TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Customer Service at Taxpayer
Assistance Centers Showed Improvement During the 2006 Filing Season
August 30, 2006
Reference Number: 2006-40-122
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Redaction Legend:
1 = Tax Return/Return Information
Phone Number |
202-927-7037
Email Address | Bonnie.Heald@tigta.treas.gov
Web Site |
http://www.tigta.gov
August 30, 2006
MEMORANDUM FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: (for) Michael R. Phillips /s/ Michael E. McKenney
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Customer Service at Taxpayer Assistance Centers Showed Improvement During the 2006 Filing Season (Audit # 200640027)
This report presents the results of our review to determine whether taxpayers receive quality service,
including correct answers to their questions, when visiting Taxpayer Assistance
Centers (TAC)[1] to get answers to their tax law questions. This audit was conducted at the
request of the Internal Revenue Service (IRS) and in conjunction with the President’s
Council on Integrity and Efficiency (PCIE) as part of its examination of relief
efforts provided by the Federal Government in the aftermath of Hurricanes
Katrina and Rita. A
copy of the final report was forwarded to the PCIE Homeland Security Working
Group, which is coordinating the Inspectors’ General reviews of this important
subject.
Synopsis
Providing quality customer service is the IRS’ first step to achieving taxpayer compliance. The complexity of the tax law has made it even more important that the IRS ensure tax assistance is available to all taxpayers because mistakes and misinformation can easily contribute to noncompliance. Taxpayers have several options to choose from when they need assistance from the IRS, including face-to-face assistance at the TACs. According to the IRS, the TACs served approximately 4 million taxpayers during the 2006 Filing Season;[2] approximately 600,000 of these taxpayers visited for assistance with the tax law.
During the 2006 Filing Season, Treasury Inspector General for Tax Administration auditors, using 47 standard scenarios, made anonymous visits to 50 TACs and asked 200 tax law questions. We also developed 10 additional scenarios related to the Katrina Emergency Tax Relief Act of 2005 (KETRA)[3] and visited 20 additional TACs to ask 80 tax law questions related to the KETRA. TAC assistors:
· Correctly applied the tax law when answering 145 (73 percent) of the 200 tax law questions auditors asked using the standard scenarios.[4] They misapplied the tax law for 29 (15 percent) of 200 questions asked. Therefore, TAC assistors correctly answered 145 (83 percent) of 174 questions. For the remaining 26 (13 percent) of 200 questions, TAC assistors did not or could not answer the questions and/or referred taxpayers to other IRS sources.
· Correctly applied the tax law when answering 60 (75 percent) of 80 tax law questions auditors asked relating to the KETRA. They misapplied the tax law for 6 (8 percent) of 80 tax law questions asked. For the other 14 (18 percent) of 80 questions, either the assistors did not or could not answer the questions and/or referred taxpayers to other IRS sources.
Assistors answered questions incorrectly because they did not use the required tools. Other contributing factors include the complexity of the tax law and the number of potential questions assistors have to be prepared to answer. When TAC assistors do not or cannot answer questions and/or refer taxpayers to other IRS sources, taxpayers ultimately are provided no service.
In addition, taxpayers making payments are not given
priority at the TACs. At 1 TAC, taxpayers
waiting for assistance with payments totaling $135,000 were turned away so the
IRS could clear the TAC by the closing time of 4:30 p.m. At a second TAC, a taxpayer sat down next to
one of the auditors and complained about
having to wait behind all other taxpayers to make a payment. Finally, at 10 of 13 TACs where we
specifically tested to determine whether auditors with payments would receive
priority, auditors with tax law questions were called prior to the auditors who
only wanted to make a payment. The
average wait time for auditors visiting the 13 TACs was 23 minutes.
Recommendations
The Commissioner, Wage and Investment Division, should develop or modify procedures to ensure assistors provide answers to taxpayers’ tax law questions. The guidelines should reinforce current referral procedures, including how assistors should respond to taxpayers’ tax law questions when the Publication Method Guide (Guide)[5] has not been updated. In addition, guidelines should be developed and training provided to TAC managers and assistors on how to manage customer traffic and wait times. This includes educating taxpayers on how the Q-Matic System works and developing consistent procedures to address and appropriately prioritize payments when experiencing high customer traffic and wait times.
Response
IRS management agreed with both recommendations. The Field Assistance Office has clarified its procedures for handling tax law inquiries during the transition period from the beginning of the filing season until the current year publication and Guide are available. The new procedures instruct assistors to answer questions if a current year publication is available, even if the Guide has not yet been updated. The Field Assistance Office also revised its procedures to ensure TAC managers have a process to better manage taxpayer traffic, including how to assist customers at the end of the day. The instructions specifically require the solicitation of payments and forms. To provide better training on managing traffic and wait times, the Field Assistance Office will update its “Managing a TAC” training. Management’s complete response to the draft report is included as Appendix VIII.
Office of Audit
Comment
Although IRS management agreed with our recommendation, the corrective action implemented does not address all of our concerns. The newly implemented procedures allow assistors to answer tax law questions without a current year Guide only when the current year publication addressing the issue is available. However, assistors are still instructed not to answer tax law questions when the current year publication is not available, even though they have been trained on tax law changes. This could create unnecessary burden and considerable frustration when taxpayers travel to a TAC, wait to be assisted, and are not provided answers to their tax law questions.
Copies of this report are also being sent to the IRS managers affected by the report recommendations. Please contact me at (202) 622-6510 if you have questions or Michael E. McKenney, Assistant Inspector General for Audit (Wage and Investment Income Programs), at (202) 622-5916.
Taxpayers Received Fewer Inaccurate Answers to Tax
Law Questions Than in the 2005 Filing Season
Taxpayers Making Payments Are Not Given Priority at
the Taxpayer Assistance Centers
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
V – Taxpayer Assistance Center Service and Quality Assurance
Appendix VI
– Taxpayer Assistance Centers Visited During the 2006 Filing Season
Appendix
VII – Accuracy Rates by Tax Law Topic During the 2006 Filing Season
Appendix
VIII – Management’s Response to the Draft Report
Providing quality customer service is the Internal Revenue
Service’s (IRS) first step to achieving taxpayer compliance. The complexity of the tax law has made it
even more important that the IRS ensure tax assistance is available to all
taxpayers. Mistakes and misinformation can easily
contribute to noncompliance. According to the November 2005
Report of the President’s Advisory Panel
on Tax Reform, in 2004, Americans spent more than 3.5 billion hours
doing their taxes, the equivalent of hiring almost 2 million new IRS
employees or more than 20 times the IRS’ current workforce. About $140 billion (over $1,000 per
family) is spent annually on tax preparation and compliance.
The picture was removed due to its size. To see the picture, please go to the Adobe
PDF version of the report on the TIGTA Public Web Page.
Taxpayers have several options to choose from when they need
assistance from the IRS, including face-to-face assistance at a Taxpayer
Assistance Center (TAC). According to
the IRS, the TACs served approximately 4 million taxpayers during the 2006 Filing
Season.[6] Approximately 600,000 of these taxpayers
visited for assistance with the tax law.[7] The Field Assistance Office has overall
responsibility for 400 TACs in 5 geographical areas throughout the
IRS employees in the TACs, called assistors, help taxpayers
by interpreting tax laws and regulations, preparing certain tax returns,
resolving inquiries on taxpayer accounts, and providing various other services
designed to minimize the burden on taxpayers in satisfying their tax
obligations. Operating guidelines
require assistors to identify themselves, provide their identification numbers
either verbally or visually to all taxpayers, and assist taxpayers professionally
and courteously. Assistors are trained and expected to be knowledgeable
in over 300 tax law topics with approximately 400 subtopics. They are expected to be able to respond to
taxpayer issues for the current and prior tax years. See Appendix V for details on how the TACs
provide assistance and ensure quality customer service.
2006 Filing Season readiness
In preparation for the 2006 Filing Season, the Treasury Inspector General for Tax Administration (TIGTA) conducted a review to determine whether the Field Assistance Office adequately planned for the 2006 Filing Season and considered and accounted for the effects of Hurricanes Katrina and Rita during filing season preparations. We reported that the Field Assistance Office issued a Fiscal Year 2006 Program Letter that identified and communicated policies, goals, and objectives to Field Assistance Office employees.[9] The Program Letter states that the Field Assistance Office expects to more than meet all Fiscal Year 2006 challenges, including the mandate from Congress to keep all TACs open in Fiscal Year 2006.
In May 2005, the IRS announced its plans to close 68 TACs in Fiscal Year 2006. In announcing the planned closures, the IRS stated that taxpayers would have continued access to tax forms, information, and tax preparation through IRS.gov, telephone assistance, and volunteer tax return preparation. While legislation required the IRS to postpone the plan to close any TACs for Fiscal Year 2006, the IRS still considers closing some TACs as a viable option to reduce operational costs. These circumstances all contributed to the TACs’ staffing shortages and presented the Field Assistance Office with a significant challenge in preparing for the 2006 Filing Season. As of January 31, 2006, the Field Assistance Office had completed critical hiring, including frontline technical employees. The Field Assistance Office also brought back all seasonal employees,[10] detailed former TAC assistors from other IRS organizations back to the Field Assistance Office, and deployed TAC assistors to multiple locations to ensure all TACs would be open.
We conducted this audit, at the request of the IRS Customer Assistance, Relationships, and Education function in the Wage and Investment Division, during the period January through May 2006. From January through April 2006, auditors asked 200 questions during 100 anonymous visits to 50 TACs. We also developed scenarios related to the Katrina Emergency Tax Relief Act of 2005 (KETRA).[11] We visited 20 additional TACs to ask 80 tax law questions related to the KETRA. The responses to these questions were not included in determining the overall accuracy rate; the results to the KETRA questions are reported separately. See Appendix VI for specific cities and States visited.
The audit was conducted in accordance with Government Auditing Standards. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
During the 2006 Filing Season, TAC assistors correctly applied the tax law when answering 145 of the 200 (73 percent) tax law questions auditors asked using the standard scenarios.[12] They misapplied the tax law for 29 of 200 (15 percent) of tax law questions asked. Therefore, TAC assistors correctly answered 145 (83 percent) of 174 questions. For the remaining 26 (13 percent) of 200 questions, TAC assistors referred auditors to other IRS functions, referred auditors to a publication so they could find the answer for themselves, or did not provide service at all. Figure 1 shows the detailed results for the 2002 through 2006 Filing Seasons. The IRS goal for Field Assistance Accuracy of Tax Law Contacts for Fiscal Year 2006 is 80 percent.
Figure 1: Comparison of TIGTA Audit Results for the
2002 through 2006 Filing Seasons
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
“Service Not Provided” occurred when the assistor chose not to answer the question because he or she had not received the current tax year Publication Method Guide (Guide)[13] or assumed the auditor did not have information needed to answer all probing questions. “Referred to Other IRS Functions” occurred when the assistor chose not to answer the question but instead referred the auditor to the IRS toll-free number.
During this review, auditors anonymously visited TACs and asked TAC assistors 200 pre‑developed scenario questions related to 32 tax law topics. See Appendix VII for a list of the tax law topics. To calculate and report the quality of customer service, we used the number of correctly answered questions (145) divided by the total number of questions asked (200). The IRS disagrees with this methodology. When responding to prior TIGTA reports or reporting its outcome measure, Field Assistance Accuracy of Tax Law Contacts, the IRS modifies the TIGTA rates to include only those questions for which assistors provide answers to tax law questions (for this audit, 174). Questions for which assistors did not provide service or referred auditors to toll‑free telephone numbers or publications are excluded from the rate calculations. The IRS does not believe referring taxpayers or failure to provide service is the same as not providing a correct tax law answer. The IRS has used TIGTA results with this modification when reporting Field Assistance Accuracy of Tax Law Contacts for Fiscal Years 2003 through 2005.
When calculating the tax law accuracy rate using the Embedded Quality system, the IRS considers a response “complete and correct” only when the assistor obtains sufficient information to answer the question and gives a correct and complete answer. The IRS’ definition of accuracy does not take into consideration any additional issues or procedures that do not directly affect the taxpayer. To ensure the response is considered correct and complete, assistors must follow all of the following Embedded Quality system requirements and correctly apply the tax law:
Using the Embedded Quality system methodology to calculate TIGTA results for this review, the accuracy rate is 49 percent. The 2005 Filing Season accuracy rate using the Embedded Quality system was 39 percent. The lower accuracy rate results because answers are rated incorrect if the assistors did not use the tools provided properly and did not ask sufficient probing questions. In addition, the IRS reduces the total number of questions used in the calculation from 200 to 174, again to exclude those questions for which auditors were referred to other IRS functions or not provided service.
Figure 2 shows the breakdown of the accuracy rates for this period, first using the TIGTA methodology we used for prior reviews, second using the TIGTA methodology as modified by the IRS, and third using the IRS Embedded Quality system methodology.
Figure 2: Responses to 200 Standard Tax Law Questions
|
COMPARISON OF TIGTA AND IRS METHODOLOGIES |
|||||||||||||||
|
|
TIGTA |
IRS |
IRS |
||||||||||||
|
|
Number |
Percentage |
Number |
Percentage |
Number |
Percentage |
|||||||||
|
Correctly |
145 |
73% |
145 |
83% |
86 |
49% |
|||||||||
|
Incorrectly |
29 |
15% |
29 |
17% |
88 |
51% |
|||||||||
|
Referred to
Other IRS Functions |
6 |
3% |
0 |
0% |
0 |
0% |
|||||||||
|
Incorrectly
Referred to |
15 |
8% |
0 |
0% |
0 |
0% |
|||||||||
|
Service
Not Provided |
5 |
3% |
0 |
0% |
0 |
0% |
|||||||||
|
Total Questions, Overall Accuracy Rate |
200 |
73% |
174 |
83% |
174 |
49% |
|||||||||
Source: Anonymous visits performed by TIGTA auditors.
The results of auditors’ visits were shared with TAC managers, who
discussed the results with those employees who responded to our tax law
questions. All results of the review
were analyzed to identify any trends or concerns.
Accuracy increases when assistors take the time to follow
required procedures and ask probing questions
Assistors continued to respond to tax law questions without taking the time to use the required tools to ask all the probing questions outlined in the Guide. The risk that taxpayers will receive inaccurate answers is increased when assistors do not follow required procedures and take the time to ask probing questions. Accuracy was 85 percent when assistors used the required tools and 45 percent when assistors did not use the required tools. Figure 3 shows a comparison of tax law questions answered and accuracy rates when assistors use the Guide.
Figure 3: Proper Use of the Guide
Figure 3 was removed due to its size.
To see Figure 3, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
During their visits, auditors asked two questions. Assistors were more likely to use the Guide only when answering the first question. For example, when answering the first question, assistors used the Guide and/or a publication to answer 72 (72 percent) of the 100 questions. However, when auditors asked the second question, assistors used the Guide to respond to only 64 (64 percent) of the 100 questions. The Field Assistance Office mandates use of the Guide and warns there will be no allowable deviation from use of the Guide.
Assistors advised us that when they did not use the Guide to answer tax law questions it was because they felt rushed to ensure customers did not have to wait for extended periods of time or were not sure which topics were covered in the Guide. In response to our results, TAC managers, where warranted, issued counseling letters and held individual counseling sessions with employees. We found the Guide to be an effective tool for ensuring the accuracy of tax law responses. When developing the scenarios for this review, we followed the steps in the Guide and were able to determine the correct answer for 55 (98 percent) of the 56 scenarios. We identified an error in the Guide for one scenario and apparent inconsistencies in the Guide related to when assistors should/should not use worksheets while assisting taxpayers. IRS management agreed with our findings, which we provided during the course of the audit, and took immediate corrective actions.
Unnecessary
burden and frustration result when assistors do not or cannot answer taxpayers’
tax law questions
Instead of answering taxpayers’ tax law questions for 26 (13 percent) of 200 questions asked, assistors referred auditors to toll-free telephone numbers or publications or did not provide service. Assistors stated they referred auditors because, for example, they:
· Believed the questions were outside the scope of their training. All questions asked during this review were within the scope of the assistors’ training.
· Did not want to bother other assistors who were busy assisting taxpayers.
· Could not locate the topic in the Guide.
In some instances, the