TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
The Wage and Investment Division Automated Underreporter Telephone Operations Could Improve Service to Taxpayers
September 13, 2006
Reference Number: 2006-40-138
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.
Phone Number | 202-927-7037
Email Address | Bonnie.Heald@tigta.treas.gov
Web Site |
http://www.tigta.gov
September 13, 2006
MEMORANDUM FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – The Wage and Investment Division Automated Underreporter Telephone Operations Could Improve Service to Taxpayers (Audit # 200540026)
This report presents the results of our review to determine whether the Wage and Investment
(W&I) Division provides timely and adequate toll-free telephone access for
taxpayers requesting assistance on Automated Underreporter (AUR) Program cases.[1]
Impact on the Taxpayer
The Internal Revenue Service (IRS) issues AUR Program notices informing taxpayers of discrepancies it found when matching information return data received from third parties with income and deductions reported on tax returns. It is important that taxpayers have an adequate level of telephone access to confirm or correct the information on the notices so that the correct tax liability can be determined. Our review determined that the IRS needs to improve the level of telephone service provided to these taxpayers.
Synopsis
Since 1998, the IRS has been providing direct AUR toll-free telephone service to taxpayers who have questions about AUR Program notices they received. AUR Program management has implemented a number of initiatives to improve the performance of the AUR toll-free telephone system. A new Universal Call Routing system allows for more efficient use of available telephone assistors. Any incoming call can now be handled by an assistor at any of the three W&I Division AUR Program call sites. Previously, the calls went to specific AUR Program call sites based on the area code of the incoming call. This centralized call management system will simplify the maintenance of the automated menus and messages on the toll-free system. AUR Program management also improved the automated menus and messages to address customer concerns raised about their effectiveness.
Increasing
the Level of Service would help to reduce taxpayer burden in resolving AUR Program
discrepancies. During FY 2005, 214,556
callers hung up without receiving assistance and an additional 191,950 received
busy signals.
The AUR Program should take further action to increase the Level of Service provided to taxpayers who use the AUR toll-free telephone system. The basic Level of Service computation is the number of calls answered divided by the number of available calls.[2] The W&I Division AUR Program averaged a 71 percent Level of Service for Fiscal Year (FY) 2005. AUR Program management established a 75 percent Level of Service goal for FY 2006. For the first 6 months of FY 2006, the AUR Program averaged a 61 percent Level of Service. An increase in the number of AUR Program notices sent to taxpayers and the resulting unanticipated increase in call volumes appear to have contributed to the lower Level of Service in the second quarter of FY 2006.
AUR Program management has not established goals for
monitoring the Level of Service provided to Spanish-speaking callers, who were
often unable to obtain access to bilingual assistors. During FYs 2003–2005, only 40 percent of the callers
requesting a Spanish‑speaking assistor were able to speak with one. The AUR Program did not have enough
bilingual assistors to handle the number of incoming Spanish calls. In addition, the
Most bilingual assistors volunteer to answer telephone calls in Spanish. The voluntary nature of this AUR Program telephone assignment is limiting the IRS’ ability to provide an adequate Level of Service. The assistors are generally on the telephones for only a portion of the day. In addition, due to assistors’ work schedules, call sites often have problems providing bilingual assistors late in the afternoon when incoming call volumes are peaking.
The Universal Call Routing system should help improve the Level
of Service to Spanish-speaking taxpayers once enough bilingual assistors are
provided. The Spanish calls that previously
would have gone to the
Recommendations
We recommended the Commissioner, W&I Division, increase the Level of Service goal for the AUR toll-free telephone operations to help ensure it is commensurate with that provided by other IRS toll-free operations; increase the number of bilingual AUR Program assistors available to handle the demand from Spanish-speaking taxpayers, revise the AUR Program tax examiner position description to specifically include telephone duties, adopt more precise scheduling and assignment practices; and establish specific goals and measures for the Spanish-language services provided on the AUR toll-free telephone lines.
Response
IRS management agreed with our second recommendation. The Director, Compliance, W&I Division, has recently hired 10 bilingual telephone assistors and will continue to evaluate the need for more assistors. The position description for AUR Program tax examiners is being revised to include telephone duties. In addition, AUR Program management is conducting studies to improve forecasting of call volumes to ensure precise scheduling and assignment practices.
However, IRS management did not agree that the AUR Program Level of Service should be commensurate with other IRS telephone operations or private industry call sites because the AUR Program is not exclusively a telephone operation. The AUR Program is responsible for providing balanced quality service to both taxpayers responding by telephone and through correspondence. AUR Program management has implemented a new case selection tool and the Universal Call Routing system to improve AUR Program operations. In addition, AUR Program management is studying the effect the new processes have had on telephone call volumes and schedules. Because they disagreed with our recommendation, IRS management also disagreed with our outcome measure.
Lastly, in relation to Spanish-speaking callers, IRS management stated that, with the migration of AUR toll-free telephone lines to the Universal Call Routing system, information is not yet available to establish additional measures. Once they have sufficient information, they will be able to determine whether additional measures are justified and determinable. In the meantime, they are committed to their goal of providing excellent service to all taxpayers. Management’s complete response to the draft report is included as Appendix V.
Office of Audit Comment
Because AUR Program notices propose additional taxes and seek additional information from taxpayers to confirm or correct the information on the notices, we continue to believe the IRS should strive to provide a Level of Service at least as high as its other toll-free telephone operations. Providing balanced quality service to both taxpayers responding by telephone and through correspondence is applicable to account inquiries in numerous IRS functions. As such, we do not believe this is an adequate basis for expecting taxpayers to wait significantly longer for inquiries related to AUR Program notices. Further, IRS internal documents indicate W&I Division management believes having an improved level of telephone service provides for a more efficient use of its limited resources. In the May 2006, Business Performance Review, W&I Division management stated their “commitment this year to close more cases via the telephone, which not only improves customer satisfaction and is more efficient, but also greatly reduces the amount of correspondence, and hence the number of times we must touch a case.” Therefore, we believe our recommendation and associated outcome measure are still valid.
The AUR toll-free telephone system currently provides enough data to provide a rudimentary measure of the effectiveness of providing Spanish-language services in the AUR Program. Although it may take time to establish specific goals, these measures should be immediately established to ensure that the AUR Program is providing excellent service to Spanish-speaking callers.
The IRS actions to increase the number of bilingual assistors should help improve its Level of Service. However, we are concerned that management has not established goals to monitor Spanish-speaking caller activity to ensure adequate access to bilingual assistors. In FYs 2003–2005, approximately 90,000 Spanish-speaking callers were unable to speak with a bilingual assistor. Without goals and actions to monitor the Level of Service, AUR Program management will not be able to identify whether Spanish-speaking callers have a sufficient level of access to a bilingual assistor. Only 60,382 (40 percent) of the 150,623 callers requesting a Spanish-speaking assistor in FYs 2003–2005 were able to speak to a bilingual assistor.
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.
Further Action Is
Needed to Increase the Automated Underreporter Program Level of Service
Spanish-Speaking Taxpayers
Were Often Unable to Obtain Access to Bilingual Assistors
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix V
– Management’s Response to the Draft Report
The Automated Underreporter (AUR) Program provides toll-free telephone
assistance for taxpayers who have questions on AUR Program notices they
receive. The Internal Revenue Service
(IRS) issues AUR Program notices informing taxpayers of discrepancies it found
when matching information return data received from third parties with income
and deductions reported on tax returns. For
example, if a financial institution reports to the IRS that it paid interest or
dividends to a taxpayer, but the taxpayer either does not report the income or
reports a different amount on his or her income tax return, the IRS will issue
a notice (i.e., Computer Paragraph (CP) 2501 or CP 2000) to the taxpayer to
resolve the discrepancy. This process
may result in an assessment of additional tax if the amount was initially unreported
or underreported by the taxpayer.
The picture of the notice was removed due
to its size. To see the picture, please
go to the Adobe PDF version on the TIGTA public web page.
The concept of matching information returns to self-reported items on a taxpayer’s return was originally developed by the IRS in the 1960s. In 1986, the IRS began the development of an AUR system designed to address the shortcomings of the previous manual underreporter program by automating case development and providing interactive case analysis and processing, automated case control, and management information systems.
In 1998, the AUR Program began to test and implement toll-free numbers for direct AUR telephone assistance. Prior to this, notices directed taxpayers to call the general IRS toll-free assistance tax information number. When the taxpayer called this number, the assistors did not have the resources to assist the taxpayer. The cases had to be referred to an AUR Program unit to have a tax examiner call the taxpayer. This caused redundant work and telecommunications costs from which neither the IRS nor the taxpayers received benefit.
The AUR toll-free telephone system provides both automated and direct verbal assistance to callers. For example, the AUR toll-free telephone system provides recorded responses to general questions about how and where to make payments and the status of the taxpayer’s case. Callers may choose to listen to these messages in either English or Spanish. If callers do not get their questions answered in the automated system, they may request to speak directly to an IRS employee (assistor). The call may then be transferred directly to an assistor or be placed in a queue of calls waiting for an assistor to answer at one of the AUR Program call sites. The IRS provides both English- and Spanish-speaking (i.e., bilingual) assistors. Our review focused on the service provided when taxpayers requested to speak with an assistor.
The IRS has been providing direct AUR toll-free telephone assistance
since 1998. The Wage and Investment
(W&I) Division of the IRS manages three AUR Program call sites. The
This review was performed at the W&I Division
Headquarters in
Automated Underreporter Program Management Has Implemented a Number of New Initiatives to Improve Service
AUR Program management has implemented a number of initiatives to improve the performance of the AUR toll-free telephone system. Following are some initiatives identified by AUR Program management as providing notable benefits.
Universal Call Routing – To provide taxpayers with improved toll-free telephone access to AUR Program assistors, the IRS implemented the Universal Call Routing system (a centralized call management system) in the AUR Program in January 2006. Under the new system, a centralized site will manage all incoming taxpayer calls. When taxpayers need to speak to an assistor, the calls are now routed to any of the three call sites based on the availability of assistors. Prior to January 2006, calls were handled at each call site based on the area code of the incoming call. Assistor availability and specific hours of operation at each call site limited taxpayer access. The Universal Call Routing system will expand the AUR toll-free telephone system hours of operation and assistor availability nationwide.
In addition, this centralized
call management system will maintain and update the automated menus and
messages of the AUR toll-free telephone system.
Centralizing this process will be more efficient than managing and
updating the messages at three different sites.
These changes will be transparent to callers.
Updated Automated Menus and Messages – Over the last several years, a contractor hired by the IRS has sent out Customer Satisfaction Surveys periodically to a sample of taxpayers that have had direct contact with the IRS. The purpose of these Surveys is to measure taxpayer satisfaction with the various services provided by the IRS. Since Fiscal Year (FY) 2002, taxpayers have consistently complained on the Surveys that the automated menus and messages on the AUR toll-free telephone system were confusing. In FY 2005, AUR Program management began working to improve the information provided to taxpayers using the automated information on their toll-free telephone lines. In January 2006, the automated menus and messages were updated to reduce taxpayer confusion and provide taxpayers faster access to needed information.
Further Action Is Needed to Increase the Automated Underreporter Program Level of Service
The Level of Service in answering telephone calls is the IRS’ primary measure of providing taxpayers with access to a live assistor. The basic Level of Service computation is the number of calls answered divided by the number of available calls.[3] In FY 2005, the AUR Program Level of Service provided to taxpayers averaged 71 percent; for the first 6 months of FY 2006, it averaged 61 percent. During FY 2005, there was no formal Level of Service goal; however, the AUR Program monitored performance as it tried to achieve a 75 percent Level of Service. For FY 2006, a 75 percent Level of Service goal was established. AUR Program management anticipated productivity gains in January 2006 due to a reduction in the number of taxpayers receiving busy signals when the Universal Call Routing system was implemented. However, these gains have not been realized consistently.
The AUR Program call sites experienced a 56 percent increase in taxpayer call volumes during the first 6 months of FY 2006 in comparison to the last fiscal year. Additional taxpayers were calling because the AUR Program had issued 39 percent more notices during these first 6 months. AUR Program management scheduled more notices to be issued to meet their FY 2006 case closure goal, which included an additional 100,000 cases over the goal for FY 2005. In addition, a Modernization and Information Technology Services organization programming problem prevented scheduled notices from being issued during December 2005 and January 2006. As a result, AUR Program management significantly increased the number of notices issued during subsequent months to keep on schedule. Also, more notices were issued in FY 2006 as a result of employees resolving fewer discrepancies during the initial screening of the taxpayers’ tax returns.
AUR Program management stated they had updated the forecasted weekly call volumes and scheduled assistor resources to address anticipated additional taxpayer calls made in response to the increased notices. However, the actual call volume statistics indicated that far more taxpayers than forecasted called in response to the notices. As a result, during the 4-week period beginning December 25, 2005, the daily Level of Service provided to taxpayers averaged 51 percent and ranged from 17 percent to 80 percent. The Level of Service fluctuated based on the number of telephone calls that resulted from the number of notices issued. Figure 1 presents the average Level of Service provided to taxpayers during the first 9 months of FY 2006.
Figure 1: Average Level of Service Provided to Taxpayers for the First 9 Months of FY 2006
|
Month |
Average Level
of Service |
|
October 2005 |
75 percent |
|
November 2005 |
81 percent |
|
December 2005 |
69 percent |
|
January 2006 |
44 percent |
|
February 2006 |
74 percent |
|
March 2006 |
55 percent |
|
April 2006 |
64 percent |
|
May 2006 |
72 percent |
|
June 2006 |
64 percent |
Source: AUR Program
telephone call data (Snapshot Report) provided by the
Although the Level of Service dramatically declined in January 2006, AUR Program management increased the number of notices issued weekly from mid-January through March. This resulted in the call sites continuing to experience difficulty in providing an appropriate Level of Service through June 2006.
As of March 31, 2006, AUR Program management was exceeding their mid-year case closure goal by 4 percent. Despite this, many taxpayers that received notices were unable to gain assistance from the call sites. During the first 6 months of FY 2006, 165,766 taxpayers hung up before reaching an assistor, and another 120,755 received busy signals. Assistors did provide assistance to 401,520 taxpayers. However, taxpayers waited a long time to speak to an assistor. The average speed of answering calls increased to 14 minutes compared to 11 minutes during FY 2005.
This increase in call volumes contributed to the lower Level of Service in the second quarter of FY 2006. Figure 2 shows the Level of Service for FYs 2003, 2004, and 2005 and the first 6 months of 2006.
Figure 2: Level of Service Provided to Taxpayers
Figure 2 was removed due to its
size. To see Figure 2, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
AUR Program management stated their long term goal was to have an 80 percent Level of Service, which they hoped to achieve in a couple of years. The IRS has its Level of Service goals for other toll-free telephone operations at over 80 percent. For example, the IRS’ FY 2006 Level of Service goal for the Customer Account Services function toll-free telephone lines for taxpayers seeking assistance in understanding the tax law is 82 percent.
AUR Program management does not expect that they will be able to meet the 75 percent goal for FY 2006 as a whole due to the low Level of Service already experienced. They stated that they were taking steps to improve the Level of Service by applying more resources to the telephone activity, looking closely at assumptions used to forecast expected call volumes, and evaluating the resources needed to meet service levels.
Although
there is no set standard for answering telephone calls, a study conducted by
the State of
Increasing the Level of Service would allow more taxpayers to timely access an assistor to resolve discrepancies and to reach agreement as to whether additional tax is owed. During FY 2005, 214,556 callers hung up without receiving assistance and an additional 191,950 received busy signals. Figure 3 shows the number of callers requesting assistance compared to the number of callers receiving assistance and the number of callers who hung up.
Figure
3: Callers Requesting Assistance
|
|
FY 2003 |
FY 2004 |
FY 2005 |
FY 2006[4] |
|
Callers Who Requested an Assistor |
575,016 |
833,571 |
1,086,851 |
567,286 |
|
Calls Handled by an Assistor |
440,105 |
658,978 |
872,295 |
401,520 |
|
Callers Who Hung Up Before |
134,911 |
174,593 |
214,556 |
165,766 |
Source: AUR Program telephone call data on the
Difficulties in responding to notices can result in additional burden to taxpayers. If taxpayers do not respond within the time period specified on the AUR Program notice, they can be assessed additional tax. During FY 2005, 652,365 taxpayers did not respond to a Statutory Notice of Deficiency[5] issued by the AUR Program and were assessed additional tax. While the amounts assessed may be correct in many of these instances, there are also instances in which additional information provided by the taxpayer may have reduced or eliminated the amount of the discrepancy. Had the AUR Program maintained an 80 percent Level of Service in its telephone operations, we estimate an additional 83,295 taxpayers[6] could have been afforded the opportunity to resolve their discrepancies in each of the past 3 years. Because this condition will continue to occur if not corrected, we estimate an additional 416,475 taxpayers could be provided service over the next 5 years if AUR Program management increases the Level of Service to 80 percent. The IRS should ensure taxpayers attempting to resolve AUR Program notices receive a Level of Service commensurate with that provided to taxpayers with other types of inquiries. This would help to ensure the correct amount of tax is assessed.
Recommendation
Recommendation 1: The Commissioner, W&I Division, should increase the Level of Service goal for the AUR toll-free telephone operations to help ensure it is commensurate with that provided by other IRS toll-free telephone operations.
Management’s Response