2011 Tax Filing: Processing Gains, but Taxpayer Assistance Could Be Enhanced by More Self-Service Tools
Highlights
What GAO Found
During the 2011 filing season the following occurred:
- Electronic filing (e-filing) increased to nearly 80 percent of the 140 million individual returns filed. The benefits of e-filing include that it is more accurate, faster, and less expensive for IRS than processing returns filed on paper.
- Due to the increase in e-filing, new systems, and IRS's performance in recent years, its refund timeliness measure and goal are outdated. The measure only relates to the 22 percent of returns filed on paper. IRS's goal is to issue refunds for paper-filed returns within 40 days. In 2012, IRS expects to issue most refunds within 4 to 6 days of processing a return (paper and e-filed), meaning the current goal does not reflect current performance and capabilities.
- The percent of callers seeking live assistance who receive it remained much lower than in 2007 and the average wait time for callers continued to increase. Providing live telephone assistance is expensive. However, IRS can shift some assistor-answered calls to less costly tools. Two such opportunities include creating self-service phone lines for taxpayers seeking to identify the (1) status of their amended return--a source of high call volume--and (2) location of a Taxpayer Assistance Center (TAC) or Volunteer Income Tax Assistance (VITA) site, where IRS employees and volunteers prepare returns, respectively. IRS officials expect the benefits of the amended return line to exceed the costs, but have not studied the costs and benefits of adding a TAC/VITA locator line.
The use of IRS's website is growing, particularly the number of searches, which IRS officials attribute, in part, to taxpayers having difficulties locating information. Having an easily searchable website is important for IRS because it reduces costly phone calls. IRS has begun spending a planned $320 million on its website over 10 years. However, IRS's initial strategy for providing new self-service tools online does not include allowing taxpayers to access account information and is missing fundamental elements, including a justification for new services and time frames. Doing so would provide Congress and taxpayers with a better understanding of the online services IRS plans to provide with its significant investment on its website.
Why GAO Did This Study
The tax filing season is an enormous undertaking in which the Internal Revenue Service (IRS) processes millions of tax returns, issues billions of dollars in refunds to taxpayers, corrects taxpayers' errors, and provides service to millions of taxpayers through telephones, website, and face-to-face assistance. Among other things, GAO was asked to assess (1) IRS's performance processing returns and issuing refunds, and providing telephone assistance, and (2) IRS's plans to expand self-service options on its website. To conduct the analyses, GAO obtained and compared data from 2007 through 2011, reviewed IRS documents, interviewed IRS officials, observed IRS operations, and interviewed tax-industry experts, including from tax preparation firms.
Recommendations
GAO recommends that IRS develop a new refund timeliness performance measure to better reflect current capabilities, create an automated telephone line for taxpayers seeking information about amended returns unless IRS has a convincing costbenefit analysis suggesting the costs exceed the benefits, assess the costs and benefits of automating a TAC/VITA locator line, and finalize a strategy for determining which self-service tools to provide on its website.
IRS agreed with three of GAO's recommendations, but said that resources are not available to automate the TAC/VITA line. GAO believes a review of the costs and benefits would better inform IRS decisions about how to allocate scarce resources.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop a new refund timeliness measure and goal to more appropriately reflect current capabilities. |
As of April 2024, IRS had not developed a new measure and goal for refund timeliness. During fiscal year 2023, individual taxpayers filed about 91 percent of returns electronically, and as a means to set taxpayer expectations, IRS publicly reported that about 90 percent of taxpayers owed a refund received it in less than 21 days. However, IRS does not set expectations for taxpayers that file on paper or have other situations that could result in longer processing times. In February 2023, IRS provided us with its analysis of refund timeliness that detailed the number of days IRS took to issue refunds to taxpayers that filed on paper or electronically. The data further distinguished between returns with certain credits and refund payment methods. According to the data, for electronically-filed returns in 2022, 9 out of 10 refunds were issued in 20 days or less compared to 168 days for paper-filed returns. IRS did not include a performance goal for issuing refunds to taxpayers in these situations. Accordingly, we continue to believe that IRS's sole performance measure of issuing paper-filed refunds within 40 days is outdated and does not acknowledge advances in technology that allow IRS to issue refunds faster. Further, taxpayers do not have appropriate expectations based on method of filing or other situations. In its Inflation Reduction Act Strategic Operating Plan, IRS describes initiatives to improve processing and provide taxpayers with real-time processing estimates. While IRS mentions it will develop performance metrics for its various initiatives, it does not detail what those measures include or if it will establish specific goals. Without a measure and goal to assess refund timeliness that includes both paper and electronically filed returns and is reflective of IRS's current capabilities, IRS is missing opportunities to provide optimum levels of taxpayer service while also ensuring that taxpayers receive accurate refunds. As such, we believe that our recommendation remains valid.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should offer an automated telephone line that gives taxpayers the status of their amended tax return, unless IRS has a convincing cost-benefit analysis to suggest that the costs exceed the benefits. |
As of August 2013, IRS has developed an automated telephone line that taxpayers can call to determine whether IRS has received an amended return and identify the amount of time that it generally takes for IRS to process the return. IRS also developed an online tool that provides the same information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should assess the costs and benefits of automating the TAC/VITA location telephone lines, and automate these lines if the benefits exceed the costs. |
On January 28, 2012, IRS launched the online VITA Site Locator application which provides timely information on the thousands of tax sites. However, as of August 2013, IRS officials said that after evaluating the resources needed to provide an automated telephone line with similar information, they believe the costs of doing so would currently be prohibitive.
|
| Internal Revenue Service |
Priority Rec.
The Commissioner of Internal Revenue should complete an Internet strategy that (1) provides a justification for the implementation of online self-service tools and includes an assessment of providing online self-service tools that allow taxpayers to access and update elements of their account online; (2) acknowledges the cost and benefits to taxpayers of new online services; (3) sets the time frame for when the online service would be created and available for taxpayer use; and (4) includes a plan to update the strategy periodically. |
As of December 2019, IRS has made meaningful progress in improving its online services strategy, as recommended in GAO's December 2011 and April 2013 reports. In April 2019, IRS published the IRS Integrated Modernization Business Plan (modernization plan). The modernization plan is intended to be a six-year roadmap to guide IRS's efforts and one of the plan's goals is to modernize the taxpayer experience. In the plan, IRS committed to developing new services, provided that IRS continues to receive the requested resources from Congress. These services include delivering taxpayer notices electronically, modernizing online installment agreements, and establishing multiple communication methods such as text chat and video chat assistance. A companion document to the modernization plan provides additional detail, including an estimated budget for fiscal years 2019 and 2020 for improving taxpayer services, timeframes for developing these capabilities, and anticipated benefits of the new services such as increasing the number of notices available electronically. GAO believes the modernization plan addresses the intent of the recommendations made in the 2011 report as it helps IRS ensure that it is maximizing the benefit to taxpayers and its investment in web services provided to taxpayers.
|