Department of the Treasury 

Treasury Inspector General for 

Tax Administration 

Congressional Budget 

Justification and Annual 

Performance Report and Plan 

FY 2019
TIGTA - 2 

Table of Contents

Section I – Budget Request........................................................................................................... 3

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

B – Summary of the Request ...................................................................................................... 3

1.1 – Appropriations Detail Table .......................................................................................... 4

1.2 – Budget Adjustments Table ................................................................................................. 4

C – Budget Increases and Decreases Description ....................................................................... 4

1.3 – Operating Levels Table ...................................................................................................... 5

D – Appropriations Language and Explanation of Changes ...................................................... 6

E – Legislative Proposals ............................................................................................................ 6

Section II – Annual Performance Plan and Report ................................................................... 7

A – Strategic Alignment ............................................................................................................. 7

B – Budget and Performance by Budget Activity ...................................................................... 8

2.1.1 – Audit Resources and Measures ....................................................................................... 8

Audit Budget and Performance ................................................................................................... 8

2.1.2 – Investigations Resources and Measures ........................................................................ 11

Investigations Budget and Performance ................................................................................... 11

Key Accomplishments and Budget Savings ............................................................................. 14

Section III – Additional Information ........................................................................................ 16

A – Summary of Capital Investments ....................................................................................... 16

 
TIGTA - 3 

Section I – Budget Request 

A – Mission Statement 

Provide quality professional audit, investigative, and inspection and evaluation services that 

promote integrity, economy, and efficiency in the administration of the Nation’s tax system. 

B – Summary of the Request 

The Treasury Inspector General for Tax Administration’s (TIGTA) Fiscal Year (FY) 2019 

budget request of $161,113,000 represents a decrease of 4.4 percent below its FY 2018 

Annualized Continuing Resolution (CR) amount. Funding TIGTA’s FY 2019 budget request 

will enable TIGTA to attempt to address its expansive workload of emerging Internal Revenue 

Service (IRS) challenges and congressional requests while conducting its oversight 

responsibilities. These resources will fund critical audit, investigative, and inspection and 

evaluation services to protect the integrity of the Nation’s system of tax administration. In 

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

amended),1

 TIGTA submits the following information related to its FY 2019 budget request: 

 The aggregate budget request for TIGTA operations is $161,113,000; 

 The portion of the request needed for TIGTA training is $1,800,000; and 

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

Integrity and Efficiency is $338,000. 

TIGTA’s vision is to maintain a highly skilled, proactive, and diverse Inspector General 

organization dedicated to working in a collaborative environment with key stakeholders to foster 

and promote fair tax administration. TIGTA’s primary functions of investigations, audit, 

inspections, and evaluations align with the following Department of the Treasury’s Strategic 

Plan for FY 2018-2022 goals: 

 Goal 1: Boost U.S. Economic Growth; 

 Goal 4: Transform Government-wide Financial Stewardship; and 

 Goal 5: Achieve Operational Excellence. 

For more on how TIGTA aligns to the Department of the Treasury goals and objectives see 

Section II in this document. 

TIGTA’s Strategic Goals: 

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

 Protect the integrity of tax administration; and 

 Be an organization that values its people. 

TIGTA’s work is focused on all aspects of activity related to the Federal tax system as 

administered by the IRS. TIGTA identifies and addresses IRS management challenges and the 

priorities of the Department of the Treasury. TIGTA protects the public’s confidence in the tax 

system. 

 

1

 5 U.S.C. app. 3 § 6(f)(1). 
TIGTA - 4 

1.1 – Appropriations Detail Table 

Dollars in Thousands 

*The FY 2017 column reflects levels appropriated in H.R. 255, the Consolidated Appropriations Act of 2017. For further details on 

the execution of these resources see the 2019 Budget Appendix chapter for the Department of the Treasury. 

1.2 – Budget Adjustments Table 

Dollars in Thousands 

Treasury Inspector General for Tax 

Administration FTE Amount 

FY 2018 Annualized CR 800 $168,482 

Changes to Base: 

 Maintaining Current Levels (MCLs): 0 $1,233 

 Pay Annualization 0 $620 

 Non-Pay 0 $613 

Subtotal Changes to Base 0 $1,233 

Total FY 2019 Base 800 $169,715 

Program Changes: 

 Program Decreases 0 ($8,602) 

 Operating Cost Reductions 0 ($8,602) 

Total FY 2019 Request 800 $161,113 

C – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ....................................................... +$1,233,000 / +0 FTE 

Pay Annualization +$620,000 / +0 FTE 

Funds are requested for annualization of the January 2018 pay raise. 

Non-Pay +$613,000 / +0 FTE 

Funds are requested for non-labor expenses such as travel, contracts, rent, supplies, 

and equipment. 

Program Decreases .................................................................................... -$8,602,000 / +0 FTE 

Operating Cost Reductions -$8,602,000 / +0 FTE 

Audit and Investigations activity levels will be reduced for operational costs. Reaching this 

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

actions to include specialized training and travel reductions for investigators and auditors, 

contract and interagency agreement reductions, and rent reductions. TIGTA will continue to 

look for contract efficiencies by evaluating contracts for strategic sourcing and by negotiating 

more advantageous contract terms. Additionally, TIGTA will pursue opportunities to reduce its 

footprint and lower its rent costs. 

Treasury Inspector General for Tax 

Administration

Appropriated Resources

New Appropriated Resources FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Audit 333 $66,020 333 $65,572 333 $62,704 0 ($2,868) 0.00% -4.37%

Investigations 467 $103,614 467 $102,910 467 $98,409 0 ($4,501) 0.00% -4.37%

Subtotal New Appropriated Resource 800 $169,634 800 $168,482 800 $161,113 0 ($7,369) 0.00% -4.37%

Other Resources

 Reimbursables 2 $357 2 $600 2 $600 0 $0 0.00% 0.00%

 Unobligated Balances Brought Forward $3,916 $4,300 $5,000 $700 16.28%

Subtotal Other Resources 2 $4,273 2 $4,900 2 $5,600 0 $700 0.00% 14.29%

Total Budgetary Resources 802 $173,907 802 $173,382 802 $166,713 0 ($6,669) 0.00% -3.85%

FY 2017* FY 2018 FY 2018 to FY 2019

Enacted Annualized CR Request Change % Change

FY 2019
TIGTA - 5 

1.3 – Operating Levels Table 

Dollars in Thousands 

Treasury Inspector General for Tax Administration FY 2017* FY 2018 FY 2019 

Object Classification Enacted Annualized CR Request 

11.1 - Full-time permanent 91,726 86,447 86,851 

11.3 - Other than full-time permanent 594 391 393 

11.5 - Other personnel compensation 8,460 8,291 8,330 

11.9 - Personnel Compensation (Total) 100,780 95,129 95,574 

12.0 - Personnel benefits 35,409 37,477 37,652 

Total Personnel and Compensation Benefits $136,189 $132,606 $133,226 

21.0 - Travel and transportation of persons 3,581 3,794 2,261 

22.0 - Transportation of things 19 15 13 

23.1 - Rental payments to GSA 9,396 9,600 8,984 

23.2 - Rental payments to others 233 200 170 

23.3 - Communications, utilities, and miscellaneous charges 1,864 740 340 

24.0 - Printing and reproduction 7 8 6 

25.1 - Advisory and assistance services 805 1,800 1,529 

25.2 - Other services from non-Federal sources 721 1,000 849 

25.3 - Other goods and services from Federal sources 8,357 11,150 8,597 

25.4 - Operation and maintenance of facilities 424 16 13 

25.7 - Operation and maintenance of equipment 944 2,989 1,469 

26.0 - Supplies and materials 1,072 640 595 

31.0 - Equipment 5,943 3,800 2,972 

42.0 - Insurance claims and indemnities 53 5 4 

91.0 - Unvouchered 26 119 85 

Total Non-Personnel $33,445 $35,876 $27,887 

New Budgetary Resources $169,634 $168,482 $161,113 

 

FTE 800 800 800 

*The FY 2017 column reflects levels appropriated in H.R. 255, the Consolidated Appropriations Act of 2017. For further details on 

the execution of these resources see the 2019 Budget Appendix chapter for the Department of the Treasury. 
TIGTA - 6 

D – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

TREASURY INSPECTOR GENERAL FOR TAX 

ADMINISTRATION 

Federal funds 

SALARIES AND EXPENSES

For necessary expenses of the Treasury Inspector General for 

Tax Administration in carrying out the Inspector General Act 

of 1978, as amended, including purchase and hire of passenger 

motor vehicles (31 U.S.C. 1343(b)); and services authorized 

by 5 U.S.C. 3109, at such rates as may be determined by the 

Inspector General for Tax Administration; $161,113,000, of 

which $5,000,000 shall remain available until September 30, 

2020; of which not to exceed $6,000,000 shall be available for 

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

be available for unforeseen emergencies of a confidential 

nature, to be allocated and expended under the direction 

of the Inspector General for Tax Administration; and of which 

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

and representation expenses. 

Note.—A full-year 2018 appropriation for this account was not 

enacted at the time the budget was prepared; therefore, the 

budget assumes this account is operating under the Continuing 

Appropriations Act, 2018 (Division D of P.L. 115–56, as 

amended). The amounts included for 2018 reflect the 

annualized level provided by the continuing resolution. 

E – Legislative Proposals 

TIGTA has no legislative proposals. 
TIGTA - 7 

Section II – Annual Performance Plan and Report 

A – Strategic Alignment 

TIGTA, an independent office within the Department of the Treasury, was created by Congress 

as a part of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98).2 It 

provides independent oversight of IRS activities by conducting independent audits, 

investigations, and inspections and evaluations necessary to prevent and detect waste, fraud, and 

abuse in IRS programs and operations. TIGTA conducts audits of the IRS’s operations and 

makes recommendations designed to improve the administration of the Federal tax system; 

conducts administrative and criminal investigations of allegations of waste, fraud, and abuse; and 

helps to ensure that the IRS protects and secures taxpayer data. TIGTA also has the unique 

responsibility of protecting the IRS and its employees. TIGTA’s role is important, given the 

current economic environment and the increased emphasis by the Administration, Congress, and 

the American people on the Federal Government’s accountability and efficient use of resources. 

TIGTA’s budget activities align with its vision and goals and with Treasury’s Strategic Plan for 

FY 2018-2022, including various objectives under the following goals: 

Goal 1: Boost U.S. Economic Growth

Objective 1.1 – Tax Law Implementation: Administer tax law to better enable all taxpayers to 

meet their obligations, while protecting the integrity of the tax system. 

TIGTA conducts comprehensive audits, inspections, and evaluations of the IRS, provides 

recommendations for achieving monetary benefits, and addresses erroneous and improper 

payments. It oversees the IRS’s efforts to increase domestic and international tax compliance, 

and to achieve program efficiencies and cost savings. TIGTA conducts audits that assess the 

IRS’s timeliness and effectiveness in implementing tax law changes, and the IRS’s effectiveness 

in protecting taxpayer data and addressing fraud, such as tax related identity theft. TIGTA 

conducts administrative and criminal investigations of allegations of waste, fraud, and abuse; 

makes recommendations designed to improve the administration of the Federal tax system; and 

helps to ensure that the IRS protects and secures taxpayer data. 

Goal 4: Transform Government-wide Financial Stewardship

Objective 4.1 – Financial Data Access/Use: Increase the access and use of Federal financial data 

to strengthen Government-wide decision-making, transparency, and accountability. 

TIGTA supports the Department of the Treasury’s Digital Accountability and Transparency Act 

efforts by implementing the related policies and requirements. Many of TIGTA’s audits include 

recommendations that, when implemented, would result in cost savings, increased or protected 

revenue, or more efficient use of resources. Additionally, TIGTA develops advanced analytics 

and innovative approaches to help prevent and detect the flow of dollars fraudulently obtained by 

criminals and IRS employees and provides the IRS with the investigative coverage and 

 

2

 Pub. L. No. 105-206, 112 Stat. 685. 
TIGTA - 8 

information necessary to mitigate domestic and foreign threats against its employees, facilities, 

and data systems. 

Goal 5: Achieve Operational Excellence 

Objective 5.1 – 5.3 Workforce Management, Treasury Infrastructure, and Customer Value. 

TIGTA hires and develops a workforce with the skills and competencies necessary to accomplish 

its mission to provide quality professional audit, investigative, and inspection and evaluation 

services related to the administration of the Nation’s tax system. TIGTA mitigates security risks 

affecting taxpayer data, tax systems, and IRS employees. It effectively improves customer value 

by protecting the IRS and its employees and responding to attempts to impersonate the IRS for 

fraudulent purposes. TIGTA prioritizes acquisition and application of human and financial 

resources to enhance its ability to detect and protect against cyberattacks. Additionally, TIGTA 

collaborates with the IRS to share intelligence and expertise to thwart cyber threats.

With the publication of the Treasury Strategic Plan for FY 2018-2022, TIGTA will work this 

year to baseline its performance against the new strategic objectives. This could result in 

(additional) changes to performance measures in the FY 2020 budget. 

B – Budget and Performance by Budget Activity 

2.1.1 – Audit Resources and Measures 

Dollars in Thousands 

 Resource Level FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

 Actual Actual Actual Actual Actual Annualized 

CR Request 

Appropriated Resources    $54,309 $53,763 $57,463 $59,752 $64,240 $65,572 $62,704 

Reimbursable Resources    $500 $600 $382 $60 0 0 0 

Unobligated Balances 

Brought Forward    0 0 $1,808 $1,780 $1,524 $1,674 $1,947 

Budget Activity Total $54,809 $54,363 $59,653 $61,592 $65,764 $67,246 $64,651 

FTE 323 309 316 329 333 333 333 

Note: FY 2017 Reimbursable Resources and Unobligated Balances Brought Forward are Actuals 

Measure FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2017 FY 2018 FY 2019

Actual Actual Actual Actual Actual Target Target Target

Percentage of Audit Products 

Delivered When Promised to 

Stakeholders

84 65 80 75 79 68 68 68

Percentage of 

Recommendations Made 

That Have Been 

Implemented

87 89 92 97 92 85 85 85

Audit Budget and Performance 

($62,704,000 from direct appropriations):

TIGTA’s Office of Audit identifies opportunities to improve the administration of the Nation’s 

tax laws by completing comprehensive and independent performance and financial audits of IRS 

programs and operations. TIGTA’s audit program incorporates both statutory audit requirements 

and specific audits identified through TIGTA’s risk assessment process. TIGTA’s audit work is 
TIGTA - 9 

concentrated on high-risk areas and on the IRS’s progress in achieving its strategic goals. 

TIGTA strategically evaluates IRS programs, activities, and functions, so that resources are spent 

in the areas of highest vulnerability of the Nation’s system of tax administration. In FY 2017, 

OA issued 104 final audit reports, and other products, that included potential financial benefits 

totaling approximately $9.1 billion and affected approximately 34 million taxpayer accounts. 

TIGTA’s Annual Audit Plan communicates its audit priorities to the IRS, Congress, and other 

interested parties. Many of the activities described in the Annual Audit Plan address the 

fundamental goals related to the IRS’s mission to administer its programs effectively and 

efficiently. Audits address a variety of high-risk issues, such as identity-theft detection and 

prevention, security of taxpayer data, tax compliance, tax law changes, fraudulent claims and 

improper payments, tax systems and online services, and globalization. TIGTA’s audits and 

recommendations help: 

 Promote the economy, efficiency, and effectiveness of IRS programs; 

 Ensure the fair and equitable treatment of taxpayers; and 

 Detect and deter waste, fraud, and abuse. 

By focusing on the most critical areas, TIGTA’s recommendations not only result in cost 

savings, but also have other quantifiable impacts, such as the protection of existing revenue, 

increased revenue, and reduction of the number of fraudulent refunds and improper payments. 

TIGTA’s reports for FY 2017 addressed issues that included: 

 Improving Tax Compliance – Potential Employer Underreported Tax Not Being Addressed. 

TIGTA noted 114,088 (83 percent) Tax Year 2013 discrepancy cases were not worked. 

These cases had a potential underreported tax difference of more than $7 billion. 

 Improving Tax Compliance – Significant Reduction in Automated Substitute for Return 

Program Negatively Affected Compliance and Collection. The Automated Substitute for 

Return Program (ASRP) attempts to bring taxpayers who are required to file a tax return but 

do not into compliance. Revising the ASRP case selection strategy to include more potential 

high net-tax due cases could result in the collection of $843 million of additional taxes over 

the next five years. 

 Achieving Program Efficiencies and Cost Savings – Replacement of Aged Hardware 

Infrastructure. From FY 2013 to FY 2017, the IRS’s aged information technology hardware 

increased from 40 percent to 64 percent. The IRS’s stated objective is an acceptable level of 

20 to 25 percent. Aged information technology hardware still in use introduces unnecessary 

risks. Aged hardware failures may have a negative effect on IRS employee productivity, 

security of taxpayer information, and customer service. 

 Reducing Fraudulent Claims and Improper Payments – Identify Potentially Improper 

Refundable Credit Claims. Effective December 18, 2015, taxpayers must have a Taxpayer 

Identification Number (TIN) that was issued before the due date of the tax return to claim 

certain tax credits. However, the IRS does not have processes to identify claims where a TIN 

was not issued timely. As a result, the IRS paid more than $34.8 million in refundable tax 

credits to taxpayers whose TIN was not issued until after the tax period in question. In 

addition, the IRS still has not established processes to prevent individuals who have a nonwork Social Security Number from receiving the Earned Income Tax Credit (EITC). As a 

result, 49,310 individuals not authorized to work in the United States received almost $117.7 

million in potentially erroneous EITCs in Tax Year 2014. 
TIGTA - 10 

Description of Performance: 

TIGTA uses two performance measures to gauge the success of its audit program. The first 

measure indicates that TIGTA’s products are more likely to be used if they are delivered when 

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

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

promised (contract date).

The second measure assesses TIGTA’s effect on improving the IRS’s accountability, operations, 

and services. TIGTA makes recommendations designed to improve the administration of the 

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

non-financial benefits. Since the IRS needs time to act on recommendations, TIGTA uses the 

Department of the Treasury’s Joint Audit Management Enterprise System to track the percentage 

of four-year-old recommendations that have been implemented, rather than the results of the 

activities during the fiscal year in which the recommendations are made. TIGTA tracks 

recommendations that have not been implemented by the IRS and has a formal process with the 

IRS to close out unimplemented recommendations in situations in which circumstances may 

have changed or when the IRS has taken alternative corrective measures to address TIGTA’s 

audit findings. 

At the end of FY 2017, the actual Percentage of Audit Products Delivered When Promised to 

Stakeholders was 79 percent, which exceeded the full-year target of 68 percent. TIGTA 

exceeded this target as a result of ongoing supervisory monitoring of the execution of audits to 

ensure timely delivery of audit products to stakeholders. At the end of FY 2017, the actual 

Percentage of Recommendations Made That Have Been Implemented was 92 percent, which 

exceeded the full-year target of 85 percent. TIGTA exceeded its target because of continued 

discussions with the IRS throughout the audit process concerning both the findings and potential 

recommended solutions to ensure that feasible alternatives were identified. 

For FY 2019, the target for Percentage of Audit Products Delivered When Promised to 

Stakeholders will remain 68 percent. The target for Percentage of Recommendations Made That 

Have Been Implemented will remain at 85 percent. TIGTA believes that these measures are best 

attained through effective monitoring of ongoing audit work and essential communication with 

the IRS regarding findings and the most appropriate corrective action recommendations. As 

such, TIGTA’s OA will continue to accentuate the importance of these processes with the 

management cadre and staff.
TIGTA - 11 

2.1.2 – Investigations Resources and Measures 

Dollars in Thousands 

 Resource Level FY 2013 FY 2014 FY 2015 FY 2016 FY 2017* FY 2018 FY 2019 

 Actual Actual Actual Actual Actual Annualized 

CR Request 

Appropriated Resources    $89,452 $95,748 $101,476 $108,106 $100,819 $102,910 $98,409 

Reimbursable Resources    $400 $1,100 $429 $475 $357 $600 $600 

Unobligated Balances 

Brought Forward    0 0 $3,192 $3,220 $2,392 $2,626 $3,053 

Budget Activity Total $89,852 $96,848 $105,097 $111,801 $103,568 $106,136 $102,062 

FTE 451 433 442 460 469 469 469 

* The FY 2017 column This column reflects levels appropriated in H.R. 255, the Consolidated Appropriations Act of 2017. For 

further details on the execution of these resources see the 2019 Budget Appendix chapter for the Department of the Treasury. 

Measure FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2017 FY 2018 FY 2019

Actual Actual Actual Actual Actual Target Target Target

Percentage of Results From 

Investigative Activities 90 92 93 90 90 81 79 79

Investigations Budget and Performance 

($98,409,000 from direct appropriations, and $600,000 from reimbursable resources):

In addition to protecting the IRS’s ability to collect the majority of the revenue for the Federal 

Government’s operations, TIGTA, through its Office of Investigations, has the statutory 

responsibility of protecting the integrity of tax administration, as well as the IRS’s most valuable 

resource, its employees. 

TIGTA’s investigative resources are allocated based 

upon a performance model that focuses on three 

primary areas of investigation: 

 Employee integrity; 

 Employee and infrastructure security; and 

 External attempts to corrupt tax administration 

The performance model (Figure 1) uses a ratio of 

those investigations that have the greatest impact on IRS operations or the protection of Federal 

tax administration to the total number of investigations conducted. These performance measures 

guide OI’s activities and help to demonstrate the value of investigative accomplishments to 

TIGTA’s external stakeholders. 

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

impedes the IRS’s ability to enforce tax laws effectively. In FY 2017, 46 percent of TIGTA’s 

body of investigative work involved alleged employee misconduct. TIGTA’s investigative 

results convey a message to IRS employees that these types of activities will not go unchecked. 

TIGTA processed 10,638 complaints, opened 2,835 investigations, and closed 2,876 

investigations in FY 2017. During this period, 168 investigations cases of all types were 

accepted for criminal prosecution, and TIGTA referred for IRS action 1,119 cases of employee 

misconduct. As a result of one of TIGTA’s investigations into employee misconduct, a former 

Figure 1: Investigative Performance Model
TIGTA - 12 

IRS special agent was charged with corrupt interference with the IRS, filing false tax returns, 

theft of Government funds, and destruction or falsification of records.3 In another case, two IRS 

employees, pled guilty to their roles in the preparation and filing of fraudulent income tax 

returns, resulting in a total tax loss to the IRS of $130,124.4

 

Employee and Infrastructure Security: In FY 2017, TIGTA responded to 1,642 threat-related 

incidents. TIGTA has a statutory responsibility to identify, investigate, and respond to threats 

against IRS personnel and physical infrastructure. TIGTA also believes that through its 

investigations of threat-related incidents, it is creating a safe and secure environment for 

taxpayers who need to conduct business with the IRS. From FY 2011 through FY 2017, TIGTA 

has processed more than 15,737 threat-related complaints and investigated more than 8,194 

threats against IRS employees. In one investigation, a man who had previously mailed his 

severed finger to the IRS,5

 was arrested and indicted for knowingly sending a fake pipe bomb to 

the IRS.6

 

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

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

nonemployees, such as impersonation of the IRS, attempted bribery of IRS employees, 

international cybercrime and identity theft, and procurement fraud. 

Impersonation Scam: Since summer 2013, a significant part of TIGTA’s workload has 

consisted of investigating a telephone impersonation scam in which a victim receives an 

unsolicited telephone call from a person claiming to be an IRS agent. The caller, using a fake 

name, provides a “badge number” and claims the victim owes taxes and is criminally liable for 

the amount owed. The victim is threatened that if he or she fails to pay the tax immediately, the 

victim will be arrested, a suit will be filed, or some other form of adverse action will be taken. 

As of September 30, 2017, more than 2.1 million Americans reported that they have received one 

of these calls, and 12,027 victims have reported that they have collectively paid a total of more 

than $60.7 million to the scammers. As a direct result of TIGTA’s investigative efforts, in 

October 2016, 56 individuals, some of whom were located within the United States, plus five call 

centers located in India were indicted for the scam. Since the indictment, the impersonation calls 

have dropped by more than 90 percent. 

International Cybercrime and Identity Theft: The increasing number of data breaches in the 

private and public sectors means more personally identifying information than ever before is 

available to unscrupulous individuals. The Office of Investigation’s highly specialized group of 

criminal investigators with technical expertise in investigating electronic crimes, including 

computer intrusions and Internet-based fraud schemes, will continue to combat cybercriminals. 

In May 2015, criminals launched a coordinated attack on the IRS e-Authentication portal that 

resulted in the exploitation of the IRS Get Transcript Application, as well as the IRS Identity 

 

3

 E.D. Cal. Superseding Indict. filed Oct. 20, 2016. 

4

 E.D. Cal. Plea Agr. filed July 26, 2017; E.D. Cal. Plea Agr. filed Aug. 25, 2017. 5

 W.D. Wash. Crim. Compl. filed July 7, 2017. 

6

 W.D. Wash. Crim. Docket filed Sep. 6, 2017; W.D. Wash. Indict. filed Sep. 6, 2017. 
TIGTA - 13 

Protection Personal Identification Number application. It is estimated that more than 110,000 

taxpayers were impacted by this attack. A subsequent review of all of the activity on the system 

revealed that more than 700,000 taxpayers were impacted by similar abuses of the system by 

multiple bad actors over an extended period of time. In January 2016, a coordinated criminal 

effort was launched that exploited the IRS Electronic Filing PIN (e-File PIN) tool. The e-File 

PIN tool was created to provide taxpayers with a special PIN number that would allow the 

taxpayer to electronically file a Federal tax return. The IRS estimates the exploitation resulted in 

the issuance of over 100,000 e-File PINs that were used to file over $100 million dollars of 

fraudulent tax returns. As a result of this exploitation, on June 23, 2016, the IRS announced that 

it had disabled the e-File PIN application. Numerous investigations are underway on the 

individuals who obtained taxpayer information from both of these attacks. As a result of one of 

TIGTA’s cybercrime investigations, a Russian man was sentenced to 57 months’ imprisonment7

for his role in a sophisticated, large-scale stolen-identity refund fraud scheme.8

Procurement Fraud: On average, the IRS acquires approximately $2.1 billion annually in new 

contract awards. According to the Association of Certified Fraud Examiners’ 2016 “Report to 

the Nation,” 9 organizations lose more than 5 percent of their annual expenditures to fraud, waste, 

and abuse. In the case of IRS procurement, this projection translates to approximately $105 

million annually. 

Description of Performance: 

TIGTA’s OI has adopted performance measures that identify the percentage of results derived 

from investigative activities that most accurately align with the strategic goals of the 

organization and provide the greatest impact on the protection of the integrity of Federal tax 

administration. At the end of FY 2017, the Percentage of Results From Investigative Activities 

was 90 percent, which exceeded the full-year target of 81 percent. The Office of Investigations 

exceeded the FY 2017 performance measure as a result of the hard work of experienced 

executives, managers, and special agents. With the FY 2019 budget request, TIGTA will attempt 

to maintain its special agents’ skills and abilities in order to be able to respond to its mission 

requirements. 

For FY 2019, OI’s performance target is 79 Percent of Results From Investigative Activities. 

TIGTA is anticipating a high rate of turnover of its management team due to retirements. In 

addition, based on fiscal resources, TIGTA is anticipating the inability to backfill special agent 

positions. As experienced special agents retire or transfer from the agency, it is anticipated that 

TIGTA’s ability to effectively produce results will decrease in FY 2019. However, TIGTA’s OI 

will continue to provide the IRS with the investigative coverage and information necessary to 

improve the integrity of IRS operations and mitigate threats against its employees, facilities, and 

data systems. Through its investigative programs, OI will continue to protect the IRS’s ability to 

process approximately 246 million tax returns, collect more than $3.4 trillion in annual revenue, 

and issue over $400 billion dollars in refunds for the Federal Government.10 

 

7

 S.D. Fla. Judgment filed June 12, 2017. 

8

 S.D. Fla. Crim. Compl. filed Nov. 17, 2016. 

9

 Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse, 2016. 10 IRS, Management’s Discussion & Analysis, Fiscal Year 2017. 
TIGTA - 14 

Key Accomplishments and Budget Savings 

While the scope, complexity, and magnitude of the Nation’s economy and deficit continue to 

present significant challenges, TIGTA remains one of the best investments in the Federal 

Government. In FY 2017, through targeted and vigorous oversight efforts that addressed 

congressional concerns and its own audit and investigative priorities, TIGTA generated overall 

potential financial accomplishments of over $9.1 billion. 

During FY 2017, these potential financial accomplishments included: 

 Increased and/or protected revenue in the amount of $8.6 billion; 

 Cost savings of $439.1 million; and 

 Significant investigative accomplishments of $38.1 million. 

The phrase “cost savings” includes questioned costs and funds put to better use. 

Questioned costs are: 

 Costs that cannot be reimbursed because they represent a violation of law, regulation, or 

contract; 

 Expenditures that are not reasonable or necessary to accomplish the intended purpose; and 

 Costs that are appropriate, but for which the vendor cannot provide proof that the cost was 

incurred. 

Funds put to better use are funds that could be used more efficiently or effectively if 

management took actions to implement the recommendation(s), including but not limited to: 

 Reductions in outlays; 

 Avoidance of unnecessary expenditures noted in pre-award contract reviews; and 

 Prevention of erroneous payment of refundable credits. 

In addition to funds that could be put to better use, TIGTA’s investigative efforts resulted in over 

$31.8 million in court-ordered fines, penalties, and restitution. 

Funding for TIGTA allows its oversight efforts to 

continue, and for each dollar invested over the five-year 

period covering FYs 2013-2017, TIGTA has produced 

an average annual return of $106 (Figure 2). 

 

Figure 2: TIGTA’s Return on Investment 
TIGTA - 15 

Office of Inspections and Evaluations Highlights

The Office of Inspections and Evaluations (I&E) identifies opportunities for improvement in IRS 

and TIGTA programs by performing inspections and evaluations that report timely, useful, and 

reliable information to decision makers and stakeholders. 

The Office of Inspections and Evaluations provides a range of specialized services and products, 

including quick reaction reviews, on-site office inspections, and in-depth evaluations of major 

functions, activities, or programs. These activities provide TIGTA with additional flexibility, 

capacity, and capability to improve tax administration. Inspections serve to: 

 Provide factual and analytical information; 

 Monitor compliance; 

 Measure performance; 

 Assess the effectiveness of programs and operations; 

 Share best practices; and 

 Inquire into allegations of waste, fraud, abuse, and mismanagement. 

Evaluations often result in recommendations to streamline IRS operations, enhance data quality, 

and minimize inefficient and ineffective procedures. In FY 2017, I&E produced nine external 

reports, which include reviews of physical security controls at IRS locations, the IRS 

Occupational Safety and Health Program, the use of critical pay authority to hire employees, and 

employment tax evasion. 
TIGTA - 16 

Section III – Additional Information 

A – Summary of Capital Investments 

Technology Investments – TIGTA has no major IT investments; however, non-major 

investments include: 

 IT Applications and Collaboration – This investment represents an enterprise view of 

TIGTA's applications development which includes system design, development, testing, 

deployment, and maintenance of information applications systems.

 IT Infrastructure End-User Systems and Support – This investment is an enterprise view 

of TIGTA's end-user hardware, peripherals and software, and the Service Desk.

 IT Infrastructure Mainframe and Servers Services and Support – This investment 

represents an enterprise view of TIGTA's servers, including hardware and software 

operations, licensing, maintenance, back-up, continuity of operations, disaster recovery, 

virtualization, and data center consolidation.

 IT Infrastructure Telecommunications – This investment represents an enterprise view of 

TIGTA's data networks and telecommunications hardware and software operations, licenses, 

maintenance, back-up, continuity of operations, and disaster recovery.

 IT Security Systems and Enterprise Architecture – This investment represents TIGTA's 

IT investments responsible for enterprise architecture services.

The Office of Information Technology provides cost-effective and timely IT products and 

services that permit successful completion of TIGTA’s business goals, while at the same time 

meeting legislative and other executive mandates. The following are TIGTA’s FY 2019 

prioritized information technology requirements that directly support TIGTA operations: 

 Continuous Diagnostics and Mitigation (CDM) – The CDM program is intended to 

provide TIGTA with the capabilities and tools to identify cybersecurity risks on a repeatable 

and recurrent basis, prioritize these risks based upon their potential impact, and enable 

cybersecurity and operational personnel the opportunity to timely address the most 

significant problems. 

 Infrastructure Refresh in Atlanta Service Center (ATSC) – TIGTA’s major infrastructure 

equipment located at the ATSC is eligible for refresh in FY 2019. The refresh will enable 

TIGTA to operate more efficiently and maintain and improve TIGTA’s security posture. 

New storage technologies (e.g., Solid-State Drives) will offer TIGTA opportunities for 

greater efficiency and enhancements in capacity, confidentiality, cybersecurity, power 

savings, system availability/responsiveness, and improved productivity. 

 Increased Bandwidth – The bandwidth for TIGTA’s field offices must be upgraded to 

support the increased demand for improved transmission of data, application utilization, 

audio and video conferencing, and more. 

 Network Segmentation – The enhancement of a more secure configuration will ensure that 

network data and personally identifiable information will be more readily protected against 

cyberattacks and leaks. The purpose of network segmentation is to increase TIGTA’s overall 

security and performance posture which would prevent sideways and undetected movement 

by would-be intruders. 

 Research, Analysis, Forensics, and Evidence system (RAFE) – The RAFE will be used by 

TIGTA for cyber analysis, tracking, and defense against potential cyber threats directed at 

both TIGTA and IRS as well as uncovering other threats to tax administration including 

seizure of evidence and analysis of activities (e.g., scammers). RAFE will directly benefit 
TIGTA - 17 

TIGTA as it will remove current security and privacy vulnerabilities and open the door to 

many new cybercrime capabilities that cannot be accommodated currently. The expected 

initial implementation is underway for FY 2018, and TIGTA expects to continue its full 

implementation in FY 2019. 

Law Enforcement Vehicles –TIGTA acquires its vehicles by lease through the General Services 

Administration. However, TIGTA will maintain ownership of approximately eight 

surveillance/communications vehicles. These vehicles will remain part of TIGTA’s capital asset 

strategy. The vehicles will be used to support TIGTA’s investigations and must meet the 

mission-critical need to conduct criminal law enforcement activities. TIGTA communications 

vehicles also are used in support of its Continuity of Operations (COOP) Plan. COOP provides a 

mechanism for the organization to recover full operational capability following a critical 

incident, including the capability to communicate during a local or national emergency.

A summary of capital investment resources, including major IT and non-technology investments, 

can be viewed and downloaded at: 

http://www.treasury.gov/about/budget-performance/Pages/summary-of-capital-investments.aspx 

This website also contains a digital copy of this document.