GAO SAYS IRS IMPROVED PERFORMANCE IN '04, BUT BETTER DATA NEEDED ON SOME SERVICES: The Internal Revenue Service scored high marks for processing returns and issuing refunds smoothly during the 2004 filing season, but didn't fare as well on accuracy in answering tax questions, according to a Government Accountability Office report.
The agency met many of its performance goals and continued a trend of improvement during the 2004 filing season, but it didn't improve in all dimensions of its filing season services, and lacked sufficient data to evaluate quality in others, the GAO said in mid-November.
From Jan. 1 through Sept. 17, 2004, the IRS processed 67 million paper returns and issued 100 million refunds. It processed 61 million electronic returns during nearly the same time frame. The proportion of returns filed electronically is up to 47 percent, although the GAO noted that the agency still doesn't expect to reach its long-term goal of having 80 percent of all individual tax returns filed electronically by 2007.
The GAO said that a higher percentage of taxpayers were able to reach IRS assistors by phone than last year, and the accuracy rate for providing taxpayers with information about their accounts remained stable. Of the 84 million calls that the IRS received on its toll-free lines through mid-July, only 173,000 - less than one-half of 1 percent - had busy signals. The GAO said that almost half of the total calls were from callers trying to obtain information on the status of their tax refunds; the rest were primarily account or tax law questions.
Consistent with the IRS's strategy, the number of taxpayers visiting IRS walk-in sites declined, while the number having tax returns prepared at volunteer sites increased. However, the accuracy rate for answering tax law questions declined to 2001 levels. IRS officials attributed the decline primarily to changes made to a publication that its customer service reps use to help them answer taxpayers' tax law questions. The GAO said that the agency began to address the problems with the guide during the 2004 filing season, and that it has a written plan with deadlines for testing the guide for the 2005 tax filing season. The GAO also noted that while the IRS continued to expand its Web site services, the site's feature for answering tax law questions raised some concerns.
The GAO noted that the IRS has limited data with which to assess the quality of key services at its walk-in sites and sites staffed by volunteers. "Although the IRS has initiatives under way to measure quality at both types of sites, the initiatives have been delayed and important details have not yet been determined, which may undermine the IRS's efforts to improve services in this area. In the meantime, some of the IRS's quality data is likely to be biased," the GAO said.
The report is available at www.gao.gov/new.items/d0567.pdf.
DELOITTE RANKS HIGHEST IN SATISFACTION AMONG MAJOR TAX FIRMS: Deloitte ranks highest in satisfaction with tax firm performance among the Big Four, according to a study of tax firm performance by J.D. Power and Associates.
The 2004 Tax Firm Performance Study measures satisfaction with tax advisors based on responses from 885 chief financial officers and tax directors.
The Big Four firm took top honors, with high marks in the areas of cost, ability to creatively explore alternatives, and advice and recommendations. Deloitte, which scored a 690 out of 1,000 possible points, also ranked highest in audit firm performance among firms managing clients with $1 billion or more in revenue in the J.D. Power and Associates 2004 Audit Firm Performance Study, which was released in mid-November.
Grant Thornton edged out the remaining Big Four firms to take second. Grant Thornton scored a 684, with high marks for advice and recommendations, ability to meet deadlines, and trustworthiness.
"While Sarbanes-Oxley has had a dramatic, and in many cases negative, impact on how CFOs view the performance of their audit firms, the tax industry has so far been shielded from the heat of the new federal auditing rules," said Ron Conlin, partner at J.D. Power and Associates. "It is extremely important for each tax service firm to clearly understand the needs and concerns of their clients and prospective clients. It is easier to switch tax firms than to switch auditors."
Ernst & Young ranked third with a score of 669, just above the industry average of 668, followed by PricewaterhouseCoopers (658), KPMG (639) and BDO Seidman (632).
