GAO issues report on the 2018 federal withholding tables

The U.S. Government Accountability Office (GAO) has issued a report on the 2018 federal income tax withholding process. Although Treasury and IRS described to GAO the process for updating the withholding tables, limited documentation of that process exists. For example, there is limited documentation of Treasury’s and IRS’s roles and responsibilities, according to the Report. According to IRS officials, IRS did not document the process to update the withholding tables because it was routine and straightforward. However, federal internal control standards require agencies to document responsibilities through policies. Documenting the process for updating withholding tables will help Treasury and IRS ensure that it is implemented consistently in the future, for example, if staff with experience in updating the tables were to leave Treasury and IRS.
Although, it was not the focus of the Report, the GAO noted that the 2018 withholding tables would result in a slightly lower proportion of overwithheld taxpayers and a slightly higher proportion of underwithheld taxpayers under the Tax Cuts and Jobs Act (P.L. 115-97) than would have been the case under prior law. (GAO Report to Congressional Requesters, Federal Income Tax Withholding, Treasury and IRS Should Document the Roles and Responsibilities for Updating Annual Withholding Tables, GAO-18-548, July 2018.)

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