Tax Administration:

Assessment of IRS' 2001 Tax Filing Season

GAO-02-144: Published: Dec 21, 2001. Publicly Released: Dec 21, 2001.

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GAO assessed the Internal Revenue Service's (IRS) performance in the following five key tax filing season activities: (1) processing individual tax returns and refunds, (2) increasing the extent to which individual income tax returns are filed electronically, (3) answering telephone calls and providing quality telephone service, (4) providing accurate and timely face-to-face assistance at its Taxpayer Assistance Centers (TAC), and (5) providing services via the Internet. GAO found that IRS' performance during the 2001 filing season varied. Although there was less information available on which to base a judgement than in past filing seasons, IRS' processing of 130 million individual income tax returns and 94 million refunds in 2001 went smoothly. IRS addressed problems quickly, with relatively minor impact on taxpayers. About 31 percent of all individual income tax returns were filed electronically in 2001--an increase of 13.7 percent compared to 2000. That rate of increase was below IRS' goal of 20 percent and the lowest percentage since 1996. IRS has identified several impediments, but it lacks enough information to determine why about 40 million individual income tax returns were prepared on computers but filed on paper in 2001. IRS has several measures to assess the ability of taxpayers to reach an IRS assistor by telephone and the accuracy of IRS' responses to callers. IRS improved its performance in varying degrees in three of four accessibility measures and met or exceeded two of its four goals for accuracy in 2001. The number of taxpayers assisted at TAC's declined in 2001 because, IRS officials believe, taxpayers made greater use of other forms of assistance, including IRS' website. IRS did not measure the quality of service provided by TACs during the filing season, but a review by the Treasury Inspector General for Tax Administration showed that the accuracy of tax law assistance was poor. Finally, overall usage of IRS' website increased. GAO's assessment of the website found that (1) a key IRS measure for tracking site usage--number of "hits"--is calculated in a way that calls into question the measure's usefulness and (2) the site is usable, but could be more user-friendly.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In responding to this recommendation, IRS said that as new processing initiatives are developed, it would incorporate a plan in its project documentation to ensure review of the implementation and effectiveness of each initiative. GAO noted during its review of the 2002 filing season that IRS had expanded the type of information available with which to assess the effectiveness of the third-party-authorization checkbox initiative--one of the initiatives for which IRS had limited evaluative information in 2001. IRS also provided us with extensive project documentation surrounding its Remittance Transaction Research Project showing improved project management of that initiative. Specifically, in a business case on the project, IRS projected benefits it should attain through the initiative. Upon completion of the project, IRS evaluated its results in a post-implementation review in May 2005, determining whether the expected benefits had been achieved. The use of a business case and post-implementation review are consistent with project management through Enterprise Life Cycle and Enterprise Life Cycle Lite, IRS's tools for project management of this type of project.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to develop a plan for evaluating the implementation and effectiveness of processing initiatives.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: In response to this recommendation, IRS conducted three surveys--one of paid practitioners who prepared returns on computers but filed the returns on paper, one of taxpayers who paid practitioners who prepared returns on computers but filed the returns on paper, and one of taxpayers who prepared their own returns on computers but filed them on paper.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to directly survey tax practitioners and taxpayers who prepare returns on computer but do not file electronically.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: According to field assistance officials, IRS developed plans to resolve the facility, staffing, equipment, and training problems identified in GAO's report. IRS raised the level of employee training to an average of 6 weeks and added an intensive course on how to equip, plan, and evaluate taxpayer assistance center (TAC) operations. To engage managers in the improvement process, IRS established Manager Councils in each of the 7 field assistance areas and completed filing season readiness checklists for each TAC. IRS's employee satisfaction survey provided an indicator that these steps had a positive effect--field assistance staff were more positive about training in 2002 than they were in 2001.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to work with TAC managers to determine if there are any significant facility, staffing, equipment, and training problems that are not addressed in existing improvement plans, and develop appropriate plans for resolving those problems.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Implemented

    Comments: According to field assistance officials, among other things, IRS provided better training and improved access to taxpayer account information, required a period of uninterrupted learning time for each Tax Resolution Representative and established several on-line job aids. Based on the results of quality reviews done by the Treasury IG for Tax Administration in 2002, those steps appear to have had a positive effect on quality. The IG reviews showed that the accuracy of tax law assistance provided to taxpayers by field assistance staff improved from about 25 percent in the 2001 filing season to about 50 percent in 2002.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to, to the extent practical, take action to correct tax law accuracy problems reported by IRS and TIGTA in 2000 and 2001, respectively, in time to improve the accuracy of tax law assistance provided by TACs in the 2002 filing season rather than deferring quality improvements until data from the new measurement system are available.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Closed - Not Implemented

    Comments: IRS, in its response to this report, said that it wanted to continue to count hits as a measure of performance of the web site because the number of hits indicates site use/traffic, and IRS uses the data to measure system performance and estimate system needs. IRS also recognized, however, that it can improve its method of counting hits when it implemented a more sophisticated, comprehensive web project in January 2002. IRS implemented that project as planned but is still counting hits the same way.

    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to either discontinue the use of hits as a measure of the performance of IRS' Web site or revise the way hits are calculated so that the measure more accurately reflects usage.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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