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More Use IRS E-Filing Service, But Targets Unlikely To Be Met

by Mike Godfrey, Tax-News.com, Washington

04 November 2003


A report from the General Accounting Office has found that the IRS’s performance in the recent tax-filing season showed some improvements on the previous year, but suggested that the agency is set to fall short of its e-filing targets, despite a further increase in the number of taxpayers using this service.

Available data for each of five key filing season activities indicates that the IRS’s performance showed some improvements in 2003 compared to 2002, and revealed that the IRS met or exceeded many of its 2003 performance goals. The tax authority processed returns and issued refunds more promptly and accurately, and increased the rate of electronic filing, although not at a rate that would allow the agency to meet its long-term goal.

While the IRS provided a significantly more accessible telephone service, the accuracy rate of its responses declined. The accuracy of tax law assistance provided at walk-in sites improved, although the number of taxpayers assisted at walk-in sites declined, in part because taxpayers made greater use of the return-preparation assistance offered by volunteer organizations.

Finally, the IRS’s web site performed well and was more user friendly than last year. The IRS attributes improved performance, in part, to fewer tax law changes that affected taxpayers, and also to continued emphasis on performance measures, a key part of its strategy to improve performance in processing returns and providing taxpayer assistance.

The IRS additionally implemented initiatives in 2003 intended to improve filing season performance. For example, it entered into an agreement with a consortium of 17 tax preparation companies to offer free on-line tax preparation, established new toll-free telephone numbers to better target different taxpayers, and began certifying walk-in staff to answer tax law questions.

Over a longer period of time, available data, although limited in some areas, also shows that the IRS’s filing season performance has improved. Since the mid-1990s, the growth of electronic filing has allowed the IRS to close one paper processing center, and the accuracy and accessibility of telephone assistance has improved. While the Congress and taxpayers expect further progress, the improvements to date are a payoff from the IRS’s ongoing modernization.

The number of individual returns filed electronically continued to grow in 2003. The IRS received an estimated 53 million individual tax returns electronically in 2003, an increase of about 13% from 46.9 million in 2002. The percentage of individual tax returns filed electronically reached an estimated 41% in 2003, up from 35.9% in 2002. While the number of tax returns filed electronically in 2003 fell just short of the IRS’s performance goal of 54 million, the IRS met its performance goal for the percentage of individual tax returns filed electronically.

However, the current rate of growth of electronic filing will not allow the IRS to achieve its long-term electronic filing goal of 80% by 2007, despite numerous initiatives to reduce barriers and encourage more electronic filing.


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