    Taxpayer Advocate Service: Caseload Has Grown and Taxpayers
    Report Being Satisfied, but Additional Measures of Efficiency and
    Effectiveness Are Needed (22-FEB-07, GAO-07-156).

    Congress created the Taxpayer Advocate Service (TAS) to assist
    taxpayers in resolving problems with the Internal Revenue Service
    (IRS) and to propose changes to IRS's practices to mitigate
    problems affecting taxpayers in general. TAS uses case advocacy
    and systemic advocacy, respectively, to address these two goals.
    GAO was asked to address (1) why TAS's caseload has increased
    since 2004, (2) how well TAS conducted its case advocacy
    activities in terms of measures such as customer satisfaction and
    quality, and (3) how well TAS measures and reports its systemic
    advocacy efforts. GAO interviewed TAS and IRS managers and other
    staff, reviewed TAS and IRS documents, and analyzed TAS and IRS
    data.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-156
        ACCNO:   A66104
      TITLE:     Taxpayer Advocate Service: Caseload Has Grown and
    Taxpayers Report Being Satisfied, but Additional Measures of
    Efficiency and Effectiveness Are Needed
         DATE:   02/22/2007
      SUBJECT:   Customer service
    	     Federal taxes
    	     Income taxes
    	     Performance measures
    	     Program evaluation
    	     Reporting requirements
    	     Standards
    	     Surveys
    	     Tax administration
    	     Tax administration systems
    	     Tax law
    	     Tax refunds
    	     Taxpayers
    	     Work measurement
    	     Policies and procedures
    	     IRS Low-Income Taxpayer Clinic Program
    	     IRS Taxpayer Advocate Management
    	     Information System

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    GAO-07-156

         * [1]Results in Brief
         * [2]Background
         * [3]Growth in TAS's Caseload since Fiscal Year 2004 Correlates w

              * [4]TAS's Caseload Increased Significantly in Fiscal Years 2005
              * [5]Growth in TAS's Caseload since Fiscal Year 2004 Was Correlat
              * [6]Other Factors Have Also Been Cited as Contributing to TAS's

         * [7]Taxpayers Report Being Satisfied, and Quality Improved in Mo

              * [8]Taxpayers Report Being Satisfied, and Case Quality Improved
              * [9]TAS Does Not Measure True Case Advocacy Efficiency or Cost
              * [10]TAS and IRS Are Working Jointly to Improve Coordination

         * [11]TAS Does Not Measure the Effectiveness of Systemic Advocacy,

              * [12]TAS Is Piloting Process to Measure the Effectiveness of Syst
              * [13]Annual Report to Congress Omits Important Information about

                   * [14]Report Does Not Include the Status of All Legislative
                     Recomm
                   * [15]IRS Actions in Response to TAS Recommendations Are
                     Unclear
                   * [16]TAS Does Not Explain Why Most Serious Problems Are
                     Different

         * [17]Conclusions
         * [18]Recommendations for Executive Action
         * [19]Agency Comments and Our Evaluation
         * [20]Appendix I: Objectives, Scope, and Methodology
         * [21]Appendix II: Process for Creating Immediate Interventions an

              * [22]Immediate Interventions
              * [23]Systemic Advocacy Projects

         * [24]Appendix III: Information to Be Included in the National Tax
         * [25]Appendix IV: Taxpayer Advocate Service Process for Selecting
         * [26]Appendix V: Low-Income Taxpayer Clinic (LITC) Grant Program
         * [27]Appendix VI: Number of Taxpayer Advocate Service Cases by Pr
         * [28]Appendix VII: Types of Taxpayer Advocate Service (TAS) Cases
         * [29]Appendix VIII: Taxpayer Advocate Service Customer Satisfacti
         * [30]Appendix IX: Comments from the National Taxpayer Advocate

              * [31]Order by Mail or Phone

    Report to the Committee on Finance, U.S. Senate

    United States Government Accountability Office

    GAO

    February 2007

    TAXPAYER ADVOCATE SERVICE

    Caseload Has Grown and Taxpayers Report Being Satisfied, but Additional
    Measures of Efficiency and Effectiveness Are Needed

    GAO-07-156

    Contents

    Letter 1

    Results in Brief 3
    Background 4
    Growth in TAS's Caseload since Fiscal Year 2004 Correlates with Increases
    in IRS Enforcement Activity 12
    Taxpayers Report Being Satisfied, and Quality Improved in Most Years, but
    TAS Lacks Measures of Efficiency and Cost 22
    TAS Does Not Measure the Effectiveness of Systemic Advocacy, and Reporting
    on Systemic Issues Is Not as Useful as It Could Be 30
    Conclusions 35
    Recommendations for Executive Action 36
    Agency Comments and Our Evaluation 36
    Appendix I Objectives, Scope, and Methodology 38
    Appendix II Process for Creating Immediate Interventions and Systemic
    Advocacy Projects 41
    Appendix III Information to Be Included in the National Taxpayer
    Advocate's Annual Report to Congress 45
    Appendix IV Taxpayer Advocate Service Process for Selecting Problems to
    Include in the Annual Report to Congress 46
    Appendix V Low-Income Taxpayer Clinic (LITC) Grant Program 47
    Appendix VI Number of Taxpayer Advocate Service Cases by Primary Issue
    Code, Fiscal Years 2002-6 49
    Appendix VII Types of Taxpayer Advocate Service (TAS) Cases That Increased
    by More than 1,000 in Fiscal Years 2005 and 2006 53
    Appendix VIII Taxpayer Advocate Service Customer Satisfaction Survey
    Results 55
    Appendix IX Comments from the National Taxpayer Advocate 56

    Tables

    Table 1: TAS Budget and FTE Staff Years, Fiscal Years 2001-6 12
    Table 2: Number of TAS Cases by Categories of Issues, Fiscal Years 2002-6
    17
    Table 3: Increase in Non-Criterion-7 TAS Caseload Compared to Increase in
    Criterion-7 Cases 21
    Table 4: TAS Performance Measure Goals and Results 22
    Table 5: TAS Quality Standards and Point Values 23
    Table 6. Overview of Our Assessment of TAS's Case Advocacy Measures 25
    Table 7: TAS 2005 Annual Report to Congress Table Summarizing Status of
    the Advocate's Legislative Recommendations; Actions Taken by the 109th
    Congress 32
    Table 8: Comparison of the Most Serious Problems Included in 2005 Annual
    Report to Those in Previous Reports 34
    Table 9: Types of TAS Cases That Increased by More than 1,000 Cases in
    Fiscal Year 2005 53
    Table 10: Types of TAS Cases That Increased by More than 1,000 Cases in
    Fiscal Year 2006 54
    Table 11: Summary of Taxpayer Advocate Service (TAS) Customer Satisfaction
    Scores: Fiscal Year 2005 55

    Figures

    Figure 1: Primary TAS Functions 7
    Figure 2: Overview of Case Advocacy Process 9
    Figure 3: TAS Case Receipts and Cases Closed, Fiscal Years 2002-6 13
    Figure 4: Individual IRS Examinations 16
    Figure 5: Enforcement Revenue Collected 16
    Figure 6: Changes in IRS and TAS CI Cases 18
    Figure 7: Changes in IRS and TAS Levy Cases 19
    Figure 8: Changes in IRS and TAS Lien Cases 20

    Abbreviations

    ACS Automated Collection System
    AMT Alternative Minimum Tax
    CI Criminal Investigation
    EITC Earned Income Tax Credit
    ESL English as a Second Language
    FTE Full-time Equivalent
    IRM Internal Revenue Manual
    IRS Internal Revenue Service
    LITC Low Income Taxpayer Clinic
    OAR Operations Assistance Request
    OMB Office of Management and Budget
    PART Program Assessment Rating Tool
    PRP Problem Resolution Program
    QRP Questionable Refund Program
    SAMS Systemic Advocacy Management System
    SB/SE Small Business/Self Employed Division
    TAMIS Taxpayer Advocate Management Information System
    TAO Taxpayer Assistance Order
    TAP Taxpayer Advocacy Panel
    TAS Taxpayer Advocate Service
    the Advocate National Taxpayer Advocate
    TIGTA Treasury Inspector General for Tax Administration
    W&I Wage and Investment Division

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    protection in the United States. It may be reproduced and distributed in
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    separately.

    United States Government Accountability Office
    Washington, DC 20548

    February 22, 2007

    The Honorable Max Baucus
    Chairman
    The Honorable Charles E. Grassley
    Ranking Minority Member
    Committee on Finance
    United States Senate

    In response to concerns about the Internal Revenue Service's (IRS)
    handling of taxpayers' problems, Congress created the Taxpayer Advocate
    Service (TAS). TAS was designed to be largely independent of the rest of
    IRS and able to promptly and fairly handle taxpayer problems not resolved
    through normal IRS channels. TAS divides its work into two primary
    functions: assisting taxpayers in resolving individual problems with IRS,
    called case advocacy, and proposing administrative and legislative changes
    to mitigate problems affecting groups of taxpayers, called systemic
    advocacy.

    TAS deals with a range of taxpayer problems including delays in cases,
    lost payments, and economic hardship (for example, when a refund check
    needs to be expedited). In fiscal year 2006 TAS assisted over 240,000
    taxpayers, or about 0.2 percent of all individual tax return filers.
    Between fiscal years 2004 and 2006, TAS's case advocacy caseload has grown
    substantially, increasing by 43 percent. Such growth matters for at least
    two reasons. First, it may be an indicator of TAS and IRS performance at
    preventing and resolving taxpayer problems. Second, it is relatively
    costly for TAS to get involved in resolving taxpayers' problems--TAS's
    budget was about $170 million^1 and TAS employed 1,894 staff, or about 2
    percent of IRS's workforce, in 2006.

    Because of Congress's concerns about whether taxpayers' issues are
    addressed and the resources devoted to TAS, you asked us to review TAS's
    performance. Specifically, you asked us to determine

               o why TAS's caseload has increased since 2004,
               o how well TAS conducted its case advocacy activities in terms of
               measures such as customer satisfaction and quality, and
               o how well TAS measures and reports its systemic advocacy efforts.

               To address our objectives, we reviewed and analyzed relevant
               documents including federal legislation and related legislative
               histories; sections of the Internal Revenue Manual (IRM); the
               National Taxpayer Advocate's 2002-5 annual reports to Congress on
               TAS activities and 2002-7 annual objectives reports to Congress;
               Treasury Inspector General for Tax Administration (TIGTA) reports;
               TAS guidance related to handling individual and systemic advocacy
               activities and the criteria for accepting individual cases,
               creating systemic advocacy projects, and for reporting systemic
               issues; TAS documents related to its performance measures; and TAS
               documents related to the Taxpayer Advocate Management Information
               System (TAMIS) and the Systemic Advocacy Management System (SAMS),
               the TAS information systems used to track individual and systemic
               advocacy activities, respectively.^2 We assessed the reliability
               of TAMIS data and determined the data were sufficiently reliable
               for our purposes. We compared the existing TAS performance
               measures to attributes of successful performance measures using
               criteria we have previously developed.^3 In terms of reporting
               systemic advocacy efforts, we focused on the annual reports to
               Congress since they are the primary method used by TAS to report
               on systemic advocacy efforts. We interviewed the National Taxpayer
               Advocate (the head of TAS, hereafter referred to as the Advocate)
               and TAS officials involved with both case and systemic advocacy in
               both headquarters and TAS field offices. We also interviewed
               officials in the Wage and Investment Division (W&I), Small
               Business/Self Employed Division (SB/SE), and Criminal
               Investigation (CI) office to obtain their views about coordinating
               and collaborating with TAS in order to address taxpayers' problems
               and why TAS's caseload has increased. We performed our work from
               September 2005 through December 2006 in accordance with generally
               accepted government auditing standards. Our scope and methodology
               are described in greater detail in appendix I.

    			  Results in Brief

               TAS's caseload increased 43 percent from fiscal year 2004 to
               fiscal year 2006--17 percent in 2005 and 23 percent in 2006--and,
               while the growth in the caseload was distributed over both
               enforcement- and non-enforcement-related cases, the overall
               increase correlated with increases in IRS's overall enforcement
               activities since fiscal year 2004, as well as increases in
               particular IRS enforcement programs and the corresponding type of
               TAS case. For example, changes in the number of refunds frozen by
               IRS correlated with the number of refund-freeze-related cases
               coming into TAS. However, such a correlation between TAS cases and
               IRS activity was not always present for other types of TAS cases.
               IRS officials and others identified other factors that could also
               have influenced the increase in TAS cases, in particular changes
               to TAS guidance for accepting cases. However, our analysis of TAS
               data does not indicate that the TAS case acceptance guidance
               changes were a factor in the caseload increase. For example, TAS
               created two new criteria for accepting cases in fiscal year 2006,
               yet of the almost 244,000 cases received by TAS in fiscal year
               2006, the new criteria resulted in just over 500 cases.

               Satisfaction among taxpayers who were served by TAS remained
               steady from fiscal year 2002 to 2006, consistently measuring
               between 4 and 5 on a 5-point scale, while case quality improved
               from fiscal year 2002 to 2004 (moving from below 80 to over 90 on
               a 100-point scale), it stayed about the same in fiscal year 2005
               and 2006. While two of TAS's four measures are sound in terms of
               their clarity, reliability, and several other factors, TAS's
               current efficiency measure, defined as the percentage of TAS cases
               involving a procedural burden, is not a true measure of efficiency
               and provides no information on case advocacy efficiency. A more
               meaningful measure of efficiency would look at the ratio of cases
               closed to the time spent on those cases and take into account the
               quality of the work and the complexity of the cases. Also, to
               allow interpretation of efficiency information in light of cost
               effectiveness and to permit, for example, TAS to identify types of
               cases that are taking up an inordinate share of case advocacy
               resources, TAS would also need to develop a case advocacy unit
               cost measure. TAS officials have plans under way to capture case
               complexity and to begin tracking time in a way that will permit
               TAS to develop case advocacy unit cost information.

               TAS's systemic advocacy function is very important because it is
               the means for TAS to eliminate taxpayer problems before they
               arise, and though TAS can point to many successes in this area,
               TAS's systemic advocacy performance measurement does not provide
               important information to Congress on systemic advocacy
               effectiveness. In August 2006, TAS began a pilot program to
               ascertain if progress is being made in correcting a few systemic
               issues. The pilot is a worthwhile initiative to identify progress
               in a few important areas, but it will not measure the
               effectiveness of systemic advocacy on a broad basis. Also, TAS's
               public reporting makes it difficult for Congress to determine what
               actions were taken to address systemic issues TAS has raised in
               the past.

               We are recommending that the Advocate add to TAS's case and
               systemic advocacy performance measures and improve its reporting
               on systemic issues. Additional measures include case advocacy
               efficiency and systemic advocacy effectiveness. TAS should also
               take several steps to improve what it reports about systemic
               advocacy in the annual report to Congress such as describing
               actions taken to address taxpayers' serious problems. The Advocate
               agreed with our recommendations and noted that TAS has already
               implemented part of one recommendation related to reporting about
               systemic advocacy and is taking steps to implement the other
               recommendations. For example, the Advocate reported that TAS has
               submitted work requests to collect information on the complexity
               of cases and time spent on cases to develop cost information. This
               will be added to the data TAS collects to measure case quality.
               This information will then be used to develop a case advocacy
               efficiency measure. We have included the Advocate's letter in
               appendix IX. TAS also provided technical comments which we
               incorporated as appropriate.

               The Commissioner of Internal Revenue was provided a draft of this
               report for review and comment. The IRS Office of Legislative
               Affairs provided technical comments, and we incorporated them as
               appropriate.

    			  Background

               TAS is an independent office within IRS created to assist
               taxpayers in resolving problems with IRS, identify areas in which
               taxpayers have problems in dealing with IRS, and propose
               administrative and legislative changes to mitigate such problems.
               TAS is the successor to the Problem Resolution Program (PRP) which
               IRS founded in 1976 to provide an independent means of helping
               taxpayers solve problems that they encountered in dealing with
               IRS. Initially, PRP units were established in IRS district
               offices. In 1979, IRS expanded PRP to its service centers and
               created the position of Taxpayer Ombudsman to head PRP. Generally,
               PRP personnel were district or service center employees who did
               not report directly to the Ombudsman. The Ombudsman was appointed
               by and reported to the Commissioner of Internal Revenue.

               Congress has since renamed the Ombudsman the "National Taxpayer
               Advocate" and taken steps to enhance the independence of the
               Advocate. While the Advocate continues to report to the
               Commissioner of Internal Revenue, the Advocate is now appointed by
               the Secretary of the Treasury after consultation with the
               Commissioner of Internal Revenue and the IRS Oversight Board.^4 In
               the IRS Restructuring and Reform Act of 1998, Congress required
               that the individual not be an IRS employee for 2 years preceding
               his or her appointment and that the individual agrees to not
               accept a position elsewhere in IRS for 5 years following his or
               her tenure as the Advocate.^5 In addition, Congress replaced the
               prior PRP organization with an independent reporting structure of
               taxpayer advocates who report directly to the Advocate and
               mandated that a local taxpayer advocate be available to taxpayers
               in each state. TAS currently has 65 local offices with at least
               one in each state, Puerto Rico, and the District of Columbia. TAS
               also has 10 offices located at IRS campuses. The current Advocate
               was appointed in 2001.

               Section 7803 of the Internal Revenue Code, as amended by the
               Restructuring Act of 1998, provides that the National Taxpayer
               Advocate is entitled to compensation at the same rate as the
               highest rate of basic pay established for the Senior Executive
               Service under 5 U.S.C. Section 5382 or, if the Secretary of the
               Treasury so determines, at a rate fixed under the streamlined
               critical pay authority set out in 5 U.S.C. S 9503 (up to the
               equivalent of the Vice President's salary, or $212,100 in 2006).^6
               The Advocate is also eligible to receive bonuses. On January 10,
               2001, the Secretary of Treasury approved the appointment of Nina
               Olson as the National Taxpayer Advocate under section 7803 and
               chose to set her pay using the streamlined critical pay
               authority.^7 The Advocate's salary was $162,100 and her bonus was
               $22,900 in 2006.

               TAS has two primary functions--case advocacy and systemic
               advocacy, although it is also responsible for administering the
               Low Income Taxpayer Clinic (LITC) Grant Program and overseeing the
               Taxpayer Advocacy Panel (TAP). Figure 1 shows TAS's primary
               functions as well as sources of work.

    ^1TAS's fiscal year 2006 budget included $8 million for Low Income
    Taxpayer Clinic grants.

    ^2To conduct our analyses, we associated cases with the fiscal year in
    which they were opened. Also, for cases that TAS closed and subsequently
    reopened, all of our analyses relate to the original case.

    ^3GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing
    Season Performance Measures, [32]GAO-03-143 (Washington, D.C.: Nov. 22,
    2002).

    ^426 U.S.C. 7803(c).

    ^5Pub. L. No. 105-206 (July 22, 1998). Service as an officer or employee
    of the Advocate's Office is not taken into account for purposes of the
    2-year and 5-year rules.

    ^6Section 9503, added to Title 5 by the Restructuring Act, provides that
    the Secretary of the Treasury may, for a period of 10 years after the date
    of enactment of the section, fix the compensation of and appoint
    individuals to designated critical administrative, technical, and
    professional positions needed to carry out the functions of the Internal
    Revenue Service, if certain criteria are met. Specifically, the relevant
    positions must require expertise of an extremely high level in an
    administrative, technical, or professional field. The positions must also
    be critical to the Internal Revenue Service's successful accomplishment of
    an important mission.

    ^7The terms of appointments made under section 9503 are limited to no more
    than 4 years. However, since the National Taxpayer Advocate was appointed
    under IRC Section 7803, which simply allows the compensation to be fixed
    under the streamlined critical pay authority of section 9503, IRS
    determined that the term limit does not apply.

    Figure 1: Primary TAS Functions

    TAS receives case advocacy cases through several sources including
    referrals from IRS, direct taxpayer contact via walk-in, phone calls, or
    mail, and the National Taxpayer Advocate toll-free line. The acceptance
    criteria for case advocacy fall into four general categories: economic
    burden, systemic burden, best interest of the taxpayer, and public policy.
    Economic burden cases involve a tax-related issue that has caused
    financial difficulty for the taxpayer. Procedural burden cases involve an
    IRS process, system, or procedure that has failed to operate as intended
    and, as a result, IRS has failed to resolve or respond to the taxpayer
    issue. Best interest of the taxpayer cases are those that raise questions
    of equity or taxpayer's rights in how the tax laws are administered.
    Finally, public policy cases are those that the Advocate decided should be
    worked based on specific issues or areas of public concern. TAS uses TAMIS
    to track its case advocacy activities.

    In some cases, TAS is able to use its statutory or delegated authorities
    to take the necessary steps to resolve a case. When TAS does not have
    statutory or delegated authority to take action, TAS issues an Operations
    Assistance Request (OAR) to the function within IRS that can take the
    needed action to resolve the taxpayer's problem. If IRS and TAS are unable
    to agree on the proper course of action, TAS might use a Taxpayer
    Assistance Order (TAO) to require IRS to take a certain action as
    permitted by law, cease an action currently being taken, review an action,
    refrain from taking any action, or release property previously levied.^8
    In fiscal year 2006, TAS issued 46 TAOs. Figure 2 provides an overview of
    the case advocacy process.

    ^8IRC S 7811 authorizes the Advocate to issue a TAO when a taxpayer is
    suffering or about to suffer a significant hardship as a result of IRS's
    administration of the tax laws. Any TAO issued by the Advocate may be
    modified or rescinded by the Advocate, the Commissioner of Internal
    Revenue, or the Deputy Commissioner of Internal Revenue if a written
    explanation of the reasons for the modification or rescission is provided
    to the Advocate.

    Figure 2: Overview of Case Advocacy Process

    Currently, TAS and IRS are renegotiating the procedures TAS and IRS
    functions will follow to process an OAR. Also, officials told us that the
    Advocate has reviewed TAS's delegated authorities with Office of Chief
    Counsel, Appeals, Tax Exempt/Government Entities, W&I, and SB/SE officials
    and plans to make recommendations to the Commissioner on possible changes.

    TAS receives suggestions for systemic advocacy projects from TAS and IRS
    employees and the public. Systemic advocacy officials evaluate each
    suggestion to determine if it meets the definition of an immediate
    intervention--an administrative issue which could cause immediate,
    significant harm to multiple taxpayers that needs quick resolution. For
    those issues that do not become immediate interventions, systemic advocacy
    officials apply the general criteria described in figure 1 in order to
    score each issue. TAS creates a systemic advocacy project for those issues
    that meet or exceed the current threshold for converting an issue into a
    systemic advocacy project. This threshold can change depending on
    available resources to work on systemic advocacy projects. For immediate
    interventions and advocacy projects, systemic analysts research the issue
    and develop recommendations for IRS. For additional details about creating
    immediate interventions and systemic advocacy projects including a
    complete list of the criteria used to score systemic issues, see appendix
    II.

    TAS also conducts systemic advocacy through participation in TAS and IRS
    research initiatives and task forces, hosting town hall meetings,
    conducting focus groups, and through TAS's two required annual reports to
    Congress. One of the two reports, the annual report to Congress, hereafter
    referred to as the annual report, is due by December 31, and summarizes
    TAS's activities during the prior fiscal year. It must include, among
    other things, a discussion of at least 20 of the most serious problems
    encountered by taxpayers and administrative and legislative
    recommendations for resolving taxpayer problems.^9 For details about how
    the most serious problems are selected, see appendix IV. The other report,
    due by June 30 of each year, must identify the objectives of the Office of
    the Taxpayer Advocate for the fiscal year beginning in that calendar year.

    Responsibility for the LITC Grant Program was transferred from W&I to TAS
    in May 2003. The IRS Restructuring and Reform Act of 1998 established the
    LITC Grant Program to help accredited academic institutions and nonprofit
    organizations represent low-income taxpayers in controversies with IRS and
    operate programs to inform individuals for whom English is a second
    language about their rights and responsibilities. TAS has responsibility
    for selecting LITC grant recipients and conducting site visits to ensure
    that LITCs are fulfilling their obligations. See appendix V for more
    information on the LITC Grant Program. TAS also has responsibility for
    overseeing the TAP, which was established in October 2002 under the
    Federal Advisory Committee Act as a way of improving IRS responsiveness to
    taxpayers' needs. The panel, consisting of approximately 104 volunteers
    nationwide including every state, Puerto Rico, and the District of
    Columbia, provides input on IRS's strategic initiatives and provides a
    venue for raising issues identified by citizens.

    ^9See app. III for a list of what must be included in the annual report.

    TAS's budget is part of the overall IRS appropriation and does not have a
    separate line item in the budget. TAS resources are spread across three
    appropriations: processing, assistance, and management; tax law
    enforcement; and information systems.

    TAS's budget increased from about $135.4 million in fiscal year 2001 to
    about $170.3 million in fiscal year 2006.^10 Over 86 percent of TAS's
    fiscal year 2006 budget was for its case advocacy function, while the rest
    was split between systemic advocacy, the LITC Grant Program,^11 TAP, and
    other expenses such as training, travel, and support. TAS's full-time
    equivalent (FTE) staff years decreased slightly from 2,064 in fiscal year
    2001 to 1,894 in fiscal year 2006. Table 1 summarizes TAS's budget and
    staffing.

    ^10In fiscal year 2006, Congress directed IRS to provide a specified
    minimum level of funding for TAS. House and Senate versions of the fiscal
    year 2007 appropriations bills continue this practice.

    ^11TAS serves as a conduit for channeling grants to LITC recipients. In
    fiscal year 2006, the amount of the grants was $8 million. TAS was
    responsible for paying the expenses of administering the LITC Grant
    Program out of its operating funds.

    Table 1: TAS Budget and FTE Staff Years, Fiscal Years 2001-6

                                                   Fiscal year
                                      2001   2002   2003   2004   2005   2006
    Budget (dollars in millions)
    Case advocacy                $123.9 $134.4 $138.3 $140.3 $142.7 $146.0
    Systemic advocacy^a             3.4    5.1    5.7    5.8    3.7    4.0
    LITC^b                           --     --     --    8.4    9.2    9.4
    TAP                             1.5    1.4    2.3    2.5    2.5    2.5
    Other^c                         6.6    9.5   10.4    8.8    9.1    8.5
    Totald                       $135.4 $150.3 $156.7 $165.8 $167.3 $170.3
    FTEs
    Case advocacy                 1,953  1,971  1,974  1,908  1,829  1,766
    Systemic advocacy^a              38     53     58     56     32     32
    LITC^b                           --     --     --      7     10     11
    TAP                              16     16     17     21     21     21
    Other^c                          57     72     77     73     71     64
    Totald                        2,064  2,112  2,126  2,065  1,963  1,894

    Source: TAS.

    aSome staff in categories other than systemic advocacy also spend some of
    their time on systemic advocacy activities, such as preparing the annual
    report to Congress.

    bThe responsibility for the LITC Grant Program was transferred to TAS in
    May 2003; however, dollars and FTEs were not allocated to TAS until fiscal
    year 2004.

    cOther includes training, travel, and support for TAS headquarters
    management activities. These activities include strategic planning,
    communications and liaison, finance, equal employment opportunity and
    diversity, business systems planning, and employee development.

    dTotals do not add due to rounding.

    Growth in TAS's Caseload since Fiscal Year 2004 Correlates with Increases in IRS
    Enforcement Activity

    The growth in TAS's caseload was not uniform over types of taxpayer
    problems, but was correlated with increases in IRS enforcement activity.

    TAS's Caseload Increased Significantly in Fiscal Years 2005 and 2006

    After decreasing from fiscal years 2002 through 2004, TAS's case receipts
    increased 43 percent from fiscal year 2004 to 2006, as shown in figure 3.
    Case receipts increased by 28,660 cases or 17 percent in fiscal year 2005
    over fiscal year 2004 and another 45,021 cases or 23 percent in fiscal
    year 2006. Since fiscal year 2004, by comparison, TAS staffing decreased
    by 171 FTEs as was shown in table 1.

    Figure 3 also shows that the number of cases that TAS closed each year
    followed a similar pattern as case receipts, with declines in fiscal years
    2002-4 and increases in fiscal years 2005 and 2006. In the earlier years
    the closure rate exceeded the number of cases coming in, so TAS was
    decreasing its backlog of cases. In fiscal years 2005 and 2006, however,
    TAS closed fewer cases than it received, and its backlog of cases
    increased by around 7,500 cases in each of those years. TAS officials said
    that the growing number of cases is posing a challenge to staff, but that
    the challenge has not become overwhelming.

    Figure 3: TAS Case Receipts and Cases Closed, Fiscal Years 2002-6

    The growth in TAS's caseload after fiscal year 2004 varied across types of
    taxpayer problems. (TAS tracks taxpayer problems by assigning one of 114
    primary issue codes to each case. Specific issue codes include processing
    an original or amended return, lien release, and stolen identity. See app.
    VI for a full breakdown of cases by issue code for fiscal years 2002
    through 2006.) Furthermore, the percentage of each type of issue, in terms
    of total caseload, varied over time. Data on taxpayer issues showed the
    following:

               o The growth in caseload was distributed across many issues with 7
               issues increasing by more than 1,000 cases in fiscal year 2005 and
               17 doing so in fiscal year 2006. (See app. VII for a breakdown of
               issues that increased by more than 1,000 cases in fiscal years
               2005 and 2006.)
               o The growth in caseload was not uniformly distributed by issue
               over time. None of the 5 issues with the greatest growth in fiscal
               year 2005 were among the top 5 in fiscal year 2006. Also, the most
               common issue in both fiscal year 2005 and 2006, criminal
               investigation (CI), increased substantially in fiscal year 2005,
               but declined in fiscal year 2006.^12
               o Total caseload was distributed over many issues with no single
               issue accounting for more than 8 percent of the total in fiscal
               year 2006. For example, although CI was the largest issue in
               fiscal years 2005 and 2006, it accounted for only 14 percent of
               cases in fiscal year 2005 and 8 percent in fiscal year 2006.
               o The issues with the highest number of cases varied from year to
               year. Of the 5 issues with the highest number of cases in fiscal
               year 2002, only 2 remained in the top 5 in fiscal year 2006.

    			  Growth in TAS�s Caseload since Fiscal Year 2004 Was Correlated
    			  with Increases in IRS Enforcement Activities and Specific
    			  Enforcement Programs

               According to the Advocate, the majority of the increase in TAS's
               caseload in fiscal years 2005 and 2006 was due to an increase in
               IRS enforcement activities. For example, the National Taxpayer
               Advocate's 2007 Objectives Report to Congress states that "The
               impact of the IRS's substantial increases in enforcement
               activities is evident in the corresponding increase in TAS
               Taxpayer Delinquent Investigation, Levy, and Automated
               Underreporter case receipts." Data from TAS and IRS are consistent
               with this argument, showing a correlation between increases in
               TAS's caseload and increases in IRS's overall enforcement
               activities since fiscal year 2004.^13 The data also show
               correlations between the growth in particular IRS enforcement
               programs and the corresponding TAS issues.

               However, IRS's enforcement programs were also growing between
               fiscal years 2002 and 2004, a time when TAS's caseload was
               shrinking. A senior TAS official said that increases in IRS
               enforcement were leading to new TAS cases in fiscal years 2002-4,
               but that the increases in caseload were more than offset by
               declines for other reasons. For example, the official stated that
               in 2000-1, TAS was still clearing out a backlog of taxpayer
               problems from the late 1990s and new problems were also arising
               from confusion stemming from the major reorganization of IRS from
               divisions based on processes to divisions based on types of
               taxpayers being served. As TAS dealt with the backlog of cases and
               as the IRS reorganization was completed, the number of cases fell.
               Data for testing this explanation were not available.

               Overall, IRS enforcement activities have been increasing, as shown
               by the number of individual examinations in figure 4 and the
               amount of enforcement revenue collected in figure 5.

               Figure 4: Individual IRS Examinations

               aFiscal year 2006 results are preliminary.

               Figure 5: Enforcement Revenue Collected

               At the same time, the majority of the growth in TAS's caseload was
               due to issues that are enforcement related, as shown in table 2.
               Table 2 combines TAS's 114 types of taxpayer issues into a few
               broad categories. Categories that consist largely of enforcement
               issues, as shown by the shaded rows in the table, accounted for
               over half of the growth in TAS caseload between fiscal years 2004
               and 2006. Moreover, there are also enforcement-related issues in
               other categories. For example, a case that TAS classifies as
               "document processing" may involve a taxpayer having trouble filing
               an amended return after an audit.

    ^12According to the National Taxpayer Advocate 2005 Annual Report to
    Congress, the vast majority of TAS's CI cases related to Questionable
    Refund Program (QRP) freezes. The QRP is a nationwide multifunctional
    program established in January 1977. The purpose of this program is to
    detect fraudulent returns and stop the payment of false refunds claimed on
    income tax returns. If CI does not validate the taxpayer's entitlement to
    a refund, it may "freeze" the refund until IRS assures itself there is no
    fraud.

    ^13We did not test for statistical correlation, rather we looked for
    positive associations between IRS enforcement activity and related TAS
    cases.

    Table 2: Number of TAS Cases by Categories of Issues, Fiscal Years 2002-6

                                                  Fiscal year
    Category of issue               2002    2003    2004    2005    2006
    Document processing           57,143  39,289  32,646  36,815  52,850
    Examination                   52,452  51,335  38,051  40,213  47,951
    Collection                    28,833  25,274  23,887  29,210  43,625
    Refunds                       31,852  22,702  19,247  20,048  27,710
    Appeals/other                 11,397  19,691  19,903  31,936  24,770
    Technical/procedural/statute   8,942   7,683   9,496  12,032  13,251
    Penalty                       14,700  10,155   9,133  10,032  12,397
    Entity                         9,337   7,270   8,176   9,760  11,617
    Payments/credits              12,746   7,666   6,804   7,089   8,175
    Interest                       1,638   1,179   1,052   1,042   1,033
    Not coded                         95   3,925   1,734     612     431
    Total                        229,135 196,169 170,129 198,789 243,810

    Source: GAO analysis of TAMIS data.

    Note: Shaded rows indicate issue categories that are primarily enforcement
    related.

    The correlation between TAS caseload growth and IRS enforcement increases
    can also be seen for particular enforcement actions. The two types of TAS
    cases that increased the most--CI cases in fiscal year 2005 and levy cases
    in fiscal year 2006--are examples.^14 While we could not verify that there
    was a causal relationship between IRS activity and TAS caseload, for CI
    and levy cases, we found a positive correlation. The number of CI refund
    freezes increased by 23 percent in fiscal year 2005 over fiscal year 2004
    and at the same time the number of TAS CI cases increased by roughly 71
    percent, as shown in figure 6. In December 2005, the Advocate issued a
    report critical of the number of taxpayers whose refunds were frozen and
    then later released, as well as the lack of information given to taxpayers
    about the status of their refund in these cases and the number of years
    that freezes are in effect. CI officials said that they subsequently made
    significant changes to the program in early 2006, freezing fewer refunds
    in 2006 and issuing fewer multiyear freezes. TAS and CI officials said
    that this likely caused the number of taxpayers seeking TAS assistance for
    refund freezes to decrease. While data on the number of CI refund freezes
    for fiscal year 2006 were not yet available when we completed our work,
    the number of TAS CI cases decreased by 25 percent that year.

    ^14We did not compare the increase in TAS's fiscal year 2006 caseload to
    fiscal year 2006 IRS enforcement activities because fiscal year 2006 IRS
    data were not yet available.

    Figure 6: Changes in IRS and TAS CI Cases

    Note: Number of CI refund freezes is reported by processing year and is an
    estimate.

    Similarly, as shown in figure 7, the number of IRS levy cases increased
    between fiscal years 2002 and 2005, including a 35 percent increase in
    fiscal year 2005 over fiscal year 2004.^15 The number of TAS levy cases
    also increased by 27 percent in fiscal year 2005 over fiscal year 2004.

    Figure 7: Changes in IRS and TAS Levy Cases

    Although there is a correlation between growth in overall IRS enforcement
    activity and growth in TAS caseload, as well as a correlation between
    growth in some specific IRS programs and corresponding TAS issues, the
    correlation does not always hold. For example, as shown in figure 8, the
    number of TAS lien cases increased by 27 percent in fiscal year 2005 while
    the number of IRS liens decreased by 2 percent.^16

    15Under the Internal Revenue Code, "levy" is defined as the seizure of a
    taxpayer's assets to satisfy a tax delinquency. IRS differentiates between
    the levy of assets in the possession of the taxpayer (referred to as a
    "seizure") and the levy of assets, such as bank accounts and wages, which
    are in the possession of third parties, such as banks or employers
    (referred to as a "levy").

    Figure 8: Changes in IRS and TAS Lien Cases

    Other Factors Have Also Been Cited as Contributing to TAS's Increased Caseload

    As previously shown in table 2, non-enforcement-related TAS cases also
    increased since fiscal year 2004. TAS officials said that increased TAS
    outreach and external factors, such as taxpayers with problems related to
    the disruptions caused by Hurricane Katrina and changes in the overall
    economy, contributed to the caseload increase.

    IRS officials and others also said that changes made to TAS's case
    acceptance guidance may have contributed to TAS's caseload increase.
    However, our analysis of TAS data does not support this. The Advocate made
    changes to TAS's case acceptance guidance twice since fiscal year 2004,
    which is when TAS's caseload started to increase. On January 13, 2005, the
    Advocate issued an internal memorandum to all TAS staff called "Common
    Sense and Good Judgment in Case Processing." According to the Advocate,
    the memo did not change the criteria but sought to clarify the criteria
    and ensure that staff were not creating unnecessary obstacles for
    taxpayers seeking TAS assistance. In January 2006, TAS implemented an
    expanded version of its case acceptance criteria. The revisions included
    slight modifications to some of the existing criteria and the creation of
    criteria 8 and 9.^17

    16A lien is a legal claim, filed in accordance with state property law,
    that attaches to property to secure payment of a debt. The effect of a
    lien may not be felt until the taxpayer sells the property or tries to
    obtain credit.

    The January 2005 memorandum clarified that TAS should accept all cases (1)
    where a taxpayer specifically requests TAS assistance and (2) that were
    referred from IRS even if the case does not meet TAS's case acceptance
    criteria to avoid sending the taxpayer back to IRS.^18 According to the
    memorandum, in these situations, the case should be classified as meeting
    criteria 7--a system or procedure failed to operate as intended or failed
    to resolve the taxpayer's problem. Therefore, if following the memorandum
    contributed to the increase in TAS's caseload, we would expect to see a
    disproportionate increase in criterion-7 cases. However, criterion-7 cases
    did not increase disproportionately in 2005 and 2006, rather the number of
    these cases grew at a slower rate than other cases, as shown in table 3.
    Furthermore, the changes made by TAS in January 2006 did not significantly
    affect TAS's caseload given that the two added criteria resulted in just
    over 500 of the approximately 244,000 cases received in fiscal year 2006.

    Table 3: Increase in Non-Criterion-7 TAS Caseload Compared to Increase in
    Criterion-7 Cases

                   All non-criterion-7 cases     Criterion-7 cases
    Fiscal year  Number Percentage change  Number Percentage change
    2004        109,462                    60,667
    2005        128,134                17  70,655                16
    2006        161,177                26  82,633                17

    Source: GAO analysis of TAS data.

    ^17See fig. 1 for a list of TAS's current case acceptance criteria.

    ^18IRS officials told us that IRS has taken steps to reduce the error rate
    for referrals to TAS from IRS campuses.

    Taxpayers Report Being Satisfied, and Quality Improved in Most Years, but TAS
    Lacks Measures of Efficiency and Cost

    TAS tracks its case advocacy performance in several dimensions. Two of
    TAS's performance measures, customer satisfaction and case quality, meet
    all of the criteria that GAO developed as attributes of successful
    performance measures. However, its employee satisfaction survey suffers
    from a declining response rate and TAS does not measure some important
    dimensions of performance such as cost per case.

    Taxpayers Report Being Satisfied, and Case Quality Improved since Fiscal Year
    2002 with a Slight Decline in Fiscal Year 2006

    TAS case advocacy performance measures include measures of customer
    satisfaction, case quality, and employee satisfaction. Table 4 shows TAS's
    performance against its goals for fiscal years 2002-6.

    Table 4: TAS Performance Measure Goals and Results

                                              Fiscal year
                         2002        2003        2004        2005        2006
    Measure        Goal Actual Goal Actual Goal Actual Goal Actual Goal Actual
    Customer          a   4.33    a   4.30    a   4.30 4.35   4.39 4.40   4.34
    satisfaction
    (scores out of
    a possible 5
    points)
    Case quality   80.0   78.5 90.0   84.7 90.0   90.5 91.0   91.6 91.5   89.7
    (scores out of
    a possible 100
    points)
    Employee         70     56   61     60   65     65   68     70   73     64
    satisfaction
    (percent)

    Source: TAS.

    Notes: Customer satisfaction figures are from a survey with a maximum
    score of 5.0 and confidence intervals of +-0.006 in 2002 and 2003, +-0.007
    in 2004, +-0.006 in 2005, and +-0.005 in 2006, all at a confidence level
    of 95 percent. Case quality figures are from a survey of completed cases
    with confidence intervals of +-0.9 in 2002, +-0.7 in 2003, +-0.5 in 2004,
    and +-0.7 in 2005 and 2006, all at a confidence level of 90 percent.
    Employee satisfaction figures are from a survey of all employees, with
    response rates of 80-82 percent in 2002-4, 48 percent in 2005, and 33
    percent in 2006.

    aTAS did not have a customer satisfaction goal in that time period.

    Taxpayers who have used TAS have consistently reported being satisfied to
    very satisfied since fiscal year 2002, as shown by the customer
    satisfaction survey results in table 4. TAS determines customer
    satisfaction through an independent and confidential telephone survey
    process to gauge the opinions of a random selection of taxpayers and their
    representatives who had recently closed cases. The survey uses a
    five-point scale where 5 represents "very satisfied" and 4 represents
    "somewhat satisfied." TAS's customer satisfaction scores varied only
    slightly from fiscal years 2002 to 2006 with customers remaining on
    average somewhere between somewhat satisfied and very satisfied. As shown
    in table 4, there was only a small amount of change in this measure from
    year to year, and only a small difference between actual performance and
    the goals for fiscal years 2005 and 2006. For additional information on
    TAS's customer satisfaction results, see appendix VIII.

    TAS's case quality improved between fiscal years 2002 and 2004 (the
    changes are statistically significant) and then leveled off, also shown in
    table 4. The slight increase in 2005 and the slight decline in 2006 are
    not different in a statistically significant sense from the 2004 results.
    As shown in table 4, TAS met its case quality goals for 2004 and 2005 but
    did not do so in 2006. To calculate the quality index, TAS randomly
    selects cases each month and measures them against eight quality
    standards. These standards are meaningful in that they cover aspects of
    quality--timeliness and technical correctness, for example--that IRS has
    found important to measure in other contexts, such as telephone service.
    The eight standards and their point values are shown in table 5.

    Table 5: TAS Quality Standards and Point Values

    Quality standard                                               Point value
    Did TAS make timely contact with the taxpayer?                           5
    Did TAS take initial action/request information within the
    specified time frame?                                                   10
    Did TAS take all subsequent actions timely from the time
    action could have been taken?                                           10
    Did TAS resolve all taxpayer issues?                                    25
    Did TAS address all related issues?                                     10
    Were all actions taken by TAS and the IRS
    operations/functional divisions technically and procedurally
    correct?                                                                15
    Did TAS give the taxpayer a clear, complete, correct
    explanation at closing?                                                 20
    Did TAS educate the taxpayer regarding any of his/her actions
    that contributed to the problem?                                         5

    Source: TAS.

    In the past, TIGTA has raised issues with TAS's timeliness and has made
    recommendations that TAS take additional steps to improve timeliness.^19
    TIGTA based its findings on a review of a sample of cases. Although the
    Advocate disagreed with TIGTA's conclusions on specific cases, the
    Advocate agreed to make changes to improve timeliness by introducing two
    types of case management reviews. The first type is an early intervention
    review where a TAS manager must be involved in a minimum of 25 percent of
    open cases within 10 calendar days from the received date for criteria 1-4
    cases and within 30 calendar days for criteria 5-9 cases.^20 The second
    type of review is a 100-day review where a manager must review all cases
    that have been open for 100 days within 15 days of reaching the 100-day
    mark, and a minimum of once every 60 days thereafter. According to the
    Advocate, these reviews help ensure that cases are resolved in a timely
    manner. TAS's efforts to improve timeliness are reflected in three
    timeliness standards that are part of the TAS quality standards shown in
    table 5. For example, the score for timeliness standard number 3, "Did TAS
    take all subsequent actions timely?" increased from 81.5 percent in fiscal
    year 2004 to 86.5 percent in fiscal year 2005. Also, TAS improved on the
    average number of days it takes to close a case, which declined from 67.6
    in fiscal year 2003 to 51.2 in fiscal year 2006.

    Employee satisfaction increased from fiscal year 2002 to 2004 but the
    results for 2005 and 2006 (all shown in table 4) may not be accurate
    because of declining survey response rates. TAS determines employee
    satisfaction through an annual IRS-wide survey conducted by an independent
    organization using a five-point scale where 5 represents "extremely
    satisfied." In fiscal years 2002 through 2004, 80 percent or more of TAS
    employees responded to the survey while only 48 percent and 33 percent
    responded in fiscal years 2005 and 2006 respectively. Survey response
    rates also declined throughout IRS during this period. Response rates this
    low may bias the results if nonrespondents have different opinions than
    respondents.

    ^19Treasury Inspector General for Tax Administration, The National
    Taxpayer Advocate Has Improved the Quality of Casework, but Continued
    Vigilance is Needed to Increase Compliance with the Quality Standards,
    Reference No. 2003-10-074 (Washington, D.C.: Mar. 10, 2003) and The
    Taxpayer Advocate Service Needs to Improve Case Management to Ensure
    Taxpayer Problems Are Resolved Timely, Reference No. 2004-10-166
    (Washington, D.C.: Sept. 29, 2004).

    ^20See fig. 1 in Background section for a list of the case criteria.

    The measures of customer satisfaction and case quality on which the
    previous description of case advocacy performance is based are sound,
    according to criteria we have previously used for assessing IRS's
    performance measures.^21 These two measures have all the attributes of
    successful measures as shown in table 6, including clarity, objectivity,
    and reliability. While it is conceptually sound to measure employee
    satisfaction with a survey, as already discussed, the employee
    satisfaction measure does not satisfy the objectivity and reliability
    criteria because of the possibility of nonresponse bias in the survey in
    recent years.

    Table 6. Overview of Our Assessment of TAS's Case Advocacy Measures

                                           GAO assessment of TAS measure
    Attributes of successful   Customer          Employee          Case
    measures                   satisfaction      satisfaction      quality
    Linkage--aligned with
    goals and mission and
    clearly communicated
    Clarity--clearly stated
    and name and definition
    are consistent with
    methodology used to
    calculate it
    Governmentwide
    priorities^a--covers a
    priority such as quality,
    timeliness, and cost of
    service
    Measurable target--has a
    numerical goal
    Objectivity and
    Reliability--free from
    significant bias and
    reliable and produces same
    result under similar
    conditions
    Core Program
    Activities--cover
    activities entity is
    expected to perform to
    support intent of program
    Limited Overlap--should
    provide new information
    Balance--suite of measures This attribute applies to the overall suite of
    covers an organization's   measures. IRS considers these measures to be
    priorities                 balanced since they address priorities such as
                                  employee and customer satisfaction and business
                                  results. However, additional measures such as
                                  cost of service could improve the balance of
                                  TAS priorities.

    Source: GAO.

    Note: A checkmark denotes that the measure has the attribute.

    aWhile the current measures cover governmentwide priorities, TAS does not
    have a cost of service measure, which is another governmentwide priority.

    ^21In previous work, we identified the eight attributes listed in table 6
    as elements of successful measures. (See [33]GAO-03-143 ).

    TAS Does Not Measure True Case Advocacy Efficiency or Cost

    TAS has an additional case advocacy measure called "efficiency" but it
    does not measure efficiency as conventionally defined. Nor does TAS have a
    measure of cost per case. The efficiency measure, which TAS defines as the
    percentage of total case receipts that are procedural burden cases (cases
    accepted under criteria 5-7) is missing important attributes of a
    successful performance measure, including linkage and clarity. TAS is
    working to develop processes to capture components of a meaningful case
    advocacy efficiency measure, which will be useful for the development of a
    useful efficiency measure in the future.

    TAS's case advocacy efficiency measure is not linked to TAS's case
    advocacy mission. According to the Advocate, TAS developed its efficiency
    measure with the thought that the percentage of procedural burden case
    receipts should eventually decrease as IRS fixes systemic problems in
    response to TAS's systemic advocacy efforts. However, the current TAS
    measure is really a measure of systemic advocacy effectiveness rather than
    case advocacy efficiency. The Office of Management and Budget (OMB)
    agrees. OMB's Program Assessment Rating Tool (PART) review described TAS's
    efficiency measure as a proxy measure for TAS's success in helping IRS fix
    systemic problems. However, it provides only limited information on the
    success of TAS's systemic advocacy mission because it is sensitive to a
    number of outside factors unrelated to TAS activities. For example, the
    number of procedural burden cases could increase because of an increase in
    new IRS errors, regardless of how well TAS had identified corrections for
    earlier systemic problems.

    In addition, TAS's efficiency measure lacks clarity because it is not a
    true measure of efficiency. Simply put, efficiency is the ratio of the
    outcome or output to the input of any program.^22 TAS's efficiency measure
    includes no information on inputs into the program, such as time, and does
    not adequately measure output.

    To develop a true measure of case advocacy efficiency, TAS would need
    information on case advocacy outputs, such as the number of cases closed,
    and inputs--primarily the amount of time spent on those cases. Currently,
    TAS managers do not have information on inputs because TAS does not track
    the amount of time spent working each case; however, TAS plans on
    implementing a method to track time in January 2007. TAS would also need
    to adjust the number of cases closed for the complexity of the cases and
    the quality of the work. In a past report, we said that efficiency
    measures that are not adjusted for quality and complexity could yield
    misleading information.^23 For example, an increase in cases closed per
    case advocate would not be a true increase in efficiency if cases were
    becoming less complex.

    ^22While productivity and efficiency are often used interchangeably and
    are closely related, they are not always synonymous. Productivity is a
    descriptive term defining what is actually produced relative to the inputs
    used. Efficiency sometimes is a normative term evaluating productivity in
    relation to the maximum amount of output that could be produced with a
    given level of input. For consistency, throughout this report we will use
    efficiency to represent both concepts in discussing TAS's efficiency
    measure.

    According to TAS officials, cases have been becoming more complex in
    recent years; however, we could not verify this because TAS only has a
    limited way to measure complexity. At this time, TAS classifies cases as
    routine or complex. However, TAS is in the process of developing a more
    sophisticated method for determining case complexity. TAS is currently
    testing a model for determining the complexity of a case and plans on
    making changes to TAMIS in order to collect complexity data. A more
    sophisticated complexity index should provide the ability to adjust case
    output to reflect changes in complexity over time.

    TAS also does not have information on the cost of working each case,
    preventing interpretation of efficiency information in light of cost
    effectiveness. Having data on the cost of each case would allow TAS
    managers, and external stakeholders, to make better decisions about where
    to allocate both TAS's case advocacy resources and systemic advocacy
    efforts. Without such data, TAS managers do not know if some categories of
    taxpayer issues are noticeably more costly to resolve than others. The
    high cost of case advocacy might become a factor in deciding how to
    prioritize systemic advocacy efforts. OMB also recommended in its PART
    report that TAS introduce a case advocacy unit cost measure. TAS officials
    indicated that they will start collecting unit cost data once they
    implement a method for tracking time on case.

    ^23GAO, Tax Administration: Planning for IRS's Enforcement Process Changes
    Included Many Key Steps but Can Be Improved, [34]GAO-04-287 (Washington,
    D.C.: Jan. 20, 2004).

    TAS and IRS Are Working Jointly to Improve Coordination

    As discussed in the Background section, TAS has limited authorities to
    take action on some cases. When TAS does not have authority to take action
    on a case, it must request that IRS take the action through an Operations
    Assistance Request (OAR).^24 TAS and IRS operating divisions have
    agreements in place that govern the OAR process. Several IRS and TAS
    officials identified coordination problems regarding the OAR process that
    could delay the resolution of taxpayer problems. Some of the problems that
    IRS officials identified include the following:

               o TAS sends OARs when TAS could have resolved the case using their
               authorities or conversely TAS takes the action when they should
               have sent an OAR.
               o TAS does not always do the necessary research or collect the
               necessary documentation before sending an OAR.
               o OARs have to either be mailed or faxed.
               o TAS routes OARs to the incorrect area.^25
               o TAS accepts cases that do not meet its criteria or where the
               taxpayer has not taken the necessary steps to resolve his or her
               problem with IRS, which increases OAR volume and circumvents
               normal case processing.

               Some TAS officials also reported some confusion over the OAR
               process. For example, officials stated that it is not always clear
               what documentation is required and the procedures for taking
               certain actions in the Internal Revenue Manual are vague, leaving
               room for interpretation. The Advocate's 2007 Objectives Report to
               Congress stated that it is a challenge for TAS employees to
               identify when an OAR should be sent, given the continuing state of
               change in IRS operating division personnel and procedures. These
               types of issues could lead to IRS rejecting more OARs, which
               causes delays for the taxpayer and unnecessary rework for TAS and
               IRS.

               The Advocate plans to take actions to reduce the number of
               rejected OARs, including identifying TAS and IRS operating
               division training needs, improving the clarity of the IRM, and
               working with IRS operating divisions to ensure TAS routes OARs to
               the right place. TAS is also working with IRS operating divisions
               to develop a method to send OARs electronically.

               TAS has taken actions to deal with past issues related to TAS-IRS
               coordination. In 2002, TIGTA found that TAS employees were taking
               actions on taxpayer cases that were outside of their authority.^26
               In response to TIGTA's findings, the Advocate agreed that there
               was confusion about the scope of TAS authorities and outlined
               corrective actions TAS had taken. As part of those actions, TAS
               provided additional training and modified the case quality review
               to include an accuracy standard that ensures actions taken are
               technically and procedurally correct and within TAS's authorities.
               TAS is looking for ways to improve the quality review and one of
               the proposals is to isolate the OAR process during the review so
               that they can better identify gaps in the OAR process. Senior TAS
               officials have provided the Advocate with recommendations for
               improving the quality review.

               IRS and TAS are also currently reviewing the need to change TAS's
               authorities. The Advocate said that she supports certain
               additional authorities, but only those that do not undermine the
               unique responsibility of TAS, namely, advocating for the taxpayer
               inside the IRS. The Advocate said that she is concerned that her
               role may become blurred if she is asking IRS to take an action
               while simultaneously possessing authority to take the same action
               directly. Furthermore, the Advocate said that there are benefits
               to having the IRS confront taxpayer issues and become aware of
               recurring issues, which may not happen if TAS had the authority to
               make the changes itself without IRS involvement.

    			  TAS Does Not Measure the Effectiveness of Systemic Advocacy, and
    			  Reporting on Systemic Issues Is Not as Useful as It Could Be

               TAS's systemic advocacy efforts have the potential to benefit
               large numbers of taxpayers. However, since TAS is just beginning
               to pilot a process to measure the effectiveness of its systemic
               advocacy efforts, TAS, IRS, Congress, and other stakeholders do
               not know how successful TAS is at accomplishing its systemic
               advocacy mission.

    			  TAS Is Piloting Process to Measure the Effectiveness of Systemic
    			  Advocacy

               TAS is piloting a process to analyze a few systemic issues in
               depth to assess progress in correcting underlying problems, but
               does not have a process for measuring systemic advocacy
               effectiveness more broadly. TAS worked with W&I to develop a
               process for using information from TAMIS and SAMS, feedback from
               TAS case workers on new problems observed in TAS cases, and input
               from the TAP to identify top systemic issues. TAS and the
               operating divisions will then collaborate to identify the root
               causes of those issues, implement needed changes to IRS procedures
               and systems, and assess whether progress is being made in
               correcting the underlying problems. If TAS management decides that
               the number of occurrences has been sufficiently reduced, the
               issues will be replaced by others. TAS is now piloting this
               process.

               In August 2006, TAS used TAMIS data to identify the top issues.
               TAS and W&I officials agreed to address the issue of problems
               related to processing amended returns. If the pilot is successful,
               TAS plans to concurrently apply the process to three additional
               issues, replacing each one as the incidence of the issue has been
               sufficiently reduced. By using data to identify issues, testing to
               determine progress in addressing issues, and piloting the new
               process before determining if it should become standard procedure,
               TAS has taken the first steps towards developing a system to
               measure the effectiveness of its systemic advocacy activities.

               While gathering in-depth information about a few systemic advocacy
               issues is important, this approach will not provide TAS managers,
               IRS, or Congress with an assessment of TAS's systemic advocacy
               efforts more broadly. Using information from TAMIS on the types of
               new issues coming in from individual taxpayers and the systemic
               projects being suggested through SAMS, TAS managers could develop
               measures of the extent to which systemic issues are recurring,
               which would in turn, provide a measure of TAS success in
               identifying and addressing the root causes of these problems. Past
               reports by the IRS Oversight Board, TIGTA, and GAO have also noted
               the need for TAS to have better information about systemic
               advocacy effectiveness.^27

    			  Annual Report to Congress Omits Important Information about
    			  Whether Systemic Issues Were Addressed

               The National Taxpayer Advocate's annual report to Congress does
               not include adequate information about steps taken to address
               systemic issues, either new issues or issues raised in the past.
               IRS managers and other interested parties, including Congress,
               need this information to know whether issues have been addressed
               to TAS's satisfaction and whether additional steps need to be
               taken.

    			    Report Does Not Include the Status of All Legislative
    			    Recommendations

               The annual report does not provide a way to track the status of
               TAS's legislative recommendations. A table is included in the
               annual report but it provides only limited information (see table
               7 for a copy of the 2005 table). We found that the table does not
               provide potentially useful information, making it difficult to
               determine what has happened as a result of a specific legislative
               recommendation. For example, the table

               o does not list all past recommendations, listing only
               recommendations for which the current Congress took some action,
               o omits information about actions taken by prior Congresses either
               on the listed recommendations or on previous recommendations,
               o does not include summaries of the recommendations or how the
               recommendations are addressed by proposed legislation, and
               o does not show the date of the recommendations it includes.

    ^24TAS issued OARs on about 46 percent of cases in fiscal year 2006. Some
    cases involved more than one OAR, for a total of about 169,000 OARs.

    ^25TAS data do not indicate the reason for incorrectly routed OARs. An OAR
    could be misrouted because of a TAS mistake, or because a procedural or
    organizational change at IRS was not adequately communicated to TAS.

    ^26Treasury Inspector General for Tax Administration, Taxpayer Advocate
    Service Employees Made Adjustments to Taxpayer Accounts Without Proper
    Authorization, Reference No. 2002-10-079 (Washington, D.C.: Mar. 28,
    2002).

    ^27IRS Oversight Board, Oversight of the Office of Taxpayer Advocate:
    Principal Findings and Actions, (September 2002); Treasury Inspector
    General for Tax Administration, Opportunities to Improve the Effectiveness
    of Internal Revenue Service Advocacy Efforts, Reference No. 199910061
    (Washington, D.C.: Sept. 27, 1999)--this report addressed the PRP, which
    was the predecessor to TAS; GAO, IRS Management: IRS Faces Challenges as
    it Restructures the Office of the Taxpayer Advocate, [35]GAO/GGD-99-124
    (Washington, D.C.: July 15, 1999).

    Table 7: TAS 2005 Annual Report to Congress Table Summarizing Status of
    the Advocate's Legislative Recommendations; Actions Taken by the 109th
    Congress

                                   Bill
    Recommendation              number  Sponsor        Date Current status
    Alternative minimum tax
    (AMT)
    Repeal the individual AMT   HR 1186 English    3/9/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
                                   S 1103  Baucus    5/23/2005 Referred to the
                                                               Senate Finance
                                                               Committee
                                   HR 2950 Neal      6/16/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
                                   HR 3841 Manzullo   9/2/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
    Index AMT exemption         HR 703  Garrett    2/9/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
                                   HR 4096 Reynolds 10/20/2005 Passed House
                                                               12/7/2005; placed
                                                               on Senate
                                                               legislative
                                                               calendar
                                                               12/13/2005
    Tax preparation and
    low-income taxpayer clinics
    (LITC)
    Matching grants for LITC    HR 894  Becerra   2/17/2005 Referred to the
    for return preparation                                  House Financial
                                                               Institutions and
                                                               Consumer Credit
                                                               Subcommittee
                                   S 832   Bingaman  4/18/2005 Referred to the
                                                               Senate Finance
                                                               Committee
    Regulation of income tax    HR 894  Becerra   2/17/2005 Referred to the
    preparers                                               House Financial
                                                               Institutions and
                                                               Consumer Credit
                                                               Subcommittee
                                   S 832   Bingaman  4/18/2005 Referred to the
                                                               Senate Finance
                                                               Committee
    Small-business issues
    Health insurance            S 663   Bingaman  3/17/2005 Referred to the
    deduction/self-employed                                 Senate Finance
    individuals                                             Committee
    Married couples as business HR 3629 Doggett   7/29/2005 Referred to the
    co-owners                                               House Ways and
                                                               Means Committee
                                   HR 3841 Manzullo   9/2/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
    Federal tax deposit         HR 3629 Doggett   7/29/2005 Referred to the
    avoidance penalty                                       House Ways and
                                                               Means Committee
                                   HR 3841 Manzullo   9/2/2005 Referred to the
                                                               House Ways and
                                                               Means Committee
    Election to be treated as   HR 3629 Doggett   7/29/2005 Referred to the
    an S corporation                                        House Ways and
                                                               Means Committee
                                   HR 3841 Manzullo   9/2/2005 Referred to the
                                                               House Ways and
                                                               Means Committee

    Source: TAS.

      IRS Actions in Response to TAS Recommendations Are Unclear

    Each annual report includes information on actions IRS has taken or
    intends to take related to the most serious systemic problems covered in
    that report. The annual reports do not include such information related to
    the problems included in previous annual reports. By not including this
    information, it is difficult to determine which problems have been
    addressed and are no longer serious problems, and what actions, if any,
    have been taken or remain to be taken to address a particular problem.

    TAS sent the recommendations included in the 2004 and 2005 annual reports
    to IRS. IRS provided information about the actions it had taken for the
    2004 recommendations and, as of November 2006, was in the process of
    providing TAS with similar information for the 2005 recommendations. TAS
    officials said they plan to include an update of IRS actions in response
    to recommendations made in the annual reports and that this update may be
    included in the annual report or posted on the TAS Web site.

      TAS Does Not Explain Why Most Serious Problems Are Different Each Year

    By law, the annual report must include a summary of at least 20 of the
    most serious problems encountered by taxpayers. These do not have to be
    the 20 worst problems, however, and the Advocate is free to list different
    problems from year to year. The annual report does not explain this,
    however, and it does not explain what happened to the problems in the
    earlier reports. As a result, readers may have the impression that the
    problems described in an annual report are the top problems facing the
    taxpayers that year. Also, when a problem is included in one year's annual
    report and not in the next, readers may mistakenly think that the problem
    has been resolved.

    A discussion of prior serious taxpayer problems may be helpful to IRS
    stakeholders, including Congress, because the problems cited by TAS vary
    from year to year. For example, of the 21 most serious problems included
    in the 2005 annual report, only 4 were included in any of the prior three
    reports, as shown in table 8.

    Table 8: Comparison of the Most Serious Problems Included in 2005 Annual
    Report to Those in Previous Reports

                                       Most serious taxpayer problems included in
                                        the 2004, 2003, and 2002 annual reports
                                       that are similar to the problems included
                                               in the 2005 annual report
    Most serious taxpayer problems  2004 annual    2003 annual   2002 annual
    included in 2005 annual report  report         report        report
    Trends in taxpayer service
    Criminal Investigation refund                  X
    freezes
    The cash economy
    Training of private debt
    collection employees
    Earned Income Tax Credit (EITC)                X             X
    exam issues
    Levies on Social Security
    payments
    Appeals campus centralization
    Refund application loans:
    Oversight of the industry,
    cross-collection techniques,
    and payment alternatives
    Identity theft
    Complexity of the Employment
    Tax Deposit system
    Automated Collection System                                  X
    (ACS) levy releases
    Regulation of Electronic Return
    Originators
    Limited scope of backup
    withholding program
    Accessibility of E-Services for
    tax practitioners
    Mandatory briefings for IRS
    employees about the Taxpayer
    Advocate Service
    Allowable expense standards for
    collection decisions
    Inadequate taxpayer service to
    exempt organizations resulting
    in unnecessary penalties
    Direct deposit of income tax
    refunds
    Innocent spouse claims                         X             X
    Limitations of collection
    account databases
    Reasonable cause assistant

    Source: GAO analysis of TAS reports.

    Note: The issues may not be exactly the same, but the titles of the issues
    were either the same, similar, or included the same words or phrases in
    each. For example, the 2005 annual report included ACS levy releases and
    the 2002 report included access to ACS.

    In addition, TAS's analysis of the most serious problems included in the
    2005 annual report showed that nine problems had not been specifically
    addressed in previous reports while the remaining problems were related to
    serious problems included in previous annual reports. For example, a
    serious problem included in the 2005 annual report was entitled "trends in
    taxpayer service" while a problem in the 2003 report was entitled
    "taxpayer assistance centers" and a problem in the 2004 report was
    entitled "taxpayer access: face-to-face interaction."

    The Advocate said that it is a balancing act each year to decide which
    taxpayer problems to include. She said that TAS should not issue an annual
    report that repeats many taxpayer problems from year to year because the
    annual report is the primary way that TAS informs Congress and the public
    about systemic problems. As there are more than just 20 problems facing
    taxpayers, reporting on new problems every year is the best approach.
    Other TAS management officials expressed similar viewpoints.

    In addition, as previously described, the Advocate must also prepare
    another report that identifies TAS's objectives for that year. According
    to the Advocate, she uses the objectives report as TAS's strategic plan
    and the report gives her a midyear chance to discuss the effect of IRS
    initiatives on taxpayers. The Advocate believes both reports are important
    and if they were combined, she would lose a communication tool that allows
    her to keep Congress informed about problems taxpayers are encountering
    and TAS's plans to mitigate those problems.

    Conclusions

    Congress established TAS to help taxpayers with problems that were not
    resolved through normal IRS channels as well as to reduce the number of
    such problems through systemic advocacy. The recent increase in TAS
    caseload may raise questions about the effectiveness of TAS systemic
    advocacy at preventing new taxpayer problems from arising. However, the
    available data--particularly the varied makeup of TAS's taxpayer cases
    from year to year--suggest that the increase in caseload may not be an
    indicator of TAS and IRS performance at preventing taxpayer problems but
    be due to other factors such as increases in IRS enforcement activities or
    changes in the economy. As IRS's enforcement actions have changed over
    time, so has the nature of the problems taxpayers bring to TAS. As certain
    problems have been reduced in number, other problems have taken their
    place.

    On the other hand, conclusions about the effectiveness of both case and
    systemic advocacy are necessarily limited by a lack of some performance
    information. Without measures of case advocacy efficiency and cost, TAS
    management lacks information potentially useful for managing its case
    advocacy staff and prioritizing its systemic advocacy efforts.
    Understanding efficiency is especially important in light of the challenge
    posed by a growing caseload. Without a broad-based measure of the
    effectiveness of systemic advocacy, TAS, IRS, and Congress lack
    information about whether efforts to prevent taxpayer problems, rather
    than resolve them after they arise, are achieving any success. Similarly,
    TAS's current reporting leaves key information about the status of the
    issues it raises and IRS and congressional responses to past
    recommendations unmentioned. TAS may have options about the best way to
    provide more complete information to Congress and the public and to do so
    does not necessarily mean adding to the length of the annual report. For
    example, it might be preferable for TAS to use the Internet to make
    available tables listing both current and past recommendations and
    summarizing IRS and legislative actions to date. We note that TAS is
    already considering posting to its Web site the actions IRS has taken to
    address the recommendations related to the most serious problems in the
    2004 annual report.

    Recommendations for Executive Action

    We recommend that the National Taxpayer Advocate

               o improve TAS case advocacy performance measures with the addition
               of a true measure of efficiency that incorporates case complexity
               and quality and a cost measure;
               o supplement the detailed information on specific systemic
               advocacy issues currently being developed with a broad measure of
               the effectiveness of systemic advocacy; and
               o improve TAS reporting by (1) describing actions taken in
               response to TAS legislative recommendations, (2) describing
               actions taken by IRS to address the most serious problems
               encountered by taxpayers, and (3) making it clear that the most
               serious problems included in the annual report to Congress are at
               least 20 of the most serious problems but not necessarily all of
               the top problems faced by taxpayers.

    			  Agency Comments and Our Evaluation

               The National Taxpayer Advocate provided written comments on a
               draft of this report in a February 12, 2007, letter which is
               reprinted in appendix IX. The Advocate agreed with our
               recommendations. Her letter notes that TAS already collects
               quality data which will be needed to develop an efficiency
               measure, has taken the first steps to collect case complexity and
               time spent on cases to be used to develop cost data, and has
               submitted work requests to collect additional case complexity and
               time spent on case data. Her letter says that TAS will then use
               this data to develop a method for measuring case advocacy
               efficiency. She also noted that TAS recognizes the value of a
               broad measure of the effectiveness of systemic advocacy and said
               that TAS will develop one. TAS is implementing an enhanced process
               to monitor actions taken in response to TAS legislative
               recommendations and the outcomes will be included in the annual
               report to Congress and be posted on the TAS web site. TAS will
               monitor the status of recommendations included in the annual
               report that address serious problems and post the results
               semiannually on the TAS web site. TAS included language in the
               2006 annual report to Congress to clarify that the most serious
               problems included in the report are at least 20 of the most
               serious problems but not necessarily all of the top problems faced
               by taxpayers.

               We also provided a draft of this report to the Commissioner of
               Internal Revenue for his review and comment. The draft report did
               not include any recommendations addressed to the Commissioner. The
               IRS Office of Legislative Affairs provided informal technical
               comments, and we incorporated them as appropriate.

               As agreed with your offices, unless you publicly announce its
               contents earlier, we plan no further distribution of this report
               until 30 days after its date. At that time, we will send copies of
               this report to the National Taxpayer Advocate, the Secretary of
               the Treasury, the Commissioner of Internal Revenue, and other
               interested parties. This report is available at no charge on GAO's
               web site at http://www.gao.gov.

               If you or your staffs have any questions, please contact me at
               (202) 512-9110 or whitej@gao.gov. Key contributors to this report
               were David Lewis, Assistant Director; Shellee Soliday; Lindsey
               Houston; John Mingus; Shirley Jones; and Jennifer Gravelle.

               James R. White
    			  Director, Tax Issues Strategic Issues Team

    			  Appendix I: Objectives, Scope, and Methodology

               Our first objective was to determine why the Taxpayer Advocate
               Service's (TAS) caseload increased since 2004. To address this
               objective, we reviewed the case advocacy process; TAS's case
               acceptance criteria, changes made to the criteria by TAS, and TAS
               guidance for applying the criteria; the legal requirements for
               TAS's case acceptance criteria; TAS documents that included
               discussions of why their caseload was increasing, and the fiscal
               years 2002-5 National Taxpayer Advocate's annual reports to
               Congress, hereafter referred to as the annual report. We analyzed
               TAS caseload data from the Taxpayer Advocate Management
               Information System (TAMIS) for fiscal years 2002-6. To conduct our
               analyses, we associated cases with the fiscal year in which they
               were opened. Also, for cases that TAS closed and subsequently
               reopened, all of our analyses relate to the original case. To
               assess the reliability of the TAMIS data, we reviewed TAS
               documentation, conducted interviews with key officials, and
               conducted electronic testing of key variables. Based on this work,
               we determined that the TAMIS data were sufficiently reliable for
               our purposes. We also analyzed data related to Internal Revenue
               Service (IRS) enforcement activities for fiscal years 2002-5 that
               were included in the IRS Data Books or obtained from IRS
               officials. We interviewed several TAS officials including the
               National Taxpayer Advocate, hereafter referred to as the Advocate,
               the Executive Director of Case Advocacy, the Acting Director of
               Management Accountability, Policy and Strategy, and Local Taxpayer
               Advocates in three state offices and one campus office. We also
               interviewed Wage and Investment (W&I), Small Business/Self
               Employed (SB/SE), and Criminal Investigation (CI) officials to
               obtain their views about why IRS referrals to TAS were increasing.

               Our second objective was to determine how well TAS conducted its
               case advocacy activities in terms of measures such as customer
               satisfaction and quality. To address this objective, we reviewed
               TAS's performance measures for case advocacy; TAS's performance
               results and targets for fiscal years 2002-6; TAS's fiscal year
               2002-5 annual reports; previous GAO reports on performance
               measures and other performance measure literature; and the Office
               of Management and Budget's (OMB) 2004 Program Assessment Rating
               Tool (PART) report that discussed TAS's measures. We assessed
               TAS's performance measures using criteria previously established
               by GAO.^1 We interviewed TAS officials, including the Advocate and
               the Executive Director of Case Advocacy. We also interviewed W&I,
               SB/SE, and CI officials to obtain their views about coordinating
               with TAS to resolve taxpayer cases. In addition, we reviewed the
               Treasury Inspector General for Tax Administration's (TIGTA) report
               on the timeliness of TAS's case advocacy process^2 and GAO's
               report on restructuring the Office of the Taxpayer Advocate, which
               included an evaluation of the adequacy of the Advocate's
               measures.^3

               Our third objective was to determine how well TAS measures and
               reports its systemic advocacy efforts. To address this objective,
               we reviewed TAS's performance measures for systemic advocacy to
               determine if they addressed the effectiveness of systemic
               advocacy. We interviewed TAS systemic advocacy officials including
               the Executive Director for Systemic Advocacy, Acting Director of
               Systemic Advocacy Projects, Director of Immediate Interventions,
               the Project Manager for the Annual Report to Congress, and the
               Senior Advisor to the National Taxpayer Advocate and the Annual
               Report to Congress. In addition, we reviewed OMB's report that
               summarized the results of its use of PART to assess TAS for the
               year 2004, TIGTA's report on the effectiveness of systemic
               advocacy efforts,^4 and GAO's report on restructuring the Office
               of the Taxpayer Advocate to identify any issues raised related to
               measuring systemic advocacy activities.^5 We reviewed the 2002-5
               annual reports to determine what information they included about
               actions taken to address systemic issues identified in them. We
               focused on the annual reports to Congress since they are the
               primary method used by TAS to report on systemic advocacy efforts.
               In addition, we reviewed the legal requirements for the annual
               report and the Department of the Treasury report that summarized
               the actions TAS took to address the recommendations included in a
               2003 Treasury Inspector General for Tax Administration report
               related to the management of systemic advocacy.^6

               We performed our work from September 2005 through December 2006 in
               accordance with generally accepted government auditing standards.

    ^1GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing
    Season Performance Measures, [43]GAO-03-143 (Washington, D.C.: Nov. 22,
    2002).

    ^2Treasury Inspector General for Tax Administration, The Taxpayer Advocate
    Service Needs to Improve Case Management to Ensure Taxpayer Problems Are
    Resolved Timely, Reference Number 2004-10-166 (Washington, D.C.: Sept. 29,
    2004).

    ^3GAO, IRS Management: IRS Faces Challenges as it Restructures the Office
    of the Taxpayer Advocate, [44]GAO/GGD-99-124 (Washington, D.C.: July 15,
    1999).

    ^4Treasury Inspector General for Tax Administration, Opportunities to
    Improve the Effectiveness of Internal Revenue Service Advocacy Efforts,
    Reference Number 1999-10-061 (Washington, D.C.: Sept. 27, 1999).

    ^5 [45]GAO/GGD-99-124 .

    ^6Treasury Inspector General for Tax Administration, The National Taxpayer
    Advocate Could Enhance the Management of Systemic Advocacy Resources,
    Reference Number 2003-10-187 (Washington D.C.: Sept. 30, 2003).

    			  Appendix II: Process for Creating Immediate Interventions and
    			  Systemic Advocacy Projects

    			  Immediate Interventions

               Taxpayer Advocate Service (TAS) systemic advocacy staff analyze
               systemic issues to determine if they meet the definition of an
               immediate intervention. Immediate interventions are administrative
               issues which cause immediate, significant harm to multiple
               taxpayers and demand an urgent response. Also, the issues have
               clear sources; are highly visible and sensitive locally, areawide,
               or nationally; and require that a resolution be identified within
               3-5 calendar days. The staff does not have written guidance for
               determining if an issue meets the definition and instead use
               factors such as their knowledge of Internal Revenue Service (IRS)
               operations and problems taxpayers are having with IRS to assess
               whether the issues meet the definition.

               If the systemic advocacy staff determines an issue meets the
               definition of an immediate intervention, they elevate the issue to
               the Director of Immediate Interventions who decides on whether to
               create an immediate intervention. If an intervention is not
               created, then the staff applies the TAS criteria used to determine
               if an issue should become a systemic advocacy project. These
               criteria are described in the following section.

               An example of TAS's use of the immediate intervention process was
               when a taxpayer submitted an issue to TAS's Systemic Advocacy
               Management System (SAMS) describing an experience while using a
               publicly shared computer at a library to access www.irs.gov .
               The taxpayer used the computer to complete and download IRS forms.
               After signing off and exiting the Web site, the taxpayer's
               personal information remained on the computer. TAS immediately
               raised the issue to the level of an immediate intervention due to
               the sensitive nature of the issue and the potential disclosure of
               taxpayer information via the external IRS Web site. TAS worked
               with other offices within IRS and the software vendor to correct
               this problem.

    			  Systemic Advocacy Projects

               TAS systemic advocacy staff use written criteria to score each
               systemic issue that does not become an immediate intervention. The
               scores are used to determine which issues will become systemic
               advocacy projects. Such issues are systemic and affect a segment
               of taxpayers; require study, analysis, recommendations, and action
               to effect positive results; involve systems, processes,
               procedures, or legislation; and involve more than one taxpayer.

               TAS systemic advocacy staff use the following 14 criteria, which
               are divided into five categories, to score the issues.

               o Extent of the problem: The following three factors help
               determine how widespread a problem may be. The greater the number
               of taxpayers potentially affected, the more widespread the
               problem, and the greater the frequency of occurrence, the more
               criteria points awarded.

                            o Potential volume of taxpayers affected within the
                            identified segment (i.e., individuals, small
                            businesses): Of the taxpaying population within the
                            identified segment, how many could be affected by
                            this issue? Designate as high, medium, or low the
                            number of affected taxpayers relative to the overall
                            segment of taxpayers.
                            o Geographic scope: Does the issue affect taxpayers
                            across the nation (national), in clustered areas
                            (area, region), or only in certain places (local)?
                            o Issue frequency: Does the issue happen on a
                            recurring or cyclical basis, on a limited or sporadic
                            basis, or only one time?

               o Interest/visibility/sensitivity: The following three factors
               help determine the amount of interest, visibility, or sensitivity
               associated with the problem. The higher the level of
               congressional, community, and media interest or support, the more
               criteria points awarded.

                            o Congressional interest/support: How much support or
                            interest has Congress expressed about this issue? Did
                            the support or interest come from one member's office
                            or is it widespread in the House or Senate or both
                            (high, moderate, or low)?
                            o Community/external stakeholder interest/support:
                            How much support or interest have external
                            stakeholders expressed about this issue? Was the
                            support from one specific group (i.e., AARP) or
                            spread across various sectors such as accountants,
                            lawyers, and other special interest groups (high,
                            moderate, or low)?
                            o Media interest/publicity: How much interest have
                            the media shown in this issue? What level of coverage
                            does this issue rate (high, moderate, or low)?

               o Taxpayer burden: The following four factors help determine the
               level of burden placed on the taxpayer trying to resolve the issue
               from the taxpayer's point of view. The more effort, time, and
               money required to straighten out the problem, the more criteria
               points awarded. If taxpayers are treated disparately, the issue is
               awarded criteria points.

                            o How long to resolve: How long does it take, from
                            the taxpayer's perspective, to resolve this issue?
                            The choices range from "less than 3 months" to
                            "greater than 1 year." The longer it takes, the more
                            points are awarded.
                            o Effort: How much effort is required, from the
                            taxpayer's or other stakeholder's perspective, to
                            resolve this issue (minimal, moderate, or
                            significant? The more effort it takes to resolve the
                            issue, the more points are awarded.
                            o Financial: What is the financial effect on the
                            taxpayer excluding tax, penalties, and interest
                            (minimal, moderate, or significant)? Factors include
                            issues such as the cost of representation, whether
                            the taxpayer has money available for this expense,
                            the cost of repeated photocopies or express mail for
                            documentation, and so on.
                            o Fairness: Is this taxpayer treated disparately
                            compared to other taxpayers? If the taxpayer is
                            treated fairly, the issue is not awarded criteria
                            points. If the taxpayer is not treated fairly, the
                            issue is awarded criteria points.

               o Taxpayer rights: The following two factors help determine how
               the problem affects taxpayers' rights. If rights are negatively
               affected, or if rights are enhanced, the issue is awarded criteria
               points.

                            o Denial of taxpayer rights: Did the taxpayer have
                            the opportunity to exercise a right or was he or she
                            denied something that the taxpayer had the right to
                            (i.e., privacy, collection, appeal)? If taxpayers'
                            rights are violated, the issue is awarded criteria
                            points; otherwise no points are awarded.
                            o Enhancement of taxpayer rights: Does this issue
                            enhance taxpayers' rights? If taxpayers' rights are
                            enhanced, the issue is awarded criteria points;
                            otherwise no points are awarded.

               o Ability to effect change: The following two factors help
               identify issues that may not be resolved without TAS intervention.
               If the operating division is likely to implement a change without
               TAS influence, minimal criteria points are awarded. If TAS is
               likely to influence operating division actions or influence
               change, more points are awarded.

                            o Likelihood of independent operating division
                            action: How likely is it that the operating division
                            will fix the problem without TAS intervention? The
                            higher the likelihood of independent action, the
                            fewer criteria points awarded.
                            o TAS ability to influence change: How likely is it
                            that TAS will be able to influence the operating
                            division to address the issue? The higher the
                            likelihood of TAS influencing change, the more
                            criteria points awarded.

               When applying criteria, staff use their knowledge of IRS
               operations; information contained in IRS systems, obtained from
               IRS officials, or developed by IRS Research offices; and current
               events.

               After the staff enter information into SAMS for each criterion,
               SAMS assigns a score. Each week, the staff then sends a list of
               scored issues to the Director of Immediate Interventions
               indicating which issues met or exceeded the current threshold for
               converting an issue into a systemic advocacy project. This
               threshold can change depending on available resources to work on
               systemic advocacy projects. The Director of Immediate
               Interventions, Director of Advocacy Projects, and the systemic
               advocacy portfolio managers review the issues and decide which
               will become systemic advocacy projects.

               An example of a systemic advocacy project was the tip compliance
               project. The project stemmed from complaints from taxpayers and
               practitioners about the manner in which IRS was conducting tip
               compliance examinations. Problems included, among others,
               inconsistent requirements for substantiating income, insistence
               that original tip diaries be sent to IRS, and refusal to provide
               detail supporting any IRS adjustments. The issue potentially
               affected a high number of taxpayers; was geographically national
               in scope; had high congressional, external stakeholder, and media
               interest; involved significant efforts by taxpayers to resolve the
               issue; and affected the equitable treatment of taxpayers, among
               other things, according to the scoring sheet used to rank the
               issue. TAS worked with Wage and Investment (W&I) and Small
               Business/Self Employed (SB/SE) staff involved in the examinations.
               TAS was able to resolve some of the issues at lower levels of W&I
               and SB/SE. For other issues, TAS submitted an Advocacy Proposal to
               the management of the Employment Tax Group within SB/SE. These
               SB/SE officials agreed to correct the issues TAS raised. TAS is
               monitoring these cases to make sure the problems are not
               experienced by other taxpayers.

    			  Appendix III: Information to Be Included in the National Taxpayer
    			  Advocate�s Annual Report to Congress

               The National Taxpayer Advocate is required^1 to prepare an annual
               report that describes the Taxpayer Advocate Service's activities
               for the previous year that shall contain full and substantive
               analysis, in addition to statistical information, and shall

    			                          1. Identify the initiatives the Office of the
                            Taxpayer Advocate has taken on improving taxpayer
                            services and Internal Revenue Service responsiveness.
                            2. Contain recommendations received from individuals
                            with the authority to issue Taxpayer Assistance
                            Orders under section 7811.
                            3. Contain a summary of at least 20 of the most
                            serious problems encountered by taxpayers, including
                            a description of the nature of such problems.
                            4. Contain an inventory of the items described in 1,
                            2, and 3 for which action has been taken and the
                            result of such action.
                            5. Contain an inventory of the items described in 1,
                            2, and 3 for which action remains to be completed and
                            the period during which each item has remained on
                            such inventory.
                            6. Contain an inventory of the items described in 1,
                            2, and 3 for which no action has been taken, the
                            period during which each item has remained on such
                            inventory, the reasons for the inaction, and identify
                            any Internal Revenue Service official who is
                            responsible for such inaction.
                            7. Identify any Taxpayer Assistance Order which was
                            not honored by the Internal Revenue Service in a
                            timely manner, as specified under section 7811 (b).
                            8. Contain recommendations for such administrative
                            and legislative action as may be appropriate to
                            resolve problems encountered by taxpayers.
                            9. Identify areas of the tax law that impose
                            significant compliance burdens on taxpayers or the
                            Internal Revenue Service, including specific
                            recommendations for remedying these problems.
                            10. Identify the 10 most litigated issues for each
                            category of taxpayers, including recommendations for
                            mitigating such disputes.
                            11. Include such other information as the National
                            Taxpayer Advocate may deem advisable.

    ^126 U.S.C. 7803(c)(2)(B).

    			  Appendix IV: Taxpayer Advocate Service Process for Selecting
    			  Problems to Include in the Annual Report to Congress

               Prior to 2006, Taxpayer Advocate Service (TAS) systemic advocacy
               officials who prepared the annual report to Congress used input
               from the National Taxpayer Advocate, the Advocate's advisors,
               local taxpayer advocates, and Taxpayer Advocate Management
               Information System (TAMIS) and Systemic Advocacy Management System
               (SAMS) data to identify serious problems that taxpayers were
               encountering.^1 TAS officials considered several factors when
               developing the list including effect on taxpayer rights, the
               number or percentage of taxpayers affected, congressional
               interest, effect of noncompliance on tax administration or tax
               revenue, and barriers to taxpayer compliance. The Advocate and the
               systemic advocacy officials then met and developed a list of
               serious problems which was sent to the Internal Revenue Service
               (IRS) for comment. If IRS officials provided information that
               illustrated one of the proposed problems was not a serious issue,
               TAS dropped the issue. Systemic advocacy officials then prepared
               the final list of serious problems and the Advocate made the final
               decision on which problems were included in the annual report.

               When preparing the 2006 annual report, TAS officials used
               essentially the same process, plus additional sources of
               information to identify the serious problems. First, TAS officials
               summarized an environmental scan of documents that described
               issues that taxpayers have with IRS. Examples of documents
               included newspaper articles, letters to the Commissioner of
               Internal Revenue, and a Department of the Treasury news release.
               Examples of issues included the alternative minimum tax and offers
               in compromise. Second, TAS officials analyzed the "most serious
               problems" included in the 2001-5 annual reports. This process
               involved ranking the problems as critical, high, medium, low, or
               resolved based on the steps IRS had taken to address them. Third,
               they reviewed information related to immediate interventions, task
               forces, operations assistance requests, and low-income taxpayer
               clinics. They combined these three sources of data with input from
               the Advocate, the Advocate's advisors, and the local taxpayer
               advocates along with TAMIS and SAMS data in order to develop the
               proposed list of serious problems for the 2006 annual report. The
               Advocate made the final decision on which problems to include in
               the report.

    ^1TAMIS and SAMS are the information systems TAS uses to track case and
    systemic advocacy activities, respectively.

    			  Appendix V: Low-Income Taxpayer Clinic (LITC) Grant Program

               Responsibility for the LITC Grant Program was transferred from the
               Wage and Investment division (W&I) to the Taxpayer Advocate
               Service (TAS) in May 2003. The LITC Grant Program helps accredited
               academic institutions and nonprofit organizations represent
               low-income taxpayers in controversies with IRS and operate
               programs to inform individuals for whom English is a second
               language about their rights and responsibilities. TAS has
               responsibility for selecting LITC grant recipients and conducting
               site visits to ensure that LITCs are fulfilling their obligations.

               LITC grant applications go through a three-step selection process
               involving an eligibility screening, a technical evaluation, and a
               program office evaluation. To be eligible, grantees must offer
               services for free or for no more than a nominal fee and either
               represent low-income taxpayers in controversies with IRS or
               provide information to English as a second language (ESL)
               taxpayers about their rights and responsibilities as U.S.
               taxpayers. Next, a panel of TAS staff knowledgeable about the
               purpose and mission of LITCs conducts a technical evaluation of
               the eligible applicants. Panel members rank each LITC applicant
               based on four weighted criteria: the quality of their programs,
               their experience in sponsoring a clinic, the quality of their
               grant administration and accounting procedures, and the number of
               low-income or ESL taxpayers in the geographic area. Finally, LITC
               program staff conduct the program office evaluation during which
               they evaluate the rankings for inconsistencies or discrepancies.
               The LITC Program Office Director makes recommendations to the
               National Taxpayer Advocate who makes the final decision on who
               will receive the grants.

               TAS conducts several types of site visits to LITC grantees.
               Someone from the LITC Program Office visits each new clinic during
               the first 6 months to educate them on program requirements and to
               verify operational requirements listed in the grant guidelines
               such as keeping taxpayer information in a secure location and
               developing and maintaining relationships with other
               community-based organizations in order to reach targeted
               audiences. There are three tiers of additional site visits. The
               first tier visit is conducted by the local taxpayer advocate and
               includes checking items such as are the clinic's hours posted and
               easily visible, are brochures and posters visible, and does file
               security appear adequate. The second tier site visit is usually
               done by someone from the LITC Program Office and is more in-depth
               than the first tier visit. He or she reviews 30 items such as
               determining if the goals stated in the program plan are reflected
               in the program's actual activities, client records are maintained
               in a confidential manner, and the clinic has a written process to
               control and monitor costs and expenditures. If as a result of the
               second tier visit, the staff member identifies issues that need
               further review, then the LITC Program Office Director conducts a
               third tier visit. During this visit, the Director reviews
               requirements including financial/Office of Management and Budget,
               personnel, and program requirements in addition to other items
               including standards of operation and ethical considerations. Third
               tier visits can result in freezing funds for a grantee.

               For the 2006 grant cycle, TAS awarded $8 million in matching
               grants, ranging from $5,000 to $97,250, to 150 nonprofit
               organizations and accredited academic institutions.^1 According to
               the National Taxpayer Advocate's 2007 Objectives Report to
               Congress, during 2006, TAS expanded the coverage of clinics into
               rural and other areas where disadvantaged taxpayers had very
               limited access to assistance, funding 11 new clinics in areas that
               were underrepresented.

    ^1Under section 7526 of the Internal Revenue Code, no more than $6 million
    per year can be allocated for grants unless otherwise provided for by a
    specific appropriation. The Department of the Treasury's 2006
    Appropriations Act, Pub. L. No. 109-115, specifically provided $8 million
    for LITC grants.

    			  Appendix VI: Number of Taxpayer Advocate Service Cases by Primary
    			  Issue Code, Fiscal Years 2002�6

                                                        Fiscal year
    Primary issue code                    2002    2003    2004    2005    2006
    Criminal Investigation (CI)          5,600  15,304  16,554  28,228  20,490
    Processing Amended Return           32,254  18,282  11,211  12,214  17,195
    Levy                                 8,413   9,104   8,208   9,279  14,651
    Injured Spouse Claim                    18   4,350   6,166   6,389  11,610
    Processing Original Return          19,396  10,730   8,485   8,966  10,417
    Reconsideration/Substitute for       7,395   7,224   7,388   8,028  10,075
    Return (SFR)/6020B/Audit
    Expedite Refund Request                 34   4,742   7,002   6,743  10,045
    Closed Under Reporter Program        7,311   6,542   4,624   6,196   7,741
    (URP)
    Open Audit (Non Remittance           6,104   5,780   4,660   5,343   6,969
    Processing System (RPS), Earned
    Income Tax Credit (EITC))
    Copies of Returns / Transcripts /    3,481   2,878   4,058   5,696   5,761
    Reports / Freedom of Information
    Act (FOIA)
    RPS (EITC Claim)                    27,184  23,358  10,307   6,945   5,729
    Other Document Processing Issues       878   1,316   2,149   3,050   5,631
    Taxpayer Delinquent Return           4,017   2,172   1,585   2,184   5,102
    (TDI)-SFR / 6020B
    Open URP                                13   1,115   2,475   2,887   4,750
    Other Refund Inquiries / Issues     20,119   8,493   3,578   3,397   4,510
    Missing/Incorrect Payments           8,674   4,854   3,578   3,926   4,337
    Combined Annual Wage reporting       3,337   3,665   2,697   2,684   4,244
    (CAWR)/Federal Unemployment Taxes
    (FUTA)
    Failure to File Penalty (FTF) /         39   1,817   3,162   3,832   4,232
    Failure to Pay (FTP)
    EITC Reconsideration                    16      43     867   3,628   3,915
    Federal Payment Levy Program             2       5     470   1,632   3,809
    (FPLP) Levy-Social Security
    Administration (SSA) Benefits
    Internal Revenue Service (IRS)       2,687   2,228   2,084   2,741   3,783
    Offset
    Lost / Stolen Refund                 7,770   3,939   2,953   2,634   3,627
    Installment Agreement (IA) - Other   2,235   1,740   1,659   2,331   3,365
    Lien Release                            17   1,229   2,486   3,063   3,316
    Account / Notice Inquiry             2,991   2,303   2,051   2,493   3,139
    Other Collection Issues              2,261   1,745   1,732   2,310   3,104
    Math Error                           2,554   1,908   1,616   1,919   2,914
    Returned/Stopped Refunds                13   1,666   1,900   2,262   2,852
    Civil Penalties other than Trust        18     788   1,718   1,926   2,754
    Fund Recovery Penalty (TFRP)
    EITC Recertification                    51   2,515   2,739   2,333   2,676
    Stolen Identity                          4      67     460   1,185   2,514
    Unpostable / Reject                            535     935   1,772   2,478
    Unable to Pay-(Currently Not         2,695   2,050   1,625   1,766   2,339
    Collectible (CNC))
    Multiple/Mixed Taxpayer              1,598   1,665   1,705   1,632   2,066
    Identification Number (TIN)
    Offer in Compromise (OIC)-Doubt as   4,487   3,383   2,500   2,047   2,042
    to Collectibility
    Form W-7/Individual Taxpayer         2,319   2,429   2,626   2,592   1,990
    Identification Number
    (ITIN)/Adoption Taxpayer
    Identification Number (ATIN)
    Other Penalty Issues                11,283   4,670   1,337   1,332   1,929
    Other Payment Issues                    14     507   1,084   1,182   1,735
    Bankruptcy                           1,439   1,005   1,009   1,185   1,721
    Failure to Deposit Penalty (FTD)     2,529   1,825   1,593   1,147   1,288
    Lien-Other                           3,124   1,757     786   1,048   1,249
    Innocent Spouse Claim                1,791   1,230     960   1,040   1,208
    Tax Questions                        2,034   1,068     860   1,115   1,175
    Other Entity Issues                    515     514     794     992   1,126
    Scrambled Social Security Numbers       98     562     841   1,128   1,112
    (SSN)
    Refund Statute (Refund Statute           5     398     821     940   1,089
    Expiration Date (RSED))
    Other Exam                             895     717     783     864   1,070
    Treasury Offset Program (TOP)            3     549     750     835   1,062
    Offset
    Other Technical, Procedural, or         13     363     734     908   1,002
    Statute Issues
    Undelivered Refunds                    902     675     570     757     987
    Application for Exempt Status          680     387     479     620     977
    (F1023/1024)
    CI (Return Preparation Program)                  5      20     449     904
    TFRP                                   828     784     774     793     894
    Individual Retirement Account                    3     262     737     846
    (IRA) Penalty
    Carryback / Carryforward Claims         17     591     733     747     717
    (Net Operating Losses (NOL), F
    1045/1139)
    Subchapter S Corporation               949     785     698     675     711
    Examination Appeals                     22     254     516     557     694
    FTD/Estimated Tax (ES)               3,386   1,635     807     631     675
    Appeals-Other                           15     221     452     524     668
    Name/Address Changes                     4     176     372     613     663
    Back-up Withholding (BWH)              664     332     759     783     660
    Direct Deposit                           3     169     223     433     577
    Streamlined IA (Unpaid Balance of        6     244     368     452     549
    Assessment under $25k and able to
    full pay in 60 months)
    EITC Certification (Qualifying                   8     466     724     484
    Child)
    Other                                5,704   3,110     846     588     460
    ES Penalty                               3     268     287     265     454
    Penalty Appeals                          5     262     516     488     454
    Lien Withdrawal                          7     138     242     338     438
    Informal Interest Abatement              9     285     390     390     431
    Request
    Lien Subordination                       1     128     224     288     396
    Original Lien Filing                     3     151     256     327     370
    Collection Due Process (CDP)             6     131     179     239     352
    Appeals
    Taxpayer Rights                        365     235     198     155     330
    Lien Discharge                           1      78     202     282     306
    Excess Collection                        5     145     242     290     304
    Collection Statute Expiration Date      28     172     320     259     290
    (CSED)
    Form 843 (other than interest           15     162     215     317     285
    abatement)
    OIC Appeals                             15     137     303     319     274
    ITIN Merge                                              13     175     266
    Electronic Federal Tax Payment           2     102     206     138     241
    System (EFTPS)
    OIC-Effective Tax Administration        10     189     277     215     231
    Unpostable Payment                       1      66     114     131     213
    Tax Exempt/Government Entity             2     147     215     195     211
    (TE/GE) (Employment Plans/Exempt
    Organizations (EP/EO)) Technical
    Formal Interest Abatement Request       18     209     275     235     209
    (F 843)
    Seizure and Sale                       115     128     127     163     197
    SS-4, Application for Employer       3,170     685     188     148     192
    Identification Number (EIN)
    Forms / Publication Request             22      93     198     231     191
    Interest Calculation                     8      86     177     203     185
    Invalid Social Security Number         321     241     173     159     177
    (SSN) (Primary / Secondary)
    OIC - Doubt as to Liability             14     248     295     246     175
    Math Error ITIN                                         18     184     163
    FPLP Levy-Fed. Empl. Salaries                           38      85     158
    Invalid Dependent SSN/Name             220     179     140     123     149
    Innocent Spouse Appeals                 20      82     143     120     137
    FPLP Levy-Office of Personnel                           41     101     129
    Management (OPM) Retirement Income
    Alien Taxation Problems/inquiries               38     125     176     128
    regarding determinations of alien
    status for income tax purposes.
    Other Interest                       1,603     522      89      84     106
    Guaranteed IA                                   28      40      75     100
    ITIN Refund Inquiry                                     14      87      90
    Tax Treaties                             1      30      79      76      85
    Non-Master File                          8     103     185     136      78
    Exclusion of Foreign Earned Income       2      27      37      77      78
    Problems/inquiries regarding the
    exclusion of income.
    SS-8 Determinations                    132     118      86      88      77
    Restricted Interest                             48      82      90      66
    Assessment Statute (Assessment           1      26      41      40      63
    Statute Expiration Date (ASED))
    Invalid Spouse/Dependent ITIN                           13      79      55
    Refunds                                 17   1,194     372      97      53
    Collection Appeals Program (CAP)                17      27      35      53
    Appeals
    FPLP Levy-Federal                                       11      38      51
    Contractor/Vendor Payments
    Foreign Tax Credit                       1      25      31      30      51
    Examination                             21     672     296      84      47
    Collection                              11     344     200      72      43
    EITC Certification (Filing Status)               2     660     244      40
    Credit Interest                                 29      39      40      36
    Technical/Procedural/Statute             2     179      89      58      33
    Document Processing                     10     433     153      50      33
    Payments/Credits                        12     423     217      53      30
    Penalty                                  5     355     138      39      29
    Disaster Relief Claim                            6       5      15      28
    Appeals/Other                           10     120      88      24      15
    Lockbox                                         25      14       8      10
    Entity                                   3      94      52      24       9
    EITC Certification (Automated                            4       3       6
    Underreporter)
    Interest                                 2      56      19       5       3
    FPLP Levy-Federal Employment                             1       1       2
    Travel and Reimbursement Payments
    Total                              229,135 196,169 170,129 198,789 243,810

               Source: GAO analysis of TAS data.

    			  Appendix VII: Types of Taxpayer Advocate Service (TAS) Cases That
    			  Increased by More than 1,000 in Fiscal Years 2005 and 2006

               Table 9: Types of TAS Cases That Increased by More than 1,000
               Cases in Fiscal Year 2005

                                                               Fiscal year
                                              Fiscal year 2004        2005 Change
    Criminal Investigation                           16,554      28,228 11,674
    Processing Amended Return                        11,211      12,214  1,003
    Closed Under Reporter Program (URP)               4,624       6,196  1,572
    Lien                                              4,196       5,346  1,150
    Earned Income Tax Credit (EITC)                     867       3,628  2,761
    Reconsideration
    Levy                                              8,769      11,136  2,367
    Copies of Returns / Transcripts /                 4,058       5,696  1,638
    Reports / Freedom of Information Act
    All Other^a                                     119,850     126,345  6,495

               Source: GAO analysis of TAS data.

               a"Other" consists of the remaining 114 issue codes that TAS
               tracks. The number of cases in each of these codes either
               increased by fewer than 1,000 cases or decreased.

               Table 10: Types of TAS Cases That Increased by More than 1,000
               Cases in Fiscal Year 2006

                                                   Fiscal year Fiscal year
                                                          2005        2006 Change
    Levy                                             11,136      18,800  7,664
    Processing Original Return                        8,966      10,417  1,451
    Open Audit (Non Remittance Processing             5,343       6,969  1,626
    System, EITC)
    Processing Amended Return                        12,214      17,195  4,981
    Closed URP                                        6,196       7,741  1,545
    Reconsideration/Substitute for                    8,028      10,075  2,047
    Return/6020B/Audit
    Other Refund Inquiries / Issues                   3,397       4,510  1,113
    Taxpayer Delinquent Return (TDI) -                2,184       5,102  2,918
    Substitute for Return (SFR) / 6020B
    Installment Agreement - Other                     2,331       3,365  1,034
    Stolen Identity                                   1,185       2,514  1,329
    Combined Annual Wage Reporting/Federal            2,684       4,244  1,560
    Unemployment Taxes
    Open URP                                          2,887       4,750  1,863
    IRS Offset                                        2,741       3,783  1,042
    Other Document Processing Issues                  3,050       5,631  2,581
    Injured Spouse Claim                              6,389      11,610  5,221
    Expedite Refund Request                           6,743      10,045  3,302
    All Other                                       113,315     117,059  3,744

               Source: GAO analysis of TAS data.

               a"Other" consists of the remaining 114 issue codes that TAS
               tracks. These codes either increased by fewer than 1,000 cases or
               decreased.

    			  Appendix VIII: Taxpayer Advocate Service Customer Satisfaction
    			  Survey Results

               Table 11: Summary of Taxpayer Advocate Service (TAS) Customer
               Satisfaction Scores: Fiscal Year 2005

    Survey question                                           Fiscal year 2005
    The TAS employee...
    gave you a way to directly contact them                         95 percent
    informed you of actions they were planning to take              91 percent
    offered you an apology                                          70 percent
    listened to your concerns                                             4.47
    gave you an adequate opportunity to explain your problem              4.47
    gave you a chance to present additional documents or                  4.35
    information
    treated you with courtesy                                             4.58
    did their best to solve your problem                                  4.33
    was knowledgeable about your problem                                  4.27
    kept you informed about progress in resolving your                    4.29
    problem
    had a positive attitude                                               4.48
    understood all the issues and requests that you presented             4.30
    The TAS process...
    it was easy to reach the person helping you                           4.25
    written correspondence was easy to understand                         4.33
    you feel your problem was handled in a reasonable                     4.11
    timeframe
    you were treated fairly by TAS                                        4.38
    overall satisfaction (unweighted)                                     4.39
    as a result of your TAS experience, your opinion of the               3.63
    Internal Revenue Service

               Source: TAS.

               Note: The responses to the first three TAS employee questions
               represented the percentage of respondents who answered "yes." The
               responses to the remaining TAS employee questions and the first
               four TAS process questions were based on a rating of 1-5, with 5
               representing "strongly agree." The response to the fifth TAS
               process question was based on a rating of 1-5, with 5 representing
               "very satisfied." The response to the last TAS process question
               was based on a scale of 1-5, with 5 representing "much more
               positive," 4 representing "a little more positive," and 3
               representing "about the same."

    			  Appendix IX: Comments from the National Taxpayer Advocate

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    www.gao.gov/cgi-bin/getrpt?GAO-07-156 .

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    and methodology, click on the link above.

    For more information, contact James White at (202) 512-9110 or
    whitej@gao.gov.

    Highlights of [47]GAO-07-156 , a report to the Committee on Finance, U.S.
    Senate

    February 2007

    TAXPAYER ADVOCATE SERVICE

    Caseload Has Grown and Taxpayers Report Being Satisfied, but Additional
    Measures of Efficiency and Effectiveness Are Needed

    Congress created the Taxpayer Advocate Service (TAS) to assist taxpayers
    in resolving problems with the Internal Revenue Service (IRS) and to
    propose changes to IRS's practices to mitigate problems affecting
    taxpayers in general. TAS uses case advocacy and systemic advocacy,
    respectively, to address these two goals. GAO was asked to address (1) why
    TAS's caseload has increased since 2004, (2) how well TAS conducted its
    case advocacy activities in terms of measures such as customer
    satisfaction and quality, and (3) how well TAS measures and reports its
    systemic advocacy efforts. GAO interviewed TAS and IRS managers and other
    staff, reviewed TAS and IRS documents, and analyzed TAS and IRS data.

    [48]What GAO Recommends

    GAO recommends that TAS add performance measures to assess the efficiency
    and cost of case advocacy and the effectiveness of systemic advocacy. TAS
    should also improve what it reports about systemic advocacy such as
    describing actions taken to address taxpayers' serious problems. The
    National Taxpayer Advocate agreed with our recommendations, noting that
    TAS has begun reporting about systemic advocacy and is acting to implement
    the other recommendations. TAS and IRS provided technical comments, and we
    incorporated them as appropriate.

    The number of individual taxpayer cases opened by TAS increased
    substantially in fiscal years 2005 and 2006 and our analysis of TAS and
    IRS data shows that these increases correlated with increases in IRS
    enforcement activities both overall and in some specific IRS enforcement
    programs. For example, changes in the number of tax refunds frozen by IRS
    coincided with changes in the number of frozen refund cases at TAS. While
    TAS made changes after fiscal year 2004 to its guidance for accepting new
    taxpayer cases, this did not notably influence TAS's caseload increase in
    fiscal years 2005 and 2006. For example, TAS created two additional case
    acceptance criteria in fiscal year 2006 that resulted in a little more
    than 500 of the approximately 244,000 cases received that year.

    TAS measures customer satisfaction and found that the taxpayers TAS serves
    remained satisfied from fiscal years 2002 to 2006. TAS also measures the
    quality of its case advocacy and found that this improved from 2002 to
    2004 and stayed about the same in 2005 and 2006. While these case advocacy
    measures are sound, there is important missing information in that TAS
    does not have meaningful measures of case advocacy efficiency or cost. A
    meaningful measure of efficiency would consider the ratio of cases closed
    to the time spent on them and take into account case complexity and the
    quality of the work, and unit cost information is needed to fully
    understand this information. TAS is developing the means to capture time
    per case, the key component of unit cost, and case complexity.

    TAS currently does not measure the effectiveness of its systemic advocacy
    efforts. TAS is piloting a program to study systemic advocacy
    effectiveness in a few areas, but not broadly. Also, it is difficult to
    determine what actions were taken to address systemic issues raised in the
    annual report to Congress, TAS's primary method for providing information
    to Congress and the public about its systemic advocacy efforts. For
    example, the report describes serious problems faced by the taxpayers but
    does not include the status of addressing those issues.

    Overview of TAS Functions

    References

    Visible links
      32. http://www.gao.gov/cgi-bin/getrpt?GAO-03-143
      33. http://www.gao.gov/cgi-bin/getrpt?GAO-03-143
      34. http://www.gao.gov/cgi-bin/getrpt?GAO-04-287
      35. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-99-124
      43. http://www.gao.gov/cgi-bin/getrpt?GAO-03-143
      44. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-99-124
      45. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-99-124
      47. http://www.gao.gov/cgi-bin/getrpt?GAO-07-156
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