Tax Administration

During the 1999 tax filing season, the Internal Revenue Service (IRS) met or exceeded several of its performance measure goals. However, IRS fell short in two key areas: the ability of taxpayers to access IRS' toll-free telephone service and the quality of IRS' answers to taxpayers who called with tax law questions. Also, IRS' accomplishment in a third area?the timeliness of refunds for paper returns?raised questions about the agency's timeliness that IRS could not answer. Other significant findings from the 1999 tax filing season included the following: IRS enhanced the availability of its walk-in service by increasing Saturday hours and making services more convenient for taxpayers who did not have easy access to a walk-in office. Use of IRS' World Wide Web site rose significantly during the 1999 tax filing season. IRS stopped millions of dollars in erroneous claims for the earned income credit in 1999 by validating social security numbers and scrutinizing some claims. Of the nearly 126 million tax returns filed in 1999, 29.3 million, or 23 percent, were filed electronically. IRS launched several initiatives directed at making electronic filing paperless and thus more appealing to potential users. Twenty percent of the returns filed in 1999 included the new child tax credit. Many of these taxpayers, however, miscalculated the credit amount, and many other taxpayers who were eligible for the credit failed to claim it. IRS made significant changes to the computer systems that it uses to process returns and remittances without any discernable processing disruptions.

GAO noted that: (1) IRS met or exceeded its 1999 goals for several performance measures, but fell short of its goals in two key areas - taxpayers' ability to access IRS' toll-free telephone service and the quality of IRS' responses to taxpayers tax law questions; (2) certain features of IRS' methodology for measuring the quality of responses to tax law questions also warranted IRS' attention; (3) the timeliness of refunds for paper returns raised some questions about IRS' timeliness that IRS could not answer; (4) IRS attempted to improve telephone service in 1999, however, service did not improve, but deteriorated; (5) GAO's work indicated this deterioration resulted from (a) unrealistic assumptions about the implementation and impact of IRS' changes, and (b) other problems managing staff training and scheduling and implementing new technology; (6) IRS enhanced the availability of its walk-in services by increasing Saturday hours and making services more accessible to taxpayers who did not have convenient access to a walk-in office; (7) IRS did a better job of measuring walk-in customer satisfaction in 1999 than 1998; (8) however, IRS made little progress in measuring the quality and timeliness of its walk-in services; (9) use of IRS' World Wide Web site on the Internet increased significantly during the 1999 filing season, but IRS data pointed to problems with taxpayers getting answers to tax law questions via electronic mail; (10) IRS stopped millions of dollars in erroneous EIC claims in 1999 by validating social security numbers and scrutinizing certain claims; (11) IRS implemented new procedures (called recertification) in 1999 that require certain taxpayers to document their eligibility for the EIC before IRS approves their claim; (12) GAO identified certain opportunities to streamline the recertification process and thus make it less burdensome to taxpayers and IRS; (13) IRS service centers were not consistently following the national guidelines for recertification, which could result in disparate treatment of taxpayers; (14) IRS implemented several initiatives in 1999 directed at making electronic filing paperless and thus more appealing to potential users; (15) 20 percent of the returns filed in 1999 included the new child tax credit; (16) many of those taxpayers erred in calculating the credit amount, while others who were eligible for the credit failed to claim it; (17) correction of these errors increased IRS' processing workload; (18) IRS made significant changes to the computer systems it uses to process returns and remittances; and (19) IRS accomplished those changes without any discernible processing disruptions.

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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