Tax Administration:

Planning for IRS's Enforcement Process Changes Included Many Key Steps but Can Be Improved

GAO-04-287: Published: Jan 20, 2004. Publicly Released: Feb 19, 2004.

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In recent years, the Internal Revenue Service (IRS) has experienced declines in most of its enforcement programs, including declines in audits and in efforts to collect delinquent taxes. Increasing enforcement productivity is one strategy that can help reverse these declines. To this end, IRS is currently planning and has begun implementing enforcement process improvement projects. GAO was asked to assess the extent to which the planning for the projects followed steps consistent with both published GAO guidance and the experiences of private sector and government organizations. Specifically, GAO assessed the extent to which four judgmentally selected projects followed the 20 planning steps.

Planning for the four enforcement process improvement projects GAO reviewed included most of the 20-step framework developed to assess the projects. This increases the likelihood that projects target the right processes for improvement, choose the best target process from among alternatives, effectively implement the project, accurately assess project outcomes, and properly manage the change to the new process. However, none of the projects completed all of the steps. For example, some projects did not fully identify the causes of productivity shortfalls, leaving a risk that the project did not fix the right problem. In the course of this work, GAO found that IRS managers do not have guidance about the steps to follow in planning process improvement projects, increasing the possibility of omitting steps. A recurring issue in the four projects was that IRS's enforcement data only partially adjust for the complexity and quality of cases worked. This issue is also a problem for IRS enforcement productivity data generally. Failing to adjust for both complexity and quality increases the risk that trends in productivity will be misunderstood. For example, a decline in the number of cases closed per employee at the same time that case complexity is increasing may not be a real decline in productivity. GAO recognizes that some options for improving productivity data could be costly. However, costs could be mitigated by using existing statistical methods and IRS complexity and quality data.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Commissioner of Internal Revenue should ensure that Small Business/Self Employed Division (SB/SE) put in place a framework to guide planning of future SB/SE process improvement projects. The framework that GAO developed for this report is an example of such a framework.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to the Director of Business Process Reengineering for IRS's Small Business/Self Employed (SB/SE) operating division, as of September 2005, SB/SE reengineering projects employ a framework consistent with the model described in the GAO report.

    Recommendation: The Commissioner of Internal Revenue should ensure that SB/SE invest in enforcement productivity data that better adjust for complexity and quality, taking into consideration the costs and benefits of doing so.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to the Director of Business Process Reengineering for IRS's Small Business/Self Employed (SBSE) operating division, as of September 2005, SB/SE reengineering projects are guided by a productivity model developed by SB/SE Research. The model uses a balanced measures approach to performance data and includes workload quality and complexity.

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