From the U.S. Government Accountability Office, www.gao.gov

Transcript for: IRS’s Performance During the 2012 Tax Season

Description: Audio interview by GAO staff with James White, Director,
Strategic Issues

Related GAO Work: GAO-13-156: 2012 Tax Filing: IRS Faces Challenges
Providing Service to Taxpayers and Could Collect Balances Due More
Effectively

Released: January 2013

[ Background Music ]

[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the U.S. Government Accountability Office. It's January
2013. In 2012, the Internal Revenue Service processed hundreds of
millions of tax returns, issued billions in refunds to taxpayers, and
provided assistance through its website, over the phone, and
face-to-face. A group led by Jim White, a director in GAO's Strategic
Issues team recently reviewed IRS's performance in support of taxpayers
during 2012. GAO's Jeremy Cluchey sat down with Jim to talk about what
they found.

[ Jeremy Cluchey: ] How did the IRS do at processing returns and issuing
refunds in 2012?

[ Jim White: ] Processing returns for IRS is a huge effort. IRS
processed about 142 million returns, issued over 100 million refunds to
taxpayers, and they do all this in a period of about three months. Well
they do most of it in a period of about three months. There were some
glitches early on in the 2012 filing season, but those got smoothed out
within a few weeks and so most of the filing season went fairly
smoothly. Most refunds for example are issued in less than 21 days, and
a fair number are issued in as few as 10 days.

[ Jeremy Cluchey: ] Your team also looked at the services that IRS
provides to taxpayers on the phone, on the internet, and as well as in
person. Can you talk about what you found in terms of how well the
taxpayers were served last year?

[ Jim White: ] Yes, and here unfortunately the story is not so positive.
IRS has, over the years, made a number of efficiency improvements. They
got an automated call routing system now. They—their telephone assisters
use better scripts to work with taxpayers on solving their problems.
They—IRS provides a lot of answers now that are automated when people
call so they don't have to wait in line to talk to a human assister. A
lot of answers are also provided on IRS's website, again, so people
don't have to wait for answers. Despite these kinds of efficiency gains
however, the telephone performance and correspondence performance
declined at IRS. And this continues a trend. The fundamental reason for
this is that the efficiency gains that IRS has realized and is
continuing to realize over time have just not kept up with the increase
in the volume of telephone calls and correspondence coming in. IRS
received 98 million phone calls in 2012 from taxpayers. To deal with
this, IRS needs more of an overall strategy. The approach has been to
try to realize efficiency gains. As I said, they've been doing that, but
an approach of trying to rely on more of these efficiency gains is doing
more of the same. And these trends in declining performance have
continued long enough now that we think a different approach, a more
drastic approach is needed. So IRS needs an overall strategy that faces
the fact that they haven't been able to keep up with this volume.

[ Jeremy Cluchey: ] You talked about the increased volume in telephone
calls and you have an interesting graphic on the highlights page of this
report that shows also the increased popularity of e-filing for
taxpayers over the years. What does this mean for taxpayers as well as
for IRS?

[ Jim White: ] Electronic filing provides large benefits to taxpayers
and also significant cost savings to IRS. So when tax returns are
e-filed to the IRS rather than filed on paper it means IRS does not have
to transcribe the information off of those tax returns. Over the years,
with the tremendous growth in e-filing, over 80% of returns are now
e-filed. With that growth in e-filing, IRS has been able to save a
substantial amount in processing costs and has been able to free up
staff for other purposes.

[ Jeremy Cluchey: ] Finally, for taxpayers looking ahead to a new tax
season, what's the bottom line on this report?

[ Jim White: ] I think the lesson for 2013 is, first of all, recognize
that at the beginning of 2013 because of the fiscal cliff legislation,
there are a number of tax law changes that have taken effect. Some of
those changes will affect the 2012 returns that are going to be filed in
2013. Other changes will affect tax year 2013 and therefore returns
that'll be filed in 2014, taxpayers need to be aware of the changes.
There are clear benefits from electronic filing so that's another
lesson. Finally, try to use IRS's website to get questions answered and
that way you can avoid having to wait in line to get through to a
telephone assister at IRS.

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next episode of GAO's Watchdog Report for more from the congressional
Watchdog, the U.S. Government Accountability Office.