Tax Administration

Internal Revenue Service (IRS) indicators show that the agency did a good job processing returns at its service centers during the 1992 filing season. The Earned Income Credit, however, continued to cause problems. IRS often gave the credit incorrectly to taxpayers who did not ask for it. In addition, IRS' procedures for processing the credit placed different requirements for some taxpayers, delaying their receipt of the credit. GAO also found that IRS' effectiveness in answering tax law questions over its toll-free telephone lines and filling orders for tax materials fell during the 1992 filing season.

GAO found that: (1) IRS received 108.1 million individual returns from January 1 through May 1, 1992, a 1-percent increase over 1991; (2) IRS increased the use of alternative filing systems, including 10.9 million electronic tax returns and 126,000 telephoned returns; (3) service centers met or exceeded the 98-percent refund accuracy rate, and refund response time averaged less than 40 days; (4) the Earned Income Credit (EIC) caused continued problems for IRS and taxpayers; (5) in 1992, IRS gave EIC to 600,000 taxpayers who had not claimed it and does not plan to recover the erroneous payments; (6) IRS placed different requirements on taxpayers when processing EIC, which delayed some taxpayers' receipt of EIC; (7) the accuracy of telephone assistance increased but the telephone system's accessibility decreased; (8) IRS accuracy in providing tax materials in response to GAO test mail and telephone orders declined slightly but there was a sharp drop in timeliness; and (9) delays in congressional tax legislation, timely printing of publications, and on-line computer problems contributed to dissemination problems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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