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Highlights

GAO assessed the Internal Revenue Service's (IRS): (1) controls for correcting errors in processing tax returns and issuing refunds and notices; and (2) efforts to identify the causes of processing errors.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service 1. The Commissioner of Internal Revenue should require service center directors to implement a program to review tax returns corrected by the Error Resolution Units before sending them to the master files, as is being done by the Fresno and Kansas City Service Centers. Service center directors should have flexibility to adjust the percentage of returns reviewed to their units' performance.
Closed - Implemented
Reviews are being conducted on a sample basis in service centers. IRS determined that 100 percent of the reviews were not cost-effective.
Internal Revenue Service 2. The Commissioner of Internal Revenue should ensure that feedback on the nature and source of errors identified in these reviews is provided promptly to the processing units responsible for missing or creating the errors, and to national office managers, so that both parties can take timely corrective action and thus help prevent future errors.
Closed - Implemented
Program Analysis System (PAS) reports showing trends in taxpayer errors were provided on a weekly basis to the service center and National Office management. Reports are to be used to determine the percentage and types of error documents for review.
Internal Revenue Service 3. The Commissioner of Internal Revenue should direct his staff to review the completeness, timeliness, and accuracy of management information produced by IRS quality monitoring and modify those reports that do not meet management needs.
Closed - Implemented
Most planned agency actions were completed as of May 1989. The Internal Revenue Manual was revised for the January 1, 1990 publication.

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