During the tax filing season, IRS processes paper and electronically filed (e-filed) tax returns and validates key pieces of information, such as a taxpayer’s name and social security number. The overwhelming majority of returns are e-filed. Eligible taxpayers may use IRS’s Free File program to prepare and e-file their federal tax returns online for free.return processing, IRS offers the following services: Telephone service for tax law and account questions: Taxpayers can speak with an IRS assistor to obtain information about their accounts or to ask tax law questions. Taxpayers can also listen to recorded tax information using automated telephone menus. In 2010, we recommended that IRS determine a telephone standard based on the quality of service provided by comparable organizations, what matters most to the customer, and resources required to achieve this standard based on input from Congress and other stakeholders.saying its current process of developing a planned level of telephone service takes into consideration many factors, including its resource availability and assumptions about call demand. We noted, however, that such a standard would allow IRS to communicate to Congress what it believes constitutes good service. Furthermore, since 2010, the IRS Oversight Board—an independent body charged to provide IRS with long- term guidance and direction—has said than an acceptable level of service should be about 80 percent, but IRS has yet to set such a standard. Correspondence: IRS assistors are also responsible for responding to paper correspondence from taxpayers. IRS tries to respond to paper correspondence within 45 days of receipt; otherwise, such correspondence is considered “overage.” Minimizing overage correspondence is important because delayed responses may prompt taxpayers to write again or call. According to IRS, the top three reasons taxpayers write relate to balance due payoffs, penalty abatements, and miscellaneous account inquiries. Online services: IRS’s website is a low-cost method for providing taxpayers with basic interactive tools to, for example, check refund status, view and print transcripts, make payments and apply for installment agreements. In response to recommendations in our April 2013 report, IRS said that a long-term online strategy for improving web services will be completed in February 2015. Face-to-face assistance: Taxpayers can obtain face-to-face assistance at IRS’s 390 Taxpayer Assistance Centers (TAC), also known as walk-in sites, or at more than 13,000 sites staffed by volunteer partners. At TACs, IRS staff answer basic tax law questions, review and adjust taxpayer accounts, take payments, authenticate Individual Taxpayer Identification Number (ITIN) applicants and assist identity theft victims. At the sites staffed by volunteers, taxpayers can receive return preparation assistance as well as financial literacy information. In 2012, we reported that despite regularly realizing efficiency gains, IRS was struggling to provide quality services to taxpayers. We showed that increases in the demand for services have offset the efficiency gains and that unless IRS made tough choices about what services to provide, performance would likely continue to suffer. For fiscal year 2014, IRS reduced or eliminated certain telephone and walk-in services. IRS officials reported they chose these reductions and eliminations because taxpayers had other options for these services. Specifically, IRS took the following actions: 1. limited telephone assistance to only basic tax law questions during the filing season and reassigned assistors to work account-related inquiries; 2. launched the “Get Transcript” tool, which allows taxpayers to obtain a viewable and printable transcript on IRS.gov and redirected taxpayers to automated tools for additional guidance; 3. redirected refund-related inquiries to automated services and did not answer refund inquiries until 21 days after a tax return was filed electronically or 6 weeks after a return was filed by paper (unless the automated service directed the taxpayer to contact IRS); 4. limited access to the Practitioner Priority Service line to only those practitioners working tax account issues; 5. limited live assistance and redirected requests for domestic employer identification numbers to IRS’s online tool; and 6. eliminated free return preparation and reduced other services at IRS’s walk-in sites. To address challenges including the requirements of PPACA and other responsibilities, IRS has recently established an agency-wide risk management program office. While IRS previously had a process to manage risk as part of the annual filing season, the agency is now standing up a process to address enterprise risk. Risk management is a tool for assessing risks, evaluating alternative management approaches, deciding which management approaches to take, and then implementing and monitoring the management steps. The goal is develop a mechanism that can be used to inform agency officials and decision makers of potential risks, and evaluate alternative countermeasures to reduce risk being considered along with associated costs. IRS’s ability to identify problems and address them with countermeasures will be crucial in having a successful filing season in 2015. IRS delayed the beginning of the 2014 filing season because the government shutdown compressed the agency’s preparation time.Despite this delay, IRS officials and stakeholders—such as large tax preparation firms—reported relatively smooth processing, in part, because there were fewer tax law changes that resulted in fewer system and form updates compared to previous years. As of September 26, 2014, IRS had achieved an 85 percent e-file rate for individual returns and processed 7 percent fewer paper returns compared to last year (see figure 1). Compared to 2009, paper returns have fallen by 51 percent, from 45 million to 22 million. See appendix I for additional data on return and refund processing. As we have previously reported, continued increases in electronic filing are important because they allow taxpayers to receive refunds faster, are less prone to transcription and other errors, and reduce IRS’s costs. Between fiscal years 2009 and 2014, as seen in figure 1, the number of FTEs devoted to processing decreased by approximately 24 percent— from 11,360 in 2009 to 8,626 in 2014. Since 2003, IRS has reduced the number of paper processing sites from eight to three: Fresno, California; Kansas City, Missouri; and Austin, Texas. According to IRS officials, this consolidation has been a key element in the agency’s ongoing program to streamline operations, improve customer satisfaction, and achieve savings through reductions in rent and labor costs. Between fiscal years 2009 and 2014, as shown in figure 2, Call volume to IRS’s taxpayer service lines varied, and was the lowest in 2014. IRS attributed 2014’s overall decline in call volume in part to smooth tax return and refund processing, which results in fewer phone calls about return errors and delayed refunds. IRS also attributed the decline to its efforts to limit or eliminate assistor-based services and direct taxpayers to self-service options. See appendix III for call volume and telephone service performance and goals since fiscal year 2009. IRS significantly reduced FTEs devoted to answering telephones— from about 9,300 to about 6,900—a 26 percent decrease. IRS answered about 41 percent more calls using automated assistance. Calls answered by IRS assistors fell to its lowest level in 5 years. Answering as many calls as possible through automation is a significant efficiency gain because IRS estimates that it costs 38 cents per call to provide an automated answer, but about $42 per call to use a live assistor—a 27 percent increase over 2013 (see appendix IV).Its costs per call grew over the past year partly because there was a bigger decline in the number of calls answered than the number of FTEs assigned to answer those calls. According to IRS officials, fewer calls were answered using live assistance because of efforts to reduce assistor-based services and because there were fewer PPACA-related calls than expected. In addition, average handle time increased from 11.8 to 12.5 minutes per call (about 6 percent) from 2013 (see appendix IV). These increases highlight the importance of IRS efforts to drive people to other sources such as web-based services. More than a third of calls ended with the taxpayer hanging up, receiving a busy signal, or being disconnected before reaching an assistor. Taxpayers who cannot initially reach IRS may need to spend additional time redialing and waiting for assistance. Further, while taxpayers can obtain tax law assistance through alternative sources—such as tax attorneys or tax preparation firms—taxpayers who have account questions that only IRS can answer must either wait to get assistance via telephone or pursue help from IRS through some other means, such as through sending correspondence to IRS or visiting TACs. Figure 2 illustrates aspects of IRS telephone service. As telephone staffing fell, in fiscal year 2014 IRS’s performance in providing live telephone assistance—referred to as the level of service— remained low compared to recent years at about 64 percent (see figure This is considerably lower than the 82 percent level of service IRS 3).achieved in 2005. It is also well below the 80 percent level of service considered acceptable by the IRS Oversight Board. While during the filing season IRS’s level of service was about 70 percent or slightly higher, this rate also is still well below past performance. IRS has requested additional funding to deliver a targeted level of service. For instance, in its fiscal year 2015 congressional justification, IRS requested a 10 percent increase in FTEs to deliver a telephone level of service of 71 percent. One of IRS’s expected outcomes of its fiscal year 2014 service changes was to improve wait time for telephone service. However, in fiscal year 2014, taxpayers had to wait more than twice as long to speak with someone as they did in fiscal year 2009, when the average wait time was about 9 minutes (see figure 3). Wait times increased in part because IRS devoted fewer FTEs to answering telephones and because the average handle time increased (see appendix IV). This is important because taxpayers must call IRS or visit walk-in sites for certain account-related information that they cannot access online.