Taxpayers That Visited Taxpayer Assistance Centers in July
and August 2002 Received Incorrect Answers to Some Tax Law Questions
November 2002
Reference Number:
2003-40-024
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
November
22, 2002
MEMORANDUM FOR
COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: Gordon C. Milbourn III /s/ Gordon C.
Milbourn III
Acting Deputy Inspector General for Audit
SUBJECT: Final Audit Report - Taxpayers That
Visited Taxpayer Assistance Centers in July and August 2002 Received Incorrect
Answers to Some Tax Law Questions (Audit # 200240059)
This
report presents the results of our review to determine if the Internal Revenue
Service (IRS) provides accurate and timely responses to taxpayers’ tax law
questions. In addition, Treasury
Inspector General for Tax Administration (TIGTA) auditors who made anonymous
visits to the Taxpayer Assistance Centers (TAC) assessed whether IRS employees
were professional and courteous and if the correct office hours were posted in
the TACs.
This
review was conducted as the result of an amendment to the Treasury spending
bill for Fiscal Year (FY) 2002 proposed by Senator Byron Dorgan (Democrat-North
Dakota), Chairman of the Subcommittee on Treasury and General Government. The amendment requires the TIGTA to conduct
visits to all TACs and report to the Congress on whether taxpayers are provided
correct and prompt answers to their questions.
The TIGTA is conducting anonymous visits to all TACs over a 2-year
period. This is the fourth in a series
of bi-monthly reports that TIGTA is issuing in response to the amendment to the
Treasury spending bill.
During July and August 2002, TIGTA auditors made 54
anonymous visits to 27 TACs. The
auditors asked 108 tax law questions and determined that IRS employees are not
providing correct answers to some tax law questions. For example:
·
Forty-eight (44 percent) of 108 questions were correctly
answered.
·
Thirty-five (32 percent) of 108 questions were incorrectly
answered.
·
Fifteen (14 percent) of 108 questions resulted in the IRS
employee referring the auditor to IRS publications and generally advising the auditor
to do his or her own research to find the answer to the question.
·
Ten
(9 percent) of 108 questions were not answered. The employee did not refer the auditor to another employee (in
the office or on the telephone).
In addition, auditors
observed the following during visits to the TACs:
·
Office hours for 1 (4 percent)
of the 27 TACs were not shown on the IRS’ Internet. Office hours for 7 (27 percent) of the 26 TACs that had office
hours posted on the Internet were not the same as the hours posted at the TAC.
·
The addresses posted at 26 (100 percent) of 26 TACs matched
the addresses listed on the Internet.
The address for one TAC was not listed on the Internet.
·
IRS employees were professional and courteous to the TIGTA
auditors in 49 (98 percent) of the 50 visits.
·
Wait time for service was 60 minutes or less for 50 (100
percent) of the 50 visits.
This
report is to advise IRS management of the results of our review. Formal recommendations will not be made to
the IRS in the bi-monthly reports.
However, the TIGTA plans to issue a second semi-annual trend report
during the second quarter of FY 2003 that may include appropriate
recommendations to help ensure taxpayers are provided accurate responses to their
tax law questions. Auditors will continue
making visits to the TACs throughout Calendar Years 2002 and 2003. The TIGTA will also continue to issue
bi-monthly reports on the results to the IRS and the Congress.
Management’s Response: The IRS
continues to disagree with our method of reporting referrals to publications
and service denied when computing the accuracy rate. However, the IRS does agree that the accuracy rate, even using
adjusted figures for the referrals to publications, is inadequate. As a result, management is continuing to
take aggressive steps to improve the quality and accuracy in the TACs. Specific actions include opening Field
Assistance offices 30 minutes later each day to allow employees more time to
prepare, assessing employee skills and training needs, providing additional job
aids, and providing immediate feedback to managers and employees.
Management’s
complete response to the draft report is included as Appendix V.
Copies of this report
are also being sent to the IRS managers who are affected by the report results. Please contact me at (202) 622-6510 if you
have questions or Michael R. Phillips, Assistant Inspector General for Audit
(Wage and Investment Income Programs), at (202) 927-0597.
Taxpayers Received Incorrect Answers to Some Tax Law
Questions
Auditors Generally Had Positive Experiences When They Visited Taxpayer Assistance Centers
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – States Visited During July and August 2002
Appendix V – Management’s Response to the Draft Report
The Senate Committee on Appropriations was deeply concerned about the findings in a Treasury Inspector General for Tax Administration (TIGTA) audit report on the Internal Revenue Service’s (IRS) Taxpayer Assistance Centers (TAC). This report showed that auditors did not receive accurate or sufficient answers to 73 percent of their tax law questions posed during anonymous visits to the TACs during January and February 2001. Based on the results of this review, Senator Byron Dorgan (Democrat-North Dakota), Chairman of the Subcommittee on Treasury and General Government, proposed an amendment to the Treasury spending bill for Fiscal Year (FY) 2002. The amendment requires the TIGTA to conduct visits to all TACs and report to the Congress as to whether taxpayers are provided correct and prompt answers to their questions. Auditors are conducting anonymous visits to all TACs over a 2-year period.
The IRS’ Field Assistance (FA) office in the Wage and Investment (W&I) Division has overall responsibility for the TACs. The TACs exist primarily to serve taxpayers who choose to seek help from the IRS in person. The IRS employees who work in the TACs provide assistance in interpreting tax laws and regulations, preparing some tax returns, resolving inquiries on taxpayer accounts, and performing various other services designed to minimize the burden on taxpayers in satisfying their tax obligations.
There are currently no statistics on the percentage of time spent by employees in the TACs on the various services detailed above. The FA office is using FY 2002 as a baseline to establish standards and other management information in this area.
There are 414 TACs located throughout the United States (U.S.), including Washington, DC. According to the IRS, the TACs served approximately 6.3 million taxpayers between January and June 2002. Approximately 1.3 million of these taxpayers visited the TACs for assistance with the tax law.
In addition to the anonymous visits being performed by TIGTA auditors, the IRS hired an outside contractor to anonymously visit its TACs and ask two tax law questions per visit. The IRS provided the contractor with four questions to choose from the following topics:
|
· Earned Income Tax Credit |
· Education Credits |
|
· Social Security Benefits |
· Dependents |
The anonymous visits were to be performed monthly during the period October 2001 through September 2002. However, in May 2002, the IRS decided to terminate the contract because of concerns with the method of reporting results identified by TIGTA auditors. This action left the IRS without reliable data to measure the quality of assistance provided in its TACs. The IRS decided to use the TIGTA’s Calendar Year 2002 results as a baseline for measuring the quality of assistance being provided in its TACs.
TIGTA auditors performing anonymous visits to the TACs also ask two questions during each visit. Auditors can choose from the questions the IRS provided to its contractor or those TIGTA developed.
The TIGTA questions relate to 22 tax law topics that are within the scope of topics that TAC employees should have been trained to answer. The TIGTA questions were designed to cover a wide range of tax law topics in order to provide an overall assessment on whether taxpayers are receiving correct answers to questions that an individual taxpayer might ask when he or she visits a TAC. In May 2002, auditors changed the scope of the questions or added additional scenarios that were more applicable to the types of questions taxpayers ask subsequent to the filing season.
This report is the fourth in a series of bi-monthly reports that TIGTA is issuing on the results of the visits to the TACs. The review was conducted in the IRS’ Customer Assistance, Relationships, and Education office in the W&I Division in July and August 2002. TIGTA auditors anonymously visited 27 TACs in 11 states. See Appendix IV for specific states visited.
This review was conducted in accordance with the President’s Council on Integrity and Efficiency’s Quality Standards for Inspections. Detailed information on the objective, scope, and methodology of this review is presented in Appendix I. Major contributors to the report are listed in Appendix II.
As of June 30, 2002, TIGTA auditors have received incorrect answers to 126 (27 percent) of the 470 questions that were asked. The IRS has taken actions to improve the quality of service in the TACs based on the results reported in the previous bi-monthly reviews.
However, the July and August 2002 results indicate that taxpayers that visited TACs after the filing season continue to receive incorrect answers to some tax law questions. The results for the 108 tax law questions asked during July and August 2002 were as follows:
· Forty-eight (44 percent) of the 108 questions were correctly answered. In 12 of the 48 questions, the IRS employee provided a correct answer without asking all of the required questions outlined in the tax law instructions and publications.
For example, the IRS employee stated that a donation to a charitable organization could be claimed as a deduction from taxable income. However, the IRS employee did not ask auditors if they were eligible to itemize deductions or if they had a receipt from the organization. In order to deduct gifts to charity, taxpayers must be able to itemize and a receipt, not a check, must be received that documents the amount of the gift.
· Thirty-five (32 percent) of the 108 questions were incorrectly answered. For example, an IRS employee provided an incorrect answer to a question on whether the auditor, as a married filing separate taxpayer, could claim the Earned Income Tax Credit (EITC). In order to claim the EITC, a taxpayer’s filing status must be single, married filing jointly, or head of household. The IRS employee did not ask the auditor’s filing status.
· Fifteen (14 percent) of the 108 questions resulted in the IRS employee referring the auditor to publications and generally advising the auditor to do his or her own research to find the answer to the question.
· Ten (9 percent) of the 108 questions asked were not answered by IRS employees. The employee did not refer the auditor to another employee (in the office or on the telephone). For example:
o An auditor arrived at a TAC approximately 40 minutes before it was scheduled to close. The IRS employee explained that they begin clearing out the waiting area one hour before closing and assistance was being provided only to the taxpayers that were already at the TAC.
The
IRS employee told the auditor he could wait, but there was no guarantee
assistance would be provided. The
auditor waited for 25 minutes until the IRS employee instructed him to come
back the next day.
o Auditors arrived at a TAC 15 minutes before it was scheduled to open. They waited 15 minutes after the scheduled opening time and decided to leave because no one opened the door to the TAC. There were people inside the TAC who saw the auditors and another elderly lady waiting, but no one opened the door.
The table below provides a complete breakdown of the accuracy of questions answered.
|
Tax Law Questions (108 questions asked) |
|||||
|
|
|
Correct
but Incomplete |
Incorrect |
Ref. to Pub. |
Service Denied |
|
Responses |
36 |
12 |
35 |
15 |
10 |
|
Percentages |
33% |
11% |
32% |
14% |
9% |
Source: Anonymous visits performed by TIGTA
auditors.
A TIGTA Auditor May Have Been
Recognized
We believe an IRS employee identified a TIGTA auditor as a shopper during one of the visits. The two TIGTA auditors visiting the TAC arrived a few minutes apart and were assisted by the same IRS employee. We believe the auditor was identified because the IRS employee recognized the question asked as one being used by the IRS’ contractor.
Upon being recognized, the IRS employee escorted the auditor to a private office. For each tax law question, the employee obtained the appropriate publication and proceeded to ask every probing question outlined in the instructions. As a result, the employee correctly answered both questions.
In contrast, the second auditor was not identified and received one correct answer and one incorrect answer to the two questions. The employee used a publication and tax instructions and assistance was provided at the employee’s counter. For the question correctly answered, the employee asked all the required probing questions. However, for the question incorrectly answered, the employee did not ask 10 of the 14 probing questions.
Auditors also assessed the quality of assistance provided by IRS employees including whether they were professional and courteous, the wait time for service, and whether employees’ names were given or visible. Auditors generally had positive experiences. The table below shows a breakdown of the quality of assistance results.
|
Quality of Assistance (27 TACs visited, 2
auditors per site) |
||
|
|
Occurrences |
Percent |
|
Employee Professional/Courteous |
49 |
98 |
|
Wait Time for Service Less Than 1 Hour |
50 |
100 |
|
Employee Wore Required Name Tag Displaying
Name and ID Number |
33 |
66 |
|
Employee Name Provided When Requested |
49 |
98 |
Source: Anonymous visits performed by TIGTA
auditors.
Taxpayers can access the IRS’ Internet and follow the links to obtain the address and office hours of the TACs located in their state. During auditor visits, they determined if the TAC address and office hours obtained from the Internet matched the information at the TAC. For example:
· Office hours for 1 (4 percent) of 27 TACs were not listed on the Internet.
· Office hours for 7 (27 percent) of the 26 TACs that had office hours listed on the Internet did not match the office hours that were posted at the TAC.
· The addresses posted at 26 (100 percent) of 26 TACs matched the addresses listed on the Internet.
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of the review was to determine if the Internal Revenue Service (IRS) provides accurate and timely responses to taxpayers’ tax law questions. In addition, Treasury Inspector General for Tax Administration auditors who made anonymous visits to the Taxpayer Assistance Centers (TAC) assessed whether IRS employees were professional and courteous and if the correct office hours were posted in the TACs.
To achieve this objective, auditors performed the following tests:
I. Determined if the IRS provided quality service and accurate responses to tax law inquiries at the 27 TACs visited. Auditors asked 108 tax law questions that an individual taxpayer might ask. Auditors developed questions based on the training provided to Tax Resolution Representatives (TRR) during the fall of 2001 and the scope of services for tax law assistance prescribed in the Fiscal Year 2002 Field Assistance Operating Procedures.
II. Determined
the quality of service provided by the TRRs.
Appendix II
Major Contributors to This Report
Michael R. Phillips, Assistant Inspector General for Audit
(Wage and Investment Income Programs)
Kerry Kilpatrick, Director
Deborah Glover, Audit Manager
Russell
Martin, Audit Manager
Pamela DeSimone, Senior Auditor
Deborah Drain, Senior Auditor
Robert Howes, Senior Auditor
Kathy Hughes, Senior Auditor
Frank Jones, Senior Auditor
Robert Baker, Auditor
Lena
Dietles, Auditor
Roberta Fuller, Auditor
Andrea Hayes, Auditor
Kathy Henderson, Auditor
Mary Keyes, Auditor
Grace Terranova, Auditor
Appendix III
Acting Commissioner N:C
Director, Customer Assistance, Relationships and Education W:CAR
Director, Field Assistance W:CAR:FA
Director, Strategy and Finance W:S
Chief Counsel CC
National Taxpayer Advocate
TA
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
Program/Process Assistant Coordinator, Wage and Investment Division W:HR
Appendix IV
States Visited During July and August
2002
The map was removed due to its
size. To see the map, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
The 11 states visited include:
Alaska, Colorado, Idaho, Kentucky, Louisiana, Mississippi, Missouri,
Ohio, Tennessee, Utah, and Wyoming.
Appendix V
Management’s 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.