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entitled 'Tax Administration: Interim Results of IRS's 2009 Filing 
Season' which was released on June 4, 2009. 

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Report to the Subcommittee on Oversight, Committee on Ways and Means, 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

June 2009: 

Tax Administration: 

Interim Results of IRS's 2009 Filing Season: 

GAO-09-640: 

GAO Highlights: 

Highlights of GAO-09-640, a report to the Subcommittee on Oversight, 
Committee on Ways and Means, House of Representatives. 

Why GAO Did This Study: 

Every tax filing season, the Internal Revenue Service (IRS) must 
quickly and accurately process Americans’ tax returns, issue refunds, 
and answer taxpayers’ questions. The 2009 filing season, when 2008 tax 
returns are filed, was especially challenging because of stimulus-
related tax law changes and IRS’s expanded assistance to financially 
distressed taxpayers, such as adding flexibility for taxpayers to 
settle a tax liability for less than the full amount owed. 

Because of the magnitude and importance of the 2009 filing season, GAO 
was asked to (1) assess IRS’s performance in processing individual 
income tax returns and providing taxpayer assistance, (2) describe 
taxpayer use of refund anticipation loans (RAL) and refund anticipation 
checks (RAC), and (3) identify what IRS knows about the number of 
taxpayers using its expanded assistance to financially distressed 
taxpayers. GAO analyzed performance data from IRS, compared the 
performance to prior years and selected goals, and interviewed IRS 
officials and external stakeholders. 

What GAO Found: 

IRS processed 127 million individual income tax returns, with 91 
million filed electronically, as of May 15, 2009. Electronic filing 
reduces processing costs. IRS also issued 103 million refunds for $276 
billion. IRS’s Customer Account Data Engine (CADE), its new, partially 
completed taxpayer account data base, processed 39 million tax returns—
important because CADE processes refunds faster. However, because of 
concerns over increasing complexities in system development, IRS has 
stopped work on CADE pending a strategy review. Regarding taxpayer 
assistance, IRS reduced its goal for telephone access. It set the 2009 
goal for the percentage of taxpayers seeking assistor help who actually 
receive it at 77 percent. IRS’s actual performance averaged 66 percent 
through May 9, but fluctuated. For example, in February, unexpected 
high call volume drove down the percentage of callers seeking assistor 
help who were able to get through. One factor contributing to the high 
call volume was stimulus-related questions. 

Figure: Weekly Calls and Percentage of Callers Seeking Assistor Help 
Who Got It, 2009: 

[Refer to PDF for image: combination stacked vertical bar and line 
graph] 

Date: January 3; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: January 10; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: January 17; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: January 24; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: February 7; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: February 14; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: February 21; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: February 28; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: March 7; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: March 14; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: March 21; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: March 28; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: April 4; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: April 11; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: April 18; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: April 25; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: May 2; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Date: May 9; 
Caller abandons: 
IRS disconnects or busy: 
Automated calls answered: 
Assistor calls answered: 
Percentage of callers seeking and receiving live assistance: 

Source: GAO analysis of IRS data. 

[End of figure] 

Compared to last year, the number of taxpayers requesting a RAL, a 
short term often high interest loan made by paid tax preparers or banks 
in anticipation of a refund, declined by 15 percent to 8.4 million. The 
number of RAC requests, which are not loans, but are taxpayer refunds 
deposited into a temporary bank account from which return preparation 
fees can be paid, increased by 10 percent to 11.5 million. 

IRS is tracking the number of taxpayers taking advantage of expanded 
flexibilities in its program that allows taxpayers to settle a tax 
liability for less than the full amount owed. However, IRS does not 
have plans to track the number of taxpayers using other program 
expansions, in part, because of the difficulty of attributing increases 
to its actions. 

What GAO Recommends: 

GAO is not making any new recommendations in this report. 

IRS officials provided technical comments on report findings, which 
were incorporated where appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-09-640] or key 
components. For more information, contact James R. White at (202) 512-
9110 or whitej@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results: 

Agency Comments: 

Appendix I: Updated Slides from the May 28, 2009 Briefing: 

Abbreviations: 

AGI: Adjusted Gross Income: 

CADE: Customer Account Data Engine: 

IRS: Internal Revenue Service: 

RAC: refund anticipation checks: 

RAL: refund anticipation loans: 

RRC: recovery rebate credit: 

Recovery Act: The American Recovery and Reinvestment Act of 2009: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

June 3, 2009: 

The Honorable John Lewis: 
Chairman: 
The Honorable Charles W. Boustany, Jr. 
Ranking Member: 
Subcommittee on Oversight: 
Committee on Ways and Means: 
House of Representatives: 

Every tax filing season is an enormous undertaking for the Internal 
Revenue Service (IRS). It must quickly and accurately process well over 
100 million tax returns, issue close to 100 million refunds, and answer 
tens of millions of taxpayer questions. The 2009 filing season, when 
2008 tax returns are filed, was especially challenging because of 
stimulus-related tax law changes and the recession. The rebate credit 
in the Economic Stimulus Act of 2008 allowed taxpayers who did not 
receive the full economic stimulus payment last year to claim some or 
all of the unpaid credit on their 2008 return, if eligible.[Footnote 1] 
The American Recovery and Reinvestment Act of 2009 (Recovery Act) 
includes some provisions, such as a first-time homebuyers credit, that 
affected 2008 tax returns and generated taxpayer inquiries.[Footnote 2] 
Additionally, IRS expanded assistance to financially distressed 
taxpayers. For example, IRS expanded flexibilities in its Offer in 
Compromise program--a program where IRS reaches an agreement with a 
taxpayer that settles the taxpayer's tax liability for less than the 
full amount owed. 

Because of the magnitude and importance of the 2009 filing season, you 
requested that we: 

* assess IRS's filing season performance in processing tax year 2008 
individual income tax returns and providing taxpayer assistance, 
compared to prior years' performance and compared to selected 
performance goals;[Footnote 3] 

* describe taxpayer usage of refund anticipation loans (RAL) and refund 
anticipation checks (RAC);[Footnote 4] and: 

* identify what IRS knows about the number of taxpayers taking 
advantage of its assistance to financially distressed taxpayers. 

To assess IRS's performance, we obtained and analyzed IRS's performance 
and production data and compared it to annual goals and prior years' 
performance, viewed IRS operations, reviewed relevant external 
documentation including our reports and reports of the Treasury 
Inspector General for Tax Administration, and interviewed IRS officials 
and external stakeholders. We conducted our work primarily at IRS 
Headquarters in Washington, D.C., and division and field offices 
including in Atlanta, Georgia. We previously assessed IRS filing season 
performance data for reliability. For example, we considered filing 
season performance measures and data that cover the quality, 
accessibility, and timeliness of IRS's services to be objective and 
reliable based on that work. Since the data sources and procedures for 
producing this year's filing season data have not significantly changed 
from prior years, we determined that the data were sufficiently 
reliable for the purposes of this report. To the extent possible, we 
corroborated information from interviews with documentation and data 
and where not possible, we report the information as attributed to IRS 
officials. We conducted this performance audit from January through May 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our objectives. 

Results: 

On May 28, 2009, we briefed subcommittee staff on IRS's filing season 
performance to date. This report transmits updated materials used at 
the briefing and reprinted in appendix I. 

IRS: 

* processed 127 million individual income tax returns, and issued 103 
million refunds, for $276 billion, as of May 15, 2009, with overall 
refund timeliness comparable to last year; 

* dealt with millions of unexpected taxpayer errors calculating the 
RRC, which delayed some refunds for up to 7 days; 

* received 91 million returns, or 72 percent, electronically which 
reduced the need for labor intensive processing of paper returns; 

* processed 39 million tax returns on the Customer Account Data Engine 
(CADE), the new, partially completed taxpayer accounts database, 27 
percent more than last year; 

* stopped work on CADE, due to IRS's concerns over increasing 
complexities in system development, pending a strategy review, which 
raises questions about CADE's future growth;[Footnote 5] 

* reduced its goal for taxpayer access to telephone assistors; and: 

* experienced continued unexpected high call volume, some of it 
stimulus-related, that caused telephone performance to fluctuate 
throughout the filing season. 

The number of taxpayers requesting a RAL, a short-term, often high- 
interest loan made by paid preparers or banks to taxpayers in 
connection with the tax return, decreased 15 percent from last year to 
8.4 million. The number of taxpayers requesting a RAC, which is not a 
loan, but is where taxpayer refunds are deposited into a temporary bank 
account from which return preparation fees can be paid, increased 10 
percent compared to last year to 11.5 million. IRS officials have 
stated that the need for RALs and RACs can be reduced by, for example, 
shortening the time it takes to receive a refund. 

IRS is tracking the number of taxpayers taking advantage of its 
expanded flexibilities in its Offer in Compromise program. However, IRS 
does not have plans to track the number of taxpayers using expansions 
of other programs, in part, because of the difficulty of attributing 
increases to its actions. 

Appendix I provides more details on IRS's 2009 filing season 
performance. 

Agency Comments: 

IRS officials provided technical comments for this report, which we 
incorporated where appropriate. 

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of the report until 30 days 
after its date. At that time, we will send copies of this report to the 
Chairman and Ranking Members of other Senate and House committees and 
subcommittees that have appropriation, authorization, and oversight 
responsibilities for IRS. We are also sending copies to the 
Commissioner of Internal Revenue, the Secretary of the Treasury, the 
Chairman of the IRS Oversight Board, and the Director of the Office of 
Management and Budget. Copies are also available at no charge on the 
GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions or wish to discuss the material 
in this report further, please contact me at (202) 512-9110 or at 
whitej@gao.gov. Contact points for our offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. GAO staff who made contributions are Vida Awumey, Kara Eusebio, 
Angela Leventis, Natalie Maddox, Neil A. Pinney, Joanna M. Stamatiades, 
and Sabrina C. Streagle. 

Signed by: 

James R. White: 
Director, Tax Issues Strategic Issues: 

[End of section] 

Appendix I: Updated Slides from the May 28, 2009 Briefing: 

Updated Slides from the May 28, 2009 Briefing: 

Subcommittee on Oversight, House Committee on Ways and Means on the 
Interim Results of Internal Revenue Service’s (IRS) 2009 Filing Season: 

Objectives, Scope, and Methodology: 

Our objectives are to: 

1. assess IRS’s 2009 filing season performance in processing tax year 
2008 individual income tax returns and providing taxpayer assistance 
including telephone service, compared to prior years’ performance and 
compared to selected performance goals; 

2. describe taxpayer usage of refund anticipation loans (RAL) and 
refund anticipation checks (RAC); and; 

3. identify what IRS knows about the number of taxpayers taking 
advantage of its assistance to financially distressed taxpayers. 

We reviewed performance and production data, IRS strategic plans and 
goals, IRS and other external reports, observed IRS operations, 
attended performance meetings, and interviewed IRS officials and 
external stakeholders. 

We previously assessed IRS filing season performance data for 
reliability. We considered performance measures and data that cover the 
quality,accessibility, and timeliness of IRS’s services to be objective 
and reliable based on that work. Since the data sources and procedures 
have not significantly changed from prior years, we determined that the 
data were sufficiently reliable for the purposes of this report. To the 
extent possible, we corroborated information from interviews and where 
not possible, we attributed the information. We conducted this 
performance audit at IRS headquarters in Washington, D.C. and division 
and field offices including in Atlanta, Ga. from January through May 
2009, in accordance with generally accepted government auditing 
standards and as part of our ongoing filing season work. 

Results in Brief: 

1. For the 2009 filing season: 

* IRS processed 127 million returns, 72 percent of which have been 
filed electronically, and issued 103 million refunds. The dollar amount 
of refunds have increased by $43.5 billion (19 percent) compared to 
last year; 

* Customer Account Data Engine (CADE) processing increased, but future 
growth is uncertain because IRS has stopped work on CADE pending a 
strategy review due to concerns over increasing complexities in system 
development; and; 

* IRS reduced its goal for telephone access and performance fluctuated 
during the filing season. 

2. The number of taxpayers requesting RALs from paid preparers or banks 
decreased to 8.4 million, while the number of taxpayers requesting RACs 
increased to 11.5 million. 

3. IRS is tracking the number of taxpayers using some, but not all of 
its expanded assistance to financially distressed taxpayers. 

Despite challenges, processing of returns and refunds was comparable to 
last year: 

Recent tax law changes created additional processing and taxpayer 
assistance workload for IRS. 

* The Economic Stimulus Act of 2008 contained the recovery rebate 
credit (RRC), which authorized last year’s economic stimulus payments 
and allowed for taxpayers that did not receive the full economic 
stimulus payment to receive some or all of the unpaid credit if they 
became eligible with their 2008 return. 

* The American Recovery and Reinvestment Act of 2009 (Recovery Act) 
includes some provisions, such as the first-time home buyer credit, 
which affected 2008 returns and generated taxpayer inquiries. 

IRS’s Web site also listed five areas of expanded assistance to 
financially distressed taxpayers, including adding flexibility for 
missing an installment agreement payment. 

Dollar amount of refunds and number of direct deposited refunds 
increased by 9 percent or more: 

As of May 15, 2009, IRS has processed over 127 million individual tax 
returns. Of those returns, 91 million, or 72 percent have been filed 
electronically. 

Electronic filing is important because: 

* taxpayers get their refunds faster, 
* processing is more accurate and costs are lower to IRS, and, 
* more return information is available for research and enforcement 
than with paper returns. 

Overall refund timeliness was similar to last year. 

Table 1: Number of refunds and amounts: 

Refunds: Number of refunds (in millions); 
2007: 98.3; 
2008: 99.1; 
2009: 103.3; 
Percentage change from 2008 to 2009: 4.2%. 

Refunds: Dollar amount of refunds (in billions); 
2007: $221.3; 
2008: $232.8; 
2009: $276.4; 
Percentage change from 2008 to 2009: 18.7%. 

Refunds: Number of direct deposits (in millions); 
2007: 59.7; 
2008: 64.5; 
2009: 70.6; 
Percentage change from 2008 to 2009: 9.4%. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 18, 2007, May 16, 2008, and May 15, 
2009. 

[End of table] 

Returns processed on CADE increased: 

Table 2: CADE Processing: 

CADE: Returns processed (in millions); 
2008: 30.3; 
2009: 38.6. 

CADE: Refunds issued (in millions); 
2008: 28.7; 
2009: 34.4. 

CADE: Dollar amount of refunds issued (in billions); 
2008: $43.8; 
2009: $57.8. 

CADE: Payments received[A](in millions); 
2008: N/A; 
2009: 7.0. 

CADE: Dollar amount of payments received(in billions); 
2008: N/A; 
2009: $9.2. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 16, 2008 and May 15, 2009. 

[A] Beginning this year, CADE has the capability of processing certain 
returns with payments. 

NA Means not applicable. 

Although CADE processed almost 28 percent more returns this year than 
last year, future growth is uncertain given that IRS has stopped work 
on CADE while rethinking its strategy for managing taxpayers’ accounts 
because of concerns over increasing complexities in system development. 

CADE processes returns and refunds between 1-8 days faster than legacy 
systems. 

[End of table] 

Free File usage declined: 

IRS officials attribute the decline to free commercial tax software 
offered outside of the free file program.[Footnote 6] 

Table 3: Use of the Free File Program and Fillable Forms (in millions): 

Free File: 
2008: 4.6; 
2009: 2.9. 

Fillable forms[A]: 
2008: N/A; 
2009: 0.3. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 22, 2008 and May 21, 2009. 

[A] For the 2009 filing season, taxpayers can now fill out electronic 
versions of some of the most common tax forms, and submit them online 
for free. 

NA means not applicable. 

[End of table] 

Electronic filing continued to increase and generate staff savings: 

Figure 1: Number of Individual Returns and IRS Staff Years for 
Individual Paper and Electronic Processing: 

[Refer to PDF for image: combination stacked vertical bar and line 
graph] 

Fiscal year: 1999; 
Staff years devoted to paper filing: 4,384; 
Staff years devoted to electronic filing: 280; 
Electronic returns processed: 29.3 million; 
Paper returns processed: 96.6 million.  

Fiscal year: 2000; 
Staff years devoted to paper filing: 4,108; 
Staff years devoted to electronic filing: 274; 
Electronic returns processed: 35.4 million; 
Paper returns processed: 92.9 million. 

Fiscal year: 2001; 
Staff years devoted to paper filing: 4,290
Staff years devoted to electronic filing: 302; 
Electronic returns processed: 40.2 million; 
Paper returns processed: 90.2 million. 

Fiscal year: 2002; 
Staff years devoted to paper filing: 4,207; 
Staff years devoted to electronic filing: 265; 
Electronic returns processed: 46.8 million; 
Paper returns processed: 84.6 million. 

Fiscal year: 2003; 
Staff years devoted to paper filing: 3,613; 
Staff years devoted to electronic filing: 226; 
Electronic returns processed: 54.6 million; 
Paper returns processed: 78.3 million. 

Fiscal year: 2004; 
Staff years devoted to paper filing: 3,281; 
Staff years devoted to electronic filing: 253; 
Electronic returns processed: 61.3 million;  
Paper returns processed: 70.2 million. 

Fiscal year: 2005; 
Staff years devoted to paper filing: 3,060; 
Staff years devoted to electronic filing: 208; 
Electronic returns processed: 68.2 million; 
Paper returns processed: 64.9 million. 

Fiscal year: 2006; 
Staff years devoted to paper filing: 2,815; 
Staff years devoted to electronic filing: 155; 
Electronic returns processed: 72.8 million; 
Paper returns processed: 61.9 million.  

Fiscal year: 2007; 
Staff years devoted to paper filing: 2,710; 
Staff years devoted to electronic filing: 152; 
Electronic returns processed: 79.6 million; 
Paper returns processed: 59.4 million. 

Fiscal year: 2008; 
Staff years devoted to paper filing: 2,509; 
Staff years devoted to electronic filing: 185; 
Electronic returns processed: 89.3 million; 
Paper returns processed: 51.6 million; 

Fiscal year: 2009[A]; 
Staff years devoted to paper filing: 2,183; 
Staff years devoted to electronic filing: 187; 
Electronic returns processed: 93.3 million; 
Paper returns processed: 46.9 million. 

Fiscal year: 2010[A]; 
Staff years devoted to paper filing: 1,981; 
Staff years devoted to electronic filing: 197; 
Electronic returns processed: 98.3 million; 
Paper returns processed: 43.6 million. 

Source: GAO analysis of IRS data. 

[End of figure] 

Taxpayer errors calculating RRC delayed some refunds early in the 
filing season: 

Millions of tax returns had RRC errors, which resulted in a delay in 
refund timeliness from 1 day to a week. IRS took actions to address the 
errors including: 

* developing an automated tool to correct the errors more quickly (the 
errors affected returns filed early in the filing season, which are 
predominately electronic), 

* outreaching to paid preparers and other stakeholders, and, 

* developing a new notice that is designed to better explain IRS’s 
actions in correcting the error. 

Table 4: Comparison of Total Expected to Actual Errors on Electronic 
and Paper Individual Tax Returns (in millions): 

Returns: Electronic; 
Returns with errors, expected: 2.1; 
Returns with errors, actual: 9.2. 

Returns: Paper; 
Returns with errors, expected: 9.9; 
Returns with errors, actual: 11.6. 

Returns: Total; 
Returns with errors, expected: 12.1; 
Returns with errors, actual: 20.8. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 15, 2009. 

[End of table] 

IRS reduced its goal to taxpayer access to telephone assistors: 

IRS officials said that they reduced goals because of resource 
tradeoffs. 

Table 5: IRS telephone assistance goals (Fiscal years 2005–2009): 

Percentage of callers seeking and receiving assistance: 
2005: 82%; 
2006: 82%; 
2007: 82%; 
2008[A]: 82%; 
2009: 77%. 

Source: GAO analysis of IRS data. 

[A] According to IRS officials, IRS revised its original goal of 82 
percent down to 74 percent due to the increase in call volume related 
to the economic stimulus. 

[End of table] 

As of early May 2009, taxpayer access to IRS assistors was lower than 
2008: 

Table 6: Calls to IRS (in millions): 

Assistor calls answered: 
2007: 16.7; 
2008: 19.6; 
2009: 20.3. 

Automated calls answered: 
2007: 19.0; 
2008: 25.6; 
2009: 23.1. 

Abandoned calls: 
2007: 10.4; 
2008: 17.1; 
2009: 17.8. 

Busies and IRS disconnects: 
2007: 0.9; 
2008: 4.1; 
2009: 5.1. 

Total calls to IRS: 
2007: 47.0; 
2008: 66.4; 
2009: 66.3. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 12, 2007, May 10, 2008 and May 9, 2009. 

[End of table] 

Table 7: Percentage of Callers Receiving Assistance and Average Wait 
Time: 

Percentage of callers seeking and receiving assistance: 
2007: 82.4; 
2008: 69.6%; 
2009: 65.5%. 

Average wait time (in minutes): 
2007: 4.2; 
2008: 6.5; 
2009: 8.5. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 12, 2007, May 10, 2008 and May 9, 2009. 

[End of table] 

Reasons for call demand and effect on telephone operations: 

IRS anticipated an increased call volume in part because it replaced 
the electronic signature form (Form 8453) with a personal 
identification number—creation of the personal identification number 
required the prior year’s adjusted gross income (AGI)—and because of 
math error notices due to incorrect calculations of RRC. Call demand 
also increased as a result of taxpayer inquiries related to tax law 
changes. 

* IRS took actions to minimize the effect of these calls, including 
implementing new announcements on its telephone lines instructing 
customers on where to find AGI on their prior year return, changing RRC 
error notices to inform taxpayers that no further action was required, 
and adding an RRC calculator to IRS’s web site to help taxpayers 
accurately calculate their credit amounts. 

As of May 9, 2009, AGI assistor demand was twice as much as IRS 
expected—5 million versus 2.4 million in projected demand. Conversely, 
RRC assistor demand also exceeded plan with 3.7 million actual attempts 
as compared to 3.3 million in projected demand. 

As Figure 2 shows, IRS's telephone assistance performance fluctuated 
during the year. 

Call volume and accessibility fluctuated during 2009: 

Figure 2: Weekly Toll-free Calls and Percentage of Callers Seeking and 
Receiving Live Assistance: 

[Refer to PDF for image: combination stacked vertical bar and line 
graph] 

Date: January 3; 
Caller abandons: 0.03 million; 
IRS disconnects or busy: 0; 
Automated calls answered: 0.01 million; 
Assistor calls answered: 0.1 million; 
Percentage of callers seeking and receiving live assistance: 91%. 

Date: January 10; 
Caller abandons: 0.41 million; 
IRS disconnects or busy: 0.03 million; 
Automated calls answered: 0.1 million; 
Assistor calls answered: 0.65 million; 
Percentage of callers seeking and receiving live assistance: 75%. 

Date: January 17; 
Caller abandons: 0.29 million; 
IRS disconnects or busy: 0.02 million; 
Automated calls answered: 0.21 million; 
Assistor calls answered: 0.71 million; 
Percentage of callers seeking and receiving live assistance: 91%. 

Date: January 24; 
Caller abandons: 0.61 million; 
IRS disconnects or busy: 0.13 million; 
Automated calls answered: 0.86 million; 
Assistor calls answered: 0.75 million; 
Percentage of callers seeking and receiving live assistance: 68%. 

Date: January 31; 
Caller abandons: 1.51 million; 
IRS disconnects or busy: 0.19 million; 
Automated calls answered: 1.97 million; 
Assistor calls answered: 1.25 million; 
Percentage of callers seeking and receiving live assistance: 66%. 

Date: February 7; 
Caller abandons: 1.87 million; 
IRS disconnects or busy: 0.81 million; 
Automated calls answered: 2.71 million; 
Assistor calls answered: 1.43 million; 
Percentage of callers seeking and receiving live assistance: 52%. 

Date: February 14; 
Caller abandons: 1.59 million; 
IRS disconnects or busy: 0.43 million; 
Automated calls answered: 2.81 million; 
Assistor calls answered: 1.43 million; 
Percentage of callers seeking and receiving live assistance: 61%. 

Date: February 21; 
Caller abandons: 1.41 million; 
IRS disconnects or busy: 1.39 million; 
Automated calls answered: 2.71 million; 
Assistor calls answered: 1.09 million; 
Percentage of callers seeking and receiving live assistance: 38%. 

Date: February 28; 
Caller abandons: 1.53 million; 
IRS disconnects or busy: 0.48 million; 
Automated calls answered: 2.03 million; 
Assistor calls answered: 1.39 million; 
Percentage of callers seeking and receiving live assistance: 58%. 

Date: March 7; 
Caller abandons: 1.14 million; 
IRS disconnects or busy: 0.44 million; 
Automated calls answered: 1.65 million; 
Assistor calls answered: 1.3 million; 
Percentage of callers seeking and receiving live assistance: 62%. 

Date: March 14; 
Caller abandons: 0.84 million; 
IRS disconnects or busy: 0.04 million; 
Automated calls answered: 1.31 million; 
Assistor calls answered: 1.27 million; 
Percentage of callers seeking and receiving live assistance: 84%. 

Date: March 21; 
Caller abandons: 0.83 million; 
IRS disconnects or busy: 0.04 million; 
Automated calls answered: 1.16 million; 
Assistor calls answered: 1.21 million; 
Percentage of callers seeking and receiving live assistance: 83%. 

Date: March 28; 
Caller abandons: 0.9 million; 
IRS disconnects or busy: 0.03 million; 
Automated calls answered: 1.08 million; 
Assistor calls answered: 1.11 million; 
Percentage of callers seeking and receiving live assistance: 75%. 

Date: April 4; 
Caller abandons: 0.88 million; 
IRS disconnects or busy: 0.04 million; 
Automated calls answered: 0.95 million; 
Assistor calls answered: 1.18 million; 
Percentage of callers seeking and receiving live assistance: 78%. 

Date: April 11; 
Caller abandons: 0.81 million; 
IRS disconnects or busy: 0.04 million; 
Automated calls answered: 0.81 million; 
Assistor calls answered: 1.27 million; 
Percentage of callers seeking and receiving live assistance: 81%. 

Date: April 18; 
Caller abandons: 1.38 million; 
IRS disconnects or busy: 0.92 million; 
Automated calls answered: 0.95 million; 
Assistor calls answered: 1.56 million; 
Percentage of callers seeking and receiving live assistance: 65%. 

Date: April 25; 
Caller abandons: 0.65 million; 
IRS disconnects or busy: 0.02 million; 
Automated calls answered: 0.66 million; 
Assistor calls answered: 0.9 million; 
Percentage of callers seeking and receiving live assistance: 79%. 

Date: May 2; 
Caller abandons: 0.58 million; 
IRS disconnects or busy: 0.03 million; 
Automated calls answered: 0.59 million; 
Assistor calls answered: 0.85 million; 
Percentage of callers seeking and receiving live assistance: 80%. 

Date: May 9; 
Caller abandons: 0.54 million; 
IRS disconnects or busy: 0.02 million; 
Automated calls answered: 0.5 million; 
Assistor calls answered: 0.78 million; 
Percentage of callers seeking and receiving live assistance: 79%. 

Source: GAO analysis of IRS data. 

[End of figure] 

IRS.gov: 

IRS’s Web site continues to be used extensively. Web services are much 
less costly to IRS than telephone services. As of May 20, 2009: 

* IRS’s Web site was visited 205.2 million times, 10 percent decrease 
from last year; 

* Taxpayers downloaded 107.4 million forms and publications, similar to 
last year; 

* Taxpayers searched IRS’s Web site 41.2 million times, a 12 percent 
increase from last year; 

* “Where’s My Refund?” visits increased to 48.9 million from 34.0 
million last year; and; 

* “How Much Was My Stimulus Payment?”, a new feature this year, was 
visited 54 million times. 

Refund Anticipation Loans (RALs) and Refund Anticipation Checks (RACs): 

RALs are short-term, often high-interest loans made by paid preparers 
or banks to taxpayers in connection with the federal and/or state tax 
returns. The amount of the loan is based on the anticipated tax refund. 

RACs are not loans, but instead are a refund delivery option that 
occurs after IRS direct deposits a refund into a temporary account set 
up by a financial institution. 

* RACs are less costly to taxpayers than RALs, but more expensive than 
receiving a refund directly. 

* RACs allow taxpayers to pay for return preparation and RAC fees out 
of their refunds, and can be attractive to taxpayers without bank 
accounts. 

* The lender sets up a temporary account for the taxpayer, so when a 
taxpayer is turned down for a RAL their refund automatically goes 
towards a RAC. 

Process for Applying for and Receiving a RAL: 

Figure 3: Process for Applying for and Receiving a RAL: 

[Refer to PDF for image: illustration] 

1) Taxpayer seeks tax return preparation assistance and a RAL from a 
paid preparer (RALs are bank loans issued through a paid preparer). 

2) The preparer electronically files the return and indicates to IRS 
that the taxpayer has applied for a bank product, such as a RAL. 

3) The lender sets up a temporary account to receive refund. 

4) IRS checks to see if the refund is subject to offset because of 
delinquent tax or other federal debt and notifies the preparer (Debt 
Indicator Notice). 

5) Preparer shares debt information with lender. 

6) Debt Indicator shows no outstanding liabilities: RAL is likely 
issued to taxpayer; or: 
Debt Indicator shows federal debt: RAL not issued and taxpayer waits 
for refund to be deposited in the temporary account. 

Source: GAO analysis of IRS data. 

[End of figure] 

RAL requests declined, while RAC requests increased: 

Early in the filing season, some lenders did not offer RALs because of 
taxpayer errors related to claiming too much RRC. 

IRS officials stated that the need for RALs or RACs can be reduced by, 
for example, shortening the time it takes to receive a refund and 
continuing to inform taxpayers about their financial choices. 

Table 8: Refund anticipation loans and checks requested by taxpayers 
(in millions): 

RAL: 
2008: 9.9; 
2009: 8.4; 
Percentage change between 2008 and 2009: -15.2%. 

RAC: 
2008: 10.4; 
2009: 11.5; 
Percentage change between 2008 and 2009: 10.0%. 

Source: GAO analysis of IRS data. 

Data from January 1 through May 16, 2008 and May 15, 2009. 

[End of table] 

IRS’s actions to provide expanded assistance to financially distressed 
taxpayers: 

IRS’s Web site listed five actions to help financially distressed 
taxpayers: 

* adding flexibility for missed Installment Agreement payments, 
* postponing collection actions, 
* expediting levy releases, 
* adding reviews for Offers in Compromise on home value, and, 
* adding flexibility in Offers in Compromise defaults. 

In addition, IRS revised its Offers in Compromise low-income 
processability procedures. 

IRS is tracking the number of taxpayers using some of its expanded 
assistance to financially distressed taxpayers: 

For the three Offers in Compromise actions, IRS officials told us they 
were tracking the number of taxpayers taking advantage of the expanded 
flexibilities. IRS reported: 

* 5 cases have been referred for a second property evaluation; 

* 1,818 potential default letters were mailed and 293 responses were 
received. Of the responses received, 222 (76 percent) requested an 
extension of time to pay and 71 (25 percent) requested another offer; 
and; 

* 1,028 offers were received without or with less than the required 
payment. Of these, 236 (23 percent) were determined to meet the new low 
income criteria. 

For the other three actions, IRS does not plan on measuring the number 
of taxpayers who take advantage of its expanded assistance, in part, 
because of the difficulty in attributing increases to its actions. 

IRS is tracking the number of taxpayers using some of its expanded 
assistance to financially distressed taxpayers: 

IRS also set up an interactive Online Payment Agreement application to 
its Web site for individuals who owe $25,000 or less in combined tax, 
penalties, and interest. 

* As of the end of April, IRS reached 686,000 installment agreements, 
up 72,000 from the same time last year. More than 5,000 of those 
agreements were obtained through this application. 

[End of briefing slides] 

Footnotes: 

[1] About 100 million households received economic stimulus payments 
last filing season as a result of the Economic Stimulus Act of 2008, 
Pub. L. No 110-185 (2008). 

[2] The American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-
5, 123 Stat. 115 (2009). Although some tax provisions contained in this 
law apply to 2008 tax returns, most apply to 2009 tax returns to be 
filed next filing season. 

[3] Most taxpayers file their 2008 tax returns from January 1 to April 
15, 2009, which is the deadline for filing individual income tax 
returns. However, millions of taxpayers received extensions from IRS, 
which allows them to delay filing until as late as October 15. 

[4] Refund anticipation loans (RAL) are short-term, often high-interest 
loans made by paid preparers or banks in connection with a federal or 
state refund, or both. Refund anticipation checks (RAC) are not loans, 
but instead are a refund delivery option that occurs after IRS direct 
deposits a refund into a temporary account set up by a financial 
institution. RACs are less costly than RALs and allow taxpayers to pay 
return preparation and fees out of their refunds. 

[5] GAO, Internal Revenue Service: Assessment of IRS's Fiscal Year 2010 
Budget Request, [hyperlink, http://www.gao.gov/products/GAO-09-754T] 
(Washington, D.C.: June 3, 2009). 

[6] Taxpayers below an income ceiling can access the Free File program 
offered through IRS’s Web site by a consortium of tax preparation 
companies that offer free on-line tax preparation and filing services 
for qualifying taxpayers. 

[End of section] 

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