2012 TAX FILING

IRS Faces Challenges 

Providing Service to 

Taxpayers and Could 

Collect Balances Due 

More Effectively

Report to Congressional Committees

December 2012

GAO-13-156

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-156, a report to 

congressional committees 

December 2012

2012 TAX FILING

IRS Faces Challenges Providing Service to 

Taxpayers and Could Collect Balances Due More 

Effectively 

Why GAO Did This Study

The tax filing season is an enormous 

undertaking during which the IRS 

processes millions of tax returns, 

issues billions of dollars in refunds and 

provides service to millions of 

taxpayers over the phone, online, and 

face-to-face. It also identifies taxpayers 

who owe additional taxes and begins 

the process of collecting their balance 

due. GAO was asked to review IRS’s 

performance during the 2012 filing 

season. Among other things, this 

report (1) assesses IRS’s performance 

in processing returns, issuing refunds, 

and providing service to taxpayers over 

the phone, online, and in-person; and 

(2) describes what is known about 

taxpayers who filed returns with a 

balance due for tax year 2010 and 

assesses IRS’s efforts to ensure timely 

payment. To conduct the analyses, 

GAO obtained and compared IRS data 

from 2007 through 2012, reviewed

pertinent IRS documents, interviewed 

IRS officials and observed IRS 

operations, and interviewed other 

experts in tax administration, including 

from states and tax preparation firms.

What GAO Recommends

GAO recommends that IRS outline a

strategy to improve taxpayer service, 

define appropriate levels of service, 

and describe how it intends to manage

performance declines; clearly define 

the roles and responsibilities of those 

reviewing the notice phase; and pilot 

risk-based approaches for contacting 

taxpayers who have a balance due.

In response to GAO’s first 

recommendation, IRS said it is 

pursuing some steps to improve 

service. IRS described plans to 

implement the other two 

recommendations. 

What GAO Found

While there have been efficiency gains and efforts to improve service, the 

Internal Revenue Service (IRS) faced challenges providing telephone service 

and responding to correspondence, continuing trends experienced in recent 

years. In 2012, 82 percent of individual taxpayers filed their returns electronically 

(e-filed), reducing IRS’s processing costs. IRS also increased calls answered 

using automated service and added a variety of self service tools, which helped 

gain efficiencies. However, IRS’s level of telephone service (the percentage of 

callers seeking live assistance who receive it) declined to 68 percent. In addition, 

of the 21 million pieces of paper correspondence IRS received, about 40 percent 

were considered overage (meaning that IRS did not respond within 45 days of 

receipt), an increase compared to last year. While IRS plans to continue to 

pursue efficiency gains, its strategy for future years does not specifically address 

how it plans to reverse these negative trends. Reversing the declines in 

telephone and correspondence services may require IRS to consider difficult

tradeoffs, such as reassessing which phone calls IRS should answer with a live 

assistor and which it should not because automated services are available.

IRS Return Processing, Telephone Service, and Correspondence, 2007 through 2012 Filing 

Seasons

2007 2008 2009 2010 2011 2012

Return processing (fiscal year)

Returns processed (in millions) 135 151 139 137 140 142

Percent e-filed 58 59 67 71 78 82

Telephone service 

(as of June 30, each year)

Percentage of callers seeking 

live assistance who receive it 81 57 68 76 72 68

Average wait time (in minutes) 4.6 8.6 8.4 9.5 11.7 17

Paper correspondence 

(end of fiscal year)

Percentage of overage 

correspondence 17 23 25 27 35 40

Source: GAO analysis of IRS data.

GAO identified about 3.8 million returns where taxpayers self-acknowledged a 

balance due of $13.8 billion for tax year 2010, the most recent data available. 

During IRS’s notice phase, when IRS sends letters to taxpayers telling them how 

to pay the balance, the majority of this amount is either fully paid or accounted for 

through installment agreements. However, at least $4.4 billion remained 

uncollected after IRS sent as many as four notices to taxpayers. These amounts 

become subject to more costly collections actions, such as phone or face-to-face 

contact. Best practices, such as risk-based approaches where contacts are 

tailored to the taxpayer, have helped increase collections in states such as New 

York and California. IRS has developed an analytics plan and uses some riskbased processes to identify which notices taxpayers will receive, but has not yet 

implemented the plan and management responsibilities are unclear. As a result, 

IRS has not tested more advanced risk-based approaches. This may lead to 

delayed collection of taxpayer debt, higher costs for IRS, and additional penalties 

for taxpayers who pay late.

View GAO-13-156. For more information, 

contact James R. White at (202) 512-9110 or 

whitej@gao.gov.
Page i GAO-13-156 Tax Filing

Letter 1 

Background 3

While IRS Has Made Efficiency Gains and Improved Performance 

in a Variety of Areas, It Faces Challenges Providing Service to 

Taxpayers 8

IRS Could More Effectively Apply Risk-Based Approaches to 

Collect Balances Due 17

Use of RACs Has Increased Significantly and IRS and Others Are 

Beginning to Address Questions About the Transparency of RAC 

and Other Fees 23

Conclusion 26

Recommendations for Executive Action: 27

Agency Comments and Our Evaluation 27

Appendix I Objectives, Scope, and Methodology 29

Appendix II Balance Due Notice Process 33

Appendix III Use of IRS Website and Online Services 35

Appendix IV Visits to Taxpayer Assistance Center and Volunteer Income 

Tax Assistance Sites 37

Appendix V Description of Telephone Calls Answered by IRS 38

Appendix VI Fees for Refund Anticipation Checks 39

Appendix VII Comments from the Department of the Treasury 40

Contents 
Page ii GAO-13-156 Tax Filing

Appendix VIII GAO Contact and Staff Acknowledgments 44

Tables

Table 1: Individual Income Tax Returns Processed from 2007 to 

2012 8

Table 2: IRS Walk-in Site Accuracy, 2008 through 2012 Filing 

Seasons 11

Table 3: IRS’s Telephone Service Goals and Performance, 2007 

through 2012 Filing Seasons 13

Table 4: Practitioner Priority Service Goals and Performance, 

Fiscal Years 2007 through 2012 14

Table 5: Accuracy of Telephone Service, 2007 through 2012 Filing 

Seasons 15

Table 6: IRS Taxpayer Correspondence Performance, Fiscal Years 

2007 through 2012 15

Table 7: Balance Due Accounted for During Notice Process or Sent 

on to Collections, Tax Year 2010 18

Table 8: Actions Taken by IRS or Taxpayers on Balance Due 

Returns by Amount Owed and Percentage, Tax Year 2010 19

Table 9: Description of Balance Due Notices for Individual Filers of 

Self-Assessed Balance Due Returns 33

Table 10: Website Use from the 2008 through 2012 Filing Seasons 35

Table 11: Services Performed at IRS TAC and VITA Sites, 2010 

through 2012 Filing Seasons 37

Table 12: Calls to IRS by Call Type, 2007 through 2012 Filing 

Seasons 38

Table 13: Comparisons of Fees and Refund Anticipation Check 

Options for Five Software Packages 39

Figures

Figure 1: Example of How a Taxpayer Receives a Refund 

Anticipation Check and When Fees May Be Incurred 7

Figure 2: Balance Due Notice Process for Individual Tax Return 

Filers 34
Page iii GAO-13-156 Tax Filing

Abbreviations

CADE Customer Account Data Engine

CFPB Consumer Financial Protection Bureau

CONOP Concept of Operations

CP Computer Paragraph

CSR Customer Service Representative

e-file electronic filing

ETAAC Electronic Tax Administration Advisory Committee

FTE Full-Time Equivalent

IMF Individual Master File

IRS Internal Revenue Service

ITA Interactive Tax Assistant

MeF Modernized e-File

PPS Practitioner Priority Service

RAC Refund Anticipation Check

RAL Refund Anticipation Loan

TAC Taxpayer Assistance Center

TIGTA Treasury Inspector General for Tax Administration

VITA Volunteer Income Tax Assistance

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

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Page 1 GAO-13-156 Tax Filing

United States Government Accountability Office

Washington, DC 20548

December 18, 2012

The Honorable Max Baucus

Chairman

The Honorable Orrin Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Charles W. Boustany

Chairman

The Honorable John Lewis

Ranking Member

Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

Every tax filing season is an enormous undertaking during which the 

Internal Revenue Service (IRS) interacts with millions of taxpayers and 

hundreds of thousands of tax preparers by processing tax returns, issuing 

refunds, answering telephone calls, and providing other services, 

including those on its website. In recent years, IRS has taken a number of 

steps to improve return processing, provide faster refunds, and deliver 

better service. For example, IRS has added automated telephone lines 

and increased the number of self-service tools that taxpayers can use 

online. IRS also has a telephone line for professional tax return preparers.

More than three-quarters of taxpayers receive a refund, but some owe 

additional tax. Taxpayers who file a return showing additional tax owed, 

referred to as a balance due, are generally required to submit payment to 

the IRS by the tax filing deadline—usually April 15th. Paying on time is 

critical—taxpayers avoid interest and penalties associated with late 

payments and IRS avoids using limited compliance staff resources to 

collect taxes owed.

Taxpayers receiving refunds have a range of decisions to make about the 

best way to obtain refunds. Last year, we reported that taxpayers’ use of 

controversial Refund Anticipation Loans (RAL)—high interest, short-term 

loans from tax preparers or banks that give quicker access to tax refunds 

than if taxpayers wait for a direct deposit or paper check—significantly 

decreased because RALs were no longer widely available. In contrast, 

taxpayers’ use of Refund Anticipation Checks (RAC)—temporary bank 

 
 

Page 2 GAO-13-156 Tax Filing

accounts set up by tax preparers allowing them to subtract tax 

preparation and other fees from taxpayers’ refunds—has continued to 

increase.1

In this context, you asked us to review a number of issues related to 

IRS’s 2012 tax filing services. Specifically, this report

Some tax industry experts and consumer protection 

organizations have expressed concerns that taxpayers do not always 

have information, especially about RAC fees, to make the best decisions 

about how to obtain their refund.

1. Assesses IRS’s performance in processing returns, delivering 

refunds, and providing telephone service and online and face-to-face 

assistance in comparison to its 2012 goals and prior years’ 

performance;

2. Describes what is known about taxpayers who filed returns with a 

balance due for tax year 2010, but did not pay by the filing deadline, 

and assesses IRS’s efforts to encourage timely payment; and

3. Summarizes the growth of RACs in recent years and the reasons 

taxpayers may obtain them, the manner in which RAC and other fees 

are disclosed to taxpayers in commonly used online tax return 

preparation software packages, and key stakeholder views regarding 

the transparency of RACs and associated fees.

To accomplish these objectives, we collected and analyzed data and 

documents from IRS and tax industry experts. We used these data to 

compare IRS’s performance in 2012 to prior years and IRS’s goals. We 

also interviewed IRS officials and tax industry experts to obtain different 

perspectives on IRS’s performance during the 2012 filing season. To 

identify the number of returns and associated dollar amounts from returns 

where the taxpayer self-identified a balance due, as well as the amount 

IRS collected and resolved during the notice phase of collections, we 

matched IRS notice data with collections data and return transaction data.

Data limitations are discussed where appropriate. We reviewed IRS 

documentation, interviewed IRS officials about computer systems and 

data limitations, and compared those results to our standards of data 

reliability. We interviewed knowledgeable IRS collections and research 

 

1

GAO, 2011 Tax Filing: Processing Gains, but Taxpayer Assistance Could Be Enhanced 

by More Self-Service Tools, GAO-12-176 (Washington, D.C.: Dec. 15, 2011). 
 

Page 3 GAO-13-156 Tax Filing

staff, as well as Treasury Inspector General for Tax Administration 

(TIGTA) staff who worked on past reports relevant to this area to identify 

data sources and better interpret our data. We consider the data 

presented in this report to be sufficiently reliable for our purposes. We 

conducted our fieldwork primarily at IRS headquarters in Washington, 

D.C., and at the Wage and Investment Division headquarters in Atlanta, 

Georgia, as well as other sites with key IRS offices.

To identify RAC and associated fees with return preparation software, we 

prepared sample returns from each of the five most frequently used 

software packages that taxpayers used to self-prepare returns in 2012. 

We also interviewed tax industry experts, consumer advocacy 

representatives, and government officials, including from the IRS and the 

Consumer Financial Protection Bureau (CFPB), to determine what, if any, 

steps are being taken to make RAC, and return preparation fees 

generally, more transparent to taxpayers. Appendix I provides additional 

details on how we did our work.

We conducted this performance audit from February 2012 through 

December 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. To conduct our 

analysis of the cost and features of RACs, we used investigative 

techniques. We conducted our related investigative work in accordance 

with investigation standards prescribed by the Council of the Inspectors 

General on Integrity and Efficiency.

IRS processes paper and electronic tax returns and validates key pieces 

of information during the filing season. The majority of returns are now 

electronically-filed (e-filed). IRS is replacing its legacy e-file system with 

the Modernized e-File (MeF) system.2

 

2

IRS cannot accept electronically filed returns directly from taxpayers. Rather, IRS 

authorizes e-file providers to transmit returns to IRS electronically using either the legacy 

e-file or MeF system.

IRS is also transitioning from the 

antiquated Individual Master File (IMF) system to a more modern tax 

processing system known as the Customer Account Data Engine 2 

Background 
 

Page 4 GAO-13-156 Tax Filing

(CADE 2), the systems IRS uses to process tax returns.3

In addition to processing tax returns, IRS provides a variety of taxpayer 

services through its telephone, website, and face-to-face operations.

CADE 2 allows 

IRS to provide quicker refunds and conduct more and better compliance 

checks before refunds are issued.

• Taxpayers can call IRS to speak directly with a customer service 

representative (CSR) to obtain information about their accounts or ask 

tax law questions. Providing live assistance over the phones is 

expensive for IRS—according to IRS officials, the cost of answering 

telephone calls has risen from about $26 per call in 2009 to about $30 

in 2011.4

• Taxpayers can also obtain some of the same information using 

automated telephone lines, including IRS’s 149 Tele-tax lines for tax 

law topics and 10 phone lines for account information. In 2011, IRS

officials said that it cost 36 cents to answer an automated phone call.

• In October 2009, IRS started using a speech analytics program called 

Contact Analytics to better understand why taxpayers call IRS and 

evaluate how CSRs interact with taxpayers. Contact Analytics is a 

sophisticated speech analytics program that converts speech, such as 

CSR conversations with taxpayers, into text for analysis.

• CSRs are also responsible for responding to paper correspondence 

from taxpayers. IRS tries to minimize the amount of overage paper 

correspondence—correspondence that IRS has not addressed within 

45 days of receipt.

• In addition to answering calls from taxpayers, CSRs answer calls from 

paid preparers who call about taxpayer accounts through IRS’s 

Practitioner Priority Service (PPS). We have reported that paid 

preparers prepare about 60 percent of tax returns and play a critical 

 

3

The IMF is the system IRS has used to process tax returns in the past. CADE 2 will 

eventually fully replace the IMF. 

4

Cost per call for 2009 is based on calls answered from January 1, 2009, through June 

30, 2009, and January 1, 2011, through June 30, 2011, respectively. 

Telephone and paper 

correspondence 
 

Page 5 GAO-13-156 Tax Filing

role in answering taxpayers’ questions and filing tax returns.5

Taxpayers who get their questions answered by a preparer may not 

need to call IRS.

• IRS also provides service to taxpayers through its website, 

http://www.IRS.gov. For example, taxpayers can find information on 

the status of their refunds, request transcripts (which are copies of a 

taxpayer’s account information), and pay account balances. 

Taxpayers can also download forms, instructions, and publications, 

and research tax law issues through interactive tools.

• IRS staff provides face-to-face assistance at 397 Taxpayer Assistance 

Centers (TAC). Staff at TACs provide answers to basic tax law 

questions, review taxpayer accounts, and prepare returns for qualified 

taxpayers.6

• IRS also has volunteer partners that staff more than 13,000 volunteer 

sites. These Volunteer Income Tax Assistance (VITA) and Tax 

Counseling for the Elderly sites prepare tax returns for traditionally 

underserved taxpayers. Some of these also serve as Facilitated SelfAssistance sites where volunteers guide taxpayers through simple tax 

returns.

IRS has begun pilot-testing virtual assistance, where IRS 

employees interact with walk-in clients through a video terminal, at a 

small number of TACs and partner sites. 

After tax returns are filed and processed, IRS begins the process of 

collecting unpaid tax debts. IRS attempts to collect unpaid tax debts in 

three phases: (1) notices sent through the mail, (2) telephone contact, 

and (3) face-to-face interactions.7

 

5

GAO, Tax Preparer Regulation: IRS Needs a Documented Framework to Achieve Goal 

of Improving Taxpayer Compliance, 

When a taxpayer files an individual 

return with a balance due but does not pay in full, IRS is statutorily 

required to send a letter detailing the proposed assessment of tax, 

penalty, and interest, and possible ways for the taxpayer to respond. If 

GAO-11-336 (Washington, D.C.: Mar. 31, 2011).

6

Taxpayers with annual incomes of $50,000 or less can have their returns prepared at 

TACs. 

7

GAO, Tax Debt Collection: IRS Has a Complex Process to Attempt to Collect Billions of 

Dollars in Unpaid Tax Debts, GAO-08-728 (Washington, D.C.: June 13, 2008).

Website 

Face to face

Debt collection process 

and RACs
 

Page 6 GAO-13-156 Tax Filing

IRS does not receive a response within an allotted time, it is statutorily 

required to send a final notice prior to taking collection action such as 

levying wages on a bank account or filing a lien. Between the first and 

final notices, IRS may send up to two additional notices. Depending on 

the taxpayer, IRS could send a total of four notices before initiating other, 

more costly collection activities such as telephone calls to taxpayers or 

face-to-face interactions. Appendix II provides a more detailed summary 

of IRS’s notices process.

Finally, in recent years, millions of taxpayers have chosen to obtain their 

tax refunds and pay for tax preparation services through a RAC obtained 

from tax software companies or paid preparers. With a RAC, paid 

preparers or software companies deduct any applicable fees from 

taxpayers’ refunds. The remainder of the refund can be deposited (1) in a 

bank account created by a financial institution or paid preparer on behalf 

of the taxpayer, (2) in the taxpayers’ own account, or (3) on a prepaid 

debit card issued by the paid preparer. In recent years, RACs have 

almost entirely replaced RALs.8 Figure 1 provides an example of potential 

fees incurred by taxpayers when filing a return and receiving a refund 

through a RAC.9

 

8

In August 2010, IRS announced it would no longer provide return preparation companies 

with the debt indicator that had allowed preparers to observe whether taxpayers had other 

debts to the federal government or if the taxpayer would likely receive the full anticipated 

refund from IRS. As a result, most banks stopped funding RALs when banking regulators 

determined them to present too much risk to participating banks. IR-2010-89, August 5, 

2010.

9

GAO-12-176. 
 

Page 7 GAO-13-156 Tax Filing

Figure 1: Example of How a Taxpayer Receives a Refund Anticipation Check and When Fees May Be Incurred

a

Taxpayers with bank accounts can generally cash or deposit their refund check without charge. If 

not, they may use an alternative provider and pay a fee to have the check cashed.
 

Page 8 GAO-13-156 Tax Filing

About 142 million individual income tax returns were filed in 2012, slightly 

up from last year. As table 1 shows, IRS achieved an 82 percent e-file 

rate for individual returns, surpassing the goal set by Congress for all 

returns in 1998—a significant accomplishment for IRS.10

Table 1: Individual Income Tax Returns Processed from 2007 to 2012

 E-filing has 

many benefits for taxpayers, including faster refunds and higher accuracy 

rates. It also provides IRS with significant cost savings by eliminating the 

need to manually transcribe data on paper returns. According to IRS, in 

fiscal year 2010, it cost 17 cents to process an e-filed return and $3.66 for 

returns filed on paper.

2007 2008 2009 a 2010 2011 2012 

Percent 

change from 

2011 to 2012

Number of individual tax returns processed (in 

millions) 

b 

135 151 139 137 140 142 2 

Electronic 79 89 94 97 109 116 6 

Paper 56 62 45 40 30 26 -13

Percentage e-filed 58 59 67 71 78 82 5 

Number of refunds issued (millions) 103 105 109 107 107 108 1 

Amount of refunds issued (dollars in billions) $234 $248 $298 $312 $303 $295 -3 

Average refund amount $2,259 $2,350 $2,725 $2,915 $2,836 $2,726 -4 

Source: GAO analysis of IRS data.

 

10IRS has yet to reach the 80 percent e-file goal for some types of returns other than 

individual income tax returns. 

While IRS Has Made 

Efficiency Gains and 

Improved 

Performance in a 

Variety of Areas, It 

Faces Challenges 

Providing Service to 

Taxpayers 

E-Filing Continued to 

Grow, MeF Contingency 

Plans Are Being Updated, 

and IRS Is Working to 

Improve Its Public 

Messaging Regarding 

Refund Turnaround Time
 

Page 9 GAO-13-156 Tax Filing

Notes: Data are from January 1 through September 28, 2007; January 1 and October 3, 2008; 

January 1 and October 2, 2009; January 1 and October 1, 2010; January 1 and September 30, 2011; 

and January 1 and September 28, 2012.

a

The Economic Stimulus Act of 2008 mandated that IRS send stimulus payments to over 100 million 

households, many of which would not otherwise have needed to file a tax return.

b

In March 2012, we reported that IRS experienced problems with its MeF 

processing system, for which it had implemented important changes. 

Given these problems, we recommended that IRS review its contingency 

plan for MeF and update it in time for the 2013 filing season.

The numbers in the table are rounded, but the percent change was calculated using exact values.

Therefore, in some cases, the percent change is slightly different than it would be if it were calculated 

using the rounded values in the table.

11 We also 

reported that IRS officials told us they had problems with a fraud 

detection process being unable to function properly in the daily 

processing environment. In June 2012, IRS officials told us that these 

problems were not detected due to limited testing before implementing 

the systems. Based on the experiences with MeF this year, and 

recommendations we and the Electronic Tax Administration Advisory 

Committee (ETAAC) made, IRS announced that it plans to keep legacy efile available in a limited capacity in case of a catastrophic MeF failure.12

In addition, IRS officials said they were concerned that MeF may not be 

able to handle peak volume during the 2013 filing season. To mitigate 

these risks, IRS is more fully testing MeF, making necessary adjustments, 

and updating its MeF Contingency Plan again in January 2013. IRS is 

working with industry experts to identify which states, preparers, and 

transmitters will support both systems.

For 2012, IRS’s public messaging for refund timeliness noted that most 

taxpayers could receive their refunds within 10 to 21 days of filing.

According to tax industry experts, they conveyed IRS’s timeframe to 

taxpayers, but delays due to processing errors or otherwise unmet 

 

11GAO, Internal Revenue Service: Interim Results of 2012 Tax Filing Season and 

Summary of the Fiscal Year 2013 Budget Request, GAO-12-566 (Washington, D.C.: Mar. 

20, 2012).

12ETAAC is a committee of tax industry experts with the primary purpose of providing 

input to the IRS on the development and implementation of IRS’s strategic plan for 

electronic tax administration. In 2012, ETAAC issued a report that agreed with our 

recommendation and went further to suggest that IRS retain the capability to roll out its 

legacy e-file system in the event of a major MeF system failure.
 

Page 10 GAO-13-156 Tax Filing

expectations resulted in preparers receiving a significant number of 

phone calls from clients. For 2013, IRS officials indicated they may 

change IRS’s public messaging to tell taxpayers to expect refunds in 21 

days or less. However, they added that they would consult the tax 

preparation industry before setting refund timeliness expectations for the 

public.

IRS’s website (http://www.IRS.gov) had 297 million visits in 2012, an 

increase of almost 19 percent over 2011. The use of self-service tools 

available on the website has continued to grow, with the greatest 

increases coming from use of Interactive Tax Assistant (ITA) tools and 

Where’s My Refund.13

IRS officials indicated that the website could be used to offer additional 

services. IRS is planning to develop more self-service tools so taxpayers 

can research tax law and account information.

For more information on website use, see 

appendix III.

14 For example, in 2013, 

IRS plans to implement a Where’s My Amended Return online tool where 

taxpayers can check whether their amended returns have been received 

by IRS. Online services give taxpayers access to information without 

calling IRS, which, as previously discussed, is expensive. We are 

conducting a separate evaluation of IRS’s efforts to develop its website.

Although far fewer taxpayers visit TAC and volunteer sites than call IRS 

or use its website, these sites provide a significant service. As of April 30, 

2012, IRS received 2.77 million taxpayer contacts at TACs, as compared 

to 2.85 million contacts this time in 2011. The accuracy of responses to 

account and tax law questions provided at TACs increased compared to 

previous years, as shown in table 2.

 

13ITA provides information on certain tax law topics by taking taxpayers through a series 

of questions. Where’s My Refund provides taxpayers with information on the expected 

refund date. Additionally, appendix III shows that Online Payment Agreements had a 

significant increase in usage. However, this may be due to a programming error that led to 

a decrease in the number of completed agreements in 2011.

14In December 2011, we recommended that IRS develop a strategy for determining which 

self-service tools it will offer online. Since our recommendation, IRS has provided more 

details, such as an assessment of costs and benefits for some new services identified and 

time frames for when these online services would be created. See GAO-12-176. 

New Self-Service Tools on 

IRS’s Website and Further 

Development of an Online 

Services Strategy May 

Produce Efficiency Gains

Expanded Self-Service and 

Virtual Service Programs 

at TAC and Volunteer Sites 

Have Helped IRS Serve 

Taxpayers
 

Page 11 GAO-13-156 Tax Filing

Table 2: IRS Walk-in Site Accuracy, 2008 through 2012 Filing Seasons

Accuracy measure (in percent) 2008 actual 2009 actual 2010 actual 2011 actual 2012 actual 2012 goal

Accounts assistance 85% 

+/-2.30

86% 

+/-1.93

91% 

+/-1.66

88% 

+/-1.94

92% 

+/-1.61

91% 

Tax law assistance 66

+/-2.73

76

+/-1.97

81

+/-1.83

82

+/-1.83

85

+/-1.70

83

Return preparation assistancea n/a n/a 82

+/-3.82

83

+/-3.45

89

+/-2.86

n/a

Legend: n/a = not applicable.

Source: GAO analysis of IRS data.

Note: Actual data for each year are from January 1 through April 30. IRS does not have comparable 

accuracy data available for the years prior to 2008.

a

IRS expanded self-service and virtual service at both TAC and volunteer 

sites to increase access, reduce wait time, and extend the effectiveness 

of its employees. IRS piloted the Virtual Service Delivery program at 10 

TACs and 2 external partner sites and plans to expand this program to an 

additional 10 to 20 sites nationwide in 2013. Through Virtual Service 

Delivery, IRS employees interact with walk-in clients through a video 

terminal when the employees are not occupied at their home site. For the 

first time beginning in 2012, IRS was able to track wait time data on a 

nationwide basis at TAC locations.

Return preparation assistance data were not available before 2010.

15

IRS partnered with 3,930 community-based organizations operating over 

13,000 volunteer sites, staffed by about 99,000 volunteers in 2012.

For 2012, 74 percent of taxpayers 

waited less than 30 minutes for TAC service.

16 The 

number of returns prepared by volunteers increased slightly to 3.15 

million in 2012, up from 3.07 million in 2011 (a 2.3 percent increase).17

 

15The wait time is calculated from the time a ticket is issued to the time service begins.

IRS expanded the number of Facilitated Self-Assistance sites (computer 

kiosks) from 102 in 2011 to 496 in 2012, and plans to increase the 

16This is an increase from almost 88,500 volunteers in 2011, or about 12 percent. 

17IRS officials said that increase in the number of returns prepared by volunteers for 2012 

was not commensurate with increase in the number of volunteers because the increase in 

volunteers was due to more accurate accounting. 
 

Page 12 GAO-13-156 Tax Filing

number of sites to 1,000 nationally by the end of the 2013 filing season. 

IRS also expanded the number of Virtual VITA sites, where taxpayers at 

remote locations can obtain service over fax, internet, and video 

connection, from 34 to 61. For more information on the services 

performed at IRS walk-in and volunteer sites, see appendix IV.

In 2012, call volume increased, and as of June 30, 2012, IRS had 

received 98 million calls, an 18 percent increase over 2011. IRS 

answered about 50 million of these calls through automation, a 36 

percent increase from 2011. IRS officials attributed the increase in 

automated calls answered to refund inquiries caused, in part, by refund 

delays early in the filing season and requests for transcripts. At the same 

time, there was a 52 percent increase in busy signals and cases where 

IRS determines that the best course of action is to disconnect the call 

before answering (due to wait times for the taxpayer or other reasons). 

For more information on calls to IRS by call type, see appendix V.

While calls answered through automation have increased, the number of 

CSR answered calls declined by about 14 percent (19.4 million calls 

compared to 22.6 million calls in 2011). However, IRS officials said that 

as more automated telephone features are added, the calls that CSRs 

actually answer have increased in complexity. For example, questions 

about topics such as identity theft, an increasingly important topic, take 

longer to resolve than inquiries about refunds and other, more basic 

services.18 Consequently, the average length of a CSR answered call has 

also increased by about 19 percent since 2009. IRS had about the same 

amount of CSR resources to answer calls and respond to paper 

correspondence in 2012 as in 2011—about 13,500 full-time equivalents 

(FTE) in both years. These CSRs are responsible for not only answering 

calls but also responding to paper correspondence (which we discuss 

below).19

 

18GAO, Identity Theft: Total Extent of Refund Fraud Using Stolen Identities is Unknown, 

GAO-13-132T (Washington, D.C.: Nov. 29, 2012).

19In the past, IRS has had more FTEs dedicated to telephone service and paper 

correspondence. For example, in 2010, IRS had over 15,000 FTEs dedicated to these 

services. 

Access to Live Telephone 

Assistance Continues to 

Decline
 

Page 13 GAO-13-156 Tax Filing

Taken together, these factors explain, at least in part, why IRS’s 

performance in providing live assistance has declined in recent years 

even though fewer calls were answered by live assistors. In 2012, IRS’s 

level of service, the percentage of callers seeking live assistance who 

receive it, was 68 percent, down from 81 percent in 2007, as is shown in 

table 3. The average wait time increased to 17 minutes in 2012, up from 

4.6 minutes in 2007. While IRS exceeded its 2012 level of service and 

wait time goals, those goals were the lowest IRS has established in 

recent years.

Table 3: IRS’s Telephone Service Goals and Performance, 2007 through 2012 Filing Seasons

Source: GAO analysis of IRS data.

Notes: Actual data are from January 1 through June 30, while goals are for the entire fiscal year. We 

believe comparing performance during the filing season to fiscal year goals is appropriate as IRS’s 

filing season performance is an indicator of its performance for the entire year.

a

Numbers in the table are rounded, but percentage change was calculated using exact values. 

Therefore, in some cases, the percentage change is slightly different than it would be if it were 

calculated using the rounded values in the table.

b

IRS revised its original fiscal year goal of 82 percent down to 74 percent because of high call volume 

due to economic stimulus-related calls.

c

IRS revised its original fiscal year goal of 77 percent down to 70 percent because of high call volume 

from taxpayers requesting e-filing authentication information and asking stimulus-related questions.

d

In 2010, we recommended that IRS take steps to define what appropriate 

levels of telephone service would be, determine a standard for telephone 

service, and identify the resources required to achieve this standard. 

However, IRS disagreed with this recommendation, saying that its current 

process of developing a planned level of telephone service takes into 

consideration many factors, including budget and assumptions about 

potential call volume. The IRS Oversight Board has said that an 

acceptable level of service should be about 80 percent.

IRS determines its wait time goals based on anticipated call volume and resource availability. IRS 

significantly raised its wait time goal for 2009 compared to 2008 in light of anticipated increased call 

volume related to tax law changes.

Access measure 2007 2008 2009 2010 2011 2012

Percent 

change from 

2011 to 2012

Percentage of callers seeking live 

help who received it

a

Goal 82% 82% 77% b 71% c 71% 61% -14.1%

Actual 81 57 68 76 72 68 -5.6

Average wait time (in minutes) Goal 4.3 4.5 10.4 11.6 d 11.6 19 62.1

Actual 4.6 8.6 8.4 9.5 11.7 17 42.7
 

Page 14 GAO-13-156 Tax Filing

Performance on IRS’s Practitioner Priority Service, where paid preparers 

can call IRS, telephone lines also declined. As shown in table 4, the level 

of service for the paid preparer telephone line decreased to 73 percent in 

2012, down from 91 percent in 2007. Over the same period, the average 

wait time for the paid preparer line increased from 2.8 minutes to 22.1 

minutes. Officials said that paid preparers are willing to wait longer than 

taxpayers because paid preparers are attempting to get answers for their 

clients. Like phone service for taxpayers, IRS lowered the level of service 

goal for the Practitioner Priority Service in 2012.

Table 4: Practitioner Priority Service Goals and Performance, Fiscal Years 2007 through 2012 

Access measure 2007 2008 2009 2010 2011 2012

Percent change 

from 2011

Percentage of tax preparers seeking live 

assistance who received it

a,b

Goal 87% 87% 82% 76% 78% 72% -7.7%

Actual

a

91 86 88 80 78 73 -6.4

Average wait time (in minutes)

a

Goal 4.9 4.5 6.5 10.0 10.7 26.2 145.4

Actual 2.8 5.2 4.7 10.5 13.3 22.1 65.8

Source: GAO analysis of IRS data.

a

The difference is 5 percentage points between actual performance in 2011 and 2012 and 6 

percentage points between fiscal year 2011 and 2012 goals.

b

The continued accuracy of the CSRs’ answers represents a positive 

aspect of IRS’s telephone service. As shown in table 5, IRS’s accuracy 

rate for CSR answered calls remained well over 90 percent. We have 

reported that IRS officials attributed the high accuracy rate to automated 

interactive tax assistance tools that CSRs use to provide answers to 

taxpayers as well as use of Contact Analytics.

The numbers in the table are rounded, but the percent change was calculated using exact values.

Therefore, in some cases, the percent change is slightly different than it would be if it were calculated 

using the rounded values in the table.

20

 

20 GAO-12-176. 
 

Page 15 GAO-13-156 Tax Filing

Table 5: Accuracy of Telephone Service, 2007 through 2012 Filing Seasons

Accuracy measures 2007 a 2008 2009 2010 2011 2012

Tax law rate

(in percent)

90.7% b +/-0.9

90.3%

+/-0.9

92.5%

+/-0.8

92.4%

+/-0.8

92.9%

+/-0.6

92.5%

+/-0.7

Account accuracy Rate (in percent) 93.2 b

+/-0.5

93.5

+/-0.4

95.1

+/-0.4

95.6

+/-0.4

96

+/-0.3

95.4

+/-0.3

Source: IRS data.

a

Based on representative samples of phone calls selected by IRS from January 1 through June 30.

b

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

appropriate actions, with a 90 percent confidence interval.

As shown in table 6, while the amount of paper correspondence in 2012 

increased by 5 percent from 2011, the percentage of overage taxpayer 

correspondence increased by 14 percent over the same period. Providing 

a timely response to paper correspondence is important because if IRS’s 

response takes too long taxpayers may write again or call IRS.

Table 6: IRS Taxpayer Correspondence Performance, Fiscal Years 2007 through 2012

Fiscal Year

2007 2008 2009 2010 2011 2012

Percent Change 

from fiscal year 

2011 to 2012

Correspondence received (in millions)a 16 18 19 20 20 21 5%

Percentage of taxpayer correspondence 

overageb 17% 23% 25% 27% 35% 40% 14% 

Source: GAO analysis of IRS data.

Note: Aggregate data are from Accounts Management and Submission Processing, which jointly 

responds to IRS’s taxpayer correspondence.

a

Data cover equivalent periods for each fiscal year with slight variation in the exact dates depending 

on the year and data source.

b

IRS generally considers paper correspondence that is not resolved within 45 days to be overage. 

Data from 2007 and 2008 data do not include overage data for correspondence processed by 

submission processing as submission processing began tracking overage data in 2009.

IRS has taken a multi pronged approach to improve taxpayer service and 

better manage call volumes. For example, in 2012, to reduce the time 

CSRs spend on phone calls, IRS implemented personal identification 

numbers that taxpayers who are transferred to a new CSR can provide to 

Overage Paper 

Correspondence Increased

IRS Does Not Have a 

Strategy to Reverse 

Declines in Service
 

Page 16 GAO-13-156 Tax Filing

eliminate the re-authentication process. To increase the number of calls 

answered by CSRs, IRS also implemented a new procedure where the 

CSR is automatically connected to the next caller after finishing the 

current call. To better manage call volume, pre-empt taxpayer questions, 

and identify which services could be provided through automation, IRS is 

using Contact Analytics to identify trends in taxpayers’ calls and update 

information on IRS.gov. Additionally, in response to our previous 

recommendation in 2009, IRS deployed an online VITA locator during 

2012 where taxpayers can enter their ZIP codes to find VITA sites close 

to their location.21

The numerous efficiency initiatives IRS has implemented to date have not 

kept pace with call or correspondence volume. IRS’s current Concept of 

Operations (CONOP) outlines a 3- to 5-year strategic plan for providing 

taxpayer services. The plan acknowledges that IRS will experience 

declining levels of service absent aggressive action and outlines potential 

actions that IRS could take to deflect demand and improve efficiency of 

operations. However, the potential actions generally continue the 

approach IRS has followed in recent years seeking incremental efficiency 

gains. The federal government’s tight budget environment makes any 

meaningful increase in resources for taxpayer service unlikely. Further, 

IRS officials said that the actions and time frames presented in the 

CONOP would be difficult for IRS to meet. Without a more strategic 

approach that recognizes the inability of efficiency initiatives to keep up 

with call volume and call complexity, as well as the reality of IRS’s 

resources and capabilities, telephone service and response time to paper 

correspondence is at risk of further decline.

Given the above, reversing the declines in telephone and correspondence 

services may require IRS to consider difficult tradeoffs. Rather than 

limiting access through long wait times, other ways of reducing demand 

might be considered. One option might be reassessing which phone calls 

IRS should answer with a CSR and which it should not because 

automated services are readily available—either online or over the 

phones. Although limiting access to CSRs for certain callers is not an 

optimal solution, it might help better target taxpayer assistance to those 

for whom live assistance is the only option. Another option might be to 

 

21GAO, Tax Administration: Opportunities Exist for IRS to Enhance Taxpayer Service and

Enforcement for the 2010 Filing Season, GAO-09-1026 (Washington, D.C.: Sept. 23, 

2009). 
 

Page 17 GAO-13-156 Tax Filing

consider whether certain types of questions should be directed to paid 

preparers or tax software companies. Identifying options, assessing their 

pros and cons, and deciding on a course of action would need to be part 

of a more extensive strategy than the currently existing CONOP.

For tax year 2010, the most recent year with available data, we found 

about $13.8 billion on returns where taxpayers filed with a selfacknowledged balance due that was not paid on time. State officials we 

interviewed described some best practices for collecting balances due, 

including earlier contact based on the characteristics and behaviors of 

individual taxpayers and more extensive use of complex data analytics 

and modeling. IRS has adopted some risk-based approaches to its notice 

phase, such as determining which taxpayers will receive which notices 

(IRS sends up to four notices), based on factors such as the size of the 

amount owed. However, a lack of clarity in the roles and responsibilities 

of IRS officials in charge of sending notices to taxpayers impedes IRS’s 

ability to best identify and implement risk-based approaches for resolving 

balances due. Although IRS has developed a data analytics plan for 

managing its balance due process, the plan has not yet been 

implemented. Further, IRS has not pilot tested other, more extensive riskbased approaches being used in some states.

As table 7 shows, about 3.8 million returns were filed where taxpayers 

self-assessed unpaid balances owed for tax year 2010, meaning that they 

filed a return where they acknowledged that they owe additional tax and 

did not pay in full by the filing deadline. These taxpayers owed a total of 

about $13.8 billion.22

 

22We calculated $13.8 billion based on the amount listed on the first notice sent to 

taxpayers who filed an individual return with a balance due but did not pay in full.

IRS Could More 

Effectively Apply 

Risk-Based 

Approaches to Collect 

Balances Due

For Tax Year 2010, 

Taxpayers Self-Assessed

Balances Due for Billions 

of Dollars
 

Page 18 GAO-13-156 Tax Filing

Table 7: Balance Due Accounted for During Notice Process or Sent on to 

Collections, Tax Year 2010

Dollars in billions

Description

Total amount due on 

first notice 

Number of returns 

(millions)

Balance due returns resolved 

during the notice process $9.4 3.2

Balance due returns sent to 

collections 4.4 0.6

Total $13.8 3.8

Source: GAO analysis of IRS data.

As shown in table 8, of those taxpayers that had a balance due at the 

filing deadline, almost two-thirds eventually paid in full or entered into 

installment agreements, which are payment plans where the taxpayer can 

repay the debt owed in scheduled increments (usually monthly). 

However, IRS was unable to collect at least $4.4 billion in balances 

through notices and these returns progressed to later collections stages. 

Additionally, an unknown amount of tax owed remained uncollected in 

cases where the taxpayer defaulted on an installment agreement.

According to IRS officials, about 18 percent of taxpayers default on 

installment agreements, resulting in IRS eventually sending these 

taxpayers to collections.23 Unpaid balances due result in IRS using more 

expensive resources, such as phone contact and field visits, to collect the 

taxes. In addition, taxpayers may face additional interest and penalties.

 

23According to IRS, the default rate for IMF installment agreements was 18 percent in 

fiscal year 2012 and 17 percent for fiscal year 2011.
 

Page 19 GAO-13-156 Tax Filing

Table 8: Actions Taken by IRS or Taxpayers on Balance Due Returns by Amount 

Owed and Percentage, Tax Year 2010

Dollars in billions

Action Taken Amount 

Percentage of 

amount owed

Percentage of 

returns 

Installment agreement $5.5 40% 33%

Full paid 3.1 23 39

Sent to collections 4.4 32 16

Other 0.7 a 5 12

Total $13.8 100% b 100%

Source: GAO analysis of IRS data.

a

The other categories include a range of taxpayers, including those that IRS determines are currently 

unable to pay and taxpayers whose returns have been referred for criminal investigation.

b

Numbers do not add due to rounding.

States have employed risk-based approaches to help them collect 

uncollected taxes that provide options that may be appropriate for IRS to 

also consider. Representatives from three states with advanced collection 

approaches (identified by the Federation of Tax Administrators, an 

organization that represents state tax administration agencies) we spoke 

with identified two best practices for collections strategies:

• applying risk-based approaches to collections strategies, including 

risk-based analytics such as risk scores based on taxpayer data, and

• initiating timely contact of taxpayers who owe debts. Both we and the 

Treasury Inspector General for Tax Administration (TIGTA) have 

reported on the success of timely contact with debtors, and it is an 

accepted debt collection best practice.24

Risk-based approaches use data on taxpayers’ filing status, payment 

history, public records such as bankruptcies, and payment behaviors to 

determine for a given taxpayer which collections methods will produce the 

best results. Risk-based analytics have been in use by IRS and other tax 

agencies for many years, but mostly in fraud detection and prevention. 

 

24GAO-08-728 and TIGTA, Reducing the Processing Time Between Balance Due Notices 

Could Increase Collections (Sept. 26, 2011). 

Some States Have 

Implemented Risk-Based 

Approaches to Debt 

Collection That Are 

Considered Best Practices
 

Page 20 GAO-13-156 Tax Filing

For example, IRS applies a risk score to returns during its screening 

process to estimate the risk of fraud. IRS sometimes audits taxpayers 

who submit returns with scores that exceed certain thresholds, which are 

those returns predicted most likely to be fraudulent. The use of such tools 

in early phases of collecting balances owed by taxpayers is an emerging 

best practice and can (1) increase amounts of debt collected if applied to 

taxpayers who do not respond quickly and (2) save resources by 

identifying taxpayers who may not require intervention (those who are 

likely to comply or tend to self-resolve their debts without intervention 

from the IRS).

According to experts we interviewed, some taxpayers may respond better 

to multiple notices sent more quickly or a phone call shortly after a notice, 

while others may respond to a single notice. According to state level 

officials we interviewed, data analysis sometimes showed that certain 

taxpayers are likely to pay without further intervention from the tax agency 

and that collection activities should be focused elsewhere.

New York State Department of Taxation and Finance officials reported 

that although they had fewer available collections resources, they 

collected an additional $83 million in 2010, an increase of 8 percent, 

during the first year using their revenue-based analytics collections 

program. According to New York State officials we interviewed, the 

program uses data analytics to determine the collection actions most 

likely to generate the greatest amount of revenue at a given point in time, 

within certain resource constraints. New York State officials reported that 

they believe the program has been instrumental in helping increase 

collections.

Officials from two other state revenue agencies, California’s Franchise 

Tax Board and North Carolina’s Department of Revenue, told us that they 

have seen some improvement in collection rates as they implement riskbased approaches and other strategies to contact taxpayers who owe 

debt, but they cannot quantify how much of the improvement is related to 

these activities as they are part of a comprehensive change in collections 

processes. California’s Franchise Tax Board experienced an 18 percent 

increase in collections revenue from fiscal years 2010 to 2011, which 

officials there attribute to the implementation of new tools, including riskbased analytics and proactive call center strategies.

In all three states, these activities are part of broad changes in collections 

processes. According to representatives from the New York State 

Department of Taxation and Finance, in their experience, the initial 
 

Page 21 GAO-13-156 Tax Filing

investment and set up of a revenue-based analytics collections program 

required both time and resources. The maintenance of this system also 

requires continuous updates as new events occur. For example, one of 

the most challenging parts of implementing the New York State system 

was to develop a way to correctly adhere to all of the state’s laws and 

policies that affected collections and at the same time not to restrict the 

analytics engine so much that it cannot make the right choices. However, 

tax administration experts at the three states we interviewed and the 

Federation of Tax Administrators generally agreed that the benefits 

should outweigh the costs.

IRS applies business rules, which determine the sequence of notices sent 

to a taxpayer, in an attempt to apply a risk-based approach to its notice 

process. IRS officials told us that they have some basic criteria, including 

taxpayers who repeatedly pay late, owe larger dollar amounts, or owe 

other taxes to the IRS, to determine which taxpayers receive which 

notices. However, we previously reported that IRS lacked information 

describing what the business rules for balance due notices are, 

specifically finding that IRS did not meet our criteria for internal controls 

for this process.25

IRS does not have well-documented, risk-based business rules, in part

because of a lack of clear management responsibility for administering 

For example, although guidance for federal internal 

control standards states that managers should have information in forms 

to ensure the effectiveness of operations, IRS officials lacked 

documentation for the business rules of the notice phase and how the 

rules operated. We recommended that IRS document rationales for the 

business rules for managers. At the time of this review, IRS was still 

unable to provide us with clear documentation of these business rules 

that would meet internal control requirements.

 

25In GAO-09-976, Tax Debt Collection: IRS Needs To Better Manage Collection Notices 

Sent to Individuals, (Washington, D.C.: Sept. 30, 2009), we cited the Internal Control and 

Management Evaluation Tool (GAO-01-1008G) which specifies criteria for a well run 

program that includes: written documentation covering the agency’s internal control 

structure and for all significant transactions and events; the documentation is readily 

available for examination; documentation, whether in paper or electronic form, is useful to 

managers in controlling their operations and to any others involved in evaluating or 

analyzing operations; and, pertinent information is identified, captured, and distributed to 

the right people in sufficient detail, in the right form, and at the appropriate time to carry 

out their duties and responsibilities efficiently and effectively. 

IRS Uses Some Risk-Based 

Approaches in the Notice 

Process but the Rationale 

and Management 

Responsibilities Are 

Unclear
 

Page 22 GAO-13-156 Tax Filing

parts of the collection notice process. This is partly because of the 

substantial reorganizations at IRS over the last 2 years, including the 

creation of an Enterprise Collection Strategy (ECS) and a Return Integrity 

Correspondence Service (RICS).

26 RICS officials told us that they have 

authority over the development and revision of balance due notices but 

that ECS is responsible for most of the analytics for the collections 

process. However, ECS officials told us that they were still determining 

the scope of their authority, but that IRS’s Wage and Investment division 

has the majority of responsibility over the balance due notices process.27

Lack of clarity in the roles and responsibilities of IRS officials responsible 

for sending notices to taxpayers impedes IRS’s ability to best identify and 

implement risk-based approaches for resolving balances due.

More effective risk-based analytics could benefit taxpayers by making 

them aware of payment options earlier and allowing them to avoid interest 

and penalties. For example, IRS does not contact taxpayers who e-file 

and have a balance due but do not pay in full until mid-May—IRS 

contacts taxpayers who file on paper as soon as the balance due is 

identified. Other approaches may also allow IRS to reduce costs by 

applying collections resources in a more targeted and effective manner. 

In recent comments, the Commissioner of Internal Revenue indicated that 

leveraging data analytics to continually improve IRS’s operations is one of 

the agency’s next major priorities.28

 

26ECS is a unit within the IRS Small Business and Self-Employed division to centralize 

more of the collections functions. ECS became active in October 2011 and is currently 

developing a mission statement and strategy based on the IRS Collections Process 

Strategy issued in 2010. The IRS Return Integrity and Correspondence Services began its 

operations in October 2011, bringing together the Accounts Management Taxpayer 

Assurance Program, Earned Income Tax Credit and Health Coverage Tax Credit offices, 

and the Office of Taxpayer Correspondence under one umbrella. This consolidation is part 

of a strategy to address rising concerns about refundable credits and refund fraud.

IRS officials told us that they have a 

proposal, referred to as their Advanced Consolidated Data Analytics Plan, 

to apply a risk-based approach to determine to the extent to which each 

taxpayer who files a balance due and does not pay in full on time is 

contacted. The plan includes routing some taxpayers directly to phone 

27According to GAO’s Standards for Internal Control in the Federal Government, a good 

internal control environment requires that the agency’s organizational structure clearly 

define key areas of authority and responsibility. GAO/AIMD-00-21.3.1.

28Prepared Remarks of IRS Commissioner Doug Shulman before the American Institute 

of Certified Public Accountants. Washington, D.C. IR-2012-89, November 7, 2012.

IRS Has Not Implemented

More Advanced RiskBased Approaches Early in 

Its Collections Process
 

Page 23 GAO-13-156 Tax Filing

and field collections after the first notice is issued. However, due to other 

priorities, IRS has not scheduled implementation of the plan.

Potential additional risk-based approaches to collecting balances due 

range from relatively simple steps to more robust data analytics similar to 

what some states have implemented. While earlier contact with taxpayers 

based on payment history, or other indicators that they are not likely to 

pay on time, is an example of a relatively simple risk-based approach, 

options exist to test more complex approaches, similar to those described 

earlier and being used by some states. Such approaches involve more 

complex statistical analysis and help better determine which 

communication strategies are likely to work the best for a given taxpayer 

and yield the most revenue.

As of September 30, 2012, taxpayers had requested more than 20 million 

RACs, which is about the same as 2010, but more than double the 

roughly 10 million RACs issued in 2005. Stakeholders we interviewed 

from both consumer protection groups and the tax industry generally 

agreed the primary benefits of RACs are allowing taxpayers to deduct 

return preparation fees from their refunds and ensuring some taxpayers 

receive refunds faster. Tax industry professionals said that RACs offer 

taxpayers flexibility that might otherwise not be available. For example, 

taxpayers may want to obtain a RAC if they do not have a personal bank 

account or lack sufficient funds to pay tax preparation fees in advance. 

Taxpayers can obtain a RAC through either use of a tax software 

package or paid preparer.

IRS data shows that nearly 40 percent of taxpayers who obtain a RAC 

use a software package to help self-prepare their returns. Our analysis of 

the five most frequently used tax software packages, 4 of which offered a 

RAC, found that

• three of the four RAC providers charged about $30 for a RAC, which 

is consistent with findings from an Urban Institute study released in 

2010,29

 

29Urban Institute, Who Needs Credit at Tax Time and Why: A Look at Refund Anticipation 

Loans and Refund Anticipation Checks (Washington, D.C.: November 2010).

and

Use of RACs Has 

Increased 

Significantly and IRS 

and Others Are 

Beginning to Address 

Questions About the 

Transparency of RAC 

and Other Fees
 

Page 24 GAO-13-156 Tax Filing

• three of the four software packages offering RACs required taxpayers 

to have a bank account to receive the remainder of the refund once all 

the fees, including the RAC fee, had been paid. This is noteworthy 

because helping taxpayers without bank accounts receive refunds is 

one of the major stated benefits of RACs.

In addition to RAC fees, we found that taxpayers may incur other fees 

related to the receipt of their refund. For example, if taxpayers choose to 

receive their refund on a prepaid debit card, they may incur fees for using 

the card or making withdrawals. Our analysis showed that cash 

withdrawal, monthly maintenance, and balance inquiry fees generally 

applied to the prepaid debit cards. Appendix VI includes more information 

on the fee structure of the software packages we reviewed.

We also found that, in general, RACs and associated fees varied, and the 

tax preparation software packages we reviewed included the required 

disclosures to taxpayers about the product. However, we were not able to 

evaluate the extent to which taxpayers read and understand the 

disclosures.30

Convincing empirical evidence about whether taxpayers are aware of and 

understand RACs and associated fees does not exist. Although we found 

that the fee structure and disclosures were included in tax software 

packages we reviewed, interested parties have expressed concerns 

about the transparency and cost of RACs. For example, we found that:

Further, we did not analyze how paid preparers operating 

commercial stores offered RACs to taxpayers or otherwise presented tax 

preparation fees.

• Representatives from consumer protection groups we interviewed 

have noted that the fees associated with a RAC may be high, lack 

transparency, and taxpayers may not fully understand alternatives for 

receiving their refunds.31

 

30We have previously reported that disclosures related to some credit cards and 

mortgages are difficult for people to understand. GAO, Credit Cards: Increased 

Complexity in Rates and Fees Heightens Need for More Effective Disclosures to 

Consumers, 

These representatives noted that taxpayers 

GAO-06-929 (Washington, D.C.: Sept. 12, 2006); and Alternative Mortgage 

Products: Impact on Defaults Remains Unclear, but Disclosure of Risks to Borrowers 

Could Be Improved, GAO-06-1021 (Washington, D.C.: Sept. 19, 2006).

31See also, National Consumer Law Center, End of the Rapid Rip-Off: An Epilogue For 

Quickie Tax Loans (February 2011).
 

Page 25 GAO-13-156 Tax Filing

who have bank accounts and access to credit should have little need 

for a RAC.

• Industry participants stated that, in some cases, RAC and other fees 

could be more effectively disclosed to taxpayers. Tax industry 

representatives told us they have made proposals to policy makers 

and regulators to enhance return preparation and bank fee 

disclosures, monitor third-party vendors, and develop marketing 

requirements and other agreed upon prohibited and best practices.

• Some states have enacted legislation governing paid tax preparers 

that offer RACs. The state laws that have been enacted require the 

disclosure of fees and the posting of a fee schedule.32 In some cases, 

the required disclosures include informing the taxpayer that the 

taxpayer has the right to not obtain a RAL or RAC.33 Some states 

have taken the additional step of placing restrictions on the fees a tax 

preparer can charge when providing a RAC. For example, Illinois law 

prohibits tax preparers from charging any additional fee to obtain a 

RAC apart from that charged by the financial institution providing the 

RAC.34

Finally, IRS officials told us that because a RAC is a bank product it 

would be more appropriate for banking regulators, who also played a key 

role in eliminating RALs, to determine whether further steps need to be 

taken to address issues that have been raised with respect to the 

transparency of RACs.35

 

32See, for example, Ark. Code §§ 4-116-101 to 4-116-108 (2012); Conn. Gen. Stat. Ann. § 

42-480 (2012); Me. Rev. Stat. tit. 9-A, § 10-310 (2012); Tex. Fin. Code § 352.001 (West 

2012).

The Bureau of Consumer Financial Protection, 

commonly referred to as the Consumer Financial Protection Bureau 

(CFPB), examines short-term, small-dollar lending, which could include

33See, for example, Cal. Bus. & Prof. Code §§ 22251 and 22253 (2012); Md. Code, Com. 

Law, §§ 14-3806; Mich. Comp. Laws Ann. § 446.111, et. seq. 

34Tax Refund Anticipation Loan Reform Act, 2012 Ill. Laws P.A. 97-849. 

35The Office of Professional Responsibility governs paid preparers in accordance with 

Circular 230, which includes unreasonable fees and misleading or false advertising by 

paid preparers. See GAO-12-176 for an explanation of the role banking regulators played 

in limiting the use of RALs.
 

Page 26 GAO-13-156 Tax Filing

RACs; however, CFPB has not done extensive work with RACs.36 CFPB 

officials said that they do not have specific jurisdiction over return 

preparation fees. Recently, in response to increased interest about RAC 

and other tax preparation fees, IRS and CFPB have begun discussing 

whether there is a need for further regulation of RAC and other fees or if 

additional steps need to be taken to help taxpayers understand return 

preparation fees. As IRS is beginning to work with consumer and 

regulatory groups on these issues, we are not making any 

recommendations to IRS at this time.

IRS deserves credit for achieving noticeable efficiency gains in 

processing returns and providing taxpayer services over recent years. In 

an era of tight budgets, such gains are vital for keeping up with an 

expanding workload and improving outcomes for taxpayers. However, 

while IRS has realized efficiency gains, it is still struggling in its efforts to 

give taxpayers access to telephone assistors and provide timely 

responses to correspondence. The efficiency gains have been more than 

offset by increases in demand for services. While further improvements, 

as envisioned in IRS’s CONOP are desirable, recent history provides little 

prospect of such gains reversing the service declines. Without a more 

dramatic revision in strategy, the recent declines in access and 

correspondence services seem likely to continue.

While processing returns and issuing refunds to taxpayers, IRS also 

collects taxes owed to the government. New analytical, risk-based tools 

are helping state tax administration agencies better determine when and 

how to contact taxpayers who file a return with a balance due but do not 

pay the government when they file their returns. However, IRS has yet to 

experiment with implementing such tools during the notice phase before 

more expensive methods of collection, including telephone calls and faceto-face visits to taxpayers, are necessary. This is due, in part, to IRS’s 

lack of clearly defined responsibilities for administering the notice phase. 

Resolving payment issues early on also helps taxpayers avoid paying 

interest and penalties on their remaining balances.

 

36The CFPB was created in 2010 to ensure that consumers get the information they need 

to make the financial decisions they believe are best for themselves. Consumer Financial 

Protection Act of 2010, Pub. L. No. 111-203, title X, 124 Stat. 1955. 

Conclusion 
 

Page 27 GAO-13-156 Tax Filing

We recommend that the Acting Commissioner of Internal Revenue take 

the following actions:

1. Outline a strategy that defines appropriate levels of telephone and 

correspondence service and wait time and lists specific steps to 

manage service based on an assessment of time frames, demand, 

capabilities, and resources.

2. Clearly define and document the roles and responsibilities of IRS 

offices administering the notice phase, such as in resolving tax debts.

3. Tailor appropriate and timely interventions with taxpayers who file 

balance due returns, by pilot testing risk-based approaches that could 

include

• implementing the Advanced Consolidated Data Analytics plan, 

and

• using more data driven methods to identify the most appropriate 

method for contacting a taxpayer.

We provided a draft of this report to the Acting Commissioner of Internal 

Revenue. He provided written comments on a draft of the report, which 

are reprinted in appendix VII. IRS also suggested technical changes to 

the report, which we incorporated where appropriate.

IRS neither agreed nor disagreed with our first recommendation. IRS said 

it already has an objective of providing taxpayers with access to accurate 

services while managing demand and that this will be achieved by 

improving contact center efficiency, providing issue resolution alternatives 

to reduce demand, and equipping the workforce with additional tools. 

However, as we stated in the draft, in recent years, IRS has realized 

efficiency gains and provided alternative types of services, including more 

automated services. Notwithstanding these efforts, IRS has not kept up 

with the demand for service. Its service to taxpayers has continued to 

decline—the percentage of calls answered by a CSR has decreased and 

telephone wait times and the percentage of overage paper 

correspondence have increased. Because IRS’s efforts to date have not 

reversed these declines in taxpayer service, we believe our 

recommendation to outline a strategy that defines appropriate levels of 

service and lists specific steps to manage service that would reverse 

recent trends remains valid. As the draft stated, a strategy to reverse the 

trends may require difficult tradeoffs. 

Recommendations for 

Executive Action:

Agency Comments 

and Our Evaluation
 

Page 28 GAO-13-156 Tax Filing

Regarding our other two recommendations, IRS described its plans to 

implement them. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Chairmen and 

Ranking Members of other Senate and House committees and 

subcommittees that have appropriation, authorization, and oversight 

responsibilities for IRS. We will also send copies to the Acting 

Commissioner of Internal Revenue, the Secretary of the Treasury, the 

Chairman of the IRS Oversight Board, and the Deputy Director for 

Management of the Office of Management and Budget. In addition, the 

report will be available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-9110 or whitej@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix VIII. 

James R. White

Director, Tax Issues

Strategic Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-13-156 Tax Filing

This report

1. Assesses the Internal Revenue Service’s (IRS) performance in 

processing returns, delivering refunds, and providing telephone 

service and online and face-to-face assistance in comparison to its 

2012 goals and prior years’ performance;

2. Describes what is known about taxpayers who filed returns and had a 

balance due for tax year 2010 but did not pay on or before the filing 

deadline, and assesses IRS’s efforts to encourage timely payment; 

and

3. Summarizes the growth of Refund Anticipation Checks (RAC) in 

recent years and the reasons taxpayers may obtain them, the manner 

in which RAC and other fees are disclosed to taxpayers in commonly 

used online tax return preparation software packages, and key 

stakeholder views regarding the transparency of RACs and

associated fees.

To assess IRS’s performance in 2012 relative to its goals and prior years’ 

performance we:

• Obtained and analyzed IRS documents and data, including 

performance and workload data, reports, testimonies, budget 

submissions, and internal studies of programs, and compared these 

to IRS’s 2012 goals and prior years’ performance to identify trends 

and anomalies.

• Reviewed various other criteria, including industry standards, federal 

requirements, and best practices to assess IRS’s performance in key 

areas.

• Observed operations at IRS’s Joint Operations Center (which 

manages telephone services) and listened to calls from taxpayers with 

telephone Customer Service Representatives (CSR). We also 

observed operations at a walk-in site located in Richmond, Virginia, 

including virtual service delivery.

• Interviewed IRS officials responsible for tax return processing, 

taxpayer services, and online services.

• Collected data from and interviewed key external stakeholders who 

frequently interact with IRS on key aspects of the filing season, 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-13-156 Tax Filing

including representatives from major tax return preparation 

companies.

To describe what is known about taxpayers who filed returns with a 

balance due in tax year 2010 but did not pay on or before the filing 

deadline, and to assess IRS’s efforts to encourage timely payment, we:

• Reviewed IRS’s process and organizational structure for contacting 

taxpayers who submit returns and owe a balance to the IRS but do 

not pay before the deadline. This included obtaining documentation 

from IRS and interviewing IRS officials responsible for this process.

• Analyzed IRS data on the number of taxpayers who file returns with a 

balance due in tax year 2010, the most recent year for which 

complete data are available. We also analyzed IRS data on the dollar 

amounts associated with these balances and the manner in which the 

balances were resolved. For our analysis, the amount on the first 

notice sent to the taxpayer, including any interest and penalties, is the 

amount owed.

• Determined the amounts owed by the taxpayer through matching data 

on notices sent to taxpayers against data from returns entering IRS’s 

collections process across databases using the Taxpayer 

Identification Number, to assure that our population included only 

those who received a notice for a self-assessed balance due.

• Analyzed the amount and distribution of returns for the types of 

notices received and whether and how they were resolved or entered 

later collection phases. 

• Interviewed representatives from state tax administration agencies, 

other experts in tax administration, and private industry experts in 

collecting balances owed to identify criteria and best practices, such 

as the use of risk-based approaches and timely contact, for getting 

taxpayers to pay balances owed on time. An organization that 

represents state tax administration agencies provided contact 

information for states with advanced collection practices. Experts from 

those states directed us to knowledgeable private industry experts.

To summarize the growth of RACs in recent years and the reasons 

taxpayers may obtain them, the manner in which RAC and other fees are 

disclosed to taxpayers in commonly used online tax return preparation 

software packages, and key stakeholder views regarding the 

transparency of RACs and associated fees, we:
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-13-156 Tax Filing

• Obtained data from IRS’s return preparer office identifying the five

most frequently used software packages by taxpayers who selfprepare returns. We analyzed information regarding RACs from the 

largest online tax preparation software companies to identify RAC 

fees and the manner in which they are presented to taxpayers 

preparing returns. 

• Interviewed consumer protection experts, tax return preparation 

industry experts, and officials from cognizant government agencies, 

including the IRS and Consumer Financial Protection Bureau (CFPB). 

We identified these experts to interview based on our prior reports 

involving consumer protection and tax administration issues and in 

consultation with organizations representing tax return preparation 

and related financial services companies. We conducted these 

interviews to obtain a range of views on the need for RACs, return 

preparation fees more generally, and whether additional actions are 

needed to regulate RACs and other associated fees.

When data were available, we compared IRS’s performance to its 2012 

goals and performance from fiscal years 2007 through 2011. IRS officials 

noted that since 2008, varying degrees of tax law changes and other 

factors have affected the agency’s performance. This report discusses 

numerous filing season and performance measures and data covering the 

quality, accessibility, and timeliness of IRS’s services. Where estimates 

are presented, we used 90 percent confidence intervals and 10 percent 

levels of statistical significance, the same used by IRS. To the extent 

possible, we corroborated information from interviews with documentation 

and data, and where not possible, attributed the information to IRS 

officials. We reviewed IRS documentation, interviewed IRS officials about 

computer systems and data limitations, and compared those results to 

our standards of data reliability.1

We conducted this performance audit from February 2012 through 

December 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

We determined that the data presented 

in this report are sufficiently reliable for our purposes.

 

1

GAO, Assessing the Reliability of Computer-Processed Data, GAO-09-680G 

(Washington, D.C.: July 2009).
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-13-156 Tax Filing

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. To conduct our 

analysis of the cost and features of RACs, we used investigative 

techniques. We conducted our related investigative work in accordance 

with investigation standards prescribed by the Council of the Inspectors 

General on Integrity and Efficiency.
Appendix II: Balance Due Notice Process

Page 33 GAO-13-156 Tax Filing

IRS is required by law to send at least two notices to taxpayers who have 

a balance due on their taxes—the first notice (known as computer 

paragraph or CP-14) and a final notice (CP-504). IRS may also send up 

to two other discretionary notices (known as CP-501 and CP-503) 

between the first and final notices. IRS uses business rules embedded in 

the programming of its computer systems to determine the number and 

type of notices sent to a taxpayer. IRS officials told us that business rules 

impact the notice path for taxpayers who meet certain criteria, including 

taxpayers who repeatedly pay late and owe larger dollar amounts.

However, these business rules are static and IRS does not otherwise 

tailor its contact methods to individual taxpayers during the notice phase. 

(See table 9).

Table 9: Description of Balance Due Notices for Individual Filers of Self-Assessed Balance Due Returns

Name CP Explanation

First notice CP-14 Issued as a first notice to inform a taxpayer of a balance due of $5.00 or more, no math error. It tells 

taxpayers they have unpaid taxes, lists the amount due, the amount of penalties and interest assessed, 

and how to contact IRS to dispute the amount or to pay. This notice is required by law.

Second notice CP-501 Second notice sent to taxpayer if no response after CP-14 notice. This notice is discretionary.

Third notice CP-503 Third notice sent to taxpayer if no response to CP-14 or to second notice. This notice is discretionary. 

Final notice CP-504 Final notice issued to taxpayers informing them that IRS intends to issue a levy against the taxpayer’s 

state tax refund because there is still a balance due on one or more of their tax accounts. Also, it informs 

the taxpayers that the IRS will begin searching for other assets on which to issue a levy and that the IRS 

may also file a federal tax lien. This notice is required by law.

Source: GAO analysis of TIGTA and IRS data.

Figure 2 shows that IRS’s balance due notice process for a taxpayer 

receiving all four notices is at least 21 weeks. IRS allows 5 weeks 

between notices to give the taxpayer a chance to respond. If the taxpayer 

does not respond to the final notice within 6 to 10 weeks to make 

arrangements to settle the balance, then IRS sends the account to phone 

or field collections or the queue, where IRS holds some accounts to 

determine what actions to take later.

IRS does not typically contact taxpayers beyond the standard two to four 

notices during the notice phase.

Appendix II: Balance Due Notice Process 
Appendix II: Balance Due Notice Process

Page 34 GAO-13-156 Tax Filing

Figure 2: Balance Due Notice Process for Individual Tax Return Filers
Appendix III: Use of IRS Website and Online 

Services

Page 35 GAO-13-156 Tax Filing

Taxpayers are increasingly using http://www.IRS.gov to download forms 

and publications and to check refund status. In 2012, IRS increased the 

number of Interactive Tax Assistant (ITA) topics from 11 to 19, which IRS 

officials said contributed to an 83 percent increase in ITA usage. 

Taxpayers’ use of the Where’s My Refund tool increased by almost 73 

percent in 2012, which IRS officials said may be attributed to processing 

issues that affected when estimated refund dates were posted and 

programming errors which provided visitors with erroneous messages.

Table 10: Website Use from the 2008 through 2012 Filing Seasons

2008 2009 2010 2011 2012

Percent change

from 2011 to 

2012a

Total visits to IRS.gov (in millions)b 292 235 239 250 297 18.8

Taxpayer forms, publications, and instructions downloads (in 

millions) 136 137 157 166 259 56.0 c

Searches (in millions) 125 d 263 277 312 290 -7.1

Volunteer site list (in thousands) n/a e n/a 48 152 f 152 g 0 h

Self-Service Tools

Where’s My Refund? (completion in millions) 38 53 64 73 126 72.6

Electronic Filing Pin Request (completion in millions) n/a n/a 5 10 12 20.0

Online Payment Agreement (completion in thousands) 19 34 43 26 64 i 146.2

Interactive Tax Assistance Tools (completion in thousands) n/a j n/a 42 212 k 388 83.0

Source: GAO analysis of IRS data.

Note: Data are from January 1 to July 31 for each year unless otherwise noted.

a

Numbers in the table are rounded, but percentage change was calculated using exact values. 

Therefore, in some cases, the percentage change is slightly different than it would be if it were 

calculated using the rounded values in the table.

b

A visit is a series of actions that begins when a visitor views their first page from the server, and ends 

when the visitor leaves the site.

c

Data is for January 1 to June 30, 2012.

d

Page views include both successful search results and search results not found.

e

2010’s listing was on 1 page, with an index at the top. 2011’s listing was split into 52 pages; one for 

each state, the District of Columbia, and Puerto Rico. For 2012, IRS created a volunteer site locator 

tool for searches using zip codes.

f

Page views data are for February 12 through July 31, 2010.

g

Data are from January 1 through June 30, 2011.

h

Appendix III: Use of IRS Website and Online 

Services

Data represents the number of visits to the disclaimer page where users leave IRS.gov to use the 

volunteer site locator application, hosted by the Department of Treasury.
Appendix III: Use of IRS Website and Online 

Services

Page 36 GAO-13-156 Tax Filing

i

A programming error led to a decrease in the number of completed agreements.

j

IRS introduced the interactive tax assistance tools in March 2010 and added more tools in 2011 and 

2012. As a result, the time frames and available services are not comparable.

k

Data are from March 7 through July 31, 2010.
Appendix IV: Visits to Taxpayer Assistance 

Center and Volunteer Income Tax Assistance 

Sites

Page 37 GAO-13-156 Tax Filing

The total number of contacts at Taxpayer Assistance Centers (TAC) 

staffed by IRS employees had decreased in 2012 as compared to 2010 

and 2011. The total number of returns prepared at Volunteer Income Tax 

Assistance (VITA) sites for 2012 increased slightly compared to 2011, 

while 97 percent of the returns prepared at volunteer sites were

electronically-filed.

Table 11: Services Performed at IRS TAC and VITA Sites, 2010 through 2012 Filing 

Seasons

2010 2011 2012

Percent change 

from 2011 to 

2012

TAC

Total contacts 2,777,478 2,847,221 2,772,044 -2.6

Return preparation 222,624 201,413 148,075 -26.5

Tax law questions 177,002 153,398 128,746 -16.1

Account notices 1,217,383 1,327,406 1,446,413 9.0

Forms 440,417 457,839 378,051 -17.4

Other 720,052 a 707,165 670,759 -5.1

VITA 

Return preparation 2,951,952 3,077,687 3,149,197 2.3

Percent of returns e-filed 95 96 97 n/a

Legend: n/a = not applicable.

Source: GAO analysis of IRS data.

Notes: Data for each calendar year are for January 1 through April 30.

a

Appendix IV: Visits to Taxpayer Assistance 

Center and Volunteer Income Tax Assistance 

Sites 

Other contacts include responding to correspondence, scheduling appointments, and providing selfassistance services, which do not fall into the defined categories.
Appendix V: Description of Telephone Calls 

Answered by IRS

Page 38 GAO-13-156 Tax Filing

IRS receives millions of calls each year from taxpayers. As table 12 

shows, while an increasingly large number of calls are answered through 

automation, the number of calls answered by customer service 

representatives (CSRs) has declined. Abandoned calls are those calls 

where the taxpayer hangs-up before receiving assistance.

Table 12: Calls to IRS by Call Type, 2007 through 2012 Filing Seasons

In millions

2007 2008 2009 a 2010 2011 2012

Percent 

change from 

2011 to 2012

Automated calls 

answered

b

20.8 43.0 25.3 31.6 36.7 50.1 36

CSR calls answered 21.5 27.0 25.7 24.1 22.6 19.4 -14

Abandoned calls 13.3 34.4 21.4 20.5 22.7 27.3 20

Busies and IRS 

disconnects 1.0 13.6 5.3 1.2 1.1 1.6 52

Total calls received 56.6 118.0 77.6 77.4 83.1 98.4 18

Source: GAO analysis of IRS data.

Note: Data are from January 1 through June 30 for all years.

a

According to IRS officials, IRS received an unprecedented number of calls in 2008 primarily related 

to economic stimulus package payments.

b

Appendix V: Description of Telephone Calls 

Answered by IRS

The numbers in the table are rounded, but the percent change was calculated using exact values.

Therefore, in some cases, the percent change is slightly different than it would be if it were calculated 

using the rounded values in the table.
Appendix VI: Fees for Refund Anticipation 

Checks

Page 39 GAO-13-156 Tax Filing

As part of our review of Refund Anticipation Checks (RAC), we observed 

how RACs and the fees associated with them, including fees for prepaid 

debit cards, are presented to taxpayers. Table 13 summarizes our results.

Table 13: Comparisons of Fees and Refund Anticipation Check Options for Five Software Packages 

Software 

Package 1 

Software 

Package 2 

Software 

Package 3 

Software 

package 4 

Software 

package 5 

Tax Return and RAC Fees

Tax preparation fee $74.90 $74.90 $17.95 $12.95 $17.90

RAC fee 29.95 32.95 16.95 n/a 29.95

Pre-paid Card Fees

ATM cash withdrawal one time 2.50 2.50 1.95 n/a n/a

Over the counter withdrawal 2.50 25.00 5.00 n/a n/a

ATM balance inquiry 0.50 1.00 0.50 n/a n/a

Monthly maintenance fee 5.95 2.50 a 2.50 b n/a c n/a

Legend: n/a = not applicable.

Source: GAO analysis.

a

The maintenance fee is waived when available balance is $50 or greater on the last day of billing 

cycle.

b

This is a monthly inactivity fee (charged after 3 months consecutive with no activity).

c

The maintenance fee is charged monthly, therefore the $2.50 amount could increase depending on 

the length of card’s activation.

Appendix VI: Fees for Refund Anticipation 

Checks 
Appendix VII: Comments from the Department 

of the Treasury

Page 40 GAO-13-156 Tax Filing

Appendix VII: Comments from the 

Department of the Treasury
Appendix VII: Comments from the Department 

of the Treasury

Page 41 GAO-13-156 Tax Filing
Appendix VII: Comments from the Department 

of the Treasury

Page 42 GAO-13-156 Tax Filing
Appendix VII: Comments from the Department 

of the Treasury

Page 43 GAO-13-156 Tax Filing
Appendix VIII: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-13-156 Tax Filing

James R. White, (202) 512-9110, whitej@gao.gov

In addition to the individual named above, Joanna Stamatiades, Assistant 

Director; LaKeshia Allen Horner; Andrew Ching; David Fox; Tom Gilbert; 

Ron Jones; Inna Livits; Kirsten Lauber; Karen O’Conor; Albert Sim; 

Sabrina Streagle; Weifei Zheng; and John Zombro made key 

contributions to this report.

Appendix VIII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(450959)
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