Tax Administration:

IRS' Service Centers Need to Improve Handling of Taxpayer Correspondence

GGD-88-101: Published: Jul 13, 1988. Publicly Released: Jul 13, 1988.

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In response to a congressional request, GAO discussed the Internal Revenue Service's (IRS) efforts to improve its handling of taxpayer correspondence to determine whether the IRS Adjustments/Correspondence Branches: (1) accurately and clearly correspond with taxpayers; and (2) comply with administrative procedures.

GAO reviewed a random sample of IRS cases involving correspondence and found that: (1) about half of the correspondence contained correct, complete, and clear information; (2) 31 percent contained critical errors involving incorrect adjustments and unresponsive letters to taxpayers; (3) 16 percent contained noncritical problems involving unclear or incomplete letters or incomplete actions; and (4) in 68 percent of the cases, IRS personnel failed to comply with administrative procedures requiring them to send acknowledgement letters and interim responses to taxpayers. GAO also found that IRS: (1) planned to implement a new computer system in 1990 which would facilitate the selection of appropriate responses to taxpayer inquiries; (2) lacked specific information on the quality of its cases involving correspondence; and (3) had difficulty retaining examiners because of the strict requirements and lack of advancement.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS has installed one automated correspondence system in all service centers and has started using a second system in some centers. Those systems satisfy the requirements specified in this recommendation. GAO saw one system operating in Cincinnati. It does allow viewing of the entire letter once composed and should help tax examiners prepare letter responses to taxpayers.

    Recommendation: The Internal Revenue Service should ensure that the system being developed to help tax examiners compose responses to taxpayer inquiries: (1) allows examiners to review letters after they have been composed; and (2) facilitates the preparation of responsive answers to taxpayer correspondence involving more than one inquiry.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS has developed a system that will enable it to report the information specified in the recommendation and has trained people in its use. Separate quality data/error rates are now being reported for correspondence being sent to taxpayers.

    Recommendation: The Internal Revenue Service should report separately the quality assurance error rates associated with Adjustments/Correspondence Branch cases involving correspondence being sent to taxpayers.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: The Fresno Service Center completed a test where tax examiners were taken off measured work. General consensus was that employees preferred measured work because it took the bias out of performance evaluations. Quality and quantity standards are now changed for these personnel on a quarterly basis. IRS is experimenting with a GS-8 tax examiner position in some centers.

    Recommendation: The Internal Revenue Service should determine whether the qualifying requirements, the quality and quantity performance standards, and the opportunity for advancement for the Adjustments/Correspondence Branch tax examiner position need to be revised.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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