United States Government Accountability Office GAO November 2010 Report to the Secretary of the Treasury _part4 pot

Management Discussion and Analysis Page 36 GAO-11-142 IRS’s Fiscal Years 2010 and 2009 Financial Statements INTERNAL REVENUE SERVICE Management Discussion and Analysis For the Fiscal Year Ended September 30, 2010 16 Financing Sources The IRS receives the majority of its funding through annual and multi-year appropriations, which are available for use within certain specified statutory limits. Besides appropriations, the IRS used other financing sources. These included net transfers from other federal agencies, and revenue from user fees for direct services provided to customers (for example, installment agreement fees, photocopy fees, and letter rulings and determinations fees). Financial Highlights Revenue and Refund Trend Information FY 2010 revenue receipts collected by IRS remained constant at $2.3 trillion. Federal tax revenues are collected through six major classifications: individual income and FICA/SECA, corporate income, excise taxes, estate and gift taxes, railroad retirement, and federal unemployment taxes. FY 2010 tax refund activity totaled $467 billion, representing an increase of approximately 7% from FY 2009. Federal tax refunds include refunds of tax overpayments, payments for interest, and disbursements for refundable tax credits such as Earned Income Tax Credit and the Additional Child Care Tax. Excise Tax Trust Fund The Quarterly Federal Excise Tax Return, Form 720, reports taxpayer liability for excise taxes. Taxpayers make periodic deposits in advance of filing the return. These deposits are classified as Federal Excise Tax. After the IRS receives and processes the returns, the IRS certifies amounts for several trust funds. Amounts reported on the Statement of Custodial Activity are for fiscal year collections (October 1 through September 30). Because Form 720 reporting requirements are completed after receipt of most of the deposits, the certification amounts will not match the amounts collected in the fiscal year. The table below shows revised receipts certified to the Airport and Airway Trust Fund, Black Lung Disability Trust Fund and the Highway Trust Fund for the eight liability quarters from December 2007 through September 2009. The Department of the Treasury prepares the warrants and allocations to the trust funds. Liability Quarter Ended December 2007 – September 2008 December 2008 – September 2009 Airport & Airway Trust Fund $11,734,723,000 $10,533,488,000 Black Lung Disability Trust Fund 644,590,000 631,138,000 Highway Trust Fund 38,052,198,000 36,445,773,000 Total $50,431,511,000 $47,610,399,000 Analysis of Unpaid Assessments – Most Unpaid Assessments Are Not Receivables and Are Largely Uncollectible The unpaid assessment balance includes amounts owed by taxpayers who file returns without sufficient payment as well as amounts assessed through the IRS enforcement programs. As reflected in the supplemental information to the IRS FY 2010 Financial Statements, the unpaid assessment balance was $330 billion as of September 30, 2010, and $184 billion (56%) of this balance consists of interest and penalties. Furthermore, the total outstanding balance of IRS unpaid assessments is largely uncollectible because it is composed mostly of compliance This is trial version www.adultpdf.com . Fund and the Highway Trust Fund for the eight liability quarters from December 2007 through September 2009. The Department of the Treasury prepares the warrants and allocations to the trust. on the Statement of Custodial Activity are for fiscal year collections (October 1 through September 30). Because Form 720 reporting requirements are completed after receipt of most of the. through the IRS enforcement programs. As reflected in the supplemental information to the IRS FY 2010 Financial Statements, the unpaid assessment balance was $330 billion as of September 30, 2010,