In a recent speech, IRS Commissioner Doug Shulman indicated that the IRS is also looking ahead, analyzing taxpayer compliance data to recognize trends and improve compliance practices. He explained that the agency created an office of compliance data analytics that helps create hypotheses for compliance improvement, launches pilots to test hypotheses, and then implements enhancements if pilots are successful. The ultimate goal, Shulman said, is to take advantage of technology to modernize IRS processes.
Shulman also described an upgrade to its Customer Account Data Engine to take effect for the 2012 tax filing season. The agency's core account database, which holds basic taxpayer information such as current account balance and payments, will move its batch processing cycle from a weekly or bi-weekly basis to a daily basis, he said. For practitioners, the upgrade means faster refunds for clients, and dealing with IRS agents who have up-to-date information, he explained.
Among IRS efforts to improve compliance through technology, the most striking statistics involve changes to the notice system. In 2001, the IRS issued about 30 million notices. From 2001 to 2009, volume increased 670 percent to 201 million notices. In that same time period, the number of individual and business taxpayers increased by only 10 percent, from 141 million to 155 million.
This year, it's likely that the IRS will exceed the 201 million notices issued in 2009. For practitioners and their clients, this means more contact with the IRS.
© Accounting Today, 2011.