The Internal Revenue Service is one of the world's most efficient tax agencies, collecting trillions of dollars each year at a cost of less than fifty cents for every one hundred dollars collected. A significant part of that efficiency comes from the way we process tax returns-a process we call the Pipeline.
The primary purpose of the Pipeline is to transfer taxpayer information from paper to the computer. Let's take a streamlined look at how work flows through the Pipeline.
Incoming mail is automatically sorted and opened by a machine that reads the bar coded envelopes that identify the types of returns inside. The machine separates returns with payments from those without payments by detecting magnetic ink on enclosed checks.
Returns are extracted from their envelopes and further sorted by type by employees using unique workstations called Sorting Tables.
Before continuing their trip through the Pipeline, returns with payments are routed through a Remittance Processing System to ensure deposit of revenue within twenty-four hours.
Returns are then batched into official units of work called blocks, containing from fifty to four hundred documents. Individual blocks containing the same types of returns are combined, placed on carts and logged into a computer system which tracks their movement through the pipeline.
Tax Examiners correct taxpayer errors, assign codes that will facilitate data entry and, if necessary, correspond with the taxpayer to request additional forms or information.
A Document Locator Number, used to identify and locate a document anywhere within the Service, is stamped on each return. It indicates the processing center, type of return, Julian date, block and sequence number and processing year.
Data Transcribers input tax return information into the computer. Portions of returns are re-entered into the system by a second transcriber to verify the original entry of the return data.
The return data is then transmitted to the Martinsburg Computing Center, where it is subjected to
math error and validity checks before attempting to post to the IRS Master File. If no errors or inconsistencies are found and all requirements are met, refunds or balance due notices are issued to the taxpayer.
Return data with errors or inconsistencies is transmitted back to the processing centers where tax examiners make corrections using an Error Resolution System. The corrected return data is transmitted back to the computing center and attempts to post to the IRS master file.
The original paper returns are then stored in Submission Processing Center files until they are retired to a Federal Record Center.
Let's review the pipeline process. Mail is opened. Returns are sorted and payments are deposited. The returns are coded, edited and numbered. Return data is entered into the computer. Validity checks are run and errors are corrected. Valid transactions are then posted to the IRS Master File. Refunds or balance due notices are issued to the taxpayer. The paper returns are retired to Federal Record Centers.
E-file, the Service's electronic alternative to paper tax returns, bypasses most of the Pipeline process. Taxpayers can use a tax preparation service or software on their personal computer to file their taxes electronically. Since return information is already computer formatted, the IRS can quickly and efficiently check for errors and transmit the data to either the Martinsburg Computing Center for posting to the Master File or to the preparer for correction. E-file saves both the Service and the taxpayer a lot of time and effort.
The use of e-file increases every year but the Pipeline continues to play a vital role in the IRS. The most important part of the Pipeline process is each employee's dedication to quality. An error made in one section of the Pipeline will impact co-workers in another section. Quality work keeps the Pipeline flowing, allowing us to fulfill the IRS mission of providing America's taxpayers with top quality service.