The Internal Revenue Service has to do a better job when scanning taxpayer correspondence to avoid errors and repeated requests for information from taxpayers, according to a new report.
The report, from the Treasury Inspector General for Tax Administration, acknowledged that the IRS is getting faster at scanning taxpayers’ paper correspondence into electronic images. But TIGTA’s report noted that a significant number of documents are being inaccurately coded or improperly scanned, leading to errors and delays.
The IRS designed its Correspondence Imaging System, or CIS, to automate the scanning of taxpayer correspondence. The Image Control Team units in the IRS submission processing sites scanned more than 8.1 million pieces of paper correspondence into the CIS during fiscal year 2012.
For its report, TIGTA reviewed whether the IRS was effectively and efficiently processing and managing taxpayer correspondence. A 2007 audit found delays in the timely scanning of taxpayer correspondence and recommended improvements to track and analyze the timeliness of correspondence scanning.
In its new audit, TIGTA found that the IRS has taken corrective actions to address the concerns raised six years ago after the previous audit about the timeliness of scanning correspondence.
However, TIGTA found there continues to be inaccurate and incomplete data in the CIS. TIGTA compared 118 paper documents received from taxpayers to the images scanned into the CIS and found that 28 of them (or 24 percent) had one or more scan errors. Moreover, documents scanned into the CIS are often incomplete, illegible or inaccurate.
In addition, identity theft correspondence is not always linked to existing cases in the CIS, which can result in multiple cases and different IRS employees working with the same taxpayers and taking conflicting actions to resolve the taxpayer’s case. Nearly 56 percent of the 913,331 open cases in the CIS inventory, as of September 2012, involved correspondence from taxpayers regarding identity theft.
“The continued problems in this area are troubling,” said TIGTA Inspector General J. Russell George in a statement. “Miscoded or illegible scanned documents can result in taxpayers being asked multiple times to provide the same information, delay the issuance of refunds, change the order in which cases are worked, or result in the incorrect calculation of interest owed to taxpayers.”
TIGTA made seven recommendations to the IRS, including ensuring that employees perform required cursory reviews of scanned documents, and that managers verify scan quality. The report also suggested the IRS should ensure that managers monitor their teams’ inventories and reassign cases as needed to ensure that the oldest cases are worked on first.
The IRS agreed to take action to address TIGTA’s recommendations. In response to the report, Peggy Bogadi, commissioner of the IRS’s Wage and Investment Division, pointed out that the CIS offers benefits such as automatic acknowledgment of taxpayer correspondence and improved customer service through instant access to scanned information while assisting taxpayers. The system also enables IRS employees at field locations to access documents without needing to get copies mailed or shipped in bulk to them.
Bogadi also pointed out that while much of TIGTA’s report focuses on the scanning of documents related to identity theft, such cases represent only a small portion of the overall CIS inventory. “The IRS closed over 6.8 million cases in CIS during fiscal year 2012, with only 460,000 cases, or 6.7 percent, representing identity theft cases,” she wrote. She took issue with figures cited in the report indicating that identity theft cases constitute 55.8 percent of all Accounts Management inventory work. But she pointed out that represents only the open individual taxpayer cases, and not the total population of cases. “While the scanning technology is not a seamless process, and errors may occur, it is important to note that none of the errors identified in the report adversely impacted our ability to serve taxpayers,” she wrote.
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