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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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 [email protected]. 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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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
*** End of document. ***