Tax Administration: Opportunities Exist for IRS to Enhance Taxpayer Service and Enforcement for the 2010 Filing Season

摘要

Preparing for the tax filing season is a significant undertaking for Internal Revenue Service (IRS). The filing season is when most individuals file their tax returns, receive refunds, and contact IRS if they have questions. As returns are received, IRS begins a series of automated compliance checks to correct errors on tax returns and ensure that refunds are justified. For example, IRS rejects electronically filed returns with basic errors requiring taxpayers to correct and resubmit them. It uses what is called 'math error authority' to automatically correct obvious noncompliance such as violations of limits on deductions or credits, which allows IRS to avoid costly audits. IRS must begin preparing for each filing season months in advance and preparations include the following. (1) Revising tax forms and publications to implement tax law changes. Recent major law changes that affected the 2009 filing season include the (a) Economic Stimulus Act of 2008, which contained the recovery rebate credit allowing taxpayers who did not receive the full economic stimulus payment last year to claim some or all of the unpaid credit on their 2008 returns; (b) Housing and Economic Recovery Act of 2008 (Housing Act), which included a first-time homebuyer credit of up to $7,500; and (c) American Recovery and Reinvestment Act of 2009 (Recovery Act), which increased the maximum credit to $8,000 and eliminated the payback provision of the first-time homebuyer credit for homes purchased before December 1, 2009. (2) Reprogramming and testing computer systems to incorporate tax law changes. (3) Hiring and training telephone assistors, many of whom are temporary hires employed for the filing season. (4) Coordinating with the paid preparer and tax software industries, which serve as important intermediaries between IRS and taxpayers and prepare close to 90 percent of all returns and all electronically filed returns. IRS also coordinates with a network of volunteer tax return preparers who help elderly individuals and others prepare their tax returns at over 12,000 volunteer sites. Because of the magnitude and importance of the filing season, you requested that we review IRS's 2009 filing season performance.