The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98), Pub. L. No. 105-206, 112 Stat. 685, sent a clear message that the IRS must do a better job in meeting taxpayer needs. The IRS faces significant challenges as it prepares to respond to over 54 million telephone calls it expects to receive during the 2000 Filing Season. Some of the challenges include implementing new tax law changes. To assess the IRS’ effectiveness in meeting these challenges, the Treasury Inspector General for Tax Administration has conducted a series of reviews to evaluate the effectiveness of the IRS’ process for preparing for the 2000 Filing Season.

The objective of this review was to determine whether the IRS was adequately preparing its Toll-Free Telephone Operation for the 2000 Filing Season.

The IRS has a fundamentally sound approach to planning telephone assistance for the 2000 Filing Season that covers: anticipating the number of taxpayers who will call on the toll-free line, staffing telephone operations with trained personnel, and purchasing equipment to improve overall service. Although the IRS has made progress towards implementing RRA 98 provisions for telephone assistance, resource limitations will prevent it from fully implementing some RRA 98 provisions that would provide new taxpayer services. However, to improve its telephone operations, the IRS needs to ensure it implements the recommendations in our final report Toll-Free Telephone Service Levels Declined in 1999 Despite Costly Efforts to Achieve World Class Performance (Reference Number 2000-30-062, dated March 2000).

Planning for the filing season is an evolving process that includes input from many sources. The National Filing Season Readiness 2000 Executive Steering Committee is responsible for overseeing the entire IRS preparation for the 2000 Filing Season. The National Director for the Customer Service Telephone Operations Division co-chairs this committee. The committee developed an action plan to monitor the implementation of action items such as staffing, training, equipment needs, and implementing new taxpayer services required by the RRA 98. Also, the National Director chairs the Customer Service Filing Season Readiness Committee. This committee conducts weekly teleconferences with other Customer Service executives and their staffs at the various toll-free call sites throughout the country to ensure items in the action plan are being timely implemented and any concerns are resolved.

Customer Service management issued operating guidelines on October 8, 1999, to assist managers in their understanding of the numerous goals the IRS is challenged to achieve and to succeed in improving customer and employee satisfaction, as well as increasing compliance and productivity.

To improve service and accessibility, the RRA 98 required the IRS to: give the taxpayer the employee’s name (effective September 22, 1998) and unique identifying number during a telephone call (effective January 22, 1999); answer taxpayers’ calls in Spanish in appropriate circumstances (effective January 1, 2000); and provide an option for taxpayers to talk with an IRS employee during normal duty hours (effective January 1, 2000).

At the time of our review, the IRS took actions to require Customer Service Representatives (CSR) to provide their name and identifying number to taxpayers when answering telephone calls. This was included in employee training and quality reviewers are required to evaluate whether employees properly identify themselves to taxpayers.

The IRS has made progress but will not fully implement the RRA 98 requirements to provide Spanish-speaking callers the option to have their questions answered in Spanish and provide all callers the option of talking to a CSR.

The IRS has three major toll-free product lines to assist in servicing taxpayers – 1040, General Inquiries; 8815, Account Inquiries; and 4262, Refund/Earned Income Tax Credit Inquiries. The IRS estimates that 2.2 million Spanish-speaking taxpayers could call the IRS from January to June 2000.

Spanish-speaking callers will not have the option of having their questions answered in Spanish when they call the 8815 and 4262 product lines. The IRS initially requested this option be placed on all of the above product lines but limited the option to the 1040 product line because of insufficient resources and other priorities.

Although the IRS will provide a new service to Spanish-speaking taxpayers, it will not be able to evaluate the quality of the service. The IRS’ national quality staff does not have bilingual quality reviewers, and there are not enough bilingual quality reviewers in the local quality review functions to monitor the Spanish calls. The IRS has attempted to hire bilingual quality reviewers in the past but has been unsuccessful in finding qualified candidates.

For Fiscal Year 2000, the IRS telephone helplines will not provide the option for all taxpayers to speak with a CSR. For example, taxpayers who use the Tele-Tax helpline (automated Response Unit system which taxpayers can access for pre-recorded tax and refund account information) will not have an option during the call to speak with a CSR. Also, when the volume of calls is high and there are not enough CSRs available, instead of receiving a busy signal, taxpayers are automatically routed to the Selected Expanded Access (SEA) service, another separate interactive automated service that will provide taxpayers with pre-recorded messages on various tax-related topics. However, the SEA also does not provide the taxpayer with an option to speak with a CSR during the same call. If the pre-recorded messages do not answer the taxpayer’s question, he/she will have to call back at a later time to speak with an available CSR.

The IRS is delaying implementation of the option to speak to a CSR during a Tele-Tax helpline call until a replacement system is implemented. The Tele-Tax helpline is not scheduled to migrate to a new system until July 2000. There are no plans to provide taxpayers access to a CSR for calls routed to the SEA.

During the 1999 Filing Season, over 37 million taxpayers used the Tele-Tax helpline and nearly 12 million taxpayers were offered the SEA option. Documentation is not available to determine the number of taxpayers who needed to speak with a CSR during the call but were unable to because their questions were not answered by the pre-recorded messages.

Management’s Response: Management has responded under a separate cover to our final report entitled Toll-Free Telephone Service Levels Declined in 1999 Despite Costly Efforts to Achieve World Class Performance (Reference Number 2000-30-062, dated March 2000), which contains numerous recommendations involving some of the same issues found in this review. Management believes they have complied with both the spirit and intent of RRA 98 as it relates to improving service to its customers. Management also stated that they remain committed to providing top quality service to the American public. Management’s complete response to the draft report is included as Appendix IV.