Recommendations and Actions
The Internal Revenue Service (IRS) faces a host of big issues in the 1990s. The Service feels budget deficit pressure to improve collections. A one percent increase in voluntary compliance equals $7 billion in annual revenue, but IRS believes that the number of people choosing not to file is growing. In addition, the service holds over $100 billion in gross receivables, all of which must be managed in order to recover even a fraction of it. Besides all this, IRS is awash in paper, handling 1.7 billion pieces annually. Plans are for a major systems modernization to deal with the paper flood.
Major support for the overall plans of IRS comes from an established, internal Total Quality Management program that is intended to improve productivity. Moreover, the IRS refers to its recently developed strategic plan as a business plan and refers to taxpayers as customers.[Endnote 1] IRS is empowering employees in pilot projects that are improving productivity, winning quality awards, and have a strong customer-first flavor. It is also trying out pilot accounting systems that focus on outputs and remove line item controls in budgets.[Endnote 2]
The IRS fosters competition among tax return centers, shifting work loads to those showing the highest productivity. New job opportunities accompany the shift in workload.
The very poor marks given IRS by the General Accounting Office (GAO) and others for phone support are improving. In 1989, one out of three callers got incorrect answers.[Endnote 3] GAO accepts IRS testing that says in 1992 the IRS gave the right answer to taxpayer questions 88 percent of the time.[Endnote 4]
NEED FOR CHANGE
The shift to a customer-driven mentality is well under way at the IRS. The overall IRS mission statement has a customer service flavor: "serve the public by continually improving products and services.''[Endnote 5] Its products are tax forms and notices. Service includes phone support.
The key objectives of IRS all have a customer dimension:
--Reduce taxpayer burden,
--Increase voluntary compliance, and
--Improve productivity and customer satisfaction.
IRS is planning to measure success against these objectives. It is already starting to survey customers. They give high ratings for timeliness of tax forms delivery and poor ratings for product clarity and support.
In another step forward, IRS is increasing the authority of front-line employees to negotiate resolution of issues with taxpayers. This supports its stated goal of resolving a person's tax issues in one IRS contact.
The time to issue refunds is central to customer service at IRS. After IRS finishes processing a return, it creates a computer tape notifying the Financial Management Service (FMS) that this and other refunds are due. The tape is then flown to FMS. FMS processes the tape and issues a refund. Ten days elapse from the time the tape is made until a refund goes out. Transmitting refund information electronically and giving at least selected disbursing authority to IRS might cut this time.
1. As part of its participation in the National Performance Review, IRS should publish customer service performance standards, to include the following examples. (1)
--A refund due on your paper return will be mailed within 40 days; a refund due on your electronic return will be mailed within 21 days when you request a check, or sent within 14 days when you specify direct deposit.
--Our goal is to resolve your account inquires in a single contact; if you have a repeat problem you can contact the Problem Resolution Office, which will resolve the problem in an average of 21 days.
--When you provide sufficient and correct information to an IRS tax assistor and get an incorrect answer, we will cancel related penalties.
--Let us know where our tax forms or instructions are confusing or difficult--by 1995, we plan to boost the clarity of tax forms and instructions so that 90 percent of individual returns are error-free.
The publication of these service performance standards will represent another step on the part of IRS toward a customer-driven operation. IRS plans to measure performance against these and other standards and seek continuing customer feedback on the importance of particular areas of service. IRS has a broader, aggressive effort to get customer inputs to measure the value added by its full set of initiatives.
2. The Secretary of the Treasury should delegate disbursing authority to IRS for refunds made using electronic funds transfer and should, for all other disbursements, expedite efforts to transmit refund information electronically between IRS and FMS. (1)
Current modernization plans will give IRS return centers most of the technical capability to do electronic funds transfer. Granting disbursing authority to IRS for these transactions should save time by eliminating the need to transfer information to the FMS before paying the taxpayer.
Similarly, electronically notifying FMS of refund checks to be issued could speed the process compared to shipping tapes by plane. Therefore, IRS and FMS are urged to find ways to do quicker transfers electronically.
1. See U.S. Department of the Treasury, Internal Revenue Service (IRS), Strategic Business Plan FY-93 and Beyond (Washington, D.C., September 1992).
2. See U.S. Department of the Treasury, Internal Revenue Service, "Cost Management System, Cincinnati Service Center," Washington, D.C., February 1993.
3. See U.S. General Accounting Office, Monitoring the Accuracy and Administration of IRS' 1989 Test Call Summary, GAO/GGD-90-36 (Washington, D.C.: U.S. General Accounting Office [GAO], 1990).
4. U.S. General Accounting Office, IRS' Budget Request For Fiscal Year 1994, GAO/T-GGD-93-23 (Washington, D.C.: GAO, 1993).
5. See IRS, Strategic Business Plan FY 1993 and Beyond.
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