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Strategic Objective
Pursue tax reform, implement the Patient Protection and Affordable Care Act and Foreign Account Tax Compliance Act, and improve the execution of the tax code
Strategic Objective
Overview
Treasury’s largest bureau, the Internal Revenue Service (IRS), touches every American in its efforts to collect taxes fairly and effectively. The Alcohol and Tobacco Tax and Trade Bureau (TTB) also has revenue collection responsibilities related exclusively to federal excise taxes on alcohol, tobacco, firearms, and ammunition. Treasury leads the Administration’s efforts to create a tax system that is simple, fair, and fiscally responsible. Treasury’s Office of Tax Policy works with the White House and Congress to develop tax reform proposals to achieve this objective. Treasury is committed to working with Congress in pursuing a tax reform plan that includes a balanced approach to deficit reduction that strengthens the U.S. government’s fiscal position, and promotes a simpler, more efficient tax code.
While protecting taxpayer rights and minimizing administrative burden, Treasury is working to become a more agile and customer-oriented organization by making greater use of new technologies to facilitate voluntary tax compliance. As new laws are enacted that impact the tax code, such as the Patient Protection and Affordable Care Act (ACA) and the Foreign Account Tax Compliance (FATCA), Treasury will continue to provide clear and timely guidance to taxpayers.
IRS has a renewed commitment to creating an corganizational culture where internal controls are consistently reviewed for effectiveness and where emerging risks are identified, openly discussed, and swiftly addressed. In the coming years, the IRS also aims to increase outreach to and collaboration with all tax practitioners, tax preparers, and other third parties in the tax system to make it is as easy as possible for them to adhere to professional standards and follow the tax code.
Read Less...Progress Update
Pursuing tax reform remains a top priority for Treasury, along with implementing tax provisions of the Affordable Care Act (ACA) and the Foreign Account Tax Compliance Act (FATCA) and administering the existing tax code fairly and effectively. In FY 2015, Treasury continued negotiating and signing FATCA agreements. At the end of FY 2015, there were 76 signed agreements, including 30 signed during the year, and an additional eight agreements in substance were reached. In July 2015, Treasury finalized the first-ever comprehensive tax treaty between the United States and Vietnam, which represents a significant step in expanding the U.S. tax treaty network (pending Senate approval).
To bring better transparency to the tax system and improve enforcement, Treasury successfully persuaded the Organization for Economic Cooperation and Development (OECD) to adopt the U.S. model to tighten the net on tax evaders. As part of the FY 2016 President’s Budget, Treasury also introduced annual revenue proposals to Congress, including 27 new proposals. The Administration’s Fiscal Year 2016 Revenue Proposals included an international tax reform section addressing inversions and 45 proposals for business tax reform. Finally in this area, TTB worked with the Department of Homeland Security’s (DHS) Customs and Border Protection and other law enforcement partners to address illicit trafficking of products through customs bonded warehouses and foreign trade zones. TTB also plans to complete full integration into the International Trade Data System to improve excise tax enforcement efforts.
Despite these successes, effective tax administration grows more challenging every year due to the worsening IRS funding situation. In the past five years, IRS funding has been reduced by $1.2 billion, causing the IRS to implement severe controls on all expenditures. These controls, which include restrictions on staff replacement, led to a reduction of almost 15,500 full-time employees since FY 2010. The funding constraints also significantly affected the IRS’s ability to modernize infrastructure and adequately staff systems. By prioritizing resources, the IRS delivered another successful filing season in 2015 in terms of return processing: opening on schedule and implementing new provisions of FATCA and ACA. The IRS also issued nine out of ten refunds in less than 21 days. The filing season was more challenging in terms of customer service, which is discussed further under Goal Five.
The IRS also dedicated significant resources to address tax fraud, resulting in the successful recovery of $813 million in 2015 and leading to a public-private partnership with software developers, banks, and other industries to identify and enact a series of steps to further protect taxpayers from tax-related identity theft in 2016. In 2015, through September, the IRS rejected or suspended the processing of 4.5 million suspicious returns and stopped 1.2 million confirmed identity theft returns, totaling $7.2 billion. Additionally, through September, the IRS stopped $2.3 billion worth of refunds in other types of fraud, totaling $9.5 billion defended against confirmed fraudulent returns.
