Washington (May 22, 2003) -- The honeymoon's over for newly installed Internal Revenue Service commissioner Mark Everson -- the General Accounting Office says the agency needs to improve its internal controls.

A report on issues identified during a fiscal year 2002 audit of the agency sets out areas in which the IRS still had shortcomings on internal control issues. Among the lapses, the report singled out security controls. It found that the IRS did not always ensure that couriers adhered to certain security requirements, and did not maintain consistently effective physical security controls over its receipt processing areas.

In addition, the report said, the IRS did not always ensure that emptied envelopes were truly empty. By not prohibiting a single employee in a remote location from performing the final check of envelopes, the report said, the risk of theft of taxpayer receipts and information increased. Finally, the report said, the IRS failed to accept cash payments from taxpayers at some centers as required by IRS policy, and did not always structure installment agreements with taxpayers to provide for full payment of the tax liability, as the code requires.

The IRS agreed with the recommendations and laid out a plan to correct the weaknesses.

-- WebCPA staff

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