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Tax Refunds: Enhanced Prerefund Compliance Checks Could Yield Significant Benefits

GAO-11-691T Published: May 25, 2011. Publicly Released: May 25, 2011.
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In 2010, the Internal Revenue Service (IRS) processed about 137 million individual income tax returns and issued 107 million refunds totaling over $312 billion. The compliance checks it performs before refunds are issued thus could affect millions of taxpayers and billions of dollars of refunds by identifying taxpayers who overclaim or underclaim tax benefits to which they are entitled. Math error authority (MEA) is just one example of the prerefund compliance checks that IRS uses. During 2010, IRS sent taxpayers 8.4 million notices for almost 10.6 million math errors identified on their 2009 individual tax returns. GAO's statement today will focus on three key areas: (1) prerefund checks and their benefits, (2) how those checks can be enhanced immediately, and (3) how they may be enhanced in the future. It is mostly based on GAO's previous work issued from 2008 through 2011, including an interim report on IRS's 2011 tax filing season, and our ongoing analysis of the 2011 filing season.

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ClaimsElectronic data processingErroneous paymentsErrorsFraudInternal controlsTax administrationTax creditTax refundsTax return auditsTax returnsTaxpayersCompliance