Tax Administration: IRS Inspection Service and Taxpayer Advocate Roles
for Ensuring That Taxpayers Are Treated Properly (Testimony, 02/05/98,
GAO/T-GGD-98-63).
GAO discussed the: (1) adequacy of the Internal Revenue Service's (IRS)
controls over the treatment of taxpayers; (2) responsibilities of the
Offices of the Chief Inspector (IRS Inspection) and the Department of
the Treasury Office of the Inspector General (OIG) in investigating
allegations of taxpayer abuse and employee misconduct; (3)
organizational placement of IRS Inspection; and (4) role of the Taxpayer
Advocate in handling taxpayer complaints.
GAO noted that: (1) in spite of IRS management's heightened awareness of
the importance of treating taxpayers properly, GAO remains unable to
reach a conclusion as to the adequacy of IRS' controls to ensure fair
treatment; (2) this is because IRS and other federal information systems
that collect information related to taxpayer cases do not capture the
necessary management information to identify instances of abuse that
have been reported and actions taken to address them and to prevent
recurrence of those problems; (3) Treasury OIG and IRS Inspection have
separate and shared responsibilities for investigating allegations of
employee misconduct and taxpayer abuse; (4) IRS Inspection has primary
responsibility for investigating and auditing IRS employees, programs,
and internal controls; (5) Treasury OIG is responsible for the oversight
of IRS Inspection investigations and audits and may perform selective
investigations and audits at IRS; (6) the two offices share some
responsibilities as reflected in a 1994 IRS Commissioner-Treasury OIG
Memorandum of Understanding; (7) in the Committee's September 1997
hearings, questions were raised about the independence of IRS
Inspection; (8) subsequently, suggestions have been made to remove IRS
Inspection from IRS and place it in Treasury OIG; (9) regardless of
where IRS Inspection is placed organizationally, within IRS or Treasury
OIG, mechanisms need to be in place to ensure its accountability and its
ability to focus on its mission independent from undue pressures or
influences; (10) the Inspectors General Act as amended in 1988, provides
guidance on the authorities, qualifications, safeguards, resources, and
reporting requirements needed to ensure independent investigation and
audit capabilities; (11) in 1979, the Taxpayer Ombudsman was established
administratively within IRS to advocate for taxpayers and assume
authority for IRS' Problem Resolution Program; (12) in 1988, this
position was codified in the Taxpayer Bill of Rights 1; (13) in 1996,
the Taxpayer Bill of Rights 2 replaced the Ombudsman with the Taxpayer
Advocate and expanded the responsibilities of the new Office of the
Taxpayer Advocate; (14) the Advocate was charged under the legislation
with helping taxpayers resolve their problems with the IRS and with
identifying and resolving systemic problems; and (15) it is now nearly
20 years after the creation of the first executive-level position in IRS
to advocate for taxpayers, and questions about the effectiveness of the
advocacy continue to be asked.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-GGD-98-63
TITLE: Tax Administration: IRS Inspection Service and Taxpayer
Advocate Roles for Ensuring That Taxpayers Are Treated
Properly
DATE: 02/05/98
SUBJECT: Taxpayers
Management information systems
Tax law
Tax administration systems
Reporting requirements
Data collection
Federal employees
Internal audits
Investigations into federal agencies
Internal controls
IDENTIFIER: IRS Problem Resolution Program
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Cover
================================================================ COVER
Before the Committee on Finance, U.S. Senate
For Release
on Delivery
Expected at
10:00 a.m. EDT
Thursday
February 5, 1998
TAX ADMINISTRATION - IRS
INSPECTION SERVICE AND TAXPAYER
ADVOCATE ROLES FOR ENSURING THAT
TAXPAYERS ARE TREATED PROPERLY
Statement of Lynda D. Willis, Director, Tax Policy and
Administration Issues, General Government Division
GAO/T-GGD-98-63
GAO/GGD-98-63T
(268841)
Abbreviations
=============================================================== ABBREV
TAX ADMINISTRATION: IRS
INSPECTION SERVICE AND TAXPAYER
ADVOCATE ROLES FOR ENSURING THAT
TAXPAYERS ARE TREATED PROPERLY
==================================================== Chapter STATEMENT
Chairman Roth, Senator Moynihan, and Members of the Committee:
We are pleased to be here today to assist the Committee in its
ongoing oversight of the Internal Revenue Service (IRS). As you
requested, my statement today addresses four issues related to
allegations of taxpayer abuse and employee misconduct. They are
-- the adequacy of IRS controls over the treatment of taxpayers,
-- the responsibilities of the Offices of the Chief Inspector (IRS
Inspection) and the Treasury Office of Inspector General
(Treasury OIG) in investigating allegations of taxpayer abuse
and employee misconduct,
-- the organizational placement of IRS Inspection, and
-- the role of the Taxpayer Advocate in handling taxpayer
complaints.
The statement is based on our past report on IRS' efforts to improve
controls for ensuring that taxpayers are treated properly\1 and
preliminary information from work we have just started to assess the
effectiveness of the Taxpayer Advocate.
In summary, my statement makes the following points:
-- In spite of IRS management's heightened awareness of the
importance of treating taxpayers properly, we remain unable to
reach a conclusion as to the adequacy of IRS' controls to ensure
fair treatment. This is because IRS and other federal
information systems that collect information related to taxpayer
cases do not capture the necessary management information to
identify instances of abuse that have been reported and actions
taken to address them and to prevent recurrence of those
problems.
-- Treasury OIG and IRS Inspection have separate and shared
responsibilities for investigating allegations of employee
misconduct and taxpayer abuse. IRS Inspection has primary
responsibility for investigating and auditing IRS employees,
programs, and internal controls. Treasury OIG is responsible
for the oversight of IRS Inspection investigations and audits
and may perform selective investigations and audits at IRS.
The two offices share some responsibilities as reflected in a 1994
IRS Commissioner-Treasury OIG Memorandum of Understanding. This
involves investigating allegations of waste, fraud, and abuse by IRS
employees. The investigations covered under this Memorandum
encompass a wide range of misconduct allegations including taxpayer
abuse. IRS Inspection is responsible for investigating allegations
against IRS employees who are GS-14s and below and who do not work in
Inspection. Treasury OIG Officials advised us that employees at this
level are the ones most likely to have direct interaction with
taxpayers and are most likely to be subject to allegations involving
taxpayer abuse. Treasury OIG is responsible for investigating
allegations against senior level IRS officials and IRS Inspection
employees.
In the 1996 report on controls to ensure the proper treatment of
taxpayers that we prepared at your request, Mr. Chairman, we noted
that officials from both organizations thought that the arrangement
was working well. However, more recent information indicates there
may now be some concerns among those officials, particularly
regarding timely referrals of allegations by both offices.
-- In the Committee's September 1997 hearings, questions were
raised about the independence of IRS Inspection. Subsequently,
suggestions have been made to remove IRS Inspection from IRS and
place it in Treasury OIG. We have historically supported a
strong statutory Treasury OIG. We also believe that the IRS
Commissioner needs an internal capability to review the
effectiveness of IRS programs. Regardless of where IRS
Inspection is placed organizationally, within IRS or Treasury
OIG, mechanisms need to be in place to ensure its accountability
and its ability to focus on its mission independent from undue
pressures or influence. The Inspectors General Act\2 as amended
in 1988, provides guidance on the authorities, qualifications,
safeguards, resources, and reporting requirements needed to
ensure independent investigation and audit capabilities.
-- In 1979, the Taxpayer Ombudsman was established administratively
within IRS to advocate for taxpayers and assume authority for
IRS' Problem Resolution Program. In 1988, this position was
codified in the Taxpayer Bill of Rights 1.\3 In 1996, the
Taxpayer Bill of Rights 2\4 replaced the Ombudsman with the
Taxpayer Advocate and expanded the responsibilities of the new
Office of the Taxpayer Advocate. The Advocate was charged under
the legislation with helping taxpayers resolve their problems
with IRS and with identifying and resolving systemic problems.
It is now nearly 20 years after the creation of the first
executive-level position in IRS to advocate for taxpayers, and
questions about the effectiveness of the advocacy continue to be
asked. These questions involve the Advocate's (1)
organizational independence within IRS; (2) adequacy of resource
commitments to achieve its mission; and (3) ability to identify
and correct problems with IRS processes and systems that
adversely affect taxpayers.
--------------------
\1 See Tax Administration: IRS Is Improving Its Controls for
Ensuring That Taxpayers Are Treated Properly (GAO/GGD-96- 176, Aug.
30, 1996).
\2 Public Law 100-504 Oct. 18, 1988.
\3 Public Law 100-647, Nov. 10, 1988.
\4 Public Law 104-168, July 30, 1996.
ADEQUACY OF IRS' CONTROLS TO
ENSURE FAIR TREATMENT OF
TAXPAYERS CANNOT BE DETERMINED
-------------------------------------------------- Chapter STATEMENT:1
The new IRS Commissioner and IRS management have expressed a
commitment to ensure that taxpayers are treated properly. Even so,
problems with current management information systems make it
impossible to determine the extent to which allegations of taxpayer
abuse and other taxpayer complaints have been reported, or the extent
to which actions have been taken to address the complaints and
prevent recurrence of systemic problems. That is because, as we
reported to you in 1996, information systems currently maintained by
IRS, Treasury OIG, and the Department of Justice do not capture the
necessary management information. These systems were designed as
case tracking and resource management systems intended to serve the
management information needs of particular functions, such as IRS
Inspection's Internal Security Division. None of these systems
include specific data elements for "taxpayer abuse"; instead, they
contain data elements that encompass broad categories of misconduct,
taxpayer problems, and legal and administrative actions.
Information contained in these systems relating to allegations and
investigations of taxpayer abuse and other taxpayer complaints is not
easily distinguishable from information on allegations and
investigations that do not involve taxpayers. Consequently, as
currently designed, the information systems cannot be used
individually or collectively to account for IRS' handling of
instances of alleged taxpayer abuse.
INFORMATION SYSTEMS RELATED
TO TAXPAYER ABUSE
ALLEGATIONS
------------------------------------------------ Chapter STATEMENT:1.1
Officials of several organizations indicated to us that several
information systems might include information related to taxpayer
abuse allegations--five maintained by IRS, one by Treasury OIG, and
two by Justice. (See attachment for a description of these systems.)
The officials familiar with these systems stated that the systems do
not include a specific data element for taxpayer abuse that could be
used to easily distinguish abuse allegations from others not
involving taxpayers. For example, officials from the Executive
Office for the U.S. Attorneys stated that the public corruption and
tort categories of their Case Management System may include instances
of taxpayer abuse. But, they also said the system could not be used
to identify such instances without a review of specific case files.
SYSTEMS DO NOT HAVE COMMON
DATA ELEMENTS OR UNIQUE
IDENTIFIERS
------------------------------------------------ Chapter STATEMENT:1.2
From our review of data from these systems for our 1996 report, we
concluded that none of them, either individually or collectively,
have common or comparable data elements that can be used to identify
the number or outcomes of taxpayer abuse allegations or related
investigations and actions. Rather, each system was developed to
provide information for a particular organizational function, usually
for case tracking, inventory, or other managerial purposes relative
to the mission of that particular function. While each system has
data elements that could reflect how some taxpayers have been
treated, the data elements vary and in certain cases may relate to
the same allegation and same IRS employee. Without common or
comparable data elements and unique allegation and employee
identifiers, these systems do not collect information in a consistent
manner that could be used to accurately account for all allegations
of taxpayer abuse.
IRS HAS ADOPTED A DEFINITION
FOR "TAXPAYER COMPLAINTS"
------------------------------------------------ Chapter STATEMENT:1.3
As we also reported in our 1996 report, IRS has not historically had
a definition of taxpayer abuse. In response to the report, IRS
adopted a definition for taxpayer complaints that included the
following elements: (1) allegations of IRS employees' violating
laws, regulations, or the IRS Code of Conduct; (2) overzealous,
overly aggressive, or otherwise improper behavior of IRS employees in
discharging their official duties; and (3) breakdowns in IRS systems
or processes that frustrate taxpayers' ability to resolve issues
through normal channels.
Also in response to the report, IRS established a Customer Feedback
System in October 1997, which IRS managers are to use to report
allegations of improper employee behavior toward taxpayers. IRS used
this system to support its first required annual reporting to
Congress on taxpayers' complaints through December 31, 1997. IRS
officials acknowledged, however, that there were changes needed to
ensure the accuracy and consistency of the reported data.
TREASURY OIG AND IRS INSPECTION
ROLES FOR INVESTIGATING
TAXPAYER ABUSE ALLEGATIONS
-------------------------------------------------- Chapter STATEMENT:2
The 1988 amendments to the Inspectors General Act, which created the
Treasury OIG, did not consolidate IRS Inspection into the Treasury
OIG, but authorized the Treasury OIG to perform oversight of IRS
Inspection and conduct audits and investigations of the IRS as
appropriate. The act also provided the Treasury OIG with access to
taxpayer data under the provisions of Section 6103 of the Internal
Revenue Code as needed to conduct its work, with some recording and
reporting requirements for such access.
TREASURY OIG'S
RESPONSIBILITIES
------------------------------------------------ Chapter STATEMENT:2.1
Currently, Treasury OIG is responsible for investigating allegations
of misconduct, waste, fraud, and abuse involving senior IRS
officials, GS-15s and above, as well as IRS Inspection employees.
Treasury OIG also has oversight responsibility for the overall
operations of IRS Inspection. Since November 1994, Treasury OIG has
had increased flexibility for referring allegations involving GS-15s
to IRS for investigation or administrative action. The need to make
more referrals of GS-15 level cases was due to resource constraints
and an increased emphasis by Treasury OIG on investigations involving
criminal misconduct and procurement fraud across all Treasury
bureaus.
In fiscal year 1996, Treasury OIG conducted 43 investigations--14
percent of the 306 allegations it received--many of which implicated
senior IRS officials. Treasury OIG officials said that these
investigations rarely involved allegations of taxpayer abuse because
senior IRS officials and IRS Inspection employees usually do not
interact directly with taxpayers.
IRS INSPECTION'S
RESPONSIBILITIES
------------------------------------------------ Chapter STATEMENT:2.2
The IRS Chief Inspector, who reports directly to the IRS
Commissioner, is responsible for conducting IRS investigations and
internal audits done by IRS Inspection, as well as for coordinating
IRS Inspection activities with Treasury OIG. IRS Inspection is to
work closely with Treasury OIG in planning and performing its duties.
IRS Inspection is also to provide information on its activities and
results, as well as constraints or limitations placed on its
activities, to Treasury OIG for incorporation into Treasury OIG's
Semiannual Report to Congress. Disputes that the IRS Chief Inspector
may have with the IRS Commissioner are to be resolved through
Treasury OIG and the Secretary of the Treasury, to whom the Treasury
OIG reports.
REPORTING RESPONSIBILITIES
FOR TREASURY LAW ENFORCEMENT
BUREAUS
------------------------------------------------ Chapter STATEMENT:2.3
In September 1992, Treasury OIG issued Treasury Directive 40-01,
which summarizes the authority vested in Treasury OIG and the
reporting responsibilities of various Treasury bureaus. Treasury law
enforcement bureaus, including IRS, are to (1) provide a monthly
report to Treasury OIG concerning significant internal investigative
and audit activities; (2) notify Treasury OIG immediately upon
receiving allegations involving senior IRS officials, internal
affairs employees, or IRS Inspection employees; and (3) submit
written responses to Treasury OIG detailing actions taken or planned
in response to Treasury OIG investigative reports and Treasury OIG
referrals for agency management action.
Under procedures established in a Memorandum of Understanding between
Treasury OIG and IRS Commissioner in November 1994, the requirement
for immediate referrals to Treasury OIG of all misconduct allegations
covered in the Directive was reiterated and supplemented. Treasury
OIG has the discretion to refer any allegation to IRS for appropriate
action, that is, either investigation by IRS Inspection or
administrative action by IRS management. If IRS officials believe
that an allegation referred by Treasury OIG warrants Treasury OIG
attention, they may refer the case back to Treasury OIG, requesting
that Treasury OIG conduct an investigation.
HOW TREASURY OIG HANDLES
ALLEGATIONS AGAINST IRS
EMPLOYEES
------------------------------------------------ Chapter STATEMENT:2.4
During our review for the 1996 report, Treasury OIG officials advised
us that under the original 1992 Directive, they generally handled
most allegations implicating Senior Executive Service (SES) and IRS
Inspection employees, while reserving the right of first refusal on
GS-15 employees. Under the procedures adopted in 1994, which were
driven in part by resource constraints and Treasury OIG's need to do
more criminal misconduct and procurement fraud investigations across
all Treasury bureaus, Treasury OIG officials stated they have
generally referred allegations involving GS-15s and below to IRS for
investigation or management action. The same is true for allegations
against any employees, including those in the SES, involving
administrative matters and allegations dealing primarily with
disputes of tax law interpretation.
Treasury OIG officials said that a determination is made by Treasury
OIG after a preliminary review of the merits of the allegation as to
whether it should investigate, refer to IRS to either investigate or
take administrative action, or take no action at all. In fiscal year
1996, Treasury OIG received 306 allegations, many of which involved
senior IRS officials. After a preliminary review, Treasury OIG
decided no action was warranted on 40 of the allegations; referred
214 to IRS--either for investigation or administrative action;
investigated 43; and closed 9 others for various administrative
reasons.
Treasury OIG officials stated that, based on their investigative
experience, most allegations of wrongdoing by IRS staff that involve
taxpayers do not involve senior-level IRS officials or IRS Inspection
employees. Rather, these allegations typically involve IRS
Examination and Collection employees who most often interact directly
with taxpayers.
HOW TREASURY OIG ASSESSES
IRS' ACTION IN RESPONSE TO
INVESTIGATIONS OR REFERRALS
------------------------------------------------ Chapter STATEMENT:2.5
Treasury OIG officials are to assess the adequacy of IRS' actions in
response to Treasury OIG investigations and referrals as follows:
(1) IRS is required to make written responses on actions taken within
90 days and 120 days, respectively, on Treasury OIG investigative
reports of completed investigations and Treasury OIG referrals for
investigations or management action; (2) Treasury OIG investigators
are to assess the adequacy of IRS' responses before closing the
Treasury OIG case; and (3) Treasury OIG's Office of Oversight is to
assess the overall effectiveness of IRS Inspection capabilities and
systems through periodic operational reviews.
In addition to assessing IRS' responses to Treasury OIG
investigations and referrals, each quarter, the Treasury Inspector
General, Deputy Inspector General, and Assistant Inspector General
for Investigations are to brief the IRS Commissioner, IRS Deputy
Commissioner, and Chief Inspector on the status of allegations
involving senior IRS officials, including those being investigated by
Treasury OIG and those awaiting IRS action.
In our 1996 report, we noted that officials from both agencies agreed
that the arrangement was working well to ensure that allegations
involving senior IRS officials and IRS Inspection employees were
being handled properly. Even so, Treasury OIG officials expressed
some concern with the amount of time IRS typically took to respond to
Treasury OIG investigations and referrals. IRS officials
acknowledged that responses were not always made within Treasury OIG
time frames because, among other reasons, determinations about taking
disciplinary actions and imposing such actions may have taken a
considerable amount of time. Also, the IRS officials said some cases
had to be returned for additional development by Treasury OIG, which
may have prolonged the time for completion. The IRS officials,
however, also suggested that actions on Treasury OIG referrals were
closely monitored, as evidenced by the referrals inclusion in
discussions during quarterly Inspector General briefings with the IRS
Commissioner.
Since 1996, there has been some indication of problems between the
two offices. Specifically, in its most recent Semiannual Report to
Congress, Treasury OIG concluded, after reviewing IRS' compliance
with Treasury Directive 40-01, that "both IRS and Treasury OIG need
to make improvements, particularly in the area of timely, prompt
referrals." It is not clear what steps Treasury OIG officials plan to
take to resolve the problems.
ORGANIZATIONAL PLACEMENT OF IRS
INSPECTION REMAINS SUBJECT OF
DEBATE
-------------------------------------------------- Chapter STATEMENT:3
At the Committee's September 1997 IRS oversight hearings, some IRS
employees raised concerns about the effectiveness of IRS Inspection
and its independence from undue pressures and influence from IRS
management. Since that time, debate has continued on the issue of
where IRS Inspection would be optimally placed organizationally to
provide assurance that taxpayers are treated properly. This is not a
new issue. During the debate preceding the passage of the 1988
amendments to the Inspectors General Act that established the
Treasury OIG and left IRS Inspection intact, as well as on several
other occasions since, concerns have been raised about the
desirability of having a separate IRS Inspection Service.
Historically, we have supported a strong statutory Treasury OIG,
believing that such an office could provide independent oversight of
the Department, including IRS. That is, reviews of IRS addressed to
the Secretary of the Treasury, rather than the IRS Commissioner,
should improve executive branch oversight of tax administration in
general and provide greater assurance that taxpayers are treated
properly, fairly, and courteously. We have also noted that under the
statute, Treasury OIG is authorized to enhance the protection of
taxpayer rights by conducting periodic independent reviews of IRS
dealings with taxpayers and IRS procedures affecting taxpayers.
We have also recognized that, to meet his managerial
responsibilities, the IRS Commissioner needs an internal capability
to review the effectiveness of IRS programs. IRS Inspection has
provided Commissioners with investigative and audit capabilities to
evaluate IRS programs since 1952. IRS Inspection currently has
roughly 1,200 authorized staff in its budget who are split about
equally between its two divisions, Internal Security and Internal
Audit.
The Treasury OIG, on the other hand, has fewer than 300 authorized
staff to provide oversight of IRS Inspection activities as well as to
carry out similar investigations and audits for Treasury and its 10
other very diverse bureaus. IRS officials have been concerned that
if IRS Inspection is transferred to the Treasury OIG, the transferred
resources will be used to investigate or audit other Treasury bureaus
to the detriment of critical IRS oversight.
The Inspectors General Act provides guidance on the authorities,
qualifications, safeguards, resources, and reporting requirements
needed to ensure independent investigative and audit capabilities.
No matter where IRS Inspection is placed organizationally, certain
mechanisms need to be in place to ensure that it is held accountable
and can achieve its mission without undue pressures or influence.
For example, a key component of accountability and protection against
undue pressures or influence is reporting of investigative and audit
activities and findings to both those responsible for agency
management and oversight.
TAXPAYER ADVOCATE'S ABILITY TO
BRING ABOUT CHANGE REMAINS AN
OPEN QUESTION
-------------------------------------------------- Chapter STATEMENT:4
Another IRS organization responsible for protecting the rights of
taxpayers is the Taxpayer Advocate. The position was originally
codified in the Taxpayer Bill of Rights 1 as the Taxpayer Ombudsman,
although IRS has had the underlying Problem Resolution Program (PRP)
in place since 1979.
In the Taxpayer Bill of Rights 2, the Taxpayer Advocate and the
Office of the Taxpayer Advocate replaced the Taxpayer Ombudsman
position and the headquarters PRP staff. The authorities and
responsibilities of this new office were expanded, for example, to
address taxpayer cases involving IRS enforcement actions and refunds.
The most significant change may have been to emphasize that the
Advocate and those assigned to the Advocate's Office are expected to
view issues from the taxpayers' perspective and find ways to
alleviate individual taxpayer concerns as well as systemic problems.
The Advocate reported that it resolved 237,103 cases in fiscal year
1997. Its reported activities included establishing cases to resolve
taxpayer concerns, providing relief to taxpayers with hardships,
resolving cases in a proper and timely manner, and analyzing and
addressing factors contributing to systemic problems. The report
also discussed activities and initiatives and proposed solutions for
systemic problems.
Even with the enhanced legislative authorities and numerous
activities and initiatives, questions about the effectiveness of the
Taxpayer Advocate persist. The questions relate to the Advocate's
(1) organizational independence within IRS; (2) resource commitments
to achieve its mission; and (3) ability to identify and correct
systemic problems adversely affecting taxpayers. We have recently
initiated a study of the Advocate's Office to address these questions
about the Advocate's effectiveness.
The first question centers on the Advocate's organizational placement
at headquarters and field offices. The Taxpayer Advocate reports to
the IRS Commissioner. Taxpayer Advocates in the field report to the
IRS Regional Commissioner, District Director, or Service Center
Director in their particular geographic area. Thus, these field
advocate officials report to the IRS executives who are responsible
for the operations that may have frustrated taxpayers and created the
Advocate's caseloads.
The second question involves the manner in which the Advocate's
Office is staffed and funded. For fiscal year 1998, the Advocate's
Office was authorized 442 positions to handle problem resolution
duties. These authorized Advocate Office staff must rely on
assistance from more than 1,000 other field employees, on a full-time
or part-time basis, to carry-out these duties. These 1,000 employees
are funded by their functional office, such as Collection or Customer
Service. While working PRP cases, these employees receive program
direction and guidance from the Advocate's Office. They are
administratively responsible to their Regional Commissioners,
District Directors, or Service Center Directors-- again, the same
managers responsible for the operations that may have frustrated
taxpayers.
The third question was debated during oversight hearings last year
regarding the Advocate's ability to identify and correct IRS systems
or processes that have frustrated taxpayers. The question
historically has been the amount of attention afforded the analysis
of problem resolution cases to identify systemic issues in light of
the Advocate's workload and available staff. The more recent
question, however, has been the ability of the Advocate's Office to
bring about needed administrative or legislative changes to address
systemic problems.
Questions about organizational placement, dedicated staffing, and
ability to change IRS processes and systems all must be answered in
assessing whether the Advocate's environment is free of undue
pressures that may detract from its ability to focus on its overall
mission. Our recently initiated study is designed to provide such an
assessment of the Advocate's effectiveness.
SUMMARY
-------------------------------------------------- Chapter STATEMENT:5
In summary, Mr. Chairman, we are unable to determine whether
existing IRS controls are adequate to ensure that allegations of
employee misconduct and taxpayer abuse are identified, investigated,
and prevented from recurring, because existing systems do not capture
this information. Both Treasury OIG and IRS Inspection have
responsibility for investigating allegations of misconduct. We
supported the 1988 amendments to the Inspectors General Act that
established an independent Treasury OIG, and recognized the IRS
Commissioner's need for an internal capability to evaluate IRS
programs. The Inspectors General Act provides guidance on the
authorities, qualifications, safeguards, resources, and reporting
requirements needed to ensure independent investigative and audit
capabilities.
Questions also remain unanswered about the effectiveness of the
Taxpayer Advocate in representing taxpayers. Regardless of where IRS
Inspection and the Advocate sit organizationally, to protect
taxpayers they must be able to discharge their responsibilities free
of undue pressures or influence and be held accountable for achieving
their respective missions.
------------------------------------------------ Chapter STATEMENT:5.1
Thank you, Mr. Chairman. This concludes my prepared statement. I
will be happy to respond to any questions you or other Members of the
Committee may have.
INFORMATION SYSTEMS RELATED TO
TAXPAYER ABUSE ALLEGATIONS
=========================================================== Appendix I
Two of the IRS systems--Inspection's Internal Security Management
Information System (ISMIS) and Human Resources' Automated Labor and
Employee Relations Tracking System (ALERTS)--are designed to capture
information on cases involving employee misconduct, which may also
involve taxpayer abuse. ISMIS is designed to determine the status
and outcome of Internal Security investigations of alleged employee
misconduct; ALERTS is designed to track disciplinary actions taken
against employees. While ISMIS and ALERTS both track aspects of
alleged employee misconduct, these systems do not share common data
elements or otherwise capture information in a consistent manner.
IRS also has three systems that include information on concerns
raised by taxpayers. These systems include two maintained by the
Office of Legislative Affairs--the Congressional Correspondence
Tracking System and the IRS Commissioner's Mail Tracking System--as
well as the Taxpayer Advocate's system known as the Problem
Resolution Office Management Information System (PROMIS). The two
Legislative Affairs systems are designed to track taxpayer inquiries,
including those made through congressional offices, to ensure that
responses are provided by appropriate IRS officials. PROMIS is to
track similar inquiries to ensure that taxpayers' problems are
resolved and to determine whether the problems are recurring in
nature.
Treasury OIG has an information system known as the Treasury OIG
Office of Investigations Management Information System. It is
designed to track the status and outcomes of Treasury OIG
investigations as well as the status and outcomes of actions taken by
IRS in response to Treasury OIG investigations and referrals.
Justice has two information systems that include data that may be
related to taxpayer abuse allegations and investigations. The
Executive Office for the U.S. Attorneys maintains a Centralized
Caseload System that is designed to consolidate the status and
results of civil and criminal prosecutions conducted by U.S.
Attorneys throughout the country. Cases involving criminal
misconduct by IRS employees are to be referred to and may be
prosecuted by the U.S. Attorney in the particular jurisdiction in
which the alleged misconduct occurred.
The Tax Division of Justice also maintains a Case Management System
that is designed for case tracking, time reporting, and statistical
analysis of litigation cases the Division conducts. Lawsuits against
either IRS or IRS employees are litigated by the Tax Division, with
representation provided to IRS employees if the Tax Division
determines that the actions taken by the employees were within the
scope of employment.
*** End of document. ***