While the Internal Revenue Service is making gains in its processing capabilities due to increased electronic filing, the agency still needs to offer taxpayers more self-service tools, according to a new report.
The report, from the Government Accountability Office, found that electronic filing increased to nearly 80 percent of the 140 million individual returns filed, during the 2011 filing season. The benefits of e-filing include that it is more accurate, faster, and less expensive for the 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increase in e-filing, new systems, and IRS’s performance in recent years, its refund timeliness measure and goal are outdated, the GAO noted, as the measure only relates to the 22 percent of returns filed on paper. The IRS’s goal is to issue refunds for paper-filed returns within 40 days. In 2012, the IRS expects to issue most refunds within four to six days of processing a return (both paper and e-filed), meaning the current goal does not reflect current performance and capabilities.
The percentage of callers seeking live assistance who receive it remained much lower than in 2007, while the average wait time for callers continued to increase. Providing live telephone assistance is expensive, the GAO acknowledged. However, the 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 status of their amended return—a source of high call volume—and the location of a Taxpayer Assistance Center or Volunteer Income Tax Assistance 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 the IRS’s Web site is growing, particularly the number of searches, which IRS officials attribute, in part, to taxpayers having difficulties locating information. Having an easily searchable Web site is important for the IRS because it reduces costly phone calls. The IRS has begun spending a planned $320 million on its Web site over 10 years. However, the 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 Web site, said the GAO.
The GAO recommended that the 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 the IRS has a convincing cost/benefit 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 Web site.
The IRS agreed with three of the GAO’s recommendations, but said that resources are not available to automate the TAC/VITA line. The GAO said it believes a review of the costs and benefits would better inform IRS decisions about how to allocate scarce resources.
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