Summary: GAO discussed its examination of the Internal Revenue Service's (IRS) tax return processing activities at its 10 service centers and its national office. GAO found that the service centers' activities are running more smoothly than they did a year ago because: (1) the centers have more computer capacity; (2) computer programs are more efficient; (3) communication between the service centers and the national office has improved; (4) service center staffing has increased; and (5) IRS provided more timely staff training. GAO found problems still exist in: (1) IRS ability to reduce its correspondence and unpostable inventories to manageable levels because of large inventory carry-over from 1985 to 1986 and inadequate controls over computer operations; (2) the installation schedule for front-end processors, which indicates that new processors will not be ready for use until the 1988 filing season; (3) funding uncertainty if IRS does not receive the supplemental appropriation it needs for its increased staffing level; and (4) IRS ability to process a larger-than-expected influx of returns in April. GAO found no new systemic problems affecting IRS ability to process returns, and IRS staff contacts with taxpayers have not identified any significant problems to date.
