GAO reports on IRS use of Form 990 data in return examination selection

GAO reports on IRS use of Form 990 data

The U.S. Governmental Accountability Office (GAO) released a report of its findings on reviewing the IRS’s use of Form 990 data.

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The GAO was specifically asked by the minority leader of the House Ways and Means Committee to assess: (1) the IRS’s use of data to select returns for examination; and (2) the process that the IRS has established for selecting returns.

GAO analyzed the IRS examination data from fiscal years 2016 through 2019 including results from the largest Form 990 model, as well as model documentation for a generalizable sample. Of the returns examined (selected using the model), changes to the return were made in 87% of cases—noted to be similar to the change rate found under the prior return selection methods.

The GAO made 13 recommendations in its report, including that the IRS establish objectives; revise model documentation; fully document processing and using data in decisions; and regularly evaluate examination selection.

Read the GAO report: Tax Exempt Organizations: IRS Increasingly Uses Data in Examination Selection, but Could Further Improve Selection Processes, GAO-20-454 [PDF 7 MB] (June 2020)


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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