The Treasury Inspector General for Tax Administration has released preliminary data for the tax-filing season on returns received and processed as of March 10.

TIGTA gave the Internal Revenue Service mostly positive feedback on the first half of its busy season, noting that the agency was presented with a number of unique challenges this year, including the one-time refund of the Telephone Excise Tax, implementation of the split refund option, and late passage of a law extending some tax deductions.

According to the report:

  • Electronic filing increased 4.9 percent, compared to the same period in 2006; however, while the number of taxpayers electronically filing their tax returns from home computers was up 8.1 percent, the number of taxpayers taking advantage of free online filing was down 5.5 percent from a year ago.
  • The number of claims for the phone refund was lower than expected, especially the number expected from taxpayers who were not otherwise required to file a return.
  • Additionally, the IRS had received over 46,000 claims for amounts over $500. Some of those excessive claims were so high in relation to the taxpayers’ incomes that the taxpayers would have to have paid more than their total yearly incomes for long-distance or bundled telephone services to justify the claims.
  • There has been limited taxpayer use of the option to split refunds into up to three different bank accounts. The IRS had estimated 3.8 million split-deposit forms would be filed this year, and the agency now estimates that the actual number will be significantly lower.
  • The IRS’s delay in processing returns with deductions for the educator expense, tuition and fees, and state sales tax deductions has not caused any significant problems.
  • While the IRS plans to assist more than 6 million taxpayers, its walk-in Taxpayer Assistance Centers served only 1.8 million taxpayers during this filing season.
  • The IRS reported a 9.1 percent increase in the number of visits to www.IRS.gov over the same period in the 2006 filing season. It also reported a 22 percent increase in the number of taxpayers obtaining their refund information online.

The inspector general also noted that the implementation of the new release of the Customer Account Data Engine, which will eventually replace the IRS Master File System, was significantly delayed this filing season. The data engine is designed to post information to taxpayer accounts daily rather than weekly, meaning faster refunds for taxpayers and more accurate information for IRS employees.The latest release was to be placed into production in mid-January, but was delayed until the first week of March. The delay means that the IRS projection of tax returns to be posted on the system has been reduced from about 33 million to between 16 million and 19 million returns.
The full report, “Interim Results of the 2007 Filing Season,” is available at www.ustreas.gov/tigta/auditreports/2007reports/200740072fr.pdf.

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