IRS to Address Problem of Returned Mail

The Internal Revenue Service is taking steps to ease its nagging returned-mail problem, which leaves some $67 million worth of tax refund checks and thousands of audit and collection notices undelivered each year.

The IRS said Monday it will begin using address-change information collected by the U.S. Postal Service to update its database of taxpayer addresses on a weekly basis.

The IRS has been using the Postal Service’s National Change of Address database to update addresses only for general information mailings--such as the 1040 packets Americans receive each year. To have refunds and audit notices mailed to a new address, taxpayers had to file a change-of-address form--Form 8822--with the IRS, or note the new address on their next 1040. Filing an address-change form at a post office wasn’t sufficient.

That caused the agency to miss many of the 800,000 address changes the Postal Service collects each week, and caused thousands of taxpayers to miss refunds, audit notices or other communications that were mailed to a former address.

The IRS wasn’t regularly updating taxpayer “master files” because a federal regulation barred the agency from using any outside source to change a taxpayer’s addresses without written notice.

That rule was recently loosened to allow the agency to use the Postal Service’s database. However, the agency is still restricted to using only this database to update addresses.

IRS officials also noted that if the personal information filed with the post office doesn’t match what’s in the IRS’ files, the agency won’t record the address change. For instance, if a taxpayer uses a middle initial on his or her tax return but not on the Postal Service’s change-of-address card, the IRS won’t automatically match the two. The taxpayer will have to file a Form 8822 or write to the IRS to register the change of address.