The Internal Revenue Service needs to improve its telephone assistance level, as well as its taxpayer service and enforcement functions, according to a new report by the Government Accountability Office.

While taxpayers’ access to telephone help was better than last year, it remained lower than in 2007 in part because of calls about tax law changes. Compared to 2005 through 2007, the IRS reduced its goal for assistor-answered calls in 2009 and set its 2010 goal at 71 percent. National Taxpayer Advocate Nina Olson also took the IRS to task for its phone-answering rate in a separate report last week (see Taxpayer Advocate Pushes for Fewer Tax Liens).

On the positive side, despite heavy call volume about stimulus-related tax questions, the accuracy of IRS responses to taxpayers’ questions remained above 90 percent, the GAO noted. The IRS started a major data collection effort on why taxpayers call, but lacks a plan to analyze the data and improve telephone service.

The GAO also looked at the IRS’s efforts to discourage taxpayers from relying on refund anticipation loans. According to the IRS, issuing refunds faster reduces taxpayers’ use of RALs, high-interest loans made by paid tax preparers or banks in anticipation of a refund. Issuing refunds is a joint effort by the IRS, the Treasury’s Financial Management Service, which checks for non-tax debt owed to the federal government, and the Automated Clearing House, which distributes funds. However, the IRS has not coordinated extensively with the other agencies to expedite refunds. In addition, the IRS has not studied the use of debit cards for unbanked taxpayers, which could also reduce taxpayers’ use of RALs by providing faster and more secure refunds.

The GAO recommended that the IRS develop a plan to analyze its telephone data, work with the other entities involved in issuing refunds to improve their timeliness, determine the feasibility of using debit cards for refunds, and revise the Form 1098-T to improve its usefulness to taxpayers who are mistakenly claiming the Hope education tax credit for more years than allowed.

In response, IRS Deputy Commissioner Steven T. Miller agreed with five of the GAO’s recommendations and described some steps the agency is taking on the other two. With regard to debit cards, Miller wrote, “We are exploring a range of alternatives to deliver refunds to unbanked taxpayers. Included among those options are debit cards provided directly or through third parties, including participating partners and current industry participants.”

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