Management Discussion and AnalysisPage 36 GAO-11-142 IRS’s Fiscal Years 2010 and 2009 Financial Statements INTERNAL REVENUE SERVICE Management Discussion and Analysis For the Fiscal Yea
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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
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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
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