IRS Chief Denies Tales of Missing Tax Returns

The commissioner of the Internal Revenue Service on Wednesday angrily denounced as “sheer, utter nonsense” reports that overworked IRS employees in Philadelphia have intentionally shredded or lost as many as 20,000 income tax returns and checks.

Commissioner Roscoe L. Egger Jr. said that an internal investigation turned up no evidence of employees destroying tax returns, which is a criminal offense. “If any such number was missing, we’d know.”

In an appearance before the National Press Club, Egger called on the accusers, who have described themselves as IRS employees, to come forward. He said their anonymous reports are “about as constructive as yelling fire in a theater.”

An aide to Sen. John Heinz (R-Penn.) said in an interview Wednesday that more than 25 persons have called his office anonymously to report such allegations and a Philadelphia newspaper reported recently that tax returns were found in a restroom and above ceiling tiles at the local IRS office.

Computer Tape Lost

Earlier this year, employees at the Philadelphia center lost a computer tape listing 28,000 transactions, which Egger termed an “isolated” human error. The center accounts for about $60 billion in taxes from 13.5 million returns.

Heinz has asked the General Accounting Office to investigate the reports of destroyed returns and to suggest within three weeks how the IRS can solve problems like jammed refund hot lines that are plaguing taxpayers. The commissioner suggested that taxpayers expecting refunds wait eight to 10 weeks before calling the IRS to inquire about them.

One caller told a Heinz aide that it took a year and 300 phone calls to obtain a refund and that, when it finally arrived, no interest had been included.

Two- to four-week delays nationwide in receiving refunds have been created by “glitches” in a new $103-million computer system that was installed at 10 processing centers several months behind schedule, Egger said. The IRS said 66% of all returns have been processed so far this year, about eight days behind the pace reported at this time last year, when 81% had been processed.

Fresno Center’s Rate

In California, the Fresno processing center reported one of the highest completion rates in the nation so far this year. As of Friday, it had processed 78% of its returns.

Despite the nationwide delays, Egger predicted that taxpayers who file returns by the April 15 deadline still will receive refunds by June 1. However, he noted that the worst crunch is yet to come.

The IRS must pay 13% interest on refunds not delivered by June 1, which amounted to more than $200 million in late fees last year, the majority going to businesses receiving tax refunds claimed in a previous year.