Business Tax Returns Were Successfully Processed in Two
Locations in 2002; However, Taxpayers Need More Information on Where to File
December 2002
Reference Number: 2003-30-038
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
December
23, 2002
MEMORANDUM FOR
COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED DIVISION
COMMISSIONER, WAGE AND
INVESTMENT DIVISION
FROM: Gordon C. Milbourn III /s/ Gordon C.
Milbourn III
Acting Deputy Inspector
General for Audit
SUBJECT: Final Audit Report - Business Tax Returns
Were Successfully Processed in Two Locations in 2002; However, Taxpayers Need
More Information on Where to File (Audit # 200230017)
This
report presents the results of our review of issues affecting the Internal
Revenue Service’s (IRS) ability to process business tax returns under its new
organizational structure at the two Business Submission Processing Centers
located in Ogden, Utah, and near Cincinnati, Ohio.
One of the factors
significant to the success of the IRS’ modernization and workload transition
efforts was the consolidation of business tax returns processing to two
Submission Processing Centers. Calendar
Year 2002 was the first year that essentially all business returns were to be
processed in only two centers.
In summary, the IRS’ efforts
to process all business returns in these two centers were successful. As of August 10, 2002, the 2 Business
Submission Processing Centers had processed over 25 million of the nation’s
business tax returns. These returns
were not processed without problems, but management at the two centers used
creative solutions to resolve many of these problems.
Despite this success, the
IRS could improve the processing of business tax returns by better educating
business taxpayers and their tax practitioners on where to file business tax
returns. Between January 1 and August
10, 2002, over 3.6 million paper business returns were sent to the wrong
Submission Processing Centers, representing 14 percent of all paper business
returns filed. We found that some tax
return instructions contained incorrect filing locations, and educational media
did not provide sufficient information for business taxpayers on where to
file. We recommend that forms,
instructions, and educational materials be updated to reflect new filing
locations.
We identified two other
issues that, if addressed, could improve service to business taxpayers. First, the IRS could both reduce the
government’s costs to issue refunds to corporate taxpayers and increase
taxpayer satisfaction by improving the processing of requests for direct
deposits and making changes, as necessary, to U.S Corporation Income Tax
Returns (Forms 1120 and 1120-A) to make selecting the direct deposit option
easier. We informed the IRS of this
issue, and it took actions to improve processing. We recommend the IRS gather data to determine if the action taken
resolved or significantly improved the problem of IRS employees overlooking
taxpayer requests for direct deposits.
In addition, the IRS should monitor the volume of direct deposit
requests, and if the number of taxpayers requesting the direct deposit option
remains low, consider appropriate changes to Forms 1120 and 1120-A. Secondly, we identified a computer
programming problem which prevented IRS employees from identifying tax
practitioners authorized to discuss taxpayers’ returns. As a result, IRS employees could not honor
taxpayers’ wishes to discuss problems or questions regarding their tax returns
with their tax practitioners. We
informed the IRS about this issue, and immediate action was taken to correct
the programming error.
Office of Audit
Comment: Although the IRS agreed
to revise tax form instructions, publications, and its web site, management
disagreed with our estimate of savings that could be realized by making these
revisions. They stated that based on
feedback received from the tax practitioner community, most of the misdirected
tax returns were not the result of inaccurate “Where to File” instructions on
the part of IRS, but occurred because of the following taxpayer errors:
§
Continued use of outdated envelopes containing the former
“Where to File” address.
§
Filing a taxpayer’s individual and business tax returns in
the same envelope.
During our audit, we asked the IRS to provide data regarding the
effect that our recommendation would have on the number of misdirected tax
returns. The IRS provided no data during
the audit or during discussions of the draft report. While we believe that the taxpayer mistakes cited by the IRS are
caused, in part, by not having sufficient IRS information on where to file, and
while we do not completely agree with the information provided by the IRS in
their response, we have nevertheless revised our estimate. See Appendix IV for details of our revised
estimate.
Copies of this
report are also being sent to the IRS managers who are affected by the report
recommendations. Please contact me at
(202) 622-6510 if you have questions or Parker F. Pearson, Acting Assistant
Inspector General for Audit (Small Business and Corporate Programs), at (410)
962-9637.
Overall,
Business Tax Returns Were Successfully Processed in Two Submission Processing
Centers
Taxpayers
and Tax Practitioners Need Better Information on Where to File Business Tax Returns
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Outcome Measures
Appendix VI – Business Tax Returns (Tax Year 2001) with Authorizations
for Third Party Contact
Appendix VII – Management’s Response to the Draft Report
As part of the Internal Revenue Service’s (IRS) modernization and workload transition efforts, the IRS has consolidated the processing of business tax returns to two Business Submission Processing Centers. This transition was substantially completed during Calendar Year (CY) 2002. Because the transition to two Business Submission Processing Centers is significant to the IRS’ modernization efforts, we initiated this audit to identify any issues affecting the IRS’ ability to process business tax returns under this new organizational structure.
We conducted our audit from December 2001 to September 2002 in the Ogden and Cincinnati Submission Processing Centers and the IRS’ Small Business/Self-Employed (SB/SE) Division’s Customer Account Services Headquarters. The audit was conducted in accordance with Government Auditing Standards. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
As of August 10, 2002, the 2 Business Submission Processing Centers had processed over 25 million of the nation’s business tax returns. Overall, the two Centers processed the tax returns accurately and completed the processing within prescribed time periods.
While the IRS encountered some problems in processing these returns, management at the two centers used creative solutions to resolve the problems that arose. For example:
· Batch carts for storing and moving tax returns became extremely scarce at times because (1) the processing peaks for the different types of business tax returns overlapped, and (2) the two centers were still processing some individual income tax returns. The centers used a variety of methods to address the problem including borrowing shopping carts from local grocery stores.
· One center experienced a significant backlog resolving computer-identified errors on electronic tax returns. To help alleviate this center’s backlog, tax examiners in the other center accessed many of the backlogged cases remotely via computer and resolved the errors.
· Many employees from the Ogden Submission Processing Center were involved in the Winter Olympics that were held when returns processing was at or near its peak. Management worked closely with those employees and their supervisors to balance the needs of the employees with those of the IRS.
Despite these successes, we identified three issues that the IRS could address to improve the processing of business tax returns. The first of these issues directly relates to the transition of business returns processing to two Submission Processing Centers. The other two issues relate to business returns processing in general.
The IRS could improve the processing of tax returns by
better educating taxpayers and their tax practitioners on where to file
business tax returns. Between January 1
and August 10, 2002, taxpayers and tax practitioners sent over 3.6 million
paper business tax returns to the wrong Submission Processing Centers. This represents 14 percent of all paper
business tax returns filed during that period.
The IRS’ samples of these misrouted tax returns indicated that over 60
percent were prepared by tax practitioners.
We identified several possible reasons why such a high percentage of
business tax returns were filed at incorrect locations.
·
Some
tax return instructions contained the wrong filing locations.
The instructions on where to file the following four business tax
returns were not updated to reflect the new filing locations:
-
Generation-Skipping
Transfer Tax Return for Distributions (Form 706-GS[D]).
-
Notification
of Distribution From a Generation-Skipping Trust (Form 706-GS[D-1]).
-
Generation-Skipping
Transfer Tax Return for Terminations (Form 706-GS[T]).
-
United
States Short Form Gift Tax Return (Form 709-A).
Instructions on each of these
forms told taxpayers to file their returns at 1 of the 10 IRS Centers, which
was the prior IRS processing structure.
·
The
IRS did not consistently inform taxpayers of the new filing locations in the
“Changes to Note” sections of the tax return instructions. The instructions for many business tax forms contain a
“Changes to Note” section (or a similar section) that discusses recent tax law
changes or other changes of which taxpayers should be aware. This section of the instructions for many
tax forms discussed the new locations for filing business tax returns. However, the “Changes to Note” sections of
the following forms made no mention of the change in filing locations:
-
Employer’s
Annual Federal Unemployment (FUTA) Tax Return (Forms 940 and 940-EZ).
-
Employer’s
Quarterly Federal Tax Return (Form 941).
-
Employer’s
Annual Tax Return for Agricultural Employees (Form 943).
-
Circular
E, Employer’s Tax Guide (Publication 15).
·
The
IRS’ web site, The Digital Daily, did not help the business taxpayer
with regard to information on where to file business tax returns. The web site contains links to web pages with information
tailored specifically for individual taxpayers, business taxpayers, tax
professionals, charities and non-profit organizations, government entities, and
retirement plans. Each of these web
pages contains a link entitled “Where to File.”
Picture
1 shows the web page designed for business taxpayers.
Picture
1 was removed due to its size. To see
Picture 1, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.
Picture
2 shows the web page which appears when taxpayers click on the “Where to File”
link from the business web page.
Regardless of which of the specially tailored web pages the taxpayer is
viewing, the “Where to File” link takes the taxpayer to the same web page with
detailed instructions and addresses for filing individual tax returns. This web page tells business taxpayers to
refer to the respective tax packages for the locations at which to file their
tax returns.
Picture 2 was
removed due to its size. To see Picture
2, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.
·
Other
IRS educational materials similarly did not assist business taxpayers. For example, a news release issued by the IRS on August 9,
2002, entitled, “IRS Provides Center Addresses to Tax Professionals,” discussed
the redistribution of workload among the IRS’ Submission Processing Centers and
again provided addresses only for individual tax returns. In addition, an e-mail service from the IRS, IRS
Digital Dispatch, issued a message on August 13, 2002, again providing a
link to the addresses for preparers of individual tax returns, but with no
similar information for business tax returns.
Part of the IRS’ mission is to help all taxpayers
understand and meet their tax responsibilities. Without improved and continued education on the proper locations
at which to file their paper business tax returns, both taxpayers and tax
practitioners will most likely continue to send their business tax returns to
the same location they have sent them in the past.
Even taxpayers who are aware of a change and who are
looking for information to help them file in the correct location may become
frustrated. For example, a tax
practitioner advised us that she had contacted the IRS specifically to complain
about not having information on the change in filing locations for business tax
returns.
Since only two IRS Submission Processing Centers are now
prepared to process business tax returns, any such returns sent to one of the
other eight centers must be boxed and shipped to the appropriate center. We estimate the cost of preparing and
shipping these documents could be reduced by $238,000 per year with greater
emphasis on taxpayer education. (See
Appendix IV for details.)
1. The Director, Tax Forms and Publications,
Wage and Investment (W&I) Division, should ensure that the following
changes are made to IRS forms and publications:
·
Update
the instructions on where to file Forms 706-GS(D), 706-GS(D-1), 706-GS(T), and
709-A.
·
Update
the “Changes to Note” (or similar) section of the Forms 940 and 941
instructions to bring to the taxpayers’ attention that there has been a change
in filing locations.
·
Indicate
in the appropriate section of Publication
15 that there has been
a change in filing locations for employment tax returns (Forms 940, 940-EZ,
941, 943, and 945).
Management’s Response: The Director, Tax Forms and Publications agreed to revise the
applicable forms and the publication to inform taxpayers of the new filing
locations.
2.
The Director, Customer Account Services, SB/SE Division should
continue to monitor the volumes of Forms 940-EZ and 943 filed in the wrong
Submission Processing Centers during CY 2003 and, if the volumes remain
significant, work with the Director, Tax Forms and Publications, W&I
Division, to obtain updates to the “Changes to Note” (or similar) sections of
these forms similar to those obtained for Forms 940 and 941.
Management’s Response: Management from the Program Management/Process Assurance Branch,
within Customer Account Services, agreed to continue to monitor the volumes of
transshipped work by form type (including Forms 940-EZ and 943). If volumes of Forms 940-EZ and 943 are high,
they will take actions to obtain updates to the “Changes to Note” sections of
these forms.
3.
The
Director, Taxpayer Education and Communication, SB/SE Division, should ensure
that paper business return filing locations are provided on the appropriate pages
of the IRS Digital Daily web site, as well as in other appropriate IRS
educational materials. At a minimum,
each web page related to business tax returns should include a link to the
information included on the “Tax Professional” web page.
Management’s Response: The Director, Taxpayer Education and Communication agreed to make
changes to the IRS’ website to include a link to information on where to file
business returns on each page on the website.
Office of Audit Comment: IRS management disagreed with the estimated cost savings that
could be realized by taking corrective actions to recommendations 1 through
3. They stated that based on feedback
received from the tax practitioner community, most of the misdirected tax
returns were not the result of inaccurate “Where to File” instructions on the
part of the IRS, but occurred because of the following taxpayer errors:
§
Continued
use of outdated envelopes containing the former “Where to File” address.
§
Filing
a taxpayer’s individual and business tax returns in the same envelope.
During our audit, we asked the IRS to provide data
regarding the effect that our recommendations would have on the number of
misdirected tax returns. The IRS
provided no data during the audit or during discussions of the draft
report. While we believe that the
taxpayer mistakes cited by the IRS are caused, in part, by not having IRS
information on where to file, and while we do not completely agree with the
information provided by the IRS in their response, we have nevertheless revised
our estimate. See Appendix IV for
details of our revised estimate.
Beginning in Tax Year 2001, corporate taxpayers that were
due refunds were given the option of having their refunds deposited directly to
the financial institutions of their choice.
A similar option has been available to individual taxpayers since the
mid-1990s. This method of issuing
refunds is advantageous to the government because it costs less to issue an
electronic refund than a paper check; it is advantageous to the taxpayer
because an electronic refund is more secure than a paper check and is received
in less time.
Based on our judgmental samples, it appears that a
significantly smaller percentage of corporate taxpayers than individual
taxpayers received electronic refunds.
As of August 9, 2002, 41 percent of all individual income tax returns
claiming refunds received those refunds through direct deposit. We selected a judgmental sample of 60
corporate tax returns at various stages of IRS processing and found that, of 19
requesting refunds, only 5 (26 percent) selected the direct deposit option, and
none actually received their refund by direct deposit.
After reviewing the results of our judgmental sample, we
used a computer program to identify all Forms 1120 and 1120-A processed between
January 1 and September 7, 2002, claiming refunds nationwide. Of 97,068 corporate refunds claimed, only 63
were processed as direct deposits.
One probable reason is that to request direct deposit,
corporate taxpayers must fill out a separate form, Direct Deposit of Corporate
Tax Refund (Form 8050). In contrast,
individual taxpayers can indicate that choice directly on their U.S. Individual
Income Tax Return (Form 1040) without filing an additional form. Because business taxpayers must obtain and
file another tax form to select the direct deposit option, they may consciously
or unconsciously overlook the option.
In addition, because the direct deposit information was included on a
separate form, IRS employees were overlooking it. In fact, IRS employees overlooked every taxpayer request for a
direct deposit in our sampled cases. We
informed the IRS about this issue on May 20, 2002. As a result, the IRS issued alerts to its processing employees
and initiated a change to processing instructions.
The potential for taxpayer burden and dissatisfaction exists when the IRS does not provide taxpayers with the form of refund that they requested. For taxpayers with large refunds, the loss of interest earned can be significant if a refund is issued via paper check versus a direct deposit. In addition, the cost to the government is increased when paper checks are issued.
The IRS could increase taxpayer satisfaction by improving the processing of requests for direct deposits and changing, as necessary, Forms 1120 and 1120-A to make selecting the direct deposit option easier. Initially, individual taxpayers were required to file a separate form to select the direct deposit option, but the IRS now includes this option on the Form 1040. This action would also reduce the costs associated with issuing corporate refunds.
4.
The
Director, Customer Account Services, SB/SE Division, should gather data to
determine whether the actions taken to change processing procedures resolved or
significantly improved the problem of IRS employees overlooking requests for
direct deposit of refunds or whether additional improvements need to be
made. This issue should also be
addressed in training for processing employees.
Management’s Response: The Director, Customer Account Services took immediate action to
address the processing deficiencies discussed.
The changes to processing procedures and instructions will be emphasized
when processing employees are trained.
5.
The
Director, Customer Account Services, SB/SE Division, should monitor the volume
of corporate taxpayers selecting the direct deposit option. If the number does not significantly
increase after steps are taken to ensure that all direct deposit requests are
properly processed, the Director should work with the Director, Tax Forms and
Publications, W&I Division, to make appropriate changes to Forms 1120 and
1120-A necessary to ensure that corporate taxpayers are aware of, and can
easily select, the direct deposit option.
Consideration should be given to including the direct deposit option on
the Forms 1120 and 1120-A in the future.
Management’s Response: The Director, Customer Account Services has requested computer
programming to capture the volumes of taxpayers requesting direct deposit of
their refunds. If volumes do not rise
significantly, further steps will be taken to increase taxpayer awareness of
the direct deposit option.
Business taxpayers filing certain tax forms have the option
to authorize the IRS and the specific tax practitioner who prepared their tax
returns to discuss the returns. (See
Appendix VI for a list of business tax forms containing the option for
taxpayers to make this authorization.)
This authorization gives the IRS permission to contact the tax
practitioner to obtain answers to questions that may arise during the
processing of the return. It also
informs the IRS that the tax practitioner has permission to contact the IRS for
information about the processing of the return or the status of any refund or
payment. The IRS may not disclose any
information regarding the tax return to anyone other than the taxpayer if this
authorization is not present. This
authorization applies only to the individual whose signature appears in the
“Paid Preparer’s Use Only” or the “Third Party Designee” sections of the
returns. It does not apply to the firm,
if any, shown in those sections.
If, during the processing of a tax return, questions arise
on the part of the IRS or the tax practitioner, IRS employees use specific
computer command codes to display information about the tax return on their
computer screens. Among this
information should be the tax practitioner authorization. However, because of a programming error, IRS
computer screens were not accurately reflecting all of the data required to
identify the tax practitioner authorized to discuss a taxpayer’s return. As a result, IRS employees could not honor
taxpayers’ wishes to discuss problems or questions regarding their tax returns
with their tax practitioners.
We informed the IRS about this issue on May 23, 2002. The IRS took immediate action to correct the
computer programming error. Computer
screens now properly display all necessary tax practitioner data.
Appendix I
Detailed Objective, Scope, and Methodology
Our overall objective was to identify issues affecting the Internal Revenue Service’s (IRS) ability to process business tax returns under its new organizational structure at the two Business Submission Processing Centers located at Ogden, Utah and near Cincinnati, Ohio. To accomplish our objective, we:
I. Interviewed officials at the Small Business/Self-Employed Division’s Customer Account Services Headquarters office and at the two Submission Processing Centers to discuss areas of concern and action plans.
II. Discussed and/or reviewed available documentation regarding the two Submission Processing Centers’ workforce, training, and work schedules.
III. Monitored the volumes of individual and business tax returns received and processed at the two Business Submission Processing Centers to identify any significant backlogs and determine whether the volumes of returns planned for were received.
IV. Reviewed a judgmental sample of paper business tax returns at various stages of processing at the two Business Submission Processing Centers to determine if the returns were processed correctly and if the information on the returns was accurately posted to the taxpayers’ accounts on the IRS’ Business Master File (BMF). See Appendix V for details of our sample selection.
V.
Determined
if the eight Submission Processing Centers assigned to process individual tax
returns followed the proper transshipment procedures and guidelines in sending
all business tax returns that they received in error to the two Business
Submission Processing Centers and monitored the volume of transshipped returns.
VI.
Evaluated
the adequacy of IRS actions to educate
taxpayers and practitioners on where to file their tax returns.
VII.
Determined whether the IRS
had taken appropriate steps to implement tax legislation that affected the
processing of business tax returns during 2002.
VIII.
Monitored
the issues discussed at production meetings at both Business Submission
Processing Centers to determine if any major problems, work stoppages, or other
issues developed that could affect the IRS’ ability to process tax returns
within established time periods and if any problems were being generated during
the normal processing of business tax returns that were surfacing during or
adversely affecting other IRS processes.
IX.
Developed
a computer program to identify U.S. Corporation Income Tax Returns (Forms 1120
and 1120-A) processed by the IRS between January 1 and September 7, 2002,
claming refunds. Our computer program
also identified those corporate taxpayers whose refunds were processed as
direct deposits.
Appendix II
Major Contributors to This Report
Parker F. Pearson, Acting Assistant Inspector
General for Audit (Small Business and Corporate Programs)
Richard J. Dagliolo, Director
Kyle R. Andersen, Audit Manager
L. Jeff Anderson, Senior Auditor
Scott D. Critchlow, Senior Auditor
Greg A. Schmidt, Senior Auditor
Roy E. Thompson, Senior Auditor
Ron
Stuckey, Computer Specialist
Appendix III
Acting Commissioner
N:C
Deputy Commissioner, Small Business/Self-Employed
Division S
Deputy Commissioner, Wage and Investment Division W
Director, Customer Account Services, Small
Business/Self-Employed Division S:CAS
Director, Tax Forms and Publications, Wage and Investment
Division W:CAR:MP:FP
Director, Taxpayer Education and Communication, Small
Business/Self-Employed Division S:T
Chief Counsel CC
National Taxpayer Advocate
TA
Director, Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk
Analysis N:ADC:R:O
Office of Management Controls N:CFO:F:M
Audit Liaisons:
Commissioner, Small Business/Self-Employed
Division S
Commissioner, Wage and Investment Division W
Director, Customer Account Services, Small
Business/Self-Employed Division S:CAS
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. These benefits will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome Measure:
· Cost Savings (Funds Put to Better Use) – Potential; $1,190,000 (see page 2).
Methodology Used to Measure the Reported Benefit:
As of August 10, 2002, the Internal Revenue Service (IRS) had processed a total of 25.3 million paper business tax returns in its 2 Business Submission Processing Centers. Approximately 3.6 million of those returns (14 percent) were filed in the wrong Submission Processing Center and had to be shipped to the Ogden or Cincinnati Centers for processing. The IRS estimates for all of Calendar Year (CY) 2002 that just over 42 million paper business returns will be processed in Ogden and Cincinnati. Applying this estimate to the percentage of returns that were misrouted as of August 10, 2002, we estimate that for CY 2002, the IRS will ship 5.88 million tax returns received in the wrong Submission Processing Center. IRS officials estimate a cost of $30.36 per box to ship these returns. On average, 300 tax returns will fit into a box for shipping. The total estimated cost to ship 5.88 million returns is, therefore, approximately $595,000.
If, by taking our recommended actions, the IRS reduced the volume of misdirected business tax returns by a conservative 40 percent, it could save $238,000 per year. Over 5 years, the IRS would save $1,190,000.
We
originally estimated that our recommended actions would reduce the volume of
misdirected business tax returns by 50 percent. The IRS disagreed with this estimate stating that feedback received from the tax
practitioner community indicated most of the misdirected tax returns were not
the result of inaccurate “Where to File” instructions on the part of the IRS,
but occurred because of the following taxpayer errors:
§
Continued
use of outdated envelopes containing the former “Where to File” address.
§
Filing
a taxpayer’s individual and business tax returns in the same envelope.
We revised our estimate to 40 percent and believe this
estimate to be very conservative for the following reasons:
§
Tax
practitioners using outdated envelopes and filing individual and business tax
returns in the same envelopes could certainly be doing so because they were not
aware of the new addresses for filing business returns. (See the comment made by a tax practitioner
on page 6.)
§
Close
to 40 percent of the misdirected tax returns were self-prepared. Taxpayers preparing these returns would be
much less likely than tax practitioners to have outdated envelopes on hand or
to be mailing multiple tax returns at the same time.
Appendix V
We selected judgmental samples of 234 paper business tax returns at
various stages of processing at the 2 Business Submission Processing Centers to
determine if the returns were processed correctly and if the information on the
returns was accurately posted to the taxpayers’ accounts on the Internal
Revenue Service’s (IRS) Business Master File (BMF).
Our samples included 119 tax returns waiting to have
data entered into IRS computers. These
returns were selected as follows:
·
We selected a
total of 67 of these tax returns at the Cincinnati Submission Processing Center
on March 6 and 7, 2002. The 67 returns
included 4 each of 18 different types of business tax returns waiting to have
data entered into IRS computers, with the following exceptions:
-
We selected four Generation-Skipping Transfer Tax Returns for
Distributions (Form 706-GS[D]) on March 14, 2002.
-
We selected only two Occupational Tax and Registration Returns for
Wagering (Form 11-C) because they were the only ones available. These two returns were selected March 12,
2002.
-
We selected
only one Generation-Skipping Transfer Tax Return for Terminations (Form
706-GS[T]) because it was the only one available. This return was selected March 14, 2002.
·
We selected a
total of 52 of these tax returns at the Ogden Submission Processing Center on
March 21 and 22, 2002. These 52 returns
included 4 each of 13 different types of business tax returns waiting to have
data entered into IRS computers.
Our samples included
115 tax returns routed to the IRS’ Error Resolution function during
processing. These returns were selected
as follows:
·
We selected a
total of 63 of these tax returns at the Cincinnati Submission Processing Center
from March 8 through May 15, 2002.
These 63 returns included 4 each of the returns with 1 of 14 frequently
occurring error codes. (We selected
more than four returns for three of the error codes.)
·
We selected a
total of 52 of these tax returns at the Ogden Submission Processing Center from
March 22 through April 9, 2002. These
52 returns included 4 each of the returns with 1 of 13 frequently occurring
error codes.
Appendix VI
Business
Tax Returns (Tax Year 2001) with Authorizations for Third Party Contact
|
|
Form Number |
|
· Employer’s Annual Federal Unemployment (FUTA) Tax
Return |
940/940-EZ |
|
· Employer’s Quarterly Federal Tax Return |
941 |
|
· Employer’s Annual Tax Return for Agricultural
Employees |
943 |
|
·
Annual Return
of Withheld Federal Income Tax |
945 |
|
·
Farmers’
Cooperative Association Income Tax Return |
990-C |
|
·
Exempt
Organization Business Income Tax Return |
990-T |
|
·
U.S. Income
Tax Return for Estates and Trusts |
1041 |
|
·
U.S. Return
of Partnership Income |
1065 |
|
·
U.S. Real
Estate Mortgage Investment Conduit (REMIC) Income Tax Return |
1066 |
|
·
U.S.
Corporation Income Tax Return |
1120 |
|
·
U.S.
Corporation Short-Form Income Tax Return |
1120-A |
|
·
U.S. Income
Tax Return of a Foreign Corporation |
1120-F |
|
·
U.S. Income
Tax Return of a Foreign Sales Corporation |
1120-FSC |
|
·
U.S. Income
Tax Return for Homeowners Associations |
1120-H |
|
·
U.S. Life
Insurance Company Income Tax Return |
1120-L |
|
·
U.S. Income
Tax Return for an S Corporation |
1120S |
|
·
U.S. Income
Tax Return for Settlement Funds (Under Section 468B) |
1120-SF |
|
·
Return for
Nuclear Decommissioning Funds and Certain Related Persons |
1120-ND |
|
·
U.S. Property
and Casualty Insurance Company Income Tax Return |
1120-PC |
|
·
U.S. Income
Tax Return for Certain Political Organizations |
1120-POL |
|
·
U.S. Income
Tax Return for Real Estate Investment Trusts |
1120-REIT |
|
·
U.S. Income
Tax Return for Regulated investment Companies |
1120-RIC |
|
|
|
Appendix VII
Management’s Response to the Draft Report
The response
was removed due to its size. To see the
complete response, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.