●

- Addressed

◐

- Partially Addressed

○

- Not Addressed

◉

- Consolidated or Other

℗

- Pending

⊘

- Closed-Partially Addressed

⊗

- Closed-Not Addressed

Year Identified: 2016

Area Number: 6

Area Type: Fragmentation, Overlap & Duplication

Action:

The Commissioner of Internal Revenue should establish a coordination mechanism to facilitate communication and information sharing across Internal Revenue Service (IRS) referral programs on crosscutting tax issues and ways to improve efficiency in the mechanisms for public reporting of possible tax violations.

Progress:

As of December 2019, IRS had established a coordination mechanism to help IRS referral programs communicate and share information, as GAO recommended in its February 2016 report. IRS initially established a cross-functional team in February 2016 to comprehensively review IRS's referral programs.

Among other things, this team explored aligning all IRS referral programs within an organizational structure to more effectively coordinate, communicate, and share information across the referral programs. The Deputy Commissioner of Services and Enforcement directed the largest recipient of referrals to facilitate quarterly meetings in order to improve communication and information sharing across multiple IRS referral programs.

Three initial meetings were held in 2017, and IRS drafted a charter to formalize the new referral coordination group. The five participating IRS divisions finalized the cross-division committee charter in September 2019, and the first quarterly committee meeting was in November 2019. The cross-division committee is charged with adapting to use the planned online referral system once the new technology is funded and operating. With a broader collaborative mechanism to communicate across referral programs, IRS will be better positioned to assist the public and leverage resources to streamline multiple referral form processes.

Action:

The Commissioner of Internal Revenue should direct the referral programs to establish a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission in order to better position the Internal Revenue Service (IRS) to leverage specialized expertise while exploring options to further consolidate the initial screening operations.

Progress:

As of December 2019, IRS had taken some action to establish a mechanism to coordinate on a plan and timeline for developing a consolidated, online referral submission, as GAO recommended in its February 2016 report. IRS established a cross-functional team in February 2016 to comprehensively review IRS's referral programs. Among other things, the team has explored options to consolidate the initial screening operations and determine the scope and complexity for moving the referral process to an online format. According to IRS, an electronic submission process is expected to provide better access to the program and reduce the burden associated with making a written report or referral.

In November 2016, the cross-functional team requested information technology resources for fiscal year 2019 to develop an online system which could potentially replace four separate referral forms, filter out incomplete referrals, and electronically route referrals for further IRS action. IRS assessed options for consolidating all forms for the various referral programs and determined that consolidating them to a single form was not feasible because of the technical nature and complexity of the various referral types.

The cross-functional team had worked with IRS Online Services to develop an online application prototype and was considering the cost-effectiveness of a commercial off-the-shelf product. According to IRS, the online application will make it easier for the public to report possible tax violations. Also, the online system will improve efficiency in coordination and provide reports that will be incorporated into the quarterly meetings of the new cross-division referral coordination committee.

As of January 2020, IRS was still considering fiscal year 2020 funding for online referral submission development. IRS estimated that a commercial off-the-shelf product would cost about $2 million with an online referral capacity operational within one year. IRS said it will consider further consolidating the referral programs once the online application is in place. Without continued progress on efforts to consolidate referral intake, IRS faces continued inefficiencies in receiving and processing referrals as well as public confusion caused by trying to choose among multiple forms.

Action:

The Commissioner of Internal Revenue should implement a staffing plan for streamlining the intake and initial review process for the whistleblower program to make more efficient use of staff resources.

Progress:

On July 10, 2016, the Internal Revenue Service (IRS) Whistleblower Office and the Small Business/Self Employed (SB/SE) operating division entered into an agreement to transfer a number of whistleblower claims process functions from the Whistleblower Office to SB/SE to streamline the intake and initial review process, as GAO recommended in its October 2015 report. This realignment gives SB/SE operational responsibility for the Initial Claim Evaluation unit, which performs the intake and initial review functions among other responsibilities, and will allow SB/SE to help ensure the resources of this unit are used efficiently and effectively. The agreement also includes expected time frames for a number of intermediate steps in the whistleblower claims review process. Whistleblower Office and SB/SE officials will meet at least quarterly, share operational data weekly, and within 6 months will evaluate the realignment and corresponding resource needs; however, it is too soon to determine what efficiency gains or resource savings will result from the realignment. Having a more streamlined staffing strategy will allow the Whistleblower Office to review more claims in a timely manner and get information to examiners more quickly to help IRS collect additional revenue.

Action:

The Commissioner of Internal Revenue should develop an additional or revised fact sheet, publish additional information about the whistleblower program on the Internal Revenue Service (IRS) website, or both.

Progress:

In August 2016, IRS published a new fact sheet that outlines the whistleblower claim review process, as GAO recommended in October 2015. IRS published a new fact sheet that includes key pieces of information including a flowchart of the entire claim review process, time ranges for each step in the process, key taxpayer rights that a taxpayer may exercise during the process, examples of why claims may be denied, and information on what to include when submitting a claim. IRS published the fact sheet to www.irs.gov and included reference to it in three of the Whistleblower Office’s templated letters to whistleblowers. IRS receives thousands of claims annually that are not actionable, and the Whistleblower Office expends significant resources sorting through these claims to identify those that warrant further evaluation. IRS acknowledges, and GAO agrees, that both whistleblowers and IRS stand to benefit greatly from this communication initiative because it could ultimately strengthen claims submission and reduce claims that are not productive.

Action:

The Commissioner of Internal Revenue should develop a comprehensive plan for evaluating the costs and benefits of the pilot annual status letter program, including obtaining feedback from whistleblowers in the pilot regarding the usefulness of the letter.

Progress:

Whistleblower Office officials analyzed cost and benefit information on the pilot annual status letter program, as GAO recommended in an October 2015 report. They determined that the program should not be fully implemented because the costs and risks of the program outweighed any potential benefit.  More than 29 percent of the letters sent in the pilot program sample were returned as undeliverable, increasing the risk of exposing the identity of a whistleblower. Whistleblower Office officials determined this was an unacceptable level of risk. Whistleblower Office officials also determined that the letters did not provide any information to whistleblowers that they did not already have. Further, they determined that fully implementing the annual status letter program would require 2.67 full-time equivalents, which can now be allocated to other responsibilities within the Whistleblower Office. As a result of this cost-benefit analysis and resulting termination of the pilot program, Whistleblower Office officials made other changes to procedures to allow for communication with whistleblowers during the award determination process to start up to 2 years earlier than previously allowed, effective August 1, 2016. Communicating relevant information earlier to whistleblowers will help address a common complaint by the whistleblower community about the lack of timely communication from the Whistleblower Office and could encourage more whistleblowers to come forward with information.