Tax Administration: Alternative Filing Systems (Letter Report, 10/16/96,
GAO/GGD-97-6).

GAO reviewed the possible benefits, impediments, and costs of
establishing a tax agency reconciliation filing system, focusing on: (1)
the estimated number of taxpayers that would not have to prepare returns
in such a system; (2) the system's operational characteristics; (3)
potential advantages and disadvantages to taxpayers and the Internal
Revenue Service (IRS); and (4) major impediments to and costs in
establishing this type of system under existing federal tax laws.

GAO found that: (1) about 51 million taxpayers, or 45 percent of all
taxpayers who filed 1992 tax returns, met the criteria for having
returns prepared for them under the reconciliation system; (2) the
general operational concept for the reconciliation system includes the
provision and verification of information about taxpayers and their
dependents, IRS preparation of tax returns, taxpayer review of tax
returns, and IRS corrections to tax returns; (3) the reconciliation
system could reduce taxpayer time and cost to prepare returns, reduce
the amount of paper documents that IRS has to process, and reduce IRS
processing and compliance costs; (4) the reconciliation system could
reduce the need for tax preparers, although some taxpayers may require
assistance in providing taxpayer information or reviewing prepared
returns; and (5) major impediments to implementing a reconciliation
system include the amount of time IRS takes to process returns, some
state tax administration systems' dependence on federal tax information,
and taxpayer distrust of IRS to accurately prepare returns and quickly
provide refunds.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-97-6
     TITLE:  Tax Administration: Alternative Filing Systems
      DATE:  10/16/96
   SUBJECT:  Tax returns
             Tax administration systems
             Electronic forms
             Administrative costs
             Tax consultants
             Taxpayers
             Personal income taxes
IDENTIFIER:  IRS TeleFile Program
             IRS Service Center Recognition/Image Processing System
             IRS/SSA Simplified Tax and Wage Reporting System
             Denmark
             Sweden
             IRS Underreporter Program