A report last month from the Government Accountability Office said the Internal Revenue Service could increase its collections by “hundreds of millions of dollars per year” by adjusting the way it does enforcement.
The analysis found that some IRS reviews are more efficient and effective than others. For example, “field exams,” which involve face-to-face meetings with taxpayers, cost more than eight times as much as the “correspondence exams” that do not require such interactions, the report said.
The GAO concluded that “a hypothetical shift of a small share of resources (about $124 million) from exams of tax returns in less productive groups shown in the figure to exams in the more productive groups could have increased direct revenue by $1 billion over the $5.5 billion per year IRS actually collected.”
The report said the IRS should take a closer look at which of its enforcement exams produce the best cost-benefit ratios and consider adjusting the way it allocates resources for such reviews.