IRS Modernization:

IRS Should Enhance Its Performance Management System

GAO-01-234: Published: Feb 23, 2001. Publicly Released: Apr 2, 2001.

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The Internal Revenue Service (IRS) has made progress in revamping its performance management system. The goals, objectives, and measures that IRS has developed, along with its new strategic planning and budgeting process, are intended to integrate results-oriented management into IRS' daily decision-making. However, as IRS officials acknowledge, extensively revamping a performance management system is a complex task that takes years to complete. GAO identified several opportunities to enhance IRS' performance management system, including clarifying goals and objectives, improving the linkages between measures, objectives, and goals, and developing fewer but more specific action items. Such enhancements could increase managerial accountability and create stronger incentives for frontline employees to achieve IRS' goals and objectives.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Because of IRS' comprehensive revision of its strategic planning process, this recommendation is no longer applicable. The operating divisions no longer establish their own strategic objectives, negating the need for performance measures to monitor progress toward objectives.

    Recommendation: As IRS continues to refine its performance management system, the Commissioner of Internal Revenue should take steps at both the agencywide and division levels to enhance the system. At the division level, these steps are to revise or develop operational performance measures to ensure that the measures are directly linked to operational objectives.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Not Implemented

    Comments: Because of IRS' comprehensive revision of its strategic planning process, this recommendation is no longer applicable. The operating divisions no longer establish their own strategic objectives. Instead, the strategic and program plans identify the measures they will use to monitor the division's contribution to IRS's agency-wide strategic objectives.

    Recommendation: As IRS continues to refine its performance management system, the Commissioner of Internal Revenue should take steps at both the agencywide and division levels to enhance the system. At the division level, these steps are to revise or develop operating objectives to ensure that they are specific, measurable, and outcome or output oriented.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Not Implemented

    Comments: Because of IRS' comprehensive revision of its strategic planning process, this recommendation is no longer applicable. The operating divisions no longer establish their own strategic goals. Instead, the strategic and program plans identify the measures they will use to monitor the division's contribution to IRS' agency-wide strategic objectives.

    Recommendation: As IRS continues to refine its performance management system, the Commissioner of Internal Revenue should take steps at both the agencywide and division levels to enhance the system. At the division level, these steps are to clarify three strategic goals to better articulate IRS' future direction, indicate the expected impact of achieving the goal, and provide a clear basis for establishing objectives.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Implemented

    Comments: In its 2005-2009 strategic plan, IRS revised the strategic goal to read "improve taxpayer service" and laid out 3 new strategic objectives. IRS identified 6 performance measures for this strategic goal. One new measure, rate of accuracy, is a quality measure, i.e. the percentage of customers receiving accurate responses to their tax law inquiries and account inquiries.

    Recommendation: As IRS continues to refine its performance management system, the Commissioner of Internal Revenue should take steps at both the agencywide and division levels to enhance the system. At the agencywide level, these steps are to add a measure of quality--that is, whether the taxpayers' problems are correctly handled within the context of the law--to the agencywide performance measures for the strategic objectives of providing quality service to taxpayers who need help or who may owe additional taxes, and provide a performance measure for the objective, "increase fairness of compliance."

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Closed - Implemented

    Comments: In its 2005-2009 strategic plan, IRS replaced its objective of "increase fairness of compliance" with four objectives that are more clearly stated and measurable. These objectives are to (1) discourage and deter noncompliance with emphasis on corrosive activity by corporations, high income individual taxpayers and other contributors to the tax gap, (2) ensure that attorneys, accountants and other tax practitioners adhere to professional standards and follow the law, (3) detect and deter domestic and off-shore based tax and financial criminal activity, and (4) deter abuse within tax-exempt and governmental entities and misuse of such entities by third parties for tax avoidance or other unintended purposes.

    Recommendation: As IRS continues to refine its performance management system, the Commissioner of Internal Revenue should take steps at both the agencywide and division levels to enhance the system. At the agencywide level, these steps are to clarify the strategic objective, "increase fairness of compliance," to more precisely express the desired result in ways that can be measured.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  6. Status: Closed - Implemented

    Comments: At the time of GAO's report, IRS required managers to develop both commitments (broad statements regarding how managers would support overall objectives) and action items (more specific statements of what the manager would do in the upcoming year to support the operating objectives). As part of the ongoing evolution of its performance management system, IRS dropped the requirement for action items in 2003, but reframed the concept of commitments to incorporate the attributes of action items. In response to GAO's recommendation, IRS' guidance to managers on developing effective commitments states commitments should be specific, measurable, and outcome oriented.

    Recommendation: IRS should provide better guidance to unit managers on how to develop action items that are few enough to focus employees' attention and are specific, measurable, and outcome or output oriented.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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