United States General Accounting Office 

GAO Report to the Chairman, Subcommittee 

on Oversight, Committee on Ways and 

Means, House of Representatives 

October 2003 TAX 

ADMINISTRATION 

IRS’s 2003 Filing 

Season Performance 

Showed 

Improvements 

GAO-04-84


a
Highlights GAO-04-84, a report to 

Chairman, Subcommittee on Oversight, 

Committee on Ways and Means, House of 

Representatives 

During the tax filing season, 

millions of taxpayers file their 

returns and seek assistance by 

calling or visiting IRS’s offices or 

Web site. GAO was asked to assess 

IRS’s 2003 filing season 

performance in five areas: 

processing returns, refunds and 

remittances; electronic filing; 

telephone service; walk-in 

assistance, and Web site. We 

assessed for each of those five 

areas (1) IRS’s performance in 

2003, including any factors that 

helped or impeded its efforts, (2) 

any new initiatives that were 

intended to improve IRS’s 

performance in 2003, and (3) IRS’s 

performance over past filing 

seasons. 

GAO recommends that IRS 

consolidate and disseminate 

available wait-time information to 

field managers. 

In commenting on a draft of this 

report, IRS partially agreed with 

our recommendation, stating that it 

will require walk-in sites equipped 

with a system to report wait-time 

information quarterly and that this 

information would provide 

valuable data for assessing overall 

trends and relationships in 

timeliness and quality. However, 

IRS did not agree to disseminate 

this consolidated wait-time 

information to field managers, but 

without it, managers would have 

difficulty balancing timeliness and 

quality. 

www.gao.gov/cgi-bin/getrpt?GAO-04-84 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact James R. White 

at (202) 512-9110 or whitej@gao.gov. 

October 2003 

TAX ADMINISTRATION 

IRS's 2003 Filing Season Performance 

Showed Improvements 

Available data for each of five key filing season activities indicates that IRS’s 

performance showed some improvements in 2003 compared to 2002 and IRS 

met or exceeded many of its 2003 performance goals. IRS processed returns 

and issued refunds more timely and accurately and increased the rate of 

electronic filing, although not at a rate that would allow IRS to meet its longterm goal. While IRS provided significantly more accessible telephone 

service, the accuracy rate of IRS responses declined. The accuracy of tax 

law assistance provided at walk-in sites improved, although the number of 

taxpayers assisted at IRS’s walk-in sites declined, in part because taxpayers 

made greater use of the return-preparation assistance offered by volunteer 

organizations. In addition, IRS did not consolidate or disseminate data on 

how long taxpayers waited for walk-in assistance, making it difficult to 

balance quality and service. Finally, IRS’s Web site performed well and was 

more user friendly than last year. IRS attributes improved performance, in 

part, to (1) fewer tax law changes that affected taxpayers and (2) continued 

emphasis on performance measures, a key part of IRS’s strategy to improve 

its performance in processing returns and providing taxpayer assistance. 

IRS implemented initiatives in 2003 intended to improve filing season 

performance. For example, IRS entered into an agreement with a consortium 

of 17 tax preparation companies to offer free on-line tax preparation, 

established new toll-free telephone numbers to better target different 

taxpayers, and began certifying walk-in staff to answer tax law questions. 

Over a longer period of time, available data, although limited in some areas, 

also show that IRS’s filing season performance has improved. Since the mid1990s, the growth of electronic filing has allowed IRS to close one paper 

processing center and the accuracy and accessibility of telephone assistance 

has improved. While the Congress and taxpayers expect further progress, 

the improvements to date are a payoff from IRS’s ongoing modernization. 

IRS’s 2003 Filing Season Activities 
Contents


Letter


Results in Brief 


Scope and Methodology 


Background 


IRS’s Processing of Returns And Refunds Improved, and IRS Closed 


One Paper Processing Center 

Electronic Filing Grew in 2003, but at Current Growth Rate IRS Will 

Not Achieve Long-Term Goal 

Telephone Service Showed Improvement in Accessibility but Not 

Accuracy 

Quality of Walk-In Assistance Improved in 2003, but Assessing 

Long-Term Improvements Is Difficult Because of Lack of Data 

IRS’s Web Site Performance Showed Some Improvement 

Conclusions 

Recommendation for Executive Action 

Agency Comments and Our Evaluation 

1 

1 

4 

6 

8 

12 

16 

24 

29 

32 

32 

33 

Appendixes 

Appendix I: 

Appendix II: 

Appendix III: 

Appendix IV: 

Data on IRS’s Processing Performance Relative to Fiscal Year 

2001-2003 Performance and Fiscal Year 2003 Goals 

Advance Payment of Child Tax Credit Had Minimal Impact on 

2003 Filing Season 

Comments from the Internal Revenue Service 

GAO Contacts and Staff Acknowledgments 

35 

37 

39 

45 

Tables Table 1: IRS Tax Filing Season Telephone Assistance Performance, 

2000-2003 Filing Seasons 19 

Table 2: IRS’s 2001-2003 Tax Filing Season Processing 

Performance 35 

Figures Figure 1: IRS’s Primary Activities During the 2003 Filing Season 

Figure 2: Growth Rate in the Number of Individual Tax Returns 

7 

Filed Electronically, 1996-2003 13 

Figure 3: Projected Percentage of Individual Tax Returns Filed 

Electronically, 2004-2007 14 

Figure 4: Reasons Taxpayers Called for Telephone Assistance 

during the 2003 Filing Season 17 

Page i GAO-04-84 2003 Tax Filing Season 
Contents 

Figure 5: How IRS Handled Calls for Telephone Assistance during 

2003 Filing Season 18 

Figure 6: Assistance Provided by IRS Walk-in and Volunteer Sites, 

2000-2003 Filing Seasons 26 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

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Page ii GAO-04-84 2003 Tax Filing Season 
Page 1 GAO-04-84 2003 Tax Filing Season 

A

United States General Accounting Office 

Washington, D.C. 20548 

October 31, 2003


The Honorable Amo Houghton


Chairman, Subcommittee on Oversight


Committee on Ways and Means


House of Representatives


Dear Mr. Chairman:


In response to your request, this report discusses the Internal Revenue 


Service’s (IRS) performance during the 2003 tax filing season.1 It is during 


the filing season that most taxpayers have their only contact with IRS, filing 


their individual income tax returns, and if needed, seeking assistance or


resolving simple problems, such as computational errors or missing Social 


Security numbers (SSN). Because of the millions of income tax returns 


processed and refunds issued and the crucial role that the filing season


plays in the collection of revenue that finances the federal government,


IRS’s performance during the filing season is important to taxpayers and 


the Congress.


This report discusses IRS’s performance in five key filing season activities


(1) processing individual income tax returns, refunds, and remittances; (2) 


receiving returns electronically; (3) assisting taxpayers over the telephone;


(4) providing face-to-face assistance at its walk-in locations; and (5) 


providing services via its Internet Web site. For each of the five areas the 


report discusses (1) IRS’s performance in 2003 compared to 2002 and 2003 


goals, including any factors that significantly affected performance, (2) any 


new initiatives that were intended to improve IRS’s performance in 2003, 


and (3) significant trends in IRS’s performance over the past several years 


resulting from modernization efforts.


Results in Brief	 Overall, IRS’s performance during the 2003 filing season improved 

compared to its performance in 2002 for each of the five filing season 

activities we reviewed, and IRS met many of its 2003 performance goals. 

However, the accuracy of telephone assistance declined, the growth of 

1

Most taxpayers file their returns between January 1 and April 15, which is the deadline for 

filing individual income tax returns. However, millions of taxpayers get an extension from 

IRS, which allows them to delay filing until as late as October 15. 

Page 1 GAO-04-84 2003 Tax Filing Season 
electronic filing is slowing, and the timeliness of walk-in assistance is 

unknown. 

Processing—IRS’s performance improved in 2003 relative to 2002 for seven 

of the eight measures it uses to judge its performance in processing 

individual income tax returns, refunds, and remittances, and IRS exceeded 

most of its performance goals. Other evidence, such as testimony from 

representatives of the tax practitioner community, indicated IRS’s 

processing performance was smooth and without significant disruptions. 

IRS officials attributed improvements in processing performance to efforts 

to build upon its largely successful 2002 filing season and the relatively 

small effect of tax law changes on taxpayers filing during the 2003 filing 

season. The growth of electronic filing and other improvements in 

processing returns, refunds, and remittances over the past several filing 

seasons has allowed IRS to eliminate paper processing at one location and 

reduce staff devoted to paper processing. 

Electronic Filing—The number of individual income tax returns that IRS 

received electronically continued to grow, from about 47 million in 2002 to 

an estimated 53 million in 2003, and the percentage of returns filed 

electronically reached an estimated 41 percent. However, the current rate 

of growth of electronic filing is slowing and will not allow IRS to achieve its 

long-term electronic filing goal of 80 percent by 2007, despite a number of 

initiatives over the years to reduce barriers and encourage more electronic 

filing. Electronic filing is important because it allows IRS to shift resources 

out of paper processing and improve customer service. 

Telephone Service—IRS performance data showed that it provided more 

accessible telephone service in 2003 and exceeded its 2003 performance 

goal for providing service to taxpayers trying to reach a Customer Service 

Representative (CSR). However, various measures show that IRS’s 

performance in providing accurate responses to taxpayer questions 

declined, and IRS did not achieve most of its 2003 performance goals for 

accuracy. IRS implemented several initiatives in 2003—including the 

establishment of new toll-free telephone numbers targeting different types 

of taxpayers—that likely contributed to improved accessibility. Since the 

mid-1990s, IRS has significantly improved its telephone service. Although 

telephone service is not yet at the level desired by taxpayers and the 

Congress, the improvements to date represent a payoff from IRS’s 

modernization efforts. 

Page 2 GAO-04-84 2003 Tax Filing Season 
Walk-in Assistance—The quality of services IRS provides at its walk-in sites 

showed some improvement in 2003, and IRS met some of its 2003 

performance goals. For example, the accuracy of tax law assistance 

provided at walk-in sites improved from 2002 to 2003. In addition, IRS 

continued its initiative to shift return preparation work to its communitybased coalitions and other volunteer organizations, contributing to a 

decline in the number of taxpayers assisted at IRS’s walk-in sites. With 

respect to accessibility, IRS did not consolidate or disseminate available 

data to managers on how long taxpayers waited for assistance in 2003. 

Without such data, managers may not be able to balance the attention given 

to accuracy and accessibility. Over the last several years, IRS has made 

efforts to standardize and improve its walk-in assistance, but a lack of 

historical performance data makes it impossible for IRS and us to quantify 

improvements. 

Internet Web Site—Overall Web site usage increased in 2003, and the site 

performed well in terms of availability and average delivery time, according 

to an independent Web site rater. However, IRS’s performance in 

responding to questions received via the Internet from taxpayers declined 

in 2003. IRS did resolve one of our key concerns from prior years about the 

search functions on the Web site, enabling taxpayers to find references to 

publications more easily. Also, in a major initiative in 2003, IRS provided 

the capability for taxpayers to check the status of their refunds on-line for 

the first time, and 11 million taxpayers did so. Over the past several filing 

seasons, usage of IRS’s Web site and the number of services provided have 

increased. The increases are another example of payoffs from IRS’s 

ongoing modernization effort. 

We are making a recommendation to the Commissioner of Internal 

Revenue that IRS consolidate and disseminate wait-time information to 

field managers on the basis of information from walk-in sites equipped with 

an automated system that can capture wait-time data in order to assess this 

important aspect of quality. In commenting on a draft of this report (see 

app. III), the Commissioner of Internal Revenue partially agreed with our 

recommendation, stating that IRS will require walk-in sites equipped with 

Q-Matic to report wait-time information quarterly. However, the 

Commissioner did not agree to disseminate this consolidated wait-time 

information to field managers. For years, as we report, IRS has contended 

that past experience has shown that employee reaction to timeliness 

measures adversely affected quality. At the same time, the Commissioner 

noted that some monitoring of wait time occurs by local managers for 

walk-in sites equipped with the automated reporting system. However, 

Page 3 GAO-04-84 2003 Tax Filing Season 
routine monitoring does not provide overall performance data, and data is 

only available to some managers whose walk-in sites have the automated 

system. In our view, there needs to be a balance between measuring quality 

and timeliness, and too much focus on either could create inappropriate 

incentives for IRS’s walk-in staff. As noted in our report, timeliness is part 

of IRS’s suite of balanced measures for telephone performance. We agree 

that too much focus on timeliness could create inappropriate incentives for 

IRS’s walk-in staff, but without consolidated timeliness information, field 

managers would have a difficult time balancing quality and timeliness. We 

discuss the Commissioner’s comments in the “Agency Comments and Our 

Evaluation” section of the report. 

Scope and 

Methodology 

Our assessment of IRS’s 2003 filing season performance was based on 

analyses of IRS data and data obtained from sources outside IRS, 

interviews with IRS officials and private sector tax preparers, and 

observations of IRS operations. We testified before the Subcommittee on 

Oversight on the interim results of our assessment in April 2003.2 Our 

assessment of filing season performance over a longer period of time was 

based, in part, on our past filing season reports. 

To assess IRS’s performance in the five key filing season activities covered 

by this report, we 

•	 reviewed and analyzed IRS documents and data, including workload 

data and data from IRS’s current suite of balanced performance 

measures, which we used to assess performance this year and relative to 

2003 goals;3 

•	 reviewed historical data that preceded the current performance 

measures to assess longer term improvements and performance; 

2

 U.S. General Accounting Office, Internal Revenue Service: Assessment of Fiscal Year 

2004 Budget Request and 2003 Filing Season Performance to Date, GAO-03-641T 

(Washington, D.C.: Apr. 8, 2003). 

3

IRS uses workload indicators, such as the number of returns processed, for purposes of 

resource planning. It uses balanced measures primarily for gauging business results 

(quantity and quality measures) in addition to employee satisfaction and customer 

satisfaction. 

Page 4 GAO-04-84 2003 Tax Filing Season 
•	 interviewed IRS officials about current operations, performance relative 

to the past filing season and 2003 performance goals, and significant 

factors and initiatives that affected performance; 

•	 observed operations at two of the eight processing centers operated by 

IRS’s Wage and Investment Operating Division (W&I) and three of IRS’s 

walk-in locations; 

•	 observed operations at three sites that offer free return preparation as 

part of IRS’s Volunteer Income Tax Assistance (VITA) and Tax 

Counseling for the Elderly (TCE) programs; 

•	 analyzed information posted to IRS’s Internet Web site, specifically 

assessing the ease of finding information on the site (i.e., navigation) 

and the accuracy and currency of data on the site (i.e., content) based 

on our work reviewing IRS’s Web site for years and as experienced 

Internet Web users; 

•	 reviewed information from a recognized authority on Internet 

performance that assessed various aspects of IRS's Web site; 

•	 interviewed representatives of various large private organizations that 

prepare tax returns and trade organizations that represent both 

individual preparers and tax preparation companies; 

•	 reviewed staff year data for the paper processing, telephone assistance, 

and walk-in assistance activities; and 

•	 reviewed related congressional testimony and work performed by the 

Treasury Inspector General for Tax Administration (TIGTA). 

This report discusses performance measures that reflect the continuing 

interest of the Subcommittee—including the quality, accessibility, and 

timeliness of IRS’s performance during the filing season. In November 

2002, we assessed the methodologies IRS used for computing its current 

suite of performance measures and the appropriateness of the performance 

goals.4 At that time, we reported that some of the performance measures 

that IRS and we use to assess various aspects of IRS’s filing season 

4

 U.S. General Accounting Office, Tax Administration: IRS Needs to Further Refine Its Tax 

Filing Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002). 

Page 5 GAO-04-84 2003 Tax Filing Season 
performance had attributes of successful performance measures including 

objectivity and reliability, although in some cases, the measures could be 

further refined. Even recognizing the limitation of these measures, we have 

determined that the data we are reporting are sufficiently reliable and 

useful for assessing IRS’s filing season performance. 

We did our work at IRS headquarters in Washington, D.C.; W&I 

headquarters and the Joint Operations Center in Atlanta, Ga;5

 and W&I 

processing centers in Atlanta, Ga, and Holtsville, N.Y.; and walk-in and 

volunteer locations in Georgia and Louisiana. We selected these offices for 

a variety of reasons, including the location of key IRS managers and 

operations. We also selected the Brookhaven Submission Processing 

Center to visit because IRS was phasing out processing operations at that 

center, which represents a significant initiative related to both paper 

processing and electronic filing. We performed our work from January 

through September 2003 in accordance with generally accepted 

government auditing standards. 

Background	 IRS’s filing season is an enormous and critical undertaking that includes 

two key activities—returns processing and taxpayer assistance. As figure 1 

shows, during the 2003 filing season, IRS processed an estimated 77 million 

individual income tax returns filed on paper, an estimated 53 million 

returns filed electronically, and issued an estimated 99 million refunds to 

taxpayers. At the same time, IRS provided extensive assistance to millions 

of taxpayers via phone, walk-in contact, and over its Web site. 

5

The Joint Operations Center is the organization responsible for managing IRS’s telephone 

operations. 

Page 6 GAO-04-84 2003 Tax Filing Season 
Figure 1: IRS’s Primary Activities During the 2003 Filing Season 

Returns processing Taxpayer assistance 

Paper returns ....................... 77 million 

Electronic returns .................. 53 million 

Refunds ..................................99 million 

Toll-free calls .........................72 million 

Walk-in contacts ......................6 million 

Web site downloads ............430 million 

Source : IRS and Art Explosion. 

Note: GAO analysis of IRS data. The number of paper and electronic returns and refunds are 

estimated for the time period January 1, 2003, to October 24, 2003; toll-free calls for the time period 

January 1, 2003, to July 12, 2003; walk-in contacts, which include returns prepared at volunteer sites, 

for the time period January 1, 2003, to April 19, 2003; and Internet downloads for the time period 

January 1, 2003, to July 31, 2003. We use different dates for the various areas because those dates 

best reflect IRS’s filing season workload in that area. 

To process individual returns in 2003, IRS had eight geographically 

dispersed W&I submission processing centers that were responsible for 

processing returns filed on paper, three of which were also responsible for 

processing tax returns filed electronically; correcting errors made on tax 

returns; and forwarding the data through a data processing and 

telecommunications infrastructure to two computing centers, which 

maintain IRS’s primary taxpayer account databases. To help taxpayers 

comply with their tax obligations, IRS provides various services at its call 

sites, walk-in sites, volunteer sites, and on the Web site. For example, 

taxpayers can call IRS toll-free to get answers to tax law questions and 

order tax forms and publications; get information or help in preparing their 

returns at IRS walk-in sites; get their returns prepared at community-based 

coalition and other volunteer organization sites in partnership with IRS; 

and get information, including answers to tax law questions, through IRS’s 

Web site. 

Page 7 GAO-04-84 2003 Tax Filing Season 
Since the IRS Restructuring and Reform Act of 19986

 (RRA 98), IRS has 

been particularly focused on improving taxpayer service. To help achieve 

this, in 2001, IRS established a suite of balanced performance 

measurements in accordance with RRA 98 and the Government 

Performance and Results Act of 1993.

7 The performance measurement 

system emphasizes accountability for achieving specific results and 

reflects IRS’s priorities, which are articulated in its mission and strategic 

goals—top quality service to all taxpayers through fair and uniform 

application of the law, top quality service to each taxpayer in every 

interaction, and productivity through a quality work environment. IRS has 

defined three elements of balanced measures to ensure balance among its 

priorities, such as providing timely and accurate service: (1) customer 

satisfaction, (2) employee satisfaction, and (3) business results (quality and 

quantity measures). IRS establishes goals each fiscal year for its 

performance measures and uses them to hold managers and frontline staff 

more accountable for improving filing season performance.8 

IRS’s W& I operating division is one of four divisions that IRS established as 

part of a reorganization that took effect in October 2000. The other three 

divisions are Small Business and Self-Employed, Large and Mid-Size 

Businesses, and Tax Exempt and Government Entities. 

IRS’s Processing of We found that on the basis of a comparison of IRS’s performance in 2003 

and 2002, IRS’s processing of individual income tax returns and refunds Returns And Refunds generally improved in 2003 and IRS exceeded most of its 2003 processing

Improved, and IRS goals. In addition, the growth in electronic filing has enabled IRS to close 

Closed One Paper paper processing operations at one location and reduce the total number of 

staff devoted to paper processing. Processing Center 

6

P.L. 105-206. 

7

The Government Performance and Results Act of 1993 (P.L. 103-62) was enacted to hold 

federal agencies accountable for achieving program results. IRS’s balanced measurement 

system is consistent with the intent of the act. 

8

Although IRS establishes goals for its balanced measures on a fiscal year basis, our 

assessment of these measures is based on the filing season, when most taxpayers have their 

only interaction with IRS. 

Page 8 GAO-04-84 2003 Tax Filing Season 
Processing Performance 

Improved in 2003 Compared 

To Last Year 

IRS’s performance improved in 2003 relative to 2002 for seven of the eight 

measures that are part of its suite of balanced measures it uses to judge its 

performance in processing individual income tax returns, refunds, and 

remittances.9 For example, IRS’s measure of the percentage of refunds on 

returns filed on paper issued within 40 days or less (refund timeliness— 

paper) increased from 98.2 percent in 2002 to 98.8 percent in 2003. In 

addition, IRS’s measure of the percentage of notices issued to taxpayers 

that had an error on the notice (notice error rate) decreased from 18.7 

percent in 2002 to 9.7 percent in 2003. IRS also exceeded its fiscal year 

2003 performance goals for five of the eight measures (including refund 

timeliness—paper), although it missed its goals for two measures (deposit 

error rate and letter error rate). We could not compare performance for 

one measure (refund interest paid) to prior years or its 2003 performance 

goal, because IRS implemented a programming change that changed the 

way it calculated the measure for the 2003 filing season and did not have 

the necessary data to revise the goal for the 2003 filing season. Table 2 in 

appendix I describes these eight measures and shows the results IRS 

reported for each of the measures. 

Other information supports the conclusion that the 2003 filing season went 

smoothly and without significant disruptions, as the following examples 

illustrate. 

•	 Production data that IRS uses to monitor operations and identify and 

resolve issues that could disrupt operations showed IRS met processing 

deadlines and did not experience significant disruptions in 2003. These 

data showed that, on average, IRS met or exceeded its goal for the 

number of days it takes to process individual income tax returns. 

•	 Directors, managers, and staff at the Atlanta and Brookhaven 

Submission Processing centers voiced similarly positive views about the 

filing season and processing, and the Director of Submission Processing 

attributed improvements during the 2003 filing season to efforts to build 

upon a largely successful 2002 filing season and the small effect of tax 

law changes on taxpayers during the 2003 filing season. Appendix II 

provides more detailed information about the Jobs and Growth Tax 

9

The data we report for 2003 are as of July 31, which were the latest data available at the 

time we ended our field work. According to IRS officials, the results through July 31 reflect 

IRS’s performance during the filing season. 

Page 9 GAO-04-84 2003 Tax Filing Season 
Relief Reconciliation Act of 200310 and its impact on the 2003 filing 

season and potential impact in 2004. 

•	 The Commissioner of IRS testified in May 2003, before the annual Joint 

Congressional Review held as part of RRA 98, that IRS had made 

progress during the 2003 filing season, although he acknowledged that 

IRS has yet to provide the level of service that taxpayers, the Congress, 

and IRS agree is necessary. 

•	 The then Acting Commissioner of Internal Revenue testified in April 

2003 before the Subcommittee that, among other things, the filing 

season was going smoothly, with no significant delays in processing 

returns and issuing refunds. Representatives from the National 

Association of Enrolled Agents,11 National Association of Accountants, 

and H&R Block—the largest tax preparation firm—all expressed 

positive feedback about IRS’s processing operations during this filing 

season. 

•	 According to TIGTA’s report on the 2003 filing season, IRS processed 

most returns accurately and on time and the filing season went well.12 

TIGTA reported that most of the key tax law changes that affected 

taxpayers in 2003 were correctly implemented or subsequently 

corrected after processing began. However, TIGTA identified some 

areas of the tax laws that were not correctly implemented and could 

result in loss of taxpayer entitlements and erroneous tax assessments.13 

10P.L. 108-27. 

11The National Association of Enrolled Agents is a national association of over 10,000 

independent, licensed tax professionals called enrolled agents. Enrolled agents are licensed 

by the federal government and are authorized to appear in place of the taxpayer at IRS. 

12Treasury Inspector General for Tax Administration, The 2003 Filing Season Was 

Completed Timely and Accurately, but Some New Tax Law Changes Were Not Effectively 

Implemented, Reference No. 2004-40-003, (Washington, D.C., 2003). 

13TIGTA identified taxpayers that were allowed retirement savings contribution credits and 

student loan interest deductions in excess of the amounts allowed by the new tax law 

changes, taxpayers with potential unclaimed additional child tax credits, and taxpayers that 

were allowed a “dual benefit” for the tuition and fees deduction and the education credit. 

Page 10 GAO-04-84 2003 Tax Filing Season 
Closing of Paper Processing 

Operations at One Center Is 

a Key Initiative and 

Represents Payoff From 

Modernization 

The growth in electronic filing and resulting reduction in the number of 

paper returns received in recent years has enabled IRS to close the paper 

processing operations at its Brookhaven Submission Processing Center— 

one of its eight centers for processing individual income tax returns filed 

on paper. The closure is a key processing initiative in 2003. IRS’s long-term 

strategy for paper processing is to continue closing its processing centers 

as electronic filing grows and shift the processing of paper returns to the 

remaining centers. IRS picked Brookhaven for the initial closure based on 

several factors, including paper return volume, personnel costs, labor 

availability, and real estate costs. As we noted in our interim testimony on 

IRS’s filing season performance, this closing represents a significant 

consolidation of IRS’s processing operations and a key payoff from 

modernization, specifically the growth in electronic filing.14 IRS officials 

attributed not meeting the goal for the percentage of letters issued to 

taxpayers with errors (letter error rate), in part, to the loss of experienced 

and knowledgeable personnel as a result of IRS’s announcement that it 

would be closing some processing centers. 

In addition to closing paper processing operations at one of its centers, IRS 

has seen other improvements in its processing operations over the past 

several filing seasons. For example, in 1996, the average number of days it 

took processing centers to process individual tax returns ranged between 8 

and 11 days. In 2003, the average number of days ranged between 6 and 8 

days. In addition, IRS’s measure of the percentage of refunds with IRScaused errors in the entity information (e.g., name or Social Security 

number) or refund amount declined from 9.8 percent in 2001 to 5.4 percent 

in 2003. IRS officials also told us that, since 2001, the eight submission 

processing centers that process individual tax returns each met or 

exceeded the established deposit program completion date—the date by 

which the processing centers must finish processing all tax receipts 

associated with the April peak processing period. 

According to IRS officials, the improvements in processing performance 

have resulted from a combination of factors, including better data 

processing equipment and more emphasis on performance management. 

For example, in the late 1990s, IRS began replacing two key data 

processing systems, which allowed for faster processing. In addition, IRS 

officials told us that they now rely more heavily on technology to 

14GAO-03-641T. 

Page 11 GAO-04-84 2003 Tax Filing Season 
communicate with employees, which they believe allows for faster and 

more accurate dissemination of information from headquarters to field 

staff and vice versa. As a result of RRA 98, IRS also has stressed the 

importance of reaching the goals for its balanced measures as compared to 

prior years, when IRS placed less importance on these types of measures. 

The improvements in processing performance also have enabled IRS to 

reduce the number of staff devoted to its paper processing operations, 

while employee satisfaction has increased. According to IRS officials, the 

number of staff years used in paper processing operations has decreased 

from 11,542 in fiscal year 2001 to 10,619 in fiscal year 2003, a decrease of 

about 8 percent.15 At the same time, the level of employee satisfaction has 

increased, as 63 percent of the staff assigned to processing expressed being 

satisfied with their job in 2003, an increase from 54 percent in 2001. 

Electronic Filing Grew The number of individual income tax returns that IRS received 

electronically continued to grow and IRS met its goal for the percentage of in 2003, but at Current returns filed electronically. However, the current rate of growth of 

Growth Rate IRS Will electronic filing will not allow IRS to achieve its long-term electronic filing 

Not Achieve Long- goal of 80 percent by 2007,

16 despite numerous initiatives to reduce barriers 

Term Goal to and encourage more electronic filing. 

Despite Growth in 

Electronic Filing In 2003, 

IRS is Not on Track to 

Achieve Its Long-Term Goal 

The number of individual returns filed electronically continued to grow in 

2003. IRS received an estimated 53 million individual tax returns 

electronically in 2003, an increase of about 13 percent from 46.9 million in 

2002. The percentage of individual tax returns filed electronically reached 

an estimated 41 percent in 2003, up from 35.9 percent in 2002. While the 

number of tax returns filed electronically in 2003 fell just short of IRS’s 

performance goal of 54 million, IRS met its performance goal for the 

percentage of individual tax returns filed electronically. 

15According to IRS officials, the staff year data for fiscal year 2003 represent actual staff year 

data through August 2, 2003, plus projected staff year usage through September 30, 2003. 

16RRA 98 provides, in part, that it should be the goal of IRS to have at least 80 percent of all 

federal tax and information returns filed electronically by 2007. IRS’s goal for individual 

income tax returns is consistent with this overall goal—80 percent by 2007. 

Page 12 GAO-04-84 2003 Tax Filing Season 
Although electronic filing continues to grow, IRS is not on track to reach its 

long-term electronic filing goal of 80 percent by 2007. As figure 2 shows, 

the growth rate from 1996 through 2003 has generally been decreasing. 

More significantly, the growth rate in 2003 represents the smallest 

percentage increase in the number of individual tax returns filed 

electronically since 1996. Some slowing of the growth rate might be 

expected because, for example, taxpayers most easily attracted to 

electronic filing have already converted. 

Figure 2: Growth Rate in the Number of Individual Tax Returns Filed Electronically, 

1996-2003 

40 Percent 

30 

20 

10 

0 

1996 1997 1998 1999 2000 2001 2002 2003 

Year 

Source: IRS. 

Note: GAO analysis of IRS data. The growth rate for 2003 is estimated. 

The current growth rate will not enable IRS to meet its long-term goals. We 

estimate, on the basis of the data in figure 3, that about 64 percent of 

individual tax returns will be filed electronically by 2007, assuming annual 

growth rates for individual tax returns filed electronically (about 13 

percent) and total number of individual tax returns filed (0.66 percent)17 

continue through 2007. IRS estimated an even lower percentage (54.4 

percent) of returns would be filed electronically by 2007.18 In order to 

achieve the long-term goal of 80 percent, IRS would have to average more 

than a 19 percent growth rate in electronic filing from 2004 to 2007. 

However, in its June 30, 2003, report to the Congress, the Electronic Tax 

Page 13 GAO-04-84 2003 Tax Filing Season 
Administration Advisory Committee (ETAAC) 19 said that the trend of 

electronic filing is clearly toward lower annual growth rates and as a result, 

IRS will have difficulty achieving its long-term goal unless it finds 

additional ways to overcome taxpayer and tax practitioner barriers to 

electronic filing. To the extent that IRS misses the goal, more resources 

will have to be devoted to processing paper returns. 

Figure 3: Projected Percentage of Individual Tax Returns Filed Electronically, 2004-

2007 

100 Percent 

Goal 80 

60 

40 

20 

0 

2004 2005 2006 2007 

Year 

Source: GAO. 

17 We used a 3-year average for the growth rate in the total number of individual tax returns 

because the growth rate in 2003 was negative and we believe that a 3-year average is more 

representative of future growth. IRS officials attributed the negative growth rate in 2003 to 

the downturn in the U.S. economy. 

18See Report of the Joint Committee on Taxation Relating to the Internal Revenue Service 

as required by the IRS Reform and Restructuring Act of 1998, JCX-53-03, May 19, 2003. 

19Electronic Tax Administration Advisory Committee, Annual Report to Congress, 

(Washington, D.C., June 2003). RRA 98 mandated that the Secretary of the Treasury 

convene an electronic commerce advisory group to ensure that the Secretary receives input 

from the private sector on IRS’s plan to increase electronic filing. ETAAC was created in 

1998 in response to that mandate and, among other things, is required to report to the 

Congress annually on IRS’s progress towards meeting the electronic filing goals set in the 

act. 

Page 14 GAO-04-84 2003 Tax Filing Season 
Note: GAO analysis of IRS data. 

IRS Has Taken Various 

Steps to Encourage More 

Electronic Filing, which Is 

Key to Continued 

Modernization 

In 2003, IRS took various steps to encourage taxpayers and practitioners to 

file electronically. These steps included the following: 

•	 IRS entered into an agreement with the Free File Alliance, a consortium 

of 17 tax preparation companies, which requires the Alliance to offer 

free on-line tax preparation and filing services for at least 60 percent (78 

million) of all taxpayers during the filing season. Taxpayers access the 

Alliance from a link on IRS’s Web site. As of July 31, 2003, about 2.8 

million taxpayers used the free on-line filing services offered by the 

Alliance, which exceeded IRS’s goal of 2.5 million taxpayers.20 However, 

IRS officials estimated that only about 1 million of these taxpayers were 

filing electronically for the first time. 

•	 IRS continued to focus the electronic filing marketing campaign on 

taxpayers and practitioners who file computer-prepared tax returns on 

paper. In 2003, IRS planned to spend $15 million, the same as the 

marketing budget in 2002. 

•	 IRS mailed a package to about 32,000 tax practitioners who prepare 

either some or all of their tax returns over the computer but submit 

paper tax returns. The package explains the benefits of electronic filing 

and encourages taxpayers to file all of their tax returns electronically. 

This built on an initiative last year where IRS sent letters to selected tax 

practitioners to encourage them to file returns electronically. 

According to IRS officials, these steps contributed to the growth in the 

number of returns filed electronically in 2003; however, the officials told us 

that they were unable to link the initiatives to a specific increase in the 

growth of individual returns filed electronically, with the exception of the 

Free File initiative. 

The growth of electronic filing has been, and continues to be, a key part of 

IRS’s modernization strategy because it allows IRS to control costs, shift 

20 TIGTA confirmed that IRS exceeded its goals for the Free File Alliance, although they had 

recommendations to improve the program. See Treasury Inspector General for Tax 

Administration, Improvements are Needed to Ensure Individual Taxpayers Have an Easy, 

No-Cost Option to e-file Their Tax Returns, Reference No. 2003-40-165, (Washington, D.C., 

2002). 

Page 15 GAO-04-84 2003 Tax Filing Season 
resources out of labor-intensive paper return processing, improve 

customer service, and as previously discussed, consolidate submission 

processing operations at fewer centers. Electronic filing has grown from 

almost 12 million returns in 1995 to an estimated 53 million in 2003, due to 

numerous initiatives implemented over the years. For example, in 1999, 

IRS made electronic filing more appealing by enabling taxpayers who owe 

money to pay their balance due either by credit card or by direct debit from 

a checking or saving account. Also, in response to concerns voiced by 

practitioners that electronic filing was not entirely paperless, IRS began 

testing alternative signature options that allowed certain electronic filers to 

sign their returns electronically and thus avoid having to send any paper to 

IRS and expanded those initiatives in 2000. Additionally, each year IRS has 

expanded the list of forms and schedules that can be filed electronically. 

As a result, according to IRS, 99 percent of all individual forms and 

schedules can be filed electronically today. 

Telephone Service 

Showed Improvement 

in Accessibility but Not 

Accuracy 

IRS provided more accessible telephone service in 2003; however, its 

performance in providing accurate responses to taxpayers declined, and 

IRS did not achieve most of its 2003 performance goals, primarily related to 

accuracy. IRS implemented several initiatives in 2003 that likely 

contributed to improved accessibility. Over a longer period of time, IRS 

has significantly improved both the accessibility and accuracy of its 

telephone service, which represents a payoff from its modernization 

efforts. 

Telephone Service Was IRS receives millions of calls to its toll-free network during the filing season 

More Accessible, Although when taxpayers, inquire about tax law issues, the status of their refunds, or 

Not More Accurate in 2003 issues regarding their accounts, among other things. As figure 4 shows, IRS 

received about 72 million calls in 2003, about 31 percent fewer calls than it 

received in 2002. Figure 4 also shows that calls about the status of refunds 

accounted for almost half of total calls received through mid-July 2003. 

Page 16 GAO-04-84 2003 Tax Filing Season 
Figure 4: Reasons Taxpayers Called for Telephone Assistance during the 2003 Filing 

Season 

Total calls to IRS 

72 million 

47% 

Other 

5.3 million 

25% 

21% 

7% 

Source: IRS and Art Explosion. 

Calls for refund 

information 

33.8 million 

Calls for account 

information 

17.6 million 

Calls for tax law 

information 

15.3 million 

Note: GAO analysis of IRS data. The “Other” category includes special telephone numbers, such as 

the one for victims of the September 11, 2001, terrorist actions, and calls that were abandoned or that 

reach a busy signal from IRS’s automated-service-only (TeleTax) number. In this figure, total calls to 

IRS refer to the number of callers that tried to reach a Customer Service Representative (CSR) or 

IRS’s TeleTax number. Data cover January 1 through July 12, 2003. 

Figure 5 shows that of the 72 million calls to IRS during the 2003 filing 

season (1) less than half of the calls resulted in the caller receiving 

automated service, (2) about one third of the calls were handled by a 

Customer Service Representative (CSR), and (3) about one fourth of the 

calls resulted in the caller hanging up or being disconnected without 

receiving service. 

Page 17 GAO-04-84 2003 Tax Filing Season 
Figure 5: How IRS Handled Calls for Telephone Assistance during 2003 Filing 

Season 

45% 

31% 

24% 

Hung up or disconnected 

without receiving service 

17.3 million 

Total calls to IRS 

72 million 

Reached a CSR 

22.4 million 

Received 

automated 

service 

32.3 million 

Source: IRS and Art Explosion. 

Note: GAO analysis of IRS data. 

IRS’s overall performance in answering calls during the 2003 filing season 

was mixed. As table 1 shows, IRS provided more accessible telephone 

service in 2003 compared to 2002 as (1) a greater percentage of callers 

attempting to reach a CSR received service, (2) a greater percentage of 

callers attempting to access automated service completed their calls, (3) a 

greater percentage of callers reached a CSR within IRS's threshold of 30 

seconds or less, and (4) callers spent less time waiting for assistance on 

average. However, table 1 also shows that IRS’s performance on various 

accuracy measures declined in 2003 as compared to 2002. 

Page 18 GAO-04-84 2003 Tax Filing Season 
Table 1: IRS Tax Filing Season Telephone Assistance Performance, 2000-2003 Filing Seasons 

2000 2001 2002 2003 

Accessibility measuresa Actual Actual Actual Actual Goals 

CSR level of serviceb j 68% 71% 85% 72% 

Automated completion ratec 47% 47% 36% 59% N/Ak 

Assistor response level

d 39% 39% 51% 56% N/Ak 

Average speed of answer

e 237 seconds 337 seconds 268 seconds 159 seconds N/Ak 

Accuracy measuresa 

Tax law quality ratef 73% 75% 82% 80% 84% 

+/- 2% +/- 1% +/- 1% +/- 1% 

Accounts quality ratef 59% 69% 76% 70% 76% 

+/- 2% +/- 1% +/- 1% +/- 1% 

Tax law customer accuracy rateg j 79% 85% 81% 87% 

+/- 1% +/- 1% +/- 1% 

Accounts customer accuracy rateg j 88% 91% 89% 91% 

+/- 1% +/- 1% +/- 1% 

Tax law timeliness rateh j j j 99% N/Ak 

+/- 1% 

Accounts timeliness rateh j j j 97% N/Ak 

+/- 1% 

Tax law professionalism ratei j j j 100% N/Ak 

+/- 1% 

Account professionalism ratei j j j 100% N/Ak 

+/- 1% 

Source: IRS. 

a

Accessibility measures are based on actual counts from January 1 through mid-July. Accuracy 

measures are based on representative samples and are estimated at the 90-percent confidence level 

and cover the period from January through June. 

b

This measure is intended to show the percentage of callers who wanted to speak to a customer 

service representative (CSR) that got through and received service. 

c

This measure is intended to show the percentage of total callers who completed a selected automated 

service. IRS did not establish a goal for 2003 because the indicator is not an official measure. 

dIRS uses the word “assistor” interchangeably with CSR. This measure shows the percentage of 

callers that waited 30 seconds or less before speaking to a CSR. IRS did not establish a goal for 2003 

because the indicator is not an official measure. 

e

The average number of seconds callers waited before speaking to a CSR. IRS did not establish a 

goal for 2003 because the indicator is not an official measure. 

f

The percentage of calls in which CSRs followed all IRS procedures for the call type and provided 

correct answers. 

g

The percentage of calls in which CSRs provided correct answers for the call type and took the 

appropriate follow-up resolution action. 

h

The percentage of calls in which CSRs used their time efficiently when responding to taxpayers 

inquires. IRS did not establish goals for 2003 for these measures because they were new in 2003. 

Page 19 GAO-04-84 2003 Tax Filing Season 
iThe percentage of calls in which CSRs used effective communication techniques to promote a 

positive IRS image when responding to taxpayer inquires. IRS did not establish goals for 2003 for 

these measures, because they were new in 2003. 

jComparable data do not exist. 

kNot applicable. 

IRS exceeded its goal for CSR level of service during the 2003 filing season. 

However, IRS did not set goals for the three other workload indicators of 

accessibility shown in table 1 because it did not consider these indicators 

to be performance measures. We believe these three indicators are 

important because they measure taxpayers’ access to automated service 

and gauge the taxpayer’s experience when attempting to reach a CSR.

21 As 

we reported in November 2002, IRS removed the automated completion 

rate as a measure of the effectiveness of serving taxpayers through 

automation.22 IRS did not agree with our recommendation to reinstate this 

measure as a means of determining the level of service provided by 

automation.23 In December 2002, we also reported that IRS stopped using 

the assistor response level and average speed of answer measures to assess 

its performance in providing telephone service because IRS’s telephone call 

sites had no control over these measures.24 In response to our 

recommendation that IRS reinstate a telephone assistance caller wait-time 

measure, IRS plans to reintroduce a wait-time measure for fiscal year 2004. 

This measure—average speed of answer—is intended to gauge the 

customer’s experience when attempting to reach a CSR. 

IRS officials attributed the improvement in the accessibility of telephone 

service to several factors. For example, IRS experienced a lower than 

expected number of calls in 2003—about 72 million calls received in 2003 

as compared to more than 104 million in 2002. IRS officials told us that 

21 IRS has other measures that we are not reporting on because the measures do not provide 

adequate information to make conclusions about the ease with which taxpayers reached 

IRS or the accuracy of the responses they received after reaching IRS. 

22GAO-03-143. 

23 IRS based its disagreement on the data on automated calls not being good enough to merit 

attention as a balanced measure. While we recognized that there were data weaknesses 

with the measure, our recommendation also called for IRS to revise the formula before 

including it among its balanced measures. See GAO-03-143. 

24U.S. General Accounting Office, IRS’s 2002 Tax Filing Season: Returns and Refunds 

Processed Smoothly; Quality of Assistance Improved, GAO-03-314 (Washington, D.C.: Dec. 

20, 2002). 

Page 20 GAO-04-84 2003 Tax Filing Season 
there were relatively few tax law changes that had an impact on taxpayers 

during the 2003 filing season as compared to last year, when IRS received a 

significant number of calls related to the rate reduction credit. Another 

possible reason for the improvement in accessibility could be the fact that 

IRS began using CSRs to route tax law related calls in 2003. IRS made this 

change because in 2002 (1) some callers spent up to 2 minutes navigating 

the menu options, (2) other callers spent up to 3 minutes talking to one 

CSR only to be transferred to another CSR for assistance, and (3) more 

than 50 percent of the calls received by CSRs were re-routed to other CSRs 

for some tax law topics. IRS officials told us that they made this change to 

improve performance during the filing season and improve the customer 

experience since many customers with tax-law-related calls had difficulty 

using the menu options. 

IRS did not meet its goals for any of its accuracy measures during the 2003 

filing season, and its performance relative to these measures declined 

compared to last year. IRS also began establishing baseline data for four 

new accuracy measures and has not yet set goals for these measures. 

These new measures assess how well CSRs manage their time and whether 

CSRs promote a positive IRS image when communicating with telephone 

callers. IRS plans to replace its existing tax law and account quality 

measures and use the new timeliness and professionalism measures and 

current customer accuracy measures to assess the accuracy of its 

performance in providing telephone assistance beginning in fiscal year 

2004. According to IRS, the new timeliness and professionalism measures 

are based on what customers indicated mattered most to them and they are 

designed with consideration to industry best practices. Although IRS 

began an analysis to determine whether there is a correlation between how 

IRS rates its CSRs on these new measures and how taxpayers report being 

treated in the customer satisfaction surveys, the analysis was not 

completed when we completed our field work. 

IRS attributed the lack of improvement in the accuracy of telephone 

service to several factors. For example, IRS officials attributed the decline 

in the accounts quality rate to the training of newly hired CSRs on accountrelated topics instead of the easier refund topics. In addition, with the 

introduction of the Internet “Where’s My Refund” feature, IRS received 

fewer refund inquires, which resulted in more complex calls being 

answered by CSRs. This feature is discussed in more detail in the “IRS’s 

Web Site Performance Showed Some Improvement” section. IRS identified 

several items that contributed to the decrease in the tax law customer 

accuracy rate, including the fact that CSRs had difficulty adapting to the 

Page 21 GAO-04-84 2003 Tax Filing Season 
changes in the guide they use to query callers. IRS officials also said 

another explanation for the lack of improvement in providing accurate 

information to callers is that some of IRS’s telephone call sites were 

transferred from one operating division to another division, which resulted 

in CSRs moving from one area of expertise to another area and needing to 

be retrained. 

IRS Implemented Several 

Initiatives in 2003 to 

Improve Telephone Service 

IRS implemented several initiatives to improve telephone service in 2003. 

According to IRS officials, these initiatives were instrumental in IRS 

improving access to telephone service during the 2003 filing season, 

although it is difficult to determine specific cause/effect relationships 

between the initiatives and improvements in telephone service. Examples 

include the following. 

•	 IRS established six new toll-free telephone numbers to better reflect 

operating division responsibility and accountability—the Refund 

Hotline, Refund Callback Line, Business and Specialty Tax Line, and 

three new customer response numbers. These new numbers are part of 

IRS’s new toll-free strategy to improve the customer’s experience by 

targeting customer segments and creating more accountability for the 

operating divisions. According to IRS officials, the three new customer 

response numbers replaced one number that IRS used in the past and 

more closely correspond to the operating division responsible for a 

particular notice. 

•	 IRS implemented a new feature on its Web site that enabled taxpayers to 

find out if IRS received their returns and whether their refunds had been 

processed, as discussed in the “IRS’s Web Site Performance Showed 

Some Improvement” section of this report. The new feature provides 

taxpayers with another option to receive assistance while reducing the 

demand for toll-free refund calls. According to IRS’s analysis for the 

period of January 1 to June 30, 2003, this new feature handled 32 percent 

of all IRS contacts from taxpayers with refund questions and reduced 

the toll-free refund call demand. 

Telephone Service Has Since the mid-1990s, IRS has significantly improved its telephone service. 

Improved over the Past Although telephone service is not yet at the level desired by taxpayers and 

Several Filing Season Partly the Congress, the improvements to date represent payoffs from IRS’s 

modernization efforts. For example, in 1997, about 49 percent of calls to as a Result of Modernization IRS primary assistance lines either received a busy signal or were 

Page 22 GAO-04-84 2003 Tax Filing Season 
abandoned before being answered, as compared to about 32 percent of 

calls in 2003. In addition, the percentage of calls where taxpayers 

attempted to reach a CSR and received service increased from about 68 to 

85 percent between the 2001 and 2003 filing seasons. With regard to 

accuracy, the percentage of tax-law-related calls in which CSRs followed all 

IRS procedures and provided the correct answer increased from 73 percent 

in 2000 to 80 percent in 2003, while the percentage of account-related-calls 

in which CSRs followed all IRS procedures and provided the correct 

answer also increased from 59 to 70 percent between the 2000 and 2003 

filing seasons. 

IRS’s telephone service improvements over the years are, in part, the result 

of numerous modernization initiatives sustained over time, although 

limited data exist to link specific initiatives to improvements. In 1998, IRS 

revised its method of distributing calls, shifting from an area-code-based 

routing system to a nationwide call allocation system. In 1999, IRS 

centralized its toll-free telephone operation at the Joint Operations Center 

to enable it to route calls on the basis of availability of CSRs. Similarly, 

from 2000 through 2003, IRS made several business process changes and 

implemented new technology. For example, in 2001, IRS shifted millions of 

calls to an automated answering system in order to free CSRs to answer 

more complex calls. IRS also enhanced its call routing ability in 2002 by 

implementing “network call screening” where callers, through the use of 

menu options, indicated their subject matter prior to being routed to a call 

site. Regarding accuracy, IRS began centralized monitoring of account- and 

tax-law-related calls in 1998. In addition, a desktop electronic version of 

IRS’s guide used to answer tax-law-related questions was made available to 

all CSRs. The guide has been improved and now contains automated links 

to on-line research material. Using this same technology, in 2002, IRS 

automated the guide that CSRs use to answer account-related questions. 

Finally, because of modernization, IRS’s telephone service has improved 

over the years while maintaining about the same workforce level in its 

telephone operations. For example, IRS expended about 8,285 staff years 

in fiscal year 1999 providing toll-free telephone service compared to 8,340 

staff years in fiscal year 2002. 

Page 23 GAO-04-84 2003 Tax Filing Season 
Quality of Walk-In 

Assistance Improved in 

2003, but Assessing 

Long-Term 

Improvements Is 

Difficult Because of 

Lack of Data 

The quality of service provided at IRS’s walk-in sites showed some 

improvement in 2003, and IRS met some of its 2003 performance goals.25 In 

addition, IRS continued its initiative to shift return preparation work to its 

community-based coalitions and other volunteer organizations, which 

contributed to a decline in the number of taxpayers assisted at IRS’s walkin sites. However, our assessment was limited by the fact that IRS did not 

report performance for the timeliness of walk-in assistance or the accuracy 

of account assistance in 2003. Over the last several years, IRS has made 

efforts to standardize and improve walk-in assistance, but a lack of longterm performance data makes it impossible to quantify improvements. 

Tax Law Accuracy and 

Volunteer Assistance 

Increased in 2003, but IRS 

Did Not Report on 

Timeliness and Account 

Assistance 

The accuracy of tax law assistance provided at walk-in sites improved 

between 2002 and 2003 on the basis of reviews conducted by TIGTA.26 

From January through April 2003, TIGTA found that about 70 percent of its 

questions were answered correctly, an increase of 20 percentage points 

over the same time period last year, but less than IRS’s 2003 performance 

goal of 80 percent. TIGTA also found that the number of times IRS 

employees referred TIGTA auditors to a publication instead of answering 

tax law questions—which had been an issue last year—declined by about 

87 percent. TIGTA attributed the increased accuracy rates to IRS (1) 

revising the guidelines used by walk-in staff, (2) certifying the proficiency 

of walk-in staff in various tax law categories, and (3) immediately 

addressing the results of TIGTA reviews at walk-in sites. As they did last 

year, field assistance officials continue to disagree with the methodology 

used by TIGTA to calculate tax law accuracy because TIGTA counts 

referrals to IRS publications as incorrect.27 However, as we stated last year, 

we believe that the complexity of tax laws and varying education levels 

among taxpayers seeking assistance suggest that requiring field assistance 

25At any one of IRS’s more than 400 walk-in sites, taxpayers can obtain (1) forms and 

publications; (2) assistance with their tax accounts; (3) answers to tax law questions; (4) 

limited return preparation assistance; and (5) various other types of assistance, such as help 

getting a taxpayer identification number. 

26In 2001, the Congress directed TIGTA to review the accuracy of tax law assistance 

provided by all of IRS’s walk-in sites, S. Rep. No. 107-57 (2001). From January through April 

2003, TIGTA reviewers visited 72 walk-in sites and asked a total of 283 tax law questions. 

27TIGTA counts referrals as incorrect when the IRS employee merely provided the 

publication, without walking the customer through it to identify the answer, as required by 

established field assistance procedures. 

Page 24 GAO-04-84 2003 Tax Filing Season 
employees to walk the taxpayer through a publication to identify the 

correct response is a necessary procedure that should be followed in 

practice for their response to be considered correct.28 

In addition to TIGTA reviews of tax law accuracy, IRS began measuring the 

accuracy of return preparation assistance provided at walk-in sites in 

January 2003, using existing data generated by the submission processing 

centers.29 IRS data shows that from January 1 to May 3, 2003, the accuracy 

rate for returns prepared at walk-in sites was 99.8 percent, which exceeded 

IRS’s performance goal of 91 percent. IRS officials attributed the high 

accuracy rate to the use of standardized software by walk-in staff to 

prepare and electronically file returns and the lack of significant tax law 

changes in 2003 as compared to last year. IRS also partners with 

community-based coalitions—a collection of local organizations that help 

low-income individuals and families—and other volunteer organizations to 

provide free return preparation assistance to taxpayers as part of its VITA 

and TCE programs.30 According to IRS officials, from January 1 to April 19, 

2003, the accuracy rate for returns prepared at VITA sites was 98.1 percent 

and 96.5 percent for returns prepared at TCE sites. 

In 2003, the number of taxpayers that received return preparation 

assistance from community-based coalitions and other volunteer 

organizations increased; at the same time, the number of taxpayers assisted 

at IRS’s walk-in sites continued to decline. Figure 6 shows the growth in 

the number of returns prepared by community-based coalitions and other 

organizations, a decline in the number of taxpayers receiving assistance at 

IRS walk-in sites, and a decline in the number of returns prepared at IRS 

walk-in sites.31 

28GAO-03-314. 

29IRS considers a return as being accurate if no math errors (obvious errors such as 

mathematical errors, omitted or inconsistent data, or other inconsistencies) are identified 

on the return. 

30These programs use IRS-trained volunteers to help prepare basic tax returns for taxpayers 

with special needs, including people with disabilities, those with low or fixed incomes, nonEnglish speaking people, and the elderly, during the filing season. 

31IRS’s walk-in sites provide return preparation assistance to taxpayers taht meet certain 

income requirements. For the 2003 filing season, the income ceiling for return preparation 

assistance was $35,000. 

Page 25 GAO-04-84 2003 Tax Filing Season 
Figure 6: Assistance Provided by IRS Walk-in and Volunteer Sites, 2000-2003 Filing 

Seasons 

8 Millions 

6 5.79 

4 

2 

0 

2000 2001 2002 2003 

0.89 0.79 0.67 0.46 

0.95 0.94 

1.31 

5.14 

4.90 

4.19 

N/A 

Returns prepared (walk-in) 

Returns prepared (volunteer) 

Total walk-in 

Source: IRS. 

Note: GAO analysis based on IRS data. Total walk-in includes all face-to-face assistance. It does not 

include the number of taxpayers assisted by walk-in employees via telephone or correspondence, 

which ranged from about 96,000 in 2000 to over 150,000 in 2003. 

The number of returns prepared at volunteer sites was not available for the 2000 filing season. 

The time periods covered by this figure each began on January 1 and ended on April 22, 2000, April 

21, 2001, April 20, 2002, and April 19, 2003. 

IRS officials attributed the overall decline in the number of taxpayers 

receiving assistance at walk-in sites to (1) IRS’s strategy to reduce the 

amount of return preparation assistance offered at walk-in sites, 32 (2) 

taxpayers use of more convenient means to obtain services that do not 

require face-to-face contact, such as through IRS’s toll-free network and 

Web site, and (3) the increasing number of taxpayers that receive return 

preparation assistance at community-based coalitions and other 

32IRS planned to reduce return preparation assistance by 20 percent in both fiscal years 2003 

and 2004 and expects walk-in sites to provide additional tax law assistance, as well as 

perform some compliance functions. 

Page 26 GAO-04-84 2003 Tax Filing Season 
organizations as part of IRS’s VITA and TCE programs.33 These officials 

also told us that the decline in the number of taxpayers assisted at walk-in 

sites helped IRS reduce its reliance on compliance staff. Traditionally, IRS 

has detailed staff from its compliance functions, such as Examination and 

Collection, to help provide walk-in assistance. In 2003, IRS was able to 

reduce the number of compliance staff that helped to provide walk-in 

assistance during the filing season by about 118 staff years (66 percent) 

during the filing season. IRS also reduced the total number of staff years 

used to provide walk-in assistance during the 2003 filing season by about 14 

percent as compared to the same time period in 2002. 

IRS did not report performance for two key indicators of walk-in service in 

2003—timeliness and accuracy of account assistance. For years, IRS 

officials have contended that, when timeliness is monitored at its walk-in 

sites, employees have felt in a hurry to provide assistance to taxpayers, 

which could diminish quality. As a result, IRS discontinued wait time as an 

official measure of field assistance in 2001 and no longer required walk-in 

sites that were manually capturing and reporting wait-time information to 

do so in 2002. While we did not agree with IRS’s decision to discontinue 

wait time as an official measure, we did agree with the decision to stop 

manual tracking of wait time because it was not practical or accurate to do 

so. 34 This year, IRS no longer required that about 140 of its 400 walk-in sites 

equipped with an automated system, known as the Queuing Management 

System, which captures wait-time information to report that information to 

upper-level management. Further, IRS did not consolidate and disseminate 

this wait-time information to field managers. According to field assistance 

officials, this decision was made for the same reason they discontinued 

wait time as an official measure—because walk-in staff felt pressured to 

hurry assistance. However, without timeliness information, IRS lacks 

information about a key component of service, which makes it difficult to 

balance timeliness and quality. As a result, walk-in staff could take 

excessive time providing assistance to a few taxpayers regardless of the 

impact on the wait time for other taxpayers. For this reason, IRS includes 

timeliness as part of its suite of balanced measures for monitoring 

telephone operations. In addition, taxpayers reported in customer 

33According to IRS, the number of community-based coalitions increased from 6 in fiscal 

year 2000 to 150 in fiscal year 2003. In 2004, IRS plans to continue expanding VITA and TCE 

sites in underserved areas, such as rural communities, while improving the operational 

effectiveness and productivity of existing partnerships. 

34GAO-03-143 and GAO-03-314. 

Page 27 GAO-04-84 2003 Tax Filing Season 
satisfaction surveys that promptness of service was by far the highest 

ranked improvement priority for its walk-in sites. 

IRS also does not presently know the accuracy of the account assistance it 

provides to taxpayers at walk-in sites. Account assistance differs from tax 

law assistance—account assistance includes answers to questions about 

taxpayers’ refunds, payments, and tax debts. IRS established baseline data 

for an account accuracy measure in 2002; however, IRS subsequently 

decided not to measure account accuracy in 2003 so that its quality 

reviewers could focus on conducting reviews of tax law accuracy at walkin sites. IRS officials stated that they are developing a plan for measuring 

account accuracy and hoped to begin using quality reviewers to measure 

the accuracy of account assistance in September 2003. Account accuracy 

is one of the balanced measures of telephone performance. 

IRS Took Steps in 2003 to 

Improve Walk-in Service 

IRS took several steps to improve walk-in service in 2003. According to 

field assistance officials, these steps likely helped improve the accuracy of 

tax law assistance, although they have not conducted any analysis to 

determine the impact of these steps on any particular aspect of quality of 

walk-in service. The following are three examples of steps intended to 

improve accuracy. 

•	 Field assistance managers began certifying the proficiency of walk-in 

staff in various tax law topics in March 2003. According to field 

assistance officials, walk-in staff that do not pass the certification in a 

particular topic cannot assist taxpayers on that topic, and managers are 

required to develop a plan to assist the staff in improving proficiency in 

that topic. 

•	 Field assistance managers and quality reviewers began conducting 

monthly reviews of tax law accuracy at walk-in sites. IRS data show 

that from January to April 2003, its reviewers reported receiving correct 

responses to about 88 percent of the questions asked of walk-in staff, 

which is higher than the results reported by TIGTA for the same time 

period. 

•	 IRS began training walk-in staff in fiscal year 2003 on how to guide 

taxpayers through a publication to answer a tax law question, instead of 

merely providing the taxpayer with the publication and having the 

taxpayers figure out the answers by themselves. As part of this training, 

IRS also developed guidance for walk-in staff to use that is similar to 

Page 28 GAO-04-84 2003 Tax Filing Season 
what CSRs use for answering tax law questions received via IRS’s tollfree telephone network. In addition, field assistance procedures 

emphasize that walk-in staff should not give taxpayers a publication in 

lieu of providing an answer to their tax law question. 

IRS Lacks Data for 

Assessing Long-term 

Improvements in Walk-In 

Assistance 

Over the last few years, IRS has made efforts to standardize walk-in 

assistance, but a lack of performance data makes it difficult for IRS and us 

to quantify long-term improvements. As we reported in December 2000, 

IRS’s National Office did not implement a quality review program for walkin sites until 2000.35 Before that time, IRS lacked meaningful nationwide 

data to assess the performance of its walk-in sites in terms of quality, 

timeliness, and taxpayer satisfaction. Despite this fact, field assistance 

officials believe that there have been improvements in the quality of 

services provided by walk-in sites in recent years, based on a number of 

factors. For example, in 2001, IRS reorganized its walk-in sites and 

established a set of measures, such as tax law accuracy, to assess 

performance and to help provide consistency and standardization. As a 

result, field assistance officials told us that walk-in sites now capture 

workload data, for example, more consistently, which makes the data more 

useful to management and which indicates an improvement in recent years. 

The officials told us that, in 2002, IRS also began providing more consistent 

and standardized services, better training, and improved access to taxpayer 

account information at walk-in sites. In addition, IRS began refining the 

process for referring complex tax law questions that are beyond the scope 

of training that walk-in staff normally receive to expert field assistance, 

toll-free telephone assistance CSRs, or compliance staff. Finally, as 

previously noted, IRS has also been able to reduce its reliance on 

compliance staff over the last few years, allowing it to redirect those 

resources to higher priority, compliance-related work. 

IRS’s Web Site 

Performance Showed 

Some Improvement 

In 2003, IRS’s Web site showed some improvement and taxpayers used it 

more than in 2002. For example, from January 1 to July 31, 2003, more than 

430 million forms, publications, and other documents had been 

downloaded from the Web site, a 22 percent increase over the same time 

period last year. 

35U.S. General Accounting Office, Tax Administration: Assessment of IRS’ 2000 Tax Filing 

Season, GAO-01-158 (Washington, D.C.: Dec. 22, 2000) 

Page 29 GAO-04-84 2003 Tax Filing Season 
Keynote—an independent Web site rater and a recognized authority on 

Internet performance—reviewed the average delivery time and 

availability36 of IRS’s Web site and reported that the site performed well, 

although the Web site did exhibit some minor problematic periods. 

Keynote reported that from April 11 through April 16, 2003, IRS’s home 

page was delivered in around 1 second and the Web site had an average 

availability rate of 99.35 percent.37 However, on April 14, 2003, Keynote 

reported that the site’s average delivery time experienced slowdowns of up 

to 6 to 8 seconds from 5 p.m. to 9 p.m., and its average availability rate 

decreased to less than 90 percent. In 2002, Keynote reported that the Web 

site’s average delivery time was less than 1 second and its availability 

averaged close to 100 percent for most of the filing season. 

Although Performance 

Declined for Questions 

Received Via IRS’s Web Site, 

Ease of Use Improved 

One important feature of IRS’s Web site is the ability of taxpayers to ask tax 

law and procedural questions of IRS via the Internet on its Web site. IRS 

data indicate that its performance in answering questions received from 

taxpayers via the Internet worsened during the 2003 filing season as 

compared to 2002. IRS took 3.7 business days on average to respond to 

those questions in 2003, as compared with 2.1 business days in 2002 and its 

2003 performance goal of 2 business days. In addition, from January 1 to 

May 31, 2003, IRS responded accurately to 73.7 percent of the questions, as 

compared to a 77.6 percent accuracy rate for the same time period in 2002 

and its 2003 performance goal of 83.5 percent. IRS officials attributed the 

increase in the average time to respond and the decrease in the accuracy 

rate to the increased volume and complexity of the questions. Although the 

number of questions received from taxpayers over the Internet is small 

when compared to the number of questions received over the telephone, 

providing accurate responses to these questions is particularly important 

36According to Keynote, availability is the percentage of time the Web site’s home page 

downloads fully and average delivery time is the time it takes for the home page to fully 

download from the time the user hits the “enter” key on the keyboard. According to IRS, a 

home page is charged with an error and therefore receives a lower percentage of availability 

even if a graphic that has nothing to do with the user’s ability to get pertinent content 

information from the page does not download properly. As such, according to IRS, the 

measure does not reflect whether the Web site itself is available or not. Also, according to 

IRS, errors can be the result of heavy traffic on the Internet in general and may have nothing 

to do with the home page. 

37Keynote measured the average delivery time and availability of IRS’s Web site from 5 p.m., 

Eastern Daylight Time (EDT), on April 11, 2003, to 9 a.m., EDT, on April 16, 2003. 

Page 30 GAO-04-84 2003 Tax Filing Season 
because of the potential for widespread dissemination of inaccurate 

responses to other taxpayers. 

We found that IRS’s Web site was more user friendly in 2003. For example, 

we did not find broken or inappropriate links between pages as we have 

found in previous years. IRS also added an index to the Web site, making it 

possible for users to search for forms, instructions, or publications by 

topic. In addition, IRS resolved our concern that the search functions do 

not always make the most pertinent information readily available. In April 

2003, we testified that when we typed, “earned income tax credit” into the 

forms and publication search function, Publication 596—the primary 

publication on the earned income tax credit—was the 70th item on the list, 

and we had to scroll through seven pages to find it. However, in June 2003, 

we again typed “earned income credit” into the search function and found 

the publication was the 9th item on the list and on the first page. IRS 

officials attributed the improvement in the search function results, in part, 

to working with contractors to (1) determine what the expected search 

results should be for the most frequently used search terms, (2) adjust the 

search results to ensure that those items appear at the top of the list, and 

(3) expand the thesaurus within the search engine to include an updated 

repository of the most frequently searched words, phrases, and variations. 

IRS Continues to Offer New 

Services to Increase Web 

Use, a Key Part of 

Modernization 

IRS offered new services on the Web site for the 2003 filing season that 

represent payoffs from modernization. For example, IRS implemented a 

refund status check (Where’s My Refund) feature on the Web site that 

enabled taxpayers to find out if IRS received their returns and whether 

their refunds were processed. As of June 9, 2003, IRS data show that about 

11 million taxpayers obtained data on their refund status using this feature. 

The ability of taxpayers to check the status of refunds on-line is particularly 

important because it has contributed to the decreased number of refund 

call inquiries handled by IRS’s toll-free telephone operations and has the 

potential to further decrease those calls. Taxpayers responding to a survey 

on the feature provided favorable reviews—about 91 percent of the survey 

respondents said they were satisfied or somewhat satisfied with the overall 

service provided by the feature. In January 2003, IRS also made available 

on the Web site a direct link to the Free File program offered through IRS 

private-sector partners. 

IRS’s Web site is a critical part of modernization because, according to IRS, 

it is more cost effective than other methods of providing taxpayer 

assistance, such as answering telephone calls. As discussed above, the 

Page 31 GAO-04-84 2003 Tax Filing Season 
initiative that allowed taxpayers to check the status of their refunds shows 

the potential of the Web site to provide more cost-effective services. 

Taxpayer’s use of IRS’s Web site and the services IRS offers on its Web site 

have grown considerably over the past several filing seasons, another 

indication that taxpayers are receiving payoffs from modernization. For 

example, by July 31, 2003, taxpayers already had downloaded more than 

430 million forms and publications compared to the 129 million for about 

the same time period in 2000. 

Conclusions	 IRS’s performance during the filing season is important because it affects 

so many taxpayers. The filing season also plays a crucial role in collecting 

the revenue that finances the federal government. The improvements seen 

this year, as well as over the past several years, are part of the payoff from 

IRS’s ongoing modernization efforts. 

One feature of modernization that has contributed to IRS’s improved 

performance is the greater reliance on performance measures to manage 

its operations. A few years ago, IRS established performance measures 

that are intended to balance priorities such as quality, timeliness, customer 

satisfaction, employee satisfaction, and outcomes. The measures IRS uses 

to assess its performance in providing telephone service are an example of 

how IRS has achieved this balance. However, as a result of IRS’s decision 

in 2003 to stop requiring sites equipped with an automated system for 

reporting wait-time data to report that information, IRS’s measures to 

assess walk-in assistance lack such balance. Finally, managers do not have 

information on this important aspect of quality and without the balance a 

timeliness measure would offer, staff might focus on providing accurate 

assistance to a few taxpayers regardless of the impact on the wait-time for 

other taxpayers. 

Recommendation for 	 We recommend that the Commissioner of Internal Revenue direct the 

appropriate officials to require that IRS consolidate and disseminate wait- Executive Action	 time information to field managers based on information from sites 

equipped with an automated system that can capture wait-time data, in 

order to assess this important aspect of quality. 

Page 32 GAO-04-84 2003 Tax Filing Season 
Agency Comments and 

Our Evaluation 

The Commissioner of Internal Revenue provided written comments in an 

October 29, 2003, letter (see app. III). The Commissioner noted that IRS’s 

filing season readiness process provided the framework and oversight to 

ensure that IRS was well prepared for the 2003 filing season. The 

Commissioner partially agreed with our specific recommendation, stating 

that IRS will require walk-in sites equipped with Q-Matic to report waittime information on a quarterly basis and that the automated wait-time 

information available from these locations would provide valuable data for 

an assessment of overall trends and relationships in timeliness and quality. 

However, the Commissioner did not agree to disseminate this consolidated 

wait-time information to field managers. For years, as we report, IRS has 

contended that past experience has shown employee reaction to timeliness 

measures tended to increase the likelihood of inaccurate or incomplete 

answers. At the same time, the Commissioner noted that routine 

monitoring of wait time occurs by local managers for walk-in sites 

equipped with Q-Matic. However, routine monitoring does not provide 

overall performance data and timeliness data is only available to some 

managers locally. In our view, there needs to be a balance between 

measuring quality and timeliness and too much focus on either could create 

inappropriate incentives for IRS’s walk-in staff. As noted in our report, IRS 

already consolidates and reports tax law and return preparation accuracy 

at its walk-in sites and plans to do the same for accounts accuracy. Without 

consolidated timeliness information, field managers would have a difficult 

time balancing quality and timeliness. 

We are sending copies of this report to the Chairmen and Ranking Minority 

Members of the Senate Committee on Finance, the House Committee on 

Ways and Means, and the Ranking Minority Member, Subcommittee on 

Oversight, House Committee on Ways and Means. We are also sending 

copies to the Secretary of the Treasury; the Commissioner of Internal 

Revenue; the Director, Office of Management and Budget; and other 

interested parties. We will also make copies available to others on request. 

In addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

This report was prepared under the direction of Joanna M. Stamatiades, 

Assistant Director. Other major contributors are acknowledged in 

appendix IV. If you have any questions about this report, contact me on 

(202) 512-9110. 

Page 33 GAO-04-84 2003 Tax Filing Season 
Sincerely yours, 

James R. White 

Director, Tax Issues 

Page 34 GAO-04-84 2003 Tax Filing Season 
Appendix I 

Data on IRS’s Processing Performance 

Relative to Fiscal Year 2001-2003 Performance 

and Fiscal Year 2003 Goals 

As table 2 shows, (1) the Internal Revenue Service’s (IRS) performance in 

2003 improved over last year for seven measures and (2) IRS exceeded its 

performance goals in 2003 for five measures but missed its goals for two 

measures (deposit error rate and letter error rate). IRS’s performance in 

2003 could not be compared with its performance in 2002 and prior years or 

2003 goal for one measure (refund interest paid) because IRS revised the 

way the measure was computed and did not have the necessary data 

available to revise the goal. Table 2 also shows that IRS’s processing 

performance has generally improved for each of its measures since 2001. 

Table 2: IRS’s 2001-2003 Tax Filing Season Processing Performance 

Fiscal year 

2003 

Fiscal year actual Fiscal year 

Fiscal year 2001 2002 (through 2003 

Measure Name Definition actualb actual July 31) goal Comments 

Deposit error Percentage of payments 5.0% 4.8% 4.4% 2.4% Performance improved, 

rate applied in error by, for +/- 0.3% +/- 0.3% but performance goal 

example, reimbursing a not met. According to 

taxpayer who overpaid IRS officials, the goal 

when the taxpayer wanted was too aggressive. 

any overpayment credited to 

next year’s tax bill. 

Deposit Interest value of money not $748 $578 $542 $573 Performance improved 

timeliness– deposited by the business and performance goal 

paper day after receipt per $1 exceeded. 

million in deposits. Measure 

assumes an 8 percent 

interest rate. 

Letter error rate Percentage of letters issued Not comparable 7.4% 7.2% 

to taxpayers with errors because of +/- 0.6% +/- 0.5% 

(includes systemic errors).c revisions to the 

measure. 

6.2%	 Performance improved, 

but goal not met. 

According to IRS 

officials, the goal was 

not met because of 

loss of experienced 

and knowledgeable 

personnel as a result of 

IRS’s announcement 

that it would be closing 

some processing 

centers. 

Notice error Percentage of incorrect Not comparable 18.7% 9.7% 13.2% Performance improved 

rate notices issued to taxpayers because of +/- 2.7% +/- 0.5 % and performance goal 

(includes systemic errors). c revisions to the exceeded. 

measure. 

Page 35 GAO-04-84 2003 Tax Filing Season 
Appendix I


Data on IRS’s Processing Performance 


Relative to Fiscal Year 2001-2003 


Performance and Fiscal Year 2003 Goals


(Continued From Previous Page) 

Fiscal year 

2003 

Fiscal year actual Fiscal year 

Fiscal year 2001 2002 (through 2003 

Measure Name Definition actualb actual July 31) goal Comments 

Refund error The percentage of refunds 9.8% 8.0% 5.4% 7.6% Performance improved 

rate –individual with IRS-caused errors in +/- 3.8% +/- 3.5% and performance goal 

(paper)c the entity information (e.g., 

incorrect name or Social 

exceeded. 

Security number) or refund 

amount; includes systemic 

errors. c 

Refund interest Amount of refund interest Not comparable Not Not Not 

paid IRS paid per $1 million of because of comparable comparable applicable 

refunds issued. revisions to the because of because of 

measure. revisions to revisions to 

the measure. the measure. 

We cannot assess 

performance relative to 

previous years or 2003 

goal. In 2002, IRS 

implemented a 

programming change 

that revised how it 

calculates the measure 

and did not have the 

necessary data to 

revise the goal for the 

2003 filing season. 

Refund Percentage of refunds 95.2% 98.2% 98.8% 98.4% Performance improved 

timeliness– issued within 40 days or +/- 2.3% +/- 2.3% and performance goal 

individual less. exceeded. 

(paper) 

Productivity Weighted volume of 30,133 28,257 30,094 29,302 Performance improved 

documents processed per and performance goal 

staff year expended at the exceeded. 

processing centers. 

Source: IRS data. 

Note: GAO analysis of IRS data. 

a The measures for fiscal year 2003 are through July 31, which were the latest data available at the 

time we ended our audit work. According to IRS officials, the 2003 results through July 31 are 

reflective of IRS’s performance during the filing season. In addition, IRS officials told us that the 

results for the measures should not change significantly through September 30. 

b

According to IRS officials, they did not compute a margin of error for these measures in 2001. 

c Systemic errors are computer-generated errors over which a particular processing center would have 

no control. 

Page 36 GAO-04-84 2003 Tax Filing Season 
Appendix II 

Advance Payment of Child Tax Credit Had 

Minimal Impact on 2003 Filing Season 

The Jobs and Growth Tax Relief Reconciliation Act of 2003,1 signed into 

law on May 28, 2003, increased the amount of the child tax credit from $600 

per child to $1,000 for 2003 and 2004. The act also provided for eligible 

taxpayers to receive the increase of $400 this summer in order to stimulate 

the economy more rapidly than if taxpayers had to wait until they filed their 

tax year 2003 return. The Department of the Treasury mailed 

approximately 24 million advanced payment checks from late July to midAugust 2003 in a manner similar to the advanced payment checks issued in 

2001. 

IRS took several steps in 2003 to prepare taxpayers for the advanced 

payments. For example, in May IRS set up a special menu prompt on its tax 

law and refund inquiry toll-free lines that provided taxpayers with general 

information about the child tax credit advance payment. In mid-July, IRS 

(1) provided additional information—such as when taxpayers could expect 

their advanced payment checks based on the last two digits of their social 

security number—on this special menu prompt, (2) established a new tollfree number to provide taxpayers with specific information about the 

advanced payments, and (3) updated its Web site to provide taxpayers with 

information on eligibility requirements and the ability to check the status of 

their advance payment. 

According to IRS officials, passage of the Jobs and Growth Tax Relief 

Reconciliation Act of 2003 had a minimal impact on the 2003 filing season. 

For example, the officials reported that IRS experienced some increase in 

telephone calls before the legislation was passed, but they expected the 

majority of taxpayers to call for telephone assistance in mid-August or 

later—after the advance payments were mailed. Data on calls were not 

available in time to be reflected in this report. IRS did not allocate 

additional resources to provide this assistance and estimated that, as a 

result of an anticipated increase in demand, the CSR level of service 

performance measure might drop by about three percentage points by the 

end of 2003 fiscal year. IRS officials anticipate that some additional impact 

on telephone service will occur during the 2004 filing season. 

IRS also anticipates that, based on its experience with the 2001 rate 

reduction credit, a number of taxpayers will make errors, such as with the 

Child Tax Credit Worksheet computation during the 2004 filing season. 

However, IRS anticipates there will be fewer errors in 2004 because fewer 

1

P.L. 108-27. 

Page 37 GAO-04-84 2003 Tax Filing Season 
Appendix II


Advance Payment of Child Tax Credit Had 


Minimal Impact on 2003 Filing Season


taxpayers are affected by the child tax credit. As we reported last year, 

taxpayers and tax practitioners made many errors related to the rate 

reduction credit during the 2002 tax filing season.2 However, IRS expects 

fewer problems with the child tax credit and advanced payment and 

attributes this in part to IRS having learned lessons from its experience 

during the 2002 filing season. For example, IRS has identified the types of 

errors taxpayers and tax professionals made related to the rate reduction 

credit and was preparing strategies to minimize the impact on taxpayers 

during the 2004 filing season. 

2 GAO-03-314. 

Page 38 GAO-04-84 2003 Tax Filing Season 
Appendix III 

Comments from the Internal Revenue Service


Page 39 GAO-04-84 2003 Tax Filing Season 
Appendix III


Comments from the Internal Revenue Service


Page 40 GAO-04-84 2003 Tax Filing Season 
Appendix III


Comments from the Internal Revenue Service


Page 41 GAO-04-84 2003 Tax Filing Season 
Appendix III


Comments from the Internal Revenue Service


Page 42 GAO-04-84 2003 Tax Filing Season 
Appendix III


Comments from the Internal Revenue Service


Page 43 GAO-04-84 2003 Tax Filing Season 
Appendix III


Comments from the Internal Revenue Service


Page 44 GAO-04-84 2003 Tax Filing Season 
Appendix IV 

GAO Contacts and Staff Acknowledgments


James White, (202) 512-9110 

Joanna Stamatiades, (404) 679-1984 

In addition to those named above, James Cook, Leon Green, Marshall 

Hamlett, Ron Heisterkamp, John Lesser, Jay Pelkofer, Amy Rosewarne, 

Sonja Ware, and Daniel Zeno made key contributions to this report. 

(440183) Page 45 GAO-04-84 2003 Tax Filing Season 
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