Objectives, Scope, and Methodology

Our objectives were to (1) review a group of commonly used notices and offer suggestions to enhance their clarity where appropriate and (2) determine if the IRS’ process for issuing notices produces clear notices. They considered the same factors in determining if the notices clearly conveyed the message IRS wanted to convey to taxpayers, including whether the text of the notice contained IRS’ intended message; title of the notice was consistent with the text; tax statement or statement of adjustment or other transaction was easy to read and compare to the taxpayer’s return; notice made any assumptions and, if so, whether they were clearly explained; terminology in the notice was easy to understand and logically presented; notice clearly explained what, if any, action was expected of the taxpayer notice provided the taxpayer with sufficient, but not excessive, information regarding the situation; and notice provided the taxpayer a telephone number to call or address to write to should he or she have questions or need additional guidance. We identified the computer programming changes required to implement the revisions. For example, we found that many of the 31 notices would have been improved by more specific language, clearer references, consistent terminology, logical presentation of material, and sufficient information and guidance. Faced with numerous demands to alter existing operational programs, ISM has found that it does not have the resources to respond to all requests. TSM is exploring ways of issuing single notices that could address multiple tax issues. IRS is considering (1) placing commonly asked questions and answers on the back of each notice and (2) expanding the existing tele-tax system to include notice information. Conclusions

IRS can do more to improve the clarity of its notices. These recommended notice changes include language and format modifications that are designed to improve notice clarity and usefulness. IRS is presently testing a new tax statement format on two other math error notices. IRS Response

IRS advised us that it is not possible for the existing computer and printing equipment to supply this kind of information on a notice.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) taxpayer notices, focusing on: (1) possible improvements to the notices; and (2) IRS processes for ensuring that its notices clearly convey essential information to taxpayers.

What GAO Found

GAO found that: (1) 31 of the 47 most commonly used notices that it reviewed have clarity problems such as language, content, and format; (2) needed improvements to the notices include more specific language, clearer references, consistent terminology, logical presentation of material, and sufficient information and guidance on how to resolve taxpayer problems; (3) despite internal reviews and recommendations to improve the notices, IRS has delayed many notice revisions and has failed to implement others primarily due to its limited computer programming resources and higher priority programming demands; (4) IRS does not have a system to track recommended notice revisions; (5) IRS is testing whether its correspondence system can generate collection notices and make more timely notice revisions, since it has a number of capabilities that the master file notice system does not; (6) two other IRS initiatives to improve notices include testing a new notice format and acquiring new printing equipment for the service centers; (7) IRS is using its Tax Systems Modernization initiative to explore ways to issue single, comprehensive notices for taxpayers with multiple and interrelated tax problems; and (8) IRS is considering ways to supplement notices with commonly asked questions and appropriate answers to improve the quality of the notices.