Summary: Testimony was given on the problems the Internal Revenue Service's (IRS) 10 service centers experienced during 1985. GAO found that: (1) IRS encountered numerous problems that severely strained taxpayer relations; (2) most of the serious disruptions to service center operations related to the introduction of a new service center computer system and related input systems; (3) IRS has taken, is taking, and plans to take several steps to correct these problems; and (4) these actions, if properly implemented, should alleviate many of the problems. In 1985: (1) more refunds were delayed and interest payments on late refunds increased substantially; (2) many taxpayers filed duplicate tax returns to expedite refund receipt; (3) erroneous notices were issued; (4) correspondence and telephone calls swelled; (5) overtime costs increased; and (6) productivity declined significantly. In 1986, IRS does not anticipate major processing problems because it will: (1) increase its computer capacity; (2) increase the efficiency of its computer programs; (3) increase its training efforts; (4) budget more time for quality assurance functions and improve quality review procedures; and (5) add more returns processing controls. However, GAO is still concerned as to whether: (1) the service centers will be able to reduce their correspondence inventories to manageable levels; (2) strategies to alleviate staffing problems will be effective; (3) sufficient controls have been implemented to ensure timely tax return processing; (4) computer equipment will be delivered in a timely manner; and (5) the service centers' computer equipment will be able to process the workload.
