IRS Customer Service: Management Strategy Shows Promise But Could Be Improved

Published by the Government Accountability Office on 1999-05-05.

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

                United States General Accounting Office

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

April 1999
                IRS CUSTOMER
                Management Strategy
                Shows Promise But
                Could Be Improved

GAO                United States
                   General Accounting Office
                   Washington, D.C. 20548

                   General Government Division


                   April 30, 1999

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

                   Dear Mr. Chairman:

                   As requested, this report discusses efforts to improve customer service at
                   the Internal Revenue Service (IRS)—a major concern at IRS and in
                   Congress. IRS has an ambitious agenda of initiatives to improve customer
                   service. This agenda came from provisions of the IRS Restructuring and
                   Reform Act of 1998 and other legislative mandates, recommendations of
                   an IRS Customer Service Task Force, and suggestions received from the
                   Commissioner’s discussions with IRS employees across the nation.
                   Collectively, the initiatives are intended to address concerns over the
                   quality of IRS’ customer service and change the way the agency treats

                   The Commissioner has noted that achieving customer service
                   improvements within the next year or two is a high priority. A key reason
                   is to show near-term progress and successes to taxpayers, employees, and
                   Congress, while they await the results of other longer term changes in
                   organization and information systems.

                   The objective for our examination of IRS’ customer service improvement
                   initiatives was to assess the strategy for managing the initiatives’
                   implementation, including whether IRS had developed information on the
                   initiatives’ expected costs and benefits, milestones and completion dates,
                   and performance measures to gauge results. To provide some perspective
                   on the type of work under way and progress being made, we also reviewed
                   25 selected individual initiatives and report our results in appendix II.

                   We requested comments on a draft of this report from the Commissioner
                   of Internal Revenue. We received written comments, which are reprinted
                   in appendix III.

                   IRS’ strategy for managing the implementation of its customer service
Results in Brief   initiatives shows promise but could be improved. IRS’ basic approach was

                       Public Law 105-206.

                   Page 1                                         GAO/GGD-99-88 Customer Service

to establish a central office, the Taxpayer Service and Treatment
Improvement Program (TSI), in Washington, D.C., and form a high-level
steering committee, chaired by the Commissioner, to oversee the
implementation of improvement initiatives that were being carried out by
many different IRS and Treasury offices. TSI and the steering committee
were established in January 1998. In its early months, TSI had problems
carrying out its responsibilities. Officials attributed most of the problems
to the large number of potential initiatives—more than 5,000—on the

By January 1999, TSI and the steering committee had taken steps to (1)
prioritize the initiatives, reducing the number to 157 primary initiatives; (2)
align these initiatives to IRS’ newly established strategic goals and
objectives; and (3) assign accountability for their completion to specific
executives. Also, TSI provided offices involved in day-to-day
implementation of individual initiatives with on-line access to the central
information database it had developed to categorize and monitor progress
on the initiatives.

IRS could further improve its customer service management strategy. By
January 1999, TSI had identified a need for information on milestones and
completion dates for each primary initiative and asked offices
implementing individual initiatives to input this information into its
database. However, TSI had not assessed the need for information on (1)
expected costs and benefits and (2) performance measures. Managers in a
few of the offices implementing initiatives we reviewed had documented
all these types of information on their own, but this information was not
being used by IRS’ leadership.

As our past reports have shown, not only do high-performing, results-
oriented organizations set priorities, align activities with mission-related
goals and objectives, and assign accountability, but they also develop and
use information to monitor progress and evaluate results. Information on
costs and benefits, milestones and completion dates, and performance
measures is critical to successfully managing for results. Although it can
be difficult to develop, this information provides agencies with tools they
can use to monitor and evaluate how efficiently and effectively programs
are achieving their purposes. It is also important to help determine

 Numerous reports by us in recent years have discussed the importance of strategic planning in federal
program management. A major report addressing these issues was Executive Guide: Effectively
Implementing the Government Performance and Results Act (GAO/GGD-96-118, June 1996).

Page 2                                                          GAO/GGD-99-88 Customer Service

             whether public resources have been used to achieve the purposes for
             which they were appropriated.

             We make recommendations at the end of this letter to the Commissioner
             of Internal Revenue for addressing certain issues identified during our

             In 1997 and 1998, the quality of service IRS provided to taxpayers was
Background   identified as a problem both in and outside IRS. The Vice President’s
             National Performance Review looked within and across federal agencies at
             how existing programs could operate more efficiently and effectively and
             what activities the government should be doing. After hearing from
             citizens, legislators, and others that IRS needed to improve in meeting the
             needs of taxpayers, NPR commissioned a Customer Service Task Force.
             The Task Force made more than 200 recommendations for customer
             service improvements. The Senate Finance Committee held hearings
             during which taxpayers, IRS employees, and others testified about
             instances of taxpayer abuse and mistreatment. At the same time, a new
             Commissioner received thousands of improvement suggestions from
             meetings held with employees across the nation.

             The Commissioner was also formulating long-term plans for restructuring
             IRS according to the functional groups of taxpayers it serves (e.g., wage
             earners, small businesses, and large corporations) in accordance with the
             IRS Restructuring and Reform Act of 1998. A major information systems
             modernization was under way, as were efforts to make IRS’ systems Year
             2000 compliant.

             To meet our reporting objective, we reviewed our prior work and IRS
             documents and interviewed cognizant officials about the overall strategy
             for managing the customer service improvement efforts and about
             activities related to the implementation of the selected individual
             initiatives. We requested comments on a draft of this report from the
             Commissioner of Internal Revenue. We received written comments, which
             are discussed near the end of this letter and reprinted in appendix III. We
             did our work primarily at IRS headquarters in Washington, D.C., between
             April 1998 and January 1999, in accordance with generally accepted
                 Reinventing Service at the IRS, IRS Publication 2197 (Mar. 1998).
                 Senate Report No. 105-174 (Committee on Finance).
              IRS systems, like many others in government and the private sector, use two-digit date fields. If
             unchanged, beginning January 1, 2000, they would interpret 2000 as 1900 and thus seriously jeopardize
             critical tax processing and collection operations.

             Page 3                                                              GAO/GGD-99-88 Customer Service

                         government auditing standards. (See app. I for more details on our scope
                         and methodology.)

                         IRS established a promising strategy for managing the implementation of
IRS Strategy for         the agency’s customer service initiatives. The development and use of
Managing Customer        management information on costs and benefits, milestones and completion
Service Improvements     dates, and performance measures would strengthen its management
Shows Promise But
Could Be Improved

A Program Office and     IRS’ basic management strategy was to establish a central office, TSI, in
                         January 1998 to manage the overall implementation of customer service
Steering Committee       improvements that were being carried out by many different IRS and
Managed Implementation   Treasury offices. The head of TSI was authorized to build a staff and create
                         a strategy for the coordinated review and implementation of the more than
                         5,000 improvement initiatives IRS received.

                         At the same time the Commissioner established TSI, he created an
                         executive steering committee, with himself as chair, to oversee the
                         implementation activities. The steering committee was to provide
                         decisions on matters affecting the implementation of the recommended
                         initiatives and was to ensure that initiatives being implemented were
                         consistent with IRS’ overall business strategy.

                         We have found that this kind of centralized coordination of crosscutting
                         programs is an effective management strategy. It can be used to identify
                         program overlap, duplication, or fragmentation. Coordination also helps
                         to ensure that program efforts are mutually reinforcing.

TSI Created a Database   By April 1998, the 12-person TSI staff had created a database of the
                         initiatives and begun using it to categorize the initiatives on its agenda. TSI
                         grouped the recommendations into functional areas, identified sources of
                         suggestions, and linked similar suggestions from different sources
                         together. The database also had fields for information on the priority level,
                         impact, and cost of implementing initiatives—data that could potentially
                         be used to monitor implementation and facilitate effective management
                         and oversight of work on initiatives. According to TSI officials, however,
                         this information was not routinely completed and updated by offices
                         implementing the initiatives.

                          Managing for Results: An Agenda To Improve the Usefulness of Agencies’ Annual Performance Plans
                         (GAO/GGD/AIMD- 98-228, Sept. 1998).

                         Page 4                                                       GAO/GGD-99-88 Customer Service

TSI Had Early Management     Early actions to develop the database notwithstanding, TSI had problems
                             in carrying out its responsibilities during its first months of operation.
Problems                     Officials said that the problems arose in large part from the sheer volume
                             of improvement initiatives on its agenda. The TSI staff was not able to
                             evaluate and prioritize the more than 5,000 mandates, recommendations,
                             and suggestions that came from sources including Congress, task force
                             groups, and individual employees and taxpayers. TSI officials said that
                             efforts to determine accountability for work, especially when two or more
                             offices shared responsibility, and to track the progress being made on
                             individual initiatives were also hampered by the large volume of initiatives.

Prioritization Process Was   As of January 1999, IRS had taken several actions to address its problems.
                             Top IRS management established criteria for prioritization in September
an Important First Step in   1998. To determine what initiatives to implement in the short term,
Managing Implementation      officials said that IRS criteria were that legislative mandates were top
                             priorities and that all initiatives selected were to show taxpayers,
                             employees, and external stakeholders (e.g., NPR and Congress) that IRS
                             was changing. In January 1999, IRS leadership approved a list of 157
                             initiatives as primary customer service improvement actions, drastically
                             reducing the number to be managed by TSI in the short term.

                             The initiatives selected were organized under 19 strategic categories (e.g.,
                             protect taxpayer rights, improve and increase the use of education and
                             delinquency prevention techniques, and create an IRS culture that values
                             employees and rewards top-quality service). An “owner”—an IRS
                             executive—was assigned as the official accountable for each strategic
                             category and the initiatives being implemented within it. Each strategic
                             category contributed to one of IRS’ three strategic goals: (1) service to
                             each taxpayer; (2) service to all taxpayers; or (3) productivity through a
                             quality work environment.

                             This prioritization process was a necessary first step to setting realistic
                             goals for progress based on IRS’ capacity to take on additional
                             responsibilities. It reduced the number of improvement actions to a
                             manageable level and established accountability for carrying out the work.
                             It also made it feasible to expect that TSI could track the progress being
                             made in implementing the priority initiatives.

                             TSI also made improvements to its database that gave offices
                             implementing the individual initiatives on-line access to information. This
                             change was designed, in part, to make it easier and more efficient to track
                             progress being made on individual initiatives.

                             Page 5                                          GAO/GGD-99-88 Customer Service

Management Strategy Could     IRS’ management strategy could be improved. As our review was being
                              completed, TSI had requested that the owners of each primary initiative
Be Improved                   enter an “action plan” into the database with information on start and
                              completion dates and milestones. As of March 1999, TSI was working with
                              managers of individual initiatives to finalize the action plans. TSI officials
                              said that they expected to use the action plans to monitor progress being
                              made and to keep current on the status of the initiatives. However, IRS had
                              not assessed the need for information on expected costs and benefits and
                              how results of the initiatives were to be measured.

                              TSI officials said that consideration of how to systematically collect
                              standard information on costs and benefits of the initiatives and plans for
                              measuring their results was in an early discussion stage. TSI had
                              concentrated its efforts on prioritization and then developing information
                              on initiatives’ key milestones and completion dates. It had not developed
                              plans to seek information on costs, benefits, or results for individual

                              As of January 1999, managers for a few of the 25 initiatives we reviewed
                              had documented management information on costs and benefits,
                              milestones and completion dates, and anticipated results. For 19 of the 25
                              initiatives we reviewed (see app. II), we asked for documentation of this
                              management information. These 19 initiatives were in process and had
                              progressed past the planning and design phases.

                              We found that 11 of the 19 initiatives had written plans with milestone
                              dates for reaching key points and an estimated final completion date. Cost-
                              benefit analyses were done for eight initiatives, and written documentation
                              of performance measures to gauge expected results were done in seven

                              Managers on individual initiatives provided a number of reasons why some
                              types of management information were not developed. For example:

                            • The manager for an initiative to administer preemployment screening
                              assessments to applicants for customer service positions said that IRS
                              leadership wanted the screening assessments to be used for hiring for the
                              1999 filing season. She noted that there was not enough time to prepare
                              formal project management documents before that hiring began in
                              September 1998.
                            • The manager of an initiative to provide tax information to small start-up
                              businesses jointly with the Small Business Administration said that it was
                              not possible to track individual taxpayers who received the information to

                              Page 6                                          GAO/GGD-99-88 Customer Service

  directly measure how receiving it improved their compliance with tax
• The manager of an initiative to provide customer service training to all IRS
  employees said that since the commitment to this training was made by
  the Acting Commissioner to the Senate Finance Committee, a cost-benefit
  analysis was not necessary to decide whether the project should be

  Our work evaluating the implementation of the Government Performance
  and Results Act has documented the difficulties that agencies face in
  developing management information, particularly measures of results.
  Extenuating circumstances, such as short time frames and difficulties
  identifying benefits and costs, may even preclude the development of
  management information in some instances. Moreover, factors such as
  scope and complexity can drive the level of detail necessary. For example,
  one would not expect to see as much detail in a plan to study why people
  hang up when they use an automated telephone menu as in a plan to begin
  using complex new call router technology.

  However, our work has also shown that public sector agencies can and do
  overcome obstacles to successfully implement strategic management
  principles and become more results-oriented. Such efforts have resulted in
  improved performance. For example, the National Oceanic and
  Atmospheric Administration began to measure the extent to which it could
  increase the advance notice it gave the public before severe weather
  events, instead of counting the number of forecasts it made. The emphasis
  is significant because having more time to prepare should lessen the loss
  of life and property. The Coast Guard’s Office of Marine Safety, Security,
  and Environmental Protection improved its mission effectiveness with
  fewer people and at lower cost. It did so by giving field commanders
  greater authority and by investing in activities and processes that went
  most directly to the goal of reducing risks on the water. Measuring
  performance allows agencies to track the progress they are making toward
  their goals and gives managers crucial information on which to base their
  organizational and management decisions.

  No picture of what government is accomplishing with the taxpayers’
  money can be complete without management information on benefits and
  costs. It provides agencies with tools to determine whether they have used
  public resources economically, efficiently, and effectively to achieve the
  purposes for which they were appropriated. Viewing program performance
      Executive Guide, GAO/GGD-96-118.

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                  in light of costs can be important on at least two levels. First, it can help
                  Congress make informed decisions. Second, it can give taxpayers an
                  accounting of what government is providing in return for their tax dollars.

                  As of January 1999, IRS had established priorities, reduced the number of
Conclusions       initiatives to a manageable level, aligned them with its strategic goals and
                  objectives, and assigned accountability for individual initiatives. IRS also
                  improved its ability to monitor and track individual initiatives by providing
                  on-line access to its database and by asking managers responsible for work
                  on individual initiatives to input information on milestones and completion

                  As IRS moves forward on its customer service improvements, we believe
                  its strategy for managing the initiatives would be enhanced by having
                  information on expected costs and benefits, milestones and completion
                  dates, and performance measures. IRS has already linked the initiatives to
                  its strategic goals and objectives and begun to collect information
                  pertaining to timeliness. However, it has not determined how much the
                  initiatives are likely to cost, what benefits are expected to be achieved, and
                  how results will be measured. We recognize that the level of detail that
                  might be needed likely would vary from initiative to initiative.

                  The TSI database could serve as a tool not only to monitor
                  implementation, but also to facilitate effective management and oversight.
                  Consistent information—including cost, benefit, and performance results
                  data, provided and kept current through on-line access—could be the link
                  between project teams, IRS’ leadership, and other stakeholders.

                  We recommend that the Commissioner of Internal Revenue develop an
Recommendations   approach and provide guidance to managers for determining the
                  appropriate cost and benefit information for the customer service
                  initiatives and for measuring the results of the initiatives in relation to IRS’
                  customer service objectives.

                  We also recommend that the Commissioner of Internal Revenue enhance
                  the TSI database to include this management information for the use of
                  IRS’ project teams, leadership, and other stakeholders.

                  We provided a draft of this report for comment to the Commissioner of
Agency Comments   Internal Revenue. The comments are summarized below and reproduced
                  in appendix III.

                  Page 8                                            GAO/GGD-99-88 Customer Service

IRS said that our report was a fair and balanced assessment of its strategy
for implementing customer service improvements—recognizing both the
strengths of the strategy and how it could be improved. IRS noted that the
report indicated our willingness to go beyond identifying problems and to
collaborate in developing pragmatic solutions.

IRS agreed that it needed to address the two recommendations we made
for enhancing its customer service improvement strategy. It noted that
some steps were already being taken to collect information on the
expected costs and benefits of improvement initiatives, and it recognized
that the design of relevant measures of results were also very important.

We are sending copies of this report to Representative William J. Coyne,
Ranking Minority Member of your Subcommittee; The Honorable Robert
E. Rubin, Secretary of the Treasury; The Honorable Charles O. Rossotti,
Commissioner of Internal Revenue; and other interested parties. We will
also make copies available to others upon request.

This report was prepared under the direction of Alton C. Harris, Assistant
Director. Other major contributors are listed in appendix IV. If you have
any questions, please call me on (202) 512-9110 or Mr. Harris on (404) 679-

Sincerely yours,

Margaret T. Wrightson
Associate Director
Tax Policy and
  Administration Issues

Page 9                                         GAO/GGD-99-88 Customer Service

Letter                                                                                                1

Appendix I                                                                                           12
                         Objective                                                                   12
Objectives, Scope, and   Scope and Methodology                                                       12
Appendix II                                                                                          14

IRS' Progress on 25
Customer Service
Appendix III                                                                                         18

Comments From the
Internal Revenue
Tables                   Table II.1: Progress on 25 Customer Service Improvement                     15
                           Initiatives as of January 1999


                         IRS           Internal Revenue Service
                         NTEU          National Treasury Employees Union
                         OPM           Office of Personnel Management
                         TSI           Taxpayer Treatment and Service Improvement Office

                         Page 10                                          GAO/GGD-99-88 Customer Service
Appendix I

Objectives, Scope, and Methodology

              At the request of the Chairman of the House Subcommittee on Oversight,
Objective     Committee on Ways and Means, we agreed to assess IRS’ strategy for
              managing the implementation of its customer service initiatives—including
              whether IRS had developed information on expected costs and benefits,
              milestones and completion dates, and performance measures to gauge
              results. To provide some perspective on the type of work being done to
              improve customer service, we also agreed to provide information on the
              progress made on 25 initiatives. (See app. II.)

              To address this objective, we interviewed officials and reviewed
Scope and     documentation and our prior reports that addressed the importance of
Methodology   strategic planning in federal program management. We interviewed
              officials from TSI and the Customer Service Task Force at IRS
              headquarters. Using a standard set of questions, we also interviewed IRS
              officials responsible for implementing 25 of IRS’ customer service
              initiatives. We asked them whether they developed and used selected
              project management information and what progress they were making in
              implementing the initiatives.

              At 3-month intervals over the course of our review, we requested updates
              of a TSI database that organized and categorized the customer service
              initiatives. We received database updates in April 1998 and July 1998. In
              October 1998 and January 1999, TSI officials advised us that no status
              reports were available because IRS had temporarily suspended follow-up
              activities on the individual initiatives to focus on the prioritization of all
              initiatives. We did not independently verify the TSI database, but we did
              examine its accuracy for the 25 improvement initiatives that we included
              in our review.

              We reviewed planning documents that had been prepared for 19 of the 25
              initiatives. Work on these initiatives was in process and had progressed
              past the design and planning stages. We determined, and TSI officials
              agreed, that they were initiatives that would benefit from having
              management information on costs and benefits, milestones and completion
              dates, and performance measures to gauge results.

              The 25 initiatives we selected for detailed review were chosen before IRS
              had prioritized its initiatives, reducing the number of primary actions to
              157. They were all recommendations of the IRS Customer Service Task
              Force and were chosen to reflect a cross section of the major customer
              improvement efforts. Several initiatives were included that addressed
              improvements in telephone assistance and employee training because
              more than 70 percent of IRS’ $103 million in fiscal year 1999 appropriations

              Page 12                                           GAO/GGD-99-88 Customer Service
Appendix I
Objectives, Scope, and Methodology

to implement customer service improvements was targeted for these two

For each improvement area, we judgmentally selected initiatives to study
based on their potential to have a positive impact on IRS’ customer
service. TSI officials agreed that all of the projects we selected were
significant initiatives. (See app. II for a list of the initiatives we reviewed
and information on the progress made in implementing them.)

Our review of the 25 initiatives recommended by the Task Force was not
intended to assess IRS’ overall progress in improving customer service.
Rather, the analysis was to provide information on some of the work being
done on initiatives recommended by the Task Force.

During our review, IRS approved a list of 157 initiatives as customer
service improvements with the highest priority for implementation in the
short term. We did not assess the prioritization criteria used.

We did our work primarily at IRS headquarters in Washington, D.C. We
also interviewed an official in the IRS Southeast Region in Atlanta, GA, and
we attended a training conference in Arlington, VA, to prepare IRS trainers
to deliver new customer service training to employees.

On March 19, 1999, we provided a draft of this report for comment to the
Commissioner of IRS. We received the Commissioner’s written comments
on April 12, 1999. They are reproduced in appendix III and discussed at the
end of the letter.

Page 13                                           GAO/GGD-99-88 Customer Service
Appendix II

IRS' Progress on 25 Customer Service
Improvement Initiatives

               Table II.1 shows the results of our review of progress made on 25
               customer service improvement initiatives. In selecting the initiatives to
               review, we determined and TSI officials agreed that they had great
               potential for improving customer service.

               Six of the 25 initiatives that we reviewed were closed as of January 1999.
               Sixteen initiatives were in process, and three had been deferred.

               Initiatives were classified as closed because officials believed that they
               had completed work on them or they did not need to complete them. For
               example, the initiative to expand telephone serve to 7 days a week, 24
               hours a day by January 1, 1999, was classified as closed because IRS had
               taken this action. The initiative to create a plan for effective alternatives to
               serve customers before closing a walk-in office was classified as closed
               because IRS did not plan to close any walk-in offices; thus, no plan for
               alternatives was needed.

               Initiatives classified as in process included those in various stages of
               implementation. For example, an initiative in the early stages of
               implementation was the effort to improve the national distribution of
               information to IRS employees. An IRS official said that major
               improvements in the national distribution of information to IRS employees
               could not be achieved until all employees had access to computers and
               were on a standard computer network. While awaiting the required
               information systems upgrades, however, IRS started smaller scale projects
               to improve communication. These included issuing a newsletter containing
               information on IRS’ modernization efforts to all employees. An initiative
               that was closer to full implementation was an initiative to assess the skills
               of IRS employees and train those with the most critical needs. Assessment
               instruments were developed and testing was underway for employees
               working in Customer Service, Collection, Examination, and Support
               Services. Some training had started to improve employees’ skills as
               identified by the testing.

               Initiatives were deferred because IRS determined that other projects had
               higher priorities or because timing was not appropriate for
               implementation. For example, IRS decided not to attempt to standardize
               the format and content of its written responses to taxpayers until it had
               completed an initiative that was under way to rewrite all of its notices.

               Page 14                                           GAO/GGD-99-88 Customer Service
                                             Appendix II
                                             IRS' Progress on 25 Customer Service Improvement Initiatives

Table II.1: Progress on 25 Customer Service Improvement Initiatives as of January 1999
Initiative                                         Status         Description of work done
Market Telefile aggressively to individual         Closed         Officials said that IRS’ current practice of mailing Telefile
taxpayers.                                                        information, rather than traditional tax filing packages, to
                                                                  taxpayers who are potentially eligible for Telefile is the most
                                                                  aggressive marketing strategy it could use.
In 1999, begin using new call router technology    Closed         Officials said that the call router was implemented in December
to provide information that is geared to specific                 1998, although IRS has plans for a number of enhancements to
customer needs, such as the tax implications of                   the system.
the sale of a house, retirement, or job change.
Before closing a walk-in office, create a plan for Closed         Officials said that no further action was needed on this initiative
effective alternatives to serve customers.                        because IRS does not plan to close any walk-in offices.
Establish a uniform set of leadership              Closed         Officials said that the Office of Personnel Management (OPM)
competencies for all levels of management.                        revalidated a set of leadership competencies that federal
                                                                  agencies could use in their entirety or adapt as needed. IRS used
                                                                  the OPM model to develop its own model. It was used in1998 as
                                                                  part of the selection process for new executives.
By January 1, 1998, expand telephone service       Closed         Officials said that IRS implemented these actions in January
to 6 days a week, 16 hours a day. By January 1,                   1999.
1999, expand telephone service to 7 days a
week, 24 hours a day.
In 1999, work to enable taxpayers to file          Closed         In February 1998, IRS started preparing a policy to guide its effort
paperless returns by eliminating the need for                     in this area, according to project officials. A pilot test is being
mailing in W-2s and other forms for paper                         conducted during the 1999 filing season on substitutes for
signature in a way that does not jeopardize law                   signatures on electronically filed returns.
Use multiple strategies to reduce demand on the    In process     IRS had several efforts under way to reduce demand on
telephone lines, such as educating customers                      telephone lines. These included providing tax law assistance by
on when to expect refunds.                                        electronic mail, improving the clarity of and reducing the number
                                                                  of notices, thereby reducing the need for taxpayers to call, and
                                                                  managing telephone calls away from live assistors and onto
                                                                  automated systems where possible.
Complete a study of why people hang up when        In process     IRS had the study under contract, with an expected delivery in
they use the automated menu and recommend                         June 1999.
needed modifications to current plans.
Assess the skills of IRS employees and train       In process     Assessment instruments were developed and testing was under
those with the most critical needs.                               way for employees working in the Customer Service, Collection,
                                                                  Examination, and Support Services areas. Some training to
                                                                  improve employees’ skills as identified by the testing had begun.
Create a skills bank that identifies the skills of In process     Officials said that IRS developed databases of information on the
IRS employees.                                                    results of assessments administered to measure employees’
                                                                  general competencies (e.g., communication and listening skills)
                                                                  and technical skills. Each of 22 field education branch offices
                                                                  managed a database and sent their data to a centralized
                                                                  database. When IRS’ integrated personnel system is in place,
                                                                  these databases are to be integrated into it.
In 1998, have an intensive agencywide special      In process     IRS developed and piloted a course, but suspended it in late
training program to introduce employees to the                    1998 at the request of the National Treasury Employees Union
new approach to customer service.                                 (NTEU). The course was redesigned, and an official said that
                                                                  training was to resume in May 1999 and be completed by
                                                                  December 1999.

                                             Page 15                                                 GAO/GGD-99-88 Customer Service
                                                    Appendix II
                                                    IRS' Progress on 25 Customer Service Improvement Initiatives

Over the long term, change how IRS selects,              In process         Separate projects addressed the selection, training, evaluation,
trains, evaluates, rewards, and supports its                                rewards, and support portions of this broad recommendation. For
employees so they can better serve customers.                               example, a pilot test was done using assessment instruments to
                                                                            measure the skills and abilities of applicants for customer service
                                                                            positions. A team proposed several ways to redesign IRS’
                                                                            performance management system, including how employees
                                                                            were evaluated and rewarded, and was awaiting feedback from
                                                                            management. Another team offered ways to implement a range
                                                                            of options (e.g., pay for performance and a streamlined external
                                                                            competitive selection process) that IRS could use to motivate and
                                                                            reward employees.
Work with NTEU to design and test a balanced             In process         In 1998, IRS developed a measurement system that was
scorecard to evaluate IRS and its employees in                              intended to balance measures of business results with measures
1998.                                                                       of customer and employee satisfaction. Implementation of the
                                                                            balanced measurement system in 1999 is to begin with new
                                                                            operational measurements for three key functions: customer
                                                                            service, examinations, and collections.
Improve national distribution of information to          In process         IRS communications activities were integrated into a single office.
IRS employees.                                                              While awaiting completion of information management systems
                                                                            upgrades that would make distribution of information to
                                                                            employees quicker and easier, the office was making
                                                                            improvements on a smaller scale. For example, it began
                                                                            producing a newsletter, New Directions, which informed
                                                                            employees about IRS’ modernization efforts.
To give small businesses a single point for              In process         According to officials, IRS organized and funded projects under
reporting tax and wage data to meet the                                     three STAWRS initiatives: streamlined customer service, single-
requirements of IRS, Social Security                                        point filing, and simplified requirements.
Administration, Department of Labor, and state
agencies, continue to work to support the
Simplified Tax and Wage Reporting Systems
(STAWRS) program.
By the end of 1998, eliminate additional                 In process         By the end of 1998, IRS had eliminated 32 notices, which
unnecessary notices. This will eliminate more                               generated 22 million pieces of mail to taxpayers annually.
than 45 million pieces of mail annually, almost                             Officials said that they are researching the possible elimination of
one-third of the total number of notices that IRS                           five more notices that generate an additional 30 million pieces of
has been sending to taxpayers.                                              mail.
Seek to route telephone calls from small                 In process         IRS officials said that this initiative is being partially addressed
businesses to specific individuals who have                                 through the call routing system available to all taxpayers.
training and the authority to answer business tax                           Additionally, they had planned to pilot test the use of a separate
questions and resolve tax account problems.                                 toll free telephone number for business calls. However, this
                                                                            project was deferred.
Give all locations the ability to input power-of-        In process         A regional advocate team examined this issue and reported on it
attorney authorizations and hold the person                                 in November 1998. The report was forwarded to the Taxpayer
receiving the authorization responsible for                                 Advocate, National Accounts Section, and others for review. No
ensuring the input.                                                         decision had been made on whether to implement the initiative
Track complaints, beginning immediately, using           In process         As part of its test of a new customer feedback system, IRS was
the Taxpayer Advocate’s Problem Resolution                                  doing limited tracking of complaints.
Information System (PROMIS).

                                                    Page 16                                                  GAO/GGD-99-88 Customer Service
                                                Appendix II
                                                IRS' Progress on 25 Customer Service Improvement Initiatives

Beginning in 1998, team up with other federal         In process        IRS had projects under way to address portions of this
agencies, financial institutions, tax preparers,                        recommendation, including three projects with federal agencies
state and local authorities, and others to provide                      to distribute tax information and a project with selected states to
tax information, training, and consultative                             make obtaining federal identification numbers easier for new
services to small start-up businesses. The                              businesses.
initiative is designed to make record-keeping,
filing, and payment requirements as simple and
easy as possible.
Use a preemployment screening assessment              In process        Preemployment screening assessments were done for applicants
tool, based on technical and behavioral skills, for                     for customer service positions at four pilot sites for the 1999 filing
all external applicants.                                                season, according to an IRS official.
Beginning in 1999, open additional temporary          In process        IRS was opening additional locations in libraries, post offices, and
community-based locations during peak season                            copy centers for distributing forms and publications in 1999.
to make publications and forms available in
banks, libraries, shopping malls, and other
Analyze the costs and benefits of handling all        Deferred          Not Applicable
federal tax deposit penalties in one centralized
Reassign a case to the next higher management         Deferred          Not Applicable
level when a complaint is unresolved after a
reasonable period of time.
Standardize the format and content of written         Deferred          Not Applicable
responses, using appropriate commercial

                                                Page 17                                                  GAO/GGD-99-88 Customer Service
Appendix III

Comments From the Internal Revenue Service

               Page 18         GAO/GGD-99-88 Customer Service
Appendix III
Comments From the Internal Revenue Service

Page 19                                      GAO/GGD-99-88 Customer Service
Page 20   GAO/GGD-99-88 Customer Service
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