IRS Customer Service: Management Strategy Shows Promise But Could Be
Improved (Letter Report, 05/05/99, GAO/GGD-99-88).

Improving customer service at the Internal Revenue Service (IRS) is a
priority for both the agency and Congress. GAO found that IRS' ambitious
strategy to improve customer service shows promise but could be
improved. As of January 1999, IRS has established priorities, reduced
the number of initiatives to a manageable level, aligned them with its
strategic goals and objectives, and assigned accountability for specific
initiatives. IRS has also improved its ability to monitor and track
individual initiatives by providing on-line access to its database and
by asking management to enter information on milestones and completion
dates. IRS' strategy could be enhanced by having information on expected
costs and benefits, milestones and completion dates, and performance
measures. IRS has already linked the initiatives to its strategic goals
and objectives and has begun to collect information on timeliness.
However, IRS has not determined how much the initiatives are likely to
cost, what benefits are expected to be achieved, and how the results
will be measured. The Taxpayer Service and Treatment Improvement Program
database could serve as a tool not only to monitor implementation but
also to facilitate effective management and oversight.

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

 REPORTNUM:  GGD-99-88
     TITLE:  IRS Customer Service: Management Strategy Shows Promise
	     But Could Be Improved
      DATE:  05/05/99
   SUBJECT:  Performance measures
	     Program evaluation
	     Data bases
	     Customer service
	     Reengineering (management)
	     Taxpayers
	     Federal agency reorganization
	     Tax administration systems
IDENTIFIER:  IRS Taxpayer Service and Treatment Improvement Program
	     National Performance Review

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IRS CUSTOMERSERVICE Management StrategyShows Promise But Could Be
Improved

United States General Accounting OfficeGAO Report to the Chairman,
Subcommittee on Oversight, Committee on Ways andMeans, House of
Representatives

April 1999

GAO/GGD-99-88

United StatesGeneral Accounting Office Washington, D.C.  20548

General Government Division

B-279958

Page 1 GAO/GGD-99-88 Customer Service

GAO

April 30, 1999 The Honorable Amo HoughtonChairman, Subcommittee on
Oversight Committee on Ways and MeansHouse of Representatives

Dear Mr. Chairman: As requested, this report discusses efforts to
improve customer service atthe Internal Revenue Service (IRS)--a
major concern at IRS and in Congress. IRS has an ambitious agenda
of initiatives to improve customerservice. This agenda came from
provisions of the IRS Restructuring and Reform Act of 19981 and
other legislative mandates, recommendations ofan IRS Customer
Service Task Force, and suggestions received from the
Commissioner's discussions with IRS employees across the
nation.Collectively, the initiatives are intended to address
concerns over the quality of IRS' customer service and change the
way the agency treatstaxpayers.

The Commissioner has noted that achieving customer
serviceimprovements within the next year or two is a high
priority. A key reason is to show near-term progress and successes
to taxpayers, employees, andCongress, while they await the results
of other longer term changes in organization and information
systems. The objective for our examination of IRS' customer
service improvementinitiatives was to assess the strategy for
managing the initiatives' implementation, including whether IRS
had developed information on theinitiatives' expected costs and
benefits, milestones and completion dates, and performance
measures to gauge results. To provide some perspectiveon the type
of work under way and progress being made, we also reviewed 25
selected individual initiatives and report our results in appendix
II. We requested comments on a draft of this report from the
Commissionerof Internal Revenue. We received written comments,
which are reprinted in appendix III. IRS' strategy for managing
the implementation of its customer serviceinitiatives shows
promise but could be improved. IRS' basic approach was

1Public Law 105-206.

Results in Brief

B-279958

Page 2 GAO/GGD-99-88 Customer Service to establish a central
office, the Taxpayer Service and TreatmentImprovement Program
(TSI), in Washington, D.C., and form a high-level steering
committee, chaired by the Commissioner, to oversee
theimplementation of improvement initiatives that were being
carried out by many different IRS and Treasury offices. TSI and
the steering committeewere established in January 1998. In its
early months, TSI had problems carrying out its responsibilities.
Officials attributed most of the problemsto the large number of
potential initiatives--more than 5,000--on the agenda. By January
1999, TSI and the steering committee had taken steps to
(1)prioritize the initiatives, reducing the number to 157 primary
initiatives; (2) align these initiatives to IRS' newly established
strategic goals andobjectives; and (3) assign accountability for
their completion to specific executives. Also, TSI provided
offices involved in day-to-dayimplementation of individual
initiatives with on-line access to the central information
database it had developed to categorize and monitor progresson the
initiatives.

IRS could further improve its customer service management
strategy. ByJanuary 1999, TSI had identified a need for
information on milestones and completion dates for each primary
initiative and asked officesimplementing individual initiatives to
input this information into its database. However, TSI had not
assessed the need for information on (1)expected costs and
benefits and (2) performance measures. Managers in a few of the
offices implementing initiatives we reviewed had documentedall
these types of information on their own, but this information was
not being used by IRS' leadership. As our past reports have shown,
not only do high-performing, results-oriented organizations set
priorities, align activities with mission-related goals and
objectives, and assign accountability, but they also develop
anduse information to monitor progress and evaluate results.

2 Information on

costs and benefits, milestones and completion dates, and
performancemeasures is critical to successfully managing for
results. Although it can

be difficult to develop, this information provides agencies with
tools theycan use to monitor and evaluate how efficiently and
effectively programs are achieving their purposes. It is also
important to help determine

2Numerous reports by us in recent years have discussed the
importance of strategic planning in federal

program management. A major report addressing these issues was
Executive Guide: EffectivelyImplementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).

B-279958 Page 3 GAO/GGD-99-88 Customer Service whether public
resources have been used to achieve the purposes forwhich they
were appropriated. We make recommendations at the end of this
letter to the Commissionerof Internal Revenue for addressing
certain issues identified during our review. In 1997 and 1998, the
quality of service IRS provided to taxpayers wasidentified as a
problem both in and outside IRS. The Vice President's National
Performance Review looked within and across federal agencies athow
existing programs could operate more efficiently and effectively
and what activities the government should be doing. After hearing
fromcitizens, legislators, and others that IRS needed to improve
in meeting the needs of taxpayers, NPR commissioned a Customer
Service Task Force.The Task Force made more than 200
recommendations for customer service improvements.3 The Senate
Finance Committee held hearingsduring which taxpayers, IRS
employees, and others testified about instances of taxpayer abuse
and mistreatment.4 At the same time, a newCommissioner received
thousands of improvement suggestions from meetings held with
employees across the nation. The Commissioner was also formulating
long-term plans for restructuringIRS according to the functional
groups of taxpayers it serves (e.g., wage earners, small
businesses, and large corporations) in accordance with theIRS
Restructuring and Reform Act of 1998. A major information systems
modernization was under way, as were efforts to make IRS' systems
Year2000 compliant.

5

To meet our reporting objective, we reviewed our prior work and
IRSdocuments and interviewed cognizant officials about the overall
strategy for managing the customer service improvement efforts and
aboutactivities related to the implementation of the selected
individual initiatives. We requested comments on a draft of this
report from theCommissioner of Internal Revenue. We received
written comments, which are discussed near the end of this letter
and reprinted in appendix III. Wedid our work primarily at IRS
headquarters in Washington, D.C., between April 1998 and January
1999, in accordance with generally accepted
3Reinventing Service at the IRS, IRS Publication 2197 (Mar. 1998).

4Senate Report No. 105-174 (Committee on Finance). 5IRS systems,
like many others in government and the private sector, use two-
digit date fields. If unchanged, beginning January 1, 2000, they
would interpret 2000 as 1900 and thus seriously jeopardizecritical
tax processing and collection operations.

Background

B-279958

Page 4 GAO/GGD-99-88 Customer Service government auditing
standards. (See app. I for more details on our scopeand
methodology.) IRS established a promising strategy for managing
the implementation ofthe agency's customer service initiatives.
The development and use of management information on costs and
benefits, milestones and completiondates, and performance measures
would strengthen its management strategy.

IRS' basic management strategy was to establish a central office,
TSI, inJanuary 1998 to manage the overall implementation of
customer service improvements that were being carried out by many
different IRS andTreasury offices. The head of TSI was authorized
to build a staff and create a strategy for the coordinated review
and implementation of the more than5,000 improvement initiatives
IRS received.

At the same time the Commissioner established TSI, he created
anexecutive steering committee, with himself as chair, to oversee
the implementation activities. The steering committee was to
providedecisions on matters affecting the implementation of the
recommended initiatives and was to ensure that initiatives being
implemented wereconsistent with IRS' overall business strategy.

We have found that this kind of centralized coordination of
crosscuttingprograms is an effective management strategy. It can
be used to identify program overlap, duplication, or
fragmentation.6 Coordination also helpsto ensure that program
efforts are mutually reinforcing.

By April 1998, the 12-person TSI staff had created a database of
theinitiatives and begun using it to categorize the initiatives on
its agenda. TSI grouped the recommendations into functional areas,
identified sources ofsuggestions, and linked similar suggestions
from different sources together. The database also had fields for
information on the priority level,impact, and cost of implementing
initiatives--data that could potentially be used to monitor
implementation and facilitate effective managementand oversight of
work on initiatives. According to TSI officials, however, this
information was not routinely completed and updated by
officesimplementing the initiatives.

6Managing for Results: An Agenda To Improve the Usefulness of
Agencies' Annual Performance Plans

(GAO/GGD/AIMD- 98-228, Sept. 1998).

IRS Strategy forManaging Customer Service ImprovementsShows
Promise But Could Be Improved A Program Office andSteering
Committee Managed Implementation

TSI Created a Database

B-279958

Page 5 GAO/GGD-99-88 Customer Service Early actions to develop the
database notwithstanding, TSI had problemsin carrying out its
responsibilities during its first months of operation. Officials
said that the problems arose in large part from the sheer volumeof
improvement initiatives on its agenda. The TSI staff was not able
to evaluate and prioritize the more than 5,000 mandates,
recommendations,and suggestions that came from sources including
Congress, task force groups, and individual employees and
taxpayers. TSI officials said thatefforts to determine
accountability for work, especially when two or more offices
shared responsibility, and to track the progress being made
onindividual initiatives were also hampered by the large volume of
initiatives.

As of January 1999, IRS had taken several actions to address its
problems.Top IRS management established criteria for
prioritization in September 1998. To determine what initiatives to
implement in the short term,officials said that IRS criteria were
that legislative mandates were top priorities and that all
initiatives selected were to show taxpayers,employees, and
external stakeholders (e.g., NPR and Congress) that IRS was
changing. In January 1999, IRS leadership approved a list of
157initiatives as primary customer service improvement actions,
drastically reducing the number to be managed by TSI in the short
term. The initiatives selected were organized under 19 strategic
categories (e.g.,protect taxpayer rights, improve and increase the
use of education and delinquency prevention techniques, and create
an IRS culture that valuesemployees and rewards top-quality
service). An "owner"--an IRS executive--was assigned as the
official accountable for each strategiccategory and the
initiatives being implemented within it. Each strategic category
contributed to one of IRS' three strategic goals: (1) service
toeach taxpayer; (2) service to all taxpayers; or (3) productivity
through a quality work environment. This prioritization process
was a necessary first step to setting realisticgoals for progress
based on IRS' capacity to take on additional responsibilities. It
reduced the number of improvement actions to amanageable level and
established accountability for carrying out the work. It also made
it feasible to expect that TSI could track the progress beingmade
in implementing the priority initiatives.

TSI also made improvements to its database that gave
officesimplementing the individual initiatives on-line access to
information. This change was designed, in part, to make it easier
and more efficient to trackprogress being made on individual
initiatives.

TSI Had Early ManagementProblems Prioritization Process Wasan
Important First Step in Managing Implementation

B-279958

Page 6 GAO/GGD-99-88 Customer Service IRS' management strategy
could be improved. As our review was beingcompleted, TSI had
requested that the owners of each primary initiative enter an
"action plan" into the database with information on start
andcompletion dates and milestones. As of March 1999, TSI was
working with managers of individual initiatives to finalize the
action plans. TSI officialssaid that they expected to use the
action plans to monitor progress being made and to keep current on
the status of the initiatives. However, IRS hadnot assessed the
need for information on expected costs and benefits and how
results of the initiatives were to be measured. TSI officials said
that consideration of how to systematically collectstandard
information on costs and benefits of the initiatives and plans for
measuring their results was in an early discussion stage. TSI
hadconcentrated its efforts on prioritization and then developing
information on initiatives' key milestones and completion dates.
It had not developedplans to seek information on costs, benefits,
or results for individual initiatives. As of January 1999,
managers for a few of the 25 initiatives we reviewedhad documented
management information on costs and benefits, milestones and
completion dates, and anticipated results. For 19 of the
25initiatives we reviewed (see app. II), we asked for
documentation of this management information. These 19 initiatives
were in process and hadprogressed past the planning and design
phases.

We found that 11 of the 19 initiatives had written plans with
milestonedates for reaching key points and an estimated final
completion date. Costbenefit analyses were done for eight
initiatives, and written documentationof performance measures to
gauge expected results were done in seven instances. Managers on
individual initiatives provided a number of reasons why sometypes
of management information were not developed. For example:

*  The manager for an initiative to administer preemployment
screeningassessments to applicants for customer service positions
said that IRS

leadership wanted the screening assessments to be used for hiring
for the1999 filing season. She noted that there was not enough
time to prepare formal project management documents before that
hiring began inSeptember 1998.

*  The manager of an initiative to provide tax information to
small start-upbusinesses jointly with the Small Business
Administration said that it was

not possible to track individual taxpayers who received the
information to

Management Strategy CouldBe Improved

B-279958

Page 7 GAO/GGD-99-88 Customer Service directly measure how
receiving it improved their compliance with taxlaws.

*  The manager of an initiative to provide customer service
training to all IRSemployees said that since the commitment to
this training was made by

the Acting Commissioner to the Senate Finance Committee, a cost-
benefitanalysis was not necessary to decide whether the project
should be completed. Our work evaluating the implementation of the
Government Performanceand Results Act has documented the
difficulties that agencies face in developing management
information, particularly measures of results.Extenuating
circumstances, such as short time frames and difficulties
identifying benefits and costs, may even preclude the development
ofmanagement information in some instances. Moreover, factors such
as scope and complexity can drive the level of detail necessary.
For example,one would not expect to see as much detail in a plan
to study why people hang up when they use an automated telephone
menu as in a plan to beginusing complex new call router
technology.

However, our work has also shown that public sector agencies can
and doovercome obstacles to successfully implement strategic
management principles and become more results-oriented. Such
efforts have resulted inimproved performance. For example, the
National Oceanic and Atmospheric Administration began to measure
the extent to which it couldincrease the advance notice it gave
the public before severe weather events, instead of counting the
number of forecasts it made. The emphasisis significant because
having more time to prepare should lessen the loss of life and
property. The Coast Guard's Office of Marine Safety, Security,and
Environmental Protection improved its mission effectiveness with
fewer people and at lower cost. It did so by giving field
commandersgreater authority and by investing in activities and
processes that went most directly to the goal of reducing risks on
the water.7 Measuringperformance allows agencies to track the
progress they are making toward their goals and gives managers
crucial information on which to base theirorganizational and
management decisions.

No picture of what government is accomplishing with the
taxpayers'money can be complete without management information on
benefits and costs. It provides agencies with tools to determine
whether they have usedpublic resources economically, efficiently,
and effectively to achieve the purposes for which they were
appropriated. Viewing program performance
7 Executive Guide, GAO/GGD-96-118.

B-279958 Page 8 GAO/GGD-99-88 Customer Service in light of costs
can be important on at least two levels. First, it can
helpCongress make informed decisions. Second, it can give
taxpayers an accounting of what government is providing in return
for their tax dollars. As of January 1999, IRS had established
priorities, reduced the number ofinitiatives to a manageable
level, aligned them with its strategic goals and objectives, and
assigned accountability for individual initiatives. IRS
alsoimproved its ability to monitor and track individual
initiatives by providing on-line access to its database and by
asking managers responsible for workon individual initiatives to
input information on milestones and completion dates. As IRS moves
forward on its customer service improvements, we believeits
strategy for managing the initiatives would be enhanced by having
information on expected costs and benefits, milestones and
completiondates, and performance measures. IRS has already linked
the initiatives to its strategic goals and objectives and begun to
collect informationpertaining to timeliness. However, it has not
determined how much the initiatives are likely to cost, what
benefits are expected to be achieved, andhow results will be
measured. We recognize that the level of detail that might be
needed likely would vary from initiative to initiative. The TSI
database could serve as a tool not only to monitorimplementation,
but also to facilitate effective management and oversight.
Consistent information--including cost, benefit, and performance
resultsdata, provided and kept current through on-line access--
could be the link between project teams, IRS' leadership, and
other stakeholders. We recommend that the Commissioner of Internal
Revenue develop anapproach and provide guidance to managers for
determining the appropriate cost and benefit information for the
customer serviceinitiatives and for measuring the results of the
initiatives in relation to IRS' customer service objectives. We
also recommend that the Commissioner of Internal Revenue
enhancethe TSI database to include this management information for
the use of IRS' project teams, leadership, and other stakeholders.
We provided a draft of this report for comment to the Commissioner
ofInternal Revenue. The comments are summarized below and
reproduced in appendix III.

Conclusions Recommendations Agency Comments

B-279958

Page 9 GAO/GGD-99-88 Customer Service IRS said that our report was
a fair and balanced assessment of its strategyfor implementing
customer service improvements--recognizing both the strengths of
the strategy and how it could be improved. IRS noted that
thereport indicated our willingness to go beyond identifying
problems and to collaborate in developing pragmatic solutions. IRS
agreed that it needed to address the two recommendations we
madefor enhancing its customer service improvement strategy. It
noted that some steps were already being taken to collect
information on theexpected costs and benefits of improvement
initiatives, and it recognized that the design of relevant
measures of results were also very important. We are sending
copies of this report to Representative William J. Coyne,Ranking
Minority Member of your Subcommittee; The Honorable Robert E.
Rubin, Secretary of the Treasury; The Honorable Charles O.
Rossotti,Commissioner of Internal Revenue; and other interested
parties. We will also make copies available to others upon
request. This report was prepared under the direction of Alton C.
Harris, AssistantDirector. Other major contributors are listed in
appendix IV. If you have any questions, please call me on (202)
512-9110 or Mr. Harris on (404) 679-1854.

Sincerely yours,

Margaret T. WrightsonAssociate Director Tax Policy
andAdministration Issues

Page 10 GAO/GGD-99-88 Customer Service

Contents

1Letter 12Objective 12 Scope and Methodology 12 Appendix
IObjectives, Scope, and

Methodology

14Appendix II IRS' Progress on 25Customer Service

ImprovementInitiatives

18Appendix III Comments From theInternal Revenue

Service

Table II.1: Progress on 25 Customer Service ImprovementInitiatives
as of January 1999 15Tables

Abbreviations IRS Internal Revenue Service NTEU National Treasury
Employees Union OPM Office of Personnel Management TSI Taxpayer
Treatment and Service Improvement Office

Appendix IObjectives, Scope, and Methodology

Page 12 GAO/GGD-99-88 Customer Service At the request of the
Chairman of the House Subcommittee on Oversight,Committee on Ways
and Means, we agreed to assess IRS' strategy for managing the
implementation of its customer service initiatives--
includingwhether IRS had developed information on expected costs
and benefits, milestones and completion dates, and performance
measures to gaugeresults. To provide some perspective on the type
of work being done to improve customer service, we also agreed to
provide information on theprogress made on 25 initiatives. (See
app. II.)

To address this objective, we interviewed officials and
revieweddocumentation and our prior reports that addressed the
importance of strategic planning in federal program management. We
interviewedofficials from TSI and the Customer Service Task Force
at IRS headquarters. Using a standard set of questions, we also
interviewed IRSofficials responsible for implementing 25 of IRS'
customer service initiatives. We asked them whether they developed
and used selectedproject management information and what progress
they were making in implementing the initiatives. At 3-month
intervals over the course of our review, we requested updatesof a
TSI database that organized and categorized the customer service
initiatives. We received database updates in April 1998 and July
1998. InOctober 1998 and January 1999, TSI officials advised us
that no status reports were available because IRS had temporarily
suspended follow-upactivities on the individual initiatives to
focus on the prioritization of all initiatives. We did not
independently verify the TSI database, but we didexamine its
accuracy for the 25 improvement initiatives that we included in
our review. We reviewed planning documents that had been prepared
for 19 of the 25initiatives. Work on these initiatives was in
process and had progressed past the design and planning stages. We
determined, and TSI officialsagreed, that they were initiatives
that would benefit from having management information on costs and
benefits, milestones and completiondates, and performance measures
to gauge results.

The 25 initiatives we selected for detailed review were chosen
before IRShad prioritized its initiatives, reducing the number of
primary actions to 157. They were all recommendations of the IRS
Customer Service TaskForce and were chosen to reflect a cross
section of the major customer improvement efforts. Several
initiatives were included that addressedimprovements in telephone
assistance and employee training because more than 70 percent of
IRS' $103 million in fiscal year 1999 appropriations

Objective Scope andMethodology

Appendix I Objectives, Scope, and Methodology

Page 13 GAO/GGD-99-88 Customer Service to implement customer
service improvements was targeted for these twoareas. For each
improvement area, we judgmentally selected initiatives to
studybased on their potential to have a positive impact on IRS'
customer service. TSI officials agreed that all of the projects we
selected weresignificant initiatives. (See app. II for a list of
the initiatives we reviewed and information on the progress made
in implementing them.) Our review of the 25 initiatives
recommended by the Task Force was notintended to assess IRS'
overall progress in improving customer service. Rather, the
analysis was to provide information on some of the work beingdone
on initiatives recommended by the Task Force.

During our review, IRS approved a list of 157 initiatives as
customerservice improvements with the highest priority for
implementation in the short term. We did not assess the
prioritization criteria used. We did our work primarily at IRS
headquarters in Washington, D.C. Wealso interviewed an official in
the IRS Southeast Region in Atlanta, GA, and we attended a
training conference in Arlington, VA, to prepare IRS trainersto
deliver new customer service training to employees.

On March 19, 1999, we provided a draft of this report for comment
to theCommissioner of IRS. We received the Commissioner's written
comments on April 12, 1999. They are reproduced in appendix III
and discussed at theend of the letter.

Appendix IIIRS' Progress on 25 Customer Service Improvement
Initiatives

Page 14 GAO/GGD-99-88 Customer Service Table II.1 shows the
results of our review of progress made on 25customer service
improvement initiatives. In selecting the initiatives to review,
we determined and TSI officials agreed that they had
greatpotential for improving customer service.

Six of the 25 initiatives that we reviewed were closed as of
January 1999.Sixteen initiatives were in process, and three had
been deferred. Initiatives were classified as closed because
officials believed that theyhad completed work on them or they did
not need to complete them. For example, the initiative to expand
telephone serve to 7 days a week, 24hours a day by January 1,
1999, was classified as closed because IRS had taken this action.
The initiative to create a plan for effective alternatives toserve
customers before closing a walk-in office was classified as closed
because IRS did not plan to close any walk-in offices; thus, no
plan foralternatives was needed.

Initiatives classified as in process included those in various
stages ofimplementation. For example, an initiative in the early
stages of implementation was the effort to improve the national
distribution ofinformation to IRS employees. An IRS official said
that major improvements in the national distribution of
information to IRS employeescould not be achieved until all
employees had access to computers and were on a standard computer
network. While awaiting the requiredinformation systems upgrades,
however, IRS started smaller scale projects to improve
communication. These included issuing a newsletter
containinginformation on IRS' modernization efforts to all
employees. An initiative that was closer to full implementation
was an initiative to assess the skillsof IRS employees and train
those with the most critical needs. Assessment instruments were
developed and testing was underway for employeesworking in
Customer Service, Collection, Examination, and Support Services.
Some training had started to improve employees' skills
asidentified by the testing.

Initiatives were deferred because IRS determined that other
projects hadhigher priorities or because timing was not
appropriate for implementation. For example, IRS decided not to
attempt to standardizethe format and content of its written
responses to taxpayers until it had completed an initiative that
was under way to rewrite all of its notices.

Appendix II IRS' Progress on 25 Customer Service Improvement
Initiatives

Page 15 GAO/GGD-99-88 Customer Service Initiative Status
Description of work doneMarket Telefile aggressively to individual
taxpayers. Closed Officials said that IRS' current practice of
mailing Telefileinformation, rather than traditional tax filing
packages, totaxpayers who are potentially eligible for Telefile is
the most

aggressive marketing strategy it could use.In 1999, begin using
new call router technology to provide information that is geared
to specificcustomer needs, such as the tax implications of the
sale of a house, retirement, or job change.

Closed Officials said that the call router was implemented in
December1998, although IRS has plans for a number of enhancements
to

the system. Before closing a walk-in office, create a plan
foreffective alternatives to serve customers. Closed Officials
said that no further action was needed on this initiativebecause
IRS does not plan to close any walk-in offices. Establish a
uniform set of leadershipcompetencies for all levels of
management. Closed Officials said that the Office of Personnel
Management (OPM)revalidated a set of leadership competencies that
federal

agencies could use in their entirety or adapt as needed. IRS
usedthe OPM model to develop its own model. It was used in1998 as
part of the selection process for new executives.By January 1,
1998, expand telephone service to 6 days a week, 16 hours a day.
By January 1,1999, expand telephone service to 7 days a week, 24
hours a day.

Closed Officials said that IRS implemented these actions in
January1999.

In 1999, work to enable taxpayers to filepaperless returns by
eliminating the need for mailing in W-2s and other forms for
papersignature in a way that does not jeopardize law enforcement.

Closed In February 1998, IRS started preparing a policy to guide
its effortin this area, according to project officials. A pilot
test is being

conducted during the 1999 filing season on substitutes
forsignatures on electronically filed returns.

Use multiple strategies to reduce demand on thetelephone lines,
such as educating customers on when to expect refunds.

In process IRS had several efforts under way to reduce demand
ontelephone lines. These included providing tax law assistance by

electronic mail, improving the clarity of and reducing the
numberof notices, thereby reducing the need for taxpayers to call,
and managing telephone calls away from live assistors and
ontoautomated systems where possible. Complete a study of why
people hang up whenthey use the automated menu and recommend
needed modifications to current plans.

In process IRS had the study under contract, with an expected
delivery inJune 1999.

Assess the skills of IRS employees and trainthose with the most
critical needs. In process Assessment instruments were developed
and testing was underway for employees working in the Customer
Service, Collection,

Examination, and Support Services areas. Some training toimprove
employees' skills as identified by the testing had begun. Create a
skills bank that identifies the skills ofIRS employees. In process
Officials said that IRS developed databases of information on
theresults of assessments administered to measure employees'

general competencies (e.g., communication and listening skills)and
technical skills. Each of 22 field education branch offices
managed a database and sent their data to a centralizeddatabase.
When IRS' integrated personnel system is in place, these databases
are to be integrated into it.In 1998, have an intensive agencywide
special training program to introduce employees to thenew approach
to customer service. In process IRS developed and piloted a
course, but suspended it in late1998 at the request of the
National Treasury Employees Union(NTEU). The course was
redesigned, and an official said that

training was to resume in May 1999 and be completed byDecember
1999.

Table II.1: Progress on 25 Customer Service Improvement
Initiatives as of January 1999

Appendix II IRS' Progress on 25 Customer Service Improvement
Initiatives

Page 16 GAO/GGD-99-88 Customer Service Over the long term, change
how IRS selects,trains, evaluates, rewards, and supports its
employees so they can better serve customers.

In process Separate projects addressed the selection, training,
evaluation,rewards, and support portions of this broad
recommendation. For

example, a pilot test was done using assessment instruments
tomeasure the skills and abilities of applicants for customer
service positions. A team proposed several ways to redesign
IRS'performance management system, including how employees were
evaluated and rewarded, and was awaiting feedback frommanagement.
Another team offered ways to implement a range of options (e.g.,
pay for performance and a streamlined externalcompetitive
selection process) that IRS could use to motivate and reward
employees.Work with NTEU to design and test a balanced scorecard
to evaluate IRS and its employees in1998. In process In 1998, IRS
developed a measurement system that wasintended to balance
measures of business results with measuresof customer and employee
satisfaction. Implementation of the

balanced measurement system in 1999 is to begin with
newoperational measurements for three key functions: customer
service, examinations, and collections.Improve national
distribution of information to IRS employees. In process IRS
communications activities were integrated into a single
office.While awaiting completion of information management
systemsupgrades that would make distribution of information to

employees quicker and easier, the office was makingimprovements on
a smaller scale. For example, it began producing a newsletter, New
Directions, which informedemployees about IRS' modernization
efforts. To give small businesses a single point forreporting tax
and wage data to meet the requirements of IRS, Social
SecurityAdministration, Department of Labor, and state agencies,
continue to work to support theSimplified Tax and Wage Reporting
Systems (STAWRS) program.

In process According to officials, IRS organized and funded
projects underthree STAWRS initiatives: streamlined customer
service, single

point filing, and simplified requirements.

By the end of 1998, eliminate additionalunnecessary notices. This
will eliminate more than 45 million pieces of mail annually,
almostone-third of the total number of notices that IRS has been
sending to taxpayers.

In process By the end of 1998, IRS had eliminated 32 notices,
whichgenerated 22 million pieces of mail to taxpayers annually.

Officials said that they are researching the possible elimination
offive more notices that generate an additional 30 million pieces
of mail.Seek to route telephone calls from small businesses to
specific individuals who havetraining and the authority to answer
business tax questions and resolve tax account problems.

In process IRS officials said that this initiative is being
partially addressedthrough the call routing system available to
all taxpayers.

Additionally, they had planned to pilot test the use of a
separatetoll free telephone number for business calls. However,
this project was deferred.Give all locations the ability to input
power-ofattorney authorizations and hold the personreceiving the
authorization responsible for ensuring the input.

In process A regional advocate team examined this issue and
reported on itin November 1998. The report was forwarded to the
Taxpayer

Advocate, National Accounts Section, and others for review.
Nodecision had been made on whether to implement the initiative
nationwide.Track complaints, beginning immediately, using the
Taxpayer Advocate's Problem ResolutionInformation System (PROMIS).
In process As part of its test of a new customer feedback system,
IRS wasdoing limited tracking of complaints.

Appendix II IRS' Progress on 25 Customer Service Improvement
Initiatives

Page 17 GAO/GGD-99-88 Customer Service Beginning in 1998, team up
with other federalagencies, financial institutions, tax preparers,
state and local authorities, and others to providetax information,
training, and consultative services to small start-up businesses.
Theinitiative is designed to make record-keeping, filing, and
payment requirements as simple andeasy as possible.

In process IRS had projects under way to address portions of
thisrecommendation, including three projects with federal agencies

to distribute tax information and a project with selected states
tomake obtaining federal identification numbers easier for new
businesses.

Use a preemployment screening assessmenttool, based on technical
and behavioral skills, for all external applicants.

In process Preemployment screening assessments were done for
applicantsfor customer service positions at four pilot sites for
the 1999 filing

season, according to an IRS official.Beginning in 1999, open
additional temporary community-based locations during peak
seasonto make publications and forms available in banks,
libraries, shopping malls, and otherlocations.

In process IRS was opening additional locations in libraries, post
offices, andcopy centers for distributing forms and publications
in 1999.

Analyze the costs and benefits of handling allfederal tax deposit
penalties in one centralized location.

Deferred Not Applicable

Reassign a case to the next higher managementlevel when a
complaint is unresolved after a reasonable period of time.

Deferred Not Applicable

Standardize the format and content of writtenresponses, using
appropriate commercial software.

Deferred Not Applicable

Appendix IIIComments From the Internal Revenue Service

Page 18 GAO/GGD-99-88 Customer Service Appendix III Comments From
the Internal Revenue Service

Page 19 GAO/GGD-99-88 Customer Service Page 20 GAO/GGD-99-88
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