IRS Volunteer Program Needs Database Fix

The Internal Revenue Service’s new database for keeping track of the performance of organizations that provide free tax preparation services to low-income and elderly taxpayers leaves something to be desired, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that while the new database successfully integrates older legacy systems used by the IRS to collect data on volunteer tax preparation organizations, it also leaves room for error because the data must be manually entered, creating problems with timeliness and accuracy. TIGTA’s new report follows up on a 2008 review.

The IRS was involved in a high-profile scandal in 2009 when a pair of conservative activists posing as a pimp and his underage prostitute visited several offices of the community organizing group ACORN asking for help with preparing their taxes and finding housing. They surreptitiously videotaped their encounters with several ACORN employees who offered suggestions. Excerpts from the video were widely circulated on conservative Web sites and replayed cable TV news channels. The outcry forced the IRS to drop ACORN as a provider in its Volunteer Income Tax Assistance program and the group eventually disbanded after Congress cut off funding (see IRS Drops ACORN).

The new volunteer database at the IRS is able to generate more than 100 management reports, including reports on the quality of tax preparation at individual volunteer program sites, TIGTA found.  However, the database does not capture information needed to compare expectations to accomplishments and requires that information from forms be manually input.

“Since more than 88,000 volunteers prepared a combined 3.1 million Federal tax returns in Fiscal Year 2011, this new database will benefit not only the IRS but also those taxpayers who rely on volunteers to prepare their tax returns,” said TIGTA Inspector General J. Russell George in a statement. “Our report makes specific recommendations on further improvements that should be made.”

As part of its review, TIGTA found that 600 forms related to 135 volunteer program sites showed that 91 of the sites (67 percent) contained data on at least one of the three forms reviewed that did not match the information contained on the database, known as the Stakeholder Partnerships, Education, and Communication Total Relationship Management System, or SPECTRM.

TIGTA recommended that the IRS consider modifying the database to accept uploads of electronic forms and require that volunteer program information entered into the database be periodically reviewed for timeliness and accuracy.  IRS officials agreed with the recommendations.