Still Some Bugs in the IRS e-file System

Two reports by the Treasury Inspector General for Tax Administration (TIGTA) call on the IRS to improve procedures for their responses to e-filed returns. One report calls on the IRS to improve both application processing issues and validation procedures regarding accuracy of returns for a given filing status. The second report cites AICPA concerns about IRS self-help (or FAQ page) for e-filed returns that were rejected by the IRS. TIGTA called for a page on www.irs.gov to provide detailed explanations of rejection codes and steps to resolve these problems. A partial response by the IRS was a self-assistance option for the 13 most common rejection codes.

Given the emphasis that the IRS has placed on e-filing, it is critical that defects in e-filed returns clearly indicate the defect and that preparers can readily determine how to make the return satisfactory. The 13 code provision, while a worthy start, is not sufficient to meet the needs of preparers and taxpayers. Additionally, the accuracy concerns of the first report need attention; public confidence in e-filing will wane if there are questions about accuracy and fairness.