In a new report to Congress, the Government Accountability Office takes a hard look at how the Internal Revenue Services manages its paperwork and customer service.

Pointing to a slowing growth rate in electronic filing, the GAO said that the IRS is missing an opportunity to generate additional savings and should consider seeking the authority to mandate electronic filing for certain income tax returns -- such as individual returns filed by paid tax preparers. In comments, IRS Commissioner Mark Everson agreed with a GAO recommendation for Congress to mandate electronic filing by paid tax preparers meeting criteria, such as filing a certain number of tax returns.

Using IRS estimates, the GAO said that savings from such a mandate could be approximately $60 million annually. In 2006, the Internal Revenue Service spent about 38 percent of its $10.8 billion budget on processing returns and providing taxpayer assistance.

The GAO also said that the IRS has another opportunity to generate savings because of excess space at its call sites, but lacks a strategy for eliminating that space by consolidating call sites. The office also recommended that the IRS begin reporting data on the improved time its modernized system for processing tax returns and refunds has realized. The GAO said that such information could be useful to Congress when making decisions about funding the completion of the individual tax return processing part of the system, estimated by the IRS to require at least another $500 million.

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