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Published: Friday, 4/15/2005

Mailing return is just 1 step in process

BY MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITER

Millions of Americans probably will heave a sigh of relief today as they drop this year's tax returns into the mailbox.

But where exactly do those returns go?

For the 5.5 million returns that will be filed this tax season by Ohioans, the answer is Memphis. There, 1,100 full-time and seasonal employees are working day and night shifts, five days a week, to process the returns, both those sent by mail and those sent electronically.

For Michigan, which will have 4.7 million federal returns, the paper forms will be handled by a Kansas City center, and electronic filings will go to the Memphis center.

The Internal Revenue Service estimates more than half of the 130 million returns to be filed nationwide this year will be filed electronically.

Next year, the Memphis center will handle only electronic returns, leaving a nostalgic feeling this year for hundreds of employees like Linda Trotter.

"I've seen it all," said Ms. Trotter, who will retire this year after 33 years in the center's data transcription center. "We started out on old key-punch machines, and I've seen numerous computer systems come and go."

Memphis center workers will be busy for at least the next couple of weeks processing the Ohio returns.

Truckloads of mailed returns arrive daily at the IRS processing center, where they are unloaded into carts and bins. Next, the envelopes are fed into a giant machine which does an initial sort according to a bar code on the envelope, which indicates what type of form the taxpayer filed last year.

The returns then are sent to IRS workers in another room who remove the returns from the envelopes, sort them into piles of similar returns, and discard the envelopes unless the postmark is late.

The stacked returns are sent to "quality reviewers," who examine each filing to make sure W-2 wage forms and needed tax schedules are attached and filled out correctly.

If not, they decide if they can fix the return or must put them aside to have a notice mailed to the taxpayer that more information is needed.

Next, the piles go to a data transcriber, who inputs the handwritten or typed figures from the tax returns into IRS computers. It takes 250 keystrokes to enter the average 1040 form into the computer.

Ms. Trotter, who is the data transcription department's operations manager, said workers are constantly evaluated on quantity and quality.

"They have to at least meet the employee standard, but they're given incentives based on speed and accuracy," she said. A "good" operator can do 35 returns an hour and incentive pay ranges from $20 to $400 a month.

The IRS estimates that 20 percent of paper returns have errors, with half of those caused by taxpayers and the other half by the input operators.

The most frequent errors, said Ms. Trotter, are that a dependent's last name does not match the IRS or Social Security records or that a taxpayer has miscalculated the earned income tax credit, a tax break for lower-income individuals.

By comparison, the IRS estimates the error rate with electronic filing is less than 1 percent.

Once data are in the computer, the paper returns are carted to warehouses where they sit for three to seven years, accessed only if a taxpayer requests a copy or an IRS investigator cannot account for an error in the computer file.

From this point, the paper returns are handled the same as electronic ones. If errors are found, the files are sent to IRS tax examiners, who will review them to determine if the miscalculations can be easily fixed or if a letter or call to the taxpayer is needed.

During the initial computer process is when returns are flagged for audits, based on a secret scoring system established by the IRS.

Returns owed refunds are shipped to the U.S. Treasury, which issues the checks.

At this time of year, it takes three to six days to get the return through the IRS pipeline and about 40 days before a refund check is received. But filing electronically means a refund can be issued in 10 days from when the return is filed.

Next year, Ohio returns filed by mail will go to the IRS center in Fresno, Calif. Electronic returns nationwide will be handled at one of three centers.

Ms. Trotter said the work can get challenging at times, but she wouldn't have traded her career for anything.

"It's a very satisfying job," she said.

Contact Mary-Beth McLaughlin at

mmclaughlin@theblade.com

or 419-724-6199.



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