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October 29, 2013


Scanning Errors and Correspondence Audits, Part 1

In the hit TV series “Mad Men,” set in the early 1960s, it is a very big deal when the advertising office — in state-of-the-art New York City — gets its first copy machine. The bulky machine operates as both a cultural curiosity and a not-so-subtle sign that things are changing.

Today, of course, a scene like that is a period piece. The digital revolution has made it possible to scan documents into digital form. The practice of doing that has become widely accepted, and that certainly includes acceptance by the IRS.

A new report from the Treasury Inspector General for Tax Administration (TIGTA) points out, however, that the IRS has been having problems with the accuracy of scanned documents. We will discuss that problem in this post.

The TIGTA report found that when the IRS scans paper from correspondence from taxpayers, the ensuing digital forms are frequently miscoded or not scanned properly. Not surprisingly, this failure to scan properly can then lead to various errors and delays.

The IRS has tried to automate the process of scanning correspondence. Such correspondence is of course the main means for conducting correspondence audits. Correspondence audits are a type of tax audit that does not rely on in-person visits by an IRS agent.

Instead, such audits involve requests for information by the IRS that taxpayers respond to. IRS requests often take the form of information document requests, which are known in tax lingo by the abbreviation IDR.

In next week’s post, we will look in more detail at the scanning problems that TIGTA found. 

Source: Accounting Today, “IRS Needs to Fix Taxpayer Correspondence Scanning,” Michael Cohn, Oct. 26, 2013