IRS' 1996 Tax Filing Season:

Performance Goals Generally Met; Efforts to Modernize Had Mixed Results

GGD-97-25: Published: Dec 18, 1996. Publicly Released: Dec 18, 1996.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) overall performance during the 1996 tax filing season, focusing on: (1) changes in 1996 that relate to taxpayer services and the processing of taxpayer refunds; and (2) some of IRS' efforts to modernize its processing activities.

GAO found that: (1) IRS met or exceeded its timeliness and accuracy goals for processing individual income tax returns and issuing taxpayer refunds, answered more telephone calls from taxpayers seeking assistance than it had planned to answer, and received more returns through alternative filing methods than it had projected; (2) for the 1996 tax filing season, IRS revised its procedures to limit the number of delayed refunds to the volume of cases it could review, and focus on the cases most in need of review, and as a result, IRS delayed many fewer refunds in 1996 than it did in 1995 and avoided the kind of negative press it received in 1995 as taxpayers and tax return preparers reacted to the delays; (3) recognizing that much could be done to improve its systems and procedures, IRS has initiated several modernization efforts, and those efforts achieved mixed results in 1996; (4) IRS is developing a strategy to increase the use of electronic filing and reassessing its strategy for processing paper returns; and (5) IRS' decision to have taxpayers send not only their payments but also their tax returns to a lockbox and to have the banks sort those returns before sending them to IRS has increased program costs, unnecessarily in GAO's opinion, by $4.7 million.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS conducted a nonuser survey in 1997. It identified several changes that respondents said might encourage them to use TeleFile. IRS has taken steps to address some of those identified barriers but has decided to do nothing with respect to others.

    Recommendation: If most eligible TeleFile users do not use the system during the 1997 filing season, as IRS is anticipating, the Commissioner of Internal Revenue should: (1) conduct a survey to determine why, including more specific information on why the nonusers prefer to file on paper; and (2) take steps to address any identified barriers to increased user participation.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Not Implemented

    Comments: This recommendation has been superseded by a related recommendation in GAO's report on the 1997 tax filing season (GGD-98-33).

    Recommendation: If the government is unable to negotiate lockbox fees that are more comparable to service center costs and in the absence of more compelling data on taxpayer burden, the Commissioner of Internal Revenue, for filing seasons after 1977, should either discontinue having returns sorted by the banks or reconsider the decision to have taxpayers send their tax returns to the banks along with their tax payments.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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