Better taxpayer service among priorities for IRS​

June 22, 2022
By Paul Bonner

The IRS should implement more than two dozen past and new top recommendations by the U.S. Government Accountability Office (GAO), the GAO said in a letter to the Service released Monday.

The letter, one of a number of similar assessments issued to federal agencies, is intended to follow up on the GAO's previous top recommendations in audit reports. As of May 2022, the IRS had 268 GAO recommendations that remained open. Of those, 25 had been designated priority recommendations, meaning the GAO considers them as deserving the Service's attention to significantly improve its operations by saving money, improving management, and preventing abuse and fraud.

Since the GAO issued a similar letter to the IRS in June 2021, the IRS has implemented four of the 25 priority recommendations, and one, concerning cryptoasset reporting, was closed because a new law requiring third-party reporting of certain cryptoasset transactions addressed the issue. To the remaining 20 priority recommendations, the GAO added five more in the letter. The IRS did not agree with all the recommendations.

The recommendations were divided into six categories: improving taxpayer services (eight recommendations); reducing tax fraud and improper payments (six recommendations); improving cybersecurity (one recommendation); enhancing information reporting (five recommendations); improving audit effectiveness (three recommendations); and enhancing IRS staffing and personnel management (two recommendations). With each recommendation, the GAO described what actions remained to be taken.

The recommendations for improving taxpayer service were:

Reduce 2020 return backlog: The IRS should revise its estimates for clearing its backlog of work from the 2020 filing season, the GAO had recommended in a March 2021 report. The IRS disagreed with this recommendation, saying it continues to monitor its backlog of paper returns. Most of these returns have been fully processed, the IRS reported in April 2022, other than some held "for review due to complex errors." The GAO requested further information on these remaining returns.

Reduce correspondence backlog: The IRS should estimate time frames for resolving its backlog of taxpayer correspondence and monitor, update, and publicly report its progress on doing so periodically, the GAO recommended. The IRS agreed. 

  • Establish a dedicated unit to lead efforts to combat business-related identity theft refund fraud;
  • Research, evaluate, and develop expanded third-party information reporting to include more information on sole proprietors' income and expenses;
  • Submit a revised modernization plan to Congress for information returns;
  • Track the results of large partnership audits and analyze them to better plan and allocate audit resources; and
  • Fully implement an agency-wide workforce planning initiative.

The state societies and the AICPA continue to advocate for better IRS services; visit the webpage describing AICPA advocacy efforts to learn more.

— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

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