Tax Gap: IRS Could Do More to Promote Compliance by Third Parties with Miscellaneous Income Reporting Requirements
Published: 2009-01-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Third party payers, often businesses, reported $6 trillion in miscellaneous income payments to IRS in tax year 2006 on Form 1099- MISC information returns. Payees are to report this income on their tax returns. Even a small share of payers failing to submit 1099-MISCs could result in billions of dollars of unreported payments. IRS data suggest that payees are more likely to report income on their tax returns if IRS receives payers' information returns. GAO was asked to examine 1099- MISC reporting including the extent to which payers fail to submit 1099-MISCs; impediments to payers to submitting1099-MISCs; and whether IRS could better use the 1099-MISCs it currently receives. GAO reviewed IRS documents and compliance data and interviewed officials from IRS, its advisory groups, and others who advise 1099-MISC payers.
section_title: What GAO Found
paragraphs: The Internal Revenue Service (IRS) does not know to what extent payers fail to submit required 1099-MISCs, but various sources point to the possibility of a significant problem. For tax year 2005, 8 percent of the approximately 50 million small businesses with assets under $10 million submitted 1099-MISCs, but IRS does not know how many of the other 92 percent were required to report payments but did not. Many business payments, such as payments to corporations, are not subject to 1099-MISC reporting. If even a small share of the businesses that did not submit a 1099-MISC should have, millions of 1099- MISCs could be missing with significant amounts of unpaid taxes by payees. GAO's prior work in 2003 found significant 1099-MISC payer noncompliance by some federal agencies. IRS could mitigate costs for research on payer noncompliance by building on its existing research programs. Payers face a variety of impediments that may contribute to 1099-MISC noncompliance, including complex reporting requirements and an inconvenient submission process. For example, certain payments to unincorporated persons or businesses are subject to 1099-MISC reporting, but payments to corporations generally are not, requiring payers to determine the status of their payees. GAO in the past determined that the benefits in terms of increased tax revenue and improved taxpayer compliance justify eliminating this distinction. IRS agrees, and the Bush Administration's proposal to do so would have required legislative action. Other options to remind payers about their reporting obligations include adding a tax return checkbox asking if payers submitted required 1099-MISCs and adding a chart to help payers navigate the detailed instructions for the Form 1099-MISC. IRS matches what the payees report on their tax returns to what payers report on 1099-MISCs to detect payees underreporting income and taxes. But IRS does not pursue all mismatches its computers detect. If IRS were to increase payer compliance with 1099-MISC requirements, the number of mismatches would likely increase. However, IRS does not systematically collect information on the causes of mismatches or whether they could be prevented.

section_title: Letter
paragraphs: For tax year 2006, third parties submitted more than 82 million  miscellaneous income information forms (Form 1099-MISC) to the Internal  Revenue Service (IRS) reporting more than $6 trillion in payments. Third  party payers are businesses, governmental units, and other organizations  that make payments to other businesses or individuals. Payers must  submit payment information on 1099-MISCs to IRS when they make a  variety of payments labeled miscellaneous income. Payees, or those being  compensated, are required to report the payments on their income tax  returns. By matching 1099-MISCs received from payers with what payees  report on their tax returns, IRS can detect underreporting of income  including failure to file a tax return.
Payer noncompliance with 1099-MISC reporting requirements undercuts  IRS’s ability to detect underreporting of income by payees and, as a  consequence, contributes to the tax gap. This contribution may be large.  IRS has long recognized that if payments made to businesses are not  reported on 1099-MISCs, it is less likely that they will be reported on payee  tax returns. Based on IRS’s most recent tax gap estimates, we reported  that for tax year 2001 sole proprietors (individual owners of  unincorporated businesses) understated their taxes by an estimated $68  billion because of underreporting their net income. An unknown  proportion of this income could have been reported to IRS on 1099-MISCs  but was not.
Other limited evidence also shows payer noncompliance with 1099-MISC  reporting requirements. In 2003, we reported that some federal agencies  failed to submit required 1099-MISCs covering billions of dollars of  payments. A 2007 report by the Treasury Inspector General for Tax  Administration (TIGTA) suggests that some state and local governments  may also not be submitting required 1099-MISCs.
Because of your concern about the tax gap, you asked us to study 1099- MISC reporting and whether IRS can make more use of 1099-MISC  information that it already receives. Specifically, our objectives were to  determine (1) what IRS knows about 1099-MISC reporting noncompliance  by payers; (2) how IRS detects and pursues 1099-MISC reporting  noncompliance by payers; (3) what impediments payers encounter in  preparing and submitting accurate 1099-MISC forms, and what options  could help IRS address these issues; and (4) what opportunities exist to  enhance IRS’s use of 1099-MISC information to detect payee  noncompliance and promote voluntary taxpayer compliance.
To address these objectives, we reviewed IRS data, IRS documents,  including advisory group reports; past GAO and TIGTA reports on 1099- MISC reporting compliance; IRS’s procedures for checking compliance;  and plans and proposals to expand 1099-MISC reporting. We also  interviewed IRS officials and members of IRS advisory groups, tax  professionals, and tax software and information return filing vendors to  identify impediments facing payers in preparing and submitting 1099- MISCs. We interviewed IRS officials on the operations of the Automated  Underreporter Program (AUR) which matches the payee’s tax return  against 1099-MISCs submitted by payers so that IRS can detect taxpayer  underreporting; we reviewed AUR program data for tax year 2004 (the last  full year available). We also analyzed data from the IRS’s Payer Master File  (PMF) and information reporting program data about 1099-MISCs  submitted for tax year 2006. To obtain perspective on the potential  magnitude of payer noncompliance, we compared the aggregate numbers  of small businesses filing tax returns with the numbers submitting 1099- MISCs for tax years 2002 to 2005.  Using IRS’s Statistics of Income data  for tax year 2006, we estimated the 1099-MISC submission rate for a  sample of Schedule C small businesses.  We assessed the IRS data and  found they were sufficiently reliable for the purposes of this report. We  conducted this performance audit from June 2007 through January 2009 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. (See app. I for more information on our  scope and methodology.)
subsections: section_title: Background
paragraphs: Payers are required to submit 1099-MISCs for a variety of payments made  in the course of a trade or business. For 1099-MISC reporting, a trade or  business generally includes businesses, non-profit organizations, and  federal, state, and local government agencies.
The types of payments reportable on a 1099-MISC and their reporting  thresholds vary widely. These include payments to nonemployees for  services of at least $600 (called nonemployee compensation), royalty  payments of $10 or more, and medical and health care payments made to  physicians or other suppliers (including payments by insurers) of $600 or  more. Personal payments, such as a payment by a homeowner to a  contractor to paint his/her personal residence, are not reportable on a  1099-MISC. Other payments that are not reportable on a 1099-MISC  generally include payments to a corporation, payments for merchandise,  and wages paid to employees. Wages paid to employees must be reported  on a form W-2. There are many other types of payments that must be  reported and numerous exceptions to these general rules. IRS provides  eight pages of instructions detailing what payments to whom are  reportable on the 1099-MISC. The form—shown in figure 1—consists of 14  boxes for reporting the various types of miscellaneous payments.
The Bush Administration’s fiscal years 2008 and 2009 budgets proposed  legislative action further expanding 1099-MISC reporting to include service  payments of $600 or more to corporations by all third-party payers.  According to the Department of the Treasury’s estimate, the Bush  Administration’s fiscal year 2009 budget proposal would generate about  $8.2 billion over the 10-year budget period from 2009 through 2018, in part  because of increased voluntary compliance and IRS’s ability to detect  underreported payments received by businesses.
For tax year 2006, more than 5 million payers submitted more than 82  million 1099-MISCs to IRS, reporting over $6 trillion in payments.  Nonemployee compensation payments totaled about $2.3 trillion and  accounted for about 55 percent of all 1099-MISCs submitted. Medical and  health payments totaled about $1.2 trillion and accounted for about 25  percent of all 1099-MISCs submitted. Each of the remaining payment types  accounted for less than 10 percent of the number of 1099-MISCs  submitted. Figure 2 shows the distribution of 1099-MISC payments types  and amounts reported for tax year 2006.
In addition to the 8 pages of instructions for 1099-MISC reporting, IRS also  has 19 pages of general instructions for third-party information reporting,  detailing how and when payers are to submit 1099-MISCs to payees and  IRS. Payers must provide 1099-MISC statements to payees by the end of  January. Payers submitting fewer than 250 1099-MISCs may submit paper  forms, which are due to IRS by the end of February, along with a Form  1096, Annual Summary and Transmittal of U.S. Information Returns.  Payers submitting paper 1099-MISC are required to use IRS’s official forms  or substitute forms with special red ink readable by IRS’s scanning  equipment. Photocopies and copies of the 1099-MISC form downloaded  from the internet or generated from software packages in black ink do not  conform to IRS processing specifications.
Payers submitting 250 or more 1099-MISCs are required to submit the  forms magnetically or electronically. Electronic submissions due at the  end of March can be submitted through IRS’s Filing Information Returns  Electronically (FIRE) system. As shown in figure 3, most 1099-MISCs for  tax year 2006 were submitted electronically. However, most payers  submit small numbers of 1099-MISCs, and most payers submitted paper  1099-MISCs.
IRS’s four business operating divisions are generally responsible for  ensuring payers comply with their 1099-MISC reporting requirements. The  Wage & Investment Division, Tax Exempt and Government Entities  Division (TE/GE), Large and Mid-Size Business Division (LMSB), and  Small Business and Self-Employed Division (SB/SE), as a part of their  duties, conduct examinations of tax returns and documents to verify  compliance with tax laws. Examinations can include checking payer  compliance with 1099-MISC reporting requirements.
IRS can penalize payers for failing to submit or submitting an inaccurate  1099-MISC. The penalty is generally $50 per information return,  increasing to $100 each for intentional payer noncompliance of 1099-MISC  requirements. To encourage voluntary reporting compliance, the penalty  is $15 (up to a maximum of $75,000 per calendar year or $25,000 for small  businesses) if the 1099-MISC is submitted within 30 days of the due date;  $30 (up to a $150,000 maximum per calendar year or $50,000 for small  businesses) if submitted after 30 days but by August 1, and $50 (up to a  maximum of $250,000 per calendar year or $100,000 for small businesses)  if submitted after August 1 or not at all. IRS will waive the penalty if the  payer can show “reasonable cause” or if the error or omission does not  prevent or hinder the IRS from processing the 1099-MISC. In IRS’s fiscal  year 2009 budget proposal, the Bush Administration proposed increasing  the $50 and $100 penalties to $100 and $250 respectively for each  information return. In 2007, we suggested that Congress consider  requiring IRS to periodically adjust penalties for inflation, and round  appropriately, the fixed dollar amounts of civil tax penalties to account for  the decrease in real value over time and so that penalties for the same  infraction are consistent over time.
Payees are responsible for reporting payments they received from payers  on the appropriate lines of their tax returns. Payees are also responsible  for paying self-employment taxes if they received nonemployee  compensation. For example, a sole proprietor receiving a 1099-MISC for  nonemployee compensation is to report the payments on Schedule C of  the 1040 tax return and file Schedule SE to pay the associated self- employment taxes. Sole proprietor payees are supposed to report 1099- MISC payments as gross receipts and separately report their expenses  rather than reporting only net amounts.
Figure 4 shows the automated process IRS uses to detect mismatches  between nonemployee compensation and other payments reported on  1099-MISCs and payees’ income tax returns. The Nonfiler program handles  cases where no income tax return was filed by a 1099-MISC payee. The  Automated Underreporter (AUR) program handles cases where a payee  filed a tax return but underreported 1099-MISC payments. AUR’s case  inventory includes payee mismatches over a certain threshold, and IRS has  a methodology using historical data to select cases for review. AUR  reviewers manually screen the selected cases to determine whether the  discrepancy can be resolved without taxpayer contact. For the remaining  cases selected, IRS sends notices asking the payee to explain  discrepancies or pay any additional taxes assessed.
According to IRS, third-party information reporting increases voluntary  tax compliance in part because taxpayers know that IRS is aware of their  income. For wages and salaries subject to tax withholding and substantial  third-party information reporting, the percentage of income that taxpayers  misreport has consistently been measured at around 1 percent. In contrast,  for non-farm sole proprietor income subject to little or no third-party  reporting, taxpayers misreported more than half of such income in 2001,  according to IRS’s most recent tax gap estimates.
section_title: IRS Has Little Information about 1099-MISC Reporting Compliance, but Available Evidence Points to the Possibility of a Significant Problem
paragraphs: IRS does not have an estimate of 1099-MISC reporting compliance or know  the characteristics of those payers that fail to comply with the reporting  requirements. Without an estimate of payers’ 1099-MISC noncompliance,  IRS does not know to what extent such noncompliance allows payees to  underreport their income without being detected. If a large number of  payers fail to submit required 1099-MISCs, then the resulting decrease in  payee tax compliance and lost revenue could be large. According to IRS, it  is a common misconception among payees that they are not required to  report payments if they have not received a 1099-MISC from payers.
IRS has invested significant resources in measuring compliance with other  aspects of the tax laws. For example, the National Research Program  (NRP) estimated the compliance rate for individual taxpayers for tax year  2001 based on an intensive review of a sample of 46,000 tax returns. IRS is  in the process of completing a new study of the rate of tax compliance by  individual taxpayers for tax years 2006 and 2007, and is conducting a  similar study of S-corporations. IRS uses such research to understand  where compliance problems are greatest and to understand the sources of  noncompliance. Armed with such understanding, IRS can make better  decisions about where and how to deploy its resources to address  noncompliance.
subsections: section_title: Although IRS Does Not Know the Extent of 1099- MISC Payer Noncompliance, Available Evidence Points to the Possibility of a Significant Problem
paragraphs: Our analysis of 1099-MISC submission patterns by small businesses as well  as past studies of federal, state and local government agencies suggests  that payer noncompliance with 1099-MISC reporting requirements may be  potentially significant. Our analysis of IRS’s PMF data for tax year 2005  (the last complete year available) showed that, in aggregate, 8 percent of  small businesses (sole proprietorships, and corporations and partnerships  with assets under $10 million) submitted a 1099-MISC. As shown in figure  5, over 4 million small businesses submitted 1099-MISCs in tax year 2005,  and in comparison, 50 million small businesses filed income tax returns  with IRS that same year. Results were similar for the three previous years.
The fact that a relatively low percentage of small businesses submitted a  1099-MISC does not indicate on its own that there is a significant payer  noncompliance problem. The many exceptions to the general rules for  submitting 1099-MISCs along with the payment thresholds mean that many  small businesses may not be required to submit a 1099-MISC. However, if  even a small proportion of the almost 46 million small businesses that did  not submit 1099-MISCs in 2005 improperly failed to report as required,  there could be millions of missing 1099-MISC information reports. As a  consequence, payees could have less incentive to voluntarily report that  1099-MISC income on their own tax returns if they did not receive a 1099- MISC from the payer, and IRS would be unable to detect payee  underreporting through document matching. Yet, IRS has no idea of the  magnitude of payer noncompliance and thus the amount of missing 1099- MISCs, as discussed above.
As a proxy for a possible 1099-MISC reporting requirement, we examined  the 1099-MISC submission rate for Schedule C small businesses that  reported amounts of $600 or more in contract labor expenses. Based on  IRS’s Statistics of Income (SOI) data for tax year 2006, about 29 percent of  Schedule C filers reporting contract labor expenses of $600 or more  submitted 1099-MISCs. Again, we could not determine whether the other  71 percent of Schedule C filers reporting contact labor expenses over the  1099-MISC reporting threshold were noncompliant. Some payers may have  amounts under the reporting threshold to multiple payees, and other  payers may have paid corporate payees currently exempt from 1099-MISC  reporting. However, some payers may have failed to submit 1099-MISCs as  required, and IRS does not have data to estimate how often this occurs.
Our 2003 assessment of federal agency compliance with 1099-MISC  reporting requirements did find significant payer noncompliance. While  most federal agencies in the 14 departments we studied submitted  information returns as required for calendar years 2000 and 2001, there  were some significant exceptions. Three federal departments— Agriculture, Commerce and Justice—collectively made $5 billion in  payments to 152,000 payees in 2000 and 2001 but did not report the  payments to IRS on Form 1099-MISCs. In turn, about 8,800 of the payees  who collectively received payments totaling about $421 million dollars— an average of about $48,000 each—did not file income tax returns for  those 2 years.
In June 2007, TIGTA reported that trends in 1099-MISC reporting by state  and local governments demonstrated potential payer noncompliance for  tax years 2003 through 2005. For example, while TIGTA found that over  half of the 81,000 state and local government entities submitted 1099-MISC  forms for each of the 3 years, 30 percent did not submit any 1099-MISC  forms over the period. As of December 2008, IRS had research planned  for fiscal year 2009 to determine whether state and local governments that  did not submit any 1099-MISCs for tax years 2003 through 2005 were  noncompliant and reasons why they did not report.
section_title: Research about Payers’ Noncompliance with 1099- MISC Reporting Requirements Could Help IRS Target Efforts to Increase Payer Voluntary Reporting Compliance
paragraphs: Research about the extent and causes of payer noncompliance could help  IRS develop more effective strategies to increase 1099-MISC submissions.  Such research would involve costs, but there are options for mitigating the  costs. IRS might be able to build on current research efforts, such as the  NRP, or use existing data from the Payer Master File.
Because NRP is already collecting detailed information about small  business compliance with the rules for reporting receipts and expenses,  the design of the NRP could be tailored at a relatively low cost to assess  the extent to which these small businesses submitted 1099-MISCs as  required.
In the 2006 and 2007 NRP, IRS is studying whether payers that submitted  1099-MISCs correctly classified the payees as nonemployees. By  misclassifying employees as nonemployees, employers could avoid  withholding taxes as well as paying employment taxes. The 2006 NRP used  a supplemental questionnaire to collect information on 1099-MISC payer  reporting for use in assessing misclassification issues. The 2007 NRP  procedures will direct NRP examiners to more systematically capture data  about whether small business payers in the NRP sample were required to  submit information returns—including 1099-MISCs—but did not. At this  time, IRS has not studied the extent to which payers failed to submit 1099- MISCs, but the future NRP results could be useful for this purpose.
Another option IRS could explore at a relatively low cost is using PMF  data to identify businesses that stop reporting or never report 1099-MISCs.  The PMF data set was used by TIGTA and us in detecting whether federal,  state, and local governments reported 1099-MISCs. In turn, IRS used PMF  data to select a sample of state and local governments that did not submit  any 1099-MISCs for a compliance research project planned for fiscal year  2009. To explore small business payer noncompliance, IRS could use the  PMF data to identify those businesses that submitted 1099-MISCs in past  years but stopped reporting. IRS also could compare the PMF population  to its master file to identify small businesses that never submitted 1099- MISCs, and subsequently conduct research to audit a sample of the  population to determine whether those not submitting 1099-MISCs should  have. From this type of research, IRS could decide how to target particular  segments of the payer population (e.g., Schedule C filers that report  contract labor expenses over $600 or more but do not submit 1099-MISCs)  for more education and outreach in order to reduce payer noncompliance.
Benefits of 1099-MISC payer compliance research could be significant. For  perspective, payers reported $6 trillion in 1099-MISC payments for tax year  2006, so a one percent increase in reported payments could result in an  additional $60 billion reported to payees and IRS.
section_title: IRS Efforts to Detect Payers That Fail to Submit 1099-MISC Forms Are Uneven
paragraphs: Within IRS, TE/GE is active in detecting and pursuing 1099-MISC payer  noncompliance among federal, state, and local agencies in part so that  government contractors and vendors cannot evade their tax liabilities. A  TE/GE official said that the division’s focus is on employer quarterly  returns that governmental entities file, as opposed to annual income tax  returns that the other business divisions examine. According to IRS  officials, as a part of this resource-intensive focus on quarterly returns,  TE/GE examiners also scrutinize information returns, including 1099- MISCs, that governmental entities file. To illustrate the impact that  TE/GE’s efforts had on detecting noncompliance among government  payers, IRS audit specialists identified and secured over 30,000 additional  1099-MISCs totaling over $522 million in payments that governmental  entities made to payees for tax years 2005 through 2007.
According to IRS officials, TE/GE implemented a “stop filer” program in  response to our 2003 recommendation that IRS develop a mechanism for  identifying and tracking federal agencies that fail to submit Form 1099- MISCs. This automated stop filer notice program, which is a minimal cost  approach compared to other enforcement options for detecting possible  payer noncompliance, was developed for federal agencies that submitted  1099-MISCs one year but not the next. Using PMF data, TE/GE issues IRS  form 3939 to a federal agency that stops submitting 1099-MISCs, asking the  agency to provide an explanation. TE/GE officials said they sent over 1,100  stop filer notices for tax year 2006 to federal entities in August 2008. The  officials also said the federal agencies’ responses to these notices are  useful to TE/GE in selecting federal agencies for voluntary compliance  checks or examinations. Servicewide, IRS also uses PMF data to identify  payers that submit 1099-MISCs late or with missing tax identification  numbers (TINs). However, IRS does not systematically use the database to  identify payers with gaps in 1099-MISC reporting history or those that  never submit the 1099-MISC forms.
At the time of our review, TE/GE officials stated that numerous  discrepancies exist in the PMF with the coding for state and local  governments, and the division is working to correct them. For fiscal year  2009, TE/GE plans a 1099-MISC compliance check for a random sample of  200 state and local governments that did not submit 1099-MISCs for tax  years 2003 through 2005. Once they have completed this activity, they will  determine whether sending notices to state and local governmental  agencies to check for payer noncompliance with 1099-MISC reporting  requirements is an option they should pursue.
Another low cost approach that TE/GE officials used is to compile a listing  of common 1099-MISC payer compliance problems drawn from  information obtained through examinations and compliance checks. For  example, government payers sometimes fail to report all payments, or  submit 1099-MISCs late or with missing payee information. According to  TE/GE officials we interviewed, their list of common 1099-MISC reporting  errors is used both to educate examiners on what to look for during  examinations and reach out to government agencies to help them better  comply.
For business taxpayers, IRS policy instructs SB/SE and LMSB examiners  to determine whether all information returns, including 1099-MISCs, are  submitted as required and consider internal controls for information  return reporting. LMSB examiners are to conduct risk analyses of tax  returns to identify potential noncompliance issues as part of the audit  planning process.  As a result of the risk analysis and in contrast with  SB/SE practices, LMSB examiners can waive the compliance checks for  LMSB taxpayers to ensure efficient and effective use of resources.
Where an examination identifies that a business failed to comply with its  requirement to submit information returns, including Form 1099-MISC, the  examiner is to secure the missing information returns. IRS could not  provide data on how many business examinations detected payers that  failed to submit 1099-MISCs or how many missing 1099-MISCs have been  secured by LMSB and SB/SE examiners. While examinations primarily  focus on income and employment tax liabilities for business payers, the  examiner also is to consider whether to pursue information return  penalties depending on the facts and circumstances of the case. Improved  voluntary compliance by the payer and its payees may justify the  expenditure of time required to track down the missing 1099-MISCs and  assess the penalties. However, the maximum penalty is $50 for  unintentional payer noncompliance and $100 for intentional  noncompliance for each additional 1099-MISC collected. IRS has  proposed increasing information return penalties to $100 and $250,  respectively.
Further, examinations have limitations in that they are costly and cover  relatively few businesses each year, and thus would not necessarily be  cost-effective as the sole means to address 1099-MISC payer reporting  compliance. For example, IRS data show that IRS examinations covered  less than 1 percent of the 2.2 million tax returns that small corporations  filed for fiscal year 2007. As we previously reported, IRS examined about 3  percent of Schedule C returns in fiscal year 2006.
Beyond conducting examinations, which we have described as having  limitations, IRS does not have an agencywide approach in place to identify  payers that do not submit 1099-MISC forms. More specifically, IRS does  not have a stop filer notice program for businesses, as it does for federal  agencies, to detect 1099-MISC reporting gaps. In contrast with the  relatively small and stable populations of federal, state, and local  government payers, the large and shifting population of small businesses  might challenge IRS in designing a cost-effective method for isolating and  contacting business payers that do not submit 1099-MISCs. Given that new  businesses start each year while others stop operating or merge with other  businesses, one approach would be to first check to see whether a  business filed a tax return before sending any notice inquiring about 1099- MISC reporting. While notices are likely to provide a more cost-effective  approach for pursuing possible payer noncompliance compared to  examinations, it would be important for IRS to test a stop filer program to  determine how to target notices to businesses. For Schedule C filers for  example, a notice program could target payers that reported large contract  labor expenses but did not submit 1099-MISCs. Without testing the  viability of a broader stop filer notice program, IRS could be overlooking a  useful tool that would help increase 1099-MISC payer compliance.
section_title: Payers Face Impediments in Preparing and Submitting 1099- MISCs, and Some Options Could Help Promote Voluntary Reporting Compliance by Payers
paragraphs: According to IRS officials, IRS advisory groups, and members of the 1099- MISC community we interviewed, a variety of impediments inhibit 1099- MISC reporting compliance. As a result, some payers report erroneous  information or fail to submit all 1099-MISCs as required. Some payers that  do not submit their 1099-MISCs as required may be unaware of their 1099- MISC reporting responsibilities. Other payers may be confused by various  aspects of the 1099-MISC requirements. Finally, the inconvenience of  submitting 1099-MISCs—whether on paper forms or electronically—may  deter compliance. While the extent to which these impediments contribute  to payer noncompliance is unknown, interviewees and others identified  options for addressing them to promote voluntary compliance.
Table 1 highlights options based on our analysis and includes options we  previously reported. We note those options that were proposed by IRS,  IRS advisory groups, and the National Taxpayer Advocate. Our list of  1099-MISC impediments and options is not exhaustive, nor is the list of  pros and cons associated with the options. Improved IRS guidance and  education are relatively low-cost options, but most taxpayers use either  tax preparers or tax software to prepare their tax returns, and may not  read IRS instructions and guidance. While taxpayer service options may  improve compliance for those that are inadvertently noncompliant, they  are not likely to affect those that are intentionally noncompliant. Some  options to change 1099-MISC reporting requirements require legislative  action, and other options would be costly for IRS to implement. Where the  option involves particular issues, such as cost or taxpayer burden, we note  them in our table.
According to our interviewees, multiple approaches could help IRS to  increase payer compliance with 1099-MISC reporting requirements. For  some options, such as eliminating the exemption on reporting corporate  payments, the evidence shows that the benefits outweigh the costs. For  other options, it is not clear whether the benefits outweigh the associated  costs. In those cases, additional research by IRS could help to evaluate the  feasibility of more costly options, such as allowing black and white paper  1099-MISCs. Action to move forward on options to target outreach to  specific payer groups or clarify guidance to reduce common reporting  mistakes would hinge on IRS first conducting research to understand the  magnitude of and reasons for payer noncompliance.
section_title: IRS Aims to Improve AUR Efficiency but Lacks a Systematic Process for Learning about the Causes of Mismatches
paragraphs: Adopting strategies, discussed above, to promote voluntary compliance  with 1099-MISC reporting requirements and to better monitor payer  noncompliance would likely increase the number of 1099-MISCs IRS  receives from payers. This in turn would increase the number of  automated mismatches identifying potential underreporting by payees.  However, the AUR program does not pursue all the mismatches from the  1099-MISCs currently received. Given limited resources for the AUR  program, it is important for IRS to find ways to more efficiently expand  AUR coverage and select the best 1099-MISC related cases to work.
While 1099-MISCs constituted 5 percent of all information returns AUR  used to detect underreporting, a significant portion of the AUR cases and  assessments were based on 1099-MISC information, as shown in table 2.  For tax year 2004 (the last full year available), 19 percent of 1099-MISC  related cases were selected for review, yielding 21 percent of the  additional tax dollars assessed by the AUR program. From the 1.9 million  1099-MISC related cases with identified income discrepancies, AUR  selected a larger proportion (47 percent) for review than from the AUR  inventory as a whole (31 percent). Over three-quarters of all 1099-MISC  related cases selected involved nonemployee compensation. The  remaining 1099-MISC related cases involve other types of 1099-MISC  payments, such as those for rent and medical services. For tax year 2004,  1099-MISC related cases in total yielded $972 million additional  assessments, accounting for 21 percent of AUR assessments.
subsections: section_title: IRS’s New Soft Notice Initiative Could Increase AUR Program Efficiency
paragraphs: AUR currently has a limited reach, pursuing less than half of 1099-MISC  related cases in its inventory and less than a third of the overall inventory  for tax year 2004. Attempting to increase AUR program efficiency, IRS has  pilot tested an automated “soft notice” program since 2005. The goal of  this program pilot is to increase accurate reporting compliance with  minimal additional expenditures for IRS. For this program pilot, AUR first  selected cases from the inventory that involved relatively small amounts of  money and thus would not have been selected for review, and then  expanded the pilot to include cases with higher-dollar potential tax  assessments. The 2,505 cases in the pilot test during fiscal years 2005 and  2006 included 550 nonemployee compensation cases based on 1099-MISC  information. AUR sent letters to these taxpayers asking them to either fix  the identified discrepancy by filing an amended return. However, if the  taxpayer’s reported income is correct, IRS encouraged the taxpayer to  contact the third party providing the information to IRS. The soft notice is  intended to educate and promote future compliance, requiring minimal  response to the notice from taxpayers.
Based on the pilot, IRS concluded that the soft notice approach increased  taxpayer compliance, without placing a heavier burden on AUR resources  to respond to taxpayers’ queries. In total for the 2 pilot years, 25 percent of  taxpayers receiving AUR soft notices filed amended tax returns, and 78  percent corrected their reporting behavior in the next year’s AUR  inventory. Less than 13 percent called IRS to inquire about the soft  notices. With phased rollout slated to begin in fiscal year 2009, AUR would  be able to achieve a greater coverage over the balance of cases in the  inventory beyond those selected for AUR review. Accordingly, the soft  notice approach may be an innovative, cost-effective way for IRS to have a  greater enforcement presence using 1099-MISC information. However, it is  too early to assess whether the effectiveness of the soft notice pilot can be  generalized to the AUR program overall. For tax year 2007, IRS plans to  send about 30,000 AUR soft notices across the range of AUR income  categories—including about 4,400 1099-MISC related cases. As of October  2008, IRS plans to collect data on taxpayer responses and develop an  analysis plan to determine which AUR case types are suited for future soft  notices.
section_title: IRS Could Use Data on Unproductive 1099-MISC Cases to Better Target Case Selection and Provide Service to Reduce Misreporting
paragraphs: Some cases AUR selected from its inventory are not productive; that is,  some cases do not yield any additional tax revenue. About 36 percent of  the 1099-MISC related cases selected for tax year 2004 were manually  screened out by AUR reviewers without taxpayer contact. Such cases may  be screened out because the payee erroneously reports a 1099-MISC  payment on the wrong tax return line but paid the correct taxes or  because the discrepancy was because of an IRS error in transcribing a  paper 1099-MISC. Of the 64 percent of the tax year 2004 1099-MISC cases  selected that involve taxpayer contact, about 22 percent yielded no change  in tax assessments. These unproductive cases cost IRS time and money  that could be spent pursuing other taxpayers who owe additional taxes  and burden honest taxpayers who must respond to IRS inquiries. A case  may result in no tax change if a taxpayer responds to the AUR notice with  information explaining the discrepancy. For example, an unproductive  1099-MISC discrepancy may be because the payer reported payments  made to a partnership under an individual partner’s SSN rather than under  the partnership TIN.
The screen-out process and handling taxpayer contacts are labor-intensive  for AUR compared with computer processing, so reducing the number of  unproductive cases would free up resources to work more productive  cases. IRS officials told us that in fiscal year 2007, IRS implemented a new  case selection tool using historical data to target cases with high  assessment potential and that this new methodology has yielded progress  in terms of increased AUR assessments during fiscal year 2008. An  additional approach would be to gain insight into the source of  discrepancies between information reported by payers submitting 1099- MISCs and by payees filing tax returns. An understanding of the specific  causes could help IRS in evaluating its matching operations and refining  the AUR case selection tool for 1099-MISC related cases. Additionally, the  information would be useful to help IRS target activities to clarify  guidance or target outreach to educate payers or payees to avoid common  reporting errors.
Currently, IRS does not systematically collect and analyze information on  the causes of unproductive mismatches that would allow it to determine  how best to reduce or eliminate such mismatches. The AUR management  information system has codes showing whether the case was closed with  or without a tax change, but does not specify how AUR accounted for the  discrepancy. For example, no change closing codes do not specify  whether the discrepancy was because of payer misreporting, payee  misreporting, or IRS error in transcribing paper 1099-MISCs. Additionally,  IRS does not routinely collect data on the screen-out process, so IRS does  not have information on the nature and cause of recurring 1099-MISC  discrepancies. According to AUR officials, the AUR program periodically  does special analyses to identify how to reduce screen-out rates but has  not specifically studied 1099-MISC related cases. Capturing information on  specific reasons why cases were unproductive is one approach to improve  AUR’s efficiency. The information would be useful to the AUR program in  making informed decisions on how to improve the match process and  refine its case selection methodology for 1099-MISC related cases.
Moreover, IRS could draw on AUR data to identify common 1099-MISC  reporting errors and determine how to target service activities to improve  payer and payee reporting. For example, IRS could avoid some  unproductive AUR cases by reminding taxpayers doing business as a  corporation or partnership to provide their business TIN rather than their  SSNs to payers. Insight about productive AUR cases also could help IRS  identify opportunities to educate taxpayers on how to avoid common  mistakes and correctly report 1099-MISC payments.
section_title: Conclusions
paragraphs: The 1099-MISCs are a powerful tool through which IRS can encourage  voluntary compliance by payees and detect underreported income of  payees that do not voluntarily comply. However, IRS has limited  knowledge about the extent of payer noncompliance with 1099-MISC  reporting requirements. If 1099-MISC reporting compliance increased by  even one percent, it could result in an additional $60 billion of payments  reported. Without better information about the extent and causes of payer  noncompliance, IRS has no way of determining if placing a heavier  emphasis or shifting more resources toward addressing 1099-MISC payer  noncompliance could lead to an increase in payee voluntary compliance  and ultimately help reduce the tax gap.
IRS could make better use of existing data to detect some kinds of payer  noncompliance. Extending the stop filer notice program used for federal  payers may be one tool for IRS to reach out to other government and  business payers that drop off the radar. Developing an estimate of payer  noncompliance and the characteristics of those payers would be key for  IRS in developing a cost-effective strategy to identify payers that never  submit 1099-MISCs.
Another approach for increasing 1099-MISC reporting compliance is for  IRS to address the variety of impediments facing payers preparing and  submitting 1099-MISCs. Eliminating the reporting exemption for payments  to corporations would ease payer burden associated with first determining  the status of their payees to identify whether payments are reportable. As  early as 1991, we determined that the benefits in terms of increased tax  revenue and voluntary taxpayer compliance would exceed the costs of  extending 1099-MISC reporting, although we did not formally recommend  the matter for congressional consideration at that time. IRS agrees that the  benefits of eliminating the corporate exemption outweigh the costs, and  the Bush Administration has proposed legislative action in its last two  budgets. Although it is unclear the extent to which taxpayers read  guidance on reporting requirements, especially taxpayers who use paid  preparers, options for additional guidance and general reminders are a low  cost way to help payers understand whether they have a 1099-MISC  reporting requirement. For other options where it is unclear whether the  benefits outweigh the associated costs, additional research by IRS could  help to evaluate whether specific options would be feasible or effective in  increasing payer compliance.
In turn, IRS research and other activities aimed at increasing payer  reporting compliance would likely increase the number of 1099-MISC  related AUR cases. Reducing the number of unproductive cases would free  up resources for IRS to handle this increased workload and make better  use of the 1099-MISC information it receives.
section_title: Matter for Congressional Consideration
paragraphs: To simplify the burden that the corporate exemption places on payers to  distinguish payees’ business status and also provide greater information  reporting, Congress should consider requiring payers to report payments  to corporations on the form 1099 MISC, as we previously suggested and as  proposed in the Bush Administration’s budget.
section_title: Recommendations for Executive Action
paragraphs: We are making eight recommendations to the Commissioner of Internal  Revenue.
To gauge the extent of 1099-MISC payer noncompliance and its  contribution to the tax gap, we recommend that the Commissioner of  Internal Revenue as part of future research studies    develop an estimate of 1099-MISC payer noncompliance and    determine the nature and characteristics of those payers that do not  comply with 1099-MISC reporting requirements so that this information  can be factored into an IRS-wide strategy for increasing 1099-MISC  payer compliance.
To increase IRS’s ability to detect 1099-MISC payer noncompliance, we  recommend that the Commissioner of Internal Revenue  test the option of developing a stop filer notice program to target  business, state, and local entities that submitted 1099-MISC one year  but did not do so the next.
To help payers better understand their 1099-MISC reporting  responsibilities, we recommend that the Commissioner of Internal  Revenue    add a general reminder to Publication 535 Business Expenses to  highlight 1099-MISC reporting responsibilities;    assess whether adding a checkbox to business tax returns, inquiring  whether all 1099-MISCs have been submitted, to serve as a reminder to  payers would help increase 1099-MISC payer compliance; and  include a chart on the Form 1099-MISC as well as business income tax  instructions for distinguishing reportable from non-reportable  payments and for calculating whether reportable payments reached the  1099-MISC reporting threshold.
To reduce the submission burden facing many payers each submitting  small numbers of 1099-MISCs, we recommend that the Commissioner    collect data on the numbers of computer-generated black and white  1099-MISCs submitted by payers and the labor spent reentering forms  that cannot be scanned, and evaluate the cost-effectiveness of  eliminating or relaxing the red ink requirement.
To help IRS improve its use of 1099-MISC information, we recommend that  the Commissioner    collect and analyze data on the types of unproductive AUR cases to  help identify reoccurring errors for use in the AUR case selection  process and for identifying ways to improve guidance and outreach to  help payers and payees more accurately report 1099-MISC payments.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report (which are reprinted in  appendix II), IRS’s Deputy Commissioner for Services and Enforcement  acknowledged that the evidence in our report indicates that the number of  1099-MISCs that payers are required to submit could be much higher than  what IRS currently receives. IRS agreed with six of our eight  recommendations. IRS staff provided technical comments that we  incorporated as appropriate.
IRS agreed to gather additional data from its ongoing and planned NRP  studies to determine the extent of 1099-MISC noncompliance. IRS also  agreed to determine the nature and characteristics of noncompliant 1099- MISC payers once several years of reporting compliance data are  available. In addition, IRS agreed to (1) analyze PMF data and develop a  1099-MISC stop filer notice test; (2) evaluate the cost effectiveness of  eliminating or relaxing the red ink requirement; and (3) analyze data for a  sample of AUR cases to identify opportunities to improve case selection  and outreach and education for payers and payees.
IRS disagreed with our recommendation to assess whether adding a  checkbox to business tax returns would increase 1099-MISC reporting  compliance. IRS agreed to enhance instructions about 1099-MISC  reporting requirements to improve voluntary compliance by payers. We do  not believe this is fully responsive to our recommendation. IRS stated that  a similar question was removed from the corporate tax return after the  Paperwork Reduction Act of 1980 was enacted. IRS said that the act  requires reducing unnecessary burden on taxpayers and prohibits  collecting information already available. We recognize that the Paperwork  Reduction Act requires agencies to certify that any collection of  information avoids unnecessary duplication and is necessary for the  proper performance of the functions of the agency, including whether the  information has practical utility. In recommending that IRS explore the  potential for this option to increase 1099-MISC reporting, we believe  information about the experience of California and other states using a  similar checkbox query could yield insight on how this option could  improve payers’ reporting compliance by reminding payers of their  reporting obligations. As discussed in this report, many taxpayers rely on  tax preparers and tax software and may not look at IRS guidance. For this  reason, the checkbox option—which we clarified would require taxpayers  to respond under penalty of perjury—might be more effective because it  would force tax preparers and software to query taxpayers about their  expenses. Further, results from the evaluation we recommend could be  useful to IRS in revisiting its 1981 assessment and weighing the benefits  and burdens associated with the checkbox option. We clarified in the  report that the National Taxpayer Advocate has reported that the taxpayer  burden associated with the checkbox option would be small.
IRS also disagreed with our recommendation to include a chart in the  1099-MISC instructions and business income tax instructions.  IRS stated  that the Form 1099-MISC instructions already contain two bulleted lists  describing which payments are reportable as well as explanations of the  rules for specific payment types. However, these two lists as well as a  third bulleted list describing reportable payments to corporations include  19 bullet points spanning two pages of the eight pages of single-spaced  1099-MISC instructions. We added an example to the report citing a chart  in IRS’s 19-page general instructions that highlights what payments and  amounts to report on the Form 1099-MISC. We believe that the chart  approach is an effective way to provide taxpayers with a quick guide for  navigating the detailed instructions for the Form 1099-MISC. For this  reason, we continue to recommend adding a chart to the 1099-MISC  instructions and business tax instructions.
As agreed with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from its  issue date. At that time, we will send copies to the Chairman and Ranking  Member, House Committee on Ways and Means; the Secretary of the  Treasury; the Commissioner of Internal Revenue; and other interested  parties. This report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff have any questions, please contact me on (202) 512- 9110 or whitej@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Key contributors to this report are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: The objectives of this report were to determine: (1) what IRS knows about  1099-MISC reporting noncompliance by payers; (2) how IRS detects and  pursues 1099-MISC reporting noncompliance by payers; (3) what  impediments payers encounter in preparing and submitting accurate 1099- MISC forms and what options could help IRS address these impediments;  and (4) what opportunities exist to enhance IRS’s use of 1099-MISC  information to both detect payee noncompliance and promote voluntary  compliance.
For background about 1099-MISC reporting requirements, we reviewed  laws and regulations as well as IRS guidance related to the Form 1099- MISC and also spoke with IRS officials. For background about the  numbers and amounts of payments reported on the 1099-MISC, we  obtained information reporting program data from Martinsburg Computing  Center for tax year 2006. We also obtained data from IRS’s Payer Master  File (PMF) on the aggregate numbers of payers submitting 1099-MISCs on  paper and electronically for tax year 2006. We determined that these data  were sufficiently reliable for our descriptive purposes.
To determine what IRS knows about the extent of 1099-MISC payer  noncompliance, we reviewed IRS documents including plans for reducing  the federal tax gap and National Research Program (NRP) as well as  budget proposals to expand 1099-MISC reporting.  Other reports we  reviewed include past GAO and Treasury Inspector General for Tax  Administration (TIGTA) reports on 1099-MISC reporting compliance by  federal, state and local government entities. We also interviewed NRP  officials and staff about research on 1099-MISC reporting compliance.
To obtain perspective on the potential magnitude of payer noncompliance,  we compared the number of small businesses filing tax returns with  number of small businesses submitting 1099-MISCs for tax years 2002 to  2005. We used IRS’s definition of small businesses—businesses entities  including sole proprietorships, S-corporations, and partnerships with  assets under $10 million—under supervision of IRS’s Small Business and  Self-Employed (SB/SE) business operating division. We obtained total  numbers of small business tax returns submitted in these four years from  IRS’s Business Master File and the Individual Master File. For these IRS  databases, we relied on the work we perform during our annual audits of  IRS's financial statements. While our financial statement audits have  identified some data reliability problems associated with coding some  fields in IRS's tax records, we determined that the tax form count data  were sufficiently reliable to address the report's objectives. We then  compared the aggregate number of payers identified as small businesses  from IRS’s PMF database to calculate the percentage of small business tax  filers that submitted 1099-MISCs.  The last complete year of payer type  information available at the time of our analysis was 2005. While we could  not isolate which businesses were required to submit a 1099-MISC but did  not, we determined the data were sufficiently reliable to show how many  small businesses submitted 1099-MISCs to IRS.
We could not produce a comparable 1099-MISC reporting percentage for  large corporations and partnerships under supervision of IRS’s Large and  Mid-Size Business (LMSB) business operating division. Large businesses  may file a consolidated corporate income tax return under the parent  company’s taxpayer identification number (TIN) for all its subsidiaries but  submit 1099-MISCs under the individual subsidiaries’ TINs.
To obtain additional perspective on potential 1099-MISC payer reporting  noncompliance among small businesses, we examined the 1099-MISC  submission rates for a sample of small business Schedule C filers. Contract  labor payments to a non-incorporated payee totaling $600 or more are  reportable on a 1099-MISC, so we used contract labor line on Schedule C  as proxy for a possible 1099-MISC reporting requirement. We included all  Schedule C filers that reported $600 or more contract labor expenses from  IRS’s Statistics of Income (SOI) for tax year 2006 (the last year available).   We identified the Schedule C filers and provided their TINs to IRS. IRS  provided data on whether these filers submitted a 1099-MISC as indicated  on the IRS’s Information Return Master File. This resulted in 44 percent of  the SOI sample (unweighted) matching 1099-MISC forms.  We then used  these matches to produce generalizable estimates of Schedule C filers  reporting $600 or more in contract labor expenses. Using SOI sampling  weights, we provide the margin of error based on 95 percent confidence  for our SOI estimate.  We determined the SOI results were reliable for  estimating how many Schedule C filers who reported contract labor  submitted a 1099-MISC. However, we could not discern whether those that  did not submit 1099-MISCs had a filing requirement due to the exceptions  for any payment under $600 and payments to corporations.
To determine how IRS detects and pursues payer noncompliance with  1099-MISC reporting requirements, we reviewed IRS’s procedures for  checking compliance used by IRS’s business operating divisions—Tax  Exempt and Government Entities Division (TE/GE), LMSB, and SB/SE. We  also interviewed IRS examination and compliance staff from each of these  divisions. Within TE/GE, we spoke with IRS officials responsible for  working with federal, state and local government entities as well as Indian  tribal governments. We interviewed IRS officials and staff about  information returns processing and related penalties. Data on IRS’s small  business examination coverage came from IRS’s publicly available Data  Book. We believe the data were sufficiently reliable for the purposes of  our review.
To identify impediments that payers encounter with 1099-MISC reporting,  options and challenges IRS confronts in addressing these concerns, we  reviewed IRS and IRS advisory committee reports, previous GAO reports  as well as those of the National Taxpayer Advocate. Further, we reviewed  IRS’s 1099-MISC form, instructions, and related guidance in addition to  outreach material used to educate payers about 1099-MISC reporting  requirements. We interviewed members of IRS advisory groups— Electronic Tax Administration Advisory Committee (ETAAC), Information  Reporting Program Advisory Committee (IRPAC), and Internal Revenue  Service Advisory Council (IRSAC). To obtain perspectives from tax  preparers and others professionals knowledgeable about 1099-MISC  payers, we interviewed attendees at IRS’s fall 2007 National Public Liaison  meeting that included members of national stakeholder organizations,  business and professional associations, tax professionals who prepare and  submit forms to the IRS, and tax software vendors. We also observed IRS’s  November 2007 National Phone Forum on Form 1099-Information  Reporting and reviewed IRS’s question and answer summary provided to  participants. We also reviewed California Franchise Tax Board’s  corporation and S corporation tax return forms and interviewed the  California officials about their experience with the check-the-box question  on the California business returns.
To determine IRS’s use of 1099-MISC information, we reviewed IRS  guidance for 1099-MISC submission processing and the Automated  Underreporter (AUR) program. We also interviewed IRS’s Martinsburg  Enterprise Computing Center, AUR, and nonfiler program officials and  staff. We obtained program data on the AUR inventory, case selection, and  additional dollars assessed for tax year 2004, the last full year available in  time for this report. The number of information returns submitted to IRS  came from SOI’s Data Book. We determined that the data we used were  sufficiently reliable for the purpose of our review.
IRS nonfiler officials stated they are not able to distinguish nonfiler  income tax return cases that were identified through 1099-MISC  information from those identified through its stop filer program that  identifies a gap in a taxpayer’s filing of tax returns. Consequently we were  unable to quantify the extent to which 1099-MISC information is used to  detect payee nonfiling in the program.
We conducted this performance audit from June 2007 through January  2009 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.
section_title: Appendix II: Comments from the Internal Revenue Service
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, MaryLynn Sergent, Assistant  Director; Jeff Arkin; Bertha Dong; Ellen Grady; Leon Green; Shirley Jones;  Donna Miller; Karen O’Conor; Jessica Thomsen; Cheri Truett; James  Ungvarsky; Shana Wallace; and John Zombro made key contributions to  this report.
section_title: Related GAO Products
paragraphs: Tax Gap: Actions That Could Improve Rental Real Estate Reporting  Compliance. GAO-08-956. Washington, D.C.: August 28, 2008.
Highlights of the Joint Forum on Tax Compliance: Options for  Improvement and Their Budgetary Potential. GAO-08-703SP.  Washington, D.C.: June 2008.
Tax Administration: Costs and Uses of Third Party Information  Returns. GAO-08-266. Washington, D.C.: November 20, 2007.
Tax Compliance: Inflation Has Significantly Decreased the Real Value of  Some Penalties. GAO-07-1062. Washington, D.C.: August 23, 2007.
Tax Gap: A Strategy for Reducing the Gap Should Include Options for  Addressing Sole Proprietor Noncompliance. GAO-07-1014. Washington,  D.C.: July 13, 2007.
Tax Compliance: Multiple Approaches Are Needed to Reduce the Tax  Gap. GAO-07-488T. Washington, D.C.: February 16, 2007.
Opportunities for Congressional Oversight And Improved Use of  Taxpayer Funds: Budgetary Implications of Selected GAO Work.  GAO-04-649. Washington, D.C.: May 4, 2004.
Tax Administration: More Can Be Done to Ensure Federal Agencies File  Accurate Information Returns. GAO-04-74. Washington, D.C.: December  5, 2003.
Tax Administration: Federal Agencies Should Report Service Payments  to Corporations. GAO/GGD-92-130. Washington, D.C.: September 22, 1992.
Tax Administration: Benefits of a Corporate Document Matching  Program Exceed the Costs. GAO/GGD-91-118. Washington, D.C.:  September 27, 1991.