TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
THE COLLECTION QUALITY MEASURE SYSTEM'S PROCESS CAN BE ENHANCED
Reference No. 2000-30-161
The Internal Revenue Serviceís (IRS) Collection function is responsible for collecting unpaid tax liabilities. Various IRS functions, including the Collection function, have developed a set of balanced measures to help assess progress against the IRSí high level goals. One of the balanced measures in the Collection function is business results. The Collection Quality Measurement System (CQMS) consists of quality reviewers performing reviews of a sample of closed cases and is a major component of the Collection functionís method of assessing its business results.
The mission of the CQMS is to provide a qualitative assessment of a Collection Field function (CFf) case by determining if the case work addressed the right issues at the right time and if the right actions were taken timely and efficiently. Additionally, the CQMS determines whether the right procedures were followed and if the case was closed correctly. IRS management should use CQMS findings to help identify and correct problems in such areas as procedures, organization, and training.
The objectives of our review were to determine whether the CQMS process is effective to measure the quality of collection work and whether the results are used to improve overall effectiveness.
The CQMS process uses numerous important standards to evaluate the key aspects of CFf work on Taxpayer Delinquent Accounts, which are unpaid tax liabilities. The sample selection process has recently changed to select cases more objectively; however, it was too early in the new process for us to evaluate its effectiveness.
Our review showed that CQMS standards and reported results could be enhanced to provide additional information to Collection function managers. Also, national guidance and corrective action should be provided regarding specific quality standards that showed a national trend of continually not being met.
Quality Standards Could Be Enhanced
The CQMS does not capture information related to pyramiding (i.e., the accruing of additional liabilities) during the time from assignment of a case to the CFf until contact with the taxpayer. In a prior audit, we determined that a large amount of tax dollars pyramid during this time frame and there is a need to shorten the time frame to address the problem. This time frame is already captured in the time analysis section of the CQMS; however, pyramiding is not measured for that period. Collection function managers do not receive feedback from the CQMS as to whether their offices have a problem with pyramiding taxes while cases are awaiting assignment to revenue officers, prior to first contacts with taxpayers. By being aware of this condition, Collection function managers may take actions to prevent additional taxes from accruing.
The CQMS also does not have a specific standard that measures whether the Trust Fund Recovery Penalty (TFRP) is applicable on each case. The TFRP can be assessed against responsible officers of corporations that have not paid their employment tax liabilities. In another audit, we found that the penalty was not being assessed timely against responsible officers, thereby decreasing the ability of the IRS to collect the taxes due. This information would also be useful to managers.
In addition, the CQMS reports do not provide information by type of taxpayer, such as business or individual, or have it available in a form that shows the trends and results for different types of taxpayers. This information could be useful to managers because different types of taxpayers may have different types of issues and need different approaches as cases are worked. This could also be helpful as the IRS reorganizes into its new operating divisions, which focus on specific groups of taxpayers. Three of these divisions are Small Business/Self-Employed, Large and Mid-Size Business, and Wage and Investment.
The Collection Field Function Should Use the Collection Quality Measurement System Results More Effectively
The three districts we visited took some actions based on the CQMS results, mostly through discussions in branch and group meetings. However, our review of 1 year (April 1999 - March 2000) of data from the CQMS results showed that, nationally, certain quality standards were met less than 60 percent of the time on average, yet no consistent national actions were taken to address the problem. These standards included:
Collection function management informed us that the CQMS standards were revised in April 1999 and the 1-year time frame to evaluate trends and make conclusions may not be significant. Also, the responsibility for interpreting CQMS results and taking corrective actions is left to Collection function managers in the field offices. Collection function management believes that field managers would be better able to analyze the causes of the problems. However, relying on the districts to take their own corrective actions has not resulted in improvement. Providing consistent national direction or training in areas that, month after month, indicate a problem may improve the quality of work nationwide.
Summary of Recommendations
We recommend that Collection function management add a standard to measure pyramiding from the date a case is assigned to the CFf until contact with a taxpayer, add a standard to measure the timely use of the TFRP, provide the ability for the districts to be able to get results based on type of taxpayer, and provide national direction, feedback, and training on areas that need improvement.
Managementís Response: Managementís response was due on September 25, 2000. As of September 26, 2000, management had not responded to the draft report.