Taxpayer Assistance Center Employees Correctly Answered More Tax Law Questions During July and August 2003 Than Compared to One Year Ago

 

December 2003

 

Reference Number:  2004-40-024

 

 

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.

 

December 4, 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 - Taxpayer Assistance Center Employees Correctly Answered More Tax Law Questions During July and August 2003 Than Compared to One Year Ago (Audit # 200340020)

 

This report presents the results of our review of the Internal Revenue Service’s (IRS) responses to taxpayers’ tax law questions.  The overall objective of the review was to determine if the IRS provides accurate and timely responses to taxpayers’ tax law questions.  In addition, Treasury Inspector General for Tax Administration (TIGTA) auditors that made anonymous visits to the Taxpayer Assistance Centers (TAC) assessed whether IRS employees adhered to operating guidelines on referral procedures and were professional and courteous, and whether TAC addresses and office hours made available to taxpayers were accurate. 

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), then Chairman of the Subcommittee on Treasury and General Government.  The amendment requires us to conduct visits to all TACs and report to the Congress on whether taxpayers are provided correct and prompt answers to their questions.  We are conducting anonymous visits to all TACs over a 2-year period.  This is the tenth in a series of bi-monthly reports that we are issuing in response to the amendment to the Treasury spending bill.

During July and August 2003, TIGTA auditors made 69 anonymous visits to 35 TACs.  The auditors asked 138 tax law questions and determined that IRS employees provided incorrect answers to some of them.  For example, IRS employees:

·        Correctly answered 88 (64 percent) of 138 questions.

·        Incorrectly answered 29 (21 percent) of 138 questions.

·        Referred the auditor to IRS publications and generally advised the auditor to do his or her own research to find the answer to 3 (2 percent) of 138 questions.

·        Denied service to the auditor for 12 (9 percent) of 138 questions.

·        Correctly offered to call the IRS toll-free telephone line for 6 (4 percent) of 138 questions.

We commend the IRS for the corrective actions it has taken in response to our previously issued semiannual and bi-monthly reports.  We believe the increase in accuracy rates compared to those in the same period in Calendar Year (CY) 2002 can be directly attributed to these actions.  For example, during July and August 2002, IRS employees correctly answered 44 percent and referred 14 percent of questions to publications, compared to correctly answering 64 percent and referring only 2 percent to publications during July and August 2003.

In January 2003, we began assessing whether IRS employees adhered to operating procedures to refer to the IRS toll-free telephone lines or Internet those taxpayer questions that were outside the scope of services that employees should have been trained to answer.  In addition to scheduled visits, our auditors completed visits to 15 other TACs.  The auditors asked 40 “out of scope” questions and determined that employees did not follow referral procedures for 12 (30 percent) of these questions.

Auditors also observed that improvement had been made in providing accurate addresses and office hours to taxpayers, IRS employees were professional and courteous to the TIGTA auditors in all 63 visits, and wait time for service was 30 minutes or less for all 63 visits. 

This report is to advise IRS management of the results of our review.  We do not make recommendations to the IRS in the bi-monthly reports.  However, we plan to issue a semiannual trend report during the second quarter of FY 2004 that will include appropriate recommendations to help ensure taxpayers are referred to employees that can provide accurate responses to their tax law questions.  Auditors will continue making visits to the TACs throughout CY 2003. We will also continue to issue bi-monthly reports on the results to the IRS and the Congress.

Management’s Response:  IRS management appreciated our recognition of the corrective actions they took which increased accuracy rates compared to the same period for CY 2002.  Management continues to take steps to improve accuracy in the TACs.  Their long-term approach to improving quality is implementation of Embedded Quality, an approach that focuses on standardized measures, employee monitoring, and feedback at the group level.

The IRS continues to disagree with including referrals to publications and service denied when computing the accuracy rates. 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 findings.  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.

 

Table of Contents

Background

Taxpayers Received Correct Answers to More Tax Law Questions When Compared to the Same Period Last Year

Taxpayers Received Answers to Some Tax Law Questions Employees Were Not Trained to Answer

Auditors Generally Had Positive Experiences When They Visited Taxpayer Assistance Centers

Improvements Were Made to Provide Accurate Taxpayer Assistance Center Office Hours and Addresses to Taxpayers

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 2003

Appendix V – Management’s Response to the Draft Report

 

Background

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), then 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 us 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 that choose to seek help from the IRS in person.  The IRS employees that 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 data 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 7.7 million taxpayers between January and October 2003. Approximately 1.6 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 FA office Quality Review Staff began visiting the TACs in October 2002 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 established an accuracy goal of 80 percent for FY 2003. The IRS also plans to use our Calendar Year (CY) 2002 results as baseline figures to measure improvement during FY 2003.

Our questions relate to 21 tax law topics that are within the scope of services.  The questions were designed to cover a wide range of tax law topics 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 2003, auditors changed the scope of the questions or added additional scenarios that are more applicable to the types of questions taxpayers ask subsequent to the filing season.

Beginning in January 2003, we also began evaluating whether employees adhered to operating procedures to refer to the IRS toll-free telephone lines or Internet (R-mail) those taxpayer questions that were outside the scope of services that employees should have been trained to answer.

This report is the tenth in a series of bi-monthly reports that we are issuing on the results of the visits to the TACs.  The review was performed in the IRS Customer Assistance, Relationships, and Education office in the W&I Division in July and August 2003.  TIGTA auditors anonymously visited 35 TACs in 13 states. Another 15 TACs in 9 states were visited as part of our referral assessment (see Appendix IV for 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 make no recommendations in the bi-monthly reports. We will issue a semiannual trend report during the first quarter of FY 2004 that will include appropriate recommendations to help ensure that taxpayers are referred to employees that can provide accurate responses to their tax law questions.  Detailed information on our audit objective, scope, and methodology is presented in Appendix I.  Major contributors to the report are listed in Appendix II.

Taxpayers Received Correct Answers to More Tax Law Questions When Compared to the Same Period Last Year

During July and August 2002, IRS employees correctly answered 44 percent and referred 14 percent of questions to publications, compared to answering 64 percent and referring only 2 percent to publications during July and August 2003.  We commend the IRS for the corrective actions it has taken in response to our previously issued semiannual and bi-monthly reports. We believe the increase in accuracy rates compared to those in the same period in CY 2002 can be directly attributed to these actions. 

Our auditors made 69 anonymous visits to 35 TACs and asked 138 tax law questions during July and August 2003.  The results were as follows:

·        Eighty-eight (64 percent) of the 138 questions were correctly answered.  However, the IRS employees provided correct answers to 10 of the 88 questions without asking all of the required questions outlined in the tax law instructions and publications.  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 answers given are correct.  For example, for 3 of the 10 questions, the IRS employees stated that the auditors did not have to report child support payments as income. However, the employees did not ask if the auditors’ payments were specifically designated as child support in the divorce agreements.

·        Twenty-nine (21 percent) of the 138 questions were incorrectly answered.  For example, for three questions, the IRS employees incorrectly advised auditors that they would not have to pay taxes on their retirement plan distribution if it was rolled over to an Individual Retirement Arrangement (IRA).  The correct answer to the scenario presented by auditors was the retirement distribution was taxable because it was not rolled over to the IRA within 60 days as required by tax law. 

The following table provides a breakdown of the accuracy of the answers to our questions.

Tax Law Questions
(138 questions asked)

 

Correct

Correct but Incomplete

Incorrect

Ref. to Pub.

Service Denied

Correct
Toll-Free Referral

Responses

78

10

29

3

12

6

Percentages

57%

7%

21%

2%

9%

4%

Source:  Anonymous visits performed by TIGTA auditors.

The chart below shows a comparison of CY 2002 to CY 2003 accuracy rates.

Comparison of July and August 2002 and 2003 Bi-Monthly 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.

 

Taxpayers Received Answers to Some Tax Law Questions Employees Were Not Trained to Answer

In January 2003, we began our assessment of whether IRS employees adhered to operating guidelines that require the referral of tax law questions outside the scope of services they have been trained to answer.  In addition to scheduled visits, TIGTA auditors completed visits to 15 additional TACs.  The auditors asked 40 “out of scope” questions and determined that employees did not follow referral procedures in providing answers to 12 (30 percent) of the questions asked.

IRS operating guidelines require IRS employees that receive a question beyond their level of training to offer to call the correct IRS toll-free telephone line on behalf of the taxpayer or to submit the question in writing to a subject-matter expert(s) via the Internet (R-mail).  The table below provides a breakdown of IRS employees’ answers to tax law questions beyond their level of training.

Out of Scope Questions
(40 questions asked)

 

Correctly Referred

Questions Answered (12)

Correct

Incorrect

Ref. to Pub.

Responses

28

9

3

0

Percentages

 70%

75%

25%

---

Source: Anonymous visits performed by TIGTA auditors.

Auditors Generally Had Positive Experiences When They Visited Taxpayer Assistance Centers

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 following table shows a breakdown of the quality of assistance results.


Quality of Assistance
(35 TACs visited, 2 auditors per site)

 

Occurrences

Percent

Employee Professional/Courteous

63

100%

Wait Time 0-15 Minutes

60

95%

Wait Time 16-30 Minutes

3

5%

Wait Time 31-45 Minutes

0

--

Wait Time 46-60 Minutes

0

--

Wait Time Greater Than 1 Hour

0

--

Employee Name Given or Visible

43

68%

Source: Anonymous visits performed by TIGTA auditors.

Improvements Were Made to Provide Accurate Taxpayer Assistance Center Office Hours and Addresses to Taxpayers  

The TIGTA auditors found that improvements were made to ensure that TAC addresses and office hours made available to taxpayers matched the information posted at the TACs. Taxpayers can access the IRS Internet web site and follow the appropriate links to obtain the addresses and office hours of the TACs located in their state.  Taxpayers that do not have access to the Internet may call the IRS toll-free telephone numbers or automated telephone messaging system to obtain this information.

In our first semiannual report, we made no recommendations pertaining to TAC addresses and office hours because of the IRS’ response to one of our bi-monthly reports.  However, while progress was made, we continued to identify concerns in this area during July through December 2002. Specifically, 43 percent of TAC addresses and 2 percent of TAC office hours posted at the TACs did not match those on the Internet.  As a result, our second semiannual trend report included a recommendation to ensure TAC addresses and office hours made available to taxpayers are accurate.  In response, the FA office issued guidance that required managers to certify the accuracy of addresses and office hours on the various systems.  The FA office also provided employee training on how to update addresses and office hours and began monitoring to ensure the accuracy of information made available to taxpayers.

Beginning in January 2003, we evaluated whether TAC addresses and office hours provided to taxpayers via the Internet, toll-free telephone numbers, and automated telephone messaging system matched the information posted in the TACs. Auditors found the following.

Improvement has been made to ensure addresses and office hours made available to taxpayers match the addresses and office hours posted at the TACs 

·        Addresses posted at 23 (79 percent) of 29 TACs matched the addresses listed on the Internet, toll-free telephone numbers, and automated telephone messaging system.

·        Office hours for 25 (71 percent) of the 35 TACs with office hours posted on the Internet and automated telephone messaging system matched the hours posted at the TAC.

·        Office hours for 26 (74 percent) of the 35 TACs with office hours posted on the toll-free telephone numbers matched the hours posted at the TAC.

The IRS informed us that the addresses and office hours available to taxpayers from the Internet were the most reliable.  As a result, we used these data as a baseline to expand our analysis to determine if addresses and office hours provided to taxpayers from the Internet matched those on the IRS toll-free telephone numbers and automated telephone messaging system.

Improvement has been made to ensure addresses and office hours provided to taxpayers that accessed the IRS Internet web site matched the information provided by the IRS toll-free telephone numbers and automated telephone messaging system

The following tables show the results of our comparison of addresses and office hours made available to taxpayers that access the Internet to the information made available to taxpayers that call the IRS toll-free telephone numbers or automated telephone messaging system.

 



Comparison of Accuracy of Information Provided
via Internet to Toll-Free

 

Occurrences

Percent

Address Correct

35

100%

Office Hours Correct

35

100%

Source:  Anonymous visits performed by TIGTA auditors.

 

Comparison of Accuracy of Information Provided via Internet
to Automated Telephone Messaging System  

 

Occurrences

Percent

Address Correct

35

100%

Office Hours Correct

34

97%

Source:  Anonymous visits performed by TIGTA auditors.

 

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 that made anonymous visits to the Taxpayer Assistance Centers (TAC) assessed whether IRS employees adhered to operating guidelines on referral procedures and were professional and courteous, and whether the TAC addresses and office hours made available to taxpayers were accurate. We did not determine the cause and effect for the findings, so we are making no recommendations in the bi-monthly reports. 

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 35 TACs visited.  Auditors asked 138 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 Years 2002 and 2003 Field Assistance (FA) office Operating Procedures. 

II.                 Determined if TRRs followed FA office Operating Procedures to refer questions that were outside the scope of services they should have been trained to answer.  In addition to scheduled visits, auditors completed visits to 15 additional TACs and asked 40 questions that were beyond the TRRs’ level of training.

III.               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)

Augusta R. Cook, Director

Russell Martin, Acting Director

Frank Jones, Audit Manager

Tanya Boone, Senior Auditor

Pamela DeSimone, Senior Auditor

Lena Dietles, Senior Auditor

Deborah Drain, Senior Auditor

Robert Howes, Senior Auditor

Edie Lemire, Senior Auditor

Bonnie Shanks, Senior Auditor

Grace Terranova, Senior Auditor

Jerome Antoine, Auditor

Robert Baker, Auditor

Roberta Fuller, Auditor

Andrea Hayes, Auditor

Kathy Henderson, Auditor

Mary Keyes, Auditor

 

Appendix III

 

Report Distribution List

 

Commissioner  C

Office of the Commissioner – Attn:  Chief of Staff  C

Deputy Commissioner for Services and Enforcement  SE

Deputy Commissioner, Wage and Investment Division  SE:W

Chief, Customer Liaison, Small Business/Self-Employed Division SE:S:COM

Director, Customer Assistance, Relationships, and Education, Wage and Investment Division  SE:W:CAR

Director, Strategy and Finance, Wage and Investment Division  SE:W:S

Director, Communications and Liaison, Small Business/Self-Employed Division  SE:S:MS:CL

Director, Field Assistance, Wage and Investment Division SE:W:CAR:FA

Director, Stakeholder Partnerships, Education, and Communication, Wage and Investment Division  SE:W:CAR:SPEC

Chief Counsel  CC

National Taxpayer Advocate  TA

Director, Office of Legislative Affairs  CL:LA

Director, Office of Program Evaluation and Risk Analysis RAS:O

Office of Management Controls  OS:CFO:AR:M

Audit Liaison:  GAO/TIGTA Liaison  SE:W:S:PA

 

Appendix IV

 

States Visited During July and August 2003

 

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 13 states visited in which auditors asked questions within the scope of services include Arkansas, Idaho, Louisiana, Maine, New Hampshire, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and Washington.

The nine states visited in which auditors asked questions outside the scope of services include Alabama, Maine, Mississippi, North Carolina, Ohio, Oregon, Tennessee, Vermont, and Washington. 

 

Appendix V

 

Management’s Response to the Draft Report

 

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