reviewed and analyzed IRS reports, testimonies, budget submissions,  other documents and data, including workload data and data from IRS’s  current suite of balanced performance measures, which we used to  assess performance this year;  interviewed IRS officials about current operations, performance relative  to 2004 goals and prior filing seasons, and significant factors and  initiatives that affected performance;  interviewed representatives of large private and non-profit  organizations that prepare tax returns and trade organizations that  represent both individual practitioners and tax preparation companies;   reviewed related TIGTA reports and interviewed TIGTA officials;   followed up on GAO recommendations made in prior filing season and   tested for statistical differences between yearly changes for various IRS   analyzed information posted to IRS’s Internet Web site based on GAO’s  knowledge of the type of information taxpayers look for, and assessed  the ease of finding information, as well as the accuracy and currency of  data on the site;   reviewed information from companies that evaluated Internet  performance and assessed various aspects of IRS's Web site; and   reviewed staffing data for paper and electronic processing, telephone  assistance, and walk-in assistance. IRS Has Generally Improved Its Performance Processing Tax Returns but Does Not Expect to Meet Its Long-Term Electronic Filing Goal

IRS processed individual income tax returns and issued refunds smoothly  in 2004. IRS nearly met or exceeded many of its 2004 performance goals,  with performance generally improving since 2001. However, despite  continued growth this year and despite various initiatives to encourage  electronic filing, IRS is not on track to achieve its long-term goal of having  80 percent of all individual tax returns filed electronically by 2007. Appendix 1 provides details. However, the accuracy of CSR answers to tax law questions declined. Taxpayer Use of IRS Walk-in Sites Continued to Decrease While Use of Volunteer Sites Increased; Quality Data Are Limited

The total number of taxpayers visiting IRS walk-in sites continued to  decrease while those having their returns prepared at volunteer sites  increased. 2). Account Assistance: During the 2004 filing season, IRS did not measure  account assistance accuracy at its walk-in sites. IRS Has Initiatives Under Way Intended to Better Measure Quality at Walk-in and Volunteer Sites Though Implementation May Not be Timely

IRS has initiatives under way intended to better measure the quality of key  services at walk-in and volunteer sites. Use of IRS’s Web Site Increased, But Concerns Exist About a Feature for Answering Tax Law Questions

IRS’s Web site is important because it provides taxpayers and tax  practitioners with customer service without having to directly contact IRS  employees. It also reported that, during the filing  season, IRS’s response time was consistent with other organizations  being measured. IRS should be commended for its efforts to improve  service. At the same time, however, we have identified several areas that present  opportunities for further improvement. Until IRS fully implements these initiatives  and gathers data on quality, it may not be able to effectively monitor and  improve performance at its walk-in sites or volunteer sites and, as a  consequence, could be risking its credibility among taxpayers who use the  sites and the community-based coalitions that prepare returns at volunteer  sites. Therefore, the data is likely to be reliable to show trends  over time.
Why GAO Did This Study

Most taxpayers have their only contact with IRS during the filing season, with tens of millions filing their returns, getting refunds, and seeking assistance by calling or visiting IRS's offices or Web site. GAO was asked to assess IRS's performance in 2004 relative to goals and prior years' performance as well as initiatives or other factors that significantly affected performance for the following areas: (1) the processing of paper and electronic returns, (2) telephone service, (3) walk-in service, and (4) Web site service.

What GAO Found

During the 2004 filing season, IRS met many of its performance goals and continued a trend of improvement in recent years. However, IRS did not improve in all dimensions of its filing season services and lacks sufficient data to evaluate quality in others. IRS processed returns and issued refunds smoothly. The proportion of returns filed electronically is up to 47 percent. Despite this achievement and numerous initiatives to increase electronic filing, IRS does not expect to reach its long-term goal of having 80 percent of all individual tax returns filed electronically by 2007. A higher percentage of taxpayers was able to reach IRS assistors by telephone than last year and the accuracy rate for providing taxpayers with information about their accounts remained stable. However, the accuracy rate for answering tax law questions declined to 2001 levels. Consistent with IRS's strategy, the number of taxpayers visiting IRS walk-in sites declined, while the number having tax returns prepared at volunteer sites increased. Finally, although IRS continued to expand its Web site services, the site's feature for answering tax law questions raises some concerns. Despite the 2004 improvements, IRS has opportunities for further service improvements. For example, IRS has limited data with which to assess the quality of key services at its walk-in sites and sites staffed by volunteers. Although IRS has initiatives under way to measure quality at both types of sites, the initiatives have been delayed and important details have not yet been determined, which may undermine IRS's efforts to improve services in this area. In the meantime, some of IRS's quality data is likely to be biased. Until IRS fully implements its initiatives and gathers data on quality, it will have difficulty monitoring and improving performance at its walk-in sites and volunteer sites.