The IRS stopped mailing out tax forms this year in response to budget cuts,but according to a new government report the agency still needs to work on a long-term strategy for reducing mailing costs.
The Treasury Inspector General for Tax Administration noted that that in response to cost savings proposed in its fiscal year 2011 budget request, the IRS formed task forces and recommended several actions to identify ways to achieve cost savings. However, the task force proposal did not include documentation to show the methodology used to make the proposals, how the estimates were calculated or validated, or how the IRS would measure the results or the cost savings of the proposals.
The task force believed that reducing the mailings of forms instead of eliminating them was a more cautious approach, affecting fewer taxpayers in the short term. Nevertheless, IRS executives decided to eliminate all mailings of tax packages for the U.S. individual income tax return (Form 1040), partnerships, and corporations in fiscal year 2011 in order to meet the cost savings presented in the FY 2011 budget request. But the report noted that this move could increase the IRS’s burden and reduce compliance for those taxpayers who rely on receiving these packages by mail.
As the IRS moves forward with the proposed cost savings or pursues other methods of saving publishing and mail costs, it needs to implement sufficient controls and procedures to ensure the decisions are documented and that the data used are accurate and complete, the report noted. In addition, these controls should be part of a long-term strategy to continually assess publishing and mail costs and identify opportunities for cost reductions and efficiencies.