Taxpayers That Visited Taxpayer Assistance Centers in
November and December 2002 Received Incorrect Answers to Some Tax Law
Questions
March 2003
Reference Number:
2003-40-072
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.
March
6, 2003
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 November and December 2002 Received
Incorrect Answers to Some Tax Law Questions (Audit # 200340014)
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 sixth in a series
of bi-monthly reports that the TIGTA is issuing in response to the amendment to
the Treasury spending bill.
During November and December 2002, TIGTA auditors made 50
anonymous visits to 25 TACs. The
auditors asked 100 tax law questions and determined that IRS employees provided
incorrect answers to some tax law questions.
For example, IRS employees:
·
Correctly answered 54 (54
percent) of 100 questions.
·
Incorrectly answered 27 (27 percent) of 100 questions.
·
Referred the auditor to IRS publications and generally
advised the auditor to do his or her own research to find the answer to 18 (18
percent) of 100 questions.
·
Offered to prepare a written referral for 1 (1 percent) of
100 questions.
In addition, auditors
observed the following during visits to the TACs:
·
Office hours for 12
(48 percent) of the 25 TACs that had office hours posted on the Internet were
the same as the hours posted at the TAC.
·
The addresses posted at 24 (96 percent) of 25 TACs matched
the addresses listed on the Internet.
·
IRS employees were professional and courteous to the TIGTA
auditors in 50 (100 percent) of the 50 visits.
·
Wait time for service was 1 hour or less for 48 (96 percent)
of the 50 visits.
This
report is to advise IRS management of the results of our review. Formal recommendations are not made to the
IRS in the bi-monthly reports. However,
the TIGTA plans to issue a second semiannual trend report during the third
quarter of FY 2003 that will 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 Year 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, but agrees that the IRS has significant room for
improvement. Management is committed to
increasing the accuracy rates as much as possible and is continuing various
efforts to do so. Specific actions
include anonymous managerial visits, error trend reports, and employee
counseling. 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 Objectives, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – States Visited During November and December 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). That report showed 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 that 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 on 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 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 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 approximately 400 TACs located throughout the United States (U.S.) including Washington, D.C. According to the IRS, the TACs served approximately 2.8 million taxpayers between July and December 2002. Approximately 500,000 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 conduct tax law accuracy visits during FY 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.
In October 2002, the FA Quality Review Staff began visiting TACs to anonymously ask tax law questions within the scope of services that TAC employees should have been trained to answer. The results of these reviews will provide each employee’s manager specific feedback on the quality of service provided in the TAC. The IRS plans to use the TIGTA’s Calendar Year (CY) 2002 results as baseline figures to measure improvement during FY 2003.
The TIGTA questions relate to 22 tax law topics that are within the scope of services. The 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 sixth in a series of bi-monthly reports that the TIGTA is issuing on the results of the visits to the TACs, in response to the amendment to the Treasury spending bill. The review was performed at the IRS’ Customer Assistance, Relationships, and Education office in the W&I Division during the period November through December 2002. TIGTA auditors anonymously visited 25 TACs in 6 states (see Appendix IV for 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 plan to issue a semiannual trend report during the third quarter of FY 2003 that will contain these elements. Detailed information on our objectives, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
From January through June 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 semiannual trend and previous bi-monthly reviews.
However, the November and December 2002 results indicate that taxpayers that visited TACs continued to receive incorrect answers to some tax law questions. The TIGTA auditors made 50 anonymous visits to 25 TACs and asked 100 tax law questions during November and December 2002. The results were as follows:
· Fifty-four (54 percent) of the 100 questions were correctly answered. In 14 of the 54 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 told the auditor he could file a joint return for himself and his deceased spouse. However, the IRS employee did not ask the auditor’s martial status on the last day of the year. In order to file a joint return with the deceased spouse, the living spouse must not have remarried before the end of the year.
· Twenty-seven (27 percent) of the 100 questions were incorrectly answered. For example, the IRS employee stated that the taxpayer could claim a niece and her son as dependents. However, the son could not be claimed as a dependent because he did not meet the residency test of staying in the home for the entire year. The IRS employee did not ask how long the niece and her son lived in the home.
· Eighteen (18 percent) of the 100 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.
· One (1 percent) of the 100 questions resulted in the IRS employee offering the auditor a written referral. IRS employees may submit in writing to subject matter experts those questions that are outside their scope of services or level of training. For example, the auditor asked if his nephew qualified him for the Earned Income Tax Credit (EITC). The IRS employee stated that the EITC was a complicated area, and he needed to obtain the publication specifically related to the EITC that was not available. The employee obtained the 2001 Tax Guide for Individuals but could not find the section related to the EITC. Since the IRS informed us that all employees have been trained to answer questions in basic tax law topics such as the EITC and the answer to this question could be found in this publication, the IRS employee should have provided an answer instead of offering to prepare a written referral.
IRS employees used the Publication Method but did not provide an answer to taxpayer questions
During the fall of 2002, IRS employees were trained to use the Publication Method when assisting taxpayers. This method requires IRS employees to obtain the appropriate publication, discuss specific information related to the topic, ask appropriate questions to obtain facts when assisting taxpayers, and respond to the taxpayer’s issue or question. On 7 of the 18 occasions, IRS employees used the Publication Method when assisting TIGTA auditors but did not provide an answer to the question. For example, a TIGTA auditor asked where on the tax return she could deduct tuition used to obtain a Master’s degree. The IRS employee obtained the appropriate publication and discussed the section related to the question. However, the IRS employee did not answer the auditor’s question.
The table below provides a breakdown of the accuracy of questions answered.
|
|
Correct |
Correct
but Incomplete |
Incorrect |
Ref. to Pub. |
Service Denied |
Written Referral |
|---|---|---|---|---|---|---|
|
Responses |
40 |
14 |
27 |
18 |
--- |
1 |
|
Percentages |
40% |
14% |
27% |
18% |
--- |
1% |
Source:
Anonymous visits performed by TIGTA auditors.
The following chart shows the bi-monthly accuracy rates for CY 2002.
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.
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 |
50 |
100 |
|
Wait Time for Service Less Than 1 Hour |
48 |
96 |
|
Employee Name Given or Visible |
26 |
52 |
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 and addresses for all 25 TACs were listed on the Internet.
· Office hours for 12 (48 percent) of the 25 TACs that had office hours posted on the Internet were the same as the hours posted at the TAC. However, office hours for the other 13 (52 percent) TACs were not the same as the hours posted at the TAC. For example, auditors arrived at 1 TAC and had to wait 45 minutes for the TAC to open because a note posted on the door stated the office was closed for lunch. The Internet did not show the TAC would be closed for lunch.
· The addresses posted at 24 (96 percent) of 25 TACs matched the addresses listed on the Internet.
In our first semiannual trend report, we did not make any formal recommendations regarding TAC addresses and office hours because of the IRS’ response to one of our prior bi-monthly reports. However, we have continued to identify concerns in this area and anticipate including recommendations in our second semiannual trend report to ensure taxpayers do not experience difficulties visiting TACs during office hours.
Appendix I
Detailed Objectives, 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. We did not determine the cause and effect for the findings and will not make formal recommendations in the bi-monthly reports.
To achieve these objectives, auditors performed the following tests:
I. Determined if the IRS provided quality service and accurate responses to tax law inquiries at the 25 TACs visited. Auditors asked 100 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
Deborah Drain, Senior Auditor
Carola Gaylord, Senior Auditor
Robert Howes, Senior Auditor
Frank Jones, Senior Auditor
Eddie Lemire, Senior Auditor
Steven Stephens, Senior Auditor
Roberta Fuller, Auditor
Andrea Hayes, Auditor
Kathy Henderson, 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
Audit Liaison: Program/Process Assistant Coordinator, Wage and Investment Division W:HR
Appendix IV
States Visited During November and December 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 six states visited include:
Connecticut, Indiana, Maine, New Mexico, Texas, and West Virginia.
Appendix V
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.