Audit: Governments could reduce number of incorrect tax submissions

George added that better compliance from governments would help roll back the so-called tax gap, the difference between what taxpayers owed and what they submitted on time. In its most recent estimate a decade ago, the IRS approximated that gap was roughly $345 billion. 

Still, as the audit added, less than 1 percent of submissions from federal, state and local governments between 2004 and 2007 contained inaccurate data, while the general population submitted invalid information at least 1.5 percent of the time all four of those years. 

And, the inspector general said, 75 government entities — or 0.1 percent — submitted 48 percent of the returns with invalid data. In all, the vast majority of incorrect government returns came from just five separate forms — a tuition statement, one on miscellaneous income, another on certain government payments, a benefit statement and a document on distributions from IRAs, pensions and other similar sources. 

The inspector general recommended that the IRS consider the number of inaccurate returns when deciding which government entities are examined or in compliance, advice the agency said it agreed with.