GAO TO IRS: FORGET SOFTWARE DEVELOPMENTThe Government Accountability Office said that the Internal Revenue Service doesn't appear to be in a position to develop its own software for tax preparation anytime soon.
Because increased electronic filing would reduce processing costs, reduce transcription errors and speed up refund turnaround, the GAO was looking to examine the benefits and costs of the agency creating its own online tax prep offering. The GAO looked at a number of systems already offered by states and in other countries that allow taxpayers to prepare and file tax returns on Web sites at no charge.
The GAO said that for the systems profiled, the reported benefits and costs were relatively modest, and it was unclear whether benefits were greater than costs, which were kept as low as possible by restricting eligibility and features of the software. California and Pennsylvania estimated savings of $1.00 and $3.47 per return, respectively, for each return converted from paper. However, the benefits were limited by usage rates of less than 6 percent. The GAO also noted that the IRS's costs could be higher than the states'.
The full report is available at www.gao.gov.
TRAC: IRS NOTES INCREASE IN NONPRODUCTIVE CORPORATE AUDITS
Internal Revenue Service agents are spending more time conducting face-to-face corporate audits that produce no revenue, according to a report released by the tax division of Syracuse University's Transactional Records Access Clearinghouse.
The IRS data analyzed by TRAC also discovered that the targeting of the agency's correspondence audits for individuals is improving.
The year-to-year growth in nonproductive audit time - defined by the IRS as face-to-face examination hours that produced what it calls "no change" results - occurred for corporations in every asset class. TRAC said that the relative growth in the unproductive hours also tended to rise as the size of the corporations increased. In the last five years, for example, the nonproductive audit time for the largest corporations - those with assets of $250 million or more - has more than doubled. Although audit dollar recommendations for the largest corporations increased substantially from 2001 to 2005, they declined by about 15 percent, to $25.5 billion, last year, a drop of $4.6 billion in potential audit revenue.
TRAC also noted that the agency is auditing many fewer corporate returns than it did a decade ago. The overall corporate audit rate in 2006 (1.2 percent) was only half what it was in 1996 (2.4 percent).
AEI LOOKS AT COMPILATION OF PUBLIC'S TAX ATTITUDES
The American Enterprise Institute has released a new public opinion study that focuses on Americans' historical attitudes to taxes. The study, Public Opinion on Taxes, was compiled by senior fellow Karlyn Bowman, who used available polling data to examine how attitudes toward paying taxes have changed over the past half century.
Among the highlights:
* The personal property tax is a bigger headache for most people than the federal income tax;
* Today, Democrats lead Republicans as the party considered better able to handle taxes, a significant change from the past;
* Pluralities of Americans think that taxes will go up under a president of either party;
* When asked how much of total income should go to taxes, people put the number at 10 to 25 percent; and,
* Ratings of the Internal Revenue Service have improved, though a majority of people would still prefer root canal to undergoing an IRS audit.
The full study is available online at www.aei.org/publicopinion6.
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