Internal Revenue Service:

Interim Results of 2012 Tax Filing Season and Summary of the Fiscal Year 2013 Budget Request

GAO-12-566: Published: Mar 20, 2012. Publicly Released: Mar 22, 2012.

Additional Materials:

Contact:

James R. White
(202) 512-3000
whitej@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

In summary, so far this filing season, IRS

  • experienced an increase in total call volume (mostly for automated calls about taxpayer's refunds), and a reduction in IRS's level of service resulted in wait times of about 17 minutes;

  • has processed almost 68 million returns, and electronic filing continues to increase; and

  • experienced problems, since resolved, that delayed refunds for about a week for millions of taxpayers, including one that involved a key electronic filing system, Modernized E-File (MeF). As we finished our work in March, IRS provided us with an update to its contingency plan for MeF dated December 2011. Given MeF's importance, the problems it experienced this year, and IRS's plans to turn off its legacy e-file system in October, without timely review and update--as needed--of its contingency plan to take into account the lessons learned from the current filing season, IRS risks not being able to timely and reliably process tax returns.

In addition, the President's fiscal year 2013 budget request shows

  • a $944.5 million (8.0 percent) increase over fiscal year 2012, mainly for the Enforcement and Operations Support appropriations. This is an increase of 5.3 percent over fiscal year 2011. The Taxpayer Service appropriation request for 2013 is about the same as last year, and IRS expects to gain savings from more e-filed returns and other efficiencies;

  • an increase of about 4,500 full-time equivalents (FTE) (5.0 percent) over fiscal year 2012, primarily for enforcement initiatives;

  • about $2.5 billion for IT investments; and

  • reduced annual goals for 2012 and 2013 for selected taxpayer service and enforcement activities from 2011.

Why GAO Did This Study

This letter transmits several briefings we provided between March 7 and 19, 2012, as well as subsequent comments from the Internal Revenue Service (IRS). The briefings were based on our work to date from Congressional requests for an assessment of IRS's 2012 tax filing season performance and a review of the fiscal year 2013 Congressional Budget Justification for IRS.

Our briefing objectives were to (1) provide an interim assessment of IRS's 2012 performance in processing tax returns and refunds and providing telephone service; and (2) describe how IRS plans to manage funding reductions in fiscal year 2012; the fiscal year 2013 budget request for IRS including dollar and staffing trends, new program initiatives, the cost of major information technology (IT) investments; and selected performance measures and goals. To conduct this work, we obtained and analyzed IRS performance data for processing tax returns and refunds and providing telephone service; interviewed IRS officials and representatives from tax preparation and tax software firms on various aspects of filing season performance and challenges faced; reviewed IRS plans to manage budget reductions; compared and analyzed budget documentation for fiscal year 2008 through 2013; reviewed and summarized IRS performance data, annual IRS databooks, and other reports including those from the IRS Oversight Board; and interviewed IRS officials in the offices of the Chief Financial Officer and Corporate Budgeting.

What GAO Recommends

The Commissioner of Internal Revenue should ensure that IRS's IT contingency plan for MeF is reviewed and updated, as needed, in time for the beginning of the 2013 filing season.

For more information, contact James R. White at (202) 512-9110 or whitej@gao.gov.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendation for Executive Action

    Recommendation: The Commissioner of Internal Revenue should ensure that IRS's IT contingency plan for Modernized E-File (MeF) is reviewed and updated, as needed, in time for the beginning of the 2013 filing season.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: In March 2012, we reported that the Information Technology (IT) contingency plan for a key IRS electronic filing system known as Modernized e-File (MeF) had not been reviewed or updated in accordance with National Institute of Standards and Technology and other guidance. Given the high volume of returns that MeF processes, the problems it experienced in 2012 such as data transmission problems, and IRS's plans to turn off its legacy e-file system in October 2012, we recommended that the Commissioner of Internal Revenue ensure IRS's IT contingency plan for MeF is reviewed and updated as appropriate in time for the beginning of the 2013 filing season. IRS agreed with our recommendation and in response it updated its contingency plan for 2013 which described the agency's plans to keep the legacy e-file system available as a back-up. As a result, IRS mitigated the risks of not being able to timely and reliably process electronically filed tax returns.

    Jul 22, 2014

    Jul 18, 2014

    Jul 7, 2014

    Jul 2, 2014

    Jun 13, 2014

    May 30, 2014

    May 20, 2014

    Apr 21, 2014

    Apr 17, 2014

    Apr 8, 2014

    Looking for more? Browse all our products here