Taxpayers That Visited Taxpayer Assistance Centers During
September and October 2002 Received More Correct Answers to Tax Law Questions
Than in Prior Months
December 2002
Reference
Number: 2003-40-040
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.
December 30, 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 During September and October 2002 Received
More Correct Answers to Tax Law Questions Than in Prior Months (Audit #
200240071)
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 a 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 fifth in a series of bi-monthly reports that the TIGTA is issuing in response to the amendment to the Treasury spending bill.
In summary, during September and October 2002, TIGTA
auditors made 62 anonymous visits to 31 TACs.
The auditors asked 124 tax law questions and determined that IRS employees
provided correct answers to the majority of the questions. For example, IRS employees:
·
Correctly answered 87 (70 percent) of 124 questions.
·
Incorrectly answered 30 (24 percent) of 124 questions.
·
Referred the auditor to IRS publications and generally
advised the auditor to do his or her own research to find the answer to 7 (6
percent) of 124 questions.
In addition, auditors
observed the following during visits to the TACs:
·
Office hours for 15
(48 percent) of the 31 TACs that had office hours posted on the Internet were
not the same as the hours posted at the TAC.
·
The addresses posted at all 31 TACs matched the addresses
listed on the Internet.
·
IRS employees were professional and courteous to the TIGTA
auditors in 61 (98 percent) of the 62 visits.
·
Wait time for service was 1 hour or less for all of the 62
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 semiannual 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, management is continuing to take steps to improve the quality and accuracy in the TACs. Specific actions include delivering a job aid to employees that describes step-by-step effective communication skills and the use of the publication method, addressing employee confusion of Tax Year 2001 and 2002 tax law, and updating office hours on the Digital Daily.
Management's complete response to the draft report is included as Appendix V. We do not intend to elevate our disagreement concerning the method of reporting referrals and service denied to the Department of Treasury for resolution.
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 Correct Answers to
a Majority of the 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 September and October 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. As a result, 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 providing various other services designed to minimize the burden on taxpayers in satisfying their tax obligations.
There are currently no statistics on the percent of time spent by employees in the TACs on the various services provided. 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 identified by TIGTA auditors with the method of reporting results. 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 the TIGTA developed.
TIGTA questions relate to 22 tax law topics that are within the scope of topics that TAC employees should have been trained to answer. TIGTA questions were designed to cover a wide range of tax law topics in order to provide an overall assessment of 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 fifth in a series of bi-monthly reports that the TIGTA will issue 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 September and October 2002. TIGTA auditors anonymously visited 31 TACs in 8 states. See Appendix IV for the specific states visited.
This review was conducted in accordance with Government Auditing Standards. However, we did not determine the cause and effect for the findings, and will not make formal recommendations in the bi-monthly reports. We will issue a semiannual trend report during the second quarter of FY 2003 that will contain these elements. 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, the TIGTA auditors 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 detailed results of our monthly visits and the results reported in the previous bi-monthly reviews.
While the TIGTA has not specifically measured the impact these actions are having on the quality of service provided in the TACs, taxpayers that visited TACs in September and October 2002 received more correct answers to their questions than in prior months.
The chart below shows the year-to-date accuracy rates.
The chart was
removed due to its size. To see the
chart, please go to the Adobe PDF version of the report on the TIGTA Public Web
Page.
The results for the 124 tax law questions asked during September and October 2002 were as follows:
· Eighty-seven (70 percent) of the 124 questions were correctly answered. In 15 of the 87 questions, however, 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 child support did not have to be included as taxable income. However, the IRS employee did not ask auditors if the payments received were specifically designated as child support in a divorce agreement. In order to exclude child support from taxable income, the payments must be designated as child support in a divorce agreement.
· Thirty (24 percent) of the 124 questions were incorrectly answered. For example, an IRS employee provided an incorrect answer to a question on whether the auditor, as a single taxpayer with a child, could claim the Earned Income Credit (EIC). The IRS employee did not ask the auditor if the child had a valid Social Security Number (SSN). In order to claim the EIC, a qualifying child must have a valid SSN. By not using available resources to ask all required questions, IRS employees are making assumptions and providing answers without considering relevant facts to ensure the answer given is correct.
· Seven (6 percent) of the 124 questions resulted in the IRS employee referring the auditors to a publication and generally advising the auditors to do their own research to find the answer to the question. For example, two auditors arrived at a TAC and noticed there was a sign at the counter that stated, “Due to limited staffing today, you may experience an extremely lengthy wait. If you can return on another day, it would be extremely appreciated.” Although there was only one other taxpayer waiting for assistance, the IRS employee referred the auditors to a publication for all four questions asked by the auditors.
The table below provides a complete breakdown of the accuracy of questions answered. (124 questions asked)
|
|
|
Correct but
Incomplete |
Incorrect |
Ref. to Pub. |
Service Denied |
|---|---|---|---|---|---|
|
Responses |
72 |
15 |
30 |
7 |
--- |
|
Percentages |
58% |
12% |
24% |
6% |
--- |
Source:
Anonymous visits performed by TIGTA auditors.
IRS employees may be confusing Tax Year 2001 and 2002 tax law
We asked the IRS employees whether the auditor, as a single taxpayer, could claim the EIC for a nephew that was living in the home. On 10 occasions, the IRS employee provided the correct answer but gave the wrong reason. The context of the scenario presented by auditors was that they had not filed their tax return for 2001 or were considering filing an amended return for 2001.
IRS employees stated that a nephew could not be claimed as a qualifying child for the EIC because the nephew did not stay in the home for more than 6 months. However, in order to claim the EIC for a nephew in 2001, the child must stay in the home for the whole year. For 2002, the tax law was changed to allow the EIC if the child stayed in the home for more than 6 months.
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.
|
|
Occurrences |
Percent |
|---|---|---|
|
Employee Professional/Courteous |
61 |
98 |
|
Wait Time for Service Less Than 1 Hour |
62 |
100 |
|
Employee Wore Required Name Tag Displaying
Name and ID Number |
36 |
58 |
|
Employee Name Provided When Requested |
61 |
98 |
Source:
Anonymous visits performed by TIGTA auditors.
Taxpayers can access the IRS’ Internet and follow the appropriate links to obtain the address and office hours of the TACs located in their state. During visits, TIGTA auditors determined if the TAC address and office hours obtained from the Internet matched the information at the TAC. Auditors found the following:
· Office hours for all 31 TACs were listed on the Internet.
· Office hours for 15 (48 percent) of the 31 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 all 31 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) limited their scope to assess 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 31 TACs visited during September and October 2002. During 62 anonymous visits, auditors asked 124 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
Tanya
Boone, Senior Auditor
Pamela DeSimone, Senior Auditor
Charles
Ekunwe, Senior Auditor
Robert Howes, Senior Auditor
Frank Jones, Senior Auditor
Edie Lemire, Senior Auditor
Robert Baker, Auditor
Roberta Fuller, Auditor
Andrea Hayes, Auditor
Kathy Henderson, Auditor
Mary Keyes, 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 September and
October 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.
Appendix V
Management 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.