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2012 Taxpayer Experience of Individuals Living Abroad:
Service Awareness, Use, Preferences, and Filing Behaviors
New Research on Tax Administration:
An IRS-TPC Conference
June 21, 2012
Research & Analysis
Background of International Taxpayer Research
Wage & Investment Research and Analysis (WIRA) has conducted several
studies on the unique needs, preferences, and behaviors of international
taxpayers, including:
Demographic and tax filing profiles of international taxpayers from tax years (TY)
2006 through 2010
Focus groups with tax practitioners who service international taxpayers
Interviews with tax attachés working with taxpayers overseas
2009 IRS Survey of International Taxpayers
Collaboration with gatekeepers of U.S. Department of State (DoS) Passport Data
and Certificate of Loss Nationality Data
Effect of IRS Printing and Postage Budget Reduction (PPBR) on direct mailings to
embassies and taxpayers living abroad
2011 IRS Survey of Individuals Living Abroad
2
Research & Analysis
Availability of IRS Service to International Taxpayers
IRS Phone Representatives
IRS Toll-Free Line (1-800-849-1040) available for Puerto Rico, Guam, Bahamas,
and Virgin Islands
International Telephone Line (1-267-941-1000) available for taxpayers outside of
the U.S.
Taxpayer Assistance Center (TAC) in Puerto Rico
Permanent TAC in Guaynabo and Temporary TAC in Ponce
Tax Attachés Located in London, Frankfurt, Paris, and Beijing
In-Person; Telephone; and Mail, Fax, and E-mail Correspondence Services
Outreach Events in Various Countries
IRS.gov website
Embassy websites
Electronic Tax Law Assistance (ETLA)
3
Research & Analysis
Survey Methodology
2011 IRS Survey of Individuals Living Abroad
The sample for the 2011 IRS Survey of Individuals Living Abroad consisted of
three distinct populations of international taxpayers:
Filers
Civilian, Military, and Non-Resident Alien Filers
Non-Filers
Non-Filers with a perceived filing obligation were identified through the IRS Non-
Filer Database and matched against U.S. DoS Passport Data
Non-Filers with no perceived filing obligation were identified through information
associated with their TY 2008 return 1
Expatriates
Expatriates were identified through the Large Business & International (LB&I)
Expatriate Database comprised of IRS as well as DoS data
The 2011 IRS Survey of Individuals Living Abroad had a 32% response rate
with 1,753 unique responses from individuals living in 81 countries.
1 All Non-Filers with no perceived filing obligation had no record of filing a tax return for the tax year prior to the TY
2008 Economic Stimulus (i.e., TY 2007) as well as no record of filing a tax return for the tax year following the TY 2008
Economic Stimulus (i.e., TY 2009).
4
Research & Analysis
International Taxpayers Prefer IRS.gov
2011 IRS Survey of Individuals Living Abroad
66% of Filers prefer to get information on IRS.gov rather than call the IRS.
76% of Filers prefer to consult IRS.gov before calling the IRS regarding tax law questions.
Only 19% of Filers reported being more confident with information received from the telephone line
compared to IRS.gov; 50% disagreed.
Filers’ Agreement with Statements About IRS Telephone Line and IRS.gov Mean
2.53
4.14
3.89
3.46
3.80
3.57
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
Research & Analysis
International Taxpayers Prefer Improved Online Services
2011 IRS Survey of Individuals Living Abroad
Nearly 70% of respondents leaned more heavily toward supporting improvements to
the online services over improvements to the telephone service.
“The IRS would like to focus its resources on improving the support it provides to U.S. taxpayers living abroad.
Based on your own experiences and preferences, where should the IRS devote more resources?”
Participants were instructed to select one circle
that best reflected their priorities
IMPROVING THE TELEPHONE SERVICE IMPROVING THE ONLINE SERVICES
Improve access by providing an Improve website interactivity specific
international toll-free line to international tax issues
(1) (2) (3) (4) (5) (6)
31% 69%
All Respondents
16% 8% 7% 14% 23% 32%
(n=1,556)
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011. 6
Research & Analysis
International Taxpayers Reported Use of IRS.gov
2011 IRS Survey of Individuals Living Abroad
Filers’ Agreement with Statements About IRS.gov
among those who used IRS.gov regarding their most recent tax return Mean
4.38
3.70
3.23
2.99
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
The majority of Filers (84%) who visited IRS.gov agreed that it was more convenient for
them than calling the IRS.
• Nearly 60% agreed that it was easy to find relevant tax-related information on IRS.gov;
however, only 41% found the international tax topics on IRS.gov easy to understand.
7
Research & Analysis
International Taxpayers Still Call After Visiting IRS.gov
2011 IRS Survey of Individuals Living Abroad
International callers to the IRS telephone line were most likely to have found the number on
the IRS website or in an IRS notice/letter.
Among Filers who called the IRS, 43% did so after failing to find the information on IRS.gov
while 31% did not visit the website before calling. Although they reported finding the
information they needed on IRS.gov, 20% called to confirm or clarify the information.
How Callers First Found IRS Telephone Number Visited IRS.gov Before Calling IRS Telephone Line
among those who called the IRS telephone line among those who called the IRS telephone line
about their most recent tax return about their most recent tax return
Filers Non-Filers Expatriates Filers Non-Filers Expatriates
(n=108) (n=4) (n=25) (n=108) (n=5) (n=27)
On the IRS website (IRS.gov) 43% 1/4 11/25 Yes, I visited IRS.gov, but I could
43% 1/5 9/27
not find the information I needed
Notice/Letter from the IRS 32% 1/4 9/25
No, I did not visit IRS.gov before
U.S. embassy or consulate 7% 1/4 2/25 31% 1/5 4/27
calling the IRS telephone line
IRS publication 7% 0/4 1/25
Yes, I found the information on
Personal accountant/book- IRS.gov, but I wanted to confirm
20% 3/5 10/27
keeper/tax preparation 6% 1/4 0/25 or clarify the information with
company someone by phone
Other 0% 0/4 0/25 Don’t remember 7% 0/5 4/27
Don’t remember 6% 0/4 2/25 Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro,
September 16, 2011.
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro,
September 16, 2011. 8
Research & Analysis
Cost Not a Major Factor in Decision to Call the IRS
2011 IRS Survey of Individuals Living Abroad
Factors in Filers’ Decision Not to Call IRS Telephone Line
among those who did not call Mean
3.88
2.31
2.04
2.16
1.91
2.67
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
Only 22% of Filers cited telephone cost as a factor influencing their decision to not call the
IRS. Among Filers who called the IRS, 33% reported not personally paying for the call.
9
Research & Analysis
Segmentation of Filers Based on Latent Class Analysis
2011 IRS Survey of Individuals Living Abroad
Using Latent Class Analysis (LCA), five unique segments of Filers were identified
from behavioral and attitudinal measures of telephone and electronic support:
Do-It-Yourself (DIY) Tech – 9%
Defining characteristics: Self-prepares taxes; uses tax software; files electronically; prefers web
Do-It-Yourself (DIY) Paper – 30%
Defining characteristics: Self-prepares taxes; files by paper; prefers web; considers phone a barrier;
moderate to high awareness of federal resources
Hire Out, Involved – 27%
Defining characteristics: Does not prepare own taxes; moderate to high awareness of IRS
resources, non-IRS federal resources, and non-federal resources
Hire Out, Uninvolved – 16%
Defining characteristics: Does not prepare own taxes; does not have reason to contact the IRS;
generally less aware of IRS services, but is aware of personal accountant/bookkeeper
Phone First – 19%
Defining characteristics: Prefers improvement to phone service; web not convenient; low awareness
of IRS website and IRS telephone line
10
Research & Analysis
Satisfaction With Federal Resources Varies by Segment
2011 IRS Survey of Individuals Living Abroad
Overall satisfaction with U.S. Federal Resources1 varied by segment, with the
highest satisfaction among DIY Tech, DIY Paper, and Hire Out, Involved.
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
1U.S. Federal Resources refers to IRS resources as well as non-IRS federal resources, such as those from a U.S.
embassy or consulate. 11
Research & Analysis
High Use of Non-Federal Resources to Determine Filing Req.
2011 IRS Survey of Individuals Living Abroad
To determine filing requirements, Filers and Expatriates were most likely to
consult a personal accountant/bookkeeper/tax preparation company (44% and
54%, respectively), compared to 22% of Non-Filers. Non-Filers were most likely
to report not consulting anyone (37%).
Approximately 18% of Filers used an IRS resource while only 8% of Non-Filers
used an IRS resource.
12
Research & Analysis Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
Increased Use of IRS.gov During Filing Season
For FY 2011, IRS operations data consistently reveals a greater number of page
views of the IRS.gov International Taxpayer site when compared to the number of
Services Provided at the International Telephone Line.
The significant increase in number of Page Views during the filing season is not
mirrored in the trend of Services Provided.
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11
Page Views of "International Taxpayer" Services Provided on the International Telephone Line
Sources:
- “IRS.gov Site Usage Reports (Monthly),” Online Services SharePoint, accessed January 5, 2012.
- Aspect Application Activity, Joint Operations Center (JOC) ETD Quick Links, accessed January 5, 2012.
13
Research & Analysis
Rapid Growth of International E-Mail Inquiries
Electronic Tax Law Assistance (ETLA) Inquiries
ETLA allows taxpayers to e- Fiscal Total International Percentage of
mail non-account related tax Year Inquiries Received All Inquiries
law questions to the IRS. 2007 3,375 22%
The most common types of 2008 3,483 21%
inquiries are from non-resident 2009 7,092 37%
aliens and U.S. citizens living
2010 7,920 36%
abroad.
2011 8,333 37%
For FY 2011, ETLA received
2012 5,454 35%
8,333 international inquiries
Source: “ETLA Access to Historical Reports,” The IRS Intranet, through 05/31/12. “Deletes”
(37% of all ETLA inquiries). were excluded from Total to determine the percent of International Inquiries from All Inquiries.
International inquiries have Electronic Tax Law Assistance (ETLA)
International Inquiry Case Types
grown 147% in just 5 years.
Number
Case Type Percentage
E-mail is most expensive Reviewed
service delivery channel.1 Alien Issue 74 26%
Filing Information 60 21%
Other Tax Law Issue 16 6%
Source: “National Quality Review System Report,” IRS, 10/01/2010 – 09/30/2011.
Research & Analysis 1 W&I Finance estimates the unit cost of e-mail to be approximately $116.66 (May 10, 2012).
Consistency in Preferences and Reported/Actual Use
Reported Preferences vs. Reported Use
Confidence in information received from the telephone vs. IRS.gov
Visiting IRS.gov before calling the IRS
Convenience of IRS telephone line’s hours of operation
Reported Use vs. Actual Use
The comparison of Services Provided to Page Views as well as ETLA
data support international taxpayers’ reported preferences and reported
use of IRS.gov over the IRS telephone line.
In summary, there is a consistent alignment between
international taxpayers’ reported preferences, reported
use, and actual use of IRS services.
15
Research & Analysis
Significant Service Opportunities and Challenges
Survey results strongly indicate that international taxpayer service
needs may best be served through investments and improvements in
the International section of IRS.gov, specifically in three key areas:
Searchability – Improve relevance of search results relating to international
tax topics on IRS.gov.
Organization – Improve ease of navigation through international pages on
IRS.gov.
Content – Improve ease of understanding information on international tax
topics on IRS.gov.
While international taxpayers as a whole may best be served through
investment and improvements to IRS.gov and/or online services, the
challenge of providing service to facilitate compliance can not be
overlooked.
16
Research & Analysis
Significant Service Opportunities and Challenges
continued . . .
Although the vast majority of Filers and Expatriates reported having
Internet access at home (93% and 91%, respectively), only 58% of
Non-Filers reported home Internet access.
Non-Filers were also less likely to look for information on IRS.gov
before calling the IRS (55%) or prefer getting information on IRS.gov
(52%) compared to Filers and Expatriates.1
Improved voluntary compliance with international tax provisions
and a reduction in the tax gap attributable to international
transactions will require a strategic balance of both service and
enforcement initiatives grounded in targeted, relevant outreach
and the effective use of technology.
1 Approximately 76% of both Filers and Expatriates agreed that if they had a tax question they would consult IRS.gov before
calling the IRS. Additionally, 66% of Filers and 62% of Expatriates indicated they preferred to get information on IRS.gov
rather than calling the IRS.
17
Research & Analysis
Acknowledgements
Directors and Management
Mark E. Pursley, Director of WIRA
Gwen M. Garren, Acting Director of WIRA
Karen D. Truss, Former Chief of WIRA Research Group 4
Javier A. Framinan, Chief of WIRA Research Group 4
Core Project Team
Tiffanie N. Bruch, Tax Analyst
David C. Cico, Technical Lead Social Scientist
Saima S. Mehmood, Social Scientist
Julie Thompson-Evans, Contracting Officer Representative (COR)
Contributing Researchers
Kathleen P. Holland, Chief of WIRA Research Group 1
Maria Celina Iglesia, Operations Research Analyst
Robert P. Thomas, Social Scientist
Jennifer D. Turner, Statistician
Survey Contractor Assistance
Pacific Consulting Group
ICF Macro
18
Research & Analysis
Appendix A: Profile of International Taxpayers
Total International Returns – For tax year (TY) 2010, 1,485,359 international returns
were filed. In 2011, the U.S. State Department estimated that 6.32 million American
citizens were living abroad.
Age – About 44% of international taxpayers are between the ages of 25 and 44,
compared to 37% of non-international taxpayers.
Preparation Method – Of international filers, 44% self-prepared their returns, with only
34% of these self-preparers filing electronically. In comparison, 43% of non-international
taxpayers self-prepared their returns, with 70% of this group filing electronically.
Filing Method – International returns were less likely to be filed electronically.
Approximately 81% of non-international returns were filed electronically, compared to
only 30% of total international returns.1
Adjusted Gross Income (AGI) – Approximately 64% of total international taxpayers
reported an AGI of $50,000 or less on Form 1040, with a median AGI of $11,770.2 Non-
international taxpayers, in contrast, had a median AGI of $32,126.3
Refund Owed – Nearly 60% of international returns resulted in a tax refund, compared
to 80% of non-international returns. Also, while 24% of international taxpayers had even
returns (neither refund owed nor balance due), only 4% of non-international taxpayers
had even returns.
1 Contributing to the low electronic filing rate of international taxpayers is the inability of non-resident alien returns to be filed
electronically. Non-resident aliens comprise 35% of total international returns.
2 Excludes returns filed using Form 1040PR or Form 1040SS, as these forms do not include a line item for AGI.
3 International wages can be reduced by the international income exclusion on Form 2555, Foreign Earned Income. The median 19
Research & Analysis wage reported on Form 2555 for TY 2010 was $65,400.
Appendix B: Response Rates and Survey Mode Used
2011 IRS Survey of Individuals Living Abroad
Total Completed Surveys
Response Rate = Surveys Sent minus Undeliverable Surveys
Response Rates
Total
Sampling Surveys Undeliverable Completed Completed Completed Response Sampling
Frame Sent Surveys by Mail by Web Surveys Rate** Error
Filers 568,779 4,700 424 546 925 1,471 34% ± 2.7%
Civilian Citizens 248,348 2,316 64 331 576 907 40% ± 3.2%
Military Citizens 176,807 1,500 344 92 180 272 24% ± 5.9%
Non-Resident Aliens 143,624 884 16 123 169 292 34% ± 5.7%
Non-Filers N/A 300 29 51 28 79 29% N/A
With a Filing Obligation N/A 100 18 2 11 13 16% N/A
With No Filing Obligation N/A 200 11 49 17 66 35% N/A
Expatriates 2,010* 1,000 42 73 130 203 21% ± 6.5%
Net Worth Above $2M N/A 93 0 8 11 19 21% N/A
Net Worth Below $2M N/A 907† 42 65 119 184 21% N/A
Total N/A 6,000 495 670 1,083 1,753 32% N/A
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro, September 16, 2011.
20
Research & Analysis
Appendix C: Tax Preparation and Filing Among Filers
2011 IRS Survey of Individuals Living Abroad
On average, Filers reported spending nearly 12 hours and over $400 on
activities and expenses related to their most recent U.S. federal tax return.
Over 64% of Filers reported filing their return by regular or express mail,
compared with 26% who filed electronically.
Filers’ Time and Money Spent Related to Filers’ Most Recent Filing Method
Most Recent U.S. Federal Tax Return (n=1,356)
2 hours or less 30%
Not sure/Filed by someone else Filed by
3 to 4 hours 19% regular or
Time Spent on
5 to 10 hours 30% express mail
Most Recent
Return 11 to 25 hours 14% Delivered in person
(n=1,276) to a U.S. embassy,
More than 25 hours 8%
consulate, or other
Average: 11.7 hours* IRS office
$0 13%
$1 to $50 34% Filed electronically
Money Spent (E-file)
on Most Recent $51 to $200 18%
Return $201 to $500 17%
(n=1,237)
More than $500 17%
Average: $413*
Source: 2011 Survey of Individuals Living Abroad: Top Line Report.
Source: 2011 Survey of Individuals Living Abroad: Top Line Report. ICF Macro,
ICF Macro, September 16, 2011.
September 16, 2011.
Research & Analysis
