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Key Tax Provisions Were Implemented Correctly for the 2014 Filing Season

Key Tax Provisions Were Implemented Correctly for the 2014 Filing Season

As of May 2, 2014, the IRS Received More than 135.5 Million Individual Income Tax Returns

WASHINGTON – The Treasury Inspector General for Tax Administration (TIGTA) released its annual review of the Internal Revenue Service’s (IRS) performance during the 2014 Filing Season. The objective of this review was to evaluate whether the IRS timely and accurately processed individual paper and electronically filed tax returns.

The closure of Government operations between October 1 and October 16, 2013 reduced the time the IRS had available to implement tax law changes and bring tax return processing systems online. As a result, the IRS delayed the start of the filing season from January 21 to January 31, 2014.

“The IRS’s performance during the 2014 Filing Season reflects its ability to process the majority of tax refunds timely, its continuing efforts to combat tax-related identity theft, and its increased emphasis on using the Internet to assist taxpayers,” said J. Russell George, Treasury Inspector General for Tax Administration. “However, more still needs to be done to ensure that all customer self-help tools accurately provide the assistance taxpayers need.”

TIGTA found that as of May 2, 2014, the IRS received more than 135.5 million tax returns, up from the more than 133.8 million tax returns filed during the same period in 2013. More than 117 million (86.4 percent) were electronically filed, up 2.9 percent from the more than 113.6 million that were e-filed in 2013. TIGTA also found that the IRS issued more than 99.9 million refunds totaling nearly $269.5 billion, compared to more than 99.5 million refunds totaling more than $264.4 billion in 2013.

The average refund in 2014 was $2,696, up 1.5 percent from the average $2,656 refund in 2013.

TIGTA’s review of the tax provisions that created additional taxes or modified existing tax provisions for the 2014 Filing Season found that these key provisions were correctly implemented. However, TIGTA did identify a problem in which some taxpayers’ nonrefundable credit claims were being improperly reduced due to employee error.

The IRS reported that it identified and confirmed 236,313 fraudulent tax returns involving identity theft as of April 30, 2014. Overall, the IRS identified 268,233 tax returns with more than $1.48 billion claimed in fraudulent refunds and prevented the issuance of more than $1.32 billion (88.9 percent) of the fraudulent refunds it identified. The IRS also identified 63,087 potentially fraudulent tax returns filed with prisoner Social Security Numbers for screening.

TIGTA also found that some taxpayers and return preparers continue to misuse the split refund opton to direct a portion of a tax refund to a preparer for payment of services. In addition, TIGTA found that some paid tax return preparers continue to be noncompliant with the Earned Income Tax Credit due diligence requirements, but the number has decreased substantially when compared to previous filing seasons.

Other significant findings:

  • Customer Self-Service Options Continue to Expand: The IRS continues to offer more self-assistance options that taxpayers can access 24 hours a day, seven days a week. However, the IRS did not always ensure that the self-help tools were updated with the most current tax information before the start of the filing season.
  • Declining Toll-Free Telephone Assistance: The IRS reported answering more than 41.5 million phone calls from taxpayers on its toll-free assistance lines through May 3, a decline from the nearly 55.4 million answered in 2013.
  • Declining Assistance at the Taxpayer Assistance Centers (TACs): The IRS estimates that the number of taxpayers it will assist at its TACs will decrease this fiscal year. The IRS assisted more than 6.5 million taxpayers in Fiscal Year 2013 compared to an estimated 5.6 million taxpayers in FY 2014, a 14 percent decline. This is attributable to the elimination and reduction of services provided at the TACs due to budget cuts and an increased emphasis of pushing taxpayers to other service channels, such as the IRS’s website.

TIGTA recommended that the IRS: review the 308,986 tax returns for which it appears the split refund option was used to inappropriately direct a portion of the tax refund to the tax return preparer; implement computer programming to systemically ensure that taxpayers’ claims for nonrefundable credits are allowed when applicable; ensure that Earned Income Tax Credit due diligence penalties are assessed on all paid tax return preparers who do not comply with the due diligence requirements; and, ensure that YouTube videos are updated with the most current tax information.

The IRS agreed or partially agreed with three of TIGTA’s four recommendations. The IRS disagreed with TIGTA’s recommendation to pursue due diligence penalties on those preparers who provide an incomplete Form 8867, Paid Preparer’s Earned Income Credit Checklist.


Source: US Department of the Treasury Inspector general news release at http://www.treasury.gov/tigta/press/press_tigta-2014-33.htm and report at http://www.treasury.gov/tigta/auditreports/2014reports/201440077fr.pdf


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