From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Reviewing the 2011 Tax Filing Season

Audio interview by GAO staff with James White, Director, Strategic
Issues

Related GAO Work: GAO-12-176: 2011 Tax Filing Season: Telephone Service
Remains Low and Self-Service Options Can Be Expanded

Released: January 2012

[ Background Music ]

[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the U.S. Government Accountability Office. It's January
2012. Each tax season the internal revenue service processes millions of
tax returns; issues billions in refunds to taxpayers; and provides
taxpayer assistant through its website, on the telephone, and
face-to-face. A group led by Jim White, a director in GAO's Strategic
Issues team, recently reviewed IRS’s performance during 2011 and its
plans for future tax seasons. GAO's Jeremy Cluchey sat down with Jim to
learn more.

[ Jeremy Cluchey: ] Each year millions of taxpayers file tax returns
with IRS and expect refunds. How did IRS do in processing these returns
this year, overall?

[ Jim White: ] Well real quickly, IRS did a good job and they're getting
better at processing tax returns. Providing service to taxpayers,
answering the telephones for example, they're a little more challenged
and we can talk in more detail about both of those. On the processing
side, IRS processed about 140 million tax returns this filing season,
roughly mid-January to mid-April. It's a tremendous accomplishment by
IRS staff. There's about 100,000 employees at IRS and most of them are
very dedicated public service, servants. It's a tremendous
accomplishment to process as many tax returns they do. They issued over
100 million refunds, adding up to over $300 billion during the filing
season.

[ Jeremy Cluchey: ] One of the big factors affecting IRSs processing of
returns is the growing popularity of e-filing. How did that growth look
in 2011?

[ Jim White: ] It was up a lot. Congress has been pushing IRS for years,
for over a decade, to increase e-filing. This year there’s a big jump.
It was up about 13 percent over last year. They're up now very close to
80 percent of all returns coming in are e-filed. This matters to
taxpayers. It enables IRS to process the returns faster. It's much
cheaper to process—it costs about 0.17 cents, I think, to process a
return that's e-filed versus over $3.50 to process one that comes in on
paper. But importantly for taxpayers, e-file returns have fewer
mistakes. If you file on paper, IRS has to transcribe, manually
transcribe, the information off the tax return to get it into their
computer systems. That introduces errors that then have to be corrected
and it causes problems for taxpayers, obviously. If you e-file, that's
all avoided. For 2012, IRS expects, after the initial processing, to be
able to turn refunds around, if they're electronically filed, in four to
six business days, which is quite amazing when you think about the
volume of returns they're dealing with, over 100 million refunds a year.

[ Jeremy Cluchey: ] Your team also looked at how IRS provides telephone
assistance to filers who call with questions. What did you find there?

[ Jim White: ] There IRS faces challenges. They have a tremendous volume
of telephone calls. This past filing season they had 83 million
telephone calls to them. Now they answer a lot of those calls with
prerecorded messages because they're commonly asked questions. But over
20 million of those calls are answered by live assisters. The number of
calls is partly due to the recent tax law changes. Over the last several
years, especially because of the economic issues we've had, there have
been a number of tax law changes made as part of efforts to stimulate
the economy. Each one of those changes generates a lot of questions from
taxpayers; even simple changes generate a lot of telephone calls to IRS.
And IRS quite frankly is somewhat overwhelmed by those calls. 

[ Jeremy Cluchey: ] For taxpayers looking ahead to the 2012 filing
season, what's the bottom line here?

[ Jim White: ] There are several things the taxpayers should think
about. One is e-file that will enable IRS to process your refund faster.
Direct deposit, if you have your refund direct deposited to your bank
you'll get it much faster than if IRS has to mail you a paper check.
Another thing is to check IRSs website—IRS.gov—before calling IRS. You
may be able to find answers to questions there faster than getting in
the queue to wait for telephone assistance at IRS. And the final thing
is to be aware of RAC fees, the refund anticipation check fees. If
you're gonna go that route make sure you understand in advance exactly
what money will be taken out of your account in the form of fees for
that extra service.

[ Music ]

[ Narrator: ] To learn more, visit gao.gov, and be sure to tune in to
the next episode of GAO's Watchdog Report for more from the
congressional watchdog, the U.S. Government Accountability Office.