Conclusions

Approximately one million taxpayers per year, as well as IRS, incur costs to abate tax assessments created due to exemption errors. Avoiding the errors, or correcting them earlier, could reduce the burden on taxpayers of complying with tax laws. IRS has taken one step intended to help taxpayers avoid these errors— revising instructions for claiming exemptions. In another step, aimed at correcting some exemption errors that continue to be made, IRS decided to do checks of name and SSN errors for spousal exemption claims during returns processing. In addition, IRS is considering implementing earlier—during returns processing—checks for dependent exemption errors and taxpayer contacts if the checks do not correct exemption errors. Considering doing such checks and contacts earlier is worthwhile. However, IRS did not provide us with any details or documentation about how or when decisions would be made. Little is known about how to reduce nonexemption errors that lead to assessments being abated. Because over one million taxpayers were burdened by such assessments, research to reduce the errors is worth considering.
What GAO Found

About one million taxpayers per year, as well as the Internal Revenue Service (IRS), incur costs to abate tax assessments created due to tax exemption errors. Avoiding the errors, or correcting them earlier, could reduce the burden on taxpayers of complying with tax laws. IRS has taken one step intended to help taxpayers avoid these errors--revising instructions for claiming exemptions. In another step, aimed at correcting some exemption errors that continue to be made, IRS decided to check name and social security number errors for spousal exemption claims during returns processing. In addition, IRS is considering implementing earlier--during returns processing--checks for dependent exemption errors and taxpayer contacts if the checks do not correct exemption errors. Doing such checks and contacts earlier is worthwhile. Although the cost savings to IRS are unknown, many taxpayers would benefit. However, IRS did not provide GAO with any details or documentation about how or when decisions would be made. Little is known about how to reduce nonexemption errors that lead to assessments being abated. Because more than one million taxpayers were burdened by such assessments, research to reduce the errors is worth considering.