Audit: IRS volunteer program often missed the mark

Volunteers in an IRS program that helps low-income families, the elderly and others file their taxes can be inaccurate, a new federal audit has found.

The Treasury Department’s inspector general for tax administration reviewed three-dozen 2010 returns prepared by the agency’s Volunteer System, and found that just 14 were handed in without mistakes.

The audit only examined a sliver of the returns handled by the program and specifically says that the accuracy rate it found should not be used as a broad projection. In all, the volunteer program used more than 87,000 volunteers to file roughly 3.1 million returns in the fiscal 2010.

But Russell George, the inspector general, said he was still very troubled by the report – which found that, in three of the cases examined, volunteers changed factual details on purpose.

“The Volunteer Program plays an important role in helping many taxpayers, notably those who have low incomes and the elderly, disabled, and limited-English proficient, participate in the tax system,” George said in a statement. “Like all taxpayers, they deserve to have their tax returns prepared accurately.”

To conduct its examination, the inspector general had auditors pose as taxpayers with three separate scenarios. The 22 incorrect returns included 15 that would have kept taxpayers from receiving a $3,874 refund. In the other cases, four taxpayers would have been charged roughly $9,800 and another three would have owed an additional $768.

As the audit notes, volunteers in the program know that IRS staff are standing by to review their work. The report also found that volunteers in the program are not given background checks, even though they have access to sensitive taxpayer information.

The inspector general recommended that, among other things, the IRS include anonymous auditor trips as part of its quality controls for the volunteer program.

The IRS agreed with the recommendations. In the agency’s response to the audit, it said it was “deeply troubled by the handful of cases of unscrupulous behavior by volunteers” and reiterated that it took immediate action in those cases. 

In a Wednesday statement, Michelle Eldrige, an IRS spokeswoman, declared that the report "was not statistically valid and focused on uncommon tax scenarios that affect a small fraction of returns handled at these sites."

"The IRS uses a statistically valid process to test volunteer tax preparation and is confident that the vast majority of income tax returns prepared by volunteers are completed accurately," Eldridge added.

This post was updated at 12:53 p.m.

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