How the 'tax factory' gobbles up your '82 return
Philadelphia — If you think filling out forms is taxing, you should see the tedium at an IRS center One of life's little mysteries is what happens to your federal tax return after it gets dropped in the mailbox.
If you live in one of three mid-Atlantic states or the District of Columbia, your return's fateful journey through the federal tax bureaucracy starts at a sprawling gray building in northeast Philadelphia whose industrial park neighbors include a Nabisco cookie plant.
What employees call the ''tax factory'' - and nine other Internal Revenue Service centers like it scattered around the United States - are being inundated with federal tax returns. Postal Service trucks start pulling through a barbed wire-topped gate here at 3 a.m. This week alone they'll disgorge an estimated 2. 5 million returns to be opened and scrutinized.
Besides being the object of taxpayer curiosity, Internal Revenue Service centers are the focus of some controversy. The centers rely heavily on a computer system designed 20 years ago which has been prone to repeated breakdowns, delaying the processing of returns.
IRS Commissioner Roscoe L. Egger Jr. has started a major program to bring the computers up to date. ''We are well on our way to reequipping all our service centers,'' he says. But he admits the IRS system will not approach state of the art ''for another 18 months to two years.''
And other IRS officials add that by the time the new computers are fully operational, they will already be at least half a generation behind the most up-to-date equipment at private companies.
While computers handle much of the required number crunching, 2,100 workers are also required in Philadelphia alone to process the mountains of paper, which punctuate a working space as large as six football fields. And although it may be small consolation for taxpayers, the drudgery of preparing a tax return is fully matched by the tedium of processing it.
For example, roughly 15 employees here spend their shift doing nothing but stamping an identifying number on each return. And some 200 workers spend all day punching data from tax returns - 45 or so an hour - into a computer terminal.
Some IRS employees do have a mischievous streak, despite an image of being steely-eyed individuals whose biggest joy is finding a misplaced decimal point. For instance, data-entry workers found that by repeatedly hitting a certain key on their computer terminals, they could cause the computer system to shut down.
''We have got a computer program now'' that identifies such game players, says Michael Kuntz, chief of the center's management staff.
The computer is also used to keep workers from browsing through the tax returns of other center employees or of famous people. The computer is programmed so that most employees cannot call up a co-worker's return. And an electronic record is kept of what tax documents an employee does examine to discourage unnecessary viewing of returns of prominent individuals - including Vice-President George Bush and several Cabinet members - which come here.
A return's journey through the center starts when a Postal Service truck backs into the loading dock in the wee hours of the morning. Soon the large gray trays containing hundreds of envelopes are wheeled from the loading dock into a sorting room.
A high-speed sorter then opens the envelopes at a clip of 30,000 an hour. At the same time, the machine ''reads'' the bar code printed on envelopes and shoots them to one of 15 bins according to the kind of return they contain - business, 1040, 1040 with farm income, and so forth.
The IRS center first gets a look at returns in a vast yellow room crammed with 101 sorting tables. They're jammed with in-boxes above and below the table level. Workers break down returns into 12 more-precise categories, including whether or not they contain money. Then each type of return is assembled into blocks of 100.
The government is eager to get your funds into its pocket. So any return containing a check is next sent to a remittance-processing area. Some 20 individuals type the amount of your check and identifying information into a computer terminal.
As a double check, the same data are also entered by a separate group of workers sitting at more complex machines. These also number each return, endorse checks, and add up the total amount of money sent in with a block of returns. Returns that do not contain checks are numbered in a different location. For one typical block here the 100 returns added $148,942.37 to Uncle Sam's coffers, with individual tax payments ranging from less than $30 to more than $35,000.
During the mid-April filing peak, it takes four to five days after a return has arrived at a center for a check to be endorsed and sent to the local Federal Reserve Bank, Mr. Kuntz says. So a local bank will probably have subtracted the tax payment from your account within 10 days from when the check reached the IRS loading dock.
Not all of the numbers you laboriously entered on federal tax forms are actually punched into the IRS data base. So on its next stop, some key information on a return - like the number of deductions - is written in code on the return in brown ink. At the same time the return is checked for a signature and all supporting schedules and attachments.
On each of the two main shifts at the center, roughly 200 people spend their day punching the coded information into a computer terminal. To make sure only correct data get into the system, numbers from each return are punched in by two separate operators. Only when the numbers match will the information be added to your file.
A separate pair of computers will take a suspicious look at the coded data from your tax return. The first examination comes from the computer at the individual service center, which checks for math errors and consistency with the law. For example, it ensures that a single taxpayer does not figure his taxes using the married taxpayer's table.
When a return contains an error, the center's computer spits out a page of information to help IRS employees spot the problem. If the mistake was made by the taxpayer, rather than the IRS, the individual will get a computer-generated letter notifying him what change is being made in the return. Recently almost 28 percent of the 1040 forms filed at the Philadelphia center have contained errors.
Once the service center computer has accepted the data on an individual return, the information is sent on magnetic tape to the IRS computer center at Martinsburg, W.Va. The Martinsburg computers decide whether a refund should be issued. Refunds are currently going out about seven weeks after returns are filed and are running 6.3 percent below last year's in size.
The central computer also uses a complex formula to decide whether your return is a good candidate for an audit. ''We have been able to improve our audit scoring system to the point'' that the government comes up empty-handed after an audit only 22 percent of the time, Commissioner Egger says. But even if your return makes the central computer suspicious, chances of being audited are slim. Mr. Egger admits that this year the IRS will audit only 1.2 million individual returns, out of 95.9 million it expects to receive.