Changes to Appeals Process Could Improve Settlements and Increase Taxpayers' Satisfaction

GGD-82-54: Published: Jul 28, 1982. Publicly Released: Jul 28, 1982.

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GAO was asked to examine the Internal Revenue Service (IRS) appeals process for resolving disputes with taxpayers who disagree with the results of their audits. GAO also obtained information from taxpayers on their experiences with the appeals process and on proposed legislation to help safeguard taxpayer rights and insure impartial treatment by IRS.

GAO found that IRS could improve the settlement of cases in the Appeals Division and increase taxpayer satisfaction with its handling of cases by: (1) strengthening management controls that identify problems with settlements; and (2) reducing the time it takes to handle such cases. Taxpayers stand an excellent chance of having their proposed audit adjustments reduced when they appeal their cases, but there is substantial variation between Appeals offices in the consideration of several factors used to settle cases. In a uniform appeals atmosphere, such variations should be at a minimum. To help achieve this uniformity, Appeals has designed a management control system which is comprised of three major components: supervisory case reviews, regional case reviews, and nationwide special issue post reviews. However, the individual components of the system were not meeting their objectives. GAO surveyed individual taxpayers regarding their perceptions of the administrative appeals process and found that: (1) although generally satisfied with their treatment by Appeals, many were dissatisfied with the amount of time required to settle their cases; (2) the majority of taxpayers did not have an accountant or attorney representing them; and (3) about one-fourth of the taxpayers cited the continued cost of appealing their cases as the major reason for their settlement with Appeals.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of Internal Revenue should require Appeals supervisors to document their case assessments.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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