question: How does the IRS handle everyone’s tax returns? How do they process returns filed through third parties like TurboTax?
comment: TurboTax just packages your return and files it the same way you would yourself. It doesn't change a thing. The sheer volume of returns means that the majority of them will not, in fact, be viewed. Not closely anyway. The IRS follows an algorithm to predict who is most likely to have filed incorrectly or falsely and they audit when they can. For the majority of 1040ez filers with no outstanding amount returned, you could probably get away with small discrepancies, but it isn't advisable due to random audits.
passages: Tax exempt organizations may file the annual information return IRS Form 990, Form 990-EZ and Form 990-N with a variety of independent tax software providers. As with the business returns, the IRS does not set prices; each e-filing company sets their own.
  
  Section::::Authorized e-filers.
  
  IRS e-filer providers must be authorized by the IRS. The IRS provides a list of authorized e-file providers on some forms. The authorized providers must pass the testing every year. The IRS changes the order of the certified providers list daily for fairness.
  
  Section::::See also.
  
  BULLET::::- Electronic Tax Administration Advisory Committee
  
  BULLET::::- Electronic tax records
   The IRS accepts electronic submission of a variety of tax forms through their IRS Authorized e-file Providers. The IRS offers e-filing to most forms ranging from 1040's to 2290's to 990's.
  
  Section::::Types of e-file providers.:Individual returns.
   Tax returns filed with the IRS are subject to examination and adjustment, commonly called an IRS audit. Only a small percentage of returns (about 1% of individual returns in IRS FY 2008) are examined each year. The selection of returns uses a variety of methods based on IRS experiences. On examination, the IRS may request additional information from the taxpayer by mail, in person at IRS local offices, or at the business location of the taxpayer. The taxpayer is entitled to representation by an attorney, Certified Public Accountant (CPA), or enrolled agent, at the expense of the taxpayer, who may make representations to the IRS on behalf of the taxpayer.
   The IRS maintains several Service Centers at which tax returns are processed. Taxpayers generally file most types of tax returns by mail with these Service Centers, or file electronically. The IRS also maintains a National Office in Washington, DC, and numerous local offices providing taxpayer services and administering tax examinations.
  
  Section::::Tax administration.:Federal.:Internal Revenue Service.:Examination.
   In June 2014, the Return Preparer Office unveiled a new, now voluntary program intended to encourage tax return preparers to participate in continuing education courses on an annual basis — the Annual Filing Season Program (AFSP). In exchange for participation in the program, tax preparers receive an Annual Filing Season Program - Record of Completion, which they can display to stand out from the competition. Participants also receive inclusion in an online IRS public information database called The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, which taxpayers can use to help locate qualified tax preparers in their area beginning January 2015.
   Marc Owens, the former director of the tax-exempt division of the IRS stated that, "there are just so many omissions, that it's hard to say for certain that any of the data on the return is accurate."
   The state forms vary widely, and rarely correspond to federal forms. Tax returns vary from the two-page (Form 1040EZ) used by nearly 70% of individual filers to thousands of pages of forms and attachments for large entities. Groups of corporations may elect to file consolidated returns at the federal level and with a few states. Electronic filing of federal and many state returns is widely encouraged and in some cases required, and many vendors offer computer software for use by taxpayers and paid return preparers to prepare and electronically file returns.
  
  Section::::Capital gains tax.
   Informational returns are prepared by third parties (employers, banks, financial institutions, etc.) and report information to both the IRS and taxpayers to help them complete their own tax returns. The forms report the amounts only on a calendar year (January 1 through December 31) basis, regardless of the fiscal year used by the payer or payee for other federal tax purposes. Taxpayers are usually not required to attach informational returns to their own federal income tax returns unless the form shows federal income tax withheld. Many businesses and organizations must file thousands of information returns per year.
   IRS computers routinely make adjustments to correct mechanical errors in returns. In addition, the IRS conducts an extensive document matching computer program that compares taxpayer amounts of wages, interest, dividends, and other items to amounts reported by taxpayers. These programs automatically issue 30-day letters advising of proposed changes. Only a very small percentage of tax returns are actually examined. These are selected by a combination of computer analysis of return information and random sampling. The IRS has long maintained a program to identify patterns on returns most likely to require adjustment.
   Individuals (with income above a minimum level), corporations, partnerships, estates, and trusts must file annual reports, called [[Tax return (United States)|tax returns]], with federal and appropriate state tax authorities. These returns vary greatly in complexity level depending on the type of filer and complexity of their affairs. On the return, the taxpayer reports income and deductions, calculates the amount of tax owed, reports payments and credits, and calculates the balance due.
   The IRS started electronic filing in 1986 to lower operating costs and paper usage. Since then, additional features have been added. In 1987 Electronic Direct Deposit was added as a form of payment. Milestones have been set and broken throughout the years. In 1990 4.2 million returns were reached and in recent years a record of 1 billion 1040's have been E-filed. E-filing originally used the processing system developed in 1969 by the IRS but, since 2003, the IRS has been developing a new enhanced processing system called CADE.
  
  Section::::Types of e-file providers.
   The IRS is headquartered in Washington, D.C., and does most of its computer programming in Maryland. It currently operates five submission processing centers which process returns sent by mail and returns filed electronically via E-file. Different types of returns are processed at the various centers with some centers processing individual returns and others processing business returns.
   To use IRS Free File, taxpayers must go through the IRS website at www.irs.gov/freefile. There, taxpayers can find a tax software product one of two ways. They can review a list of companies and their offers. Or, they can use a simple web tool that asks a few questions - such as income, state residency and age - and the tool will locate those software products for which taxpayers are eligible. Once a taxpayer chooses a product, they will be directed off the IRS.gov site and onto the Alliance member's website to complete their federal tax return.
   In 1995, the IRS began to use the public Internet for electronic filing. Since the introduction of e-filing, self-paced online tax services have flourished, augmenting the work of tax accountants, who were sometimes replaced.
  
  In 2003, the IRS struck a deal with tax software vendors: The IRS would not develop online filing software and, in return, software vendors would provide free e-filing to most Americans. In 2009, 70% of filers qualified for free electronic filing of federal returns.
   In 2011, 234 million tax returns were filed allowing the IRS to collect $2.4 trillion out of which $384 billion were attributed to mistake or fraud.
  
  Section::::Tax collection statistics.:Outsourcing collection and tax-assistance.
   [[IRS e-file|Electronic filing]] of tax returns may be done for taxpayers by registered tax preparers.
  
  If a taxpayer discovers an error on a return, or determines that tax for a year should be different, the taxpayer should file an amended return. These returns constitute claims for refund if taxes are determined to have been overpaid.
  
  Section::::Tax examinations.
  
  [[File:1920 tax forms IRS.jpg|thumb|People filing tax forms in 1920.]]
   In the United States, taxpayers may file an amended return with the Internal Revenue Service to correct errors reported on a previous income tax return. Typically a taxpayer does not need to file an amended return if he or she has math errors as the IRS will make the necessary corrections. For individuals, amended returns are filed using Form 1040X, Amended U.S. Individual Income Tax Return. In some cases taxpayers may use Form 1045, for example, to carry back a Net Operating Loss to a prior tax period. Form 1045 is generally processed much faster than Form 1040X.
   In its continual effort to enforce the tax laws and identify unreported and under-reported income, the IRS uses tax information returns in electronic cross-matching against income tax returns. Because of this reliance on receiving information returns from the payers of income, the IRS administers a system of assessing monetary penalties, which can be severe, on businesses and other entities that do not file all of the information returns they are required to file, or file the returns with errors that make it more difficult for the IRS to identify the taxpayers who received the income.
  
  Section::::Tax gap.
   Section::::Initiative Background.
   CADE will increase the speed of tax return processing. Under the current system, processing tax returns can take as long as one week and taxpayers have to wait between 14–35 days for the IRS to deposit their refund or mail them a check. Using CADE, tax returns will be generally completed within 24 hours and deposits issued within 48–72 hours. Check mailing times have not yet been determined, but there is expected to be at least a one-week wait.
  
  Section::::Benefits.:Benefits to the IRS.
   Some states have licensing requirements for anyone who prepares tax returns for a fee and some for fee-based preparation of state tax returns only. The Free File Alliance provides free tax preparation software for individuals with less than $58,000 of adjusted gross income for tax year 2010. People who make more than $58,000 can use Free File Fillable Forms, electronic versions of U.S. Internal Revenue Service (IRS) paper forms.
  
  Section::::National registration.
   Intuit, the maker of TurboTax, has lobbied extensively against the IRS creating its own online system of tax filing. As part of an agreement with the IRS, TurboTax allows individuals making less than $66,000 a year to use a free version of TurboTax; a 2019 ProPublica investigation revealed that TurboTax deliberately makes this version hard to find and that it deceptively steers individuals who search for the free version to TurboTax versions that cost. TurboTax has tricked military service members to pay to use the filing software by creating and promoting a "military discount" and by making the free version hard to find when many service members are in fact eligible to use the software for free. Intuit is reportedly under investigation by New York’s Department of Financial Services.
   In November 2009, Congress adopted a provision that required federal tax return preparers to use IRS e-file to submit returns. Beginning in 2012, if a preparer expected to prepare and file eleven or more individual tax returns, he or she was expected to electronically file the returns. In order to e-file, a preparer must become an Authorized IRS e-file Provider. Preparers were to be able to use IRS e-services to submit an application.
  
  Section::::Return Preparer Office.
   BULLET::::- Google BigQuery, which has IRS Form 990 data as a public dataset. This is based on statistics published by the IRS from 2012 to the most recent completed year.
  
  BULLET::::- Charity Navigator, which maintains a "990 Decoder" website with over 2.5 million tax returns. This is based on forms filed from 2011 to the present, and uploaded by the IRS to Amazon S3.
  
  BULLET::::- Citizen Audit provides PDF copies of annual returns, signatures not blacked out.
  
  BULLET::::- Economic Research Institute provides PDF copies of annual returns, signatures not blacked out.
   The IRS, state, and local tax authorities may examine a tax return and propose changes. Changes to tax returns may be made with minimal advance involvement by taxpayers, such as changes to wage or dividend income to correct errors. Other examination of returns may require extensive taxpayer involvement, such as an audit by the IRS. These audits often require that taxpayers provide the IRS or other tax authority access to records of income and deductions. Audits of businesses are usually conducted by IRS personnel at the business location.
  