Tax Administration:

IRS' 1999 Tax Filing Season

GGD-00-37: Published: Dec 15, 1999. Publicly Released: Dec 15, 1999.

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Pursuant to a congressional request, the GAO discussed the Internal Revenue Service's (IRS) performance during the 1999 tax filing season, focusing on: (1) telephone service; (2) availability of walk-in services; (3) other taxpayer service efforts; (4) Earned Income Credit (EIC) noncompliance; (5) electronic filing; (6) implementation of recent tax law changes; and (7) implementation of a new return and remittance processing system.

GAO noted that: (1) IRS met or exceeded its 1999 goals for several performance measures, but fell short of its goals in two key areas - taxpayers' ability to access IRS' toll-free telephone service and the quality of IRS' responses to taxpayers tax law questions; (2) certain features of IRS' methodology for measuring the quality of responses to tax law questions also warranted IRS' attention; (3) the timeliness of refunds for paper returns raised some questions about IRS' timeliness that IRS could not answer; (4) IRS attempted to improve telephone service in 1999, however, service did not improve, but deteriorated; (5) GAO's work indicated this deterioration resulted from (a) unrealistic assumptions about the implementation and impact of IRS' changes, and (b) other problems managing staff training and scheduling and implementing new technology; (6) IRS enhanced the availability of its walk-in services by increasing Saturday hours and making services more accessible to taxpayers who did not have convenient access to a walk-in office; (7) IRS did a better job of measuring walk-in customer satisfaction in 1999 than 1998; (8) however, IRS made little progress in measuring the quality and timeliness of its walk-in services; (9) use of IRS' World Wide Web site on the Internet increased significantly during the 1999 filing season, but IRS data pointed to problems with taxpayers getting answers to tax law questions via electronic mail; (10) IRS stopped millions of dollars in erroneous EIC claims in 1999 by validating social security numbers and scrutinizing certain claims; (11) IRS implemented new procedures (called recertification) in 1999 that require certain taxpayers to document their eligibility for the EIC before IRS approves their claim; (12) GAO identified certain opportunities to streamline the recertification process and thus make it less burdensome to taxpayers and IRS; (13) IRS service centers were not consistently following the national guidelines for recertification, which could result in disparate treatment of taxpayers; (14) IRS implemented several initiatives in 1999 directed at making electronic filing paperless and thus more appealing to potential users; (15) 20 percent of the returns filed in 1999 included the new child tax credit; (16) many of those taxpayers erred in calculating the credit amount, while others who were eligible for the credit failed to claim it; (17) correction of these errors increased IRS' processing workload; (18) IRS made significant changes to the computer systems it uses to process returns and remittances; and (19) IRS accomplished those changes without any discernible processing disruptions.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to ensure that all service centers implement the recertification procedures according to national guidelines to avoid possible disparate treatment of taxpayers.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, guidelines were developed and issued to each service center and reviews have been/are being conducted to assess conformance to those guidelines. However, GAO's continuing work in the area indicates that IRS' 10 service centers may still be doing certain things inconsistently.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to, if IRS continues using Form 8862 for recertification purposes, redesign the form to include reference to the documentation listed on Form 886-H and any other documentation that IRS thinks is necessary for recertification so that taxpayers who are required to recertify know as early as possible what documentation is required for recertification.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Not Implemented

    Comments: IRS has made no change to Form 8862, and no change seems forthcoming.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to, if IRS does not rely on Form 8862 for recertification purposes, discontinue its use.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Not Implemented

    Comments: IRS has decided to continue using Form 8862, at least for the foreseeable future.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to implement a program for assessing the performance of IRS' walk-in sites. As part of that program, require that quality reviews be done, provide sufficient guidance to ensure that the reviews are done consistently and address appropriate issues, and require that data on the results of quality reviews and wait-time monitoring (whether done automatically or manually) be reported to a central location for analysis.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, and as confirmed during GAO's review of the 2000 tax filing season, it has implemented a quality review program to measure the quality and timeliness of service at walk-in sites and its statisticians have determined the number of offices and visits needed to ensure that it has a valid sample size. After quality reviews are completed, results are to be incorporated into the walk-in national database for analysis. Also, wait time monitoring results are now reported monthly to headquarters for analysis.

    Recommendation: The Commissioner of the Internal Revenue should direct the appropriate officials to analyze the effect of not achieving the planned sample size for monitoring the accuracy of responses to tax law calls and use the results of that analysis to design the sample used in future monitoring.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, it completed an analysis of the effect of not achieving the planned sample size for monitoring the accuracy of tax law changes and, based on that analysis, started the process to fill 20 additional positions at its Centralized Quality Review site. With that additional staff, IRS says that it will be able to meet the desired plan for monitoring tax law and other telephone calls.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to analyze the results of the refund timeliness tests to determine, among other things, why about 15 percent of the refunds took longer than 40 days to issue and what the test results showed for returns that were filed error-free.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, it did a preliminary analysis of the data on 1999 refunds that took longer than 40 days to issue and decided, based on that analysis, that a more detailed review would not produce data that would result in better service to taxpayers. Instead, IRS has revised its methodology for measuring refund timeliness that changes the starting point for the measure. Instead of using the date the taxpayer signed the return, which IRS felt did not always reflect when the return was mailed, IRS will now be using the date it receives the return as the starting point. That change could, by itself, reduce the extent to which IRS exceeds the 40-day refund issuance goal.

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