(Washington, DC) The Internal Revenue Service should not settle for “good” performance; it must set its sights on “great” performance. That was the conclusion and recommendation of the IRS Oversight Board in its recently-released 2007 Annual Report which spelled out the need for “breakthrough” IRS performances in four key areas: (1) taxpayer service, (2) enforcement, (3) human capital; and (4) information technology.
Board Chairman Paul Cherecwich observed that taking such a big step forward is both realistic and doable: “The IRS has made enormous across-the-board improvements since the enactment of the IRS Restructuring and Reform Act of 1998. It has created a solid foundation upon which to build.”
However, the Board Chair cautioned that IRS cannot simply throw a switch and go from “good” to “great.” He pointed to a number of requirements and challenges: “Taking the IRS to the next level will require heightened management focus and employee engagement. The IRS must apply proven best practices from the private and public sectors and be creative about how to do business in the 21st century. And the IRS can only succeed if it has the continued involvement, commitment, and support of Congress, future Administrations, and the tax administration community. The Board stands ready to do its part.”
The Board’s 2007 Annual Report discusses in detail the improvements the IRS must make in each of the four areas to achieve “breakthrough” performance.
To take customer service to the next level, the IRS must do more than just respond to taxpayer inquiries. For example, it must better understand taxpayer needs through new research and implement education and outreach services tailored to the needs of specific taxpayer groups.
The IRS must also apply the results of its research program to increase the effectiveness and efficiency of its enforcement activity, such as focusing its audits on where they will be the most effective.
The Oversight Board also encourages the IRS to find ways to leverage the strong support for voluntary compliance and personal integrity – as demonstrated through the Board’s annual taxpayer attitude survey – and reinforce the message that tax compliance is a “social norm.”
The IRS’ workforce is one of its greatest assets but also an enormous challenge; approximately 4,000 employees retire each year. Many of these individuals possess unique skills and institutional knowledge that are not captured when they leave and the IRS has had difficulty recruiting a sufficient number of skilled employees to replace them. The Board believes that IRS must devote more attention to the total career development of its workforce, from hiring to retiring; the Agency should emphasize career development throughout an employee’s entire “work life.”
Lastly, much more progress must also be made in the IRS’ efforts to modernize its information technology. The IRS has made slow but steady progress to replace its antiquated IT systems. However, IRS performance is still hampered by archaic data management systems used for central record-keeping and the IRS will not be able to achieve “great performance” until it can update its central records on a daily basis, much like any other modern financial institution.
Oversight Board Chairman Cherecwich concluded, “The Board has challenged the IRS to rise to an unprecedented level of performance in all parts of its mission. It will not be easy and there are no givens. But the Board firmly believes that today’s IRS is up to the task and the end results will be worth the journey and the hard work.”
A complete copy of the report can be found at: www.irsoversightboard.treas.gov/irsob/reports/documents/IRSOB_Annual-Report_2007.pdf