Treasury Inspector General for 

Tax Administration 

FY 2016 

President’s Budget 

February 2, 2015 
TIGTA - 2 

Table of Contents

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

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

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

1B – Vision, Priorities and Context ............................................................................................ 3

Section 2 – Budget Adjustments and Appropriation Language ............................................. 15

2.1 – Budget Adjustments Table ............................................................................................... 15

2A – Budget Increases and Decreases Description ................................................................... 15

2.2 – Operating Levels Table .................................................................................................... 18

2B – Appropriations Language and Explanation of Changes ................................................... 19

2C – Legislative Proposals ........................................................................................................ 19

Section 3 – Budget and Performance Plan ............................................................................... 20

3A – Audit................................................................................................................................. 20

3.1.1 – Audit Budget Activity Budget and Performance Plan .................................................. 23

3B – Investigations ................................................................................................................... 23

3.1.2 – Investigations Budget and Performance Plan ............................................................... 27

Section 4 – Supplemental Information ...................................................................................... 28

4A – Summary of Capital Investments ..................................................................................... 28

 
TIGTA - 3 

Section 1 – Purpose 

1A – Mission Statement 

Provide quality professional audit, investigative, and inspections and evaluations services that 

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

1.1 – Appropriations Detail Table 

Dollars in Thousands

Treasury Inspector General for Tax 

Administration FY 2014 FY 2015 FY 2016 FY 2015 to FY 2016

Appropriated Resources Enacted Enacted Request $ Change % Change

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Audit 349 60,850 349 61,572 358 65,100 9 3,528 2.58% 5.73%

Investigations 486 95,525 486 96,638 501 102,175 15 5,537 3.09% 5.73%

Subtotal New Appropriated Resources 835 $156,375 835 $158,210 859 $167,275 24 $9,065 2.87% 5.73%

Other Resources:

Reimbursables 2 1,700 2 1,500 2 1,500 0 0 0.00% 0.00%

Subtotal Other Resources 2 $1,700 2 $1,500 2 $1,500 0 $0 0.00% 0.00%

Total Budgetary Resources 837 $158,075 837 $159,710 861 $168,775 24 $9,065 2.87% 5.68%

1B – Vision, Priorities and Context 

The Treasury Inspector General for Tax Administration (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)1 with a statutory mandate to provide 

oversight by conducting independent audit, investigative, and inspections and evaluations 

services necessary to improve the quality and credibility of Internal Revenue Service (IRS) 

operations, including oversight of the IRS Chief Counsel and the IRS Oversight Board. TIGTA 

conducts independent reviews and provides an unbiased perspective for improving the economy, 

efficiency, and effectiveness of IRS programs. TIGTA 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 taxpayers’ data. TIGTA also has the unique responsibility of protecting the IRS and 

its employees. 

TIGTA continues to be committed to its vision and mission, and to accomplishing its strategic 

goals and objectives. TIGTA safeguards the integrity of and the public’s trust and confidence in 

Federal tax administration through the audits, investigations, and inspections and evaluations it 

conducts. This focus is a matter of extreme importance given the current economic environment 

and the increased emphasis by the Administration, Congress, and the American people on 

Federal Government accountability and its efficient use of resources. The American people must 

be able to trust that their Government is taking action to stop wasteful practices and ensure that 

every tax dollar is spent wisely. 

 

1

 Pub. L. No. 105-206, 112 Stat. 685. 
TIGTA - 4 

 

TIGTA’s Fiscal Year 2013 – 2016 Strategic Plan guides program and budget activities and 

supports the Department of the Treasury’s FY 2014-2017 Strategic Plan (the Plan), which 

includes Strategic Goal 2: “Fairly and effectively reform and modernize Federal financial 

management, accounting, and tax systems.” 

TIGTA’s vision is specifically consistent with objective 3.2 of the Plan, “Improve the 

disbursement and collection of Federal funds and reduce improper payments made by the U.S. 

Government.” Likewise, TIGTA’s vision supports objective 3.3 of the Plan, “Pursue tax reform, 

implement the Patient Protection and Affordable Care Act (ACA)2

 and the Foreign Account Tax 

Compliance Act (FATCA),3 and improve the execution of the Internal Revenue Code (IRC or 

tax code).” 

TIGTA’s progress in meeting the strategic goal of valuing its people was demonstrated last year 

when the Partnership for Public Service announced the results of the 2014 Best Places to Work

rankings. TIGTA placed 10th out of 315 agency subcomponents. The scoring index measured 

the performance of agency subcomponents related to employee satisfaction and commitment. 

Among all Treasury bureaus, TIGTA placed the highest in this ranking.

TIGTA’s headquarters facility is in Washington, D.C., and TIGTA has 67 offices located 

throughout the United States and Puerto Rico. TIGTA is uniquely organized by function, to 

meet current tax administration challenges and to keep pace with emerging issues. These 

functions include: 

 Office of Audit (OA) – This Office conducts audits and issues reports that advise the 

American people, Congress, the Secretary of the Treasury, and IRS management of high-risk 

issues relating to the administration of IRS programs and operations. TIGTA’s audit 

recommendations aim to improve IRS systems and operations, while emphasizing fair and 

equitable treatment of taxpayers. 

 Office of Investigations (OI) – This Office investigates external threats of violence against 

IRS employees and facilities and internal allegations of criminal and administrative 

 

2

 Pub. L. No. 111-148, 124 Stat. 119, as amended by the Health Care and Education Reconciliation Act of 2010, 

Pub. L. No. 111-152, 124 Stat. 1012. 

3

 Hiring Incentives to Restore Employment (HIRE) Act of 2010, Title V, Pub. L. 111-147, 124 Stat. 71. 

TIGTA Vision 

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 Strategic Goals 

Promote the economy, efficiency, and effectiveness of tax administration. 

Protect the integrity of tax administration. 

Continue to be an organization that values its people.
TIGTA - 5 

misconduct by IRS employees and contractors. OI also conducts investigations to protect the 

IRS against bribery attempts; impersonations; and external, cyberbased, and often globally 

complex threats that would impede the IRS’s ability to collect revenues and safeguard the 

processing of approximately 199 million returns annually. 

 Office of Inspections and Evaluations (I&E) – This Office provides responsive, timely, and 

cost-effective inspections and evaluations of challenging areas in IRS programs. I&E’s 

oversight activities are designed to identify high-risk systemic inefficiencies in IRS 

operations and to investigate exploited weaknesses in tax administration. 

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 

Fiscal Year (FY) 2014, through targeted 

and vigorous oversight efforts that 

addressed congressional concerns and audit 

and investigative priorities, TIGTA 

generated overall financial 

accomplishments of $16.6 billion. 

These financial accomplishments included: 

 Increased and/or protected revenue in 

the amount of $7.7 billion; 

 Cost savings of $8.7 billion 

 Significant Investigative Accomplishments of $.037 billion, and 

 Other Financial Benefits of $.119 billion. 

Funding for TIGTA allows oversight efforts to continue, and in FY 2014, these efforts produced 

a return on investment (ROI) of $106 for every $1 invested (Figure 1). For example, during that 

period TIGTA issued audit reports with recommendations that potentially increased and/or 

protected revenue of $7.7 billion. Increased/protected revenue includes the assessment or 

collection of additional taxes (increased revenue) and ensuring the accuracy of the total taxes, 

penalties, and interest paid to the Federal Government (revenue protection). TIGTA also issued 

Figure 1: TIGTA’s Return on Investment
TIGTA - 6 

audit reports with recommendations that identified a potential $8.7 billion in cost savings. The 

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

Questioned costs are: 

 Costs that cannot be reimbursed because such costs represent a violation of law, regulation, 

or contract; 

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

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

incurred. 

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

management took actions to implement and complete the recommendation, 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 

$15,319,984 in court-ordered fines, penalties, restitution, and recovery of embezzled/stolen 

funds. 

To continue strengthening its oversight and issuing results-driven recommendations, TIGTA 

must: 

 Adapt to the evolving nature of IRS operations and mitigate internal and external risks 

associated with security, modernization, tax compliance and the tax gap, tax-exempt 

organizations, offshore tax evasion, identity theft, procurement fraud, and the implementation 

of tax laws including ACA; 

 Respond to threats and attacks against IRS employees, property, and sensitive information; 

 Conduct comprehensive audits and inspections and evaluations that identify problems and 

include recommendations which result in higher revenue and less waste, fraud, and abuse; 

and 

 Inform the American people, Congress, and the Secretary of the Treasury of the challenges 

confronting the IRS and its efforts to increase voluntary tax compliance, and to address 

identity theft and tax fraud. 

FY 2016 Budget Request 

TIGTA’s FY 2016 budget request of $167,275,000 represents an increase of 5.73 percent above 

the FY 2015 enacted budget. These resources will fund critical audit, investigative, and 

inspections and evaluations 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),4

 TIGTA submits the following information related to its FY 2016 Budget Request: 

 The aggregate budget request for TIGTA operations is $167,275,000; 

 The portion of the request needed for TIGTA training is $1,766,000; and 

 

4

 5 U.S.C. app. 3 § 6(f)(1). 
TIGTA - 7 

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

Integrity and Efficiency is $451,000. 

The amount requested for training supports TIGTA’s training needs for FY 2016. 

FY 2016 Priorities 

TIGTA’s audit, investigative, and inspections and evaluations priorities include: 

 Identifying opportunities to improve the administration of the Nation’s tax laws and achieve 

program efficiencies and cost savings; 

 Mitigating risks associated with: security over taxpayer data and employees; information 

systems modernization; identity theft; oversight of tax-exempt organizations; procurement 

fraud; tax compliance; the implementation of tax law changes; and human capital challenges 

facing the IRS in its domestic and/or international operations; 

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

threats against its employees, facilities, and data systems; 

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

data infrastructure, and sensitive information; 

 Rapidly and effectively responding to attempts to impersonate the IRS for fraudulent 

purposes; 

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

misconduct, including the unauthorized disclosure of confidential taxpayer information by 

IRS employees; 

 Conducting comprehensive audits and inspections and evaluations that provide 

recommendations for achieving monetary benefits; addressing erroneous and improper 

payments; and enhancing the service the IRS provides to taxpayers; 

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

a timely basis once all facts are known; 

 Overseeing the IRS’s efforts to administer tax provisions of the ACA; and 

 Overseeing the IRS’s efforts in reducing tax noncompliance of U.S. businesses and 

individual taxpayers residing and working overseas. 

Closing the Federal Tax Gap 

Increasing voluntary taxpayer compliance and reducing the tax gap remain the focus of many 

IRS initiatives. In FY 2012, the IRS updated its estimates of the tax gap. The gross tax gap - the 

difference between estimated taxes owed and taxes voluntarily paid on time - was $450 billion in 

2006, an increase from the $345 billion estimated in 2001. Although the IRS reported that the 

tax gap is caused by both unintentional taxpayer errors and willful tax evasion or cheating, it 

does not have sufficient data to differentiate the amounts attributable to each. The IRS also 

reported that meaningful improvement in the voluntary compliance rate requires a long-term, 

focused effort involving taxpayer service, modernization, and enforcement. Tax compliance 

initiatives include the administration of tax regulations, the collection of the correct amount of 

tax from businesses and individuals, and the oversight of tax-exempt and government entities. 

TIGTA will continue to direct its efforts to reduce the tax gap. In FY 2014, TIGTA reported that 

the IRS could better use third-party data to detect potentially improper Simplified Employee 

Pension deductions and potentially realize $29 million in revenue over five years. 
TIGTA - 8 

Office of Audit 

The budget for OA provides funding for comprehensive and independent audits of IRS programs 

and operations that help promote sound administration of the Nation's tax laws. Audit coverage 

is determined by assessing the risks associated with the potential audit universe and identifying 

the highest priority audits to address major management challenges and key emphasis areas. 

Sufficient funding will allow TIGTA to continue its oversight responsibilities and audit coverage 

of the major management challenges facing the IRS. Audit activities are also focused on 

assessing key areas in which the IRS faces major risks, including: 

 Tax-exempt organizations; 

 Identity theft detection and prevention; 

 ACA implementation and administration; and 

 International tax compliance. 

The President signed into law significant changes to the Nation’s health care system under the 

ACA. Multiple ACA provisions have been added to the IRC and existing provisions in the IRC 

have been amended. At least eight of those provisions require the IRS to build new processes in 

tax administration. These provisions provide incentives and tax breaks to individuals and small 

businesses to offset health care expenses. They also impose penalties, administered through the 

IRC, for individuals and businesses that do not obtain health coverage for themselves or their 

employees. Other provisions raise revenue to offset the costs of health care reform. TIGTA’s 

independent oversight plays a key role in ensuring that these provisions are implemented and 

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

Beginning in 2014, most individuals are required to maintain minimum essential coverage. A 

penalty (Individual Shared Responsibility Payment) will be imposed on individuals who fail to 

have minimum essential coverage for themselves and their dependents. The penalty is assessed 

through the tax code and accounted for as an additional amount of Federal tax owed. In addition, 

some low-to middle-income individuals will be eligible to receive a refundable tax credit known 

as a Premium Tax Credit (PTC), intended to assist them with the cost of obtaining required 

health insurance coverage. Individuals will begin claiming the tax credit on their Tax Year 

(TY) 2014 tax returns. 

FY 2016 will be a significant year for the IRS’s implementation of ACA provisions. Due to 

delays in employer reporting requirements, tax returns processed in 2016 will be the first returns 

for which the IRS will have all the reporting information required under the ACA to verify 

related claims on the returns. TIGTA will continue to evaluate the effectiveness of IRS’s 

processing of returns to verify compliance with the individual coverage mandate and the 

accuracy of PTC claims. The IRS will also continue to assess the reliability of the data it 

receives from the exchanges for use in verifying PTC claims and individual compliance with the 

requirement to have insurance coverage. 

In addition, TIGTA will continue its assessment of IRS efforts to identify questionable PTC 

claims, including the IRS’s continued development of systems to prevent, detect, and resolve 

fraud and abuse during ACA tax return processing. The IRS’s ACA implementation plan, when 

fully developed and implemented is designed to leverage third party reporting from the 

exchanges and new computer analytical capability built into the Return Review Program. 
TIGTA - 9 

The plan calls for the development of the ACA Validation Service, which will be used to identify 

improper ACA-related refunds. The ACA Validation Service will be designed to perform 

screening for improper refunds, and will identify fraudulent schemes that include multiple 

returns. Until these new systems are successfully developed, TIGTA remains concerned that the 

IRS’s existing fraud detection system may not be capable of identifying ACA refund fraud or 

schemes prior to the issuance of tax refunds. Many of the ACA tax provisions on Health and 

Human Services (HHS) and IRS processes and procedures will also require continued 

coordination between TIGTA and HHS’s Office of Inspector General during FY 2016. 

OA has a continuing need to provide close oversight of the IRS’s tax-exempt organization 

program. In FY 2013, TIGTA issued a report on the IRS’s processing of applications from 

organizations claiming tax-exempt status under I.R.C. 501(c)(3) and I.R.C. 501(c)(4). This 

report highlighted ineffective management in this area and identified inappropriate practices by 

IRS employees who processed these cases. Congress has called for continuing oversight by 

TIGTA of the IRS’s tax-exempt program to ensure that these problems have been corrected and 

will never happen again. In his February 5, 2014, congressional testimony before the House 

Ways and Means Committee, Subcommittee on Oversight, on the State of the IRS, the IRS 

Commissioner stated that the IRS has implemented all of the recommendations in TIGTA’s audit 

report. The IRS has taken various actions, including establishing guidelines, training employees, 

and issuing proposed regulations. TIGTA will continue evaluating whether the IRS has the 

proper structure and processes in place to provide impartial and effective oversight for 

organizations seeking or operating under tax-exempt status. 

Office of Investigations 

In FY 2014 through its investigative 

programs, OI sought to protect the IRS’s 

ability to process 199 million tax returns and 

collect over $3.1 trillion in annual revenue 

for the Federal Government by investigating 

IRS employee misconduct and criminal 

activity, threats to IRS employees and 

facilities, and attempts to impede or 

otherwise interfere with the IRS’s collection 

efforts (Figure 2). 

Funding OI allows TIGTA to meet the significant challenges facing the IRS in the 

implementation of a fair and effective system of tax administration. IRS employees are entrusted 

with the sensitive personal and financial information belonging to the American taxpayers. 

Because the Federal tax system is based on voluntary compliance, it is also essential to the 

public’s confidence that information given to the IRS for tax administration purposes be 

adequately safeguarded and kept confidential. Employee misconduct not only breaks the 

public’s trust and confidence, but also undermines the IRS’s ability to deliver taxpayer service, 

enforce tax laws effectively, and collect taxes owed. 

TIGTA’s OI places the highest priority on its statutory responsibility to safeguard approximately 

95,000 IRS employees located in 670 facilities throughout the United States. Threats of physical 

Figure 2: TIGTA’s Protection of the Federal Tax System 
TIGTA - 10 

violence, harassment, and intimidation of IRS employees are criminal violations that OI 

aggressively investigates and refers for prosecution. As a result, IRS employees feel more secure 

in their work environment and can focus on performing their critical jobs. By maintaining a 

constant focus on the expanding threat environment, OI balances its attention on this critical area 

and its other investigative programs that help to protect the integrity of the Federal tax system. 

Emerging Issues 

ACA: TIGTA anticipates a rise in the number of complaints and investigations because of the 

IRS’s increased role in the ACA implementation. This budget request will allow TIGTA to 

investigate ACA-related allegations, timely respond to threats and assaults against IRS 

employees and facilities, and provide armed escorts to IRS employees who meet with potentially 

dangerous taxpayers. TIGTA anticipates an increase in: 

 The number of threats against IRS employees and facilities as the IRS begins collecting ACA 

tax penalties that take effect in 2015; 

 The number of ACA-related impersonation investigations by criminals attempting to 

fraudulently obtain personally identifiable information from unsuspecting taxpayers; and 

 The number of employee integrity investigations, to ensure that IRS employees and 

contractors are appropriately safeguarding sensitive information from taxpayers’ health 

insurers and prevent the potential for unauthorized access to, or disclosure of, confidential 

taxpayer information. 

International Cybercrimes and Identity Theft: By the end of Calendar Year (CY) 2012, the IRS 

reported almost 1.8 million identity theft cases. Taxpayers who were victims of identity theft 

brought approximately 16 percent of these cases to the attention of the IRS, and the IRS detected 

about 84 percent. The tools and techniques used by the perpetrators of identity theft are such that 

they can be deployed from anywhere in the world, without regard to borders, using Internetconnected computers. The FY 2016 budget request includes resources needed to combat 

cybercriminals by funding a highly specialized group of criminal investigators with technical 

expertise in investigating electronic crimes, including computer intrusions and Internet-based 

fraud schemes. 

The electronic system of tax administration that is 

conducted over IRS computer networks is targeted 

for malicious activity each day from network 

connections located throughout the world. 

Because many cybercriminals reside outside the 

United States, TIGTA special agents work with 

law enforcement personnel in foreign countries 

(Figure 3) to identify leads and execute search and 

arrest warrants. The FY 2016 resources will allow 

TIGTA to recruit and retain highly trained special 

agents that will support these critical international 

investigations. Figure 3: Examples of countries linked to TIGTA 

cybercrimes investigations
TIGTA - 11 

Office of Inspections and Evaluations 

TIGTA's I&E provides a range of specialized services and products, including quick reaction 

reviews, onsite office inspections, and in-depth evaluations of a major function, activity, or 

program. Inspections: 

 Provide factual and analytical information; 

 Monitor compliance; 

 Measure performance; 

 Assess the effectiveness and efficiency 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 2014, I&E produced 14 reports. 

Two inspections reviewed IRS expenditures under the American Recovery and Reinvestment 

Act of 2009.5 Seven inspections reviewed deposits delivered by Submission Processing 

employees; physical controls at selected facilities; Submission Processing Centers’ mailroom 

screening processes for hazardous materials; executive long-term taxable travel; compliance with 

U.S. Constitution training requirements; compliance with the Lautenberg Amendment;6

 and a 

follow-up review of controls over religious compensatory time. Finally, I&E produced a 

comprehensive evaluation of past audit recommendations that have not been implemented by the 

IRS. 

I&E will provide oversight of the IRS’s administration of the ACA and implementation of the 

FATCA. I&E provides TIGTA with additional flexibility, capacity, and capability to produce 

value-added products and services to improve tax administration. Inspections usually are more 

limited in scope and completed in a more compressed period of time than are traditional audits. 

The work of I&E complements the Offices of Audit and Investigations, and its findings may 

result in subsequent audits and/or investigations. 

Office of Information Technology 

TIGTA’s Office of Information Technology (OIT) provides cost-effective, timely Information 

Technology (IT) products and services that permit successful completion of TIGTA’s business 

goals while meeting legislative mandates. By developing, providing, and supporting a wide 

variety of IT products and services, OIT facilitates the collection, management, analysis, and 

dissemination of information for the benefit of audit, investigative, legal, and management 

services. 

TIGTA has no major IT investments based on the criteria of the Office of Management and 

Budget (OMB) and the Department of the Treasury. Several non-major investments, however, 

directly support the mission, strategy, and day-to-day operations of TIGTA. 

These investments include: 

 Secure IT Mobility; 

 Server and Storage Infrastructure; 

 

5

 Pub. L. No. 111-5, 123 Stat. 115. 

6

 18 U.S.C. § 922(g)(9). 
TIGTA - 12 

 Refreshed Applications and Collaboration Environment; 

 IT Governance and Total Cost of Ownership; and 

 Telecommunications Infrastructure. 

TIGTA’s Audit, Investigations, and Inspections and Evaluations functions rely heavily on the 

products and services provided by OIT to execute TIGTA’s mission. Information Technology is 

the critical force that allows auditors, special agents, and inspectors and evaluators to accomplish 

their objectives within the staffing and physical constraints that might otherwise prevent their 

completion. As the demands on the organization grow, it becomes increasingly dependent on the 

use of technology. Those demands translate into the need for more and improved IT services 

and the skilled staff to provide those services to the organization. 

In addition to auditing and reporting on the condition of IT security at the IRS, TIGTA, like all 

Federal agencies, faces its own challenges regarding compliance with the security mandates and 

recommendations of OMB, Department of Homeland Security, Executive Orders, and National 

Institute of Standards and Technology guidance. To prevent the compromise of the data 

obtained within the parameters of its jurisdiction, TIGTA must aggressively ensure that its own 

security posture is properly maintained. This requires training for staff that will allow them to be 

both knowledgeable in IT security and skilled in its practice. 

Safeguarding the IRS and Providing Comprehensive Oversight 

TIGTA places its highest priority on ensuring the safety and security of IRS employees and 

facilities. TIGTA evaluates intelligence information regarding potential violent acts against the 

IRS and develops proactive leads from other law enforcement agencies and sources to mitigate 

potential threats. 

 

As part of these improvements, the Threat Information and Critical Incident Response Center 

Initiative was created to ensure that threats against IRS personnel, facilities, or critical 

infrastructure are effectively and proficiently identified, investigated, and mitigated. 

Additionally, OI has established a Threat Information Notification System (TINS) to ensure the 

efficient and accurate distribution of threat-related information to all impacted stakeholders. The 

TINS protocol supports key personnel within TIGTA and the IRS, and provides for real-time 

information sharing to facilitate the protection of the IRS’s most important resource, its 

employees. 

TIGTA and the IRS are now better positioned to make decisive investigative and security 

decisions affecting IRS personnel, facilities, and critical infrastructure well into the future. 

Security for Taxpayer Data and Employees: The IRS faces the daunting task of securing its 

computer systems against the growing threat of cybercrimes. Effective information systems 

security is essential to ensure that data are protected against inadvertent or deliberate misuse, 

unauthorized disclosure, or destruction, and that computer operations supporting tax 

administration are secured against disruption or compromise. In addition to securing a vast 

amount of sensitive financial and personal data, the IRS must also protect approximately 95,000 

employees and 670 facilities throughout the United States. These operating conditions are 
TIGTA - 13 

challenging for the IRS and underscore the need for continued vigilance in the area of physical 

and personnel security. 

In FY 2014, TIGTA issued a report noting that the IRS’s network conversion to Internet Protocol 

version 6 (IPv6) introduces security risks if the conversion is not implemented and managed 

properly. The IRS controls were not established to ensure that all new IT purchases were IPv6 

capable. Unsecured data and networks are vulnerable to unauthorized disclosure, which can lead 

to identity theft. Furthermore, security breaches can cause network disruptions and prevent the 

IRS from performing vital services such as processing tax returns, issuing refunds, and 

answering taxpayer inquiries. 

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

employees who inspect tax information without authorization (commonly known as UNAX). 

The initial investigation into the allegation of UNAX by an IRS employee often leads to the 

discovery of other criminal violations, including fraud and identity theft. The importance of 

efforts to detect UNAX is often underestimated, because too often UNAX is seen as browsing by 

bored employees. IRS employees who are found to have committed UNAX violations may be 

subject to fines, imprisonment, and/or loss of their jobs. In FY 2014, TIGTA initiated 287 

UNAX investigations, and closed 217 cases that resulted in adjudicated personnel actions against 

IRS employees. 

 

Another significant oversight responsibility is TIGTA’s review of the IRS’s computer 

applications that contain sensitive information. The IRS currently has 132 application systems 

that process sensitive data. Eighty-three of those applications are considered to be at risk for 

UNAX. With the FY 2016 resources, TIGTA can ensure that these applications are evaluated 

properly. In addition, TIGTA can make necessary recommendations so the IRS can implement 

improvements to mitigate these risks. 

 

TIGTA’s outreach program continues to play an important role in its broader efforts to raise 

awareness, educate, and train IRS employees and tax practitioners about potential threats and 

crimes against the IRS and taxpayers. Every year, special agents conduct security awareness 

presentations to educate IRS employees of TIGTA’s oversight responsibility and share 

information to help identify ways to prevent physical assaults and threats and deter waste, fraud, 

and abuse. In FY 2014, TIGTA provided 1,138 awareness presentations to 36,471 IRS 

employees and 23 awareness presentations to 3,074 tax practitioners and preparers. 

Fraudulent Claims and Improper Payments: The Improper Payments Information Act of 20027

defines an improper payment as any payment that should not have been made or that was made 

in an incorrect amount (both overpayments and underpayments) under statutory, contractual, 

administrative, or other legally applicable requirements. In FY 2014, TIGTA issued a report 

noting that the IRS developed a project to identify business taxpayers erroneously claiming the 

Advance Energy Credits; however, the IRS does not have a similar program for individual 

taxpayers. TIGTA’s review identified over $3 million in Advance Energy Credits claimed by 

individuals in TY 2011 who were potentially ineligible to receive the credit. TIGTA, in another 

report, indicated that by comparing third-party data to tax returns claiming a qualified retirement 

 

7

 Pub. L. No. 107-300, 116 Stat. 2350. 
TIGTA - 14 

savings contribution credit, the IRS could have identified approximately $53 million in 

potentially false or overstated credits and protected this revenue. 

Achieving Program Efficiencies and Cost Savings: During the fall of 2011 through the summer 

of 2012, numerous Department of the Treasury, OMB, Presidential Executive Orders, and other 

guidance documents were issued to ensure that the Federal Government acts as a good steward 

of taxpayer money by identifying opportunities to promote efficient and effective spending and 

eliminating excessive spending on conferences and travel. In FY 2014, TIGTA issued a report 

indicating that the IRS’s inadequate management of software licenses has resulted in an 

estimated waste of $11.6 million and overutilization of $1.5 million in license and software 

subscription support fees. 

Advising Congress: In FY 2014, TIGTA provided three testimonies, over 30 briefings, and 

more than 15 official written responses to Congress on its audit, investigative, and inspections 

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

congressional committees on critical issues involving IRS programs and operations. 

Fraud and Electronic Crime: Historically, investigations and audits have shown that the 

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

others residing throughout the world who could use the information to commit crimes involving 

fraud and identity theft. TIGTA’s audit, investigative, and inspections and evaluations work 

provides coverage of this growing national and international problem, providing proactive 

prevention and detection efforts that are critically necessary in this highly vulnerable and everevolving area. As described in Homeland Security Presidential Directive 7, IRS operations that 

fund the Federal Government are part of the Nation’s key resources and critical infrastructure, 

which provide essential services that underpin American society. Degradation of the public’s 

trust in the tax system would lead to a decline in voluntary compliance and present a risk to 

national security. 

Promoting Efficient Spending and the Campaign to Cut Waste: TIGTA continues to uphold its 

commitment to promote efficient spending and cutting waste. All capital investments and major 

acquisitions undergo a rigorous review by TIGTA’s Investment Review Board. This Board 

performs regular monitoring of capital investments and major acquisitions to ensure proper 

management of these investments. For FYs 2015 and 2016, TIGTA will continue to scrutinize 

its budget and identify areas for cost savings and efficiencies. For example, TIGTA will reduce 

costs by consolidating and reducing space. Additionally, in FY 2016, TIGTA will reduce the 

cost of background investigations of employees who hold positions that are designated as 

sensitive. 

In order to maintain a highly skilled, proactive, and diverse Inspector General organization with 

a reputation of protecting and promoting fair tax administration, TIGTA’s employees will 

require ongoing training to meet the challenge of staying abreast of changing IRS programs and 

priorities. In addition, TIGTA will ensure that its workforce receives training that strengthens 

the knowledge and skills it needs to continue to protect the public’s and Congress’s confidence 

in the tax system. 

 
TIGTA - 15 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Treasury Inspector General for Tax Administration FTE Amount

FY 2015 Enacted 835 $158,210

Changes to Base:

Maintaining Current Levels (MCLs): - $2,557

Pay-Raise - $1,249

Pay Annualization - $319

FERS Contribution Increase - $426

Non-Pay - $563

Efficiency Savings: - ($84)

Personnel Security Background Investigations - ($17)

Space Optimization - ($67)

Subtotal Changes to Base - $2,473

Total FY 2016 Base 835 $160,683

Program Changes:

Program Increases: 24 $6,592

Enhance Capabilities to Protect the Tax Administration System 

Against Fraud & Cyberthreats 24 $6,592

Total FY 2016 Request 859 $167,275

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ...................................................... +$2,557,000 / +0 FTE

Pay-Raise +$1,249,000 / +0 FTE 

Funds are requested for the proposed January 2016 pay-raise. 

Pay Annualization +$319,000 / +0 FTE 

Funds are requested for annualization of the January 2015 pay-raise. 

FERS Contribution Increase +$426,000 / +0 FTE 

Funds are requested for increases in agency contributions to FERS based on updated actuarial 

estimates. 

Non-Pay +$563,000 / +0 FTE 

Funds are requested for non-labor costs such as travel, contracts, rent, and equipment. 

Efficiency Savings ........................................................................................... -$84,000 / +0 FTE 

Personnel Security Background Investigations -$17,000 / +0 FTE 

TIGTA will generate a savings of $17,000 from a reduction in the number of personnel 

investigations it will need to conduct based on the results of an ongoing position sensitivity 

designation review. 

Space Optimization -$67,000 / +0 FTE 

TIGTA will achieve real property cost savings through the reduction of space, non-renewal of 

lease agreements, and/or the consolidation of existing space. TIGTA continues to implement 
TIGTA - 16 

telework and office right-sizing measures in order to reduce its footprint. As a result, TIGTA 

will need less building space, generating a savings of $67,000. 

Program Increases .................................................................................. +$6,592,000 / +24 FTE

Enhance Capabilities to Protect the Tax Administration System Against Fraud & Cyberthreats 

+$6,592,000 / +24 FTE 

The threats to the Nation’s tax system are growing in complexity and sophistication. The IRS 

processes over $3.1 trillion in Federal tax payments and it receives, processes, and stores 199 

million tax returns for 145 million taxpayers. The IRS’s computer systems are accessed by 

roughly 95,000 IRS and contract personnel located throughout the United States and the world. 

For FY 2014, the IRS managed over $2.6 billion in contracts to support its tax administration 

duties. 

In FY 2012, the IRS estimated the gross tax gap, which is the difference between estimated taxes 

owed and taxes voluntarily paid on time, was $450 billion in 2006. The tax gap is caused by 

both unintentional taxpayer errors and willful tax evasion or cheating, and the IRS does not have 

data to differentiate the amounts attributable to each. Still, a significant portion of revenue loss 

is caused by the intentional introduction of erroneous or false information into the tax system. 

Identity theft is the leading scam identified by the IRS, costing billions in lost revenue as well as 

personal hardships, and this criminal activity continues to evolve. 

TIGTA developed this cross-functional initiative to enhance its capabilities to assess and protect 

the Federal tax system. TIGTA’s use of advanced analytics and cross-discipline approaches will 

assist the IRS to reduce the billions of dollars in revenue losses due to fraudulent payments, help 

prevent data loss, and identify and prevent procurement fraud. This cross-cutting initiative 

proposes to: 

 Acquire advanced analytic tools that permit automated review of text-based and other data 

sources (e.g., e-mail, procurement documents, structured/unstructured data, other). Analytics 

will innovate the identification and correlation of meaningful indicators of employee fraud or 

misuse of taxpayer data. 

 Acquire targeted data collection and assessment tools that support independent testing and 

analysis of system security controls across the spectrum of data loss prevention and external 

threat potentials. 

 Establish a multi-discipline team to conduct risk assessments of emerging threats from 

domestic and international sources. This includes development of specialized skillsets 

necessary to effectively integrate cross-discipline/cross-jurisdictional approaches in 

preventing threats and countering them when they cannot be prevented. 

 Establish centers of competency to build risk-specific capabilities while establishing crossdiscipline teams that leverage those capabilities across the spectrum of risks that exist. This 

includes data science and Information Technology support personnel to develop and apply 

advanced analytic models in support of emerging threats. 

Identity theft is associated with a potential $3.6 billion in fraudulent tax refunds, as last reported 

by TIGTA for TY 2011. TIGTA has seen an increase in identity theft investigations involving 

IRS employees who have stolen and misused privileged taxpayer data, undermining public trust 

in the IRS. Many IRS employees are believed to be transmitting and perhaps disclosing taxpayer 
TIGTA - 17 

information across the Internet. A targeted review of IRS e-mail over a short period of time 

generated hundreds of incidents where IRS employees sent taxpayer information to external 

parties. An expanded review could generate thousands of investigative leads to ensure taxpayer 

information is not being misused for criminal purposes. 

Criminals are increasingly sophisticated in scamming American taxpayers. In the summer of 

CY 2013, US taxpayers were subjected to an extensive scam involving the impersonation of IRS 

employees and e-mail. To date, the TIGTA Hotline has received over 269,000 related contacts 

involving this activity where a caller or e-mail claims to represent the IRS, purportedly collecting 

tax from a recent audit. By e-mail and telephone calls originating from domestic and 

international locations, taxpayers were requested to submit a credit card or other payment under 

threats such as arrest, suspension of business or driver’s license, and deportation. To date, over 

2,400 taxpayers have been defrauded out of over $13 million as a result of this impersonation 

scam. 

These examples highlight challenges and consequences associated with protecting IRS systems 

and data, which is why TIGTA listed Security for Taxpayer Data and IRS Employees as its 

number one major management challenge for FY 2015. Innovative tools and approaches are 

needed to augment existing capabilities. 

The IRS modernization continues at a pace where rigorous testing is needed to ensure 

appropriate security controls are being implemented. Weak security controls offer internal and 

external parties new opportunities to exploit the tax systems for illicit or inappropriate purposes. 

This initiative proposes an investment of $6.6 million so TIGTA can develop innovative tools 

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

criminals and employees, both domestically and internationally, and help ensure the security of 

IRS data for the goal of protecting our Nation’s tax system. The ROI for this initiative is 

unknown at this time, as this initiative covers a broad spectrum of expanded capabilities from 

preventing revenue/data loss to identity theft. However, based upon TIGTA’s prior year’s 

(FYs 2010-2014) average ROI of about $113 to every $1 invested, we would expect this 

initiative to result in a contribution of about $700 million annually in monetary impacts. 

 
TIGTA - 18 

2.2 – Operating Levels Table 

Dollars in Thousands

Treasury Inspector General for Tax Administration FY 2014 FY 2015 FY 2016

Object Classification Actual Enacted Request

11.1 - Full-time permanent 79,432 87,042 91,135

11.3 - Other than full-time permanent 269 588 590

11.5 - Other personnel compensation 7,648 8,374 8,405

11.9 - Personnel Compensation (Total) 87,349 96,004 100,130

12.0 - Personnel benefits 30,471 32,579 34,307

Total Personnel and Compensation Benefits $117,820 $128,583 $134,437

21.0 - Travel and transportation of persons 2,937 3,233 3,514

22.0 - Transportation of things 8 19 19

23.1 - Rental payments to GSA 9,440 9,115 9,221

23.2 - Rental payments to others 162 225 229

23.3 - Communication, utilities, and misc charges 1,554 1,795 1,829

24.0 - Printing and reproduction 4 7 7

25.1 - Advisory and assistance services 780 775 790

25.2 - Other services 1,064 695 708

25.3 - Other purchases of goods & serv frm Govt accounts 8,174 7,821 8,218

25.4 - Operation and maintenance of facilities 2 408 416

25.7 - Operation and maintenance of equip 2,292 909 926

26.0 - Supplies and materials 516 1,032 1,052

31.0 - Equipment 4,654 3,517 5,832

42.0 - Insurance claims and indemnities 2 51 52

91.0 - Confidential Expenditures 86 25 25

Total Non-Personnel 31,675 29,627 32,838

Subtotal New Appropriated Resources $149,495 $158,210 $167,275

Budget Activities:

Audit 54,363 62,172 65,700

Investigations 96,848 97,538 103,075

Total Budgetary Resources $151,211 $159,710 $168,775

FTE 742 837 861

 
TIGTA - 19 

2B – 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; [$158,210,000] 

$167,275,000, of which $5,000,000 shall remain available until 

September 30, [2016] 2017; of which not to exceed $6,000,000 shall 

be available for official travel expenses; of which not to exceed 

$500,000 shall be available for unforeseen emergencies of a 

confidential nature, to be allocated and expended under the direction 

of the Inspector General for Tax Administration[; and of which not 

to exceed $1,500 shall be available for official reception and 

representation expenses]. (Department of the Treasury 

Appropriations Act, 2015.)

2C – Legislative Proposals 

TIGTA has no Legislative Proposals. 
TIGTA - 20 

Section 3 – Budget and Performance Plan 

3A – Audit 

($65,100,000 from direct appropriations, and $600,000 from reimbursable resources): 

TIGTA 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 

concentrated on high-risk areas and 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 to the Nation’s system of tax administration. By focusing on the 

most critical areas, TIGTA identifies and recommends improvements that add value while 

addressing high-risk tax administration issues. 

Each year, TIGTA identifies and addresses the major management and performance challenges 

and key issues confronting the IRS. OA identifies the major risks facing the IRS and annually 

proposes a national audit plan based on perceived risks, stakeholder concerns, and follow-up 

reviews of previously audited areas with significant control weaknesses. To keep apprised of 

operating conditions and emerging issues, TIGTA maintains liaison and consults on an ongoing 

basis with applicable stakeholders such as IRS executives, the IRS Oversight Board, the 

Department of the Treasury, the Government Accountability Office, and Congress. 

TIGTA’s Annual Audit Plan communicates 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, refund fraud, 

improper payments, tax-exempt organizations, security vulnerabilities, complex modernized 

computer systems, tax compliance, and waste and abuse in IRS operations. 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. 

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. 

Recognizing the constantly evolving nature of the IRS’s goals, programs, and priorities, TIGTA 

often adjusts its oversight responsibilities. In addition to its coverage of the major management 

challenges facing the IRS, OA places importance on key emphasis areas based on their 

significance and impact on tax administration. 

Specifically: 

 Identity Theft Detection and Prevention – Identity theft continues to be a serious and 

growing problem that has a significant impact on tax administration. The IRS must make 

significant improvements in its ability to stop fraudulent payments and provide adequate 

taxpayer service to victims. Incidents of identity theft affecting tax administration have 
TIGTA - 21 

continued to rise since CY 2011, when the IRS identified more than one million incidents of 

identity theft. 

 Tax-Exempt Organizations – The IRS’s use of inappropriate criteria for selecting and 

reviewing applications for tax-exempt status is of continuing concern to both Congress and 

organizations seeking tax-exempt status. There have been a number of congressional 

hearings, as well as ongoing Federal investigations into this matter. The IRS will continue to 

face a high level of scrutiny in the exempt organizations area in FY 2015, and this area will 

be a continued area of focus for TIGTA. 

 ACA Implementation and Administration – The ACA impacts individual and business 

taxpayers at all income levels, IRS compliance and enforcement programs, information 

reporting requirements, the administration of tax penalties, and information technology. The 

IRS’s ability to ensure accurate tax returns are filed and information reported is correct is 

dependent on the timely receipt of information from exchanges, insurance providers, and 

employers. A further challenge for the IRS is the fact that a number of the reporting 

provisions relating to insurance providers and employers have been delayed. 

 International Tax Compliance – The tax compliance of business and individual taxpayers 

involved in international transactions remains a significant area of concern for the IRS. As 

the number and complexity of international transactions continues to grow, the IRS must 

focus its international efforts on ensuring compliance with the tax laws regardless of where 

the taxpayers reside. FATCA was enacted to combat tax evasion by U.S. persons holding 

investments in offshore accounts and is an important development in the IRS’s efforts to 

improve U.S. tax compliance involving foreign financial assets and offshore accounts. 

In FY 2014, TIGTA issued 95 final audit reports that included potential financial benefits of 

approximately $16.5 billion and affected over 3.6 million taxpayer accounts. TIGTA’s reports 

for FY 2014 addressed issues that included: 

 Qualified Retirement Savings Contribution Credit – For TY 2011, TIGTA determined that 

taxpayers potentially made approximately $53 million in improper claims for contributions 

made to a qualifying retirement account. Based on a comparison with third party data, these 

claims appear to be potentially either false or overstated. In the future, if the IRS identifies 

and addresses taxpayers who are potentially ineligible to receive the saver’s credit, it could 

recover approximately $264 million over five years. 

 IRS’s Award Program – Providing awards to employees with conduct issues, especially 

Federal tax compliance, appears to create a conflict with the IRS’s charge of ensuring the 

integrity of tax administration. While the IRS’s award program complied with Federal 

requirements, TIGTA found that between October 1, 2010 and December 31, 2012, more 

than 2,800 IRS employees who had been disciplined for conduct issues, including 1,100 

employees with Federal tax compliance issues, had received $2.8 million in monetary 

awards, over 27,000 hours in time-off awards, and 175 quality step increases. 

 Small Purchase Card Procurements – TIGTA audit results confirmed that the IRS properly 

reported four instances of identified purchase card misuse. One such instance was confirmed 

as purchase card fraud and resulted in the cardholder’s resignation from the IRS. Action on 

the remaining three instances had not been completed. 

 Advance Energy Credit – TIGTA found 1,149 individual taxpayers who reported more than 

$3 million in advance energy credits for TY 2011 but who do not appear to have a business 

relationship with a manufacturer that was awarded the credit. While the IRS has a process to 
TIGTA - 22 

identify business taxpayers who erroneously claim this credit, it does not have a similar 

process to identity individual taxpayers who erroneously claim the credit. 

 Mainframe Software License Management – Inadequate software license management has 

resulted in an estimated waste of $11.6 million and an overutilization of $1.5 million in 

license and software subscription support fees. TIGTA found that the IRS needs to develop 

policies and guidance, define roles and responsibilities, and develop an enterprise-wide 

inventory to more effectively manage mainframe software spending. 

 Taxpayers Rights in Bankruptcy Proceedings – TIGTA found that IRS Field Insolvency 

function specialists frequently did not follow the required procedures when working 

bankruptcy cases. Based on three random samples of closed cases reviewed, TIGTA found 

that the specialists did not always follow established procedures in 57 percent of the Chapter 

7 cases, 50 percent of Chapter 11 cases, and 43 percent of Chapter 13 cases. While no 

violations of taxpayer rights and/or failures to protect the Government’s interest were found, 

there is a higher risk that this could occur when procedures are not followed. 

Description of Performance: 

TIGTA uses two performance measures to gauge the success of the 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). 

Additionally, 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. This second measure assesses TIGTA’s effect on improving the IRS’s 

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

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

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

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

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

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

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

TIGTA’s audit findings. 

In FY 2014, the actual Percentage of Audit Products Delivered when Promised to Stakeholders 

was 65 percent against a full-year target of 65 percent. TIGTA achieved this target as a result of 

ongoing supervisory monitoring of the execution of audits to ensure timely audit products to 

stakeholders. 

The actual Percentage of Recommendations Made That Have Been Implemented was 89 percent 

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

discussions with the IRS throughout the audit process, both on the findings and on potential 

recommended solutions, to ensure that feasible alternatives were identified. For FY 2014, 

TIGTA lowered its target for timely delivery of audit products to reflect increased vacancies 

resulting from the FY 2013 hiring freeze. The hiring freeze, which has delayed recruitment for 

key audit positions, requires TIGTA to utilize acting roles for frontline managers and executive-
TIGTA - 23 

level positions, resulting in extensive transition within TIGTA. For FY 2016, the target for 

percentage of audit products delivered when promised to stakeholders is 68 percent. The target 

for percentage of recommendations made that have been implemented is 85 percent. 

3.1.1 – Audit Budget Activity Budget and Performance Plan 

Dollars in Thousands

Audit Budget Activity

Resource Level FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Actuals Actuals Actuals Actuals Actuals Enacted Enacted Request

 Appropriated Resources $55,186 $57,421 $57,306 $57,306 $54,309 $60,850 $61,572 $65,100

 Reimbursable Resources $539 $529 $351 $0 $500 $600 $600 $600

Budget Activity Total $55,725 $57,950 $57,657 $57,306 $54,809 $61,450 $62,172 $65,700

Measure FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Audit Products 

Delivered when Promised to 

Stakeholders

81.0 76.0 68.0 71.0 84.0 65.0 68.0 68.0

Percentage of 

Recommendations Made that 

Have Been Implemented

91.0 95.0 93.0 94.0 87.0 89.0 85.0 85.0

Key: DISC - Discontinued and B - Baseline

3B – Investigations 

($102,175,000 from direct appropriations, and $900,000 from reimbursable resources): 

While most offices of Inspectors General focus primarily on waste, fraud, and abuse, TIGTA’s 

mission is more extensive. In addition to protecting the IRS’s ability to collect the majority of 

the revenue for the Federal Government’s operations, TIGTA also has the statutory 

responsibility of protecting the integrity of tax administration while protecting 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 4) results in 

reliable statistical data that are used to make 

mission-critical decisions regarding staffing, 

budgeting, and training. The performance model 

utilizes 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. 

Figure 4: Investigative Performance Model
TIGTA - 24 

These performance measures guide OI’s activities and help to demonstrate the value of 

investigative accomplishments to external stakeholders. 

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

impedes the IRS’s ability to enforce tax laws effectively. This misconduct manifests itself in a 

variety of ways, including misuse of IRS resources or authority, theft, fraud, extortion, taxpayer 

abuses, and unauthorized access to, and disclosure of, tax return information. In FY 2014, 

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

TIGTA’s special agents possess the knowledge, skills, and expertise to investigate such matters. 

TIGTA’s efforts convey a message to IRS employees that these types of activities will not go 

unchecked. 

TIGTA promotes employee integrity by conducting proactive investigative initiatives to detect 

criminal activity and serious misconduct in the administration of IRS programs. In FY 2014, 

TIGTA initiated 41 proactive investigative initiatives to detect systemic weaknesses or potential 

IRS program vulnerabilities. A recent investigative focus identified seasonal IRS employees 

who continued to receive unemployment benefits after being recalled to work from furlough 

status by the IRS, resulting in numerous arrests, prosecutions, and terminations of IRS 

employees for this fraud. 

TIGTA received 10,193 complaints, opened 2,964 investigations, and closed 3,054 

investigations in FY 2014. During this time period, TIGTA referred for IRS action 1,343 cases 

of employee misconduct and 144 cases of all types of investigations were accepted for criminal 

prosecution. As a result of a TIGTA investigation into employee misconduct, a former IRS 

employee was sentenced to 57 months in prison for her role in an identity theft scheme. 8

Employee and Infrastructure Security: In FY 2014, TIGTA responded to 2,001 threat-related 

incidents. Tax revenue is critical to our Nation’s infrastructure. Threats and assaults directed at 

IRS employees, facilities, data, and computer systems impede the effective administration of the 

Federal tax system. TIGTA has a statutory responsibility to identify, investigate, and respond to 

threats against IRS personnel and physical infrastructure (Figure 5). 

TIGTA’s authority to investigate threats and assaults is derived from the provisions of Title 26 

U.S.C. § 7608(b), authority of internal revenue enforcement officers; RRA 98; the Inspector 

General Act of 1978, as amended, and the Inspector General Reform Act of 2008; and is further 

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

against IRS employees performing their official duties are referred to OI. TIGTA has the 

necessary authority to access taxpayer information in support of ongoing investigations, 

including tax matters related to threats and assaults involving the IRS. 

To ensure IRS employee safety, OI undertakes investigative initiatives to identify individuals 

who could commit violence against IRS employees, or who could otherwise pose a threat to IRS 

employees, facilities, or infrastructure. OI provides crucial intelligence to IRS officials to assist 

them in making proactive operational decisions about potential violence or other activities that 

could pose a threat to IRS systems, operations, and people. 

 

8

 N.D. Ga. Judgment filed June 5, 2014. 
TIGTA - 25 

Over the past several years, the United States has experienced numerous violent incidents in 

schools, private offices, and public areas. These tragic events are unpredictable and result in 

numerous innocent people losing their lives or being severely injured. Despite the declining 

number of TIGTA special agents, TIGTA has processed over 13,392 threat-related complaints 

and investigated over 6,621 threats against IRS employees in FY 2010 through FY 2014. 

TIGTA takes threats directed at the IRS and its employees very seriously. In March 2014, a 

Baton Rouge, Louisiana man was sentenced to two years of imprisonment for threatening to 

retaliate against a witness in a Federal trial involving an income tax preparation business. 9 The 

witness had testified in a Federal criminal case against the defendant’s mother, who was 

subsequently convicted by a jury for 21 Federal felonies.10 In another case, an individual was 

sentenced for threatening to assault and murder an IRS revenue agent, as well as the revenue 

agent’s immediate family member, with the intent to interfere with the employee’s official duties 

and to retaliate against the employee for performing his official duties.11 

TIGTA’s partnership with the IRS’s Office of Employee Protection (OEP) to identify Potentially 

Dangerous Taxpayers (PDTs) is one example of TIGTA’s commitment to collaborate with the 

IRS and protect IRS employees. If a taxpayer has been designated as potentially dangerous, 

TIGTA conducts a follow-up assessment of the taxpayer after five years and provides the IRS’s 

OEP with information to determine if the taxpayer still poses a danger to IRS employees. 

TIGTA’s special agents are responsible for providing physical security, known as “armed 

escorts,” to IRS employees in dangerous situations. TIGTA’s special agents escort IRS 

employees when they require personal contact with a PDT. These armed escorts provide a safe 

environment for IRS employees to conduct tax administration activities. 

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 attempted bribery of IRS employees and impersonation of the IRS. 

Many IRS employees are in direct contact with taxpayers and often encounter situations where a 

taxpayer may challenge the employees’ integrity by offering a bribe. Bribery, or attempted 

bribery, of a public official is a criminal offense, and it is an attack on the integrity of the entire 

IRS organization and the Nation’s system of tax administration. TIGTA is currently 

investigating nationwide IRS impersonations schemes in which criminals are pretending to be 

employees of the IRS and are attempting to collect phantom tax liabilities from innocent 

taxpayers. Since the scam was first reported in the summer of 2013, the TIGTA Hotline has 

received over 269,000 related contacts, and it is estimated that the scheme has resulted in over 

$13 million in payments made by over 2,400 victims. 

 

9

 M.D. La. Judgment filed Apr. 3, 2014. 

10 Id. 11 D R.I. Indictment filed Jan. 15, 2014. 
TIGTA - 26 

Figure 5: U.S. Map of Assaults and Threats 

With adequate FY 2016 resources, TIGTA will have the necessary staffing to ensure these 

criminal acts are promptly investigated. Another key aspect of protecting the integrity of tax 

administration in today’s environment is the oversight and investigation of IRS procurement 

matters. On average, the IRS awards approximately 900 contracts each year, worth 

approximately $31 billion in total contract value.12 A 2014 Association of Certified Fraud 

Examiners report13 estimated that five percent of an organization’s revenue is at risk of fraud on 

an annual basis. In the case of the IRS, this projection translates to approximately $1.6 billion. 

TIGTA focuses its contract fraud investigations on administrative, civil, and criminal violations. 

TIGTA’s contract fraud investigations add to the Nation’s treasury through court-ordered 

settlements and recoveries. With FY 2016 resources, TIGTA could proactively identify and 

address procurement fraud risks in IRS programs to help ensure that the IRS and taxpayers 

receive full value for the billions of contracting dollars spent. 

Description of Performance: 

TIGTA’s investigative performance model is 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 external stakeholders. 

 

12 The total dollar value of a contract over the life of the contract. 13 Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse, 2012. 

FY 2014 Investigative Activities 

(Assaults and Threats)
TIGTA - 27 

The performance model provides reliable statistical data, which are used to make mission-critical 

decisions regarding investigative staffing, budgeting, and training. 

The FY 2014 year-end results for the Percentage of Results from Investigative Activities were 

92 percent, 13 percent above the target of 79 percent. This increase in investigative activities 

was due primarily to the finalization of a large number of cases opened in prior years that were 

accepted for prosecution with final legal action in FY 2014. With the FY 2015 budget request, 

TIGTA plans to continue backfilling more special agent vacancies and develop the new special 

agents’ skills and abilities through training and mentoring programs striving to achieve a high 

level of performance. This approach supports maintaining a performance goal of 79 percent in 

FY 2015. The FY 2016 budget request will provide funding for TIGTA to enhance its 

performance of investigative activities and support increasing the performance goal to 81 percent 

for FY 2016. 

3.1.2 – Investigations Budget and Performance Plan 

Dollars in Thousands

Investigations Budget Activity

Resource Level FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Actuals Actuals Actuals Actuals Actuals Enacted Enacted Request

 Appropriated Resources $90,897 $94,579 $94,694 $94,390 $89,452 $95,525 $96,638 $102,175

 Reimbursable Resources $318 ($442) $949 $0 $400 $1,100 $900 $900

Budget Activity Total $91,215 $94,137 $95,643 $94,390 $89,852 $96,625 $97,538 $103,075

Measure FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Actual Actual Actual Actual Actual Actual Target Target

Percentage of Results from 

Investigative Activities

83.0 86.0 82.0 89.0 90.0 92.0 79.0 81.0

Key: DISC - Discontinued and B - Baseline
TIGTA - 28 

Section 4 – Supplemental Information 

4A – Summary of Capital Investments 

Secure Information and Technology (IT) Mobility 

The tax system is at risk for billions of dollars of fraudulent payments related to a variety of tax 

credits and identity theft. Threats against the tax system continue to demonstrate increased 

volume, velocity, and variety in the methods and types of endeavors. Perpetrators are 

increasingly more sophisticated in scamming American taxpayers, as evidenced by the IRS 

employee impersonation scam, e-mail phishing, and other approaches. TIGTA continues to 

make strategic investments to increase the agility and analytic capabilities of TIGTA employees, 

so that they can continue to work effectively wherever the need or threat dictates. The lease for 

the current inventory of laptops provided to all TIGTA employees will come to an end during 

FY 2016. Efforts to determine the type of devices or methodologies that will provide suitable 

access for employees based on their roles and responsibilities will determine the final 

configurations for deployment. Access to all of the TIGTA devices will be enabled with 

TIGTA-issued Homeland Security Presidential Directive-12 Personal Identity Verification cards, 

as has been the situation since FY 2013. The expectation is that other investments related to 

applications that will securely expose capabilities to the end user will greatly enhance the 

flexibility, responsiveness, collaboration, and effectiveness of the TIGTA workforce. 

Server and Storage Infrastructure 

TIGTA remains a leader in server virtualization. In FYs 2013 and 2014, TIGTA refreshed its 

server and storage area network with updated technology that is more energy efficient and costeffective, and installed its host infrastructure in the IRS Enterprise Computing Center in 

Martinsburg, WV. TIGTA intends to use targeted investments in advanced data analysis and 

visualization tools to enhance its capabilities to protect the tax system. Refined data sets 

generated with these tools will be used by TIGTA auditors and criminal investigators to address 

risks to the tax system. These advanced analytic tools will permit automated review of various 

data sources, some of which were previously unavailable or unusable given the state of TIGTA’s 

analytic capability. The data analytics capability will provide an innovative approach to the 

identification and correlation of meaningful indicators of employee or external fraud or misuse 

of taxpayer data. It is also expected to enable TIGTA to perform some predictive analytics that 

could lead to the identification of high-risk transactions and accounts that seek to subvert tax 

administration. 

The overall expected benefits are the ability to: 

 Better understand key relationships and develop models intuitively and quickly; 

 Build better, more efficient models with a versatile toolset; 

 More quickly and easily derive insights for better decisions; 

 Allow for more self-sufficiency and automation for tedious manual tasks; 

 Empower users of all skill levels with advanced analytics; 

 Answer complex questions faster; 

 Drive collaboration and information sharing; and 

 Deliver self-service capabilities on an enterprise-wide level. 

 
TIGTA - 29 

Refreshed Applications and Collaboration Environment 

TIGTA continues its leadership in its use of collaborative tools that enable capture, storage, 

editing, distribution, and collaboration across the enterprise. During FYs 2014 and 2015, TIGTA 

is conducting difficult and time-consuming surveys and analyses that lay out an updated path. 

This includes establishing security baseline configurations for server environment operating 

systems, Structured Query Language servers, SharePoint, and the introduction of Customer 

Relationship Management (CRM) as a platform replacing a mission critical TIGTA system. 

FY 2016 should see the advent of more complete and complex capabilities in CRM and the 

ability to leverage the features enabled by the new environments. TIGTA is building upon its 

experiences using the collaborative tools and intends to incorporate new capabilities and feature 

sets in the modernized environment. This budget will allow TIGTA to continue investing in 

more powerful and more robust capabilities. 

 

IT Governance and Total Cost of Ownership 

In FY 2010, TIGTA established its current IT governance program. The program requires that 

all new IT requests pass through a Change Management Board chaired by the Chief Information 

Officer. Requests requiring cross-functional activity or support, presenting high risk or 

significant cost, among other factors, are elevated to the Program Management Board (PMB), 

chaired by the Associate Inspector General for Mission Support and with representatives from all 

of the TIGTA functional units. Requests must present a total cost picture, a business case, and a 

high-level work breakdown schedule that are adjusted for risks, to gain PMB approval to 

commence work. Projects involving substantial financial commitments or high mission visibility 

require approval from the Investment Review Board, composed of TIGTA's senior executives. 

Refinements to the process are ongoing as projects evolve and the knowledge and experience 

base of the PMB grows. 

By the end of FY 2013, TIGTA had extended its new governance process to all TIGTA 

functional units, to help manage projects and priorities. Under TIGTA’s program-management 

process, milestones for all projects are established and tracked. At any point, projects that have 

cost overruns, are behind schedule, or are not delivering at anticipated business performance 

levels, are analyzed for cause. 

Law Enforcement Vehicles 

Effective FY 2014, TIGTA acquired its vehicles by lease through the General Services 

Administration. However, TIGTA will maintain ownership of approximately 10 

surveillance/communications vehicles. These 10 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 will also be used in support of TIGTA’s Continuity of Operations (COOP) Program. 

COOP provides a mechanism for the organization to recover full operational capabilities 

following a critical incident, including the ability to communicate during a local or national 

emergency. 

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