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entitled 'Taxpayer Advocate Service: Caseload Has Grown and Taxpayers 
Report Being Satisfied, but Additional Measures of Efficiency and 
Effectiveness Are Needed' which was released on March 26, 2007. 

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Report to the Committee on Finance, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

February 2007: 

Taxpayer Advocate Service: 

Caseload Has Grown and Taxpayers Report Being Satisfied, but Additional 
Measures of Efficiency and Effectiveness Are Needed: 

GAO-07-156: 

GAO Highlights: 

Highlights of GAO-07-156, a report to the Committee on Finance, U.S. 
Senate 

Why GAO Did This Study: 

Congress created the Taxpayer Advocate Service (TAS) to assist 
taxpayers in resolving problems with the Internal Revenue Service (IRS) 
and to propose changes to IRS’s practices to mitigate problems 
affecting taxpayers in general. TAS uses case advocacy and systemic 
advocacy, respectively, to address these two goals. GAO was asked to 
address (1) why TAS’s caseload has increased since 2004, (2) how well 
TAS conducted its case advocacy activities in terms of measures such as 
customer satisfaction and quality, and (3) how well TAS measures and 
reports its systemic advocacy efforts. GAO interviewed TAS and IRS 
managers and other staff, reviewed TAS and IRS documents, and analyzed 
TAS and IRS data. 

What GAO Found: 

The number of individual taxpayer cases opened by TAS increased 
substantially in fiscal years 2005 and 2006 and our analysis of TAS and 
IRS data shows that these increases correlated with increases in IRS 
enforcement activities both overall and in some specific IRS 
enforcement programs. For example, changes in the number of tax refunds 
frozen by IRS coincided with changes in the number of frozen refund 
cases at TAS. While TAS made changes after fiscal year 2004 to its 
guidance for accepting new taxpayer cases, this did not notably 
influence TAS’s caseload increase in fiscal years 2005 and 2006. For 
example, TAS created two additional case acceptance criteria in fiscal 
year 2006 that resulted in a little more than 500 of the approximately 
244,000 cases received that year. 

TAS measures customer satisfaction and found that the taxpayers TAS 
serves remained satisfied from fiscal years 2002 to 2006. TAS also 
measures the quality of its case advocacy and found that this improved 
from 2002 to 2004 and stayed about the same in 2005 and 2006. While 
these case advocacy measures are sound, there is important missing 
information in that TAS does not have meaningful measures of case 
advocacy efficiency or cost. A meaningful measure of efficiency would 
consider the ratio of cases closed to the time spent on them and take 
into account case complexity and the quality of the work, and unit cost 
information is needed to fully understand this information. TAS is 
developing the means to capture time per case, the key component of 
unit cost, and case complexity. 

TAS currently does not measure the effectiveness of its systemic 
advocacy efforts. TAS is piloting a program to study systemic advocacy 
effectiveness in a few areas, but not broadly. Also, it is difficult to 
determine what actions were taken to address systemic issues raised in 
the annual report to Congress, TAS’s primary method for providing 
information to Congress and the public about its systemic advocacy 
efforts. For example, the report describes serious problems faced by 
the taxpayers but does not include the status of addressing those 
issues. 

Figure: Overview of TAS Functions: 

[See PDF for Image] 

Source: GAO. 

[End of figure] 

What GAO Recommends: 

GAO recommends that TAS add performance measures to assess the 
efficiency and cost of case advocacy and the effectiveness of systemic 
advocacy. TAS should also improve what it reports about systemic 
advocacy such as describing actions taken to address taxpayers’ serious 
problems. The National Taxpayer Advocate agreed with our 
recommendations, noting that TAS has begun reporting about systemic 
advocacy and is acting to implement the other recommendations. TAS and 
IRS provided technical comments, and we incorporated them as 
appropriate. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-156]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact James White at (202) 512-
9110 or whitej@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Growth in TAS's Caseload since Fiscal Year 2004 Correlates with 
Increases in IRS Enforcement Activity: 

Taxpayers Report Being Satisfied, and Quality Improved in Most Years, 
but TAS Lacks Measures of Efficiency and Cost: 

TAS Does Not Measure the Effectiveness of Systemic Advocacy, and 
Reporting on Systemic Issues Is Not as Useful as It Could Be: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Process for Creating Immediate Interventions and Systemic 
Advocacy Projects: 

Appendix III: Information to Be Included in the National Taxpayer 
Advocate's Annual Report to Congress: 

Appendix IV: Taxpayer Advocate Service Process for Selecting Problems 
to Include in the Annual Report to Congress: 

Appendix V: Low-Income Taxpayer Clinic (LITC) Grant Program: 

Appendix VI: Number of Taxpayer Advocate Service Cases by Primary Issue 
Code, Fiscal Years 2002-6: 

Appendix VII: Types of Taxpayer Advocate Service (TAS) Cases That 
Increased by More than 1,000 in Fiscal Years 2005 and 2006: 

Appendix VIII: Taxpayer Advocate Service Customer Satisfaction Survey 
Results: 

Appendix IX: Comments from the National Taxpayer Advocate: 

Tables: 

Table 1: TAS Budget and FTE Staff Years, Fiscal Years 2001-6: 

Table 2: Number of TAS Cases by Categories of Issues, Fiscal Years 2002-
6: 

Table 3: Increase in Non-Criterion-7 TAS Caseload Compared to Increase 
in Criterion-7 Cases: 

Table 4: TAS Performance Measure Goals and Results: 

Table 5: TAS Quality Standards and Point Values: 

Table 6. Overview of Our Assessment of TAS's Case Advocacy Measures: 

Table 7: TAS 2005 Annual Report to Congress Table Summarizing Status of 
the Advocate's Legislative Recommendations; Actions Taken by the 109th 
Congress: 

Table 8: Comparison of the Most Serious Problems Included in 2005 
Annual Report to Those in Previous Reports: 

Table 9: Types of TAS Cases That Increased by More than 1,000 Cases in 
Fiscal Year 2005: 

Table 10: Types of TAS Cases That Increased by More than 1,000 Cases in 
Fiscal Year 2006: 

Table 11: Summary of Taxpayer Advocate Service (TAS) Customer 
Satisfaction Scores: Fiscal Year 2005: 

Figures: 

Figure 1: Primary TAS Functions: 

Figure 2: Overview of Case Advocacy Process: 

Figure 3: TAS Case Receipts and Cases Closed, Fiscal Years 2002-6: 

Figure 4: Individual IRS Examinations: 

Figure 5: Enforcement Revenue Collected: 

Figure 6: Changes in IRS and TAS CI Cases: 

Figure 7: Changes in IRS and TAS Levy Cases: 

Figure 8: Changes in IRS and TAS Lien Cases: 

Abbreviations: 

ACS: Automated Collection System: 

AMT: Alternative Minimum Tax: 

CI: Criminal Investigation: 

EITC: Earned Income Tax Credit: 

ESL: English as a Second Language: 

FTE: Full-time Equivalent: 

IRM: Internal Revenue Manual: 

IRS: Internal Revenue Service: 

LITC: Low Income Taxpayer Clinic: 

OAR: Operations Assistance Request: 

OMB: Office of Management and Budget: 

PART: Program Assessment Rating Tool: 

PRP: Problem Resolution Program: 

QRP: Questionable Refund Program: 

SAMS: Systemic Advocacy Management System: 

SB/SE: Small Business/Self Employed Division: 

TAMIS: Taxpayer Advocate Management Information System: 

TAO: Taxpayer Assistance Order: 

TAP: Taxpayer Advocacy Panel: 

TAS: Taxpayer Advocate Service: 

the Advocate: National Taxpayer Advocate: 

TIGTA: Treasury Inspector General for Tax Administration: 

W&I: Wage and Investment Division: 

United States Government Accountability Office: 
Washington, DC 20548: 

February 22, 2007: 

The Honorable Max Baucus: 
Chairman: 
The Honorable Charles E. Grassley: 
Ranking Minority Member: 
Committee on Finance: 
United States Senate: 

In response to concerns about the Internal Revenue Service's (IRS) 
handling of taxpayers' problems, Congress created the Taxpayer Advocate 
Service (TAS). TAS was designed to be largely independent of the rest 
of IRS and able to promptly and fairly handle taxpayer problems not 
resolved through normal IRS channels. TAS divides its work into two 
primary functions: assisting taxpayers in resolving individual problems 
with IRS, called case advocacy, and proposing administrative and 
legislative changes to mitigate problems affecting groups of taxpayers, 
called systemic advocacy. 

TAS deals with a range of taxpayer problems including delays in cases, 
lost payments, and economic hardship (for example, when a refund check 
needs to be expedited). In fiscal year 2006 TAS assisted over 240,000 
taxpayers, or about 0.2 percent of all individual tax return filers. 
Between fiscal years 2004 and 2006, TAS's case advocacy caseload has 
grown substantially, increasing by 43 percent. Such growth matters for 
at least two reasons. First, it may be an indicator of TAS and IRS 
performance at preventing and resolving taxpayer problems. Second, it 
is relatively costly for TAS to get involved in resolving taxpayers' 
problems--TAS's budget was about $170 million[Footnote 1] and TAS 
employed 1,894 staff, or about 2 percent of IRS's workforce, in 2006. 

Because of Congress's concerns about whether taxpayers' issues are 
addressed and the resources devoted to TAS, you asked us to review 
TAS's performance. Specifically, you asked us to determine: 

* why TAS's caseload has increased since 2004, 

* how well TAS conducted its case advocacy activities in terms of 
measures such as customer satisfaction and quality, and: 

* how well TAS measures and reports its systemic advocacy efforts. 

To address our objectives, we reviewed and analyzed relevant documents 
including federal legislation and related legislative histories; 
sections of the Internal Revenue Manual (IRM); the National Taxpayer 
Advocate's 2002-5 annual reports to Congress on TAS activities and 2002-
7 annual objectives reports to Congress; Treasury Inspector General for 
Tax Administration (TIGTA) reports; TAS guidance related to handling 
individual and systemic advocacy activities and the criteria for 
accepting individual cases, creating systemic advocacy projects, and 
for reporting systemic issues; TAS documents related to its performance 
measures; and TAS documents related to the Taxpayer Advocate Management 
Information System (TAMIS) and the Systemic Advocacy Management System 
(SAMS), the TAS information systems used to track individual and 
systemic advocacy activities, respectively.[Footnote 2] We assessed the 
reliability of TAMIS data and determined the data were sufficiently 
reliable for our purposes. We compared the existing TAS performance 
measures to attributes of successful performance measures using 
criteria we have previously developed.[Footnote 3] In terms of 
reporting systemic advocacy efforts, we focused on the annual reports 
to Congress since they are the primary method used by TAS to report on 
systemic advocacy efforts. We interviewed the National Taxpayer 
Advocate (the head of TAS, hereafter referred to as the Advocate) and 
TAS officials involved with both case and systemic advocacy in both 
headquarters and TAS field offices. We also interviewed officials in 
the Wage and Investment Division (W&I), Small Business/Self Employed 
Division (SB/SE), and Criminal Investigation (CI) office to obtain 
their views about coordinating and collaborating with TAS in order to 
address taxpayers' problems and why TAS's caseload has increased. We 
performed our work from September 2005 through December 2006 in 
accordance with generally accepted government auditing standards. Our 
scope and methodology are described in greater detail in appendix I. 

Results in Brief: 

TAS's caseload increased 43 percent from fiscal year 2004 to fiscal 
year 2006--17 percent in 2005 and 23 percent in 2006--and, while the 
growth in the caseload was distributed over both enforcement-and non- 
enforcement-related cases, the overall increase correlated with 
increases in IRS's overall enforcement activities since fiscal year 
2004, as well as increases in particular IRS enforcement programs and 
the corresponding type of TAS case. For example, changes in the number 
of refunds frozen by IRS correlated with the number of refund-freeze- 
related cases coming into TAS. However, such a correlation between TAS 
cases and IRS activity was not always present for other types of TAS 
cases. IRS officials and others identified other factors that could 
also have influenced the increase in TAS cases, in particular changes 
to TAS guidance for accepting cases. However, our analysis of TAS data 
does not indicate that the TAS case acceptance guidance changes were a 
factor in the caseload increase. For example, TAS created two new 
criteria for accepting cases in fiscal year 2006, yet of the almost 
244,000 cases received by TAS in fiscal year 2006, the new criteria 
resulted in just over 500 cases. 

Satisfaction among taxpayers who were served by TAS remained steady 
from fiscal year 2002 to 2006, consistently measuring between 4 and 5 
on a 5-point scale, while case quality improved from fiscal year 2002 
to 2004 (moving from below 80 to over 90 on a 100-point scale), it 
stayed about the same in fiscal year 2005 and 2006. While two of TAS's 
four measures are sound in terms of their clarity, reliability, and 
several other factors, TAS's current efficiency measure, defined as the 
percentage of TAS cases involving a procedural burden, is not a true 
measure of efficiency and provides no information on case advocacy 
efficiency. A more meaningful measure of efficiency would look at the 
ratio of cases closed to the time spent on those cases and take into 
account the quality of the work and the complexity of the cases. Also, 
to allow interpretation of efficiency information in light of cost 
effectiveness and to permit, for example, TAS to identify types of 
cases that are taking up an inordinate share of case advocacy 
resources, TAS would also need to develop a case advocacy unit cost 
measure. TAS officials have plans under way to capture case complexity 
and to begin tracking time in a way that will permit TAS to develop 
case advocacy unit cost information. 

TAS's systemic advocacy function is very important because it is the 
means for TAS to eliminate taxpayer problems before they arise, and 
though TAS can point to many successes in this area, TAS's systemic 
advocacy performance measurement does not provide important information 
to Congress on systemic advocacy effectiveness. In August 2006, TAS 
began a pilot program to ascertain if progress is being made in 
correcting a few systemic issues. The pilot is a worthwhile initiative 
to identify progress in a few important areas, but it will not measure 
the effectiveness of systemic advocacy on a broad basis. Also, TAS's 
public reporting makes it difficult for Congress to determine what 
actions were taken to address systemic issues TAS has raised in the 
past. 

We are recommending that the Advocate add to TAS's case and systemic 
advocacy performance measures and improve its reporting on systemic 
issues. Additional measures include case advocacy efficiency and 
systemic advocacy effectiveness. TAS should also take several steps to 
improve what it reports about systemic advocacy in the annual report to 
Congress such as describing actions taken to address taxpayers' serious 
problems. The Advocate agreed with our recommendations and noted that 
TAS has already implemented part of one recommendation related to 
reporting about systemic advocacy and is taking steps to implement the 
other recommendations. For example, the Advocate reported that TAS has 
submitted work requests to collect information on the complexity of 
cases and time spent on cases to develop cost information. This will be 
added to the data TAS collects to measure case quality. This 
information will then be used to develop a case advocacy efficiency 
measure. We have included the Advocate's letter in appendix IX. TAS 
also provided technical comments which we incorporated as appropriate. 

The Commissioner of Internal Revenue was provided a draft of this 
report for review and comment. The IRS Office of Legislative Affairs 
provided technical comments, and we incorporated them as appropriate. 

Background: 

TAS is an independent office within IRS created to assist taxpayers in 
resolving problems with IRS, identify areas in which taxpayers have 
problems in dealing with IRS, and propose administrative and 
legislative changes to mitigate such problems. TAS is the successor to 
the Problem Resolution Program (PRP) which IRS founded in 1976 to 
provide an independent means of helping taxpayers solve problems that 
they encountered in dealing with IRS. Initially, PRP units were 
established in IRS district offices. In 1979, IRS expanded PRP to its 
service centers and created the position of Taxpayer Ombudsman to head 
PRP. Generally, PRP personnel were district or service center employees 
who did not report directly to the Ombudsman. The Ombudsman was 
appointed by and reported to the Commissioner of Internal Revenue. 

Congress has since renamed the Ombudsman the "National Taxpayer 
Advocate" and taken steps to enhance the independence of the Advocate. 
While the Advocate continues to report to the Commissioner of Internal 
Revenue, the Advocate is now appointed by the Secretary of the Treasury 
after consultation with the Commissioner of Internal Revenue and the 
IRS Oversight Board.[Footnote 4] In the IRS Restructuring and Reform 
Act of 1998, Congress required that the individual not be an IRS 
employee for 2 years preceding his or her appointment and that the 
individual agrees to not accept a position elsewhere in IRS for 5 years 
following his or her tenure as the Advocate.[Footnote 5] In addition, 
Congress replaced the prior PRP organization with an independent 
reporting structure of taxpayer advocates who report directly to the 
Advocate and mandated that a local taxpayer advocate be available to 
taxpayers in each state. TAS currently has 65 local offices with at 
least one in each state, Puerto Rico, and the District of Columbia. TAS 
also has 10 offices located at IRS campuses. The current Advocate was 
appointed in 2001. 

Section 7803 of the Internal Revenue Code, as amended by the 
Restructuring Act of 1998, provides that the National Taxpayer Advocate 
is entitled to compensation at the same rate as the highest rate of 
basic pay established for the Senior Executive Service under 5 U.S.C. 
Section 5382 or, if the Secretary of the Treasury so determines, at a 
rate fixed under the streamlined critical pay authority set out in 5 
U.S.C. § 9503 (up to the equivalent of the Vice President's salary, or 
$212,100 in 2006).[Footnote 6] The Advocate is also eligible to receive 
bonuses. On January 10, 2001, the Secretary of Treasury approved the 
appointment of Nina Olson as the National Taxpayer Advocate under 
section 7803 and chose to set her pay using the streamlined critical 
pay authority.[Footnote 7] The Advocate's salary was $162,100 and her 
bonus was $22,900 in 2006. 

TAS has two primary functions--case advocacy and systemic advocacy, 
although it is also responsible for administering the Low Income 
Taxpayer Clinic (LITC) Grant Program and overseeing the Taxpayer 
Advocacy Panel (TAP). Figure 1 shows TAS's primary functions as well as 
sources of work. 

Figure 1: Primary TAS Functions: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

TAS receives case advocacy cases through several sources including 
referrals from IRS, direct taxpayer contact via walk-in, phone calls, 
or mail, and the National Taxpayer Advocate toll-free line. The 
acceptance criteria for case advocacy fall into four general 
categories: economic burden, systemic burden, best interest of the 
taxpayer, and public policy. Economic burden cases involve a tax- 
related issue that has caused financial difficulty for the taxpayer. 
Procedural burden cases involve an IRS process, system, or procedure 
that has failed to operate as intended and, as a result, IRS has failed 
to resolve or respond to the taxpayer issue. Best interest of the 
taxpayer cases are those that raise questions of equity or taxpayer's 
rights in how the tax laws are administered. Finally, public policy 
cases are those that the Advocate decided should be worked based on 
specific issues or areas of public concern. TAS uses TAMIS to track its 
case advocacy activities. 

In some cases, TAS is able to use its statutory or delegated 
authorities to take the necessary steps to resolve a case. When TAS 
does not have statutory or delegated authority to take action, TAS 
issues an Operations Assistance Request (OAR) to the function within 
IRS that can take the needed action to resolve the taxpayer's problem. 
If IRS and TAS are unable to agree on the proper course of action, TAS 
might use a Taxpayer Assistance Order (TAO) to require IRS to take a 
certain action as permitted by law, cease an action currently being 
taken, review an action, refrain from taking any action, or release 
property previously levied.[Footnote 8] In fiscal year 2006, TAS issued 
46 TAOs. Figure 2 provides an overview of the case advocacy process. 

Figure 2: Overview of Case Advocacy Process: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Currently, TAS and IRS are renegotiating the procedures TAS and IRS 
functions will follow to process an OAR. Also, officials told us that 
the Advocate has reviewed TAS's delegated authorities with Office of 
Chief Counsel, Appeals, Tax Exempt/Government Entities, W&I, and SB/SE 
officials and plans to make recommendations to the Commissioner on 
possible changes. 

TAS receives suggestions for systemic advocacy projects from TAS and 
IRS employees and the public. Systemic advocacy officials evaluate each 
suggestion to determine if it meets the definition of an immediate 
intervention--an administrative issue which could cause immediate, 
significant harm to multiple taxpayers that needs quick resolution. For 
those issues that do not become immediate interventions, systemic 
advocacy officials apply the general criteria described in figure 1 in 
order to score each issue. TAS creates a systemic advocacy project for 
those issues that meet or exceed the current threshold for converting 
an issue into a systemic advocacy project. This threshold can change 
depending on available resources to work on systemic advocacy projects. 
For immediate interventions and advocacy projects, systemic analysts 
research the issue and develop recommendations for IRS. For additional 
details about creating immediate interventions and systemic advocacy 
projects including a complete list of the criteria used to score 
systemic issues, see appendix II. 

TAS also conducts systemic advocacy through participation in TAS and 
IRS research initiatives and task forces, hosting town hall meetings, 
conducting focus groups, and through TAS's two required annual reports 
to Congress. One of the two reports, the annual report to Congress, 
hereafter referred to as the annual report, is due by December 31, and 
summarizes TAS's activities during the prior fiscal year. It must 
include, among other things, a discussion of at least 20 of the most 
serious problems encountered by taxpayers and administrative and 
legislative recommendations for resolving taxpayer problems.[Footnote 
9] For details about how the most serious problems are selected, see 
appendix IV. The other report, due by June 30 of each year, must 
identify the objectives of the Office of the Taxpayer Advocate for the 
fiscal year beginning in that calendar year. 

Responsibility for the LITC Grant Program was transferred from W&I to 
TAS in May 2003. The IRS Restructuring and Reform Act of 1998 
established the LITC Grant Program to help accredited academic 
institutions and nonprofit organizations represent low-income taxpayers 
in controversies with IRS and operate programs to inform individuals 
for whom English is a second language about their rights and 
responsibilities. TAS has responsibility for selecting LITC grant 
recipients and conducting site visits to ensure that LITCs are 
fulfilling their obligations. See appendix V for more information on 
the LITC Grant Program. TAS also has responsibility for overseeing the 
TAP, which was established in October 2002 under the Federal Advisory 
Committee Act as a way of improving IRS responsiveness to taxpayers' 
needs. The panel, consisting of approximately 104 volunteers nationwide 
including every state, Puerto Rico, and the District of Columbia, 
provides input on IRS's strategic initiatives and provides a venue for 
raising issues identified by citizens. 

TAS's budget is part of the overall IRS appropriation and does not have 
a separate line item in the budget. TAS resources are spread across 
three appropriations: processing, assistance, and management; tax law 
enforcement; and information systems. 

TAS's budget increased from about $135.4 million in fiscal year 2001 to 
about $170.3 million in fiscal year 2006.[Footnote 10] Over 86 percent 
of TAS's fiscal year 2006 budget was for its case advocacy function, 
while the rest was split between systemic advocacy, the LITC Grant 
Program,[Footnote 11] TAP, and other expenses such as training, travel, 
and support. TAS's full-time equivalent (FTE) staff years decreased 
slightly from 2,064 in fiscal year 2001 to 1,894 in fiscal year 2006. 
Table 1 summarizes TAS's budget and staffing. 

Table 1: TAS Budget and FTE Staff Years, Fiscal Years 2001-6: 

Budget (dollars in millions). 

Case advocacy; 
Fiscal year: 2001: $123.9; 
Fiscal year: 2002: $134.4; 
Fiscal year: 2003: $138.3; 
Fiscal year: 2004: $140.3; 
Fiscal year: 2005: $142.7; 
Fiscal year: 2006: $146.0. 

Systemic advocacy[A]; 
Fiscal year: 2001: 3.4; 
Fiscal year: 2002: 5.1; 
Fiscal year: 2003: 5.7; 
Fiscal year: 2004: 5.8; 
Fiscal year: 2005: 3.7; 
Fiscal year: 2006: 4.0. 

LITC[B]; 
Fiscal year: 2001: --; 
Fiscal year: 2002: --; 
Fiscal year: 2003: --; 
Fiscal year: 2004: 8.4; 
Fiscal year: 2005: 9.2; 
Fiscal year: 2006: 9.4. 

TAP; 
Fiscal year: 2001: 1.5; 
Fiscal year: 2002: 1.4; 
Fiscal year: 2003: 2.3; 
Fiscal year: 2004: 2.5; 
Fiscal year: 2005: 2.5; 
Fiscal year: 2006: 2.5. 

Other[C]; 
Fiscal year: 2001: 6.6; 
Fiscal year: 2002: 9.5; 
Fiscal year: 2003: 10.4; 
Fiscal year: 2004: 8.8; 
Fiscal year: 2005: 9.1; 
Fiscal year: 2006: 8.5. 

Total[D]; 
Fiscal year: 2001: $135.4; 
Fiscal year: 2002: $150.3; 
Fiscal year: 2003: $156.7; 
Fiscal year: 2004: $165.8; 
Fiscal year: 2005: $167.3; 
Fiscal year: 2006: $170.3. 

FTEs. 

Case advocacy; 
Fiscal year: 2001: 1,953; 
Fiscal year: 2002: 1,971; 
Fiscal year: 2003: 1,974; 
Fiscal year: 2004: 1,908; 
Fiscal year: 2005: 1,829; 
Fiscal year: 2006: 1,766. 

Systemic advocacy[A]; 
Fiscal year: 2001: 38; 
Fiscal year: 2002: 53; 
Fiscal year: 2003: 58; 
Fiscal year: 2004: 56; 
Fiscal year: 2005: 32; 
Fiscal year: 2006: 32. 

LITC[B]; 
Fiscal year: 2001: --; 
Fiscal year: 2002: --; 
Fiscal year: 2003: --; 
Fiscal year: 2004: 7; 
Fiscal year: 2005: 10; 
Fiscal year: 2006: 11. 

TAP; 
Fiscal year: 2001: 16; 
Fiscal year: 2002: 16; 
Fiscal year: 2003: 17; 
Fiscal year: 2004: 21; 
Fiscal year: 2005: 21; 
Fiscal year: 2006: 21. 

Other[C]; 
Fiscal year: 2001: 57; 
Fiscal year: 2002: 72; 
Fiscal year: 2003: 77; 
Fiscal year: 2004: 73; 
Fiscal year: 2005: 71; 
Fiscal year: 2006: 64. 

Total[D]; 
Fiscal year: 2001: 2,064; 
Fiscal year: 2002: 2,112; 
Fiscal year: 2003: 2,126; 
Fiscal year: 2004: 2,065; 
Fiscal year: 2005: 1,963; 
Fiscal year: 2006: 1,894. 

Source: TAS. 

[A] Some staff in categories other than systemic advocacy also spend 
some of their time on systemic advocacy activities, such as preparing 
the annual report to Congress. 

[B] The responsibility for the LITC Grant Program was transferred to 
TAS in May 2003; however, dollars and FTEs were not allocated to TAS 
until fiscal year 2004. 

[C] Other includes training, travel, and support for TAS headquarters 
management activities. These activities include strategic planning, 
communications and liaison, finance, equal employment opportunity and 
diversity, business systems planning, and employee development. 

[D] Totals do not add due to rounding. 

[End of table] 

Growth in TAS's Caseload since Fiscal Year 2004 Correlates with 
Increases in IRS Enforcement Activity: 

The growth in TAS's caseload was not uniform over types of taxpayer 
problems, but was correlated with increases in IRS enforcement 
activity. 

TAS's Caseload Increased Significantly in Fiscal Years 2005 and 2006: 

After decreasing from fiscal years 2002 through 2004, TAS's case 
receipts increased 43 percent from fiscal year 2004 to 2006, as shown 
in figure 3. Case receipts increased by 28,660 cases or 17 percent in 
fiscal year 2005 over fiscal year 2004 and another 45,021 cases or 23 
percent in fiscal year 2006. Since fiscal year 2004, by comparison, TAS 
staffing decreased by 171 FTEs as was shown in table 1. 

Figure 3 also shows that the number of cases that TAS closed each year 
followed a similar pattern as case receipts, with declines in fiscal 
years 2002-4 and increases in fiscal years 2005 and 2006. In the 
earlier years the closure rate exceeded the number of cases coming in, 
so TAS was decreasing its backlog of cases. In fiscal years 2005 and 
2006, however, TAS closed fewer cases than it received, and its backlog 
of cases increased by around 7,500 cases in each of those years. TAS 
officials said that the growing number of cases is posing a challenge 
to staff, but that the challenge has not become overwhelming. 

Figure 3: TAS Case Receipts and Cases Closed, Fiscal Years 2002-6: 

[See PDF for image] 

Source: GAO analysis of TAMIS data. 

[End of figure] 

The growth in TAS's caseload after fiscal year 2004 varied across types 
of taxpayer problems. (TAS tracks taxpayer problems by assigning one of 
114 primary issue codes to each case. Specific issue codes include 
processing an original or amended return, lien release, and stolen 
identity. See app. VI for a full breakdown of cases by issue code for 
fiscal years 2002 through 2006.) Furthermore, the percentage of each 
type of issue, in terms of total caseload, varied over time. Data on 
taxpayer issues showed the following: 

* The growth in caseload was distributed across many issues with 7 
issues increasing by more than 1,000 cases in fiscal year 2005 and 17 
doing so in fiscal year 2006. (See app. VII for a breakdown of issues 
that increased by more than 1,000 cases in fiscal years 2005 and 2006.) 

* The growth in caseload was not uniformly distributed by issue over 
time. None of the 5 issues with the greatest growth in fiscal year 2005 
were among the top 5 in fiscal year 2006. Also, the most common issue 
in both fiscal year 2005 and 2006, criminal investigation (CI), 
increased substantially in fiscal year 2005, but declined in fiscal 
year 2006.[Footnote 12] 

* Total caseload was distributed over many issues with no single issue 
accounting for more than 8 percent of the total in fiscal year 2006. 
For example, although CI was the largest issue in fiscal years 2005 and 
2006, it accounted for only 14 percent of cases in fiscal year 2005 and 
8 percent in fiscal year 2006. 

* The issues with the highest number of cases varied from year to year. 
Of the 5 issues with the highest number of cases in fiscal year 2002, 
only 2 remained in the top 5 in fiscal year 2006. 

Growth in TAS's Caseload since Fiscal Year 2004 Was Correlated with 
Increases in IRS Enforcement Activities and Specific Enforcement 
Programs: 

According to the Advocate, the majority of the increase in TAS's 
caseload in fiscal years 2005 and 2006 was due to an increase in IRS 
enforcement activities. For example, the National Taxpayer Advocate's 
2007 Objectives Report to Congress states that "The impact of the IRS's 
substantial increases in enforcement activities is evident in the 
corresponding increase in TAS Taxpayer Delinquent Investigation, Levy, 
and Automated Underreporter case receipts." Data from TAS and IRS are 
consistent with this argument, showing a correlation between increases 
in TAS's caseload and increases in IRS's overall enforcement activities 
since fiscal year 2004.[Footnote 13] The data also show correlations 
between the growth in particular IRS enforcement programs and the 
corresponding TAS issues. 

However, IRS's enforcement programs were also growing between fiscal 
years 2002 and 2004, a time when TAS's caseload was shrinking. A senior 
TAS official said that increases in IRS enforcement were leading to new 
TAS cases in fiscal years 2002-4, but that the increases in caseload 
were more than offset by declines for other reasons. For example, the 
official stated that in 2000-1, TAS was still clearing out a backlog of 
taxpayer problems from the late 1990s and new problems were also 
arising from confusion stemming from the major reorganization of IRS 
from divisions based on processes to divisions based on types of 
taxpayers being served. As TAS dealt with the backlog of cases and as 
the IRS reorganization was completed, the number of cases fell. Data 
for testing this explanation were not available. 

Overall, IRS enforcement activities have been increasing, as shown by 
the number of individual examinations in figure 4 and the amount of 
enforcement revenue collected in figure 5. 

Figure 4: Individual IRS Examinations: 

[See PDF for image] 

Source: IRS. 

[A] Fiscal year 2006 results are preliminary. 

[End of figure] 

Figure 5: Enforcement Revenue Collected: 

[See PDF for image] 

Source: IRS. 

[End of figure] 

At the same time, the majority of the growth in TAS's caseload was due 
to issues that are enforcement related, as shown in table 2. Table 2 
combines TAS's 114 types of taxpayer issues into a few broad 
categories. Categories that consist largely of enforcement issues, as 
shown by the shaded rows in the table, accounted for over half of the 
growth in TAS caseload between fiscal years 2004 and 2006. Moreover, 
there are also enforcement-related issues in other categories. For 
example, a case that TAS classifies as "document processing" may 
involve a taxpayer having trouble filing an amended return after an 
audit. 

Table 2: Number of TAS Cases by Categories of Issues, Fiscal Years 2002-
6: 

Category of issue: Document processing; 
Fiscal year: 2002: 57,143; 
Fiscal year: 2003: 39,289; 
Fiscal year: 2004: 32,646; 
Fiscal year: 2005: 36,815; 
Fiscal year: 2006: 52,850. 

Category of issue: Examination; 
Fiscal year: 2002: 52,452; 
Fiscal year: 2003: 51,335; 
Fiscal year: 2004: 38,051; 
Fiscal year: 2005: 40,213; 
Fiscal year: 2006: 47,951. 

Category of issue: Collection; 
Fiscal year: 2002: 28,833; 
Fiscal year: 2003: 25,274; 
Fiscal year: 2004: 23,887; 
Fiscal year: 2005: 29,210; 
Fiscal year: 2006: 43,625. 

Category of issue: Refunds; 
Fiscal year: 2002: 31,852; 
Fiscal year: 2003: 22,702; 
Fiscal year: 2004: 19,247; 
Fiscal year: 2005: 20,048; 
Fiscal year: 2006: 27,710. 

Category of issue: Appeals/other; 
Fiscal year: 2002: 11,397; 
Fiscal year: 2003: 19,691; 
Fiscal year: 2004: 19,903; 
Fiscal year: 2005: 31,936; 
Fiscal year: 2006: 24,770. 

Category of issue: Technical/procedural/statute; 
Fiscal year: 2002: 8,942; 
Fiscal year: 2003: 7,683; 
Fiscal year: 2004: 9,496; 
Fiscal year: 2005: 12,032; 
Fiscal year: 2006: 13,251. 

Category of issue: Penalty; 
Fiscal year: 2002: 14,700; 
Fiscal year: 2003: 10,155; 
Fiscal year: 2004: 9,133; 
Fiscal year: 2005: 10,032; 
Fiscal year: 2006: 12,397. 

Category of issue: Entity; 
Fiscal year: 2002: 9,337; 
Fiscal year: 2003: 7,270; 
Fiscal year: 2004: 8,176; 
Fiscal year: 2005: 9,760; 
Fiscal year: 2006: 11,617. 

Category of issue: Payments/credits; 
Fiscal year: 2002: 12,746; 
Fiscal year: 2003: 7,666; 
Fiscal year: 2004: 6,804; 
Fiscal year: 2005: 7,089; 
Fiscal year: 2006: 8,175. 

Category of issue: Interest; 
Fiscal year: 2002: 1,638; 
Fiscal year: 2003: 1,179; 
Fiscal year: 2004: 1,052; 
Fiscal year: 2005: 1,042; 
Fiscal year: 2006: 1,033. 

Category of issue: Not coded; 
Fiscal year: 2002: 95; 
Fiscal year: 2003: 3,925; 
Fiscal year: 2004: 1,734; 
Fiscal year: 2005: 612; 
Fiscal year: 2006: 431. 

Category of issue: Total; 
Fiscal year: 2002: 229,135; 
Fiscal year: 2003: 196,169; 
Fiscal year: 2004: 170,129; 
Fiscal year: 2005: 198,789; 
Fiscal year: 2006: 243,810. 

Source: GAO analysis of TAMIS data. 

Note: Shaded rows indicate issue categories that are primarily 
enforcement related. 

[End of table] 

The correlation between TAS caseload growth and IRS enforcement 
increases can also be seen for particular enforcement actions. The two 
types of TAS cases that increased the most--CI cases in fiscal year 
2005 and levy cases in fiscal year 2006--are examples.[Footnote 14] 
While we could not verify that there was a causal relationship between 
IRS activity and TAS caseload, for CI and levy cases, we found a 
positive correlation. The number of CI refund freezes increased by 23 
percent in fiscal year 2005 over fiscal year 2004 and at the same time 
the number of TAS CI cases increased by roughly 71 percent, as shown in 
figure 6. In December 2005, the Advocate issued a report critical of 
the number of taxpayers whose refunds were frozen and then later 
released, as well as the lack of information given to taxpayers about 
the status of their refund in these cases and the number of years that 
freezes are in effect. CI officials said that they subsequently made 
significant changes to the program in early 2006, freezing fewer 
refunds in 2006 and issuing fewer multiyear freezes. TAS and CI 
officials said that this likely caused the number of taxpayers seeking 
TAS assistance for refund freezes to decrease. While data on the number 
of CI refund freezes for fiscal year 2006 were not yet available when 
we completed our work, the number of TAS CI cases decreased by 25 
percent that year. 

Figure 6: Changes in IRS and TAS CI Cases: 

[See PDF for image] 

Source: GAO analysis of TAS and IRS data. 

Note: Number of CI refund freezes is reported by processing year and is 
an estimate. 

[End of figure] 

Similarly, as shown in figure 7, the number of IRS levy cases increased 
between fiscal years 2002 and 2005, including a 35 percent increase in 
fiscal year 2005 over fiscal year 2004.[Footnote 15] The number of TAS 
levy cases also increased by 27 percent in fiscal year 2005 over fiscal 
year 2004. 

Figure 7: Changes in IRS and TAS Levy Cases: 

[See PDF for image] 

Source: GAO analysis of IRS and TAS data. 

[End of figure] 

Although there is a correlation between growth in overall IRS 
enforcement activity and growth in TAS caseload, as well as a 
correlation between growth in some specific IRS programs and 
corresponding TAS issues, the correlation does not always hold. For 
example, as shown in figure 8, the number of TAS lien cases increased 
by 27 percent in fiscal year 2005 while the number of IRS liens 
decreased by 2 percent.[Footnote 16] 

Figure 8: Changes in IRS and TAS Lien Cases: 

[See PDF for image] 

Source: GAO analysis of IRS and TAS data. 

[End of figure] 

Other Factors Have Also Been Cited as Contributing to TAS's Increased 
Caseload: 

As previously shown in table 2, non-enforcement-related TAS cases also 
increased since fiscal year 2004. TAS officials said that increased TAS 
outreach and external factors, such as taxpayers with problems related 
to the disruptions caused by Hurricane Katrina and changes in the 
overall economy, contributed to the caseload increase. 

IRS officials and others also said that changes made to TAS's case 
acceptance guidance may have contributed to TAS's caseload increase. 
However, our analysis of TAS data does not support this. The Advocate 
made changes to TAS's case acceptance guidance twice since fiscal year 
2004, which is when TAS's caseload started to increase. On January 13, 
2005, the Advocate issued an internal memorandum to all TAS staff 
called "Common Sense and Good Judgment in Case Processing." According 
to the Advocate, the memo did not change the criteria but sought to 
clarify the criteria and ensure that staff were not creating 
unnecessary obstacles for taxpayers seeking TAS assistance. In January 
2006, TAS implemented an expanded version of its case acceptance 
criteria. The revisions included slight modifications to some of the 
existing criteria and the creation of criteria 8 and 9.[Footnote 17] 

The January 2005 memorandum clarified that TAS should accept all cases 
(1) where a taxpayer specifically requests TAS assistance and (2) that 
were referred from IRS even if the case does not meet TAS's case 
acceptance criteria to avoid sending the taxpayer back to IRS.[Footnote 
18] According to the memorandum, in these situations, the case should 
be classified as meeting criteria 7--a system or procedure failed to 
operate as intended or failed to resolve the taxpayer's problem. 
Therefore, if following the memorandum contributed to the increase in 
TAS's caseload, we would expect to see a disproportionate increase in 
criterion-7 cases. However, criterion-7 cases did not increase 
disproportionately in 2005 and 2006, rather the number of these cases 
grew at a slower rate than other cases, as shown in table 3. 
Furthermore, the changes made by TAS in January 2006 did not 
significantly affect TAS's caseload given that the two added criteria 
resulted in just over 500 of the approximately 244,000 cases received 
in fiscal year 2006. 

Table 3: Increase in Non-Criterion-7 TAS Caseload Compared to Increase 
in Criterion-7 Cases: 

Fiscal year: 2004; 
All non-criterion-7 cases: Number: 109,462; 
All non- criterion-7 cases: Percentage change: [Empty]; 
Criterion-7 cases: Number: 60,667; 
Criterion-7 cases: Percentage change: [Empty]. 

Fiscal year: 2005; 
All non-criterion-7 cases: Number: 128,134; 
All non- criterion-7 cases: Percentage change: 17; 
Criterion-7 cases: Number: 70,655; 
Criterion-7 cases: Percentage change: 16. 

Fiscal year: 2006; 
All non-criterion-7 cases: Number: 161,177; 
All non- criterion-7 cases: Percentage change: 26; 
Criterion-7 cases: Number: 82,633; 
Criterion-7 cases: Percentage change: 17. 

Source: GAO analysis of TAS data. 

[End of table] 

Taxpayers Report Being Satisfied, and Quality Improved in Most Years, 
but TAS Lacks Measures of Efficiency and Cost: 

TAS tracks its case advocacy performance in several dimensions. Two of 
TAS's performance measures, customer satisfaction and case quality, 
meet all of the criteria that GAO developed as attributes of successful 
performance measures. However, its employee satisfaction survey suffers 
from a declining response rate and TAS does not measure some important 
dimensions of performance such as cost per case. 

Taxpayers Report Being Satisfied, and Case Quality Improved since 
Fiscal Year 2002 with a Slight Decline in Fiscal Year 2006: 

TAS case advocacy performance measures include measures of customer 
satisfaction, case quality, and employee satisfaction. Table 4 shows 
TAS's performance against its goals for fiscal years 2002-6. 

Table 4: TAS Performance Measure Goals and Results: 

Measure: Customer satisfaction (scores out of a possible 5 points); 
Fiscal year: 2002: Goal: [A]; 
Fiscal year: 2002: Actual: 4.33; 
Fiscal year: 2003: Goal: [A]; 
Fiscal year: 2003: Actual: 4.30; 
Fiscal year: 2004: Goal: [A]; 
Fiscal year: 2004: Actual: 4.30; 
Fiscal year: 2005: Goal: 4.35; 
Fiscal year: 2005: Actual: 4.39; 
Fiscal year: 2006: Goal: 4.40; 
Fiscal year: 2006: Actual: 4.34. 

Measure: Case quality (scores out of a possible 100 points); 
Fiscal year: 2002: Goal: 80.0; 
Fiscal year: 2002: Actual: 78.5; 
Fiscal year: 2003: Goal: 90.0; 
Fiscal year: 2003: Actual: 84.7; 
Fiscal year: 2004: Goal: 90.0; 
Fiscal year: 2004: Actual: 90.5; 
Fiscal year: 2005: Goal: 91.0; 
Fiscal year: 2005: Actual: 91.6; 
Fiscal year: 2006: Goal: 91.5; 
Fiscal year: 2006: Actual: 89.7. 

Measure: Employee satisfaction (percent); 
Fiscal year: 2002: Goal: 70; 
Fiscal year: 2002: Actual: 56; 
Fiscal year: 2003: Goal: 61; 
Fiscal year: 2003: Actual: 60; 
Fiscal year: 2004: Goal: 65; 
Fiscal year: 2004: Actual: 65; 
Fiscal year: 2005: Goal: 68; 
Fiscal year: 2005: Actual: 70; 
Fiscal year: 2006: Goal: 73; 
Fiscal year: 2006: Actual: 64. 

Source: TAS. 

Notes: Customer satisfaction figures are from a survey with a maximum 
score of 5.0 and confidence intervals of ±0.006 in 2002 and 2003, 
±0.007 in 2004, ±0.006 in 2005, and ±0.005 in 2006, all at a confidence 
level of 95 percent. Case quality figures are from a survey of 
completed cases with confidence intervals of ±0.9 in 2002, ±0.7 in 
2003, ±0.5 in 2004, and ±0.7 in 2005 and 2006, all at a confidence 
level of 90 percent. Employee satisfaction figures are from a survey of 
all employees, with response rates of 80-82 percent in 2002-4, 48 
percent in 2005, and 33 percent in 2006. 

[A] TAS did not have a customer satisfaction goal in that time period. 

[End of table] 

Taxpayers who have used TAS have consistently reported being satisfied 
to very satisfied since fiscal year 2002, as shown by the customer 
satisfaction survey results in table 4. TAS determines customer 
satisfaction through an independent and confidential telephone survey 
process to gauge the opinions of a random selection of taxpayers and 
their representatives who had recently closed cases. The survey uses a 
five-point scale where 5 represents "very satisfied" and 4 represents 
"somewhat satisfied." TAS's customer satisfaction scores varied only 
slightly from fiscal years 2002 to 2006 with customers remaining on 
average somewhere between somewhat satisfied and very satisfied. As 
shown in table 4, there was only a small amount of change in this 
measure from year to year, and only a small difference between actual 
performance and the goals for fiscal years 2005 and 2006. For 
additional information on TAS's customer satisfaction results, see 
appendix VIII. 

TAS's case quality improved between fiscal years 2002 and 2004 (the 
changes are statistically significant) and then leveled off, also shown 
in table 4. The slight increase in 2005 and the slight decline in 2006 
are not different in a statistically significant sense from the 2004 
results. As shown in table 4, TAS met its case quality goals for 2004 
and 2005 but did not do so in 2006. To calculate the quality index, TAS 
randomly selects cases each month and measures them against eight 
quality standards. These standards are meaningful in that they cover 
aspects of quality--timeliness and technical correctness, for example-
-that IRS has found important to measure in other contexts, such as 
telephone service. The eight standards and their point values are shown 
in table 5. 

Table 5: TAS Quality Standards and Point Values: 

Quality standard: Did TAS make timely contact with the taxpayer?; 
Point value: 5. 

Quality standard: Did TAS take initial action/request information 
within the specified time frame?; 
Point value: 10. 

Quality standard: Did TAS take all subsequent actions timely from the 
time action could have been taken?; 
Point value: 10. 

Quality standard: Did TAS resolve all taxpayer issues?; 
Point value: 25. 

Quality standard: Did TAS address all related issues?; 
Point value: 10. 

Quality standard: Were all actions taken by TAS and the IRS operations/ 
functional divisions technically and procedurally correct?; 
Point value: 15. 

Quality standard: Did TAS give the taxpayer a clear, complete, correct 
explanation at closing?; 
Point value: 20. 

Quality standard: Did TAS educate the taxpayer regarding any of his/her 
actions that contributed to the problem?; 
Point value: 5. 

Source: TAS. 

[End of table] 

In the past, TIGTA has raised issues with TAS's timeliness and has made 
recommendations that TAS take additional steps to improve 
timeliness.[Footnote 19] TIGTA based its findings on a review of a 
sample of cases. Although the Advocate disagreed with TIGTA's 
conclusions on specific cases, the Advocate agreed to make changes to 
improve timeliness by introducing two types of case management reviews. 
The first type is an early intervention review where a TAS manager must 
be involved in a minimum of 25 percent of open cases within 10 calendar 
days from the received date for criteria 1-4 cases and within 30 
calendar days for criteria 5-9 cases.[Footnote 20] The second type of 
review is a 100-day review where a manager must review all cases that 
have been open for 100 days within 15 days of reaching the 100-day 
mark, and a minimum of once every 60 days thereafter. According to the 
Advocate, these reviews help ensure that cases are resolved in a timely 
manner. TAS's efforts to improve timeliness are reflected in three 
timeliness standards that are part of the TAS quality standards shown 
in table 5. For example, the score for timeliness standard number 3, 
"Did TAS take all subsequent actions timely?" increased from 81.5 
percent in fiscal year 2004 to 86.5 percent in fiscal year 2005. Also, 
TAS improved on the average number of days it takes to close a case, 
which declined from 67.6 in fiscal year 2003 to 51.2 in fiscal year 
2006. 

Employee satisfaction increased from fiscal year 2002 to 2004 but the 
results for 2005 and 2006 (all shown in table 4) may not be accurate 
because of declining survey response rates. TAS determines employee 
satisfaction through an annual IRS-wide survey conducted by an 
independent organization using a five-point scale where 5 represents 
"extremely satisfied." In fiscal years 2002 through 2004, 80 percent or 
more of TAS employees responded to the survey while only 48 percent and 
33 percent responded in fiscal years 2005 and 2006 respectively. Survey 
response rates also declined throughout IRS during this period. 
Response rates this low may bias the results if nonrespondents have 
different opinions than respondents. 

The measures of customer satisfaction and case quality on which the 
previous description of case advocacy performance is based are sound, 
according to criteria we have previously used for assessing IRS's 
performance measures.[Footnote 21] These two measures have all the 
attributes of successful measures as shown in table 6, including 
clarity, objectivity, and reliability. While it is conceptually sound 
to measure employee satisfaction with a survey, as already discussed, 
the employee satisfaction measure does not satisfy the objectivity and 
reliability criteria because of the possibility of nonresponse bias in 
the survey in recent years. 

Table 6: Overview of Our Assessment of TAS's Case Advocacy Measures: 

Attributes of successful measures: Linkage--aligned with goals and 
mission and clearly communicated; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Clarity--clearly stated and name and 
definition are consistent with methodology used to calculate it; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Governmentwide priorities[A] -- 
covers a priority such as quality, timeliness, and cost of service; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Measurable target--has a numerical 
goal; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Objectivity and Reliability--free 
from significant bias and reliable and produces same result under 
similar conditions; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: [Empty]; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Core Program Activities--cover 
activities entity is expected to perform to support intent of program; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Limited Overlap--should provide new 
information; 
GAO assessment of TAS measure: Customer satisfaction: Check; 
GAO assessment of TAS measure: Employee satisfaction: Check; 
GAO assessment of TAS measure: Case quality: Check. 

Attributes of successful measures: Balance--suite of measures covers an 
organization's priorities; 
GAO assessment of TAS measure: Customer satisfaction: This attribute 
applies to the overall suite of measures. IRS considers these measures 
to be balanced since they address priorities such as employee and 
customer satisfaction and business results. However, additional 
measures such as cost of service could improve the balance of TAS 
priorities. 

Source: GAO. 

Note: A checkmark denotes that the measure has the attribute. 

[A] While the current measures cover governmentwide priorities, TAS 
does not have a cost of service measure, which is another 
governmentwide priority. 

[End of table] 

TAS Does Not Measure True Case Advocacy Efficiency or Cost: 

TAS has an additional case advocacy measure called "efficiency" but it 
does not measure efficiency as conventionally defined. Nor does TAS 
have a measure of cost per case. The efficiency measure, which TAS 
defines as the percentage of total case receipts that are procedural 
burden cases (cases accepted under criteria 5-7) is missing important 
attributes of a successful performance measure, including linkage and 
clarity. TAS is working to develop processes to capture components of a 
meaningful case advocacy efficiency measure, which will be useful for 
the development of a useful efficiency measure in the future. 

TAS's case advocacy efficiency measure is not linked to TAS's case 
advocacy mission. According to the Advocate, TAS developed its 
efficiency measure with the thought that the percentage of procedural 
burden case receipts should eventually decrease as IRS fixes systemic 
problems in response to TAS's systemic advocacy efforts. However, the 
current TAS measure is really a measure of systemic advocacy 
effectiveness rather than case advocacy efficiency. The Office of 
Management and Budget (OMB) agrees. OMB's Program Assessment Rating 
Tool (PART) review described TAS's efficiency measure as a proxy 
measure for TAS's success in helping IRS fix systemic problems. 
However, it provides only limited information on the success of TAS's 
systemic advocacy mission because it is sensitive to a number of 
outside factors unrelated to TAS activities. For example, the number of 
procedural burden cases could increase because of an increase in new 
IRS errors, regardless of how well TAS had identified corrections for 
earlier systemic problems. 

In addition, TAS's efficiency measure lacks clarity because it is not a 
true measure of efficiency. Simply put, efficiency is the ratio of the 
outcome or output to the input of any program.[Footnote 22] TAS's 
efficiency measure includes no information on inputs into the program, 
such as time, and does not adequately measure output. 

To develop a true measure of case advocacy efficiency, TAS would need 
information on case advocacy outputs, such as the number of cases 
closed, and inputs--primarily the amount of time spent on those cases. 
Currently, TAS managers do not have information on inputs because TAS 
does not track the amount of time spent working each case; however, TAS 
plans on implementing a method to track time in January 2007. TAS would 
also need to adjust the number of cases closed for the complexity of 
the cases and the quality of the work. In a past report, we said that 
efficiency measures that are not adjusted for quality and complexity 
could yield misleading information.[Footnote 23] For example, an 
increase in cases closed per case advocate would not be a true increase 
in efficiency if cases were becoming less complex. 

According to TAS officials, cases have been becoming more complex in 
recent years; however, we could not verify this because TAS only has a 
limited way to measure complexity. At this time, TAS classifies cases 
as routine or complex. However, TAS is in the process of developing a 
more sophisticated method for determining case complexity. TAS is 
currently testing a model for determining the complexity of a case and 
plans on making changes to TAMIS in order to collect complexity data. A 
more sophisticated complexity index should provide the ability to 
adjust case output to reflect changes in complexity over time. 

TAS also does not have information on the cost of working each case, 
preventing interpretation of efficiency information in light of cost 
effectiveness. Having data on the cost of each case would allow TAS 
managers, and external stakeholders, to make better decisions about 
where to allocate both TAS's case advocacy resources and systemic 
advocacy efforts. Without such data, TAS managers do not know if some 
categories of taxpayer issues are noticeably more costly to resolve 
than others. The high cost of case advocacy might become a factor in 
deciding how to prioritize systemic advocacy efforts. OMB also 
recommended in its PART report that TAS introduce a case advocacy unit 
cost measure. TAS officials indicated that they will start collecting 
unit cost data once they implement a method for tracking time on case. 

TAS and IRS Are Working Jointly to Improve Coordination: 

As discussed in the Background section, TAS has limited authorities to 
take action on some cases. When TAS does not have authority to take 
action on a case, it must request that IRS take the action through an 
Operations Assistance Request (OAR).[Footnote 24] TAS and IRS operating 
divisions have agreements in place that govern the OAR process. Several 
IRS and TAS officials identified coordination problems regarding the 
OAR process that could delay the resolution of taxpayer problems. Some 
of the problems that IRS officials identified include the following: 

* TAS sends OARs when TAS could have resolved the case using their 
authorities or conversely TAS takes the action when they should have 
sent an OAR. 

* TAS does not always do the necessary research or collect the 
necessary documentation before sending an OAR. 

* OARs have to either be mailed or faxed. 

* TAS routes OARs to the incorrect area.[Footnote 25] 

* TAS accepts cases that do not meet its criteria or where the taxpayer 
has not taken the necessary steps to resolve his or her problem with 
IRS, which increases OAR volume and circumvents normal case processing. 

Some TAS officials also reported some confusion over the OAR process. 
For example, officials stated that it is not always clear what 
documentation is required and the procedures for taking certain actions 
in the Internal Revenue Manual are vague, leaving room for 
interpretation. The Advocate's 2007 Objectives Report to Congress 
stated that it is a challenge for TAS employees to identify when an OAR 
should be sent, given the continuing state of change in IRS operating 
division personnel and procedures. These types of issues could lead to 
IRS rejecting more OARs, which causes delays for the taxpayer and 
unnecessary rework for TAS and IRS. 

The Advocate plans to take actions to reduce the number of rejected 
OARs, including identifying TAS and IRS operating division training 
needs, improving the clarity of the IRM, and working with IRS operating 
divisions to ensure TAS routes OARs to the right place. TAS is also 
working with IRS operating divisions to develop a method to send OARs 
electronically. 

TAS has taken actions to deal with past issues related to TAS-IRS 
coordination. In 2002, TIGTA found that TAS employees were taking 
actions on taxpayer cases that were outside of their 
authority.[Footnote 26] In response to TIGTA's findings, the Advocate 
agreed that there was confusion about the scope of TAS authorities and 
outlined corrective actions TAS had taken. As part of those actions, 
TAS provided additional training and modified the case quality review 
to include an accuracy standard that ensures actions taken are 
technically and procedurally correct and within TAS's authorities. TAS 
is looking for ways to improve the quality review and one of the 
proposals is to isolate the OAR process during the review so that they 
can better identify gaps in the OAR process. Senior TAS officials have 
provided the Advocate with recommendations for improving the quality 
review. 

IRS and TAS are also currently reviewing the need to change TAS's 
authorities. The Advocate said that she supports certain additional 
authorities, but only those that do not undermine the unique 
responsibility of TAS, namely, advocating for the taxpayer inside the 
IRS. The Advocate said that she is concerned that her role may become 
blurred if she is asking IRS to take an action while simultaneously 
possessing authority to take the same action directly. Furthermore, the 
Advocate said that there are benefits to having the IRS confront 
taxpayer issues and become aware of recurring issues, which may not 
happen if TAS had the authority to make the changes itself without IRS 
involvement. 

TAS Does Not Measure the Effectiveness of Systemic Advocacy, and 
Reporting on Systemic Issues Is Not as Useful as It Could Be: 

TAS's systemic advocacy efforts have the potential to benefit large 
numbers of taxpayers. However, since TAS is just beginning to pilot a 
process to measure the effectiveness of its systemic advocacy efforts, 
TAS, IRS, Congress, and other stakeholders do not know how successful 
TAS is at accomplishing its systemic advocacy mission. 

TAS Is Piloting Process to Measure the Effectiveness of Systemic 
Advocacy: 

TAS is piloting a process to analyze a few systemic issues in depth to 
assess progress in correcting underlying problems, but does not have a 
process for measuring systemic advocacy effectiveness more broadly. TAS 
worked with W&I to develop a process for using information from TAMIS 
and SAMS, feedback from TAS case workers on new problems observed in 
TAS cases, and input from the TAP to identify top systemic issues. TAS 
and the operating divisions will then collaborate to identify the root 
causes of those issues, implement needed changes to IRS procedures and 
systems, and assess whether progress is being made in correcting the 
underlying problems. If TAS management decides that the number of 
occurrences has been sufficiently reduced, the issues will be replaced 
by others. TAS is now piloting this process. 

In August 2006, TAS used TAMIS data to identify the top issues. TAS and 
W&I officials agreed to address the issue of problems related to 
processing amended returns. If the pilot is successful, TAS plans to 
concurrently apply the process to three additional issues, replacing 
each one as the incidence of the issue has been sufficiently reduced. 
By using data to identify issues, testing to determine progress in 
addressing issues, and piloting the new process before determining if 
it should become standard procedure, TAS has taken the first steps 
towards developing a system to measure the effectiveness of its 
systemic advocacy activities. 

While gathering in-depth information about a few systemic advocacy 
issues is important, this approach will not provide TAS managers, IRS, 
or Congress with an assessment of TAS's systemic advocacy efforts more 
broadly. Using information from TAMIS on the types of new issues coming 
in from individual taxpayers and the systemic projects being suggested 
through SAMS, TAS managers could develop measures of the extent to 
which systemic issues are recurring, which would in turn, provide a 
measure of TAS success in identifying and addressing the root causes of 
these problems. Past reports by the IRS Oversight Board, TIGTA, and GAO 
have also noted the need for TAS to have better information about 
systemic advocacy effectiveness.[Footnote 27] 

Annual Report to Congress Omits Important Information about Whether 
Systemic Issues Were Addressed: 

The National Taxpayer Advocate's annual report to Congress does not 
include adequate information about steps taken to address systemic 
issues, either new issues or issues raised in the past. IRS managers 
and other interested parties, including Congress, need this information 
to know whether issues have been addressed to TAS's satisfaction and 
whether additional steps need to be taken. 

Report Does Not Include the Status of All Legislative Recommendations: 

The annual report does not provide a way to track the status of TAS's 
legislative recommendations. A table is included in the annual report 
but it provides only limited information (see table 7 for a copy of the 
2005 table). We found that the table does not provide potentially 
useful information, making it difficult to determine what has happened 
as a result of a specific legislative recommendation. For example, the 
table: 

* does not list all past recommendations, listing only recommendations 
for which the current Congress took some action, 

* omits information about actions taken by prior Congresses either on 
the listed recommendations or on previous recommendations, 

* does not include summaries of the recommendations or how the 
recommendations are addressed by proposed legislation, and: 

* does not show the date of the recommendations it includes. 

Table 7: TAS 2005 Annual Report to Congress Table Summarizing Status of 
the Advocate's Legislative Recommendations; Actions Taken by the 109th 
Congress: 

Alternative minimum tax (AMT). 

Recommendation: Repeal the individual AMT; 
Bill number: HR 1186; 
Sponsor: English; Date: 3/9/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Repeal the individual AMT; 
Bill number: S 1103; 
Sponsor: Baucus; 
Date: 5/23/2005; 
Current status: Referred to the Senate Finance Committee. 

Recommendation: Repeal the individual AMT; 
Bill number: HR 2950; 
Sponsor: Neal; 
Date: 6/16/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Repeal the individual AMT; 
Bill number: HR 3841; 
Sponsor: Manzullo; 
Date: 9/2/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Index AMT exemption; 
Bill number: HR 703; 
Sponsor: Garrett; 
Date: 2/9/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Index AMT exemption; 
Bill number: HR 4096; 
Sponsor: Reynolds; 
Date: 10/20/2005; 
Current status: Passed House 12/7/2005; placed on Senate legislative 
calendar 12/13/2005. 

Tax preparation and low-income taxpayer clinics (LITC). 

Recommendation: Matching grants for LITC for return preparation; 
Bill number: HR 894; 
Sponsor: Becerra; 
Date: 2/17/2005; 
Current status: Referred to the House Financial Institutions and 
Consumer Credit Subcommittee. 

Recommendation: Matching grants for LITC for return preparation; 
Bill number: S 832; 
Sponsor: Bingaman; 
Date: 4/18/2005; 
Current status: Referred to the Senate Finance Committee. 

Recommendation: Regulation of income tax preparers; 
Bill number: HR 894; 
Sponsor: Becerra; 
Date: 2/17/2005; 
Current status: Referred to the House Financial Institutions and 
Consumer Credit Subcommittee. 

Recommendation: Regulation of income tax preparers; 
Bill number: S 832; 
Sponsor: Bingaman; 
Date: 4/18/2005; 
Current status: Referred to the Senate Finance Committee. 

Small-business issues. 

Recommendation: Health insurance deduction/self-employed individuals; 
Bill number: S 663; 
Sponsor: Bingaman; 
Date: 3/17/2005; 
Current status: Referred to the Senate Finance Committee. 

Recommendation: Married couples as business co-owners; 
Bill number: HR 3629; 
Sponsor: Doggett; 
Date: 7/29/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Married couples as business co-owners; 
Bill number: HR 3841; 
Sponsor: Manzullo; 
Date: 9/2/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Federal tax deposit avoidance penalty; 
Bill number: 
HR 3629; 
Sponsor: Doggett; 
Date: 7/29/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Federal tax deposit avoidance penalty; 
Bill number: HR 3841; 
Sponsor: Manzullo; 
Date: 9/2/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Election to be treated as an S corporation; 
Bill number: HR 3629; 
Sponsor: Doggett; 
Date: 7/29/2005; 
Current status: Referred to the House Ways and Means Committee. 

Recommendation: Election to be treated as an S corporation; 
Bill number: HR 3841; 
Sponsor: Manzullo; 
Date: 9/2/2005; 
Current status: Referred to the House Ways and Means Committee. 

Source: TAS. 

[End of table] 

IRS Actions in Response to TAS Recommendations Are Unclear: 

Each annual report includes information on actions IRS has taken or 
intends to take related to the most serious systemic problems covered 
in that report. The annual reports do not include such information 
related to the problems included in previous annual reports. By not 
including this information, it is difficult to determine which problems 
have been addressed and are no longer serious problems, and what 
actions, if any, have been taken or remain to be taken to address a 
particular problem. 

TAS sent the recommendations included in the 2004 and 2005 annual 
reports to IRS. IRS provided information about the actions it had taken 
for the 2004 recommendations and, as of November 2006, was in the 
process of providing TAS with similar information for the 2005 
recommendations. TAS officials said they plan to include an update of 
IRS actions in response to recommendations made in the annual reports 
and that this update may be included in the annual report or posted on 
the TAS Web site. 

TAS Does Not Explain Why Most Serious Problems Are Different Each Year: 

By law, the annual report must include a summary of at least 20 of the 
most serious problems encountered by taxpayers. These do not have to be 
the 20 worst problems, however, and the Advocate is free to list 
different problems from year to year. The annual report does not 
explain this, however, and it does not explain what happened to the 
problems in the earlier reports. As a result, readers may have the 
impression that the problems described in an annual report are the top 
problems facing the taxpayers that year. Also, when a problem is 
included in one year's annual report and not in the next, readers may 
mistakenly think that the problem has been resolved. 

A discussion of prior serious taxpayer problems may be helpful to IRS 
stakeholders, including Congress, because the problems cited by TAS 
vary from year to year. For example, of the 21 most serious problems 
included in the 2005 annual report, only 4 were included in any of the 
prior three reports, as shown in table 8. 

Table 8: Comparison of the Most Serious Problems Included in 2005 
Annual Report to Those in Previous Reports: 

Most serious taxpayer problems included in 2005 annual report: Trends 
in taxpayer service; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Criminal 
Investigation refund freezes; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: X; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: The cash 
economy; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Training 
of private debt collection employees; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Earned 
Income Tax Credit (EITC) exam issues; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: X; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: X. 

Most serious taxpayer problems included in 2005 annual report: Levies 
on Social Security payments; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Appeals 
campus centralization; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Refund 
application loans: Oversight of the industry, cross-collection 
techniques, and payment alternatives; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Identity 
theft; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Complexity of the Employment Tax Deposit system; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Automated Collection System (ACS) levy releases; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: X. 

Most serious taxpayer problems included in 2005 annual report: 
Regulation of Electronic Return Originators; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Limited 
scope of backup withholding program; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Accessibility of E-Services for tax practitioners; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Mandatory briefings for IRS employees about the Taxpayer Advocate 
Service; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Allowable expense standards for collection decisions; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Inadequate taxpayer service to exempt organizations resulting in 
unnecessary penalties; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Direct 
deposit of income tax refunds; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: Innocent 
spouse claims; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: X; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: X. 

Most serious taxpayer problems included in 2005 annual report: 
Limitations of collection account databases; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Most serious taxpayer problems included in 2005 annual report: 
Reasonable cause assistant; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2004 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2003 annual report: [Empty]; 
Most serious taxpayer problems included in the 2004, 2003, and 2002 
annual reports that are similar to the problems included in the 2005 
annual report: 2002 annual report: [Empty]. 

Source: GAO analysis of TAS reports. 

Note: The issues may not be exactly the same, but the titles of the 
issues were either the same, similar, or included the same words or 
phrases in each. For example, the 2005 annual report included ACS levy 
releases and the 2002 report included access to ACS. 

[End of table] 

In addition, TAS's analysis of the most serious problems included in 
the 2005 annual report showed that nine problems had not been 
specifically addressed in previous reports while the remaining problems 
were related to serious problems included in previous annual reports. 
For example, a serious problem included in the 2005 annual report was 
entitled "trends in taxpayer service" while a problem in the 2003 
report was entitled "taxpayer assistance centers" and a problem in the 
2004 report was entitled "taxpayer access: face-to-face interaction." 

The Advocate said that it is a balancing act each year to decide which 
taxpayer problems to include. She said that TAS should not issue an 
annual report that repeats many taxpayer problems from year to year 
because the annual report is the primary way that TAS informs Congress 
and the public about systemic problems. As there are more than just 20 
problems facing taxpayers, reporting on new problems every year is the 
best approach. Other TAS management officials expressed similar 
viewpoints. 

In addition, as previously described, the Advocate must also prepare 
another report that identifies TAS's objectives for that year. 
According to the Advocate, she uses the objectives report as TAS's 
strategic plan and the report gives her a midyear chance to discuss the 
effect of IRS initiatives on taxpayers. The Advocate believes both 
reports are important and if they were combined, she would lose a 
communication tool that allows her to keep Congress informed about 
problems taxpayers are encountering and TAS's plans to mitigate those 
problems. 

Conclusions: 

Congress established TAS to help taxpayers with problems that were not 
resolved through normal IRS channels as well as to reduce the number of 
such problems through systemic advocacy. The recent increase in TAS 
caseload may raise questions about the effectiveness of TAS systemic 
advocacy at preventing new taxpayer problems from arising. However, the 
available data--particularly the varied makeup of TAS's taxpayer cases 
from year to year--suggest that the increase in caseload may not be an 
indicator of TAS and IRS performance at preventing taxpayer problems 
but be due to other factors such as increases in IRS enforcement 
activities or changes in the economy. As IRS's enforcement actions have 
changed over time, so has the nature of the problems taxpayers bring to 
TAS. As certain problems have been reduced in number, other problems 
have taken their place. 

On the other hand, conclusions about the effectiveness of both case and 
systemic advocacy are necessarily limited by a lack of some performance 
information. Without measures of case advocacy efficiency and cost, TAS 
management lacks information potentially useful for managing its case 
advocacy staff and prioritizing its systemic advocacy efforts. 
Understanding efficiency is especially important in light of the 
challenge posed by a growing caseload. Without a broad-based measure of 
the effectiveness of systemic advocacy, TAS, IRS, and Congress lack 
information about whether efforts to prevent taxpayer problems, rather 
than resolve them after they arise, are achieving any success. 
Similarly, TAS's current reporting leaves key information about the 
status of the issues it raises and IRS and congressional responses to 
past recommendations unmentioned. TAS may have options about the best 
way to provide more complete information to Congress and the public and 
to do so does not necessarily mean adding to the length of the annual 
report. For example, it might be preferable for TAS to use the Internet 
to make available tables listing both current and past recommendations 
and summarizing IRS and legislative actions to date. We note that TAS 
is already considering posting to its Web site the actions IRS has 
taken to address the recommendations related to the most serious 
problems in the 2004 annual report. 

Recommendations for Executive Action: 

We recommend that the National Taxpayer Advocate: 

* improve TAS case advocacy performance measures with the addition of a 
true measure of efficiency that incorporates case complexity and 
quality and a cost measure; 

* supplement the detailed information on specific systemic advocacy 
issues currently being developed with a broad measure of the 
effectiveness of systemic advocacy; and: 

* improve TAS reporting by (1) describing actions taken in response to 
TAS legislative recommendations, (2) describing actions taken by IRS to 
address the most serious problems encountered by taxpayers, and (3) 
making it clear that the most serious problems included in the annual 
report to Congress are at least 20 of the most serious problems but not 
necessarily all of the top problems faced by taxpayers. 

Agency Comments and Our Evaluation: 

The National Taxpayer Advocate provided written comments on a draft of 
this report in a February 12, 2007, letter which is reprinted in 
appendix IX. The Advocate agreed with our recommendations. Her letter 
notes that TAS already collects quality data which will be needed to 
develop an efficiency measure, has taken the first steps to collect 
case complexity and time spent on cases to be used to develop cost 
data, and has submitted work requests to collect additional case 
complexity and time spent on case data. Her letter says that TAS will 
then use this data to develop a method for measuring case advocacy 
efficiency. She also noted that TAS recognizes the value of a broad 
measure of the effectiveness of systemic advocacy and said that TAS 
will develop one. TAS is implementing an enhanced process to monitor 
actions taken in response to TAS legislative recommendations and the 
outcomes will be included in the annual report to Congress and be 
posted on the TAS web site. TAS will monitor the status of 
recommendations included in the annual report that address serious 
problems and post the results semiannually on the TAS web site. TAS 
included language in the 2006 annual report to Congress to clarify that 
the most serious problems included in the report are at least 20 of the 
most serious problems but not necessarily all of the top problems faced 
by taxpayers. 

We also provided a draft of this report to the Commissioner of Internal 
Revenue for his review and comment. The draft report did not include 
any recommendations addressed to the Commissioner. The IRS Office of 
Legislative Affairs provided informal technical comments, and we 
incorporated them as appropriate. 

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
after its date. At that time, we will send copies of this report to the 
National Taxpayer Advocate, the Secretary of the Treasury, the 
Commissioner of Internal Revenue, and other interested parties. This 
report is available at no charge on GAO's web site at 
http://www.gao.gov. 

If you or your staffs have any questions, please contact me at (202) 
512-9110 or whitej@gao.gov. Key contributors to this report were David 
Lewis, Assistant Director; Shellee Soliday; Lindsey Houston; John 
Mingus; Shirley Jones; and Jennifer Gravelle. 

Signed by: 

James R. White: 
Director, Tax Issues Strategic Issues Team: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our first objective was to determine why the Taxpayer Advocate 
Service's (TAS) caseload increased since 2004. To address this 
objective, we reviewed the case advocacy process; TAS's case acceptance 
criteria, changes made to the criteria by TAS, and TAS guidance for 
applying the criteria; the legal requirements for TAS's case acceptance 
criteria; TAS documents that included discussions of why their caseload 
was increasing, and the fiscal years 2002-5 National Taxpayer 
Advocate's annual reports to Congress, hereafter referred to as the 
annual report. We analyzed TAS caseload data from the Taxpayer Advocate 
Management Information System (TAMIS) for fiscal years 2002-6. To 
conduct our analyses, we associated cases with the fiscal year in which 
they were opened. Also, for cases that TAS closed and subsequently 
reopened, all of our analyses relate to the original case. To assess 
the reliability of the TAMIS data, we reviewed TAS documentation, 
conducted interviews with key officials, and conducted electronic 
testing of key variables. Based on this work, we determined that the 
TAMIS data were sufficiently reliable for our purposes. We also 
analyzed data related to Internal Revenue Service (IRS) enforcement 
activities for fiscal years 2002-5 that were included in the IRS Data 
Books or obtained from IRS officials. We interviewed several TAS 
officials including the National Taxpayer Advocate, hereafter referred 
to as the Advocate, the Executive Director of Case Advocacy, the Acting 
Director of Management Accountability, Policy and Strategy, and Local 
Taxpayer Advocates in three state offices and one campus office. We 
also interviewed Wage and Investment (W&I), Small Business/Self 
Employed (SB/SE), and Criminal Investigation (CI) officials to obtain 
their views about why IRS referrals to TAS were increasing. 

Our second objective was to determine how well TAS conducted its case 
advocacy activities in terms of measures such as customer satisfaction 
and quality. To address this objective, we reviewed TAS's performance 
measures for case advocacy; TAS's performance results and targets for 
fiscal years 2002-6; TAS's fiscal year 2002-5 annual reports; previous 
GAO reports on performance measures and other performance measure 
literature; and the Office of Management and Budget's (OMB) 2004 
Program Assessment Rating Tool (PART) report that discussed TAS's 
measures. We assessed TAS's performance measures using criteria 
previously established by GAO.[Footnote 28] We interviewed TAS 
officials, including the Advocate and the Executive Director of Case 
Advocacy. We also interviewed W&I, SB/SE, and CI officials to obtain 
their views about coordinating with TAS to resolve taxpayer cases. In 
addition, we reviewed the Treasury Inspector General for Tax 
Administration's (TIGTA) report on the timeliness of TAS's case 
advocacy process[Footnote 29] and GAO's report on restructuring the 
Office of the Taxpayer Advocate, which included an evaluation of the 
adequacy of the Advocate's measures.[Footnote 30] 

Our third objective was to determine how well TAS measures and reports 
its systemic advocacy efforts. To address this objective, we reviewed 
TAS's performance measures for systemic advocacy to determine if they 
addressed the effectiveness of systemic advocacy. We interviewed TAS 
systemic advocacy officials including the Executive Director for 
Systemic Advocacy, Acting Director of Systemic Advocacy Projects, 
Director of Immediate Interventions, the Project Manager for the Annual 
Report to Congress, and the Senior Advisor to the National Taxpayer 
Advocate and the Annual Report to Congress. In addition, we reviewed 
OMB's report that summarized the results of its use of PART to assess 
TAS for the year 2004, TIGTA's report on the effectiveness of systemic 
advocacy efforts,[Footnote 31] and GAO's report on restructuring the 
Office of the Taxpayer Advocate to identify any issues raised related 
to measuring systemic advocacy activities.[Footnote 32] We reviewed the 
2002-5 annual reports to determine what information they included about 
actions taken to address systemic issues identified in them. We focused 
on the annual reports to Congress since they are the primary method 
used by TAS to report on systemic advocacy efforts. In addition, we 
reviewed the legal requirements for the annual report and the 
Department of the Treasury report that summarized the actions TAS took 
to address the recommendations included in a 2003 Treasury Inspector 
General for Tax Administration report related to the management of 
systemic advocacy.[Footnote 33] 

We performed our work from September 2005 through December 2006 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Process for Creating Immediate Interventions and Systemic 
Advocacy Projects: 

Immediate Interventions: 

Taxpayer Advocate Service (TAS) systemic advocacy staff analyze 
systemic issues to determine if they meet the definition of an 
immediate intervention. Immediate interventions are administrative 
issues which cause immediate, significant harm to multiple taxpayers 
and demand an urgent response. Also, the issues have clear sources; are 
highly visible and sensitive locally, areawide, or nationally; and 
require that a resolution be identified within 3-5 calendar days. The 
staff does not have written guidance for determining if an issue meets 
the definition and instead use factors such as their knowledge of 
Internal Revenue Service (IRS) operations and problems taxpayers are 
having with IRS to assess whether the issues meet the definition. 

If the systemic advocacy staff determines an issue meets the definition 
of an immediate intervention, they elevate the issue to the Director of 
Immediate Interventions who decides on whether to create an immediate 
intervention. If an intervention is not created, then the staff applies 
the TAS criteria used to determine if an issue should become a systemic 
advocacy project. These criteria are described in the following 
section. 

An example of TAS's use of the immediate intervention process was when 
a taxpayer submitted an issue to TAS's Systemic Advocacy Management 
System (SAMS) describing an experience while using a publicly shared 
computer at a library to access www.irs.gov. The taxpayer used the 
computer to complete and download IRS forms. After signing off and 
exiting the Web site, the taxpayer's personal information remained on 
the computer. TAS immediately raised the issue to the level of an 
immediate intervention due to the sensitive nature of the issue and the 
potential disclosure of taxpayer information via the external IRS Web 
site. TAS worked with other offices within IRS and the software vendor 
to correct this problem. 

Systemic Advocacy Projects: 

TAS systemic advocacy staff use written criteria to score each systemic 
issue that does not become an immediate intervention. The scores are 
used to determine which issues will become systemic advocacy projects. 
Such issues are systemic and affect a segment of taxpayers; require 
study, analysis, recommendations, and action to effect positive 
results; involve systems, processes, procedures, or legislation; and 
involve more than one taxpayer. 

TAS systemic advocacy staff use the following 14 criteria, which are 
divided into five categories, to score the issues. 

* Extent of the problem: The following three factors help determine how 
widespread a problem may be. The greater the number of taxpayers 
potentially affected, the more widespread the problem, and the greater 
the frequency of occurrence, the more criteria points awarded. 

- Potential volume of taxpayers affected within the identified segment 
(i.e., individuals, small businesses): Of the taxpaying population 
within the identified segment, how many could be affected by this 
issue? Designate as high, medium, or low the number of affected 
taxpayers relative to the overall segment of taxpayers. 

- Geographic scope: Does the issue affect taxpayers across the nation 
(national), in clustered areas (area, region), or only in certain 
places (local)? 

- Issue frequency: Does the issue happen on a recurring or cyclical 
basis, on a limited or sporadic basis, or only one time? 

* Interest/visibility/sensitivity: The following three factors help 
determine the amount of interest, visibility, or sensitivity associated 
with the problem. The higher the level of congressional, community, and 
media interest or support, the more criteria points awarded. 

- Congressional interest/support: How much support or interest has 
Congress expressed about this issue? Did the support or interest come 
from one member's office or is it widespread in the House or Senate or 
both (high, moderate, or low)? 

- Community/external stakeholder interest/support: How much support or 
interest have external stakeholders expressed about this issue? Was the 
support from one specific group (i.e., AARP) or spread across various 
sectors such as accountants, lawyers, and other special interest groups 
(high, moderate, or low)? 

- Media interest/publicity: How much interest have the media shown in 
this issue? What level of coverage does this issue rate (high, 
moderate, or low)? 

* Taxpayer burden: The following four factors help determine the level 
of burden placed on the taxpayer trying to resolve the issue from the 
taxpayer's point of view. The more effort, time, and money required to 
straighten out the problem, the more criteria points awarded. If 
taxpayers are treated disparately, the issue is awarded criteria 
points. 

- How long to resolve: How long does it take, from the taxpayer's 
perspective, to resolve this issue? The choices range from "less than 3 
months" to "greater than 1 year." The longer it takes, the more points 
are awarded. 

- Effort: How much effort is required, from the taxpayer's or other 
stakeholder's perspective, to resolve this issue (minimal, moderate, or 
significant? The more effort it takes to resolve the issue, the more 
points are awarded. 

- Financial: What is the financial effect on the taxpayer excluding 
tax, penalties, and interest (minimal, moderate, or significant)? 
Factors include issues such as the cost of representation, whether the 
taxpayer has money available for this expense, the cost of repeated 
photocopies or express mail for documentation, and so on. 

- Fairness: Is this taxpayer treated disparately compared to other 
taxpayers? If the taxpayer is treated fairly, the issue is not awarded 
criteria points. If the taxpayer is not treated fairly, the issue is 
awarded criteria points. 

* Taxpayer rights: The following two factors help determine how the 
problem affects taxpayers' rights. If rights are negatively affected, 
or if rights are enhanced, the issue is awarded criteria points. 

- Denial of taxpayer rights: Did the taxpayer have the opportunity to 
exercise a right or was he or she denied something that the taxpayer 
had the right to (i.e., privacy, collection, appeal)? If taxpayers' 
rights are violated, the issue is awarded criteria points; otherwise no 
points are awarded. 

- Enhancement of taxpayer rights: Does this issue enhance taxpayers' 
rights? If taxpayers' rights are enhanced, the issue is awarded 
criteria points; otherwise no points are awarded. 

* Ability to effect change: The following two factors help identify 
issues that may not be resolved without TAS intervention. If the 
operating division is likely to implement a change without TAS 
influence, minimal criteria points are awarded. If TAS is likely to 
influence operating division actions or influence change, more points 
are awarded. 

- Likelihood of independent operating division action: How likely is it 
that the operating division will fix the problem without TAS 
intervention? The higher the likelihood of independent action, the 
fewer criteria points awarded. 

- TAS ability to influence change: How likely is it that TAS will be 
able to influence the operating division to address the issue? The 
higher the likelihood of TAS influencing change, the more criteria 
points awarded. 

When applying criteria, staff use their knowledge of IRS operations; 
information contained in IRS systems, obtained from IRS officials, or 
developed by IRS Research offices; and current events. 

After the staff enter information into SAMS for each criterion, SAMS 
assigns a score. Each week, the staff then sends a list of scored 
issues to the Director of Immediate Interventions indicating which 
issues met or exceeded the current threshold for converting an issue 
into a systemic advocacy project. This threshold can change depending 
on available resources to work on systemic advocacy projects. The 
Director of Immediate Interventions, Director of Advocacy Projects, and 
the systemic advocacy portfolio managers review the issues and decide 
which will become systemic advocacy projects. 

An example of a systemic advocacy project was the tip compliance 
project. The project stemmed from complaints from taxpayers and 
practitioners about the manner in which IRS was conducting tip 
compliance examinations. Problems included, among others, inconsistent 
requirements for substantiating income, insistence that original tip 
diaries be sent to IRS, and refusal to provide detail supporting any 
IRS adjustments. The issue potentially affected a high number of 
taxpayers; was geographically national in scope; had high 
congressional, external stakeholder, and media interest; involved 
significant efforts by taxpayers to resolve the issue; and affected the 
equitable treatment of taxpayers, among other things, according to the 
scoring sheet used to rank the issue. TAS worked with Wage and 
Investment (W&I) and Small Business/Self Employed (SB/SE) staff 
involved in the examinations. TAS was able to resolve some of the 
issues at lower levels of W&I and SB/SE. For other issues, TAS 
submitted an Advocacy Proposal to the management of the Employment Tax 
Group within SB/SE. These SB/SE officials agreed to correct the issues 
TAS raised. TAS is monitoring these cases to make sure the problems are 
not experienced by other taxpayers. 

[End of section] 

Appendix III: Information to Be Included in the National Taxpayer 
Advocate's Annual Report to Congress: 

The National Taxpayer Advocate is required[Footnote 34] to prepare an 
annual report that describes the Taxpayer Advocate Service's activities 
for the previous year that shall contain full and substantive analysis, 
in addition to statistical information, and shall: 

1. Identify the initiatives the Office of the Taxpayer Advocate has 
taken on improving taxpayer services and Internal Revenue Service 
responsiveness. 

2. Contain recommendations received from individuals with the authority 
to issue Taxpayer Assistance Orders under section 7811. 

3. Contain a summary of at least 20 of the most serious problems 
encountered by taxpayers, including a description of the nature of such 
problems. 

4. Contain an inventory of the items described in 1, 2, and 3 for which 
action has been taken and the result of such action. 

5. Contain an inventory of the items described in 1, 2, and 3 for which 
action remains to be completed and the period during which each item 
has remained on such inventory. 

6. Contain an inventory of the items described in 1, 2, and 3 for which 
no action has been taken, the period during which each item has 
remained on such inventory, the reasons for the inaction, and identify 
any Internal Revenue Service official who is responsible for such 
inaction. 

7. Identify any Taxpayer Assistance Order which was not honored by the 
Internal Revenue Service in a timely manner, as specified under section 
7811 (b). 

8. Contain recommendations for such administrative and legislative 
action as may be appropriate to resolve problems encountered by 
taxpayers. 

9. Identify areas of the tax law that impose significant compliance 
burdens on taxpayers or the Internal Revenue Service, including 
specific recommendations for remedying these problems. 

10. Identify the 10 most litigated issues for each category of 
taxpayers, including recommendations for mitigating such disputes. 

11. Include such other information as the National Taxpayer Advocate 
may deem advisable. 

[End of section] 

Appendix IV: Taxpayer Advocate Service Process for Selecting Problems 
to Include in the Annual Report to Congress: 

Prior to 2006, Taxpayer Advocate Service (TAS) systemic advocacy 
officials who prepared the annual report to Congress used input from 
the National Taxpayer Advocate, the Advocate's advisors, local taxpayer 
advocates, and Taxpayer Advocate Management Information System (TAMIS) 
and Systemic Advocacy Management System (SAMS) data to identify serious 
problems that taxpayers were encountering.[Footnote 35] TAS officials 
considered several factors when developing the list including effect on 
taxpayer rights, the number or percentage of taxpayers affected, 
congressional interest, effect of noncompliance on tax administration 
or tax revenue, and barriers to taxpayer compliance. The Advocate and 
the systemic advocacy officials then met and developed a list of 
serious problems which was sent to the Internal Revenue Service (IRS) 
for comment. If IRS officials provided information that illustrated one 
of the proposed problems was not a serious issue, TAS dropped the 
issue. Systemic advocacy officials then prepared the final list of 
serious problems and the Advocate made the final decision on which 
problems were included in the annual report. 

When preparing the 2006 annual report, TAS officials used essentially 
the same process, plus additional sources of information to identify 
the serious problems. First, TAS officials summarized an environmental 
scan of documents that described issues that taxpayers have with IRS. 
Examples of documents included newspaper articles, letters to the 
Commissioner of Internal Revenue, and a Department of the Treasury news 
release. Examples of issues included the alternative minimum tax and 
offers in compromise. Second, TAS officials analyzed the "most serious 
problems" included in the 2001-5 annual reports. This process involved 
ranking the problems as critical, high, medium, low, or resolved based 
on the steps IRS had taken to address them. Third, they reviewed 
information related to immediate interventions, task forces, operations 
assistance requests, and low-income taxpayer clinics. They combined 
these three sources of data with input from the Advocate, the 
Advocate's advisors, and the local taxpayer advocates along with TAMIS 
and SAMS data in order to develop the proposed list of serious problems 
for the 2006 annual report. The Advocate made the final decision on 
which problems to include in the report. 

[End of section] 

Appendix V: Low-Income Taxpayer Clinic (LITC) Grant Program: 

Responsibility for the LITC Grant Program was transferred from the Wage 
and Investment division (W&I) to the Taxpayer Advocate Service (TAS) in 
May 2003. The LITC Grant Program helps accredited academic institutions 
and nonprofit organizations represent low-income taxpayers in 
controversies with IRS and operate programs to inform individuals for 
whom English is a second language about their rights and 
responsibilities. TAS has responsibility for selecting LITC grant 
recipients and conducting site visits to ensure that LITCs are 
fulfilling their obligations. 

LITC grant applications go through a three-step selection process 
involving an eligibility screening, a technical evaluation, and a 
program office evaluation. To be eligible, grantees must offer services 
for free or for no more than a nominal fee and either represent low- 
income taxpayers in controversies with IRS or provide information to 
English as a second language (ESL) taxpayers about their rights and 
responsibilities as U.S. taxpayers. Next, a panel of TAS staff 
knowledgeable about the purpose and mission of LITCs conducts a 
technical evaluation of the eligible applicants. Panel members rank 
each LITC applicant based on four weighted criteria: the quality of 
their programs, their experience in sponsoring a clinic, the quality of 
their grant administration and accounting procedures, and the number of 
low-income or ESL taxpayers in the geographic area. Finally, LITC 
program staff conduct the program office evaluation during which they 
evaluate the rankings for inconsistencies or discrepancies. The LITC 
Program Office Director makes recommendations to the National Taxpayer 
Advocate who makes the final decision on who will receive the grants. 

TAS conducts several types of site visits to LITC grantees. Someone 
from the LITC Program Office visits each new clinic during the first 6 
months to educate them on program requirements and to verify 
operational requirements listed in the grant guidelines such as keeping 
taxpayer information in a secure location and developing and 
maintaining relationships with other community-based organizations in 
order to reach targeted audiences. There are three tiers of additional 
site visits. The first tier visit is conducted by the local taxpayer 
advocate and includes checking items such as are the clinic's hours 
posted and easily visible, are brochures and posters visible, and does 
file security appear adequate. The second tier site visit is usually 
done by someone from the LITC Program Office and is more in-depth than 
the first tier visit. He or she reviews 30 items such as determining if 
the goals stated in the program plan are reflected in the program's 
actual activities, client records are maintained in a confidential 
manner, and the clinic has a written process to control and monitor 
costs and expenditures. If as a result of the second tier visit, the 
staff member identifies issues that need further review, then the LITC 
Program Office Director conducts a third tier visit. During this visit, 
the Director reviews requirements including financial/Office of 
Management and Budget, personnel, and program requirements in addition 
to other items including standards of operation and ethical 
considerations. Third tier visits can result in freezing funds for a 
grantee. 

For the 2006 grant cycle, TAS awarded $8 million in matching grants, 
ranging from $5,000 to $97,250, to 150 nonprofit organizations and 
accredited academic institutions.[Footnote 36] According to the 
National Taxpayer Advocate's 2007 Objectives Report to Congress, during 
2006, TAS expanded the coverage of clinics into rural and other areas 
where disadvantaged taxpayers had very limited access to assistance, 
funding 11 new clinics in areas that were underrepresented. 

[End of section] 

Appendix VI: Number of Taxpayer Advocate Service Cases by Primary Issue 
Code, Fiscal Years 2002-6: 

Table:  

Primary issue code: Criminal Investigation (CI); 
Fiscal year: 2002: 5,600; 
Fiscal year: 2003: 15,304; 
Fiscal year: 2004: 16,554; 
Fiscal year: 2005: 28,228; 
Fiscal year: 2006: 20,490. 

Primary issue code: Processing Amended Return; 
Fiscal year: 2002: 32,254; 
Fiscal year: 2003: 18,282; 
Fiscal year: 2004: 11,211; 
Fiscal year: 2005: 12,214; 
Fiscal year: 2006: 17,195. 

Primary issue code: Levy; 
Fiscal year: 2002: 8,413; 
Fiscal year: 2003: 9,104; 
Fiscal year: 2004: 8,208; 
Fiscal year: 2005: 9,279; 
Fiscal year: 2006: 14,651. 

Primary issue code: Injured Spouse Claim; 
Fiscal year: 2002: 18; 
Fiscal year: 2003: 4,350; 
Fiscal year: 2004: 6,166; 
Fiscal year: 2005: 6,389; 
Fiscal year: 2006: 11,610. 

Primary issue code: Processing Original Return; 
Fiscal year: 2002: 19,396; 
Fiscal year: 2003: 10,730; 
Fiscal year: 2004: 8,485; 
Fiscal year: 2005: 8,966; 
Fiscal year: 2006: 10,417. 

Primary issue code: Reconsideration/Substitute for Return (SFR)/6020B/ 
Audit; 
Fiscal year: 2002: 7,395; 
Fiscal year: 2003: 7,224; 
Fiscal year: 2004: 7,388; 
Fiscal year: 2005: 8,028; 
Fiscal year: 2006: 10,075. 

Primary issue code: Expedite Refund Request; 
Fiscal year: 2002: 34; 
Fiscal year: 2003: 4,742; 
Fiscal year: 2004: 7,002; 
Fiscal year: 2005: 6,743; 
Fiscal year: 2006: 10,045. 

Primary issue code: Closed Under Reporter Program (URP); 
Fiscal year: 2002: 7,311; 
Fiscal year: 2003: 6,542; 
Fiscal year: 2004: 4,624; 
Fiscal year: 2005: 6,196; 
Fiscal year: 2006: 7,741. 

Primary issue code: Open Audit (Non Remittance Processing System (RPS), 
Earned Income Tax Credit (EITC)); 
Fiscal year: 2002: 6,104; 
Fiscal year: 2003: 5,780; 
Fiscal year: 2004: 4,660; 
Fiscal year: 2005: 5,343; 
Fiscal year: 2006: 6,969. 

Primary issue code: Copies of Returns / Transcripts / Reports / Freedom 
of Information Act (FOIA); 
Fiscal year: 2002: 3,481; 
Fiscal year: 2003: 2,878; 
Fiscal year: 2004: 4,058; 
Fiscal year: 2005: 5,696; 
Fiscal year: 2006: 5,761. 

Primary issue code: RPS (EITC Claim); 
Fiscal year: 2002: 27,184; 
Fiscal year: 2003: 23,358; 
Fiscal year: 2004: 10,307; 
Fiscal year: 2005: 6,945; 
Fiscal year: 2006: 5,729. 

Primary issue code: Other Document Processing Issues; 
Fiscal year: 2002: 878; 
Fiscal year: 2003: 1,316; 
Fiscal year: 2004: 2,149; 
Fiscal year: 2005: 3,050; 
Fiscal year: 2006: 5,631. 

Primary issue code: Taxpayer Delinquent Return (TDI)-SFR / 6020B; 
Fiscal year: 2002: 4,017; 
Fiscal year: 2003: 2,172; 
Fiscal year: 2004: 1,585; 
Fiscal year: 2005: 2,184; 
Fiscal year: 2006: 5,102. 

Primary issue code: Open URP; 
Fiscal year: 2002: 13; 
Fiscal year: 2003: 1,115; 
Fiscal year: 2004: 2,475; 
Fiscal year: 2005: 2,887; 
Fiscal year: 2006: 4,750. 

Primary issue code: Other Refund Inquiries / Issues; 
Fiscal year: 2002: 20,119; 
Fiscal year: 2003: 8,493; 
Fiscal year: 2004: 3,578; 
Fiscal year: 2005: 3,397; 
Fiscal year: 2006: 4,510. 

Primary issue code: Missing/Incorrect Payments; 
Fiscal year: 2002: 8,674; 
Fiscal year: 2003: 4,854; 
Fiscal year: 2004: 3,578; 
Fiscal year: 2005: 3,926; 
Fiscal year: 2006: 4,337. 

Primary issue code: Combined Annual Wage reporting (CAWR)/Federal 
Unemployment Taxes (FUTA); 
Fiscal year: 2002: 3,337; 
Fiscal year: 2003: 3,665; 
Fiscal year: 2004: 2,697; 
Fiscal year: 2005: 2,684; 
Fiscal year: 2006: 4,244. 

Primary issue code: Failure to File Penalty (FTF) / Failure to Pay 
(FTP); 
Fiscal year: 2002: 39; 
Fiscal year: 2003: 1,817; 
Fiscal year: 2004: 3,162; 
Fiscal year: 2005: 3,832; 
Fiscal year: 2006: 4,232. 

Primary issue code: EITC Reconsideration; 
Fiscal year: 2002: 16; 
Fiscal year: 2003: 43; 
Fiscal year: 2004: 867; 
Fiscal year: 2005: 3,628; 
Fiscal year: 2006: 3,915. 

Primary issue code: Federal Payment Levy Program (FPLP) Levy-Social 
Security Administration (SSA) Benefits; 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 5; 
Fiscal year: 2004: 470; 
Fiscal year: 2005: 1,632; 
Fiscal year: 2006: 3,809. 

Primary issue code: Internal Revenue Service (IRS) Offset; 
Fiscal year: 2002: 2,687; 
Fiscal year: 2003: 2,228; 
Fiscal year: 2004: 2,084; 
Fiscal year: 2005: 2,741; 
Fiscal year: 2006: 3,783. 

Primary issue code: Lost / Stolen Refund; 
Fiscal year: 2002: 7,770; 
Fiscal year: 2003: 3,939; 
Fiscal year: 2004: 2,953; 
Fiscal year: 2005: 2,634; 
Fiscal year: 2006: 3,627. 

Primary issue code: Installment Agreement (IA) - Other; 
Fiscal year: 2002: 2,235; 
Fiscal year: 2003: 1,740; 
Fiscal year: 2004: 1,659; 
Fiscal year: 2005: 2,331; 
Fiscal year: 2006: 3,365. 

Primary issue code: Lien Release; 
Fiscal year: 2002: 17; 
Fiscal year: 2003: 1,229; 
Fiscal year: 2004: 2,486; 
Fiscal year: 2005: 3,063; 
Fiscal year: 2006: 3,316. 

Primary issue code: Account / Notice Inquiry; 
Fiscal year: 2002: 2,991; 
Fiscal year: 2003: 2,303; 
Fiscal year: 2004: 2,051; 
Fiscal year: 2005: 2,493; 
Fiscal year: 2006: 3,139. 

Primary issue code: Other Collection Issues; 
Fiscal year: 2002: 2,261; 
Fiscal year: 2003: 1,745; 
Fiscal year: 2004: 1,732; 
Fiscal year: 2005: 2,310; 
Fiscal year: 2006: 3,104. 

Primary issue code: Math Error; 
Fiscal year: 2002: 2,554; 
Fiscal year: 2003: 1,908; 
Fiscal year: 2004: 1,616; 
Fiscal year: 2005: 1,919; 
Fiscal year: 2006: 2,914. 

Primary issue code: Returned/Stopped Refunds; 
Fiscal year: 2002: 13; 
Fiscal year: 2003: 1,666; 
Fiscal year: 2004: 1,900; 
Fiscal year: 2005: 2,262; 
Fiscal year: 2006: 2,852. 

Primary issue code: Civil Penalties other than Trust Fund Recovery 
Penalty (TFRP); 
Fiscal year: 2002: 18; 
Fiscal year: 2003: 788; 
Fiscal year: 2004: 1,718; 
Fiscal year: 2005: 1,926; 
Fiscal year: 2006: 2,754. 

Primary issue code: EITC Recertification; 
Fiscal year: 2002: 51; 
Fiscal year: 2003: 2,515; 
Fiscal year: 2004: 2,739; 
Fiscal year: 2005: 2,333; 
Fiscal year: 2006: 2,676. 

Primary issue code: Stolen Identity; 
Fiscal year: 2002: 4; 
Fiscal year: 2003: 67; 
Fiscal year: 2004: 460; 
Fiscal year: 2005: 1,185; 
Fiscal year: 2006: 2,514. 

Primary issue code: Unpostable / Reject; 
Fiscal year: 2002: ; 
Fiscal year: 2003: 535; 
Fiscal year: 2004: 935; 
Fiscal year: 2005: 1,772; 
Fiscal year: 2006: 2,478. 

Primary issue code: Unable to Pay-(Currently Not Collectible (CNC)); 
Fiscal year: 2002: 2,695; 
Fiscal year: 2003: 2,050; 
Fiscal year: 2004: 1,625; 
Fiscal year: 2005: 1,766; 
Fiscal year: 2006: 2,339. 

Primary issue code: Multiple/Mixed Taxpayer Identification Number 
(TIN); 
Fiscal year: 2002: 1,598; 
Fiscal year: 2003: 1,665; 
Fiscal year: 2004: 1,705; 
Fiscal year: 2005: 1,632; 
Fiscal year: 2006: 2,066. 

Primary issue code: Offer in Compromise (OIC)-Doubt as to 
Collectibility; 
Fiscal year: 2002: 4,487; 
Fiscal year: 2003: 3,383; 
Fiscal year: 2004: 2,500; 
Fiscal year: 2005: 2,047; 
Fiscal year: 2006: 2,042. 

Primary issue code: Form W-7/Individual Taxpayer Identification Number 
(ITIN)/Adoption Taxpayer Identification Number (ATIN); 
Fiscal year: 2002: 2,319; 
Fiscal year: 2003: 2,429; 
Fiscal year: 2004: 2,626; 
Fiscal year: 2005: 2,592; 
Fiscal year: 2006: 1,990. 

Primary issue code: Other Penalty Issues; 
Fiscal year: 2002: 11,283; 
Fiscal year: 2003: 4,670; 
Fiscal year: 2004: 1,337; 
Fiscal year: 2005: 1,332; 
Fiscal year: 2006: 1,929. 

Primary issue code: Other Payment Issues; 
Fiscal year: 2002: 14; 
Fiscal year: 2003: 507; 
Fiscal year: 2004: 1,084; 
Fiscal year: 2005: 1,182; 
Fiscal year: 2006: 1,735. 

Primary issue code: Bankruptcy; 
Fiscal year: 2002: 1,439; 
Fiscal year: 2003: 1,005; 
Fiscal year: 2004: 1,009; 
Fiscal year: 2005: 1,185; 
Fiscal year: 2006: 1,721. 

Primary issue code: Failure to Deposit Penalty (FTD); 
Fiscal year: 2002: 2,529; 
Fiscal year: 2003: 1,825; 
Fiscal year: 2004: 1,593; 
Fiscal year: 2005: 1,147; 
Fiscal year: 2006: 1,288. 

Primary issue code: Lien-Other; 
Fiscal year: 2002: 3,124; 
Fiscal year: 2003: 1,757; 
Fiscal year: 2004: 786; 
Fiscal year: 2005: 1,048; 
Fiscal year: 2006: 1,249. 

Primary issue code: Innocent Spouse Claim; 
Fiscal year: 2002: 1,791; 
Fiscal year: 2003: 1,230; 
Fiscal year: 2004: 960; 
Fiscal year: 2005: 1,040; 
Fiscal year: 2006: 1,208. 

Primary issue code: Tax Questions; 
Fiscal year: 2002: 2,034; 
Fiscal year: 2003: 1,068; 
Fiscal year: 2004: 860; 
Fiscal year: 2005: 1,115; 
Fiscal year: 2006: 1,175. 

Primary issue code: Other Entity Issues; 
Fiscal year: 2002: 515; 
Fiscal year: 2003: 514; 
Fiscal year: 2004: 794; 
Fiscal year: 2005: 992; 
Fiscal year: 2006: 1,126. 

Primary issue code: Scrambled Social Security Numbers (SSN); 
Fiscal year: 2002: 98; 
Fiscal year: 2003: 562; 
Fiscal year: 2004: 841; 
Fiscal year: 2005: 1,128; 
Fiscal year: 2006: 1,112. 

Primary issue code: Refund Statute (Refund Statute Expiration Date 
(RSED)); 
Fiscal year: 2002: 5; 
Fiscal year: 2003: 398; 
Fiscal year: 2004: 821; 
Fiscal year: 2005: 940; 
Fiscal year: 2006: 1,089. 

Primary issue code: Other Exam; 
Fiscal year: 2002: 895; 
Fiscal year: 2003: 717; 
Fiscal year: 2004: 783; 
Fiscal year: 2005: 864; 
Fiscal year: 2006: 1,070. 

Primary issue code: Treasury Offset Program (TOP) Offset; 
Fiscal year: 2002: 3; 
Fiscal year: 2003: 549; 
Fiscal year: 2004: 750; 
Fiscal year: 2005: 835; 
Fiscal year: 2006: 1,062. 

Primary issue code: Other Technical, Procedural, or Statute Issues; 
Fiscal year: 2002: 13; 
Fiscal year: 2003: 363; 
Fiscal year: 2004: 734; 
Fiscal year: 2005: 908; 
Fiscal year: 2006: 1,002. 

Primary issue code: Undelivered Refunds; 
Fiscal year: 2002: 902; 
Fiscal year: 2003: 675; 
Fiscal year: 2004: 570; 
Fiscal year: 2005: 757; 
Fiscal year: 2006: 987. 

Primary issue code: Application for Exempt Status (F1023/1024); 
Fiscal year: 2002: 680; 
Fiscal year: 2003: 387; 
Fiscal year: 2004: 479; 
Fiscal year: 2005: 620; 
Fiscal year: 2006: 977. 

Primary issue code: CI (Return Preparation Program); 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 5; 
Fiscal year: 2004: 20; 
Fiscal year: 2005: 449; 
Fiscal year: 2006: 904. 

Primary issue code: TFRP; 
Fiscal year: 2002: 828; 
Fiscal year: 2003: 784; 
Fiscal year: 2004: 774; 
Fiscal year: 2005: 793; 
Fiscal year: 2006: 894. 

Primary issue code: Individual Retirement Account (IRA) Penalty; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 3; 
Fiscal year: 2004: 262; 
Fiscal year: 2005: 737; 
Fiscal year: 2006: 846. 

Primary issue code: Carryback / Carryforward Claims (Net Operating 
Losses (NOL), F 1045/1139); 
Fiscal year: 2002: 17; 
Fiscal year: 2003: 591; 
Fiscal year: 2004: 733; 
Fiscal year: 2005: 747; 
Fiscal year: 2006: 717. 

Primary issue code: Subchapter S Corporation; 
Fiscal year: 2002: 949; 
Fiscal year: 2003: 785; 
Fiscal year: 2004: 698; 
Fiscal year: 2005: 675; 
Fiscal year: 2006: 711. 

Primary issue code: Examination Appeals; 
Fiscal year: 2002: 22; 
Fiscal year: 2003: 254; 
Fiscal year: 2004: 516; 
Fiscal year: 2005: 557; 
Fiscal year: 2006: 694. 

Primary issue code: FTD/Estimated Tax (ES); 
Fiscal year: 2002: 3,386; 
Fiscal year: 2003: 1,635; 
Fiscal year: 2004: 807; 
Fiscal year: 2005: 631; 
Fiscal year: 2006: 675. 

Primary issue code: Appeals-Other; 
Fiscal year: 2002: 15; 
Fiscal year: 2003: 221; 
Fiscal year: 2004: 452; 
Fiscal year: 2005: 524; 
Fiscal year: 2006: 668. 

Primary issue code: Name/Address Changes; 
Fiscal year: 2002: 4; 
Fiscal year: 2003: 176; 
Fiscal year: 2004: 372; 
Fiscal year: 2005: 613; 
Fiscal year: 2006: 663. 

Primary issue code: Back-up Withholding (BWH); 
Fiscal year: 2002: 664; 
Fiscal year: 2003: 332; 
Fiscal year: 2004: 759; 
Fiscal year: 2005: 783; 
Fiscal year: 2006: 660. 

Primary issue code: Direct Deposit; 
Fiscal year: 2002: 3; 
Fiscal year: 2003: 169; 
Fiscal year: 2004: 223; 
Fiscal year: 2005: 433; 
Fiscal year: 2006: 577. 

Primary issue code: Streamlined IA (Unpaid Balance of Assessment under 
$25k and able to full pay in 60 months); 
Fiscal year: 2002: 6; 
Fiscal year: 2003: 244; 
Fiscal year: 2004: 368; 
Fiscal year: 2005: 452; 
Fiscal year: 2006: 549. 

Primary issue code: EITC Certification (Qualifying Child); 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 8; 
Fiscal year: 2004: 466; 
Fiscal year: 2005: 724; 
Fiscal year: 2006: 484. 

Primary issue code: Other; 
Fiscal year: 2002: 5,704; 
Fiscal year: 2003: 3,110; 
Fiscal year: 2004: 846; 
Fiscal year: 2005: 588; 
Fiscal year: 2006: 460. 

Primary issue code: ES Penalty; 
Fiscal year: 2002: 3; 
Fiscal year: 2003: 268; 
Fiscal year: 2004: 287; 
Fiscal year: 2005: 265; 
Fiscal year: 2006: 454. 

Primary issue code: Penalty Appeals; 
Fiscal year: 2002: 5; 
Fiscal year: 2003: 262; 
Fiscal year: 2004: 516; 
Fiscal year: 2005: 488; 
Fiscal year: 2006: 454. 

Primary issue code: Lien Withdrawal; 
Fiscal year: 2002: 7; 
Fiscal year: 2003: 138; 
Fiscal year: 2004: 242; 
Fiscal year: 2005: 338; 
Fiscal year: 2006: 438. 

Primary issue code: Informal Interest Abatement Request; 
Fiscal year: 2002: 9; 
Fiscal year: 2003: 285; 
Fiscal year: 2004: 390; 
Fiscal year: 2005: 390; 
Fiscal year: 2006: 431. 

Primary issue code: Lien Subordination; 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 128; 
Fiscal year: 2004: 224; 
Fiscal year: 2005: 288; 
Fiscal year: 2006: 396. 

Primary issue code: Original Lien Filing; 
Fiscal year: 2002: 3; 
Fiscal year: 2003: 151; 
Fiscal year: 2004: 256; 
Fiscal year: 2005: 327; 
Fiscal year: 2006: 370. 

Primary issue code: Collection Due Process (CDP) Appeals; 
Fiscal year: 2002: 6; 
Fiscal year: 2003: 131; 
Fiscal year: 2004: 179; 
Fiscal year: 2005: 239; 
Fiscal year: 2006: 352. 

Primary issue code: Taxpayer Rights; 
Fiscal year: 2002: 365; 
Fiscal year: 2003: 235; 
Fiscal year: 2004: 198; 
Fiscal year: 2005: 155; 
Fiscal year: 2006: 330. 

Primary issue code: Lien Discharge; 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 78; 
Fiscal year: 2004: 202; 
Fiscal year: 2005: 282; 
Fiscal year: 2006: 306. 

Primary issue code: Excess Collection; 
Fiscal year: 2002: 5; 
Fiscal year: 2003: 145; 
Fiscal year: 2004: 242; 
Fiscal year: 2005: 290; 
Fiscal year: 2006: 304. 

Primary issue code: Collection Statute Expiration Date (CSED); 
Fiscal year: 2002: 28; 
Fiscal year: 2003: 172; 
Fiscal year: 2004: 320; 
Fiscal year: 2005: 259; 
Fiscal year: 2006: 290. 

Primary issue code: Form 843 (other than interest abatement); 
Fiscal year: 2002: 15; 
Fiscal year: 2003: 162; 
Fiscal year: 2004: 215; 
Fiscal year: 2005: 317; 
Fiscal year: 2006: 285. 

Primary issue code: OIC Appeals; 
Fiscal year: 2002: 15; 
Fiscal year: 2003: 137; 
Fiscal year: 2004: 303; 
Fiscal year: 2005: 319; 
Fiscal year: 2006: 274. 

Primary issue code: ITIN Merge; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 13; 
Fiscal year: 2005: 175; 
Fiscal year: 2006: 266. 

Primary issue code: Electronic Federal Tax Payment System (EFTPS); 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 102; 
Fiscal year: 2004: 206; 
Fiscal year: 2005: 138; 
Fiscal year: 2006: 241. 

Primary issue code: OIC-Effective Tax Administration; 
Fiscal year: 2002: 10; 
Fiscal year: 2003: 189; 
Fiscal year: 2004: 277; 
Fiscal year: 2005: 215; 
Fiscal year: 2006: 231. 

Primary issue code: Unpostable Payment; 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 66; 
Fiscal year: 2004: 114; 
Fiscal year: 2005: 131; 
Fiscal year: 2006: 213. 

Primary issue code: Tax Exempt/Government Entity (TE/GE) (Employment 
Plans/Exempt Organizations (EP/EO)) Technical; 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 147; 
Fiscal year: 2004: 215; 
Fiscal year: 2005: 195; 
Fiscal year: 2006: 211. 

Primary issue code: Formal Interest Abatement Request (F 843); 
Fiscal year: 2002: 18; 
Fiscal year: 2003: 209; 
Fiscal year: 2004: 275; 
Fiscal year: 2005: 235; 
Fiscal year: 2006: 209. 

Primary issue code: Seizure and Sale; 
Fiscal year: 2002: 115; 
Fiscal year: 2003: 128; 
Fiscal year: 2004: 127; 
Fiscal year: 2005: 163; 
Fiscal year: 2006: 197. 

Primary issue code: SS-4, Application for Employer Identification 
Number (EIN); 
Fiscal year: 2002: 3,170; 
Fiscal year: 2003: 685; 
Fiscal year: 2004: 188; 
Fiscal year: 2005: 148; 
Fiscal year: 2006: 192. 

Primary issue code: Forms / Publication Request; 
Fiscal year: 2002: 22; 
Fiscal year: 2003: 93; 
Fiscal year: 2004: 198; 
Fiscal year: 2005: 231; 
Fiscal year: 2006: 191. 

Primary issue code: Interest Calculation; 
Fiscal year: 2002: 8; 
Fiscal year: 2003: 86; 
Fiscal year: 2004: 177; 
Fiscal year: 2005: 203; 
Fiscal year: 2006: 185. 

Primary issue code: Invalid Social Security Number (SSN) (Primary / 
Secondary); 
Fiscal year: 2002: 321; 
Fiscal year: 2003: 241; 
Fiscal year: 2004: 173; 
Fiscal year: 2005: 159; 
Fiscal year: 2006: 177. 

Primary issue code: OIC - Doubt as to Liability; 
Fiscal year: 2002: 14; 
Fiscal year: 2003: 248; 
Fiscal year: 2004: 295; 
Fiscal year: 2005: 246; 
Fiscal year: 2006: 175. 

Primary issue code: Math Error ITIN; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 18; 
Fiscal year: 2005: 184; 
Fiscal year: 2006: 163. 

Primary issue code: FPLP Levy-Fed. Empl. Salaries; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 38; 
Fiscal year: 2005: 85; 
Fiscal year: 2006: 158. 

Primary issue code: Invalid Dependent SSN/Name; 
Fiscal year: 2002: 220; 
Fiscal year: 2003: 179; 
Fiscal year: 2004: 140; 
Fiscal year: 2005: 123; 
Fiscal year: 2006: 149. 

Primary issue code: Innocent Spouse Appeals; 
Fiscal year: 2002: 20; 
Fiscal year: 2003: 82; 
Fiscal year: 2004: 143; 
Fiscal year: 2005: 120; 
Fiscal year: 2006: 137. 

Primary issue code: FPLP Levy-Office of Personnel Management (OPM) 
Retirement Income; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 41; 
Fiscal year: 2005: 101; 
Fiscal year: 2006: 129. 

Primary issue code: Alien Taxation Problems/inquiries regarding 
determinations of alien status for income tax purposes; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 38; 
Fiscal year: 2004: 125; 
Fiscal year: 2005: 176; 
Fiscal year: 2006: 128. 

Primary issue code: Other Interest; 
Fiscal year: 2002: 1,603; 
Fiscal year: 2003: 522; 
Fiscal year: 2004: 89; 
Fiscal year: 2005: 84; 
Fiscal year: 2006: 106. 

Primary issue code: Guaranteed IA; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 28; 
Fiscal year: 2004: 40; 
Fiscal year: 2005: 75; 
Fiscal year: 2006: 100. 

Primary issue code: ITIN Refund Inquiry; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 14; 
Fiscal year: 2005: 87; 
Fiscal year: 2006: 90. 

Primary issue code: Tax Treaties; 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 30; 
Fiscal year: 2004: 79; 
Fiscal year: 2005: 76; 
Fiscal year: 2006: 85. 

Primary issue code: Non-Master File; 
Fiscal year: 2002: 8; 
Fiscal year: 2003: 103; 
Fiscal year: 2004: 185; 
Fiscal year: 2005: 136; 
Fiscal year: 2006: 78. 

Primary issue code: Exclusion of Foreign Earned Income Problems/ 
inquiries regarding the exclusion of income; 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 27; 
Fiscal year: 2004: 37; 
Fiscal year: 2005: 77; 
Fiscal year: 2006: 78. 

Primary issue code: SS-8 Determinations; 
Fiscal year: 2002: 132; 
Fiscal year: 2003: 118; 
Fiscal year: 2004: 86; 
Fiscal year: 2005: 88; 
Fiscal year: 2006: 77. 

Primary issue code: Restricted Interest; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 48; 
Fiscal year: 2004: 82; 
Fiscal year: 2005: 90; 
Fiscal year: 2006: 66. 

Primary issue code: Assessment Statute (Assessment Statute Expiration 
Date (ASED)); 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 26; 
Fiscal year: 2004: 41; 
Fiscal year: 2005: 40; 
Fiscal year: 2006: 63. 

Primary issue code: Invalid Spouse/Dependent ITIN; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 13; 
Fiscal year: 2005: 79; 
Fiscal year: 2006: 55. 

Primary issue code: Refunds; 
Fiscal year: 2002: 17; 
Fiscal year: 2003: 1,194; 
Fiscal year: 2004: 372; 
Fiscal year: 2005: 97; 
Fiscal year: 2006: 53. 

Primary issue code: Collection Appeals Program (CAP) Appeals; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 17; 
Fiscal year: 2004: 27; 
Fiscal year: 2005: 35; 
Fiscal year: 2006: 53. 

Primary issue code: FPLP Levy-Federal Contractor/Vendor Payments; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 11; 
Fiscal year: 2005: 38; 
Fiscal year: 2006: 51. 

Primary issue code: Foreign Tax Credit; 
Fiscal year: 2002: 1; 
Fiscal year: 2003: 25; 
Fiscal year: 2004: 31; 
Fiscal year: 2005: 30; 
Fiscal year: 2006: 51. 

Primary issue code: Examination; 
Fiscal year: 2002: 21; 
Fiscal year: 2003: 672; 
Fiscal year: 2004: 296; 
Fiscal year: 2005: 84; 
Fiscal year: 2006: 47. 

Primary issue code: Collection; 
Fiscal year: 2002: 11; 
Fiscal year: 2003: 344; 
Fiscal year: 2004: 200; 
Fiscal year: 2005: 72; 
Fiscal year: 2006: 43. 

Primary issue code: EITC Certification (Filing Status); 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 2; 
Fiscal year: 2004: 660; 
Fiscal year: 2005: 244; 
Fiscal year: 2006: 40. 

Primary issue code: Credit Interest; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 29; 
Fiscal year: 2004: 39; 
Fiscal year: 2005: 40; 
Fiscal year: 2006: 36. 

Primary issue code: Technical/Procedural/Statute; 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 179; 
Fiscal year: 2004: 89; 
Fiscal year: 2005: 58; 
Fiscal year: 2006: 33. 

Primary issue code: Document Processing; 
Fiscal year: 2002: 10; 
Fiscal year: 2003: 433; 
Fiscal year: 2004: 153; 
Fiscal year: 2005: 50; 
Fiscal year: 2006: 33. 

Primary issue code: Payments/Credits; 
Fiscal year: 2002: 12; 
Fiscal year: 2003: 423; 
Fiscal year: 2004: 217; 
Fiscal year: 2005: 53; 
Fiscal year: 2006: 30. 

Primary issue code: Penalty; 
Fiscal year: 2002: 5; 
Fiscal year: 2003: 355; 
Fiscal year: 2004: 138; 
Fiscal year: 2005: 39; 
Fiscal year: 2006: 29. 

Primary issue code: Disaster Relief Claim; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 6; 
Fiscal year: 2004: 5; 
Fiscal year: 2005: 15; 
Fiscal year: 2006: 28. 

Primary issue code: Appeals/Other; 
Fiscal year: 2002: 10; 
Fiscal year: 2003: 120; 
Fiscal year: 2004: 88; 
Fiscal year: 2005: 24; 
Fiscal year: 2006: 15. 

Primary issue code: Lockbox; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: 25; 
Fiscal year: 2004: 14; 
Fiscal year: 2005: 8; 
Fiscal year: 2006: 10. 

Primary issue code: Entity; 
Fiscal year: 2002: 3; 
Fiscal year: 2003: 94; 
Fiscal year: 2004: 52; 
Fiscal year: 2005: 24; 
Fiscal year: 2006: 9. 

Primary issue code: EITC Certification (Automated Underreporter); 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 4; 
Fiscal year: 2005: 3; 
Fiscal year: 2006: 6. 

Primary issue code: Interest; 
Fiscal year: 2002: 2; 
Fiscal year: 2003: 56; 
Fiscal year: 2004: 19; 
Fiscal year: 2005: 5; 
Fiscal year: 2006: 3. 

Primary issue code: FPLP Levy-Federal Employment Travel and 
Reimbursement Payments; 
Fiscal year: 2002: [Empty]; 
Fiscal year: 2003: [Empty]; 
Fiscal year: 2004: 1; 
Fiscal year: 2005: 1; 
Fiscal year: 2006: 2. 

Primary issue code: Total; 
Fiscal year: 2002: 229,135; 
Fiscal year: 2003: 196,169; 
Fiscal year: 2004: 170,129; 
Fiscal year: 2005: 198,789; 
Fiscal year: 2006: 243,810. 

Source: GAO analysis of TAS data. 

[End of table] 

[End of section] 

Appendix VII: Types of Taxpayer Advocate Service (TAS) Cases That 
Increased by More than 1,000 in Fiscal Years 2005 and 2006: 

Table 9: Types of TAS Cases That Increased by More than 1,000 Cases in 
Fiscal Year 2005: 

Criminal Investigation; 
Fiscal year 2004: 16,554; 
Fiscal year 2005: 28,228; 
Change: 11,674. 

Processing Amended Return; 
Fiscal year 2004: 11,211; 
Fiscal year 2005: 12,214; 
Change: 1,003. 

Closed Under Reporter Program (URP); 
Fiscal year 2004: 4,624; 
Fiscal year 2005: 6,196; 
Change: 1,572. 

Lien; 
Fiscal year 2004: 4,196; 
Fiscal year 2005: 5,346; 
Change: 1,150. 

Earned Income Tax Credit (EITC) Reconsideration; 
Fiscal year 2004: 867; 
Fiscal year 2005: 3,628; 
Change: 2,761. 

Levy; 
Fiscal year 2004: 8,769; 
Fiscal year 2005: 11,136; 
Change: 2,367. 

Copies of Returns / Transcripts / Reports / Freedom of Information Act; 
Fiscal year 2004: 4,058; 
Fiscal year 2005: 5,696; 
Change: 1,638. 

All Other[A]; 
Fiscal year 2004: 119,850; 
Fiscal year 2005: 126,345; 
Change: 6,495. 

Source: GAO analysis of TAS data. 

[A] "Other" consists of the remaining 114 issue codes that TAS tracks. 
The number of cases in each of these codes either increased by fewer 
than 1,000 cases or decreased. 

[End of table] 

Table 10: Types of TAS Cases That Increased by More than 1,000 Cases in 
Fiscal Year 2006: 

Levy; 
Fiscal year 2005: 11,136; 
Fiscal year 2006: 18,800; 
Change: 7,664. 

Processing Original Return; 
Fiscal year 2005: 8,966; 
Fiscal year 2006: 10,417; 
Change: 1,451. 

Open Audit (Non Remittance Processing System, EITC); 
Fiscal year 2005: 5,343; 
Fiscal year 2006: 6,969; 
Change: 1,626. 

Processing Amended Return; 
Fiscal year 2005: 12,214; 
Fiscal year 2006: 17,195; 
Change: 4,981. 

Closed URP; 
Fiscal year 2005: 6,196;  
Fiscal year 2006: 7,741; 
Change: 1,545. 

Reconsideration/Substitute for Return/6020B/Audit; 
Fiscal year 2005: 8,028; 
Fiscal year 2006: 10,075; 
Change: 2,047. 

Other Refund Inquiries / Issues; 
Fiscal year 2005: 3,397; 
Fiscal year 2006: 4,510; 
Change: 1,113. 

Taxpayer Delinquent Return (TDI) - Substitute for Return (SFR) / 6020B; 
Fiscal year 2005: 2,184; 
Fiscal year 2006: 5,102; 
Change: 2,918. 

Installment Agreement - Other; 
Fiscal year 2005: 2,331; 
Fiscal year 2006: 3,365; 
Change: 1,034. 

Stolen Identity; 
Fiscal year 2005: 1,185; 
Fiscal year 2006: 2,514; 
Change: 1,329. 

Combined Annual Wage Reporting/Federal Unemployment Taxes; 
Fiscal year 2005: 2,684; 
Fiscal year 2006: 4,244; 
Change: 1,560. 

Open URP; 
Fiscal year 2005: 2,887; 
Fiscal year 2006: 4,750; 
Change: 1,863. 

IRS Offset; 
Fiscal year 2005: 2,741; 
Fiscal year 2006: 3,783; 
Change: 1,042. 

Other Document Processing Issues; 
Fiscal year 2005: 3,050; 
Fiscal year 2006: 5,631; 
Change: 2,581. 

Injured Spouse Claim; 
Fiscal year 2005: 6,389; 
Fiscal year 2006: 11,610; 
Change: 5,221. 

Expedite Refund Request; 
Fiscal year 2005: 6,743; 
Fiscal year 2006: 10,045; 
Change: 3,302. 

All Other; 
Fiscal year 2005: 113,315; 
Fiscal year 2006: 117,059; 
Change: 3,744. 

Source: GAO analysis of TAS data. 

[A] "Other" consists of the remaining 114 issue codes that TAS tracks. 
These codes either increased by fewer than 1,000 cases or decreased. 

[End of table] 

[End of section] 

Appendix VIII: Taxpayer Advocate Service Customer Satisfaction Survey 
Results: 

Table 11: Summary of Taxpayer Advocate Service (TAS) Customer 
Satisfaction Scores: Fiscal Year 2005: 

The TAS employee... 

Survey question: gave you a way to directly contact them; 
Fiscal year 2005: 95 percent. 

Survey question: informed you of actions they were planning to take; 
Fiscal year 2005: 91 percent. 

Survey question: offered you an apology; 
Fiscal year 2005: 70 percent. 

Survey question: listened to your concerns; 
Fiscal year 2005: 4.47. 

Survey question: gave you an adequate opportunity to explain your 
problem; 
Fiscal year 2005: 4.47. 

Survey question: gave you a chance to present additional documents or 
information; 
Fiscal year 2005: 4.35. 

Survey question: treated you with courtesy; 
Fiscal year 2005: 4.58. 

Survey question: did their best to solve your problem; 
Fiscal year 2005: 4.33. 

Survey question: was knowledgeable about your problem; 
Fiscal year 2005: 4.27. 

Survey question: kept you informed about progress in resolving your 
problem; 
Fiscal year 2005: 4.29. 

Survey question: had a positive attitude; 
Fiscal year 2005: 4.48. 

Survey question: understood all the issues and requests that you 
presented; 
Fiscal year 2005: 4.30. 

The TAS process... 

Survey question: it was easy to reach the person helping you; 
Fiscal year 2005: 4.25. 

Survey question: written correspondence was easy to understand; 
Fiscal year 2005: 4.33. 

Survey question: you feel your problem was handled in a reasonable 
timeframe; 
Fiscal year 2005: 4.11. 

Survey question: you were treated fairly by TAS; 
Fiscal year 2005: 4.38. 

Survey question: overall satisfaction (unweighted); 
Fiscal year 2005: 4.39. 

Survey question: as a result of your TAS experience, your opinion of 
the Internal Revenue Service; 
Fiscal year 2005: 3.63. 

Source: TAS. 

Note: The responses to the first three TAS employee questions 
represented the percentage of respondents who answered "yes." The 
responses to the remaining TAS employee questions and the first four 
TAS process questions were based on a rating of 1-5, with 5 
representing "strongly agree." The response to the fifth TAS process 
question was based on a rating of 1-5, with 5 representing "very 
satisfied." The response to the last TAS process question was based on 
a scale of 1-5, with 5 representing "much more positive," 4 
representing "a little more positive," and 3 representing "about the 
same." 

[End of table] 

[End of section] 

Appendix IX: Comments from the National Taxpayer Advocate: 

National Taxpayer Advocate: 

February 12, 2006: 

Mr. James R. White: 
Director, Tax Issues: 
U.S. Government Accountability Office: 
141 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. White: 

I have reviewed the draft Government Accountability Office (GAO) report 
titled 'Taxpayer Advocate Service: Caseload Has Grown and Taxpayers 
Report Being Satisfied, but Additional Measures of Efficiency and 
Effectiveness Are Needed" (GAO-07-156). We agree with the 
recommendations contained in the report and have enclosed detailed 
comments. 

We appreciate both the helpful suggestions you have made to improve 
Taxpayer Advocate Service (TAS) measures of efficiency and 
effectiveness and your finding that taxpayers who obtained assistance 
from TAS report being satisfied. We believe that TAS has made 
remarkable progress since it was established as a new organization in 
the IRS Restructuring and Reform Act of 1998. 

As your report notes, the two main functions in TAS are "case advocacy" 
and "systemic advocacy." Approximately 90 percent of TAS's operating 
funds in FY 2006 were spent on case advocacy. By statute, TAS is 
required to maintain at least one office in each state, and TAS 
maintains multiple offices in the largest states and in co-location 
with each IRS campus. Since FY 2001, TAS's first full year of 
existence, the results of TAS's case advocacy quality measure have 
improved from 71.6 in FY 2001 to 89.7 in FY 2006 (on a scale of 0-100). 
At the same time, we have managed to reduce cycle time (median cycle 
time on TAS cases was 45 days in FY 2006), and satisfy the taxpayers 
whom we serve (on a scale of 0-5, taxpayers reported an average 
satisfaction level of 4.34 in FY 2006). In 70 percent of the cases TAS 
closed in FY 2006, we were able to obtain relief for the taxpayer. 

I am particularly pleased that TAS has managed to maintain its high 
levels of TAS case quality and timeliness in the face of a 43 percent 
increase in TAS cases over the past staffing of seven percent.Footnote 
37] The increase in cases combined with the reduction in staffing means 
that the average workload of each TAS case advocate has increased by 
about 50 percent. 

Because cases generally come to TAS only when taxpayers have 
encountered problems trying to resolve their problems directly with 
other IRS functions, it is essential to sound tax administration that 
these taxpayers be properly treated on the second attempt. While we 
have managed to handle our increasing inventory to date, I am concerned 
that our effectiveness in meeting the needs of the taxpaying public 
will decline if the gap between the number of cases we receive and the 
staffing we have available to work those cases widens much further. 

The other major TAS function is systemic advocacy. While systemic 
advocacy accounts for a small percentage of TAS's budget, TAS's 
systemic advocacy efforts, including the National Taxpayer Advocate's 
Annual Reports to Congress, play an important role in resolving 
recurring problems in tax administration. Within the IRS, we work to 
improve administrative policies and procedures. For example, we 
participate on numerous cross-functional teams designed to improve the 
administration of the earned income tax credit (EITC); we are key 
participants in developing the Taxpayer Assistance Blueprint (TAB) 
initiative, pursuant to a congressional directive; we worked with the 
IRS extensively over the past year to incorporate taxpayer protections 
in its refund fraud prevention program; and we have participated and 
continue to participate on teams working to implement the private debt 
collection initiative. While I have expressed concerns about the 
private debt collection initiative in concept, I am able to say that 
the IRS team charged with implementing the initiative has taken our 
concerns seriously and done its level best to ensure that taxpayer 
rights are protected to the maximum extent possible. 

In our reports to Congress, we call attention to lingering or pervasive 
problems that have not been resolved, and we make recommendations for 
legislative action. For example, we have recommended that Congress 
adopt a uniform definition of a qualifying child, regulate unenrolled 
Federal income tax preparers, develop a direct filing portal so that 
taxpayers can file their returns directly with the IRS, require brokers 
and mutual fund companies to track and report the cost basis of their 
customer's holdings on a Form 1099 upon sale, and made numerous other 
proposals designed to address the tax gap. As a result of our advocacy 
efforts, the Office of the Taxpayer Advocate is receiving increasing 
numbers of requests for comments and suggestions from Members of 
Congress and their staffs on a wide variety of tax administration 
issues, and the National Taxpayer Advocate has personally been invited 
to testify at 10 congressional hearings since the beginning of FY 2006. 

Thus, while we welcome your suggestions to improve our measures, I want 
to emphasize that we believe TAS is serving taxpayers well. 

I appreciate your support and the valuable assistance and guidance your 
staff has provided. If you have any questions or if you would like to 
discuss this report in more detail, please contact me at (202) 622- 
6100. 

Sincerely, 

Signed by:  

Enclosure: 

Nina E. Olson: 
National Taxpayer Advocate: 

Enclosure: 

Recommendation One: 

"[I]mprove TAS case advocacy performance measures with the addition of 
a true measure of efficiency that incorporates case complexity and 
quality and a cost measure." 

Response: 

TAS agrees with this recommendation. The required inputs would be time, 
complexity and quality measures per case. TAS already has quality 
measures, as described in the GAO report. With regard to time, TAS 
began in FY 2005 to study and develop a timekeeping system that will 
allow management to quantify the staff costs associated with TAS cases. 
Phase I of this system is complete, and formal implementation is 
scheduled to begin in March 2007. In this phase, a timer application 
within the Taxpayer Advocate Management Information System (TAMIS) will 
track the amount of time a TAS employee spends on a case while the case 
is open on TAMIS. 

TAS has submitted a work request for Phase II of this system to IRS's 
Modernization & Information Technology Services (MITS). We expect Phase 
II to be developed and operational by the end of Calendar Year 2007. 
Phase II will include a graphical front-end screen to enable users to 
capture time spent on cases when TAMIS is not used (e.g., research, 
telephone calls, etc.), allowing users to enter and edit their own 
time. 

With regard to complexity, a task force has completed a study that 
identified 22 case complexity factors. TAS has submitted a work request 
that will allow TAS to identify the degree of complexity of each case 
via the TAMIS system. We expect a response from MITS by the end of 
February 2007, at which time an operational date will be established. 

Once time tracking is in place, fiscal data, quality results, and case 
complexity can be incorporated into a computation that measures overall 
efficiency. 

Recommendation Two: 

"[S]upplement the detailed information on specific systemic advocacy 
issues currently being developed with a broad measure of the 
effectiveness of systemic advocacy." 

Response: 

TAS recognizes the value of a broad measure of the effectiveness of its 
systemic advocacy function and is actively working to develop an 
appropriate measure. It is important to note, however, that there will 
be shortcomings in any measure of systemic advocacy effectiveness. For 
example, one measure might be to track of the percentage of TAS's 
systemic recommendations that are implemented within a specified period 
of time by the IRS or by Congress. But TAS does not exercise direct 
control over the outcome, and such a measure is subject to numerous 
variables. 

For example, the National Taxpayer Advocate has strongly advocated for 
repeal of the alternative minimum tax (AMT) for individuals since 2001. 
She has made recommendations in her reports to Congress, she testified 
at a congressional hearing on the AMT and before the President's 
Advisory Panel on Federal Tax Reform, and she has been cited widely by 
Members of Congress in floor statements in support of repeal. Even so, 
complaints about the AMT are widespread and would be made even if the 
National Taxpayer Advocate had not made a recommendation. It does not 
seem reasonable for TAS to claim credit if the AMT is repealed, nor 
does it seem reasonable to count it against TAS if the AMT is not 
repealed. 

Administratively, TAS has made many ambitious and forward-thinking 
recommendations. If TAS adopts a measure that looks simply at the 
percentage of recommendations the IRS implements, an incentive will 
arise for TAS to limit its recommendations to more scaled-down 
proposals it believes the IRS quickly will accept. To avoid an 
incentive to "dumb down" our recommendations, we are trying to 
formulate a measure that may also include a component measuring the 
extent to which TAS advocates forcefully for its recommendations, 
whether or not they are ultimately adopted. Undoubtedly, such a measure 
would have its own shortcomings. 

TAS recognizes that other organizations, including GAO and the Treasury 
Inspector General for Tax Administration, face similar challenges. 
Because TAS is placed in the delicate position of being internal to the 
IRS yet granted independent reporting responsibilities, we think TAS 
faces a special challenge in ensuring that any measures it develops do 
not cause TAS to "go easy" on the IRS and therefore call into question 
whether its recommendations are truly independent. As noted above, 
however, we do recognize the value of a broad measure, and we will work 
to develop one. 

We also note that TAS's Office of Systemic Advocacy has already 
implemented process measures that monitor the timeliness and accuracy 
of project closure as well as responsiveness to issues that require 
immediate interventions. During the current fiscal year, TAS will 
develop and establish baselines for internal customer and outside 
stakeholder satisfaction measures. 

Recommendation Three: 

"[I]mprove TAS reporting by (1) describing actions taken in response to 
TAS legislative recommendations, (2) describing actions taken by IRS to 
address the most serious problems encountered by taxpayers, and (3) 
making it clear that the most serious problems included in the annual 
report to Congress are at least 20 of the most serious problems but not 
necessarily all of the top problems faced by taxpayers." 

Response: 

1. TAS is implementing an enhanced process to monitor actions taken in 
response to TAS legislative recommendations. The outcomes will be 
included in the Annual Report to Congress and will be posted on the TAS 
website. 

2. TAS has already initiated a process to monitor the IRS's actions in 
response to the most serious problems identified in the National 
Taxpayer Advocate's Annual Reports to Congress. Team leads and 
technical liaisons will work with IRS contacts to assess progress and 
will report outcomes on a regular basis. TAS's Office of Systemic 
Advocacy will post the status of recommendations semi-annually on the 
TAS website. Recommendations related to Annual Reports in both 2004 and 
2005 have been posted on the TAS website, and we will consider whether 
to make additional refinements. In addition, the National Taxpayer 
Advocate will continue to highlight linkages to prior annual report 
recommendations as she identifies continuing most serious problems in 
the future. 

3. In the introduction to "The Most Serious Problems Encountered by 
Taxpayers" section of the 2006 Annual Report to Congress, the National 
Taxpayer Advocate clarified that the most serious problems included in 
the Annual Report to Congress constitute at least 20 of the most 
serious problems but not necessarily all of the most serious problems 
faced by taxpayers. She also discussed the methodology used in the 
selection of the most serious problems, which includes a comprehensive 
analysis of problems surfacing in various TAS systems such as TAMIS and 
SAMS, stakeholder input, and the current status of problems identified 
in previous annual reports. 

[End of section] 

(450446) 

FOOTNOTES 

[1] TAS's fiscal year 2006 budget included $8 million for Low Income 
Taxpayer Clinic grants. 

[2] To conduct our analyses, we associated cases with the fiscal year 
in which they were opened. Also, for cases that TAS closed and 
subsequently reopened, all of our analyses relate to the original case. 

[3] GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing 
Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 
2002). 

[4] 26 U.S.C. 7803(c). 

[5] Pub. L. No. 105-206 (July 22, 1998). Service as an officer or 
employee of the Advocate's Office is not taken into account for 
purposes of the 2-year and 5-year rules. 

[6] Section 9503, added to Title 5 by the Restructuring Act, provides 
that the Secretary of the Treasury may, for a period of 10 years after 
the date of enactment of the section, fix the compensation of and 
appoint individuals to designated critical administrative, technical, 
and professional positions needed to carry out the functions of the 
Internal Revenue Service, if certain criteria are met. Specifically, 
the relevant positions must require expertise of an extremely high 
level in an administrative, technical, or professional field. The 
positions must also be critical to the Internal Revenue Service's 
successful accomplishment of an important mission. 

[7] The terms of appointments made under section 9503 are limited to no 
more than 4 years. However, since the National Taxpayer Advocate was 
appointed under IRC Section 7803, which simply allows the compensation 
to be fixed under the streamlined critical pay authority of section 
9503, IRS determined that the term limit does not apply. 

[8] IRC § 7811 authorizes the Advocate to issue a TAO when a taxpayer 
is suffering or about to suffer a significant hardship as a result of 
IRS's administration of the tax laws. Any TAO issued by the Advocate 
may be modified or rescinded by the Advocate, the Commissioner of 
Internal Revenue, or the Deputy Commissioner of Internal Revenue if a 
written explanation of the reasons for the modification or rescission 
is provided to the Advocate. 

[9] See app. III for a list of what must be included in the annual 
report. 

[10] In fiscal year 2006, Congress directed IRS to provide a specified 
minimum level of funding for TAS. House and Senate versions of the 
fiscal year 2007 appropriations bills continue this practice. 

[11] TAS serves as a conduit for channeling grants to LITC recipients. 
In fiscal year 2006, the amount of the grants was $8 million. TAS was 
responsible for paying the expenses of administering the LITC Grant 
Program out of its operating funds. 

[12] According to the National Taxpayer Advocate 2005 Annual Report to 
Congress, the vast majority of TAS's CI cases related to Questionable 
Refund Program (QRP) freezes. The QRP is a nationwide multifunctional 
program established in January 1977. The purpose of this program is to 
detect fraudulent returns and stop the payment of false refunds claimed 
on income tax returns. If CI does not validate the taxpayer's 
entitlement to a refund, it may "freeze" the refund until IRS assures 
itself there is no fraud. 

[13] We did not test for statistical correlation, rather we looked for 
positive associations between IRS enforcement activity and related TAS 
cases. 

[14] We did not compare the increase in TAS's fiscal year 2006 caseload 
to fiscal year 2006 IRS enforcement activities because fiscal year 2006 
IRS data were not yet available. 

[15] Under the Internal Revenue Code, "levy" is defined as the seizure 
of a taxpayer's assets to satisfy a tax delinquency. IRS differentiates 
between the levy of assets in the possession of the taxpayer (referred 
to as a "seizure") and the levy of assets, such as bank accounts and 
wages, which are in the possession of third parties, such as banks or 
employers (referred to as a "levy"). 

[16] A lien is a legal claim, filed in accordance with state property 
law, that attaches to property to secure payment of a debt. The effect 
of a lien may not be felt until the taxpayer sells the property or 
tries to obtain credit. 

[17] See fig. 1 for a list of TAS's current case acceptance criteria. 

[18] IRS officials told us that IRS has taken steps to reduce the error 
rate for referrals to TAS from IRS campuses. 

[19] Treasury Inspector General for Tax Administration, The National 
Taxpayer Advocate Has Improved the Quality of Casework, but Continued 
Vigilance is Needed to Increase Compliance with the Quality Standards, 
Reference No. 2003-10-074 (Washington, D.C.: Mar. 10, 2003) and The 
Taxpayer Advocate Service Needs to Improve Case Management to Ensure 
Taxpayer Problems Are Resolved Timely, Reference No. 2004-10-166 
(Washington, D.C.: Sept. 29, 2004). 

[20] See fig. 1 in Background section for a list of the case criteria. 

[21] In previous work, we identified the eight attributes listed in 
table 6 as elements of successful measures. (See GAO-03-143). 

[22] While productivity and efficiency are often used interchangeably 
and are closely related, they are not always synonymous. Productivity 
is a descriptive term defining what is actually produced relative to 
the inputs used. Efficiency sometimes is a normative term evaluating 
productivity in relation to the maximum amount of output that could be 
produced with a given level of input. For consistency, throughout this 
report we will use efficiency to represent both concepts in discussing 
TAS's efficiency measure. 

[23] GAO, Tax Administration: Planning for IRS's Enforcement Process 
Changes Included Many Key Steps but Can Be Improved, GAO-04-287 
(Washington, D.C.: Jan. 20, 2004). 

[24] TAS issued OARs on about 46 percent of cases in fiscal year 2006. 
Some cases involved more than one OAR, for a total of about 169,000 
OARs. 

[25] TAS data do not indicate the reason for incorrectly routed OARs. 
An OAR could be misrouted because of a TAS mistake, or because a 
procedural or organizational change at IRS was not adequately 
communicated to TAS. 

[26] Treasury Inspector General for Tax Administration, Taxpayer 
Advocate Service Employees Made Adjustments to Taxpayer Accounts 
Without Proper Authorization, Reference No. 2002-10-079 (Washington, 
D.C.: Mar. 28, 2002). 

[27] IRS Oversight Board, Oversight of the Office of Taxpayer Advocate: 
Principal Findings and Actions, (September 2002); Treasury Inspector 
General for Tax Administration, Opportunities to Improve the 
Effectiveness of Internal Revenue Service Advocacy Efforts, Reference 
No. 199910061 (Washington, D.C.: Sept. 27, 1999)--this report addressed 
the PRP, which was the predecessor to TAS; GAO, IRS Management: IRS 
Faces Challenges as it Restructures the Office of the Taxpayer 
Advocate, GAO/GGD-99-124 (Washington, D.C.: July 15, 1999). 

[28] GAO, Tax Administration: IRS Needs to Further Refine Its Tax 
Filing Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 
22, 2002). 

[29] Treasury Inspector General for Tax Administration, The Taxpayer 
Advocate Service Needs to Improve Case Management to Ensure Taxpayer 
Problems Are Resolved Timely, Reference Number 2004-10-166 (Washington, 
D.C.: Sept. 29, 2004). 

[30] GAO, IRS Management: IRS Faces Challenges as it Restructures the 
Office of the Taxpayer Advocate, GAO/GGD-99-124 (Washington, D.C.: July 
15, 1999). 

[31] Treasury Inspector General for Tax Administration, Opportunities 
to Improve the Effectiveness of Internal Revenue Service Advocacy 
Efforts, Reference Number 1999-10-061 (Washington, D.C.: Sept. 27, 
1999). 

[32] GAO/GGD-99-124. 

[33] Treasury Inspector General for Tax Administration, The National 
Taxpayer Advocate Could Enhance the Management of Systemic Advocacy 
Resources, Reference Number 2003-10-187 (Washington D.C.: Sept. 30, 
2003). 

[34] 26 U.S.C. 7803(c)(2)(B). 

[35] TAMIS and SAMS are the information systems TAS uses to track case 
and systemic advocacy activities, respectively. 

[36] Under section 7526 of the Internal Revenue Code, no more than $6 
million per year can be allocated for grants unless otherwise provided 
for by a specific appropriation. The Department of the Treasury's 2006 
Appropriations Act, Pub. L. No. 109-115, specifically provided $8 
million for LITC grants. 

[37] Due to differences in the time of measurement and methodology, 
annual case receipts reported in the GAO report differ slightly from 
official TAS case totals. However, the totals differ by less than one 
percent, and both sets of numbers show a 43 percent increase in TAS 
cases over the past two years. 

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