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Treasury Inspector General for Tax Administration

Press Release


March 24, 2011
TIGTA - 2011-15
Contact: Karen Kraushaar
(202) 622-6500
karen.kraushaar@tigta.treas.gov
TIGTACommunications@tigta.treas.gov

IRS Examinations of Taxpayer Returns: More Needs to be Done to Reduce Taxpayer Burden

WASHINGTON – The Internal Revenue Service (IRS) has taken steps to reengineer its program for examining taxpayer returns, but more must be done to reduce taxpayer burden, according to a new report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

The Correspondence and Discretionary Examination (CDE) Program conducts examinations exclusively by mail to reduce IRS operational costs and minimize the burden on taxpayers. However, taxpayers have expressed concerns with the length of the examination process, the lack of consideration given to information they send to the IRS, and treatment by IRS employees.

At the request of the IRS Oversight Board, TIGTA initiated this audit to assess whether recent IRS efforts to identify weaknesses and take actions in its program actually improved results. TIGTA’s overall objective was to determine whether the IRS’s reengineered program resulted in a more responsive and less burdensome process for taxpayers.

TIGTA determined that steps that the IRS has taken to reengineer the CDE Program and improve employee compliance with Program guidelines could ultimately lessen taxpayer burden and increase taxpayer rights and entitlements. The audit found significant improvements in several attributes used to measure performance, however audit findings showed that IRS employees did not always adhere to established procedures and/or guidelines when processing correspondence that taxpayers submit for examinations of their tax returns.

In a statistical sample of cases where taxpayers agreed to additional tax assessments, 28 of 62 cases contained errors. The majority of these errors related to CDE employees untimely closing cases. Further, TIGTA’s analysis of cases where the taxpayer did not agree with the additional assessment showed that CDE employees did not always consider the taxpayer’s correspondence before closing the case.

“While our report concluded that the IRS has made improvements to the Examination program, it is critical that examiners follow all established procedures, including taking fully into consideration the information that taxpayers provide,” said J. Russell George, the Treasury Inspector General for Tax Administration.

TIGTA made three recommendations in its report, including that the IRS ensure all CDE employees follow mail processing guidelines when working cases and follow Program guidelines for handling, responding to, and considering taxpayer correspondence.

The IRS agreed with TIGTA’s recommendations, but it did not agree with its reported outcome measure.

To view the report, including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/auditreports/2011reports/201130016fr.pdf.

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