oversight

IRS Employee Evaluations: Opportunities to Better Balance Customer Service and Compliance Objectives

Published by the Government Accountability Office on 1999-10-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Report to the Chairman, Committee on
               Ways and Means, and the Chairman,
               Subcommittee on Oversight, House of
               Representatives

October 1999

               IRS EMPLOYEE
               EVALUATIONS
               Opportunities to
               Better Balance
               Customer Service and
               Compliance
               Objectives




GAO/GGD-00-1
United States General Accounting Office                                                          General Government Division
Washington, D.C. 20548




                                    B-281902
                                    October 14, 1999

                                    The Honorable Bill Archer
                                    Chairman, Committee on Ways and Means
                                    House of Representatives

                                    The Honorable Amo Houghton
                                    Chairman, Subcommittee on Oversight
                                    Committee on Ways and Means
                                    House of Representatives

                                    The enactment of the Internal Revenue Service Restructuring and Reform
                                               1
                                    Act of 1998 signaled strong congressional concern that the Internal
                                    Revenue Service (IRS) had been overemphasizing revenue production at
                                    the expense of fairness and consideration of taxpayers. The concern
                                    centered on frontline enforcement employees who have face-to-face
                                    dealings with taxpayers during the potentially confrontational process of
                                                                   2
                                    assessing and collecting taxes. In response, the Commissioner of Internal
                                    Revenue is seeking to transform the agency’s culture to one that more fully
                                    embraces customer service as a core organizational value. The
                                    Commissioner began this transformation by replacing IRS’ old mission
                                    statement, which emphasized collecting the proper tax at the least cost,
                                    with a new one, which emphasizes providing world-class customer service
                                    by helping taxpayers understand and meet their tax responsibilities and
                                    applying the tax law with integrity and fairness. IRS has begun a number of
                                    long-range initiatives to make the new mission statement a reality,
                                    including developing new organizational performance measures and
                                    revamping the overall performance management system.

                                    In light of this, you asked us to review the extent to which the current
                                    employee evaluation system can support the new mission statement during
                                    the period IRS will need to revamp its performance management system.
                                    Specifically, the objectives for this report are to (1) determine the relative
                                    emphasis on revenue production, efficiency, and customer service in
                                                                                            3
                                    enforcement employees’ annual written evaluations; (2) identify features
                                    1
                                        Public Law 105-206, July 22, 1998.
                                    2
                                     Enforcement employees exercise judgment regarding taxpayers’ tax liability or ability to pay. Our
                                    report focuses on revenue agents and tax auditors, who deal directly with the taxpayer when auditing
                                    tax returns, and revenue officers, who deal directly with the taxpayer when collecting unpaid taxes.
                                    3
                                    We used the language of IRS’ old and new mission statements to form categories for comments
                                    pertaining to revenue production, efficiency, and customer service as described in appendix I. For




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                   of the evaluation process that might be used to greater advantage to
                   reinforce the importance of customer service; and (3) describe IRS
                   initiatives to promote customer service, including those to encourage
                   enforcement employees to be taxpayer oriented. To address these issues,
                   we analyzed a representative sample of the two most recent enforcement
                   employee evaluations prepared under IRS’ old mission statement for the
                   period ending June 1998. Thus, our results are most appropriately used as
                   baseline data for determining the degree to which supervisors might need
                   to change the way they prepare employee evaluations under the current
                   process to better reflect IRS’ new mission.

                   IRS could take advantage of opportunities within the current evaluation
Results in Brief   process to reinforce the importance of customer service among its
                   frontline enforcement employees. There are a number of reasons for doing
                   so. Most importantly, the current evaluation process is not aligned with
                   IRS’ new mission statement because it emphasizes revenue production
                   more than customer service. Also, it is uncertain when a new performance
                   management system that IRS is planning will become fully operational.
                   Accordingly, during the period IRS needs to put its new system in place,
                   we are recommending that the Commissioner of Internal Revenue make
                   better use of the current evaluation process to develop and encourage
                   good customer service among the agency’s enforcement employees.

                   Enforcement employees’ two most recent written evaluations for the
                   period ending June 1998 emphasized their revenue production and
                   efficiency skills more than their customer service skills. Based on a
                   representative sample, we estimated that two-thirds of the comments
                   contained in evaluations related to revenue production and efficiency
                   issues and one-third related to customer service. Looking only at the
                   technical skill portion of the evaluations, comments on revenue
                   production and efficiency outnumbered customer service by about four to
                   one. When supervisors made comments on employees’ customer service
                   skills, their comments did not emphasize the importance of taking into
                   account the taxpayers’ point of view or how well they understood the tax
                   issues being raised by the enforcement employee.

                   Available evidence indicates that four features of the current evaluation
                   process could be used to greater advantage to reinforce the importance of
                   customer service among enforcement employees. If the features were to

                   example, comments on customer service were categorized as comments regarding (1) helping
                   taxpayers understand and meet their tax responsibilities and (2) applying the tax laws with integrity
                   and fairness. We also included a category for interpersonal skills because IRS has emphasized that
                   quality interactions with taxpayers are an important component of customer service.




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  be used more, however, IRS would need to consider the potential
  implications for the way in which supervisors allocate their time between
  these and other administrative tasks.

• The narrative portion of an employee’s written evaluation provides
  flexibility for supervisors to focus on employees’ customer service skills.
  Narrative is not required in all situations, and we estimate that nearly half
  of the employees received one or more evaluations that did not have any
  narrative comments.
• Midyear progress reviews, which are required, provide supervisors with
  opportunities to give interim feedback on aspects of case handling—
  including any deficiencies—in relation to customer service (and other)
  goals. We estimate that 65 percent of employees’ files did not contain
  evidence that such a review was done.
• Mandatory reviews of a sampling of completed cases present another
  opportunity for supervisors to comment on customer service skills
  because these are ex post facto examinations of documents prepared by
  employees to support their case decisions. We estimate that the
  evaluations of about 30 percent of employees did not contain evidence that
  they were supported by such reviews.
• Field visits—in which the supervisor is to attend employees’ face-to-face
  meetings with taxpayers—present an excellent opportunity to reinforce
  customer service. Through field visits, supervisors can directly observe
  employee-taxpayer interactions. As such, they are natural vehicles for
  providing coaching and feedback. However, field visits are optional after
  the employee’s first year. Based on our analysis, field visits were not
  documented for more than 60 percent of employees during the 2-year
  period.

  IRS has implemented a number of initiatives to promote customer service.
  It has revised its strategic goals; aligned them with its mission statement;
  and introduced organizational performance measures that are to balance
  customer satisfaction, employee satisfaction, and business results. In the
  coming years, IRS also plans to revamp its entire performance
  management system, including its employee evaluation process. However,
  it is uncertain when such a system would be fully operational. The
  challenges that IRS faces in making a successful transition are formidable,
  and the agency’s track record for implementing reform is poor.

  In the meantime, IRS has taken several interim actions to encourage
  enforcement employees to be taxpayer oriented. It has incorporated into
  the employee evaluation process a new retention standard relating to the
  fair and equitable treatment of taxpayers that employees must meet at a



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             passing level to retain their jobs. Also, the Collection Division, where many
             enforcement employees now work, has revised the revenue officers’
             position description and critical job elements. While IRS has issued
             comprehensive guidance on how to implement the new retention standard,
             it has not issued similar guidance on how to implement the revised critical
             job elements for revenue officers, and we are recommending that it do so.

             The employee evaluation process is an important tool for influencing
Background   employee behavior. At IRS, as in other federal agencies, employee
             evaluations are the official documents used to support many personnel
             actions, including within-grade pay increases, performance awards,
             promotions, reductions-in-force, and adverse performance-based actions.
             As stated in IRS documents, the process is intended to accurately reflect
             employees’ performance, facilitate their development, and improve and
             enhance their work.

             For enforcement (and most other IRS) employees, the evaluation process
             is to include an annual formal written evaluation and a midyear progress
             review. The annual written evaluation involves a quantitative assessment
             of performance, which may be supported by narrative commentary.
             Supervisors who complete the evaluations are to address how well
             employees perform a number of critical job elements, which are job skills
             that must be performed at or above a set standard for an employee’s
             performance to be judged acceptable. The critical elements include
             technical skills—the specialized skills needed to process cases, such as
             workload management and case analysis—as well as customer relations,
             which involves interpersonal skills in dealing with taxpayers.

             The number of critical job elements on which an enforcement employee is
             evaluated generally has ranged from five to seven, depending on his or her
             job classification (e.g., tax auditor, revenue officer, or revenue agent).
             Each element is rated on a 5-point scale, with 1 being unacceptable and 5
             being outstanding. A score of 3 is to be given for performance deemed fully
             successful. The evaluation forms for the types of enforcement employees
             we reviewed have similar formats and critical job elements, as the
             examples shown in appendix II illustrate. Progress reviews are also
             required, preferably at midyear, and are to be communicated by
             supervisors to each of their employees.

             IRS policy imposes several additional requirements. Notably, the
             supervisor who is responsible for assigning an employee’s work is also
             responsible for preparing and signing his or her evaluation. The evaluation
             must be reviewed, approved, and signed by a higher level manager. And to



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              help ensure the accuracy and fairness of the rating, the supervisor who
              prepares the evaluation is to observe the performance of the employee
                                       4
              during the rating period.

              In evaluating employee performance, supervisors are to exercise caution
              when describing employees’ skills and contributions vis-a-vis revenue
              production and efficiency, so as not to improperly emphasize the
              accomplishment of statistical or numerical goals. IRS policy prohibits
              rating officials from using enforcement statistics, such as the average
              amount of taxes assessed or collected, in employee evaluations. However,
              during hearings held by the Senate Committee on Finance in September
              1997, witnesses alleged that IRS’ focus on enforcement statistics at the
              organizational level was encouraging enforcement officers to take
                                                                                       5
              unnecessary and inappropriate enforcement actions against taxpayers.
              IRS’ Internal Audit subsequently reviewed the use of such statistics by
              examination and collection supervisors and found an atmosphere largely
              driven by statistical measures. In November 1998, we reported that 75
              percent of revenue agents, tax auditors, and revenue officers believed that
                                                              6
              enforcement results affected their evaluations.

              To meet our reporting objectives, we reviewed the two most recent
Scope and     evaluations for each employee as of June 1998 in a statistically
Methodology   representative sample of 19,096 examination and collection frontline
              employees and the supplemental documentation supporting those
              evaluations. Because the confidence intervals for the different estimates
              vary in size, we report all of them in appendix IV. We also interviewed
              responsible IRS headquarters officials and 30 supervisors in 3 district
              offices and sent division chiefs in all 33 IRS district offices a survey on
              how supervisors allocated their time.

              We requested comments on a draft of this report from the Commissioner
              of Internal Revenue. In a letter dated September 17, 1999, we received his
              comments, which are discussed at the end of this letter and reprinted in
              appendix VIII.

              4
               The procedures used in the evaluation process and the resulting personnel actions are negotiated by
              IRS and the National Treasury Employees Union (NTEU) and are covered by the union agreement.
              5
               The Internal Revenue Restructuring Act of 1998 prohibits IRS from using tax enforcement results to
              evaluate its employees or to impose or suggest production quotas or goals. This provision replaced a
              similar prohibition included in the Technical and Miscellaneous Revenue Act of 1988, which applied
              only to employees involved in collections activities and their immediate supervisors.
              6
               IRS Personnel Administration: Use of Enforcement Statistics in Employee Evaluations (GAO/GGD-99-
              11, Nov. 30, 1998).




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                                    We did our work at IRS headquarters in Washington D.C., and the Northern
                                    California, Kansas-Missouri, and Georgia District Offices between
                                    November 1998 and June 1999 in accordance with generally accepted
                                    government auditing standards. (See app. I for more details on our
                                    objectives, scope, and methodology.)

                                    Our analysis of evaluations written when IRS’ old mission statement was in
Employee Written                    effect showed that, overall, written evaluations of enforcement employees
Evaluations                         emphasized revenue production and efficiency more than customer
Emphasized Revenue                  service. In addition, customer service comments, when made, often did not
                                    emphasize the importance of taking into account the taxpayer’s point of
Production and                      view or how well the taxpayer understood the tax issues being raised by
Efficiency More Than                the enforcement employee.
Customer Service

Revenue Production and              As shown in table 1, about two-thirds of supervisors’ comments related to
                                    revenue production and efficiency, and one-third related to customer
Efficiency Emphasized               service. Looking only at the comments in the technical skill portion of the
                                    evaluations, comments on revenue production and efficiency outnumbered
                                                                           7
                                    customer service by about four to one. Of the comments in the customer
                                    relations element, we estimate that about three-fourths related to
                                    customer service and one-fourth to revenue production and efficiency.

Table 1: Estimated Frequency of
Customer Service Comments and                                                                              Comments
Revenue Production and Efficiency                                                                                Revenue
Comments in Employee Evaluations                                                           Customer        production and
                                    Skill element                                            service            efficiency            Total
                                    Technical skill
                                     Manage time and workload                                    1,455                22,998        24,453
                                     Analyze cases and determine proper
                                     course of action                                           6,187                 24,579        30,766
                                     Process or work case                                       8,923                 19,574        28,497
                                     Document actions and conclusions                           1,736                  4,287         6,023
                                    Subtotal                                                   18,301                 71,438        89,739
                                    Customer relations                                         20,465                  7,150        27,615
                                    Total                                                      38,766                 78,588       117,354
                                    Note: Confidence intervals for these estimates are included in appendix IV.
                                    Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.

                                    7
                                     As described in detail in appendix IV, the critical elements of different types of enforcement employee
                                    evaluations use somewhat different language to describe similar critical elements. Thus, to determine
                                    the frequency of comments on revenue production, efficiency, and customer service, we grouped the
                                    various elements into five skill groups—four relate to the employee’s technical skills and one,
                                    customer relations, relates to customer service.




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                                         In considering these results, it is important to point out that, to some
                                         extent, the design of IRS’ employee evaluations for enforcement personnel
                                         could lead supervisors to focus on revenue production and efficiency. This
                                         is because customer relations is only one of five or more equally weighted
                                                                                                       8
                                         critical job elements upon which employees are evaluated. Because the
                                         other, more technical elements logically tend to involve considerations of
                                         revenue production and efficiency, the evaluation likely would focus on
                                         such issues.

Comments on Customer                     Our analysis also revealed that, overall, many of the customer service
                                         comments did not emphasize the importance of taking into account the
Service Did Not Emphasize                taxpayers’ point of view or whether they understood the tax issues being
the Importance of the                    raised by the enforcement employee. To illustrate, consider the following
Taxpayers’ Point of View                 results on comments regarding employees’ assistance in helping taxpayers
and Understanding                        to better understand their tax issues. As shown in table 2, an estimated 53
                                         percent of the employees received evaluations discussing their efforts to
                                         describe the law and regulations related to the examination and collection
                                         process to the taxpayer. An estimated 4 percent received evaluations
                                         discussing efforts to check on taxpayers’ understanding of these issues by
                                         asking taxpayers questions or soliciting their responses. Both approaches
                                         can improve taxpayer understanding. However, the latter approach—and
                                         comments as to its use or lack thereof—can also help reinforce the
                                         importance of targeting explanations to the needs of the taxpayer.

Table 2: Estimated Frequency of                                                                                                           a
Comments in Evaluations That Indicated                                                                                      Employees
the Employee Helped Taxpayers            Evaluation comment                                                                Number Percent
Understand and Meet Their Tax            Described examination or collection process to taxpayer                            10,074     53
Responsibilities                         Provided Publication 1 to taxpayer without explanationb                             2,391     13
                                         Explained appeals rights to taxpayer                                                2,076     11
                                         Looked for ways to improve taxpayer’s future compliance                             1,302      7
                                         Checked taxpayer’s understanding by asking questions or
                                         soliciting responses                                                                    818             4
                                         Asked questions to identify taxpayer needs                                              526             3
                                         Note: Confidence intervals for these estimates are included in appendix IV.
                                         a
                                             Total number of employees is 19,096.
                                         b
                                             Publication 1 describes a taxpayer’s rights to appeal and the examination and collection process.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


                                         Most of the comments regarding whether the employee applied the tax law
                                         with integrity and fairness also did not reflect the taxpayer’s point of view.

                                         8
                                          Revenue agents are evaluated on seven critical job elements, tax auditors are evaluated on six critical
                                         job elements, and revenue officers are evaluated on five critical job elements. Each position has a
                                         customer relations critical job element.




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                                         As shown in table 3, an estimated 31 percent of the employees had
                                         comments in their evaluations discussing whether the employee balanced
                                         taxpayer’s interests with the government’s interests by listening to and
                                         considering the taxpayer’s position. Comments that were more reflective
                                         of the taxpayer’s point of view, such as whether the employee considered a
                                         variety of actions to try to meet taxpayer needs, such as proposing an
                                         installment agreement to meet the tax liability, or took proactive action,
                                         such as identifying tax credits or deductions the taxpayer was entitled to,
                                         were each made for about 6 percent of the employees.

Table 3: Estimated Frequency of                                                                                                    a
Comments in Evaluations That Indicated                                                                                  Employees
the Employee Applied the Tax Law With    Evaluation comment                                                            Number Percent
Integrity and Fairness                   Balanced taxpayer’s interest with government’s interest                         5,861     31
                                         Applied law objectively                                                         2,749     14
                                         Considered variety of actions to try to meet taxpayer’s needs                   1,226      6
                                         Took proactive action in favor of taxpayer                                      1,209      6
                                         Note: Confidence intervals for these estimates are included in appendix IV.
                                         a
                                         Total number of employees is 19,096.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


                                         As shown in table 4, an estimated 38 percent of the employees received
                                         evaluations indicating that they listened to taxpayers, and 32 percent
                                         received evaluations indicating that they were courteous with taxpayers.

Table 4: Estimated Frequency of                                                                                                    a
Comments in Evaluations That                                                                                           Employees
Described the Employee’s Interpersonal   Evaluation comment                                                            Number Percent
Skills                                   Listened to the taxpayer                                                        7,222     38
                                         Was courteous or tactful with taxpayer                                          6,039     32
                                         Responded quickly to taxpayer inquiries                                         4,032     21
                                         Was well prepared or organized for taxpayer contact                             3,160     17
                                         Treated taxpayer fairly                                                         2,484     13
                                         Treated taxpayer with respect                                                   1,021      5
                                         Note: Confidence intervals for these estimates are included in appendix IV.
                                         a
                                         Total number of employees is 19,096.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


                                         Categorizing comments as we have done was necessary for determining
                                         the frequency of these comments. However, a simple count does not
                                         convey the context in which the comments were made. While comments
                                         about revenue production and efficiency may be appropriate, our analysis
                                         found instances where IRS missed an opportunity to balance these
                                         comments with comments that could reinforce customer service. For
                                         example, we estimated that about 32 percent of the employees received



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evaluations reinforcing the importance of the employee being firm with the
taxpayer or demanding payment from the taxpayer. While such actions
may be warranted, some evaluations did not balance the discussion with
the actions the employee could take to help taxpayers meet their payment
obligations, such as entering into an installment agreement. To illustrate,
one manager commented

“Over the last year the Service is emphasizing payments be obtained at the conclusion of
the examination. It can truly be said that the agent has kept to this philosophy. The agent
always seeks to obtain full payment of the deficiency, penalties, and interest. This shows a
strong commitment to the Service programs.”

Further, the above comment was contained in the narrative for the
customer relations critical job element and seems to equate good customer
relations with success in obtaining full payment in every case.

About 24 percent of the employees received evaluations that emphasized
that the employee set time limits or time frames for the taxpayer to
comply. While such actions may appropriately encourage timely taxpayer
response, our analysis found instances where managers emphasized
timeliness at the expense of customer service. In commenting on how an
employee managed his time and workload, one manager said

“You set clear, reasonable deadlines and follow-up on them promptly, usually with an
appropriate collection tool rather than a phone call. Your success in that regard is
referenced above. During the selection of cases for one entity review it was noted that 84%
of your inventory was less than 5 months old. On another it was noted that only 4 of your
cases had been assigned for longer than six months.”

While this discussion of the employee’s performance may be appropriate,
it was not balanced with statements indicating the employee considered
the taxpayer’s circumstances when setting deadlines and taking follow-up
actions.

Although the employee’s actions from the perspective of revenue
production and efficiency may warrant discussion, given IRS’ new mission
statement, these comments logically would need to be balanced with
comments on the employee’s action from the perspective of customer
service. Appendix V contains examples on how supervisor comments can
reflect the old versus new mission statements.




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                                        The current IRS evaluation process contains four features that provide
Features of Current                     supervisors with opportunities to reinforce the customer service
Evaluation Process                      orientation reflected in IRS’ new mission statement. The narrative portion
Could Be Used to                        of employee evaluations, midyear progress reviews, case reviews, and field
                                        visits provide supervisors with the flexibility to identify and provide
Reinforce Customer                      feedback on employees’ customer service behaviors, as well as on their
Service                                 technical skills.

Features of Current                     Available evidence indicates that IRS supervisors could take greater
                                        advantage of four features to emphasize customer service. They could use
Evaluation Process Offer                the narrative part of the evaluation more fully. They also could conduct
Opportunities to Promote                more midyear progress reviews, case reviews, and field visits and sit-ins.
                                                                                                                  9


Good Customer Service
Skills
Employee Annual Evaluations             Employee annual evaluations are intended to facilitate employees’
                                        development and improve and enhance their work. The narrative portion
                                        of an employee’s written evaluation provides flexibility to supervisors to
                                        focus on employees’ customer service skills. We estimated that over a 2-
                                        year period, more than 40 percent of the employees received evaluations
                                        with no narratives in one or both evaluations. An additional estimated 12
                                        percent of employees received an evaluation that duplicated the narratives
                                        from the prior year, sometimes repeated word-for-word. A further 13
                                        percent had some narrative but at least one evaluation with no narrative
                                        for at least one critical job element. Table 5 shows the extent of missing
                                        and duplicate narratives.

Table 5: Estimated Frequency of
Missing or Duplicate Narratives in at   Occurrence of the narratives in the                                                  Employees
Least One of Two Evaluations            employee evaluations                                                               Number   Percent
                                        No narrative in both evaluations                                                     1,948       10
                                        No narrative in one evaluation                                                       6,776       35
                                        Duplicate narrative for all critical job elements                                    2,304       12
                                        No narrative for at least one critical job element in at least
                                        one evaluation                                                                        2,536               13
                                        Original narrative for all critical job elements for both years                       5,532               29
                                        Total                                                                                19,096               99
                                        Note: Percentage does not equal 100 due to rounding. Confidence intervals for these estimates are
                                        included in appendix IV.
                                        Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.



                                        9
                                         Sit-ins are conducted by supervisors of tax auditors at their IRS office. Since both field visits and sit-
                                        ins represent supervisors observing interactions between their employees and taxpayers, we are
                                        calling both activities field visits in this report.




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                           According to the examination and collection division chiefs who
                           completed our survey in IRS’ 33 district offices, enforcement supervisors
                           have an average of 12 employees that they supervise. To reduce the
                           administrative burden associated with completing the evaluations, IRS and
                           NTEU agreed that supervisors could omit narratives from evaluations
                           under two circumstances. Supervisors can omit all narratives for
                           employees who have earned the same numerical rating in every critical job
                           element as the prior year. In these cases, supervisors may revalidate the
                           prior evaluation without having to prepare a new evaluation. Also,
                           supervisors are allowed to omit narratives for critical job elements when
                           employees receive a numerical rating of either 5 (outstanding) or 4
                           (exceeds fully successful) for those elements, and the numerical rating is
                           the same as or higher than the prior year’s rating. IRS’ evaluation policies
                           do not address the use of duplicate narratives.

Midyear Progress Reviews   Midyear progress reviews provide supervisors with opportunities to
                           provide interim feedback on all aspects of case handling, including any
                           deficiencies, relating to agency customer service (and other) goals. While
                           supervisors are required to conduct midyear progress reviews, we
                           estimated that about 65 percent of the employees’ files did not contain
                           evidence that a midyear progress review was done. Also, for the employees
                           for whom reviews were documented, an estimated 36 percent did not have
                           reviews discussing the customer relations critical job element.

Case Reviews               Supervisors are required to review a sample of each employee’s cases at
                           least once a year. We estimated that the evaluations of about 30 percent of
                           the employees did not contain evidence that they were supported by case
                           reviews. These reviews are important because they provide supervisors
                           with the opportunity to examine employees’ case documentation to
                           determine whether employees’ case decisions were made in accordance
                           with the agency’s policies and procedures, including those that relate to
                           customer service. Also, we found that supervisors did not always take
                           advantage of case reviews to review customer service. We estimate that 23
                           percent of employees for whom case reviews were documented did not
                           receive reviews that addressed the customer relations critical job element.

Field Visits               According to IRS training documents, many experienced supervisors see
                           significant benefits to field visits, which allow supervisors to observe the
                           employee interacting with taxpayers and the employee’s application of the
                           law, regulations, and procedures. One field visit is required during an
                           employee’s first year, but after the first year, the frequency and need for
                           visits is left to the supervisor’s judgment. We found that supervisors had
                           not documented field visits for an estimated 66 percent of the employees



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                              and that for those employees for whom visits were documented, an
                              estimated 18 percent had reviews with no indication that the customer
                              relations critical job element was discussed.

Increased Use of Evaluation   More fully using the evaluation process features discussed above,
                              especially field visits, could reduce the time supervisors spend on their
Process Features Could        other administrative tasks. The 30 supervisors from 3 district offices that
Reduce Time Spent on          we visited estimated that they were spending an average of about 25
Other Administrative Tasks    percent of their time on the 4 employee evaluation activities and about 29
                              percent of their time on clerical duties and other administrative and
                                                10
                              collateral duties. All but one of these supervisors we talked to indicated
                              that direct observation of employees was the best method for evaluating
                              customer service skills. However, 25 of the 30 supervisors said that they
                              did not have time to spend in the field with their employees and also
                              complete their other supervisory and administrative responsibilities. The
                              supervisors’ administrative burden and its effect on supervisors’ ability to
                              manage their employees was also raised in a 1991 nationwide IRS survey
                              of revenue officer supervisors and more recently by the Professional
                                                        11
                              Managers Association. In a December 17, 1998, message to the
                              Commissioner of Internal Revenue, the association stated, “One of the
                              major concerns of frontline managers is the excessive administrative
                              burden placed on them.”

                              Supervisors we interviewed suggested several options that would give
                              them more time to spend in the field with their employees and on other
                              employee evaluation activities. These options included reducing their
                              administrative duties, providing clerical staff to take over some of their
                              administrative duties, and reducing the number of employees that report to
                              them. We did not evaluate the feasibility or impact of these alternatives. If
                              the features were to be used more, IRS would need to consider the
                              potential implications for the way in which supervisors allocate their time
                              between these and other administrative tasks.




                              10
                                 Division chiefs who completed our survey in the 33 district offices estimated that their supervisors
                              were spending an average of about 28 percent of their time on the 4 employee evaluation activities and
                              18 percent of their time on clerical duties and other administrative and collateral duties. Appendix VII
                              summarizes how the 30 supervisors we interviewed allocated their time during an average month and
                              presents the results of our survey of division chiefs.
                              11
                               The Professional Managers Association represents supervisors and managers of federal agencies,
                              including IRS.




                              Page 12                 GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                     B-281902




                     IRS has implemented a number of initiatives to promote customer service,
IRS Initiatives to   setting the stage for the reform of IRS’ entire performance management
Promote Customer     system over the coming years. Thus far, IRS has revised its strategic goals;
Service              aligned them with its new mission statement; and introduced
                     organizational performance measures that are to balance customer
                     satisfaction, employee satisfaction, and business results. IRS has also
                     taken several interim actions to promote customer service in evaluating
                     enforcement employees.

                     IRS’ new strategic goals are intended to promote customer service by (1)
                     providing service to each taxpayer by such means as being prompt,
                     professional, and helpful to taxpayers when additional taxes may be due;
                     (2) providing service to all taxpayers by such means as increasing the
                     fairness of compliance; and (3) increasing productivity by providing a
                     quality work environment for employees.

                     To evaluate how well it is achieving these new goals, IRS has also
                     developed new organizational performance measures that are intended to
                     balance customer satisfaction, employee satisfaction, and business
                             12
                     results. Customer satisfaction is to be measured through written or
                     telephone surveys to obtain taxpayers’ perceptions of how they were
                     treated by IRS employees during interactions. Employee satisfaction is to
                     be measured through annual employee surveys of work environment
                     satisfaction. The quality aspects of business results are to be measured
                     through samples of completed cases taken under its various operational
                     quality review programs, while the quantity aspects are to be based on data
                     collected on such outcome-neutral items as the number of cases handled.
                     IRS is in the process of providing training to supervisors and employees on
                     the new balanced measures, which emphasizes customer service.

                     IRS also intends to revamp its entire performance management system as
                     required by the Internal Revenue Service Restructuring and Reform Act of
                     1998. Performance management systems are broad systems for managing
                     employee behavior that incorporate the evaluation process and other
                     managerial actions. Office of Personnel Management regulations define
                     performance management as the integrated processes agencies use to (1)
                     communicate and clarify organizational goals, (2) identify accountability
                     for accomplishing organizational goals, (3) identify and address
                     developmental needs, (4) assess and improve performance, (5) measure

                     12
                      See also Small Business: Taxpayers Face Many Layers of Requirements (GAO/T-GGD-99-76, Apr. 12,
                     1999) and IRS Management: Business and Systems Modernization Pose Challenges (GAO/T-
                     GGD/AIMD-99-138, Apr. 15, 1999).




                     Page 13               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
B-281902




performance for recognizing and rewarding accomplishments, and (6)
prepare appraisals.

It is difficult to determine when IRS’ new system would become fully
operational. As we have reported, IRS faces formidable challenges to
achieve this and other reforms related to its ongoing modernization
         13
efforts. As we noted, IRS is attempting to implement all of the reforms in
a comprehensive, rather than sequential, fashion. The integrated approach
that IRS is using makes sense and has the potential to significantly
improve the way IRS interacts with taxpayers. However, it also presents a
significant challenge. At the same time IRS is attempting to reform its
performance management system, it also is striving to revamp its business
practices, restructure its organization, and implement new technology.
Effectively implementing such a broad and complex set of interdependent
changes will strain IRS’ management capacity. Having to make the
transition while continuing to operate the existing tax administration
process will strain the agency further. These factors and IRS’ poor track
record for implementing reforms suggest that it could be years before a
new performance management system is fully operational.

IRS recognizes that revamping its performance management system is a
major effort. With respect to enforcement employees in particular, IRS has
recognized that the evaluation process is an important part of any
performance management system and may be a key to improving customer
service. In laying out its long-term strategy for creating a customer-
oriented work force, IRS has identified the need for change in the
evaluation process for enforcement and other employees so that
supervisors communicate what constitutes good customer service, ensure
that employees adopt the new desired behaviors, and assess and develop
employees’ customer service skills. IRS has also recognized that short-
term improvements in employees’ customer service are needed and has
advised managers to think of ways they could begin fostering the new
orientation.

IRS has incorporated into the evaluation process a new performance
standard relating to the fair and equitable treatment of taxpayers that
employees must meet at a passing level to retain their jobs. The retention
standard, which was required by the IRS Restructuring and Reform Act,
says that employees must “Administer the tax laws fairly and equitably,
protect all taxpayers’ rights, and treat each taxpayer ethically with

13
 IRS Management: Formidable Challenges Confront IRS as It Attempts to Modernize (GAO/T-
GGD/AIMD-99-255, July 22, 1999).




Page 14               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
B-281902




honesty, integrity, and respect.” When evaluating employees, supervisors
are to first determine whether the employee met the retention standard
and, if the employee did, then proceed to evaluate the employee on the
critical job elements. IRS officials expect that most employees will meet
the retention standard.

The new retention standard was put in place in July 1999. IRS issued
guidance on how managers were to implement the retention standard. The
guidance included examples of behaviors that would meet the standard
and those that would not. Supervisors were also instructed to develop
other examples of behavior tailored to their employees’ occupations. By
July 31, 1999, supervisors were to have held individual or group meetings
with their employees to discuss how employees would be evaluated under
the standard.

In addition, the Collection Division has taken two steps to restructure its
evaluation system for revenue officers to better reflect the increased value
that IRS now places on customer service. The division has (1) revised its
standard position description for revenue officers and (2) reduced the
number of critical job elements for revenue officers from five to three. The
three revised critical job elements of customer relations and assistance,
case resolution, and case management take the place of time and workload
management, case decisions, investigation and analysis, accounts
maintenance, and customer relations.

The revised elements became effective in July 1999. The guidance issued
to IRS district collection officials on implementing the revised elements is
not as comprehensive as the guidance issued for the new retention
standard. The guidance instructs supervisors to meet with their employees
to discuss the revised position description and critical job elements. It
does not, however, explain or provide examples of how the revised
elements are to be incorporated into the evaluation process or to be used
to evaluate revenue officers.

In a related effort, the Examination Division was exploring the extent to
which critical job elements for revenue agents should reflect IRS’ auditing
standards. By linking the critical job elements with the auditing standards,
the Examination Division hoped to reduce the number of standards
supervisors must refer to when evaluating employee performance. At the
time we completed our fieldwork, the Examination Division had not yet
established a time frame for completing the initiative, which began in April
1999.




Page 15          GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                      B-281902




                      To fulfill its new mission statement, IRS will need to make a significant
Conclusions           departure from the past supervisory practice of emphasizing revenue
                      production and efficiency in employee evaluations to one that balances
                      these goals with good customer service. IRS recognizes that making
                      changes to its employee evaluation process will be important in bringing
                      about cultural change and establishing customer service as an agency
                      priority. IRS expects to change the process as part of a larger reform of its
                      entire performance management system.

                      However, because of the magnitude of the changes IRS is undertaking, it is
                      uncertain when such a system will become fully operational and a new
                      employee evaluation process put in place. In the meantime, IRS could take
                      better advantage of opportunities within the current evaluation process to
                      reinforce the importance of customer service among its frontline
                      enforcement employees.

                      We recommend that the Commissioner of Internal Revenue develop an
Recommendations       interim approach for making better use of enforcement employees’
                      performance evaluations to develop and encourage good customer service.
                      The approach could include providing guidance on the conditions under
                      which supervisors should provide narrative for critical job elements and
                      conduct field visits in assessing individual employees. As part of
                      developing the approach, the Commissioner should determine whether to
                      better enforce the existing agency policies requiring that supervisors
                      conduct midyear progress reviews of all enforcement employees and
                      review a sample of their caseloads annually.

                      We also recommend that the Commissioner ensure that Collection
                      Division supervisors are given more comprehensive guidance on how the
                      revised elements are to be incorporated into the evaluation process and
                      used to evaluate revenue officers.

                      The Commissioner of Internal Revenue provided written comments on a
Agency Comments and   draft of this report in a September 17, 1999, letter, which is reprinted in
Our Evaluation        appendix VIII. We also met with senior Collection and Examination
                      officials on August 26, 1999, to obtain oral comments from them on the
                      draft report. We have incorporated technical comments from that meeting
                      and the Commissioner’s letter where appropriate. Our evaluation of IRS’
                      comments focuses on those of the Commissioner, since his comments and
                      those provided by IRS officials were generally consistent.

                      The Commissioner’s letter emphasized that IRS is providing training to
                      supervisors and employees on the balanced measurement system that



                      Page 16          GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
B-281902




would reinforce IRS’ increased emphasis on good customer service.
Although IRS’ training on performance measures was not part of our
review, we said in our testimony on modernization that—given the critical
role that frontline employees will have in improving taxpayer service—
such training will be important to effectively align IRS’ culture with its new
                     14
mission statement.

More specific to our report, the Commissioner noted that the report
provides timely information on IRS’ current evaluation system. He also
agreed with our recommendation to develop an interim approach for
making better use of enforcement employees’ performance evaluations to
develop and encourage good customer service. He said IRS is developing a
Manager’s Guide to Performance Management that would provide detailed
information on the entire appraisal process, including monitoring and
evaluating employee performance. He said that the guide, which is
expected to be issued in October 1999, would specifically address the
conditions under which managers should provide a narrative for critical
job elements and conduct field visits. He also stated that mandatory mid-
year progress reviews are to be conducted.

The Commissioner did not specifically say if he would enforce existing
agency policies requiring supervisors to review a sample of employees’
caseloads. However, he stated that current IRS procedures require
periodic reviews of employees’ caseloads, which we interpret to mean the
current requirement for annually reviewing a sample of employees’
caseloads will be enforced. As our report points out, case reviews are
important for determining whether employees’ case decisions were made
in accordance with agency policies and procedures.

The Commissioner stated that IRS plans to discuss with NTEU
representatives our recommendation that more comprehensive guidance
on the revised critical job elements be provided to Collection supervisors.
He stated that the revised critical job elements represent a reordering of
previous job elements under the current appraisal system and that IRS
worked closely with NTEU to define the features of this appraisal system.
Therefore, IRS plans to collaboratively work with NTEU to develop any
additional guidance regarding incorporating the revised elements for
revenue officers into the evaluation process. We believe that this is an
appropriate approach to take. Our recommendation is based on the
premise that customer service starts with the frontline employees, who
need to know what IRS expects, and that supervisors are a key link in
14
     See GAO/T-GGD/AIMD-99-255, July 22, 1999.




Page 17                  GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
B-281902




explaining those expectations. NTEU representatives should be
knowledgeable of the sort of guidance supervisors need to evaluate
revenue officers and can help IRS develop guidance about IRS’
expectations regarding acceptable performance under the revised critical
job elements, including good customer service.

We are sending copies of this report to Representative Charles B. Rangel,
Ranking Minority Member, Committee on Ways and Means; Representative
William J. Coyne, Ranking Minority Member, Subcommittee on Oversight,
Committee on Ways and Means; various other congressional committees;
the Honorable Lawrence H. Summers, Secretary of the Treasury; the
Honorable Charles O. Rossotti, Commissioner of Internal Revenue; and
other interested parties. We will also make copies available to others on
request.

If you have any questions, please contact me at (202) 512-9110 or Ralph T.
Block at (415) 904-2000. Other major contributors are acknowledged in
appendix IX.




Margaret T. Wrightson
Associate Director, Tax Policy
 and Administration




Page 18          GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Page 19   GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Contents



Letter                                                                                                  1


Appendix I                                                                                             24
                         Objectives                                                                    24
Objectives, Scope, and   Scope and Methodology                                                         24
Methodology
Appendix II                                                                                            26

Samples of Employee
Evaluation Forms
Appendix III                                                                                           30
                         Sample Design                                                                 30
GAO Sampling             Sample Disposition                                                            30
Methodology              Calculation of Survey Estimates                                               31
                         Sampling Error                                                                31


Appendix IV                                                                                            32

Criteria for
Categorizing Narrative
Statements and the
Results of Our
Analysis
Appendix V                                                                                             38
                         Comments That Reflect Revenue Production and                                  38
Examples of                Efficiency
Supervisors’             Comments That Reflect Customer Service                                        39

Comments From
Employee Evaluations




                         Page 20         GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                        Contents




Appendix VI                                                                                           41

Data on Field Visits,
Case Reviews, and
Midyear Progress
Reviews
Appendix VII                                                                                          42

Results of Survey to
Determine How IRS
Supervisors Allocate
Their Time
Appendix VIII                                                                                         44

Comments From the
Internal Revenue
Service
Appendix IX                                                                                           49

GAO Contacts and
Staff
Acknowledgments
Tables                  Table 1: Estimated Frequency of Customer Service                               6
                          Comments and Revenue Production and Efficiency
                          Comments in Employee Evaluations
                        Table 2: Estimated Frequency of Comments in                                    7
                          Evaluations That Indicated the Employee Helped
                          Taxpayers Understand and Meet Their Tax
                          Responsibilities
                        Table 3: Estimated Frequency of Comments in                                    8
                          Evaluations That Indicated the Employee Applied the
                          Tax Law With Integrity and Fairness
                        Table 4: Estimated Frequency of Comments in                                    8
                          Evaluations That Described the Employee’s
                          Interpersonal Skills


                        Page 21         GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Contents




Table 5: Estimated Frequency of Missing or Duplicate                          10
  Narratives in at Least One of Two Evaluations
Table III.1: Disposition of Sample Cases                                      30
Table IV.1: Grouping of Critical Job Elements for Each                        33
  Employee Classification Into Five Skill Groups
Table IV.2: Estimated Frequency of Comments on                                34
  Customer Service, Revenue Production, and Efficiency
  in Evaluations of Employee Technical Skills
Table IV.3: Estimated Frequency of Comments Related to                        34
  Revenue Production and Efficiency and Customer
  Service
Table IV.4: Estimated Frequency of Employees With                             35
  Narratives Who Had at Least One Customer Service
  Comment in the Customer Service Critical Job Element
Table IV.5: Estimated Frequency of Employees With at                          35
  Least One Comment on One or Both Evaluations That
  Would Support One or Both of the Elements in IRS’
  New Mission Statement
Table IV.6: Estimated Frequency of Employees With                             35
  Evaluations Having Comments That Indicated the
  Employee Helps Taxpayers Understand and Meet Their
  Tax Responsibilities
Table IV.7: Estimated Frequency of Employees With                             36
  Evaluations Having Comments That Indicated That
  Employee Applies Tax Law With Integrity and Fairness
Table IV.8: Estimated Frequency of Employees With                             36
  Evaluations Having Comments That Described the
  Interpersonal Skills of Employee
Table IV.9: Estimated Frequency of Employees With                             36
  Other Evaluation Comments on Employee Interaction
  With Taxpayer
Table IV.10: Estimated Frequency of Employees Whose                           37
  Files Indicated They Did Not Receive Some Features of
  the Current Evaluation Process
Table IV.11: Estimated Frequency of Employees With                            37
  Some Discussion of Customer Service on Their
  Progress Reviews, Field Visits, or Case Reviews
Table IV.12: Estimated Frequency of Employees With                            37
  Missing or Duplicate Narratives in at Least One of
  Their Evaluations




Page 22         GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
          Contents




          Table VI.1: Estimated Frequency of Evaluation Files                            41
            Supported by Field Visits, Case Reviews, and Midyear
            Progress Reviews and the Number of Field Visits, Case
            Reviews, and Midyear Progress Reviews Discussing
            Customer Service
          Table VII.1: Information Received From Supervisors on                          42
            Their Time Allocation During a Typical Month
          Table VII.2: Information Received From District Offices                        43
            on Supervisors’ Time Allocation During a Typical
            Month


Figures   Figure II.1: Employee Evaluation, Part 2, Revenue Officer                      27
          Figure II.2: Employee Evaluation, Part 2, Revenue Agent                        28
          Figure II.3: Employee Evaluation, Part 2, Tax Auditor                          29




          Abbreviations

          IRS           Internal Revenue Service
          NTEU          National Treasury Employees Union




          Page 23          GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix I

Objectives, Scope, and Methodology


              Our objectives in this report are to (1) determine the relative emphasis on
Objectives    revenue production, efficiency, and customer service in enforcement
              employees’ annual written evaluations; (2) identify features of the
              evaluation process that might be used to greater advantage to reinforce the
              importance of customer service; and (3) describe IRS initiatives to
              promote customer service, including those to encourage enforcement
              employees to be taxpayer oriented.

              To determine the relative emphasis on revenue production, efficiency, and
Scope and     customer service comments in annual evaluations written under IRS’
Methodology   former mission statement, we reviewed the two most recent evaluations
              for each employee as of June 1998 in a statistically representative sample
                                                                         1
              of 19,096 examination and collection frontline employees. For comments
              on revenue production, we included comments such as those discussing
              (1) dollars assessed or collected by the employee, (2) number of cases in
              which the taxpayer agreed with IRS’ assessment, or (3) use of collection
              tools by the employee to secure payment from the taxpayer. For
              comments on efficiency, we included comments such as those discussing
              (1) timeliness and output, such as the number of overage cases, which are
              cases that have been in inventory for more than a certain length of time,
              and (2) the average number of hours needed to complete work on a return.

              For customer service comments, we included comments on the extent to
              which the employee (1) helped taxpayers to understand and meet their tax
              responsibilities and (2) applied the law with integrity and fairness. We also
              included a category for interpersonal skills because IRS has emphasized
              that quality interactions with taxpayers are an important component of
              customer service. To validate our approach, we discussed our criteria with
              IRS headquarters officials in the Collection and Examination Divisions,
              who agreed that it accurately captured their new customer-service
              orientation. Appendix III provides a more detailed explanation of our
              sampling methodology, and appendix IV provides a summary of the results
              of our analysis.

              To identify features in the current evaluation process that could be used to
              reinforce the importance of customer service, we reviewed the same two
              evaluations mentioned above. We counted the number of evaluations
              without narrative descriptions, and the number of evaluations that
              contained evidence that they were based on field visits, case reviews, and
              midyear progress reviews that included comments on the customer
              relations critical job element. To strengthen our understanding of how
              1
                  See GAO/GGD-99-11, Nov. 30, 1998.




              Page 24                  GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix I
Objectives, Scope, and Methodology




supervisors allocated their time, we interviewed 30 supervisors from the
Northern California, Kansas-Missouri, and Georgia District Offices, which
we chose because of their proximity to our offices, and sent a survey to
examination and collection division chiefs in IRS’ 33 district offices.

To obtain data describing any IRS initiatives to promote customer service,
we interviewed IRS headquarters officials, attended IRS training sessions
introducing IRS’ new initiatives, and reviewed draft documents describing
the new initiatives.

Our review was subject to some limitations. Our choice of evaluative
statements as supporting revenue production, efficiency, and customer
service, and our analysis of supervisors’ written comments required us to
make judgments that were, in part, subjective. To maximize the objectivity
of our analysis, we (1) obtained IRS’ concurrence that the categories we
used to characterize the evaluative statements were appropriate and (2)
conducted two separate and independent assessments of each sampled
evaluation. When differences arose, a collaborative approach was used to
resolve them. Although we did not verify responses from our survey of
division chiefs, we did discuss supervisory and administrative
responsibilities with 30 supervisors in the field.




Page 25             GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix II

Samples of Employee Evaluation Forms


              The evaluation forms for revenue officers, revenue agents, and tax
              auditors are very similar and have three parts. The first part provides basic
              information on the employee; assesses the employee’s competence level;
              and provides an overall rating of the employee, such as outstanding or fully
              successful.

              The second part, shown in figures II.1, II.2, and II.3, is tailored to the job
              classification. It lists the critical job elements and provides the supervisor’s
              numerical rating of how well the employee performed.

              The third part contains the narrative to support the numerical rating. We
              have not included a sample for this part because there is no official
              document for the narrative part of the evaluation. The supervisors attach
              as many typed or handwritten pages of narrative as they feel are necessary.




              Page 26           GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                           Appendix II
                                           Samples of Employee Evaluation Forms




Figure II.1: Employee Evaluation, Part 2, Revenue Officer




                                           Page 27            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                          Appendix II
                                          Samples of Employee Evaluation Forms




Figure II.2: Employee Evaluation, Part 2, Revenue Agent




                                          Page 28            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                           Appendix II
                                           Samples of Employee Evaluation Forms




Figure II.3: Employee Evaluation, Part 2, Tax Auditor




                                           Page 29            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix III

GAO Sampling Methodology


                                           This appendix discusses the sampling methodology we used to determine
                                           the extent to which evaluations referred to customer service and the
                                           extent to which supervisors used various features of the current evaluation
                                           system to monitor and give feedback on employees’ customer service
                                           skills.

                                           To minimize disruption of IRS operations, we used the same sample for
Sample Design                              this report that we drew for our report entitled IRS Personnel
                                           Administration: Use of Enforcement Statistics in Employee Evaluations
                                           (GAO/GGD-99-11, Nov. 30, 1998).

                                           To determine the extent to which (1) evaluations referred to revenue
                                           production, efficiency, and customer service and (2) supervisors used
                                           various features of the current evaluation process, we reviewed the
                                           evaluations of a sample of 300 IRS employees from the 3 enforcement
                                           employee groups of interest: tax auditors, revenue agents, and revenue
                                           officers.

                                           IRS managers are not required to write performance narratives for every
                                           rating dimension for every employee each year. To review more narratives,
                                           two ratings were requested from IRS for each employee in the sample. The
                                           results presented in the report reflect only employees who received two
                                           performance evaluations during the period of our review.

                                           From our sample of 300 IRS employees, we received usable responses for
Sample Disposition                         267 employees for a response rate of approximately 89 percent. We
                                           eliminated all nonrespondents, including those for whom we did not have
                                           two evaluations or who functioned in a specialized capacity, such as
                                           computer audit specialist (known ineligible), and those for whom we did
                                           not receive responses (unknown eligibility). Disposition of the sampled
                                           cases is provided in table III.1.

Table III.1: Disposition of Sample Cases
                                                                               Initial selection               Nonrespondents
                                                                    Number in Number of          Eligible      Known    Unknown
                                           Definition of strata     population selections respondents        ineligible eligibility
                                           Tax auditors                  1,867            30           28             1           1
                                           Revenue agents              11,796            135         123              6           6
                                           Revenue officers              5,433           135         116             10           9
                                           Total                       19,096            300         267             17         16
                                           Source: IRS data and GAO sample.




                                           Page 30                GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                        Appendix III
                        GAO Sampling Methodology




                        After weighting the responses to account for selection probabilities and
Calculation of Survey   nonresponse, we were able to make estimates of the percentage of IRS
Estimates               employees who received a narrative referring to customer service in at
                        least one of their two most recent employee evaluations prepared for the
                        period ending June 1998. In addition, we were able to make estimates of
                        the percentage of employees whose files indicated they received field
                        visits, case reviews, and midyear progress reviews referring to customer
                        service, as well as the number of evaluations lacking narrative for one or
                        more critical job elements.

                        Because we reviewed a statistical sample of employee evaluations, each
Sampling Error          estimate developed from the sample has a measurable precision or
                        sampling error. The sampling error is the maximum amount by which the
                        estimate obtained from a statistical sample can be expected to differ from
                        the true population value being estimated. Sampling errors are stated at a
                        certain confidence level—in this case, 95 percent. This means that the
                        chances are 19 out of 20 that if we reviewed evaluations for all IRS
                        employees in the groups of interest, the true value obtained for a question
                        on these evaluations would differ from the estimate obtained from our
                        sample by less than the sampling error for that question. Because the
                        confidence intervals for the different estimates vary in size, we report all of
                        them in appendix IV.




                        Page 31           GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix IV

Criteria for Categorizing Narrative Statements
and the Results of Our Analysis

                  This appendix discusses the criteria we used to categorize narrative
                  statements in evaluations of enforcement employees and the results of our
                  analysis of that data.

                  We reviewed the two latest evaluations for the period ending June 1998 for
                  each employee in a statistically representative sample of 267 of 19,096
                  examination and collection enforcement employees. For each narrative
                  describing performance in a critical job element, we documented
                  comments on (1) revenue production, (2) efficiency, and (3) customer
                  service. Comments about revenue production included statements
                  discussing the dollars assessed or collected by the employee, the number
                  of cases in which the taxpayer agreed with IRS’ assessment, or the use of
                  collection tools by the employee to secure payment from the taxpayer.
                  Comments on efficiency included statements discussing timeliness and
                  output, such as the number of overage cases, and the average number of
                  hours needed to complete work on a return. Customer service comments
                  were categorized as comments regarding (1) helping taxpayers understand
                  and meet their tax responsibilities and (2) applying the tax laws with
                  integrity and fairness. We also included a category for interpersonal skills
                  because IRS has emphasized that quality interactions with taxpayers are
                  an important component of customer service.

                  Comments on skills that we looked for in determining whether the
                  narrative contained a customer service comment are listed below. IRS
                  headquarters officials agreed that these behaviors were appropriate for the
                  customer service critical job element.

                  The following are comments on the extent to which the employee helped
                  taxpayers understand and meet their tax responsibilities:

              • Employee asks questions to identify taxpayer needs.
              • Employee explains the examination or collection process to taxpayer.
              • Employee provides Publication 1 to taxpayer without explanation.
              • Employee explains taxpayer rights to taxpayer.
              • Employee checks taxpayer’s understanding of issues involved, process
                involved, and what’s expected by asking questions or soliciting a response
                from the taxpayer.
              • Employee looks for ways to improve taxpayer’s future compliance.

                  The following are comments on the extent to which the employee applied
                  tax law with integrity and fairness:

              • Employee applies law objectively.



                  Page 32          GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                            Appendix IV
                                            Criteria for Categorizing Narrative Statements and the Results of Our Analysis




                                        • Employee considers a variety of actions to try to meet the taxpayer’s need.
                                        • Employee takes proactive action in favor of the taxpayer.
                                        • Employee balances taxpayer interest with government interest.

                                            The following are comments on the employee’s customer service
                                            interpersonal skills:

                                        •   Employee treats taxpayer with respect.
                                        •   Employee treats taxpayer fairly.
                                        •   Employee is courteous and tactful in dealings with taxpayer.
                                        •   Employee is well prepared or organized for taxpayer contact.
                                        •   Employee responds quickly to taxpayer’s inquiries or problems.
                                        •   Employee listens to the taxpayer.

                                            We also documented additional comments about an employee’s interaction
                                            with the taxpayer such as (1) the employee is firm with or demands
                                            payment from the taxpayer and (2) the employee sets time frames or limits
                                            for the taxpayer.

                                            The critical job elements are different for revenue agents, tax auditors, and
                                            revenue officers. In order to discuss the narrative comments for all three
                                            employee types together, we grouped the critical job elements for each
                                            employee type into five skill groups, as shown in table IV.1. IRS
                                            Examination and Collection officials agreed with our grouping of the job
                                            elements into those skill groups.

Table IV.1: Grouping of Critical Job
Elements for Each Employee                                                             Critical job elements
Classification Into Five Skill Groups       Skill group                Revenue agent        Tax auditor               Revenue officer
                                            How well employees         Workload management Inventory                  Time and
                                            manage their time                               management                workload
                                            and workload                                                              management
                                            How well employees         Issue identification;     Preexamination       Case decisions
                                            analyze cases and          fact finding              analysis; tax law
                                            determine proper                                     interpretation and
                                            course of action                                     application
                                            How well employees         Application of            Examination          Investigation and
                                            process or work a case     accounting and            techniques           analysis
                                                                       auditing principles;
                                                                       application of tax law
                                            How well employees         Written product           Preparation of     Accounts
                                            document their actions                               workpapers         maintenance
                                            and conclusions                                      and reports
                                            How well employees         Customer relations        Taxpayer relations Customer
                                            interact with the                                                       relations
                                            taxpayer




                                            Page 33              GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                         Appendix IV
                                         Criteria for Categorizing Narrative Statements and the Results of Our Analysis




                                         Tables IV.2 through IV.12 present the results of our analysis of narrative
                                         comments made by supervisors in our sample of enforcement employees.
                                         We analyzed two evaluations for each employee. In table IV.3 and table
                                         IV.4, we combined the data from the two evaluations into one record for
                                         each employee.

Table IV.2: Estimated Frequency of
Comments on Customer Service,                                                                      Comment
Revenue Production, and Efficiency in                                         Customer         Revenue
Evaluations of Employee Technical        Technical skill                         service    production   Efficiency                Total
Skills                                   Manage time and workload                  1,455          2,863      20,135               24,453
                                                                                  [750 to      [1,868 to  [18,245 to          [22,065 to
                                                                                   2,161]         3,858]    22,026]              26,842]
                                         Analyze cases/determine                   6,187         17,040       7,539               30,766
                                         proper course of action                [4,791 to     [14,762 to   [5,487 to          [2,6971 to
                                                                                    ,583]       19,317]       9,592]             34,561]
                                         Process or work case                      8,923         12,789       6,786               28,497
                                                                                [7,168 to     [10,555 to   [4,591 to          [24,462 to
                                                                                 10,678]        15,022]       8,980]             32,533]
                                         Document actions and                      1,736            734       3,554                6,023
                                         conclusions                              [882 to        [267 to   [2,358 to           [4,492 to
                                                                                   2,590]         1,200]      4,750]              7,554]
                                         Total                                    18,301         33,425      38,014               89,739
                                                                              [15,377 to     [28,959 to  [32,251 to          [80,358 to
                                                                                 21,226]        37,890]     43,777]              99,122]
                                         Note 1: Confidence intervals are bracketed.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


Table IV.3: Estimated Frequency of
Comments Related to Revenue                                                                                       Comments
Production and Efficiency and Customer                                                                                Confidence
Service                                  Critical element reviewed                                            Percent      interval
                                         Customer service only
                                          Revenue production and efficiency comments                                 26          22 to 30
                                          Customer service comments                                                  74          70 to 78
                                         All critical elements
                                          Revenue production and efficiency comments                                 67          65 to 69
                                          Customer service comments                                                  33          31 to 35
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.




                                         Page 34                GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                         Appendix IV
                                         Criteria for Categorizing Narrative Statements and the Results of Our Analysis




Table IV.4: Estimated Frequency of
Employees With Narratives Who Had at                                                                  Employees
Least One Customer Service Comment                                                              Confidence                   Confidence
                                                                                       a
in the Customer Service Critical Job     Customer service narrative             Number              interval  Percent           interval
Element                                  Comment present                         14,291     13,229 to15,353        89            84 to94
                                         Comment not present                      1,742      1,009 to 2,475        11             6 to16
                                         Total with narrative                    16,033                           100
                                         a
                                         Total number of employees is 19,096.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


Table IV.5: Estimated Frequency of
Employees With at Least One Comment                                                                  Employees
on One or Both Evaluations That Would                                                            Confidence                  Confidence
Support One or Both of the Elements in   Customer service narrative             Number                interval Percent          interval
IRS’ New Mission Statement               Comment present                         13,667      12,563 to 14,771       72          66 to 78
                                         Comment not present                      5,429        4,325 to 6,533       28          23 to 34
                                         Total                                   19,096                            100
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


Table IV.6: Estimated Frequency of
Employees With Evaluations Having                                                                      Employees
Comments That Indicated the Employee                                                               Confidence                Confidence
                                                                                             a
Helps Taxpayers Understand and Meet      Evaluation comment                        Number             interval Percent          interval
Their Tax Responsibilities               Explained examination or collection
                                         process to taxpayer                         10,074 8,871 to 11,278            53        46 to 59
                                         Provided Publication 1 to taxpayer
                                         without explanation                          2,391      1,866 to 2,916        13        10 to 15
                                         Employee explained appeals rights
                                         to taxpayer                                  2,076      1,425 to 2,728        11         7 to 14
                                         Looked for ways to improve
                                         taxpayer’s future compliance                 1,302       701 to 1,903           7        4 to 10
                                         Checked taxpayer’s understanding
                                         by asking questions or soliciting
                                         responses                                         818    343 to 1,293           4          2 to 7
                                         Asked questions to identify taxpayer
                                         needs                                             526      101 to 951           3          1 to 5
                                         a
                                         Total number of employees is 19,096.
                                         Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.




                                         Page 35               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                     Appendix IV
                                     Criteria for Categorizing Narrative Statements and the Results of Our Analysis




Table IV.7: Estimated Frequency of
Employees With Evaluations Having                                                                        Employees
Comments That Indicated That                                                                         Confidence          Confidence
                                                                                              a
Employee Applies Tax Law With        Evaluation comment                          Number                 interval Percent    interval
Integrity and Fairness               Balanced taxpayer’s interest with
                                     government interest                             5,861 4,739 to 6,984             31      25 to 37
                                     Applied law objectively                         2,749 1,865 to 3,632             14      10 to 19
                                     Considered variety of actions to try to
                                     meet taxpayer’s needs                           1,226          645 to 1,807       6        3 to 9
                                     Took proactive action in favor
                                     of taxpayer                                     1,209          620 to 1,798       6        3 to 9
                                     a
                                     Total number of employees is 19,096.
                                     Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


Table IV.8: Estimated Frequency of
Employees With Evaluations Having                                                                          Employees
Comments That Described the                                                                          Confidence           Confidence
                                                                                              a
Interpersonal Skills of Employee     Evaluation comment                      Number                      interval Percent    interval
                                     Listened to the taxpayer                  7,222               6,056 to 8,389      38    32 to 44
                                     Was courteous or tactful with taxpayer    6,039               4,956 to 7,121      32    26 to 37
                                     Responded quickly to taxpayer inquiries   4,032               3,056 to 5,008      21    16 to 26
                                     Was well prepared and/or organized for
                                     taxpayer contact                          3,160 2,262 to 4,058                   17      12 to 21
                                     Treated taxpayer fairly                   2,484 1,671 to 3,297                   13       9 to 17
                                     Treated taxpayer with respect             1,021 458 to 1,584                      5        2 to 8
                                     a
                                     Total number of employees is 19,906.
                                     Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.


Table IV.9: Estimated Frequency of
Employees With Other Evaluation                                                                          Employees
Comments on Employee Interaction                                                                    Confidence             Confidence
                                                                                          a
With Taxpayer                        Evaluation comment                         Number                 interval Percent       interval
                                     Is firm with and/or demands payment
                                     from the taxpayer                            6,022           4,958 to 7,085     32       26 to 37
                                     Sets time frames or limits for the
                                     taxpayer                                     4,647           3,840 to 5,454     24       20 to 28
                                     a
                                     Total number of employees is 19,096.
                                     Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.




                                     Page 36               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                         Appendix IV
                                         Criteria for Categorizing Narrative Statements and the Results of Our Analysis




Table IV.10: Estimated Frequency of
Employees Whose Files Indicated They                                                                   Employees
Did Not Receive Some Features of the     Features of the evaluation                                Confidence            Confidence
Current Evaluation Process               process                                    Number              interval Percent    interval
                                         Did not receive any narrative                8,725      7,522 to 9,928       46    39 to 52
                                         Did not receive midyear reviews             12,460    11,344 to 13,576       65    59 to 71
                                         Did not receive case review                  5,817      4,696 to 6,938       30    24 to 36
                                         Did not receive field visit                 12,628    11,483 to 13,773       66    60 to 72
                                         Source: GAO analysis of employee evaluations for the 2-year period ending June 1998.


Table IV.11: Estimated Frequency of
Employees With Some Discussion of                                                                          Employees
Customer Service on Their Progress                                                                   Confidence                 Confidence
Reviews, Field Visits, or Case Reviews   Features of the evaluation process         Number               interval Percent          interval
                                         Midyear progress review                      2,380        1,581 to 3,179      36          26 to 46
                                         Review of completed cases                    3,092        2,167 to 4,018      23          17 to 30
                                         Supervisor field visit                       1,146          546 to 1,746      18           9 to 26
                                         Source: GAO analysis of employee evaluations for the 2-year period ending June 1998.


Table IV.12: Estimated Frequency of
Employees With Missing or Duplicate                                                                    Employees
Narratives in at Least One of Their                                                              Confidence                     Confidence
Evaluations                              Condition of the narrative                 Number           interval Percent              interval
                                         No narrative in either evaluation            1,948    1,238 to 2,659      10               6 to 14
                                         No narrative in at least one
                                         evaluation                                   6,776    5,622 to 7,931          35          29 to 42
                                         Duplicate narrative in both
                                         evaluations                                  2,304    1,514 to 3,094          12           8 to 16
                                         No narrative for at least one critical
                                         job element in at least one
                                         evaluation                                   2,536    1,715 to 3,358          13           9 to 18
                                         Narratives included for all critical job
                                         elements for both years                      5,532    4,432 to 6,631          29          23 to 35
                                         Total                                       19,096                            99
                                         Note: Percentage does not total to 100 due to rounding.
                                         Source: GAO analysis of employee evaluations for the 2-year period ending June 1998.




                                         Page 37               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix V

Examples of Supervisors’ Comments From
Employee Evaluations

                    This appendix provides examples of written comments by supervisors
                    from evaluations of the enforcement employees reviewed for this report.
                    The comments are grouped in two categories: (1) comments on revenue
                    production and efficiency that reflect IRS’ old mission statement and (2)
                    comments on customer service behaviors that reflect IRS’ new mission
                    statement. At the beginning of each excerpt from an employee evaluation,
                    we note which of the critical job elements the statements are from.

                    The following illustrate comments that would appear to encourage and
Comments That       support revenue production and efficiency.
Reflect Revenue
Production and    • Critical Job Element Category: Analyze Cases to Determine Course of
Efficiency          Action

                    “Time spent, both in terms of hours applied and months in process, was on the high end of
                    an acceptable range. Decisions need to be made in a more timely manner and weighed
                    against the ultimate tax potential of the issues being developed.”

                    “You do not hesitate to use the full array of collection tools to resolve a case or move it
                    along. Summonses, prompt assessments, levies, and seizures have all been frequently used
                    with great success throughout the rating period . . . . You have maintained a vigorous
                    program of appropriate enforcement with many seizures resulting in full payment and some
                    others going to Chapter 11. These have included restaurants, an attorney’s office, a bakery,
                    a social club and several vehicles.”

                  • Critical Job Element Category: Managed Time and Workload

                    “You set clear, reasonable deadlines and follow-up on them promptly, usually with an
                    appropriate collection tool rather than a phone call. Your success in that regard is
                    referenced above. During the selection of cases for one entity review it was noted that 84%
                    of your inventory was less than 5 months old. On another it was noted that only 4 of your
                    cases had been assigned for longer than six months.”

                  • Critical Job Element Category: How Well Employee Processed Case

                    “On another case, she found that the taxpayers had no mortgage on their home, she dealt
                    with the taxpayers and convinced them that they needed to take out a mortgage. They took
                    out that mortgage and fullpayed the liability.”

                  • Critical Job Element Category: Interaction With Taxpayers

                    “Your case files show that you consistently demand full payment, warn T/Ps [taxpayers] of
                    enforcement and document Publication 1. receipt. Taxpayers’ rights are fully observed with
                    respect to lien filing and final notice issuance before levy. During the year you have had
                    frequent enforcement activity with BMF [Business Master File] cases . . .. The fact that so
                    many of these led to full payment is indicative of your proper direction and refusal to




                    Page 38              GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                     Appendix V
                     Examples of Supervisors’ Comments From Employee Evaluations




                     accept less. With many of these types of cases, effective customer relations means standing
                     firmly behind your correct decisions and you have done that very well.”

                     “[Employee name] does a very good job in developing pertinent information through the
                     interview process. On several cases [employee name] was able to pick up subsequent and
                     related returns, get agreement, collect deficiency and close returns out in a short time
                     frame.”

                     “Your attention to the aspects of this element has remained high. You continue to observe
                     the rights of taxpayers by professionally demanding full payment and/or delinquent returns.
                     You also continue to consistently explain and warn of enforcement actions, which you also
                     document fully. You conduct yourself in a very businesslike way and demonstrate an
                     industrious manner.”

                     “Your personal contacts and discussions are conducted in a firm business-like and
                     professional manner. The customer relation aspects of the -A- and -B- case examinations
                     are significant. The examinations were conducted in a timely manner with documented
                     efforts to maintain the forward momentum of the examinations. You applied good time
                     saving techniques, conducted the majority of the audit at the taxpayer’s place of business
                     and, in general, conducted the examinations in a prompt and efficient manner. In both
                     instances, you proposed significant adjustments as a result of your audit efforts, and
                     secured the taxpayer’s agreement and checks in full settlement of the resulting tax, which,
                     again, was significant. Not only did you save the taxpayer from additional charges by
                     collecting the tax on the spot, but you also supported the Servicewide objective of
                     maintaining a high collectibility rate, thereby reducing costs of collecting taxes due.”

                     In contrast to the above comments that appear to support revenue
Comments That        production and efficiency, the following comments appear to support the
Reflect Customer     type of customer service that is more reflective of IRS’ new mission
Service              statement.

                   • Critical Job Element Category: Analyze Cases to Determine Course of
                     Action

                     “You approach your audits in an objective manner and always consider the taxpayer’s
                     position on issues that are unagreed. You generally cite the tax law for each adjustment you
                     make ….You document the taxpayer’s position on unagreed issues and explain to them
                     your position and the tax law’s applications.”

                     “You make a point to explain all the facts, apply the proper code section, regulations, and
                     include numerous cases to support your position and conclusion. You are able to identify
                     factual differences between your issues and those in court cases and rulings. You ensure
                     taxpayer is in agreement as to the facts and the only disagreement is the question of the
                     law.”




                     Page 39              GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
  Appendix V
  Examples of Supervisors’ Comments From Employee Evaluations




• Critical Job Element Category: Interaction With Taxpayers

  “You are open minded when dealing with your customers and willing to listen to their point
  of view as well as other information they may provide prior to making case decisions.
  Overall the case decisions you have made as well as the information you share have been
  presented in a professional and understandable manner.”

  “You have a difficult inventory, inhabited by difficult taxpayers and even more difficult
  exasperating representatives. In spite of this, you handled all of your customers well. You
  were extremely fair and did an excellent job in balancing the rights of your taxpayers with
  the protection of the interests and revenue of the Service . . . .You projected an excellent
  image of the Service.”

  “You have displayed a very helpful and courteous attitude towards taxpayers and have
  demonstrated that you are willing to take every step possible to ensure that the Service is
  represented to the public in the best possible light. You treat everyone you come into
  contact with both within the Service and outside of the Service, in a respectful manner,
  which not only enhances agreed cases but also contributes in a significant way to positive
  customer relations. Overall you are very good at securing cooperation during the course of
  examinations, thus facilitating case closings and demonstrating skill in explaining findings
  and conclusions with technical competence, while also effectively listening and considering
  the taxpayer’s point of view . . . In your discussions with taxpayers or their representatives,
  you will always disclose all facts and will never misrepresent the Service policies or
  interpretations of case law. You carefully listen to the opposing view and will tell the
  taxpayer that you need to research further and will get back to him in an expeditious
  manner. You employ a tactful manner in discussions of controversial tax issues while at the
  same time demonstrating your technical knowledge, always in attempting to resolve cases
  at the lowest possible level.”




  Page 40              GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VI

Data on Field Visits, Case Reviews, and
Midyear Progress Reviews

                                          This appendix provides the results of our review of IRS enforcement
                                          employee evaluations to determine how often supervisors used various
                                          features of the evaluation process to support their written evaluations and
                                          the extent to which supervisors addressed customer service when using
                                          them.

Table VI.1: Estimated Frequency of
Evaluation Files Supported by Field                                                  Summary category
Visits, Case Reviews, and Midyear                                                              Employees with customer
Progress Reviews and the Number of                                 Employees with evaluations       service discussions
Field Visits, Case Reviews, and Midyear   Features used to           supported by the feature documented by the feature
Progress Reviews Discussing Customer      support evaluations             Number      Percent       Number      Percent
Service                                   Field visits or sit-ins           6,468          34          5,321         82
                                          Midyear progress reviews          6,636          35          4,256         65
                                          Case reviews                     13,279          70         10,186         77
                                          Source: GAO analysis of enforcement employee evaluations for the 2-year period ending June 1998.




                                          Page 41               GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VII

Results of Survey to Determine How IRS
Supervisors Allocate Their Time

                                         This appendix provides data on the results of our survey of 30 supervisors
                                         selected by IRS in 3 district offices (see table VII.1) and examination and
                                         collection division chiefs in all 33 IRS district offices (see table VII.2). As
                                         shown in the tables, both supervisors and division chiefs agree that
                                         supervisors, the immediate managers of frontline enforcement employees,
                                         spend little time on field visits and a significant amount of time on clerical,
                                         administrative, and collateral duties.

Table VII.1: Information Received From
Supervisors on Their Time Allocation                                                                           Average percent of time
During a Typical Month                   Activity                                                            spent in an average month
                                         Performance evaluation activities
                                          Field visits                                                                                        5
                                          Case reviews                                                                                       12
                                          Employee evaluations (annual, midyear progress reviews)                                             8
                                           Subtotal                                                                                          25
                                         Clerical and administrative activities
                                          Clerical activities                                                                                 9
                                          Other administrative and collateral duties                                                         20
                                           Subtotal                                                                                          29
                                         Other activities
                                          Workload/inventory reviews                                                                      7
                                          Review of employee time charges                                                                 2
                                          Responding to employee questions                                                               14
                                          Group meetings                                                                                  3
                                          Closing conferences                                                                             2
                                          Taxpayer meetings                                                                               4
                                          Continuing education for group manager                                                          2
                                          Training provided to employees                                                                  4
                                          Leave                                                                                           8
                                           Subtotal                                                                                      46
                                         Total                                                                                          100
                                         Source: Interviews with 30 supervisors from the Northern California, Kansas-Missouri, and Georgia
                                         District Offices.




                                         Page 42                GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
                                         Appendix VII
                                         Results of Survey to Determine How IRS Supervisors Allocate Their Time




Table VII.2: Information Received From
District Offices on Supervisors’ Time                                                                           Average percent of time
Allocation During a Typical Month        Activity                                                               spent in an average month
                                         Performance evaluation activities
                                          Field visits                                                          7
                                          Case reviews                                                          12
                                          Employee evaluations (annual, midyear progress reviews)               9
                                           Subtotal                                                             28
                                         Clerical and administrative activities
                                          Clerical activities                                                   6
                                          Other administrative and collateral duties                            12
                                           Subtotal                                                             18
                                         Other Activities
                                          Workload/inventory reviews                                            11
                                          Review of employee time charges                                       3
                                          Responding to employee questions                                      14
                                          Group meetings                                                        5
                                          Closing conferences                                                   3
                                          Taxpayer meetings                                                     5
                                          Continuing education for group manager                                2
                                          Training provided to employees                                        4
                                          Leave                                                                 8
                                           Subtotal                                                             55
                                         Total                                                                  101
                                         Note: Percentages do not sum to 100 due to rounding.
                                         Source: Survey sent to the Examination and Collection division chiefs in all 33 IRS district offices.




                                         Page 43                 GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VIII

Comments From the Internal Revenue Service




                Page 44   GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VIII
Comments From the Internal Revenue Service




Page 45            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VIII
Comments From the Internal Revenue Service




Page 46            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VIII
Comments From the Internal Revenue Service




Page 47            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix VIII
Comments From the Internal Revenue Service




Page 48            GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Appendix IX

GAO Contacts and Staff Acknowledgments


                  Margaret T. Wrightson (202) 512-3516
GAO Contacts      Ralph T. Block (415) 904-2000



                  In addition to those named above, Wendy Ahmed, Robert V. Arcenia,
Acknowledgments   Benjamin Douglas, Suzy Foster, Ronald J. Heisterkamp, Sidney H.
                  Schwartz, Sam Scrutchins, Jonda Van Pelt, and John N. Zugar made key
                  contributions to this report.




                  Page 49         GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Page 50   GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
Page 51   GAO/GGD-00-1 Balancing Customer Service and Compliance Objectives
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