Many view the IRS compliance and collection programs (CCP) -- such as audits to determine whether taxpayers have accurately reported the amount of taxes that they owe and collection follow-up with taxpayers who have not paid what is owed -- as critical for maintaining the public's confidence in our tax system. But declines in CCP have been dramatic. From FY 1996-2000, the number of individual tax returns audited by IRS declined by over 60%. Further, IRS was unable to pursue many delinq. taxpayers. This report: describes the changes since 1996 in IRS CCP, and the factors contributing to the changes; determines how the program changes have affected taxpayers; and determines how IRS addressed the program changes in its strategic assessments. Also includes a 17-page report, "Tax Deductions: Further Estimates of Taxpayers Who May Have Overpaid Federal Taxes by Not Itemizing."

Taxpayers disagreeing with Internal Revenue Service (IRS) compliance decisions can request an independent review by IRS's Appeals Office (Appeals). In 2004 the Commissioner requested that Appeals establish a feedback program to share the results of Appeals' reviews with the compliance programs. GAO was asked to assess whether (1) information on Appeals results would provide useful feedback to IRS operating divisions to benefit compliance programs, Appeals, and taxpayers through better case resolution and (2) the feedback project is being effectively managed to maximize its potential to improve IRS's performance and thereby reduce disputes with taxpayers.