	Background

Under tax law, married couples who file joint tax returns are treated as a single unit, which means that each spouse becomes individually responsible for paying the entire amount of the tax associated with his or her joint return. IRS procedures require that its staff establish a separate, individual tax account for the taxpayer who was judged responsible for the tax liability and transfer the tax liability to that account. The principal initiatives that IRS undertook to improve its management of the innocent spouse case workload included   centralizing case processing within one W&I location—its Cincinnati site in Covington, Kentucky—and bringing more of the program staff under the project manager’s direction;   developing an automated decision-making and case-building tool;   developing a model to estimate future workload and staffing needs and monitor program performance; and   measuring the quality of case decision making, including adherence to procedures and the accuracy of decisions. TRRs are to perform a variety of services at IRS field locations throughout the country. IRS decided 61,423 cases in fiscal year 2001, or about 21 percent more than the 50,840 cases it received, reducing some of the backlog from previous years. To some extent, IRS also was able to reach decisions on more innocent spouse cases than it received in fiscal year 2001 because the portion of innocent spouse cases it receives that are not eligible for relief has been increasing. On the basis of our review of IRS’s procedures and our inspection of the process used at the Cincinnati processing site for transferring tax liabilities when innocent spouse relief was approved, we concluded that the procedures conform with the federal guidance for managing information processing. As a result, IRS does not know how useful the site is to taxpayers or what effect, if any, it has had on lessening taxpayer confusion about innocent spouse eligibility. The Innocent Spouse Program Web site, which went on-line in December 1999, was developed to help taxpayers determine their eligibility for innocent spouse relief. Although the Web site’s enhancements may provide IRS with more useful information than it currently has, the agency’s plans did not call for obtaining directly from taxpayers any information on the Web site’s usefulness.
What GAO Found

By law, married persons who file joint tax returns are each fully responsible for the accuracy of the tax return and for the full tax liability. This is true even though only one taxpayer may have earned the wages or income shown on the tax return. Under the Internal Revenue Service's (IRS) Innocent Spousal Program, IRS can relieve taxpayers of tax debts on the basis of equity considerations, such as not knowing that their spouse failed to pay taxes due. Since passage of the IRS Restructuring and Reform Act of 1998, IRS has received thousands of requests from taxpayers for innocent spouse relief. IRS's inability to provide timely responses to such requests has generated concerns among taxpayers, Congress, and other stakeholders. IRS reached decisions on 21 percent more cases than it received in fiscal year 2001, reducing some of its backlog from previous years. The agency accomplished this through a variety of initiatives, including a substantial staffing commitment, centralization and specialization, automated tools, and routine estimating of future workload and staffing needs. IRS's procedures conform to applicable guidance for transferring tax liabilities from joint tax accounts to individual tax accounts when innocent spouse relief has been granted. The procedures follow federal internal control guidelines by requiring a mix of checks, verifications, reconciliations, and documentation to support steps throughout the process. The Web site for IRS's Innocent Spouse Program--part of IRS's agency wide Web site--went on-line in December 1999 to help taxpayers determine their eligibility for innocent spouse relief. Because IRS has not evaluated the Web site, the agency does not know how useful the Web site has been to taxpayers in determining their eligibility for innocent spouse relief.