Treasury Inspector General for Tax Administration
March 28, 2011
TIGTA - 2011-16
Contact: Karen Kraushaar
WASHINGTON – The Internal Revenue Service (IRS) is reducing its mail costs, but recent reductions were responses to budget cuts rather than part of a long-term strategy, according to a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).
In response to cost savings proposed in its Fiscal Year (FY) 2011 budget request, the IRS formed task forces and recommended several actions to identify ways to achieve cost savings. However, the task force proposal did not include documentation to show the methodology used to make the proposals, how estimates were calculated or validated, or how the IRS will measure the results or the cost savings of the proposals.
The task force believed that reducing the mailings of forms instead of eliminating them was a more cautious approach, affecting fewer taxpayers in the short term. Nevertheless, IRS executives decided to eliminate all mailings of tax packages for U.S. Individual Income Tax Return (Form 1040), partnerships, and corporations in FY 2011 in order to meet the cost savings presented in the FY 2011 budget request. This could increase burden and reduce compliance for those taxpayers who rely on receiving these packages by mail.
As the IRS moves forward with the proposed cost savings or pursues other methods of saving publishing and mail costs, it needs to implement sufficient controls and procedures to ensure decisions are documented and that the data used are accurate and complete. In addition, these controls should be part of a long-term strategy to continually assess publishing and mail costs and identify opportunities for cost reductions and efficiencies.
TIGTA recommended that the Commissioner, Wage and Investment Division, establish and implement a system of internal controls to ensure that savings and cost data related to the elimination or reduction of mailing tax products are current and reliable.
“An important part of the IRS’s mission is to help taxpayers understand and meet their tax responsibilities by providing forms and publications to individual and business taxpayers,” said J. Russell George, the Treasury Inspector General for Tax Administration. “Efforts to manage these costs should be part of a long-term strategy that includes goals and measures, as well as steps to monitor the effect on taxpayer burden and compliance.”
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.
In their response to the report, IRS officials agreed with both recommendations.
To view the report, including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/auditreports/2011reports/201140025fr.pdf.
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