According to IRS data, for example, (1) IRS’ telephone assistors answered 11 percent more calls than IRS anticipated and provided accurate answers to 91 percent of taxpayers’ tax law questions; (2) 97 percent of taxpayers’ orders for tax forms and publications were filled accurately; (3) on average, refunds on paper returns were processed and issued within 36 days; and (4) service centers met deadlines for processing tax payments submitted with returns. What IRS’ indicators do not reveal are the difficulties IRS experienced in the 1995 filing season. IRS delayed refunds for up to 8 weeks on other returns (both paper and electronic), even if the returns had no missing or invalid SSNs, to allow staff time to identify duplicate uses of the same SSN and fraud schemes. Because IRS’ indicator is based on the number of calls IRS expects to answer rather than the number it expects to receive, the indicator masks the serious problems taxpayers have encountered in the past and encountered again in 1995 in trying to reach IRS by telephone. The exception was a new document imaging system that IRS used in 1995 to process several forms, including individual income tax returns filed on Form 1040EZ. But, extensive downtime and slower-than-expected processing rates during the filing season limited the effectiveness of SCRIPS.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) performance during the 1995 tax filing season, focusing on the: (1) processing of individual income tax returns and refunds; (2) ability of taxpayers to reach IRS by telephone; and (3) new IRS computer system for processing returns.

What GAO Found

GAO found that: (1) IRS delayed about 7 million refunds for up to 8 weeks because of systematic checks for questionable refund claims; (2) IRS delayed refunds on returns with missing or invalid social security numbers (SSN) to identify duplicate uses of the same SSN and fraud schemes; (3) IRS could have alleviated negative publicity about the delays had it better forewarned taxpayers about the potential for delays; (4) although IRS answered 11 percent more calls from taxpayers in the 1995 filing season, the chance of reaching an IRS assistor was not very good; (5) various IRS processing and accessibility goals mask problems in its actual performance; and (6) IRS experienced numerous problems with its electronic image computer system, including extensive downtime and slow processing rates.