Tax Administration:

The Internal Revenue Service Can Improve Its Management of Paper Case Files

GAO-07-1160: Published: Sep 28, 2007. Publicly Released: Oct 11, 2007.

Additional Materials:

Contact:

Michael Brostek
(202) 512-9039
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Proper paper case file management is a significant issue for the Internal Revenue Service (IRS) because its staff investigate and close millions of case files every year. In addition, IRS employees depend heavily on case files when pursuing enforcement actions. GAO was asked to review IRS's case file storage, tracking, and documentation processes to determine whether IRS has (1) an effective process to ensure that paper case files can be located timely and (2) sufficient data to assess the performance of its paper case file processes. To review these processes, GAO interviewed staff who request case files and case file managers.

IRS does not have an effective process to ensure that paper case files can be located within the requesters' time frames. Missing case files can result in lost revenue, create unnecessary taxpayer burden, and make case files unavailable for other units such as quality review groups or advisory groups. IRS has acknowledged its historic difficulties in locating and retrieving case files. When IRS cannot locate paper case files, it may attempt to re-create them by requesting information from taxpayers, which can result in unnecessary taxpayer burden. Difficulties in locating case files can also hinder congressional oversight. When GAO requested case files in two prior audits, IRS could not locate all of the case files requested. IRS does not have sufficient data to assess the performance of its paper case file management processes. Having such data would enable IRS to assess whether its case management processes are in accordance with FRA and internal control standards. IRS does not track whether all of the case files it requests are located or received timely, or the reasons why case files cannot be located. If IRS developed this type of data, officials could use this data to identify problems in existing programs, to try to identify the causes of problems, and/or to develop corrective actions. Records management officials have recently instituted some performance measures, but these measures do not specifically address paper case files. IRS program managers also have not developed performance measures or data to determine how well paper case files are managed to achieve performance targets. Program managers do not know who has overall responsibility for case file management so performance information cannot be developed across IRS's compliance programs. GAO identified some potential improvements that IRS can consider, but IRS will need to determine which improvements are the most cost effective.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: By November 2009, IRS had placed current contact listings for campus coordinators and Area Records Managers on its website and changed one of its Files Activity phone numbers.

    Recommendation: To ensure that paper case files are readily available for examination, the Acting Commissioner of Internal Revenue should reiterate to staff who the campus coordinators and Area Records Managers are for requesting paper case files.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: In March 2008, IRS developed procedures for expediting large case file requests from GAO and TIGTA and subsequently performed training on these procedures. In addition, IRS developed a job aid for interpreting charge out information; developed a files informational tips document; and revised document request forms to improve IRS staff requests for case files. Also, IRS subsequently developed special procedures to expedite Freedom of Information Act (FOIA), Ex Parte, and 6103D case file requests.

    Recommendation: To ensure that paper case files are readily available for examination, the Acting Commissioner of Internal Revenue should establish clearer responsibility for coordinating large samples of case files to provide specific reasons why case files cannot be located.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: In February 2008, IRS established a Records and Files Coordination Team, which meets quarterly or as needed to coordinate efforts to improve IRS's management of case files.

    Recommendation: To ensure that paper case files are readily available for examination, the Acting Commissioner of Internal Revenue should ensure that case file performance is monitored across IRS's compliance programs by clearly defining responsibility for doing so.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Implemented

    Comments: In April 2010, IRS collected data at one Submission Processing Center on the number of unfulfilled document requests and reasons for failures, including data on requests for case files. IRS's analysis of this data identified several areas for improvement one of which included requests for case files. In addition, IRS collected data to determine a Files service rate which IRS established as a performance measure at that center, and collected data on other performance measures that were already in the Internal Revenue Manual.

    Recommendation: To ensure that paper case files are readily available for examination, the Acting Commissioner of Internal Revenue should ensure that case files are managed in accordance with Federal Records Act and internal control standards including tracking the number of paper case files that cannot be located or are received untimely and the reasons why and developing performance measures to monitor the effectiveness of the paper case file process to assist in determining which options for improving paper case file management are the most beneficial for IRS.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Closed - Implemented

    Comments: In October 2008, the Director, Collection Policy sent out a memorandum reminding Collection field offices to ship closed case files as soon as the respective cases are closed in accordance with the Internal Revenue Manual. In addition, IRS has developed briefing materials for new employees on record responsibilities which include case files. In April 2010, IRS collected data at one Submission Processing Center on the number of unfulfilled document requests and reasons for failures, such as when no source document was received. IRS's analysis of this data identified several areas for improvement one of which included developing a method to identify missing source documents. In addition, IRS developed a stamp which is to be used in Files Activities to indicate when a source document is not received.

    Recommendation: To ensure that paper case files are readily available for examination, the Acting Commissioner of Internal Revenue should ensure that paper case files are sent to storage areas as soon as the cases are closed; include with the Integrated Data Retrieval System Transaction Record documentation that indicates whether a case file was sent to storage; and track the number and location of paper case files that have not been sent to storage.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

Explore the full database of GAO's Open Recommendations »

Sep 22, 2014

Sep 18, 2014

Aug 11, 2014

Jul 29, 2014

Jul 22, 2014

Jul 18, 2014

Jul 7, 2014

Jul 2, 2014

Jun 13, 2014

May 30, 2014

Looking for more? Browse all our products here