Treasury Inspector General for Tax Administration
Inspections and Evaluations Highlights
Highlights of Report Number: 2016-IE-R005 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement and Deputy Commissioner for Operations Support.
WHY TIGTA DID THIS STUDY
This project was initiated because the Internal Revenue Service Restructuring and Reform Act of 1998 required a significant transformation of the agency. The legislation changed the IRS mission, organizational structure, and business focus to transform the culture from “enforcement first” to a customer‑oriented organization. Congress envisioned the reform provisions to help transform the IRS culture by introducing innovations and new management practices.
Recently, the IRS encountered several challenging events that caused congressional concerns. Accompanying these events, overall reductions in discretionary Government spending reduced the annual IRS budget by several billion dollars. Therefore, several of the issues that prompted the restructuring have resurfaced, while other goals of the legislation have remained substantially unrealized.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS Commissioner ensure that all organizational changes for offices reporting directly to a Deputy Commissioner or the Commissioner have a documented business case. In addition, the Chief, Communications and Liaison, should contact the congressional tax‑writing committees to determine whether the IRS should provide the required tax complexity report.
In their response to the report, IRS officials agreed with our recommendations.
Issued on March 28, 2016
Several Changes Sought by the Internal Revenue Service Restructuring and Reform Act of 1998 Remain a Challenge
IMPACT ON TAXPAYERS
The RRA 98 required changes to transform the IRS into a modern financial institution. These changes included having an Oversight Board to assist in governance, maintaining a taxpayer‑focused organizational structure, achieving an 80 percent electronic filing rate for returns and information documents, offering online personal accounts, abstaining from diverting training resources to meet other budget requirements, participating in reducing tax law complexity, and increasing voluntary compliance through applied research.
WHAT TIGTA FOUND
Several major organizational changes were completed without a business case as required by the Department of the Treasury and without required Oversight Board approval. The Oversight Board continually had membership vacancies and suspended operations in April 2015. TIGTA also found that the IRS has not sustained the goal of providing prompt taxpayer service. Budget reductions have included cuts to taxpayer service staffing levels. Taxpayers have difficulty when corresponding with, calling, or visiting the IRS. The lower staffing allocation levels are not sufficient to meet the demands for service. In addition, the inability to provide a personal online account could make self-service more difficult for some taxpayers. While the IRS self-service initiative shows promise, it is not planned to provide immediate results.
Our report found that the IRS substantially implemented taxpayer rights and protections into practices and procedures. Further actions were taken to better communicate the rights by creating the Taxpayer Bill of Rights document.
READ THE FULL REPORT
To view the report, including the scope, methodology, and full IRS response, go to: