The Internal Revenue Service sends out more than 200 million notices and letters to taxpayers every year. But in most cases, the tax agency misses its own deadlines for processing correspondence from taxpayers, sometimes waiting as long as 56 days to respond, according to a new audit.
“Taxpayers are burdened when issues are not timely and appropriately resolved,” the 28-page audit released this week by the Treasury Inspector General for Tax Administration concludes.
If the correspondence were processed faster, the IRS could save $2.1 million over five years in mailing costs for confusing interim letters that tell taxpayers that their cases are awaiting action.
A statistical sample of 73 correspondence cases from the IRS’s Accounts Management staff — who handle questions on tax returns and refunds — found that only 14 (19 percent) of taxpayers received timely and accurate responses within the 30 days required by IRS rules.
The correspondence sampled excluded tax returns, but includes just about everything else, including mail taxpayers may not be happy to get. Requests for information, questions that may accompany a tax return and responses to IRS requests for information are included.
The agency fared better in its Automated Underreporter program, which reviews deductions submitted by third parties against information on the return and the taxpayer’s income. The content of these letters was accurate, but only 56 percent were timely. In correspondence from the IRS's Field Assistance Office, only 8 percent of taxpayers received timely and accurate responses.
Auditors recommended that the IRS clarify to employees the importance of timely correspondence and update its quality-review procedures to ensure better oversight over the staff.
The IRS accepted the report's recommendations on the need to clarify its instructions to employees, but disagreed with the error rates, saying the audits were based on unrepresentative samples.