IRS Response to Audited Taxpayers Just too Slow: GAO

Rather than 30 to 45 Days, Several Months Is More Common

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GAO Finds IRS Response to Letters From Audited Taxpayers Just Taking Too Long. Joe Raedle/Getty Images

The IRS now conducts most of its taxpayer audits by mail. That’s the good news. The bad news, reports the Government Accountability Office (GAO) is that the IRS misleads audited taxpayers by providing them with wildly unrealistic time frames on when it will respond to their correspondence.

According to the GAO’s investigation, audit notices promise taxpayers that the IRS will respond to correspondence from them within “30 to 45 days,” when in reality it consistently takes the IRS “several months” to respond.

Delays like that merely worsen the IRS’s rapidly falling public image and trust, while doing nothing to close the nation’s tax gap, which drives up taxes for all Americans.

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The GAO found that as of early 2014, IRS data showed that it had failed to respond within its promised 30 to 45 days to more than half of correspondence from audited taxpayers. Many times, refunds are not issued until the audit is completed.

Causes Calls They Just Can’t Answer

When interviewed by GAO investigators, IRS tax examiners said the delayed responses resulted in “taxpayer frustration” and a raft of “unnecessary” calls to the IRS from taxpayers. Even more bothersome, the tax examiners who answer those so-called unnecessary calls said they could not answer the taxpayers, because they actually had no idea when the IRS would respond to their letters.

“The taxpayers cannot understand why IRS would send a letter out with such unrealistic time frames and there is no acceptable way we can explain it to them,” one tax examiner told GAO.

“That is why they are so frustrated. It puts us in a very awkward and embarrassing situation…. I try to gain control of the situation and tell the taxpayer I understand the frustration so that he will calm down so we can make the phone call productive, but this takes time and wastes time for both the taxpayer and me.”

GAO’s Questions the IRS Could Not Answer

The IRS shifted from its old face-to-face, sit-and-suffer audits to mail-based audits in 2012 with implementation of its Correspondence Examination Assessment Project (CEAP) claiming it would reduce taxpayer burden.

Two years later, the GAO found that the IRS has no information showing how or if the CEAP program had affected taxpayer burden, tax collection compliance or its own costs of conducting the audits.

“Thus,” reported the GAO, “it is not possible to tell whether the program is performing better or worse from one year to the next.”

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In addition, the GAO found that the IRS had developed no guidelines on how its managers should use the CEAP program to make decisions. “For example, IRS did not track data on the number of times a taxpayer called IRS or sent documents,” reported the GAO. “Using incomplete information limits insights on the additional revenues identified from IRS's audit investments and on how much burden the audits impose on the taxpayers.”

IRS is Working On It, But

According to the GAO, the IRS created the CEAP program based on five problem areas it had identified involving communications with taxpayers, the audit process, expedited audit resolution, resource alignment, and program metrics.

Even now, CEAP project managers have 19 program improvement efforts either finished or underway. However, the GAO found that the IRS has yet to define or track the intended benefits of its program improvement efforts. “As a result,” said the GAO, “it will be difficult to determine whether the efforts successfully addressed the problems.”

A third-party consultant hired by the IRS to study the CEAP program recommended that IRS create a “tool” for better balancing program resources between handling calls from audited taxpayers and responding to correspondence from them.

Also See: IRS At Last Adopts a Taxpayer Bill of Rights

According to the GAO, IRS officials said that while they would “consider” the recommendations, they had no plans for how or when.

“Thus, it will be difficult to hold IRS managers accountable for ensuring that the recommendations are completed in a timely manner,” stated the GAO.