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Tax Administration: Most Filing Season Services Continue to Improve, but Opportunities Exist for Additional Savings

GAO-07-27 Published: Nov 15, 2006. Publicly Released: Nov 15, 2006.
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Highlights

In 2006, the Internal Revenue Service (IRS) spent about 38 percent of its $10.8 billion budget on processing returns and providing taxpayer assistance. GAO was asked to (1) assess IRS's 2006 filing season performance processing paper and electronically filed tax returns and providing telephone, Web site, and face-to-face assistance relative to 2006 goals and prior years' performance; (2) identify potential cost savings or other improvements; and (3) report on the status of IRS's Taxpayer Assistance Blueprint (TAB). To address these issues, GAO collected relevant information from IRS and other sources, reviewed performance measures and past filing season assessments, and interviewed officials.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
Given the efficiencies to be gained, the Congress may wish to mandate electronic filing by paid tax preparers meeting criteria such as a threshold number of returns filed.
Closed – Implemented
Public Law 111-92 (November 6, 2009) mandates that tax return preparers filing more than 10 individual income tax returns in one tax year must file those individual income tax returns on magnetic media. This mandate applies to returns filed after December 31, 2010.

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should direct the appropriate officials to timely develop, validate, and implement a plan to consolidate call sites.
Closed – Not Implemented
IRS has completed a workload analysis designed to evaluate changes in telephone resources and call demand, resulting in a preliminary ranked list of call sites for potential closure. According to IRS officials, the next steps include (1) conducting an extensive cost-analysis review of different options for reducing excess capacity at call sites (i.e. closing sites versus leasing smaller spaces for some sites), (2) formulating a consolidation timeline and workload redistribution plan, and (3) developing external communication plans. IRS expects to begin the cost-analysis around October 2007 and complete it by April 2008. During the course of our 2009 filing season work, IRS officials informed us that because of the high volume of calls IRS has received over the last two years, it is no longer considered consolidating sites. Instead, IRS feels that it will need to fully utilize all existing call site resources.
Internal Revenue Service The Commissioner of Internal Revenue should direct the appropriate officials to report to the Congress refund timeliness for Customer Account Data Engine compared to the Master File legacy system.
Closed – Implemented
Various IRS documents, including its Business Systems Modernization (BSM) Expenditure Plans, budget requests, and testimonies by IRS officials have reported to Congress the benefits of Customer Account Data Engine (CADE) 2, including expedited refunds compared to the Master File.

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Topics

Cost analysisCustomer serviceDisaster relief aidElectronic data processingElectronic formsHurricane KatrinaPerformance measuresProgram evaluationTax administrationTax administration systemsTax returnsTaxpayersWebsitesProgram implementation