oversight

Tax Administration: IRS Needs to Improve Distribution of Tax Materials to the Public

Published by the Government Accountability Office on 1990-01-10.

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

>:1..:   _._   ,.   .“).”   .‘.   (’   .’   ”   ,’
      United States
GAO   General Accounting
      Washington,
                            Office
                    D.C. 20548

      General   Government    Division

      B-237389.1

      .Januarv ~ 10 1 19%)

      The Honorable J. J. Pickle
      Chairman, Subcommittee on Oversight
      Committee on Ways and Means
      House of Representatives

      Dear Mr. Chairman:

      In response to your request, this report discusses the need for the Internal Revenue Service
      (IRS)  to improve distribution of tax materials to the public. Specifically, we assessed the
      availability of tax materials at IRS’distribution centers and walk-in offices during the 1989
      filing season.

      As arranged with the Subcommittee, we are sending copies of this report to other
      congressional committees, the Secretary of the Treasury, the Commissioner of Internal
      Revenue, and other interested parties.

      The major contributors to this report are listed in appendix III. Please contact me on 272-
      7904 if you or your staff have any questions concerning the report.




      Paul L. Posner
      Associate Director, Tax Policy
        and Administration   Issues
Executive Summary                    ---


                   Taxpayers need a wide range of tax materials, such as forms, schedules,
Purpose            instructions, and pubhcations when they file their annual federal tax
                   returns. Because the Internal Revenue Service (IRS) encourages taxpay-
                   ers to file early. it is important that these materials be available early.

                   Not being able to get t,ax materials when needed can frustrate taxpay-
                   ers, especially if they made a special effort to visit an IRS office, and can
                   cause them to file later or file inaccurately. In 1988, GAO reported that
                   tax materials were not always available at walk-in sites and that tele-
                   phone orders were not always completely filled. GAO noted, however,
                   that availability improved as the 1988 filing season progressed.

                   The Subcommittee on ( jversight, House Committee on Ways and Means,
                   asked GAO to examine t,he availability of tax materials during the 1989
                   filing season at (1) IKS walk-in sites and (2) IRS distribution centers.


                   Taxpayers can visit any of IRS’ over 600 walk-in sites across the country
Background         to obtain tax materials Taxpayers may also contact one of three IRS dis-
                   tribution centers by mail or toll-free telephone and request to have an
                   item shipped directI> to them. Besides filling requests from taxpayers,
                   the distribution cent(*rb also supply the walk-in sites with materials.

                   IRS  made several changes in an attempt to better ensure the availability
                   of materials during the, 1989 filing season. IRS required each walk-in site
                   to stock a minimum (4 79 specific tax items, placed greater responsibil-
                   ity on each site for managing its own tax material inventory, developed
                   training to assist walk in site personnel, and opened a third distribution
                   center.

                   Between late January nnd mid-April 1989, GAO visited 60 walk-in sites in
                   13 states and checked fo? the 79 items each site was required to stock
                   and a sample of optional items each site chose t,o stock. During t,hat
                   same period, GAO also) 1jlaced telephone and mail orders to each of the
                   t.hree distribution cctnr ~rs for randomly selected items on a randomly
                   determined schedllic* I SVP pp. 12 and 13.)


                   Although IKS took st ~1IS to improve the availability of tax materials, tax-
Results in Brief   payers may still have\ had difficulties obtaining materials in 1989. Walk-
                   in sites GAO chctrk(bli c>;trly in the filing season were missing, on average,
                   about 16 percent (11’1I c’rcbquircd items and 22 percent of the sampled




                   Page 2                                   GAO/GGD-9034   Distribution   of Tax Materials
                               ExecutiveSummary




                               optional items. Although availability later improved, the lack of availa-
                               bility early in the season may have hampered taxpayer efforts to file
                               early.

                               Tax materials were not always available at walk-in sites because (1) dis-
                               tribution centers did not make initial shipments to sites in a timely man-
                               ner, (2) not all required items were included in the initial shipments to
                               sites, and (3) prescribed inventory management procedures were not
                               always followed.

                                   Taxpayers who tried to order items from the distribution centers also
                                   may have encountered difficulties. As of May 31, 1989, GAO had not
                                   received about 20 percent of the ordered items and, in many cases, IRS
                                   did not provide an explanation as to why an item was not shipped.
                                   Without an explanation, a requester does not know whether to look for
                                   the item elsewhere, wait for IRS to ship it, or reorder the item. Even
                                   when explanations were provided, they were not always correct.



Principal   Findings

Materials Often Not                Tax materials were not always available at the walk-in sites GAO visited,
                                   especially early in the filing season. Of the 24 sites visited before Febru-
Available at Walk-In Sites         ary 12, for example, 18 were missing at least 10 percent of the items GAO
Early in the Filing Season         checked for. Conversely, of the 36 sites visited after that date, only 4
                                   were missing as many as 10 percent. Among the items missing most
                                   often were publications dealing with the supplemental Medicare pre-
                                   mium, tax rules for children and dependents, pension and annuity
                                   income, and individual retirement arrangements. (See pp. 16-20.)

                               -
Initial Shipments   to Walk-       More timely delivery of tax items to walk-in sites would improve availa-
                                   bility. Some deliveries were delayed because items, like a publication on
In Sites Delayed                   the supplemental Medicare premium that GAO found missing on almost
                                   all of its visits, were not available from the printers until after the filing
                                   season began. Other delays, however, were caused by distribution cen-
                                   ters not shipping items to the sites as soon as they were available. One
                                   item, for example, was available at the center on December 27, 1988, but
                                   was not shipped to a sit<> uo visited until February 1, 1989. (See pp. 21
                                   and 22.)



                                   Page 3                                  GAO/GGD-90.34   Distribution   of Tax Materials
Required Items Not           In 1989, for the first Lime, IRS required that all its walk-in sites stock 79
                             commonly used tax it.ems. Some of the 79 items were not available at the
Initially Shipped to Sites   sites GAO visited bec~ausc they were not included in initial shipments to
                             sitrs. This oc,crlrrc>tl tlccausc ( 1 ) IRS’ Kational Office did not include nine
                             of the items on thr> preprinted list from which sites ordered stock and
                             (2) some sites did not order required items that were on the preprinted
                             list-apparently      tllcl result, of some confllsion among the sites as to what
                             \vas required. (Sfhcbp 22. )


Inventory Management         IRSdcvelopcd an lrl\ cmtory management manual and training to provide
Procedures Not Always        improved invenLc)ry control procedures for walk-in site personnel. Per-
                             sonnel at over 50 ~~t~rc~~ntof the sites GAO visited. however, did not
Followed                     receive the training E:vcbnat sites where personnel were trained, proce-
                             duros covered by t hc\ training were not always followed. For example,
                             the procedures ~111 for setting reorder points to help ensure that stocks
                             were replenished before they ran out,. At 33 of 60 &es GAO visited, how-
                             ever’, at least one ircm ~‘as at or below the reorder point and had not
                             been reordered. Twc~lvc~of the sites had five or more items at or below
                             I hi reorder point I tr;lt had not b~~cn reordered. (See p, 23.)


Distribution Centers Did     GAO  placed 223 m;lil and telephone orders to IRSdistribution centers and
Not Always Process           received 80 perccant of the 2,206 items ordered. IKS procedures require
                             that, taxpayers b(> provided an explanation as to why an item they
Orders Completely            ordrred was not shipped. GAO, however, received no explanation for
                             most of the items It did not receive. An clxplanation is important because
                             it notific,s the rc’qlctSstc~rthat IRS received thr order and tells the
                             requester why the* item is unavailable. In those instances where GAO
                             rc,r(Gvc,d an c~xplatiation, tat.rr follow-up with the centers indicat,ed that
                             many of thus oxplan:\tions wctre inac*curat,e. (See pp. 27-29.)

                             IIS officials attrlI)ul r%dproblems to procc>ssing errors at distribution cen-
                             Leri;, lost ordfxrs. :lnd t hc higher risk for error posed by the make-up of
                             GAO’S orders. (; XCI h(~liovcs that, the cenWrs need to supplement their
                             yualit,y rtlvicws I () \pcscifically assess pc,rformance in handling larger
                             orders likt thos~~ ~~i,~w~l by G.W. ‘l’hosct ~~rdcrs may rcquirc more han-
                             dling than the, WIJ 11~ orders the ccntrrs said they typically receive and
                             thus may htt m ~‘1’\ll?cItptiblfX to error. I SW pp. 30, 33. and 34.)




                             Page 4                                    GAO/GGB90-34   Distribution   of Tax Materials
                    Executive   Summary




                           recommends     t klill   IRS
Recommendations     GAO


                  . make initial shipmcrrts of tax materials to walk-in sites within 48 hours
                    after receipt at the distrrbution centers (the same st,andard centers use
                    in filling reorders from walk-in sites);
                  * automatically include all required tax items in the initial shipments to
                    each walk-in site;
                  . train walk-in site personnel responsible for tax material inventories in
                    reordering procetlr~rc~s and inventory management techniques and moni-
                    tor walk-in site opt’rar ion5 to make sure that procedures and techniques
                    are implemented; anti
                  . supplement distribution center quality reviews to specifically assess
                    performance on ordl,rs where errors are most likely to occur.

                  -_______
                    The Commissioner of Imernal Kevenue, in commenting on a draft of this
Agency Comments     report, expressed agreement with its findings and recommendations and
                    said that corrective a.tions have already been taken in preparation for
                    the 1990 filing seast~r (See pp. 24 and 35.)




                     Page 5                                GAO/GGD-9034   Distribution   of Tax Materials
                          Executive   Summary




Executive      Summary                                                                                           2

Chapter 1                                                                                                        8
                          Distribution of Tax Material                                                           8
Introduction              IRS Made Changes Intended to Improve Availability          of                         11
                                Tax Materials in 1989
                          Objective, Scope, and Methodology                                                     12

Chapter 2                                                                                                       15
Tax Materials Not          IRS Took Steps to Improve Tax Material Availability     at                           15
                                Walk-In Sites
Always Available at        Most Walk-In Sites IIad Missing Tax Materials                                        16
All Walk-In Sites,         Availability    of Tax Materials Improved as Filing Season                           18
                                Progressed
Especially Early in the    Availability    Could Be Improved With More Timely                                   21
Filing Season                    Deliveries and Better Inventory Management
                           Conclusions                                                                          23
                           Recommendations to the Commissioner of Internal                                      24
                                 Revenue
                           Agency Comments and Our Evaluation                                                   24

Chapter 3                                                                                                       25
Distribution Centers       Distribution Center Procedures for Processing Orders                                 25
                           GAO’s Orders Were Not Always Filled Completely                                       27
Could Do a Better Job      Most Items Were Received in a Timely Manner                                          30
of Filling Mail and        IRS’ Quality Review Results Differed From GAO’s Results                              33
                           Conclusions                                                                          35
Telephone Orders           Recommendation to the Commissioner of Internal                                       35
                                 Revenue
                           Agency Comments and Our Evaluation                                                    35

Appendixes                  Appendix I: Listing of Tax Items Required to Be Stocked                              38
                                at Walk-In Sites and Number of Times Each Item Was
                                Missing During 96 GAO Visits
                            Appendix II: Comments From the Internal Revenue                                      41
                                Service
                            Appendix III: Major C’ontributors to This Report                                     44

Tables                      Table 1.1: Distribution   Center Work Load for the First 5                           11
                                 Months of 1989


                            Page 6                                  GAO/GGD-9034   Distribution   of Tax Materials
          Executive   Summary




          Table 3.1: Center Provided        Explanations   for Nonreceipt                           29
               of Requested Items

Figures   Figure 1.1: Tax Material Distribution                                                      9
          Figure 1.2: Location of IRS Walk-In Sites Visited by GAO                                  13
          Figure 2.1: Frequency of Missing Required Items                                           18
          Figure 2.2: Percentage of Missing Items at Sites Visited                                  19
               Before and After February 12, 1989
          Figure 2.3: Percentage of Missing Tax Materials at 12                                     20
               Sites GAO Visited More Than Once
          Figure 3.1: Percent of Items Received by Range of                                         31
               Workdays - All Orders
          Figure 3.2: Percent of Items Received by Range of                                         32
               Workdays - Mail Orders
          Figure 3.3: Percent of Items Received by Range of                                         33
               Workdays - Telephone Orders




          Abbreviation

           IHS           Internal   Revenue Service


           Page 7                                      GAO/GGD-9034   Distribution   of Tax Materials
Chapter 1

Introduction


                        Each year, between January 1 and mid-April, millions of taxpayers file
                        tax returns with the Internal Revenue Service (IRS). To better manage
                        and process this large volume of returns, IRS encourages taxpayers to
                        file early in the filing season. To file early, taxpayers need the appropri-
                        ate tax materials (i.e., forms, schedules, instructions, and publications).
                        Having the right tax materials available should also help taxpayers com-
                        ply with the tax law and minimize errors on tax returns.


                        IRS is responsible for providing tax materials, and over 600 individual
Distribution   of Tax   items are available for distribution depending on the needs of the tax-
Material                payers. Most taxpayers receive annually a package of tax materials
                        through the mail. Taxpayers who want additional materials or who do
                        not receive a tax package can obtain tax materials at about 64,000
                        banks, post offices, and libraries; at over 600 IRS walk-in sites; or
                        through phone and mail orders placed with three IRS distribution cen-
                        ters. Figure 1.1 shows the distribution proc*ess.




                        Page 8                                 GAO/GGD-9034   Distribution   of Tax Materials
                                                        Chapter        I
                                                        Introduction




Figure   1.1: Tax Material   Distribution


                                                       IRS Natlonal   Office
                                                     Designs Tax Material to
                                                    Implement Legislation and
                                                    Refines Existing Materials
                                        \


                                                                       4               -

                                                           Government
                                                          Printing  Office
                                                 Prints and Contracts for Printing
                                                          of Tax Material




                                                                 Printers
                                                         Print Tax Materials and
                                                    (1) Ship to Banks, Post Offices,
                                                               and Libraries
                                                (2) Mail Tax Packages to Taxpayers
                                                 (3) Supply IRS Distribution Centers




                                                            IRS Distribution
                                                                  Centers
                               -                    (1) Supply IRS Walk-In Sites
                                                  (2) Supply Banks, Post Offices,
                                                               and Libraries
                                                   (3) Fill Phone and Mail Orders
                                                             From Taxpayers
                                            \




                                                          Page 9                           G A O XGDM-34   Distribution   of Tax Materials
                             Chapter 1
                             Introduction




                             IRS estimated that it printed 2.2 billion tax items during fiscal year 1988,
                             at a cost of $57.3 million. It further estimated that postage and freight
                             costs associated wit,h transporting tax materials to distribution centers,
                             walk-in sites, and taxpayers totalled $137.3 million. IRS was unable to
                             determine the staffing and facility costs incurred by the distribution
                             centers and walk-in sites.

                             The distribution    points providing   materials    to taxpayers          are discussed
                             below.


Direct Mailout               Usually in mid-December, printers mail tax packages to taxpayers who
                             filed returns the previous year. Each package contains tax materials for
                             filing a return, a special address label, a preaddressed envelope for mail-
                             ing the return, and a form for ordering any additional tax materials. The
                             decision as to what tax materials will be included in a particular tax-
                             payer’s package depends on the type of return the taxpayer filed the
                             previous year. IRS’ annual report for 1988 stated that IRS mailed about
                              117 million tax packages that year to individuals and businesses.


Banks, Post Offices, and     IRS  has a special program for organizations that wish to distribute tax
Libraries                    materials to the public. The program is primarily set up to distribute tax
                             materials through banks, post offices, and libraries, but also includes
                             state and local governments, chambers of commerce, military posts, and
                             others. The variety of material provided through this program varies
                             according to the participating organization. IRS’ 1988 annual report
                             stated that more than 400 million tax forms and instructions were dis-
                             tributed to taxpayers through this program.

                                                   -.--
Walk-In    Sites              Over 600 IRS offices located throughout the country stock tax materials
                              for distribution to taxpayers, The number and type of tax items availa-
                              ble vary from office to office depending on which items each office
                              chooses to stock. In its 1988 annual report, IRS reported that more than
                              100 million pieces of tax material were distributed through its walk-in
                              sites


Distribution       Centers    For    the 1989 filing season, IRS had   three distribution centers responsible
                              for   (1) sending an initial shipment    of tax materials to IRS’ walk-in sites,
                              (2)   filling subsequent requests for    materials from the sites, and (3) fill-
                              ing   phone and mail orders received      directly from taxpayers. The three


                              Page 10                                     GAO/GGD9@34   Distribution      of Tax Materials
                                             Chapter 1
                                             Introduction




                                             centers are located in Richmond, Virginia (Eastern); Bloomington, Illi-
                                             nois (Central); and Ranch0 Cordova, California (Western). Each center
                                             serves a portion of the country with the Eastern and Central centers
                                             each responsible for about 40 percent of the total workload and the
                                             Western center responsible for the rest.

                                             As shown in table 1.1, during the first 5 months of calendar year 1989,
                                             the three centers filled over 11 million taxpayer and IRS walk-in site
                                             requests for tax materials.

Table 1.1: Distribution   Center Work Load
for the First 5 Months    of 1989            Center                                                                                         Orders filled
                                             Eastern                                                                                            4,274,770
                                             Central                                                                                            4302,320
                                             Western                                                                                            2,621,044
                                             Total                                                                                            11.198.934


                                             During the filing season, when work loads are heaviest, the Eastern and
                                             Central centers are each staffed with about 200 telephone operators and
                                             about 1,100 to 1,200 persons responsible for filling orders. The Western
                                             center, with a smaller work load, has a staff of about half that size.


                                             As part of a review of the 1988 tax return filing season, we assessed the
IRS Made Changes                             availability of certain forms and publications. We testified in February
Intended to Improve                          1988 that several documents were not available at six walk-in sites we
Availability of Tax                          visited early in the filing season.’ As we reported later, however, a
                                             recheck of availabi1it.y at five of those sites in March and April 1988
Materials in 1989                            showed that the situation had improved.2 We also reported that of the
                                             23 test phone orders we placed with IRS’ distribution centers, 17 were
                                             received in 10 workdays or less (the standard IRS sets for itself), 4 were
                                             received within 11 to 15 days, and 2 were never received.

                                             For the 1989 filing season, IRS placed a priority on making tax materials
                                             available to the public and implemented several changes toward that
                                             end. IRS (1) established a list of tax items that all walk-in sites were
                                             required to stock, (2) plarcd greater responsibility for tax material
                                             inventory managemcni on each walk-in site, (3) developed a training

                                             ‘Status   of the 1988 Tax Kr.tuy    Wing Season (GAO/T-GGD-88.13,          Feb 23, 1988)

                                             ‘Effective     Implementatwn   ot 1111~Tax Reform Act led to lJnrventfu1    1988 Filing Season (GAO/
                                             GGD-89-2.       NW 14.1988)




                                             Page 11                                                  GAO/GGD-9034        Distribution   of Tax Materials
                          Chapter 1
                          Introduction




                          course for site personnel involved in managing tax material inventories,
                          (4) opened the Western Distribution Center, and (5) planned to imple-
                          ment an automated phone order system and integrate it with the distri-
                          bution centers’ computt&ed     inventory management system.


                          The Subcommittee on Oversight, House Committee on Ways and Means,
Objective, Scope, and     asked us to monitor the availability of tax materials at IRS distribution
Methodology               centers and walk-in offices during the 1989 filing season. To accomplish
                          this objective, WC focusctd on the following questions:

                        . Were tax items available to taxpayers at walk-in sites‘?
                        . Were responsible walk-in site personnel trained in and using tax mate-
                          rial order proccdurcs?
                        . Were walk-in site tax mattBria1 inventories properly managed’?
                        . Were phone and mail orders properly and timely filled?

                          To address these questions, we did work at 1~s’National Office, the three
                          distribution centers, and 60 walk-in sites. We randomly selected the 60
                          wdlk-in sites from those located within a 200-mile radius of participat-
                          ing GAO offices in Cincmnati, Ohio; Dallas, Texas; New York, New York;
                          and San Francisco, California. As shown in figure 1.2. the 60 sites were
                          located in 13 differcbnt slates and included sites serviced by each of IRS’
                          three distribution coni tars.

                          By visiting 48 sites om’e and 12 sites four times each, we completed a
                          total of 96 walk-in site \,isits from late <January through mid-April 1989.
                          WC visited 12 sites 4 times each to measure changes in tax material
                          availability as the filing season progressed. At each of the walk-in sites,
                          we ( 1) determined the availability of 79 tax items that IRS’ Kational
                          Office required each site to stock, (2) determined the availability of ran-
                          domly selected items from those which the site chose to stock over and
                          above the 79 requirclcl itc‘ms, (3) determined whether responsible walk-
                          m site personnel had bc(sn trained in inventory management procedures,
                          and (4) evaluated how sites managed their stocks of tax materials.




                           Page   12                             GAO,‘GGD-9034   Distribution   of Tax Materials
Figure   1.2: Location   of IRS Walk-h   Sites Visited    by GAO                                              -
                                                                                                                  1




                                                         Page 13   GAO/GGDYO-34   Distribution   of Tax Materials
Chapter 1
Introduction




To evaluate the availability of tax materials at IRS’ distribution centers,
we placed a total of 118 mail and 105 telephone orders at the three cen-
ters. An official in the Publishing Services Branch of IRS’ National Office
identified listings of items available to the public. We randomly selected
our orders, which were generally for 10 tax items each, from these list-
ings. In total, we ordered 1,164 items by mail and 1,042 items by phone.
Staff from our offices in Cincinnati, Dallas, New York, San Francisco,
and Washington, D.C. placed the orders between January 23 and April
 14,1989. We randomly selected the type of order (mail or phone); the
date the order was to be placed; the time the order was to be placed, if
by phone; the ident.ity of the items to be ordered; and the GAO office
placing the order. No two orders were exactly the same. For each order,
we recorded (1) whether we received the item, (2) when we received the
item, and (3) whether IRS provided an explanation when we did not
receive an item.

Our orders were not intended to represent the kinds of orders a distribu-
tion center most frequently receives. As such, our results indicate the
centers’ performance in responding to orders like ours, not the centers’
overall performance in filling taxpayers’ orders during the 1989 filing
season.

 We did our work from October 1988 to July 1989 and in accordance with
 generally accepted government auditing standards. IRS provided written
 comments on a draft of this report. Those comments are included in
 appendix II and are evaluated on pages 24 and 35.




 Page   14                             GAO/GGD-9034   Distribution   of Tax Materials
Chapter 2                                      .-~~~ -~

Tax Materials Not Always Available at All
WakIn Sites, EspeeiaUy Early in the
Flling Season
                              Having tax materials available at walk-in sites is important if IRS is to
                              minimize the frustration felt by taxpayers who make a special effort to
                              visit a site in search of information only to find it unavailable. Recogniz-
                              ing this, IRS implemented changes that were intended to improve tax
                              material availability at its walk-in sites during the 1989 filing season.
                              Each walk-in site was required to stock 79 tax items as well as any
                              optional items it chose to stock. In addition, training was developed to
                              help site personnel better understand their inventory management
                              responsibilities.

                              Our visits to walk-m sites showed that, despite those changes, tax mate-
                              rials were not always available, especially at those sites visited early in
                              the filing season. For example, of the 24 sites we visited before Febru-
                              ary 12, 1989, 18 were missing at least 10 percent of the required and
                              optional items we were checking for. Conversely, only 4 of the 36 sites
                              visited aft,er February 12 were missing as many as 10 percent of the
                              Items. If IRS is going to encourage early filing, as it has done in recent
                              years. those materials taxpayers commonly need to prepare their
                              returns must be available early.

                              .4vailability of materials was a problem because (1) some tax items were
                              delivered late from prmters to the distribution centers, (2) distribution
                              centers did not make initial shipments of tax items to walk-in sites as
                              soon as the items were available, (3) several required stock items were
                              not included in the initial shipments to walk-in sites, and (4) many walk-
                              in site staff were not following reordering procedures.


                              An IRS goal is to provide high-quality service to taxpayers. One way IRS
IRS Took Steps to             provides service is by distributing tax materials. To better meet the pub-
Improve Tax Material          lic demand for tax mat.erials, IRS changed the distribution process at its
Availability at Walk-In       walk-in sites for the 1989 filing season. Those changes, which were
                              intended to improve tax material availability and improve inventory
Sites                         management, focust‘tl on

                          . requiring that each walk-in site stock a minimum of 79 specific tax
                            items,
                          . making walk-in site personnel more responsible for managing invento-
                            ries and ordering rcplrnishments when needed, and
                          . developing inventor)   management procedures and training for walk-in
                            sire pt,rsonnel.




                              Page 15                                 GAO/GGD-9034   Distribution   of Tax Mat&ala
                                                   -
                     Chapter 2
                     Tax Materials  Not Always Available    at All
                     Walk-In Sites, Especially Early in the
                     Filing Season




                     Before 1989, each walk-in site had a recommended list of tax materials
                     to stock that varied depending on whether the site was considered large,
                     medium, or small. In 1989, all sites were required to stock the same 79
                     tax items. IRS’ National Office developed the listing of required items to
                     ensure uniformity in what sites stock and to make available what it con-
                     sidered to be the most commonly used forms, schedules, instructions,
                     and publications. Besides the required items, sites also had the option to
                     stock additional items (referred to as “optional items”) to accommodate
                     taxpayers living in thtair service area.

                     During the 1988 filing season, walk-in sites received their tax materials
                     through eight automatic shipments spaced over the filing season. This
                     distribution pattern resulted in sites that had items out of stock while
                     waiting for an automatic shipment or that received automatic shipments
                     they did not need. To solve these problems, IRS decided, for the 1989
                     filing season, to send only an initial shipment of each item the site indi-
                     cated that it intended to stock. The initial shipment generally repre-
                     sented 25 percent of the walk-in site’s estimated 1989 needs. Sites were
                     expected to order additional quantities, as needed, directly from the
                     appropriate distribution center.

                      With the multiple automatic shipments before 1989, walk-in site person-
                      nel did not have to be too concerned about inventory management. The
                      change in 1989 to one initial shipment placed greater responsibility for
                      inventory management on walk-in site personnel. IRS developed inven-
                      tory management procedures and training to help walk-in site personnel
                      carry out their duties. The inventory management procedures covered
                      such areas as how to time reorders to avoid running out of tax material
                      before stocks can be replenished.


                      The unavailability    of tax items at walk-in sites can have several conse-
Most Walk-In Sites    quences. It can (1) frustrate taxpayers who may have made a special
Had Missing Tax       effort to visit the site, (2) inconvenience taxpayers by forcing them to
Materials             look elsewhere for an it.em, and/or (3) cause taxpayers to file later or
                      file inaccurately. With that in mind, we reviewed tax material availabil-
                      ity at 60 walk-in sites in 13 states between danuary 25 and April 13,
                      1989. We visited 12 sites four times each (to assess trends) and visited
                      48 sites one time each for a total of 96 visits. At each of these sites, we
                      reviewed the availability of the 79 required items and a sample of up to
                      21 optional items.




                      Page   16                                      GAO/GGD9034   Distribution   of Tax Materials
Chapter 2
Tax Materials   Not Alwavs Available   at Au
W&-In    Sites, EspeciaU~ Early in the
Filing Season




Tax materials were not always available at the walk-in sites. For exam-
ple, we checked for each of the 79 required items during each of our 96
visits-a   total of 7,584 checks-and  found an item missing during 533
(7 percent) of those checks. On 89 of our 96 visits, we found at least 1 of
the 79 items missing. An optional item was missing 222 (11 percent) of
the 1,988 times we checked, and at least one such item was found miss-
ing during 71 of our 96 visits.

The frequency with which we found required items missing varied
depending on the item. As shown in appendix I, publications (which are
generally intended to help taxpayers understand the requirements relat-
ing to a specific issue) were more likely to be missing than were forms
and instructions. Among the publications missing most often were two
dealing with the supplemental Medicare premium (found missing on 84
and 22 of our 96 visits, respectively) and others dealing with tax rules
for children and dependents (missing on 39 visits), pension and annuity
income (missing on 20 visits), and individual retirement arrangements
(missing on 18 visits).

 The availability   of items also varied considerably from site to site. As
 shown in figure 2.1, for example, of 79 required items checked for dur-
 ing our 96 visits, w’c found from 0 to 41 missing.




 Page   17                                     GAO/GGD-9034   Distribution   of Tax Materials
                                                   Chapter 2
                                                   Tax Materials  Not Always Available    at All
                                                   Walk-In Sites, Especially Early in the
                                                   Filing Season




Figure   2.1: Frequency   of Missing   Required   Items
30
28
26
24
22
20
18
16
14
12
10
 6
 6
 4
 2
 cl




                                                   Although we found items missing during most of our visits, the situation
Availability  of Tax                               improved as the 1989 filing season progressed. As shown in figure 2.2,
Materials Improved                         aS      the 24 walk-in sites visited before February     12, 1989, were missing  an

Filing Season                                      average of about 15 pc’rcent of the required items and 22 percent of the
                                                   optional items, while thcl 36 sites visited after that time were missing an
Progressed                                         average of about 4 percc‘nt of the required items and 8 percent of the
                                                   optional items. Of’ the, 23 sites visited before February 12, 18 had at
                                                    least 10 percent of the> IINIW missing. Conversely, of the 36 sites visited
                                                   after that date. only 1 hrid as many as 10 percent missing.

                                                   To further determim III,> a\ ailability of tax materials over the course of
                                                   1he filing season, WV v151tcd 12 walk-in sites four t,imes each. As shown
                                                   In figurt3 2.3, at <ba(‘1I01’1IIOW 12 sites. the mlmbt~r of missing items
                                                   ticclint~ti bctwccn ttlcb Iit ,I ,~!~ti fourth visits.



                                                    Page   18                                      GAO/G<;D-90-14   Distribution   of Tax Materials
                                      Chapter 2
                                      Tax Matmia.ls Not Always Available       at AU
                                      WalkIn    Sites, Especially Early in the
                                      Filinjt season




at Sites Visited Before   and After
                                      22     Percent
February   12,1989
                                      20

                                      16

                                      16

                                      14

                                      12

                                      10

                                       6

                                       6

                                       4

                                       2




                                             Required   tax              Optional   tax
                                             items                       items


                                                        Before 2112B9

                                                        After 2/l Z/89



                                      Reflects   results of ~n~tlal VISIIS 10 60 sites 24 sites were wslted before   Z/12/89   and 36 sites   were   vlslted
                                      after 2/12/89     Results of follow U/I VISIIS are shown I” ftgure 2 3




                                      Page    19                                                  GAO/GGD9%34          Distribution    of Tax Materials
                                             ___
                                                   Chapter 2
                                                   Tax Materials  Not Always Available    at All
                                                   Walk-In Sites, Especially Early in the
                                                   EuiIlg Srason




Figure 2.3: Percentage   of Missing   Tax
Materials  at 12 Sites GAO Visited    More
                                                   26    Percent
Than Once
                                                   24
                                                   22
                                                   20
                                                   16
                                                   16
                                                   14
                                                   12
                                                   10
                                                    6
                                                    6
                                                    4
                                                    2
                                                     0

                                                          Required tax          Dptional tax
                                                          items                 ilems

                                                                   Frst wit (between Jan 25 and Feb. 9)
                                                         I
                                                                   Second visit (between Feb. 14 and Mar. 2)
                                                                   Tfwd visit (between Mar. 7 and Mar. 23)
                                                                   Fourth wit (between Mar. 30 and Apr. 13)


                                                    Based on checks for 948 requred     Items and 251 optional    Items


                                                    Although availability improved as the season progressed, we did not
                                                    find all 79 required ittams at any one site until a March 30, 1989, visit.
                                                    Several sites, in&ding    one visited February 8, would have had all
                                                    required items available c,arlier were it not for Publication 936 (Some
                                                    Facts About The Supplemental Medicare Premium), which did not
                                                    become available to the walk-in sites until late March 1989. IRS officials
                                                    in the Publishing SW\ ices Branch said that Publication 936 was delayed
                                                    because it took a long time for IRS t,o develop guidance to help taxpayers
                                                    interpret the Metliczr~~ (‘wtastrophic Coverage Act, of 1988 (P. I,. lOO-
                                                    3W), which was c~n;lcWtl in -July 1988.




                                                    Page 20                                                    GAO ‘GGD-9034   Distribution   of Tax Materials
-
                               Chapter 2
                               Tax Materials Not Always Available    at AU
                               Walk-h Sites, Especially Early in the
                               Filing Season




                               Tax materials were not always available at the walk-in sites because of
Availability Could Be          late deliveries from prjnters, shipping delays by distribution centers, the
Improved W ith More            failure to automatically ship required items, and poor inventory man-
                               agement at walk-in sitcts.
Timely Deliveries and
Better Inventory
Management

    Late Deliveries            Tax materials normally flow from printers to distribution centers and
                               then to the walk-in sites. Walk-in sites were authorized to offer 1989 tax
    Contributed to Items Not   materials to the public in December 1988. Some tax items scheduled to
    Being Available            be at walk-in sites bcforc .January 1989, however, were not available at
                               distribution centers until later in the filing season. The centers did not
                               receive 38 of the 79 required and 7 1 of the 205 optional tax items that
                               we looked for at walk-in sites until after the items were scheduled for
                               delivery to those sites

                               IRS officials in the Publishing Services Branch said that some late deliv-
                               eries were due to ( 1) legislation that was enacted close to the start of the
                               filing season and (2) the lengthy process for developing or modifying tax
                               materials and obtaining the necessary approvals before an item can be
                               printed. They citc‘d several items, in addition to Publication 935, that
                               were delivered late for those reasons. For example, Form 8586 on the
                               low income housing credit, which was necessitated by the Technical and
                               Miscellaneous Kevem~e .4ct, of 1988 (I’. L. 100-647, enacted in Nov.
                                1988) was not shippcbd from the printers lmtil early March 1989.


    Distribution Centers Did    After distribution c,cWt’rs received items t’rom printers, they accumu-
    Not Always Ship Tax         lated several items t)cBforcsmaking the initial shipment to walk-in sites.
                                Distribution crntcsr ()f’fic,ials said that this procedure was used when
    Items Promptly              sc,nding t,ax mwtcrlals to practit,ioners before the filing season to save
                                J)ost,age and as a (“HI\ c>rGnc.c to the practitioners. They said that centers
                                continued to follow this procedure when making initial shipments to
                                \valk-in sites btlfor(> ,Ind during the filing season and that as many as 2
                                weeks could pass I )cstwt’en the time an item was received at the distribu-
                                tion ccntcr and t,hlx I imr~ it was shipped to the walk-in sites. W identi-
                                fied several instanc,cs: where the elapsed t imt> was even greater than 2
                                uccks.




                                Page 21                                      GAO GGGD-90-34   Distribution   of Tax Materials
                            Chapter 2
                            Tax Materials  Not Always Available    at All
                            Walk-In Sites, Especially Early in the
                            Filing Season




                            Although the practice of accumulating items for shipment may be prac-
                            tical before the beginning of the filing season, it delays the availability
                            of tax materials once the filing season begins. If the distribution centers
                            had made their initial shipments to the sites as quickly as they try to fill
                            walk-in site reorders (within 48 hours of receipt of the reorder), fewer
                            items would have been missing at the walk-in sites. For example, a site
                            we visited in late ,January had not yet received an initial shipment of 12
                            it,ems that we were checking for. The distribution center had those 12
                            items available from 7 to 36 days before shipping them to the site-an
                            average of about 13 days. For example, Publication 521 (Moving
                            Expenses) was not shipped to the site until February 1, 1989, even
                            though it was available at the distribution center on December 27, 1988.


Required Stock Items Were   IJsing an ordering list that has preprinted on it many of the items availa-
                            ble for stocking by walk-in sites, each site, before the filing season
Not Always Included in      begins, identifies the number and type of items it wants to stock. During
Initial
* r.. Shipments to Walk-    the last quarter of calendar year 1988 and into the 1989 filing season,
In sites                    distribution centers sent each site an initial shipment of the items that
                            the site indicated it wanted to stock.

                            Some of the 79 required items were not available at some of the walk-in
                            sites we visited because they were not part of the initial shipments made
                            to the sites. This occurred, in part, because 9 of the 79 required items
                            were not included on the preprinted ordering list that sites used to indi-
                            cate which items they wanted to stock. 1RS National Office officials
                            explained that the ordering list did not include the nine items because it
                            was developed before the list of required items was finalized. Once the
                            latter list was finalized and sent to the field, it was up to each site to
                            make sure it had ordered supplies of all 79 items and to submit another
                            order, if necessary. Several sites, however, did not order supplies of all
                            79 items, including items that were on the preprinted ordering list. Of
                            the 60 sites we visited, 37 did not order one or more of the 70 required
                            items that were included on the ordering list. The number of required
                            items not. ordered for initial stocking by those sites ranged from 1 to 38,
                            with an average of 6

                             In explaining why SC)mc sites did not order required items even though
                             the items were included on the ordering list, a National Office official
                             said that a change> in procedure may have caused some confusion. In the
                             past, sites were sent ;I list of recommended items to stock, which varied
                             by size of office, with no requirement that a site stock all the recom-
                             mended items. In 19-)x!). however, all sites were required to stock the


                             Page 22                                        GAO/GGD-9034   Distribution   of Tax Materials
                           chapter   2
                           Tax Materials   Not Alwavs Available    at Au
                           Walk-h   Sites, Especially Early in the
                           Filing season




                           same 79 items. National Office officials agreed that a good way to avoid
                           confusion in the future and ensure that required items are available at
                           all walk-in sites would be to automatically ship a supply of each
                           required item to each site.


Poor Inventory             Once sites received their initial supply of tax materials, they were
                           responsible for monitoring inventory and ordering new stock. IKS devel-
Management May Have        oped procedures and training to help walk-in site personnel carry out
Contributed to Items Not   this responsibility.
Being Available
                           IKS developed an inventory management manual and organized training
                           to cover material cont,ained in the manual. The purpose of the training
                           was to instruct IRS personnel at walk-in sites on reordering procedures
                           and inventory management techniques. An important part of the man-
                           ual was a section on when to reorder materials and how to identify
                           reorder points. This section was intended to ensure that walk-in sites did
                           not run out of an item before a new supply was received.

                           At 34 of the 60 walk-in sites we visited, staff in charge of having a suffi-
                           cient supply of tax material available had not received the inventory
                           management training. Site personnel said that they did not attend train-
                           ing because (1) they were unaware training was available, (2) they were
                           hired after training was offered, (3) their office did not have enough
                           money to send them to the training, or (4) they were too busy to attend
                           the training. IRS’ national survey of walk-in site personnel after the filing
                           season confirmed our results. It showed that 211 of 467 respondents (45
                           percent) had not, received training.

                            Site personnel, whether trained or not, did not always follow reordering
                            procedures. IRSprovides guidance to site personnel for determining
                            when to reorder tax materials. The objective of specifying reorder
                            points is to ensure that a new supply of materials arrives before availa-
                            ble stock runs out. Of the 60 sites we visited, however, 33 had at least
                            one item that was at or below a reorder point and had not been reor-
                            dered. Of the 33 sit es, 12 had 5 or more items that were at or below the
                            reorder point and had not been reordered.


                            Our visits to IRS’walk-in sit,es showed that the availability of tax materi-
Conclusions                 als improved as the filing season progressed. That is of little comfort,
                            however, to the taxfjaycr who wants to file early-as        IRS encourages.
                            Some of the reasons for missing material, such as late legislation, may be


                            Page 23                                        GAO/G4XHO-34   Distribution   of Tax Materials
                            Chapter 2
                            Tax Materials  Not Always Available    at AU
                            Walk-In Sites, Especially Early in the
                            Filing Season




                            outside of IRS’ control. However, other reasons, such as delays in ship-
                            ping materials from distribution centers to sites, the confusion over
                            what items sites are required to stock, and the failure of some sites to
                            follow inventory management procedures, are correctable.


                            We recommend          that IKS
Recommendations    to
the Commissioner   of   . make initial shipments of t,ax materials to walk-in sites within 48 hours
Internal Revenue          ,)f their receipt at, the distribution centers,
                        a automatically include, itI1 required tax items in the initial shipments to
                          each walk-in site. and
                        . train all walk-in site personnel responsible for tax material inventories
                          in reordering procedures and inventory management techniques and
                          monitor walk-in site operations to make sure the procedures and tech-
                          niques are implemented.


                            In commenting on a draft of this report (see app. II), the Commissioner
Agency Comments and         of Internal Revenue expressed agreement with our recommendations
Our Evaluation              and noted several steps that would be taken to help ensure a successful
                            1990 filing season. In rt>sponse to our first recommendation, he said that
                            the distribution centers in *January 1990 would begin making weekly
                            consolidated shipmcnls to walk-in sites of all tax materials received that
                            week, with more immt>tliatt> shipment,s-within     48 hours-if   circum-
                            stances warrant. He explained that IRS has neither the staff nor the
                            transportation   budget to implement a standard 4%hour turnaround as
                            we recommended. WC recognize II& fiscal situation and believe that the
                            proposed act,ions mcac? hcs intent of our recommendation. Weekly ship-
                            ments. supplement(a11 with more immediatca shipments to meet urgent
                            needs, should improvr, thtl overall availability of’tax materials at walk-
                            in sites.

                             The Commissioner sa~ti also that ( 1 ) required items, of which there will
                             be 87 in 1990, will t)r’ %hipped automatically to each walk-in site; (2)
                             revised training mai.c~r~als were dist,ribut.ed to field offices in October
                             1989; and (3) rcgion;~l ,.,fficcs were asked to ensure that all appropriate
                             walk-in personnel alra I rained and that rcqllired procedures are being
                             followed.




                             Page 24                                       GAO/GGD90-34   Distribution   of Tax Materials
Chapter 3                                                                                                        -

Distribution Centers Could Do a Better Job of
F’illing Mail and Telephone Orders

                      Taxpayers may also obtain tax materials by placing mail and phone
                      orders directly with IKS distribution centers. IRS’goal is to fill all orders
                      completely and within 10 workdays. If an ordered item is not available,
                      IRS procedures  require that an explanation be provided so the taxpayer
                      will know that the order was received and when or if to expect the
                      ordered item.

                      As of May 3 1, 1989, we had received about 80 percent of the items we
                      ordered through the mail and over the phone. About 71 percent of the
                      items we received were received within 10 workdays. In only about 25
                      percent of the cases in which we did not receive an item did the distribu-
                      tion center provide the required explanation as to why. Follow-up with
                      the centers indicated that most items we did not receive were probably
                      available at the centers when we ordered them.

                      IRS officials gave three reasons for the problems we experienced:
                      processing errors at the distribution centers, orders lost in the mail or at
                      the centers, and the additional handling required to fill our orders. IRS
                      officials said that our orders increased the risk of processing errors
                      because they were larger and contained some items that were not fre-
                      quently requested. This might explain why distribution center quality
                      reviews did not detect problems to the same extent we did. Nonetheless,
                      IRS distribution center officials said that we should have received the
                      ordered items or explanations why the items were missing. They said
                      that our results had identified weaknesses that they plan to correct
                      through increased training and supervision and restructured quality
                      reviews.


                      Taxpayers may request Lax materials from IRS’ three distribution                cen-
Distribution Center   ters by calling a toll-rree telephone number or by mail.
Procedures for
Processing Orders     At the Central and Western Centers, mail and telephone orders were
                      processed in mucxh t hc same way during 1989. Operators rec.orded tele-
                      phone orders on order forms that were then sent to a receipt unit, which
                      was also responsible for opening mail orders. The receipt unit (1) sorted
                      orders according to t hc items requested so that the orders would go to
                      the appropriate proc essing line; (2) determined whether the items
                      ordered were availahlr by comparing items requested with a list of items
                      not, available at 11r1xcent cr; (3) researched items they could not initially
                      identify and dct(‘rmlntXd whether requested items were available for
                      public distribution. ;tntl (4) prepared not ices t,o explain that an item
                      needed to be backorllcrt~d or was not available to t axpaycrs because, for


                      Paye 25                                  GAO/GGD-90-34   Distribution   of Tax Materials
Chapter 3
Distribution  Centers Could Do a Better   Job of
Filling Mail and Telephone  Orders




example, the item was obsolete or was only available for IRS’ internal
use. The receipt unit then sent sorted orders to the order fulfillment
unit.

The order fulfillment unit contains several processing lines. Depending
on the number of different items ordered and their type, an order might
be handled by only one person on one line or by several persons on sev-
eral different lines. The person on the line either pulls the ordered item
from stock and puts it in an envelope or notes on the order form that the
item is not available. If an ordered item is not available, the order fulfill-
ment unit prepares the appropriate notice and inserts it in the envelope,
which is eventually sent t.o the taxpayer.

Among the notices that taxpayers might receive is one that tells them
that an out-of-stock item has been backordered and will be mailed once
the center receives a new supply. Those notices can be prepared by the
receipt unit, which works from a list of out-of-stock items, or the order
fulfillment unit, which might identify an out-of-stock item when it
attempts to fill an order.

 At the Eastern Center, mail orders were generally handled as discussed
 above. Telephone orders were processed a little differently, however,
 because Eastern used an automated phone order system that allowed
 operators to enter phone orders into a computer. The system (1) checked
 ordered items for availability, which allowed the operator to tell the
 requester that an item was not available and the reason why; (2) auto-
 matically generated a backorder notice when an item was not available;
 and (3) generated an order for processing. The orders were sorted and
 sent to the order fulfillment unit at which point the process was the
 same as at the other centers.

 IRS had intended to use the automated phone system at all three centers
 during the 1989 filing season. After realizing the system could not han-
 dle the work load, however, IRS decided in late December to limit the
 system’s use to Eastern. IRS officials said they have increased the sys-
 tem’s efficiency and capacity through software and hardware modifica-
 tions and expect to have the system fully operational at all three centers
 by January 1990.




 Page 26                                           GAO/GGD-9034   Distribution   of Tax Materials
                    Chapter 3
                    Distribution  Centers Could   Do a Better   Job of
                    Filling Mail and Telephone    Orders




                    We placed 223 mail and telephone orders to the three distribution cen-
GAO’s Orders Were   ters between January 23 and April 14, 1989. Those orders involved a
Not Always Filled   total of 2,206 items. which we randomly selected from a list of tax mate-
Completely          rials that an IRS National Office official said would be stocked at the
                    centers and available to taxpayers.

                    Because the items were randomly selected, they included not only items
                    that might be ordered by many taxpayers but also items that might be
                    ordered by only a few taxpayers. For example, our orders included such
                    frequently used items as Form 1040, the basic individual income tax
                    form, and Publication 501, which provides information on exemptions
                    and the standard deduction, and such less frequently used items as
                    Form 6478, which is filed to claim a credit for using alcohol as a fuel,
                    and Publication 908. which provides information on bankruptcy.

                    Our primary intent in placing the mail and phone orders was to detcr-
                    mine to what extent the center either (1) sent us the item we ordered or
                    (2) sent us an explanation, such as “item obsolete,” as to why we would
                    not receive the item. If, by May 31, 1989, we had received neither the
                    item nor an explanation, we considered the order incomplete.’ If we
                    received a backorder notice or some other explanation for a missing item
                    that indicated we would eventually receive the item, WC considered the
                    order complete only if WC received the item by May 3 1.

                    IJsing those criteria, we considered only 84 (38 percent) of our 223
                    orders to be complete. The 139 incomplete orders included 15 for which
                    we received nothing. Most of the 139 incomplete orders, however, were
                    complete except for 1 or 2 items. As a result, although only 38 percent
                    of our 223 orders were complete, we received 80 percent of the 2,206
                    items we ordered.

                    For most items we did not receive, we also received no explanation as to
                    why. Even when we received an explanation, it was not always accu-
                    rate. Follow-up with the centers indicated that (1) many of the items we
                    did not receive shor~ld have been at the centers when we ordered them
                    and (2) our failure to rcccive them was apparently occasioned by
                    processing errors




                     Page 27                                             GAO, WXNO-34   Distribution   of Tax Materials
                             Chapter 3
                             Distribution  Centers Could Do a Better   Job of
                             FiIling Mail and Telephone  ON&S




Explanations Often Not       As noted above, many of our orders were considered incomplete because
                             we did not receive an item and were not given an explanation. There are
Provided for Missing Items   several reasons why items ordered by taxpayers might not be available
                             at the distribution center. For example, the center may have depleted its
                             stock and may be awaiting a shipment from the printer, the item may be
                             something that the center does not have (like an obsolete form), or the
                             item may be something that is not available to the general public.

                             When an item is not available, IRS procedures call for the requester to be
                             provided an explanation. This explanation lets the requester know that
                             IRS received the order and tells the requester why the ordered item is not
                             available. Without this information, the requester does not know
                             whether to look for this item elsewhere, wait for IRS to ship it, or reorder
                             the item.

                             Our 223 mail and phone orders included a total of 2,206 items. Of those,
                             we did not receive 440 (20 percent). We analyzed the missing items to
                             see to what extent the distribution centers provided explanations. We
                             excluded from that analysis the 15 orders for which we received nothing
                             because IRS may never have received those orders or may have lost them
                             before it had a chance to prepare an explanation. Those orders
                             accounted for 150 of the 440 missing items. The other 290 missing items
                             were in orders that we know IRS received and processed because we
                             received something back from IRS. IRS did not provide an explanation for
                             176 (61 percent) of those 290 items.

                              We learned later that many of the missing items for which we had not
                              received an explanation may have been in stock at the centers when we
                              ordered them. Officials at two centers examined their inventory records
                              on 145 items that were missing from orders placed at those centers.
                              They determined that. 110 (76 percent) of those items should have been
                              available at the time of our orders. According to the officials, the other
                              35 would not have been available because they were, among other
                              things, obsolete, intended for IRS internal use only, or not yet printed.”

                              Officials at the distribution centers and IRS’ National Office agreed that
                              the centers need to do a better job of providing taxpayers with an expla-
                              nation when an item is not available. They indicated that full implemen-
                              tation of the automated phone system should help matters because the


                              “Our orders included those kmds of items because IRS did not exclude them when it identified    for us
                              those items that would be stocked at the centers and available to taxpayers.




                              Page 29                                             GAO/GGIH4%34      Distribution   of Tax Materials
                                                  Chapter 3
                                                  Distribution    Centers Could   Do a Better   Job of
                                                  Pilling Mail   and Telephone    Orders




                                                   system automatically            generates a backorder         notice if an item is not
                                                   available.


Explanations            Not Always                 Even when the distribution center explained why an item was missing
                                                   from our order, the explanation was not always accurate. As shown in
Accurate                                           table 3.1, IRS provided explanations for 114 of the ordered items we did
                                                   not receive.
                                             -
Table 3.1: Center Provided    Explanations
for Nonreceipt   of Requested   Items              Explanations    Provided                                                   Number                  Percent
                                                   Backordered--to    be shipped when available                                          37                     32
                                                   Obsolete                                                                              21                     18
                                                   Not prlnted as of date request recewed                                                17                     15
                                                   IRS could not ldentlfy reqlJested items                                               17                     15
                                                   Forwarded to another location to be fllled                                             10                     9
                                                   IRS Internal use only                                                                   a                     7
                                                   Other                                                                                   4                     4
                                                   Totals                                                                               114                 100


                                                   Officials at two distribution centers examined explanations provided by
                                                   their centers and furnished information that showed that several were
                                                   incorrect. Some examples follow:

                                                 - Of 26 backordered items reviewed at the two centers, 7 were available
                                                   at the centers at the time of our order and should have been shipped
                                                   instead of backordered, 7 were received by the centers in time to be
                                                   shipped to and received by us before May 31 but were not, 7 were not
                                                   available for shipment. 3 were not stocked by the center and the request
                                                   should have been t’orwarded to another location for filling, and 2 were
                                                   IRS internal use items t,hat would not be shipped to the public.
                                                 - Of 14 items reported as obsolete, 2 were active items of which 1 was
                                                   available when our order was placed. The other 12 were obsolete.
                                                 - Of the 17 items that the distribution centers reported as not identifiable,
                                                    which would lead rclquesters to believe that they had ordered something
                                                   that did not exist,, IO were identified upon further review. Of the 10
                                                    identified items, 6 llad not been received from the printer at the time of
                                                    our order, 3 were not generally available for public use, and 1 should
                                                    have been availablfs at the time of our order.




                                                    Page 29                                              GAO/GGD-99.34   Distribution          of Tax Materials
                                          Chapter 3
                                          Distribution  Centers Could Do a Better   Job of
                                          Filling Mail and Telephone  Orders




Prnreccino         T?rrn~    Cited   as   Besides the need for distribution center personnel to do a better job of
                                          providing explanations, center officials pointed to other processing
~~~SUILS     IUL     lltctimplete         errors that could account for our incomplete orders. Errors they identi-
Orders                                    fied included (1) picking the wrong item for shipment, (2) treating an
                                          incomplete order as completed, (3)entering the wrong item number
                                          when filling out an order blank for a written order, and (4) not thor-
                                          oughly researching a requested item before deciding it was not availa-
                                          ble. They said that several factors could account for those instances
                                          where entire orders were missing. The possibilities included nonreceipt
                                          of the order by the center, loss of the order at the center, and loss of the
                                          order after it left the center. Officials at the center using the automated
                                          telephone system said that they lost some orders when their telephone
                                          operators inadvertently    hit a computer terminal key, thereby erasing
                                          the order-a    situation they intend to correct through training.

                                          Center officials said that order processing personnel were generally low-
                                          paid employees hired on a temporary basis, often for a short period
                                          when the demand for tax materials was high. Many of those employees
                                           received limited training other than that obtained in actually doing the
                                          job. Center officials said that additional training and closer supervision
                                           would be provided in the future.

                                           National Office officials said that center performance in filling orders
                                           will improve if the automated phone order system is successfully imple-
                                           mented at all three centers. Although successful implementation       should
                                           improve the telephone order taking process and the generation of back-
                                           order notices, it will have no effect on errors associated with filling
                                           those orders, such as pulling the wrong item from stock, or errors associ-
                                           ated with mail orders.


                                           We also assessed the speed with which distribution centers responded to
Most Items Were                            our orders. IRS tells taxpayers to expect delivery of their orders within
Received in a Timely                       10 workdays. Of t,he 1,766 items we received, 71 percent were received
Manner                                     within 10 workdays and 92 percent within 15 workdays. As might be
                                           expected, items ordered by mail took longer than items ordered by tele-
                                           phone. Figures 3.1, X2, and 3.3 show the range of workdays from the
                                           date of request until the date of receipt.




                                           Page 30                                           GAO/GGD90-34   Distribution   of Tax Materials
                                                 Chapter 3
                                                 Distribution     Centers Could Do a Better   Job of
                                                 Fi         Mail and Telephone  Orders




Figure
Range
         3.1: Percent
         of Workdays
                        of Items Received
                         - All Orders
                                            by


                                                                                                         4%
                                                                                                         11 to 15days




                                                                   r                                     16 to 20 days


                                                                       7                                 zr2Odays




                                                                                                L        10 days and under




                                                 Page 31                                               GAO/GGDW34        Distribution   of Tax Materials
                                                 Chapter 3
                                                 Distribution  Centers Could   Do a Better   Job of
                                                 Filling Mail and Telephone    Orders




Figure   3.2: Percent   of Items Received   by
Range    of Workdays     - Mail Orders
                                                                                                       7%
                                                                                                       16 to 20 days

                                                                                                       7%
                                                                                                       Over 20 days




                                                                                                        10 days and under




                                                            I                                           11 to15days




                                                  Page 32                                             GAO/C&D-go-34    Distribution   of Tax Materials
                                                  Chapter 3
                                                  Distribution    Centers Could Do a Better   Job of
                                                  Pilling Mail   and Telephone  Orders




Figure   3.3: Percent   of Items Received    by
Range    of Workdays     - Telephone  Orders




                                                                                                           10 days and under




                                                  2% of telephone    orders received in 16 to 20 days.


                                                  The distribution centers review filled orders before they leave the center
IRS’ Quality Review                               to measure performance quality and to identify processing problems. In
Results Differed From                             addit.ion, IRS’ National Office reviewed distribution center performance
GAO’s Results                                     during the 1989 filing swson. Each of those reviews showed better per-
                                                  formance in 1989 than did our results, except for timeliness, where
                                                  results were comparable

                                                  At each of the distribution centers, a quality assurance staff sampled
                                                  filled orders for such things as missing items; different quantities than
                                                  ordered by the taxpayer; and an incorrect item, package size, or label. In
                                                  contrast to the 38 percent accuracy rate for our orders (see p. 27), each
                                                  of the centers reported processing accuracy rates of over 90 percent
                                                  during the 1989 filing sc~ason.

                                                  Center officials said that their results probably differed from ours
                                                  because most of the orders they receive, and thus the bulk of the cen-
                                                  ters’ quality review samples, are for one or two items relating to individ-
                                                  ual tax returns. Such ordt-rs are normally filled with little difficulty. In
                                                  contrast, they said thar olu- larger orders of items randomly selected
                                                  from all items available t’or distribution would present greater opportu-
                                                  nity for error (because thc‘y might require more handling or involve


                                                  Page 33                                                GAO/GGD-90-34   Distribution   of Tax Materials
Chapter 3
Distribution  Centers Could Do a Better   Job of
Filling Mail and Telephone  Orders




items that more likely require research) while having less chance of
being selected for quality review.

Because a center’s quality reviews involve samples of the center’s over-
all work load, the results may mask problems with certain types of
orders. One of the areas we discussed with distribution center officials
was the possibility of doing separate quality reviews of orders like ours,
where the risk of error seems greatest. They said that they expect to
change their quality reviews before the 1990 filing season to better mea-
sure performance in filling all types of orders.

There are other reasons, unrelated to the nature of our orders, why our
results might differ from the distribution centers’ results. The centers,
for example, would consider an order complete if a missing item were
covered by a backorder notice. We would not consider the order com-
plete until the backordered item was received. Our orders included 37
items for which we had received a backorder notice but had not received
the backordered item by May 3 1, 1989.

A separate study by IKS’National Office showed that 81 percent of its
test orders were filled completely, compared with our rate of 38 percent.
IRS considered an ordc,r complete if it received the correct item or if a
backorder notice or information notice were included. In the National
Office study, 30 IRS employees in 30 different states placed a total of
5,100 orders from January 9 to March 17, 1989. The number of items
ordered ranged from 1 to 58 but usually included 3 to 8 items per order.
The ordered items were judgmentally selected, with each participant
placing the same order on a given day. Alt,hough 5,100 orders were
placed, IRS decided to stop its study after analyzing 3,071 of those orders
because of time and resource constraints.

In discussing the National Office study, IRS officials said that (1) they,
unlike us, accepted, as a valid explanation for a missing item, an infor-
mal slip of paper stating that an item had been backordered but not
identifying which item; (2) they, like the distribution centers, considered
an order complete if a backorder notice were included, whereas we did
not consider the order complete until the backordered item had been
received; (3) their analysis, unlike ours, included only orders for which
they had received something-15       (or about 11 percent) of the 139
orders we considered incomplete were orders for which we had received
nothing; and (4) distribution center personnel sometimes knew which
orders were test orders. Those circumstances may account for some oi
the difference betwcfxn IRS’results and ours.


 Page 34                                           GAO/GGD-YO-34   Distribution   of Tax Materials
                      Chapter 3
                      Distribution    Centers Could   Do B Batter   Job of
                      Filling Mall   and Telephone    Orders




                      Taxpayers requesting materials from IRS’S distribution centers should
Conclusions           expect to receive the materials in a timely manner or receive an expla-
                      nation if, for some reason, an item is not available. On the basis of IRS’
                      responses to our orders, that does not always happen.

                      It was not completely clear why distribution centers had problems filling
                      many of our mail and telephone orders. Some of the reasons could rest
                      outside IRS. For example, we cannot be sure that some of our orders or
                      IRS’ shipments were not lost in transit. Other reasons obviously   rest with
                      IRS and seem to involve mistakes in filling orders or failures to provide
                      required explanations.

                      Although some error can be expected in an order processing operation,
                      there should always be efforts to minimize errors through a quality
                      review process that pinpoints problem areas. In that respect, the fact
                      that our orders were apparently larger and more diverse than the typi-
                      cal order received by the distribution centers served to point to prob-
                      lems that were not being disclosed through the centers’ quality reviews.
                      Our orders apparently required handling by more people at the centers
                      and were more likely to involve items that required explanations
                      because they were out of stock or not available to the public. We believe
                      that the centers need to have a better basis for assessing their perform-
                      ance in handling those kinds of orders so that taxpayers who make such
                      orders can be as assulcd of good service as taxpayers who order one or
                      two common items. That can be accomplished, in our opinion, by doing
                      separate quality reviews of less typical cases-those where the risk of
                      error seems greatest. That will help management identify areas that
                      require closer supervision, additional training, or other corrective
                       action.

                                                                                                                              -
                       We recommend that IKS supplement the distribution centers’ quality
Recommendation to      reviews to specifically assess performance on orders in which errors are
the Commissioner of    most likely to occur.
Internal Revenue

                       The Commissioner of Internal Revenue, in commenting on a draft of this
Agency Comments and    report (see app. II), agrt>ed with our recommendation and said that dis-
Our Evaluation         tribution center workl)lans call for more quality reviews during the fil-
                       ing season and that sampling of telephone order taking and processing
                       lines will be increased tc) pinpoint specific problems. He said also that IRS



                       Page 36                                               GAO/GGD90-34   Distribution   of Tax Materials
                              -
Chapter 3
Distribution     Centers Could Do a Better   Job of
Fillii     Mail and Telephone  Orders




would emphasize to the distribution centers the importance of monitor-
ing infrequently ordered items where the risk of error is greatest.




 Page 36                                              GAO/GGD9034   Distribution   of Tax Materials
Page 37   GAO/GGD90-34   Distribution   of Tax Materials
Appendix       I

Listing of Tax Items Required to Be Stocked at
Walk-In Sites and Number of Times Each Item
Was Missing During 96 GAO Visits

                                                                                                                                                         Number of
                                                                                                                                                              times
Item                                        Title                                                                                                          missing
                                                                                          --
w-2                                         Wage and Tax Statement                                                                                                  3
                   -__          __~~   ~-                                                          -.--__
InstructIon                                 Instruct\ons for W-2 and W-2P
   w-2                                                                                                                                                               2
w-3                                         Transmittal of Income and Tax Statement              -__                                                                 2
w-4                                         Employee’s WIthholdIng Allowance       Certificate                                                                       2
                                                                           ~_    ~..____             ____~
940                                         Employer’s Annual     Federal Unemployment       Tax  Return                                                             2
                                                            --.__           ~-
941                                         Employe?s Quarterly Federal Tax Return                                                                                   9
942                                         Employer’s Quarterly Tax Return For Household
                                                                                        ~.-~-.     Employees                                              __.-      IO
1040                                        U S lndlvldual Income Tax Return                                                                                         0
InstructIon                                 Instructions for Form 1040
    Form 1040                                                                                                                                                            0
1040SchA/B                                  ltemlzed Deductions/    Interest and Dlvldend Income                                                                         1
1040 Sch C                                  Proflt or (Loss) from Business or Profession (Sole Proprietorshlp)                                                           d
                                                                            ~~ ~-
1040 Sch D                                  Capital Gains and Losses and Reconclllation     of Form 1099-B                                                               0
 1040 Sch E                                 Supplemental     Income SchedLile                                                                            ___             0
 1040 Sch F                                 Farm Income and Expenses                                                                                                     1
                                                                                                                                                         __-
 1040 Sch R                                 Credit for the Elderly or for the aermanently and Totally Disabled                                                            1
 InstructIon                                 lnstructlons for Form 1040 Scht?d>le R
    1040 Sch R                                                                                                                                                           L‘I
 1040SchSE               ~---               Computation     of Social Security Self~fmployment                 Tax                                                        1
 1040 A                                     U !i lndlvldual Income Tax Returrl                                                                                            n
                                                                                               -            -__-         __-__-
 1040 EZ                                    Income Tax Return for Stngle Fslers with No Dependents                       _    _.-.--                                      0
 Instructions                               lnz,tructibns for Forms 1040 A ar~~i 1040 EZ
     1040 A/EZ                                                                                                                                                            0
                                                                                                                                                         ____
  1040 ES                                    Estimated      Tax for In&duals                                                                                              2
  1040 x                                     Amended        U Slndlvldual    Income Tax Return                                                                            1
 InstructIon                                 Instructions    for Form1040    X
     1040 x                                                                                                                                                               0
 1096                                        Annual Summary and TransmIttat         of US. Information Returns                                                            4
                                                                                                                                                         ...___-
 InstructIon                                 InstructIons for Form 599 Serle:        1098. 5498, 1096, and W2r-‘-
     1099                                                                                                                                                ~_--             7
 i 099~MISC                                  Statements for Reclplents of Miscellaneous _ Income
                                                                                            ~~---_______-~~-                                                              6
 2106                                        Employee Business Expenses             ~~ ~~ ~______._____                                                                   1
 InstructIon                                 ln&u&ns    for Form 2106
     Form 2106                                                                                                                                                             1
                                                                                                                              ___-
 2119         ~~                             Sale or Exchange of Princrpal Restdence                                                                                      0
  2210                                       Underpayment     of Estimated Tar by lndlvlduals                                                                            14
  Instruction                                InstructIons for Form 2210
     2210                                                                                                                                                                IO.-
  244 1                                      Credit for Child and Deoendent Care Exoenses                                                                                  0
  3468~-                                     Computation    of Investment Crerjlt                                                                                          4
                                                                                                                                                        -____
                                                                                                                                                           (continued)



                                                    Page 98                                                          GAO/GGD4@34       Distribution   of Tax Materials
                          Appendix    I
                          Listing of Tax Items Required to Be Stocked
                          at Walk-111 Sites and Number of Times Each
                          Item Was Missing During 96 GAO Visits




                                                                                                                            Number of
                                                                                                                                 times
Item                Title                                                                                                     missing
Instructron         lnstructrons    for Form 3468
   Form 3468                                                                                                                              3
                                                                                                           __-
3903                Movrng Expense Adlustment                                                                                             2
lnstructlon         lnstructrons for Form 3903
   Form 3903                                                                                                                              2
4506                Request for Copy of Tax Return or lndivrdual         Tax Account   lnformatton
4562                Deprecratron and Amortrzatron
Instructron         lnstructrons for Form 4562
   Form 4562
                                                                                                                                ---
4684                Casualttes and Thefts                                                                                                 2
Instructron         lnstructrons for Form 4684
   Form 4684                                                                                                                              2
                                                                                                 __-
4797                Supplementafschedule     of Gains and Loss&-           -~-~~--~-                                                      1
Instructron         Instructtons for Form 4797
   4797                                                                                                                                   n
4868                Appkatron      for Automatrc    Extensw   of Time to Frle U.S. lndrvidual      Income Tax
                      Return                                                                                                              7
6251                Alternatrve Mrnrmum Tax Computatron             ~-                                                                    3
Instructron         Instructrons for Form 6251
   Form 6251                                                                                                                              9
8283                Noncash Chantable Contrrbutrons                                                                                       8
Instructron         lnstructrons for Form 8283
   Form 8283                                                                                                                             15
8582                Passive Actrwty Loss Lrmttatrons                                                                                      8
Instructron         lnstructrons for Form 8582
   Form 8582                                                                                                                             15
8606                Nondeductrble IRA Contrrbutrons, IRS Basrs and Nontaxable IRA Drstributrons
8615                Computatron of Tax for Chrldren Under Age 14 Who Have Investment Income of
                      More Than $1,000
Publrcatron   15    Crrcular E Emplover‘s Tax Gurde
Publrcatron   17    Your Federal IncomeTax                                                                                             4
Pubkatron     334   Tax Gurde for Small Business                                                                                       6
Publrcatron   463   Travel Entertarnment,    and Grft Taxes                                                                            6
Publtcatron   505   Tax Wrihholdlng   and Estrmated Tax                                                                               11
Publrcatron   521   Moving Expenses                                                                                                    8
Publrcatron   523   Tax lnformatron on Sellrng or Buytng Your Home -~~~--------~~~                                               ~-.~~ 2
Publrcatlon   524   Credit for The Elderly                                                                                             3
Publrcatron   526   Charrtable Contrlbutrons                                                                                           1
Publrcatron   527   Rental Property                                                                                                    5
Publrcatron   529   Mtscellaneous   Deductrons                                                                                         5
Publrcatron   530   Tax lnformatron for Homes. Condomrnums,     and Cooperatwe Apartments                                              5
Pubkatton     533   SelVtmployment     Tax                                                                                             2
Publrcatlon   534   Deprecratron                                                                                                       7
                                                                                                                           (continued)



                          Pagr JY                                                 GAO/GGB90.34         Distribution   of Tax Materials
                               Appendix     I
                               Listing of   Tax Items Required to Be Stocked
                               at Walk-In     Sites and Number of Times Each
                               Item Was     Missing During 96 GAO Visits




                                                                                                                         Number of
                                                                                                                              times
                          Title                                                                                            missing
Publlcatlon   535         Business Expenses                                                                                           9
Publlcatlon   545         lnt&est Expense                                                                                             6
Publication   553         Hlghllghts of 1988 Tax Changes                                                                           20
Publlcatlon   575 -       Pension and Annutty Income                                                                               20
Publication   590         Ta&formatlon     on lndlwdual Retirement    Arrangements                                                 18
Publlcatlon   910     -   Guide to Free Tax Services                                                                               IO
Publication   916         Information Returns                                                                                         9
Publlcatlon   917         Business Use of a Car                                                                                    13
Publlcatlon   919         Is My WithholdIng Correct?                                                                               11
Publlcatlon   929         Tax Rules for Children and Dependents                                                                    39
Publication   934         Supplemental    Medlcare Preml\lm                                 ~~    ~                .-~     ~~~~ 22  -
Publlcatlon   935         Some Facts About the%upplementa~~~~carePr&m~             ~.~-                                            84
Publlcatlon               InformatIon and Order Blank for Preparers of Federal Income Tax Returns
   1045                                                                                                                             25
Total                                                                                                                             533




                                Page 40                                              GAO/GGD-9034   Distribution    of Tax Materials
Appendix   II

Comments From the Internal Revenue Service




                                                        C’EPARTMENT    OF THE TREASlJRY
                                                           ‘NTERNAL   REVENUC bER‘.‘iCE
                                                              WAS~,NGTOlrl, 0 c 211271




                "Ir . Richard       L. Fogel
                Assistant        Comptroller                   General
                United      States     General                 Accountinq              Office
                Washington,        DC        20548

                Dear      “Ir.     Fo~el:

                         ‘de have     reviewed          your      recent      draft         report      entitled      “TAX
                Administration:                IV       Needs       to Improve           Distribution            oE Tax
                tiaterials        to the       Pub1 ic”         and believe            that        it represents        a
                thorough        evaluation            of the        forms     distribution              process.        we are
                 in agreement           witi-     its     findings        and recommendations                    and
                corrective          .actions        have      already       been       taken.

                          IRS recognizes                  the      importance              of making          its      forms,
                schedules,               instruct          ion% and puhl ications                       readily          available             to
                taxpayers              as early           as possible.                   To help        ensure         a successful
                 1990      filing          season,           we have         taken         several        steps        to improve              the
                distribution                 p-cocesr;,         including             xaking         more     tiinely
                distributions                   tn 1Rq walk-in                 sites         and automatically                    including
                all      required            tax      itelns       in the        initial           shipment          to these           sites.
                ‘Je \ave          improved           our      forms       flanageaent              and ordering              training             for
                tialk-in          site       personnel            t.dho are        responsible              for      maintaining               the
                 tax     material             inventories             and re will                also     substantially
                 increase           quality          rzvieus          at our          distribution               centers         during          the
                 (upcoming          filing         se15on.

                       Addit        ional        information              on     the     actions          we have           taken        is
                clclosed.

                        Yest       reRards,

                                                                                         Sincerely,




                Page 41                                                                    GAO,&GD-90-34             Distribution        of Tax Materials
         Appendix        II
         Comments          From    the Internal        Revenue         Service




-

                                  IRS CDMMLNTS   ON RECOMMENDATlONS
                             CONTAINED   IN GAO DRAFT REPORT ENTITLED
            “TAX        ADMINISTRATION.      IRS NEEDS TO IMPROVE   DISTRIBUTION
                                 OF T4>. MATERIALS   TO THE PUBLIC”


    Recommendation:

                Make     initial              shlpmvnts           of      pax materials               to walk-in               sites
                within        48      hours        of their             receipt    at the             distribution
                centers.

    Comment         :

                 The problems                 encountered                last       filing          season        do call        for
    corrective              action.             In J,lnuary,               the      distribution                centers        will
    beqin        making         weekly          cnns<)lidated                 shipments             to the walk-in
    siies        of all         items         received            that        week.           If ,i situation              arises
    where        an urgently                needed         item        is received                late,       we will        ask
    the     distribution                 cen~crs           to deviate               from        the     consolidation
    plan      and       immediately               rhio        that       single           item      to walk-in           sites
     (i.e.       within         48 hour?).                 1n order             to standardize                  a 48 hour
    turnaround              time          it wo~11~~ he necessary                           to package            and ship
    each       line       item       individu.31           ly.        Ye have            neither          the     staff
    resources            nor       transpi,rt.>t            ion     budget           to support              such     an
    operation.                we believe               rhnl.      our      revised            plan      will      be adequate
    to remzdy             the      problemi            $l<perienced               last        year.


    Recommendation

                 Automatically            in\,l.ldr       all             required           tax     items        in     the
                 initial       shipmenLc.           1.0 each              walk-in         site.

    comment:

                Last     year,      walk-jr>           sites     were   required        to maintain      79
    tax      items.        This     year.         hosed       on the    results       of our     field
    S!lr”f?yS,       we have         incre.iscd            Lhe number       of required        tax items                               to
    83.        For   the    upcoming           ‘-iling        season,     each   site     will
    automatically              receive           III     of these     items.


    Recommendation:

                   Train       all    walk-i1      site   personnel         responsible                           for    tax
                   Imaterial        inventories         in reordering          procedures                           and
                    inventory         management techniques               and monitor                           walk-in      site
                   operations            to malit, sure     the    procedures           and                   techniques
                   are      implementrd.




          Page 42                                                                     GAO/GGB9034               Distribution       of Tax Materials
     Appendix       II
     Comments            From the Internal             Revenue         Service




                                                                  -2-


Comment:
---
           Last    year       was the         i I -31 year         that    reference                       and    training
materials         were      developed           suec>Eically            Eor walk-in                        personnel.
We believe         this       represented             rg significant            step                  forward.          This
year      we have       undertaken            t.he following            efEorts                     to further
enhance       out    training          proi!r     urn

           A task       force        was c::wened           in July      1989                     to revise          and
           strengthen            the conte.~t         of the      Procedures                          on Ordering
           Forms      rrainine          rn,~texr ,il.      The task         force                     was made           up      of
           representatives                 frnrn both      National        Office                       and field
           taxpaver          service         awl puttlishing         activities.

           Revised              training            II,,‘,   rials        were   printed            and    distributed
           to field               offices           .:I      rroher        1989.

           The     training                 COUT’F        or          Taxpayer    Service        Representatives
           now     contains                 this   .*l,i.erisl            on forms      inventory        management
           .And    ordering.

           A memorandum           was CWTI lo all          Regional         Commissioners                                       on
           September          28,  1984  f      convey      the   list      of tax       items
           required         to he rna~n~      1nr1     and to provide             expectations
           nbouL     training        and  i*L;trict       oEfice       evaluations.

           A memorandum                  was semi      to all                    Assistant         Kegional
           Commissioners                    (DJL 3 I roc?ssing)                       and     (Resources
           Management)                  on Sept ,~ber       28,                  1989      to request         that       all
           appropriate                  walk-i   3 ers*>nnel                       receive       instruction.


Recommendal              ion:

           We recommend           that       I I!, supplement             the     distribution
           centers      quality          ~ev~i’nis        to specifically                assess
           performance          on ordiz          . i’lt:re    errors         are     [most likely       to
           occur     and help          idtv        iy Ihe need            for     additional       Lraining
           .ind 5upervision.



           Distribution               Ccnto,         3 ~rlxl~lans        cal 1 Eor substantially
increased           quality         review-,         :Jrirq        the     filing        season.           Sampling
of telephone              ordering           tahm-r:        .lnd processing              lines       will     be
increased           in order           Lo pin!l<linl            specific          problems.            Employees
responsible             for     errors         wi 11 ht, provided                 prompt        feedback        by
Lheir      supervisors.                 The rii?         Cbution           centers         will      also     be
conducting            Lraining           for     ih I’.arvisocs,           new employees               and
wasonal           recalls         which        $4: I      in< lude       promotion           of quality.

            1.4e w i 1 1 R 1 so em p h ,I c. ,’ I c the                            distribution            centers             the
 i,np?rtence         of monitorine           v rf,quently                              ordered       i terns where               the
 rish     of error       is grente-.




       Pa@? 43                                                                         GAO/GGB99.34          Distribution             of Tax Materials
Appendix    III

Major Contributors to This Report


                                 David J. Attianese,        Assistant Director, Tax Policy and Administration
General Government                 Issues
Division, Washington,
D.C.

                                 Robert     I. Lidman, Issue Area Manager
Cincinnati         Regional      Homer      N. Carrington. Evaluator-in-Charge
                                 Daniel     J. Meadows, Evaluator
                                 Marvin      E. Bonner. Evaluator


Dallas       Regional   Office   Larry P. Lannen,      EvillllalOr




                                 Tobie W. Davis, Evaluator
New York Regional
Office
                                                            -
                                 James E. Hampton, Evaluator
 San Francisco
 Regional Office




 (268369)                         Page 44                                      GAO/XI%9034   Distribution   of Tax Materials
: