Tax Administration:

IRS Notices Can Be Improved

GGD-95-6: Published: Dec 7, 1994. Publicly Released: Dec 7, 1994.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) taxpayer notices, focusing on: (1) possible improvements to the notices; and (2) IRS processes for ensuring that its notices clearly convey essential information to taxpayers.

GAO found that: (1) 31 of the 47 most commonly used notices that it reviewed have clarity problems such as language, content, and format; (2) needed improvements to the notices include more specific language, clearer references, consistent terminology, logical presentation of material, and sufficient information and guidance on how to resolve taxpayer problems; (3) despite internal reviews and recommendations to improve the notices, IRS has delayed many notice revisions and has failed to implement others primarily due to its limited computer programming resources and higher priority programming demands; (4) IRS does not have a system to track recommended notice revisions; (5) IRS is testing whether its correspondence system can generate collection notices and make more timely notice revisions, since it has a number of capabilities that the master file notice system does not; (6) two other IRS initiatives to improve notices include testing a new notice format and acquiring new printing equipment for the service centers; (7) IRS is using its Tax Systems Modernization initiative to explore ways to issue single, comprehensive notices for taxpayers with multiple and interrelated tax problems; and (8) IRS is considering ways to supplement notices with commonly asked questions and appropriate answers to improve the quality of the notices.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A contractor for IRS studied the feasibility of using Correspondex and other systems to produce taxpayer notices, and decided to use one of the other systems. The system chosen is easier to program, less labor-intensive, and less costly to operate.

    Recommendation: The Commissioner of Internal Revenue should test the feasibility of using Correspondex to produce Individual Master File (IMF) and Business Master File (BMF) notices and, if possible, transfer as many IMF and BMF notices as practical to the Correspondex system. To help the transition to Correspondex, the notices should be transferred in stages and a mechanism should be established or an existing body, such as the National Automation Advisory Group, should establish the order in which notices would be transferred. The ease of the transition, the costs of the transfer, and the benefits of making these transfers should all be considered in establishing the order.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS has established a procedure to annually obtain reports from operational areas on the status of proposed revisions to notices. A bulletin board will allow all functional areas involved in the notice revision process to access the tracking system information and send status information to the Office of Notice Clarity. The system will include thresholds beyond which delays at various points in the process must be followed up. The IRS Senior Council for Management Controls has approved this action.

    Recommendation: The Commissioner of Internal Revenue should establish a system to monitor proposed notice text revisions to oversee progress or problems encountered in improving notice clarity. This system should be able to identify when a revision was proposed and the revision status at all times until it is implemented. The Commissioner should include in the monitoring system a threshold beyond which delays must be appropriately followed up and resolved.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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