The Internal Revenue Service intends to process complaints against tax preparers from their clients in a more timely way, in response to a new government report that found it had begun work on only about half the complaints it received since October 2012.
The report, from the Treasury Inspector General for Tax Administration, reviewed 8,354 complaints against tax preparers received by the IRS between Oct. 1, 2012 and Sept. 11, 2013 and identified 3,953 (or 47 percent) for which work on the complaints had yet to be initiated. Of the 3,953 complaints, 1,920 (49 percent) had been in the IRS’s inventory for at least 60 business days with no work initiated.
The IRS processed about 77 million individually electronically filed federal income tax returns prepared by paid tax return preparers in 2013, TIGTA pointed out. As part of its oversight responsibilities, the IRS has developed processes and procedures through which taxpayers can file a complaint with the IRS. However, those procedures do not ensure that taxpayer complaints are accurately and consistently processed, TIGTA noted.
In addition, processes have not been established to effectively track the complaint referrals to IRS business functions to ensure that the complaints are received for evaluation and track how the referred complaints are ultimately resolved.
“Tax return preparers play an increasingly important role in helping taxpayers to comply with the tax laws,” said TIGTA Inspector General J. Russell George in a statement. “Unqualified or unethical tax return preparers can negatively impact taxpayers as well as tax revenue if the tax returns they prepare are incorrect and/or fraudulent.”
TIGTA made eight recommendations to the IRS, including that it establish goals and procedures to ensure that complaints are timely processed; develop a process to ensure that complaints are recorded in inventory records; ensure that criteria for referring complaints to business functions are appropriately applied and that the business functions’ resolution of complaint referrals is tracked; and establish procedures to contact taxpayers for missing information.
IRS management agreed with six of TIGTA’s recommendations and plans to take corrective actions.
However, the IRS disagreed with the recommendation that it ensure its Complaints Referral function establish procedures for case processors to contact taxpayers for missing information in order to work on as many complaints as possible, noting that it is focusing first on resolving the current backlog of complaints and does not have the resources at this time to contact complainants or establish a pilot program to contact those who submit incomplete information. In addition, the IRS only partially agreed with the recommendation that it track the resolution of how complaints were resolved by the various business functions.
With respect to the recommendation with which IRS management partially agreed and the other with which IRS management disagreed, TIGTA said it continues to believe that the IRS should track how the business functions resolve referred complaints and should contact taxpayers for missing information on submitted complaints in order to work on as many complaints as possible.
IRS deputy commissioner of services and enforcement John M. Dalrymple wrote in response to the report that conditions at the IRS’s Complaint Referrals function have improved significantly since TIGTA began its inspection.
“Since the Complaint Referrals office was created in December 2011, we have made significant progress establishing effective processes to handle the large volume of complaints we receive every year,” he wrote. “While TIGTA observed a backlog of unprocessed complaints in September 2013, we have since increased staffing, enhanced our processes and written guidance, and trained RPO employees. Further, we are now using a centralized database to manage the complaints. As a result of these improvements, between January and May 2014, we reduced our inventory backlog by 59 percent. We will continue to reduce the inventory level and increase efficiencies as we analyze results and refine our processes.”
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