Federal Tax Collection: Potential for Using Passport Issuance to Increase Collection of Unpaid Taxes
Published: 2011-03-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: According to the Internal Revenue Service (IRS), as of the end of fiscal year 2010, the balance of reported unpaid federal taxes was about $330 billion. Given the many challenges that IRS faces, the enforcement of the tax laws and the tax code is on GAO's list of high-risk areas. GAO was asked to (1) determine, to the extent possible, the magnitude of known unpaid federal taxes for individuals who were issued passports in fiscal year 2008; and (2) identify examples of passport recipients who have known unpaid federal taxes. GAO reviewed data from the Department of State (State) and IRS. To identify examples for detailed audit and investigation, GAO chose a nonrepresentative selection of 25 passport recipients based on a number of factors, including amount of taxes owed. These case studies were chosen, among other things, by the more egregious amount of federal taxes owed and cannot be generalized beyond the cases presented.
section_title: What GAO Found
paragraphs: State issued passports to about 16 million individuals during fiscal year 2008; of these, over 224,000 individuals (over 1 percent) owed over $5.8 billion in unpaid federal taxes as of September 30, 2008. State is not authorized to restrict the issuance of passports to individuals because they owe federal taxes. In addition, federal law does not permit IRS to disclose taxpayer information, including unpaid federal taxes, to State officials unless the taxpayer consents. In contrast, federal law permits certain restrictions on the issuance of passports to individuals, such as individuals owing child support debts over $2,500. For 2008, the estimated amount of unpaid federal taxes is likely understated because it excludes individuals who have not filed tax returns or underreported income. In addition, according to State officials, State cannot compel a passport applicant to provide a Social Security Number (SSN). As a result, State's records sometimes did not contain a valid SSN, which is necessary to match passport data to IRS data. Also, the number of passport holders and dollars owed only includes 1 year of passports that were issued, substantially understating the total tax debt for all passport holders. GAO judgmentally selected 25 passport recipients to investigate for abuse related to the federal tax system or criminal activity. Of these cases, at least 10 passport recipients had been indicted or convicted of federal laws. In addition, IRS assessed trust fund recovery penalties on several passport recipients when the individual did not remit payroll taxes to the federal government. Rather than fulfill their role as trustees of this money and forward it to IRS, they diverted the money for other purposes. Willful failure to remit payroll taxes is a felony under U.S. law. Some of these individuals accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes. At least 16 passport recipients traveled outside the country while owing federal taxes. At least 4 passport recipients resided in another country at the time of GAO's investigation. Two individuals used the identities of deceased individuals to fraudulently obtain passports and then used these passports to travel to Mexico, France, and Africa. In one case, the unpaid tax debt belonged to a deceased individual, and in the other case, the debt was incurred by the imposter. We referred these 2 cases to IRS for further investigation. If Congress is interested in pursuing a policy of linking federal tax debt collection to passport issuance, it may consider taking steps to enable State to screen and prevent individuals who owe federal taxes from receiving passports. This could include asking State and IRS to jointly study policy and practical issues and develop options with appropriate criteria and privacy safeguards. State provided technical comments which we incorporated into the report as appropriate.

section_title: Letter
paragraphs: The Internal Revenue Service (IRS) pursues collection of unpaid federal  taxes to help ensure compliance with and confidence in the tax system. As  of September 30, 2010, IRS had identified cumulative unpaid taxes,  including interest and penalties, of about $330 billion. Beyond this  reported tax debt, the amount of unknown tax debts is substantial. This is  because the inventory of tax debts excludes underreported amounts filed  by taxpayers and taxes owed by taxpayers who do not file tax returns.   Given the many challenges that IRS faces, the enforcement of the tax laws  continues to be on our list of high-risk areas.
In fiscal year 2008, the Department of State (State) issued over 16 million  passports to U.S. citizens. Federal law permits the Secretary of State to  deny or revoke the issuance of passports in certain circumstances. For  example, the Passport Denial Program described in 42 U.S.C. § 652(k)  requires State to deny passports to individuals based on delinquent child  support obligations. Under the program, the names of noncustodial  parents certified by a state as having arrearages exceeding $2,500 are  submitted by the Department of Health and Human Services to State,  which denies them U.S. passports upon application or the use of a  passport service until the debt is satisfied. Since the program was initiated  in 1998, about $200 million has been collected on child support obligations  from this program. However, State is not authorized to restrict the  issuance of passports to individuals because they owe federal taxes.
Given your interest in the challenges that IRS faces in collecting unpaid  taxes, and the potential for substantial future tax collections from tax- delinquent individuals holding or seeking issuance of a passport, you  asked us to (1) determine, to the extent possible, the magnitude of known  unpaid federal taxes for individuals who were issued passports in fiscal  year 2008; and (2) identify examples of passport recipients who have  known unpaid federal taxes.
To identify the magnitude of passport recipients with unpaid federal taxes,  we obtained and analyzed IRS tax debt data as of September 30, 2008, and  obtained and analyzed data on passport recipients from State for fiscal  year 2008. We matched the list of passport recipients with IRS tax debts  using the Social Security number (SSN). To identify examples, we selected  25 passport recipients for a detailed audit and investigation of the extent  and nature of abusive or criminal activity. A nonrepresentative selection of  25 cases were selected from the population of passport recipients who  owed federal taxes described above using a data mining approach based  on a number of factors, such as total amount of taxes owed by passport  recipients, number of tax years that the passport recipient did not pay all  taxes, types of taxes, and location of the tax recipient. For these 25 cases,  we reviewed copies of automated tax transcripts and other tax records  (for example, revenue officers’ notes) and performed additional searches  of criminal, travel, financial, and public records. These case studies serve  to illustrate the sizeable amounts of taxes owed by some individuals who  were issued passports in fiscal year 2008 and other characteristics of the  cases that can extend beyond the tax system. These cases were among the  more egregious and cannot be generalized beyond the cases presented. A  more detailed description of the scope and methodology related to our  audit and investigative work supporting this report is provided in   appendix I.
We conducted this forensic audit from October 2009 to March 2011 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives. We conducted our related investigative  work in accordance with standards prescribed by the Council of the  Inspectors General on Integrity and Efficiency.
subsections: section_title: Background
subsections: section_title: Individuals with Unpaid Taxes Are Not Prohibited from Receiving Passports
paragraphs: Federal law does not authorize State to deny the issuance of passports to  individuals who owe federal taxes. Federal law permits the Secretary of  State to deny or revoke the issuance of passports only in certain  circumstances, including, but not limited to, when the individual   is subject to a criminal court order, condition of probation, or condition of  parole, any of which forbids departure from the United States and the  violation of which could result in the issuance of a federal warrant of  arrest, including a warrant issued under the Federal Fugitive Felon Act;  is over $2,500 delinquent in child support;  is delinquent in certain Department of State debts;    has an outstanding felony warrant;    has an outstanding foreign felony warrant;  is subject to an extradition request that has been presented to a foreign  country;    has been declared legally incompetent;    used a passport or crossed an international border to commit an act based  on which the individual was subsequently convicted of certain drug  trafficking crimes, but only during the period the individual is imprisoned  or on parole or supervised release; or    used a passport or crossed an international border to commit an act based  on which the individual was subsequently convicted under the federal “sex  tourism” statute, but only during the period the individual is imprisoned or  on parole or supervised release.
section_title: Federal Law Prevents Disclosure of Taxpayer Information
paragraphs: The protection of taxpayer information is commonly thought to be critical  to voluntary compliance with the tax code and necessary to protect  taxpayer privacy. Under current law, taxpayer information is protected  under 26 U.S.C. § 6103, among other provisions. IRS must keep taxpayer  information confidential and may only disclose it under limited  circumstances, e.g., for federal or state tax administration, to assist in the  enforcement of child support programs, and to verify eligibility for public  assistance programs, unless the taxpayer consents to such disclosure.  Individuals or agencies receiving taxpayer data must, as a condition of  receiving such data, have safeguards for the protection of, and for  accounting for, the use of such data.
section_title: Magnitude of Unpaid Taxes Owed by Individuals Issued a Passport
paragraphs: The State Department issued passports to over 224,000 individuals who  owed over $5.8 billion in known unpaid federal taxes as of September 30,  2008. This represented over 1 percent of the approximately 16 million  individuals issued a passport during fiscal year 2008. Currently, federal law  does not authorize State to deny the issuance of passports to individuals  who owe federal taxes. Because IRS’s database does not include amounts  owed by taxpayers who have not filed tax returns and for which IRS has  not assessed tax amounts due, the estimated amount of unpaid federal  taxes is likely understated. Also, the figures cited within this report only  represent passports issued for 1 fiscal year. As such, our estimate likely  understates the total amount of unpaid taxes by all passport holders.  According to State, there are tens of millions of passport holders, thus the  number of passport holders with unpaid federal taxes and the magnitude  of unpaid federal taxes owed by passport holders are likely to be  substantially higher than the figures cited in this report.
subsections: section_title: Tax Characteristics of Individuals Issued a Passport
paragraphs: As shown in figure 1, about 90 percent of the approximately $5.8 billion in  unpaid taxes comprised individual income taxes. The other 10 percent of  taxes were taxes owed from “trust fund recovery penalties.” In these  situations, IRS found that individuals within the business (e.g., corporate  officers) were personally liable for the payroll taxes withheld from  employees’ paychecks but not forwarded and assessed a civil monetary  penalty for those withheld amounts.
A substantial amount of the unpaid federal taxes shown in IRS records as  owed by individuals issued a passport in fiscal year 2008 had been  outstanding for several years. As reflected in figure 2, about 41 percent of  the $5.8 billion in unpaid taxes was assessed within the last 3 years. Our  previous work has shown that as unpaid taxes age, the likelihood of  collecting all or a portion of the amounts owed decreases. This is, in part,  because of the continued accrual of interest and penalties on the  outstanding tax debt, which, over time, can dwarf the original tax  obligation. The amount of unpaid federal taxes reported above does not  include all tax debts owed by individuals issued a passport in fiscal year  2008 because of statutory provisions that give IRS a finite period under  which it can seek to collect unpaid taxes. Generally, there is a 10-year  statutory collection period beyond which IRS is prohibited from  attempting to collect tax debt. Consequently, if the individuals issued a  passport owe federal taxes beyond the 10-year statutory collection period,  the older tax debt may have been removed from IRS’s records. We were  unable to determine the amount of tax debt that had been removed.
Further, for many of these debts, IRS is attempting to collect using the  Federal Payment Levy Program (FPLP). FPLP is a levy program where  the Department of the Treasury collects delinquent tax debt by  continuously levying (offsetting) up to 15 percent of certain federal  payments (e.g., federal salary payments and certain Social Security  Administration payments) made to tax debtors. IRS typically sends the tax debts to FPLP except in cases where  (1) IRS has not completed its notification process;  (2) tax debtors have filed for bankruptcy protection or other litigation;  (3) tax debtors have agreed to pay their tax debt through monthly  installment payments or have requested to pay less than the full amount  owed through an offer in compromise;  (4) IRS determined that the tax debtors are in financial hardship;  (5) tax debtors are filing an amended return; and  (6) IRS determined that specific circumstances (e.g., criminal  investigation) exist that warrant special exclusion from FPLP.
Our analysis of Treasury data found that about 42,500 of the approximately  224,000 passport recipients were sent to Treasury for continuous levy. The  dollar amount of these debts was about $1.3 billion.
section_title: Unpaid Federal Taxes of Individuals Issued a Passport Are Substantially Understated
paragraphs: Although the over $5.8 billion in unpaid federal taxes owed by individuals  issued a passport as of September 30, 2008, is a significant amount, it likely  substantially understates the full extent of unpaid taxes owed by these or  other individuals. The IRS tax database reflected only the amount of  unpaid federal taxes reported by the individual on a tax return or assessed  by IRS through its various enforcement programs. The IRS database does  not reflect amounts owed by businesses and individuals that have not filed  tax returns or understated their taxable income and for which IRS has not  assessed tax amounts due. For example, during our audit, we identified  several instances from our 25 case studies in which individuals issued a  passport failed to file tax returns for a particular tax period and IRS had  not assessed taxes for these tax periods. Consequently, while these  individuals likely had unpaid federal taxes, they were listed in IRS records  as having no unpaid taxes for those periods. Further, our analysis did not  attempt to account for individuals who purposely underreported income  and were not specifically identified by IRS as owing the additional federal  taxes.
In addition, although federal law requires passport applicants applying for  or renewing a passport to provide their SSN if the applicant has a SSN,  having a SSN is not a prerequisite to obtaining a passport. According to  State officials, section 7(a)(1) of the Privacy Act prevents State from  refusing to issue a passport to an applicant even though the application  does not have a SSN. State officials stated that State needs legislation to  compel passport applicants to provide a SSN and to withhold passport  issuance or deny the application for failure to do so. Therefore, we found  that State records did not always contain this key field or contained  obviously false numbers, as State instructs applicants who do not have a  SSN to enter all zeros into the SSN field of the passport application. The  lack of SSNs prevented us from determining whether those passport  applicants had unpaid federal taxes and, if so, the amount of unpaid taxes  owed by them.
Because our $5.8 billion estimate in unpaid taxes only represents 1 year of  passport recipients, the dollar amount of tax debts owed by individuals  who hold passports is likely to be substantially higher. State issues  millions of passports each year. As such, the amount of tax debt for  individuals currently holding U.S. passports may be in multiples of our  $5.8 billion estimate for fiscal year 2008. Because passports are typically  valid for up to 10 years, many of these individuals will likely owe federal  taxes at the time they apply for renewal of their passports.
section_title: Examples of Individuals Issued a Passport Involved in Abusive and Potentially Criminal Activity Related to the Federal Tax System
paragraphs: Among the 25 cases involving passport recipients with outstanding tax  debt that we audited and investigated, we found abusive or potentially  criminal activity related to the federal tax system. These 25 passport  recipients either lived outside the United States or resided in California,  Florida, Illinois, Nevada, New Jersey, New York, Oregon, Texas, or  Washington. Of these cases, we identified several passport recipients for  which IRS had assessed trust fund recovery penalties due to these  individuals’ willful failure to remit payroll taxes withheld from their  employees’ paychecks to the federal government. In these situations, IRS  found that several of these individuals were to be held personally liable for  the withheld amounts not forwarded and assessed a civil monetary penalty  for those withheld amounts. Rather than fulfill their role as “trustees” of  this money and forward it to IRS as required by law, these passport  recipients diverted the money for other purposes. Our investigations  revealed that, despite owing substantial amounts of federal taxes to IRS,  some of these 25 passport recipients had substantial personal assets— including multimillion dollar homes and luxury cars. For example, one  passport recipient purchased a house for about $2 million and investment  property for about $1.5 million while the recipient owed over $1 million in  federal taxes. Another passport recipient owned luxury vehicles and  gambled millions of dollars while owing about $47 million in taxes. This  recipient received multimillion dollars in federal tax refunds to support  this lifestyle until IRS discovered the tax debts in a later examination.
Our investigations found that several of these recipients used their  passports to travel internationally for business. Two of the case study  passport recipients are or had been individuals who worked on State  contracts who traveled to Europe, Asia, and the Caribbean performing  work for State. These individuals were or are potentially performing  sensitive work for the Department of State on behalf of the United States.  However, 26 U.S.C. § 6103 precludes IRS from disclosing their names to  State, and precludes us from both disclosing their names to State and from  contacting State to determine whether these individuals have security  clearances. Our investigations also found that two individuals committed  identity theft by using the identities of deceased individuals to fraudulently  obtain passports. Our investigations found that these individuals used  their passports to travel to Mexico, France, and Africa. Issuing passports  to “deceased” individuals, in these cases, enabled fraudulent activity of  these individuals who traveled internationally using the identity of and  impersonating the deceased individual. We referred these two cases to IRS  for further investigation. Similar to the State contractors, 26 U.S.C. § 6103  also precludes us from referring these fraud cases to State directly. Our  investigations also revealed that at least four passport recipients currently  reside in another country while owing federal taxes. For example, we  identified one passport recipient who filed no tax returns nor paid any  taxes to IRS during the 2000s, who currently lives overseas while working  for the World Bank.
During our investigations, we also noted the following:    At least 14 passport recipients did not file their annual income tax return  for 1 or more years.
For at least 20 passport recipients, IRS had filed federal tax liens against a  recipient’s property.  IRS included at least 16 of the passport recipients in FPLP for continuous  levy.
At least 10 passport recipients had been indicted or convicted of violating  federal laws. These include indictments and convictions for controlled  substance distribution, making false statements to the government, bank  fraud, and money laundering.
One passport recipient lives in a million-dollar house that is owned by the  individual’s employer. The employer leases the house to the recipient for  thousands of dollars a month.
Table 1 highlights 15 of the 25 cases of individuals owing federal taxes at  the time of passport issuance. Appendix II provides details on the other 10  cases we examined. We are referring all 25 cases we examined to IRS for  further collection activity and criminal investigation, if warranted.
In December 2010, we met with IRS to discuss the 25 cases that we  investigated and audited to obtain an understanding of IRS’s investigative  and collection activities performed on each case. Although IRS did not  provide detailed investigative and collection activities for each case, IRS  officials did broadly discuss certain barriers and limitations in the  investigation and collection efforts by the agency for these 25 cases and  other individuals and entities that owe taxes. In addition, IRS officials  explained the impact 26 U.S.C. § 6103 has on IRS’s ability to share  information with State. Specifically, IRS officials stated that they cannot  inform Department of State of the two individuals who have worked on  State contracts or the two deceased individuals we identified through our  investigations without the taxpayers’ consent. IRS officials stated that       26 U.S.C. § 6103 prevents this disclosure of the deceased individuals even  though they may pose security risks to the nation based on the fraudulent  acquisition of the passport. IRS officials stated that six of the cases were  under criminal investigation or are currently under investigation.
In a December 2010 meeting with IRS officials, we also discussed what IRS  and State can do to prevent the issuance of passports to these 25  individuals with federal tax delinquencies. As discussed earlier, State  currently cannot deny the issuance of passports to individuals who owe  federal taxes, although passports can be denied for other reasons. For  State to deny passports for this reason, legislation would need to be  passed to provide such authorization and to permit IRS to disclose  taxpayer information. If such a federal law were enacted, criteria would  need to be established in determining when a tax debt meets the passport  restriction requirement. In addition, Congress or the executive branch may  need to decide if certain individuals should be exempted from this  requirement, such as for national security purposes.
To implement such a restriction, the executive branch may want to use the  FPLP as the mechanism or as a model to determine whether an individual  owes federal taxes for purposes of passport restrictions. Currently, the  Department of Defense (DOD) and Centers for Medicare & Medicaid  Services (CMS) periodically send their payment information (e.g., DOD  federal contracts payment data and Medicare claims data for physician  services, respectively) to FPLP to determine whether those payments  should be levied for federal taxes. Treasury electronically compares the  names and Taxpayer Identification Numbers (TIN) on the payment files to  the control names (first four characters of the names) and TINs of the tax  debtors. If there is a match and all legal notifications have been made,  Treasury notifies DOD and CMS to reduce (or levy) the federal payment to  help satisfy the unpaid federal taxes. State could work with IRS and  Treasury to develop a similar process to determine if the passports should  be issued or not because of federal taxes owed.
IRS officials stated that screening passport applicants for federal tax debts  would likely improve tax collections. Such a requirement could serve as an  incentive to individuals wishing to obtain passports to comply with their  tax obligations, thus reducing the level of tax delinquencies and promoting  compliance. IRS officials stated that there may be practical issues that may  arise in implementing such a requirement. For example, it will require  additional work for IRS to ensure that State adequately safeguards this  taxpayer information. State officials indicated that they would like to  study any proposed legislation to provide additional authority to deny  passports including constitutional, policy, and practical issues that may  arise in its application and use.
section_title: Conclusion
paragraphs: IRS enforcement of federal tax laws is vital—not only to identify tax  offenders—but also to promote broader compliance by giving taxpayers  confidence that others are paying their fair share. As federal deficits  continue to mount, the federal government has a vital interest in efficiently  and effectively collecting the billions of dollars of taxes owed under  current law. Federal law already allows the linkage of debt collection with  the passport issuance process in certain areas, including for certain  outstanding State Department debt and child support enforcement. The  question is whether this is a public policy strategy that might have broader  application in other areas, such as federal tax debt. If so, legislation would  be needed to facilitate screening for outstanding federal tax liability with  linkage to the passport issuance process. Such legislation could have the  potential to help generate substantial collections of known unpaid federal  taxes and increase tax compliance for tens of millions of Americans  holding passports. Appropriate criteria and safeguards would need to be  developed and applied, such as to ensure individual privacy, minimize  undue approval delays, and permit appropriate exemptions. Related  programs currently operating can serve as a starting point for such  considerations.
section_title: Matter for Congressional Consideration
paragraphs: If Congress is interested in pursuing the policy strategy of linking federal  tax debt collection to passport issuance as an approach to help reduce the  federal deficit and to increase taxpayer compliance with tax laws, it may  wish to consider taking steps to enable and require the Secretary of State  to screen and prevent individuals who owe federal taxes from receiving  passports, to include establishing criteria for specific categories of  passport holders and waivers as appropriate. To do this, Congress may  wish to ask the Secretary of State and Commissioner of Internal Revenue  to jointly study policy and practical issues and develop options for further  consideration, including developing appropriate criteria and safeguards.
section_title: Agency Comments
paragraphs: We provided a draft of this report to IRS, State, and Department of the  Treasury’s Financial Management Service (FMS) for their review and  comment. IRS, State, and FMS did not provide written comments. State  provided technical comments, which we have incorporated as appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of the  Treasury, Secretary of State, the Commissioner of Internal Revenue, and  other interested parties. In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-6722 or kutzg@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report.
section_title: Appendix I: Scope and Methodology
paragraphs: To identify the magnitude of unpaid taxes owed by passport recipients, we  requested from the Department of State (State) a list of passport recipients  for fiscal year 2008. We also obtained and analyzed Internal Revenue  Service (IRS) unpaid assessment data as of September 30, 2008. We  matched the passport data to IRS unpaid assessment data using the Social  Security number (SSN) field. To avoid overestimating the amount owed by  passport recipients, we excluded from our analysis tax debts meeting  specific criteria to establish a minimum threshold in the amount of tax  debt to be considered when determining whether a tax debt is significant.  The criteria we used to exclude tax debts are as follows:  tax debts that IRS classified as compliance assessments or memo accounts  for financial reporting, and  tax debts of less than $100.
The criteria above were used to exclude tax debts that might be under  dispute or generally duplicative or invalid, and tax debts that were  recently incurred. Specifically, compliance assessments or memo accounts  were excluded because these taxes have neither been agreed to by the  taxpayers nor affirmed by the court, or these taxes could be invalid or  duplicative of other taxes already reported. We further excluded tax debts  of less than $100 because we considered them to be de minimis amounts  for collecting individuals’ debts.
To identify examples of abuse or criminal activity, we selected 25 passport  recipients with federal tax debts for detailed audit and investigation. The  25 cases were chosen using a nonrepresentative selection approach based  on our judgment, data mining, and a number of other criteria, such as total  amount of taxes owed by passport recipients, number of tax years that the  passport recipient did not pay all taxes, types of taxes, and location of the  tax recipient. While these case studies were among the more egregious  and cannot be generalized beyond the cases presented, they serve to  illustrate the sizeable amounts of taxes owed by some individuals and the  other characteristics of the cases that could extend beyond the tax system,  including the use of passports by individuals involved in crimes such as  money laundering. We obtained copies of automated tax transcripts and  other tax records (for example, revenue officers’ notes and certain  individual tax returns) from IRS, and reviewed these records to exclude  passport recipients who had recently paid off their unpaid tax balances  and considered other factors before reducing our number of case studies  to 25. We performed additional searches of criminal, financial, and public  records. We updated the tax debt amount as of July 2010 for these 25  cases, to reflect any additional tax assessments, including interest and  penalty, or collections that have occurred.
To determine the extent to which State officials are required to consider  tax debts or other criminal activities in the processing of passports, we  examined federal law and State regulations. We also made inquiries with  State officials on whether State specifically considers tax debts or  performs background checks before the passport is issued.
subsections: section_title: Data Reliability Assessment
paragraphs: To determine the reliability of IRS unpaid assessments data, we relied on  the work we performed during our annual audits of IRS’s financial  statements. While our financial statement audits have identified some data  reliability problems associated with the coding of some of the fields in  IRS’s tax records, including errors and delays in recording taxpayer  information and payments, we determined that the data were sufficiently  reliable to address this report’s objectives.
To determine the reliability of the passport data, we interviewed State  officials responsible for those databases about the quality of the data. In  addition, we performed electronic testing of the passport database and  used the IRS tax assessment file to determine the validity of specific data  elements used to perform our work. Based on our discussions with  agency officials and our own testing, we concluded that the data used for  this report were sufficiently reliable for our purposes.
We conducted this forensic audit from October 2009 to March 2011 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives. We conducted our related investigative  work in accordance with standards prescribed by the Council of the  Inspectors General on Integrity and Efficiency. Initiation of our audit was  delayed significantly because of State’s refusal to comply with our request  for the passport recipient database for over a year. We requested access to  the database in September 2008 but did not obtain it until October 2009.
section_title: Appendix II: Passport Recipients Owe Federal Taxes
paragraphs: This appendix presents summary information on passport recipients who  owe federal taxes associated with 10 of our 25 cases. Table 2 shows the  remaining 10 cases that we audited and investigated. As with the 15 cases  discussed in the body of this report, we also found abuse and potentially  criminal activity related to the federal tax system or other federal laws.