The Internal Revenue Service may still be auditing groups on the basis of their political and religious views, according to a Wednesday report issued by the Government Accountability Office.
In particular, the report found that "control deficiencies" in the agency's Wage and Investment division "increase the risk of selecting organizations for audit in an unfair manner — for example, based on an organization's religious, educational, political, or other views.
"W&I has not defined key terms such as 'fairness and integrity,' as required by internal control standards," GAO added. "Documented objectives and key terms would help W&I hone the measures it uses to assess its audit selection efforts and bring a consistent understanding of 'fairness and integrity' to audit selection staff."
The audit also covered the agency's Small Business/Self-Employed division. "Fairness is specified in SB/SE's mission statement and referenced in IRS's procedures for auditors," the GAO noted. "However, IRS has not defined fairness or program objectives for audit selection that would support its mission of treating taxpayers fairly."
The report did not receive a warm reception from the IRS, where the possibility of unfair treatment was shrugged off as a "hypothetical" in a letter from Deputy Commissioner John Dalrymple.
"While your report posits a hypothetical risk to fair case selection ... your report did not identify any instances where the selection of a case was considered inappropriate or unfair," Dalrymple responded. The GAO suggested Dalrymple had missed the point.
"We did not design our study to look for inappropriate and unfair selections, but rather to assess ... internal controls," the GAO replied. "Further, even if we did design our study to look for unfair selections, our design would be hampered by the lack of a definition for fairness and related objective[s] and measures to evaluate whether selections were fair."
As a remedy, the GAO recommended in part that the IRS "clearly define and document the key term 'fairness' for return selection activities," in addition to "clearly communicat[ing] examples of fair selections to staff to better assure consistent understanding."
Dalrymple replied that the IRS would attempt to implement the GAO's recommendations, closing with an expression of his agency's gratitude.
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"We agree with the importance of sound internal controls and are committed to their improvement," Dalrymple concluded. "In closing, we appreciate and value your continued support and insight as we strive to further strengthen our process."