remote work and maxi-flex 

work schedules.

As work routines, employee expectations, and customer 

needs evolve, we continuously evaluate our practices 

through the Quarterly Performance Review, 

Organizational Health Workbook, and other 

organizational performance health measurement 

processes. We also completed an evaluation of telework 

policies and practices.

BETTER USE OF DATA

In FY 2023, we established the role and function of the 

Chief Data Officer and clarified priorities, beginning with 

building data capacity, increasing data literacy, 

improving data infrastructure, and facilitating a common 

lexicon across our Department. 

In FY 2023, USAspending.gov launched a new homepage 

that improves the experience of users by re-organizing 

content and presenting a friendly face to reduce what was 

previously reported as being intimidating. The 

USAspending.gov team also created several features to

help users understand data, including an interactive tool 

called “About the Data,” and launched eight new videos 

on YouTube to help users understand how to use 

USAspending.gov answer common questions. Finally, 

given the importance of Congressional stakeholders, 

USAspending.gov updated features across the site to

reflect new Congressional Districts, while ensuring that 

all data is backwards compatible to show prior 

Congressional Districts.

In FY 2024, we will expand our capacity to visualize and 

mature data by developing a data governance operational 

model with a focus on data stewardship and data sharing 

responsibilities. Implementing a Treasury-wide data 

catalogue will enable our workforce to access our 

metadata for analysis in support of mission priorities. 

We are poised to better assess our commercial data 

investments by: (1) expanding the utility of our data 

inventory to capture each bureau’s third-party data 

inventory; (2) building a data strategy to consolidate the 

investment, leading to a strategic sourcing effort that 

better leverages our buying power; and (3) potentially 

reducing cost burdens and improving data sharing. 

CUSTOMER EXPERIENCE PRACTICES

Despite limited resources, we continue to make 

significant progress strengthening customer experience 

governance and capacity. We issued an agency vision 

statement for customer experience: “Earning your trust 

through reliable, exceptional service.” Our customer 

experience vision statement is a key deliverable of our 

FY 2022 – 2026 Strategic Objective 5.4, to mature and 

embed strong customer experience practices across the 

Department. Our customer experience vision statement 

builds on previous actions that established the Treasury 

Customer Experience Community of Practice, which 

provides a senior leadership forum to promote successful 

adoption of customer experience practices across our 

bureaus and offices through collaboration and information 

sharing.

The Customer Experience Community of Practice has 

sufficiently matured to allow the transition to bureau 

leadership and continues to facilitate meaningful 

coordination, sharing, and collaboration across service 

providers.
36 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

GOAL 5: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure 

(Responsible Bureau/Office)

FY 20 FY 21 FY 22 FY 23 FY 23 

Target Result vs Target

Percent of Aged Hardware (IRS)1 16.0% 9.3% 7.1% 19.9% 20.0% Met 

Treasury-wide EVS Satisfaction Index 

(Management)2

71% 67% 65% 65% 65% Met 

Explanation of Results 

1The percent of aged hardware was 19.9 percent which met the 20 percent target for FY 2023. The major driver in exceeding 

this goal was the focus on hardware selections and timely refresh implementations. For FY 2024, IRS will continue with riskbased management to prioritize funding of assets with highest risk values.

2The Federal Employee Viewpoint Survey (FEVS) is the primary tool that agencies use to measure employee sentiment. Each 

year, we track and report on the FEVS Overall Satisfaction Index which comprises three FEVS satisfaction questions. 
DEPARTMENT OF THE TREASURY 37 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

ENTERPRISE RISK MANAGEMENT

FRAMEWORK

OMB Circular No. A-123, Management’s Responsibility 

for Enterprise Risk Management and Internal Control, 

provides guidance to federal managers to effectively 

manage risks to achieve strategic objectives. 

Management, together with the Chief Risk Officer (CRO), 

is responsible for establishing a governance structure to

implement a robust process of risk management and 

internal control, as well as an enterprise-wide risk profile. 

Successful implementation requires us to establish and 

foster an open and transparent culture that encourages 

personnel to communicate information about potential 

risks and other concerns that impact our programs and 

operations. 

The CRO meets regularly with senior leaders to discuss 

top risks to critical programs, systems, projects, and 

priorities, including response strategies. The Enterprise 

Risk Management (ERM) Council, chaired by the Deputy 

CRO, brings together risk managers from each of our 

bureaus and policy offices on a bi-monthly basis to share 

best practices and discuss risks. In October 2022, the 

Assistant Secretary for Management aligned the ERM

program to the Office of Strategy, Planning, and 

Performance Improvement (OSPPI) to improve its 

integration with our strategic direction. OSPPI works 

with our bureaus and policy offices to monitor and 

annually update our risk profile. 

Beyond its work within the Department, the Deputy CRO

leads an interagency ERM community of practice 

including officials from more than 50 federal agencies. 

This group originated from our efforts to support agencies 

in their implementation of ERM, including the Playbook:

Enterprise Risk Management for the U.S. Federal 

Government as amended in 2021. This government-wide 

working group meets bimonthly to discuss common risks 

and various methods of implementing the guidelines of

the circular.

RISKS AND CHALLENGES

Through the FY 2023 SOAR and enterprise risk 

management process, we identified the following crosscutting risks.

Evolving Cyber Risks: We and financial sector partners 

face increasing attacks from cyber criminals and state 

actors attempting to disrupt operations or steal data from 

sensitive systems. The tactics, techniques, and 

procedures that these threat actors employ are constantly 

evolving.

Human Capital: There is a potential for an erosion in our 

mission capability due to human capital challenges, such 

as in the areas of hiring, knowledge management, 

diversity and inclusion, and employee engagement. This 

risk may be exacerbated when paired with changing 

mission and skill requirements. 

Enterprise Prioritization: We may not be able to achieve 

the fullest extent of our objectives and perform our 

mission to its greatest capacity if we cannot allocate 

resources effectively in the current resource‐constrained 

environment. This risk is exacerbated by uncertain 

funding, new or changing legislative requirements, and 

reduced capacity. 

Data and Evidence: If we are not able to leverage data as

a strategic asset, then poor data quality may deteriorate 

our decision‐making and impede our ability to generate 

evidence for effective use. Insufficient technology 

infrastructure, poor data governance, lack of accessibility 

and reliability of data, and the inability to interpret data 

compounded by process inefficiencies may hinder our 

ability to use and share data and evidence to support 

decision‐making.

Operational Resilience: We may face significant 

disruptions to operations, due to climate change, natural 

disasters, terrorist events, pandemics, or lapse in

appropriations, which could inhibit successful mission 

delivery, curtail progress in critical areas, and introduce 

challenges for agency employees and contractors as well 

as our customers and taxpayers. 
38 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

Procurement, Acquisition, and Vendor Management: The 

inability of our offices and bureaus to timely acquire 

necessary products and services, initiate work under 

contracts, and effectively monitor contract execution and 

budget may result in failure to execute mission, loss of

funding, and public loss of confidence in us.

CLIMATE-RELATED RISKS AND CHALLENGES

Climate change is already impacting or is anticipated to

impact our national infrastructure, operations, 

agriculture, human health and labor productivity, and 

household financial security. The likelihood of extreme 

weather events that could threaten our ability to fulfill 

time‐sensitive tasks is increasing. Highly visible 

disruptions to our operations may reduce public 

confidence in government and financial markets. 

We issue broad guidelines rather than overly restrictive 

instructions for conducting climate risk assessments as

we have diverse missions and operations. These 

guidelines included, but were not limited to, key factors 

such as flooding, heat, and extreme weather (e.g.,

hurricanes). Currently, we are using our climate action 

plan to guide investments towards enhancing the 

resilience of our buildings. Additionally, we are working 

to improve the access to and quality of climate data and 

analytical tools to better inform decision‐making across 

the financial system. As noted above, this year the OFR 

launched JADE, which supports the FSOC and its 

member agencies researching climate-related financial 

risks. Finally, we are continuing to coordinate with 

regulators through the FSOC to facilitate information 

sharing, analysis, and capacity building on climaterelated financial risks. This year we launched the 

Climate-related Financial Risk Advisory Committee 

(CFRAC) within FSOC to receive information and 

analysis on climate‐related financial risks from a broad 

array of stakeholders. 

We are committed to using our broad and far-reaching 

policy influence to lead and support Executive Order 

14008, Tackling the Climate Crisis at Home and Abroad. 

We will play a significant role working with other federal 

agencies, foreign governments, and international 

financial institutions to stimulate global action on

addressing climate change, environmental justice, and 

working to prevent climate change-created economic and 

financial crises.

Our latest Climate Action Plan can be found on our 

website: https://home.treasury.gov/about/budget-financialreporting-planning-and-performance/climate-action-plan.
DEPARTMENT OF THE TREASURY 39 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

FY 2024 STRATEGIC OUTLOOK

Our FY 2022 – 2026 Strategic Plan, published in March 

2022, describes the long-term goals and objectives we aim 

to achieve during this Administration. In September 

2023, we updated our FY 2022 – 2026 Strategic Plan to

reflect our progress, including updating our goals and 

objectives to reflect the most relevant initiatives and 

stakeholder feedback, as well as further specifying our 

desired outcomes and measures/indicators of success. 

The updated strategic plan includes language that better 

describes the unique status of Tribal Governments and 

the nature of our work with Tribal communities and 

governments, updates to strategic objectives that reflect 

initiatives associated with the IRA, and updates to reflect 

our priorities in global climate commitments, among 

others. 

Our FY 2023 SOAR outlined several critical leadership 

actions in the following priority areas for the coming year: 

(1) economic measures to advance national security; (2) 

transparency in the financial system; (3) climate 

incentives and investment; (4) sustainable Treasury 

operations; and (5) recruiting and retaining a diverse and 

inclusive workforce. 

Looking ahead, we will make progress in these areas and 

other key priorities through several targeted initiatives:

• identify different mechanisms to encourage progress 

towards beneficial ownership accountability (Goal 2:

Enhance National Security); 

• continue the current APG on payment experience 

(Goal 3: Protect Financial Stability and Resiliency); 

• implement tax incentives for investments in clean 

energy, domestic manufacturing, and cost-saving 

energy efficiency as authorized by the IRA (Goal 4:

Combat Climate Change); 

• continue implementing OMB Memorandum 23-15, 

Measuring, Monitoring, and Improving 

Organizational Health and Organizational 

Performance in the Context of Evolving Agency Work 

Environments, (Goal 5: Modernize Treasury 

Operations). 

In addition, we will continue to work diligently to support 

efforts to combat climate change as articulated in the 

IRA. We have made strides and will continue to advance 

global commitments in combating climate change, 

including setting foundations to strengthen finance for 

emerging markets, climate adaptation, and 

demonstrating leadership in the Green Climate Fund. 
40 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

FINANCIAL HIGHLIGHTS – FINANCIAL OVERVIEW

The financial highlights below are an analysis of the 

information included in our consolidated financial 

statements that appear within Part 2, “Financial Section”

of this report. Our principal financial statements have 

been prepared to report the agency’s financial position, 

and results of operations, pursuant to the requirements of

31 USC 3515(b). These consolidated financial statements 

have been prepared from the books and our records in

accordance with federal generally accepted accounting 

principles (GAAP) and the formats prescribed by OMB. 

The consolidated financial statements are in addition to

the financial reports used to monitor and control 

budgetary resources, which are prepared from the same 

books and records. The financial statements are for a 

component of the U.S. government, a sovereign entity.

The chart below presents changes in key financial 

statement line items as of and for the fiscal year ended 

September 30, 2023 compared to September 30, 2022.

 

Summary Financial Information (dollars in billions) 

2023 2022 $ Change % Change 

Total Assets $ 37,288.0 $ 34,846.9 $ 2,441.1 7.0 % 

Total Liabilities $ 36,491.9 $ 33,991.1 $ 2,500.8 7.4 % 

Total Net Position $ 796.1 $ 855.8 $ (59.7) (7.0)% 

Total Net Cost of Treasury Operations $ 78.5 $ 186.8 $ (108.3) (58.0)% 

Federal Debt Interest Costs, Net $ 826.6 $ 675.9 $ 150.7 22.3 % 

Other Federal Costs, Net $ 15.9 $ 17.2 $ (1.3) (7.6)% 

GSEs Non-Entity Cost (Revenue), Net $ (16.7) $ (2.9) $ (13.8) 475.9 % 

COVID-19 Non-Entity (Revenue) Cost, Net $ (1.3) $ 1.9 $ (3.2) (168.4)% 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 902.1 $ 878.1 $ 24.0 2.7 % 

Total Budgetary Resources $ 1,349.0 $ 1,341.8 $ 7.2 0.5 % 

Agency Outlays, Net $ 871.1 $ 828.2 $ 42.9 5.2 % 

Net Revenue Received (Custodial) $ 4,061.5 $ 4,392.5 $ (331.0) (7.5)% 

Financial Overview. Our financial performance as of and 

for the fiscal year ended September 30, 2023, reflects 

several major trends. Most significantly, the outstanding

federal debt, including interest, rose by $2.2 trillion, to

$33.2 trillion, to finance the U.S. government’s

operations. 

Additionally, our “Total Net Cost of Treasury Operations 

and Non-Entity Costs” for FY 2023 increased by

$24.0 billion due to $148.8 billion of higher federal debt 

interest costs, corresponding to the increase in federal 

debt as mentioned above, partially offset by a 

$108.3 billion decrease in net cost primarily associated 

with the financial assistance we provided in support for 

the COVID-19 pandemic relief efforts over the past 

several years, as well as $13.8 billion of higher revenue 

from our investments in two Government-Sponsored 

Enterprises (GSEs) – the Federal National Mortgage 

Association (Fannie Mae) and the Federal Home Loan 

Mortgage Corporation (Freddie Mac) – pursuant to our 

Senior Preferred Stock Purchase Agreements (SPSPAs), 

as amended (refer to Note 11 of the Consolidated 

Financial Statements). 
DEPARTMENT OF THE TREASURY 41 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Figure 1: Total Assets, Total Liabilities, and Net Position (in billions) 

Total Assets of $37.3 trillion at September 30, 2023 

consist of a receivable due from the General Fund of the 

U.S. government (General Fund) of $33.2 trillion, intragovernmental loans and interest receivable of

$2.0 trillion, and fund balance and various other assets 

totaling $2.1 trillion (Figure 2). 

Figure 2: FY 2023 Total Assets (Composition) 

The $2.4 trillion (or 7.0 percent) increase in total assets at

the end of FY 2023 over the prior year is primarily due to

a $2.2 trillion increase in our receivable, “Due From the 

General Fund,” which corresponds to a $2.2 trillion 

increase in federal debt and interest payable. The “Due 

From the General Fund” asset represents future funds 

required from the General Fund to pay borrowings from 

the public and other federal agencies.

Intra-governmental “Loans and Interest Receivable”

represents loans issued primarily by the Fiscal Service to

other federal agencies for their own use or for the 

agencies to loan to private sector borrowers whose loans 

are guaranteed by the federal agencies. This receivable 

increased by $341.7 billion (or 21.2 percent) during 

FY 2023 due to higher borrowings from the Department 

of the Education, Federal Deposit Insurance Corporation 

(acting in its capacity as Receiver), and Department of

Housing and Urban Development—to fund their 

programs. 

Other assets primarily include “Fund Balance,” “Cash,

Foreign Currency, and Other Monetary Assets,” “Taxes 

Interest, and Other Receivables, Net,” “Advances and 

Prepayments,” and “Investments in Government 

Sponsored Enterprises.” Other assets totaling 

$2.1 trillion decreased by $78.3 billion or (3.6 percent), 

largely reflecting a decrease in our “Taxes, Interest, and 

Other Receivables, Net” and “Advances and 

Prepayments”. 

The “Taxes, Interest, and Other Receivables, Net,”

primarily comprised of federal taxes receivable, decreased 

by $53.0 billion principally due to decreased unpaid 

transition taxes on foreign earnings pursuant to Internal 

Revenue Code Section 965(h), coupled with the effect of

taxpayer payments received for the deferred employers’

portion of Federal Insurance Contributions Act Social 

Security taxes due to the U.S. government pursuant to

$100

$300

$500

$700

$900

$1,100

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Total Assets $25,614.5 $32,200.1 $32,591.1 $34,846.9 $37,288.0

Total Liabilities $25,125.0 $31,152.8 $31,626.2 $33,991.1 $36,491.9

Net Position $489.5 $1,047.3 $964.9 $855.8 $796.1

Net Position

Total Assets and 

Total Liabilities
42 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

the Coronavirus Aid, Relief, and Economic Security Act

(CARES Act) (refer to Note 8 to the Consolidated 

Financial Statements entitled Taxes, Interest, and Other 

Receivables, Net).

Other assets also reflect a decrease of $53.3 billion in

“Advances and Prepayments,” which represents 

additional liquidation of advances primarily paid to state, 

local, territorial, and Tribal governments pursuant to the 

COVID-19 related legislations enacted during FY 2021 

and FY 2020 (refer to Note 10 within the Consolidated 

Financial Statements). 

 

Figure 3: FY 2023 Total Liabilities (Composition)

Total Liabilities of $36.5 trillion at September 30, 2023 

principally consist of the federal debt held by the public, 

including interest, of $26.3 trillion (Figure 3), which was 

mainly issued as Treasury Notes, Bonds, and Bills. 

Liabilities also include intra-governmental liabilities 

totaling $10.0 trillion (of which $6.9 trillion represent 

principal and interest of federal debt in the form of

Treasury securities held by other federal agencies), and 

various other liabilities totaling $195.6 billion. Federal 

debt, including interest, held by the public and other 

federal agencies together totaled $33.2 trillion at the end 

of FY 2023, an increase of $2.2 trillion over the prior year. 

This increase in the federal debt accounts for the 

$2.5 billion (or 7.4 percent) increase in total liabilities 

over the prior year. Federal debt is needed to finance the 

U.S. government’s operations. 

Total Net Position of $796.1 billion at September 30, 2023

represents the combined total of our cumulative results of

operations and unexpended appropriations at the end of

the fiscal year. The $59.7 billion decrease in the net 

position at the end of FY 2023 was principally 

attributable to a decrease in unexpended appropriations 

remaining available to support pandemic relief programs 

authorized through the American Rescue Plan Act of 2021

(ARP), Consolidated Appropriations Act, 2021 (CAA), and 

the CARES Act.

Figure 4: Net Cost of Treasury Operations and Non-Entity Costs (in billions)

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Net Cost of Treasury Operations $16.6 $128.5 $137.0 $186.8 $78.5

Net Non-Entity Costs $526.0 $502.7 $428.3 $691.3 $823.5

Total Net Cost $542.6 $631.2 $565.3 $878.1 $902.1

Total Net Cost

Net Cost of Treasury Operations

and Net Non-Entity Costs
DEPARTMENT OF THE TREASURY 43 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

Total Net Cost of Treasury Operations and Non-Entity 

Costs is presented on our Consolidated Statements of Net 

Cost (Figure 4). “Net Cost of Treasury Operations”

represents the gross costs, net of earned revenues, we

incurred related to our own entity activities comprising 

both operating bureaus and Departmental Offices that 

are consolidated with the Department. “Net Non-Entity 

Costs” represents the gross costs, net of earned revenues, 

we incurred on behalf of the U.S. government (or General 

Fund), and primarily include “Federal Debt Interest 

Costs, Net” (net of interest revenue from loans), “Other

Federal Costs, Net,” “GSEs Non-Entity Revenue, Net,”

“COVID-19 Non-Entity (Revenue) Cost, Net,” and other 

federal costs and revenues. 

“Total Net Cost of Treasury Operations and Non-Entity 

Costs” totaled $902.1 billion and $878.1 billion for FY

2023 and FY 2022, respectively, an increase of

$24.0 billion (or 2.7 percent) over the prior year. Net 

costs associated with our entity operations (“Net Cost of

Treasury Operations”) decreased $108.3 billion year-overyear primarily as a result of decreased costs associated 

with our pandemic relief programs. Net costs associated 

with our non-entity operations (“Net Non-Entity Costs”)

increased by $132.2 billion year-over-year, primarily 

driven by a combination of $148.8 billion of higher federal 

debt interest costs, partially offset by $13.8 billion of

increased revenue from our GSE investments.

Figure 5 : Net Cost of Treasury Operations by Strategic 

Program (in billions)

Net Cost of Treasury Operations is presented on our 

Consolidated Statements of Net Cost based on the costs 

and revenues associated with three major program 

segments for achieving Treasury’s mission—Economic, 

Financial, and Security (Figure 5). The following is a 

description of each program segment as it relates to our 

mission.

Table 2: Program Segments by Treasury Mission 

Program 

Segments Treasury Mission 

Economic 

Program 

Promoting economic prosperity and maintaining 

stability, encouraging sustainable and global 

economic growth 

Financial 

Program 

Managing the government’s finances and 

resources effectively, protecting the integrity of

financial systems that are critical to the nation’s

financial infrastructure, and fostering improved 

governance in financial institutions 

Security 

Program 

Enhancing national security by implementing 

economic sanctions against foreign threats to the 

U.S., identifying and targeting the financial support 

networks of national security threats, and 

improving the safeguards of the financial systems 

Our “Net Cost of Treasury Operations” totaled 

$78.5 billion for FY 2023 compared to $186.8 billion for 

FY 2022, a decrease of $108.3 billion (or 58.0 percent). 

This decrease primarily stems from the year-over-year 

$101.2 billion net decrease in costs associated with 

pandemic relief efforts (refer to Note 10 of the 

Consolidated Financial Statements). 

Federal Debt Interest Costs, Net (a non-entity cost) 

totaling $826.6 billion for FY 2023 primarily reflect 

interest expense on the federal debt, net of interest 

income on loans. This net cost increased $150.7 billion (or 

22.3 percent) from the prior year, primarily attributable 

to an increase in interest rates, and an increase in

outstanding debt held by the public.

Other Federal Costs, Net (a non-entity cost) of

$15.9 billion in FY 2023 decreased by $1.3 billion from the 

prior year primarily due to a decrease in interest expense 

incurred on uninvested credit program funds held on

behalf of other federal agencies. 

GSEs Non-Entity Revenue, Net (a non-entity revenue) is

reported as a net revenue totaling $16.7 billion and 

$2.9 billion for FY 2023 and FY 2022, respectively. GSE 

non-entity revenue is driven by fair value changes to our 

GSE investments and changes to the liquidation 

$61.0

$16.6

$0.5

$170.6

$15.2

$0.5

Economic Financial Security

FY 2023 FY 2022
44 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

preference of our GSE senior preferred stock. The asset 

value of our GSE investments grew by $16.7 billion in

FY 2023 compared to FY 2022, reflecting a fair value 

valuation loss in our senior preferred stock and warrants 

of $3.8 billion in FY 2023, which was more than offset by

a $20.5 billion growth in the liquidation preference of the 

senior preferred stock. The FY 2023 $3.8 billion fair 

value valuation loss when compared to the $27.9 billion 

fair value loss in the prior year, resulted in a year-overyear gain of $24.1 billion as reflected in the current fiscal 

year’s net costs of non-entity operations. The $24.1 billion 

year-over-year fair value gain, offset by a $10.3 billion 

year-over-year decrease in our senior preferred stock 

liquidation preference (discussed below), resulted in a 

total $13.8 billion year-over-year change in this line.

Pursuant to amendments to the SPSPAs that, among 

other things, increased the GSEs’ capital reserve 

amounts, the GSEs will not pay a quarterly dividend until 

they achieve their regulatory minimum capital 

requirement. We received no cash dividends for the fiscal 

years ended September 30, 2023 and 2022 as the GSEs’

had not achieved their capital requirement as of the fiscal 

years ended (refer to Note 11 to the Consolidated 

Financial Statements). As compensation to Treasury for 

the replacement of the dividend, the SPSPA amendments 

call for the liquidation preference of the GSEs’ senior 

preferred stock to increase by a specified amount until 

each GSE has achieved its capital reserve requirement. 

The liquidation preference of our senior preferred stock 

increased in value by $20.5 billion in FY 2023 compared 

to $30.8 billion in FY 2022, pursuant to the amended 

SPSPA, which had the effect of increasing the year-overyear net costs of non-entity operations by $10.3 billion. 

The GSEs agreed that, at the end of each fiscal quarter, 

through and including the capital reserve end date, our 

liquidation preference will be increased by an amount

equal to the increase in the GSEs’ net worth amount, if

any, during the immediately prior fiscal quarter. 

COVID-19 Non-Entity (Revenue) Cost, Net (a non-entity 

revenue or cost) primarily reflects fair value losses or

gains recognized on financial instruments received from 

U.S. airlines in FY 2020 and 2021 as appropriate 

compensation to the U.S. government for the financial 

support provided to preserve aviation jobs during the 

pandemic. As a provision of the CARES Act in FY 2020, 

and further extended by the CAA and ARP in FY 2021, 

the U.S. government received promissory notes and 

common stock warrants for providing financial support to

the aviation industry. We recognized a fair value gain of

$1.3 billion in FY 2023 compared to a $1.9 billion fair 

value loss in FY 2022 on these instruments. 

Figure 6 : Total Budgetary Resources and Agency Outlays, Net (in billions)

Total Budgetary Resources of $1.3 trillion in FY 2023

(Figure 6) increased by $7.2 billion (or 0.5 percent), 

primarily due to a $84.4 billion increase in

appropriations, partially offset by a $73.8 billion yearover-year reduction in unobligated balances brought 

forward from the prior years. 

The $84.4 billion increase in appropriations stems 

primiarly from a $163.0 billion year-over-year increase in

new resources required to finance the increased public 

$930.3 

$1,805.8 

$1,550.0 

$1,341.8 $1,349.0 

$538.1 

$718.3 $832.6 $828.2 $871.1 

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Total Budgetary Resources Net Outlays
DEPARTMENT OF THE TREASURY 45 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

debt (including increased average interest rates, which 

were partially offset by a decrease in inflation 

adjustments), partially offset by $81.4 billion of fewer 

resources received to implement the provisions of the IRA 

which was passed into law in August 2022. The IRA 

authorized the IRS to offer tax incentives for climatefriendly investments. The $73.8 billion reduction in

unobligated balances brought forward is primarily 

attributable to fewer pandemic relief program 

unobligated resources carried over from FY 2022 

compared to FY 2021.

Agency Outlays, Net of $871.1 billion were higher in FY

2023 (Figure 6) by $42.9 billion (or 5.2 percent) primarily 

due to an increase in interest payments on public debt as

discussed above, partially offset by a decrease in outlays 

in the form of financial assistance payments primarily in

connection with pandemic relief programs. 

Figure 7 : Net Revenue Received (Custodial) (in billions)

Net Revenue Received (Custodial), representing the net 

revenue we collect on behalf of the U.S. government, 

includes various taxes, primarily income taxes, as well as

user fees, fines and penalties, and other revenue 

(Figure 7). Over 90 percent of these revenues (before 

refunds) are related to income and social security taxes. 

Net revenue received was $4.1 trillion for FY 2023, a 

decrease of $0.3 trillion (or 7.5 percent) over the prior 

fiscal year. This decrease is attributable mainly to an

overall decline in income tax collections, primarily from 

individuals and corporations, coupled with decreased 

deposits of earnings from the Federal Reserve due to

increased interest rates.

$3,190.2 

$2,863.6 $3,100.8 

$4,392.5 

$4,061.5 

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
46 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

MANAGEMENT ASSURANCES

THE SECRETARY’S ASSURANCE STATEMENT

The Department of the Treasury’s management is

responsible for managing risks and maintaining effective 

internal control and financial management systems to

meet the objectives of the Federal Managers’ Financial 

Integrity Act (FMFIA). We conducted our assessment of

risk and internal controls in accordance with OMB 

Circular A-123, Management’s Responsibility for 

Enterprise Risk Management and Internal Control. 

Based on our assessment, we can provide reasonable 

assurance that, in accordance with Section 2 of the 

FMFIA, Treasury’s internal control over operations, 

reporting, and compliance with laws and regulations were 

operating effectively as of September 30, 2023. In

addition, we can provide reasonable assurance that, as of

September 30, 2023, we are in substantial conformance 

with the federal financial management systems 

requirements of Section 4 of the FMFIA, with the 

exception of the significant deficiency related to the 

financial management systems at the IRS. 

As a result of the significant deficiency at the IRS, our 

financial management systems are not in substantial 

compliance with the Federal Financial Management 

Improvement Act (FFMIA) as of September 30, 2023. In

FY 2023, the Fiscal Service successfully remediated its 

prior year significant deficiency related to its financial 

management systems. Our remediation commenced in

FY 2022 with the elimination of that portion of the 

significant deficiency related to the Fiscal Service’s debt 

management systems, and the remaining portion of the 

deficiency related to its cash management systems was 

eliminated in FY 2023. 

As demonstrated by the elimination of the significant 

deficiency of the Fiscal Service’s financial management 

systems over the past two years, we continue to make 

progress in remediating our deficiencies and remain 

committed to focusing management’s attention and 

resources on appropriate corrective actions. Overall, we

continue our efforts to ensure high standards, minimize 

internal control weaknesses, and meet federal financial 

management systems requirements. Additional 

information on the lack of compliance can be found in

Part 3, Section A, of this report. 

Janet L. Yellen 

Secretary of the Treasury 

November 15, 2023 
DEPARTMENT OF THE TREASURY 47 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT 

SYSTEMS, CONTROLS AND LEGAL COMPLIANCE

FMFIA

Background 

The FMFIA requires executive branch agencies to

establish and maintain internal control and financial 

systems to provide reasonable assurance that: 

• obligations and costs comply with applicable laws; 

• funds, property, and other assets are safeguarded 

against waste, loss, unauthorized use, or

misappropriation; and 

• revenues and expenditures applicable to agency 

operations are properly recorded and accounted for to

permit the preparation of accounts and reliable 

financial and statistical reports, and to maintain 

accountability over the assets. 

OMB Circular A-123 provides the implementing guidance 

for FMFIA and defines management’s responsibility for 

establishing and assessing internal controls. The 

Circular also requires federal agencies to adhere to the 

U.S. Government Accountability Office’s (GAO) 

Standards for Internal Control in the Federal 

Government, and to evaluate and report on the 

effectiveness of the organization’s internal controls to

achieve: (1) the objectives of effective and efficient 

operations, (2) reliable reporting for internal and external 

use, and (3) compliance with applicable laws and 

regulations (FMFIA Section 2). Additionally, agencies are 

required to assess whether financial management 

systems comply with federal financial management 

systems requirements (FMFIA Section 4). 

Analysis of Controls 

The Secretary relies on the annual assurances of our 

principal bureaus and offices (components), which are 

supported by a comprehensive risk-based internal control 

evaluation plan. This plan includes a methodology that 

identifies and documents key controls and provides for 

the assessment and testing of those controls to provide 

reasonable assurance that the controls are designed, 

implemented, and operating effectively. As part of the 

evaluation process, we considered results of this extensive 

testing and assessment across the Department, as well as

independent audits conducted by the OIG and GAO. 

Internal Control over Financial Reporting 

In accordance with OMB Circular A-123, Appendix A,

Management of Reporting and Data Integrity Risk, we

also conducted an assessment of our internal controls over 

financial reporting. Our components assessed the 

effectiveness of their internal controls to support reliable 

financial reporting through testing the design and 

operating effectiveness of key internal controls for 

material transactions. Based on the results of this 

assessment we can provide reasonable assurance 

regarding the effectiveness of our internal control over 

financial reporting as of September 30, 2023. 

FFMIA AND FINANCIAL MANAGEMENT SYSTEMS

FFMIA

The FFMIA requires federal agencies to implement and 

maintain financial management systems that 

substantially comply with federal financial management 

systems requirements, applicable federal accounting 

standards, and the U.S. Standard General Ledger at the 

transaction level. A financial management system 

includes an agency’s overall financial operation, reflecting 

the people, processes, and technology to capture, classify, 

summarize, and report data in a meaningful manner to

support business decisions. 

FFMIA Section 803(c)(1) requires us to make an annual 

determination of the agency’s substantial compliance with 

Section 803(a) of the Act based on a review of relevant 

factors. We assess our financial management systems 

annually for conformance with the requirements of the 

revised OMB Circular A-123, Appendix D, Management 

of Financial Management Systems- Risk and Compliance, 

and other federal financial management system 

requirements. Our assessment process includes the use 

of the FFMIA Compliance Determination Framework, 

(the “Compliance Framework”) in OMB Circular A-123, 

Appendix D, which is a risk and evidence-based 
48 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

assessment model that leverages existing audits, 

evaluations, and reviews that auditors and agency 

management already perform. The Compliance 

Framework is an outcome-based approach to assessing 

FFMIA compliance through a series of financial 

management goals that are common to all agencies. 

In applying the Compliance Framework, we assess 

available information from audit reports and other 

relevant and appropriate sources, such as the Federal 

Information Security Modernization Act (FISMA) 

compliance activities, to determine whether our financial 

management systems substantially comply with FFMIA. 

We also assess improvements and ongoing efforts to

strengthen financial management systems and the impact 

of instances of noncompliance on overall financial 

management system performance. Based on the results 

of our overall assessment, we concluded that our financial 

management systems were not substantially compliant 

with federal financial management system requirements 

as of September 30, 2023, due to a significant deficiency

at the IRS. 

The IRS has a significant deficiency in internal control 

over financial reporting related to its unpaid assessments 

and information system controls. Specifically, this

deficiency relates to: (1) limitations in the ability of IRS’s

financial management systems to classify unpaid 

assessments and report tax receivable in accordance with 

federal accounting standards, and (2) unresolved and new 

internal control deficiencies related to information system 

controls. The IRS worked diligently during FY 2023 to

continue to enhance its IT security. The IRS continues to

implement a strategy and assessment process to verify 

the effectiveness of internal controls for the financial 

systems that affect the financial statements. This 

assessment supports the IRS’s overall internal control 

framework and helps mitigate deficiencies in the IT

environment. 

In FY 2023, the Fiscal Service successfully remediated its 

significant deficiency related to its financial management 

systems. Our remediation commenced in FY 2022 with 

the elimination of that portion of the significant deficiency 

related to the Fiscal Service’s debt management systems, 

and the remaining portion of the deficiency related to its 

cash management systems was eliminated in FY 2023. 

The Fiscal Service remains committed to making 

improvements necessary for maintaining compliance with 

federal financial management systems requirements. 

Financial Management Systems 

Our financial management systems framework consists of

two foundational components: (1) financial and mixed 

systems maintained by our components, and (2) the 

Treasury-wide Financial Analysis and Reporting System 

(FARS). Our bureaus process and record detailed 

financial transactions and submit summary-level data to

the FARS, which maintains the key financial data 

necessary for Treasury-wide consolidated financial 

reporting. This framework satisfies the financial 

operational and reporting needs of our reporting entities, 

as well as our internal and external reporting 

requirements. The FARS framework plays a key role in

our efforts to obtain an unmodified audit opinion. 

The FARS includes the following financial applications: 

• Treasury Information Executive Repository (TIER) —

a financial data repository used to consolidate and

validate bureau financial data and to support

external financial reporting requirements; and

• TIER Financial Statements (TFS) — a reporting

application used to produce monthly and annual

financial statements, notes, and other supporting

reports.

Our components submit summary-level financial data to

TIER monthly. The TFS application uses the bureau data 

to produce financial statements and report on a Treasurywide and component-level basis. 

Nineteen of our bureaus and offices use centralized 

financial management, budget formulation and 

performance management, and IT hosting provided by the 

Fiscal Service’s Administrative Resource Center (ARC). 

Additionally, the Treasury Executive Office for Asset 

Forfeiture (TEOAF) is making steady progress in their 

effort to migrate to ARC’s shared services by

October 2024. This effort will modernize and update 

TEOAF’s core financial management system, 

procurement system, and related support services. The 
DEPARTMENT OF THE TREASURY 49

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2023 AGENCY FINANCIAL REPORT

shared service approach enables bureaus and offices to

have access to core financial systems without maintaining

separate technical and system architectures. ARC also

provides administrative services in the areas of financial

management transaction processing, human resources,

procurement, and travel to our bureaus and offices as well

as to other federal entities to support core business

activities. Using shared services reduces the need for

Treasury to maintain duplicative financial management

systems, thereby promoting efficiency and cost savings

while enhancing the quality, timeliness, and accuracy of

financial management processes.

Goals and Supporting Strategies

Our financial system goals and supporting strategies

focus on improving, streamlining, and integrating current

bureau financial management systems, as well as the

current FARS applications, to support new financial

management requirements and to support data-driven

financial decision making by management. In FY 2023,

we made significant strides in our mission to migrate our

FARS applications to the Microsoft Azure cloud hosting

platform by FY 2024. The cloud adoption, once

completed, will allow for a more cost effective and secure

alternative that supports rapid deployment of new

information technology (IT) assets.

Along with bureau financial systems, the TIER and TFS

applications form a unified financial governance solution

that focuses on improving financial processes and

controls. These systems and applications help to reduce

operating costs; enable us to provide assurance over

financial data quality; and allow us to ensure that we can

provide timely, transparent, and well controlled financial

information.

We maintain an information security program for our

financial systems consistent with applicable FISMA

requirements, OMB policy and guidance, and NIST

standards and guidelines. Our systems undergo annual

security assessments, and we remediate security

weaknesses we identify through those assessments by

developing and implementing plans of action and

milestones. We monitor bureau conformance with

government-wide information technology security targets

and provide roll-up reports quarterly to OMB. 

Representatives of the OIG evaluate our compliance with

FISMA annually.

We continue to focus on financial innovation and

transformation. FY 2023 marked the first year of the

mandated use of the Government Invoicing (G-Invoicing)

solution, which Fiscal Service developed to help broker

Intragovernmental Buy/Sell Transactions and to assist

more broadly in reducing intragovernmental differences. 

The Fiscal Service continued to partner closely with

federal agencies and system vendors to drive

enhancements to G-Invoicing. FY 2023 also saw Fiscal

Service expedite the implementation of the Common

Approach to Identity Assurance (CAIA) in response to

Treasury’s requirement to implement multi-factor

authentication through CAIA to strengthen our

cybersecurity posture. In FY 2023, ARC implemented

eight new Robotic Process Automation (RPAs) to improve

efficiency, timeliness, and quality in its service operations

and business processes. 

OTHER LAWS

We are not aware of any violations of the Antideficiency

Act.

IMPROPER PAYMENTS

Background

The Payment Integrity Information Act of 2019 (PIIA)

requires agencies to annually report on all programs and

activities, identify those that may be susceptible to

significant improper payments, estimate annual improper

payments in the susceptible programs and activities, and

report the results of their improper payment activities. 

An improper payment is any payment that should not

have been made or that was made in an incorrect amount

(including both overpayments and underpayments). 

Risk Assessments and Results

In FY 2023, we completed a full program inventory and

performed risk assessments to identify programs that

have a significant risk of improper payments. We

perform our assessment of each program on a three-year

rotational schedule, excluding the Earned Income Tax
50 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS 

Credit (EITC), the American Opportunity Tax Credit 

(AOTC), the Additional Child Tax Credit (ACTC), and the 

net Premium Tax Credit (PTC), using the eleven 

qualitative risk factors identified in OMB Circular A-123, 

Appendix C, Requirements for Payment integrity 

Improvement. We assessed risks related to the amounts 

of payments processed relative to the OMB specified 

threshold amounts which define programs susceptible to

significant improper payments. As a result of prior risk 

assessments, we determined that the EITC, the AOTC, 

the ACTC, and the net PTC were susceptible to

significant improper payments. 

The EITC, AOTC, ACTC, and net PTC are refundable tax 

credits that offset income tax taxpayers owe. If the credit 

exceeds the amount of taxes due, the IRS provides a 

refund payment to those who qualify. The IRS estimates 

that for FY 2023, 33.5 percent ($21.9 billion) of the total 

EITC payments of $65.4 billion were improper. For the 

AOTC, the IRS estimates that for FY 2023, 31.6 percent 

($1.7 billion) of the total payments of $5.2 billion were 

improper. For the ACTC, the IRS estimates that for FY

2023, 14.5 percent ($.5 billion) of the total payments of

$3.8 billion were improper. For Net PTC, the IRS 

estimates that for FY 2023, 26.0 percent ($1 billion) of the 

total payments of $3.7 billion were improper. The IRS 

has a robust enforcement program for its refundable tax 

credits which consist of examinations and audits, math 

error notices, and document matching. 

We are reporting improper payment estimates for these 

four refundable tax credits in accordance with OMB 

Circular A-123, Appendix C. However, it is our position 

that refundable tax credits are more appropriately 

addressed in the Tax Gap (see Part 3, Section B: Tax Gap 

and Tax Burden, of this report), which is how we manage 

noncompliance. Additional information on refundable tax 

credits and improper payment reporting can be found in

Part 3, Section D: Payment Integrity. 

Payment Recapture Audits 

The PIIA requires agencies to conduct payment recapture 

audits (also known as recovery audits) for each program 

and activity that expends $1 million or more annually, if

conducting such audits would be cost-effective. We

performed the payment recapture activities in accordance 

with OMB Circular A-123, Appendix C. Details on our 

improper payments and results can be found at

https://paymentaccuracy.gov/. 
PART 2: 

FINANCIAL SECTION

Message from the Assistant Secretary 

For Management and Deputy Chief 

Financial Officer .................................................................53 

Inspector General’s Transmittal Letter ...................................55

Independent Auditors’ Report ................................................57

Management’s Response to Independent 

Auditors’ Report ................................................................63

Financial Statements ..............................................................64

Notes to the Financial Statements .........................................72 

Required Supplementary Information 

(Unaudited) ......................................................................176
 

 
DEPARTMENT OF THE TREASURY 53 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

MESSAGE FROM THE ASSISTANT SECRETARY FOR MANAGEMENT AND 

DEPUTY CHIEF FINANCIAL OFFICER 

In fiscal year 2023, Treasury continued to pursue an aggressive set of initiatives 

to manage the Department more efficiently and implement the priorities set by

the Secretary of the Treasury and the President. Treasury took a leadership role 

in undertaking some of the government’s most persistent challenges: addressing 

department wide and financial sector cybersecurity risks, evaluating and 

modernizing the Treasury work environment, and continuing to further efforts on

diversity, equity, inclusion, and accessibility. 

In fiscal year 2023, we also demonstrated effective fiscal and management 

leadership by: 

• promoting successful achievement of priorities by providing direction, support, and accountability to the critical 

programs and projects that are most essential to achieving Treasury’s goals, including implementing the Inflation 

Reduction Act and the FinCEN Beneficial Ownership Secure IT System, and taking steps to replace the Bureau of

Engraving and Printing’s Washington, DC Currency Production Facility; 

• administering Treasury’s Climate Action Plan, which includes assessing our financial investments in property and 

the procurement of renewable energy credits and energy-savings performance contracts; and 

• leading Treasury efforts in assessing and measuring our organizational health and work environment through 

examination of organizational performance, resiliency, and capacity. 

We received an unmodified audit opinion on our consolidated financial statements for the 24th consecutive year. We were 

also successful this past year in fully remediating our significant deficiency related to the Bureau of the Fiscal Service’s

financial management systems. We are proud of this progress. Despite the complexity of Treasury’s financial systems, we

remain committed to making steady progress toward fully resolving all remaining deficiencies associated with our systems. 

As we lead Treasury’s management programs and initiatives, we will continue to ensure that we can deliver our mission 

effectively and efficiently and provide the best value to the American people. 

Anna Canfield Roth Carole Y. Banks 

Assistant Secretary for Management Deputy Chief Financial Officer 

November 15, 2023 November 15, 2023

Anna Canfield Roth 

Assistant Secretary 

for Management 

Carole Y. Banks 

Deputy Chief Financial 

Officer 
 

 

[Page intentionally left blank]
DEPARTMENT OF THE TREASURY 55 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

INSPECTOR GENERAL’S TRANSMITTAL LETTER

DEPARTMENT OF THE TREASURY

WASHINGTON, D. C. 20220

OFFICE OF

INSPECTOR GENERAL 

November 15, 2023 

INFORMATION MEMORANDUM FOR SECRETARY YELLEN 

FROM: Richard K. Delmar /s/ 

Deputy Inspector General 

SUBJECT: Audit of the Department of the Treasury’s Consolidated Financial Statements for 

Fiscal Years 2023 and 2022

INTRODUCTION 

The Chief Financial Officer’s Act, as amended, requires the Department of the Treasury’s (Treasury) 

Inspector General or an independent auditor, as determined by the Inspector General, to audit Treasury’s

consolidated financial statements. We contracted with a certified independent public accounting firm of 

KPMG LLP (KPMG) to audit the consolidated financial statements of Treasury as of September 30, 2023 

and 2022, and for the years then ended. The contract required that the audit be performed in accordance 

with U.S. generally accepted government auditing standards and Office of Management and Budget (OMB) 

Bulletin No. 24-01, Audit Requirements for Federal Financial Statements. 

RESULTS OF INDEPENDENT AUDIT 

In its audit of Treasury, KPMG reported 

• the consolidated financial statements were fairly presented, in all material respects, in accordance 

with U.S. generally accepted accounting principles; 

• a significant deficiency in internal control over unpaid assessments and a significant deficiency in 

information system controls at the Internal Revenue Service, collectively representing a significant 

deficiency for Treasury as a whole; 

• noncompliance with certain requirements of FFMIA related to federal financial management 

systems requirements; and 

• no instances of reportable noncompliance with laws, regulations, contracts and grant agreements 

tested.
56 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

EVALUATION OF AUDITORS’ PERFORMANCE

In connection with the contract, we reviewed KPMG’s report and related documentation and 

inquired of its representatives. Our review, as differentiated from an audit in accordance with 

U.S. generally accepted government auditing standards, was not intended to enable us to 

express, and we do not express, an opinion on Treasury’s consolidated financial statements; 

conclusions about the effectiveness of internal control; whether Treasury’s financial 

management systems substantially complied with FFMIA; and compliance with laws, 

regulations, contracts, and grant agreements. KPMG is responsible for the attached auditor’s 

report dated November 15, 2023, and the conclusions expressed in the report. However, our 

review disclosed no instances where KPMG did not comply, in all material respects, with U.S. 

generally accepted government auditing standards.

I appreciate the courtesy and cooperation extended to KPMG and my staff during the audit. If you wish to 

discuss this report, please contact me at (202) 528-8997 or Deborah L. Harker, Assistant Inspector General 

for Audit, at (202) 486-1420.

Attachment 

cc: Anna Canfield Roth 

Assistant Secretary for Management 

Carole Y. Banks 

Deputy Chief Financial Officer 
KPMG LLP, a Delaware limited liability partnership and a member firm of 

the KPMG global organization of independent member firms affiliated with 

KPMG International Limited, a private English company limited by guarantee. 

Independent Auditors’ Report

Deputy Inspector General

Department of the Treasury:

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of the Department of the Treasury (Department), which 

comprise the consolidated balance sheets as of September 30, 2023 and 2022, and the related consolidated

statements of net costs, consolidated statements of changes in net position, combined statements of budgetary 

resources, and statements of custodial activity for the years then ended, and the related notes to the 

consolidated financial statements.

In our opinion, based on our audits and the reports of the other auditors, the accompanying consolidated

financial statements present fairly, in all material respects, the financial position of the Department as of 

September 30, 2023 and 2022, and its net costs, changes in net position, budgetary resources, and custodial 

activity for the years then ended in accordance with U.S. generally accepted accounting principles.

We did not audit the financial statements of the Internal Revenue Service (IRS), a component entity of the 

Department, which statements reflect total assets constituting 0.74 percent and 0.95 percent, respectively, of

the Department’s consolidated total assets at September 30, 2023 and 2022; net costs of operations 

constituting 20.04 percent and 7.55 percent, respectively, of the Department’s consolidated net costs of 

operations for the years then ended; budgetary resources constituting 6.86 percent and 7.11 percent, 

respectively, of the Department’s combined budgetary resources for the years then ended; and custodial 

revenue constituting 99.34 percent and 96.93 percent, respectively, of the Department’s total custodial revenue 

for the years then ended. Those statements were audited by other auditors, whose report has been furnished to 

us, and our opinion, insofar as it relates to the amounts included for IRS, is based solely on the report of the 

other auditors.

We also did not audit the financial statements of the Office of Financial Stability (OFS) – Troubled Asset Relief 

Program (TARP), a component entity of the Department, which statements reflect total assets constituting 

0.04 percent and 0.04 percent, respectively, of the Department’s consolidated total assets at September 30,

2023 and 2022; net costs of operations constituting 0.16 percent and 0.12 percent, respectively, of the 

Department’s consolidated net costs of operations for the years then ended; and budgetary resources 

constituting 0.01 percent and 0.01 percent, respectively, of the Department’s combined budgetary resources for 

the years then ended. Those statements were audited by other auditors, whose report has been furnished to 

us, and our opinion, insofar as it relates to the amounts included for OFS-TARP, is based solely on the report of 

the other auditors.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards, 

issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin 

No. 24-01, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards

and OMB Bulletin No. 24-01 are further described in the Auditors’ Responsibilities for the Audit of the

57

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006
Consolidated Financial Statements section of our report. We are required to be independent of the Department 

and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to 

our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 

for our audit opinion. 

Emphasis of Matter 

As discussed in Note 11, the Department is a participant in transactions with certain entities as part of 

significant legislation whose purpose is to assist in stabilizing the financial markets. Also as discussed in 

Note 1AB, the U.S. government’s interventions with regards to these entities are not expected to be permanent. 

Furthermore, as discussed in Notes 1V and 11, the value of certain investments and commitments is based on 

estimates. These estimates are inherently subject to substantial uncertainty arising from the likelihood of future 

changes in general economic, regulatory, and market conditions. As such, there will likely be differences 

between the estimated value of these investments and commitments as of September 30, 2023 and 2022, and 

the amounts that may ultimately be realized from these investments or may be required to settle these 

commitments. Such differences may be material and will also affect the ultimate cost of these programs. Our 

opinion is not modified with respect to these matters. 

Other Matter - Interactive Data 

Management has elected to reference to information on websites or other forms of interactive data outside the 

Agency Financial Report to provide additional information for the users of its consolidated financial statements. 

Such information is not a required part of the consolidated financial statements or supplementary information 

required by the Federal Accounting Standards Advisory Board. The information on these websites or the other 

interactive data has not been subjected to any of our auditing procedures, and accordingly we do not express 

an opinion or provide any assurance on it. 

Responsibilities of Management for the Consolidated Financial Statements 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in 

accordance with U.S. generally accepted accounting principles, and for the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of consolidated financial 

statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a 

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that 

includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and 

therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing 

Standards, and OMB Bulletin No. 24-01 will always detect a material misstatement when it exists. The risk of 

not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud 

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the consolidated financial statements. 

In performing an audit in accordance with GAAS, Government Auditing Standards, and OMB 

Bulletin No. 24-01, we: 

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures

include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated

financial statements.

58
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Department’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting

estimates made by management, as well as evaluate the overall presentation of the consolidated financial

statements.

We are required to communicate with those charged with governance regarding, among other matters, the 

planned scope and timing of the audit, significant audit findings, and certain internal control related matters that 

we identified during the audit. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s Discussion and 

Analysis and Required Supplementary Information sections be presented to supplement the basic consolidated 

financial statements. Such information is the responsibility of management and, although not a part of the basic 

consolidated financial statements, is required by the Federal Accounting Standards Advisory Board who 

considers it to be an essential part of financial reporting for placing the basic consolidated financial statements 

in an appropriate operational, economic, or historical context. We, and the other auditors, have applied certain 

limited procedures to the required supplementary information in accordance with GAAS, which consisted of 

inquiries of management about the methods of preparing the information and comparing the information for 

consistency with management’s responses to our, and the other auditors’ inquiries, the basic consolidated 

financial statements, and other knowledge we, and the other auditors, obtained during our audits of the basic 

consolidated financial statements. We do not express an opinion or provide any assurance on the information 

because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any 

assurance. 

Other Information 

Management is responsible for the other information included in the Agency Financial Report. The other 

information comprises the Message from the Secretary of the Treasury, the Message from the Assistant 

Secretary for Management and Deputy Chief Financial Officer, and the Other Information but does not include 

the consolidated financial statements and our auditors’ report thereon. Our opinion on the consolidated financial 

statements does not cover the other information, and we do not express an opinion or any form of assurance 

thereon. 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information and the 

consolidated financial statements, or the other information otherwise appears to be materially misstated. If, 

based on the work performed, we conclude that an uncorrected material misstatement of the other information 

exists, we are required to describe it in our report. 

Report on Internal Control Over Financial Reporting 

This report includes our consideration of the results of the other auditors’ testing of internal control over 

financial reporting that are reported on separately by those other auditors. However, this report, insofar as it 

relates to the results of the other auditors, is based solely on the reports of the other auditors. 

In planning and performing our audit of the consolidated financial statements as of and for the year ended 

September 30, 2023, we considered the Department’s internal control over financial reporting (internal control) 

as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of 

expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an 

opinion on the effectiveness of the Department’s internal control. Accordingly, we do not express an opinion on 

59
the effectiveness of the Department’s internal control. We, and the other auditors, did not test all internal 

controls relevant to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 

1982.

A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial 

statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a 

deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet 

important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section 

and was not designed to identify all deficiencies in internal control that might be material weaknesses or 

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not 

identified. Given these limitations, during our audit we and the other auditors did not identify any deficiencies in 

internal control that we consider to be material weaknesses. We and the other auditors identified certain 

deficiencies in internal control, described below, that we consider to be a significant deficiency.

A. Significant Deficiency in Internal Control Over Financial Reporting at the Internal Revenue Service

IRS continued to take steps to improve internal control over financial reporting to ensure reliable and timely

financial information is obtained, maintained, and reported in accordance with OMB Circular A-123,

Management’s Responsibility for Enterprise Risk Management and Internal Control. However, the other

auditors reported significant deficiencies in internal control over unpaid assessments and information

system controls that we collectively considered as a significant deficiency at the Department level. IRS

internal control deficiencies are summarized as follows:

1. Unpaid Assessments

During fiscal year 2023, the systems IRS uses to account for federal taxes receivable and other unpaid 

assessment balances continued to have limitations, as well as other control deficiencies that led to errors in 

taxpayer accounts. Because of these deficiencies, IRS’s systems were unable to provide the timely, 

reliable, and complete transaction-level financial information necessary to enable IRS to appropriately 

classify and report unpaid assessment balances. As in prior years, IRS used a manually driven statistical 

estimation process to compensate for the effects of its system limitations and other deficiencies on a 

material portion of its federal taxes receivable balance to help ensure that this balance was free of material 

misstatement. During fiscal year 2023, IRS recorded adjustments totaling about $18.4 billion to correct the 

effects of continued errors in its underlying data that IRS identified during its estimation process.

While using this process to determine the material portion of taxes receivable has enabled IRS to produce 

reliable related balances for year-end reporting, it does not provide IRS management with readily available, 

reliable unpaid assessment information daily throughout the year for effectively managing unpaid 

assessment balances. Further, errors in taxpayer accounts create a burden for those taxpayers whose 

accounts were affected.

2. Information System Controls

During fiscal year 2023, IRS continued to have unresolved information system control deficiencies from 

prior year audits, along with new control deficiencies, which collectively, represent a significant deficiency in 

IRS’s internal control over financial reporting. These control deficiencies relate to information system 

general controls in the areas of security management, access controls, and configuration management. 

The new and continuing control deficiencies include the timely creation of plans of action and milestones to 

address identified vulnerabilities or weaknesses, use of multifactor authentication, encryption of sensitive 

60
data, logging and monitoring of audit records, and management configuration settings for certain platforms. 

Such control deficiencies, as well as others comprising the significant deficiency, increase the risk of 

unauthorized access to, modification of, and disclosure of sensitive data and programs, as well as the 

disruption of critical operations.

IRS mitigated the potential effect of the identified control deficiencies primarily through compensating 

controls that management has designed to detect potential misstatements on the financial statements. 

Additionally, over the past several years, IRS management has increased its focus on completing the 

correcting action plans necessary to address many of the information system control deficiencies 

comprising the significant deficiency. This has resulted in the closure of numerous system-specific 

recommendations. During fiscal year 2023, IRS successfully completed corrective actions sufficient to 

address system-specific recommendations involving the use of multifactor authentication and encryption of 

sensitive information.

Recommendation

The other auditors separately provided IRS management a report detailing the conditions identified and their 

recommendations to address the above significant deficiency. We recommend that the ASM and DCFO ensure 

that IRS implements corrective actions to resolve the control deficiencies at IRS.

Report on Compliance and Other Matters

This report includes our consideration of the results of the other auditors’ testing of compliance and other 

matters that are reported on separately by those other auditors. However, this report, insofar as it relates to the 

results of the other auditors, is based solely on the reports of the other auditors.

As part of obtaining reasonable assurance about whether the Department’s consolidated financial statements 

as of and for the year ended September 30, 2023 are free from material misstatement, we performed tests of 

its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance 

with which could have a direct and material effect on the financial statements. However, providing an opinion 

on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such 

an opinion. The results of our tests and those of the other auditors disclosed no instances of noncompliance or 

other matters that are required to be reported under Government Auditing Standards or OMB Bulletin

No. 24-01.

We also performed tests of the Department’s compliance with certain provisions referred to in Section 803(a) of 

the Federal Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion on compliance with 

FFMIA was not an objective of our audit, and accordingly, we do not express such an opinion. The results of 

our tests and those of the other auditors disclosed an instance described below, in which the Department’s 

financial management systems did not substantially comply with the Federal financial management systems 

requirements. The results of our tests and those of the other auditors disclosed no instances in which the 

Department’s financial management systems did not substantially comply with applicable Federal accounting 

standards, and the United States Government Standard General Ledger at the transaction level.

B. Noncompliance with Federal Financial Management Improvement Act of 1996

The Department’s financial management systems did not substantially comply with the federal financial

management systems requirements. As discussed in finding A, the Department had deficiencies in IRS’s

financial reporting systems. Specifically, the Department did not consistently design, implement, and

operate information system controls and security programs over these systems in accordance with the

federal financial management system requirements.

Recommendation

We, and the other auditors, separately provided IRS management with recommendations to address the above 

noncompliance with the federal financial management system requirements. We recommend that the ASM and 

61
DCFO ensure that IRS develop and implement remediation plans outlining actions to be taken to resolve 

noncompliance with the federal financial management system requirements and the resources and responsible 

organizational units for such planned actions.

Department’s Response to Findings

Government Auditing Standards requires the auditor to perform limited procedures on the Department’s 

response to the findings identified in our audit and described previously. The Department’s response to the 

findings is included in a separate letter immediately following this report. The Department’s response was not 

subjected to the other auditing procedures applied in the audit of the consolidated financial statements and, 

accordingly, we express no opinion on the response.

Purpose of the Reporting Required by Government Auditing Standards

The purpose of the communication described in the Report on Internal Control Over Financial Reporting and 

the Report on Compliance and Other Matters sections is solely to describe the scope of our testing of internal 

control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the 

Department’s internal control or compliance. Accordingly, this communication is not suitable for any other 

purpose.

Washington, DC

November 15, 2023

62
DEPARTMENT OF THE TREASURY 63 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT

November 15, 2023 

KPMG LLP

1801 K Street, NW

Washington, DC 20006

To Whom This May Concern: 

On behalf of Secretary Yellen, we are responding to your audit report on the Department of the 

Treasury's fiscal year 2023 consolidated financial statements. Our bureaus and program offices are 

proud of the Department's success in achieving an unmodified audit opinion on the Department's 

financial statements for the 24th consecutive year. 

The high level of professionalism, technical expertise, and integrity demonstrated by KPMG LLP in

conducting this year's audit contributed greatly to Treasury's successful fiscal year 2023 results. We also 

appreciate the expertise and commitment demonstrated by the other organizations involved in the audit 

process - the Office of Inspector General, Government Accountability Office, and the firms that audited 

several of our bureaus. 

We acknowledge the one significant deficiency related to IRS’s financial systems at the Department level 

which resulted in a noncompliance with laws and regulations described in your report. We agree with your 

recommendations and will continue our focus on necessary corrective actions to address these issues.

We continue to make strong progress in enhancing our internal control environment. Between FY 2022 and 

2023, we successfully remediated our significant deficiency related to the Bureau of the Fiscal Service’s

financial management systems. We are very proud of our progress and remain committed to ensuring high 

standards of integrity and transparency in reporting our financial performance. 

 

Anna Canfield Roth 

Assistant Secretary for Management 

 

 

Carole Y. Banks 

Deputy Chief Financial Officer 
64 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Balance Sheets

As of September 30, 2023 and 2022

(in millions) 2023 2022

ASSETS 

Intra-Governmental 

Fund Balance (Note 2) $ 543,532 $ 554,590 

Loans Receivable: 

 Loans and Interest Receivable (Note 3) 1,953,567 1,611,875 

 Advances to Trust Funds (Note 3) 37,269 47,298 

Other Assets: 

 Due From the General Fund (Note 4) 33,242,246 31,064,578 

 Other (Note 15) 1,501 1,370 

Total Intra-Governmental 35,778,115 33,279,711 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 816,530 784,073 

 Gold and Silver Reserves (Note 6) 11,062 11,062 

 Reserve Position in the International Monetary Fund (Note 7) 31,970 31,334 

Accounts Receivable, Net: 

 Taxes, Interest, and Other Receivables, Net (Note 8) 185,003 238,027 

Loans Receivable, Net: 

 Loans and Interest Receivable, Net (Notes 7 and 10) 12,481 12,072 

 Credit Program Receivables, Net (Notes 9 and 10) 3,386 3,415 

Advances and Prepayments (Note 10) 171,890 225,180 

Investments in Government Sponsored Enterprises (GSEs) (Note 11) 240,410 223,720 

Other Investments: 

 Investments in Special Purpose Vehicles (Note 10) 15,114 17,835 

 Investments in Multilateral Development Banks (Note 12) 9,105 8,727 

 Other, Net (Notes 10 and 13) 6,674 6,799 

Property, Plant, and Equipment, Net (Note 14) 3,256 3,072 

Other Assets (Note 15) 2,968 1,867 

Total Other Than Intra-Governmental 1,509,849 1,567,183 

Total Assets $ 37,287,964 $ 34,846,894 

Heritage Assets (Note 14) 

The accompanying notes are an integral part of these financial statements. 
DEPARTMENT OF THE TREASURY 65 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Balance Sheets

As of September 30, 2023 and 2022

(in millions) 2023 2022

LIABILITIES 

Intra-Governmental 

Federal Debt and Interest Payable: 

 Federal Debt and Interest Payable (Notes 4 and 16) $ 6,878,998 $ 6,717,361 

 Other Federal Debt and Interest Payable (Note 17) 5,527 4,878 

Other Liabilities: 

 Due To the General Fund (Note 4) 3,080,791 2,768,781 

 Other (Note 19) 2,872 1,551 

Total Intra-Governmental 9,968,188 9,492,571 

Other Than Intra-Governmental 

Federal Debt and Interest Payable (Notes 4 and 16) 26,328,135 24,308,695 

Accounts Payable: 

 Refunds Payable (Note 4) 6,662 6,961 

 Other Payables 1,945 1,402 

Other Liabilities: 

 Special Drawing Right Certificates Issued to the Federal Reserve (Note 5) 5,200 5,200 

 Allocation of Special Drawing Rights (Note 5) 151,041 147,009 

 Gold Certificates Issued to the Federal Reserve Banks (Note 6) 11,037 11,037 

 D.C. Federal Pension and Judicial Retirement Actuarial Liability (Note 18) 8,780 8,461 

 Other (Note 19) 10,941 9,776 

Total Other Than Intra-Governmental 26,523,741 24,498,541 

Total Liabilities (Note 19) 36,491,929 33,991,112 

Commitments and Contingencies (Note 27) 

NET POSITION 

Unexpended Appropriations 

Funds from Dedicated Collections (Note 24) 200 200

Funds from Other than Dedicated Collections 718,186 785,761 

Total Unexpended Appropriations 718,386 785,961 

Cumulative Results of Operations 

Funds from Dedicated Collections (Note 24) 49,066 45,259 

Funds from Other than Dedicated Collections 28,583 24,562 

Total Cumulative Results of Operations 77,649 69,821 

Total Net Position (Note 20) 796,035 855,782 

Total Liabilities and Net Position $ 37,287,964 $ 34,846,894 

The accompanying notes are an integral part of these financial statements. 
66 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Statements of Net Cost 

For the Fiscal Years Ended September 30, 2023 and 2022 

(in millions) 2023 2022

COST OF TREASURY OPERATIONS: 

Economic Program 

Gross Cost (Note 10) $ 90,462 $ 190,762 

Less Earned Revenue (29,512) (20,173) 

Net Program Cost 60,950 170,589 

Financial Program 

Gross Cost 27,337 25,708 

Less Earned Revenue (10,700) (10,511) 

Net Program Cost 16,637 15,197 

Security Program 

Gross Cost 518 548

Less Earned Revenue (13) (28) 

Net Program Cost 505 520

Total Program Gross Costs 118,317 217,018 

Total Program Earned Revenues (40,225) (30,712) 

Total Net Program Cost before Changes in Actuarial Assumptions 78,092 186,306 

Loss on Pension, ORB, or OPEB Assumption Changes 443 519

Total Net Cost of Treasury Operations (Note 21) 78,535 186,825 

NON-ENTITY COSTS: 

Federal Debt Interest 871,019 722,233 

Restoration of Foregone Federal Debt Interest (Note 16) 3,292 726

Less Interest Revenue from Loans (47,745) (47,064) 

Federal Debt Interest Costs, Net 826,566 675,895 

Other Federal Costs, Net (Note 21) 15,856 17,180 

GSEs Non-Entity Revenue, Net (Note 11) (16,690) (2,860) 

COVID-19 Non-Entity (Revenue) Cost, Net (Note 10) (1,263) 1,945 

Other, Net (920) (858) 

Total Net Non-Entity Costs 823,549 691,302 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 902,084 $ 878,127 

The accompanying notes are an integral part of these financial statements. 
DEPARTMENT OF THE TREASURY 67 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Statement of Changes in Net Position 

For the Fiscal Year Ended September 30, 2023

Consolidated Consolidated 

Funds from Funds from Other 

Dedicated than Dedicated 2023

(in millions) Collections Collections Eliminations Total 

UNEXPENDED APPROPRIATIONS (Notes 20 and 24) 

Beginning Balance $ 200 $ 785,761 $ - $ 785,961 

Appropriations Received - 845,087 - 845,087 

Appropriations Transferred In/Out - (21) - (21) 

Other Adjustments - (5,301) - (5,301) 

Appropriations Used - (907,340) - (907,340) 

Net Change in Unexpended Appropriations - (67,575) - (67,575) 

Total Unexpended Appropriations 200 718,186 - 718,386 

CUMULATIVE RESULTS OF OPERATIONS (Notes 20 and 24) 

Beginning Balance 45,259 24,562 - 69,821 

Appropriations Used - 907,340 - 907,340 

Non-Exchange Revenue 834 1 (285) 550

Donations and Forfeitures of Cash/Equivalent 28 - - 28

Transfers In/Out Without Reimbursement (1,376) 254 - (1,122) 

Donation/Forfeiture of Property 714 - - 714

Accrued Interest and Discount on Debt - 70,342 - 70,342 

Imputed Financing Sources (Note 21) 99 1,005 - 1,104 

Transfers to the General Fund and Other 1,498 (70,542) - (69,044) 

Net Cost of Treasury Operations and Non-Entity Costs 2,010 (904,379) 285 (902,084) 

Net Change in Cumulative Results of Operations 3,807 4,021 - 7,828 

Total Cumulative Results of Operations 49,066 28,583 - 77,649 

Net Position $ 49,266 $ 746,769 $ - $ 796,035 

The accompanying notes are an integral part of these financial statements. 
68 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Statement of Changes in Net Position 

For the Fiscal Year Ended September 30, 2022

Consolidated Consolidated 

Funds from Funds from Other 

Dedicated than Dedicated 2022

(in millions) Collections Collections Eliminations Total 

UNEXPENDED APPROPRIATIONS (Notes 20 and 24) 

Beginning Balance $ 200 $ 878,410 $ - $ 878,610 

Appropriations Received - 802,456 - 802,456 

Appropriations Transferred In/Out - 200 - 200

Other Adjustments - (18,236) - (18,236) 

Appropriations Used - (877,069) - (877,069) 

Net Change in Unexpended Appropriations - (92,649) - (92,649) 

Total Unexpended Appropriations 200 785,761 - 785,961 

CUMULATIVE RESULTS OF OPERATIONS (Notes 20 and 24) 

Beginning Balance 49,178 37,068 - 86,246 

Appropriations Used - 877,069 - 877,069 

Non-Exchange Revenue 453 (1) (41) 411

Donations and Forfeitures of Cash/Equivalent 721 - - 721

Transfers In/Out Without Reimbursement (691) 547 (3) (147) 

Donation/Forfeiture of Property 172 - - 172

Accrued Interest and Discount on Debt - 38,873 - 38,873 

Accrued Interest on Restoration of Federal Debt Principal (Note 16) - (409) - (409) 

Imputed Financing Sources (Note 21) 71 709 - 780

Transfers to the General Fund and Other 554 (56,322) - (55,768) 

Net Cost of Treasury Operations and Non-Entity Costs (5,199) (872,972) 44 (878,127) 

Net Change in Cumulative Results of Operations (3,919) (12,506) - (16,425) 

Total Cumulative Results of Operations 45,259 24,562 - 69,821 

Net Position $ 45,459 $ 810,323 $ - $ 855,782 

The accompanying notes are an integral part of these financial statements. 
DEPARTMENT OF THE TREASURY 69 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Combined Statement of Budgetary Resources 

For the Fiscal Year Ended September 30, 2023

Non-Budgetary 2023

(in millions) Budgetary Financing Total 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) (Note 22) $ 415,578 $ 206 $ 415,784 

Appropriations (discretionary and mandatory) (Note 20) 918,840 - 918,840 

Borrowing authority (discretionary and mandatory) - 1,000 1,000 

Spending authority from offsetting collections 

 (discretionary and mandatory) 13,143 250 13,393 

Total Budgetary Resources $ 1,347,561 $ 1,456 $ 1,349,017 

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 953,089 $ 1,407 $ 954,496 

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 340,770 29 340,799 

 Exempt from apportionment, unexpired accounts 1,929 - 1,929 

 Unapportioned, unexpired accounts 50,838 20 50,858 

 Unexpired unobligated balance, end of year 393,537 49 393,586 

 Expired unobligated balance, end of year 935 - 935

Unobligated balance, end of year 394,472 49 394,521 

Total Status of Budgetary Resources $ 1,347,561 $ 1,456 $ 1,349,017 

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ 930,832 $ - $ 930,832 

Distributed offsetting receipts (59,773) - (59,773) 

Agency Outlays, Net (Discretionary and Mandatory) $ 871,059 $ - $ 871,059 

Disbursements, net (mandatory) $ (4,228) $ (4,228) 

The accompanying notes are an integral part of these financial statements. 
70 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Combined Statement of Budgetary Resources 

For the Fiscal Year Ended September 30, 2022 

Non-Budgetary 2022

(in millions) Budgetary Financing Total 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) (Note 22) $ 489,225 $ 313 $ 489,538 

Appropriations (discretionary and mandatory) (Notes 10 and 20) 834,390 - 834,390 

Borrowing authority (discretionary and mandatory) - 5,463 5,463 

Spending authority from offsetting collections 

 (discretionary and mandatory) 11,571 834 12,405 

Total Budgetary Resources $ 1,335,186 $ 6,610 $ 1,341,796 

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments (Note 10) $ 930,261 $ 6,316 $ 936,577 

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 306,461 216 306,677 

 Exempt from apportionment, unexpired accounts 1,935 - 1,935 

 Unapportioned, unexpired accounts 95,808 78 95,886 

 Unexpired unobligated balance, end of year 404,204 294 404,498 

 Expired unobligated balance, end of year 721 - 721

Unobligated balance, end of year 404,925 294 405,219 

Total Status of Budgetary Resources $ 1,335,186 $ 6,610 $ 1,341,796 

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ 893,311 $ - $ 893,311 

Distributed offsetting receipts (65,142) - (65,142) 

Agency Outlays, Net (Discretionary and Mandatory) $ 828,169 $ - $ 828,169 

Disbursements, net (mandatory) $ (4,722) $ (4,722) 

The accompanying notes are an integral part of these financial statements. 
DEPARTMENT OF THE TREASURY 71 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

For the Fiscal Y

Statements of Custodial Activity 

ears Ended September 30, 2023 and 2022 

 

(in millions) 2023 2022

SOURCES OF CUSTODIAL REVENUE (Note 23) 

Individual Income and FICA Taxes $ 4,111,955 $ 4,308,098 

Corporate Income Taxes 456,941 475,871 

Estate and Gift Taxes 35,434 33,355 

Excise Taxes 92,344 90,240 

Railroad Retirement Taxes 7,218 6,148 

Unemployment Taxes 7,947 7,046 

Deposit of Earnings, Federal Reserve System 581 106,675 

Fines, Penalties, Interest and Other Revenue 8,680 7,305 

Total Revenue Received 4,721,100 5,034,738 

Less Refunds and Other Payments (Note 10) (659,569) (642,230) 

Net Revenue Received 4,061,531 4,392,508 

Non-Cash Accrual Adjustment (53,696) (66,747) 

Total Custodial Revenue 4,007,835 4,325,761 

DISPOSITION OF CUSTODIAL REVENUE (Note 23) 

Amounts Provided to Fund Non-Federal Entities 369 421

Amounts Provided to Fund the Federal Government 4,061,162 4,392,087 

Non-Cash Accrual Adjustment (53,696) (66,747) 

Total Disposition of Custodial Revenue 4,007,835 4,325,761 

Custodial Revenue Less Disposition of Collections $ - $ - 

The accompanying notes are an integral part of these financial statements. 
72 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

NOTES TO THE FINANCIAL STATEMENTS

TABLE OF CONTENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES..........................................................................................................................73 

2. FUND BALANCE.......................................................................................................................................................................................95

3. LOANS AND INTEREST RECEIVABLE – INTRA-GOVERNMENTAL.....................................................................................................97

4. DUE FROM THE GENERAL FUND AND DUE TO THE GENERAL FUND..........................................................................................100 

5. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS.....................................................................................................102 

6. GOLD AND SILVER RESERVES, AND GOLD CERTIFICATES ISSUED TO THE FEDERAL RESERVE BANKS ................................. 104 

7. RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND AND RELATED LOANS AND INTEREST RECEIVABLE....... 105

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET ...................................................................................................................... 106

9. CREDIT PROGRAM RECEIVABLES,NET ............................................................................................................................................ 107

10. COVID-19 INVESTMENTS, ADVANCES, RECEIVABLES, AND OTHER.......................................................................................... 108

11. INVESTMENTS IN GOVERNMENT SPONSORED ENTERPRISES........................................................................................................ 123

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS ........................................................................................................... 127

13. OTHER INVESTMENTS, NET ............................................................................................................................................................... 128

14. PROPERTY, PLANT, AND EQUIPMENT, NET..................................................................................................................................... 129

15. NON-ENTITY VS. ENTITY ASSETS...................................................................................................................................................... 131

16. FEDERAL DEBT AND INTEREST PAYABLE AND RELATED LIABILITIES ....................................................................................... 133

17. OTHER FEDERAL DEBT AND INTEREST PAYABLE.......................................................................................................................... 137

18. D.C. FEDERAL PENSION AND JUDICIAL RETIREMENT ACTUARIAL LIABILITY........................................................................... 138

19. LIABILITIES ...........................................................................................................................................................................................140 

20. NET POSITION ...................................................................................................................................................................................... 141

21. CONSOLIDATED STATEMENTS OFNET COST AND NET COSTS OF TREASURY SUB-ORGANIZATIONS.................................... 142

22. ADDITIONAL INFORMATION RELATED TO THE COMBINED STATEMENTS OF BUDGETARY RESOURCES............................... 148

23. SOURCES AND DISPOSITION OF CUSTODIAL REVENUE .................................................................................................................. 151

24. FUNDS FROM DEDICATED COLLECTIONS......................................................................................................................................... 153

25. RECONCILIATION OFNET COST OF TREASURY OPERATIONS AND NON-ENTITY COSTS TO AGENCY OUTLAYS, NET ........160 

26. SCHEDULE OF FIDUCIARY ACTIVITY ................................................................................................................................................. 163

27. COMMITMENTS AND CONTINGENCIES .............................................................................................................................................. 164

28. RECLASSIFICATION OF AGENCY FINANCIAL STATEMENTS TO FINANCIAL REPORT 

OF THE U.S. GOVERNMENT FORMAT............................................................................................................................................ 168

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED – SEE ACCOMPANYING AUDITORS’ REPORT) ................................... 176
DEPARTMENT OF THE TREASURY 73 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. REPORTING ENTITY

The accompanying financial statements include the operations of the Department of the Treasury, one of 24 Chief Financial 

Officers (CFO) Act agencies of the Executive Branch of the United States (U.S.) government, and certain custodial activities 

the Department manages on behalf of the entire U.S. government. Except where the content clearly indicates otherwise, the 

use of the terms “Department,” “Treasury,” “we,” “us,” or “our” refers to the Department of the Treasury, including its 

Departmental Offices (DO) and operating bureaus, which are further discussed below. The following paragraphs describe 

the activities of the reporting entity. 

We were established by an Act of Congress approved on September 2, 1789. Many subsequent acts affected our development, 

delegating new duties to our charge and establishing the numerous bureaus and divisions that now comprise the 

Department. As a major policy advisor to the President, the Secretary of the Treasury (Secretary) has primary responsibility 

for formulating and managing the domestic and international tax and financial policies of the U.S. government. 

Further, the Secretary is responsible for recommending and implementing U.S. domestic and international economic and 

fiscal policy; governing the fiscal operations of the U.S. government; maintaining foreign assets control; managing the 

federal debt; collecting income and excise taxes; representing the U.S. on international monetary, trade, and investment 

issues; overseeing our overseas operations; and directing the manufacture of coins, currency, and other products for customer 

agencies and the public. 

Our reporting entities include DO and seven operating bureaus. For financial reporting purposes, DO is composed of: 

Community Development Financial Institutions (CDFI) Fund, Office of D.C. Pensions (ODCP), Exchange Stabilization Fund 

(ESF), Federal Financing Bank (FFB), Government Sponsored Enterprises (GSEs) Program, International Assistance 

Programs (IAP), Office of Financial Research (OFR), Office of Financial Stability (OFS), Office of Inspector General (OIG), 

Office of Recovery Programs (ORP), Small Business Lending Fund (SBLF), Special Inspector General for Pandemic Recovery 

(SIGPR), Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Treasury Executive Office of Asset 

Forfeiture (TEOAF), Treasury Inspector General for Tax Administration (TIGTA), and the DO policy offices. 

Our seven operating bureaus are: Bureau of Engraving and Printing (BEP), Bureau of the Fiscal Service (Fiscal Service), 

Financial Crimes Enforcement Network (FinCEN), Internal Revenue Service (IRS), U.S. Mint (Mint), Office of the 

Comptroller of the Currency (OCC), and Alcohol and Tobacco Tax and Trade Bureau (TTB). Our consolidated financial 

statements reflect the reporting of our entity activities, comprising both our operating bureaus and DO. This includes 

appropriations received to conduct our operations and revenue generated from those operations. They also reflect the 

reporting of certain non-entity (custodial) functions we perform on behalf of the U.S. government and others. Non-entity 

activities include collecting certain federal revenue, servicing the federal debt, disbursing certain federal funds, and 

maintaining certain assets and liabilities for the U.S. government (refer to Notes 4 and 15), as well as for other federal 

entities. Our reporting entity does not include the General Fund of the U.S. Government (General Fund), which maintains 

receipt, disbursement, and appropriation accounts for all federal agencies. 
74 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Following U.S. Generally Accepted Accounting Principles (GAAP) for federal entities, we do not consolidate into our financial

statements the assets, liabilities, or results of operations of any financial organization or commercial entity in which we hold

either a direct or indirect majority equity investment, unless they meet the criteria for consolidation as described in

Statement of Federal Financial Accounting Standards (SFFAS) No. 47, Reporting Entity. We have determined that none of

our significant equity investments meet such criteria for consolidation. SFFAS No. 47 also provides criteria for reporting

“disclosure entities” and “related party” relationships of such significance that it would be misleading to exclude information

about them. Refer to the accounting policy below entitled “Disclosure Entities and Related Parties” for additional

information on Treasury’s “disclosure entities” and “related parties”, which are material to our consolidated financial

statements, of significance to the public, or required by SFFAS No. 47.

B. BASIS OF ACCOUNTING AND PRESENTATION

The financial statements have been prepared from our accounting records in conformity with GAAP, and Office of

Management and Budget (OMB) Circular No. A-136, Financial Reporting Requirements, as revised. Accounting principles

generally accepted for federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board

(FASAB). The American Institute of Certified Public Accountants recognizes FASAB as the official accounting standardssetting body for the U.S. government. Certain presentations and disclosures may be modified, if needed, to prevent the

disclosure of classified information. 

These financial statements consist of the Consolidated Balance Sheets, the Consolidated Statements of Net Cost, the

Consolidated Statements of Changes in Net Position, the Combined Statements of Budgetary Resources, and the Statements

of Custodial Activity. The statements and the related notes are prepared in a comparative form to present both fiscal year

(FY) 2023 and 2022 information.

We have eliminated transactions and balances among our entities from the Consolidated Balance Sheets, Consolidated

Statements of Net Cost, and Consolidated Statements of Changes in Net Position. We present the Statements of Budgetary

Resources on a combined basis; therefore, intra-departmental transactions and balances have not been eliminated from these

statements. 

While these financial statements have been prepared from our accounting records primarily in accordance with the formats

prescribed by OMB, these financial statements are in addition to the financial reports we use to monitor and control

budgetary resources, which are prepared from the same accounting records. 

Intra-governmental assets and liabilities are those due from or to other federal entities. Intra-governmental earned

revenues are collections or accruals of revenue from other federal entities, and intra-governmental costs are payments or

accruals of expenditures to other federal entities.

The financial statements should be read with the recognition that we are a component of the U.S. government, a sovereign

entity and, accordingly, our liabilities not covered by budgetary resources cannot be liquidated without the legislative

enactment of an appropriation, and that the payment of all liabilities other than for contracts can be abrogated by the

sovereign entity. Liabilities represent the probable and measurable future outflow or other sacrifice of resources as a result

of past transactions or events. Liabilities covered by budgetary resources are those liabilities for which Congress has

appropriated funds or funding is otherwise available to pay amounts due. Liabilities not covered by budgetary resources

represent amounts owed in excess of available, congressionally appropriated funds or other amounts, and there is no

certainty that the appropriations will be enacted. Liabilities not requiring budgetary resources are liabilities that have not
DEPARTMENT OF THE TREASURY 75

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

in the past required, nor will in the future, require budgetary resources, e.g., liabilities for clearing accounts, non-fiduciary

deposit funds, custodial collections, and unearned revenue. 

There are numerous acronyms used throughout the notes herein as well as other sections of this Agency Financial Report

(AFR). Refer to the “Glossary of Acronyms” located in the Appendix of this report for a complete listing of these acronyms

and their definitions.

C. FUND BALANCE

“Fund Balance” is the aggregate amount of our accounts with the U.S. government’s central accounts from which we are

authorized to make expenditures and pay liabilities. It is an asset because it represents our claim to the U.S. government’s

resources. “Fund Balance” is not equivalent to unexpended appropriations because it also includes non-appropriated

revolving and enterprise funds, suspense accounts, and custodial funds such as deposit funds, special funds, and trust funds.

D. LOANS RECEIVABLE – INTRA-GOVERNMENTAL

Loans and Interest Receivable

Intra-governmental entity loans and interest receivable from other federal agencies represent the principal and related

interest receivable on loans we issue through FFB. We do not record loan loss allowance for credit reform subsidy costs for

loans purchased from federal agencies or for guaranteed loans made to non-federal borrowers because those agencies

guarantee the outstanding balances (interest and principal). 

Intra-governmental non-entity loans and interest receivable from other federal agencies represent the principal and related

interest receivable on loans we issue, through the Fiscal Service. We act as an intermediary issuing these loans because the

agencies receiving these loans lend these funds to third parties to carry out various programs of the U.S. government. 

Because of our intermediary role in issuing these loans, we do not record a loan loss allowance related to these non-entity

intra-governmental loans. Instead, the ultimate lender, the federal agency that issued the loans to the public, recognizes

loan loss allowances and subsidy costs. We accrue interest revenue on intra-governmental loans when earned. 

Advances to the Unemployment Trust Fund

The General Fund issues advances to the Department of Labor’s (DOL) Unemployment Trust Fund for states to pay

unemployment benefits. The Fiscal Service accounts for the advances issued on behalf of the General Fund. As outlined in

42 United States Code (USC) 1323, Repayable Advances to Federal Unemployment Account, these advances bear an interest

rate that is computed as the average interest rate as of the end of the calendar month preceding the issuance date of the

advance for all interest-bearing obligations of the U.S. that form the public debt, to the nearest lower 1/8 of 1.0 percent. 

Interest on the advances is due on September 30 of each year. These advances are recorded within the “Advances to Trust

Funds” line of the Consolidated Balance Sheets. DOL repays advances when the Secretary, in consultation with the

Secretary of the DOL, determines that the balance in the Unemployment Trust Fund is adequate to allow repayment. 

Advances to the Federal Supplementary Medical Insurance Trust Fund

The General Fund issues advances to the Department of Health and Human Services’ (HHS) Federal Supplementary

Medical Insurance Trust Fund to temporarily replace the reduction in Medicare Part B participants’ premiums. The Fiscal

Service accounts for the advances issued on behalf of the General Fund. As outlined in 42 USC 1395, Prohibition Against
76 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Any Federal Interference, these advances do not bear any interest. These advances are recorded within the “Advances to

Trust Funds” line of the Consolidated Balance Sheets. HHS repays advances over time from amounts collected from certain

participants’ increase in premiums until the balance due reaches zero.

Advances to the Agricultural Disaster Relief Trust Fund

The General Fund issues advances to the U.S. Department of Agriculture’s (USDA) Agricultural Disaster Relief Trust Fund

to make payments to farmers and ranchers under disaster relief programs established in accordance with the Food,

Conservation, and Energy Act of 2008, Public Law (P.L.) 110-246. The Fiscal Service accounts for the advances issued on

behalf of the General Fund. As outlined in 19 USC 2497a, Agricultural Disaster Relief Trust Fund, interest on advances is

at a rate determined by the Secretary to be equal to the current average market yield of comparable marketable obligations

with similar maturity dates, compounded annually. These advances are recorded within the “Advances to Trust Funds” line

of the Consolidated Balance Sheets. 

E. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS

Substantially all of our operating cash is non-entity government-wide cash held in depository institutions and Federal

Reserve Bank (FRB) accounts. Agencies deposit funds that are submitted to them directly into either a Federal Reserve

Treasury General Account (TGA) or a local TGA depositary. We transfer the balances in these TGA accounts into the

Federal Reserve Bank of New York’s (FRBNY) TGA throughout the day.

Operating cash of the U.S. government represents balances from tax collections, customs duties, other revenue, federal debt

receipts, and other various receipts, net of cash outflows for budget outlays and other payments held in the FRBs and in

foreign and domestic financial institutions. Outstanding checks net against operating cash until they clear the Federal

Reserve System (FR System).

The FRBNY maintains the TGA, which functions as the U.S. government’s checking account for deposits and disbursements

of public funds. Cash in the TGA is restricted for government-wide operations.

Foreign currency and Foreign Currency Denominated Assets (FCDAs) represent foreign deposit accounts and securities with

original maturities of three months.

Special Drawing Rights (SDR) holdings comprise most of the other monetary assets (refer to the accounting policy below

entitled “Special Drawing Rights”).

F. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

We do not accrue federal taxes receivable, net, and the corresponding liability due to the General Fund, until the taxpayer

files related tax returns, or the IRS makes assessments and either the taxpayer or the court agrees to them. Additionally,

prepayments are netted against tax liabilities. We make accruals to reflect penalties and interest on taxes receivable

through the balance sheet date.
DEPARTMENT OF THE TREASURY 77 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Taxes receivable consist of unpaid assessments (taxes and associated penalties and interest) due from taxpayers. The 

existence of a receivable is supported by a taxpayer agreement, such as filing of a tax return without sufficient payment, or a 

court ruling in favor of the IRS. We record an allowance for doubtful accounts to reflect an estimate of the portion of total 

taxes receivable deemed to be uncollectible. Taxes receivable also consist of unpaid taxes related to Internal Revenue Code 

(IRC) section 965, which requires taxpayers who are shareholders of certain specified foreign corporations to pay a transition 

tax on foreign earnings as if those earnings had been repatriated to the U.S. IRC 965(h) allows taxpayers to elect to pay 

their 965(h) tax on an eight-year installment schedule. Additionally, taxes receivable includes employer’s deferred share of

the Social Security portion of the Federal Insurance Contributions Act (FICA), and the employer’s and employee 

representative’s share of the Railroad Retirement Tax (RRTA). Pursuant to the Coronavirus Aid, Relief, and Economic 

Security Act, P.L. 116-136 (CARES Act), employers were allowed to defer payment, without penalty, of these portions of FICA 

and RRTA. 

Compliance assessments are unpaid assessments that neither the taxpayer nor a court has affirmed the taxpayer owes to the 

U.S. government. Examples include assessments resulting from an IRS audit or examination in which the taxpayer does not 

agree with the results. Write-offs consist of unpaid assessments for which the IRS does not expect further collections due to

factors such as taxpayers’ bankruptcy, insolvency, or death. We do not report compliance assessments and write-offs on the 

balance sheet. Statutory provisions require the accounts to be maintained until the statute for collection expires. 

G. LOANS RECEIVABLE, NET – OTHER THAN INTRA-GOVERNMENTAL

Loans and Interest Receivable, Net 

Other than intra-governmental (or public) loans and interest receivable include a supplemental borrowing arrangement 

between the U.S. and the International Monetary Fund (IMF) (refer to Note 7). These loans are denominated in SDRs and 

recorded at the equivalent U.S. dollar amount (refer to the accounting policy below entitled “Special Drawing Rights”). We

periodically adjust the value of these loans, due to fluctuations in the value of the U.S. dollar with respect to the SDR, to

maintain the amount of these loans in dollar terms. We do not record a loan loss allowance for these loans as we do not 

anticipate any defaults on the repayment of these loans. 

The Coronavirus Disease 2019 (COVID-19) notes and interest receivable represent the principal and related interest 

receivable on promissory notes received in connection with providing financial assistance to air carriers, cargo air carriers, 

and airline contractors to support ongoing employment of their aviation workers under the CARES Act, Consolidated 

Appropriations Act, 2021, P.L. 116-260 (CAA), and American Rescue Plan Act of 2021, P.L. 117-2 (ARP) (refer to Note 10). 

Interest revenue on the promissory notes is accrued as earned over the life of the notes. The notes include a Payment-InKind (PIK) option in which borrowers may elect to pay the interest in-kind, capitalizing the interest due to the principal 

amount of the note, instead of paying the interest in cash. We increase the principal balance of the note and reduce interest 

receivable by the amount of unpaid interest when borrowers make this PIK election. 

This receivable is an asset of the U.S. government, and we are precluded from using the cash proceeds realized from the 

financial instruments we receive. We report the non-entity receivable net of an allowance for loss, which reflects our best

estimate of the amount of credit losses experienced within the existing portfolio of promissory notes, within the “Loans and 

Interest Receivable, Net” line of the Consolidated Balance Sheets. We annually assess this estimated credit loss amount by

deriving the fair value of these notes and determining the extent to which credit factors (such as historical loss experience,

delinquencies, and note restructurings) reduced the value of these receivables from their face value to their lower net 

realizable value. We derived the fair value of the notes portfolio as the present value of the expected future cash flows of the 
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FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

notes (including disbursements, repayments, interest, defaults, and recoveries). We recognize the receivable and related 

interest as a non-entity exchange transaction within the “COVID-19 Non-Entity (Revenue) Cost, Net” line of the 

Consolidated Statements of Net Cost. This receivable also results in a corresponding increase to “Due To the General Fund.”

Credit Program Receivables, Net 

We account for all of our credit program receivables under the provisions of credit reform accounting pursuant to the Federal 

Credit Reform Act (FCRA). Credit programs include loans or equity securities associated with our CDFI Fund programs, 

state and local Housing Finance Agency (HFA) initiative programs, IAP programs, SBLF program, and the Troubled Asset 

Relief Program (TARP) (refer to Note 9). Our credit programs also include loans associated with emergency relief efforts in

response to the COVID-19 pandemic. 

To account for our credit program receivables, we apply the accounting provisions of SFFAS No. 2, Accounting for Direct 

Loans and Loan Guarantees, as amended. SFFAS No. 2 requires measurement of the asset or liability at the net present 

value of the estimated future cash flows. The cash flow estimates for each credit program transaction reflect the actual 

structure of the instruments. For each of these instruments, we estimate cash inflows and outflows related to the program 

over the estimated term of the instrument. Further, each cash-flow estimate reflects the specific terms and conditions of the 

program, technical assumptions regarding the underlying assets, risk of default or other losses, and other factors as

appropriate. The measurement of assets within these programs is primarily derived from inputs, which generally represent 

market data and, when such data is not available, management’s best estimate of how a market participant would assess the 

asset’s inherent risk.

The primary purpose of the FCRA is to measure the cost of federal credit programs, and to place the cost of such credit 

programs on a basis equivalent with other federal spending. FCRA requires that the ultimate costs of a credit program be

calculated and the budgetary resources be obtained before incurring the direct loan obligations. To accomplish this, we first 

predict or estimate the future performance of direct and guaranteed loans when preparing our annual budget. We reestimate the data we use for these budgetary estimates at the fiscal year-end to reflect changes in actual loan performance 

and actual interest rates in effect when the loans were issued. The re-estimated data reflect adjustments for market risks, 

asset performance, and other key variables and economic factors. We then use the re-estimated data to report the cost of the 

loans disbursed under the direct or guaranteed loan program as a program cost on our Consolidated Statements of Net Cost. 

Cash flows associated with our credit programs generally include disbursements, repayments, repurchases, fees, recoveries, 

interest, dividends, proceeds from sales of instruments, borrowings from Treasury, negative subsidy, and the subsidy cost 

received from the program accounts. We draw security-level data and assumptions used as the basis for cash flow model 

forecasts and program performance from widely available market sources, as well as information published by investees. 

Key inputs and assumptions to the cash flow forecasts include, but are not limited to:

• security characteristics such as unpaid principal balance, coupon rate, weighted-average loan age, issued bond balance, 

credit rating, maturity date, sinking fund schedules, principal and interest payment schedules, and performance of

underlying collateral; 

• discount rate; 

• observed market prices; 

• department actions, as well as changes in legislation; 

• forecast dividend payments, late payments, prepayment rates and default rates; 

• forward interest rates; 
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• historical prepayments; 

• option adjusted spread; 

• default and recovery reports Moody’s and Standard and Poor’s publish; 

• modeled asset prices from third-party market sources; and 

• forecast and historical Special Purpose Vehicles (SPVs) preferred equity repayments. 

The recorded subsidy cost associated with each of our credit programs represents the difference between disbursed amounts 

and the net present value of future cash flows we anticipate receiving. The subsidy allowance, as initially established by the 

subsidy cost, takes into consideration projected repayments and defaults, and the projected cost of borrowings. We amortize 

the allowance to reflect the difference between projected and actual financing costs. 

Our actions, as well as changes in legislation, may impact estimated future cash flows and related subsidy costs. We

recognize the cost or cost savings of a modification in subsidy costs when the terms of a program are modified. Workouts are 

actions taken to maximize repayments of existing credit programs, and the expected effects on cash flows are included in the 

original estimate and re-estimates of the subsidy cost. Subsidy costs are also impacted by re-estimates, which may occur as

a result of updates to the original program subsidy cost estimates to reflect actual cash flows experience, as well as changes 

in forecasts of estimated future cash flows associated with the credit program.

H. ADVANCES AND PREPAYMENTS

We primarily issue advances to COVID-19 pandemic-related recovery financial assistance programs directed through state, 

local, territorial, and Tribal governments (refer to Note 10). These advances are issued as direct payments for specified use 

to cover the recipient’s anticipated qualified incurred costs. These advances are initially recorded when disbursed within the 

“Advances and Prepayments” line of the Consolidated Balance Sheets and subsequently recognized as expense within the 

“Economic Program” costs on the Consolidated Statements of Net Cost as the qualified costs are incurred by the recipients.

I. INVESTMENTS

Investments in GSEs 

We hold senior preferred stock and warrants for the purchase of common stock of two GSEs: the Federal National Mortgage 

Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). We present these non-federal 

investment holdings at their fair value on the Consolidated Balance Sheets (see the discussion below on “Fair Value 

Measurement”). We record changes in the valuation of these investments as non-entity exchange transactions on the 

Consolidated Statements of Net Cost. We also record dividends related to these investments as non-entity exchange 

transactions, which are accrued when declared. 

The GSE Senior Preferred Stock Purchase Agreements (SPSPAs), which we entered into with each GSE when the GSEs 

were placed under conservatorship, require that we increase our investment in the GSEs’ senior preferred stock if, at the end 

of any quarter, the Federal Housing Finance Agency (FHFA), acting as the conservator, determines that the liabilities of

either GSE exceed its respective assets. Since funding to the GSEs to pay their excess liabilities is appropriated directly to

us, we report such payments, as needed, as entity expenses within the “Economic Program” on the Consolidated Statements 

of Net Cost, and in the line item, “Cumulative Results of Operations,” on the Consolidated Balance Sheets. These payments 

also result in an increase to the non-entity investment in the GSEs’ senior preferred stock, with a corresponding increase to

“Due To the General Fund,” as we hold the investment on behalf of the General Fund. 
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The annual valuation as of September 30 of the senior preferred stock and warrants incorporates various forecasts,

projections and cash flow analyses to develop an estimate of the assets’ fair value. We estimate the value of the senior

preferred stock by first estimating the fair value of the total equity of each GSE (which, in addition to the senior preferred

stock, is comprised of other equity instruments including common stock, common stock warrants, and junior preferred stock). 

We base the fair value of the total equity on a discounted cash flow valuation methodology, whereby the primary input is the

present value of the projected quarterly cash flows to equity holders. The fair value of the GSEs’ other equity instruments is

then deducted from its total equity, with the remainder representing the fair value of the senior preferred stock. The

primary input into the warrants valuation is the market value of the shares of common stock of the GSEs which, along with

the junior preferred stock, are traded on the over-the-counter (OTC) market. We evaluate the need for adjusting our OTC

market-based valuation of the warrants for the effects, if any, of significant events occurring after the close of the market but

before the end of the measurement date (refer to Note 11). 

Investments in Special Purpose Vehicles

Pursuant to the CARES Act enacted in FY 2020 in response to the COVID-19 pandemic, we hold preferred equity

investments in SPVs the Board of Governors of the Federal Reserve System (Federal Reserve Board or Board) established

through the Federal Reserve Bank of New York (FRBNY) and Federal Reserve Bank of Boston (FRBB) to enhance the

liquidity of the U.S. financial system (refer to Note 10). We present these non-federal investment holdings at their fair value

(see the discussion below on “Fair Value Measurement”). We record changes in the valuation of these investments as entity

exchange transactions on the Consolidated Statements of Net Cost. 

The annual valuation of these investments as of September 30 incorporates various forecasts, projections and cash flow

analyses to develop an estimate of the assets’ fair value. We estimate the fair value of our SPV preferred equity investments

based on a discounted cash flow valuation methodology which calculates the present value of the projected annual cash flows

associated with these investments. 

Investments in Multilateral Development Banks

On behalf of the U.S., we invest in Multilateral Development Banks (MDBs) to support poverty reduction, private sector

development, transitions to market economies, and sustainable economic growth and development, thereby advancing U.S.

economic, political, and commercial interests abroad. As a participating member country, we provide a portion of the capital

base of the MDBs, through subscriptions to capital, which allows the MDBs to issue loans at market-based rates to middleincome developing countries. These paid-in capital investments are non-marketable equity investments valued at cost on

our Consolidated Balance Sheets.

In addition, on behalf of the U.S., we contribute funding to MDBs to finance grants and extend credit to poor countries at

below market-based interest rates. We report these U.S. contributions, also referred to as “concessional window”

contributions, as an expense within the “Economic Program” on our Consolidated Statements of Net Cost.
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Other Investments, Net

In connection with our Emergency Capital Investment Program established pursuant to the FY 2021 enactment of the CAA,

we hold preferred stock and subordinated debt we received in exchange for our capital disbursed to low- and moderateincome community financial institutions to augment their efforts to support small businesses and consumers in their

communities (refer to Notes 10 and 13). We present these non-federal investment holdings at their fair value (see the

discussion below on “Fair Value Measurement”). We record changes in the valuation of these investments as entity

exchange transactions on the Consolidated Statements of Net Cost. We recognize preferred stock dividend income when

declared and interest income on subordinated debt when earned.

In connection with other emergency relief programs established in response to the COVID-19 pandemic, we also hold

warrants for the purchase of common stock we received as compensation from recipients of financial assistance provided to

support ongoing employment of aviation workers during the pandemic (refer to Note 10). The warrants are assets of the U.S.

government and we are precluded from using the cash proceeds realized from the financial instruments we received. We

present these non-entity, non-federal investment holdings at their fair value (see the discussion below on “Fair Value

Measurement”). These investments and related fair valuation changes also result in a corresponding “Due To the General

Fund” liability, as we hold these investments on behalf of the General Fund. We report the investment revenue, as well as

changes in valuation, as non-entity, exchange transactions within the “COVID-19 Non-Entity (Revenue) Cost, Net” line of

the Consolidated Statements of Net Cost. 

The annual valuation as of September 30 of the preferred stock, subordinated debt, and common stock warrants incorporates

various forecasts, projections and cash flow analyses to develop an estimate of the assets’ fair value. We estimate the fair

value of our preferred stock, and subordinated debt based on a discounted cash flow valuation methodology which calculates

the present value of the projected annual cash flows associated with these investments. The primary input into our

preferred stock is dividend rates; our subordinated debt primarily incorporates interest rates and percentage of deferred

interest payments (interest deferral rates). Both our preferred stock and subordinated debt inputs include redemption rates,

annual qualified lending growth rates, issuer credit scores, and market yield discount rates. 

We estimate the fair value of our common stock warrants that are closely held using a Black-Scholes valuation methodology. 

The primary input into our common stock warrant investments that are publicly held is the market value of the underlying

shares of common stock of those warrants. Our common stock warrant inputs also include, but are not limited to, the

implied volatility and market prices of comparable options. We evaluate the need for adjusting our market-based valuation

of these warrants for the effects, if any, of significant events occurring after the close of the market but before the end of the

measurement date.

The ESF holds most of our foreign currency investments (refer to Note 13). We present the ESF’s foreign currency

denominated assets and investment securities at fair value (see the discussion below on “Fair Value Measurement”). These

holdings are normally invested in interest-bearing securities issued or held through foreign governments or monetary

authorities. We recognize interest on investments, amortization of premiums, and accretion of discounts on an accrual basis,

and amortize or accrete premiums and discounts over the life of the related investment security as an adjustment to yield

using the effective interest method. 
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FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Fair Value Measurement 

Fair value is a market-based measurement. For certain assets and liabilities, observable market transactions or market 

information may be available. For other assets and liabilities, observable market transactions and market information may

not be available. However, the objective of a fair value measurement in both cases is to estimate the price at which an

orderly transaction to sell an asset or to transfer a liability between market participants at the measurement date occurs 

under current market conditions.

When a price for an identical asset or liability is not observable, a reporting entity measures fair value using another 

valuation technique that maximizes relevant observable inputs and minimizes unobservable inputs. Because fair value is a 

market-based measurement, it is measured using the assumptions that market participants would use when pricing the 

asset or liability, including assumptions about risk. 

The measurement of fair value of an asset or a liability is categorized with different levels of fair value hierarchy as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can 

access at the measurement date. 

• Level 2—Inputs other than quoted prices included within Level 1 inputs that are observable for the asset or liability, 

either directly or indirectly. 

• Level 3—Unobservable inputs for the asset or liability. 

The inputs or methodology we use for valuing assets and liabilities are not necessarily indicative of the risks associated with 

those assets and liabilities. 

J. PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment (PP&E) is composed of capital assets used in providing goods or services. It also includes 

assets acquired through capital leases, which are initially recorded at the amount recognized as a liability for the capital 

lease at its inception. PP&E is stated at full cost, including costs related to acquisition, delivery, and installation, less 

accumulated depreciation. We capitalize major alterations and renovations, including leasehold and land improvements, 

while we charge maintenance and repair costs to expense as incurred. We record costs for construction projects as

construction-in-progress until completed and value the costs at actual (direct) cost plus applied overhead and other indirect 

costs.

Internal-use software encompasses software design, development, and testing of projects adding significant new 

functionality and long-term benefits. We accumulate costs for developing internal-use software in work-in-development until 

we place a project into service and we successfully complete testing and final acceptances. Once completed, we transfer the 

costs to depreciable property. 

We lease land and buildings from the General Services Administration (GSA) to conduct most of our operations. We have no

material leases that meet capital lease requirements for financial reporting purposes. GSA charges a standard level user 

fee, which approximates commercial rental rates for similar properties. 
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Our bureaus are diverse both in size and in operating environment. Accordingly, our capitalization policy provides minimum

capitalization thresholds, which generally range from $25,000 to $50,000 for all property categories except for internal-use

software. Minimum capitalization thresholds for internal-use software generally range from $50,000 to $250,000 (except for

the IRS, for which minimum capitalization thresholds generally range from $10 million to $50 million). We also use a

capitalization threshold for bulk purchases, which generally ranges from $50,000 to $500,000 for non-manufacturing

bureaus, and $25,000 to $50,000 for manufacturing bureaus. Bureaus determine the individual items that comprise bulk

purchases based on our guidance. 

We expense depreciation on a straight-line basis over the estimated useful life of the asset except for leasehold improvements

and capital leases, which we depreciate over the term of the lease or the useful life of the improvement or asset, whichever is

shorter. Service life ranges (two to 50 years) are wide due to the diversity of our PP&E. We do not depreciate land,

construction-in-progress, and internal-use software in development. We record impairment costs related to a significant and

permanent decline in the service utility of PP&E and construction-in-progress in the period incurred. 

Heritage Assets

Heritage assets are of historical significance. Multi-use heritage assets are those heritage assets for which the predominant

use is general government operations. We capitalize all acquisition, reconstruction, and betterment costs for our multi-use

heritage asset buildings as PP&E and depreciate these costs over their service life.

K. FEDERAL DEBT AND INTEREST PAYABLE

We issue federal debt in the form of Treasury securities. This debt relates to monies borrowed from the public and certain

other federal agencies to fund the operations of the U.S. government. We issue certain federal debt at a discount or

premium. We amortize these discounts and premiums over the term of the security using an interest method for all longterm securities and the straight-line method for short-term securities. We accrue interest costs as an expense as incurred

and report the costs on the Consolidated Statements of Net Cost as non-entity costs. 

L. REFUNDS PAYABLE

Refunds payable arise in the normal course of tax administration when we determine that taxpayers have paid more than

the actual taxes they owe. We record amounts concluded to be valid refunds owed to taxpayers as a liability entitled

“Refunds Payable” on the Consolidated Balance Sheets, with a corresponding receivable from the General Fund included in

the line entitled “Due From the General Fund.”

M. SPECIAL DRAWING RIGHTS

The SDR is an international reserve asset the IMF created to supplement its member countries’ official reserves. Under its

Articles of Agreement, the IMF may allocate SDRs to member countries in proportion to their IMF quotas. Pursuant to the

Special Drawing Rights Act of 1968, as amended, the ESF holds all SDRs allocated to or otherwise acquired by the U.S.

Allocations and Holdings

We record the SDR holdings that are permanent resources to the U.S. as part of “Cash, Foreign Currency, and Other

Monetary Assets,” and we record the SDR allocations as a liability entitled “Allocation of Special Drawing Rights” when the

IMF allocates SDRs to the U.S. The SDR allocations are a liability because the U.S. is obligated to repay the allocation

amount to the IMF under specified circumstances. Except for the payment of interest and charges on SDR allocations to the
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FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

U.S., the payment of the U.S. commitment related to SDR allocations is conditional on the following events in which the U.S.

has a substantial or controlling voice: (i) withdrawal by the U.S. from IMF membership or termination of its position in the

SDR Department of the IMF, (ii) cancellation of the SDRs by the Board of Governors (pursuant to an 85 percent majority

decision of the voting power of IMF members), (iii) liquidation of the IMF, or (iv) liquidation of the SDR Department of the

IMF.

SDR holdings increase primarily as a result of IMF SDR allocations. We record SDR transactions as incurred, and include

purchases and sales of SDRs, interest received on SDR holdings, interest charges on SDRs allocations, and valuation

adjustments. The U.S. government also receives remuneration in SDRs from the IMF based on claims on the IMF as

represented by the U.S. Reserve Position in the IMF and loans receivable from the supplemental borrowing arrangement. 

We credit remuneration to the ESF, which transfers to the TGA account an equivalent amount of dollars plus nominal

interest. 

On a daily basis, the IMF calculates the value of the SDR using the currency exchange rate in terms of the U.S. dollar from

weighted amounts of each of five freely usable currencies, as defined by the IMF. These currencies are the U.S. dollar, the

European euro, the Japanese yen, the British pound sterling, and the Chinese renminbi. We revalue the U.S. SDR holdings

and allocations from the IMF monthly based on the SDR exchange rate calculated by the IMF, resulting in the recognition of

unrealized gains or losses that are reported on the Consolidated Statements of Net Cost.

Certificates Issued to the Federal Reserve

The Special Drawing Rights Act of 1968, as amended, authorizes the Secretary to issue certificates, not to exceed the value of

SDRs held against the certificates, to the FRBs in return for dollar amounts equal to the face value of certificates issued. We

issue certificates to finance the acquisition of SDRs from other countries or to provide U.S. dollar resources to finance other

ESF operations. We redeem certificates issued at such times and in such amounts as the Secretary may determine. The

certificates do not bear interest. We report certificates issued to the FRBs at their face value, which approximates their

carrying value since, under the terms of the arrangements with the Federal Reserve Board, there is no set repayment date

and no interest accrued while certificates remain outstanding.

N. FEDERAL EMPLOYEE BENEFITS PAYABLE – FECA ACTUARIAL LIABILITY

The Federal Employees’ Compensation Act (FECA) provides income and medical cost protection to covered federal civilian

employees injured on the job, and employees who have incurred a work-related injury or occupational disease. The

Department of Labor (DOL) administers the FECA program, pays valid claims, and subsequently seeks reimbursements

from us for these paid claims. Generally, we reimburse the DOL within two to three years once funds are appropriated. The

FECA liability consists of two components. The first component is based on actual claims the DOL paid but which we have

not yet reimbursed. The second component is the estimated liability for future workers compensation as a result of past

events. We report both components in the “Other” line item within “Other Liabilities” on the Consolidated Balance Sheets. 

DOL generates these future workers’ compensation estimates by applying actuarial procedures developed to estimate the

liability for FECA benefits. The actuarial liability estimates for FECA benefits include the expected liability for death,

disability, medical, and miscellaneous costs for approved compensation cases.
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O. ANNUAL, SICK, AND OTHER LEAVE

We report annual and compensatory leave employees earn, but have not yet used, as an accrued liability. We adjust the

accrued balance annually to reflect current pay rates. Any portion of the accrued leave for which funding is not available is

recorded as an unfunded liability and reported in the “Other” line item within “Other Liabilities” on the Consolidated

Balance Sheets. We expense sick and other leave as taken and do not record a liability for such amounts, because employees

do not vest in sick and other leave benefits.

P. PENSION COSTS, OTHER RETIREMENT BENEFITS, AND OTHER POST-EMPLOYMENT BENEFITS

Federal Pension Costs, Other Retirement Benefits, and Other Post-Employment Benefits

We recognize the full cost of our employees’ pension benefits, including recognizing imputed cost for the difference between

the estimated service cost and the sum of participants’ pension benefit withholdings and agency contributions. However, the

Office of Personnel Management (OPM) rather than the Department recognizes the assets and liabilities associated with

these benefits.

Most of our employees hired prior to January 1, 1984, participate in the Civil Service Retirement System (CSRS), and

employees hired between January 1, 1984, and December 31, 1986, are covered under the CSRS Offset System, to which we

contribute 7.0 percent and 7.5 percent of pay for regular and law enforcement employees, respectively. On January 1, 1987,

the Federal Employees’ Retirement System (FERS) went into effect pursuant to the Federal Employees’ Retirement System

Act of 1986, P.L. 99-335. FERS is a three-tiered retirement system consisting of a Basic Benefit Plan, Thrift Savings Plan

(TSP), and Social Security benefits. For the FERS Basic Benefit Plan, we contribute between 16.5 percent and 18.4 percent

for regular employees, and between 36.4 percent and 38.2 percent for law enforcement officers. The TSP under FERS is a

401(k)-type savings plan in which we automatically contribute one percent of base pay and match any employee

contributions up to an additional four percent of base pay. For most employees hired after December 31, 1983, we also

contribute the employer’s matching share for Social Security. 

Similar to federal retirement plans, OPM, rather than the Department, reports the assets and liability for future payments

to retired employees who participate in the Federal Employees Health Benefits Program (FEHBP) and Federal Employees

Group Life Insurance (FEGLI) Program. We report the full cost of providing other retirement benefits (ORB). We also

recognize an expense and a liability for other post-employment benefits (OPEB), which includes all types of benefits,

provided to former or inactive (but not retired) employees, their beneficiaries, and covered dependents. Additionally, one of

our bureaus, OCC, separately sponsors a postretirement life insurance benefit plan for current and future retired employees. 

OCC is also a participating employer in the Pentegra Defined Benefit Plan for Financial Institutions, a multiple employer

plan that provides benefits for certain retired employees who meet eligibility requirements. In addition, the OCC

administers two 401(k) plans. Eligible OFR employees also participate in one of these two plans.

District of Columbia Federal Pension and Judicial Retirement Funds

Pursuant to Title XI of the Balanced Budget Act of 1997, as amended, we became responsible for the District of Columbia

Judicial Retirement and Survivors Annuity Fund (the Judicial Retirement Fund) and the District of Columbia Teachers,

Police Officers, and Firefighters Federal Pension Fund (the D.C. Federal Pension Fund) retirement plans (refer to Note 18). 

The actuarial cost method we use to determine costs and actuarial liability for the Judicial Retirement Fund is the

Individual Entry Age Normal Cost Method, which approximates the methodology specified by the Aggregate Entry Age
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FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Normal Actuarial Cost Method. The actuarial cost method we use to determine the cost and actuarial liability for the D.C. 

Federal Pension Fund is the Projected Unit Credit Cost Method, which recognizes that participants have fully accrued all 

service and does not generate a normal cost. These methodologies base actuarial liabilities on long-term economic 

assumptions. The pension benefit costs the plans incur are included on the Consolidated Statements of Net Cost.

Q. COMMITMENTS AND CONTINGENCIES

Through FFB, we make loan commitments with federal agencies, or private sector borrowers with loans guaranteed by

federal agencies, to extend credit for their own use (refer to the accounting policy above entitled “Loans and Interest 

Receivable, Intra-Governmental”). We establish loan commitments when FFB and other parties fully execute agreements in

which we become obligated to issue loans pursuant to the terms and conditions within the agreements. We reduce loan 

commitments when we issue the loans or when the commitments expire. 

On behalf of the U.S., we subscribe to shares of certain MDBs, of which some shares represent capital commitments that are 

callable under certain limited circumstances to meet the obligations of the respective MDB. The callable capital 

commitments become binding on the U.S. when we issue instruments of commitment subscribing to the U.S. portion of

callable capital. 

Additionally, on behalf of the U.S., we have established financial commitments through our participation in the IMF through 

a quota subscription and a borrowing arrangement that supplements IMF resources. U.S. financial commitments to the IMF 

become binding when the U.S. consents to an increase in its participation as an IMF member country, and all other 

conditions to the increase have been met. The outstanding financial commitment in the U.S. quota decreases or increases 

when the IMF draws upon or repays funding it obtained pursuant to a letter of credit established by the U.S. to make 

domestic currency available to the IMF as needed. The outstanding financial commitment in the supplemental borrowing 

arrangement decreases or increases when the IMF borrows and repays loans under the related supplemental funding 

arrangement (refer to Note 7). 

In accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government, we recognize material contingent 

liabilities meeting the following criteria:

• a past event or exchange transaction has occurred; 

• a future cash outflow is probable; and 

• a future cash outflow is measurable. 

The estimated liability we record is either a specific amount or within a range of amounts. If some amount within the range 

is a better estimate than any other amount within the range, we recognize that amount. If no amount within the range is a 

better estimate than any other amount, we recognize the minimum amount in the range, and we disclose the range and a 

description of the nature of the contingency. We follow this policy in recording a contingent liability, if any, related to the 

GSE SPSPA program (refer to Note 11), and loss contingencies that may arise from claims, assessments, litigations, fines, 

penalties, and other sources (refer to Note 27).

If we meet one or more, but not all, of the above criteria for recognition, and there is a reasonable possibility of loss, we will 

disclose, if material, the nature of the contingent liability, along with a range of possible loss, if estimable, and a description 

of the nature of the contingency. 
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R. REVENUE AND FINANCING SOURCES

We finance our activities either through exchange revenue we receive from others or through non-exchange revenue and

financing sources (such as appropriations the Congress provides and penalties, fines, and certain user fees we collect). User

fees primarily include collections from the public for the IRS costs to process installment agreements, letter ruling and

determinations, and income verification. We recognize exchange revenue when we earn it, i.e., we delivered goods or

rendered services. We recognize revenue from reimbursable agreements when providing services. We record non-exchange

revenues when we receive them or when we accrue revenues due to a legal claim. We recognize appropriations used as

financing sources when we incur related expenses or purchase assets. 

We also incur certain costs paid in total or in part by other federal entities, such as pension costs, the FEHBP, and any unreimbursed payments made from the Treasury Judgment Fund on our behalf. We recognize these subsidized costs on the

Consolidated Statements of Net Cost, and we recognize the imputed financing for these costs on the Consolidated

Statements of Changes in Net Position. As a result, there is no effect on net position. We also recognize other non-exchange

financing sources, such as donations and transfers of assets without reimbursements, for the period in which they occurred

on the Consolidated Statements of Changes in Net Position.

We recognize revenue we receive from disposition of forfeited property as non-exchange revenue on the Consolidated

Statements of Changes in Net Position. We report costs related to the Forfeiture Fund program on the Consolidated

Statements of Net Cost. The Treasury Forfeiture Fund is the special fund account for depositing non-tax forfeiture proceeds

we receive pursuant to laws law enforcement bureaus that participate in the Treasury Forfeiture Fund enforce or

administer. We report forfeited property balances in other than intra-governmental “Other Assets” on the Consolidated

Balance Sheets.

S. CUSTODIAL REVENUES

Non-entity revenue reported on our Statements of Custodial Activity includes cash we collected, primarily from taxes. It

does not include revenue other federal agencies collect, such as user fees and other receipts, which are remitted for general

operating purposes of the U.S. government or are dedicated for certain trust funds. We present the Statements of Custodial

Activity on the “modified accrual basis.” We recognize revenues as we collect cash, and record a “non-cash accrual

adjustment” representing the net increase or decrease during the reporting period in net revenue-related assets and

liabilities, mainly taxes receivable. 

T. APPROPRIATIONS AND OTHER BUDGETARY ACTIVITY

Combined Statement of Budgetary Resources Activity

We record appropriations when authorized by legislation. We record incurred obligations of appropriations when we place

orders or sign contracts for goods and services, award a grant, or take other actions that require us to make payments to the

public or another federal entity. We record outlays when we make disbursements. 

Permanent and Indefinite Appropriations

We use permanent and indefinite appropriations to disburse tax refunds, refundable tax credits and related interest. We

recognize refund payment funding as we use appropriations. Permanent indefinite authority for refund activity is available

for an unlimited period of time in the amount necessary to cover the refund and/or credit. We report tax refunds and credits
88 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

as a custodial activity of the Department, since they are, in substance, a custodial revenue-related activity resulting from

taxpayer overpayments of their tax liabilities.

We have two permanent and indefinite appropriations related to debt activity. We use one permanent and indefinite

appropriation to pay interest on the public debt securities, and use the other to redeem securities that are matured, called, or

eligible for early redemption. These accounts are not annual appropriations and do not have refunds. We report debt

redemption appropriations related to our liability on our Consolidated Balance Sheets. We record interest appropriations at

the beginning of the fiscal year and again at mid-year, if necessary, and we return any unused authority to the General Fund

at the end of the fiscal year. Permanent indefinite authority for debt redemptions and related interest is available for an

unlimited period of time.

We also have permanent and indefinite appropriations to fund increases in the projected subsidy costs of credit programs as

determined by the re-estimation process the FCRA requires.

Additionally, we have other permanent and indefinite appropriations to make certain payments on behalf of the U.S.

government. We receive these appropriations to make payments to the FRB for fiscal services provided, and to the financial

institutions for services provided as financial agents of the U.S. government. They also include appropriations provided to

make other disbursements on behalf of the U.S. government, including payments made to various parties as a result of

certain claims and judgments rendered against the U.S.

U. INCOME TAXES

As an agency of the U.S. government, we are exempt from all income taxes any governing body imposes, whether it is a

federal, state, territorial, local, or foreign government.

V. USE OF ESTIMATES

We have made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues, expenses, and the

disclosure of contingent liabilities to prepare our financial statements. Actual results may differ from these estimates. 

Adverse changes in the outlook for the key assumptions underlying management’s estimates may materially affect the

results of our operations, cash flows, and our financial position in future periods. Transactions subject to estimates

principally include our GSE and other non-federal investment holdings, loan and credit program receivables, credit reform

subsidy costs, tax receivables, impairment to any of our investments and receivables, loan guarantees, depreciation,

actuarial liabilities, cost and earned revenue allocations, as well as contingencies and any related recognized liabilities.

Estimation of such complex and long-duration receivables, investments, and contingencies is subject to uncertainty. It is

possible that new developments will adversely impact the value of receivables, investments, and contingencies, as well as

ultimate amounts we are required to fund. Except as expressly noted herein, we have not revalued or included in our

estimates as of September 30, 2023, the effects of any new developments that may have occurred subsequent to September

30, 2023. 

We derive credit program receivables using credit reform modeling, which is subject to the use of estimates and forecasts

that have inherent uncertainty. Refer to the accounting policy above entitled “Credit Program Receivables, Net” and Notes 9

and 10 for additional discussion related to the estimation of credit program receivables. 
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We estimate our non-federal investment holdings based on fair value and changes in these asset valuations, including

impairment. Since the valuation is an annual process, we deem changes in valuation of our equity investments as usual and

recurring. Refer to the accounting policy above entitled “Investments” and Notes 10 and 11 for additional discussion related

to fair value estimations. 

For certain of our liabilities, we perform annual calculations, as of September 30, to assess our need for recording an

estimated liability in accordance with SFFAS No. 5 related to certain liabilities of our CARES Act programs, as well as

liabilities related to our funding commitment to the GSEs under the SPSPAs. 

As stipulated by the CARES Act, we must remit excess residual proceeds we realize from our SPV capital contributions and

direct loans to air carriers and other related businesses to the Federal Old-Age and Survivors Insurance Trust Fund (refer to

Note 10). We estimate and record the net present value of this potential liability, if any, based on the probable future

occurrence of excess cash flows received above the full recovery of our costs associated with these programs. This calculation

is subject to the same sensitivities as those related to our credit reform modeling we discuss above. 

Liability to the GSEs recognition is predicated on the probable future occurrence of an excess of liabilities and minimum

capital reserve amounts, as defined, over the assets of either GSE at the end of any reporting quarter. The occurrence of

future GSE deficits, which ultimately determines our liability to the GSEs, is most sensitive to future changes in the housing

price index and, to a lesser extent, future changes in guarantee fees the GSEs receive on single-family mortgages and

interest rates (refer to Note 11). 

Refer to the accounting policy above entitled “Pension Costs, Other Retirement Benefits, and Other Post-Employment

Benefits” and Note 8 for additional discussion related to the estimation of actuarial liabilities and tax receivables,

respectively. 

W. OTHER-THAN-TEMPORARY IMPAIRMENTS

We account for a decline in the market value (either due to credit, price or currency) of any investment below cost that is

deemed to be other-than-temporary as an impairment, and reduce the carrying value to fair value for financial reporting

purposes. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and

intent to hold the investment until a market price recovery, and consider whether evidence indicating that the cost of the

investment is recoverable outweighs evidence to the contrary.

X. CREDIT, MARKET AND FOREIGN CURRENCY RISK

Credit risk is the potential, no matter how remote, for financial loss from a failure of a borrower or counterparty to perform

in accordance with underlying contractual obligations. We take on possible credit risk when we make direct loans or

guarantees to non-federal entities, provide credits to foreign entities, or become exposed to institutions that engage in

financial transactions with foreign countries (refer to Note 13). The following programs entail credit risk: monetary assets

held; investments, direct loans and other receivables related to our COVID-19, CDFI, IAP, SBLF, and TARP programs, as

well as committed but undisbursed direct loans and funding commitments related to our COVID-19 and GSE programs; and

GSE direct loans receivable under the HFA initiative (the New Issue Bond Program). 

Our activities generally focus on the underlying problems in the credit markets. We developed these programs, or provided

credit support to the pandemic emergency relief programs of the Federal Reserve Board, to provide credit where borrowers

are not able to get access to credit with reasonable terms and conditions. Because these programs attempt to correct for a
90 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

market imperfection, it can expose us to potential costs and losses. Additional risk of costs and losses could result from

terrorist attacks under the Terrorism Risk Insurance Program. We describe the extent of the risk we assumed in more detail

in the notes to the financial statements and, where applicable, we factor it into credit reform models and reflect it in fair

value measurements (refer to Notes 9, 10, 11, and 27). 

We face certain risks and uncertainties as a result of holding securities denominated in foreign currency. The price of

holdings of such securities may widely fluctuate as a result of volatility in foreign currency markets and changes in real and

perceived credit risk of our counterparties. 

Y. FUNDS FROM DEDICATED COLLECTIONS

We account for revenues and other financing sources for funds from dedicated collections (FDC) separately from other funds. 

Such funds are financed by specifically identified revenues provided to the U.S. government by non-federal sources, often

supplemented by federal and other financing sources, which remain available over time. Statute requires that we use these

specifically identified revenues and other financing sources for designated activities, benefits, or purposes. We apply the

following criteria for purposes of designating funds as dedicated collections: (i) a statute committing the U.S. government to

use specifically identified revenues and/or other financing sources that are originally provided to the U.S. government by a

non-federal source only for designated activities, benefits, or purposes; (ii) explicit authority for the fund to retain revenues

and/or other financing sources not used in the current period for future use to finance the designated activities, benefits, or

purposes; (iii) a requirement to account for and report on the receipt, use, and retention of the revenues and/or other

financing sources that distinguishes the fund from the U.S. government’s general revenues; and (iv) for funds comprised of

both federal and non-federal sources, such funding is predominantly non-federal, or the non-federal funding is material to

our financial statements.

Z. ALLOCATION TRANSFERS

We are a party to allocation transfers with other federal agencies as both a transferring (parent) entity and/or a receiving

(child) entity. Allocation transfers are legal delegations by one department of its authority to obligate budget authority and

outlay funds to another department. A separate fund account (allocation account) is created in Treasury as a subset of the

parent fund account for tracking and reporting purposes. We credit all allocation transfers of balances to this account, and

charge subsequent obligations and outlays the child entity incurs to this allocation account as they execute the delegated

activity on behalf of the parent. Parent federal agencies report both the proprietary and budgetary activity and the child

agency does not report any financial activity related to budget authority allocated from the parent federal agency to the child

federal agency. However, OMB guidance requires Treasury to report the activity when we receive allocation transfers, as

the child, from the Executive Office of the President (see Circular No. A-136, II.3.1, Parent-Child Reporting for two

exceptions). 

We allocate funds, as the parent, to the DOL and HHS. Also, we receive allocation transfers, as the child, from HHS, the

Department of Transportation, U.S. Agency for International Development, and the Executive Office of the President.

AA. FIDUCIARY ACTIVITIES

Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment, and disposition by

the U.S. government of cash or other assets in which non-federal individuals or entities have an ownership interest that the

U.S. government must uphold. Fiduciary cash and other assets are not assets of the U.S. government. We do not report

these activities in our consolidated financial statements, but instead report them in Note 26. 
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AB. DISCLOSURE ENTITIES AND RELATED PARTIES

SFFAS No. 47, Reporting Entity, requires that our consolidated financial statements reflect the balances and activities of

consolidation entities, including Treasury bureaus and other reporting entities, meeting the following “principles for

inclusion” when considered as a whole: (i) the entity is included in the Budget of the United States (also known as the

President’s Budget); (ii) the U.S. government holds “majority ownership interest”; (iii) the U.S. government has “control with

risk of loss or expectation of benefit”; or (iv) it would be misleading to exclude such entity. SFFAS No. 47 also provides

guidance for assessing whether we report an organization meeting the inclusion principles as a disclosure entity or related

party. 

A disclosure entity exists when we determine that an entity meets any of the following SFFAS No. 47 “inclusion principles”

with respect to the U.S. government but does not meet the characteristics of a “consolidation entity.” Based on SFFAS No.

47 criteria, the Federal Reserve System is considered to be a disclosure entity. Additionally, entities the U.S. government

owns and/or controls as a result of regulatory actions—such as organizations in receivership or conservatorship—or other

U.S. government intervention actions are generally classified as disclosure entities if the relationship with such entities is

not expected to be permanent. 

A related party exists when one party to an established relationship has the ability to exercise significant influence over

another party in making policy decisions. Related parties generally do not meet the SFFAS No. 47 inclusion principles;

however, we report on a relationship that is of such significance that it would be misleading to exclude information about

that entity. Disclosure entities and related parties are not considered components of the consolidated Treasury reporting

entity and, thus, are only disclosed in the notes to our consolidated financial statements. Using the principles prescribed in

SFFAS No. 47, we identified the following disclosure entities and related parties as of September 30, 2023.

Disclosure Entities

Federal Reserve System

Congress, under the Federal Reserve Act of 1913 (Federal Reserve Act), created the FR System. The FR System includes the

Federal Reserve Board, Federal Reserve Banks (FRB), and the Federal Open Market Committee (FOMC). Collectively, the

FR System serves as the nation’s central bank and is responsible for formulating and conducting monetary policy, issuing

and distributing currency (Federal Reserve Notes), supervising and regulating financial institutions, providing nationwide

payments systems (including large-dollar transfers of funds, automated clearinghouse operations, and check collection),

providing certain financial services to federal agencies and fiscal principals, and serving as the U.S. government’s bank. 

Monetary policy includes actions the FR System undertakes that influence the availability and cost of money and credit as a

means of helping to promote national economic goals. The FR System also conducts operations in foreign markets in order to

counter disorderly conditions in exchange markets or to meet other needs specified by the FOMC to carry out its central

bank responsibilities. 

While we consult with the FR System on matters affecting the economy and certain financial stabilization activities it is

considered an independent central bank, and the executive branch of the U.S. government does not ratify its decisions. In

accordance with SFFAS No. 47 criteria, the FR Systems’ assets, liabilities, and operations are not consolidated into our

consolidated financial statements; however, we account for and disclose our financial activities with the FR System within

our consolidated financial statements. 
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FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Federal Reserve System Structure 

Federal Reserve Board of Governors 

The Board is an independent regulatory organization governed by seven members appointed by the President and confirmed 

by the Senate. The full term of a Board member is 14 years, and the appointments are staggered so that one term expires on

January 31 of each even-numbered year. The Board has a number of supervisory and regulatory responsibilities for 

institutions including, among others, state-chartered banks that are members of the FR System, bank holding companies, 

and savings and loan holding companies. In addition, the Board has general supervisory responsibilities for the 12 FRBs, 

and issues currency (Federal Reserve Notes) to the FRBs for distribution. No government appropriation is required to

support the operation of the Board. The Board’s budget transactions are not included in the President’s Budget, nor are they 

subject to the President’s review because of its unique role in conducting monetary policy. 

Federal Reserve Banks 

The 12 FRBs are chartered under the Federal Reserve Act, which requires each member bank to own the capital stock of its 

FRB. Each FRB has a board of directors that exercises supervision and control of each FRB, with three members appointed 

by the Board, and six board members elected by their member banks. The FRBs participate in formulating and conducting 

monetary policy, distributing currency and coin, and serving as the government’s fiscal agent, as well as the fiscal agent for 

other fiscal principals (i.e., banks, credit unions, saving and loan institutions). Additionally, the FRBs provide short-term 

loans to depository institutions and loans to participants in programs or facilities with broad-based eligibility in unusual and 

crucial circumstances when approved by the Board and the Secretary of the Treasury. 

We utilize the services of the FRBs to execute a variety of transactions on behalf of the Fiscal Service and the ESF. The 

following are examples of our interaction with the FRBs:

• The FRBs serve as our fiscal agent and depositary, executing banking and other financial transactions on our behalf 

(refer to Note 5). We reimburse the FRBs for these services, the cost of which is included on the Consolidated 

Statements of Net Costs. 

• The FRBs hold Treasury and other federal securities in the FRBs’ System Open Market Account (SOMA) for the purpose 

of conducting monetary policy. 

• The FRBs hold gold certificates we issue in which the certificates are collateralized by gold (refer to Note 6). 

• The FRBs hold SDR certificates we issue which are collateralized by SDRs (refer to Notes 5 and 7). 

• The FRBs are required by Board policy to transfer their excess earnings to us on behalf of the U.S. government (refer to

Notes 8 and 23). 

Federal Open Market Committee 

The FOMC is comprised of the seven Board members and five of the 12 FRB presidents. FOMC formulates and conducts 

monetary policy primarily through open market operations (the purchase and sale of certain securities in the open market), 

the principal tool of national monetary policy. These operations affect the amount of reserve balances available to depository 

institutions, thereby influencing overall monetary and credit conditions. 
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Federal Reserve System Assets and Liabilities

The FRBs hold Treasury and other securities in the SOMA for the purpose of conducting monetary policy. These assets are

generally subject to the same market conditions as other financial instruments. In the open market, the FR System

purchases and sells Treasury securities as a mechanism for controlling the money supply. 

The FRBs have deposit liabilities with Treasury and depository institutions. The FRBs issue Federal Reserve Notes, the

circulating currency of the U.S., which are collateralized by the Treasury securities and other assets held by the FRBs. 

FRB Residual Earnings Transferred to the Department

FRBs generate income from interest earned on securities, reimbursable services provided to federal agencies, and by

providing priced services to depository institutions as specified by the Monetary Control Act of 1980. Although the FRBs

generate earnings from carrying out open market operations, via the earnings on securities held in the SOMA account, their

execution of these operations is for the purpose of accomplishing monetary policy rather than generating earnings. Each

FRB is required by Board policy to transfer to us its residual (or excess) earnings after providing for the cost of operations,

payment of dividends, and surplus funds not to exceed an FRB’s allocated portion of an aggregate of $6.8 billion for all FRBs,

in accordance with the provisions of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year

2021 (P.L. 116-283). 

FRBs’ residual earnings may vary due to, among other things, changes in the SOMA balance levels that may occur in

conducting monetary policy. Under P.L. 116-283, if an FRB’s earnings for the year are not sufficient to provide for the cost of

operations, dividend payments, or allocated portion of the $6.8 billion aggregate surplus funds limitation, an FRB will

suspend its payments to us until such earnings become sufficient. The FRB’s residual earnings of $0.6 billion and $106.7

billion for fiscal years ended September 30, 2023 and 2022, respectively, are reported as custodial revenues on our

Statements of Custodial Activity. They constituted 0.01 percent and 2.12 percent of our total custodial revenues collected in

FY 2023 and 2022, respectively. “Taxes, Interest and Other Receivables, Net” includes a receivable for FRB’s residual

earnings which represents the earnings due to us as of September 30, but not collected by us until after the end of the month

(refer to Note 8). 

FRB-Managed Special Purpose Vehicles – Liquidity Lending Facilities

We hold equity investments in SPVs the Federal Reserve Board established through the FRBNY and FRBB to enhance the

liquidity of the U.S. financial system. Our involvement in these programs represents non-permanent intervention activities

designed to help mitigate the economic impacts of the pandemic. Accordingly, our equity interests in these SPVs meet the

SFFAS No. 47 criteria for classifying our SPV investments as disclosure entities. These entities are not consolidated as part

of our consolidated financial statements; however, the value of our investments in these entities is presented as equity

investments on our Consolidated Balance Sheets (refer to Note 10).

Government Sponsored Enterprises – Fannie Mae and Freddie Mac

During the FY 2008 financial crisis, the U.S. government placed Fannie Mae and Freddie Mac under conservatorship to help

ensure their financial stability. These entities meet the SFFAS No. 47 criteria for disclosure entities as organizations owned

or controlled by the U.S. government as the result of regulatory actions (such as conservatorship). Additionally, the U.S.

government’s intervention actions with regards to these GSEs are not expected to be permanent. Accordingly, these entities

are not consolidated as part of our consolidated financial statements; however, the value of our investments in these entities

is presented as equity investments on our Consolidated Balance Sheets (refer to Note 11).
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Related Parties

In accordance with SFFAS No. 47 determination principles, we currently maintain related party relationships with the IMF

and the MDBs. The IMF is an international organization of 190 member countries that works to foster global monetary

cooperation, secure financial stability, sustain economic growth, and reduce poverty around the world. The U.S. government

holds the largest quota subscription of any member. The U.S. quota subscription serves as the key determinant for our 16.5

percent share of voting rights in various IMF decisions for which the U.S. government has a substantial voice. The Secretary

serves as the U.S. Governor to the IMF, and the U.S. Governor nominates and elects the U.S. Executive Director of the IMF,

who is one of 24 directors responsible for exercising voting rights over the strategic direction of the institution.

The U.S. commitment to the IMF is in the form of cash and interest-bearing instruments. Historically, the U.S. has not

experienced a loss to its commitment in the IMF (refer to accounting policies above entitled “Loans Receivable, Net – Other

Than Intra-Governmental,” “Commitments and Contingencies,” “Special Drawing Rights,” and Notes 5 and 7 for a further

description of our relationship, financial risk, and activities with the IMF).

Additionally, on behalf of the U.S., we invest in and provide funding to the MDBs to support poverty reduction and promote

sustainable economic growth in developing countries. The MDBs provide financial and technical support by means of

strengthening institutions, providing assistance that addresses the root causes of instability in fragile and conflict-affected

states, responding to global crises, and fostering economic growth and entrepreneurship. U.S. participation in the MDBs is

in the form of financial contributions used to ensure the effectiveness and impact of the MDBs’ global development agenda. 

The U.S. has voting power in each of the MDBs to which we contribute, ranging from approximately six percent to 50 percent

(refer to accounting policies above entitled “Investments,” “Commitments and Contingencies,” and Notes 12 and 27 for a

further description of our relationship, financial risk, and activities with the MDBs). 
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2. FUND BALANCE 

Fund Balance increases when we receive appropriations, reappropriations, continuing resolutions, appropriation 

restorations, and allocations; and when we receive transfers and reimbursements from other federal agencies. Fund Balance 

can also be increased by amounts borrowed from the Fiscal Service, FFB, other federal entities, and by amounts collected 

and credited to appropriation or fund accounts. 

Likewise, Fund Balance is reduced when we make disbursements to pay liabilities or to purchase assets, goods, and services; 

investments in U.S. securities (securities issued by Fiscal Service or other federal agencies); when expired appropriations are 

canceled; transfers and reimbursements made to other federal entities, non-federal entities, or the General Fund; and due to

sequestration or rescission of appropriations. 

STATUS OF FUND BALANCE 

As of September 30, 2023 and 2022, the status of the fund balance consisted of the following: 

(in millions) 2023 2022

Unobligated Balance - Available $ 342,728 $ 308,612 

Unobligated Balance - Not Available 51,793 96,607 

Obligated Balance Not Yet Disbursed 183,665 181,515 

Subtotal 578,186 586,734 

Adjustment for ESF (194,109) (188,154) 

Adjustment for Intra-Treasury Investments (11,183) (10,481) 

Adjustment for Borrowing Authority (7,678) (7,180) 

Adjustment for IMF 152,768 150,041 

Adjustment for Authority Unavailable for Obligations 18,274 17,371 

Other Adjustments 7,274 6,259 

Total Status of Fund Balance $ 543,532 $ 554,590 

Portions of the Unobligated Balance Not Available, as shown on the Combined Statement of Budgetary Resources, include 

amounts appropriated in prior fiscal years that are not available to fund new obligations. However, we may use such 

amounts for upward and downward adjustments for existing obligations in future years. The Obligated Balance Not Yet 

Disbursed represent amounts designated for payment of goods and services we ordered but have not received, or goods and 

services we received but for which payment has not yet been made. The changes in Unobligated Balance - Available and 

Unobligated Balance - Not Available are primarily due to funding provided by the Inflation Reduction Act (IRA) being 

apportioned in FY 2023. In August 2022, Congress passed, and the President signed into law the IRA, which, among other 

things, addresses climate change by providing tax incentives. 

Since the following line items are either a component of Fund Balance or post to budgetary status accounts, the following 

adjustments are required to reconcile the budgetary status to the non-budgetary Fund Balance as reported on the 

Consolidated Balance Sheets:

• Adjustments for ESF – ESF investments in Treasury securities (which are eliminated on the Consolidated Balance 

Sheets), foreign investments, SDR holdings, and related balances that meet the criteria for reporting as part of

budgetary resources are reported on the Combined Statements of Budgetary Resources; however, they are not a 

component of the Fund Balance as they represent invested funds; 
96 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

• Adjustments for Intra-Treasury Investments – Budgetary resources include Treasury security investments; however, we

have moved the money from the Fund Balance to Investments, which we eliminate on the Consolidated Balance Sheets; 

• Adjustments for Borrowing Authority – Borrowing authority is in budgetary status reported on the Combined 

Statements of Budgetary Resources but not in the Fund Balance because we have not received the amounts; 

• Adjustments for IMF – We report the funding we receive through appropriation warrants for IMF quota subscription 

and borrowing arrangement as a component of Fund Balance; however, we do not report the IMF transactions as

budgetary resources and uses on the Combined Statements of Budgetary Resources (refer to Note 7); and 

• Adjustment for Authority Unavailable for Obligations – Resources unavailable for obligations reduced the budgetary 

resources reported on the Combined Statements of Budgetary Resources; however, they do not impact the Fund Balance. 

As of September 30, 2023 and 2022, we had no budgetary authority in the Fund Balance that was specifically withheld from 

apportionment by the OMB. We hold balances in non-entity funds, such as certain deposit funds (e.g., seized cash), for the 

public or for another federal entity, such as the General Fund. Such funds have an offsetting liability equal to the Fund 

Balance. Refer to Note 7 regarding restrictions related to the letter of credit held for a portion of the U.S. quota in the IMF. 
DEPARTMENT OF THE TREASURY 97 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

3. LOANS AND INTEREST RECEIVABLE – INTRA-GOVERNMENTAL 

ENTITY INTRA-GOVERNMENTAL

Through FFB, we issue loans to federal agencies for the agencies’ own use or for the agencies to loan to private sector 

borrowers whose loans are guaranteed by the federal agencies. FFB is a wholly-owned Government corporation that 

operates under the general supervision of the Secretary, and has its own broad statutory authority to finance any obligations 

that federal agencies issue, sell, or guarantee. For agencies that have the statutory authority to borrow in the market, but 

not from Treasury through the Fiscal Service (refer to the Non-Entity Intra-Governmental section below), FFB uses its 

statutory authority to make these loans directly to federal agencies. 

FFB also uses its statutory authority to finance direct or indirect federally-guaranteed obligations, which, as a matter of

long-standing federal credit policy, is the least expensive and most efficient method of financing these credit-risk obligations 

when compared to private sector lender financing. When a federal agency has to honor its guarantee because a privatesector borrower defaults, the federal agency that guaranteed the loan must obtain an appropriation or use other resources to

repay FFB. 

All principal and interest on FFB loans to federal agencies and loans to private-sector borrowers which are guaranteed by

federal agencies are, or have a commitment to be, backed by the full faith and credit of the U.S. government. Accordingly, we

have not recognized any credit-related losses on its loans, nor have we recorded an allowance for uncollectible intragovernmental loans. 

As of September 30, 2023 and 2022, entity intra-governmental loans (issued by FFB) and interest receivable consisted of the 

following: 

2023 2022

Loans Interest Loans Interest 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Agriculture $ 54,548 $ 373 $ 54,921 $ 51,814 $ 30 $ 51,844 

Federal Deposit Insurance Corporation(1) 50,000 91 50,091 - - - 

Department of Energy 16,614 81 16,695 15,449 73 15,522 

United States Postal Service(2) 13,000 81 13,081 10,000 39 10,039 

Department of Housing & Urban 

 Development 2,800 8 2,808 2,716 8 2,724 

Other Agencies 709 4 713 623 3 626

Total Entity Intra-Governmental $ 137,671 $ 638 $ 138,309 $ 80,602 $ 153 $ 80,755 

(1) In September 2023, FFB executed a transaction in support of the Federal Deposit Insurance Corporation (FDIC), acting in

its capacity as Receiver, wherein FFB purchased a $50 billion note issued by a trust created by an FDIC Receivership 

and backed by a guarantee from the FDIC in its corporate capacity. 

(2) As a result of an operating deficit experienced by the United States Postal Service (USPS) in past fiscal years, on April 6, 2022, the 

President signed the Postal Service Reform Act of 2022, P.L. 117-108, with an objective to return the USPS to a sound financial 

position. We, along with Congress and other stakeholders, will continue monitoring the USPS progress towards this objective. 
98 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

NON-ENTITY INTRA-GOVERNMENTAL 

Through the Fiscal Service, we account for and report on the principal borrowings from and repayments to the General Fund 

for various funds other federal agencies manage, as well as the related interest due to the General Fund. These federal 

agencies are statutorily authorized to borrow from the General Fund, through the Fiscal Service, to make loans for a broad 

range of purposes, such as education, housing, farming, and small business support. The information below reflects amounts 

borrowed under the federal agency’s statutory authorization, and does not include unused available borrowing authority.

As of September 30, 2023 and 2022, non-entity intra-governmental loans (issued by the Fiscal Service) and interest 

receivable that were due to the General Fund consisted of the following:

 

2023 2022

Loans Interest Loans Interest 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Education $ 1,188,589 $ - $ 1,188,589 $ 905,076 $ - $ 905,076 

Small Business Administration 334,320 - 334,320 362,801 - 362,801 

Department of Housing and Urban 

Development 107,104 - 107,104 93,585 - 93,585 

Department of Agriculture 94,315 3 94,318 87,342 - 87,342 

Department of Transportation 22,220 - 22,220 16,066 - 16,066 

Department of Homeland Security 20,529 - 20,529 20,533 - 20,533 

Export Import Bank of the U.S. 12,804 - 12,804 13,501 - 13,501 

US International Development Finance 

 Corporation 10,498 - 10,498 8,965 - 8,965 

Department of Labor 6,658 - 6,658 6,557 - 6,557 

Department of Energy 6,513 32 6,545 6,442 31 6,473 

Railroad Retirement Board 4,627 60 4,687 4,418 35 4,453 

Environmental Protection Agency 2,953 - 2,953 1,557 - 1,557 

Department of Defense 1,910 - 1,910 1,598 - 1,598 

Other Agencies 2,123 - 2,123 2,613 - 2,613 

Total Non-Entity Intra- 

 Governmental $ 1,815,163 $ 95 $ 1,815,258 $ 1,531,054 $ 66 $ 1,531,120 

Total Intra-Governmental Loans 

 and Interest Receivable (Entity 

 and Non-Entity) $ 1,952,834 $ 733 $ 1,953,567 $ 1,611,656 $ 219 $ 1,611,875 
DEPARTMENT OF THE TREASURY 99 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

ADVANCES TO TRUST FUNDS

Advances to Trust Funds consists of Advances to the Unemployment Trust Fund, Advances to the Agricultural Disaster 

Relief Trust Fund, and Advances to the Federal Supplementary Medical Insurance Trust Fund. The General Fund issues 

advances to the DOL’s Unemployment Trust Fund to disburse to states for unemployment benefits. The General Fund also 

issues advances to USDA’s Agricultural Disaster Relief Trust Fund to make crop and livestock feed disaster assistance 

payments to farmers and ranchers. The Bipartisan Budget Act of 2015, P.L. 114-74, authorized a transfer from the General 

Fund to HHS’ Federal Supplementary Medical Insurance Trust Fund to temporarily replace the reduction in Medicare Part 

B participants’ premiums. We transfer DOL’s and HHS’s repayment of these advances to the General Fund. 

As of September 30, 2023 and 2022, Advances to Trust Funds consisted of the following:

2023 2022

Loans Interest Loans Interest 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Advances to the Unemployment Trust Fund $ 31,499 $ 35 $ 31,534 $ 39,500 $ 51 $ 39,551 

Advances to the Agricultural Disaster 

 Relief Trust Fund 2,881 - 2,881 - - - 

Advances to the Federal Supplementary 

 Medical Insurance Trust Fund 2,854 - 2,854 7,747 - 7,747 

Total Advances to Trust Funds $ 37,234 $ 35 $ 37,269 $ 47,247 $ 51 $ 47,298 

Advances to the Unemployment Trust Fund and Federal Supplementary Medical Insurance Trust Fund decreased by $8.0 

billion and $4.9 billion, respectively, from the end of the prior fiscal year, largely due to states and HHS repaying their 

outstanding borrowings from the respective Trust Funds to the General Fund. As of September 30, 2023, there were no

repayments by USDA of their outstanding borrowings from the Agricultural Disaster Relief Trust Fund.
100 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

4. DUE FROM THE GENERAL FUND AND DUE TO THE GENERAL FUND

The General Fund consists of assets and liabilities used to finance the daily and long-term operations of the U.S government, 

as a whole. It also includes accounts used in the management of the Budget of the U.S. Government. 

We hold and manage General Fund assets, such as loans and interest receivable, cash, and investments in the GSEs on

behalf of the U.S. government. General Fund assets constitute resources available to meet the operating needs of the U.S. 

government. We report these managed assets separately on the Consolidated Balance Sheets, with a corresponding amount 

reported as Due To the General Fund that represents a liability to reflect assets we owed to the General Fund. 

General Fund liabilities, primarily federal debt and interest payable and liability for restoration of federal debt principal and 

interest, are obligations of the U.S. government. We report these Department-managed liabilities separately on the 

Consolidated Balance Sheets, with a corresponding amount reported as Due From the General Fund that represents a 

receivable, or future funds required of the General Fund to repay borrowings from the public and other federal agencies. 

As of September 30, 2023 and 2022, the General Fund liabilities we owed exceeded the assets we hold on behalf of the 

General Fund by $30.2 trillion and $28.3 trillion, respectively. This represents the amount the U.S. government needs, 

through a combination of future tax collections or continued borrowing from the public and federal agencies to meet its 

obligations.

As of September 30, 2023 and 2022, Due From the General Fund included the following non-entity liabilities:

Liabilities Requiring Funding from the General Fund (in millions) 2023 2022

Federal Debt and Interest Payable - Held by the Public (Note 16) $ 26,328,135 $ 24,308,695 

Federal Debt and Interest Payable - Intra-Governmental (Note 16) 6,878,998 6,717,361 

Refunds Payable 6,662 6,961 

Adjustment for Eliminated Liabilities 28,451 31,561 

Total Due From the General Fund $ 33,242,246 $ 31,064,578 

The Adjustment for Eliminated Liabilities principally represents investments in U.S. government securities our reporting 

entities hold that were eliminated against Federal Debt and Interest Payable Intra-governmental.
DEPARTMENT OF THE TREASURY 101 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

As of September 30, 2023 and 2022, Due To the General Fund included the following non-entity assets:

Assets to be Distributed to the General Fund (in millions) 2023 2022

Fund Balance $ 3,891 $ 3,147 

Loans and Interest Receivable - Intra-Governmental (Note 3) 1,815,258 1,531,120 

Advances to Trust Funds (Note 3) 37,269 47,298 

Cash Due To the General Fund (Held by the Department) (Note 5) 638,923 617,114 

Taxes and Other Non-Entity Receivables Due To the General Fund 183,759 237,763 

Credit Reform Downward Subsidy Re-estimates 94 84

Loans and Interest Receivable, Net (Note 10) 12,406 11,585 

Common Stock Warrant Investments (Notes 10 and 13) 397 493

Investments in Government Sponsored Enterprises (Note 11) 240,410 223,720 

Adjustment for Eliminated Assets 146,779 94,977 

Other 1,605 1,480 

Total Due To the General Fund $ 3,080,791 $ 2,768,781 

The assets to be distributed to the General Fund do not represent all of the non-entity assets we manage. Refer to Note 15 for all 

of our non-entity assets held.

The Fund Balance reported above represents the non-entity funds we hold on behalf of the General Fund. We use it to

administer programs such as the Presidential Election Campaign and payments for Legal Services Corporation and thus it is

not available for our general use. 

Taxes and Other Non-Entity Receivables Due To the General Fund primarily represents IRS-related federal taxes receivable 

(refer to Note 8).

The Adjustment for Eliminated Assets principally represents loans and interest payable our Treasury reporting entities owe, 

which were eliminated against Loans and Interest Receivable Intra-governmental the Fiscal Service holds. The increase in

the Adjustment for Eliminated Assets balance is primarily due to increased borrowings from FFB.
102 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

5. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS

Cash, Foreign Currency, and Other Monetary Assets held as of September 30, 2023 and 2022 were as follows: 

(in millions) 2023 2022

Entity: 

Cash $ 95 $ 25

Foreign Currency and Foreign Currency Denominated Assets 13,682 12,816 

Other Monetary Assets: 

 Special Drawing Right Holdings 163,157 153,596 

 U.S. Dollars Held in Cash by the IMF 370 319

Total Entity 177,304 166,756 

Non-Entity: 

Operating Cash of the U.S. government 638,923 617,013 

Foreign Currency 174 144

Miscellaneous Cash Held by All Treasury Reporting Entities 129 160

Total Non-Entity 639,226 617,317 

Total Cash, Foreign Currency, and Other Monetary Assets $ 816,530 $ 784,073 

We hold non-entity operating and other miscellaneous cash due to the General Fund which consisted of the following as of

September 30, 2023 and 2022: 

(in millions) 2023 2022

Operating Cash - FRB Account $ 656,889 $ 635,994 

Outstanding Checks (17,966) (18,981) 

Total Operating Cash of the U.S. government 638,923 617,013 

Miscellaneous Cash 50 110

Subtotal 638,973 617,123 

Amounts Due to the Public (50) (9) 

Total Cash Due to the General Fund (Note 4) $ 638,923 $ 617,114 

ENTITY

Entity cash, foreign currency, and other monetary assets principally include foreign currency, foreign currency denominated 

assets (FCDAs), and SDRs. These assets are valued as of September 30, 2023 and 2022 using current exchange rates plus 

accrued interest. 

Special Drawing Rights 

The SDR is an international reserve asset the IMF created to supplement existing reserve assets (refer to Note 1M). The 

SDR derives its value as a reserve asset from the commitments of participants to hold and accept SDRs and to honor various 

obligations connected with their proper functioning as a reserve asset. The IMF has allocated new SDRs on several 

occasions to members participating in the IMF’s SDR department typically in response to the global financial crisis. During 

FY 2023 and 2022, we purchased an additional 2.6 billion SDRs (valued at $3.5 billion) and 3.3 billion SDRs (valued at $4.5 

billion), respectively, from other IMF participants. Our increased commitment to hold and accept SDRs helps to provide 

liquidity to the global economic system and supplement member countries’ official reserves. 

As of September 30, 2023 and 2022, the total amount of SDR holdings of the U.S. (including interest receivable) was the 

equivalent of $163.2 billion and $153.6 billion, respectively. As of September 30, 2023 and 2022, the total value of SDR 
DEPARTMENT OF THE TREASURY 103

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

allocations to the U.S. was the equivalent of $151.0 billion and $147.0 billion, respectively. The outstanding SDR certificates

issued to the Federal Reserve are valued at $5.2 billion which we reported as a liability on the Consolidated Balance Sheets

as of September 30, 2023 and 2022.

NON-ENTITY

We manage the non-entity cash, foreign currency, and other monetary assets which principally included Operating Cash of

the U.S. government. Also included is foreign currency maintained by various U.S. disbursing offices, miscellaneous cash

such as seized monetary instruments, undistributed cash, and offers in compromises which are maintained as a result of our

tax collecting responsibilities. 
104 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

6. GOLD AND SILVER RESERVES, AND GOLD CERTIFICATES ISSUED TO

THE FEDERAL RESERVE BANKS

Through the Mint, we are responsible for safeguarding most of the U.S. government’s gold and all of the silver reserves in

accordance with 31 USC 5117; a smaller portion of the gold is in the custody of the FRBs. 

The gold reserves we hold are partially offset by a liability for gold certificates the Secretary issued to the FRBs at the

statutory rate, as provided in 31 USC 5117. Since 1934, we have issued Gold Certificates in non-definitive or book-entry 

form to the FRBs. Our liability incurred by issuing the Gold Certificates, as reported on the Consolidated Balance Sheets, is

limited to the gold we hold at the statutory value. Upon issuance of Gold Certificates to the FRBs, we deposit the proceeds 

from the certificates into the operating cash of the U.S. government. All of our certificates issued are payable to the FRBs. 

The Mint also holds 100,000 fine troy ounces (FTO) ($4 million at the statutory carrying value) of gold reserves without 

certificates. 

The U.S. Mint and the FRBs hold the gold and silver bullion reserves. We report these reserves on the consolidated financial 

statements at the values stated in 31 USC 5116 – 5117 (statutory rates) which are $42.2222 per FTO of gold and no less 

than $1.292929292 per FTO of silver. Accordingly, the silver is valued at $1.292929292 per FTO. The market values of the 

gold and silver reserves we disclose below are based on the London Gold Fixing. As of September 30, 2023 and 2022, the 

values of gold and silver reserves consisted of the following:

2023

Statutory 2023

Carrying Market Market 

Statutory Value Rate Per Value 

 FTOs Rate (in millions) FTO (in millions) 

Gold Held by U.S. Mint 248,046,116 $ 42.2222 $ 10,473 $ 1,870.50 $ 463,970 

Gold Held by Federal Reserve Banks 13,452,811 $ 42.2222 568 $ 1,870.50 25,164 

Total Gold 261,498,927 11,041 489,134 

Silver 16,000,000 $ 1.2929 21 $ 23.08 369

Total Gold and Silver Reserves $ 11,062 $ 489,503 

2022

Statutory 2022

Carrying Market Market 

Statutory Value Rate Per Value 

 FTOs Rate (in millions) FTO (in millions) 

Gold Held by U.S. Mint 248,046,116 $ 42.2222 $ 10,473 $ 1,671.75 $ 414,671 

Gold Held by Federal Reserve Banks 13,452,811 $ 42.2222 568 $ 1,671.75 22,490 

Total Gold 261,498,927 11,041 437,161 

Silver 16,000,000 $ 1.2929 21 $ 19.02 304

Total Gold and Silver Reserves $ 11,062 $ 437,465 
DEPARTMENT OF THE TREASURY 105 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

7. RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND AND 

RELATED LOANS AND INTEREST RECEIVABLE

The U.S. participates in the IMF through a quota subscription and a separate borrowing arrangement—the New 

Arrangements to Borrow (NAB)—that supplements IMF resources. 

As a result of the Consolidated Appropriations Act, 2016 , P.L. 114-113, we obtained appropriation warrants to cover the full 

amount of the commitment made to the IMF and received current indefinite authority to maintain the U.S. dollar equivalent 

of the SDR funding commitment levels. The IMF transactions—other than related interest earnings and cost estimates for 

U.S. quota and NAB adjustments—are not reported as budgetary resources and uses on our Combined Statement of

Budgetary Resources. 

RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND

We pay quota subscriptions partly through the transfer of reserve assets—such as foreign currencies or SDRs, which are 

international reserve assets the IMF created—and partly by making domestic currency available as needed through a noninterest-bearing letter of credit. This letter of credit, which we issue and the FRBNY maintains, represents our available 

commitment to the IMF, which may be drawn upon by the IMF. 

Transfers to the IMF under the U.S. quota do not result in net budgetary outlays as they constitute an exchange of monetary 

assets in which the U.S. receives an equal offsetting claim on the IMF in the form of an increase in the U.S. reserve position 

in the IMF. Similarly, when the IMF repays dollars to the U.S., no net budgetary receipt results because the U.S. reserve 

position declines concurrently in an equal amount. The U.S. reserve position is an interest-bearing asset like other 

international reserve assets the U.S. holds, and is available at any time to meet U.S. funding needs.

The U.S. quota is denominated in SDRs. As of September 30, 2023 and 2022, the U.S. quota in the IMF was SDR 

83.0 billion. The equivalent U.S. dollar value of the U.S. quota consisted of the following:

(in millions) 2023 2022

Letter of Credit (1) $ 76,932 $ 74,708 

Reserve Position (2) 31,970 31,334 

Total U.S. Quota in the IMF $ 108,902 $ 106,042 

(1) We include Letter of Credit amounts as part of the “Fund Balance” as reported on the Consolidated Balance Sheets. Amounts also include 

approximately 0.25 percent of the U.S. quota held in cash in an IMF account at the FRBNY. 

(2) We report the Reserve Position amounts as “Reserve Position in the IMF” on the Consolidated Balance Sheets. 

Fluctuations in the value of the U.S. dollar with respect to the SDR result in valuation changes in dollar terms for the U.S. 

quota. We periodically adjust this balance to maintain the SDR value of the U.S. quota as required by the IMF Articles of

Agreement. The U.S. quota reflects a net upward adjustment in value of $2.9 billion as of September 30, 2023 when 

compared to 2022, and a net downward adjustment in value of $10.7 billion as of September 30, 2022 when compared to

2021, due to the depreciation and appreciation of the U.S. dollar against the SDR, respectively.

IMF LOANS AND INTEREST RECEIVABLE

In addition to quota subscriptions, the IMF maintains borrowing arrangements to supplement its resources in order to

forestall or cope with an impairment of the international monetary system when IMF liquidity is low. The U.S. has the 
106 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

authority to participate in the NAB. When the U.S. transfers funds to the IMF under the NAB, the U.S. receives in

exchange a liquid and interest-bearing claim on the IMF. 

The U.S. participation in the NAB as of September 30, 2023 and 2022 was SDR 56.4 billion, which was equivalent to

$74.2 billion and $72.2 billion, respectively. As of September 30, 2023 and 2022, under the U.S. NAB arrangement with the 

IMF, there was $0.1 billion and $0.5 billion, respectively, of U.S. loans outstanding, which we reported as “Loans and 

Interest Receivable, Net” on the Consolidated Balance Sheets. 

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

As of September 30, 2023 and 2022, Taxes, Interest, and Other Receivables, Net consisted of the following:

(in millions) 2023 2022

Non-Entity 

Federal Taxes Receivable, Gross $ 404,280 $ 437,271 

Less Allowance on Taxes Receivable (222,215) (201,200) 

Receivable on FRB Deposits of Earnings - 7 

Other Receivables 1,926 1,814 

Less Allowance on Other Receivables (119) (113) 

Total Non-Entity (Note 15) 183,872 237,779 

Entity 

Miscellaneous Entity Receivables and Related Interest 1,131 248

Total Taxes, Interest, and Other Receivables, Net $ 185,003 $ 238,027 

Federal taxes receivable constitutes the largest portion of these receivables, with IRS-related federal taxes receivable 

representing the majority of the balance. IRS federal taxes receivable consists of delinquent tax assessments, penalties, and 

interest, which were not paid or abated, and which were agreed to by either the taxpayer and IRS, or the courts. These 

receivables also include non-delinquent IRC 965(h) amounts and employers’ deferred share of the Social Security portion of

FICA and both the employers’ and employee representatives’ share of the Railroad Retirement Tax (RRTA), as provided for 

by the CARES Act. The decrease in the net federal taxes receivable amount is largely due to payments received for these 

deferrals.

The portion of taxes receivable estimated to be collectible and the allowance for doubtful accounts are based on projections of

collectability from a statistical sample of taxes receivable (refer to the section entitled Required Supplementary Information 

(unaudited) for additional discussion on IRS Federal Taxes Receivable, Net). 

In addition to amounts attributed to taxes, these receivables also include accrued interest income due on funds deposited in

FRBs. We do not establish an allowance for the receivable on deposits of FRB earnings because weekly deposits are required 

by the Federal Reserve Act, as amended, and there has been no history of uncollectible accounts.
DEPARTMENT OF THE TREASURY 107 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

9. CREDIT PROGRAM RECEIVABLES, NET

We administer a number of programs designed to stabilize the nation’s financial system and restore the flow of credit to

consumers, businesses, and homeowners. As of September 30, 2023 and 2022, Credit Program Receivables, Net (including 

our Credit Program Receivables associated with our COVID-19 programs, which are discussed in Note 10) consisted of the 

following:

(in millions) 2023 2022

CDFI Fund's Bond Guarantee Program (BGP) $ 1,302 $ 1,198 

State and Local Housing Finance Agency Program (GSE sponsored) 1,019 1,083 

Direct Loans to Air Carriers and Other Related Businesses (Note 10) 901 1,046 

Other(1) 164 88

$ 3,386 $ 3,415 

(1) Includes IAP, SBLF, and other CDFI credit program receivables valued at $84 million, $32 million, and $48 million, respectively, as of

September 30, 2023, and other CDFI, SBLF, and TARP credit program receivables valued at $49 million, $36 million, and $3 million, 

respectively, as of September 30, 2022. 

CDFI FUND’S BOND GUARANTEE PROGRAM (BGP)

The Small Business Jobs Act of 2010, P.L. 111-240, created the CDFI-BGP. The CDFI Fund issues guarantees for the full 

amount of bonds issued to support CDFIs that make investments for eligible community or economic development purposes. 

The bonds support CDFI lending and investment by providing a source of long-term capital to CDFIs. As of

September 30, 2023 and 2022, the CDFI-BGP net credit program receivable of $1.3 billion and $1.2 billion, respectively, 

included a negative subsidy allowance of $59 million and $49 million, respectively, which reflects our projection that the 

program will result in a net revenue to us after accounting for repayments, interest, and fees. 

We performed a financial statement re-estimate of the program’s cost as of September 30, 2023 and 2022. These reestimates resulted in a downward re-estimate, or a decrease in the cost of the program, of $2 million and an upward reestimate, or an increase in the cost of the program, of $7 million as of September 30, 2023 and 2022, respectively. The 

downward re-estimate in FY 2023 was driven by changes in performance assumptions, actual performance to-date, and 

actual program funding cost. The 2023 performance assumptions anticipate an overall revenue to the program due to lower 

default projections in future years’ cash flows. The upward re-estimate in FY 2022 was driven by higher bond prepayments. 

STATE AND LOCAL HOUSING FINANCE AGENCY PROGRAM (GSE SPONSORED) 

Under the Housing and Economic Recovery Act of 2008, P.L. 110-289 (HERA), we, together with the FHFA, Fannie Mae, and 

Freddie Mac, created a program in October 2009 to provide support to HFAs. The HFA Program is comprised of the New 

Issue Bond Program (NIBP) that is designed to support low mortgage rates and expand resources for low- and middleincome borrowers to purchase or rent homes, making them more affordable over the long term. Under the terms of the 

NIBP, we purchased securities of Fannie Mae and Freddie Mac backed by new mortgage revenue bonds HFAs issued. As of

September 30, 2023 and 2022, the HFA net credit program receivable of $1.0 billion and $1.1 billion, respectively, included a 

positive subsidy allowance of $137 million and $184 million, respectively, which reflects our projection that the HFA program 

will result in a net cost to us after accounting for repayments, interest, and fees. 

We performed a financial statement re-estimate of the NIBP program’s cost as of September 30, 2023 and 2022. These reestimates resulted in a downward re-estimate, or a decrease in the cost of the program, of $38 million and $55 million as of

September 30, 2023 and 2022, respectively. The downward re-estimates in FY 2023 and 2022 were primarily driven by
108 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

higher than estimated principal collections. A higher prepayment assumption was used in the projection of future years’

cash flows for FY 2023, which contributed to the downward re-estimate. 

10. COVID-19 INVESTMENTS, ADVANCES, RECEIVABLES, AND OTHER

The global spread of the COVID-19 over the past several years resulted in a severe global health and economic crisis. In

FY 2020 and 2021, Congress took steps to limit the damage the pandemic in the U.S. caused by passing several key statutes, 

including the Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136 (CARES Act), the Consolidated 

Appropriations Act, 2021, P.L. 116-260 (CAA), and the American Rescue Plan Act of 2021, P.L. 117-2 (ARP). The relief 

funding these legislative Acts provided helped reduce the financial burden on individuals and their families, minimized 

business and employment losses, and enhanced the liquidity of the U.S. financial system. In addition to the FY 2022 and 

2021 rescissions pursuant to the Infrastructure Investment and Jobs Act, P.L. 117-58 (IIJA) and the CAA, respectively, on

June 3, 2023, Congress passed the Fiscal Responsibility Act of 2023, P.L. 118-5 (FRA), which rescinded certain unobligated 

funds that were provided by these legislative Acts.

The following tables summarize our key budgetary resources, for the fiscal year ended September 30, 2023 and 2022, for 

each Treasury program established under the legislative Acts enacted in response to the COVID-19 pandemic:
DEPARTMENT OF THE TREASURY 109 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Fiscal Year Ended September 30, 2023 

(in millions) 

Beginning 

Available 

Budgetary 

Resources 

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred 

Remaining 

Available 

Budgetary 

Resources 

ARP Authority 

Economic Impact Payments to Individuals $ - $ 1,238 $ (1,238) $ - 

Advances for Child Tax Credits - (282) 282 - 

Other COVID-19 Related Tax Credits - 51,750 (51,750) - 

Total Taxpayer Support Programs - 52,706 (52,706) - 

Coronavirus State and Local Fiscal Recovery Funds 

 

66 - (1) 65

Emergency Rental Assistance 394 - (373) 21

Homeowners Assistance Fund 29 - (5) 24

Coronavirus Capital Projects Fund 127 - (116) 11

State Small Business Credit Initiative 5,524 (175) (4,097) 1,252 

Total State, Local, Territorial, and Tribal Programs 6,140 (175) (4,592) 1,373 

Payroll Support to Aviation Workers 358 (356) (2) - 

Total American Industry and Financial Markets Programs 358 (356) (2) - 

Total ARP Authority (2) $ 6,498 $ 52,175 $ (57,300) $ 1,373 

CAA Authority 

Economic Impact Payments to Individuals $ - $ 814 $ (814) $ - 

Total Taxpayer Support Programs - 814 (814) -

Emergency Rental Assistance 26 (4) (22) - 

Total State, Local, Territorial and Tribal Programs 26 (4) (22) - 

Payroll Support to Aviation Workers 133 (133) - - 

Coronavirus Economic Relief for Transportation Services 16 - 5 21

Total American Industry and Financial Markets Programs 149 (133) 5 21

Emergency Capital Investment Program 678 (104) (294) 280

CDFI Rapid Response and Equitable Recovery Programs 1,747 - (1,729) 18

Total CDFI Programs 2,425 (104) (2,023) 298

Total CAA Authority (2) $ 2,600 $ 573 $ (2,854) $ 319
110 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Fiscal Year Ended September 30, 2023 

(in millions) 

Beginning 

Available 

Budgetary 

Resources 

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred 

Remaining 

Available 

Budgetary 

Resources 

CARES Act Authority 

Economic Impact Payments to Individuals $ - $ (87) $ 87 $ - 

Total Taxpayer Support Programs - (87) 87 - 

Payroll Support to Aviation Workers 369 (295) - 74

Direct Loans to Air Carriers and National Security Business 228 (195) (11) 22

Total American Industry and Financial Markets Programs 597 (490) (11) 96

Total CARES Act Authority (2) $ 597 $ (577) $ 76 $ 96

(1) Rescissions and Other Adjustments primarily include permanent and indefinite authority obtained as of September 30, 2023, to fund certain tax 

provision programs that extended beyond September 30, 2022. We will obtain permanent and indefinite appropriations in FY 2024 to fund 

certain tax provision programs that extend beyond September 30, 2023. Pursuant to the June 3, 2023 FRA, additionally included rescissions of

the following: (i) $150 million and $356 million of ARP authority related to the State Small Business Credit Initiative and the Payroll Support to

Aviation Workers programs, respectively, (ii) $133 million, $104 million and $4 million of CAA Authority related to the Payroll Support to

Aviation Workers, Emergency Capital Investment Program and the Emergency Rental Assistance programs, respectively, and (iii) $295 million 

and $200 million of CARES Act authority related to the Payroll Support to Aviation Workers and the Direct Loans to Air Carriers and National 

Security Business programs, respectively. 

(2) Total ARP, CAA, and CARES Act Authority does not include amounts related to the Department’s program support and oversight of these 

programs. 
DEPARTMENT OF THE TREASURY 111 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Fiscal Year Ended September 30, 2022 

(in millions) 

Beginning 

Available 

Budgetary 

Resources 

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred 

Remaining 

Available 

Budgetary 

Resources 

ARP Authority 

Economic Impact Payments to Individuals $ - $ 10,534 $ (10,534) $ - 

Advances for Child Tax Credits - 46,649 (46,649) - 

Other COVID-19 Related Tax Credits - 29,470 (29,470) - 

Total Taxpayer Support Programs - 86,653 (86,653) - 

Coronavirus State and Local Fiscal Recovery Funds 107,066 - (107,000) 66

Emergency Rental Assistance 13,084 - (12,690) 394

Homeowners Assistance Fund 8,988 - (8,959) 29

Coronavirus Capital Projects Fund 10,000 - (9,873) 127

State Small Business Credit Initiative 9,994 (100) (4,370) 5,524 

Local Assistance and Tribal Consistency Fund 2,000 - (2,000) - 

Total State, Local, Territorial, and Tribal Programs 151,132 (100) (144,892) 6,140 

Payroll Support to Aviation Workers 329 - 29 358

Total American Industry and Financial Markets Programs 329 - 29 358

Total ARP Authority (2) $ 151,461 $ 86,553 $ (231,516) $ 6,498 

CAA Authority 

Economic Impact Payments to Individuals $ - $ 2,721 $ (2,721) $ - 

Total Taxpayer Support Programs - 2,721 (2,721) - 

Emergency Rental Assistance 6 - 20 26

Total State, Local, Territorial and Tribal Programs 6 - 20 26

Payroll Support to Aviation Workers 317 (200) 16 133

Coronavirus Economic Relief for Transportation Services 705 - (689) 16

Total American Industry and Financial Markets Programs 1,022 (200) (673) 149

Emergency Capital Investment Program 8,976 - (8,298) 678

CDFI Rapid Response and Equitable Recovery Programs 1,751 (2) (2) 1,747 

Total CDFI Programs 10,727 (2) (8,300) 2,425 

Total CAA Authority (2) $ 11,755 $ 2,519 $ (11,674) $ 2,600 
112 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Fiscal Year Ended September 30, 2022 

(in millions) 

Beginning 

Available 

Budgetary 

Resources 

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred 

Remaining 

Available 

Budgetary 

Resources 

CARES Act Authority 

Economic Impact Payments to Individuals $ - $ (147) $ 147 $ - 

Total Taxpayer Support Programs - (147) 147 - 

Payroll Support to Aviation Workers 3,347 (3,000) 22 369

Direct Loans to Air Carriers and National Security Business 1,591 (1,363) - 228

Total American Industry and Financial Markets Programs 4,938 (4,363) 22 597

Total CARES Act Authority (2) $ 4,938 $ (4,510) $ 169 $ 597

(1) Rescissions and Other Adjustments primarily include permanent and indefinite authority obtained as of September 30, 2022, to fund certain tax 

provision programs that extended beyond September 30, 2021. We obtained permanent and indefinite appropriations in FY 2023 to fund certain 

tax provision programs that extended beyond September 30, 2022. Pursuant to the November 15, 2021 IIJA, also included are rescissions of

$3.0 billion and $1.4 billion of CARES Act authority related to the Payroll Support to Aviation Workers program and the Direct Loans to Air 

Carriers and National Security Business programs. 

(2) Total ARP, CAA, and CARES Act Authority does not include amounts related to the Department’s program support and oversight of these 

programs. 

TAXPAYER SUPPORT

ECONOMIC IMPACT PAYMENTS FOR INDIVIDUALS 

Pursuant to the CARES Act, CAA, and ARP, Treasury, through the IRS, used its permanent and indefinite authority to pay 

recovery rebates for individuals (also referred to as the “Economic Impact Payments” (EIPs)). These Acts authorized the IRS 

to allow for a tax credit (or rebate) to individuals against their income taxes. We reported these outlays as “Refunds and 

Other Payments” on the Statements of Custodial Activity (refer to Note 23).

ADVANCES FOR CHILD TAX CREDITS

The ARP increased the child tax credit from $2,000 to $3,000 for the 2021 tax year only. For the 2021 tax year only, the 

child tax credit was made fully refundable for taxpayers whose principal residence for more than one-half of the tax year was 

in the U.S. The program also included the ability to receive a portion of the child tax credit as an advance from July through 

December of 2021.

OTHER RELATED TAX CREDITS

Other related tax credits primarily consist of the Employee Retention Credit (ERC). The CARES Act authorized eligible 

employers to claim the ERC against applicable employment taxes for a portion of qualified wages employers paid to

employees during the COVID-19 crisis. The credit is available to employers whose (i) operations were fully or partially 

suspended, due to a COVID-19 related shut-down order, or (ii) gross receipts declines by more than 50 percent when 

compared to the same quarter in the prior year. The ERC was extended through June 30, 2021, and then through 

December 31, 2021 by the CAA and ARP, respectively. 
DEPARTMENT OF THE TREASURY 113 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Refunds and Other Payments 

The IRS used its permanent and indefinite authority to fund the taxpayer support programs as authorized by the CARES 

Act, CAA, and ARP. We reported this activity within the “Refunds and Other Payments” line of the Statements of Custodial 

Activity (also refer to Note 23). EIP outlays and tax credits paid in FY 2023 and 2022 were as follows:

(in millions) 2023 2022

Economic Impact Payments $ 1,965 $ 13,108 

Advances for Child Tax Credits (282) 46,649 

Other COVID-19 Related Tax Credits (1) 51,750 29,470 

Total COVID-19 Related Refunds and Other Payments $ 53,433 $ 89,227 

(1) Includes ERC credits which change significantly due primarily to the timing of taxpayers’ submission and delayed processing of tax returns. 

SUPPORT PROVIDED THROUGH STATE, LOCAL, TERRITORIAL AND TRIBAL GOVERNMENTS

The following is a description of each support program directed through state, local, territorial, and Tribal governments. 

Refer to the section near the end of this note entitled “COVID-19 Pandemic Relief – Advances and Prepayments” which 

discusses the accounting treatment for these programs.

CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), established in FY 2021 in accordance with the ARP, 

provide a combined $350.0 billion, to remain available through December 31, 2024, to state, local, territorial, and Tribal 

governments to reduce the fiscal effects stemming from COVID-19, and lay the foundation for a strong and equitable 

recovery. Pursuant to the terms of the ARP, we provided eligible jurisdictions assistance to support:

• households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; 

• eligible workers of state, territorial, or Tribal governments by providing them premium pay for performing essential 

work during the COVID-19 public health emergency; 

• vital public services and help retain jobs and to replace lost state, local, territorial, and Tribal government revenue; and 

• necessary investments in water, sewer, or broadband infrastructure.

We allocated the $350.0 billion of appropriations we received as follows: $195.3 billion for states, including the District of

Columbia; $130.2 billion for local governments, including counties, metropolitan cities, and non-entitlement units of local 

government; $4.5 billion for territorial governments; and $20.0 billion for Tribal governments. 

Of the $350.0 billion appropriated in FY 2021 for this program, we disbursed an aggregate total of $349.9 billion through 

September 30, 2023, of which $1.0 billion and $106.0 billion were disbursed during the fiscal years ended September 30,

2023 and 2022, respectively.

EMERGENCY RENTAL ASSISTANCE (HOUSING SUPPORT) 

We established two Emergency Rental Assistance (ERA) programs in FY 2021, the first program created pursuant to the 

CAA (ERA 1) and a second round under the ARP (ERA 2). The ERA programs make funding available through state, local, 

territorial, and Tribal governments. Recipients must use up to 90 percent of the awarded funding to provide financial 
114 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

assistance to eligible households for rent (and arrears), utilities and home energy costs (and arrears), other housing costs and

housing stability services. The ERA 1 funding expired on September 30, 2022, and the ERA 2 funding will generally remain

available until September 30, 2025. Of the $21.6 billion appropriated in FY 2021 for the ERA 2 program, we disbursed an

aggregate total of $21.4 billion through September 30, 2023, of which $3.3 billion and $9.8 billion were disbursed during the

fiscal years ended September 30, 2023 and 2022, respectively.

HOMEOWNER ASSISTANCE FUND

The ARP provided $9.9 billion of appropriated funds to establish the Homeowner Assistance Fund (HAF) to help prevent

homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacement of

homeowners experiencing financial hardship after January 21, 2020. Funds from the HAF are being made available through

state, local, territorial, and Tribal governments. Recipients must use the funds for assistance with mortgage payments,

homeowner’s insurance, utility payments, and other specified purposes related to mortgages and housing. This funding will

remain available until September 30, 2025. As of September 30, 2023, we fully disbursed the $9.9 billion appropriated in

FY 2021 for this program, of which $0.3 billion and $8.6 billion were disbursed during the fiscal years ended

September 30, 2023 and 2022, respectively.

CORONAVIRUS CAPITAL PROJECTS FUND

The Coronavirus Capital Projects Fund, established pursuant to the ARP in FY 2021, addresses certain challenges of the

pandemic, especially in rural America and low- and moderate-income communities, helping to ensure that all communities

have access to high-quality, modern infrastructure, including internet access. The ARP provided an appropriation of

$10.0 billion for payments to states, territories, the freely associated states, and Tribal governments to carry out critical

capital projects that directly enable work, education, and health monitoring, including remote options, in response to the

public health emergency. This appropriation will remain available until the funds are fully spent. Of the $10.0 billion

appropriated in FY 2021 for this program, we disbursed an aggregate total of $231 million through September 30, 2023, of

which $200 million and $31 million were disbursed during the fiscal years ended September 30, 2023 and 2022, respectively.

STATE SMALL BUSINESS CREDIT INITIATIVE

We established the State Small Business Credit Initiative (SSBCI) program under the ARP to provide $10.0 billion in

appropriated funds to state, territorial, and Tribal governments for small business credit support and investment programs. 

The remainder of the funds will continue to remain available until expended to provide support to small businesses

responding to and recovering from the economic effects of the COVID-19 pandemic, help socially and economically

disadvantaged individuals have access to credit and investments, provide technical assistance to help small businesses

applying for various support programs, and to pay reasonable costs of administering this program. This program amends

the SSBCI program we had previously established under the Small Business Jobs Act of 2010. 

The ARP requires all disbursements and remaining obligations to be completed on or before September 30, 2030; any

remaining unexpended amounts as of that date will be rescinded and returned to the General Fund. Of the $9.85 billion in

net appropriated funds (including rescissions) for this program, we disbursed an aggregate total of $2.6 billion through

September 30, 2023, of which $1.3 billion and $1.3 billion were disbursed during the fiscal years ended September 30, 2023

and 2022, respectively.
DEPARTMENT OF THE TREASURY 115

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

LOCAL ASSISTANCE AND TRIBAL CONSISTENCY FUND

The ARP provided us $2.0 billion of appropriated funds to establish the Local Assistance and Tribal Consistency Fund and

make payments to eligible revenue-sharing counties and Tribal governments for any governmental purpose other than a

lobbying activity. Of the total appropriated amount, the ARP reserved $750 million and $250 million for eligible revenuesharing counties and Tribal governments, respectively. The $2.0 billion of appropriated funds remained available until

September 30, 2023, with amounts obligated during FY 2022 and 2023. Of the $2.0 billion appropriated in FY 2021 for this

program, we disbursed an aggregate total of $1.9 billion through September 30, 2023, of which $1.8 billion and $0.1 billion

were disbursed during the fiscal years ended September 30, 2023 and 2022, respectively.

SUPPORT TO AMERICAN INDUSTRY AND FINANCIAL MARKETS

INVESTMENTS AND DIRECT LOANS OVERVIEW

In FY 2020, the CARES Act appropriated $500.0 billion to our Exchange Stabilization Fund to fund the credit subsidy costs

associated with making loans, loan guarantees or investments through December 31, 2020 in support of eligible businesses,

states and municipalities that incurred losses as a result of COVID-19. Additionally, in FY 2020, the Federal Reserve Board

of Governors (Board) used its emergency-lending authority under Section 13(3) of the Federal Reserve Act (Section 13(3)

hereafter) and Regulation A of the Board, authorizing the Federal Reserve Bank of New York (FRBNY) and Federal Reserve

Bank of Boston (FRBB) to establish liquidity lending facilities for the purpose of making loans and purchasing debt and

commercial paper of eligible entities to support key U.S. financial markets.

Since the CARES Act, there were several legislative enactments that, among other things, eliminated our ability to make

new loans and investments under the CARES Act effective January 9, 2021. The enactment of the CAA on December 27,

2020, among other things, rescinded an aggregate total of $478.8 billion of the $500.0 billion appropriation provided to

Treasury. On November 15, 2021, the IIJA rescinded an additional $1.4 billion of the remaining appropriation. Further, in

accordance with the FRA, an additional $200 million was rescinded on June 3, 2023. As of September 30, 2023 and 2022, the

remaining appropriation was $22 million and $228 million, respectively.

SECTION 13(3) FEDERAL RESERVE PROGRAMS

In FY 2020, pursuant to its emergency-lending authority under Section 13(3), the FRBNY and FRBB implemented certain

emergency lending facilities through Special Purpose Vehicles (SPVs) governed by Limited Liability Company (LLC)

agreements between Treasury and the applicable Federal Reserve Bank (FRB). The FRBNY and FRBB established these

SPVs to make loans and purchase debt and other commercial paper of eligible entities affected by COVID-19. The SPVs

purchased assets and offered loans collateralized by corporate bonds, commercial paper, asset-backed securities, and

municipal debt and loans to certain eligible states, municipalities, businesses and non-profit organizations affected by

COVID-19. The FRBNY and FRBB made loans to the SPVs, on a recourse basis, to fund the SPVs’ purchase of assets from,

or loans to, eligible U.S. issuers and businesses with certain assets as collateral. As the managing member of each SPV,

FRBNY or FRBB, as applicable, has the exclusive right to manage the business of the SPV and has all powers and rights

necessary to carry out the purposes and business of the SPV.

In FY 2020, we disbursed an aggregate total of $102.5 billion in exchange for a preferred equity interest in the SPVs. To the

extent the FRBNY and FRBB experience losses from financing the facilities, our preferred equity accounts absorb such losses

up to the maximum amounts per the terms of the LLC agreements. As a preferred equity member, we have no voting,
116 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

consent, or control rights over the SPVs. The managing member and preferred equity member are the sole members of the 

SPVs.

Upon dissolution of the SPVs, we will be entitled to an amount equal to the cash balance of the preferred equity account plus 

90 percent of the cash balance in all the other accounts of the SPV. The applicable FRB is entitled to 10 percent of the cash 

balance in all the other accounts of the SPV. We will use the final distribution amount we receive to repay all costs 

associated with our preferred equity investment in the SPV, including the initial subsidy amounts funded by appropriation 

and all amounts borrowed from the Fiscal Service. In accordance with the CARES Act, any excess amount of the final 

distribution after repayment of the appropriations and debt will be deposited into the Federal Old-Age and Survivors 

Insurance Trust Fund established under Section 201(a) of the Social Security Act.

The SPV LLC Agreements provide for interim distributions to Treasury in November and May of each fiscal year in

accordance with the terms of the most recent amended agreements. During the fiscal years ended September 30, 2023 and 

2022, we received $4.6 billion and $8.5 billion in interim distributions from the SPVs, respectively, which we used to repay 

outstanding debt to the Fiscal Service that we borrowed to finance the non-subsidized portion of these investment 

transactions. The interim distributions to Treasury represent the amounts by which funds that were contributed by

Treasury to each facility (and earnings thereon) exceeded the purchase price of the assets, loans, and/or loan participations, 

as the case may be, within each facility at such time. We cannot use our funds remaining in the SPVs funded under the 

CARES Act for further lending, asset purchases, or extensions of credit.

(in millions) 

Outstanding 

Equity 

Contribution 

9/30/22 

FY 2023 

Interim 

Distribution 

Remaining 

Outstanding 

Equity 

Contribution 

9/30/23 (1)

Main Street Facilities LLC $ 13,891 $ (4,206) $ 9,685 

Municipal Liquidity Facility LLC 2,895 (69) 2,826 

Term Asset-Backed Securities II LLC 1,154 (306) 848

Total 13(3) Facilities $ 17,940 $ (4,581) $ 13,359 

(1) These amounts exclude cumulative 9/30/23 fair valuations associated with these assets. 

See table below for such fair valuations. 

(in millions) 

Outstanding 

Equity 

Contribution 

9/30/21 

FY 2022 

Interim 

Distribution 

Remaining 

Outstanding 

Equity 

Contribution 

9/30/22 (1)

Main Street Facilities LLC $ 16,572 $ (2,681) $ 13,891 

Municipal Liquidity Facility LLC 6,276 (3,381) 2,895 

Term Asset-Backed Securities II LLC 3,549 (2,395) 1,154 

Total 13(3) Facilities $ 26,397 $ (8,457) $ 17,940 

(1) These amounts exclude cumulative 9/30/22 fair valuations associated with these assets. 

See table below for such fair valuations.

The following is a description of the remaining liquidity lending facilities. Following these descriptions is a section entitled, 

“Investments in Special Purpose Vehicles,” which discusses the accounting treatment for these facilities. 
DEPARTMENT OF THE TREASURY 117 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

• Main Street Facilities LLC (MSF) was established by the FRBB in May 2020 to support lending to small- and mediumsized businesses that were in sound financial condition before the onset of the COVID-19 pandemic and have good postpandemic prospects. Loans issued under this program have a five-year maturity, principal payments are deferred for 

two years, and interest payments are deferred for one year. The SPV ceased purchasing loan participations in

January 2021. 

• Municipal Liquidity Facility LLC (MLF) was established by the FRBNY in May 2020 to help state and local 

governments manage cash flow pressures while continuing to serve households and businesses in their communities. 

The facility purchased short-term notes directly from eligible U.S. states (including the District of Columbia), counties 

and cities. The SPV ceased purchasing eligible notes in December 2020. 

• Term Asset-Backed Securities Loan Facility II LLC (TALF) was established by the FRBNY in March 2020 to support 

the flow of credit to consumers and businesses to stabilize the U.S. financial system. This program facilitated the 

issuance of asset-backed securities backed by student loans, auto loans, credit card loans, commercial mortgages, and 

certain other assets. No new credit extensions were made after December 2020. 

Investments in Special Purpose Vehicles 

As of September 30, 2023 and 2022, our preferred equity investments in the SPVs were valued as follows:

Investments in SPVs (in millions) 

Gross 

Investments 

As of 9/30/23 

Cumulative 

Valuation 

Gain (Loss) 

9/30/23 

Fair Value 

Main Street Facilities LLC (1) $ 9,685 $ 1,439 $ 11,124 

Municipal Liquidity Facility LLC (1) 2,826 181 3,007 

Term Asset-Backed Securities II LLC (1) 848 135 983

Total Investments in SPVs $ 13,359 $ 1,755 $ 15,114 

(1) In FY 2023, Treasury received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and 

earnings thereon) exceeded the purchase price of the assets held within these SPVs. 

 

Investments in SPVs (in millions) 

Gross 

Investments 

As of 9/30/22 

Cumulative 

Valuation 

Gain (Loss) 

9/30/22 

Fair Value 

Main Street Facilities LLC (1) $ 13,891 $ (200) $ 13,691 

Municipal Liquidity Facility LLC (1) 2,895 44 2,939 

Term Asset-Backed Securities II LLC (1) 1,154 51 1,205 

Total Investments in SPVs $ 17,940 $ (105) $ 17,835 

(1) In FY 2022, Treasury received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and 

earnings thereon) exceeded the purchase price of the assets held within these SPVs. 

Budgetary vs. Proprietary Accounting Treatment of SPVs. The CARES Act stipulated that our SPV investment 

transactions, to the extent they involved the use of the CARES Act appropriation, be funded in accordance with the 

provisions of FCRA. For budgetary accounting purposes, we accounted for the initial investment financing and subsequent 

activity related to these investments pursuant to FCRA guidelines in accordance with Section 185 of OMB Circular A-11,

Preparation, Submission, and Execution of the Budget. 

For proprietary accounting purposes, we accounted for all SPV investments at fair value, rather than as direct loans, as

these instruments do not meet the criteria of SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees. Accordingly, 

we record changes in the fair value of these investments as realized or unrealized fair value gains or losses within the 

“Economic Program” on the Consolidated Statements of Net Cost. The budgetary subsidy cost allowance is based on cash 
118 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

flows discounted using a Treasury rate to determine the subsidy cost, and the proprietary fair value adjustment is based on

market interest rates to discount projected cash flows. For the fiscal years ended September 30, 2023 and 2022, we recorded

an unrealized fair value net gain of $1.9 billion and $0.7 billion related to these investments, respectively.

Fair Value Estimation Factors. In determining the fair value of our SPV investments, we use available market pricing data,

forward interest rates, expected loss rates, historical prepayment rates, and contractual instrument terms to estimate

scenario-specific, expected cash flows for the SPVs. For market pricing data, we specifically use: (i) active market prices for

the TALF program that owns publicly traded securities, (ii) Bloomberg estimated prices for the MLF program, which owns

securities that do not have active market prices but have estimated prices in Bloomberg, or (iii) market prices for baskets of

comparable publicly traded bonds for the MSF program, based on relevant bond attributes, such as instrument credit rating,

time to maturity, issuer industry, coupon rate, and call provisions. We use contractual instrument terms, active market prices,

expected loss rates, historical prepayment rates, and, where applicable, forward interest rates, to estimate scenario-specific,

expected cash flows, which are discounted using market-based discount rates.

In deriving the fair value of our SPV investments, we relied upon market observed prices for SPV purchased assets and

collateral, market prices for comparable assets, asset valuations performed by third parties, historical asset data, discussions

with subject matter experts within Treasury, and other information pertinent to the valuations. Because the instruments are

not publicly traded, there is no comparable trading information available. The fair valuations rely on Level 3 inputs that

reflect assumptions about the expectations that market participants would use in pricing.

Transfer of Proceeds Upon Dissolution of SPVs. For those SPVs that we funded through a combination of CARES Act

appropriation and Fiscal Service borrowings in accordance with FCRA guidelines, all proceeds that we realize from these

investments upon the dissolution of the SPVs are transferred to us to repay all borrowings and other funding costs incurred

from these investments. In accordance with the CARES Act, we must transfer any remaining excess residual proceeds to the

Federal Old-Age and Survivors Insurance Trust Fund. To the extent that the fair value of the SPV investment assets also

incorporates anticipated realization of excess residual proceeds, we record a corresponding liability due to the Federal OldAge and Survivors Insurance Trust Fund. We recorded a liability of $952 million and $186 million as of September 30, 2023

and 2022, respectively.

Entity vs. Non-Entity Exchange Transactions. Our SPV preferred equity investments are treated as exchange transactions

in that we received a preferred equity interest in the SPVs in exchange for our capital funding of the liquidity facilities. All

SPV investment assets funded through a combination of CARES Act appropriation and Fiscal Service borrowings, along with

any related income or loss associated with these assets, are treated as entity transactions, with the exception of that portion

of the assets and related income or loss representing the excess residual proceeds that will be remitted to the Federal OldAge and Survivors Insurance Trust Fund, which are treated as non-entity transactions. 

DIRECT LOANS TO AIR CARRIERS AND OTHER RELATED BUSINESSES

The CARES Act authorized us to make direct loans and loan guarantees to eligible passenger and cargo air carriers and

national security businesses to provide them liquidity for losses they incurred as a result of COVID-19. We chose to make only

direct loans under this authorization. The CARES Act specified that the Secretary determines the terms and conditions of the

loans and stated that the duration of the loans will be no longer than five years. As “financial protection of the Government,”

the CARES Act also mandated that we obtain certain financial instruments including, but not limited to, common stock in the

eligible business for the benefit of taxpayers. As of September 30, 2023 and 2022, there were no remaining loan commitments

for which future borrowings could be made under the CARES Act. The following is a discussion of our accounting related to our
DEPARTMENT OF THE TREASURY 119

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

direct loans. 

Credit Program Receivables, Net

We present the direct loans as credit program receivables on our Consolidated Balance Sheets. As of September 30, 2023,

the net credit program receivables of the passenger airlines and other related businesses of $901 million included a positive

subsidy allowance of $70 million. The other related businesses include national security, air cargo carriers, ticket agents, and

maintenance and repair businesses. As of September 30, 2022, the net credit program receivables of the passenger airlines

and other related businesses of $1.0 billion included a negative subsidy allowance of $32 million. The positive or negative

subsidies at the end of FY 2023 and 2022 reflect our projection as of those dates that these programs would result in net cost

or net earnings to us, respectively, after accounting for principal loan repayments, interest, and fees. Included in these

receivables are the projected cash flows associated with the common stock warrants, common stock shares, and senior debt

instruments we received in connection with making these direct loans. 

We performed a financial statement re-estimate of these credit programs costs. The re-estimates we performed as of

September 30, 2023, resulted in an upward re-estimate, or an increase of $17 million, in the cost of the passenger airline

programs and other related businesses programs. The upward re-estimate primarily stemmed from an increase in projected

Federal Old-Age and Survivors Insurance Trust Fund payments, which was partially offset by lower expected losses for

outstanding investments. The re-estimates we performed as of September 30, 2022, resulted in an upward re-estimate, or an

increase of $78 million, in the cost of the passenger airline programs and other related businesses programs. The upward reestimate primarily stemmed from a decline in the value of warrants we hold. The FY 2023 and 2022 re-estimates we

recorded included the expected Federal Old-Age and Survivors Insurance Trust Fund liabilities for passenger airlines and

other related businesses. 

We treat our net credit program receivables, including loan principal repayments, interest, fees, and proceeds from common

stock sales, as entity exchange transactions. We will use all such future proceeds realized from the net credit program

receivables to repay all of our borrowing and other funding costs we incur from these direct loans. In accordance with the

CARES Act, we must transfer any remaining excess residual proceeds to the Federal Old-Age and Survivors Insurance Trust

Fund. Accordingly, to the extent that our net credit program receivables also incorporate anticipated realization of excess

residual proceeds, we will record a corresponding liability due to the Federal Old-Age and Survivors Insurance Trust Fund. 

Hence, our net credit program receivables, including loan principal repayments, interest, fees, and proceeds from common stock

sales are treated as entity transactions, with the exception of any excess residual amounts owed to this trust fund, which are

treated as non-entity transactions. As of September 30, 2023 and 2022, we recorded a liability of $128 million and $184 million,

respectively, due to the Federal Old-Age and Survivors Insurance Trust Fund. 

PAYROLL SUPPORT TO AVIATION WORKERS

Disruption to economic activity the spread of COVID-19 caused in the early spring of 2020 placed significant pressure on

U.S. airlines and the aviation industry as a whole. We established three payroll support programs (PSPs), the first program

created pursuant to the CARES Act (PSP1) in FY 2020, and continued in FY 2021 through the CAA (PSP2) and ARP (PSP3),

with PSP3 only providing additional assistance to those who received assistance under PSP2. These PSP programs provided

for relief to this industry by helping to preserve aviation jobs and compensate air carrier industry workers. Specifically, the

PSPs provided financial assistance to passenger air carriers, cargo air carriers, and certain contractors to be used exclusively

for the continuation of payment of employee salaries, wages, and benefits.
120 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

We entered into Payroll Support Program Agreements (PSPA) with passenger air carriers, cargo air carriers, and aviation

industry contractors. Each agreement specified that the recipient could receive up to a maximum awardable amount equal

to the compensation the recipient paid to its employees for a certain period specified in the relevant Act. For the fiscal years

ended September 30, 2023 and 2022, we recorded $2 million and $21 million, respectively, of financial assistance

disbursements under the PSPs as “Economic Program” costs on the Consolidated Statements of Net Cost.

The CARES Act further authorized the Secretary to receive warrants, options, preferred stock, debt securities, or other

financial instruments recipients of the PSP issued, which provide appropriate compensation to the federal government for

providing the financial assistance. We received no promissory notes and warrants during the fiscal years ended September

30, 2023 and 2022. The recipients repaid an aggregate total of $346 million and $351 million of principal on the promissory

notes during the fiscal years ended September 30, 2023 and 2022, respectively. We report the promissory notes and

warrants we received as compensation within “Loans and Interest Receivable, Net” and “Other Investments, Net,”

respectively, on the Consolidated Balance Sheets. 

The following provides further discussion of our accounting for the promissory notes and common stock warrants.

Loans and Interest Receivable, Net

We present our promissory notes totaling $12.4 billion and $11.6 billion as of September 30, 2023 and 2022, respectively, net

of an allowance for doubtful accounts estimated at $2.0 billion and $3.2 billion, respectively. Interest on the notes is payable

semi-annually on March 31 and September 30 of each year. For the fiscal years ended September 30, 2023 and 2022, we

recognized interest revenue of $155 million and $166 million, respectively. 

We treat the promissory notes as exchange transactions as we received them as compensation for financial assistance paid to

air carriers to support ongoing employment of their aviation workers. The notes and related interest receivable also

represent assets of the U.S. government, or non-entity assets, as we are precluded from using any of the cash proceeds

realized from these promissory notes. Accordingly, we reported the initial revenue recognized at the inception of the loans,

and subsequent recognition of related interest revenue, within the “COVID-19 Non-Entity (Revenue) Cost, Net” line item of

the Consolidated Statements of Net Cost. The recording of this receivable also resulted in a corresponding amount recorded

to the “Due To the General Fund” liability (refer to Note 4).

Other Investments, Net

We account for the common stock warrants at fair value, with changes in the fair value of these investments recorded as

realized or unrealized gains or losses within the Consolidated Statements of Net Cost. As of September 30, 2023 and 2022, our

common stock warrants were valued at $397 million and $493 million, respectively, which includes a fair value loss of

$52 million and $354 million, respectively, recognized for the fiscal years ended September 30, 2023 and 2022, respectively. The

warrants held give us the right to purchase common shares upon the warrants’ exercise. For the fiscal year ended September

30, 2023, we exercised $44 million in warrants. There were no warrants exercised during FY 2022.

Our common stock warrants are comprised of those that give us a right to purchase common shares of either publicly traded

or non-publicly traded air carriers. If we obtained the warrants from publicly traded companies, then we determined the fair

value based on quoted prices of underlying shares in an active market as well as other significant unobservable inputs that

reflect assumptions about the expectations that market participants would use in pricing. If we obtained the warrants from

non-publicly traded companies, then we determined their fair value based only on significant unobservable inputs. As such,

the measurement of our common stock warrants fair value includes Level 3 inputs.
DEPARTMENT OF THE TREASURY 121

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

SUPPORT TO AMERICAN SMALL BUSINESSES THROUGH CDFIS

EMERGENCY CAPITAL INVESTMENT PROGRAM

Established under the CAA, the Emergency Capital Investment Program encourages low- and moderate-income community

financial institutions to augment their efforts to support small businesses and consumers in their communities. Under this

program, we are providing up to $9.0 billion in capital directly to depository institutions through purchases of preferred stock

or subordinated debt from certified CDFIs or minority depository institutions (MDIs). This funding is intended to be used to,

among other things, provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers,

especially in low-income and underserved communities, that may be disproportionately impacted by the economic effects of

the COVID-19 pandemic. We set aside $2.0 billion for CDFIs and MDIs with less than $500 million in assets and an

additional $2.0 billion for CDFIs and MDIs with less than $2.0 billion in assets. As of September 30, 2023 and 2022, we

disbursed $0.23 billion and $8.3 billion in connection with this program, respectively. No further disbursements are expected

after September 30, 2023.

With the permission of the institution, we may transfer or sell the interest in the capital investment for no consideration or

for a de minimis amount to a mission-aligned nonprofit affiliate of an applicant that is an insured community development

financial institution. We will transfer all cash proceeds we receive in connection with these investments, including dividend

and payments, and proceeds from the sale of the investments, to the CDFI Fund—a Treasury component—to be used to

provide financial and technical assistance pursuant to the Community Development Banking and Financial Institutions Act

of 1994.

We account for the preferred stock and subordinated debt investments at fair value, with changes in the fair value of these

investments recorded as realized or unrealized gains or losses within the “Economic Program” on the Consolidated

Statements of Net Cost. As the incentives and other conditions of our capital investments result in more favorable terms

than available to the CDFIs and MDIs from private investors and more favorable terms compared to investment pricing

available in the conventional financial markets, their fair values are less than the amounts we paid at acquisition. As of

September 30, 2023 and 2022, our preferred stock and subordinated debt investments were valued at $2.5 billion and

$2.5 billion, respectively, which includes a fair value loss of $0.23 billion and $5.8 billion recognized for the fiscal years ended

September 30, 2023 and 2022, respectively.

CDFI FUND’S RAPID RESPONSE AND EQUITABLE RECOVERY PROGRAMS

The CAA also provided $1.25 billion in appropriations to our CDFI Fund, which awarded CDFIs with grants to deliver

immediate assistance in communities impacted by the COVID-19 pandemic. The CDFI Fund awarded these funds through

its newly established CDFI Rapid Response Program (CDFI RRP), which was designed to quickly deploy capital to certified

CDFIs through a streamlined application and review process for those specialized organizations that provide financial

services to low-income communities and those that lack access to financing. 

In addition to the funding provided for the CDFI RRP, the CAA also appropriated our CDFI Fund with $1.75 billion to

deliver COVID-19 recovery resources to CDFIs to expand financial activity in low- or moderate-income minority communities

and to minorities that have significant unmet capital or financial services needs. The CDFI Fund made these funds

available to support lending in minority communities through its newly established Equitable Recovery Program that

commenced in FY 2023. This funding will remain available for obligation until expended. Of the $3.0 billion appropriated in
122 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

FY 2021 for these programs, we disbursed an aggregate total of $2.5 billion through September 30, 2023, of which 

$1.3 billion and $0.1 billion were disbursed during the fiscal years ended September 30, 2023 and 2022, respectively.

COVID-19 PANDEMIC RELIEF - ADVANCES AND PREPAYMENTS 

During FY 2023 and 2022, we disbursed an aggregate total of $9.2 billion and $125.9 billion, respectively, in appropriated 

and obligated funds to state, local, territorial, and Tribal governments, as well as in support to American small businesses 

through CDFIs to cover eligible costs that recipients incurred in response to the pandemic (refer to the sections entitled 

“Support Provided Through State, Local, Territorial and Tribal Governments”, and “Support to American Small Businesses 

Through CDFIs”). Of the aggregate amounts disbursed, we initially recorded $5.6 billion and $115.8 billion as an advance 

during FY 2023 and 2022, respectively, within the line item “Advances and Prepayments” on the Consolidated Balance 

Sheets, and recorded the remaining $3.6 billion and $10.0 billion disbursed in FY 2023 and 2022, respectively, as “Economic

Program” costs on the Consolidated Statements of Net Cost. We subsequently recognized $58.3 billion and $146.6 billion of

this advance as an expense which were recorded as “Economic Program” costs on the Consolidated Statements of Net Cost 

for the fiscal years ended September 30, 2023 and 2022, respectively, to reflect the estimated amount of eligible costs 

incurred during those years by recipients.

COVID-19 PANDEMIC RELIEF – SUMMARY IMPACT ON THE STATEMENT OF NET COST

For the fiscal years ended September 30, 2023 and 2022, the primary impact of COVID-19 relief efforts reported as

“Economic Program” costs on the Consolidated Statements of Net Cost were as follows: 

(in millions) 2023 2022

Entity Cost/(Revenue): 

Expense Recognition of Support to States, Local, Territorial, and Tribal Governments $ 61,557 $ 156,360 

Emergency Capital Investment Program - Fair Value Loss 228 5,848 

Section 13(3) SPV Investments - Fair Value Gain (1,860) (715) 

Coronavirus Economic Relief for Transportation Services Payments (23) 686

CDFI Fund's Rapid Response and Equitable Recovery Programs Payments 123 110

Other 100 146

Total Net Entity Costs (Economic Program) (Note 21) 60,125 162,435 

Non-Entity Cost/(Revenue): 

Payroll Support for Aviation Workers - Promissory Note Compensation (1,315) 1,591 

Payroll Support for Aviation Workers - Common Stock Warrant Compensation 52 354

Total Non-Entity (Revenue)/Cost (1,263) 1,945 

Total COVID-19 Pandemic Relief Costs, Net $ 58,862 $ 164,380 
DEPARTMENT OF THE TREASURY 123 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

11. INVESTMENTS IN GOVERNMENT SPONSORED ENTERPRISES

Congress established Fannie Mae and Freddie Mac as GSEs to provide stability and increase liquidity in the secondary 

mortgage market and to promote access to mortgage credit throughout the nation. A key function of the GSEs is to purchase 

mortgages, package those mortgages into securities, which are subsequently sold to investors, and guarantee the timely 

payment of principal and interest on these securities.

Congress passed HERA (P.L. 110-289) in July 2008 in response to the financial crisis that year and the increasingly difficult 

conditions in the housing market, which challenged the soundness and profitability of the GSEs and thereby threatened to

undermine the entire housing market. This act created FHFA, with enhanced regulatory authority over the GSEs, and 

provided the Secretary with certain authorities intended to ensure the financial stability of the GSEs, if necessary. In 2008, 

FHFA placed the GSEs under conservatorship, and we invested in the GSEs by entering into a Senior Preferred Stock 

Purchase Agreement (SPSPA) with each GSE. We took these actions to preserve the GSEs’ assets, ensure a sound and 

solvent financial condition, and mitigate systemic risks that contributed to market instability. The purpose of such actions is

to maintain the solvency of the GSEs so they can continue to fulfill their vital roles in the mortgage market while the 

Administration and Congress determine what structural changes should be made to the housing finance system. Draws 

under the SPSPAs would result in an increased investment in the GSEs as further discussed below.

In return for committing to maintain the GSEs’ solvency by making a quarterly advance of funds to each GSE in an amount 

equal to any excess of the GSEs’ total liabilities over its total assets as of the end of the previous quarter, we initially 

received from each GSE: (i) 1,000,000 shares of non-voting variable liquidation preference senior preferred stock with a 

liquidation preference value of $1,000 per share, and (ii) a non-transferable warrant for the purchase, at a nominal cost, of

79.9 percent of common stock on a fully-diluted basis. The warrants expire on September 7, 2028. We were entitled to

distributions on our senior preferred stock equal to 10.0 percent per annum fixed rate dividend on the total liquidation 

preference (as discussed below). In the third amendment in August 2012, this dividend structure was changed to a variable 

equivalent to the GSEs’ positive net worth above a capital reserve amount. The capital reserve amount was initially set at

$3.0 billion for calendar year 2013 and, upon nearing its scheduled decline to zero, was reset at $3.0 billion in calendar year 

2017. 

On September 27, 2019, the Department and FHFA amended the SPSPAs to increase the capital reserve amounts of Fannie 

Mae and Freddie Mac to $25 billion and $20 billion, respectively. In exchange, our liquidation preference in each GSE was 

scheduled to gradually increase up to the adjusted capital reserve amounts based on the quarterly earnings of each GSE. 

On January 14, 2021, the Department and FHFA further amended the SPSPAs to replace the prior variable dividend with 

an alternative compensation plan for the Department that permits the GSEs to continue their recapitalization efforts, as

prescribed by the GSE capital framework finalized by FHFA in 2020. Under the amended SPSPAs, each GSE is permitted to

retain capital until the GSE has achieved its regulatory minimum capital requirement, including buffers (i.e., the capital 

reserve end date), at which point its cash dividend obligations will resume along with the obligation to pay a periodic 

commitment fee. As compensation to Treasury for the replacement of the variable dividend, the liquidation preference of

Treasury’s senior preferred stock in each GSE will increase quarterly by the amount of retained capital until each GSE has 

achieved its capital reserve end date. 
124 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Additionally, the January 14 amendment, among other things, imposed restrictions on certain GSE business activities,

including purchases of loans backed by investment properties, second homes, and multifamily properties, and on purchases

of loans with multiple high-risk characteristics or for cash consideration. On September 14, 2021, Treasury and FHFA

entered into letter agreements to suspend certain business activity restrictions added to the SPSPAs by the January 14

amendment while FHFA undertakes a review of the extent to which these requirements are redundant or inconsistent with

existing FHFA standards, policies, and directives. Under the letter agreements, the suspension will terminate six months

after Treasury notifies the GSEs. As of September 30, 2023, Treasury has not provided notice to the GSEs to terminate the

suspension.

For the fiscal year ended September 30, 2023, Treasury’s liquidation preference in Fannie Mae and Freddie Mac increased

by $12.6 billion and $7.9 billion, respectively. For the fiscal year ended September 30, 2022, Treasury’s liquidation

preference in Fannie Mae and Freddie Mac increased by $19.1 billion and $11.7 billion, respectively. The GSEs will not pay

a quarterly dividend until after the capital reserve end date. We received no cash dividends for the fiscal year ended

September 30, 2023 and 2022, as the GSEs had not achieved their capital reserve end date as of September 30, 2023. 

The SPSPAs, which have no expiration date, require us to disburse funds to either GSE if, at the end of any quarter, the

FHFA determines that the liabilities of either GSE exceed its assets. Draws from the Department under the SPSPAs are

designed to ensure that the GSEs maintain positive net worth, with a fixed maximum amount available to each GSE under

this agreement, established as of December 31, 2012 (refer to the “Contingent Liability to GSEs” section below). Draws

against the funding commitment of the SPSPAs do not result in the issuance of additional shares of senior preferred stock;

instead, they increase the liquidation preference of the initial 1,000,000 shares by the amount of the draw. The combined

cumulative liquidation preference totaled $305 billion and $284 billion as of September 30, 2023 and 2022, respectively. 

There were no payments to the GSEs for the fiscal years ended September 30, 2023 and 2022. 

ACCOUNTING TREATMENT

Entity Transactions― If we estimate a probable and reasonably estimable contingent liability to the GSEs, we will accrue

and report this liability on our Consolidated Balance Sheets and fund the liability through our direct appropriations. We

will report the liability accrual, if any, at its gross amount as an “entity” cost on our Consolidated Statements of Net Cost,

and within the line item, “Cumulative Results of Operations” on our Consolidated Balance Sheets, without considering the

increase in senior preferred stock liquidation preference/fair value adjustments, and future dividend receipts from the GSEs.

Non-Entity Transactions― If we make actual payments to the GSEs, they will result in increases to the U.S. government’s

liquidation preference in the GSEs’ senior preferred stock, and thus represent General Fund exchange revenue reported on

our Consolidated Statements of Net Cost as “GSEs Non-Entity Revenue, Net.” Changes in the fair valuation of the GSE

preferred stock and common stock warrants, and related dividends received, are General Fund-related costs and revenues

which we report as “GSEs Non-Entity Revenue, Net.”

INVESTMENTS IN GSES 

As of September 30, 2023 and 2022, our investments in the GSEs consisted of the following: 
DEPARTMENT OF THE TREASURY 125 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Gross Cumulative 

Investments Valuation 9/30/23 

GSEs Investments (in millions) As of 9/30/23 Gain/(Loss) Fair Value 

Fannie Mae Senior Preferred Stock $ 190,383 $ (55,883) $ 134,500 

Freddie Mac Senior Preferred Stock 114,429 (12,729) 101,700 

Fannie Mae Warrants Common Stock 3,104 (374) 2,730 

Freddie Mac Warrants Common Stock 2,264 (784) 1,480 

Total GSEs Investments $ 310,180 $ (69,770) $ 240,410 

Gross Cumulative 

Investments Valuation 9/30/22 

GSEs Investments (in millions) As of 9/30/22 Gain/(Loss) Fair Value 

Fannie Mae Senior Preferred Stock $ 177,746 $ (62,046) $ 115,700 

Freddie Mac Senior Preferred Stock 106,572 (2,072) 104,500 

Fannie Mae Warrants Common Stock 3,104 (854) 2,250 

Freddie Mac Warrants Common Stock 2,264 (994) 1,270 

Total GSEs Investments $ 289,686 $ (65,966) $ 223,720 

SENIOR PREFERRED STOCK AND WARRANTS FOR COMMON STOCK

In determining the fair value of the senior preferred stock and warrants for common stock, we relied on the GSEs’ public 

filings and press releases concerning their financial statements, as well as non-public, long-term financial forecasts, monthly 

summaries, quarterly credit supplements, independent research regarding preferred stock trading, independent research 

regarding the GSEs’ common stock trading on the OTC Market, discussions with each of the GSEs and FHFA, and other 

information pertinent to the valuations. Because the senior preferred stock is not publicly traded, there is no comparable 

trading information available. The fair valuation of the senior preferred stock relies on significant Level 3 unobservable 

inputs that reflect assumptions about the expectations that market participants would use in pricing. 

The fair value of the senior preferred stock considers forecasted cash flows to equity holders and the traded prices of the 

other equity securities, including the GSE’s common stock and junior preferred stock. The fair value of the senior preferred 

stock—as measured by unobservable and observable inputs—increased as of September 30, 2023, when compared to

September 30, 2022. Fannie Mae’s senior preferred stock drove this increase primarily due to higher projected cash flows 

and a decrease in credit-related expenses (refer to Notes 1I and 1V).

Factors impacting the fair value of the warrants include the nominal exercise price and the large number of potential 

exercise shares, the market prices and trading volumes of the underlying common stock as of September 30, the principal 

market, and the market participants. Other factors impacting the fair value include, among other things, the holding period 

risk related directly to the assumption of the amount of time that it will take to sell the exercised shares without depressing 

the market. The fair value of the warrants—as measured by observable inputs—increased at the end of FY 2023, when 

compared to 2022, primarily due to increases in the Level 1 fair value measurement of the market price of the underlying 

common stock of each GSE.

CONTINGENT LIABILITY TO GSES

As part of the annual process, we prepare a series of long-term financial forecasts to assess, as of September 30, the 

likelihood and magnitude of future draws to be required by the GSEs under the SPSPAs within the forecast time horizon. 

We used 25-year financial forecasts prepared through years 2048 and 2047 in assessing if a contingent liability was required 

as of September 30, 2023 and 2022, respectively. If future payments under the SPSPAs are deemed to be probable within 
126 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

the forecast horizon, and we can reasonably estimate such payment, we will accrue a contingent liability to the GSEs to

reflect the forecasted equity deficits of the GSEs. We do not discount this accrued contingent liability, nor do we take into 

account any of the offsetting dividends that we could receive, as the dividends, if any, would be owed directly to the General 

Fund. We will adjust such recorded accruals in subsequent years as new information develops or circumstances change. 

Based on our annual assessment, we estimated there was no probable future funding draws as of September 30, 2023 and 

2022, and thereby accrued no contingent liability. However, as of September 30, 2023, it is reasonably possible that a period 

of sustained economic and housing market volatility could potentially cause the GSEs to generate quarterly losses of

sufficient magnitude to result in future funding draws against our funding commitment. Due to challenges quantifying

future market volatility or the timing, magnitude, and likelihood of such events, we could not estimate the total amount of

this reasonably possible future funding liability as of September 30, 2023. There were no payments to the GSEs for the fiscal 

year ended September 30, 2023. At September 30, 2023 and 2022, the maximum remaining contractual commitment to the 

GSEs for the remaining life of the SPSPAs was $254.1 billion. 

In assessing the need for an estimated contingent liability, we rely on the GSEs’ public filings and press releases, including 

their financial statements, monthly business summaries, and quarterly credit supplements, as well as non-public, long-term 

financial forecasts, the FHFA House Price Index, discussions with each of the GSEs and FHFA, and other information 

pertinent to the liability estimates. The forecasts prepared in assessing the need for an estimated contingent liability as of

September 30, 2023 include two potential scenarios, with varying assumptions regarding the continuation of the GSEs new 

business activities, including purchasing mortgage loans and issuing new guaranteed mortgage-backed securities. The 

forecasts as of September 30, 2023, also assumed the maintenance of the GSEs’ retained mortgage portfolios below the 

maximum permitted under the amended SPSPAs. 

ESTIMATION FACTORS

Our forecasts concerning the GSEs may differ from actual results. Estimated senior preferred values and future draw 

amounts will depend on numerous factors that are difficult to predict including, but not limited to, changes in government 

policy with respect to the GSEs, the business cycle, inflation, home prices, unemployment rates, interest rates, changes in

housing preferences, home financing alternatives, availability of debt financing, market rates of guarantee fees, outcomes of

loan refinancings and modifications, new housing programs, and other applicable factors. 

GSES NON-ENTITY REVENUE

For the fiscal years ended September 30, 2023 and 2022, GSEs Non-Entity Revenue, Net consisted of the following: 

Summary of GSEs Non-Entity Revenue (in millions) 2023 2022

General Fund Revenue from Increase in Liquidation Preference of GSEs 

 Preferred Stock $ (20,494) $ (30,761) 

Fair Value Loss/(Gain) on GSEs Warrants/Preferred Stock 3,804 27,901 

Total GSEs Non-Entity Revenue, Net $ (16,690) $ (2,860) 

REGULATORY ENVIRONMENT

To date, Congress has not passed legislation nor has FHFA taken action to end the GSEs’ conservatorships. The GSEs 

continue to operate under the direction of FHFA as conservator. 
DEPARTMENT OF THE TREASURY 127 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) was funded by an increase of ten basis points in the 

GSEs’ guarantee fees (referred to as “the incremental fees”) which began in April 2012, and extended by the Infrastructure 

Investment and Jobs Act of 2021 (P.L. 117-58) through September 30, 2032. The incremental fees are remitted to us and not 

retained by the GSEs and, thus, do not affect the profitability of the GSEs. For FY 2023 and 2022, the GSEs remitted to us

the incremental fees totaling $6.2 billion and $5.8 billion, respectively, which are reported within the line item entitled 

“Fines, Penalties, Interest and Other Revenue” on our Statements of Custodial Activity. 

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS

As of September 30, 2023 and 2022, Investments in Multilateral Development Banks consisted of the following:

(in millions) 2023 2022

International Bank for Reconstruction and Development $ 3,677 $ 3,470 

Inter-American Development Bank (1) 2,023 2,023 

Asian Development Bank 991 991

African Development Bank 714 543

European Bank for Reconstruction and Development 636 636

International Finance Corporation 569 569

North American Development Bank 450 450

Multilateral Investment Guarantee Agency 45 45

Total $ 9,105 $ 8,727 

Refer to Note 27 for a description of the additional commitments related to these institutions. 

(1) Includes Inter-American Investment Corporation 
128 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

13. OTHER INVESTMENTS, NET

Other Investments, Net include foreign currency holdings that we typically invest in interest-bearing securities issued or

held through foreign governments or monetary authorities (refer to Note 5). The ESF holds most of our foreign currency 

investments. Of the total $3.7 billion fair value of foreign investments (excluding interest receivable) held at September 30, 

2023, $0.4 billion will mature within one year, $2.6 billion will mature after one year but before five years, and $0.7 billion 

will mature after five years but before ten years. 

Other Investments, Net also include non-federal investment holdings acquired pursuant to the establishment of emergency 

relief programs in response to the COVID-19 pandemic, including investments of $2.5 billion in preferred stock and 

subordinated debt pursuant to the Emergency Capital Investment Program, and $0.4 billion and $0.5 billion of common 

stock warrants for the Payroll Support to Aviation Workers program as of September 30, 2023 and 2022, respectively (refer 

to Note 10).

The table below presents the fair value measurements hierarchy classification by investment type:

Fair Value Measurement of Other Investments, Net as of September 30, 2023 

Investment Type (in millions) Level 1 Level 2 Level 3 Total 

Foreign Investments $ 3,703 $ - $ - $ 3,703 

COVID-19 Investments (Note 10) - - 2,913 2,913 

Other Investments 55 - 3 58

Total Fair Value Measurements $ 3,758 $ - $ 2,916 $ 6,674 

Fair Value Measurement of Other Investments, Net as of September 30, 2022 

Investment Type (in millions) Level 1 Level 2 Level 3 Total 

Foreign Investments $ 3,796 $ - $ - $ 3,796 

COVID-19 Investments (Note 10) - - 2,945 2,945 

Other Investments 58 - - 58

Total Fair Value Measurements $ 3,854 $ - $ 2,945 $ 6,799 

The following table provides a roll forward of our investment balances as of September 30, 2023 and 2022:

(in millions) 2023 2022

Beginning Balance $ 6,799 $ 6,164 

Acquisition of Investments(1) 6,677 21,343 

Sale/Repayment of Investments(2) (6,598) (12,208) 

(Loss)/Gain on Sales/Dispositions (143) (943) 

Valuation Adjustments(3) (10) (7,436) 

Change in Accrued Dividend/Interest Income and Other (51) (121) 

Ending Balance $ 6,674 $ 6,799 

(1) Acquisition of investments decreased primarily due to the Emergency Capital Investment Program and 

foreign investments activity of $8.0 billion and $6.7 billion, respectively 

(2) The significant changes in sale/repayment of investments are primarily related to foreign investments 

activity. 

(3) The change in valuation adjustments primarily include $5.6 billion and $1.5 billion of fair value 

adjustments in the Emergency Capital Investment Program (refer to Note 10) and foreign investments 

activity, respectively. 
DEPARTMENT OF THE TREASURY 129 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

14. PROPERTY, PLANT, AND EQUIPMENT, NET

As of September 30, 2023 and 2022, Property, Plant, and Equipment, Net consisted of the following:

2023

Net 

Service Accumulated Book 

(in millions) Life Cost Depreciation Value 

Buildings, Structures and Facilities 3 - 50 years $ 1,234 $ (630) $ 604

Furniture, Fixtures and Equipment 2 - 20 years 2,591 (1,873) 718

Construction-in-Progress N/A 351 - 351

Land N/A 12 - 12

Internal-Use Software in Use 2 - 15 years 4,115 (3,479) 636

Internal-Use Software in Development N/A 742 - 742

Assets Under Capital Lease 2 - 25 years 8 (5) 3 

Leasehold Improvements 2 - 25 years 459 (269) 190

Total $ 9,512 $ (6,256) $ 3,256 

2022

Net 

Service Accumulated Book 

(in millions) Life Cost Depreciation Value 

Buildings, Structures and Facilities 3 - 50 years $ 1,040 $ (597) $ 443

Furniture, Fixtures and Equipment 2 - 20 years 2,671 (1,972) 699

Construction-in-Progress N/A 377 - 377

Land N/A 12 - 12

Internal-Use Software in Use 2 - 15 years 3,968 (3,223) 745

Internal-Use Software in Development N/A 612 - 612

Assets Under Capital Lease 2 - 25 years 32 (24) 8 

Leasehold Improvements 2 - 25 years 446 (270) 176

Total $ 9,158 $ (6,086) $ 3,072 

The service life ranges vary significantly due to the diverse nature of PP&E we hold.
130 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

The following table provides a reconciliation of total PP&E and accumulated depreciation for the fiscal years ended 

September 30, 2023 and 2022: 

2023 2022

Accumulated Net Accumulated Net 

(in millions) PP&E Depreciation PP&E PP&E Depreciation PP&E

Balance Beginning of Year $ 9,158 $ (6,086) $ 3,072 $ 8,854 $ (5,858)$ 2,996 

 Capitalized Acquisitions 670 (1) 669 597 - 597

 Dispositions (309) 277 (32) (293) 286 (7) 

 Depreciation Expense - (446) (446) - (514) (514) 

 Other (7) - (7) - - - 

Balance at End of Year $ 9,512 $ (6,256) $ 3,256 $ 9,158 $ (6,086)$ 3,072 

HERITAGE ASSETS

We have 15 heritage assets, of which five are considered multi-use, for FY 2023 and 2022. The Treasury Complex (Main 

Treasury Building and Annex), declared a national historical landmark in 1972, is treated as a multi-use heritage asset, 

along with the collection of artifacts within, and is expected to be preserved indefinitely. The buildings that house the Mint 

in Denver, San Francisco, Fort Knox, and West Point are also multi-use heritage assets and included on the National 

Register of Historic Places. Additionally, the Mint maintains heritage assets consisting of four coin collections and six 

collections of historical artifacts. They include various coins produced over the years, furniture and equipment used in

Mint’s facilities, and examples of the coin manufacturing process. These items are collection-type assets that are maintained 

for exhibition and are preserved indefinitely because of their historical, cultural, educational, or artistic importance.
DEPARTMENT OF THE TREASURY 131 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

15. NON-ENTITY VS. ENTITY ASSETS 

Non-entity assets are those that we hold and manage on behalf of the General Fund but are not available for our use. The 

table below shows our total assets, segregated between non-entity and entity, as of September 30, 2023 and 2022: 

 2023 

(in millions) Non-Entity Entity Total 

Intra-Governmental 

Fund Balance (Note 2) (a) $ 7,740 $ 535,792 $ 543,532 

Loans Receivable: (Note 3) 

 Loans and Interest Receivable 1,815,258 138,309 1,953,567 

 Advances to Trust Funds 37,269 - 37,269 

Other Assets: 

 Due From the General Fund (Note 4) 33,242,246 - 33,242,246 

 Other (b) 1,406 95 1,501

Total Intra-Governmental 35,103,919 674,196 35,778,115 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 639,226 177,304 816,530 

 Gold and Silver Reserves (Note 6) 11,062 - 11,062 

 Reserve Position in the International Monetary Fund (Note 7) - 31,970 31,970 

Accounts Receivable, Net: 

 Taxes, Interest, and Other Receivables, Net (Note 8) 183,872 1,131 185,003 

Loans Receivable, Net: 

 Loans and Interest Receivable, Net (Notes 7 and 10) 12,406 75 12,481 

 Credit Program Receivables, Net (Notes 9 and 10) - 3,386 3,386 

Advances and Prepayments (Note 10) - 171,890 171,890 

Investments in GSEs (Note 11) 240,410 - 240,410 

Other Investments: 

 Investments in Special Purpose Vehicles (Note 10) - 15,114 15,114 

 Investments in Multilateral Development Banks (Note 12) - 9,105 9,105 

 Other, Net (Notes 10 and 13) 397 6,277 6,674 

Property, Plant, and Equipment, Net (Note 14) - 3,256 3,256 

Other Assets (c) - 2,968 2,968 

Total Other Than Intra-Governmental 1,087,373 422,476 1,509,849 

Total Assets $ 36,191,292 $ 1,096,672 $ 37,287,964 

(a) $3.9 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(b) Consists of accounts receivable, net and advances and prepayments totaling $1.4 billion and $56 million, respectively.

(c) Consists of inventory and related property.
132 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

2022

(in millions) Non-Entity Entity Total 

Intra-Governmental 

Fund Balance (Note 2) (d) $ 5,888 $ 548,702 $ 554,590 

Loans Receivable: (Note 3) 

 Loans and Interest Receivable 1,531,120 80,755 1,611,875 

 Advances to Trust Funds 47,298 - 47,298 

Other Assets: 

 Due From the General Fund (Note 4) 31,064,578 - 31,064,578 

 Other (e) 1,311 59 1,370 

Total Intra-Governmental 32,650,195 629,516 33,279,711 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 617,317 166,756 784,073 

 Gold and Silver Reserves (Note 6) 11,062 - 11,062 

 Reserve Position in the International Monetary Fund (Note 7) - 31,334 31,334 

Accounts Receivable, Net: 

 Taxes, Interest, and Other Receivables, Net (Note 8) 237,779 248 238,027 

Loans Receivable, Net: 

 Loans and Interest Receivable, Net (Notes 7 and 10) 11,585 487 12,072 

 Credit Program Receivables, Net (Notes 9 and 10) - 3,415 3,415 

Advances and Prepayments (Note 10) - 225,180 225,180 

Investments in GSEs (Note 11) 223,720 - 223,720 

Other Investments: 

 Investments in Special Purpose Vehicles (Note 10) - 17,835 17,835 

 Investments in Multilateral Development Banks (Note 12) - 8,727 8,727 

 Other, Net (Notes 10 and 13) 493 6,306 6,799

Property, Plant, and Equipment, Net (Note 14) - 3,072 3,072 

Other Assets (f) - 1,867 1,867 

Total Other Than Intra-Governmental 1,101,956 465,227 1,567,183 

Total Assets $ 33,752,151 $ 1,094,743 $ 34,846,894 

(d) $3.1 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(e) Consists of accounts receivable, net and advances and prepayments totaling $1.3 billion and $37 million, respectively. 

(f) Consists of inventory and related property. 

 
DEPARTMENT OF THE TREASURY 133 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

16. FEDERAL DEBT AND INTEREST PAYABLE AND RELATED LIABILITIES

Treasury is responsible for administering the federal debt on behalf of the U.S. government. The federal debt includes 

borrowings from the public as well as borrowings from federal agencies. The federal debt does not include debt other 

governmental agencies issue, including agencies such as the Tennessee Valley Authority or Department of Housing and 

Urban Development.

Debt held by the public primarily represents the amount the U.S. government has borrowed to finance cumulative cash 

deficits. In contrast, debt held by other federal agencies, primarily trust funds, represents balances of Treasury securities 

held by individual federal agencies with either the authority or the requirement to invest excess receipts in Treasury 

securities, with the principal and interest guaranteed by the full faith and credit of the U.S. government. 

Federal Debt and Interest Payable as of September 30, 2023 and 2022 is as follows:

Held by Other Federal Agencies (Intra-Governmental) (in millions) 2023 2022

Beginning Balance $ 6,593,327 $ 6,104,279 

New Borrowings - Net of Repayments 209,705 489,048 

Subtotal at Par Value 6,803,032 6,593,327 

Premium 39,179 88,757 

Debt Principal Not Covered by Budgetary Resources (Note 19) 6,842,211 6,682,084 

Interest Payable Covered by Budgetary Resources 36,787 35,277 

Total $ 6,878,998 $ 6,717,361 

Held by the Public (in millions) 2023 2022

Beginning Balance $ 24,299,193 $ 22,282,900 

New Borrowings - Net of Repayments 2,030,949 2,016,293 

Subtotal at Par Value 26,330,142 24,299,193 

(Discount) (118,729) (71,681) 

Debt Principal Not Covered by Budgetary Resources (Note 19) 26,211,413 24,227,512 

Interest Payable Covered by Budgetary Resources 116,722 81,183 

Total $ 26,328,135 $ 24,308,695 

FEDERAL DEBT HELD BY OTHER FEDERAL AGENCIES

Certain federal agencies are allowed to invest excess funds in debt securities we issue on behalf of the U.S. government. The 

terms and the conditions of debt securities we issue allow the U.S. government to meet its cash needs. The vast majority of

debt securities are non-marketable securities issued at par value, but others are issued at market prices and interest rates 

that reflect market terms. The average intra-governmental interest rate for debt held by the federal entities, excluding 

Treasury Inflation-Protected Securities (TIPS) and Floating Rate Notes (FRNs), for FY 2023 and 2022 was 2.7 percent and 

2.3 percent, respectively. The average intra-governmental interest rate on TIPS for FY 2023 and 2022 was 1.1 percent and 

1.0 percent, respectively. The average interest rate on FRNs for FY 2023 and 2022 was 5.4 percent and 3.0 percent, 

respectively. The average interest rate represents the original issue weighted effective yield on securities outstanding at the 

end of the fiscal year.

The federal debt also includes intra-governmental marketable debt securities that certain agencies are permitted to buy and 

sell on the open market. The debt federal agencies held at par value (not including premium/discount or interest payable) as

of September 30, 2023 and 2022 is as follows: 
134 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

(in millions) 2023 2022

Social Security Administration $ 2,816,655 $ 2,838,279 

Office of Personnel Management 1,141,290 1,120,736 

Department of Defense Agencies 1,734,130 1,528,954 

Department of Health and Human Services 358,353 349,663 

All Other Federal Entities — Consolidated 752,604 755,695 

Total Federal Debt Held by Other Federal Agencies $ 6,803,032 $ 6,593,327 

These amounts do not include intra-departmental debt and related interest that are eliminated from our financial statements.

FEDERAL DEBT HELD BY THE PUBLIC

Federal Debt Held by the Public at par value (not including premium/discount or interest payable) as of September 30, 2023 

and 2022 consisted of the following: 

Average 

Interest 

(at par value in millions) Term Rates 2023

Marketable: 

Treasury Bills 1 Year or Less 5.4% $ 5,259,329 

Treasury Notes Over 1 Year - 10 Years 2.1% 13,724,904 

Treasury Bonds Over 10 Years 3.1% 4,240,162 

Treasury Inflation-Protected Securities (TIPS) 5 Years or More 0.6% 1,934,947 

Treasury Floating Rate Notes (FRN) 2 Years 5.0% 575,539 

Total Marketable 25,734,881 

Non-Marketable On Demand to Over 40 Years 3.7% 595,261 

Total Federal Debt Held by the Public $ 26,330,142 

Average 

Interest 

(at par value in millions) Term Rates 2022

Marketable: 

Treasury Bills 1 Year or Less 2.5% $ 3,643,675 

Treasury Notes Over 1 Year - 10 Years 1.6% 13,696,488 

Treasury Bonds Over 10 Years 3.0% 3,867,672 

Treasury Inflation-Protected Securities (TIPS) 5 Years or More 0.5% 1,839,843 

Treasury Floating Rate Notes (FRN) 2 Years 3.3% 625,897 

Total Marketable 23,673,575 

Non-Marketable On Demand to Over 40 Years 2.7% 625,618 

Total Federal Debt Held by the Public $ 24,299,193 

We generally issue Treasury bills, notes, bonds, and TIPS to meet the borrowing needs of the U.S. government. We issue 

marketable bills at a discount or at par, and pay the par amount of the security upon maturity. The average interest rate on

Treasury bills represents the original issue effective yield on securities outstanding at year end. We issue marketable notes 

and bonds as long-term securities that pay semi-annual interest based on the securities’ stated interest rates. We issue 

these securities at either par value or at an amount that reflects a discount or premium. The average interest rate on

marketable notes and bonds represents the stated interest rate adjusted by any discount or premium on securities 

outstanding at year-end. 
DEPARTMENT OF THE TREASURY 135

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

We also issue TIPS that have interest and redemption payments tied to the Consumer Price Index (CPI) for all Urban

Consumers, a widely used measurement of inflation. We adjust the principal for TIPS daily over the life of the security

based on the CPI for all Urban Consumers. At maturity, TIPS are redeemed at the inflation-adjusted principal amount, or

the original par value, whichever is greater. TIPS pay a semi-annual fixed rate of interest applied to the inflation-adjusted

principal. The average interest rate on TIPS represents the stated interest rate on the inflation-adjusted principal, adjusted

by any discount or premium on securities outstanding as of the end of the fiscal year. The inflation-adjusted TIPS principal

balance of federal debt held by the public included inflation of $362.3 billion and $336.1 billion as of September 30, 2023 and

2022, respectively.

We also issue marketable FRNs, which accrue interest daily and pay the aggregated interest on a quarterly basis. The

interest rate is based on two components; the interest rate tied to the highest accepted discount rate of the most recent 13-

week marketable bill auction and the spread rate, which is the highest accepted discount rate determined at auction when

the FRN is first offered. Similar to marketable notes and bonds, we issue these securities at either par value or at an

amount that reflects a discount or premium. The average interest rate on marketable FRNs represents the highest accepted

discount rate of the most recent 13-week marketable auction as of September 30, adjusted by any discount or premium on

securities outstanding as of that date. 

Federal Debt Held by the Public includes federal debt held outside of the U.S. government by individuals, corporations,

FRBs, state and local governments, foreign governments, and central banks. As of September 30, 2023, the FRB’s SOMA

had total holdings of $2.8 trillion which: (i) excluded $2.1 trillion in Treasury securities used in overnight reverse repurchase

transactions, and (ii) excludes $26.8 billion lent to dealers and not collateralized by other Treasury securities. As of

September 30, 2022, the FRB’s SOMA had total holdings of $2.7 trillion which: (i) excluded $2.9 trillion in Treasury

securities used in overnight reverse repurchase transactions, and (ii) includes a net of $3.7 billion held by the FRB as

collateral for securities lending activities. For the years ended September 30, 2023 and 2022, we incurred interest expense of

$105.1 billion and $114.7 billion, respectively, related to Treasury securities held by the FRBs.

We issue non-marketable securities at either par value or at an amount that reflects a discount or a premium. The average

interest rate on the non-marketable securities represents the original issue weighted effective yield on securities outstanding

as of September 30, 2023 and 2022. Non-marketable securities are issued with a term of on demand out to 40 years. In FY

2020, we expanded our non-marketable securities to include a new special non-marketable Treasury security, known as a

Special Purpose Vehicle (SPV) security. We issued these securities to SPVs, which were established by the Federal Reserve

to implement its emergency lending facilities under Section 13(3) of the Federal Reserve Act to respond to the COVID-19

pandemic (refer to Note 10). An SPV security is a demand deposit certificate of indebtedness for which interest accrues daily

and is paid at redemption. The total amount of SPV securities redeemed in FY 2023 and 2022 was $4.0 billion and

$7.0 billion, respectively; including $477 million and $122 million in capitalized interest, respectively. There were no

issuances of SPV securities in FY 2023 and 2022. As of September 30, 2023 and 2022, the total amount of SPV securities

outstanding was $11.9 billion and $15.4 billion, respectively.
136 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

STATUTORY DEBT LIMIT 

The statutory debt limit is the total amount of money that the U.S. government is authorized to borrow to meet its existing

legal obligations, with certain adjustments. Outstanding debt obligations subject to the debt limit were $33.1 trillion and

$30.9 trillion as of September 30, 2023 and 2022, respectively. Congress has provided us with statutory authority to take

certain extraordinary measures in the event that the public debt nears the debt limit and a delay in raising the debt limit

occurs. These measures authorize us to deviate from our normal debt management operations – which include the

investment (or non-investment) of trust fund balances in Treasury securities – to avoid exceeding the debt limit. We

undertake these measures to meet the U.S. government’s obligations as they come due without exceeding the debt limit.

During a period of delay in raising the debt limit, we may undertake the following extraordinary measures: (i) suspend new

issuances of Treasury securities to the Government Securities Investment Fund (G Fund) of the FERS TSP, the Civil Service

Retirement and Disability Fund (Civil Service Fund), the Postal Service Retiree Health Benefits Fund (Postal Benefits

Fund), and the ESF; (ii) redeem early a certain amount of Treasury securities held by the Civil Service Fund and Postal

Benefit Fund; (iii) suspend new issuances of State and Local Government Series (SLGS) securities; (iv) utilize FFB to

exchange outstanding Treasury securities held by the Civil Service Fund for non-Treasury securities (refer to Note 17); and

(v) issue cash management bills to manage short-term financing needs.

When the period of delay in raising the debt limit ends, we discontinue using extraordinary measures and resume our

normal debt management operations. Furthermore, we are required by the relevant statutes to issue to the G Fund, along

with the OPM-administered Civil Service Fund and Postal Benefits Fund (the OPM funds), Treasury securities that bear

such interest rates and maturity dates necessary to replicate the investments the funds would have held had the delay not

occurred (the unissued securities). In addition, relevant statutes require us to pay these funds the related lost interest

(foregone interest) on the unissued securities. While we may restore the ESF, relevant statutes do not permit us to pay the

ESF interest lost during a period of delay. 

A delay in raising the debt limit occurred during the period August 2, 2021 through December 15, 2021, at which time

Treasury departed from its normal debt management operations and undertook extraordinary actions to avoid exceeding the

debt limit. On October 14, 2021, Congress enacted the Bipartisan Budget Act of 2019 (P.L. 117-50), raising the debt limit by

$480 billion, from $28.401 trillion to $28.881 trillion. As this raise in the debt limit provided only a temporary reprieve, we

continued the use of extraordinary measures to meet U.S. government obligations without exceeding the debt limit. On

December 16, 2021, Congress enacted P.L. 117-73, raising the debt limit by $2.5 trillion, from $28.881 trillion to

$31.381 trillion allowing Treasury to discontinue the use of extraordinary measures and resume normal debt management

operations. On December 16, 2021, we restored uninvested principal totaling $326.7 billion, of which $262.0 billion was

restored to the G Fund and $64.7 billion was restored to the OPM administered Civil Service Fund. We also restored

foregone interest totaling $1.1 billion, of which $812.3 million was restored to the G Fund on the next interest payment date

of December 17, 2021, and $322.4 million was restored to the OPM funds on the next semi-annual interest payment date of

December 31, 2021.

Of the $1.1 billion of foregone interest paid in FY 2022, we reported $726 million in FY 2022 as a current year, non-entity

expense within the line item “Restoration of Foregone Federal Debt Interest”. In FY 2022, we reversed $409 million of

foregone interest, previously accrued in FY 2021, within the line item “Accrued Interest on Restoration of Federal Debt

Principal,” on the Consolidated Statements of Changes in Net Position. 
DEPARTMENT OF THE TREASURY 137 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Another delay in raising the debt limit commenced on January 19, 2023, at which time we again departed from our normal 

debt management operations and undertook extraordinary measures to avoid exceeding the debt limit. On June 3, 2023,

Congress enacted the Fiscal Responsibility Act of 2023 (P.L. 118-5) which temporarily suspended the debt limit through 

January 1, 2025. On June 5, 2023, we discontinued the use of extraordinary measures and resumed normal debt 

management operations. On this date, we restored unissued securities totaling $310.5 billion, of which $289.1 billion was 

restored to the G Fund and $21.4 billion was restored to the OPM administered Civil Service Fund. We also restored 

foregone interest totaling $3.0 billion to the G Fund on June 6, 2023. We restored foregone interest totaling $282.3 million to

the two OPM funds on the next semi-annual interest payment date on June 30, 2023.

17. OTHER FEDERAL DEBT AND INTEREST PAYABLE

Through FFB, we have outstanding borrowings and related accrued interest owed to the Civil Service Fund. At September 

30, 2023 and 2022, FFB had outstanding borrowings of $5.5 billion and $4.9 billion, inclusive of $35 million and $31 million 

of accrued interest payable, respectively. The outstanding borrowings at September 30, 2023, had stated interest rates that 

ranged from 2.25 percent to 3.00 percent per annum, and an effective interest rate of 2.51 percent. The outstanding 

borrowings at September 30, 2022, had stated interest rates that ranged from 2.25 percent to 2.88 percent per annum, and 

an effective interest rate of 2.53 percent. Maturity dates ranged from June 30, 2024, to June 30, 2035, for outstanding 

borrowings at September 30, 2023, and from June 30, 2023, to June 30, 2029, for outstanding borrowings at

September 30, 2022.

As an extraordinary measure undertaken during the January through June 2023 period of delay in raising the statutory 

debt limit (refer to Note 16), on May 25, 2023, through FFB, we exchanged $1.9 billion of non-Treasury debt securities that 

did not count against the debt limit, for an equivalent amount of Treasury debt securities held by the Civil Service Fund that 

did count against the debt limit. FFB used the Treasury debt securities it received from the Civil Service Fund to repay 

$1.9 billion of outstanding principal borrowings, including interest, owed to the Fiscal Service. The Fiscal Service then 

extinguished the Treasury debt securities it received from FFB, which thereby helped Treasury remain below the debt limit. 
138 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

18. D.C. FEDERAL PENSION AND JUDICIAL RETIREMENT ACTUARIAL 

LIABILITY

Title XI of the Balanced Budget Act of 1997, as amended, was intended to relieve the D.C. government of the burden of

unfunded pension liabilities transferred to the District by the U.S. government in 1979. To fulfill our responsibility, we

manage two funds ― the District of Columbia Teachers, Police Officers, and Firefighters Federal Pension Fund (the D.C. 

Federal Pension Fund) and the District of Columbia Judicial Retirement and Survivors Annuity Fund (the Judicial 

Retirement Fund). We are required to make annual amortized payments from the General Fund to the D.C. Federal Pension 

Fund and the Judicial Retirement Fund. The D.C. Federal Pension Fund benefit payments relate to creditable service 

performed on or before June 30, 1997, while the Judicial Retirement Fund benefit payments relate to all creditable service. 

A reconciliation of the combined actuarial pension liability for the D.C. Federal Pension Fund and the Judicial Retirement 

Fund as of September 30, 2023 and 2022 is as follows: 

(in millions) 2023 2022

Beginning Liability Balance $ 8,461 $ 8,010 

Pension Expense: 

Normal Cost 7 7 

Interest on Pension Liability During the Year 77 67

Actuarial (Gains) Losses During the Year: 

From Experience 359 384

From Discount Rate Assumption Change 27 194

From Other Economic Assumption Changes 420 326

From Non-Economic Assumption Changes - 28

Total Pension Expense 890 1,006 

Less Amounts Paid (571) (555) 

Ending Liability Balance $ 8,780 $ 8,461 
DEPARTMENT OF THE TREASURY 139 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

D.C. Federal Judicial 2023

Additional Information ($ in millions): Pension Fund Retirement Fund Total 

Amount Received from the General Fund $ 609 $ 22 $ 631

Annual Rate of Investment Return Assumption 1.30% - 3.26% 1.30% - 3.26%

Future Annual Rate of Inflation and Cost-Of- 

 Living Adjustment: 

 Police Officers 2.63% N/A 

 Firefighters 2.63% N/A 

 Teachers 2.60% N/A 

 Judicial N/A 2.58%

Future Annual Rate of Salary Increases: 

 Police Officers 2.75% N/A 

 Firefighters 2.55% N/A 

 Teachers 2.10% N/A 

 Judicial N/A 1.67%

 

 

 

D.C. Federal Judicial 2022

Additional Information ($ in millions): Pension Fund Retirement Fund Total 

Amount Received from the General Fund $ 540$ 19$ 559

Annual Rate of Investment Return Assumption 0.87% - 3.21% 0.87% - 3.21% 

Future Annual Rate of Inflation and Cost-Of- 

 Living Adjustment: 

 Police Officers 2.15% N/A 

 Firefighters 2.15% N/A 

 Teachers 2.14% N/A 

 Judicial N/A 1.88% 

Future Annual Rate of Salary Increases: 

 Police Officers 2.15% N/A 

 Firefighters 2.20% N/A 

 Teachers 2.30% N/A 

 Judicial N/A 1.26% 
140 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

19. LIABILITIES

LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

As of September 30, 2023 and 2022, liabilities not covered by budgetary resources consisted of the following: 

(in millions) 2023 2022

Intra-Governmental Liabilities Not Covered by Budgetary Resources 

Federal Debt Principal, Premium/Discount (Note 16) $ 6,842,211 $ 6,682,084 

Other Intra-Governmental Liabilities 73 75

Total Intra-Governmental Liabilities Not Covered by Budgetary Resources 6,842,284 6,682,159 

Federal Debt Principal, Premium/Discount (Note 16) 26,211,413 24,227,512 

Other Payables 5 5 

Other Liabilities 1,083 1,078 

Total Liabilities Not Covered by Budgetary Resources 33,054,785 30,910,754 

Total Liabilities Covered by or Not Requiring Budgetary Resources 3,437,144 3,080,358 

Total Liabilities $ 36,491,929 $ 33,991,112 

OTHER LIABILITIES

The “Other” line item within “Other Liabilities” displayed on the Consolidated Balance Sheets consists of liabilities that are 

covered by, not covered by, and not requiring budgetary resources. The “Other” line item within “Other Liabilities” at

September 30, 2023 and 2022, consisted of the following: 

2023 2022

Non- Non- 

(in millions) Current Current Total Current Current Total 

Intra-Governmental 

Accounts Payable $ 820 $ - $ 820 $ 855 $ - $ 855

Advances From Others and Deferred Revenue 627 - 627 27 - 27

Other Accrued Liabilities 1,366 59 1,425 611 58 669

Total Intra-Governmental $ 2,813 $ 59 $ 2,872 $ 1,493 $ 58 $ 1,551 

Other Than Intra-Governmental 

Federal Employee Benefits Payable $ 32 $ 579 $ 611 $ 29 $ 592 $ 621

Unfunded Leave 666 - 666 648 1 649

Advances From Others and Deferred Revenue 1,889 - 1,889 1,164 - 1,164 

Accrued Funded Payroll and Leave 765 - 765 664 - 664

Other Liabilities Without Related Budgetary Obligations 370 28 398 316 28 344

Other Liabilities With Related Budgetary Obligations 870 206 1,076 604 - 604

Liability for Non-Fiduciary Deposit Funds 

 and Clearing Accounts 5,534 - 5,534 5,729 - 5,729 

Other Accrued Liabilities - 2 2 - 1 1 

Total Other Than Intra-Governmental $ 10,126 $ 815 $ 10,941 $ 9,154 $ 622 $ 9,776 
DEPARTMENT OF THE TREASURY 141 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

20. NET POSITION

Unexpended Appropriations represents the amount of spending authorized as of year-end that is unliquidated or unobligated 

and has not lapsed, been rescinded, or withdrawn. No-year appropriations remain available for obligation until expended. 

Annual appropriations remain available for upward or downward adjustment of obligations until canceled. We report 

adjustments related to unexpended appropriations, such as cancellations of expired funds or rescissions, as “Other 

Adjustments” on the Consolidated Statements of Changes in Net Position. 

Cumulative Results of Operations represents the net results of operations since inception, and includes cumulative amounts 

related to investments in capitalized assets and donations and transfers of assets in and out without reimbursement. Also 

included as a reduction in Cumulative Results of Operations are accruals for which the related expenses require funding 

from future appropriations and assessments. These future funding requirements include, among others: (a) accumulated 

annual leave earned but not taken; (b) accrued FECA; (c) credit reform cost re-estimates; (d) unfunded D.C. Federal pension; 

and (e) expenses for contingent liabilities.

APPROPRIATIONS RECEIVED

Congress appropriates the amount reported as “Appropriations Received” from the General Fund receipts, such as income 

taxes, which are not dedicated by law for a specific purpose. This amount will not necessarily agree with the “Appropriations 

(discretionary and mandatory)” amount reported on the Combined Statements of Budgetary Resources because of differences 

between proprietary and budgetary accounting concepts and reporting requirements. For example, certain dedicated 

receipts are recorded as “Appropriations (discretionary and mandatory)” on the Combined Statements of Budgetary 

Resources, but are recognized as exchange or non-exchange revenue (i.e., typically in revolving, special, and non-revolving 

trust funds) and reported on the Consolidated Statements of Changes in Net Position in accordance with SFFAS No. 7, 

Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, as

amended.

TRANSFERS TO THE GENERAL FUND AND OTHER

The amount reported as “Transfers to the General Fund and Other” on the Consolidated Statements of Changes in Net 

Position includes the following for the years ended September 30, 2023 and 2022: 

(in millions) 2023 2022

Categories of Transfers to the General Fund and Other 

Interest Revenue $ (50,959) $ (49,204) 

Increase in Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Note 11) (16,690) (2,860) 

COVID-19 Non-Entity (Revenue)/Cost (Note 10) (1,263) 1,945 

Downward Re-estimates of Credit Reform Subsidies (112) (1,349) 

U.S. Quota in the IMF - Valuation Upward/(Downward) Adjustment 942 (3,177) 

Other (962) (1,123) 

Total $ (69,044) $ (55,768) 
142 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Included in “Transfers to the General Fund and Other” is accrued interest revenue on inter-agency loans held on behalf of

the U.S. government. We report a corresponding amount on the Consolidated Statements of Net Cost under “Non-Entity 

Costs: Less Interest Revenue from Loans.” Eliminations between our bureaus reduce the amount reported on the 

Consolidated Statements of Net Cost. Also included is the increase in liquidation preference in the GSE Senior Preferred 

Stock investments and annual valuation adjustment. Our “COVID-19 Non-Entity (Revenue) Cost” relates to notes 

receivable and common stock warrants received pursuant to the CARES Act, CAA, and ARP. The credit reform downward 

re-estimate subsidies transferred to the General Fund is driven by a change in forecasted future cash flows. Additionally, 

there are unrealized gains and losses recognized on the U.S. Quota in the IMF due to SDR exchange rate fluctuation. 

21. CONSOLIDATED STATEMENTS OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS

Our Consolidated Statements of Net Cost display information on a consolidated basis. We consist of Departmental Offices 

(DO) and seven operating bureaus that we provide supporting schedules for Net Cost in the notes to the financial statements 

(refer to Note 1). These supporting schedules provide consolidating information, which fully displays the costs, revenues, 

and net cost of DO and each operating bureau.

The classification of sub-organizations has been determined in accordance with SFFAS No. 4, Managerial Cost Accounting 

Standards and Concepts which states that the predominant factor is the reporting entity’s organization structure and 

existing responsibility components, such as bureaus, administrations, offices, and divisions within a department.

Each sub-organization is responsible for accumulating costs. The assignment of the costs to Department-wide programs is

the result of using the following cost assignment methods: (1) direct costs, (2) cause and effect, and (3) cost allocation.

INTRA-DEPARTMENTAL COSTS/REVENUES

We report intra-departmental costs/revenues from providing goods and/or services on a reimbursable basis among our suborganizations as costs by providing sub-organizations and as revenues by receiving sub-organizations. We recognized intradepartmental imputed costs, such as un-reimbursed payments made from the Treasury Judgment Fund on our behalf, on the 

Consolidated Statements of Net Cost of $1.2 billion and $1.4 billion during FY 2023 and 2022, respectively. Accordingly, we

eliminated such costs or revenues in the consolidation process.

INTRA-GOVERNMENTAL COSTS

Intra-governmental costs relate to the source of goods and services we purchased and not to the classification of the related 

intra-governmental revenue.

In certain cases, other federal agencies incur costs that are directly identifiable to our operations. In accordance with SFFAS 

No. 4, as amended, we recognize identified costs paid on our behalf by other agencies. The imputed intra-governmental 

financing sources we currently recognize include the actual cost of future benefits for the federal pension plans, and the 

Federal Employees Health Benefits Program that other federal entities pay on our behalf. We reflect the funding for these 

costs as costs on the Consolidated Statements of Net Cost, and as imputed financing sources on the Consolidated Statements 

of Changes in Net Position. Costs other agencies pay on our behalf were $1.1 billion and $0.8 billion for the fiscal years 

ended September 30, 2023 and 2022, respectively.
DEPARTMENT OF THE TREASURY 143 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

CONSOLIDATED STATEMENTS OF NET COST PRESENTATION

Basis of Presentation 

On our Consolidated Statements of Net Cost, we present the net cost of operations by major programs. Specifically, we

present our gross costs and earned revenues by three major program categories aligned with Treasury’s mission: (i) 

Economic program – our mission of promoting economic prosperity and maintaining stability, encouraging sustainable and 

global economic growth; (ii) Financial program – our mission of managing the government’s finances and resources 

effectively, protecting the integrity of financial systems that are critical to the nation’s financial infrastructure, and fostering 

improved governance in financial institutions; and (iii) Security program – our mission of enhancing national security by

implementing economic sanctions against foreign threats to the U.S., identifying and targeting the financial support 

networks of national security threats, and improving the safeguards of the financial systems. We assign each of our bureaus 

and reporting entities to one of the above three program categories based on their major function and core mission 

responsibility. Our bureaus’ and reporting entities’ gross costs and earned revenues fall within a single program category in

the Consolidated Statements of Net Cost, with the exception of DO for which we allocate gross costs and earned revenues to

multiple programs. 

Non-Entity Costs and Revenues 

Our Consolidated Statements of Net Cost also present interest expense on the federal debt, other federal costs incurred, and 

non-entity exchange revenues earned on behalf of the U.S. government. We present these costs and revenues separately 

from the net cost of Treasury operations. We eliminate these costs in the consolidation process to the extent that they 

involve transactions with our sub-organizations. 

Non-entity other federal costs shown on the Consolidated Statements of Net Cost for the fiscal years ended 

September 30, 2023 and 2022 consisted of the following: 

(in millions) 2023 2022

Credit Reform Interest on Uninvested Funds (Intra-Governmental) $ 11,860 $ 12,699 

Judgment Claims and Contract Disputes 1,814 2,170 

Resolution Funding Corporation 920 920

Legal Services Corporation 580 529

Corporation for Public Broadcasting 535 485

All Other Payments 147 377

Total $ 15,856 $ 17,180 
144 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) 

For Fiscal Year Ended September 30, 2023 

Program Costs 

Bureau of 

Engraving & 

Printing 

Bureau of the 

Fiscal 

Service 

Departmental 

Offices(a)

Financial 

Crimes 

Enforcement 

Network 

Internal 

Revenue 

Service U.S. Mint 

ECONOMIC PROGRAM 

Gross Cost $ - $ - $ 90,662 $ - $ - $ - 

Less Earned Revenue - - (30,308) - - - 

Net Program Cost - - 60,354 - - - 

FINANCIAL PROGRAM 

Gross Cost 878 2,699 5,021 - 17,809 4,336 

Less Earned Revenue (973) (530) (4,409) - (580) (4,423) 

Net Program Cost (95) 2,169 612 - 17,229 (87) 

SECURITY PROGRAM 

Gross Cost - - 475 168 - - 

Less Earned Revenue - - (16) (2) - - 

Net Program Cost - - 459 166 - - 

Total Net Program Cost (Revenue) 

 Before Changes in Actuarial 

 Assumptions (95) 2,169 61,425 166 17,229 (87) 

(Gain)/Loss on Pension, ORB, or OPEB 

 Assumption Changes - - 447 - - - 

Total Net Cost of (Revenue From) 

 Treasury Operations $ (95) $ 2,169 $ 61,872 $ 166 $ 17,229 $ (87) 

(a) The total $60.4 billion of the Economic Program net costs DO reported consisted of $61.8 billion of net costs from ORP: $49.4 billion for Coronavirus State 

and Local Fiscal Recovery Funds, $8.7 billion for Emergency Rental Assistance, $1.8 billion for Local Assistance and Tribal Consistency Fund, $1.3 billion 

for State Small Business Credit Initiative, and $0.6 billion for other COVID-19 relief programs (refer to Note 10); and $1.7 billion in net costs from IAP; 

partially offset by $3.7 billion of net income from ESF. The remaining net costs consisted of net costs from other DO programs or offices. 
DEPARTMENT OF THE TREASURY 145 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T):

For Fiscal Year Ended September 30, 2023 

Program Costs 

Office of the 

Comptroller of the 

Currency 

Alcohol 

and 

Tobacco 

Tax and 

Trade 

Bureau 

Combined 

Total Eliminations 

2023 

Consolidated 

ECONOMIC PROGRAM 

Gross Cost $ - $ 150 $ 90,812 $ 350 $ 90,462

Less Earned Revenue - (7) (30,315) (803) (29,512) 

Net Program Cost - 143 60,497 (453) 60,950 

FINANCIAL PROGRAM 

Gross Cost 1,207 - 31,950 4,613 27,337 

Less Earned Revenue (1,185) - (12,100) (1,400) (10,700) 

Net Program Cost 22 - 19,850 3,213 16,637 

SECURITY PROGRAM 

Gross Cost - - 643 125 518

Less Earned Revenue - - (18) (5) (13) 

Net Program Cost - - 625 120 505

Total Net Program Cost (Revenue) 

 Before Changes in Actuarial 

 Assumptions 22 143 80,972 2,880 78,092

(Gain)/Loss on Pension, ORB, or OPEB 

 Assumption Changes (4) - 443 - 443

Total Net Cost of (Revenue From) 

 Treasury Operations $ 18 $ 143 $ 81,415 $ 2,880 $ 78,535
146 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T):

For Fiscal Year Ended September 30, 2022 

Program Costs 

Bureau of 

Engraving & 

Printing 

Bureau of the 

Fiscal 

Service 

Departmental 

Offices(a)

Financial 

Crimes 

Enforcement 

Network 

Internal 

Revenue 

Service U.S. Mint 

ECONOMIC PROGRAM 

Gross Cost $ - $ - $ 191,038 $ - $ - $ - 

Less Earned Revenue - - (20,348) - - - 

Net Program Cost - - 170,690 - - - 

FINANCIAL PROGRAM 

Gross Cost 874 2,562 4,175 - 16,201 4,857 

Less Earned Revenue (1,012) (476) (3,497) - (534) (5,006) 

Net Program Cost (138) 2,086 678 - 15,667 (149) 

SECURITY PROGRAM 

Gross Cost - - 538 154 - - 

Less Earned Revenue - - (35) (2) - - 

Net Program Cost - - 503 152 - - 

Total Net Program Cost (Revenue) 

 Before Changes in Actuarial 

 Assumptions (138) 2,086 171,871 152 15,667 (149) 

(Gain)/Loss on Pension, ORB, or OPEB 

 Assumption Changes - - 548 - - - 

Total Net Cost of (Revenue From) 

 Treasury Operations $ (138) $ 2,086 $ 172,419 $ 152 $ 15,667 $ (149) 

(a) The total $170.7 billion of the Economic Program net costs DO reported consisted of $163.0 billion of net costs from ORP: $122.1 billion for Coronavirus 

State and Local Fiscal Recovery Funds, $13.3 billion for Emergency Rental Assistance, $10.9 billion for Coronavirus Relief Fund, $8.6 billion for 

Homeowners Assistance Fund, $5.9 billion for Emergency Capital Investment Program, $1.3 billion for State Small Business Credit Initiative, and $0.9 

billion for other COVID-19 relief programs (refer to Note 10); $4.2 billion of net costs from ESF; and $2.5 billion from IAP. The remaining net costs 

consisted of net costs from other DO programs or offices. 
DEPARTMENT OF THE TREASURY 147 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T):

For Fiscal Year Ended September 30, 2022 

Program Costs 

Office of the 

Comptroller of the 

Currency 

Alcohol 

and 

Tobacco 

Tax and 

Trade 

Bureau 

Combined 

Total Eliminations 

2022 

Consolidated 

ECONOMIC PROGRAM 

Gross Cost $ - $ 137 $ 191,175 $ 413 $ 190,762

Less Earned Revenue 

 

 

- (8) (20,356) (183) (20,173) 

Net Program Cost - 129 170,819 230 170,589 

FINANCIAL PROGRAM 

Gross Cost 1,135 - 29,804 4,096 25,708 

Less Earned Revenue (1,205) - (11,730) (1,219) (10,511) 

Net Program Cost (70) - 18,074 2,877 15,197 

SECURITY PROGRAM 

Gross Cost - - 692 144 548

Less Earned Revenue - - (37) (9) (28) 

Net Program Cost - - 655 135 520

Total Net Program Cost (Revenue) 

 Before Changes in Actuarial 

 Assumptions (70) 129 189,548 3,242 186,306 

(Gain)/Loss on Pension, ORB, or OPEB 

 Assumption Changes (29) - 519 - 519

Total Net Cost of (Revenue From) 

 Treasury Operations $ (99) $ 129 $ 190,067 $ 3,242 $ 186,825
148 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

22. ADDITIONAL INFORMATION RELATED TO THE COMBINED

STATEMENTS OF BUDGETARY RESOURCES

NET ADJUSTMENTS TO UNOBLIGATED BALANCE, BROUGHT FORWARD, OCTOBER 1 

Net adjustments to unobligated balance, brought forward, October 1 as of September 30, 2023 and 2022 consisted of the 

following: 

(in millions) 2023 2022

Unobligated Balance, Brought Forward From Prior Year $ 405,219 $ 489,160 

Adjustments to Budgetary Resources Made During Current Year 

 Downward Adjustments of Prior Year Undelivered Orders 2,785 1,329 

 Downward Adjustments of Prior Year Delivered Orders 4,676 19,123 

 Other Adjustments 3,104 (20,074) 

Unobligated Balance From Prior Year Budget Authority, Net 

 (Discretionary and Mandatory) $ 415,784 $ 489,538 

The decrease in Unobligated Balance, Brought Forward From Prior Year Budget Authority, Net is primarily the result of 

$157.6 billion of FY 2022 obligation activity related to the execution of CARES Act, CAA, and ARP funded programs (refer to

Note 10). These unobligated balances were partially offset by a $78.2 billion increase in resources carried forward from the 

Inflation Reduction Act.

UNDELIVERED ORDERS

Undelivered orders represent goods and services ordered and obligated which have not been received. This includes any 

orders for which we have paid in advance, but for which delivery or performance has not yet occurred. The decrease in

Undelivered Orders - Paid as of September 30, 2023, primarily reflects the use of COVID-19 financial assistance by

recipients for covered eligible costs incurred in response to the pandemic (refer to Note 10). The decrease in Undelivered 

Orders - Unpaid as of September 30, 2023, primarily reflects the amounts associated with those COVID-19 financial 

assistance programs that have been fully disbursed as of September 30, 2023 (refer to Note 10). Undelivered orders as of

September 30, 2023 and 2022 consisted of the following: 

2023 2022

(in millions) Federal Non-Federal Total Federal Non-Federal Total 

 Paid $ 666 $ 189,195 $ 189,861 $ 38 $ 225,181 $ 225,219 

 Unpaid 1,099 23,523 24,622 830 26,416 27,246 

Undelivered Orders at the End of the Year $ 1,765 $ 212,718 $ 214,483 $ 868 $ 251,597 $ 252,465 

CONTRIBUTED CAPITAL

Contributed capital represents the current year authority and prior year balances of amounts actually transferred through 

non-expenditure transfers to miscellaneous receipt accounts of the General Fund to repay a portion of a capital investment 

or transfer seigniorage and numismatic profits. Contributed capital for the fiscal years ended September 30, 2023 and 2022

was $0 million and $114 million, respectively.
DEPARTMENT OF THE TREASURY 149 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

TERMS OF BORROWING AUTHORITY USED

Several of our programs have authority to borrow under the FCRA, as amended. The FCRA provides indefinite borrowing 

authority to financing accounts to fund the unsubsidized portion of direct loans and to satisfy obligations in the event the 

financing account’s resources are insufficient. OMB Circular No. A-11 defines repayment requirements. We calculate 

interest expense due based on the beginning balance of borrowings outstanding and the borrowings/repayments activity that 

occurred during the fiscal year. Undisbursed Departmental borrowings earn interest at the same rate as the financing 

account pays on its debt owed to the Fiscal Service. In the event that principal and interest collections exceed the interest 

expense due, we receive the excess payment. If principal and interest do not exceed interest expense due, we will borrow the 

difference. We make periodic principal repayments based on the analysis of cash balances and future disbursement needs. 

All interest on borrowings is due on September 30. Interest rates on FCRA borrowings range from 0.54 percent to

5.50 percent.

AVAILABLE BORROWING

The available borrowing authority and related changes in available borrowing authority as of and for the fiscal years ended 

September 30, 2023 and 2022 are shown below: 

(in millions) 2023 2022

Beginning Balance $ 7,180 $ 6,117 

Current Authority(1) 1,000 5,513 

Borrowing Authority Withdrawn - (59) 

Borrowing Authority Converted to Cash (502) (4,391) 

Ending Balance $ 7,678 7,180 

(1) The significant decrease in borrowing authority is primarily related to lower downward reestimates for COVID related loans (refer to Note 10). 

RECONCILIATION OF THE PRESIDENT’S BUDGET

The Budget of the United States (also known as the President’s Budget), with actual numbers for FY 2023, was not 

published at the time that these financial statements were issued. We expect OMB to publish the FY 2025 President’s

Budget in February 2024, and will be available from the U.S. Government Publishing Office. The following chart displays 

the differences between the Combined Statement of Budgetary Resources (SBR) in the FY 2022 AFR and the actual FY 2022

balances included in the FY 2024 President’s Budget.
150 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Reconciliation of FY 2022 Combined Statement of Budgetary Resources 

to the FY 2024 President’s Budget 

New 

Obligations Outlays (net Distributed 

Budgetary and Upward of offsetting Offsetting Net 

(in millions) Resources Adjustments collections) Receipts Outlays 

Combined Statement of Budgetary Resources (SBR) Amounts $ 1,341,796 $ 936,577 $ 893,311 $ (65,142) $ 828,169

IRS non-entity tax credit payments and other outlays not in SBR (1) 344,825 344,825 338,267 - 338,267 

Tax and Trade Bureau (TTB) non-entity collections for Puerto Rico not in SBR 414 414 414 - 414

Expired funds in SBR (836) - - - - 

Non-Treasury offsetting receipts - - - (35) (35) 

Non-Budgetary Financing Disbursements, net(2) - - (4,722) - (4,722) 

Prior Year Adjustment on FRF not in President's Budget 4 4 - - - 

Prior Year Adjustments on ORP not in President's Budget (129,076) (129,076) - - - 

Other - (1) (3) (5) (8)

President's Budget Amounts $ 1,557,127 $ 1,152,743 $ 1,227,267 $ (65,182) $ 1,162,085

(1) These are primarily refundable Earned Income Tax Credit and Refundable Premium Tax Credit that are reported with refunds as custodial 

activities in our financial statements and thus are not reported as budgetary resources.

(2) These are credit reform financing account net outlays. The SBR excludes gross disbursements and offsetting collections from credit financing 

accounts.

LEGAL ARRANGEMENTS AFFECTING USE OF UNOBLIGATED BALANCES

The use of unobligated balances is restricted based on annual legislation requirements or enabling authorities. Funds are 

presumed to be available for only one fiscal year unless otherwise noted in the annual appropriation language. Unobligated 

balances in unexpired Treasury account fund symbols are available in the next fiscal year for new obligations unless some 

restrictions have been placed on those funds by law. In those situations, the restricted funding will be temporarily 

unavailable until such time as the reasons for the restriction have been satisfied or legislation has been enacted to remove 

the restriction.

Amounts in expired Treasury account fund symbols are not available for new obligations, but may be used to make 

adjustments to reflect, and make disbursements to liquidate, obligations that were created before the budgetary authority 

expired.
DEPARTMENT OF THE TREASURY 151 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

23. SOURCES AND DISPOSITION OF CUSTODIAL REVENUE 

We collect the majority of federal revenue from income and excise taxes. The table below shows collection activity, by

revenue type and tax year, for the fiscal years ended September 30, 2023 and 2022: 

Tax Year 

Pre- 2023

(in millions) 2023 2022 2021 2021 Collections 

Individual Income and FICA Taxes $ 2,546,749 $ 1,414,071 $ 69,626 $ 81,509 $ 4,111,955

Corporate Income Taxes 270,170 155,513 4,935 26,323 456,941 

Estate and Gift Taxes 1,263 29,944 2,077 2,150 35,434 

Excise Taxes 70,846 20,911 236 351 92,344 

Railroad Retirement Taxes 5,423 1,579 2 214 7,218 

Unemployment Taxes 4,983 2,737 24 203 7,947

Fines, Penalties, Interest & Other Revenue - 

 Tax Related 596 2 1 7 606

Tax Related Revenue Received 2,900,030 1,624,757 76,901 110,757 4,712,445 

Deposit of Earnings, Federal Reserve System(1) 127 454 - - 581

Fines, Penalties, Interest & Other Revenue - 

 Non-Tax Related 6,525 1,549 - - 8,074 

Non-Tax Related Revenue Received 6,652 2,003 - - 8,655 

Total Revenue Received $ 2,906,682 $ 1,626,760 $ 76,901 $ 110,757 $ 4,721,100

Less Amounts Collected for Non-Federal Entities (369) 

Total $ 4,720,731

(1) The significant decrease in the FRB deposit of excess earnings is primarily due to increased interest rates and impacts on the FRB’s interest 

income and expense, which has affected the FRB’s surplus (refer to Note 1AB). 

Tax Year 

Pre- 2022

(in millions) 2022 2021 2020 2020 Collections 

Individual Income and FICA Taxes $ 2,495,597 $ 1,679,952 $ 99,529 $ 33,020 $ 4,308,098

Corporate Income Taxes 294,023 156,609 3,428 21,811 475,871 

Estate and Gift Taxes 2,310 25,840 1,785 3,420 33,355 

Excise Taxes 69,930 19,916 36 358 90,240 

Railroad Retirement Taxes 4,417 1,341 389 1 6,148 

Unemployment Taxes 4,799 2,050 22 175 7,046 

Fines, Penalties, Interest & Other Revenue - 

 Tax Related 320 1 - 1 322

Tax Related Revenue Received 2,871,396 1,885,709 105,189 58,786 4,921,080 

Deposit of Earnings, Federal Reserve System 79,961 26,714 - - 106,675 

Fines, Penalties, Interest & Other Revenue - 

 Non-Tax Related 5,599 1,384 - - 6,983 

Non-Tax Related Revenue Received 85,560 28,098 - - 113,658 

Total Revenue Received $ 2,956,956 $ 1,913,807 $ 105,189 $ 58,786 $ 5,034,738

Less Amounts Collected for Non-Federal Entities (421) 

Total $ 5,034,317
152 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

AMOUNTS PROVIDED TO FUND THE U.S. GOVERNMENT 

For the fiscal years ended September 30, 2023 and 2022, collections of custodial revenue transferred to other federal entities 

were as follows: 

(in millions) 2023 2022

General Fund $ 4,059,898 $ 4,390,703 

Other Federal Agencies 1,264 1,384 

Total $ 4,061,162 $ 4,392,087 

FEDERAL TAX REFUNDS AND OTHER PAYMENTS 

Federal tax refunds and other payments include amounts paid to taxpayers who have paid more than the actual taxes they 

owe, as well as payments for various refundable tax credits. The CARES Act, CAA, and ARP included provisions to help 

stimulate the economy through economic impact payments (including recovery rebate credits) (refer to Note 10). In FY 2023

and 2022, the IRS disbursed $2.0 billion and $13.1 billion, respectively, of payments to eligible taxpayers based upon the 

criteria in each Act. Refunds and other payments, by revenue type and tax year, were as follows for the years ended 

September 30, 2023 and 2022: 

Tax Year 

2023

Pre- Refunds/ 

(in millions) 2023 2022 2021 2021 Payments 

Individual Income and FICA Taxes $ 100,011 $ 302,575 $ 160,572 $ 47,836 $ 610,994

Corporate Income Taxes 4,435 8,655 10,955 19,810 43,855 

Estate and Gift Taxes - 409 1,012 430 1,851 

Excise Taxes 715 1,145 164 667 2,691 

Railroad Retirement Taxes - 24 (9) - 15

Unemployment Taxes - 79 22 61 162

Fines, Penalties, Interest & Other Revenue - - - 1 1 

Total $ 105,161 $ 312,887 $ 172,716 $ 68,805 $ 659,569

Tax Year 

2022

Pre- Refunds/ 

(in millions) 2022 2021 2020 2020 Payments 

Individual Income and FICA Taxes $ 85,825 $ 418,527 $ 63,548 $ 15,433 $ 583,333

Corporate Income Taxes 4,378 12,267 6,047 32,919 55,611 

Estate and Gift Taxes 1 10 589 248 848

Excise Taxes 540 921 425 389 2,275 

Railroad Retirement Taxes - 45 (16) - 29

Unemployment Taxes - 73 13 47 133

Fines, Penalties, Interest & Other Revenue - - - 1 1 

Total $ 90,744 $ 431,843 $ 70,606 $ 49,037 $ 642,230
DEPARTMENT OF THE TREASURY 153 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

24. FUNDS FROM DEDICATED COLLECTIONS

The ESF represents the majority of our FDC activities. In addition, such funds managed by BEP, Mint, and OCC (our nonappropriated bureaus) and certain funds managed by the IRS, and FinCEN’s Financial Integrity Fund, are public enterprise 

(or revolving) funds and receive no appropriations from the Congress. Fiscal Service, DO, IRS, OFR, TEOAF, and the CDFI 

Fund manage other miscellaneous FDCs.

The following is a list of FDCs and a brief description of the purpose, accounting, and uses of these funds.

Bureau Fund Code Fund Title/Description 

Exchange Stabilization Fund (ESF) 

ESF 020X4444 Exchange Stabilization Fund 

Public Enterprise/Revolving/Trust Revolving 

BEP Funds 020X4502 Bureau of Engraving and Printing Fund 

Mint 020X4159 United States Mint Public Enterprise Fund 

OCC 020X8413 Assessment Funds 

IRS 020X4413 Federal Tax Lien Revolving Fund 

FinCEN 020X4394 Financial Integrity Fund 

Other FDC Funds 

Fiscal Service 020X5080 Gifts to Reduce Public Debt 

Fiscal Service 020X5081 Presidential Election Campaign 

Fiscal Service 020X8625 Gulf Coast Restoration Trust Fund 

Fiscal Service 020X8902 Esther Cattell Schmitt Gift Fund 

Fiscal Service 5805585001 Travel Promotion Fund, Corp for Travel Promotion 

Fiscal Service 580X5585 Travel Promotion Fund, Corp for Travel Promotion 

Fiscal Service 020X5581 HOPE Reserve Fund 

Fiscal Service 0205445002 Debt Collection Special Fund 

Fiscal Service 0205445003 Debt Collection Special Fund 

Fiscal Service 020X5445 Debt Collection Special Fund 

Fiscal Service 0207/85445 Debt Collection Special Fund 

Fiscal Service 0208/95445 Debt Collection Special Fund 

Fiscal Service 0209/05445 Debt Collection Special Fund 

Fiscal Service 0200/15445 Debt Collection Special Fund 

Fiscal Service 020X5680 Guam World War II Claims Fund 

Fiscal Service 0205680001 Taxes, Duties and Fees, Guam World War II Claims Fund 

DO 020X8790 Gifts and Bequests Trust Fund 

IRS 020X5510 Private Collection Agent Program 

IRS 020X5433 Informant Reimbursement 

IRS 020X5622 Special Compliance Personnel Program Account 

OFR 020X5590 Financial Research Fund 

TEOAF 020X5697 Treasury Forfeiture Fund 

CDFI 020X8524 Capital Magnet Fund 
154 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Pursuant to the legal authority found in Section 10 of the Gold Reserve Act of 1934, as amended, the Secretary, with the

approval of the President, through the ESF, may deal in gold, foreign exchange, and other instruments of credit and

securities the Secretary considers necessary, consistent with U.S. obligations in the IMF on orderly exchange arrangements

and a stable system of exchange rates. The ESF accounts for and reports its holdings to the Fiscal Service on the Standard

Form 224, “Statement of Transactions,” and provides other reports to Congress. Interest on SDRs in the IMF, investments

in Treasury securities, and investments in foreign currency assets are the ESF’s primary sources of revenue. The ESF’s

interest and realized gains on foreign currency assets, along with the interest on SDRs in the IMF represent inflows of

resources to the government, and the interest revenues earned from Treasury securities are the result of intra-departmental

flows.

The BEP, FinCEN, Mint, OCC, and IRS operate “public enterprise/revolving funds” to account for all or some of their

respective revenues and expenses. 31 USC 5142 established the Bureau of Engraving and Printing Fund for BEP to account

for revenue and expenses related to the production of currency and other federal security documents. P.L. 104-52 (31 USC

5136) established the Public Enterprise Fund for the Mint to account for all revenue and expenses related to the production

and sale of numismatic products and circulating coinage. Revenues and other financing sources at the Mint are mainly from

the sale of numismatic and bullion products and the sale of circulating coins to the FRB system. These revenues represent

inflows of resources to the government. 12 USC 16, 481 and 482 established the Assessment Funds for OCC. Revenue and

financing sources are from the bank assessments for the oversight of the national banks, federal savings associations, and

federal branches and agencies of foreign banks. These non-appropriated funds contribute to the inflows of resources to the

government to specifically fund these entities’ operations. 26 USC 7810 established the Federal Tax Lien Revolving Fund to

account for revenue and expenses from the sale of property foreclosed upon by a holder of a lien. Such revenue represents

inflows of resources to the U.S. government. The Anti-Money Laundering Whistleblower Improvement Act, which was

enacted as part of the Consolidated Appropriations Act, 2023 (P.L. 117-328), enhanced FinCEN’s whistleblower program by

establishing a $300 million revolving fund, the Financial Integrity Fund, to pay eligible whistleblowers. There are minimal

transactions with other government agencies.

There are other FDCs at several of our bureaus, such as donations to the Presidential Election Campaign Fund, gifts to

reduce the public debt, and other enforcement related activities. Public laws and the U.S. Code established and authorized

the use of these funds. Sources of revenues and other financing sources include contributions, cash and property forfeited in

enforcement activities, public donations, and other allocations, all which represent inflows to the government.

INTRA-GOVERNMENTAL INVESTMENTS IN TREASURY SECURITIES

The U.S. government does not set aside assets to pay future benefits or other expenditures associated with FDCs. Our

bureaus and other federal agencies invest some of the funds that they collect from the public, if they have the statutory

authority to do so, in Treasury securities. The Fiscal Service collects cash and makes deposits in the General Fund, which is

then available for general government purposes.

When our bureaus or other federal agencies redeem these securities to make expenditures, the government finances those

redemptions out of accumulated cash balances, by collecting taxes or other receipts, by borrowing from the public, or by

curtailing expenditures. This is the same way that the government finances all other expenditures.
DEPARTMENT OF THE TREASURY 155

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT

The securities are an asset to our bureaus and other federal agencies and a liability of the General Fund. Because our

bureaus and other federal agencies are parts of the U.S. government, these assets and liabilities offset each other from the

standpoint of the government as a whole. For this reason, they do not represent an asset or a liability in the U.S.

government-wide financial statements.

Our financial statements do not display the balances related to the investments made by our bureaus because the bureaus

are subcomponents of the Department. However, the General Fund remains liable to the Fiscal Service for the invested

balances and the Fiscal Service remains liable to the investing bureaus (refer to Note 4).
156 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Summary Information for Funds from Dedicated Collections 

as of and for the Fiscal Year Ended September 30, 2023

(in millions) 

Exchange 

Stabilization 

Fund 

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds 

Other FDC 

Funds 

Combined 

FDC Funds 

Eliminations 

between 

FDC Funds 

2023 

Consolidated 

FDC Funds 

ASSETS 

Intra-Governmental: 

Fund Balance $ - $ 1,475 $ 2,124 $ 3,599 $ - $ 3,599 

Investments, Net 14,700 2,235 4,730 21,665 - 21,665 

Other Assets - 3 309 312 309 3 

Total Intra-Governmental 

 

 

14,700 3,713 7,163 25,576 309 25,267 

Other Than Intra-Governmental 

Cash, Foreign Currency, and Other Monetary Assets 176,839 - 91 176,930 - 176,930 

Taxes, Interest, and Other Receivables, Net - 198 53 251 - 251

Advances and Prepayments - 14 289 303 - 303

Other Investments, Net 3,703 21 - 3,724 - 3,724 

Property, Plant, and Equipment, Net - 1,190 25 1,215 - 1,215 

Other Assets - 1,389 1,580 2,969 - 2,969 

Total Other Than Intra-Governmental 180,542 2,812 2,038 185,392 - 185,392 

Total Assets $ 195,242 $ 6,525 $ 9,201 $ 210,968 $ 309 $ 210,659 

LIABILITIES 

Intra-Governmental 

Due To the General Fund $ - $ - $ 497 $ 497 $ - $ 497

Other - 36 1,129 1,165 309 856

Total Intra-Governmental - 36 1,626 1,662 309 1,353 

Other Than Intra-Governmental 

Other Payables 1,029 72 153 1,254 - 1,254 

Special Drawing Right Certificates Issued to the Federal 

Reserve 5,200 - - 5,200 - 5,200 

Allocation of Special Drawing Rights 151,041 - - 151,041 - 151,041 

Other - 686 1,859 2,545 - 2,545 

Total Other Than Intra-Governmental 157,270 758 2,012 160,040 - 160,040 

Total Liabilities 157,270 794 3,638 161,702 309 161,393 

Net Position 

Unexpended Appropriations 200 - - 200 - 200

Cumulative Results of Operations 37,772 5,731 5,563 49,066 - 49,066 

Total Liabilities and Net Position $ 195,242 $ 6,525 $ 9,201 $ 210,968 $ 309 $ 210,659 
DEPARTMENT OF THE TREASURY 157 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Summary Information for Funds from Dedicated Collections 

as of and for the Fiscal Year Ended September 30, 2023

(in millions) 

Exchange 

Stabilization 

Fund 

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds 

Other FDC 

Funds 

Combined 

FDC Funds 

Eliminations 

between 

FDC Funds 

2023 

Consolidated 

FDC Funds 

Statement of Net Cost 

Gross Cost $ 28,011 $ 6,422 $ 624 $ 35,057 $ - $ 35,057 

Less: Earned Revenue (29,987) (6,583) (493) (37,063) - (37,063) 

Gains/Losses on Pension, ORB, or OPEB Assumption - (4) - (4) - (4) 

Total Net Cost of (Revenue From) Operations $ (1,976) $ (165) $ 131 $ (2,010) $ - $ (2,010) 

 

Statement of Changes in Net Position 

Cumulative Results of Operations: 

Beginning Balance $ 35,796 $ 5,126 $ 4,337 $ 45,259 $ - $ 45,259 

Individual Income Tax - - 23 23 - 23

Miscellaneous Taxes and Receipts - 90 - 90 - 90

Intra-Governmental Non-Exchange Revenue - - 824 824 103 721

Donations and Forfeitures of Cash/Equivalent - - 28 28 - 28

Transfers In/Out Without Reimbursement (971) - (405) (1,376) - (1,376) 

Donation/Forfeiture of Property - - 714 714 - 714

Imputed Financing Sources - 92 7 99 - 99

Transfers to the General Fund and Other 971 258 166 1,395 (103) 1,498 

Net Revenue (Cost) of Operations 1,976 165 (131) 2,010 - 2,010 

Net Change in Cumulative Results of Operations 1,976 605 1,226 3,807 - 3,807 

Ending Balance $ 37,772 $ 5,731 $ 5,563 $ 49,066 $ - $ 49,066 
158 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Summary Information for Funds from Dedicated Collections 

as of and for the Fiscal Year Ended September 30, 2022

(in millions) 

Exchange 

Stabilization 

Fund 

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds 

Other FDC 

Funds 

Combined 

FDC Funds 

Eliminations 

between 

FDC Funds 

2022 

Consolidated 

FDC Funds 

ASSETS 

Intra-Governmental: 

Fund Balance $ - $ 1,587 $ 1,821 $ 3,408 $ - $ 3,408 

Investments, Net 18,401 2,225 4,143 24,769 - 24,769 

Other Assets - 4 - 4 - 4 

Total Intra-Governmental 18,401 3,816 5,964 28,181 - 28,181 

Other Than Intra-Governmental 

Cash, Foreign Currency, and Other Monetary Assets 166,412 - 12 166,424 - 166,424 

Taxes, Interest, and Other Receivables, Net - 113 126 239 - 239

Advances and Prepayments - 2 - 2 - 2 

Other Investments, Net 3,796 20 - 3,816 - 3,816 

Property, Plant, and Equipment, Net - 993 20 1,013 - 1,013 

Other Assets - 1,026 842 1,868 - 1,868 

Total Other Than Intra-Governmental 170,208 2,154 1,000 173,362 - 173,362 

Total Assets $ 188,609 $ 5,970 $ 6,964 $ 201,543 $ - $ 201,543 

LIABILITIES 

Due To the General Fund $ - $ - $ 728 $ 728 $ - $ 728

Other - 33 848 881 - 881

Total Intra-Governmental - 33 1,576 1,609 - 1,609 

Other Than Intra-Governmental 

Other Payables 404 137 76 617 - 617

Special Drawing Right Certificates Issued to the Federal 

Reserve 5,200 - - 5,200 - 5,200 

Allocation of Special Drawing Rights 147,009 - - 147,009 - 147,009 

Other - 674 975 1,649 - 1,649 

Total Other Than Intra-Governmental 152,613 811 1,051 154,475 - 154,475 

Total Liabilities 152,613 844 2,627 156,084 - 156,084 

Net Position 

Unexpended Appropriations 200 - - 200 - 200

Cumulative Results of Operations 35,796 5,126 4,337 45,259 - 45,259 

Total Liabilities and Net Position $ 188,609 $ 5,970 $ 6,964 $ 201,543 $ - $ 201,543 
DEPARTMENT OF THE TREASURY 159 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Summary Information for Funds from Dedicated Collections 

as of and for the Fiscal Year Ended September 30, 2022

(in millions) 

Exchange 

Stabilization 

Fund 

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds 

Other FDC 

Funds 

Combined 

FDC Funds 

Eliminations 

between 

FDC Funds 

2022 

Consolidated 

FDC Funds 

Statement of Net Cost 

Gross Cost $ 24,750 $ 6,865 $ 1,346 $ 32,961 $ - $ 32,961 

Less: Earned Revenue (20,126) (7,223) (384) (27,733) - (27,733) 

Gains/Losses on Pension, ORB, or OPEB Assumption 

Changes 

- (29) - (29) - (29) 

Total Net Cost of (Revenue From) Operations $ 4,624 $ (387) $ 962 $ 5,199 $ - $ 5,199 

Statement of Changes in Net Position 

Cumulative Results of Operations: 

Beginning Balance $ 40,420 $ 4,888 $ 3,870 $ 49,178 $ - $ 49,178 

Individual Income Tax - - 21 21 - 21

Intra-Governmental Non-Exchange Revenue - - 432 432 - 432

Donations and Forfeitures of Cash/Equivalent - - 721 721 - 721

Transfers In/Out Without Reimbursement (95) (114) (482) (691) - (691) 

Donation/Forfeiture of Property - - 172 172 - 172

Imputed Financing Sources - 64 7 71 - 71

Transfers to the General Fund and Other 95 (99) 558 554 - 554

Net Revenue (Cost) of Operations (4,624) 387 (962) (5,199) - (5,199) 

Net Change in Cumulative Results of Operations (4,624) 238 467 (3,919) - (3,919) 

Ending Balance $ 35,796 $ 5,126 $ 4,337 $ 45,259 $ - $ 45,259 
160 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

25. RECONCILIATION OF NET COST OF TREASURY OPERATIONS AND 

NON-ENTITY COSTS TO AGENCY OUTLAYS, NET

The Reconciliation of Net Cost of Treasury Operations and Non-Entity Costs (referred to as “Net Cost” for purposes of this 

note) to Agency Outlays, Net (referred to as “Net Outlays” for purposes of this note) depicts the difference between 

proprietary information and budgetary accounting information. Proprietary financial accounting information is intended to

depict the U.S. government’s financial operations and financial position presented on an accrual basis in accordance with 

GAAP. The accrual basis includes information about costs arising from the consumption of assets and the incurrence of

liabilities. In contrast, we use budgetary accounting information for planning and control purposes, and it includes net 

outlays that reflect both the receipt and use of cash, as well as reporting of the federal deficit. “Agency Outlays, Net” also 

includes $116.7 billion and $81.2 billion of interest accrued on outstanding public debt as of September 30, 2023 and 2022,

respectively; as well as $189.9 billion and $28.7 billion of net amortization of discounts on outstanding public debt as of

September 30, 2023 and 2022, respectively. These amounts represent non-cash outlays that have not yet been disbursed. 

The reconciliation of Net Cost (presented on an accrual basis) and Net Outlays (presented on a budgetary basis) reflects the 

relationship between proprietary accounting and budgetary information. The reconciliation serves not only to identify costs 

paid in the past and those that will be paid in the future, but also to assure integrity between financial and budgetary 

accounting. The following is a description of principal transactions that result in differences between our proprietary net 

costs and budgetary net outlays: 

• Non-Entity Activity – Represents activity related to assets that we hold and manage on behalf of the General Fund but 

are not available for our use. We removed this activity from Net Cost through inclusion of change in asset activity, 

however, it has no impact on either Net Cost or Net Outlays and must be included as an Other Reconciling Item. 

• Accrued Liabilities on Federal Debt – Represents, among other things, accrued interest and discount on federal debt 

that has been recorded by Fiscal Service and only impacts the Statement of Changes in Net Position. We removed this 

activity from Net Cost through inclusion of change in liability activity, however, it has no impact on either Net Cost or

Net Outlays and must be included as an Other Reconciling Item. 

• Intradepartmental Eliminations – Represents intra-agency activity that is included in our Net Outlays, which is

presented on a combined basis. As we report Net Cost on a consolidated basis, we exclude this intra-agency activity. To

reconcile between combined and consolidated amounts, we must remove intra-agency transactions and only present 

activity with other federal agencies and with the public. 
DEPARTMENT OF THE TREASURY 161 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

For the fiscal years ended September 30, 2023 and 2022, the Reconciliation of Net Cost of Treasury Operations and NonEntity Costs to Agency Outlays, Net consisted of the following:

(in millions)

IntraGovernmental

Other Than 

IntraGovernmental 2023 Total

Total Net Cost of Treasury Operations and Non-Entity Costs $ 161,686 $ 740,398 $ 902,084

Components of Net Operating Cost Not Part of Budgetary Outlays:

 Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Notes 11 and 20) - 16,690 16,690

 Property, Plant, and Equipment Depreciation Expense and Dispositions(Note 14) - (478) (478)

 Unrealized Valuation Gain on Special Drawing Rights (Note 5) - 135 135

 Unrealized Valuation (Loss) and Sales/Dispositions (Loss) on Investments (Note 13) - (153) (153)

 Year-End Credit Reform Subsidy Accrual Re-Estimates - 72 72

 Adjustments to Prior Year Credit Reform Re-Estimates accrual - 748 748

Increase/(Decrease) in Assets:

 Loans and Interest Receivable (Notes 3, 7, and 10) 341,692 409 342,101

 Advances to Trust Funds (Note 3) (10,029) - (10,029)

 Due From the General Fund (Note 4) 2,177,668 - 2,177,668

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) - 28,290 28,290

 Advances and Prepayments (Note 10) - (53,290) (53,290)

 Other Assets 131 2,305 2,436

(Increase)/Decrease in Liabilities:

 Federal Debt and Interest Payable (Notes 4 and 16) (161,637) (2,019,440) (2,181,077)

 Due To the General Fund - Excludes Custodial Liability Activity (Note 4) (365,037) - (365,037)

 Other Liabilities (1,970) (1,728) (3,698)

Other Financing Sources:

 Imputed Costs (1,104) - (1,104)

Total Components of Net Operating Cost Not Part of Budgetary Outlays 1,979,714 (2,026,440) (46,726)

Components of Budgetary Outlays That Are Not Part of Net Cost:

 Acquisition of Property, Plant and Equipment (Note 14) - 669 669

 Acquisition of Other Investments, Net (Note 13) - 6,677 6,677

 Sale/Repayment of Other Investments, Net (Note 13) - (6,598) (6,598)

 Effect of Prior Year Credit Reform Subsidy Re-Estimates (59) (59)

Other Financing Sources:

 Transfers (In)/Out Without Reimbursement 1,122 - 1,122

Total Components of Budgetary Outlays That Are Not Part of Net Cost 1,122 689 1,811

Other Reconciling Items:

 Distributed Offsetting Receipts - (59,773) (59,773)

 Non-Entity Activity 70,830 - 70,830

 Other 5,525 (2,692) 2,833

Total Other Reconciling Items 76,355 (62,465) 13,890

Agency Outlays, Net $ 2,218,877 $ (1,347,818)$ 871,059
162 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

(in millions)

IntraGovernmental

Other Than 

IntraGovernmental 2022 Total

Total Net Cost of Treasury Operations and Non-Entity Costs $ 194,394 $ 683,733 $ 878,127

Components of Net Operating Cost Not Part of Budgetary Outlays: 

 

 

 

 

 

 Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Notes 11 and 20) - 2,860 2,860

 Property, Plant, and Equipment Depreciation Expense and Dispositions (Note 14) - (521) (521)

 Unrealized Valuation (Loss) on Special Drawing Rights (Note 5) - (473) (473)

 Unrealized Valuation (Loss) and Sales/Dispositions (Loss) on Investments (Note 13) - (8,379) (8,379)

 Year-End Credit Reform Subsidy Accrual Re-Estimates - (804) (804)

 Adjustments to Prior Year Credit Reform Re-Estimates accrual - 1,163 1,163

Increase/(Decrease) in Assets:

 Loans and Interest Receivable (Notes 3, 7, and 10) (182,515) (2,549) (185,064)

 Advances to Trust Funds (Note 3) (44,080) - (44,080)

 Due From the General Fund (Note 4) 2,254,486 - 2,254,486

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) - 420,257 420,257

 Advances and Prepayments (Note 10) - (30,892) (30,892)

 Other Assets 42 382 424

(Increase)/Decrease in Liabilities:

 Federal Debt and Interest Payable (Notes 4 and 16) (492,153) (1,983,477) (2,475,630)

 Liability for Restoration of Federal Debt Principal and Interest (Notes 4 and 16) 60,562 157,035 217,597

 Due To the General Fund - Excludes Custodial Liability Activity (Note 4) (185,470) - (185,470)

 Other Liabilities 1,339 (3,240) (1,901)

Other Financing Sources:

 Imputed Costs (780) - (780)

Total Components of Net Operating Cost Not Part of Budgetary Outlays 1,411,431 (1,448,638) (37,207)

Components of Budgetary Outlays That Are Not Part of Net Cost:

 Acquisition of Property, Plant and Equipment (Note 14) - 597 597

 Acquisition of Other Investments, Net (Note 13) - 21,343 21,343

 Sale/Repayment of Other Investments, Net (Note 13) - (12,208) (12,208)

Other Financing Sources:

 Transfers (In)/Out Without Reimbursement 147 - 147

Total Components of Budgetary Outlays That Are Not Part of Net Cost 147 9,732 9,879

Other Reconciling Items: 

 Distributed Offsetting Receipts - (65,142) (65,142)

 Non-Entity Activity 53,405 - 53,405

 Accrued Liabilities on Federal Debt (4,882) - (4,882)

 Other 781 (1,476) (695)

 Intradepartmental Eliminations (5,316) - (5,316)

Total Other Reconciling Items 43,988 (66,618) (22,630)

Agency Outlays, Net $ 1,649,960 $ (821,791)$ 828,169
DEPARTMENT OF THE TREASURY 163 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

26. SCHEDULE OF FIDUCIARY ACTIVITY

We have identified the following 15 funds as meeting the criteria for fiduciary activity. Details of the funds are provided 

below.

Bureau Fund Code Authority Fund Title/Description 

Fiscal Service 020X6133 31 USC 1322 Payment of Unclaimed Monies 

BEP 020X6513.013 31 USC 5119 Mutilated Currency Claims Funds 

Fiscal Service 020X6045 31 USC 3328 Proceeds, Payments of Unpaid Checks 

Fiscal Service 020X6048 31 USC 3329, 3330 Proceeds of Withheld Foreign Checks 

Fiscal Service 020X6092 31 USC 1321 Debt Management Operations 

Fiscal Service 020X6210 22 USC 1623 Iraq Claims Settlement Fund 

Fiscal Service 020X6501.018 31 USC 3513 Small Escrow Amounts 

Fiscal Service 020X6720 31 USC 3513 Small Difference Account for Deposit and Check Adjustments 

Fiscal Service 020X6830 104 Stat. 1061 Net Interest Payments to/from State 

Fiscal Service 020X6999 31 USC 3513 Accounts Payable, Check Issue Underdrafts 

Fiscal Service 020X6317.001 22 USC 2431 Belize Escrow, Debt Reduction 

IRS 020X6737 90 Stat. 269-270 Internal Revenue Collections for Northern Mariana Island 

IRS 020X6738 31 USC 3513 Coverover Withholdings-U.S. Virgin Islands 

IRS 020X6740 31 USC 3515 Coverover Withholdings-Guam 

IRS 020X6741 31 USC 3513 Coverover Withholdings-American Samoa 

“Payment of Unclaimed Monies” is a fund authorized by 31 USC 1322, permitting the Fiscal Service to collect unclaimed 

monies on behalf of the public. Our other fiduciary activities as listed above are included in All Other Fiduciary Funds.

Schedule of Fiduciary Activity 

 

2023 2022

Payment of All Payment of All

Unclaimed Other Total Unclaimed Other Total 

Monies Fiduciary Fiduciary Monies Fiduciary Fiduciary 

(in millions) Fund Funds Funds Fund Funds Funds 

Fiduciary Net Assets, Beginning of 

 the Year $ 974 $ 144 $ 1,118 $ 890 $ 154 $ 1,044 

Increases: 

 Contributions to Fiduciary Net Assets 55 1,429 1,484 84 1,096 1,180 

Total Increases 55 1,429 1,484 84 1,096 1,180 

Decreases: 

 Disbursements to and on behalf 

 of beneficiaries - (1,435) (1,435) - (1,106) (1,106) 

Total Decreases - (1,435) (1,435) - (1,106) (1,106) 

Net Increase (Decrease) in 

 Fiduciary Assets 55 (6) 49 84 (10) 74

Fiduciary Net Assets, End of Year $ 1,029 $ 138 $ 1,167 $ 974 $ 144 $ 1,118 
164 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Schedule of Fiduciary Net Assets

2023 2022

Payment of All Payment of All

Unclaimed Other Total Unclaimed Other Total 

Monies Fiduciary Fiduciary Monies Fiduciary Fiduciary 

(in millions) Fund Funds Funds Fund Funds Funds 

Fiduciary Net Assets 

Fund Balance with Treasury $ 1,029 $ 137 $ 1,166 $ 974 $ 143 $ 1,117 

Investments in Treasury Securities - 1 1 - 1 1 

Total Fiduciary Assets 1,029 138 1,167 974 144 1,118 

Total Fiduciary Net Assets $ 1,029 $ 138 $ 1,167 $ 974 $ 144 $ 1,118 

27. COMMITMENTS AND CONTINGENCIES

LEGAL CONTINGENCIES

We are a party in various administrative proceedings, legal actions, and claims, which may ultimately result in settlements 

or decisions adverse to the U.S. government. These contingent liabilities arise in the normal course of operations, and their 

ultimate disposition is unknown. We disclose contingent liabilities where the conditions for liability recognition have not 

been met and the likelihood of unfavorable outcome is more than remote. We do not accrue for possible losses related to

cases where we cannot estimate the potential loss or the likelihood of an unfavorable outcome is less than probable.

In some cases, a portion of any loss that may occur may be paid by our Judgment Fund, which is separate from our operating 

resources. For cases related to the Contract Disputes Act of 1978 (P.L. 95-563) and awards under federal anti-discrimination 

and whistle-blower protection acts, we must reimburse the Judgment Fund from future appropriations.

In the opinion of our management and legal counsel, based on information available as of the date of this report, the 

expected outcome of other legal actions, individually or in the aggregate, will not have a materially adverse effect on our 

consolidated financial statements, except for the pending legal actions described below which may have a materially adverse 

impact on our consolidated financial statements depending on the outcomes of the cases.

Pending Legal Actions 

• Tribal Trust Cases: Numerous Native American tribes have filed cases in U.S. District Courts seeking a declaration 

that the U.S. has not provided the tribes with a full and complete accounting of their trust funds and non-monetary trust 

assets, and also seeking an order requiring the U.S. government to provide such an accounting. In addition, plaintiff 

tribes have filed a number of related cases seeking damages in the U.S. Court of Federal Claims, which do not name 

Treasury as a defendant. The majority of the Tribal Trust cases have been resolved through negotiated settlements, and 

the U.S. government is currently in discussion with counsel representing most of the remaining plaintiff tribes with 

pending cases about the feasibility of an out-of-court settlement. Plaintiff tribes in some of the pending cases have 

chosen to pursue active litigation, rather than settlement discussion, and the U.S. government is litigating those cases 

vigorously. We are unable to determine the likelihood of an unfavorable outcome or an estimate of potential loss at this 

time. 

• GSE Related Cases: A number of cases were filed in the U.S. Court of Federal Claims and U.S. District Courts in which 

the plaintiffs allege, among other things, that the U.S. government took their property, breached contractual rights of
DEPARTMENT OF THE TREASURY 165 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

preferred and common stockholders, and breached fiduciary duties when the third amendments to the SPSPAs between 

us and each GSE were executed in August 2012 (refer to Note 11). In the U.S. Court of Federal Claims, the plaintiffs 

seek just compensation and other damages from the U.S. government. With respect to certain cases pending before the 

U.S. Court of Federal Claims, the U.S. government’s motion to dismiss was granted with respect to certain claims and 

denied with respect to certain other claims. The U.S. Court of Appeals for the Federal Circuit dismissed all of the 

claims. Certain plaintiffs filed petitions for a writ of certiorari with the Supreme Court, which were denied. While most 

of the cases brought before the U.S. Court of Federal Claims have been dismissed, some are still pending. In the U.S. 

District Courts, the plaintiffs seek to set aside the third amendments to the SPSPAs as well as damages, and in some 

cases an injunction that (i) results in changes to Treasury’s liquidation preference, or (ii) converts Treasury’s senior 

preferred stock to common stock. Following the Supreme Court’s decision in June 2021, the Court left open the 

possibility that the plaintiffs may be entitled to retrospective relief if the unconstitutional provision inflicted 

“compensable harm”. The Fifth and Eighth Circuit Courts of Appeals remanded cases to the U.S. District Court for the 

Southern District of Texas and the U.S. District Court for the District of Minnesota, where plaintiffs filed amended 

complaints alleging that the unconstitutional provision inflicted “compensable harm.” In the Southern District of Texas 

litigation, plaintiffs also added claims that FHFA’s funding structure violates the Appropriations Clause of the U.S. 

Constitution. The U.S. District Court for the Southern District of Texas dismissed the amended complaint, and the 

Fifth Circuit Court of Appeals affirmed the dismissal. The U.S. District Court for the District of Minnesota also 

dismissed the amended complaint, and that case is now again pending at the Eighth Circuit Court of Appeals. The 

Sixth Circuit Court of Appeals remanded a case to the U.S. District Court for the Western District of Michigan to

determine if the unconstitutional provision inflicted “compensable harm,” while rejecting claims that an FHFA director 

had been serving in violation of the Appointments Clause of the U.S. Constitution. The plaintiffs filed a petition for a 

writ of certiorari with the Supreme Court regarding the Appointments Clause claim, which was denied. On remand, 

plaintiffs are seeking to amend their complaint to add claims that FHFA’s funding structure violates the Appropriations 

Clause of the U.S. Constitution. A case in the Eastern District of Pennsylvania remains in litigation, and a motion to

dismiss is pending. We are unable to determine the likelihood of an unfavorable outcome or an estimate of potential loss 

in these cases at this time. 

• Adam Steele, Brittany Montrois, and Joseph Henchman v. United States: The plaintiffs filed a class claim in the U.S. 

District Court for the District of Columbia seeking refunds of all user fees paid, plus interest, to obtain a preparer tax 

identification number (PTIN). Additionally, the plaintiffs seek to force IRS to cease charging a user fee to obtain a PTIN 

and asking for more information than is necessary to issue a PTIN. On June 1, 2017, the U.S. District Court for the 

District of Columbia found for the plaintiffs in the previously mentioned matters, and the U.S. government appealed. In

March 2019, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court’s opinion and 

determined that IRS is entitled to charge a PTIN user fee. The case was remanded back to the lower court to determine 

whether the amount of the fees previously charged was appropriate. As of September 30, 2023 and 2022, the 

Department has determined the likelihood of an unfavorable outcome as reasonably possible and estimated a potential 

loss within a range of $0 to $246 million and $0 to $230 million, respectively. 

• American Recovery and Reinvestment Tax Act of 2009 (ARRA) Cases: A number of cases were filed in the U.S. Court of

Federal Claims alleging that the U.S. government violated statutory and regulatory mandates to make proper payments 

to plaintiffs under ARRA, Section 1603, for having placed certain energy properties into service. On October 28, 2016, 

the U.S. Court of Federal Claims entered judgment against the U. S. in the amount of $207 million in one of the cases. 

The U.S. government appealed the judgment, and on July 27, 2018, the Federal Circuit reversed the trial court’s
166 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

decision, vacated judgment, and remanded the case to the U.S. Court of Federal Claims for reassignment to a new judge. 

The case remains in litigation. As of September 30, 2023 and 2022, we have determined there is a reasonably possible 

likelihood of an unfavorable outcome in some of the cases totaling approximately $265 million, respectively. 

• Treaty Claim: A Notice of Arbitration was filed under the United Nations Commission of International Trade Law 

Arbitration Rules alleging that Treasury’s Office of Foreign Assets Control acted in violation of U.S. obligations under a 

U.S. bilateral investment treaty. As of September 30, 2023, the Department has determined the likelihood of an

unfavorable outcome as reasonably possible and estimated a potential loss within a range of $0 to $170 million. 

• Anonymous Whistleblower v. United States: A number of whistleblower cases were filed in the U.S. Tax Court under 

seal, appealing the denial of an award by the IRS Whistleblower Office. The anonymous claimants allegedly provided 

confidential information about tax fraud committed by a taxpayer to the IRS. The U.S. Tax Court is currently holding 

these cases in abeyance until it can coordinate their resolution under the Multiple Whistleblower Rule. As of September 

30, 2023, the Department has determined there is probable likelihood of an unfavorable outcome in these cases is a 

combined award of $71 million. 

• Other Legal Actions: We are also involved in employment related legal actions (e.g., matters alleging discrimination and 

other claims before federal courts, the Equal Employment Opportunity Commission, and the Merit Systems Protection 

Board) for which an unfavorable outcome is reasonably possible, but for which an estimate of potential loss cannot be

determined at this time. We do not expect that these cases will have a material adverse effect on our consolidated 

financial position or results. 

OTHER COMMITMENTS AND CONTINGENCIES

Loan Commitments 

Through the FFB, we make loan commitments with federal agencies, or private sector borrowers with loans guaranteed by

federal agencies, to extend them credit for their own use (refer to Notes 1Q and 3). As of September 30, 2023 and 2022, we

had remaining loan commitments totaling $132.6 billion and $34.7 billion, respectively. During FY 2023, the FFB

recognized additional loan commitments with the Federal Deposit Insurance Corporation and the Farm Credit System 

Insurance Corporation that permit FFB to issue loans up to a specified amount of $100 billion and $10 billion, respectively. 

In addition to the loan commitments, the FFB has agreements with agencies that permit FFB to issue loans up to amounts 

authorized in those agencies’ annual program appropriations. 

Multilateral Development Banks 

On behalf of the U.S., we have subscribed to shares of certain MDBs, of which some shares represent capital commitments 

that are callable under certain limited circumstances to meet the obligations of the respective MDB. There has never been, 

nor is there anticipated, a call on the U.S. commitment for these subscriptions. As of September 30, 2023 and 2022, U.S. 

callable capital in MDBs was as follows:
DEPARTMENT OF THE TREASURY 167 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

(in millions) 

$ 

$ 

2023 2022

Inter-American Development Bank $ 49,181 49,181 

International Bank for Reconstruction and Development 49,206 47,785 

Asian Development Bank 18,701 18,701 

African Development Bank 8,177 7,321 

European Bank for Reconstruction and Development 3,055 3,055 

North American Development Bank 1,530 1,530 

Multilateral Investment Guarantee Agency(1) 315 315

Total $ 130,165 127,888 

(1) Both FY 2023 and 2022 include commitments of $22 million for the undisbursed portion of the subscription to paid-in capital 

investments. 

Terrorism Risk Insurance Program 

Congress originally enacted the Terrorism Risk Insurance Act in November 2002, to address market disruptions resulting 

from terrorist attacks on September 11, 2001. Most recently, the Terrorism Risk Insurance Program Reauthorization Act of

2019 (P.L. 116-94) extended the Terrorism Risk Insurance Program (TRIP) until December 31, 2027. The TRIP helps to

ensure available and affordable commercial property and casualty insurance for terrorism risk, and simultaneously allows 

private markets to stabilize. The authority to pay claims under the TRIP is activated when the Secretary (in consultation 

with the Secretary of the Department of Homeland Security and the Attorney General of the United States) certifies an “act

of terrorism.” In the event of certification of an “act of terrorism,” insurers may be eligible to receive reimbursement from 

the U.S. government for associated insured losses – assuming an aggregate insured loss threshold (“program trigger”) has 

been reached – once a particular insurer has satisfied its designated deductible amount. For calendar years 2023 and 2022, 

the program trigger amount was $200 million. Insurance companies and the U.S. government will share insured losses 

above insurer deductibles. The TRIP includes both mandatory and discretionary authority for Treasury to recoup federal 

payments made under the TRIP through policyholder surcharges under certain circumstances, and contains provisions 

designed to manage litigation arising from or relating to a certified act of terrorism. There were no claims under the TRIP as

of September 30, 2023 or 2022.

Exchange Stabilization Agreement 

The North American Framework Agreement (NAFA), which we signed in 1994 and renew annually, is implemented by

Treasury through the Exchange Stabilization Agreement (ESA) with Mexico. Treasury, through the ESF, offers Mexico a 

swap line with drawings contingent on certain conditions being met. Effective November 30, 2018, an amended and restated 

ESA increased the potential size of the swap line from $3.0 billion to $9.0 billion. The amounts and terms (including the 

assured source of repayment) of any swap arrangement under the NAFA and/or the ESA will have to be negotiated and 

agreed to before any actual drawing can occur. There were no drawings outstanding on the ESF swap line as of September 

30, 2023 and 2022. 
168 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

28. RECLASSIFICATION OF AGENCY FINANCIAL STATEMENTS TO

FINANCIAL REPORT OF THE U.S. GOVERNMENT FORMAT

To prepare the Financial Report of the U.S. Government (Financial Report), federal agencies submit to Fiscal Service a trial 

balance containing financial statement account ending balances and activity. Fiscal Service uses this trial balance 

information to reclassify agencies’ account balances and activity in a manner that conforms to the format of the financial 

statement presentation in the Financial Report. Our reclassified financial statements—including the Reclassified Statement 

of Net Cost and Reclassified Statement of Operations and Changes in Net Position—are accessed using the Governmentwide Treasury Account Symbol Adjusted Trial Balance System. Fiscal Service eliminates all intragovernmental balances 

and activity between federal agencies in generating the Financial Report consolidated financial statements. This note 

depicts how our AFR Consolidated Statement of Net Cost and Consolidated Statement of Changes in Net Position are 

adjusted to derive the Financial Report reclassified financial statements prior to the elimination of intragovernmental 

balances and prior to the aggregation of repeated Financial Report line items. A copy of the FY 2022 Financial Report can be

found on the Fiscal Service website and a copy of the FY 2023 Financial Report will be posted to the site as soon as it is

released.
DEPARTMENT OF THE TREASURY 169 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Statement of Net Cost 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts 

 (in millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

COST OF TREASURY OPERATIONS: 

Total Program Gross Costs $ 118,317 $ 34,106 $ - $ 78,227 $ - $ 112,333 Non-Federal Gross Costs 

Intra-governmental Costs 

286 - 2,260 - 2,546 Benefit Program Costs 

99 - 1,006 - 1,105 Imputed Costs 

402 - 1,385 210 1,577 Buy/Sell Cost 

91 - - - 91 Purchase of Assets 

- - 131 - 131 Federal Securities Interest Expense 

3 - - 3 - Borrowing and Other Interest Expenses 

- - 9 - 9 Borrowing Losses 

19 - 597 - 616 Other Expenses (without Reciprocals) 

(91) - - - (91) Purchase of Assets Offset 

809 - 5,388 213 5,984 Total Intra-governmental Costs 

Total Program Gross Costs 118,317 34,915 - 83,615 213 118,317 Total 

Total Program Earned Revenues (40,225) (35,900) - (962) - (36,862) Non-Federal Earned Revenue 

Intra-governmental Revenue 

(55) - (671) (206) (520) Buy/Sell Revenue 

(811) - - (811) - 

Federal Securities Interest Revenue Including Associated 

Gains and Losses 

- - (2,746) (2) (2,744) Borrowing and Other Interest Revenue 

- - (1) - (1) Borrowing Gains 

(98) - - - (98) 

Collections Transferred in to a TAS Other Than the General 

Fund of the U.S. Government - Exchange 

(964) - (3,418) (1,019) (3,363) Total Intra-governmental Earned Revenue 

Total Program Earned Revenues (40,225) (36,864) - (4,380) (1,019) (40,225) Total 

Loss on Pension, ORB, or OPEB Assumption 

Changes 443 (4) - 447 - 443 Non-Federal Gross Costs 

Total Net Cost of Treasury Operations 78,535 (1,953) - 79,682 (806) 78,535 Total 
170 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Statement of Net Cost 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts 

 (in millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

NON-ENTITY COSTS: 

Federal Debt Interest $ 871,019 $ - $ - $ 674,988 $ - $ 674,988 Interest on Debt Held by the Public (Non-Federal) 

- - 197,122 1,091 196,031 Federal Securities Interest Expense (Federal) 

 Total Federal Debt Interest 871,019 - - 872,110 1,091 871,019 Total 

Restoration of Foregone Federal Debt Interest 3,292 - - 3,009 - 3,009 Interest on Debt Held by the Public (Non-Federal) 

- - 283 - 283 Federal Securities Interest Expense (Federal) 

 Total Restoration of Foregone Federal Debt 

Interest 3,292 - - 3,292 - 3,292 Total 

Less Interest Revenue from Loans (47,745) - - 7 - 7 Borrowing losses (Federal) 

Intra-governmental Revenue 

- - (47,750) - (47,750) Borrowing and Other Interest Revenue (Federal) 

- - (2) - (2) Borrowing Gains 

- - (47,752) - (47,752) Total Intra-governmental Earned Revenue 

 Total Less Interest Revenue from Loans (47,745) - - (47,745) - (47,745) Total 

Other Federal Costs, Net 15,856 96 - 4,299 - 4,395 Non-Federal Gross Costs 

 Intra-governmental Costs 

- - 55 - 55 Buy/Sell Cost 

- - 11,860 - 11,860 Borrowing and Other Interest Expenses 

- - 11,915 - 11,915 Total Intra-governmental Costs 

(198) - (256) - (454) Buy/Sell Revenue (Federal) 

 Total Other Federal Costs, Net 15,856 (102) - 15,958 - 15,856 Total 
DEPARTMENT OF THE TREASURY 171 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Statement of Net Cost 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts 

 (in millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

GSEs Non-Entity Revenue, Net (16,690) - - (16,690) - (16,690) Non-Federal Earned Revenue 

COVID-19 Non-Entity (Revenue) Cost, Net (1,263) - - (1,050) - (1,050) Non-Federal Gross Costs 

 - - (213) - (213) Non-Federal Earned Revenue 

 Total COVID-19 Non-Entity Cost (Revenue), Net (1,263) - - (1,263) - (1,263) Total 

Other, Net (920) 45 - 1 - 46 Non-Federal Gross Costs 

 - - (2) - (2) Non-Federal Earned Revenue 

 - - (964) - (964) Buy/Sell Revenue (Federal) 

 Total Other, Net (920) 45 - (965) - (920) Total 

Total Net Non-Entity Costs 823,549 (57) - 824,697 1,091 823,549 Total 

 77 - 239,689 - 239,766 Non-Federal Gross Costs (1)

Total Net Cost of Treasury Operations and NonEntity Costs $ 902,084 $ (1,933) $ - $ 1,144,068 $ 285 $ 1,141,850 Total Net Cost (1)

(1) Includes income tax credits of $239.8 billion, which are reported on the Treasury Statement of Custodial Activity within the “Less Refunds and Other Payments” line item. These costs are reported as part of net cost on the reclassified 

financial statements for the purpose of presenting these costs in the manner presented in the Financial Report.
172 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts (in 

millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

STATEMENT OF CHANGES IN NET POSITION 

UNEXPENDED APPROPRIATIONS 

Beginning Balance $ 785,961 $ 200 $ - $ 785,761 $ - $ 785,961 Net Position, Beginning of Period 

Appropriations Received 845,087 - - 845,087 - 845,087 Appropriations Received as adjusted 

Appropriations Transferred In/Out (21) - - (21) - (21) 

Non-Expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources 

Other Adjustments (5,301) - - (5,301) - (5,301) Appropriations Received as adjusted 

Appropriations Used (907,340) - - (907,340) - (907,340) Appropriations Used 

Net Change in Unexpended Appropriations (67,575) - - (67,575) - (67,575) Total 

Total Unexpended Appropriations 718,386 200 - 718,186 - 718,386 Total 

CUMULATIVE RESULTS OF OPERATIONS 

Beginning Balance 69,821 45,259 - 24,562 - 69,821 Net Position, Beginning of Period 

Appropriations Used 907,340 - - 907,340 - 907,340 Appropriations Expended 

Non-Exchange Revenue 550 436 - - - 436

Collections Transferred Into a TAS Other Than the General 

Fund of the U.S. Government 

103 103 - - - 

Accruals for entity amounts to be collected in a TAS other 

than the General Fund of the US Government - 

Nonexchange 

23 - - - 23 Individual Income Tax and Tax Withholdings 

90 - 1 - 91 Other Taxes and Receipts 

285 - - 285 - 

Federal Securities Interest Revenue Including Associated 

Gains and Losses (Non-Exchange) 

 Total Non-Exchange Revenue 550 937 103 1 285 550 Total 
DEPARTMENT OF THE TREASURY 173 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts (in 

millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

Donations and Forfeitures of Cash/Equivalent 

 

 

 

 

 

 

 

 

 

28 28 - - - 28 Other Taxes and Receipts 

Transfers In/Out Without Reimbursement (1,122) 106 106 - - - 

Appropriation of Unavailable Special or Trust Fund 

Receipts Transfers-In

(106) (106) - - - 

Appropriation of Unavailable Special or Trust Fund 

Receipts Transfers-Out 

- - 1 1 - 

Non-expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources 

(1) - - (1) - 

Non-expenditure Transfers-Out of Unexpended 

Appropriations and Financing Sources 

6 - 999 1,000 5 Expenditure Transfers-In of Financing Sources 

(1,232) - (2) (1,000) (234) Expenditure Transfers-Out of Financing Sources 

- - 150 150 - 

Non-expenditure Transfers-In of Financing Sources - Capital 

Transfers 

(150) - - (150) - 

Non-expenditure Transfers-Out of Financing Sources - 

Capital Transfers 

3,566 3,565 1 2 - Transfers-In Without Reimbursement 

(3,565) (3,565) (895) (2) (893) Transfers-Out Without Reimbursement 

 Total Transfers In/Out Without Reimbursement (1,122) (1,376) - 254 - (1,122) Total 

Donation/Forfeiture of Property 714 714 - - - 714 Other Taxes and Receipts 

Accrued Interest and Discount on Debt 70,342 - - 70,342 - 70,342 

Other Non-Budgetary Financing Sources for Debt 

Accruals/Amortization 
174 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts (in 

millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

Imputed Financing Sources 1,104 99 - 1,005 - 

- 

- 

- 

- 

- 

 1,104 Imputed Financing Sources 

Transfers to the General Fund and Other (69,044) - - (674) (674) 

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Government 

 - - (70,830) (70,830) Non-Entity Collections Transferred to the General Fund 

 996 - 20 1,016 Other Financing Sources with Budgetary Impact 

 502 - 942 1,444 Other Taxes and Receipts 

 Total Transfers to the General Fund and Other (69,044) 1,498 - (70,542) (69,044) Total 

Net Cost of Treasury Operations and Non-Entity 

Costs (902,084) 1,933 - (1,144,068) (285) (1,141,850) Net Cost of Operations (2)

Net Change in Cumulative Results of Operations 7,828 3,833 103 (235,668) - 

$ -

(231,938) Total 

Total Cumulative Results of Operations $ 77,649 $ 49,092 $ 103 $ (211,106) $ (162,117) Total 

STATEMENT OF CUSTODIAL ACTIVITY 

Sources of Custodial Revenue 

Individual Income and FICA Taxes $ 4,111,955 $ 77 $ - $ 4,111,878 $ - $ 4,111,955 Individual Income Tax and Tax Withholdings 

Corporate Income Taxes 456,941 - - 456,941 - 456,941 Corporation Income Taxes 

Estate and Gift Taxes 35,434 - - 35,434 - 35,434 Estate and Gift Taxes 

Excise Taxes 92,344 - - 92,344 - 92,344 Excise Taxes 

Railroad Retirement Taxes 7,218 - - 7,218 - 7,218 Other Taxes and Receipts 

Unemployment Taxes 7,947 - - 7,947 - 7,947 Unemployment Taxes 

Deposit of Earnings, Federal Reserve System 581 - - 581 - 581 Other Taxes and Receipts 

Fines, Penalties, Interest and Other Revenue 8,680 - - 8,680 - 8,680 Other Taxes and Receipts 

(2) Includes income tax credits of $239.8 billion, which are reported on the Treasury Statement of Custodial Activity within the “Less Refunds and Other Payments” line item. These tax credits are reported as part of net cost on the 

reclassified financial statements for the purpose of presenting these costs in the manner presented in the Financial Report.
DEPARTMENT OF THE TREASURY 175 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity 

For the Fiscal Year Ended September 30, 2023 

AFR Financial Statement Line 

Amounts (in 

millions) 

Dedicated 

Collections 

Combined 

Dedicated 

Collections 

Eliminations 

Other than 

Dedicated 

Collections 

(with 

Eliminations) 

Eliminations 

between 

Dedicated 

and Other 

than 

Dedicated 

Total 

 (in millions) Reclassified Financial Statement Line 

Less Refunds and Other Payments (659,569) - - (380,195) - (380,195) Individual Income Tax and Tax Withholdings 

 - - (35,013) - (35,013) Corporation Income Taxes 

 - - (158) - (158) Unemployment Taxes 

 - - (2,658) - (2,658) Excise Taxes 

 - - (1,766) - (1,766) Estate and Gift Taxes 

 - - (13) - (13) Other Taxes and Receipts 

 Total Less Refunds and Other Payments (659,569) - - (419,803) - (419,803) Total 

Non-Cash Accrual Adjustment (53,696) - - (53,988) - (53,988) Other Taxes and Receipts 

 - - (7) - (7) Excise Taxes 

 - - 299 - 299

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Gov't 

 Total Non-Cash Accrual Adjustment (53,696) - - (53,696) - (53,696) Total 

Disposition of Custodial Revenue 

Amounts Provided to Fund Non-Federal Entities (369) - - (369) - (369) Other Taxes and Receipts 

Amounts Provided to Fund the Federal 

Government (4,061,162) - - (4,059,898) - (4,059,898) Non-Entity Collections Transferred to the General Fund 

 - - (1,264) (1,264) 

Collections Transferred to a TAS Other Than the General 

Fund of the U.S. Government 

 Total Amounts Provided to Fund the Federal 

Government (4,061,162) - - (4,061,162) - (4,061,162) Total 

Non-Cash Accrual Adjustment 53,696 - - 53,701 - 53,701 

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Gov't 

 - - (5) - (5) 

Accrual of Collections Yet to be Transferred to a TAS Other 

Than the General Fund of the U.S. Gov't 

 Total Non-Cash Accrual Adjustment 53,696 - - 53,696 - 53,696 Total 

Total Statement of Changes in Net Position and 

Statement of Custodial Activity $ 796,035 $ 49,369 $ 103 $ 746,769 $ - $ 796,035 

Total Reclassified Statement of Operations and Changes 

in Net Position 
176 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED – SEE ACCOMPANYING 

AUDITORS’ REPORT) 

INTRODUCTION

This section provides the Required Supplementary Information as prescribed by accounting standards.

OTHER CLAIMS FOR REFUNDS

We estimated that $2.4 billion and $3.4 billion as of September 30, 2023 and 2022, respectively, may be payable as other 

claims for tax refunds. This estimate represents amounts (principal and interest) that we may pay for claims pending 

judicial review by the federal courts or internally, by Appeals. In FY 2023, the total estimated payout (including principal 

and interest) for claims pending judicial review by the federal courts and appeals courts is $1.1 billion and $1.3 billion, 

respectively. In FY 2022, the total estimated payout (including principal and interest) for claims pending judicial review by

the federal courts and appeals courts was $2.1 billion and $1.3 billion, respectively. To the extent judgments against the 

government in these cases prompt other similarly situated taxpayers to file similar refund claims, these amounts could 

become significantly greater. 

IRS FEDERAL TAXES RECEIVABLE, NET

In accordance with SFFAS No. 7, some unpaid tax assessments do not meet the criteria for financial statement recognition. 

Internal Revenue Code (IRC) 6201 authorizes and requires us to make inquiries, determinations, and assessments of all 

taxes that taxpayers have not duly paid (including interest, additions to the tax, and assessable penalties) under the law. 

Unpaid assessments result from taxpayers filing returns without sufficient payment, as well as from tax compliance 

programs such as examination, under-reporter, substitute for return, and combined annual wage reporting. We also have

authority to abate the paid or unpaid portion of an assessed tax, interest, and penalty. Abatements occur for a number of

reasons and are a normal part of the tax administration process. Abatements may result in claims for refunds or a reduction 

of the unpaid assessed amount.

Under federal accounting standards, we consider unpaid assessments agreed to by the taxpayer or the court federal taxes 

receivable. We consider assessments not agreed to by taxpayer or the court compliance assessments. Due to the lack of

agreement, these compliance assessments are less likely to have future collection potential than those unpaid assessments 

that we consider federal taxes receivable.

We call assessments with little or no future collection potential write-offs. Write-offs principally consist of amounts owed by

deceased, bankrupt, or defunct taxpayers. Write-offs have little or no future collection potential, but statutory provisions 

require that we maintain these assessments until the statute for collection expires.

Although we do not consider compliance assessments and write-offs receivables under federal accounting standards, they 

represent legally enforceable claims of the U.S. government. 

The components of the total unpaid assessments at September 30, 2023 and 2022, were as follows: 
DEPARTMENT OF THE TREASURY 177 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

(in millions) 2023 2022

Total Unpaid Assessments $ 574,000 $ 602,000 

Less Compliance Assessments (94,000) (88,000) 

Write-Offs (76,000) (77,000) 

Gross Federal Taxes Receivable 404,000 437,000 

Less Allowance for Doubtful Accounts (222,000) (201,000) 

Federal Taxes Receivable, Net $ 182,000 $ 236,000 

In FY 2023, total unpaid assessments include $116 billion of non-delinquent taxes receivable in IRC 965(h) tax, which is

collectible based on the type of taxpayer and the financial health of large dollar businesses. The non-delinquent IRC 965 (h) 

component refers to taxpayers who elected to pay their IRC 965(h) tax on an eight-year installment schedule. 

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

As an agent of the U.S. government and as authorized by 26 USC, the TTB collects excise taxes from alcohol, tobacco, 

firearms, and ammunition industries. In addition, the TTB collects special occupational taxes from certain alcohol and 

tobacco businesses. During FY 2023 and 2022, TTB collected approximately $18.1 billion and $19.6 billion in taxes, interest, 

and other revenues, respectively. TTB also collects federal excise taxes on certain articles produced in Puerto Rico and the 

U.S. Virgin Islands, and imported into the U.S. In accordance with 26 USC 7652, such taxes collected on rum imported into 

the U.S. are “covered over” or paid into the treasuries of Puerto Rico and the U.S. Virgin Islands.

TTB remits substantially all of the taxes collected, net of related refund disbursements, to the General Fund. We further 

distribute this revenue to federal agencies in accordance with various laws and regulations. The firearms and ammunition 

excise taxes are an exception. TTB remits those revenues to the Fish and Wildlife Restoration Fund under provisions of the 

Pittman-Robertson Act of 1937.

DEFERRED MAINTENANCE AND REPAIRS

In FY 2023 and 2022, we had no material amounts of deferred maintenance and repair costs to report on vehicles, buildings, 

heritage assets, and structures we owned.

Deferred maintenance and repairs applies to owned PP&E. Deferred maintenance and repairs are maintenance and repair 

activity that we had not performed when it should have been, or scheduled to be, and put off or delayed for a future period. 

We define maintenance and repairs as the act of keeping capitalized assets in an “acceptable condition” to serve their 

required mission. It includes preventive maintenance, normal repairs, replacement of parts and structural components, and 

other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected 

useful life. Deferred maintenance and repairs excludes activities aimed at expanding the capacity or significantly upgrading 

the assets to a different form than it was originally intended (i.e., activities related to capitalized improvements, 

modernization, and/or restoration).

Logistic personnel use condition assessment surveys and/or the total life-cycle cost methods to determine if there are any 

deferred maintenance and repairs needed to keep an asset in acceptable operating condition. We use periodic condition 

assessments, physical inspections, and review of manufacturing and engineering specifications, work orders, and building 

and other structure logistics reports under these methodologies.
178 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

LAND

We hold land for BEP and Mint operational use in the production of U.S. currency and circulating coins. 

The estimated land acreage for operational use as of September 30, 2023 and 2022, was as follows:

(in acreage) 2023 2022

Beginning Balance 279 175

Increase in land for operational use - 104

Total Land 279 279

STATEMENT OF BUDGETARY RESOURCES DISAGGREGATED BY TREASURY REPORTING ENTITY

The following tables provide the Statement of Budgetary Resources for the fiscal years ended September 30, 2023 and 2022

disaggregated by Treasury reporting entity rather than by Treasury major budget account, since we manage our budget at

the reporting entity level. 
DEPARTMENT OF THE TREASURY 179 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Fiscal Year 2023 Combining Statement of Budgetary Resources Disaggregated 

by Sub-organization Accounts 

 

 

 

Bureau of Bureau of Fin. Crimes Internal 

Engraving & the Fiscal Departmental Enforcement Revenue 

(in millions): Printing Service Offices (a) Network Service 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) $ 839 $ 1,818 $ 329,345 $ 93 $ 80,933

Appropriations (discretionary and mandatory) - 901,800 5,279 190 11,422 

Borrowing authority (discretionary and mandatory) - - 1,000 - - 

Spending authority from offsetting collections 

 (discretionary and mandatory) 975 334 6,058 24 150 

Total Budgetary Resources $ 1,814 $ 903,952 $ 341,682 $ 307 $ 92,505

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 923 $ 902,115 $ 28,606 $ 210 $ 16,526

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 800 1,722 262,288 92 75,071 

 Exempt from apportionment, unexpired accounts - 2 107 - 7 

 Unapportioned, unexpired accounts 91 93 50,062 - 612 

 Unexpired unobligated balance, end of year 891 1,817 312,457 92 75,690 

 Expired unobligated balance, end of year - 20 619 5 289 

Unobligated balance, end of year 891 1,837 313,076 97 75,979 

Total Status of Budgetary Resources $ 1,814 $ 903,952 $ 341,682 $ 307 $ 92,505

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ 61 $ 901,405 $ 13,814 $ 166 $ 15,204

Distributed offsetting receipts - (50,710) (9,010) - (53) 

Agency Outlays, Net (Discretionary and Mandatory) $ 61 $ 850,695 $ 4,804 $ 166 $ 15,151

Disbursements, net (mandatory) $ - $ - $ (4,228) $ - $ -

(a) Of the $342 billion of Total Budgetary Resources for DO, ORP, GSE, ESF and IAP had $9 billion, $254 billion, $46 billion and 

$15 billion, respectively. The remainder is spread throughout other offices. 
180 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Fiscal Year 2023 Combining Statement of Budgetary Resources Disaggregated 

by Sub-organization Accounts 

Alcohol 

and 

Office of the Tobacco 

Comptroller Tax and 

of the Trade Non- 

(in millions): U. S. Mint Currency Bureau Budgetary Budgetary 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) $ 896 $ 1,852 $ 8 $ 415,578 $ 206

Appropriations (discretionary and mandatory) - - 149 918,840 - 

Borrowing authority (discretionary and mandatory) - - - - 1,000 

Spending authority from offsetting collections 

 (discretionary and mandatory) 4,674 1,169 9 13,143 250 

Total Budgetary Resources $ 5,570 $ 3,021 $ 166 $ 1,347,561 $ 1,456

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 4,749 $ 1,208 $ 159 $ 953,089 $ 1,407

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 821 - 5 340,770 29

 Exempt from apportionment, unexpired accounts - 1,813 - 1,929 - 

 Unapportioned, unexpired accounts - - - 50,838 20

 Unexpired unobligated balance, end of year 821 1,813 5 393,537 49

 Expired unobligated balance, end of year - - 2 935 - 

Unobligated balance, end of year 821 1,813 7 394,472 49

Total Status of Budgetary Resources $ 5,570 $ 3,021 $ 166 $ 1,347,561 $ 1,456

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ 70 $ (26) $ 138 $ 930,832 $ -

Distributed offsetting receipts - - - (59,773) - 

Agency Outlays, Net (Discretionary and Mandatory) $ 70 $ (26) $ 138 $ 871,059 $ -

Disbursements, net (mandatory) $ - $ - $ - $ (4,228)
DEPARTMENT OF THE TREASURY 181 

FINANCIAL SECTION | FY 2023 AGENCY FINANCIAL REPORT 

Fiscal Year 2022 Combining Statement of Budgetary Resources Disaggregated 

by Sub-organization Accounts 

Bureau of Bureau of Fin. Crimes Internal 

Engraving & the Fiscal Departmental Enforcement Revenue 

(in millions): Printing Service Offices (a) Network Service 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) $ 610 $ 1,910 $ 481,367 $ 29 $ 2,694

Appropriations (discretionary and mandatory) - 738,997 2,536 202 92,527 

Borrowing authority (discretionary and mandatory) - - 5,463 - - 

Spending authority from offsetting collections 

 (discretionary and mandatory) 1,253 321 4,515 24 154 

Total Budgetary Resources $ 1,863 $ 741,228 $ 493,881 $ 255 $ 95,375

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 1,038 $ 739,482 $ 174,836 $ 180 $ 14,569

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 704 1,636 269,422 72 34,338 

 Exempt from apportionment, unexpired accounts - 4 90 - 7 

 Unapportioned, unexpired accounts 121 93 49,095 - 46,196 

 Unexpired unobligated balance, end of year 825 1,733 318,607 72 80,541 

 Expired unobligated balance, end of year - 13 438 3 265 

Unobligated balance, end of year 825 1,746 319,045 75 80,806 

Total Status of Budgetary Resources $ 1,863 $ 741,228 $ 493,881 $ 255 $ 95,375

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ (39) $ 739,117 $ 140,249 $ 143 $ 13,855

Distributed offsetting receipts - (52,374) (12,192) - (576) 

Agency Outlays, Net (Discretionary and Mandatory) $ (39) $ 686,743 $ 128,057 $ 143 $ 13,279

Disbursements, net (mandatory) $ - $ - $ (4,722) $ - $ -

(a) Of the $494 billion of Total Budgetary Resources for DO, ORP, GSE, ESF and IAP had $166 billion, $254 billion, $41 billion 

and $16 billion, respectively. The remainder is spread throughout other offices. 
182 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | FINANCIAL SECTION 

Fiscal Year 2022 Combining Statement of Budgetary Resources Disaggregated 

by Sub-organization Accounts 

Alcohol 

and 

Office of the Tobacco 

Comptroller Tax and 

of the Trade Non- 

(in millions): U. S. Mint Currency Bureau Budgetary Budgetary 

BUDGETARY RESOURCES 

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) $ 1,182 $ 1,738 $ 8 $ 489,225 $ 313

Appropriations (discretionary and mandatory) - - 128 834,390 - 

Borrowing authority (discretionary and mandatory) - - - - 5,463 

Spending authority from offsetting collections 

 (discretionary and mandatory) 4,905 1,224 9 11,571 834 

Total Budgetary Resources $ 6,087 $ 2,962 $ 145 $ 1,335,186 $ 6,610

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 5,206 $ 1,128 $ 138 $ 930,261 $ 6,316

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 500 - 5 306,461 216 

 Exempt from apportionment, unexpired accounts - 1,834 - 1,935 - 

 Unapportioned, unexpired accounts 381 - - 95,808 78

 Unexpired unobligated balance, end of year 881 1,834 5 404,204 294 

 Expired unobligated balance, end of year - - 2 721 - 

Unobligated balance, end of year 881 1,834 7 404,925 294 

Total Status of Budgetary Resources $ 6,087 $ 2,962 $ 145 $ 1,335,186 $ 6,610

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ (18) $ (123) $ 127 $ 893,311 $ -

Distributed offsetting receipts - - - (65,142) - 

Agency Outlays, Net (Discretionary and Mandatory) $ (18) $ (123) $ 127 $ 828,169 $ -

Disbursements, net (mandatory) $ - $ - $ - $ (4,722)
PART 3: 

OTHER INFORMATION 

(UNAUDITED) 

Section A: Summary of Financial Statement 

Audit and Management Assurances ...............185

Section B: Tax Gap and Tax Burden ....................187

Section C: Management and Performance 

Challenges and Treasury Response .................197

Section D: Payment Integrity .............................256

Section E: Civil Monetary Penalties Inflation 

Adjustment ......................................................261

Section F: Grants Programs ................................268

Appendix: Glossary of Acronyms ........................269
 

 
DEPARTMENT OF THE TREASURY 185 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

SECTION A: SUMMARY OF FINANCIAL STATEMENT AUDIT AND 

MANAGEMENT ASSURANCES

The following tables summarize the results of our financial statement audit, as well as management’s assurances regarding 

conformance with the Federal Managers’ Financial Integrity Act of 1982 (FMFIA) and compliance with the Federal Financial 

Management Improvement Act of 1996 (FFMIA). 

SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion: Unmodified

Restatement: No

Beginning Ending 

Material Weakness Balance New Resolved Consolidated Balance 

Total Material Weaknesses 0 0 0 0 0 

SUMMARY OF MANAGEMENT ASSURANCES

EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA SECTION 2)

Statement of Assurance: Unmodified

Beginning Ending 

Material Weakness Balance New Resolved Consolidated Reassessed Balance 

Total Material Weaknesses 0 0 0 0 0 0 

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA SECTION 2)

Statement of Assurance: Unmodified

Beginning Ending 

Material Weakness Balance New Resolved Consolidated Reassessed Balance 

Total Material Weaknesses 0 0 0 0 0 0 

CONFORMANCE WITH FMFIA SECTION 4 

Statement of Assurance: Federal systems conform, except for instances of nonconformance with financial management system 

requirements

Beginning Ending 

Nonconformances Balance New Resolved Consolidated Reassessed Balance 

Fiscal Service's Cash Management 

Information Systems 1

1 0 1 0 0 0 

IRS's Unpaid Tax Assessments 1

1 0 0 0 0 1 

IRS's Information System Controls 1

1 0 0 0 0 1 

Total nonconformances 3 0 1 0 0 2 

1 Refer to Independent Auditors’ Report in Part 2 of this report. 
186 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

COMPLIANCE WITH FFMIA SECTION 803(a) 

Agency Auditor 

1. Federal Financial Management System Requirements Lack of compliance noted Lack of compliance noted 

2. Applicable Federal Accounting Standards No lack of compliance noted No lack of compliance noted 

3. U.S. Standard General Ledger (USSGL) at Transaction Level No lack of compliance noted No lack of compliance noted 

FMFIA AND FFMIA REQUIREMENTS

The FMFIA requires agencies to establish and maintain internal controls to ensure that federal programs operate efficiently, 

effectively, and in compliance with laws and regulations. The Secretary must evaluate and report annually on (a) whether 

there is reasonable assurance that the Agency’s controls are achieving their intended objectives, and (b) material weaknesses 

in the Agency’s controls (FMFIA Section 2). Additionally, the Secretary must evaluate and report separately on whether the 

Agency’s financial management systems comply with government-wide requirements (FMFIA Section 4). The FFMIA 

requires agencies to implement and maintain financial management systems that substantially comply with federal 

financial management systems requirements, applicable federal accounting standards, and the USSGL at the transaction 

level. The requirements of the FMFIA serve as an umbrella under which other reviews, evaluations, and audits should be

coordinated and considered to support management’s assertion about the effectiveness of internal control over operations, 

reporting, and compliance with laws and regulations.

As of September 30, 2023, we had no material weaknesses under Section 2 or Section 4 of the FMFIA. However, as of the 

end of FY 2023, we had two instances of nonconformance with the federal financial management systems requirements of

Section 4 of the FMFIA, compared to three instances of nonconformance in FY 2022, and four instances of nonconformance at

the end of FY 2021. In FY 2023, we were successful in remediating one component of the Fiscal Service’s significant 

deficiency related to its cash management systems and, in FY 2022, we successfully remediated the other component of this 

significant deficiency related to the Fiscal Service’s debt management systems, thereby resolving one instance of

nonconformance in each of FY 2023 and FY 2022. 

The two remaining instances of nonconformance is a result of the IRS’s significant deficiency which relates to deficiencies in

unpaid tax assessments and information system controls. These two remaining instances of nonconformance constitute a 

lack of compliance with federal financial management system requirements, as reported above under FFMIA Section 803(a). 

Refer to the section in Part 1 entitled Systems, Controls and Legal Compliance and the section in Part 2 entitled 

Independent Auditors’ Report for additional information on the nonconformance issues. 
DEPARTMENT OF THE TREASURY 187 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

SECTION B: TAX GAP AND TAX BURDEN 

TAX GAP

The gross tax gap is the amount of true tax liability for a given tax year not paid voluntarily and/or timely. Tax gap 

estimates provide insight on the level of overall non-compliance during the relevant tax periods and under the Internal 

Revenue Code (IRC) provisions in effect at the time. They also provide the Internal Revenue Service (IRS) with periodic 

appraisals about the nature and extent of noncompliance for use in formulating tax administration strategies.

The IRS develops tax gap estimates on a periodic basis. A particular challenge for tax gap estimation is the time it takes to

collect certain compliance data, especially data on underreporting that come from completed audits. This results in a timing 

difference between when the compliance behavior occurred and the development of tax gap estimates. The most recent tax 

gap estimates cover Tax Years (TY) 2014 - 2016 and were published in October 2022. The IRS produces annual tax gap 

projections to provide more current tax gap information. In October 2023, the IRS issued tax gap projections for TY 2020

and 2021. 

Measuring and reporting on taxpayer compliance related to various tax provisions is inherently complex and challenging. As

a result, the IRS develops estimates of the tax gap in order to measure overall compliance with the current tax system. The 

IRS also undertakes analyses of compliance behavior with respect to specific tax provisions, such as refundable and nonrefundable tax credits. The IRS enforcement strategies and legislative proposals are influenced by its National Research 

Program (NRP), which involves conducting detailed audits of a statistically representative sample of taxpayers to estimate 

compliance with individual income tax provisions and provides data on misreporting on voluntarily filed returns. To provide 

greater reliability and precision of the compliance estimates, the IRS groups multiple years of data together. This results in

a timing difference between the time period from which the IRS generates the reported data and issues the report. 

Misreporting can be in favor of the taxpayer or the government, although estimates indicate that the majority of

misreporting is associated with tax underreporting. Underreporting can manifest as either understatements of the liability 

due at the time the taxpayer files the return, the taxpayer claiming and receiving an excessive refund, or a combination of

both. 

Tax Gap Projections 

The projected gross tax gap for TY 2021 is $688 billion. The net tax gap is the gross tax gap less tax that the IRS projects 

will be subsequently paid, either voluntarily but late, or collected as a result of IRS administrative and enforcement 

activities. In effect, the net tax gap is the portion of the gross tax gap that will not be paid. We project that $63 billion of the 

gross tax gap will eventually be paid, resulting in a net tax gap of $625 billion.

The tax gap projections separate noncompliance into components by the type of tax and source of noncompliance. The three 

primary sources of noncompliance that result in payment of less than the tax owed are:

(i) the non-filing tax gap ($77 billion): the tax not paid on time by those who do not file required returns on time; 

(ii) the underreporting tax gap ($542 billion): the net understatement of tax on timely filed returns; and 

(iii) the underpayment tax gap ($68 billion): which is the amount of tax reported on timely filed returns that is not 

paid on time.1 

1 Detail may not add to the total due to rounding. 
188 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

We also group the gross tax gap projections by type of tax: individual income tax ($520 billion), corporate income tax ($45 

billion), employment tax ($118 billion), and estate tax ($4 billion).2

TAX GAP MAP: TAX GAP PROJECTIONS FOR TAX YEAR 2021 (EXCERPT) ($ IN BILLIONS) 

Notes: 

*Totals include Excise Tax 

# - No estimate 

Detail may not add to totals due to rounding. 

(1) Includes adjustments, deductions, and exemptions. 

(2) Includes the Alternative Minimum Tax and taxes reported in the “Other Taxes” section of the Form 1040 except for self-employment tax and unreported Social 

Security and Medicare tax (which are included in the employment tax gap projections).

(3) The difference between: (1) the projection of the individual income tax underreporting tax gap where underreported tax is calculated based on all misreporting 

combined and, (2) the projection of the individual income tax underreporting tax gap based on the sum of the tax gaps associated with each line item where the 

line-item tax gap is calculated based on the misreporting of that item only. There may be differences if the marginal tax rates are different in these two situations. 

(4) Self-employment tax only. 

2 These projections are excerpted from the tax gap “map” shown below; the full version can be found in https://www.irs.gov/pub/irs-pdf/p5869.pdf.
DEPARTMENT OF THE TREASURY 189 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Tax Gap Data and Methodology Limitations 

Given the complexity of the tax systems and available data, we cannot use a single approach to estimate each component of

the tax gap. Each approach is subject to measurement or non-sampling error; the component estimates that are based on

samples are also subject to sampling error. The individual income tax NRP compliance studies are the foundation for the 

individual income tax underreporting tax gap estimates and projections. For the individual income tax underreporting tax 

gap, we use a statistical adjustment to adjust for measurement errors that result when we do not detect some existing 

noncompliance during an audit.3 We use other statistical techniques to control for bias in estimates based on corporate 

operational audit data. Due to the heterogenous nature of the estimation methodology, we do not report standard errors, 

however, the user should be mindful of these limitations when using these estimates. In addition to sampling error and 

measurement error, there is estimation error and coverage error. The estimates do not fully represent noncompliance in

some components of the tax system, particularly as it relates to corporation income tax, income from flow-through entities, 

foreign or illegal activities, digital assets, and pandemic credits, because compliance data are lacking. Since the 

underreporting projections assume compliance rates have not changed from the prior TY 2014 - 2016 tax gap estimates, they 

are subject to the same data limitations as those tax gap estimates. The projections are also subject to projection error. 

Individual Income Tax Underreporting Tax Gap Projections for Tax Year 2021 

The projections in the table below provide a breakout of the components of the individual income tax underreporting tax gap, 

which is the largest single contributor to the gross tax gap. For each income component, we show the component’s share of

both the gross tax gap and the individual income tax underreporting tax gap. Business income accounts for 46 percent of the 

total individual income tax underreporting tax gap for TY 2021. This primarily consists of nonfarm proprietor income 

(28 percent); income from flow-through entities--partnerships, S corporations, and estates and trusts (10 percent); rent and 

royalty income (6 percent); and farm income (2 percent).

3

 See https://www.irs.gov/pub/irs-pdf/p5869.pdf for more details. 
190 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

INDIVIDUAL INCOME TAX UNDERREPORTING TAX GAP PROJECTIONS BY SOURCE: TAX YEAR 2021 (1)

($ IN BILLIONS)

Tax Return Line Items Tax Gap 

Share of Gross Tax 

Gap 

Share of Individual 

Income Tax 

Underreporting 

Tax Gap 

Gross Tax Gap $ 688 100% N/A 

Individual Income Tax Underreporting Tax Gap $ 396 58% 100%

Items Subject to Substantial Information Reporting and 

Withholding $ 9 1% 2%

Wages, salaries, tips $ 9 1% 2%

Items Subject to Substantial Information Reporting $ 22 3% 6%

Interest income 1 (2) (2) 

Dividend income $ 2 (2) (2) 

State income tax refunds $ (2) (2) (2) 

Pension & annuities $ 9 1% 2%

Unemployment Compensation 2 (2)  1%

Taxable Social Security benefits $ 9 1% 2%

Items Subject to Some Information Reporting $ 94 14% 24%

Partnership, S-Corp, Estate & Trust, etc. $ 41 6% 10%

Alimony income (2) (2) (2) 

Capital Gains $ 53 8% 13%

Items Subject to Little or No Information Reporting $ 167 24% 42%

Form 4797 income $ 6 1% 2%

Other income $ 20 3% 5%

Nonfarm proprietor income $ 110 16% 28%

Farm income $ 6 1% 2%

Rents and royalties $ 25 4% 6%

Total Credits $ 51 7% 13%

Child Tax Credit and Additional Child Tax Credit $ 18 3% 5%

EITC $ 27 4% 7%

Education Credits $ 3 (2) 

 1%

All Other Credits $ 2 (2) 

 1%

Other Taxes $ 5 1% 1%

Unallocated Marginal Effects $ 15 2% 4%

Income Offsets (Adjustments, Deductions, Exemptions) $ 26 4% 7%

Filing Status $ 8 1% 2%

(1) These figures will be updated as more complete compliance data becomes available. 

(2) Less than 0.5 percent or $0.5 billion. 

Note: Individual amounts may not add to total due to rounding. 

Individual Income Tax Credits 

The IRS is responsible for administering 21 refundable and non-refundable individual income tax credits, including the 

Earned Income Tax Credit (EITC), American Opportunity Tax Credit (AOTC), Additional Child Tax Credit (ACTC), and Net 

Premium Tax Credit (PTC). Total tax credits account for 13 percent of the individual income tax underreporting tax gap. 

EITC accounts for 7 percent of the individual income tax underreporting tax gap, followed by the refundable and nonrefundable Child Tax Credit (CTC) (5 percent), and the refundable and non-refundable education credits (1 percent).
DEPARTMENT OF THE TREASURY 191

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

Relationship of Tax Compliance Estimation to Improper Payments

The Payment Integrity Improvement Act (PIIA) includes specific reporting requirements for payment programs that are

determined to be susceptible to significant improper payments. The focus of PIIA, as well as related guidance from the

Office of Management and Budget (OMB), is on implementing internal controls to prevent and detect improper payments. 

PIIA does not take into consideration all aspects of administering tax provisions in a system that relies heavily on voluntary

reporting. In keeping with PIIA requirements, the IRS reports improper payment (i.e., overclaim) estimates for four

refundable tax credits, the EITC, AOTC, ACTC and net PTC, deemed susceptible to significant improper payments (refer to

Part 3, Section D: Payment Integrity, of this report).

The IRS follows the practice of reporting improper payment estimates largely because refundable tax credits may result in a

payment to the taxpayer in excess of tax liability. It can be challenging to distinguish between the portion of a credit that

offsets an individual tax liability versus the portion that is refundable. Determining the impact of a refundable tax credit

depends on multiple variables, including other return elements and information the taxpayer provides, some of which are

unrelated to the refundable tax credit in question. 

The same features of the tax system and taxpayer behaviors that create the compliance problems with refundable tax credits

also create the risk of noncompliance with other tax provisions. Several credits enacted by Congress to promote social and

economic objectives (e.g., assisting particular groups of individuals or businesses) have eligibility rules that are complex and

often lead to high overclaim rates.

Tax refunds, which constitute a transfer of cash from the federal government to a taxpayer, are an integral part of the tax

system as a whole. The IRS tax gap estimation process measures compliance with the current tax system and always

includes noncompliance with refundable and non-refundable tax credits. Whether a tax credit results in a refund instead of

a reduction in tax liability depends on all of the taxpayers' characteristics, such as income, deductions, and other credits

claimed, and is not simply driven by the credit itself.

The IRS’s risk assessments on refundable tax credits have consistently concluded that overclaims are not rooted in internal

control deficiencies, but instead are due to the complexities of verifying eligibility, including unavailability of relevant thirdparty data, for refundable tax credits within the time periods the tax system prescribes. Consequently, errors in taxpayer

claims for credits are the result of factors beyond our control under current law and existing authority, and are therefore,

more appropriately included in the analysis of tax compliance.

Refundable Tax Credits and the Challenges of Compliance

Refundable tax credits (RTC) generally have different eligibility rules, often relating to personal family and living

arrangements, which determine eligibility. Complexity in the form of differing rules is a contributor to tax credit errors. 

Additionally, these credits are difficult for the IRS to verify due to the lack of available and relevant third-party data. Much

of the information necessary to validate the accuracy of an RTC claim before issuing a tax refund is not comprehensively

available in any U.S. government database. 
192 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION

The complexity of eligibility rules for refundable tax credits contributes to the compliance burden for taxpayers and

administrative costs for the IRS. These rules differ by credit and are often complex because they must address complicated

family relationships and residency arrangements to determine eligibility. The relatively high overclaim error rates for these

credits are a result, in part, of this complexity. In some cases, due also in part to the complex rules, overclaims by an

ineligible taxpayer could go to another family member who is eligible for, but fails to claim, the credit. The lack of thirdparty data to verify eligibility requirements for these refundable credits complicates the IRS’s ability to administer the

credits. Such data may not exist, may be unreliable or inaccurate, or may be reported to the IRS too late to be useful during

tax return processing. The IRS also has limited authority to correct mismatches at filing and traditionally used audits to

correct errors, which increases taxpayer burden. The IRS runs various automated checks of certain data on a tax return

before paying a refund but is otherwise limited in its ability to question and correct the taxpayer’s claim. The IRS

continually looks for complete and accurate data sources to verify eligibility for claimed refundable credits to reduce the

burden on compliant taxpayers.

Faced with the complexities of claiming certain refundable credits, many potential credit recipients seek help filing their tax

returns from paid preparers. One-half of taxpayers claiming refundable credits use paid preparers. Unenrolled return

preparers, who prepare a significant number of EITC returns, are not subject to the same level of training and certification

requirements as other tax professionals and have higher error rates for EITC returns than taxpayers who prepare their own

returns or who hire enrolled return preparers. Preparer education and outreach are major components of the IRS’s overall

strategy to address the tax gap and to reduce errors. The IRS’s education and outreach efforts seek to inform preparers

about the availability of the credits and about the eligibility requirements that taxpayers must meet to claim the credits. 

The IRS uses many communication vehicles to send important and useful messages to the return preparer community.

The IRS has a responsibility to detect and address errors and misreporting on tax returns, including those claiming

refundable credits. The IRS frequently enhances filters and other detection tools to improve the accuracy of tax returns and

reduce taxpayer burden, but in some instances, enforcement activities must take place. The IRS rejects millions of

electronically filed returns claiming refundable credits for a variety of reasons, such as missing forms, incorrect Social

Security numbers (SSNs), or if another taxpayer has claimed the same child. Most taxpayers can correct their electronic

returns and successfully re-file with little burden. In some cases, a taxpayer must print and submit a paper return,

resulting in refund delays. Despite the compliance burden and costs to the government associated with these refundable tax

credits, the burden to taxpayers may be lower than with other payment or benefit programs. For example, tax credit

recipients can self-certify eligibility; they do not need to meet with caseworkers, or submit upfront documentation as is

required with some direct service anti-poverty programs, such as with the Supplemental Security Income or Temporary

Assistance for Needy Families programs. Increasing pre-refund screening for eligibility would increase the administrative

costs for refundable tax credits and may discourage eligible taxpayers from claiming the credits. 
DEPARTMENT OF THE TREASURY 193

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

The IRS may initiate a correspondence audit if it identifies, through its scoring and selection process, potential

noncompliance with eligibility requirements. The IRS conducts most refundable credit audits before it issues a refund,

meaning the IRS holds the credit refund until the taxpayer substantiates eligibility. The IRS sends a letter to the taxpayer

requesting documentation showing that the taxpayer meets credit eligibility requirements. In addition to the refund delay,

taxpayers face the burden of gathering and sending in the requested information. In FY 2023, the IRS conducted

273,909 refundable credit audits, the majority through correspondence audits. However, over-reliance on audits to resolve

basic errors results in interest costs by delaying the issuance of refunds to taxpayers, and can lead to fewer taxpayers

receiving credits and deductions for which they are eligible and thus decrease accuracy in tax administration, whereas

focusing on helping taxpayers submit accurate filings upfront will increase payment accuracy while reducing administrative

burdens for the IRS and the tax filer. Moving forward, the IRS intends to reduce the number of audits specifically focused on

refundable credits while also expanding outreach, helping taxpayers get it right at the point of filing, and stepping-up

enforcement activities that focus on unscrupulous preparers that contribute to noncompliance in this domain.

TAX BURDEN

The Internal Revenue Code (IRC) creates the basis for a progressive tax system that applies higher rates of taxation to

progressively higher levels of income. The amount of taxable income can be adjusted through the application of exemptions

and deductions, which influence the amount of taxes taxpayers owe. In addition, many taxpayers qualify for one or more

refundable tax credits, which collectively have a significant impact on tax administration, federal tax revenues, and refund

payments.

The IRS measures tax liability by income level for individuals, and by revenue and assets for corporations. Using these data,

it is possible to illustrate how tax liability rises with increases in Adjusted Gross Income (AGI) for individuals (Figures 1.1

and 1.2 and Table 1). Similar data for corporations shows the tax burden based on the percentage of taxable income

(Figure 2 and Table 2). This information is the most recent data available for individuals (TY 2021) and corporations

(TY 2020).
194 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION

INDIVIDUAL INCOME TAX LIABILITY

FIGURE 1.1: AVERAGE AGI REPORTED AND AVERAGE INDIVIDUAL INCOME TAX LIABILITY FOR TY 2021

FIGURE 1.2: INDIVIDUAL INCOME TAX LIABILITY AS A PERCENTAGE OF AGI FOR TY 2021
DEPARTMENT OF THE TREASURY 195 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

TABLE 1: INDIVIDUAL INCOME TAX DATA BY AGI FOR TY 2021 

Average 

Average AGI income tax Income tax 

Adjusted Gross Number of Total per return per return as a 

Income taxable returns AGI income tax (in whole (in whole) percentage 

(AGI) (in thousands) (in millions) (in millions) dollars) dollars) of AGI 

Under $15,000 30,714 $ 160,421 $ 535 $ 5,223 $ 17 0.3% 

$15,000 under 

$30,000 27,410 610,846 12,033 22,286 439 2.0% 

$30,000 under 

$50,000 28,926 1,135,403 50,662 39,252 1,751 4.5% 

$50,000 under 

$100,000 37,547 2,681,108 200,702 71,407 5,345 7.5% 

$100,000 under 

$200,000 24,180 3,318,595 367,380 137,245 15,194 11.1% 

$200,000 under 

$500,000 3,728 828,814 123,563 222,321 33,145 14.9% 

$500,000 or more 7,888 6,117,860 1,421,518 775,591 180,213 23.2% 

Total 160,393 $ 14,853,047 $ 2,176,393 

All negative AGI under $15,000 are treated as zero-dollar amount. 
196 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

CORPORATION TAX LIABILITY

FIGURE 2: CORPORATION TAX LIABILITY AS A PERCENTAGE OF TAXABLE INCOME FOR TY 2020 

TABLE 2: CORPORATION TAX DATA BY TOTAL ASSETS FOR TY 2020 

Total Assets Income subject to tax Total income tax after credits Percentage of income tax 

(in thousands) (in millions) (in millions) after credits to taxable income 

Zero Assets $ 21,064 $ 4,439 21.1% 

$1 under $500 6,908 1,426 20.6% 

$500 under $1,000 4,364 886 20.3% 

$1,000 under $5,000 21,444 4,312 20.1% 

$5,000 under $10,000 13,079 2,640 20.2% 

$10,000 under $25,000 19,851 3,900 19.6% 

$25,000 under $50,000 17,342 3,389 19.5% 

$50,000 under $100,000 19,750 3,854 19.5% 

$100,000 under $250,000 33,865 6,584 19.4% 

$250,000 under $500,000 32,033 6,189 19.3% 

$500,000 under $2,500,000 117,758 21,388 18.2% 

$2,500,000 or more 1,472,847 217,604 14.8% 

Total $ 1,780,305 $ 276,611 

21.1% 20.6% 20.3% 20.1% 20.2%

19.6% 19.5% 19.5% 19.4% 19.3% 18.2%

14.8%

Zero

Assets

$1

to under

$500

$500

to under

$1,000

$1,000

to under

$5,000

$5,000

to under

$10,000

$10,000

to under

$25,000

$25,000

to under

$50,000

$50,000

to under

$100,000

$100,000

to under

$250,000

$250,000

to under

$500,000

$500,000

to under

$2,500,000

$2,500,000

or more

(Amounts in Thousands)
DEPARTMENT OF THE TREASURY 197 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

SECTION C: MANAGEMENT AND PERFORMANCE CHALLENGES AND 

TREASURY RESPONSE

In accordance with the Reports Consolidation Act of 2000, the Inspectors General are required to identify specific 

management and performance challenges we face. At the end of each fiscal year, the Treasury Office of Inspector General 

(OIG) and Treasury Inspector General for Tax Administration (TIGTA) send an update of these management challenges to

the Secretary and cite any new challenges for the upcoming fiscal year. The Special Inspector General for the Troubled 

Asset Relief Program (SIGTARP) identifies its management or performance challenges for the Office of Financial Stability 

(OFS) separately in its quarterly report to Congress. This section contains the OIG and TIGTA identified management and 

performance challenges and management’s response.
198 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

OFFICE OF

INSPECTOR GENERAL

D E P AR T M E N T O F T H E T R E AS U R Y

WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL MANAGEMENT CHALLENGES

October 10, 2023 

INFORMATION MEMORANDUM FOR SECRETARY YELLEN

FROM: Richard K. Delmar /s/ 

Deputy Inspector General 

SUBJECT: Management and Performance Challenges Facing the 

Department of the Treasury (OIG-CA-24-001) 

In accordance with the Reports Consolidation Act of 2000, we are providing you with our perspective on 

the most serious management and performance challenges facing the Department of the Treasury (herein 

“Treasury” or “the Department”). In this year’s memorandum, my office is reporting six challenges, one of 

which is new and reports on the challenges faced with operating in an uncertain environment. As shown 

below, five challenges are repeated and updated from last year to include Treasury’s continued role in

combatting the economic fallout of the Coronavirus Disease 2019 (COVID-19) global pandemic, as well as

its impacts on related workforce and workstreams. The new challenge considers factors beyond Treasury’s

control and their impact on Treasury’s operations. 

• COVID-19 Pandemic Relief (Repeat) 

• Cyber Threats (Repeat) 

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

• Information Technology Acquisition and Project Management (Repeat) 

• Climate Initiatives Risk (Repeat) 

• Operating in an Uncertain Environment (New) 

We identified challenges based on the threat they pose to Treasury’s mission and stakeholders’ interests. We

also acknowledge the Department’s accomplishments and efforts over the past year to address critical 

matters as noted within each challenge. While the national emergency declaration for the COVID-19 

pandemic ended in May 2023, Treasury programs established to support the pandemic are in various stages 

of maturity and continue to pose challenges for Treasury. As noted throughout this memorandum, Treasury 

will need to continue to act swiftly and draw on its existing resources to meet economic needs. 

We are available to discuss our views on the management and performance challenges and the other matters 

expressed in this memorandum in more detail. 

cc: Anna Canfield Roth 

Assistant Secretary for Management 
DEPARTMENT OF THE TREASURY 199 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Challenge 1: COVID-19 Pandemic Relief (Repeat)

The COVID-19 pandemic continues to affect the health and economic stability of communities worldwide 

and thus the Department of the Treasury’s (hereinafter Treasury or the Department) responsibilities and

workloads are still enormously expanded. Specifically, Treasury has been instrumental to the 

implementation of economic relief provisions of the Coronavirus Aid, Relief, and Economic Security Act1

(CARES Act), the Consolidated Appropriations Act, 20212(CAA, 2021), the American Rescue Plan Act of 

20213(ARP), and the Consolidated Appropriations Act, 20234(CAA, 2023). Treasury is tasked with 

disbursing over $655 billion5

in aid to more than 30,000 recipients, including state, local, territorial, and 

tribal government entities, in a relatively short period of time and with limited staffing. As such, the 

Department established the Office of Recovery Programs (ORP) to implement Treasury’s COVID-19

pandemic programs. A Chief Recovery Officer, who is the lead administrator and the principal advisor to

the Treasury Secretary and Deputy Secretary on pandemic programs, leads the office. With ORP leading, 

the Department implemented multiple pandemic programs and is now challenged with managing those 

programs in different stages of maturity. In addition, Treasury must carry the administrative and monitoring 

responsibilities in its role resolving Single Audit Act findings and potentially serving as cognizant agency 

for a significant number of entities6in compliance with the Office of Management and Budget’s (OMB) 

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

7 

Pandemic Programs- End of Period of Performance

For pandemic programs near the end of the period of performance, Treasury faces challenges 

(1) closing out awards, (2) resolving Single Audit Act findings, (3) maintaining internal control, guidance, 

and methodologies for oversight of funds disbursed, (4) collecting high quality, reliable data, and (5) 

sustaining operations with limited funding. The pandemic programs near maturity or in the close out phase 

include the Payroll Support Programs (PSP), Coronavirus Economic Relief for Transportation Services 

(CERTS), the Coronavirus Relief Fund (CRF), and the first Emergency Rental Assistance Program (ERA1). 

Payroll Support Programs

To maintain pay and benefits of airline industry workers, Treasury implemented PSP1 authorized under the 

CARES Act for up to $32 billion of direct financial assistance for passenger air carriers, cargo air carriers, 

and contractors. Financial support for air carrier workers was extended twice by CAA, 2021 and ARP, which 

provided additional assistance to passenger air carriers and contractors up to $16 billion (PSP2) and $15 

billion (PSP3), respectively. Using existing resources and contractor support, Treasury disbursed a total of 

approximately $58.9 billion, as of June 30, 2023, to air carriers and contractors under all three payroll 

support programs. My office has completed 10 audits of recipients’ certified financial data provided to

Treasury in applications for a PSP1 award. Our audits identified approximately $1.37 million in questioned 

costs/improper payments. It is important for Treasury to recoup these payments and to obtain support

1Public Law 116-136 (March 27, 2020) 

2

 Public Law 116-260 (December 27, 2020) 

3

 Public Law 117-2 (March 11, 2021) 

4

 Public Law 117-328 (December 29, 2022) 

5

 Amount excludes Economic Impact Payments distributed by the Internal Revenue Service and support to small businesses under 

the Paycheck Protection Program administered by the Small Business Administration. 

6

 Single Audit Act of 1984 (P.L 98-502; October 19, 1984), as amended by the Single Audit Act Amendments of 1996 (P.L 104-

156; July 5, 1996 

7 https://www.ecfr.gov/current/title-2/part-200
200 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

documentation to confirm awarded amounts for the hundreds of other recipients that have not yet been 

audited. My office will continue audits of PSP1 recipients’ certifications and initiate audits of certifications 

submitted by PSP2 recipients in fiscal year 2024. It is incumbent upon the Department to maintain strong

internal controls over recipients’ compliance with signed terms and conditions for receiving financial 

assistance. 

Coronavirus Economic Relief for Transportation Services

Congress expanded financial support to non-air carrier transportation service providers under the CERTS 

provisions of CAA, 2021. Treasury established the CERTS Program that provides 

$2 billion in non-competitive grants to eligible companies that certify revenue loss of 25 percent or more 

due to the COVID-19 pandemic. Treasury disbursed approximately $1.97 billion to 1,464 recipients as of 

February 3, 2023. The CERTS period of performance ended on October 22, 2022. During the close out 

phase of this program, Treasury should maintain strong internal controls to ensure compliance with grant 

agreements. Although there is no mandate directing my office to audit CERTS recipients, we are currently 

auditing Treasury’s administration of the program. 

Coronavirus Relief Fund 

The $150 billion CRF, established under Title VI of the Social Security Act, as amended by Title V of the 

CARES Act, continues to be a large endeavor for both the Department and my office. The Department 

disbursed the entire $150 billion in direct payments to states, units of local government, the District of 

Columbia, U.S. territories, and tribal governments. Disbursement of funds was a complicated undertaking 

given the number of recipients at varying levels of government and other payment requirements of the 

CARES Act. Although Treasury is authorized to make payments, the CARES Act assigned Treasury OIG 

with responsibility for monitoring and oversight of the receipt, disbursement, and use of funds. 

Additionally, my office has authority to recoup funds if it is determined that recipients fail to comply with 

uses of funds for COVID-19 related costs under Section 601 (d), “Use of Funds,” of the Social Security Act,

as amended.8

The Department also has a fundamental role to clarify its policy9

over the uses of funds when interpretation 

matters arise. As of September 30, 2023, recipients are still in the process of reporting on and closing out 

their awards, and questions may arise that require interpretation. 

My office has completed desk reviews10 of CRF recipients and has identified approximately 

$2 billion in questioned costs, which will require interpretation of Treasury’s policy to determine eligibility 

of those expenditures and whether funds should be returned or recouped. The quarterly reporting for the 

8

 Section 601 (d), Use of Funds, recipients shall use the funds to cover only those costs of the state, tribal government, or unit of

local government that (1) are necessary expenditures incurred due to the public health emergency with respect to COVID–19; (2) 

were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or

government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021. The period of

performance end date of the CRF was extended through December 31, 2021 by the Consolidated Appropriations Act, 2021. The 

period of performance end date for Tribal entities was further extended to December 31, 2022 by the State, Local, Tribal, and 

Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act, Division LL of the Consolidated Appropriations 

Act, 2023, P.L. 117-328, 

December 29, 2022, 136 Stat. 4459.

9 Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments Federal Register, Vol. 86, No. 10;

January 15, 2021 

10 The CARES Act assigned the Department of the Treasury Office of Inspector General with responsibility for compliance 

monitoring and oversight of the receipt, disbursement, and use of CRF payments. The purpose of a desk review is to perform 

monitoring procedures of the prime recipient’s receipt, disbursement, and use of CRF proceeds as reported in the grants portal on

a quarterly basis. 
DEPARTMENT OF THE TREASURY 201

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CRF will end with the third quarter of calendar year 2023, making it critical that Treasury provide as much

clarity as possible for ensuring recipients understand the compliance requirements and are accountable and

transparent in how they report uses of funds. My office has received over 400 complaints regarding recipient,

and in some instances sub-recipient, uses of CRF proceeds and approximately 300 of these complaints require

continued collaboration between the Department and my office. In addition, Treasury’s responsibilities to

provide management responses to Single Audit Act findings for the CRF within required timeframes is a

challenge given limited resources and funding.

First Emergency Rental Assistance Program (ERA1)

To assist vulnerable households at risk of housing instability, Congress established the first of two ERA

programs, ERA1, in CAA, 2021 availing about $25 billion to households in need. Division N, Title V,

Subtitle A, of CAA, 2021, created ERA1 and requires that my office conduct monitoring and oversight of

the receipt, disbursement, and use of ERA1 funds. As of June 22, 2023, Treasury disbursed $24.98 billion

of the $25 billion appropriated by CAA, 2021 for ERA1. Treasury disbursed ERA1 funds to states

(including Washington, DC), U.S. territories, tribal governments (with a provision for the Department of

Hawaiian Home Lands), and units of local government with populations of 200,000 or greater to pay for

rent, utilities, and other housing-related expenses and arrears through September 30, 2022. With ERA1

disbursements complete and the end of the period of performance for these awards, Treasury faces

challenges administering the closeout process and resolving Single Audit Act findings associated with

hundreds of eligible grantees and related sub-recipients. To date, my office has received more than 3,500

complaints from the public concerning ERA usage, expediency of payments to beneficiaries, and potential

improper payments. Treasury will need to work with my office to recoup ERA funds not used for allowable

purposes.

Pandemic Programs- Ongoing Period of Performance

For programs where the period of performance and administration is ongoing, Treasury faces challenges

(1) ensuring proper allocation and distribution of funds, (2) developing and maintaining internal control,

guidance, and methodologies and procedures for monitoring and reporting, (3) finding and/or maintaining

qualified staff needed to administer and monitor programs, (4) collecting high-quality, reliable data,

(5) resolving Single Audit Act findings, (6) remediating and recouping funds, and (7) sustaining operations

with limited funding. These programs include the second Emergency Rental Assistance Program (ERA2),

the Homeowner Assistance Fund (HAF), the Coronavirus State and Local Fiscal Recovery Funds (SLFRF),

the State Small Business Credit Initiative (SSBCI), the Emergency Capital Investment Program (ECIP), and

the Community Development Financial Institutions (CDFI) Fund’s Equitable Recovery Program (ERP).

Second Emergency Rental Assistance (ERA2) and Homeowner Assistance Funds

With ARP, Congress established a second ERA program, ERA2, to provide additional assistance to

vulnerable households at risk of housing instability, availing over $21.55 billion to households in need. For

ERA2, as of June 22, 2023, Treasury disbursed $20.94 billion of the $21.55 billion appropriated in ARP.

Similar to ERA1, ERA2 provides funding for eligible renter households’ rent, utilities, and other housingrelated expenses and arrears, but ERA2 does not include tribal governments as eligible grantees. ERA2

funds are to remain available until September 30, 2027. While CAA, 2021 requires that my office conduct

monitoring and oversight of the receipt, disbursement, and use of ERA1 funds, ARP does not require my

office to monitor ERA2. ERA2 disbursements are ongoing and Treasury faces challenges in maintaining

internal control and establishing guidance and methodologies for monitoring, reporting, and oversight of

funds disbursed. In addition, the lack of consistent quality, reliable grantee disbursement data and an
202 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

adequate workforce impedes Treasury’s ability to perform proper monitoring and recoupment functions. 

Further, Treasury faces challenges resolving Single Audit Act findings associated with hundreds of eligible 

grantees and related sub-recipients. To date, my office has received more than 3,500 complaints from the 

public concerning ERA usage, expediency of payments to beneficiaries, and potential improper payments. 

Treasury will need to work with my office to recoup ERA funds not used for allowable purposes. 

In addition to ERA2, ARP created HAF to prevent mortgage delinquencies, defaults, foreclosures, loss of 

utility services, and displacement by covering mortgage-related expenses, utility expenses, and arrears for 

homeowners experiencing financial hardship after January 21, 2020. Treasury has implemented the HAF

program and as of July 2023, disbursed more than $9.8 billion of the $9.9 billion authorized to states 

(including the District of Columbia and Puerto Rico), tribal governments (including the Department of

Hawaiian Home Lands), Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of the 

Northern Mariana Islands. The funds are available until September 30, 2025. 

The ERA and HAF programs are fully implemented and, while Treasury has issued relevant guidance for 

each of the programs, it is essential its program offices continue to respond to recipients to clarify guidance 

and to provide insight into the eligible uses of the funds Treasury distributed. Clear and timely responses to

recipient questions is critical in enabling program recipients to administer their programs and disburse funds 

to households effectively. 

Coronavirus State and Local Fiscal Recovery Funds

The SLRF provisions of ARP provide state, local, U.S. territorial, and tribal governments another $350 

billion under the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund 

(together referred to as SLFRF); $10 billion under the Coronavirus Capital Projects Fund (CPF); and $2

billion under the Local Assistance and Tribal Consistency Fund (LATCF). Administering SLFRF requires 

recipients to obligate funds by December 31, 2024 and expend all obligations by December 31, 2026, 

except as noted below for the Surface Transportation projects and Title I. This poses challenges given the 

volume of recipients that Treasury must oversee that include all 50 states, U.S. territories, tribal 

governments, local government recipients with population sizes of 250,000 or more, and approximately 

26,000 Non-Entitlement Units (NEU) of Local Governments that received funding through a state or U.S. 

territory. States and U.S. territories were required to establish a process for NEUs to provide pre-pandemic 

budget and other critical information and documentation before distributing funds. In addition to the volume 

of NEUs for Treasury to oversee, reconciliation between states’ and U.S. territories’ disbursements to NEUs 

and recipient performance reporting may be challenging. That is, performance reporting for NEU funding is

the responsibility of the NEUs and not the states and U.S. territories where accountability for the 

disbursement of funds resides. Furthermore, due to increased pandemic funding, many NEUs are required to

have a Single Audit or alternate compliance examination engagement over which Treasury may have 

agency cognizance or oversight. As a result, Treasury will face challenges with ongoing compliance 

monitoring of SLFRF recipients and related administrative issues. 

While Treasury has built the Treasury Recovery Award Management System for recipient communication 

and reporting, there are still challenges obtaining sufficient quality data from SLFRF, CPF, and LATCF 

recipients. For SLFRF recipients, Treasury allows for lengthy narrative responses as part of the data 

collection that may be more cumbersome to review and lack critical details. Confirming data quality and

providing timely data to the public and oversight community has been challenging for Treasury. To

effectively administer and monitor recipients’ compliance, Treasury must have access to sufficient data that

accurately reflects how recipients have expended pandemic awards. While progress has been made, it is

critical that Treasury continue to refine mechanisms to ensure the data is complete, accurate, reliable, and
DEPARTMENT OF THE TREASURY 203 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

transparent in reflecting how recipients have expended pandemic awards. Treasury will need to continue to

collect sufficient and timely data for monitoring recipients’ compliance with pandemic programs, and to

ensure remediation and recoupment actions occur, as appropriate. Additionally, while much of Treasury’s

pandemic funding has been distributed, Treasury must deliver the remaining CPF and LATCF funds 

through fiscal year 2024, ensuring accurate allocations and award distributions, and timely obligations. 

Treasury ORP initially had difficulty finding specialized staff to administer and monitor the SLFRF 

program and faces ongoing challenges to recruit and retain staff as the program matures. Treasury has also 

been challenged with compliance report review backlogs and vast testing workloads. As discussed in more 

detail under the Accountability and Transparency section below, Treasury faces future funding challenges to

support ORP operations, to include ongoing administration of the SLFRF program and recipient monitoring. 

An additional challenge for Treasury has been coordinating with other Federal Agencies, such as Federal 

Emergency Management Agency, the Department of Transportation, and the Department of Housing and 

Urban Development to develop regulations and update reporting guidance for SLFRF recipients. In August 

2023, Treasury published an interim rule for guidance to ensure that recipients are aware of the additional 

SLFRF allowable uses of funds for emergency disaster relief and infrastructure projects, in accordance with 

program flexibilities provided under Division LL of the CAA, 2023 legislation. While provisions in the 

interim rule became effective September 20, 2023, Treasury will need to consider additional feedback 

through fiscal year 2024. Consistent with the existing SLFRF eligible uses, recipients must obligate funds 

for the new SLFRF eligible uses by December 31, 2024. Recipients must expend SLFRF funds obligated to

provide emergency relief from natural disasters by December 31, 2026. Recipients must expend SLFRF 

funds obligated for Surface Transportation projects and Title I projects by September 30, 2026.

With the overlap of CRF, SLFRF, CPF, and LATCF recipients, we expect that there may be continued 

confusion between the uses of funds requirements and reporting mechanisms that may be a challenge for 

recipients. Given the volume of recipients and varying requirements under these programs, Treasury will 

need to ensure that there are sufficient resources for the remaining distribution of funds and ongoing 

monitoring of recipient reporting and compliance with terms and conditions for funds received. 

Furthermore, with the level of funding under both CRF and SLFRF, Treasury may have agency cognizance 

over many smaller local governments (particularly NEUs) and tribal governments now required to have 

Single Audits. To minimize recipient burden, Treasury developed alternate reporting requirements for 

smaller SLFRF recipients, which would otherwise be subject to Single Audit. In the Compliance 

Supplement for 2023, Treasury provides the option of an alternate compliance examination engagement for 

SLFRF recipients meeting certain eligibility requirements. Treasury worked with OMB and the audit 

community to find a solution for receiving these non-audit reports. The Federal Audit Clearinghouse, which

operates on behalf of OMB to support oversight and assessment of federal award audit requirements and

maintain a public database of completed audits, is now receiving these alternate compliance examination 

reports for fiscal year 2022, and will continue to do so going forward. Single Audit and alternative 

compliance examination procedures are relatively new to 25,000 SLFRF recipients, so there will continue to

be more guidance and oversight required of Treasury. 

State Small Business Credit Initiative

The SSBCI, which was originally created in the Small Business Jobs Act of 201011 to increase availability of 

credit for small businesses, ended in 2017. However, Section 3301 of ARP reauthorized SSBCI and 

provided $10 billion in funding for the program. Under SSBCI, participating states, U.S. territories, and 

tribal governments may obtain funding for programs that partner with private lenders to extend credit to

small businesses. Additionally, ARP modified SSBCI in ways including the following set-asides: (1) $500 

11 Public Law 111-240 (September 27, 2010) 
204 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

million in allocations to tribal governments in proportions determined appropriate by the Secretary of the 

Treasury; (2) $1.5 billion in allocation to states, U.S. territories, and tribal governments for business 

enterprises owned and controlled by socially and economically- disadvantaged individuals (SEDI); 

(3) $1 billion to be allocated as an incentive for states, U.S. territories, and tribal governments that 

demonstrate robust support for SEDI businesses; (4) $500 million to be allocated to very small businesses

with fewer than 10 employees; and (5) $500 million to provide technical assistance to certain businesses 

applying for SSBCI or other state or federal programs that support small businesses. As a result of the debt 

ceiling crisis, the Fiscal Responsibility Act of 202312 rescinds $150 million from the SSBCI program. As of 

July 2023, out of $8 billion in approved applications in the capital program, Treasury has distributed $2.45

billion to 64 states, U.S. territories, and Tribal governments. 

Treasury faces challenges as it continues to administer the program through the approval of applications, 

distribution, and monitoring of the funds. Primary oversight of the use of SSBCI funds is the responsibility 

of the participating state, U.S. territory, or Tribal government. The participants are responsible for providing 

Treasury with quarterly assurances that their programs approved for SSBCI funding comply with program 

requirements. In November 2022, Treasury issued its SSBCI Capital Program National Compliance 

Standards to set forth recommended practices to support participating jurisdictions in implementing their 

SSBCI capital programs.13 These standards compliment the SSBCI Capital Program Policy Guidelines, 

which require certifications from lenders, investors, borrowers, and investees for each SSBCI-supported 

transaction.14 Certifications include information on conflicts of interest and use of proceeds among other 

things. The guidelines also state that participating jurisdictions should, as part of their compliance 

monitoring procedures and as appropriate to the requirements of a specific certification, establish a process 

to determine whether the required certifications have been properly documented. However, Treasury does 

not require participating jurisdictions to independently verify the representations made by the authorized 

representative of the small business borrower or investee. Relying on the participating jurisdictions to

ensure that required certifications are collected could lead to Treasury not (1) identifying non-compliant 

recipients, (2) holding recipients accountable for SSBCI-supported transactions, and/or (3) properly 

remediating and recouping funds. 

Additionally, under the SSBCI program, an Allocation Agreement establishes the terms and conditions for 

participating jurisdictions to receive capital funds. The Allocation Agreement, in part, requires a 

participating jurisdiction to promptly notify Treasury in writing if there has been any material adverse 

change in the condition, financial or otherwise, or operations of the participating jurisdiction that may affect 

its approved programs. As noted in our previous Management Challenges Letter, Treasury still needs to

define what constitutes a material adverse change that may affect the participating jurisdictions’ approved

programs. Treasury may have difficulty collecting high quality, reliable data and monitoring the recipients’

use of funds. Further, Treasury must ensure proper allocation and distribution of funds in compliance with 

the multiple set-asides of the program. Therefore, Treasury must continue to develop and maintain internal 

controls, program guidance, and methodologies and procedures for monitoring and reporting the use of 

SSBCI funding. Treasury must also be cognizant of possible additional reductions in the funding of the 

program, which could impact their ability to maintain qualified staff needed to administer and monitor 

programs and sustain operations. 

12 Public Law 118-5 (June 3, 2023) 

13 SSBCI Capital Program National Compliance Standards. U.S. Department of the Treasury. November 17, 2022. 

14 SSBCI Capital Program Policy Guidelines, U.S. Department of the Treasury, November 10, 2021, and as amended August 16,

2023. 
DEPARTMENT OF THE TREASURY 205 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Emergency Capital Investment Program

As authorized under CAA, 2021, Treasury has invested $8.57 billion in 175 CDFIs15 and Minority Deposit 

Institutions, which is all of the capital available for investment under ECIP, providing capital to low-tomoderate income community financial institutions that support small businesses and consumers. Originally, 

Treasury experienced challenges in fully implementing ECIP. As reported in our audit of ECIP’s

implementation, Treasury had not completed key documentation, such as policies and procedures to include 

a post-investment compliance and monitoring plan to fully implement and administer investments.16 With 

all allowable investments made, The Fiscal Responsibility Act of 2023, enacted on June 3, 2023, rescinded 

the funding that was available for a second investment round. After the implementation audit, Treasury 

provided policies and procedures related to the ECIP. It is imperative that Treasury implement and uphold 

policies and procedures to govern its post–investment activities. 

Participants in the ECIP are required to calculate and provide their baseline amount of qualified lending 

through an Initial Supplemental Report. This baseline will be used to calculate the dividend or interest rates 

applicable to each participant in accordance with the Rate Reduction Incentive Guidelines and the ECIP 

legal agreements. In June 2023, Treasury provided waivers for certain ECIP recipients, removing the 

requirement in the ECIP Securities Purchase Agreement for attestation from their independent auditor that

the processes and controls used to generate the Supplemental Reports are satisfactory for 2022. This change 

potentially lowers the reliability of self-reported data. Also in June 2023, Supplemental Reporting deadlines 

were extended for progress reports from certain ECIP recipients because Treasury had not yet received final 

approval on the forms and instructions. Treasury also extended 2022 quarterly reporting to August 17, 2023

and first and second 2023 quarterly reporting to September 1, 2023. Treasury needs to implement planned

controls to ensure that investments provide the intended benefits. Accountability and transparency are 

crucial for the integrity of the program. 

CDFI Equitable Recovery Program

On April 10, 2023, the CDFI Fund announced the awarding of $1.75 billion of the $3 billion authorized 

under CAA, 2021 for the CDFI Fund Equitable Recovery Program (CDFI ERP). Awards granted under 

ERP are intended for low- or moderate-income minority communities that have significant unmet capital or 

financial services needs and were disproportionately impacted by the COVID-19 pandemic. 

The CDFI Fund is in the process of adapting existing policies and procedures, compliance monitoring tools, 

and data collection forms that have been successfully used to monitor the CDFI Fund's other programs to

effectively monitor the CDFI ERP Awards. 

In addition, the CDFI Fund plans to implement designation of minority lending institutions (MLI) as

defined under the CAA, 2021 separately from the award of ERP funds. The CDFI Fund requested public 

comment on the criteria that will be used to designate a certified CDFI as a MLI from July 28, 2022, to

November 25, 2022. As noted within the CDFI ERP Notice of Funds Availability, this criterion was not 

used as part of the CDFI ERP award process. Going forward, Treasury has a lengthy period of performance 

for award recipients, so there is much work to be done overseeing the CDFI ERP awards and determining 

next steps regarding the new MLI certification. 

15 Treasury OIG is required to submit to the Committee on Financial Services of the House of Representatives and the Committee 

on Banking, Housing, and Urban Affairs of the Senate, and the Secretary of the Treasury, not less frequently than 2 times per 

year, a report relating to the oversight provided including any recommendations for improvements to the Community 

Development Investment programs. 

16 OIG, Audit of Treasury’s Implementation of the Emergency Capital Investment Program (OIG-22-028; March 8, 2022)
206 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Accountability and Transparency 

In the context of this overarching challenge, we recognize the breadth and scope of Treasury’s

responsibilities as it impacts programs, operations, and activities regardless of jurisdictional oversight 

boundaries. Along with administering and delivering economic relief, Treasury must manage the 

unprecedented oversight of the pandemic relief funding. As noted above, Treasury is evaluating whether it

will have cognizance over thousands of non-federal recipients of SLFRF and be required to carry out a 

larger administrative and monitoring role to ensure compliance under OMB’s Uniform Administrative 

Requirements, Cost Principles, and Audit Requirements for Federal Awards. Among its responsibilities as a 

Federal awarding agency, Treasury must follow-up on Single Audit findings to ensure that recipients take 

appropriate and timely corrective action and issue management decision letters.17 Many recipients are 

smaller governments, which for the first time are subject to Single Audit or the alternative compliance 

examination available to eligible recipients meeting eligibility requirements. Regardless of cognizance, 

Treasury will have to work with recipients to resolve Single Audit and alternative compliance examination 

findings specific to each of its pandemic relief programs. Given the anticipated budget shortfalls as noted 

below, carrying out this level of oversight of thousands of recipients will be very challenging for Treasury. 

In addition to my office’s ongoing work on pandemic programs, Treasury is subject to additional 

Congressional oversight bodies, the Special Inspector General for Pandemic Recovery (SIGPR),18 Treasury

Inspector General for Tax Administration, the Government Accountability Office (GAO), and the Pandemic 

Response Accountability Committee (PRAC). Treasury is also accountable for providing transparency over 

the expenditure of pandemic relief funds. Many reporting requirements of sections 15010 and 15011 of the 

CARES Act were extended under the CAA, 2021, PRAC amendments. Most notably, Treasury is

responsible for reporting obligations and expenditures of large covered funds (over $150,000) to the PRAC. 

While my office continues to collect and report CRF data to the PRAC under an agreement with the 

Department, Treasury is responsible for reporting expenditures of its other pandemic relief programs. As

noted above, data collection and quality are still challenges for Treasury under the various pandemic 

programs. The Department must balance its ongoing response to the financial impacts of the public health 

emergency with its responsibility to stakeholders for reporting and transparency. 

While Treasury has leveraged its existing workforce, hired contractors, and obtained detailees from other 

Federal agencies to address the demands of the pandemic programs, it continues to face future funding 

challenges to carry out its expansive administrative and compliance monitoring role. For fiscal year 2023, 

Treasury ORP supported nine pandemic programs valued at over $648 billion for awards across 30,000 

recipients. Total administrative budget for the year was $96.6 million.19 At the same time Treasury worked 

to modify its operating model to rely on data-centric, risk-based monitoring and to minimize staffing to

oversee the programs, Treasury is pro-actively working to reduce spending across the board on SLFRF and 

other impacted programs, as well as in central service areas to extend essential operations. However, this 

may not be enough to carry out the large-scale compliance monitoring responsibilities of SLFRF, CPF, 

ERA, HAF, and LATCF. 

17 2 CFR § 200.521, “The management decision must clearly state whether or not the audit finding is sustained, the reasons for the 

decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. If the 

auditee has not completed corrective action, a timetable for follow-up should be given...” (https://www.ecfr.gov/current/title2/subtitle-A/chapter-II/part-200/subpart-F/subject-group- ECFR4424206eaecf751/section-200.521) 

18 SIGPR was authorized under the CARES Act to oversee loans, loan guarantees, and other investments provided by Treasury 

and must report to Congress quarterly on SIGPR’s activities and Treasury’s loan programs. SIGPR terminates five years after 

enactment of the CARES Act (March 27, 2025). 

19 https://home.treasury.gov/system/files/266/07A.-COVID-FY-2023-CJ.pdf
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Going forward, Treasury may experience difficulties in balancing its ongoing pandemic oversight 

responsibilities and workloads while managing several ongoing challenges as described throughout this 

memorandum. While the COVID-19 pandemic national emergency declaration ended in May 2023, I 

remain mindful that both short-term and long-term challenges lay ahead for both Treasury and my office. 

Challenge 2: Cyber Threats (Repeat)

Cybersecurity remains a long-standing and serious challenge facing the Nation and reported by GAO as a 

government-wide issue in its 2023 high-risk list published biennially.20 A reliable critical infrastructure, 

including information systems and networks, is vital to our national security and economic stability. Cyber 

threats remain a persistent concern as Treasury’s information systems are critical to the core functions of 

government and the Nation’s financial infrastructure, along with the financial sector it oversees. As cyber 

threats continue to evolve and become more sophisticated, subtle, and easier to perform, Treasury must 

fortify and safeguard its internal systems and operations while modernizing and maintaining them. Although 

managing known risks is an ongoing challenge, Treasury must also be ready to reinforce and/or redirect 

cybersecurity efforts when unforeseen events occur, such as the COVID-19 pandemic, the on-going conflict 

in Ukraine,21 or when serious flaws are discovered in software or systems that allow for remote 

administrative-level access. 

Threat actors frequently exploit vulnerable networks or systems in a string of trusted connections to gain 

access to government systems. Organized hacking groups leverage published and unpublished 

vulnerabilities and vary their methods to make attacks hard to detect and even harder to prevent. Criminal 

groups and nation-states are constantly seeking to steal information; commit fraud; disrupt, degrade, or deny 

access to information systems; or infiltrate information systems and maintain a presence to enable future 

actions. Through information sharing, federal agencies are better prepared to thwart potential attacks to the 

cyber infrastructure of the Federal Government and the financial sector. 

The tools used to perpetrate cyber-attacks continue to become easier to use and more widespread, lowering 

the technological knowledge and resources needed to launch successful attacks of increasing sophistication. 

Such attacks include distributed denial of service, phishing, fraudulent wire payments, business email 

compromise, malicious spam (malspam), ransomware, and compromise of supply chains (both hardware 

and software). Additionally, Treasury must remain cognizant of the increased risk profile a remote 

workforce presents, as it provides threat actors with a broader attack surface. Increased network traffic from 

remote sources provides cover for attackers to blend in with the federal workforce and launch cyber 

assaults, and denial of service attacks upon a network or service can disrupt operations and prevent remote 

workers from performing their duties. 

There is continuing concern over foreign adversaries creating and exploiting vulnerabilities in the Nation’s

supply chain for information and communication technology and services. Executive 

Order (EO) 13873, Securing the Information and Communications Technology and Services Supply Chain,

was issued on May 15, 2019, to secure the supply technology and services chain by banning the import, use, 

or sale of technology or services designed, developed, manufactured, or supplied from persons or 

20 GAO, High-Risk Series: Efforts Made to Achieve Progress Need to Be Maintained and Expanded to Fully Address All Areas

(GAO-23-106203: April 20, 2023) 

21 A joint Cybersecurity Advisory was issued by the Cybersecurity and Infrastructure Security Agency to “warn organizations that 

Russia’s invasion of Ukraine could expose organizations both within and beyond the region to increased malicious cyber activity. 

This activity may occur as a response to the unprecedented economic costs imposed on Russia as well as materiel support 

provided by the United States and U.S. allies and partners.” (Alert (AA22-110A) Russian State-Sponsored and Criminal Cyber 

Threats to Critical Infrastructure; April 20, 2022) 
208 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

companies that are owned or controlled by governments defined as hostile to the United States.22 On

May 10, 2023, this EO was extended again for 1 year.23 There are risks that Treasury’s systems and 

resources already in use, including critical infrastructure, contain components from sources that have yet to

be designated as threats. Once a source is designated as such, repairs and/or upgrades of key system 

components may no longer be available. Therefore, there is risk of disruption of critical operations. The 

Department will need to continue to monitor developments in this area closely and plan for the possibility 

that its current supply chain may no longer be available. 

Furthermore, EO 14028, Improving the Nation’s Cybersecurity, issued on May 12, 2021, calls for federal 

agencies to update existing plans to prioritize resources for adoption and use of cloud technology and to

adopt a zero-trust architecture,24 among other things. To achieve the goals outlined in EO 14028, OMB 

issued M-22-09, Moving the U.S. Government Toward Zero Trust Cybersecurity Principles25 to provide the 

strategy for achieving a zero-trust architecture, and require agencies to meet specific cybersecurity standards 

and objectives by the end of fiscal year 2024. OMB also issued M-22-18, Enhancing the Security of the 

Software Supply Chain through Secure Software Development Practices26 to use only software that 

complies with secure software development standards. As mentioned above, Treasury management must be 

mindful that the efforts to secure Treasury’s supply chain may hamper cloud adoption and the 

implementation of zero-trust architecture. In response to our fiscal year 2022 memorandum, Treasury 

reported the Enterprise Cyber Risk Management program enhanced the risk assessment process to identify 

compliance items separately from cybersecurity risk reporting, and continued to grow the Supply Chain Risk 

Management program. 

We continue to remind the Department that, in addition to Treasury’s own networks and systems, 

management must be cognizant of, and mitigate, the risks posed by attacks made against other federal and

non-federal agencies and Treasury contractors and subcontractors. Threats and risks to third parties’

networks and systems also pose risks to Treasury’s networks and systems, due to interconnections with 

other federal, state, and local agencies, and service providers to conduct its business. Management must 

exercise due care when authorizing such internetwork connections and verify that third parties comply with 

federal policies and standards including any guidance issued to address new and/or expanded threats and

risks. Management is also challenged with ensuring that critical data and information maintained by thirdparty cloud service providers are properly protected. Issues related to management of cloud systems were 

reported in four consecutive Federal Information Security Modernization Act of 2014 (FISMA) audits (fiscal 

years 2015, 2016, 2017, and 2018),27 with one repeat recommendation, related to third-party cloud service 

providers demonstrating FISMA compliance, remaining unimplemented as of fiscal year 2022. As of this 

letter, work is being performed to verify closure of the recommendation. 

Treasury is looked upon to provide effective leadership to financial institutions in particular, and the 

financial sector in general, to strengthen awareness and preparedness against cyber threats to the Nation’s

critical infrastructure. As such, effective public-private coordination is essential to the Nation’s financial and

22 EO 13873, Securing the Information and Communications Technology and Services Supply Chain 

(May 15, 2019) 

23 Message to the Congress on the Continuation of the National Emergency With Respect to Securing the Information and

Communications Technology and Services Supply Chain (May 10, 2023) 

24 Zero-trust architecture is a method of designing a system in which all actions are presumed dangerous until reasonably proven 

otherwise, thereby reducing the chance of a successful attack causing further damage. 

25 OMB M-22-09, Moving the U.S. Government Toward Zero Trust Cybersecurity Principles (January 26, 2022), 

(https://www.whitehouse.gov/wp-content/uploads/2022/01/M-22-09.pdf) 

26 OMB M-22-18, Enhancing the Security of the Software Supply Chain through Secure Software Development Practices 

(September 14, 2022), (https://www.whitehouse.gov/wp-content/uploads/2022/09/M-22-18.pdf)

27 Public Law 113-283 (December 18, 2014)
DEPARTMENT OF THE TREASURY 209 

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national security. In this regard, the Office of Cybersecurity and Critical Infrastructure Protection 

coordinates Treasury’s efforts to enhance the security and resilience of the financial services sector critical 

infrastructure and reduce operational risk including risks associated with cybersecurity. That said, Treasury 

and other federal agencies have yet to fully implement the National Institute of Standards and Technology 

(NIST) guidance to assist federal agencies in managing cybersecurity risks.28 In 2018, GAO had reported 

that the extent of adoption of the NIST framework by critical infrastructure sectors was unknown since 

agencies were not measuring framework implementation.29 With respect to Treasury, GAO had 

recommended that steps be taken to consult with respective sector partners to develop methods for 

determining the level and type of adoption by entities across the financial services sector. In 2020, GAO 

recommended that Treasury track the content and progress of sector wide cyber risk mitigation efforts, and 

prioritize their completion according to sector goals and priorities in the sector-specific plan. Additionally, 

Treasury should update the financial services sector-specific plan to include specific metrics for measuring 

the progress of risk mitigation effects and information on the sector’s ongoing and planned risk mitigation 

efforts.30 However, as of January 2023, GAO reported Treasury had yet to develop methods to determine 

the level and type of framework adoption, stating that the voluntary nature of private sector participation in

sector risk management agency activities affects the agency's ability to implement certain recommendations 

related to critical infrastructure protection. Treasury was planning implementation of a tool to track sector 

risks and mitigation efforts, but it was still in development. Lastly, Treasury reported to GAO that it did not 

believe it would be beneficial to update the sector-specific plan until the Department of Homeland Security 

completes its updates to the national plan and provides guidance on sector-specific plans.31

The Department reported in its response to last year’s letter that it made strategic investments to evolve their 

cybersecurity infrastructure and bring it into alignment with zero-trust architecture requirements, and 

mitigate risks associated with the modern threat landscape. Treasury also reported a continued focus on 

network defense efforts for its High Value Assets.32 While addressing increases in cyber threats, Treasury

will need to continue to balance cybersecurity demands while maintaining and modernizing Information 

Technology (IT) systems. To this end, Treasury must ensure that cybersecurity is fully integrated into its IT

investment decisions as discussed in Challenge 4. 

Challenge 3: Anti-Money Laundering/Terrorist Financing and Bank Secrecy Act 

Enforcement (Repeat) 

Over the past year, the Office of Terrorism and Financial Intelligence (TFI) has remained dedicated to

countering the ability of financial networks that support terrorists, organized transnational crime, weapons 

of mass destruction proliferators, and other threats to international security through intelligence analysis, 

sanctions, and international private-sector cooperation. As previously reported, identifying, disrupting, and

dismantling these networks continue to be challenging. Additionally, criminals and other bad actors evolve 

and continue to develop sophisticated money laundering methods in an attempt to avoid detection. 

28 NIST, Framework for Improving Critical Infrastructure Cybersecurity (Version 1.0, February 12, 2014; superseded by Version 

1.1; April 16, 2018) 

29 GAO, Critical Infrastructure Protection: Additional Actions Are Essential for Assessing Cybersecurity Framework Adoption 

(GAO-18-211; February 18, 2018) 

30 GAO, Critical Infrastructure Protection: Treasury Needs to Improve Tracking of Financial Sector Cybersecurity Risk 

Mitigation Efforts (GAO-20-631; September 17, 2020) 

31GAO, Priority Open Recommendations: Department of the Treasury (GAO-23-106469; July 7, 2023) 

32 High Value Assets are assets, information systems, information, and data for which an unauthorized access, use, disclosure, 

disruption, modification, or destruction could cause a significant impact to the U S.’ national security interests, foreign relations, 

economy, or to the public confidence, civil liberties, or public health and safety. 
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FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

TFI’s authorities are key tools in implementing U.S. policy to pressure foreign countries and regimes, such 

as Russia, by using a variety of targeted financial measures to include designations and economic sanctions. 

TFI has significantly increased sanctions against Russia related to its actions against Ukraine and its other 

malign activities. TFI’s counter-terrorism designations disrupt the financial networks that support terrorist 

organizations. Other TFI tools, such as diplomatic and private sector engagement, regulatory oversight, and 

intelligence analysis, also play an important role. Disrupting terrorist financing depends on a whole-ofgovernment approach and requires collaboration and coordination within Treasury, other federal agencies,

the private sector, and international partners. 

Collaboration and coordination are key to successfully identifying and disrupting illicit financial networks 

and meeting TFI’s mission. This effort requires effective and efficient working relationships among 

components within TFI and the Intelligence Community. In an effort to effectively implement U.S. policy 

and disrupt these financial networks, officials stated that TFI is moving towards a more collaborative 

approach to achieve its mission. Given Treasury’s critical mission and its role to carry out U.S. policy, we

continue to consider anti-money laundering and combating terrorist financing programs and operations as

inherently high-risk. 

Data privacy and information sharing are challenges for the Financial Crimes Enforcement Network 

(FinCEN), which has experienced unauthorized disclosures of Bank Secrecy Act (BSA) information.33

FinCEN is required to maintain a highly secure database for financial institutions to report BSA 

information. FinCEN has previously identified that the success of that system depends on the financial 

sector’s confidence that those reports are adequately protected, but unauthorized disclosures threaten to

undermine that confidence. The challenge for FinCEN is to ensure the BSA information remains secure in

order to maintain the confidence of the financial sector, while meeting the access needs of law enforcement, 

regulatory, and intelligence partners. FinCEN also faces an additional challenge, to develop and implement 

a new secure database for certain businesses to report their beneficial ownership information, as required by

the Corporate Transparency Act.34 FinCEN expects to implement the database in January 2024. 

Challenge 4: Information Technology Acquisition and Project Management (Repeat)

The Federal Information Technology Acquisition Reform Act35 (FITARA), enacted in December 2014, was 

the first major overhaul of federal IT management since the passage of the Clinger- Cohen Act of 1996, 36

which was designed to improve the Federal Government’s acquisition and management of its resources to

include IT investment. Among other things, it expanded the involvement of Chief Information Officers

(CIO) of federal agencies in IT decision making, including annual and multi-year planning, programming, 

budgeting, execution, reporting, management, governance, and oversight functions. FITARA is intended to

improve how federal agencies acquire and manage IT, as well as enable Congress to monitor progress and 

hold federal agencies accountable for reducing duplication and achieving cost savings. FITARA includes 

specific requirements related to seven areas: (1) the federal data center consolidation initiative, (2) enhanced 

transparency and improved risk management, (3) agency CIO authority enhancements, (4) portfolio review,

(5) expansion of training and use of IT acquisition cadres, (6) government-wide software purchasing, and 

(7) maximizing the benefit of the federal strategic sourcing initiative. 

33 Public Law 91-508 (October 26, 1970) 

34 Public Law 116-283 (January 1, 2021)

35 Public Law 113-291 (December 19, 2014)

36 Public Law 104-106 (February 10, 1996) 
DEPARTMENT OF THE TREASURY 211 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

While FITARA is intended for agencies to better manage their IT investments, implementation continues to

be a government-wide challenge. Since February 2015, GAO has included the management of IT

acquisitions and operations on its high-risk list as cost overruns and schedule delays impact mission related

outcomes government-wide.37 In its April 2023 high-risk report, GAO acknowledged that the Federal 

Government has undertaken numerous initiatives to better manage the more than $100 billion that is

invested annually in IT. However, GAO reported that federal IT investments too frequently fail to deliver 

capabilities in a timely manner. They also incur cost overruns or schedule slippages while contributing little

to mission-related outcomes. These investments often lack disciplined and effective management in areas 

such as project planning, requirements definition, and program oversight and governance. GAO noted that 

Congress and OMB continue to demonstrate leadership commitment to ensuring agencies implement IT

reform initiatives. Additionally, OMB and agencies made progress in implementing GAO’s

recommendations—73 percent of recommendations have been fully implemented, an increase from 65 

percent reported in GAO’s 2021 High-Risk List.38 In general, GAO recommends that agencies should 

implement its 294 open recommendations related to improving the management of IT acquisitions and 

operations. For example, federal agencies should improve the effectiveness of agency CIOs, enhance IT

workforce planning practices, and develop plans for modernizing or replacing legacy systems. GAO also 

calls on Congress to consider formalizing the federal CIO position and establishing responsibilities and

authorities for government-wide IT management, which is an open recommendation for this high-risk area 

that GAO suggested in September 2022.39

The House Oversight and Accountability Committee worked with GAO to develop a scorecard to assess 

federal agencies’ efforts in implementing FITARA by assigning a grade from A to F based on self-reported 

data at the agency level. Agencies are scored on areas of CIO authority enhancements, transparency and risk 

management, portfolio review, data optimization, software licensing, and modernizing government 

technology. Since the first scorecard was issued in November 2015, Treasury’s overall FITARA score has 

wavered between a D- and a B. More recently, in December 2022, Treasury received a B for its FITARA 

implementation efforts. Areas needing most improvement were transparency and risk management (i.e. IT

investment risk) and agency CIO authority enhancements. The latest scorecard currently features seven 

grading categories – down from eight categories on the December 2021 scorecard due to the sunsetting of 

the data center optimization category.

As of March 2023, Treasury reported that approximately $2.5 billion was spent on major IT investments, 

which is expected to increase. Additionally, approximately 38 percent of Treasury’s total IT spending is on

62 major investments. Overall, approximately 87 percent of Treasury’s total IT projects were on schedule and 

approximately 76 percent were within budget. Given this sizable investment, we are reporting the 

Department’s IT acquisition and project management as an ongoing management and performance 

challenge distinct from Challenge 2 that addresses cybersecurity concerns. As of August 2023, Treasury’s

CIO assessed 44 IT investments as having moderately low or low risk to accomplishing their goals. 

Treasury’s CIO also reported 17 IT projects as having medium risk to accomplishing their goals. Although 

projects identified with medium overall risk in cost and scheduling require special attention from the highest 

level of agency management, they are not necessarily at risk for failure.40

37 GAO, High- Risk Series, An Update (GAO-15-290; February 11, 2015) 

38 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas (GAO-21-119SP: 

March 2021) 

39 GAO, Chief Information Officers: Private Sector Practices Can Inform Government Roles (GAO-22-104603: September 2022) 

40 IT Dashboard, “the Agency CIO rates each investment based on his/her judgment using a set of pre-established criteria. As a 

rule the evaluation should reflect the CIO’s assessment of risk and the investment’s ability to accomplish goals.” Evaluation 

ratings are based on a five-point risk scale as follows: 5= low risk, 4= moderately low risk, 3= medium risk, 2= moderately high 

risk, and 1= high risk. 
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FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Treasury’s CIO noted one project, Wholesale Securities Services, as having a high-risk CIO summary 

investment rating. Treasury’s Wholesale Securities Services includes the Financing Modernization project, 

a multi-year program to modernize the debt financing system to align with Treasury's strategic priorities and

long-term business requirements. This modernization will include development of a new system to support

operations, meet customer expectations, become current with existing technologies, manage technical debt, 

and improve the delivery of secure, flexible, and resilient financing services. The Bureau of the Fiscal 

Service (Fiscal Service) has implemented a Program Management Improvement Accountability Act 

Framework to improve transparency and accountability of project performance, including a monthly 

dashboard of key metrics on cost, schedule, scope, efficiency, and quality. In addition, Fiscal Service’s

Chief Information Security Officer is actively monitoring compliance with all Cyber Executive Orders and

National Security Council accelerated timelines. Enterprise Architecture and Investment Sub-councils 

discuss the investment risks regularly and the ratings are also shared with Fiscal Service senior leadership to

ensure transparency of the risk. If negative trends surface or persist, the Fiscal Service CIO and CFO have 

the ability to request an internal Fiscal Service “ChatStat”41 to take swift action and address risks. ChatStats 

and related open action items are tracked on the Fiscal Service’s Program Management Improvement 

Accountability Act Project Performance Dashboard. 

An ongoing initiative to manage and monitor IT investments includes the government-wide adoption of the 

Technology Business Management (TBM) framework as reported in the fiscal year 2018 President’s

Management Agenda: Modernizing Government for the 21st Century (March 20, 2018). The TBM 

framework consists of layers that represent different views into IT costs and performance, enabling greater 

transparency into the true cost of IT and its value to the business. TBM is expected to improve IT spending 

data accountability and transparency, empowering agency executive suite leadership from across the 

enterprise to drive mission value and improve customer experience through technology. 

Non-IT related acquisitions also require attention to ensure timely delivery and minimization of cost 

overruns for achieving cost savings. The Program Management Improvement Accountability Act of 2016 42

was intended to improve program and project management practices across the Federal Government. 

Similar to IT projects, other major acquisitions need to be monitored so that the project goals are met in a 

timely manner and costs are not allowed to significantly exceed established budgets.

The Bureau of Engraving and Printing (BEP) project to replace its Washington, DC facility with a new 

facility is currently estimated to cost $1.78 billion. However, this cost estimate will be updated to better 

reflect supply chain and industry labor limitations as well as additional costs incurred as the project 

progresses. In fiscal year 2023, estimates were $25.96 million for the next phase of the replacement facility 

project including the completion of the design, and architecture and engineering work for the new facility. 

The U.S. Army Corps of Engineers will award a construction contract for the replacement facility during 

fiscal year 2024 with construction expected to begin by fiscal year 2025. Until the estimated completion of 

the facility in 2027, BEP will need to ensure effective project oversight for construction of the building, 

purchase of equipment and machinery, and employment of a workforce to produce the new family of secure 

notes and maintain confidence in U.S. currency. 

41 A ChatStat process is where investments or projects are formally reviewed to address negative performance trends or concerns, 

and to identify course-correction actions that are formally tracked. ChatStats are monitored monthly by Fiscal Service senior 

leadership until resolved.

42 Public Law 114-264 (December 14, 2016) 
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Challenge 5: Climate Initiatives Risk (Repeat) 

In January 2021, EO 14008, Tackling the Climate Crisis at Home and Abroad, identified the immediate 

need for comprehensive action to address the catastrophic impacts of climate change. EO 14008 emphasizes 

that U.S. leadership, and that of federal departments and agencies, will be required to significantly enhance 

global action and achieve the necessary policy outcomes on climate change. Furthermore, in May 2021, the 

White House introduced EO 14030, Climate- Related Financial Risk, which aims to: (1) advance consistent, 

clear, intelligible, comparable, and accurate disclosure of climate-related financial risk, including both 

physical and transition risks;43

(2) mitigate that risk and its drivers, while accounting for and addressing disparate impacts on 

disadvantaged communities and communities of color and spurring the creation of well-paying jobs; and (3) 

achieve the Administration’s target of a net-zero emissions economy by no later than 2050. The Secretary of 

the Treasury, as the Chair of the Financial Stability Oversight Council (FSOC), will lead several efforts 

related to EO 14030. Taken together, these two EOs place an emphasis on ensuring climate change is at the 

forefront of U.S. foreign policy and national security; establishing a government-wide approach to the 

climate crisis; and bolstering the resiliency of our communities, States, Tribes, territories, and financial 

institutions to position the United States to lead the global economy to a more prosperous and sustainable 

future. 

Treasury continues to play a significant role working with other federal agencies, foreign governments, and

international financial institutions to stimulate global action on addressing climate change, promoting 

environmental justice, and addressing climate-related risks. In 2021, Treasury created a new Climate Hub 

and appointed a Climate Counselor to help set the strategic direction of its efforts to address climate change 

and coordinate across those efforts. The Treasury Climate Hub will coordinate and enhance existing 

climate-related activities by engaging the tools, capabilities, and expertise from across the Department, 

including officials from Domestic Finance, Economic Policy, International Affairs, and Tax Policy. With a 

view of all Treasury climate initiatives, the Hub will work to ensure that Treasury is prioritizing climate 

action. On July 27, 2023, Treasury announced the appointment of a new Climate Counselor. 

As stated in its July 2021 Climate Action Plan, Treasury anticipates that climate change will continue to be 

a significant global challenge and that aspects of its mission and operations will be impacted by global

warming, sea level rise, increased intensity and frequency of major weather events, and impacts on energy 

availability. To manage the process of climate change adaptation and resilience within Treasury’s

operations and its facilities, the Department has developed a comprehensive management framework, in

accordance with the Interim Instructions for Preparing Draft Climate Action Plans under EO 14008. 

Treasury’s Departmental Offices (DO) and operating bureaus will continually assess changing conditions 

and scientific understanding of climate change to adjust policies, programs, and activities to improve 

resilience and adaptation. Treasury’s Climate Action Plan establishes the following five priority actions to

strengthen and build upon Treasury’s climate resilience and adaptive capabilities: (1) rebuilding programs 

and capabilities that may have atrophied or stagnated in recent years; (2) addressing climate change impacts 

and vulnerabilities across the range of Departmental operations, including administrative, manufacturing, 

and law enforcement activities; (3) ensuring a climate-focused approach to managing Treasury’s real 

property portfolio footprint; (4) enabling procurement management to fully consider climate change 

43 Physical risk refers to the harm to people and property arising from acute, climate-related disaster events such as hurricanes, 

wildfires, and floods as well as longer-term chronic phenomena such as higher average temperatures. Transition risk refers to

stresses to certain institutions or sectors arising from the shifts in policy, consumer and business sentiment, or technologies 

associated with the changes necessary to limit climate change.
214 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

realities; and (5) providing, measuring, and accounting for a financial investment approach appropriate to

the Department’s climate objectives. 

Treasury is also engaged in work to address climate-related risks to the financial system through its role as a 

leading banking regulator, with the Office of the Comptroller of the Currency (OCC), and its

responsibilities within FSOC. Internationally, Treasury represents the United States at the G7 and G20, at

the Financial Stability Board, and other institutions and forums such as the International Monetary Fund.

OCC and the Federal Insurance Office are members of the international organization, the Network of 

Central Banks and Supervisors for Greening the Financial System (NGFS). In October 2021, FSOC issued 

its Report on Climate-Related Financial Risk, as mandated by EO 14030. The report highlights challenges 

in efforts to comprehensively understand and address climate-related financial risk. Those challenges 

include the types and quality of available data and measurement tools, the ability to assess climate-related 

financial risks and vulnerabilities, and the incorporation of these risks into management practices and 

supervisory expectations as appropriate. FSOC concluded the report with thirty-five recommendations. 

Many, if not most, apply to the Department, through either the Office of Financial Research (OFR), the 

Federal Insurance Office, or OCC. It will be important that each recommendation be addressed not only 

timely, but also collectively with the other FSOC members to ensure a cohesive response. 

To meet the challenges relating to the types and quality of available data and measurement tools, 

the OFR is developing an interagency data and analytics platform – the Joint Analysis Data Environment 

(JADE). Based on a pilot program, JADE will provide FSOC member agencies with access to data, 

analytical software, and high-performance computing tools to allow users to jointly analyze financial 

stability risks and vulnerabilities. With an initial version now operational, the OFR will need to continue to

expand JADE to evolve and include new data and allow access to other FSOC member agencies. 

Furthermore, OCC has implemented multiple initiatives to address climate-related financial risk. They have 

partnered with other federal banking regulators to work collaboratively in understanding the risks and 

continue to consider the comments received on the draft Principles for Climate-Related Financial Risk 

Management for Large Banks. OCC also engages with international groups such as the Network of Central 

Banks and Supervisors for Greening the Financial System, to share best practices and understand the 

development of climate-related financial risk management in the financial sector. Internally, OCC’s Office 

of Climate Risk led by a Chief Climate Risk Officer assesses climate-related financial risks and advises 

management on OCC policy, banking supervision, and research. These collaborations will continue to be 

important for developing a common understanding of climate-related financial risks and their impact to

ensure the continued safety and soundness of the banking system. OCC also continues to work with FSOC 

and other member agencies to understand the broader implications of climate-related financial risks and

their potential impact on financial stability. 

Challenge 6: Operating in an Uncertain Environment (New) 

In assessing the Department’s most serious challenges, we remain mindful of external factors and future 

uncertainties that affect its operations. These factors include, but are not limited to, the repeated cycle of 

budget and debt ceiling stopgaps, rising interest rates, and inflation. Congress has yet to resolve unfinished 

business when it comes to the Nation’s debt, and the long-term sustainability of programs. Although 

legislation was passed to temporarily suspend the debt limit until January 1, 2025,44 no long-term solution 

has been found. The impact of these challenges and their uncertainties require the Department to continue to

focus its resources on programs that are in the highest need to citizens and/or where there is a unique federal 

44 Public Law 118-5, (June 3, 2023) 
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role. It is essential that programs and reforms be managed and communicated effectively to achieve 

performance and accountability. 

Debt Limit and the Budget

The debt limit—commonly called the debt ceiling— is the total amount of money that the U.S. government 

is authorized to borrow to meet its existing legal obligations. The amount is set by law and has been 

increased or suspended over the years to allow for the additional borrowing needed to finance the 

government’s operations. Failing to increase or suspend the debt limit would have catastrophic economic 

consequences, as it would cause the government to default on its legal obligations. As experienced, even 

threats that the U.S. government may fail to meet its obligations have led credit agencies to downgrade the 

Federal Government’s credit rating in 2011 and 2023, which increases borrowing costs and hurts the longrun budget. Until lawmakers enact legislation to raise or suspend the debt limit, Treasury must use its cash 

balance and the available extraordinary measures— special temporary strategies to handle cash and debt 

management—to fund ongoing government activities. The challenges Treasury generally faces with a debt 

limit impasse include the disruption of its prudent cash management policy implementation, uncertainty in

the Treasury debt market, communicating and managing the economic impact, and diversion of resources. 

Treasury’s prudent cash balance policy is to maintain sufficient funds to cover at least the one-week-ahead

cash need, including net fiscal outflows and the gross volume of maturing marketable debt. This policy is a 

risk-management tool to protect against potential interruptions to market access. However, because the debt 

limit constrains Treasury’s borrowing, it can become impossible to comply with this policy during debt 

limit impasses. A cash balance below the policy level creates substantial risks in the event of unexpected 

adverse circumstances. These risks typically worsen as a debt limit impasse goes on and the cash balance 

declines towards zero. For example, on June 1, 2023, Treasury had an end-of-day cash balance of just $23

billion compared to a policy level that called for approximately $300 billion on that day (and an average 

balance in 2022 of more than $600 billion). Furthermore, once a debt limit impasse is resolved, Treasury 

must rapidly replenish its cash balance back towards the policy level, which can result in elevated volatility 

in the primary and secondary markets for bills. Also, actions to manage the amount of outstanding Treasury 

securities when outstanding debt is at or near the statutory limit can add uncertainty to the Treasury market. 

For example, during past debt limit impasses, Treasury has postponed auctions and dramatically reduced the 

amount of bills outstanding, which compromised the regularity of auctions and the certainty of supply, on 

which Treasury relies to achieve the lowest borrowing cost over time. 

As debt nears the limit, managing both debt and cash require more time and Treasury resources. Treasury's

operational focus on the debt limit begins as early as 6 to 9 months before the debt limit is expected to be 

reached and increases as debt nears the limit. In 2023, while Congress deliberated on increasing the debt 

limit, Fiscal Service and the Office of Fiscal Projections implemented extraordinary measures to prevent the 

United States from defaulting on its obligations. Extraordinary measures included (1) suspending 

investments in the Government Securities Investments Fund of the federal employees’ Thrift Savings Plan 

and Civil Service Retirement and Disability Fund (CSRDF), (2) redeeming certain investments held by 

CSRDF and Postal Service Retiree Health Benefits Fund earlier than normal, (3) suspending new issuances 

of State and Local Government Series securities, and (4) exchanging $1.9 billion of Treasury securities held 

by the CSRDF for securities issued by the Federal Financing Bank. These activities diverted time and

Treasury resources from other cash and debt management issues and impacted people ranging from senior 

leaders to operational staff. This diversion of staff resources increases the risk in performing daily 

operational activity as normal processes are delayed and fewer staff resources are available for normal 

operational tasks. Estimates provided by Fiscal Service and the Office of Fiscal Projections, the entities 

primarily affected by the delays, indicated that these entities' personnel devoted approximately 7,730 hours 

to managing debt near the limit when delays in raising the debt limit occurred in 2023.
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The Fiscal Responsibility Act of 2023, enacted on June 3, 2023, suspends the debt limit through January 1, 

2025; increases the limit on January 2, 2025, to accommodate the obligations issued during the suspension 

period; and sets statutory caps on defense and non-defense discretionary spending for fiscal years 2024 and 

2025. Specifically, discretionary budget authority will be capped at $1.59 trillion in 2024— a reduction of 

$12 billion compared to fiscal year 2023, which provides the first cut to base discretionary spending 

authority in more than a decade —and $1.61 trillion in 2025— an overall increase of 1% compared with 

fiscal year 2024. The legislation also includes a penalty for failure to enact regular appropriations by 

January 2024 in the form of one percent reductions to defense and nondefense spending levels (to take 

effect by April 30, 2024), which is intended to aid the budget process and deter excessive reliance on

continuing resolutions; a similar penalty and timeline also apply for fiscal year 2025. Continued delays in

enacting annual appropriations timely could have a negative impact on Treasury's operations. According to

the DO fiscal year 2024 Congressional Budget Justification, the lack of adequate funding for inflationary 

increases and gradual reduction of full-time employee levels across Treasury policy offices, erodes DO’s

capacity to maintain support of fundamental DO mission areas. DO mission areas include maintaining the 

public debt, setting Treasury’s strategy, and performing legal analysis on issues related to Treasury equities. 

Inflationary pressures lead to increased funding needs for programs and modernization efforts budgeted in

prior years. Funding is needed to ensure that DO can sustain critical policy work necessary to maintain a 

strong economy and create economic growth and financial stability. 

Rising Interest Rates and Inflation

Rising interest rates and lower bond ratings impact Treasury’s costs to manage the Federal Government’s

finances and resources effectively. The increasing cost to service the federal debt makes these critical 

markets vulnerable to stresses, which could have significant consequences for economic growth and 

financial stability. With federal, state, and local government debt now exceeding $30 trillion, ensuring that

these markets remain resilient is a critical component of sound fiscal policy. 

The rapid increase in interest rates were a contributing factor to multiple bank failures in early 2023, 

resulting in a period of increased market volatility that threatened U.S. financial stability. When the Federal 

Reserve increased interest rates throughout 2022 and into 2023, some banks did not have sufficient liquidity 

to satisfy their obligations. Banks often invest the money received from demand deposits and checking and 

savings accounts in long-term assets with the intention that the interest rates on their long-term investments 

will exceed the interest rates paid to their customers resulting in a gain for the bank. However, the rapid 

pace of interest rate hikes resulted in many banks having to pay customers a higher interest rate while their 

funds were tied up in long-term investments that were paying lower interest rates. The result was some 

banks experienced a liquidity crisis. Because these banks did not have sufficient liquidity and access to

capital, they failed. Sound banks were also adversely impacted, because the interest rate increases 

depreciated the value of their investment portfolios. As a result of the liquidity crisis, many banks have 

taken steps to strengthen their financial positions; however, they remain under pressure. Uncertainty 

regarding future interest rates continue to pose risk to banks. Treasury as a leading banking regulator, 

through OCC, must be mindful of these liquidity risks on the institutions they supervise and the broader 

U.S. financial system. 
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TREASURY MANAGEMENT RESPONSE TO THE OFFICE OF INSPECTOR GENERAL (OIG) IDENTIFIED 

CHALLENGES

OIG Challenge 1 - COVID-19 Pandemic Relief (Repeat): The COVID-19 pandemic continues to affect the health and 

economic stability of communities worldwide and thus the Department’s responsibilities and workloads are still enormously 

expanded. Specifically, Treasury has been instrumental to the implementation of economic relief provisions of various 

legislation. As such, the Department established the Office of Recovery Programs (ORP) to implement Treasury’s COVID-19 

pandemic programs. A Chief Recovery Officer, who is the lead administrator and the principal advisor to the Treasury 

Secretary and Deputy Secretary on pandemic programs, leads the office. With ORP leading, the Department implemented 

multiple pandemic programs and is now challenged with managing those programs in different stages of maturity. In 

addition, Treasury must carry the administrative and monitoring responsibilities in its role resolving Single Audit Act 

findings and potentially serving as cognizant agency for a significant number of entities in compliance with the Office of 

Management and Budget’s (OMB) “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for 

Federal Awards.

Management’s Response: As several of the pandemic programs near the end of their period of performance, we and ORP 

continue to work through the administrative management and monitoring challenges the size, complexity, and scope of the 

programs create. During FY 2023, ORP made significant improvement in developing internal controls and building out the 

people, policies, and systems to support recipient monitoring, audit resolution, remediation, and debt management 

capabilities. This includes:

• hiring and onboarding staff in a newly combined Audit and Compliance Resolution Team (ACT);

• developing and issuing policy and procedure documents for Single Audit resolution with a focus on cooperative audit 

resolution techniques to ensure we address root causes and recipients are ultimately positioned to achieve the 

intended purpose of their awards; and 

• developing policy and functionality in the Treasury Recovery Award Management System (TRAMS) for improved 

recipient reporting, risk-based monitoring, and debt collection. 

As part of the Consolidated Appropriations Act, 2023, we received “Administrative Flexibility” to use administrative funds 

from programs with sufficient funding to support programs with shortages. In addition, we received an annual 

appropriation of $12 million to support financial assistance programs. As a result, ORP made modest adjustments to the 

budget to improve program and recipient support through the intended period of performance. 

In FY 2024, ORP will continue to work closely with recipients to provide technical assistance, address questions, and help 

recipients achieve success. Further, ORP is working closely with OMB and the Department of Health and Human Services 

to pilot new ways of reporting for tribes and other recipients in rural areas who may have access to lower quality broadband 

to improve customer service across programs. ORP expects to further support efforts like these, while continuing to monitor 

compliance across the population of over 30,000 recipients, engage with recipients to provide technical assistance, resolve 

outstanding recommendations in Single Audit findings, support promising practices, and share successes to promote peer 

learning across the programs.

We also improved the administration of several pandemic programs with ongoing periods of performance including: 

• completing the Emergency Capital Investment program (ECIP) policies and procedures for asset management in

early March 2023 with the Collection of Quarterly Supplemental Reports commencing in August;
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• adapting existing policies and procedures, compliance monitoring tools, and data collection forms that we

successfully used to monitor other CDFI programs, including the CDFI Equitable Recovery Program (ERP) Awards; 

and 

• developing the ERP Compliance module in our Awards Management Information System. It will be fully 

implemented by summer 2024. The CDFI Fund currently administers other programs with equal or longer 

compliance periods than ERP.

OIG Challenge 2 - Cyber Threats (Repeat): Cybersecurity remains a long-standing and serious challenge facing the Nation 

and was reported by GAO as a government-wide issue in its 2023 high-risk list published biennially. A reliable critical 

infrastructure, including information systems and networks, is vital to our national security and economic stability. Cyber 

threats remain a persistent concern as Treasury’s information systems are critical to the core functions of government and 

the Nation’s financial infrastructure, along with the financial sector it oversees. As cyber threats continue to evolve and 

become more sophisticated, subtle, and easier to carry out, Treasury must fortify and safeguard its internal systems and 

operations while modernizing and maintaining them. Although managing known risks is an ongoing challenge, Treasury 

must also be ready to reinforce and/or redirect cybersecurity efforts when unforeseen events occur, such as the COVID-19 

pandemic, the on-going conflict in Ukraine, or when serious flaws are discovered in software or systems that allow for remote 

administrative-level access. Furthermore, EO 14028, Improving the Nation’s Cybersecurity, issued on May 12, 2021, calls 

for federal agencies to update existing plans to prioritize resources for adoption and use of cloud technology and to adopt a 

zero-trust architecture, among other things. To achieve the goals outlined in EO 14028, OMB issued M-22-09, Moving the 

U.S. Government Toward Zero Trust Cybersecurity Principles. In addition to Treasury’s own networks and systems, 

management must be cognizant of, and mitigate, the risks posed by attacks made against other federal and non-federal 

agencies and Treasury contractors and subcontractors where interconnections with Treasury’s networks and systems exist.

Management Response: We have 20 High Value Assets (HVA) for which unauthorized access, use, disclosure, disruption, 

modification, or destruction could cause a significant impact to U.S. national security interests, foreign relations, the 

economy, public confidence, civil liberties, or public health and safety. We continue to focus on network defense efforts for 

these assets, which includes an increased emphasis on risk/vulnerability assessments as well as accelerated compliance with 

logging, encryption, and multi-factor authentication requirements. During FY 2023, we completed 10 HVA assessments to

identify potential cyber risks/vulnerabilities in the systems architecture/processes. We also continued efforts to bring our 20

HVAs into compliance with Event Logging (EL) Tier 3 (EL3) advance maturity rating for logging as defined in OMB M-21-

31, Improving the Federal Government’s Investigative and Remediation Capabilities Related to Cybersecurity Incidents. As

of September 2023, six HVAs (30 percent) comply with EL3 requirements, and we expect to achieve 80 percent compliance by

the end of the calendar year.

In FY 2023, we made progress toward adopting a zero-trust architecture (ZTA) in response to EO 14028 and M-22-09

including: 

• accelerating efforts to bring systems into compliance with federal ZTA mandates related to multi-factor 

authentication, encryption of data-at-rest, and encryption of data in-transit. We expect over 90 percent system 

compliance across all requirements by the end of the calendar year;

• implementing multifactor authentication within the identity pillar for 57 FISMA boundaries. As of September 

2023, we conduct over 2 million multi-factor authentications on average every 30 days. This includes several highprofile public facing systems. These implementations strengthen systems security and prevent fraud by reducing 

the risk of credential theft;
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• implementing data at rest encryption on 55 FISMA boundaries, and data in transit encryption on 39 boundaries, 

reducing the risk to the confidentiality and integrity of the data. Within the data tier, 37 systems have achieved the 

EL2 intermediate maturity rating for logging, introducing increased telemetry for security investigations and 

monitoring. In addition to implementing technical controls, we trained over 600 personnel on ZTA principles, and 

we are embedding architecture patterns into modernization efforts;

• modernizing the legacy Treasury Enterprise Federation Service (TEFS) to a new Treasury Enterprise 

Authentication Service (TEAS), providing improved functionality and user experience. We implemented 33

applications to the new TEAS platform to enforce multi-factor authentication across all users, with 33 additional 

applications currently in development and testing;

• successfully configuring the Treasury Derived Personal Identification and Validation Credential solution at the 

Office of the Comptroller of the Currency and the Treasury Inspector General for Tax Administration. We are 

piloting it at Departmental Offices to prepare for full deployment; and

• raising the percentage of Treasury endpoints that are covered by an EndPoint Detection Response (EDR) solution to

91.6 percent, making them compliant with EO 14028 EDR requirements. We are also initiating a multi-stage 

deployment of a Department-wide EDR solution, in coordination with the Cybersecurity and Infrastructure Security 

Agency (CISA). Pending an October 2023 contract action to procure additional software licenses, we expect 

approximately 95 percent of our endpoints will be covered and compliant by the end of the calendar year. 

During FY 2023, we issued the Treasury Cloud Report which focuses on current cloud adoption within the financial services 

sector. This report highlights the potential benefits and challenges that the sector faces related to increased cloud adoption. 

The report identified six gaps the financial services sector and regulatory stakeholders must address.

Pursuant to our role as a sector risk management agency, we continue to advocate for financial sector entities to participate 

in CISA’s Cyber Hygiene Vulnerability Scanning to receive timely notifications of vulnerable internet-facing systems, while 

contributing to summary reports regarding participating entities’ vulnerability trends. Enrollment increased from 272 in

October 2021 to 622 in August 2023, and participation continues to grow by 40 - 50 percent annually. We also contributed to

the development of the Cross Sector Cyber Performance Goals, with significant input from the financial sector and 

independent regulators. Our ongoing work on this initiative will enhance the cybersecurity and resilience of the financial 

services sector’s critical infrastructure. 

We also participate on the Cloud and Artificial Intelligence Working Groups, which are currently undertaking two efforts to

improve cyber security in the sector focused on cloud adoption and artificial intelligence. Alongside our Financial Services 

Sector Coordinating Council, Financial and Banking Information Infrastructure Committee (FBIIC), and cloud service 

provider stakeholders, we established a Cloud Executive Steering Group (CESG) to close the six gaps the Treasury Cloud 

Report identified, referred to above. We are also developing an effort focused on the benefits and challenges related to

cybersecurity in the financial services sector, stemming from increased use of artificial intelligence.

The Bureau of the Fiscal Service’s (Fiscal Service) Security Fusion Center (SFC) initiative plans to launch a centralized, 

intelligence-driven, and decision-making entity to correlate and enrich technical and non-technical threat information for 

actionable insights. The SFC will enable Fiscal Service to proactively identify, contain, mitigate, and recover from securityrelated incidents, and identify vulnerabilities and weaknesses, enabling Fiscal Service to apply countermeasures before 

exploits occur. 
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OIG Challenge 3 - Anti-Money Laundering/Terrorist Financing and Bank Secrecy Act Enforcement (Repeat): Over the past 

year, the Office of Terrorism and Financial Intelligence (TFI) has remained dedicated to countering the ability of financial 

networks that support terrorists, organized transnational crime, weapons of mass destruction proliferators, and other 

threats to international security through intelligence analysis, sanctions, and international private-sector cooperation. 

Identifying, disrupting, and dismantling these networks continue to be challenging. Additionally, criminals and other bad 

actors evolve and continue to develop sophisticated money laundering methods to avoid detection. TFI’s authorities are key 

tools in implementing U.S. policy to pressure foreign countries and regimes, such as Russia, by using a variety of targeted 

financial measures to include designations and economic sanctions. Data privacy and information sharing are challenges for 

the Financial Crimes Enforcement Network (FinCEN), which has experienced unauthorized disclosures of Bank Secrecy Act 

(BSA) information. FinCEN is required to maintain a highly secure database for financial institutions to report BSA 

information. The success of that system depends on the financial sector’s confidence that those reports are adequately 

protected, but unauthorized disclosures threaten to undermine that confidence. The challenge for FinCEN is to ensure the 

BSA information remains secure in order to maintain the confidence of the financial sector, while meeting the access needs 

of law enforcement, regulatory, and intelligence partners.

Management’s Response: We are working on several initiatives to continue to identify and disrupt illicit financial networks

and meet other mission goals. TFI continues to implement the Economic Analysis Unit in the Office of Foreign Assets

Control (OFAC) following the recommendation of Treasury’s 2021 Sanctions Review. The unit incorporates into the

sanctions decision-making process analysis of the anticipated economic implications of our actions, particularly the impact

on sanctions targets, the U.S. economy, our allies, and other third parties. Incorporating this economic analysis helps ensure

that the costs of actions fall on intended targets and that we minimize potential negative impact on others. Our effort will

bolster this powerful enforcement tool while also building the necessary workforce to address more sophisticated illicit

enterprises.

We continued to apply our economic tools and authorities against Russia due to its illegal invasion of Ukraine in 2022, with

three key objectives: (1) depriving Russia of the enabling means necessary to wage war in Ukraine; (2) preventing Russia

from projecting military power; and (3) deterring and denouncing Russian war crimes and human rights abuses in Ukraine. 

To achieve these objectives, we deployed well-established policy, enforcement, intelligence, and regulatory tools, including

robust sanctions. Most notably, we worked with international partners to impose a price cap on Russian-origin oil,

constituting 30–35 percent of the total Russian budget prior to the war. This coordinated action caused a reduction in

Russia’s overall oil revenues and a corresponding decrease in its budget. This resulted in undercutting Russia’s militaryindustrial complex while also keeping global energy markets well supplied, avoiding damaging price spikes, and limiting

Russia’s ability to profit from its energy exports.

In addition, we addressed the illicit drug trade in fentanyl and other synthetic opioids by deploying a variety of tools to

address the crisis both domestically and abroad. This included engaging foreign counterparts both bilaterally and

multilaterally to expand international cooperation to disrupt all aspects of the supply chain and the flow of this deadly drug

into the U.S. Efforts also included working closely with the private sector, which has played a significant role in identifying

suspicious activity related to fentanyl and other opioids. This collaboration helped identify valuable leads for law

enforcement investigations and led to successful prosecutions. 
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FinCEN has undertaken multiple workstreams to implement the Corporate Transparency Act of 2020 (CTA), which aims to

provide authorized stakeholders with beneficial ownership information (BOI) for the purpose of detecting, preventing, and 

punishing terrorism, money laundering and other misconduct through business entities. FinCEN is committed to ensuring 

that reporting entities are aware of their obligations and understand the types of BOI they need to report and when, so that 

the Beneficial Ownership IT System becomes a “database that is highly useful to national security, intelligence, and law

enforcement agencies and federal functional regulators” as required by the CTA. FinCEN is finalizing regulation identifying 

who can access BOI, for what purposes, and how they may use it. This regulation will also outline the stringent security and 

confidentiality requirements applicable to each category of authorized stakeholder. Authorized stakeholders will receive 

access to the Beneficial Ownership IT System only after fulfilling these requirements. In addition, FinCEN is designing an

audit and monitoring system to identify potential misuse of BOI by authorized users, which will be similar to the monitoring 

and inspection processes for BSA access that we are currently enhancing. In accordance with the requirements of the CTA, 

this system will include an annual audit by FinCEN of every local, Tribal, state, or federal law enforcement agency that has 

an MOU to access BOI to ensure that each agency has requested and used BOI appropriately. The Beneficial Ownership IT

System supporting the CTA will also be accredited to the FISMA “High” standards.

TFI and FinCEN are committed to their roles in safeguarding BSA information as well as BOI. As FinCEN begins to collect 

BOI in 2024, and consistent with the purposes laid out in the CTA, FinCEN will provide external access to the Beneficial 

Ownership IT system only to specific authorized stakeholders who have a legitimate need to access the information. From a 

technical perspective, all of FinCEN’s unclassified systems, including those that currently store BSA information and will 

store BOI, adhere to FISMA “High” standards. These standards require implementation of the highest level of security 

controls for a system at the unclassified level, to help protect against the loss of confidentiality, integrity, or availability of

information. FinCEN continues to update its IT security program and controls to implement new guidance and directives, 

such as EO 14028 and CISA’s Continuous Diagnostic and Mitigation program and Binding Operational Directives to

maintain a strong security posture and address new emerging threats. 

OIG Challenge 4 - Information Technology Acquisition and Project Management (Repeat): The Federal Information 

Technology Acquisition Reform Act (FITARA), enacted in December 2014, was the first major overhaul of federal 

Information Technology (IT) management since the passage of the Clinger-Cohen Act of 1996, which was designed to 

improve the federal government’s acquisition and management of its resources to include IT investments. Among other 

things, it expanded the Chief Information Officers (CIO) of federal agencies involvement in IT decision making, including 

annual and multi-year planning, programming, budgeting, execution, reporting, management, governance, and oversight 

functions. While FITARA is intended for agencies to better manage their IT investments, implementation continues to be a 

government-wide challenge.

Management Response: We have sought continual improvements to further refine our FITARA implementation and build a 

mechanism to deliver more effective department-wide IT acquisition strategy and outcomes. This includes process 

improvements that drive review of Bureau IT acquisitions to identify opportunities for more centralized procurement 

practices and further reduce department-wide acquisition duplication and waste. Key among these efforts is implementation 

of the PROTECTS acquisition vehicle, which is intended to ensure we can obtain cybersecurity goods and services more 

quickly, with less effort, and centrally, leveraging the buying power of the entire Department. We achieved several successes 

in service of our FITARA 2.0 goal, including:

• revising Office of the Chief Information Officer (OCIO) FITARA IT Acquisitions policy to require OCIO-level reviews 

that allow us to identify enterprise-wide service/support opportunities (i.e., cybersecurity);
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• suspending a $188 million dollar IRS-specific Cybersecurity IT acquisition and incorporating its requirements into 

Treasury’s existing enterprise PROTECTS acquisition vehicle; 

• awarding an enterprise contract for Zscaler services, a critical element in supporting our zero trust requirements; 

• completing our annual budget year 2025 (BY25) Capital Planning and Investment Control (CPIC) IT Investment 

submission. Reviewing and submitting 281 IT investments, with a total proposed IT budget of approximately $8.7 

billion dollars; and

• maintaining our FITARA Scorecard of “B” as of Scorecard 16 published for September 2023. 

We also continued to expand our enterprise TBM program this fiscal year by establishing the five-year TBM roadmap and 

completing several projects including:

• creating and improving IT investment project dashboards to improve our oversight of the IT projects’ budget and 

schedule; 

• completing a proof of concept of Cloud TBM reports for our Amazon cloud platform, setting the stage to improve the 

enterprise reporting of our Cloud Spend across all platforms in FY 2024;

• leveraging TBM reports, which provide IT spend data on IRA-funded IT investments, to assist IRS in restructuring 

its IT investment (for example, in BY25, IRS reported 15 major investments following the TBM framework, versus 

123 IT investments in the past years.) TBM reports provide IT spend data on Inflation Reduction Act (IRA) funded 

IT investments;

• completing a proof of concept of Applications and Services TBM reports for Departmental Offices, setting the stage 

to implement Enterprise Applications and Services TBM reporting for all our bureaus in FY 2024; and

• streamlining the IT Spend reporting process between the Enterprise TBM system (Apptio) and CPIC system by

completing integration between both systems; the Enterprise TBM system is now the source system for our IT

Spend data published on the CPIC system and therefore OMB’s IT Dashboard. 

In September 2023, Fiscal Service completed the first phase of implementing the Program Management Improvement 

Accountability Act Framework, a large step towards strengthening program and project management accountability, 

transparency, capabilities, and skillsets across the bureau. The framework will be fully implemented in December 2023. 

This capability gives the Fiscal Service the necessary transparency on project and incremental delivery health through datadriven and qualitative assessments of scope, quality, cost, and schedule performance. This information also provides Fiscal 

Service’s CIO a more comprehensive, proactive view into investment risks, which is reflected in the Bureau Investment Risk 

Rating promoted to Treasury monthly. 

In January 2023, Fiscal Service strengthened the business case and technical solution review process at the sub-council 

advisory level to ensure alignment with strategic priorities, including cyber executive orders and the National Security 

Council's accelerated timelines, IT strategy/enterprise architecture, and FITARA. Fiscal Service’s governance sub-councils 

for system architecture and enterprise investment regularly review and discuss the Financing Modernization program risks 

and progress. The Financing Modernization work is fully compliant with all cyber executive orders and the National 

Security Council timelines.
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Fiscal Service continues to redirect business lines away from Large-Scale Programs (LSPs) and “big bang” modernization to

embrace smaller, incrementally delivered value through an Indefinite Sustainability Model. Fiscal Service continues work to

ensure transparency and accountability using the Program Management Improvement Accountability Act (PMIAA) 

framework as development in the Financing Modernization program progresses. Once the PMIAA implementation is

complete in FY 2024, Fiscal Service will focus efforts to improve governance board visibility into results management (giving 

a full life-cycle view of investment results).

The BEP continues its efforts to replace its Washington, D.C. facility with a new facility via a formal project governance and 

change management structure with stakeholders, including the Department, the Federal Reserve Board, and the U.S. Army 

Corps of Engineers (USACE). The BEP is also effectively partnering with the USACE to perform multiple third-party cost, 

schedule, and risk assessments to validate the project budget, contingency amounts, schedule, and known risks. The BEP

anticipates it will complete the project design and receive formal governance approval to award a construction contract in FY

2024. The current schedule anticipates construction will be completed by the end of calendar year 2027.

OIG Challenge 5 - Climate Initiatives Risk (Repeat): In January 2021, EO 14008, Tackling the Climate Crisis at Home and 

Abroad, identified the immediate need for comprehensive action to address the catastrophic impacts of climate change. EO 

14008 emphasizes that U.S. leadership, and that of federal departments and agencies, will be required to significantly 

enhance global action and achieve the necessary policy outcomes on climate change. Treasury continues to play a significant 

role working with other federal agencies, foreign governments, and international financial institutions to stimulate global 

action on addressing climate change, environmental justice, and climate change-created economic and financial crises. In 

2021, Treasury created a new Climate Hub and appointed a Climate Counselor to coordinate and lead many of its efforts to 

address climate change. In October 2021, the Financial Stability Oversight Council (FSOC) issued its Report on ClimateRelated Financial Risk, as mandated by EO 14030. The report highlights challenges in efforts to comprehensively 

understand and address climate-related financial risk. Those challenges include the types and quality of available data and 

measurement tools, the ability to assess climate-related financial risks and vulnerabilities, and the incorporation of these 

risks into management practices and supervisory expectations as appropriate.

Management Response: We continue to make progress on the Climate Action Plan. Some of the activities that promote the 

progress of the plan include:

• FSOC continues to use its Climate-related Financial Risk Committee (CFRAC) as a forum to facilitate member 

agencies’ efforts to advance the recommendations in the Report on Climate-Related Financial Risk. The CFRAC 

also promotes interagency information sharing, coordination, and capacity-building on climate-related financial risk; 

facilitates the development of common approaches and standards; and fosters communication across FSOC 

members, including via dedicated working groups on data, scenario analysis, and risk assessment. 

• The OFR and FSOC continue to prioritize the development of the JADE, including onboarding FSOC member 

agencies during the fall (2023) and winter (2024). JADE will offer scalable, high-performance computing with 

analytical software and support for programming languages such as R and Python in a cloud-based environment 

with analysis-ready data.

• We continue our active involvement in international circles that are investigating climate-related financial risks 

and developing recommendations to address them. This includes involvement in the Network of Central Banks and 

Supervisors for Greening the Financial System, and the Financial Stability Board.
224 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

• In FY 2023, we released two new learning modules focused on climate change through our Integrated Talent 

Management system. Our Climate Literacy Work Group (CLWG) partnered with the National Oceanic and 

Atmospheric Administration to develop the “Climate 101” employee training presentation open to all staff to gain an

understanding of the basics and background of climate change. We also established the “Climate Focused 

Management” module, which was specifically developed by and for our manufacturing bureaus, the U.S. Mint and 

the Bureau of Engraving and Printing. The CLWG will continue to expand the climate literacy program in FY24 to

ensure a climate-ready workforce.

• We are actively making efforts to convert our fleet from gas-powered vehicles to electric vehicles (EV) as well as

plug-in hybrid EVs. We are also taking steps to install electric vehicle supply equipment (EVSE) infrastructure 

(charging stations) required to power EV fleet vehicles. The EV and EVSE initiatives demonstrate our commitment 

to meeting the requirements of EO 14057, Catalyzing Clean Energy Industries and Jobs Through Federal 

Sustainability. 

• We hired a dedicated Climate Change and Sustainability Specialist who is tasked with overseeing all aspects of

Treasury’s initiatives relating to Carbon-Pollution Free Electricity; Zero Emissions Fleet Vehicles; and Net Zero 

Emissions Buildings, Campuses, and Installations; and facilitating additional climate-related projects and 

initiatives across the Department. Additionally, we filled our Department Fleet Manager position, thereby ensuring 

continuity of the EV Strategic Program and EV goals as outlined in EO 14057. 

• The OCC established and staffed its Office of Climate Risk and completed climate-related financial risk 

management discovery reviews of banks with over $100 billion in total consolidated assets. This provided OCC with 

an in-depth understanding of these banks’ practices on a wide range of areas pertaining to climate-related financial 

risk management such as corporate governance, reporting, metrics, data, risk identification and management, and 

scenario analysis. 

• OCC will be leading the Risk Assessment Working Group of the FSOC CFRAC and will start the climate-related 

financial risk management reviews of banks or foreign banking organizations with over $100 billion in total 

consolidated assets to develop a deeper understanding of banks’ climate risk profiles and the banks’ progress on the 

management of climate-related financial risks for safety and soundness.

OIG Challenge #6 - Operating in an Uncertain Environment (New): In assessing the Department’s most serious challenges, 

we remain mindful of external factors and future uncertainties that affect its operations. These factors include, but are not 

limited to, the repeated cycle of budget and debt ceiling stopgaps, rising interest rates, and inflation. Congress has yet to 

resolve unfinished business when it comes to the Nation’s debt, and the long-term sustainability of programs. The impact of 

these challenges and their uncertainties require the Department to continue to focus its resources on programs that are in 

the highest need to citizens and/or where there is a unique federal role. It is essential that programs and reforms be 

managed and communicated effectively to achieve performance and accountability.
DEPARTMENT OF THE TREASURY 225

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Management Response: Domestic Finance staff consistently informs senior staff and the Secretary of projected key dates

leading up to the point at which we will reach the debt subject to limit (“debt limit”), and the projected dates through which

extraordinary measures would last. Throughout the debit limit crisis that lasted from January through early June 2023,

Domestic Finance staff kept senior leaders including the Secretary informed about the impact on cash flows and balances,

and debt issuances and market impacts. In addition, Fiscal Service took extraordinary actions consistent with relevant laws

and regulations to avoid exceeding the debt limit. These actions included suspending investments to certain federal

government accounts. The operational oversight of Domestic Finance offices enabled the Secretary to effectively

communicate key deadlines to Congress, enabling it to pass a bill suspending the debt limit prior to the exhaustion of

extraordinary measures. 

On Saturday, June 3, 2023, the President signed into law the Fiscal Responsibility Act of 2023, which suspended the

statutory debt limit through January 1, 2025. On Monday, June 5, 2023, Fiscal Service discontinued using extraordinary

actions and resumed normal debt management operations. Between June 6, 2023, and June 30, 2023, Fiscal Service

restored the uninvested principal and related interest to the federal government accounts affected by the extraordinary

actions it took during the delay in raising the debt limit.

In response to market stress in March 2023, the OCC quickly invoked its market disruption protocols, which included daily

monitoring of certain banks. The OCC immediately increased engagement across business lines and with other agencies to

aggregate and report on risks and the impacts of those risks. 

In addition, following the financial system stress beginning in March 2023, regulators with supervision authority over

Silicon Valley Bank and Signature Bank published reports on lessons learned from those bank failures. Leveraging those

key lessons, the OCC is conducting an assessment of its own supervision processes and identified areas where it can further

enhance its processes. Work is underway to finalize action plans.

As part of the OCC’s strategic plan, an initiative is underway focused on expanding information access and sharing across

business units. This effort is geared toward developing an approach and piloting information sharing delivery methods. 

This will aid in accelerating information availability and conversation on emerging trends and risks being identified within

different business units.

 
226 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION MANAGEMENT CHALLENGES

U.S. DEPARTMENT OF THE TREASURY 

 WASHINGTON, D.C. 20024

 

 

 TREASURY INSPECTOR GENERAL 

 FOR TAX ADMINISTRATION 

October 11, 2023

MEMORANDUM FOR SECRETARY YELLEN 

FROM: Heather M. Hill 

Acting Inspector General 

SUBJECT: Management and Performance Challenges Facing the 

Internal Revenue Service for Fiscal Year 2024 

The Reports Consolidation Act of 2000 requires that the Treasury Inspector General for Tax Administration 

(TIGTA) summarize, for inclusion in the annual Department of the Treasury Agency Financial Report, its

perspective on the most serious management and performance challenges confronting the Internal 

Revenue Service (IRS).1

Each year, TIGTA evaluates IRS programs, operations, and management functions to identify the most 

vulnerable areas in the Nation’s tax system. The passage of the Inflation Reduction Act of 2022 (IRA)2 on

August 16, 2022, significantly impacted the IRS by providing the opportunity and funding to transform all 

aspects of its operations over the next decade. The IRS issued a long-term Strategic Operating Plan (SOP) 

on April 6, 2023, that outlines its vision for the future of tax administration. Achieving the five objectives 

reflected in the SOP, through a series of initiatives and projects, will be the central challenge confronting 

the IRS for the foreseeable future. These transformation efforts are a significant undertaking that impact 

all the management challenges discussed in this memorandum. 

1 31 U.S.C. § 3516(d) (2006). 

2 Public Law No. 117-169, 136 Stat. 1818. 
DEPARTMENT OF THE TREASURY 227 

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For Fiscal Year (FY) 2024, we have identified the IRS’s top management and performance challenges as: 

• Managing IRA Transformation Efforts; 

• Tax Law Changes; 

• Taxpayer Service; 

• Human Capital; 

• Information Technology Modernization; 

• Protection of Taxpayer Data and IRS Resources; 

• Tax Compliance and Enforcement; 

• Tax Fraud and Improper Payments; and 

• Taxpayer Rights. 

The following information detailing the management and performance challenges is provided to promote 

the economy, efficiency, and effectiveness of the IRS’s administration of the Nation’s tax laws. 

MANAGING IRA TRANSFORMATION EFFORTS 

The IRA legislation appropriated almost $80 billion to the IRS through September 30, 2031, to improve 

taxpayer service, update its computer systems, and increase compliance and enforcement actions against 

high-income taxpayers and large corporations. After the passage of the IRA, the IRS was required to

develop a SOP detailing how resources will be spent over the next decade. When it was released on April 

6, 2023, the SOP indicated that the IRA created a historic opportunity for the IRS to transform the 

administration of the tax system. The SOP outlines the IRS’s transformation mission as: 

We will make it easier for taxpayers to meet their tax responsibilities and receive tax incentives for 

which they are eligible. We will adopt a customer-centric approach that dedicates more resources 

to helping taxpayers get it right the first time, while addressing issues in the simplest ways 

appropriate. We will address noncompliance, using data and analytics to expand enforcement in

certain segments. We will become an employer of choice across government and industry. These 

changes will enable us to serve all taxpayers more equitably and in the ways they want to be served. 

The SOP is structured to achieve five objectives, which will be accomplished through a series of initiatives 

and projects aligned to each objective. 
228 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Figure 1: IRS Objectives of its IRA Strategic Operating Plan 

 

Source: TIGTA graphic based on review of the IRS’s IRA SOP.

Managing the transformation efforts will be a significant challenge for the IRS because the SOP was 

predicated on the provision of sufficient annual funding. In addition, TIGTA has previously raised concerns 

about the many challenges the IRS has faced when implementing large-scale transformation projects. The 

Commissioner of Internal Revenue stated that “the IRS’s plan for IRA implementation assumed the IRA 

funds will support the transformation efforts, while 

day-to-day operations would continue to be supported by annual appropriations.” However, within 

months of laying out its transformation vision, the IRS has already seen cuts to its funding. 

With the passage of the Fiscal Responsibility Act of 2023,3 which increased the Federal debt limit,

approximately $1.4 billion of the IRA funding available for enforcement was rescinded. In addition to this 

rescission, an agreement was reached to potentially reduce the IRS’s annual appropriations in FYs 2024 and 

2025 by $10 billion each year. This change would represent a 

79 percent reduction relative to the Congressional Budget Office’s projection of the IRS’s discretionary 

budget authority over those two fiscal years. The reduction in funding, which appears possible based on an

agreement reached with passage of the Fiscal Responsibility Act, will impact the IRS’s ability to use IRA 

funds as intended and instead force the IRS to shift these funds to maintain current operations. 

If the IRS continues to receive reductions to its funding over the next decade, it will have to make difficult 

decisions on what to prioritize when making improvements to its operations and the way in which it serves 

taxpayers. The IRS has historically struggled to fulfill long-term plans to transform the organization. While 

some of this can be attributed to the continually changing budget environment, the IRS has also not 

effectively managed the process. For instance, in 2015, the IRS laid out its vision for the Future State of the 

IRS, with six stated themes to achieve its goals before merging the Future State into the IRS’s strategic plan 

in 2018. At the request of Congress, the Government Accountability Office reviewed the Future State and 

found that it was unclear how implementation of the Future State via the IRS Strategic Plan would occur or

when it would be completed. 

3 Public Law No. 118-5 137 Stat. 10.
DEPARTMENT OF THE TREASURY 229 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

The IRS has also had difficulty implementing large scale projects within the Information Technology 

function, leading to cost overruns, late deliverables, and inefficient use of funds. For example, the IRS’s

Customer Account Data Engine 2 (CADE 2) program involves major changes to core IRS tax processing 

systems. The IRS began developing CADE 2 in 2009; however, the Government Accountability Office 

reported that the IRS’s CADE 2 development has taken much longer and cost significantly more than 

originally planned.4 

The implementation of the IRA will challenge the IRS to ensure the proper balance of improving services to

taxpayers, expanding enforcement, and modernizing its information technology. In addition, the IRS will 

need to ensure that it uses this increased funding in the most effective manner. TIGTA will continue to

provide oversight work that addresses all five of the previously mentioned IRA SOP objectives. The 

oversight work conducted will provide external stakeholders insight into how well the IRS is achieving each 

of its stated goals over the next 10 years. 

TAX LAW CHANGES 

The annual filing season is a critical time for the IRS because it is when most individuals file their income tax 

returns and contact the IRS if they have questions about specific tax laws or filing procedures. Errors in the 

IRS’s tax return processing systems may delay tax refunds, affect the accuracy of taxpayer accounts, or

result in incorrect taxpayer notices. One of the continuing challenges that the IRS faces each year in

processing tax returns is the implementation of new tax law changes as well as changes resulting from 

expired tax provisions. Legislative actions generating the changes often occur late in the year, shortly 

before the filing season begins. 

For example, the IRA contains 36 tax provisions that affect individual and business taxpayers. Twenty of

these tax provisions required the IRS to implement changes related to tax return processing for Processing 

Year 2023. This required the IRS to create or revise tax forms, instructions, and publications; update 

computer programming to process tax returns affected by the provisions; and communicate and provide 

guidance to taxpayers and tax professionals on the tax law changes.5

The IRS used several established processes to immediately begin the task of tracking and implementing the 

36 tax provisions. This included creating an implementation oversight office to work across the IRS 

overseeing the implementation efforts. Additionally, the IRS created the IRA 2022 Tax Provision 

Implementation Office, which is primarily responsible for overseeing the implementation of the tax 

provisions. As of May 2023, the IRS created or revised 71 tax products impacting Processing Year 2023. 

Most IRA tax provisions affect future tax years. However, a small number of provisions affected individual 

tax filers for Tax Year (TY) 2022. Figure 2 identifies the three provisions most relevant to the 2023 Filing 

Season and provides the estimated tax impact for each provision for Calendar Years 2023 through 2026.6

4 TIGTA, Report No. 2023-20-006, Annual Assessment of the IRS’s Information Technology Program for Fiscal Year 2022 (Apr. 2023).

5 TIGTA, Report No. 2024-408-004, Inflation Reduction Act: Assessment of Implementation of Processing Year 2023 Tax Provisions

(Oct. 2023). 

6 TIGTA, Report No. 2023-40-029, Interim Results of the 2023 Filing Season (May 2023). 
230 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Figure 2: Summary of IRA Provisions Affecting the 2023 Filing Season 

Provision Overview of Related Provisions 

Tax Impact 

Calendar Years 

2023 - 2026 

Energy Efficient Home 

Improvement Credit 

(13301) 

Renamed and replaced the existing Nonbusiness Energy 

Property Credit and extended the credit through 

December 31, 2032.

$5.9 billion 

Residential Clean 

Energy Credit (13302) 

Renamed and replaced the existing Residential Energy Efficient 

Property Credit and increased the credit rate to 30 percent for 

property placed into service beginning in TY 2022.

$6.9 billion 

Clean Vehicle Credit 

(13401) 

Renamed and replaced the existing Qualified Plug-In Electric 

Drive Motor Vehicle Credit. For TY 2022, transition rules for the 

requirement that qualifying vehicles must undergo final 

assembly in North America apply for vehicles placed into 

service on or after August 16, 2022.

$1.8 billion 

Source: The IRA and the Joint Committee on Taxation JCX-18-22.

Actions are underway to implement the 16 tax provisions of the IRA that become effective during 

Processing Years 2024 through 2028. As of June 2023, the IRS had identified 68 tax products affected for 

future processing years related to these provisions, including 25 tax forms, 41 instructions, and two 

publications. The actions include efforts to implement processing controls for the clean vehicle credits and 

elective payments for energy property and electricity produced from certain renewable resources. TIGTA 

plans to continue to monitor the implementation during Processing Year 2024. 

The 2023 Filing Season was also impacted by several tax provisions in the Consolidated Appropriations Act, 

2021 and the American Rescue Plan Act of 2021 (ARPA) that expired at the end of Calendar Year 2022.7 

The ARPA modified several credits, including the Child and Dependent Care Credit (CDCC) and Child Tax 

Credit (CTC). The ARPA expanded the CTC to provide taxpayers the ability to receive up to one half of the 

estimated TY 2021 CTC in advance payments between July and December 2021. 

TIGTA reported that the IRS created an automated process to recalculate the CTC, including the amount of

advance payments posted to a taxpayer’s tax account.8 This process identified 3.8 million tax returns that 

contained a discrepancy between the IRS calculated CTC amount and the amount claimed by the taxpayer 

that required resolution. Further, the IRS developed a process in response to TIGTA’s concerns to identify 

undeliverable advance payments that occurred after taxpayers filed their TY 2021 tax return. As of October 

2022, the IRS reissued payments to 7,877 taxpayers totaling $5.4 million. 

The ARPA also temporarily expanded the CDCC, making it fully refundable for taxpayers whose main home 

was in the United States for more than one-half of the year. The legislation also temporarily expanded the 

eligibility rules and the amount of Earned Income Tax Credit (EITC) for taxpayers with no qualifying 

children. In 2022, TIGTA reported on a number of weaknesses in the controls over the processing of CDCC 

7 Pub. L. No 116-260, 132 Stat. 1182, and Pub. L. No. 117-2, 135 Stat. 4 (codified in scattered sections 

of 7, 12, 15, 19, 20, 26, 29, 42, and 45 U.S.C.), respectively. 

8 TIGTA, Report No. 2023-47-035, American Rescue Plan Act: Review of the Reconciliation of the Child Tax Credit (June 2023). 
DEPARTMENT OF THE TREASURY 231 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

claims.9 In a follow-up audit, TIGTA determined that IRS management needs to take additional actions to

address prior agreed to recommendations.10 As a result, TIGTA made additional recommendations for the 

IRS to improve its processing of the CDCC and EITC. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act11 contains numerous 

tax-related provisions impacting individuals and businesses and appropriates approximately $750 million in

additional funding to the IRS to administer and oversee these provisions. The CARES Act allows employers, 

including self-employed taxpayers, to defer deposits of the employer’s share of Social Security tax. 

Employers can defer the full amount of the employer’s share of the Social Security tax while self-employed 

taxpayers can defer 50 percent of the total Social Security tax. TIGTA determined that the IRS developed 

processes to systemically identify tax accounts with an unpaid December 2021 Social Security tax deferral 

and manually adjust the tax accounts.12 However, due to limited resources, the IRS was unable to develop 

programming to adjust accounts systemically that did not timely pay the Social Security tax deferral. As a 

result, TIGTA estimates $108 million in potential penalties and interest were not assessed on approximately 

67,000 tax accounts. 

The implementation of significant legislative mandates will continue to be a challenge for the IRS to

address when preparing for the processing of tax returns during future filing seasons. 

TAXPAYER SERVICE 

Voluntary tax compliance is closely linked to the customers’ experience and the services provided, and 

survey results reported in Calendar Year 2019 showed that the IRS’s customer service lags behind service 

provided by other Government agencies and the private sector.13 The Taxpayer First Act (TFA), signed into 

law on July 1, 2019, required the IRS to submit a written comprehensive customer service strategy to

Congress.14 In January 2021, the IRS submitted its Taxpayer Experience Strategy (TXS) and its plans for the 

creation of the Taxpayer Experience Office (TXO). 

TIGTA reported that the IRS developed plans to implement the TXS but can more effectively monitor its

progress in its implementation.15 IRS management indicated its ability to hire staff for the new office was 

materially limited until the FY 2022 Federal budget was passed in March 2022. As of February 2023, the 

TXO was not fully staffed, and it had not tracked and monitored the implementation of TXS capabilities; 

developed a detailed implementation plan for the top prioritized TXS capabilities; updated the TXS

Roadmap.; or developed performance measures. 

The IRS business units continue to implement many initiatives that make up the TXS capabilities, but the 

TXO has not overseen the organization’s progress. According to TXO management, their goal was to be

9 TIGTA, Report No. 2022-47-023, American Rescue Plan Act: Assessment of Processes to Identify and Address Improper Child and 

Dependent Care Credit Claims (Mar. 2022). 

10 TIGTA, Report No. 2023-47-037, American Rescue Plan Act: Assessment of the Expanded Child and Dependent Care and Earned 

Income Tax Credits (June 2023). 

11 Pub. L. No. 116-136, 134 Stat. 281 (codified as amended in scattered sections of 2, 5, 12, 15, 20, 21, 29, 42, and 45 U.S.C.). 

12 TIGTA, Report No. 2023-46-030, Recurring Identification Is Needed to Ensure That Employers Full Pay the Deferred Social Security 

Tax (May 2023). 

13 American Customer Satisfaction Index, ACSI Federal Government Report 2018 (2019), and Forrester Research, Inc., The US Federal 

Customer Experience Index (June 11, 2019). 

14 Pub L. No. 116-25, 133 Stat. 981 (codified in scattered sections of 26 U.S.C.). 

15 TIGTA, Report No. 2023-15-028, Plans Were Made to Implement the Taxpayer Experience Strategy, but Progress Is Not 

Monitored (May 2023). 
232 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

fully staffed by March 2023, at which time they planned to establish details of the day-to-day operations 

and the oversight of the implementation of the TXS. However, TXO management stated that the TXO’s

future direction could change based on the IRS’s implementation of the IRA, and that it may take until the 

end of Calendar Year 2023 to be fully staffed. 

The IRS has long recognized that improving customer service to taxpayers in underserved communities is a 

key component of a voluntary tax system and began taking steps to make improvements as an

organizational priority before the enactment of the TFA. Some of these efforts were designed to assist 

taxpayers in specific underserved communities, while other efforts are more broadly focused on larger 

segments of the taxpayer population, which often include taxpayers in underserved communities. Figure 3 

lists the underserved communities identified in the TXS. 

Figure 3: TXS Underserved Communities 

 

 

 

Source: TFA Report to Congress. 

TIGTA reported that the TXS included details about how the IRS would implement service improvements 

for two of the eight underserved communities, but the IRS has not yet developed detailed plans to address 

the other six communities, nor has it created a comprehensive agencywide strategy to implement and 

monitor service improvements.20 The TXS included service improvement strategies for taxpayers with 

limited English proficiency and international taxpayers. However, the TXS strategies for the remaining six 

communities were all similarly generically worded to conduct focused research to learn more about the 

communities and to work with partners. 

There is a risk that the IRS will not use resources optimally when assisting underserved communities 

because the IRS could duplicate its efforts if it does not determine how communities overlap. Additionally, 

initiatives focused solely on specific underserved communities may not be as effective in increasing 

voluntary compliance or reducing taxpayer burden because they may address only one issue for taxpayers 

that have multiple common issues. 

In December 2022, we reported that the IRS inventories of unprocessed tax returns would not return to

pre-Coronavirus Disease 2019 (COVID-19) pandemic levels by the end of Calendar Year 2022 and 

16 The taxpayers with disabilities community includes taxpaying populations needing special assistance due to sight, hearing, 

dexterity, limited mobility, and cognitive challenges. 

17 The IRS defines elderly taxpayers as those who are age 60 or older. 

18 Low-income taxpayers generally make $60,000 or less per year. 

19 Rural communities are populations of 500 or less persons per square mile.

20 TIGTA, Report No. 2023-15-027, Services to Underserved Communities Have Been Ongoing; However, an Agencywide Strategy 

Has Not Been Developed (May 2023). 
DEPARTMENT OF THE TREASURY 233 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

subsequently reported that backlogs of tax returns and account work remained for the 2023 Filing 

Season.21 

Further, in May 2023, TIGTA identified the following contributing factors to the remaining backlogs in the 

Accounts Management function, which is responsible for assisting individual and business taxpayers with 

tax law and tax account inquiries, including making adjustments to taxpayer accounts when necessary. 

Figure 4: Factors Contributing to Remaining Inventory Backlogs 

Source: TIGTA graphic based on findings identified during our review.

While the employees assigned to the Accounts Management function Surge Team contributed to the 

additional closures of its inventory, there were fewer employees available than anticipated. In addition, the 

loss of employees from other IRS functions resulted in an estimated $2.6 billion in potential lost or delayed 

revenue, due to fewer examination and collection cases being worked. 

Further, the Form 1040-X, Amended U.S. Individual Tax Return, Surge Team’s closure rates were less than 

one-half of the normal employees’ closure rates. Automating the processing of these amended returns 

would reduce the burden on taxpayers waiting for their amended returns to be processed, and the benefits 

far outweigh the associated costs. For example, TIGTA estimated that the IRS would potentially save more 

than $322 million in yearly processing costs by automating the processing of Forms 1040-X. This is in

addition to any interest saved. 

During the 2023 Filing Season, the IRS made significant progress to reduce tax return inventories closer to

pre-pandemic levels. For example, more than 2 million individual tax returns and transactions remained in

inventory as of the end of Calendar Year 2022, compared to more than 8.4 million as of the end of Calendar 

Year 2021. IRS management stated that for the first time since the pandemic began, individual tax return 

processing and related activities were returning to normal timeliness goals. The IRS cleared the carryover 

inventory of unprocessed individual tax returns received during Calendar Year 2022 by February 2023.22 

However, as of July 2023, the IRS had more than 1.3 million individual and business paper returns received 

in Calendar Year 2023 waiting to be processed. 

21 TIGTA, Report No. 2023-46-007, Backlogs of Tax Returns and Other Account Work Will Continue Into the 2023 Filing Season (Dec. 

2022); TIGTA, Report No. 2023-46-026, Additional Actions Are Needed to Reduce Accounts Management Function Inventories to

Below Pre-Pandemic Levels (May 2023). 

22 TIGTA, Report No. 2023-40-029, Interim Results of the 2023 Filing Season (May 2023). 
234 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Figure 5: Status of Paper Returns Waiting to Be Processed as of July 2023 

Category 

Returns 

Individual Business Unspecified Total 

Received in Calendar Year 2023 548,251 760,405 16,217 1,324,873 

Source: IRS Submission Processing Weekly Inventory Report, as of July 21, 2023.

The IRS assists millions of taxpayers via its website (IRS.gov), telephone, and social media platforms as well 

as face-to-face assistance at its Taxpayer Assistance Centers (TAC), Volunteer Income Tax Assistance sites, 

and Tax Counseling for the Elderly sites. During the 2023 Filing Season, the IRS saw improvement in its

Level of Service (i.e., how many of those who call are able to speak to a Customer Service Representative) 

and wait times for its toll-free telephone lines when compared to the 2022 Filing Season. Figure 6 shows a 

comparison for Calendar Years 2022 and 2023. 

Figure 6: Toll-Free Telephone Performance Statistics for Calendar Years 2022 and 2023 

Source: IRS management information reports (as of May 14, 2022, for Calendar Year 

2022 and as of May 13, 2023, for Calendar Year 2023) and TIGTA analysis of the 

reports. 

In addition to providing service to taxpayers over the telephone, the IRS also plans to assist approximately 

2.7 million taxpayers at its TACs in FY 2023. This is an increase of 97 percent from the number of taxpayers 

the IRS assisted during FY 2022.24 Figure 7 shows the number of contacts by product line at the TACs for 

FYs 2022 and 2023. 

23 The Level of Access is computed by taking the sum of Assistor Calls Answered and Automated Calls Answered divided by the

Total Dialed Number Attempts Open Hours. TIGTA developed this metric; it is not an official IRS statistic. As noted in TIGTA, 

Report No. 2019-40-041, Telephone Performance Measures Do Not Provide an Accurate Assessment of Service to Taxpayers (June 

2019), the IRS’s Level of Service measure does not reflect overall call demand for telephone assistance. We also reported that the 

IRS’s measure was not consistent with access measures reported by other types of organizations that operate toll-free help lines, 

such as the Social Security Administration and tax agencies in the States of California, Georgia, and New York. 

24 TIGTA, Report No. 2023-40-029, Interim Results of the 2023 Filing Season (May 2023). 

Statistics 

Filing Season 

2022 2023 

Assistor Calls Answered 5,429,000 8,951,000 

Level of Service 15.5% 82.8% 

Average Speed of Answer (Minutes) 28 4 

Level of Access23 29.4% 51.9% 
DEPARTMENT OF THE TREASURY 235 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Figure 7: TAC Contacts for 

FYs 2022 and 2023 

Contacts/Product Lines 

Fiscal Year 

2022 

Actual 

2023 

Projections 

Tax Account Contacts 745,000 1,801,000 

Form Contacts 52,000 61,000 

Other Contacts 552,000 790,000 

Tax Law Contacts 8,000 18,000 

Totals 1,357,000 2,670,000 

Source: IRS management information reports. Numbers shown are 

rounded. 

However, insufficient staffing continues to result in the TACs not being open to provide taxpayer 

assistance. As of May 2023, the IRS reported that 22 of the 363 TACs were closed due to a lack of staffing. 

IRS management cautioned that the operating status of the TACs can vary 

day-to-day due to illness, staff leaving, or staff taking other positions within the IRS. For example, as of

May 2023, 157 of the 363 TACs the IRS operated were staffed with one or two IRS employees. Similar to

prior filing seasons, the IRS continues to use its appointment service for all TACs. However, in

February 2023, in an effort to further assist taxpayers, the IRS announced special Saturday hours at more 

than 40 locations for face-to-face help between February and May with no appointments required. 

In addition, digital communications have the potential to allow the IRS to more efficiently and effectively 

communicate with taxpayers. The Taxpayer Digital Communication (TDC) program is intended to enable 

taxpayers and tax professionals to interact with the IRS electronically. It is designed to facilitate quick and 

secure sharing of files and documents online by IRS employees and taxpayers, instead of waiting for 

physical mail, traveling to pick up documents, or requiring in-person interactions. Accordingly, the use of

digital communications should allow IRS employees to resolve taxpayer issues more efficiently. 

However, the IRS could do more to plan and implement a TDC program that meets taxpayers’ needs. For

example, the IRS did not proactively identify IRS functions or operations for which digital communication 

may have provided sizable benefits for both taxpayers and IRS employees. Rather, any IRS program, 

function, or business unit wishing to explore a digital communication installation was allowed to express 

interest. TIGTA also reported that there is a need for the IRS to establish an office that can more readily 

provide oversight and coordination between the business units involved in the implementation and 

operation of the TDC installations and the Information Technology organization.25

As the IRS implements initiatives related to the IRA, it must continue to focus its efforts on improving 

service to taxpayers, including innovative ways to simplify or eliminate processes that unnecessarily burden 

taxpayers. 

25 TIGTA, Report. No. 2023-30-003, More Should Be Done to Expand and Increase Use and Availability of the IRS’s Taxpayer Digital 

Communication Tools (Nov. 2022). 
236 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

HUMAN CAPITAL 

Human capital remains a serious, underlying issue with wide-ranging implications for both the IRS and 

taxpayers. From FYs 2010 to 2020, the number of IRS employees decreased significantly. During this 

period, the IRS’s budget decreased approximately $1 billion, or 8 percent, from $12.5 billion in FY 2010 to

$11.5 billion in FY 2020, affecting its ability to hire employees to replace those who left. The IRS ended FY

2020 with slightly more than 80,000 employees, a 15 percent decline from just over the 94,000 employees 

in FY 2010. At a time when the IRS is taking on the enormous challenge of implementing the IRA, the 

recruitment of new employees and retention of existing employees are critical to ensuring a quality 

workforce capable of meeting the needs of the American public. As stated in its IRA SOP, IRS employees in

the future will require a broader foundation of core competencies. The IRS envisions a greater number of

data scientists as it becomes a data-centric organization. To address increasingly complex tax filings, the 

IRS indicated in the future its compliance functions will rely on specialized teams who respond to

increasingly complex filings. 

According to its IRA SOP, the IRS plans to hire approximately 29,500 employees in FYs 2023 and 2024 due 

to funding provided by the IRA. In its FY 2024 budget request, the IRS indicated it has experienced 

significant staff attrition over the past 10 years, with a loss of over 10,000 positions since 2012, 

predominantly within the compliance function. According to data provided by the IRS, approximately 

15,000 employees had retired or separated during FY 2022. In addition, the IRS’s budget request stated 

that an estimated 63 percent of the IRS’s employees will be eligible for retirement in the next five years, 

and its current attrition rate is nearly 26 percent higher than the average for Federal agencies. The IRS 

indicated that approximately 21,000 employees will be eligible to retire by the end of FY 2023. These 

employees will take with them valuable knowledge of IRS systems, procedures, and information on day-today operations. The IRS will be challenged to recruit, quickly hire, onboard, and train the large number of

individuals with the appropriate core competencies to replace both its planned staff attrition and increased 

staffing levels provided by the IRA. 

Federal agencies can use special payment incentives to recruit and retain employees, and to fill missioncritical skill gaps. However, TIGTA reported that the IRS has used these incentives on only a limited basis.26

 

Between FYs 2019 and 2022, the IRS issued recruitment, retention, or relocation incentive payments to

1,466 employees from various non-IT organization business units, totaling just over $1.5 million. However, 

the vast majority of these payments, approximately $900,000, were retention incentives issued in FY 2020 to

1,435 employees returning to work during the start of the COVID-19 pandemic. As part of its expanded 

hiring efforts, the use of special payment incentives could assist the IRS to fill mission-critical positions and 

reduce the challenges of hiring and retaining employees. 

In addition, the IRS piloted the use of Critical Position Pay Authority in response to prior TIGTA 

recommendations. Specifically, in March and June 2019, the IRS submitted six requests (through the 

Department of the Treasury) to the Office of Personnel Management to hire or retain Senior Executive 

Service positions designated as mission critical. It took almost three years from the initial drafting of the 

business case to receive approval for all six hiring requests. As a result, the IRS does not have plans to

continue the use of Critical Position Pay Authority. 

26 TIGTA, Report No. 2023-10-043, Expanded Use of Special Payment Incentives Could Help Improve Recruitment and Retention 

Efforts (Aug. 2023). 
DEPARTMENT OF THE TREASURY 237 

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TIGTA also reported that the IRS can improve its process to help prevent the loss of 

mission-critical skills and knowledge due to attrition, reorganization, or promotional moves for 

experienced employees to share knowledge and experience with newer employees.27 In FY 2017, the IRS 

implemented the enterprise-wide Knowledge Management program to capture, share, and apply 

employee knowledge to enhance learning, performance, collaboration, and decision-making. TIGTA 

surveyed nearly 6,300 IRS employees to gauge the effectiveness of the enterprise-wide Knowledge 

Management program. Some of those surveyed expressed concerns about locating pertinent information 

on the program website. Also, some of the employees who located the site found the information hard to

use and lacking in relevant information. Additionally, employees designated as subject matter experts 

were sometimes unhelpful due to their limited experience level. A successful Knowledge Management 

program allows experienced employees to share knowledge and experience with newer employees in a 

format that is effective and efficient. This will be an important tool for the IRS as it continues to onboard 

new employees. 

The IRS will continue to be challenged to have the right people in the right place at the right time. Budget 

constraints, legislative changes, and economic shifts can create unforeseen challenges for the IRS in

addressing its long-term human capital issues. 

INFORMATION TECHNOLOGY MODERNIZATION 

Successful modernization of systems and the development and implementation of new information 

technology applications are critical to meeting the IRS’s evolving business needs and enhancing services 

provided to taxpayers. Modernization is necessary to deliver efficient taxpayer services and enforcement 

with enhanced user experiences.28 The IRS uses different legacy case management systems that vary 

widely in complexity, size, and customization to support tax administration. According to the IRS’s IRA 

SOP, it uses some of the oldest information systems in the Federal Government. The IRS indicated that it

uses more than 600 applications, many of them more than 20 years old.29 The IRS’s goal is to retire the 

Business and Individual Master Files by FYs 2027 and 2028, respectively. 

Modernizing the IRS’s computer systems has been a persistent challenge for many years and will likely 

remain a challenge for the foreseeable future. The IRA SOP calls for a modern data architecture with a 

common platform to be more technologically efficient and improve the IRS’s ability to resolve taxpayer 

issues. This is a significant challenge and requires updating programming and the replacing legacy 

systems. According to the IRS’s plan, the Enterprise Case Management (ECM) platform will be modernized 

by FY 2025 to allow for the decommissioning of many legacy applications. In its summary of the IRS’s IRA 

SOP, the Congressional Research Service stated that the IRS’s use of the $4.8 billion provided by the IRA for 

modernization is arguably central to the entire IRS strategic vision and serves as the foundation for 

planned improvements in taxpayer service and enforcement.30 In its IRA SOP, the IRS indicates that 35 of

its 42 initiatives are dependent on its objective to deliver cutting-edge technology, data, and analytics. 

27 TIGTA, Report No. 2023-30-024, The Knowledge Management Program Will Benefit From Addressing User Concerns and 

Improving Performance Measures and Controls Over Employee Costs (May 2023). 

28 TIGTA, Report No. 2023-20-006, Annual Assessment of the IRS’s Information Technology Program for Fiscal Year 2022 (Apr. 

2023). 

29 Publication 3744, Internal Revenue Service Inflation Reduction Act Strategic Operating Plan FY 2023-2031, 

(Rev. 4-2023). 

30 Congressional Research Service, The Internal Revenue Service’s Strategic Operating Plan to Spend $79 Billion in Inflation 

Reduction Act Funding (May 2, 2023). 
238 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

While modernizing its systems to enhance the user experience, the IRS must incorporate operational 

security measures. Recent cybersecurity incidents underscore the importance of increased visibility before, 

during, and after an incident. Information from audit logs on Federal information systems is invaluable in

the detection, investigation, and remediation of cyber threats. Failure to capture and review audit trails for 

all systems with access to sensitive data prevents the IRS from assuring it can safeguard taxpayer data. In

addition, without fully operational audit trails, unauthorized accesses, misuse, and theft of taxpayer data 

and Personally Identifiable Information could be occurring in IRS applications without detection. 

The IRS’s ability to provide high-quality taxpayer service and maintain the integrity of the tax system 

requires modern, secure, and nimble operations as well as a sustained and talented workforce. Many 

emerging trends offer challenges and opportunities for the IRS, including changes in the taxpaying public 

and its expectations, technological disruptions, shifts in the workforce, and an increasingly globalized and 

interconnected world. Successful modernization of systems and the development and implementation of

new information technology applications will continue to be a critical challenge for the IRS to meet its

evolving business needs and enhance services provided to taxpayers. 

PROTECTION OF TAXPAYER DATA AND IRS RESOURCES 

The IRS relies extensively on computerized systems to support its financial and mission-related operations. 

Without effective security controls, computer systems are vulnerable to human errors or actions committed 

with malicious intent. People acting with malicious intent can use their access to obtain sensitive 

information, commit fraud and identity theft, disrupt operations, or launch attacks against other computer 

systems and networks. These threats to computer systems and related critical infrastructure can come 

from sources that are internal or external to an organization. Internal threats include equipment failures, 

human errors, and fraudulent or malicious acts by employees or contractors. External threats include the 

ever-growing number of cyberattacks that can come from a variety of sources, such as individuals, groups, 

and countries that wish to do harm to an organization’s systems or steal an organization’s data. The IRS 

indicated that it observes and mitigates more than 1.4 billion cyberattacks annually, including denial-ofservice attacks, intrusion attempts, probes or scans, and other unauthorized connectivity attempts.31

According to the IRS, its future vision is to provide taxpayers and tax professionals access to information 

online to view their account; make changes; interact with the IRS; and manage preferences for payments, 

refunds, and communications.32 This future vision will challenge the IRS to ensure taxpayer privacy and 

security are safeguarded. Identity and access management is a fundamental and critical information 

technology capability ensuring that the right people have the right access to the right resources at the 

right time. If an unauthorized access occurs, it could result in substantial harm to systems and a loss of

public confidence in the IRS. 

In June 2021, for the first time ever, the IRS began outsourcing digital identity assurance by contracting 

with a private company under the Secure Access Digital Identity program. Since that time, the IRS has 

faced increased pressure to use a Government solution, specifically Login.gov, even though its service is

not consistent with Digital Identity Guidelines provided under the National Institute of Standards and 

Technology. Accepting a reduction of standards for the sake of using a Government solution that does not 

31 Publication 3744, Strategic Plan FY 2022-2026, (Rev.7-2022). 

32 Publication 3744, Internal Revenue Service Inflation Reduction Act Strategic Operating Plan FY 2023-2031, 

(Rev. 4-2023). 
DEPARTMENT OF THE TREASURY 239 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

currently provide the same level of effectiveness as a private contractor could have significant, negative 

impacts in the public’s trust in the security of their data with the IRS. 

The IRS established a Continuous Diagnostics and Mitigation Program, which includes managing “who is

on the network” through identity and access management and privileged account management tools. 

TIGTA identified areas of improvement related to the access management system.33 Specifically, TIGTA 

reviewed vulnerability scans for both on-premise and off-premise cloud-based servers and determined that 

the off-premise server vulnerability scans had limited risk severity (e.g., critical, high, medium, low) and no

historical aging information, such as first seen and last seen dates. In December 2022, TIGTA verified the 

cloud service provider upgraded its server vulnerability reporting to include aging and risk severity level 

information. 

TIGTA also found that the remediation of on-premise server vulnerabilities is not consistently or accurately 

tracked with plans of action and milestones or risk-based decisions as required. The IRS created two plans 

of action and milestones eight and 21 months after the vulnerabilities were identified, instead of within 60

days from identification, as required. Errors in reporting and tracking vulnerability remediation may further 

expose systems and data by allowing internal and external actors more time to exploit known 

vulnerabilities. 

The IRS’s ECM system is designed to modernize and consolidate legacy case management systems across 

the IRS. The ECM system processes and stores sensitive information within the IRS, providing restricted 

access to IRS employees via the Internet. The ECM system is a hybrid cloud system, with components 

residing on IRS premises and in the cloud hosted by an outside service provider. 

However, TIGTA determined that the ECM system did not consistently meet cloud security requirements. 

Specifically, the IRS did not timely prepare or fully prepare action plans to address identified security risks.34 

In addition, ECM system production servers residing in the cloud lacked required malicious code 

protection. Further, the IRS did not timely remediate 24 high- and two medium-risk vulnerabilities for the 

ECM system. Control weaknesses within the ECM system can pose a substantial risk to taxpayer records 

currently residing in the system. The potential harm includes breach, unauthorized access, and disclosure 

of taxpayer information. 

Vulnerabilities that have been previously used to exploit public and private organizations are a frequent 

attack vector for malicious cyber actors of all types. The Department of Homeland Security issued a 

directive that focuses on vulnerabilities that are active threats and should be Federal agencies’ top priority. 

However, TIGTA reported that from September through December 2022, there were between 494 and 

5,976 assets with known exploited vulnerabilities past the remediation period.35 TIGTA was unable to

determine the status of each asset with a vulnerability because information in the IRS’s system is not 

reliable. In addition, the IRS is not following established guidance on isolating or removing all vulnerable 

assets from its network. Ineffective tracking and untimely remediation of known exploited vulnerabilities 

increases the risk to the overall security of IRS assets and allows affected assets to become targets of

33 TIGTA, Report No. 2023-20-013, The IRS Implemented the Business Entitlement Access Request System; However, Improvements 

Are Needed (Mar. 2023). 

34 TIGTA, Report No. 2023-20-018, The Enterprise Case Management System Did Not Consistently Meet Cloud Security 

Requirements (Mar. 2023). 

35 TIGTA, Report No. 2023-20-048, Known Exploited Vulnerabilities That Remain Unremediated Could Put the IRS Network at Risk

(Aug. 2023). 
240 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

external exploitation with the intent to steal taxpayer data. In addition, failure to isolate or remove 

vulnerable assets from the network increases the risk of malicious attacks. 

The IRS is required to create and store backups of both business and individual tax records to ensure that 

these records are available to conduct business, document IRS activities adequately, and protect the 

interests of the Federal Government and the American taxpayers. However, TIGTA reported significant 

deficiencies in the IRS’s handling of microfilm backup cartridges containing sensitive taxpayer data.36 

Specifically, TIGTA reported that annual inventories have not been performed to account for microfilm 

cartridges. As a result of the lack of adequate inventory controls, the IRS cannot account for thousands of

microfilm cartridges containing millions of sensitive business and individual tax account records. The 

personal taxpayer and tax information included on these backup cartridges is key information that can be

used to commit tax refund fraud identity theft. In addition, these cartridges are not adequately 

safeguarded to limit access to this information. 

In addition to safeguarding taxpayer data, the IRS also faces the daunting task of protecting its employees 

and facilities. Threats and assaults directed at IRS employees, facilities, and infrastructure impede the 

effective and safe administration of the Federal tax system and the IRS’s ability to collect tax revenue. 

TIGTA reviewed the IRS’s process for implementing security countermeasures for identified vulnerabilities 

and found that it did not ensure that minimum physical security countermeasures were tracked and 

considered.37 The IRS does not consistently use a centralized system to track physical security 

countermeasure recommendations, approvals, implementation actions, and associated costs. As a result, 

TIGTA was unable to determine the status of all current recommended physical security countermeasures 

in some of the IRS facilities reviewed. 

Although threats over the past year have been at or below five-year averages, many of the provisions of

the IRA that could generate additional threats, such as attempts to collect tax liabilities and additional 

enforcement contacts with taxpayers, have not yet been instituted by the IRS. After passage of the IRA, 

threats directed at the IRS and its employees received additional media attention. As a result, the 

Commissioner of Internal Revenue announced efforts to perform a comprehensive review of existing IRS 

safety and security measures. In July 2023, the Commissioner announced a policy change that ended most 

unannounced visits to taxpayers by IRS personnel, in part to enhance the overall safety for IRS employees. 

Threats and assaults directed at IRS employees, facilities, and infrastructure impede the effective and safe 

administration of the Federal tax system and the IRS’s ability to collect tax revenue. 

Funding provided to the IRS by the IRA is expected to significantly increase IRS staffing levels over the 

course of the next 10 years. As a result, the IRS should anticipate the potential for increased employee 

misconduct allegations. The IRA also includes funding for the IRS to study the cost and feasibility of

creating a free direct e-file program, which would expand the overall scope and control of the current IRS 

Free File Program. The implementation of such a system will create additional avenues for malicious actors 

looking to exploit the IRS network and its online portals. 

TAX COMPLIANCE AND ENFORCEMENT 

36 TIGTA, Report No. 2023-IE-R008, Sensitive Business and Individual Tax Account Information Stored on Microfilm Cannot Be

Located (Aug. 2023). 

37 TIGTA, Report No. 2022-10-046, The Process for Tracking Physical Security Weaknesses Identified in IRS Facilities Does Not 

Ensure That Vulnerabilities Are Properly Addressed (Sept. 2022). 
DEPARTMENT OF THE TREASURY 241 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

One of the IRS’s key responsibilities is to ensure that taxpayers comply with the tax law. Sustaining and 

improving taxpayer compliance is important because small declines in compliance cost the Nation billions 

of dollars in lost revenue and shift the tax burden from those who do not pay their taxes to those who pay 

their taxes on time every year. The difference between the estimated amount of tax legally owed by a 

taxpayer and the amount they voluntarily and timely pay for a tax year is known as the Tax Gap, which 

gives a broad 

view of the Nation’s compliance with Federal tax laws. The IRS estimated that the gross annual Tax Gap for 

TYs 2014 to 2016 was $496 billion per year, and projects that for TYs 2017 to 2019, it will increase to $540 

billion per year.38 The IRS’s Tax Gap estimate for TYs 2014 through 2016 indicates that approximately 80

percent of the gross Tax Gap results from the underreporting of tax liabilities on filed returns, representing 

the highest potential for noncompliance.39 New and evolving issues, such as virtual currencies and abusive 

tax schemes, will also contribute to the Tax Gap. 

However, the IRS does not use Tax Gap estimates to determine where its Examination functions should 

allocate resources in its work planning.40 IRS management informed TIGTA that ongoing research on

complex areas of noncompliance and planned future changes to the Tax Gap methodology should make 

the Tax Gap more useful for informing resource allocation decisions through enterprise examination 

planning. 

Further, TIGTA reported that the IRS could take actions to improve Tax Gap estimates.41 For example, the 

IRS has not developed estimates for certain aspects of the Tax Gap, and some sources of noncompliance 

may not be reflected in the Tax Gap estimates. In addition, although the Tax Gap identifies certain known 

limitations, it does not identify what actions, if any, are being taken to address other excluded areas of

noncompliance such as those associated with foreign activities and digital assets. The IRS also does not 

have formalized processes for internal or external review of its Tax Gap estimates. Internal reviews are 

performed at various points in the estimation process. However, these reviews are not documented and 

do not allow for any oversight. The absence of formal guidance for the internal and external review 

processes creates the potential for unidentified errors that could affect the quality of the estimates. 

Additionally, the lag time between the tax years used for the estimates and the year the estimates are 

published limits their usefulness. 

Reductions to IRS enforcement function staffing levels over the last decade have also affected the total 

enforcement revenue collected. A reduction in the number of enforcement function employees may affect 

the IRS’s ability to maintain sufficient audit coverage of entities and individuals contributing the most to

the Tax Gap and limit its efforts to collect the taxes taxpayers acknowledge they owe but have not paid.42

The IRS estimates that, with existing hiring actions and expected attrition, the Large Business and 

International (LB&I) Division could hire approximately 450 positions and the 

Small Business/Self Employed (SB/SE) Division could hire approximately 2,300 positions without exceeding 

38 TIGTA, Report No. 2023-10-025, Planning Efforts to Hire Employees Who Conduct Audits of High Earners and Large Businesses 

Could Be Improved (June 2023). 

39 Publication 5365, Tax Gap Estimates for Tax Years 2014-2016 (Rev. 10-2022).

40 TIGTA, Report No. 2023-30-008, Opportunities Exist for the IRS to Develop a More Coordinated Approach to Examination 

Workplan Development and Resource Allocation (Feb. 2023). 

41 TIGTA, Report No. 2023-10-016, Actions Are Needed to Improve the Completeness, Development, and Review of IRS Tax Gap 

Estimates (Mar. 2023). 

42 TIGTA, Report No. 2023-10-025, Planning Efforts to Hire Employees Who Conduct Audits of High Earners and Large Businesses 

Could Be Improved (June 2023). 
242 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

their authorized staffing levels. However, the hiring surge of 10,000 employees to assist in reducing the tax 

return filing backlog for the Wage and Investment Division’s Submission Processing and Accounts 

Management functions has prevented the LB&I and SB/SE Divisions from hiring more employees to

increase audits of high earners. Further, the LB&I and SB/SE Divisions have not maintained their ideal 

staffing levels with normal attrition and the hiring of new employees to replace those who have left the 

business units. The IRS’s IRA SOP estimates that, through the end of FY 2024, approximately 8,700 of the 

approximately 29,500 employees funded by the IRA are planned for enforcement business units. 

In addition, the SB/SE Division’s Fiscal Year 2023 Examination Plan showed no significant increase in the 

number of high-income individual audits. Additionally, the LB&I Division’s resource allocation plan is not 

detailed enough for TIGTA to assess the IRS’s intended efforts to examine high-income individuals with the 

increased enforcement funding. 

Further, the IRS does not have a unified or updated definition for individual high-income taxpayers. The 

definition varies according to context as different programs are designed to address compliance coverage 

across different parts of the filing population. 

The IRS’s current examination activity code uses $200,000 as the main threshold to measure high-income 

returns. Consequently, the IRS needs an updated high-income taxpayer definition and examination code 

to better identify and track examination results and manage examination priorities. 

Research shows that audits have a strong, positive impact on reporting compliance.43 However, TIGTA 

reported that the IRS does not have a multiyear Examination Strategic Plan for allocating resources. The 

IRS has a general five-year strategic plan with broad goals for the agency; however, the strategic plan does 

not contain the detail needed for the compliance functions, such as

Examination, to most effectively allocate resources. Creating a 

multiyear, comprehensive Examination Strategic Plan would 

provide IRS management with clear direction on how to allocate 

Examination resources.44

Notably, the Secretary of the Treasury directed the Commissioner 

of Internal Revenue to ensure that small businesses and households 

earning $400,000 or less will not see audit rates increase relative to

historical levels due to IRA funding. Instead, the IRS plans to use

IRA funding to focus on high-dollar noncompliance. However, 

TIGTA reported that the IRS’s efforts for training new hires do not 

appear to be fully leveraging this expertise.45 The IRS treats this 

training as specialized and only offers it when necessary for 

employees auditing in this specialized area. Commensurate with the new funding, the IRS needs to change 

its training paradigm and expose new hires to the types of issues associated with high-income taxpayer 

returns. For example, the IRS indicated that the IRA funding will allow it to hire and train more specialists 

43 The Impact of the IRS on Voluntary Tax Compliance: Preliminary Empirical Results, by Alan H. Plumley, Technical Advisor, IRS 

National Headquarters Office of Research, National Tax Association 95th Annual Conference on Taxation, Orlando, Florida, 

November 14 - 16, 2002. 

44 TIGTA, Report No. 2023-30-008, Opportunities Exist for the IRS to Develop a More Coordinated Approach to Examination 

Workplan Development and Resource Allocation (Feb. 2023). 

45 TIGTA, Report No. 2023-30-054, The IRS Needs to Leverage the Most Effective Training for Revenue Agents Examining HighIncome Taxpayers (Aug. 2023). 
DEPARTMENT OF THE TREASURY 243 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

such as accountants, attorneys, engineers, economists and data specialists. According to the IRS, these

resources will enhance its enforcement activities for emerging issues such as digital assets and international 

issues. 

Increasing voluntary taxpayer compliance and reducing the Tax Gap will remain a persistent challenge 

facing the IRS. As such, the IRS will need to stay committed to a strong, visible, and robust tax enforcement 

presence to support voluntary compliance and protect the integrity of the tax system.

TAX FRAUD AND IMPROPER PAYMENTS 

The IRS continues to work diligently to combat various scams designed to steal taxpayers’ money or

personal information. Compiled annually, the IRS’s “Dirty Dozen” lists a variety of common scams that 

taxpayers may encounter. These scams involve the theft of a person’s money and identity with bogus 

e-mails, social media posts, and unexpected telephone calls, among other things. The scams can take a 

variety of forms, including using unemployment information and fake job offers to steal money and 

information from people. All of these efforts can lead to sensitive personal information being stolen, with 

scammers using it to try filing a fraudulent tax return as well as harming victims in other ways. 

Identity theft tax refund fraud involves the use of another person’s name and Taxpayer Identification 

Number46 to file a fraudulent tax return reporting false income and withholding to receive a fraudulent tax 

refund. The IRS continues to increase the number of fraudulent tax returns detected and stopped from 

entering the tax processing system (i.e., rejecting e-filed tax returns and preventing paper tax returns from 

posting).47 For the 2023 Filing Season, the IRS used 260 filters to identify potential identity theft tax returns 

and prevent the issuance of fraudulent refunds. In comparison, the IRS used 168 filters for the 2022 Filing 

Season. These filters incorporate criteria based on characteristics of confirmed identity theft tax returns, 

including amounts claimed for income and withholding, filing requirements, prisoner status, taxpayer age, 

and filing history. Tax returns identified by these filters are held during processing until the IRS can verify 

the taxpayer’s identity. As of May 2023, the IRS reported that it identified nearly 2.4 million tax returns with 

refunds totaling approximately $13.8 billion for additional review as a result of the identity theft filters. As 

of that same date, the IRS had confirmed 87,591 tax returns as fraudulent and prevented the issuance of

$1.2 billion in fraudulent refunds. 

Improper payments (i.e., payments that should not have been made, were made in an incorrect amount, or

were made to an ineligible recipient) continue to be a challenge facing the IRS. TIGTA found that for FY

2022, the IRS was largely compliant with the reporting requirements contained in the Payment Integrity 

Information Act of 2019.48 While largely compliant, the IRS has not met the Act’s goal of reducing overall 

improper payment rates to less than 10 percent.49 The IRS estimates it issued approximately $26 billion in

potentially improper payments in FY 2022. As shown in Figure 8, this represents a significant loss to the 

Federal Government. 

46 A nine-digit number assigned to taxpayers for identification purposes. Depending upon the nature of the taxpayer, it can be an

Employer Identification Number, a Social Security Number, or an Individual Taxpayer Identification Number. 

47 TIGTA, Report No. 2023-40-029, Interim Results of the 2023 Filing Season (May 2023). 

48 Pub. L. No. 116-117, 134 Stat. 113.

49 TIGTA, Report No. 2023-40-032, Fiscal Year 2022 Improper Payment Reporting Requirements Were Largely Met; However, 

Improper Payment Estimates Are Less Precise (May 2023). 
244 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Figure 8: IRS Estimated FY 2022 Improper Payments and Rates50

Program Estimated Improper 

Payment Rate 

Total 

Payments 

Estimated Improper 

Payments 

 

Earned Income Tax Credit (EITC) 32% $57.5 billion $18.2 billion 

Additional Child Tax Credit (ACTC) 16% $32.8 billion $5.2 billion 

American Opportunity Tax Credit (AOTC) 36% $5.6 billion $2.0 billion 

Net Premium Tax Credit (Net PTC)51 27% $2.1 billion $0.6 billion 

Source: FY 2022 Department of the Treasury Agency Financial Report. 

The IRS has implemented a number of initiatives to help reduce refundable tax credit improper payment 

rates, yet rates remain persistently high. For example, estimates of improper payment rates have risen 

since FY 2020. Figure 9 shows the improper payment rates for EITC, ACTC, and AOTC for the last three 

fiscal years. 

Figure 9: FYs 2020 – 2022 Improper Payment Rates 

Source: FYs 2020 - 2022 Department of the Treasury Agency Financial Reports. 

However, refundable credit improper payments are not primarily the result of internal control weaknesses 

that the IRS can address. In addition to the lack of reliable, relevant, and timely third-party data, the 

Department of the Treasury Agency Financial Report indicates that eligibility rules differ for each credit and 

are often complex because they address complicated family relationships and residency arrangements to

determine eligibility. 

Other refundable credits, such as the Employee Retention Credit, present a unique risk to tax administration 

because taxpayers not only can have their tax reduced to zero but also receive a "refund" of excess credit. 

The unintended consequences of refundable credits are that they can result in the issuance of improper

payments and can be the target of unscrupulous individuals. As such, they pose a significant risk as an

avenue for those seeking to defraud the Government. Although the IRS continues to improve and expand 

its fraud detection and prevention processes, it must remain diligent as new schemes emerge each year. 

TAXPAYER RIGHTS 

As the IRS seeks to transform its operations and the way in which it interacts with taxpayers, it will need to

50 For presentation purposes, the improper payment rates, total payments, and estimated improper payments as presented may be

impacted by rounding. Further detail is available within the datasets found on www.paymentaccuracy.gov. 

51 The Net PTC is the amount of Premium Tax Credit minus the amount of Advance Premium Tax Credit. This is the first year the IRS 

has reported an improper payment rate for the Net PTC. 
DEPARTMENT OF THE TREASURY 245 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

continue to work to ensure that all taxpayers are treated equitably. Concerns were previously raised about 

the equitable treatment of taxpayers, especially as it pertains to audit selection. In September 2023, the 

Commissioner of Internal Revenue acknowledged the disparity in a letter to the Chairman of the Senate 

Finance Committee, stating that the Treasury Department and IRS have validated recent research using race 

information, which demonstrates Black taxpayers are audited at three to five times the rate of non-Black 

taxpayers. The Commissioner in his letter further stated “we are making broad efforts to overhaul 

compliance efforts in a manner that robustly advances our commitment to fair, equitable, and effective tax 

administration.” The Commissioner also laid out specific actions that the IRS will take this filing season to

address the equitable treatment of taxpayers, noting a commitment to publicly report on the IRS’s efforts. 

Improper administration of the Internal Revenue Code can also result in increased taxpayer burden, 

especially for vulnerable taxpayers. For example, on December 4, 2015, the Fixing America’s Surface 

Transportation (FAST) Act was signed into law.52 The Act includes a provision that requires the IRS to use

private collection agencies (PCA) to collect taxes on cases involving inactive tax receivables. On July 1,

2019, the TFA was signed into law, which amended some of the FAST Act requirements for the private debt 

collection program. The TFA contains adjustments to PCA case inventory intended to protect certain lowincome taxpayers from being subject to PCA collections. However, TIGTA identified 14,141 taxpayers 

whose incomes fell beneath the threshold for PCA assignment after the law was put in place but whose 

accounts were not properly recalled. If the IRS does not recall the 14,141 low-income taxpayers from PCA 

inventory, it is potentially burdening these taxpayers by PCA attempts to collect on debts that are not 

legally collectible by the PCAs under the Internal Revenue Code. 

The IRS must balance tax compliance activities to enforce the tax code while at the same time upholding 

taxpayer rights. The IRS continues to dedicate significant resources and attention to complying with the 

taxpayer rights provisions of the IRS Restructuring and Reform Act of 1998,53 which requires TIGTA to audit 

certain taxpayer rights provisions and report whether the IRS complied with those provisions. While overall 

compliance has improved, TIGTA continues to identify areas in which the IRS can improve. For example, 

TIGTA evaluated whether the IRS complied with the filing of Notice of Federal Tax Liens and a taxpayer’s

right to elect a Collection Due Process hearing. However, TIGTA found that enforcement actions were not 

always suspended while taxpayers had the right to request a Collection Due Process hearing or while the 

taxpayer’s appeal was pending.54 In addition, the IRS did not always send copies of lien notices to the 

taxpayers’ representatives as required. 

Additionally, Collection Due Process hearing provisions are designed to give taxpayers an opportunity for 

an independent review to ensure that the levy action that has been proposed or the Notice of Federal Tax 

Lien that has been filed is warranted and appropriate. Similar to prior audits, TIGTA identified incorrect 

Collection Statute Expiration Date posting errors in sampled taxpayer cases. In some cases, the IRS 

incorrectly extended the time period, allowing the IRS additional time to collect delinquent taxes.55

52 Pub. L. No. 114-94, 129 Stat. 1311. 

53 Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2, 5, 16, 19, 22, 23, 26, 31, 38, and 49 U.S.C.). 

54 TIGTA, Report No. 2023-30-057, Fiscal Year 2023 Statutory Review of Compliance With Notice of Federal Tax Lien Filing Collection 

Due Process Procedures (Sept. 2023). 

55 TIGTA, Report No. 2023-10-038, Review of the IRS Independent Office of Appeals Collection Due Process Program (July 2023). 
246 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

TIGTA also reported that the IRS can better comply with legal guidelines when issuing levies to seize 

taxpayers’ assets.56 TIGTA reviewed levies issued by the IRS for more than 2 million taxpayers during the 

period July 1, 2021, through June 30, 2022, and identified approximately 11,200 instances of

noncompliance resulting in violations of taxpayers’ rights and taxpayers being burdened. 

When married taxpayers elect to file a joint income tax return, they are held jointly and individually 

responsible for the tax, interest, or penalties due on the joint return, even if they later separate or divorce 

(i.e., one spouse can be held responsible for payment of all the tax due). The Internal Revenue Code 

provides an exception to joint and several liability (often referred to as “innocent spouse” relief). However, 

TIGTA reported that the IRS did not always protect taxpayer rights when working innocent spouse claims.57 

This included not fully developing the facts and circumstances in innocent spouse claims or providing 

specific guidance for employees related to equitable relief. In addition, the IRS did not timely close 

innocent spouse claims. Prior to the COVID-19 pandemic, innocent spouse claims already exceeded the 

IRS’s 240-day closure goal, taking approximately one year to close. However, after the COVID-19 pandemic 

restrictions, the IRS took an average of 557 days (over 18 months) to close these cases. 

With the additional IRA funding available and its plans for increasing its compliance efforts, the IRS must 

continue to remain vigilant in safeguarding the rights of taxpayers and promoting tax fairness. 

CONCLUSION 

This memorandum is provided as our annual summary of the most serious major management and 

performance challenges confronting the IRS in FY 2024. TIGTA’s Fiscal Year 2024 Annual Audit Plan and 

Fiscal Year 2024 Inspections and Evaluations Program Plan contain our proposed reviews. 

cc: Deputy Secretary of the Treasury 

Assistant Secretary for Management 

Deputy Chief Financial Officer 

Commissioner of Internal Revenue 

56 TIGTA, Report No. 2023-30-066, Fiscal Year 2023 Statutory Review of Compliance With Legal Guidelines When Issuing Levies

(Sept. 2023). 

57 TIGTA, Report No. 2024-300-001, The Innocent Spouse Program Needs Improved Guidance for Employees and Increased 

Communication With Taxpayers (Oct. 2023). 
DEPARTMENT OF THE TREASURY 247

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IRS MANAGEMENT RESPONSE TO TIGTA IDENTIFIED CHALLENGES FACING THE IRS FOR FISCAL YEAR

2024

The IRS appreciates TIGTA's management and performance challenges as valuable feedback to improving administrative

processes and accomplishing our mission.

After enactment of the IRA, the IRS developed a detailed Strategic Operating Plan (SOP) that consists of five

transformational objectives and 42 initiatives that the IRS will be working on through FY 2031 when the funding expires. In

FY 2023, the IRS made progress on many areas highlighted in the SOP, and many more are in progress as the IRS works to

modernize the way it serves taxpayers through improved technology, better service, and fairer enforcement. The IRS

completed substantial work to advance the objectives and the performance goals of the SOP, but the IRS has sustained work

ahead to build on these improvements.

TIGTA Challenge #1 - Managing IRA Transformation Efforts 

The IRS is committed to implementing the IRA, which will ensure the proper balance of improving services to taxpayers,

expanding enforcement, and modernizing its information technology. The SOP outlines how the IRS will deploy IRA

investments to better serve taxpayers, tax professionals, and the broader tax ecosystem. Included in the plan is the IRS’s

IRA transformation vision to make it easier for taxpayers to meet their tax responsibilities and receive tax incentives for

which they are eligible. There is a funding risk as Congress considers cutting IRA funding or reducing the annual

appropriations because of the IRA funding. If the IRS does not receive the discretionary funding needed to maintain base

operations, planned transformation will be in jeopardy. IRA funding will then be needed to support normal operations, or

the IRS will not be able to deliver all improved services nor transform its information technology as outlined in the SOP. To

make the SOP vision a reality, and to deliver on the commitments in the SOP, the IRS’s new Transformation and Strategy

Office is coordinating collaboration across the IRS and engaging in disciplined and transparent accountability processes.

The Transformation and Strategy Office also supports IRS leadership by providing and maintaining a clear and effective

governance and accountability structure; facilitating real-time, transparent enterprise prioritization, performance

monitoring, and risk management; leading organization-wide capacity building and change management; supporting

detailed execution planning and project management; and enhancing the IRS’s culture and operations. The Chief

Transformation and Strategy Officer leads these efforts, which an advisory committee coordinates to facilitate informed

decision making by the Commissioner on issues related to strategic alignment and problem solving. The IRS recognizes that

to achieve the agency's strategic objectives, it must complete significant and highly complex technology transformations. The

additional multi-year funding the IRA provides marks a transformational moment for the IRS and an opportunity to impact

the future of tax administration. The IRS has struggled for many years without sufficient resources to fulfill its important

mission. During the next decade, this funding will help in many areas, including adding important resources for technology.

TIGTA Challenge #2 - Tax Law Changes

The IRA was the primary legislation affecting the 2023 filing season. While most IRA tax provisions will become effective

during processing years 2024 - 2028, many actions are underway to implement the remaining 16 of the 36 tax provisions. As

of July 2023, the IRS had identified 82 tax products affected by these provisions in future processing years, including 42 tax

forms, 39 instructions, and one publication. The IRS also has efforts underway to implement processing controls for the

provisions most relevant to the 2023 filing season, the clean vehicle credits, and elective payments for energy and electricity

produced from certain renewable resources.
248 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Significant legislative changes affected the Earned Income Tax Credit and Child and Dependent Care Tax Credits for Tax 

Year 2021, making them two of the largest refundable tax credits available to individuals. Of the nearly 12.7 million Tax 

Year 2021 returns that claimed self-only Earned Income Tax Credit, 99.94 percent were processed correctly (not potentially 

fraudulent or erroneous). Of the 5.5 million returns claiming the Child and Dependent Care Tax Credit, 99.99 percent were 

processed correctly. 

The IRS improved its ability to administer the Child and Dependent Care Tax Credit by revising internal guidance; creating 

compliance filters; issuing Servicewide Electronic Research Program Alerts; revising Form 2441, Child and Dependent Care 

Expenses; elevating a legislative proposal to the Office of Tax Policy; and adding examples to Publication 503, Child and 

Dependent Care Expenses. 

The IRS will also work with us to advance legislation to treat a tax return as ‘filed’ only when it is accepted. This would 

remove the legal risks associated with rejecting tax returns with conditions that indicate that the taxpayer is ineligible for 

refundable credits claimed on the return. If legislation is enacted, the IRS will determine the actions it will take. The IRS 

will conduct program assessments to ensure rules for selecting returns for review are accurate. The IRS will also examine 

the sample of returns identified to ensure taxpayers receive the correct Child and Dependent Care Credit and Earned 

Income Tax Credit.

The IRS has worked through many unique technical and procedural challenges to implement processes to ensure taxpayers 

paid their deferred Social Security tax as required by the CARES Act. When an employer or taxpayer did not pay or deposit 

the required deferral amount by the installment due dates, the IRS reversed the false credit on the applicable accounts. In

some instances, this process created erroneous, duplicative reversals on some accounts. We manually reviewed and 

monitored these accounts, and used a tool to correct each of the 3,231 accounts. The IRS will ensure all applicable modules 

with unpaid deferred Social Security tax properly show the unpaid balances.

TIGTA Challenge #3 - Taxpayer Service

Providing quality Taxpayer Service is essential to the effective administration of a voluntary compliance system of taxation. 

TXO began operating in March 2022 and in its initial months of operation focused primarily on hiring staff and establishing 

the organization. While the TXO was building its organization, the President signed the IRA into law, which gave the IRS 

unprecedented levels of funding to transform the IRS. 

The SOP supersedes all previous IRS strategic plan documents, including the Taxpayer Experience Strategy and Roadmap, 

but is based in part on insights from those prior plans. The SOP includes some of the foundations of the Taxpayer 

Experience Strategy and includes several strategic initiatives to help improve service to underserved communities. As part 

of the IRS transformation efforts under the SOP, the Chief Taxpayer Experience Officer will: 

• track and regularly report on taxpayer experience improvements resulting from any responsibilities aligned to the 

TXO within the SOP, as well as other reporting requirements for agency Customer Experience offices; and 

• work in conjunction with the Chief Transformation and Strategy Officer and other operating divisions throughout 

the IRS to implement new SOP initiatives to dramatically improve taxpayer services for all taxpayers, including 

those who are underserved. 
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OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

In FY 2023, the TXO worked with business units across the IRS to improve the taxpayer experience. In support of the

implementation of the Clean Energy credits, the TXO conducted focus groups to ensure business operations and decisions

are informed by those they impact. Also, work is underway to deliver guidance in an accessible, timely and digestible

manner through the TXO’s efforts as the initiative lead for SOP initiative 1.7, Provide earlier legal certainty. The TXO is

also working to ensure that underserved communities benefit from the increase in taxpayer service. To meaningfully

improve taxpayer experience, it is essential that we bring service improvements to populations that have limited access to

traditional support mechanisms. The TXO will lead the multilingual strategic initiative efforts for IRS in FY 2024. Through

this initiative, efforts are underway to expand services and products in additional languages and conduct tailored outreach to

segments of the population that have been identified as underserved. The TXO’s role in ensuring the customer experience

principles are infused within the SOP initiative efforts will improve compliance through the publication of clearer guidance,

reduce the level of interaction required to resolve disputes, allow taxpayers to communicate in methods they prefer and

reduce the overall burden on taxpayers as they voluntarily comply.

To ensure uniform processing, the IRS issued alerts to employees reiterating current operating procedures regarding receipt

and screening of correspondence. The IRS also developed reports and updated the Internal Revenue Manual to improve

efficiency in the process of re-routing correspondence. To help reduce inventory levels, the IRS hired over 200 clerks, and

created surge teams to focus on the Form 1040-X, Amended U.S. Individual Income Tax Return inventory.

The IRS is developing a plan that balances streamlining the barred statutes paperwork process with accountability

responsibilities to reduce the backlog of aged, barred statute cases. The IRS is reviewing the correspondence scanning

process to determine if it needs additional high-speed scanners. Funding was also approved to evaluate the requirements to

automate processing of Form 1040-X. This feasibility evaluation could take several years due to the complexity associated

with Form 1040-X processing and work that must be done across multiple systems.

In addition, the IRS developed programming requirements to resolve the issue of generating transcripts for manual refunds

less than $100, as well as programming requirements that will permit the systemic issuance of decedent refunds when the

appropriate personal representative information has been updated. Programmers are conducting scope, feasibility and

impact studies, and cost analysis to create a universal unassigned inventory system that streamlines the work distribution

process. 

Direct Hire and IRA Hiring Authorities in FY 2023 allowed the IRS to continue filling key positions focusing on customer

service and taxpayer experience. Due to surge efforts almost 900 employees returned to address the backlog inventory. By

February 2023, the IRS cleared unprocessed individual tax returns received in 2022 and reduced total inventory from

Calendar year (CY) 2022 to CY 2023 (through September) by 63 percent. Remote Call Site employees volunteered to assist

in reducing IRS 1040-X inventory.
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FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION

The Taxpayer Digital Communications program represents a major IRS initiative to improve the IRS’s ability to

communicate securely, quickly and effectively with taxpayers. The Taxpayer Digital Communications’ Secure Messaging

installations allow IRS employees and taxpayers to correspond in a secure, authenticated environment that improves the

IRS’s ability to timely receive documentation and resolve cases. The IRS has achieved success with several secure messaging

installations in prior fiscal years; however, the program struggled in FY 2022 and had only one new installation and an

expansion of an existing installation. The program pace recovered in FY 2023, completing three new deployments. The

Small Business/Self-Employed Field Collection, Small Business/Self-Employed Examinations, and Wage and Investments

Error Resolution System all received new installations, enabling over 8,500 additional IRS employees and 1.75 million

additional taxpayers to use the tool. The IRS currently has four deployments scheduled for FY 2024, which will add

capabilities for over 18,000 IRS employees and up to 4.75 million additional taxpayers. When selecting new installations for

prioritization, the IRS looks at a variety of factors, including the potential number of employees and taxpayers who can be

served, and the scope and impact of the program requesting the new installation. The IRS seeks to strike a balance between

meeting the needs of the broadest swaths of the population and ensuring that underserved taxpayer segments are also given

due consideration. The IRS will continue to evaluate and improve the program moving forward through FY 2024, looking for

opportunities to further integrate Taxpayer Digital Communications into other applications–for example, building on the

successful addition of Secure Messaging to Online Account in FY 2023–and improving our capability to assess the impact

and effect of Taxpayer Digital Communications on agency operations. Taxpayer Digital Communications will continue to be

a high-value program, and the IRS will continue to look for opportunities to make it a more effective and more widespread

tool in its customer service repertoire.

As of the end of the 2023 filing season the IRS received 137 million tax returns, of which 132 million (96.3 percent) were

electronically filed. The IRS issued nearly 86 million refunds totaling $236.6 billion. The infusion of IRA funding enabled

the IRS to provide taxpayers with a substantially better experience in the 2023 filing season than in previous years. The

IRS is in the planning stages to ensure a successful 2024 filing season.

TIGTA Challenge #4 - Human Capital

Special payment incentives are just one tool available to the IRS to address the recruitment and retention of employees in

mission-critical occupations. The IRS is working toward a comprehensive strategy for using financial incentives to recruit

and retain mission-critical occupations.

The IRS Knowledge Management program serves an integral role for our operations through training support and delivery,

technical support to employees, collaboration across business units, and technical support to the public through items

published on IRS.gov. The IRS is committed to continue strengthening the Knowledge Management program and better

capture, share, and apply employee knowledge to enhance learning, performance, decision-making and collaboration. The

IRS continues efforts to collect and act on employees’ feedback and concerns, as well as cost and performance data, to

enhance tools such as the Virtual Library and other services offered through the Knowledge Management program.

TIGTA Challenge #5 - Information Technology Modernization

Since January 2023, the IRS has expanded the modernization efforts of e-filing Information Returns. Businesses are now

able to file Form 1099 series income information returns free of cost, using a new online portal known as the Information

Returns Intake System, reducing millions of paper Form 1099s. Also, it is important to note that taxpayers can now

electronically file Form 1040-X, Amended U.S. Individual Income Tax Return, and for the first time can select direct deposit

of any resulting refund.
DEPARTMENT OF THE TREASURY 251

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

With the expanded use of the Document Upload Tool, many taxpayers can now respond to certain IRS notices online for the

first time this year. This new secure step will allow taxpayers or their tax professionals to electronically upload documents

rather than mailing them, helping reduce time and effort with resolving tax issues. This potentially can help more than

500,000 taxpayers each year who receive notices, including military personnel serving in combat zone areas and recipients of

important credits like the Earned Income Tax Credit and Child Tax Credit.

The IRS also expanded the multi-form, multi-solution scanning effort by deploying scanning solutions for Forms 1040 with

up to 25 attachments. This is in addition to the Form 940, Employer’s Annual Federal Unemployment Tax Return, and

Form 941, Employer’s Quarterly Federal Tax Return, which are currently being digitally scanned. Since the start of 2023,

the IRS has already scanned more than 400,000 paper Form 940s.

In FY 2023, as part of the “Agent Desktop Modernization” effort, the IRS continued to implement a single desktop tool for

IRS customer service agents to manage calls and chats. Efforts are underway to provide software/platform upgrades and

new features that will enable agents to receive notifications when contacts transferred to them have been authenticated and

allow them to access caller account information without re-authenticating.

As part of the implementation of Taxpayer First Act Sec. 2304, the IRS successfully delivered the automated electronic

fingerprint solution (Fieldprint) after a three-year effort. The system communicates with the Federal Bureau of

Investigations and allows applicants to schedule fingerprinting appointments, verify their identity, capture electronic

fingerprints and manage payment collections.

Taxpayers can now use their Online Account to create a long-term payment plan, which provides them more flexibility to

submit payment plans online. In the first month after deployment of this new functionality, taxpayers established nearly

11,000 payment agreements. 

The IRS completed initial deployments modernizing the IRS network. The IRS needs more network resources to meet the

demands of additional people tapping into new, high-bandwidth technologies. In FY 2023, the IRS deployed Enterprise Data

Platform Release 2.2 and Release 2.3. Release 2.2 provided infrastructure capabilities for ingesting and processing data with

complicated relationships while providing the ability to deliver queries using application programming interfaces and

business intelligence tools. Release 2.3 provides the most current individual taxpayer data, which will enable programs such

as Enterprise Case Management and IRA programs (e.g., Green Energy) to query taxpayer data, as well as have business

intelligence tools on the Enterprise Data Platform for Individual Master File modernization programs.

TIGTA Challenge #6 - Protection of Taxpayer Data and IRS Resources

The IRS improved oversight of the Business Entitlement Access Request System, which we host, and the vulnerabilities

remediation process. In FY 2023, the IRS Information Technology organization developed a Continuous Monitoring Report

and summary, which includes monitoring information technology vulnerabilities per the Federal Risk and Management

Program and Internal Revenue Manual 10.8.1 guidance. A monthly summary is submitted to the authorizing official that

communicates the security posture of the Cloud system. Information Technology continues to review vulnerability scans for

the Business Entitlement Access Request System servers monthly, document the scan results, monitor progress toward

remediation, and create a Plan of Action and Milestones, when finding remediation cannot be completed within the required

time frames in accordance with IRS policy. It is important to note that the Business Entitlement Access Request System has

not had any additional overdue vulnerabilities or overdue Plan of Action and Milestones.
252 DEPARTMENT OF THE TREASURY

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION

The IRS is actively working to ensure the Enterprise Case Management system consistently meets cloud security

requirements. IRS updated Internal Revenue Manual 10.8.1 to align with NIST guidelines for malicious code protection

requirements for Linux servers. The Web Integration Services Division identified and implemented malicious code

protection on all Enterprise Case Management servers in the cloud to meet malicious code policy requirements. In addition,

the IRS will monitor Enterprise Case Management privileged user activity logs and regularly disable inactive privileged

accounts in accordance with agency security requirements.

In addition, the IRS will follow the timeframes set forth in Cybersecurity and Infrastructure Security Agency's Known

Exploited Vulnerability Catalog to ensure timely remediation of all known exploited vulnerabilities. The IRS will update

relevant processes and procedures to reflect the applicable date in the asset and vulnerability repository, inclusive of

signature changes and associated dates applicable to the remediation time frame. Finally, the IRS will finalize the standard

operating procedures regarding internal vulnerability management and update the Internal Revenue Manual accordingly.

The IRS continues to use the Countermeasure Tool as a centralized location to manage and track security-related

recommendations, which allows for a better assessment of the IRS’s current security posture and demonstrates compliance

with departmental security guidelines. The tool allows the IRS to strategically manage security resources, track decisions,

actions taken, implementation costs and the mitigation or acceptance of risks. On a weekly basis, the IRS uploads completed

Facility Security Assessments from the Department of Homeland Security Federal Protective Service Modified

Infrastructure Survey Tool database into the Countermeasure Tool and tracks recommended countermeasures in the

Countermeasure Tool until it completes a new risk assessment. In addition, the IRS ensures the Physical Security Specialist

and Security Section Chief complete and certify Facility Security Compliance Assessments. Upon completion, the

countermeasure recommendations are automatically generated in the Countermeasure Tool.

The IRS is required to create and store backups of both business and individual tax records to ensure that these records are

available to conduct business, document IRS activities adequately, and protect the interests of the federal government and

American taxpayers. To account for backup microfilm cartridges, the IRS sent an IRS-wide alert to employees in February

2023, with instructions on how to document reasons when they cannot locate microfilm, and added procedures to the

Internal Revenue Manual in June 2023. The IRS modified its vendor contract in April 2023, requiring the IRS to be notified

one month before microfilm backup cartridges must be shipped to the Federal Records Center. Additionally, the IRS revised

desk procedures to set a notification for eleven months after the last year/data type microfilm shipment has been made to a

campus. This reminder will allow one month for IRS to prepare the microfilm for shipment to the Federal Records Center in

a timely manner. Further, the IRS will perform quarterly reviews of active microfilm work to ensure shipments are

completed in a timely manner.

The IRS is taking a detailed inventory of all microfilm tapes at the Tax Processing Centers. In addition, the IRS will

complete written annual reconciliation reports at each location and report discrepancies to management. Through the

inventory process, the IRS will identify microfilm cartridges eligible for destruction and will initiate the destruction process

for these cartridges. The IRS is also completing detailed inventories of the microfilm repositories, including reconciliations of

vendor logs and shipments from closed Tax Processing Centers. The IRS will develop a microfilm request log template to be

used for consistency and which will be accessible for periodic review. The IRS is contracting with a vendor to review, label,

re-box and repackage the microfilm stored at the IRS’s Bloomington National Distribution Center. After repackaging to

meet Federal Records Center requirements, the cartridges will be shipped for archiving. The IRS will develop and

implement a process for conducting periodic reviews of unfilled microfilm requests to identify actions needed to address the

reason(s) for the unfulfillment. The IRS also will review annually the accuracy and completeness of microfilm request logs.

 
DEPARTMENT OF THE TREASURY 253

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

TIGTA Challenge #7 - Tax Compliance and Enforcement

Audits of high-income taxpayers and efforts to address abusive syndicated conservation easement transactions are two

examples of the IRS’s ability to respond flexibly to critical areas in meeting strategic priorities. The IRS established the

Joint Strategic Emerging Issues Team, consisting of representatives from business units, Chief Counsel, and other

supporting organizations, to address significant compliance risks.

Recruitment and hiring are foundational to the IRS’s ability to provide taxpayers with quality service and fair enforcement.

With the passage of the IRA, the IRS sees tremendous opportunities to dramatically increase enforcement hiring in the

coming years. The SOP includes in its focus a robust suite of hiring initiatives, including hiring within the IRS’s compliance

functions. The IRS is coordinating yearly hiring planning, improving communication channels across business units and

increasing staff and other resources to increase hiring capacity and enable the IRS to process all hiring as and when

requested. Effective employee training is also fundamental to the agency’s ability to fairly enforce tax laws. The IRS is

developing a comprehensive plan to train new hires and existing employees that will examine high-income taxpayers. As the

IRS continues to transform its training programs, the agency will ensure that existing knowledge and experience will be

considered and incorporated into curriculum design and creation and provided to those revenue agents whose job duties

include examining high-income taxpayers.

The IRS is committed to continuously improving the tax gap estimates. The IRS released the annual tax gap report in

October 2023, providing projections for tax years 2020 and 2021. The IRS also addressed the timeliness of the tax gap

reports by starting a cadence of annual updates of projections (with periodic updates of estimates) as part of the Statistics of

Income release schedule. Tax gap projections for TY 2022 will be developed in FY 2024 and included in the Statistics of

Income release schedule for fall 2024. The IRS Office of Research, Applied Analytics, and Statistics will research hard-todetect areas of noncompliance during FY 2024, with the goal of enhancing future tax gap reporting.

TIGTA Challenge #8 - Tax Fraud and Improper Payments

Reducing improper payments (i.e., payments that should not have been made, made in an incorrect amount, or made to an

ineligible recipient) continues to be a challenging priority for the IRS. Although the IRS was largely compliant with the

reporting requirements contained in the Payment Integrity Information Act of 2019, the IRS still has not satisfied the Act’s

goal to reduce improper payment rates to less than 10 percent for the Earned Income Tax Credit, the Additional Child Tax

Credit, the American Opportunity Tax Credit and the Net Premium Tax Credit. Reducing improper payment rates to less

than 10 percent would require significant restructuring of the tax credit programs and legislative action.

Further, the ARP temporarily expanded both the Child and Dependent Care Tax Credit and the Child Tax Credit. Under

this act, both tax credits became fully refundable and had their income phase-out limits increased; and the Child Tax Credit

saw changes to its eligibility requirements to allow more taxpayers to claim the credit. The unintended consequence of

refundable credits is that they can result in the issuance of improper payments and can be the target of unscrupulous

individuals.

Reasons causing the increase in improper payment rates are not the result of internal control weaknesses, but are due to

factors outside the IRS’s control, such as the complex eligibility rules, which are different for each tax credit and often

involve reconciling complicated family relationships and residency arrangements.
254 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

The IRS is realigning resources internally to accelerate progress toward its strategic priorities. In FY 2024, the IRS will 

reduce the number of correspondence audits focused specifically on certain refundable tax credits, such as the Earned 

Income Tax Credit, American Opportunity Tax Credit, Net Premium Tax Credit, and Additional Child Tax Credit. Overreliance on audits to resolve basic errors results in interest costs by delaying the issuance of refunds to taxpayers, and 

focusing on helping taxpayers submit accurate filings upfront will increase payment accuracy while reducing administrative 

burdens for the IRS and the taxpayer. 

The IRS’s strategy with respect to improper payments is to intervene early to ensure compliance with the law. In FY 2023, 

the IRS addressed improper payments through its compliance programs as well as through expansive outreach and 

education efforts to taxpayers and preparers. Programs that contribute to the IRS’s strategy of identifying and reducing 

improper refund claims associated with various refundable tax credits include examination, math error notices, document 

matching, utilizing two- and ten-year bans, investigating identity theft and fraud, criminal investigations, and soft notices. 

For the 2023 filing season, the IRS completed annual refresh of key identity theft models and modified existing filters to find 

potential identity theft tax returns and prevent the issuance of fraudulent tax refunds. The IRS holds tax returns identified 

by these filters during processing until the IRS can verify and confirm the taxpayer’s identity to prevent the issuance of a 

fraudulent refund.

TIGTA Challenge #9 - Taxpayer Rights

The IRS collection programs are consistent with the taxpayer’s statutory right to collection due process. Treasury Decision 

8979 affirms that suspending levy actions is not required after the issuance of a Letter 3172, Notice of Federal Tax Lien and 

Your Rights to a Hearing Under Internal Revenue Code Section 6320. The IRS Automated Levy Programs continue during 

the Internal Revenue Code 6320 Collection Due Process appeal period, but the IRS generally suspends other types of levies. 

When a taxpayer requests and the IRS accepts a Collection Due Process hearing, the IRS suspends automated levies during 

the administrative or judicial appeal. In FY 2023, the IRS implemented automated levy corrective programing to ensure 

taxpayers receive a new Collection Due Process notice after the IRS makes an additional assessment.

In FY 2024, the IRS will:

• review guidance to address any inconsistencies in providing Collection Due Process lien notices to representatives; 

• conduct a study of Collection Due Process levy hearing requests in both Field and Campus Collection to determine 

the average time frame from when it receives and uploads hearing requests into the tracking system. The results of

the tracking system will assess if time frames are reasonable or need to be adjusted; and 

• issue a reminder to Field Collection managers addressing their responsibilities related to violations of taxpayer 

rights and reporting potential violations. 

The IRS has a commitment to taxpayer rights and to reinforce existing policies requiring staff to accurately input and review 

necessary actions. The IRS will develop a quality review plan for the restart of the Correspondence Production Services pilot 

program and ensure it mails the notices. The IRS will monitor this action as part of our internal management system of

controls. In FY 2023, the IRS drafted supplemental training for processing staff to be delivered early in FY 2024.
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OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT

The IRS remains committed to fair, equitable, and effective administration of the innocent spouse provisions. The IRS

created the Centralized Innocent Spouse Operation to ensure it develops and resolves innocent spouse claims in a consistent

manner. Quality reviews are performed regularly on Centralized Innocent Spouse Operation determinations. The accuracy

of Centralized Innocent Spouse Operation determinations is supported by National Quality Review System data reflecting

an FY 2022 overall accuracy of 95.83 percent. Internal Revenue Manual 25.15.3.9, Equitable Relief, provides employees

detailed and specific equitable relief guidance and includes references to Internal Revenue Code Section 6015(f) and Revenue

Procedure 2013-34. The IRS experienced challenges meeting the 240-day innocent spouse claim cycle time/closure goal. The

COVID-19 pandemic and unanticipated attrition contributed to delays resolving innocent spouse inventory. Increasing

staffing is a priority and has led to an innocent spouse inventory reduction and a decrease in cycle time. The IRS remains

dedicated to meeting the 240-day innocent spouse closure goal.
256 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

SECTION D: PAYMENT INTEGRITY

We currently report erroneous payments for refundable tax credits (RTCs) within this section in accordance with the 

improper payment reporting requirements of the PIIA and OMB Circular A-123, Appendix C, Requirements for Payment 

Integrity Improvement (OMB Appendix C) as well as part of the tax gap estimate program (see Part 3, Section B: Tax Gap 

and Tax Burden). However, we have long held that these RTCs are more appropriately addressed in the tax gap estimate. 

Improper payment reporting does not simultaneously provide a comprehensive understanding of the extent and nature of

taxpayer compliance with Internal Revenue Code tax credit provisions needed for tax administration purposes. The IRS’s

tax gap estimate and ERM framework better equip the IRS to analyze and address noncompliance throughout the federal 

tax system. Focusing enforcement resources on the larger tax gap is a more 

efficient and cost-effective way to minimize the tax gap and maximize tax 

collections. 

Moreover, internal control issues are not the root cause of RTC errors. 

Instead, they are the result of factors beyond the IRS’s control, such as the 

statutory design of the RTCs, the complexity of the eligibility requirements, 

the reliance on taxpayers’ self-certification of the accuracy of their returns, 

and the lack of third-party data for verification. GAO and TIGTA audits 

have concluded that RTC errors are largely due to the statutory design and 

complexity of the RTC programs, not internal control weaknesses, financial 

management deficiencies, or reporting failures as PIIA guidelines are 

intended to address. We continue to support the reporting of RTC errors as

part of the tax gap estimate as a better reflection of how the IRS approaches 

taxpayer compliance relative to the U.S. tax system.

We refer to erroneous claims for RTCs as “overclaims” and improper 

payment rates as “error” rates. Accordingly, we report error rates as

outlined in the PIIA and OMB Appendix C, for four refundable tax credits—

the EITC, AOTC, ACTC, and net PTC—which have error rates similar in

concept to “significant improper payments.” Current and prior year 

Payment Integrity information can be accessed at

https://paymentaccuracy.gov/. 

Earned Income Tax Credit (EITC) 

Congress enacted the EITC in 1975 through the Tax Reduction Act Public Law (P.L.) 94-12, as a temporary anti-poverty 

measure to offset inflation and rising Social Security payroll taxes. In addition to encouraging work and reducing 

dependence on cash welfare, the credit was also viewed as a means to encourage economic growth in the face of the 1974

recession and rising food and energy prices.1 Since then, the EITC has undergone numerous legislative changes, most 

notably by the Revenue Act of 1978 (P.L. 95-600), which made the EITC a permanent refundable tax credit. Congress 

believed the EITC would be an effective way to provide financial assistance to working families, with or without children, 

who might otherwise rely on government subsidized welfare payments. 

1 Congressional Research Report, The Earned Income Tax Credit (EITC): A Brief Legislative History, March 20, 2018. 

QUOTEINSPECTOR.COM

Primary Causes of RTC Errors 

• Complex statutory eligibility rules 

• Inability to verify taxpayer-provided 

information prior to refunding due to

lack of independent data sources 

• Lack of correctable error authority 

• Statutory requirement to issue tax 

refunds within 45 days of the filing 

deadline without paying interest
DEPARTMENT OF THE TREASURY 257 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

American Opportunity Tax Credit (AOTC) 

Education tax credits have generally been intended to provide federal financial assistance to students from middle-income 

families who may not benefit from other forms of traditional student aid.2 Congress enacted the AOTC as part of the 

American Recovery and Reinvestment Act of 2009 (P.L. 111-5) to replace the Hope Credit and to expand the education tax 

credit to lower- and upper-income students. The AOTC is a partially refundable tax credit that provides financial assistance 

to taxpayers (or their children) with qualified educational expenses who are pursuing a higher education. Like other 

education tax credits, the AOTC was enacted with the goal of making higher education more affordable. 

Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) 

Congress enacted the CTC to help ease the financial burdens for families with children as part of the Taxpayer Relief Act of

1997 (P.L. 105-34). If the CTC exceeds the tax liability, taxpayers may receive some or all of the credit as a refund, known as

the ACTC. Various legislative changes over the past 20 years have made significant changes to the CTC, which have 

expanded it from a generally non-refundable credit available only to the middle- and upper-middle class, to a partially

refundable credit that more low-income families are eligible to claim. Notably, the Tax Cuts and Jobs Act of 2017 (P.L. 115-

97) doubled the CTC, increased the amount that taxpayers could claim as a refund, and allowed it to include more uppermiddle class families. Further, the ARP (P.L. 117-2) made the CTC a fully refundable tax credit for TY 2021, increased the 

amount, and broadened the eligibility requirements.

Net Premium Tax Credit (PTC) 

The PTC, created under the Affordable Care Act of 2010 (P.L. 111-148), was designed to make health insurance more 

affordable for individuals and families with lower incomes and helps cover the premiums for their health insurance 

purchased through the Health Insurance Marketplace. The PTC program is operationally divided between the Department 

of Health and Human Services (HHS) and Treasury. The HHS, through the Centers for Medicare & Medicaid Services 

(CMS), administers advance payments to insurance providers on behalf of applicants/taxpayers through the federally 

facilitated exchange. These payments are referred to as advance payments of the Premium Tax Credit (advance PTC or

APTC). We and the IRS administer the federal income tax return process where a tax credit (repayment or zero are other 

possibilities) is based on reconciliation of APTC amounts with final allowable PTC determined in tax filing. Payment of this 

credit is referred to as net PTC.

2 Congressional Research Report, The American Opportunity Tax Credit: Overview, Analysis, and Policy Options, Updated June 4, 2018. 
258 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

REDUCING RTC ERRORS DIVERTS VALUABLE RESOURCES FROM OTHER TAX GAP ELEMENTS AND 

UNDERMINES THE STATUTORY PURPOSE OF THE CREDITS

Compliance with the improper payment legislation and OMB reporting guidance requires reducing each program’s improper 

payment rate to 10 percent or less. Currently, the IRS must deploy a variety of costly enforcement tools, including audits, to

verify the information on the tax return prior to paying tax refunds or collecting any tax due. In an FY 2020 study to reduce 

error rates to less than 10 percent, to meet PIIA compliance standards, the IRS estimated that it would need additional or

reallocated resources of $2.5 billion to audit 4.2 million additional RTC returns in the pre-refund environment. If the IRS 

were to reallocate enforcement resources to be compliant with PIIA, a substantial loss in enforcement revenue, estimated at

$6.4 billion, would result because the IRS would have to divert resources from programs with higher returns and tax gap 

elements to audits of RTC returns. To meet OMB’s metric of reducing the improper payment rate to 10 percent or less for 

FY 2023, RTC programs would need to reduce erroneous payments by $17.3 billion, based on FY 2023 estimates. Table 2 

illustrates this data. In addition, conducting pre-refund audits of millions of additional RTC claims would mean that refunds 

would be held up for millions of taxpayers whose returns contain no errors. These additional delays in refund receipt would 

interfere with achieving the statutory purpose of the credits for eligible claimants.

TABLE 1:

RTC Claims and Improper Payments, TY 20211(dollars in billions) 

Reduction of Improper 

Payments to 10% of claims 

value 

Program Claims Improper Payments 

Improper 

Payment Rate 5

10% of 

claims value 

Reduction 

needed for ≤ 

10%

EITC $65.4 $21.9 33.5% 6.5 $15.4

ACTC3 3.8 0.5 14.5% 0.4 0.1 

AOTC 5.2 1.7 31.6% 0.5 1.2 

net PTC4 3.7 1.0 26.0% 0.4 0.6 

Total $78.1 $25.1 32.1% 2 $7.8 $17.3

(1) In FY 2023, we are reporting on claims and improper payments associated with tax year 2021 tax returns filed in 2022 and 2023. 

(2) Total improper payments ÷ Total RTC claims ($25.1 ÷ $78.1). 

(3) The ARP included a one-time, one-year amendment to the Internal Revenue Code of 1986, expanding the existing Child Tax Credit (CTC) laws 

for tax year 2021, which provided Child Tax Credit Improvements for TY (TY) 2021 (TY 2021 CTC). Total claimed under this new refundable 

CTC was $125.9 billion which includes advanced payments totaling $92.7 billion to eligible taxpayers from July to December 2021. 

(4) Includes amounts for federal and state exchanges. 

(5) Percentages may not calculate due to rounding. 

Table 1 provides the estimate of the improper payment rate for ACTC outlays, exclusive of TY 2021 CTC. TY 2021 CTC is

structured and processed differently than any previous non-refundable CTC, as eligible taxpayers automatically received 

advance payments (unless they opted-out) and later had to reconcile the credit on their 2021 tax returns. Eligibility and 

other criteria for ACTC also changed significantly. The IRS designated and implemented TY 2021 CTC as part of the 

COVID-19 assistance programs; thus, the credit is similarly temporary in nature and has no basis for future improper 

payment estimates. To estimate improper payment rates for refundable tax credits, the IRS must perform comprehensive 

audits over a large sample of tax returns. Given the statutory timelines, IRS needs a minimum of three years to calculate an

estimated improper payment rate for a given program, which in this case will be long after the TY 2021 CTC has ended. 
DEPARTMENT OF THE TREASURY 259 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

As PTC has been determined to be susceptible to significant improper payments, we collaborated with HHS to develop a joint 

methodology for reporting improper payment information for PTC. We report net PTC for both the federal and state 

exchanges in Table 1 above. HHS reports APTC in its improper payment table within its AFR. Both departments disclose 

the combined advance and net PTC rates in their AFRs. To satisfy reporting to OMB and PaymentAccuracy.gov 

requirements, CMS reports disbursements/outlays, estimated error rate, and other data for APTC. The IRS similarly 

reports estimated overclaims and error rate for net PTC. The combined advance and net PTC rates are for informational 

purposes only and will not be included in either Department’s overall improper payment rate or reported to

PaymentAccuracy.gov. For TY 2021, CMS reported APTC outlays of $46.5 billion and improper payments of $271.8 million. 

For TY 2021, IRS reported net PTC claims of $2.0 billion and estimated improper payments of $512.7 million. The combined 

APTC and net PTC improper payment estimate is $784.5 million out of $48.5 billion total Premium Tax Credit 

outlays/claims, or 1.62 percent.3 

The error rate for EITC has averaged 25.8 percent from FY 2006 to

FY 2023 despite the ongoing base enforcement and EITC 

compliance strategies. The current improper payment statutory 

framework does not consider recoveries of improper payments as

reductions to the error rate. Therefore, remediation efforts would 

need to be preventative in nature, which creates challenges given 

the tax framework and the need to process returns timely or incur 

interest payment obligations. Accordingly, all enforcement activity

would need to be in the pre-refund environment to be counted as a 

reduction of errors. The control activities specific to reducing the 

improper payment rate to less than 10 percent are the same as

those being deployed to reduce the RTC portion of the tax gap: 

additional audits, system buildouts or enhancements (upgrades), 

increased outreach, third-party databases to verify taxpayer data, 

and others. The IRS would have to increase these control activities 

significantly in an entirely pre-refund environment to reduce the 

erroneous RTC payments, which would come with highly 

diminishing returns. Refer to Table 2 for other tax administration 

strategies.

The estimated improper payment rate for the EITC was 33.5 percent in FY 2023, which is not statistically different from the 

estimated rate of 31.6 percent for FY 2022. The estimated improper payment rate for the ACTC was 14.5 percent in FY

2023, which is not statistically different from the estimated rate of 15.8 percent for FY 2022. The estimated improper 

payment rate for the AOTC was 31.6 percent in FY 2023, which is not statistically different from the estimated rate of 36.1 

percent for FY 2022. The estimated improper payment rate for the net PTC was 26.0 percent in FY 2023, which is not 

statistically different from the estimated rate of 27.4 percent for FY 2022. The sample precision margins at 95 percent 

confidence, for FY 2023 estimated rates are +/- 6.11 percent for EITC, +/- 4.95 percent for ACTC, +/- 5.66 percent for AOTC, 

and +/- 5.14 percent for net PTC. The wider sample precision margins are the result of a reduction in the number of returns 

sampled that was necessitated by the significant reduction in the IRS’s budget over the last decade along with the resulting 

decrease in the IRS’s examination staff.

3

The combined APTC and net PTC improper payment amounts in this paragraph reflects payment amounts for taxpayers using the federal exchange only.

DEPARTMENT OF THE TREASURY

Estimated Errors Have Averaged 25.8% Despite 

Efforts to Reduce Error Rates 

EITC estimated error rates have ranged from 22.8 

percent to 33.5 percent between FY 2006 and FY 2023, 

with an average annual error rate estimate of 25.8 

percent.
260 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

The IRS designed the initial TY 2019 NRP Individual Income Tax Reporting Compliance sample, upon which the FY 2023 

estimates are based, to include the original sample of 10,954 returns, a 20 percent decrease compared to study years prior to

the TY 2016 NRP sample. Due to a continued decline in enforcement staff, the IRS further reduced the sample to 4,000 

returns, which were drawn from the original sample; these returns are representative of the entire sampling frame, 

including returns that did not claim RTCs subject to improper payments reporting. The differences in the EITC, ACTC, 

AOTC, and net PTC point estimates are not statistically significant because the FY 2022 estimates fall within the wider FY

2023 statistical margin of error. Accordingly, one cannot conclude that the true population estimated improper payment 

rates for EITC, ACTC, AOTC, or net PTC has changed based upon these samples.

TABLE 2: 

Other Tax Administration Strategies

Nationwide Tax Forum The annual tax forum offers three full days of seminars with the latest news 

from the IRS leadership and experts. More than 8,300 preparers attended the 

presentations entitled, Frequently Asked Questions about Due Diligence and 

Sailing Through Refundable Credits. 

Interactive Due Diligence 

Training Module

The training module on IRS.gov covers the technical aspects of the due diligence 

requirements. In FY 2023, more than 11,000 preparers received a certificate of

completion.

Tax Preparer Toolkit The Tax Preparer Toolkit on IRS.gov has resources to assist tax return 

preparers with the EITC, ACTC, AOTC, as well as other credits and tax 

benefits.

Software Developers 

Working Group

The IRS meets with members of tax preparation companies and software 

industry representatives to identify software enhancements that can help 

reduce errors taxpayers and paid preparers make and to assist paid preparers in

meeting their due diligence requirements.

Filing Season Readiness 

Webinars

The IRS hosts discussions and provides instructions and demonstrations over 

the internet. In FY 2023, nearly 6,600 preparers attended the virtual webinar 

on refundable tax credit eligibility and due diligence requirements entitled, 

Looking to Tax Year 2022: American Rescue Plan Tax Changes to Earned 

Income Tax Credit and Other Child-Related Credits.

Tax Preparer Alerts Alerts on IRS.gov provide return preparers with updated news and information 

on key refundable credit and return filing topics. 

Refundable Credits 

Summit

In FY 2023, the IRS held its annual summit to provide a forum for interested 

internal and external stakeholders to discuss opportunities to reduce improper 

payments, ease taxpayer burden, and mitigate compliance risks.
DEPARTMENT OF THE TREASURY 261 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

SECTION E: CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act) amended the Federal Civil 

Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), to improve the effectiveness of civil monetary 

penalties (CMPs) and to maintain their deterrent effect. The 2015 Act requires agencies to annually adjust the level of

CMPs for inflation and report annually in AFRs. The 2015 Act requires that agencies make annual inflation adjustments 

based on annual OMB guidance and publish the latest penalty levels in the Federal Register no later than January 15 each 

year. The Inflation Adjustment Act and the 2015 Act exclude penalties under the IRC and the Tariff Act of 1930. The table 

below depicts the covered CMPs that are under our purview.

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

50 USC App. 16(b)(1) 

Trading with the Enemy Act, 

Section 16(b)

Sanctions violation 1917 2023 $105,083

DO (Office of

Foreign Assets 

Control 

(OFAC)) 

88 Federal Register 

2229 (January 13,

2023)

https://www.govinfo.g

ov/content/pkg/FR2023-01-13/pdf/2023-

00593.pdf

50 USC 1705 

International Emergency 

Economic Powers Act, Section 

206

Sanctions violation 1977 2023

The greater of

$356,579 or

twice the value 

of the 

underlying 

transaction

DO (OFAC) Same as above

18 USC 2339B(b) 

Antiterrorism and Effective 

Death Penalty Act of 1996

Sanctions violation 1996 2023

The greater of

$94,127 or twice 

the amount of

which a financial 

institution was 

required to

retain 

possession or

control

DO (OFAC) Same as above

21 USC 1906(b) 

Foreign Narcotics Kingpin 

Designation Act, Section 807

Sanctions violation 1999 2023 $1,771,754 DO (OFAC) Same as above

19 USC 3901-3913 

Clean Diamond Trade Act Sanctions violation 2003 2023 $16,108 DO (OFAC) Same as above

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Failure to furnish 

information pursuant to 31

CFR 501.602 irrespective of

whether any other violation 

is alleged 

2008 2023 $27,520 DO (OFAC) Same as above
262 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Failure to furnish 

information pursuant to 31

CFR 501.602 where OFAC 

has reason to believe that 

the apparent violation(s) 

involves a transaction(s) 

valued at greater than 

$500,000, irrespective of

whether any other violation 

is alleged 

2008 2023 $68,801 DO (OFAC) Same as above 

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Late filing of a required 

report, whether set forth in

regulations or in a specific 

license, if filed within the 

first 30 days after the report 

is due 

2008 2023 $3,439 DO (OFAC) Same as above

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Late filing of a required 

report, whether set forth in

regulations or in a specific 

license, if filed more than 

30 days after the report is

due

2008 2023 $6,881 DO (OFAC) Same as above

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Late filing of a required 

report, whether set forth in

regulations or in a specific 

license, if the report relates 

to blocked assets, an

additional CMP for every 30

days that the report is

overdue, up to five years 

2008 2023 $1,377 DO (OFAC) Same as above

50 USC 1701 - 1706

International Emergency 

Economic Powers Act 

Failure to maintain records 

in conformance with the 

requirements of OFAC’s

regulations or of a specific 

license 

2008 2023 $68,928 DO (OFAC) Same as above

15 USC 6701 note 

Terrorism Risk Insurance Act, as

amended

Civil Penalty 2002 2023 $1,643,738

DO (Federal 

Insurance 

Office) 

88 Federal Register 

16885 (March 21,

2023) 

https://www.govinfo.g

ov/content/pkg/FR2023-03-21/pdf/2023-

05769.pdf 

12 USC 1829b(j) 

Bank Secrecy Act, as amended

Recordkeeping Violations 

for Funds Transfers 1988 2023 $24,793 FinCEN 

88 Federal Register 

3311 (January 19,

2023)

https://www.govinfo.g

ov/content/pkg/FR2023-01-19/pdf/2023-

00943.pdf

12 USC 1955 

Bank Secrecy Act, as amended

Willful/Grossly Negligent 

Recordkeeping Violations 1988 2023 $24,793 FinCEN Same as above

31 USC 5318(k)(3)(C) 

Bank Secrecy Act, as amended

Failure to Terminate 

Correspondent Relationship 

with Foreign Bank 

2001 2023 $16,771 FinCEN Same as above
DEPARTMENT OF THE TREASURY 263 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

31 USC 5321(a)(1) 

Bank Secrecy Act, as amended

General Civil Penalty 

Provision for Willful 

Violations of Bank Secrecy 

Act Requirements 

1986 2023 $67,544 to

$270,180 FinCEN Same as above

31 USC 5321(a)(5)(B)(i) 

Bank Secrecy Act, as amended

Foreign Financial Agency 

Transaction - Non-Willful 

Violation of Transaction 

2004 2023 $15,611 FinCEN Same as above

31 USC 5321(a)(5)(C)(i)(l) 

Bank Secrecy Act, as amended

Foreign Financial Agency 

Transaction - Willful 

Violation of Transaction 

2004 2023 $156,107 FinCEN Same as above 

31 USC 5321(a)(6)(A) 

Bank Secrecy Act, as amended

Negligent Violation by

Financial Institution or NonFinancial Trade or Business 1986 2023 $1,350 FinCEN Same as above

31 USC 5321(a)(6)(B) 

Bank Secrecy Act, as amended

Pattern of Negligent Activity 

by Financial Institution or

Non-Financial Trade or

Business 

1992 2023 $105,083 FinCEN Same as above

31 USC 5321(a)(7) 

Bank Secrecy Act, as amended

Violation of Certain Due 

Diligence Requirements, 

Prohibition on

Correspondent Accounts for 

Shell Banks, and Special

Measures 

2001 2023 $1,677,030 FinCEN Same as above

31 USC 5330(e) 

Bank Secrecy Act, as amended

Civil Penalty for Failure to

Register as Money 

Transmitting Business 

1994 2023 $9,966 FinCEN Same as above

12 USC 93(b) 

Section 5239(b) of the Revised 

Statutes 

Tier 1 Violation of Various 

Provisions of the National 

Bank Act 

1978 2023 $11,864 OCC 

88 Federal Register 

289 (January 4, 2023) 

https://www.govinfo.g

ov/content/pkg/FR2023-01-04/pdf/2022-

28539.pdf

12 USC 93(b) 

Section 5239(b) of the Revised 

Statutes

Tier 2 Violation of Various 

Provisions of the National 

Bank Act 

1978 2023 $59,316 OCC Same as above

12 USC 93(b) 

Section 5239(b) of the Revised 

Statutes

Tier 3 Violation of Various 

Provisions of the National 

Bank Act 

1978 2023 $2,372,677 OCC Same as above

12 USC 164 

Section 5213 of the Revised 

Statutes

Tier 1 Violation of Reporting 

Requirements 1869(2) 2023 $4,745 OCC Same as above

12 USC 164 

Section 5213 of the Revised 

Statutes

Tier 2 Violation of Reporting 

Requirements 1869(2) 2023 $47,454 OCC Same as above

12 USC 164 

Section 5213 of the Revised 

Statutes

Tier 3 Violation of Reporting 

Requirements 1869(2) 2023 $2,372,677 OCC Same as above

12 USC 481 

Section 5240 of the Revised 

Statutes

Refusal of Affiliate to

Cooperate in Examination 

(National Banks) 

1864(2) 2023 $11,864 OCC Same as above

12 USC 504 

Section 29 of the Revised 

Statutes

Tier 1 Violation of Various 

Provisions of the Federal 

Reserve Act 

1978 2023 $11,864 OCC Same as above
264 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

12 USC 504 

Section 29 of the Revised 

Statutes

Tier 2 Violation of Various 

Provisions of the Federal 

Reserve Act 

1978 2023 $59,316 OCC Same as above

12 USC 504 

Section 29 of the Revised 

Statutes

Tier 3 Violation of Various 

Provisions of the Federal 

Reserve Act 

1978 2023 $2,372,677 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal 

Deposit Insurance Act

Tier 1 Violation of Change in

Bank Control Act 1978 2023 $11,864 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal 

Deposit Insurance Act

Tier 2 Violation of Change in

Bank Control Act 1978 2023 $59,316 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal 

Deposit Insurance Act

Tier 3 Violation of Change in

Bank Control Act 1978 2023 $2,372,677 OCC Same as above 

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal 

Deposit Insurance Act

Tier 1 Violation of Law, 

Unsafe or Unsound 

Practice, or Breach of

Fiduciary Duty 

1978 2023 $11,864 OCC Same as above

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal 

Deposit Insurance Act

Tier 2 Violation of Law, 

Unsafe or Unsound 

Practice, or Breach of

Fiduciary Duty 

1978 2023 $59,316 OCC Same as above

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal 

Deposit Insurance Act

Tier 3 Violation of Law, 

Unsafe or Unsound 

Practice, or Breach of

Fiduciary Duty 

1978 2023 $2,372,677 OCC Same as above 

12 USC 1820(k)(6)(A)(ii) 

Section 10(k)(6)(A)(ii) of the 

Federal Deposit Insurance Act

Violation of PostEmployment Restrictions 2004 2023 $390,271 OCC Same as above

12 USC 1832(c) 

Section 2 of Public Law 93-100

Violation of Withdrawals by

Negotiable or Transferable 

Instrument for Transfers to

Third Parties (National 

Banks) 

1973 2023 $3,446 OCC Same as above

12 USC 1832(c) 

Section 2 of Public Law 93-100

Violation of Withdrawals by

Negotiable or Transferable 

Instrument for Transfers to

Third Parties (Federal 

Savings Associations) 

1973 2023 $3,132 OCC Same as above

12 USC 1884 

Section 5 of the Bank 

Protection Act of 1968

Violation of the Bank 

Protection Act 1968 2023 $345 OCC Same as above

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank 

Holding Company Act 

Amendments of 1970

Tier 1 Violation of AntiTying Provisions Regarding 

Correspondent Accounts, 

Unsafe or Unsound 

Practices, or Breach of

Fiduciary Duty 

1978 2023 $11,864 OCC Same as above
DEPARTMENT OF THE TREASURY 265 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank 

Holding Company Act 

Amendments of 1970

Tier 2 Violation of AntiTying Provisions Regarding 

Correspondent Accounts, 

Unsafe or Unsound 

Practices, or Breach of

Fiduciary Duty 

1978 2023 $59,316 OCC Same as above

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank 

Holding Company Act 

Amendments of 1970

Tier 3 Violation of AntiTying Provisions Regarding 

Correspondent Accounts, 

Unsafe or Unsound 

Practices, or Breach of

Fiduciary Duty 

1978 2023 $2,372,677 OCC Same as above

12 USC 3110(a) 

Section 16(a) of the 

International Banking Act of

1978

Violation of Various 

Provisions of the 

International Banking Act 

(Federal Branches and 

Agencies) 

1991 2023 $54,224 OCC Same as above

12 USC 3110(c) 

Section 16(c) of the 

International Banking Act of

1978

Tier 1 Violation of Reporting 

Requirements of the 

International Banking Act 

(Federal Branches and 

Agencies) 

1991 2023 $4,339 OCC Same as above

12 USC 3110(c) 

Section 16(c) of the 

International Banking Act of

1978

Tier 2 Violation of Reporting 

Requirements of the 

International Banking Act 

(Federal Branches and 

Agencies) 

1991 2023 $43,377 OCC Same as above 

12 USC 3110(c) 

Section 16(c) of the 

International Banking Act of

1978

Tier 3 Violation of Reporting 

Requirements of the 

International Banking Act 

(Federal Branches and 

Agencies) 

1991 2023 $2,168,915 OCC Same as above

12 USC 3909(d)(1) 

Section 910(d)(1) of the 

International Lending 

Supervision Act of 1983

Violation of International 

Lending Supervision Act 1983 2023 $2,951 OCC Same as above 

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 1 (natural person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

Company Act, or the 

Investment Advisers Act 

1990 2023 $11,162 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 1 (other person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

Company Act, or the 

Investment Advisers Act 

1990 2023 $111,614 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 2 (natural person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

1990 2023 $111,614 OCC Same as above
266 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

Company Act, or the 

Investment Advisers Act 

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 2 (other person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

Company Act, or the 

Investment Advisers Act 

1990 2023 $558,071 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 3 (natural person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

Company Act, or the 

Investment Advisers Act 

1990 2023 $223,229 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities 

Exchange Act of 1934

Tier 3 (other person) 

Violation of Various 

Provisions of the Securities 

Act, the Securities Exchange 

Act, the Investment 

Company Act, or the 

Investment Advisers Act 

1990 2023 $1,116,140 OCC Same as above

15 USC 1639e(k) 

Section 129E(k) of the Truth in

Lending Act

First Violation - Violation of

Appraisal Independence 

Requirements 

2010 2023 $13,627 OCC Same as above

15 USC 1639e(k) 

Section 129E(k) of the Truth in

Lending Act

Subsequent Violations - 

Violation of Appraisal 

Independence

Requirements 

2010 2023 $27,252 OCC Same as above 

42 USC 4012a(f)(5) 

Section 102(f)(5) of the Flood 

Disaster Protection Act of 1973

Flood Insurance 1994 2023 $2,577 OCC Same as above 

12 USC 1464(v) 

Section 5(v) of the Home 

Owners' Loan Act

Tier 1 Reports of Condition - 

Savings Associations 1989 2023 $4,745 OCC Same as above

12 USC 1464(v) 

Section 5(v) of the Home 

Owners' Loan Act

Tier 2 Reports of Condition - 

Savings Associations 1989 2023 $47,454 OCC Same as above

12 USC 1464(v) 

Section 5(v) of the Home 

Owners' Loan Act

Tier 3 Reports of Condition - 

Savings Associations 1989 2023 $2,372,677 OCC Same as above

12 USC 1467(d) 

Section 9(d) of the Home 

Owners' Loan Act

Refusal of Affiliate to

Cooperate in Examination 1989 2023 $11,864 OCC Same as above

12 USC 1467a(r) 

Section 10(r) of the Home 

Owners' Loan Act

Tier 1 Late/Inaccurate 

Reports (Savings and Loans) 1989 2023 $4,745 OCC Same as above
DEPARTMENT OF THE TREASURY 267 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Statutory Authority Penalty (Name or

Description) 

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation) 

Current Penalty 

Level ($

Amount or

Range) (1) 

Sub-Agency 

Bureau/ 

Entity 

Location for Penalty 

Update Details

12 USC 1467a(r) 

Section 10(r) of the Home 

Owners' Loan Act

Tier 2 Late/Inaccurate 

Reports (Savings and Loans) 1989 2023 $47,454 OCC Same as above

12 USC 1467a(r) 

Section 10(r) of the Home 

Owners' Loan Act

Tier 3 Late/Inaccurate 

Reports (Savings and Loans) 1989 2023 $2,372,677 OCC Same as above

27 USC 218 

Federal Alcohol Administration 

Act, as amended; Section 207

of the Alcohol Beverage 

Labeling Act of 1988, P.L. 100-

690

Violation 1988 2023 $24,759 TTB

88 Federal Register 

2228 (January 13,

2023)

https://www.govinfo.g

ov/content/pkg/FR2023-01-13/pdf/2023-

00594.pdf

31 USC 333 

Prohibition of Misuse of

Department of the Treasury 

Names, Symbols, etc.

Misuse of Treasury name or

symbol 1994 2023 $9,399 Department Wide 

88 Federal Register 

16885 (March 21,

2023) 

https://www.govinfo.g

ov/content/pkg/FR2023-03-21/pdf/2023-

05769.pdf 

31 USC 333 

Prohibition of Misuse of

Department of the Treasury 

Names, Symbols, etc.

Misuse of Treasury name or

symbol in broadcast or

telecast 

1994 2023 $46,989 Department 

Wide Same as above 

31 USC 3802 

Program Fraud Civil Remedies 

Act

Program Fraud Civil 

Remedies Act 1986 2023 $9,399 Department Wide Same as above 

(1) Current penalty level amounts represent the maximum penalty amounts. 

(2) For purposes of calculating the appropriate inflation factor, OMB’s guidance issued February 24, 2016 uses the calendar year 1914 CMP CatchUp Adjustment Multiplier for all penalties enacted prior to 1914. 
268 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

SECTION F: GRANTS PROGRAMS

The summary table below shows the total number and balances of federal grants and cooperative agreements that we

awarded for which closeout has not yet occurred and the period of performance has elapsed by more than two years. 

CATEGORY 2-3 Years 4-5 Years More than 5 Years 

Number of Grants/Cooperative Agreements with Zero Dollar 

Balances 223 2 - 

Number of Grants/Cooperative Agreements with Undisbursed 

Balances 118 1 - 

Total Amount of Undisbursed Balances $ 2,208,001 $ 2,121 $ - 

The majority of these awards are with IRS’s Volunteer Income Tax Assistance, Low Income Taxpayer Clinics, and Tax 

Counseling for the Elderly grant programs. The IRS continues to make the closeout of awards a priority every fiscal year. 

The IRS did see an increase in the number of expired grants and cooperative agreements with period of performance over 

two years from FY 2022 to FY 2023. Grant recipients have not correctly completed and submitted all progress reporting 

forms and financial forms in the Payment Management System which continues to be a challenge preventing closeout of

awards. Other factors include competing priorities, employee turnover, and challenges associated with integrating a new 

grants management system. In addition, the Low Income Taxpayer Clinic grant cap was doubled after awards were granted 

based on the original amounts. This was a time-consuming process of soliciting requests and awarding additional funds. 

The program offices are reviewing closeout procedures and are dedicated to closing out the remaining accounts in FY 2024.
DEPARTMENT OF THE TREASURY 269 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

APPENDIX: GLOSSARY OF ACRONYMS

Abbreviation Description 

2015 Act Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 

ACT Audit and Compliance Resolution Team 

ACTC Additional Child Tax Credit 

AFR Agency Financial Report 

AGI Adjusted Gross Income 

AMLA Anti-Money Laundering Act of 2020 

AML/CFT Anti-Money Laundering and Combating the Financing of Terrorism 

AOTC American Opportunity Tax Credit 

APG Agency Priority Goal 

APR Annual Performance Report 

APTC Advance Payments of the Premium Tax Credit 

ARC Administrative Resource Center 

ARP American Rescue Plan Act of 2021

ARRA American Recovery and Reinvestment Tax Act of 2009 

ASM Assistant Secretary for Management 

BEP Bureau of Engraving and Printing 

BGP Bond Guarantee Program 

BOI Beneficial Ownership Information 

BSA Bank Secrecy Act 

BY25 Budget Year 2025 

CAA Consolidated Appropriations Act, 2021

CADE Customer Account Data Engine 2 

CAIA Common Approach to Identity Assurance 

CARES Act Coronavirus Aid, Relief, and Economic Security Act 

CDCC Child and Dependent Care Credit 

CDFI Community Development Financial Institutions 

CDFI RRP CDFI Rapid Response Program 

CDM Continuous Diagnostics and Mitigation 

CEG Cyber Expert Group 

CERTS Coronavirus Economic Relief for Transportation Services 

CESG Cloud Executive Steering Group 

CFE Carbon-free electricity 

CFIUS Committee on Foreign Investment in the United States 

CFO Chief Financial Officer 

CFR Code of Federal Regulations 

CFRAC Climate-related Financial Risk Advisory Committee 

CHIPS Act CHIPS and Science Act 

CIFS Critical Individual Filing Season 

CIO Chief Information Officer 

CISA Cybersecurity and Infrastructure Security Agency 
270 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Abbreviation Description 

Civil Service Fund Civil Service Retirement and Disability Trust Fund 

CLWG Climate Literacy Work Group 

CMP Civil Monetary Penalties 

CMS Centers for Medicare & Medicaid Services 

Compliance Framework FFMIA Compliance Determination Framework 

COVID-19 Coronavirus Disease 2019 

CPF Coronavirus Capital Projects Fund 

CPI Consumer Price Index 

CPIC Capital Planning and Investment Control 

CRF Coronavirus Relief Fund 

CRO Chief Risk Officer 

CSR Customer Service Representative 

CSRS Civil Service Retirement System 

CTA Corporate Transparency Act of 2020 

CTC Child Tax Credit 

D.C. District of Columbia 

D.C. Federal Pension Fund D.C. Teachers’, Police Officers’, and Firefighters’ Federal Pension Fund 

DEIA Diversity, Equity, Inclusion, and Accessibility 

DO Departmental Offices 

DOL Department of Labor 

DPC Treasury Derived Personal Identification and Validation Credential 

ECIP Emergency Capital Investment Program 

ECM Enterprise Case Management 

EDR EndPoint Detection Response 

EEO Equal Employment Opportunity 

EFT Electronic Funds Transfer 

EIP Economic Impact Payment 

EITC Earned Income Tax Credit 

EO Executive Order 

ERA Emergency Rental Assistance 

ERC Employee Retention Credit 

ERM Enterprise Risk Management 

ESA Exchange Stabilization Agreement 

ESAPR Enterprise Self-Assistance Participation Rate 

ESF Exchange Stabilization Fund 

EV Electric Vehicle 

EVSE Electric Vehicle Supply Equipment 

Fannie Mae Federal National Mortgage Association 

FARS Financial Analysis and Reporting System 

FASAB Federal Accounting Standards Advisory Board 

FAST Fixing America’s Surface Transportation 

FBIIC Financial and Banking Information Infrastructure Committee 
DEPARTMENT OF THE TREASURY 271 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Abbreviation Description 

FCDA Foreign Currency Denominated Assets 

FCRA Federal Credit Reform Act 

FDC Funds from Dedicated Collections 

FECA Federal Employees’ Compensation Act 

Federal Reserve Act Federal Reserve Act of 1913 

Federal Reserve Board or Board Federal Reserve Board of Governors 

FEGLI Federal Employees Group Life Insurance 

FEHBP Federal Employees Health Benefits Program 

FERS Federal Employees’ Retirement System 

FEVS Federal Employee Viewpoint Survey 

FFB Federal Financing Bank 

FFMIA Federal Financial Management Improvement Act of 1996 

FHFA Federal Housing Finance Agency 

FICA Federal Insurance Contributions Act 

Financial Report Financial Report of the U.S. Government 

FinCEN Financial Crimes Enforcement Network 

Fiscal Service Bureau of the Fiscal Service 

FISMA Federal Information Security Management Act 

FITARA Federal Information Technology Acquisition Reform Act 

FIU Financial Intelligence Unit 

FMFIA Federal Managers’ Financial Integrity Act 

FOMC Federal Open Market Committee 

FR System Federal Reserve System 

FRB Federal Reserve Bank 

FRBB Federal Reserve Bank of Boston 

FRBNY Federal Reserve Bank of New York 

Freddie Mac Federal Home Loan Mortgage Corporation 

FRN Floating Rate Note 

FTO Fine Troy Ounce 

FY Fiscal Year 

G Fund Government Securities Investment Fund 

G7 Group of Seven 

G20 Group of 20

GAAP Generally Accepted Accounting Principles 

GAO U.S. Government Accountability Office 

GCF Green Climate Fund 

General Fund General Fund of the U.S. Government 

GPRA Government Performance and Results Act 

GSA General Services Administration 

GSE Government Sponsored Enterprise 

HAF Homeowner Assistance Fund 

HBCU Historically Black College and University 
272 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Abbreviation Description 

HERA Housing and Economic Recovery Act of 2008

HFA Housing Finance Agency 

HHS Department of Health and Human Services 

HQM High-Quality Market Corporate Bond 

HUD Department of Housing and Urban Development 

HVA High Value Asset 

IA International Affairs 

IAP International Assistance Programs 

IIJA Infrastructure Investment and Jobs Act 

IMF International Monetary Fund 

Inflation Adjustment Act Federal Civil Penalties Inflation Adjustment Act of 1990 

IRA Inflation Reduction Act 

IRC Internal Revenue Code 

IRS Internal Revenue Service 

IT Information Technology 

JADE Joint Analysis Data Environment 

Judicial Retirement Fund District of Columbia Judicial Retirement and Survivors’ Annuity Fund 

LB&I Large Business and International 

LLC Limited Liability Company 

LOS Level of Service 

MALSPAM Malicious Spam 

MDB Multilateral Development Bank 

MDI Minority Deposit Institution 

MFA Multi-Factor Authentication 

MLF Municipal Liquidity Facility LLC

MOU Memorandum of Understanding 

MSF Main Street Facilities LLC

NAB New Arrangements to Borrow 

NAFA North American Framework Agreement 

NEU Non-Entitlement Units 

NIBP New Issue Bond Program 

NIST National Institute of Standards and Technology 

NRP National Research Program 

OCC Office of the Comptroller of the Currency 

OCIO Office of the Chief Information Officer 

OCRE Office of Civil Rights and Equal Employment Opportunity 

ODCP Office of D.C. Pensions 

ODEIA Office of Diversity, Equity, Inclusion, and Accessibility 

OFAC Office of Foreign Assets Control 

OFM Office of Financial Markets 

OFR Office of Financial Research 

OFS Office of Financial Stability 
DEPARTMENT OF THE TREASURY 273 

OTHER INFORMATION | FY 2023 AGENCY FINANCIAL REPORT 

Abbreviation Description 

OIG Office of the Inspector General 

OMB Office of Management and Budget 

OMWI Office of Minority and Women Inclusion 

OPEB Other Post-Employment Benefits 

OPM Office of Personnel Management 

OPM Funds Civil Service Fund and Postal Benefits Fund 

ORB Other Retirement Benefits 

ORP Office of Recovery Programs 

OSPPI Office of Strategy, Planning, and Performance Improvement 

OTA Office of Technical Assistance 

OTC Over-the-Counter 

P.L. Public Law 

PCA Private Collection Agencies 

PIIA Payment Integrity Information Act of 2019 

PIK Payment-in-Kind 

PIO Performance Improvement Officer 

PMIAA Program Management Improvement Accountability Act 

Postal Benefits Fund Postal Service Retiree Health Benefits Fund 

PP&E Property, Plant, and Equipment 

PRAC Pandemic Response Accountability Committee 

PSP Payroll Support Program 

PSPA Payroll Support Program Agreement 

PTC Premium Tax Credit 

PTIN Preparer Tax Identification Number 

RPA Robotic Process Automation 

RRTA Railroad Retirement Tax 

RTC Refundable Tax Credits 

SARs Suspicious Activity Reports 

SB/SE Small Business/Self Employed 

SBLF Small Business Lending Fund 

SBR Statement of Budgetary Resources 

SDR Special Drawing Rights 

Secretary Secretary of the Treasury 

SEDI Socially and Economically-Disadvantaged Individuals 

SFC Security Fusion Center 

SFFAS Statement of Federal Financial Accounting Standards 

SIGPR Special Inspector General for Pandemic Recovery 

SIGTARP Special Inspector General for the Troubled Asset Relief Program 

SLFRF Coronavirus State and Local Fiscal Recovery Funds 

SLGS State and Local Government Series 

SOAR Strategic Objective Annual Review 

SOMA System Open Market Account 
274 DEPARTMENT OF THE TREASURY 

FY 2023 AGENCY FINANCIAL REPORT | OTHER INFORMATION 

Abbreviation Description 

SOP Strategic Operating Plan 

SPSPA Senior Preferred Stock Purchase Agreements 

SPV Special Purpose Vehicle 

SSBCI State Small Business Credit Initiative 

SSN Social Security Number 

TACs Taxpayer Assistance Centers 

TALF Term Asset-Backed Securities II LLC

TARP Troubled Asset Relief Program 

TBM Technology Business Management 

TDC Taxpayer Digital Communication 

TEAS Treasury Enterprise Authentication Service 

TEOAF Treasury Executive Office of Asset Forfeiture 

TFA Taxpayer First Act 

TFI Terrorism and Financial Intelligence 

TFS TIER Financial Statements 

TGA Treasury General Account 

TIER Treasury Information Executive Repository 

TIGTA Treasury Inspector General for Tax Administration 

TIPS Treasury Inflation-Protected Securities 

TRAMS Treasury Recovery Award Management System 

TRIP Terrorism Risk Insurance Program 

TSP Thrift Savings Plan 

TTB Alcohol and Tobacco Tax and Trade Bureau 

TXO Taxpayer Experience Office 

TXS Taxpayer Experience Strategy 

TY Tax Year 

U.S. United States 

U.S. Mint United States Mint 

USACE United States Army Corps of Engineers 

USC United States Code 

USDA United States Department of Agriculture 

USPS United States Postal Service 

USSGL United States Standard General Ledger 

ZTA Zero-Trust Architecture