Report: IRS should create more electronic help

The Internal Revenue Service should create self-help tools on its Web site for providers who transmit taxpayers' returns electronically but  are notified that a return is rejected for error, Treasury's inspector general of tax administration (TIGTA) said in a recent report.

A self-help option would help the IRS make sure that it continues to deliver service and support to customers who file returns electronically in addition to avoiding unnecessary burdens on the transmitters and cost to the agency, Michael Phillips, TIGTA’s deputy inspector general for audit, said in the report.

Taxpayers do not directly e-file their returns to IRS but pay electronic return originators or third-party transmitters to do so, and the service's e-filing system conducts upfront automated tax return validity checks. If the return does not pass the validity check, the IRS sends the electronic files back to the transmitter, who is responsible for correcting the problems and resubmitting the tax returns.

The e-file acknowledgment does not provide adequate information about the reason for the rejection, so transmitters must review publications and contact the IRS to obtain a detailed description of what caused the rejection and how to correct it, the report said.

The document noted that the IRS rejected more than 6.8 million e-filed returns it received in 2007 for Tax Year 2006. More than 5.4 million of these returns were later corrected and successfully e-filed, the report said. In 2007, the IRS said it spent more than $3 million providing 154,986 transmitters with telephone assistance to address e-file rejections.

In the long term, Phillips said the IRS should give transmitters a reason for the rejection and information on how to resolve it in the e-file acknowledgment file.

“This would provide customers with one-stop self-assistance,” he said.

The IRS will modify a current system to include information on how to resolve reject conditions and place it on IRS.gov as a short-term solution for self-help, Richard Byrd Jr., commissioner of IRS’ Wage and Investment Section, said in response to the report.
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The service plans to begin implementation in September 2009 of the Modernized E-file Program, which will include reject codes and information for transmitters, Byrd said.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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