The Internal Revenue Service scored high marks for processing returns and issuing refunds smoothly during the 2004 filing season, but didn't fare as well on accuracy in answering tax law questions, according to a Government Accountability Office report.

The agency met many of its performance goals and continued a trend of improvement during the 2004 filing season, but it didn't improve in all dimensions of its filing season services and lacked sufficient data to evaluate quality in others, the GAO said this week.

The GAO said that the IRS processed returns and issued refunds smoothly during the 2004 filing season. From Jan. 1 through Sept. 17, 2004, the IRS processed 67 million paper returns and issued 100 million refunds. It processed 61 million electronic returns during nearly the same time frame. The proportion of returns filed electronically is up to 47 percent, although the GAO noted that the agency still doesn't expect to reach its long-term goal of having 80 percent of all individual tax returns filed electronically by 2007.

The GAO said that a higher percentage of taxpayers were able to reach IRS assistors by phone than last year, and the accuracy rate for providing taxpayers with information about their accounts remained stable. Of the 84 million calls the IRS received on its toll-free lines through mid-July, only 173,000 -- less than one-half of 1 percent -- had busy signals. GAO said that almost half of the total calls were from callers trying to obtain information on the status of their tax refunds; the rest were primarily account or tax law questions.

Consistent with the IRS's strategy, the number of taxpayers visiting IRS walk-in sites declined, while the number having tax returns prepared at volunteer sites increased. However, the accuracy rate for answering tax law questions declined to 2001 levels. IRS officials attributed the decline primarily to changes made to a publication that its customer service reps use to help them answer taxpayers' tax law questions. The GAO said that the agency began to address the problems with the guide during the 2004 filing season, and that it has a written plan with deadlines for testing the guide for the 2005 tax filing season. The GAO also noted that while the IRS continued to expand its Web site services, the site's feature for answering tax law questions raised some concerns.

The GAO noted that the IRS has limited data with which to assess the quality of key services at its walk-in sites and sites staffed by volunteers. "Although IRS has initiatives under way to measure quality at both types of sites, the initiatives have been delayed and important details have not yet been determined, which may undermine the IRS's efforts to improve services in this area. In the meantime, some of the IRS's quality data is likely to be biased," the GAO said.

The full report is available at

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