Management Discussion and Analysis_part2 potx

Management Discussion and Analysis
Page 39 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
17
Integrated Financial System (IFS)
FY 2011 accomplishments include:
♦ Upgraded the Business Ware-
house (BW) for improved perfor-
mance and reporting capabilities.
♦ Improved security of IFS by
upgrading to Oracle 11g.
assessments and write-offs. Under federal accounting standards, unpaid
assessments require taxpayer or court agreement to be considered
federal taxes receivable. Assessments not agreed to by taxpayers or the
courts are considered compliance assessments and are not considered
federal taxes receivable. Assessments considered to have no future
collection potential are called write-offs. The following provides detail on
unpaid assessments:
♦ Taxes receivable represent $147 billion (41%) of unpaid assessments
and increased $9 billion (7%) from $138 billion as of September 30,
2011. About $112 billion (76%) of this balance is estimated to be
uncollectible due primarily because of the economic situations of the
taxpayers. Except for bankruptcy situations, the IRS may continue
collection actions for 10 years after the assessment. About $35
billion (24%) of taxes receivable is estimated to be collectible.

♦ Compliance assessments of $103 billion represent amounts that have
not been agreed to by either the taxpayer or a court. These
assessments result primarily from various IRS enforcement programs
promoting voluntary compliance.
♦ Write-off amounts of $106 billion include amounts owed by defunct
corporations with no assets and failed financial institutions. The
remaining amounts are owed by taxpayers with extreme economic
and/or financial hardships, deceased taxpayers, and taxpayers who
are insolvent due to bankruptcy.
The Integrated Financial System (IFS)
The IFS is the financial management system for the administrative
activities in IRS. IFS also provides timely financial statements and
reports in accordance with the federal accounting and reporting
standards including information for budgeting, analysis, and government-
wide reporting.
In addition, IFS provides the core processes of General Ledger, Accounts
Payable, Accounts Receivable, Budget Execution, Cost Accounting,
Administrative Tax and Travel Accounting, Cost Allocations, some tax
processing functionality for Health Coverage Tax Credit (HCTC)
payments, Budget Formulation, Labor Forecasting and Budget Execution
decision support.
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