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Part 4. Examining Process

Chapter 75. Exempt Organizations Examination Procedures

Section 26. Tax Exempt Quality Measurement System (TEQMS)

4.75.26  Tax Exempt Quality Measurement System (TEQMS)

4.75.26.1  (01-01-2003)
Introduction to TEQMS

  1. This IRM describes the Tax Exempt Quality Measurement System (TEQMS) for management and employees in the Tax Exempt and Government Entities (TEGE) Division, Exempt Organizations Examinations.

  2. TEQMS is a system designed to measure the quality of exempt organization examination cases as part of IRS Balanced Measures. TEQMS is a measure of the quality of examinations included under " business results." TEQMS is a tool for providing information for management to utilize to identify current quality achievements and identification of improvement opportunities.

  3. TEQMS is designed to achieve assess organizational performance with statistical accuracy at the national and area levels.

4.75.26.2  (01-01-2003)
Background

  1. The incentive for developing new quality standards was initiated by the enactment of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) and the Service's increased awareness of the need to focus on customer service and satisfaction.

4.75.26.3  (01-01-2003)
TEQMS and Balanced Measures

  1. Balanced Measures is one of the five levers of change (balanced measures, revamped business practices, four operating divisions, management roles with clear responsibility, and new technology).

  2. Balanced Measures, is a three part concept. The three concepts are:

    • Customer Satisfaction

    • Employee Satisfaction

    • Business Results

  3. The Business Results concept includes a Balanced Performance Measurement System. The Balanced Performance Measurement System requires that organizational case quality and quantity be numerically scored. Organizational measures serve as an indicator of the progress the Service is making in achieving high-level strategic goals.

  4. TEQMS is the mechanism used to measure case quality. Cases selected for TEQMS are reviewed and rated by an EO Examination Special Reviewer.

  5. EO examination cases are rated for eight quality standards. A standard can be rated either "Yes" or "No." The desired answer to all questions is " Yes."

    Note:

    For a detailed discussion of the quality standards for EO examination cases refer to the TEQMS, Tax Exempt Quality Measurement System, EO Examinations Student Guide, IRS catalog number 86727A.

  6. The results of each TEQMS case review are entered in a TEQMS database. The TEQMS database computes the organizational score for case quality based on the reviewers' "Yes" or "No " ratings.

    Note:

    Each quality standard is weighted equally.

  7. The organizational score for all EO Examinations is calculated as follows:

    Total Number of Standards Passed = Organizational Score
    Total Number of Standards Rated

    Example:

    During the fiscal year, 1,000 EO Examination cases are sampled for TEQMS. The quality input form for EO Examinations contains eight quality standards. Therefore the total number of standards rated equals 8,000 (1000 x 8). Of the 8,000 standards rated, only 6,500 standards are passed. (i.e. answered "Yes " ). The organizational score would be calculated as:

    6,500 Total Number of Standards Passed = 81% Organizational Score
    8,000 Total Number of Standards Rated

4.75.26.4  (01-01-2003)
TEQMS Case Selection Process

  1. TEQMS cases are selected by statistical sample. The population is based on the number of cases closed. The sample size for each category will vary each fiscal year as the population changes with the work plan. The Systems Administrator will make any adjustment(s) to the sample rate. The population consists of all cases, including Mandatory Review cases, that contain a Form 990, 990-PF, 990-EZ, or 1120-POL. Team Examination Program (TEP) cases, surveyed cases and tax-exempt bond cases are not part of the population. All returns of a taxpayer (related returns and prior/subsequent year returns) will be counted as one unit for sample population purposes.

4.75.26.5  (01-01-2003)
Review Process

  1. Employees in EO Examinations Special Review are charged with reviewing examination cases and reporting the results of these reviews. These reviews:

    1. Provide feedback to management,

    2. Serve as a tool to help identify improvement opportunities in case quality,

    3. Improve customer service satisfaction by identifying common examination procedures needing improvement and/or by helping reduce taxpayer burden,

    4. Identify possible training and Continuing Professional Education (CPE) needs, and

    5. Increase consistency in examinations.

  2. Reviewers prepare an electronic checksheet identifying each specific quality element or standard and recording the data (Was the standard met? "Yes" or "No" ) for the particular examination. The information from each examination is transmitted to a national database and quarterly reports and analysis are prepared.

4.75.26.6  (01-01-2003)
Quality Results

  1. Quality results are reported in a number of high level documents. Examples include the following:

    • IRS Congressional Justification of TEGE Strategy and Program Plan

    • TEGE Business Performance Review Process

    • IRS Annual Performance Plan

    • Commissioner's Monthly Report

    • IRS Management Board Report

    • Executive Management Support System

4.75.26.7  (01-01-2003)
TEQMS Reports

  1. The data uploaded to the TEQMS database for EO examinations is summarized in the form of various reports that are generated each quarter. These reports provide an indicator of the extent to which completed work meets quality standards. The reports:

    1. Provide measures of overall performance on standards but do not provide evaluative information for individual employees,

    2. Reflect the percentage of "Yes" answers for each standard as well as the organizational score, and

    3. Provide a list of the narrative comments entered on the checksheets explaining the "Yes" and " No" answers.

4.75.26.8  (01-01-2003)
Report Analysis

  1. The database generated reports are analyzed and trend reports are prepared. The trend reports discuss:

    1. The overall trend in the quality of cases (increased or decreased),

    2. The trend for each standard (improved or diminished scores),

    3. The specific goals for the period (met or not met), and

    4. Suggestions for improvement.

4.75.26.9  (01-01-2003)
Tools To Ensure Data Reliability

  1. Consistency reviews are utilized to encourage greater consistency between reviewers in applying TEQMS standards to cases. A consistency review is made by having all EO Special Reviewers independently review the same TEQMS case and prepare a checksheet.

  2. The Manager, EO Special Review is responsible for

    1. Scheduling consistency reviews on a regular basis,

    2. Selecting the TEQMS cases for the consistency reviews,

    3. Analyzing the results of the consistency reviews

    4. Providing appropriate training and/or improved procedures to address any areas of inconsistency, and

    5. Retaining records to document the results of the consistency reviews.

4.75.26.10  (01-01-2003)
Case Return Criteria

  1. Generally TEQMS cases are not returned to the group for further development.

  2. Cases will be returned to the group per IRM 7.75.19 when any of the following conditions exist:

    1. There is clear evidence that an incorrect determination has been reached with regard to the exemption of an organization, i.e., an underdeveloped case will not be returned unless it is evident in the case file that the organization is not qualified for exemption.

    2. There is a "clearly defined substantial " error based on an established Service position existing at the time of the examination.

      Note:

      " Clearly defined" means the error is clearly apparent as opposed to being vague or uncertain. "Substantial" refers to the dollar amount of the tax. Any proposed tax change should involve net additional tax of $10,000 to be considered "substantial."

    3. There is evidence of fraud, malfeasance, collusion, concealment or misrepresentation by the taxpayer or representative.

    4. The case cannot be processed due to administrative or procedural errors.

    5. The adjustment is favorable to the taxpayer and the report cannot be readily corrected by Special Review Staff.

    6. Other circumstances exist that indicate failure to return the case would be a serious administrative omission.

    7. Mandatory review cases will be returned for correction following current procedures.


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