Tax Administration: Better Measures Needed to Assess Progress of IRS'
One-Stop Service (Letter Report, 08/29/94, GAO/GGD-94-131).

The Internal Revenue Service (IRS) has been frequently criticized for
its handling of taxpayer questions, requests for assistance, and
complaints.  In response, IRS has developed a concept of taxpayer
assistance known as "one-stop service." The idea is that taxpayers
should be able to call, write, or walk into an IRS office for help with
any kind of tax problem and see that matter resolved with only one
contact by the taxpayer.  GAO concludes that both taxpayers and IRS will
benefit if IRS can achieve its one-stop service goals.  Taxpayers will
be able to avoid time-consuming dealings with multiple IRS contacts, and
IRS should see increased taxpayer compliance.  Between 1992 and 1993,
IRS improved its delivery of one-stop service to taxpayers who called
with account questions.  However, several barriers still limit IRS'
ability to deliver one-stop service over the telephone.  IRS hopes to
remove some of these barriers by consolidating various telephone and
correspondence handling services into 23 Customer Service Centers, which
should be up and running by 2001.  In the meantime, current measures
overstate delivery of one-stop service at toll-free sites.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-131
     TITLE:  Tax Administration: Better Measures Needed to Assess 
             Progress of IRS' One-Stop Service
      DATE:  08/29/94
   SUBJECT:  Tax administration systems
             Computerized information systems
             Information dissemination operations
             Telephone communications operations
             Taxpayers
             Management information systems
             Quality control
             Productivity
             Internal controls
             Telecommunications operations
IDENTIFIER:  IRS One Stop Service Initiative
             
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Cover
================================================================ COVER

Report to the Chairman, Subcommittee on Commerce, Consumer, and
Monetary Affairs, Committee on Government Operations, House of
Representatives

August 1994

TAX ADMINISTRATION - BETTER
MEASURES NEEDED TO ASSESS PROGRESS
OF IRS' ONE-STOP SERVICE

GAO/GGD-94-131

IRS' One-Stop Service


Abbreviations
=============================================================== ABBREV

  IRS - Internal Revenue Service

Letter
=============================================================== LETTER


B-248488

August 29, 1994

The Honorable John M.  Spratt, Jr.
Chairman, Subcommittee on Commerce, Consumer
 and Monetary Affairs
Committee on Government Operations
House of Representatives

Dear Mr.  Chairman: 

The Internal Revenue Service (IRS) has frequently been criticized by
the press, the public, and Congress for its handling of taxpayer
questions, requests for assistance, and complaints.  Taxpayers have
long been frustrated with the circuitous routes that they often must
follow to obtain clear, concise, and accurate information about their
accounts or tax law issues. 

To better address taxpayers' concerns, IRS introduced a new concept
of taxpayer assistance known as "one-stop service." IRS defined
one-stop service as the "resolution of issues during the taxpayer's
initial contact (with IRS) or as a result of that contact." IRS
envisions that one-stop service will allow taxpayers to call, write,
or walk into an IRS office for assistance on any type of tax problem
and that office will be able to resolve the matter with only one
contact by the taxpayer.  Initially, IRS has focused on providing
one-stop service to taxpayers who call for assistance. 

IRS began implementing one-stop service in August 1991, but does not
expect it to be fully operational until September 1998.  We first
reported to the Subcommittee on IRS' one-stop service effort in April
1992.\1 This report discusses IRS' progress since then.  Because of
the Subcommittee's continuing interest in the quality of IRS' service
to taxpayers, you asked that we issue this report to you. 

We believe that one-stop service, if properly implemented, would
significantly improve IRS' service to taxpayers.  Resolving problems
in one contact with IRS should reduce taxpayer burden in terms of the
additional time and accompanying frustration that come with making
numerous IRS contacts, often with different IRS employees.  For IRS,
one-stop service should reduce its costs and contribute to increased
taxpayer compliance. 


--------------------
\1 Tax Administration:  One-Stop Service:  A New Concept of
Assistance for Taxpayers (GAO/T-GGD-92-33, Apr.  28, 1992). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

IRS initially focused on providing one-stop service for
account-related inquiries received at its 32 toll-free telephone
sites.  To do this, IRS purchased additional equipment to provide
staff with better access to taxpayer account information, trained the
staff, and gave them additional authority to handle account-related
matters.  We believe these steps have resulted in improved telephone
account service for taxpayers. 

Despite improvements in service, we believe IRS has overstated its
accomplishments in providing one-stop service by telephone because
its measure of that service is flawed.  IRS reported that it provided
one-stop service on 96 percent of the 11.7 million taxpayer account
inquiries received by telephone in fiscal year 1993, up from 74
percent of 6.7 million telephone inquiries handled in fiscal year
1992.  However, IRS relies on a measurement method that assumes all
callers with account inquiries who reach IRS receive one-stop
service, except those callers whose inquiries are written up for
later resolution and not resolved within 15 days.  IRS does not
monitor calls handled on-line (a call handled while the taxpayer is
on the telephone with IRS) to determine whether those callers
actually receive one-stop service.  We found examples of callers who
did not receive, but were counted as having received, one-stop
service on-line, leading us to conclude that IRS overstated its
one-stop service accomplishments in fiscal year 1993. 

Our analysis of a small sample of on-line account calls illustrates
that many of the callers IRS assumed received one-stop service would,
in fact, have had to make further contact with IRS to resolve the
issue.  We listened to 109 account inquiry calls handled on the
telephone by IRS assistors at 4 call sites.  We found that 21 of the
109 callers, or about 19 percent, received one-stop service and,
consistent with IRS' definition, would not have required further
contact with IRS.  The remaining 87 callers,\2 or about 81 percent,
did not receive one-stop service because, for example, they needed to
write another IRS office to resolve a matter or opted to call back
because an assistor with the expertise to handle the taxpayer's
inquiry was not available.  Under IRS' measurement method, all 109
callers were reported as receiving one-stop service because their
calls were handled on-line. 

Several obstacles block IRS' ability to provide one-stop service over
the telephone.  These obstacles include assistors' inability to
respond to account inquiries because of delays in processing taxpayer
transactions and posting them to taxpayer accounts.  Also, to receive
one-stop service, taxpayers must first reach IRS.  During the first 4
months of 1993, only about one of every four calls reached IRS--the
others received busy signals or taxpayers hung up after being placed
on hold.  IRS recognizes these barriers and is working to overcome
them.  Even when IRS makes its best efforts, it is not realistic to
expect one-stop service 100 percent of the time.  Taxpayers will need
to make additional contacts, for example, in instances where IRS
needs additional documentation to authenticate a taxpayer claim or
the taxpayer lacks the information necessary for IRS to resolve an
issue. 

IRS has not yet done a great deal to analyze its ability to deliver
one-stop service in other areas where it assists taxpayers.  IRS
applies its one-stop service measure to account inquiry calls because
it assumes that taxpayers making other types of calls--calls
concerning tax law questions or filing requirements, for
example--usually receive one-stop service.  This is a questionable
assumption.  We listened to 45 such calls that were handled on-line
and found that 20 callers received one-stop service and 24 did not. 
In one case, we were unable to determine if the caller received
one-stop service. 

IRS has begun to measure one-stop service for calls to automated
collection sites and had made limited attempts to measure such
service in handling taxpayer correspondence, but little has been done
to measure one-stop service for forms distribution centers and
walk-in sites.  We support IRS' initial emphasis on providing
one-stop service for telephone account inquiries; however, if IRS
wants to meet its 1998 one-stop service goal, we believe it also
needs to begin work in these other areas. 

We are recommending that IRS develop better measures to assess all of
its service activities.  Better measures should allow IRS to (1)
accurately assess its progress toward its 1998 goal of one-stop
service for 95 percent of all taxpayer inquiries, (2) identify and
correct problems that may impede such progress, and (3) determine the
relative quality of service available throughout various IRS
activities. 


--------------------
\2 We could not determine whether one caller received one-stop
service. 


   BACKGROUND
------------------------------------------------------------ Letter :2

In fiscal year 1993, IRS handled about 75 million inquiries from
taxpayers on matters ranging from routine queries on tax account
balances to complex requests about corporate tax issues.  These
inquiries included 47 million telephone calls (63 percent of all
inquiries), 21 million letters (28 percent), and 7 million personal
visits (9 percent) to the hundreds of IRS offices across the country. 

Many different IRS offices are responsible for handling taxpayer
telephone calls, correspondence, and visits.  About 75 percent of the
47 million telephone inquiries IRS received in fiscal year 1993 were
answered at 32 toll-free telephone call sites operated by IRS'
Taxpayer Service Division.  Toll-free sites handle a variety of
issues; telephone assistors at these sites answer tax law questions,
make adjustments and answer inquiries about taxpayer accounts, and
address such procedural matters as where to file a tax return.  In
addition, about 5 million calls on IRS enforcement actions were
handled by 23 automated collection sites, and nearly 7 million calls
requesting tax forms were handled by 3 forms distribution centers. 

Most taxpayer correspondence is directed to the 10 IRS service
centers and the Austin, TX, Compliance Center.  Taxpayers sent over
21 million letters to these centers in fiscal year 1993 inquiring
about their accounts, their returns, and various enforcement matters. 
In addition, about 7 million taxpayers visited IRS' 63 district
offices or 779 smaller satellite offices with requests for tax forms
or questions about tax returns and tax accounts. 

IRS initiated one-stop service to improve its handling of taxpayer
calls, correspondence, and visits.  IRS defines one-stop service as
the "resolution of issues during the taxpayer's initial contact [with
IRS] or as a result of that contact." Afterwards, the taxpayer should
not need to make any additional contacts with IRS on that particular
problem. 

IRS' one-stop service goal is consistent with the aims of the private
sector, which relies heavily on telephone service.  Representatives
from the airline, credit card, and utility industries told us that it
is important to help customers while they are on the telephone. 
Forcing a customer to call back, they said, may well result in lost
business and/or damaged customer relations.  IRS' goal is also
consistent with the results of the National Performance Review, which
found that successful organizations "put the customer first."

To provide one-stop service, IRS offices need access to IRS computer
systems supplying account information, account status, and case
disposition information.  The staff must not only answer questions
but also make account adjustments, contact other IRS organizations,
and track the status of any issue these organizations manage. 

In August 1991, IRS convened the One-Stop Service Executive Steering
Committee, a group established to determine how one-stop service
would apply to all the different organizations managing taxpayer
inquiries.  The Committee published guidelines in March 1993 to
incorporate one-stop service principles into all IRS operations. 
Overall, IRS' goal is to be able, by September 1998, to answer 95
percent of all taxpayer inquiries with one stop, whether the
inquiries are made by a telephone call, letter, or personal visit. 

In November 1993, IRS announced plans to consolidate its various
telephone and correspondence services into 23 Customer Service
Centers.  Employees at the centers are to handle taxpayer matters not
involving face-to-face interaction--all the tasks currently performed
at taxpayer service telephone sites, automated collection sites,
forms distribution sites, and many tasks now done at IRS' service
centers.  To accomplish these tasks, employees are to have additional
information, authority, and equipment to resolve taxpayer questions
and problems.  IRS said that Customer Service Centers will be better
able to provide one-stop service to taxpayers.  IRS is testing
Customer Service Center prototypes at its Fresno Service Center and
Nashville District Office and expects to have the other centers
operational by 2001. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

In April 1992, we provided testimony to the Subcommittee on one-stop
service.\3 The chairman subsequently requested a report on our
follow-up efforts.  Our objectives were to (1) assess the progress of
IRS' one-stop service, (2) evaluate IRS' measurement of its progress,
and (3) identify obstacles, if any, that stand in the way of one-stop
service.  To accomplish these objectives, we focused primarily on
IRS' handling of account inquiries at its toll-free telephone sites
because IRS has emphasized providing one-stop service there.  In
particular: 

  We interviewed officials responsible for administering the one-stop
     service in IRS' National Office and at seven district offices
     from IRS' Mid-Atlantic, Southeast, and Central regions.  Our
     discussions covered not only the delivery of one-stop service on
     account-related telephone calls but also IRS' plans for one-stop
     service in activities that handle other telephone contacts,
     taxpayer correspondence, and taxpayer visits to IRS offices. 

  We determined the accuracy of IRS' one-stop service performance
     measure by looking at its formulas for calculating one-stop
     service and how those formulas were applied. 

  We sent questionnaires to the Taxpayer Service Division chiefs at
     29 of IRS' 32 toll-free telephone sites to determine the status
     of one-stop service at the sites.  (To facilitate follow-up, we
     excluded the three sites outside the continental United States.)

  We monitored 154 taxpayer telephone calls (109 of which involved
     account inquiries and 45 of which involved questions about the
     tax law or such procedural issues as where to file a tax return)
     received at 4 toll-free sites (Baltimore, MD; Cincinnati, OH;
     Jacksonville, FL; and Nashville, TN) during April and May 1993
     to determine whether callers received one-stop service.  To
     determine whether taxpayers received one-stop service, we
     listened to each taxpayer call and IRS' response and determined
     whether the taxpayer would need to contact IRS again to have the
     inquiry answered.  Although our sample is not large enough to
     project the extent to which IRS provides one-stop service across
     IRS, it provides examples of where IRS falls short in delivering
     one-stop service and demonstrates flaws in IRS' measure of
     one-stop service. 

We did our work between January 1993 and April 1994 in accordance
with generally accepted government auditing standards. 

We discussed the contents of this report with IRS officials on July
12, 1994.  They agreed with our recommendation and told us that IRS
plans to implement new one-stop measures in fiscal year 1995.  Their
comments and our evaluation are presented on pages 13 and 14. 


--------------------
\3 GAO/T-GGD-92-33. 


   TELEPHONE ACCOUNT SERVICE HAS
   IMPROVED
------------------------------------------------------------ Letter :4

Since 1991, IRS has directed most of its attention to implementing
one-stop service for taxpayer account services that have become
increasingly available through the 32 toll-free telephone call sites. 
For much of the 20-year history of the toll-free sites, telephone
assistors have primarily answered taxpayer questions on tax law and
technical procedures.  However, as IRS technology advanced, the
toll-free sites redirected their staff to handle more taxpayer
account service and applied the concept of one-stop service to this
expanded service. 

A combination of technical improvements, personnel training, and
procedural revisions has made it possible for staff at the toll-free
telephone call sites to do more to help taxpayers with account
inquiries than was possible in the past.  If, for example, a taxpayer
called in 1991 to question a math error notice concerning a tax
return, toll-free site assistors could have done little except tell
the taxpayer to write a service center for an explanation and any
necessary account adjustment.  The alternative for assistors was to
wait for weeks to obtain a copy of the taxpayer's return and then
possibly still not have the authority to make an account adjustment. 

Presently, however, a taxpayer with the same problem can call a
toll-free site, and an assistor may be able to clear up the caller's
difficulties during the course of the telephone call.  Due to recent
computer enhancements, a toll-free site assistor can now immediately
retrieve the portion of the taxpayer's return showing the error. 
Using this record, the assistor can, with the taxpayer's help,
identify the reason for the error and, if the error is below a
certain dollar amount, adjust the taxpayer's account to reflect the
corrected figures. 

Since the beginning of fiscal year 1992, IRS has purchased equipment
to answer taxpayer account questions at the toll-free sites.  In
1992, IRS put 824 new computer terminals into its toll-free sites. 
These terminals and software enhancements give assistors access to
account information, making it possible for them to not only check
the latest changes posted to taxpayers' accounts but also to make
adjustments to correct or update these accounts. 

Furthermore, despite overall staff cuts at many toll-free sites, the
number of assistors assigned to handle account questions has
increased by 33 percent--from 1,522 to 2,022 staff from 1992 to
1993.\4 This occurred because IRS shifted staff from other taxpayer
service operations and trained more assistors to make account
adjustments.  As of February 1992, IRS had fully trained 77 percent
of its telephone account assistors to make account adjustments.  As
of February 1993, IRS had fully trained 84 percent of its account
assistors. 

IRS officials said the increased equipment, staffing, and training
has resulted in an increase in the number of account questions
handled by telephone assistors and more one-stop service.  IRS
reported that it provided one-stop service on 96 percent (11.2
million) of the 11.7 million account inquiries it received from
taxpayers in fiscal year 1993, up from 74 percent on 6.7 million
inquiries received in fiscal year 1992. 


--------------------
\4 Our data on staffing increases and the following data on training
are based on questionnaire responses provided by staff at 29 of IRS'
32 toll-free telephone sites. 


   IRS' ONE-STOP SERVICE
   ACCOMPLISHMENTS ARE OVERSTATED
------------------------------------------------------------ Letter :5

We believe IRS overstates the actual delivery of one-stop service
because of the way it measures whether a taxpayer was able to resolve
an issue with one contact.  Better measures would help IRS identify
and deal with one-stop service obstacles. 


      FLAWED MEASURE OF ONE-STOP
      TELEPHONE SERVICE
---------------------------------------------------------- Letter :5.1

IRS defines one-stop telephone service as the resolution of an issue
while the taxpayer is on the telephone with IRS (an "on-line"
resolution) or within 15 days if the assistor writes up the
taxpayer's inquiry for later resolution.\5 In either case, for
service to qualify as one-stop, the taxpayer should need to make no
further contact with IRS on that particular issue. 

When measuring delivery of one-stop service for account-related calls
(the focus of IRS attempts to measure one-stop service), IRS counts
the number of calls that were written up and not answered within 15
days and assumes that all other callers received one-stop service. 
It does not monitor calls to determine whether callers' inquiries
were in fact resolved on-line.  Of the 96 percent (11.2 million) of
all account inquiries that IRS reported receiving one-stop service in
fiscal year 1993, about 84 percent were taxpayer inquiries that IRS
assumed were resolved while the taxpayer was on-line.  The other 12
percent were written up by an assistor and resolved within 15 days. 

To determine whether callers in fact received one-stop service, we
monitored 109 account-related calls that were handled on-line at 4
IRS call sites during April and May 1993.  Our objective was to find
out whether taxpayers' inquiries were resolved or would require
further contact with IRS.  Our analysis found that 21 callers (19
percent), not the 100 percent shown by IRS' measure, actually
received one-stop service, while 87 callers (81 percent) would have
needed further contact with IRS.  We could not determine whether the
remaining caller received one-stop service. 

Although IRS concentrates on account-related calls when it measures
delivery of one-stop service, we also monitored 45 calls from
taxpayers with questions about the tax law or procedural issues.  IRS
does not measure delivery of one-stop service to these callers
because it reasons that these calls are handled on-line and thus
receive one-stop service.  We found, however, that only 20 callers
(44 percent) received one-stop service, and 24 callers (53 percent)
would have needed to contact IRS again.  We could not determine
whether the remaining caller received one-stop service. 

In December 1993, IRS' Office of Internal Audit also reported that
fewer taxpayers received one-stop service than reported by IRS'
measure.  It monitored 963 calls and identified 270 calls (28
percent) where one-stop service was not provided and/or an offer to
write up and refer an inquiry was not appropriate.  Some examples of
why the 270 calls did not result in one-stop service included

  assistors gave inaccurate responses,

  taxpayers were asked to call another IRS office, and

  assistors offered to prepare a written referral but the taxpayers
     elected to call back. 

An IRS National Office official in the Taxpayer Service Division told
us in June 1994 that IRS was revising its reporting instructions to
clarify and correct ambiguities in measuring one-stop service
accomplishments. 


--------------------
\5 An assistor might need to document a taxpayer inquiry for later
resolution if IRS computers were not operating at the time of the
taxpayer's call or if the assistor needed to do additional research. 


      OBSTACLES LIMIT ONE-STOP
      TELEPHONE SERVICE
---------------------------------------------------------- Letter :5.2

Better measures would help IRS identify and correct situations that
limit its ability to provide one-stop service.  The reasons our
sample callers' problems were not resolved (although IRS counted
these calls as one-stop service) included such things as IRS having
technical problems, procedural limitations, and processing delays. 
For example: 

  Twenty-five percent of the callers in our sample were not helped
     because there was no one available to help at the time of the
     call.  All the trained assistors with access to IRS computers
     were busy with other callers, and taxpayers opted to call back
     later rather than have their inquiries documented for IRS to
     respond to in writing later. 

  Telephone assistors referred another 24 percent of the callers to
     other IRS offices because the assistors either did not have the
     authority or did not have the necessary information to resolve
     the taxpayers' issues.  The referral required the taxpayers to
     place another call or write to the other IRS office. 

  IRS' processing time sometimes prevented assistors from having an
     up-to-date record of a taxpayer's account, which resulted in the
     assistor telling a taxpayer to call back later.  For example, it
     might take IRS several weeks to post a taxpayer payment and up
     to 3 months to process and post an amended return, preventing
     assistors from answering taxpayer questions about those
     transactions during the processing periods. 

Following are some examples of calls we considered unresolved but
which IRS counted as an on-line resolution and one-stop service: 

  One caller asked for help with an installment agreement and then
     learned that IRS' computers were not working.  The taxpayer
     opted to call back rather than have the assistor document the
     matter for later resolution by mail. 

  A man called about his refund and was told that it was being held
     because he owed $2,000 in back taxes.  When the man asked how he
     could take care of that debt, the assistor told him to call
     another IRS office because IRS had already sent him notices of
     tax liability that the man had never answered, and that office
     was now responsible for the case. 

  A caller requested that his current year tax debt be included in
     his ongoing installment agreement.  The assistor obtained the
     necessary information to add this debt to the agreement, but at
     the end of the call told the taxpayer to write the service
     center to arrange adding the new debt to the agreement.  This
     occurred because the combined debt was greater than the amount
     the assistor was authorized to handle. 

  After waiting 12 weeks for her amended return to be processed, a
     taxpayer called to find out the status of the return.  The
     assistor was unable to help her because the amended return had
     still not been processed, and the taxpayer was advised to call
     back in 3 to 4 weeks. 

  One caller wanted to send an express package to a service center in
     an IRS region outside the one in which she was calling.  When
     she requested the center's street address, the assistor was
     unable to provide it and told the caller to call the service
     center, a toll call. 

  Other callers were told, for various reasons, to call another IRS
     line (TELETAX) that provides taped information on tax issues,
     write a service center, or visit a walk-in office. 

Another factor not accounted for in IRS' measure of one-stop service
was whether a taxpayer could reach IRS in the first place.  To obtain
one-stop telephone account service, a taxpayer must first be able to
gain access to a toll-free site assistor.  In the past year, this has
become increasingly difficult as access rates to IRS telephones have
dropped.  During the first 4 months of 1993, only about one of every
four calls placed to the toll-free sites was completed, down from the
previous year when roughly one in three calls was completed. 
Taxpayers whose calls were not answered received busy signals or they
hung up after being placed on hold. 

Finally, there are some unavoidable constraints that limit IRS'
ability to provide one-stop service.  For example, taxpayers might
not have gathered the information needed for IRS to resolve an issue. 
Also, taxpayers may need to make additional contacts in instances
when they challenge an IRS position or when a telephone assistor is
limited, for internal control purposes, on the dollar amount of an
adjustment that can be made without further documentation.  Such
restrictions make it unlikely that IRS will be able to provide
one-stop service all of the time.  However, without good measures of
one-stop service, IRS will not know the circumstances under which it
could be provided. 

IRS recognizes many of these limitations and is working to overcome
them.  During 1994, for example, IRS is attempting to improve
telephone accessibility by routing telephone calls to toll-free sites
that are most likely to have open telephone lines.  Over the next
several years, IRS expects to improve one-stop service by
consolidating taxpayer services at Customer Service Centers and by
improving its capability to process tax transactions and adjust
taxpayer accounts.  Although it is too soon to predict whether these
efforts will be successful, we believe IRS is moving in the right
direction. 


   ONE-STOP MEASURES NEEDED IN
   OTHER TAXPAYER ASSISTANCE
   ACTIVITIES
------------------------------------------------------------ Letter :6

IRS' goal includes providing one-stop service not only to taxpayers
who call with account-related inquiries but also to taxpayers who
correspond with IRS, visit an IRS office, or call for other reasons. 
The latter include, for example, taxpayers who call with tax law or
procedural questions, are responding to a collection notice, or are
requesting an IRS form or publication. 

Since our 1992 testimony on one-stop service,\6 IRS has begun to
measure such service to varying degrees at automated collection sites
and in handling taxpayer correspondence at some service centers. 
Little, however, has been done to measure one-stop service at walk-in
and forms distribution sites.  As discussed next, we tested IRS'
measure of one-stop service for taxpayer correspondence in a separate
study.  We made no attempt to measure IRS' one-stop service at
walk-in or forms distribution sites or to test the measure being used
at automated collection sites. 

IRS has made limited attempts to deliver and measure one-stop service
in the handling of taxpayer correspondence.  In fiscal year 1993, IRS
service centers processed about 21 million pieces of taxpayer
correspondence--about 99 percent of the correspondence taxpayers sent
to IRS.  IRS' March 1993 one-stop service guidance was vague
concerning taxpayer correspondence.  It directed offices dealing with
taxpayer correspondence to continue monitoring the quality and
timeliness of IRS' responses. 

Some service centers' correspondence activities have begun attempting
to measure delivery of one-stop service.  For example, the Service
Center Adjustments/Correspondence Branches\7 began measuring "repeat
rates" in January 1993.  This rate purports to show how often each
branch responds to the same taxpayer issue more than once.  From
January to September, the branches reported that less than 1 percent
of taxpayer correspondence related to issues the office had
previously dealt with, which equates to a one-stop service rate of
over 99 percent, assuming that taxpayers who did not write back to
IRS were satisfied with IRS' initial response. 

Our recent report on IRS' handling of taxpayer correspondence showed
a higher repeat rate.\8 From a December 1992 sample of taxpayer
correspondence from the Adjustments/Correspondence branches at two
IRS service centers, we found that about 20 percent of the taxpayers
wrote in to resolve issues left unresolved during earlier contacts
with IRS--an 80-percent one-stop service rate, given the same
assumption noted above. 

One reason our repeat rates differed from IRS' is that IRS defined
repeat correspondence more narrowly.  While we counted as repeat
correspondence any issue that had been raised before in
correspondence to any service center activity, IRS counted only those
letters that indicated the prior correspondence was handled in the
same branch, and the branch had handled the initial correspondence
incorrectly.  From a taxpayer's standpoint, we believe our method of
measurement is more meaningful. 

As IRS begins consolidating its telephone and correspondence handling
activities in Customer Service Centers, it is important that IRS
determine the ability of all these activities to deliver one-stop
service.  We agree with IRS' decision to concentrate initially on
providing one-stop service for telephone inquiries.  However, if IRS
wants to meet its 1998 one-stop service goal for 95 percent of all
taxpayer inquiries, we believe it also needs to begin work in the
other areas. 


--------------------
\6 GAO/T-GGD-92-33. 

\7 Service Center Adjustments/Correspondence branches are responsible
for changing, adding, or correcting information in taxpayer accounts
and responding to account-related taxpayer correspondence. 

\8 Tax Administration:  More Improvement Needed in IRS Correspondence
(GAO/GGD-94-118, June 1, 1994). 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

Both taxpayers and IRS will benefit if IRS is able to reach its
one-stop service goals.  Taxpayers will have the opportunity to
resolve issues in one contact with IRS, thus avoiding the
time-consuming frustrations of dealing with multiple IRS contacts. 
Reducing multiple contacts will save money for IRS, and lowering
taxpayer frustrations should benefit IRS through increased taxpayer
compliance. 

Between 1992 and 1993, IRS improved its ability to deliver one-stop
service to taxpayers who call with account inquiries.  Although
progress has been made, several barriers limit IRS' ability to
deliver one-stop service over the telephone.  IRS hopes to remove
some of these barriers through its consolidation of various telephone
and correspondence handling services into 23 Customer Service
Centers.  IRS expects these centers to be operational by 2001. 

In the meantime, current measures overstate delivery of one-stop
service at toll-free sites.  In many instances counted as one-stop
service, a taxpayer will likely need to contact IRS again about the
same matter.  Moreover, measures of one-stop service in service
center correspondence activities and at forms distribution and
walk-in sites are limited or nonexistent. 


   RECOMMENDATION
------------------------------------------------------------ Letter :8

We recommend that the Commissioner of Internal Revenue develop better
measures of one-stop service that do not include instances where
taxpayers will likely need to contact IRS again about the same
matter.  The measures developed should apply to all taxpayer
telephone inquiries, including account-related, tax law, and
procedural inquiries as well as calls to automated collection sites
and forms distribution sites; service center correspondence
activities; and walk-in sites.  Moreover, they should be designed in
such a way that they enable IRS to (1) gauge its progress toward
meeting its 1998 one-stop service goal, (2) identify and correct
problems that might impede IRS' progress toward the goal, and (3)
compare delivery of one-stop service among various taxpayer services
available at IRS. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

IRS provided oral comments on a draft of this report in a July 12,
1994, meeting with IRS' Assistant Commissioner for Taxpayer Service,
members of her staff, and other IRS staff involved with one-stop
service.  IRS agreed with our recommendation and outlined steps to
implement it. 

First, IRS said that it had already begun to revise its one-stop
service measurement system for telephone account inquiries.  IRS
plans to sample account calls instead of relying on the current
approach of assuming that all callers who reach IRS receive one-stop
service, except callers whose inquiries are written up for later
resolution and not resolved in 15 days.  IRS said it would test the
revised approach in August and September, followed by actual use
beginning in October 1994. 

Second, IRS said that in the longer term, it will no longer measure
resolution of issues during the taxpayers' initial contact to satisfy
its own needs.  Instead, in its new business vision, it will be
measuring initial contact resolution from the taxpayer's point of
view so that the taxpayer will not need to telephone IRS twice on the
same issue.  In addition, IRS plans to create an electronic
casefolder for each taxpayer that will record all activity on the
taxpayer's account.  IRS plans to notate the casefolder for each
contact and determine if taxpayers made multiple contacts and the
issues involved.  Although full implementation is not planned until
2001, IRS plans to make incremental changes until all the technology,
systems, and processes are completely in place. 

We believe the actions outlined by IRS are responsive to our
recommendation and, if properly implemented, should enable IRS,
Congress, and the public to better assess IRS' delivery of one-stop
service. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to other congressional
committees, the Secretary of the Treasury, the Commissioner of
Internal Revenue, and other interested parties. 

Major contributors to this report are listed in appendix I.  Please
contact me on (202) 512-9110 if you have any questions. 

Sincerely yours,

Natwar M.  Gandhi
Associate Director, Tax Policy and
 Administration Issues


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix I:1

John M.  Lovelady, Assistant Director, Tax Policy and
 Administration Issues
Robert L.  Giusti, Assignment Manager
Nancy M.  Peters, Evaluator-in-Charge
Christie M.  Arends, Evaluator


   CINCINNATI REGIONAL OFFICE
--------------------------------------------------------- Appendix I:2

Cheryl K.  Andrew, Site Senior
Jennifer C.  Jones, Evaluator
Robert I.  Lidman, Issue Area Manager


   ATLANTA REGIONAL OFFICE
--------------------------------------------------------- Appendix I:3

Lorelei H.  Hill, Site Senior
Elizabeth M.  Mixon, Evaluator

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