A Statistical Portrayal of the Taxpayer Advocate Service for Fiscal Years 2005 Through 2009
August 16, 2010
Reference Number: 2010-10-081
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.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
HIGHLIGHTS
A STATISTICAL PORTRAYAL OF THE
TAXPAYER ADVOCATE SERVICE FOR FISCAL YEARS 2005 THROUGH 2009
Highlights
Final Report issued on August 16, 2010
Highlights of Reference Number:
2010-10-081 to the National Taxpayer Advocate.
IMPACT ON TAXPAYERS
The
Taxpayer Advocate Service (TAS) plays an important role in tax administration by helping
taxpayers who have tried, unsuccessfully, to resolve their tax problems using
normal Internal Revenue Service (IRS) channels.
TIGTA found that fluctuating staffing levels, current authorities, and
increased case receipts have contributed to longer case processing time. As a result, although the TAS may take
interim actions to assist taxpayers, they
have had to wait longer for their tax problems to be fully resolved. Despite the increased workload and decreased
staffing, the TAS has been successful in maintaining high levels of quality and
customer satisfaction.
WHY TIGTA DID THE AUDIT
This review
was initiated to gain an overall perspective of the TAS program in light of its
mission of solving taxpayer problems.
Our overall objective was to provide a statistical portrayal with trend
analyses of the TAS for Fiscal Years 2005 through 2009. This audit addresses the IRS major management
challenge of Providing Quality Taxpayer Service Operations.
WHAT TIGTA FOUND
Many internal and external factors have affected the
TAS’ ability to timely assist taxpayers.
Specifically, the economy, the IRS’ increased emphasis on enforcement
actions, and legislative changes have led to more taxpayers asking for the TAS’ help.
In addition, the TAS’ internal policy of accepting all cases referred to
it by other IRS functions may have contributed to the 38 percent increase in
case receipts since Fiscal Year 2005.
Collectively, TIGTA believes these factors have made it challenging for
the TAS to accomplish part of its mission related to timely resolving taxpayer
problems.
Rising
caseloads have also affected case processing time. In Fiscal Year 2009, cases were open an
average of 80 calendar days, an increase of 14 calendar days (22 percent) since
Fiscal Year 2005. Despite these
challenges, the TAS reported an overall quality rating of 88 percent and a
customer satisfaction rating
of 84 percent during Fiscal Year
2009. However, TIGTA believes many of the issues identified
in our review will continue to present challenges for the TAS and affect its
ability to timely resolve taxpayer problems in the future.
WHAT TIGTA RECOMMENDED
Due to the
nature of this review, TIGTA made no recommendations. However, key TAS management officials
reviewed the report prior to issuance and, overall, agreed with the facts and
conclusions presented regarding the major trends in the TAS over the past five
years. TAS management provided
additional perspective related to the TAS’ change in authority and its effect
on the issuance of Operations Assistance Requests to the operating
divisions. In addition, TAS management
also provided input related to the increase in case processing time.
August 16, 2010
MEMORANDUM FOR NATIONAL TAXPAYER ADVOCATE
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – A Statistical Portrayal of the Taxpayer Advocate Service for Fiscal Years 2005 Through 2009 (Audit # 201010017)
This report presents the results of our review of statistical information that reflects activities of the Taxpayer Advocate Service (TAS). The overall objective of this review was to provide a statistical portrayal with trend analyses of the TAS for Fiscal Years 2005 through 2009. This audit is included in our Fiscal Year 2010 Annual Audit Plan and addresses the major management challenge of Providing Quality Taxpayer Service Operations.
Due to the nature of
this review, we made no recommendations.
However, key TAS management officials reviewed the report prior to
issuance and, overall, agreed with the facts and conclusions presented regarding
the major trends in the TAS over the past 5 years. TAS management provided additional
perspective related to the TAS’ change in authority and its effect on the
issuance of Operations Assistance Requests to the operating divisions. In addition, TAS management also provided input
related to the increase in case processing time.
Management’s complete response to the draft report is
included as Appendix XI.
Please contact me at (202) 622-6510 if you have questions or Nancy Nakamura, Assistant Inspector General for Audit (Management Services and Exempt Organizations), at
(202) 622-8500.
The Systemic Advocacy
Program Received Fewer New Submissions and Opened Fewer Projects
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Historial Perspective of the Taxpayer Advocate
Service
Appendix
V – Criteria – Case Advocacy Program
Appendix
VI – Expenditures and Staffing for Fiscal Years 2005 Through 2009
Appendix
VII – Sources of Cases Received During Fiscal Year 2009
Appendix
IX – Casework Quality Index Standards
Appendix
X – Customer Satisfaction Survey Results
Appendix
XI – Management’s Response to the Draft Report
Abbreviations
|
FTE |
Full-Time Equivalent |
|
FY |
Fiscal Year |
|
IRS |
Internal Revenue Service |
|
OAR |
Operations Assistance Request |
|
RRA 98 |
Restructuring and Reform Act of 1998 |
|
TAS |
Taxpayer Advocate Service |
In response to concerns about the quality of service provided to taxpayers, Congress passed the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98),[1] which led to the reorganization of the IRS. The RRA 98 created the position of the National Taxpayer Advocate and established the Taxpayer Advocate Service (TAS) as an independent organization within the IRS.[2]
In March 2000, the TAS stood up as a separate operating division within the IRS, headed by the National Taxpayer Advocate. The TAS has two principal statutory missions, which are summarized in the TAS mission statement: “As an independent organization within the IRS, we help taxpayers resolve problems with the IRS and recommend changes that will prevent the problems.”[3] The TAS plays an important role in tax administration by helping taxpayers who have tried, unsuccessfully, to resolve their tax problems using normal IRS channels. In addition, the TAS helps taxpayers whose tax problems are causing financial difficulty or significant cost. The TAS established two internal functions to address its principal statutory missions.
By statute, the TAS is required to
maintain at least one Local Taxpayer Advocate office in each State.[5] The TAS currently
has 76 offices throughout the Nation and Puerto Rico, as well as the Headquarters
office in
The structure of the TAS organization has changed since its
inception. In addition to performing its
statutory missions, the TAS assumed responsibility for the administration of
the Taxpayer Advocacy Panel (a Federal advisory committee made up of members of
the general public from each State) in Calendar Year 2002 and the Low Income
Taxpayer Clinic (a grant program) in May 2003.
This review was performed at the TAS National Headquarters
in
We identified
several trends in the TAS’ caseload, authority, and resources during Fiscal Years
(FY) 2005 through 2009 that point to significant changes within the TAS
organization. Many internal and external
factors have affected the TAS’ ability to timely assist taxpayers. The economy, the IRS’ increased emphasis on enforcement
actions, and legislative changes such as the electronic stimulus payment[7] have led to more taxpayers asking for TAS
help. In addition, the TAS’ internal
policy of accepting all cases referred to it by other IRS functions may have contributed
to the 38 percent increase in case receipts since FY 2005. Collectively, we believe these factors have
made it challenging for the TAS to accomplish part of its mission related to
timely resolving taxpayer problems.
Rising caseloads
have also affected case processing time.[8] In FY
2009, cases were open an average of 80 calendar days, an increase of 14
calendar days (22 percent) since FY 2005. This means taxpayers have had to wait longer
for all their issues to be fully resolved.
The TAS’ staffing levels
have also fluctuated since FY 2005, which may have affected its ability to keep
pace with rising inventory and contributed to longer case processing time. The TAS organization was at its lowest
staffing in FY 2007. Since then, the TAS
has been able to hire more personnel and plans
to fill all positions lost to
attrition during FY 2010.
In addition, while the
volume of cases has increased, TAS employees do not have the ability to
directly resolve certain taxpayer problems due to a change in their level of
authority. Most cases must be referred
to the IRS operating divisions for resolution, which typically adds an
additional 45 calendar days to the case processing time. Finally,
although the TAS has experienced increased workload and decreased staffing, it
has been successful in maintaining high levels of quality and customer
satisfaction. However, we believe many
of the issues we identified will continue to present challenges for the TAS and
affect its ability to timely resolve taxpayer problems in the future.
Fluctuating Staffing Levels, Authorities, and Increased Receipts Have Contributed to Longer Processing Time in the Case Advocacy Program
The TAS is an important function within the IRS because it provides an
avenue of assistance for taxpayers experiencing financial difficulties, as well
as those taxpayers that have been unsuccessful in resolving their tax problems
directly with the IRS. Because many of
these taxpayers have already experienced delays and possibly hardships caused
by the IRS, the TAS needs efficient processes to ensure taxpayers receive
timely resolution of their problems.
The TAS’ ability to keep pace with rising caseloads was affected by
fluctuating staffing levels and attrition.
From FY 2005 through FY 2007, TAS staffing levels steadily decreased and
reached its lowest level in FY 2007 with 1,870 Full-Time Equivalents (FTE).[9] Beginning in FY 2006, TAS management began a
hiring initiative to bring staffing levels back to FY 2005 levels. In FY 2009, the TAS organization grew to 1,998
FTEs, an increase of 6.8 percent from FY 2007.
Figure 1 shows the TAS’ fluctuating staffing levels.
Figure 1: FTEs in the TAS Organization
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Since their FY 2010 budget was increased from FY 2009, TAS management has been able to hire more employees to
fill vacant positions, especially in the Case Advocacy Program.[10] To address staffing shortfalls, management
plans to continue hiring to fill all positions (more than 140) that were vacant
due to attrition. In addition, management informed us that they intend
to create and fill at least 25 new case advocate positions in FY 2010.[11] Figure 2 provides a breakdown of staffing for
all TAS functions since FY 2005.
Figure 2: FTEs for FY
2005–FY 2009
|
Program Area |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Core Functions |
|
|
|
|
|
|
1,829 |
1,766 |
1,757 |
1,785 |
1,851 |
|
|
Systemic Advocacy |
32 |
32 |
25 |
29 |
29 |
|
Other Functions |
|
|
|
|
|
|
Low Income Taxpayer Clinic |
10 |
11 |
13 |
12 |
14 |
|
Taxpayer Advocacy Panel |
21 |
21 |
20 |
18 |
24 |
|
Other[12] |
71 |
64 |
56 |
74 |
79 |
|
Total FTEs[13] |
1,963 |
1,894 |
1,870 |
1,918 |
1,998 |
Source: Data provided by TAS management, December
2009.
Replacing positions lost to attrition will be necessary to manage
higher volumes of casework, but it can take years for new employees to become
proficient case advocates.[14] We are concerned that if funding is not
provided to allow the TAS to continue to add case advocate positions, it may
ultimately have to identify other methods to manage case inventories.
The Systemic Advocacy Program has also experienced challenges with staffing
The
Systemic Advocacy Program is an important function within the TAS because the
issues addressed can affect large groups of taxpayers. During a FY 2003 review of the Systemic
Advocacy Program,[15]
we expressed concerns that employees were not always able to fully devote the
time necessary to address advocacy projects due to conflicting priorities.[16]
We observed that personnel were shifted
away from the program for significant periods of time in order to work on the
Annual Report to Congress. However, we
could not determine whether the staffing level was appropriate because no
information was available on the staff days expended in working Systemic
Advocacy Program projects or developing issues for the Annual Report to
Congress.
We did not evaluate the
staffing structure of the Systemic Advocacy Program during this review;
however, we intend to conduct another review of this area in a future audit.
The TAS’ current
authority has led to increased reliance on other IRS operating divisions
In FY 2001, the IRS Commissioner delegated significant
authority to the TAS to enable TAS employees to take various actions on
taxpayer accounts, such as processing certain types
of claims and returns. At that time, it was thought that giving
the TAS these authorities would facilitate
faster service for taxpayers
by decreasing the need to request assistance from other functions within the
IRS. However,
in FY 2007, the National Taxpayer Advocate agreed to relinquish some of the
authority that had previously been granted to the TAS. This change limits the actions case advocates
can take to directly resolve taxpayer account problems. TAS
management believes that its employees should not make any decision that may be
later appealed by a taxpayer, such as accepting/denying claims for refunds or
upholding/abating penalties. TAS
management believes that taking these types of actions interfere with its
Congressional mandate to advocate for taxpayers. In FY 2007, TAS obtained some new
authorities, such as the ability to make certain account adjustments and issue
manual refunds in certain situations.
With their current authorities, TAS employees are limited to taking actions
that are routine and non-substantive,
such as inputting a taxpayer’s change of
address. Specifically, the TAS can no
longer directly resolve many common taxpayer problems such as processing claims
for refund, abating
penalties, or designating taxpayer accounts as “Currently
not Collectible,”
regardless of the
amounts involved.
Although
the TAS receives most of its cases from the IRS operating divisions, it generally must send most cases back to
the IRS for resolution.[17] This means that the TAS must collaborate with the IRS operating divisions to address
most taxpayer cases through the use of Operations Assistance
Requests (OAR).[18] As
a result of the current authority and increasing case receipts, the TAS has had
to issue increasingly more OARs to the IRS operating divisions to address taxpayer issues.
In FY 2008, the TAS issued
approximately 15 percent more OARs than in the prior fiscal year. Therefore, taxpayers may have to wait longer
for resolution because OARs generally extend overall case processing time.
At the request of the National Taxpayer Advocate, we performed an audit during FY 2007 to determine whether the OAR process was efficient.[19] We found that taxpayers may have been burdened because the OAR process was paper-intensive and added unnecessary time to case processing. These delays were especially critical if the taxpayer was experiencing a financial hardship and needed expedited assistance.
Another significant problem we identified during our
previous review was the high number of OARs rejected by the IRS functions.[20] This further delays resolution of the taxpayer’s problem
since the OAR must be corrected and resubmitted to the applicable IRS function
for processing. One of the most
common reasons the IRS rejected the OARs issued by the TAS was because they
were sent to an incorrect operating division or function.
In our FY 2007 report, we
recommended that TAS management evaluate a sample of OARs to determine the
reasons why they were rejected. In this review, we noted that the TAS has made continued
progress in reducing the number
of OARs rejected by the IRS functions. Figure 3 shows the OARs issued and rejected:
Figure
3: OARs Issued by the TAS and Rejected
by the IRS
|
Fiscal Year |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Percentage of Cases Closed With |
Unknown |
49.4% |
48.5% |
52.8% |
54.7% |
|
OARS Issued by the TAS |
162,096 |
190,429 |
196,861 |
226,446 |
243,309 |
|
OARS Rejected by the IRS[21] |
21,235 |
25,898 |
25,020 |
20,764 |
17,320 |
|
Reject Rate |
13.1% |
13.6% |
12.7% |
9.2% |
7.1% |
Source:
TAS FY 2008 and FY 2009 4th
Quarter Business Performance Reviews; TAS 2005 Annual Report to Congress;
Discussion of Taxpayer Advocate Service Process Reengineering Efforts, dated
March 2008; and Taxpayer Advocate Service: FY 2009 Review and Fiscal Year 2010 Target
Setting Process for IRS Oversight Board Meeting: November 18, 2009.
Although the TAS has taken steps to
reduce the number of OARs rejected by the IRS, we continue to be concerned that
the use of OARs significantly increases TAS processing time on cases.
Since FY 2005, the average cycle time on cases with at
least 1 OAR was 45 calendar days longer than the average cycle time for cases
without any OARs. During FY 2009, the TAS issued 50 percent more OARs than during FY
2005.
The TAS sent an average of two OARs to the IRS for each taxpayer case that required an OAR.[22] For example, the TAS may send one OAR to an Examination function group to reconsider a taxpayer’s audit assessment and a separate OAR to a Collection function because the taxpayer requested an installment agreement. TAS management informed us that they are also considering expanding the use of “piggyback OARs” in which one OAR is used for an issue that is worked by multiple functions/business units.
In our FY 2007 report, we recommended that the TAS automate the OAR process to enable IRS personnel to input data and return OARs electronically. While the TAS agreed with our recommendation, the process has not yet been fully automated. However, TAS management indicated they have taken other actions to improve the OAR process, including:
Creating web links to IRS resources that aid the TAS in routing the OARs to the correct IRS functional office.
Using dedicated email boxes and secure email to transmit the OARs in order to avoid delays associated with mailing paper files.
Adding
a feedback button to the TAS intranet web site that allows IRS employees to elevate problems with the
OAR process.
After we completed our audit of the OAR process, the TAS contracted with an independent consulting firm to explore ways to improve case processing. In a September 2008 report, the consulting firm stated that the OAR process was inefficient. They noted that misrouted OARs cause rework for the TAS and the IRS and cause delays for taxpayers. The consulting firm also agreed with our recommendation to automate the OAR process.[23] However, the final report with the consulting firm’s results was not yet completed by the end of our fieldwork on this review.
The OARs have become an integral part of case processing. As a result, the TAS is dependent on the other IRS functions to ensure that actions taken on taxpayers’ accounts are timely and accurate. Consequently, it is important that the OAR process be efficient so that taxpayers are not subject to lengthy or unnecessary delays in resolving their tax problems.
Receipts in the Case
Advocacy Program have continued to rise since FY 2005
Another significant
factor affecting the TAS organization is the number of taxpayers asking for
assistance. Since FY 2005, case receipts
have increased significantly, increasing almost 38 percent by FY 2009.[24] As
shown in Figure 4, despite the rising inventory, TAS personnel closed almost 50
percent more cases in FY 2009 than in FY 2005.
Figure 4: TAS Inventory Measures for FY 2005–FY 2009
|
Performance Measure |
FY 2005 |
FY 2006 |
FY 2007 |
FY 2008 |
FY 2009 |
Change From |
|
Case Receipts |
197,679 |
242,173 |
247,839 |
274,051 |
272,404 |
37.8% |
|
Closures |
190,153 |
234,630 |
245,467 |
260,439 |
283,841 |
49.3% |
|
Ending Inventory |
40,648 |
48,198 |
50,534 |
64,348 |
52,936 |
30.2% |
Source: TAS FY
2008 and FY 2009 4th Quarter Business
Performance Reviews.
The increased volume of
casework can be attributed to several external factors and trends, such as
legislative changes and the economy. For
example, the number of TAS cases involving identity theft increased from 2,486
in FY 2006 to 14,023 in FY 2009 (an increase of more than 460 percent). The National Taxpayer Advocate also
attributes a rise in case receipts to increased IRS emphasis on enforcement
actions such as liens and levies. Figure
5 shows the correlation between IRS levy actions and the receipt of cases
involving levies in the TAS.
Figure 5: IRS Levies Against Taxpayers and Impact on
TAS Cases
Figure 5 was removed due to its size. To see Figure 5, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Another factor affecting
the TAS’ high inventory levels is its case acceptance policies. Most of the cases the TAS receives are
referred to it by the IRS functions, primarily through the toll-free telephone
lines;[25] however, TAS employees have indicated
that many of these cases could have been resolved by the IRS function that
referred the taxpayer’s request to them. In a FY 2009 survey, TAS employees identified
inappropriate referrals[26] from the IRS functions as one of the top five challenges facing the
TAS.
TAS management has also
acknowledged the problem. In her 2010
Annual Objectives Report to Congress, the National Taxpayer Advocate noted, “In
surprisingly many instances, the cases TAS receives from the IRS could as
easily and sometimes more easily, be resolved by the IRS employees themselves.”[27] However,
the TAS does not routinely reject referrals from the IRS, even when they do not
meet TAS case acceptance criteria, because the National Taxpayer Advocate
believes that taxpayers would be further burdened if their case is not accepted
by the TAS.
We noted in a FY 2008
report that the TAS could take additional steps to ensure that cases referred
by other IRS operating divisions meet its case criteria.[28] During
our previous audit, we identified many instances where the IRS did not provide
enough details about the taxpayers’ situations to determine whether the case should
have been worked by the TAS. We believe
this may have occurred because IRS managers were not required to review economic
burden cases[29] before referring the taxpayer to the TAS
for assistance.[30] As
a result, we could not determine whether many of the cases referred to the TAS
met its criteria.
In response to our
recommendation in the FY 2008 report, the TAS agreed to analyze a sample of
cases referred from other IRS functions to assess whether the IRS provided an adequate
description of the taxpayer’s problem; however, the National Taxpayer Advocate declined our recommendation to require that
IRS managers review all economic burden referrals before they are submitted to
the TAS. We still believe it may be
appropriate for IRS managers to determine whether they can immediately assist
the taxpayer before referring the case to the TAS. This could be significant since the referring
function may have the authority to immediately resolve the taxpayer’s problem.
TAS management advised us during this review that
they are working on several initiatives that should help the TAS keep pace with
rising case receipts. This includes
hiring additional staff and developing technical training modules to help case
advocates address complex issues in case processing. In addition,
the TAS is developing a new information system that is expected to improve its
ability to share information among TAS operations and eliminate duplicate
information in multiple systems.[31] TAS
management is scheduled to begin implementing this new system in FY 2011.
Case processing
time has steadily increased since FY 2005, causing taxpayers to wait longer for
resolution of their problems
Since FY 2005, some taxpayers have had to wait longer periods of time for the TAS to fully address their problems. We believe this could signify a critical issue because providing timely service is critical to the TAS’ mission.[32] In FY 2004, we performed an audit to review the TAS’ case cycle time to determine if taxpayers were receiving timely customer service.[33] Based on our review, we estimated that 76,183 taxpayers experienced unnecessary delays averaging 16 calendar days in FY 2003 because the TAS did not always take timely actions. In response to our recommendation in the FY 2004 report, the TAS agreed to conduct additional case reviews to ensure taxpayer cases were processed in a timely manner.
Since FY 2005, the TAS’ average case processing time has
steadily increased to more than 80 calendar days, the highest processing time reported in the last 5 fiscal years.[34] The
TAS cycle time for FY 2009 represents a 22 percent increase from FY 2005, when
the average cycle time was 66 calendar days.
During this review, we could not determine whether the increase in processing time directly affected taxpayers; however, we continue to have concerns that taxpayers who may have already experienced IRS delays must wait longer to receive help from the TAS.[35] Figure 6 shows taxpayer cases are taking longer to resolve.
Figure 6: Case Advocacy Program – Case Cycle Time
Figure 6 was removed due to its size. To see Figure 6, please go to the Adobe PDF version of the report on the TIGTA Public Web Page..[36]
Since FY 2005, the TAS has also received increasingly greater numbers of economic burden cases, the most critical and time-sensitive cases in the TAS inventory. Typically, the taxpayer asks the TAS to stop an IRS enforcement action (e.g., a wage levy) or to expedite his or her refund to prevent a potential financial hardship. Figure 7 shows the increase in economic burden cases.
Figure 7: Economic Burden Cases in the Case Advocacy Program
Figure 7 was removed due to its size. To see Figure 7, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Although the TAS gives these taxpayers priority treatment, it is taking longer to process economic burden cases. As shown in Figure 8, in FY 2009, the average case processing time for economic burden cases was approximately 65 calendar days, an increase since FY 2005 of more than 19 calendar days (approximately 43 percent).
Figure 8: Economic Burden Case Cycle Time
Figure 8 was removed due to its size. To see Figure 8, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
We are also concerned that the volume of casework will continue to affect the ability of case advocates to take timely actions on taxpayer cases. This concern was raised earlier by officials from the Government Accountability Office in a 1999 testimony before a Congressional oversight committee.[37] They noted that an increase in the number of cases could negatively affect the timeliness and quality of casework and could make it necessary for the National Taxpayer Advocate to reevaluate which cases to address with their limited resources.
The Case Advocacy Program has not met its goals for timeliness
Since timeliness is one of the key attributes of quality customer service, it is important to ensure that taxpayer issues reaching the stage of a TAS case are resolved as expeditiously as possible. Annually, the TAS establishes goals and measures for timeliness of case actions. They are:
Timeliness of the initial contact.
Timeliness of initial actions.
Timeliness of subsequent actions.
In FY 2009, the TAS scored high marks (more than 95
percent) for 2 of its timeliness goals: making
timely initial contacts with taxpayers and taking initial actions; however, it
did not meet its target for timeliness of subsequent actions.[38]
TAS management does not set specific case processing time goals since
their objective is to take whatever time necessary to fully resolve the case
issues. They do, however, require
managerial reviews of cases at specific intervals (such as every 100 calendar
days) to help ensure case advocates take timely actions on taxpayer’s
accounts. Nonetheless, in a prior audit,
we found that managerial reviews were not always effective for this
purpose. During that review, we found
delays continued even after management had reviewed some of the cases in our
sample.[39]
The Systemic Advocacy Program Received Fewer New Submissions and Opened Fewer Projects
The Systemic Advocacy Program plays an important role in identifying issues that can burden large groups of taxpayers. Issues received in the Systemic Advocacy Program come from many sources, including TAS and other IRS employees, tax practitioners, and the general public.
Once the
TAS selects an issue for its Systemic Advocacy Program, the issue is identified
as either an Immediate Intervention[40] or an Advocacy Project.[41]
Immediate intervention projects are
considered to be more time sensitive and may require urgent attention. For example, an Immediate Intervention
project would be warranted if an IRS computer programming error caused a delay
in the issuance of refunds to thousands of taxpayers.
Since FY 2006, the
Systemic Advocacy Program has received fewer total submissions. During FYs 2006 and 2007, the Systemic
Advocacy Program received more than 1,100 suggestions for Systemic Advocacy
Program projects, respectively; however, in FY 2009, the program received only
860 submissions, a 30 percent decrease in new issues received from FY
2007. In FY 2009, the Systemic Advocacy
Program opened 135 new projects, (the lowest number in the past 5 fiscal
years), closed 128 projects, and had 123 projects in ending inventory.
TAS management
attributes the drop in new receipts to better screening and enhancements made
to its database, the Systemic Advocacy Management System. We did not evaluate the reasons for the
declining submissions during this review.
Figure 9 shows total receipts in the Systemic Advocacy Program, Figure
10 shows closures, and Figure 11 shows ending inventory.
Figure 9: Project
Receipts in the Systemic Advocacy Program
|
Fiscal Year |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Suggestions Received[42] |
635 |
1,144 |
1,224 |
964 |
860 |
|
Advocacy Projects Opened |
156 |
126 |
164 |
111 |
116 |
|
Immediate Interventions Opened |
19 |
55 |
68 |
36 |
19 |
|
Total Projects Opened |
175 |
181 |
232 |
147 |
135 |
|
Percent of Projects
Opened on Suggestions Received |
27.6% |
15.8% |
19.0% |
15.2% |
15.7% |
Source: TAS
2005, 2006, 2007, 2008 Annual Reports to Congress; TAS FY 2008 and 2009 4th
Quarter Business
Performance Reviews; and data provided by TAS management, March 2010.
Figure 10: Project Closures in the Systemic Advocacy
Program
|
Fiscal Year |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Advocacy
Projects Closed |
Unknown |
203 |
159 |
166 |
103 |
|
Immediate
Interventions Closed |
Unknown |
35 |
62 |
48 |
25 |
|
Total
Projects Closed |
333 |
238 |
221 |
214 |
128 |
Source: TAS 2006, 2007, and 2008 Annual Reports to
Congress and data provided by TAS management,
March 2010.
Figure 11: Ending Inventory in the Systemic Advocacy Program
|
Fiscal Year |
2005 |
2006 |
2007 |
2008 |
2009 |
|
Advocacy
Projects |
Unknown |
Unknown |
157 |
127 |
115 |
|
Immediate
Interventions |
Unknown |
Unknown |
26 |
13 |
8 |
|
Total
Projects |
229 |
170 |
183 |
140 |
123 |
Source: TAS FY 2007, 2008, and 2009 4th
Quarter Business Performance Reviews and data provided by TAS management, March
2010.
The
Systemic Advocacy Program has not met its timeliness goals for project actions
In a prior audit conducted during FY 2003, we found that Systemic Advocacy Program projects
were frequently not completed timely and there were long periods of time
without any project activity.[43]
Further, we identified the temporary
assignments of TAS personnel to work on the Annual Report to Congress were a competing priority with Systemic Advocacy Program
projects. We were concerned that delays
in completing Systemic Advocacy Program projects could adversely affect
substantial numbers of taxpayers; therefore,
we recommended that the TAS establish timeliness and staff resource standards
for conducting Systemic Advocacy Program projects. Beginning in FY 2007, the TAS implemented quality standards for the
Systemic Advocacy Program, which includes guidelines for timeliness.
In FY 2009, the TAS did not meet the timeliness goals set for Advocacy Projects or Immediate Interventions.[44] During a discussion with TAS management in March 2010, they indicated this was due in part to the temporary assignment of analysts to higher priority work, including preparation of the Annual Report to Congress. Management also indicated they were not fully staffed, but the recent hiring of five new systemic field analysts would help them attain higher levels of timeliness. We did not evaluate the reasons for untimely actions on projects, but we may review this issue in a future audit.
The Taxpayer Advocate Service Continues to Report High Levels of Casework Quality and Customer Satisfaction
Since FY 2005, the TAS has reported high scores for the quality of work done in its Case Advocacy Program. Despite rising case receipts, fluctuating staffing levels, and decreased authority, TAS case quality and customer satisfaction measures remain high. In FY 2009, the TAS reported an overall quality rating of 88 percent, which was only slightly less than the highest rating of 92 percent reported in FY 2005. During this review, we did not evaluate the TAS’ quality review process and we relied upon the data provided by TAS officials.
In a FY 2008 review of TAS casework, we expressed concerns to TAS management about the overall accuracy of their quality measures.[45] Although 56 percent of the cases we reviewed had errors that affected taxpayers or Government revenue, the TAS reported an overall quality rating of 90 percent for the same period (FY 2006). We attempted to reconcile the difference by reviewing the TAS’ sampling methodology used to select cases for its quality review process. However, the TAS did not identify which, if any, of the cases in our sample were selected as part of its quality review process. As a result, we were unable to determine the reasons for the difference within the scope of the audit. The TAS has subsequently drafted new quality measures and it plans to begin implementation in FY 2010.
Most Case Advocacy Program quality scores remain high
To help TAS management assess how well its Case Advocacy Program is performing, the TAS developed an overall quality measure. The TAS’ overall quality measure consists of 8 quality standards weighted from 5 to 25 points.[46] Although the TAS was close to meeting most of its internally established quality goals during FY 2009, it met only one[47] of its eight goals as shown in Figure 12.
Figure 12: FY 2009 Case Quality – Case Advocacy Program
Figure 12 was removed due to its size. To see Figure 12, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Standard number 3 (Timeliness of Subsequent Actions) is the percent of all cases with timely subsequent case actions. This standard dropped from 87 percent in FY 2005 to 70 percent in FY 2009 and assesses whether the TAS takes all subsequent actions timely (including required taxpayer contacts). Figure 13 compares the overall quality rating to the timeliness standard number 3.
Figure 13: Case Advocacy Overall Quality Rating and Comparison With Timeliness of Subsequent Actions
Figure 13 was removed due to its size. To see Figure 13, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Most quality measures for the Systemic Advocacy Program continue to
improve
In FY 2007, the TAS established quality measures and began conducting quality reviews of its closed Advocacy Projects and Immediate Interventions. The TAS uses three general standards to measure overall quality: Accuracy, Timeliness, and Quality of Communications. Figure 14 shows that although most scores have improved since FY 2007, the TAS has consistently low scores for taking timely actions.
Figure 14: Systemic Advocacy Program
Quality Ratings
|
Quality Measure |
FY 2007 |
FY 2008 |
FY 2009 |
FY 2009 Target |
|
|
Advocacy |
Accuracy of Closed
Projects |
75.8 |
87.8 |
91.5 |
90.7 |
|
Timeliness of Actions |
37.2 |
49.0 |
61.0 |
64.1 |
|
|
Quality of
Communications |
83.2 |
84.4 |
90.8 |
86.8 |
|
|
Immediate Interventions |
Accuracy of Closed Projects |
79.9 |
82.4 |
90.1 |
87.5 |
|
Timeliness of Actions |
51.8 |
47.4 |
53.8 |
70.0 |
|
|
Quality of
Communications |
85.0 |
76.0 |
75.3 |
82.5 |
|
Source:
TAS FY 2009 Performance Measures and Target Results Report.
Customer satisfaction scores are generally
positive for the Case Advocacy Program
The TAS contracted with an outside
vendor to conduct quarterly surveys to assess whether taxpayers are satisfied
with the service provided by the Case Advocacy Program. Although all results from the individual
survey questions are not published, TAS management reports three broad
categories of results:
Percentage of
taxpayers satisfied with the service provided by the TAS.
Percentage of
taxpayers dissatisfied with the service provided by the TAS.
Percentage of
taxpayers who indicate the TAS employee did their best to solve their
problem.[48]
While overall satisfaction remains high, the FY 2009 targets were not met.[49] In FY 2009, more than 15,000 taxpayers responded to these surveys (approximately 5 percent of the taxpayer cases closed in FY 2009). The results showed that 84 percent of the taxpayers surveyed were satisfied with the service provided by the TAS, while 12 percent were dissatisfied. The FY 2009 goals for customers satisfied and dissatisfied were 86 percent and 11 percent, respectively. In addition, 86 percent of taxpayers responded that the TAS employee did their best to solve their problem. In light of other trends (e.g., increased case receipts, case processing time, etc.), the relatively constant level of customer satisfaction is noteworthy.
Figure 15: Case Advocacy Program Customer Satisfaction
Figure 15 was removed due to its size. To see Figure 15, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
In FY 2008, TAS management began identifying the TAS offices with the lowest and highest customer
satisfaction scores. They have engaged a contractor to work with
employees in these offices to identify performance variables and best practices
to help offices improve scores.
Some customers felt the Systemic Advocacy Program could have been more
responsive
In FY 2007, management in the Systemic
Advocacy Program initiated a survey to assess whether TAS employees who submitted issues
were satisfied with the process. In FY
2008, the TAS expanded the survey to include submitters in other IRS business
units. We reviewed the survey results for FY 2007
and FY 2008 and found that some persons who made suggestions appeared
dissatisfied with the communication from Systemic Advocacy Program personnel.
For FY 2007, the response rate was 42 percent
and, of those, 37 percent were not satisfied with the communication
and/or interactions they had with Systemic Advocacy Program personnel. Further, just 31 percent of the respondents
were satisfied with the overall outcome of the issue they submitted.
For FY 2008, the overall response rate dropped to 34 percent. However, the number of respondents who were not satisfied with the communications/interactions with Systemic Advocacy Program personnel dropped to 27 percent. The TAS did not specifically ask if respondents were satisfied with the overall outcome, although 86 percent of those surveyed indicated they would use the system again. TAS management indicated in FY 2009 they plan to become more interactive with persons that submit issues to the Systemic Advocacy Program and will share the final outcome of projects with them.
Appendix I
Detailed
Objective, Scope, and Methodology
The overall objective of this review was to provide a statistical portrayal with trend analyses of the TAS for FYs 2005 through 2009. To accomplish this objective, we:
I. Determined the statutory mission of the TAS and identified each of the programs currently assigned to the TAS.
II. Reviewed published data relating to the TAS’ activities for FYs 2005 through 2009.[50]
III Identified the resources (i.e., FTEs and budget) devoted to the TAS and determined how the resources are employed within the programs the TAS administers.
IV. Reviewed and analyzed statistical data for trends in the Case Advocacy Program.
V. Reviewed and analyzed statistical data for trends in the Systemic Advocacy Program.
VI. Reviewed Treasury Inspector General for Tax Administration and Government Accountability Office reports issued in FYs 2005 through 2009 to compile relevant information that provides additional perspective of explanations for identified trends.
VII. Discussed relevant issues with management to confirm the results of our review.
Internal controls
methodology
Internal controls relate to management’s plans, methods, and procedures
used to meet their mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program
operations. They include the systems for
measuring, reporting, and monitoring program performance. We did not assess internal controls because
doing so was not applicable within the context of our audit objective.
Appendix II
Major Contributors to This Report
Nancy A. Nakamura, Assistant Inspector General for Audit (Management Services and Exempt Organizations)
Jeffrey M. Jones, Director
Janice M. Pryor, Audit Manager
Mary F. Herberger, Lead Auditor
Joseph P. Smith, Senior Auditor
Kanika Kals, Auditor
Appendix III
Commissioner C
Office of the
Commissioner – Attn: Chief of Staff C
Deputy National Taxpayer Advocate TA
Executive Director, Case Advocacy TA:EDCA
Executive Director, Systemic Advocacy Systems TA:EDSA
Chief Counsel CC
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of Internal
Control OS:CFO:CPIC:IC
Audit Liaison: National Taxpayer Advocate TA
Appendix IV
Historical Perspective of the Taxpayer
Advocate Service
The TAS has undergone significant changes since it evolved from the Problem Resolution Program, which was founded by the IRS in 1976. At that time, taxpayer issues were worked under the Problem Resolution Program by IRS employees reporting directly to IRS District Directors, who oversaw all IRS field offices.
The Office of the Taxpayer Ombudsman was created by the IRS in 1979 to serve as the primary advocate for taxpayers. This position was codified in the Omnibus Taxpayer Bill of Rights in 1988.[51] The law also provided the Ombudsman authority to issue Taxpayer Assistance Orders. Taxpayer Assistance Orders allowed the Ombudsman to direct the IRS to take or cease an action when taxpayers were suffering or about to suffer significant hardships because of the way the Internal Revenue laws were being administered. For example, the Ombudsman could issue a Taxpayer Assistance Order to the Collection function to release a wage levy if the taxpayer was unable to pay for necessary living expenses.
In 1996, the Taxpayer Bill of Rights 2 replaced the Office of the Taxpayer Ombudsman with the Office of the Taxpayer Advocate.[52] According to the National Taxpayer Advocate, this was in response to a perceived need to strengthen the voice and authority of the position and expanded the scope of some authorities granted to the Ombudsman. In addition, it also established the requirement for this office to issue two annual reports directly to Congress. It did not, however, provide the Taxpayer Advocate with direct line authority over the regional and local personnel who handled taxpayer cases.
In response to concerns about the quality of service provided to taxpayers, Congress passed the IRS RRA 98,[53] which created the position of the National Taxpayer Advocate and established the TAS as an independent organization within the IRS. To ensure the National Taxpayer Advocate’s independence, the RRA 98 provided for the National Taxpayer Advocate to be appointed by the Secretary of the Treasury instead of the IRS Commissioner. Further, the RRA 98 provided for increased independence of the Taxpayer Advocate’s office, requiring direct management control of the office’s staff by the National Taxpayer Advocate.
Appendix V
Criteria – Case Advocacy Program
The following chart details the TAS criteria for accepting cases into
its Case Advocacy Program.[54]
|
Economic Burden Criteria |
1 |
A taxpayer is
experiencing economic harm or is about to suffer economic harm. |
|
2 |
A taxpayer is facing an
immediate threat of adverse action. |
|
|
3 |
A taxpayer will incur
significant costs if relief is not granted (including fees for professional
representation). |
|
|
4 |
A taxpayer will suffer
irreparable injury or long-term adverse impact if relief is not granted. |
|
|
Systemic Burden Criteria |
5 |
A taxpayer has had a delay
of more than 30 calendar days (after normal processing) to resolve a tax
account problem. |
|
6 |
A taxpayer has not
received a response/resolution to his/her problem/inquiry by the date
promised. |
|
|
7 |
A system(s) or
procedure(s) has either failed to operate as intended or failed to resolve
the taxpayer’s problem or dispute within the IRS. |
|
|
Best Interest of the Taxpayer |
8 |
The manner in which the
tax laws are being administered raise considerations of equity, or have
impaired or will impair the taxpayer’s rights. |
|
Public Policy |
9 |
The National Taxpayer
Advocate determines compelling public policy warrants assistance to an
individual or group of taxpayers. |
Source: Internal Revenue Manual Part 13, dated July
23, 2007.
Appendix VI
Expenditures and Staffing for
Fiscal Years 2005 Through 2009
The following figures show expenditures made by the TAS and
staffing levels during the period FYs 2005 through 2009.
Figure 1: Expenditures for FY 2005–FY 2009 (in millions)
|
Program Area |
FY 2005 |
FY 2006 |
FY 2007 |
FY 2008 |
FY 2009 |
|
Case Advocacy |
$142.7 |
$146.0 |
$150.5 |
$162.8 |
$174.7 |
|
Systemic Advocacy[55] |
$3.7 |
$4.0 |
$3.2 |
$4.0 |
$4.3 |
|
Low Income Taxpayer Clinic[56] |
$9.2 |
$9.4 |
$9.6 |
$10.7 |
$11.4 |
|
Taxpayer Advocacy Panel |
$2.5 |
$2.5 |
$2.7 |
$2.7 |
$3.2 |
|
Other[57] |
$9.1 |
$8.5 |
$8.1 |
$10.1 |
$11.2 |
|
Total[58] |
$167.3 |
$170.3 |
$174.0 |
$190.3 |
$204.8 |
Source:
Data provided by TAS management, December 2009.
Figure 2: FTEs for FYs 2005–2009
|
Program Area |
FY 2005 |
FY 2006 |
FY 2007 |
FY 2008 |
FY 2009 |
|
Case Advocacy |
1,829 |
1,766 |
1,757 |
1,785 |
1,851 |
|
Systemic Advocacy1 |
32 |
32 |
25 |
29 |
29 |
|
Low Income Taxpayer
Clinic2 |
10 |
11 |
13 |
12 |
14 |
|
Taxpayer Advocacy Panel
|
21 |
21 |
20 |
18 |
24 |
|
Other3 |
71 |
64 |
56 |
74 |
79 |
|
Total4 |
1,963 |
1,894 |
1,870 |
1,918 |
1,998 |
Source: Data provided by TAS management, December 2009.
Appendix VII
Sources of Cases Received During Fiscal Year 2009
|
TAS Cases
Received From IRS Operating Divisions |
|
|
IRS Referrals |
42.2% |
|
NTA Toll-Free Telephone
Line |
28.3% |
|
Taxpayer Requests |
2.5% |
|
IRS – Congressional Referral |
0.2% |
|
Total Case Receipts
From the IRS |
73.2% |
|
Cases Received Through Direct Contact With the TAS |
|
|
Form 911 / Correspondence |
14.3% |
|
Congressional Inquiry |
6.2% |
|
Telephone Call |
4.2% |
|
Walk-In |
1.4% |
|
ASKTAS1 Toll-Free
Telephone Line |
0.7% |
|
Total Direct TAS
Contacts |
26.8% |
|
Total |
100% |
Source: TAS 4th
Quarter FY 2009 Business Performance Review.
Notes:
NTA = National Taxpayer
Advocate.
Taxpayers and IRS employees use Request for Taxpayer Advocate Service Assistance
(And Application for Taxpayer Assistance Order (Form 911)) to submit issues to the TAS. The
NTA Toll-Free Line (1-877-777-4778) is staffed by IRS employees in the Wage and
Investment Division. ASKTAS1 Toll-Free Telephone
Line (1-877-275-8271) calls are routed
to TAS intake advocates.[59]
Appendix VIII
Case
Advocacy Program
Full-Time Equivalents and Case Receipts
for Fiscal Years 2005 Through 2009
As shown in Figure 1, the number of new case receipts has steadily increased in the Case Advocacy Program. In addition, since FY 2005, staffing has fluctuated and was at its lowest level during FY 2007.
Figure 1: Case Receipts and Full-Time Equivalents
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Appendix IX
Casework
Quality Index Standards
|
STANDARD |
OVERVIEW |
APPLICATION |
|
#1 – Did
the TAS make timely contact with the taxpayer?(5 points) |
The TAS must make
contact with the taxpayer or representative (preferably by telephone) within
the specified time period indicated in Internal Revenue Manual Part 13. This standard applies to timeliness of the
contact only, not content. |
For all cases. |
|
#2 – Did
the TAS take initial action/request information within the specified time
period? |
The TAS must make
substantive initial actions to resolve the taxpayer’s case with no
unnecessary delays. This standard
ensures that case actions are started promptly. This standard measures timeliness only. |
For all cases. |
|
#3 – Did
the TAS take all subsequent actions timely from the time action could have
been taken? |
It is essential that
the TAS take actions expeditiously to resolve the taxpayer’s case with no
unnecessary delays. To ensure timely
actions, the TAS must meet internal followup dates for subsequent actions and
meet next contact dates communicated to customers. This standard measures
whether the TAS takes all subsequent actions (internal followups and next
contacts with customers) timely. |
For most cases. Exception: Cases resolved on the same day as the
initial action. |
|
#4 – Did
the TAS resolve all taxpayer issues? |
TAS cases will not be
closed until the TAS has taken all actions necessary to resolve the
taxpayer’s issue(s) and all transactions have posted. If the TAS does not properly resolve the
taxpayer’s issue(s), the taxpayer will not be satisfied and will need to contact
the IRS or the TAS again. |
For all cases
(including cases closed due to nonresponse by the taxpayer or
representative). |
|
#5 – Did
the TAS address all related issues? |
A related issue is a tax issue, other
than the primary core issue, that arose or was identified during the course of
working the case. Related issues can be
identified by the TAS, the IRS, or even the taxpayer. Once identified, the TAS has the
responsibility to address the issue with the taxpayer and provide guidance on
resolution of the related issue or provide options to the taxpayer. |
For cases with related issues. A related issue could
involve the TAS customer or another taxpayer who has been affected by TAS
actions on behalf of the TAS customer. |
|
STANDARD |
OVERVIEW |
APPLICATION |
|
#6 – Were all actions taken by the TAS and the IRS
operations/functional divisions technically and procedurally correct? |
This standard ensures that all actions
made by the TAS and/or IRS operations are technically and procedurally
correct. The term “technically
correct” refers to the mechanics of adjustments, while “procedurally correct”
refers to working the case in accordance with the law, Internal Revenue
Manual, and IRS procedural handbooks. This standard also measures the
following issues:
|
For all cases where an adjustment was
input and/or an action was required. Exception: If a case is closed as a “no response”
case, and there have been no verbal contacts with the taxpayer for
authentication purposes, no adjustment actions taken, and no collection holds
requested, Standard #6 would be rated as “not applicable.” Note: (1) The term
“adjustment” refers to any action taken which will change the taxpayer’s
account on any Master File[60]
(e.g., tax adjustments, penalty adjustments, credit transfers, freeze code
input/release, entity changes, etc.).
“Any Master File” includes Individual Master File,[61]
Business Master File,[62]
Non-Master File,[63]
Individual Retirement Account File,[64]
etc. (2) The TAS is responsible
for ensuring that adjustments made by other IRS functions as a result of an
OAR are done correctly and post properly. (3) The term “action”
refers to any action. |
|
STANDARD |
OVERVIEW |
APPLICATION |
|
#7 – Did the TAS give the taxpayer a clear, complete,
and correct explanation at closing?
(20 points) |
Customer surveys indicate taxpayers
expect at case closing clear, complete, and correct explanations of the
resolutions of their problems. This means case histories must include
documented evidence that the TAS informed the taxpayer/representative at
closing of the final resolution of his/her complaint (including appeal rights
when applicable). By addressing all
issues as identified by the taxpayer and/or the TAS, the TAS ensures
resolution of all taxpayer issues at the point of first contact. |
For all cases. Exception: Cases closed due to nonresponse by the
taxpayer. |
|
#8 – Did the TAS educate the taxpayer regarding any of
his/her actions that contributed to the problem? |
It is necessary to educate the taxpayer
to ensure his/her compliance with tax laws and to prevent recurrence of the
same issue(s)/problem(s) in the future. |
For all cases where it is clearly
evident the taxpayer’s actions or lack of actions contributed to his/her
situation. |
Source: TAS web
site, January 4, 2010.
Note: These eight standards are used by the TAS to review random samples of regular and reopen criteria codes 1–9 cases each month. Some standards are not always applicable in all cases.
Appendix X
Customer
Satisfaction Survey Results
|
Measure/ |
Description |
Source |
FY 2005 |
FY 2006 |
FY 2007 |
FY 2008 |
FY 2009 |
FY 2009 Target |
|
Customers Satisfied |
Percentage of taxpayers
who are very satisfied or somewhat satisfied with the service provided by the
TAS (Question 12 on the Customer Satisfaction Survey). |
Customer Satisfaction Survey (Quarterly) |
86 |
85 |
83 |
85 |
84 |
86 |
|
Customers Dissatisfied |
Percentage of taxpayers
who are somewhat dissatisfied or very dissatisfied with the service provided
by the TAS (Question 12). |
Customer Satisfaction Survey (Quarterly) |
13 |
12 |
13 |
12 |
12 |
11 |
|
Solved Taxpayer Problem |
Percentage of taxpayers
who indicate the TAS employee did their best to solve their problems. |
Customer Satisfaction Survey Question 7B (Quarterly) |
-- |
-- |
85 |
87 |
86 |
88 |
Source:
TAS FY 2009 Performance Measures and Target Results Report.
Appendix XI
Management’s Response to the Draft Report
TAXPAYER
ADVOCATE SERVICE
JULY, 27 20l0
MEMORANDUM FOR MICHAEL R. PHILLIPS
DEPUTY
INSPECTOR GENERAL FOR AUDIT
FROM: Nina E. Olson /S/ Nina E. Olsen
National Taxpayer Advocate
SUBJECT: Draft
Audit Report - A Statistical Portrayal of the Taxpayer Advocate Service for
Fiscal Years 2005Through 2009 (Audit #: 201010017)
I appreciate the opportunity to comment on
the draft audit report, A Statistical Portrayal
of the Taxpayer Advocate Service for Fiscal Years 2005 through 2009. In general, I believe the report presents an accurate
and instructive overview of major trends in the Taxpayer Advocate Service over
the past five years.
The success of any organization rises or
falls on the skill and dedication of its employees, and with that in mind, I
want to acknowledge the extraordinary efforts and successes of TAS's workforce.
By statute, the first prong of TAS's mission is to "assist taxpayers in
resolving problems with the Internal Revenue Service.”[65]·
Your report correctly notes that the number of taxpayer cases closed by TAS rose
from 190,197 in FY 2005 to 283,841 in FY 2009 - an increase of 49 percent. At
the same time, the number of Case Advocacy employees available to work those
cases rose by only one percent (increasing from 1,829 in FY 2005 to 1,851 in FY
2009). Thus, the workload of the average TAS case advocate increased by about
half over the five-year period.
Despite-this huge surge in workload, TAS has
been able to meet taxpayer needs. While the mean cycle time has increased
somewhat, 84 percent of taxpayers surveyed reported that they were satisfied or
very satisfied with TAS in FY 2009 - a drop of only two percentage points since
FY 2005. We appreciate and agree with the statement in the report: "In
light of other trends (e.g. increased case receipts, case processing time,
etc,), the relatively constant level of customer satisfaction is noteworthy."
At the management level, we have taken and are continuing to take significant steps
to reduce the burden that this increase in cases is placing on our employees.
For example, we implemented a workload re-balancing initiative to even out workloads
across our offices. Looking forward, we are working to design a major new integrated
system, the Taxpayer Advocate Service Integrated System (TASIS), that we plan
to rollout in FY 2013 and that will help our case advocates achieve much
greater efficiencies.
Although your report does not contain
specific recommendations that require a response, I would like to provide my perspective
on a few issues.
Effect of Change in TAS Authorities
On
page 6, the report states that TAS's current authority has led to increased reliance
on other IRS functions. The report explains that the IRS Commissioner "delegated
significant authority to the TAS to enable TAS employees to take various
actions on taxpayer accounts" in FY 2001, and that in FY 2007, the
National Taxpayer Advocate relinquished some of the authority that had previously
been granted to TAS. We have two concerns with this explanation. First, it suggests
that the 2007 changes were far more significant than they were. Second, it implies
that his change in authority was responsible for the increase in cases
requiring Operations Assistance Requests (OARs). While the change in authorities
may have had a minor effect on the number of OARs TAS has transmitted, the
report does not cite any data that directly support the implication.
For context, it is important to point out
that the most significant change in authorities occurred when Congress decided
in the IRS Restructuring and Reform Act of 1998 (RRA 98) to replace the Problem
Resolution Program (PRP) structure with the current TAS structure. Because PRP
Problem Resolution Officers (predecessors to TAS case advocates) operated within
the regular IRS chain of command and were located within, for example, the Examination and Collection
functions, they possessed the full authorities of Examination and Collection
employees and could make substantive decisions. The decision to place case
advocates under the supervision of the National Taxpayer Advocate reflected congressional
concern that having case workers in the regular IRS chain of command compromised
their independence. As independent case advocates, however, these employees
lost all authority to make substantive decisions at that time.
As a general matter, I agree with the
principle that case advocates should not have the authority to make substantive
decisions. One cannot be an advocate and a decision-maker at the same time. If
case advocates had the authority to make substantive decisions, they
necessarily would have to make taxpayer-adverse decisions as well as taxpayer-favorable
ones. And if TAS employees are making final taxpayer-adverse decisions, they
are not being taxpayer advocates.
This view of the limited role of the ombudsman
is well established. Within the federal government a1one, there are dozens of ombuds
offices, and as a consequence, the American Bar Association (ABA) has adopted “Standards
for the Establishment and Operations of Ombuds Offices," widely regarded
as the foremost authority on ombuds. The first two "Limitations on the Ombuds'
Authority” described by the ABA are that an ombuds should not "(1) make, change,
or set aside a1aw, policy or administrative decision" or -(2) make binding
decisions or determine rights.”·
In 2001, the Commissioner issued a delegation
order providing TAS with certain very limited authorities. At the time, it was
envisioned that these authorities were routine and non-substantive, requiring
"little independent judgment" and “no in-depth research."[66]
With the benefit of experience, however, it became apparent that a few
delegated authorities crossed the line into substantive decision-making, while
a few undelegated actions that arose frequently did not require substantive
decision-making. Accordingly, at the request of the National Taxpayer Advocate
and after considerable research regarding the impact of this change on
taxpayers and case advocates, the Acting Commissioner agreed in 2007 to modify
the delegated authorities to align the authorities with the overarching
principles I have described.
The impact of the 2007 changes on casework
was relatively minor, with TAS ceding certain authorities and acquiring others.
The newly acquired authorities included the authority to input adjustments
after the operating division or function has made a determination, and the
authority to issue manual refunds on cases that are open in another function
with approval from the function. TAS also acquired read-only access to certain
IRS systems (e.g., CEAS and RGS), so it no longer has to issue OARs to obtain
copies of tax returns or account history pages. These new authorities have reduced
the number of OARs TAS must send. Significantly, the audit team did not analyze
how many additional OARs the ceded authorities require or how many OARs the
acquired authorities are saving. Therefore, there are no audit findings to support
a conclusion that, on a net basis, the change in authorities is requiring TAS
to issue more OARs. Our own analysis shows that the change in authorities resulted
in a one percent net increase in OARs issued between FY2007 and FY 2009.[67]~
We achieved a customer satisfaction rate of 87percent in these additional cases.[68]
The report states that the number of OARs issued
increased by 15 percent from FY 2007 to FY 2008, implying that this 15 percent
increase was attributable to the change in authorities. We note, however, that
TAS experienced an 11 percent increase in case receipts in this same period.
Therefore, even if the percentage of cases requiring an OAR remained unchanged,
the number of OARs would have risen 11 percent, leaving only four percent of
the increase, at most, attributable to the change in authorities:. Moreover, it
is not even clear that this remaining four percent increase was attributable to
the change in authorities. While there has been an uptick of a few percentage
points in the number of cases requiring OARs over-the last few years, the
uptick did not occur just in the year after the change. The percentage of cases
requiring OARs has continued to rise even after the change year, indicating
that the change in authorities did not account for all of the increase in the
OAR rate and raising questions about whether, on a net basis, it accounted for
any of the increase.
On page 11, the report notes that TAS's
average case processing time has steadily increased from 66 calendar- days in
FY 2005 to more than 80 calendar days in FY 2009. I would like to reiterate
that the primary goal of our case advocates is to fully resolve all related
issues for the taxpayer. While we aim to accomplish this as quickly as
possible, we would rather take longer and resolve the case correctly than score
a quick hit but fail to assist a taxpayer properly. TAS management is aware
that average case processing time has increased over the past several years,
partly due to the increasing number of cases and partly due to the increasing
complexity of cases (e.g., the number of cases with more than one issue code
rose from 66,614 in FY 2005 to 120,842 in FY 2009 - an 81 percent increase). We
will continue to take steps to ensure that TAS handles cases in a timely
manner, and we will continue to monitor our customer satisfaction scores and
other relevant performance measures to ensure that we are doing the best job we
possibly can to assist taxpayers.
Thank you for the opportunity to review and comment
on this report. While the report did not make specific recommendations, it was
helpful to have the benefit of your analysis of TAS’s caseload, authorities,
and resources, and your identification of significant statistical trends. If
you have any questions or concerns about our comments, please contact Chris Lee
at (202) 622-8391 or christoher.i..lee@irs.gov.
[1] Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C.,31 U.S.C., 38 U.S.C., and 49 U.S.C.).
[2] See Appendix IV for a historical perspective of the TAS.
[3] Internal Revenue Code Section 7803 (2009).
[4] See Appendix V for a definition of the TAS’ criteria for accepting cases into the program.
[5] Internal Revenue Code Section 7803(c)(D)(i)(1) (2009).
[6] Offices are located in the IRS campuses and field offices. Campuses are the data processing arm of the IRS. The campuses process paper and electronic submissions, correct errors, and forward data to the Computing Centers for analysis and posting to taxpayer accounts.
[7] The Economic Stimulus Act of 2008 (Pub.L. 110-185, 122 Stat. 613, enacted February 13, 2008) was an Act of Congress providing for several kinds of economic stimuli intended to boost the United States economy in 2008 and to avert a recession or ameliorate economic conditions.
[8] Case processing time is also known as “cycle time” and is the average number of days a TAS case remained open.
[9]
A measure of labor hours in which 1 FTE is equal
to 8 hours multiplied by the number of compensable days in a particular fiscal
year. For FY 2009, 1 FTE was equal to
2,088 staff hours. For FY 2010, 1 FTE is
equal to 2,088 staff hours.
[10] The TAS FY 2010 budget is $215,954,000, which includes $10 million in grant money to be awarded to Low Income Tax Clinics.
[11] See Appendix VI for more information on TAS expenditures and FTEs.
[12] Other includes TAS personnel performing headquarters management activities. These activities include strategic planning, communications and liaison, finance, equal opportunity and diversity, business systems planning, and employee development.
[13] The totals do not add up due to rounding.
[14] Case advocates work directly with taxpayers and their representatives to resolve TAS cases.
[15] The National Taxpayer Advocate Could Enhance the Management of Systemic Advocacy Resources (Reference Number 2003-10-187, dated September 30, 2003).
[16] The TAS creates advocacy projects from advocacy issues that have been reviewed, ranked under established criteria, and accepted as projects for assignment and further development.
[17] In FY 2009, 73.2 percent of TAS case receipts were referrals from the IRS, primarily the toll-free telephone lines. See Appendix VII for the sources of cases received by the TAS.
[18] The OAR process is a collaborative effort between the TAS and the applicable IRS operating division. It involves the creation and routing of the OAR by the TAS, the assignment of the OAR, and completion of the requested action by the operating division.
[19] Inefficiencies in Processing Operations Assistance Requests Caused Taxpayers Unnecessary Delays (Reference Number 2007-10-068, dated May 18, 2007).
[20] When IRS functions reject OARs, they return them to the TAS without taking action or addressing the taxpayer’s problem.
[21] The number of OARs rejected by IRS functions in FY 2005 and FY 2006 are approximated based on the number of OARs issued and the reject rate because actual numbers were not published by the TAS.
[22] In FY 2009, the average processing time for each OAR was 18 calendar days and each case required an average of 1.9 OARs.
[23] Inefficiencies in Processing Operations Assistance Requests Caused Taxpayers Unnecessary Delays (Reference Number 2007-10-068, dated May 18, 2007).
[24] See Appendix VIII for trends in case receipts and TAS staffing in the Case Advocacy Program.
[25] See Appendix VII for the sources of TAS cases during FY 2009.
[26] Inappropriate referrals are deemed to be those that do not meet TAS criteria or that could have been resolved by the IRS function that referred the case to the TAS.
[27] FY 2010 Annual Objectives Report to Congress, dated June 30, 2009.
[28] The Taxpayer Advocate Service Needs to Improve Its Processing of Economic Burden Cases (Reference Number 2008-10-088, dated April 21, 2008).
[29] Economic burden cases are broadly defined as those in which an IRS action or inaction has caused or will cause financial difficulties or a hardship for the taxpayer.
[30] See Appendix V for more information.
[31] The Taxpayer Advocate Service Integrated System will combine the TAS’ multiple information technology applications and databases into a single interface.
[32] It is TAS policy to keep cases open until all of the taxpayer’s issues are addressed. For example, the TAS will first address the taxpayer’s primary problem, such as processing an amended return. Next, the TAS may address secondary issues, such as considering the taxpayer’s request for an installment agreement.
[33] The Taxpayer Advocate Service Needs to Improve Case Management to Ensure Taxpayer Problems Are Resolved Timely (Reference Number 2004-10-166, dated September 29, 2004).
[34] In FY 2009, the average cycle time was 81 calendar days.
[35] In FY 2009, 23 percent of TAS cases involved a delay of more than 30 days to resolve a tax account problem.
[36] Days are calendar days, median is the midpoint number
in the range of all numbers ascending from lowest to highest, and the mean is
the average of all the numbers.
[37] Testimony before the Subcommittee on Oversight, Committee on Ways and Means, House of Representatives, February 10, 1999.
[38] See Appendix IX for all TAS 2009 quality standards.
[39] The Taxpayer Advocate Service Needs to Improve Case Management to Ensure Taxpayer Problems Are Resolved Timely (Reference Number 2004-10-166, dated September 29, 2004).
[40] An immediate intervention is an operational issue, identified internally or externally, which causes immediate, significant harm to multiple taxpayers and demands an urgent response.
[41]
The TAS creates Advocacy projects from an
advocacy issue that has been reviewed, ranked under established criteria, and
accepted as a project for assignment and further development.
[42] Although anyone can submit an issue for the Systemic Advocacy Program to consider, not all submissions result in Systemic Advocacy Program projects.
[43] The National Taxpayer Advocate Could Enhance the Management of Systemic Advocacy Resources (Reference Number 2003-10-187, dated September 30, 2003).
[44] See Appendix IX for the TAS FY 2009 quality measures which includes timeliness.
[45] The Taxpayer Advocate Service Needs to Improve Its Processing of Economic Burden Cases (Reference Number 2008-10-088, dated April 21, 2008).
[46] See Appendix IX for more information.
[47] The goal was met for quality review standard number 8, which allows 5 points for “educating” the taxpayer regarding any of his/her actions that contributed to the problem.
[48] The TAS began reporting this standard in FY 2007.
[49] See Appendix X for more information on Customer Satisfaction Survey Results.
[50] We did not independently verify the results reported in published data.
[51] Pub. L. No. 100-647, 102 Stat. 3730 (1988) (codified as amended in scattered sections of 5 U.S.C. and 26 U.S.C.).
[52] Pub. L. No. 104-168, 110 Stat. 1452 (1996) (codified as amended in scattered sections of 26 U.S.C.).
[53] Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49 U.S.C.).
[54] The TAS has identified specific criteria that qualify certain taxpayers for TAS assistance. The criteria under which the TAS accepts a case do not govern whether a taxpayer is entitled to relief they have requested. Situations meeting the criteria above should be referred to the TAS for special handling.
[55] Some staff help prepare the Annual Report to Congress.
[56] The responsibility for the Low Income Taxpayer Clinic Grant Program was transferred to the TAS in May 2003; however, dollars and Full-Time Equivalents were not allocated to the TAS until FY 2004.
[57] Other includes training, travel, and support for TAS Headquarters
management activities.
[58] The totals do not add up due to rounding.
[59] Intake advocates answer incoming telephone calls and customer inquiries. This includes, but is not limited to: internal, taxpayer, congressional, and stakeholder contacts.
[60] The IRS database that stores various types of taxpayer account information. This database includes individual, business, and employee plans and exempt organizations data.
[61] The IRS database that maintains transactions or records of individual tax accounts.
[62] The IRS database that consists of Federal tax-related transactions and accounts for businesses. These include employment taxes, income taxes on businesses, and excise taxes.
[63] Consists of transactions on tax accounts not included on the Master File.
[64] An individual retirement account is a
trust or custodial account set up in the
[65] IRC Section 7803 (c)(2)(A)(1)
[66] See Memorandum of Understanding Regarding Additional Delegation of Authority to the National Taxpayer Advocate (Jan. 17, 2001).
[67] TAS received 8,821 additional OARs from FY 2007 to FY 2009 as a result of the change in authorities. TAS issued 196,867 OARs in FY 2007, 226,445 OARs in FY 2008, and 243,309 OARs in FY 2009 (8,621/666,616 = 1.3 percent).
[68] FY2008 data.