Management Discussion and Analysis Page 53 GAO-12-165 IRS’s Fiscal Years 2011 and 2010 Financial Statements INTERNAL REVENUE SERVICE Management Discussion and Analysis For the Fiscal Year Ended September 30, 2011 31 Erroneous and Improper Payments and Credits Reduce improper payments that include base compliance activities and redesign efforts. Actions Taken: • Protected over $3.7 billion in revenue through EITC enforcement efforts, including the examination of almost 484,000 original and amended returns claiming EITC, almost 1.2 million document matching reviews, and 300,000 math error process corrections. • Used the Electronic Fraud Detection System to identify almost 1.8 million fraudulent returns and stopped over $14 billion in fraudulent claims. • Increased EITC paid preparer due diligence visits; resulting in a 100% increase in the number of preparers penalized over FY 2010 and proposed penalties of more than $10.6 million. • Improved the accuracy of EITC returns by refining EITC paid preparer treatment activities, including doubling the number of due diligence audits, increasing visits by revenue and criminal investigation agents by 50%, and increasing educational and compliance notices to first-time and experienced preparers by 25%, to influence the accuracy of EITC returns filed. o Completed four expedited injunctions, stopping preparers from filing future erroneous claims and preventing over $60 million in erroneous payments. o Penalized over 90% of preparers audited, proposing $10.6 million in penalties. • Increased marketing and outreach efforts for the 5 th EITC Awareness Day to increase overall participation, targeting the underserved and distressed taxpayers affected by the economic downturn. Provided Public Service Announcement campaigns in English and Spanish, utilizing TV, radio, and print ads with almost 43,000 airings/insertions. • Used social media, including Twitter, Facebook, and My Space, to reach over 57,000 people. o Generated more than 600 activities in support of EITC Awareness Day, including news conferences and releases, email blasts, and newsletters. o Provided assistance at local IRS offices to over 15,000 taxpayers during two EITC Saturdays during the filing season. o Increased EITC dollars distributed by 1.4% over the same period in 2010. • Completed activities for year six of the EITC Return Preparer Study, including: o Analyzed short-term outcomes, including penalties assessed and collected, and return accuracy. o Conducted the annual lessons learned case review and identified program improvements for FY 2012. • Identified outreach and education opportunities for known patterns of noncompliance using AUR data. • Initiated a test on Additional Child Tax Credit (ACTC) returns with dependent issues not selected for examination to assist in developing the ACTC compliance strategy moving forward. • Required documentation to accompany returns claiming the Adoption Credit to reduce fraud, and developed new cross-functional procedures to minimize delays in return processing. Actions Planned or Underway for FY 2012 and Beyond: • Hold a sixth annual EITC Awareness Day to increase eligible taxpayers’ awareness, stakeholder partnerships, and media coverage. • Implement the requirement that EITC paid preparers attach Form 8867, Paid Preparer’s Earned Income Credit Checklist, to their clients’ returns to encourage preparer compliance with EITC due diligence requirements. This is trial version www.adultpdf.com . o Provided assistance at local IRS offices to over 15,000 taxpayers during two EITC Saturdays during the filing season. o Increased EITC dollars distributed by 1.4% over the same period in 2010. •. resulting in a 100% increase in the number of preparers penalized over FY 2010 and proposed penalties of more than $10.6 million. • Improved the accuracy of EITC returns by refining EITC paid preparer. notices to first-time and experienced preparers by 25%, to influence the accuracy of EITC returns filed. o Completed four expedited injunctions, stopping preparers from filing future erroneous claims