The Government Accountability Office says that the performance of the Internal Revenue Service's Offers in Compromise program has been mixed, and suggests that a combination of better management information and simplification could improve it.
The OIC program allows taxpayers who are unable to pay their full tax liability to offer a compromise to the agency -- paying what they can afford and asking the IRS to write off the rest of the amount as a liability. In 2005, the IRS accepted more than 14,000 offers.
In a report, the GAO described trends in the program's performance, attempted to determine whether the IRS's regulations for exceptional circumstance offers were consistent with statute, and looked at a handful of program objectives, including timeliness, quality, accessibility, compliance and cost.
The IRS agreed to consider tracking compliance, study repeat offers and reduce staffing (offers have decreased in recent years, though processor levels have remained the same). The agency only said that it would consider setting goals for timeliness from the perspective of taxpayers.
The GAO also said that the IRS also has not analyzed whether the decrease in offers accepted since fiscal year 2003 reflects a decrease in program accessibility, or whether the efforts to improve the compliance of program participants have been successful.
The full report is available at www.gao.gov/new.items/d06525.pdf.
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