Limited English Proficient Taxpayers Need Improved Written
Products to Help Them Understand and Comply With Tax Laws
August 2003
Reference
Number: 2003-40-163
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.
August 11,
2003
MEMORANDUM
FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: Gordon C. Milbourn III /s/ Gordon C. Milbourn III
Assistant Inspector General for Audit (Small Business and
Corporate Programs)
SUBJECT: Final Audit Report – Limited English Proficient Taxpayers Need
Improved Written Products to Help Them Understand and Comply With Tax Laws (Audit
# 200340023)
This report presents the results of our
review to determine if the Internal Revenue Service (IRS) had identified and
translated vital documents to assist limited English proficient (LEP) persons
in preparing their tax returns. This
audit was conducted as part of the Treasury Inspector General for Tax
Administration’s Fiscal Year 2003 discretionary audit coverage of the Wage and
Investment Division.
Executive
Order 13166, signed August 2000, requires Federal Government agencies to
examine the services they provide and develop and implement programs by which
LEP persons can obtain meaningful access to the services normally provided to
English proficient taxpayers. In
identifying the specific services it should make available to LEP taxpayers,
the IRS must consider: 1) the number or proportion of
LEP persons served or encountered; 2) the frequency with which LEP persons
contact with the program; 3) the nature and importance of the program,
activity, or service; and 4) the available resources and costs. Once it identifies the services to make
available to LEP taxpayers, the IRS is then required to determine the
appropriate mix of verbal and written language services it will provide.
The IRS took numerous actions both
prior to and subsequent to the signing of Executive Order 13166 to implement
verbal and written services for LEP taxpayers similar to those provided to
English proficient taxpayers. For
example, the IRS has hired Spanish-speaking employees to assist taxpayers that
call toll-free telephone numbers or visit Taxpayer Assistance Centers (TAC),
successfully placed interpreter services in 97 percent of its TACs, established
a Multilingual Initiative that includes the establishment of a Project Office
with executive oversight, and translated over 244 written documents including
forms, publications, and notices.
Many IRS actions to date have focused
on providing verbal assistance services to LEP taxpayers. In an attempt to expand meaningful written
services, the IRS, since the passage of the Executive Order, has been in the
process of identifying those written documents
that are vital to providing LEP taxpayers access to IRS programs, including
helping them understand and comply with tax laws. Specifically, the IRS has conducted informal surveys to obtain
feedback from external stakeholders on those written documents that are useful
to LEP taxpayers in complying with tax laws.
The survey resulted in the external stakeholders’ identification of 58
written documents that could help LEP taxpayers understand and comply with tax
laws. However, of the 58 products
identified by stakeholders, only 16 are included in the 244 documents the IRS
has already translated. Two examples of
documents that were identified by the external stakeholders that need to be
translated are the United States Individual Income Tax Return (Form 1040),
along with the respective instructions for completing the tax return. Based on the fact that only 16 (28 percent)
of the 58 documents identified by external stakeholders have been translated, it
is imperative that the IRS continually interact with external stakeholders to
ensure that the IRS translates the documents the LEP taxpayer population needs
the most.
The IRS is also in the process of
requesting feedback from its business operating divisions as to those written
products that each considers vital and that should be translated to assist LEP
taxpayers in interactions with the respective business unit. However, the actions to date have been
informal at best; the IRS has not established a formal process by which it
ensures continuous interaction with LEP taxpayers and their stakeholder
groups.
To facilitate the IRS’ efforts to
provide written services similar to those provided to English proficient
taxpayers, we recommended that the Commissioner, Wage and Investment Division,
develop a formal survey process by which
to identify the LEP taxpayer population.
A formal survey process will assist the IRS in ensuring that those
documents provided are the ones LEP taxpayers believe are useful to their
ability to understand and comply with tax laws.
We agree that the IRS has recognized the need to improve products and
services made available to LEP taxpayers; however, we disagree with IRS
management’s rationale to eliminate the 10.3 million residents who speak
English "well" from the need for document translation. As reported, the IRS excludes these
residents because it considers these persons as English proficient and believes
they would not benefit from having vital documents identified and translated
into non-English languages. Our
potential outcome measure of 21 million includes these persons because
residents that described themselves as being able to speak English
"well" did not indicate their ability to read or understand written
English. We believe that the
translation or interpretation of written documents would benefit this
population of residents.
Copies
of this report are also being sent to the IRS managers who are affected by the
report recommendation. Please contact
me at (202) 622-6510 if you have questions or Michael R. Phillips, Assistant
Inspector General for Audit (Wage and Investment Income Programs), at (202)
927-0597.
Numerous Actions Have Been Taken to Assist Limited English Proficient Taxpayers
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 – Management’s Response to the Draft Report
Executive Order 13166, signed August 2000, requires
Federal Government agencies to examine the services they normally provide in
English and to develop and implement a system by which limited English
proficient (LEP) persons can meaningfully
access those services without unduly burdening the mission of the agency. LEP taxpayers are those residents who do not
speak English as their primary language and who have a limited ability to read,
write, speak, or understand English. To
identify those specific services it should make available to LEP taxpayers, the
Internal Revenue Service (IRS) must give consideration to the following four
factors established by the Department of
Justice:
·
The number or
proportion of LEP persons served or encountered.
·
The frequency
with which LEP persons contact the program.
·
The nature and
importance of the program, activity, or service.
·
The available
resources and costs.
The IRS must also determine the appropriate mix of verbal and written language services to be provided to LEP taxpayers. Verbal language services include hiring bilingual staff, contracting for interpreters, and using telephone interpreter lines. For written language services, the IRS must identify for translation those documents that are critical or vital to LEP taxpayers in helping them understand and comply with tax filing requirements.
In the National Taxpayer
Advocate’s Fiscal Year (FY) 2000 Annual Report to Congress, the Advocate stated
that tax law complexity was the highest-ranking problem individual taxpayers
had with the IRS. Although LEP
taxpayers have several verbal services to choose from when they need non-English
assistance from the IRS, these taxpayers may be requiring this assistance
because IRS written products (i.e., notices, forms, and publications) in
non-English languages are limited.
This review was
conducted in Lanham, Maryland, in the IRS’ Multilingual Initiative (MLI)
Project Office in the Wage and Investment (W&I) Division during January and
February 2003. It was conducted as part
of the Treasury Inspector General for Tax Administration’s efforts to assess
and report to the Congress the IRS’ efforts to improve services to LEP
taxpayers. The review 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.
For LEP taxpayers, language can be a barrier to accessing important benefits or services, understanding and exercising important rights, complying with tax filing responsibilities, or understanding the information provided by the IRS to the taxpaying public. The IRS has taken numerous actions to enable LEP taxpayers to obtain the verbal and written assistance needed to understand and comply with tax laws. These actions were taken both prior to and subsequent to the passage of Executive Order 13166 in August 2000. Actions taken prior to passage include:
· Hiring Spanish-speaking employees to assist taxpayers who call toll-free telephone numbers or visit Taxpayer Assistance Centers.
·
Implementing over-the-phone interpreter (OPI) services
in 97 percent of its Taxpayer Assistance Centers that allow LEP persons
speaking any of 140 languages to communicate with IRS employees by using an
interpreter.
· Producing such things as brochures, videos, television announcements, and newspaper advertisements in other languages including Mandarin, Spanish, and Vietnamese.
· Translating 244 written products, throughout the years, in response to taxpayer needs including forms, publications, and notices into Spanish.
Actions taken subsequent to the passage of Executive Order
13166 have been primarily focused on establishing a strategic program to
address the needs of LEP taxpayers.
These include:
· Establishing a Project Office with executive oversight to accomplish the goal of expanding and integrating services that assist Spanish and other LEP taxpayers in meeting their tax responsibilities.
· Developing a Multilingual Initiative with a 5-year time line outlining the steps the IRS will follow to expand and integrate products and services for LEP taxpayers by FY 2005. As part of this initiative, teams were formed to look at the various services each IRS function provides. These teams gave the Project Office 32 recommendations to improve oral and written language services for LEP taxpayers.
Since the August 2000 signing of Executive Order 13166, the IRS has undertaken the process of identifying the vital written documents (e.g., forms, publications, notices) that must be translated to assist LEP taxpayers in understanding and complying with tax laws. The IRS’ MLI Project Office has taken several steps towards identifying these vital documents, which include:
· Obtaining a September 2001 opinion from the IRS’ Office of Chief Counsel on the definition of what constitutes a “vital document” and what forms and documents the IRS considers vital. In response, the Office of Chief Counsel mirrored guidance from the Department of Justice in that a document is considered to be vital if it contains information that is critical for obtaining Federal Government services or benefits or is required by law.
· Completing informal surveys in June 2002 of external stakeholders for feedback on the needs of LEP taxpayers and documents that would be useful to them, and conducting a subsequent survey of tax practitioners.
· Requesting feedback from IRS business operating divisions in December 2002 as to those written products they believe are vital documents that should be translated to assist LEP taxpayer interactions. This process is due to be completed by September 2003.
Stakeholders identified
products that could help LEP taxpayers meet their tax responsibilities
IRS information relative to LEP taxpayers is based primarily on informal surveys of external stakeholders, as no formal process is in place to ensure the IRS continually receives feedback from stakeholders regarding accessibility to IRS products and services that are available in English. These informal surveys provide some insight into how LEP taxpayers are affected by the IRS’ current practice of issuing products predominately in English. For example, the surveys generally indicate that LEP taxpayers need the same tax products in non-English that are available to their English-speaking counterparts.
These surveys also provide information that could assist the IRS’ efforts to identify and translate vital documents to improve LEP persons’ access to agency services. For instance, IRS management believes that the 244 written documents that have already been translated are those documents that are necessary to give LEP taxpayers meaningful access to IRS services. However, the external stakeholders surveyed in June 2002 identified 58 written products that could help LEP taxpayers understand and comply with tax laws. We found that 16 (28 percent) of the written products had already been translated. Examples of two documents identified by the external stakeholders that have not been translated are the United States Individual Income Tax Return (Form 1040) and its instructions. It is imperative that the IRS continually interact with the external stakeholders to ensure that the IRS translates the documents the LEP taxpayer population needs the most.
The Form 1040 was discussed in the IRS Office of Chief Counsel’s opinion as a product that constitutes a vital document. According to Counsel’s opinion, Form 1040 is critical for accessing the IRS’ programs because it is used to determine individual tax liability and to seek refunds. The Form 1040 is the primary means for the IRS to ensure tax compliance, and it is a primary document through which the IRS interacts with individual taxpayers. (See Appendix V for a list of documents identified by external stakeholders).
The external stakeholders identified documents they believed were vital for LEP taxpayers to gain meaningful access to IRS products and services. The IRS did not have formal procedures for obtaining input from external stakeholders because procedures were in the developmental phase. Without a formal process to obtain input from these stakeholders, there is a risk that the IRS will not be aware of or respond to the need to translate additional documents that stakeholders may identify in the future.
Millions of LEP taxpayers stand to benefit from
having better access to IRS services and programs
The IRS has various statistics on its taxpayer population as a whole including the number and types of tax returns filed, the number of calls to toll-free telephone numbers for English and Spanish assistance, and accesses to the OPI service. While data are available on the number of inquiries for non-English assistance, the IRS has not historically captured information on the population of LEP taxpayers that could benefit from the identification of vital documents. It recently began to capture this information as a result of the signing of Executive Order 13166.
The informal surveys of external stakeholders suggest that an availability of tax products in non-English languages would reduce LEP taxpayers’ reliance on tax practitioners for actions such as return preparation and reading IRS correspondence. These services often have an associated cost to the taxpayers.
Data compiled by the United
States Census Department for the year 2000 indicate that approximately 47
million residents speak a language other than English when at home, and over 21 million of these residents described themselves
as being able to speak English less than “very well.” See the chart below.
|
English
Proficiency Level |
Residents |
|---|---|
|
Speaks English “Not at All” |
3.3 million |
|
Speaks English “Not Well” |
7.6 million |
|
Speaks English “Well” |
10.3 million |
|
Speaks English “Very Well” |
25.6 million |
Source: United States Census 2000 (Summary File 3) Table PCT 12.
Therefore, these 21 million residents who speak English less than “very well” could benefit from having vital documents identified and translated into non-English languages. IRS management considers the 10.3 million residents who speak English “well” as being English proficient. The IRS excludes these residents because it believes these persons would not benefit from having vital documents identified and translated into non-English languages. Since census data do not include information on residents’ ability to read and understand English, we included these persons to show the maximum number of LEP persons who could benefit from having documents translated into non-English languages.
It is important that the IRS completes its identification and translation process for those documents that give LEP taxpayers meaningful access to IRS programs and services. This identification process is expected to be completed in September 2003. The IRS plans to complete its process of translating identified vital documents by FY 2005.
We recommend that the Commissioner, W&I Division:
1.
Develop a formal survey process to both identify its
LEP taxpayer population and assist its efforts to identify written documents
that are vital to LEP taxpayers’ ability to comply with tax laws.
Office of Audit Comment: We agree that the IRS has recognized the need to improve products and services made available to LEP taxpayers; however, we disagree with IRS management’s rationale to eliminate the 10.3 million residents who speak English “well” from the need for document translation. As reported, the IRS excludes these residents because it considers these persons as English proficient and believes they would not benefit from having vital documents identified and translated into non-English languages. Our potential outcome measure of 21 million includes these persons because residents that described themselves as being able to speak English “well” did not indicate their ability to read or understand written English. We believe that the translation or interpretation of written documents could provide benefits to this population of residents.
Appendix I
The overall objective of this review was to determine if the Internal Revenue Service (IRS) had identified and translated vital documents to assist limited English proficient (LEP) persons in preparing their tax returns.
To achieve the objective, we
performed the following tests:
I.
Determined
the actions taken by the IRS during the first 2 years (Fiscal Years (FY) 2001
and 2002) of the Multilingual Strategy by contacting the Multilingual
Initiative (MLI) Project Office Manager and discussing actions taken in FYs
2001 and 2002 to identify and translate vital documents and the process for
obtaining stakeholder input.
II.
Determined
the reasons that the identification of vital documents was delayed until the
issuance of a December 2002 memorandum to IRS executives. We contacted the Project Office Manager and
discussed the reasons for nonidentification during the 2-year period of FYs
2001 and 2002.
III.
Determined
the reason that the identification of vital documents was targeted for FY 2003
and ascertained the projected date for translating documents identified as
vital by contacting the Project Office Manager.
IV.
Determined the
impact of the IRS not having identified and translated vital documents for LEP
taxpayers. We:
A.
Contacted
the MLI Project Office Manager and obtained information on the number of LEP
taxpayers serviced by the IRS in FYs 2001 and 2002.
B.
Reviewed
the IRS’ management information systems to identify the number of calls
received on the non-English toll-free telephone lines during FYs 2001 and 2002
and the number of taxpayers served by the IRS’ interpreter service in Taxpayer
Assistance Centers.
C.
Reviewed
census data for the year 2000 to identify the number and nationality of United
States taxpayers speaking non-English languages.
V.
Clarified the
IRS’ planned process for translating documents after they are identified, by
contacting the MLI Project Office Manager to discuss their interim guidelines
for translating documents.
Appendix II
Major
Contributors to This Report
Michael R. Phillips, Assistant Inspector General for Audit (Wage and
Investment Income Programs)
Kerry
Kilpatrick, Director
Russell Martin, Acting Director
Deborah
Glover, Audit Manager
Frank
Jones, Acting Audit Manager
Bernice Banks,
Senior Auditor
David
Hartman, Senior Auditor
Robert Baker, Auditor
Appendix III
Commissioner N:C
Deputy Commissioner
for Services and Enforcement N:SE
Deputy
Commissioner, Wage and Investment Division
W
Director, Strategy
and Finance, Wage and Investment Division
W:S
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative
Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
N:ADC:R:O
Office of Management Controls N:CFO:AR:M
Audit
Liaison: GAO/TIGTA Liaison, Wage and
Investment Division W:S:PA
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. This benefit will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome
Measure:
· Taxpayer Burden – Potential; 21 million United States residents (see page 3).
Methodology Used to Measure
the Reported Benefit:
We used United States census data for the year 2000, which is the most reliable information available on the number of persons that do not use English as their primary language and who may be limited English proficient (LEP). The census shows that approximately 47 million residents speak a non-English language when at home and that approximately 21 million of these residents speak English less than “very well.” The primary languages spoken by these residents are Spanish, other Indo-European languages, and Asian and Pacific Island languages. The 21 million is comprised of:
3.3 million residents who do not speak
English at all.
7.6 million residents who do not speak
English well.
10.3
million residents who speak English well.
Internal Revenue Service management
considers the 10.3 million residents who speak English “well” as being English
proficient and believes they would not benefit from having vital documents
identified and translated into non-English languages. Since census data do not include information on residents’
ability to read and understand English, we included these persons as part of
the maximum number of LEP persons who could benefit from having documents
translated into non-English languages.
The unavailability of tax related
documents in languages for LEP persons potentially causes them increased burden
in meeting their tax responsibilities.
The nonidentification of vital documents potentially precludes the
translation of vital documents into languages for taxpayers who are not
proficient in speaking and reading English.
Appendix V
Written Documents Identified by
External Stakeholders That Could Benefit Limited English Proficient Taxpayers
|
Product Name |
Description |
|---|---|
|
Form
433 * |
Collection
Information Statement |
|
Form 656 |
Offer in
Compromise |
|
Form 940 |
Employer’s
Annual Federal Unemployment (FUTA) Tax Return |
|
Form
1040 |
United
States (U.S.) Individual Income Tax Return |
|
Form
1040 Instructions |
Instructions
for Form 1040 |
|
Form
1040NR & Instructions |
U.S.
Nonresident Alien Income Tax Return (Form 1040-NR) and Instructions for Form
1040-NR |
|
Form
1040 Schedules and Instructions |
Schedules
and Instructions for Form 1040 |
|
Form
1040A * |
U.S.
Individual Income Tax Return |
|
Form
1040EZ |
Income
Tax Return for Single Filers and Joint Filers With No Dependents |
|
Form
1040X Instructions |
Instructions
for Amended U.S. Individual Income Tax Return |
|
Form
1065 |
U.S.
Return of Partnership Income |
|
Form
1099 |
U.S.
Information Return |
|
Form
1099 Miscellaneous Instructions |
Instructions
for Miscellaneous Income (Form 1099 MISC) |
|
Form
1120/1120S |
U.S.
Corporation Income Tax Return/U.S. Income Tax Return for an |
|
Form
2290 * |
Heavy
Vehicle Use Tax Return |
|
Form
2441 |
Child
and Dependent Care Expenses |
|
Form
2848 |
Power of
Attorney and Declaration of Representative |
|
Form
4506 |
Request
for Copy or Transcript of Tax Form |
|
Form
5471 |
Information
Return of U.S. Persons With Respect to Certain Foreign Corporations |
|
Form
8453 |
U.S.
Individual Income Tax Declaration for Electronic Filing |
|
Form
8814 |
Parents’
Election to Report Child’s Interest and Dividends |
|
Form
8821 |
Tax
Information Authorization |
|
Form
8849 |
Claim
for Refund of Excise Tax |
|
Form
8853 |
Archer
MSAs and Long-Term Care Insurance Contracts |
|
Form
8857-SP * |
Request
for Innocent Spouse Relief (Spanish Version) |
|
Form
8862 |
Information
to Claim Earned Income Credit After Disallowance |
|
Form
8865 |
Return
of U.S. Persons With Respect to Certain Foreign Partnerships |
|
Form
8867 |
Paid
Preparer’s Earned Income Credit Checklist |
|
Form
12153 |
Request
for a Collection Due Process Hearing |
|
Form W-2 |
Wage and
Tax Statement |
|
Form W-4
and Instructions |
Employee’s
Withholding Allowance Certificate |
|
Form W-
5 |
Earned
Income Credit Advance Payment Certificate |
|
Form
W-7(SP) * |
Application
for IRS Individual Taxpayer Identification Number (Spanish Version) |
|
Form W-9
|
Request
for Taxpayer Identification Number and Certification |
|
Letter
0064C * |
Penalty
& Interest Explained |
|
Letter
0644C |
Highway
Use Filing Requirements |
|
Letter 0672C |
Payment(s) Located and/or Applied |
|
Publication
1 SP * |
Your
Rights as a Taxpayer (Spanish Version) |
|
Publication
5 |
Your
Appeal Rights and How To Prepare a Protest If You Don’t Agree |
|
Publication
15 |
Circular
E – Employer’s Tax Guide |
|
Publication
17 |
Your
Federal Income Tax |
|
Publication
54 |
Tax
Guide for U.S. Citizens and Resident Aliens Abroad |
|
Publication
334 |
Tax
Guide for Small Business (for Individuals Who Use Schedule C |
|
Publication
509 |
Tax
Calendar |
|
Publication
510 |
Excise
Taxes |
|
Publication
529 |
Miscellaneous
Deductions |
|
Publication
560 |
Retirement
Plans for Small Business (SEP, Simple, and Qualified Plans) |
|
Publication
579 SP * |
How to
Prepare the Federal Tax Return (Spanish Version) |
|
Publication
590 |
Individual
Retirement Arrangements (IRAs) |
|
Publication
594 SP * |
What You
Should Know About the IRS Collection Process (Spanish Version) |
|
Publication
596 SP * |
Earned
Income Credit (Spanish Version) |
|
Publication
850 * |
English-Spanish
Glossary of Words and Phrases Used in Publications |
|
Publication
1235 SP * |
Advance
Earned Income Tax Credit Brochure (Spanish Version) |
|
Publication
1660 |
Collection
Appeal Rights |
|
Publication
1838 SP * |
Advance
Earned Income Tax Credit Folder (Spanish Version) |
|
Publication
1915 SP * |
Understanding
Your IRS Individual Taxpayer Identification Number (Spanish Version) |
|
Publication
3211 SP * |
Earned
Income Tax Credit Q & A’s (Spanish Version) |
|
Publication
3512 SP * |
Innocent
Spouse Relief Brochure (Spanish Version) |
* Denotes that item has been translated into
Spanish for use in the United States.
Appendix VI
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.