Review of IRS in ’95 Finds Unjustified Refund Delays, Unanswered Calls

As the Internal Revenue Service prepares for a new tax-filing season, congressional watchdogs are giving the agency poor grades for delayed refunds and unanswered telephone calls last year.

The IRS generally met the goals it set for itself, but “there were several serious problems not obvious from the indicators,” the General Accounting Office said in a report.

As part of an antifraud crackdown, the IRS delayed 7 million of the 74 million refunds it issued through mid-June. About 3 million had missing or invalid Social Security numbers, but the rest did not.

The GAO, Congress’ investigative arm, said it supported checking Social Security numbers to combat fraud, particularly among claimants of the earned income tax credit for the working poor. But the GAO said the IRS did a poor job of informing taxpayers that their checks could be held up even if they used correct Social Security numbers.

“We fail to see how any harm would have been caused by simply alerting taxpayers to the possibility that their refunds might be delayed,” the GAO said.

According to the IRS’ reckoning, it issued refunds claimed on paper returns, on average, in 36 days last year, the same as during the previous year. But, the GAO said, figuring in the returns that were delayed without justification, the average worsened to 38 days.

The IRS says it plans to continue checking Social Security numbers this year but has adjusted its procedures so that few refunds on returns with valid numbers will be delayed.

Meanwhile, the GAO said it is becoming increasingly difficult to get an answer on the IRS’ toll-free question lines. Only 8% were answered last year, down from 21% in 1994 and 58% as recently as 1989.

On the bright side, the accuracy of the answers increased to 91% last year, from 89% in 1994 and 63% in 1989. But early in the filing season, IRS workers demonstrated difficulty in explaining changes in eligibility for the earned income tax credit.

The IRS blames the increase in busy signals on the use of repeat dialers by callers and pointed out that it answered 39 million calls last year, 3 million more than its budget provided. And, it said, access is much better when you factor in that many more callers get through after trying four or five times.

But the GAO said the “IRS’ ability to answer more calls than it estimated . . . means little to the many taxpayers whose calls to the IRS went unanswered or who gave up in frustration after receiving busy signals.”

It said the answer rate on toll-free lines for ordering tax forms was better, 50%, but “there was still much room for improvement.”

IRS spokesman Wilson Fadley said the agency expected to improve its ability to answer taxpayer questions by setting aside a separate toll-free number for people with account problems. It also is encouraging alternative ways to get tax information, such as the agency’s Internet site and tapes available for listening by telephone.

Meanwhile, the congressional agency said the IRS’ computer systems generally worked well last year--with one significant exception. A new “document imaging system,” designed to process Form 1040EZ, the simplest individual return, suffered problems at all five IRS centers where it was used. Two of the centers stopped processing the 1040EZ on the system, while the other three stopped processing for extended periods.

Fadley said that last year was the first for the system and “this year we’re very confident those problems have been resolved.”