Executive Summary

Objective and Scope

Background

Results

Conclusion

Appendix I – Detailed Objective, Scope, and Methodology

Appendix II – Major Contributors to This Report

Appendix III – Report Distribution List

Appendix IV – Outcome Measures

Appendix V – Glossary of Terms

Appendix VI – Management’s Response to the Draft Report

Executive Summary

The Internal Revenue Service’s (IRS) toll-free telephone system is the cornerstone of its customer service operations. Historically, the IRS has struggled to effectively meet the annual customer demand for its toll-free telephone services. The largest part of that demand occurs during the first three and one-half months of each calendar year, which is generally defined as the "filing season" for individual taxpayers. During the 1999 Filing Season, taxpayers attempted over 57 million calls to the IRS’ three main toll-free telephone lines.

Providing top quality service to each taxpayer is one of the strategic goals of the IRS’ modernization plans. Likewise, Customer Service management has committed to becoming "a World Class Customer Service Organization." In 1998, the IRS began a multi-year plan to modernize its toll-free operations. Some of the planned changes were implemented in 1999. Thus, the audit was conducted to determine whether the IRS’ strategy to improve telephone service resulted in an increased level of quality customer service in an economical manner.

The IRS was not able to satisfactorily handle the level of customer demand on its toll-free telephone lines during the 1999 Filing Season. Although the IRS implemented a major technological change and numerous initiatives that were intended to enhance customer service, far too many taxpayers received busy signals or abandoned their calls after being placed on hold. For the 3 main toll-free telephone lines, for example, about 19.5 million calls resulted in busy signals during the 1999 Filing Season - almost 16 million more than during the previous filing season. Callers abandoned another 8.4 million calls before reaching a Customer Service Representative (CSR). The Level of Service (LOS) provided to taxpayers on these 3 lines for the 1999 Filing Season declined to 51 percent from 73 percent for the 1998 Filing Season.

Management attributed these difficulties to such issues as start-up problems, tax law changes, and new telephone demand. At the same time, the IRS shifted to a balanced measures approach which de-emphasized production and put a greater emphasis on employee satisfaction.

The cost to provide toll-free telephone service during the 1999 Filing Season increased while productivity decreased. The IRS’ labor costs to handle toll-free calls during the first 6 months of Fiscal Year (FY) 1999 were more than $175 million as compared to about $145 million during the same period in FY 1998. During this same 6-month period, the productivity of the individual CSRs decreased by approximately 16 percent from the prior year. As a result, the IRS’ labor costs increased by $1.30 per call (approximately 19 percent). Beyond the Customer Service costs, enforcement resources used to supplement the toll-free program cost the government approximately $314 million in lost revenue that could have been collected.

The service level decline can be attributed, in part, to the start-up problems caused by many technical and operational changes. However, another key factor was that Customer Service management entered the 1999 Filing Season without developing an integrated plan to effectively align the technology and human resource management changes. Further, the technological solution was implemented without effectively addressing fundamental operating problems.

Implementation problems with the IRS’ new national call routing system kept taxpayers from having improved access to the toll-free telephone system. When the problems continued, the IRS reverted to the call routing method used in prior years for the initial routing of calls. However, the problems inherent in this prior method reduced the advantages to be gained by the newer system. In addition, the new technology was implemented without automated controls that would have promptly detected problems.

The forecasting process to determine the staff resources needed to meet estimated customer demand was seriously flawed. Delays and inaccuracies in staffing schedules resulted in an insufficient number of adequately trained CSRs being available when needed. To compensate for these problems, a significant number of Compliance enforcement resources (i.e., Examination and Collection Division staffs) were assigned to answer the telephones. The estimated staff costs alone for these resources were almost $21 million. An additional minimum of nearly $314 million of tax revenue was also uncollected. Further, Customer Service management did not employ sufficient "call avoidance strategies" to reduce its reliance on CSRs.

Several conditions require attention to improve efficiency and reduce costs. These conditions are in the overall organization structure and the work management practices.

The IRS’ ability to effectively and efficiently provide toll-free telephone service is hindered by the large number of call centers it uses. Whereas 1 to 3 call centers is viewed as optimum by businesses recognized as providing world class telephone service, the IRS has 30 toll-free call sites. In addition to the administrative and management overhead associated with so many sites, these sites were generally located in or near large metropolitan areas where labor and space costs tend to be higher.

Some problems exist specifically because of the large number of call sites. First, it makes the complex task of scheduling resources to meet the forecasted call demand even more complicated. Second, with so many labor markets, some sites experience serious recruiting problems. Finally, the lack of standardized equipment among call sites made the technology changes more complicated. Even though substantial site consolidation is the industry trend, the IRS plans to eventually discontinue only 5 of the 30 sites.

CSR productivity in answering taxpayer calls declined 16 percent between FY 1998 and FY 1999. While Management Information System data for determining the cause of this decline are limited, some productivity analyses are possible. For example, six call sites tracked CSR time when the CSRs were actually signed on the system. The data show that these CSRs handled calls only 49 percent of their sign-on time. The other 51 percent was spent in waiting for calls, wrapping up prior calls, taking lunch and other breaks, attending meetings, etc. Thus, if a CSR was signed on the telephone system for a typical eight and one-half hour day, that CSR would actually speak with taxpayers about four hours a day.

Management at several call sites had concerns with the effect that some types of "down" time may have had on the LOS. However, the IRS’ agreement with its national labor union limited the ability of Customer Service management to use certain types of "down" time in evaluating individual CSR performance.

Another factor affecting service levels was expanding from a 96-hour week to a full 168-hour week. Staffing was shifted to cover the expanded hours, so fewer people were available during peak periods. However, less than four percent of the calls to the three main toll-free lines were received during the expanded hours.

When taxpayers did speak with a CSR, the quality of service and customer satisfaction may have been less than satisfactory. The IRS has a new Centralized Quality Review System. Likewise, the IRS has new programs to expand services to some other taxpayers requiring toll-free assistance: the Quality Assurance Program, the Problem Resolution Program (PRP), and the Spanish Language Program. These new systems and programs also encountered problems.

Taxpayers who called the IRS with tax law questions during the 1999 Filing Season received correct answers only 72 percent of the time, as compared to 79 percent last year. The lower accuracy rate could be attributable, in part, to the number of 1999 tax law changes. However, it may also represent an actual decline in quality since managers at nearly half of the 20 call sites surveyed were concerned with the overall ability of their new recruits to professionally and accurately answer telephone calls.

However, even the precision of the 72 percent accuracy rate is questionable. For example, during the 1999 filing season the IRS monitored less than 25 percent of the required number of tax law calls that the sampling plan developed by IRS statisticians required to be monitored. In addition, the IRS performed no corporate monitoring of calls received from Spanish-speaking taxpayers or calls received during the extended service hours that were extensively staffed with new and inexperienced CSRs.

A relatively small percentage of the calls that reached a CSR on the new PRP line involved unresolved tax problems that met PRP criteria. At least one site serviced these non-PRP calls rather than transferring the calls to the appropriate line. This may be causing other callers with legitimate PRP concerns to be unable to reach a CSR.

The IRS did not provide Spanish-speaking taxpayers with effective access to toll-free telephone services. The IRS has a limited number of Spanish-speaking CSRs who often handled English-language calls. Therefore, only a very small percentage of calls from Spanish-speaking taxpayers were successfully routed to Spanish-speaking CSRs. Spanish-speaking callers were frequently told to call back with an interpreter.

The IRS needs different management approaches to provide effective and economical world class toll-free telephone service. A systems management approach throughout the entire Customer Service organization is needed to ensure effective and continuous improvements. Productivity should be improved by evaluating the number of call sites, more timely and accurately conducting resource planning, reducing hours of "live" assistance, and providing managers with tools to monitor CSR productivity. Additionally, quality measurement and customer service can be improved by ensuring that statistically valid samples are taken. Finally, customer service can be improved by providing better access to PRP and Spanish-language services.

Management’s Response: IRS management agreed that the performance of the toll-free telephone system during the 1999 Filing Season fell short of their goals and has agreed to implement some of our recommendations. The Customer Service management structure has been realigned; a study group has been formed to develop criteria for determining which call sites receive more hiring authority than others; program changes have been made to increase the number of refund calls handled by automation; portions of the Union agreement were renegotiated to provide call site managers with more effective tools for monitoring assistor "idle" time; additional quality reviewers are being hired; a bilingual quality review center is being established; and several actions are being taken to make toll-free telephone services more accessible to Spanish-speaking taxpayers.

However, management did not agree to implement several recommendations. They also expressed the opinion that the report did not adequately acknowledge the significant challenges the IRS faced during the 1999 Filing Season, the steps taken during the 1999 Filing Season to correct the problems encountered, and the corrective actions the IRS completed which resulted in improved service during the current filing season.

Management’s complete response to the draft report is included as Appendix VI.

Office of Audit Comment: The Office of Audit concurs that there were significant challenges and changes in 1999. Progress is being made in several areas. At the same time, IRS management did not address, or only partially addressed, some issues and recommendations. In some cases, the Office of Audit will require further clarification and information from IRS management.

Objective and Scope

This review is part of one of our Fiscal Year (FY) 1999 emphasis areas to evaluate whether Customer Service operations are being effectively and economically improved to provide taxpayers with quality customer service, in accordance with Congressional and administrative direction.

Audit work was performed at the National Office; the Customer Service Operations Center (CSOC) in Atlanta; the Centralized Quality Review System (CQRS) site in Philadelphia; and call sites located in Fresno, Nashville, and Pittsburgh. In addition, we surveyed the call sites via a detailed questionnaire and analyzed the responses that were received from 20 call sites. Our scope did not include a review of management’s plans for the 2000 Filing Season. The audit was conducted between October 1998 and November 1999 in accordance with Government Auditing Standards.

Our overall objective was to determine whether the Internal Revenue Service’s (IRS) strategy to improve telephone service has resulted in an increased level of quality customer service in an economical manner. To accomplish this objective, we determined if:

• The process for forecasting, planning, and scheduling demand and resource requirements is operating effectively and contributing to a world class telephone operation.
• The IRS has a sound methodology of performance measures in place to accurately assess the quality of service being provided to customers.
• The existing number of call sites provides the optimum configuration to ensure that high quality toll-free telephone services are provided to taxpayers in the most effective, efficient, and economical manner.

Details of our audit objective, scope, and methodology are presented in Appendix I. Major contributors to this report are listed in Appendix II. In addition, we have included an extensive Glossary of Terms as Appendix V.

Background

The IRS’ mission is to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. In 1993, the President issued Executive Order 12862, "Setting Customer Service Standards," which set a goal for the Federal government to deliver service equal to the best in business.

During the 1999 Filing Season, there were over 57 million call attempts to the IRS’ 3 main toll-free telephone lines. Taxpayers calling these lines can elect to listen to a pre-recorded message that may provide the information they seek, or they can elect to speak with a Customer Service Representative (CSR). Overall, the IRS toll-free telephone program has approximately 8,700 employees located in 30 call sites.

A second toll-free telephone system that the IRS provides is known as Tele-Tax. It gives taxpayers access to automated tax topics and automated refund information. Taxpayers cannot reach CSRs through Tele-Tax.

Results

In 1998, the IRS began a multi-year plan to modernize its toll-free telephone operations. Some of the planned changes were implemented in 1999. These changes include using the Customer Service Call Router (CSCR) to link the IRS’ geographically-dispersed call centers into a single "virtual" call center; establishing centralized call center management; expanding toll-free telephone operations to 24 hours a day, 7 days a week (i.e., 24/7 service); and adding a Problem Resolution Program (PRP) toll-free telephone number. These 1999 initiatives were the initial IRS efforts to become a world class customer service organization.

While it has taken a number of steps, the IRS still has many problems to overcome before world class service is achieved. The following table compares the IRS’ 1999 Filing Season performance with world class performance levels.

In addition, the IRS’ Level of Service (LOS) declined from 73 percent during the 1998 Filing Season to
51 percent during the 1999 Filing Season for the 3 main toll-free telephone lines. Thus, about 19.5 million calls resulted in busy signals, almost 16 million more than during the previous filing season, and callers abandoned another 8.4 million calls before reaching a CSR. These IRS performance levels were achieved at a minimum cost of over $700 million.

The Customer Service Division also implemented a strategy to improve Tele-Tax access for the 1999 Filing Season. The strategy addressed eliminating all old voice response units, increasing line capacity for new systems, and relocating equipment to better balance nationwide traffic and reduce busy signals. As a result, access significantly improved, with callers to the Tele-Tax system receiving considerably fewer busy signals during the 1999 Filing Season (2.8 million) than for the same period in 1998 (13 million).

Customer Service management should focus its attention on the following specific problems that negatively impacted the performance of the toll-free telephone system during the 1999 Filing Season:

• Management effectiveness could be improved through systems management methods.
• CSR efficiency could be improved by better organization structure and work management practices.
• Improvements are needed for measuring quality and providing specialized services.

Each of the above issues is discussed in detail in the remaining sections of this report.

Management Effectiveness Could Be Improved Through Systems Management Methods

For FY 1999, the IRS made many significant changes to the toll-free telephone system. Changes were made to the organizational structure and the planning process. Others were technical changes to increase telephone system performance. However, many changes were made without adequately assessing the effect on the total telephone system operation.

In 1992, the IRS selected the systems management approach to continuously improve organizational performance and customer satisfaction. The systems management approach calls for management to understand, control, and improve systems and to find more cost-efficient ways to provide products and services. The IRS executives and top-level managers were charged with leading the effort to establish a systems management environment.

Customer Service executives did not use an effective management process to implement the many changes to the toll-free telephone system. This caused the Customer Service Division to provide low service levels at a very high cost. Details will be discussed later in this report regarding the decrease in the LOS, the reduction in productivity at an additional cost, and the IRS’ not having a reliable quality measure.

The systems management approach would improve the following areas:

• Implementing technology changes.
• Identifying critical processing points and establishing automated failure signals.
• Scheduling Customer Service resource requirements more accurately and timely.
• Eliminating the need to rely on expensive Compliance program resources.
• Using automated systems to handle routine inquiries.

To improve taxpayer accessibility to the toll-free telephone lines, the IRS spent over $22 million for the CSCR to replace its former routing method. However, various implementation problems kept taxpayers from having the desired access during FY 1999.

A well-managed system requires an owner who is accountable for the system’s performance and has the authority to change it. The systems owner is responsible for ensuring communication and cooperation, resolving conflicts, and eliminating competition among system components in order to maximize system performance.

The primary problem with the CSCR was the premature national rollout. In December 1998, the Customer Service executive decided to implement the CSCR nationally instead of conducting a site-by-site rollout designed to stabilize the system before a national rollout. In addition, Information Systems (IS) employees informed us that approximately 18 months would be required for a successful rollout; however, the IRS implemented the CSCR in 6 months.

Examples of the resulting problems follow.

• Not having compatible telephone equipment at the call sites prevented the CSCR from working correctly. Consequently, callers received busy signals rather than being connected to a CSR.
• The activation of the Selected Expanded Access (SEA) caused problems that required discontinuance of some call distribution capabilities for several weeks until the CSCR could be modified. When service levels began to decline, Customer Service management activated the SEA, a system that allows taxpayers to choose automated services rather than receiving a busy signal and having to call back. However, the CSCR was not designed to work with the SEA. In addition, a May 1999 IRS study showed that 75 percent of the callers offered the SEA rejected the option to potentially find the information they sought from this automated system.

As a result of technical problems with the CSCR caused by the SEA activation, the IRS reverted to the call routing method that was used in prior years for the initial routing of calls. The CSCR replaced this system because it was labor intensive, created an unbalanced workload across call sites, and potentially resulted in unequal access and longer hold times for taxpayers at sites affected by heavier volumes. Thus, reverting to the prior call routing method reduced the advantages to be gained by the CSCR, and may have resulted in a lower level of service to taxpayers.

• Prior to implementation of the CSCR, there were over 190 specialized skill groups in which CSRs were placed. In order to operate effectively, the CSCR required the IRS to reduce and nationally standardize the CSR skill groups. Hence, they were reduced to 26 skill groups. This reduction limited CSRs to answering questions routed to the skill group to which they were assigned. However, some CSRs had the ability to answer categories of questions outside of those in their assigned groups, while others did not have the full set of skills necessary to answer all of the questions in their skill group.

In an effort to improve the CSCR performance, the IRS contracted with the Illinois Institute of Technology Research Institute (IITRI). The IITRI report, issued in February 1999, cited many technical and management problems. For example, the report pointed out:

1. To effectively operate as a "virtual call center" and to ensure that calls are consistently connected and quickly answered, Customer Service management needs to deploy a systems management approach throughout their entire organization.
2. To improve Customer Service operations, the IRS needs to manage the toll-free business components as an integrated system. Customer Service management needs to align the policies, organization structure, and technology with work practices into an integrated system.

Management’s Response: Customer Service management stated that, since the rollout of the CSCR, the whole project management "system" has matured, especially with the inclusion of the PRIME alliance expertise. A Near Term Release (NTR) Project Office was established to provide direction and oversight. A process was established which includes a thorough and comprehensive work breakdown structure that is continually monitored, a NTR Executive Steering Committee with senior executive leadership from both the IRS and the PRIME, and a Change Control Board for the call center environment with expertise from a technical review board.

Customer Service management stated that they have completed some long-term systems improvements for the FY 2000 Filing Season. These include the realignment of the Customer Service management structure, improved work and staff scheduling processes, and implementation of the balanced measures process.

On October 1, 1999, the management of all 25 Customer Service sites was unified under the Customer Service Field Organization. By October 1, 2000, Customer Service will complete the final transition to realign under the Wage and Investment and Small Business Operating Divisions. This reorganization will provide the singular focus and accountability necessary to completely align the policies, organization structure, and technology with work practices into an integrated system.

Office of Audit Comment: Although management’s response to Recommendation 1 provided numerous corrective actions, it does not address our concern that they are lacking a systems management process that includes an owner who provides oversight for all projects and functions. Instead, the IRS refers to numerous committees, projects and contractors with various oversight responsibilities. While these actions appear to provide an improved level of control within the Customer Service organization, we continue to believe that a single systems owner is necessary to effectively manage the coordination of all projects as well as the competition among projects for limited resources.

To properly manage a call center operation, automated system failure signals are needed so corrective action can be immediately taken. In discussing technical problems with the IRS toll-free system, the IITRI report states that, "Bottlenecks and alarm conditions cannot be automatically identified." When timely corrective actions are not taken, service levels decrease, resources are wasted and service objectives are not met.

A prime example of a critical processing point is the identification of temporarily inactive telephone lines. Systems analysts can identify this condition by manually viewing the status of each telephone line or by monitoring the system and investigating any calls that have long wait times. However, these manual problem identification processes might occur too late to positively affect how customers are served on a given day. An automated control could identify the problem much more quickly than manual intervention.

When the CSCR routes calls to sites that do not have lines ready to receive calls, callers may receive a busy signal or wait in long queues. Unfortunately, at the same time, there may have been available lines at other sites.

3. Using a systems management approach, Customer Service management needs to identify all critical conditions where the telephone system needs to be fail-safe and install automated alarms to alert systems analysts of failure conditions when they occur.

Management’s Response: For the 1999 Filing Season, the CSCR provided the means for CSOC personnel to centrally monitor the status of equipment, calls, and agents in every call center on a continuous basis using standard templates. For the 2000 Filing Season, the standard templates were refined to enable monitoring by specific agent groups and applications. Alert thresholds are set for the number of agents in an available or ready state and the number of calls queued for those agents.

The AT&T commercial product Network Traffic Monitor, provided in January 1999, enabled CSOC personnel to continually monitor the status of trunk lines for each call center by using an Internet web site. The real time display automatically refreshes every five minutes. Thresholds are set to automatically alert monitoring personnel by changing color in a grid. This information enables CSOC personnel to identify circuitry issues and adjust call routing scripts to prevent the CSCR from routing calls to any site without sufficient trunk lines ready to receive calls.

The Aspect Database Standardization was fully implemented for the 2000 Filing Season. The design of the FY 2000 database provides indicators for the Systems Analysts to monitor call center activity and detect the system failures as soon as they occur and take corrective action as appropriate.

The resource scheduling was neither timely accomplished nor accurately projected. The IITRI report stated that, "The forecasting of workforce needs is primitive and needs much attention."

Several factors affected the scheduling process:

• In October 1998, Customer Service executives entered into an agreement with the National Treasury Employees Union (NTEU) to increase employee satisfaction. However, certain elements of the agreement (e.g., involuntary tour of duty change restrictions, "auto wrap," not allowing automated information on employee down time to be used for evaluative purposes, etc.) hampered management’s ability to effectively meet previously established business goals and to sufficiently manage resources.
• The initial half-hour schedules were based on an erroneous planning assumption that production rates would be constant throughout the planning period. Actual production rates varied significantly by week within the planning period.
• The initial Customer Service plans provided for using less Full Time Equivalents (FTEs) than were used the prior year. This was based on the assumption that there would be a large increase in the number of CSR calls answered per FTE in 1999. Instead, as the following chart shows, CSR calls answered per FTE has declined significantly over the past three years.

• The original unrealistic schedules (both the assumption of constant production rates and the overestimation of actual CSR production rates) led to frequent and late changes being provided to the call sites. These not only caused the call sites to continually change their staffing plans but also to do so with little advance warning. On some occasions, changes for the following week were provided as late as Thursday or Friday of the prior week.
• The schedule was developed under the planning premise that 24/7 service would level demand by spreading out the calls over a longer time. Thus, the IRS rescheduled its resources for the 1999 Filing Season so that fewer resources were available during weekdays and certain times of the day when the greatest volumes of calls are traditionally received.

Customer Service managers at 17 (85 percent) of the 20 call sites that responded to our questionnaire expressed some level of dissatisfaction with the effectiveness of the scheduling of resources at their call site for the 1999 Filing Season. The following two comments from the questionnaire responses illustrate the frustration experienced by the local call site managers:

The scheduling accuracy and timing problems caused many Customer Service site managers difficulty in timely recruiting, hiring and training a sufficient and competent workforce.

3. Customer Service management needs to establish national owners to manage the various interdependent systems (e.g., hiring, training, labor relations, work planning, forecasting, and scheduling) that affect telephone operations.
4. The appropriate national owners need to be accountable for timely, accurate, and complete workload and customer demand projections.

Management’s Response: Customer Service completed a significant realignment of their management structure in October 1999. The Chief, Customer Service Field Operations, is now responsible for the delivery of all processes that impact the delivery of telephone operations. Work planning, forecasting, and scheduling are all accomplished in his organization as well as monitoring and delivery of those schedules. The Customer Service/NTEU agreement was renegotiated and hiring and training guidelines were issued which significantly improved the FY 2000 scheduling process.

Customer Service developed the FY 2000 workplans considerably earlier and with executive oversight. The first planning period (October 1^st - December 31^st) schedules were issued in August 1999. The draft second period (January 1^st - June 30^th) schedules were issued in early September 1999.

By October 1, 2000, Customer Service will complete the final realignment to Wage and Investment and Small Business Operating Divisions. This reorganization will more clearly establish national owners to manage the various interdependent systems (e.g., hiring, training, labor relations, work planning, forecasting, and scheduling) that affect telephone operations.

Office of Audit Comment: Management’s response to Recommendation 5 did not address the accountability of the national owners that they propose to have in place by October 1, 2000.

The systems management concept requires an organization to evaluate the external environment to identify barriers to goal achievement. The IRS’ inability to recruit and retain a sufficient number of qualified CSRs is a fundamental cause for the annual struggle to effectively meet the demand for toll-free telephone assistance. The recruiting and retention problems exist, in large part, because of the heavy reliance on seasonal employees to supplement the permanent CSR staff.

The following presents an excerpt from the comments of Customer Service management at one of the call sites that responded to our questionnaire:

The 1995 Federal Consortium Benchmark Study Report on best practices in telephone service states that benchmarking partners for world class telephone operations, "All commit the resources necessary to meet the customer service standards. This involves heavy investing in hiring and training the right employees, providing expert systems and empowering employees."

However, the IRS does not have sufficient employees in its toll-free telephone function to effectively meet customer demand. As a result, a significant number of Compliance (i.e., Collection and Examination Division) resources were reassigned to the toll-free telephone system during the 1999 Filing Season. These Compliance employees were used to answer the telephones on-line and/or work the Message Callback Program, whereby they answered advanced technical tax law questions that were left by taxpayers.

The approximately 400 FTEs in Compliance resources the IRS diverted to answer the toll-free telephone lines in FY 1999 was done at a substantial cost. While the IRS does not have goals to collect a certain amount of dollars per FTE, revenue is tracked on an historical basis. Using this historical IRS data, we determined that, at a minimum, the use of enforcement resources for toll-free telephone assistance resulted in foregone revenue of approximately $314 million and salary costs of almost $21 million. Thus, the total cost of using these Compliance resources to handle telephone calls was about $335 million which exceeds the entire Customer Service toll-free telephone staffing budget for FY 1999.

However, the IRS does not have a methodology in place that effectively tracks all of the enforcement resources diverted to answering the toll-free telephone lines. As a result, these figures are minimum estimates. There may be additional millions in lost revenue and salary costs that cannot be determined.

6. Customer Service national systems owners need to address the serious shortage of trained CSRs by coordinating their actions to:

1. Identify "best practices" at the call sites with successful recruiting/hiring and intermediary skill training experiences and share them with management at all sites.
2. Reallocate resources, resulting from attrition, from those sites with hiring difficulties to other sites where qualified labor pools are more plentiful.
3. Allocate seasonal resources to those sites where qualified labor pools are more plentiful.
4. Provide local site management with "delegated examining units," which provide them authority to direct-hire employees.
5. Provide local site management with the authority to promote CSRs to Taxpayer Service Specialists as needed.
6. Explore the use of continuous open vacancies for seasonal workers.
7. Offer incentives such as signing bonuses, subsidized transportation costs, and extended-hour day care facilities.
8. Enhance the retention of trained CSRs by converting more seasonal positions to permanent positions and by pursuing external partners (e.g., other government agencies or private businesses) with whom opportunities may exist for sharing employees during the non-peak period for the IRS.
9. Explore alternatives (e.g., out-sourcing to the private sector) for dealing with the seasonal customer demands for answers to filing questions and tax law issues.

6. Enhance its efforts to handle calls to completion at first contact by terminating the Message Callback Program. If Compliance resources must be used to assist in responding to taxpayers, have them handle "live" calls.

Management’s Response: A web site will be created to allow call sites to research "best practices" in recruiting and training and post their own success stories.

Customer Service management stated that they believe their use of permanent and seasonal employees, coupled with the use of Compliance resources, represents the best possible approach to delivering the telephone program since, under the IRS’ current budget, they are not in a position to meet peak telephone workload demands. Management agreed that improvements are needed to target their hiring to those locations that have higher quality labor pools and stated that a working group is currently developing a series of criteria to be used in determining the optimum locations for hiring decisions. However, they stated that careful analysis is required to ensure that strategic hiring approaches are fully supported, not only by data, but also by current federal hiring practices and discussions with the NTEU. Management agreed that the use of incentives has merit and they plan to use these tools, as appropriate, per agency human resource policies.

Customer Service management stated that they conducted an extensive analysis of outsourcing in 1997 and concluded that, while it was technically feasible, there were a number of barriers that made it impractical. Management will revisit the analysis to determine if circumstances will change.

Customer Service management stated that the Message CallBack Program will be continued for FY 2000. In planning for FY 2001, management anticipates continuing to use Compliance employees to support the filing season.

Office of Audit Comment: Management’s response did not address Recommendations 6.4, 6.5, 6.6, and 6.8. These recommendations are largely based on input from Customer Service call site managers who responded to our questionnaire. Because of the high value these managers felt they would have on telephone operations, we believe that IRS management should address these recommendations.

We also believe that the Message Callback Program is not the best use of compliance resources nor does it provide taxpayers with initial contact resolution. Our Recommendation 7 recognized that Customer Service might believe that it is still necessary to use Compliance resources to meet telephone demand. Therefore, we addressed this option by recommending that the Compliance resources be used to handle "live" calls. Not only does this resolve the taxpayers’ calls with one contact, it also prevents the situation where, after a designated number of unsuccessful attempts to reach the taxpayer, the case is closed and the taxpayer must recall the IRS and leave another message to again, attempt to obtain a response.

From January 1 through June 30, 1999, CSRs handled nearly 6 million refund calls at an estimated cost of approximately $53 million. A December 1998 study contracted by the IRS states that 80 percent of the type of calls suited for automation (e.g., tax law questions and account calls are not suited for automation, while refund calls are) should be handled that way. Using this percentage, almost 4.8 million refund calls could be handled by automation, saving nearly $42 million in staff costs that could be used to handle more complex calls.

One reason that taxpayers may be electing to speak with CSRs regarding refunds is that, on the automated system, they are required to input their Social Security number, their Filing Status, and the refund amount on their return. If the IRS revises that refund amount due to math error, unallowable items or Federal debt offset, the taxpayer is advised that there is no record of the return. This may cause the taxpayer to contact a CSR to determine their refund status.

In organizations that provide world class telephone service, "call avoidance strategies" are developed to reduce reliance on live assistors and to reduce costs. By directing more refund calls to an automated response system, the IRS would not only save money but would also free up CSRs to handle other calls.

8. Customer Service management needs to identify ways to reduce the refund calls that are handled by CSRs. This would include revising the automated system to accept the information that the taxpayer puts on the return. If the amount differs, the recording could state that the return has been processed and any refund amounts can be changed by math errors, unallowable items, or Federal debt offsets.

Management’s Response: Customer Service management has added a program check with allows the refund application to accept the refund amount from the return even if the processed amount is different from what was originally claimed by the taxpayer. The system then continues to process the call in automation once a match occurs.

To improve the processing of refund calls in automation, programming changes have been made that will provide automated refund assistance to Spanish-speaking taxpayers, improve universal IDRS capability, and prevent refund calls from defaulting to a CSR when there is account data at more than one site.

Customer Service Representative Efficiency Could Be Improved by Better Organization Structure and Work Management Practices

During the 1999 Filing Season, there were over 100 million call attempts to the IRS’ toll-free telephone lines. The Customer Service Division’s cost to service these calls was over $225 million. In addition, the IRS spent over $22 million to purchase, test, install, modify, and maintain the new CSCR to replace its former method of routing.

The GAO "Standards for Internal Control in the Federal Government" states that, "Effective management of an organization’s employees – its human capital – is essential to achieving results…." These standards also state that, "Only when the right employees for the job are on board and are provided the right training, tools, structure, incentives, and responsibilities is operational success possible."

The IRS was less efficient at providing toll-free telephone service during the 1999 Filing Season than during the 1998 Filing Season. During the first six months of FY 1999, the IRS used more resources yet answered fewer calls when compared to the same period in FY 1998.

Calculations based on the following table show that:

• The Customer Service labor cost to handle toll-free telephone calls during the first 6 months of FY 1999 was more than $175 million as compared to nearly $145 million during the same period in FY 1998.
• The IRS used an additional 431 FTEs to answer more than 1.4 million fewer calls.
• The average number of calls answered per hour (includes work hours, vacation, training, etc.) by individual CSR decreased by more than 16 percent.

Even if the average salary had remained constant for the two time periods, the IRS would have spent over $26 million more to answer 1.4 million fewer calls. This increased cost of $1.30 per call (approximately 19 percent) demonstrates a productivity decline.

There are several potential causes for the productivity decline, including:

• The technical problems that resulted in calls not being routed to available CSRs.
• Delayed hiring and training.
• Increased usage of Compliance employees.
• The large number of call sites in a centrally-managed call site environment.
• Excessive time spent on activities other than answering taxpayer calls.
• The introduction of 24/7 "live" telephone assistance.

(The first three items were addressed in previous sections of this report. The remaining three items are addressed in the following sections of this report.)

The National Performance Review’s report, "Putting Customers First - Serving the American Public: Best Practices in Telephone Service," stated that one to three call sites is widely viewed as the optimum number of operating locations. Likewise, Customer Service management has conducted studies that suggest that service could be enhanced and operating costs could be lowered by reducing the number of call centers.

However, Customer Service management continues to attempt to provide world class service while remaining committed to a 25-call site configuration. The IRS answered toll-free calls from 30 call sites during the 1999 Filing Season and intends to eventually phase out 5 satellite call sites through attrition. However, a timetable has not been set for completing even this phase-out process.

The joint benefits of improving performance and reducing costs by reducing the number of call sites are described below.

World class telephone operations invest in hiring the right people and training them. Some IRS call sites experience serious difficulty in meeting their hiring quotas. At the same time, some call site managers believe that the skills of the recruits are declining.

Of the five call sites ranked lowest for tax law accuracy, two expressed concerns with their ability to hire, and four expressed some concern with the abilities of their new hires. (The fifth site was not allowed to hire new employees in FY 1999.)

The following two comments were excerpted from the questionnaire responses of the lowest quality call sites:

When sufficient and competent recruits cannot be attracted, service and quality levels suffer.

The IRS’ call sites are generally located in large metropolitan areas where labor costs and rental costs for space tend to be higher. For example, at 22 of the 30 call sites, the labor costs ranged from .21 percent to 7.19 percent higher than the "Rest of the U.S." due to the government’s locality pay. Overall, the IRS’ FY 1999 Toll-Free Work Plan shows that 68 percent of staffing was allocated to the 22 call sites where salaries were the highest.

The IRS’ rental costs for the 30 call sites ranged from $10.36 to $33.95 per square foot. Of the 15 call sites with the highest labor rates, 10 also incurred the highest rental costs.

Comparison of the Customer Service Division’s work plans for FY 1997 and FY 1999 suggests that toll-free operations are increasing at call sites with higher operating costs while decreasing at sites that are less costly. At the 9 sites where labor and rental rates were the highest, staffing allocations had increased by nearly 19 percent from FY 1997 to FY 1999. At the 8 sites where labor and rental rates were the lowest, the staffing allocations had decreased by nearly 10 percent during the same period.

The IRS may be paying considerably more than necessary to house and operate the call sites. In FY 1999, the IRS budgeted over $312 million for toll-free operations salaries. The Customer Service Division does not control space costs and could not provide us with a space cost estimate.

Customer Service management should take steps to contract with an independent call center management consultant to:

9. Determine the potential cost savings, enhanced management performance, and improved customer service that could be achieved by consolidating the toll-free telephone operations.

10. Assist the IRS in developing and implementing short-term and long-term plans for reducing the number of call centers.

Management’s Response: The IRS does not plan to implement these recommendations although Customer Service management will revisit their site sizing analysis on a periodic basis. Customer Service management stated that, with 3 sites, front-line staffing would average about 4,000 employees per call center--far above the 600 maximum cited in the Federal Consortium Benchmarking Study Report. They also stated that an analysis of the relationship between direct hours spent and calls per hour at each site last filing season found no indication that large sites were more productive than small sites. Management stated that contracting to three sites would erode their back-up capability if any site went down and also pose staffing risks since local job markets are volatile. Management also cited the cost to close some sites and expand others and the strong political and union opposition to closing sites that the IRS faces.

Office of Audit Comment: We did not recommend that the IRS collapse its toll-free telephone operations into three call sites. We only recommended that the IRS use a consultant to independently determine if improved performance and economy could be achieved through a reduction in the number of call sites.

Usually, CSRs sign on the telephone system at the beginning of the tour of duty and sign off at the end of the tour unless they are in all-day training.

While the CSRs are logged on the system, one of four activities generally occurs:

• The CSR is handling a call.
• The CSR is "available" to take a call, but no calls are coming in.
• The CSR is in "idle" status (i.e., the CSR has temporarily left the workstation or is not assigned incoming calls).
• The CSR is in "wrap" status (i.e., the CSR is completing work related to the prior call, is preparing for the next call, or requires time to relieve a stressful call situation).

Corporate data on the amount of time spent by CSRs in the above categories were not available. However, 1 region had data for its 6 call sites that show that the CSRs spent only 49 percent of their sign-on time actually handling calls. The following table shows the time distribution among CSR activities.

An April 1998 report, "Consulting Services for Customer Service Business Master Plan Draft Report," done under contract by an outside contractor for the IRS, addresses the percentage of time spent handling calls. The report stated that, if handle time was 50 percent, "results in this range would suggest underutilization of staff due to inaccurate forecasting or scheduling."

When a CSR is in "idle" status, the CSR is required to report the appropriate change of work status using one of four "Idle with Reason Codes." These identify the types of idle time that the employee was using. Three of the four codes are specific. However, one category encompasses a wide array of activities including lunch, breaks, meetings, and other items.

The preceding chart shows that the CSRs at 6 call sites collectively spent 33 percent of their sign-on time in "idle." (This equates to 2 hours and 48 minutes in an 8 and 1/2 hour day.) Also, the "idle" time ranged from a low of 23 percent at one call site to a high of 44 percent at another site. The NTEU agreement prohibits management’s use of the "Idle with Reason Codes" for evaluating individual performance.

Management at 8 of the 20 call sites that responded to our questionnaire expressed some level of dissatisfaction with the impact that idle time has had on the level of service provided. The following comments were excerpted from two of the questionnaire responses:

Effective November 1, 1998, the IRS’ agreement with the NTEU mandated using "auto wrap," a function that automatically moves the CSRs into an unavailable status after each call. Previously, each call site selected which type of "wrap" it wanted. For those sites that did not select "auto wrap," CSRs would be available immediately to receive another call unless the CSRs selected otherwise.

Also, per the NTEU agreement, it is up to the CSRs to determine how much "wrap" time they need and when to take the next call. Managers may discuss with employees the proper use of "wrap" time and may address the amount of "wrap" time used based upon telephone monitoring and work reviews. However, managers are not allowed to consider the amount of "wrap" time used for evaluative purposes.

As shown in the chart on page 23, the CSRs at 6 call sites collectively spent 9 percent (i.e., 46 minutes in an 8 and 1/2 hour day) of their time in "wrap." The "wrap" time ranged from a low of 1 percent at 1 site to a high of 16 percent at another site.

Overall, management at 9 of the 20 call sites that responded to our questionnaire expressed some level of dissatisfaction with the effect that "auto wrap" had on the LOS. The following two comments were excerpted from the questionnaire responses we received:

To show the cumulative effect that seemingly small amounts of time can have on service levels, if the CSRs had handled just 1 more call per hour, the IRS would have answered over 8.5 million (42 percent) more calls during the first 6 months of FY 1999.

Private industries recognized as providing world-class telephone service have successfully used outcome-based incentive pay systems to reward employees for increased productivity. However, the IRS does not employ this type of system.

To increase the productivity and efficiency of the IRS’ toll-free telephone operations, Customer Service management needs to:

10. Determine the reasons for the variations in "idle" and "wrap" time at various call sites and take appropriate steps to develop corporate measures for each.
11. Expand and/or redefine the "Idle with Reason Codes" to provide call site managers with more useful information for monitoring their operations.
12. Renegotiate with the NTEU to allow the use of "Idle with Reason Codes" to determine employee abuses of lunches, breaks, etc. Allow managers to use automated management information to identify trends and atypical performance.
13. Renegotiate with the NTEU to allow Customer Service management to designate the type of "wrap" to be used and establish guidelines for using "wrap" time.
14. Explore the development and testing of an outcome-based incentive pay system that rewards the CSRs at those call sites which meet and/or exceed corporate goals in productivity, quality, and customer satisfaction measures.

Management’s Response: After the 1999 Filing Season, the IRS and the NTEU renegotiated portions of the Customer Service Agreement specifically related to the use of "Idle with Reason Codes." Two new categories of "idle" were added to provide managers with helpful information to monitor telephone activity. "Read time" and "Break time" were placed in their own respective categories.

In addition, new training has been developed to teach managers how to effectively use automated management information system data to identify employee problem areas and take appropriate corrective actions. A "train-the-trainer" session was conducted January 4-6, 2000, and was immediately thereafter rolled-out to managers at the 25 call sites.

The Chief, Customer Service Field Operations, has asked his Deputies to assemble a "best practices audit team" to evaluate why some sites have a relatively high percentage of their CSRs actually talking to taxpayers on the telephone while other sites have problems doing so.

Regarding the development and testing of an outcome-based incentive pay system, Customer Service management stated that, under their present performance system, an employee is evaluated and rewarded based on his/her critical elements. Management is in the process of revising employee critical job elements to reflect their corporate goals. Management stated that the new critical elements, along with a balanced measures approach, should enhance their ability to meet or exceed their corporate goals.

Office of Audit Comment: IRS management did not address the first part of Recommendation 13 or Recommendation 14. We continue to believe that CSR productivity would be improved by the implementation of these recommendations.

IRS management did not specifically comment on developing an outcome-based incentive pay system. Recommendation 15 was based on the concept of rewarding group effort (i.e., "call sites which meet and/or exceed corporate goals") while management’s response related to a continuation of current practices to solely reward individual effort. The February 1995 "Federal Consortium Benchmark Study Report" cited this type of corporate outcome-based incentive pay system as a best practice in telephone service. Thus, we continue to believe that IRS management should consider its implementation.

In October 1997, the President announced several changes that would make the IRS "more customer friendly." Among these changes was providing "round-the-clock IRS telephone service starting in 1999."

Accordingly, the IRS expanded its hours of operation for the toll-free telephone system from 96 hours a week (i.e., 16 hours a day for 6 days) in 1998 to 168 hours a week (i.e., 24 hours a day for 7 days) in 1999. However, an appropriate infrastructure was not in place for this expanded service.

The 72 additional hours that the toll-free telephone system was available each week in 1999 represented a 75 percent increase. However, less than four percent of the total calls to the IRS’ three main toll-free lines were received during these expanded hours of operation.

An internal study of 24/7 service published by the IRS in May 1999 showed that costs for overtime and night differential increased by almost $3 million from FY 1998 to FY 1999. IRS management attributed this increase to toll-free operations.

The IDRS is an IRS computer system used by CSRs to view taxpayer accounts and make account adjustments. The IDRS is unavailable during some time each day to update, usually after core business hours and on weekends.

The Corporate Files On-Line (CFOL) is an alternative system used to provide assistance to taxpayers when the IDRS is down. The CFOL provides CSRs with access to tax account information, but its information is not as current as the IDRS, and it cannot be used to adjust accounts.

The May 1999 IRS study showed that 26 percent of the callers on 4 Sundays during the filing season could not be served due to the IDRS being unavailable. While this ad hoc survey is not statistically valid, it does provide information on some effects of the IDRS unavailability.

Customer Service management at 11 of the 20 call sites that responded to our questionnaire expressed some level of dissatisfaction with the effect that the unavailability of the IDRS had on their ability to effectively assist callers during the extended hours of service. The following comments were excerpted from two of the questionnaire responses:

Our discussions with IS management provided conflicting information on when the IDRS was available during the 1999 Filing Season. The only clear consensus was that the IDRS must be down for some period each day for updating. IS did state that it was the responsibility of each call site to negotiate its need for expanded access with its service center. However, with national call routing, expanded access needs to be controlled on a national basis.

IRS executive management did not fully determine the effect of the NTEU agreement on offering full-service telephone tax assistance 24 hours a day, 7 days a week. A provision of the NTEU agreement resulted in extended hours being staffed primarily with inexperienced employees and new managers.

The shortage of experienced staff to answer difficult tax law or account inquires during non-prime shifts led to the preparation of written referrals that had to be answered by experienced day-shift employees. When day-shift employees are replying to written referrals, they are not available to answer incoming calls for tax assistance.

Management at one extended-hours site stated:

To improve service to taxpayers on the toll-free lines, Customer Service management should:

16. Provide CSRs on the toll-free lines only on a 16 hours a day, 6 days a week (i.e., 16/6) basis to deliver quality customer service that effectively meets taxpayer demand patterns. Automated services should be made available on a 24/7 basis.
17. Assign national responsibility within the Customer Service Division for the coordination and communication of IDRS availability with IS and the call sites to ensure IDRS availability at all times when CSRs are providing taxpayer service.

Management’s Response: Effective April 18, 2000, Customer Service will provide tax law service on a 16/6 basis during non-filing season. Customer Service management stated that they continually assess customer needs and adjust their services as appropriate within available resources. Customer Service will continue to offer automated services consistent with IDRS availability.

Customer Service has established a communication plan with IS to ensure that system availability information is shared nationwide. Customer Service will designate the Servicewide Electronic Research Program as the media to display IDRS real-time schedules to CSRs.

Office of Audit Comment: IRS management’s response to the issue of 24/7 service does not effectively address the concerns that we raised in this report. The "tax law service" that they mention is only on one of the toll-free lines, and they are only addressing non-filing season. We continue to believe that it is not good customer service to allow access for account calls on a 24/7 basis and then not be able to respond to taxpayers because the IDRS is unavailable.

IRS management commented on page 24 of their response that it is "cost prohibitive" to have quality reviewers available beyond 16/6 service because only 5 percent of the calls are received during those additional hours. It would also follow that it is an ineffective use of the IRS’ limited resources to provide "live" telephone coverage during these same hours. Additionally, we believe that the IRS should not be offering toll-free telephone service at times when they cannot monitor the quality of the answers that are provided to taxpayers.

IRS management’s response to Recommendation 17 does not specifically state whether national responsibility has been assigned. In addition, it is unclear how they are ensuring IDRS availability at all times when CSRs are providing taxpayer service. The response seems to indicate that call sites will know when the IDRS will be down, but does not state what CSRs are expected to do to handle account calls during these times. We believe that it is not customer oriented to accept calls when account services cannot be provided.

Improvements Are Needed for Measuring Quality and Providing Specialized Services

The CQRS began operating on October 1, 1997, in Philadelphia, Pennsylvania, to monitor the accuracy of the answers provided to tax law questions. In addition, the IRS has programs to expand services to other taxpayers requiring special toll-free assistance: the Quality Assurance Program, the Spanish Language Program and the PRP. These new systems and programs also encountered problems.

World class quality measures include courtesy, initiative, accuracy, and completeness. While world class toll-free telephone operations do not generally employ centralized monitoring, the IRS does use a centralized measurement system.

From October 1, 1998, to April 17, 1999, the CQRS results showed that the IRS achieved a national accuracy rate of 72 percent for tax law questions. Although quality improved as the filing season progressed, this accuracy rate was seven percent less than the accuracy rate measured by the CQRS during FY 1998. Accuracy rates at the individual call sites ranged from a low of 63 percent to a high of 77 percent.

The quality levels may be attributable in part to the number of 1999 tax law changes. Another possible factor is the problems many of the call sites experienced in recruiting and hiring qualified CSRs.

Of greater concern is the fact that CQRS results are unreliable because the sample of monitored calls was not large enough to provide a precise measurement of the true accuracy rate. The sampling aspects that we identified as needing improvement follow.

The Statistics of Income function developed the CQRS sampling plan. The plan was designed to produce, at a 90 percent confidence level, a nationally valid accuracy rate that was reliable within plus or minus 5 percent. This means that 90 of 100 samples would identify an accuracy rate that was within 5 percent of the true accuracy rate.

However, the CQRS sampled less than 25 percent of the required number of tax law calls for FY 1999 through the end of the filing season. As a result, the 72 percent accuracy rate measured by the CQRS was statistically reliable within plus or minus 12 percent. Therefore, the true accuracy rate may have been anywhere from 60 percent to 84 percent.

There were two primary reasons for the insufficient sampling. The first reason was insufficient staffing. The second reason was that the reviewers’ productivity rate was less than 75 percent of the planned rate.

The CQRS sampling plan specified that an equal volume of calls should be monitored for each site. However, the calls to some sites were monitored far more often than the calls to other sites. The monitoring ranged from 198 calls at 1 site to 339 calls at another site. When the sampling plan for the number of monitored calls per site is not followed, the reported accuracy rates may be incorrect.

CQRS management did not have an effective control to ensure that specific tax law issues were monitored proportionately to the call volume for those issues. For example, filing status category questions were 26.4 percent of the incoming calls but were only 14.1 percent of the calls monitored. Because accuracy rates vary among tax law issues, disproportionate monitoring diminishes the reliability of the overall accuracy rate measurement.

The IRS performed no corporate quality monitoring of Spanish-language calls because the CQRS staff had no reviewers that could interpret the Spanish language. The Spanish-speaking call volume is significant, although the IRS does not have a system to track this information. We estimate that between 5 and 10 percent of call attempts may have been from Spanish-speaking callers. The lack of Spanish-speaking call monitoring further reduces the reliability of the reported accuracy rate.

The Customer Service FY 1999 Program Letter stated that CQRS reviews of tax law calls would cover all hours of operation. However, the CQRS staff monitored only Mondays through Fridays during the daytime hours. Consequently, 14.8 percent of tax law calls were received outside the hours when the CQRS staff was conducting its monitoring. Therefore, the IRS had no corporate information to determine the quality level provided during the hours of operation outside of the weekday daytime hours. Not monitoring calls during these hours further reduces the reliability of the reported accuracy rate.

To attain a reliable corporate measure of the quality of toll-free telephone service provided to taxpayers, Customer Service management needs to take actions to:

18. Ensure that there is an adequately-sized CQRS staff in place to meet the requirements of the sampling plan or find ways to increase the volume of calls monitored by each reviewer.
19. Revise the process for selecting calls to more effectively ensure that there is a proportionate number of calls monitored for quality for each call site.
18. Ensure that all issues are monitored and that there is an equitable balance of coverage by the national quality review system.
19. Develop a means to ensure that Spanish-language calls are remotely monitored for quality in the same manner as English-language calls.
18. Expand corporate monitoring to include the quality of answers provided to taxpayers during all hours of operation.

Management’s Response: To ensure that there is an adequately-sized CQRS staff in place, Customer Service management is currently in the process of hiring an additional 15 reviewers. Management stated that the current review samples are large enough to provide a statistically valid call site level quality number on a quarterly basis within the accepted confidence and precision margins. Their long-term goal is to provide quality estimates at each call site each month that meet the confidence and precision margins (90 percent and plus/minus 5 percent). The additional staff at the CQRS site will augment the monthly sample to achieve this objective.

Customer Service management does not believe that any changes to the process of selecting calls for quality review are necessary to ensure that a proportionate number of calls are monitored for each call site and to ensure that an equitable balance of coverage is provided for all tax law issues. They stated that the CQRS staff monitors each site’s sample volume throughout the week and makes necessary adjustments if it appears a site will receive a disproportionate sample. Due to the complexity of the tax law calls, CQRS reviewers are assigned to monitor specific applications in which they have expertise. Management stated that this methodology provides excellent coverage of issues but cannot reflect the universe of tax law calls due to the number of issues that are messaged.

To ensure that Spanish-language calls are monitored for quality, Customer Service management solicited other potential call sites that had an adequate resource pool to provide bilingual quality review. Many sites expressed interest in housing the bilingual review operation but most were unable to provide a long-term solution due to short-term space considerations. The Dallas call site expressed interest in providing a short-term solution and announced for the bilingual positions on March 6, 2000. The Dallas bilingual quality review call site is projected to be operational in May 2000.

At this time, Customer Service management is planning no corrective actions to the issue of providing quality review coverage on a 24/7 basis. They stated that the CQRS site currently operates on a 16/6 basis and provides quality review coverage for 95 percent of the scheduled toll-free call volumes. They believe that the additional overtime and utilities would be cost prohibitive to provide coverage for the remaining five percent of scheduled call volumes.

However, they are considering a proposal to conduct call recordings that would provide coverage of the toll-free telephone service 24/7 and allow the CQRS staff to manage their workload as an inventory. Final organizational approval and funding are required to move forward with this initiative.

Office of Audit Comment: Management’s response to Recommendation 19 states that they do not believe any changes are necessary to address the disproportionate monitoring of calls at various call sites. The Office of Audit believes management needs to take corrective action so the reported accuracy rates are correct.

IRS management's response to Recommendation 20 covers account calls as well as tax law issues; however, our recommendation was only related to tax law. We do concur that they cannot monitor the tax law calls that are messaged and it was not our intent that these should be considered in the recommendation. However, they have stated that they have a sample designed to monitor all other tax law calls equally. Our review, as shown in this report, shows that there was not equal monitoring during the 1999 Filing Season. The Office of Audit needs further clarification on this issue.

Regarding Recommendation 22, we point out our comment following Recommendation 16, wherein we state that we do not believe that the IRS should be offering toll-free telephone service at times when it cannot monitor the quality of responses that taxpayers receive.

The PRP provides special service to taxpayers whose problems have not been timely resolved through normal IRS procedures. The need for both increasing public awareness of and providing taxpayers with access to PRP assistance was highlighted during the September 1997 Senate Finance Committee hearings.

In November 1998, the IRS implemented a new dedicated toll-free help line to provide assistance to taxpayers for problems unresolved through normal channels. During the 1999 Filing Season, CSRs answered PRP calls at five IRS call sites. Approximately 241,000 taxpayers attempted to call the new toll-free PRP line between November 1998 and April 17, 1999.

A relatively small percentage of the calls that actually reached a CSR involved unresolved tax problems that met PRP criteria.

Of the approximately 241,000 calls into the PRP line:

• 72,000 (30 percent) were abandoned (i.e., the taxpayer hung up).
• 116,000 (48 percent) were subsequently transferred because they did not meet PRP criteria.

Customer Service management attributed the volume of non-PRP calls on the PRP line to the callers’ inability to get through to the IRS on the other toll-free lines.

The IRS lacked an effective method to ensure that only PRP calls actually reached the CSRs. Instead, Internal Revenue Manual procedures require CSRs to transfer calls to the appropriate lines if the taxpayer’s problem does not meet PRP criteria. At least one of the five call sites handling PRP calls elected to respond to non-PRP calls on the PRP line in an effort to provide service to the callers.

Time spent listening to and transferring non-PRP calls, as well as time spent working non-PRP calls on the PRP line, may prevent taxpayers with real PRP issues from gaining prompt access to the PRP line. It is also a costly way to handle the appropriate routing of calls. Additionally, it may result in wrong answers being provided to taxpayers if the CSRs on the PRP line do not have the proper skills to answer taxpayers’ questions.

18. Customer Service management should devise a menu system that ensures only appropriate calls are routed to the PRP line.

Management’s Response: Beginning with the 2000 Filing Season, callers who dial the National Taxpayer Advocate (NTA) (formerly PRP) toll-free number are directed in the Voice Response Unit (VRU) script to validate whether they qualify for NTA service. Should callers not qualify because they have not previously contacted the IRS, or because their last contact was less than 30 days, they are prompted with 4options that will permit their calls to be processed in the most efficient manner. If the caller selects 1 of these options, the call is post routed to 1 of the 15 district offices based on the best site available to handle the call.

Technical and Staffing Improvements Are Needed to Ensure That Spanish-Speaking Callers Are More Effectively Served

The IRS did not provide Spanish-speaking taxpayers with effective access to its toll-free telephone services. The Customer Service Division had only about 200 Spanish-speaking employees to assist an estimated 2.9 to 5.7 million Spanish-speaking callers. Further, the bilingual CSRs also answered English-language calls and were frequently unavailable to answer Spanish-language calls.

This resulted in only a very small percentage of successful call transfers to Spanish-speaking CSRs. If Spanish-speaking CSRs were not available, the Spanish-speaking taxpayers were told to call back with an interpreter.

In order to make the IRS more accessible to Spanish-speaking taxpayers, RRA 98 required the IRS to provide all callers to the toll-free help lines with the option of having their questions answered in Spanish. This provision took effect on January 1, 2000. To meet this requirement, the IRS is developing a menu choice for a Spanish script and is developing Spanish messages.

Recommendations

19. To further improve the ability of Spanish-speaking taxpayers to use the IRS’ toll-free telephone system, Customer Service management needs to undertake one or more of the following actions:

1. Consider developing a separate toll-free line for Spanish-speaking callers.
2. Develop a comprehensive strategy for recruiting and hiring more Spanish-speaking CSRs.
3. Assign a designated number of the available Spanish-speaking CSRs to exclusively handle calls from Spanish-speaking taxpayers.
4. Determine the feasibility of routing calls from Spanish-speaking taxpayers to the Puerto Rico call site.

Management’s Response: Customer Service management determined that a separate toll-free line for Spanish-speaking callers was not a viable option at this time because of budgetary and technological restraints and a lack of potential assistors. Instead, the IRS decided to institute post routing in January 2000 to nine existing call sites through the use of a Spanish script option.

Bilingual Spanish-speaking assistors and managers were recruited at the nine selected call sites. Additional volunteers were sought from the existing staff. The results of the initial filing season will determine the extent and the direction of continued publicity, recruitment, and hiring.

Beginning in January 2000, Spanish-speaking customers are intelligently routed on an enterprise-wide basis using a pool of CSRs at nine designated call sites. Using post-route call processing, Spanish-speaking customers are directed to two groups who receive (1) Spanish calls only, and (2) Spanish calls and English procedural calls only. The second group was designated because assistors with a dual assignment remain consistently productive and procedural calls are short in nature and have a quick turnaround. Spanish calls have first priority to prevent Spanish-speaking customers from waiting while CSRs in the second group are speaking to English-speaking customers.

Customer Service management conducted a feasibility study and decided to expand the call routing system to include Puerto Rico. They are establishing a new site, installing a new system, and hiring 125 new assistors to begin training in October 2000. The Puerto Rico call site will become part of the Customer Service toll-free enterprise prior to the 2001 Filing Season.

Conclusion

After investing heavily in new technology, committing significant Compliance resources, and expanding the hours of operation to 24/7, the IRS still did not improve toll-free telephone service in 1999. The IRS’ performance in providing toll-free telephone service compares unfavorably with world class service.

To increase productivity and improve the efficiency of the toll-free telephone operation, the IRS should follow the lead of organizations recognized for providing world class telephone service. Actions to be taken include implementing systems management throughout the Customer Service organization, consolidating the toll-free operations into fewer call centers, developing a reliable corporate measure for quality, and employing innovative methods to address the serious shortage of trained CSRs.

Detailed Objective, Scope, and Methodology

Our overall objective was to determine whether the Internal Revenue Service’s (IRS) strategy to improve telephone service has resulted in an increased level of quality customer service in an economic manner. We conducted our review between October 1998 and November 1999 at the National Office, the Customer Service Operations Center (CSOC) in Atlanta, the Centralized Quality Review System (CQRS) site in Philadelphia, and three call sites (Nashville, Pittsburgh, and the Fresno Service Center (FSC)).

We performed the following audit work to accomplish our objective.

1. To evaluate whether the process for forecasting, planning, and scheduling of demand and resource requirements was operating effectively and contributing towards a world class telephone operation, we:
1. Analyzed the effectiveness of 24/7 (i.e., 24 hours a day, 7 days a week) toll-free telephone service.
1. Conducted a site visit at the Atlanta Service Center call site, one of the primary call sites handling 24/7 service.
1. Surveyed the call sites via questionnaire regarding the effectiveness of 24/7 service. Analyzed the responses received to this questionnaire.
1. Reviewed procedures for handling account calls when the IRS’ Integrated Data Retrieval System (IDRS) is unavailable and determined how management ensured that these calls were resolved in a prompt and effective manner.
1. Evaluated the effectiveness of the national call router in providing taxpayers with improved access to the toll-free system.
1. Conducted a pre-filing season site visit to the CSOC to evaluate readiness for the call router national rollout.
1. Reviewed the business rules for the call router to determine whether they were appropriately designed to increase the level of service to taxpayers.
1. Interviewed management regarding potential problems and progress towards national implementation.
1. Determined whether the call router was working effectively at the call sites.
1. Surveyed the call sites via a questionnaire to request their input on any issues/concerns relative to the national call router.
1. Interviewed management regarding any problems with the call router.
1. Determined what measures were taken if the network was unavailable at a site.
1. Periodically reviewed the daily CSOC Log to identify any recurring problems being experienced at more than one site. We contacted sites to determine their methodology for identifying selected systemic problems that they had reported.
1. Obtained and reviewed management and contractor reports on the call router.
1. Compared Fiscal Year (FY) 1998 and FY 1999 national management reports to determine whether the call router resulted in increased level of access (LOA) and level of service (LOS) or in reduced amounts of resources needed to answer the call volumes.
1. Evaluated the potential causes for the significant decline in the LOA and LOS for the 1999 Filing Season.
1. Surveyed the call sites via a questionnaire to request their input on a variety of issues and concerns relative to the 1999 Filing Season. We analyzed and categorized the concerns of the 20 call sites that responded to the questionnaire.
1. Reviewed the October 1998, "Memorandum of Agreement Between the Internal Revenue Service and the National Treasury Employees Union" (NTEU) to identify provisions that may have impacted management’s ability to achieve the business goals.
1. Interviewed management regarding any concerns with the decline in the LOA and LOS.
1. Followed up on various issues that we identified in the above three steps.
1. To determine whether the IRS has a sound methodology of performance measures in place to accurately assess the quality of service being provided to customers, we:
1. Determined whether the quality review process was adequately designed to measure the quality of the toll-free telephone service.
1. Visited the CQRS site where centralized monitoring of tax law calls is handled and interviewed CQRS employees to identify their system for measuring effectiveness and to determine the specific quality assurance methods used to monitor the performance of the reviewers.
1. Visited the National Office, Quality Analysis Section, to discuss the performance standards and program objectives and determined the status of using recording technology to expedite their review process.
1. Visited two district office call sites and one service center call site.
1. Determined the method used to evaluate the work of the quality reviewers.
1. Reviewed the quality assurance process to evaluate the scope of their local call monitoring activity and determine whether duplication of work existed between the local sites and the CQRS quality review process.
1. Interviewed Customer Service management to evaluate the methods for ensuring the quality of services provided to Spanish-speaking customers using the toll-free telephone system. We analyzed a management report for April 30, 1999, for 1 site showing 1,156 calls routed to the 8815 line and 185 calls to the 4262 line. We analyzed on-line activity on May 17, 1999, for 52 calls transferred to Spanish-language applications.
1. Evaluated the adequacy of quality assurance coverage provided for the toll-free telephone lines during the extended 24 hours of operation.
1. Evaluated the impact of the new Problem Resolution Program (PRP) toll-free line on improved customer service and the adequacy of quality monitoring during the extended 24 hours of operation.

1. Evaluated the effectiveness of the publicity of the PRP toll-free number.
2. Reviewed the National Taxpayer Advocate Telephone Activity and the Weekly Customer Service (Snapshot) Reports and evaluated the LOA, LOS, and volume of activity on the PRP toll-free line.
3. Visited two Customer Service call sites designated to handle calls received on the PRP toll-free line.

1. Evaluated monitoring during the extended 24 hours of operation.
1. Determined whether a sample of calls was properly controlled on the Problem Resolution Office Management Information System or transferred to the appropriate telephone number if the call did not meet PRP criteria.

1. Determined whether the quality review process provided accurate results.
0. Evaluated the adequacy of the sampling techniques in determining baseline rates for tax law accuracy.
1. Discussed the development of the sampling plan with Statistics of Income statisticians and Customer Service management.
1. Determined whether the CQRS sampling plan was based on sound mathematical and statistical theory and was designed to ensure that a representative number of calls was monitored from each call site.
1. Determined whether the planned sample sizes were sufficient to ensure that the quality review results were reliable.
1. Analyzed the execution of the sampling plan by the CQRS and the 3,689 tax law calls monitored from October 1, 1998, to April 17, 1999, to determine whether a sufficient number of calls were monitored, including an appropriate number from each call site, to accurately evaluate quality.
1. Determined how the CQRS sampling plan ensured a representative cross-section of applications (i.e., tax law issues) to effectively measure overall quality.
1. Determined whether the three call sites reviewed the required sample that was specified in their sampling plans.
1. Evaluated the reliability of the information from the monitored calls.
1. Reviewed the documentation for a judgmental sample of 59 calls monitored by the CQRS and by the Quality Review Database call sites (Nashville and FSC) to evaluate whether the data collection process was reliable and whether sufficient information was recorded to support the reviewers’ quality determinations.
1. Reviewed the documentation for a judgmental sample of 79 calls monitored by the CQRS and by the 3 Customer Service call sites to determine whether the Initial Contact Resolution was acknowledged only when there was a successful resolution of all issues resulting from a taxpayer’s first inquiry with the IRS.
1. Determined whether the feedback from the quality review process was adequately identifying trends, training needs, and the measurements of customer satisfaction.
0. Determined the effectiveness of the system for identifying trends and problem areas.
1. Evaluated CQRS management reports and the use of the CQRS Intranet web page to determine how CSR errors and trends were provided to the National Office, the regional offices, and the call sites.
1. Evaluated management reports at the call sites to determine:
0. The method by which CSR errors and trends were provided to the National Office, the regional offices, and to the CSRs.
1. The method by which call sites obtained trends and information on CSR errors from the National Office, the CQRS, and the regional offices and how that information was used.
1. Determined whether the CQRS staff and the PRP call site staff had a sufficient level of competence to effectively handle their telephone call monitoring responsibilities through an analysis of their work experience and training.
1. Determined whether the measurement of customer satisfaction was used to provide the best possible service to the customers.
1. Determined whether adequate samples were made from the toll-free telephone customers at the call sites for the Customer Satisfaction Surveys.
1. Evaluated the IRS’ method of analyzing and trending the answers to the Customer Satisfaction Surveys to determine how the IRS used the results to improve customer service.
1. Evaluated the IRS’ initiative to provide Customer Satisfaction Surveys for Spanish-speaking customers.
1. Reviewed the process and procedures for handling refund inquiries to the IRS for tax refund offsets to child support and Federal agency debts.
1. Evaluated the process and procedures for resolving Child Tax Credit inquiries and the IRS’ position for using oral testimony to handle these on-line inquiries.

1. To determine whether the existing number of Customer Service call sites provided the optimum configuration to ensure that high quality toll-free telephone services were provided to taxpayers in the most effective, efficient, and economical manner, we:
1. Identified and evaluated the IRS’ plans for any future consolidation and/or closing of sites currently handling taxpayer service toll-free calls, the automated collection system, service center compliance, and service center account work.
1. Interviewed Customer Service management in the National Office.
1. Discussed the planned timetable for closing the five taxpayer service toll-free sites that have already been designated as "non-continuing."
1. Discussed whether the Customer Service Division has any future plans to close additional call sites.
1. Discussed the potential impact of the pending IRS reorganization on the number and location of Customer Service call sites.
1. Researched the IRS Modernization Blueprint, the October 1996 Customer Service Telephone Navigation Concept of Operation (CONOPS) Report, and the FY 1997 Customer Service Telecommunications Study to identify any plans and/or recommendations that would impact the number of call sites.
1. Evaluated the economical and operational requirements of the current configuration of call sites to determine whether it contributed to operational inefficiencies.
1. Analyzed Customer Service rent cost data and locality pay to evaluate the impact of the difference in costs of providing toll-free telephone services to taxpayers at specific call sites.
1. Compared FY 1997 and FY 1999 Customer Service Toll-Free Work Plan summaries to assess changes in the allocation of Full-Time Equivalent resources and the potential impact of the non-continuing call sites.
1. Reviewed Customer Service Performance results reports.
1. Assessed the impact of the operational requirements of the current configuration.
1. Recruiting and hiring
1. Office space, equipment, and other capital outlays
1. Scheduling and staffing
1. Standardization
1. Call router
1. Operations Centers
1. Identified reported deficiencies in the current toll-free system for which the root cause can be attributed to the IRS’ decentralized telephone operations.
1. Reviewed recent IRS Internal Audit reports and General Accounting Office (GAO) reports on IRS telephone services.
1. Reviewed other IRS internal studies (e.g., 1997 Customer Service Telecommunications Study).
1. Identified best practices and attributes of the customer service telephone operations used in private industry and other government agencies to identify any economic or operational benefits that could be realized by centralizing the IRS toll-free telephone operations.
1. Reviewed the Vice President’s National Performance Review report on the best practices in telephone service that was issued in February 1995.
1. Reviewed the GAO report on the Social Security Administration’s toll-free telephone system.
1. Researched the Internet, periodicals, and other reference materials to identify information on customer service operations and related technology used by private industry or other government agencies.

Major Contributors to This Report

Gordon C. Milbourn III, Associate Inspector General for Audit (Small Business and Corporate Programs)

Kerry Kilpatrick, Director

Phil Shropshire, Deputy Director

William Stewart, Audit Manager

Robert Nicely, Senior Auditor

Thomas Schumacher, Senior Auditor

Karen Stafford, Senior Auditor

Denise Gladson, Auditor

Una Smith, Auditor

James Wellman, Auditor

Michelle D. Brasfield, Senior Auditor

Report Distribution List

Deputy Commissioner Operations C:DO

Chief Operations Officer OP

Assistant Commissioner (Customer Service) OP:C

Director, Office of Program Evaluation and Risk Analysis M:OP

National Director, Customer Service Compliance, Accounts and Quality OP:C:A

National Director, Customer Service Telephone Operations and Systems OP:C:T

Director, Customer Service Center OP:C:CS

National Director for Legislative Affairs CL:LA

Office of Management Controls M:CFO:A:M

Office of the Chief Counsel CC

Audit Liaison:

Office of the Assistant Commissioner (Customer Service) OP:C

Outcome Measures

This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. These benefits will be incorporated into our Semiannual Report to the Congress.

The Internal Revenue Service’s (IRS) inability to recruit and retain a sufficient number of qualified Customer Service Representatives (CSRs) is a fundamental cause for the annual struggle to effectively meet the demand for toll-free telephone assistance. The recruiting and retention problems exist in large part because of the heavy reliance on seasonal employees to supplement the permanent CSR staff. The IRS has provided substantial Compliance enforcement resources (i.e., Collection and Examination Division employees) to answer the telephones on-line and/or work the Message Callback Program, whereby they answer advanced technical tax law questions that were left by taxpayers. This has resulted in, at a minimum, foregone revenue of approximately $314 million and salary costs for these resources of nearly $21 million.

Glossary of Terms

Abandoned Call – A call in which the caller hangs up before the call is answered.

Accounts Call – An inquiry relating to a taxpayer’s tax account or entity information that deals with the processing of the tax return, correction of errors found during processing, and/or corrections resulting from adjustments or audit assessments. An accounts call does not include tax law questions regarding the initial filing of the return.

Assistor – A term used synonymously with Customer Service Representative (CSR).

Automated Collection System (ACS) – The Internal Revenue Service’s (IRS) computerized inventory system that maintains balance due accounts and return delinquency investigations. Using telephones, ACS tax examiners try to locate and speak with taxpayers to secure delinquent returns and payment of all taxes owed.

Auto-Wrap – A function that automatically moves the CSRs into an unavailable status after each call.

Average Speed of Answer – The average answer wait time for calls to a service or route.

Balanced Measures – Performance goals for organizational units set up by the IRS. The three elements of the IRS’ balanced measures are: Customer Satisfaction Measures, Employee Satisfaction Measures, and Business Results Measures.

Business Rules – The parameters for a system to include operational processes and contingency scenarios.

Busy – Term used to describe the line condition when the called party’s telephone is already in use.

Call Attempts – Total calls received plus all overflows (i.e., calls that were given busy signals).

Call Monitoring – Listening to a taxpayer’s call from beginning to end to evaluate the assistor’s response. This is performed by management and quality reviewers as a tool to identify problem areas that may signal a need for further clarification or additional training.

Calls Answered – Total calls received minus all abandoned calls.

Call Sites/Call Centers – Any location within a company where quantities of incoming and/or outgoing calls are handled by people, telephones, and computers. The IRS’ sites/centers provide assistance to taxpayers by answering questions, providing assistance, and resolving account-related issues.

Centralized Quality Review System (CQRS) – The IRS’ corporate monitoring system for its main toll-free telephone lines. The role of the CQRS is to provide a single product review system that provides qualitative and quantitative data for use in determining whether the IRS is fulfilling its three goals of increasing voluntary compliance, reducing taxpayer burden, and improving quality-driven productivity and customer satisfaction.

Collection – The function of the IRS that is responsible for collecting the proper amount of Federal tax from all persons who have not filed returns and/or paid tax as required by law.

Compliance – A term used to describe the IRS’ Collection and Examination functions whose mission is to ensure taxpayer compliance through collecting delinquent taxes and auditing tax returns to determine correct tax liabilities.

Corporate Files On-Line (CFOL) – Command codes that provide nationwide access to information processed through any district/service center and posted to any of the masterfiles. CFOL command codes are available even when the Integrated Data Retrieval System (IDRS) is not. The CFOL command codes allow research capabilities only and cannot be used to adjust accounts.

Customer Satisfaction Surveys – A voluntary survey to measure how satisfied taxpayers were with the service provided by the IRS.

Customer Service – When capitalized in this report, Customer Service refers to the function in the IRS that is responsible for direct taxpayer contact in such areas as toll-free telephone assistance and "walk-in" site assistance.

Customer Service Call Router (CSCR) – Provides a means of routing incoming toll-free service calls to call centers (interactive voice systems and/or to CSRs) where the call can be processed with the minimum expected delay.

Customer Service Operations Center (CSOC) – The new centralized operations center in Atlanta, Georgia. In December 1998, the management of the IRS’ toll-free telephone operations were transferred from the regions and local call centers to the CSOC.

Customer Service Representative (CSR) – An IRS employee who may perform work on the telephones, as well as paper inventory resulting from telephone contacts.

Enforcement – Activities such as auditing tax returns, collecting delinquent taxes, and prosecuting criminal tax cases.

Examination – The IRS function which administers a nationwide audit program involving the selection and examination of all types of Federal tax returns to determine correct liabilities of taxpayers.

Fail-safe – Capable of compensating automatically for a mechanical failure.

Federal Debt Offset – Effective January 12, 1999, the Financial Management Service offset tax refunds for delinquent child support and debts owed to Federal agencies.

Filing Season – The period from January 1 through April 15 of each calendar year during which most taxpayers typically file their individual income tax returns.

Fiscal Year (FY) – A 12-month period that ends on the last day of any month except December. The IRS’ fiscal year runs from October 1 of one calendar year through September 30 of the following calendar year.

Forecast – An expected or desired set of standards for a service over a specified period of time. This includes the number of calls offered, the number of calls handled, average talk time, etc.

Full Time Equivalent (FTE) – The number of full-time employees that would be required during a period to perform the work done during that period. To calculate the FTE, divide the number of seconds of work performed by the number of seconds in the period. For example, if employees spent a total of 7,200 seconds handling calls during a half-hour (1,800 second) interval, the FTE for call handling during the interval is 7,200 person-seconds / 1,800 seconds = 4 persons.

Handle Time – The amount or percentage of time that CSRs spend talking on an inbound call and performing after-call work.

Idle Time – A work status during which a CSR has temporarily left the workstation or is not assigned incoming calls.

Idle With Reason Codes – Codes input by the CSRs to identify the type of idle time that they are using.

Illinois Institute of Technology Research Institute (IITRI) – Contractor hired by the IRS to review call routing and processing and provide recommendations for improvement.

Initial Contact Resolution (ICR) – The successful resolution of all issues resulting from a taxpayer’s first inquiry with the IRS.

Integrated Data Retrieval System (IDRS) – An IRS computer system that enables employees in the service centers and the district offices to have instantaneous visual access to certain taxpayer accounts. This system is capable of retrieving or updating stored information; it works in conjunction with taxpayers’ account records.

IRS Restructuring and Reform Act of 1998 (RRA 98) – Legislation signed into law on July 22, 1998, that contains many new and important taxpayer rights and protections.

Level of Access (LOA) – Provides information about how well customers are able to get through to the telephone system. The calculation for LOA is calls received divided by total call attempts.

Level of Service (LOS) – The relative success rate of taxpayers who are calling for toll-free telephone services. For FY 1999, the LOS was expressed as the total number of calls answered divided by the total call attempts to arrive at the percentage of callers who actually received service.

Locality Pay – One of two parts of Federal employees’ annual pay raises. This part is supposed to be a fine-tuned adjustment to reflect private-sector salaries on a city-by-city basis.

Logged On – A state in which CSRs have made their presence known to the system but may or may not be ready to receive calls.

Math Error – One of a large number of mistakes a taxpayer can make on his/her tax return and for which the IRS issues a notice.

Message Callback Program – Also known as "Compliance messaging." In this program, for several of the more technical and time-consuming applications, taxpayers were allowed to leave a voice message that Compliance personnel later answered.

National Performance Review – A review of the Federal government that began on March 3, 1993. The goal of the review was to make the entire Federal government both less expensive and more efficient.

Precision – The range of values, less or more than the estimated figure, within which the true value is expected to fall.

Pre-Routing – The GeoTel routing concept that enables the call router to execute routing decisions before a call terminates at a call center. The call router uses real-time data on the status of the call centers to make its decisions on where to route calls.

Problem Resolution Office Management Information System – A database of cases that have been escalated to the Problem Resolution Officers either in the district offices or service centers.

Problem Resolution Program (PRP) – A program established to improve the ability of the IRS to respond effectively to taxpayer problems. The program is headed by the National Taxpayer Advocate whose goal is to make certain that taxpayers’ rights are protected, to serve as an advocate for taxpayers within IRS, and to represent the interests and concerns of taxpayers. A taxpayer problem meets PRP criteria if it involves a second contact at least 30 days after an initial inquiry or complaint, no response was provided to the taxpayer by the date promised, or established systems have failed to resolve the taxpayer’s problem.

Quality Review Database – An IRS intranet-based system that allows all toll-free sites immediate availability to quality review information and reports.

Queue – A holding place for calls while waiting for a CSR to become available.

Rest of the U.S. – For purposes of Federal employees’ annual pay raises, this refers to all locations that have not been designated to receive a locality pay adjustment specific to their local area.

Scheduling – The process of forecasting the workforce that will be needed to meet the anticipated customer demand.

Script – Prerecorded statements that taxpayers move through before speaking with a CSR.

Selected Expanded Access (SEA) – A system that allows taxpayers to choose automated services rather than receiving a busy signal and having to call back for assistance.

Service Center – The data processing arm of the IRS. The service centers process paper and electronic submissions, correct errors, and forward data to the computing centers for analysis and posting to taxpayer accounts.

Skill Group – A collection of CSRs that share a common set of skills such as being able to answer certain types of tax law questions. A CSR can be a member of one or more skill groups.

Statistics of Income – The IRS function responsible for planning, developing, and directing a national program of research and statistical analysis.

Systems Management – Understanding the work processes for which you are accountable, having data to know how well the process is performing, making data-based decisions to drive improvements, and making sustainable improvements to the process.

Tax Law Questions – These inquiries are mainly received on the 1-800-829-1040 product line and involve either individual or business tax returns, as well as estate, gift, or other tax situations, usually before the return is filed. Tax law contacts may also be procedural inquiries that are not account-related, thereby not requiring research on the IDRS.

Taxpayer Service Specialists – A CSR with a more specialized set of skills. This position is normally a promotion for a CSR.

Tele-Tax – A toll-free telephone line that provides taxpayers with access to pre-recorded messages covering various tax topics and automated tax refund status information.

Toll-Free Telephone System – The IRS has a variety of toll-free telephone lines to assist taxpayers in meeting their Federal tax obligations. The three main telephone lines referred to throughout this report are:

• 1-800-829-1040 for tax law inquiries.
• 1-800-829-8815 for questions regarding notices, letters, or bills received from the IRS.
• 1-800-808-4262 for inquiries on the status of a tax refund.

The IRS offers a toll-free telephone service called Tele-Tax, which provides recorded tax information on about 150 topics and automated refund information. The IRS also offers other toll-free telephone lines which allow taxpayers to order tax forms and publications and to have direct contact with the PRP.

Unallowable Items – Items entered on a taxpayer’s return that are of a questionable nature or that exceed statutory limitations.

Virtual Call Center – An approach to enterprise-wide call center management that treats several geographically dispersed call centers as if they were a single call center.

Voice Response Unit (VRU) – A telecommunications computer, also called an Interactive Voice Response unit, that responds to caller-entered touch-tone digits. The VRU responds to caller-entered digits in much the same way that a conventional computer responds to keystrokes or a click of the mouse. The VRU uses a digitized voice to read menu selections to the caller. The caller then enters the touch-tone digits that correspond to the desired menu selection. The caller-entered digits can invoke options as varied as looking up account balances, moving the call within or to another call distributor, or playing a pre-recorded announcement for the caller.

Wrap Time – A work status during which a CSR is completing work related to the prior call, is preparing for the next call, or requires time to relieve a stressful call situation.

Management’s Response to the Draft Report

Response has been removed due to its size. To see the complete Response, please go to the Adobe PDF version of this report on the TIGTA Public Web Page.