By Ken Berry
There's more troubling news for the IRS: A new report released by the Treasury Inspector General for Tax Administration (TIGTA) points out accuracy problems in tax returns prepared for certain taxpayers as part of a special volunteer program (TIGTA Ref. No. 2013-40-110).
The IRS Volunteer Program provides no-cost tax return preparation and electronic filing services to low-to-moderate income families, the elderly, disabled individuals, and limited English-proficient taxpayers. However, ensuring that tax returns are properly prepared remains a challenge for the volunteers. After it encountered problems last year, TIGTA conducted a follow-up audit of the program to determine if taxpayers were receiving quality services, including accurate preparation of tax returns.
TIGTA says the IRS continues to emphasize to volunteers the need to carefully review intake/interview sheets with taxpayers during the tax return process. In addition, training and resource materials have been adjusted to clarify and underscore the due diligence obligations of volunteers. Nevertheless, TIGTA still discovered accuracy problems with some of the tax returns prepared for TIGTA auditors making anonymous visits to the Volunteer Program sites.
Of the thirty-nine tax returns for the 2012 tax year prepared for auditors during the 2013 tax filing season, twenty (or 51 percent) were prepared correctly and nineteen (or 49 percent) were prepared incorrectly. This is a two percentage-point increase over the 49 percent accuracy rate TIGTA reported for the same number of returns filed in 2012.
What were the inaccuracies attributed to? TIGTA says the nineteen incorrect tax returns resulted from incorrect application of the tax law, insufficient requests for information during the intake/interview process, or lack of adherence to quality-review requirements.
The IRS continues to refine its anonymous shopping procedures to evaluate the accuracy of tax returns prepared at its Volunteer Program sites. It reported a 49 percent accuracy rate for the forty-three tax returns prepared, compared with the 51 percent accuracy rate TIGTA found. The IRS' anonymous reviews also indicate the same reasons for inaccuracies that TIGTA has listed.
"Ensuring that tax returns are accurately prepared by volunteers remains a challenge for the IRS", said TIGTA Inspector General J. Russell George in a prepared statement. "When volunteers use established interview and quality-review processes, the accuracy of the tax returns they prepare improves."
In the new report, TIGTA recommends the IRS ensure that volunteer return preparers, quality reviewers, and site coordinators annually complete intake/interview and quality-review training. The IRS has agreed to these recommendations and plans to require that all volunteer instructors, return preparers, quality reviewers, and site coordinators complete intake/interview and quality-review training annually.
"A fundamental objective of the IRS is to promote voluntary participation within the tax system", wrote Peggy Bogadi, commissioner of the IRS's Wage and Investment Division, in response to the report. "The volunteer programs sponsored by the IRS help achieve that objective by providing tax return preparation and electronic filing services at no cost to those segments of the population most in need." According to Bogadi, more than 91,000 volunteers assisted more than 3.3 million individuals with preparation and filing of federal and state income tax returns during the 2012 tax filing season.