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OIG Recovery Act Plan Overview
OIG Name: Treasury Inspector General for Tax Administration (TIGTA)
In its oversight role of the IRS Recovery Act programs and activities, TIGTA will monitor and evaluate
the IRS, in much the same manner that it currently oversees tax administration, in general. To
accomplish its goals for Recovery Act involvement, TIGTA will aggressively:
• account for IRS monies expended and pursue those who defraud the IRS;
OIG Broad Recovery Act Goals:
• protect the interests of the American taxpayers;
• hold accountable Government officials who are responsible for administering Recovery Act funds;
• serve as a deterrent to those who are inclined to victimize Federal agencies; and
• provide for an overall atmosphere of transparency.
TIGTA will continue our integrity briefing to IRS employees and managers, conduct presentations at
OIG Broad Training and Outreach Recovery Act taxpayer forums, and discuss tax administration issues with the IRS Commissioner and his senior staff,
Goals: the National Taxpayer Advocate, the IRS Oversight Board, and applicable Congressional Committees;
staff dedicated to Recovery Act oversight equal 10 FTEs.
Because of the unprecedented nature of the Recovery Act, all IRS ARRA activities are deemed to be
OIG Recovery Act Risk Assessment Process: high risk. TIGTA will use the existing strategic planning process to identify the appropriate oversight
actions needed for specific IRS tax provisions.
OIG Recovery Act Funds: $7 million
Expiration Date of OIG Recovery Act Funds: 2013
OIG Recovery Act Funds Allocated to Contracts: No
Purpose of Recovery Act Contracts: N/A - none awarded
Types of Recovery Act Contracts Awarded to
N/A - none awarded
Date:
Link to OIG Recovery Act Work Plan: http://www.treas.gov/tigta/recovery.shtml
Page 1 of Overview 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
OIG FY 2010 Recovery Act Work Plan
Review
Included on Expected Expected
Recovery Act Funds Expected
Entity Performing Prior Quarter Quarter
Agency Program Area Associated Type of Review Project Title Background Objective Number of
Review Recovery Work Final Report
w/Program Area Reports
Act Plan Begins Issued
(Y/N)
Internal Revenue The Recovery Act provided $80 million to the
Review of the Health Determine if controls are in place for
Service Health Administrative/Finan Internal Revenue Service to implement the health
IRS $80 Million OIG Staff Care Tax Credit System administration and expansion of the Health Yes Q3 FY09 Q3 FY10 1
Care Tax Credit cial care tax credit. The funds are available through
Upgrade #200920130 Coverage Tax Credit.
Administration September 30, 2010.
$123 Million (total IRS' Readiness to Procure Both the Recovery Act and the implementing Determine the IRS's level of readiness to
Tax Law received by IRS for Goods and Services guidance from the Office of Management and implement the requirements for planning,
IRS Performance OIG Staff Yes Q3 FY09 Q3 FY10 1
Implementation implementation of under the Recovery Act Budget require transparency in all contract actions awarding, and reporting of Recovery Act funded
tax provisions) #200910124 funded by the Recovery Act. procurement actions.
Under prior law, new operating losses may be
carried back to the two taxable years before the
year that the loss arises and carried forward to
$123 Million (total Determine if the IRS properly implemented the
Review of Processing of each of the succeeding twenty taxable years after
Tax Law received by IRS for new Recovery Act 5 year Net Operating Loss
IRS Performance OIG Staff Net Operating Loss the year that the loss arises. For 2008, the Yes Q3 FY09 Q3 FY10 1
Implementation implementation of Carryback provision, and to follow-up on prior
Carrybacks #200940136 Recovery Act extends the maximum carryback
tax provisions) audit recommendations related to carrybacks.
period from two years to five years for small
businesses with gross receipts of $15 million or
less.
In previous legislation, Congress provided
taxpayers with a refundable tax credit that was
equivalent to an interest-free loan equal to 10
percent of the purchase of a home (up to $7,500)
by first-time home buyers. The provision applies
to homes purchased on or after April 9, 2008 and
before July 1, 2009. Taxpayers receiving this tax
credit are currently required to repay any amount
received under this provision back to the
government over 15 years in equal installments or
$123 Million (total Process to Administer Determine the effectiveness of the IRS's efforts to
if earlier when the home is sold. The credit phases
Tax Law received by IRS for the First Time distinguish between filers claiming the credit for a
IRS Performance OIG Staff out for taxpayers with adjusted gross income in No Q4 FY09 Q3 FY10 1
Implementation implementation of Homebuyer Credit purchase in 2008 versus those claiming the credit
excess of $75,000 ($150,000 in the case of a joint
tax provisions) #201040101 for a purchase in 2009.
return). The Recovery Act eliminates the
repayment obligation for taxpayers that purchase
homes after January 1, 2009, increases the
maximum value of the credit to $8,000, and
removes the prohibition of financing by mortgage
revenue bonds, and extends the availability of the
credit for homes purchased after December 1,
2009. The Recovery Act retains the credit
recapture if the house is sold within three years of
purchase.
The Recovery Act increased the Federal
Government's portion of health coverage tax
$123 Million (total credit payments from 65 percent to 80 percent
Health Coverage Tax
Tax Law received by IRS for and also extended it to family members of trade- Evaluate the efficiency and effectiveness of the
IRS Performance OIG Staff Credit Payment Yes Q4 FY09 Q3 FY10 1
Implementation implementation of affected workers and retirees. Prior to the Health Care Tax Credit payment processing.
Processing #201040106
tax provisions) Recovery Act, payments were for only current or
future months; now payments become
retroactive.
Page 2 of Work Plan 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
OIG FY 2010 Recovery Act Work Plan
Review
Included on Expected Expected
Recovery Act Funds Expected
Entity Performing Prior Quarter Quarter
Agency Program Area Associated Type of Review Project Title Background Objective Number of
Review Recovery Work Final Report
w/Program Area Reports
Act Plan Begins Issued
(Y/N)
$123 Million (total
2010 Filing Season Each year, TIGTA conducts reviews and assesses Evaluate whether the IRS timely and accurately
Tax Law received by IRS for
IRS Performance OIG Staff Implementation IRS's progress and effectiveness of processing tax processes individual paper and electronically filed Yes Q4 FY09 Q4 FY10 1
Implementation implementation of
#201040102 returns during the individual filing season. tax returns during the 2010 Filing Season.
tax provisions)
Tax Exempt Bonds The Build America Bonds introduced by the Determine whether the Tax Exempt Bonds Office
$123 Million (total
Office's Readiness for Recovery Act allow for a Federal subsidy for has developed controls that will timely and
Tax Law received by IRS for Administrative/Finan
IRS OIG Staff Recovery Act Bonds (Pre- interest payments. These interest payments may accurately issue Build America Bonds interest Yes Q4 FY09 Q4 FY10 1
Implementation implementation of cial
Payment Compliance) be disbursed to either the bond issuer or other payments while preventing erroneous payments
tax provisions)
#200910136 third parties. from being disbursed.
For 2009 and 2010, the Recovery Act provides a Determine whether changes to withholding will
refundable tax credit of up to $400 for working have unintended negative effect on taxpayers; is
individuals and $800 for working families. This tax the IRS providing adequate outreach to employers
credit would be calculated at a rate of 6.2% of and taxpayers to ensure they know to adjust
$123 Million (total
Review of the Making earned income, and would phase out for withholding if the employees will exceed the
Tax Law received by IRS for
IRS Performance OIG Staff Work Pay Credit - Phase taxpayers with adjusted gross income in excess of adjusted gross income limits or will otherwise be No Q1 FY10 Q4 FY10 1
Implementation implementation of
2 #201040139 $75,000 ($150,000 for married couples filing negatively affected; determine if provisions are
tax provisions)
jointly). Taxpayers can receive this benefit made for waiving estimated tax penalties if wage
through a reduction in the amount of income tax earners do not qualify for the credit but had
that is withheld from their paychecks, or through reduced withholding due to their employer's
claiming the credit on their tax returns. implementation of the new rates.
In previous legislation, Congress provided
taxpayers with a refundable tax credit that was
equivalent to an interest-free loan equal to 10
percent of the purchase of a home (up to $7,500)
by first-time home buyers. The provision applies Determine what steps the IRS is taking to ensure
to homes purchased on or after April 9, 2008 and taxpayers taking the credit qualify, or to identify
before July 1, 2009. Taxpayers receiving this tax those who did qualify for the credit but fail to stay
credit are currently required to repay any amount in their homes for three years after purchase;
received under this provision back to the determine how the IRS is handling the change in
Review of IRS Efforts to
$123 Million (total government over 15 years in equal installments or the law to allow taxpayers purchasing homes in
Identify Improper Claims
Tax Law received by IRS for if earlier when the home is sold. The credit phases 2009 and claiming the $7,500 repayable loan to
IRS Performance OIG Staff for the First-Time No Q1 FY10 Q4 FY10 1
Implementation implementation of out for taxpayers with adjusted gross income in amend their 2008 tax returns to claim the
Homebuyer Credit -
tax provisions) excess of $75,000 ($150,000 in the case of a joint refundable $8,000 credit, including whether the
Phase 2 #201040138
return). ARRA eliminates the repayment IRS will be able to process the influx of amended
obligation for taxpayers that purchase homes after returns timely, what controls will be in place to
January 1, 2009, increases the maximum value of identify questionable claims, and what
the credit to $8,000, and removes the prohibition documentation the IRS will require to substantiate
of financing by mortgage revenue bonds, and the claims.
extends the availability of the credit for homes
purchased after December 1, 2009. ARRA retains
the credit recapture if the house is sold within
three years of purchase.
$123 Million (total Processing of Amended Determine whether IRS has controls in place to
Tax Law received by IRS for Returns Claiming the ensure claims for the First-Time Homebuyer Credit
IRS Performance OIG Staff No Q2 FY10 Q4 FY10 1
Implementation implementation of First-Time Homebuyer claimed on amended tax returns are appropriately
tax provisions) Credit #201040140 processed.
Page 3 of Work Plan 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
OIG FY 2010 Recovery Act Work Plan
Review
Included on Expected Expected
Recovery Act Funds Expected
Entity Performing Prior Quarter Quarter
Agency Program Area Associated Type of Review Project Title Background Objective Number of
Review Recovery Work Final Report
w/Program Area Reports
Act Plan Begins Issued
(Y/N)
Certain plug-in electric vehicles acquired after
February 17, 2009 and before 2012 qualify for a
new tax credit equal to 10 percent of the vehicle Determine whether the IRS's controls identify
$123 Million (total
Controls Over Plug-In cost. The credit is limited to $2500 and cannot erroneous claims for the Plug-In Electric Vehicle
Tax Law received by IRS for
IRS Performance OIG Staff Electric Vehicle Credit exceed the sum of the tax liability. There is also a Credit and prevent fraudulent claims of the Credit; Yes Q2 FY10 Q1 FY11 1
Implementation implementation of
#201040131 credit that vehicles that have been converted to a also assess whether forms, instructions, and
tax provisions)
qualified plug-in electric vehicle. That credit is 10 taxpayer education efforts are adequate.
percent of the cost of converting the vehicle not
exceeding $40,000.
Observations about
$123 Million (total Contractor Officer's Both the Recovery Act and the implementing Report observations identified during the Review
Tax Law received by IRS for Technical Representative guidance from the Office of Management and of the Effectiveness of the IRS Contracting
IRS Performance OIG Staff Yes Q3 FY10 Q3 FY10 1
Implementation implementation of Effectiveness and the Budget require transparency in all contract actions Officer's Technical Representatives audit that
tax provisions) Recovery Act funded by the Recovery Act. relate to the Recovery Act.
#201010115
Internal Revenue Health Coverage Tax The Recovery Act provided $80 million to the
Determine if the IRS is properly accounting for
Service Health Administrative/Finan Credit System Upgrades Internal Revenue Service to implement the health
IRS $80 Million OIG Staff Recovery Act funds as part of system upgrades to Yes Q3 FY10 Q4 FY10 1
Care Tax Credit cial for Fiscal Year 2010 care tax credit. The funds are available through
the Health Coverage Tax Credit system.
Administration #201020101 September 30, 2010.
The Recovery Act allows taxpayers a new state
and local tax deduction on the purchase of
qualifying vehicles. The deduction is limited to the
$123 Million (total Deductions Associated
sales and excise taxes paid on up to $49,500 Assess the effectiveness of the IRS's process to
Tax Law received by IRS for with the Purchase of
IRS Performance OIG Staff purchase price. The deduction is phased out for identify erroneous Qualified Motor Vehicle Yes Q3 FY10 Q1 FY11 1
Implementation implementation of Qualified Motor Vehicles
taxpayers whose modified adjusted gross income deductions.
tax provisions) #201040108
is between $125,000 and $135,000 for individual
filers and between $250,000 and $260,000 for
joint filers.
Recovery Act
$123 Million (total Both the Recovery Act and the implementing Report observations identified during the
Observations on a
Tax Law received by IRS for guidance from the Office of Management and Acquisitions Risks Identified during a Decade of
IRS Performance OIG Staff Decade of Procurement Yes Q3 FY10 Q1 FY11 1
Implementation implementation of Budget require transparency in all contract actions IRS Procurement Audit Coverage audit that relate
Audit Coverage at IRS
tax provisions) funded by the Recovery Act. to the Recovery Act.
#201010116
The Recovery Act also incorporated tax credit
Tax Exempt Bonds bonds which may eventually replace traditional
$123 Million (total Office's Readiness for tax exempt bonds. Prior to the Recovery Act, tax Assess the Tax Exempt Bonds Office's progress in
Tax Law received by IRS for Recovery Act Bonds (Post- credit bonds were a small part of the bond developing a workload selection process to
IRS Performance OIG Staff Yes Q3 FY10 Q2 FY11 1
Implementation implementation of Issuance Compliance market; (about $2 billion in 2008); since the identify Recovery Act bonds with a potential for
tax provisions) Workload Selection) Recovery Act, the amount of tax credit bonds that noncompliance.
#201010111 can be issued increased by approximately $52.8
billion.
Page 4 of Work Plan 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
OIG FY 2010 Recovery Act Work Plan
Review
Included on Expected Expected
Recovery Act Funds Expected
Entity Performing Prior Quarter Quarter
Agency Program Area Associated Type of Review Project Title Background Objective Number of
Review Recovery Work Final Report
w/Program Area Reports
Act Plan Begins Issued
(Y/N)
The Recovery Act requires IRS to conduct a survey
of Health Coverage Tax Credit eligible individuals
and report selected demographic information such
as income and education levels, satisfaction with
$123 Million (total Survey and Report on
the enrollment process, and satisfaction with the Assess the methodology used to conduct the IRS's
Tax Law received by IRS for Enhanced Health
IRS Performance OIG Staff health coverage options. The IRS is also required Health Coverage Tax Credit study to ensure results Yes Q3 FY10 Q2 FY11 1
Implementation implementation of Coverage Tax Credit
to annually report other information including the are accurately reported.
tax provisions) Program #201040112
number of eligible individuals and the number
receiving the credit and the number of eligible
individuals that receive an advanced payment of
the credit.
The IRS uses various forms of information from
$123 Million (total multiple third parties in carrying out its tax
Use of External Data to Assess the IRS's efforts to use third party
Tax Law received by IRS for administration duties. The increased Earned
IRS Performance OIG Staff Validate Earned Income information to validate Earned Income Tax Credit Yes Q3 FY10 Q2 FY11 1
Implementation implementation of Income Tax Credit under the Recovery Act adds to
Tax Credits #201040111 Claims.
tax provisions) the need for IRS to effectively use this information
in carrying out its mission.
Post-Award Compliance
$123 Million (total Both the Recovery Act and the implementing
of FY 2009 Procurement Determine whether the IRS's Recovery Act funded
Tax Law received by IRS for guidance from the Office of Management and
IRS Performance OIG Staff Actions with the procurement actions were compliant with the Yes Q3 FY10 Q3 FY11 1
Implementation implementation of Budget require transparency in all contract actions
Recovery Act Recovery Act and all implementing guidance.
tax provisions) funded by the Recovery Act.
#201010114
In previous legislation, Congress provided
taxpayers with a refundable tax credit that was
equivalent to an interest-free loan equal to 10
percent of the purchase of a home (up to $7,500)
by first-time home buyers. The provision applies
to homes purchased on or after April 9, 2008 and
before July 1, 2009. Taxpayers receiving this tax
credit are currently required to repay any amount
received under this provision back to the
government over 15 years in equal installments or
$123 Million (total Process to Ensure
if earlier when the home is sold. The credit phases Assess the IRS's efforts to ensure accurate and
Tax Law received by IRS for Repayment of the First
IRS Performance OIG Staff out for taxpayers with adjusted gross income in timely repayment of the First Time Homebuyers Yes Q4 FY10 Q1 FY11 1
Implementation implementation of Time Homebuyer Credit
excess of $75,000 ($150,000 in the case of a joint Credit.
tax provisions) #201040107
return). The Recovery Act eliminates the
repayment obligation for taxpayers that purchase
homes after January 1, 2009, increases the
maximum value of the credit to $8,000, and
removes the prohibition of financing by mortgage
revenue bonds, and extends the availability of the
credit for homes purchased after December 1,
2009. The Recovery Act retains the credit
recapture if the house is sold within three years of
purchase.
Page 5 of Work Plan 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
OIG FY 2010 Recovery Act Work Plan
Review
Included on Expected Expected
Recovery Act Funds Expected
Entity Performing Prior Quarter Quarter
Agency Program Area Associated Type of Review Project Title Background Objective Number of
Review Recovery Work Final Report
w/Program Area Reports
Act Plan Begins Issued
(Y/N)
The Recovery Act revised existing residential
energy credits by extending through 2010 the time
period for improvements to energy-efficient
$123 Million (total existing homes and increasing the credit to 30
Tax Law received by IRS for Residential Energy percent of the amount paid or incurred for Assess the effectiveness of the IRS's processes to
IRS Performance OIG Staff Yes Q4 FY10 Q2 FY11 1
Implementation implementation of Credits #201040109 qualified energy efficiency improvements and identify erroneous Residential Energy Credits.
tax provisions) allowing individuals to claim a 30 percent credit
for qualified solar water heating property,
qualified small wind energy property, and
qualified geothermal heat pumps.
For 2009 and 2010, the bill would provide State
and local governments with the option of issuing a
tax credit bond instead of a tax-exempt
governmental obligation bond. Because the
market for tax credits is currently small given
current economic conditions, the bill would allow
Program Controls to the State or local government to elect to receive a
Effectively Process Build direct payment from the Federal government
$123 Million (total Determine whether the IRS has adequately
America Bonds, Recovery equal to the subsidy that would have otherwise
Tax Law received by IRS for planned for the processing of the three Recovery
IRS Performance OIG Staff Zone Bonds, and been delivered through the Federal tax credit for Yes Q4 FY10 Q2 FY11 1
Implementation implementation of Act bonds for the bond holders to ensure they
Qualified Energy bonds; an additional $2.4 billion of qualified
tax provisions) provide accurate reporting.
Conservation Bonds energy conservation bonds to finance State,
#201030133 municipal and tribal government programs and
initiatives designed to reduce greenhouse gas
emissions is also authorized. The bill would also
clarify that qualified energy conservation bonds
may be issued to make loans and grants for capital
expenditures to implement green community
programs.
Determine whether the receipt and acceptance
As of April 2010, the IRS has expended $31.9
Internal Revenue Incurred Cost Review of process on IRS Recovery Act planned/funded
million in Recovery Act funds for procurements
Service Health Administrative/Finan Recovery Act Funded procurements was performed properly and
IRS $80 Million OIG Staff related to HCTC and tax change programming on No Q4 FY10 Q4 FY11 1
Care Tax Credit cial Procurements (Audit whether all invoices presented for payment were
IRS computer systems and forms to implement the
Administration #TBD) for allowable costs and were appropriately
requirements of the Act.
supported with documentation.
Page 6 of Work Plan 09d292a1-40fe-4c5e-87f8-3b46bbc76fa7.xls
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