Providing Incomplete Taxpayer Complaint Information Increases the Risk That Statutory Reporting Requirements Are Not Met

September 2001

Reference Number: 2001-10-186

 

This report has cleared Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.

September 25, 2001

MEMORANDUM FOR DIRECTOR, COMMISSIONERíS COMPLAINT PROCESSING AND ANALYSIS GROUP

FROM: Pamela J. Gardiner /s/ Pamela J. Gardiner

Deputy Inspector General for Audit

SUBJECT: Final Audit Report - Providing Incomplete Taxpayer Complaint Information Increases the Risk That Statutory Reporting Requirements Are Not Met

This report presents the results of our review of the development of an interim Integrated Complaint Tracking and Reporting System (ICTRS) for taxpayer complaints. The objective of this review was to determine if the Internal Revenue Serviceís (IRS) proposed ICTRS is on schedule to improve the accuracy of the number of taxpayer complaints reported to the Treasury Inspector General for Tax Administration (TIGTA). The 26 U.S.C. Section (ß) 7803 (d)(2)(A) (2000) requires that the TIGTA include in each TIGTA Semiannual Report to the Congress the number of taxpayer complaints received and the number of employee misconduct and taxpayer abuse allegations received by the IRS or the TIGTA from taxpayers, IRS employees, and other sources.

In summary, IRS management developed the ICTRS as an interim system to consolidate data from the Automated Labor and Employee Relations Tracking System (ALERTS) and from the Executive Correspondence Management System (ECMS). These systems track a wide range of labor relations activity, including actions taken based on findings of IRS employee misconduct or performance problems, and a wide variety of complaints received by the IRS Commissioner. The ICTRS is also designed to include data on formal Equal Employment Opportunity complaints.

IRS management has made significant efforts to develop the ICTRS; however, the system is not yet fully operational. The IRS has initiated testing of the ICTRS and determined that it can identify taxpayer complaints from the ALERTS and the ECMS, as well as potential duplicate complaints between the two systems. Eliminating duplicate complaints would enable the IRS to provide more accurate information to the TIGTA. However, because the ALERTS and ECMS do not encompass all taxpayer complaints received by the IRS, there is a risk that incomplete data will be provided for the TIGTA Semiannual Reports to the Congress. As of July 2001, there are complaint data on other IRS computer systems that are not included in the ICTRS. Decisions to not include complaints from other systems were based on TIGTA and IRS managementís interpretation of the reporting requirements, which do not specify what types of taxpayer complaints need to be reported.

We recommended that the Commissionerís Complaint Processing and Analysis Group (CCPAG) management meet with the TIGTA to identify the types of taxpayer complaints that should be reported in the TIGTA Semiannual Reports to the Congress. The CCPAG management should then consider including these complaints in the future development of the ICTRS.

Managementís Response: The CCPAG management agreed to take appropriate action for the recommendations in this report, including meeting with the TIGTA to identify the types of taxpayer complaints to be reported and determining whether to include taxpayer complaints in the ICTRS. Managementís complete response to the draft report is included as Appendix IV.

Copies of this report are also being sent to the IRS managers who are affected by the report recommendations. Please contact me at (202) 622-6510 if you have questions or John R. Wright, Acting Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.

Table of Contents

Background

Complaint Information Exists on Computer Systems That Are Not Included in the Integrated Complaint Tracking and Reporting System

Recommendation 1:

Recommendation 2:

Appendix I Ė Detailed Objective, Scope, and Methodology

Appendix II Ė Major Contributors to This Report

Appendix III Ė Report Distribution List

Appendix IV Ė Managementís Response to the Draft Report

Background

The 26 U.S.C. Section (ß) 7803 (d)(2)(A) (2000) requires that the Treasury Inspector General for Tax Administration (TIGTA) include in each TIGTA Semiannual Report to the Congress (SAR) the number of taxpayer complaints received and the number of employee misconduct and taxpayer abuse allegations received by the Internal Revenue Service (IRS) or the TIGTA from taxpayers, IRS employees, and other sources.

The four TIGTA SARs issued through September 30, 2000, have included a footnote that the number of complaints reported by the IRS may contain duplicate information. Prior to enactment of the IRS Restructuring and Reform Act of 1998 (RRA 98), the IRS used multiple systems and procedures to record taxpayer complaints. Because the systems did not interface or communicate with each other, the IRS could not be sure that the reported taxpayer complaints were not duplicated among the different systems.

In September 1999, the IRS Commissioner advised the TIGTA that a specific action plan to improve the accuracy of the taxpayer complaint information reported to the TIGTA would be developed within 60 days. Also, by the second quarter of Fiscal Year 2000, architecture would be developed to allow for the appropriate interfaces necessary to integrate the databases used to record taxpayer complaints.

On April 12, 1999, the Commissionerís Complaint Processing and Analysis Group (CCPAG) was created and given the responsibility of consolidating, validating, and reporting complaint information required by 26 U.S.C. ß 7803 (d)(2)(A) to the TIGTA. The CCPAG was also given responsibility for coordinating the development of the Integrated Complaint Tracking and Reporting System (ICTRS). The CCPAG contracted with a vendor, MicroPact Engineering, Inc., to develop the system and to work closely with the IRS Systems Support Division to ensure that the new system met the IRSí approved design, system, and documentation standards.

CCPAG management developed the ICTRS as an interim system to consolidate data from the following computer systems:

The ICTRS is also designed to include data on formal Equal Employment Opportunity (EEO) complaints.

Our audit tests included interviewing key personnel in the CCPAG, the IRS Systems Support Division, the National Taxpayer Advocate office, and MicroPact Engineering, Inc. We also reviewed ICTRS design information.

This audit was conducted between April 2001 and August 2001 in accordance with Government Auditing Standards. We did not perform tests to validate the accuracy of taxpayer complaint data identified by the ICTRS. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.

Complaint Information Exists on Computer Systems That Are Not Included in the Integrated Complaint Tracking and Reporting System

IRS management has made significant efforts to develop the ICTRS; however, the system is not yet fully operational. The ICTRS hardware, operating system, and database software have been installed, and some ECMS and ALERTS data have been loaded into the system. In addition, the IRS has initiated testing of the ICTRS. It performed some queries of the data and identified some potential duplicate complaints from the ALERTS and the ECMS, as well as potential duplicate complaints between the two systems. Eliminating duplicate complaints would enable the IRS to provide more accurate information to the TIGTA.

The scheduled implementation date for the ICTRS was July 31, 2001. However, as of August 2001, the ALERTS data are the only data that have been fully loaded onto the ICTRS. The ECMS data on the ICTRS are incomplete because the associated scanned images for each record are inaccessible for loading onto the ICTRS. The scanned images are maintained on a separate computer from the text data. These images cannot be readily linked to their related text records. In addition, EEO data on the Department of the Treasuryís computer system were to be included in the ICTRS, but electronic access to these data has been denied by the Department of the Treasury and IRS EEO officials because of concerns about the sensitivity and potential misuse of the data.

Because the ALERTS and ECMS do not encompass all taxpayer complaints received by the IRS, there is a risk that incomplete data will be provided for the TIGTA SARs. As of July 2001, there are complaint data on other IRS computer systems, such as the Taxpayer Advocate Management Information System, that are not included in the ICTRS.

Before and during development of the ICTRS, similar criteria were not always used to identify taxpayer complaints. This resulted in inconsistency in the type of complaint information identified by the IRS for the TIGTA SARs. The different types of complaints reported in the TIGTA SARs included the following:

March 31, 2001, SAR

In February 2001, a decision was reached by representatives of the TIGTA, the CCPAG, Strategic Human Resources, and the Information Technology Services to no longer provide the TIGTA with EEO data or information extracted from the Taxpayer Advocate System.

Decisions to not include complaints from other systems were based on TIGTA and IRS managementís interpretation of the 26 U.S.C. ß 7803 (d)(2)(A) reporting requirements, which do not specify what types of taxpayer complaints need to be reported. Not reporting these complaints increases the risk that incomplete data are being provided for the TIGTA SARs. Continued coordination between the IRS and the TIGTA is needed to determine the types of taxpayer complaints to be reported. If additional complaints are being tracked on other IRS systems, the IRS will need to determine if the complaint data can be integrated with the ICTRS.

Recommendations

  1. CCPAG management should meet with the TIGTA to identify the types of taxpayer complaints that should be reported in the TIGTA SARs.
  2. Managementís Response: IRS management will meet with the TIGTA to review the requirements for reporting taxpayer complaints.

  3. CCPAG management should consider including these complaints in the future development of the ICTRS.

Managementís Response: IRS management officials will determine whether to include taxpayer complaints in the ICTRS.

Appendix I

Detailed Objective, Scope, and Methodology

The overall objective of this review was to determine if the Internal Revenue Serviceís (IRS) proposed Integrated Complaint Tracking and Reporting System (ICTRS) is on schedule to improve the accuracy of the number of taxpayer complaints reported to the Treasury Inspector General for Tax Administration (TIGTA). We performed the following work:

  1. Determined if the testing and implementation of the ICTRS was on schedule.
    1. Interviewed the ICTRS Project Manager, the vendorís representative, and Information Technology Services representatives to identify the completion schedule and to determine if the project was on schedule to be fully functional by those dates.
    2. Reviewed the ICTRS Project Tracking Schedule to identify the system testing schedule.
  2. Determined if all computerized sources of taxpayer complaints had been identified and if these systems could be accessed by the ICTRS.
    1. Interviewed the ICTRS Project Manager to determine if all sources of computerized data had been identified.
    2. Interviewed the ICTRS Project Manager and TIGTA personnel to determine if the ICTRS will contain the same data identified for past TIGTA Semiannual Reports to the Congress (SAR).
    3. Interviewed TIGTA personnel, the Commissionerís Complaint Processing and Analysis Group personnel, and other IRS computer systems owners and reviewed IRS documents to determine if there was a consistent definition of "taxpayer complaint" among the various offices.
    4. Interviewed the ICTRS Project Manager and TIGTA personnel to determine if they had identified the types of complaints required by the Congress.
  3. Determined if there was potential for improvement in the accuracy of the number of taxpayer complaints reported to the TIGTA by comparing the methodology used to report complaints in prior TIGTA SARs with the proposed system for gathering complaint information using the ICTRS.

Appendix II

Major Contributors to This Report

Maurice S. Moody, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs)

Nancy A. Nakamura, Director

Gerald T. Hawkins, Audit Manager

Barry G. Huff, Senior Auditor

Wallace C. Sims, Senior Auditor

Andrew J. Burns, Auditor

Appendix III

Report Distribution List

Commissioner N:C

Chief Counsel CC

Assistant Deputy Commissioner N:ADC

National Taxpayer Advocate TA

Chief, Equal Employment Opportunity and Diversity N:EEO

Chief, Information Technology Services M:I

Assistant Inspector General for Investigations (Investigative Support) IG:I:I

Director, Legislative Affairs CL:LA

Director, Office of Program Evaluation and Risk Analysis N:ADC:R:O

Office of Management Controls N:CFO:F:M

Audit Liaisons

Chief, Equal Employment Opportunity and Diversity N:EEO

Chief, Information Technology Services M:I

Appendix IV

Managementís Response to the Draft Report

The response was removed due to its size. To see the complete response, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.