Tax Administration:

IRS' Implementation of the Restructuring Act's Personnel Flexibility Provisions

GGD-00-81: Published: Apr 28, 2000. Publicly Released: May 31, 2000.

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Pursuant to a congressional request, GAO provided information on the Internal Revenue Service's (IRS) Restructuring and Reform Act's personnel flexibility provisions, focusing on: (1) IRS' implementation of these provisions; and (2) any tax administration concerns that may have arisen in relation to implementation.

GAO noted that: (1) IRS has implemented or begun to implement the mandated personnel flexibility provisions in the Restructuring Act; (2) specifically, the agency has: (a) begun implementing a new three-phase performance management system; (b) been reviewing alleged employee misconduct, and, as of March 1, 2000, had terminated 17 employees for misconduct; (c) been working to eliminate enforcement statistics in employee evaluations; and (d) implemented a new training program emphasizing customer service; (3) IRS has also begun using some of the discretionary personnel flexibility provisions permitted by the Restructuring Act; (4) senior managers have been hired at critical pay, a new pay-banding system for non-Senior Executive Service managers has been adopted, and several streamlined demonstration projects and new separation incentive payments are under development; (5) also, certain recruitment, retention, and performance bonuses have been paid; (6) IRS' implementation of the personnel flexibility provisions raises several tax administration concerns; (7) as GAO's prior report and a Treasury Inspector General for Tax Administration (TIGTA) report have noted, IRS has had difficulty in eliminating the use of enforcement statistics in employee evaluations; (8) another TIGTA report found that IRS has had difficulty developing an accurate system for counting taxpayer complaints of employee misconduct; (9) in addition, as GAO has previously reported, IRS employees have taken significantly fewer enforcement actions to collect delinquent taxes since passage of the Restructuring Act; and (10) frontline employees GAO spoke to believed that the decline was due to a lack of agency guidance on how to interpret the provision concerning employee misconduct.

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