The Internal Revenue Service (IRS) initiated Problem Solving Days (PSDs) in November 1997 so that those taxpayers with unresolved tax problems could meet face-to-face with the appropriate tax specialists. Each IRS district office is responsible for operating the PSD Program under the overall coordination of the National Taxpayer Advocate. Taxpayer problems that cannot be resolved on these PSDs are handled as part of the IRS’ Problem Resolution Program (PRP).

The audit was conducted to evaluate the effectiveness of the Ohio District’s PSD Program.

Overall, Ohio District management has planned and implemented a successful PSD Program. Since the initial event in November 1997, PSDs have been held monthly on a rotating basis among the larger offices in the Ohio District. District management has taken the necessary actions to ensure that the events have been extensively publicized. District management has also ensured that sufficient staff, with the appropriate technical skills, is provided to assist taxpayers in resolving their problems.

The most recent customer feedback reports on the Ohio District’s PSD Program showed taxpayers were very satisfied with their overall experience. For example, the feedback report for the March 1998 event showed that 86 percent of the taxpayers gave the District the top rating possible in overall satisfaction. Customers also gave the District high marks in "employee courtesy" and "employee competence." Our observation of the PSD held in Dayton, Ohio, on December 3, 1998, showed that the event was effectively planned and carried out in accordance with national and local guidelines.

Two areas of concern, however, were identified that warrant District management’s attention:

Labor costs charged to the PSD Program between November 22, 1997, and November 7, 1998, were overstated by nearly $514,000. The problem was caused by incorrectly coded timesheets that resulted in all of the employees’ time, in the current as well as subsequent pay periods, to continue to be charged to the PSD Program after they returned to their normal functions.

Prior to this review, District management had received no information on costs incurred during PSDs and, as a result, was unaware that their labor costs were unusually high. In addition, District management had no controls in place to routinely monitor labor costs charged to the PSD Program.

A detailed analysis of the centralized quality review results for PRP cases revealed that the Ohio District is achieving less success in meeting the quality standards for effective PRP casework on PSD cases than on PRP cases as a whole. District management was not aware of the lower quality because the centralized quality review reports do not identify the PSD cases that were included in the sample of PRP cases selected for review.

The Taxpayer Advocate for the Ohio District attributed the lower quality to the employees from the compliance functions (e.g., Collection and Examination) who work the PSD cases, as not having the same level of training, familiarity, and experience with PRP casework standards, including the documentation requirements, as those employees who work PRP cases full-time.

During the audit, we recommended that Ohio District management alert timekeepers to the correct procedures for recording time charged to PSDs and establish a control to monitor all bi-weekly time charges to the PSD Program. The District Director promptly issued a memorandum clarifying the procedures for charging time to PSDs. In addition, the local Taxpayer Advocate promptly implemented a cost tracking system.

To improve PSD casework quality, we recommend that Ohio District management ensure that future PSD training and employee briefings include an emphasis on those specific quality standards that were not being satisfactorily achieved. District management should also establish a control to monitor improvement in achieving quality standards on PSD cases.

Management’s Response: Ohio District management has taken steps to remedy the timekeeping errors and has implemented new internal controls to ensure that employee time on PSDs is properly reported. Similar National procedures are planned for all offices holding PSDs. To improve the quality of PSD cases, National PSD procedures have been updated to include case file "memory joggers," an improved initial taxpayer contact sheet that outlines principles of good taxpayer contact, a documentation portion, which also provides for an apology to the taxpayer, and the inclusion of PRP quality case standards with each case file. Management's complete response to the draft report is included as Appendix IV.