Tax Policy:
Options for Speeding Tax Refunds and Reducing IRS' Interest Costs
GGD-86-72: Published: Jul 28, 1986. Publicly Released: Jul 28, 1986.
Additional Materials:
- Full Report:
Contact:
(202) 275-6407
contact@gao.gov
Office of Public Affairs
(202) 512-4800
youngc1@gao.gov
GAO examined the requirements under which the Internal Revenue Service (IRS) pays taxpayers interest on tax refunds to determine whether changes to the requirements for paying interest on various types of refunds or to IRS operating procedures could speed up the payment of tax refunds and reduce the government's interest costs.
GAO found that: (1) IRS paid $1.5 million in interest while processing the amended return refunds that it issued within 45 days; (2) IRS took almost twice as long to process refunds on amended returns that it subjected to a detailed examination as it did to process returns that it subjected to normal processing procedures; (3) only 12 percent of the detailed examinations resulted in additional tax assessments; and (4) the increased interest costs associated with delaying these refunds amounted to $37.6 million. GAO estimated that IRS paid at least $3 million in interest costs during 1983 on non-income-based returns that it processed within 45 days of receipt.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: IRS has revised its criteria for claims, which the examination will review and may claim before issuing the refund. This should result in more refunds being issued before examination of the refund claim.
Recommendation: The Commissioner of Internal Revenue should amend IRS procedures to provide for issuing certain refunds before making a detailed examination of the refund claim. The criteria for making these refunds should recognize the need for IRS to continue to hold certain refunds having a high potential for disallowance.
Agency Affected: Department of the Treasury: Internal Revenue Service
Explore the full database of GAO's Open Recommendations
»
Explore the full database of GAO's Open Recommendations
Jan 14, 2021
Tax Administration:
Better Coordination Could Improve IRS's Use of Third-Party Information Reporting to Help Reduce the Tax GapGAO-21-102: Published: Dec 15, 2020. Publicly Released: Jan 14, 2021.
Nov 18, 2020
-
IRS Reorganization:
Planning Addressed Key Reform Practices, but Goals and Measures for the Plan Have Not Been FinalizedGAO-21-18: Published: Oct 19, 2020. Publicly Released: Nov 18, 2020.
Nov 9, 2020
-
Opportunity Zones:
Improved Oversight Needed to Evaluate Tax Expenditure PerformanceGAO-21-30: Published: Oct 8, 2020. Publicly Released: Nov 9, 2020.
Oct 19, 2020
-
Tax Administration:
Opportunities Exist to Improve Oversight of Hospitals' Tax-Exempt StatusGAO-20-679: Published: Sep 17, 2020. Publicly Released: Oct 19, 2020.
Sep 23, 2020
-
Taxpayer Service:
IRS Could Improve the Taxpayer Experience by Using Better Service Performance MeasuresGAO-20-656: Published: Sep 23, 2020. Publicly Released: Sep 23, 2020.
Aug 31, 2020
-
Abusive Tax Schemes:
Offshore Insurance Products and Associated Compliance RisksGAO-20-589: Published: Jul 30, 2020. Publicly Released: Aug 31, 2020.
Jun 29, 2020
-
Taxpayer Compliance:
More Income Reporting Needed for Taxpayers Working through Online PlatformsGAO-20-366: Published: May 28, 2020. Publicly Released: Jun 29, 2020.
Jun 16, 2020
-
Tax Exempt Organizations:
IRS Increasingly Uses Data in Examination Selection, but Could Further Improve Selection ProcessesGAO-20-454: Published: Jun 16, 2020. Publicly Released: Jun 16, 2020.
May 1, 2020
-
Management Report:
Improvements Are Needed to Enhance the Internal Revenue Service's Internal Control over Financial ReportingGAO-20-480R: Published: May 1, 2020. Publicly Released: May 1, 2020.
Apr 30, 2020
-
Priority Open Recommendations:
Internal Revenue ServiceGAO-20-548PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.
Looking for more? Browse all our products here
Explore our Key Issues on Tax Policy and Administration
Explore our other Key Issues here
