Part 1. Organization, Finance, and Management
Chapter 34. Revenue Accounting
Section 1. Definitions and Acronyms
This IRM provides definitions for terms and acronyms used in Revenue Financial Management (RFM). The definitions may be modified when relevant terms are updated by issuances from the Office of Management and Budget (OMB), the Financial Management Service (FMS) Treasury, the Government Accountability Office (GAO) and the Federal Accounting Standards Advisory Board (FASAB).
The Office of Revenue Reporting, Revenue Financial Management (IFM), under the Chief Financial Officer (CFO), develops and maintains this IRM.
Abatements are reductions in tax assessments and are a normal part of the IRS tax administration process. Abatements may occur for a number of reasons. For example, a taxpayer may file an amended return claiming a lower tax liability than previously reported or a qualifying corporation may claim a net operating loss which created a credit that can be carried back to reduce a prior year’s tax liability.
Accrual Accounting is the accounting basis whereby transactions and events are recognized when they occur, regardless of when cash is received or paid
Adjusted Trial-Balance (ATB) is a list of U.S. Standard General Ledger (USSGL) accounts with preclosing adjusted balances and attributes prepared at a specified date (for example at fiscal yearend). ATBs are submitted by fund account and include USSGL accounts listed in numeric order. The USSGL account balances should reflect preclosing adjusting entries. The total sum of the debit balances must equal the total sum of the credit balances in the ATB. The required attributes must be included with the appropriate USSGL accounts.
Agency Location Code (ALC) is used to identify each Federal agency that prepares an Financial Management Service (FMS) 224, Statement of Transactions. For the 8-digit ALC:
The first two digits of the symbol identify the department or agency,
The third and fourth digits identify the particular bureau within the department, and
The remaining four digits identify the particular agency accounting station within that bureau.
Agencies must include the ALC on all correspondence, forms, and other documentation forwarded to financial institutions, FMS, other Federal agencies, Regional Financial Centers (RFCs), and particularly on disbursement data reported on all Standard Forms (SFs) 215: Deposit Tickets, and/or related SFs 5515: Debit Vouchers.
Allotment is a part of an agency’s system of administrative control of funds whose purpose is to keep obligations and expenditures from exceeding apportionments and allotments. An allotment is an authorization to incur obligations within a specified amount. Allotments are made based on the general apportionment guidelines in OMB Circular No. A-11, Preparation, Submission and Execution of the Budget. The amount allotted by an agency cannot exceed the amount apportioned by OMB.
Allowance for Doubtful Accounts is an estimate of the portion of total taxes receivable deemed to be uncollectible.
Antideficiency Act is a Federal law that:
Prohibits the making of expenditures or the incurring of obligations in advance of an appropriation;
Prohibits the incurring of obligations or the making of expenditures in excess of amounts available in appropriation or fund accounts unless specifically authorized by law;
Prohibits the acceptance of voluntary or personal services unless authorized by law;
Requires OMB, by a delegation from the President, to apportion appropriated funds and other budgetary resources for all executive branch agencies;
Requires a system of administrative controls within each agency;
Prohibits incurring any obligation or making any expenditure in excess of an apportionment or reapportionment or in excess of other subdivisions established; and
Specifies penalties for deficiencies.
The act permits agencies to reserve funds (that is, withhold them from obligation) under certain circumstances.
Antideficiency Act Violation occurs when one or more of the following happens:
Overobligation or overexpenditure of an appropriation or fund account;
Entering into a contract or making an obligation in advance of an appropriation, unless specifically authorized by law;
Acceptance of voluntary service, unless authorized by law;
Overobligation or overexpenditure of an apportionment or reapportionment or amounts permitted by the administrative control of funds regulations.
Once it has been determined that there has been a violation of the Antideficiency Act, the agency head must report all relevant facts and a statement of actions taken to the President and Congress and submit a copy of the report to the Comptroller General. Penalties for Antideficiency Act violations include administrative discipline, such as suspension from duty without pay or removal from office. In addition, an officer or employee convicted of willfully and knowingly violating the law shall be fined not more than $5,000, imprisoned for not more than two years, or both.
Apportionment is a distribution made by OMB of amounts available for obligation in an appropriation or fund account into amounts available for specified time periods, program, activities, projects, objects, or any combinations of these. The apportioned amount limits the obligations that may be incurred.
Apportionment/Reapportionment Schedule (SF 132) is used to document OMB approval of the agency’s apportionment of budgetary resources and presents the disposition of resources by Treasury Appropriation Fund Symbols (TAFS) and by category:
Category A apportionments distribute budgetary resources by fiscal quarters
Category B apportionments distribute budgetary resources by activities, projects, objects or a combination of these categories
Category C apportionments distribute budgetary resources for multiyear and no year accounts into future fiscal years.
Appropriation is a provision of law (not necessarily in an appropriations act) authorizing the expenditure of funds for a given purpose. Usually, but not always, an appropriation provides budget authority.
Appropriation Warrant is an official document issued by the Secretary of the Treasury, pursuant to law, that establishes the amount of appropriations that can be obligated and disbursed.
Asset is a tangible or intangible item owned by the Federal Government , which would have probable economic benefits that can be obtained or controlled by a Federal Government entity.
Attribute is a modifier that further describes a USSGL account to meet a specific reporting requirement. Attributes are captured at the transaction level. The following attributes are used to further modify a USSGL account:
A—This is an attribute of a USSGL account balance that indicates the amount is not reported on the Statement of Custodial Activity or custodial footnote.
F—This is an attribute of a USSGL account balance that results from transactions between Federal Government entities included in the Financial Report of the U.S. Government (FR). These often are referred to as intragovernmental transactions. The USSGL account reported on an ATB with attribute F must have a two-digit partner code that identifies the trading partner at the department level.
N—This is an attribute of a USSGL account balance that results transactions not with a Federal Government entity included in the FR.
S—This is an attribute of a USSGL account balance that indicates the activity is related to the Statement of Custodial Activity or custodial footnote.
T—This is an attribute of a USSGL account balance that indicates the balance being reported is nonexchange revenue. Nonexchange revenue arises primarily from exercise of the Government’s power to demand payments from the public (for example, taxes, duties, fines, and penalties) but also includes voluntary donations and other inflows of resources.
X—This is an attribute of a USSGL account balance that indicates the balance being reported is exchange revenue. Exchange revenue arises when a Federal entity provides goods and services to the public or to another Federal entity for a price. Exchange revenue includes most user charges other than taxes. Another term for exchange revenue is earned revenue.
Balance Sheet is a principle financial statement that presents, as of a specific time, amounts of future economic benefits owned or managed by the reporting entity (assets), amounts owed by the entity (liabilities), and amounts which comprise the difference (net position). Custodial lines on the IRS Balance Sheet include:
Federal Tax Refunds Payable – is a fully funded liability and is offset with a corresponding asset Due from Treasury.
Due from Treasury – is recorded to designate approved funding to pay year-end tax refund liabilities. The liability account represents the Federal tax refunds to taxpayers
Federal Taxes Receivable, Net – is offset with the corresponding liability account Due to Treasury are not accrued until related tax returns are filed or assessments are made by the IRS and agreed to by either the taxpayer or the court.
Due to Treasury –is recorded to designate the amount of taxes receivable that once collected are to be returned to Treasury
Book Value is the net amount at which an asset or liability is carried on the books of account. It equals the gross or nominal amount of an asset or liability minus an allowance or valuation amount.
Budget refers to the Budget of the United States Government, which presents the President's comprehensive financial plan and indicates the President's priorities for the Federal Government .
Budgetary Accounting tracks the use of each appropriation for specified purposes through the various stages of budget execution from appropriation to apportionment and allotment to obligation and eventual outlay.
Budgetary Accounts are the 4000 series of accounts in the USSGL Chart of Accounts used to recognize and track budget approval and execution. The budgetary accounts are self-balancing accounts.
Budgetary Resources are amounts available to enter into new obligations and to liquidate them. Budgetary resources are made up of new budget authority (including direct spending authority provided in existing statute and obligation limitations), and unobligated balances of budget authority provided in previous years.
Budget Authority (BA) is the authority provided by law to incur financial obligations that will result in outlays. Specific forms of budget authority include appropriations, borrowing authority, contract authority, and spending authority from offsetting collections.
Duration of Budget Authority. One-Year Authority is budget authority available for obligation only during a specific fiscal year which expires at the end of that fiscal year. It is also known as fiscal year or annual budget authority. Multiple-Year Authority (Multiyear) is budget authority available for a fixed period of time in excess of 1 fiscal year. This authority generally takes the form of two-year, three-year, and so forth, availability but may cover periods that do not coincide with the start or end of a fiscal year. For example, the authority may be available from July 1 of one fiscal year through September 30 of the following fiscal year, a period of 15 months. This latter type of multiple-year authority is sometimes referred to as forward funding. No-Year Authority is budget authority that remains available for obligation for an indefinite period of time. A no-year appropriation (X) is usually identified by language such as "to remain available until expended."
Timing of Budget Authority. Current Authority-Budget Authority is budget authority that is made available by Congress for the fiscal year or years during which the funds are available for obligation. Permanent Authority is budget authority that is available as the result of previously enacted legislation and is available without further legislative action. For example, authority to retain and use offsetting receipts tends to be permanent authority. Such budget authority can be the result of substantive legislation or appropriation acts.
Determination of Amount for Budget Authority. Definite Authority is budget authority that is stated as a specified sum at the time the authority is enacted. This type of authority, whether in an appropriation act or other law, includes authority stated as "not to exceed" a specified amount. Indefinite Authority is budget authority that, at time of enactment, is for an unspecified amount. Indefinite budget authority may be appropriated as all or part of the amount of proceeds from the sale of financial assets, the amount necessary to cover obligations associated with payments, the receipts from specified sources—the exact amount of which is determinable only at some future date—or it may be appropriated as "such sums as may be necessary" for a given purpose.
Availability for New Obligations. Expired Budget Authority is budget authority that is no longer available to incur new obligations but is available for an additional 5 fiscal years for disbursement of obligations properly incurred during the budget authority’s period of availability. Unobligated balances of expired budget authority remain available for 5 years to cover legitimate obligation adjustments or for obligations properly incurred during the budget authority’s period of availability that the agency failed to record. Unexpired Budget Authority is budget authority that is available for incurring new obligations
Budget Enforcement Act (BEA) category designates how the budgetary resources of an account will be classified (for example discretionary, mandatory) for FMS's Federal Agencies’ Centralized Trial Balance System (FACTS) II and OMB's MAX reporting.
CA$HLINK is the FMS’s worldwide deposit reporting and cash concentration system. Users can obtain daily deposit information reported on all SF 215: Deposit Tickets, and/or related SF 5515: Debit Vouchers using the Agency Access option within CA$HLINK.
Cash Basis of Accounting is a system of accounting and budgeting in which revenues are recorded when received in cash and expenses or expenditures are recorded when cash is disbursed without regard to the accounting period in which the revenues were earned or costs were incurred. Cash generally refers to payment by cash, checks, or electronic funds transfers. Cash equivalent refers to the use of an instrument or process that creates a substitute for cash.
Child Tax Credit is a special credit for taxpayers who work, whose earnings fall below the established allowance ceiling, and who have a qualifying child provided under Internal Revenue Code (26 USC) Section 24.
Closed (Canceled) Account refers to an appropriation account whose balance has been canceled. Once balances are canceled, the amounts are not available for obligation or expenditure for any purpose. An account available for an indefinite period (no-year account) is canceled if:
The head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and
No disbursement has been made against the appropriation for two consecutive fiscal years.
Collections are monies collected by the Government that the budget records as either a governmental receipt, an offsetting collection, or an offsetting receipt.
Collection Gap is the cumulative amount of tax, penalties, and interest that has been assessed over many years, but has not been paid by a certain point in time, and which the IRS expects to remain uncollectible. In essence, it represents the difference between the total balance of unpaid assessments and the net taxes receivable reported on IRS’s balance sheet. The tax gap and the collection gap are related and overlapping concepts, but they have significant differences. The collection gap is a cumulative balance sheet concept for a particular point in time, while the tax gap is like an income statement item for a single year. Moreover, the tax gap estimates include all noncompliance, while the collection gap includes only amounts that have been assessed (a small portion of all noncompliance). Also, the tax gap includes only tax, while the collection gap includes tax, penalties, and interest. (see Tax Gap)
Compliance Assessments are unpaid assessments for which neither the taxpayer nor a court has affirmed that the taxpayer owes amounts to the Federal Government . Examples include assessments resulting from an IRS examination or non-filer enforcement programs in which the taxpayer does not agree with the recorded tax assessment. IRS reports the balance of compliance assessments in its supplementary information. Statutory provisions require that IRS maintain these accounts until the statute for the collection expires. The statutory period for collection is generally 10 years from the date IRS records the tax assessment.
Consolidated Financial Statements are the financial statements of a parent and its subsidiary or component entities, presented as if the group were a single entity. There are consolidated financial statements for the Treasury Department. There are also consolidated financial statements for the Federal Government that encompass the executive, legislative, and judicial branches, as well as, consolidated statements for agencies that encompass all of their offices, bureaus and activities.
Custodial Detail Data Base (CDDB) is ultimately intended to serve as a subsidiary ledger for IRS’s tax administration activities, including tax revenue receipts, tax refund disbursements, and unpaid tax debt. A subsidiary ledger helps insure that reported balances are accurate, complete, and supported by underlying detailed records. CDDB analyzes and links account information in IRS’s master files to its Interim Revenue Accounting Control System (IRACS) general ledger for tax administration activities.
Customer Account Data Engine (CADE) is a new IRS system designed to replace the magnetic tape-based Individual Master File system. A key benefit of CADE is the daily posting and settlement of the tax return and the reduction of time that taxpayers have to wait for their paper check or direct deposit refund.
Deposit Fund is an account established to record amounts held temporarily by the Government until ownership is determined (for example, earnest money paid by bidders for mineral leases) or held by the Government as an agent for others (for example, State and local income taxes withheld from Federal employees' salaries and not yet paid to the State or local Government ).
Disbursements are amounts paid by Federal agencies, by cash or cash equivalent, during the fiscal year to liquidate Government obligations. Disbursement is used interchangeably with the term outlay. In budgetary usage, gross disbursements represent the amount of checks issued and cash or other payments made, less refunds received. Net disbursements represent gross disbursements less income collected and credited to the appropriation or fund account, such as amounts received for goods and services provided.
Disclosure is the explanation, or exhibit, attached to a financial statement, or embodied in a report (for example, an annual audit report) containing a fact, opinion, or detail required or helpful in the interpretation of the statement or report; an expanded heading or a footnote.
Discretionary is a term that usually modifies either spending, appropriation, or amount.
Discretionary spending refers to outlays from budget authority that is provided in and controlled by appropriation acts.
Discretionary appropriation refers to those budgetary resources that are provided in appropriation acts, other than those that fund mandatory programs.
Discretionary amount refers to the level of budget authority, outlays, or other budgetary resources (other than those which fund mandatory programs) that are provided in, and controlled by, appropriation acts.
Earmarked Taxes are taxes levied by the Federal Government to finance a specific Federal program.
Earned Income Tax Credit (EITC) is a special credit for employed taxpayers whose earnings fall below the established allowance ceiling.
Electronic Federal Tax Payment System (EFTPS) is the dominant tax payment method that:
Allows taxpayers to make Federal tax payments electronically, and
Is used to process deposit data related to payroll and other taxes paid by Federal agencies through the Federal Agency Tax Payments and Returns (FedTax) II system.
By law, EFTPS has to be used by businesses with employment or other depository taxes that exceed $200,000 annually. The EFTPS system also processes data related to Federal agencies’ payroll taxes, as well as Federal excise and Railroad Retirement taxes.
Entity is a unit within the Federal Government, such as a department, agency, bureau, or program, for which a set of financial statements would be prepared. Entity also encompasses a group of related or unrelated commercial functions, revolving funds, trust funds, and/or other accounts for which financial statements will be prepared in accordance with OMB annual guidance on Form and Content of Financial Statements.
Expenditure is the actual spending of money; an outlay.
Expense is an outflow or other depletion of assets or incurrence of liabilities (or a combination of both) during some period as a result of providing goods, rendering services, or carrying out other activities related to an entity’s programs and missions, the benefits from which do not extend beyond the present operating period.
Federal Accounts Symbols and Titles (FAST) Book is a supplement of the Treasury Financial Manual (TFM) and lists receipt, appropriation, and other fund account symbols and titles assigned by the Department of the Treasury for all executive, legislative, and judicial branches of Government.
Federal Accounting Standards Advisory Board (FASAB) is the body designated by the American Institute of Certified Public Accountants (AICPA) as the source for generally accepted accounting principles (GAAP) for Federal reporting entities. FASAB is sponsored under an agreement between Treasury, OMB and GAO. FASAB issues Statements of Federal Financial Accounting Standards (SFFAS) after considering the financial and budgetary information needs of citizens, congressional oversight groups, executive agencies, and other users of Federal financial information.
Federal Agencies' Centralized Trial-Balance System II (FACTS II) is the FMS system used to electronically submit the accounting data that:
Supports the SF 133 Report on Budget Execution and Budgetary Resources and
Provides much of the initial set of past year data in MAX schedule P.
FACTS II is managed by the FMS for OMB. The system gathers quarterly budget execution information electronically, which is used to prepare SF 133, Reports on Budget Execution; FMS 2108, Yearend Closing Statements; and portions of the actual column of the President’s Budget.
Federal Tax Deposits (FTDs) are payments that taxpayers make electronically or by paper coupons. Electronic FTDs are referred to as EFTPS payments. Under the Federal Tax Deposit System, taxpayers deposit payments with a Federal Reserve Bank (FRB) or an authorized commercial bank. The taxpayer uses an FTD form supplied by IRS in a coupon booklet format and the coupons are forwarded to IRS through the FRB (See EFTPS.)
Federal Taxes Receivable is a custodial line item reported on the balance sheet and is comprised of unpaid assessments (taxes and associated penalties and interest) due from taxpayers for which IRS can support the existence of a receivable through:
Taxpayer agreement, such as filing of a tax return without sufficient payment, or
Court ruling in favor of IRS.
IRS reports taxes receivable on its balance sheet net of an allowance for doubtful accounts. Taxes Receivable is a proprietary (or financial) accounting term and not a budget term. Taxes Receivable does not constitute budget authority against which an agency may incur an obligation. For Federal proprietary accounting, taxes receivable are assets that arise from specifically identifiable, legally enforceable claims to cash or other assets through an entity’s established assessment processes. Taxes receivable include only unpaid assessments made through the end of the period plus related fines, penalties and interest. Taxes receivable do not include amounts received or due with tax returns received after the close of the reporting period or amounts that are compliance assessments or pre-assessment work in process.
Federal Tax Refunds Payable is a custodial line item reported on the balance sheet and is a fully funded liability account which is offset with a corresponding asset Due from Treasury. Refunds Payable is a proprietary (or financial) accounting term and not a budget term. IRS records Due from Treasury to designate approved funding to pay year-end tax refund liabilities. The liability account represents the Federal tax refunds to taxpayers. The amounts include those refunds, where returns (or claims for refund) have been filed by the taxpayer and the Government has determined the specific amounts refundable and has identified the payee.
Fiduciary Activity is activity that relates to the collection or receipt, and the management, protection, accounting, investment and disposition by the Federal Government of cash or other assets in which non-Federal individuals or entities have an ownership interest that the Federal Government must uphold. Non-Federal parties must have an ownership interest in assets held by the Federal entity under provision of law, regulation, or other fiduciary arrangement, usually including an ownership interest in any related income generated. For there to be a fiduciary activity, there must be a fiduciary relationship based on statutory or other legal authority and evidence that the Government activity is in furtherance of that relationship. The ownership interest must be enforceable against the Federal Government. Judicial remedies must be available for the breach of the fiduciary obligation.
Fiduciary Asset is an asset in which non-Federal parties have an ownership interest and are held by a Federal entity under provision of law, regulation or other fiduciary arrangement.
Fiduciary Collections are an inflow to a Federal entity of cash or other assets in which non-Federal parties have an ownership interest that the Federal Government must uphold.
Fiduciary Fund Balance with Treasury is the cash that is held in the U.S. Treasury and administered by a Federal entity on behalf of fiduciary beneficiaries.
Fiduciary Relationship is a relationship in which an entity or authorized agent of the Government accepts, recognizes, agrees to or consents to undertake fiduciary activity. A fiduciary relationship is based on statutory or other legal authority and evidence that the Government activity is in furtherance of that relationship. A fiduciary relationship may be implied from the actions of Federal parties acting within the scope of their authority.
Financial Management Service (FMS) is a bureau of the Department of the Treasury that provides central payment services to Federal Program Agencies (FPAs), operates the Federal Government's collections and deposit systems, provides Government -wide accounting and reporting services, and manages the collection of delinquent debt owed to the Government. FMS also supports Federal agencies' financial management improvement efforts in the areas of education, consulting, and accounting operations.
Financial Statements describe an entity’s financial activity and status for a specified period. Under Federal law and applicable accounting standards, the financial statements for a Federal agency usually include a balance sheet, statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of custodial activity.
Fiscal Year is the twelve month accounting period used in the Government. It begins on October 1 and ends on September 30, and is designated by the calendar year in which it ends.
Fund is a term with more than one meaning. Depending on the context it may mean merely a resource as in funds available to pay an obligation.
For budgetary accounting, fund may mean Federal funds or trust funds, the two major groups of funds in the budget. The main financing component of the Federal funds group is referred to as the General Fund, which is used to carry out the general purposes of Government rather than being restricted by law to a specific program and consists of all collections not earmarked by law to finance other funds
For a fiscal and entity accounting, fund may mean with a self-balancing set of accounts recording cash and other assets, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
Fund Accounting is commonly used to refer to the system of funds control that each agency establishes to ensure compliance with Federal fiscal laws. The statutory basis for fund accounting is found primarily in the requirement of the Antideficiency Act that the head of each agency prescribe, by regulation, a system of funds control.
Fund Balance with Treasury (FBWT) represents the monies that agencies can spend for future authorized transactions. Appropriation warrants, non-expenditure transfers, collections, disbursements and related adjustments reported to Treasury and classified to a Treasury account symbol increase or decrease the FBWT account balance. To ensure the reliability of the amounts reported to Treasury, IRS reviews and reconciles aggregate revenue receipts, by tax class, recorded in the Interim Revenue Accounting Control System (IRACS) to balances maintained at Treasury, which are obtained from GWA. The overall purpose of IRS custodial cash reconciliations is to identify and reconcile differences between the IRS general ledger cash balances and what Treasury shows in its records as the IRS cash balances.
General Fund means the accounts for receipts not earmarked by law for a specific purpose, the proceeds of general borrowing, and the expenditure of these moneys. The general fund is part of the Federal funds group.
Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the congressional watchdog, GAO investigates how the Federal Government spends taxpayer dollars. GAO performs the annual financial audit of the IRS financial statements since IRS collections are significant to overall Federal receipts and to the consolidated financial statements of the U.S. Government . Annually GAO determines whether:
The IRS financial statements are fairly stated, and
IRS management maintains effective internal controls.
GAO also tests IRS’s compliance with selected provisions of significant laws and regulations and its financial systems’ compliance.
Governmental Receipts are collections from the public based on the Government’s exercise of its sovereign powers, including:
Individual and corporate income taxes
Social insurance taxes,
Compulsory licenses, and
Deposits of earnings by the Federal Reserve System.
Gifts and contributions (as distinguished from payments for services or cost-sharing deposits by state and local Government s) are also counted as governmental receipts. Total governmental receipts include those specifically designated as off-budget by provisions of law. Total governmental receipts are compared with total outlays in calculating the budget surplus or deficit.
Government-Wide Accounting (GWA) addresses the central accounting and reporting functions and processes associated with budget execution, accountability, and cash/other asset management. This includes the collection and dissemination of financial management and accounting information from and to Federal program agencies. It also includes the business processes in FMS that are related to ledger accounting for each appropriation, fund, and receipt account's Fund Balance with Treasury, general ledger accounting for the cash and monetary assets of the Government, and the preparation of the Monthly Treasury Statement and the U.S. Government Combined Statement and Appendix.
Integrated Data Retrieval System (IDRS) is a system used to perform research on taxpayer accounts which interfaces with Master File. It is used to perform additional research on all imperfect and multiple–split receipts. It is also used to process larger volumes of multiple–split receipts. IDRS is different from the Integrated Submission and Remittance Processing System (ISRP) because it is downloaded from the master files. Thus, it is used not only for payment processing, but also for research purposes and for processing assessments and abatements.
Integrated Submission and Remittance Processing System (ISRP) is designed to process both tax returns and receipts. ISRP is made up of two components:
The Common Services system which is used to key tax return and
The Transport–Unisys system (the Transport) which is used to make digital images of receipts and scannable vouchers and to make corrections to the data.
Interest is the service charge for the use of money or capital, paid at agreed intervals by the user, commonly expressed as an annual percentage of outstanding principal. Interest on delinquent taxes and other receivables that arise as the result of custodial operations are non-entity assets, held by the IRS as an agent for the Government as a whole rather than on its own behalf.
Interim Revenue Accounting Control System (IRACS) is the custodial accounting system of record and is used to gather, post, accumulate, summarize and report all tax assessment, receipt and refund transactions. These include the recording and posting of all monetary receivables, receipts, refunds, assessments, collections and disbursements currently processed by IRS’s campuses. IRS uses IRACS to report tax revenue receipt, refund and earned income tax credit data to Treasury and to accumulate accounting data for financial statement presentation and disclosure.
Internal Control is an integral component of an organization’s management that provides reasonable assurance that the following objectives are being achieved:
Effectiveness and efficiency of operations,
Reliability of financial reporting, and
Compliance with applicable laws and regulations.
Julian Date is the numeric day of the year that a return or document was numbered for processing.
Liability is defined differently for obligational (or budgetary) and proprietary (or financial) accounting purposes.
Obligational (or budgetary) accounting is designed to ensure compliance with fiscal laws, is based on the concept of legal liability. A legal liability is a claim that may be legally enforced against the Government . It may be created in a variety of ways, such as by signing a contract, grant, or cooperative agreement or by operation of law.
Proprietary (or financial) accounting is designed to generate data for financial statement purposes, is based on the concept of accounting liability. For Federal financial accounting purposes, a liability is a probable future outflow or other sacrifice of resources as a result of past transactions or events.
Generally, liabilities are thought of as amounts owed for items or services received, assets acquired, construction performed (regardless of whether invoices have been received), an amount received but not yet earned, or other expenses incurred.
Lockbox Depository System (Lockbox) is comprised of the branch offices of commercial banks that are under contract with FMS to process individual income tax payments, FUTA, and other employer tax payments for IRS. FMS and IRS personnel conduct periodic lockbox reviews to evaluate internal controls and performance and to ensure compliance with the terms of the Invitation for Expression of Interest (IEI) between the banks, IRS, and FMS. Lockbox processing starts when post office boxes maintained by the contractor banks receive tax payments. Couriers transport payments from these post offices to areas in the banks designated as lockbox receipts processing areas. These areas are restricted access areas, and surveillance cameras are used to monitor receipt-processing activities.
Mandatory is a term that usually modifies either spending or amount.
Mandatory spending, also known as direct spending, refers to budget authority that is provided in laws other than appropriation acts and the outlays that result from such budget authority. Mandatory spending includes entitlement authority (for example, the Food Stamp, Medicare, and Veterans’ pension programs), payment of interest on the public debt, and non-entitlements such as payments to states from Forest Service receipts. By defining eligibility and setting the benefit or payment rules, Congress controls spending for these programs indirectly rather than directly through appropriations acts.
Mandatory amount refers to the level of budget authority, outlays, or other budgetary resources that are controlled by laws other than appropriations acts. Budget authority provided in annual appropriations acts for certain programs is treated as mandatory because the authorizing legislation entitles beneficiaries to receive payment or otherwise obligates the Government to make payment.
Mandatory Spending is spending controlled by laws other than appropriation acts (including spending for entitlement programs) and spending for the food stamp program. Although the BEA uses the term direct spending to mean this, mandatory spending is commonly used instead.
Master File is a detailed database system of taxpayer information and tax processing activity. The master file system consists of two major files:
Individual Master Files (IMF)
Business Master Files (BMF)
The master file records tax information related to individual and business taxpayers by tax year or tax period. This includes such data as the assessed tax, interest and penalties, receipt of payments and other adjustments to the assessments. The master file records the type of return filed, date the return was received and processed, expiration dates for assessment of additional taxes against taxpayers, collection activity (for example unpaid assessment account sent to revenue officer for collections) and status of the taxpayer’s account (for example account paid in full, taxpayer filed bankruptcy, taxpayer is deceased).
Material Weakness is a significant deficiency, or a combination of significant deficiencies, that result in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
MAX A-11 Data Entry is a computer system used to collect and process most of the information required for preparing the budget. MAX collects the budget data using a series of schedules or sets of data within the database. Each schedule describes a view of the President’s Budget.
Memo Accounts are balance due accounts in IRS records that should not be reported in any of the three unpaid assessment categories of taxes receivable, compliance assessments or write-offs. Examples of assessments meeting the memo criteria include:
Assessments made clearly in error,
Complex global netting issues on multi-year examination cases
Non-master file duplicate assessments and
Credits that are posted to one module with the assessment on another module not yet merged.
IRS excludes the balance of memo accounts from its gross unpaid assessment balance. (See Unpaid Assessments)
Monthly Treasury Statement (MTS) is a summary statement prepared from agency accounting reports and issued by the Department of the Treasury (Treasury). The MTS presents the receipts, outlays, resulting budget surplus or deficit, and Federal debt for the month and the fiscal year to date and a comparison of those figures to those of the same period in the previous year. The MTS is approved by the Fiscal Assistant Secretary of the Treasury and is normally released on the 8th workday of the month following the reporting month.
Negative Balance Account is an account for which disbursements exceed the available cash balance. Except in unusual circumstances, a negative balance indicates an Antideficiency Act violation.
Net Tax Refund Report (NTRR) is a report generated at each service center stating the net tax refund amounts. This monthly report summarizes the amount of tax refund disbursements by tax class as confirmed by FMS. The NTRR ending balance agrees with the Treasury Account Symbols 20X0903 (principal) and 20X0904 (interest) on the SF 224: Statement of Transactions. Tax refund disbursements are not detailed by tax class on the SF 224, but only as principal and interest amounts.
Non-Budgetary is a term used to refer to transactions of the Government that do not belong within the budget. Nonbudgetary transactions (such as deposit funds, direct loan and loan guarantee financing accounts, and seigniorage) do not belong in the budget because they do not represent net budget authority or outlays, but rather are means of financing. This contrasts with off-budget, which refers to activities that are budgetary in nature but are required by law to be excluded from the budget.
Non-Exchange Revenue refers to inflows of resources to the Government that the Government demands or that it receives by donations. The inflows that it demands include taxes, duties, fines, and penalties.
Non-Exchange Transaction is a transaction that arises when one party to a transaction receives value without giving or promising value in return or one party to a transaction gives or promises value without receiving value in return.
Non-Expenditure Transfer (NET) is a transaction between appropriation and fund accounts that does not represent payments for goods and services received or to be received but rather serves only to adjust the amounts available in the accounts for making payments. However, transactions between budget accounts and deposit funds will always be treated as expenditure transactions since the deposit funds are outside the budget. These transfers may not be recorded as obligations or outlays of the transferring accounts or as reimbursements or receipts of the receiving accounts. For example, the transfer of budget authority from one account to another to absorb the cost of a Federal pay raise is a non-expenditure transfer. NET transactions formerly documented on the SF 1151: Non-Expenditure Transfer Authorization are now recorded through GWA NET system.
Non-Master File enables IRS to process taxpayer accounts that cannot be processed on the master file. The non-master file may be used for:
The rapid implementation of new tax laws that may require extensive system modifications for which time or resources may not be available to timely make changes;
Processing accounts which have an excessive number of transactions for the master file to systemically handle;
Processing accounts which have an account balance too large for the master file to systemically handle;
Immediate, legal assessments (within 24-36 hours), for those instances when the master file would be too slow to post the assessment (4-6 weeks); and
Reversal of Erroneous Abatements-Accounts that require reversal of erroneous abatements when the statute for assessment has expired and processing of Full Collection Child Support accounts.
Notices are computer generated messages resulting from an analysis of the taxpayer’s account on the master file. The types of notices and their purposes are:
Settlement Notices-Notices of assessments of tax due, payments, adjustments, balance due or overpayment which are sent to taxpayers.
Taxpayer Inquiry Letter- Requests to the taxpayer for additional information or documents needed to process the taxpayer’s return correctly.
Service Center Notices-Issued to request information and alert service centers to certain conditions necessary to correct or update a taxpayer’s account.
Obligated Balance means the cumulative amount of budget authority that has been obligated but not yet outlayed. It is the amount of unliquidated obligations in an account less the amounts collectible as repayments to the account. In other words, it is unpaid obligations (which are made up of accounts payable and undelivered orders) net of accounts receivable and unfilled customers orders. Technically, the obligated balance is the unliquidated obligations. Budget authority that is available for a fixed period expires at the end of its period of availability, but the obligated balance of the budget authority remains available to liquidate obligations for 5 additional fiscal years. At the end of the fifth fiscal year, the account is closed and any remaining balance is canceled. Budget authority available for an indefinite period may be canceled, and its account closed if:
It is specifically rescinded by law, or
The head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made from the appropriation for two consecutive years.
Obligations are binding agreements that will result in outlays, immediately or in the future. Budgetary resources must be available before obligations can be incurred legally. A definite commitment that creates a legal liability of the Government for the payment of goods and services ordered or received, or a legal duty on the part of the United States that could mature into a legal liability by virtue of actions on the part of the other party beyond the control of the United States. Payment may be made immediately or in the future. For example, an agency incurs an obligation when it places an order, signs a contract, awards a grant, purchases a service, or takes other actions that require the Government to make payments to the public or from one Government account to another. The standards for the proper reporting of obligations are found in section 1501(a) of title 31 of the United States Code.
Obligational Accounting consists of the accounting systems, processes, and people involved in collecting financial information necessary to control, monitor, and report on all funds made available to Federal entities by legislation, including permanent, indefinite appropriations as well as appropriations enacted in annual and supplemental appropriations laws that may be available for one or multiple fiscal years. It is through obligational accounting that agencies ensure compliance with fiscal laws, including the Antideficiency Act and statutes related to the purpose and period of availability of appropriations. Obligational accounting rests on the central concepts of the obligation and disbursement of public funds. The Antideficiency Act and the provisions of section 1501 of the United States Code provide the fundamental components of obligational accounting. Obligational accounting is sometimes also referred to as fund control accounting, appropriation accounting, and budgetary accounting.
Office of Management and Budget (OMB) assists the President in overseeing the preparation of the Federal budget and to supervise its administration in Executive Branch agencies. In helping to formulate the President's spending plans, OMB evaluates the effectiveness of agency programs, policies, and procedures, assesses competing funding demands among agencies, and sets funding priorities. OMB ensures that agency reports, rules, testimony, and proposed legislation are consistent with the President's Budget and with Administration policies.
Offsetting Collections are collections authorized by law to be credited to appropriation or fund expenditure accounts. They result from:
Businesslike transactions or market-oriented activities with the public,
Collections from the public that are Government al in nature but required by law to be classified as offsetting.
Collections resulting from businesslike transactions with the public and other Government accounts are also known as reimbursements. Laws authorizing offsetting collections make them available for obligation to meet the account’s purpose without further legislative action. However, it is not uncommon for annual appropriation acts to include limitations on the obligations to be financed by these collections. The authority to obligate and spend offsetting collections is a form of budget authority. The Congressional Budget Act of 1974, as amended by the BEA of 1990, defines offsetting collections as negative budget authority and the reductions to it as positive budget authority. Offsetting collections include:
Transfers between Federal and trust fund accounts,
Offsetting governmental collections, and
Offsetting Governmental Collections is a term used by OMB to designate offsetting collections from non-Federal sources that are governmental in nature but are required by law to be credited to expenditure accounts.
Offsetting Governmental Receipts is a term used by OMB to designate receipts that are governmental in nature (for example, tax receipts, regulatory fees, and compulsory user charges) but are required by law to be classified as offsetting.
Offsetting Receipts are collections that are offset against gross outlays but are not authorized to be credited to expenditure accounts. Offsetting receipts are deposited in receipt accounts. Like offsetting collections, they result from:
Business–like transactions or market-oriented activities with the public,
Collections from the public that are governmental in nature but required by law to be classified as offsetting receipts.
Offsetting receipts are offsets to gross budget authority and outlays, usually at the agency or subfunction level, but some are undistributed and are offsets to budget authority and outlays in the aggregate. Unlike offsetting collections, offsetting receipts cannot be used without being appropriated.
Open Account is an account for which the availability to incur new obligations has not expired (such as an X account) or for which the availability to incur new obligations has expired but 5 years have not passed since its availability period ended.
OMB Circular No. A-11: Preparation, Submission and Execution of the Budget is the document that provides detailed guidance to executive departments and establishments by OMB for preparing and submitting the President’s budget and executing the budget.
OMB Circular No. A-136: Financial Reporting Requirements is the document that provides detailed guidance for agency and Government -wide financial reporting. OMB in conjunction with the Chief Financial Officers (CFO) Council, has established OMB Circular No. A-136 as the central reference point for Federal financial reporting requirements.
Outlay is a payment to liquidate an obligation. Outlays generally are equal to cash disbursements but also are recorded for cash-equivalent transactions, such as Federal employee salaries and debt instruments. Outlays are the measure of Government spending from the issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a Federal obligation. An outlay is not recorded for disbursements from deposit funds, and refunds of receipts that result from overpayments. Outlays during a fiscal year may be for payment of obligations incurred in prior years (prior-year obligations) or in the same year. Outlays, therefore, flow in part from unexpended balances of prior-year budgetary resources and in part from budgetary resources provided for the year in which the money is spent. For custodial accounting, an outlay refers to the excess of refundable credits above tax liability.
Performance and Accountability Report (PAR) provides financial and performance information that enables Congress, the President, and the public to assess the performance of an organization relative to its mission and for management to be accountable for its actions and resources. OMB provides guidance on the contents of the PAR, which integrates the reporting requirements of several laws, including:
The Chief Financial Officers Act of 1990,
The Federal Managers’ Financial Integrity Act of 1982,
The Government Management Reform Act of 1994,
The Government Performance and Results Act (GPRA) of 1993, and
The Reports Consolidation Act of 2000.
Postable is a term used to describe a processable return that meets all the requirements for acceptance into a specified program.
Preclosing Unexpended Balances are balances provided by FMS on the FMS 2108 showing transactions submitted by the administrative agencies and including balances of unfunded contract authority, borrowing authority, investments held (at par), unrealized discount, and funds held outside the Treasury as separate line items under the account.
Proprietary Accounting involves Federal entities recording and accumulating financial information on transactions and balances for reporting purposes to management and externally in an entity’s financial statements. Proprietary accounting is also referred to as financial accounting and is usually based on generally accepted accounting principles (GAAP), which follow established conventions, such as the recognition of the depreciation of capital assets over time as expenses, instead of recognition on the basis of strict association with the obligation or expenditure of appropriated funds. Most Federal entities are subject to proprietary accounting standards promulgated through FASAB.
Proprietary Accounts are the 1000, 2000, 3000, 5000 and 6000 series accounts from the USSGL Chart of Accounts used to recognize and track assets, liabilities, revenues, and expenses.
Proprietary Receipts from the Public are collections from outside the Government that are deposited in receipt accounts that arise as a result of the Government’s business-type or market-oriented activities. Among these are interest received, proceeds from the sale of property and products, charges for non-regulatory services, and rents and royalties. Such collections may be credited to general fund, special fund, or trust fund receipt accounts and are offset against budget authority and outlays. In most cases, such offsets are by agency and by subfunction, but some proprietary receipts are deducted from total budget authority and outlays for the Government as a whole.
Receipts are collections that result from the Government's exercise of its sovereign power to tax or otherwise compel payment, and gifts of money to the Government. They are compared to outlays in calculating a surplus or deficit. (See Offsetting Collections and Offsetting Receipts.)
Regional Financial Centers (RFCs) are FMS centers that issue payments and process cancellation documents on behalf of Federal agencies that do not have their own disbursing authority. RFCs perform other payment-related services, including preliminary handling of check claims, complete handling of Electronic Funds Transfer (EFT) claims, processing of all trace and reclamation actions for EFT payments, cancellation of returned checks, and making any related adjustment in agencies' accounts.
Reportable Condition represents a significant deficiency in the design or operation of internal controls and could adversely affect IRS’ ability to meet internal control objectives.
Revenue is either of the following :
As used in the congressional budget process, a synonym for governmental receipts. Revenues result from amounts that result from the Government’s exercise of its sovereign power to tax or otherwise compel payment or from gifts to the Government, or
As used in Federal proprietary accounting, an inflow of resources that the Government demands, earns, or receives by donation.
Revenue comes from two sources, exchange transactions and nonexchange transactions.
Exchange revenues arise when a Government entity provides goods and services to the public or to another Government entity for a price. Another term for exchange revenue is earned revenue.
Nonexchange revenues arise primarily from exercise of the Government’s power to demand payments from the public (for example, taxes, duties, fines, and penalties) but also include donations.
The term revenue does not encompass all financing sources of Government reporting entities, such as most of the appropriations they receive. Revenues result from:
Services performed by the Federal Government and
Goods and other property delivered to purchasers.
RFC Agency Link is an on-line FMS application. RFCs use this application to inform an agency that checks have been issued on the agency’s behalf.
Significant Deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected.
Special Fund is a category of expenditure accounts for receipts earmarked for specific purposes and the expenditure of these receipts.
Spending Authority from Offsetting Collections is a type of budget authority that permits obligations and outlays to be financed by offsetting collections.
Statement of Custodial Activity (SCA) is required for entities that collect non exchange revenue for the General Fund of the Treasury, a trust fund, or other recipient entities. The collecting entities do not recognize as revenue those collections that have been or should be transferred to others as revenues. Rather, they account for sources and disposition of the collections as custodial activities on the SCA. Custodial collections are normally non exchange revenues, such as taxes and duties collected by the Internal Revenue Service and the U.S. Customs and Border Protection.
Statement of Differences (SOD) identifies differences between deposit and disbursement data. FMS identifies these differences on the SOD 6652 by comparing Statement of Transactions (SOT) and Statement of Accountability (SOA) data reported by agencies to data reported by financial institutions, RFCs and through Treasury’s IPAC system. For custodial transactions, the SOD is generated for differences between FMS balances and what is reported on the IRACS SF 224.
Statement of Federal Financial Accounting Standards (SFFAS) are the accounting principles that provide Federal reporting entities with a framework for principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles (GAAP).
Statement of Transactions (SF 224, SOT) is a monthly report that provides detailed information on collections, refund disbursements, and refund check cancellations to FMS by Treasury Account Symbols. The report is produced at each Center and IRS National Office. The report is broken down into three sections. Section I shows the amount of tax revenue receipts and net tax refund disbursements for each Treasury Account Symbol. Section II contains the payment transactions that occurred and Section III shows the total deposit activity for the month. There are two different SF 224 reports prepared:
RACS 018, provides detailed information on collections, refund disbursements, and refund check cancellations. RACS 018 also includes the supplemental report for refunds to classify by tax class [tax classes 3 through 8] the aggregate tax refund disbursement amount initially reported on the FMS 224.
RACS 019, supplemental for Federal tax deposits classifies FTD tax revenue receipts initially reported as unclassified in the FMS 224. The Center classifies the FTD receipts as Corporate Income, Excise, Railroad Retirement, Federal Unemployment, and Withholding tax class. This report is only generated when the total net amount of unclassified FTDs for all Centers are in excess of $100 million.
Each Center submits the report to FMS each month. The Supplemental Report for Refunds classifies and summarizes refunds for the appropriations account 20X0903 by the following tax classes (subclass prefix):
Corporate income (3),
Estate and gift (5),
Railroad retirement (7), and
Federal unemployment (8).
The amounts for Individual Income Withholding and FICA tax are contra to the total of all prefixed amounts and, thus, are not included.
Surplus is the amount by which receipts exceed outlays in a fiscal year. It may refer to the on-budget, off-budget, or unified budget surplus.
Surplus Warrant is the documentary evidence of the Treasury action that withdraws or cancels unobligated balances of appropriations to X-year accounts and other various TAFS.
Tax is a sum that legislation imposes upon persons, property or activities to pay for Government operations (broadly defined to include individuals, trusts, estates, partnerships, associations, companies, and corporations). The power to impose and collect Federal taxes is given to Congress in Article I, Section 8, of the U.S. Constitution. Collections that arise from the sovereign powers of the Federal Government constitute the bulk of governmental receipts, which are compared with budget outlays in calculating the budget surplus or deficit.
Tax Class refers to the category of tax receipts associated with a Treasury receipt account that are reported in IRS financial statements. The tax classes are numbered 1 through 8 and 0. (for example Tax Class 1, reported on Treasury Account Symbol 200101 refers to Withheld Individual Income and Federal Insurance Contribution Act Taxes).
Tax Credit is an amount that offsets or reduces tax liability. When the allowable tax credit amount exceeds the tax liability and the difference is paid to the taxpayer, the credit is considered refundable and is considered an increase in outlays in the Federal budget. Otherwise, the difference can be:
Allowed as a carry forward against future tax liability,
Allowed as a carry back against taxes paid, or
Lost as a tax benefit. (See Tax Expenditure.)
Tax Deduction is an amount that is subtracted from the tax base before tax liability is calculated.
Tax Expenditures are revenue losses and represent the amount of revenue that the Government forgoes resulting from tax provisions that:
Allow a special exclusion, exemption or deduction from gross income or
Provide a special credit, preferential rate or deferred tax liability.
Under U.S. generally accepted accounting principles, tax expenditure amounts are not required to be disclosed as part of Federal agencies’ financial statements, but certain information on tax expenditures can be included as other accompanying information to the financial statements. Tax expenditures are subsidies provided through the tax system. Rather than transferring funds from the Government to the private sector, the U.S. Government forgoes some of the receipts that it would have collected, and the beneficiary taxpayers pay lower taxes than they would have had to pay. The Congressional Budget Act requires that a list of tax expenditures be included in the President’s budget. Examples include tax expenditures for child care and the exclusion of fringe benefits, such as employer-provided health insurance, from taxation.
Tax Gap represents the amount of taxes that are owed to the Federal Government but have not been paid by taxpayers. The IRS financial statements do not include an estimate of the tax gap however, the tax gap is included in the Management Discussion and Analysis and in other accompanying information to the financial statements. The tax gap estimate is based on a study conducted to measure the compliance rate of individual filers based on an estimation of a statistical sample of filed tax returns.
Taxpayer Identification Number (TIN) is the permanent identification number used on the master file for each taxpayer. The employer identification number (EIN) is used to identify a taxpayer’s business account. The social security number (SSN) is used as the account number of an individual taxpayer.
Tax Period is the period of time for which a return is filed. The IRS uses a six digit code to indicate the end of the tax period for a given return. The first four digits represent the year and the next two digits represent the month.
Tax Refund is money owed to taxpayers by the Government when their total tax payments are greater than their total tax. Refunds are generated when taxpayers either file paper or electronic returns; and the amount of tax assessed is:
Less than the total amount of taxes paid or withheld, plus
Any tax credits claimed such as the Earned Income Tax Credit (EITC) or Child Tax Credit.
Refunds are also generated when IRS tax examiners enter adjustments to taxpayer master file records which result in an excess of payments and/or credits above the amount of taxes owed. Cash refunds should be based on repayments of taxes and duties during the period. Refunds include refund offsets and drawbacks. Refund offsets are amounts withheld from refunds on behalf of other agencies and paid to such agencies.
Trace Identification Numbers (Trace ID) provide detail transaction traceability for revenue and refund transactions between IRACS and the payment systems by using a unique 20 digit trace id. Traceability is necessary to enable IRS to better ensure that its records are accurate, complete, and fully supported. GAO has verified the effectiveness of trace IDs For refunds and for revenue processed through the EFTPS. TraceID addresses GAO’s findings of a lack of adequate audit trails for most material tax–related balances, including tax revenue, tax refunds, and taxes receivable.
Transfer means the moving of budgetary resources from one budget account to another. Depending on the circumstances, the budget may record a transfer as an expenditure transfer, which means a transfer that involves an outlay, or as a non expenditure transfer, which means a transfer that doesn't involve an outlay.
Treasury Account Symbol (TAS) represents by agency, and bureau (for miscellaneous receipts), individual appropriations, receipts, and other fund accounts.
Treasury Appropriation Fund Symbol (TAFS) refers to the separate Treasury accounts for each appropriation title based on the availability of the resources in the account. The TAFS is a combination of Federal account symbol and availability code (for example, annual, multi-year, or no-year).
Treasury Financial Manual (TFM) is the Department of the Treasury's official publication for financial accounting and reporting of all receipts and disbursements of the Federal Government . FMS issues the TFM to provide policies, procedures, and instructions for Federal departments and agencies, FRBs, and other concerned parties to follow in carrying out their fiscal responsibilities.
Treasury Information Executive Repository (TIER) is an enterprise-wide system that collects monthly financial information from Treasury bureaus and supports the preparation of agency financial statements. TIER receives monthly budgetary and proprietary data in the form of a trial balance. The data is uploaded in a standard ASCII text file format and is validated based on the TIER system's defined validation checks. The uploaded data is initially stored in a TIER holding area until bureaus verify its accuracy. While the data is stored in the TIER holding area, TIER users can generate a variety of standard and customized reports using parameters such as bureau name, USSGL account number, fiscal month and year, and Treasury Fund Symbol (TFS). The monthly Three-Day Close TIER submission must be completed by 5:00 PM, Eastern Standard Time, on the third workday after the close of the month (except on occasions where Treasury has extended the deadline), and must pass all fatal TIER data edit checks before it can be loaded into the TIER repository.
Trust Fund Recovery Penalties (TFRP) are the assessments made against responsible business officers of a company that have not paid the taxes it withholds from employees’ wages, such as Social Security or individual income tax withholding to the IRS. The IRS may record assessments against each of several individuals for the employee-withholding component of payroll tax liability of a given business in an effort to collect the total tax liability of the business. Although assessed against multiple parties, the liability need only be paid once. Thus two or more assessments exist for the same tax liability. For financial reporting purposes only, one can be considered the account of record and the others are duplicates.
Unexpended Balance is the sum of the unobligated and obligated balances in an account.
U.S. Standard General Ledger (USSGL) Chart of Accounts is a chart of accounts (and technical guidance) established to support the consistent recording of financial events as well as the preparation of standard external reports required by OMB and the Department of the Treasury. Agencies are required by law to implement and maintain financial management systems that comply substantially with, among other things, the USSGL. It contains two complete and separate, but integrated, self-balancing sets of accounts—budgetary and proprietary.
Unobligated Balance means the cumulative amount of budget authority that is not obligated and that remains available for obligation under law.
For an appropriation account that is available for a fixed period, the budget authority expires after the period of availability ends but its unobligated balance remains available for 5 additional fiscal years for recording and adjusting obligations properly chargeable to the appropriations period of availability. For example, an expired, unobligated balance remains available until the account is closed to record previously unrecorded obligations or to make upward adjustments in previously under-recorded obligations, such as contract modifications properly within scope of the original contract. At the end of the fifth fiscal year, the account is closed and any remaining balance is canceled.
For a no-year account, the unobligated balance is carried forward indefinitely until specifically rescinded by law or the head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made from the appropriation for two consecutive years.
Unpaid Assessments are legally enforceable claims against taxpayers and consist of taxes, penalties and interest that have not been collected or abated. Unpaid assessments result from taxpayer filing returns without sufficient payments, as well as from IRS enforcement programs such as examination, under-reporter, substitute for return and combined annual wage reporting. Unpaid assessments are generally created when:
A taxpayer files a return without full payment,
An IRS audit identifies additional amounts owed, and
IRS makes adjustments (for example correction of taxpayer’s math error) to correct inaccuracies on the return.
IRS creates additional unpaid assessments as a part of its enforcement programs. These enforcement programs generally identify taxpayers who failed to:
File or timely file the required Federal returns,
Accurately report their taxes,
Voluntarily pay the amount of taxes due to the Government .
The IRS classifies its total unpaid assessments inventory into the following four categories:
Unpostables (UP) is a term used to describe data that cannot be posted (updated) to a master file due to an unprocessible condition such as an incorrect TIN, date or transaction code.
User Fee/User Charge is a fee assessed to users for goods or services provided by the Federal Government. User fees generally apply to Federal programs or activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public. User fees are normally related to the cost of the goods or services provided. Once collected, they must be deposited into the general fund of the Treasury, unless the agency has specific authority to deposit the fees into a special fund of the Treasury. An agency may not obligate against fees collected without specific statutory authority. From an economic point of view, user fees may also be collected through a tax such as an excise tax. Since these collections result from the Government’s sovereign powers, the proceeds are recorded as governmental receipts, not as offsetting receipts or offsetting collections.
Write-Offs consist of unpaid assessments for which the IRS does not expect further collections due to factors such as taxpayers’ bankruptcy, insolvency or death. These amounts are not reported on the balance sheet but disclosed in supplementary information. Statutory provisions require that IRS maintain these accounts until the statute for the collection expire. The statutory period for collection is generally 10 years from the date IRS records the tax assessment.
Yearend Closing Statement (FMS 2108) is the form used to close obligated and unobligated balances in annual and multi-year accounts.
The following is a list of acronyms used within Revenue Financial Management.
ACRONYMS ACS Automated Collection System AICPA American Institute of Certified Public Accountants ALC Agency Location Code ARDI Accounts Receivable Dollar Inventory ATB Adjusted Trial Balance BA Budget Authority BEA Budget Enforcement Act BMF Business Master File CADE Customer Account Data Engine CDDB Custodial Detail Database CFR Consolidated Financial Report of the United States Government CNC Currently Not Collectible CVS Classical Variable Sampling EFT Electronic Funds Transfer EFTPS Electronic Federal Tax Payment System EIN Employer Identification Number EITC Earned Income Tax Credit ERS Error Resolution System FACTS II Federal Agencies’ Centralized Trial Balance System FASAB Federal Accounting Standards Advisory Board FASB Financial Accounting Standards Board FAST Book Federal Account Symbols and Titles Book FBWT Fund Balance with Treasury FEDTAX Federal Agency Tax Payments and Returns FICA Federal Insurance Contribution Act FMIS Financial Management Information System FMS Financial Management Service FPAs Federal Program Agencies FR Financial Report of the U.S. Government FRB Federal Reserve Bank FTD Federal Tax Deposit FUTA Federal Unemployment Tax Act FY Fiscal Year GAAP Generally Accepted Accounting Principles GAO Government Accountability Office GPRA Government Performance and Results Act GWA Government-Wide Accounting IDRS Integrated Data Retrieval System IEI Invitation for Expression of Interest IFM Internal Financial Management IMF Individual Master File IPAC Intragovernmental Payment and Collection System IRACS Interim Revenue Accounting Control System IRM Internal Revenue Manual IRS Internal Revenue Service ISRP Integrated Submission and Remittance Processing System MFC Matters for Further Consideration MTS Monthly Treasury Statement MUS Monetary Unit Sampling NET Non-Expenditure Transfer NMF Non-Master File NTFL Notice of Federal Tax Lien NTRR Net Tax Refund Report OMB Office of Management and Budget PAR Performance and Accountability Report PBC Prepared by Client PCA Private Collection Agency RFC Regional Financial Center RFM Revenue Financial Management RRACS Redesigned Revenue Accounting Control System SCA Statement of Custodial Activity SFFAC Statement of Federal Financial Accounting Concepts SFFAS Statement of Federal Financial Accounting Standards SOA Statement of Accountability SOD Statement of Differences SOT Statement of Transactions SSN Social Security Number TAFS Treasury Appropriation Fund Symbol TAS Treasury Account Symbol TDI Taxpayer Delinquency Investigation TFM Treasury Financial Manual TFRP Trust Fund Recovery Penalty TFS Treasury Fund Symbol TIER Treasury Information Executive Repository TIN Taxpayer Identification Number TRCAT Taxpayer Service Returns Processing Category TRO Tax Refund Offset UA Unpaid Assessments UP Unpostables U.S. United States USSGL U.S. Government Standard General Ledger UWR Unified Work Request
Additional information for the use and applicability of Federal financial management terms and definitions, is available through the following oversight agency guidance.
Federal Accounting Standards Advisory Board at: http://fasab.gov/
SFFAS 1: Accounting for Selected Assets and Liabilities
SFFAS 5: Accounting for Liabilities of the Federal Government
SFFAS 7: Accounting for Revenue and Other Financing Sources
SFFAS 7: Implementation Guide
SFFAS 15: Management's Discussion and Analysis - Standards
SFFAS 24: Selected Standards for the Consolidated Financial Report of the United States Government
SFFAS 27: Identifying and Reporting Earmarked Funds
SFFAS 31: Accounting for Fiduciary Activities
SFFAS 32: Consolidated Financial Report of the United States Government Requirements
Exposure Draft: The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board
Financial Management Service at: http://fms.treas.gov/
Chapter 1000: Introduction
Chapter 1500: Description of Accounts Relating to Financial Operations
Chapter 2000: Warrant and Nonexpenditure Transfer (NET) Transactions
Chapter 2500: Expenditure Transactions Between Appropriation, Fund, and Receipt Accounts
Chapter 3100: Instructions for Disbursing Officers' Reports
Chapter 3300: Statement of Transactions (FMS 224) Reporting by Agencies for Which the Treasury Disburses
Chapter 3500: Daily Transmittal for Internal Revenue Service
Chapter 3900: Reconciliation to Financial Management Service (FMS) Accounting Results
Chapter 4700: Agency Reporting Requirements for the Financial Report of the United States Government
Chapter 5100 Reconciling Fund Balance with Treasury Accounts
Federal Account Symbols and Titles Booklet (supplement to the TFM)
Government Accountability Office at: http://www.gao.gov/
Financial Audit: IRS's Fiscal Years 2008 and 2007 Financial Statements, November 10, 2008
Revenue Receipts Cycle Memorandum, 2007/2008
Unpaid Assessments Cycle Memorandum, 2008
Refund Cycle Memorandum, 2007
Financial Reporting Cycle Memorandum, 2008
A Glossary of Terms Used in the Federal Budget Process
Internal Revenue Service:
IRS Processing Codes Information, Document 6209
Office of Management and Budget at: http://www.whitehouse.gov/omb/agency/default/
A-11: Preparation, Submission and Execution of the Budget
A-136: Financial Reporting Requirements