Taxpayer Advocate Service: Opportunities Exist to Improve Reports to Congress

GAO-21-217 Published: Jun 16, 2021. Publicly Released: Jun 16, 2021.
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Fast Facts

IRS's Taxpayer Advocate Service helps taxpayers deal with IRS by: 1) resolving individual taxpayer cases; and 2) working with IRS to resolve systemic problems that affect groups of taxpayers. The service has received over 2 million cases since 2011.

Each year, the service is required to give Congress two reports—one that discusses the most serious taxpayer problems, and another that discusses the service's objectives.

We recommended ways to improve these reports. For example, the objectives report could more clearly identify objectives and link them to planned activities to help Congress understand what the service is trying to achieve.

Illustration of a computer monitor displaying the taxpayer advocate service

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Highlights

What GAO Found

The budget for the Internal Revenue Service's (IRS) Taxpayer Advocate Service (TAS) declined by about 14 percent from fiscal years 2011 to 2020, when adjusted for inflation. For fiscal year 2020, TAS used most of its resources to assist individual taxpayers, known as case advocacy. TAS allocated about 76 percent of its $222 million budget and 86 percent of its almost 1,700 full-time equivalents to this purpose. The percentage of resources for case advocacy has decreased during the past decade—in fiscal year 2011 about 85 percent of the budget was devoted to it. For the same period, resources to address broader issues affecting groups of taxpayers, known as systemic advocacy, increased from 9 percent to 14 percent of the total budget. This shift is due in part to the reallocation of staff to better integrate systemic advocacy work and TAS's overall attrition rate more than doubling to 15.9 percent between fiscal years 2011 and 2019.

Since 2011, TAS has received more than 2 million taxpayer cases, of which almost half were referrals from other IRS offices. TAS closed more cases than it received each year from 2012 to 2017, but its inventory has grown since fiscal year 2018, due in part to attrition in case advocacy staff and an increase in taxpayers seeking assistance (see figure below).

Number of Taxpayer Cases Received and Closed, Fiscal Years 2011 to 2020

Number of Taxpayer Cases Received and Closed, Fiscal Years 2011 to 2020

TAS has recently modified its two mandated reports to Congress by reducing their length and separately compiling legislative recommendations. It shortened its annual reports in part because the Taxpayer First Act reduced the required number of most serious taxpayer problems from “at least 20” to “the 10” most serious problems. GAO identified the following additional actions that could further improve TAS reporting.

Report outcome-oriented objectives and progress. The objectives for the upcoming fiscal year that TAS included in its most recent report are not always clearly identified and do not link to the various planned activities that are described. Further, the objectives TAS does identify do not include measurable outcomes. In addition, TAS's reports do not include the actual results achieved against objectives so it is not possible to assess related performance and progress. Improved performance reporting could help both TAS and Congress better understand which activities are contributing toward achieving TAS's objectives and where actions may be needed to address any unmet goals.

Consult with Congress and other stakeholders. TAS briefs congressional committees each year after publishing its annual report and solicits perspectives from stakeholders. TAS officials said they incorporate the perspectives into its objectives. However, TAS does not follow leading practices to consult congressional committees about its goals and objectives prior to publication at least once every 2 years. Thus, it misses opportunities to obtain congressional input on its objectives and performance reporting. Consultations would provide TAS opportunities to confirm if its goals incorporate congressional and other stakeholder perspectives and whether its reports meet their information needs.

Publish updates on recommendation implementation status. By law, TAS's annual report must include an inventory of actions IRS has fully, partially, and not yet taken on TAS's recommendations to address the most serious problems facing taxpayers. If those recommendations take multiple years to implement, which some have as shown in the table below, updating the inventory would be required. In its objectives reports, TAS provides only a one-time inventory of IRS responses to TAS's recommendations made during the preceding year, including plans and preliminary actions taken for those IRS accepts for implementation. TAS does not publicly update the inventory in subsequent annual reports to reflect actions IRS takes or does not take to address TAS's recommendations. This reporting approach does not provide complete information on the status of actions IRS has taken to address serious problems facing taxpayers and also does not provide the information in the annual report, as required. Publishing such updated status information would support congressional oversight.

Taxpayer Advocate Service's (TAS) Recommendation Reporting and Status as of the Fourth Quarter of Fiscal Year 2020

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GAO also identified options for TAS to consider to improve its reporting. These options include explaining changes to the list of the most serious taxpayer problems from year to year and streamlining report sections congressional staff use less frequently.

Why GAO Did This Study

TAS, an independent office within IRS, helps taxpayers resolve problems with IRS and addresses broader, systemic issues that affect groups of taxpayers by recommending administrative and legislative changes to mitigate such problems. Congress mandated that TAS issue two reports every year—one known as the annual report which includes sections on, among other things, the 10 most serious problems encountered by taxpayers, and the other known as the objectives report that discusses organizational objectives.

GAO was asked to review how TAS carries out its mission, focusing on resources and reporting. This report (1) describes TAS's resources and workload, and (2) assesses TAS's reporting to Congress and identifies opportunities for improvement.

GAO reviewed documents from TAS, IRS, and other sources, including TAS's annual and objectives reports and internal guidance; analyzed TAS's budget, staffing, and workload data for fiscal years 2011 through 2020; and interviewed knowledgeable TAS and IRS officials. GAO assessed TAS's reporting of its objectives and performance against statutory requirements, relevant internal control standards, and selected key practices for performance reporting developed by GAO. In addition, GAO reviewed relevant TAS web pages, analyzed the length and composition of TAS's reports, and interviewed key congressional committee staff to identify additional options to improve TAS's reporting.

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Recommendations

GAO is making seven recommendations to help improve the usefulness of TAS's reports. GAO recommends, among other things, that the National Taxpayer Advocate take the following actions:

  • Clearly identify TAS's objectives for the upcoming fiscal year and link them to TAS's planned activities.
  • Define measurable outcomes for TAS's objectives.
  • Expand TAS's reporting beyond planned activities to include the actual results it achieved through those activities.
  • Consult with congressional stakeholders—at least once every 2 years—and other relevant stakeholders to obtain input on TAS's goals and measures and better understand stakeholders' information needs.
  • Publish updates on the inventory of IRS's actions taken, partially taken, or not taken in response to recommendations made in the most serious problems section of TAS's annual report.

TAS agreed with all of GAO's recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Taxpayer Advocate The National Taxpayer Advocate should clearly identify TAS's objectives for the upcoming fiscal year in its objectives report. This should include clearly linking objectives to TAS's planned activities. (Recommendation 1)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. In its Fiscal Year 2022 Objectives Report to Congress, TAS added clear and consistent labels to more easily identify TAS's objectives and the planned activities that support those objectives. We will continue to monitor TAS's implementation of this recommendation and others related to improving TAS's Objectives Report. As of August 2022, we are reviewing TAS's Fiscal Year 2023 Objectives Report and will follow-up with TAS as needed.
Office of the Taxpayer Advocate The National Taxpayer Advocate should define measurable outcomes for TAS's objectives. This may involve aligning TAS's existing performance goals with its objectives, and where gaps may exist, developing new performance goals. (Recommendation 2)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. However, TAS noted it may face difficulties defining systemic advocacy outcomes that can be directly measured. As stated in our report, clearly aligning activities and related measures to objectives will enable TAS to better understand how its activities contribute to the outcomes it seeks to achieve. Although TAS may not have direct control over those outcomes, such information could help TAS leadership make more informed decisions about actions that could lead to further progress toward those outcomes. At the start of fiscal year 2022, TAS published (online) its annual operational plan, including proposed timeframes for completing activities . TAS plans to provide quarterly updates on its progress. We will continue to monitor TAS's implementation of this recommendation and others related to improving TAS's Objectives Report. As of August 2022, we are reviewing TAS's webpage for information related to its annual operational plan, objectives, and measures and will follow-up with TAS as needed on potential measurable outcomes.
Office of the Taxpayer Advocate The National Taxpayer Advocate should expand TAS's reporting beyond planned activities to include the actual results it achieved through those activities. This performance reporting should include information to help assess progress toward objectives, including full-year performance data and trend information from past years. (Recommendation 3)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. Beginning with the 2022 National Taxpayer Advocate Annual Report to Congress, TAS plans to include performance reporting for fiscal year 2022 and prior years and continue this practice in future Annual Reports. As of August 2022, we continue to monitor TAS's implementation of this recommendation. We plan to review TAS's forthcoming 2022 Annual Report when published in Winter 2023 and will continue to follow up with TAS as needed.
Office of the Taxpayer Advocate The National Taxpayer Advocate should consult with congressional stakeholders—at least once every 2 years—and other relevant stakeholders to obtain input on TAS's goals and measures and better understand stakeholders' information needs. (Recommendation 4)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. We will continue to monitor TAS's implementation of this recommendation. As of August 2022, we are reviewing information related to TAS's goals and measures and will follow-up with TAS to obtain additional information about their consultations to obtain stakeholder input.
Office of the Taxpayer Advocate The National Taxpayer Advocate should publish updates on the inventory of IRS's actions taken, partially taken, or not taken in response to recommendations made in the most serious problems section of TAS's annual report. Updates should include how long those actions have remained on the inventory as partially taken and not yet taken, as well as planned completion dates. Updates should also be discussed as part of TAS's annual report. (Recommendation 5)
Open – Partially Addressed
The Taxpayer Advocate Service (TAS) agreed with this recommendation. TAS has published online information on the status of IRS actions in response to its administrative recommendations from TAS's 2017 to 2021 Annual Reports. The online recommendation status tracker includes IRS's responses to TAS's recommendations, the extent to which IRS adopted the recommendations, updates on corrective actions, and the due date for action on open recommendations. Recommendations can be sorted by annual report year and open/closed status to determine how long actions have been on the inventory. As of August 2022, we continue to monitor TAS's implementation of this recommendation, including fulfilling the requirement to discuss such information in its Annual Reports.
Office of the Taxpayer Advocate The National Taxpayer Advocate should better identify in TAS's annual report what statistical data and sections of the report were or were not included in IRS's review. This should include a discussion of whether IRS found the information it reviewed to be valid or methodologically sound. (Recommendation 6)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. As of August 2022, we continue to monitor TAS's implementation of this recommendation. We will review TAS's 2021 Annual report as well as its forthcoming 2022 Annual Report to be published in Winter 2023. We will follow up with TAS as needed to determine how its Annual Reports clearly identify what data IRS reviewed or the results of IRS's review in accordance with statutory requirements.
Office of the Taxpayer Advocate The National Taxpayer Advocate should update TAS guidance to reflect TAS's current procedures for reviewing annual report sections' statistical data with IRS. (Recommendation 7)
Open
The Taxpayer Advocate Service (TAS) agreed with this recommendation. In preparation for its upcoming Annual Report, TAS planned to update the Internal Revenue Manual and its Process Guide for the Annual Reports to Congress to reflect TAS's procedures for IRS's review of statistical data for the annual report. As of August 2022, we are reviewing information TAS provided to determine whether it has fully implemented this recommendation by documenting necessary steps to help ensure the reliability and accuracy of statistical information reported in its Annual Reports.

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