Collecting Back Taxes:

IRS Phone Operations Must Do Better

IMTEC-91-39: Published: Jun 18, 1991. Publicly Released: Jun 27, 1991.

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Rona B. Stillman
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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Automated Collection System (ACS), focusing on ACS call sites' effectiveness in calling and providing assistance to persons who owed taxes.

GAO found that: (1) during fiscal year (FY) 1990, the call sites collected about $2.6 billion in back taxes and assessed another $1.6 billion to be collected later; (2) although ACS represented a great improvement over the manual collection system it replaced, ACS has not significantly improved since FY 1985; (3) call sites closed an average of 600 cases per staff year, although collection cases steadily increased from just under 575,000 in 1985 to about 950,000 in September 1990; (4) incoming callers to ACS sites frequently received busy signals or abandoned calls after waiting on hold; (5) only 10 of 23 call sites followed IRS policy for being open 64 hours a week to reach potential taxpayers during evenings and weekends; (6) state and private collection agencies used automated dialing systems, located collection offices in areas with high unemployment rates, and used flexible work hours, part-time help, and incentive pay to ensure adequate staffing; (7) during FY 1990, call site employees charged 52 percent of their time to overhead; (8) although private collection agencies' operations differed from ACS sites, they typically had much lower overhead rates; (9) regional offices operated their call sites differently, making it difficult to improve operations; and (10) although IRS cannot use private collection agencies to collect delinquent taxes, such agencies could help IRS to evaluate and improve its call sites' operations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to GAO's report, IRS established standard hours of operation at call sites and installed call routing systems at all 23 customer service sites. In March 1996, IRS awarded a contract to pilot a system for making outgoing calls. The system was installed at the Buffalo, New York, customer service site and pilot tested from October 1, 1996 to March 29, 1997. According to IRS, preliminary results show the system is performing as anticipated. A final evaluation report of the pilot, including recommendations for nationwide rollout, is expected by the end of May 1997.

    Recommendation: Because of the potential for increasing the collection of back taxes, the Commissioner of Internal Revenue should implement at all call sites: (1) automation for making outgoing calls and for receiving and directing incoming calls; and (2) standard hours of operation.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: The IRS effort to establish meaningful measurements of ACS productivity and level of service is complete. Baseline measurements to evaluate performance of all sites are now available from U.S. Sprint. Contractor assistance has been obtained to ensure that these ACS features are included in the design of the Integrated Case Processing program. In addition, IRS still plans to conduct additional studies of private sector collection operations as part of its Contracting Out Study.

    Recommendation: The Commissioner of Internal Revenue should expeditiously establish measurements, such as target overhead rate, to evaluate the performance of call sites. Private collection agencies should be used to help do this, and to look at call site operations and identify specific management, technological, operational, and organizational changes that would improve the collection of back taxes.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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