By Frank Byrt
It looks like the last-minute run-up to the April 15 tax deadline has been particularly frantic for accountants, taxpayers, and the IRS this year. "As of March 9, the IRS had received more than 65 million tax returns, down from the nearly 72 million returns filed during the same period in 2012", TIGTA said in an April 11 report, Interim Results of the 2013 Filing Season. TIGTA attributes the delay to the last-minute changes to the tax code and to IRS staff reductions.
That means there likely was a huge wave of returns being filed close to the deadline. The IRS said it expects to process 148.5 million individual income tax returns during calendar year 2013. Of those, it estimates approximately 28.4 million will be paper returns and 120.1 million will be filed electronically.
The IRS is also behind last year's pace. TIGTA said the IRS "issued more than 53 million refunds totaling nearly $155 billion as of March 9, compared to 59.2 million refunds totaling more than $174 billion in 2012. The average refund decreased slightly to $2,894 in 2013, compared with $2,944 during the same period last year."
"This filing season is a particularly challenging one for the IRS", said J. Russell George, Treasury Inspector General for Tax Administration. "The IRS had a very tight time frame in which to update tax forms, instructions, and publications and reprogram its computer systems before accepting returns."
Although most taxpayers were able to file their tax return starting January 30, some had to wait until March 4. The IRS began accepting all individual tax returns on March 4.
"Enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013, reduced the time the IRS had to implement the tax changes the law contained", TIGTA said.
"In addition, the Budget Control Act of 2011 required federal agencies, including the IRS, to implement mandatory budget cuts if Congress did not enact a Fiscal Year 2013 budget by March 1", TIGTA said. "On March 5, the IRS announced that it would have to make significant cuts in all major programmatic areas, including customer service, for the remainder of the fiscal year."
Of the 65 million tax returns received, about 59 million, or 91 percent, were filed electronically, down from 64 million e-filed in 2012, TIGTA reported. This is the first year in which the IRS has relied solely on the Modernized e-File (MeF) system to receive and process individual tax returns.
The TIGTA report was prepared to provide interim information only; therefore, TIGTA made no recommendations in the report. A final report that reviews the entire 2013 filing season will be issued in September.
Other significant findings of the TIGTA report include:
- Taxpayer Assistance Centers: Due to reduced staffing, the IRS planned to assist only 6 million taxpayers at its walk-in offices in 2013, 11.8 percent fewer than in 2012.
- Toll-free telephone assistance: As of March 9, IRS assistors had answered 8.3 million calls and achieved a 67.8 percent level of service, compared to 66.8 percent in 2012.
- Internet self-help assistance: As of March 9, the IRS reported a 21.1 percent increase in the number of visits to IRS.gov website over the same period in 2012. It also reported a 41.7 percent increase in the number of taxpayers obtaining their refund information online via the "Where's My Refund" option found on IRS.gov.
- Social media usage: The IRS is offering more self-assistance options through various forms of social media, including its mobile application IRS2Go, YouTube, Twitter, Tumblr, and Facebook. As of March 21, the IRS had more than 1.9 million new downloads of its IRS2Go mobile application, more than 1.5 million new views of IRS YouTube videos, and a 31 percent increase in Twitter followers.
- Fraudulent refunds: The IRS is continuing to expand its efforts to detect tax refund fraud. As of March 9, the IRS reported that it identified 220,821 tax returns with $1.86 billion claimed in fraudulent refunds and prevented the issuance of $1.79 billion (96.2 percent) of the fraudulent refunds. This includes 85,385 fraudulent tax returns involving identity theft, and 87,817 potentially fraudulent tax returns filed by prisoners for screening.
- Earned Income Tax Credit: Many paid tax return preparers continue to be noncompliant with Earned Income Tax Credit (EITC) due diligence requirements. As of March 7, TIGTA identified 80,585 paid tax return preparers filing 616,622 tax returns claiming nearly $1.9 billion in EITC without the required Form 8867 attached to the tax return. This equates to more than $306 million in penalties that can be assessed by the IRS.
- American Opportunity Tax Credit: The IRS is continuing to issue potentially erroneous education credits. As of March 7, TIGTA identified 18,061 taxpayers who filed tax returns claiming education credits totaling $30 million for students who were unlikely to be enrolled in a four-year college degree program. In addition, an error in tax preparation software packages caused further delays for individuals claiming the credit.