Appendix E

IRS Strategic Objectives: Customer Service, Compliance, and Efficiency Gains Supplementary Information

 

Notices and correspondence

In fiscal year 1996, the IRS decreased the number of notices issued to taxpayers to 103 million. The 103 million consists of approximately 50 million computer-generated notices from taxpayer master files, 48 million collection notices, and 5 million examination, underreporter, and information return notices. Additionally, in fiscal year 1996 IRS employees created 14 million letters of correspondence.

The Commission believes that taxpayer burden and expense should not be increased because IRS lacks the ability to post timely taxpayer correspondence and track notices and correspondence. The IRS should develop a mechanism to track (e.g., inventory) taxpayer notices and correspondence using a system integrated into taxpayer account databases. Examples of policies to increase taxpayer satisfaction and confidence in the IRS include responding to correspondence within twenty-one business days and if additional time is needed, the IRS should contact the taxpayer to explain the reasons for the delay. Other examples include improving the tone of the notices to reflect the partnership between the IRS and the taxpayer to ensure accurate reporting, data collection, and payment.

 

Telephone assistance

The delivery of new technology and increased authority for personnel to resolve taxpayer problems would positively affect IRS ability to keep pace with private sector call centers.

From October 1, 1995 to September 28, 1996, the IRS received a total of 219 million call attempts for assistance. Within this population, 97 million call attempts (45%) were from individual callers, defined by the IRS as the number of unique telephone numbers from which the IRS received a call attempt during any one week period. The remainder of the call attempts (55%) are considered repeat callers who unable to reach an assistor with the first call. Thus, the IRS does not measure the concept of "repeat callers" directly.

GAO, however, measures all call attempts, not individual callers. The IRS, by eliminating repeat callers, measures individual taxpayers attempting to reach assistance, even if multiple calls were required by the same taxpayer. For the period noted above, IRS measured the level of access (46.2%) as the actual calls answered (callers served) divided by the unique number demand, (i.e., the number of individual phone numbers from which the IRS received calls during a one week period of time). GAO calculated the level of access (21%) by using the number of callers served divided by the total number of call attempts. Thus 21% of answered calls as measured by GAO equates to 46.2% of taxpayers receiving assistance as measured by the IRS.

The length of time to reach assistance also affects access. According to IRS, the best available estimates calculate the length of assistance at 12.4 minutes. This estimate is comprised of a 9 minute average time that callers wait before speaking to an assistor (i.e., for approximately 2 minutes callers listen to a menu/script and approximately 7 minutes of queue time before an assistor answers) and approximately 3.4 minutes for the assistor to help the taxpayer.

However, until the ability of taxpayers to reach an assistor more closely aligns with the actual number of taxpayers seeking assistance, the IRS and GAO differing access measures will continue to be misleading and confusing. As the level of access to IRS assistance increases, the number of repeat callers will decrease and the GAO and IRS methods of measuring telephone assistance will converge. Examples of policies to increase access, satisfaction and confidence in the IRS include allowing a taxpayer to leave a message with the assurance that their call will be returned within 24 hours.

 

Private Sector Benchmarks

In testimony before the Commission by Hobart Harris, Ph.D., Center For Technology Enablement, Ernst & Young, there are three basic customer service principles: Near-Immediate Access, One and Done, and Immediate Follow-Up.

 

1. Near-Immediate Access

Callers for private sector assistance should be able to get through the first time they call and in less than 45 seconds to a minute. The most often-quoted goal in industry is that 80% of calls should be answered in 20 seconds or less.

2. One and Done

Callers for private sector assistance should have their questions answered on the very first call if they have all of the information needed by the call center to address their questions. Routine calls should not have to be referred for research or later follow-up for any reason. However, technical questions may require further specialization. Referrals to more knowledgeable agents should only occur occasionally and when done, the transfer should be made to another agent immediately and with the first agent still on the line. To do this, assistors must be properly trained and technology must provide access to any information that will be required to answer the callers question.

3. Immediate Follow-Up

Telephone assistors should be able to make customer record changes immediately, without any needed additional steps and should be able to order the requested documents, forms, instructions, or publications while the taxpayer is still on the phone.

 

Because of the diverse purposes and needs for taxpayer calls for assistance, assistors need an integrated system to provide timely and accurate assistance. According to Hobart Harris, call centers in quality organizations generally utilize the following components:

1. Assistors have rapid (i.e. computerized) access to descriptions and examples of the rules, procedures and facts that are necessary to answer these kinds of calls.
2. Artificial intelligence-based search engines, Frequently-Asked Questions (FAQ) lists and agent-directing scripts are available to assistors to identify the information that the callers need.
3. Every telephone assistor must be equipped with an intelligent terminal that can support these functionalities.
4. If callers can generally identify the nature of their questions, then an Interactive Voice Response Unit (IVR) should be used to ask the callers to identify their needs.
5. Expert routing directs calls to agents who have received extra training in specific areas or who have access to specialized information. This gives the telephone assistors the best chance of answering the calls quickly and accurately.
6. Assistors must be able to retrieve relevant portions of callers tax account records. This retrieval is enormously complicated and involves highly sophisticated information technology.

 

Enhanced technology should provide IRS assistors with the ability to make automated adjustments, automated payment tracers, improved penalty and interest computations, online financial statement preparation and analysis for installment agreements, and allow call site representatives to take immediate action from a single workstation.

 

Taxpayer representation

With respect to represented taxpayers, practitioners have experienced continued frustration in their ability to work with the IRS to resolve a taxpayer account. The IRS should improve Power of Attorney (POA) procedures and administration. For example, POA procedures could be streamlined through the acceptance of facsimile and oral POA authorizations, inclusion of the POA authorization on the tax return (706 and 8453 already have this), and agency-wide access to POA data.

In 1993, the IRS began implementation of Corporate Education. Extraordinary, nationwide recruitment efforts were initiated to select executive-level leaders with extensive educational, organizational, and professional expertise for the director and dean positions. The IRS outlined a vision for IRS education based on the corporate university model and began implementation of initiatives leading to this vision. Unfortunately, the lack of decision making and strong management stalled implementation and created animosity and internal battles between Corporate Education and the remainder of the organization. Barriers include:

 

· Executive Autonomy - There is a strong history of executive autonomy in the field and a perception that power for field leaders is related to the size of their function or area. These values conflict with the organizational need to consolidate all educational activities within a streamlined educational process managed by educational professionals. Current efforts to consolidate field education are strongly resisted and more than 60% of all educational employees are managed outside of the educational process and are supervised by managers largely without educational expertise. Acceptance of this separation of the educational components reinforces the continuation of "shadow" training operations and the perception that the educational system is fragmented and dysfunctional.
· Training is not valued - There exists a general lack of appreciation for training as a value-adding activity and recognition of training as a separate area of expertise. Training is routinely the first item cut when resources become tight, and training resources are also routinely used for information sharing, meetings, and other non-training purposes. Successful organizations recognize training as an essential tool for managing change and addressing problems. Many IRS managers and executives focus on short-term goals to the detriment of long-term goals by viewing training as an expense and time-off-the-job rather than as an investment and means of increasing productivity and quality.
· IRS Commitment to Redeployment - Another barrier is the selection and retention process and the inability to determine, design, and deliver the proper training for the employee when it is needed to perform their job. While employees can be trained to enhance their basic communications skills and to upgrade their technical skills, the effectiveness of such training depends as much on the aptitude of the employee as on the quality of the training.

 

Efforts essential to improving IRS education that have proven difficult to implement include the following:

· Streamlining the IRS education process, improving accountability, and centralizing budget execution;
· Establishing an infrastructure for training delivery including: education institutes, distance learning technology, an automated training administration system, and the performance development system;
· Establishing and staffing institutes to focus on specific training requirements;
· Encouraging and promoting partnering with the private sector (e.g., tax professional organizations, educational institutions, state tax departments, and other government agencies) to receive training and education materials and services;
· Linking training plans to the strategic planning and budget process;
· Increasing the authority of the Education Advisory Board; and
· Increasing use of education technology to develop and deliver just-in-time training that meets individual needs cost-effectively and to accelerate learning. (Significant savings could be realized with implementation of technology such as Interactive Video Teletraining (IVT). IVT is expected to net the IRS $53 million in savings over the next decade for a 2:1 rate of return; projecting fiscal year 1998 savings of at least 20% of the training travel budget with increased savings in following years.)

 

Achievement of success can be evaluated by the following benchmarks of successful education programs:

· Up-to-date training materials are provided when needed;
· Trained personnel report to new jobs/reassignments;
· Professional career/vocational counseling is available to all employees;
· Career-long learning is the norm;
· Training staff operate within a connected community with uniform accountability;
· Dedicated, professional training cadre is responsive to the field;
· Technology supports learning and job performance;
· Training staff operate in a quality achievement environment;
· In-depth measurement, evaluation and feedback document value-added and customer satisfaction; and
· Budget formulation and execution are centralized.

 

Examination

Tax auditors and revenue agents do not receive adequate, consistent, and continuous training. Training resources for agents have been sacrificed to meet budget requirements. While reduced funding of training and education may meet short-term goals, such resource allocations result in long-term, irreparable damage to the tax administration system.

 

CPE Hours per Technical Staff Year

1992

1993

1994

1995

1996

1997 Plan

Tax Auditors

25

27

26

11

9

39

Revenue Agents

29

32

31

17

15

38

Until recently, IRS interpreted Office of Personnel Management (OPM) requirements for accounting qualifications as college level accounting credits. Recently, however, OPM directed IRS to discontinue this interpretation. Thus, tax auditors went from a 6 hour accounting credit requirement to only a "substantive knowledge of accounting principles" requirement. OPM, however, did increase the accounting credit requirements for revenue agents from 24 to 30. Salary range for selected grades of tax auditor and revenue agent positions, using salaries effective January 1997 for the Washington-Baltimore locality, are as follows:

Without Benefits

With Benefits

GS-9

$31,680 - $41,185

$38,086 - $49,513

GS-11

$38,330 - $49,831

$46,080 - $59,907

GS-13

$54,629 - $71,017

$65,675 - $85,377

 

Currently, IRS must maintain two separate training and employee evaluation systems. A single occupation classification could be accompanied with an increase in the accounting credit requirements and attainment of increased qualifications could be phased in. For example, education criteria could include: a junior level examiner requires 15 accounting credits to qualify for the job with 40 credits of annual CPE, and a senior level examiner requires 30 accounting credits to qualify for the job with 40 credits of annual CPE.

Finally, the partnership between taxpayers, taxpayer representatives, and the IRS can be improved in examination through the sharing of third-party information, other than informant information, that the IRS has obtained (e.g., bank accounts, appraisals, loans) regarding the taxpayer.