Chapter 2 Results of IRS' Nonfiler Strategy available information. IRS released the refund in cases where there was no filing requirement or the taxpayer established that a significant hardship existed. Otherwise, the refund was applied to the balance due on any delinquent return(s), with any remaining balance sent to the taxpayer. IRS data show that the refund hold program in 1994 resulted in the receipt Was the Nonfiler According to IRS, the Nonfiler Strategy was generally a success. In reaching that conclusion, it pointed to several aspects of the Strategy, some of which were discussed in the preceding section. Among other things, IRS cited (1) a decrease in the nonfiler inventory, (2) creation of the refund hold program, (3) elimination of unproductive cases that allowed IRS to focus its enforcement resources more effectively, (4) elimination of backlogs in the automated SFR inventory, (5) increases in the number of returns secured from and dollars assessed against individual nonfilers during the 2 years of the Strategy (fiscal years 1993 and 1994) compared with the year before the Strategy (fiscal year 1992), and (6) a closer working relationship between IRS and outside stakeholders and professional associations. We assessed the results of the Strategy by looking at the key performance "Unknown nonfilers are individuals or businesses that IRS did not realize were nonfilers until they filed an overdue tax return. Table 2.2: Number of Returns Secured Chapter 2 Results of IRS' Nonfller Strategy percent in fiscal year 1993 and 4.2 percent in fiscal year 1994. Whatever the Net Tax Assessments and IRS officials responsible for the Nonfiler Strategy said that IRS' objective was to bring nonfilers into compliance rather than to generate revenue. Accordingly, collection of additional revenues was not a specific goal of the Strategy. Nevertheless, IRS' key performance indicators for the Nonfiler Strategy included (1) dollars assessed and (2) dollars collected at the time the return was secured. As shown in table 2.3, if constant 1994 dollars are used, (1) net assessments' decreased from fiscal year 1992 to fiscal year 1993 and then increased in fiscal year 1994; and (2) fewer dollars were collected with the return, in absolute numbers and as a percent of net assessments, in 1993 and 1994 than in 1992. The “dollars collected with return" indicator does not reflect the total amount eventually collected from the nonfilers; only the amount collected at the time the return was secured. Additional amounts may have been collected later through installment agreements, but IRS did not track that information. *IRS defines net dollars assessed as gross dollars assessed less any prepaid credits (e.g., withheld taxes) plus any dollars refunded or offset. For example, in one of our sample nonfiler cases, the net assessment was $0, based on a $133 gross assessment, less a $385 withholding credit, plus a $252 refund. |