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Tax Administration: IRS Should Reassess the Level of Resources for Testing Forms and Instructions

GAO-03-486 Published: Apr 11, 2003. Publicly Released: Apr 11, 2003.
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Highlights

Taxpayers rated the Internal Revenue Service's (IRS) ability to provide clear and easy-to-use forms and instructions among the lowest of 27 indicators of service in 1993. Due to continuing concerns about unclear forms and instructions, GAO was asked to determine (1) whether and how often IRS tests the clarity of new and revised individual income tax forms and instructions; (2) the benefits, if any, of testing forms and instructions for clarity prior to their use; and (3) whether any factors limit IRS's ability to do more tests and if so, how they can be addressed.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service Because testing could potentially yield clearer and more understandable tax forms and instructions thereby producing benefits both to taxpayers and IRS, the Acting Commissioner of Internal Revenue should develop written criteria for determining which changes to tax forms and instructions should be tested with taxpayers before publication.
Closed – Implemented
The IRS agreed with GAO's recommendation and implemented it by developing written criteria for assessing whether focus group testing should be conducted for new or redesigned tax forms and instructions.
Internal Revenue Service Because testing could potentially yield clearer and more understandable tax forms and instructions, thereby producing benefits both to taxpayers and IRS, the Acting Commissioner of Internal Revenue should develop official written guidance that incorporates those criteria and ensure that the guidance requires staff that develop new or revised forms and instructions to document which changes would merit testing and why.
Closed – Implemented
The IRS agreed with GAO's recommendation. IRS implemented the recommendation by developing written guidelines that incorporated the newly developed criteria for testing new, revised, or redesigned tax forms and instructions. The guidance provides information on the documentation that should be maintained that justifies the rational for testing, including an explanation of the perceived merits of testing.
Internal Revenue Service Because testing could potentially yield clearer and more understandable tax forms and instructions, thereby producing benefits both to taxpayers and IRS, the Acting Commissioner of Internal Revenue should clarify procedures by designating when in the annual forms development process that a draft version of forms and instructions should be available for testing with taxpayers.
Closed – Implemented
The IRS agreed with and implemented GAO's recommendation. In response, the IRS revised its testing guidelines to include information on when draft forms and instructions should be available for testing with taxpayers in the annual forms development process.
Internal Revenue Service Because testing could potentially yield clearer and more understandable tax forms and instructions, thereby producing benefits both to taxpayers and IRS, the Acting Commissioner of Internal Revenue should ensure that an appropriate range of evaluations are conducted of tests that are performed to better establish the costs and benefits of performing tests and to refine IRS's approach to testing on the basis of lessons learned.
Closed – Not Implemented
In August 2004, IRS's staff who develop and test tax forms and instructions, in conjunction with the IRS Research Division, concluded that focus group testing of tax forms and instructions does not lend itself to establishing cost benefit analysis to assess the benefits from testing. According to IRS, focus testing does not provide quantitative data to show a link between focus testing and reduced error rates on forms and instructions tested and that factors other than testing could contribute to the results. However, IRS stated that since the GAO report, it has conducted focus group testing on major forms and used feedback to make adjustments. IRS stated that it would continue its commitment to obtain feedback from taxpayers and tax practitioners to ensure that its tax products are as simple as possible and are designed to improve customer satisfaction. IRS reaffirmed this position in April 2006.
Internal Revenue Service Because testing could potentially yield clearer and more understandable tax forms and instructions, thereby producing benefits both to taxpayers and IRS, the Acting Commissioner of Internal Revenue should use information gained from documenting when changes to forms or instructions likely would be beneficial and from evaluations of tests to reassess an appropriate level of resources to perform testing.
Closed – Not Implemented
Based on an April 2007 interview with IRS staff, including its director of the Tax Forms and Publications Division, IRS did not implement our recommendation. IRS told us that it makes decisions on the adequacy of resources for testing based on the capacity of its workforce rather than by justifying and assessing whether the resource level is appropriate using information derived from documenting when testing would be beneficial and evaluations of tests.

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Topics

Federal formsFirst article testingIncome taxesInternal controlsPerformance measuresTax administrationTaxpayersData errorsEarned income tax creditTax credit