IRS Trying To Overhaul Program For Examining Taxpayer Returns

IRS is trying to overhaul its program for examining taxpayer returns, but more must be done to reduce taxpayer burden, the Treasury Inspector General for Tax Administration (TIGTA) said in an audit released on March 24. (Audit Report No. 2011-30-016) As described in the audit, IRS's Correspondence and Discretionary Examination (CDE) Program conducts examinations exclusively by mail to reduce operational costs and minimize the burden on taxpayers. “However, taxpayers have expressed concerns with the length of the examination process, the lack of consideration given to information they send to the IRS, and treatment by IRS employees,” TIGTA said. Auditors determined that IRS's progress to date could ultimately lessen taxpayer burden and increase taxpayer rights and entitlements. Significant improvements were noted in certain areas. “However, audit findings showed that IRS employees did not always adhere to established procedures and/or guidelines when processing correspondence that taxpayers submit for examinations of their tax returns,” TIGTA said. In a statistical sample of cases where taxpayers agreed to additional tax assessments, 28 of 62 cases contained errors. The majority of these errors related to the untimely closing of cases. In cases where the taxpayer did not agree with an additional assessment, agency employees did not always consider the taxpayer's correspondence before closing the case. “It is critical that examiners follow all established procedures, including taking fully into consideration the information that taxpayers provide,” said J. Russell George, the inspector general. The audit is located at http://www.treasury.gov/tigta/auditreports/2011reports/201130016fr.pdf.