Department of the Treasury

Fiscal Year 2009

JUSTIFICATION FOR APPROPRIATIONS 

AND PERFORMANCE PLANS
Department of the Treasury – Congressional Justification FY 2009



Departmental Summary

FY 2009 President’s Budget by Function

(Dollars in Thousands)

Appropriation

FY 2007 FY 2008 FY 2009

Enacted Enacted President’s 

Budget

Increase/

Decrease Percent Change

Management & Financial $614,774 $699,412 $682,817 -$16,595 -2.4%

Departmental Offices Salaries and Expenses 216,348 248,360 273,895 25,535 10.3%

Dept-wide Systems & Capital Invest. Program 30,268 18,710 26,975 8,265 44.2%

Office of Inspector General 16,957 18,450 19,356 906 4.9%

Treasury IG for Tax Administration 132,861 140,533 145,736 5,203 3.7%

Community Development Financial Institutions Fund 54,506 94,000 28,620 (65,380) -69.6%

Financial Crimes Enforcement Network 73,216 85,844 91,335 5,491 6.4%

Alcohol & Tobacco Tax and Trade Bureau 90,618 93,515 96,900 3,385 3.6%

Fiscal Service Operations $414,235 $417,294 $426,398 $9,104 2.2%

Financial Management Service 235,381 234,423 239,344 4,921 2.1%

Bureau of the Public Debt* 178,854 182,871 187,054 4,183 2.3%

Tax Administration** $10,597,065 $10,892,384 $11,361,509 $469,125 4.3%

IRS Taxpayer Services 2,138,238 2,150,000 2,150,000 0 0.0%

IRS Enforcement 4,686,477 4,780,000 5,117,267 337,267 7.1%

IRS Operations Support 3,544,835 3,680,059 3,856,172 176,113 4.8%

IRS Business Systems Modernization 212,659 267,090 222,664 (44,426) -16.6%

IRS Health Insurance Tax Credit Administration 14,856 15,235 15,406 171 1.1%

Total, Treasury Appropriations Committee $11,626,074 $12,009,090 $12,470,724 $461,634 3.8%

Treasury International Programs $1,357,369 $1,327,579 $2,241,305 $913,726 68.8%

International Financial Institutions 1,273,219 1,277,289 2,071,305 794,016 62.2%

Technical Assistance 19,800 20,235 29,000 8,765 43.3%

Debt Restructuring 64,350 30,055 141,000 110,945 369.1%

Total $12,983,443 $13,336,669 $14,712,029 $1,375,360 10.3%

* Does not include estimated user fee offset.

** FY 2007 Enacted represents the approved Operating Plan.

Overview

The U.S. Department of the Treasury’s budget 

priorities reflect the Department’s dedication to 

promoting economic growth and opportunity, 

strengthening national security, and exercising 

fiscal discipline while steadily improving the 

Department’s operations to ensure it remains a 

world-class organization.

The FY 2009 President’s Budget request identifies 

the resources required to support the Treasury 

Department’s role as the steward of U.S. economic 

and financial systems, and as an influential participant 

in the international economy. The FY 2009 

President’s Budget emphasizes initiatives that directly 

support the Department’s four strategic goals:

•	Effectively manage U.S. government finances

•	Ensure U.S. and world economies perform at full 

economic potential

•	Prevent terrorism and promote the nation’s 

security through strengthened international 

financial systems

•	Dedicate to management and organizational 

excellence

The Department of the Treasury performs a critical 

role in U.S. and global economies, continually 

evolving to meet the ever-changing needs of the 

nation. The Department provides cash management 

for the federal government, produces currency and 

coin, administers the tax code, oversees the financial 

sector, and plays an integral role in combating the 

financing of terrorism, the proliferation of weapons 

of mass destruction, and other threats to our 

national security. 

This chapter will highlight how Treasury’s FY 2009 

budget request supports each of these priorities and 

discuss the Department’s progress toward meeting 

the goals of the President’s Management Agenda. 

Detailed information on how each bureau supports 

these goals is provided in its respective chapter. 
Department of the Treasury – Congressional Justification FY 2009

FY 2009 President’s Budget by Strategic Goal (Dollars in Thousands)

Treasury Goal/Objective

Effectively Managed 

US Government 

Finances

U.S. and World 

Economies

Perform at Full 

Economic Potential

Prevented Terrorism 

& Promoted Nation’s 

Security

Management and 

Organizational 

Excellence

Total

Direct $ Reimb. $ Direct $ Reimb. $ Direct $ Reimb. $ Direct $ Reimb. $ Direct $ Reimb. $

Management & Financial $108,571 $2,399 $150,903 $8,609 $197,285 $12,238 $226,058 $10,573 $682,817 $33,819 

Departmental Offices Salaries and Expenses 59,151 936 74,803 7,204 105,950 6,987 33,991 3,373 273,895 18,500 Dept-wide Systems & Capital Invest. Program 26,975 26,975 0 Office of Inspector General 19,356 6,300 19,356 6,300 Treasury IG for Tax Administration 145,736 900 145,736 900 Community Development Financial Institutions Fund 28,620 28,620 0 Financial Crimes Enforcement Network 91,335 5,251 91,335 5,251 Alcohol & Tobacco Tax and Trade Bureau 49,420 1,463 47,480 1,405 96,900 2,868 

Fiscal Service Operations $426,398 $243,017 $0 $0 $0 $0 $0 $0 $426,398 $243,017 

Financial Management Service 239,344 228,010 239,344 228,010 Bureau of the Public Debt 187,054 15,007 187,054 15,007 

Tax Administration $11,091,461 $96,285 $0 $0 $270,048 $11,619 $0 $0 $11,361,509 $107,904 

IRS Taxpayer Services 2,150,000 22,454 2,150,000 22,454 IRS Enforcement 4,909,071 32,081 208,196 11,619 5,117,267 43,700 IRS Operations Support 3,794,320 41,750 61,852 3,856,172 41,750 Business Systems Modernization 222,664 222,664 0 Health Insurance Tax Credit Administration 15,406 15,406 0 

Total, Treasury Appropriations Committee $11,626,430 $341,701 $150,903 $8,609 $467,333 $23,857 $226,058 $10,573 $12,470,724 $384,740 

Treasury International Programs 2,241,305 2,241,305 0 

Total, Appropriated Level $13,867,735 $341,701 $150,903 $8,609 $467,333 $23,857 $226,058 $10,573 $14,712,029 $384,740 Non Appropriated Bureaus $0 $0 $0 $3,747,826 $0 $0 $0 $136,011 $0 $3,747,826 

Treasury Franchise Fund 136,011 0 136,011 Bureau of Engraving and Printing 559,500 0 559,500 U.S. Mint 2,125,816 0 2,125,816 Office of the Comptroller of the Currency 810,872 0 810,872 Office of Thrift Supervision 251,638 0 251,638 

Subtotal, Direct $ $13,867,735 $150,903 $467,333 $226,058 $14,712,029 Subtotal, Reimbursable $ $341,701 $3,756,435 $23,857 $146,584 $4,268,577 Total, Treasury Level $14,209,436 $3,907,338 $491,190 $372,642 $18,980,606 
Department of the Treasury – Congressional Justification FY 2009



FY 2009 President’s Budget Request

The FY 2009 President’s Budget request of 

$12.4 billion for the Treasury Department identifies

the resources necessary to effectively manage 

the government’s finances, promote economic 

opportunity through sound fiscal policy, work towards 

entitlement reform, strengthen trade and investment 

policies, and maximize voluntary tax compliance. The 

request, which is $461 million above the FY 2008

enacted level (an increase of 3.8 percent), reflects

the growing need for the Treasury Department 

to advance an economic system that promotes an 

improved global quality of life while supporting the 

national security strategy, and ensuring the safety and 

integrity of our financial systems against the abuse 

of terrorist financiers, money launderers, and other 

criminals. While the majority of the Department’s 

budget is funded through the Department of 

the Treasury Appropriations Act, an additional 

$2.2 billion is funded through the State, Foreign 

Operations, and Related Programs Appropriations 

Act for international assistance, including $400 

million as the first installment of a $2 billion U.S. 

commitment to a newly created international clean 

technology fund to address the growing problem of 

accelerating greenhouse gas emissions growth in major 

developing countries.

Effectively Manage the Nation’s Finances 

The FY 2009 budget request funds the Department’s 

priorities in managing the nation’s finances effectively, 

which includes collecting money due to the United 

States by maximizing voluntary compliance with tax 

laws and regulations, making payments, and financing 

the federal government by continually improving 

financial management processes. Key priorities also 

include overseeing, accounting for, and reporting on 

government expenditures and collections, particularly 

delinquent debt owed the government; accurately 

forecasting receipts and payments; determining 

borrowing needs; and executing the borrowing 

strategy to meet the financial demands of the federal 

government at the lowest possible cost over time.

Discourage and Deter Non-Compliance

Collecting federal taxes and other revenue through a 

fair and uniform application of the law is integral to 

the Department of the Treasury’s core mission. The 

Department’s priority is to efficiently and effectively 

enforce the nation’s tax laws, minimize taxpayer 

burden, and deliver appropriate levels of service to 

maximize voluntary compliance, thereby reducing 

the tax gap. The FY 2009 budget request includes 

$11.362 billion for the IRS, which is an increa

of $469 million above the FY 2008 enacted level. 

Highlights include:

•	$287 million for new enforcement initiatives aimed 

at improving compliance and reducing the tax 

gap. The IRS will enhance coverage of high-risk 

compliance areas and expand document matching 

efforts. It will target the tax gap associated with 

large corporate and small business taxpayers, highincome taxpayers, and domestic taxpayer offshore 

activities of U.S. taxpayers. Enforcement will 

focus on critical reporting, filing, and payment 

compliance programs and highlight abusive 

tax avoidance transactions. These initiatives 

(including the research investment noted below) 

will generate $2 billion per year in new enforcement 

revenue once the new hires reach full potential in 

FY 201

•	$51 million for enhanced research to allow the

IRS to improve the targeting of its enforcement 

resources to specific areas of non-compliance, 

thus reducing the burden on compliant taxpayers, 

improving the fairness of the tax system, and 

increasing revenue. 

•	$23 million to implement legislative proposals

that would improve compliance with minimum 

impact on taxpayer burden. It is estimated that 

these proposals will generate $36 billion in revenue

over the next ten years. 

•	$223 million for the Business Systems Modernization

program to continue progress on modernizing tax 

administration systems that improve both service 

and enforcement programs.

The Treasury Department also regulates the 

manufacture and sale of alcohol, tobacco, firearms, 

and ammunition, and collects excise taxes on the 

sale of these products. In FY 2007, the Alcohol and 

Tobacco Tax and Trade Bureau collected $14.7 billion

in excise taxes, interest, and other revenues.
Department of the Treasury – Congressional Justification FY 2009

Optimize Cash and Debt Portfolio 

and Expand Electronic Transactions

The FY 2009 budget request provides the funds 

necessary for Treasury to meet its responsibilities as 

the federal government’s financial manager. 

Treasury’s management of the federal government’s 

finances includes disbursing payments, collecting 

revenue, issuing debt, and preparing public financial 

statements through the Financial Management 

Service. The Department plays an important role in 

providing critical services to millions of U.S. taxpayers 

as it issues timely and accurate government payments 

such as Social Security benefits, IRS tax refunds, and 

veterans’ benefits. As the government’s financial 

manager, Treasury oversees a daily cash flow of nearly 

$60 billion, disbursing 85 percent of the federal 

government’s payments. The Department continues 

to leverage technological advancements to achieve allelectronic cash management, issuing over 981 million

non-Defense payments worth $1.6 trillion to a wide

variety of recipients, including special payments such 

as Federal Emergency Management Agency payments 

and the 2007 telephone excise tax refund. Seventyeight percent of all payments disbursed were via direct 

deposit, representing a cost savings to the taxpayer of 

over 80 cents per transaction. 

The Department determines and executes the federal 

borrowing strategy to meet the monetary needs of 

the government at the lowest possible cost. Each 

year, Treasury manages more than $9 trillion of 

public debt through its Bureau of Public Debt. 

Public debt includes marketable securities, savings 

bonds, and other instruments held by state and local 

governments, federal agencies, foreign governments, 

corporations, and individuals. The Department 

of the Treasury’s activities minimize the interest 

paid on the national debt over time and enhance 

market liquidity. To improve debt management 

the Department will invest resources in system 

modernization creating redundancy and enhanced 

functionality. In order to provide better customer 

service, Treasury offers Treasury Direct, an electronic, 

web-based system that electronically issues securities 

to retail customers and enables investors to manage 

their accounts on-line. 

Ensure Full Performance 

of U.S. and World Economies

The Secretary of the Treasury is the President’s 

leading policy advisor on a broad range of domestic 

and international economic issues. Treasury’s 

Departmental Offices, including the Offices of 

International Affairs, Tax Policy, Economic Policy, and 

Domestic Finance, support the Secretary in this role 

through the provision of technical analysis, economic 

forecasting, and policy guidance on issues ranging 

from federal financing to responding to international 

financial crises. The Department supports policies 

that stimulate U.S. economic growth, strengthen 

and modernize entitlement programs, and minimize 

regulatory burdens while ensuring the safety and 

soundness of financial institutions. 

Stimulate U.S. Economic Growth

U.S. capital markets make a vital contribution to 

the nation’s wealth and prosperity by directing 

investments toward innovation, promoting economic 

growth, and ensuring that the allocation of resources 

is directed toward the most efficient use. Vibrant 

capital markets enable investors to seed new 

companies, leading to job creation and economic 

prosperity. American consumers and investors benefit 

from a vibrant and healthy financial services sector 

that provides opportunities to access credit, save and 

invest for the future, and insure against risks. It is 

important, therefore, that our capital markets remain 

the best in the world. 

Accordingly, the Treasury Department has undertaken 

a competitiveness-related initiative to examine the 

regulatory structure of our financial institutions 

to evaluate and propose solutions that achieve the 

right balance. The regulatory policies in place 

for financial institutions must effectively protect 

consumers and investors, while at the same time 

promote entrepreneurialism and capitalism that is 

the foundation of our national economic success. 

The Treasury Department plans to release its report 

early in 2008.

In addition, by participating in the negotiation and 

implementation of international agreements, the 

Treasury Department removes trade and investment 

barriers, stimulates domestic and global growth, and 

creates employment opportunities for Americans. 
Department of the Treasury – Congressional Justification FY 2009

Additionally, the Department supports trade 

liberalization and budget discipline through its role in 

negotiating, implementing, and policing international 

agreements to reduce official export subsidies. By 

negotiating agreements in the Organization for 

Economic Cooperation and Development, the 

Treasury Department drastically reduced the subsidies 

that member governments can provide when financing 

national exports. The volume of this financing 

activity is approximately $70 billion annually. These 

agreements open markets and level the playing field 

for U.S. exporters, and save U.S. taxpayers about 

$800 million each year. Cumulative budget savings 

from these agreements are estimated to be over 

$12 billion

Maintaining Healthy Markets

Treasury is committed to supporting healthy financial 

markets and to addressing weaknesses when they do 

arise. In FY 2009, the Department will continue its 

industry-wide effort to respond to the downturn in 

the housing and mortgage markets. By preventing 

avoidable foreclosures, the Department will help 

to safeguard neighborhoods and communities, and 

fulfill our primary responsibility of protecting the 

broader U.S. economy. 

After convening a diverse group of market participants 

through the HOPE NOW Alliance, in FY 2008 

the Treasury Department implemented a three 

point plan to avoid preventable foreclosures and to 

minimize the impact of the housing downturn on the 

U.S. economy:

•	Increasing efforts to reach able homeowners who 

are struggling with their mortgages

•	Working to increase the availability of affordable 

mortgage solutions for these borrowers

•	Leading the industry to develop a systematic 

means of efficiently moving able homeowners into 

sustainable mortgages

In its first three months, the HOPE NOW Alliance 

sent over 450,000 letters to at-risk borrowers 

encouraging them to contact their servicer or a 

non-profit credit counselor at 888-995-HOPE. 

The Department has also coordinated with the 

Department of Housing and Urban Development 

to implement FHASecure, allowing over 67,000 

families to refinance into FHA insured loans, while 

also supporting additional reforms to the tax code 

that were signed by the President. 

The FY 2009 budget request also includes 

$28.6 million for the Community Development 

Financial Institutions Fund (CDFI Fund). The CDFI 

Fund’s mission is to expand the capacity of financial 

institutions to provide credit, capital, and financial 

services to underserved populations and communities 

in the United States.

Strengthen Financial Institutions

One of the principal objectives of the Treasury 

Department is to enable commerce. The Department 

is responsible for the safety and soundness of national 

banks and federally-chartered savings associations. 

The Treasury Department also produces the coins and 

currency needed for commerce, and guards against 

counterfeiting and other misuse of our money. 

The Department, through the Office of the 

Comptroller of the Currency (OCC) and Office of 

Thrift Supervision (OTS), works with other federal 

banking regulators to issue guidance on subprime 

mortgage lending and non-traditional mortgage 

products, and to encourage financial institutions 

to work with residential borrowers that are unable 

to meet their contractual home loan obligations. 

Additionally, these agencies work with the Conference 

of State Bank Supervisors and American Association 

of Residential Mortgage Regulators to encourage 

individual states to adopt the guidelines for mortgage 

brokers under their supervision. As of September 

2007, OCC oversaw financial assets held by national 

bank charters and federal branches of foreign banks 

totaling $7.2 trillion. As of September 2007, 

OTS supervised holding company enterprises 

with approximately $8.5 trillion in U.S. domiciled 

consolidated assets, and regulated savings associations 

with total assets of $1.57 trillion

The U.S. Mint (Mint) and the Bureau of Engraving 

and Printing (BEP) are responsible for producing the 

nation’s coins and currency. In FY 2007, the Mint and 

BEP produced 15.4 billion coins and 9.1 billion pape

currency notes, respectively. The Mint successfully 

issued the first three circulating Presidential $1 coins

and the first three First Spouse gold coins. BEP also 
Department of the Treasury – Congressional Justification FY 2009

completed its redesign of the new five dollar note, 

which is scheduled to enter circulation on March 

13, 2008  Also, due to continued improvemen

in operating results and profits from FY 2007, 

the Mint returned $825 million to the Treasury 

General Fund. 

Funding for the OCC, OTS, Mint, and BEP is not 

included in the Department’s annual budget requests 

because these bureaus have non-appropriated funding 

sources. OCC’s operations are funded primarily by 

semi-annual assessments levied on national banks. 

Revenue from licensing, other fees, and investments 

in U.S. Treasury securities provides the remaining 

revenue. OTS’s operations are funded from 

assessments on thrifts and savings and loan holding 

companies; examination, application, and security 

filing fees; interest on investments in U.S. government 

obligations; and rent and other sources. The U.S. 

Mint’s operations are financed by proceeds from the 

sales of circulating coins to the Federal Reserve Bank 

System and numismatic items to the public. BEP 

operations are financed primarily by the printing 

of currency for the Federal Reserve Bank System. 

Other BEP revenues are derived from the printing 

of securities for the Public Debt and commissions, 

certificates, and invitations for various Government 

agencies, as well as space rental fees.

Prevent Terrorism 

and Promote the Nation’s Security

The sponsorship of terrorism and the potential 

acquisition of weapons of mass destruction by 

rogue regimes and non-state entities represent a 

grave threat to U.S. national security and all free 

and open societies. The Treasury Department 

leverages financial and all-source intelligence to 

identify the financial underpinnings of criminal, 

terrorist and weapons proliferation networks, and 

utilizes the Department’s unique regulatory and law 

enforcement authorities to combat national security 

threats and safeguard the financial system. The 

Department protects the integrity of the financial 

system through administration of the Bank Secrecy 

Act and implements targeted financial measures 

and other forms of sanctions in support of U.S. 

government policy goals, which include stopping 

the flow of money and support to terrorist groups, 

state sponsors of terrorism, proliferators of weapons 

of mass destruction, drug traffickers, money 

launderers, and regimes that constitute a threat to the 

United States. 

Pre-Empted and Neutralized Threats

The Office of Terrorism and Financial Intelligence 

(TFI) marshals the Treasury Department’s intelligence 

and enforcement functions, aimed at safeguarding 

the financial system against illicit use and combating 

rogue nations, terrorist facilitators, proliferators of 

weapons of mass destruction, money launderers, drug 

traffickers, and other national security threats. 

TFI extracts financial and other source intelligence to 

effectively utilize the Department’s unique authorities 

to combat national security threats and safeguard 

the financial system. Confidence in the integrity of 

the U.S. and international financial systems fosters 

economic growth and improves national security. 

Transparency in the financial sector denies terrorist, 

drug traffickers, WMD proliferators, and other 

criminals the ability to conceal their illicit activities. 

The security of the United States is enhanced when 

financial systems are safeguarded from criminal abuse. 

Treasury’s actions include:

•	Freezing the assets of terrorists, proliferators, 

drug kingpins, and other criminals and shutting 

down the channels through which they raise and 

move money,

•	Cutting off corrupt foreign jurisdictions 

and financial institutions from the U.S. 

financial system,

•	Developing and enforcing regulations to reduce 

terrorist financing and money laundering,

•	Tracing and repatriating assets looted by corrupt 

foreign officials, and

•	Promoting a meaningful exchange of information 

with the private financial sector to help detect and 

address threats to the financial system

In the FY 2009 President’s Budget, Treasury requests 

$11 million above the FY 2008 enacted level t

combat state sponsored terrorism, establish the 

capability to coordinate financial intelligence across 
Department of the Treasury – Congressional Justification FY 2009

the intelligence community, and to enhance security 

operations. 

•	To enable the Department to more effectively 

target state sponsors of terrorism, such as Iran 

and Sudan, as well as terrorists and their support 

networks, the budget request includes funds to hire 

additional sanctions investigators, enforcement 

and compliance officers, and other resources to 

administer sanctions programs. 

•	The absence of a coordinated, Intelligence 

Community (IC)-wide effort in the collection 

and analysis of financial intelligence around the 

world has been noted as a critical capacity gap by 

Congress and the national security community. 

The President’s Budget request for Treasury includes 

additional resources to support this coordinating 

role in the identification of finance-related 

intelligence collection priorities and analysis. 

Demonstrating the high priority the Department 

places on this initiative, in addition to the requested 

new resources, Treasury will realign funds internally 

to support these activities.

•	As Treasury's national security mission increases, 

Treasury becomes a greater target of foreign 

adversaries. Building on the Treasury Counter 

Intelligence Assessment undertaken in FY 2007, the 

Budget includes additional resources to strengthen 

Treasury’s defensive capabilities to identify and 

mitigate threats to the Department’s personnel 

and systems.

The Financial Crimes Enforcement Network 

(FinCEN), a bureau within TFI, is responsible for 

administering the Bank Secrecy Act (BSA). The 

FY 2009 President’s Budget request for FinCEN 

includes resources to strengthen global anti-money 

laundering efforts, streamline business processes, 

reduce the cost of compliance to industry, and 

enhance BSA data collection, management and 

analysis through improved information technology 

management.

Dedicate to Management 

and Organizational Excellence

The Department of the Treasury strives to maintain 

public trust and confidence in U.S. and international 

economic and financial systems through exemplary 

leadership, best-in-class processes, and a culture of 

excellence, integrity, and teamwork. The Treasury 

Department realizes its strategic goals by building 

a strong institution that is citizen-centered, resultsoriented, and efficient, while actively promoting 

innovation. 

Enable an Effective Treasury Department

Management’s primary role and responsibility in the 

Department is to create the conditions that allow all 

programs and activities to perform efficiently and 

effectively. The Department’s priorities are to drive 

improved results through performance and cost-based 

decision-making, strategically align its resources to 

deliver outcomes, secure its information technology 

infrastructure and leverage technology investments, 

close skill gaps in mission critical occupations, and 

develop leadership capacity. 

Requested funding seeks to build a strong management 

infrastructure, ensuring that Treasury remains a 

world-class organization that meets the President’s 

standard of a citizen-centered, results-oriented 

government. 

The Department is committed to organizational 

excellence. Funding is included in this request for 

an Operations Center which will provide 24/7 

continuity and oversight of the world financial 

markets. The center will include representatives from 

key Treasury Department policy offices facilitating a 

rapid response to events around the globe.

The Treasury Department’s request will fund 

infrastructure and technology investments to 

modernize business processes throughout Treasury 

to improve efficiency. In FY 2009, Treasury requests 

$26.98 million for infrastructure improvements, 

ongoing modernization and critical information 

technology projects, and investments in other 

new technologies that will improve efficiency and 

service to the American people. The budget request 

includes:

•	$12 million to address critical building deficiencies

in the Treasury Annex Building, which will ensure 

the safety and health of the occupants.

•	$6 million to continue the implementation of a 

Treasury-wide Enterprise Content Management 

System. The system will result in increased 
Department of the Treasury – Congressional Justification FY 2009

efficiencies, enhanced mission effectiveness, 

reduced total cost of ownership, and the orderly 

retirement of legacy systems. 

•	$4 million necessary to stabilize and modernize the 

Treasury Secure Data Network, the Department’s 

collateral classified communication system, 

enabling reliable and secure connectivity. 

•	$5 million to improve Treasury’s FISMA 

performance and strengthen the Department’s 

overall security posture; and completing required 

milestones as part of Treasury’s Presidential 

E-Government Implementation Plan.

Additionally, this budget request includes funding 

for the Treasury Department’s Inspectors General. 

The Office of the Inspector General and the Treasury 

Inspector General for Tax Administration play an 

important oversight role in the overall management 

of the Department and the fair administration of the 

nation’s tax laws.

President’s Management Agenda (PMA)

The Department of the Treasury is committed 

to the principles of the President’s Management 

Agenda (PMA). The PMA is designed to improve 

management practices across the federal government 

and transform it into a results-oriented, efficient, 

and citizen-centered enterprise. Executing the PMA 

involves lowering the cost of doing business through 

competition, strengthening the Department’s 

workforce, improving financial performance, 

increasing the use of information technology and 

e-government capabilities, and integrating budget 

decisions with performance data.

The President holds each agency accountable for 

its performance in carrying out the PMA, and 

performance results are demonstrated through 

quarterly scorecards issued by OMB. The Treasury 

Department is responsible for reporting on seven 

initiatives; five are standard government-wide and 

two apply to select groups of federal agencies of which 

Treasury is a part. 

In FY 2007, the Department continued to be 

successful in its Human Capital initiative. The 

Performance Improvement, Competitive Sourcing, 

Financial Performance, and E-Government initiatives 

each had mixed results during the year while 

the Improper Payments initiative 

remains unsatisfactory. In its first 

year as a PMA initiative, the Credit 

Management initiative received a 

mixed result rating. 

Human Capital: In FY 2007, the 

Department used succession planning 

to develop emerging leaders, speciallytargeted development and training to 

close skill gaps, and human capital 

flexibilities to attract and retain a 

diverse talent pool. In addition, 

management recognized and rewarded 

its employees for their contributions 

toward achieving the Department’s 

priorities and outcomes. 

FY 2007 highlights included:

•	 Reduced the time-to-hire by 

leveraging web-based hiring solutions 

and providing improved job announcements,

•	 Achieved diversity hiring success through the 

employment of women and Hispanics, and

•	 Addressed the Department’s diversity need by 

developing a strategy for improving the recruitment 

President’s Management Agenda

Initiative

Status FY 2007 

Progress

FY 2004 FY 2005 FY 2006 FY 2007 Q4

Human Capital ● Y ● Y ● G ● G ● G

Competitive 

Sourcing ● Y ● G ● G ● Y ● Y

Financial 

Performance ● R ● R ● R ● Y ● G

E-Government ● R ● R ● Y ● Y ● Y

Performance 

Improvement ● Y ● Y ● Y ● Y ● G

Improper 

Payments N/A ● R ● R ● R ● Y

Credit 

Management N/A N/A N/A ● Y ● G

Green for 

Success

Yellow for 

Mixed Results

Red for 

Unsatisfactory
Department of the Treasury – Congressional Justification FY 2009

of individuals with disabilities, promoting the use of 

the Department of Labor’s Workforce Recruitment 

Program, and training managers on providing 

reasonable accommodations to individuals 

with disabilities.

Performance Improvement: In FY 2007, the 

Department of the Treasury’s progress to achieve 

improved performance was successful. During this 

past year, the Department completed and issued 

its updated strategic plan for FYs 2007–2012. By

June 2007, the Office of Strategic Planning and 

Performance Management had conducted strategic 

planning workshops with all of the bureaus to develop 

and align their performance goals to the mission and 

the strategic goals and objectives of the Department. 

Additionally, the updated strategic plan introduces 

the Integrated Management System, which is 

based on a model of continuous improvement and 

integrates performance and budgeting. By integrating 

performance and budgeting, the Department will 

be able to determine the funding level necessary to 

achieve intended results, and options will be executed 

to produce increased value for stakeholders. 

Competitive Sourcing: Through Competitive 

Sourcing, the Department of the Treasury utilizes 

public-private competition to effectively deliver services 

at the lowest possible cost to the American taxpayer. 

Competitive Sourcing allows the Department to look 

internally and externally for the most efficient way to 

achieve its mission. During FY 2007, the Treasury 

Department, in the spirit of the A-76 Circular, made 

the decision to develop a competitiveness plan. This 

plan will continually review positions and activities 

to ensure the Department is competitive, effective, 

and efficient, but will also surface potential publicprivate competitions. The Treasury Department 

has received mixed results in its PMA rating, but is 

committed to working with OMB to develop a plan 

to achieve success by improving performance and 

lowering costs.

Improved Financial Performance: During 

FY 2007, the Treasury Department continued 

working towards full compliance with the Federal 

Managers’ Financial Integrity Act (FMFIA) and 

Federal Financial Management Improvement Act 

(FFMIA), and improved financial management 

processes to produce accurate and timely information 

that supports operating, budget, and policy decisions. 

In addition, the Department continued to emphasize 

the resolution of material weaknesses and completed 

the vast majority of the planned corrective actions. 

For 2007, the Department again received a clean 

audit opinion on its financial statements. A three day 

close at the end of each month and the continuous 

enhancement of the Department’s Financial Analysis 

and Reporting System helped to ensure a successful 

audit. The Department continued to review its 

financial reporting process and perform variance 

analyses on the quarterly financial statements to ensure 

its financial data integrity. The Department worked 

closely with OMB, GAO, FMS, and the Federal 

Accounting Standards Advisory Board on policy 

guidance and accounting standards and practices to 

improve financial reporting and performance. This 

initiative improved its overall status rating during 

FY 2007 from “red” to “yellow,” and it received 

“green” progress results on a quarter-by-quarter basis 

for all four quarters of FY 2007. 

Expanded E-Government: The focus for the 

Department’s E-Government organization is 

to collaborate government-wide and identify 

opportunities for participating in solutions that 

deliver significant productivity and performance 

gains. One example of these efforts is the Treasury 

Department’s active involvement in the Budget 

Formulation and Execution Line of Business and its 

efforts to make its Budget Formulation and Execution 

Manager (BFEM) available on a multi-agency basis. 

Over the course of the past year, six agencies have 

used the BFEM service to modernize their budget 

formulation processes. By building on the work of 

the Treasury Department, these agencies avoided the 

software development costs typically incurred in any 

modernization effort while simultaneously lowering 

their marginal operational expenses by disbursing 

expenses across several agencies. In addition, 

the Treasury Department developed a BFEM 

Performance Module, which will allow agencies to 

manage its performance measures. Over the next 

year, the Department will share this solution with 

other agencies and work to implement it across the 

government.

Eliminating Improper Payments: In FY 2007, the 

IRS continued its effort to reduce improper payments 

for the Earned Income Tax Credit (EITC) program, 

which is the only high risk program in the Treasury 
Department of the Treasury – Congressional Justification FY 2009

1

Department due to erroneous payments. The IRS 

continued to evaluate new ways of reducing erroneous 

EITC payments while maintaining participation 

by eligible taxpayers, in addition to pursuing base 

compliance activities and redesign efforts. 

By detecting and correcting errors during return 

processing, the IRS prevented incorrect refunds in 

the amounts of $460 million and $400 million, 

respectively for the 2006 and 2007 filing seasons. This 

decreasing trend in errors is attributable to education, 

return preparation assistance, and electronic filing. 

Improving Credit Management: During FY 2007, 

the Treasury Department participated, with the 

government’s five major creditor agencies in an 

initiative to improve the management of federal 

credit programs. FMS’s Debt Management Services 

group specifically addressed delinquent debt 

collection issues in the areas of agency compliance 

with Debt Collection Improvement Act (DCIA) 

of 1996, program effectiveness and goals for

improvement, effective management information 

reporting, controlling and measuring costs, and 

customer satisfaction. To address and improve agency 

compliance, Performance Expectation Agreements are 

currently being negotiated between FMS and the five 

major credit agencies.

During FY 2007, the Department took the following 

actions:

•	Established a performance measure for debt 

collection as a percentage of delinquent debt 

referred to the Treasury Department,

•	Assessed agency progress toward use of administrative 

wage garnishment, centralized offset of federal 

salary payments, and debtor bar provisions of 

the DCIA,

•	Established benchmarks and goals for controlling 

costs and determining customer satisfaction, and

•	Utilized receivable reporting to improve program 

management.

Program Assessment 

and Rating Tool (PART) Summary

Program evaluation is a core management tool used 

to allocate resources and promote efficiency and 

effectiveness. In addition to regular independent 

program evaluations conducted by the Treasury 

Department’s bureaus, the Department works with 

OMB to select programs each year that will be 

evaluated or re-evaluated through the PART process. 

Programs are evaluated every five years through this 

process by the OMB. In FY 2007, two international 

programs went through the PART process; both 

received moderately effective ratings. As of the end 

of FY 2007, all Department programs have gone 

through the PART process; based on the number of 

programs, 1 percent are rated effective, 22 percen

are rated moderately effective, 22 percent are rated 

adequate,  percent are rated ineffective, and the

remaining 22 percent received a rating of results 

not demonstrated.

Effective

Moderately Effective

Adequate

Ineffective

Results not Demonstrated

0 2 4 6 8 10 12 14 16 18 20

PART Scoring History

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

Percent Passing

0% 20% 40% 60% 80% 100%

Percentage Treasury Programs Passing PART

Evaluations (adequate or better score)
Department of the Treasury – Congressional Justification FY 2009

Summary of FY 2009 Increases and Decreases

(Dollars in Thousands)

DO DSCIP OIG TIGTA CDFI FINCEN TTB FMS BPD IRS Total

FY 2008 Enacted $248,360 $18,710 $18,450 $140,533 $94,000 $85,844 $93,515 $234,423 $182,871 $10,892,384 $12,009,090 

Non-Pay Inflation Adjustments 2,396 0 87 615 119 300 752 553 1,497 54,828 61,147 

Pay Annualization 

Adjustments

837 0 101 799 48 861 402 1,080 769 57,854 62,751 

Pay Inflation Adjustments 2,849 0 318 2,419 111 981 1,075 3,288 2,445 152,303 165,789 

Maintaining Current Levels $6,082 $0 $506 $3,833 $278 $2,142 $2,229 $4,921 $4,711 $264,985 $289,687 

Base Realignment 0 0 0 0 0 0 (1,149) 0 0 0 (1,149)

Non-Recurring Costs (1,500) (16,986) 0 0 0 0 0 0 0 (12,593) (31,079)

Initiative Annualizations 4,433 0 0 0 0 1,337 0 0 0 0 5,770 

Transfers 1,724 (1,724) 0 1,370 0 1,000 0 0 0 (2,370) 0 

Efficiencies/Savings 0 0 0 0 0 0 0 0 0 (81,656) (81,656)

Base Reinvestments 0 0 0 0 0 0 0 0 0 32,604 32,604 

Adjustments to Base $4,657 ($18,710) $0 $1,370 $0 $2,337 ($1,149) $0 $0 ($64,015) ($75,510)

FY 2009 Base $259,099 $0 $18,956 $145,736 $94,278 $90,323 $94,595 $239,344 $187,582 $11,093,354 $12,223,267 

Program Decreases 0 0 0 0 (65,658) (4,146) (685) (958) (528) (92,691) (164,666)

Program Reinvestments 0 0 0 0 0 2,897 0 958 0 0 3,855 

Program Increases 14,796 26,975 400 0 0 2,261 2,990 0 0 360,846 408,268 

FY 2009 President’s Budget $273,895 $26,975 $19,356 $145,736 $28,620 $91,335 $96,900 $239,344 $187,054 $11,361,509 $12,470,724 

Offsetting Fees 0 0 0 0 0 0 0 0 (10,000) 0 (10,000)

FY 2009 President’s Budget 

less Offsetting Fees

$273,895 $26,975 $19,356 $145,736 $28,620 $91,335 $96,900 $239,344 $177,054 $11,361,509 $12,460,724 

Fiscal Year Comparison of Full-Time Equivalent (FTE) Staffing

(Direct and Reimbursable)

Appropriation FY 2007 Actual FY 2008 Estimated FY 2009 President’s Budget

Direct Reimb. Total Direct Reimb. Total Direct Reimb. Total

Departmental Offices Salaries and Expenses 1,055 86 1,141 1,133 90 1,223 1,200 90 1,290

Office of Inspector General 111 3 114 112 0 112 115 0 115

Treasury IG for Tax Administration 792 3 795 835 3 838 835 3 838

Community Development Financial Institutions Fund 53 0 53 75 0 75 75 0 75

Financial Crimes Enforcement Network 302 0 302 334 1 335 343 1 344

Alcohol & Tobacco Tax and Trade Bureau 523 10 533 544 15 559 525 15 540

Financial Management Service 1,483 408 1,891 1,692 428 2,120 1,500 441 1,941

Bureau of the Public Debt 1,303 16 1,319 1,371 17 1,388 1,371 17 1,388

Internal Revenue Service 92,017 698 92,715 91,123 623 91,746 92,922 650 93,572

Subtotal, Treasury Appropriated Level 97,639 1,224 98,863 97,219 1,177 98,396 98,886 1,217 100,103

Working Capital Fund 0 201 201 0 223 223 0 233 233

Treasury Franchise Fund 0 769 769 0 830 830 0 793 793

Bureau of Engraving and Printing 0 2,109 2,109 0 2,200 2,200 0 2,150 2,150

U.S. Mint 0 1,944 1,944 0 2,071 2,071 0 2,065 2,065

Office of the Comptroller of the Currency 0 2,954 2,954 0 3,078 3,078 0 3,139 3,139

Office of Thrift Supervision 0 974 974 0 1,104 1,104 0 1,104 1,104

Terrorism Insurance Program 10 0 10 10 0 10 10 0 10

Total 97,649 10,175 107,824 97,229 10,683 107,912 98,896 10,701 109,597
Department of the Treasury – Congressional Justification FY 2009

2
Departmental Offices 

Mission Statement 

Serve the American people and strengthen national security by managing the U.S. 

Government’s finances effectively, promoting economic growth and stability, and 

ensuring the safety, soundness, and security of U.S. and international financial systems. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Departmental Offices - S & E Enacted Enacted Request $ Change % Change 

Executive Direction $19,728 $20,749 $21,592 $843 4.06%

Economic Policies and Programs 38,393 44,242 45,853 1,611 3.64%

Financial Policies and Programs 24,695 29,465 34,735 5,270 17.89%

Terrorism and Financial Intelligence 47,540 56,775 61,712 4,937 8.70%

Treasury-wide Management and 

Programs 16,748 18,505 19,009 504 2.72%

Administration Programs 69,244 78,624 90,994 12,370 15.73%

Total Appropriated Resources $216,348 $248,360 $273,895 $25,535 10.28%

Total FTE 1,055 1,133 1,200 66 5.87%

FY 2009 Priorities 

The FY 2009 budget request supports the Departmental Offices’ (DO’s) leading role in 

accomplishing key Administration goals: 

• Effectively Manage U.S. Government Finances – The Department will dedicate 

significant resources to increasing the efficiency and sophistication of debt 

management tools, which will result in taxpayer savings. 

• Ensure U.S. and World Economies Perform at Full Economic Potential – The 

Department strives to maintain America’s strength and prosperity, and will 

continue to do so by developing and implementing policies that encourage overall 

economic growth, protecting key financial infrastructure, and ensuring foreign 

investment in the U.S. economy is sound and secure. The Department will also 

build a Operations center to improve its ability to provide timely response to 

financial crises. 

• Prevent Terrorism and Promote the Nation’s Security Through Strengthened 

International Financial Systems – The Department will maximize its impact by 

increasing its role as a leader in the area of financial intelligence, setting the 

guidelines for the Intelligence Community (IC) in the area of financial 

intelligence. The Department will increase its counterintelligence capabilities and 

enhance its capacity to administer sanctions against terrorist groups and their 

sponsors. 

• Promote Management and Organizational Excellence – The Department 

continues to develop integrated plans where policies and operations align to 

produce maximum value for the American people. DO will fund technology 

investments and disaster recovery planning. 
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.1 – Budget Adjustments Table..................................................................................... 8 

2A – Budget Increases and Decreases Description ........................................................ 8 

2.2 – Operating Levels Table........................................................................................ 13 

2.3 – Appropriations Detail Table ................................................................................ 14 

2B – Appropriations Language and Explanation of Changes....................................... 15 

2C – Legislative Proposals ........................................................................................... 16 

Section 3 – Budget and Performance Plan ................................................................... 18

3.1 – Budget by Strategic Goal..................................................................................... 18 

3A – Executive Direction ............................................................................................. 18 

3.2.1 – Executive Direction Budget and Performance Plan ......................................... 19 

3B – Economic Policies and Programs......................................................................... 19 

3.2.2 – Economic Policies and Programs Budget and Performance Plan..................... 20 

3C – Financial Policies and Programs.......................................................................... 21 

3.2.3 – Financial Policies and Programs Budget and Performance Plan...................... 22 

3D – Terrorism and Financial Intelligence ................................................................... 23 

3.2.4 – Terrorism and Financial Intelligence Budget and Performance Plan............... 25 

3E – Treasury-wide Management and Programs......................................................... 25 

3.2.5 – Treasury-wide Management and Programs Budget and Performance Plan ..... 26 

3F – Administration Programs...................................................................................... 27 

3.2.6 – Administration Programs Budget and Performance Plan................................. 27 

Section 4 – Supporting Materials.................................................................................. 29

4A – Human Capital Strategy Description ................................................................... 29 

4.1 – Summary of IT Resources Table ......................................................................... 34 

4B – Information Technology Strategy ........................................................................ 35 

4.2 – PART Evaluation Table....................................................................................... 37 

4C – Terrorism Risk Insurance (TRIA)........................................................................ 38 

4.3 – TRIA Baseline Outlays and Receipt Table.......................................................... 38 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Departmental Offices (DO), as the headquarters of the Department of the Treasury, 

performs core functions vital to national security, the promotion of economic growth, and 

the management of the nation’s finances. 

The FY 2009 budget request supports DO’s leading role in accomplishing the outcomes 

of the Treasury strategic framework: 

• Managing the Government’s Finances – The ability of the Department of the 

Treasury to manage the nation’s finances with integrity is paramount to 

maintaining financial stability and enabling economic growth. DO will continue 

to play an important role in this effort through sound fiscal management enabling 

continual operation of essential government services and allowing the Department 

to meet its financial obligations while minimizing borrowing costs. 

• Securing America’s Economic and Financial Future – The integration of the 

global economy and liberalization of markets holds forth the promise of an

increasingly prosperous and secure world. DO will continue to work toward an 

economic system that promotes competitive capital markets, free trade and 

investment, while always striving to decrease the gap in the global standard of 

living. 

• Strengthening National Security – The Department plays an integral role in 

stopping the financing of terrorism and identifying and dismantling terrorist 

organizations’ support networks. DO will continue to lead the effort, working 

closely with other agencies and with governments around the world, to identify 

and block financial assets of terrorists, proliferators of weapons of mass 

destruction, and narcotics traffickers and their support networks. Doing so will 

impair, impede, and economically isolate these individuals, organizations and 

entities. 

• Producing Effective Results – The Department is committed to creating the 

conditions that allow its programs and activities to perform efficiently and 

effectively, while continuing to drive results through performance and cost-based 

decision-making, DO will continue to align resources to deliver outcomes; to 

invest in, secure and leverage information technology; to close skill gaps, recruit 

and retain a high performing workforce; and to develop effective leadership. 

DO - 1 
1B – Program History and Future Outlook 

DO has transitioned to operate beyond the scope of traditional headquarters 

responsibilities, allowing it to accomplish multiple missions that are broad in scope. DO 

plays a direct role in fighting the war on terror and in promoting the President's economic 

policy agenda domestically and abroad. 

Managing the Government’s Finances – The primary function of the Department of the 

Treasury is the management of the monetary resources of the United States. Many 

critical aspects of that management function fall under the scope of DO; including the 

determination of domestic and international economic policy and debt management. The 

Departmental Offices have recently experienced success in both of these areas. 

 

In FY 2007, the Office of Tax Policy continued to support the Administration’s health 

care initiatives through significant and timely analysis of the taxation and employee 

benefits issues underlying many health and Medicare reform proposals. The office 

worked to develop a proposal that would make health care more affordable and more 

accessible. Under this proposal, all taxpayers who buy health insurance, whether on their 

own or through their employer, and no matter the cost of the plan, would get the same

standard tax deduction for health insurance. The proposal would help hold down healthcare costs by removing the current tax bias that encourages over-spending. 

The Department of the Treasury released a comprehensive seven-point strategy in a 

continuing effort to reduce the tax gap and increase compliance. This budget includes 

resources critical to implementing that strategy, including new funding for research on 

noncompliance with the tax law. Analytical support will focus on developing tools for 

narrowing the tax gap without imposing excessive burdens on compliant taxpayers. 

The Office of Tax Policy also released a study titled “Approaches to Improve the 

Competitiveness of the U.S. Business Tax System for the 21st Century,” which examined 

the impact of tax policy on the global competitiveness of U.S. companies and workers. 

This study is part of an ongoing effort by the Department to explore opportunities that 

will enhance U.S. competitiveness. 

In FY 2009, the Department will continue working toward the full automation of the 

interest rate and yield curve certifications presently executed by the Office of Debt 

Management. Treasury is required by statute and regulation to determine a broad array 

of critical interest rates including rates for savings bonds, Social Security Trust Funds, 

and State and Local Government Series securities. Treasury also creates the official real 

and nominal yield curves for financial markets. The implementation of these efforts will 

ensure that Treasury can produce these mission-critical processes on a timely basis, 

provide them to market participants quickly, and bolster contingency procedures. 

Securing America’s Economic and Financial Future – The Department plays a key 

policy role in promoting prosperous U.S. and world economies, raising standards of 

living, and protecting domestic and international economic and financial systems. The 

DO - 2 
Department will strive to maintain America’s strength and prosperity by developing and 

implementing policies that encourage overall economic growth, protect key financial 

infrastructure, and ensure investment in the U.S. economy is sound. 

In FY 2007, the Office of Financial Market Policy (OFMP) took a lead role in the 

President’s Working Group on Financial Markets (PWG) acting as liaison to other PWG 

agencies, the Government Accountability Office (GAO), and Congressional staff. As the 

internal Treasury coordinator for PWG issues OFMP coordinated meetings on various 

issues including Private Pools of Capital/Hedge Funds with hedge fund managers, prime 

brokers/counterparties, investors, fiduciaries/pension funds/endowments, and support 

industries (lawyers, accountants/auditors). These efforts culminated in the release of the 

PWG’s Principles and Guidelines Regarding Private Pools of Capital in February 2007 

to address systemic risk and investor protection issues

FY 2007 also saw an increased effort by the Treasury Department to increase financial 

education. Department officials traveled to 20 states, held 95 financial education 

sessions, responded to approximately 220 inquiries from financial education providers 

through the Department’s Technical Assistance Center, and recognized three 

organizations for their exemplary financial education programs. As part of its leadership 

of the Financial Literacy and Education Commission, Treasury hosted three statutorily 

required public meetings, submitted the annual Strategy for Assuring Financial 

Empowerment to Congress in a timely fashion, completed 15 calls to action as outlined in 

the National Strategy for Financial Literacy, and implemented two recommendations of 

the GAO’s recently issued report. In addition, the promotion of the MyMoney.gov Web 

site and the 1-888-MyMoney toll-free hotline resulted in more than 900,000 visits and 

more than 16,000 calls respectively. The office also released its evaluation of First 

Accounts Program recipients and testified before Congress on the status of financial 

literacy efforts, and collaborated (and continues to collaborate) with the White House to 

launch a financial literacy initiative. 

Treasury’s Office of Critical Infrastructure Protection, in conjunction with regional 

coalitions in Chicago and San Francisco, led the financial industry-wide pandemic flu 

exercise held in the fall of 2007. Additionally, the Office organized and ran a crossborder exercise between the President’s Working Group on Financial Markets and the 

Tripartite Standing Committee in the United Kingdom. This exercise highlighted the 

need for continued efforts between the financial authorities in these countries and others

to come together to focus on areas where further collaboration is necessary to address 

potentially global financial crises. 

In FY 2009, the Department of the Treasury will launch a cross-departmental strategic 

initiative to better manage the government’s finances with increased levels of automation, 

resiliency, reporting, transparency and cost savings. The Department plans to design, 

build and implement cash and debt management systems, analytics, policies, and 

procedures to administer the nation’s finances, arming the Department of the Treasury 

with 21st century tools to efficiently and effectively execute its core mission. The 

initiative has four principal components: cash management modernization, debt 

DO - 3 
management modernization, enhanced reporting and transparency, and improved risk 

management. 

As the lead agency for the banking and finance sector, the Treasury Department will 

continue to work to ensure the resilience of the American financial services sector, and 

by extension the American economy, so it is resilient and able to withstand natural 

disasters or man-made attacks intended to disrupt, dismantle, or destroy its critical 

infrastructure. Economic security has been identified as a National Essential Function, 

and the confidence of our citizens and our trading partners depends in part on the 

knowledge that the U.S. financial system is at all times available and resilient in the face 

of all such potential incidents. 

In FY 2008, the Department implemented a three point plan to avoid preventable 

foreclosures and to minimize the impact of the housing downturn on the U.S. economy. 

The plan included: increasing efforts to reach able homeowners who are struggling with 

their mortgages; working to increase the availability of affordable mortgage solutions for 

these borrowers; and leading the industry to develop a systematic means of efficiently 

moving able homeowners into sustainable mortgages. In FY 2009 the Department will 

also continue its industry-wide effort to respond to the downturn in the housing and 

mortgage markets. By preventing avoidable foreclosures, the Department will help to 

safeguard neighborhoods and communities, and fulfill our primary responsibility of 

protecting the broader U.S. economy. 

Strengthening National Security – The Treasury Department leads the U.S. 

government’s multi-faceted effort to keep the world’s financial systems free and open to 

legitimate uses, while excluding those who wish to use those systems for illegal purposes, 

through its Office of Terrorism and Financial Intelligence (TFI). Since its creation in FY 

2004, TFI has expanded its capabilities from focusing on the current intelligence process 

to the production and dissemination of analysis on strategic and systemic issues. 

TFI’s Office of Foreign Asset Control (OFAC) successfully executes sanctions against 

foreign countries, targeted regimes, and entities and individuals, including residual 

enforcement actions associated with programs that have been lifted. Although these 

many programs differ in terms of their scope and application, they all involve the 

exercise of the President’s constitutional and statutory wartime and national emergency 

powers to impose controls on transactions and trade, and to freeze foreign assets that 

come within the jurisdiction of the United States. In administering and enforcing these 

economic sanctions, it is imperative that OFAC maintain a close working relationship 

with other federal departments and agencies in order to ensure both that these programs 

are implemented in a manner consistent with U.S. national security and foreign policy 

interests, and that they are enforced effectively. 

Over the past several years, the Department has focused its efforts on exploiting current 

intelligence, building breadth and depth in its analytic ranks, improving its strategic 

analytic capability, and building the capacity to perform systemic analyses of national 

security threats. 

DO - 4 
In FY 2009, the Department will build on these capabilities by using its unique expertise 

to help coordinate the collection and analysis of information regarding the means, 

methods, and networks that form the financial underpinning of national security threats, 

and develop the tools to address those threats. Requested resources will be targeted to 

aligning collection on finance-related issues more closely with policymaker needs by 

driving the requirements process; developing and taking advantage of new sources of 

information; enhancing analysis on finance-related issues in coordination with the 

intelligence community (IC); expanding Treasury’s role and relationships within the IC; 

and ensuring TFI’s Office of Intelligence and Analysis’ infrastructure meets these new 

responsibilities. 

Producing Effective Results – The Department continues to work at providing the tools 

necessary to execute the Treasury Department’s mission in the most efficient and cost 

effective manner. Essential components required for achieving the Department’s mission 

include human resources, facility services, information technology, budgetary services, 

and procurement. 

In FY 2007, the Treasury Department ably executed initiatives aimed at supporting the 

goals of the organization. For example, the Department successfully transitioned to a 

new Department-wide Complaint Management Tool, which enabled the capture of 

Treasury-wide data at the pre-complaint phase of the EEO process. The data provided by 

the system is being used by management to measure the timeliness and effectiveness of

the EEO counseling process. For the first time, the Treasury Department instituted 

service-wide standards for the operation of the Treasury Complaint Center to assist us in 

meeting our oversight responsibility. 

During FY 2007, DO led a successful Department-wide effort to address a number of 

human capital issues. Program accomplishments included implementing of a human 

capital accountability and audit program; developing and issuing Succession 

Management and Workers Compensation policies; leading efforts to strengthen agencywide performance management; improving hiring processes and timeliness; and leading 

or facilitating initiatives that added value to the agency’s ability manage the workforce. 

The Department built a Treasury-wide training program to provide the required training 

to meet the first year requirements of the No Fear Act. In addition to making that training 

available across the Department, the program has been shared with other federal 

agencies. 

To enhance human capital management within the Department in FY 2009, focus will be 

placed on: improved outreach to diverse groups, including establishing intern programs

from sources such as the Hispanic Association of Colleges and Universities, Historically 

Black Colleges and Universities, the Washington Internships for Native Students, and the 

Workforce Recruitment Program; enhanced oversight of the Treasury Complaint Mega 

Center in Dallas, Texas; improved overall processing times for EEO formal complaints; 

increased participation in Alternative Dispute Resolution (ADR) programs and activities, 

with an emphasis on dispute prevention and conflict resolution; and establishment of

DO - 5 
Treasury-wide goals to measure our progress in hiring individuals with disabilities, with 

monitoring of accomplishments in this area. 

Within DO, resources will be dedicated to: revising and developing personnel policies, 

programs and processes; developing and delivering new supervisory and leadership 

training to create and sustain a learning environment within DO; assisting offices in 

focusing on succession planning; providing the necessary support to implement ongoing 

government-wide initiatives to build a robust intelligence analysis capability; and 

expanding and formalizing the DO telework program to help attract, employ and retain 

the best and brightest from among today’s workforce. 

The Department of the Treasury is committed to strengthening the IT investment 

management, and has recently taken additional steps to do so. First, the Department has 

included all IT investments under the Department’s IT Capital Planning and Investment 

Control Policy processes. Second, the Department is establishing a process to ensure that 

the Project and Program Managers are certified in accordance with OMB requirements.

Finally, the Department is working to better engage the Department’s executive 

leadership by re-establishing the Executive Investment Review Board (E-Board). The EBoard will: make recommendations to the Secretary on strategic IT priorities for the 

Treasury based on statutory requirements, the President’s Management Agenda, the 

Treasury Strategic Plan, or issues identified by GAO or the Department’s Inspectors 

General; annually review the IT Strategic Plan prepared by the Chief Information Officer 

(CIO); determine the IT investments (and corresponding budgets) that best support the 

Treasury’s missions and program delivery processes; review the progress of existing 

systems and ongoing IT projects to determine if they should proceed as planned, be 

redirected or discontinued; and evaluate the results achieved by the use/operation of 

Treasury IT systems to ensure Treasury IT investments yield the planned results.

The Office of the Procurement Executive (OPE) continues to provide Department-wide 

acquisition policy and oversight, ensuring proper business controls, continuous 

improvement and achievement of key acquisition goals. OPE, in conjunction with the 

CIO, implemented a High Impact Acquisition (HIA) program designed to support 

improved oversight and management of the Department’s information technology 

investments. The HIA program requires contract reviews by contracting officers in 

consultation with program managers as part of the quarterly Capital Planning and 

Investment Control quarterly reviews. These reviews cover over 150 contracts each 

quarter, and result in an executive scorecard of investments with contract issues that 

require corrective action planning. The HIA scorecard promotes executive level 

engagement in IT issues as it is distributed regularly to the Treasury Acquisition Council, 

the CIO Council (the Treasury Investment Review Board), and the Chief Financial 

Officer Council, and will be used in assessments of bureau budget requests. 

Finally, the Office of Emergency Programs (OEP) facilitated a series of training exercises 

in the area of continuity of operations during critical national security and emergency 

events. OEP worked with the Secret Service to standardize emergency notification 

procedures in the Secret Service-Treasury Command Center. The office provided 

DO - 6 
management support to over 30 Main Treasury incidents in FY 2006, and is on track to 

double this number in FY 2007. This office took the lead in managing numerous 

Treasury-wide incidents such as hurricanes, floods, and security incidents at remote 

facilities throughout the year and will continue to do so going forward. 

DO - 7 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Departmental Offices - S & E FTE Amount

FY 2008 Enacted 1,133 $248,360

Base Realignment:

 OIA – Base Realignment (1,000)

 OIA – Global Finance Initiative 1,000

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 2,396

 Pay Annualization 837

 Pay Inflation Adjustment 2,849

Initiative Annualization:

 IA - Annualization of FY 2008 Initiative 4 748

 OFAC - Annualization of FY 2008 Initiatives 5 986

 OIA - Annualization of FY 2008 Initiatives 9 1,465

 TFFC - Annualization of FY 2008 Initiatives 4 803

 TP - Annualization of FY 2008 Initiatives 2 431

Non-Recurring Costs:

SCIF (1,500)

Transfers In:

 DOIT - Disaster Recovery 1,724

Total FY 2009 Base 1,156 $259,099

Program Increases:

 DF - Debt Management Office Analytical Support 2 3,000

 DF - Ensuring National Security Through CIP 1,300

 DO - Operations Center 24 6,200

 OFAC - State Sponsored Terrorism (Iran and Sudan) 4 1,380

 OGC - General Counsel Support for CFIUS 2 483

 OIA - Counterintelligence and Security Capabilities Enhancement 3 1,433

 OIA - Global Finance Initiative 10 1,000

Subtotal FY 2009 Program Changes 44 14,796

Total FY 2009 Request 1,200 $273,895

2A – Budget Increases and Decreases Description 

Base Realignment .........................................................................................+$0 / +0 FTE 

Office of Intelligence Analysis (OIA) - Base Realignment -$1,000,000 / +0 FTE 

A portion of the Treasury base funding will be transferred within the DO budget to 

support the Global Finance Initiative. 

OIA - Global Finance Initiative +$1,000,000 / +0 FTE 

In FY 2009, Treasury will realign $1 million in base resources to support the Global 

Finance Initiative for a total of $2 million. This investment is described in more detail in 

the “Program Increases” section below. 

Maintaining Current Levels (MCLs) ...........................................+$6,082,000 / +0 FTE 

Non-Pay Inflation Adjustment +$2,396,000 / +0 FTE 

Funds are requested for the inflationary increases to non-labor related items such as 

contracts, travel, supplies, equipment, and General Services Administration (GSA) rent 

adjustments; and Department of State overseas Capital Security Cost Sharing. 

DO - 8 
Pay Annualization +$837,000 / +0 FTE 

Funds are requested for the FY 2009 cost of the January 2008 pay increase. 

Pay Inflation Adjustment +$2,849,000 / +0 FTE 

Funds are requested for the proposed January 2009 pay raise. 

Initiative Annualization ...............................................................+$4,433,000 / +23 FTE 

Funds are requested for completing the full-year cost and FTE realization of positions

from enacted FY 2008 initiatives. 

Office of International Affairs (IA) - Annualization of FY 2008 Initiative +$748,000 / +4 

FTE 

In FY 2008, funds were enacted to recruit investment flow analysts and other specialists. 

This function is necessary to provide adequate support for, and measure progress toward, 

achieving the International Affairs objective of ensuring national security and increasing 

economic growth. 

Office of Foreign Asset Control (OFAC) - Annualization of FY 2008 Initiatives 

+$986,000 / +5 FTE 

In FY 2008, resources were enacted to continue the Treasury Department's efforts in 

combating terrorism networks and state sponsors of terrorism. New Executive Orders 

with respect to Sudan and Syria were issued in 2006 and the Administration is 

extensively engaged with respect to Iran. Funding was also enacted to expand the 

weapons of mass destruction (WMD) sanctions program by strengthening OFAC's ability 

to track, identify, and designate financiers and other supporters of WMD proliferation. 

Finally, additional support was enacted to expand enforcement capacity in support of 

investigation and blocking activities, which are critical to the enforcement of sanctions. 

OIA - Annualization of FY 2008 Initiatives +$1,465,000 / +9 FTE 

In FY 2008, funding was enacted to expand OIA's analytic programs to meet increased 

demands and expand the breadth and depth of its analytic coverage to address emerging

national security threats and issues. Additionally, resources were provided to integrate 

Treasury further into the Intelligence Community (IC); to increase Departmental access 

to critical intelligence; and to expand the Department’s ability to coordinate on terroristfinancing and WMD proliferation matters with the IC, law enforcement communities, 

and foreign partners. Finally, funding was enacted for OIA’s Office of Intelligence 

Support (OIS) to provide intelligence on a full range of political, economic, and security 

matters to the Secretary, Deputy Secretary and other senior Treasury leadership. The 

information provided by OIS is critical for the participation by the Treasury Department's

senior leaders in the policymaking process National Security Council. 

Office of Terrorist Financing and Financial Crimes (TFFC) - Annualization of FY 2008 

Initiatives +$803,000 / +4 FTE 

In FY 2008, resources were enacted for additional policy advisors dedicated to disrupting 

terrorist financial networks in the Western Hemisphere, Africa and the Middle East-South 

DO - 9 
Asia nexus, bringing together the U.S. government tools available to law enforcement 

and national security agencies. Funding was also provided to target rogue regimes such 

as North Korea and other significant national security hot spots (including Afghanistan, 

Pakistan, India, and Central Asia). 

Office of Tax Policy (TP) - Annualization of FY 2008 Initiatives +$431,000 / +2 FTE 

In FY 2008, funds were enacted to increase tax policy analytical support. TP presently 

has only limited capability to produce analyses for a narrow range of tax policy changes. 

Additional resources dedicated to to this analysis will afford decision makers estimates of

the full effect of tax policy changes decision-makers in order to inform tax policy 

determinations. The resources requested will facilitate production of these estimates for 

proposed Federal tax legislation. This funding annualizes that initiative to ensure full year 

funding for FY 2008 hires. 

Non-Recurring Costs ......................................................................-$1,500,000 / +0 FTE 

Sensitive Compartmented Information Facility (SCIF) -$1,500,000 / +0 FTE 

Of the $3 million in SCIF funding enacted in FY 2008, $1.5 million is non-recurred in 

FY 2009. 

Transfers In ....................................................................................+$1,724,000 / +0 FTE 

DOIT - Disaster Recovery +$1,724,000 / +0 FTE 

The FY 2009 budget proposes to transfer funding for its disaster recovery site from the 

Department-wide Systems and Capital Investments Program account to the DO Salaries 

and Expenses account due to the fact that the funds are for continuing operations and not 

development. The DO disaster recovery site was established in 2002 at another 

government site in West Virginia. The servers, workstations and network devices were 

procured and installed as part of the seat management contract. Thus, the systems are 

paid for over a three- or four-year period and refreshed at the end of the cycle. The fixed 

cost of equipment, labor and leased telecommunications lines are mandatory expenses 

that will continue in perpetuity. 

Program Increases .....................................................................+$14,796,000 / +44 FTE 

DF - Debt Management Office Analytical Support +$3,000,000 / +2 FTE 

A complete revamp of the Office of Debt Management's (ODM) information technology 

systems is necessary to equip decision makers with better models so that more accurate 

and timely projections can be made. This will result in more effective financing of the 

Federal Government and will increase the reliability of crucial data on which the capital 

markets rely. By investing in ODM’s systems, the Treasury Department will be in a 

position to significantly reduce the risk of operational failure, better manage its $9+ 

trillion debt portfolio and improve national security. Securing the ODM infrastructure 

through multiple failsafe mechanisms and backup facilities will ensure that the U.S. 

Treasury market remains the most important sovereign issuer in global capital markets. 

This modernization will make the U.S. debt management technology more comparable to 

the sophisticated systems used in other countries like the United Kingdom, Canada, and 

Japan. Additionally, the potential cost savings for the American public from completing 

DO - 10 
this initiative is significant - a one basis point reduction in interest costs would save the 

US taxpayer $430 million annually. 

DF - Ensuring National Security Through the Office of Critical Infrastructure Protection

+$1,300,000 / +0 FTE 

This funding will help prepare the American financial services sector against disasters,

either natural or manmade. The mission of this office is to lead the efforts of the Banking 

and Finance Sector to maintain and improve the security and resilience of the U.S. 

financial infrastructure. Initiatives currently underway have made a direct and positive 

impact on cooperative public-private sector efforts to identify threats and vulnerabilities, 

to share critical information, and to work together to mitigate risks to the sector and 

protect the U.S. economy and our national security. Given the important mission and its 

many accomplishments, the FY 2009 budget seeks additional resources to expand the 

work of providing for the resilience and protection of the Nation's financial services 

infrastructure. Additional funding will allow for further international exercises with 

entities such as the European Central Bank, extensive mapping of the financial sector, 

and the establishment of secure communications with financial institutions. 

DO - Operations Center +$6,200,000 / +24 FTE 

The war on terror and the increasing globalization of the world economy requires the 

Department of the Treasury’s policy offices and bureaus to coordinate actions in a 

dynamic environment. Interactions with international financial markets, regulation of 

domestic financial markets, and the financial analysis of terrorist organizations demand 

continuous coordination. The global scope of the Treasury Department’s operation 

requires a 24/7 monitoring capability. Only instant communication and continuous 

coordination will enable the Department to respond efficiently to an international or 

domestic financial crisis. The FY 2009 budget establishes an Operations Center that will 

act as a fusion center for the processing, dissemination, and coordination of crisis 

management actions of policy offices including international affairs, domestic finance, 

and intelligence analysis. It will incorporate and expand the existing Market Room’s 

capacity to monitor international and domestic financial markets; coordinate actions with 

Federal agencies, foreign governments, and global financial markets; and manage the 

Department’s global operations on a daily basis. The center will include representatives 

from key Treasury Department policy offices and will provide them with necessary 

communication equipment and information technology. 

OFAC - State Sponsored Terrorism (Iran and Sudan) +$1,380,000 / +4 FTE 

The FY 2009 budget proposes to enhance capacity to effectively administer and 

implement the application of economic sanctions to state-sponsors of terrorism, such as 

Iran and Sudan, as well as terrorists, terrorist groups, and their support networks. The 

funds will provide additional sanctions investigators; enforcement, compliance, licensing, 

blocking, and civil penalties officers; Freedom of Information Act specialists; and 

program advisor and records management specialists to support these efforts. 

DO - 11 
Office of General Counsel (OGC) - General Counsel Support for the Committee on 

Foreign Investment in the United States (CFIUS) +$483,000 / +2 FTE 

The Office of the Assistant General Counsel for IA requires additional legal support so

that it may meet the increased demand to support clients on the Treasury-chaired 

Committee on Foreign Investment in the United States. The number of cases reviewed 

by CFIUS has substantially increased, as has the scrutiny accorded to each case. 

Treasury Department attorneys are involved much earlier in the process of case review 

and are devoting far more time to each case in order to examine jurisdictional issues and 

participate in interagency discussions of possible mitigation agreements when potential

national security threats are present. 

OIA - Counterintelligence and Security Capabilities Enhancement +$1,433,000 / +3 FTE 

Funding this initiative is critical to the Department’s efforts to address current and 

emerging threats that affect its national security mission. These include: preventing 

espionage in the Department; thwarting adversarial threats to our personnel, programs,

and facilities; and identifying and mitigating threats from compromise of Treasury 

critical programs or theft. As Treasury's national security mission increases, Treasury 

becomes a greater target of foreign adversaries. This initiative builds on the recent 

Departmental Counterintelligence assessment. Furthermore, this initiative aligns with the 

Director of National Intelligence’s National Intelligence Strategy Enterprise Objective 

Seven and the National Counterintelligence Strategy. 

OIA - Global Finance Initiative +$1,000,000 / +10 FTE 

Targeted financial measures supported by sound financial intelligence have become one 

of the most effective weapons against national security threats, as policymakers continue 

to seek options short of military force. Treasury’s efforts in this area have been 

instrumental in disrupting terrorist financing and applying pressure on countries such as 

Iran and North Korea in direct support of U.S. policy goals. This initiative provides $2 

million, including a realignment of $1 million in base resources, and 10 positions to 

establish a capability to facilitate the coordination of global finance intelligence issues

within the IC. These resources will enable OIA, Treasury’s intelligence component, to 

effectively leverage information from the IC to provide actionable intelligence to senior 

policymakers in support of these increasingly utilized measures, and to play a critical role 

in facilitating coordination across the IC on matters related to financial intelligence. 

Resources will be targeted to aligning collection requirements on finance-related issues

more closely with policymaker needs; developing and taking advantage of new sources of 

information; enhancing analysis on finance-related issues in coordination with the IC; 

expanding OIA’s role and relationships within the IC; and ensuring OIA’s infrastructure 

meets these new responsibilities. This initiative is aligned with key tasks and objectives 

of the National Security Strategy, the National Intelligence Strategy, the National 

Implementation Plan for the War on Terror, and the Treasury Strategic Plan. 

DO - 12 
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Departmental Offices - S & E

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Rescission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 1,055 1,133 1,200

Object Classification:

 11.1 - Full-time permanent 107,172 112,379 0 112,378 130,297

 11.3 - Other than full-time permanent 2,781 2,781 0 2,781 2,781

 11.5 - Other personnel compensation 197 197 0 197 197

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 23,792 23,843 0 23,843 28,377

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 4,200 6,789 0 6,790 5,047

 22 - Transportation of things 0 0 0 0 0

 23.1 - Rental payments to GSA 4,000 5,239 0 5,239 4,000

 23.2 - Rental payments to others 0 0 0 0 0

 23.3 - Comm, utilities, and misc charges 13,146 7,967 0 7,967 14,058

 24 - Printing and reproduction 2,715 3,615 0 2,715 2,715

 25 - Other contractual services 0 0 0 0 0

 25.1 - Advisory and assistance services 26,690 52,837 (1,782) 51,055 37,699

 25.2 - Other services 13,612 0 0 9,724 19,229

 25.3 - Other purchases of goods and services from Govt.

accounts 

15,751 28,564 0 18,840 22,249

 25.4 - Operation and maintenance of facilities 900 0 0 900 900

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 1,000 1,000 0 1,000 1,000

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

 26 - Supplies and materials 0 3,857 0 3,857 3,426

 31 - Equipment 392 1,073 0 1,073 1,920

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $216,348 $250,141 $(1,782) $248,360 $273,895

Budget Activities:

 Executive Direction 19,728 19,816 933 20,749 21,592

 Economic Policies and Programs 38,393 45,450 (1,208) 44,242 45,853

 Financial Policies and Programs 24,695 28,869 595 29,465 34,735

 Terrorism and Financial Intelligence 47,540 56,224 551 56,775 61,712

 Treasury-wide Management and Programs 16,748 19,010 (348) 18,505 19,009

 Administration Programs 69,244 80,772 (2,305) 78,624 90,994

Total Budget Authority $216,348 $250,141 $(1,782) $248,360 $273,895

DO - 13 
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Newly Appropriated Resources:

Executive Direction Programs 119 $19,094 119 $19,728 129 $20,749 131 21,592 1.16% 4.06%

Economic Policies and Programs 232 35,581 232 38,393 244 44,242 247 45,853 1.44% 3.64%

Financial Policies and Programs 181 24,878 181 24,695 194 29,465 198 34,735 1.80% 17.89%

Terrorism and Financial Intelligence 264 43,115 264 47,540 308 56,775 342 61,712 11.06% 8.70%

Treasury-wide Management Policies and Programs 99 15,705 99 16,748 99 18,505 99 19,009 0.00% 2.72%

Administration Programs 160 75,154 160 69,244 160 78,624 184 90,994 15.00% 15.73%

Subtotal Newly Appropriated Resources 1,055 213,527 1,055 216,348 1,133 248,360 1,200 273,895 5.87% 10.28%

Other Resources:

Offsetting Collections - Reimbursable 86 $17,816 86 $19,800 90 $19,800 90 $18,500 0.00% -6.57%

Subtotal Other Resources 86 17,816 86 19,800 90 19,800 90 18,500 0.00% -6.57%

Total Resources Available for Obligation 1,141 $231,343 1,141 $236,148 1,223 $268,160 1,290 $292,395 5.44% 9.04%

1/ FY 2007 Obligations equal enacted less anticipated lapse

FY 2007 FY 2008 FY 2009 FY 2008

Resources Available for Obligation Request to FY 2009

FY 2007

Obligations Enacted Enacted 1

% Change

DO - 14 
2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

DEPARTMENTAL OFFICES 

Federal Funds 

SALARIES AND EXPENSES: 

For necessary expenses of the Departmental Offices 

including operation and maintenance of the Treasury 

Building and Annex; hire of passenger motor 

vehicles; maintenance, repairs, and improvements of, and 

purchase of commercial insurance policies for, real 

properties leased or owned overseas, when necessary 

for the performance of official business, [$248,360,000] 

$273,895,000, [of which not to exceed $10,840,000 is for 

executive direction program activities; not to exceed 

$9,909,000 is for general counsel program activities; not to 

exceed $44,242,000 is for economic policies and programs 

activities; not to exceed $29,464,000 is for financial 

policies and programs activities; not to exceed $56,775,000 

is for terrorism and financial intelligence activities; not to 

exceed $18,505,000 is for Treasury-wide management 

policies and programs activities; and not to exceed 

$78,625,000 is for administration programs activities: 

Provided, That the Secretary of the Treasury is authorized 

to transfer funds appropriated for any program activity of 

the Departmental Offices to any other program activity of 

the Departmental Offices upon notification to the House 

and Senate Committees on Appropriations: Provided 

further, That no appropriation for any program activity 

shall be increased or decreased by more than 2 percent by 

all such transfers: Provided further, That any change in 

funding greater than 2 percent shall be submitted for 

approval to the House and Senate Committees on 

Appropriations:] Provided [further], That of the amount 

appropriated under this heading, not to exceed $3,000,000, 

to remain available until [September 30, 2009] September 

30, 2010, is for information technology modernization 

requirements; not to exceed [$150,000] $200,000 is for 

official reception and representation expenses; and not to 

exceed $258,000 is for unforeseen emergencies of a 

confidential nature, to be allocated and expended under the 

direction of the Secretary of the Treasury and to be 

The language has been 

amended to remove the 

allocation of appropriated 

funds by budget activity. 

The amended language 

provides flexibility to the 

Secretary of the Treasury

to meet critical 

requirements in a timely 

manner. This 

methodology is in line 

with submissions from

prior years, and will 

make DO’s 

reprogramming 

requirements the same as 

all other Treasury 

bureaus. 

The language requests 

that representation funds 

be increased by $50,000 

to reflect Treasury’s 

greater overseas presence 

and increased 

DO - 15 
accounted for solely on his certificate: Provided further, 

That of the amount appropriated under this heading, 

$[5,114,000] 5,232,443, to remain available until 

[September 30, 2009] September 30, 2010, is for the 

Treasury-wide Financial Statement Audit and Internal 

Control Program, of which such amounts as may be 

necessary may be transferred to accounts of the 

Department’s offices and bureaus to conduct audits: 

Provided further, That this transfer authority shall be in 

addition to any other provided 

in this Act: Provided further, That of the amount 

appropriated under this heading, [$3,000,000] $500,000, to 

remain available until [September 30, 2009] September 30, 

2010, is for secure space requirements: Provided further, 

That of the amount appropriated under this heading, 

[$2,300,000] $1,100,000, to remain available until 

[September 30, 2009] September 30, 2010, is for salary and 

benefits for hiring of personnel whose work will require 

completion of a security clearance investigation in order to 

perform highly classified work to further the activities of

the Office of Terrorism and Financial Intelligence: 

Provided further, That of the amount appropriated under 

this heading, [$2,100,000] $3,400,000, to remain available 

until [September 30, 2010] September 30, 2011, is to 

develop and implement programs within the Office of 

Critical Infrastructure Protection and Compliance Policy, 

including entering into cooperative agreements, Provided 

further, That of the amount appropriated under this 

heading $3,000,000 to remain available until September 

30, 2011, is for modernizing the Office of Debt 

Management's information technology.

international 

responsibilities. 

2C – Legislative Proposals 

Legislation has been proposed that will give the Secretary of the Treasury the ability to

manage the government’s short-term excess operating cash more efficiently. Under the 

current authority, which is codified at 31 U.S.C. 323, the Government is authorized to 

invest its short-term excess cash in obligations of the United States Government and 

depositary institutions, principally banks, savings and loan associations, and credit 

unions. This initiative would enable the Secretary of the Treasury to broaden investment 

options and improve earnings on investments. This initiative is expected to increase the 

interest earnings on the Treasury’s investment of short-term excess cash by 

approximately $10 million a year. Such earnings would be deposited in the general fund 

of the Treasury. 

DO - 16 
This proposal is consistent with recommendations in the September 2007 GAO report 

entitled “Treasury has Improved Short-Term Investment Programs, but Should Broaden 

Investments to Reduce Risks and Increase Return.” In its report, GAO suggests that 

Congress consider providing the Secretary of the Treasury with broader authority in the 

design of an expanded repossession program. Specifically, GAO recommended that 

Treasury explore the reallocation of its short-term investments and, if provided the 

authority to do so, implement a permanent expanded repossession program that would 

meet Treasury’s short-term investment objectives while maintaining current minimal risk 

investment policies. 

DO - 17 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Goal1

Dollars in Thousands

FY 2008 

Enacted 

FY 2009 

Request

Percent 

Change

AMOUNT AMOUNT AMOUNT

Effectively Managed U.S. Government Finances 56,431 60,087 6.48%

U.S. & World Economies Perform at Full Economic

Potential 78,011 82,007 5.12%

Prevented Terrorism & Promoted the Nation's Security

Through Strengthened International Systems 106,461 112,937 6.08%

Management and Organizational Excellence 25,957 37,364 43.95%

Total $266,860 $292,395 9.57%

TREASURY Strategic Goal

3A – Executive Direction ($21,592,000 from direct appropriations and $700,000 from 

reimbursable programs): The Executive Direction program area provides direction and 

policy formulation to the Department and DO, and interacts with Congress and the public 

on Departmental policy matters. These include: the Office of the Secretary, Deputy 

Secretary, Chief of Staff, Executive Secretary, General Counsel, Legislative Affairs, 

Public Affairs, and Treasurer. 

A portion of the funds from all reimbursable programs are allocated to the Executive 

Direction and Administrative Programs budget activities to support management and 

legal services provided to reimbursable programs 

 

1

 DO activities support each of the Department’s sixteen strategic outcomes. Presenting these dollars at the 

strategic goal level provides a better demonstration of DO’s activity levels. 

DO - 18 
3.2.1 – Executive Direction Budget and Performance Plan

Executive Direction Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $14,430 $16,329 $19,094 $20,749 $21,592

 Reimbursable Resources $0 $0 $660 $0 $700

Total Resources $14,430 $16,329 $19,754 $20,749 $22,292

Budget Activity Total $14,430 $16,329 $19,754 $20,749 $22,292

No specific performance goals/measures are presented for this budget activity as the 

activity supports the mission of the entire Department. 

3B – Economic Policies and Programs ($45,853,000 from direct appropriations and 

$3,200,000 from reimbursable programs): A major mission of the Departmental Offices 

is to promote economic growth and security. The Offices pursue this mission by 

providing economic guidance and support to the Secretary in his role as the President’s 

chief economic adviser. Offices within Economic Policies and Programs monitor 

domestic and international economic conditions and developments, and collect and 

analyze financial data including foreign credits and credit guarantees. They also provide 

advice and assistance to the Secretary in the formulation and execution of U.S. and 

international economic and financial policies. 

Other Resources: Reimbursements totaling $3.2 million are collected from the U.S. 

Agency for International Development for Treasury economic and financial technical 

assistance to foreign governments and from the Mansfield Center for Pacific Affairs for 

personnel services rendered on a rotational basis to the Government of Japan’s Ministry 

of Finance. (Note: A portion of these funds are allocated to the Executive Direction and 

Administrative Programs budget activities to support management and legal services 

provided to reimbursable programs.) 

Office of International Affairs

The mission of the Office of International Affairs is to raise economic growth in 

developed and developing countries; improve financial stability and security in emerging 

and world markets; increase the effectiveness of U.S. assistance to the world’s poorest 

countries; enhance the functioning of the international financial institutions; and promote 

an open and transparent international trade and investment regime. 

IA leads the Treasury Department effort in the development of policies and guidance 

related to international monetary affairs, trade and investment policy, international debt 

strategy, and United States participation in international financial institutions. IA 

coordinates United States economic policies with the finance ministers of other G-7 

industrial nations and prepares the President for annual economic summits. 

DO - 19 
Office of Economic Policy 

The Office of Economic Policy plays a key role in supporting the Secretary by providing 

technical analysis, economic forecasting, and policy guidance on issues ranging from 

changes in entitlement policy to responding to international financial crises. EP provides 

economic intelligence through the analysis and reporting of current and prospective 

economic developments in the U.S. and world economies. EP also provides assistance in 

the evaluation and determination of the appropriate economic approach. 

In recent years, Treasury has taken a leadership role on the Social Security and Medicare 

Working Group with EP representing the Treasury Department. This group has proposed 

and implemented significant changes in the Trustees Reports, including perpetuity 

estimates of unfunded liabilities in the Social Security and Medicare reports. EP has 

published a series of Issue Briefs detailing a set of criteria and associated metrics to allow 

evaluations and analysis of options related to Social Security reform. 

3.2.2 – Economic Policies and Programs Budget and Performance Plan 

Economic Policies and Programs Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $31,203 $31,691 $35,581 $44,242 $45,853

 Reimbursable Resources $2,379 $8,504 $3,195 $7,204 $3,200

Total Resources $33,582 $40,195 $38,776 $51,446 $49,053

Budget Activity Total $33,582 $40,195 $0 $51,446 $49,053

Economic Policies and Programs Budget

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Number of new trade and investment 

negotiations underway or completed (Oe) 

 N/A N/A N/A Baseline 6

Improve International Monetary Fund (IMF) 

effectiveness and quality through periodic 

review of IMF programs (%)(Oe) 

 78% 100% 100% 90% 90%

Percentage of grant and loan proposals 

containing satisfactory frameworks for results 

measurement (%) (Oe) 

 78% 88% 92% 90% 90%

U.S. unemployment rate (%) (Oe) 5% 5% 5% 5% 5%

US Real Gross Domestic Product (GDP) 

growth rate (%) (Oe)

 4% 3% 2% 3% 3%

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

Description of Performance: The Treasury Department is committed to participating in 

the negotiation and implementation of international agreements, which help to remove 

trade and investment barriers and stimulate domestic and global growth. This goal is 

accomplished by increasing the number of new Free Trade Agreements (FTAs) and 

Bilateral Investment Treaties (BITs). The Department continues to seek strong 

commitments from its trading partners to ensure those markets are available to the United 

States on a fair and open basis. Once implemented, the agreements serve as a core 

element for a trading partner’s economic infrastructure, helping to enhance international 

DO - 20 
economic and financial stability. In FY 2007, the Department of the Treasury surpassed 

its target. 

To help ensure that the Multilateral Development Banks (MDBs) demonstrate results of 

their development assistance, MDBs closely monitor the percentage of grant and loan 

proposals containing satisfactory measurement frameworks. Over the past few years, 

most of the MDBs have made substantial progress towards developing frameworks that 

measure the results of their development assistance. For FY 2007, 92 percent of grant 

and loan proposals contained results measurement frameworks, exceeding the 

Department’s target of 90 percent. 

Currently, DO is working to develop meaningful performance measures that will align to 

the Treasury Department’s Strategic Plan. Once completed in FY 2008, these new 

measures will replace the existing measures. 

3C – Financial Policies and Programs ($34,735,000 from direct appropriations and 

$4,300,000 from reimbursable programs): Offices within Financial Policies and 

Programs monitor and provide advice and assistance to the Secretary in the areas of tax 

policy and domestic finance. 

Other Resources: Reimbursements totaling $4.3 million are collected from the Council 

of Economic Advisors and the Board of Governors of the Federal Reserve for personnel 

services rendered. (Note: A portion of these funds is allocated to the Executive 

Direction and Administrative Programs budget activities to support management and 

legal services provided to reimbursable programs.) 

Office of Tax Policy

The Office of Tax Policy supports the Secretary of the Treasury through the provision of 

technical analysis, economic forecasting, and policy guidance on issues relating to 

Federal tax policy. TP’s analysis also supports the Department’s management of the

Federal revenues, collection of tax revenues due the United States, and Federal debt 

management - all essential for ensuring the integrity of the American financial system. 

TP has supported the Administration’s health care initiatives through significant and 

timely analysis of the taxation and employee benefits issues underlying many health and 

Medicare reform proposals. TP is currently facing two significant challenges: to improve 

its analytical capabilities by expanding its data systems and its economic modeling 

capabilities, and, working with the Internal Revenue Service, to reduce the “tax gap” 

through initiatives to enhance taxpayer compliance. 

DO - 21 
Office of Domestic Finance 

The mission of the Office of Domestic Finance is to advise and assist the Secretary and 

Deputy Secretary on the domestic financial system, fiscal policy and operations, 

governmental assets and liabilities, and related economic and financial matters, as well as 

create the conditions necessary for the financial sector to be resilient in the event of

unforeseeable future events. 

DF covers diverse areas such as trading and clearing initiatives, risk mitigation, 

derivatives issues, bankruptcy/netting, hedge funds, Social Security reform, contingency 

of operations/business continuity planning, corporate governance and accounting issues, 

maintenance of the integrity of United States currency (including new currency design 

features), threat assessment issues, specific research and development, program planning 

and control, and analysis of policies related to government borrowing, banking and 

investing. 

3.2.3 – Financial Policies and Programs Budget and Performance Plan 

Financial Policies and Programs Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $25,231 $26,308 $24,878 $29,465 $34,735

 Reimbursable Resources $900 $936 $4,304 $936 $4,300

Total Resources $26,131 $27,244 $29,182 $30,401 $39,035

Budget Activity Total $26,131 $27,244 $0 $30,401 $39,035

Financial Policies and Programs Budget

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Audit opinion received on government-wide 

financial statements (Oe) 

 1 1 1 1 1

Release Federal Government-wide financial

statements on time (Oe) 

 1 1 1 1 1

Variance between estimated and actual 

receipts (annual forecast) (%) (Oe) 

 5% 4% 2% 5% 5%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and M - Management/Cust. Satisfaction. *This data is an 

estimate. 

Description of Performance: In FY 2007, for the fourth consecutive year, the Treasury 

Department’s Office of Domestic Finance released the federal government-wide financial 

statements on time, and expects to meet its target for both FY 2008 and 2009. The 

prompt release of this statement is important because it represents the culmination of the 

recent government-wide campaign to accelerate the issuance of financial reporting. In 

addition, the Department manages the government’s cash position to ensure that funds 

are available on a daily basis to cover federal payments and to maximize investment 

earnings and minimize borrowing costs. The Department of the Treasury met its goal of 

receiving audit opinions on government-wide financial statements, and has plans to meet 

FY 2008 and 2009 targets. 

DO - 22 
The Office of Fiscal Projections ensures that funds are available on a daily basis to cover 

federal payments, maximize investment earnings, and minimize borrowing costs. The 

metric “variance between estimated and actual receipts” measures the accuracy of the 

office’s monthly forecast of budget receipts over the entire year. 

In FY 2007, the Office of Fiscal Projections continued to improve its receipt forecasting 

and exceeded its targeted variance level of 5 percent. In FYs 2008 and 2009, a new 

analytical functionality will be added to make additional improvements in receipt 

projections. Combining improved receipt forecasting with more accurate projection of 

outlays and other cash flow components will allow the Department to reach its primary 

goals of cash and debt management: (1) lowest cost of borrowing over time; (2) adequate 

cash balances to meet Federal obligations at all times; and (3) investment of excess cash 

balances to increase the rate of return and lower even further the net cost of borrowing. 

After review, it has been determined that the current performance measures are not 

adequate or meaningful. Therefore, the Department is in the process of developing new 

measures that align with the Treasury Strategic Plan. Once the new measures have been 

developed in FY 2008, existing measures will be discontinued and replaced. 

3D – Terrorism and Financial Intelligence ($61,712,000 from direct appropriations 

and $4,000,000 from reimbursable programs): The Office of Terrorism and Financial 

Intelligence (TFI) marshals the department's functions that strengthen national security 

with the twin aims of safeguarding financial systems against illicit use and combating 

rogue nations, terrorist facilitators, money launderers, drug kingpins, proliferators of 

weapons of mass destruction, and other national security threats. 

Other Resources: Reimbursements totaling $4.0 million are collected from the Executive 

Office of Asset Forfeiture and the U.S. Department of Defense. (Note: A portion of these 

funds is allocated to the Executive Direction and Administrative Programs budget 

activities to support management and legal services provided to reimbursable programs.) 

 

The Office of Foreign Asset Control 

The Office of Foreign Asset Control is dedicated to carrying out the complex mission of 

administering and enforcing economic and trade sanctions based on U.S. foreign policy 

and national security goals. OFAC administers approximately 30 economic sanctions 

programs against foreign countries, targeted regimes, and entities and individuals, 

including residual enforcement actions associated with programs that have been lifted. 

Although these programs differ in terms of their scope and application, they all involve 

the exercise of the President’s constitutional and statutory wartime and national 

emergency powers to impose controls on transactions and trade, and to freeze foreign 

assets that come within the jurisdiction of the United States. 

The majority of programs administered and enforced by OFAC arise from the President’s 

authorities under the International Emergency Economic Powers Act (IEEPA). In 

DO - 23 
administering and enforcing these economic sanctions, OFAC must maintain a close 

working relationship with other federal departments and agencies in order to ensure both 

that these programs are implemented in a manner consistent with U.S. national security 

and foreign policy interests, and that they are enforced effectively. To fulfill its mission, 

OFAC works directly with the Departments of State, Commerce, and Justice (including

the Federal Bureau of Investigation and the Drug Enforcement Administration); the 

Department of Homeland Security's U.S. Customs and Border Protection and U.S. 

Immigration and Customs Enforcement; the Department of Defense; bank regulatory 

agencies; and other law enforcement and intelligence community agencies. 

Office of Intelligence and Analysis

The Office of Intelligence and Analysis is responsible for the receipt, analysis, collation, 

and dissemination of foreign intelligence and foreign counterintelligence information 

related to the operation and responsibilities of the Department of the Treasury. OIA’s 

mission is to support the formulation of policy and execution of Treasury authorities. 

OIA executes this mission by producing expert intelligence analysis on financial and 

other support networks for terrorist groups, proliferators, and other key national security 

threats, and by providing timely, accurate, and focused intelligence on the full range of 

economic, political, and security issues. 

The Office of Terrorist Financing and Financial Crimes

The Office of Terrorist Financing and Financial Crimes is the policy and outreach 

apparatus for the Office of Terrorism and Financial Intelligence on terrorist financing, 

money laundering, financial crime, and sanctions issues. It develops and implements 

strategies, policies, and initiatives to identify and address vulnerabilities in the U.S. and 

the international financial system and to disrupt and dismantle terrorist and WMD 

proliferation financial networks. TFFC collaborates with the other elements of TFI and 

other Treasury offices and works closely with the federal law enforcement community – 

in particular, IRS-CI criminal investigators – as well as with the regulatory community, 

the private sector, and its counterparts abroad to identify and address terrorist financing 

and WMD proliferation threats. 

More specifically, TFFC leads and coordinates the United States representation at 

international bodies dedicated to fighting terrorist financing and financial crime such as 

the Financial Action Task Force and increases our multilateral and bilateral efforts in this 

field. The office advances international standards, conducts assessments, and applies 

protective countermeasures against high-risk foreign jurisdictions and financial 

institutions. Bilaterally, TFFC works with foreign counterparts to craft strategies to 

jointly attack terrorist financing both globally and within specific regions. 

DO - 24 
3.2.4 – Terrorism and Financial Intelligence Budget and Performance Plan 

Terrorism and Financial Intelligence Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $34,796 $39,540 $43,115 $56,775 $61,712

 Reimbursable Resources $6,167 $6,987 $3,934 $6,987 $4,000

Total Resources $40,963 $46,527 $47,049 $63,762 $65,712

Budget Activity Total $40,963 $46,527 $47,049 $63,762 $65,712

Terrorism and Financial Intelligence 

Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Increase the number of outreach engagements

with the charitable and international financial 

communities (Ot) 

 95 45 85 70 70

Number of countries that are assessed for 

compliance with the Financial Action Task

Force (FATF) 40+9 recommendations (Ot)

 49 5 6 12 12

Number of open civil penalty cases that are 

resolved within the Statute of Limitations

period (Ot) 

 85 85 296 120 120

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

Description of Performance: Currently, DO is working to develop meaningful 

performance measures that will align to the Treasury Department’s Strategic Plan. Once 

these new measures have been developed in FY 2008, existing measures will be 

discontinued and replaced. 

3E – Treasury-wide Management and Programs ($19,009,000 from direct 

appropriations and $2,700,000 from reimbursable programs): Treasury-wide

Management’s (TWM) primary responsibility within the Department of Treasury is to 

create the conditions that allow for Administration priorities and goals to be achieved in 

the most efficient and effective manner. Treasury-wide Management provides strategic 

plans and policy direction in the fields of: human resources; emergency management 

(including Treasury employee evacuation and Continuity of Operations); information 

technology security; and financial administration (including the formulation and 

management of the Treasury budget). The development of these integrated plans helps to 

align policy and operations in order to produce maximum value for the American people. 

Other Resources: Reimbursements totaling $2.7 million are collected from the Internal 

Revenue Service Oversight Board, Department of Homeland Security, D.C. Pensions, 

and other Treasury bureaus for services rendered. (Note: A portion of these funds is 

allocated to the Executive Direction and Administrative Programs budget activities to 

support management and legal services provided to reimbursable programs.) 

DO - 25 
3.2.5 – Treasury-wide Management and Programs Budget and Performance Plan 

Treasury-wide Management and Programs

Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $16,245 $16,674 $15,705 $18,505 $19,009

 Reimbursable Resources $0 $3,373 $2,696 $3,373 $2,700

Total Resources $16,245 $20,047 $18,401 $21,878 $21,709

Budget Activity Total $16,245 $20,047 $18,401 $21,878 $21,709

Treasury-wide Management and Programs

Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Injury and illness rate Treasurywide-including

DO (Oe) 

 3 1 1 1 1

Number of open material weaknesses closed 

identified (Oe) 

 7 1 0 3 1

Management cost per Treasury employee ($) 

(E) 

$ 39 $ 41 $ 30 $ 38 $ 38

Complete investigations of EEO complaints 

within 180 days (%) (Oe) 

 36% 20% 52% 50% 50%

Percent of complainants informally contacting

EEO (for the purposes of seeking counseling

or filing a complaint) who participate in the 

ADR process (% ) (Oe) 

 25% 25% 29% 30% 30%

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

Description of Performance: DO, through TWM, is committed to building a strong 

institution that is dedicated to serving the public’s interest and focused on delivering 

results. The focus of the past year has been on ways to measure progress toward key 

goals related to building a world-class organization Treasury-wide. 

The Department met its goal of completing investigations of Equal Employment 

Opportunity (EEO) complaints within 180 days. In FY 2007, the Treasury Department 

instituted service level standards to assess the performance of the Treasury Complaint 

Mega Center, which processes all EEO complaints for all Treasury bureaus. This is part 

of the Department’s initiative to improve oversight of the center and ensure continuous 

improvement in operations. The establishment of the position for Chief, Complaint 

Operations, is needed to assist the efforts to hold the organization accountable for 

improvements in quality and reduction in timeframes to process complaints. 

The FY 2007 performance goal to reduce the percent of complainants informally 

contacting EEO (for the purposes of seeking counseling or filing a complaint) who 

participate in the ADR process was met. However, to reduce the Department’s costs, 

increased attention and emphasis should be placed on effective dispute prevention 

programs, in addition to an effective ADR program that is viewed as fair and objective by 

employees and managers. In FY 2006, the Treasury Department spent over $1 million 

dollars to settle EEO complaints, and over $9 million in a U.S. Mint class action 

settlement. 

In FY 2004, the Department of Labor recognized Treasury for reducing the total injury 

and lost time injury rates by more than 10 percent each, well below the recommended 3 

DO - 26 
percent for all federal agencies. In 2007, Treasury continued its aggressive occupational 

safety and health program and had an additional 1.4 percent reduction. In February 2007, 

Treasury received an award from the Department of Labor for reducing more injuries and 

illnesses, including those that resulted in time away from work, than any other Federal 

Agency. 

The Department works to attract and retain the best talent while rewarding employees for 

their individual performance. Building a stronger management infrastructure through 

Department-wide management training and by linking organization accomplishments to 

individual performance is a key step. The Department’s leadership strives to create an 

environment that offers purposeful, challenging work in a constructive performance 

culture. TWM has laid a foundation that is focused on results-oriented performance, 

leadership succession planning, and accountability, to not only to maintain the present 

skills base and diversity in the Department’s workforce, but to also to meet future human 

resource needs. The Department-wide succession plan ensures that future management

acquires appropriate skills to enable them to lead the Department in an ever-changing 

environment. 

3F – Administration Programs ($90,994,000 from direct appropriations and 

$3,600,000 from reimbursable programs): Administration Programs provides operational 

support and shared services to all offices within DO. Activities include accounting, 

budget, human resources, information technology, procurement, facilities support, and 

travel services. Approximately one-third of the budget activity relates to information 

technology support (including desktop computers, printers, faxes, copiers, and helpdesk 

support). Another one-third consists of shared services: GSA rent, utilities, 

telecommunications, printing and graphics, public transit subsidy, workers compensation, 

and financial system support. By centralizing shared services, economies of scale and 

workload efficiencies are achieved. The final third consists of employee salaries, routine 

building maintenance, custodial services, library services, and the like. 

A portion of the funds from all reimbursable programs is allocated to the Executive 

Direction and Administrative Programs budget activities to support management and 

legal services provided to reimbursable programs. 

3.2.6 – Administration Programs Budget and Performance Plan 

Administration Programs Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $56,506 $63,094 $75,154 $78,624 $90,994

 Reimbursable Resources $0 $0 $3,028 $0 $3,600

Total Resources $56,506 $63,094 $80,878 $78,624 $94,594

Budget Activity Total $56,506 $63,094 $80,878 $78,624 $94,594

DO - 27 
No specific performance goals/measures are presented for this budget activity as the 

activity supports the mission of the entire DO, whose work is captured in other 

performance measures. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

DO - 28 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

By providing sound advice and guidance on staff employment/retention, recognition, 

relations/benefits, performance and development, the DO’s Office of Human Resources 

(OHR) helps ensure the availability of HR tools required to manage human capital 

effectively to support relevant strategic goals and mission accomplishment. 

Specific accomplishments for fiscal year 2007 include the following: 

HC Strategic Goal 1: Organizational Effectiveness – Align human capital plans, 

strategies, and systems to achieve organizational effectiveness and mission

accomplishment.

• Upon issuance of the 2006 Federal Human Capital Survey Results by the 

Office of Personnel Management (OPM), OHR immediately took assessment 

of the results specific to DO, which were generally quite favorable. 

Management briefings were conducted and action plans implemented to 

address areas of concern and the greatest challenges. Many of the issues 

raised in the survey were addressed through prior initiatives to revise several 

DO policies such as those covering Performance Management and telework. 

New strategies are being developed to better assess the training/developmental 

needs of all DO staff. 

• Several DO Management and Policy offices have been identified for skill gap 

analyses and detailed succession plans to ensure vital components within 

Main Treasury continue to have the talent and skills necessary to accomplish 

their missions. 

• Within OHR, further organizational restructuring resulted in the establishment 

of an area specifically dedicated to staff development and workforce analysis. 

Enhancements were made to all existing supervisory/leadership programs to 

better clarify training objectives and complete requirements. and ensure closer 

alignment with DO subject matter that is mission-related. 

• OHR has worked to establish Senior Administrative Contacts for each policy 

office to partner with in the implementation of significant HR initiatives and 

DO - 29 
provide administrative support and a sounding board for management to 

communicate their own unique organizational challenges. 

HC Strategic Goal 2: Recruitment and Diversity – Recruit and hire a highly skilled 

and diverse workforce aligned with business goals. 

• OHR continues to work closely with OIA to effectively meet and deal with 

significant recruitment challenges and quickly filling analyst positions with 

the best-qualified individuals to support anti-terrorist efforts. 

• DO continued its exercise of excepted appointments to ensure that new talent 

is hired as quickly as possible, e.g., by using Presidential Management 

Fellows, the Student Career Experience Program, DO specific fellowship 

programs, and other authorities. DO actively supports initiatives aimed at 

increasing the diversity of its workforce, including the use of student interns 

under the Hispanic National Internship Program and the Washington 

Internships for Native American Students (WINS). Selected entry-level 

vacancy announcements are also referred automatically to organizations 

assisting qualified disabled applicants. 

• DO also continues to advocate the use of pay and workplace scheduling 

flexibilities, where appropriate, e.g., recruitment bonuses, superior 

qualifications appointments, alternative work schedules and telework. 

HC Strategic Goal 3: Employee Retention and Satisfaction – Retain a high 

performing workforce while maintaining an environment conducive to a high level of 

employee satisfaction. 

• OHR has continued conducting “Benefits Brown Bag” sessions. These onehour sessions are scheduled to address staff benefit programs to help 

employees make better informed choices and relevant decisions in order to 

enhance their quality of life. Sessions fill quickly and the feedback is 

overwhelmingly positive. 

• Because of the substantial number of DO employees eligible to retire within 

the next five years, OHR plans to contract with an outside vendor to provide 

several retirement seminars during this fiscal year. 

DO - 30 
• Plans have also been implemented to conduct a special session for DO staff 

concerning Estate Planning. 

HC Strategic Goal 4: Information Technology – Enhance workforce capabilities to 

support the use of current, new and evolving technologies. 

• Plans are underway to implement the E-OPF (Official Personnel Folder) 

initiative mandated by the Office of Personnel Management by FY 2010. Cost 

projections have been prepared, appropriate requests submitted and a search 

has begun for possible immediate residual funding resources. Electronic 

employment files will contribute to the paperless, efficient, versatile operation 

of OHR particularly in meeting the challenges associated with employment 

data needs on short notice or during government shutdowns or other 

unexpected emergencies. Employee access to electronic SF-50 Personnel 

Actions was accomplished in July, 2007. 

• Concerted efforts have been implemented to identify those remaining DO staff

not registered into the HR Connect system. A concentrated marketing effort 

and plan is being implemented to get to a 100% staff registration rate. A 

special training system on HR Connect system capabilities has been provided 

to the Senior Administrative Contacts. Also, an HR Connect training session 

for participants was incorporated into the DO New Supervisory Readiness 

Training Program.

• A new OHR phone system is being implemented to connect customers 

directly to the appropriate resource based on specific customer needs. Callers 

will also have the option of remaining on the line for the next available staff

member (as opposed to leaving a voicemail). 

As in the previous fiscal year, DO is confronted with numerous human capital 

challenges in FY 2008: 

• Increasing competition from private sector and other government agencies for 

mission-critical positions such as intelligence analysts, economists and 

information technology specialists. 

Strategies for Addressing Challenge: 

DO - 31 
• Increase education about and support of a variety of 

hiring/retention flexibilities and incentives, such as direct 

hire (where request to OPM is appropriate), superior 

qualifications appointments, recruitment bonuses, student 

loan repayment, retention allowances, alternative work 

arrangements/schedules and other work life issues. 

• Contractual arrangements are under consideration to obtain 

the services of the Corporate Executive Board Recruiting 

Roundtable to explore cutting edge strategies to meet DO’s 

most challenging recruitment goals. 

• Enhance workplace flexibilities such as implementation of 

a revised telework policy to attract good applicants, 

increase employee job satisfaction, and retain employees 

them for years to come. 

• Loss of institutional knowledge through retirement waves, particularly for critical 

subject experts, managers and senior executives. 

Strategies for Addressing Challenge: 

• Increase emphasis on determining leadership bench 

strength and supporting leadership/executive development 

programs that help to identify and prepare cadres of future 

leaders, and gain approval to hire at a level needed to 

continue to meet mission objectives. 

• Work with DO policy offices to identify succession issues 

and develop appropriate strategies, emphasizing an overall 

need to conduct workforce planning to transition and 

maintain technical knowledge. 

• Implement a broad, systematic approach whereby both line 

staff and management can assess individual staff training 

needs on an annual basis and identify relevant fiscal 

requirements in meeting them. 

• Instilling and developing a performance management culture that is resultsoriented. 

Strategies for Addressing Challenge: 

DO - 32 
DO - 33 

• Implementation of a revised performance management 

policy that is clear, direct, and identifies and links 

commitments to organizational goals that are measurable 

and results-based. 

• Conduct perpetual reviews of DO policy office 

performance management programs to ensure staff are on 

performance plans and receiving timely feedback from 

their supervisors. 

• Ensure performance awards are distributed in a fair manner 

and that their justification is based on objective, relevant, 

and merit-based criteria. 
DO - 34 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments 1/

FY 2006 FY 2007 FY 2008 

Major IT Investments / Funding Source Budget Activity

& Earlier 

Enacted 2/ Enacted Enacted 

Securities Management Financial Policies and Programs $425 $0 $0 N/A Treasury Foreign Intelligence Network (TFIN)

Terrorism and Financial Intelligence(TFI) $0 $0 $3,000 N/A 

Treasury Secure Data Network (TSDN) Executive Direction, Economic Policy, TFI $2,772 $1,283 $3,072 139.4% Subtotal, Major IT Investments $3,197 $1,283 $6,072 373.3% Non-Major IT Investments $4,937 $5,112 $4,779 -6.5% Infrastructure Investments $20,100 $26,483 $29,347 10.8% Enterprise Architecture $1,397 $0 $2,120 N/A Total IT Investments $29,631 $32,878 $42,318 28.7% 1/ This chart includes appropriated resources only, and may not reflect total project costs.2/ This column reflects appropriated resources provided to a project in FY 2006 and any previous years.

% Change from

FY07 to FY08
4B – Information Technology Strategy 

The Office of the Chief Information Officer (OCIO) Telecommunications Management 

organization (OCIO-TM) provides direct and indirect support to the Secretary in the fight 

against terrorism by providing technology and communications required to ensure a 

stable domestic and international economy. In addition to supporting the Secretary, the 

OCIO-TM supports the IT infrastructure and operations of critical offices including the 

Office of the Secretary, the Assistant Secretary for Management, DO policy offices, and 

the Office of Terrorism and Financial Intelligence. OCIO-TM also provides the Office of

Domestic Finance with support to facilitate timely decisions on yield curve and interest 

rates; provides the Office of Intelligence Analysis with the ability to communicate timely 

data between bureaus and other intelligence communities; shares finance-related data to 

protect the banking and financial industry against cyber-terrorism; and provides oversight 

to the District of Columbia's pension fund. 

As part of the OCIO-TM strategy the CIO’s office established a governance structure that 

ensures Treasury delivers quality, responsive services that securely meet our customers 

needs most economically. As discussed in Section 1B, the Department of the Treasury is 

taking steps to improve its IT management. The Department is now including all IT 

investments under the Department’s IT Capital Planning and Investment Control Policy

processes; has established a process to ensure that the Project and Program Managers are 

certified in accordance with OMB requirements; and is re-establishing the Executive 

Investment Review Board (E-Board). 

Modernize the DO IT Infrastructure: Modernization of the DO IT infrastructure

provides enhanced functionality, performance, and security to allow offices to 

achieve their missions more effectively. Specific projects will include enhanced 

disaster recovery capabilities, consolidation of remote access solutions, software and 

hardware upgrades, and overall optimization of the DO IT network. Realignment 

with the Infrastructure Line of Business is in the initial stages, and DO continues to 

integrate and consolidate network components where feasible and practical. 

Improve IT Governance and Project Management: OCIO is committed to 

ensuring that information and IT resources are managed efficiently and effectively. 

In support of DO IT governance and project management, the OCIO 

Telecommunications Management team was successful in establishing a separate 

governance structure for the Departmental Offices to provide greater oversight and 

guidance to the non-enterprise major and non-major investments. 

The Departmental Office’s envisions a two year effort to consolidate services under 

the pending OCIO TNET wide area network service offering. The vision is as 

follows: 

FY08 Transition of Existing TCS Contract Services: The risk-mitigating strategy 

of the Departmental Offices (OCIO, HQ IT) is to limit the FY 2008 focus to 
transitioning the existing DO funded TCS services to the TNET offering. The TCS 

contract provisioned services for the DO includes: 

o 36 TCS circuits of various types 

o 3 Firewalls 

o 4 ATM connections 

o VPN services; and 

o Hosting services for a DO application. 

FY09 Business Case Assessment for Further Consolidation: Outside the TCS 

contract, DO has an inventory of circuits and services obtained from a it’s existing 

GSA and Treasury infrastructure contracts. In early FY 2009, HQ IT will conduct 

Business Case Assessment for the consolidation of these non-TCS circuits and 

network services to the Treasury TNET contract. Thereafter, based upon the funding 

and the business case approved recommendations, the DO will commence a two-year

phased consolidation consistent with the business case recommendations. 

DO investments met 99 percent of their performance goals in FY 2007. In its diligence 

to provide taxpayers with the most efficiency, OCIO-TM continues working with 

Enterprise Architecture (EA) staff and the Office of Performance Budgeting (OPB) to 

improve its metrics and methodologies to better track established milestones. For 

instance, DO delivered uninterrupted network availability 99.9 percent of the time in FY 

2007 with a satisfaction rate of 3.61, slightly higher than the planned 3.5. 

The secure systems Treasury Foreign Intelligence Network (TFIN) and the Treasury 

Secure Data Network (TSDN) work in conjunction with the intelligence community to 

provide faster, more timely data to an increased number of users with access to secret and 

top secret information in order to support the fight against terrorism. By the end of the 

FY 2007, all metrics were on target for both TSDN and TFIN with the number of TFIN

users increasing to 115. 

DO - 36 
4.2 – PART Evaluation Table 

PART Name: Economic and Trade Sanctions Program - OFAC

Year PARTed: FY 2002

Rating: RND

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. Adopting annual performance goals and aligning them with the long-term performance goals. 

1. The program lacks long-term performance goals with specific targets.

2. The program has not yet instituted annual performance goals to determine the effectiveness of its

sanctions. 

3. The program is lacking unit cost measures. 

1. Working to develop long-term performance goals with specific timeframes and measures.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

DO - 37 
4C – Terrorism Risk Insurance (TRIA) 

The Terrorism Risk Insurance Program Reauthorization Act of 2007 (P.L. 110-160) 

reauthorized and revised the program established by the Terrorism Risk Insurance Act 

(TRIA) of 2002 (P.L. 107-297). The Act extended the Terrorism Insurance Program for 

seven years, through December 31, 2014. The 2007 extension of TRIA added a 

requirement for commercial property and casualty insurance companies to make available 

coverage for losses from domestic as well as foreign acts of terrorism. The Act maintains 

for all seven years an insurer deductible of 20 percent of direct earned premiums and an 

insurer co-payment of 15 percent of insured losses above the insurer's deductible. In 

addition, the Act sets the event trigger amount for Federal payments at $100 million in 

aggregate insured losses from an act of terrorism and the annual cap of $100 billion on 

total insurer losses from acts of terrorism for which payment of the Federal share of

compensation could be made. The 2007 extension changes recoupment provisions, 

requiring Treasury to collect 133 percent of the Federal payments made under the 

program up to $27.5 billion, and accelerates time horizons for recoupment by certain 

dates up to September 30, 2017. 

The Budget, for the first time, includes the estimated Federal cost of compensating 

providers of terrorism risk insurance, reflecting the 2007 TRIA extension. The growth in 

the private insurance market for this coverage provides data in the form of insurance 

premiums that show how private insurers estimate the likelihood of attack and price their 

projected losses. Using this market driven data, the Government can project annual 

outlays and recoupment under TRIA. These estimates represent the weighted average of 

TRIA payments over a full range of scenarios, most of which include no acts of terrorism

(and therefore no TRIA payments), and some of which include acts of terrorism of 

varying magnitudes. The Budget projections, however, are in no way an official forecast 

of future attacks. On this basis, the Budget projects the 2007 TRIA extension will have a 

net deficit impact (spending less receipts from premium surcharges) of $1.78 billion over 

the 2009-2013 period and $3.85 billion over the 2009-2018 period. 

4.3 - TRIA Baseline Outlays and Receipt Table 

Dollars in billions 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009-

2013

2009-

2018

Changes in Direct Spending (Insurance Claim Outlays)

Projected Budget Authority 0.1 0.4 0.7 1 1.3 1.4 1.6 1.5 1.2 0.9 0.6 4.9 10.8

Projected Outlays 0.1 0.4 0.7 1 1.3 1.4 1.6 1.5 1.2 0.9 0.6 4.9 10.8

Change in Revenues (Recoupment of Claim Outlays)

Projected Revenues 0 0.1 0.3 0.6 1.3 0.8 0.9 1 1 0.8 0.1 3.1 6.9

Net Impact

Projected Net Outlays 0.1 0.3 0.4 0.5 -0.1 0.7 0.7 0.5 0.3 0.1 0.5 1.8 3.8

DO - 38 
Department-wide Systems and Capital Investments Program 

Mission Statement 

The Department-wide Systems and Capital Investments Program (DSCIP) is authorized 

to be used by or on behalf of the Treasury Department’s bureaus, at the Secretary’s 

discretion, to improve infrastructure, modernize business processes and increase 

efficiency through technology investments. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Departmental Offices- Department-wide 

Systems and Capital Investments 

Program Enacted Enacted Request $ Change % Change 

Department-wide Systems and 

Capital Investments Program $30,268 $18,710 $26,975 $8,265 44.17%

Total Appropriated Resources $30,268 $18,710 $26,975 $8,265 44.17%

Total FTE 0 0 0 0 0.00%

FY 2009 Priorities 

• Restore and repair the Treasury Annex Building;

• Upgrade the Treasury Secure Data Network (TSDN);

• Improve the Treasury Department’s ability to secure critical infrastructure / key 

resources, address cyber security weaknesses, and conduct real-time security 

assessments;

• Continue implementation of an Enterprise Content Management (ECM) program; and

• Continue leadership in E-Government initiatives.
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language....................................3 

2.1 – Budget Adjustments Table..................................................................................... 3 

2A – Budget Increases and Decreases Description ........................................................ 3 

2.2 – Operating Levels Table.......................................................................................... 7 

2.3 – Appropriations Detail Table .................................................................................. 8 

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

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

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

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

Section 4 – Supporting Materials...................................................................................12 

4B – Information Technology Strategy ........................................................................ 12 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

DSCIP funding is authorized to be used by or on behalf of Treasury Department bureaus, 

at the Secretary’s discretion, to modernize business processes and increase efficiency 

through technology investments. Continuing investments include the Annex Repair and 

Renovation (ARR), Treasury Secure Data Network (TSDN), Cyber Security, Enterprise 

Content Management (ECM), and E-Government initiatives. 

Top Priorities for FY 2009

• Annex Repair and Renovation (ARR) – The ARR project will address the 

immediate need to correct critical building and system deficiencies to ensure the 

safety and health of the occupants. 

• Treasury Secure Data Network – This initiative will provide TSDN analysts 

with data search tools, which can find information more quickly and allow for 

faster analysis. 

• Cyber Security - The Cyber Security program protects the security and integrity 

of Treasury’s classified and unclassified systems, the information they process, 

and the services they perform. 

• Enterprise Content Management – The ECM project will result in increased 

efficiencies, enhanced mission effectiveness, reduced total cost of ownership; and 

the retirement of legacy systems. 

• E-Government – E-Government initiatives drive the Treasury Department to 

identify opportunities to leverage existing systems and services in order to reduce 

costs and duplication within the Treasury Department and across government. 

The FY 2009 total budget for DSCIP is $26,975,000. 

1B – Program History and Future Outlook 

The Treasury Department utilized DSCIP funding to establish a disaster recovery site for 

Departmental Offices (DO) activities which support the policy and administration 

oversight for the Department. DO has established e-mail capabilities as well as access to 

user data files at the disaster site and some critical applications have also been 

established. Current capabilities include the ability to copy files from the production site 

at Main Treasury several times daily to ensure that critical files are available in the event 

of an emergency. This site now has the capability to bring Treasury systems back online 

within a couple days in the event of a disaster. Since some aspects of this system are 

entering into operations and maintenance (O&M) mode, the Treasury Department is 

requesting funding under the DO Salaries & Expenses account to provide for O&M as 

DSCIP - 1 
well as to support developmental activities which will enable Treasury systems to come 

back online within hours instead of days. 

The Treasury Department has designated DSCIP funding to stabilize and modernize the 

infrastructure of TSDN. The improvement project for TSDN will replace 500 

workstations with new workstations running supported Microsoft operating systems and 

related office software. In addition, the cable plant is being replaced by a Protected 

Distribution System that meets new security requirements. Servers will be replaced with 

new servers running Microsoft Windows Server 2003. Additionally, all communication 

switches will be replaced. The system, which is currently experiencing significant 

performance problems, will be upgraded to support at least 800 users. 

The Department of the Treasury has a three-phased approach to planning, development, 

and deployment of the ECM solution sets across the Department. This type of strategy 

recognizes and avoids the one-size fits all approach. The Department’s strategy to 

incrementally implement the ECM solution sets using a “Lines of Business” approach 

with a mission emphasis will result in increased efficiencies, enhanced mission 

effectiveness, reduced total cost of ownership, and the orderly retirement of legacy 

systems. 

DSCIP’s major challenge is transitioning initiatives from the developmental stage to 

operations. DSCIP will look to identify redundant systems as the Department retires outdated systems and migrates to E-Government approved systems. DSCIP will ensure 

contracted activities stay within established Earned Value Management (EVM) standards 

and schedules. 

DSCIP - 2 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Departmental Offices- Department-wide Systems and Capital Investments 

Program FTE Amount

FY 2008 Enacted 0 $18,710

Non-Recurring Costs:

 DSCIP Base (16,986)

Transfers Out:

 Backup Disaster Recovery (1,724)

Total FY 2009 Base 0 $0

Program Increases:

 Annex Repair and Renovation 11,518

 Cyber Security 3,000

 Electronic Government 2,057

 Enterprise Content Management 6,000

 Treasury Secure Data Network 4,400

Subtotal FY 2009 Program Changes 0 26,975

Total FY 2009 Request 0 $26,975

2A – Budget Increases and Decreases Description 

Non-Recurring Costs ....................................................................-$16,986,000 / +0 FTE 

DSCIP Base -$16,986,000 / +0 FTE 

 

The Department-wide Systems and Capital Investment Program is a zero-based budget. 

Transfers Out ..................................................................................-$1,724,000 / +0 FTE 

Backup Disaster Recovery -$1,724,000 / +0 FTE 

The DO disaster recovery site was established in 2002 at another government site in West 

Virginia. The servers, workstations and network devices were procured and installed as 

part of the SEAT management contract. Thus, the systems are paid for over a three or

four year period and refreshed at the end of the cycle. The equipment costs, labor costs 

along with the costs for the leased telecommunications lines are fixed, ongoing and are 

required to be paid every year. 

Program Increases .......................................................................+$26,975,000 / +0 FTE 

Annex Repair and Renovation +$11,518,000 / +0 FTE 

The purpose of the Annex Repair and Renovation (ARR) project is to support Treasury's

strategic goal of creating the conditions that enable program goals to be accomplished. 

The Treasury Annex is considered an American treasure, constructed in 1918 and 1919, 

and is part of the Lafayette Square National Register Historic District. The current status 

of upkeep and maintenance for the building is based on code compliance, failure of 

DSCIP - 3 
equipment, and/or minimal routine maintenance. The overall program need is to repair 

the mechanical, electrical, plumbing and life safety systems to provide a safe, 

comfortable and efficient facility to house Department of the Treasury personnel and 

programs. 

The FY 2009 proposed funding will enable Treasury to address the immediate need to

correct critical building and system deficiencies to ensure the safety and health of the 

occupants. Substantial corrective measures are necessary to address the advance state of 

erosion of building elements and replacement of infrastructure that is at the end of its life 

cycle. In preparation for this effort, the General Services Administration (GSA) will 

assist the Treasury Department in conducting an overall assessment of the Annex’s 

condition during the second quarter of FY 2008. 

FY 2009 ARR priorities include: 

• Correcting failing systems, such as the HVAC and plumbing systems; 

• Correcting structural elements, such as the ground level ventilation system; 

• Correcting advanced state of erosion of building elements; and 

• Introducing more energy efficient systems. 

Cyber Security +$3,000,000 / +0 FTE 

The Cyber Security program performs a critical function in protecting the security and 

integrity of classified and unclassified Treasury systems, the information they process, 

and the vital services they perform. This funding is mission critical to support the efforts 

of the Department-wide cyber security program, which provides a comprehensive 

security policy and compliance framework to ensure the implementation and 

effectiveness of information security controls over cyber assets Department-wide. In 

doing so, the central program works with and supports the system-specific security 

activities of Treasury bureaus and their program officials responsible for individual 

systems. Furthermore, funding provides continuity of support for security policy, 

oversight, and compliance activities, principally including: 1) operation of the 

Department-wide cyber security program for unclassified systems, to include the 

functioning of the Treasury Computer Security Incident Response Center (TCSIRC); 2) 

leading the Department-wide cyber security program for national security systems; and 3) 

complying with the requirements of the Federal Information Security Management Act 

(FISMA). This support is mission-critical to securing classified and sensitive information 

technology at the Treasury Department and to address weaknesses identified by the 

Inspectors General in our overall program.

DSCIP - 4 
Electronic Government +$2,057,000 / +0 FTE 

The President's Management Agenda (PMA) and E-Government initiatives drive the

Treasury Department to identify opportunities to leverage existing systems and services 

in order to reduce costs and duplication within the Department and across government. 

The Treasury Department provides program management oversight and coordination for 

each of the initiatives assuring compliance by all bureaus. E-Government enables the 

Treasury Department to continue to meet the implementation milestones in the OMB 

approved E-Government Implementation Plan, positively impacting the Treasury 

Department's ability to implement best practices and leverage government-wide 

technologies. The Treasury Department’s active involvement in the Budget Formulation 

and Execution Line of Business – managed by the Department of Education – provides 

cross-agency interoperable, flexible, and cost effective solutions linking formulation and 

execution of the federal budget. The Treasury Department supports several other EGovernment initiatives, which are discussed in the E-Government chapter of this 

Congressional Justification. 

Enterprise Content Management +$6,000,000 / +0 FTE 

The requested funding will enable the Department of the Treasury to continue with the 

phased implementation of an ECM solution in FY 2009. The Treasury Department 

processes a massive volume of data (e.g., documents, records, and case files) and much 

of this information is subject to statutory/regulatory handling and storage requirements. 

The Department of the Treasury currently has an array of disparate and incompatible 

systems used for information tracking, management, retention and storage. The Treasury 

Department is unable to quickly and, with a high level of certainty, retrieve information 

from across all bureaus and organizations related to a specific subject matter without a 

considerable amount of staff hours dedicated to coordinating and verifying that the 

correct information is going forward and that only those with the need to know have 

access to this information. The Treasury Department concluded that there is an urgent

need for an ECM system to minimize duplication of effort and infrastructure investments, 

to address workflow, document and case management, and reporting challenges. The 

enterprise-wide approach, under the oversight of the Treasury Department's Chief 

Information Officer, will ensure that all Department-wide ECM efforts map to consistent 

standards, are aligned with related government-wide initiatives, such as the Case 

Management Line of Business, and leverage commonalities in requirements among 

Treasury Department components, thereby achieving economies of scale and efficiencies 

in information sharing. 

Treasury Secure Data Network +$4,400,000 / +0 FTE 

The TSDN was established in 2000 to serve as a secure network for the Office of 

International Affairs and the bureaus. The applicability of TSDN expanded with the 

creation of the Office of Terrorism and Financial Intelligence (TFI). This initiative will 

provide TSDN analysts with data searching tools to mine information more quickly and 

allow for more immediate trend analysis and review. These trends are currently difficult 

DSCIP - 5 
and time consuming to follow due to the lack of an automated storage and retrieval 

system and are now done manually using paper copies of files. The initiative will also 

provide funds to begin the establishment of a disaster recovery capability for the TSDN 

system, which is extremely vulnerable now due to the lack of said disaster recovery 

capability. With the establishment of TFI in FY 2004, the Treasury Department’s 

requirement for a secure and classified network has increased considerably, as TFI has a 

role in coordinating responses from Treasury Department offices such as Office of 

Foreign Assets Control (OFAC), Financial Crimes Enforcement Network (FinCEN), and 

Office of Intelligence and Analysis (OIA), which all make major contributions to 

Treasury Department’s support of the IC and the national and international finance and 

banking communities. 

DSCIP - 6 
 2.2 – Operating Levels Table 

Operating Levels

(Dollars in Thousands)

Bureau: DSCIP FY 2007 

Enacted

FY 2008 

Enacted

Cong.

Action

including 

Rescission

Proposed

Reprogrammings

FY 2009 

Requested

Level

FTE - - -

Object Classification:

11.1 Full-Time Permanent Positions..................... $0 $0 $0

11.1 Other than Full-Time Permanent Positions.... 0 0

11.5 Other Personnel Compensation.................... 0 0 0

11.8 Special Personal Services Pa

0

yments............ 0 0 0

11.9 Personnel Compensation (Total)............... $0 $0 $0 $0 $0

12.0 Personnel Benefits........................................ 0 0 0

13.0 Benefits to Former Personnel........................ 0 0

21.0 Travel............................................................ 81 40 5

22.0 Transportation of Thin

0

gs............................... 0 0 0

23.1 Rental Payments to GSA.............................. 467 200 0

23.2 Rent Payments to Others.............................. 0 0 0

23.3 Communications, Utilities, & Misc................. 0 0 0

24.0 Printing and Reproduction............................. 0 0 0

25.1 Advisory & Assistance Services.................... 2,769 1,000 1,000

25.2 Other Services.............................................. 20,803 14,000 11,527

25.3 Purchase of Goods/Serv. from Govt. Accts... 3,738 1,970 2,000

25.4 Operation & Maintenance of Facilities........... 0 0 0

25.5 Research & Development Contracts............. 0 0 0

25.6 Medical Care................................................. 0 0 0

25.7 Operation & Maintenance of Equipment........ 787 500 400

25.8 Subsistence & Support of Persons................ 0 0

26.0 Supplies and Materials.................................. 292 200 25

31.0 Equipment..................................................... 1,331 800 500

32.0 Lands and Structures.................................... 0 0 11,518

33.0 Investments & Loans....................................

0

. 0 0

41.0 Grants, Subsidies.........................................

0

. 0 0

42.0 Insurance Claims & Indemn.......................... 0 0 0

43.0 Interest and Dividends...........................

0

... 0 0

44.0 Refunds........................................................

0

. 0 0

Total Budget Authority....................................

0

... $30,268 $18,710 $0 $0 $26,975

DSCIP - 7 
2.3 – Appropriations Detail Table 

Appropriation Detail Table

(Dollars in Thousands)

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Department-wide Systems & Capital

Investment Program 0 $24,608 0 $30,268 0 $18,710 0 $26,975 0.00% 44.17%

Subtotal New Appropriated Resources 0 $24,608 0 $30,268 0 $18,710 0 $26,975 0.00% 44.17%

Other Resources:

Subtotal Other Resources 0 $0 0 $0 0 $0 0 $0 0.00% 0.00%

Total Resources Available for Obligation 0 $24,608 0 $30,268 0 $18,710 0 $26,975 0.00% 44.17%

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2009

Obligations Enacted Enacted Request to FY 2009

% Change

FY 2008

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT-WIDE SYSTEMS AND CAPITAL 

INVESTMENTS PROGRAM 

Federal Funds 

GENERAL AND SPECIAL FUNDS: 

For development and acquisition of automatic data 

processing equipment, software, and services for the 

Department of the Treasury, [$18,710,000] $26,975,000, to 

remain available until September 30, [2010] 2011: 

Provided, That $11,518,000 is for repairs to the Treasury 

Annex Building: Provided further, That these funds shall 

be transferred to accounts and in amounts as necessary to 

satisfy the requirements of the Department's offices, 

bureaus, and other organizations: Provided further, That 

this transfer authority shall be in addition to any other 

transfer authority provided in this Act: Provided further, 

That none of the funds appropriated shall be used to 

support or supplement ``Internal Revenue Service, 

Operations Support” or ``Internal Revenue Service, 

Business Systems Modernization''. (Department of the 

Treasury Appropriations Act, 2008.) 

No legislative changes 

requested. 

2C – Legislative Proposals 

DSCIP does not have any pending legislative proposals. 

DSCIP - 8 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Goal FY 2008 FY 2009 Percent

 TREASURY Strategic Objective Enacted Request Change

TREASURY Strategic Outcome AMOUNT AMOUNT AMOUNT 

Accountability & trans 6,000 6,000 0.0%

 Aligned organization 2,466 13,575 450.5%

 National security 8,000 4,400 -45.0%

U.S. & intl financial sys 2,244 3,000 33.7%

Total $18,710 $26,975 44.2%

3A – Department-wide Systems and Capital Investments Program ($26,975,000 

from direct appropriations): DSCIP funding improved infrastructure, modernizes 

business processes, and increases efficiencies through IT investment. All of the DSCIP 

efforts provide tangible benefits in their specific areas to produce an improved overall IT 

environment for the Department of the Treasury. The following section describes what 

the Treasury Department expects to accomplish with the requested DSCIP funding and 

the specific benefits each program will provide at the completion of FY 2009. 

3.2.1 – Department-wide Systems and Capital Investments Program Budget and 

Performance Plan 

Department-Wide Systems and Capital Investments Program

FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Obligations Enacted Enacted Request

Appropriated Resources $31,931 $20,635 $24,608 $30,268 $18,710 $26,975

Reimbursable Resources 0 0 0 0 0 0

Total Resources $31,931 $20,635 $24,608 $30,268 $18,710 $26,975

(Dollars in Thousands)

Department-Wide Systems and Capital Investments Program

Annex Repair and Renovation - The FY 2009 proposed funding for the Annex Repair 

and Renovation (ARR) project will enable Treasury to address the immediate need to 

correct critical building and system deficiencies to ensure the safety and health of the 

occupants. Substantial corrective measures are necessary to address the advance state of 

erosion of building elements and replacement of infrastructure that is at the end of its life 

DSCIP - 9 
cycle. FY 2009 ARR priorities include correcting failing systems, such as the HVAC and 

plumbing systems; correcting structural elements, such as the ground level ventilation 

system; correcting the advanced state of erosion of building elements; and introducing 

more energy efficient systems. A comprehensive project plan will be developed that will 

address issues of cost, schedule, and performance. A project manager will be appointed 

who will provide senior management with in-process reviews for the express purpose of

monitoring milestones and deliverables while ensuring that costs and schedules are met.

Treasury Secure Data Network – Funding for the continued improvement of the Treasury 

Secure Data Network (TSDN) operating system and hardware components will assure 

continued functionality throughout FY 2009. As a consequence, the Treasury 

Department will continue to have reliable access to the SIPRNET and the Department of 

Defense classified communications network, which will ensure ongoing communications 

with officials in law enforcement as well as the Departments of Defense and State. These 

activities will help ensure that the department is able to assist in reducing the threat posed 

by terrorism and associated activities to interdict terrorism, the proliferation of weapons 

of mass destruction (WMD), and narcotics trafficking. 

Cyber Security – Cyber Security funds will be used to ensure that all Treasury 

Department’s Critical Infrastructure / Key Resources (CI/KR) are identified and, 

furthermore, to protect these systems against possible terrorist attack by ensuring that 

strong security requirements are established and monitored. This program will provide 

greater protection against network intrusions, which can result in significant disruptions 

and delays in its business activities. Funding in this area will also support reviews of 

selected bureau security programs, and will support the Treasury Department in 

improving its overall compliance with FISMA. This funding will also support enhanced 

protection of the Department’s classified systems, thus directly support the goal of better 

protecting the national security, by reducing the risk to those systems. 

Enterprise Content Management – Funding for the Enterprise Content Management 

(ECM) program will be used to continue implementation of an enterprise-wide ECM 

project for the Department of the Treasury. The ECM project will address the critical and 

urgent business needs of the Office of Foreign Asset Control (OFAC) and the Financial 

Crimes Enforcement Network (FinCEN), both of which are struggling under an 

increasingly burdensome paper-based system of operations. This approach to ECM will 

minimize duplication of effort and infrastructure investments by capitalizing on 

Department and government-wide efforts. By the end of FY 2009, the Treasury 

Department will have significantly improved the workflow processes for both OFAC and 

FinCEN, as well as positioned the Department for a full transition to a Department-wide 

ECM solution. The Treasury’s ECM program will directly support the department’s goal 

to reduce the threat to national security from terrorist related financial activities by 

enhancing and developing the ability of related offices to quickly access and assess 

department-wide records and files in a centralized manner. 

E-Government Initiatives – The Treasury Department funds 14 of the 27 E-Government

initiatives and six of the nine E-Government Lines of Business, which includes funding 

DSCIP - 10 
from the DSCIP account. More information on the benefits of each E-Government 

initiative can be found in the E-Government chapter of this budget request. Overall, 

funding for the E-Government initiative will allow the Treasury Department to execute 

all required memoranda of understanding with Presidential E-Government Managing 

Partners. E-Government activities enable a more citizen-centered, results-oriented 

environment across government. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

DSCIP - 11 
Section 4 – Supporting Materials 

4B – Information Technology Strategy 

DSCIP supports a broad range of IT programs and initiatives which are critical to 

improving Treasury’s IT security capabilities, protecting its critical infrastructure and 

achieving enterprise-wide benefits through E-Government, ECM, and other Departmentwide initiatives. These program areas are aligned with and support OCIO and 

Departmental IT strategic goals and objectives. 

Treasury’s work to improve its E-Government PMA status continues to be a top priority. 

Improving Treasury’s PMA performance requires a concerted effort across the 

Department to strengthen multiple program areas such as Cyber Security and EGovernment. These initiatives support the Department’s focus on business and technical 

modernization, strengthening its IT security posture, ensuring a resilient IT environment, 

and migrating to common solutions when appropriate. Performance and success for these 

initiatives is measured by Treasury’s E-Government PMA score from OMB, FISMA 

metrics, compliance with OMB direction and guidance regarding consolidating and 

leveraging existing capabilities and investments, and meeting project-specific cost, 

schedule, and performance goals. 

DSCIP’s telecommunications activities include enhancements to the TSDN. This 

initiative will provide TSDN analysts with data search tools to allow for more rapid and 

immediate trend analysis and review. 

DSCIP activities are developmental and designed to maximize and leverage technology 

to achieve efficiencies and improved performance. Activities associated with DSCIP 

projects are normally contracted and we rigorously apply Earned Value Management 

(EVM) techniques to the management of these contracted vehicles, ensuring that the 

services provided are within expectations for cost and schedule and other EVM 

measurements. 

DSCIP - 12 
Office of Inspector General 

Mission Statement 

To: (1) conduct and supervise audits and investigations of Treasury programs and 

operations; (2) provide leadership and coordination and recommend policies for activities 

designed to (a) promote economy, efficiency, and effectiveness in the administration of 

Treasury programs and operations, and (b) prevent and detect fraud, waste, and abuse in 

Treasury programs and operations; and (3) keep the Secretary and the Congress fully and 

currently informed about problems, abuses, and deficiencies in Treasury programs and 

operations. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

Audit $11,639 $12,658 $13,280 $622 4.91%

Investigations 5,318 5,792 6,076 284 4.90%

Total Appropriated Resources $16,957 $18,450 $19,356 $906 4.91%

Total FTE 111 112 115 3 2.68%

FY 2009 Priorities 

Ensure the effectiveness and integrity of Treasury programs by: 

• Completing 100 percent of mandated audits on time; 

• Focusing on programs to combat terrorist financing and money laundering, the 

security of Treasury’s information systems, and Treasury’s management of capital 

investments; 

• Addressing requirements related to financial statements, information security and 

failed financial institutions; 

• Investigating allegations of fraud, waste, abuse, and employee misconduct; and 

• Conducting proactive efforts to detect, deter and investigate electronic crimes and 

threats to Treasury’s physical and cyber infrastructure. 
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language................................... 3 

2.1 – Budget Adjustments Table..................................................................................... 3 

2A – Budget Increases and Decreases Description ........................................................ 3 

2.2 – Operating Levels Table.......................................................................................... 4 

2.3 – Appropriations Detail Table .................................................................................. 5 

2B – Appropriations Language and Explanation of Changes......................................... 5 

2C – Legislative Proposals ............................................................................................. 5 

Section 3 – Budget and Performance Plan ..................................................................... 6 

3.1 – Budget by Strategic Outcome ................................................................................ 6 

3A – Audit ..................................................................................................................... 6 

3.2.1 – Audit Budget and Performance Plan .................................................................. 6 

3B – Investigations ........................................................................................................ 7 

3.2.2 – Investigations Budget and Performance Plan ..................................................... 7 

Section 4 – Supporting Materials.................................................................................... 9 

4A – Human Capital Strategy Description ..................................................................... 9 

4.1 – Summary of IT Resources Table ......................................................................... 10 

4B – Information Technology Strategy ........................................................................ 11 

4.2 – PART Evaluation Table....................................................................................... 12 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Fiscal Year (FY) 2009 President’s Budget request for the Office of Inspector General 

(OIG) will be used to provide critical audit and investigative services, ensuring the 

effectiveness and integrity of Treasury’s programs and operations. OIG will continue, as 

the first audit priority, to address mandated requirements related to financial statements, 

information security, and as necessary, failed financial institutions resulting in material 

losses (more than $25 million) to the deposit insurance funds. While there are a number 

of critical areas where the OIG will provide audit oversight, highlights of three of the 

Department’s most serious management challenges where OIG will focus its resources 

include: 

• Improving regulatory gaps in the detection of and/or timely enforcement action 

against financial institutions for Bank Secrecy Act (BSA) and related violations, and 

strengthening Office of Foreign Assets Control (OFAC) compliance examinations for 

the institutions examined by the Office of the Comptroller of the Currency (OCC) and 

the Office of Thrift Supervision (OTS). 

• Improving the Department’s compliance with information technology security 

policies, procedures, standards, and guidelines as required by the Federal Information 

Security Management Act (FISMA) 

• Improving Treasury’s management of large acquisitions of systems and other capital 

investments to prevent costly or failed acquisition projects 

The requested funding will also allow OIG to continue to prevent fraud, waste and abuse, 

at all non-IRS Treasury bureaus and offices, including investigating complaints of alleged 

employee misconduct, and allegations of fraud and other crimes involving Treasury 

programs, performing oversight of the Treasury's police operations at the Bureau of 

Engraving and Printing and the U.S. Mint, and conducting proactive efforts to detect, 

investigate, and deter electronic crimes and other threats to the Department’s physical 

and cyber critical infrastructure. 

Additional resources provided in the FY 2009 Budget request will enable OIG to hire two 

auditors and one investigator to assist in the oversight of the critical management 

challenges cited above. 

Total resources required to support OIG activities for FY 2009 are $25,656,000, 

including $19,356,000 from direct appropriation, and $6,300,000 from offsetting 

collections and reimbursable programs. 

OIG - 1
1B – Program History and Future Outlook 

In FY 2007, the OIG completed 64 Audit products, reviewed 450 allegations, opened 

130 investigations, and referred 188 investigations, including 64 one-time referrals 

from a GAO investigation into Metrocheck fraud and 10 one-time referrals from a 

cyber initiative. Audits identified potential monetary benefits totaling nearly 

$35 million. Investigations led to nearly $700 thousand collected in fines, restitution, 

recoveries, and settlements. 

In FYs 2008 and 2009, the OIG expects to complete 56 and 60 Audit products, 

respectively, and refer 105 investigations (each year) for criminal prosecution, civil 

litigation, or administrative action. 

In FYs 2006 and 2007, the OIG met mandated audit requirements while focusing its 

self-initiated audit resources to address the major management and performance 

challenges identified by the Inspector General. The OIG expects to continue this trend

in FYs 2008 and 2009. 

OIG - 2
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 112 $18,450

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 87

 Pay Annualization 101

 Pay Inflation Adjustment 318

Total FY 2009 Base 112 $18,956

Program Increases:

 Increased Audit & Investigative Capability 3 400

Subtotal FY 2009 Program Changes 3 400

Total FY 2009 President's Budget Request 115 $19,356

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ..............................................+$506,000 / +0 FTE 

Non-Pay Inflation Adjustment +$87,000 / +0 FTE 

Funds inflation for non-labor related items such as contracts, travel, supplies, equipment 

and GSA rent. 

Pay Annualization +$101,000 / +0 FTE 

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

Pay Inflation Adjustment +$318,000 / +0 FTE 

Funds are requested for the January 2009 pay raise. 

Program Increases ............................................................................+$400,000 / +3 FTE 

Increased Audit & Investigative Capability +$400,000 / +3 FTE 

This initiative provides funding for two auditors and one investigator. These FTE will 

enable OIG to improve audit coverage in high risk areas, such as programs to combat

terrorist financing and money laundering, management of capital investments, 

particularly IT projects, and IT system security in meeting FISMA and OMB 

requirements. These additional FTE will also help to reduce investigative caseload 

backlog. 

OIG - 3
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 112 112 112 115

Object Classification:

 11.1 - Full-time permanent 10,740 10,765 0 10,765 11,303

 11.3 - Other than full-time permanent 45 60 0 60 65

 11.5 - Other personnel compensation 400 500 0 500 515

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 0 2,775 0 2,775 2,894

 13 - Benefits for former personnel 2,480 0 0 0 0

 21 - Travel and transportation of persons 240 475 0 475 450

 22 - Transportation of things 0 0 0 0 0

 23.1 - Rental payments to GSA 0 1,326 0 1,326 1,240

 23.2 - Rental payments to others 1,410 0 0 0 0

 23.3 - Comm, utilities, and misc charges 350 439 0 439 500

 24 - Printing and reproduction 10 15 0 15 15

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 0 0 0 0 0

 25.2 - Other services 200 385 0 385 450

 25.3 - Other purchases of goods and services from Govt.

accounts 

710 975 0 975 1,013

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

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 32 40 0 40 42

 25.7 - Operation and maintenance of equip 150 0 0 225 250

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

 26 - Supplies and materials 90 150 0 150 244

 31 - Equipment 100 320 0 320 375

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $16,957 $18,450 $0 $18,450 $19,356

Budget Activities:

 Audit 11,639 12,658 0 12,658 13,280

 Investigations 5,318 5,792 0 5,792 6,076

Total Budget Authority $16,957 $18,450 $0 $18,450 $19,356

OIG - 4
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Audit 72 $11,561 72 $11,639 72 $12,658 74 $13,280 2.78% 4.91%

Investigations 39 5,292 40 5,318 40 5,792 41 6,076 2.50% 4.90%

Subtotal New Appropriated Resources 111 $16,853 112 $16,957 112 $18,450 115 $19,356 2.68% 4.91%

Other Resources:

Offsetting Collections - Reimbursable 3 1,375 4 1,300 0 6,300 0 6,300 0.00% 0.00%

Transfer in of Multi-year Funds/50%Balance 420 431

Subtotal Other Resources 3 $1,795 4 $1,731 0 $6,300 0 $6,300 0.00% 0.00%

Total Resources Available for Obligation 114 $18,648 116 $18,688 112 $24,750 115 $25,656 2.68% 3.66%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted Request

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

OFFICE OF INSPECTOR GENERAL 

Federal Funds 

SALARIES AND EXPENSES: 

For necessary expenses of the Office of Inspector General 

in carrying out the provisions of the Inspector General 

Act of 1978, not to exceed $2,000,000 for official travel 

expenses, including hire of passenger motor vehicles; of 

which not to exceed $100,000 for unforeseen emergencies 

of a confidential nature, to be allocated and expended 

under the direction of the Inspector General of the 

Treasury; [$18,450,000] $19,356,000, of which not to 

exceed $2,500 shall be available for official reception and 

representation expenses. (Consolidated Appropriations 

Act, 2008) 

2C – Legislative Proposals 

The Office of Inspector General has no legislative proposals for FY 2009 

OIG - 5 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 Accountability & trans 24,750 25,656 3.7%

Total $24,750 $25,656 3.7%

3A – Audit ($13,280,000 from direct appropriations and $6,300,000 from 

reimbursable programs): The Office of Audit conducts audits and produces more than 

50 products annually; and provides firsthand, unbiased perspectives and

recommendations for improving the economy, efficiency, and effectiveness of Treasury 

programs and operations. The Office often identifies significant cost savings to the 

government, principally through self-initiated audits. The Office also responds to 

requests by Treasury officials and the Congress for specific work. While statute requires 

certain audits be conducted every year, the number of required and requested products 

has increased in recent years. Reimbursable funding supports agreements for contract 

audits of other Treasury bureaus. 

3.2.1 – Audit Budget and Performance Plan 

Audit Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $10,582 $11,549 $11,561 $12,658 $13,280

 Reimbursable Resources $2,208 $2,009 $1,795 $6,300 $6,300

Total Resources $12,790 $13,558 $13,356 $18,958 $19,580

Budget Activity Total $12,790 $13,558 $13,356 $18,958 $19,580

Audit Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percent of statutory audits completed by the 

required date (%) (E)

 100.00% 100.00% 100.00% 100.00% 100.00%

Number of completed audit products (Ot) 54 57 64 56 60

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

OIG - 6 
Description of Performance: In FYs 2006 and 2007, the Office of Audit completed 57 

and 64 audit products, identified potential monetary benefits totaling nearly 

$35 million and $7 million, respectively, and completed all statutory audits by the 

required dates. In FYs 2008 and 2009, the Office plans to complete 56 and 60 Audit 

products, respectively.

In FYs 2006 and 2007, the Office of Audit met mandated audit requirements while 

focusing its self-initiated audit resources to address the major management and 

performance challenges identified by the OIG. In FY 2007 those challenges were 

(1) Corporate Management, (2) Management of Capital Investments, (3) Information 

Security, (4) Linking Resources to Results and (5) Anti-Money Laundering and 

Terrorist Financing/Bank Secrecy Act Enforcement. The OIG expects to continue to 

meet mandated audit requirements and focus its self-initiated audit resources to address 

the major management and performance challenges identified by the OIG in FYs 2008 

and 2009. 

3B – Investigations ($6,076,000 from direct appropriations): The Office of 

Investigations prevents, detects and investigates complaints of fraud, waste and abuse. 

This includes the detection and prevention or deterrence of employee misconduct and 

fraud, or related financial crimes within or directed against Treasury. The Office refers its 

cases to the Department of Justice and state or local prosecutors for criminal prosecution 

or civil litigation, or to agency officials for corrective administrative action. 

3.2.2 – Investigations Budget and Performance Plan 

Investigations Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $5,621 $5,281 $5,292 $5,792 $6,076

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $5,621 $5,281 $5,292 $5,792 $6,076

Budget Activity Total $5,621 $5,281 $5,292 $5,792 $6,076

Investigations Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Number of investigations referred for criminal

prosecution, civil litigation or corrective 

administrative action. (Oe) 

 85 144 188 105 105

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

Description of Performance: In FY 2006, the Office of Investigations reviewed 489 

allegations, opened 129 investigations, and referred 144 investigations. Investigations led 

to nearly $600 thousand collected in fines, restitution, recoveries, and settlements. In 

FY 2007, the Office reviewed 450 allegations, opened 130 investigations, and referred 188 

investigations, including 64 one-time referrals from a GAO investigation into Metrocheck 

fraud, and 10 one-time referrals from a cyber initiative. Investigations led to nearly $700 

thousand collected in fines, restitution, recoveries, and settlements. In FYs 2008 and 2009, 

OIG - 7 
the Office expects to refer 105 investigations for criminal prosecution, civil litigation, or 

corrective administrative action. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

OIG - 8 
OIG - 9 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The OIG identified two mission critical occupations that closely align to its two budget 

activities, audit and investigations, and has integrated workforce plans for these 

specialized professionals (auditors, criminal investigators) with strategic and annual plan 

goals and objectives. 

The OIG has had exceptional recruitment success using automated tools to re-establish 

and then maintain its human capital pipeline for the past four years, with OIG job 

announcements attracting up to 1,000 applicants, and selections made and positions 

offered within 30-days, on average. 
OIG - 10 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments 1/

FY 2006 FY 2007 FY 2008 

Major IT Investments / Funding Source Budget Activity

& Earlier 

Enacted 2/ Enacted

Likely

Enacted 

N/A 

Subtotal, Major IT Investments $0 $0 $0 Non-Major IT Investments

Audit Investigations $900 $390 -56.7% $450 

OIG STEADY STATE OPERATING COSTS

Infrastructure Investments $0Enterprise Architecture $0Total IT Investments $900 $390 -56.7% $450 1/ This chart includes appropriated resources only, and may not reflect total project costs.2/ This column reflects appropriated resources provided to a project in FY 2006 and any previous years.

% Change 

from FY06 to 

FY07

% Cha

from FY

FY0
4B – Information Technology Strategy 

Information technology (IT) funding has been critical in enabling OIG to make 

significant progress in providing technology refreshment that allows our auditors, 

investigators, and support personnel to use hardware and software actively maintained by 

the manufacturers. IT funding also strengthens OIG’s entity-wide IT security program, 

with equipment designed for anti-virus detection/protection, anti-spam detection, anti-spy 

detection, intrusion detection/prevention, monitoring and patch management, and disaster 

recovery. This ensures that the OIG IT infrastructure operates in a secure manner and that 

the information collected during audits and investigations of the Department’s operations 

and resources are not susceptible to computer attacks and terrorist activities. Maintaining 

the OIG IT infrastructure and its IT security program at an acceptable level requires ongoing upgrades of tools and technologies. 

IT funding has also enhanced OIG’s ability to perform computer forensics during 

investigations and computer vulnerability scanning during audits of the Department’s IT 

operations and resources. Maintaining these capabilities requires on-going upgrades of 

tools and technologies. 

OIG - 11 
4.2 – PART Evaluation Table 

Not applicable to the OIG. 

OIG - 12 
Treasury Inspector General for Tax Administration 

Mission Statement 

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

integrity in the administration of the internal revenue laws. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

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

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

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

Total FTE 817 835 835 0 0.00%

FY 2009 Priorities 

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

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

and enforcement efforts; 

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

information; 

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

abuse or misconduct by IRS employees; 

• Conducting comprehensive audits, inspections, and evaluations that include 

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

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

to resolve them. 
Table of Contents 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1A – Description of Bureau Vision and Priorities 

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

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

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

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

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

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

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

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

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

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

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

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

administration system. 

 

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

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

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

taxpayers. TIGTA’s investigative and audit priorities include: 

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

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

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

information; 

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

abuse or misconduct by IRS employees; 

• Conducting comprehensive audits, inspections, and evaluations that include 

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

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

to resolve them. 

 

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

These strategic goals are to: 

 

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

• Protect the Integrity of Tax Administration and; 

• Be an Organization that Values Its People. 

TIGTA – 1 
1B – Program History and Future Outlook 

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

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

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

independent audit and investigative services necessary to improve the quality and 

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

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

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

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

administration. 

 

In FY 2007, TIGTA’s accomplishments included: 

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

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

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

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

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

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

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

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

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

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

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

measures to protect sensitive information maintained by the IRS. 

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

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

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

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

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

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

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

administration. Between October 2006 and September 2007, TIGTA provided 

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

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

presentations to revenue officers and revenue agents at their continuing professional 

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

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

professional conferences. 

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

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

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

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

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

approximately $3.55 billion, and potentially impacted approximately 5.7 million 

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

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

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

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

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

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

potential loss of revenue to the federal government. 

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

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

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

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

unsubstantiated concerns that may needlessly impede IRS operations. Accordingly, 

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

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

audit and investigative functions and provides TIGTA with additional flexibilities and 

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

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

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

administer the tax laws. 

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

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

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

of informing interested parties to expand. 

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

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

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

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

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

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

against IRS employees. 

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

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

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

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

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

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

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

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

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

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

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

highlights of these issues and their challenges: 

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

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

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

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

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

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

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

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

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

compliance represents a potential risk to national security. 

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

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

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

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

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

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

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

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

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

erode voluntary compliance, facilitate criminal violations, and enable potentially 

hazardous security breaches of IRS computer systems. 

TIGTA – 4 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 835 $140,533

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 615

 Pay Annualization 799

 Pay Inflation Adjustment 2,419

Transfers In:

 Transfer from IRS for building operations 1,370

Total FY 2009 Base 835 $145,736

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

2A – Budget Increases and Decreases Description 

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

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

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

supplies, equipment, and GSA rent. 

Pay Annualization +$799,000 / +0 FTE 

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

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

Funds are requested for the FY 2009 pay raise. 

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

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

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

support services currently provided by IRS on behalf of TIGTA. 

TIGTA – 5 
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 817 835 835 835

Object Classification:

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

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

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

 11.8 - Special personal services payments 0 0 0 0 0

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

 13 - Benefits for former personnel 0 0 0 0 0

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

 22 - Transportation of things 57 24 0 24 24

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

 23.2 - Rental payments to others 272 282 0 282 288

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

 24 - Printing and reproduction 19 8 0 8 8

 25 - Other contractual Services 0 0 0 0 0

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

 25.2 - Other services 659 921 0 921 986

 25.3 - Other purchases of goods and services from Govt.

accounts 

3,941 0 0 0 6,695

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

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

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

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

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

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

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 130 150 0 150 150

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

 91.0 - Confidential Expenditures 54 52 0 52 53

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

Budget Activities:

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

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

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

TIGTA – 6 
2.3 – Appropriations Detail Table 

Dollars in Thousands

Appropriation Detail Table

(Dollars in Thousands)

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

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

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

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

Other Resources:

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

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

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

% Change

FY 2009 FY 2008

Resources Available for Obligation Obligations Enacted Enacted Request to FY 2009

FY 2007 FY 2007 FY 2008

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

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

TREASURY INSPECTOR GENERAL FOR TAX 

ADMINISTRATION 

Federal Funds 

General and Special Funds: 

SALARIES AND EXPENSES

For necessary expenses of the Treasury Inspector General 

for Tax Administration, in carrying out the Inspector 

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

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

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

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

be determined by the Inspector General for Tax 

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

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

unforeseen emergencies of a confidential nature, to be 

allocated and expended under the direction of the 

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

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

available for official reception and representation 

expenses. (Department of the Treasury Appropriations 

Act, 2008)

2C – Legislative Proposals 

TIGTA does not have any legislative proposals for FY 2009. 

TIGTA - 8 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 Accountability & trans 141,433 146,636 3.7%

Total $141,433 $146,636 3.7%

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

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

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

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

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

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

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

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

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

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

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

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

protected. 

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

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

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

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

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

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

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

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

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

improvements in IRS programs, including: 

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

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

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

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

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

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

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

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

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

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

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

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

compliance. IRS management agreed with the recommendations. Continued TIGTA 

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

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

balancing taxpayer services and enforcement without jeopardizing taxpayer rights. 

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

individual income tax returns reporting deductions for noncash charitable contributions, 

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

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

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

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

corrective actions once they have been implemented. 

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

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

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

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

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

 in Social Security 

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

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

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

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

TIGTA will reevaluate the IRS' improvements in this area. 

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

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

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

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

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

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

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

minimize the number of overstated refund requests and administrative burden on 

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

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

 

1

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

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

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

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

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

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

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

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

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

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

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

taxpayers. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

filings and employing technology and operational improvements to process returns, 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

program can continue to provide effective customer service.

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

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

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

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

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

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

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

threat environment related to increased terrorist and hacker activity. 

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

financial information and personally identifiable information such as Social Security 

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

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

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

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

information. The IRS agreed with the recommendations and provided adequate 

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

of the IRS' corrective actions. 

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

prior to conducting background investigations on employees was appropriate and 

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

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

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

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

and 72 percent of the contractor employee investigations within established IRS 

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

may be hiring unsuitable employees that could compromise sensitive taxpayer 

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

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

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

track background investigations and to periodically advise appropriate IRS employees to 

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

systems. 

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

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

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

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

requests for action to continue into future fiscal years. 

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

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

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

3.2.1 – Audit Budget and Performance Plan 

Audit Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

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

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

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

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

TIGTA - 13 
Audit Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Audit Products Delivered When 

Promised to Stakeholders 

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

Percentage of Recommendations Made That 

Have Been Implemented 

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

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

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

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

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

Additionally, TIGTA makes recommendations designed to improve administration of the 

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

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

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

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

Management Enterprise System to track the percentage of recommendations made four 

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

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

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

process with the IRS for closing out unimplemented recommendations for which 

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

measures that address concerns identified by TIGTA. 

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

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

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

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

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

investigates allegations of criminal violations and administrative misconduct by IRS 

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

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

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

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

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

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

employee misconduct. These investigations of employee misconduct allegations include 

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

integral part of the employee integrity program involves investigations of unauthorized 

access to confidential taxpayer records by IRS employees. 

TIGTA - 14 
Employee and Infrastructure Security: In 1998, The President of the United States 

designated IRS operations as a critical infrastructure.2

 TIGTA meets the challenge of 

maintaining IRS employee and infrastructure security by conducting investigations in 

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

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

administration of a Criminal Intelligence Program that utilizes law enforcement and 

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

threat to tax administration. 

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

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

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

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

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

and the corruption of IRS programs through procurement fraud. 

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

tax administration and thus require intensified oversight. Particularly important to 

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

 Such schemes 

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

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

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

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

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

employee, and identity theft incidents are resolved properly. 

Congressional concern regarding the magnitude of uncollected revenue has prompted the 

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

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

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

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

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

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

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

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

against IRS facilities. 

Current resources committed to addressing external security risks include six special 

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

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

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

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

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

 

2 Presidential Decision Directive NSC-63. 3

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

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

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

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

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

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

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

activity conducted on behalf of the Department of the Treasury. 

3.2.2 – Investigations Budget and Performance Plan 

Investigations Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

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

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

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

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

Investigations Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Results from Investigative 

Activities (%) (Oe) 

 82.00% 79.00% 81.00% 76.00% 76.00%

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

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

investigative activities include: bribes offered by taxpayers to compromise IRS 

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

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

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

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

TIGTA’s continuous focus on quality investigative activities. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

TIGTA - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

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

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

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

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

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

TIGTA’s performance management program differentiates levels of employee 

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

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

Capital Plan to support a revised TIGTA Strategic Plan. 

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

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

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

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

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

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

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

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

ability to effectively fulfill its core mission. 

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

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

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

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

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

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

entire programs. 

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

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

modernization effort and its increasingly computerized operating systems and 

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

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

and other improprieties in IRS computer systems are needed. 

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

electronic learning management system containing a skills assessment program that 

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

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

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

of TIGTA’s workload is located. 

TIGTA - 17 
TIGTA - 18 

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

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

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

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

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

4.1 – Summary of IT Resources Table 

Dollars in Thousands
4B – Information Technology Strategy 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

and availability, and to determine when technology maintenance and refreshment 

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

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

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

geographically distributed investigative and audit workforce. The WAN provides 

adequate bandwidth for internal and external data transmissions while providing secure 

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

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

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

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

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

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

reliable wireless communication devices. 

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

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

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

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

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

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

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

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

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

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

Enterprise Architecture: TIGTA operates several programs to comply with various 

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

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

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

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

information technology investment and related resource allocation decisions. 

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

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

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

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

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

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

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

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

available. 

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

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

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

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

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

their associated IT infrastructure. As the Department ECM initiative presents 

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

tracking, and workflow management functions. 

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

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

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

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

The system facilitates GPRA compliance by collecting data needed to measure 

performance of investigative activities, specifically as it pertains to complaint 

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

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

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

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

TIGTA - 21 
4.2 – PART Evaluation Table 

Not applicable to TIGTA. 

TIGTA - 22 
Community Development Financial Institutions Fund 

Mission Statement 

To expand the capacity of financial institutions to provide credit, capital and financial 

services to underserved populations and communities in the United States. 

Program Summary by Budget Activity 

Dollars in Thousands

Appropriation FY 2007 FY 2008 FY 2009

Community Development Financial 

Institutions Fund Enacted Enacted Request $ Change % Change 

Community Development Financial

Institutions Program $31,881 $58,480 $24,417 ($34,063) -58.25%

New Markets Tax Credit Program 4,258 4,120 4,203 83 2.01%

Bank Enterprise Award 12,551 21,400 0 (21,400) -100.00%

Native Initiatives 5,816 10,000 0 (10,000) -100.00%

Total Appropriated Resources $54,506 $94,000 $28,620 ($65,380) -69.55%

Total FTE 68 75 75 0 0.00%

FY 2009 Priorities 

• Provide allocations of tax credits through the New Markets Tax Credit Program, 

• Provide awards through the Community Development Financial Institutions (CDFI) 

Program as well as training, and 

• Manage the Fund’s existing portfolio of awards and allocations including 

strengthening its compliance management program.
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language................................... 3 

2.1 – Budget Adjustments Table..................................................................................... 3 

2A – Budget Increases and Decreases Description ........................................................ 3 

2.2 – Operating Levels Table.......................................................................................... 4 

2.3 – Appropriations Detail Table .................................................................................. 5 

2B – Appropriations Language and Explanation of Changes......................................... 6 

2C – Legislative Proposals ............................................................................................. 6 

Section 3 – Budget and Performance Plan ..................................................................... 7 

3.1 – Budget by Strategic Outcome ................................................................................ 7 

3A – Community Development Financial Institutions Program ................................... 7 

3.2.1 – Community Development Financial Institutions Program Budget and 

Performance Plan............................................................................................................ 8 

3B – New Markets Tax Credit Program........................................................................ 9 

3.2.2 – New Markets Tax Credit Program Budget and Performance Plan..................... 9 

3C – Bank Enterprise Award....................................................................................... 10 

3.2.3 – Bank Enterprise Award Budget and Performance Plan.................................... 11 

3D – Native Initiatives................................................................................................. 11 

3.2.4 – Native Initiatives Budget and Performance Plan.............................................. 11 

Section 4 – Supporting Materials.................................................................................. 12 

4A – Human Capital Strategy Description ................................................................... 12 

4.1 – Summary of IT Resources Table ......................................................................... 13 

4B – Information Technology Strategy ........................................................................ 14 

4.2 – PART Evaluation Table....................................................................................... 15 

CDFI - 0 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The mission of the Community Development Financial Institutions Fund (the Fund) is to 

expand the capacity of financial institutions to provide credit, capital and financial 

services to underserved populations and communities in the United States. 

The Fund has three priorities: 

1. To Support the Growth and Capacity of Community Development Financial 

Institutions (CDFIs) Through the CDFI Program – The CDFI Program provides financial 

assistance and technical assistance awards to CDFIs through annual competitive funding 

rounds to carry out the Fund’s mission. In addition, the Fund is authorized to provide 

support through training as well as evaluating the impact of the programs through 

evaluation and research. 

 

2. To Increase Investment Capital in Low Income Communities Through the New 

Markets Tax Credit (NMTC) Program – The NMTC Program attracts private sector

capital into low-income communities through investments in Community Development 

Entities (CDEs). CDEs raise funds by providing tax credits to private investors in 

exchange for equity investments, which are then invested in low-income communities. 

CDEs apply for allocations of NMTCs through annual, competitive allocation rounds. 

3. To Manage the Fund’s Existing Portfolio of Awards Including Strengthening its 

Compliance Management Program – Certain activities pertaining to the existing portfolio 

of grant awards are required. These activities consist of finalizing the terms of assistance 

agreements with recent awardees, making disbursements under awards not fully 

disbursed as of the end of FY 2008, and monitoring awardee compliance with the terms 

of their three-year award assistance and allocation agreements. This later step includes 

reviewing annual reports provided by awardees and conducting site visits, to ensure that 

awardee performance meets the goals as stipulated in the assistance agreements and that 

unmet performance is explained. 

1B – Program History and Future Outlook 

The CDFI Fund administers two direct funding programs in support of Community 

Development Financial Institutions (the CDFI Program) and Native American 

communities (the Native American CDFI Assistance – NACA - Program), and also 

administers the New Markets Tax Credit (NMTC) Program. 

In FY 2007, the Fund processed $197 million of award applications which resulted in 

awards totaling approximately $42 million through the CDFI and NACA programs. The 

Fund also processed $27.9 billion of applications competing for $3.9 billion in allocations 

under the New Markets Tax Credit program. Those selected for award will be announced 

later in the calendar year. 

CDFI – 1
In FY 2007, the Fund reported 35,022 jobs created or retained by CDFI Program

awardees, which exceeded the projected target of 34,009 jobs. For NMTC allocatees, 

98,530 jobs were created or retained, pertaining to real estate development/rehabilitation 

and/or business support. In addition, CDFI Program financial assistance awards 

leveraged an additional $778 million dollars, which equates to a leverage factor of $19:$1 

(every $1 of the Fund’s financial assistance awards resulted in an additional $19 raised 

and leveraged by awardees). 

During FY 2007 the Fund took in 290 applications, most of which were through the 

consolidated Grants.gov intake system, as required by the Presidential Management 

Agenda (PMA) initiative. The Fund began preparing its migration plan to the PMA 

Grants Management Line of Business (GMLoB) initiative and has selected the 

Department of Health and Human Services, Administration for Children and Families as 

its partner for this effort. The Fund also commenced significant planning to support the 

implementation of the Federal Funding Accountability and Transparency Act (FFATA), 

which requires the Office of Management and Budget to maintain a single website 

providing information about federal spending in FY 2007 and beyond. The Fund began 

using the Trusted Agent FISMA (TAF) tool developed so that all Treasury bureaus and 

offices can document and track compliance with FISMA security mandates. 

Future Challenges 

A challenge facing the Fund is the transitioning of its award-making activities to the 

Grants Management Line of Business (GMLoB). One of the requirements of the 

President’s Management Agenda is for the development and administration of uniform 

requirements for grant processing among all federal agencies. The intent of these 

uniform requirements is to support end-to-end grants management activities that promote 

citizen access, customer service, and agency financial and technical stewardship. These 

uniform requirements are referred to as the GMLoB. Certain federal agencies provide 

these grant processing functions for their grant-making federal agency customers. The 

Fund is in the process of transitioning its award administration requirements (currently 

met in-house) to the Department of Health and Human Services, which provides such 

services. This transition process will require a complete evaluation of the Fund’s award 

activities, from application to award, to determine when the activities can be transitioned, 

and the most efficient process for making the transition. 

 

CDFI – 2
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Community Development Financial Institutions Fund FTE Amount

FY 2008 Enacted 75 $94,000

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 119

 Pay Annualization 48

 Pay Inflation Adjustment 111

Total FY 2009 Base 75 $94,278

Program Decreases:

 Bank Enterprise Award Program (6) (21,428)

 CDFI Program 12 (34,190)

Native Initiatives (6) (10,040)

Subtotal FY 2009 Program Changes 0 (65,658)

Total FY 2009 President's Budget Request 75 $28,620

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ..............................................+$278,000 / +0 FTE 

Non-Pay Inflation Adjustment +$119,000 / +0 FTE 

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

equipment and GSA rent. 

Pay Annualization +$48,000 / +0 FTE 

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

Pay Inflation Adjustment +$111,000 / +0 FTE 

Funds are requested for the January 2009 pay raise. 

Program Decreases .......................................................................-$65,658,000 / +0 FTE 

Bank Enterprise Award Program -$21,428,000 / -6 FTE 

The Fund is not requesting resources for the Bank Enterprise Award (BEA) Program in 

FY 2009. 

CDFI Program -$34,190,000 / +12 FTE 

The FY 2009 budget request seeks to reduce funding for this program. The increase in 

FTEs pertains to the transfer of staff administering the Bank Enterprise Award Program 

(6 FTEs) and Native Initiatives (6 FTEs). 

Native Initiatives -$10,040,000 / -6 FTE 

No separate authorization exists for Native Initiatives so no separate set aside is being

requested in FY 2009. 

CDFI – 3
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Community Development Financial 

Institutions Fund FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 68 63 12 75 75

Object Classification:

 11.1 - Full-time permanent 5,413 5,267 1,823 5,660 6,230

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

 11.5 - Other personnel compensation 0 0 0 0 0

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 1,408 1,373 97 1,470 1,619

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 119 112 7 119 114

 22 - Transportation of things 20 20 0 20 20

 23.1 - Rental payments to GSA 1,319 1,353 (17) 1,411 1,447

 23.2 - Rental payments to others 127 130 99 193 189

 23.3 - Comm, utilities, and misc charges 303 317 0 317 332

 24 - Printing and reproduction 20 20 0 20 20

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 3,635 2,550 (27) 2,484 2,522

 25.2 - Other services 490 271 737 1,008 438

 25.3 - Other purchases of goods and services from

Govt. accounts 

649 598 269 867 911

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

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 0 0 0 0 0

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

 26 - Supplies and materials 91 94 12 106 111

 31 - Equipment 75 75 0 75 75

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 1,300 740 0 2,170 530

 41 - Grants, subsidies, and contributions 39,537 15,637 62,443 78,080 14,062

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $54,506 $28,557 $65,443 $94,000 $28,620

Budget Activities:

 Community Development Financial Institutions 

Program

31,881 24,437 34,043 58,480 24,417

 New Markets Tax Credit Program 4,258 4,120 0 4,120 4,203

 Bank Enterprise Award 12,551 0 21,400 21,400 0

 Native Initiatives 5,816 0 10,000 10,000 0

Total Budget Authority $54,506 $28,557 $65,443 $94,000 $28,620

CDFI – 4
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

30 $31,847 33 $31,881 55 $58,480 55 $24,417 0.00% -58.25%

15 3,704 19 $4,258 20 $4,120 20 $4,203 0.00% 2.02%

5 12,469 6 $12,551 0 $21,400 0 $0 0.00% -100.00%

7 5,500 10 $5,816 0 $10,000 0 $0 0.00% -100.00%

Subtotal New Appropriated Resources 57 $53,520 68 $54,506 75 $94,000 75 $28,620 0.00% -69.55%

Other Resources:

Recoveries 658 0 658 0 500 0 2,000 0.00% 300.00%

Unobligated Balance 1,533 0 1,533 0 986 0 500 0.00% -49.29%

Offsetting Collections 600 0 600 0 500 0 500 0.00% 0.00%

Available multi-year/no-year funds 50 0 402 0 402 0 402 0.00% 0.00%

Subtotal Other Resources 0 $2,841 0 $3,193 0 $2,388 0 $3,402 0.00% 42.46%

Total Resources Available for Obligation 57 $56,361 68 $57,699 75 $96,388 75 $32,022 0.00% -66.78%

% Change

Obligations Enacted to FY 2009

Community Development Financial

Institutions Program

New Markets Tax Credit Program

Bank Enterprise Award Program

Native Initiatives

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted President's Budget

CDFI - 5 
2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

COMMUNITY DEVELOPMENT FINANCIAL 

INSTITUTIONS FUND 

COMMUNITY DEVELOPMENT FINANCIAL 

INSTITUTIONS FUND PROGRAM ACCOUNT 

To carry out the Community Development Banking and 

Financial Institutions Act of 1994 (Public Law 103-325), 

including services authorized by 5 U.S.C. 3109, but at rates 

for individuals not to exceed the per diem rate equivalent

to the rate for ES-3, [94,000,000] $28,620,000 to remain 

available until September 30, [2009] 2010, of which

[$8,000,000 shall be for financial assistance, technical 

assistance, training and outreach programs designed to 

benefit Native American, Native Hawaiian, and Alaskan 

Native communities and provided primarily through 

qualified community development lender organizations 

with experience and expertise in community development 

banking and lending in Indian country, Native American 

organizations, tribes and tribal organizations and other 

suitable providers, and] up to [$13,500,000] $13,778,000

may be used for administrative expenses, including 

administration of the New Markets Tax Credit, up to 

[$7,500,000] $1,200,000 may be used for the cost of direct 

loans, and up to $250,000 may be used for administrative 

expenses to carry out the direct loan program: Provided, 

That the cost of direct loans, including the cost of 

modifying such loans, shall be as defined in section 502 of 

the Congressional Budget Act of 1974, as amended: 

Provided further, That these funds are available to 

subsidize gross obligations for the principal amount of 

direct loans not to exceed [$16,000,000] $3,000,000. 

2C – Legislative Proposals 

The CDFI Fund has no legislative proposals for FY 2009. 

CDFI - 6 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 94,000 28,620 -69.6%

Total $94,000 $28,620 -69.6%

3A – Community Development Financial Institutions Program ($24,417,000 from 

direct appropriations): The CDFI Program enables the Fund to carry out its mission of 

expanding the capacity of financial institutions to provide credit, capital and financial 

services to underserved populations and communities in the United States. The CDFI 

Program also addresses Treasury’s strategic objective to increase economic growth and 

create jobs. The program is comprised of three components: Financial Assistance, 

Technical Assistance, and Training. 

• Financial Assistance (FA) awards are only provided to entities that have been 

certified by the Fund as meeting the statutory criteria to be a CDFI. Because of the 

wide range of institution types that can be certified as CDFIs, the FA application 

process contains a degree of complexity not shared by other Fund award programs. 

Each applicant must describe and demonstrate its financial health, management 

capacity, and ability, based on historic and future projected activity, to deliver a 

product or service that will increase access to capital, credit and quality financial 

services in underserved communities. For every $1 in FA awards, awardees are able 

to raise an additional $19, so the approximately $11 million in FY 2009 FA awards 

should result in an additional $209 million raised and deployed into low income

communities. 

• Technical Assistance (TA) grants serve to secure a sound foundation for developing 

CDFIs and can be used for training, technology and other one-time costs generally 

related to start-up or major growth phases of a CDFI. 

• Training programs are designed to support identified areas of skills improvement 

for CDFIs and other members of the financial service industry. The program supports 

Treasury’s objective to increase economic growth and create jobs by providing 

needed education and support for skills development to enable relevant parties to 

deliver or utilize financial services. 

CDFI - 7 
In addition to the above, the Fund is actively engaged in developing strategies to share as 

much data as possible with the public to increase the ability of CDFIs and CDEs to 

address the financing needs of low income communities. In FY 2007 the Fund released 

its first aggregated data sets, making available data pertaining to CDFIs for FY 2003, 

2004 and 2005. The Fund also engages in studies, evaluations, and research designed to 

complement the Fund’s programs, measure the impact on low income communities and 

low income persons and increase the level of knowledge and understanding of successful 

business strategies necessary to meet the financing needs of low income communities. 

Other Resources: Other resources of funds in FY 2009 total $3,402,000 which are 

available for use by the CDFI Program, as follows (amounts in thousands): 

• Unobligated Balances - $500,000 

Consists of amounts appropriated for FY 2008 not obligated by the end of that fiscal 

year. The Fund’s appropriations are available for use over a two-year period. 

• Offsetting Collections - $500,000 

Consists of current year investment income as well as the proceeds from the 

redemption of investments during the year, available for new awards. 

• Recoveries - $2,000,000 

Consists of awards obligated during FY 2008 which were subsequently deobligated, 

and so are available for obligation in FY 2009. 

• Available multi-year / no-year funds - $402,000 

Consists of offsetting collections from prior years available for new awards. 

3.2.1 – Community Development Financial Institutions Program Budget and 

Performance Plan 

Community Development Financial 

Institutions Program Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $24,595 $30,268 $31,847 $58,480 $24,417

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $24,595 $30,268 $31,847 $58,480 $24,417

Budget Activity Total $24,595 $30,268 $31,847 $58,480 $24,417

Community Development Financial 

Institutions Program Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008* FY 2009*

Actual Actual Actual Target Target

FTE - Number of full-time equivalent jobs

created or maintained in underserved 

communities by businesses financed by CDFI 

Program Awardees (Oe) 

 23,656 22,329 35,022 TBD TBD

Administrative costs per Financial Assistance 

(FA) application processed (E) 

$ 5,130 $ 8,710 $7,180 TBD TBD

Private Dollars - Dollars of private and nonCDFI Fund investments that CDFIs are able to

leverage because of their CDFI Fund Financial 

Assistance. ( in millions) (Oe) 

$ 1,800 $ 1,400 $ 778 TBD TBD

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

* Targets for performance measures in 2008 and 2009 will be established in early 2008. 

CDFI - 8 
Description of Performance: In FY 2007, the Fund made $23.9 million in CDFI Program

awards to CDFIs that primarily serve rural and urban low-income communities. 

In FY 2007, the Fund leveraged $778 million in private and non-CDFI Program dollars, 

which was slightly less than the target of $861 million. The shortfall was due to two 

reasons: 1) in FY 2007 there was a decrease in the amount of FA disbursements 

compared to that which was projected; and 2) the calculated leverage ratio decreased 

from $27:1, to $19:1. The leverage ratio will change over time simply because the size 

and composition of the group of CDFIs that provides leverage information changes every 

year. Different CDFIs have varying ability to raise equity and borrow against that 

equity, and will invest in widely different projects. 

In FY 2007, the Fund created or maintained 35,022 full-time equivalent jobs in 

underserved communities, a slight improvement over its goal of 34,009 jobs. 

3B – New Markets Tax Credit Program ($4,203,000 from direct appropriations): The 

NMTC Program spurs investment of private capital into a range of privately managed 

investment vehicles called Community Development Entities (CDEs). CDEs apply for 

allocations of NMTCs through annual, competitive allocation rounds. A CDE receiving

an allocation of tax credits is authorized to provide such credits to private sector investors 

in exchange for equity investments (Qualified Equity Investments, or QEIs) in the CDEs. 

The CDE then uses the proceeds from these equity investments to make loans and equity 

investments in New Markets businesses located in and serving economically distressed 

communities. An investor in the CDE receives tax credits against its Federal income

taxes for making the QEI. The tax credits provided to an investor total 39 percent of the 

cost of the investment and can be claimed over a seven-year credit allowance period. A 

total of $19.5 billion in investor capital will be raised under the NMTC Program. Five 

funding rounds have been completed corresponding to tax credit allocations supporting 

$16.0 billion in private sector capital, with the CY 2008 funding round remaining, which 

will provide allocations of tax credits supporting $3.5 billion in investor capital. 

The FY 2009 budget request will fund the costs required to administer the NMTC 

program. Because it is a tax credit program, there is no program funding requested in this 

account. 

3.2.2 – New Markets Tax Credit Program Budget and Performance Plan 

New Markets Tax Credit Program Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $11,926 $3,936 $3,704 $4,120 $4,203

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $11,926 $3,936 $3,704 $4,120 $4,203

Budget Activity Total $11,926 $3,936 $3,704 $4,120 $4,203

CDFI - 9 
New Markets Tax Credit Program Budget 

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Administrative costs per number of New

Markets Tax Credit (NMTC) applications 

processed ($) (E) 

$ 5,390 $ 4,360 $5,320 $ 4,875 $ 4,875

Private Equity - Amount of investments in

low-income communities that Community

Development Entitites (CDEs) have made

with capital raised through their New Markets

Tax Credit (NMTC) tax credit allocations ($

in billions)(Oe) 

$ 1.1 $ 2 $ 2.5 $ 2.5 $ 2.5

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

Description of Performance: In FY 2007, the Fund made $3.9 billion in tax credit 

allocations, providing recipients the potential ability to raise this amount of capital to 

invest in low-income communities. For FY 2008, a total of $3.5 billion in tax credit 

authority is available (allocations are made later in the year). The Fund works closely 

with the IRS to implement this program. 

As reported in FY 2007 (applicable to awards made during FY 2006), Community 

Development Entities (CDEs) exceeded the anticipated $2.1 billion in Qualified LowIncome Community Investments (QLICIs), by closing $2.5 billion in QLICIs. The Fund 

will continue to analyze the increasing rate that allocatees raise equity and make qualified 

investments, and use this analysis to set appropriate targets going forward. 

Also as reported in FY 2007 (applicable to FY 2006), the NMTC Program created or 

maintained 98,530 jobs. Of this amount, 90,385 jobs pertained to real-estate development 

/rehabilitation projects (i.e. categorized as “construction”) and 8,145 jobs were associated 

to non real-estate projects (i.e. categorized as “business-support”). There is no target 

against which this number can be measured, as there is no reliable process to project the 

number of jobs created or maintained for the NMTC Programs. 

3C – Bank Enterprise Award (No funding): The FY 2009 budget does not request 

funding for the Bank Enterprise Award (BEA) Program. Through the BEA Program, the 

CDFI Fund provides monetary awards to FDIC insured depository institutions as 

incentives to increase their lending and investments in economically distressed 

communities. Funding is not being requested for FY 2009 primarily because the 

program’s structure requires that awards be made on the basis of past activity. 

The Fund will undertake changes to the BEA Program in the FY 2009 funding round, 

should the program be funded in future years. These modifications will require that BEA 

awards be used for future activities that are eligible for award under the BEA Program. 

This change will better align the use of BEA awards with the Program’s goals and 

objectives. The current program has no such requirement. The steps to affect effect this 

change will include amendments to the BEA regulations, application, assistance 

agreement, and the creation of a compliance and monitoring system that does not 

currently exist for this Program. 

CDFI - 10 
3.2.3 – Bank Enterprise Award Budget and Performance Plan 

Bank Enterprise Award Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $9,782 $13,286 $12,469 $21,400 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $9,782 $13,286 $12,469 $21,400 $0

Budget Activity Total $9,782 $13,286 $12,469 $21,400 $0

3D – Native Initiatives (No funding): The FY 2009 budget does not request funding for 

Native Initiatives. No separate authorization exists for Native Initiatives so no separate 

set aside is being requested in FY 2009. Native Initiatives is a funding program that is 

targeted to increasing the number and capacity of existing or new CDFIs serving Native 

American Communities (Native American CDFIs), and includes complementary 

capacity-building initiatives that seek to foster the development of Native American 

CDFIs through training and technical assistance. 

3.2.4 – Native Initiatives Budget and Performance Plan 

Native Initiatives Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $1,704 $5,416 $5,500 $10,000 $0

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $1,704 $5,416 $5,500 $10,000 $0

Budget Activity Total $1,704 $5,416 $5,500 $10,000 $0

Native Initiatives Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008* FY 2009

Actual Actual Actual Target Target

Administrative costs per number of Native

American CDFI Assistance (NACA) 

applications processed ($)(E)

$ 10,050 $ 8,130 $13,510 TBD N/A

Total Assets - Annual percentage increase in

the total assets of Native CDFIs (%) (Oe) 

 103.00% 182.00% 19.00% TBD N/A

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

* Targets for performance measures in 2008 will be established in early 2008. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

CDFI - 11 
CDFI - 12 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Over the past several years the Fund has experienced a large number of staff vacancies; 

however, in FY 2007 the Fund was successful in filling many of them. The staff 

vacancies were due partly to the two Strengthening America’s Communities initiatives 

(SACI) proposed by the administration as part of the FY 2006 and FY 2007 President’s 

Budgets. Under these initiatives, a number of Federal community development 

programs, including those administered by the Fund, were to be consolidated within a 

single federal agency. In anticipation of implementing these initiatives, the Fund began 

downsizing its workforce. 

 

As a result of funding levels provided in FY 2007 and FY 2008, the Fund began 

backfilling its vacant positions in FY 2007. As a result, the Fund projects a total of 

75 FTE positions in FY 2009. Since most of these positions were being filled throughout 

FY 2007 and early FY 2008, FY 2008 will be the first year in which most of this 

increased FTE level will be reflected. With elimination of funding for the Bank 

Enterprise Award (BEA) Program and Native Initiatives in FY 2009, FTEs which 

administered those programs will be transferred to different responsibilities associated 

with the CDFI Program. 
CDFI - 13 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments

FY 2006 FY 2007 FY 2008 FY 2009

Major IT Investments / Funding Source Budget Activity

& Earlier

Enacted 1/ Enacted Enacted Requested 

NoneSubtotal, Major IT Investments $0 $0 $0 N/A $0 NACommunity Investment Impact System (CIIS)

Community Development Financial Institutions and New Markets Tax Credit Programs

$670 $0 $414 $427

Non-Major IT Investments $670 $0 $414 -100.0% $427 3.1%CDFI Infrastructure (Telecommunications) Community Development Financial 

Institutions, Bank EnterpriseAwards, Native Initiatives and New Markets Tax Credit Programs

$200 $150 $0 $0

CDFI Infrastructure (Office Automation) Community Development Financial 

Institutions, Bank EnterpriseAwards, Native Initiatives and New Markets Tax Credit Programs

$2,690 $750 $1,966 $2,179

CDFI Infrastructure(IT Security)

Community Development Financial Institutions, Bank EnterpriseAwards, Native Initiatives and New Markets Tax Credit Programs

$360 $0 $364 $0

CDFI Infrastructure (Infrastructure) Community Development Financial 

Institutions, Bank EnterpriseAwards, Native Initiatives and New Markets Tax Credit Programs

$190 $100 $335 $335

Infrastructure Investments $3,440 $1,000 $2,665 -70.9% $2,514 -5.7%NoneEnterprise Architecture $0 $0 $0 N/A $0 NATotal IT Investments $4,110 $1,000 $3,079 -75.7% $2,941 -4.5%1/ This chart reflects appropriated resources only and may not reflect total project costs.2/ this column reflects appropriated resources provided to a project in FY 2006 and any previous years.

% Change from 

FY07 to FY08

% Change 

from FY08 to 

FY09
4B – Information Technology Strategy 

The Fund does not have any Major IT investments (using Department of the Treasury and 

OMB Circular A-11 guidelines for defining Major IT investments) and, as such, is not 

required to submit an OMB Exhibit 300. The Fund does, however, have a Chief 

Information Officer (CIO) Operating Plan which is administered by the CIO and ensures 

all decision making is integrated into the organizations planning, operations and 

budgeting processes. The operating plan utilizes existing processes and structures such 

as the Director's Operations Committee and the Budget Advisory Committee to ensure 

that the Fund's IT investments are tied to the organization's strategic plan, support the 

agency's mission and remain strictly within the approved budget. 

The Fund's CIO is also responsible for ensuring that the agency's IT strategic goals 

conform to required legislation as well as Treasury and Presidential goals, such as the 

Federal Information Security Management Act (FISMA), the E-Gov Act, the Privacy 

Act, the President’s Management Agenda, Grants.gov and the Grants Management Line 

of Business. This information, as well as budget and project management information for 

the Capital Planning and Investment Control process, are coordinated with the Treasury 

CIO office as part of the overall Treasury IT management process. 

CDFI - 14 
4.2 – PART Evaluation Table 

PART Name: CDFI Fund: Finance and Technical Assistance

Year PARTed: FY 2004

Rating: Adequate

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. The Fund has built the IT system needed to set a target for the second long-term measure.

5. A contract to evaluate the program was awarded in FY 2005 and is currently underway.

4. Make disaggregated program performance data available to the public.

2. Set a target and timeframe for the second long-term measure.

3. Establish a baseline for the efficiency measure, set a target, and measure progress in achieving this

target.

PART Evaluation

1. The CDFI Program is not unique because several states administer similar programs and CDFIs can use 

private sector equity investment to accomplish activities they otherwise would accomplish with CDFI Fund 

awards.

3. The Fund conducted the analysis needed, set the baseline for the efficiency measure and began

measuring progress in FY 2006.

4. The Fund made disaggregated data available to the public in January 2005 and will continue to do so

annually.

5. Conduct an independent evaluation of the program.

1. The Fund is not taking any action related to the duplication/redundancy finding because:

a. Fewer than 10 states administer CDFI programs and none of these state programs fully meets the

capital needs of the CDFIs in its state. Furthermore, CDFIs in 40 states do not have access to any state 

CDFI program.

b. There are too few private sector equity investments available to meet CDFIs' needs for capital.

CDFI - 15 
PART Name: New Markets Tax Credit (NMTC)

Year PARTed: FY 2004

Rating: Adequate

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

PART Evaluation

1. The program is not unique because other federal, state and local tax credit programs are available and 

because numerous programs at HUD (CDBG) and Commerce (EDA) augment the NMTC Program goal of

improving low-income communities.

2. Set targets for the annual performance measures and measure performance in achieving them.

3. The Fund conducted the analysis needed, set the baseline for the efficiency measure and began

measuring progress in FY 2006.

4. In FY 2005 the Fund issued an RFP for an independent evaluation of the program and the multi-year

evaluation began in the last quarter of FY 2006.

3. Establish a baseline for the efficiency measure, set a target, and measure progress in achieving this

target.

4. Conduct an independent evaluation of the program.

1. The Fund is not taking any action on the duplicative/redundancy finding because, in the Fund's opinion,

the other available programs complement rather than duplicate the NMTC Program.

2. NMTC Program allocatees submitted data in June 2005 that the Fund needed in order to set performance

measure targets. The Fund set targets and began measuring its achievements in FY 2005.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

CDFI - 16 
Financial Crimes Enforcement Network 

Mission Statement 

To enhance U.S. national security, deter and detect criminal activity, and safeguard 

financial systems from abuse by promoting transparency in the U.S. and international 

financial systems. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

BSA Administration and Analysis $64,780 $76,889 $82,157 $5,268 6.85%

Regulatory Support Programs 8,436 8,955 9,178 223 2.49%

Total Appropriated Resources $73,216 $85,844 $91,335 $5,491 6.40%

Total FTE 326 334 343 9 2.69%

FY 2009 Priorities 

• Improve regulatory effectiveness by ensuring consistent application of Bank Secrecy 

Act (BSA) regulations through implementation of memoranda of understanding 

allowing information sharing between FinCEN and additional state regulators and 

enhanced communication and clarification of regulatory requirements to financial 

industries; 

• Strengthen effectiveness of international anti-money laundering and counter-terrorist 

financing efforts and combat foreign threats by improving analytical products and 

responsiveness to foreign government counterparts; and 

• Ensure the safety and security of FinCEN’s employees and property through the 

implementation of additional physical security measures. 
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language................................... 6

2.1 – Budget Adjustments Table..................................................................................... 6 

2A – Budget Increases and Decreases Description ........................................................ 6 

2.2 – Operating Levels Table.......................................................................................... 9 

2.3 – Appropriations Detail Table ................................................................................ 10 

2B – Appropriations Language and Explanation of Changes....................................... 10 

2C – Legislative Proposals ........................................................................................... 10 

Section 3 – Budget and Performance Plan ................................................................... 11

3.1 – Budget by Strategic Outcome .............................................................................. 11 

3A – BSA Administration and Analysis...................................................................... 12 

3.2.1 – BSA Administration and Analysis Budget and Performance Plan.................. 12 

3B – Regulatory Support Programs.............................................................................. 15 

3.2.2 – Regulatory Support Programs Budget and Performance Plan.......................... 15 

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

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

4.1 – Summary of IT Resources Table ......................................................................... 20 

4B – Information Technology Strategy ........................................................................ 21 

4.2 – PART Evaluation Table....................................................................................... 23 
 Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Financial Crimes Enforcement Network (FinCEN), a bureau within Treasury’s 

Office of Terrorism and Financial Intelligence, ensures safer and more transparent U.S.

and international financial systems through the administration of the Bank Secrecy Act 

(BSA), in support of the Department of the Treasury’s strategic goal “Prevented 

Terrorism and Promoted the Nation’s Security through Strengthened International 

Financial Systems.” 

The BSA requires financial institutions to file reports on certain types of financial activity 

and to establish appropriate internal controls to guard against money laundering, terrorist 

financing, and other types of illicit finance. These reports have a high degree of 

usefulness in criminal, tax, and regulatory matters as well as counter-terrorist financing. 

The documents filed by businesses pursuant to the BSA requirements are heavily used by 

law enforcement agencies, both domestically and through exchanges with international 

counterparts to identify, detect and deter money laundering whether it is in furtherance of 

a criminal enterprise, terrorism, tax evasion or other unlawful activity. FinCEN also 

serves as the nation’s financial intelligence unit (FIU). An FIU serves as a national 

center set up to collect, analyze, disseminate, and exchange information pursuant to a 

country’s anti-money laundering/counter-terrorist financing legislation and regulations. 

This includes information about suspicious or unusual financial activity reported by the 

finanical sector. 

FinCEN is in the process of updating its strategic plan for FY 2008 – FY 2012 to align 

with the new Treasury Department strategic plan. The bureau’s priorities are linked to 

the following strategic goals proposed in the revised plan: 

• Financial systems resistant to abuse by money launderers, terrorists and their 

financial supporters, and other perpetrators of financial crime; 

• Detection and deterrence of money laundering, terrorist financing, and other illicit 

activity; and

• Enhanced management, use, and security of BSA information. 

The total resources required to support FinCEN for FY 2009 are $96,586,000 including 

$91,335,000 for direct appropriation and $5,251,000 from offsetting collections. 

1B – Program History and Future Outlook 

FinCEN fulfills its mission, goals and priorities by: administering the BSA; supporting 

law enforcement, regulatory, and intelligence agencies through sharing and analysis of 

financial intelligence; enhancing international anti-money laundering and counterterrorist financing efforts and cooperation; and networking people, entities, ideas, and 

information. 

FinCEN’s regulatory policy efforts focus on efficient and effective administration of the 

BSA. This includes improving consistency in the application of BSA regulations to the 

FinCEN - 1 
regulated financial institutions and providing feedback enabling greater clarity regarding 

regulatory expectations and optimized understanding of the value of their contributions. 

FinCEN’s regulatory policy protects the financial system and enhances national security 

by making relevant data available to law enforcement authorities and the regulatory 

agencies that examine for BSA compliance, and maximizes the effectiveness and 

efficient use of government resources. 

Specific FY 2007 accomplishments in the regulatory area include: 

• Published the following final and amended BSA regulations: Amendment to the Bank 

Secrecy Act Regulations-Imposition of Special Measure Against Banco Delta Asia, 

Including Its Subsidiaries Delta Asia Credit Limited and Delta Insurance Limited, as a 

Financial Institution of Primary Money Laundering Concern (March 2007); 

Amendments to the Bank Secrecy Act Regulations Regarding Casino Recordkeeping 

and Reporting Requirements (June 2007); Anti-Money Laundering Programs-Special 

Due Diligence Programs for Certain Foreign Accounts (August 2007); 

• Published additional BSA guidance to financial institutions to improve consistency in 

the interpretation and application of BSA regulations, and reduce misperception of 

excessive regulatory expectations. Specific guidance included: Guidance (Frequently 

Asked Questions) – Suspicious Activity Reporting Requirements for Mutual Funds 

(October 2006); Advisory – Potential Money Laundering Risks related to Shell 

Companies (November 2006); Guidance (Frequently Asked Questions) – Customer 

Identification Programs and Banks Serving as Insurance Agents (December 2006); 

Guidance – Application of the Customer Identification Program Rule to Future 

Commission Merchants Operating as Executing and Clearing Brokers in Give-Up 

Arrangements (April 2007); Guidance – Requests by Law Enforcement for Financial 

Institutions to Maintain Accounts (June 2007); Guidance – Suspicious Activity Report 

Supporting Documentation (June 2007); 

• Delivered complex analytical studies targeted to regulatory authorities from each of 

the 43 state regulators with which FinCEN has entered into a memoranda of 

understanding to exchange information; 

• Developed and provided reports on mortgage loan fraud, money laundering through 

the commercial real estate sector, and shell companies to assist in the promulgation of 

guidance to financial institutions and regulatory examiners about vulnerabilities and 

associated compliance obligations; 

• Participated as a speaker/panelist in 99 domestic and overseas outreach events; 

• Enhanced outreach activities to the money services business (MSB) industry by using 

information from law enforcement partners that encounter potential unregistered 

MSBs to focus FinCEN’s education initiatives; 

• Translated MSB brochures into seven languages; 

• Developed a strategy in conjunction with the Internal Revenue Service (IRS) to focus 

resources for ensuring BSA compliance by non-bank financial institutions; 

• Implemented an action plan to address concerns among domestic and international 

policymakers, law enforcement, and financial institutions about the misuse of various 

types of business entities (e.g., corporations, limited liability companies, limited 

partnerships, trusts, etc.) to facilitate money laundering and other financial crimes; 

FinCEN - 2 
• Assessed civil money penalties against financial institutions for willful violations of

BSA requirements, including through joint or concurrent actions with federal and state 

agencies; and 

• Contributed to the revisions of the Federal Financial Institutions Examination Council 

(FFIEC) BSA/AML examination manual, which helps ensure consistent application 

by federal and state supervisors of their regulatory authority. 

In FY 2008/2009, FinCEN will expand regulatory policy efforts to include: 

• Implementing additional information sharing agreements with federal and state 

regulators, with a focus on insurance commissioners; 

• Identifying compliance trends and patterns across industries subject to the BSA and 

publishing, as appropriate, studies promoting greater awareness of emerging money 

laundering trends and vulnerabilities; 

• Continuing efforts to overhaul BSA regulations for inclusion in a new Code of Federal 

Regulations chapter to provide greater clarity in regulations and make them easier for 

industry to follow, as well as more intuitive and responsive to industry feedback; 

• Publishing final and amended BSA regulations for the anti-money laundering program

rule for dealers in precious metals, precious stones, or jewels; 

• Continuing efforts to implement and refine strategies with regard to the MSB industry, 

including partnerships to identify unregistered MSBs, consider options to simplify and 

clarify the regulatory framework, and continue to enhance outreach activities 

concerning this industry; 

• Continuing efforts, in conjunction with the federal banking agencies, to match riskbased examination for BSA compliance with actual risks posed by products and 

services offered, and customers and geographic locations served by depository 

institutions; 

• Undertaking enforcement actions against financial institutions, as necessary, for 

willful violations of BSA requirements, including joint or concurrent actions with 

federal and state agencies; 

• Reducing any undue perception of excessive regulatory responsibilities by providing 

clarification to regulated industries regarding their programmatic, recordkeeping, and 

reporting requirements under the BSA; 

• Increasing efforts to provide regulatory partners with analytical products and 

information to identify institutions with potential compliance problems, thereby 

promoting enhanced consistency across examinations; 

• Reducing the time to coordinate and complete compliance reviews with regulatory 

examination authorities, while promoting speedy remediation by industry of identified 

deficiencies; and 

• Streamlining regulatory requirements and other modifications relating to MSBs, 

subsequent to a review of the existing regulatory framework and current issues. 

FinCEN’s analytic efforts focus on developing products and services that help law 

enforcement better utilize resources to enhance detection and deterrence of domestic and 

international money laundering, terrorist financing, and other illicit activity. This 

includes exchange of information with counterpart foreign government FIUs in over 100 

countries that are members of the Egmont Group. 

FinCEN - 3 
Specific FY 2007 accomplishments related to analytic efforts include: 

• Enhanced support to law enforcement agencies by focusing on actionable analyses 

targeted at high-priority money laundering and terrorist financing targets; 

• Collaborated on analytical projects with key federal law enforcement customers, such 

as the FBI’s Terrorist Financing Operations Section, the Drug Enforcement 

Administration, Customs and Border Protection’s Tactical Analysis Group, 

Immigration and Customs Enforcement’s Financial and Trade Division, and other 

analytical agencies like the National Drug Intelligence Center; 

• Published a technical reference guide for law enforcement officials on MSBs to 

describe traditional types of remittances and services, as well as emerging services 

such as online payments and prepaid card services; 

• Collaborated with other FIUs in the Egmont Group to improve understanding of how 

emerging payments methods, such as internet-based payment methods, might be 

exploited for illicit activity; 

• Completed collaborative efforts with other FIUs, law enforcement agencies, and the 

intelligence community to take full advantage of financial intelligence sources and 

resources; 

• Worked with Egmont Group partners to develop actionable intelligence concerning 

illicit money flows across the northern and southwestern borders of the U.S.; 

• Provided greater and more sustained technical assistance and training to Egmont 

Group candidates under FinCEN’s sponsorship and to Egmont members whose 

organizational capabilities have been strained by growing needs to collect and analyze 

financial intelligence and building the information technology infrastructure for these 

activities; and 

• Supported the establishment of a permanent Egmont Group Secretariat with the 

appointment of the Executive Secretary and opening of a permanent office in Toronto 

July 3, 2007. 

In FY 2008/2009, FinCEN will continue to develop analytic products and services that 

enhance detection and deterrence of illicit activity. These efforts include: 

• Continuing the proactive evaluation, analysis and referral of potential terrorism and 

financial crimes related SARs to the law enforcement and intelligence communities; 

• Expanding capabilities and methodologies for geographic and industry threat 

assessments and for financial analysis; 

• Enhancing the focus on transnational financial crimes, to include cross-border money 

flows, the South Florida region, and an annual threat/targeting assessment of the 

Southwest Border; 

• Expanding the complexity of FinCEN products to better meet the needs of the 

bureau’s international partners, and increasing U.S. law enforcement use of the 

Egmont FIU process to combat money laundering and terrorist financing; 

• Continuing outreach to U.S. law enforcement and regulatory agencies to educate them 

on the benefits provided by the global network of FIUs in terms of investigative and 

intelligence resources and information sharing;

• Increasing the number of analyst exchanges with partner FIUs, and expanding 

customized technical assistance and training provided to meet the needs of specific 

FIUs in vulnerable international geographic areas; and 

FinCEN - 4 
• Continuing to publish technical reference manuals for law enforcement officials 

describing investigational approaches to payment systems. 

FinCEN’s efforts related to the management, use, and security of BSA information focus 

on maximizing utilization by improving the overall information infrastructure and 

enhancing information technology management capabilities. 

Specific FY 2007 accomplishments related to the management, use, and security of BSA 

information include: 

• Expanded access to BSA information to enable authorized law enforcement and 

regulatory users to quickly and efficiently query the data when needed; 

• Conducted a feasibility analysis with the financial services industry and law 

enforcement to determine the benefits and costs to all affected parties as a part of a 

Congressionally mandated study of the feasibility of implementing a cross-border 

electronic funds transfer reporting requirement; 

• Established a formal Data Issue Management process and framework and Data 

Management Council, including representatives from FinCEN and the IRS, to address 

BSA data quality issues in a consistent and repeatable fashion; 

• Maintained the focus on promoting electronic filing of BSA reports as a way to 

enhance speed, economy, and data quality; 

• Deployed disaster recovery capability for the BSA E-Filing system to ensure 

continuity of system operations for stakeholders in the event of a major outage; 

• Launched FinCEN’s first enterprise-wide business transformation and IT

modernization program, based on an effective collaboration of BSA stakeholders and 

a rigorous program management framework; and 

• Established a new Program Management Office (PMO), which will create a 

disciplined environment in which proven project management principles, tools, and 

techniques will be consistently applied across the bureau’s major information 

technology initiatives to identify, manage, and mitigate risks. 

In FY 2008/2009, FinCEN will accelerate efforts related to the management, use, and 

security of BSA information to include: 

• Continuing deployment of a disaster recovery capability for critical systems to 

minimize or eliminate system downtime in the event of the loss of access or system

use at FinCEN’s primary location; 

• Pending final approval by the Secretary of the Treasury, beginning development of the 

technological systems required to receive, securely store, analyze and disseminate 

cross-border wire transfer data; 

• Enhancing project management capabilities and oversight of information technology 

projects by expanding Capital Investment Planning, Enterprise Architecture, 

Configuration Management, and Change Management controls; 

• Beginning to upgrade various technology components to meet the expanded user 

population, and increase electronic filing alternatives; and 

• Continuing planning efforts and establishing the foundation for future BSA data 

management and quality activities. 

FinCEN - 5 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 334 $85,844

Maintaining Current Levels (MCLs):

 Pay Annualization 300

 Pay Inflation Adjustment 861

 Non-Pay Inflation Adjustment 981

Initiative Annualization:

 Annualization of Project Management Initiative 6 1,337

Transfers In:

 Transfer from IRS for BSA E-Filing 1,000

Total FY 2009 Base 340 $90,323

Program Decreases:

 Reprioritization of Resources (4) (697)

 Information Technology Funding Realignment (3,449)

Program Reinvestment:

 BSA Data Management and Analysis 2,897

Program Increases:

 Improve BSA Effectiveness/Consistency 5 1,139

 Strengthen Global Anti-Money Laundering Efforts 2 865

 Increase Physical Security 257

Subtotal FY 2009 Program Changes 3 1,012

Total FY 2009 President's Budget Request 343 $91,335

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ...........................................+$2,142,000 / +0 FTE 

Pay Annualization +$300,000 / +0 FTE 

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

Pay Inflation Adjustment +$861,000 / +0 FTE 

Funds are requested for the proposed January 2009 pay raise. 

Non-Pay Inflation Adjustment +$981,000 / +0 FTE 

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

equipment, and GSA rent adjustments. 

Initiative Annualization .................................................................+$1,337,000 / +6 FTE 

Annualization of Project Management Initiative +$1,337,000 / +6 FTE 

These funds will allow FinCEN to complete implementation of the Project Management 

Office (PMO) approved in FY 2008. This annualization provides the remaining funding 

for OMB, Treasury and GAO recognized requirements to improve FinCEN's project 

management capability for both information technology and non-information technology 

projects, which are especially critical at this time of modernization of FinCEN's core IT 

systems and functions. 

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

Transfer from IRS for BSA E-Filing +$1,000,000 / +0 FTE 

FinCEN - 6 
The IRS annually reimburses FinCEN for the cost associated with operations and 

maintenance contract supporting the Bank Secrecy Act (BSA) e-filing system which is 

administered and controlled by FinCEN. This transfer will provide FinCEN with the 

base funding it needs to continue supporting its BSA e-filing system. 

Program Decreases ..........................................................................-$4,146,000 / -4 FTE 

Reprioritization of Resources -$697,000 / -4 FTE 

Base reductions were identified as the result of business process efficiencies from

consolidation of administrative responsibilities and reductions in the number of 

commercial, financial, and law enforcement database queries due to the automation of the 

commercial database and networking functions. 

Information Technology Funding Realignment -$3,449,000 / +0 FTE 

This program decrease realigns funding from the terminated BSA Direct Retrieval and 

Sharing project. 

Program Reinvestment ..................................................................+$2,897,000 / +0 FTE 

BSA Data Management and Analysis +$2,897,000 / +0 FTE 

BSA Data Management and Analysis encompasses the data management and quality 

activities of FinCEN, including the original objectives from the BSA Direct retrieval and 

sharing (R&S) program. Investments in information technology are at the core of 

FinCEN's national security mission to make BSA information available for hundreds of 

government agencies and international partners to fight terrorism and money laundering. 

With this reinvestment, FinCEN will focus resources to improve BSA data quality and 

integrity, resulting in expanded utilization of the BSA information. 

Program Increases .........................................................................+$2,261,000 / +7 FTE 

Improve BSA Effectiveness/Consistency +$1,139,000 / +5 FTE 

Effective administration of the Bank Secrecy Act (BSA) requires timely exchange of 

information, consistent BSA application, and tailored outreach to assist regulated 

industries to better target their limited resources. The initiative aims to realize 

efficiencies for all entities subject to the regulatory framework. Greater efficiency will 

reduce regulatory burden on the financial industry, while at the same time enhancing 

effectiveness in providing law enforcement and regulators with information needed to

combat the financing of terrorism and money laundering. Proposed funding will enable 

FinCEN to better align regulatory requirements with global risk management strategies 

developed by the largest global conglomerates, while also reducing risk-based obligations 

on some of the smallest institutions. A significant part of this effort will be to avoid 

potential anti-competitive effects through enhanced consistency of application across 

different sectors of the financial industry. Some sectors subject to the USA PATRIOT 

Act mandate, such as the insurance sector, have yet to be fully brought under the BSA 

administration and compliance framework. FinCEN must devote additional resources to 

clarifying regulatory requirements to financial industries and leveraging partner 

regulatory agencies, including the federal banking agencies, SEC, CFTC, IRS and 

various regulators in 50 states covering the banking, securities, insurance, money services 

business, and gaming industries. Requested funding will enable FinCEN to tailor present 

FinCEN - 7 
and future requirements, expand outreach efforts, and execute information sharing 

agreements with and provide related support to additional state regulatory authorities. 

Overall, funding will enable FinCEN to increase coordination of regulatory agencies

from 40 to 62 percent of those with jurisdiction over industries covered under the BSA, 

while at the same time easing industry compliance obligations by reducing public 

reporting and recordkeeping obligation time. 

Strengthen Global Anti-Money Laundering Efforts +$865,000 / +2 FTE 

FinCEN works with FIUs around the world to intensify international anti-money 

laundering collaboration and combat terrorist financing. In recent years, FinCEN, 

together with other U.S. agencies, has invested significant resources in the FIUs to 

strengthen their investigative and analytical capacity to provide greater information on 

money laundering/terrorist financing activities. Additional resources are required to take 

further advantage of the FIUs newly expanded and strengthened capacities, including 

expanded information exchanges to benefit U.S. law enforcement. The Egmont Group 

has grown from 58 foreign FIU members in FY 2001 to an anticipated 106 members by 

FY 2008. As a result, the number of FIU case requests increased 23 percent from FY 

2005 to FY 2007, and continued growth is projected. This increased case load has 

resulted in a backlog that, without additional resources, will reach 666 by FY 2010, and 

has already lengthened the average completion time to 5.5 months, more than five times 

the Egmont Group best practices timeframe. Results from FinCEN's 2006 customer 

satisfaction survey indicated that almost one-third of FIU respondents were dissatisfied 

with the case response time and reflected a desire for FinCEN to conduct more in-depth 

research on case requests. FinCEN estimates that approximately 20 percent of FIU case 

requests can be improved by conducting more advanced analysis. Additional funding 

will allow FinCEN to reduce the FIU case request backlog from 128 in FY 2009 to 4 by 

FY 2011, reduce the average completion time to less than one month, and redirect a 

portion of resources to expand analytical efforts on applicable FIU cases, beginning with 

0 percent in FY 2009 and reaching 20 percent in FY 2011. 

Increase Physical Security +$257,000 / +0 FTE 

FinCEN will utilize FY 2009 funds to enhance its Physical Security Program to mitigate 

vulnerabilities. Currently, FinCEN leases over 240,000 square feet of office space for its 

Virginia headquarters location. Presently 440 federal employees and other personnel 

have access to this office space. A recent review of FinCEN's physical security 

environment by the Federal Protective Service identified security vulnerabilities. This 

funding will allow FinCEN to procure additional security equipment to enhance its 

Physical Security Program in order to mitigate some of those vulnerabilities. 

FinCEN - 8 
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 326 352 334 343

Object Classification:

 11.1 - Full-time permanent 28,773 31,531 0 31,531 33,092

 11.3 - Other than full-time permanent 284 284 0 284 284

 11.5 - Other personnel compensation 526 526 0 526 526

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 7,414 8,433 0 8,433 9,030

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 1,032 1,190 0 1,190 1,216

 22 - Transportation of things 0 0 0 0 0

 23.1 - Rental payments to GSA 4,800 5,117 0 5,117 5,343

 23.2 - Rental payments to others 43 1,328 0 1,328 70

 23.3 - Comm, utilities, and misc charges 996 0 0 0 1,364

 24 - Printing and reproduction 250 400 0 400 450

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 522 1,815 0 1,815 1,815

 25.2 - Other services 9,354 11,758 0 11,758 13,136

 25.3 - Other purchases of goods and services from Govt.

accounts 

9,454 12,706 0 12,706 14,198

 25.4 - Operation and maintenance of facilities 960 960 0 960 960

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 120 145 0 145 153

 25.7 - Operation and maintenance of equip 4,908 4,815 0 4,815 5,003

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

 26 - Supplies and materials 369 409 0 409 444

 31 - Equipment 3,411 4,427 0 4,427 4,251

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $73,216 $85,844 $0 $85,844 $91,335

Budget Activities:

 BSA Administration and Analysis 64,780 76,889 0 76,889 82,157

 Regulatory Support Programs 8,436 8,955 0 8,955 9,178

Total Budget Authority $73,216 $85,844 $0 $85,844 $91,335

FinCEN - 9 
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

BSA Administration and Analysis 302 $61,386 326 $64,780 334 $76,889 343 $82,157 2.69% 6.85%

Regulatory Support Programs 7,924 8,436 8,955 9,178 2.49%

Subtotal New Appropriated Resources 302 $69,310 326 $73,216 334 $85,844 343 $91,335 2.69% 6.40%

Other Resources:

Offsetting Collections - Reimbursable 1,960 2,600 5,251 5,251 0.00%

Available multi-year/no-year funds 5,872 9,418 7,343 2,500 -65.95%

Transfers In/Out 225 225 225 225

Subtotal Other Resources 0 $8,057 0 $12,243 0 $12,819 0 $7,976 -37.78%

Total Resources Available for Obligation 302 $77,367 326 $85,459 334 $98,663 343 $99,311 2.69% 0.66%

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Obligations Enacted Enacted Request to FY 2009

% Change

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

FINANCIAL CRIMES ENFORCEMENT NETWORK 

Federal Funds 

SALARIES AND EXPENSES: 

For necessary expenses of the Financial Crimes 

Enforcement Network, including hire of passenger motor 

vehicles; travel and training expenses of non-Federal and 

foreign government personnel to attend meetings and 

training concerned with domestic and foreign financial 

intelligence activities, law enforcement, and financial 

regulation; not to exceed $14,000 for official reception and 

representation expenses; and for assistance to Federal law 

enforcement agencies, with or without reimbursement, 

[$85,844,000] $91,335,000 of which not to exceed 

$16,340,000 shall remain available until September 30, 

[2010] 2011; and of which [$8,955,000] $9,178,000 shall 

remain available until September 30, [2009] 2010: 

Provided, that funds appropriated in this account may be 

used to procure personal services contracts. 

2C – Legislative Proposals 

FinCEN does not have any legislative proposals for FY 2009. 

FinCEN - 10 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 U.S. & intl financial sys 91,095 96,586 6.0%

Total $91,095 $96,586 6.0%

3A – BSA Administration and Analysis ($82,157,000 from direct appropriations and 

$5,251,000 from reimbursable programs): This activity comprises FinCEN’s efforts to 

administer the BSA, including promulgating regulations, providing outreach and issuing 

guidance to the regulated industries, providing oversight of BSA compliance, initiating 

enforcement actions, and, with the IRS, managing the information filed by the regulated 

industries, as well as analytic activities. Internationally, FinCEN promotes the 

development of anti-money laundering regimes through training and technical assistance. 

Analytical programs include support to U.S. law enforcement and international FIUs in 

combating financial crime by facilitating the exchange of investigative information; 

identifying foreign and domestic money laundering and terrorist financing trends, 

patterns, and techniques; and liaison with and support of intelligence initiatives within the 

intelligence community and within Treasury. This activity also incorporates efforts to 

support large-scale, complex law enforcement investigations involving terrorist 

financing, money laundering, and other financial crimes. 

FinCEN works closely with federal and state regulatory agencies that examine financial 

institutions for BSA compliance to ensure consistency across regulated industries. 

Through these efforts and direct outreach, FinCEN also assists regulated financial 

institutions in establishing risk-based anti-money laundering programs with appropriate 

policies, procedures, and internal controls and maintaining certain records and filing 

reports on certain types of financial activity pursuant to the BSA. As appropriate, 

FinCEN investigates alleged violations by financial institutions, issues letters of caution 

or warning, and seeks injunctions; additionally, when required, FinCEN imposes civil 

monetary penalties for egregious BSA violations, typically in conjunction with partner 

federal and state agencies. 

FinCEN - 11 
In the global arena, FinCEN’s activities include: supporting international initiatives to 

educate other jurisdictions about the BSA regulatory regime; working to establish 

international anti-money laundering/counter-terrorist financing regulatory standards and 

norms; and improving the expertise and capabilities of personnel with anti-money 

laundering/counter-terrorist financing missions. 

FinCEN supports law enforcement agencies, intelligence agencies, and foreign FIUs 

investigating financial crimes by providing specialized and unique analysis of BSA data 

along with information from law enforcement, intelligence, and commercial sources. 

FinCEN’s analysis also supports regulatory and other policy decisions. The analysis 

includes development of threat assessments, industry reports, and technical guides 

describing financial transaction mechanisms. Additionally, FinCEN identifies 

individuals and networks involved in suspicious financial activity, referring that 

information to appropriate law enforcement agencies. 

As administrator of the BSA, FinCEN must ensure the effective management, 

accessibility, dissemination, and use of the highly sensitive confidential information 

collected under the Act. FinCEN provides direct access to BSA information to 

authorized law enforcement, regulatory, and intelligence agencies. FinCEN will continue 

to integrate and modernize the various components of the BSA data collection and 

sharing systems. These efforts include upgrading the BSA E-Filing system to provide a 

more robust collection function, improving the quality of BSA data by preventing the 

omission of critical information, validating the information collected, and upgrading the 

BSA analytical tools used by FinCEN analysts. 

Other Resources: Offsetting collections and reimbursements totaling $5,251,000 are 

collected to support joint activities with other agencies such as the Department of State 

for technical assistance provided to foreign countries and Treasury Forfeiture Fund for 

special projects to support law enforcement. 

3.2.1 – BSA Administration and Analysis Budget and Performance Plan 

BSA Administration and Analysis Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $71,922 $64,458 $64,780 $76,889 $82,157

 Reimbursable Resources $1,195 $4,473 $1,541 $5,251 $5,251

Total Resources $73,117 $68,931 $66,321 $82,140 $87,408

Budget Activity Total $73,117 $68,931 $66,321 $82,140 $87,408

FinCEN - 12 
BSA Administration and Analysis Budget 

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Average time to process enforcement matters 

(in Years) (E) 

 1 1 1 1 1

Percentage of Regulatory Resource Center 

Customers rating the guidance received as 

understandable 

 % 94.00% 91.00% 90.00% 90.00%

Percentage of bank examinations conducted

by the Federal Banking Agencies indicating a 

systemic failure of the anti-money laundering

program rule.

 % % 5.20% 5.20% 5.20%

Percentage of customers finding FinCEN�s 

analytic reports highly valuable. 

 % % 82.00% 79.00% 80.00%

Percentage of customers satisfied with the 

BSA E-Filing (Oe) 

 % 92.00% 94.00% 90.00% 90.00%

Number of federal and state regulatory

agencies with which FinCEN has concluded 

memoranda of understanding/information

sharing agreements. 

 41 48 50 52 59

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

Description of Performance 

In the regulatory area, FinCEN achieved its FY 2007 targets related to increasing 

compliance oversight through establishment of information sharing MOUs with 

regulators and the Regulatory Resource Center customer satisfaction rating. FinCEN also 

established a baseline for a new performance measure relating to industry compliance for 

depository institutions.

FinCEN continues to increase activities to monitor financial institutions examined for 

BSA compliance by state and federal regulators through the establishment of MOUs to 

exchange compliance information with regulators. In FY 2007, FinCEN executed two 

additional such agreements and has met its FY 2007 target of 50. With the resources 

requested in FY 2009, FinCEN can increase the number of compliance MOUs to 59, with 

an ultimate goal of 73 by 2011. These information exchanges help ensure effective 

application of the BSA regulations across all regulated financial service industries by 

providing vital compliance data across all industries subject to BSA regulations. 

FinCEN works closely with its regulatory partners to take enforcement action against 

institutions that systemically and egregiously violate the provisions of the BSA, including 

through imposition of civil money penalties in appropriate matters. Timely enforcement 

action communicates urgency to financial institutions, and is paramount to deterring noncompliance. In FY 2007, FinCEN experienced a slight increase in the average processing 

time, exceeding the 1.0 year average by 21 days, resulting in an average of 1.1 years. 

This was the result of two enforcement cases that closed in the fourth quarter of FY 2007 

after abnormally long periods of time. Each of those enforcement actions was taken on a 

joint/concurrent basis with both the Department of Justice and the respective financial 

supervisor(s), which also had to complete their respective investigations. Moreover, the 

process of coordination with other interested government authorities, which itself is a 

Departmental priority, will often require longer time periods than unilateral actions. As 

such, the time periods of these two cases were outliers, and FinCEN will reconsider in the 

future whether the processing time target is appropriate for joint enforcement actions. 

FinCEN - 13 
FinCEN established an FY 2006 baseline of 94 percent of Regulatory Resource Center 

customers rating regulatory guidance received as understandable, and a target of 

maintaining at least a 90 percent level in FY 2009. In FY 2007, FinCEN met its target 

with 91 percent rating the guidance received as understandable. Providing

understandable guidance to financial institutions is critical to their establishing antimoney laundering programs that comply appropriately with the BSA. 

FinCEN established a baseline for the new performance measure “percentage of bank

examinations conducted by federal banking agencies indicating a systemic anti-money 

laundering program failure” in FY 2007. This measure provides an indicator to FinCEN

of trends in regulatory compliance and examination efforts. FinCEN will continue to

work toward developing additional improved outcome measures to address the impact of

program activities on preventing the misuse of the financial system by those engaged in 

illicit activities. 

In the analytical area, FinCEN supports domestic law enforcement and international FIU 

partners by providing analyses of BSA information, and measures the percentage of 

customers finding FinCEN’s analytic reports highly valuable, as well as progress toward 

achieving the bureau’s long term goal of increasing the percentage of advanced analytical 

products produced by FinCEN analysts. 

In FY 2006, FinCEN revised its value of analytical products measure to more accurately 

target its disparate audiences as well as its different products. The reformulated measure 

more closely ties to how BSA information is used by law enforcement, regulators and 

international partners to identify, investigate, and prevent abuse of the financial system. 

In FY 2007, FinCEN surpassed its target of 78 percent with 82 percent of its customers 

finding the analytic products highly valuable. 

FinCEN has also reevaluated its long term goals for increasing the percentage of 

advanced analytical products and revised the methodology based on the increased support 

provided to foreign FIU counterparts. FinCEN found that continuing to measure the 

percentage of complex analytic products in the manner originally developed will result in 

an apparent decrease in complexity beginning in FY 2007. The reason for this is the 

significant projected increases of FIU cases. Since FIUs are prohibited from receiving 

direct access to BSA information, FinCEN performs the required research and analysis 

on these cases. The significant projected increase in the number of FIU cases, which are 

non-discretionary and non-complex, skews the complexity measure. FinCEN originally 

projected a target of 50 percent in FY 2007 and a sustained rate of 75 percent complexity 

by FY 2008. The goal for FY 2009, with the additional resources requested, is to achieve 

50 percent, with an ultimate long-term goal of 70 percent by 2011. 

In the management, use, and security of BSA information, FinCEN conducted a baseline 

survey of the users of the BSA E-Filing system to determine the overall satisfaction level 

and to identify where improvements are needed. The FY 2007 target was to maintain at 

least a 90 percent satisfaction level. In FY 2007, FinCEN exceeded its target with 94 

percent of respondents being satisfied with the BSA E-Filing system. This measure ties 

FinCEN - 14 
to the FinCEN goal of enhanced management, use, and security of BSA information. 

The information and the technology used to facilitate analysis are at the core of FinCEN’s 

mission to deter and detect criminal activity, and safeguard financial systems from abuse 

by promoting transparency in the U.S. and international financial systems. FinCEN will 

continue to satisfy E-filing customer expected service levels with at least a 90 percent 

satisfaction level in FY 2009. FinCEN developed a survey to further assess customer 

satisfaction by authorized law enforcement, regulatory, and intelligence agencies that 

directly access BSA information. The 2007 survey result of 74 percent establishes the 

baseline for this measure. 

3B – Regulatory Support Programs ($9,178,000 from direct appropriations): This 

activity supports implementation, strengthening and clarification of the programmatic 

(anti-money laundering, Customer Identification Program, and suspicious activity 

reporting), recordkeeping, and reporting requirements of the BSA for financial 

institutions subject to those requirements. FinCEN will continue efforts with the IRS, 

especially related to the money services business (MSB) industry to ensure compliance, 

respond to public inquiries, distribute forms and publications, and support collection and 

maintenance of BSA information. This may include enhancing the capability to correct 

identified data quality issues, enhance electronic filing, potentially explore overall forms 

design, and other related enhancements to the BSA collection and dissemination systems. 

These resources also fund IRS BSA compliance activities for non-bank financial 

institutions, especially related to the money services business industry. 

3.2.2 – Regulatory Support Programs Budget and Performance Plan

Regulatory Support Programs Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $0 $8,436 $8,436 $8,955 $9,178

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $0 $8,436 $8,436 $8,955 $9,178

Budget Activity Total $0 $8,436 $8,436 $8,955 $9,178

Regulatory Support Programs Budget 

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

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

Description of Performance. 

FinCEN achieved the following quantifiable results in FY 2007 and plans to enhance 

these results with the FY 2009 funding requested above: 

• Increased the number of registered MSBs to 38,379 as of December 19, 2007. 

FinCEN plans to maintain or exceed this level by FY 2009; 

• Continue to analyze SARs on a monthly basis for indications of possible unregistered 

MSBs, coordinating with law enforcement and state regulatory agencies on 

FinCEN - 15 
appropriate outreach, and continue efforts to educate MSBs regarding requirements for 

registration by publishing guidance and participating in industry outreach events. 

From September 2002 through August 2007, 4,770 individuals/entities suspected of 

being engaged in unregistered MSB activity have been identified through a review of 

SARs filed by depository institutions; and 

• Continue to investigate methods for measuring the extent of BSA compliance among 

MSBs. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

FinCEN - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

FinCEN’s strategic human capital objective to attract, develop and retain a highperforming diverse workforce includes efforts to improve workforce planning and 

deployment, leadership and knowledge management, establish a results-oriented 

performance culture, promote diversity, recruit and retain a talented workforce, and 

improve accountability. 

The FinCEN FY 2008-2012 Strategic Plan includes areas that require employees with 

enhanced skills. Additionally, the Strategic Plan has a management goal of a properly 

staffed and fully developed organization capable of providing the highest quality public 

service. 

In terms of competitive sourcing, FinCEN submitted its FY 2007 FAIR Act Inventory to 

the Department in April 2007, and continues to rely upon the private sector to perform 

commercial activities, especially in the information technology environment. 

FinCEN recently completed several organizational realignments throughout the bureau to 

more closely align functions and support the mission of the organization. For example, 

FinCEN’s regulatory division has established an office to provide outreach to institutions 

that are subject to the BSA programmatic, recordkeeping, and reporting requirements. 

Additionally, the information technology division is establishing a customer service 

center that provides FinCEN employees with the support to better serve external 

customers. 

FinCEN leaders and managers effectively manage people and sustain a learning 

environment that drives continuous improvement in performance. In FY 2007, FinCEN 

continued its aggressive training strategy for managers and trained the majority of 

managers in executive leadership competencies. In addition, seven employees 

participated in government-sponsored leadership development programs. 

FinCEN estimates that 25 percent of the current workforce will be eligible for retirement 

between now and FY 2011. To confront this management challenge, the bureau is 

emphasizing leadership development activities at all levels. In FY 2007, FinCEN leaders 

participated in a competency assessment that resulted in the development of a bureau 

leadership competency model. That model defines what FinCEN values in its leaders and 

identified the critical competencies required to be successful, and formed the basis for 

FinCEN’s Leadership Development Program. FinCEN will focus initial development 

efforts on three of the eight competencies included in the Leadership Competency Model: 

Managing Change, Communicating Effectively, and Developing Others. Components of 

the Leadership Effectiveness through Active Development (LEAD) program will include 

an annual skills assessment, a minimum of 24 hours of leadership/management training

each year, books and journal articles, and a curriculum for high potentials. In March 

2007, FinCEN initiated a monthly newsletter entitled “SMART” (Stimulate Managers’ 

FinCEN - 17 
Reflective Thinking); this newsletter highlights articles that discuss the latest, most 

innovative thinking on leadership and leadership development. As part of leadership 

development, FinCEN offered “Leadership Skills for Non-Supervisors” training to 40 

employees. 

In order to create a results-oriented, high performing workforce, FinCEN abolished the 

pass/fail performance system in FY 2005 and established a new five-tier performance 

management system. The new performance system requires that each employee be 

placed on performance standards that include three individual commitments linked 

directly to the strategic plan. The new performance system allows managers to 

differentiate performance levels among employees and hold employees accountable for 

meeting specified performance goals and targets. In addition, each employee is also 

placed on an annual Individual Development Plan to identify areas for further growth and 

development. 

Subsequently, FinCEN implemented the Awards and Recognition Program, including the 

Director’s Awards and Recognition Program. In FY 2006, 67.5 percent of the workforce 

was rated above the fully successful level and were appropriately recognized, while 1.3 

percent was rated below fully successful and appropriate remedial actions were taken.

FinCEN completed several efforts to ensure a diverse workforce is maintained. Major 

efforts are listed below: 

• Continued participation in the Treasury Diversity Council and its support group; 

• Maintained a Diversity Advisory Committee; and 

• Continued a mandatory Equal Employment Opportunity (EEO)/Diversity element 

in all supervisory performance plans to address EEO principles, workplace 

conflict, supporting EEO plans and diversity hiring requirements. 

FinCEN is committed to developing defined paths for career progression, mentoring and 

coaching programs to identify and grow talent, and enhancing the skills of existing 

employees. In FY 2007, FinCEN’s Information Technology (IT) Specialists participated 

in the IT Workforce Capability Assessment. Results of that assessment determined the 

specialized skills training for FinCEN’s IT Specialists. FinCEN conducted a skills gap 

assessment for its mission critical Intelligence Research Specialists. Results of that 

assessment will target training needs for the remainder of the fiscal year. FinCEN will 

also complete similar skills gap assessments for its mission critical Regulatory Specialists 

and Law Enforcement Liaison Specialists in FY 2008. In FY 2007, specialized training 

was provided on improving job performance in these occupations. FinCEN’s leadership 

actively encourages employees to take advantage of available training opportunities. 

Additionally, FinCEN took advantage of various hiring authorities and flexibilities within 

the last year. For example, in FY 2007, four students were hired under the Student 

Temporary Employment Program (STEP); 16 in FY 2006, and 10 in FY 2005. In FY 

2007, two students were hired under the Student Career Employment Program (SCEP). 

FinCEN utilized both the Veterans Employment Opportunity Act (VEOA) and the 

Veteran Rehabilitation Act (VRA) by making two appointments over the past two years. 

FinCEN - 18 
FinCEN - 19 

As reported in the Quarterly Hiring Timeline Report over the last four quarters, FinCEN 

averaged 40.25 days, which is under the 45 day hiring timeframe. 

Results from the 2006 Federal Human Capital Survey indicated that 80 percent of 

FinCEN employees know how their work relates to the agency’s goals and priorities and 

76 percent feel that they are held accountable for achieving results. FinCEN continues to 

clearly show distinctions of and consequences in levels of performance. FinCEN is 

following up on some issues from the latest Federal Human Capital Survey to identify 

ways to increase scores by improving employee satisfaction. FinCEN continues to 

review the performance management system to identify areas for improvement. 
FinCEN - 20 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments

Budget Activity

FY 2006 

Enacted

FY 2007 

Enacted

FY 2008

Enacted

FY 2009 

Request

Non-Major IT Investments

BSA Administration and Analysis 10,378 11,424 10.1% 17,273 51.2% 18,108 4.8%

Infrastructure Investments 

BSA Administration and Analysis 8,295 8,474 2.2% 9,711 14.6% 9,800 0.9%

FinCEN EA Investment

BSA Administration and Analysis 100 203 103.0% 237 16.7% 385 62.4%

Total IT Investments

BSA Administration and Analysis 18,773 20,101 7.1% 27,221 35.4% 28,293 3.9%

% Change

from FY06 to 

FY07

% Change 

from FY07 to 

FY08

% Change 

from FY08 to

FY09
4B – Information Technology Strategy 

Information and the technology used to facilitate its analysis are at the core of FinCEN’s 

mission to deter and detect criminal activity, and safeguard financial systems from abuse 

by promoting transparency in the U.S. and international financial systems. However, 

FinCEN is currently facing a critical need to improve the quality and accessibility of its 

data and increase responsiveness to stakeholders by introducing flexible and innovative 

technical solutions. 

In 2006, the number of BSA reports filed rose by 12 percent to approximately 17.6 

million, with more than one million SARs for all covered industries. FinCEN recognizes 

the enormous obligation on one of its critical stakeholders—regulated financial 

institutions. Feedback from financial institutions, obtained through a recent survey on efiling, indicated that FinCEN needs to streamline how it captures information through the 

various forms and simplify means to submit information. 

Based on the growing need to reduce the obligation on the financial institutions while 

increasing the quality and timeliness of the information provided to the bureau’s 

stakeholders, FinCEN has launched an information technology modernization vision and 

transition strategy (IT Modernization V&S). This strategy spans all of the bureau’s lines 

of business and will serve as the organization’s roadmap for aligning its IT portfolio with 

its business objectives and processes. 

Over the last several months, the integrated team dedicated to this initiative has 

documented the current business operating model and future business transformation 

goals and objectives, identified capability gaps, and created an actionable, five-year 

enterprise transition strategy with near-term (0-2 years) and long-term (3-5 years) 

business process reengineering and IT initiatives. 

As a result of the IT Modernization V&S effort, FinCEN has developed its five-year 

strategic vision, which focuses on two keys aspects—information management and 

analysis, and stakeholder relations and collaboration. By establishing an enterprise-wide 

information management and analysis framework, FinCEN will be equipped with better 

decision-making ability and control of BSA data collection and processing, as well as 

improved data quality and integrity. FinCEN also envisions implementing emerging 

technology that provides the capability to securely manage stakeholder contact 

information and provide a proactive mechanism to identify stakeholder needs and 

continuously improve customer service. 

As next steps, FinCEN will use the results of the IT Modernization V&S effort to develop 

a new IT Strategic Plan (to be released in FY 2008) and realign its IT initiative portfolio 

by enhancing existing systems and introducing proven shared services and infrastructure. 

In addition, as FinCEN moves forward, it will continue to collaborate with the IRS on 

how best to partner on new technologies and explore opportunities that reduce the overall 

cost to the Department, while still meeting the needs of its various stakeholders. 
This five-year IT Modernization V&S supports FinCEN’s goal to enhance the 

management, use and accessibility of BSA information and the Department’s goal to 

prevent terrorism and promote the nation’s security through strengthened international 

financial systems. Specifically, by increasing the timeliness and quality of the BSA 

information, FinCEN will enable stakeholders to more quickly identify terrorist and 

criminal threats. 

FinCEN - 22 
4.2 – PART Evaluation Table 

PART Name: Bank Secrecy Act Data Collection, Retrieval and Sharing 

Year PARTed: 2005 

Rating: Moderately Effective 

OMB Major Findings/Recommendations 

• The program has long-term performance measures that focus on the program’s 

purpose and strategic goals, but more work is needed to measure data quality. 

• Federal Managers are held accountable for cost, schedule and performance 

results. However, some activities are managed by another entity and are outside 

the scope of the performance measures. 

• The program can show improved efficiencies and cost effectiveness for collecting 

and sharing data. The program has been able to show substantial increases in the 

number of users directly accessing data, and the share of filings submitted 

electronically. 

Bureau Actions Planned or Underway 

• FinCEN created a measure and targets to track the number of top 650 filers who 

file reports electronically. FinCEN will continue to monitor the progress and 

tracking of this measure and identify where improvements can be made. This will 

be a critical project as this measure is linked to the long-term E-Filing goals. 

• FinCEN will survey BSA users to systematically find out if users are receiving 

the information they need in a timely manner, if the information they are 

receiving is helpful, and if there are any problems with the information, format, 

etc. A survey of BSA E-Filers was completed, and FinCEN began surveying the 

Secure Outreach and WebCBRS users. FinCEN plans to examine both surveys 

and determine appropriate improvements. 

• FinCEN has taken steps to create a performance measure to measure the quality 

of information provided on Suspicious Activity Reports. In FY 2006, FinCEN 

established a measure, including a target rate, that tracks the critical field 

omission rate of E-Filed SARs to measure the quality of information provided on 

SARs. FinCEN will continue to monitor duplicate SAR data for filers with 

systemic duplicate filings, implement established referral procedures on all filers 

with systemic omission rate problems, and monitor future duplicate SAR data to 

verify referred institutions have corrected their systemic problems. 

• Increase the quality of BSA data by correcting data quality issues. In FY 2007, 

FinCEN, in collaboration with IRS, initiated a BSA Data Management framework 

process to increase the quality of BSA data. This initiative identified issues that

FinCEN - 23 
affect the quality of BSA data, which were prioritized. FinCEN and IRS have 

established a process for updating and tracking these issues. In FY 2008, FinCEN 

and IRS plan to implement a minimum of two releases of system changes to 

address between 20 percent – 25 percent of the issues prioritized as of July 2007. 

FinCEN and IRS will meet quarterly to review their progress toward improving 

BSA data quality. FinCEN will also evaluate the BSA Information framework 

process established to measure the overall progress and identify ways to simplify 

or improve the process. 

• FinCEN will look at ways to reduce filing burden on the financial community, 

including streamlining reporting obligations and increasing feedback and notices 

to filers. Progress will be tracked and reported to stakeholders/published by 

FinCEN. 

• FinCEN will work with stakeholders, through a formal partnership established in 

2007, to identify additional steps on how to increase efficiency in completing and 

filing required reports. In order to highlight and track progress, FinCEN will 

quantify and publish the reduction in filing burden. 

FinCEN - 24 
PART Name: Bank Secrecy Act (BSA) Analysis 

Year PARTed: FY 2006 

Rating: Adequate 

OMB Major Findings/Recommendations 

• FinCEN currently administers a survey to its customers to evaluate the impact and 

usefulness of its analytic products. The response rate for 2006 was significantly 

increased for financial institutions and foreign intelligence units (FIUs), but more 

work is needed to increase the response rate for domestic law enforcement 

customers. 

• FinCEN currently administers a survey to its customers to evaluate the impact and 

usefulness of its analytic reports, but more work is needed to develop a method 

for better assessing the law enforcement impact of FinCEN’s analytic products. 

• FinCEN has developed plans to expand the percentage of advanced analytic 

products that it produces, but significant effort will be required to achieve its 

long-term target of 75 percent in FY 2008. FinCEN has increased the percentage 

of advanced analytic products from 1.6 percent in FY 2004 to 39 percent in FY 

2006. 

Bureau Actions Planned or Underway 

• Developing a plan to improve the survey response rate from domestic law 

enforcement. FinCEN has devised a plan to improve its survey response rate and 

will continue to monitor the response rates and make adjustments as necessary. 

• Evaluating the feasibility of better assessing law enforcement impact of FinCEN's

products. During FY 2007, FinCEN took numerous steps, including meeting with 

internal and external stakeholders, to evaluate the options for better assessing the 

law enforcement impact related to the utility of BSA data. In FY 2008, based on 

the information collected, FinCEN will draft a recommendation on the next steps 

to implement a process to collect information that would quantify the impact of 

utilization of BSA data to law enforcement. 

• Developing measures of the impact of FinCEN's efforts to strengthen anti-terrorist 

financing and anti-money laundering programs worldwide. In FY 2007, FinCEN 

determined that an annual customer survey would be the most appropriate 

mechanism for measuring the impact of FinCEN's efforts to strengthen antiterrorist financing and anti-money laundering programs worldwide. In the 

remainder of FY 2007, FinCEN: identified international liaison activities that 

could be utilized to measure impact, drafted a survey to solicit customer input, 

and created a database to capture requisite contact information for potential 

respondents. In FY 2008, FinCEN will administer the survey and review and 

analyze the response rate. 

FinCEN - 25 
PART Name: Bank Secrecy Act (BSA) Administration 

Year PARTed: 2006 

Rating: Results Not Demonstrated 

OMB Major Findings/Recommendations 

• Questions have been raised concerning compliance and burden issues relating to 

the regulations FinCEN issues, and more time is needed to examine the costs and 

benefits of the reporting requirements. 

• Although FinCEN has made progress in executing memoranda of understanding 

(MOUs) governing the exchange of information with federal and state regulatory 

agencies, additional time is needed to ensure BSA compliance in more vulnerable 

industries, particularly the money services business industry. 

• The program has annual performance measures that focus on the implementation 

of the BSA, such as the number of MOUs that have been entered into, but more 

work is needed to measure the impact of program activities on preventing the 

misuse of the financial system by those engaged in illicit activities. 

Bureau Actions Planned or Underway 

• Expanding outreach efforts to certain targeted industries to augment their 

understanding of the value of BSA data. FinCEN has developed a BSA value 

presentation for standard outreach presentations and training sessions targeted 

toward depository institutions presented by FinCEN. In FY 2008, FinCEN will 

continue including the BSA value presentation in standard outreach presentations, 

with a focus on expanding use of presentations to involve other covered 

industries. 

• Developing a long-range plan to expand compliance oversight and reporting by 

state regulators for newly covered industries. FinCEN is currently in discussions 

with the IRS, the federal banking agencies, and state regulatory agencies and their 

associations to develop a long-range plan for compliance oversight over the 

money services business industry. 

• Developing measures of the impact of program activities on preventing the 

misuse of the financial system by those engaged in illicit activities. In FY 2007, 

FinCEN developed a working group to examine options and data available to 

create a meaningful performance measure to assess the impact of project activities 

on preventing the misuse of the financial system by those engaged in illicit 

activities and determined a survey of its regulatory partners will best capture the 

performance. In FY 2008, FinCEN will develop and conduct the survey and 

establish a baseline and future targets.

FinCEN - 26 
• FinCEN will meet with staff from the Office of Information and Regulatory 

Policy (OIRA) to discuss the tools and methods they employ when making 

cost/benefit decisions related to regulations. 

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

FinCEN - 27 
Alcohol and Tobacco Tax and Trade Bureau 

Mission Statement 

To collect alcohol, tobacco, firearms, and ammunition excise taxes that are rightfully due; 

to protect the public from adulterated product, and misleading or confusing marketing; 

and to assist industry members to understand and comply with Federal tax and regulatory 

requirements. 

Program Summary by Budget Activity 

Dollars in Thousands

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

Collect the Revenue $46,215 $47,693 $49,420 $1,727 3.62%

Protect the Public 44,403 45,822 47,480 1,658 3.62%

Total Appropriated Resources $90,618 $93,515 $96,900 $3,385 3.62%

Total FTE 544 544 525 (19) -3.49%

FY 2009 Priorities 

• Collect roughly $15 billion in excise taxes rightfully due to the federal government; 

• Process permit applications that allow for the commencement of new alcohol and 

tobacco businesses; 

• Process applications for certificate of label approval required to introduce alcohol 

beverage products into the marketplace; 

• Conduct criminal investigations to effectively administer the Internal Revenue Code 

and Federal Alcohol Administration Act provisions with the objective to minimize 

tax fraud and diversion risks; 

• Complete audits of large and at risk taxpayers who pay federal excise taxes; 

• Conduct field investigations of alcohol and tobacco industry members regarding 

permit applications, consumer complaints, Federal Alcohol Administration Act trade 

practice violations, tax fraud, and alcohol beverage product integrity verifications. 

• Refresh information technology infrastructure to ensure technology is operating to 

support the tax collection and regulatory functions; and 

• Promote e-filing of industry member data, including taxpayer operational reports and 

tax returns, as well as certificate of label approval applications. 
Table of Contents

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

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

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

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.1 – Budget Adjustments Table..................................................................................... 8 

2A – Budget Increases and Decreases Description ........................................................ 8 

2.2 – Operating Levels Table........................................................................................ 10 

2.3 – Appropriations Detail Table ................................................................................ 11 

2B – Appropriations Language and Explanation of Changes....................................... 11 

2C – Legislative Proposals ........................................................................................... 12 

Section 3 – Budget and Performance Plan ................................................................... 13

3.1 – Budget by Strategic Outcome .............................................................................. 13 

3A – Collect the Revenue ............................................................................................. 14 

3.2.1 – Collect the Revenue Budget and Performance Plan ......................................... 14 

3B – Protect the Public ................................................................................................. 16 

3.2.2 – Protect the Public Budget and Performance Plan ............................................. 16 

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

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

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

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

4.2 – PART Evaluation Table....................................................................................... 21 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) serves as the nation’s primary 

federal authority in the regulation of the alcohol and tobacco industries. TTB is 

responsible for the administration and enforcement of federal law, namely those sections 

of the Internal Revenue Code of 1986 associated with the collection of excise taxes on 

alcohol, tobacco, firearms and ammunition; and the Federal Alcohol Administration Act, 

which provides for the regulation of those engaged in the alcohol beverage industry and 

the protection of consumers of alcohol beverages. 

In Fiscal Year (FY) 2009, TTB will continue to focus efforts on helping industry 

members comply with alcohol, tobacco, firearms and ammunition laws and regulations, 

thus ensuring that all the appropriate excise taxes are collected and that alcohol beverages 

meet federal production, labeling, advertising and marketing requirements. 

TTB’s priorities are directly linked to the following key strategic objectives: 

• Collect all the Revenue that is rightfully due: 

 Through partnership with industry, states, and other federal agencies, develop 

alternative methods of promoting voluntary tax compliance; 

 Ensure correct payment of taxes focusing on audit of “major” and “at-risk” 

taxpayers; 

 Account accurately for the revenue assessed and collected; 

 Reduce the taxpayer paperwork burden associated with collection of the revenue 

by creating alternative electronic filing methods; 

 Ensure consistent tax administration; and 

 Prevent tax evasion and identify other criminal conduct in the regulated 

industries, including diversion and smuggling of taxable commodities. 

• Protect the Public through education, inspection, and investigation: 

 Ensure the integrity of the products, people, and companies in the alcohol 

beverage marketplace; 

 Enforce compliance with federal laws related to the issuance of permits to 

industry members and the production, labeling, advertising, and marketing of 

alcohol products; 

 Utilize electronic government to reduce taxpayer burden and improve service with 

online filing for permit applications and formula submissions, business activity 

reports, claims, applications, certificate of label approval, and other forms; 

 Perform appropriate testing, laboratory analyses, and review documents of 

regulated commodities to ensure product safety and integrity; 

 Review and act on labels and formulas for domestic and imported beverage 

alcohol products and maintain public access to approved certificate of label 

approval (COLA); 

 Respond to industry and consumer complaints; 

 Investigate product contamination and adulteration incidents or allegations; 

 Investigate violations concerning unfair trade practices, labeling, and advertising 

in the beverage alcohol industry; and 

 Regulate the international import/export trade in beverage and industrial alcohol. 

TTB – 1
The total resources required to support TTB activities for FY 2009 are $99,768,000 

including $96,900,000 from direct appropriations and $2,868,000 from offsetting 

collections, mainly from the Puerto Rico cover-over program. 

1B – Program History and Future Outlook 

Program History - TTB has two primary activities that focus on collecting all the 

revenue rightfully due and ensuring products meet regulatory standards. 

Collect the Revenue - This activity collects alcohol, tobacco, firearms, and ammunition 

excise taxes. These products generate nearly $15 billion in tax revenue annually, making 

TTB the third largest tax collection agency in the federal government. 

The excise taxes collected by TTB come from approximately 8,500 businesses, and the 

taxes are imposed and collected at the producer and importer level of operations. 

Members of the regulated industries paying excise taxes are distilleries, breweries, 

bonded wineries, bonded wine cellars, manufacturers of cigarette tubes, manufacturers of 

tobacco products, and manufacturers and importers of firearms and ammunition. About 

200 of the largest taxpayers account for 98 percent of the annual excise tax collected. In 

FY 2007, the majority of taxes collected were from tobacco (49 percent) and alcohol 

(49 percent), with the remainder from firearms and ammunition (2 percent). 

Strategies used to collect the revenue rightfully due focus on identifying any gaps in tax 

payment, any illegal entities, individuals operating outside the excise tax system, 

developing a balanced field approach of audits and investigations that targets noncompliant industry members, and establishing an identifiable presence within the industry 

that encourages voluntary compliance. Alcohol and tobacco taxes collected by TTB are 

remitted to the Department of the Treasury General Fund. Firearms and ammunition 

excise taxes are remitted to the Fish and Wildlife Restoration Fund under provisions of

the Pittman-Robertson Act of 1937. 

The investments in this activity resulted in the following performance highlights and 

accomplishments during FY 2007: 

• Collected $14.7 billion in excise taxes, interest, and other revenues from alcohol, 

tobacco, firearms, and ammunition industries. 

• Expanded the e-filing program to allow all excise taxpayers to file and pay taxes and 

file monthly operational reports electronically through the Pay.Gov system. In 

FY 2007, 98 percent of TTB’s tax receipts were collected electronically. 

• Improved voluntary compliance – 75 percent of taxpayers filed payments on or before 

the scheduled due date. 

• Processed $459 million in cover-over payments to Puerto Rico and $8 million to the 

Virgin Islands. Federal excise taxes collected on all imported rum and on rum

produced in Puerto Rico and the Virgin Islands and subsequently brought into the 

United States are “covered-over” (or paid into) the treasuries of Puerto Rico and the 

Virgin Islands. 

• Processed $336 million in drawback claims. Under current law, persons who use 

non-beverage alcohol in the manufacture of medicines, food products, flavors, 

TTB – 2
extracts, or perfume and other non-potable products may be eligible to claim

drawback of excise taxes paid on distilled spirits used in their products. The TTB 

laboratory analyzes and approves a product formula before a company can 

manufacture a product and file a claim. The Non-Beverage Products Lab completed 

7,300 non-beverage drawback formulas and 1,623 specially denatured alcohol 

formulas. 

• Laboratories analyzed a total of 2,000 beverage alcohol samples for product integrity, 

pre-import analysis, and IRC section 5010-tax credit determination. TTB also 

analyzed 152 tobacco product samples for tax classification. TTB laboratories review 

formulations or analyze alcohol and tobacco products to ensure compliance with TTB 

tax and classification regulations. 

• Rulemaking initiatives included new regulatory guidance on the tax classification of 

cigars and cigarettes. The regulatory changes seek to provide industry with clearer 

and more objective classification criteria for tobacco products in order to reduce the 

risks of misclassification of cigarettes as little cigars. This regulatory change is in the 

comment and analysis stage. 

This table displays the amount of federal excise tax collections at the bureau from 

FY 2003 – 2007 by revenue type. 

Revenue Type 2003 2004 2005 2006 2007

Alcohol $6,857,456,528 $6,989,010,058 $7,075,430,170 $7,183,043,493 $7,232,154,000

Tobacco $7,435,494,644 $7,440,206,609 $7,408,285,850 $7,350,594,192 $7,194,097,000

Firearms Ammunition Mfg $193,414,143 $216,005,637 $225,817,132 $249,577,917 $287,835,000

Special Occupational Taxes 1/ $102,178,604 $100,573,837 $10,189,069 $2,895,164 $2,808,000

 TOTALS $14,588,543,918 $14,745,796,141 $14,719,722,221 $14,786,110,766 $14,716,894,000

1/ Special Occupational Taxes (SOT) were suspended on most alcohol taxpayers, effective July 1, 2005 and repealed for all alcohol taxpayers 

effective July 1, 2008. However, the SOT relating to tobacco permittees (manufacturers, importers, and export warehouses) remained intact.

Economic Impact and Tax Collections from the Alcohol Industry 

Studies of the wine,1

 distilled spirits,2 and beer industries 3 disclosed that the annual 

economic impact from those businesses on the U.S. domestic economy is rapidly 

approaching $500 billion (Wine - $162 billion; Beer - $189 billion; and Distilled Spirits - 

$103 billion) and represents 3 to 4 percent of the GNP. The alcohol beverage industry in 

the United States pays over $7 billion in federal excise taxes each year and also 

contributes tax revenues for state and local governments. Economic forecasts predict 

continued modest growth in the alcohol industry, and taxes collected on alcoholic 

beverages are expected to continue to rise throughout the period FY 2007 – FY 2009. 

TTB envisions that in the next few years the increase in new alcohol businesses will be 

most prominent in the number of new alcohol fuel plants (ethanol), wineries, craft 

breweries, and craft distilleries. 

 

1

 “The Impact of Wine, Grapes and Grape Products on the American Economy 2007,” MKF Research 

LLC. 

2

 “The National Trade Association Representing Producers and Marketers of American’s Favorite Brands 

of Distilled Spirits,” Distilled Spirits Council of the United States. 3

 “The Beer Industry Economic Contribution Study Prepared for The Beer Institute,” Guerrilla Economics, 

LLC, April 2007. 

TTB – 3
Tobacco Collections 

The federal excise tax collections from tobacco imports and domestic sales fell slightly in 

2007. TTB collects the federal excise tax only upon products from domestic 

manufacturers and U.S. Customs and Border Protection (CBP) collects the tax on 

imported tobacco products. The reduction of tobacco tax collections is likely attributable 

to an increased consumption of domestic cigarette alternatives (such as little cigars and 

roll your own tobacco), which are taxed at lower rates than cigarettes. Also, this decline 

in domestic sales may also be attributable to a proliferation of the sale of illegal or

smuggled cigarettes, which adversely impacts collections at TTB. Based upon the 

bureau’s own findings as well as recent Center of Disease Control findings,4

 TTB does 

not believe decreased collections are the result of an overall decrease in the use of 

tobacco products. 

Since many states increased their taxes on cigarettes following the Master Settlement 

Agreement 5

 (particularly premium brands), sales of domestic cigarettes have decreased, 

while sales of lower-taxed alternative tobacco products (such as little cigars and roll your 

own tobacco) have increased. Even so, the increases in lower-taxed alternative domestic 

tobacco product sales are too modest to fully compensate for the decrease in domestic 

cigarette sales.

Finally, while consumers purchase less expensive cigarettes (generic) manufactured in 

the United States over their premium brand competitors, TTB has found an increased risk 

in underreporting related to tax liability for many generic products. To ensure that all 

taxes rightfully due are collected for generic products, TTB has deployed audit and 

investigation resources to investigate these cases and take appropriate action to resolve 

liability and associated compliance violations. 

Firearms, Ammunitions Tax (FAET) Collections 

Firearms and ammunition excise taxes are remitted to the Fish and Wildlife Restoration 

Fund under provisions of the Pittman-Robertson Act of 1937. The firearms and 

ammunition business industry continues to grow. Federal excise tax collections on 

firearms and ammunition has increased from $193 million in FY 2003 to $289 million 

during FY 2007, an increase of $96 million over the past four years, or 50 percent growth 

in federal revenues. The increase in reported tax revenue can be attributed to industry 

growth; effective outreach initiatives at the bureau; and the presence of field audits which 

continues to promote voluntary taxpayer compliance. 

 

4

 “Cigarette Smoking Among Adults – United States, 2006,” Morbidity and Mortality Weekly Reports, 

November 9, 2007. 

5

 In 1998, the Attorneys General of 46 states signed the Master Settlement Agreement (MSA) with the four 

largest tobacco companies in the United States to settle state suits to recover billions of dollars in costs 

associated with treating smoking-related illnesses. Four states - Florida, Minnesota, Mississippi, and Texas 

- settled their tobacco cases separately from the MSA states. 

TTB – 4
Protect the Public - This activity ensures the integrity of the alcohol and tobacco 

industries and of beverage alcohol products found in the marketplace, and regulates 

roughly 45,600 alcohol and tobacco businesses. Under this activity, TTB enforces 

federal laws related to the issuance of permits to industry members and the production, 

importation, exportation, labeling, advertising, and marketing of alcohol products. TTB 

conducts these activities through investigations, application reviews, laboratory testing, 

and educational programs. TTB works with industry, foreign and state governments, and 

other interested parties to make it easier to comply with regulatory requirements and to 

maintain the appropriate level of oversight to ensure public safety. Education, 

partnerships, and open communication are paramount strategies in facilitating compliance 

with regulatory requirements. 

The investments in this budget activity have resulted in the following performance 

highlights and accomplishments during FY 2007: 

• Processed 125,117 Certificate of Label Approval (COLAs) applications, of which 

63,811 applications were filed electronically through COLAs Online, a total of 

51 percent. The Federal Alcohol Administration Act requires importers and bottlers 

of alcoholic beverages to obtain a COLA prior to introduction of the product into 

commerce. 

• Issued 4,600 original permits, approved 22,116 amended permits, and prepared 

related correspondence. TTB issues original and amended permits to persons who are 

engaged in the alcohol and tobacco industries. Illicit activity in these industries has 

the potential to be highly lucrative, so it is crucial that organized crime and terrorists 

are kept out of these industries. 

• The Scientific Services Division (SSD) received its accreditation from the 

International Organization for Standardization (ISO). 

• Conducted 467 field investigations on the most high-risk applications to ensure 

objectives of the Anti-Terrorism Act of 2001 were met. 

• Conducted 945 field application investigations of industry members regarding 

applications, consumer complaints, tax fraud, trade practice violations, and product 

and labeling integrity verifications. 

• Assisted in the labeling agreement with the World Wine Trade Group (WWTG). 

WWTG members include the U.S., Argentina, Australia, Canada, Chile, and New 

Zealand. The labeling agreement was signed in January 23, 2007, which will 

facilitate the export trade in wine from the U.S. to WWTG countries. 

Specific Challenges in FY 2009 

Law Enforcement 

TTB is dependent upon the availability of other agencies to supply law enforcement 

resources to pursue criminal cases. The law enforcement challenges on the alcohol and 

tobacco industries revolve around tax fraud, label fraud, unlawful diversion, and unlawful 

trade practices. Tax fraud issues have also arisen in the firearms and ammunition 

industry as well. 

TTB – 5
Tax fraud, through unlawful diversion or other means, represents an extremely high risk 

to the revenue as well as a funding source for organized crime and terrorists. The lost 

revenue from these illegal activities is estimated to be in the range of $1 billion, 

conservatively. The proliferation of alcohol fuel plants presents a serious concern for 

significant revenue loss that may result from unlawful diversion. Label fraud and 

unlawful trade practices also represent a serious threat to the economic stability of the 

alcohol trade. Label fraud deceives consumers as to what they are buying, but also 

threatens domestic producer’s ability to effectively trade in interstate commerce. 

Unlawful trade practices present a similar threat to free commerce because of their 

potential to undermine healthy small business activity and limit consumer choices. 

Alcohol Fuel Plants (AFPs) 

Another challenge is the accelerated growth of alcohol fuel production. In 2005, total 

U.S. production of alcohol for fuel use was approximately 4 billion gallons, and in 2006 

it was nearly 5 billion gallons. Current capacity is nearly 7 billion gallons per year, and 

plants under construction will make an additional 5 billion gallons annually. The recent 

Energy Independence and Security Act of 2007 mandates the use of 36 billion gallons of 

renewable fuel per year by 2022. In comparison, total U.S. consumption of beverage 

distilled spirits is only 420 million gallons per year – and beverage spirits contain less 

than half the ethanol that is in alcohol fuel. Most alcohol fuel production comes from

fewer than 150 large plants, but hundreds of smaller plants have applied for TTB permits 

in each of the last four fiscal years. TTB currently has 1,567 active alcohol fuel plants. 

These developments present a serious concern for TTB because of the possibility for 

significant revenue losses that would result from unlawful diversion. 

Succession Planning 

Succession planning is high on the list of TTB strategic priorities, especially regarding 

TTB’s investigative forces. TTB expects to lose forty percent of its workforce by 2010 

due to retirements and other attrition. To mitigate these losses, TTB continues to use the 

personnel interventions identified in the Pay Demonstration project to enable the bureau 

to improve its capacity to recruit, develop, and retain high-caliber employees. TTB uses 

tailored approaches designed, developed, and implemented specifically for the bureau’s 

continuing and evolving needs in order to meet mission requirements and remain 

competitive for highly skilled talent. The FY 2009 budget seeks authority to continue 

this program an additional year. 

Rulemaking 

Over the next few years TTB anticipates continued industry and interest group petitions, 

inquiries, and other expressions of interest in more detailed beverage labeling. An 

advance notice of proposed rulemaking published in mid-2005 on the labeling and 

advertising of wines, distilled spirits, and malt beverages sought comments on various 

labeling issues including, among others, information panels, alcohol content, and allergen 

labeling; this notice generated over 19,000 comments. In July 2006, TTB published in 

the Federal Register an interim rule setting forth standards for voluntary allergen labeling 

of alcohol beverages concurrently with a notice of proposed rulemaking for mandatory 

allergen labeling for alcohol beverages. In FY 2008 and 2009, the bureau will consider 

TTB – 6
the feasibility of regulatory changes in response to the comments received on the 2005 

advance notice. 

In July 2007, TTB published in the Federal Register for public comment proposed 

regulatory changes which would require a statement of alcohol content for all alcohol 

beverage products, expressed as a percentage of alcohol by volume and appearing on any 

label affixed to the container. Also included in the proposed regulatory changes is a 

requirement for a Serving Facts panel on alcohol beverage labels, which would include a 

content statement covering calories, carbohydrates, fat, and protein. Under the proposals, 

industry members may also disclose on the serving facts panel the number of U.S. fluid 

ounces of pure alcohol per serving as part of a statement that includes alcohol content 

expressed as a percentage of alcohol by volume. The new regulations would also specify 

reference serving sizes for wines, distilled spirits, and malt beverages based on the 

amount of beverage customarily consumed as a single serving rather than based on a 

definition of a standard drink. The purpose of these proposed regulatory changes is to 

ensure that alcohol beverage labels provide consumers with adequate information about 

the products they are consuming. 

TTB – 7
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 544 $93,515

Base Realignment:

 Base Realignment from Collect the Revenue (935)

 Base Realignment to Protect the Public 935

 Increased Reimbursable Payments from PR Gov't (11) (1,149)

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 752

 Pay Annualization 402

 Pay Inflation Adjustment 1,075

Total FY 2009 Base 533 $94,595

Program Decreases:

 Efficiency Savings (8) (685)

Program Increases:

 IT Infrastructure (Hardware Refresh) 2,990

Subtotal FY 2009 Program Changes (8) 2,305

Total FY 2009 Request 525 $96,900

2A – Budget Increases and Decreases Description 

Base Realignment ...........................................................................-$1,149,000 / -11 FTE 

Base Realignment from Collect the Revenue -$935,000 / +0 FTE 

Realignment of funds from the Collect the Revenue Budget Activity based on historical 

spending patterns. 

Base Realignment to Protect the Public +$935,000 / +0 FTE 

Realignment to Protect the Public Budget Activity. 

Increased Reimbursable Payments from Puerto Rican Government -$1,149,000 / -11 FTE 

Recovery for indirect costs for general administrative, information technology, legal, and 

other enforcement bureau activities which support the Puerto Rico cover over program. 

The cost model which was adopted by the bureau was determined to be in full 

compliance with the guidelines promulgated by the Office of Management and Budget, 

the CFO Act, and Statements of Federal Financial Accounting Standards. These 

reimbursable funds have been used to supplant the direct appropriations. 

Maintaining Current Levels (MCLs) ...........................................+$2,229,000 / +0 FTE 

Non-Pay Inflation Adjustment +$752,000 / +0 FTE 

Non-labor related items such as contracts, travel, supplies, equipment, and GSA rent 

adjustments.

Pay Annualization +$402,000 / +0 FTE 

Funds are requested for the FY 2009 cost of the January 2008 pay increase. 

Pay Inflation Adjustment +$1,075,000 / +0 FTE 

Funds are requested for the January 2009 pay raise. 

TTB – 8
Program Decreases .............................................................................-$685,000 / -8 FTE 

Efficiency Savings -$685,000 / -8 FTE 

Reduction in funding due to anticipated savings to be realized from improvements in 

business processes, systems, and operations at the bureau. 

Program Increases .........................................................................+$2,990,000 / +0 FTE 

IT Infrastructure (Hardware Refresh) +$2,990,000 / +0 FTE 

The funding will be used to refresh the information technology hardware and 

infrastructure in order to facilitate mission critical functions in support of departmental 

and bureau strategic goals and objectives of collecting the revenue and protecting the 

public. TTB has two core business applications to support this mission: Integrated 

Revenue Information System (IRIS) and Certification/Exception of Label/Bottle 

Approval (COLAs) Online. IRIS supports the collection of nearly $15 billion in federal 

excise taxes per year by automating the examination of industry member tax accounts. 

COLAs Online provides industry members with an internet-based application to submit, 

track, and review applications for label approval, thereby expediting TTB business 

processes and improving customer service. 

Based on internal systems reviews and industry best practices, TTB has determined that 

by FY 2009 a significant portion of the current infrastructure will become technically 

obsolete and that the risk of business disruption from malfunctioning equipment will 

negatively impact basic tax and regulatory services. TTB has identified significant 

impacts of an obsolete infrastructure including, but not limited to, risks to excise tax 

collection, public safety concerns, decreased customer satisfaction, management 

reporting issues, staff productivity inefficiencies and impacts to the compliance with 

federal mandates. Meeting federal mandates such as Internet Protocol Version 6, 

HSPD-12, GPEA, FISMA, and e-government initiatives will be facilitated with this 

infrastructure refresh. 

TTB – 9
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 544 544 544 525

Object Classification:

 11.1 - Full-time permanent 42,695 43,640 0 43,640 44,940

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

 11.5 - Other personnel compensation 698 778 0 778 778

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 10,979 11,525 0 11,525 11,235

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 3,265 3,363 0 3,363 3,000

 22 - Transportation of things 98 101 0 101 101

 23.1 - Rental payments to GSA 4,943 4,981 0 4,981 5,219

 23.2 - Rental payments to others 0 0 0 0 0

 23.3 - Comm, utilities, and misc charges 4,787 4,931 0 4,931 5,049

 24 - Printing and reproduction 367 378 0 378 387

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 0 0 0 0 0

 25.2 - Other services 20,762 21,733 0 21,733 22,131

 25.3 - Other purchases of goods and services from

Govt. accounts 

0 0 0 0 0

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

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 0 0 0 0 0

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

 26 - Supplies and materials 650 670 0 670 670

 31 - Equipment 1,374 1,415 0 1,415 3,390

 31.6 - ADP Equipment 0 0 0 0 0

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $90,618 $93,515 $0 $93,515 $96,900

Budget Activities:

 Collect the Revenue 46,215 47,693 0 47,693 49,420

 Protect the Public 44,403 45,822 0 45,822 47,480

Total Budget Authority $90,618 $93,515 $0 $93,515 $96,900

TTB – 10
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Collect the Revenue 277 $46,215 277 $46,215 277 $47,693 268 $49,420 -3.25% 3.62%

Protect the Public 267 44,403 267 44,403 267 45,822 257 47,480 -3.75% 3.62%

Subtotal New Appropriated Resources 544 $90,618 544 $90,618 544 $93,515 525 $96,900 -3.49% 3.62%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 15 3,024 15 3,024 15 3,755 15 2,868 0.00% -23.62%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 15 $3,024 15 $3,024 15 $3,755 15 $2,868 0.00% -23.62%

Total Resources Available for Obligation 559 $93,642 559 $93,642 559 $97,270 540 $99,768 -3.40% 2.57%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted Request

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

ALCOHOL AND TOBACCO TAX AND 

TRADE BUREAU 

Federal Funds 

SALARIES AND EXPENSES:

For necessary expenses of carrying out section 

1111 of the Homeland Security Act of 2002, 

including hire of passenger motor vehicles, 

[$93,515,000] $96,900,000 of which not to 

exceed $6,000 for official reception and 

representation expenses; not to exceed $50,000 

for cooperative research and development 

programs for Laboratory Services; and 

provision of laboratory assistance to State and 

local agencies with or without reimbursement. 

Treasury Administrative Provisions:

Sec. 115. Section 122(g) (1) of Public Law 105-

119 as amended (5 U.S.C. 3104 note), is further 

amended by striking [“8 years”] “10 years” and 

inserting [“10 years”] “11 years”. 

TTB proposes to continue the Pay 

Demonstration Program by 

amending the language to extend the 

program for one additional year. 

TTB - 11 
2C – Legislative Proposals 

Extend Pay Demonstration Program for one additional year. TTB proposes to continue 

the Pay Demonstration Program (Pay Demo) by amending the general provision language 

to extend the program for one additional year. This project was established to enhance 

TTB’s ability to effectively recruit and retain highly qualified employees. Pay Demo has 

been extended every year since it was first established in FY 1999. In FY 2006, TTB 

contracted for a study to provide an independent evaluation of this program. The results 

of the study are being examined. 

TTB - 12 
Section 3 – Budget and Performance Plan

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

in the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan 

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

agency intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Goal FY 2008 FY 2009 Percent

 TREASURY Strategic Objective Enacted Request Change

TREASURY Strategic Outcome AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 47,662 48,885 2.6%

 Revenue collected 49,608 50,883 2.6%

Total $97,270 $99,768 2.6%

3A – Collect the Revenue ($49,420,000 from direct appropriations and $1,463,000 

from reimbursable programs): The Collect the Revenue activity works toward providing 

the most effective and efficient systems for the collection of tax revenue, eliminating or 

preventing tax evasion and other criminal conduct, and providing high quality service 

while imposing the least regulatory burden on taxpayers. TTB will employ a number of

strategies to ensure that the revenue that is rightfully due is collected. The Tax Audit 

Division (TAD) will focus its audit resources on large and at risk taxpayers. The Office 

of Field Operations will continue to provide industry outreach to facilitate voluntary 

compliance, investigate allegations or indications of tax fraud, verify destruction of large 

quantities of taxable commodities, and conduct compliance investigations of permittees 

who have substantial potential for tax liability. 

Reducing taxpayer burden and improving service remain priorities at TTB. The ultimate 

goal is to allow permittees and taxpayers to file all payments, returns, and applications

online with the National Revenue Center. The FY 2009 budget request enables the 

continuation of efforts to achieve the performance measures supporting TTB’s strategic 

goal of providing the most effective and efficient system for the collection of all revenue 

that is rightfully due, eliminating or preventing tax evasion and other criminal conduct, 

and providing high quality service while imposing the least regulatory burden. 

Offsetting Collections............................................................Total $1,463,000 

Federal Sources (Laboratory Services)..........................................................$27,000 

Non Federal Sources (Puerto Rico)............................................................1,436,000 

The non- federal reimbursable funds cover the costs associated with the functioning and 

support of the Puerto Rico office, and are paid from the “cover-over” (return) which is 

offset from the roughly $459 million in cover-over taxes collected in the United States on 

TTB - 13 
products originating in Puerto Rico. Also, the bureau collects a nominal amount of 

reimbursable funding for lab services performed to support criminal investigations being 

conducted at the Alcohol Tobacco Firearms and Explosives Agency (ATFE). 

3.2.1 – Collect the Revenue Budget and Performance Plan 

Collect the Revenue Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $45,285 $49,618 $46,215 $47,693 $49,420

 Reimbursable Resources $935 $935 $1,512 $1,915 $1,463

Total Resources $46,220 $50,553 $47,727 $49,608 $50,883

Budget Activity Total $46,220 $50,553 $47,727 $49,608 $50,883

Collect the Revenue Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Voluntary Compliance in filing

tax payments timely and accurately (in terms 

of revenue) (Revenue %) (Oe) 

 86 87 86 87 87

Cumulative percentage of excise tax revenue 

audited over 3 years (%) (Ot) 

 82% 93% 16% 74% 90%

Percentage of Voluntary Compliance in filing

tax payments timely and accurately (in terms 

of number of compliant industry members)(%)

(Oe) 

 70% 76% 75% 75% 75%

Percentage of total tax receipts collected

electronically (%) (E) 

 98% 98% 98% 98% 98%

Resources as a percentage of revenue (%) (E) .37% .31% .31% .34% .34%

Unit cost to process an excise tax return based 

on new legislation ($) (E) 

 Baseline 76 61 76 76

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

Description of Performance: 

In FY 2007, TTB met all of its performance measures under the Collect the Revenue 

strategy, while showing continued improvements in performance scores. TTB continues 

to collect nearly $15 billion in federal excise taxes in a highly efficient manner. Also, 

key performance metrics show that 98 percent of the federal excise tax receipts are 

collected electronically at the bureau and that 75 percent of industry members voluntarily 

file their tax and operational reports on or before the scheduled due date and the filing 

information is both accurate and reliable. TTB’s audit strategy is to audit regulated 

businesses based on its risk model, and continue its audits of the largest taxpayers, with 

its goal of 90 percent revenue audited in its second cycle by FY 2009. TTB’s “Resources 

as a percentage of revenue (%)” measure continues to benchmark as one of the most 

efficient tax collection agencies or bureaus in the world. 

TTB - 14 
3B – Protect the Public ($47,480,000 from direct appropriations and $1,405,000 from 

reimbursable programs): The Protect the Public activity ensures the integrity of products 

and industry members in the marketplace, ensures compliance with laws and regulations

by regulated industries, and provides information to the public as a means to prevent 

consumer deception. Under this activity, TTB enforces compliance with federal laws 

related to the issuance of permits to industry members and the production, importation, 

exportation, labeling, advertising, and marketing of alcohol products. TTB conducts 

investigations, application reviews, laboratory testing, and educational programs in 

support of its mission. TTB works with industry, other federal and state governments, 

and other interested parties to make it easier to comply with regulatory requirements, 

while maintaining the appropriate level of oversight to ensure public safety. Innovation, 

partnerships, and open communication are paramount to achieving this strategic goal. 

TTB monitors trade practices of the alcohol industry and takes enforcement actions on 

violations or discrepancies, monitors and reviews international trade in alcohol beverages 

to identify trade barriers and incidents of international fraud and contaminated products; 

and to promote international agreements on product integrity. 

Users of specially denatured alcohol (SDA) are required to submit a formula to the TTB 

Laboratory. Likewise, those using alcohol for non-beverage purposes, such as in the 

manufacture of flavorings or medicines, must also gain approval of their formula in order 

to file a claim for drawback of excise taxes previously paid. In both cases, the TTB Lab 

reviews the formula and analyzes samples to grant or deny the action requested by the 

applicant. 

TTB also protects the consumer by monitoring alcohol products and investigating 

incidents of suspected unsafe conditions or product deficiencies related to production and 

labeling. TTB does this by testing samples of alcohol beverages sold at the retail level 

and obtained directly from producers. The purpose of this testing is to ensure that alcohol 

beverages marketed in the United States meet formulation and labeling requirements, do 

not contain unauthorized substances or contaminants, and are properly classified for tax 

purposes. 

Offsetting Collections............................................................Total $1,405,000 

Federal Sources (Laboratory Services)..........................................................$26,000 

Non-Federal Sources (Puerto Rico)....................................................... $1,379,000 

The non-federal reimbursable funds cover the costs associated with the functioning and 

support of the Puerto Rico office, and are paid from the “cover-over” (return) which is 

offset from the roughly $359 million in cover-over taxes collected in the United States on 

products originating in Puerto Rico. Also, the bureau collects a nominal amount of 

reimbursable funding for lab services performed to support criminal investigations being 

conducted at ATFE. 

TTB - 15 
3.2.2 – Protect the Public Budget and Performance Plan 

Protect the Public Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $37,051 $40,597 $44,403 $45,822 $47,480

 Reimbursable Resources $765 $765 $1,512 $1,840 $1,405

Total Resources $37,816 $41,362 $45,915 $47,662 $48,885

Budget Activity Total $37,816 $41,362 $45,915 $47,662 $48,885

Protect the Public Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percent of electronically filed Certificate of

Label Approval applications (%) (E) 

 25% 38% 51% 48% 48%

Percentage of COLA approval applications 

processed within 9 calendar days of receipt 

(%) (E) (This measure will become inactive 

beginning in FY 2008.)

 50% 44% 42% 35% Discontinued

Percentage of permit application (original and 

amended) processed by the National Revenue 

Center within 60 days (%) (E) 

 81% 86% 85% 80% 80%

Unit cost to process a Wine Certificate of 

Label Approval

null% null% 34% 34% 85%

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

Description of Performance: 

In FY 2007, TTB met all but one of its performance measures under the Protect the 

Public budget activity. The results from the metrics, along with program performance 

during the year, demonstrate that the bureau administered the laws and regulations in a 

manner that protects the consumer, promotes voluntary compliance, and facilitates import 

and export trade in beverage and industrial alcohols. The performance measure not met 

was the “Percentage of certificate of label applications (COLA) processed within 

9 calendar days of receipt.” TTB examines all alcohol labels prior to their use and issues 

a certificate of label approval (COLA) to ensure alcohol beverage labels adequately 

identify the product and do not contain misleading information. The performance metric 

target was 45 percent and the final result was 42 percent. This measure was difficult to 

achieve because the complexity and volume of this COLA workload, which is driven

from industry members, has continued to increase for several years. Since 1999, COLA 

applications have risen over 84 percent, while the available staff dedicated to this 

operation has remained constant. While this challenge will continue, the bureau fully 

expects to gain efficiency of operations from encouraging industry members to file their 

COLA applications electronically versus paper. The number of electronic submissions 

has increased from 25 percent in FY 2005 to over 50 percent in FY 2007. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

TTB - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

By properly managing its human capital needs, TTB supports the Department of the 

Treasury’s strategic goals: 

 

• Effectively managed U.S. government finances; 

• U.S. and world economies perform at full economic potential, 

To accomplish and fulfill both TTB’s and the Department of the Treasury’s strategic 

plans, TTB has taken several steps to maintain and improve its current professional 

workforce. TTB’s Human Capital Strategic Plan, which is aligned with the Bureau 

Strategic Plan, documents strategies to improve skill and competency gaps, 

demographics, workforce management and performance measurement efforts, and 

succession planning. The model for strategically assessing TTB’s skills gap outlook for 

future years is predicated on assumptions regarding future changes in the workforce, 

including retirement eligibility rules and rates of attrition. 

Succession planning is a strategic priority for TTB’s future transitioning, especially as it 

relates to the bureau’s mission critical positions. TTB expects to lose approximately 

forty percent of its workforce between 2008 and 2010 due to retirements and other 

attrition. To mitigate these losses, it is vital that TTB continue to recruit, develop, and 

retain high-caliber employees in mission critical positions. 

Other HR Highlights 

During FY 2007, TTB: 

• Completed an independent evaluation of the TTB Pay Demonstration Project over a 

three year period. This included conducting an Attitude Survey and Survey Followup Focus Groups with Pay Demo Project employees and supervisors and an analysis 

of cost comparisons with General Schedule and other Pay Demonstration Programs. 

As a result of the evaluation, TTB chartered a Labor/Management Workgroup that 

developed cost containment options for future Pay Demo Project Performance 

Payouts that were implemented for the FY 2007 performance cycle. 

• Achieved a top five percent of agency subcomponents ranking according to the 

Partnership for Public Service’s report on “The Best Places to Work in the Federal 

Government”. The ranking was based on employee responses to the 2006 Federal 

Human Capital Survey. TTB’s response rate on the survey was the highest within the 

Department of the Treasury (78 percent). 

• Designed, developed, tested, and deployed a new performance management program 

and automated performance management system that provides a clear line of sight for 

each employee to the overall Bureau strategic plan. In addition, conducted related 

Performance Management Training for both General Schedule and Pay 

Demonstration Project employees. 

• Negotiated the first Master Labor Agreement exclusively for TTB with the National 

Treasury Employees Union (NTEU). 

TTB - 17 
TTB - 18 

• Established an Early Conflict Prevention and Resolution (CPR) Program to assist 

TTB employees in seeking fair, equitable solutions to work-related concerns through 

an informal confidential process apart and separate from both the Equal Employment 

Opportunity (EEO) Complaints and the Administrative Grievance processes. The 

CPR Program assists with maintaining a harmonious and productive workplace for 

our employees. 

• Implemented a Mentoring Program to provide guidance and motivation, strengthen 

relationships, and ensure that all the talents and skills of Bureau employees are 

maximized in accomplishing the Bureau’s mission. The Mentoring Program supports 

workforce and succession planning by developing employees to be future leaders. 

• Established three Leadership Development Programs (LDPs) based on grade level 

and supervisory level. These programs consist of short-term executive, management, 

leadership and supervisory programs to prepare employees for the next level in their 

career progression and professional development and create a cadre of employees 

prepared to compete for positions with greater leadership responsibility to meet the 

bureau’s needs. 

• Published the first TTB recruitment brochure featuring TTB’s mission critical 

positions. 

• Continued to exceed the Treasury hiring goal of 45 days with an annual overall 

average of 33 days time to hire. 
TTB - 19 

4.1 – Summary of IT Resources Table Dollars in Thousands

Information Technology Investments(Dollars in Thousands) FY 2006 FY 2007 FY 2008 Major IT Investments / Funding Source Budget Activity

& Earlier 

Enacted Enacted

President's 

Budget Re

Subtotal, Major IT Investments

Collect the Revenue/Protect the 

Public $ - $ - $ - 0.0% $ 

Non-Major IT Investments

Collect the Revenue/Protect the 

Public $ 2,780 $ 2,850 $ 2,925 2.6% $ 

Infrastructure Investments

Collect the Revenue/Protect the 

Public $ 15,111 $ 15,514 $ 15,915 2.6% $ 

Enterprise Architecture

Collect the Revenue/Protect the 

Public $ 464 $ 477 $ 491 2.9% $ 

Total IT Investments

Collect the Revenue/Protect the 

Public $ 18,355 $ 18,841 $ 19,331 2.6% $ 

% Change from

FY07 to FY08
4B – Information Technology Strategy 

TTB has a modernization blueprint that focuses information technology (IT) investments 

on important bureau functions and defines how those functions will be measurably 

improved. All TTB systems and projects have business cases that have been approved by 

the Department of the Treasury’s Office of the Chief Information Officer, and 

100 percent of IT systems have certification and accreditation. The bureau will 

aggressively pursue all e-Gov opportunities that will reduce taxpayer burden for tax filing 

and increase all regulatory compliance. TTB has established its own investment review 

board that evaluates and makes preliminary selection decisions by addressing high level 

questions: 

• Does the initiative have value to TTB and to Treasury? 

• Is there a balance of benefits against costs and risks? 

• Is TTB eliminating duplication and stovepipe projects? 

TTB’s investment review board ensures compliance with guidance and legislation (OMB 

Circular A-130, Management of Federal Information Resources and Clinger Cohen Act 

of 1996). A scoring criterion was developed to help ensure that only sound and viable 

initiatives that support the bureau’s mission and strategic goals are included in the 

portfolio. 
4.2 – PART Evaluation Table

PART Name: Collect the Revenue

Year PARTed: FY 2004

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

3. TTB has completed several economic impact studies which provide incremental cost and social net 

benefits of regulations. TTB has only collected several cost/social net benefit studies (e.g. economic impact 

studies which support TTB's impact study positions). 

2. Improve estimates of how funds are distributed across TTB's two lines of business to ensure that funds 

are obligated in accordance with planned schedules.

3. Develop a baseline to compare the incremental cost and net benefits of regulation.

1. Develop baseline for annual performance measures .

1. TTB is in the process of completing the baselines for its annual performance measures in FY 2006.

2. TTB currently uses the BPD ARC accounting system, which allows for the allocation and tracking of

funds. In FY 2008 TTB introduced a new account code structure to capture and measure costs by strategic 

goals, programs, projects and budget activities.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

TTB - 21 
Financial Management Service 

Mission Statement 

To provide central payment services to Federal Program Agencies (FPAs), operate the 

federal government’s collections and deposit systems, provide government-wide 

accounting and reporting services, and manage the collection of delinquent debt. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2007 FY 2008 FY 2009

Financial Management Service Enacted Enacted Request $ Change % Change 

Payments $148,408 $145,977 $147,445 $1,468 1.01%

Collections 17,434 19,804 21,481 1,677 8.47%

Debt Collection 5,029 0 0 0 0.00%

Government wide Accounting and 

Reporting 64,510 68,642 70,418 1,776 2.59%

Total Appropriated Resources $235,381 $234,423 $239,344 $4,921 2.10%

Total FTE 1,761 1,692 1,500 (192) -11.35%

FY 2009 Priorities 

• Provide federal payments timely and accurately and continue to move toward an allelectronic Treasury for payments. 

• Provide timely collection of federal government receipts, at the lowest cost, and 

continue to move toward an all-electronic Treasury. 

• Maximize collection of government delinquent debt by providing efficient and 

effective centralized debt collection services. 

• Issue accurate, accessible, and timely financial reports and improve the compilation 

process and audit opinion on the Financial Report of the U.S. Government.
Table of Contents 

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

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

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

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

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

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

2.2 – Operating Levels Table.......................................................................................... 8 

2.3 – Appropriations Detail Table .................................................................................. 9 

2B – Appropriations Language and Explanation of Changes......................................... 9 

2C – Permanent, Indefinite Appropriations.................................................................... 9 

2.4 – Permanent, Indefinite Appropriations.................................................................. 11 

2C – Legislative Proposals ........................................................................................... 11 

Section 3 – Budget and Performance Plan............................................... 12

3.1 – Budget by Strategic Outcome .............................................................................. 12 

3A – Payments.............................................................................................................. 12 

3.2.1 – Payments Budget and Performance Plan.......................................................... 14 

3B – Collections............................................................................................................ 15 

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

3C – Debt Collection ................................................................................................... 17 

3.2.3 – Debt Collection Budget and Performance Plan ................................................ 18 

3D – Government wide Accounting and Reporting ..................................................... 18 

3.2.4 – Government wide Accounting and Reporting Budget and Performance Plan . 20 

Section 4 – Supporting Materials.............................................................. 21

4A – Human Capital Strategy Description ................................................................... 21 

4.1 – Summary of IT Resources Table ......................................................................... 23 

4.1 – Summary of IT Resources Table (continued)...................................................... 24 

4B – Information Technology Strategy ........................................................................ 25 

4.2 – PART Evaluation Table....................................................................................... 26 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Financial Management Service (FMS) plays a key role in supporting the Department 

of the Treasury’s strategic goal of managing the United States Government’s finances 

effectively by operating as the financial manager and principal fiscal agent for the federal 

government. This role includes managing the nation’s finances by collecting money due 

to the United States, making its payments and performing central accounting functions. 

Three FMS programs – payments, collections and cash forecasting – are part of the 

nation’s Financial Critical Infrastructure which requires these activities to be fully 

operational at all times. 

FMS’ Strategic Goals, as reflected in the FY 2009 priorities, are to: 

• Provide federal payments timely and accurately, and move toward an all-electronic 

Treasury for payments. 

• Provide timely collection of federal government receipts, at the lowest cost, through 

an all-electronic Treasury. 

• Maximize collection of government delinquent debt by providing efficient and 

effective centralized debt collection services. 

• Produce accurate, accessible, and timely government-wide financial information and 

reports which contribute to improved quality of the nation's financial decision 

making. 

• Facilitate the achievement of a clean audit opinion on the Financial Report of the U.S. 

Government through FMS’ internal operations and support to government agencies. 

FMS provides critical services to millions of United States taxpayers and other 

customers. It embodies Treasury’s leadership strategy to create value for the American 

people, provide responsible and effective stewardship over the government’s finances, 

and focus on quality service results and innovation. The breadth, scope and impact of 

FMS programs on the economy and the American public are enormous. FMS’ activities 

touch millions of American citizens, virtually every Federal Program Agency (FPA) and 

state governments across the country, as well as having international reach. 

As the government’s financial manager, FMS oversees a daily cash flow in excess of $60 

billion, disbursing 85 percent of the federal government’s payments. These payments 

include income tax refunds, Social Security benefits, veterans’ benefits and other federal 

payments to individuals and businesses. FMS also administers the world’s largest 

collection system, collecting over $3.0 trillion in FY 2007. FMS provides cash 

management guidance to FPAs, maintains the government’s accounting books, and 

compiles and publishes government-wide financial information used to monitor the 

FMS - 1
government’s financial status. Finally, FMS serves as the government’s central debt 

collection agency for delinquent non-tax debt. 

1B – Program History and Future Outlook 

The Payments program develops and implements federal payment policy and procedures, 

issues and distributes payments, promotes the use of electronics in the payment process, 

and assists agencies in converting payments from paper checks to Electronic Funds 

Transfer (EFT). This includes controlling and providing financial integrity to the 

payments process through reconciliation, accounting, and claims activities. It also 

includes special payments such as Federal Emergency Management Agency payments 

and the recent telephone excise tax refund. In FY 2007, FMS issued over 981 million 

non-Defense payments worth $1.6 trillion to a wide variety of recipients, such as those 

who receive Social Security benefits, IRS tax refunds and veterans’ benefits. Seventyeight percent of all payments disbursed were issued via direct deposit 

Streamlining the payments processes while continually investing in state-of-the-art 

technology is integral in processing payments accurately, timely, and more safely and 

securely for the taxpayer. In FY 2009, FMS will continue to expand the use of electronic 

media to deliver federal payments. Electronic media provides a safer, more secure and 

reliable method of payment for recipients. It also decreases the number of paper checks 

issued, which minimizes costs and inefficiencies associated with the delivery of nonelectronic benefits. 

The Collections program collects revenues needed to operate the federal government 

through the effective management of the government’s collections infrastructure. In FY 

2007, FMS collected $3.1 trillion through a network of more than 9,000 financial 

institutions, of which 79 percent were done electronically. Dollar revenues collected in 

FY 2007 exceeded those collected in FY 2006 by six percent. The most important 

program that supports electronic collections is the Electronic Federal Tax Payment 

System (EFTPS). EFTPS is a tax payment system that offers all businesses and 

individuals the convenience of making their federal tax payments electronically 24 hours 

a day, seven days a week. 

In FY 2009, FMS will continue to expand the use of electronic collection mechanisms

that use the most advanced and secure collection technologies that are flexible enough to 

accommodate the varying needs and technical sophistication of all taxpayers and FPAs. 

In addition, FMS will work to streamline, modernize and improve the processes and 

systems supporting Treasury’s collections and cash management program. Currently, 

collection agents report collections information to many FPAs and multiple U.S. 

Treasury systems. To collect this information, the FPAs and U.S. Treasury systems 

interface with many different sources using a variety of formats and interface 

technologies. FMS is developing a system which will provide a single touch point for 

information reporting and retrieval via transaction brokering, data warehousing, and 

business intelligence. The single touch point will enable the standardization and 

consolidation of collections information and eliminate redundancies in the federal 

FMS - 2
government’s collections reporting processes. FMS will also continue to focus on 

security oversight efforts at financial agent processing facilities and banking institutions 

as a way to proactively identify security control weaknesses and detect and deter fraud, 

waste, theft and unauthorized access associated with the collection of government 

remittances and protection of sensitive information. 

The Debt Collection program recovers delinquent government and child support debt by 

providing centralized debt collection, oversight, and operational services to FPAs and 

states as required by the Debt Collection Improvement Act (DCIA) of 1996 and related 

legislation. 

In FY 2007, FMS collected a record $3.76 billion in delinquent debt. Debt referrals from

creditor agencies were at 100 percent of eligible debt at the end of FY 2007. As a result 

of FMS’ continued program improvements, total collections since the enactment of the 

DCIA in 1996 are over $31.7 billion. By FY 2009, FMS’ Integrated FedDebt system will 

have combined FMS’ Cross-Servicing program and the Treasury Offset Program (TOP) 

into one system. This reduces redundancies, improves data integrity, and provides 

agencies direct online access. FMS will also continue to roll out Debt Check, an online 

program used to help agencies bar delinquent debtors from obtaining new loans or loan 

guarantees. In addition, a Federal Contractor Tax Compliance Task Force subgroup 

consisting of the FMS, the IRS, and the Center for Medicare and Medicaid Services 

(CMS) is examining how best to incorporate CMS payments to Medicare providers into 

the Federal Payment Levy Program. 

The Government-wide Accounting and Reporting program maintains the federal 

government’s books and accounts for its monetary assets and liabilities by operating and 

overseeing the government’s central accounting and reporting system. For FY 2007, 

FMS released the Financial Report of the United States Government (FR) 75 days after 

the fiscal year-end for the fourth consecutive year. The FR presents a picture of 

government-wide finances that complements the traditional federal government budget 

information. It is invaluable when assessing the long-term impact of the government’s 

policy decisions and the timely availability of this additional information is critical to a 

fully informed budget process. To complement and support the accelerated release of the 

FR, Treasury continues to release the Monthly Treasury Statement (the monthly public 

source of budgetary results) on the eighth workday of each month. With this release 

schedule, agency financial managers are better able to verify and use the data in their own 

reports. 

In FY 2009, FMS will continue to revamp and implement government-wide accounting

processes to provide more useful and reliable financial information on a regular basis. 

FMS has two major initiatives which will modernize long standing federal accounting 

processes and provide agencies with methodologies and tools to improve the accuracy 

and consistency of their financial data. 

FMS is building and implementing a system that replaces existing government-wide 

accounting functions and processes that vastly improves the exchange of financial 

FMS - 3
information among FMS, FPAs, Office of Management and Budget (OMB) and the 

banking community. This system will improve the reliability, usefulness, and timeliness 

of the government’s financial information, provide agencies and other users with better 

access to that information, and will eliminate duplicate reporting and reconciliation 

burdens by agencies, resulting in significant government-wide savings. As part of the 

system redesign, FMS provides agencies with a web-based account statement resembling 

a bank statement, which contains summarized Treasury fund account balance activity. 

Once fully implemented, agencies will have daily direct access through a web-based 

system to the data supporting the items on the account statement for reconciliation and

fund reclassification, rather than having to use multiple systems. Fund balance 

information will be available to agencies on a near real-time (one-day lag) basis. This

will move the government one step closer to achieving its objective of producing 

financial information on a regular, recurring basis more quickly and reliably. In FY 

2009, FMS will be working with FPAs to report payment, collection and intragovernmental payment and collection transactions to the new Government-wide 

Accounting System. 

In FY 2009, FMS will also continue moving forward on the Financial Information and 

Reporting Standardization (FIRST) initiative. This initiative integrates budget and 

financial reports from FPAs. FIRST will improve the consistency of the budgetary and 

proprietary accounting data recorded in agency financial statements and reported to FMS 

through its trial balance. FIRST is designed to provide authoritative information, 

contained in Treasury’s central accounting system, to the agencies to facilitate the 

reconciliation process for specific intra-governmental transactions. 

FMS - 4
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Financial Management Service FTE Amount

FY 2008 Enacted 1,692 $234,423

Base Realignment:

 FTE Adjustment (192)

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 553

 Pay Annualization 1,080

 Pay Inflation Adjustment 3,288

Total FY 2009 Base 1,500 $239,344

Program Decreases:

 Government-Wide Accounting & Reporting Modernization Program (326)

Payments Operations (172)

 Accounting Architecture (460)

Program Reinvestment:

 Financial Information Reporting Standardization (FIRST) 958

Subtotal FY 2009 Program Changes 0 0

Total FY 2009 President's Budget Request 1,500 $239,344

2A – Budget Increases and Decreases Description 

Base Realignment ......................................................................................+$0 / -192 FTE 

FTE Adjustment +$0 / -192 FTE 

FMS identified 192 unfunded base FTE upon review of its FY 2008 proposed financial 

plan, which is reflected by this adjustment. 

Maintaining Current Levels (MCLs) ...........................................+$4,921,000 / +0 FTE 

Non-Pay Inflation Adjustment +$553,000 / +0 FTE 

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

equipment and GSA rent. 

Pay Annualization +$1,080,000 / +0 FTE 

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

Pay Inflation Adjustment +$3,288,000 / +0 FTE 

Funds are requested for the FY 2009 pay raise. 

Program Decreases ............................................................................-$958,000 / +0 FTE 

Government-Wide Accounting & Reporting Modernization Program -$326,000 / +0 FTE 

As a result of efficiencies gained through modernization and a decreased requirement for 

contractor support for legacy applications and the certification and accreditation process, 

funding can be redirected from the Government-wide Accounting and Reporting budget 

activity to cover a portion of the Financial Information Reporting Standardization 

(FIRST) initiatives. 

FMS - 5
Payments Operations -$172,000 / +0 FTE 

As a result of improvements in the payments activity (e.g. presort equipment), FMS can 

redirect this funding to the Financial Information Reporting Standardization initiative. 

Accounting Architecture -$460,000 / +0 FTE 

Funding has been identified in Government-wide Accounting and Reporting from prior 

years Accounting Architecture initiative. These funds can be redirected to the Financial 

Information Reporting Standardization initiative. 

Program Reinvestment .....................................................................+$958,000 / +0 FTE 

Financial Information Reporting Standardization (FIRST) +$958,000 / +0 FTE 

FMS is requesting an increase of $958,000 to the current base of $2,393,000 for FIRST. 

This initiative will be fully funded by redirects from savings generated from the GWA 

program, Payments Operations and Accounting Architecture. 

FIRST integrates budgetary and proprietary financial data from FPAs. Currently, 

budgetary and proprietary accounting data are collected separately in four different 

systems. FIRST will improve the consistency of agency financial information, which is 

reported in agency financial statements and submitted to FMS through agency accounting 

trial balances. This investment will move FMS closer to achieving its strategic goal of

producing accurate, accessible and timely government-wide financial information and 

reports that contribute to improved quality of the nation's financial decision making. 

FIRST will accomplish this by: 

• Automating the maintenance and distribution of the United States Standard General 

Ledger (USSGL) accounting rules and guidance through an interactive database on 

the internet, making it more accurate and consistent, easier to maintain, and easier to 

use. 

• Combining four current FMS stovepipe accounting data collection systems into one 

quarterly submission. 

• Improving the accuracy, consistency and timeliness of agency reporting by validating 

the agency data and balances against authoritative balances in FMS’ central

accounting system. 

• Realizing the full benefit of the United States Standard General Ledger (USSGL) in 

the financial accounting and reporting for the U.S. Government. 

Consistent reporting is required for central managers to make sound decisions, and is 

crucial to attaining FMS' strategic goal of facilitating the achievement of a clean audit 

opinion on the Financial Report of the United States Government (FR). This initiative 

provides a systemic solution to improve data accuracy and consistency for all 

government-wide accounting and reporting operations. FIRST will address two material 

weaknesses of the FR: (1) the Accounting for and Reconciliation of Intragovernmental 

Activity and Balances; and (2) the Preparation of Consolidated Financial Statements. 

The applications that FIRST is replacing are not compliant with the FMS technical 

reference model. The additional resources will be used to develop the Accounting Trial 

FMS - 6
Balance (ATB) system and its interfaces to Standards and Guidance of the USSGL 

Interactive Database (SID) and Government-wide Financial Reporting System (GFRS) 

by the end of FY 2011. There will also be efficiencies realized in having only one 

application on one platform to maintain. In addition, government-wide agency savings, 

conservatively estimated at $31 million annually, will be realized when FIRST is fully 

implemented. If FMS does not build FIRST, the four current reporting systems will need 

to be upgraded to comply with FMS' enterprise architecture at significant cost without 

improving functionality. 

FMS - 7
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Financial Management Service

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Rescission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 1,761 1,692 1,692 1,500

Object Classification:

 11.1 - Full-time permanent 118,323 118,955 0 118,955 124,208

 11.3 - Other than full-time permanent 1,500 1,500 0 1,500 1,500

 11.5 - Other personnel compensation 2,500 3,000 0 3,000 3,000

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 26,172 26,200 0 26,200 29,888

 13 - Benefits for former personnel 175 175 0 175 175

 21 - Travel and transportation of persons 1,553 1,603 0 1,603 1,503

 22 - Transportation of things 195 195 0 195 195

 23 - Rent, Communications and Utilities 0 0 0 0 0

 23.1 - Rental payments to GSA 14,950 13,500 0 13,500 13,500

 23.2 - Rental payments to others 365 365 0 365 670

 23.3 - Comm, utilities, and misc charges 12,658 12,569 0 12,569 11,413

 24 - Printing and reproduction 700 500 0 500 500

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 4,750 4,800 0 4,800 6,002

 25.2 - Other services 22,157 22,081 0 22,081 19,035

 25.3 - Other purchases of goods and services from Govt.

accounts 

6,009 7,037 (768) 6,269 6,000

 25.4 - Operation and maintenance of facilities 950 1,000 0 1,000 500

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 7,500 7,500 0 7,500 8,005

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

 26 - Supplies and materials 4,250 4,300 0 4,300 3,600

 31 - Equipment 10,149 9,386 0 9,386 9,100

 32 - Land and structures 475 475 0 475 500

 33 - Investments and loans 0 0 0 0 0

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

 42 - Insurance claims and indemnities 50 50 0 50 50

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $235,381 $235,191 $(768) $234,423 $239,344

Budget Activities:

 Payments 148,408 146,465 (488) 145,977 147,445

 Collections 17,434 19,869 (65) 19,804 21,481

 Debt Collection 5,029 0 0 0 0

 Government wide Accounting and Reporting 64,510 68,857 (215) 68,642 70,418

Total Budget Authority $235,381 $235,191 $(768) $234,423 $239,344

FMS - 8
2.3 – Appropriations Detail Table 

Dollars in Thousands

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

FINANCIAL MANAGEMENT SERVICE 

Federal Funds 

SALARIES AND EXPENSES: 

For necessary expenses of the Financial Management 

Service, [$234,423,000] $239,344,000 of which not to 

exceed $9,220,000 shall remain available until September 

30, [2010] 2011, for information systems modernization 

initiatives, of which not to exceed $2,500 shall be available 

for official reception and representation expenses.

 [Department of the Treasury Appropriations Act, 2008]

2C – Permanent, Indefinite Appropriations 

Federal Reserve Bank Permanent, Indefinite Appropriation

The Federal Reserve Banks (FRBs) act as fiscal agents of the United States when directed 

by the Secretary of the Treasury in accordance with 12 United States Code (U.S.C.) 391. 

The FRBs support the fiscal operations and provide banking and financial services on 

behalf of the Treasury of the United States. The Federal Reserve Reimbursement and 

Fiscal Responsibility Act of 1997 amended section 3302 (f) of title 31, U.S.C. and 

provided a permanent and indefinite appropriation of amounts necessary to pay the FRBs 

 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Payments 924 $147,055 1,173 $148,408 1,112 $145,977 963 $147,445 -13.42% 1.01%

Collections 147 19,649 113 $17,434 137 $19,804 135 $21,481 -1.39% 8.47%

Debt Collection 0 0 56 $5,029 0 $0 0 $0 0.00% 0.00%

Gov. Accounting and Reporting 412 64,954 419 $64,510 443 $68,642 402 $70,418 -9.21% 2.59%

Subtotal New Appropriated Resources 1,483 $231,658 1,761 $235,381 1,692 $234,423 1,500 $239,344 -11.35% 2.10%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 408 201,445 370 196,282 428 215,179 441 228,010 3.04% 5.96%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 408 $201,445 370 $196,282 428 $215,179 441 $228,010 3.04% 5.96%

Total Resources Available for Obligation 1,891 $433,103 2,131 $431,663 2,120 $449,602 1,941 $467,354 -8.44% 3.95%

FY 2008

% Change

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Obligations Enacted Enacted Request to FY 2009

FMS - 9 
for the services they provide as fiscal agents on behalf of the Treasury. Since the FRBs 

support each FMS program activity, the performance measures listed in the Salaries and 

Expense section of this budget apply to the work done by the FRBs. FMS estimates that 

the cost of FRB services for FY 2009 will be approximately $305 million.

Financial Agent Services Permanent, Indefinite Appropriation

broad discretion to

l Tax

e services

MS estimates that the cost of FA services for FY 2009 will be approximately $593 

o

.

e

he

red for 

 to 

entity 

Congress has given the Secretary of the Treasury longstanding,

deposit money in financial institutions and to obtain banking services by designating

financial institutions to act/serve as Financial Agents (FA) of the United States 

Government. The services are in support of such programs as Electronic Federa

Payment System (EFTPS), the Lockbox Networks, plastic cards, e-commerce systems,

and CA$HLINKII, a deposit reporting and cash concentration system. These and other

programs are vital to FMS strategic goals, the government’s financial critical 

infrastructure, and the President’s emphasis on expanding E-Government. Th

provided by such financial institutions are authorized under numerous statutes including,

but not limited to, 12.U.S.C. 90 and 265. In FY 2004, Treasury received a permanent 

indefinite appropriation to pay for these services. 

F

million. Of this amount, approximately $40 million is appropriated to other bureaus t

pay for these services, which is reimbursed to FMS and deposited into the General Fund

The increase in the estimate from prior years is a direct result of the significant increase 

in volume, complexity, and transactions processed for “identity programs,” such as 

passport and immigration fee collections. For example, as a result of the Intelligenc

Reform and Terrorism Prevention Act of 2004, which requires a passport for entry to t

United States via air and ship from Canada, the Caribbean, and Mexico, the financial 

agents have seen the volume of passport applications nearly double. They have had to

hire hundreds of new employees to manage the workload, open additional processing 

locations, implement 24 hours a day, seven days a week processing, and invest in 

additional sorting, extraction, imaging, and document management hardware and 

software. Passport applications are expected to rise again once passports are requi

land border crossings from Mexico and Canada, beginning in FY 2008, and after the 

State Department begins to offer the option for a wallet sized passport card in addition

the traditional passport. None of the offsetting passport fees are deposited into this fund.

Other identity programs administered by U.S. Citizenship and Immigration Services will 

lead to additional increases in transaction volume processed by financial agents, and even

greater increases in volume if immigration reform legislation is passed. Given the 

complexity, requirements, and volumes for processing fees under these and other id

programs, outlays for this fund may increase by 50 percent over recent historical rates. 

FMS - 10 
2.4 – Permanent, Indefinite Appropriations 

2007 2008 FY 2009

Enacted Enacted Request

Federal Reserve Bank $245,000 $295,000 $305,000

Financial Agent Services $311,000 $426,000 $593,000

Table 2.4

Permanent, Indefinite Appropriations

(Dollars in Thousands)

Permanent, Indefinite Appropriation

2C – Legislative Proposals 

Eliminate the 10-year Limitations Period on Offset (31 U.S.C. 3716) 

This proposal would eliminate the 10-year limitation on the collection of delinquent nontax federal debts by administrative offset. This would ensure that delinquent debts can be 

collected by offset without regard to any statutory, regulatory or administrative limitation 

on the period within which debts may be collected. The proposed change would allow 

for the collection by offset of other federal debts consistent with the current law for 

student loans. 

The proposal would be consistent with the Supreme Court’s decision to allow the 

Department of Education to offset social security benefits to collect student loans over 10 

years old. 

Payment Transaction Integrity - Allows the federal government to trace and recover 

federal payments sent electronically to the wrong account. 

The proposal, which amends 12 U.S.C. 3413, revises an existing exception to the Right to 

Financial Privacy Act so that improper electronic payments and improperly negotiated 

Treasury checks can be traced and recovered. Revising the exception will also permit the 

federal government to verify the identities of persons making payments to or receiving 

payments from the government. 

FMS - 11 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Enacted Request Change

AMOUNT AMOUNT AMOUNT 

 Financial information 68,642 73,597 7.5%

 Payments 283,826 286,029 1.2%

 Revenue collected 97,134 107,728 9.5%

Total $449,602 $467,354 3.9%

3A – Payments ($147,445,000 from direct appropriations and $138,584,000 from 

reimbursable programs): The Payments activity issues and distributes payments, 

develops and implements federal payment policy and procedures, promotes the use of 

electronics in the payment process, and assists agencies in converting payments from

paper checks to Electronic Funds Transfer (EFT). This activity also includes controlling 

and providing financial integrity to the payments process through reconciliation, 

accounting and claims activities. Included in this activity is the claims activity which 

settles claims against the United States. These claims result from federal government 

checks that have been forged, lost, stolen or destroyed. FMS collects monies from those 

parties liable for fraudulent or otherwise improper negotiation of government checks. It 

also includes processing claims and reclamations for EFT payments. 

FMS continues to expand and market the use of electronic media to deliver federal 

payments, improve service to payment recipients, and reduce government program costs. 

This helps decrease the number of paper checks issued and minimize costs associated 

with postage, the re-issuance of lost, stolen and misplaced checks, and inefficiencies 

associated with the non-electronic delivery of benefits. 

Direct deposit offers federal benefit payment recipients ease and convenience, and 

protects against fraud and identity theft. Direct deposit also generates significant cost 

savings to the government over paper checks - each payment converted from paper to 

direct deposit saves the taxpayer over 88 cents per transaction. However, FMS faces 

challenges in increasing growth in electronic payments. As the government prepares for 

the huge increase in retiring baby boomers in the near future, it is critical that FMS 

dramatically increase use of direct deposit for issuing benefit payments. To increase the 

use of direct deposit for federal benefit payments, FMS began a nationwide campaign 

FMS - 12 
called “Go Direct” to encourage current check recipients to switch to direct deposit. In 

the first year, Go Direct exceeded the goal to convert approximately half a million check 

recipients to direct deposit, savings millions of dollars for the United States Treasury in 

the years to come. In December 2007, the Go Direct campaign achieved a major 

milestone, converting 1.6 million check recipients to direct deposit, since the inception of 

the campaign. 

Additionally, in FY 2007, FMS implemented a pilot program, Direct Express, which 

targeted the un-banked, to disburse benefit payments through debit cards. A survey of 

the Direct Express cardholders in July 2007 showed that 85 percent of those surveyed are 

satisfied with Direct Express, and four out of five people report that they would 

recommend the card. After conducting an evaluation of the pilot, FMS expects to roll out 

this debit card program nationwide and extend it to other benefit payments in the summer 

of 2008. Debit cards represent another electronic payment alternative to checks and one 

that holds promise for the unbanked. FMS is also working with the Social Security 

Administration to develop plans (entitled Universal Direct Deposit) which will require

newly enrolled beneficiaries to receive payments electronically unless they do not have a 

bank account. 

In support of its payments function, FMS has also undertaken considerable efforts to 

modernize its payment systems, incorporating new technologies and the internet. Some

programs that will continue to be in focus are: 

• Stored Value Card (SVC): This is a smartcard, similar to a credit/debit card, using an 

encrypted computer chip to process "electronic money" stored on the card. This 

program is aimed at reducing the float-loss associated with the more than $2 billion in

coin and currency in circulation at military bases, ships at sea, and other closed 

government locations around the world. From 1997 to September 2007, over 8 

million EFT transactions with a dollar value in excess of $1.3 billion were processed 

via the SVC programs. 

• Automated Standard Application for Payments (ASAP.gov): ASAP is a web-based 

system built by FMS in coordination with the Federal Reserve Bank of Richmond. 

Through this all electronic grants payment system, organizations including states, 

universities, for-profit and non-profit entities receive federal funds from accounts preauthorized by federal agencies. ASAP is one of two systems authorized by the Chief 

Financial Officer’s Council to disburse civilian grant payments on behalf of program

agencies. Twenty-five federal agencies use ASAP.gov and the total FY 2007 

disbursements to organizations were $447 billion. 

• Internet Payment Platform (IPP): The IPP will provide a centralized electronic 

invoicing and payment information portal accessible to all participants in federal 

payment transactions: agencies, payment recipients, and FMS. The use of IPP lowers 

costs for FMS and federal agencies by converting paper-based financial management 

activities, such as purchase orders and invoices, into automated online processes. It 

also provides a single central repository that allows suppliers access to the data they 

FMS - 13 
need to handle many inquiries on their own and avoid numerous disputes. The IPP is 

designed to yield government-wide efficiencies by (1) reducing paper processing by 

accounts payable, (2) enhancing Treasury’s value and service to its citizens by 

increasing access to and quality of payment data, and (3) providing a single central 

application in which government finance departments can engage with their suppliers, 

and in which government suppliers can engage with agencies. 

Other Resources:

Offsetting collections and reimbursements totaling $138,584,000 are collected for 

disbursement of federal agency payments to beneficiaries, including Social Security 

payments, Railroad Retirement Board payments, tax refunds and the Department of 

Veterans Affairs benefit payments. 

3.2.1 – Payments Budget and Performance Plan 

Payments Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $135,872 $142,979 $147,055 $145,977 $147,445

 Reimbursable Resources $129,264 $134,400 $132,712 $137,849 $138,584

Total Resources $265,136 $277,379 $279,767 $283,826 $286,029

Budget Activity Total $265,136 $277,379 $279,797 $283,826 $286,029

Payments Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

 Actual Actual Actual Target Target

Number of check payments (Millions) (Ot) 228 219 215 208 204

Number of electronic payments (Millions) 

(Ot) 

725 745 767 787 809

Unit cost for Federal Government payments 

($) (E) 

$.35 $.37 $.39 $.40 $.40

Percentage of Treasury Payments and 

associated information made electronically

(%) (Oe) 

 76.00% 77.00% 78.00% 79.00% 80.00%

Percentage of paper check and Electronic 

Funds Transfer (EFT) payments made 

accurately and on time (%) (Oe) 

 100.00% 100.00% 100.00% 100.00% 100.00%

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

Description of Performance: FMS disburses 85 percent of the federal government's

payments to a wide variety of recipients, such as those who receive Social Security 

Administration payments, Internal Revenue Service tax refunds, and the Department of 

Veterans Affairs benefits. In FY 2007 FMS issued over 981 million non-Defense 

payments, with a dollar value of approximately $1.6 trillion. Seventy-eight percent of 

these transactions were issued by Electronic Funds Transfer. In FY 2009, FMS is 

targeting the percentage of electronic payments to be 80 percent. 

FMS - 14 
3B – Collections ($21,481,000 from direct appropriations): The Collections activity 

collects revenues needed to operate the federal government through the management of 

the federal government’s collections infrastructure. FMS collected a record of $3.1 

trillion in FY 2007 through a network of more than 9,000 financial institutions. It also 

manages the collection of federal revenues such as individual and corporate income tax 

deposits, customs duties, loan repayments, fines and proceeds from leases. FMS 

establishes and implements collection policies, regulations, standards and procedures for 

the federal government. The majority of dollar collections are made electronically. In 

FY 2007, 79 percent of dollar collections were electronic. FMS has set its FY 2009 

target for the percentage collected electronically to be 80 percent. 

FMS develops and operates a variety of collection mechanisms and systems to meet 

program agency needs. It has initiated a comprehensive effort to streamline, modernize 

and improve the processes and systems supporting Treasury’s collections and cash 

management program. This effort, Collections and Cash Management Modernization, 

will improve financial performance by enabling FMS and government agencies to more 

effectively manage financial transaction information and improve the efficiency of the 

collections information reporting processes. Additionally, it will improve timeliness by

providing FPAs with the ability to predefine accounting rules to facilitate timely 

processing of financial transactions through the re-engineering of reporting processes. 

Through the expanded use of web-based technologies, this effort supports the integration 

of financial and performance information government-wide by providing data on a daily 

basis. 

FMS continues to promote the use of electronics in the collections process and assist 

agencies in converting collections from paper to electronic media with programs such as: 

• Electronic Federal Tax Payment System (EFTPS): This is an accurate, secure and 

convenient way to pay all federal tax payments, including corporate, excise and 

employment taxes and 1040 quarterly estimated taxes via the internet or a telephone 

voice response system. EFTPS processes 95 percent of United States tax dollars and 

is required for businesses with annual federal tax obligations above $200,000. FMS 

is also working to communicate the benefits of EFTPS – accuracy, security, 

simplicity and flexibility – to financial institutions, small businesses and tax 

practitioners. The goal is to encourage businesses and individuals to pay their federal 

taxes electronically through EFTPS rather than by using paper Federal Tax Deposit 

coupons, which number close to 38 million. FMS will direct its EFTPS efforts to 

financial institutions that process paper tax coupons as well as the tax practitioner 

community and small businesses to further expand the use of EFTPS. Through 

September 30, 2007, more than 90 million payments were processed through EFTPS, 

which represents an 8.33 percent increase over FY 2006. 

• Pay.gov: Pay.gov is an innovative system that allows individuals and businesses to 

make non-tax payments to federal agencies over the internet. Pay.gov provides 

collections, form submittal, bill presentment, authentication and agency financial 

reporting services. Since inception, it has processed approximately 23.5 million 

FMS - 15 
transactions valued at over $86.6 billion. Pay.gov responds to the increasing 

demands of consumers and businesses for electronic alternatives by providing the 

opportunity to complete forms and applications, make payments, and submit queries 

online 24 hours a day, seven days a week. Pay.gov, which has been implemented 

with 102 federal agencies representing 317 cash flows, collected $37.9 billion in FY 

2007 and $29.5 billion in FY 2006. New development will focus on interfaces with 

new systems within the new Collections Business Line Enterprise Architecture. 

• Check Conversion and Truncation: This collections settlement service converts a 

paper check either into an image that is cleared through the banking system or into an 

EFT debit against the check writer’s bank account. In both cases, paper checks are 

digitized at the point of receipt and the transactions are cleared and settled 

electronically. This service is a key program in realizing FMS’ goal of increasing 

electronic collections and reducing collection costs. In FY 2007, more than 9.7 

million items received over the counter, representing more than $14 billion, were 

processed through check conversion or truncation. Additionally, through FY 2007 

more than 7.7 million items received through the mail at lockboxes, representing 

more than $6.4 billion, were similarly processed. By the end of FY 2009, it is FMS’

goal that all paper checks remitted to the federal government via lockboxes will be

converted or truncated and processed electronically. 

3.2.2 – Collections Budget and Performance Plan 

Collections Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $16,229 $18,291 $19,649 $19,804 $21,481

 Reimbursable Resources $0 $0 $0 $0 $0

Total Resources $16,229 $18,291 $19,649 $19,804 $21,481

Budget Activity Total $16,229 $18,291 $169,649 $19,804 $21,481

Collections Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Unit cost to process a Federal revenue 

collection transaction ($) (E) 

$1.20 $1.10 $1.19 $1.30 $1.27

Percentage collected electronically of total

dollar amount of Federal government receipts

(%) (Oe) 

 79.00% 79.00% 79.00% 79.00% 80.00%

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

Description of Performance: In FY 2007, FMS collected a record $3.1 trillion through a 

network of more than 9,000 financial institutions. The majority of the dollar amounts of 

FMS collections were made electronically – 79 percent of the $3.1 trillion collected. 

However, approximately half of the transactions, 51.6 percent in FY 2007, are paper 

checks. In FY 2007, taxpayers paid more than $2.0 trillion using EFTPS, up 8.3 percent 

from FY 2006, and the number of payments to the government rose 8 percent, to 90 

million. FMS stepped up its efforts in FY 2007 to work with federal agencies to promote 

FMS - 16 
the use of electronics in the collections process and assists agencies in converting 

collections from paper to electronic media. 

3C – Debt Collection ($86,247,000 from reimbursable programs): The Debt Collection 

activity collects delinquent government and child support debt by providing centralized 

debt collection, oversight and operational services to Financial Program Agencies (FPAs) 

and states as required by the Debt Collection Improvement Act of 1996 and related 

legislation. The services include, but are not limited to, collecting delinquent debts 

through Cross-Servicing and offsetting federal payments, providing a database for use as 

a tool for barring delinquent debtors, providing post-judgment collection, advising and 

educating agencies towards improving debt management, and referrals to the Department 

of Justice. 

By FY 2009, FMS will collect delinquent debt through FedDebt, a comprehensive system

that integrated FMS’ previous collection tools: Cross-Servicing and the Treasury Offset 

Program (TOP). The TOP FedDebt function compares the names and Taxpayer 

Identifying Numbers (TINs) of debtors with the names and TINs of recipients of federal 

payments. If there is a match, the federal payment is reduced, or “offset,” to satisfy the 

overdue debt. Cross-Servicing activities include applications for various collection tools 

such as offset, demand letters to debtors, repayment agreements, administrative wage 

garnishment, referrals to the Department of Justice, credit bureau reporting, reporting 

discharged debts to the Internal Revenue Service (IRS), and use of private collection 

agencies. 

FedDebt, which integrates the payment offset and cross-servicing applications, provides 

FPAs with batch and online capabilities for all users, via a single sign-on interface and

will employ a common file format for submitting Cross-Servicing or TOP debts. 

FedDebt provides a single platform for debt business applications, a single entry portal, a 

web-based customer interface, and a single database for reporting. FedDebt eliminates 

many labor-intensive processes and hard-copy data exchanges for federal agency 

customers and service partners. FMS will continue developing FedDebt by implementing 

a service-oriented architecture. 

FMS is working to incorporate additional payment types into the payment offset and levy 

programs. This effort is directed primarily at increasing collections of debt, especially 

tax debt owed by contractors and vendors. FMS is working with the Center for Medicare 

and Medicaid Services (CMS) and IRS to determine the most efficient approach for 

bringing CMS medical debts into the levy and offset programs. In addition, 

enhancements of collection tools such as Administrative Wage Garnishment and Debt 

Check, an online database used to assist agencies in barring delinquent debtors from

obtaining new loans or loan guarantees, will improve program performance. 

FMS - 17 
3.2.3 – Debt Collection Budget and Performance Plan 

Debt Collection Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $8,738 $5,393 $0 $0 $0

 Reimbursable Resources $29,793 $28,312 $67,611 $77,330 $86,247

Total Resources $38,531 $33,705 $67,611 $77,330 $86,247

Budget Activity Total $38,531 $33,705 $67,611 $77,330 $86,247

Debt Collection Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Amount of delinquent debt collected per $1

spent ($) (E) 

$36.23 $39.97 $53.55 $40.00 $42.00

Amount of delinquent debt collected through 

all available tools (Billions $) (Ot)

$3.25 $3.34 $3.76 $3.40 $3.50

Percentage of delinquent debt referred to FMS 

for collection compared to amount eligible for 

referral (%) (Ot) 

 97.00% 95.00% 100.00% 95.00% 95.00%

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

Description of Performance: In FY 2007, FMS collected a record $3.76 billion in 

delinquent debt, which exceeded the FY 2007 target of $3.2 billion. This includes $1.7 

billion in past due child support, $1.47 billion in federal non-tax debt, and over $586 

million in federal tax levies and state tax debt offsets. Debt referrals from creditor 

agencies were at 100 percent of eligible debt at the end of FY 2007. As a result of the 

continued program improvements, collections have steadily increased to more than $31.7 

billion since the enactment of the Debt Collection Improvement Act of 1996. In calendar 

year 2007, the Internal Revenue Service referred an additional $32.2 billion of tax debts 

for continuous levy, a 14 percent increase from calendar year 2006 for the same period. 

3D – Government wide Accounting and Reporting ($70,418,000 from direct 

appropriations and $3,179,000 from reimbursable programs): The Government-wide 

Accounting and Reporting activity maintains the federal government’s books and 

accounts for its monetary assets and liabilities by operating and overseeing the 

government’s central accounting and reporting system. It also works with federal 

agencies to adopt uniform accounting and reporting standards and systems and provides 

support, guidance and training to assist FPAs in improving their government-wide 

accounting and reporting responsibilities. FMS gathers and publishes government-wide 

financial information which is used in establishing fiscal and debt management policies 

and is also used by the public and private sectors to monitor the government’s financial 

status. These publications include: the Daily Treasury Statement, the Monthly Treasury 

Statement, the Treasury Bulletin, the Combined Statement of the United States 

Government, and the Financial Report of the United States Government (FR). 

FMS is building and implementing a system to improve the exchange of financial 

information among FMS, FPAs, OMB and the banking community. Once completed, 

FMS - 18 
this project, the Government-wide Accounting (GWA) Modernization Project will 

comprehensively replace current government-wide accounting functions and processes 

that are both internal and external to FMS. In FY 2008 and FY 2009, FMS will be 

working with FPAs to roll-out the new GWA system for the reporting of payments, 

collections and intra-governmental collection and payment transactions. It will improve 

the reliability, usefulness, and timeliness of the government’s financial information, 

provide FPAs and other users with better access to that information, and will eliminate 

duplicate reporting and reconciliation burdens by agencies. In addition, FPAs will have 

better tools for reporting financial information and access to daily account statements for 

monitoring the status of their financial information at the Treasury Department. This 

initiative will result in significant savings throughout government as agencies will no 

longer have to prepare month-end reports classifying all of their disbursement and 

collection transactions or performing reconciliations on statements of differences 

associated with this month-end reporting. 

FMS is taking significant steps to address the material weaknesses found in the 

compilation process of Financial Report (FR) of the United States Government, 

including: 

• Requiring comprehensive accounting data from agencies on a quarterly basis that will 

allow FMS to better analyze the data for consistency and completeness. 

• Providing agencies with authoritative data to reconcile inter-agency transfers and 

other transactions that agencies report to the central accounting system. 

• Using the Chief Financial Officers (CFO) Council, Treasury Reporting Group as a 

forum to discuss these accounting and reporting issues that affect the FR. 

• Working with the CFO Council and OMB to develop more consistent business rules 

for intra-governmental transactions. 

• Encouraging greater auditor participation by requiring agency auditors to more 

closely scrutinize intra-governmental out-of-balance conditions with other agencies. 

The goal of these actions is to remove the compilation process as a barrier to a clean audit 

opinion for the FR. 

In FY 2009, FMS will continue moving forward on the Financial Information and 

Reporting Standardization (FIRST) initiative. This initiative integrates budget and 

financial reports from FPAs. FIRST will improve the consistency of the budgetary and 

proprietary accounting data recorded in agency financial statements and reported to FMS 

through its trial balance. FIRST is designed to provide authoritative information, 

contained in Treasury’s central accounting system, to the agencies, to facilitate the 

reconciliation process for specific intra-governmental transactions. 

FMS - 19 
3.2.4 – Government wide Accounting and Reporting Budget and Performance Plan 

Government wide Accounting and Reporting 

Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $62,668 $67,338 $64,954 $68,642 $70,418

 Reimbursable Resources $0 $0 $1,122 $0 $3,179

Total Resources $62,668 $67,338 $66,076 $68,642 $73,597

Budget Activity Total $62,668 $67,338 $66,076 $68,857 $73,597

Government wide Accounting and 

Reporting Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Unit Cost to Manage $1 Million Dollars of

Cash Flow 

Baseline $8.50 $10.36 $11.72 $13.39

Percentage of Government-wide accounting

reports issued accurately (%) (Oe) 

 100.00% 100.00% 100.00% 100.00% 100.00%

Percentage of Government-wide accounting

reports issued timely (%) (E) 

 100.00% 100.00% 100.00% 100.00% 100.00%

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

Description of Performance: FMS issues 100 percent of its government-wide accounting 

reports accurately and timely. For the fourth consecutive year, FMS released the 

Financial Report of the United States Government (FR) 75 days after the fiscal year-end. 

In FY 2006, Government Accountability Office (GAO) acknowledged and noted 

improvements with regard to consistency with agency information in the Balance Sheet, 

the Statement of Net Cost and Statement of Social Insurance and in the note disclosures 

that are directly linked to the amounts on these principal financial statements. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

FMS - 20 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

FMS’ strategic management of human capital is consistent with its mission, vision and 

priorities supporting the President’s Management Agenda, and Treasury’s strategic goal 

to manage the United States Government’s Finances Effectively. 

FMS is on the technology forefront in the performance of its mission. FMS has taken 

steps to improve the quality of its professional workforce. A Human Capital Strategic 

Plan has been developed to identify current structure weaknesses and build upon its 

strengths. Achieving the following objectives will support and strengthen its work force: 

• Strategic Alignment: A human capital strategy is aligned with FMS’ mission, goals, 

organizational objectives, and is integrated into the strategic plans, performance plans 

and budgets. 

• Workforce Planning & Deployment: FMS is citizen-centered, delayered, missionfocused, and leverages E-Government and competitive sourcing. 

• Leadership & Knowledge Management: Leaders and managers effectively manage 

people, ensure continuity of leadership, and sustain a learning environment that drives 

continuous improvement in performance. Succession strategies result in a diverse 

leadership talent pool that is continually updated. 

• Results-Oriented Performance Culture: FMS has a diverse, results-oriented, high 

performance workforce, a performance management system and awards program that 

effectively differentiates between high and low performance. It holds employees 

accountable, links individual/team/unit performance to organizational goals and 

desired results. 

• Diversity: Under-representation is addressed, particularly in mission-critical 

occupations and leadership positions and processes are in place to sustain diversity. 

• Talent: FMS has significantly reduced mission-critical skills, knowledge and 

competency gaps. FMS is making significant progress and demonstrates continued 

improvement in meeting agreed-upon hiring timeline goals, i.e., the 45-day hiring 

model. 

• Accountability: Human capital decisions are guided by a data-driven results-oriented

planning and accountability system. 

Through these objectives FMS has strengthened its human capital position. Proactive 

identification and filling of vacant positions is a part of recruiting and retaining new 

talent. Delegated Examination and student intern program authorities are used 

extensively to attract talent from some of the best colleges and universities. 

FMS has action plans to attain and maintain the right number of people with the right 

skills to accomplish the mission. It continually manages the ongoing challenge of 

FMS - 21 
FMS - 22 

recruiting and retaining highly skilled individuals in critical areas, including Accountants 

(with strong analytical skills) and IT Specialists. These challenges have increased with 

heightened competition from the private sector. In addition, there is ongoing position 

management and assessment of FTE distribution. As vacancies occur, they are reviewed 

to determine whether the position should be back-filled, the FTE be redirected as 

appropriate, or the FTE be eliminated. This is how FMS counters the possibility of either 

a surplus or deficiency of staff in certain job occupations. 

Through FY 2010, 26 percent of FMS’ current employees are eligible for Optional 

Retirement and 43 percent are eligible for Discontinued Service or Early Retirement. 

Strategies are in place to close skill-gaps and fill staffing requirements in mission-critical 

occupations. This includes use of all pay incentives within budget constraints (e.g., 

Recruitment and Retention Incentives) and specialized employee development programs: 

SES Candidate Development, Project Management Certification, Management 

Preparatory Development, Federal Career Intern Program, Leadership, and Mentoring. 

Another strategy to manage staffing needs is use of contractors and/or outsourcing. FMS 

supplements its workforce with contractors in security, building maintenance, IT support 

and various finance functions provided by the Bureau of the Public Debt. Government 

collections are outsourced to financial institutions and Federal Reserve Banks who serve 

as financial and fiscal agents of the Treasury Department. 

FMS believes that a diverse workforce is vital to achieve its mission. It monitors 

recruitment and diversity goals to improve areas of under-representation and actively 

supports programs and initiatives to recruit minority college students. The following 

programs have been established to ensure a diverse workforce: 

• SES candidate program was developed to create a diverse pipeline of future senior 

executives. 

• Special emphasis programs were expanded and Equal Employment Opportunity and 

diversity awareness training was instituted. 

• Hispanic recruitment was enhanced through the increased use of Hispanic 

Associations of Colleges and Universities interns, which created a pipeline for new 

Hispanic employees. 

In addition, FMS has increased participation in the Washington Internship for Native 

Students program as well as the Department of Labor’s Workforce Recruitment Program 

for students with disabilities was increased. FMS continues to use the Federal Career 

Internship Program to facilitate and accelerate general hiring of qualified and talented 

minority student interns. 

FMS has a solid and viable Human Capital Strategy to fulfill its mission. 
4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments

FY 2008 

Major IT Investments / Funding Source Budget Activity

FY 2006 & 

Earlier

Enacted

FY 2007 

Enacted

Likely 

Enacted

FY 2009 

Requested

Automated Standard Application for Payments (ASAP) Payments 8,739 2,245 -74.3% 2,235 -0.4% 2,422 8.4%

FMS S&E no FTE 689 69 -90.0% 88 27.5% 77 -12.5%FMS S&E FTE Costs 8,050 2,176 -73.0% 2,147 -1.3% 2,345 9.2%Multi-Year 0 0 N/A 0 N/A 0 N/A

Debt Management Accounting System (DMAS) Debt Collection 0 0 0.0% 0 0.0% 0 0.0%

FMS S&E no FTE 0 0 N/A 0 N/A 0 N/A

FMS S&E FTE Costs 0 0 N/A 0 N/A 0 N/AMulti-Year 0 0 N/A 0 N/A 0 N/A

Deposit and Data Management (DDM) Collections 730 1,156 0.0% 1,226 0.0% 1,276 4.1%

FMS S&E no FTE 0 0 N/A 0 N/A 0 N/A

FMS S&E FTE Costs 730 1,156 N/A 1,226 0.0% 1,276 4.1%

Multi-Year 0 0 N/A 0 N/A 0 N/A

FMS EFTPS (Electronic Federal Tax Payment System) Collections 617 617 N/A 638 3.4% 659 3.3%

FMS S&E no FTE 0 0 N/A 0 N/A 0 N/A

FMS S&E FTE Costs 617 617 N/A 638 3.4% 659 3.3%

Multi-Year 0 0 N/A 0 N/A 0 N/A

FedDebt Debt Collection 0 0 0.0% 0 0.0% 0 0.0%

FMS S&E no FTE 0 0 N/A 0 N/A 0 N/A

FMS S&E FTE Costs 0 0 N/A 0 N/A 0 N/AMulti-Year 0 0 N/A 0 N/A 0 N/A

Financial Information and Reporting Standardization (FIRST)

Government-wide 

Accounting 3,384 4,107 21.4% 5,792 41.0% 7,056 21.8%

FMS S&E no FTE 838 138 -83.5% 2,309 1573.2% 3,351 45.1%

FMS S&E FTE Costs 2,298 3,367 46.5% 3,399 1.0% 3,705 9.0%

Multi-Year 248 602 N/A 84 N/A 0 N/A

Government-Wide Accounting and Reporting Modernization (GWA)

Government-wide 

Accounting 80,711 15,361 -81.0% 10,094 -34.3% 9,568 -5.2%

FMS S&E no FTE 38,669 3,349 -91.3% 2,250 -32.8% 1,668 -25.9%FMS S&E FTE Costs 29,282 9,460 -67.7% 5,492 -41.9% 5,941 8.2%

Multi-Year 12,760 2,552 N/A 2,352 N/A 1,959 N/A

Internet Payment Platform (IPP) Payments 533 291 0.0% 300 3.1% 309 3.0%

FMS S&E no FTE 0 0 N/A 0 N/A 0 N/A

FMS S&E FTE Costs 533 291 N/A 300 3.1% 309 3.0%

Multi-Year 0 0 N/A 0 N/A 0 N/A

% Change from 

FY06 to FY07

% Change from 

FY07 to FY08

% Change 

from FY08 to

FY09

FMS - 23 
FMS - 24 

4.1 – Summary of IT Resources Table (continued) 

Dollars in Thousands

Information Technology Investments

FY 2008 

Major IT Investments / Funding Source Budget Activity

FY 2006 &

Earlier 

Enacted

FY 2007 

Enacted

Likely 

Enacted

FY 2009 

Requested

FMS S&E FTE Costs 4,104 500 -87.8% 500 0.0% 552 10

Multi-Year 0 0 N/A 0 N/A 0 

PACER Payments 11,134 2,325 -79.1% 2,489 7.1% 2,631 5

FMS S&E no FTE 6,680 1,441 -78.4% 1,578 9.5% 1,693 7

FMS S&E FTE Costs 4,454 884 -80.2% 911 3.1% 938 3Multi-Year 0 0 N/A 0 N/A 0 

Pay.gov Collections 1,560 522 -66.5% 545 4.4% 569 4

FMS S&E no FTE 0 0 N/A 0 N/A 0 

FMS S&E FTE Costs 1,560 522 -66.5% 545 4.4% 569 4Multi-Year 0 0 N/A 0 N/A 0 

Payment Application Modernization (PAM) Payments 12,445 12,776 2.7% 12,697 -0.6% 11,939 -6

FMS S&E no FTE 1,490 985 -33.9% 1,027 4.3% 1,039 1

FMS S&E FTE Costs 10,730 11,566 7.8% 11,445 -1.0% 10,675 -6

Multi-Year 225 225 N/A 225 N/A 225 

Secure Payment System (SPS) Payments 16,815 3,517 -79.1% 3,875 10.2% 3,901 0

FMS S&E no FTE 8,039 1,660 0.0% 1,737 0.0% 1,712 -1FMS S&E FTE Costs 8,776 1,857 0.0% 2,138 0.0% 2,189 2

Multi-Year 0 0 N/A 0 N/A 0 

Treasury Check Information System (TCIS) Payments 5,519 857 -84.5% 836 -2.5% 854 2

FMS S&E no FTE 552 0 N/A 0 N/A 0 

FMS S&E FTE Costs 4,967 857 -82.7% 836 -2.5% 854 2Multi-Year 0 0 N/A 0 N/A 0 

Subtotal, Major IT Investments 288,478 88,048 -69.5% 81,954 -6.9% 82,920 1Non-Major IT Investments 1/ 11,300 4,845 -57.1% 4,893 1.0% 3,789 -22

Infrastructure Investments 2/ 20,056 20,056 0.0% 20,056 0.0% 23,200 15Enterprise Architecture 1,800 1,400 -22.2% 1,400 0.0% 1,370 -2Total IT Investments 321,634 114,349 -64.4% 108,303 -5.3% 111,279 2

% Change from

FY06 to FY07

% Change from 

FY07 to FY08

% Chan

from FY0

FY09

2/ Figures provided for FY 2009 include funding amounts for the Treasury Web Application Infrastructure (TWAI) platform that were not included in previous years.1/ In FY 2009, the number of Non-Majors reporting increased to 14 investments.
4B – Information Technology Strategy 

The FMS IT Strategy addresses all bureau information resource management. It focuses 

on technology and how it supports FMS’ Strategic Planning Goals. The FMS Strategic 

Plan is a long-range plan that supports the economic policies and mission of the 

Department of the Treasury for payments, collections, government-wide accounting and 

reporting, and collection of delinquent debt. 

FMS has an established governance process that selects, evaluates, and monitors new and 

existing IT investments. FMS IT Governance Process complies with Department of the 

Treasury and OMB's requirements for Capital Planning and Investment Control, and 

Enterprise Architecture. Before projects are started or a major change implemented, 

there is a formal approval process beginning with the Division Information Officers 

(DIO) Council. Each project provides the DIO Council with project business case 

documentation, which describes the project, documents benefits, shows start-up costs, 

full life-cycle costs, other systems impacted, programmatic impact, and platforms that 

will be used. Costs include all project costs including contracts, FTE, hardware, and 

software. The FMS governing bodies, including the DIO Council and Architecture 

Review Board (ARB), review each investment to ensure compliance with FMS’ target 

architecture, use of existing infrastructure, and shared resources (e.g. document imaging 

and Single Sign On). 

At least once a year, each FMS project is presented to the DIO Council. Current cost, 

schedule, and performance goals status for the project is presented. Any project that is 

not within acceptable cost, schedule, and performance goals must provide the DIO 

Council with a project remediation plan detailing the steps it plans to implement to get 

the investment back within acceptable ranges. The project is also required to provide the 

DIO Council with quarterly cost, schedule, and performance updates. 

The FMS process includes recommendations by the DIO council for 

approval/disapproval of all IT investments and major enhancements. The FMS 

executive board (EB) must also approve all large scale IT projects and it conducts 

quarterly reviews of all FMS investments with Exhibit 300s. 

FMS - 25 
4.2 – PART Evaluation Table 

PART Name: Debt Collection

Year PARTed: FY 2003

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

3. As a result of increased debt revenues, in FY 2008 FMS’ Debt Collection Budget Activity will be fully funded by fee 

revenue.

2. Set interim targets and describe interim actions necessary to achieve the long-term performance measure.

3. Level fund the debt collection program for FY 2005.

1. Develop a more ambitious long-term performance measure.

1. FMS establishes annual performance measures for collections and referrals of debt by agencies. Listed are examples of 

collection tools and initiatives used by FMS to achieve long-term measures:

• Administrative Wage Garnishment (AWG)

• DebtCheck

• Continuous Agency Outreach

• President's Management Agenda (PMA)

• Receivables Reporting

2. A Federal Contractor Tax Compliance Task Force consisting of FMS, IRS, and the Center for Medicare and Medicaid

Services is examining the issue of how best to incorporate CMS payments to Medicare providers into the Federal Payment 

Levy Program.

4. Propose legislation to increase and enhance debt collection opportunities.

4. FMS supports numerous legislative proposals which will enable FMS to significantly enhance our debt collection 

opportunities. Listed are some of the debt collection enhancement proposals for 2007-08: 

 • (26 U.S.C. 6402) Offsets of past-due, legally enforceable state unemployment compensation debts against overpayment. 

This proposal will allow FMS to offset federal tax refunds to collect past-due state unemployment compensation debts.

• (21 U.S.C. 3716) Eliminate the Ten-year period of Offset. This proposal will eliminate the ten-year limitation on the 

collection of delinquent non-tax deferral debts by administrative offset.

• Allow the IRS to issue its due process notice for levy after the levy has been served. 

5. The debt long-term measure will be evaluated and updated as part of FMS' update to its Strategic Plan. For 2007, FMS

has a target of $3.2 billion in collections.

FMS - 26 
PART Name: Collection

Year PARTed: FY 2004

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. FMS partnered with the State of Illinois to pilot joint Federal and state tax payments through the Electronic Federal Tax 

Payment System (EFTPS). An evaluation is underway to determine whether this pilot can be expanded cost-effectively to

additional states. For Fiscal Year 2007, EFTPS is on track to increase the volume of payments by 8% and the dollar amount 

of payments by 10% over Fiscal Year 2006. 

3. FMS will continue to promote its other electronic collection mechanisms such as: 

• Electronic Check Processing (ECP) System which converts paper checks received at a lockbox to electronic debits or

truncates the checks and processes the images via Check 21. All non-tax lockbox collections will be collected through ECP 

by the end of 2007 and we expect to convert tax lockbox collections by the end of 2009.

• Pay.gov collects money for 99 Federal agencies. FMS will be working with a number of Federal agencies, including the 

Departments of Housing and Urban Development and Education to move their large cash flows to Pay.gov.

• The Paper Check Conversion Over the Counter (PCC OTC) System converts paper checks to electronic debits or truncates

the checks and processes the images via Check 21. PCC OTC supports 32 Federal agencies in the U.S. and overseas. 

• TGAnet, a web-based deposit reporting system for over-the-counter collections, is now capable of supporting activity for

both domestic and international deposits. FMS will continue to convert more agencies and banks to TGAnet over the next 

few years.

4. Operate within budgetary resources. 

2. Provide 2006 funding at the same level as in 2005 (excluding funding received for services provided to other federal 

agencies).

1. FMS has initiated a comprehensive effort to streamline, modernize and improve the processes and systems supporting 

Treasury’s collections and cash management program. This effort will improve financial performance by enabling FMS and 

government agencies to more effectively manage financial transaction information and improve the efficiency of the 

collections information reporting processes.

1. Work with program partners to explore opportunities to better reduce paper-based collections.

PART Name: Payments

Year PARTed: FY 2005

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

1. Working with Federal agencies to reduce the number of paper check payments and increasing the number of more

efficient and secure electronic payments. This reflects FMS' efforts to work toward its 2010 goal of 90 percent of all 

payments made electronically.

3. Implemented Go Direct, a nationwide campaign to encourage current Federal check recipients to switch to direct deposit. 

Go Direct has converted one million check recipients to direct deposit since its inception.

1. The program must continue its efforts toward and all electronic treasury.

4. In FY 2007, FMS implemented a pilot program, Direct Express, which is targeted at the un-banked, to disburse benefit

payments through debit cards. 

5. FMS is developing plans entitled Universal Direct Deposit which will require at some future date, that all newly enrolled 

beneficiaries receive payments electronically unless they do not have a bank account. 

2. FMS will continue to promote its electronic payment mechanisms such as Stored Value Card (SVC), a smartcard, similar

to a credit/debit card, using an encrypted computer chip to process "electronic money" stored on the card and the Internet 

Payment Platform (IPP) which provides a centralized electronic invoicing and payment information portal accessible to all 

participants in federal payment transactions: agencies, payment recipients, and FMS.

FMS - 27 
PART Name: Government-wide Accounting and Reporting

Year PARTed: FY 2006

Rating: Moderately Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

3. FMS is taking the following actions to address unreconciled intra-governmental transactions:

• Requiring comprehensive intragovernmental accounting data from agencies on a quarterly basis that will allow FMS to 

provide data to all federal agencies for them to better analyze and reconcile intragovernmental differences.

• Working with the CFO Council and OMB to enforce the business rules for intra-governmental transactions and to organize

the Dispute Resolution Committee.

• Encouraging greater auditor participation by requiring agency auditors to more closely scrutinize intra-governmental out-ofbalance conditions with other agencies.

• Moving forward on the FIRST initiative which is being designed to provide authoritative information contained in Treasury’s 

central accounting system to the agencies to facilitate the reconciliation process for specific intra-governmental transactions. 

1. The program must develop a baseline for its efficiency performance measure. While FMS has unit cost, timeliness, and 

accuracy measures in its internal and external performance reporting that are used to manage for improved efficiency, at the 

time of this PART evaluation, a baseline for the new unit cost measure had yet not been established.

2. More work needs to be done in order to ahieve a clean opinion on the Financial Report of the U.S. Government. 

Improvement is needed on material weakness in the areas of accounting data compilation/consolidation and reconciliation of

intragovernmental reporting differences.

1. FMS has developed a baseline for the efficiency performance measure that measures the unit cost to manage one million 

dollars of cash flow.

2. FMS has two major initiatives which will modernize long standing Federal accounting processes and provide agencies

with methodologies and tools to improve the accuracy and consistency of their financial data:

• The Government-wide Accounting (GWA) Modernization project which will replace existing government-wide accounting 

functions and processes. This project will improve the reliability, usefulness, and timeliness of the government’s financial 

information, provide agencies and other users with better access to that information, and will eliminate duplicate reporting 

and reconciliation burdens by agencies, resulting in significant government-wide savings. It will also improve the budgetary

information being collected from the agencies at the transaction level. 

• The Financial Information and Reporting Standardization (FIRST) initiative integrates budget and financial reports from

Federal Program Agencies. FIRST will improve the consistency of the budgetary and proprietary accounting data recorded 

in agency financial statements and reported to FMS through its trial balance. 

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

FMS - 28 
Bureau of the Public Debt 

Mission Statement 

To borrow the money needed to operate the federal government, account for the resulting 

debt and provide reimbursable support services to federal agencies. 

Program Summary by Budget Activity 

Dollars in Thousands

Appropriation FY 2007 FY 2008 FY 2009

Administering the Public Debt Enacted Enacted Request $ Change % Change 

Wholesale Securities Services $19,996 $20,518 $21,047 $529 2.58%

Government Agency Investment

Services 14,594 14,648 14,497 (151) -1.03%

Retail Securities Services 137,020 140,573 144,194 3,621 2.58%

Summary Debt Accounting 7,244 7,132 7,316 184 2.58%

Total Appropriated Resources $178,854 $182,871 $187,054 $4,183 2.29%

Total FTE 1,390 1,371 1,371 0 0.00%

Note: FY 2007 Total Appropriated Resources include $3,000,000 in projected user fee 

collections. FY 2008 and FY 2009 Total Appropriated Resources include $10,000,000 in 

projected user fee collections. 

FY 2009 Priorities 

• Ensure that the most efficient systems are in place to conduct borrowing operations 

and deliver securities services to investors. 

• Continue to adopt technological advances to ensure that Public Debt’s various 

information technology systems remain secure. 

• Encourage investors to convert their marketable securities and paper savings bonds to 

TreasuryDirect. 

• Communicate with customers about the benefits of dealing directly with Treasury to 

purchase securities and manage their holdings online. 
Table of Contents 

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

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

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

Section 2 – Budget Adjustments and Appropriation Language .............. 4 

2.1 – Budget Adjustments Table..................................................................................... 4 

2A – Budget Increases and Decreases Description ........................................................ 4 

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

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

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

2B – Permanent, Indefinite Appropriations.................................................................... 8 

2C – Legislative Proposals ............................................................................................. 9 

Section 3 – Budget and Performance Plan............................................... 10 

3.1 – Budget by Strategic Outcome .............................................................................. 10 

3A – Wholesale Securities Services ............................................................................. 10 

3.2.1 – Wholesale Securities Services Budget and Performance Plan ......................... 11 

3B – Government Agency Investment Services........................................................... 12 

3.2.2 – Government Agency Investment Services Budget and Performance Plan....... 13 

3C – Retail Securities Services..................................................................................... 13 

3.2.3 – Retail Securities Services Budget and Performance Plan................................. 14 

3D – Summary Debt Accounting.................................................................................. 15 

3.2.4 – Summary Debt Accounting Budget and Performance Plan.............................. 16 

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

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

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

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

4.2 – PART Evaluation Table....................................................................................... 21 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Bureau of the Public Debt’s vision is to lead the way for responsible, effective 

government through commitment to service, efficient operations, openness to change and 

values-based behavior. In carrying out its mission and vision, Public Debt annually 

auctions and issues more than $4 trillion in Treasury bills, notes, bonds and Treasury 

Inflation-Protected Securities (TIPS); effectively administers the regulation of the 

primary and secondary Treasury securities markets; ensures that reliable systems and 

processes are in place for issuing, transferring, paying interest on and redeeming Treasury 

securities; issues and redeems more than 78 million paper savings bonds each year; 

administers in excess of $4 trillion in investments for some 230 federal trust funds; and 

provides timely and accurate information on the public debt. 

In support of Treasury’s strategic outcome of financing the government at the lowest 

possible cost over time, Public Debt’s top priority is to ensure that the most efficient 

systems are in place to conduct borrowing operations and deliver securities services to 

investors. To that end, Public Debt continues to enhance its TreasuryDirect system

where retail customers can purchase and manage their holdings of Treasury securities 

over the internet and will, in the first quarter of calendar year 2008, replace its aging 

auction system. As it increasingly relies on conducting business electronically, 

Public Debt also places a high priority on adopting technological advances to ensure that 

its systems remain secure. 

Public Debt’s major operational initiative is to consolidate all Government Agency 

Investment Services functions into one automated system by FY 2012 to reduce costs and 

facilitate future enhancements. To date, the Government Account Series (GAS) and 

borrowings functions are operating from the same automated platform and the effort to 

merge the State and Local Government Series (SLGS) program is underway. 

Issuing all Treasury securities electronically is a long-term goal for the retail program; 

however, the timetable for achieving that goal depends on several factors. A key 

challenge is to communicate with customers about the benefits of dealing directly with 

Treasury to purchase securities and manage their holdings online. As the public becomes 

increasingly comfortable with conducting financial business online, Public Debt believes 

more customers will take advantage of these benefits. 

With its resources, Public Debt: 

• Conducts more than 200 marketable securities auctions annually, resulting in the 

issuance of more than $4 trillion in Treasury bills, notes, bonds and TIPS; 

• Administers in excess of $4 trillion in GAS investments, which amount to 45 percent 

of the public debt; 

• Manages some 6,900 active SLGS securities accounts valued at $297 billion; 

• Serves more than 50 million retail customers holding marketable and savings 

securities, including nearly 300,000 investor accounts in the internet-accessed 

TreasuryDirect system; 

BPD - 1
• Accounts for and reports on $219 billion in federal agency borrowings from Treasury 

in 78 funds; 

• Accounts for and reports on the balance and composition of the nearly $9 trillion in 

public debt, the single largest liability on the federal government’s balance sheet, and 

reconciles more than $77 trillion in securities transactions reported from numerous 

systems to cash flowing in and out of the federal government each year; and 

• Annually receives unqualified audit opinions on the Schedules of Federal Debt. 

The total resources required to support Public Debt activities in FY 2009 are 

$202,061,000, including $187,054,000 from direct appropriations, of which $10,000,000 

are user fees, and $15,007,000 from offsetting collections and reimbursable programs. 

1B – Program History and Future Outlook 

Public Debt continues to enhance the mechanisms for participation by a wide range of 

investors in its wholesale, government agency investment services and retail programs. 

Over the years, Public Debt has dramatically reduced the time required to complete 

marketable securities auctions. Results are now consistently released within two minutes, 

plus or minus 30 seconds, of closing. By reducing the time bidders are exposed to the 

risk of adverse market movements, auction participants are likely to bid at more favorable 

rates and yields to the federal government. 

In the first quarter of calendar year 2008, Public Debt will replace its aging auction 

system to fully automate the announcement, auction and issuance of marketable securities 

and, at the same time, provide greater speed and flexibility to Treasury debt managers in 

bringing new types of securities to market. By eliminating manual processes, the new 

Treasury Automated Auction Processing System (TAAPS) will help ensure error-free 

auction results. Going forward, Public Debt will upgrade TAAPS to keep pace with 

changes in technology to ensure financing operations are conducted timely and with 

100 percent accuracy. 

Public Debt continues its commitment to providing efficient mechanisms for federal, 

state and local government entities to purchase GAS and SLGS securities and borrow 

from Treasury. Public Debt will also continue to work with the Financial Management 

Service and federal agency customers to simplify financial reporting and streamline the 

reconciliation processes associated with producing government-wide financial 

statements. 

Public Debt will continue to enhance and support TreasuryDirect. To take advantage of 

the efficiencies of electronic processing, Public Debt will encourage investors to convert 

their marketable securities and paper savings bonds to TreasuryDirect. In FY 2009, 

TreasuryDirect will be expanded to enable fiduciaries, trusts and other organizations to 

open and maintain accounts. Also in FY 2009, Public Debt will streamline gift purchases 

in TreasuryDirect. 

BPD - 2
Public Debt continues to work to improve the clarity, utility and availability of federal 

debt information. Public Debt began producing daily public debt financial statements in 

June 2007. This effort supports the President’s Management Agenda goal of providing 

accurate and timely financial information. Going forward, Public Debt will work to 

modernize its system used for public debt accounting by migrating common summary 

debt accounting financial information to a shared service provider. This will potentially 

reduce operational risks and costs, while standardizing system, business and data 

elements. 

Although not supported by appropriated funding, Public Debt has made its franchise 

operations, the Administrative Resource Center and Information Technology Group, a 

significant part of what it does. As a recognized Shared Service Provider (SSP), 

Public Debt’s Administrative Resource Center supplies reimbursable support services to 

federal agencies, generating revenue to pay all organizational expenses. This designation 

fosters customer growth, as the Office of Management and Budget and the General 

Services Administration encourage agencies to use the efficiencies offered by SSPs, thus 

allowing customers to focus on mission-related activities. Public Debt’s Information 

Technology Group offers a combination of experience and know-how that allows it to 

effectively plan and execute government IT solutions. Additional information 

technology services, such as application hosting, are also provided to customers through 

the Information Technology Group. For FY 2009, Public Debt’s Administrative 

Resource Center and Information Technology Group plan to serve 78 customers with 

$103 million in revenue. 

BPD - 3
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Administering the Public Debt FTE Amount

FY 2008 Enacted 1,371 $182,871

Maintaining Current Levels (MCLs)

Non-Pay Inflation Adjustment 1,497

Pay Annualization 769

Pay Inflation Adjustment 2,445

Total FY 2009 Base 1,371 187,582

Program Decreases:

Government Agency Investment Services System (GAISS) Savings (528)

Subtotal FY 2009 Program Changes 0 (528)

Total FY 2009 Request 0 $187,054

Adjustments to Request User Fees:

User Fees (10,000)

Subtotal FY 2009 Offsetting Fees and Rescissions 0 (10,000)

Total FY 2009 0 $177,054

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ...........................................+$4,711,000 / +0 FTE 

Non-Pay Inflation Adjustment +$1,497,000 / +0 FTE 

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

equipment and GSA rent. 

Pay Annualization +$769,000 / +0 FTE 

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

Pay Inflation Adjustment +$2,445,000 / +0 FTE 

Funds are requested for the proposed January 2009 pay raise. 

Program Decreases ............................................................................-$528,000 / +0 FTE 

Government Agency Investment Services System (GAISS) Savings -$528,000 / +0 FTE 

Due to the consolidation of Public Debt's Special Purpose Security and InvestOne 

systems, Public Debt projects a $528,000 savings for its GAISS. The decrease is the 

result of a 20 percent savings due to the consolidation, offset by inflation and a 

10 percent increase for contract expenses. Through consolidation, Public Debt will 

streamline the technology used for supporting this business line and standardize its 

internal control of processes common to all Government Agency Investment Services 

programs. 

BPD - 4
Adjustments to Request User Fee ................................................-$10,000,000 / +0 FTE 

User Fees -$10,000,000 / +0 FTE 

For $100 account maintenance fees that Public Debt charges to account holders in the 

Legacy Treasury Direct system with an account balance of more than $100,000 in par 

value. 

BPD - 5
 2.2 – Operating Levels Table 

Bureau: Bureau of the Public Debt FY 2007 

Enacted

FY 2008 

President's 

Budget

Cong. 

Action 

including

Rescission

FY 2008

Enacted

Level

Proposed

Reprogra

mmings

FY 2008 

Proposed

Operating 

Level

FY 2009 

Requested

Level

FTE 1,390 1,390 1,371 1,371 1,371

Object Classification:

11.1 Full-Time Permanent Positions..................... $83,937 $89,149 - 81,920 - 81,920 $84,003

11.3 Other than Full-Time Permanent Positions.... 201 213 - 213 - 213 218

11.5 Other Personnel Compensation.................... 4,310 2,989 - 2,989 - 2,989 3,065

11.8 Special Personal Services Payments............ - - - - - - -

11.9 Personnel Compensation (Total)............... $88,448 $92,351 $0 $85,122 $0 $85,122 $87,286

12.0 Personnel Benefits........................................ 22,534 23,403 - 23,403 - 23,403 24,453

13.0 Benefits to Former Personnel........................ 30 28 - 50 - 50 50

21.0 Travel............................................................ 1,842 1,732 - 1,661 - 1,661 1,673

22.0 Transportation of Things............................... 90 85 - 90 - 90 91

23.1 Rental Payments to GSA.............................. 6,217 6,393 - 6,762 - 6,762 7,262

23.2 Rent Payments to Others.............................. 5 5 - 2 - 2 2

23.3 Communications, Utilities, & Misc................. 15,845 15,384 - 14,240 - 14,240 14,339

24.0 Printing and Reproduction............................. 1,956 1,837 - 1,735 - 1,735 1,747

25.1 Advisory & Assistance Services.................... 502 472 - 344 - 344 346

25.2 Other Services.............................................. 24,914 25,402 - 26,069 - 26,069 26,249

25.3 Purchase of Goods/Serv. from Govt. Accts... 7,869 7,392 - 10,376 - 10,376 10,448

25.4 Operation & Maintenance of Facilities........... 557 742 - 868 - 868 874

25.5 Research & Development Contracts............. - - - - - - -

25.6 Medical Care................................................. 19 18 - 22 - 22 22

25.7 Operation & Maintenance of Equipment........ 2,420 2,273 - 3,906 - 3,906 3,933

25.8 Subsistence & Support of Persons................ 10 - - - - - -

26.0 Supplies and Materials.................................. 2,365 2,222 - 2,247 - 2,247 2,263

31.0 Equipment..................................................... 3,134 3,030 - 5,752 - 5,752 5,792

32.0 Lands and Structures.................................... 95 89 - 220 - 220 222

33.0 Investments & Loans..................................... - - - - - - -

41.0 Grants, Subsidies.......................................... - - - - - - -

42.0 Insurance Claims & Indemn.......................... 2 2 - 2 - 2 2

43.0 Interest and Dividends.............................. - 11 - - - - -

44.0 Refunds......................................................... - - - - - - -

Total Budget Authority....................................... $178,854 $182,871 $0 $182,871 $0 $182,871 $187,054

Budget Activities:

Wholesale Securities Services.............................. 19,996 12,474 - $20,518 - 20,518 21,047

Government Agency Investment Services............... 14,594 13,239 - $14,648 - 14,648 14,497

Retail Securities Services.................................... 137,020 151,359 - $140,573 - 140,573 144,194

Summary Debt Accounting................................. 7,244 5,799 - $7,132 - 7,132 7,316

Total Budget Authority....................................... $178,854 $182,871 $0 $182,871 $0 $182,871 $187,054

BPD - 6
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Wholesale Securities Services 146 $19,475 155 $19,996 154 $20,518 154 $21,047 0.00% 2.58%

Government Agency Investment Services 104 13,903 113 $14,594 110 $14,648 110 $14,497 0.00% -1.03%

Retail Securities Services 1,002 133,425 1,066 $137,020 1,054 $140,573 1,054 $144,194 0.00% 2.58%

Summary Debt Accounting 51 6,769 56 $7,244 53 $7,132 53 $7,316 0.00% 2.58%

Subtotal New Appropriated Resources 1,303 $173,572 1,390 $178,854 1,371 $182,871 1,371 $187,054 0.00% 2.29%

Other Resources:

Offsetting Collections - Reimbursable 16 13,970 17 14,058 17 14,565 17 15,007 0.00% 3.03%

Available multi-year/no-year funds 3,299 5,311 3,658

User Fees 2,797

Recoveries 12 70

Subtotal Other Resources 16 20,066 17 19,381 17 18,293 17 15,007 0.00% -17.96%

Total Resources Available for Obligation 1,319 $193,638 1,407 $198,235 1,388 $201,164 1,388 $202,061 0.00% 0.45%

Enacted 2/

FY 2007 FY 2009

Enacted 1/ Request 2/ to FY 2009

% Change

FY 2008 FY 2008

Resources Available for Obligation

FY 2007

Obligations

1/ Subtotal New Appropriated Resources include $3,000,000 in projected user fee collections. 

2/ Subtotal New Appropriated Resources include $10,000,000 in projected user fee collections. 

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

Appropriations Language Explanation of 

Changes 

DEPARTMENT OF THE TREASURY 

BUREAU OF THE PUBLIC DEBT 

Federal Funds 

Administering the Public Debt 

For necessary expenses connected with any public-debt issues of 

the United States, [$182,871,000]$187,054,000, of which not to 

exceed $2,500 shall be available for official reception and 

representation expenses, and of which not to exceed $2,000,000 

shall remain available until September 30, [2010]2011, for 

systems modernization: Provided, That the sum appropriated 

herein from the general fund for fiscal year [2008]2009 shall be 

reduced by not more than $10,000,000 as definitive security issue 

fees and Legacy Treasury Direct Investor Account Maintenance 

fees are collected, so as to result in a final fiscal year [2008]2009

appropriation from the general fund estimated at 

[$172,871,000]$177,054,000. In addition, [$70,000]$90,000 to be 

derived from the Oil Spill Liability Trust Fund to reimburse the 

Bureau for administrative and personnel expenses for financial 

management of the Fund, as authorized by section 1012 of Public 

Law 101-380. (Department of the Treasury Appropriations Act, 

2008.)

The $10,000,000 

in user fees 

associated with 

the Legacy 

Treasury Direct 

system was 

enacted in 

FY 2008. 

Legacy Treasury 

Direct is a bookentry system that 

has been in 

operation since 

1986. 

2B – Permanent, Indefinite Appropriations 

Reimbursements to the Federal Reserve Banks

Public Law 101-509, 104 Stat. 1389, 1394 (1990), established a permanent indefinite 

appropriation to pay such sums as necessary to reimburse the Federal Reserve Banks for acting 

as fiscal agents. A permanent indefinite account was established in FY 1992. Claims for 

reimbursements are closely monitored for compliance with the Instructions for Filing 

Reimbursement Claims for Fiscal Agency Services Provided to the Bureau of the Public Debt 

(current edition). Funding for FY 2009 is estimated at $130,170,000. 

Government Losses in Shipment

Public Law 103-329 established a permanent indefinite appropriation to pay such sums as 

necessary to make payments for the replacement of valuables, or the value thereof, lost, 

destroyed, or damaged in the course of United States government shipments. The Government 

BPD - 8 
Losses in Shipment Act was approved July 8, 1937, to dispense with the necessity for insurance 

by the government against loss or damage to valuables in shipment and for other purposes. The 

Act was amended in 1943 to cover losses resulting from the redemption of savings bonds (for 

example, stolen bonds which were fraudulently negotiated even though the paying agent 

followed identification guidelines established by the Treasury). All authority of the Treasury 

under the Act has been delegated to the Commissioner of the Bureau of the Public Debt. In 

FY 2009, the funding estimated to support payments for the replacement of valuables is 

$500,000. 

2C – Legislative Proposals 

Public Debt has no legislative proposals for FY 2009. 

BPD - 9 
Section 3 – Budget and Performance Plan

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

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

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

accomplish over the next five years.

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

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

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome

Enacted

AMOUNT AMOUNT AMOUNT

Financial information 7,585 $7,783 2.6%

Government financing 189,851 194,278 2.3%

Total $197,436 $202,061 2.3%

FY 2008 FY 2009 Percent 

Request Change

Note: FY 2008 and FY 2009 totals include $10,000,000 in projected user fee collections. 

3A – Wholesale Securities Services ($21,047,000 from direct appropriations and $1,343,000 

from reimbursable programs): The Wholesale Securities Services activity involves the 

announcement, auction, issuance and settlement of marketable Treasury bills, notes, bonds and 

TIPS. It also provides an efficient infrastructure for the transfer, custody and redemption of 

these securities. Large market participants buy most of Treasury’s marketable securities at 

auction. In FY 2007, Public Debt conducted more than 200 marketable securities auctions 

resulting in the issuance of more than $4 trillion in securities. Treasury’s commercial book-entry 

system holds approximately $4.3 trillion, or 98 percent, of Treasury marketable securities. 

Treasury uses this system to issue most of its marketable debt, make principal and interest 

payments and support the active secondary market in Treasury securities. It is estimated that 

about $1.23 trillion per day in Treasury securities are transferred among account holders in the 

commercial book-entry system. 

 

This activity directly supports the Department of the Treasury’s strategic outcome of financing 

the government at the lowest possible cost over time. To help meet this outcome, in the first 

quarter of calendar year 2008, Public Debt will replace its auction system to fully integrate the 

automated announcement, auction and issuance of marketable securities and provide greater 

speed and flexibility to Treasury debt managers in bringing new types of securities to market. 

Public Debt will continue to seek opportunities in U.S. and global markets to listen and learn 

from holders of its securities and share information. The Bureau will also educate current and 

potential investors about Treasury’s debt financing policies, the auction process and its 

securities. 

BPD - 10 
Public Debt also has the responsibility of regulating the government securities market. 

Public Debt administers Treasury’s regulations that provide investor protection and maintain the 

integrity, liquidity and efficiency in the government securities market under the Government 

Securities Act of 1986, as amended. Public Debt also administers the rules for Treasury’s 

securities auctions and buybacks and prescribes provisions for Treasury’s Fiscal Service 

collateral programs, including collateral eligibility and valuation. Fiscal Service collateral 

programs ensure that government funds on deposit or invested at commercial banks are secured. 

Other Resources: 

Reimbursements totaling $1,343,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation. 

3.2.1 – Wholesale Securities Services Budget and Performance Plan 

Wholesale Securities Services Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

Appropriated Resources $13,290 $17,987 $19,475 $20,518 $21,047

Reimbursable Resources 408 1,594 1,301 1,302 1,343

Total Resources $13,698 $19,581 $20,776 $21,820 $22,390

Wholesale Securities Services Budget Activity

Measure

$126,828 $148,926 $235,172 $263,306 $275,610

95.00% 100.00% 99.10% 95.00% 95.00%

FY 2008

Target

FY 2009

Target

FY 2005

Actual

FY 2006

Actual

FY 2007

Actual

Cost per debt financing operation ($) (E)

Percent of auction results released in 2 minutes +/-

30 seconds (%) (Oe)

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

Description of Performance: Public Debt established an efficiency measure for its cost per debt 

financing operation, which is incurred in Public Debt’s annual appropriation as well as in its 

permanent indefinite fund established to reimburse Federal Reserve Banks that act as Treasury’s

fiscal agents. In FY 2007, the actual cost per debt financing operation was $235,172, which 

exceeded Public Debt's target by $6,763. Contributing to the increased costs were one fewer 

auction than anticipated and a delay in implementing the new auction system. Increased 

necessary testing of the new system resulted in a delayed implementation and the need to also 

run the existing auction system longer than originally anticipated. 

The cost per debt financing operation is estimated at $263,306 in FY 2008 and $275,610 in 

FY 2009. Increases in the cost per debt financing operation are due to the implementation of a 

new auction system requiring a complete replacement of the existing network, hardware and 

software. This new system will provide enhanced back-up and recovery capability, ease and 

flexibility in placing bids in Treasury securities auctions and improved information sharing to 

Public Debt’s customers and stakeholders.

BPD - 11 
In FY 2007, Public Debt surpassed its performance target of releasing auction results within two 

minutes, plus or minus 30 seconds, 95 percent of the time. Reductions in requested FY 2009 

funding would risk decreases in staffing levels and the ability to provide contingency processing. 

3B – Government Agency Investment Services ($14,497,000 from direct appropriations and 

$3,827,000 from reimbursable programs): The Government Agency Investment Services 

(GAIS) program supports federal, state and local government agency investments in 

non-marketable Treasury securities as well as federal agency borrowing from Treasury. 

Public Debt offers two major non-marketable special purpose investment programs to 

government agencies. Government Account Series (GAS) securities are issued only to federal 

agencies with statutory investment authority. There are some 230 trust and investment funds 

held by federal agencies. For 18 of the funds, Public Debt also maintains the investment 

accounts and performs additional administrative functions on behalf of the Secretary of the 

Treasury. These additional functions include processing receipts into and transfers out of the 

funds to the related federal program agencies for the purpose of administering the underlying 

programs that are supported by the trust funds. Some of the more recognizable federal trust 

funds are the four Social Security and Medicare Funds, as well as the Unemployment and 

Highway Trust Funds. With more than $4 trillion in investments, federal government and other 

entities’ holdings of GAS securities make up 45 percent of the public debt outstanding. 

State and Local Government Series (SLGS) securities are issued to state and local government 

entities across the nation. At approximately $297 billion outstanding, the SLGS program is 

important to over 6,900 state and local government entities that use these securities to help 

comply with provisions of the Internal Revenue Code. 

Public Debt also accounts for and reports on the principal borrowings from and repayments to 

Treasury for 78 funds managed by other federal agencies, as well as the related interest due to 

Treasury. These agencies are statutorily authorized to borrow from Treasury to make loans for a 

broad range of purposes, such as education, housing, farming, and small business support. The 

funds hold about $219 billion in loans and loan guarantees. 

At the federal level, Public Debt’s services in this activity directly help customers produce timely 

and accurate financial information that contributes to the reliability and usefulness of the 

government-wide financial statements. Instant access to account information has significantly 

simplified reconciliation and audit confirmation efforts across the country and assisted SLGS 

purchasers in complying with Internal Revenue Service requirements related to the issuance of

tax exempt securities. 

Other Resources: 

Reimbursements totaling $3,827,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation and investment accounting on behalf of the 

Secretary of the Treasury. 

BPD - 12 
3.2.2 – Government Agency Investment Services Budget and Performance Plan 

Government Agency Investment Services

Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $13,825 $14,599 $13,903 $14,648 $14,497 

 Reimbursable Resources $2,641 $3,418 $3,170 $3,744 $3,827

Total Resources $16,466 $18,017 $17,073 $18,392 $18,324

Budget Activity Total $16,466 $18,017 $17,073 $18,392 $18,324

Government Agency Investment Services

Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Number of Government Agency Investment

Services control processes consolidated 

 N/A N/A 3 3 2

Cost per federal funds investment transaction

($) (E) 

$88.74 $62.64 $68.53 $77.10 $77.70 

Percentage of Government Agency customer

initiated transactions conducted online (%) 

(Oe)

 72.70% 97.03% 97.31% Discontinued Discontinued

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

Description of Performance: In the GAIS budget activity, Public Debt has an efficiency 

measure to track the cost per federal funds investment transaction. Federal investments are 

special-purpose securities issued only to federal agencies that manage trust, deposit and other 

special funds. Public Debt handles issuing, paying interest on and redeeming the securities held 

by each fund, as well as handling all of the debt-related accounting and reporting for the 

securities on the consolidated financial statement of the federal government. Public Debt 

projects the cost per federal funds investment transaction to be $77.10 for FY 2008 and $77.70 

for FY 2009. The projected cost per federal funds investment transaction is increasing each year 

due to inflationary cost increases and transaction volumes that are projected to remain constant. 

Public Debt established a long-term goal to reduce the number of systems used to support GAIS. 

Through systems reduction, Public Debt will streamline the diversity of technology involved in 

supporting this business line. Additionally, this effort will allow the Bureau to consolidate and 

standardize the internal controls over processes common to all GAIS programs. The control 

environment consists of 18 processes that will be transformed into six standardized processes. 

Consolidating the three systems that house GAIS data into a single, integrated control 

environment will provide one location for all investment activities. This will reduce operational 

risks, while standardizing system, business and data elements. 

3C – Retail Securities Services ($144,194,000 from direct appropriations, including 

$10,000,000 from user fee collections and $9,370,000 from offsetting collections and 

reimbursable programs): Public Debt’s Retail Securities program serves more than 50 million 

retail customers who have invested in marketable and savings securities directly with Treasury. 

Investors may hold these securities in book-entry or paper form. 

The goal of the retail program is to migrate products and services to the internet-accessed 

TreasuryDirect system so that eventually all retail securities are issued and maintained in 

book-entry form. TreasuryDirect enables Public Debt to serve customers more effectively and 

BPD - 13 
manage resources more efficiently since investors are able to purchase securities online and 

self-manage their holdings. To accelerate these efficiencies, Public Debt encourages customers 

to convert holdings to TreasuryDirect. The potential for conversions is significant since there are 

over 700 million paper savings bonds and nearly 400,000 accounts in the Legacy Treasury Direct 

marketable securities system. While moving to all-electronic processing, Public Debt remains 

committed to supporting its legacy systems. 

Other Resources: 

Offsetting collections totaling $10,000,000 are collected for definitive securities issue and 

Legacy Treasury Direct Investor Account maintenance fees. In addition, $9,370,000 in 

reimbursements are collected for providing computer matching for the Social Security

Administration and administrative support to Public Debt’s franchise operation. 

3.2.3 – Retail Securities Services Budget and Performance Plan 

Retail Securities Services Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

Appropriated Resources $140,084 $132,939 $133,425 $140,573 $144,194

Reimbursable Resources 4,348 11,873 9,047 9,066 9,370

Total Resources $144,432 $144,812 $142,472 $149,639 $153,564

Retail Securities Services Budget Activity

Measure

$8.51 $4.97 $6.65 $10.83 $12.58

$3.43 $3.06 $3.24 $3.88 $3.93

88.70% 98.00% 99.43% 90.00% 90.00% Percentage of retail customer service transactions

completed within 12 business days (%) (Oe)

FY 2008

Target

FY 2009

Target

Cost per TreasuryDirect assisted transaction ($) (E)

Cost per TreasuryDirect online transaction ($) (E)

FY 2005

Actual

FY 2006

Actual

FY 2007

Actual

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

Description of Performance: Public Debt has three performance measures for Retail Securities 

Services that include two efficiency and one outcome measure. 

The first efficiency measure is the cost per TreasuryDirect assisted transaction. Although 

TreasuryDirect promotes self-sufficiency, there are times when assistance from a customer 

service representative is necessary. Representatives handle phone and email inquiries, offline 

authentication forms processing, conversions, changes in bank information, and transactions 

requiring legal evidence. The FY 2007 unit cost of $6.65 exceeded the projected unit cost of 

$6.16 due to an increase in costs to handle more complex transactions. Public Debt projects unit 

costs of $10.83 in FY 2008 and $12.58 in FY 2009 for TreasuryDirect assisted transactions. 

While BPD expects the workload to remain steady or increase slightly, Retail workload is 

sensitive to changes in market rates. When market rates are low, TreasuryDirect accounts are 

BPD - 14 
not likely to grow at the pace seen in prior years. Cost increases reflect additional direct and 

support costs to handle a continuing increase in more complex work. 

The second efficiency measure is the cost per TreasuryDirect online transaction. In Public Debt’s 

internet-accessed system, investors set up accounts, purchase electronic securities and manage 

their holdings. Since investors have this self-service capability, Public Debt tracks the cost of 

online transactions, including establishing accounts, purchasing and redemption of securities and 

changing account information online. The FY 2007 unit cost of $3.24 exceeded BPD's projected 

unit cost by $0.28 due to its refinement of IT cost allocations among Public Debt programs and a 

lower volume of online transactions. Public Debt projects unit costs of $3.88 in FY 2008 and 

$3.93 in FY 2009 for TreasuryDirect online transactions since Retail workload is sensitive to 

changes in market rates. When market rates are low, TreasuryDirect accounts are not likely to 

grow at the pace seen in prior years. BPD expects workload to remain steady, while costs to 

operate the TreasuryDirect system should remain relatively constant. 

The third measure includes the timeliness of processing retail customer service transactions, 

including answering phone and email inquiries, processing payments or changes to payment 

instructions and handling TreasuryDirect assisted transactions. For FY 2007, Public Debt 

processed 99.43 percent of retail customer service transactions within 12 business days, 

surpassing its target of 90 percent. Future goals are to complete 90 percent of transactions within 

11 business days in FY 2009 and within 10 business days in FY 2010. Reaching a ten-day 

turnaround for retail customer service transactions represents the culmination of a long-term goal 

for expedited quality service set by Public Debt in FY 2004. Sufficient funding, efficiencies 

gained from improved work processes and an increase in electronic transactions will allow 

Public Debt to meet these goals. 

3D – Summary Debt Accounting ($7,316,000 from direct appropriations and $467,000 from 

reimbursable programs): The Summary Debt Accounting program accurately accounts for and 

reports timely on the outstanding public debt and related interest expenses. The program

provides daily information on the balance and composition of the public debt, and summary level 

accounts represent the control totals for dozens of subordinate investment systems. 

Each year, Public Debt reconciles more than $77 trillion in securities transactions reported from

numerous systems to cash flowing in and out of the federal government. Public Debt’s summary 

level accounting system provides detailed financial information on the nearly $9 trillion in public 

debt and associated interest expense for publication in the annual Financial Report of the United 

States Government, Treasury’s Performance and Accountability Report, and the Schedules of 

Federal Debt Managed by the Bureau of the Public Debt. 

The Bureau publishes information on the balance and composition of the public debt in the 

Monthly Statement of the Public Debt of the United States on its website. In June 2007, Public 

Debt began producing daily public debt financial statements. 

Public Debt has always been committed to maintaining strong accounting controls to ensure the 

integrity of operations and the accuracy of the information provided to the public. The Bureau 

has consistently received unqualified audit opinions on the Schedules of Federal Debt, which 

BPD - 15 
presents details supporting the largest single liability on the government-wide financial 

statement. 

Other Resources: 

Reimbursements totaling $467,000 are allocated to this program for providing administrative 

support to Public Debt’s franchise operation. 

3.2.4 – Summary Debt Accounting Budget and Performance Plan 

Summary Debt Accounting Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

Appropriated Resources $5,402 $6,431 $6,769 $7,132 $7,316

Reimbursable Resources 166 570 452 453 467

Total Resources $5,568 $7,001 $7,221 $7,585 $7,783

Summary Debt Accounting Budget Activity

Measure

$12.62 $10.96 $9.29 $9.74 $9.97

FY 2005

Actual

FY 2006

Actual

FY 2007

Actual

FY 2008

Target

FY 2009

Target

Cost per summary debt accounting transaction ($) (E)

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

Description of Performance: Public Debt has an efficiency measure to track the cost per 

transaction of performing summary debt accounting, which includes reporting all financial 

activity related to the public debt of the United States. Issues, redemptions and interest payments 

on the public debt must be accounted for to calculate the amount of debt outstanding and interest 

paid. Public Debt projects the cost per summary debt accounting transaction to be $9.74 in 

FY 2008 and $9.97 in FY 2009. The projected cost per summary debt accounting transaction is 

increasing each year due to inflationary cost increases and transaction volumes that are projected 

to remain constant. 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: 

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

BPD - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Public Debt’s strategic management of human capital is consistent with its mission, vision and 

priorities and supports not only the President’s Management Agenda, but also Treasury’s 

strategic goal of Effectively Managed U.S. Government Finances. 

Public Debt has developed a comprehensive recruitment program to attract candidates with the 

necessary competencies to minimize skill gaps. As a part of its program, Public Debt attends 

approximately 25 career fairs per year and solicits applications through diversity specific 

magazines and websites to identify and hire a talented and diverse workforce. Extensive work is 

done with management before and during the recruitment process to identify staffing needs and 

pinpoint the particular characteristics and skills necessary for Public Debt to succeed. 

A prime component of Public Debt’s human capital strategy is operating as a values-based 

organization. Public Debt is known in the local and surrounding communities as a values-based 

organization where candidates want to work and employees want to stay. Public Debt’s 

recognition of the need for a balanced family and work life makes it an attractive employer. In 

fact, according to the report, Best Places to Work in the Federal Government 2007, Public Debt 

is ranked in the top 11 percent of federal agencies. This ranking is based on results from the 

Office of Personnel Management’s 2006 Human Capital Survey. 

Public Debt uses the full range of pay flexibilities to recruit and retain high quality candidates 

with the skills necessary to accomplish its mission. Specifically, Public Debt uses superior 

qualifications appointments, student loan repayments and recruitment and retention incentives. 

Public Debt also uses special employment programs to hire quality candidates. The Bureau has 

been very successful using the Federal Career Intern Program, Student Career Experience 

Program, and Veterans’ Recruitment Act to provide a source of highly qualified applicants. 

Public Debt fosters a learning culture that provides employees at all levels with opportunities for 

continuous development. Management invests in education, training and other developmental 

opportunities to help employees build mission-critical competencies, both leadership and 

technical, that are beneficial to the Bureau. The readiness of Public Debt’s workforce, including 

its Mission Critical Occupations, is determined through skills gap assessments. Public Debt 

works with focus groups to assess the training needs necessary to keep employee skills current

and develop the future training opportunities needed to prevent skills gaps. These focus groups 

ensure that Public Debt employees are among the best trained in the government and remain 

abreast of new technologies affecting their work. 

Public Debt has identified three Mission Critical Occupations (MCOs): Customer Service 

Specialist (CSS), Accountant, and Financial Systems Analyst. Workforce analysis indicates that 

retirement eligibility among the CSS positions is relatively high compared to the other MCOs. 

To offset the potential retirement issue among the CSS positions, Public Debt recruits applicants 

with basic communication and customer service skills. Once on board, these basic skills, 

coupled with specific training, ensure a ready source of qualified employees. Public Debt’s 

BPD - 17 
BPD - 18 

workforce analysis indicates that as employees retire, it will continue to have a sufficient pool of 

internal candidates to fill CSS positions. 

Human capital initiatives, including succession planning, are another important part of Public 

Debt’s strategic plan. Public Debt is very successful in filling senior-level positions internally. 

This success can be attributed, in part, to leadership development programs and knowledge 

transfer techniques. To cultivate leadership and management skills, Public Debt uses programs 

such as Management Candidate Development, Senior Executive Service Candidate 

Development, and Supervisory Excellence. Of the GS-13 level and above workforce, 42 percent 

of employees are eligible to retire by December 31, 2012. Public Debt will continue to use these 

types of programs to fill future vacancies. 

 
BPD - 19 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments

FY 2006 FY 2007 FY 2008 F

Major IT Investments / Funding Source Budget Activity

& Earlier 

Enacted 1/ Enacted

President's

Budget Re

Government Agency Investment Services System (GAISS)/2

Government Agency InvestmentServices $0 $4,447 $3,790 -14.8% 

Public Debt Accounting and Reporting System (PARS) Summary Debt Accounting $2,038 $1,914 $1,971 3.0% 

SaBRe Retail Securities Services $4,344 $4,873 $4,640 -4.8% 

Treasury Automated Auction Processing System (TAAPS) Wholesale Securities Services $44,900 $47,080 $31,623 -32.8% 

 Subtotal: TAAPS Appropriated Funding $2,996 $10,570 $11,332 7.2% 

 Subtotal: TAAPS Permanent Indefinite Funding $41,904 $36,510 $20,291 -44.4% 

TreasuryDirect Retail Securities Services $5,013 $5,191 $5,389 3.8% 

Subtotal, Major IT Investments $56,295 $63,505 $47,413 -25.3% 

Non-Major IT Investments $9,456 $9,581 $9,793 2.2% 

Infrastructure Investments $24,563 $15,553 $15,895 2.2% 

Enterprise Architecture $200 $321 $342 6.5% Total IT Investments $90,514 $88,960 $73,443 -17.4% 

1/ This column reflects appropriated resources provided to a project in FY 2006 and any previous years.

2/ SPSS and InvestOne merged into GAISS beginning FY07.

% Change from 

FY07 to FY08
4B – Information Technology Strategy 

The Bureau of the Public Debt operates systems that process a wide range of customer 

service transactions, initiate trillions of dollars in customer payments and account for the 

public debt at both the detail and summary accounting levels. By delivering services to 

customers online and automating work processes, these major IT investments are the 

most cost-effective means to conduct borrowing and deliver securities services to 

investors. 

Public Debt’s Capital Planning and Investment Control program is a disciplined, 

integrated process that addresses system prioritization of new and existing IT 

investments, risk management, long-range planning, business objectives, alternative 

analysis and governance. Public Debt’s quarterly enterprise architecture reviews ensure 

alignment of its IT investments to the strategic enterprise direction of Treasury and 

identify potential duplication of systems. By tracking and reporting the progress of each 

investment and the performance measures achieved each quarter, Public Debt ensures its 

IT system portfolio is well managed, cost effective and supports the strategic goal of 

Effectively Managed U.S. Government Finances. Through Public Debt’s management of 

its IT system portfolio, the government’s critical financing needs are met while 

maintaining the integrity of primary and secondary markets for Treasury securities. 

Public Debt’s IT system portfolio is comprised of certified and accredited applications, 

ensuring financially secure E-Government systems. 

For example, the new Treasury Automated Auction Processing System (TAAPS), 

designed to fully automate the announcement, auction and issuance of marketable debt, is 

scheduled for implementation in the first quarter of calendar year 2008 and will replace a 

number of aging legacy systems. The new system is also designed to provide Treasury 

debt managers with the ability to bring new types of securities to market with greater 

speed. TAAPS is being developed to meet the Bureau’s performance goal to consistently 

release auction results within two minutes, plus or minus 30 seconds, of closing. Shorter, 

accurate and consistent auction releases reduce the time auction bidders are exposed to 

the risk of adverse market movements, thereby reducing the cost of borrowing for 

Treasury. 

The TreasuryDirect system is another example of Public Debt ensuring that project 

management methods are used to meet cost, schedule and performance goals. This 

system is an internet-accessed application that offers all retail Treasury securities 

available to the public at one convenient location. The system is designed to maximize 

customer self-sufficiency and minimize off-line transaction processing by customer 

service personnel. By enabling investors to manage their Treasury securities holdings 

online, Public Debt better serves retail customers and, at the same time, manages 

resources more efficiently. The TreasuryDirect system continues to be enhanced using 

Rapid Application Development techniques that give the program manager the flexibility 

to quickly incorporate new functionality into the system. 
4.2 – PART Evaluation Table 

PART Name: Administering the Public Debt

Year PARTed: 2003

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. Consolidate Government Agency Investment Services into a single, integrated control environment by FY 2012.

3. Migrate Summary Debt Accounting to a shared service solution by FY 2013.

1. By 2012, 90% of Primary Dealers demonstrate the ability to participate in a live auction from their disaster recovery sites.

2. The program meets its annual performance goals and continues to improve targets for subsequent fiscal years.

3. The Bureau of the Public Debt identifies new long-term goals to improve efficiency and effectiveness.

1. The Bureau of the Public Debt has a clear purpose and is well designed and managed.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

BPD - 21 
Internal Revenue Service

Mission Statement 

Provide America’s taxpayers top-quality service by helping them understand and meet 

their tax responsibilities and by applying the tax law with integrity and fairness to all. 

Program Summary by Appropriations Account 

Dollars in Thousands 

FY 2007 FY 2008

Appropriation Enacted 1 Enacted Request $ Change % Change

Taxpayer Services $2,138,238 $2,150,000 $2,150,000 $0 0.00%

Enforcement 4,686,477 4,780,000 5,117,267 337,267 7.06%

Operations Support 3,544,835 3,680,059 3,856,172 176,113 4.79%

Business Systems Modernization 212,659 267,090 222,664 (44,426) -16.63%

Health Insurance Tax Credit Administration 14,856 15,235 15,406 171 1.12%

Total Appropriated Resources $10,597,065 $10,892,384 $11,361,509 $469,125 4.31%

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

FY 2009

FY 2009 Priorities 

The Internal Revenue Service (IRS) administers America’s tax laws and collects the 

revenue that funds most federal government operations. The IRS taxpayer service 

program assists millions of taxpayers with understanding and meeting their tax 

obligations. The IRS enforcement program is aimed at deterring taxpayers inclined to 

evade their responsibilities while vigorously pursuing those who violate tax laws. 

In FY 2009, the IRS will continue efforts to implement tax compliance strategies 

addressed in Reducing the Federal Tax Gap: A Report on Improving Voluntary 

Compliance (see http://www.irs.gov/pub/irs-news/tax_gap_report_final_080207_ 

linked.pdf) and the IRS Taxpayer Assistance Blueprint (TAB) (see 

http://www.irs.gov/individuals/article/0,,id=156394,00.html) by focusing on the 

following priorities: 

• Improve voluntary compliance and reduce the tax gap by: 

o Increasing front-line enforcement resources, 

o Improving taxpayer service options, 

o Enhancing research, and 

o Implementing legislative and regulatory changes. 

• Maintain balance between taxpayer service and enforcement. 

• Invest in technology to improve infrastructure, modernize, and increase the 

productivity of existing resources. 
Table of Contents

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

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

1B – Program History and Future Outlook ............................................................... 7

Section 2 – Budget Adjustments – Internal Revenue Service..................................... 15

Program Summary by Appropriations Account and Budget Activity .................. 15

2.1 – Budget Adjustments Tables.............................................................................. 16

2A – Budget Increases and Decreases Description .................................................. 19

Budget by Strategic Outcome .................................................................................... 19

Efficiencies/Savings..................................................................................................... 22

Reinvestments.............................................................................................................. 23

Program Decreases ..................................................................................................... 26

Taxpayer Assistance Centers and Outreach......................................................... 26

Taxpayer Advocate Service................................................................................... 26

VITA Grants Program........................................................................................... 26

Business Systems Modernization .......................................................................... 26

Program Increases...................................................................................................... 27

Reduce the Tax Gap for Small Business / Self-Employed..................................... 27

Reduce the Tax Gap for Large Business............................................................... 35

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance . 39

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity.......... 41

Expand Document Matching................................................................................. 44

Implement Legislative Proposals to Improve Compliance ................................... 45

2.2 – Operating Levels Table ..................................................................................... 49

2.3 – Appropriation Detail Table............................................................................... 50

2B – Appropriation Language and Explanation of Changes.................................. 51

2C – Legislative Proposals.......................................................................................... 56

Improve Tax Administration and Other Miscellaneous Proposals........................ 57

Section 3 – Budget and Performance Plan ................................................................... 58

Taxpayer Services....................................................................................................... 58

2.1 – Budget Adjustments Table............................................................................... 59 

2.2 – Operating Levels Table.................................................................................... 60 

2.3 – Appropriation Detail Table.............................................................................. 61 

3A – Pre-Filing Taxpayer Assistance and Education ............................................... 61 

3.2.1 – Budget and Performance Plan....................................................................... 62 

3A – Filing and Account Services............................................................................ 64 

3.2.2 – Budget and Performance Plan....................................................................... 65 

Enforcement ................................................................................................................ 68

2.1 – Budget Adjustments Table............................................................................... 68 

2.2 – Operating Levels Table.................................................................................... 69 

2.3 – Appropriation Detail Table.............................................................................. 70 

3A – Investigations................................................................................................... 70 

3.2.3 – Budget and Performance Plan....................................................................... 71 

3A – Exam and Collections...................................................................................... 72 

3.2.4 – Budget and Performance Plan....................................................................... 74 
3A – Regulatory........................................................................................................ 76 

3.2.5 – Budget and Performance Plan....................................................................... 77 

Operations Support .................................................................................................... 79

2.1 – Budget Adjustments Table............................................................................... 81 

2.2 – Operating Levels Table.................................................................................... 82 

2.3 – Appropriation Detail Table.............................................................................. 83 

3A – Infrastructure.................................................................................................... 83 

3.2.6 – Budget and Performance Plan....................................................................... 84 

3A – Shared Services and Support............................................................................ 85 

3.2.7 – Budget and Performance Plan....................................................................... 86 

3A – Information Services........................................................................................ 88 

3.2.8 – Budget and Performance Plan....................................................................... 90 

Business Systems Modernization............................................................................... 92

2.1 – Budget Adjustments Table............................................................................... 92 

2.2 – Operating Levels Table.................................................................................... 93 

2.3 – Appropriation Detail Table.............................................................................. 94 

3A – Business Systems Modernization..................................................................... 94 

3.2.9 – Budget and Performance Plan..................................................................... 101 

Health Insurance Tax Credit Administration........................................................ 104

2.1 – Budget Adjustments Table............................................................................. 104 

2.2 – Operating Levels Table.................................................................................. 105 

2.3 – Appropriation Detail Table............................................................................ 106 

3A – Health Insurance Tax Credit Administration................................................. 106 

3.2.10 – Budget and Performance Plan................................................................... 107 

Section 4 – Supporting Materials................................................................................ 108

4A – Human Capital Strategy Description............................................................. 108

4B – Information Technology (IT) Strategy........................................................... 112

4.1 – Summary of IT Resources Table .................................................................... 116

4.2 – PART Evaluation Tables................................................................................. 118

4.3 – IRS Performance Measure Table and Data Dictionary Link...................... 136

4.4 – Summary of IRS FY 2009 Budget Request ................................................... 137
Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

The FY 2009 President’s Budget request supports the IRS and the Department of the 

Treasury Strategic Plans, the Taxpayer Assistance Blueprint (TAB), and the recently 

released report, Reducing the Federal Tax Gap: A Report on Improving Voluntary 

Compliance. These plans underscore IRS commitment to ensure fairness, observe 

taxpayer rights, and reduce taxpayer burden while working in a balanced manner to 

reduce non-compliance. The IRS strategic plan goals are: 

• Improve Taxpayer Service – Help people understand their tax obligations, 

making it easier for them to participate in the tax system. 

• Enhance Enforcement of the Tax Law – Ensure taxpayers meet their tax 

obligations, so that when Americans pay their taxes, they can be confident their 

neighbors and competitors are also doing the same. 

• Modernize the IRS through its People, Processes, and Technology – 

Strategically manage resources, associated business processes, and technology 

systems to effectively and efficiently meet service and enforcement strategic 

goals. 

In support of these goals, the FY 2009 IRS Budget priorities follow the guiding principle 

of Service plus Enforcement equals Compliance and sustain the IRS objectives to: 

• Simplify the tax process and improve service options for the taxpaying public; 

• Discourage and deter non-compliance with emphasis on corrosive activity by 

corporations, high-income taxpayers and other contributors to the tax gap 

including abusive domestic and off shore tax entities; and 

• Modernize information systems and business processes to maximize resources 

and improve service and enforcement. 

The IRS established a set of enterprise-wide long-term goals, which the IRS Oversight 

Board approved in March 2007. These long-term goals link to the IRS 2005-2009 

Strategic Plan and serve as overarching indicators of achieving objectives that support 

IRS mission-critical programs. 

IRS-1 
These goals provide focus and rigor for measuring the effectiveness of IRS programs that 

manage the nation’s tax system. The long-term goals are: 

• Increase the voluntary compliance rate, 

• Improve the electronic filing (e-File) rate, 

• Increase individual taxpayer satisfaction as measured by the American Customer 

Satisfaction Index (ACSI) score, 

• Increase level of non-revenue enforcement activity, and 

• Improve employee engagement/satisfaction. 

FY 2009 President’s Budget Request 

The FY 2009 President’s Budget request for the IRS is $11.4 billion, which is 

$469.1 million, or an increase of 4.3 percent above the FY 2008 enacted level. The 

funding request for Taxpayer Services is $2.2 billion; Enforcement is $5.1 billion; 

Operations Support is $3.9 billion; Business Systems Modernization (BSM) is 

$222.7 million; and Health Insurance Tax Credit Administration (HITCA) is 

$15.4 million. In FY 2009, the IRS budget will continue to restore enforcement activities 

targeted at improving compliance by reducing the tax gap for large businesses and small 

business/self employed, increasing reporting of compliance of domestic taxpayers with 

offshore activity, and continuing research activities. This budget request will also 

implement legislative changes to improve tax compliance. These legislative proposals 

will generate about $36 billion in revenue over the next ten years. In addition, the IRS 

will continue modernizing its technology to strengthen taxpayer service and enforcement 

programs. 

The IRS $469.1 million increase consists of: 

• $200.9 million for changes to the base, including: 

o $265.0 million for Maintaining Current Levels, 

o –$1.4 million transfer to Treasury Inspector General for Tax 

Administration, 

o –$1.0 million transfer to FinCEN, 

o –$71.4 million for efficiency savings, 

o –$22.9 million for program savings, and 

o $32.6 million in base reinvestments. 

• $268.2 million for program changes, including: 

o –$92.7 million for program changes to taxpayer assistance centers and 

outreach, Taxpayer Advocate Service, VITA grants program, and BSM 

activities; 

o $286.8 million to expand enforcement activities aimed at improving 

compliance and reducing the tax gap; 

o $51.1 million to increase support for research to determine the reasons for 

taxpayer non-compliance; and 

o $23.0 million to implement legislative proposals to improve compliance. 

IRS-2 
Reducing the Tax Gap 

In FY 2007, the IRS collected $2.7 trillion in taxes (gross receipts before tax refunds), 

96 percent of total federal government receipts. The IRS improved tax compliance by 

increasing enforcement and enhancing taxpayer service. From 2001 to 2007, the IRS 

increased revenue from its enforcement programs by 75 percent from $33.8 billion to an 

all-time high of $59.2 billion, yielding a 5.6 to 1 return on investment in 2007. Revenue 

growth has been greatest in the areas of corporate taxes and high income individual taxes. 

The FY 2009 President’s Budget request will support Administration and Congressional 

deficit reduction efforts by strengthening the federal government’s ability to collect more 

legally owed taxes. 

The tax gap is defined as the aggregate amount of tax liability imposed by law for a given 

tax year that is not paid voluntarily and timely. Tax liability means the amount of tax that 

would be determined for the tax year in question if all relevant aspects of the tax law 

were applied correctly to all of the relevant facts of that taxpayer’s situation. The gross 

tax gap, about $345 billion for Tax Year 2001, represents the amount of non-compliance 

with the tax laws. There are three categories of non-compliance: 

• Underreporting – Not reporting one’s full tax liability on a timely filed return; 

• Nonfiling – Not filing required returns on time; and 

• Underpayment – Not timely paying the full amount of tax reported on a timely 

return. 

Underreporting tax liability accounts for 83 percent of the gross tax gap. The remainder 

is almost evenly divided between nonfiling (8 percent) and underpaying (10 percent). 

The IRS remains committed to finding ways to increase compliance and reduce the tax 

gap, while minimizing the burden on the vast majority of taxpayers who pay their taxes 

accurately and on time. 

IRS-3 
The gross tax gap estimate, however, does not take into account taxes paid voluntarily but 

paid late, or tax collections resulting from IRS enforcement activities. Considering these 

factors, the “net tax gap” is estimated at $290 billion. 

Non-compliance may not be deliberate and can stem from a wide range of causes, 

including lack of knowledge, confusion, poor recordkeeping, differing legal 

interpretations, unexpected personal emergencies, and temporary cash flow problems. 

Accordingly, helping taxpayers understand and fulfill their obligations under the tax law 

is a critical part of addressing the tax gap. However, some non-compliance is willful, 

even to the point of criminal tax evasion. Because both taxpayer service and enforcement 

are critical to improving voluntary compliance and reducing the tax gap, the IRS remains 

committed to its working equation of: 

Service + Enforcement = Compliance 

In August 2007, the Department of the Treasury and the IRS released a report, Reducing 

the Federal Tax Gap: A Report on Improving Voluntary Compliance, addressing efforts 

to improve the level of voluntary compliance with federal tax laws, which builds upon 

the Department of the Treasury’s “A Comprehensive Strategy for Reducing the Tax Gap” 

issued in September 2006. The report provides details on activities and efforts taken and 

planned to improve voluntary compliance. In addition, the report presents an outreach 

approach to ensure all taxpayers understand their tax obligations and recognizes the 

IRS-4 
importance of having a multi-year research program that will help the IRS understand

both the scope of and reasons for non-compliance. This report, combined with legislative 

changes and tax simplification, will guide IRS efforts to reduce the tax gap. 

Taxpayer Service and Enforcement Programs 

The IRS and its employees represent the face of the federal government to more 

American citizens than any other government agency. IRS taxpayer service programs

provide the information and tools taxpayers need to calculate and understand their tax 

obligations; collect, process, and store filed tax returns; and collect and process tax 

receipt and refunds owed. IRS enforcement activities, such as examination and 

collection, will continue to target its casework and enforcement activities to more 

effectively deliver results and drive down the tax gap. 

Providing quality taxpayer service is especially important to help taxpayers avoid making 

unintentional errors. Moreover, assisting taxpayers with their tax questions before they 

file their returns addresses inadvertent non-compliance and reduces burdensome postfiling notices and other correspondence from the IRS. Accordingly, the IRS provides 

year-round assistance to millions of taxpayers through many sources, including outreach 

and education programs, issuance of tax forms and publications, rulings and regulations, 

toll-free call centers, the IRS.gov web site, Taxpayer Assistance Centers (TACs), 

Volunteer Income Tax Assistance (VITA) sites, and Tax Counseling for the Elderly 

(TCE) sites.

The IRS delivered Phase 1 of the TAB Report to Congress in April 2006. Phase 1 

defined the population that uses IRS services and identified leading practices, 

opportunities for improvement, and a plan for additional research. In April 2007, the IRS 

delivered Phase 2 of the TAB Report to Congress, which outlines a five-year strategic 

plan for taxpayer service that will help the IRS enhance the services delivered to 

taxpayers and partners. The TAB strategic plan includes performance measures, service 

improvement initiatives, and an implementation strategy for improving future service 

investment decisions. The TAB Report provides the future direction of IRS service 

delivery and identifies strategic challenges, including: 

• Complexity and changes to the tax code; 

• Need for additional data on the causes of non-compliance; 

• Expanding use of third parties; 

• Scope and diversity of the taxpaying population; and 

• Keeping pace with technology and taxpayer expectations. 

IRS enforcement activities are also important for improving voluntary compliance with 

federal tax laws and implementing the Department of the Treasury’s tax gap strategy. 

Increased resources for IRS enforcement programs yield a positive return on investment 

(ROI). As shown in the table below, the proposed IRS FY 2009 enforcement initiatives 

will generate about $2.0 billion in additional annual enforcement revenue once the new 

hires reach full potential in FY 2011. 

IRS-5 
Return on Investment for IRS Enforcement Initiatives 

Dollars in Millions

FY 2009 Enforcement Investment Cost Revenue ROI Cost Revenue ROI

All Enforcement Initiatives $360.8 $769.0 2.1 $306.1 $2,001.1 6.5

Direct Revenue Producing Initiatives $337.8 $769.0 2.3 $283.1 $2,001.1 7.1

Reduce the Tax Gap for Small Business/Self-Employed 168.5 422.0 2.5 136.7 980.8 7.2

Increase Reporting Compliance of Domestic Taxpayers with Offshore Activity 13.7 39.5 2.9 11.3 101.9 9.0

Reduce the Tax Gap for Large Business 69.5 121.0 1.7 61.3 543.9 8.9

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance 51.1 15.1 0.3 42.3 15.9 0.4

Expand Document Matching 35.1 171.4 4.9 31.5 358.6 11.4

Other Enforcement Initiatives $23.0 $0.0 0.0 $23.0 $0.0 0.0

First Year (FY 2009) Full Performance (FY 2011)

IRS enforcement activities also yield indirect revenue by deterring non-compliance. This 

effect is more difficult to measure, but it is estimated to be at least three times the direct 

revenue impact. IRS enforcement efforts improved in virtually every area over the last 

several years. While the increase in enforcement revenue is most obvious, the increased 

audit coverage in all segments of the filing population demonstrates IRS continued 

emphasis on reductions to the tax gap. 

Fully Costing the Taxpayer Service and Enforcement Programs 

IRS taxpayer service and enforcement programs depend on support activities, such as 

information technology and rent, funded by the Operations Support appropriation. As 

shown in the following table, the IRS allocates this appropriation funding to its core 

operational program funded in the Taxpayer Service and Enforcement appropriations in 

order to reflect the full cost of operating these programs (see Section 3, Operations 

Support, for further description of the allocation methodology). 

IRS-6 
Taxpayer Service and Enforcement Programs 

Dollars in Thousands

Programs

FY 2007

Enacted

FY 2008

Enacted

FY 2009 

Request

1

%Change

FY 2008 to

FY 2009

Taxpayer Service $3,547,252 $3,612,833 $3,636,230 0.6%

Taxpayer Services Appropriation 2,138,238 2,150,000 2,150,000

Operations Support Appropriation 1,409,014 1,462,833 1,486,230

Enforcement $6,822,298 $6,997,226 $7,487,209 7.0%

Enforcement Appropriation 4,686,477 4,780,000 5,117,267

Operations Support Appropriation 2,135,821 2,217,226 2,369,942

Total Taxpayer Services and Enforcement $10,369,550 $10,610,059 $11,123,439 4.8%

1 The Operations Support funds allocated to the Taxpayer Service and Enforcement programs in

FY 2009 use the FY 2008 President’s Budget allocation methodology. In order to execute FY2009 spending,

the Administration is proposing language to adjust Operations Support allocations by up to 1 percent with

prior notification to the Appropriations Committees.

1B – Program History and Future Outlook 

Each year, IRS employees make millions of contacts with American taxpayers and 

businesses. These contacts encourage and facilitate self-sufficiency for taxpayers in 

meeting their tax obligations. The IRS also enforces the tax laws to ensure 

non-compliant taxpayers pay their fair share. To improve voluntary tax compliance, the 

IRS must provide the proper balance of service and enforcement. 

Strategic Goal I: Improve Taxpayer Service 

Helping the public understand their tax reporting and payment obligations is the 

cornerstone of taxpayer compliance and is vital for maintaining public confidence in the 

tax system. Assisting taxpayers with their tax questions before they file their returns 

addresses inadvertent non-compliance and reduces burdensome post-filing notices and 

other correspondence from the IRS. Thus, the IRS continued to address taxpayer needs 

and make improvements in key services for taxpayers in FY 2007. 

The IRS delivered a successful 2007 filing season despite several new challenges. 

Challenges included the implementation of the Telephone Excise Tax Refund (TETR), a 

one-time payment designed to refund long distance telephone taxes introducing split 

refund capability, which provided taxpayers with more control over their refunds by 

allowing direct deposit of a refund to up to three financial accounts and making the 

necessary changes to forms and systems to accommodate late passage of provisions of 

the Tax Relief and Health Care Act of 2006. Results of the 2007 filing season include: 

IRS-7 
• The IRS issued more than 105 million refunds totaling more than $261 billion for 

those individual tax filers. Providing quality taxpayer service, and continuing to 

improve that service, remains a strategic priority for the IRS. 

• The overall American Customer Satisfaction Index (ACSI) score for all individual 

tax filers increased 17 points, from 51 in 1999 to 68 in 2007. The ACSI score for 

the popular IRS website, IRS.gov, increased five points over the 2005 filing

season to 74. 

• The IRS outreach and educational services were enhanced through partnerships 

between the IRS and public organizations. Through its 11,922 VITA and TCE 

sites, the IRS provided free tax assistance to the elderly, disabled, and limited 

English proficient individuals and families. Over 76,000 volunteers filed

2.63 million returns, a 14 percent increase over FY 2006. Additionally, the IRS 

established 16 new clinics in rural areas to help low income taxpayers meet their 

tax obligations. 

• More than 3.9 million taxpayers used the free services offered by the Free File 

Alliance. Home computer filing of returns increased to 22.5 million in 2007, 

while tax professional use of e-file increased 10 percent to 57.2 million returns. 

• The IRS successfully implemented TETR by delivering an integrated approach, 

which enabled the filing of over 94 million 2006 tax returns including TETR 

refund claims, of more than $4.81 billion. In addition, the IRS prevented more 

than $291 million in potential erroneous refunds with the aid of a return selection 

tool created specifically to catch questionable TETR requests. The 

comprehensive approach to administering this refund allowed the IRS to 

successfully meet taxpayer and stakeholder expectations. 

• Seventy-five percent (9 of 12) of the taxpayer service performance targets were 

met or within 98.5 percent of the target. The IRS continues its upward trend in 

most categories with over 83 percent of the taxpayer service measures exceeding 

FY 2006 levels. 

IRS-8 
The table below highlights IRS taxpayer service performance and workload trends for 

FY 2005 through FY 2007. 

Performance Measures and Workload Statistics by Fiscal Year 

Performance Measures FY 2005 FY 2006 FY 2007

Percent of Individuals Filing Electronically 51.1% 54.1% 57.1%

Percent of Business Returns Filed Electronically 17.8% 16.6% 19.1%

Toll Free Assistance Level of Service 82.6% 82.0% 82.1%

Toll Free Tax Law Accuracy 89.0% 90.9% 91.2%

Toll Free Accounts Accuracy 91.5% 93.2% 93.4%

Workload Statistics FY 2005 FY 2006 FY 2007

Number of IRS.gov Page Visits (in Millions) 177.0 194.0 215.0

Number of IRS.gov Page Views (in Millions) 1,259.0 1,302.0 1,350.0

"Where's My Refund?" Usage (in Millions) 22.1 24.7 32.1

To further address taxpayer needs, the IRS delivered two phases of the TAB to Congress 

and established a Taxpayer Services Program Management Office and IRS Services 

Committee to formalize integrated service investment decision-making. Research 

conducted for the Phase 2 TAB, submitted in April 2007, indicated the following: the 

majority of taxpayers who used IRS assistance indicated a willingness to use electronic 

services; fewer customers visit TACs as opposed to other options, such as phone and 

correspondence; taxpayers are most concerned with first contact resolution; and 9 out of 

10 taxpayers using IRS services in 2005 reported they would use the same method again. 

Going forward, the IRS will continue integration of the TAB Strategic Plan within 

planning and budgeting processes and will implement service-wide improvement 

initiatives and future research projects identified by the TAB. Additionally, the IRS will 

implement a multi-year research portfolio by making service-related decisions based on

taxpayer data and develop new measures for compliance, taxpayer, partner, and 

government value.

IRS-9 
Strategic Goal II: Enhance Enforcement of the Tax Law 

The potential for narrowing the nation’s tax gap hinges primarily on IRS efforts to 

improve compliance with tax laws. Non-compliance may not be deliberate and can stem

from a wide-range of causes, including lack of knowledge, confusion, poor recordkeeping, differing legal interpretations, unexpected personal emergencies, and temporary 

cash flow problems. However, some non-compliance is willful, even to the point of 

criminal tax evasion. 

FY 2007 was a record year for collections related to enforcement activities. Enforcement 

revenue from all sources rose 75 percent from $33.8 billion in FY 2001 to an all-time

high of $59.2 billion in FY 2007 (see chart below). The increased enforcement revenue 

collected resulted from the IRS focus on noncompliant activities of corporations, highincome taxpayers, and other major violators of the tax code. Targeting high-risk 

taxpayers improves IRS examination efficiency, reduces the burden on compliant 

taxpayers, and concentrates enforcement presence where needed. 

Enforcement Revenue Continues to Rise 

(Dollars in Billions) 

23.9 26.0

21.3 21.3 22.1 24.3 24.4 24.8 25.7 26.6 28.2

31.8

1.0

1.2

1.4 1.6 1.5

1.6 1.8

3.3

3.9

13.2 10.1

12.5 10.0 10.2 7.9 7.9

10.7

14.7

17.7

17.2

23.5

2.2

3.1 2.7

0

10

20

30

40

50

60

70

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07

 $ Billions

Collection Document Matching Exam and Appeals

$43.1

$38.1 $37.2

$34.1 $35.2

$37.6

$32.9 $33.8 $33.8

$47.3

 $48.7

 $59.2

The IRS continues to build on its enforcement efforts, while emphasizing early 

identification of tax liabilities through increased audits and focused collection activities. 

IRS-10 
Since FY 2005, the IRS steadily progressed in its enforcement efforts and showed 

marked increases in performance and workload statistics, as illustrated in the table below. 

Performance Measures

FY 2005 to

FY 2006

FY 2006 to

FY 2007

Criminal Investigations Completed 1.0% 3.0%

Workload Statistics

Individual Audits 7.0% 8.0%

High-Income Audits (Total Positive Income Over $200,000) 18.0% 29.0%

Small-Business Audits (Total Gross Receipts Less Than $10 Million) 8.0% 17.0%

Collection Case Closures 15.0% 12.0%

Revenue Received from Collection Case Closures 9.0% 13.0%

Percent Change of Performance and Workload Statistics

In FY 2007, the IRS substantially enhanced its productivity by implementing 

technological and process improvements in the Automated Underreporter (AUR), 

Examination, and Compliance Services Collection Operations. Significant improvements 

made in FY 2007 included: 

• Implementing a new AUR case selection and scoring methodology for 

individuals, resulting in a 20.5 percent increase in assessments; 

• Controlling and directing incoming examination toll-free calls through an 

Intelligent Call Management system, resulting in a 6.1 percent increase in the 

level of service; and 

• Automating the process of installment agreement problem cases freed resources to 

process additional installment agreement compliance work. Over 43 percent of 

installment problem cases were handled using the new automated process. 

The IRS continued to reengineer its examination and collection procedures to reduce 

time, increase yield, and expand coverage. Emphasizing early identification of tax 

liabilities through increased audits and more focused collection activities, the IRS 

undertook the following actions in FY 2007: 

• Piloted new Automated Substitute for Return screening and batching procedures, 

with the increased efficiencies resulting in a productivity improvement of over 

156 percent, from 7.5 cases per hour to 19.2 cases per hour; 

• Increased detection of fraudulent activities and the number of recommendations 

for civil fraud penalties by 49 percent over the prior year level; and 

• Developed an employment tax strategy that includes eliminating/reducing

overlaps and gaps in processes to enhance organizational effectiveness, expanding 

work relationships with federal and state authorities, conducting studies to better 

understand the tax gap, and assessing new ways to impact taxpayer behavior. 

IRS-11 
Strategic Goal III: Modernize the IRS through its People, Processes and 

Technology 

The BSM program combines best practices and expertise in business solutions and 

internal management from the IRS, business, and technology sectors to develop a worldclass tax administration system that fulfills the revenue collection requirements of the 

United States as well as taxpayer needs and expectations. 

The IRS met most of its targets for BSM project deliveries and continued to adhere to 

established governance processes that ensure success in managing complex and 

complicated system development efforts. Notable modernization accomplishments for 

FY 2007 include: 

• Processed over 11 million returns and issued refunds of $11.6 billion using the 

Customer Account Date Engine (CADE). CADE processed filing season

changes, as well as the capability to handle the TETR and Form 1040 schedules. 

• Added new functionality to the Modernized e-File (MeF) system, which enhanced 

electronic filing capabilities for Forms 1065, U .S. Return of Partnership Income, 

and 1065-B, U.S. Return of Income for Electing Large Partnerships, returns and 

made all the required extender legislation changes. This resulted in the 

processing of over two million corporate, non-profit, and partnership forms. 

• Developed the Accounts Management Services (AMS) system, designed to 

deliver improved customer support and functionality by leveraging existing IRS 

applications. AMS exited the detailed design phase for Release 1.1, which 

provides address update capabilities, and Release 1.2, which provides inventory 

management capabilities. 

In FY 2007, the IRS implemented a new governance structure for all information 

technology (IT) investment projects. The new structure facilitates the ability to identify 

and address project-related issues and risks, ensuring IT investment projects deliver 

required results. As a result, in FY 2007, 92 percent of system releases were delivered 

within +/-10 percent of cost estimates, and 77 percent were delivered within 

+/-10 percent of schedule estimates. 

In addition, the IRS developed a five-year IT Modernization Vision and Strategy 

(MV&S) that addresses priorities for modernizing front-line tax administration functions. 

The strategy guides IT investment decision-making for 2007. Important aspects include: 

establishing partnerships among IT and business leadership; leveraging existing systems; 

emphasizing the delivery of smaller, incremental releases; and unifying the portfoliolevel view of investments. 

Security of infrastructure and IT systems remains a top priority for the IRS. In FY 2007, 

the IRS continued to update its systems, processes, and training efforts to ensure taxpayer 

information is properly safeguarded. The IRS also established new offices and governing 

bodies to provide direction and oversight regarding the security and protection of 

sensitive information. Highlights of security measures executed include: 

IRS-12 
• Implemented enterprise disk encryption, which secured 100 percent of IRS 

laptops with automatic hard drive encryption to protect data in the event of 

computer loss or theft; 

• Worked with business partners to deploy secure data transmission, an automated 

solution that eliminated the physical mailing of tape shipments to federal, state, 

and municipal tax agencies; 

• Upgraded firewall and intrusion detection devices, which strengthened the 

security posture of the network infrastructure and reduced the cost of operations 

and maintenance; and 

• Deployed mandatory information protection training for all IRS employees and 

contractors having access to sensitive information. 

FY 2009 Challenges 

The IRS continues to seek efficiencies in delivering taxpayer service and bolstering its 

enforcement efforts to improve compliance with the tax laws and, ultimately, increase tax 

revenue. Using the internet as a means of providing taxpayers access to tax information 

and services is one approach to achieving greater efficiencies. The IRS continues to seek 

alternative, cost-effective ways of improving taxpayer service and enforcement. The 

following discussion identifies some of the most significant internal and external 

challenges for the IRS. 

Improving Voluntary Compliance and Reducing the Tax Gap 

Continuing progress in restoring enforcement presence remains a high priority for the

IRS in addressing key elements of the tax gap. The FY 2009 President’s Budget request 

will enhance coverage of high-risk compliance areas. Funding will be used to target key 

areas such as critical reporting, filing, and payment within the small business and selfemployed taxpayer community, high-income taxpayers, flow-through entities (e.g., 

partnerships), and large multinational corporations. Additional resources will also 

address offshore activities of domestic taxpayers. The IRS will continue to reengineer its 

examination and collection procedures to reduce time, increase yield, and expand 

coverage. 

Measuring and understanding taxpayer non-compliance are keys to ensuring optimal 

allocation of IRS resources and allow the IRS to better understand the size and causes of 

the tax gap. The FY 2009 President’s Budget request provides for resources to support 

ongoing research studies of filing, payment, and reporting compliance to provide a 

comprehensive picture of the overall level of taxpayer compliance. Research enables the 

IRS to develop strategies to combat specific areas of non-compliance, improve voluntary 

compliance, and allocate resources more effectively to reduce the tax gap. 

The IRS also focuses on compliance by addressing the issues identified in the TAB and 

in Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance. The 

IRS maintains its commitment to high-quality taxpayer services through improvements to 

IT and targeted efficiencies. The IRS will also continue to identify opportunities for 

IRS-13 
providing quality taxpayer service at a lower cost by providing and marketing expanded 

services to increase use of the IRS.gov website and maintaining growth in e-filing, which 

improves efficiency and accuracy and ultimately reduces tax administration costs. While 

the IRS continues to address compliance problems by improving customer service and 

using traditional methods of enforcement, the FY 2009 President’s Budget request also 

includes funding to implement legislative proposals aimed at improving compliance. 

These legislative proposals would serve as enforcement tools with minimal impact on 

taxpayer burden and generate an estimated $36 billion over 10 years. 

Modernizing the IRS 

The IRS must ensure its employees possess the tools necessary to increase program

efficiency and effectiveness. The FY 2009 President’s Budget request includes funding 

to continue the modernization of IT systems and align them with the overall business 

strategy, as well as to provide IRS employees with the tools they need to administer and 

improve taxpayer service and enforcement programs. Modernizing the technology 

environment allows the IRS to address extremely high volumes, widely varying inputs 

from taxpayers, seasonal processing with significant variations in processing load, 

transaction rates on the order of billions per year, and storage capacity needs measured in 

trillions of bytes. 

The Complexity of the Tax Code 

The Internal Revenue Code contains over a million words, creating complexity for 

taxpayers. Provisions such as the alternative minimum tax create additional 

computational work for taxpayers and can be hard to interpret. The IRS must explain the 

Code in a way that taxpayers can understand if they are to comply with their tax 

obligations. In addition, the IRS must continue to find ways to effectively administer tax 

law changes in a manner that minimizes complexity, the burden on taxpayers, and the 

cost of administering the tax code. 

Achieving 80 Percent E-Filing 

The IRS continues to work toward the goal of increasing the e-file rates to 80 percent. 

For the third consecutive year, more than half (over 80 million) of all individual returns 

were filed electronically, representing an 11 percent increase over FY 2006. More than 

16,900 large corporations, subject to the electronic filing mandate, successfully e-filed 

their returns in 2007. The IRS processed this volume of very complex returns and 

accepted and acknowledged receipt well within its 24-hour turnaround standard. The IRS 

also continues to work on finding ways to encourage more taxpayers to use electronic 

filing options. 

IRS-14 
Section 2 – Budget Adjustments – Internal Revenue Service 

The IRS Budget request for FY 2009 is $11,361,509,000 in direct appropriations and 

92,922 FTE. This is an increase of $469,125,000 or 4.3 percent, and 1,799 FTE, over the 

FY 2008 enacted level of $10,892,384,000 and 91,123 FTE. 

Program Summary by Appropriations Account and Budget Activity 

Dollars in Thousands 

FY 2007 FY 2008 

Appropriation Enacted 1 Enacted Request $ Change % Change

Taxpayer Services $2,138,238 $2,150,000 $2,150,000 $0 0.00%

 Pre-filing Taxpayer Assistance and Education 576,537 645,375 617,326 (28,049)

(44,426)

-4.35%

 Filing and Account Services 1,561,701 1,504,625 1,532,674 28,049 1.86%

Enforcement 4,686,477 4,780,000 5,117,267 337,267 7.06%

 Investigations 576,785 593,794 603,466 9,672 1.63%

 Exam and Collections 3,959,741 4,038,309 4,363,826 325,517 8.06%

 Regulatory 149,951 147,897 149,975 2,078 1.41%

Operations Support 3,544,835 3,680,059 3,856,172 176,113 4.79%

 Infrastructure 845,203 843,720 883,325 39,605 4.69%

 Shared Services and Support 1,179,216 1,170,686 1,243,703 73,017 6.24%

 Information Services 1,520,416 1,665,653 1,729,144 63,491 3.81%

Business Systems Modernization 212,659 267,090 222,664 -16.63%

Health Insurance Tax Credit Administration 14,856 15,235 15,406 171 1.12%

Total Appropriated Resources $10,597,065 $10,892,384 $11,361,509 $469,125 4.31% 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

FY 2009

IRS-15 
2.1 – Budget Adjustments Tables 

Dollars in Thousands 

Internal Revenue Service 

FTE $000

FY 2008 Enacted 91,123 $10,892,384

Changes to Base:

Maintaining Current Levels $264,985

Pay Annualization 57,854

Pay Inflation Adjustment 152,303

Non-Pay Inflation Adjustment 54,828

Transfers ($2,370)

(1,370)

(1,000)

(976) ($94,249)

(769) (71,356)

(207) (10,300)

(12,593)

(946)

(312) ($92,691)

(262) (31,200)

(25) (7,711)

(8,000)

(25) (45,780)

Transfer to TIGTA

Transfer to FinCEN

Efficiencies/Savings

Efficiency Savings

Increase e-File Savings

Non-Recur Savings

Base Reinvestments 30 $32,604

Increase Efficiency through Submission Processing Consolidations 2,006

Address Correspondence Inventory 30 2,457

Fully Fund Postage Base 28,141

Subtotal Changes to Base $200,970

Total FY 2009 Base - Current Services 90,177 $11,093,354

Program Changes:

Program Decreases:

Taxpayer Assistance Centers and Outreach

Taxpayer Advocate Service 

Volunteer Income Tax Assistance Grants Program

Business System Modernization

Program Increases - Enforcement Initiatives 3,057 $360,846

Reduce the Tax Gap for Small Business / Self-Employed 1,608 168,498

Reduce the Tax Gap for Large Businesses 519 69,488

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance 393 51,058

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity 124 13,697

Expand Document Matching 413 35,060

Implement Legislative Proposals to Improve Compliance 23,045

Subtotal FY 2009 Program Changes 2,745 $268,155

Total FY 2009 Request 92,922 $11,361,509

IRS-16 
Taxpayer Service Program Summary Budget Adjustment Table

(Includes Both Direct Costs in the Taxpayer Services Appropriation

and Indirect Costs in the Operations Support Appropriation) 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 36,066 $3,612,833

Changes to Base:

Maintaining Current Levels $86,261

Pay Annualization 18,332

Pay Inflation Adjustment 48,838

Non-Pay Inflation Adjustment 19,091

Transfers ($523)

(523)

(298) ($37,415)

(91) (14,522)

(207) (10,300)

(12,593)

(268)

(287) ($46,911)

(262) (31,200)

(25) (7,711)

(8,000)

(249) ($44,220)

Transfer to TIGTA

Efficiencies/Savings

Efficiency Savings

Increase e-File Savings

Non-Recur Savings

Base Reinvestments 30 $19,294

Increase Efficiency through Submission Processing Consolidations 2,006

Address Correspondence Inventory 30 2,457

Fully Fund Postage Base 14,831

Subtotal Changes to Base $67,617

Total FY 2009 Base - Current Services 35,798 $3,680,450

Program Changes:

Program Decreases

Taxpayer Assistance Centers and Outreach

Taxpayer Advocate Service 

Volunteer Income Tax Assistance Grants Program

Program Increases - Enforcement Initiatives 38 $2,691

Reduce the Tax Gap for Small Business / Self-Employed 38 2,691

Subtotal FY 2009 Program Changes

Total FY 2009 Request1 35,549 $3,636,230

1 The Operations Support funds allocated to the Taxpayer Service and Enforcement programs in FY 2009 use the FY 2008 

President’s Budget allocation methodology. In order to execute FY 2009 spending, the Administration is proposing language to

adjust Operations Support allocations by up to 1 percent with prior notification to the Appropriations Committees.

IRS-17 
Enforcement Program Summary Budget Adjustment Table 

(Includes Both Direct Costs in the Enforcement Appropriation 

and Indirect Costs in the Operations Support Appropriation) 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 54,682 $6,997,226

Changes to Base:

Maintaining Current Levels $177,048

Pay Annualization 39,170

Pay Inflation Adjustment 102,390

Non-Pay Inflation Adjustment 35,488

Transfers ($1,847)

(847)

(1,000)

(677) ($56,683)

(677) (56,683)

(677)

Transfer to TIGTA

Transfer to FinCEN

Efficiencies/Savings

Efficiency Savings

Base Reinvestments $13,310

Fully Fund Postage Base 13,310

Subtotal Changes to Base $131,828

Total FY 2009 Base - Current Services 54,005 $7,129,054

Program Changes:

Program Increases - Enforcement Initiatives 3,019 $358,155

Reduce the Tax Gap for Small Business / Self-Employed 1,570 165,807

Reduce the Tax Gap for Large Businesses 519 69,488

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance 393 51,058

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity 124 13,697

Expand Document Matching 413 35,060

Implement Legislative Proposals to Improve Compliance 23,045

Subtotal FY 2009 Program Changes 3,019 $358,155

Total FY 2009 Request1 57,024 $7,487,209

1 The Operations Support funds allocated to the Taxpayer Service and Enforcement programs in FY 2009 use the FY 2008 

President’s Budget allocation methodology. In order to execute FY 2009 spending, the Administration is proposing language to

adjust Operations Support allocations by up to 1 percent with prior notification to the Appropriations Committees.

IRS-18 
2A – Budget Increases and Decreases Description 

Treasury Strategic Goals and Outcome 

All of the IRS FY 2009 initiatives support the Treasury Strategic Goal of “Effectively 

Managed U.S. Government’s Finances” and the Treasury Strategic Outcome of 

“Revenue collected when due through a fair and uniform application of the law.” The 

table below shows the IRS Budget by strategic outcome. 

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

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

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

accomplish over the next five years.

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

http://www.treasury.gov/offices/management/budget/strategic-plan/2007-

2012/home.html

Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Goal

Treasury Strategic Objective

Treasury Strategic Outcome

Effectively Managed U.S. Government Finances $10,626,721 $11,091,461 4.4%

Cash resources are available to operate the government 10,626,721 11,091,461 4.4%

Revenue collected when due through a fair and uniform application of the 

law 

10,626,721 11,091,461 4.4%

Prevented Terrorism and Promoted the Nation's Security Through

Strengthened International Financial Systems $265,663 $270,048 1.7%

Pre-empted and neutralized threats to the international financial systems and 

enhanced U.S. national security

265,663 270,048 1.7%

Removed and reduced threats to national security from terrorism,

proliferation of weapons of mass destruction, drug trafficking, and other

criminal activity on the part of rogue regimes, individuals, and their support

networks

265,663 270,048 1.7%

Total $10,892,384 $11,361,509 4.3%

FY 2008 

Enacted

FY 2009

Request

Percent

Change

Treasury Strategy for Reducing the Tax Gap 

The IRS FY 2009 Budget request directly supports its Strategic Plan and includes the 

initiatives directly aimed at increasing voluntary compliance and reducing the tax gap. 

The IRS FY 2009 initiatives support the IRS report, Reducing the Federal Tax Gap: A 

Report on Improving Voluntary Compliance, which builds upon the Department of the 

Treasury’s “Comprehensive Strategy for Reducing the Tax Gap”. 

IRS-19 
The Treasury Tax Gap Strategy consists of seven components that form the basis for the 

detailed compliance improvement efforts that were set forth in the IRS Report. The 

seven Treasury Tax Gap Strategy components are: 

1. Reduce Opportunities for Evasion 

The focus of this component is to identify legislative proposals that would reduce 

evasion opportunities and improve the efficiency of the IRS. It also includes the 

development of regulations and other published guidance to clarify ambiguous 

areas of the law, target specific areas of non-compliance, and prevent abusive 

behavior. 

2. Make a Multi-Year Commitment to Research 

Research is an essential component to identify sources of non-compliance and to 

understand the relationship between taxpayer burden, compliance, and customer 

service on voluntary compliance. 

3. Continue Improvements in Information Technology (IT) 

Improvements in IT are critical to providing the IRS with better tools to increase 

compliance through early detection, better case selection, and better case 

management. 

4. Improve Compliance Activities 

The focus of this component is to increase and enhance activities in examination, 

collection, and document matching, which will allow the IRS to better prevent, 

detect, and remedy non-compliance. These activities will increase compliance not 

only among those directly contacted by the IRS, but also among those who will be 

deterred from non-compliant behavior as a consequence of a more visible IRS 

enforcement presence.

5. Enhance Taxpayer Service 

The importance of this component is to help taxpayers avoid making 

unintentional errors. Through new and existing tools, such as the IRS website, the 

IRS provides taxpayers with assistance and clear and accurate information before 

they file their tax returns, thus reducing unnecessary post-filing contacts.

6. Reform and Simplify the Tax Law 

The focus of this component is to simplify the tax law, forms, and procedures so 

that unintentional errors could be reduced. The complexity of the current tax code 

causes unintentional errors due to lack of understanding. Simplifying the tax code 

also would reduce the opportunities for intentional evasion and make it easier to 

administer the tax laws. The Department of the Treasury and the IRS will 

continue to recommend additional legislative changes to Congress that will reduce 

taxpayer burden. 

IRS-20 
7. Coordinate with Partners and Stakeholders 

The purpose of this component is to share information and compliance strategies 

by enhancing coordination between the IRS and state and foreign governments, as 

well as practitioner organizations, including bar and accounting associations. 

Initiative Costing Methodology 

The IRS applies a variety of methodologies to cost its initiatives based on the type of 

initiative. Costs for initiatives that require labor funding are calculated by converting the 

workload to the number and type of staff (e.g., Revenue Agents, Revenue Officers, or 

Special Agents) needed to deliver targeted performance goals. Once the number of fulltime equivalents (FTE) and type of staff are determined, the cost of the FTE is estimated 

using a Unit Cost Rate (UCR) calculator, a tool for projecting FTE salary and non-salary 

support cost and/or savings. The UCR fully costs the salary, benefits, and support costs 

needed for each FTE. 

Total Changes to Base +$200,970,000 / -946 FTE 

Maintaining Current Levels (MCLs)

+$264,985,000 / 0 FTE

This request funds the estimated cost of pay and benefits increases and non-pay inflation. 

This amount includes: 

• $57,854,000 to fund annualization of the January 2008 federal pay raise in FY 2009; 

• $152,303,000 to fund the proposed January 2009 federal pay raise; and 

• $54,828,000 to fund the FY 2009 non-pay inflation adjustment for items such as rent, 

utilities, communications, contracts, travel, supplies, and equipment. 

Transfer to Treasury Inspector General for Tax Administration (TIGTA)

-$1,370,000 / 0 FTE

The IRS Restructuring and Reform Act of 1998 (RRA 98), P.L. 105-206, eliminated the 

IRS Office of the Chief Inspector and transferred its responsibilities to a new TIGTA 

Office. Once TIGTA was established in FY 1999, the IRS and TIGTA signed a 

Memorandum of Understanding whereby the IRS would continue providing services until 

the costs could be determined and budgetary transfers made. 

In FY 2009, the IRS budget proposes to permanently transfer $1.4 million from the IRS 

to TIGTA to provide base funding for its costs associated with building operations and 

support services such as public transportation subsidy, security, management training, 

and telecommunications. 

IRS-21 
Transfer to Financial Crimes Enforcement Network (FinCEN)

-$1,000,000 / 0 FTE

The IRS annually reimburses FinCEN for the costs associated with the operations and 

maintenance contract supporting the Bank Secrecy Act (BSA) e-filing system, which is 

administered and controlled by FinCEN. This transfer permanently moves funds from 

IRS to FinCEN to provide the base funding it needs to continue supporting its BSA 

e-filing system. 

Efficiencies/Savings 

-$94,249,000 / -976 FTE 

Efficiency Savings

-$71,356,000 / -769 FTE

The IRS has identified organizational changes designed to increase operating efficiencies 

and reduce costs for FY 2009. 

In the enforcement and operations support programs, savings will be achieved through 

enhancement of technology and support structure improvements such as the Integrated 

Collections Systems (ICS) Windows, Integrated Data Retrieval System (IDRS) Decision 

Assisting program, and Compliance Data Environment (CDE). These enhancements will 

improve system performance and workload distribution, increase the ability to interface 

with other modernized systems, and reduce cycle time while improving customer service. 

Additional productivity will be gained by continued efforts to streamline and centralize 

work processes, enhance workload selection techniques, and improve case selection 

tools. In the Operations Support programs, the IRS will realize savings by implementing 

re-engineered business processing efforts. For example, the IRS expects to gain 

efficiencies and engage stakeholders and business customers in decisions by 

implementing the seat management concept of managing workstations, i.e., the 

coordination of all workstations in an enterprise network by overseeing the installation, 

operation, and maintenance of hardware and software at each workstation. Through 

innovative concepts, evolving techniques, and streamlined efforts, the IRS will ensure 

efficiencies within the operations support programs. The IRS also plans to save by 

deferring lower priority space and housing projects and focusing on higher priority 

projects. 

This budget request proposes to reinvest these savings to Fully Fund Postage Base. 

Increase e-File Savings

-$10,300,000 / -207 FTE

As the result of increased electronic filing, the IRS projects a decrease of paper return 

filings in FY 2009. An estimated 4.2 million fewer paper returns (3.5 million individual 

and 0.7 million business) will be received in FY 2009 due to increases in electronicallyfiled returns. As a result, 207 fewer FTE will be required to perform submissions 

processing activities, generating a savings of $10.3 million. This savings will be 

IRS-22 
reinvested to cover the costs of Increase Efficiency through Submission Processing 

Consolidations and Address Correspondence Inventory. 

The IRS continues to strive to meet the legislatively-established goal of electronically 

receiving 80 percent of all tax and information returns. While technological advances, 

such as modernization of the 1040 e-File system, facilitate the IRS efforts, the 80 percent 

e-File goal was not met in FY 2007. The IRS expects progress toward this goal by 

continuing to enhance taxpayer service efforts, including expanding options for filing, 

payments, and communications, a key component of the strategy to reduce the tax gap. 

The table below shows the actual and projected percent of returns processed 

electronically for FY 2006 through FY 2011 for individual and business returns. 

Performance Level FY 2006 

Actual

FY 2007 

Actual

FY 2008 

Target

FY 2009 

Target

FY 2010 

Target

FY 2011 

Target

Percent of Individual Returns Processed

 Electronically 54.10% 57.10% 61.80% 64.70% 67.00% 69.00%

Percent of Business Returns Processed

 Electronically 16.60% 19.10% 20.80% 22.80% 25.20% 26.60%

Non-Recur Savings

-$12,593,000 / 0 FTE

This reduction reflects non-recurring, one-time costs associated with the IRS FY 2008 

initiatives, such as new hire training, background investigations, and acquisition of 

telecommunications equipment, computers, and printers. 

Reinvestments 

+$32,604,000 / +30 FTE 

Increase Efficiency through Submission Processing Consolidations

+$2,006,000 / 0 FTE

Initiative Summary 

Increased use of e-Filing options has driven continued efforts to consolidate the 

processing of individual returns into fewer sites. Resources from Increased e-File 

Savings will be reinvested to fund one-time severance pay costs for the ramp-down of the 

Andover submissions processing site. As the Andover consolidation approaches, the IRS 

will continue to assist employees in finding employment either in or outside the IRS. 

IRS-23 
Implementation Plan and Benefits 

This reinvestment supports the IRS efforts to implement planned submissions processing 

strategies, including the downsizing of paper operations to meet increases in electronic 

submissions and cost efficient opportunities in processing the paper returns. Return 

processing efficiency and effectiveness will improve as electronic filing increases. The 

ramp-down and consolidation of the Andover submissions processing site will also 

improve compliance by providing taxpayer services more efficiently and effectively, a 

key component of the tax gap strategy. 

Address Correspondence Inventory

+$2,457,000 / +30 FTE

Initiative Summary 

This reinvestment provides $2.5 million and 30 FTE in the IRS Accounts Management 

program. This initiative provides $1.8 million for Customer Service Representatives 

(CSRs) to address increased volumes in correspondence inventory and assist individual 

taxpayers with their questions to reach accounts resolution. As a result, addressing the 

correspondence inventory will improve overall taxpayer compliance. Recently, this 

program has experienced increased volumes, and cases have become more complex. 

This initiative also provides $0.7 million in training funds to provide CSRs with 

additional technical training on the processing of the Form 1040X, Amended U.S. 

Individual Income Tax Return, and to address taxpayer questions. Training funds will 

also be used for managerial training as the Wage & Investment operating division 

continues to decrease its span of control. 

Implementation Plan and Benefits 

Through additional hires and training for CSRs, the IRS will more effectively address the 

needs of taxpayers and process the continuously increasing number of Form 1040X 

returns. This reinvestment supports the IRS efforts to improve compliance by providing 

taxpayer services more efficiently and effectively, a key component of the tax gap 

strategy. 

Fully Fund Postage Base

+$28,141,000 / 0 FTE

Initiative Summary 

This reinvestment will fully fund the IRS postage costs. Increases in both IRS 

enforcement and service-related correspondence activities have resulted in an increase in 

postage costs to contact taxpayers and issue notices via mail. Increased costs are not only 

due to an increase in volume, length, and weight of the mailings, but also due to a larger 

proportion of the mailings being sent via certified mail to ensure taxpayer privacy. 

Similarly, IRS emphasis on providing quality service to American taxpayers necessitates 

effective communication of important information about tax laws and available services, 

IRS-24 
such as e-filing. Fully funding IRS postage costs is critical to supporting enforcement 

efforts to improve compliance and enhancements to taxpayer service programs, two key 

components of the IRS strategy to narrow the tax gap. To fund the postage program, the 

IRS redirected $8.5 million in FY 2006 and reprogrammed $31 million in FY 2007 from 

prior year and user fee balances. 

As illustrated by the table below, the number of notices sent to taxpayers increased from 

146.9 million in FY 2005 to 160.8 million (9.5 percent) in FY 2006 and another 

16.5 million (10 percent) in FY 2007. 

29.6

81.1

119.7

142.2 146.9

160.8

177.3

0

20

40

60

80

100

120

140

160

180

Millions

FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Correspondence Production Services (CPS) Branch

Number of Notices per Fiscal Year

IRS-25 
Total FY 2009 Program Changes +$200,970,000 / -946 FTE 

Program Decreases 

-92,691,000 / -312 FTE 

Taxpayer Assistance Centers and Outreach

- $31,200,000 / -262 FTE

Additional resources were provided in FY 2008 for increasing outreach and education 

activities, for individuals, businesses, and tax-exempt entities; and increasing the number 

of tax returns prepared at the Taxpayer Assistance Centers (TACs). In FY 2009, the IRS 

will continue to work to implement the taxpayer assistance improvements detailed in the 

Taxpayer Assistance Blueprint (TAB). 

Taxpayer Advocate Service

-$7,711,000 / -25 FTE

Additional Taxpayer Advocate Service (TAS) funds were provided in FY 2008 to expand 

TAS case processing activities. In FY 2009, these activities will be restored to levels in 

line with resources for other taxpayer service programs. However, the IRS does requests 

additional TAS program resources where appropriate in support of enforcement staffing 

initiatives (e.g., the FY 2009 Reduce the Tax Gap for Small Business/Self Employed

initiative). 

VITA Grants Program

-$8,000,000 / 0 FTE

Funds provided in FY 2008 included $8,000,000 for a new Volunteer Income Tax 

Assistance (VITA) matching grant demonstration program for tax return preparation 

assistance. This funding is available until September 30, 2009. Given the ramp-up time 

to establish the grant application and approval process, these grants are expected to be 

issued for the 2009 filing season. 

Business Systems Modernization

-$45,780,000 / -25 FTE

The FY 2009 proposed level of $222,664,000 will allow continued progress on key 

modernization projects including the Customer Account Data Engine (CADE), Accounts 

Management Services (AMS), and Modernized e-File (MeF). 

IRS-26 
Program Increases 

+360,846,000 / +3,057 FTE 

Reduce the Tax Gap for Small Business / Self-Employed

+$168,498,000 / +1,608 FTE

Initiative Summary 

This initiative provides for an increase of $168.5 million and 1,608 FTE to address and 

improve compliance among Small Business and Self-Employed (SB/SE) and Wage & 

Investments taxpayers in the tax gap elements of reporting, filing, and payment 

compliance. Over $980.8 million in additional annual enforcement revenue will be 

produced once new hires reach full potential in FY 2011 by increasing examinations of 

business and high-income returns, increasing audits involving flow-through entities, 

implementing voluntary tip agreements, increasing document matching audits, and 

collecting unpaid taxes from filed and unfiled tax returns. 

This initiative will increase staff resources by 687 to address Underreporting Compliance, 

721 to address Nonfiling and Underpayment Compliance, 33 to address Fraud/BSA and 

167 for other direct support. 

Implementation Plan and Expected Benefits by Program 

Underreporting Compliance (+$74.6 million/ +687 FTE)

The Underreporting Compliance tax gap, estimated at $285 billion, reflects the 

underreporting of income and the overstating of deductions on returns filed timely. This 

portion of the tax gap is comprised of four major components: individual income tax, 

employment tax, corporate income tax, and estate and excise taxes. Underreporting of 

individual income tax and employment tax constitutes over 70 percent of the gross tax 

gap. Individual income tax underreporting totals $197 billion, of which over half, or 

$109 billion, is attributed to understated net business income. Another 28 percent, or 

$56 billion, represents underreported non-business income such as wages, tips, interest, 

dividends, and capital gains. Employment tax accounts for another $54 billion of the 

underreporting tax gap, of which 72 percent or $39 billion represents self-employment 

tax. 

In FY 2009, this investment will increase staff resources by 530 Revenue Agents (RAs), 

74 Tax Compliance Officers (TCOs), 53 Specialty Field Examination RAs, 

and 30 Correspondence Examination Customer Service Representatives. 

Field Examination 

The RAs will continue to focus on Abusive Tax Avoidance Transactions (ATAT), 

structured transactions, and corporate and high-income examinations involving flowthrough entities (e.g., trusts, partnerships, S corporations). The Employment Tax (ET) 

IRS-27 
RAs will be dedicated to securing and implementing voluntary agreements within the 

gaming industry tip compliance program to increase the accuracy of tip reporting for both 

the employer and employee. 

The RAs and TCOs will examine an additional 5,100 individual income tax returns 

(IMF closures) and 1,000 business income tax returns (BMF closures). Once new hires 

reach full potential in FY 2011, this investment is projected to produce an additional 

19,000 individual return audits and 3,000 business return audits, potentially generating 

$377.6 million in increased revenue. 

Despite 5 percent growth in individual return filings from FY 2008 through FY 2011, the 

IRS estimates that with the addition of Field Examination resources, the IRS will be able 

to maintain the current audit coverage rate for individual returns of approximately 

1 percent. 

EXAMINATION IMF CLOSURES

(In Thousands)

280

290

300

310

320

330

340

350

360

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

EXAMINATION BMF CLOSURES

(In Thousands)

40

42

44

46

48

50

52

54

56

58

60

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

IRS-28 
Specialty Tax Program

The Specialty Tax Program addresses the tax gap by handling cases in the employment, 

excise, and estate and gift tax program areas. In the employment tax area, the IRS 

continues to target efforts toward egregious non-compliance, such as the lower 

compliance levels of tipped employees compared to straight-wage earners. In the excise 

tax area, the IRS is focusing on claims for long-distance telephone tax as well as 

compliance with fuel tax. In the estate and gift tax area, the IRS is focusing on areas of 

non-compliance involving timing and valuation. 

Specialty Tax staff (53 FTE) will conduct approximately 2,300 more tax audits in 

FY 2009, with an emphasis on employment tax cases. Once new hires reach full 

potential in FY 2011, this investment will result in an additional 4,000 tax audits with 

potential revenue of $12.1 million. 

NON-INCOME TAX SPECIALTY CLOSURES

(In Thousands)

64

66

68

70

72

74

76

78

80

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

Correspondence Examination 

The Correspondence Examination program addresses the tax gap through increased 

enforcement presence and coverage. The additional 30 FTE will allow the 

Correspondence Examination program to examine approximately 4,700 more cases in 

FY 2009. Once new hires reach full potential in FY 2011, the additional FTE will 

complete approximately 6,000 more audits with a projected revenue increase of 

$44.4 million. 

IRS-29 
CORRESPONDENCE EXAMINATION CLOSURES

(In Thousands)

325

330

335

340

345

350

355

360

365

370

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

Nonfiling and Underpayment Compliance (+$69.4 million / +721 FTE)

Nonfiling comprises 8 percent or $27 billion of the tax gap. In recent years, nonfilers 

with high-incomes and higher amounts of net tax due have dominated the SB/SE nonfiler 

population. In 2002, SB/SE individual nonfilers accounted for 66 percent of the 

individual high-income nonfiler population, representing a 20 percent increase since 

FY 2000. Revenue Officers and Campus Compliance employees use an array of 

techniques to address nonfiling, including the determination of compliance assessments 

based upon available internal and third-party information. 

Nonfiler 

This initiative requests funding to increase the collection efforts on key compliance 

assessments focused on improving voluntary compliance and decreasing nonfiling. 

Additional Field Collection staff (96 FTE) will resolve approximately 1,900 additional 

nonfiler Tax Delinquency Investigations (TDI) in FY 2009, and once new hires reach full 

potential in FY 2011 an additional 3,000 nonfiler investigations. Additional Campus 

Collection/Automated Collection System (ACS) staff (19 FTE) will resolve 

approximately 12,000 additional nonfiler TDI in FY 2009, and once new hires reach full 

potential in FY 2011, an additional 16,000 nonfiler investigations. 

IRS-30 
FIELD TDI CLOSURES

(In Thousands)

260

265

270

275

280

285

290

295

300

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

ACS TDI CLOSURES

(In Thousands)

470

480

490

500

510

520

530

540

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

Underpayment 

Payment Compliance represents 10 percent, or $33 billion, of the tax gap. Additional 

staffing will increase coverage of potentially collectible inventory (PCI) and focus on 

addressing the PCI growth. PCI is the amount of the total unpaid assessments that is 

available for active collection actions. Total PCI increased from $81 billion in 2004 to 

$105 billion in 2007. In 2004, compliance assessments accounted for $14 billion of PCI, 

increasing to $23 billion in 2005, $27 billion in 2006, and $36 billion in 2007. 

Additional Field Collection staff of 486 FTE will resolve approximately 

42,000 additional Tax Delinquency Accounts (TDA) in FY 2009. Once new hires reach 

full potential in FY 2011, the additional staff will resolve an additional 88,000 delinquent 

tax accounts, generating approximately $333.6 million in revenue. 

IRS-31 
FIELD TDA CLOSURES

(In Thousands)

1,150

1,175

1,200

1,225

1,250

1,275

1,300

1,325

1,350

1,375

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

Additional Campus Collection/ACS staff of 120 FTE (92 TDA/28 TDI) will resolve 

approximately 43,000 additional TDA in FY 2009. Once new hires reach full potential in 

FY 2011, the new ACS staff will resolve approximately 67,000 additional delinquent tax 

accounts, with a potential generation of $213.1 million collected. 

ACS TDA CLOSURES

(In Thousands)

1,800

1,820

1,840

1,860

1,880

1,900

1,920

1,940

1,960

1,980

2,000

2,020

2,040

2,060

2,080

2,100

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

IRS-32 
Fraud/BSA (+$3.4 million / +33 FTE) 

The 33 RA FTE will be dedicated to the BSA program and will close an additional 229 

Title 31 cases, and in FY 2011, an additional 400 such cases. In FY 2009, 129 additional 

Form 8300 cases will be examined, and once new hires reach full potential in FY 2011, 

200 additional cases will be examined. 

Title 31 Cases Closed

7000

7200

7400

7600

7800

8000

8200

8400

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

Section 8300 Cases Closed

2300

2400

2500

2600

2700

2800

2900

3000

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

CLOSURES

PRE INITIATIVE CLOSURES POST INITIATIVE CLOSURES

IRS-33 
Follow-On Support (+$21.1 million / +167 FTE) 

The IRS Appeals division ($9.3 million and 67 FTE) will process additional cases 

generated from increased examination and collection program staffing. 

The IRS Office of Chief Counsel ($8.5 million and 62 FTE) will provide legal advice and 

assistance in litigating the increased number of cases and support for additional tax 

shelter litigation and published guidance; as well as and conduct tax reform-related work 

pertaining to SB/SE cases. A legislative change in FY 2006 transferring Collection Due 

Process (CDP) cases involving employment taxes from the United States District Courts 

to the United States Tax Court will have a direct impact on the number of increased CDP 

cases litigated by SB/SE Counsel Attorneys. 

Funding for the Taxpayer Advocate Service ($3.3 million and 38 FTE) will be applied to 

both examination and collection programs to ensure the IRS follows appropriate 

procedures and does not create unnecessary burdens or compromise taxpayer rights. 

Expected Benefits 

This request will produce $980.8 million in additional annual enforcement revenue once 

new hires reach full potential in FY 2011. 

ROI

$169 $137 $137

$422

$778

$981

$0

$300

$600

$900

$1,200

FY09 FY10 FY11

in millio

n

s

Cost Enforcement Revenue

2.5 to 1

5.7 to 1

7.2 to 1

IRS-34 
Reduce the Tax Gap for Large Business

+$69,488,000 / +519 FTE

Initiative Summary 

This initiative requests an increase of $69.5 million and 519 FTE to address the tax gap 

derived primarily from the underreporting of income tax by large, usually multi-national 

businesses; foreign residents; and smaller corporations with significant international 

activity. To narrow this gap, the IRS will continue to improve identification of risk, 

implement more effective approaches to address non-compliance, and allocate resources 

to the highest risk areas. This initiative funds additional RAs with international, financial 

products, and valuation expertise; operational support to enable the IRS to further use 

existing systems to capture other electronic data through scanning and imaging; and 

increases for Counsel attorney and Appeals support. 

In addition to traditional audits, the IRS will expand the use of pre-filing methods, such 

as the Compliance Assurance Process (CAP), which benefit from the post-SarbanesOxley environment of transparency in financial disclosures including required disclosures 

of uncertain tax positions. 

Funding of this initiative will allow the IRS to: 

• Increase and maintain appropriate examination coverage of corporations among 

various stratifications based on compliance risk. For example, in Calendar Year 

(CY) 2005, corporations with assets of more than $250 million reported $172 billion 

in tax and have the largest book-to-tax differences. Efforts to identify risk and deal 

with them effectively through a balance of service and enforcement would be a 

priority. 

• Allocate additional resources to complex enterprises with significant compliance 

risks, often including flow-through entities or offshore special purpose entities. 

(Flow-through entities are the fastest growing population in the Large and Mid-Size 

Business (LMSB) return population, comprising over 64 percent of filings.) 

• Increase and maintain examination coverage of smaller corporate returns and 

individuals with international activity. 

• Leverage technology through the increased development and deployment of 

workforce tools, issue management systems and management information systems to 

increase organizations capabilities to address compliance risk. 

• Provide operational support to enable IRS to further use existing systems to capture 

other electronic data through scanning and imaging. This will provide early and 

efficient delivery of modernized e-file and residual paper return data to field 

compliance employees for identification and resolution of compliance issues. 

IRS-35 
• Strengthen the technical expertise and specialization of the LMSB workforce, aligned 

with complex issues of compliance risk. 

• Provide for on-going renewal of the LMSB workforce to avoid future skill and 

experience gaps.

Implementation Plan and Benefits 

Increase Coverage of Large and Mid-Size Corporations 

This initiative funds an additional 333 FTE comprised of RAs and specialized personnel 

such as international and financial products specialists, engineers, and economists to 

primarily support increased coverage of large and mid-size corporations, including 

returns with significant international activity as well as a small increase in individual 

returns of foreign residents. These additional RAs and specialized personnel will 

improve examination coverage of large businesses, with specific focus on key areas of 

non-compliance involving not only the largest taxpayers, but the most complex financial 

transactions and difficult issues of accounting and tax law. An additional 32 FTE will be

designated for tax technicians to conduct examinations of individual foreign resident 

returns, and 3 FTE will be designated for international technical training to meet the 

demand for increased technical skills of employees dealing with international tax issues

and non-compliance. 

The resources provided by this initiative will increase the ability of the IRS to ensure that 

the complicated transactions arising from the factors identified in the next paragraph are 

properly reported for tax purposes. This initiative will fund the hiring of a workforce 

needed to implement new data-driven processes using an issue-focused approach to 

compliance through specialization of resources. 

IRS historical enforcement results show that non-compliance by large corporations 

represents a significant portion of the $345 billion gross tax gap. As filings continue to

increase, the IRS assumes the tax gap associated with these filings also increases. While 

it is difficult to identify the exact source for the large corporate tax gap, a large portion 

may be attributed to: 

• Unreconciled or undisclosed book-to-tax differences between financial 

reporting and income tax reporting. Corporate taxpayers are encouraged to 

show high profitability for financial reporting purposes and low profitability 

for tax reporting purposes. In FY 2003, book-to-tax differences increased by 

at least $266 billion compared to FY 2000 through FY 2002. As book-to-tax 

differences continue to increase, it is likely that underreporting attributable to 

these differences will also increase. The lack of adequate information 

regarding relevant business transactions and book-to-tax reconciliations 

increases the risk of undetected non-compliance with tax laws. 

• Increased opportunities to engage in improper tax planning due to rapid global 

business expansion across differing tax jurisdictions, including tax haven 

countries. Between December 31, 2004 and June 30, 2005, 31,298 taxpayers 

IRS-36 
filed Schedule M-3 for corporate tax returns. Aggregated data estimates that 

$227 billion of net income from controlled foreign corporation was excluded 

from tax return filings, and $89 billion of net income from non-includible U.S. 

entities was excluded from U.S. tax returns. 

• Use of abusive tax avoidance transactions and illegal shelters. 

• Increased risks from the evolution of complex business structures as 

businesses respond to pressure for increased shareholder return. These 

structures include offshore and multilateral arrangements reflected in special 

purpose entities, joint ventures, and other specialized arrangements, which 

often include tiered flow-through entities. For the largest corporations for 

which a “team approach” is used for examinations, 69 percent were involved 

in tiered partnerships directly or through subsidiaries. 

• Increased complexity within the tax code. 

IRS compliance efforts are facilitated by the implementation of mandatory electronic 

filing for large businesses and implementation of the Schedule M-3, which provides 

information on potentially non-compliant transactions that have differing treatment for 

book and tax purposes. The improved data from electronic filings allows the IRS to 

quickly assess risks in these returns and deliver the returns to the field for compliance 

action where warranted. The data from Schedule M-3 provides direction for the IRS to 

address critical compliance issues early and provides a more level playing field for 

determining which returns require audit or other compliance action. The improved 

information will enhance the IRS ability to determine where resources should be applied 

and better assess the necessary scope and depth of the audits or other compliance action. 

Faced with growing business risks, the IRS has implemented and improved processes to 

maintain audit coverage in the large corporate sector - those corporations with 

$10 million or greater in assets. The currency and cycle time initiative improves the 

timeliness of examinations. The IRS also implemented new, non-traditional approaches 

to compliance. These approaches include pre-filing and real-time compliance solutions 

in contrast to post-filing solutions, which do not occur until years after the actual 

transactions. Specific examples of these new approaches include the CAP, use of issue 

management teams, pre-filing agreements, currency and cycle time initiatives, and issue

specialization among the IRS workforce. At the international level, the IRS supports the 

Joint International Tax Shelter Information Centre (JITSIC) and exchanges of 

information with treaty partners. 

Return filings for the volatile large business taxpayer population continue to increase. 

Projected filings for CY 2008 are 205,800, a 36 percent increase over the CY 2002 total 

of 151,353. As indicated by the chart below, filings are projected to grow an additional 

3 percent to 212,700 in CY 2009. 

IRS-37 
Filings by type of

return by assets

CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009

Corporations

$10M <$250M 48,694 47,786 43,064 44,744 44,773 43,700 43,000 42,400

Corporations >$250M 10,908 11,188 11,027 12,133 12,584 12,500 12,500 12,500

Sub Chapter S >$10M 25,271 26,954 30,017 32,753 36,325 38,000 40,100 42,300

Partnerships 66,480 71,000 81,000 86,322 99,482 104,800 110,200 115,500

Total 151,353 156,928 165,108 175,952 193,164 199,000 205,800 212,700

Technological and Process Improvements 

This initiative includes an additional 77 FTE for support of certain critical compliance 

information systems. The additional FTE will enable IRS to further use existing systems 

to capture other electronic data through scanning and imaging. These data come from

residual paper returns, which include international information returns, paper-filed 

Schedule M-3s, and certain flow-through filings, as well as returns not mandated to be

filed electronically. These data will facilitate the better and quicker identification of

abusive transactions and issues from book-tax differences that are a major contributor to 

the tax gap. 

The 77 FTE requested to support each system under this initiative are: 

 

• 30 FTE for Data Capture, 

• 7 FTE for LMSB Imaging Network (LIN), 

• 15 FTE for Promoter Imaging Network (PIN), and 

• 25 FTE for Chapter 3 Withholding (CTW). 

Other Direct Costs 

The IRS Office of Chief Counsel ($6.8 million and 54 FTE) will provide support to this 

initiative and increased case closures. Counsel attorneys will advise RAs on complicated 

issues of tax law and accounting principles in the context of large corporate and flowthrough enterprises. The attorneys will assist in all phases, including: developing facts 

by assisting in gathering documents; issuing summonses and conducting interviews; 

identifying issues; developing legal positions; assessing the merits of taxpayer positions; 

developing responses to taxpayer submissions; accompanying agents to taxpayer 

meetings; commenting on taxpayer protests; drafting closing agreements; reviewing 

statutory notices; attending pre-conferences with Appeals; and litigation, as necessary. 

The IRS Appeals division ($2.6 million and 20 FTE) will provide support to this 

initiative by increasing coverage through non-traditional approaches, leveraging 

technology to enhance the quality and timeliness of risk identification, and employing a 

strategic approach to issue management. 

IRS-38 
Expected Benefits 

With technological and process improvements and new approaches to compliance, the 

IRS is positioned to quickly identify the issues most warranting compliance action and to 

apply compliance treatments that are appropriate for the type of risk and taxpayer 

behavior. IRS performance reflects the improvement in processes derived from an issuedriven approach to compliance motivated by improved data delivery tools. 

Return on Investment (ROI) 

The ROI for this initiative will generate $543.9 million in additional annual enforcement 

revenue once the new hires reach full potential in FY 2011 (see chart below.) 

ROI

$70 $61 $61

$121

$254

$544

$-

$100

$200

$300

$400

$500

$600

FY 09 FY 10 FY 11

in millio

n

s

Cost Enforcement Revenue

1.7 to 1

4.1 to 1

8.9 to 1

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance

+$51,058,000 / +393 FTE

Initiative Summary 

This initiative provides $51.1 million and 393 FTE to support and expand ongoing 

research studies of filing, payment, and reporting compliance to provide a comprehensive 

picture of the overall taxpayer compliance level. Research enables the IRS to develop

strategies to combat specific areas of non-compliance, improve voluntary compliance, 

and allocate resources more effectively to reduce the tax gap. The goal of the measures is 

to provide benchmarks against which the IRS can evaluate the effectiveness of programs 

designed to improve compliance with the tax code and reduce the tax gap. 

IRS-39 
Implementation Plan and Benefits 

This initiative supports ongoing Reporting Compliance Studies through the National 

Research Program (NRP). The request funds research studies of reporting compliance 

for new segments of taxpayers, such as corporations, partnerships, and other business 

entities, and updates existing estimates of reporting compliance (e.g., individual 

taxpayers). The initiative will also enhance an existing base of operating division 

examiners with varying expertise to perform reporting compliance studies to limit the 

diversion of resources from operational priorities. Accordingly, this initiative requests

FTE in the following divisions; 68 in LMSB, 208 in SB/SE, 87 in 

Tax-Exempt/Government Entities (TEGE) and an additional 30 in support divisions. 

Expected Benefits 

Improved quality of research data will allow the IRS to spend a smaller proportion of its 

resources auditing taxpayers who are already compliant with the law. This initiative 

improves the fairness of the tax system and voluntary taxpayer compliance, reduces the 

burden on compliant taxpayers, and increases revenue to reduce the tax gap. The audits 

associated with these studies will generate $16 million in additional annual enforcement 

revenue once new hires reach full potential in FY 2011. 

The initiative focuses on three measures (filing, payment, and reporting compliance) to 

provide a comprehensive picture of the overall level of compliance. The measures will 

provide benchmarks against which the IRS can evaluate the effectiveness of programs 

designed to improve taxpayer compliance with the tax code. 

The data captured during the studies will enable the IRS to develop strategies to combat 

specific areas of non-compliance, improve voluntary compliance, allocate resources more 

effectively, respond to new sources of non-compliance as they emerge, and reduce the tax 

gap. The IRS needs estimates of non-compliance for all of the major taxes and groups of 

taxpayers in order to effectively deploy resources. 

Moreover, since patterns of non-compliance in the population change over time, the IRS 

requires updated estimates of taxpayer compliance. With up-to-date studies, the IRS will 

be able to respond rapidly to trends and emerging vulnerabilities in the tax system. The 

initiative also benefits compliant taxpayers by using reporting compliance studies to 

improve workload selection formulas. 

Return on Investment (ROI) 

The ROI for this initiative will generate $15.9 million in additional annual enforcement 

revenue once the new hires reach full potential in FY 2011 (see chart below). 

IRS-40 
ROI

$51

$42 $42

$15 $16 $16

$0

$100

FY09 FY10 FY11

in millio

n

s

Cost Enforcement Revenue

0.3 to 1 0.4 to 1 0.4 to 1

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity

+$13,697,000 / +124 FTE

Initiative Summary 

This initiative provides for an increase of $13.7 million and 124 FTE to address domestic 

taxpayer offshore activities. Abusive tax schemes, reporting of flow-through income, and 

high-income individuals are prime channels or candidates of opportunity for tax 

avoidance. Abusive offshore tax schemes involve the use of foreign jurisdictions that 

enacted financial secrecy laws in an effort to attract investments from outside their 

borders. Domestic promotions lure taxpayers with the promise of illegitimate tax 

benefits that do not conform to current law and are marketed as devices that reduce, 

eliminate, or help evade income, self-employment, employment, estate, gift, and/or 

excise taxes.

One of the most difficult tasks the IRS encounters in addressing offshore compliance is 

identifying individual taxpayers who are involved in offshore arrangements. Offshore 

arrangements may be designed to conceal the identity of the taxpayers and to shield their 

ownership of assets and income from detection. The process used by IRS to identify 

taxpayers involved in offshore arrangements is known as “following the money”. Below 

are four basic components to an offshore abusive arrangement: 

• Devise an overall offshore plan (the Promoter/Promotion); 

• Covertly transfer funds and assets offshore (Expatriation); 

• Control the funds and assets transferred offshore (Control/Ownership); and 

• Access the offshore funds (Repatriation). 

IRS-41 
Implementation Plan 

Financial privacy laws in certain foreign jurisdictions pose a significant hurdle in IRS 

efforts to battle offshore abusive tax shelters. These jurisdictions deliberately attract 

foreign business with government policies including enacting incentives that minimize or 

mitigate tax, “business friendly” regulatory/supervisory regimes such as exchange 

controls, disclosure requirements, and secrecy enforced by law. 

The legal framework of these jurisdictions makes them unique. In addition, these 

jurisdictions enable banks, trust companies, company incorporators, other financial 

intermediaries, and financial advisors resident in that jurisdiction to provide products and 

services to non-residents in their home countries. The IRS is particularly concerned 

about offshore secrecy jurisdictions that: 

• Offer the instant formation and management of foreign trusts, international 

business companies (IBCs), and other special purpose entities; 

• Lack transparency in that they offer banking and financial secrecy by law and 

custom (enforced by civil and criminal penalties including incarceration); 

• Make the beneficial owner of an entity, transaction, or asset unknown; and 

• Do not exchange tax information with the United States. 

A few offshore secrecy jurisdictions have Tax Information Exchange Agreements 

(TIEAs) in place as a means for the U.S. to receive information. However, the IRS 

cannot take full advantage of a TIEA in situations where the U.S. person’s identity is 

unknown. In addition, even where the United States is able to secure information about a 

taxpayer, the TIEAs do not provide for assistance with the collection of U.S. taxes from

foreign-based assets. 

To take advantage of TIEA while addressing offshore activities, the IRS plans to 

establish five new domestic taxpayer offshore activity groups to fill gaps in geographic 

areas. The additional specially-trained RAs will uncover use of offshore credit cards, 

disguised corporate ownership, and brokering activities. 

Other Direct Costs 

Of the 124 FTE, this initiative has 10 FTE for support cost. The IRS Appeals division 

($0.5 million and 4 FTE) will process the additional anticipated exam cases that will be 

referred and accommodate the increased time that will be required to resolve these cases. 

The IRS Office of Chief Counsel ($0.8 million and 6 FTE) will provide legal advice and 

assistance in the area of investigating taxpayers with financial dealings in offshore 

secrecy jurisdictions. 

IRS-42 
Expected Benefits 

The additional FTE will generate in the first year an estimated 3,200 additional 

examinations of taxpayers who use offshore activities to hide, conceal, defer, or obscure 

assets and taxable income. 

Domestic Taxpayers with Offshore Activity Exam

Closures

0

1,000

2,000

3,000

4,000

5,000

6,000

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Year

Closures

PRE INITIATIVE POST INITIATIVE

Return on Investment (ROI) 

This request will generate approximately $39 million in additional resources in the first 

year and $101.9 million in additional annual enforcement revenue once the new hires

reach full potential in FY 2011 (see chart below).

ROI

$14 $11 $11

$39

$84

$102

$0

$30

$60

$90

$120

FY09 FY10 FY11

in millions

Cost Enforcement Revenue

9.0 to 1 

7.4 to 1 

2.9 to 1 

IRS-43 
Expand Document Matching

+$35,060,000 / +413 FTE

Initiative Summary 

This initiative requests $35.1 million to increase the coverage of the IRS Automated 

Underreporter (AUR) program in order to reduce the number of non-compliant taxpayers 

who misreport their income. Increased document matching of small business/selfemployed and individual taxpayer account information identifies taxpayers who 

underreport their income and minimizes revenue loss. This initiative will generate 

$359 million in additional annual enforcement revenue once the new hires reach full 

potential in FY 2011. 

Implementation Plan 

The objective of the AUR program is to minimize revenue loss through document 

matching of taxpayer account information. The IRS commitment to maintaining a robust 

AUR program is demonstrated by a commitment to increasing enforcement results and is 

reflected in targets for the long-term goals and corresponding performance targets. 

About 6.9 million small business taxpayers may currently misreport their income based 

on third party information returns. Of those, the small business AUR program processes 

approximately 2.2 million taxpayer cases, leaving an unaddressed gap of 4.7 million 

taxpayers. 

The number of individual taxpayers who may annually misreport their income is about 

5.1 million based on third party information returns. The AUR program currently 

processes about 2.3 million taxpayer cases, leaving an unaddressed gap of 2.8 million 

taxpayers. 

The additional resources will increase the number of SB/SE AUR closures from 

1.7 million in FY 2009 to 1.8 million in FY 2011 and individual AUR closures from

2.1 million in FY 2009 to 2.4 million in FY 2011. 

Other Direct Costs 

The IRS Appeals division ($2.1 million and 14 FTE) will process additional cases that 

will be referred by the AUR document matching program. 

Expected Benefits 

The AUR program has one of the highest returns on investment ratios of all compliance 

programs. By 2011, the return on investment is expected to reach 11.4 to 1. This 

initiative will generate $358.6 million in additional annual enforcement revenue once the 

new hires reach full potential in FY 2011. 

IRS-44 
ROI

$35 $32 $32

$171

$287

$359

$0

$100

$200

$300

$400

FY09 FY10 FY11

in millio

n

s

Cost Enforcement Revenue

4.9 to 1

9.1 to 1

11.4 to 1

This initiative also links IRS compliance resources to clearly defined, measurable, and 

results-oriented annual performance outcomes. It addresses the erosion of the IRS 

enforcement presence and the continued growth in non-compliance expressed by TIGTA, 

GAO, Congress, and the media. The initiative will also help decrease the tax gap, 

increase voluntary compliance, and reduce the number of taxpayers who underreport 

income in future tax years. 

Implement Legislative Proposals to Improve Compliance

+$23,045,000 / 0 FTE

Initiative Summary 

This initiative provides an increase of $23 million to implement several legislative 

proposals that are intended to provide the IRS with additional enforcement tools to 

improve compliance with minimum taxpayer burden. These tools would supplement the 

IRS ongoing efforts to address compliance problems by improving customer service and 

using traditional methods of enforcement. These proposals would expand information 

reporting, improve compliance by businesses, strengthen tax administration, and expand 

penalties. This enforcement initiative includes funding for purchasing software and 

making modifications to the IRS IT systems necessary to implement these legislative 

proposals. 

Implementation Plan 

Although the Budget includes sixteen proposals, additional information is provided 

below only for those proposals that will require funding to implement in FY 2009. 

Information Reporting on Merchant Payment Card Reimbursements: 

Underreported business income among members of the SB/SE community accounts for a 

significant portion of the individual income tax gap. Businesses often receive payments 

for goods or services via a consumer’s payment card, but subsequently fail to report the 

IRS-45 
income from these transactions on the business’ federal income tax return. These 

underreported transactions add up to be significant contributors to the tax gap. 

This proposal will address this portion of the tax gap by providing the IRS with an 

additional means of cross-referencing the income reported by businesses with their 

payment card receipts. Under this proposal, the IRS would require payment card 

processors to report annually total reimbursements paid to businesses for goods and 

services. The reported amount would then be compared to gross receipts reported by 

businesses on their federal returns. A significant difference in the dollar values of the 

reimbursements by payment card companies and the gross receipts reported by 

businesses would be a red flag that income was possibly being underreported. 

The IRS anticipates that this proposal will help reduce the tax gap in three ways. First,

businesses would benefit from having an annual summary of credit card payments, which 

they could compare with their own records (much as individuals benefit from receiving a 

confirmation from their bank as to how much interest they earned during the year). 

Second, businesses that might otherwise be inclined to underreport their income might 

reconsider, knowing the IRS has a means to validate the gross income reported on their 

federal tax returns. Third, businesses that continue to abrogate their responsibilities as

taxpayers (e.g., by not filing returns, or understating their income) would be more easily 

identified, so that appropriate enforcement action could be taken. 

The IRS anticipates receiving approximately 125 million information return documents 

from credit and debit card processors per year, associated with approximately five million 

SB/SE taxpayers. Revenue Agents in the field could then follow up with delinquent 

taxpayers in the course of standard enforcement operations. 

Information Reporting on Certain Government Payments: 

One of the most high-profile components of the tax gap relates to the failure of some 

government vendors and contractors to meet their tax filing and payment obligations. 

Under present law, the federal government has broad authority to levy federal payments 

made to vendors of goods and services. The proposal would authorize the 

implementation of regulations requiring information reporting and backup withholding 

on all non-wage payments by federal, state, and local governments to procure property 

and services. 

As part of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), enacted 

on May 17, 2006, Congress enacted a provision requiring 3 percent withholding on 

certain government vendor payments. This provision is broader than the 

Administration’s proposal in that it requires information reporting and immediate 

withholding on government payments, rather than information reporting and backup 

withholding. The TIPRA provision applies only to payments made after 

December 31, 2010, whereas the Administration’s proposal would be effective for 

payments made on or after January 1, 2009. 

The IRS anticipates receiving an additional 89 to 177 million information returns as a 

result of the new reporting requirements. The costs associated with implementation of 

this program are for reprogramming affected information technology systems. Once 

IRS-46 
these initial costs have been incurred, subsequent costs will decrease as processing, 

transcription, and matching activities will occur largely within existing workgroups. 

Information Reporting on Payments to Corporations: 

The National Research Program and earlier compliance studies have consistently shown 

that misreporting of individual income and offsets to income is significantly reduced

where there is substantial third-party information reporting. This is likely to be true for 

corporations, as well. Under current law, businesses are not required to issue Forms 1099 

for services provided by corporations. 

Implementation of this proposal will increase the number of Forms 1099 filed. Voluntary 

compliance is expected to increase for corporate reporting of amounts subject to this 

information reporting. The IRS would require additional resources to implement 

matching programs to address the increased volume of Forms 1099. 

Basis Reporting on Security Sales: 

GAO estimates that 36 percent of individual taxpayers misreported their securities capital 

gains or losses in 2001. The estimated capital gains tax gap for Tax Year 2001 is $11 

billion dollars. This amount will be significantly reduced by requiring financial 

institutions to: 

• report the adjusted cost basis of securities sold and the nature of the sale (short-term

or long-term) to the IRS, and 

• exchange information to enable other financial institutions to meet adjusted cost basis 

reporting requirements for clients who transfer securities to a successor financial 

institution. 

In those instances where a broker does not have sufficient information to compute the 

adjusted cost basis, the taxpayer will be responsible for reporting the sale. 

Increase Information Return Penalties: 

The IRS currently asserts a penalty for failure to file a correct information return. The

current penalty amount of $50 (or $100 for intentional disregard), with a calendar year 

cap of $250,000 for each filer, provides little incentive to increase compliance. This 

proposal will enhance compliance in this area by increasing the penalty amount and the 

cap to increase the cost of doing business for perpetual offenders. The penalty will be 

increased to $100 (or $250 for intentional disregard) for each unfiled return. The cap will 

be increased to $1,500,000 unless the failure is due to intentional disregard of a filing

requirement, in which case there will continue to be no calendar year limit. For certain 

small filers whose average annual gross receipts do not exceed $5,000,000, the cap will 

be increased from $100,000 to $500,000. 

During the 2005 Tax Year, 53,821 payers received a Proposed Penalty Notice for failure 

to timely and accurately provide Forms 1099. While penalties are not considered a 

revenue source since they are inversely related to compliance, placing a monetary price 

on non-compliance is expected to result in significant revenue, enhanced voluntary 

compliance and a diminishing penalty rate over time. 

IRS-47 
Expand IRS Access to Information in the NDNH Database:

The Department of Health and Human Services maintains the National Directory of New 

Hires (NDNH), which contains newly hired employee data, quarterly wage data from

state and federal employment security agencies, and unemployment benefit data. 

Currently, the IRS may obtain NDNH data only for administering the Earned Income Tax 

Credit and for verifying employment reported on a return. 

Employment data, used by the IRS to administer a wide range of tax provisions, is 

currently obtained on a state-by-state basis, which is both time-consuming and costly. 

This legislative proposal would amend the Social Security Act to allow the IRS access to 

the NDNH for general tax administration, including data matching, verification of 

taxpayer claims, preparation of substitute returns for noncompliant taxpayers, and 

identification of levy sources. Expanded IRS access to NDNH data will increase 

productivity and enhance compliance. 

Expected Benefits 

This initiative supports the tax gap strategy outlined in the IRS report, Reducing the

Federal Tax Gap: A Report on Improving Voluntary Compliance, that was published 

August 2007. Implementation of these legislative proposals will improve compliance 

without imposing undue burdens on honest taxpayers and supports the first component of 

this strategy: Reduce Opportunities for Evasion. Collectively, the Department of the 

Treasury estimates that these 16 legislative proposals will generate about $36 billion over 

the next ten years. 

IRS-48 
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: Internal Revenue Service FY 2007 

Enacted 

FY 2008

President's

Budget

Cong. 

Action

including

Rescission

FY 2008 

Enacted 

Level 

FY 2009 

Requested

Level

FTE 93,088 93,486 (2,363) 91,123 92,923

Object Classification:

11.1 Full-Time Permanent Positions............................ $5,304,177 $5,614,374 $5,485,417 $5,711,664

11.3 Other than Full-Time Permanent Positions........

($128,957)

. 417,819 428,545 428,501 433,088

11.5 Other Personnel Compensation.........................

(44)

. 248,846 327,366 260,553 272,744

11.8 Special Personal Services Payments................. 17,494 17,499 17,268 17,726

11.9 Personnel Compensation (Total)................... $5,988,336 $6,387,784 $6,191,739 $6,435,222

12.0 Personnel Benefits................................................ 1,612,921 1,581,334 1,538,774 1,624,404

13.0 Benefits to Former Personnel.............................. 56,090 55,096 1,695 56,791 53,839

21.0 Travel.....................................................................

(66,813)

(231)

($196,045)

(42,560)

. 203,612 209,176 1,412 210,588 250,003

22.0 Transportation of Things....................................... 86,873 30,060 3,473 33,533 34,702

23.1 Rental Payments to GSA...................................... 629,076 649,631 628,957 653,829

23.2 Rent Payments to Others.....................................

(20,674)

. 4,371 388 112 500 510

23.3 Communications, Utilities, & Misc........................ 359,054 373,331 372,788 414,628

24.0 Printing and Reproduction...................................

(543)

. 70,745 67,279 1,024 68,303 69,333

25.1 Advisory & Assistance Services........................... 91,069 69,895 77,077 146,972 150,077

25.2 Other Services....................................................... 696,411 771,946 726,179 720,388

25.3 Purchase of Goods/Serv. from Govt. Accts......

(45,767)

... 163,583 98,909 2,554 101,463 104,981

25.4 Operation & Maintenance of Facilities................. 159,992 170,953 168,829 181,503

25.5 Research & Development Contracts..................

(2,124)

. 5,863 8,177 7,478 7,620

25.6 Medical Care......................................................... 10,025 10,245 0 10,245 10,764

25.7 Operation & Maintenance of Equipment............

(699)

. 70,993 82,712 77,338 79,745

25.8 Subsistence & Support of Persons.....................

(5,374)

. 4,486 5,022 1,837 6,859 6,910

26.0 Supplies and Materials......................................... 55,414 62,658 7,920 70,578 73,384

31.0 Equipment.............................................................. 251,195 388,237 7,005 395,242 423,039

32.0 Lands and Structures........................................... 54,259 55,132 51,826 48,139

33.0 Investments & Loans............................................

(3,306)

. 0 0 0 0 0

41.0 Grants, Subsidies.................................................. 12,108 12,569 9,000 21,569 12,502

42.0 Insurance Claims & Indemn................................. 5,294 1,033 12 1,045 1,114

43.0 Interest and Dividends................................. 0 0 0 0 0

44.0 Refunds.................................................................. 0 0 0 0 0

91.0 Unvouchered.............................................. 5,295 3,932 856 4,788 4,873

Total Budget Authority....................................... $10,597,065 $11,095,499 $10,892,384 $11,361,509

Appropriations:

Taxpayer Services............................................. $2,138,238 $2,103,089 $46,911 $2,150,000 $2,150,000

Enforcement ...................................................

($203,115)

... 4,686,477 4,925,498 4,780,000 5,117,267

Operations Support..........................................

(145,498)

... 3,544,835 3,769,587 3,680,059 3,856,172

Business Systems Modernization........................

(89,528)

... 212,659 282,090 267,090 222,664

Health Insurance Tax Credit Administration............

(15,000)

... 14,856 15,235 0 15,235 15,406

Total Budget Authority....................................... $10,597,065 $11,095,499 $10,892,384 $11,361,509 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

($203,115)

IRS-49 
2.3 – Appropriation Detail Table 

Dollars in Thousands 

Internal Revenue Service

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Taxpayer Services 31,908 2,133,464 31,557 $2,138,238 31,218 $2,150,000 30,792 $2,150,000 -1.36% 0.00%

Enforcement 47,842 4,652,556 48,307 4,686,477 47,349 4,780,000 49,792 5,117,267 5.16% 7.06%

Operations Support 11,904 3,514,581 12,890 3,544,835 12,181 3,680,059 11,989 3,856,172 -1.58% 4.79%

Business Systems Modernization 353 158,758 317 212,659 358 267,090 333 222,664 -6.98% -16.63%

Health Insurance Tax Credit Administration 10 14,850 17 14,856 17 15,235 16 15,406 -5.88% 1.12%

Subtotal New Appropriated Resources 92,017 $10,474,209 93,088 $10,597,065 91,123 $10,892,384 92,922 $11,361,509 1.97% 4.31%

Other Resources:

Recoveries 0 4,082 0 4,082 0 0 0 0 0.00% 0.00%

Offsetting Collections - Reimbursable 698 90,160 598 90,160 623 104,898 650 107,904 4.33% 2.87%

Available multi-year/no-year funds 0 148,686 0 148,686 0 158,893 0 151,110 0.00% -4.90%

50% Carryover 0 43,358 0 43,358 0 0 0 0 0.00% 0.00%

Transfers In/Out 0 4,552 0 4,552 0 0 0 0 0.00% 0.00%

Mandatory Appropriations - User Fees 0 136,789 0 136,789 0 258,372 0 177,655 0.00% -31.24%

Subtotal Other Resources 698 $427,627 598 $427,627 623 $522,163 650 $436,669 4.33% -16.37%

Total Resources Available for Obligation 92,715 $10,901,836 93,686 $11,024,692 91,746 $11,414,547 93,572 $11,798,178 1.99% 3.36%

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Obligations Enacted Request to FY 2009

% Change

IRS-50 
2B – Appropriation Language and Explanation of Changes 

Appropriations Language Explanation of Changes 

DEPARTMENT OF THE TREASURY 

INTERNAL REVENUE SERVICE 

TAXPAYER SERVICES: 

For necessary expenses of the Internal Revenue 

Service to provide taxpayer services, including prefiling assistance and education, filing and account 

services, taxpayer advocacy services, and other 

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

as may be determined by the Commissioner, 

$2,150,000,000, of which [not less than $3,000,000]up 

to $4,100,000 shall be for the Tax Counseling for the 

Elderly Program, of which [not less than 

$9,000,000]$8,000,000 shall be available for lowincome taxpayer clinic grants[, of which not less than 

$8,000,000, to remain available until September 30, 

2009, shall be available to establish and administer a 

Community Volunteer Income Tax Assistance 

matching grants demonstration program for tax return 

preparation assistance, and of which not less than 

$177,000,000 shall be available for operating expenses 

of the Taxpayer Advocate Service]. (Department of 

the Treasury Appropriations Act, 2008.)

ENFORCEMENT: 

(including transfer of funds) 

For necessary expenses of the Internal Revenue 

Service to determine and collect owed taxes, to 

provide legal and litigation support, to conduct 

criminal investigations, to enforce criminal statutes 

related to violations of internal revenue laws and other 

financial crimes, [to]for the purchase (for police-type 

use, not to exceed 850) and hire of passenger motor 

vehicles (31 U.S.C. 1343(b)), and to provide other 

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

as may be determined by the Commissioner, 

[$4,780,000,000]$5,117,267,000, of which not less 

than $57,252,000 shall be for the Interagency Crime 

and Drug Enforcement program: Provided, That up to 

$10,000,000 may be transferred as necessary from this 

account to the Internal Revenue Service, “Operations 

Deleted language for VITA and 

the Taxpayer Advocate Service 

consistent with the IRS 2009 

Budget request. 

IRS-51 
Support” [appropriations] solely for the purposes of 

the Interagency Crime and Drug Enforcement 

program: Provided further, That this transfer authority 

shall be in addition to any other transfer authority 

provided in this Act. (Department of the Treasury 

Appropriations Act, 2008.)

OPERATIONS SUPPORT:

For necessary expenses of the Internal Revenue 

Service to[operate and] support taxpayer services and 

enforcement programs, including rent payments; 

facilities services; printing; postage; physical security; 

headquarters and other IRS-wide administration 

activities; research and statistics of income; 

telecommunications; information technology 

development, enhancement, operations, 

maintenance, and security; the hire of passenger motor 

vehicles (31 U.S.C. 1343(b)); and other services as 

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

determined by the Commissioner; 

[$3,680,059,000]$3,856,172,000, of which up to

$75,000,000 shall remain available until September 

30, [2009]2010, for information technology support; 

of which not to exceed $1,000,000 shall remain 

available until September 30, [2010]2011, for 

research; of which not [less than $2,000,000] to exceed 

$1,600,000 shall be for the Internal Revenue Service 

Oversight Board; and of which not to exceed $25,000 

shall be for official reception and representation. 

(Department of the Treasury Appropriations Act, 

2008.)

BUSINESS SYSTEMS MODERNIZATION: 

For necessary expenses of the Internal Revenue 

Service’s business systems modernization program, 

[$267,090,000]$222,664,000, to remain available until 

September 30, [2010]2011, for the capital asset 

acquisition of information technology systems, 

including management and related contractual costs of 

said acquisitions, including related Internal Revenue 

Service labor costs, and contractual costs associated 

with operations authorized by 5 U.S.C. 3109: 

Provided, That, with the exception of labor costs, none 

of these funds may be obligated until the Internal 

Revenue Service submits to the Committees on 

Adding the “up to” language 

allows additional flexibility to 

determine late in the year which 

projects may require a second 

year for obligation. 

IRS-52 
Appropriations[, and such Committees approve,] a 

plan for expenditure that: (1) meets the capital 

planning and investment control review requirements 

established by the Office of Management and Budget, 

including Circular A-11; (2) complies with the Internal

Revenue Service’s enterprise architecture, including 

the modernization blueprint; (3) conforms with the 

Internal Revenue Service’s enterprise life cycle 

methodology; (4) is approved by the Internal Revenue 

Service, the Department of the Treasury, and the 

Office of Management and Budget; (5) has been 

reviewed by the Government Accountability Office; 

and (6) complies with the acquisition rules, 

requirements, guidelines, and systems acquisition 

management practices of the Federal Government. 

(Department of the Treasury Appropriations Act, 

2008.)

HEALTH INSURANCE TAX CREDIT 

ADMINISTRATION: 

For expenses necessary to implement the health 

insurance tax credit included in the Trade Act of 2002 

(Public Law 107-210), [$15,235,000]$15,406,000. 

(Department of the Treasury Appropriations Act, 

2008.)

 

ADMINISTRATIVE PROVISIONS: 

(including transfer of funds) 

Sec. 101. Not to exceed 5 percent of any 

appropriation made available in this Act to the Internal

Revenue Service or not to exceed 3 percent of 

appropriations under the heading “Enforcement” may 

be transferred to any other Internal Revenue Service 

appropriation upon the advance [approval]notification

of the Committees on Appropriations. 

Sec. 102. The Internal Revenue Service shall maintain 

a training program to ensure that Internal Revenue 

Service employees are trained in taxpayers’ rights, in 

dealing courteously with taxpayers, and in crosscultural relations. 

Sec. 103. The Internal Revenue Service shall institute 

and enforce policies and procedures that will 

safeguard the confidentiality of taxpayer information. 

[Sec. 104. Funds made available by this or any other 

Act to the Internal Revenue Service shall be available 

for improved facilities and increased staffing to 

Sec. 104 The IRS has sustained 

a level of service of 82 percent 

for the last three years and 

believes this provision is no 

IRS-53 
provide sufficient and effective 1-800 help line service 

for taxpayers. The Commissioner shall continue to 

make the improvement of the Internal Revenue 

Service 1-800 help line service a priority and allocate 

resources necessary to increase phone lines and staff to 

improve the Internal Revenue Service 1-800 help line 

service.] 

[Sec. 105. Section 9503(a) of title 5, United States 

Code, is amended by striking “for a period of 10 years 

after the date of enactment of this section” and 

inserting “before July 23, 2013”.] 

[Sec. 106. Sections 9504(a) and (b), and 9505(a) of 

title 5, United States Code, are amended by striking 

“For a period of 10 years after the date of enactment of 

this section” each place it occurs and inserting “Before 

July 23, 2013”.] 

[Sec. 107. Section 9502(a) of title 5, United States 

Code, is amended by striking “Office of Management 

and Budget” and inserting “Office of Personnel 

Management”.] 

[Sec. 108. Of the funds made available by this Act for 

the Internal Revenue Service, not less than $7,350,000 

shall be available for increasing above fiscal year 2007 

levels the number of full-time equivalent positions and 

related support activities performing Automated 

Collection System functions.] 

Sec. 104. Of the funds made available by this Act to 

the Internal Revenue Service, not less than 

$6,997,226,000 shall be available only for tax 

enforcement and related support activities funded in 

Internal Revenue Service, "Enforcement" and 

"Operations Support" accounts. In addition, of the 

funds made available by this Act to the Internal 

Revenue Service, and subject to the same terms and 

conditions, an additional $489,983,000 shall be 

available for enhanced tax enforcement and related 

support activities: Provided, that not to exceed 1

percent of the funds made available by this Act to the 

Internal Revenue Service "Operations Support" 

account, for tax enforcement related support activities, 

may be transferred to taxpayer service related support 

activities upon advance notification of the Committees 

on Appropriations. (Department of the Treasury 

Appropriations Act, 2008.)

 

longer necessary. 

Sec. 105 through Sec. 107 

extended IRS critical pay 

authority through 2013 and are 

not needed in the 2009 

appropriation bill. 

Sec. 108 The funding for the 

Automated Collection System

functions is included in the base 

of the IRS 2009 Budget request. 

As in the past three budget 

requests, the Administration 

proposes to include these 

enforcement increases as a 

Budget Enforcement Act 

program integrity cap 

adjustment. 

The IRS allocates Operations 

Support funding (e.g., rent, 

telecommunications, 

information technology) to the 

Taxpayer Service and 

Enforcement programs based on 

a cost allocation methodology. 

In many cases the IRS must 

move money between support 

activities during budget 

execution (e.g., from facilities 

to postage). This language will 

provide the IRS with flexibility 

to transfer up to one percent of 

IRS-54 
 enforcement related operations 

support funds to taxpayer 

service related support 

activities. This will allow 

greater flexibility in execution 

without reducing front line 

enforcement effort. 

IRS-55 
2C – Legislative Proposals 

The FY 2009 President’s Budget includes a number of legislative proposals intended to 

improve tax compliance with minimum taxpayer burden. These proposals will generate 

about $36 billion over the next ten years. The Administration proposes to expand 

information reporting, improve compliance by businesses, strengthen tax administration, 

and expand penalties. 

• Expand information reporting – Compliance with the tax laws is highest when 

payments are subject to information reporting to the IRS. Specific information 

reporting proposals would: 

1) require information reporting on payments to corporations; 

2) require basis reporting on security sales; 

3) require information reporting on merchant payment card reimbursements; 

4) require a certified Taxpayer Identification Number (TIN) from contractors; 

5) require increased information reporting on certain government payments; 

6) increase information return penalties; and 

7) improve the foreign trust reporting penalty. 

• Improve compliance by businesses – Improving compliance by businesses of all sizes is 

important. Specific proposals to improve compliance by businesses would: 

1) require electronic filing by certain large organizations; and 

2) implement standards clarifying when employee leasing companies can be held 

liable for their clients’ Federal employment taxes.

• Strengthen tax administration – The IRS has taken a number of steps under existing 

law to improve compliance. These efforts would be enhanced by specific tax 

administration proposals that would: 

1) expand IRS access to information in the National Directory of New Hires for tax 

administration purposes; 

2) permit disclosure of prison tax scams; 

3) make repeated willful failure to file a tax return a felony; 

4) facilitate tax compliance with local jurisdictions; 

5) extend statutes of limitations where state tax adjustments affect federal tax 

liability; and 

6) improve the investigative disclosure statute. 

IRS-56 
• Expand penalties – Penalties play an important role in discouraging intentional noncompliance. A specific proposal to expand penalties would: 

1) impose a penalty on failure to comply with electronic filing requirements. 

Improve Tax Administration and Other Miscellaneous Proposals 

The Administration has put forward additional proposals relating to IRS administrative 

reforms. Five of these proposals are highlighted below: 

The first proposal modifies employee infractions subject to mandatory termination and 

permits a broader range of available penalties. It strengthens taxpayer privacy while 

reducing employee anxiety resulting from unduly harsh discipline or unfounded 

allegations. 

The second proposal allows the IRS to terminate installment agreements when taxpayers 

fail to make timely tax deposits and file tax returns on current liabilities. 

The third proposal eliminates the requirement that the IRS Chief Counsel provide an 

opinion for any accepted offer-in-compromise of unpaid tax (including interest and 

penalties) equal to or exceeding $50,000. This proposal requires that the Secretary of 

Treasury establish standards to determine when an opinion is appropriate. 

The fourth proposal extends the IRS authority to use the proceeds received from

undercover operations through December 31, 2012. The IRS was authorized to use 

proceeds received from undercover operations to offset necessary and reasonable 

expenses incurred in such operations. The IRS authority to use proceeds from

undercover operations expired on December 31, 2007. 

The fifth proposal equalizes penalty standards between tax return preparers and 

taxpayers, reducing unnecessary conflicts of interest between them. The standard 

applicable to tax return preparers for disclosed positions would be reasonable basis, but 

for certain reportable transactions with a significant purpose of tax avoidance, the 

existing standard would persist, i.e., the preparer should have a reasonable belief that the 

position, more likely than not, would be sustained on the merits. 

IRS-57 
Section 3 – Budget and Performance Plan 

Taxpayer Services 

Appropriation Description 

The Taxpayer Services appropriation provides funding for taxpayer service activities and 

programs including: forms and publications; processing tax returns and related 

documents; filing and account services; taxpayer advocacy services; and taxpayer 

assistance. 

The Taxpayer Services Budget request for FY 2009 is $2,150,000,000 in direct 

appropriations and 30,792 FTE. The FY 2009 funding for the direct appropriation 

maintains the FY 2008 enacted level and is an increase of 426 FTE over the FY 2008 

level of 31,218 FTE. 

IRS-58 
2.1 – Budget Adjustments Table 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 31,218 $2,150,000

Changes to Base:

Maintaining Current Levels $54,726

Pay Annualization 14,435

Pay Inflation Adjustment 38,823

Non-Pay Inflation Adjustment 1,468

Efficiencies/Savings (207) ($14,969)

(207) (8,996)

(5,973)

(177)

(287) ($46,911)

(262) (31,200)

(25) (7,711)

(8,000)

(249) ($44,220)

Increase e-File Savings

Non-Recur Savings

Base Reinvestments 30 $4,463

Increase Efficiency through Submission Processing Consolidations 2,006

Address Correspondence Inventory 30 2,457

Subtotal Changes to Base $44,220

Total FY 2009 Base - Current Services 31,041 $2,194,220

Program Changes:

Program Decreases:

Taxpayer Assistance Centers and Outreach

Taxpayer Advocate Service 

Volunteer Income Tax Assistance Grants Program

Program Increases - Enforcement Initiatives 38 $2,691

Reduce the Tax Gap for Small Business / Self-Employed 38 2,691

Subtotal FY 2009 Program Changes

Total FY 2009 Request 30,792 $2,150,000

IRS-59 
2.2 – Operating Levels Table

Dollars in Thousands 

Appropriation Title: Taxpayer Services FY 2007 

Enacted

FY 2008

President's 

Budget

Cong. 

Action 

including 

Rescission

FY 2008 

Enacted 

Level 

FY 2009

Requested

Level

FTE 31,557 31,120 98 31,218 30,792

Object Classification:

11.1 Full-Time Permanent Positions............................ $1,134,191 $1,176,433 $30,700 $1,207,133 $1,206,453

11.3 Other than Full-Time Permanent Positions......... 320,431 319,641 (502) 319,139 320,840

11.5 Other Personnel Compensation.......................... 76,769 86,714 82,367 84,003

11.8 Special Personal Services Payments................. 0 0 $0 $0 $0

11.9 Personnel Compensation (Total)................... $1,531,391 $1,582,788 $25,851 $1,608,639 $1,611,296

12.0 Personnel Benefits................................................ 391,036 328,643 306,566 318,294

13.0 Benefits to Former Personnel.............................. 3,441 3,243 5,968 9,211 5,307

21.0 Travel.....................................................................

(4,347)

(22,077)

. 29,847 28,724 2,690 31,414 28,866

22.0 Transportation of Things....................................... 4,548 4,405 2,056 6,461 6,501

23.1 Rental Payments to GSA...................................... 00000

23.2 Rent Payments to Others...................................... 46 0 44 44 45

23.3 Communications, Utilities, & Misc........................ 4,073 4,982 4,584 4,612

24.0 Printing and Reproduction...................................

(398)

. 9,827 8,124 1,017 9,141 8,948

25.1 Advisory & Assistance Services........................... 18,862 4,374 19,952 24,326 24,477

25.2 Other Services....................................................... 43,869 99,774 99,549 100,428

25.3 Purchase of Goods/Serv. from Govt. Accts......

(225)

... 65,927 11,459 2,863 14,322 14,409

25.4 Operation & Maintenance of Facilities................. 71 94 0 94 94

25.5 Research & Development Contracts................... 00000

25.6 Medical Care......................................................... 00000

25.7 Operation & Maintenance of Equipment............. 8,121 667 0 667 671

25.8 Subsistence & Support of Persons...................... 1,456 1,455 120 1,575 1,485

26.0 Supplies and Materials......................................... 12,662 11,527 50 11,577 11,601

31.0 Equipment.............................................................. 827 567 0 567 570

32.0 Lands and Structures........................................... 130000

33.0 Investments & Loans............................................. 00000

41.0 Grants, Subsidies.................................................. 11,950 12,232 9,000 21,232 12,315

42.0 Insurance Claims & Indemn................................. 271 31 0 31 81

43.0 Interest and Dividends................................. 00000

44.0 Refunds.................................................................. 00000

91.0 Unvouchered.............................................. 00000

Total Budget Authority....................................... $2,138,238 $2,103,089 $46,911 $2,150,000 $2,150,000

Budget Activities:

Pre-filing Taxpayer Assistance & Education............... $576,537 $589,882 $55,493 $645,375 $617,326

Filing & Account Services....................................... 1,561,701 1,513,207 1,504,625 1,532,674

Total Budget Authority....................................... $2,138,238 $2,103,089 $46,911 $2,150,000 $2,150,000

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

(8,582)

IRS-60 
2.3 – Appropriation Detail Table 

Dollars in Thousands 

Taxpayer Services

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 5,626 $573,685 6,091 $576,537 6,313 $645,375 6,063 $617,326 -3.96% -4.35%

Filing and Account Services 26,282 1,559,779 25,466 1,561,701 24,905 1,504,625 24,729 1,532,674 -0.71% 1.86%

Subtotal New Appropriated Resources 31,908 $2,133,464 31,557 $2,138,238 31,218 $2,150,000 30,792 $2,150,000 -1.36% 0.00%

Other Resources:

Recoveries 275 275

Offsetting Collections - Reimbursable 310 20,924 314 20,924 327 21,715 341 22,454 4.28% 3.40%

Available multi-year/no-year funds 15,866 15,866 6,286 6,286 0.00% 0.00%

50% Carryover 27,924 27,924

Transfers In/Out

Mandatory Appropriations - User Fees 64,659 64,659 95,750 126,950 0.00% 32.58%

Subtotal Other Resources 310 $129,648 314 $129,648 327 $123,751 341 $155,690 4.28% 25.81%

Total Resources Available for Obligation 32,218 $2,263,112 31,871 $2,267,886 31,545 $2,273,751 31,133 $2,305,690 -1.31% 1.40%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Request

3A – Pre-Filing Taxpayer Assistance and Education ($617,326,000 in direct 

appropriation, and $905,000 from reimbursable programs): This budget activity funds 

services to assist with tax return preparation, including tax law interpretation, publication 

production, and advocate services. This includes the following program activities: 

• Pre-Filing Services Management administers pre-filing, taxpayer assistance, and 

education programs. 

• Taxpayer Communication and Education researches customer needs, prepares tax 

forms and publications; develops and manages educational programs, establishes 

partnerships with stakeholder groups, and disseminates tax information to taxpayers 

and the general public through a variety of media, including publications and 

mailings, web sites, broadcasting, and advertising. 

• Media and Publications develops and produces notices, forms, and publications for 

printed and electronic tax materials, and provides media production services to 

taxpayers. 

• Taxpayer Advocacy provides advocate services to taxpayers by identifying the 

underlying causes of taxpayer problems and participating in the development of 

systematic and/or procedural remedies. 

• Account Management and Assistance – Field Assistance provides face-to-face 

assistance, education, and compliance services to taxpayers. It includes return 

preparation, answering tax questions, resolving account and notice inquiries, and 

supplying forms and publications to taxpayers. 

• Taxpayer Advocate Case Processing provides advocate services to taxpayers to 

resolve taxpayers’ disputes on tax returns through prompt identification, referral, and 

settlement. 

• National Distribution Center processes orders for IRS forms and publications 

received from individual taxpayers, tax practitioners, and IRS tax return preparation 

partners. 

IRS-61 
3.2.1 – Budget and Performance Plan 

Dollars in Thousands 

Pre-Filing Taxpayer Assistance & Education Budget Activity

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $559,249 $573,685 $576,537 $645,375 $617,326

Reimbursable Resources 1,038 843 843 877 905

Mandatory Appropriations - User Fees 1,201 1,201 0 0

Total Resources $560,287 $574,528 $578,581 $646,252 $618,231

Pre-Filing Taxpayer Assistance & Education Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target Target Target

91.4% 83.0% 83.5% 85.2% 86.0% 86.0%

80.0% 61.2% 84.0% 79.6% 86.0% 86.0%

42.5% 46.8% 49.5% 48.6% 51.5% 52.5%

80.0% * * 75%-85% 75%-80% 75%-80%

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

*The methodology for estimating the eligibility rate is being revised. Data not available.

Key: Oe - Outcome Measure, E - EfficiencyMeasure, Ot - Output/Workload Measure, and L - Long Term Goal

Timeliness ofCritical Filing Season Tax Products to the Public (Ot)

Timeliness ofCritical Other Tax Products to the Public (Ot)

Percent of Eligible Taxpayers Who File for EITC (Oe)

Taxpayer Self Assistance Rate (E) (L)

1

Description of Performance 

Improved service options for taxpayers and simplifying the tax process are key objectives 

under the IRS strategic goal to improve taxpayer service. Helping taxpayers understand 

their tax reporting and payment obligations remains a vital part of maintaining public 

confidence in administering the tax laws. The IRS continued to expand its outreach by 

relying on partner organizations such as state taxing authorities and volunteer groups, 

such as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly, to 

help serve taxpayer needs. The IRS also provided assistance to millions of taxpayers 

through toll-free call sites, the IRS.gov website and Taxpayer Assistance Centers (TACs). 

In addition, developing and maintaining relationships with IRS stakeholders and partners 

in tax administration has become a key strategy in developing and distributing tax 

information to our customers. By augmenting and opening these avenues of 

communication, the IRS is able to quickly identify and respond to emerging issues in tax 

compliance and to more efficiently provide education and outreach to a wider population 

of taxpayers to improve compliance. 

To further address taxpayer needs, the IRS delivered two phases of the TAB to Congress 

and established a Taxpayer Services Program Management Office and IRS Services 

Committee to formalize integrated service investment decision-making. The TAB 

Phase 2 Report outlines a five-year plan for taxpayer service that will help the IRS 

enhance the services delivered to taxpayers and partners. The report contains 

performance metrics, service improvement initiatives, and an implementation strategy for 

IRS-62 
improving service investment decisions. It also outlines the future direction of IRS 

service delivery and identifies strategic challenges facing taxpayers and the IRS. 

The report Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance

identifies current tax gap activities and presents the steps being taken to reduce 

opportunities for tax evasion, leverage technology, and support legislative proposals to 

improve compliance. It provides an outreach approach to ensure all taxpayers understand 

their tax obligations and highlights the importance of having a multi-year research 

program to help the IRS understand both the scope of and reasons for non-compliance 

while reaffirming the need to minimize burden for compliant taxpayers. 

These reports, combined with legislative changes and tax simplification, will provide the 

roadmap necessary to deliver on the important priorities of service and enforcement, and 

lead to improved compliance. 

Despite late enactment of tax law changes in December 2006, over 83.5 percent (137 of 

164) of the critical filing season tax products and 84 percent of critical other (business)

tax products were delivered to the public on time in FY 2007. Over 1,000 tax product 

revisions were required. The Tax Relief and Health Care Act of 2006 (TRHCA) included 

the extension of several significant tax benefits. However, because TRHCA was enacted 

after the forms and publications for Tax Year 2006 were printed and distributed, the IRS 

was required to notify taxpayers how to modify their claims for the allowable benefits. In 

addition, all 401 TACs remained open and serviced over 7 million taxpayers. 

The FY 2007 taxpayer self-assistance rate was 49.5 percent, higher than the FY 2007 

target of 48.6 percent. This success is primarily attributed to the increased use of the 

“Where’s My Refund?” self-service internet application, which is up 30 percent (totaling 

32.1 million taxpayers). The implementation of improvements to the IRS website, 

including the addition of a sales tax deduction calculator, also contributed to the increase 

in usage. The IRS also continues efforts to simplify its tax forms and publications to

make them more user-friendly, with the ultimate goal of providing all of its published 

products in electronic format. 

Over 83,000 taxpayer returns requested the split refund option. The capability to split 

refunds in the 2007 filing season provided individual taxpayers with a new option of 

choosing direct deposit for depositing their tax refunds to different accounts. All 

taxpayers who filed using any of the 1040 series forms had the option to divide their 

refunds in up to three financial accounts including individual retirement accounts, over 

500 college savings plans, savings bonds, or a variety of other accounts. 

IRS-63 
In FY 2007, the IRS also improved services for Earned Income Tax Credit (EITC) 

participants through the following actions: 

• Developed a three-point plan expanding outreach initiatives and identified ways 

to simplify and improve forms and make IRS.gov more user friendly; 

• Held an EITC Awareness Day, a nationwide media campaign to increase 

awareness of the EITC among eligible taxpayers, especially those with limited 

English proficiency; 

• Developed outreach strategies and products to reach and increase participation 

among the underserved EITC populations, such as Hispanic and rural 

communities; and 

• Increased partnerships with community-based organizations dedicated to assisting 

taxpayers with financial literacy, return preparation, and tax return filing, which 

increased IRS outreach by 15 percent and return preparation by 18 percent from

FY 2006. 

The IRS partners with organizations such as state taxing authorities and volunteer groups 

to serve taxpayer needs. Through its 11,922 VITA and Tax Counseling for the Elderly 

(TCE) sites, the IRS provided free tax assistance to the elderly, disabled, and limited 

English proficient individuals and families. In FY 2006, 69,000 volunteers filed 

approximately 2.3 million returns, a 7 percent increase over FY 2005. This trend 

continued in FY 2007, with 76,619 volunteers located at the sites preparing 

approximately 2.63 million returns, a 14 percent increase over FY 2006. 

The IRS established 16 new Low Income Taxpayer Clinics (LITC) in rural areas to help 

taxpayers who cannot afford representation obtain competent assistance in meeting their 

obligations. LITCs reduce taxpayer uncertainty and errors by clarifying taxpayer rights 

and responsibilities, and through their outreach efforts, offer effective information and 

education. Existing procedures were also enhanced to secure translators for any taxpayer 

seeking assistance in a language other than English or Spanish. 

In FY 2008, the IRS will continue improvements to better serve taxpayers. Efforts to 

increase electronic filing will continue, including adding new forms and schedules to the 

business electronic portfolio, leveraging partner organizations such as state taxing 

authorities, and increasing use of volunteers to better serve taxpayer needs. 

3A – Filing and Account Services ($1,532,674,000 in direct appropriation, $21,549,000 

from reimbursable programs, and $126,950,000 from user fees): This budget activity 

funds programs that provide filing and account services to taxpayers, process paper and 

electronically submitted tax returns, issue refunds, and maintain taxpayer accounts. This 

includes the following program activities:

• Filing and Account Services Management administers filing and account services 

programs. 

IRS-64 
• Submission Processing processes paper and electronically-submitted tax returns 

and supplemental documents, accounts for tax revenues, and issues refunds and 

tax notices. 

• Account Management and Assistance – Electronic Correspondence Assistance 

provides education and assistance to taxpayers through telephone, paper, and 

internet correspondence to resolve account and notice inquiries. 

• Electronic Tax Administration markets and administers electronic tax 

administration products and services. 

• Files Most Efficient Organization stores the administrative files and the most 

recent tax returns in-process that are most likely to be requested for research by 

various IRS organizations until they are forwarded to the federal records centers. 

3.2.2 – Budget and Performance Plan 

Dollars in Thousands 

Filing and Account Services

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $1,568,209 $1,559,779 $1,561,701 $1,504,625 $1,532,674

Reimbursable Resources 24,242 20,081 20,081 20,838 21,549

Mandatory Appropriations - User Fees 63,458 63,458 95,750 126,950

Total Resources $1,592,451 $1,643,318 $1,645,240 $1,621,213 $1,681,173

Filing and Account Services FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measures Actual Actual Actual Target Target Target

51.1% 54.1% 57.1% 57.0% 61.8% 64.7%

17.8% 16.6% 19.1% 19.5% 20.8% 22.8%

89.0% 90.9% 91.2% 91.0% 91.0% 91.0%

91.5% 93.2% 93.4% 93.3% 93.5% 93.7%

7,585 7,414 7,648 7,702 8,000 8,100

82.6% 82.0% 82.1% 82.0% 82.0% 82.0%

99.2% 99.3% 98.9% 99.2% 98.4% 98.4%

Key: Oe - Outcome Measure, E - EfficiencyMeasure, Ot - Output/Workload Measure, and L - Long Term Goal

Customer Service Representative (CSR) Level of Service (Oe) (L)

Refund Timeliness - Individual (paper) (Ot)

Customer Contacts Resolved per Staff year (E)

Percent Individual Returns Processed Electronically (Oe) (L)

Percent of Business Returns Processed Electronically (Oe) (L)

Customer Accuracy - Tax Law Phones (Ot)

Customer Accuracy - Customer Accounts (Phones) (Ot)

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

Description of Performance 

The IRS delivered a successful 2007 filing season notwithstanding new challenges that

included implementing the Telephone Excise Tax Refund (TETR, a one-time payment

designed to refund long distance telephone taxes); introducing split refund capability, 

which provided taxpayers with more control over their refunds by allowing direct deposit 

of a refund to up to three financial accounts; and making the necessary changes to forms

IRS-65 
and systems to accommodate late passage of provisions of the Tax Relief and Health 

Care Act of 2006. During the 2007 filing season, the IRS: 

• Processed more than 139.7 million individual returns and issued more than 

105.5 million refunds totaling $261 billion; 

• Maintained a telephone level of service of 82.1 percent while answering 33.2 million 

calls; 

• Correctly responded to 91.2 percent of tax law questions and 93.4 percent of account 

questions received via the telephone; 

• Served over 7 million taxpayers at 401 Taxpayer Assistance Centers; and

• Increased electronic filing:

• Individual returns electronically filed reached 57.1 percent, up from 54.1 percent 

in 2006; 

• Business returns electronically filed reached 19.1 percent, up from 16.6 percent in 

2006; 

• Home computer filing increased to 22.5 million returns, an 11 percent 

improvement over 2006; and 

• Tax professional use of e-file increased to 57.2 million returns or 10 percent over 

2006. 

In FY 2007, 3.9 million taxpayers used the Free File Alliance, the partnership between 

the IRS and a consortium of tax preparation software companies. In the same year, the 

IRS negotiated an amendment to the agreement with the Free File Alliance that removed 

ancillary products from the free-filing process. Qualified taxpayers were able to prepare 

and e-file their returns without the distraction of advertisements for various products. In 

addition, the IRS launched a Spanish Free File page with two companies providing tax 

preparation software in Spanish. 

In FY 2007, the IRS also successfully delivered the TETR, a one-time credit available on 

federal income tax returns designed to refund previously collected long distance 

telephone taxes. The IRS integrated approach to educate and assist taxpayers included: 

• Using regular IRS income tax processing channels and existing income tax forms 

by adding a line for TETR on every form; 

• Developing a methodology for claiming the credit using a standard amount for 

individuals and an estimation formula for businesses; 

• Reprogramming major filing systems to process the TETR credit with the filing of 

individual tax returns; 

• Creating a new form for individuals without an income tax filing requirement to 

claim the credit; and 

• Implementing an extensive communication strategy that focused on education, 

maximizing media reach, and publicizing compliance issues. 

For the 2007 filing season, the IRS issued 22 news releases, eight “Tax Tips,” and 

messages included in over 4,000 articles related to taxes and tax filing. To further assist 

taxpayers and the practitioner community, the IRS launched a TETR web page on 

IRS.gov that was viewed by more than 4.5 million people. 

IRS-66 
Successful delivery of the integrated TETR approach enabled the filing of over 

94 million 2006 federal income tax returns including TETR refund claims, which are 

more than $4.81 billion in telephone excise tax refunds. In addition, the IRS prevented 

more than $291 million in potential erroneous refunds with the aid of a return selection 

tool created specifically to catch questionable TETR requests. The comprehensive 

approach to administering this refund allowed the IRS to successfully meet taxpayer and 

stakeholder expectations. 

In FY 2008, the IRS will continue to research and evaluate information regarding 

taxpayer service needs, priorities, and preferences to improve delivery of services that 

support taxpayer-preferred approaches for obtaining information or services. The IRS 

will seek opportunities to invest in technology, process improvement, and training to 

achieve consistent repeatable quality service with reduced costs. 

The FY 2009 Budget request provides additional resources to increase efficiencies in 

submissions processing by continuing site consolidations and by increasing individual 

and business electronic filing. 

IRS-67 
Enforcement 

Appropriation Description 

The Enforcement appropriation funds the examination of tax returns, both domestic and 

international; administrative and judicial settlement of taxpayer appeals of examination 

findings; technical rulings; monitoring of employee pension plans; determination of 

qualifications of organizations seeking tax-exempt status; examination of tax returns of 

exempt organizations; enforcement of statutes relating to detection and investigation of 

criminal violations of the internal revenue laws; identification of underreporting of tax 

obligations; and the securing of unfiled tax returns and collecting unpaid accounts. 

The Enforcement Budget request for FY 2009 is $5,117,267,000 in direct appropriations 

and 49,792 FTE. This is an increase of $337,267,000 or 7.1 percent and 2,443 FTE over 

the FY 2008 enacted level of $4,780,000,000 and 47,349 FTE. 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 47,349 $4,780,000

Changes to Base:

Maintaining Current Levels $126,003

Pay Annualization 33,184

Pay Inflation Adjustment 87,006

Non-Pay Inflation Adjustment 5,813

Transfers ($1,000)

(1,000)

(538) ($48,762)

(538) (48,762)

(538)

Transfer to FinCEN

Efficiencies/Savings

Efficiency Savings

Subtotal Changes to Base $76,241

Total FY 2009 Base - Current Services 46,811 $4,856,241

Program Changes:

Program Increases - Enforcement Initiatives 2,981 $261,026

Reduce the Tax Gap for Small Business / Self-Employed 1,570 132,093

Reduce the Tax Gap for Large Businesses 515 57,009

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance 359 35,473

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity 124 11,075

Expand Document Matching 413 25,376

Subtotal FY 2009 Program Changes 2,981 $261,026

Total FY 2009 Request 49,792 $5,117,267

IRS-68 
2.2 – Operating Levels Table

Dollars in Thousands 

Appropriation Title: Enforcement FY 2007 

Enacted

FY 2008

President's 

Budget

Cong. 

Action 

including 

Rescission

FY 2008 

Enacted 

Level 

FY 2009

Requested

Level

FTE 48,307 49,140 (1,791) 47,349 49,792

Object Classification:

11.1 Full-Time Permanent Positions............................ $3,193,531 $3,394,207 $3,279,944 $3,490,824

11.3 Other than Full-Time Permanent Positions........

($114,263)

. 85,058 97,309 86,817 89,150

11.5 Other Personnel Compensation.........................

(10,492)

. 138,672 171,714 146,354 156,069

11.8 Special Personal Services Payments................. 17,494 17,499 17,268 17,726

11.9 Personnel Compensation (Total)................... $3,434,755 $3,680,729 $3,530,383 $3,753,769

12.0 Personnel Benefits................................................ 915,516 926,653 920,205 987,447

13.0 Benefits to Former Personnel.............................. 2,3060000

21.0 Travel.....................................................................

(25,360)

(231)

($150,346)

(6,448)

. 135,827 145,802 143,789 184,360

22.0 Transportation of Things......................................

(2,013)

. 11,786 5,685 883 6,568 6,731

23.1 Rental Payments to GSA...................................... 550000

23.2 Rent Payments to Others...................................... 410 383 68 451 459

23.3 Communications, Utilities, & Misc........................ 29,261 6,642 4,682 4,808

24.0 Printing and Reproduction...................................

(1,960)

. 8,440 5,443 5,435 5,589

25.1 Advisory & Assistance Services..........................

(8)

. 17,562 21,209 9,831 31,040 32,486

25.2 Other Services....................................................... 50,516 59,830 1,674 61,504 64,849

25.3 Purchase of Goods/Serv. from Govt. Accts......... 37,505 25,642 1,993 27,635 26,734

25.4 Operation & Maintenance of Facilities................. 182 163 77 78

25.5 Research & Development Contracts..................

(86)

. 2,925 2,908 1 2,909 2,960

25.6 Medical Care......................................................... 200000

25.7 Operation & Maintenance of Equipment............. 2,196 6,747 1,709 1,745

25.8 Subsistence & Support of Persons.....................

(5,038)

. 2,637 3,289 717 4,006 4,121

26.0 Supplies and Materials......................................... 23,739 24,342 4,923 29,265 30,761

31.0 Equipment.............................................................. 3,102 5,361 4,912 4,999

32.0 Lands and Structures........................................... 00000

33.0 Investments & Loans............................................

(449)

. 00000

41.0 Grants, Subsidies.................................................. 158 337 0 337 187

42.0 Insurance Claims & Indemn................................. 2,284 401 305 311

43.0 Interest and Dividends..............................

(96)

... 00000

44.0 Refunds.................................................................. 00000

91.0 Unvouchered.............................................. 5,295 3,932 856 4,788 4,873

Total Budget Authority....................................... $4,686,477 $4,925,498 $4,780,000 $5,117,267

Budget Activities:

Investigations...................................................

($145,498)

... $576,785 $602,385 $593,794 $603,466

Exam and Collections .......................................

(8,591)

... 3,959,741 4,164,361 4,038,309 4,363,826

Regulatory ......................................................

(126,052)

... 149,951 158,752 147,897 149,975

Total Budget Authority....................................... $4,686,477 $4,925,498 $4,780,000 $5,117,267 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

(10,855)

($145,498)

IRS-69 
2.3 – Appropriation Detail Table

Dollars in Thousands 

Enforcement

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Investigations 4,283 $573,469 4,315 $576,785 4,278 $593,794 4,239 $603,466 -0.91% 1.63%

Exam and Collections 42,334 3,932,874 42,751 3,959,741 41,842 4,038,309 44,389 4,363,826 6.09% 8.06%

Regulatory 1,225 146,213 1,241 149,951 1,229 147,897 1,164 149,975 -5.29% 1.41%

Subtotal New Appropriated Resources 47,842 $4,652,556 48,307 $4,686,477 47,349 $4,780,000 49,792 $5,117,267 5.16% 7.06%

Other Resources:

Recoveries 98 98

Offsetting Collections - Reimbursable 116 41,460 115 41,460 120 42,522 125 43,700 4.17% 2.77%

Available multi-year/no-year funds 2,286 2,286 5,746 5,746

50% Carryover 4,325 4,325

Transfers In/Out (18,948) (18,948)

Mandatory Appropriations - User Fees 5,452 5,452 59,254

Subtotal Other Resources 116 $34,673 115 $34,673 120 $107,522 125 $49,446 4.17% -54.01%

Total Resources Available for Obligation 47,958 $4,687,229 48,422 $4,721,150 47,469 $4,887,522 49,917 $5,166,713 5.16% 5.71%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Request

3A – Investigations ($603,466,000 in direct appropriation and $33,678,000 from 

reimbursable programs): This budget activity funds the IRS Criminal Investigations (CI) 

programs that explore potential criminal violations of the internal revenue tax laws, 

enforce criminal statutes relating to these violations, and recommend prosecution as 

warranted. This includes the following program activities: 

• CI supports the enforcement of criminal statutes relating to violations of internal 

revenue laws and other financial crimes. CI investigates cases of suspected intent to 

defraud involving both legal and illegal sources of income and recommends 

prosecution as warranted. This activity also includes the investigation and 

prosecution of tax and money-laundering violations associated with narcotics 

organizations. 

• General Management and Administration supports the headquarters management 

activities of strategic planning, communications, finance, and human resources for 

CI activities.

• Criminal Tax Legal Support provides staffing, training, and direct support to Counsel 

and CI. 

IRS-70 
3.2.3 – Budget and Performance Plan 

Dollars in Thousands 

Investigations Budget Activity

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $599,878 $573,469 $576,785 $593,794 $603,466

Reimbursable Resources 33,306 32,441 32,441 32,817 33,678

Mandatory Appropriations - User Fees 0 0 0 0 0

Total Resources $633,184 $605,910 $609,226 $626,611 $637,144

Investigations Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target Target Target

4,104 4,157 4,269 4,000 4,000 4,025

2,151 2,019 2,155 2,069 2,135 2,135

91.2% 91.5% 90.2% 92.0% 92.0% 92.0%

$295,316 $328,750 $301,788 $314,008 $317,625 $317,625

Number of Convictions (Oe) (L)

Conviction Rate (Oe) (L)

Conviction Efficiency Rate ($) (E) (L)

Key: E - Efficiency Measure, Ot - Output/Workload Measure, L - Long Term Goal

Criminal Investigations Completed (Ot) (L)

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

Description of Performance 

Enforcement of criminal statutes is an integral component of IRS efforts to enhance 

voluntary compliance and enforce the tax laws. In FY 2006, criminal investigations 

completed exceeded the target of 3,945 by 5 percent. Both the referral acceptance rate 

(71.8 percent) and total number of referrals accepted (445) were higher than last year. 

Abusive tax schemes and shelters were a concern in FY 2006 and remained a high 

investigative priority in FY 2007 due to egregious activities in areas of corporate fraud 

and tax avoidance of high-income individuals. 

 

In FY 2007, the IRS continued its focus on legal source tax investigations, partnering 

with other law enforcement agencies to develop significant tax, money laundering, and 

other financial investigations that adversely affect tax administration. The IRS also took 

steps to combat fraudulent and financial crime schemes identified through improved case 

development efforts and Bank Secrecy Act (BSA) investigations. Performance levels 

remained high in FY 2007: 

• Completed 4,269 criminal investigations, exceeding the target of 4,000. 

• Maintained a conviction rate of over 90 percent. 

• Increased acceptance rate by the Department of Justice to 94.6 percent, higher than 

the FY 2006 rate of 92.2 percent; and the acceptance rate by the U.S. Attorney 

increased to 90.2 percent, 2 percent higher than the 88.3 percent achieved in FY 2006. 

• Obtained 2,155 convictions, exceeding the target of 2,069. 

• Stopped fraudulent claims in excess of $1 billion through IRS Fraud Detection 

Centers. 

IRS-71 
In FY 2009, CI will aggressively attack tax evasion and reduce the tax gap. CI will focus 

on abusive tax schemes, corporate fraud, nonfilers, employment tax fraud, general fraud, 

narcotics, tax and other financial crimes identified through Bank Secrecy Act (BSA) 

related examinations, and case development efforts. 

3A – Exam and Collections ($4,363,826,000 in direct appropriation and $9,905,000 

from reimbursable programs): This budget activity funds programs that enforce the tax 

laws through examination and collection programs that ensure proper payment and tax 

reporting. The budget activity also supports appeals and litigation activities associated 

with exam and collection. This includes the following program activities: 

• Compliance Services Management supports management associated with compliance 

program activities. 

• Payment Compliance – Correspondence Collection supports the IRS collection 

activities by initiating contact and collecting delinquent taxpayer liabilities through 

written notices and other means. 

• Automated Collections and Support supports the IRS centralized Automated 

Collection System by initiating contact and collecting delinquent taxpayer liabilities 

through automated means. 

• Payment Compliance – Field Collection conducts field investigations and collection 

efforts associated with delinquent taxpayer and business entity liabilities, including 

direct taxpayer contact and outreach programs to protect the government’s interest in 

delinquent tax liability situations. 

• Tax Reporting Compliance – Document Matching supports the Automated 

Underreporter (AUR), Combined Annual Wage Reporting (CAWR), Federal 

Unemployment Tax Act (FUTA), and other Document Matching Programs. 

• Tax Reporting Compliance – Electronic/Correspondence Exam initiates written 

correspondence with taxpayers regarding unpaid tax liabilities identified from tax 

returns. 

• Tax Reporting Compliance – Field Exam compares taxpayer correct income levels 

and corresponding tax liabilities to ensure accuracy of taxpayer returns. This activity 

also provides determination letters, advance pricing agreements, and other 

determinations. 

• Fraud/Bank Secrecy Act enforces the anti-money laundering provisions of the Bank 

Secrecy Act (BSA) of 1970, and the USA PATRIOT Act of 2001. It examines nonbank financial institutions for compliance with these laws, receives and processes 

more than 15 million financial reports annually, and manages a centralized database

of that information for the Financial Crimes Enforcement Network (FinCEN). The 

Fraud program follows the “money trail” to support the criminal investigation of tax 

evasion operations. Fraud Technical Advisors and RAs provide investigative leads 

and referrals to federal, state, and local law enforcement agencies. 

• Appeals provides an administrative review process that provides a channel for 

impartial case settlement before a case is docketed in a court of law. 

• Litigation provides legal support for the IRS in litigation of cases, including 

interpretation of the tax law. 

IRS-72 
• Specialty Programs - Exams examines federal tax returns of businesses and 

individuals responsible for the filing and payment of employment, excise, estate, and 

gift taxes. This specialty program also oversees IRS international exam and 

collection programs involving U.S. citizens residing abroad, non-resident aliens, 

expatriates, and examinations involving other international issues (e.g., Foreign Tax 

Credit and Foreign Earned Income Exclusion). 

• Specialty Programs – Collection supports international field collection efforts 

associated with delinquent taxpayer and business entity liabilities from U.S. citizens 

residing abroad, non-resident aliens, expatriates, and those involving other 

international issues (e.g., Foreign Tax Credit and Foreign Earned Income Exclusion). 

• Unit General Management and Administration provides staffing, training, and direct 

support for headquarters management activities of strategic planning, communication 

and liaison, finance, human resources, EEO and diversity, and business system

planning and embedded training. 

• Whistleblowers provides staffing, training, and direct support to process, assess, and 

analyze incoming tips from individuals who identify tax problems wherever they may 

be encountered, including in their workplace, while conducting day-to-day personal 

business. 

• Communications and Liaison coordinates local government and liaison relationships; 

manages congressional, state, and national stakeholder relationships and issues; 

coordinates crosscutting issues including managing audits and legislative 

implementation; manages national media contacts and local media relationships; and 

ensures IRS-wide compliance with Disclosure and Privacy laws. 

IRS-73 
3.2.4 – Budget and Performance Plan 

Dollars in Thousands 

Exam and Collections

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $3,925,839 $3,932,874 $3,959,741 $4,038,309 $4,363,826

Reimbursable Resources 9,851 8,764 8,764 9,592 9,905

Mandatory Appropriations - User Fees 5,452 5,452 59,254

Total Resources $3,935,690 $3,941,638 $3,973,957 $4,107,155 $4,373,731

Exam and Collections Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target Target Target

0.9% 1.0% 1.0% 1.0% 1.0% 1.0%

N/A 85.9% 85.9% 87.0% 87.0% 87.0%

N/A 88.2% 89.4% 89.0% 90.0% 90.0%

77.0% 85.0% 87.0% 88.0% 88.0% 89.0%

89.0% 96.0% 96.0% 97.0% 96.0% 96.0%

7.8% 7.3% 6.8% 8.2% 6.6% 6.8%

1,701 1,832 1,956 1,932 1,961 1,823

2.2% 2.4% 2.5% 2.5% 2.5% 2.5%

121 128 137 136 133 134

53.0% 54.0% 54.0% 54.0% 53.0% 53.0%

1,514 1,677 1,828 1,723 1,835 1,835

N/A 84.2% 84.0% 86.0% 86.0% 86.0%

88.5% 91.0% 92.9% 91.0% 92.0% 92.0%

Examination Quality (LMSB) - Coordinated Industry (Oe) (L)

Examination Coverage - Individual (Oe) (L)

Office Exam Embedded Quality (Oe) (L)

Field Exam Embedded Quality (Oe) (L)

Examination Quality (LMSB) - Industry (Oe) (L)

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

Examination Coverage - Business (Oe) (L)

AUR Efficiency (E) (L)

Key: Oe - Outcome Measure, E - EfficiencyMeasure, L - Long Term Goal

Field Collection Embedded Quality (Ot) (L)

Automated Collection System (ACS) Accuracy (Oe)

AUR Coverage (E) (L)

Examination Efficiency - Individual (E) (L)

Collection Coverage - Units (Ot) (L)

Collection Efficiency - Units (E) (L)

1

IRS-74 
Description of Performance 

Targeting the tax gap remained a top IRS priority for FY 2007. Total enforcement 

revenue was $59.2 billion, a 75 percent increase over 2001. The steady increase in 

enforcement revenue is primarily a result of concerted efforts by the IRS to detect and 

deter non-compliance with the tax code. In FY 2007, total individual audits increased 

8 percent, collection cases closed increased 12 percent, dollars collected increased 

13 percent, high-income audits increased 29 percent, small business audits increased 

17 percent, and corporate audits increased 3 percent from FY 2006. 

In FY 2007, the IRS continued to reengineer its examination and collection procedures to 

reduce time, increase yield, and expand coverage. The IRS is building on its enforcement 

efforts with emphasis on increased audits and collection activities. Emphasizing early 

identification of tax liabilities through increased audits and more focused collection 

activities, the IRS undertook the following actions: 

• Piloted new Automated Substitute for Return screening and batching procedures, with

the increased efficiencies resulting in a productivity improvement of over 

156 percent, from 7.5 cases per hour to 19.2 cases per hour; 

• Increased detection of fraudulent activities and increased the number of 

recommendations for civil fraud penalties by 49 percent over the prior year level; and 

• Developed an Employment Tax Strategy that includes eliminating/reducing overlaps 

and gaps in processes to enhance organizational effectiveness; expanding work 

relationships with federal and state authorities; conducting studies to better 

understand the tax gap; and assessing new ways to impact taxpayer behavior. 

The IRS substantially enhanced its productivity by implementing technological and 

process improvements in the Automated Underreporter (AUR), Examination, and 

Compliance Services Collection Operations. Significant improvements made in FY 2007 

included: 

• Implemented a new AUR case selection and scoring methodology for individuals, 

resulting in a 20.5 percent increase in AUR assessments; 

• Controlled and directed incoming Examination toll-free calls through an Intelligent 

Call Management system resulting in a 6.1 percent increase in the service level; and 

• Automated the processing of over 43 percent of installment agreement problem cases, 

which freed resources to process additional installment agreement compliance work. 

The IRS, through its Compliance Assurance Process (CAP) Pilot Program, continued to 

expand and work with large businesses to identify and resolve issues prior to return 

filing. The objective of the program is to reduce taxpayer burden and uncertainty while 

assuring tax returns are accurate prior to filing, thereby reducing or eliminating the need 

for post-filing examinations. CAP benefits both the IRS and the taxpayer by fostering 

compliance, reducing the time it takes to process a return, and improving both customer 

and employee satisfaction while maintaining a high level of quality. 

The IRS continued to deter tax shelter abuse and tax scheme promoters through targeted 

audits and aggressive litigation and publicity in FY 2007. The IRS made significant 

progress in resolving civil matters with promoters of abusive and listed tax shelter 

IRS-75 
transactions. In addition to sizeable penalty assessments and public admissions of 

regrettable behavior by businesses and some of their former employees, the IRS obt

future compliance agreements from all promoters. For FY 2007, penalties assessed and 

collected from the program totaled over $69 million. In addition, the IRS focused its 

efforts to combat abusive tax avoidance transactions (ATAT) by providing early 

guidance, addressing shelters at the promoter level, and increasing the strength of

response. The IRS will continue to aggressively address abusive transactions through 

enhanced identification techniques, published guidance, traditional examination 

processes, alternative dispute resolutions, communication, and resource allocation

ained 

ATAT

.

FY 2007, the IRS reorganized its international organization to better address the 

ficant

tional 

he exchange of information between a foreign revenue agency and the IRS led to the 

. In 

es

es 

FY 2008, the IRS will continue to reengineer its examination and collection 

IRS

creasing IRS enforcement presence remains a priority for FY 2009. The FY 2009 

e 

A – Regulatory ($149,975,000 in direct appropriation and $117,000 from 

nting of

Tax Law Interpretation and Published Guidance interprets the tax law through 

published guidance, technical advice, and other technical legal services. 

In

increasing scope of international tax administration where non-compliance is a signi

and growing problem. In addition, the IRS developed a comprehensive strategy to 

identify and highlight activities that will improve customer service, enhance interna

tax compliance, and modernize the IRS to more effectively keep pace with globalization. 

T

recent unraveling of an abusive cross-border tax scheme involving hundreds of taxpayers and tens of millions of dollars in improper deductions and unreported income

late 2007, the Joint International Tax Shelter Information Centre (JITSIC) will open a 

second office in London and the Japanese National Tax Agency will join. JITSIC shar

information and expertise in identifying and curbing tax avoidance and shelters. As 

collaboration between member countries continues to grow, more cross-border schem

will be uncovered, shared, and addressed. 

In

procedures to reduce processing time, increase yield, and expand coverage. The

plans to build on its enforcement efforts to further enhance early identification of tax 

liabilities through increased audits and focused collection activities. 

In

Budget provides additional resources to expand enforcement efforts in key areas of th

tax gap such as reporting, nonfiling, and payment. The FY 2009 request will also focus

efforts on targeted enforcement in the small business and self-employed taxpayer 

community, improve capabilities to examine large multinational corporations, and

improve tax gap research. 

3

reimbursable programs): This budget activity funds the development and pri

published IRS guidance materials; interpretation of tax laws; advice on general legal 

servicing, ruling and agreements; enforcement of regulatory rules, laws and approved

business practices; and supporting taxpayers in the areas of pre-filing agreements, 

determination letters, and advance pricing agreements. This includes the following

program activities: 

•

IRS-76 
• General Legal Services provides advice to the IRS on non-tax legal issues, inclu

procurement, personnel, labor relations, equal employment opportunity, f

ding 

iscal law, 

•

ing agreements, and other 

• y 

 integrity, and conduct of those who represent 

.2.5 – Budget and Performance Plan

Dollars in Thousands 

tort claims and damages, ethics, and conflict of interest. 

Rulings and Agreements applies the tax law to specific taxpayers in the form of

pre-filing agreements, determination letters, advance pric

pre-filing determinations and advice. 

Office of Professional Responsibility identifies, communicates, and enforces Treasur

Circular 230 standards of competence,

taxpayers before the IRS including attorneys, Certified Public Accountants (CPAs), 

enrolled agents, enrolled actuaries and appraisers, and other professionals. 

3

Regulatory

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $150,115 $146,213 $149,951 $147,897 $149,975

Reimbursable Resources 151 255 255 113 117

Mandatory Appropriations - User Fees

Total Resources $150,266 $146,468 $150,206 $148,010 $150,092

Regulatory Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target

1 Target1 Target1

126,481 108,462 109,408 118,200 100,600 98,000

1

 Additional resources were committed in FY 2007 to TEGE determination closures to reduce the backlog of applications and bring the inventory down to a 

sustainable level consistentwith projected annual receipts.

Key: Ot- Output/Workload Measure

TE/GE Determination Case Closures (Ot)

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

escription of Performance

ent presence in the tax-exempt and government entities 

ctor is particularly important given the role that a small number of these entities play in 

S 

t 

 of the determination process for 

xempt organizations by eliminating the backlog of cases in this area. Over the course of 

D

Maintaining a strong enforcem

se

accommodating abusive transactions entered into by taxable parties. In FY 2007, the IR

expanded its enforcement presence by conducting reviews of executive compensation 

practices among tax-exempt organizations. New outreach tools were developed and 

deployed including www.stayexempt.org, a popular tax compliance website for exemp

entities; web-based tools to help tax exempt entities understand their federal tax 

requirements; and workshops to assist remote tribal villages in understanding federal and

state employment tax and other reporting requirements. 

In FY 2007, the IRS focused on improving the timeliness

e

FY 2007, the unassigned inventory was reduced by 35 percent, cutting 34 days from the 

average time in inventory. 

IRS-77 
For FY 2007, the IRS achieved 93 percent of the target of 118,200 determination case 

closures. This was caused by several factors. First, workload in this area is driven by

xternal demand; for various reasons, the IRS received 12,000 fewer applications than 

In

ce Before the

ternal Revenue Service) were published. These regulations address weaknesses in the 

rds and

d protest for

rivate debt collection services, negotiated a Memorandum of Understanding offering 

e

expected. Responding to customer requests, the IRS extended certain filing deadlines.

addition, following a major revision to the user fee schedule for determination, a large 

number of submissions were returned to applicants due to incorrect user fees. Finally, 

legislative changes in the Pension Protection Act shifted workload priorities toward a 

number of time-consuming cases, resulting in fewer closures overall. 

The IRS faces a wide variety of non-tax legal issues. In September 2007, final 

regulations under Treasury Circular 230 (Regulations Governing Practi

In

current regulatory scheme to ensure that tax professionals are adhering to standa

following the law, a key objective to success in enforcing the tax laws. 

In FY 2007, IRS General Legal Services (GLS) litigated cases involving practitioner who

advised on questionable tax transactions, successfully defended an awar

p

online tax return preparation and filing services, worked on promulgation of guidance in 

connection with the recently enacted whistleblower statute, and drafted informant 

agreements concerning the recovery of taxes due. 

IRS-78 
Operations Support 

Appropriation Description 

The Operations Support appropriation provides funding for overall planning, direction, 

and support for the IRS, including shared service support related to facilities services, 

rent payments, printing, postage, and security. This appropriation also funds 

headquarters policy and management activities such as corporate support for strategic 

planning, communications and liaison, finance, human resources, Equal Employment 

Opportunity (EEO) and diversity; research and statistics of income; and necessary 

expenses for information systems and telecommunication support, including 

development, security, and maintenance of the IRS information systems. 

The Operations Support Budget request for FY 2009 is $3,856,172,000 in direct 

appropriations and 11,989 FTE. This is an increase of $176,113,000 or 4.8 percent and a 

decrease of 192 FTE over the FY 2008 enacted level of $3,680,059,000 and 12,181 FTE. 

Taxpayer Service and Enforcement Allocation

The IRS allocates funding in this appropriation to either the taxpayer service or 

enforcement program. 

The IRS allocates the Operations Support account funding and FTE into activities 

supporting taxpayer service and enforcement to identify the full cost of operating these 

programs. The IRS developed a methodology to assign the appropriation funding to the 

core program that these resources support, which is updated and improved on an ongoing 

basis. Operations Support uses several allocation methodologies: 

• Costs specifically related to either a taxpayer service or enforcement activity, such 

as an Information Technology (IT) system used only for enforcement purposes, 

are allocated directly to the program supported; 

• Service-wide costs, such as printing and postage, that pertain to both taxpayer 

service and enforcement are allocated based on historical usage; and 

• Other support costs, such as physical security services and rent payments, are 

primarily allocated by FTE. 

The Operations Support funds allocated to the taxpayer services and enforcement 

programs in FY 2009 use the FY 2008 President’s Budget allocation methodology. In 

order to execute FY 2009 spending, the Administration is proposing language to adjust 

Operations Support allocations by up to 1 percent with prior notification to the 

Appropriations Committees. 

IRS-79 
Support of Information Technology to the Taxpayer Services and Enforcement 

Programs 

The IRS information technology infrastructure as well as staffing, equipment, and related 

costs necessary to maintain and manage current information systems are critical to the 

support of the taxpayer services and enforcement programs. Technology is the critical 

link that allows the IRS to do its job quickly and efficiently. The core purpose of the IRS 

Modernization & Information Technology Services (MITS) organization is to provide 

and maintain the best technology available in serving the taxpaying public and to manage 

and upgrade this technology to support the IRS administration of the tax laws as carefully 

and proficiently as possible. Improvement to the IT infrastructure includes procuring and 

replacing desktop computers, automated call distributor hardware, mission critical 

servers, and wide area and local area network routers and switches. 

The MITS organization provides information technology and telecommunications 

services to support the operation, maintenance, and enhancement of current IT systems 

and develops new information technology systems and products through the business 

systems modernization process. The IRS is in the midst of a multi-year, multi-billion 

effort to move its technology systems and operations from antiquated legacy systems to 

modernized IT systems equal to those of their counterparts in both the public and private 

sectors. The MITS organization supports every facet and phase of tax administration and 

provides the tools necessary to taxpayers to communicate and conduct transactions with 

the IRS. MITS core activities include the following programs, procedures, and actions: 

• Maintaining and updating the IT systems essential to delivering the filing 

season 

• Managing existing information technology and developing new IT systems 

• Developing an IT service management model 

• Defining and meeting systems availability service levels 

• Implementing seat management (desktop) business process reengineering 

• Consolidating and standardizing work request processes 

• Sustaining a viable infrastructure program

• Administering a comprehensive approach to customer relationship 

management

IRS business programs rely heavily on IT systems to process tax and information returns, 

account for tax revenues collected, send bills for taxes owed, issue refunds, assist in the 

selection of tax returns for audit, and provide telecommunications services for all 

business activities and business units as well as operations support functions, including 

the toll-free access to tax information. 

IRS-80 
2.1 – Budget Adjustments Table 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 12,181 $3,680,059

Changes to Base:

Maintaining Current Levels $82,580

Pay Annualization 9,883

Pay Inflation Adjustment 25,399

Non-Pay Inflation Adjustment 47,298

Transfers ($1,370)

(1,370)

(230) ($30,367)

(230) (22,443)

(1,304)

(6,620)

(230)

Transfer to TIGTA

Efficiencies/Savings

Efficiency Savings

Increase e-File Savings

Non-Recur Savings

Base Reinvestments $28,141

Fully Fund Postage Base 28,141

Subtotal Changes to Base $78,984

Total FY 2009 Base - Current Services 11,951 $3,759,043

Program Changes:

Program Increases - Enforcement Initiatives 38 $97,129

Reduce the Tax Gap for Small Business / Self-Employed 33,714

Reduce the Tax Gap for Large Businesses 4 12,479

Improve Tax Gap Estimates, Measurement, and Detection of Non-Compliance 34 15,585

Increase Reporting Compliance of U.S. Taxpayers with Offshore Activity 2,622

Expand Document Matching 9,684

Implement Legislative Proposals to Improve Compliance 23,045

Subtotal FY 2009 Program Changes 38 $97,129

Total FY 2009 Request 11,989 $3,856,172

IRS-81 
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: Operations Support FY 2007 

Enacted

FY 2008

President's 

Budget

Cong. 

Action 

including 

Rescission

FY 2008 

Enacted 

Level 

FY 2009

Requested

Level

FTE 12,890 12,892 (711) 12,181 11,989

Object Classification:

11.1 Full-Time Permanent Positions............................ $939,639 $1,006,173 $960,155 $978,431

11.3 Other than Full-Time Permanent Positions........

($46,018)

. 11,883 11,120 10,680 21,800 22,332

11.5 Other Personnel Compensation.......................... 32,757 68,257 31,250 32,073

11.8 Special Personal Services Payments................. 00000

11.9 Personnel Compensation (Total)................... $984,279 $1,085,550 $1,013,205 $1,032,836

12.0 Personnel Benefits................................................ 296,239 315,559 303,481 309,867

13.0 Benefits to Former Personnel.............................. 50,343 51,853 47,580 48,532

21.0 Travel.....................................................................

(37,007)

($72,345)

(12,078)

(4,273)

. 37,794 34,315 922 35,237 36,627

22.0 Transportation of Things....................................... 70,539 19,970 534 20,504 21,470

23.1 Rental Payments to GSA...................................... 628,829 649,433 628,759 653,627

23.2 Rent Payments to Others.....................................

(20,674)

. 3,9155056

23.3 Communications, Utilities, & Misc........................ 325,716 361,707 1,815 363,522 405,208

24.0 Printing and Reproduction.................................... 52,473 53,712 15 53,727 54,796

25.1 Advisory & Assistance Services........................... 54,645 44,312 47,294 91,606 93,114

25.2 Other Services....................................................... 424,290 428,496 395,119 427,449

25.3 Purchase of Goods/Serv. from Govt. Accts......

(33,377)

... 60,151 61,808 59,506 63,838

25.4 Operation & Maintenance of Facilities................

(2,302)

. 159,739 170,696 168,658 181,331

25.5 Research & Development Contracts..................

(2,038)

. 2,938 5,269 4,569 4,660

25.6 Medical Care......................................................... 10,005 10,245 0 10,245 10,764

25.7 Operation & Maintenance of Equipment............

(700)

. 60,105 68,203 67,681 70,048

25.8 Subsistence & Support of Persons.....................

(522)

. 393 278 1,000 1,278 1,304

26.0 Supplies and Materials......................................... 19,006 26,782 2,947 29,729 31,014

31.0 Equipment.............................................................. 246,451 325,661 7,452 333,113 360,820

32.0 Lands and Structures........................................... 54,246 55,132 51,826 48,139

33.0 Investments & Loans............................................

(3,306)

. 00000

41.0 Grants, Subsidies.................................................. 00000

42.0 Insurance Claims & Indemn................................. 2,739 601 108 709 722

43.0 Interest and Dividends................................. 00000

44.0 Refunds.................................................................. 00000

91.0 Unvouchered.............................................. 00000

Total Budget Authority....................................... $3,544,835 $3,769,587 $3,680,059 $3,856,172

Budget Activities:

Infrastructure ...................................................

($89,528)

... $845,203 $879,672 $843,720 $883,325

Shared Services & Support .................................

(35,952)

... 1,179,216 1,229,231 1,170,686 1,243,703

Information Services ..........................................

(58,545)

... 1,520,416 1,660,684 4,969 1,665,653 1,729,144

Total Budget Authority....................................... $3,544,835 $3,769,587 $3,680,059 $3,856,172 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

($89,528)

IRS-82 
2.3 – Appropriation Detail Table

Dollars in Thousands 

Operations Support

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Infrastructure $808,254 $845,203 $843,720 $883,325 0.00% 4.69%

Shared Services and Support 5,790 1,154,724 6,622 1,179,216 5,802 1,170,686 5,699 1,243,703 -1.78% 6.24%

Information Services 6,114 1,551,603 6,268 1,520,416 6,379 1,665,653 6,290 1,729,144 -1.40% 3.81%

Subtotal New Appropriated Resources 11,904 $3,514,581 12,890 $3,544,835 12,181 $3,680,059 11,989 $3,856,172 -1.58% 4.79%

Other Resources:

Recoveries 1,186 1,186

Offsetting Collections - Reimbursable 272 27,776 169 27,776 176 40,661 184 41,750 4.55% 2.68%

Available multi-year/no-year funds 28,018 28,018 43,039 43,039 0.00% 0.00%

50% Carryover 11,109 11,109

Transfers In/Out 23,500 23,500

Mandatory Appropriations - User Fees 66,678 66,678 103,368 50,705 0.00% -50.95%

Subtotal Other Resources 272 $158,267 169 $158,267 176 $187,068 184 $135,494 4.55% -27.57%

Total Resources Available for Obligation 12,176 $3,672,848 13,059 $3,703,102 12,357 $3,867,127 12,173 $3,991,666 -1.49% 3.22%

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Obligations Enacted t Request o FY 2009

% Change

3A – Infrastructure ($883,325,000 in direct appropriation and $16,100,000 from user 

fees): This budget activity funds administrative services related to space and housing,

rent and space alterations, building services, maintenance, guard services, and 

non-Automated Data Processing (ADP) equipment. This includes the following program 

activities: 

• Building Delegation oversees and manages the IRS GSA-delegated buildings, 

including cleaning, maintenance, utilities, protections, administrative, and recurring 

and one-time repair costs. 

• Rent provides resources for all IRS rent needs. 

• Space and Housing / Non-ADP Equipment provides management of all IRS building 

services, maintenance, space alterations, guard services, custodial overtime, utility 

services needs, and Non-ADP equipment. 

IRS-83 
3.2.6 – Budget and Performance Plan 

Dollars in Thousands 

Infrastructure

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $837,320 $808,254 $845,203 $843,720 $883,325

Reimbursable Resources 103 121 121 0 0

Mandatory Appropriations - User Fees 0 0 0 16,100 16,100

Total Resources $837,423 $808,375 $845,324 $859,820 $899,425 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

Description of Performance 

In FY 2007, the IRS continued to achieve cost savings associated with an aggressive rent 

management strategy. These savings, coupled with savings from previous years, have 

helped offset the increased infrastructure costs associated with infrastructure 

improvement initiatives such as the new Kansas City consolidated campus. 

Rent costs, including the costs of facility security, increased from $651.4 million in 

FY 2006 to $666.6 million in FY 2007. To partially fund this increase, the IRS achieved 

rent savings by identifying and completing 59 space reduction projects, releasing a 

cumulative total of 412,000 square feet. These projects have annualized savings 

estimated at $8.4 million. Through September 2007, the total rent cost increased by 

2.3 percent, far below the year-end target of 5.3 percent. 

In addition to the rent reduction projects mentioned above, the IRS and GSA embarked 

on a delegated leasing initiative designed to save commission fees and achieve negotiated 

lease savings. Leases already in effect or proposed to commence in FY 2008 will result 

in projected savings of $380,000 annually or $1.9 million over five years for 10 projects 

(subject to GSA approval). 

In FY 2008 and beyond, Real Estate and Facilities Management will develop a 

comprehensive real estate strategy, balancing mission critical planning assumptions with 

the condition, utility, and opportunity for project execution. The savings associated with 

this strategy are critical for addressing major campus construction projects as well as 

unfunded costs such as new mandates, rescissions, and other inflationary costs. 

IRS-84 
3A – Shared Services and Support ($1,243,703,000 in direct appropriation and 

$14,002,000 from reimbursable programs): This budget activity funds policy and 

management, IRS-wide support for research, strategic planning, communications and 

liaison, finance, human resources, and equal employment opportunity and diversity 

services and programs. It also funds printing and postage, business systems planning, 

security, corporate training, legal services, procurement, and employee benefits 

programs. This includes the following program activities: 

• National Headquarters Management and Administration directs the management 

activities of strategic planning, communications and liaison, finance, human 

resources, EEO and diversity, and business systems planning and embedded training. 

This activity sets policies and goals, provides leadership and direction for the IRS and 

builds partner relationships with key stakeholders (e.g., Congress, GAO, Office of 

Management and Budget [OMB]). It provides policy guidance for conducting IRS 

planning and budgeting strategies, conducting analysis of programs and investments 

to support strategic decision-making, and developing and managing the human 

resources. It also includes official reception and representation expenses. 

• Facilities Services provides services and supplies required to manage IRS facilities. 

• Procurement supports the procurement function of the IRS. 

• EEO Field Operations plans and manages the IRS EEO and Diversity Program. 

• Communications and Liaison coordinates local government and liaison relationships; 

handles congressional, state, and national stakeholder relationships and issues; 

coordinates cross-cutting issues including managing audits and legislative 

implementation; handles national media contacts and local media relationships; and 

ensures IRS-wide compliance with disclosure and privacy laws. 

• Customer Support plans and manages financial services including relocation, travel, 

imprest fund, purchase cards, corporate express, and employee clearances. 

• Treasury Complaint Centers plans and manages the Treasury Complaint Centers. 

• Shared Support not provided by Agency-Wide Shared Services (AWSS) provides 

resources for shared cross-functional support such as copiers, postage meters, 

shredders, courier services, and post office boxes. 

• Printing and Postage residing in the Media and Publication Organization provides 

operating divisions with printing and postage, including shipping of taxpayer and 

internal use materials. 

• Statistics of Income provides resources for market-based research to identify 

compliance issues; for conducting tests of treatments to address non-compliance; and 

for the implementation of successful treatments of taxpayer non-compliant behavior. 

• Research provides resources for researching annual income, financial, and tax data 

from tax returns filed by individuals, corporations, and tax-exempt organizations. 

• Security protects employees, facilities and assets, and the confidentiality of taxpayer 

information. 

• Security Services ensures that the IRS has effective security policies and programs in 

place to safeguard taxpayer records, employees, facilities, business processes, 

systems, and other resources. It includes operation of the Computer Systems Incident 

Response Center (CSIRC) and Situation Awareness and Management Centers 

(SAMC), coordination of service-wide disaster recovery and business continuity 

planning, security training and awareness, and sensitive system certification and 

IRS-85 
accreditation coordination with Treasury on the Federal Critical Infrastructure 

Protection Program. 

• Benefit Payments provides resources to fund Workers’ Compensation benefits and 

Unemployment Compensation for Federal Employees payments. 

• Shared Services provide additional services such as Public Transit Subsidy and 

Career Counselor Contract. 

3.2.7 – Budget and Performance Plan 

Dollars in Thousands 

Shared Services and Support

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $1,154,616 $1,154,724 $1,179,216 $1,170,686 $1,243,703

Reimbursable Resources 17,836 13,649 13,649 13,575 14,002

Mandatory Appropriations - User Fees 0 0 0 14,814 0

Total Resources $1,172,452 $1,168,373 $1,192,865 $1,199,075 $1,257,705 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

Description of Performance 

Through support activities including management and administration of human resources, 

security, and research, the IRS continues to provide shared services to all IRS programs. 

Workforce planning is a significant challenge. With a diverse population of more than 

100,000 employees and more than 700 locations across the country and overseas, the IRS 

works continuously to ensure that recruiting and training activities support a workforce 

that has the skills and competencies needed to accomplish the IRS mission. 

To meet changing business and technological demands, the IRS initiated a program to 

identify targeted occupations, skill sets, and hard-to-fill positions. The program features 

integration of all recruitment, hiring, and compensation efforts, along with the 

development of new and improved methods of predicting future attrition through 

retirements. Developing activities specifically targeted toward mitigating the impact of

retirements and attracting and retaining new hires with advanced skills continues to be 

critical to the successful delivery of IRS business goals. 

The IRS continued to enhance and implement its human capital strategy in FY 2007. The 

strategy includes bringing critical personnel on board and objectives for employee 

training, leadership development, and workforce retention. Actions taken in FY 2007 

included: 

• Established a Center of Excellence Office to determine the skills and 

competencies for each area of expertise; and 

• Developed training requirements and a new recruitment strategy. 

Future efforts are aimed at synchronizing the hiring of new staff with the retirement of 

older staff such that adequate knowledge transfer occurs. 

IRS-86 
Security of infrastructure and IT systems remains a top priority for the IRS. In FY 2007, 

the IRS continued to update its systems, processes, and training efforts to ensure taxpayer 

information is properly safeguarded. The IRS completed all required Federal Information 

Security Management Act activities; contingency plan testing on the 260 applications and 

systems on the master inventory; and live disaster recovery testing for all major 

applications. The IRS also established new offices, including a new Cybersecurity 

organization, and governing bodies to provide direction and oversight regarding the 

security and protection of sensitive information. As part of its security effort to protect 

sensitive information, the IRS: 

• Installed automatic full disk encryption on the total deployed inventory of over 

52,000 IRS laptops; 

• Implemented a secure electronic online solution for data exchanged with federal, 

state and other partners; 

• Deployed mandatory information protection training for all IRS employees and 

contractors with access to sensitive information; 

• Issued updated data protection policies, processes, and education training tools to 

improve employee awareness and skill levels; and 

• Deployed upgraded firewalls and intrusion detection devices. 

In FY 2007, the IRS began the process of validating the enterprise-wide Business Impact 

Analysis (BIA) to identify the effect computer application disruptions would have on the 

ability of the IRS to perform critical business processes. The BIA will be completed in 

FY 2008 and will provide the IRS with needed information to build a strong foundation 

for making effective risk management decisions. 

Research efforts also enable the IRS to develop strategies to combat specific areas of 

non-compliance, improve voluntary compliance, allocate resources more effectively, and 

reduce the tax gap. To support these efforts, the IRS undertook significant efforts to 

estimate voluntary taxpayer compliance in FY 2007. A reporting compliance study for 

Subchapter S corporations was initiated in FY 2007. A Tax Year (TY) 2006 individual 

income reporting compliance study began in October 2007. In addition, the IRS updated 

its workload selection models for TY 2006 using data from prior reporting compliance 

studies, enabling the IRS to better leverage limited enforcement resources and reduce the 

burden on compliant taxpayers. 

IRS success in improving its research capabilities was recognized in 2007 when the 

Compliance Data Warehouse (CDW) was named a 2007 Computerworld Honors 

Laureate. The CDW was nominated in the category of Government and Non-Profit 

Organizations for the extraordinary use of IT. The CDW offers a range of databases used 

by the IRS research community to support projects related to tax administration, 

enforcement, and customer service. 

The FY 2009 Budget request will allow the IRS to increase research efforts in 

understanding the reasons for taxpayer non-compliance. Efforts will focus on three 

components affecting taxpayer filing: taxpayer burden, tax law complexity, and 

IRS-87 
contributors to taxpayer error. Understanding these factors will improve voluntary 

compliance by targeting resources to the areas of greatest need. 

3A – Information Services ($1,729,144,000 in direct appropriation, $27,748,000 from 

reimbursable programs and $34,605,000 from user fees): This budget activity funds 

staffing, equipment, and related costs to manage, maintain, and operate the information 

systems critical to the support of tax administration programs. Under this budget activity 

staff develops and maintains the millions of lines of programming code that support all 

aspects and phases of tax-processing. They are also responsible for operating and 

administering the hardware infrastructure of mainframes, servers, personal computers, 

networks, and a variety of management information systems. 

MITS is composed of discrete but intertwined organizations responsible for everything 

dealing with information systems and technology, ranging from cyber security and 

networks to applications development and end user equipment and services. They are 

described below. 

• Cyber security ensures effective security policies and programs to safeguard taxpayer 

records, business processes, and IT systems. The program establishes a governance 

process to perform vulnerability assessments and provide service-wide mission 

assurance as well as security support to IRS systems modernization. Security 

management provides executive direction for enterprise-wide IT security policy 

development and implementation, operations, and services. 

• Tier B provides support to single-owner, small-to medium-sized investment projects 

using core data to support specialized functions. 

• Modernization & IT Services (MITS) Strategic Sourcing funds the operations of the 

MITS Office of Strategic Sourcing with oversight of all A-76 efforts in the MITS 

organization. 

• National Headquarters (NHQ) ADP Management provides for the management and 

oversight of investments in IT for the Chief of Staff and RAS. The program enables 

NHQ to manage and leverage IT solutions that are responsive to IRS-wide 

management, tax compliance, enforcement strategic, and tactical research projects. 

• MITS Executive Oversight provides support to the immediate office of the Chief 

Information Officer, as well as the direct reports for EEO and Diversity, and the 

Director, Stakeholder Management (including Communications Services and 

Program Oversight). The program provides executive direction for the MITS 

organization, enabling MITS to be a customer-focused supplier of IT solutions that 

are responsive to customer business priorities and effectively meet functional and 

operational needs. 

• Application Development performs the analysis, design, development, testing, and 

implementation of approximately 85,000 application programs supporting critical tax 

processing, management information reporting, and financial and management 

support systems for the IRS. This program activity also supports external trading 

partner data exchanges with federal government agencies, state and local 

governments, and other third party entities. The program controls application source 

code and deploys applications to the production environment. 

IRS-88 
• Enterprise Operations designs, develops, and maintains IT that supports critical tax 

processing, management information reporting, and financial and management 

support systems for the IRS. The program supports data exchanges with external 

organizations such as other federal government agencies, state and local governments, 

and external entities (e.g., employers and banks) and includes a comprehensive 

disaster recovery capability to ensure continued operations in the agency in the event 

of a major interruption of service. 

• Enterprise Network provides telecommunications service delivery to all customer 

segments, including management of day-to-day operations and execution of routine 

modifications to the telecommunications infrastructure and applications. It addresses 

all phases of engineering, acquisition, implementation, and operation of 

telecommunications systems and services, including voice, video, and data 

communications. 

• Enterprise Services plans and manages service and delivery methods used across the 

MITS organization, including demand analysis, enterprise architecture, configuration 

management, project reporting, enterprise life cycle management, release 

management, systems engineering, dashboard reporting, and internal management. 

• End User Equipment and Services maintains the IRS automated business processes at 

headquarters and field sites by providing technical systems support and applications 

software support to end users, legacy operations maintenance, local and corporate 

systems administration activities, email and domain user account maintenance, 

network and systems monitoring administration, asset management activities, and 

support and maintenance of the voice and data infrastructure at the territory offices. 

• MITS Management provides the management and oversight of investments in IT, 

human capital investment, and other MITS operational priorities. 

• IT Security Certification and Accreditation provides design and operations of security 

controls and the technical mechanism used by the IRS systems/applications as part of 

the system security plan, system risk assessment, and IT contingency plan. It also 

supports security testing/evaluation as part of the certification process including time 

preparing system documentation, interviewing with contractors, and responding to 

information requests. 

• IT Operational Security oversees Federal Information Security Management Act 

(FISMA) reporting, including preparing for, conducting, and reporting National 

Institute of Standards and Technology (NIST) 800-26 self-assessments and annual 

testing of controls. 

• IT Security Training provides training for FISMA reporting purposes. 

• IT Homeland Security Presidential Directive-12 oversees the use of Personal Identity

Verification (PIV) technology for physical access to federally-controlled facilities and 

logical access to information systems for all federal employees and contractors who 

require long-term access.

• IT Infrastructure corporately funds the replacement of IRS IT infrastructure that has 

reached or surpassed its useful life cycle. The resources achieved through 

efficiencies in various parts of MITS are centralized to ensure replacement of the 

Service’s aging infrastructure is addressed corporately. 

• Treasury Working Capital Fund separates the telecommunications program budget 

required for paying Treasury billings for IRS corporate telecommunications services. 

IRS-89 
• Integrated Document Solutions Enterprise (IDSE) Campus Operations Most Efficient 

Organization (MEO) captures savings resulting from IDSE MEO activities. 

3.2.8 – Budget and Performance Plan 

Dollars in Thousands 

Information Services

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted Enacted Request

Appropriated Resources $1,510,449 $1,551,603 $1,520,416 $1,665,653 $1,729,144

Reimbursable Resources 3,330 14,006 14,006 27,086 27,748

Mandatory Appropriations - User Fees 0 66,678 66,678 72,454 34,605

Total Resources $1,513,779 $1,632,287 $1,601,100 $1,765,193 $1,791,497 1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

Description of Performance 

IT solutions are the most effective and efficient means of increasing the number of IRS 

contacts with taxpayers while also offering a greater variety of faster alternatives to file 

and pay their tax obligations. IT solutions also enhance the IRS ability to identify 

non-compliance and combat tax avoidance schemes that contribute to the tax gap. 

The technology environment at the IRS is extraordinarily complex because of high 

volumes, widely varying inputs from taxpayers (from simple records with just a few 

fields to complex documents of many megabytes), seasonal processing with extreme 

variations in processing load, transaction rates on the order of billions per year, and 

storage measured in trillions of bytes. Nevertheless, the IRS infrastructure modernization 

efforts have sustained records of achievement in implementing systems that yield 

tangible benefits for American taxpayers. 

In FY 2007, the IRS produced the timely delivery of quality software into production in 

preparation for the filing season and in the midst of numerous challenges. New 

legislative mandates required the IRS to implement initiatives such as the Telephone 

Excise Tax Refund (TETR). The rollout of additional IT modernized functions such as 

split refunds, the late passage of “extender” legislation, and processing changes to 

support business needs all required coordinated development, testing, and execution of 

many systems. 

Notable highlights of the FY 2007 filing season include: 

• Delivered “Split Refunds” capability. Taxpayers filing the 1040 tax forms were 

given the option to split their tax refunds in up to three financial accounts. The 

split refunds process gives taxpayers the choice of depositing their tax refunds 

directly into individual retirement accounts, over 500 college savings plans, 

savings bonds, or a variety of other accounts. Over 83,000 taxpayer returns used 

the split refunds option. 

• Supported E-Services application with over 236,000 registered users. The 

application allows tax practitioners to request Preparer Tax Identification 

IRS-90 
Numbers (PTINS), e-file applications, and transcripts; submit Powers of 

Attorney; and discuss tax matters electronically with the IRS. Additionally, it 

allows payers the ability to verify Tax Identification Numbers (TIN) and name

controls prior to filing. The application received over: 

o 3.9 million of TIN match requests; 

o 385,000 on-line requests of PTINS; 

o 219 million bulk TIN match requests; and 

o One million applications for an Employee Identification Number (EIN). 

For FY 2007, the IRS has made progress on FISMA compliance security metrics. The 

IRS has successfully completed security certification and accreditation for 98 percent of 

its IT systems, and is moving towards the goal of 100 percent certified and accredited. 

 

In FY 2008, the IRS will continue to develop and test the automated Correspondence 

Imaging System in addition to improving FISMA compliance. Maintaining the 

infrastructure, modernizing IRS information systems, and developing better tools will 

allow the IRS to operate more efficiently and with improved productivity. 

IRS-91 
Business Systems Modernization 

Appropriation Description 

The Business Systems Modernization (BSM) appropriation provides resources for the 

planning and capital asset acquisition of IT to modernize the IRS business systems. 

The BSM Budget request for FY 2009 is $222,664,000 in direct appropriations and 

333 FTE. This is a decrease of $44,426,000 or 16.6 percent, and 25 FTE, over the 

FY 2008 enacted level of $267,090,000 and 358 FTE. 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 358 $267,090

Changes to Base:

Maintaining Current Levels $1,354

Pay Annualization 332

Pay Inflation Adjustment 1,022

Subtotal Changes to Base $1,354

Total FY 2009 Base - Current Services 358 $268,444

Program Changes:

Program Decreases: (25) ($45,780)

(25) (45,780)

(25) ($45,780)

Business System Modernization

Subtotal FY 2009 Program Changes

Total FY 2009 Request 333 $222,664

IRS-92 
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: Business Systems

Modernization FY 2007 

Enacted

FY 2008

President's 

Budget

Cong. 

Action 

including 

Rescission

FY 2008 

Enacted 

Level 

FY 2009

Requested

Level

FTE 317 317 41 358 333

Object Classification:

11.1 Full-Time Permanent Positions............................ $34,504 $35,166 $624 $35,790 $33,621

11.3 Other than Full-Time Permanent Positions......... 447 475 270 745 766

11.5 Other Personnel Compensation.......................... 626 658 (99)

(1,957)

559 575

11.8 Special Personal Services Payments................. 00000

11.9 Personnel Compensation (Total)................... $35,577 $36,299 $795 $37,094 $34,962

12.0 Personnel Benefits................................................ 9,772 10,108 8,151 8,444

13.0 Benefits to Former Personnel.............................. 00000

21.0 Travel...................................................................... 0 187 0 0

22.0 Transportation of Things......................................

(187)

. 00000

23.1 Rental Payments to GSA...................................... 00000

23.2 Rent Payments to Others...................................... 00000

23.3 Communications, Utilities, & Misc........................ 00000

24.0 Printing and Reproduction.................................... 00000

25.1 Advisory & Assistance Services........................... 00000

25.2 Other Services....................................................... 165,924 171,753 157,914 115,327

25.3 Purchase of Goods/Serv. from Govt. Accts......

(13,839)

... 00000

25.4 Operation & Maintenance of Facilities................. 00000

25.5 Research & Development Contracts................... 00000

25.6 Medical Care......................................................... 00000

25.7 Operation & Maintenance of Equipment............. 571 7,095 186 7,281 7,281

25.8 Subsistence & Support of Persons...................... 00000

26.0 Supplies and Materials......................................... 00000

31.0 Equipment.............................................................. 815 56,648 2 56,650 56,650

32.0 Lands and Structures........................................... 00000

33.0 Investments & Loans............................................. 00000

41.0 Grants, Subsidies.................................................. 00000

42.0 Insurance Claims & Indemn................................. 00000

43.0 Interest and Dividends................................. 00000

44.0 Refunds.................................................................. 00000

91.0 Unvouchered.............................................. 00000

Total Budget Authority....................................... $212,659 $282,090 $267,090 $222,664

Budget Activities:

IT Investments................................................... $212,659 $282,090 $267,090 $222,664

Total Budget Authority....................................... $212,659 $282,090 $267,090 $222,664

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

($15,000)

(15,000)

($15,000)

IRS-93 
2.3 – Appropriation Detail Table 

Dollars in Thousands 

Business Systems Modernization

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 353 $158,758 317 $212,659 358 $267,090 333 $222,664 -6.98% -16.63%

Subtotal New Appropriated Resources 353 $158,758 317 $212,659 358 $267,090 333 $222,664 -6.98% -16.63%

Other Resources:

Recoveries 2,523 2,523

Offsetting Collections - Reimbursable

Available multi-year/no-year funds 102,516 102,516 103,822 96,039 0.00% -7.50%

50% Carryover

Transfers In/Out

Mandatory Appropriations - User Fees

Subtotal Other Resources 0 $105,039 0 $105,039 0 $103,822 0 $96,039 0.00% -7.50%

Total Resources Available for Obligation 353 $263,797 317 $317,698 358 $370,912 333 $318,703 -6.98% -14.08%

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Obligations Enacted Request to FY 2009

% Change

3A – Business Systems Modernization ($222,664,000 in direct appropriation): This 

budget activity funds the planning and capital asset acquisition of IT to modernize the 

IRS business systems, including labor and related contractual costs. The IRS BSM 

program is required to submit an annual expenditure plan that justifies the projects for 

which resources are requested. 

BSM management provides executive direction over the program. The BSM program 

develops the vision and strategy, manages the release of projects, and provides enterprise 

architecture support. The program ensures that all the integrated components of both 

technical and business modernization will provide a total business solution. This 

program will meet the needs of both taxpayers and internal users by providing business 

processes, enabled by IT, that permit timely and accurate delivery of tax account and 

other tax-related information while ensuring security and privacy. 

BSM projects are developed and funded on a useable-segment basis. Each request for 

project funding covers an identifiable portion of the project’s development. As 

completed BSM projects demonstrate successful operation, their costs are then funded 

from the Operations Support appropriation. 

Business Systems Modernization +$222,664,000 / +333 FTE

Recognizing the long-term commitment in IT needed to meet the IRS mission, Congress 

and the IRS designed the BSM program to develop and implement systems equal to those 

achieved through private and public sector best practices, while managing the risks 

inherent in one of the largest, most visible, and sensitive modernization programs 

underway. The IRS technology environment is extremely challenging and is 

characterized by exceptionally high processing volumes, widely varying inputs from

taxpayers (from simple records with just a few fields to complex documents of many 

IRS-94 
megabytes), seasonal processing with great variations in processing load, and transaction 

rates of billions per year with storage measured in trillions of bytes. 

The benefits accruing from delivery and implementation of BSM projects provide value 

to taxpayers, the business community, and government. Many of these benefits 

contribute to operational improvements and efficiencies within the IRS. The BSM 

program has made sustained progress in realizing substantial segments of the 

modernization vision - a key component in the strategy to reduce the tax gap. The 

program will continue in this direction as the projects are incrementally developed and 

deployed. 

BSM funding by project is shown in the chart below. 

FY 2009 BSM Project Activities 

Dollars in Thousands 

Project Activities

FY 2007 

Enacted

FY 2008

Enacted

FY 2009

Budget

Customer

Account Data

Engine

Release content master plan, including a mid-year release to

add new functionality and January release adding tax law

changes.

$58,500 $58,500 $58,800

Accounts 

Management

Services

Provides a Common User Interface for access and update of

taxpayer accounts managed by CADE Systems and

IMF/CFOL/IDRS.

0 28,983 26,158

Modernized

e-File

Continue development of Forms 1040 Phase II by delivering 

90 forms and schedules associated with Form 1040. 20,000 55,802 25,000

Filing &

Payment

Compliance

The Filing & Payment Compliance project plans no further

releases. 3,500 0 0

43,500 39,150 32,000

39,500 35,100 35,000

2,310 4,310 2,300

$167,310 $221,845 $179,258

45,000 44,000 42,052

$212,310 $265,845 $221,310

349 1,245 1,354

$212,659 $267,090 $222,664

Maintaining Current Levels

Total BSM Budget Request

Subtotal Program Request

Management Reserve

Core Infrastructure

 Architecture, Integration, and Management

Subtotal Capital Investments

BSM Labor

Customer Account Data Engine (CADE) - $58.8 million 

CADE is the lynchpin IRS modernization project to replace the antiquated master file. 

These master files are based on flat files with weekly updates achieved by batch 

processing of a sequential file repository, taking two weeks to update taxpayer tax 

accounts. This batch process compares poorly to the real-time updates provided by all 

other financial institutions. The delay in updating data allows data inconsistencies to 

develop among the various applications in use across the IRS. These inconsistencies 

prevent IRS employees from being able to resolve many taxpayer issues on the first 

attempt, which increases taxpayer burden. By providing daily or real-time updates to 

taxpayer accounts, CADE will enable the Accounts Management Services (AMS) project 

to provide real-time access to taxpayer account information containing current data. 

IRS-95 
CADE processed more than 11 million returns for Filing Season 2007 on a modernized 

and secure platform, including numerous schedules and forms such as Form 1040, U.S.

Individual Income Tax Return, Form 1040-EZ, Income Tax Return for Single Filers and 

Joint Filers with No Dependent, and Form 1040-A, U.S. Individual Income Tax Return;. 

In addition, CADE issued over $11 billion in refunds. As CADE moves the IRS towards 

its long-term IT modernization vision, it plays a significant role in providing the 

technology to facilitate quick access to compliance data. Access to this data is a critical 

component in the effort to close the tax gap. The IRS intends to continue providing 

better tools to improve compliance though early detection, better case selection, and 

better case management. In this regard, CADE serves as the foundation of IRS 

modernization. 

In 2009, the IRS plans to continue the development of CADE in stages. CADE will 

continue development by improving the infrastructure to allow continuous processing and 

transaction based recovery, and by adding an interface to the Integrated Data Retrieval 

System to provide new opportunities for business functionality. When fully operational, 

the CADE database will house tax returns information for more than 200 million 

individual and business taxpayers. 

Accounts Management Services (AMS) - $26.2 million 

The IRS will continue the development and deployment of the AMS project. The ability 

to provide immediate access to integrated account data, enable real-time transaction 

processing, and settle accounts on a daily basis is critical to improving customer service 

and business results. Realizing these capabilities requires implementing tools that allow 

retention of taxpayer accounts in the modernized CADE database through on-line access, 

monitoring, and adjustment. 

In FY 2009, IRS plans to add AMS release functionality to convert the Desktop 

Integration inventories to the Document Management Framework and increase the 

number of cross-functional capabilities with CADE. It will also create a modernized user 

interface for inputting agreements on CADE and/or Current Processing Environment 

accounts with decision support capability. AMS will develop the functionality to 

increase the business value by improving accuracy and efficiency with penalty 

abatement, balance due processing, and notice review capabilities to retain more accounts 

in CADE. 

When completed, AMS will provide the data presentation services to display and validate 

changes to update taxpayer accounts. AMS will store and manage IRS activities such as 

work assignments, transfers, case closures, and the generation of letters to taxpayers. 

AMS will provide the front-end applications for adjustments, penalties, interest, 

abatements, credit and debit transfers, name and address changes, bankruptcies, 

installment agreements, changes to the automated treatment streams, and many other 

taxpayer account-related functions required for customer service and compliance. AMS 

will provide applications that monitor taxpayer accounts for follow-up activity or 

deferred actions. 

IRS-96 
Modernized e-File (MeF) - $25 million 

The MeF project provides a standard filing structure for all IRS return types, a robust 

platform that can meet performance and capacity needs with enhanced and up-to-date 

technologies, and a greater appeal to external customers and stakeholders. With MeF, the 

IRS will store all tax return data in XML format in a modernized Tax Return Database

(MTRDB) allowing authorized viewers of the data to see the entire tax return online over 

the Internet. Once fully implemented, all tax returns and transmission files will adhere to 

the formal IRS rules (schemas). MeF initially covered Form 1120, U.S. Corporation 

Income Tax Return; Form 1120-S, U.S. Income Tax Return for an S corporation; and 

Form 990, Return of Organization Exempt from Income Tax. In January 2007, the IRS 

also brought Form 1065, U.S. Return of Partnership Income, onto the modernized 

platform. Plans call for implementing Form 1040; Form 1041, U.S. Income Tax Return 

for Estates and Trusts; and the family of Forms 94X, Employment/Unemployment Tax, to 

the MeF environment. In January 2008, MeF Release 5 added the Foreign Tax Return 

(1120F) and the Non-Profit e-Postcard (990N). The 990N was a late addition to Release 

5 and was the result of an e-file mandate contained in the Pension Protection Act passed 

in August 2006. A capacity and performance model and a series of engineering 

enhancement recommendations were also developed during Release 5. 

In FY 2007, the IRS started development of Release 6 (1040 Phase I). Release 6 will 

include Form 1040 and 10 other schedules and supporting forms, including Schedule A, 

Itemized Deductions; Schedule B, Interest and Ordinary Dividends; and Schedule D, 

Capital Gains and Losses, as well as deliver the base infrastructure and all 1040 

interfaces. Release 6 will go into production in 2009 and reach 61 percent of the 

individual e-File population, or approximately 55.1 million filers. 

In FY 2009, the IRS will continue development of Release 7 (1040 Phase II) which 

initiated development in FY 2008. Release 7 will roll out an additional 90 supporting 

schedules and forms that will expand the reach of MeF to 99 percent of the e-File 

population, or approximately 93.7 million filers. 

Core Infrastructure - $32.0 million

Core infrastructure provides critical services in architecture, engineering, and deployment 

of a standardized, consolidated, virtualized, and secure modernized production 

environment for use by major and non-major projects. The continued development and 

management of this infrastructure aligns with the IRS Modernization Vision & Strategy 

(MV&S) by incorporating the identification and development of common infrastructure, 

security, and application integration services for use and re-use by major and non-major 

projects. By leveraging this shared infrastructure, projects can speed time to delivery and 

reduce application development and maintenance costs. 

A significant portion of the IRS technology infrastructure supporting the core tax 

processing systems is composed of incompatible mainframe computers, mid-range 

systems, multiple workstation configurations, and insufficient security controls. Most of

these systems are incompatible due to dissimilar operating systems, hardware 

configurations, software configurations, and business applications. Stand-alone networks 

IRS-97 
further complicate access to these systems, especially by IRS employees who need to use 

several systems to perform their jobs – including resolving taxpayers’ problems. The 

nature of the IRS legacy infrastructure requires significant time and money to manage, 

maintain, and update these systems and networks. While the IRS has done much to 

improve and modernize this infrastructure, more work is needed. Once modernized, the 

environment needs to be continually refreshed as new technologies become available to 

support the business needs of the IRS and improve compliance to reduce the tax gap. 

Infrastructure Shared Services

Resources will deliver fully-integrated shared IT development and production 

infrastructure, which includes hardware, software, shared applications, data, 

telecommunications, security, and an enterprise approach to systems and operations 

management. These funds support the identification and management of project-related 

infrastructure requirements and the engineering and acquisition of all components, 

hardware, and software, needed for the development, test, and production environments. 

Technical guidance and direction is provided to all projects, along with a level of support 

services, which enables all projects to use the common integrated and shared 

infrastructure. This approach results in overall reductions in time and dollars to develop, 

deploy, and maintain the infrastructure and business applications that use the 

infrastructure. 

Core infrastructure activities include the continued management of, and enhancements to, 

the development, integration, and test environment for the applications using the 

modernized environment. This approach allows the IRS to develop infrastructure and 

common service solutions usable across multiple projects, extending into the legacy 

environments. By leveraging this shared infrastructure, projects can speed time to 

delivery and reduce application development and maintenance costs, as well as eliminate 

unnecessary duplicative capabilities.

IRS will further develop and enhance the shared enterprise infrastructure services in 

support of the increased number of major and non-major projects requiring use of the 

modernized infrastructure in support of business requirements. Integral to the success of 

these projects is the need to provide core infrastructure engineering services in capacity 

planning and performance engineering, as well as in implementing performance 

monitoring tools and processes to ensure availability and reliability of IRS systems and 

applications, to include use of IRS portals and access to needed services and data. This 

increase is necessary to support the identification, engineering, and development of 

additional infrastructure, security, and application services for planned re-use by 

Modernization Vision & Strategy (MV&S) projects in support of a Service Oriented 

Architecture (SOA). 

IRS-98 
Development, Integration, Testing (DITE)

Funding will support a number of projects that utilize the DITE to help address 

development, integration and testing needs; maintain Federal Information Security 

Management Act compliance using updated security monitoring tools; and provide a 

virtualized environment for remote application developers. DITE is a standardized 

development and test environment comprised of all of the modernized infrastructure 

components and applications that are needed by projects planning to use and integrate 

into the modernized production environment. DITE uses streamlined processes and 

standard tools that enable thorough development and testing in a controlled environment 

ensuring that projects work effectively and seamlessly within the modernized production 

environment. Its primary components are a Virtual Development Environment (VDE) 

and an Enterprise Integration and Test Environment (EITE). The VDE provides a 

software development environment, enabling geographically distributed developers 

access to standardized tools, information, and services in support of the modernization 

projects. The EITE provides a more structured, production-like, comprehensive 

environment to support integration and testing of projects before deployment into 

production. 

Architecture, Integration & Management (AI&M) - $35.0 million 

AI&M provides management operations essential to delivering a program of the 

magnitude, nature, and complexity of BSM. To date, overall financial performance 

continues to demonstrate successful, sound, and sustainable BSM financial management 

discipline. Each primary AI&M component performs a different and critical role. Major 

AI&M components are: 

• Architecture & Integration (A&I): Ensures system solutions meet business 

needs and provides a single authoritative source of guidance for effectively 

integrating each project as it moves from the development environment to the 

business environment. A recurring theme for activities in this area is to develop 

management processes in a manner that facilitates their extension and adoption 

into non-major projects. 

• Business Integration (BI): Ensures BSM services are aligned with each IRS 

operating unit’s vision and enable projects to deliver desired business results. BI 

activities include the following areas: Modernization Vision and Strategy, 

Demand Management, Cost Estimation, Transition Management, Business Rules 

and Requirements Management, and Budget Management. BI delivers enterprisewide processes and standards that enable the IRS to define, manage, and 

successfully deliver its IT portfolio. 

• Management Processes (MP): Management disciplines leading to consistent

quality, managed risk, increased stakeholder satisfaction, and delivery of 

modernized business systems within established cost and schedule parameters. 

The IRS is continually working to strengthen its management processes through 

the development and deployment of processes and procedures and compliance 

IRS-99 
with program oversight requirements. The dynamic nature of modernization 

drives BSM to continually assess its operation and implement improvements. 

• Program Management (PM): Provides a single point of accountability for 

contractor activities. BSM PM operations will continue to focus on sustaining 

improvements to program performance, improving management process 

disciplines, and ensuring delivery of taxpayer benefit. In terms of program 

performance, the emphasis is on delivery of projects on time, on budget, and at or 

above quality targets. BSM PM will also continue to work to eliminate barriers to 

effective competition of business solutions. PM activities include four main 

areas: Program Executive Management, Business Services, Contracts and 

Procurement, and Document Management. 

• Federally Funded Research & Development Center (FFRDC): Provides 

national experts in systems engineering, architectural design and development, IT, 

security, and other technical disciplines that are critical to modernization success. 

FFRDC’s broad visibility, deep domain knowledge, and objectivity allow it to 

provide an independent voice to executive management staff and is widely 

viewed as a source of management guidance on difficult issues. 

BSM Labor - $43.4 million 

Of the $43.4 million, $42 million is for BSM labor and $1.4 million is for labor inflation 

adjustments. These funds provide for government labor costs associated with the 

development of the BSM projects. 

Management Reserve - $2.3 million 

Funds will be used to cover unanticipated cost adjustments for the BSM projects. 

IRS-100 
3.2.9 – Budget and Performance Plan 

Dollars in Thousands 

Business Systems Modernization

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted 1 Enacted Request

Appropriated Resources $113,702 $158,758 $212,659 $267,090 $222,664

Reimbursable Resources 0 0 0 0 0

Mandatory Appropriations - User Fees 0 0 0 0 0

Total Resources $113,702 $158,758 $212,659 $267,090 $222,664

Business Systems Modernization Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target Target Target

N/A * * 10.0% 10.0% 10.0%

N/A * * 10.0% 10.0% 10.0%

* Cost and Schedule variance is based on +/- 10% and is reported on major project segments.

BSM Project Schedule Variance by Release/Subrelease E

BSM ProjectCost Variance by Release/Subrelease E

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

Description of Performance 

Increased reliance on technology and its impact on business processes and the ability to 

maintain a talented workforce are positively changing how IRS employees conduct 

business and deliver services. For FY 2007, 92 percent of the major project segments 

were within the target of +/- 10 percent cost variance, and 77 percent of the major project 

segments were within the +/- 10 percent schedule variance. 

The IRS has made progress in meeting project deliverables and has continued to build 

foundational processes, controls and governance that are essential to continued success in 

managing the complex system development efforts. In FY 2007, the IRS implemented a 

tiered, enterprise-wide governance model for its IT investment projects. The new 

governance structure incorporates variance and risk thresholds and effectively promotes 

portfolio management, control, and accountability. 

The IRS also expanded the scope of its five-year IT Modernization Vision & Strategy 

that addresses priorities for modernizing front-line tax administration functions to include 

domains for security and internal management portfolios in order to put in place the 

capability for future enhancements. The strategy guides IT investment decision-making 

for FY 2007. Important aspects include: establishing partnerships among IT and 

business leadership; leveraging existing systems; emphasizing the delivery of smaller, 

incremental releases; and unifying the portfolio-level view of investments. 

IRS-101 
Significant modernization accomplishments for FY 2007 include: 

• Processed over 11 million returns and issue refunds of $11.6 billion in the 

Customer Account Date Engine (CADE), including filing season changes and 

capabilities to handle the Telephone Excise Tax Refund and the 1040 schedules. 

• Delivered Modernized e-File (MeF) Release 4.0, which enhanced electronic filing 

capabilities for Partnership Returns (Forms 1065, U.S. Return of Partnership 

Income, and 1065-B, U.S. Return of Income for Electing Large Partnership) and 

made all required extender legislation changes, meeting the mandate for taxpayers 

with 100 or more partners to file electronically. MeF received over two million 

corporate, non-profit, and partnership forms. 

• Delivered Filing & Payment Compliance Release 1.2, which transferred over 

51,000 cases to Private Debt Collectors, resulting in the collection of more than 

$31 million.

• Deployed the first two releases of the Accounts Management Services (AMS) 

system which is designed to enable authorized users to resolve taxpayer issues by 

accessing integrated account data. AMS builds the applications and databases 

that enable IRS employees to use the data in CADE to facilitate faster, more 

accurate issue resolution and results in quick and accurate access to authoritative 

account information in response to customer inquiries. AMS delivered 

functionality to provide daily rather than weekly updates to the authoritative 

account and began the Domain Architecture to describe the business vision and 

supporting conceptual technical architecture that will drive AMS releases for the 

next five years. 

In addition to the key modernization projects, several initiatives and improvements were 

undertaken in 2007 to effectively integrate the systems with the legacy production 

environment and improve the technology infrastructure. New and improved processes 

were also put in place to better integrate business and technology strategies and allow the 

IRS to operate more efficiently with improved productivity. The IRS: 

• Institutionalized the use of Enterprise Architecture into the Modernization Vision 

& Strategy process (and received the prestigious E-Gov award as the Best

Civilian Agency to use Enterprise Architecture for Government Business 

Transformation). 

• Completed the Enterprise Service Oriented Architecture strategy and established 

the process to identify Enterprise Common Services in order to achieve operation 

excellence and cost savings. 

• Delivered high-priority portal platform improvements and stabilized operations to 

meet near term needs for the 2007/2008 filing seasons for tax practitioners and 

internal IRS users. 

• Integrated the Enterprise Application Integration Broker into the core 

infrastructure to enable the use of common services to leverage data and 

applications between legacy and modernized environments. 

IRS-102 
• Expanded the Infrastructure Center of Excellence to include configuration 

management, measurement and analysis, capacity planning and performance 

engineering, and project monitoring and control. 

Tax administration in the 21st century requires improved IT solutions for the IRS. For 

FY 2008 and FY 2009, the IRS is committed to continuing to make improvements in 

technology by: 

• Replacing antiquated core account management systems and technology; 

• Expanding and enhancing compliance activities through early detection, better 

case selection, and better case management; 

• Delivering effective customer service, including expanded e-file systems and web 

services at reduced cost; and 

• Investing in infrastructure necessary to perform operations more efficiently, thus 

freeing up resources for enforcement and taxpayer service programs. 

As the IRS continues to upgrade and modernize its IT infrastructure and systems in 

FY 2009, it will reduce taxpayer burden by increasing and improving services offered to 

taxpayers and delivering the taxpayer service and enforcement programs more effectively 

and efficiently. 

IRS-103 
Health Insurance Tax Credit Administration 

Appropriation Description 

The Health Insurance Tax Credit Administration (HITCA) appropriation provides 

funding for contractor support to develop and administer the advance payment option for 

the health insurance tax credit included in P.L. 107-210, the Trade Adjustment Assistance 

Act (Trade Act of 2002). 

Currently, the IRS administers specific components of this credit: enrollment, payment, 

and compliance. The Department of Labor, state workforce agencies, and the Pension

Benefit Guaranty Corporation (PBGC) are responsible for determining potentially 

eligible HCTC taxpayers. 

The HITCA Budget request for FY 2009 is $15,406,000 in direct appropriation and 

16 FTE. This is an increase of $171,000 or 1.1 percent, and a decrease of 1 FTE, over the 

FY 2008 enacted level of $15,235,000 and 17 FTE. 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

FTE $000

FY 2008 Enacted 17 $15,235

Changes to Base:

Maintaining Current Levels $322

Pay Annualization 20

Pay Inflation Adjustment 53

Non-Pay Inflation Adjustment 249

Efficiencies/Savings (1) ($151)

(1) (151)

(1)

Efficiency Savings

Subtotal Changes to Base $171

Total FY 2009 Base - Current Services 16 $15,406

Program Changes:

Subtotal FY 2009 Program Changes

Total FY 2009 Request 16 $15,406

IRS-104 
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: Health Insurance Tax Credit

Administration FY 2007 

Enacted

FY 2008

President's 

Budget

Cong. 

Action 

including 

Rescission

FY 2008 

Enacted 

Level 

FY 2009

Requested

Level

FTE 17 17 0 17 17

Object Classification:

11.1 Full-Time Permanent Positions............................ $2,312 $2,395 $0 $2,395 $2,335

11.3 Other than Full-Time Permanent Positions......... 00000

11.5 Other Personnel Compensation.......................... 22 23 0 23 2

11.8 Special Personal Services Payments................. 00000

11.9 Personnel Compensation (Total)................... $2,334 $2,418 $0 $2,418 $2,359

12.0 Personnel Benefits................................................ 358 371 0 371 352

13.0 Benefits to Former Personnel.............................. 00000

21.0 Travel.....................................................................

4

. 144 148 0 148 150

22.0 Transportation of Things....................................... 00000

23.1 Rental Payments to GSA...................................... 192 198 0 198 202

23.2 Rent Payments to Others...................................... 00000

23.3 Communications, Utilities, & Misc........................ 40000

24.0 Printing and Reproduction.................................... 50000

25.1 Advisory & Assistance Services........................... 00000

25.2 Other Services....................................................... 11,812 12,093 0 12,093 12,335

25.3 Purchase of Goods/Serv. from Govt. Accts......... 00000

25.4 Operation & Maintenance of Facilities................. 00000

25.5 Research & Development Contracts................... 00000

25.6 Medical Care......................................................... 00000

25.7 Operation & Maintenance of Equipment............. 00000

25.8 Subsistence & Support of Persons...................... 00000

26.0 Supplies and Materials......................................... 77078

31.0 Equipment.............................................................. 00000

32.0 Lands and Structures........................................... 00000

33.0 Investments & Loans............................................. 00000

41.0 Grants, Subsidies.................................................. 00000

42.0 Insurance Claims & Indemn................................. 00000

43.0 Interest and Dividends................................. 00000

44.0 Refunds.................................................................. 00000

91.0 Unvouchered.............................................. 00000

Total Budget Authority....................................... $14,856 $15,235 $0 $15,235 $15,406

Budget Activities:

Health Insurance Tax Credit Administration............... $14,856 $15,235 $15,235 $15,406

Total Budget Authority....................................... $14,856 $15,235 $0 $15,235 $15,406

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

1

IRS-105 
2.3 – Appropriation Detail Table 

Dollars in Thousands 

Health Insurance Tax Credit Administration

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Health Insurance Tax Credit Administration 10 $14,850 17 $14,856 17 $15,235 16 $15,406 -5.88% 1.12%

Subtotal New Appropriated Resources 10 $14,850 17 $14,856 17 $15,235 16 $15,406 -5.88% 1.12%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable

Available multi-year/no-year funds

50% Carryover

Transfers In/Out

Mandatory Appropriations - User Fees

Subtotal Other Resources 0 $0 0 $0 0 $0 0 $0 0.00% 0.00%

Total Resources Available for Obligation 10 $14,850 17 $14,856 17 $15,235 16 $15,406 -5.88% 1.12%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted 1 Request

3A – Health Insurance Tax Credit Administration ($15,406,000 in direct 

appropriation): The HITCA budget activity funds costs to administer a refundable tax 

credit for health insurance to qualified individuals. 

The Trade Act of 2002 created a tax credit for the purchase of certain types of health 

insurance coverage for eligible taxpayers. The credit was created to help displaced 

workers and retirees who have lost their jobs due to trade with countries who participate 

in the North American Free Trade Agreement. The credit pays for 65 percent of the 

health insurance premiums for eligible workers. The IRS responsibility relating to the 

health care tax credit (HCTC) is to ensure participating eligible taxpayers receive the 

credit to which they are entitled. 

The Trade Act of 2002 required the IRS to develop and operate a system to provide an 

advance, refundable tax credit for certain individuals who receive a trade readjustment 

allowance or benefit from the Pension Benefit Guaranty Corporation (PBGC). This

activity maintains the administrative and direct support for the HITCA program office 

and the staff charged with administering the program for the IRS. 

IRS-106 
3.2.10 – Budget and Performance Plan 

Dollars in Thousands 

Health Insurance Tax Credit Administration

FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Resource Level Obligations Obligations Enacted 1 Enacted Request

Appropriated Resources $19,993 $14,850 $14,856 $15,235 $15,406

Reimbursable Resources 0 0 0 0 0

Mandatory Appropriations - User Fees 0 0 0 0 0

Total Resources $19,993 $14,850 $14,856 $15,235 $15,406

Health Insurance Tax Credit Administration Budget Activity FY 2005 FY 2006 FY 2007 FY 2007 FY 2008 FY 2009

Measure Actual Actual Actual Target Target Target

N/A $13.71 $14.90 $14.25 $14.25 $14.25

Sign-up Time (days) - Customer Engagement 98.1 98.7 93.3 97.0 97.0 97.0

Cost per Taxpayer Served ($)

1 FY 2007 Enacted represents the approved FY 2007 Operating Plan.

Description of Performance 

The Department of Labor, state workforce agencies, and the PBGC are responsible for 

determining potentially eligible HCTC taxpayers. The IRS administers the HCTC by 

working with health plan administrators to arrange direct payment of health plan 

premiums. 

In FY 2007, the IRS processed approximately 8.6 million HCTC eligibility records, made 

nearly 175,000 HCTC payments on behalf of taxpayers, handled almost 100,000 inbound 

HCTC telephone calls, and mailed over 400,000 pieces of outbound correspondence. In 

addition, the IRS maintained a HCTC program customer satisfaction level of 90 percent. 

The FY 2007 cost per participant served was $14.90, which was higher than the year-end 

target of $14.25 due to a recent large print order. In addition, the sign-up time was 

93.3 days, which was 4 percent below the year-end target of 97 days (sign-up time is 

measured as the median number of days between the first program kit mailing and the 

first payment received from the participant). 

The IRS also implemented new business processes to generate efficiencies, improve call 

handle time, and automate manual processes. In addition, the IRS completed a 

comprehensive study of enrollment time, a critical factor in determining access to the 

credit by potential enrollees, and continues to work with the Department of Labor to 

improve access to the credit. The IRS continues to look at ways to reduce the cost of

program administration beyond the 50 percent already achieved since the program was 

introduced in 2003. 

In future years, the IRS will maintain a balanced approach to administering the HITCA 

program by communicating program changes, encouraging eligible taxpayers to comply, 

and working closely with other Departments to ensure eligible individuals receive the 

HCTC. Current enrollment in the HCTC program has been stable at 15,000 to 16,000 

participants claiming the advance credit each month. 

IRS-107 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Introduction

With over 94,000 employees located nationwide, the IRS is the largest bureau in the 

Department of the Treasury. Over 70 percent of the IRS budget funds human capital 

costs. The large seasonal workforce accounts for over 24 percent of the IRS employee 

population during peak workload seasons. 

The IRS is focusing on workforce retention and replenishment, leadership succession

planning, and competency gap assessment and resolution. To ensure strategic direction 

of human capital management, the IRS established four human capital strategic goals: 

Goal 1: Continually assess and shape the workforce to efficiently accomplish the 

 IRS mission 

Goal 2: Increase employee proficiency and engagement to enhance tax law 

 compliance 

Goal 3: Leverage human capital technology to reduce burden 

Goal 4: Enable quick and agile management action to achieve business goals 

The FY 2008 human capital priorities supporting these goals include: 

• Continued emphasis on customer service and satisfaction; 

• Timely communication and guidance; 

• Streamlining of processes; 

• Continual employee engagement to improve business results; and 

• Expanding the IRS look at technology. 

Recruitment 

The IRS continues to place significant focus on recruitment and hiring of mission-critical 

talent from both internal and external sources. The IRS planning and review process 

ensures evaluation of short- and long-term hiring goals and objectives to determine 

resource allocation and operational activities of the strategic recruitment and hiring office 

are on target. The IRS also has developed and implemented a multi-year recruitment and 

marketing plan to target a diverse applicant pool, coupled with a comprehensive 

assessment strategy to identify applicants with the knowledge, skills, and abilities 

necessary to meet the current and future needs of the business. In addition, the IRS 

continues to refine and implement corporate hiring goals and strategies. 

The IRS consistently emphasizes the need to review and improve its manager-toemployee span of control and to continue to redirect needed resources to front-line 

operations. The IRS also increased its use of workforce planning tools to develop a more 

robust link between business plans (e.g., examination plans) and workforce 

IRS-108 
replenishment. The IRS workforce plan and the resulting framework document outline 

the mechanism to incorporate the workforce strategy into the planning and budgeting 

processes. 

Retention 

The IRS is addressing the human capital impact of increasing employee retirements, 

workforce migrations within and outside the IRS, and other broad-based workforce 

issues. The number of IRS retirement eligible employees has grown over the past five 

years and is expected to continue to grow. Approximately 3 percent of IRS employees 

migrate to a new position each year and create competency gaps. This is particularly 

evident in the enforcement and compliance programs. 

Currently, 39 percent of IRS executives and 20 percent of other IRS managers are 

eligible for retirement and they are retiring at a higher rate than the non-management 

workforce. The IRS is identifying retention tools and working to establish consistent and 

objective standards for utility. Consistent monitoring and evaluating will ensure 

relevance to existing needs and objectives and ensure close linkage to IRS competency 

based workforce initiatives. 

Number of Number of Number of Number of

Employees Percent Employees Percent Employees Percent Employees Percent

2008 99 39.1% 1,845 23.0% 11,709 16.3% 13,653 17.1%

2009 27 10.7% 456 5.7% 3,139 4.4% 3,622 4.5%

2010 23 9.1% 450 5.6% 3,055 4.3% 3,528 4.4%

2011 8 3.2% 401 5.0% 3,104 4.3% 3,513 4.4%

2012 14 5.5% 404 5.0% 2,907 4.1% 3,325 4.2%

2013 and Beyond 82 32.4% 4,474 55.7% 47,716 66.6% 52,272 65.4%

Not Eligible * 1 0.0% 3 0.0% 4 0.0%

Total 253 100.0% 8,031 100.0% 71,633 100.0% 79,917 100.0%

* includes employees such as reemployed CSRS annuitants and "no code applies"employees.

Fiscal Year

Full-Time Permanent IRS Employees "On Board" and Eligible to Retire as of December 8, 2007

Executive Manager Other Total

The IRS-wide strategic approach to employee retention is a priority and will encompass 

on-going identification of skill sets and positions in need of retention effort and 

utilization of appropriate retention tools to ensure that the IRS is thought of as an 

employer of choice. 

IRS-109 
The Office of Personnel Management’s Strategic Management of Human Capital 

Areas

1. Strategic Alignment: To strategically and tactically meet human capital challenges, 

the IRS developed Human Capital Strategic and Implementation Plans to align human 

capital management with the agency’s mission. These plans set forth a clear line of 

sight between the achievement of the Treasury Human Capital Strategic Goals, the 

IRS Strategic Goals and its Human Capital Strategic Goals, the President’s 

Management Agenda, and the Human Capital Assessment and Accountability 

Framework. Specifically, the Human Capital Strategic Implementation Plan 

establishes measures for monitoring the IRS performance in achieving specific 

objectives, processes, and projects. 

The four Human Capital Strategic Goals are the foundation of the IRS Human Capital 

Strategy. This corporate approach for strategically managing human capital ensures 

that the IRS builds and maintains the workforce needed to carry out its mission in an 

efficient and effective manner therefore “Linking Human Achievement with Business 

Results.” 

The IRS workforce plan describes the effective management of all key IRS positions. 

Focusing on mission critical occupations, the plan will be used in the planning and 

budgeting cycle to align hiring levels with the IRS Human Capital Strategic and 

Implementation Plans. The IRS is well underway in the development of a Workforce 

Planning Framework for IRS-wide implementation. This framework will ensure the 

consistency in how the IRS acquires and manages needed talent. 

2. Leadership and Knowledge Management: The comprehensive corporate 

Leadership Succession Program of the IRS will promote the replenishment of talented

leaders as the IRS mitigates the anticipated impact of retirements, including training 

of current and potential leaders to ensure they possess the needed competencies. The 

cornerstone for this training is the establishment of an IRS Leadership Competency 

Model describing the behaviors required for leadership success in the IRS. The 

competencies are linked to IRS Managers’ Performance Plan Core Responsibilities 

and drive all aspects of IRS leadership selection, development, evaluation, and 

compensation. 

In the summer of 2007, the IRS launched an automated Leadership Succession 

Review (LSR) Process and Training Program that will enable the IRS to identify 

talent for leadership positions IRS-wide. LSR will detect gaps in leadership bench 

strengths for critical positions and target management training and development. 

The IRS is establishing best practices and using innovative approaches within its 

succession management program for the Senior Executive Service (SES) to identify, 

recruit, and develop talented leaders. These efforts are critical as the IRS faces an 

upcoming shortage of leaders due to the baby boomer retirement wave and increased 

competition for senior leadership talent from both the private and public sectors. As a 

result, the IRS is transitioning to a new streamlined method of identifying, selecting, 

and developing individuals for the SES. 

IRS-110 
3. Results-Oriented Performance Culture: One of the methods the IRS uses to link 

performance with compensation is paybanding. The IRS implemented pay-forperformance payband systems for its front-line managers, department managers, 

senior managers, and senior executives. Under the new payband systems, 

compensation is linked to performance. These performance-based increases replace 

the annual adjustments paid under the Federal General Schedule pay system. 

Program evaluations are underway to ensure a solid foundation in performance 

management and its critical linkage to pay. 

4. Talent Management: The IRS made significant strides in the identification of the 

competencies needed, both by its leadership and mission critical occupations, 

throughout the IRS. The identified competencies are used for recruitment, selection, 

and development purposes. Career path information is available online to employees 

to provide identification of the competencies needed to successfully qualify for, and 

perform in, the career of their choice. To further the IRS evaluation of its 

workforce’s competencies, the Competency Assessment Center (CAC) is provided as 

an online portal for employee assessments on various competencies. To date, IRS 

launched two assessments on Individual Taxpayer Advisory Specialists (formerly 

Taxpayer Resolution Representative) and Special Investigators through this portal. 

5. Accountability: The IRS Human Capital Strategic Accountability Framework 

encompasses the IRS Human Capital Strategic Plan, tactical Implementation Plan, 

Program Assessments, Delegated Examining Unit Reviews and Performance 

Indicators and Targets to monitor and ensure the accomplishment of long-range goals

and objectives. It also aligns with Treasury and the Office of Personnel 

Management's Presidential Management Agenda requirements. 

IRS-111 
4B – Information Technology (IT) Strategy 

Modernization Vision and Strategy (MV&S)

The IRS implemented an information technology (IT) investment strategy, known as the 

Modernization Vision & Strategy (MV&S), which identifies potential IRS IT investments 

in business domains directly related to front-line tax administration functions such as 

submission processing, managing taxpayer accounts, customer service, reporting 

compliance, filing and payment compliance, and criminal investigation. In addition, 

there are five crosscutting service domains – enterprise data, IT service management, 

security and privacy, IT human capital management, and common business services - that 

may be leveraged across both the technical and business domains to identify 

opportunities for projects across the business to use common solutions, platforms, data 

sources, and system components. 

The IRS regularly updates the MV&S to address both the full scope of tax administration 

functions and changing business priorities, including planning for the consolidation, 

retirement, and potential reuse of many legacy systems. The IRS has recently completed 

the third phase of the MV&S approach. 

During the first year of implementing the MV&S, the IRS focused on the business 

priorities needed to enhance and improve service and enforcement capabilities. IT also

introduced new investment decision support programs that included solution concept and 

project estimation services. By applying a more uniform, disciplined, and rigorous 

approach to the development of solutions concepts and project estimates, future 

investment decisions can be based on data that are more reliable and consistent. 

In the second year, the MV&S focused on expanding the business scope to include 

internal management and security and privacy domains. In addition, the service domains 

were further defined to address crosscutting technical opportunities, expand the common 

business services which identify opportunities, leverage services that support multiple 

domains and data, and focus on all aspects of data management. Technical domains also 

were introduced and high-level strategies were formulated. The technical domains are 

Applications Development; Enterprise Networks; Enterprise Services; End User 

Equipment and Services; and Enterprise Operations. These domains focus on the delivery 

of base products and services such as end-user support, networks, and storage. 

The IRS is entering the third year of the MV&S and the strategy will expand to represent 

and include all technology services and products delivered by the IRS. The technical and 

service domains will propose potential projects and initiatives using the solution concept 

and project estimation services in order to ensure discipline, consistency, and uniformity 

across all IT investments. New business domains, including functions that support tax 

administration such as the Taxpayer Advocate and Chief Counsel, will be added and will 

build upon the fundamental principle of domain strategies driving investments. The IRS 

will begin developing domain architectures for each of the major business areas in tax 

administration, thus providing a framework for diagnosing, analyzing, and solving 

specific business issues that result from common architecture misalignments. 

IRS-112 
In the long term, the MV&S will build out the domain architectures, improve the IT 

services and products, refine roles and responsibilities, and ultimately define a 

comprehensive IT investment portfolio that integrates budget formulation and execution. 

Information Technology Major IT Investment Portfolio

The IRS is submitting 33 IT investments for inclusion in the FY 2009 IT portfolio. All 

support the mission and strategic goals of the IRS. These investments will include 

routine system maintenance to sustain “steady state” capacities as well as larger-scale 

efforts to develop, modernize, or enhance IT system capabilities. Below are brief 

descriptions of some of the major investments (excluding the business modernization 

projects, which are described separately in the Business Systems Modernization section). 

• Automated Collection System (ACS) – ACS is a centralized production system

located at the Martinsburg Computing Center. ACS controls the Integrated Data 

Retrieval System (IDRS) balance due and nonfiler cases requiring telephone 

contact with the taxpayer for resolution. ACS uses case management abilities to 

contact taxpayers, review their case histories, and issue notices, liens, or levies to 

resolve the cases. Taxpayer contact is accomplished through telephone calls via 

Predictive Dialer and through correspondence to taxpayers and third parties. 

• Business Master File (BMF) and Employee Master File (EPMF) – These are 

the authoritative data stores for taxpayers’ accounts other than Individual Filers. 

The BMF contains the tax records of businesses, tax exempt organizations, 

estates, and gift tax filers. Accounts are updated, taxes are assessed, and refunds 

are generated as required each tax filing period. 

• Correspondence Examination Automated System (CEAS) – CEAS provides 

phases of unattended case processing for discretionary inventories, workload 

resolution, issue, document, and inventory management. The CEAS system will 

incrementally replace the Reports Generation Software applications for campus 

reporting compliance as the inventory management/report writing system for all 

campus examination work. 

• Correspondence Imaging System (CIS) – CIS improves the quality of customer 

service by providing on-line access to images of taxpayer correspondence. This 

will aid in the efficient resolution of subsequent telephone and written inquiries. 

CIS provides customer service representatives with an online ability to view, read, 

forward, save, retrieve, print, and manage incoming taxpayer inquiries. 

• Electronic Management System (EMS) – This is a “front-end” processing 

system that receives, validates, stores, and forwards taxpayer filings to the

mainframe Electronic Filing (ELF) systems and acknowledges electronic files 

containing tax documents. EMS is the IRS main processing system for electronic 

information exchanges between the IRS and external trading partners. 

IRS-113 
EMS receives sensitive but unclassified tax information, performs validation for 

each form type/format, provides a unique acknowledgement receipt, and rejects 

transmissions not meeting validation requirements. Valid transmission files are 

made available for subsequent retrieval and processing by the mainframe ELF 

systems. These subsequent systems return acknowledgement files to EMS. The 

acknowledgements are sent to taxpayers in the same format as originally 

transmitted.

• Enterprise Data Access Strategy (EDAS) - Formally referred to as the 

Enterprise Data Warehouse, the EDAS provides tax exempt and government 

entities customers with electronically filed business returns in a relational format 

while also giving the IRS a consolidated database of tax return and account data. 

By analyzing the data on EDAS, the IRS can implement initiatives to improve tax 

compliance in one area that does not lead to a decrease in compliance in another 

area, thereby affecting the IRS ability to reduce the tax gap.

• Integrated Customer Communications Environment (ICCE) – ICCE provides 

interactive services (applications) in support of taxpayers, practitioners, and 

employees through multiple contact channels, including telephones and the web. 

ICCE interactive services include Automated Self Service Applications that help 

resolve tax law, compliance, collections, and refund issues as well as other 

inquiries. Where automated assistance is insufficient or not desirable, ICCE 

interactive services gather information from taxpayers/practitioners to help route 

the contact to the best possible non-automated assistance. ICCE focuses on 

interactive services that require access to taxpayer account information. 

• Integrated Collection System (ICS) – ICS provides workload management, case 

assignment/tracking, inventory control, electronic mail, case analysis tools, and 

capabilities to support the Collection fieldwork. ICS is part of the IRS plan for 

overall automation of its activities. The objective of ICS is to deliver a computer 

system to automate many labor-intensive collection tasks. 

• Integrated Data Retrieval System (IDRS) – IDRS is an IRS mission-critical 

system consisting of databases and programs supporting IRS employees working 

active tax cases. IDRS manages data retrieved from the Tax Master Files 

allowing IRS employees to take specific actions on taxpayer account issues, track 

status, and post updates back to the Master Files. IDRS provides for systemic 

review of case status. 

• Interim Revenue Accounting Control System (IRACS) – IRACS records tax 

revenue owed to the federal government and maintains records of assessments, 

collections, accounts receivables, refunds, over-assessments, and other elements 

of revenue accounting. All data entry funds contain validity and consistency 

checks to help ensure that the integrity of the database is protected from invalid, 

unbalanced, and duplicate data. IRACS provides ongoing maintenance of data to 

support the daily operations including maintenance of the existing application, 

annual updates, and answering queries from IRS customers. 

IRS-114 
• Individual Master File (IMF) – This is the authoritative data store for taxpayers’ 

accounts of individuals and sole proprietorships. The IMF project maintains the 

IMF data. IMF accounts are updated, taxes are assessed, and refunds are 

generated as required each tax filing period. 

• Information Returns Processing (IRP) – IRP consist of a group of compliance 

projects providing data and support for the IRS to administer the U.S. tax system

efficiently and effectively. IRP processes more than one billion information 

documents each year and maintains a data store of more than eight billion 

information documents. IRP performs compliance analyses with these documents 

and Master File account data. IRP also provides data and analyses to business 

functions throughout the IRS, as well as external federal and state trading 

partners. 

• Integrated Submission and Remittance Processing (ISRP) – ISRP is a 

mission-critical mixed life cycle project that provides both individual and 

business taxpayers a method to file paper tax returns. ISRP provides a method to 

process remittances and provides for the processing of various forms at eight 

submissions processing sites throughout the country. As ISRP data entry 

operators enter the information from the various paper documents, it is converted 

into electronic data that are used by downstream operations such as financial 

information systems. The processing capacity and performance of ISRP supports 

the mandatory processing timeliness requirements imposed by Congress and other 

agencies for the processing of tax returns, providing the taxpayers their refunds 

and notices, as well as depositing the revenue. 

Additionally, ISRP provides remittance data, including check images, to the 

Remittance Transaction Research system for customer service representatives to 

search through electronically archived remittances. The performance gap in 

services offered by ISRP is reflected in the ability to process paper. 

Modernization partially replaces ISRP through electronic filing. The strategies 

resulting from Tax Administration Vision and Strategy eGOV are expected to 

replace ISRP fully by year 2012. Until that time, ISRP is needed to fill the gap. 

• Service Center Recognition/Image Processing System (SCRIPS) – SCRIPS is 

a data capture, management, and storage system that uses high speed scanning 

and digital imaging technology to process tax documents. The system does 

character recognition from the imaged documents and stores images of the returns 

for access from internal IRS organizations. The perfected data are sent 

downstream for processing on the IRS Mainframe systems and Master File 

storage. 

• Tax Return Database (TRDB) – The TRDB is a centralized corporate database

containing the data submitted by taxpayers on their federal tax returns. The 

TRDB receives the return data from a variety of electronic submission systems, 

including those filed using an authorized e-file provider, through an online filing 

company or via a federal/state program. 

IRS-115 
4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Information Technology Investments

FY 2006 FY 2007 FY 2008 FY 2009

Major IT Investments / Funding Source

Budget

Activity

& Earlier 

Enacted Enacted Enacted Requested

Account Management Services (AMS) - Major

Information 

Technology

Investments 11.800 1.570 44.270 2719.7% 47.949 8.3%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 11.800 0.000 37.520 100.0% 37.660 0.4%

IRS Taxpayer Services 20-0912-0-1-803 0.000 0.000 0.000 0.0% 3.360 100.0%

IRS Operations Support 20-0919-0-1-803 Information

Services 0.000 1.570 6.750 329.9% 6.929 2.7%

Appeals Automation Environment (AAE) Information 

Services 25.531 13.243 13.741 3.8% 14.089 2.5%

Automated Collection System (ACS) - Major Information 

Services 8.674 4.843 4.613 -4.7% 4.723 2.4%

Business Master File Information 

Services 51.887 12.284 13.121 6.8% 13.464 2.6%

Common Services (Portal) Information 

Services 0.000 0.000 30.772 100.0% 34.132 10.9%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 0.000 0.000 0.000 0.0% 0.000 0.0%

IRS Taxpayer Services 20-0912-0-1-803 0.000 0.000 0.000 0.0% 3.360 100.0%

IRS Operations Support 20-0919-0-1-803 Information

Services 0.000 0.000 30.772 100.0% 30.772 0.0%

Computer Security Audit Trails - (CSAT) Information 

Services 0.000 0.000 0.000 0.0% 0.000 0.0%

Correspondence Examination Auto Support - Major

Wintel (CEASMW)

Information 

Services 0.000 7.473 5.530 -26.0% 6.418 16.1%

IRS Operations Support 20-0919-0-1-803 Information

Services 0.000 5.343 4.932 -7.7% 5.804 17.7%

IRS Operations Support (EITC) 20-09E9 0.000 2.130 0.598 -71.9% 0.614 2.7%

Correspondence Imaging System (CIS) - Release 2 -

Major

Information 

Services 10.626 10.297 6.937 -32.6% 7.090 2.2%

Counsel Automated Systems Environment (CASE) Information 

Services 27.036 28.498 27.501 -3.5% 28.150 2.4%

Criminal Investigation Management Information

System (CIMIS) - Major

Information 

Services 0.000 3.086 1.361 -55.9% 0.561 -58.8%

IRS Enforcement 20-0913-0-1-999 0.000 0.800 0.815 1.9% 0.561 -31.2%

IRS Operations Support 20-0919-0-1-803 0.000 2.286 0.546 -76.1% 0.000 -100.0%

Customer Account Data Engine (CADE)

Information 

Technology

Investments 448.979 122.380 80.158 -34.5% 80.722 0.7%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 396.179 112.877 68.000 -39.8% 68.300 0.4%

IRS Taxpayer Services 20-0912-0-1-803 8.665 2.230 2.320 4.0% 2.340 0.9%

IRS Operations Support 20-0919-0-1-803 Information

Services 44.135 7.273 9.838 35.3% 10.082 2.5%

e-Services Information 

Services 71.750 14.063 15.090 7.3% 15.407 2.1%

Electronic Fraud Detection System (EFDS) Information 

Services 197.026 11.325 12.374 9.3% 12.640 2.1%

IRS Operations Support 20-0919-0-1-803 Information

Services 134.096 7.825 8.874 13.4% 9.070 2.2%

IRS Operations Support (EITC) 20-09E9 62.930 3.500 3.500 0.0% 3.570 2.0%

Electronic Management System (EMS) Information 

Services 183.310 8.898 6.848 -23.0% 6.993 2.1%

End to End Publishing - Major Information 

Services 11.127 4.854 1.955 -59.7% 1.825 -6.6%

IRS Operations Support 20-0919-0-1-803 Information

Services 11.127 4.854 0.439 -91.0% 1.159 164.0%

IRS Taxpayer Services 20-0912-0-1-803 0.000 0.000 1.516 100.0% 0.666 -56.1%

Enterprise Data Access Strategy (EDAS) (Formerly:

Enterprise Data Warehouse)

Information 

Services 6.953 7.035 5.421 -22.9% 5.559 2.5%

IRS BSM 20-0921-0-1-803 0.000 0.000 0.000 0.0% 0.000 0.0%

IRS Operations Support 20-0919-0-1-803 6.953 7.035 5.421 -22.9% 5.559 2.5%

% Change 

from FY07 to

FY08

% Change 

from FY08 to

FY09

IRS-116 
Continuation – 4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Examination Desktop Support System (EDSS) -

Release 2

Information 

Services 13.060 4.834 8.129 68.2% 8.078 -0.6%

IRS Enforcement 20-0913-0-1-999 0.000 0.000 2.664 100.0% 3.504 31.5%

IRS Operations Support 20-0919-0-1-803 Information

Services 13.060 4.834 5.465 13.1% 4.574 -16.3%

Excise Files Information Retrieval System (ExFIRS) -

Major

Information 

Services 0.000 0.471 0.000 -100.0% 0.000 0.0%

Exise Tax e-File & Compliance (ETEC) - Major All External

Funding 7.927 0.000 0.000 0.0% 0.000 0.0%

Filing and Payment Compliance (F&PC) (Blended)

Information 

Technology

Investments 93.267 19.342 5.709 -70.5% 5.834 2.2%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 80.536 19.342 0.000 -100.0% 0.000 0.0%

IRS Taxpayer Services 20-0912-0-1-803 0.662 0.000 0.240 100.0% 0.240 0.0%

IRS Operations Support 20-0919-0-1-803 Information

Services 12.069 0.000 5.469 100.0% 5.594 2.3%

Financial Management Information System (FMIS) Information 

Services 2.468 5.863 5.619 -4.2% 5.748 2.3%

Individual Master File (IMF) Information 

Services 37.637 12.603 11.869 -5.8% 12.172 2.6%

Information Returns Processing (IRP) Information 

Services 25.290 7.590 7.115 -6.3% 7.306 2.7%

Integrated Collection System (ICS) Information 

Services 16.588 8.872 7.745 -12.7% 7.945 2.6%

Integrated Customer Communications Environment

(ICCE)

Information 

Services 338.681 16.981 14.653 -13.7% 14.977 2.2%

Integrated Data Retrieval Systems (IDRS) Information 

Services 78.955 17.645 15.741 -10.8% 16.151 2.6%

Integrated Financial System/CORE Financial System

(IFS)

IRS Business 

Systems 

Modernization 269.308 16.552 15.123 -8.6% 15.435 2.1%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 0.000 0.000 0.000 0.0% 0.000 0.0%

IRS Taxpayer Services 20-0912-0-1-803 43.628 3.689 0.000 0.0% 0.000 0.0%

IRS Operations Support 20-0919-0-1-803 Information

Services 225.680 12.863 15.123 17.6% 15.435 2.1%

Integrated Submission and Remittance Processing

System (ISRP)

Information 

Services 30.325 16.555 16.774 1.3% 17.123 2.1%

Interim Revenue Accounting Control System (IRACS) -

BAC 99

Information 

Services 0.672 0.812 0.935 15.1% 3.774 303.6%

Modernized e-File (MeF)

Information 

Technology

Investments 259.086 58.650 86.049 46.7% 56.023 -34.9%

IRS BSM 20-0921-0-1-803

Information

Technology

Investments 212.788 45.420 61.300 35.0% 30.500 -50.2%

IRS Taxpayer Services 20-0912-0-1-803 0.000 0.460 7.360 1500.0% 7.534 2.4%

IRS Enforcement 20-0913-0-1-999 3.057 0.776 0.928 19.6% 0.677 -27.0%

IRS Operations Support 20-0919-0-1-803 Information

Services 43.241 11.994 16.461 37.2% 17.312 5.2%

Service Center Recognition/Image Processing System

(SCRIPS)

Information 

Services 42.365 16.951 15.539 -8.3% 15.862 2.1%

Tax Return Database (TRDB) - BAC 99 Information 

Services 22.367 4.836 4.039 -16.5% 4.141 2.5%

Travel Reimbursement and Accounting System

(TRAS) - BAC 99

Information 

Services 1.521 1.428 1.350 -5.5% 0.000 -100.0%

Subtotal, Major IT Investments 2,294.216 459.834 486.081 5.7% 470.291 -3.2%

Non-Major IT Investments 464.189 486.662 547.301 12.5% 564.893 3.2%

Infrastructure Investments 827.632 796.235 924.599 16.1% 948.875 2.6%

IRS/Data Center Systems and Services (Consol) Information

Services 247.191 323.021 431.237 33.5% 438.570 1.7%

IRS/Telecommunications Systems Services Information

Services 231.262 213.293 254.205 19.2% 265.059 4.3%

IRS/End User Systems and Services Information

Services 349.179 259.921 239.157 -8.0% 245.246 2.5%

Enterprise Architecture 4.242 4.391 4.654 6.0% 4.793 3.0%

Total IT Investments 3,590.279 1,747.122 1962.635 12.3% 1,988.852 1.3%

1

 The prior year resources for Electronic Federal Tax Payments (EFTPS) major projectmerged with Enrolled Practitioners Program System (EPPS) non major.

1

IRS-117 
4.2 – PART Evaluation Tables 

PART Name: Tax Collection 

Year PARTed: FY 2002 

Rating Results Not Demonstrated

This program collects tax debts from citizens and businesses. Agents contact taxpayers 

through notices, phone calls, and personal visits to secure payments. If necessary, 

collection agents can use liens, levies, or seizures, or refer delinquent taxpayers for 

criminal prosecution. 

OMB Major Findings/Recommendations 

1. IRS collection of unpaid taxes yields substantial revenue ($18 billion in 2001). 

However, IRS does not work enough collection cases with its current resources, work 

processes, and technology to ensure fair tax enforcement. Each year billions of dollars of 

unpaid taxes goes uncollected. 

2. IRS has been working to make management improvements in the last several years, 

including implementing good output measures. However, its financial management 

systems do not provide the information needed to make effective day-to-day management 

decisions. 

3. IRS has a strong planning process closely linked to its budget process. IRS is 

currently developing improved collection outcome measures and goals. 

Bureau Actions Planned or Underway 

1. Introduce risk-based approaches using reengineering and technology modernization 

efforts to target specific taxpayers with the most effective collection procedure (i.e., 

notice, phone call, or field visit). 

IRS is developing enhancements to the Inventory Delivery System that will provide 

better case routing to improve case selection, delivery, and treatment. Also, IRS is 

developing a plan to deploy a rules engine to simplify routing changes and flexibility in 

order to provide enhancements that ensure the right cases at the right time to the right 

treatment stream that is effective and increases collections and improves compliance. 

2. Legislation has been approved that allows IRS to hire private collection agency 

contractors (PCAs) to secure payment in some cases. The legislation includes strong 

taxpayer rights protections. The contractors will be paid from receipts based on actual 

collections. PCAs cannot accept direct payment or use enforcement tools available to

IRS (e.g. liens, levies and seizures). PCA employees are subject to the same taxpayer 

protection and privacy as the IRS. 

3. Improve Collection selection criteria and filters for balance due and nonfiler cases, 

including identifying and addressing potential high income nonfilers. 

New techniques were tested to route cases by source of assessment with results available 

IRS-118 
beginning in November 2008. If analysis of results is favorable, the Collection Inventory 

Delivery System will be updated with the routing routines. To address nonfilers, the IRS 

approved a Service-wide Nonfiler Strategy in July 2007 and established a Nonfiler 

Governance Council that will stand up in February 2008. The Council will build nonfiler 

workplans by August 2008. 

4. Improve program performance by implementing new tools in 2007 to segment 

collection workload according to risk to ensure IRS takes the right action to secure 

delinquent taxes. 

In May 2007, the Collection Governance Council agreed to the Collection Inventory 

(CACI) recommendations. New case routing rules are being tested to determine best 

routing for specific types of cases. In August 2007, IRS increased the threshold for cases 

assigned to the Automated Collection System (ACS) to $5,000 for cases with two or 

fewer modules. A new case coding routine was implemented to prioritize assignment to 

the field when real estate equity is greater than $50,000. In 2008, the IRS will continue

to test new treatments streams between ACS and field. 

IRS-119 
PART Name: Earned Income Tax Credit 

Year PARTed: FY 2002 

Rating Ineffective

This program administers the earned income tax credit (EITC), which rewards work and 

lifts families out of poverty. The program seeks to maximize participation of eligible 

taxpayers and reduce payments to ineligible taxpayers. 

OMB Major Findings/Recommendations 

1. The program has failed to reduce erroneous EITC payments to acceptable levels. 

While IRS prevents roughly $1 billion in erroneous EITC payments per year, 27 to 

32 percent of all EITC payments were still made in error for 1999. The magnitude of this 

error rate is the reason for the rating of “ineffective.” 

2. IRS has a strong planning process closely linked to its budget process, but it has not 

yet used outcome information for this program to set performance targets that allow it to 

demonstrate results. 

3. IRS has made numerous management improvements in recent years. However, its 

financial management systems do not provide the information needed to make effective 

day-to-day management decisions. 

Bureau Actions Planned or Underway 

1. IRS will require high-risk EITC applicants to pre-certify that the children claimed on 

their return are really qualifying children under EITC. Incorrectly claimed qualifying 

children have been a major source of EITC error. High-risk applicants will be identified 

through databases such as the Federal Case Registry (information on child custody) and 

by focusing on taxpayers with characteristics linked to high error rates in compliance 

studies (e.g., relatives other than parents who claim a child for EITC purposes). 

EITC overclaim estimates are currently measured through National Research Program

(NRP) study, which looks at prior year return information and economic modeling to 

account for tax law changes. Starting in 2009, the IRS new multi-year NRP studies with 

EITC-specific components will yield annual estimates of EITC error starting with TY

2006 and provide detailed information on areas of error. This new data point will allow 

for more directed compliance treatments than in the past. 

2. Improve program performance by conducting 500,000 examinations of EITC returns 

per year based on enhanced case selection systems. 

IRS will deliver its annual base EITC compliance programs including processing 

approximately 400,000 math errors, conducting 500,000 examinations, and reviewing 

350,000 underreporter cases to protect over $2.6 billion annually, while also improving 

case scoring. 

IRS-120 
3. Improve program performance by identifying paid tax return preparers with high EITC 

error rates and using education and enforcement procedures to improve their 

performance. 

IRS will continue implementing its updated Concept of Operations (CONOPS), which 

outlines a holistic approach to address the various influences affecting EITC error rates

by return preparers. With the CONOPS’ main focus on paid preparers, IRS will continue 

identification, testing, analysis and implementation of preparer compliance treatments 

and outreach that affect behavior. 

IRS-121 
PART Name: Submission Processing 

Year PARTed: FY 2003 

Rating Moderately Effective 

This program processes 224 million tax returns and 1.5 billion information returns (such 

as bank reports on taxpayer’s interest income) each year and issues 109 million refunds. 

In 2005, more than half of individual tax returns were submitted electronically. 

OMB Major Findings/Recommendations 

1. More Americans are electronically filing their taxes. Electronic filing is growing

more than 10 percent per year. However, this growth is not sufficient for IRS to meet the 

legislative goal of 80 percent electronic filing by 2007. Congress has not yet acted on the 

Administration’s proposals to accelerate the increase in electronic filing.

2. Every return converted from paper to electronic filing saves the IRS $2.15 in 

processing costs. More importantly, electronically filed returns have a less than 1 percent 

error rate compared to 5 percent for paper filed returns, saving taxpayers time and money. 

Finally, according to the annual American Customer Satisfaction Results report, 

electronic filers have high satisfaction rates. 

 

3. Based on the recently completed IRS tax gap study, approximately 13 percent of 

refund dollars (excluding earned income tax credit refunds) are paid in error. With 

current third party reporting and technology, IRS is unable to identify and prevent these 

errors during processing. 

Bureau Actions Planned or Underway 

1. Improve program performance by seeking legislative changes to promote electronic 

filing, including greater authority to require electronically filed returns. 

Although the Administration has continued its proposals to accelerate the increase in 

electronic filing, Congress has not yet acted on those proposals. At the current growth 

rate, the IRS projects the 80 percent electronic filing rate will be achieved in 2012. 

2. Improve performance by setting goals by 2007 for reduced taxpayer filing burden 

resulting from the time and expense of preparing and filing their returns. 

IRS and its contractor continue to work on a model of compliance burden among small 

business taxpayers. The small business study focuses on the burden that occurs in the 

pre-filing and filing periods and extends to burdens associated with not only the 

individual's tax return but also to employment and excise tax requirements. Preliminary 

estimates were released in FY 2007 and IRS intends to have the model in full production 

by the summer of 2008 and to publish burden estimates using the model late in 2008. An 

upcoming S-Corp burden reduction project in January 2008 will provide alternative 

methods of relief for those taxpayers who file late Forms 1120S (small business 

elections). The IRS also plans an Employment Tax Return project that involves the 

design of new forms by 2009 that will be used to correct employment tax reporting errors 

IRS-122 
or to claim refunds. The new forms are designed to reduce burden for taxpayers who 

need to correct their returns or claim refunds for overpayment. 

3. Improve program performance by using a single cost based efficiency measure by 

2008 (cost per return processed). 

The IRS has established an office responsible for developing a managerial cost 

accounting program and issued a service-wide cost policy in August 2007. At this time, 

managerial cost accounting is in its initial stages and actions are focused on identifying 

the systems and methodology to appropriately match cost and performance information. 

Until the objectives of the service-wide cost program have been clearly defined and 

determinations made on how costs will be accumulated at the bureau level, there are no

pending activities associated with developing cost-based measures for specific programs. 

Specific improvement actions will be more clearly defined in the future and this 

improvement action will be re-activated. 

4. Employ technology and operational improvements to process returns and refunds more 

accurately and efficiently by providing a single electronic pipeline for capturing and 

processing data. 

IRS will finalize plans and costing estimates to modernize the submission processing

function. The vision of the future system, Modernized Submission Processing (MsP), 

will process Form 1040 tax returns, information returns, and miscellaneous documents 

(processed via the Service Center Recognition/Image Processing System-SCRIPS) 

submitted via paper, utilizing a state-of-the-art, efficient image and data extraction 

system using Optical Character Recognition technology to extract data electronically. 

With a phased approach, MsP will replace current paper processing to achieve the 

Submission Processing domain vision strategy. 

IRS-123 
PART Name: Taxpayer Service 

Year PARTed: FY 2004 

Rating Adequate

This program reduces taxpayer burden by providing assistance on tax law and account 

issues in a professional and courteous manner. In 2005, the IRS answered 59 million

calls, served 6.6 million taxpayers in walk-in offices, and had almost 116 million 

downloads from its forms, instructions and publications web site. 

OMB Major Findings/Recommendations 

1. IRS has significantly improved taxpayer service and maintained high levels of 

customer satisfaction in recent years. In 2001, IRS was able to answer only 62 percent of 

taxpayer calls. In 2005, IRS had improved this to 83 percent with a 94 percent customer 

satisfaction rate. 

2. IRS continues to have trouble with the accuracy of answers. In 2004, IRS estimates 

only 80 percent of tax law calls were answered accurately (improved to 89 percent in 

2005). Accuracy is a significant challenge given the complexity of the tax code. 

3. IRS has developed a strong set of balanced measures (quality, customer satisfaction, 

and results) to understand its taxpayer service performance. During the assessment, IRS 

added an efficiency measure (customer contacts per staff year) for this program. 

Bureau Actions Planned or Underway 

1. Improve program performance by converting to cost based efficiency measures for the 

2008 budget (e.g., cost per call answered) and adding efficiency measures for service 

processes for management. 

The IRS has established an office responsible for developing a managerial cost 

accounting program and has issued a service-wide cost policy in August 2007. At this 

time, managerial cost accounting is in its initial stages and actions are focused on 

identifying the systems and methodology to appropriately match cost and performance 

information. Until the objectives of the service-wide cost program have been clearly 

defined and determinations made on how costs will be accumulated at the bureau level, 

there are no pending activities associated with developing cost based measures for 

specific programs. Specific improvement actions will be more clearly defined in the 

future and this improvement action will be re-activated. 

2. Explore the mix of service options (phones, walk-in, internet, volunteer services) to 

ensure that the most efficient and effective means is used to deliver service. 

During 2006 - 2007, the IRS delivered Phases 1 and 2 of the Taxpayer Assistance 

Blueprint (TAB) Report to Congress. The report provides results, actions, and 

recommendations on the appropriate mix of service options (phones, walk-in, internet, 

and volunteer services) to ensure that the most efficient and effective means are used to 

deliver services. The report includes the TAB Strategic Plan, which provides a portfolio 

IRS-124 
of over 50 recommended service investments that balance taxpayer needs and preferences 

with government value. Integration of the TAB Strategic Plan into the IRS Strategic 

Planning process will begin in January 2008. The significant recommended service 

investments scheduled for implementation in FY 2008 include providing toll-free callers 

with an Estimated Wait Time (EWT) while on hold for toll-free applications. IRS plans 

to collect and analyze the data on accuracy of EWT and the impact on taxpayer behavior 

and use the results to design an optimum strategy and goals for EWT. In addition, 

implementation of Contact Analytics (CA) will increase the ability to effectively identify

and respond to customer service problems. CA will expand functionality with additional 

software that captures data for all calls on all Toll-free product lines. Capabilities of CA 

include recording of all contacts and the ability to store the recording for analysis and 

tracking across the network resulting in improved taxpayer service. The web-based 

application "Where's My Refund?" continues to provide an efficient method for taxpayers 

to check the status of their refunds, initiate an on-line refund trace, and provide an 

updated address if their refund was not deliverable as originally addressed. During the 

2007 filing season (January through June 2007), the application provided information to 

30 million taxpayers, which is approximately a 28 percent increase from the same period 

for 2006. In FY 2008, IRS will further expand online refund inquiry capabilities by 

introducing a version of "Where's My Refund?" for Spanish-speaking taxpayers. 

Beginning in FY 2008, the IRS deployed the Facilitated Self Assistance Research Project 

(FSRP) at 15 Taxpayer Assistance Centers (TAC). FSRP provides taxpayers with the 

ability to help themselves to IRS services from internet-connected computers located in 

the Taxpayer Assistance Centers (TAC) via IRS.gov. Analysis of results from the first 15 

sites will be used to determine further deployment. 

3. Improve program performance by researching the impact of taxpayer service programs 

on voluntary compliance and reporting findings by 2008. 

IRS plans to research the impact of taxpayer service programs on voluntary compliance 

and reporting findings in FY 2008. The effect of service on taxpayer compliance will be 

examined by focusing on the following four areas: meeting taxpayer needs by providing 

the right channel of communication, better understanding taxpayer burden, understanding 

taxpayer needs through the errors they make, and the impact of service on overall levels 

of voluntary compliance. The research will attempt to quantify the relationship between 

services provided and overall compliance. 

4. Improve the accuracy and consistency of tax law information provided to taxpayers by 

developing and implementing a single tool for use by walk-in and telephone assistors. 

The IRS is developing an on-line interactive tool that combines the content of the Probe 

& Response Guide (P&R Guide) used by toll-free telephone assistors and the Publication 

Method Guide (PMG) used by Taxpayer Assistance Center (TAC) assistors into one tool 

for use when answering tax law questions. The tool supports the TAB initiative to 

provide consistent, quality service to taxpayers across different service delivery channels. 

IRS-125 
PART Name: Taxpayer Advocate Service 

Year PARTed: FY 2004 

Rating Moderately Effective 

This program helps taxpayers solve tax problems when normal IRS systems have failed 

to treat them fairly. It serves as an independent advocate within the IRS for individuals 

and proposes solutions to systemic problems. 

OMB Major Findings/Recommendations 

1. The quality of the Advocate’s case work on behalf of taxpayers has improved from 

71 percent with quality standards in 2001 to 90.5 percent in 2004. 

2. Taxpayer hardship cases caused by flaws in IRS business processes have declined 

from 217,081 in 2001 to 129,382 in 2004 as the Advocate has worked with IRS program 

managers to improve processes. 

3. During the assessment, the program set goals and developed an efficiency measure. 

These include achieving a 100 percent closure-to-receipts ratio through 2010, 95 percent 

case quality score by 2009, and 4.53 (out of 5) customer satisfaction score by 2009. 

Efficiency is measured by counting the reduction in the quantity of taxpayer problems 

resulting from flaws in IRS’ business processes. 

Bureau Actions Planned or Underway 

1. Improve program performance by developing a unit cost measure for its casework by 

2008. 

Phase I of a new time reporting system was implemented that gives TAS the ability to 

automatically capture the amount of time spent on cases, from receipt through closure, 

when a case is accessed through TAMIS. The system provides for reporting time by case 

characteristics such as criteria code (the reason a case is accepted), core issue (the

problem type), and type of system user (e.g., case advocate, manager, analyst, etc.). The 

work request for Phase II is complete and, when implemented, will provide a graphical 

front-end screen that allows users to capture time spent on cases when TAMIS is not used 

(e.g., research, telephone calls, etc.). The Phase II WR was submitted with an expected

implementation date of December 2008. TAS must have time data along with fiscal data 

and case complexity results before a costing system can be developed. In the interim, 

two case advocacy cost indicators have been developed: Closed Cases per Case 

Advocacy Full Time Equivalent (FTE) and Closed Cases per Direct FTE. In FY 2009, 

TAS will track reliability and utility of Phase II time data results and results from case 

advocacy cost indicators and explore opportunities for integrating the data with 

performance metrics. 

2. Improve program performance by exploring other means to measure effectiveness in 

solving systemic problems leading to taxpayer hardship. IRS will report its findings in 

2006 for possible inclusion in its FY 2008 Budget (findings delayed until 2007). 

 

IRS-126 
During FY 2007, TAS implemented a formal quality review process and established 

baseline measures for quality and timeliness of closed Advocacy Projects and Immediate 

Interventions.1

 FY 2008 targets for TAS’s quality measures have been developed and 

have been shared with the IRS Oversight Board. TAS also developed and administered 

its first internal customer satisfaction survey and will analyze results during FY 2008. 

TAS is baselining data for efficiency and effectiveness and plans to establish FY 2009-

2011 performance targets by the end of FY 2008. 

TAS is also working to develop a set of outcome measures to track progress on 

improving case referrals from IRS Operating Divisions and is conducting a study with 

Wage & Investment on the referral of amended returns due to processing delays. 

Throughout FY 2008, TAS will continue to identify similar efforts with other Divisions. 

3. Improve financial information as part of the IRS-wide financial management 

improvements. 

The IRS has established an office responsible for developing a managerial cost 

accounting program and issued a service-wide cost policy in August 2007. At this time, 

managerial cost accounting is in its initial stages and actions are focused on identifying 

the systems and methodology to appropriately match cost and performance information. 

Until the objectives of the service-wide cost program have been clearly defined and 

determinations made on how costs will be accumulated at the bureau level, there are no

pending activities associated with developing cost-based measures for specific programs. 

Specific improvement actions will be more clearly defined in the future and this 

improvement action will be re-activated. 

4. Improve program performance by improving case quality to 91.5 percent by 2006, 93 

percent by 2009, and 95 percent by 2014. 

TAS fell just short of the goal in FY 2007 with a cumulative quality rate of 90.5 percent 

due to rising case receipts, complexity of case issues, and reduced staffing. From 2004 to 

2007, case receipts increased 47 percent while the number of advocates to work cases 

decreased by 18 percent. TAS’s case quality index goal for FY 2009 has been changed to 

91.7 percent. 

 

1

Advocacy Projects are issues submitted by taxpayers, practitioners, and IRS personnel that suggest that a 

law, regulation, or IRS procedure is creating a systemic problem for taxpayers. An Immediate Intervention

is an administrative issue, identified internally or externally, that causes immediate, significant harm to

multiple taxpayers and demands an urgent response.

IRS-127 
PART Name: Criminal Investigations

Year PARTed: FY 2005 

Rating Moderately Effective 

This program ensures taxpayers comply with their tax obligations by investigating 

possible criminal violations of the tax code. Conviction of tax cheaters deters tax evasion 

among the general public and helps reassure taxpayers that the system is fair. 

OMB Major Findings/Recommendations 

1. The tax gap, the difference for a given year between taxes legally owed and taxes 

actually paid, for 2001 (latest available figure) is estimated to be $345billion.2 Criminal 

Investigation is one of the major IRS programs intended to minimize this revenue loss. 

2. Research suggests that higher levels of criminal sentences lead to higher tax 

compliance. IRS has succeeded in raising convictions in recent years. They rose from

1,926 in 2002 to 2,215 in 2005. However, they remain low by historical standards (in 

1996 convictions totaled 2,915). 

3. IRS has set long-term goals and efficiency measures. However, it has difficulty 

measuring compliance in a timely manner due to the complexity and expense involved

and in holding employees accountable for performance due to legal restrictions. 

Bureau Actions Planned or Underway 

1. Implement Criminal Investigation Management Information System (CIMIS) 

enhancements to address the consolidation of areas, offices, and the movement of 

workgroups. 

Currently, CIMIS supports closing organizations, but not moving, merging, and splitting 

organizations. CIMIS release 2.2 will provide the capability to define moves, merges and 

splits and have the new organization structure reflected in user interfaces, reports and 

scoping logic. This CIMIS enhancement will allow CI the flexibility to adjust the 

organizational structure to more effectively and efficiently track performance and 

strategic goals. The enhancement is scheduled to be implemented by Q4 FY 2008. 

2. Implement the Investigative Scanning and Document Management System (ISDM). 

The ISDM will increase efficiency and effectiveness of CI employees by enabling them

to image, view, search, and manage all types of documentation generated and received 

during the course of criminal investigations. ISDM will allow employees to scan paper 

documents, converting them to an electronic format and linking them to on-going 

investigations. With the enhancement, employees can apply key word identifiers to 

enhance search and indexing capabilities allowing CI Special Agents to more efficiently 

 

2

 This figure has been updated to the most current data and differs from what is published on the OMB

ExpectMore.gov website. The tax gap as measured does not include the criminal sector, but tax fraud 

prosecutions have a large indirect effect on compliance. 

IRS-128 
gather, organize and summarize evidence. Design of the enhancement and prototype will 

be developed in FY 2008 and the initial roll-out to selected field office will occur during 

FY 2009. Final roll-out and training will continue through FY 2010, with all field offices 

completed as funding is applied. The ISDM is part of the Enterprise Content 

Management (ECM) effort sponsored by the Treasury Department under the Terrorism 

and Financial Intelligence (TFI) Domain for Law Enforcement. 

3. Implement a pilot program to improve the effectiveness of the Suspicious Activity 

Report (SAR) Review Teams. 

SAR Review Teams review reports from financial institutions detailing suspicious

monetary transactions. Review of the reports often leads to significant tax, money 

laundering, and narcotic investigations. The pilot program will maximize resources 

through co-location, use of deputized state and local officers, and strong U.S. Attorney 

Office support to increase the efficiency and effectiveness of the SAR Review Teams. 

The pilot will be implemented in seven CI offices by the end of FY 2008, with additional 

offices to be included in FY 2009. If the pilot is successful, it will result in the increased 

identification and prosecution of administrative criminal tax, money laundering, and 

currency crime investigations. It will also enhance the notification of law to individuals 

on currency transaction legislations and benefit compliance with regulations and 

strengthen future criminal investigations by documenting knowledge. 

IRS-129 
PART Name: Examinations 

Year PARTed: FY 2005 

Rating Moderately Effective 

This program ensures that citizens pay the correct tax by auditing returns at a high risk 

for non-compliance. Audits help ensure individuals comply with their tax obligations, 

deter tax evasion among the general public, and help reassure taxpayers that the system is 

fair. 

OMB Major Findings/Recommendations 

1. The tax gap, the difference for a given year between taxes legally owed and taxes 

actually paid, for 2001 (latest available figure) is estimated to be $345 billion. 3 

Examination is one of the major IRS programs intended to minimize this revenue loss. 

2. After dropping substantially in the late 1990s, IRS audit rates have begun to rise and 

will continue to increase, largely through productivity growth. IRS audit rates have 

grown from a low of 1.49 percent (i.e., less than two returns in one hundred audited) in 

2001 to 3.09 percent in 2005. 

3. IRS has set long-term goals and efficiency measures. However, it has difficulty 

measuring compliance in a timely manner due to the complexity and expense involved

and in holding employees accountable for performance due to legal restrictions. It also 

needs cost based efficiency measures. 

Bureau Actions Planned or Underway 

1. Research tax compliance of S-corporations (a popular business form where profits are 

passed through to the owners and taxed only once) based on a statistically valid sample of 

the filing population. 

By June 2008, the S-corp compliance study will be completed. Design of sampling and 

exam procedures have been completed to generate the data for the study and the sample 

has been identified. The IRS is on target for completion of data collection in FY 2008. 

Results will be analyzed and tax gap estimates will be updated to help in the 

understanding of compliance issues. 

2. Improve tools for selecting the most productive audit cases by 2007 using the detailed 

compliance information gathered in the recent individual tax gap study. 

On October 2007, selection, classification and auditing of individual returns based on 

updated selection scores (DIF) began with results available to begin evaluating 

effectiveness of new scoring by October 2008. By September 2009, the IRS will use 

information from the Subchapter S-corps National Research Project to enhance return

selection and examination. Returns selected for examination in late FY 2007 will begin 

 

3

 This figure has been updated to the most current data and differs from what is published on the OMB

ExpectMore.gov website. 

IRS-130 
to show results in late FY 2008. IRS anticipates improved selection and possible 

reductions in "no change" rates. 

3. Improve program performance by introducing cost based efficiency measures by 2008 

(e.g., enforcement revenue/program budget). 

The IRS has established an office responsible for developing a managerial cost 

accounting program and issued a service-wide cost policy in August 2007. At this time, 

managerial cost accounting is in its initial stages and actions are focused on identifying 

the systems and methodology to appropriately match cost and performance information. 

Until the objectives of the service-wide cost program have been clearly defined and 

determinations made on how costs will be accumulated at the bureau level, there are no

pending activities associated with developing cost-based measures for specific programs. 

Specific improvement actions will be more clearly defined in the future and this 

improvement action will be re-activated. 

4. Undertake compliance study on individual income tax returns. 

In October 2007, IRS began reporting for the Tax Year (TY) 2006 individual income tax 

returns, and by October 2008 will begin reporting for the TY 2007 individual income tax 

returns. IRS has completed the design of procedures for sampling on the TY 2006 

returns, has already identified 95.5 percent of the sample, and has completed 

classification of 81 percent of the sample. 

5. Explore methods for measuring the impact of Examination on compliance. New 

efforts could include studies of the impact of audits on future compliance of audited 

taxpayers and attitude surveys. 

By September 2008, IRS will increase the number of Schedule C audits by 7 percent to 

address the individual business income underreporting gap. By September 2009, IRS 

will add another 5 percent to the increase. IRS also plans to update current tax gap 

estimates using new and existing data. By June 2008, the S-corp compliance study 

results will be released and used to update payment compliance estimates, and by June 

2009, both payment and filing estimates will be updated. 

IRS-131 
PART Name: Retirement Savings Regulatory Program

Year PARTed: FY 2006 

Rating Adequate

This program ensures that tax breaks provided to encourage retirement savings are only 

allowed for retirement plans that follow minimum standards. The law requires that plans 

follow participation, funding and vesting standards and provide some protection for the 

surviving spouse of the plan participants. 

OMB Major Findings/Recommendations 

1. The IRS cooperates with the Department of Labor and the Pension Benefit Guarantee 

Corporation to protect retirement investors and to ensure that retirement-related tax 

breaks are used for their intended purposes. Tax breaks to retirement plans to encourage 

savings total more than $100 billion per year. 

2. Preliminary data from the program's compliance study shows that retirement plans are 

in compliance with legal standards 80 percent of the time.

4

 The IRS is working to 

improve this level by increasing enforcement efforts and improving targeting. This 

compliance study is a critical element in this effort because it gives the IRS better 

information on the sources of non-compliance. 

 

3. IRS has had trouble processing requests for regulatory approval from retirement plans 

in a timely manner (less than 120 days). It is working to improve its performance in this 

area by implementing a new staggered schedule for retirement plan renewal requests and 

improving productivity. 

Bureau Actions Planned or Underway 

1. Introducing cost based efficiency measures by 2008. 

The IRS has established an office responsible for developing a managerial cost 

accounting program and issued a service-wide cost policy in August 2007. At this time, 

managerial cost accounting is in its initial stages and actions are focused on identifying 

the systems and methodology to appropriately match cost and performance information. 

Until the objectives of the service-wide cost program have been clearly defined and 

determinations made on how costs will be accumulated at the bureau level, there are no

pending activities associated with developing cost based measures for specific programs. 

Specific improvement actions will be more clearly defined in the future and this 

improvement action will be re-activated. 

2. Implement electronic case file development system to improve timeliness and 

efficiency of the examination process.

Milestones: 

 

4

 Further study shows the baseline for compliance with legal standards has been reduced to 73 percent.

IRS-132 
January 2008 - Implement release to address technical and performance issues with 

application 

March 2008 - Complete training and roll-out of system to all groups. 

3. Implement staggered amendment process and review initial experience to further 

enhance determination processing efficiency. 

Milestones: 

March 2008 - Complete review of first set of pre-approved plan applications for defined 

contribution plans. 

April 2008 - Initiate technical review for defined benefit pre-approved plan applications. 

December 2008 - Develop recommendations to refine staggered amendment process.

4. Streamline voluntary compliance program and expand access for small businesses. 

Milestones: 

June 2008 - Issue new procedures to make it easier for small employers to self-correct 

plan defects. 

September 2008 - Expand marketing and outreach to promote voluntary compliance 

options to small business owners. 

IRS-133 
PART Name: Health Care Tax Credit Administration 

Year PARTed: FY 2006 

Rating Results Not Demonstrated

This program administers the Health Insurance Tax Credit, which helps displaced 

workers and retirees afford health insurance. It is intended to benefit workers who have 

lost their jobs due to trade with countries that participate in free trade agreements (e.g., 

the North America Free Trade Agreement). 

OMB Major Findings/Recommendations 

1. The program's measures do not adequately capture the program's success in providing 

access to the credit to potential beneficiaries. 

2. This credit has low participation. This can be attributed to the time it takes for other 

agencies to identify potentially eligible workers and for the IRS to enroll them. Another 

likely cause is the affordability of coverage to potential recipients. It is also possible that 

many of those identified as potentially eligible may ultimately not quality. 

3. The IRS successfully implemented this unique tax credit in 2003. This required the 

creation of a new process outside of the normal tax filing system in a short timeframe. 

Since that time, in response to the low take-up, the IRS has successfully reduced the cost 

of administering the credit by 50 percent. 

Bureau Actions Planned or Underway 

1. Work with other participating federal agencies to develop long term goals by 2011 that 

capture the program's success in providing access to the tax credit to potential 

beneficiaries. 

In FY 2007, IRS completed a study of the time it takes individuals to enroll in the 

program once they receive the program kit. Results indicate participants can be enrolled 

and receive their first payment within 26 days (on average). IRS continues to work with 

DOL, state agencies, and the Pension Benefit Guaranty Corporation to understand the 

timelines and the steps necessary to encourage participation and improve access to the 

credits in an effort to identify the objectives to measure. 

2. Work with partner federal agencies to find ways to improve access to the tax credit for 

eligible workers. 

3. Continue to focus on administrative changes to lower program cost and improve 

taxpayer service. 

HCTC will implement cost efficient processes such as systemic performance testing and 

automation of manual processes. Improvements will include automation of critical 

repeatable processes necessary as participation increases. For this aged program, 

technical and process improvements have been identified to promote economies of scale 

to drive down costs and new efficiency-focused processes and technology is planned to 

IRS-134 
allow for systemic processing of annual premium changes, reducing costs associated with 

participants for whom a payment has not been made to a health plan administrator for 

three consecutive processing cycles. Also, IRS plans to streamline processing of 

payments by automating manual processes and accounting entries to eliminate manual 

work. IRS will also continue to identify data retrieval enhancements that allow the 

customer service representatives to provide consistent and timely customer service. As 

participation increases, technology costs will drop through continuous data management, 

archiving, and virtualization efforts. In FY 2008, HCTC will continue to look for 

opportunities to automate business processes and improve operations. HCTC will 

examine opportunities to improve the infrastructure and business system processes, 

including a payment processing solution, an automated premium increase solution, 

automation of the refund process, simplification of re-registration processes, and 

expansion of fax channels. New self-service channels are planned that provide taxpayers 

with more efficient assistance through web applications. 

IRS-135 
 4.3 – IRS Performance Measure Table and Data Dictionary Link 

The following table shows IRS performance measures achieved and projected from FY 

2006 through FY 2009. 

Performance Measures

Type of 

Measure

FY 2006

Actual

FY 2007

Actual

FY 2007 

Planned

FY 2008 

Planned

FY 2009 

Planned

Customer Service Representative Level of Service Oe, L 82.0% 82.1% 82.0% 82.0% 82.0%

Customer Contacts Resolved per Staff Year E 7,414 7,648 7,702 8,000 8,100

Percent of Eligible Taxpayers Who File for EITC Oe * * 75% - 85% 75% - 80% 75% - 80%

Customer Accuracy - Tax Law (Phones) Ot 90.9% 91.2% 91.0% 91.0% 91.0%

Customer Accuracy - Accounts (Phones) Ot 93.2% 93.4% 93.3% 93.5% 93.7%

Timeliness of Critical Filing Season Tax Products to the Public Ot 83.0% 83.5% 85.2% 86.0% 86.0%

Timeliness of Critical Other Tax Products to the Public Ot 61.2% 84.0% 79.6% 86.0% 86.0%

Percent Individual Returns Processed Electronically Oe, L 54.1% 57.1% 57.0% 61.8% 64.7%

Cost per Taxpayer Served ($) (HCTC) E $13.71 $14.90 $14.25 $14.25 $14.25

Sign-Up Time (Days) - Customer Engagement (HCTC) Ot 98.7 93.3 97.0 97.0 97.0

Percent of Business Returns Processed Electronically Oe, L 16.6% 19.1% 19.5% 20.8% 22.8%

Refund Timeliness - Individual (Paper) Ot 99.3% 98.9% 99.2% 98.4% 98.4%

Taxpayer Self-Assistance Rate E, L 46.8% 49.5% 48.6% 51.5% 52.5%

Examination Coverage - Individual Oe, L 1.0% 1.0% 1.0% 1.0% 1.0%

Field Exam Embedded Quality Oe, L 85.9% 85.9% 87.0% 87.0% 87.0%

Office Exam Embedded Quality Oe, L 88.2% 89.4% 89.0% 90.0% 90.0%

Examination Quality - Industry Oe, L 85.0% 87.0% 88.0% 88.0% 89.0%

Examination Quality - Coordinated Industry Oe, L 96.0% 96.0% 97.0% 96.0% 96.0%

Examination Coverage - Business Oe, L 7.3% 6.8% 8.2% 6.6% 6.8%

Examination Efficiency - Individual E, L 128 137 136 133 134

Automated Underreporter Efficiency E, L 1,832 1,956 1,932 1,961 1,823

Automated Underreporter Coverage E, L 2.4% 2.5% 2.5% 2.5% 2.5%

Collection Coverage (Units) Ot, L 54.0% 54.0% 54.0% 53.0% 53.0%

Collection Efficiency (Units) E, L 1,677 1,828 1,723 1,835 1,835

Field Collection Embedded Quality Ot, L 84.2% 84.0% 86.0% 86.0% 86.0%

Automated Collection System Accuracy Oe 91.0% 92.9% 91.0% 92.0% 92.0%

Criminal Investigations Completed Ot, L 4,157 4,269 4,000 4,000 4,025

Number of Convictions Oe, L 2,019 2,155 2,069 2,135 2,135

Conviction Rate Oe, L 91.5% 90.2% 92.0% 92.0% 92.0%

Conviction Efficiency Rate ($) E, L $328,750 $301,788 $314,008 $317,625 $317,625

TE/GE Determination Case Closures Ot 108,462 109,408 118,200 100,600 98,000

BSM Project Cost Variance by Release/Subrelease E ** ** 10.0% 10.0% 10.0%

BSM Project Schedule Variance by Release/Subrelease E   10.0% 10.0% 10.0%

**  The Cost and Schedule Variance is based on +/- 10 percent and reported on several project releases/subreleases.

IRS Performance Measures

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long-Term Goal

* The IRS is revising the methodology for estimating the eligibility rate. Data is not available.

Data Dictionary Link for Performance Measures 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.irs.gov/pub/irs-utl/2008_data_dictionary.pdf

IRS-136 
4.4 – Summary of IRS FY 2009 Budget Request Bureau: Internal Revenue Service ENFORCEMENT ENFORCEMENT BSM HITCA TOTAL Summary of IRS 2009 Budget Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE FY 2008 Enacted $2,150,000 31,218 $4,780,000 47,349 $3,680,059 12,181 $3,612,833 36,066 $6,997,226 54,682 $267,090 358 $15,235 17 $10,892,384 91,123 Changes to Base: Maintaining Current Levels $54,726 $126,003 $82,580 $86,261 $177,048 $1,354 $322 $264,985

Pay Annualization 14,435 33,184 9,883 18,332 39,170 332 20 57,854Pay Inflation Adjustment 38,823 87,006 25,399 48,838 102,390 1,022 53 152,303Non-Pay Inflation Adjustment 1,468 5,813 47,298 19,091 35,488 249 54,828

Transfers ($1,000) ($1,370) ($523) ($1,847) ($2,370)

Transfer to TIGTA (1,370) (523) (847) (1,370)Transfer to FinCEN (1,000) (1,000) (1,000)

Efficiencies/Savings ($14,969) (207) ($48,762) (538) ($30,367) (230) ($37,415) (298) ($56,683) (677) ($151) (1) ($94,249) (976)

Efficiency Savings (48,762) (538) (22,443) (230) (14,522) (91) (56,683) (677) (151) (1) (71,356) (769)Increase e-File Savings (8,996) (207) (1,304) (10,300) (207) (10,300) (207)Non-Recur Savings (5,973) (6,620) (12,593) (12,593)

Reinvestments $4,463 30 $28,141 $19,294 30 $13,310 $32,604 30

Increase Efficiency through Submission Processing Consolidations 2,006 2,006 2,006Address Correspondence Inventory 2,457 30 2,457 30 2,457 30Fully Fund Postage Base 28,141 14,831 13,310 28,141

Subtotal Changes to Base $44,220 (177) $76,241 (538) $78,984 (230) $67,617 (268) $131,828 (677) $1,354 $171 (1) $200,970 (946)Total FY 2009 Base - Current Services $2,194,220 31,041 $4,856,241 46,811 $3,759,043 11,951 $3,680,450 35,798 $7,129,054 54,005 $268,444 358 $15,406 16 $11,093,354 90,177Program Changes

Program Decreases:

Taxpayer Assistance Centers and Outreach (31,200) (262) (31,200) (262) (31,200) (262)Taxpayer Advocate Service (7,711) (25) (7,711) (25) (7,711) (25)Volunteer Income Tax Assistance Grants Program (8,000) (8,000) (8,000)Business Systems Modernization (45,780) (25) (45,780) (25)

Subtotal, Program Decreases ($46,911) (287) ($46,911) (287) ($45,780) (25) ($92,691) (312)

Program Increases:

Enforcement InitiativesReduce the Tax Gap for S

mall Business / Self-Employed 2,691 38 132,093 1,570 33,714 2,691 38 165,807 1,570 168,498 1,608

Reduce the Tax Gap for Large Businesses 57,009 515 12,479 4 69,488 519 69,488 519Improve Tax Gap Estimates, Measure

ment, and Detection of Non-Compliance 35,473 359 15,585 34 51,058 393 51,058 393

Increase Reporting Compliance of U.S. Taxpayers 

with Offshore Activity 11,075 124 2,622 13,697 124 13,697 124

Expand Document Matching 25,376 413 9,684 35,060 413 35,060 413Implement Legislative Proposals to Improve Compliance 23,045 23,045 23,045

Subtotal, Program Increases $2,691 38 $261,026 2,981 $97,129 38 $2,691 38 $358,155 3,019 $360,846 3,057

Subtotal FY 2009 Progra

m Changes ($44,220) (249) $261,026 2,981 $97,129 38 ($44,220) (249) $358,155 3,019 ($45,780) (25) $268,155 2,745

Total FY 2009 Request $2,150,000 30,792 $5,117,267 49,792 $3,856,172 11,989 $3,636,230 35,549 $7,487,209 57,024 $222,664 333 $15,406 16 $11,361,509 92,922

OPERATIONS 

SUPPORT

TAXPAYER

SERVICES TAXPAYER SERVICE

IRS-137 
Treasury Forfeiture Fund 

Mission Statement 

To affirmatively influence the consistent and strategic use of asset forfeiture by law 

enforcement bureaus participating in the Fund to disrupt and dismantle criminal 

enterprises. 

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Treasury Forfeiture Fund Obligated Estimated Estimated $ Change % Change 

Asset Forfeiture Fund $391,512 $438,000 $356,000 ($82,000) -18.72%

Total Resources $391,512 $438,000 $356,000 ($82,000) -18.72%

The FY2008 estimate includes obligations from a carryover of $160.117 million. The Fund incurs expenses 

immediately upon the start of the new fiscal year; therefore, the carryover is required for each year. 

FY 2009 Priorities 

Use of high-impact forfeiture to dismantle criminal enterprise: 

• Continue to cultivate and strengthen relationships at the Federal and state and 

local levels to use high-impact asset forfeiture to disrupt and dismantle 

criminal enterprise. 

• Educate and focus stakeholders and others on the vision and mission of 

Treasury’s multi-Departmental asset forfeiture program. 

• Focus resources in a high-impact manner that enhances enforcement against: 

terrorist financing, illegal immigration, bulk cash smuggling, and money 

laundering, providing support to the National Money Laundering Strategy.

• Foster and support the investment of forfeiture resources in the needs of our 

participating law enforcement bureaus, including new technologies and data 

collection, in order to promote program excellence and strengthen the overall 

quality of high-impact criminal investigations, and 

• Reinforce relationships with member bureaus that extend across Departmental 

boundaries and with state, local and foreign law enforcement agencies that 

“extend the reach” of federal law enforcement.

• Develop and modify forfeiture training and awareness programs that are 

responsive to today’s needs and continually re-evaluate such training 

initiatives for best practices. 
Table of Contents 

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

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

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

1C – Industry Outlook .................................................................................................... 2 

Section 2 – Budget Adjustments and Appropriation Language................................... 3

2.2 – Operating Levels Table.......................................................................................... 3 

2.3 – Resource Detail Table............................................................................................ 3 

2B – Appropriations Language and Explanation of Changes......................................... 3 

2C – Legislative Proposals ............................................................................................. 3 

Section 3 – Budget and Performance Plan ..................................................................... 4

3.1 – Budget by Strategic Outcome ................................................................................ 4 

3A – Asset Forfeiture Fund ........................................................................................... 4 

3.2.1 – Asset Forfeiture Fund Budget and Performance Plan ........................................ 5 

Section 4 – Supporting Materials.................................................................................... 7

4A – Human Capital Strategy Description ..................................................................... 7 

4.1 – Summary of IT Resources Table ........................................................................... 7 

4B – Information Technology Strategy .......................................................................... 7 

4.2 – PART Evaluation Table......................................................................................... 7 
 Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Treasury Forfeiture Fund (the Fund) is the receipt account for the deposit of non-tax 

forfeitures made pursuant to laws enforced or administered by bureaus participating in 

the Treasury Forfeiture Fund. The member bureaus include the Internal Revenue 

Service’s Criminal Investigation (IRS-CI), Customs and Border Protection (CBP), 

Immigration and Customs Enforcement (ICE), and the U.S. Secret Service (Secret 

Service.) The latter three bureaus are part of the Department of Homeland Security, 

transferred as part of the Homeland Security Act of 2002. These member bureaus are 

joined by the U.S. Coast Guard, Department of Homeland Security, as the result of a 

long-standing close law enforcement relationship with legacy Customs. 

Vision: The focus of Fund management is on strategic cases and investigations that 

result in high-impact forfeitures. Management believes this approach will have the 

greatest impact on criminal organizations and thus will accomplish the ultimate mission 

of the Fund to disrupt and dismantle criminal enterprises. The enhancement of forfeiture 

activity requires longer, more in-depth investigations. To this end, Fund management

emphasizes the use of mandatory funding authorities that fund large case initiatives 

including the purchase of evidence and information, joint operations expenses, 

investigative expenses leading to seizure, and asset identification and removal teams. In 

addition, it is also a priority to fund revenue-enhancing projects such as major case 

funding, database development and computer forensics through the use of the Secretary’s 

Enforcement Fund or Super Surplus funds when available. 

Priorities: Asset seizure and forfeiture is a priority for the Fund’s participating law 

enforcement organizations, as well as the Department of the Treasury, and is linked 

directly to the National Money Laundering Strategies. In this regard, management has 

identified the following priorities for mission success: 

• Continue to educate and focus stakeholders, and others, on the vision and mission of 

Treasury’s multi-Departmental asset forfeiture program (i.e., affirmatively influence 

the consistent and strategic use of asset forfeiture by law enforcement bureaus 

participating in the Treasury Forfeiture Fund to disrupt and dismantle criminal 

enterprises),

• Focus resources in a manner that enhances support of law enforcement’s national 

money laundering strategy and anti-terrorism financing efforts, and 

• Foster and support the investment of forfeiture resources in the needs of our 

participating law enforcement bureaus in order to promote program excellence and 

strengthen the overall quality of criminal investigations.

TEOAF - 1 
1B – Program History and Future Outlook 

Program History: The Treasury Forfeiture Fund continued in its capacity as a multiDepartmental Fund in FY 2007, representing the forfeiture interests of law enforcement 

components of the Departments of the Treasury and Homeland Security. In the midst of 

this period of growth and change, the Fund’s law enforcement bureaus continued their 

hard work of federal law enforcement and the application of asset forfeiture as a sanction 

to bring criminals to justice. FY 2007 continued a pattern of robust revenue years with 

income from forfeitures and recoveries totaling $468.7 million. 

Program Outlook: Management forecasts a continued vigorous program for FY 2008 

and FY 2009 with forfeiture revenue and recoveries estimated at $356 million for each 

year. 

1C – Industry Outlook 

FY 2008: Fund management will remain focused on support for strategic investigative 

initiatives that will have the greatest impact on national and international criminal 

enterprise including valuable training and investigative expense funding that emphasizes 

high impact forfeiture cases. Fund management plans to continue investment in 

technologies and data collection and to further develop and modify forfeiture training and 

forfeiture awareness programs that are responsive to today’s needs and designed to foster 

the understanding and application of asset forfeiture; and to continually re-evaluate our 

basic method of operation to ensure that this methodology is the best one. Fund 

management will continue its work to reinforce relationships with member bureaus that 

extend across Departmental boundaries to ensure that the vision, mission, and operating 

strategies and policies of the Treasury Forfeiture Fund continue to be recognized by the 

various Departments. 

FY 2009: The Treasury Forfeiture Fund is a vital, continuing, business enterprise that is 

important to our member law enforcement bureaus. Given the priorities of the National 

Money Laundering Strategy and the law enforcement priorities of our member bureaus, 

the outlook for FY 2009 is similar to FY 2008; management intends to maintain a 

dynamic and evolving asset forfeiture program that is responsive to the needs of our 

member law enforcement bureaus. 

TEOAF - 2 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Treasury Forfeiture Fund FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 20 20 20

Object Classification:

 25.2 - Other services 106,385 145,000 145,000

 25.3 - Other purchases of goods and services from Govt. accounts 140,587 183,000 101,000

 41 - Grants, subsidies, and contributions 144,540 110,000 110,000

Total Budget Authority $391,512 $438,000 $356,000

Budget Activities:

 Asset Forfeiture Fund 391,512 438,000 356,000

Total Budget Authority $391,512 $438,000 $356,000

2.3 – Resource Detail Table 

Table 2.3 Resource Detail Table

Dollars in thousands

% Change

The Fund has no direct FTE. FY 2007 FY 2008 FY 2009 FY 2008

Actual Estimated Estimated to FY 2009

Revenue:

Sources:

 Carryover from prior year $82,935 $160,117 $78,117 -51.21%

 Current year forfeiture revenue 468,694 356,000 356,000 0.00%

 Total Revenue 551,629 516,117 434,117 -15.89%

Uses:

 Permanent Authority (Obligations) 391,512 438,000 356,000 -18.72%

 Total Obligations 391,512 438,000 356,000 -18.72%

Carryover to next year 1

/ 160,117 78,117 78,117 0.00%

2B – Appropriations Language and Explanation of Changes 

The Treasury Forfeiture Fund does not receive any discretionary appropriation authority 

from the Congress and, therefore, does not have appropriations language. 

2C – Legislative Proposals 

The Treasury Forfeiture Fund is currently reviewing the enacting legislation, 31 U.S.C. § 

9703, and plans to make some technical changes before the end of the calendar year. The 

Office of Management and Budget (OMB) will be notified once the appropriate staff 

within TEOAF has completed the review and draft. 

TEOAF - 3 
 Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Estimated Estimated Change

AMOUNT AMOUNT AMOUNT 

 National security 438,000 356,000 -18.7%

Total $438,000 $356,000 -18.7%

The FY2008 estimate includes obligations from a carryover of $160.117 million. See table 2.3 for this reference. The 

Fund incurs expenses immediately upon the start of the new fiscal year; therefore, the carryover is required for each 

year. 

3A – Asset Forfeiture Fund ($356,000,000 from reimbursable programs): The function 

of the Treasury Forfeiture Fund is to ensure resources are managed to cover the costs of 

an effective asset seizure and forfeiture program, including the costs of seizing, 

evaluating, inventorying, maintaining, protecting, advertising, forfeiting and disposing of 

property. Asset forfeiture is used by federal law enforcement to disrupt and dismantle 

criminal enterprises. 

Summary of Treasury Forfeiture Fund Authorities: The Treasury Forfeiture Fund is a 

special fund with permanent, indefinite authority. Special funds are federal fund 

collections that are earmarked by law for a specific purpose, and which consist of 

separate receipt and expenditure accounts. The enabling legislation for the Treasury 

Forfeiture Fund (31 U.S.C. § 9703) defines those purposes for which Treasury forfeiture 

revenue may be used. The funds can be allocated and used without the enactment of an 

annual appropriation by Congress. 

A forfeiture process begins once property or cash is seized. Upon forfeiture, seized 

currency, initially deposited into suspense, or holding account, is transferred to the Fund 

as forfeited revenue. Once forfeited, physical properties are sold and the proceeds are 

deposited into the Fund as forfeited revenue. It is forfeiture revenue that composes the 

budget authority for meeting expenses of running the Treasury Forfeiture Fund program. 

Expenses of the Fund are set in a relative priority so that unavoidable or “mandatory” 

costs are met first. Expenses may not exceed revenue in the Fund. 

TEOAF - 4 
Types of spending authority of the Fund: 

The mandatory authority items are generally used to meet “business expenses” of 

the Fund, including expenses of storing and maintaining seized and forfeited assets; 

valid liens and mortgages; investigative expenses incurred in pursuing a seizure; 

information and inventory systems; and certain costs of local police agencies incurred 

in joint law enforcement operations. Following seizure, equitable shares are paid to 

state and local law enforcement agencies that contributed to the seizure activity at a 

level proportionate to their involvement. 

Secretary’s Enforcement Fund (SEF) is derived from equitable shares received 

from the Department of Justice or U.S. Postal Service (USPS) forfeitures. These 

shares represent Treasury’s portion in the overall investigative effort that lead to a 

Justice or USPS forfeiture. SEF revenue is available for Federal law enforcement 

purposes of any law enforcement organization participating in the Treasury Forfeiture

Fund. 

Super Surplus represents the remaining un-obligated balance at the close of the 

fiscal year after an amount is reserved for Fund operations in the next fiscal year. 

Super Surplus can be used for any federal law enforcement purpose. 

3.2.1 – Asset Forfeiture Fund Budget and Performance Plan 

Asset Forfeiture Fund Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $0 $0 $391,512 $438,000 $356,000

Total Resources $0 $0 $391,512 $438,000 $356,000

Budget Activity Total $0 $0 $391,512 $438,000 $356,000

Asset Forfeiture Fund Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percent of forfeited cash proceeds resulting

from high-impact cases (%) (Oe) 

 81.00% 72.93% 84.18% 75.00% 75.00%

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

TEOAF - 5 
Description of Performance

 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

For FY 2009, Fund management will measure the strategic performance of our

participating law enforcement bureaus through the use of the performance measure:

percent of forfeited cash proceeds resulting from high-impact cases. This measures the 

percentage of forfeited cash proceeds resulting from high-impact cases; those with 

currency seizures in excess of $100,000. Fund management believes that focusing on 

strategic cases and investigations that result in high-impact seizures will do the greatest

damage to criminal organizations while accomplishing the ultimate objective which is to 

disrupt and dismantle criminal activity. 

 

Target: A target of 75 percent high-impact cases has been set for this performance 

measure. The target allows for those cases which may not be high-impact in nature but 

that are important to the exercise of law enforcement. The measure is calculated by 

dividing the total amount of forfeited cash proceeds from cases equal to or greater than 

$100,000 by the total amount of forfeited cash proceeds for all cases. The data is

regularly available to Fund management and provided through accounting systems that

record the data and is audited annually as part of the annual financial statement audit 

process. 

 

Performance Exceeds Target: Law enforcement bureaus participating in the Treasury

Forfeiture Fund have exceeded the performance target in three of the last four fiscal 

years, only narrowly missing the target in FY 2006 as the result of forfeiture deposit

timing. This achievement remains excellent given the extra demands placed on law

enforcement personnel for anti-terrorism initiatives. 

TEOAF - 6 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The Treasury Forfeiture Fund is managed by the Executive Office for Asset Forfeiture 

(EOAF), a policy office that reports to the Assistant Secretary for Terrorist Financing. 

EOAF reimburses Departmental Offices for a total of about 20 FTE annually. 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

None 

4B – Information Technology Strategy 

The Treasury Forfeiture Fund uses Departmental Offices systems, and is part of DO’s 

information technology strategy. 

4.2 – PART Evaluation Table 

The Treasury Forfeiture Fund is not subject to the PART process. 

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

TEOAF - 7 
Working Capital Fund 

Introduction

The Department of the Treasury Working Capital Fund (WCF) was established by the 

Excise, Estate, and Gift Tax Adjustment Act of 1970 (P.L. 91-614 § 401). As codified in 

31 USC §322, “Amounts in the fund are available for expenses of operating and 

maintaining common administrative services of the Department that the Secretary of the 

Treasury, with the approval of the Director of the Office of Management and Budget, 

decides may be carried out more advantageously and more economically as central 

services.” 

Program Summary by Bureau Type 

Dollars in Thousands 

Funding Source FY 2007 FY 2008 FY 2009 $ Change % Change

Enacted Estimate Estimate FY 2008 FY 2008

To FY 2009 To FY 2009

Treasury Appropriated Bureaus $232,302 $241,791 $241,584 ($207) -0.09%

Treasury non-Appropriated Bureaus $15,109 $16,184 $18,081 $1,897 11.72%

Non-Treasury $10,520 $7,158 $6,117 ($1,041) -14.54%

Grand Total Financial Plan Requirements $257,931 $265,133 $265,783 $650 0.25%

Operation of the Working Capital Fund 

The Treasury Department has standard criteria to determine what functions are financed 

through the WCF: 

 

1) Promotes economies of scale, 

2) Reduces overhead costs, 

3) Promotes central management, 

4) Avoids duplication among those who might provide the service, 

5) Improves service quality, 

6) Makes available goods and services to those users who could not afford them

except on a centralized basis, 

7) Provides flexibility in the timing of purchases, and 

8) Allows for replacement of equipment and other assets on a long-term basis 

through the use of depreciation charges to users, as a means of recovering 

those costs.
Table of Contents

SECTION 1 – PURPOSE ............................................................................................................. 1 

1.1 – Description of Service Providers......................................................................................... 1 

A – Intelligence and Security...................................................................................................... 1 

1. Security Programs.............................................................................................................. 1 

B – Deputy Assistant Secretary, Human Resources/Chief Human Capital Officer.................... 2 

1. Human Capital Strategic Management.............................................................................. 2 

2. Civil Rights and Diversity ................................................................................................. 3 

C – Deputy Assistant Secretary, Information Systems/Chief Information Officer..................... 4 

1. Associate Chief Information Officer HR Connect and National Finance Center/Employee 

Express.................................................................................................................................... 4 

a. HR Connect ................................................................................................................... 4 

b. NFC/Employee Express................................................................................................ 4 

2. Chief Information Officer Executive Office / Resource Management Services................ 5 

3. ACIO Telecommunications (Treasury-wide).................................................................... 5 

a. Digital Telecommunications System............................................................................. 6 

b. Treasury Communications System................................................................................ 6 

c. Treasury Network .......................................................................................................... 7 

d. Wireless Program .......................................................................................................... 7 

e. Web Hosting.................................................................................................................. 8 

f. Secure Communications Center..................................................................................... 8 

g. Alpha-VAX Computer Usage ....................................................................................... 8 

4. ACIO Cyber Security ........................................................................................................ 9 

5. ACIO E-Government......................................................................................................... 9 

a. Enterprise Architecture.................................................................................................. 9 

b. Enterprise Solutions ...................................................................................................... 9 

c. Planning....................................................................................................................... 10 

d. Management ................................................................................................................ 10 

6. HSPD-12.......................................................................................................................... 10 

7. ACIO Capital Planning and Information Management ................................................... 12 

a. Capital Planning and Investment Control.................................................................... 12 

b. Information Management............................................................................................ 12 

D – Treasury-wide Management Programs .............................................................................. 13 

1. Financial Systems Integration.......................................................................................... 13 

2. Emergency Programs....................................................................................................... 13 

3. Small and Disadvantaged Business Utilization ............................................................... 14 

4. Procurement Programs..................................................................................................... 15 

5. Government-wide Council Payments.............................................................................. 16 

E – DAS, Headquarters Operations .......................................................................................... 16 

1. Environment, Safety, and Health..................................................................................... 16 

2. Printing and Graphics Services........................................................................................ 17 

3. Communications, Information, and Locator Center ........................................................ 18 

F – Centralized Support Services.............................................................................................. 19 

SECTION 2 – BUDGET AND PERFORMANCE PLAN ....................................................... 20 

2.1 – Funding Detail by Program............................................................................................... 20 

2.2 – Full-Time Equivalents by Program .................................................................................. 21 

2.3 – Funding Detail by Bureau.................................................................................................. 22 

2.4 – Funding Detail by Operating Levels................................................................................. 23 
Section 1 – Purpose 

1.1 – Description of Service Providers 

The majority of the service providers under the WCF program are organizational 

components of the Assistant Secretary for Management and Chief Financial Officer 

(ASM/CFO) in the Departmental Offices. The three exceptions are the Security Program, 

which is located in the Office of Terrorism and Financial Intelligence; the Office of Small 

and Disadvantaged Business Utilization, which is located in the Office of the Deputy 

Secretary; and the Homeland Security Presidential Directive – 12 program, for which the 

Internal Revenue Service serves as the Executive Agent. The programs in the WCF for 

FY 2009 are as follows: 

A – Intelligence and Security

1. Security Programs 

Resource Level: $797,962 and 3 FTE 

Program Description: Security programs under the Assistant Secretary of Intelligence 

and Analysis, develops guidance and provides operational assistance and direction to the 

Treasury Department for: 

• Information security for classified and sensitive information (not to include IT 

systems life cycle costs); 

• Industrial security (access to and use of Treasury/U.S. Government classified and 

sensitive information by the private sector); 

• Physical security (operational direction for the protection of personnel and 

property related to National Security Information); 

• Personnel security (background investigations for sensitive and national security 

positions);

• Security education, training for persons authorized access to classified 

information; 

• General guidance to un-cleared employees; 

• Physical protection of critical infrastructure; and 

• Counter-intelligence awareness (including precautions during official foreign 

travel). 

Billing Methodology: The charge assessed to each customer is based on the number of 

FTE in the current year enacted budget as a percent of the total. Bureau-specific orders 

are billed based on the cost of the service requested. 

WCF - 1 
B – Deputy Assistant Secretary, Human Resources/Chief Human Capital Officer

1. Human Capital Strategic Management 

Resource Level: $786,654 and 4 FTEs 

Program Description: The Office of Human Capital Strategic Management (HCSM) 

provides critical, crosscutting human resource management services to the bureaus. The 

staff provides a consolidated approach to programs and delivers Department-wide 

program implementation and consultation to Treasury bureaus on a broad range of 

complex human resources issues, including performance management, workforce 

development, executive resources, recruitment and staffing, compensation policy, and 

workers compensation services. This includes providing leadership and direction on new 

programs and initiative and working closely with Treasury bureaus to develop creative 

and innovative solutions to emerging human resources issues. This office also works 

closely with the Office of Personnel Management (OPM) and the Office of Management 

and Budget to ensure Treasury human resources policies and programs support 

government-wide, results based human capital initiatives. Services provided include: 

Human Resources (HR) Program Efficiencies: 

• Develop efficiencies for the management of human resources programs that have 

Department-wide impact and enhance the bureaus ability to meet their missions 

(e.g., provide coordinated agency-wide hiring process improvement; facilitates 

bureau efforts on meeting the 45 day hiring model; work with HR Connect on 

improving the effective use of automated hiring tools; coordinates joint-bureau 

participation in career fairs; establish contacts with a large number of highereducation institutions; and represent bureau interests in pursuing hiring 

flexibilities); 

• Identify areas where bureaus need technical training or specialized guidance on a 

variety of complex HR issues and disseminate information through agency-wide 

workgroup meetings, written products, or arrange for it through OPM or outside 

vendors (e.g., training on Fair Labor Standards Act, Career Transition Assistance 

Program/Reemployment Priority List, and new HR flexibilities such as Category 

Rating). 

Federal Health Benefit Programs Management: 

• Manage the Federal Health Benefits Open Season contract which consolidates the 

handling of all materials for participating bureaus; 

• Provide support on employee benefits programs including the centralized 

distribution of benefit materials (e.g., Federal Employee Health Benefits, Federal 

Employee Group Life Insurance, Thrift Savings Plan forms/brochures); 

• Disseminate guidance and materials for bureau benefits specialists. 

WCF - 2 
Crosscutting HR Products and Services: 

• Lead the development and implementation of new programs; hold bureau work 

groups and meetings to resolve issues; assist bureaus by making suggestions to 

improve bureaus processes and heads-off potential problems; and provide training 

and technical guidance to bureau staffing contacts; 

• Assist bureaus with creating, developing, and implementing new pay systems and 

schedules under special pay authorities (e.g., police pay systems and pay bands); 

• Work with bureaus on staffing issues - Example: Prepare a 30-page report for 

OPM consolidating bureau concerns regarding specific barriers to 

effective/efficient recruitment, and recommended solutions; 

• Develop and publish tools that assist bureaus in carrying out HR program 

responsibilities. 

Department-wide External Influence: 

• Represent Treasury bureaus' interests on OPM/interagency task forces (e.g., the 

development of the Federal Career Intern Program and regulations that allowed 

for Treasury bureaus' preference on how to handle poor performers); 

• Represent the interests of the bureaus in proposing, developing, or requesting 

changes in legislation, regulations, and other proposals 

• Serve as the bureaus’ advocate in getting Departmental, OPM, or other approvals 

pertaining to certain personnel authorities (e.g., request for authority to establish 

an extended probationary period for certain positions; changes in qualifications 

standards and approval of new competencies standards, and waivers of dual 

compensation); 

• Assist bureaus with downsizing and restructuring by providing consultation and 

assistance on complex restructuring initiatives and gaining OPM approval of 

buyout and early-out (VERA/VSIP) authority. 

Billing Methodology: The charge assessed to each customer is based on the number of 

FTEs in the current year enacted budget as a percent of the total. 

2. Civil Rights and Diversity 

Resource Level: $1,340,256 and 9 FTEs 

Program Description: The Office of Civil Rights and Diversity (OCRD) program

ensures that Treasury employees, former employees, and applicants are protected from

discrimination on the basis of race, color, religion, national origin, sex, age, disability, 

reprisal for engaging in protected activity, sexual orientation, parental status, and 

protected genetic information. OCRD manages the statutory Equal Employment 

Opportunity complaint process for all of the bureaus, including management of the 

Treasury-wide complaint management data system and oversight of the Treasury 

Complaint Center. 

WCF - 3 
The OCRD program supports the department-wide goals of ensuring diversity and equal 

opportunity for all employees; that people with disabilities have equal access to the 

Department's programs and facilities; and that Treasury's federal financial assistance 

beneficiaries are not excluded from participation in, denied the benefits of, or otherwise 

subjected to discrimination under any program or activity funded by the Department. 

OCRD represents the Department’s interests in the areas of EEO, diversity and civil 

rights before the Equal Employment Opportunity Commission, the Office of Personnel 

Management, and the Department of Justice (pertaining to external civil rights activities). 

Billing Methodology: The charge assessed to each customer is based on the number of 

actual complaints filed in the previous 12 month period as a percent of the total. 

Customers with no complaints are assessed one complaint charge for maintenance. 

C – Deputy Assistant Secretary, Information Systems/Chief Information Officer

1. Associate Chief Information Officer HR Connect and National Finance 

Center/Employee Express 

a. HR Connect 

Resource Level: $24,645,902 and 33 FTEs

Program Description: HR Connect is Treasury’s enterprise system, a web-based 

solution built on PeopleSoft commercial-off-the-shelf (COTS) software. HR Connect 

transforms core back-office HR functions, moving them from a processing-centric 

capability supported by Treasury and National Finance Center (NFC) legacy systems, to 

a strategic-centric capability enabled through its commercial software underpinning. 

Additionally, self-service components of the software fundamentally transform the 

standard government HR service delivery model, putting additional information, services 

and processes (i.e., personal data, position management, requests for personnel action, 

recruitment, reporting, etc.) directly in the hands of managers and employees. 

Billing Methodology: The HR Connect costs are distributed based on the number of 

active accounts as a percent of the total. 

b. NFC/Employee Express 

Resource Level: $22,822,816 and 18 FTEs

Program Description: The Treasury HR Line of Business Shared Service Center (SSC) 

involves a partnership with the National Finance Center (NFC). HR Connect is 

Treasury’s enterprise human resources solution, and the HR Connect system

interacts/syncs with NFC in order to provide NFC payroll services to customers. 

Employee Express is an OPM service that feeds into the NFC database to allow 

employees to perform various self-service activities. Specifically, it allows employees to 

WCF - 4 
update their payroll information (taxes, allotments, health insurance, savings bonds, and 

thrift savings contribution). 

Billing Methodology: The NFC/Payroll and Employee Express costs are distributed 

based on the number of W-2's issued for the prior tax year in the current calendar year as 

a percent of the total. 

2. Chief Information Officer Executive Office / Resource Management Services

Resource Level: $2,995,821 and 4 FTEs 

Program Description: This program provides the administrative management and 

comprehensive strategic development activities that support the Office of the Chief 

Information Officer’s (OCIO) mission. These activities include strategic planning, 

program/project implementation, financial and budget guidance, briefing development, 

business case analysis, comprehensive research, performance assessment, project 

management, IT governance facilitation, and alternatives analyses. 

This program also develops and implements efficient and effective controls over the 

resources within the OCIO and facilitates achievement of operational objectives through 

policy guidance, advice, and management of budget formulation and execution activities 

across OCIO programs that support Treasury-wide missions. 

Billing Methodology: The allocation percentage is derived by taking each customer’s 

contribution to various CIO programs then dividing it by the total contributions from all 

customers who contributed to more than one program.

3. ACIO Telecommunications (Treasury-wide) 

ACIO Telecommunications – Front Office: 

Resource Level: $3,475,052 and 2 FTEs

Program Description: The program is responsible for telecommunications developing 

standards and guidelines; managing enterprise voice, video, and data services; supporting 

IT applications and infrastructure for Treasury Departmental Offices; and ensuring the 

resiliency, and redundancy of Treasury telecommunications infrastructure. 

Telecommunications Management develops short and long-range plans and guidelines 

for the efficient management of telecommunications operations and resources. 

Telecommunications Operations provides comprehensive administration, service 

delivery, and customer service for common voice, data, and video requirements across 

Treasury. TFO oversees bureau programs such as DTS, TCS, TNet, and Wireless. 

Billing Methodology: The allocation percentage is derived by taking each customer’s 

contribution to various CIO Telecommunication programs and dividing it by the total 

contribution of all customers who contributed to more than one program. 

WCF - 5 
a. Digital Telecommunications System 

Resource Level: $24,069,367 and 14 FTEs

Program Description: The Digital Telecommunications System (DTS) Wide Area 

Voice Services are comprised of several programs which, together, provide 

telecommunications capabilities to the Department of the Treasury. The three core 

programs include the General Services Administration’s Washington Interagency 

Telecommunications System, Treasury Local Access Transport Area, and Synchronous 

Optical Network.

Billing Methodology: There are two costs associated with this program: customerspecific and shared. Shared costs are based on each customer’s seat count and number of 

mailboxes, divided by the total seats and mailboxes for all customers combined. 

Customer-specific costs are based on each customer’s anticipated requirements for that 

fiscal year. 

b. Treasury Communications System 

Resource Level: $45,000,000 and 10 FTEs

Program Description: The Treasury Communications System (TCS) serves as the 

Department of the Treasury’s enterprise program for integrated information technology 

and telecommunications services. TCS offers Treasury a complete range of services 

including enterprise Internet access which gives users access to public domains across the 

Internet, other Treasury bureaus, and to Treasury’s government and non-government 

business partners. The program also offers solutions for business application 

development and systems integration, web and application infrastructure platform

hosting, telecommuting network access, and other managed services. 

TCS performs a wide range of activities including requirements analysis, procurements, 

engineering and design, site surveys, configuration, installation and operations and 

maintenance for various applications and infrastructure. 

The program further supports the Department by operating a 24x7x365 security 

operations center that executes event monitoring, problem identification, fault isolation, 

problem eradication, service restoration, maintenance, and traffic and usage analysis. 

TCS also maintains firewalls for network access, provides intrusion detection systems 

and performs certifications and accreditations for systems Department-wide. 

Billing Methodology: There are two costs associated with this program: customerspecific and shared. Shared costs are based on capacity, usage, and sites. Customerspecific costs are based on each customer’s anticipated requirements for that fiscal year. 

WCF - 6 
c. Treasury Network 

Resource Level: $45,000,000 and 0 FTEs

Program Description: The Treasury Network (TNet) is in transition to replace TCS, the 

current wide area network (WAN) support program for Treasury. The TNet program was 

initiated to provide secure, seamless WAN voice and data telecommunications services to 

the Department of the Treasury WCF customers. TNet services guaranteed delivery of 

application, email, internet, and voice traffic over a robust optical wide area network. As 

such, it is critical to the ability of Treasury employees to fulfill the mission of the 

Department. 

Billing Methodology: The allocation of costs is derived by taking the estimated 

FY 2009 TCS commercial circuit and maintenance charges per customer and dividing it 

by the total estimate for all customers. Customer-specific costs are based on each 

customer’s anticipated requirements for that fiscal year. 

d. Wireless Program 

Resource Level: $1,260,338 and 0 FTEs

Program Description: The Wireless program office is organized into three segments: 

program management, tactical activities, and non-tactical activities. The program

management focuses on ensuring that the program meets its responsibilities to the 

Department and its stakeholders through prudent financial and resource management, 

plus the maintaining of critical relationships in the federal wireless marketplace. 

The tactical activities include the services necessary to keep Treasury mission-critical 

wireless assets and associated functions represented and protected. The services include 

managing and coordinating spectrum resources, participating and representing Treasury 

at the Interdepartmental Radio Advisory Committee, participating and representing 

Treasury in the Integrated Wireless Network, serving as a liaison to the Office of 

Emergency Preparedness for the high frequency network, and providing technical 

support, representation, or coordination as requested by the bureaus. 

The non-tactical portion of the Office functions primarily as the central office for 

wireless policy and responds to the executive, regulatory, budgetary, and legislative 

requests that the Department receives concerning their wireless assets and activities. 

These services include responding to Office of Management and Budget requests (e.g., 

Exhibit 300s), responding to requests related to the Presidential Determination on 

Improving Spectrum Management in the 21st Century, providing information to the 

National Communications Systems Annual Report, and fostering refinement of Treasurywide wireless guidelines to increase guideline consistency throughout the Department. 

Billing Methodology: The Wireless methodology consists of two allocations: tactical 

and non-tactical. The tactical allocation is derived from the number of frequencies per 

WCF - 7 
customer as a percent of total frequencies. The non-tactical allocation is derived from the 

number of FTEs per customer as a percent of total FTEs. 

e. Web Hosting 

Resource Level: $2,276,917 and 2 FTEs

Program Description: Web Hosting provides hosting support for Treas.Gov, the 

Treasury public website, and TreasNet, the Treasury-wide intranet site. Services include 

website creation; content updating and management; Treasury-wide team collaboration 

sites oversight; e-learning hosting and registration by bureau; survey creation, hosting, 

and analysis; support for bureau/office webmasters and content managers; and a search 

capability for bureau public web sites.

Billing Methodology: The Web Hosting methodology uses the TCS percentage 

distributed across customers participating in Web Hosting services. 

f. Secure Communications Center 

Resource Level: $5,267,294 and 17 FTEs

Program Description: The Secure Communications Center (SCC) provides secure 

handling of highly-classified, sensitive data for the Departmental Offices and Treasury 

bureaus and their senior management staffs. The SCC provides Communications 

Security (COMSEC) support for the Treasury Department, including site surveys and 

distribution of encrypted keys. 

Billing Methodology: The Center’s costs are billed to customers based upon the number 

of messages as a percentage of the total number of messages processed. 

g. Alpha-VAX Computer Usage 

Resource Level: $303,202 and 1 FTEs 

Program Description: Previously, The Departmental Offices (DO) Information 

Technology office managed several VAX computers which ran mainframe applications 

and were replaced with Alpha systems in FY 2005. The only WCF customer for this 

program is the Federal Financing Bank (FFB). The program receives funding from FFB 

to support staff and part of the computer maintenance. The Alpha computer systems are 

also used for several critical applications for non-reimbursable DO customers, including 

the tax models and the SMART application for Domestic Finance. 

Billing Methodology: The methodology is based on the total cost of operating the Alpha 

computer and is distributed based upon the actual usage of the services the Computer 

Data Center provides on the system. 

WCF - 8 
4. ACIO Cyber Security 

Resource Level: $1,353,465 and 6 FTEs 

Critical Infrastructure Protection and Information Security (CIRC): 

Program Description: The Cyber Security Program supports protection of Treasurywide information technology systems (unclassified and national security [collateral and 

intelligence]) and the information they process from risks to confidentiality, availability 

and integrity whether arising from insiders, malicious hackers, or other threats posed 

against the Department. The program accomplishes this through the issuance of guidance 

and leadership of the Treasury CIRC and the Critical Infrastructure Program (cyber 

systems and applications) to identify and protect key resources. This year, the program’s 

key priorities include focusing on the implementation of new security configuration 

management requirements from OMB, FISMA compliance, and responding to serious 

Internet threats. 

Billing Methodology: The charge assessed to each customer is based on their 

contribution to various CIO programs then dividing it by the total contributions from all 

customers who contributed to more than one program.

5. ACIO E-Government

a. Enterprise Architecture 

Resource Level: $2,857,669 and 4 FTEs

Program Description: The Treasury Enterprise Architecture (EA) program will 

establish a roadmap for the modernization and optimization of the Department’s business 

processes and information technology (IT) environment. EA will provide a framework to 

guide IT investment planning, streamline systems, and ensure that IT programs align with 

business requirements and strategic goals. EA allows Treasury to conduct enterprisewide analysis and management of results, focus on lines of businesses to facilitate better 

alignment and cross-bureau collaboration in investments, and develop more robust 

business cases. EA fulfills the need to recognize and capitalize on opportunities for the 

development of enterprise wide solutions and E-Government (E-Gov) participation and 

leadership.

Billing Methodology: The charge assessed to each customer is based on their number of 

FTEs in the current year enacted budget as a percent of the total. 

b. Enterprise Solutions

Resource Level: $7,249,780 and 7 FTEs

WCF - 9 
Program Description: The Enterprise Solutions (ES) business model is to optimize 

cost-effective delivery of enterprise services through a small professional staff of senior 

project managers and contractor teams. The ES team works closely with EA and 

Information Security to identify and implement common (multi-bureau) and enterprise 

(Treasury-wide) solutions in support of an efficient technology architecture that is 

aligned with the rest of the Federal Government. The ES team also works closely with 

their customers to help them understand and take advantage of these solutions. ES 

consists of two core business units: Authentication and Identity Management Systems; 

and Enterprise Business Application Services and Solutions. 

Billing Methodology: The charge assessed to each customer is based on their number of 

FTEs in the current year enacted budget as a percent of the total. 

c. Planning 

Resource Level: $829,160 and 1 FTEs

Program Description: The E-Gov Planning Office provides the critical leadership and 

direction needed to achieve the Department’s Presidential Management Agenda, E-Gov, 

Clinger-Cohen goals. E-Gov Planning sets goals, objectives, and strategies to guide 

enterprise-wide solutions.

Billing Methodology: The charge assessed to each customer is based on their number of 

FTEs in the current year enacted budget as a percent of the total. 

d. Management 

Resource Level: $940,786 and 2 FTEs 

Program Description: Treasury continues to identify and develop targeted Treasury EGov initiatives to improve service delivery to citizens and businesses. Treasury is a 

managing partner in two of the Presidential E-Gov initiatives, Federal Asset Sales and 

GeoSpatial Line of Business, and participates in several other Presidential E-Gov 

initiatives. E-Gov is also responsible for managing, coordinating and reporting on the 

President’s Management Agenda E-Gov Initiatives and Lines of Business.

Billing Methodology: The charge assessed to each customer is based on their number of 

FTEs in the current year enacted budget as a percent of the total. 

6. Homeland Security Presidential Directive -12 

Resource Level: $45,850,000* and 0 FTE 

* Currently, the Department of the Treasury Homeland Security Presidential Directive – 

12 (HSPD-12) program has been authorized through FY 2008 for release 1, card issuance 

only. Discussions with the Department of the Treasury's senior leadership regarding 

WCF - 10 
increased program scope and funding requirements for FY 2008 are on-going. No 

approvals have been granted at this time. Note: Department of the Treasury HSPD-12 

program execution and WCF collection is subject to the Executive Steering Committee 

approval. 

Resource levels are based on the below assumptions: 

Assumptions, re: card issuance, FY 2008 carryover: 

• 75% of cards will by issued in FY 2008 with the remaining to be issued in FY 

2009. 

• Card issuance will be completed by 12/31/08 (1st quarter, FY 2009). 

• All hardware, software, and infrastructure costs will remain at 100% for FY 2008. 

• 25% of FY 2008 card issuance costs (includes card issuance, maintenance, and 

sleeves) will be incurred in FY 2009. 

• Treasury Program Management Office FTE and contractor staff will extend at FY 

2008 levels through 1st quarter, FY 2009 (12/31/2008). 

Assumptions, re: release 2, proposed WCF eligible costs: 

• Treasury HSDP-12 Program Management Office costs. 

• Card issuance operation and maintenance cost. 

• Logical Access Controls acquisition costs. 

• Physical Access Controls acquisition costs. 

Program Description: HSPD-12 was signed on August 27, 2004, mandating a common 

identification standard for federal employees and contractors. HSPD-12 requires a 

standardized Personal Identity Verification process for the issuance and use of a common 

federal government identification card. The directive mandates that any identification 

card issued by a federal agency must be: 

• Secure and reliable; 

• Issued based upon sound criteria for verifying an individual’s identity; 

• Resistant to identity fraud, tampering, counterfeiting, and terrorist exploitation; 

• Interoperable across federal agencies; and 

• Used to allow both physical access and logical access to federally-controlled 

facilities and information systems. 

This initiative is being led by the Internal Revenue Service (IRS) in an Executive Agent 

arrangement with Departmental Offices. The program is under the auspices of the 

Associate Chief Information Officer of E-Government. 

Billing Methodology: The charge assessed to each customer is based on their number of 

Federal government and contractor personnel as a percentage of total Treasury 

government and contractor personnel. 

WCF - 11 
7. ACIO Capital Planning and Information Management 

a. Capital Planning and Investment Control 

Resource Level: $4,044,000 and 6 FTEs

Program Description: Funds will provide the portfolio management tool services that 

all bureaus use for Capital Planning and Investment Control (CPIC) compliance. 

Services include necessary software maintenance costs, licenses, hosting, development, 

and help desk support required to keep the Treasury CPIC portfolio management system

operational in an effective and efficient manner. 

Treasury’s capital planning process is a dynamic process in which information 

technology (IT) investments are selected and then continually monitored and evaluated to 

ensure each chosen investment is well managed, cost effective, and supports the mission 

and strategic goals of the organization. 

Billing Methodology: The charge assessed to each customer is based on their 

contribution to various CIO programs then dividing it by the total contributions from all 

customers who contributed to more than one program.

b. Information Management 

Resource Level: $1,486,377 and 4 FTEs

Program Description: The Information Management (IM) organization is responsible 

for implementing OCIO statutory and regulatory programs to include clearing bureau 

information collection requests for OMB approval as well as monitoring and reporting to 

OMB in accordance with the Paperwork Reduction Act. Collections are reported in the 

Business Gateway electronic government initiative. The IM organization provides 

leadership and direction for Treasury-wide records management program and develops 

records management strategy to produce the policies, procedures, and guidance necessary 

to implement the programs; cooperates with bureaus and offices to develop and apply 

technology to records management; coordinates programs within the bureaus and offices 

and with oversight organizations; conducts and/or facilitates Treasury-wide employee 

and bureau records training; and assists records management programs across the 

Department with advice and technical expertise. 

Billing Methodology: The charge assessed to each customer is based on their 

contribution to various CIO programs then dividing it by the total contributions from all 

customers who contributed to more than one program.

WCF - 12 
D – Treasury-wide Management Programs

1. Financial Systems Integration 

Resource Level: $2,520,493 and 2 FTEs 

Program Description: The Office of the Deputy Chief Financial Officer, Financial 

Systems Integration (FSI) program provides systems and program support to produce the 

Treasury Department's financial statements and management reports. Monthly and 

quarterly reports are distributed to the Office of Management and Budget, Financial 

Management Service, and bureau program and financial offices. Programs covered by 

FSI include financial analysis and reporting, audit follow-up and performance 

management. Bureaus submit data to the Financial Analysis and Reporting System to 

meet program, legislative, and OMB requirements.

Billing Methodology: Treasury Information Executive Repository (TIER) and CFO 

Vision charges are based 80 percent on funding and 20 percent on the average number of 

records submitted to TIER as a percentage of the total. The Joint Audit Management 

Enterprise System is based on the number of audit recommendations and planned 

corrective actions as a percent of the total. Performance reporting is based 80 percent on 

the current year enacted budget and 20 percent on the number of performance measures 

as a percent of the total.

2. Emergency Programs 

Resource Level: $1,988,260 and 4 FTEs

Program Description: The Office of Emergency Programs (OEP) ensures continuity of 

the Treasury Department’s essential functions during disasters. The focus of the WCF 

funded component is to maintain facilities and communications between the Department 

of the Treasury’s bureaus and senior officials in a state of emergency. 

The program provides operational activities associated with implementing National 

Security Emergency Preparedness (NSEP) goals and objectives that are identified in: 

• The National Strategy for Pandemic Influenza 

• The Implementation Plan for the National Strategy for Pandemic Influenza 

• Executive Order 12656 

• Homeland Security Presidential Directive 20 & National Security Presidential 

Directive 51

• Homeland Security Presidential Directives 5, 8, 9, 10, and 12 

• The National Response Plan 

• Federal Preparedness Circulars 65-67 (FPC 65) 

OEP administers and maintains the Treasury Emergency Management program, codified 

in the Treasury Security Manual - TDP-71-10. The program ensures that the Department 

WCF - 13 
of the Treasury is fully prepared for natural and man-made disasters by executing major 

operational items contained in FPC 60 and 65 during White House or Department of 

Homeland Security sponsored Continuity of Operations activation and training scenarios. 

Billing Methodology: The charge assessed to each customer is based on their number of 

FTEs in the current year enacted budget as a percentage of the total. 

3. Small and Disadvantaged Business Utilization 

Resource Level: $915,134 and 4 FTEs 

Program Description: The Small and Disadvantaged Business Utilization program

facilitates acquisitions from the business community of veteran-owned, service-disabled 

veteran-owned, 8(a), Historically Underutilized Business Zone, small disadvantaged, and 

women-owned small businesses for all of the Department of the Treasury. The program: 

• Disseminates information through the maintenance of a robust small business 

procurement assistance website - www.treas.gov/sba; 

• Generates “Small Business Marketing Publications” such as “Forecast of Contract 

Opportunities” and “Subcontracting Opportunities Directory.” This material is 

available electronically, in hard copy, or mini marketing disks and contains 

information on each individual bureau; 

• Provides outreach to small businesses through monthly Vendor Outreach 

Sessions, Annual Office of Small and Disadvantaged Business Utilization 

Directors’ Conference, and other external outreach events; 

• Provides small business program training to bureaus. The staff presents on a 

variety of small business topics such as new developments, refresher training, and 

training for new employees; 

• Develops and manages Mentor-Protégé Program where experienced firms are 

teamed with less experienced firms to compete more effectively for Treasury 

Department contracts. The staff reviews business applications for participation in 

the program and provide follow-up reviews on an annual basis; 

• Updates the “Small Business Handbook” to provide guidance, tips, and best 

practices to the Treasury Department’s bureaus through Acquisition Bulletins; 

• Establishes department-wide “Annual Small Business Goals” in compliance with 

the Small Business Act, Executive Orders, and the Office of Federal Procurement 

Policy guidelines; and 

• Assists the bureaus in identifying qualified small businesses for match-making to 

increase procurement opportunities whereby the staff works with individual 

bureaus to develop acquisition strategies, and small business friendly contract 

vehicles. 

Billing Methodology: The charge assessed to each customer is based on their 

procurement dollars as a percent of total Treasury Department procurement dollars.

WCF - 14 
4. Procurement Programs 

Resource Level: $868,640 and 2 FTEs 

Program Description: The Procurement Program provides services to the Treasury 

Department’s bureaus for the following: 

• Purchase Card Program: The program provides coordination and best practices 

for the Department of the Treasury’s purchase card program, including support 

for the re-compete and transition to SmartPay2. The goals are to ensure proper 

usage, maximize rebates and to develop and maintain a quality Treasury-wide 

purchase card program. 

• Integrated Acquisition Environment (IAE) Implementation and Liaison: This 

office acts as the Treasury Department’s liaison for the various IAE service 

providers. Procurement disseminates implementation information, and tracks 

Treasury-wide use of IAE systems and manages data verification and validation 

audits of Treasury’s federal procurement data, serves as the IAE System

Administrator for the bureaus, and operates as the focal point for any Treasury 

Department issues to be raised with service providers. IAE systems streamline 

service delivery to customers, reduce paperwork, and apply best commercial 

practices to improve and facilitate purchasing office interaction with customers 

and businesses while saving resources and streamlining the acquisition process. 

This results in improved efficiency and effectiveness of the Treasury 

Department's acquisition systems. 

• Acquisition Career Management Program: The procurement office provides input 

to the Treasury Human Capital Strategic Plan for procurement staff, managing a 

formal process for GS-1102 employees to equate their past education, experience, 

and acquisition training to the Federal Acquisition Certification in Contracting 

Program requirements for civilian agency employees. The Treasury Acquisition 

Career Manager reviews and recommends certification of acceptable contracting 

certification requests submitted by employees. The Senior Procurement 

Executive makes decisions on requests and signs a certificate for each successful 

applicant. Finally, the organization supports implementation of two additional 

Federal Acquisition Certification programs, for Program and Project Managers, 

and for Contracting Officer’s Technical Representatives. 

• E-Government –IAE System Payment: IAE is one of the 24 E-Government 

initiatives which support the President’s Management Agenda. The IAE provides 

a common, secure business environment, which facilitates and supports cost 

effective acquisition of goods and services and will interoperate with multiple EGovernment initiatives. Federal agencies receive the benefit of shared use of the 

IAE in the conduct of their acquisition functions. The General Services 

Administration (GSA), the Managing Partner of the IAE project, is reimbursed for 

the cost of managing, operating and maintaining the IAE architecture by the 

federal agencies that use the IAE and share the expense. To reimburse GSA, the 

Department of the Treasury collects funds from participating bureaus and 

WCF - 15 
transfers the aggregated funds to GSA in accordance with the Memorandum of 

Agreement between GSA and the Department of the Treasury. The IAE provides 

the Treasury Department’s bureaus with access to the following systems: 

Operational 

 Acquisition.gov 

 Central Contract Registration 

 Excluded Parties List 

 Electronic sub-Contractor Reporting 

 Federal Registration 

 Federal Technical Data Solution 

 Federal Procurement Data System – Next Generation 

 On-Line Representations and Certifications Application 

 Wage Determination On-Line 

Planned 

 Performance Data 

Billing Methodology: The charge assessed to each customer is based on their 

procurement dollars as a percent of total Treasury Department procurement dollars. 

5. Government-wide Council Payments 

Resource Level: $351,709 and 0 FTE 

Program Description: The Government-wide Council Payments support Treasury’s 

participation in Government-wide Councils. These councils are: Chief Financial 

Officer’s Council, Chief Information Officer’s Council, Chief Acquisitions Officer’s 

Council, Chief Human Capital Officer’s Council and President’s Management Council. 

Billing Methodology: The charge assessed to each customer is based on their FY 2007 

enacted funding levels as a percent of the total. 

E – DAS, Headquarters Operations

1. Environment, Safety, and Health 

Resource Level: $1,157,636 and 2 FTE 

Program Description: The Environment, Safety, and Health Division, as part of the 

Office of Facilities and Support Services, provides support for environmental and safety 

issues that affect most bureaus. This program also maintains the Safety and Health 

Information Management System (SHIMS). 

SHIMS is a department-wide “web” enabled electronic system that records and tracks

occupational injuries and illnesses. The system allows data manipulation by individual

WCF - 16 
organizations and data consolidation providing department-wide mandatory reporting to 

the Department of Labor’s Office of Workers’ Compensation system. SHIMS identifies 

trends in accident experiences and causes which can provide assistance in injury 

reduction and the reduction in lost work days. The system can generate monthly and 

quarterly statistics, as well as the annual incidents summary as required by the “Annual 

Safety and Health Program” and in performance reporting. 

Billing Methodology: The charge assessed to each customer is based on the number of 

Safety and Health Information Management System claims filed by each customer as a 

percent of the total.

2. Printing and Graphics Services 

Resource Level: $4,471,861 and 27 FTEs 

Program Description: The mission of the Printing and Graphics Division is to provide 

quality graphics, design, printing (both offset and digital printing), duplicating, and 

electronic services and to be the provider of choice for the effective, economical, and 

quality presentation of information for the Department of the Treasury. The Printing and 

Graphics Division uses a variety of methods and alternative strategies that draw upon 

their collective expertise.

The Printing and Graphics Division is organizationally divided into three branches: the 

Printing Procurement Branch; the Departmental Printing Branch; and the Graphics 

Branch. 

Products are numerous and range from internal routing slips, posters, brochures, and full 

color presentations, to the commercial procurement of large quantities of complicated and 

expensive printed pieces and presentation materials used by the Secretary and/or the 

President for press and Congressional briefings. Services include: 

• A full range of visual services with design consultation and production; 

• High-resolution scans and low-resolution scans for web application; 

• Prepress requirements and preparing the electronic files for printing and/or web 

position to ensure our customer files are prepared correctly, i.e., checking for 

printability with correct fonts, formats, setups for color separations; 

• Security printing to protect against fraud; 

• Electronic publishing on-demand digital printing and duplicating; 

• On-site high speed digital black and white and color printing; 

• High-quality process/multi-color printing; 

• Variable data printing; 

• Coordination with the Government Printing Office (GPO) and contractors; 

• Ensure adherence to Treasury Department policy and government statutes and 

regulations governing printing and binding; 

• A full line of specialized binding; 

• Printing procurement acquisition services outside GPO; 

WCF - 17 
• Quality assurance follow up and problem resolution between the customers and 

the printers; 

• Internet job submission; 

• Government Printing Office printing costs for publications, forms and various 

documents that benefits all the Treasury Department’s bureaus; and 

• Blank paper and other supplies procured through the Government Printing Office 

for the printing of publications, forms, and various documents. 

Billing Methodology: The charge assessed to each customer is based on their previous 

year usage of the various programs as a percent of the total prior year usage from all 

customers. 

3. Communications, Information, and Locator Center 

Resource Level: $776,904 and 8 FTEs 

Program Description: The Communications Information and Locator Center: 

• Answers, screens, and provides numbers to and/or transfer people who call 

Treasury’s listed numbers during work hours; 

• Provides general public information or organizational assistance to internal and 

external inquiries; 

• Maintains the Treasury employee locator information system; 

• Provides Deputy Assistant Secretaries (DAS) and above with calling service to 

employees during non-work hours; 

• Screens incoming collect and 1-800 calls and transfers these calls to the Treasury 

official when appropriate; 

• Schedules, coordinates, and places conference calls on Treasury’s conference 

bridge; 

• Provides local, long distance, and overseas telephone services for Senior 

Executives; 

• Provides dialing instructions or assistance to Treasury personnel upon request; 

• Provides continuous communication service in an emergency or crisis event; 

• Provides “after hours” office phone coverage for DAS and above upon request; 

• Answers, screens, and transfers calls to bureau heads and DAS and above, while 

on travel – this service is provided upon request and with the submission of the 

executive’s travel itinerary and contact numbers; and 

• Provides services Monday through Friday from 6 a.m. to 7:30 p.m.

Billing Methodology: The charge assessed to each customer is based on their number of 

calls received and services provided as a percent of the total. 

WCF - 18 
F – Centralized Support Services

Resource Level: $8,079,130 and 27 FTEs 

Program Description: The WCF Support Services cost center captures centralized 

administrative support costs for all WCF funded personnel that is not reflected in each 

WCF program’s budget. It also captures the costs of the administrative personnel who 

directly serve the WCF programs. 

Centralized Administrative Support Costs are paid by the Treasury Department through 

centralized bills. Examples include security programs, trash removal, mail, moving, 

copiers, industrial hygienist, Equal Employment Opportunity complaint center, child 

care, worker’s compensation, health exams, nursing services, electricity, steam, gas, 

water and sewer, parking, accounting system, Digital Telecommunications System, 

Treasury Communications System, and transit subsidy. 

Administrative personnel costs are for services used by all WCF programs. They are: 

• Legal Services: Legal services, such as legal advice and guidance 

• Information Technology Support Services: Information technology support 

services include infrastructure support, applications development and planning 

activities 

• Human Resources Services: Human resources personnel services such as position 

classification, hiring, performance management, and pay/benefits 

• WCF Corporate Office - Fund Management, Communication, and Customer 

Advocates Service: Policy, guidance, and overall management of the WCF is 

provided through the Fund Manager 

• Accounting, Budgeting, and Procurement Services: Accounting, budget 

formulation, budget execution, day-to-day financial operations of requisition fund 

certification, Memorandum of Understanding creation, operation of the integrated 

financial system for WCF invoice payments, and procurement services are 

provided to the WCF 

• Facilities and Support Services: Facilities and support services such as space and 

mail and messenger services 

Billing Methodology: The charge assessed to each customer is based on their total 

dollar value of WCF services received as a percent of the total. 

WCF - 19 
Section 2 – Budget and Performance Plan

2.1 – Funding Detail by Program 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

INTELLIGENCE & SECURITY

Security Programs $718 $779 $798

Intelligence & Security (Total) $718 $779 $798

DAS, HUMAN RESOURCES/CHCO

Human Capital Strategic Management $643 $768 $787

Civil Rights & Diversity $1,141 $1,309 $1,340

Human Resources (Total) $1,784 $2,077 $2,127

DAS, INFORMATION SYSTEMS & CIO

ACIO HRConnect Operations & Maintenance $26,695 $23,819 $24,646

ACIO NFC Payroll/Employee Express $22,187 $22,288 $22,823

HR Connect (Subtotal) $48,882 $46,107 $47,469

CIO Executive Office 1/ $1,129 $0 $0

CIO Resource Management 1/ $1,932 $2,926 $2,996

ACIO Telecommunications

Telecommunications Front Office $3,233 $3,394 $3,475

Digital Telecommunications System $23,171 $22,553 $24,069

Treasury Communications System $93,904 $90,029 $45,000

Treasury Network $4,786 $19,102 $45,000

Wireless Program $1,145 $1,231 $1,260

Web Hosting $0 $2,224 $2,277

Secure Communications Center $5,951 $5,760 $5,267

Alpha-VAX Computer Usage $282 $296 $303

ACIO Cyber Security $976 $1,322 $1,353

ACIO E-Government

Enterprise Architecture $1,860 $2,791 $2,858

Enterprise Solutions $11,294 $7,080 $7,250

Planning $788 $810 $829

Management $1,109 $919 $941

HSPD-12 2/ $31,436 $29,395 $45,850

ACIO Capital Planning & Information Management

Capital Planning and Investment Control $2,565 $3,949 $4,044

Information Management $1,434 $1,452 $1,486

Information Systems (Subtotal) $186,994 $195,231 $194,259

DAS, Information Systems (Total) $235,876 $241,338 $241,728

TREASURY-WIDE MANAGEMENT

Financial Systems Integration $2,681 $2,794 $2,520

Emergency Programs 1/ N/A $1,942 $1,988

Small & Disadvantaged Business Utilization $670 $894 $915

Procurement Program $744 $820 $869

Government-wide Council Payments $286 $343 $352

Treasury-wide Management (Total) $5,970 $6,793 $6,644

DAS, HEADQUARTERS OPERATIONS (DASHO)

Facilities & Support Services:

Environment, Safety, & Health $1,077 $1,131 $1,158

Printing Procurement, Reproduction & Graphics Services $4,464 $4,367 $4,472

Communications, Information, & Locator Center $676 $759 $777

Headquarters Operations (Total) $6,216 $6,256 $6,406

Centralized Support Services $7,366 $7,890 $8,079

Grand Total $257,931 $265,133 $265,783

1/ Offices combined in FY 2008 for administrative efficiencies.

2/ The WCF Executive Steering Committee will determine the scope of FY 2009 efforts during FY 2008.

WCF - 20 
2.2 – Full-Time Equivalents by Program 

Dollars in Thousands 

Federal & Contractor Staff

Fed. Cont. Fed. Cont. Fed. Cont.

Intelligency & Security

Security Programs 3 - 3 - 3 -

Intelligence & Security (Total) 3 - 3 - 3 -

DAS, HUMAN RESOURCES/CHCO

Human Capital Strategic Management 4 - 4 - 4 -

Civil Rights & Diversity 9 - 9 - 9 -

Human Resources (Total) 13 - 13 - 13 -

DAS, INFORMATION SYSTEMS & CIO

ACIO HRConnect Operations & Maintenance 30 34 33 14 33 14

ACIO NFC Payroll/Employee Express 18 2 18 2 18 2

HR Connect (Subtotal) 48 36 51 16 51 16

CIO Executive Office 1/ - 2 - - - -

CIO Resource Management 1/ 8 4 4 12 4 12

ACIO Telecommunications

Telecommunications Front Office 2 12 2 12 2 12

Digital Telecommunications System 14 58 14 58 14 58

Treasury Communications System 11 221 10 221 10 221

Treasury Network 5 14 - 21 - 21

Wireless Program - 3 - 3 - 3

Web Hosting - - 2 - 2 -

Secure Communications Center 18 6 17 6 17 6

Alpha-VAX Computer Usage 1 - 1 - 1 -

ACIO Cyber Security 6 - 6 - 6 -

ACIO E-Government

Enterprise Architecture 4 7 4 7 4 7

Enterprise Solutions 8 14 7 12 7 12

Planning 1 - 1 - 1 -

Management 2 3 2 3 2 3

HSPD-12 - - - - - -

ACIO Capital Planning & Information Management

Capital Planning and Investment Control 6 5 6 5 6 5

Information Management 4 - 4 - 4 -

Information Systems (Subtotal) 90 349 80 360 80 360

CIO/Information Systems (Total) 138 385 131 376 131 376

TREASURY-WIDE MANAGEMENT

Financial Systems Integration 2 8 2 8 2 8

Emergency Programs 4 - 4 - 4 -

Small & Disadvantaged Business Utilization 4 - 4 - 4 -

Procurement Program 2 - 2 - 2 -

Government-wide Council Payments - - - - - -

Treasury-wide Management (Total) 12 8 12 8 12 8

DAS, Headquarters Operations (DASHO)

Facilities & Support Services:

Environment, Safety, & Health 1 2 2 1 2 1

Printing Procurement, Reproduction, & Graphics 27 1 27 1 27 1

Communications, Information, & Locator Center 8 - 8 - 8 -

Headquarters Operations (Total) 36 3 37 2 37 2

Centralized Support Services 27 - 27 - 27 -

Grand Total 229 396 223 386 223 386

1/ Offices combined in FY 2008 for administrative efficiencies.

The Terms "Fed" and "Cont" in the column headers refers to "Federal Employees" and "Contractors," respectively. 

Plan Estimate Estimate

FY 2007 FY 2008 FY 2009

Initial Initial Plan Budget

WCF - 21 
2.3 – Funding Detail by Bureau 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

ALCOHOL & TOBACCO TAX & TRADE BUREAU $2,692 $4,025 $4,149

COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND $338 $345 $363

DEPARTMENTAL OFFICES (OTA) $82 $85 $87

DEPARTMENTAL OFFICES (S&E) $16,268 $18,055 $18,731

DEPARTMENTAL OFFICES (DSCIP) $849 $389 $399

FINANCIAL CRIMES ENFORCEMENT NETWORK $2,572 $3,222 $1,968

FINANCIAL MANAGEMENT SERVICE $6,877 $7,350 $8,122

INTERNAL REVENUE SERVICE $198,869 $204,265 $203,062

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION $1,294 $1,553 $1,817

OFFICE OF INSPECTOR GENERAL $409 $480 $526

PUBLIC DEBT $2,052 $2,025 $2,360

Subtotal (Treasury Appropriated Bureaus) $232,302 $241,791 $241,584

COMPTROLLER OF THE CURRENCY $4,123 $4,549 $5,169

DC PENSION $82 $190 $204

DEPARTMENTAL OFFICES (WCF) $227 $261 $270

ENGRAVING & PRINTING $5,143 $5,401 $6,066

EXECUTIVE OFFICE FOR ASSET FORFEITURE $500 $157 $148

FEDERAL FINANCING BANK $329 $355 $368

OFFICE OF THRIFT SUPERVISION $632 $1,096 $1,428

FF - FMS TREASURY AGENCY SERVICES (TAS) $19 $15 $0

FF - BPD ADMINISTRATIVE RESOURCE CENTER (ARC) $854 $993 $1,049

FF - DO FEDERAL CONSULTING GROUP $12 $22 $23

FF - DO FED SOURCE $369 $129 $0

U.S. MINT $2,818 $3,016 $3,356

Subtotal (Treasury non-Appropriated Bureaus) $15,109 $16,184 $18,081

ALCOHOL, TOBACCO, FIREARMS, & EXPLOSIVES $4,219 $2,001 $1,668

ALCOHOL, TOBACCO, FIREARMS, & EXPLOSIVES (NIBIN) $169 $0 $0

DHS - FLETC $2 $2 $2

DHS - HEADQUARTERS $641 $528 $477

DHS - OFFICE OF INSPECTOR GENERAL $1,301 $1,284 $689

DHS - U.S. SECRET SERVICE $1,624 $1,556 $1,450

HOUSING AND URBAN DEVELOPMENT $2,563 $1,786 $1,830

Subtotal (Non-Treasury) $10,520 $7,158 $6,117

Grand Total Financial Plan Requirements $257,931 $265,133 $265,783

Note: Non-Treasury customers purchase services from: HR Connect, Telecommunications, E-Government, Financial Systems

Integration, and Environment, Safety, & Health. 

WCF - 22 
2.4 – Funding Detail by Operating Levels 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Initial Initial Plan Budget

Resources Available for Obligation Plan Estimate Estimate

Object Classification:

11.1 Full-Time Permanent Positions $20,528 $22,265 $22,637

11.1 Other than Full-Time Permanent Positions 0 0 0

11.5 Other Personnel Compensation 333 182 348

11.8 Special Personal Services Payments 0 0 0

11.9 Personnel Compensation (Total) $20,860 $22,447 $22,985

12.0 Personnel Benefits 4,601 5,010 5,130

13.0 Benefits to Former Personnel 0 0 0

21.0 Travel 494 488 451

22.0 Transportation of Things 5 5 5

23.1 Rental Payments to GSA 0 0 0

23.2 Rent Payments to Others 0 0 0

23.3 Communications, Utilities, & Misc 6,327 6,165 6,075

24.0 Printing and Reproduction 114 198 203

25.1 Advisory & Assistance Services 0 0 0

25.2 Other Services 201,827 204,661 203,922

25.3 Purchase of Goods/Serv. from Govt. Accts 19,131 18,959 19,641

25.4 Operation & Maintenance of Facilities 0 0 0

25.5 Research & Development Contracts 0 0 0

25.6 Medical Care 0 0 0

25.7 Operation & Maintenance of Equipment 0 0 0

25.8 Subsistence & Support of Persons 0 0 0

26.0 Supplies and Materials 551 502 512

31.0 Equipment 4,021 6,697 6,858

32.0 Lands and Structures 0 0 0

33.0 Investments & Loans 0 0 0

41.0 Grants, Subsidies 0 0 0

42.0 Insurance Claims & Indemn 0 0 0

43.0 Interest and Dividends 0 0 0

44.0 Refunds 0 0 0

Total Budget Authority $257,931 $265,133 $265,783

WCF - 23 
Treasury Franchise Fund 

Mission Statement 

To offer world-class administrative solutions that provides value to Treasury and other 

federal customers while allowing them to concentrate on their core missions. 

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Treasury Franchise Fund Obligated Estimated Estimated $ Change % Change 

Consolidated/Integrated Administrative 

Management $419,041 $189,763 $0 ($189,763) -100.00%

Financial Management Administrative Support 

Services 109,615 113,819 122,284 8,465 7.44%

Financial Systems, Consulting and Training 13,671 12,923 13,727 804 6.22%

Total Resources $542,327 $316,505 $136,011 ($180,494) -57.03%

FY 2009 Priorities 

• Reduce the cost of administrative services for Treasury through sharing costs with other 

agencies. 

• Develop quantitative performance measures that demonstrate cost savings to Treasury and 

other agencies. 

• Increase the efficiency and effectiveness of Treasury’s administrative business processes. 

• Enhance the system environment of Treasury’s administrative operations by eliminating 

duplication and reducing information technology support costs. 

• Create a stronger shared services organization structure for Treasury. 
Table of Contents 

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

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

1B – Program History and Future Outlook................................................................... 4 

1C – Industry Outlook .................................................................................................. 7 

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.2 – Operating Levels Table........................................................................................ 8 

2.3 – Resource Detail Table ....................................................................................... 9 

2B – Appropriations Language and Explanation of Changes....................................... 9 

2C – Legislative Proposals ........................................................................................... 9 

Section 3 – Budget and Performance Plan ................................................................... 10

3.1 – Budget by Strategic Outcome ............................................................................ 10 

3A – Consolidated/Integrated Administrative Management ..................................... 10 

3.2.1 – Consolidated/Integrated Admin. Mgmt Budget and Performance Plan ......... 11 

3B – Financial Management Administrative Support Services................................. 11 

3.2.2 – Financial Mgmt Admin. Support Services Budget and Performance Plan..... 12 

3C – Financial Systems, Consulting and Training .................................................... 13 

3.2.3 – Financial Systems, Consulting and Training Budget and Performance Plan . 14 

Section 4 – Supporting Materials.................................................................................. 16

4A – Human Capital Strategy Description ................................................................. 16 

4B – Information Technology Strategy ...................................................................... 16 

4.2 – PART Evaluation Table..................................................................................... 16 
 Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The vision of the Treasury Franchise Fund (the Fund) is to transform the administrative 

support arena in the Department of the Treasury (Treasury) and help other federal 

agencies by creating a shared services business model that can offer marketplace success 

through competition. The Franchise Fund provides value to its customers by reducing 

costs while increasing the efficiency of administrative services. 

The Franchise Fund businesses have been leaders in redefining the methods for 

delivering administrative products and services that combine streamlined processes, 

simplified rules, full accountability, competitive costing, timely completion, and one-stop 

shopping for customers. Franchise Fund efforts have resulted in significant dollar 

savings within Treasury and throughout the federal government primarily through the 

following franchising objectives: 

• Promote efficiencies in the delivery of administrative products and services 

• Eliminate redundant systems and reducing duplication of effort 

• Foster competition 

• Enhance customer satisfaction 

During FY 2007, Treasury transferred management and operations of the FedSource 

franchise business activity from its host, Departmental Offices, to the Bureau of the 

Public Debt. In FY 2008 the Treasury Franchise Fund is comprised of three Franchise 

Business Activities. 

• Bureau of the Public Debt (BPD) Franchising (FedSource and the Administrative 

Resource Center) 

• Federal Consulting Group (FCG) 

• Financial Management Service Treasury Agency Services (TAS) 

The Fund reports the activity of the three Businesses in three Budget Activities that 

represent the various service offerings. 

Consolidated/Integrated Administrative Management – Includes BPD FranchisingFedSource

Treasury decided to transition out of the interagency acquisition business operated by 

FedSource by the end of FY 2008 because it was determined the work was outside the 

scope of Treasury’s core mission. Efforts to relocate the business to another government 

agency were unsuccessful which led to steps being taken to shut down FedSource. To 

close out the business line, management and operational responsibility of FedSource was 

transferred from its previous host, Departmental Offices, to the Bureau of the Public Debt 

in FY 2007. In addition, the Fund is discontinuing the Consolidated/Integrated 

Administrative Management budget activity in FY 2009. Estimates of any residual 

TFF - 1 
business are included in the Financial Management Administrative Support Services 

budget activity for the host organization (BPD Franchising - ARC) 

During FY 2008, the BPD Franchising-FedSource’s priorities are to: 

• Ensure a smooth transition for customers and vendors 

• Provide employees with job placement and separation assistance 

• Keep the cost of the closeout to a minimum 

Financial Management Administrative Support Services – Includes BPD FranchisingAdministrative Resources Center (ARC)

For the past 11 years, ARC has provided federal agencies with common administrative 

support in the areas of accounting, procurement, travel, human resources, and 

information technology. With a focus on excellence and superior service, ARC’s mission 

is to advocate “good government” by improving overall effectiveness through the 

delivery of responsive and cost effective administrative support to its customers. In 

addition to high quality administrative support, benefits are also realized by improving 

customers’ ability to effectively discharge their mission. 

ARC’s priorities over the next two years are to: 

• Work with the Financial Management Line of Business (FMLoB) and Financial 

Systems Integration Office (FSIO) to define the role of Federal Shared Service 

Providers 

• Upgrade infrastructure to meet Federal Shared Service Provider demands 

• Review and streamline processes to strengthen controls and ensure high quality, value 

added services at the lowest possible cost 

Financial Systems, Consulting and Training – Includes the Federal Consulting Group 

(FCG) and Treasury Agency Services (TAS)

The mission of the Federal Consulting Group (FCG) is to provide services to federal 

agencies to support their efforts to become more efficient, effective, citizen-centric, 

results-oriented, and market based. FCG’s mission directly supports the President’s 

vision for government reform and is guided by these principles. FCG works with federal 

agencies to improve the services and performance they deliver to or on behalf of the 

American people so that these organizations can contribute to conditions of prosperity 

and stability. 

The FCG’s three business lines--Consulting, Executive Coaching, and Performance 

Measurement and Customer Satisfaction--provide federal agencies with innovative 

solutions using the latest management and information technology tools, techniques, and 

best practices. FCG provides guidance to meet the requirements of the President’s 

Management Agenda, the Government Performance and Results Act, and the Program 

Assessment Rating Tool. FCG assists federal agencies in meeting performance 

improvement mandates while simultaneously accomplishing their core mission. 

TFF - 2 
The Performance Measurement and Customer Satisfaction (PMCS) Business Line 

focuses on aiding federal agencies in understanding what internal and external customers 

think of their efforts and improving overall customer satisfaction. This is accomplished 

through the use of the American Customer Satisfaction Index (ACSI), which is the 

world’s leading metric for assessing and improving customer satisfaction. Working with 

the University of Michigan, which provides access to the patented ASCI methodology, 

this business line compiles an annual benchmark of customer satisfaction for the federal 

government. Due to the emphasis on assessing and improving customer satisfaction with 

government agencies, this benchmark continues to rise and is nearly as high as customer 

satisfaction in the private sector. The PMCS area is also playing a key role in the 

evolution of electronic Government, a key element of the President’s Management 

Agenda. The use of the ACSI to continuously assess and improve the satisfaction of 

website visitors is increasing trust and confidence in government, expanding the use of 

federal websites, and reducing operational costs by encouraging citizens to use the 

internet to access federal information, services, and programs. 

FCG’s priorities over the next two years are to: 

• Continue to reduce administrative overhead costs 

• Continue to strengthen internal controls 

• Expand service offerings within business lines 

• Achieve Balanced Scorecard Performance Goals 

• Continue to achieve high customer service score through the use of the American 

Customer Satisfaction Index (ACSI) 

Treasury Agency Services (TAS) shares one common mission with the Financial 

Management Service (FMS) – to help agencies improve the quality of government 

financial management. TAS’ vision is to be the partner of choice for federal managers 

seeking financial management improvements and success. TAS’ strength is found in 

FMS’ expertise combined with an entrepreneurial perspective. TAS is a reimbursable 

source for information, advice, assistance, and training that reflect today’s environment 

and are customized to meet client agency requirements. These services provide the venue 

for linking program objectives with the best financial management practices. 

TAS has two major business lines. 

• The Consulting service line provides cash reconciliation services as well as the 

preparation of monthly and year-end reports. In addition, the Consulting service line 

provides financial management assistance, such as, operational reviews, internal

control reviews, financial reporting compliance reviews, standard general ledger 

conversions, strategic planning, and cost management. 

• The Financial Education service line offers open enrollment and agency specific 

financial courses, seminars, conferences and workshops. The focus of this education 

and training is to provide background, orientation, and skills in existing and new 

financial legislation, regulations, and practices. 

TFF - 3 
TAS’ priorities over the next two years are to: 

• Gain internal support for future business in the Fund 

• Expand service offerings within FMS’ government-wide accounting initiative to help 

educate financial personnel across the government 

1B – Program History and Future Outlook 

The Government Management Reform Act of 1994 (GMRA) authorized the 

establishment of six Franchise Fund Programs within the federal government. The 

franchise concept was built on OMB’s 12 operating principles for business-like 

organizations: 

• Competition Between Providers 

• Customers Exit Voluntarily 

• Full Cost Recovery 

• Ability to Handle Surges in Business

• FTE Accountability 

• Initial Capitalization 

• Dynamic Adjustments 

• Cessation of Activities 

• Clear Organizational Structure 

• Service Oriented 

• Measured Performance 

• Benchmarked Performance 

 

In 1996, OMB designated the Department of the Treasury as one of the six Executive 

Branch agencies authorized to establish a franchise fund program. The Treasury 

Franchise Fund began operations in 1997 with the following six Franchise Business 

Activities (FBA): 

 

• Center for Applied Financial Management 

• Federal Quality Consulting Group 

• Go-To.Gov 

• FBA-Central 

• FBA Seattle

• FBA-West 

Over the past decade, many new Franchise Business Activities have joined the Fund. 

Business entities, such as the Rocky Mountain Regional CASU and the Administrative 

Resource Center, sought out the Treasury Franchise Fund because of the financial 

flexibilities that were offered. At the same time, businesses have left the Fund. 

Businesses such as the Inspector General Auditors Training Institute left the Fund 

because they could not meet the Fund’s business benchmarks. Also during this time, 

several businesses consolidated to form new Franchise Business Activities within the

Fund. For example, FedSource was created by consolidating several Franchise Business 

Activities that provided similar service lines. 

As businesses have come and gone, the size of the Fund changed over the years. The 

Fund evolved in terms of the number of businesses, amount of revenue earned, and the 

TFF - 4 
number of FTEs supported. The Fund’s original six businesses had less than 80 FTE and 

earned $38 million of revenue in the first year of operation. In FY 2007, the Fund had 

only 3 businesses, 769 FTE, and earned $519 million of revenue. With the closeout of 

FedSource in FY 2008, the largest revenue producer, the Fund is projecting FY 2009 FTE 

of 793 and revenues of $137 million. 

Demonstrated Success – Eliminating Duplication

Shared Platform and Services 

As a shared service provider the Administrative Resource Center (ARC) performs fullservice transaction processing and reporting for many customers. The establishment of 

the ARC reduced the number of federal administrative systems. By providing access to 

an integrated system platform for accounting, travel, procurement, human resources, and 

information technology services, ARC, a Center of Excellence for Financial 

Management, now provides: 

• 31 organizations with administrative accounting services 

• 39 organizations with travel services 

• 30 organizations with procurement services 

• 28 organizations with personnel services 

• 11 organizations with information technology services 

The consolidation of these federal customers onto a shared systems platform provided 

substantial savings to the federal government. These organizations now get better system

license costs and share the costs associated with operations and maintenance. In addition 

to the cost savings, these organizations are upgraded to the latest version of the software 

and reach compliance with the E-Government initiatives simultaneously as opposed to

each organization managing these projects independently. For example, ARC’s standard 

solution currently supports the following E-Government initiatives. 

• E-Travel – Integration exists between Northrup Gruman’s GovTrip system and core 

accounting system. 

• E-Payroll – Integration exists between all four payroll providers and core accounting 

and labor distribution systems. 

• Grants.gov – Integration exists between Department of Health and Human Services 

Payment Management System and core accounting system. 

In the past, the Department of the Treasury had a decentralized administrative service 

environment. There were 15 different Bureaus and organizations within Treasury 

running their own accounting, procurement, and travel systems on various platforms. 

Each organization trained separate staffs to manage their systems and process their 

transactions. With the evolution of the Administrative Resource Center (ARC), Treasury 

moved to a shared services environment where 12 of the 15 entities share systems on a 

single integrated platform. In addition, many of the Bureaus take advantage of ARC’s 

experienced staff to process their transactions and provide their reporting. 

TFF - 5 
Demonstrated success –Timeliness and Accuracy

Timely Financial Information 

The Administrative Resource Center (ARC) has always been among Treasury's best in 

quality and timeliness of financial reporting. ARC strives to set the example for 

efficiency and quality in the area of financial reporting. With Oracle’s reporting tool 

(Discoverer), federal managers have real-time data at their fingertips any day of the 

month. By closing their customer’s books by the third business day following each 

month, timely financial data (such as unobligated balances) is quickly in the hands of 

federal mangers for decision-making. By closing the books five business days after yearend, federal managers have the data necessary to provide year-end reporting well ahead 

of their counterparts in other agencies. 

There is no better test for the accuracy and quality of financial data than an annual 

financial statement audit. The Treasury Franchise Fund has received 10 straight “clean” 

audit opinions. Externally, ARC has assisted customers in achieving clean audit opinions 

and also maintains an exceptional internal control structure. Each year ARC undergoes a 

SAS-70 audit that verifies the entire control structure from disbursement processing to 

financial reporting. The SAS-70 enhances customer confidence in ARC’s systems and 

services and reduces the agencies’ annual financial statement audit costs as auditors rely 

on the SAS-70 audit work. 

Demonstrated Success – Efficiency

Efficiency is the ability to perform well or achieve a result without wasting energy, 

resources, effort, time or money. Competition, a cornerstone of the franchising concept, 

has been the impetus behind improving government efficiency. Competition has 

increased the focus of service providers on the needs of the customer, introduced the need 

for market solutions (instead of administrative bureaucracy), decentralized authority, and 

improved efficiency by delivering better services at lower costs in the most effective 

manner. 

Future Outlook

Through FY 2009 the Fund will maintain its commitment to excellence and will continue 

to meet or exceed all strategic goals and benchmarks. With the elimination of the 

FedSource business line at the end of FY 2008, the Fund will look to grow existing 

business lines and add other value added, marketable administrative services. In 

addition, the Business Activities will continue to provide value to Treasury and nonTreasury agencies by providing cost sharing opportunities and eliminating duplicate 

systems. 

Quantifying Cost Savings

The Treasury Franchise Fund plans to expand its performance measurement with an 

emphasis on cost savings. In the past, the Franchise Business Activities have been 

challenged to demonstrate specific quantitative cost savings. Many times the effort 

TFF - 6 
necessary to capture and track specific quantitative cost savings is prohibitive. In other 

cases, baseline costs necessary for comparisons are known only to our customers. 

Customers are reluctant to share these costs with the businesses that provide them

services. The Franchise Fund and its businesses must provide incentives to its customers 

to share this cost data. It is imperative to demonstrate cost savings to Treasury and nonTreasury customers, as well as OMB, who manages the Line of Business initiatives.

The Fund also plans to expand its performance measurement on internal cost data. Cost 

data including transaction and process costs can be tracked to demonstrate cost savings. 

While it is difficult to compare this data to relevant industry standards because of the 

significant differences in cost accumulation, the data could be compared internally and 

tracked year-to-year to show progress. 

1C – Industry Outlook 

There is a positive outlook for the shared services sector in the federal government. The 

Fund anticipates further growth in this sector due to OMB’s Line of Business (LOB) 

initiatives. 

There is tremendous synergy between the business model established by the Treasury 

Franchise Fund over 11 years ago and the recent initiatives being rolled out by OMB. 

Each model supports the concept of sharing costs across agencies to reduce each entity’s 

cost burden, especially capital investments in systems. In addition, most of the Lines of 

Business use the concept of competition to keep the costs of service providers to a 

minimum and to allow customer agencies to shop around for the service provider that 

best satisfies their needs.

TFF - 7 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Treasury Franchise Fund FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 769 830 793

Object Classification:

 11.1 - Full-time permanent 46,940 52,037 50,514

 11.3 - Other than full-time permanent 434 503 498

 11.5 - Other personnel compensation 2,607 2,436 2,378

 11.8 - Special personal services payments 0 0 0

 12 - Personnel benefits 13,908 15,928 15,765

 13 - Benefits for former personnel 86 866 0

 21 - Travel and transportation of persons 1,317 1,621 1,437

 22 - Transportation of things 531 126 83

 23.1 - Rental payments to GSA 1,728 1,103 16

 23.2 - Rental payments to others 499 151 39

 23.3 - Comm, utilities, and misc charges 1,886 1,442 1,301

 24 - Printing and reproduction 94 109 86

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 15,084 10,108 9,207

 25.2 - Other services 417,001 193,932 25,778

 25.3 - Other purchases of goods and services from Govt. accounts 26,098 25,366 23,313

 25.4 - Operation and maintenance of facilities 128 89 92

 25.5 - Research and development contracts 0 0 0

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 4,390 1,828 1,187

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 941 489 426

 31 - Equipment 8,288 8,361 3,889

 32 - Land and structures 342 8 0

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 0 1 1

 43 - Interest and dividends 25 1 1

 44 - Refunds 0 0 0

Total Budget Authority $542,327 $316,505 $136,011

Budget Activities:

 Consolidated/Integrated Administrative Management 419,041 189,763 0

 Financial Management Administrative Support Services 109,615 113,819 122,284

 Financial Systems, Consulting and Training 13,671 12,923 13,727

Total Budget Authority $542,327 $316,505 $136,011

TFF - 8 
2.3 – Resource Detail Table 1/ 

(Dollars in Thousands)

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

 Financial Mgt. Admin. Support Services $107,615 $115,950 $123,000 6.08%

Consolidated/Integrated Admin. Mgt. 411,047 182,321 Discontinued N/A

Financial Systems, Consulting & Training 12,577 13,326 14,281 7.17%

Total Revenue / Offsetting Collections $531,239 $311,597 $137,281 -55.94%

Expenses

 Financial Mgt. Admin. Support Services 642 $109,615 729 $113,819 754 $122,284 3.43% 7.44%

Consolidated/Integrated Admin. Mgt. 105 419,041 65 189,763 Discontinued N/A N/A

Financial Systems, Consulting & Training 22 13,671 36 12,923 39 13,727 8.33% 6.22%

Total Expenses 769 $542,327 830 $316,505 793 $136,011 -4.46% -57.03%

Net Results

 Financial Mgt. Admin. Support Services -$2,000 $2,131 $716 -66.40%

Consolidated/Integrated Admin. Mgt. -7,994 -7,442 Discontinued N/A

Financial Systems, Consulting & Training -1,094 403 554 37.47%

Net Results -$11,088 -$4,908 $1,270 -125.88%

Estimated to FY 2009

FY 2007 FY 2008 FY 2009 FY 2008

Actual

% Change

Estimated

1/ To ensure consistency with the President's Budget, fiscal year 2007 actual amounts in Table 2.3 represent the budgetary 

resources and new obligations for the Fund. Other references to fiscal year 2007 actual amounts contained within the narrative

are based on the Fund's actual results of operations (revenue, expenses and net operating results).

2B – Appropriations Language and Explanation of Changes 

The Treasury Franchise Fund receives no appropriated funds from Congress. 

2C – Legislative Proposals 

The Treasury Franchise Fund has no legislative proposals for FY 2009. 

TFF - 9 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Estimated Estimated Change

AMOUNT AMOUNT AMOUNT 

 Aligned organization 316,505 136,011 -57.0%

Total $316,505 $136,011 -57.0%

3A – Consolidated/Integrated Administrative Management (No funding): This 

Budget Activity consists of only one Franchise Business Activity, BPD FranchisingFedSource. 

The mission of FedSource was to provide entrepreneurial business solutions for the 

acquisition and financial management of common administrative services and products in 

support of agency missions and objectives. FedSource focused on support services and 

copier/printer management. 

Treasury decided to transition out of the interagency acquisition business operated by 

FedSource by the end of FY 2008 because it was determined this work was outside the 

scope of Treasury’s core mission and independent audits identified several internal 

control weaknesses. Efforts to relocate the business to another government agency were 

unsuccessful which led to steps being taken to shut down FedSource. The Treasury 

Franchise Fund’s FY 2009 budget submission reflects the discontinuance of the 

Consolidated/Integrated Administrative Management budget activity. Estimates of any 

residual business are included in the host’s organization’s budget activity, Financial 

Management Administrative Support Services. 

TFF - 10 
3.2.1 – Consolidated/Integrated Administrative Management Budget and 

Performance Plan 

Consolidated/Integrated Administrative 

Management Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $701,150 $540,586 $419,041 $189,763 $0

Total Resources $701,150 $540,586 $419,041 $189,763 $0

Budget Activity Total $701,150 $540,586 $419,041 $189,763 $0

Consolidated/Integrated Administrative

Management Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Customer Satisfaction Index - 

Consolidated/Integrated Administrative 

Mngmnt (%)(Oe) 

 71% 51% 0% 74% n/a

Operating expenses as a percentage of 

revenue--Consolidated/Integrated

Administrative Management (%)(E) 

 4% 4% 4% 12% n/a

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

Description of Performance:

Since making the decision to close-out the FedSource business line, all efforts have been 

focused on ensuring a smooth transition for customers and vendors, providing employees 

with job placement and separation assistance and minimizing close-out costs. Therefore, 

the Fund’s performance targets will not be applied to the BPD Franchising – FedSource 

business line. 

In FY 2007, FedSource accounted for over 75% of the Fund’s gross revenue. 

Accordingly, closing the business line significantly reduces the Franchise Fund’s budget 

estimates for FY 2008 and FY 2009. In addition, it is estimated that FedSource’s 

administrative costs will be significantly higher in FY 2008 as customer accounts and 

offices are closed. FedSource ended FY 2007 with a $2.5 million loss and it is estimated 

that they will lose an additional $7.4 million in FY 2008 as the closeout is completed. 

These losses and any unforeseen claims and disputes, will be covered using FedSource’s 

operating reserves. For FY 2009, the Fund has discontinued the Consolidated/Integrated 

Administrative Management budget activity. Estimates of any residual business are 

included in the host organization’s budget activity, Financial Management Administrative 

Support Services. 

3B – Financial Management Administrative Support Services ($122,284,000 from 

reimbursable programs): This Budget Activity consists of only one Franchise Business 

Activity, BPD Franchising-ARC. 

The Financial Management Administrative Support Activity supports the President’s 

Management Agenda and furthers “good government” by standardizing administrative 

TFF - 11 
financial systems and processes required to operate federal organizations. Value is 

provided through economies of scale in systems and operating costs and other high 

quality, value added services. ARC provides traditional administrative support functions 

with a focus on accounting, procurement, travel, human resources, and information 

technology services. This program has been very successful in meeting its mission goals 

as evidenced by the increasing demands for its services and the level of satisfaction 

expressed by its customers. 

As a Center of Excellence for Financial Management, ARC has delivered improvements 

in several areas. Overall, the number of federal administrative systems has been reduced. 

ARC’s integrated platform for accounting, travel, procurement, and personnel functions 

ensure that shared expectations are met and consistent accounting practices are used. 

In addition to improved service, consolidation of federal customers onto a shared systems 

platform offers the opportunity for overall savings for the federal government. Volume

discounts for items such as license and service agreements, together with a consolidated 

voice for changes and software improvements, mean better service for customers. 

Attention to software upgrades and information technology security initiatives also add to 

the benefits. 

3.2.2 – Financial Management Administrative Support Services Budget and 

Performance Plan 

Financial Management Administrative 

Support Services Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $74,850 $88,735 $109,615 $113,819 $122,284

Total Resources $74,850 $88,735 $109,615 $113,819 $122,284

Budget Activity Total $74,850 $88,735 $109,615 $113,819 $122,284

Financial Management Administrative 

Support Services Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Customer Satisfaction Index - Financial Mgmt

Admin Support Services (%) (Oe) 

 71% 75% 0% 74% 74%

Operating expenses as a percentage of 

revenue--Financial Management 

Administrative Support (%) (E) 

 9% 17% 15% 12% 12%

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

Description of Performance:

ARC continued to demonstrate operations of a profitable franchise business in FY 2007. 

However, for FY 2008 and FY 2009, ARC estimates lower customer and revenue growth 

as they position themselves to support their role as a Federal Shared Service Provider and 

oversee the closeout of FedSource. 

TFF - 12 
To measure customer satisfaction, the Fund uses the American Customer Satisfaction 

Index (ACSI). This advanced customer satisfaction measurement tool is exhaustive and 

provides actionable results. Due to the costs, ACSI measurements are not taken annually 

for each business. The Franchise Business Activities have the option of using internal 

customer satisfaction survey tools during years the ACSI is not used. Internal customer 

satisfaction survey scores are not officially tracked and reported because they use a 

different rating scale. Although ARC is reporting actual FY 2007 ACSI score of not 

applicable, an internal customer satisfaction survey was conducted, resulting in an overall 

customer satisfaction rate of 91 percent. 

3C – Financial Systems, Consulting and Training ($13,727,000 from reimbursable 

programs): This Budget Activity consists of two Franchise Business Activities, Federal 

Consulting Group and Treasury Agency Services. 

The mission of the Federal Consulting Group (FCG) is to work with other federal 

agencies to support their transformation efforts to become more efficient, effective, 

citizen-centric, and results-oriented. FCG’s three business lines - Measuring 

Performance and Customer Satisfaction, Consulting, and Executive Coaching - provide 

federal agencies with innovative solutions using the latest management and information 

technology tools, techniques, and best practices. 

• The Performance Measurement and Customer Satisfaction business line focuses on 

aiding federal agencies in understanding what internal and external customers think 

of their efforts and improving overall customer satisfaction. This is accomplished 

through the use of the American Customer Satisfaction Index (ACSI), which is the 

world’s leading metric for assessing and improving customer satisfaction and other 

measures of customer and employee satisfaction. 

• The Consulting business line focuses on assisting federal agencies in achieving 

organizational effectiveness through strategic planning, organizational development, 

process improvement, and workforce planning. FCG provides guidance to meet the 

requirements of the President’s Management Agenda and the Program Assessment 

Rating Tool. Other services include conducting Baldridge and various types of 

program assessments. 

• The Executive Coaching business line focuses on leadership development, team

building, appreciative inquiry, executive coaching/mentoring, personal leadership 

skills and feedback coaching. 

The mission of Treasury Agency Services (TAS) is to help agencies improve the quality 

of government financial management. TAS, hosted by the Financial Management 

Service, is a provider of information, advice, assistance, and training that is customized to 

meet today’s environment and client agencies’ requirements. 

TFF - 13 
3.2.3 – Financial Systems, Consulting and Training Budget and Performance Plan 

Financial Systems, Consulting and Training 

Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $12,250 $13,133 $13,671 $12,923 $13,727

Total Resources $12,250 $13,133 $13,671 $12,923 $13,727

Budget Activity Total $12,250 $13,133 $13,671 $12,923 $13,727

Financial Systems, Consulting and Training 

Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

"Customer Satisfaction Index - Financial 

System, Consulting & Training"

 71% 81% 0% 74% 74%

"Operating expenses as a percentage of

revenue--Financial Systems, Consulting and

Training (%) (E)" 

 11% 10% 7% 12% 12%

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

Description of Performance:

Federal Consulting Group (FCG)

FCG has been consistently earning a profit since its inception. FCG anticipates

controlled revenue growth from FY 2007 to FY 2009. The expansion of “Performance

Measurement and Customer Satisfaction” as FCG’s top business line has helped generate 

consistent revenue. 

FCG worked hard to keep operating costs to a minimum. As a result, they have 

consistently met the Fund’s operating percentage benchmark by keeping their operating 

costs less than 12 percent of their total revenue. This shows that FCG is running a lean 

organization and is placing emphasis on costs that directly impact the customer rather 

than overhead. 

FCG offers the American Customer Satisfaction Index (ACSI) as a tool for the federal 

government to measure customer satisfaction. It is only fitting that FCG maintains one of 

the highest indexed scores in the federal government. FCG received considerable 

feedback and actionable data from last year’s rating. As a result FCG chose not to 

undergo a new rating in FY 2007 until they could make changes and implement the 

action items from last year’s process. 

Treasury Agency Services (TAS)

TAS ended FY 2007 with a $75 thousand loss. TAS has struggled the last several years 

to break-even. It made significant strides in FY 2007 by reducing overhead costs. TAS 

reduced its rent costs in FY 2007 by $212,000. This helped TAS meet the Fund’s 

performance target of keeping its operating expenses below 12 percent of its total 

revenue. In FY 2007, TAS also reduced salaries and benefits by approximately $800,000 

and experienced a drop in revenue of almost 27 percent. The loss in FY 2007 was fully 

TFF - 14 
covered by TAS’ equity (almost $1 million) generated while in the Fund. TAS estimates 

positive net results in FY 2008 and FY 2009. 

TAS plans to increase revenue by offering more financial training classes, expanding 

marketing efforts, and developing new product lines such as providing agencies with 

training and assistance on Government-wide Accounting projects. 

TAS also decided not to perform an American Customer Satisfaction Index (ACSI) 

survey in FY 2007. They monitored customer satisfaction based on feedback from class 

participation and customer responses. TAS will participate with the other businesses next 

year to use the ACSI. TAS’ internal customer satisfaction rating was 84 percent for 

FY 2007. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

TFF - 15 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The Fund relies heavily on its host Bureaus (BPD, FMS, and DO) to provide the basis of 

its human capital strategy. Each bureau has done significant work in this area. The 

Fund, in a supplemental role, continues to improve recruitment, retention, professional 

development and evaluation strategies. The Fund makes full use of special hiring 

authorities, such as the Federal Career Intern, Outstanding Scholar and Student Career 

Experience Programs. With a significant portion of the FTE’s located in Parkersburg,

WV, the Fund has had a great deal of success recruiting highly qualified personnel. 

The Treasury Franchise Fund maintains its “EthicSmart” initiative that increases 

awareness of ethical dilemmas that are heightened in a service business environment. 

This initiative helps support one of the Fund’s goals of complying with relevant laws and 

regulations. The program is designed to help convey management’s desire to create an 

environment where employees can make the right decision and take the right course.

4B – Information Technology Strategy 

The businesses in the Treasury Franchise Fund (TFF) use their host bureaus for 

information technology (IT) strategic planning. If the Fund developed crosscutting or 

corporate level IT investment needs, the Fund’s Advisory Board could function as an 

Investment Review Board (IRB). In this role, the Fund’s Advisory Board would monitor 

investment activity. All IT investments would be supported by a business need and the 

investment must add value to the services TFF provides its customers. When reviewing 

investments, the TFF IRB would consider/address these questions: 

• Does the IT investment support core/priority mission functions that need to be 

performed by the Treasury Franchise Fund?

• Does the project have to be undertaken by the Franchise Fund because no alternative 

private sector or government source can support the function more efficiently?

• Does the investment support work processes that have been simplified or otherwise 

redesigned to reduce costs, improve effectiveness, and make maximum use of 

commercial, off-the-shelf technology?

• Does the investment eliminate redundant systems and centralize core functions 

consistent with Treasury’s enterprise architecture? 

4.2 – PART Evaluation Table 

The Treasury Franchise Fund has not received a PART Evaluation.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

TFF - 16 
Bureau of Engraving and Printing 

Mission Statement 

To design and manufacture high quality security documents that meet customer 

requirements for quality, quantity and performance, including counterfeit deterrence. 

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2007 FY 2008 FY 2009

Bureau of Engraving and Printing Obligated Estimated Estimated $ Change % Change 

Manufacturing $493,000 $469,000 $497,500 $28,500 6.08%

Protection and Accountability of Assets 63,000 62,000 62,000 0 0.00%

Total Resources $556,000 $531,000 $559,500 $28,500 5.37%

FY 2009 Priorities 

• The continued re-tooling and retrofitting of the currency production process which 

will allow BEP to integrate to a 50-subject (notes per sheet) manufacturing capability 

from the current 32-subject (notes per sheet) currency production process. This new 

equipment will ensure that the BEP continues to operate in an efficient and costeffective manner. 

• The introduction of a new $100 note. The new $100 notes will contain enhanced 

security features including subtle background colors as well as a new overt 

counterfeit deterrent feature. The Federal Reserve will determine when the new note 

is issued to the public. The new notes are part of the current multi-year initiative to 

implement the most ambitious currency redesign in United States history. 

• Continue process improvements as required of an ISO 9001 certified organization, a 

designation that indicates to current and prospective customers that the Bureau 

employs a rigorous quality management program. 

• Continue to work with the Advanced Counterfeit Deterrent Committee and other 

Government agencies to research and develop state-of-the-art counterfeit deterrent 

features for use in future currency notes that will enhance and protect future notes. 
Table of Contents 

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

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

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

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

2.2 – Operating Levels Table.......................................................................................... 5 

2.3 – Resource Detail Table............................................................................................ 6 

2B – Appropriations Language and Explanation of Changes......................................... 6 

2C – Legislative Proposals ............................................................................................. 6 

Section 3 – Budget and Performance Plan ..................................................................... 7

3.1 – Budget by Strategic Outcome ................................................................................ 7 

3A – Manufacturing....................................................................................................... 7 

3.2.1 – Manufacturing Budget and Performance Plan.................................................... 8 

3B – Protection and Accountability of Assets............................................................... 8 

3.2.2 – Protection and Accountability of Assets Budget and Performance Plan............ 9 

Section 4 – Supporting Materials.................................................................................. 11

4A – Human Capital Strategy Description ................................................................... 11 

4.1 – Summary of IT Resources Table ......................................................................... 12 

4B – Information Technology Strategy ........................................................................ 13 

4.2 – PART Evaluation Table....................................................................................... 14 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The mission of the Bureau of Engraving and Printing is to design and manufacture high 

quality security documents that deter counterfeiting and meet customer requirements for 

quality, quantity and performance. 

The Bureau of Engraving and Printing began printing currency in 1862. The Bureau 

operates on the basis of authority conferred upon the Secretary of the Treasury by 31 

U.S.C. 321(a) (4) to engrave and print currency and other security documents. 

Operations are financed by a means of a revolving fund established in 1950 in accordance 

with Public Law 81-656. This fund is reimbursed through product sales for direct and 

indirect costs of operations including administrative expenses. In 1977, Public Law 95-

81 authorized the Bureau to include an amount sufficient to fund capital investment and 

to meet working capital requirements in the prices charged for products. This eliminated 

the need for appropriations from Congress. 

The Bureau’s vision is to maintain its position as a world-class securities printer 

providing its customers and the public superior products through excellence in 

manufacturing and technological innovation. The Bureau strives to produce U.S. 

currency of the highest quality, as well as many other security documents issued by the 

federal Government. Other activities at the Bureau include engraving plates and dies; 

manufacturing inks used to print security products; purchasing materials, supplies and 

equipment; and storing and delivering products in accordance with the requirements of 

customers. In addition, the Bureau provides technical assistance and advice to other 

federal agencies in the design and production of documents, which, because of their 

innate value or other characteristics, require counterfeit deterrence. 

The Bureau’s top priorities for FY 2009 include the continued re-tooling and retrofitting 

of the currency production process which will allow the BEP to integrate to a 50-subject 

(notes per sheet) manufacturing capability from the current 32-subject (notes per sheet) 

currency production process. This new equipment will ensure that the BEP continues to 

operate in an efficient and cost-effective manner. Another top priority for FY 2009 is the 

introduction of a new $100 note. The new $100 notes will contain enhanced security 

features including subtle background colors as well as a new overt counterfeit deterrent 

feature. The Federal Reserve will determine when the new note is issued to the public. 

Background colors help consumers, particularly those who are visually impaired, to tell 

the denominations apart. Because aggressive law enforcement, effective design, and 

public education are all essential components of a concerted anti-counterfeiting program, 

the Bureau will continue its work with the Advanced Counterfeit Deterrent Committee to 

research and develop future currency designs that will enhance and protect future notes. 

Manufacturing – The Bureau of Engraving and Printing manufactures high quality 

security documents that deter counterfeiting while supporting commerce through safe and 

secure U. S. notes. These products are grouped into two programs: Federal Reserve 

notes and other security documents. 

BEP - 1 
Protection and Accountability of Assets – The Bureau’s Protection and Accountability of 

Assets activity supports the Department of the Treasury’s strategic objective, Trust and 

Confidence in U.S. Currency Worldwide. Because of the value of the products 

manufactured, the Bureau must maintain an accurate and cost effective system of 

accountability for all Bureau products, which will ensure that products are accounted for 

while in production and that its customers receive the correct quantity of the product 

ordered. The protection and accountability of assets is a joint effort crossing many 

divisions within the Bureau; products are tracked and accounted for at every step of the 

production process. The primary mission of the Bureau’s Office of Security is to 

preserve the integrity of and safeguard critical Bureau resources and assets such as 

personnel, products, facilities and equipment. 

1B – Program History and Future Outlook 

Redesigned Federal Reserve Notes: The Bureau of Engraving and Printing has a long 

term commitment to develop state-of-the-art counterfeit deterrent features for use in 

future currency notes through new, more innovative technologies. The Bureau expects to 

redesign United States currency every seven to ten years in an effort to stay ahead of 

counterfeiters as advances in technology make counterfeiting of currency less difficult. 

The Advanced Counterfeit Deterrent Steering Committee, which includes members from 

BEP, other Department of the Treasury officials, the United States Secret Service, and the 

Federal Reserve Board, is continually researching counterfeit deterrent features for 

possible use in future currency designs that will enhance and protect future notes from 

counterfeiting. Aggressive law enforcement, an effective design, and public education 

are all essential components of a concerted anti-counterfeiting program. The United 

States government continues to enhance the security of our nation's currency in an effort 

to provide the public with safe and secure notes and information which instills public 

confidence in order to enable commerce. 

In FY 2008, production of a redesigned $5 note will begin and it will be placed in 

circulation later in the year. The redesigned $5 was the fourth denomination in the new 

currency series that incorporated enhanced security features, as well as subtle background 

colors and symbols of freedom into the designs. This note was selected to be redesigned 

at this time because ongoing scrutiny of counterfeiting techniques detected a pattern 

where counterfeiters bleached the ink off of old $5 notes, and then printed counterfeit 

$100 notes on the paper. The public was deceived because of similarities between the 

placement of the security features on the $5 and $100 notes. While these counterfeit 

attempts posed no significant economic problems, Treasury and Federal Reserve officials 

determined that a redesign of the $5 would help ensure such problems would not develop 

in the future. A redesigned $100 note is scheduled to be in production in FY 2009. 

Public Education: Because the improved security features in the redesigned currency are 

most effective when the public knows about and uses the features to authenticate their 

currency, a broad, public education program is crucial to the anti-counterfeiting effort. In 

cooperation with the Federal Reserve, BEP administers a public education program to 

support the introduction of new currency designs. The program offers public education 

BEP - 2 
and training materials to the public in order to inform them about the latest currency 

designs. These materials are also available on line and can be downloaded from

www.moneyfactory.gov/newmoney. The site has received over 222 million hits since its 

launch in May 2003 and gets about 280,000 unique visitors each month. 

The goal of this program is to build an adequate threshold of awareness to support 

commerce and ensure seamless, "business as usual" transitions as new currency designs 

are introduced to the public. Overall, counterfeiting of U.S. currency remains at low 

levels – due primarily to a combination of improvements in the notes’ security features, 

aggressive law enforcement and public education efforts. Statistics continue to indicate 

that the amount of counterfeit U.S. currency worldwide is less than one percent of 

genuine U.S. currency in circulation. 

An education campaign will be conducted for the new $100 notes following the 

successful campaigns for the redesigned $20, $50, $10 and $5 notes. No domestic paid 

advertising will be used to introduce the new notes, but paid media of some nature may 

prove necessary in certain foreign markets. $100 notes comprise more that 50 percent of 

outstanding United States currency, an estimated two-thirds which is held outside the 

United States borders. This education program ensures that people all over the world 

accept, recognize and use the enhanced security features of the new currency. 

Quality: Along with innovative, cutting-edge designs, BEP will maintain its focus on 

producing high quality security products in the most cost effective manner possible. It 

will continue to pursue process improvements as required of an ISO 9001 certified 

organization, a designation that indicates to current and prospective customers that the 

Bureau employs a rigorous quality management program. Continuous process 

improvements will be the catalyst for world class quality and improved cost performance 

through streamlined processes and low spoilage. In FY 2007, the BEP attained ISO 

14001 certification for its environmental management systems institutionalizing its 

commitment to sound environmental stewardship. 

Cost Reduction Efforts: The Bureau strives to provide its customers with superior 

products for the lowest possible price. The BEP continuously looks for ways to cut costs 

without compromising quality. Significant capital investments are planned in FY 2008 

and FY 2009 that will enhance productivity and reduce spoilage. During FY 2006 the 

Bureau streamlined the organization by realigning and grouping similar functions 

together. This has improved efficiency, reduced response time, and facilitated currency 

redesign efforts. 

Improvements in image inspection technology have led to the development of 

sophisticated inspection systems that BEP uses in its currency manufacturing processes. 

These systems use a proprietary software package to provide real time inspection of 

printed work. The Bureau’s investment in automated inspection systems has proven to be 

more cost effective than the system it replaced. It has also afforded BEP some flexibility 

in redeploying resources to other areas while enhancing it’s capability of delivering a 

high quality product. 

BEP - 3 
BEP’s success would not be possible without the contributions of its people. The Bureau 

remains strongly committed to the continued streamlining and development of its 

workforce through an array of career development programs tailored to the demand and 

skill requirements of a high-technology workplace. In FY 2008, BEP plans to perform a 

skills assessment of its workforce in preparation for the installation of new manufacturing 

technology and to prepare for the anticipated wave of baby-boomer retirements. Strategic 

investment in people and technology will continue to be critical factors in maintaining the 

Bureau’s status as a world class securities manufacturer. 

BEP - 4 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Bureau of Engraving and Printing FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 2,109 2,200 2,150

Object Classification:

 11.1 - Full-time permanent 161,500 166,200 168,300

 11.3 - Other than full-time permanent 0 0 0

 11.5 - Other personnel compensation 13,000 11,900 13,000

 11.8 - Special personal services payments 0 0 0

 12 - Personnel benefits 46,000 46,500 47,000

 13 - Benefits for former personnel 0 0 0

 21 - Travel and transportation of persons 1,750 1,900 1,900

 22 - Transportation of things 150 100 100

 23.1 - Rental payments to GSA 2,000 2,000 2,000

 23.2 - Rental payments to others 1,000 1,000 1,000

 23.3 - Comm, utilities, and misc charges 12,000 12,500 15,000

 24 - Printing and reproduction 800 800 800

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 4,500 4,500 4,600

 25.2 - Other services 44,000 45,000 51,000

 25.3 - Other purchases of goods and services from Govt. accounts 0 0 0

 25.4 - Operation and maintenance of facilities 8,200 8,500 8,700

 25.5 - Research and development contracts 3,000 3,000 3,000

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 7,000 7,000 7,000

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 171,000 155,000 176,000

 31 - Equipment 80,000 65,000 60,000

 32 - Land and structures 0 0 0

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 100 100 100

 43 - Interest and dividends 0 0 0

 44 - Refunds 0 0 0

Total Budget Authority $556,000 $531,000 $559,500

Budget Activities:

 Manufacturing 493,000 469,000 497,500

 Protection and Accountability of Assets 63,000 62,000 62,000

Total Budget Authority $556,000 $531,000 $559,500

BEP - 5 
2.3 – Resource Detail Table 

% Change

FY 2007

Description to FY 2008 FTE AMOUNT FTE AMOUNT FTE AMOUNT

Revenue:

Federal Reserve Notes $572,700 $532,000 $562,000 5.6%

Other Security Products 5,400 6,000 6,000 0.0%

Total Revenue $578,100 $538,000 $568,000 5.6%

Expenses:

Direct Manufacturing 1800 1700 1650 -2.9%

Paper and Ink $171,000 $160,000 $180,000 12.5%

Direct Labor 32,000 31,500 31,000 -1.6%

Other Direct MfgCosts 7,000 7,500 7,500 0.0%

Subtotal Direct Manufacturing Costs 210,000 199,000 218,500 9.8%

 Indirect Manufacturing Support 500 259,500 500 269,000 500 278,000 3.3%

 Total Manufacturing Activity Costs 469,500 468,000 496,500 6.1%

Total Protection & Accountability of Assets ActivityCosts 62,300 63,000 63,000 0.0%

Total Expenses $531,800 $531,000 $559,500 5.4%

Net Results $46,300 $7,000 $8,500 21.4%

Federal Reserve NotesManufactured (in Billions) 9.1 8.3 9.3 12.0%

Actual

FY 2008

Estimated

FY 2009

Estimated

Dollars in Thousands

FY 2007

2B – Appropriations Language and Explanation of Changes 

BEP receives no appropriated funds from Congress. 

2C – Legislative Proposals 

BEP has no legislative proposals for FY 2009. 

BEP - 6 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Estimated Estimated Change

AMOUNT AMOUNT AMOUNT 

 U.S. notes & coins 531,000 559,500 5.4%

Total $531,000 $559,500 5.4%

3A – Manufacturing ($497,500,000 from reimbursable programs): BEP manufactures 

high quality security documents that deter counterfeiting. These manufactured products 

are grouped into two programs: Federal Reserve notes and other security documents. 

The Bureau’s Manufacturing Activity supports Treasury’s strategic objective, Trust and 

Confidence in U.S. Currency Worldwide. 

BEP uses the latest technologies for security printing and processing, including 

automated inspection equipment used in the production of the nation’s currency. The 

Bureau’s production equipment is operated by highly skilled craft personnel that have 

developed their unique skills through multi-year apprenticeship programs. 

The manufacturing of state-of-the-art currency deters counterfeiting, contributes to public 

confidence, and facilitates daily commerce ensuring seamless, "business as usual" 

transitions as new currency designs are introduced to the public. 

In FY 2007, the Bureau delivered 9.1 billion Federal Reserve Notes to the Federal 

Reserve Banks. The currency order was fulfilled on schedule, at lower cost than 

anticipated. The Federal Reserve has ordered 8.3 billion notes for delivery in FY 2008 

and their order is estimated at 9.3 billion notes for FY 2009 based on their projections of 

currency demand. 

BEP - 7 
3.2.1 – Manufacturing Budget and Performance Plan 

Manufacturing Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $436,000 $445,000 $493,000 $469,000 $497,500

Total Resources $436,000 $445,000 $493,000 $469,000 $497,500

Budget Activity Total $436,000 $445,000 $493,000 $469,000 $497,500

Manufacturing Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Manufacturing costs for currency (dollar costs 

per thousand notes produced) ($) (E) 

$28.83 $27.71 $28.71 $33 $34

Percent of currency notes delivered to the 

Federal Reserve that meet customer quality

requirements (%) (Oe)

 99.9% 99.9% 100% 99.9% 99.9%

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

Description of Performance: 

Manufacturing Costs for Currency (dollar cost per 1,000 notes produced) is an indicator 

of manufacturing efficiency and effectiveness of program management. This measure is 

based on contracted price factors, and anticipated productivity improvements. Actual 

performance against standard depends on BEP’s ability to meet annual spoilage, 

efficiency, and capacity utilization goals. Performance against this measure has been

favorable for the past seven years. 

Percent of Currency Notes Delivered to the Federal Reserve that meet customer quality 

requirements has an annual target of 99.9 percent. The Bureau has met or exceeded this 

target for the last three years as indicated. BEP’s ability to consistently meet this annual 

target enables commerce by ensuring that currency notes delivered will work the first 

time and every time in day-to-day financial transactions. 

3B – Protection and Accountability of Assets ($62,000,000 from reimbursable 

programs): The purpose of the Bureau’s Protection and Accountability of Assets Activity 

is to provide effective and efficient security and accountability during the manufacture 

and delivery of United States currency to the Federal Reserve, as well as protect 

thousands of BEP employees and contractors, facilities and equipment. The activity 

supports Treasury’s strategic objective, Trust and confidence in U.S. Currency 

Worldwide. BEP’s ability to provide product security and accountability during the 

manufacture and delivery of currency notes preserves the integrity of the nation’s 

currency. 

The value of what the Bureau produces requires it to have the highest standards of 

accountability and control available. The Bureau must maintain an accurate and cost 

effective system of accountability for all Bureau products which will ensure that products 

are accounted for while in production and that customers receive the correct quantity of

BEP - 8 
products ordered. The protection and accountability of assets is a joint effort crossing 

many divisions within the Bureau; products are tracked and accounted for at every step of 

the production process. 

The Bureau’s annual financial statement audit represents an assessment by an 

independent, certified public accounting firm of the integrity of the Bureau’s revolving 

fund and the reliability of the financial data used for managerial decision making. 

Successful financial reporting at the Bureau is a joint effort that requires coordination 

between financial management, operations, and information technology personnel, as 

well as close coordination with the independent, certified public accounting firm

contracted to perform the annual audit and the Office of Inspector General, which 

oversees their work. In addition, the Bureau’s Office of Security’s primary mission is to 

preserve the integrity of and safeguard critical Bureau resources and assets such as 

personnel, products, plant facilities and equipment. 

3.2.2 – Protection and Accountability of Assets Budget and Performance Plan 

Protection and Accountability of Assets 

Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $56,000 $61,000 $63,000 $62,000 $62,000

Total Resources $56,000 $61,000 $63,000 $62,000 $62,000

Budget Activity Total $56,000 $61,000 $63,000 $62,000 $62,000

Protection and Accountability of Assets 

Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Security costs per 1000 notes delivered ($) (E) $5.75 $6 $5.92 $5.65 $5.5

Currency shipment discrepancies per million 

notes (%) (Oe) 

 0% 0.01% 0.01% 0.01% 0.01%

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

Description of Performance:

Currency Shipment Discrepancies is an indicator of the Bureau’s ability to provide 

effective product security and accountability. This measure refers to product overages or 

underages of as little as a single currency note in shipments of finished notes to the 

Federal Reserve Banks. This target is very difficult to achieve, given the amount of 

currency notes produced and the speed at which the notes are processed. However, BEP 

continually strives to meet its long term goal of 0 percent, and has been able to do so 

several times. For several years, this measure has had an annual target of .01 percent. 

The Bureau has been able to meet or exceed this target on a regular basis. 

The measure security cost per 1000 notes delivered. This measure reflects the cost of 

providing product security. The measure is kept at the lowest level possible without 

compromising the security posture of the Bureau. BEP strives to reduce the target on an 

BEP - 9 
annual basis through a combination of competitive sourcing initiatives, leveraging of the 

best practices of other federal law enforcement agencies, targeted system investments,

and improvements in facility design that incorporate security attributes. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

BEP - 10 
BEP - 11 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

To best position the Bureau of Engraving and Printing for the future, the Bureau 

completed a functional realignment of its organizational structure in early FY 2007. The 

realignment streamlined the organization and the Bureau has benefited from the synergies 

created. FY’s 2008/2009 human capital strategy includes: 

• Use of pay incentive flexibilities to retain unique expertise that enables the Bureau to 

meet its goals; 

• Expansion of the BEP Telework program enhancing employee work life and 

increasing work flexibilities that benefit employee recruitment and retention 

programs; 

• Mission critical training for all Bureau employees is documented in the “BEP Master 

Training Plan.” In collaboration with management, mission critical training was 

identified and made available to all Bureau employees. Training is on-going; 

• Management’s annual performance goals and accomplishment of strategic goals are 

directly linked to the achievement of organizational goals; 

• All employee performance plans include core elements directly linked to 

organizational goals; 

• BEP’s Senior Management Service Candidate Development Program reflects the 

Bureaus’ commitment to provide equal opportunities at the highest management 

levels and improve succession planning; and 

• Completing a skills assessment survey to identify and target skill gaps and prepare for 

the wave of baby-boomer retirements. 
BEP - 12 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments 

FY 2006 FY 2007 FY 2008 

& Earlier Likely % Change 

Major IT Investments/Funding Source Budget Activity Enacted Enacted Enacted FY07 to F

0 0 0 

Subtotal, Major IT Investments $0 $0 $0 Non-Major IT Investments Technology1

Manufacturing Support Systems Manufacturing 1.6 1.2 1.4 Public Sales System N/A 0.61 0.63 0.78 WebTA N/A 0.04 0.02 0.07 

Subtotal, Non-Major IT Investments $2.25 $1.85 $2.25 Infrastructure Investments2 0 0 0 

BEP Data Ctr. Sys. & Serv. (for Consolidation) Manufacturing 3.6 3 5.7 

BEP End User Sys. & Serv. (for Consolidation) Manufacturing 3.8 3.1 6.2 BEP Telecommunications (for Consolidation) Manufacturing 0.51 0.45 0.3 BEP Infrastructure Security (for Consolidation) Protection and Accountability 1.4 1.8 0 -

Subtotal, Infrastructure Investments $9.31 $8.35 $12.20 Enterprise Architecture N/A 0.271 0.02 0.05 -Subtotal, Enterprise Architecture Investments $0.27 $0.02 $0.05 -IT Investments $11.83 $10.22 $14.50 Note1: In FY 2005 and prior years, costs for these systems were included in BEP's Infrastructure and Office Automation programs. 

Note2: Infrastructure funding is consolidated into the Treasury Departmental Integrated IT Infrastructure Exhibit 300.
4B – Information Technology Strategy 

Information Technology (IT) and IT-Embedded Investments are fully aligned with the 

Department of the Treasury’s and BEP’s Strategic Plan to support the technical 

development and manufacturing of Federal Reserve notes. 

Major Investments: BEP has no planned independent major investments. BEP 

participates as a partner in significant Treasury-wide enterprise level investments such as 

T/Net (Treasury’s implementation of General Services Administration ‘s (GSA) 

Networx), Homeland Security Presidential Directive -12 (again through Treasury’s 

partnership with GSA), HRConnect (an Human Resources Line of Business service 

provider) and Internet Protocol version 6. 

Non-Major Investments: BEP adheres to the Treasury’s Capital Planning and Investment 

Control (CPIC) program as well as BEP’s own IT CPIC processes. Limited additional 

non-major investments are planned to garner savings in administrative costs and provide 

organizational efficiencies. 

Infrastructure Investments: Appropriately categorized as part of Treasury Optimized 

Enterprise IT Infrastructure. 

Enterprise Architecture: It is the policy of the Bureau to implement and comply with the 

requirements of the Clinger-Cohen Act, the Government Performance and Results Act, 

the Federal Information Security Reform Act, Office of Management and Budget (OMB) 

Circular A-130, “Management of Federal Information Resources,” OMB Circular A-11, 

Part 7, and associated Capital Programming Guide, and all applicable Federal Enterprise 

Architecture guidance issued by OMB, to include both the Federal Enterprise 

Architecture and associated reference models. 
4.2 – PART Evaluation Table 

PART Name: New Currency Manufacturing 

Year PARTed: 2005

Rating Effective 

OMB Major Findings/Recommendations

 1. The program's New Currency program has a clear purpose, is well 

 planned, and is managed effectively.

 2. The program met the initial production and timeline goals of its New

 Currency program with the rollout of the new $20 bill in 2003. 

 3. The program has adequate long-term targets and timeframes, 

 including planned rollouts of counterfeit deterrent features for use in future

 generation notes through the next seven to ten years. 

Bureau Actions Planned or Underway

 1. Working closely with the Advanced Counterfeit Steering Committee 

 to identify and evaluate future counterfeit deterrent designs. 

 2. Continuing to work with the Advanced Counterfeit Deterrent Steering

 Committee to assess impact of New Currency on counterfeiting

 performance measures across government. 

 3. Monitoring its design and overhead costs related to the manufacture of New

 Currency to ensure the most efficient production and distribution of future

 denominations. 

PART Name: Protection and Accountability

Year PARTed: 2006

Rating Effective 

OMB Major Findings/Recommendations

 1. This program is on track to reduce security costs by 43 percent from 2006 to 2012.

 2. This program maintains high consistency and reliability standards,

 demonstrated by its ISO 9001 certification. 

 3. Guarding against theft is a priority of this program.

Bureau Actions Planned or Underway

 1. Performing in-depth, annual assessments of the program's security and 

 accountability by an internal group not associated with the program and

 contracting with an outside group on a two-to-three-year cycle. 

 2. Ensuring that proper accountability and security features are identified and

 addressed during each stage of acquisition and installation of new equipment.

 3. Updating and revising the Bureau's strategic plan; the new plan will focus on 

 enhancing the Protection and Accountability program.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

BEP - 14 
United States Mint 

Mission Statement 

The men and women of the United States Mint serve the nation by exclusively and efficiently 

creating the highest quality, most beautiful and inspiring coins and medals that enable commerce; 

reflect American values; advance artistic excellence; educate the public by commemorating 

people, places and events; and fulfill retail demand.

Program Summary by Budget Activity 

Dollars in Thousands

FY 2007 FY 2008 FY 2009

United States Mint Obligated Estimated Estimated $ Change % Change 

Manufacturing $1,770,265 $2,129,806 $2,079,192 ($50,614) -2.38%

Protection 43,943 45,520 46,624 1,104 2.43%

Total Resources $1,814,208 $2,175,326 $2,125,816 ($49,510) -2.28%

Capital Investments $22,654 $44,763 $37,116 ($7,642) -17.0% 

(Not included in Total Resources Above)

FY 2009 Priorities 

• Efficiently and effectively produce and distribute approximately 15.4 billion coins to meet 

demand for circulating coins during FY 2009 to effectively enable commerce, an important 

strategic objective for the Department of the Treasury’s manufacturing activities. 

• Mint and issue Presidential $1 Coins for circulation to honor Presidents Martin Van Buren, 

William Henry Harrison, John Tyler and James K. Polk. 

• Continue to produce and ship other Presidential $1 Coin Act products, including the 24-Karat 

First Spouse Gold Bullion Coins and 24-Karat American Buffalo Gold Bullion Coins, and to 

mint and issue Native American $1 Coins. 

• Produce and distribute new 2009 coin and commemorative programs including redesigned 

one-cent coin, new quarters and the Lincoln and Braille commemorative programs. 

• Produce and distribute recurring numismatic products and sets, as well as other numismatic 

items, in quantities sufficient to make them accessible, available, and affordable to Americans 

who choose to purchase them. 
Table of Contents 

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

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

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

1C – Industry Outlook .................................................................................................... 3 

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

2.2 – Operating Levels Table.......................................................................................... 5 

2.3 – Resource Detail Table............................................................................................ 6 

2B – Appropriations Language and Explanation of Changes......................................... 6 

2C – Legislative Proposals ............................................................................................. 6 

Section 3 – Budget and Performance Plan ..................................................................... 7

3.1 – Budget by Strategic Outcome ................................................................................ 7 

3A – Manufacturing........................................................................................................ 7 

3.2.1 – Manufacturing Budget and Performance Plan.................................................. 10 

3B – Protection ............................................................................................................. 11 

3.2.2 – Protection Budget and Performance Plan ......................................................... 11 

Section 4 – Supporting Materials.................................................................................. 13

4A – Human Capital Strategy Description ................................................................... 13 

4.1 – Summary of IT Resources Table ......................................................................... 14 

4B – Information Technology Strategy ........................................................................ 15 

4.2 – PART Evaluation Table....................................................................................... 16 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The United States Mint is the world’s largest coin manufacturer with operations in California, 

Colorado, Kentucky, New York, Pennsylvania, and Washington, D.C. The United States Mint’s 

vision is “to embody the American spirit through the creation of our nation’s coins and medals.” 

The United States Mint is committed to holding down costs, streamlining operations, and 

providing value to the American people. Every coin and medal that the United States Mint makes 

should represent something great about America; (the workers that made it, the flawless quality 

of “Made in America”, and the beautiful designs). 

The United States Mint has established the following strategic goals for achieving its mission in 

line with this vision: 

• Establish and reinforce the exclusive brand identity of the United States Mint 

• Create and execute the most effective coin and medal portfolio strategy 

• Achieve greater excellence in coin and medal design 

• Increase operational efficiency while meeting the highest quality standards 

• Develop optimal workforce and workplace culture 

1B – Program History and Future Outlook 

Since FY 1996, the United States Mint has been operating under the United States Mint’s Public 

Enterprise Fund (PEF). As authorized by Public Law 104-52 (codified at 31 U.S.C. § 5136), the 

PEF eliminates the need for appropriations. Proceeds from the sales of circulating coins to the 

Federal Reserve Banks (FRB) and numismatic items to the public are the source of funding for 

operations. Both operating expenses and capital investments are associated with the production 

of circulating and numismatic coins and coin-related products and protective services. Revenues 

in excess of amounts required by the PEF are transferred to the United States Treasury General 

Fund. 

The United States Mint’s consolidated earned revenue, plus other financing sources (seigniorage), 

increased to $2.6 billion in FY 2007 from $2.3 billion in FY 2006. These results reflect increases 

in the demand for both circulating and numismatic products. As a result of operations, the United 

States Mint transferred $825 million to the Treasury General Fund in FY 2007, compared with

$750 million in FY 2006. This increase is primarily attributable to the release of the first three 

Presidential $1 Coins. 

Although the challenge of rising metal prices continued to burden the United States Mint’s

circulating coinage operations in FY 2007, the face value of circulating coins shipped to the 

Federal Reserve increased to $1,727.8 million, $455.9 million higher than $1,271.9 million in FY 

2006. The average market prices through September 2007 for copper, nickel, and zinc increased 

7 percent, 78 percent, and 23 percent, respectively, from FY 2006. Rising metal prices have had 

a significant effect on circulating coinage results and are causing the one-cent coin (penny) and 

Mint - 1 
5-cent coin (nickel) to cost more than their face value to manufacture on a per-unit basis. The 

United States Mint has been working with the Department of the Treasury and Congress to keep 

the public informed and to examine alternatives that could mitigate the effect that current metal

prices are having on the circulating coinage. In July 2007, the Administration transmitted to 

Congress a United States Mint legislative proposal that would allow the Secretary of the Treasury

to change the compostion of coins to less expensive materials. As a result, the “Coinage 

Materials Modernization Act of 2007” (H.R. 3330 and S. 1986) was introduced. Changing the 

composition of pennies and nickels to less expensive materials could save the United States 

Treasury approximately $100 million a year without compromising the utility of these coins. 

The United States Mint’s numismatic and bullion operations’ sales to the public decreased to 

$907.6 million from $1.052 billion in FY 2006. The decrease is attributable to a decline in 

bullion coin demand. 

The United States Mint is positioning itself for a future environment that is expected to bring new 

challenges and opportunities. Future success depends on further developing coin production 

expertise, increasing organizational flexibility, and implementing new production technology. To 

achieve this, innovative new technologies and materials are being considered to increase 

capability and agility in the design and manufacture of new products and to streamline 

administrative and related support services.

Challenges

United States Mint operations face key challenges. The new products legislated by the 

Presidential $1 Coin Act of 2005, coupled with efforts for the core recurring numismatic 

products, offer the public many new opportunities for collections, gifts, or investments. Some of 

the key challenges the United States Mint expects to face in the coming years are: 

• Promoting Robust Circulation of $1 Coins – While first-year orders for the Presidential $1 

Coins approached 1 billion, the coins have not yet entered into general circulation. The 

United States Mint is finalizing plans to educate more vendors, transit agencies, retailers and 

citizens on the utility of the $1 coin to promote general circulation. In addition, continued 

efforts are needed to facilitate the most efficient and effective distribution from the United 

States Mint and Federal Reserve into the hands of consumers. 

• Rising Prices of Metal Leading to Higher Production Costs – Steady and dramatic increases 

in the prices of zinc, copper, and nickel have increased the cost of producing circulating 

coinage. This is causing the one-cent and 5-cent coins to cost more than their face value on a 

per-unit basis. As a result, the Department of the Treasury is working with Congress to 

explore alternatives to mitigate the effect of high metals prices, and legislation has been 

introduced to allow the Secretary of the Treasury to change the metal composition of coins. 

• Conclusion of the 50 State Quarters® Program – In recent years, there has been an increased 

demand for numismatic products – much of it because of the popularity of the 50 State 

Quarters products. However, this numismatic product line will cease when the 50 State 

Quarters Program ends in December 2008. 

Mint - 2 
1C – Industry Outlook 

Historic coin production levels reflect a long-term underlying increase in the need for circulating 

coins. While demand in individual years may fluctuate, the United States Mint sees a future in

which the demand for circulating coinage is relatively stable from year to year. In this 

environment, there is opportunity for growth with numismatic coins, as evidenced by the 

popularity of circulating commemorative programs such as the 50 State Quarters Program and the 

Westward Journey Nickel SeriesTM. To position operations to accommodate new designs and 

new products, it is necessary to analyze the market and communicate with the public, in addition 

to developing the production techniques and capacity.

United States Mint plans for addressing these challenges include the following: 

Establish and reinforce the exclusive brand identity of the United States Mint 

The United States Mint is a well-known brand within the numismatic and coin collecting 

community, but its brand identity among the general public and in the commercial marketplace is 

less pervasive. Strengthening the United States Mint brand is essential to building the 

numismatic business line. The current strategic planning process encompasses the design and 

development of cost-effective programs to build the United States Mint brand image into one of 

the most recognized names in the marketplace. At the same time, the United States Mint will 

strive to improve customer satisfaction. 

Create and execute the most effective coin and medal portfolio strategy

The United States Mint has had substantial growth in its numismatic business over the past 

several years. While circulating coin demand has remained stable, there are many opportunities 

to expand the numismatic business to meet the needs of the public. A key element of the United 

States Mint strategy is to analyze current and historic products, reassess customer demand, and 

explore ethnic and geographic markets to develop the optimal product portfolio. The United 

State’s Mint will then create and execute a portfolio strategy that not only meets the needs of the 

collector marketplace, but also leads to an increased customer base and increased units sold with 

lower customer acquisition costs.

Achieve greater excellence in coin and medal design 

Programs such as the Artistic Infusion Program (AIP) have proven very successful and have 

increased the quality of designs significantly. The AIP was launched in 2004 to enrich and 

invigorate the design of the nation’s coins and medals. The artists, selected from a nationwide 

competition, represent a broad range of disciplines from illustration drawing, sculpture, painting, 

and graphic design. Several Master Designer artists who have been with the program for a 

number of years have developed into top performers earning an impressive list of design credits. 

The United States Mint’s goal is to continue to develop and mentor new and existing AIP artists 

to become successful coin and medal designers. 

In addition, the United States Mint is placing more emphasis on coinability requirements and has 

raised the standards for excellence in design overall. Most notably, great strides are being made 

in the development of 2D digital design and 3D digital sculpting, resulting in consistently higher 

quality coins and medals. 

Mint - 3 
During the American Numismatic Association convention held in August 2007, the United States 

Mint received the prestigious “Coin of the Year” award for its Marine Corps 230th Anniversary

Silver Dollar. Coins from throughout the world are selected on the basis of excellence in 

artisanship, practicality, and general appeal. With greater emphasis placed on excellence in 

design, more design awards are anticipated in the near future. 

While prior successes in coin and medal design are noteworthy, the United States Mint strives to 

reach new levels in coin design excellence. By assembling the right talent, providing the right 

inspiration, communicating American values and evoking the American spirit, the United States 

Mint will introduce a new era in coin and medal design. 

Increase operational efficiency while meeting the highest quality standards 

The United States Mint continually strives to improve production and administrative efficiencies. 

With new designs such as the Presidential $1 Coin products, it is necessary to have the shortest 

time to take a coin from authorizing legislation to the finished product for sale. It also maximizes 

the availability of coins for purchase by the public. 

• The United States Mint is researching and developing new technologies and new materials to 

achieve greater capabilities and efficiencies in the design and manufacturing processes. 

Initiatives include establishing a technology center at the United States Mint at Philadelphia, 

assessing new technologies in digital engraving, and developing a plan to improve the 

response and capability of die manufacturing operations. These initiatives are designed to 

improve quality and lower the costs per coin. 

• Coin manufacturing positions are under review to create a more efficient and effective 

position management structure. This includes developing a coin and die competency-based 

certification program to ensure skill proficiency now and for the future. 

Develop optimal workforce and workplace culture 

• The United States Mint is positioning itself to meet current and future challenges by ensuring

its workforce has the necessary skills to perform the duties of the future and to be engaged in 

accomplishing the mission of the United States Mint. The United States Mint is working 

towards improving standings in workplace surveys so that all employees contribute and feel 

valued for their contribution. The United States Mint is committed to ensuring a safe work 

environment for its employees. While the current accident rate is already low compared to 

industry standards, the United States Mint will strive to improve on this safety record 

whenever possible. 

• Projected Full Time Equivalent (FTE) levels for both FY 2008 and FY 2009 are 

increasing slightly to 2,071 and 2,065 from 1,944 actual usage in FY 2007. This 

reflects increases at the manufacturing facilities to keep up with increased production 

of new and ongoing programs.

Mint - 4 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: United States Mint FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 1,944 2,071 2,065

Object Classification:

 11.1 - Full-time permanent 118,587 137,207 141,712

 11.3 - Other than full-time permanent 0 0 0

 11.5 - Other personnel compensation 21,098 15,157 14,987

 11.8 - Special personal services payments 0 0 0

 12 - Personnel benefits 27,892 44,609 45,960

 13 - Benefits for former personnel 883 1,055 125

 21 - Travel and transportation of persons 3,235 3,436 3,509

 22 - Transportation of things 26,088 28,933 28,803

 23.1 - Rental payments to GSA 592 407 408

 23.2 - Rental payments to others 13,874 17,584 17,888

 23.3 - Comm, utilities, and misc charges 12,959 22,800 23,988

 24 - Printing and reproduction 3,167 4,370 4,372

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 44,842 77,413 61,550

 25.2 - Other services 29,722 84,805 67,429

 25.3 - Other purchases of goods and services from Govt. accounts 0 12,175 12,283

 25.4 - Operation and maintenance of facilities 0 0 0

 25.5 - Research and development contracts 0 3,000 2,443

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 21,883 26,408 20,996

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 1,481,202 1,693,715 1,677,088

 31 - Equipment 8,160 2,147 2,165

 32 - Land and structures 0 0 0

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 24 105 110

 43 - Interest and dividends 0 0 0

 44 - Refunds 0 0 0

Total Budget Authority $1,814,208 $2,175,326 $2,125,816

Budget Activities:

 Manufacturing 1,770,265 2,129,806 2,079,192

 Protection 43,943 45,520 46,624

Total Budget Authority $1,814,208 $2,175,326 $2,125,816

Mint - 5 
2.3 – Resource Detail Table 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Circulating $1,049,977 $974,250 $1,442,940 48.11%

Commemorative Quarters 677,800 748,000 165,500 -77.87%

Numismatic 907,572 1,117,412 1,065,033 -4.69%

Total Revenue / Offsetting Collections $2,635,349 $2,839,662 $2,673,473 -5.85%

Unobligated balances, Start of year 0 0 0

 Recoveries of prior year obligations 0 0 0

BA: Offsetting Collections - Anticipated, without advance 0 0 0

Total budgetary resources available $2,635,349 $2,839,662 $2,673,473 -5.85%

Expenditures/Obligations

Circulating 435 472,088 438 613,827 699 923,603 59.59% 50.47%

Commemorative Quarters 323 353,241 330 417,547 83 106,858 -74.85% -74.41%

Numismatic 818 944,936 920 1,098,432 900 1,048,732 -2.17% -4.52%

Protection 368 43,943 383 45,520 383 46,624 0.00% 2.43%

Total Expenditures / Obligations 1,944 $1,814,208 2,071 $2,175,326 2,065 $2,125,816 -0.29% -2.28%

 Capital Investments $22,654 $44,763 $37,116

Net Results $821,141 $664,336 $547,657 -3.58%

 Coin Shipments (In Millions)

Circulating:

One-Cent 8,080 7,660 8,079

Five-Cent 1,306 1,451 1,413

Dime 2,342 2,771 2,710

Quarter 2,799 2,992 2,648

Half-Dollar 2 6 6

Dollar 896 545 521

Total Circulating 15,425 15,425 15,377

Numismatic 13 14 12

Bullion 10 10 10

FY 2007 FY 2008 FY 2009 FY 2008

% Change

Actual Estimated Estimated to FY 2009

0.00%

0.00%

0.00%

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of 

Changes 

DEPARTMENT OF THE TREASURY 

UNITED STATES MINT PUBLIC ENTERPRISE FUND 

Federal Funds 

Pursuant to section 5136 of title 31, United States Code, the 

United States Mint is provided funding through the United States 

Mint Public Enterprise Fund for costs associated with the 

production of circulating coins, numismatic coins, and protective 

services, including both operating expenses and capital 

investments. The aggregate amount of new liabilities and 

obligations incurred during fiscal year [2008]2009 under such 

section 5136 for circulating coinage and protective service capital 

investments of the United States Mint shall not exceed 

[$33,200,000]$42,150,000. (Department of the Treasury 

Appropriations Act, 2008.

2C – Legislative Proposals 

The United States Mint has no legislative proposals for FY 2009. 

Mint - 6 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Estimated Estimated Change

AMOUNT AMOUNT AMOUNT 

 U.S. notes & coins 2,175,326 2,125,816 -2.3%

Total $2,175,326 $2,125,816 -2.3%

3A – Manufacturing ($2,079,192,000 from reimbursable programs): The United States 

Mint manufactures and sells products. For budget reporting purposes, these products are grouped 

into three programs: Circulating Coinage, 50 State Quarters, and Numismatic. 

Circulating Program

Circulating Coinage includes the one-cent coin, 5-cent coin, dime, half-dollar and dollar used to 

enable the conduct of trade and commerce. The focus of this mission is to produce coins for 

circulation to meet the needs of the United States in a cost efficient and safe manner using stateof-the-art manufacturing technology and equipment. The United States Mint delivers the 

circulating coinage to the Federal Reserve Bank for distribution. 

The current FY 2009 budget estimate includes resource needs of $924 million to produce and 

ship 14.7 billion coins and generate $1.443 billion in face value (excluding 50 State Quarters).

By spending $924 million on circulating coinage in FY 2009, the United States Mint will produce 

and ship approximately: 

• 8.1 billion one-cent coins with an aggregate value of $81 million, 

• 1.4 billion 5-cent coins with an aggregate value of $71 million, 

• 2.7 billion dime coins with an aggregate value of $270 million, 

• 2.0 billion quarter-dollar coins (non-50 State Quarters coins) with an aggregate value of $500 

million, 

• 521 million dollar coins with an aggregate value of $521 million. 

Mint - 7 
50 State Quarters® Program 

A significant component of operations is the 50 State Quarters Program, which began in 1999 to 

commemorate and honor each of the 50 states over a ten-year period. Five new commemorative 

quarter-dollar coins are produced each year. Each quarter’s reverse celebrates one of the 50 states 

with a design honoring that state’s unique history, traditions, and symbols. The quarters are 

released in the same order in which the states ratified the United States Constitution or were 

admitted into the Union. The releases for calendar year 2008 quarters are Oklahoma, New 

Mexico, Arizona, Alaska and Hawaii. The quarters are circulating coins; however, by statute, the 

revenue from this program is considered numismatic for budgetary reporting purposes. The 

Program is displayed separately in the narrative and the financial schedules to present a clearer 

picture of its impact. The 50 State Quarters Program will come to an end in December 2008. 

During the first three months of FY 2009, the United States Mint will continue to produce 2008 

50 State Quarters. The United States Mint plans to spend $107 million to produce and ship 

approximately 664 million 50 State Quarters coins, generating revenues of $166 million dollars in 

FY 2009. 

Impact of the FY 2008 Consolidated Appropriations Act on Mint 

A provision of the FY 2008 Consolidated Appropriations Act, Public Law (P.L. 110-161) 

authorizes the Secretary of the Treasury to issue a series of circulating commemorative quarterdollar coins in calendar year 2009 with reverse designs emblematic of the District of Columbia 

and each of the United States Territories. In 2009, six quarter-dollar coins will be minted and 

issued by the United States Mint in honor of the District of Columbia and the five United States 

Territories: the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin 

Islands, and the Commonwealth of the Northern Mariana Islands.

Public Law (P.L. 110-161) also includes an amendment to move the inscription “In God We 

Trust” from the edge of the Presidential $1 Coins and Native American $1 Coins to the face.

Numismatic Program 

The Numismatic program includes six types of coin products, which the United States Mint 

markets and sells to the public, including (1) Bullion Coins, (2) American Eagle Proof Coins, (3) 

24-Karat Gold Proof Program, (4) Recurring Coin Programs, (5) Commemorative Coins, and (6) 

Medals. The program focuses on providing quality products and services, expanding markets and 

supporting the long-term objectives. The current FY 2009 budget estimate includes resource 

needs of $1,049 million to generate $1,065 million in revenues from the sale of these products. 

Bullion coins are largely bought by precious metal dealers and sold to consumers who desire 

precious metals as part of an investment portfolio. Gold and platinum bullion coins are issued 

with one-tenth, one-quarter, one-half or one ounce precious metal content. Silver bullion coins 

are issued with one ounce of silver metal content. The demand for bullion coins can be greatly

affected by the performance of other investment options, such as equities markets or currency 

markets, and therefore is highly unpredictable. As required by law, in 2006, new 24-karat gold

bullion coins were introduced as part of the American Buffalo Gold Coin Program, and the coins 

in this program complement the popular 22-Karat gold bullion coins. 24-karat (99.99 percent 

fineness) has become the global standard for gold investment coins. The new coins give investors 

Mint - 8 
a second option to purchase gold bullion coins whose content and purity are backed by the United 

States Government in the global precious metal market. 

American Eagle Proof Coin products include platinum, gold, and silver and are issued in proof 

quality. Gold and platinum proof coins are issued with one-tenth, one-quarter, one-half or one 

ounce precious metal content. Silver proof coins are issued with one ounce of silver metal 

content. The proof quality coins are considered numismatic products and are sold directly to

consumers from the United States Mint, either as individual coins or in sets. 

The 24-Karat Gold Proof coins are collector versions of the official United States Mint American 

Buffalo Gold Bullion Coins and are available in limited mintages. The obverse features a profile 

of a Native American. The reverse features an American Buffalo. These are the first 24-karat 

gold coins ever issued by the United States Government. 

The First Spouse Program, which honors our nation’s first spouses in the order they served as 

first spouses, is also a feature product of the 24-karat gold coins produced by the United States 

Mint. These one-half ounce gold coins are issued on the same schedule as the Presidential $1 

Coins. 

Recurring products are circulating-derived products, such as proof sets; uncirculated sets; silver 

proof sets; and rolls and bags of quarter-dollars, half-dollars, and dollars. These products are 

designed for mass appeal. 

Commemorative coins are authorized by Congress to celebrate and honor American people, 

places, events, and institutions. Each is minted and issued by the United States Mint in limited 

quantity and is available only for a limited time. Included in the price is a surcharge that is 

authorized to be paid to the designated recipient organizations for projects that benefit the 

community. For example, the American Bald Eagle Recovery and National Emblem

Commemorative Coin Act (Public Law 108-486, dated December 23, 2004), requires the United 

States Mint to produce three coins in 2008 – one gold, one silver and one clad coin – to celebrate 

the recovery and restoration of the American bald eagle, the national symbol of the United States. 

The United States Mint also produces national medals—selective awards authorized by 

Congress—to commemorate significant historical events of the nation, or to honor those persons 

whose superior deeds and achievements have enriched our history, or the world. Some are 

produced as part of a continuing series, such as the Presidents of the United States, Secretaries of 

the Treasury, Directors of the Mint, and Historic Buildings of the United States. 

Mint - 9 
Because of the creation of a new United States Mint Strategic Plan, new performance measures

are currently under development. The new measures tie to the strategic goals listed at the 

beginning of this document. The performance measures listed below are measures that were 

previously tracked, some of which may not be used in the future. 

Description of Performance: 

Conversion Cost per 1,000 Coin Equivalents 

The United States Mint’s costs vary by product, and the product mix has been variable over time. 

This makes it difficult to compare operating results from year to year. The coin equivalent 

calculation converts the production output to a common denominator based on the circulating 

quarter. Production costs, excluding metal and fabrication, are then divided by this standardized 

production level, thus resulting in “conversion costs per 1,000 coin equivalents.” This metric 

allows comparison of performance over time by negating the effects of changes in the product 

mix. Starting in FY 2008, the target and results will be presented as a percentage difference from

the baseline in order to allow for the impact of fixed costs as they get spread over varying levels 

of production. The dollar value of the target is then dependent upon the actual volume of coin 

equivalents produced. For example, at a production level of 21.9 billion coin equivalents, the 

baseline cost target would be $7.51 per 1,000 coin equivalents. The conversion cost per 1,000 

coin equivalents through September FY 2007 was $7.23, an improvement over the FY 2006 result 

of $7.55. The performance measure met the FY 2007 target of $7.27. 

Order fulfillment 

Overall order fulfillment is tracked for the circulating coins shipped to the Federal Reserve and 

the numismatic coins sold to the public. Order fulfillment is an important aspect of the United 

States Mint's operations. On-time fulfillment of Federal Reserve orders ensures adequate 

inventory of coins available for commerce. One important component of customer satisfaction 

with numismatic coin products is the timely fulfillment of orders. Both components are weighted 

by their respective share of the total revenues and other financing sources. Order fulfillment 

through FY 2007 was 98 percent, an increase from 95 percent in FY 2006. This means that 98 

percent of the United States Mint’s revenue and other financing sources through FY 2007 were 

3.2.1 – ManufacturingBudget and Performance Plan

Manufacturing Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources

 Reimbursable Resources

$0 $0 $0 $0 $0

$979,159 $1,469,100 $1,770,265 $2,129,806 $2,079,192

Total Resources $979,159 $1,469,100 $1,770,265 $2,129,806 $2,079,192

Budget Activity Total $979,159 $1,469,100 $1,770,265 $2,129,806 $2,079,192

Manufacturing Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Cost per 1000 Coin Equivalents ($)(E) $7.42 $7.55 $7.23 Discontinued Discontinued

Cost per 1000 C in Equivalents (% Deviation

%

o

From target )(E) N/A N/A N/A %

 98.00%

0.00

 Discontinued

0.00

Order Fulfillment (%)(Oe) 94.00% 95.00% Discontinued

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

 

Mint - 10 
earned from products that were shipped to the customer in a timely fashion, meeting the target of 

96 percent. 

As previously mentioned, new performance measures are currently under development and the 

Order Fulfillment measure will be discontinued after FY 2007. 

3B – Protection ($46,624,000 from reimbursable programs): The United States Mint 

secures over $100 billion in market value of the nation’s gold reserves, silver, and other assets. 

The United States Mint Police protects United States Mint assets while safeguarding its 

employees against potential threats at its facilities across the country. The United States Mint 

Police addresses possible threats by ensuring good perimeter security at all sites and coordinating 

with various federal, state and local law enforcement agencies. It also ensures that proper 

policies are in place, and procedures followed, in handling the assets used to produce and 

transport coinage. 

Plans include efforts to leverage new technology to automate entry and exit procedures at United 

States Mint facilities. Innovative threat assessment strategies will continue to be pursued to 

effectively prevent and counteract any security threats against its operations.

3.2.2 – Protection Budget and Performance Plan 

Protection Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $34,984 $36,917 $43,943 $45,520 $46,624

Total Resources $34,984 $36,917 $43,943 $45,520 $46,624

Budget Activity Total $34,984 $36,917 $43,943 $45,520 $46,624

Protection Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Protection Cost Per Square Foot ($) (E) $32.43 $32.49 $31.75 $32.11 $32.00

Total Losses ($) (Oe) $1,135 $ 0 $0 $5,000 $2,000

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

Description of Performance: 

Protection Cost per Square Foot 

Protection cost per square foot is the Office of Protection’s total operating cost divided by the 

area of usable space, which is 90 percent of the total square footage. The cost per square foot 

provides a measurement of efficiency over time. The square footage of usable space at the 

United States Mint is a stable figure and will only change significantly with major events such as 

the addition or removal of a facility. Protection cost per square foot through September 2007 was 

$31.75, a decrease from $32.49 in FY 2006, meeting the performance target of $32.99. 

Mint - 11 
Total Losses

The United States Mint performs its protection function by minimizing the vulnerability to theft 

and preventing unauthorized access to critical assets. Total losses measures the dollar amount of 

losses incurred in cases that have been investigated and closed. The total losses measure includes 

three categories of losses: 

• Financial Losses: intentional monetary losses, thefts or fraud from metal reserves, produced 

coinage, retail sales and other administrative losses 

• Cost of Intrusions: the cost of repair or recovery from an intentional intrusion, either 

electronically or physically, into United States Mint systems and facilities 

• Productivity Losses: the cost of intentional damage or destruction to production capabilities, 

including related costs for continuity of operations 

At the end of FY 2007, the United States Mint initiated a review to examine the policies and 

procedures that serve as the basis for this measure. The FY 2007 result for the Total Losses 

measure is pending the outcome of this review. The review is expected to be completed during 

FY 2008, and the results for FY 2007 will be published in subsequent budget reports and in the 

FY 2008 annual report.

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

Mint - 12 
Mint - 13 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The United States Mint’s human capital strategies and efforts continue to evolve and include the 

following initiatives: 

• Creating a leadership development program to develop highly skilled supervisors and leaders 

and proactively plan for succession 

• Developing a coin and die competency-based certification program to ensure skill proficiency 

now and for the future 

• Ensuring employees are engaged in the mission 

 

As of September 2007, 46 percent of the United States Mint’s workforce is, or will become, 

eligible for retirement before FY 2011. Four mission-critical occupations are most affected by 

imminent retirements and lack of technical expertise and skills: Metal Forming Machine 

Operators, Coin Assembly Machine Operators, Toolmakers, and Production Machinery 

Mechanics. 

To mitigate this challenge, the United States Mint is developing a Coin and Die Manufacturer 

Certification Program. Its purpose is to build teams of multi-skilled workers in order to provide 

more flexibility and efficiency in operations, to identify skills needed for the future and plan for 

acquiring these skills, and to develop a career ladder program to provide a vehicle for further 

advancement. 
Mint - 14 

4.1 – Summary of IT Resources Table 

Dollars in Thousands

Information Technology Investments

FY 2006

Major IT Investments / Funding Source Budget Activity

& Earlier 

Obligated 1/

FY 2007 

Obligated

FY 2008 

Estimated

Retail Sales System Manufacturing $4,800 $4,850 1.0% $4,900 Subtotal, Major IT Investments $4,800 $4,850 1.0% $4,900 Non-Major IT Investments $4,600 $4,540 -1.3% $4,700 Infrastructure Investments $35,900 $36,677 2.2% $35,935 Enterprise Architecture $1,100 $1,302 18.4% $3,050 Total IT Investments $46,400 $47,369 2.1% $48,585 1/ This chart includes resources only, and may not reflect total project costs.2/ This column reflects resources provided to a project in FY 2006 and any previous years.

% Change from

FY06 to FY07

% 
4B – Information Technology Strategy 

The United States Mint is a manufacturing agency whose primary mission is to produce coinage 

to effectively enable commerce. As such, capital investment requirements are predominantly for 

manufacturing-type equipment, rather than Information Technology purchases, as reflected in the 

chart below. 

The United States Mint’s capital projects are focused on improving processes, developing new 

coin design capabilities, and expanding information handling. These investments are designed to 

reduce costs, shorten the overall time from product concept to production, and achieve greater 

flexibility to respond to shifts in market demands. The major IT investment planned for 2009 is 

in the Retail Sales System. 

The Retail Sales System (RS2) was developed in response to a growing need to meet the rapidly

expanding numismatic market and to take advantage of new technology that would better support 

the United States Mint's business requirements. RS2 was designed to meet high public demand

for E-Government services and provide an easy and secure way for customers to order products 

directly from the United States Mint. An integrated mail order and cataloging system supports 

the United States Mint's core mission as well as the President's E-Government initiative. 

Capital Investments 

(Dollars in Millions) 

FY 2007

Obligations

FY 2008

Estimated

FY 2009

Estimated

Circulating & Protection Capital Investments

Circulating Information Technology 1.286 3.012 0.971

Circulating Building Improvements 3.835 4.239 5.061

Circulating Equipment 5.208 7.218 8.617

Protection 2.008 8.940 3.475

Total Circulating and Protection 12.337 23.409 18.124

Numismatic Capital Investments

Numismatic Information Technology 1.286 3.012 0.970

Numismatic Building Improvements 1.165 6.787 6.668

Numismatic Equipment 7.866 11.555 11.354

Total Numismatic 10.317 21.354 18.992

Total Capital Investments 22.654 44.763 37.116

Major Investments

The United States Mint’s FY 2009 circulating and protection capital request is $18.1 million, 

which is $24.1 million below the projected circulation and protection depreciation (capital limit) 

amount of $42.2 million. 

Each year, the United States Mint commits funds for capital projects to maintain, upgrade or 

acquire physical structures, equipment, physical security, and information technology systems. 

Total capital projects are estimated to be $37.1 million in FY 2009. This includes approximately

$14.6 million for circulating projects, $3.5 million for security improvement projects, and $19.0 

million for numismatic projects. 
4.2 – PART Evaluation Table 

PART Name: Coin Production

Year PARTed: 2002

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

3. Establishing a performance target to reduce the time rquired to process raw materials into produce coins.

1. Reducing the maintenance down time of coin manufacturing machinery.

3. The Mint has shown some efficiency improvements in achieving reduced manufacturing costs. The Mint has achieved a 19 

percent reduction in manufacturing costs since 1997.

1. The Mint has established performance measures focused on customer satisfaction and improving cost efficiencies. For

instance, the Mint reports the results of a Federal Reserve Board Customer Satisfaction survey.

2. The Mint needs to improve customer satisfaction survey scores.

2. Competing customer service and order mailing staff to determine if contractors could handle these functions more

efficiently.

PART Name: Numismatic Program

Year PARTed: 2004

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. Continuing to streamline the production of numismatic products in order to reduce costs and improve efficiency.

1. The program has made enormous strides over the past several years to streamline the production of numismatic products. 

Between 1999 and 2003, the Mint reduced costs by 38 percent and reduced workforce by 50 percent. During that same time

period, production levels increased by 46 percent.

2. The Mint has an excellent internal management structure that is able to receive and analyze real-time financial, production, 

and other operating data on a daily basis. This enables the Mint to respond quickly to changing production and customer

demand.

3. The Mint is making significant progress toward meeting its inventory turnover target of 4.2 in 2005, which reflects the 

number of times per year the Mint works through its inventory. This measure improved 27 percent from 1.96 in 2003 to 2.48 in 

2004. By improving performance, the Mint reduces costs associated with inventory and the production planning process runs

more efficiently.

1. Continuing substantial progress toward reaching the Mint's target goal for inventory turnover.

PART Name: Protection Program

Year PARTed: 2005

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. Continue to improve employee confidence in the United States Mint protection program.

1. The United States Mint has developed adequate long-term performance measures with ambitous targets and timeframes. 

The Mint's target for total losses is $250,000 in 2005 and $0 in 2010

2. The United States Mint's Protection program has a clear purpose, is well planned, and managed effectively. However, it is

somewhat duplicative of other Federal efforts aimed at protecting money, such as the Bureau of Engraving and Printing, and 

the Federal Reserve Police forces.

3. The United States Mint regularly achieves its annual performance goals and works with other law enforcement partners to

assess threat levels and assist in achieving future goals. The United States Mint is a participant in the multi-agency CounterTerrorism Program.

1. Continue to assess and implement ways in which the cost of protection per square foot can be minimized.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

Mint - 16 
Office of the Comptroller of the Currency 

Mission Statement 

To ensure a safe and sound national banking system for all Americans. 

Program Summary by Budget Activity 

Dollars in Thousands

FY 2007 FY 2008 FY 2009

Office of the Comptroller of the Currency Obligated Estimated Estimated $ Change % Change 

Supervise $528,622 $625,582 $675,780 $50,198 8.02%

Regulate 91,296 98,669 108,414 9,745 9.88%

Charter 18,515 24,849 26,678 1,829 7.36%

Total Resources $638,433 $749,100 $810,872 $61,772 8.25%

FY 2008 Priorities 

• Regulate and supervise approximately 1,740 national bank charters and 48 federal 

branches of foreign banks with total assets of approximately $7.7 trillion; 

• Conduct examinations based on the risk profile of individual national banks to ensure 

they are safe and sound, sufficiently capitalized, and comply with consumer 

protection laws and regulations; 

• Address potential adverse changes in national bank asset quality and risk profiles;

• Fill key experienced and specialty examiner and bank supervision policy analyst 

positions; continue the recruitment of entry-level examiners and enhance their 

retention at the critical three/four-year point of their careers; develop the next 

generation of bank supervision leadership; 

• Work with other federal banking regulators to implement the banking agencies’ riskbased capital standards (Basel II);

• Combat fraud and money laundering and protect the integrity of the financial system

through national banks’ compliance with the Bank Secrecy Act, anti-money 

laundering, and the Uniting and Strengthening America by Providing Appropriate 

Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act laws and 

regulations;

• Address sound underwriting, risk management systems, and consumer issues 

presented in connection with retail banking products offered by national banks; 

• Continue to support and defend the attributes and benefits of the national bank 

charter; and

• Continue to support a competitive national banking system through entry of new 

charters, other bank structure transactions, and expansion of bank services and 

products in a safe and sound manner. 

OCC -1 
Table of Contents 

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

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

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

1C – Industry Outlook .................................................................................................. 12 

Section 2 – Budget Adjustments and Appropriation Language................................. 14

2.2 – Operating Levels Table........................................................................................ 14 

2.3 – Resource Detail Table.......................................................................................... 15 

2B – Appropriations Language and Explanation of Changes....................................... 15 

2C – Legislative Proposals ........................................................................................... 15 

Section 3 – Budget and Performance Plan ................................................................... 16

3.1 – Budget by Strategic Outcome .............................................................................. 16 

3A – Supervise............................................................................................................. 16 

3.2.1 – Supervise Budget and Performance Plan.......................................................... 16 

3B – Regulate............................................................................................................... 18 

3.2.2 – Regulate Budget and Performance Plan ........................................................... 18 

3C – Charter................................................................................................................. 19 

3.2.3 – Charter Budget and Performance Plan.............................................................. 19 

Section 4 – Supporting Materials.................................................................................. 20

4A – Human Capital Strategy Description ................................................................... 20 

4.1 – Summary of IT Resources Table ......................................................................... 22 

4B – Information Technology Strategy ........................................................................ 23 

4.2 – PART Evaluation Table....................................................................................... 24 

OCC -0 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Office of the Comptroller of the Currency (OCC) was created by Congress to charter 

national banks, to oversee a nationwide system of banking institutions, and to ensure that 

national banks are safe and sound, competitive and profitable, and capable of serving in 

the best possible manner the banking needs of their customers. 

The OCC supervises approximately 1,740 national bank charters and 48 federal branches 

of foreign banks in the United States (U.S.). Total assets under the OCC supervision are 

approximately $7.7 trillion or 68 percent of total U.S. commercial banking assets. The 

average size and complexity of the institutions in the national banking system continue to 

grow, creating increasing and diverse challenges for the OCC. 

As the regulator of national banks, the OCC has established four strategic goals that help 

support a strong economy for the American public: 1) a safe and sound national banking 

system; 2) fair access to financial services and fair treatment of bank customers; 3) a 

flexible legal and regulatory framework that enables the national banking system to 

provide a full competitive array of financial services; and 4) an expert, highly motivated, 

and diverse workforce that makes effective use of OCC resources. The OCC organizes 

its activities under three programs: Supervise, Regulate, and Charter, to achieve the goals 

and objectives outlined in its strategic plan. 

The OCC’s priorities for the 2008 fiscal year (FY) include supervisory issues related to 

potential adverse changes in national bank asset quality and risk profiles, continued work 

on proposed revisions to the federal banking agencies’ risk-based capital standards, 

compliance with Bank Secrecy Act/anti-money laundering (BSA/AML) and USA 

PATRIOT Act requirements, and addressing issues raised by the range of retail banking 

products offered by national banks. Coordination and cooperation with state regulators 

will be a significant focus for the agency. Filling key experienced and specialty examiner 

and bank supervision policy analyst positions, recruiting entry-level examiners and 

enhancing their retention at the critical three/four-year point of their careers, and 

developing the next generation of bank supervision leadership are also critical initiatives 

of the OCC. 

1B – Program History and Future Outlook 

The OCC has its headquarters in Washington, D.C., and operates four district offices in 

Chicago, Dallas, Denver, and New York, and field and satellite offices throughout the 

U.S. Resident examiner teams are located in the largest banking companies, and there is 

an examining office in London, England. 

Operations are funded primarily (approximately 96 percent) from semiannual 

assessments levied on national banks. Revenue from investments in U.S. Treasury 

securities and licensing and other fees comprises the remaining four percent of the OCC’s 

OCC – 1 
funding. The OCC does not receive congressional appropriations to fund any portion of 

its operations. 

Continued uncertainty about the future direction of interest rate changes, coupled with net 

interest margin compression, will pose challenges to bank management and put pressure 

on bank earnings. Credit quality will continue to be monitored closely for deterioration, 

with the leveraged lending and subprime markets being the most vulnerable. Domestic 

and foreign nonbank players and investors increasingly affect the way that banks 

structure and price products and manage their risk profiles. The role and transparency of 

hedge funds in financial markets will continue to receive heightened scrutiny by 

investors, regulators, and Congress. Fair lending, information security, and other 

consumer protection issues will remain in the forefront for the banking industry and the 

OCC. BSA and AML supervision will continue to be an important component of the 

federal law enforcement and national security programs. Basel II implementation will 

require significant bank and examiner resources at mandatory Basel II banks and large 

banks owned by foreign-owned banking organizations. Operational risk issues, including 

technology security and management, payment systems and backroom operations, and 

outsourcing and vendor management, will continue to be prominent. 

The following are highlights of the OCC’s FY 2007 accomplishments and specific FY

2008 challenges. 

Supervisory Activities

The OCC continuously supervises banks in its community bank, midsize and credit card 

bank, and large bank programs. A supervisory strategy is developed based on each 

banking institution’s risk profile and condition. Examination activities focus on safety 

and soundness, consumer compliance, BSA/AML/USA PATRIOT Act, fair lending, 

asset management, bank information technology, and the Community Reinvestment Act 

(CRA). 

Areas of emphasis during the OCC’s FY 2007 supervisory strategies included: credit 

quality and the adequacy of credit risk management systems; allowance for loan and 

lease loss methodology and adequacy; compliance with guidance on nontraditional 

mortgage products and commercial real estate concentrations; risk management practices; 

audit and internal controls; BSA/AML compliance; Basel II implementation at mandatory 

and opt-in banks; capital adequacy; risk measurement and management for new and 

innovative trading activities; risk management systems related to hedge fund exposures; 

compliance management systems; Home Mortgage Disclosure Act (HMDA) data and fair 

lending reviews; and business continuity planning. 

Monitoring Credit Quality 

Monitoring and evaluating the quality of the loans and investments made by national 

banks is a fundamental component of the OCC’s supervision program. Examiners 

evaluate asset quality and the adequacy of a bank’s credit and investment risk 

management and controls through their on-site examination activities. They also look to 

OCC – 2 
ensure that the bank has properly recorded any losses that have occurred in their loans or 

investments and that the bank maintains adequate reserves for inherent losses in their 

loan portfolio. 

In addition to individual bank examinations, the OCC conducts a variety of other 

activities aimed at identifying and responding to systemic trends and emerging risks that 

could adversely affect asset quality or the availability of credit at national banks and the 

banking system. FY 2007 activities included: 

• Annual Survey of Credit Underwriting Practices - This annual survey, conducted by 

the OCC examiners and Credit Risk staff, identifies trends in lending standards and 

credit risk for the most common types of commercial and retail credit products 

offered by national banks. It provides an aggregate snapshot of how various factors, 

such as competition, are affecting how banks price and underwrite loans and whether 

the OCC examiners believe that the inherent credit risk in banks’ portfolios are 

increasing or decreasing. 

• Shared National Credit Review - The annual Shared National Credit (SNC) review is 

a joint program conducted by the OCC, the Board of Governors of the Federal 

Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the 

Office of Thrift Supervision (OTS) that reviews large syndicated loans held by 

multiple banks. The 2007 review covered 7,700 facilities (or 5,400 borrowers) with 

commitments totaling $2.3 trillion. SNC commitments increased by nearly $400 

billion, or 21 percent, since the 2006 SNC review. Overall credit quality of the SNC 

portfolio remains satisfactory with criticized commitments as a percentage of total 

SNC commitments in-line with prior year results. Easing of underwriting standards 

continued to be evident, especially in the syndicated leveraged loan market. 

However, the largest national banks that originate and agent SNCs mitigate direct 

credit risk by selling down their SNC exposures to hold levels that are appropriate for 

the bank’s earnings/capital position. The OCC and other agencies also continued 

work on a modernization effort to standardize and expand the data collection process 

to improve the effectiveness of SNC reviews. This project will also continue in FY 

2008. 

• Horizontal Examinations - Large Bank Supervision (LBS) conducted or is in the 

process of completing three horizontal reviews to determine large bank compliance 

with interagency guidance. The scope of these reviews focused on nontraditional 

mortgage guidance, credit risk management guidance for home equity lending, and 

credit card account management guidance. 

Bank Secrecy Act/Anti-Money Laundering 

Through on-site examination activities, the OCC examiners evaluate banks’ 

compliance with BSA/AML requirements and, where weaknesses are noted, seek 

corrective action. The OCC investigates national banks that fail to meet BSA/AML 

requirements and brings enforcement actions against them. Other supervisory activities 

during FY 2007 included updates to the Federal Financial Institutions Examination 

OCC – 3 
Council's (FFIEC) BSA/AML Examination Manual and issuance of the OCC’s 2007 

Money Laundering Risk (MLR) System results. The MLR provides over 1600 

community bank charters with succinct BSA/AML risk assessment information. This 

information also enhances the OCC’s effectiveness in BSA/AML supervision. Also, an 

Interagency Statement on Enforcement of BSA/AML Requirements was issued by the 

OCC, FRB, FDIC, OTS, and the National Credit Union Administration (NCUA) which 

promotes consistency among the agencies, as well as transparency in the way that 

enforcement decisions are made. 

Concentrations in Commercial Real Estate Lending

Commercial real estate is an area in which some banks are becoming increasingly 

concentrated. In FY 2007, the OCC, FRB, and FDIC issued guidance on sound risk 

management practices for concentrations in commercial real estate lending to help ensure 

that institutions pursuing a significant commercial real estate lending strategy remain 

healthy and profitable while continuing to serve the credit needs of their communities. 

Allowance for Loan and Lease Losses

The allowance for loan and lease losses (ALLL) represents one of the most significant 

estimates in an institution’s financial statements and regulatory reports. Management’s 

assessment of the appropriateness of the ALLL is critical to the safety and soundness of a 

financial institution, especially in today’s uncertain economic environment and when 

concentrations in untested loan products are present. In December 2006, the OCC, FRB, 

FDIC, OTS, and NCUA (the agencies) issued updated guidance that describes the 

responsibilities of the boards of directors, management, and examiners of banks and 

savings associations regarding the ALLL; factors to be considered in the estimation of the 

ALLL; and the objectives and elements of an effective loan review system, including a 

sound credit grading system. The agencies also issued a series of frequently asked 

questions to assist institutions in applying the guidance. During FY 2007, the OCC 

completed ALLL training related to this new policy statement. 

Subprime and Nontraditional Mortgages 

Weaknesses in the U.S. housing and mortgage markets, resulting in increased residential 

mortgage delinquencies and foreclosures, have been a major concern for bankers, 

consumers, regulators, and public policy officials throughout the past year. In recent 

weeks these concerns have adversely affected U.S. and global financial markets. These 

effects have included a sharp contraction in the liquidity in certain secondary markets, 

such as those for jumbo, non-conforming mortgage loans, asset-backed commercial paper 

programs, and various collateralized debt obligations. Investors' heightened concerns 

about overall credit quality have also affected the commercial leveraged and 

collateralized loan markets. Through the OCC’s on-site examiners at the OCC’s largest 

institutions and various regulatory coordinating mechanisms, the agency is monitoring 

closely these market conditions. The OCC will work with Treasury and the other 

regulatory agencies to pursue any policies or actions as needed. In addition, the OCC 

OCC – 4 
will continue to encourage banks to work with homeowners who are unable to make 

mortgage payments. 

Supervisory Guidance

During the past year, the OCC has worked with the other federal banking regulators to 

issue supervisory guidance on nontraditional mortgage products and subprime mortgage 

lending. Both issuances articulate the prudent safety and soundness and consumer 

protection standards that institutions should follow to ensure that borrowers obtain loans 

they can afford to repay. Given the prominent role that nonfederally regulated 

institutions play in these markets, the agencies worked closely with the Conference of 

State Bank Supervisors and the American Association of Residential Mortgage 

Regulators to encourage individual states to adopt and effectively enforce these 

guidelines for mortgage brokers under their supervision. The agencies also issued a 

statement encouraging financial institutions to work constructively with residential 

borrowers who are financially unable to make their contractual payment obligations on 

their home loans. 

Illustrated Consumer Disclosures for Nontraditional and Subprime Mortgage Products 

To make informed choices when seeking a mortgage loan, consumers must understand 

and be able to compare the material features and potential risks, including the likelihood 

of increased payments or substantial prepayment penalties, of products before entering a 

loan. The agencies’ supervisory guidance sets forth recommended practices to ensure 

that consumers have clear and balanced information about these products. The agencies 

issued illustrations of consumer information to help institutions implement these 

practices. They also published a booklet for consumers, Interest-Only Mortgage 

Payments and Payment-Option ARMs — Are They for You? that provides a glossary of 

lending terms, a mortgage shopping worksheet, and a list of additional information 

sources. This information can help consumers, whether buying a house or refinancing a 

mortgage, decide whether an interest-only mortgage (an I-O mortgage) or an adjustablerate mortgage (ARM) with the option to make a minimum payment (a payment-option 

ARM) is right for them.

Assessing Complex Financial Activities

 

Advances in risk modeling and the concurrent globalization of financial markets have led 

to an ever expanding array of complex financial products that are used and offered by 

large national banks. The OCC resident examination staffs at the largest national banks 

closely monitor these developments to ensure that banks have adequate risk management 

policies and controls in place to govern these activities. Supervisory activities in this area 

during FY 2007 included: 

• Improving Backroom Processing of Derivatives Contracts - The OCC has worked 

with other U.S. and international regulators and major dealers to improve the 

infrastructure that supports the global derivatives market. These efforts, which 

include reducing the level of backlog confirmations and moving towards more 

OCC – 5 
electronic processing platforms, will help ensure the smooth operations of the 

derivatives markets as the volume of activities in these markets continue to grow. 

• Interagency Statement on Complex Structured Finance Transactions - In January 

2007, the OCC, FRB, FDIC, OTS, and Securities Exchange Commission (SEC) 

issued a final statement on the complex structured finance activities of financial 

institutions. The statement describes the types of internal controls and risk 

management procedures that should help financial institutions identify, manage, and 

address the heightened legal and reputational risks that may arise from certain 

complex structured finance transactions. 

Implementation of a Revised Capital Framework - Basel II

Bank capital serves as a buffer against unexpected losses. The OCC continued work with 

the FRB, FDIC, and OTS to modernize the agencies’ regulatory capital requirements. 

Beginning with the issuance of the New Basel Accord in June 2004, the OCC has worked 

with the other U.S. banking regulators to implement the revised framework for risk-based 

capital standards. In September 2006, the OCC, together with the FRB, the FDIC, and 

the OTS issued a proposed regulation, generally referred to as the Basel II proposal, 

implementing that framework for certain U.S. banks. At the same time, the agencies 

published revisions to their current market risk capital rule. Subsequently (in December 

2006), the agencies issued a third proposed regulation that would revise the current riskbased capital framework. This third proposal was commonly referred to as Basel IA. 

When the Basel II proposal was issued, the agencies contemplated that the largest, 

internationally active U.S. banks (so-called “core banks”) would be required to use the 

Basel II rule. Certain other banks (so-called “opt-in banks”) could use the Basel II rule 

with the permission of their primary federal supervisor, and banks that were neither core 

banks nor opt-in banks would be subject to the Basel IA rule. On July 20, 2007, the 

Comptroller of the Currency and the principals of the other three federal banking 

agencies announced their agreement on an approach to finalizing the Basel II rule and on 

a plan to issue a new proposal that would make the so-called standardized approach, 

contained in the new Basel Accord, available to non-core banks. This would replace the 

earlier proposed rule to adopt the “Basel 1A” option. The final Basel II rule was 

published in the Federal Register on December 7, 2007 (72 FR 69288), and the text of the 

new standardized proposal is expected to be released during 2008. 

Protecting the National Bank System and Its Customers against Natural Disasters, 

Criminal Activity, and Terrorist Threats

The events of September 11, 2001, and more recently, Hurricanes Katrina and Rita 

underscore the vital role that the national banking system plays in the U.S. economy and 

the lives of its citizens. Through the OCC supervisory programs and partnerships with 

other government agencies, the OCC works to ensure the resiliency of the nation’s 

banking system in the face of regional or national emergencies and to prevent the 

inappropriate use of the financial system by criminals and terrorists. 

OCC – 6 
Sound business continuity plans allow banks to recover, resume, and maintain their 

critical operations in the event of an unexpected disruption. To assist banks in 

developing and evaluating their business continuity plans, the OCC, in conjunction with 

the FFIEC, is revising the FFIEC’s Business Continuity Planning Booklet for release in 

FY 2008. The revised booklet will incorporate lessons learned from the Gulf Coast 

hurricanes. It will also highlight issues and challenges that financial institutions could 

face during a pandemic, and the mitigating controls that should be implemented to 

address pandemics. 

Fair Access to Financial Services and Fair Treatment of Bank Customers

The OCC fulfills its strategic goal of fair access to financial services and fair treatment of 

bank customers through its ongoing supervisory programs for national banks and their 

operating subsidiaries. These programs include ongoing supervisory examinations to 

ensure compliance with fair lending laws, the Community Reinvestment Act (CRA), 

section 5 of the Federal Trade Commission Act (prohibiting unfair or deceptive acts and 

practices), and other consumer laws and regulations. In addition to supervisory activities, 

the OCC issues guidance and handbooks and offers training to bankers and bank directors 

to help them understand and meet their compliance and CRA obligations. 

 

The OCC’s fair lending supervisory and enforcement process is designed to assess and 

monitor the level of fair lending risk in every national bank. The OCC assesses 

compliance with fair lending laws and regulations; obtains corrective action when 

significant weaknesses or deficiencies are found in a bank’s policies, procedures, and 

controls relating to fair lending; and ensures that enforcement action is taken when 

warranted. This includes referrals to the Department of Justice and notifications to the 

Department of Housing and Urban Development (HUD). 

The OCC also conducts outreach with a variety of organizations, including advocacy 

groups, research organizations, community development practitioners, and community 

development membership organizations whose constituencies include or affect low- and 

moderate-income consumers, distressed communities, and small and minority-owned 

businesses. To better reach consumers directly, the OCC launched a new website in July 

2007, helpwithmybank.gov, which is designed to help consumers when they have 

questions or need help in resolving problems with their banks. 

During FY 2007, the OCC and other federal banking agencies issued proposed 

interagency questions and answers that address topics related to their CRA regulations, 

updated lists of distressed or underserved non-metropolitan middle-income geographies 

in which bank revitalization or stabilization activities will receive CRA consideration,

and updated median family income levels that are used in CRA performance evaluations. 

The OCC actively supports the efforts of national banks to engage in sound and 

successful community development activities. During FY 2007, the OCC issued a 

bulletin to national banks implementing changes in the authority for national banks to 

OCC – 7 
make public welfare investments under 12 USC 24. On October 13, 2006, the Financial 

Services Regulatory Relief Act of 2006 was enacted, which among other provisions 

increased the maximum aggregate public welfare investment limit for a national bank 

from 10 to 15 percent of the bank’s unimpaired capital and surplus. 

The OCC held a tele-seminar that focused on the Small Business Administration 504 

Certified Development Companies Loan program, which brought together 504 

practitioners and an examiner to provide interested listeners with additional information 

on how the program operates. The OCC also publishes periodic Community 

Development Insights papers on products, services, and initiatives that are relevant to 

community development and consumer banking activities. During FY 2007, the OCC 

produced such papers on foreclosure prevention, new markets tax credits, reaching ethnic 

markets, workforce housing, and federal low-income housing tax credits. The OCC also 

published Community Developments newsletters covering topics on community 

development venture capital and minority-owned financial institutions. 

 

During FY 2007, the OCC continued its work with the other federal banking agencies to 

improve financial disclosures to consumers. In May 2007, the agencies issued final 

illustrations of consumer information for nontraditional mortgage products. The 

illustrations are intended to help implement the consumer protection portion of the 

“Interagency Guidance on Nontraditional Mortgage Products Risks.” English and 

Spanish versions of the illustrations are available on the OCC’s website. Also, in March 

2007, the OCC and seven other federal regulators released a notice of proposed 

rulemaking requesting comment on a proposed model privacy notice. The proposed 

model privacy notice is intended to provide consumers with a succinct and 

comprehensive privacy notice. 

The OCC issued several bulletins and advisories that were geared toward helping 

consumers. Consumer Advisory 2007-3 provides advice to help consumers avoid 

becoming victims of fraud involving cashier’s checks, money orders, and official bank 

checks. In March 2007, the OCC issued a consumer alert regarding certain deceptive 

loan solicitations sent to consumers that implied cash grants or disbursements were 

available from so-called CRA programs. 

The OCC also issued a reminder to banks about working with customers in disaster areas 

related to hurricane Katrina. The OCC Bulletin 2007-8 provided guidance on making 

decisions regarding payment deferrals, loan modifications, extensions, restructurings or 

other workout programs. 

In addition, the OCC issued Bulletin 2007-14, which discusses the interagency policy on 

working with mortgage borrowers who have ARMs scheduled to reset in the next 12 to 

18 months, particularly subprime hybrid ARMs. The OCC, along with the other federal 

banking agencies, encourages institutions to work with borrowers who may be unable to 

meet contractual payment obligations on loans secured by their primary residence. The 

OCC paid special attention to foreclosure prevention issues affecting banks and 

consumers, in particular by highlighting best practices of bankers and their nonprofit 

OCC – 8 
partners in a research paper and by holding interagency roundtables across the country. 

The OCC also unveiled public service announcements aimed at encouraging delinquent 

mortgage borrowers to get help by contacting their lenders or a trusted counselor in order 

to avoid foreclosure. In addition, the OCC highlighted efforts to assist minority-owned 

banks, including sponsoring an interagency conference and a newsletter dedicated to 

issues involving those institutions. 

Customer Assistance

The OCC’s Customer Assistance Group (CAG) assists consumers who have questions or 

complaints about national banks and their operating subsidiaries. The CAG received 

67,000 contacts from consumers in the form of telephone calls, letters, faxes, and e-mails 

in FY 2007. 

In FY 2007, CAG received favorable results from a customer satisfaction survey that was 

conducted at the beginning of the fiscal year. In FY 2008, follow-up surveys will be

conducted to identify trends and patterns in the responses. Also, during FY 2007, the 

OCC expanded the CAG call center hours to Monday through Friday, from 7 a.m. to 

7 p.m. (CST) to enhance customer accessibility. 

During FY 2007, outreach activities to state bank regulators resulted in Memorandums of 

Understanding (MOU) being signed between the OCC and 25 state banking departments 

and the Commonwealth of Puerto Rico with several other MOU agreements in process. 

The agreements detail ways to gain efficiencies in processing cases by streamlining the 

way the states and the CAG exchange bank customers’ complaint information. The 

CAG goals for FY 2008 include a continuation of outreach activities to state regulators 

and others. 

 

Regulation

As one of its four strategic goals, the OCC strives to maintain a flexible legal and 

regulatory framework that enables the national banking system to provide a full, 

competitive array of financial services. In FY 2007, the OCC participated in the 

interagency review of regulations required by the Economic Growth and Regulatory 

Paperwork Reduction Act of 1996 (EGRPRA), continued progress on the implementation 

of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), and issued 

supervisory guidance in areas of lending activity that present new or heightened risks to 

national banks. 

The OCC’s strategic objectives emphasize regulatory oversight practices that support 

national banks’ ability to compete while maintaining safety and soundness. This 

objective entails, among other things, refinement and clarification of the key attributes 

that define the national bank charter, including the preemptive attributes of the charter. 

In FY 2006, the U.S. Supreme Court granted certiorari in Watters v. Wachovia Bank,

N.A., a national bank preemption case in which the OCC, represented through the 

Solicitor General of the United States, participated as amicus curiae. The Supreme 

OCC – 9 
Court’s decision in the Watters case, issued in FY 2007, reaffirmed the key principle 

from its Barnett Bank of Marion County, N.A. v. Nelson decision of over a decade ago 

that state law may not significantly burden, curtail, or hinder a national bank’s exercise of 

its express or implied powers, whether those powers are exercised directly by the bank or 

through other means. Watters confirms that preemption depends on the effects that state 

law has on the exercise of national bank powers regardless of the corporate structure a 

bank uses. 

In FY 2007, the OCC made permanent a pilot program aimed at helping community 

banks with national charters continue to meet the credit needs of their customers. 

National banks are generally allowed to lend no more than 15 percent of capital on an

unsecured basis, plus an additional 10 percent secured by readily marketable collateral, to 

a single borrower. Many states have established higher limits for the banks they charter. 

Under the program, a qualified, well-managed national bank may use a higher lending 

limit for 1-4 family residential real estate loans, small business loans, and small farm

loans, if the state where the bank is located allows its state-chartered banks to use a 

higher lending limit for these types of loans. 

In FY 2008, the OCC will continue to provide case-by-case analysis, when appropriate,

with respect to the applicability of state law and the exclusivity of the agency’s visitorial 

authority under the national banking laws, in order for national banks to operate 

efficiently under uniform national standards. 

Completion of Regulation Review 

In FY 2006, the OCC, together with the other federal banking agencies and the NCUA, 

completed the review of regulations required by the EGRPRA. EGRPRA requires the 

federal agencies that are members of the FFIEC to review their rules every 10 years to 

identify those that are outdated or unnecessary and to revise or eliminate such rules if 

appropriate.1

 Upon completion of the review, EGRPRA further requires the agencies to 

submit a report to Congress. The agencies submitted that report in November 2007. 

The OCC identified a number of changes to its rules that should streamline existing 

requirements or procedures and enhance national banks’ flexibility in conducting 

authorized activities. The OCC’s proposed amendments to its rules effecting these 

changes were published for comment in July 2007. Work on a rule to finalize the 

changes the OCC proposed will continue into FY 2008. 

Implementation of the FACT Act 

The FACT Act2

 amended the Fair Credit Reporting Act in a number of areas that require 

the issuance of implementing regulations. In FY 2006, the OCC, together with the FRB, 

the FDIC, the OTS, and the NCUA completed a rulemaking implementing the FACT 

Act’s limitations on obtaining and sharing medical information. In addition, these 

agencies and the Federal Trade Commission issued a final rule in October 2007, 

 

1 12 U.S.C. § 3311 2

 Pub. L. No. 108-159, 117 Stat. 1952 (Dec. 4, 2003)

OCC – 10 
pertaining to patterns, practices, and specific forms of activity (referred to as “red flags”) 

that indicate the possible existence of identity theft. 

OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix A

In compliance with OMB Circular A-123, Appendix A, in FY 2007 the OCC continued 

to refine its A-123 program. A risk assessment of all business processes related to 

financial reporting was expanded to include additional assessment of other programs that 

have an impact on the OCC’s financial statements or which pose other risks to the OCC, 

such as reputation risk. Based on this assessment, the OCC carried out 40 comprehensive 

test plans, including coverage of the information systems that support financial reporting. 

The testing revealed no material internal control weaknesses. During FY 2008, the 

OCC’s risk assessment process will be enhanced to incorporate the Enterprise Risk 

Management Framework recommended by the Committee of Sponsoring Organizations 

of the Treadway Commission, as well as the OCC strategic risk assessment. The OCC 

will also update documentation over financial processes as needed and carry out test 

plans to support the FY 2008 assessment over financial reporting. 

Homeland Security Presidential Directive 12 (HSPD-12) and Federal Information 

Security Management Act (FISMA)

In FY 2007, the OCC successfully established a HSPD-12 program that involves both a 

physical and logical security implementation strategy. This program involves close 

coordination with the Treasury HSPD-12 Program Management Office (PMO) and 

General Services Administration (GSA) Managed Service Office (MSO). The program 

plan calls for a three-phase implementation strategy. The three phases of the OCC 

HSPD-12 program are: 1) Phase I - Project planning, requirements analysis, and 

acquisition of integration services, 2) Phase II – HSPD-12 system

enterprise/infrastructure integration and deployment, and 3) Phase III – HSPD-12 

systems maintenance and the OCC application integration. 

 

In FY 2007, the OCC completed the Phase I project planning elements of the program. It 

established system integration plans with both Treasury and GSA. The OCC is working 

with Treasury to leverage the shared services solution provided by the GSA MSO. This 

Treasury and GSA solution will also satisfy the additional goals pertaining to the EGovernment initiatives for sharing government-wide services and will also provide a

complete solution to support the OCC’s ID badge program requirements. In FY 2008, 

the OCC will work with Treasury and GSA on the Phase II systems 

enterprise/infrastructure integration and deployment of the systems necessary to create 

and use smartcard IDs, which control both physical access to the OCC facilities and 

logical access to the OCC information systems. 

The OCC also has made improvements in computer security via policy and technical 

changes. New rules instituted in FY 2007 on the use of the OCC computer equipment 

and networks include a policy that all data on computers and removable media be 

encrypted, procedures for assessing the impact and any needed agency response to data 

OCC – 11 
breaches, and procedures for sensitive data on the OCC computers. Technical changes 

include full disk encryption on the OCC computers, encrypting all BlackBerry devices, 

enhancing network and computer security software, and instituting two-factor 

authentication for remote access to the OCC network. On the compliance side, the OCC 

continues to refine its approach to documentation, training, and certification and 

accreditation activities required by the FISMA as well as evolving Treasury and 

government-wide standards. Employees and contractors in the OCC’s Chief Information 

Officer's office with special security responsibility took additional training to underscore 

and reinforce their security duties. 

To further strengthen computer and physical security, during FY 2007, the OCC 

contracted with a third-party vendor to conduct an end-to-end assessment. This project 

resulted in recommendations for improvements to physical and technological 

infrastructure and security policies and procedures. Actions to address the 

recommendations are currently underway. 

1C – Industry Outlook 

Bank earnings have been strong for the last 15 years, and strong earnings have in turn 

contributed to healthy capital ratios. Banks have successfully expanded their product 

range, and this expansion has been an important factor in maintaining robust earnings 

growth. Along with the greater range of products has come the growing importance and 

complexity of off-balance sheet income and noninterest income. These have been 

especially important at the largest banks, and are now becoming important for some

smaller institutions as well. The OCC expects these trends to continue. There is more 

uncertainty about banks’ ability to continue to rely on the real estate sector to drive asset 

and earnings growth. 

Over the next five years, bank assets are likely to grow at the same rate as nominal Gross 

Domestic Product (GDP). This is consistent with historical experience and with the 

status of banking as a mature industry, in which profits grow over the long-term at about 

the rate of nominal GDP. 

Assets ($t) Number Assets ($t) Number

2006 10.1 7,402 6.8 1,715 77.3%

2011e 12.9 6,781 8.7 1,571 80.0%

Commercial Banks National Banks Share of total system assets

in banks over $10 billion

The number of banks has fallen steadily for at least two decades. The long-term trend of

bank consolidation is likely to continue, and that over the next five years, the number of 

national banks will likely decline at the same rate experienced by the total commercial 

bank population. In 2006, 88 banks had assets exceeding $10 billion, while about 3,200 

banks had assets under $100 million. By 2011, the number of banks over $10 billion is 

expected to remain about the same, while the number of banks under $100 million is

expected to continue to decline. 

OCC – 12 
Large banks will continue to dominate the industry. Banks with over $10 billion in assets 

now account for 77 percent of system assets; this share has been increasing, and this trend 

is expected to continue. 

Until about five years ago, national banks consistently accounted for about 59 percent of 

all commercial bank assets. Since then, a series of mergers has increased the national 

bank share to about 68 percent of commercial bank assets. 

Risks to the banking system include an economic slowdown, and deterioration in real 

estate markets, have accounted for much of the growth in bank income and assets over 

the last several years. 

OCC – 13 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Office of the Comptroller of the Currency

FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 2,954 3,078 3,139

Object Classification:

 11.1 - Full-time permanent 308,736 347,157 369,946

 11.3 - Other than full-time permanent 7,583 7,194 7,666

 11.5 - Other personnel compensation 1,726 2,003 2,135

 11.8 - Special personal services payments 148 0 0

 12 - Personnel benefits 105,590 116,584 132,787

 13 - Benefits for former personnel 453 190 206

 21 - Travel and transportation of persons 39,073 45,360 50,351

 22 - Transportation of things 2,023 2,837 3,190

 23.1 - Rental payments to GSA 921 2,690 2,716

 23.2 - Rental payments to others 27,380 29,432 31,371

 23.3 - Comm, utilities, and misc charges 9,744 14,242 15,367

 24 - Printing and reproduction 1,158 1,182 1,234

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 33,460 37,247 38,524

 25.2 - Other services 15,472 19,223 20,665

 25.3 - Other purchases of goods and services from Govt. accounts 4,786 6,588 7,082

 25.4 - Operation and maintenance of facilities 2,834 3,678 3,954

 25.5 - Research and development contracts 0 0 0

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 43,629 56,206 56,598

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 5,269 7,152 8,022

 31 - Equipment 20,056 20,481 26,443

 32 - Land and structures 8,368 29,604 32,565

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 24 50 50

 43 - Interest and dividends 0 0 0

 44 - Refunds 0 0 0

Total Budget Authority $638,433 $749,100 $810,872

Budget Activities:

 Supervise 528,622 625,582 675,780

 Regulate 91,296 98,669 108,414

 Charter 18,515 24,849 26,678

Total Budget Authority $638,433 $749,100 $810,872

OCC – 14 
2.3 – Resource Detail Table 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Assessments $677,890 $725,400 $779,900 7.51%

Interest 27,622 29,100 31,100 6.87%

Other Income 2,810 3,100 3,200 3.23%

Total Revenue / Offsetting Collections $708,322 $757,600 $814,200 7.47%

Unobligated balances, Start of year 597,772 667,661 676,161 1.27%

 Recoveries of prior year obligations 0 0 0

 Net transfers (includes capital transfers) 0 0 0

Total budgetary resources available $1,306,094 $1,425,261 $1,490,361 4.57%

Expenses/Obligations

Supervision 2,482 528,622 2,557 625,582 2,609 675,780 2.03% 8.02%

Regulate 390 91,296 428 98,669 436 108,414 1.87% 9.88%

Charter 82 18,515 93 24,849 94 26,678 1.08% 7.36%

Total Expenses / Obligations 2,954 $638,433 3,078 $749,100 3,139 $810,872 1.98% 8.25%

Net Results $667,661 $676,161 $679,489 0.49%

Estimated to FY 2009

FY 2007 FY 2008 FY 2009 FY 2008

Obligated

% Change

Estimated

0.00%

0.00%

2B – Appropriations Language and Explanation of Changes 

OCC receives no appropriations from Congress. 

2C – Legislative Proposals 

OCC currently has no legislative proposals. 

OCC – 15 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Outcome FY 2008 FY 2009 Percent

Estimated Estimated Change

AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 123,518 135,092 9.4%

 Fin. & econ.crises 625,582 675,780 8.0%

Total $749,100 $810,872 8.2%

3A – Supervise ($625,582,000 from reimbursable programs): The Supervise program 

consists of those ongoing supervision and enforcement activities undertaken to ensure 

that each national bank is operating in a safe and sound manner and is complying with 

applicable laws, rules, and regulations relative to the bank and the customers and 

communities it serves. This program includes bank examinations and enforcement 

activities; resolution of disputes through the National Bank Appeals process; ongoing 

monitoring of banks; and analysis of systemic risks and market trends in the national 

banking system or groups of national banks, the financial services industry, and the 

economic and regulatory environment. 

3.2.1 – Supervise Budget and Performance Plan 

Supervise Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $408,091 $471,882 $528,622 $625,582 $675,780

Total Resources $408,091 $471,882 $528,622 $625,582 $675,780

Budget Activity Total $408,091 $471,882 $528,622 $625,582 $675,780

OCC – 16 
Supervise Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of national banks that are 

categorized as well capitalized (%) (Oe) 

 99% 99% 99% 95% 95%

Percentage of national banks with composite 

CAMELS rating 1 or 2 (%) (Oe) 

 94% 95% 96% 90% 95%

Rehabilitated national banks as a percentage 

of the problem national banks one year ago 

(CAMELS 3, 4, or 5) (%) (Oe) 

44% 46% 52% 40% 40%

Percentage of national banks with consumer 

compliance rating of 1 or 2 (%) (Oe) 

94% 94% 97% 94% 94%

Total OCC costs relative to every $100,000 in

bank assets regulated ($) (E) 

 N/A $8.57 $8.89 $9.55 $9.55

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

Description of Performance: 

Well Capitalized National Banks 

The Federal Deposit Insurance Act established a system of prompt corrective action 

(PCA) that classifies insured depository institutions into five categories (well capitalized, 

adequately capitalized, undercapitalized, significantly undercapitalized, and critically 

undercapitalized) based on their capital levels relative to their risks. Through September 

30, 2007, 99 percent of national banks were classified as well capitalized. National 

banks’ capital has remained at this consistently high level for the past several years. 

National Banks with Composite CAMELS Rating of 1 or 2 

The composite CAMELS (Capital adequacy, Asset quality, Management, Earnings, 

Liquidity, and Sensitivity to market risk) rating reflects the overall condition of a bank. 

Bank regulatory agencies use the Uniform Financial Institutions Rating System, 

CAMELS, to provide a general framework for evaluating all significant financial, 

operational and compliance factors inherent in a bank. The rating scale is 1 through 5 of 

which 1 is the highest rating granted. CAMELS ratings are assigned at the completion of 

every supervisory cycle or when there is a significant event leading to a change in 

CAMELS. Through September 30, 2007, 96 percent of national banks earned a 

composite CAMELS rating of either 1 or 2, signifying an overall safe and sound national 

banking system and a foundation for a strong U.S. economy. 

Rehabilitated National Banks

Problem banks ultimately can reach a point at which rehabilitation is no longer feasible. 

The OCC’s early identification and intervention with problem banks can lead to 

successful remediation of these banks. The OCC recommends corrective actions to

problem banks for improving their operations and, as a result, 52 percent of banks with 

composite CAMELS rating of 3, 4, or 5 one year ago have improved their ratings to 

either 1 or 2 this year. This is an improvement from 46 percent achieved in FY 2006 and 

44 percent achieved in FY 2005. 

 

National Banks with Consumer Compliance Rating of 1 or 2 

To ensure fair access to financial services and fair treatment of bank customers, the OCC 

evaluates a bank’s compliance with consumer laws and regulations. Bank regulatory 

agencies use the Uniform Financial Institutions Rating System, Interagency Consumer 

OCC – 17 
Compliance Rating, to provide a general framework for assimilating and evaluating 

significant consumer compliance factors inherent in a bank. Each bank is assigned a 

consumer compliance rating based on an evaluation of its present compliance with 

consumer protection and civil rights statutes and regulations, and the adequacy of its 

operating systems designed to ensure continuing compliance. Ratings are on a scale of 1 

through 5 in increasing order of supervisory concern. National banks continue to show 

strong compliance with consumer protection regulations with 97 percent earning a 

consumer compliance rating of either 1 or 2 through September 30, 2007.

Total OCC Costs Relative to Every $100,000 in Bank Assets Regulated 

Beginning in FY 2006, the OCC implemented a performance measure—Total OCC Costs 

Relative to Every $100,000 in Bank Assets Regulated—that reflects the efficiency of its 

operations while meeting the increasing supervisory demands of a growing and more 

complex national banking system. OCC costs are those reported as total program costs 

on the annual audited Statement of Net Cost. Bank assets are those reported quarterly by 

national banks on their Reports of Condition and Income. Total bank assets represent the 

growth and complexity of the national banking system. This measure supports the 

OCC’s strategic goal of efficient use of agency resources. The OCC’s ability to control 

its costs while ensuring the safety and soundness of the banking system benefits all 

national bank customers. 

3B – Regulate ($98,669,000 from reimbursable programs): The Regulate program

consists of those ongoing activities that result in the establishment of regulations, 

policies, operating guidance, and interpretations of general applicability to national 

banks. These regulations, policies, and interpretations may establish system-wide 

standards, define acceptable banking practices, provide guidance on risks and 

responsibilities facing national banks, or prohibit (or restrict) banking practices deemed 

to be imprudent or unsafe. This program includes the establishment of examination 

policies, handbooks, and interpretations for examiners as well as representation of the 

OCC’s regulatory authorities and interpretations in administrative, judicial, and 

congressional hearings. 

3.2.2 – Regulate Budget and Performance Plan 

Regulate Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $64,011 $70,992 $91,296 $98,669 $108,414

Total Resources $64,011 $70,992 $91,296 $98,669 $108,414

Budget Activity Total $64,011 $70,992 $91,296 $98,669 $108,414

Regulate Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

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

OCC – 18 
3C – Charter ($24,849,000 from reimbursable programs): The Charter program

involves those ongoing activities that result in the chartering of national banks as well as 

the evaluation of the permissibility of structures and activities of national banks and their 

subsidiaries. This includes the review and approval of new national bank charters, 

federal branches and agencies, mergers, acquisitions, conversions, business 

combinations, corporate reorganizations, changes in control, operating subsidiaries, 

branches, relocations, and subordinated debt issues. 

3.2.3 – Charter Budget and Performance Plan

Charter Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $15,011 $13,952 $18,515 $24,849 $26,678

Total Resources $15,011 $13,952 $18,515 $24,849 $26,678

Budget Activity Total $15,011 $13,952 $18,515 $24,849 $26,678

Charter Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of licensing applications and 

notices completed within established 

timeframes. (%) (Oe) 

 96% 94% 96% 95% 95%

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

Description of Performance: 

Licensing Applications and Notices Completed within Time Frames 

The OCC’s timely and effective approval of corporate applications contributes to the 

nation’s economy by enabling national banks to complete various corporate transactions 

and introduce new financial products and services. Delays in providing prompt decisions 

on applications and notices can deprive a bank of a competitive or business opportunity, 

create business uncertainties, or diminish financial results. Time frames have been 

established for completing each type of application and notice. The OCC completed 96 

percent of applications and notices within the time standard through September 30, 2007. 

Institutions receiving decisions on their corporate applications and notices rated the 

OCC’s overall licensing services an average of 1.2. The licensing survey is based on a 

five-point rating scale, in which 1 indicates outstanding and 5 indicates significantly 

deficient. 

 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

OCC – 19 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The OCC has developed bureau-specific human capital goals to meet its overall strategic 

goals of ensuring the safety and soundness of national banks and maintaining an expert, 

highly motivated, and diverse workforce. The first is to align and employ the OCC 

workforce resources consistent with current and projected agency priorities. To help 

achieve this goal, on an annual basis, the OCC identifies high priority recruitment needs 

and approves incentives specifically designed to address those priorities. Other 

strategies include: 1) using all qualified personnel on priority assignments, realizing the 

increasing dependence and need for “fungibility” among and within various disciplines; 

2) using the midsize/community banks area as the primary entry-level recruitment, 

training, and development vehicle to provide a diverse bank examiner selection pool for 

many departments and divisions in the bureau; and 3) identifying skill gaps and using 

them to establish recruitment and training priorities as part of the OCC’s ongoing 

strategic planning process.

The OCC has implemented a number of programs to increase and strengthen its examiner 

and leadership pools. The OCC has a highly successful college hiring and training team 

program to ensure a steady pipeline of entry-level bank examiners. Since the program’s 

inception in FY 2003, almost 600 examiners have been hired, including more than 150 in 

FY 2007. The agency has focused heavily on recruiting the expertise needed to fill 

positions in our Chief National Bank Examiner’s (CNBE) office and Large Banks line of

business. The OCC has also recognized the challenge of ensuring that it has the skill sets 

needed now and in the future to supervise the increasingly complex array of activities and 

businesses found in the national banking system. As a result, the OCC recently 

developed a framework to assess where and when specialized skills are needed (e.g., 

what types of bank assignments) and to ensure that the OCC has the staffing resources 

necessary to meet those needs. This framework, the Specialty Skills Assessment, allows 

the OCC to measure gaps in its current skill levels in eight critical business line areas 

(Asset Management, Bank Information Technology, Capital Markets, Compliance, 

Commercial Lending, Retail Lending, Mortgage Banking, and Operational Risk) and to 

develop strategic plans to fill those gaps. It establishes a standard process to identify an

individual’s specialty skills, which can be compared to actual examination resources 

necessary for the effective supervision of the population of national banks. Assessment 

results will aid examination staffing, recruiting initiatives, and provide employees and 

managers with a valuable tool that can be used to identify developmental opportunities to 

further an individual’s career objectives. 

A second human capital goal is to develop current and future leaders who demonstrate 

strong strategic, people management, and technical skills. To achieve this goal, the OCC 

is piloting a leadership development program, LeaderTRACK, based upon identified 

competencies. The program, which will be piloted for 18 months, began in FY 2007. 

This pilot program offers participants three six-month assignments, with significant 

managerial and supervisory roles, that will develop leadership skills rather than prepare 

OCC – 20 
OCC – 21 

them for a specific position. The OCC also continues to focus on aligning leadership 

performance expectations with organizational goals and preparing leaders to create and 

sustain a productive work environment and assume responsibility for developing staff. 

A third human capital goal is to maintain strategic compensation/benefit programs and 

performance systems that link with organizational goals and mission accomplishment, 

enable the OCC to recruit and retain critical positions, and reward high performers. To 

accomplish this goal, the OCC regularly reviews and adjusts compensation and benefits 

and performance management programs to ensure that they continue to support the OCC 

objectives. The OCC operates under a merit-based performance system. Annual acrossthe-board increases are not granted. Salary increases are awarded based on merit to 

reward employee performance, employee development that is relevant to the OCC needs, 

and employee contributions to the OCC’s priorities. The OCC continually evaluates its 

programs to ensure that there is an appropriate correlation between pay and performance.

The OCC is confident that these strategies will enable it to avoid any critical deficiencies 

in terms of having the right numbers of people with the right skills to accomplish the 

OCC’s mission. 

OCC Makes Top Ten List of Best Places to Work in Federal Government 

The OCC ranked fourth out of more than 200 federal agency sub-components for best 

places to work in the federal government in 2006, according to the Partnership for Public 

Service and American University’s Institute for the Study of Public Policy 

Implementation. The list reflects the responses of more than 221,000 randomly selected 

federal employees who completed the Office of Personnel Management’s 2006 Federal 

Human Capital Survey. The list compares agencies in effective leadership, employee 

skills/mission match, family friendly culture, pay and benefits, performance-based 

rewards and advancement, strategic management, support for diversity, teamwork, 

training/development, and work/life balance. 
OCC – 22 

4.1 – Summary of IT Resources Table Dollars in Thousands

Information Technology Investments (from Exhibit 53) *(Dollars in thousands) FY 2006 FY 2007 FY 2008 Major IT Investments / Funding Source Budget Activity Obligated Obligated Estimated 

Chief Counsel OCC - Charter, Supervise, Regulate 3,765 2,770 -26.4% 523 Enterprise Services OCC - Charter, Supervise, Regulate, Manage 1,262 1,323 4.8% 806 Examinations OCC - Supervise 3,946 2,535 -35.8% 3,236 WISDM *** OCC - Supervise 0 0 0.0% 0 Fiscal Management *** OCC - Manage 754 312 -58.6% 2,490 

Subtotal, Major IT Investments ** $9,727 $6,940 -28.7% $7,055 Chief Counsel OCC - Charter, Supervise, Regulate 240 0 -100.0% 0 Canary Early Warning System OCC - Supervise 301 460 52.8% 250 Examiner View OCC - Supervise 0 0 0.0% 665 Ombudsman OCC - Supervise 154 150 -2.6% 745 Shared National Credit OCC - Supervise 731 0 -100.0% 3,567 SIS LB - Institutional Data OCC - Supervise 523 0 -100.0% 847 SIS - Peer Analytical Data OCC - Supervise 0 0 0.0% 636 Suspicious Activity Reports OCC - Supervise 181 204 12.7% 0 CARS & FINDRS OCC - Supervise 0 272 0.0% 0 STARS OCC - Supervise 0 0 0.0% 5,755 HR/Operational Datamarts & Mainframe Retirement OCC - Manage 966 321 -66.8% 0 Web & Electronic Publishing System OCC - Supervise 488 0 -100.0% 4,449 

Non-Major IT Investments ** $3,584 $1,407 -60.7% $16,914 OCC - Data Center Systems & Services (Consolidated Infrastructure) 6,099 8,261 35.4% 8,486 

OCC - Security Program 1,396 2,077 48.8% 2,959 OCC - Telecommunications Systems & Services 11,258 12,453 10.6% 11,476 OCC - Enterprise Identity Management 0 1,323 0.0% 1,050 Infrastructure Investments $18,753 $24,114 28.6% $23,971 Enterprise Architecture $0.00 $0.00 0.0% $0.00 Total IT Investments $32,064 $32,461 1.2% $47,940 

Notes:

 */ All OCC budget authority derives from an indefinite availability trust fund, i.e., "no-year". **/ OCC uses an IT Portfolio setaside where major and non-major projects can be selected throughout the year which may cause realignments between categories or line-items for FY 2009.***/ Beginning in FY 2009, OCC will report 1 major investment to Treasury (FISCAL MANAGEMENT). WISDM will be reported as part of the consolidated Treasury Enterprise Content Management 300.

% Change from 

FY06 to FY07

% Ch

FY07 
4B – Information Technology Strategy 

The OCC’s strategic plan for meeting its IT needs is tied to the current and target

enterprise architecture. The OCC’s enterprise architecture provides the agency with the 

data, technology, and infrastructure needs to support the operational and strategic needs 

of the business. The OCC’s capital planning process ensures that all IT investments are 

aligned with the current or target enterprise architecture and will align to the mission of

the OCC before a project is selected for funding. 

The capital planning process ensures that business cases are reviewed to ensure alignment 

to Enterprise Architecture (EA), to leverage opportunities to use existing technology, to 

capitalize on enterprise opportunities as well as ensure that there is no redundancy in IT

systems that are selected into the portfolio. 

The Department’s overall strategy to effectively use technology to support the mission, 

goals, and objectives of the agency is enforced by the Investment Review Board (IRB), 

comprised of business unit and IT representatives from across the agency. The IRB 

makes recommendations to the OCC’s Technology and Systems and Subcommittee 

(TSS). The TSS is chaired by the Chief Information Officer and includes the Senior 

Deputy Comptrollers for Large Bank Supervision, International and Economic Affairs, 

the Chief Financial Officer, and the Chief of Staff. Both the IRB and TSS have regularly 

scheduled meetings to address IT investments. This process ensures that the overall IT 

strategy has adequate funding, resources, and prioritization to support the direction of 

Information Technology in alignment with the mission, goals and objectives of the 

agency. 

Linkage to the OCC programs and strategic goals are documented in each 

project business case and prioritized by the IRB and TSS. Performance metrics are 

linked to the delivery, alignment, and achievement of the OCC strategic program

objectives. Investments are monitored on a quarterly basis by the IRB and TSS. The 

OCC's IT investments are also subject to Quarterly Control reviews conducted 

by Treasury’s CIO Council. During the Quarterly Control Review meetings, the IRB and 

TSS decide whether to continue, defer, or terminate projects based on project 

performance including performance metrics. If it is determined that the project is not 

meeting its performance metrics, it first is asked to develop a remediation plan to address 

the risk. The IRB monitors the risk mitigation implementation process and decides 

whether the strategy is satisfactory. The IRB decides whether to terminate or proceed 

with the project based on the results of the implementation of the risk mitigation strategy. 

OCC -23 
4.2 – PART Evaluation Table 

PART Name: Bank Supervision

Year PARTed: FY 2003

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. Federal banking regulatory agencies, including the OCC, the Office of Thrift Supervision (OTS), the National Credit

Union Administration (NCUA), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC), should

work together to align outcome goals and related measures to allow for greater comparison of program performance

in the industry.

1. The FY 2003 assessment of the OCC's Bank Supervision found that the program purpose is clear, goals are 

outcome-oriented, program measurements are clear, program is efficiently and effectively managed, but the program 

is not unique in that other agencies perform similar types of regulatory functions in the banking industry.

1. Regulatory agencies that include the OCC, OTS, NCUA, FDIC, Federal Reserve, Office of Federal Housing 

Enterprise Oversight (OFHEO), Securities and Exchange Commission (SEC), and the Federal Housing Finance

Board (FHFB) continue to share their strategic plans, performance plans, and performance measures on a regular 

basis. This allows each agency to consider the approaches used by the other agencies when developing or revising

their goals and measures. The OCC and OTS, as bureaus in the Department of the Treasury, continue to work 

together to maintain alignment of their performance measures.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

OCC – 24 
Office of Thrift Supervision 

Mission Statement 

To supervise savings associations and their holding companies in order to maintain their 

safety and soundness and compliance with consumer laws and to encourage a competitive 

industry that meets America’s financial services needs. 

Program Summary by Budget Activity 

Dollars in Thousands

FY 2007 FY 2008 FY 2009

Office of Thrift Supervision Obligated Estimated Estimated $ Change % Change 

Supervision of the Thrift Industry $232,500 $245,500 $251,638 $6,138 2.50%

Total Resources $232,500 $245,500 $251,638 $6,138 2.50%

FY 2008 Priorities 

• Comprehensive and Risk-Focused Examinations, 

• Interest Rate and Credit Risks including sub-prime mortgage lending, 

• Compliance Risks, Financial Crimes, Data Breaches, and Information Security, 

• Disaster and Emergency Preparedness, 

• Global Financial Services, 

• Regulatory Burden Reduction, 

• Communicate the benefits of the Thrift Charter, and 

• Succession Planning and Management of OTS Resources. 

OTS - 1 
Table of Contents 

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

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

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

1C – Industry Outlook .................................................................................................... 7 

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.2 – Operating Levels Table.......................................................................................... 8 

2.3 – Resource Detail Table............................................................................................ 9 

2B – Appropriations Language and Explanation of Changes......................................... 9 

2C – Legislative Proposals ............................................................................................. 9 

Section 3 – Budget and Performance Plan ................................................................... 10

3.1 – Budget by Strategic Outcome .............................................................................. 10 

3A – Supervision of the Thrift Industry....................................................................... 10 

3.2.1 – Supervision of the Thrift Industry Budget and Performance Plan.................... 12 

Section 4 – Supporting Materials.................................................................................. 15

4A – Human Capital Strategy Description ................................................................... 15 

4.1 – Summary of IT Resources Table ......................................................................... 16 

4B – Information Technology Strategy ........................................................................ 17 

4.2 – PART Evaluation Table....................................................................................... 18 

OTS - 0 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

Established by Congress as a bureau of the Department of the Treasury on August 9, 

1989, the Office of Thrift Supervision (OTS) charters, examines, supervises, and 

regulates federal savings associations insured by the Federal Deposit Insurance 

Corporation (FDIC). OTS’s primary statutory authority is the Home Owners’ Loan Act 

originally enacted in 1933. OTS also examines, supervises, and regulates state-chartered 

savings associations insured by the FDIC and provides for the registration, examination, 

and regulation of savings and loan holding companies (SLHCs) and other affiliates. 

The thrift charter has several unique characteristics including nationwide branching under 

a single charter; a holding company structure offering a single regulator for the holding 

company and its subsidiary depository institution; and preemption authority. OTS is the 

only federal-banking agency that both charters depository institutions and supervises their 

holding companies. The thrift charter continues to flourish as institutions change and 

adapt their business strategies and focus. OTS supervised holding companies are diverse, 

ranging from large, multinational corporations to small companies with few assets other 

than their thrift charter. As of September 30, 2007, OTS supervised 470 holding 

company enterprises with approximately $8.5 trillion in U.S. domiciled consolidated 

assets. Over half of all savings associations and 83 percent of total savings association 

assets are owned by OTS regulated holding companies. 

The thrift industry is strong and well capitalized. As of September 2007, OTS regulated 

831 savings associations with total assets of $1.57 trillion. Savings associations operate 

in a safe and sound manner with 93 percent achieving an overall composite CAMELS 

rating of 1 or 2. The CAMELS rating reflects OTS’s evaluation of an institution’s 

Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to market risk. 

The industry’s capital position remains strong with 99 percent of savings associations

meeting the well-capitalized standards. 

OTS Vision, Strategic Goals and Priorities 

OTS’s vision is to perform and be recognized as the premier regulator of financial 

institutions and holding companies. The FY 2008 budget submission is guided by the 

four strategic goals outlined in the OTS 2007-2012 Strategic Plan. 

• A safe and sound thrift industry. 

• Fair access to financial services and fair treatment of thrift customers. 

• A flexible legal and regulatory framework that enables the thrift industry to provide a 

full competitive array of financial services. 

• A professional, highly motivated, and diverse workforce that effectively uses OTS 

resources to provide exceptional service to its customers. 

OTS’s FY 2008 budget of $245.5 million supports OTS’s efforts to address these key 

strategic issues and challenges: 

OTS - 1 
• Examine, supervise, and regulate 831 savings associations with total assets of $1.57 

trillion 

• Supervise 470 holding company enterprises with approximately $8.5 trillion in 

consolidated assets, 

• Tailor examinations to the risk profile of the institution and streamline the 

examination of smaller institutions, 

• Conduct safety and soundness examinations of savings associations every 12-18 

months that also incorporates an assessment of compliance with consumer protection 

laws and regulations, 

• Promote the reduction of regulatory burden, 

• Coordinate supervisory and policy development activities with relevant domestic and 

foreign financial regulators, 

• Abate money laundering and terrorist financing by examining savings associations for 

compliance with the Bank Secrecy Act, the USA PATRIOT Act, and other antimoney laundering laws, 

• Communicate the benefits of the thrift charter and the important role of communitybased thrifts, 

• Continue efforts to implement the international Basel II risk-based capital framework, 

and 

• Address succession planning. 

1B – Program History and Future Outlook 

OTS is headquartered in Washington, D.C. with five regional offices located in Jersey 

City, Atlanta, Chicago, Dallas, and San Francisco. The headquarters office develops 

nationwide policies and programs for the agency and coordinates the operations of OTS. 

The regional offices examine and supervise institutions and process most applications. 

Approximately 72 percent of OTS’s staff of 1,028 employees work in OTS’s regional 

offices. 

The President, with Senate confirmation, appoints OTS’s Director for a 5-year term. 

OTS’s Director also serves as a member of the Board of Directors of the Federal Deposit 

Insurance Corporation (FDIC), a member of the Federal Financial Institutions 

Examination Council (FFIEC), and a director of NeighborWorks® America. 

The following activities highlight FY 2007 OTS accomplishments and FY 2008 strategic 

priorities and challenges. 

Comprehensive Examination Approach

OTS conducts a comprehensive examination combining safety and soundness and 

compliance reviews to eliminate multiple reviews of the same area for different purposes. 

OTS’s examination teams issue one report of examination that covers both compliance 

and safety and soundness. This approach allows OTS to comprehensively assess an 

institution’s risk management programs, business strategy, and operations with a topdown, risk-focused approach that promotes comprehensive compliance management, 

OTS - 2 
including the establishment of adequate internal controls to ensure regulatory compliance 

and to prevent predatory practices. OTS is also able to evaluate compliance management 

programs and compliance with the Bank Secrecy Act, Fair Lending, and Flood Disaster 

Protection on a more frequent basis. 

OTS is more efficient and has reduced regulatory burden due to its comprehensive 

examination approach. It issues one information request package prior to the start of 

each examination and examines lending portfolios from both compliance and safety and 

soundness perspectives at the same time. This comprehensive approach reduces savings 

association cost and burden while promoting an efficient, risk-focused examination report 

that details all exam findings. The majority of OTS-regulated institutions indicate a 

favorable response to the comprehensive examination approach. 

To maintain its rigorous staff accreditation standards, OTS requires that its examiners: 1) 

undergo formal, informal, and independent training, 2) pass proficiency tests, 3) receive 

on-the-job training to become proficient in examination disciplines and 4) serve as 

examiner-in-charge of at least two comprehensive examinations prior to accreditation. 

OTS continually works to provide specialized training, rigorous accreditation and 

professional development programs, and other supervisory tools to ensure OTS is capably 

equipped to supervise a dynamic and growing industry. OTS also recognizes that there 

are very complex and highly technical issues that arise in connection with our 

comprehensive examination approach. For this reason, OTS continues to maintain 

compliance, lending, capital markets, trust, and information technology specialists to 

assist examiners in addressing these matters. 

Interest Rate and Credit Risks 

As community-based lenders, thrifts remain focused on residential mortgage lending with 

50.7 percent of assets invested in 1-4 family mortgage loans as of September 30, 2007. 

Given this concentration, thrift asset quality is dependent on stable real estate values and 

consumers’ continued employment and ability to service their debt. 

OTS closely monitors interest rate risk due to the thrift industry’s natural concentration in 

longer-term mortgage loans, which are generally funded with shorter-term deposits and 

borrowings. OTS maintains an interest rate risk sensitivity model that stress-tests savings 

association portfolios to evaluate potential exposure to changing interest rates. OTS 

remains cautious of the potential impact of a rapid increase in market interest rates and

will remain vigilant in monitoring savings associations for adverse trends. In 2006, OTS 

enhanced its state of the art Net Portfolio Value (NPV) Model to expand OTS’s off-site 

interest rate risk monitoring capability and improve the efficiency and effectiveness of

on-site examinations. The NPV model improves the agency’s unique ability to provide 

OTS regulated institutions with quarterly estimates of their interest rate risk exposures. 

Alternative or nontraditional mortgage lending products (such as variable rate mortgages, 

pay option ARMS or interest only) present a unique hybrid of credit and interest rate 

risks. Credit risk in mortgage lending, typically managed by sound underwriting criteria, 

OTS - 3 
is more complex with these nontraditional lending products. In 2006 the federal financial 

regulatory agencies issued guidance to address the risks posed by these types of loans,

recommending that management recognize these products require strong risk 

management standards, capital levels commensurate with the risk, and a loan loss 

allowance reflective of the portfolio collectibility. On May 31, 2007 the regulatory 

agencies issued final illustrations of consumer information intended to help institutions

implement the consumer protection portion of the Interagency Guidance on 

Nontraditional Mortgage Product Risks that the agencies adopted October 4, 2006. The 

guidance addresses the risks posed by residential mortgage products that allow borrowers 

to defer repayment of principal and sometimes interest. It describes sound practices for 

managing risk and supplements existing OTS guidance on these products. 

OTS and the other banking agencies worked with the Conference of State Bank 

Supervisors and American Association of Residential Mortgage Regulators to encourage 

individual states to adopt the guidelines for mortgage brokers under their supervision. 

The banking regulators also encouraged financial institutions to work with residential 

borrowers that are unable to meet their contractual home loan obligations. 

The thrift industry’s current sound financial condition permits it to address potential 

credit quality problems from a position of strength. Thrifts continue to take appropriate 

steps in response to the continued weakness in the housing market by maintaining strong 

capital and increasing their provisions for loan losses. The ability of the industry to post 

solid earnings while continuing the provisioning for loan losses, and the current strong 

capital position, will help the industry weather any further weakening in the housing 

markets.

Compliance Risks 

An OTS-regulated institution is required to have an effective compliance management

program that is commensurate with its size, complexity, and risk profile. OTS examiners 

assess whether an institution is ensuring the privacy and security of consumer financial 

information, guarding against money laundering and terrorist financing, and ensuring fair 

and equal access to credit for all customers. 

OTS examines for Bank Secrecy (BSA), the USA PATRIOT Act, and other Anti-money 

Laundering (AML) compliance. Between January 1, 2006 and June 30, 2007, OTS 

conducted 884 BSA examinations and cited 148 institutions for violations. Most 

violations were remedied during the examination process and resulted in no further 

action. The others resulted in OTS initiating 40 enforcement actions. 

 

On July 19, 2007, the federal financial regulatory agencies issued a statement setting 

forth the agencies’ policy for enforcing specific anti-money laundering requirements of 

the Bank Secrecy Act (BSA). The purpose of the Interagency Statement on Enforcement 

of Bank Secrecy Act/Anti-Money Laundering Requirements is to provide greater 

consistency among the agencies in enforcement decisions in BSA matters and to offer 

insight into the considerations that form the basis of those decisions. 

OTS - 4 
OTS’s compliance program is structured to ensure that thrifts keep credit information 

confidential, fight identity theft, and ensure the accuracy of consumers’ credit reports. 

Data security is reviewed at thrifts and third party technology service providers. The 

Gramm-Leach-Bliley Act requires that all financial institutions establish a program to 

protect their customer’s personal information. OTS, with the other financial banking 

agencies, issued guidance regarding data security, security breach notification 

requirements, and electronic authentication in an electronic banking environment. 

Thrifts provide services that encourage home ownership and affordable housing and 

contribute to economic growth. As of the end of September 2007, thrifts held over $1 

trillion in housing-related loans and securities. In March 2007, OTS revised its 

Community Reinvestment Act (CRA) regulations to reestablish uniformity between its 

regulations and those of the other federal banking agencies. The alignment best serves 

the interests of insured depository institutions and their communities by providing for 

consistency in regulation and compliance. The vast majority of OTS institutions are in 

compliance with the Community Reinvestment Act. OTS’s compliance reviews help to 

ensure fair and equal access to credit for all Americans. 

Emergency and Disaster Preparedness 

OTS is actively involved in initiatives to address emergency and disaster preparedness. 

In October 2007, OTS urged thrifts in areas affected by the Southern California wildfires 

to consider all reasonable steps to meet customers’ financial needs while maintaining 

standards of safety and soundness and emphasized that thrifts in affected areas could: 

• Consider temporarily waiving charges for late payments and penalties for early 

withdrawal of savings; 

• Reassess the credit needs of their communities and offer prudent loans to help 

rebuild; 

• Restructure borrowers’ debt obligations, when appropriate, by adjusting payment 

terms; 

• Solicit state and federal guarantees and other means to help mitigate excessive credit 

risks; and 

• Consider all available programs offered by the Federal Home Loan Banks. 

For the past 20 years, OTS, in conjunction with the other FFIEC agencies, has issued 

guidance to the industry with regard to Disaster Recovery and Business Continuity 

Planning. During examinations, OTS reviews each institution’s plans for continuity of 

operations and emergency preparedness. OTS participates on the Financial and Banking 

Information Infrastructure Committee to improve the reliability and security of the 

financial industry’s infrastructure. 

OTS - 5 
Global Financial Services

OTS’s Complex and International Organization program oversees OTS’s global services. 

The European Union (EU) seeks to ensure that financial conglomerates domiciled outside 

EU member countries are subject to an equivalent level of supervision by foreign 

supervisors and to enhance coordination among relevant supervisors. OTS is the 

supervisor for U.S. thrift holding companies, including a number of financial 

conglomerates active in the EU. OTS was the first regulatory authority to be designated a 

consolidated coordinating regulator of a holding company with operations in the EU. 

The EU designation was received in December 2004 for OTS’s oversight of GE Capital 

Services, in September 2006 for Ameriprise, and January 2007 for the American 

International Group, Inc. (AIG). The supervision and examination of GE, AIG, and 

Ameriprise are managed by a group solely dedicated to that task in Supervision. 

The federal banking agencies are continuing efforts to implement the international Basel 

II risk-based capital framework. In early November, 2007, the Federal Reserve, the 

Office of the Comptroller of the Currency, the OTS, and the Federal Deposit Insurance 

Corporation approved a final rule regarding the advanced approaches for computing large 

banks’ risk-based capital requirements. That rule should be published in the Federal 

Register before year-end, with an effective date of April 1, 2008. The federal banking 

agencies also plan to propose, in the first quarter of 2008, a standardized capital 

framework as an option for all remaining U.S. banks that will not be required to adopt the 

advanced approaches. This proposal will introduce a capital framework similar to that 

which is available in many other countries. By design, it should also mitigate some

concerns about domestic competitive equity raised by the adoption of the advanced 

approaches. It will supplant the now-abandoned Basel IA proposal. 

 

Regulatory Burden Reduction

Under the Economic Growth and Regulatory Paperwork Reduction Act, enacted by 

Congress in 1996, federal banking agencies are required to review all of their regulations 

at least once every 10 years. In 2003, the agencies began a joint effort to categorize the 

regulations, publish the categories for comment, report to Congress on any significant 

issues raised by the comments, and eliminate unnecessary regulations. The first review 

was completed in 2006, as required under this law. 

The federal banking agencies identified burdens that would require legislative changes to 

the underlying statutes before changes could be made to the regulations. These changes 

were presented to Congress as a list of consensus items that the national bank and thrift 

industries support. Congress passed the “Financial Services Regulatory Relief Act of 

2006” on September 30, 2006, and President Bush signed it into law on October 13, 

2006. This law provides regulatory burden relief for the financial services, banking, and 

thrift industries. The law allows regulators to adjust exam cycles of healthy institutions 

for greater efficiency and modernizes record keeping requirements for regulators. 

OTS - 6 
Staffing and Succession Planning

Fifty-five percent of OTS’s current staff will reach retirement eligibility by the end of

2010. OTS is actively addressing succession planning and the corresponding training

needs. Over 70 new examiners were hired during fiscal year 2007 and OTS upgraded its 

training program for new and existing examiners. OTS’s compensation program enables 

OTS to attract, retain, and reward staff comparable to the other federal banking agencies. 

1C – Industry Outlook 

The thrift industry continues to fulfill its traditional role as a mortgage lender. Capital 

levels remain strong and earnings remain positive, despite the pressures on earnings and 

asset quality resulting from the growing weaknesses in the housing market, rising 

mortgage delinquencies and foreclosures, and deterioration in secondary market liquidity. 

As of September 30, 2007, 99 percent of all thrifts exceed the regulatory standard to 

qualify as “well-capitalized”. Net income for fiscal year 2007 totaled $11.3 billion. The 

number of problem thrifts  those with composite examination ratings of 4 or 5 ─ was up 

from ten thrifts in June 2007 to 12 as of September 2007. 

Financial services consolidation has reduced the overall number of savings institutions, 

but industry asset size has remained stable. OTS expects this to continue. OTS has 

worked closely with the industry to maintain the integrity and viability of the thrift 

charter as the industry continues to adapt to the evolving nature of the financial services 

business and the demands of its customers. 

OTS - 7 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Office of Thrift Supervision FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 1,015 1,104 1,104

Object Classification:

 11.1 - Full-time permanent 115,224 122,981 126,056

 11.3 - Other than full-time permanent 2,217 4,194 4,298

 11.5 - Other personnel compensation 0 0 0

 11.8 - Special personal services payments 0 0 0

 12 - Personnel benefits 67,085 65,274 66,906

 13 - Benefits for former personnel 300 190 195

 21 - Travel and transportation of persons 13,984 15,562 15,951

 22 - Transportation of things 241 287 294

 23.1 - Rental payments to GSA 0 0 0

 23.2 - Rental payments to others 3,944 4,384 4,494

 23.3 - Comm, utilities, and misc charges 3,582 4,335 4,443

 24 - Printing and reproduction 216 306 314

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 2,161 3,326 3,409

 25.2 - Other services 5,623 8,851 9,072

 25.3 - Other purchases of goods and services from Govt. accounts 3,923 3,674 3,766

 25.4 - Operation and maintenance of facilities 5,220 4,195 4,300

 25.5 - Research and development contracts 0 0 0

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 328 311 319

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 1,669 2,069 2,121

 31 - Equipment 5,544 4,342 4,451

 32 - Land and structures 1,239 1,219 1,249

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 0 0 0

 43 - Interest and dividends 0 0 0

 44 - Refunds 0 0 0

Total Budget Authority $232,500 $245,500 $251,638

Budget Activities:

 Supervision of the Thrift Industry 232,500 245,500 251,638

Total Budget Authority $232,500 $245,500 $251,638

OTS - 8 
2.3 – Resource Detail Table 

% Change

FY 2007 FY 2008 FY 2009 FY 2008

Description Actual Estimated Estimated to FY 2009

Summary of Revenue and Expenses:

Revenue:

Supervision

Assessments $218,100 $220,000 $225,500 2.50%

Rental Income $5,070 $4,950 $5,074 2.50%

Interest $8,500 $11,000 $11,275 2.50%

Fees & Other $7,330 $16,050 $16,451 2.50%

Total Revenue $239,000 $252,000 $258,300 2.50%

Expenses:

Supervision

Compensation & Benefits $184,825 $192,639 $197,455 2.50%

Travel & Transportation $14,225 $15,849 $16,245 2.50%

Facilities $14,310 $14,280 $14,637 2.50%

Other Services & Supplies $19,140 $22,732 $23,300 2.50%

Total Expenses $232,500 $245,500 $251,637 2.50%

Net Results $6,500 $6,500 $6,663 2.50%

2B – Appropriations Language and Explanation of Changes 

OTS receives no appropriated funds from Congress. 

2C – Legislative Proposals 

OTS currently has no legislative proposals. 

 

OTS - 9 
Section 3 – Budget and Performance Plan

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

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

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

intends to accomplish over the next five years. 

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

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Goal FY 2008 FY 2009 Percent

 TREASURY Strategic Objective Estimated Estimated Change

TREASURY Strategic Outcome AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 24,550 25,164 2.5%

Fin. & econ.crises 220,950 226,474 2.5%

Total $245,500 $251,638 2.5%

3A – Supervision of the Thrift Industry ($245,500,000 from reimbursable programs): 

OTS examines savings associations every 12 – 18 months for safety and soundness and 

compliance with consumer protection laws and regulations. During these exams, the 

association’s ability to identify, measure, monitor, and control risk is evaluated, including 

the risk posed by other entities within the corporate structure. When weaknesses are 

identified, supervisory action is taken. 

OTS receives no appropriated funds from Congress; the revenue of the bureau is derived 

principally from assessments on savings associations and savings and loan holding 

companies. Other sources of income include fees, rents, and interest on investments. 

OTS has received consecutive unqualified opinions on its financial statements since 

being formed in 1989. 

OTS’s four strategic goals guide the annual budget activity. 

Strategic Goal 1: A safe and sound thrift industry. 

Through the examination process, OTS assesses the financial condition and risk profile of 

savings associations, including their ownership structure, and identifies and addresses 

unsafe and unsound practices and violations of law and regulation. Through the off-site 

monitoring process, OTS regularly monitors the financial performance of individual 

savings associations and the industry. Such monitoring enables early identification of 

emerging trends or problems. 

Strategic Goal 2: Fair access to financial services and fair treatment of thrift customers. 

OTS’s Community Affairs Program supports the thrift industry's efforts to meet the 

convenience and needs of the communities they are chartered to serve; fulfill their CRA 

obligations; and provide safe and sound loans, investments and financial services for low 

OTS - 10 
and moderate income individuals, communities and other areas of greatest need. OTS's 

Community Affairs staff works with savings associations, community-based 

organizations, government officials and others to promote partnerships and other 

initiatives with savings associations at the local level to address and respond to 

community and economic development needs. In addition, OTS promotes industry 

adoption of comprehensive compliance management programs and encourages 

associations to strategically develop the diverse opportunities presented by the 

communities they are chartered to serve. 

Strategic Goal 3: A flexible legal and regulatory framework that enables the thrift 

industry to provide a full competitive array of financial services. 

OTS strives to reduce the regulatory burden on savings associations while maintaining 

effective supervision. To achieve this goal, OTS is improving the application process, 

limiting assessment rate increases and reviewing statutes and regulations of other 

governmental entities that may be burdensome. OTS reduced the amount of on-site 

examination time, redesigned regulations to make them easier to understand, and 

eliminated unnecessary restrictions. OTS tailors examinations to the risk profile of the 

individual institutions. This ensures that the examination process is responsive and 

enables the thrift industry to provide competitive financial services. 

OTS strives to manage operations to ensure that assessment rate increases do not exceed 

the inflation rate. Without compromising responsibilities, the assessment rate increases 

have not exceeded the inflation rate for the past four years. 

Strategic Goal 4: A professional, highly motivated and diverse workforce that effectively 

uses OTS resources to provide exceptional service to its customers. 

OTS strives to maintain a workforce that is professional and well trained to regulate the 

thrift industry and to deal with the public in a professional, informed, and responsive 

manner. OTS will continue to cross-train its examiners in both the safety and soundness 

and compliance disciplines. OTS provides the public with statistical reports, securities

filings of OTS registrants, chartering records and other public information. OTS assists 

savings association customers with inquiries and complaints concerning savings 

associations. 

In line with the President’s Management Agenda, OTS is committed to the effective,

efficient, and economic management of its resources. OTS analyzes new enterprise 

initiatives for best value.

OTS - 11 
3.2.1 – Supervision of the Thrift Industry Budget and Performance Plan 

Supervision of the Thrift Industry Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $187,434 $199,497 $218,129 $245,500 $251,638

Total Resources $187,434 $199,497 $218,129 $245,500 $251,638

Budget Activity Total $187,434 $199,497 $218,129 $245,500 $251,638

Supervision of the Thrift Industry Budget 

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Total OTS costs relative to every $100,000 in

savings association assets regulated ($) (E) 

N/A $13 $14 $15 $15

Percent of safety and soundness exams started 

as scheduled (%) (Ot)

 93% 94% 95% 90% 90%

Percent of thrifts that are well capitalized (%) 

(Oe) 

 100% 100% 99% 95% 95%

Percent of thrifts with compliance 

examination ratings of 1 or 2 (%) (Oe) 

 94% 93% 97% 90% 90%

Percent of thrifts with composite CAMELS

ratings of 1 or 2 (%) (Oe) 

 94% 93% 93% 90% 90%

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

Description of Performance: OTS met all of its performance measure targets for FY 

2007 and plans to maintain its current high level of achievement for all performance 

measures. The FY 2008 Performance Budget describes the goals, strategies, and 

priorities that will guide OTS’s operations. The FY 2008 budget enables OTS to 

continue tailoring supervisory examinations to the risk profile of the institutions, while 

effectively allocating resources to oversee and assess the safety and soundness and 

consumer compliance record of the thrift industry. 

Percent of thrifts with composite CAMELS ratings of 1 or 2.

On December 9, 1996, the Federal Financial Institutions Examination Council (FFIEC) 

adopted the CAMELS rating system (Capital adequacy, Asset quality, Management, 

Earnings, Liquidity and Sensitivity to market risk) as the internal rating system to be used 

by the federal and state regulators for assessing the safety and soundness of financial 

institutions on a uniform basis. The CAMELS rating system puts increased emphasis on 

the quality of risk management practices. OTS assigns a composite CAMELS rating to 

savings associations at each examination. OTS adjusts the level of supervisory resources 

devoted to an association based on the composite rating. The CAMELS rating is based 

upon a scale of 1 through 5 in increasing order of supervisory concern. 

Percent of thrifts with compliance examination ratings of 1 or 2.

A uniform, interagency compliance rating system was first approved by the FFIEC in 

1980. The FFIEC rating system was designed to reflect, in a comprehensive and uniform

fashion, the nature and extent of a savings association’s compliance with consumer 

protection statutes, regulations and requirements. The Compliance Rating System is 

based upon a scale of 1 through 5 in increasing order of supervisory concern. 

OTS - 12 
OTS elected to combine safety and soundness and compliance examinations in 2002 to 

attain exam efficiencies and to improve risk assessment. Using comprehensive exam

procedures, compliance with consumer protection laws is reviewed at more frequent 

intervals, which has improved the quality of the examination process. 

Percent of thrifts that are well capitalized.

Capital absorbs losses, promotes public confidence and provides protection to depositors 

and the FDIC insurance fund. It provides a financial cushion that can allow a savings 

association to continue operating during periods of loss or other adverse conditions. The 

Federal Deposit Insurance Act established a system of prompt corrective action (PCA) 

that classifies insured depository institutions into five categories (well-capitalized; 

adequately capitalized; undercapitalized, significantly undercapitalized; and critically 

undercapitalized) based on their relative capital levels. The purpose of PCA is to resolve 

the problems of insured depository institutions at the least possible long-term cost to the 

deposit insurance fund. 

 

Percent of safety and soundness exams started as scheduled

OTS examines savings associations every 12-18 months for safety and soundness, 

compliance and consumer protection laws. OTS performs safety and soundness 

examinations of its regulated savings associations consistent with statutory authority. 

When safety and soundness or compliance issues are identified during its risk-focused 

examinations, OTS acts promptly to ensure association management and directors 

institute corrective actions to address supervisory concerns. OTS staff often meets with 

the savings association’s board of directors after delivery of the Report of Examination to 

discuss findings and recommendations. 

Difference between the inflation rate and the OTS assessment rate increase.

Without compromising responsibilities and the risk-based examination approach, OTS 

strives to efficiently manage its operations and budget to ensure that assessment rate 

increases do not exceed the inflation rate without compromising OTS’s responsibilities 

and the risk-based examination approach. However, if OTS believes that events require 

more personnel or other expenditures, OTS may increase assessments to raise the 

required resources. Annually, OTS analyzes its operating costs and compares them to the 

assessments it charges savings associations and holding companies in order to achieve a 

structure that keeps assessment rates as low as possible while providing OTS with the 

resources necessary for effective supervision. 

Total OTS Costs Relative to Every $100,000 in Savings Association Assets Regulated.

Beginning in FY 2006, OTS included a performance measure that reflects the efficiency 

of its operations while meeting the increasing supervisory demands of a growing and 

more complex thrift industry. This measure supports OTS’s ongoing efforts to efficiently 

use agency resources. The efficiency measure is impacted by the relative size of the 

savings associations regulated. Approximately 60 percent of all savings associations 

have total assets of less than $250 million and are generally community-based 

organizations that provide retail financial services in their local markets. The measure 

OTS - 13 
does not include over $8.5 trillion in assets of holding company enterprises regulated by 

OTS. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

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

OTS - 14 
OTS - 15 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Human capital represents OTS’s primary resource to meet its strategic objectives. 

Sustaining and nurturing human capital resources requires a blend of competitive 

compensation, strategic and innovative training, and a diverse, supportive work 

environment. 

OTS developed its Human Capital Strategic Plan in response to the President’s 

Management Agenda. The Plan follows the Department of the Treasury’s Human 

Capital Strategic Plan for Fiscal Years 2004-2008 and incorporates strategies and 

practices to ensure that OTS has sufficient staff with the right skills to accomplish its 

mission presently and in the future. The Plan consists of four main strategic goals: 

Organizational Effectiveness, Recruitment and Diversity, Employee Retention and 

Satisfaction, and Technology Skills. 

Fifty-five percent of OTS’s current staff will reach retirement eligibility by year-end 

2010. OTS is developing a revitalized succession planning program to analyze specific 

positions and categories of positions, identify internal and external pools of available and 

projected candidates, and design professional development programs to match these 

needs. Over 70 new examiners were hired during 2007. OTS’s compensation program 

enables OTS to attract, retain, and reward staff comparable to the other federal banking 

agencies. 

OTS is working to cross train its examination staff to create a work force capable of 

performing multiple examination types (e.g., safety and soundness examinations and 

compliance examinations), as well as designing training programs to meet the challenges 

OTS faces with anticipated retirements as part of its overall succession planning program. 

To meet the needs of a thriving thrift industry, OTS seeks qualified experienced and entry 

level candidates with diverse backgrounds. OTS is developing recruiting materials, 

attending job fairs including events targeting minority and women’s groups, and working 

to provide both centralized and regional recruitment support to meet its various 

recruitment needs.
OTS - 16 

4.1 – Summary of IT Resources Table Dollars in Thousands

Information Technology Investments

FY 2006 FY 2008 

Major IT Investments / Funding Source

Budget

Activity

& Earlier

Enacted 1/

FY 2007

Enacted

President's

Budget

F

Re

Major IT Investments $0.0 $0.0 $0.0 0.0 Non-Major IT InvestmentsAdministrative - Mixed Supervision $851.5 $863.9 $975.0 11.4% Examinations Supervision $1,915.8 $1,799.9 $1,632.0 -10.3% $Thrift Financial Data Supervision $2,596.8 $3,522.2 $3,105.0 -13.4% $TFR Validation Supervision $1,532.6 $1,555.1 $1,507.0 -3.2% $Industry Structure and Tracking Supervision $1,745.5 $1,532.0 $1,140.0 -34.4% $CIO Planning Supervision $1,953.7 $1,757.4 $1,920.0 8.5% $Total Non-Major IT Investments $12.2 $11,030.5 $10,279.0 -7.3% $1Infrastructure InvestmentsTreasury Consolidated Data Center & Services $2,770.0 $3,754.8 $7,801.0 51.9% $Treasury Consolidated Telecommunications $921.6 $814.2 $1,750.0 53.5% $Treasury Consolidated End User Services $2,732.0 $2,987.7 $3,360.0 11.1% $Treasury Consolidated Security $865.8 $1,710.6 $0.0 0.0% Total Infrastructure Investments $7,289.4 $9,267.3 $12,911.0 28.2% $1Enterprise Architecture $170.3 $115.0 $148.0 2.5% Total IT Investments $21.6 $20,412.8 $23,338.0 2.5% $2

% Change

from FY07 to

FY08
4B – Information Technology Strategy 

The OTS Information Technology Investment Review Board (IRB) provides overall 

direction and vision for how OTS’s information technology should contribute to OTS’s 

goals and objectives. It serves as the forum for senior OTS executives to make decisions 

regarding IT expenditures and investments. 

OTS’s Chief Information Officer is responsible for the policy, oversight and 

improvement of all information systems, information management and data 

communications used by OTS to carry out its mission; he serves as the Executive 

Director of the IRB. OTS’s Director serves as the IRB Chair.

The IRB meetings are incorporated into the Regional Managers meetings to ensure that 

all senior staff participates in the discussion of the IT program, its budget, projects, 

strategies, and priorities. Projects are evaluated annually during the budget cycle and can 

be terminated or funded for further development. 

OTS successfully implemented the Personal Identity Verification (PIV) process in 2006 

to comply with the PIV-1 requirements of Homeland Security Presidential Directive 12 

(HSPD-12). OTS will work with Treasury’s team to implement a new identity 

management program and to issue new smartcard badges. 

During 2007, OTS provided timely and efficient technological assistance and solutions to 

meet regulatory responsibilities and improve operations. OTS continues to make 

progress in achieving OMB’s, requirements for full-disk encryption and two-factor 

authentication. At year end 2006, all of our remote user workforce and regional office 

staff hard-drives were fully encrypted. Full encryption of Washington staff machines 

was complete by the end of the 2007 calendar year. 

OTS is working to develop a security program that adequately addresses the National 

Institute of Standards and Technology (NIST) requirements while being manageable for a 

small agency. OTS strengthened its IT Security program during FY 2006 and hired five 

new security professionals who are dedicated to addressing operational and regulatory 

security requirements. OTS also separated Operational Security into a distinct team to 

address day-to-day security concerns and activities. OTS will strive to improve the 

Federal Information Security Management Act (FISMA) posture by implementing new 

processes compliant with the NIST standards and by recertifying its national systems. 

OTS has no major IT investments planned for FY 2008. 

 

OTS - 17 
4.2 – PART Evaluation Table 

PART Name: Thrift Supervision

Strategic Goal: Increase the reliability of the U.S. financial system (F3)

ting: Effective

jor Findings

ommendations

 Actions Taken

Actions Planned or Underway

2. Based on feedback received over the past two years, the vast majority of the industry prefers the efficiency and effectiveness of a 

joint examination. OTS eliminated much of the redundancy of two separate exams. OTS will fulfill its statutory examination 

responsibilities with less FTEs as a result of this change.

2. The program developed new goals that are outcome-oriented and program measurements which are clear.

3. The program is efficiently and effectively managed.

1. The program purpose is clear.

1. OCC and OTS worked together throughout the strategic and performance planning efforts to ensure that their strategic goals were

closely aligned. The banking regulatory agencies share their strategic and performance plans with each other and meet quarterly to

discuss strategic and performance planning.

1. Federal banking regulatory agencies, including the OTS, the OCC, the NCUA, and the FDIC, work together

to align outcome goals and related measures to allow for greater comparison of program performance in the

industry.

2. The OTS evaluates the efficiency and effectiveness of a single examination for both Safety and Soundness

and Compliance functions.

3. The OTS take steps to examine long-term systemic risks in the industry.

3. OTS will continue to examine and address systemic risks.

3. During the 2004 strategic planning process, systemic risks were examined and addressed in the Plan.

1. OTS will continue to work with the OCC to ensure that strategic goals are closely aligned. OTS will continue

to share its strategic and performance plans with the other banking regulatory agencies and meet to discuss 

strategic and performance planning.

2. OTS will continue to perform a joint examination.

Ra

OMB Ma

OMB Rec

OTS

OTS

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

OTS - 18 
E-Government Initiatives 

Introduction

The primary purpose of the E-Government and Lines of Business initiatives is to improve 

services to U.S. citizens and promote increases in the efficiency and effectiveness of 

government operations so that they provide savings to the taxpayer. The Treasury 

Department has made significant progress toward these goals by providing funding for 14 

of the 27 E-Government initiatives and six of the nine Lines of Business. By facilitating 

discussions between Departmental E-Government representatives and the federal 

Managing Partners, the Treasury Department has improved the efficiency of many of its 

activities and has begun to identify and eliminate duplicative systems. For example, as 

managing partner of the Internal Revenue Service Free File program, the Treasury 

Department made it possible for almost 4 million taxpayers to file electronically in tax 

year 2006, producing a cost savings for the government of $9.1 million. The Treasury 

Department’s participation in the E-Travel initiative allowed the Department to save 

$402,000 in travel management fees in FY 2007. Further specifics on the benefits, level 

of funding, and source of funding for each of the Department’s E-Government initiatives 

are laid out in this chapter. 

Program Summary by Funding Source 

Dollars in Thousands 

Funding Source FY 2009

Agency Contributions $3,292

Agency Service Fees 1/ $29,027

Grand Total Financial Plan Requirements $32,319

1/ Service fees are estimates based on actual usage.
Table of Contents

Section 1 – Program Benefits........................................................................................... 1 

1.1 – Description and Benefits of E-Government Initiatives.............................................. 1 

Government to Citizen.................................................................................................... 1 

IRS Free File ............................................................................................................... 1 

GovBenefits.gov ......................................................................................................... 1 

Disaster Assistance Improvement Plan....................................................................... 1 

Government to Business................................................................................................. 2 

Business Gateway ....................................................................................................... 2 

E-Rulemaking. ............................................................................................................ 2 

Government to Government ........................................................................................... 2 

Grants.gov ................................................................................................................. 2 

Internal Efficiency and Effectiveness............................................................................. 2 

Recruitment One-Stop ................................................................................................ 2 

E-Payroll ..................................................................................................................... 3 

E-Travel . .................................................................................................................. 3 

Enterprise Human Resources Integration ................................................................... 3 

E-Training................................................................................................................... 3 

Integrated Acquisition Environment........................................................................... 4 

Integrated Acquisition Environment – Loans and Grants........................................... 4 

Lines of Business (LOBs)............................................................................................... 4 

Human Resources Management ................................................................................ 4 

Financial Management................................................................................................ 4 

Grants Management.................................................................................................... 4 

Budget Formulation and Execution ............................................................................ 5 

Geospatial ................................................................................................................... 5 

Cross-Cutting .................................................................................................................. 5 

E-Authentication......................................................................................................... 5 

Section 2 – Budget............................................................................................................. 6 

2.1 – Funding by Program .................................................................................................. 6 
 Section 1 – Program Benefits

1.1 – Description and Benefits of E-Government Initiatives 

Government to Citizen......................................................................................$2,600,213 

IRS Free File $1,800,000 (Agency Contribution) The Internal Revenue Service’s (IRS) 

Free File program allows eligible taxpayers to prepare and electronically file their tax

returns over the Internet using commercial software for free. This free filing service is

available at www.irs.gov and is made possible through a partnership between the 

government and the Free File Alliance, a consortium of tax preparation software 

manufacturers. For the 2006 tax year, the IRS reached out to 70 percent of the tax filing 

public and received 3.85 million e-filed tax returns through Free File services 

representing a cost-savings to the government of approximately $9.1 million. Treasury is 

the only agency supporting the Free File Initiative and the source of funding for the 

operation and maintenance of Free File are appropriated funds. 

Since inception in 2003, IRS Free File has allowed the U.S. Government to realize cost 

savings of $45.5 million and through FY 2007 the IRS has spent $2,250,000 and used 19 

FTEs on the Free File program. The cost increase for FY 2007 included $1,500,000 used 

to market the program. Both the IRS Inspector General and the Electronic Tax 

Administration Advisory Committee (a group of external experts that advises the IRS 

on electronic issues) have recommended expansive Free File marketing efforts. In 

response, the IRS developed a robust marketing campaign. Additional costs were due to 

an increase in contract costs for updating the IRS Free File website and the application 

that provides guides to taxpayers to the different company offerings. The contract for 

those services was renegotiated prior to FY 2007. 

GovBenefits.gov $323,840 (Agency Service Fee) GovBenefits.gov supports the Treasury 

Department’s mission by increasing public awareness of valuable tax benefit programs 

that allow businesses and individuals to grow and prosper without being limited by 

unnecessary or obsolete rules and regulations. For FY 2007, over 7,678 referrals to 

Treasury Department program pages were accessed by citizens using GovBenefits.gov. 

Disaster Assistance Improvement Plan $476,373 (Agency Contribution) The Disaster 

Assistance Improvement Program (DAIP) is a government-wide initiative to improve the 

delivery of assistance to disaster victims. Through modification of an existing E-Gov 

initiative, GovBenefits.gov, DAIP provides a one-stop portal for those affected by 

disasters by providing information on programs offering disaster assistance and screening 

of benefits for which they may be eligible. After determining their eligibility, users may 

apply for disaster assistance benefits using a single application through FEMA, leading to 

a more simplified, streamlined process. All benefit applications are adjudicated by the 

appropriate agency. DAIP will also allow returning users to check the status of the 

request for benefits available through the single application. DAIP includes member 

agencies that have programs that: provide benefits for persons in response to disasters; 

E-Government - 1 
help facilitate the application and delivery process through validation; have other 

resources that may assist disaster victims: or are otherwise relevant to those who are 

impacted by disasters. During its first year of operation, the DAIP Program Office will 

quantify and report on the benefits and cost savings for each member agency. 

Government to Business..................................................................$838,606 

Business Gateway $354,132 (Agency Contribution) Business Gateway (BG) is a 

convenient portal for businesses to access a wide range of applicable forms online. BG 

reduces costs associated with forms printing, duplication, and distribution through the 

www.business.gov website and benefits the Treasury Department by supporting the 

Department’s desire to help businesses succeed. BG supports the Alcohol and Tobacco 

Tax and Trade Bureau (TTB) and the IRS by providing businesses and citizens greater 

access to compliance tools and documents including 59 links to guidance resources and 

forms. BG also provides links to 674 tax guidance resources, forms, and tools and 

provides a centralized location for sharing changes in tax regulations or in the tax code 

and providing a forum to solicit feedback on such issues. Forms.gov, an extension of 

Business.gov, currently has 987 government-to-business and government-to-citizen 

forms and 1,045 related documents from all bureaus and offices.

E-Rulemaking $484,474 (Agency Service Fee) The Treasury Department fully 

implemented its rulemaking processes to the Federal Docket Management System

(FDMS), E-Rulemaking’s government-wide solution. The Department will continue to 

implement other rulemaking-related documents to FDMS. This initiative enables the 

Treasury Department to streamline and automate the rulemaking process, improve citizen 

participation in the comment phases, and enhance information management processes 

within the Department. 

Government to Government...............................................................$74,596 

Grants.gov $74,596 (Agency Contribution) Grants.gov benefits the Treasury 

Department by providing a single location for citizens to find and apply for Department 

grant opportunities. The Department has three grant-making programs: the IRS Low 

Income Taxpayer Clinic, IRS Tax Counseling for the Elderly, and the Community 

Development Financial Institutions (CDFI) Fund. The Department of the Treasury is 

meeting its targeted goals regarding posting of grant opportunities and applications on the 

Grants.gov portal. The Department has posted five funding opportunities and five 

application packages on Grants.gov. The Department received 293 electronic 

applications and expects to report a total cost avoidance of $45,000 in FY 2007. 

Internal Efficiency and Effectiveness..............................................$28,266,198

Recruitment One-Stop $808,814 (Agency Service Fee) The USAJOBS.GOV web-portal 

allows the Treasury Department to announce position openings and attract qualified 

candidates from a larger and diversified pool. This expedites the Department’s ability to 

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fill mission critical positions and reduces paper applications and processing time, thus 

improving access to top candidates and the efficiency of the hiring process. The Treasury 

Department also leverages the USAJOBS resume function by uploading into its 

automated system, CareerConnector. 

E-Payroll $17,772,620 (Agency Service Fee) As a participant in the E-Payroll initiative, 

the Treasury Department leverages economies of scale through the use of the National 

Finance Center (NFC). E-Payroll creates standardized services and provides full payroll 

services to the Treasury Department.

E-Travel $7,426,421 (Agency Service Fee) The Treasury Department is in the process 

of migrating all of its travel services to GovTrip, one of the designated E-Gov Travel 

Service (ETS) providers. The Treasury Department has fully deployed GovTrip in all but 

one bureau, and the remaining bureau is scheduled for full deployment by May 2008. As 

a result of deployment to GovTrip, the following benefits have been realized. Through a 

combination of advantageous Travel Management Center (TMC) pricing and a 

substantially higher degree of On-Line Booking Engine (OBE) usage (73 percent), the 

Department saved over $402,000 in travel management service fees for reservations in 

FY 2007. By utilizing ETS, the Department reduced the time for manual post travel 

audits by 30 percent. The Department continues to process vouchers through the ETS 

and processed over 2,000 in August 2007. The Department decommissioned costly 

stovepipe legacy systems further supporting the Presidential Management Agenda (PMA) 

goals and objectives. 

Enterprise Human Resources Integration $1,027,500 (Agency Service Fee) Enterprise 

Human Resources Integration (EHRI) provides a standard Department-wide approach to 

gathering, maintaining, and analyzing personnel data across its 11 bureaus. Data 

warehouse and data-mining tools assist with forecast projections for strategic hiring, 

trend analysis, and succession planning. The Treasury Department is also planning to use 

EHRI resources to convert paper-based Official Personnel Folders (OPFs) to electronic 

format for some of its bureaus. This will be the first in a multi-year effort to convert all 

OPFs across the Department. 

E-Training $750,000 (Agency Service Fee) The Treasury Department previously had five 

separate Learning Management Systems (LMSs) servicing over 110,000 employees and, 

through a collaborative process, consolidated these disparate LMSs to one system in FY 

2007. This consolidation eliminated redundant software and hardware, thereby 

decreasing future operations and maintenance costs. Additionally, the Department will 

leverage its buying power to lower the cost of future upgrades and enhancements. The 

Department can now electronically collect, maintain, and report training information and 

monitor professional development Department-wide. The transformation from a bureaucentric to an enterprise-wide approach will ensure that the Department is able to fully

address the growing need to meet Treasury mission requirements through delivery of 

quality and cost-effective training. 

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Integrated Acquisition Environment $367,879 (Agency Service Fee) Through adoption of 

Integrated Acquisition Environment (IAE) tools and services, the Treasury Department is 

improving its ability to make informed and efficient purchasing decisions and automate 

manual processes. IAE will provide a common data warehouse to facilitate trend analysis 

and provide acquisition information across the Department. IAE has allowed the 

Department to automate manual and paper-based processes as well as retire legacy 

systems. For example, the Department retired an acquisition data system in FY 2005 for 

a savings of $161,000. 

Integrated Acquisition Environment – Loans and Grants $112,963 (Agency Contribution)

All agencies participating in the posting and/or awarding of Loans & Grants are required 

by the Federal Funding Accountability and Transparency Act (FFATA) to disclose award 

information on a publicly accessible website. Cross-government cooperation with the 

Office of Management and Budget’s Integrated Acquisition Environment initiative in 

determining unique identifiers for Loans & Grants transactions furthers the agency in 

complying with the Transparency Act, which enhances transparency of federal program

performance information, funding, and Loans & Grants solicitation. 

Lines of Business (LOBs)...............................................................$474,330 

Human Resources Management $260,870 (Agency Contribution) The Treasury 

Department operates HR Connect, an approved HR Line of Business (LoB) service 

provider. This initiative allows the Department to spread the cost of managing HR 

systems and processes across a larger customer base, reducing agency costs to operate 

these systems and processes. 

Financial Management $75,000 (Agency Contribution) The Treasury Department’s 

Bureau of Public Debt is one of four federal Financial Management (FM) LoB shared 

service providers. The Department hosts and administers financial systems and performs 

business processing operations for over 30 Government organizations, including most 

Department bureaus and 16 non-Department-related organizations. The increased 

customer base reduces duplicative financial management systems within the Department 

and allows for sharing of overall operation and maintenance costs. The Department 

leverages its IT and financial processing expertise to realize cost savings and avoidance 

through the standardization of business processes and a common business language at the 

agency and bureau levels. 

Grants Management $28,460 (Agency Contribution) By relying on shared service 

centers for the processing of grants, the Treasury Department will benefit from improved 

delivery of services to grant recipients, improved decision-making and decreased costs 

associated with building and maintaining grants management IT systems. The IRS, one 

of two grant-making entities within the Treasury Department, will continue to rely on the 

Department of Health and Human Services (HHS) for grants processing. CDFI, the 

second grant-making entity within the Treasury Department, has signed an Interagency 

Agreement (IAA) to migrate its grants-processing functions to HHS and expects to report 

cost savings/avoidance as these functions migrate. 

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Budget Formulation and Execution $95,000 (Agency Contribution) The Budget 

Formulation and Execution (BFE) LoB is a cross-agency effort to find common solutions 

that produce efficiencies in budget formulation and execution activities across the federal 

government. In working toward this goal, the BFE LoB developed nine technologybased capabilities solutions. One of these solutions includes “Agency Budgeting Tools,” 

which is intended to make software applications already developed by some agencies 

available to the overall federal budget community. The Treasury Department has been 

leading an effort in making the formulation module of the Budget Formulation and 

Execution Manager (BFEM) available to any agency that wishes to use the tool. Since 

that time, six agencies have used the service and the Department is now working to make 

a performance module available as well. Aside from benefiting the overall federal 

government by eliminating costs agencies must incur for independent development 

efforts, this effort has a direct benefit for the Treasury Department since it spreads the 

cost of future BFEM development work. By creating a pool of funds contributed to by a 

wide range of agencies, the Department no longer has to fund BFEM development itself 

and can share those costs with other agencies. 

Geospatial $15,000 (Agency Contribution) The Treasury Department uses geospatial 

data to assist enforcement efforts and financial forecasting. The Geospatial LoB will 

enable geospatial interoperability across federal programs. Through interagency 

cooperation, federal programs can enhance their capacity for understanding and using 

information in terms of its relevant geography. Optimal use of geographic data and geoanalytics can significantly improve the way that governments plan their strategies, 

manage their organizations, and offer goods and services to the public. The LoB also 

facilitates a more coordinated approach to producing, maintaining, and using geospatial 

data, and will ensure sustainable participation from federal partners to establish a 

collaborative model for geospatial-related activities and investments. 

Cross-Cutting.............................................................................$65,000 

E-Authentication $65,000 (Agency Service Fee) The E-Authentication initiative allows 

the Treasury Department and its bureaus to use identity credentials issued and managed 

by organizations internal and external to the federal government, thereby relieving the 

Department of the cost of providing its own identity management solutions. The ultimate 

goal of the Department’s identity management solutions will be to enable users of one 

domain to securely access data or systems of another domain seamlessly, and without the 

need for completely redundant user administration. Use of identity management 

standards can reduce cost by eliminating the need to scale one-off or proprietary 

solutions. It can increase security and lower risk by enabling the Department to identify 

and authenticate a user once, and then use that identity information across multiple 

systems, including external partner websites. 

Exhibit 300s for all of Treasury’s capital investments can be found at 

http://www.treas.gov/exhibit300/ . The Treasury Department does not serve as the 

managing partner for any multi-agency E-Government initiatives. 

E-Government - 5 
Section 2 – Budget

2.1 – Funding by Program 

Funding by Program Managing Agency FY 2009

Government to Citizen

IRS Free File Department of the Treasury $1,800,000

GovBenefits.gov 1/ Department of Labor $323,840

Disaster Assistance Improvement Plan Department of Homeland Security $476,373

Government to Citizen (Total) $2,600,213

Government to Business

Business Gateway Small Business Administration $354,132

E-Rulemaking 1/ Environmental Protection Agency $484,474

Government to Business (Total) $838,606

Government to Government

Grants.gov Health and Human Services $74,596

Government to Government (Total) $74,596

Internal Efficiency and Effectiveness

Recruitment One-Stop 1/ Office of Personnel Management $808,814

E-Payroll 1/ Office of Personnel Management $17,772,620

E-Travel 1/ General Services Administration $7,426,421

EHRI 1/, 2/ Office of Personnel Management $1,027,500

E-Training 1/ Office of Personnel Management $750,000

Integrated Acquisition Environment 1/ General Services Administration $367,879

Integrated Acquisition Environment - Loans and Grants General Services Administration $112,964

Internal Efficiency and Effectiveness (Total) $28,266,198

Lines of Business

Human Resources Office of Personnel Management $260,870

Financial Management

 Department of Energy / Department

of Labor $75,000

Grants Management

 National Science Foundation /

Department of Energy $28,460

Budget Formulation and Execution Department of Education $95,000

Geospatial Department of Interior $15,000

Lines of Business (Total) $474,330

Cross-Cutting

E-Authentication 1/ General Services Administration $65,000

Cross Cutting (Total) $65,000

Grand Total $32,318,943

1/ Service fees are estimates based on actual usage.

 2/ The Working Capital Fund Steering Committee will determine the exact scope of FY 2009 efforts during FY 2008. 

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