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IRS Advised To Identify Timeframe For 'Real Time Tax'
Source:
tax-news.com
- Jun 7, 2013
by Mike Godfrey, Tax-News.com, Washington
06 June 2013
The United States Government Accountability Office (GAO) has reviewed the Internal Revenue Service's (IRS) strategy for exploring "Real Time Tax" that had, in 2011, been indicated as a means of, for example, improving the verification of refunds by matching third party information to income tax returns before they are paid.
The IRS's matching of tax returns to information provided to it by third parties is already regarded as a powerful tool for helping ensure compliance with the tax laws. However, doing so is also a vast undertaking. In tax year 2011, IRS had to match over 140m individual income tax returns against the 1.6bn third-party information returns it received from employers.
The GAO pointed out that, in fact, the IRS receives few information returns before issuing most tax refunds. In 2012, IRS issued 50 percent of tax year 2011 refunds to individuals by the end of February, but had only received 3 percent of information returns. By April, the IRS had issued 82 percent of refunds to individual filers but had received only 30 percent of all information returns.
Most information returns are not received by the IRS until after mid-April each year, and the IRS conducts the first match of tax and information returns in July, with subsequent matches in February and May of the following year. By August 2012, when the IRS completed its first match of information return data to tax returns, it had already issued 92 percent of refunds to individual taxpayers.
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Category: IRS
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