February 29,2000

Roth Statement on GAO Financial Audit of the IRS

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today released the following statement on the U.S. General Accounting Offices' audit report on the Internal Revenue Services' FY 1999 financial statements:

"I am deeply concerned about the Internal Revenue Service's continuing internal control and financial management weaknesses. While we know it will take time to modernize and reform the IRS, many of GAO's findings in connection with the financial audit of the IRS are troubling.

"IRS reform and modernization are crucial to help solve the problems that plague the agency. While not universal, it should not take over 10 years to record a taxpayer's payment to the IRS or take over 18 months to correct an erroneous assessment due to a input error. It is appalling that in 26% of the cases GAO tested, Federal tax liens were not released within 30 days after the taxpayer paid the IRS. Taxpayers don't deserve this type of treatment. In addition, the IRS must protect its collection efforts and should have systems to prevent it from issuing refunds to taxpayers who owe outstanding taxes.

"An agency that is charged with collecting our nation's taxes should have strong internal controls to safeguard cash, checks, and taxpayer information. The IRS must beef up these safeguards. There should never be instances documented by GAO where IRS employees hand over a $28 million deposit to a new courier without requesting to see identification.

"The IRS must also establish numerous other internal controls to provide appropriate accounting of its assets and to ensure computer security - especially in light of the recent cyber attacks on the private sector.

"I am also concerned with the GAO's finding regarding weaknesses in the IRS management information system. GAO found that the costs of customer service and compliance are intermingled. Due to this, GAO found that the 'IRS is unable to report to the Congress or the public the appropriate information on the cost of either of its two largest programs.' This makes it impossible for us to know how much the IRS is actually spending on customer service and compliance.

"I am confident that the IRS, under Commissioner Rossotti's watch, will address the substantial weaknesses noted by the GAO and continue moving towards the goal of reform and modernization."