The Taxpayer Advocate Service Needs to Improve Case
Management to Ensure Taxpayer Problems Are Resolved Timely
September 2004
Reference Number: 2004-10-166
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
September
29, 2004
MEMORANDUM FOR
NATIONAL TAXPAYER ADVOCATE
FROM: Gordon C. Milbourn III /s/ Gordon C.
Milbourn III
Acting Deputy Inspector
General for Audit
SUBJECT: Final Audit Report - The Taxpayer Advocate Service Needs to Improve Case
Management to Ensure Taxpayer Problems Are Resolved Timely (Audit # 200310039)
This
report presents the results of our review of the Taxpayer Advocate Service’s
(TAS) case processing function. The
overall objective of this review was to evaluate the efficiency and timeliness
of the TAS in resolving taxpayers’ problems.
This audit was conducted as part of our Fiscal Year (FY) 2004 Annual
Audit Plan.
In
summary, the time it takes the TAS to resolve taxpayers’ problems has increased
significantly over the past 5 years, from an average of 37 days in FY 1998 to
76 days in FY 2003. This increase is not
due to a decrease in staff or a heavier workload. Staffing for the TAS has remained fairly
constant since FY 2000. Moreover, new
case receipts and closures have decreased approximately 41 percent since FY
1998. The National Taxpayer Advocate (NTA)
stated that part of the increase in case resolution time resulted from changes
in the TAS organizational structure and its authorities in FY 2000. The NTA also believes the TAS now works a
higher percentage of cases involving complex issues. However, the NTA was not able to provide enough
data or other evidence for us to verify these as causes for increased case
resolution time.
Based
on our review, we believe a significant portion of the increase in time needed
to resolve taxpayers’ problems was due to inefficient case management on the
part of TAS employees (called case advocates) and inadequate management oversight by the TAS. We reviewed a statistical sample of 500 of
the 203,634 TAS cases closed in FY 2003. There
were 273 cases in our sample in which case advocates did not take timely action
to resolve the taxpayers’ problems.
Based on the results of our review, we estimate that 76,183 taxpayers
experienced unnecessary delays in FY 2003 because the TAS did not take timely
actions. These delays increased the TAS’
average time needed to resolve cases by 16 days.
Case
advocates generally did not document a plan of action on taxpayer cases and did
not effectively establish follow-up dates for actions needed to resolve
cases. Even when follow-up dates were
recorded, case advocates did not follow up by the dates set and did not
document why follow-up dates were missed.
Delays also occurred because it appeared case advocates did not have the
technical knowledge needed to resolve certain cases and did not seek assistance
from management or technical experts. In
addition, case reviews conducted by TAS managers did not appear to address the absence
of action plans or untimely case processing.
Last
year, we reviewed the TAS Systemic Advocacy function, which is devoted to
resolving problems that affect large numbers of taxpayers. In our opinion, systemic problems were not
addressed timely because many of the staff were shifted away from Systemic Advocacy
function work to produce the NTA’s Annual Report to Congress. Based on our prior and current reviews of the
TAS, we are concerned the TAS may not be using its resources effectively to
accomplish its primary mission of helping individual taxpayers and resolving
systemic problems.
There
were also some delays in closing cases that did not affect taxpayers but did
inflate the TAS inventory of open cases and the average reported case
resolution time. In 56 of the 500 TAS
cases reviewed, the cases were not closed after the TAS had completed all case
actions. We estimate these types of
delays affected 18,817 cases, which inflated the average reported case
resolution time in FY 2003 by over 3 days.
For
the cases in which the TAS used an Operations Assistance Request to ask for
assistance from one of the Internal Revenue Service (IRS) operating divisions
to resolve taxpayers’ problems, there was generally not enough information in
the cases to evaluate whether actions by the operating divisions were
timely. The TAS has since developed an
electronic method to maintain and track these Requests. However, in the cases we reviewed, the case
advocates generally did not coordinate with the operating divisions to
establish reasonable time periods for completion. Better communication will be needed to ensure
the dates set for completion are achievable; otherwise, the reports and
statistical information the TAS provides to the operating divisions may be of
limited benefit in providing a useful measure of timeliness.
We
recommended the NTA alert TAS managers that case advocates are not developing and
documenting case action plans as required, provide training to case advocates
on developing case action plans and establishing estimated case completion
dates, and eliminate the 5-day grace period allowed on follow-up actions. The NTA should provide specific direction for
managers as to when and how often to review cases. The NTA should also revise procedures and
alert managers that cases should be closed once a determination has been made
on a taxpayer’s problem. Further, the NTA
should provide additional guidance to case advocates on communicating with IRS
operating divisions to coordinate case resolution and to set agreed on time
periods in which to complete the actions specified on Operations Assistance
Requests.
Management’s Response: The NTA agreed with five of the seven
recommendations in our report and with the premise that timeliness in casework
is vital. The TAS has redesigned the Taxpayer
Advocate Management Information System (TAMIS) to give employees the tools to
maintain date fields, action plan items, and inventory management
controls. Managers use the “Next Action
Date” report generated by the new TAMIS to ensure timeliness of case
actions. TAS management is required to
use a new case review form that addresses the necessity of documenting a case
action plan. Recent changes to the TAS
procedures will provide clarity on the use of action plans and follow-up dates,
and these new procedures will be part of TAS training scheduled for the first
quarter of FY 2005. The TAS will also
examine the managerial review process and has implemented a new requirement for
local taxpayer advocates to review cases that have reached 100 days. Area and Headquarters Offices will review the
local manager reviews. In addition, the
TAS is developing a strategy to conduct case reviews 7-10 days after new cases
are received to ensure case advocates have developed action plans and are on
the right track. The TAS plans to make a
formal determination on the types and frequency of reviews based on the trends
identified through its quality and evaluative reviews.
In addition, the TAS will issue a reminder to ensure
all actions occur on or within limits described in TAS procedures. The TAS will review the existing procedural
requirements to determine if additional clarification is needed. The redesigned TAMIS will allow managers to more
effectively track dates set by case advocates and to conduct follow-up reviews
to ensure deadlines are met. The TAS
will continue to emphasize setting achievable completion dates and work with
the operating divisions to ensure adherence to the Service Level
Agreements. The TAS has initiated
projects to promote campus consistency and to improve procedures for processing
innocent spouse claims, Criminal Investigation function freeze cases, and Earned
Income Tax Credit cases. In addition, TAS
procedures recommend time periods for some common issues arising through
Operations Assistance Requests to assist the TAS in establishing estimated
completion dates.
The NTA did
not agree to eliminate the 5-day grace period allowed on follow-up dates
because the NTA believes case advocates must have the flexibility to set their
own work priorities. In addition, the
NTA did not agree to close cases on the TAMIS that the TAS is only monitoring
while the cases are in the Appeals function because the NTA believes it would
not be consistent with the TAS’ mission of assisting taxpayers regarding their
appeal rights and processes.
The
NTA also expressed some concerns about the presentation of data and conclusions
in this report. The NTA believes a
statistical sample of cases for fiscal
years before FY 2003 would be necessary to make a determination of the cause of
the increase in cycle time from earlier years.
The NTA also disagreed with our determination on more than 30 percent of
the cases we reviewed. The NTA believes many of the
audit team’s findings of delay reflect subjective judgments about how cases
should be handled rather than instances of inefficiency or neglect. The NTA asserted that the median case cycle
time is a better indicator of timeliness than the mean or average cycle time. Further, the NTA stated that the case cycle
time statistics before FY 2001 are not comparable to those for FY 2003 because
the TAS operated as the Problem Resolution Program until March 2000.
The NTA noted that recent trends show TAS casework is timelier by the
TAS quality standards and believes a higher percentage of cases have complex
issues than in FY 2001. The NTA believes
an indicator of complexity is the increase in cases classified as “compliance”
compared to “service” cases. The TAS is
still working to develop a better measure to quantify complexity but, based on
anecdotal evidence, the NTA believes this is a reasonable indicator.
The
NTA again noted disagreement with our prior report on the TAS Systemic Advocacy
function. The NTA stated that certain
systemic issues can be resolved only through legislation; therefore, using Systemic
Advocacy function resources for the Annual Report to Congress is proper. Management’s complete response to the draft
report is included as Appendix VI.
Office
of Audit Comment: We believe the
conclusions and recommendations in this report are valid. The NTA should eliminate the 5-day grace period allowed on
follow-up dates because allowing this grace period undermines the importance of
meeting follow-up dates and the sense of urgency inherent to the TAS. We understand that case advocates may not
always meet the follow-up dates they set.
We believe in those instances they should document the cases with an
explanation. In our review, we found
that case histories were poorly documented, and case advocates generally did
not explain why follow-up dates were missed.
In addition, the NTA should close cases on the TAMIS once the IRS has
made a determination on the case. Keeping the cases open on the TAMIS when the cases are in
monitoring status reduces the accuracy of case cycle time statistics, which reduces
their benefit as a diagnostic tool.
Also, we
believe that the TAS’ actions do not fully address Recommendations 1 and 7. The TAS’ actions appear to be beneficial but do not fully
address the recommendation to alert managers that case advocates are not
developing action plans as already required by TAS procedures, and that
follow-up dates are not being recorded or met.
The purpose of an alert is to quickly notify management that a
significant problem exists and should be addressed immediately. In addition, the TAS’ actions appear
beneficial to the overall processing of Operations Assistance Requests, but the
proposed corrective actions do not fully address our recommendation to provide
case advocates additional guidance on communicating with the IRS operating
divisions. Both the TAS and the operating
divisions need to reach agreement about when Operations Assistance Requests
will be completed.
While we still believe our recommendations are worthwhile, we do not
intend to elevate our disagreement concerning them to the Department of the
Treasury for resolution.
Our results and estimates are based on
a sample of FY 2003 cases to provide the most current and relevant information
to TAS management. The trend information
from FYs 1998 to 2003 shows the basis for our concern about the timeliness of
the TAS advocacy program. TAS management
agreed or partially agreed with our findings in about 70 percent of our cases,
which represented approximately 80 percent of the total time that the cases
were delayed. We considered the TAS’
responses in each of the 88 cases to which it did not agree. Notwithstanding, we continue to disagree and
still believe a delay occurred in these cases.
·
In 42 cases, the TAS’ responses were too vague to determine
the reason for disagreement.
·
In 14 cases, the TAS responded the taxpayer had not been
harmed even though a delay occurred.
·
In 19 cases, the TAS responded the delay was justified based
on the case advocate’s judgment; however, management did not present a valid
reason for the delay.
·
In 13 cases, the TAS disagreed because employees were
operating within the TAS policies and procedures related to the 5-day grace
period for follow-up dates or those that allow case advocates to keep cases open
for monitoring while the cases are in the Appeals function.
The
NTA believes median cycle time is a more accurate indicator of what the typical
TAS customer experiences. We do not
agree. The median is the mid-point. As such, 50 percent of the taxpayers experience
a case resolution time that is longer than the median case resolution time. A timeliness standard that relies on a
mid-point minimizes the collective impact of extreme delays, many of which we
encountered in our review. Such extreme
delays caused serious burden to some taxpayers and should prompt more
aggressive resolution by the TAS than is currently taken.
It
should be noted that we never took exception to the length of time a case was
open; we took exception only if actions were not timely. The average case cycle time was used to show
the effect of delays. The mean case
cycle time is the same information the TAS reported to the IRS Commissioner in
past Business Performance Reviews.
The
NTA stated that the case cycle time statistics before FY 2001 are not
comparable to those for FY 2003 because the casework was handled by the Problem Resolution Program until March
2000. We would like to clarify this
point. The Office of the Taxpayer
Advocate replaced the position of the Taxpayer Ombudsman in 1996. The IRS Restructuring and Reform Act of 1998
did not create the Office of the Taxpayer Advocate but reorganized employees
from the Problem Resolution Program into a system of local taxpayer advocates
who report directly to the NTA. This organizational
structure was implemented in March 2000.
Notwithstanding, we believe comparing trends over time provides useful
information to management and helps identify problems. We recognized in this report that the TAS
organizational structure has undergone significant changes as a result of the
tax laws; however, the TAS and the Problem Resolution Program both share the same
core mission of assisting taxpayers when the IRS has not addressed their
problems.
The
NTA believes TAS casework is timelier based on certain quality standards the
TAS uses in its quality reviews. We did
not review the accuracy of TAS quality reviews during this audit. However, we did find significant delays by
the TAS in resolving cases, and TAS management acknowledged most of these
delays. The NTA also asserted that TAS
casework has become more complex. We do
not believe the TAS’ anecdotal evidence provides an adequate basis for this
assertion.
Last
year, we reported the TAS did not address potential systemic problems that
affected large groups of taxpayers.
Instead, TAS management redirected a significant number of its staff to
work on the NTA’s Annual Report to Congress.
Systemic projects were allowed to age up to 3 years without action
because analysts were devoting the majority of their time to the Annual Report
to Congress. For example, we identified
a partnership project that potentially affected 16.5 million taxpayers which
had been open for 2.5 years without any action.
The NTA’s assertion that no delay occurred because these taxpayers could
only have been assisted by means of a legislative proposal put forth in the
Annual Report to Congress is misleading. At the time of our review, the TAS was taking no
such action on their behalf. We
recommended changes to help the TAS use and monitor its resources to improve the
Systemic Advocacy function while still providing the NTA’s Annual Report to
Congress.
Copies of this report are
also being sent to the IRS managers affected by the report
recommendations. Please contact me at
(202) 622-6510 if you have questions or Daniel R. Devlin, Assistant Inspector
General for Audit (Headquarters Operations and Exempt Organizations Programs),
at (202) 622-8500.
Inefficient
Case Management Often Led to Lengthy Delays in Resolving Taxpayers’ Problems
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix IV
– Outcome Measures
Appendix V –
Charts Showing Case Processing Time, Receipts, Closures, and Staffing
Appendix VI
– Management’s Response to the Draft Report
The Office of the Taxpayer Advocate, also known as the Taxpayer Advocate Service (TAS), is an independent function within the Internal Revenue Service (IRS) which helps taxpayers resolve problems with the IRS that have not been resolved through normal IRS processes. The TAS also works to correct systemic problems that affect large numbers of taxpayers. In Fiscal Year (FY) 2003, the TAS received 188,209 new cases from taxpayers, tax practitioners, and referrals by the IRS operating divisions and Congressional offices. Table 1 provides a summary of the reasons taxpayers contacted the TAS in FY 2003.
Table 1: Types of TAS Cases Received in FY 2003
Reason for Contacting the TAS
|
Percentage
|
IRS systems or procedures
either did not operate as intended or did not resolve the taxpayer’s problem.
|
31%
|
Taxpayer experienced a delay of
more than 30 days to resolve a tax account problem with the IRS.
|
27%
|
Taxpayer did not receive a
response from the IRS by the date promised.
|
19%
|
Taxpayer is suffering or about
to suffer a significant hardship.
|
12%
|
Taxpayer is facing threat of
adverse action.
|
3%
|
Taxpayer will incur significant
costs if relief is not granted.
|
2%
|
Taxpayer will suffer an
irreparable injury or long term adverse impact.
|
2%
|
Any case not meeting specific
TAS criteria but warranting TAS intervention.
|
4%
|
Source: National Taxpayer Advocate – FY 2003 Annual
Report to the Congress.
If a taxpayer’s problem falls within the TAS’ authorities, a
TAS employee, known as a case advocate, will work the case to resolution. However, if any action is outside the TAS’
authorities, case advocates must obtain the assistance of an IRS operating
division(s) using an Operations Assistance Request (Form 12412) to resolve the
taxpayer’s problem.
In September 2002,
the IRS Oversight Board issued a report that focused on the TAS’ operation. One of the major concerns of the IRS
Oversight Board was that the TAS and the IRS operating divisions are not
resolving taxpayers’ problems quickly.
The American Institute of Certified Public Accountants (AICPA) also
expressed concerns about slow responses from the TAS and its unwillingness to
use its authority to cut through red tape.
We performed this review to evaluate the efficiency and timeliness of the processes used by the TAS to resolve taxpayers’ problems. This review was performed using a statistical sample of TAS cases nationwide which were closed in FY 2003 and information obtained from the TAS Washington, D.C., office during the period November 2003 through June 2004. The audit was conducted in accordance with Government Auditing Standards. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
Because cases the
TAS receives often involve financial hardships to the taxpayers as well as
delays in resolving taxpayer problems though normal IRS channels, the TAS is
concerned about the timeliness of its case processing. The TAS uses case cycle time as one of its
diagnostic measures in its Business Performance Review.
TAS statistics
indicate the average time to resolve cases has increased significantly since
1998—it more than doubled over the last 5 years, from an average of 37 days to
76 days. The increase in case cycle time
is not due to fewer staff or heavier workload.
There was a significant increase in the TAS staff during FY 2000, and
since then the number of employees assigned to case advocacy has remained relatively
consistent. Moreover, the TAS case
workload has decreased over time—the number of cases received and closed by the
TAS was 41 percent lower in FY 2003 than in FY 1998. Table 2 shows the trends in the TAS workload,
staffing, and cycle time to resolve cases.
Table 2: Trends in the TAS Workload, Staffing, and
Cycle Time to Resolve Cases, FYs 1998 – 2003
Fiscal Year |
Cases |
Cases |
Case Advocacy Employees |
Cycle Time to Resolve Cases (calendar days) |
1998 |
333,636 |
314,554 |
n/a |
37 |
1999 |
286,773 |
294,899 |
n/a |
46 |
2000 |
257,196 |
238,063 |
1,499 |
54 |
2001 |
254,026 |
248,011 |
1,922 |
72 |
2002 |
216,899 |
234,327 |
1,829 |
81 |
2003 |
188,209 |
196,619 |
1,904 |
76 |
Source: National
Taxpayer Advocate – Business Performance Reviews.
During FYs 1998, 1999, and part of 2000,
the TAS operated under a different organizational structure, known as the
Problem Resolution Program. The National
Taxpayer Advocate (NTA) stated that part of the increase in case resolution
time resulted from changes in the TAS organizational structure and its authorities
in FY 2000. The NTA also believes the
TAS now works a higher percentage of cases involving complex issues. However, the NTA was not able to provide
enough data or other evidence for us to verify these as causes for increased
case resolution time. Based on our
review, we believe a significant portion of the increase in time needed to
resolve taxpayers’ problems was due to inefficient case management on the part
of TAS employees and inadequate management oversight by the TAS.
Last year, we reviewed the TAS Systemic Advocacy
function, which is devoted to resolving problems that affect large numbers of
taxpayers. In our opinion, systemic
problems were not addressed timely because TAS management shifted staff away
from Systemic Advocacy function work to produce the NTA’s Annual Report to
Congress. Based on our prior and current
reviews of the TAS, we are concerned the TAS may not be using its resources
effectively to accomplish its primary mission of helping individual taxpayers and
resolving systemic problems.
To manage its inventory of taxpayer
cases, the TAS uses an automated system called the Taxpayer Advocate Management
Information System (TAMIS). To evaluate
the timeliness of actions taken to resolve taxpayers’ problems, we reviewed a
statistical sample of 500 of the 203,634 TAS cases closed in FY 2003.
Of the 500 cases we reviewed,
there were 273 cases in which the TAS did not take timely actions to resolve the
taxpayers’ problems, which often caused prolonged delays. In many of the cases, the case advocates did
not document a plan of action to resolve the taxpayer’s problem and were not
effectively establishing follow-up dates on the TAMIS, which prevented them
from using the System’s automated tools to prioritize their work. Even when follow-up dates were recorded on
the TAMIS, case advocates often did not follow up by the dates set and did not
document why the follow-up dates were missed.
In addition, case advocates often set follow-up dates which were too far
in the future when information needed to take the next action on the case was
available at a much earlier date.
Case resolution was also
delayed because it appeared the case advocates did not have the technical
knowledge to resolve certain cases and did not seek assistance from management
or the technical experts. We also found
that TAS procedures allow case advocates to miss a follow-up date they
established by up to 5 workdays, which minimizes the sense of urgency inherent in
the TAS. Since a case can have numerous
follow-up dates, delays could be compounded if the case advocate consistently
misses the follow-up dates. Table 3
summarizes the results from our sample of 500 TAS cases and the estimated total
number of taxpayers affected by each type of TAS delay in FY 2003.
Table 3: TAS Cases With Unnecessary Delays in
Resolving Taxpayers’ Problems (FY 2003)
Type of Delay
|
Number
|
Estimated Taxpayers Affected
|
Average Days Delayed For
Taxpayers Affected
|
Estimated Effect
|
No follow-up date was set for the next action to resolve
the case.
|
159
|
32,797
|
35
|
5.71
|
Follow-up date was documented but missed by more than 5
workdays.
|
102
|
23,447
|
36
|
4.18
|
Delays in obtaining technical assistance.
|
65
|
11,224
|
56
|
3.08
|
Follow-up date provided more time than needed to complete
the case action.
|
47
|
15,127
|
15
|
1.14
|
Follow-up date was documented but missed by 5 or fewer
workdays.
|
43
|
15,779
|
7
|
.54
|
Excessive and/or multiple deadlines were set to obtain
internal/external documents.
|
31
|
9,426
|
43
|
.97
|
No actions were taken while the employee was on leave or
in training.
|
14
|
1,673
|
34
|
.28
|
Dispute between TAS offices as to which office was
responsible for the case.
|
9
|
1,240
|
24
|
.15
|
Source: The Treasury Inspector General for Tax
Administration (TIGTA) sample review of 500 TAS FY 2003 closed cases and
statistical projections.
We estimate that 76,183 taxpayers
experienced at least 1 unnecessary delay in FY 2003 because the TAS did
not take timely actions to resolve taxpayers’ problems. In addition, we estimate the TAS’ average
time of 76 days to resolve cases in FY 2003 would have been 16 days fewer if
case actions had been timely.
These delays can cause additional
frustration and burden to taxpayers who have already been unable to resolve
their problems through normal IRS processes.
The following are examples of cases in our sample with lengthy delays
encountered by taxpayers in resolving their problem through the TAS:
·
In a
case that involved a problem with employment taxes, it took 910 days (approximately
2½ years) for the TAS to resolve the matter.
Delays accounted for 71 percent of the time the case was open. There were 11 separate periods of inactivity
that totaled 649 days. One period of
inactivity was 230 consecutive days. The
case advocate did not use follow-up dates, and there were no explanations for
the delays in the case history.
·
A
business contacted the TAS because it had received a refund to which it was not
entitled. It took 538 days (almost 1½
years) for the TAS to resolve this problem.
Unnecessary delays accounted for 391 consecutive days. The case advocate did not take the necessary
action to try to solve the taxpayer’s problem during the period of
inactivity. It appeared the case
advocate did not know how to correct the account and did not contact the group
manager or other technical specialists to help resolve the issue sooner.
·
In a
case involving penalties and interest that should have been removed from a
taxpayer’s account, it took 281 days for the TAS to resolve the matter. The case advocate missed 3 separate follow-up
dates originally set in the case history by 125, 16, and 106 consecutive
days. We estimate the TAS should have
resolved the taxpayer’s issue within 34 days.
·
A
nonprofit organization’s bank account was levied while the TAS was supposed to
be working on its case. The TAS took no
action on the case for 201 consecutive days and did not timely contact the IRS
Collection function. Due to the bank
levy, the nonprofit organization had difficulty paying its employees and the
TAS took almost a year to correct the situation and refund the monies that were
levied.
TAS procedures require case advocates to develop an action plan when they initially receive a taxpayer’s case. An action plan is important because it facilitates proper case management and provides a map for anyone who may need to take action on the case. The procedures also require case documentation to be clear, specific, and complete so anyone reviewing a case can follow the progress of the action plan, know what actions have been taken, and know what the next action will be. Despite these requirements, case advocates generally did not develop and document action plans needed to resolve taxpayers’ problems. Case documentation was generally poor and delays were not explained.
Manager case reviews were limited and did not appear
to be effective
TAS management’s review of cases did not appear to address the absence of case action plans or untimely case processing. TAS management reviewed only 172 (34 percent) of the 500 cases in our sample. Most of the cases reviewed by management indicated the case was reviewed, but no guidance was provided in the case history. Consequently, the case files could not be used to determine how management attempted to address delays. Moreover, in some instances, delays continued to occur even after management reviewed the cases.
According to TAS officials, concerns by employees and the National Treasury Employees Union (NTEU) that management reviews could be used against employees have caused many TAS managers to not document their reviews in case files. The TAS is in the process of developing a new method for management case reviews that is being negotiated with the NTEU. TAS management stated this new method was developed to provide a more comprehensive format and consistency across the nation. However, there is no indication the new TAS method for management review will address the inadequate case planning and the untimely casework. In addition, the new method does not specify when or how often manager reviews are to be performed.
Better monitoring by TAS managers would help detect poor workload management and delays in resolving cases. It would act as an important control and a means to provide immediate feedback and direction to employees.
The NTA should:
1.
Alert TAS managers that case advocates are not
developing and documenting case action plans as required. Further, managers should be alerted that
follow-up dates are often not being recorded on the TAMIS as required and that established
follow-up dates are often not met.
Management’s Response: The NTA agreed with our recommendation and has redesigned the TAMIS to give employees the tools to maintain date fields, action plan items, and inventory management controls. Managers use the “Next Action Date” report generated by the new TAMIS to ensure timeliness of case actions. TAS management is required to use a new case review form that addresses the necessity of documenting a case action plan. Recent changes to the TAS procedures will provide clarity on the use of action plans and follow-up dates. The proper use of action plans and follow-up dates will be part of TAS training on the new procedures scheduled for the first quarter of FY 2005.
Office of Audit Comment: The TAS’ actions appear to be beneficial but do not fully address the recommendation to alert managers that case advocates are not developing action plans as already required by TAS procedures and that follow-up dates are not being recorded or met. The purpose of an alert is to quickly notify management that a significant problem exists and should be addressed immediately.
2.
Provide training to case
advocates on the requirement to develop and document case action plans at the
beginning of each case. The training
should guide employees on determining the overall time period needed to
complete a case as well as intermediate follow-up dates to ensure the case is
progressing as intended. The training
should also address the need to improve case documentation so the progress of
the case action plan can be properly monitored.
Management’s Response: The NTA agreed with this recommendation and
has redesigned the TAMIS to give employees the tools to maintain date fields,
action plan items, and inventory management controls. Also, recent changes to the TAS procedures
will provide clarity on the use of action plans and follow-up dates that will
be part of TAS training scheduled for the first quarter of FY 2005.
3. Revise the procedures to eliminate the 5-day grace period allowed on follow-up dates.
Management’s Response: The NTA did not agree with this recommendation. The NTA indicated that all cases must be worked as they arrive and case advocates often face multiple deadlines that fall on the same day. This 5-day grace period provides case advocates with the flexibility they require to set priorities. For example, a case advocate facing a follow-up date on one case may receive another case in which the IRS is about to seize a taxpayer’s property. The NTA believes case advocates must have the flexibility to work the case involving the property seizure before working other cases.
Office of Audit Comment: We believe case advocates should take action by the date they specified in the case history to avoid delays and move the case to resolution. Allowing a grace period undermines the importance of meeting follow-up dates and the sense of urgency inherent to the TAS. We understand that case advocates may not always meet the follow-up date they set. In those instances, they should document the case with an explanation. However, we found that case histories were poorly documented and case advocates generally did not explain why follow-up dates were missed.
4. Include in the new management case review procedures specific direction for when and how often managerial reviews are to be performed. An expected completion date should be established at the beginning of each case to assist managers in identifying cases which have been delayed, so the managers will review such cases and take corrective action.
Management’s Response: The NTA agreed with this recommendation and will examine the managerial review process. The TAS has already implemented a new case review form and a new requirement for local taxpayer advocates to review cases that have reached 100 days. In FY 2005, Area and Headquarters Offices will review the local manager reviews. In addition, the TAS is developing a strategy to conduct case reviews 7-10 days after new cases are received to ensure case advocates have developed action plans and are on the right track. The TAS plans to make a formal determination on the types and frequency of reviews based on the trends identified through its quality and evaluative reviews.
There were also delays in closing cases
that did not affect the taxpayers involved but did inflate the TAS open
inventory and average reported case resolution time. In 56 of the 500 TAS cases reviewed, the
cases were not closed on the TAMIS when the TAS had completed all case
actions. In 29 cases, the delayed case
closing appeared to be an oversight on the part of the TAS since the taxpayers’
issues were already resolved. In the
other 27 cases, the TAS left the cases open for monitoring. Table 4 summarizes the results from our
sample of 500 TAS cases and the estimated total number of cases in FY 2003 in
which the case closure was delayed.
Table 4: TAS Cases With Incorrectly Reported Case
Resolution Time (FY 2003)
Type of Delay
|
Number of Cases
|
Estimated Cases Affected
|
Average Days Delayed for Cases
Affected
|
Estimated Effect
|
Untimely case closing after all actions were completed.
|
29
|
17,039
|
14
|
1.19
|
The TAS left cases open for monitoring.
|
27
|
1,778
|
229
|
2.00
|
Source: The TIGTA sample review of 500 TAS FY 2003
closed cases and statistical projections.
For TAS cases in general, if the IRS
determines a taxpayer is not entitled to relief and the taxpayer appeals the
decision, the TAS will close the case.
However, the NTA directed that cases involving innocent spouse issues be
kept open throughout the entire appeals process to monitor processing that may
occur by the IRS campuses after the Appeals function has completed its
review. TAS procedures for innocent
spouse cases state, “Cases going to Appeals Division will not be closed until
Appeals makes a determination on the appeal and the taxpayer/representative is
informed.”
The TAS’ policy of monitoring these types
of cases throughout the Appeals function process may be beneficial; however,
because of the length of the Appeals function process and because further case
actions on the part of the TAS are usually not necessary, the practice of
leaving these cases open on the TAMIS reduces the accuracy of the case
resolution time statistics provided by this System. Although these cases account for a small
percentage of the total number of cases with delays, the total number of days
these cases are left open affects the overall case cycle time, which affects
the reliability and comparability of the TAMIS data. For example, 1 such TAS case took 1,330 days
(more than 3½ years) to close. In our opinion, the case advocate should have
closed this case 959 days (more than 2½ years) earlier once the Appeals function
received the request for relief.
Overall, based on the cases we reviewed,
we estimate these delays in recording case closure affected 18,817 cases in FY
2003, which inflated the TAS’ average case resolution time by over 3 days.
The NTA should:
5.
Alert TAS managers that case advocates are not
closing cases after all actions are completed.
Management’s Response: The NTA agreed with this recommendation and
will issue a reminder to ensure all actions occur on or within limits described
in TAS procedures. The TAS will also review
the existing procedural requirements to determine if additional clarification
is needed. In addition, the redesigned
TAMIS allows managers to more effectively track dates set by case advocates and
to conduct follow-up reviews to ensure deadlines are met.
6.
Revise TAS procedures
to close cases once the IRS has made a determination, even if the
taxpayer appeals that determination. If the TAS monitors
such cases, it should ensure the TAMIS reflects that the cases are in
monitoring status.
Management’s Response: The NTA did not
agree with this recommendation. The NTA indicated
the TAS must assist each taxpayer until the IRS completes action on the
case. If a taxpayer appeals an adverse
IRS determination, a TAS case advocate assists the taxpayer regarding his or
her appeal rights and processes. The TAS
also retains the authority to intervene on the taxpayer’s behalf and, if
necessary, to issue a Taxpayer Assistance Order to the Appeals function. Each determination to hold a case open during
the appeal process is made on the basis of a facts-and-circumstances
analysis. The NTA believes closing cases
simply to shorten cycle time would elevate process above fulfillment of the TAS’
core mission.
Office of Audit Comment: Keeping cases open
on the TAMIS when the cases are in monitoring status reduces the accuracy of
case resolution time statistics, which reduces their benefit as a diagnostic
tool.
Before the IRS Restructuring and Reform Act of 1998 (RRA 98) was implemented, TAS employees performing case-related activities were part of the IRS’ core business functions, such as Collection or Examination. Prior to FY 2000, the TAS operated as the Problem Resolution Program. After the passage of the RRA 98, the TAS became an independent function and its employees no longer reported to the core business functions. When the TAS became an independent function, the actions TAS employees could take to resolve taxpayer issues were very limited. In January 2001, the IRS Commissioner delegated additional authorities to the TAS to take certain case-related actions. This increased the number of cases the TAS employees could resolve without assistance from IRS operating divisions. Nonetheless, there are still many case actions needed to resolve taxpayer problems which are outside the TAS’ authorities. For these actions, case advocates must obtain the assistance of an IRS operating division(s) using an Operations Assistance Request.
The NTA has stated that the process of referring cases to the IRS operating divisions may have had a significant impact on the TAS’ case cycle time. However, we could not validate this assumption since the TAS did not keep statistics regarding the age or timeliness of Operations Assistance Requests.
In September 2002, the TAS established Service Level
Agreements with the operating divisions to provide a uniform method and basic
requirements for the IRS operating divisions when assisting the TAS. The Service Level Agreements require that the
TAS and the operating divisions negotiate and agree to a completion date for each
Operations Assistance Request. In
general, the Service Level Agreements state that, if
the taxpayer’s case cannot be completed by the agreed upon date, the TAS
manager or liaison should contact the operating division liaison to discuss the
reasons for the delay.
In our sample of 500 TAS cases closed in FY 2003, there were 323 cases that required 1 or more Operations Assistance Requests. For these 323 cases, there were 612 Operations Assistance Requests. We compared the Requested Completion Date (the date requested by the case advocate) with the date the operating division employee completed the requested action to determine whether the operating divisions were resolving issues timely. However, there was not enough information in the TAS case files to determine if the operating divisions were causing delays because the Operations Assistance Requests were incomplete. Case advocates did not include the Requested Completion Date for 123 Operations Assistance Requests, and the operating division employees did not record the date they completed 99 Operations Assistance Requests.
Further, although case advocates are
required to contact the IRS operating division employee assigned to an Operations
Assistance Request to discuss case issues and the proposed completion date,
case advocates did not do this consistently.
For the cases in which the case advocate did record a Requested
Completion Date, there was no indication that the case or the proposed
completion date was discussed with the appropriate IRS operating division.
Beginning in FY 2004, the TAS developed an electronic method
to maintain and track Operations Assistance Requests on its inventory
system. In addition, the TAS is
developing an online Intranet portal that will be available to the operating
divisions. After the portal is
implemented, the TAS plans to provide reports to each operating division with
the location, age, and status of each Operations Assistance Request. This portal will help the TAS and the
operating divisions manage their inventory of Operations Assistance Requests
and will provide statistical data on the timeliness of completion of these Requests. The Deputy
Commissioner for Services and Enforcement has required the operating divisions
to report on the status of the TAS case inventory in their Business Performance
Reviews starting in FY 2004. The
operating divisions were directed to include any conclusions drawn from the
reports provided by the TAS and resolve any systemic delays or problems.
This
electronic method to maintain and track Operations Assistance Requests is a
step in the right direction. Nonetheless, since Requested Completion Dates are often established by
the TAS without the agreement of the operating divisions, the reports
and statistical information the TAS provides to the operating divisions for
Operations Assistance Requests may be of limited benefit in providing a useful
measure of timeliness. Better
communication will be needed to ensure the dates set
for completion are achievable.
7. The NTA should provide additional guidance to case advocates on communicating with IRS operating divisions to coordinate case resolution and to set achievable deadlines for completing Operations Assistance Requests.
Management’s Response: The NTA agreed with this recommendation. The TAS will continue to emphasize setting achievable completion dates and work with the operating divisions to ensure adherence to the Service Level Agreements. The TAS has initiated projects to promote campus consistency and to improve procedures for processing innocent spouse claims, Criminal Investigation function freeze cases, and Earned Income Tax Credit cases. In addition, TAS procedures recommend time periods for some common issues arising through Operations Assistance Requests to assist the TAS in establishing estimated completion dates.
Office of Audit Comment: The TAS’ actions appear beneficial to the overall processing of Operations Assistance Requests, but the proposed corrective actions do not fully address our recommendation to provide case advocates additional guidance on communicating with the IRS operating divisions. Both the TAS and the operating divisions need to reach agreement about when Operations Assistance Requests will be completed.
Appendix I
Detailed Objective,
Scope, and Methodology
The overall objective of this review was to evaluate the efficiency and timeliness of the Taxpayer Advocate Service (TAS) in resolving taxpayers’ problems. To complete this objective, we:
I.
Determined what
guidance had been provided to the TAS and Internal Revenue Service (IRS) operating
division employees for the processing of TAS cases by reviewing the Internal
Revenue Manual, authorities delegated to the TAS by the IRS Commissioner, and
Service Level Agreements between the TAS and the operating divisions.
II.
Used the Taxpayer
Advocate Management Information System (TAMIS) to select a stratified
statistical sample of 500 cases from the 196,617 regular cases and 7,017 reopened
cases closed by the TAS in Fiscal Year 2003.
With the assistance of a statistician, we selected a sample to project
the number of taxpayers affected and the amount of time delayed. The sample used a 95 percent confidence
interval and a +/‑ 4 percent desired precision rate. The strata were determined as follows:
Stratum |
Number of Days the Case Was Open |
Population of Stratum |
Sample Size per Stratum |
1 |
0-29 |
61,508 |
50 |
2 |
30-69 |
71,671 |
75 |
3 |
70-119 |
38,226 |
125 |
4 |
120-365 |
28,877 |
125 |
5 |
366-1,307 |
3,327 |
100 |
6 |
1,308 or longer |
25 |
25 |
III.
Determined if the TAS
caused delays in processing the 500 cases in our sample by reviewing the case
histories on the TAMIS and the physical case files. For the cases we identified with delays, we
projected the number of exceptions and days delayed over the population with
the assistance of a statistician.
IV.
Determined the number
of cases that involved an Operations Assistance Request and reviewed them for
timely actions by the operating divisions.
This included reviewing completion dates on Operations Assistance Requests
required to be input by the operating divisions and the TAS.
Appendix II
Major Contributors to This
Report
Daniel R. Devlin,
Assistant Inspector General for Audit (Headquarters Operations
and Exempt Organizations Programs)
Michael E. McKenney,
Director
Aaron R. Foote, Audit
Manager
Janice M. Pryor, Lead
Auditor
Joseph P. Smith,
Senior Auditor
Michael J. Della Ripa,
Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Services and Enforcement SE
Commissioner, Large and Mid-Size Business Division SE:LM
Commissioner, Small Business/Self-Employed Division SE:S
Commissioner, Tax Exempt and Government Entities Division SE:T
Commissioner, Wage and Investment Division SE:W
Chief, Appeals AP
Chief Counsel CC
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk
Analysis RAS:O
Office of Management Controls OS:CFO:AR:M
Audit Liaisons:
National Taxpayer Advocate TA
Deputy Commissioner for Services and Enforcement SE
Commissioner, Large and Mid-Size Business Division SE:LM
Commissioner, Small Business/Self-Employed Division SE:S
Commissioner, Tax Exempt and Government Entities Division SE:T
Commissioner, Wage and Investment Division SE:W
Chief, Appeals AP
Appendix IV
This appendix presents detailed information on the measurable effect that our recommended corrective actions will have on tax administration. These benefits will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome Measure:
· Taxpayer Burden – Potential; delays in resolving 76,183 taxpayer problems during Fiscal Year (FY) 2003 (see page 2).
· Reliability of Data – Potential; 18,817 Taxpayer Advocate Service (TAS) cases due to untimely actions in closing cases and TAS procedures (see page 10).
Methodology Used to Measure the Reported Benefit:
The TAS provided the number of closed cases in FY 2003. The population consisted of 196,617 “regular” cases and 7,017 cases that had been reopened. We selected a statistically valid stratified sample of 500 cases closed in FY 2003. Of these, 273 cases had unnecessary delays in resolving taxpayers’ problems. Based on the sample, we estimated that a total of 76,183 taxpayer cases were delayed (our estimate is based on a 95 percent confidence level and a precision of +/- 4.6 percent). We also identified eight specific types of delays that affected taxpayers and the TAS’ overall average time to resolve cases (see Table 3 on page 5). Our statistician computed weighted averages for each type of delay to determine the number of cases that were affected and the average number of days delayed for each category.
Using the same statistically valid stratified sample of 500 cases closed in FY 2003, we also identified 56 cases that increased the TAS’ case cycle time, which affected the reliability of data but did not cause taxpayer burden. We estimated there were a total of 18,817 cases with unreliable case resolution time (our estimate is based on a 95 percent confidence level and a precision of +/- 3.5 percent). We also identified two specific types of delays that affected reliability of case resolution time (see Table 4 on page 11). Our statistician computed weighted averages for each type of delay to determine the number of cases that were affected and the average number of days delayed for each category.
Appendix V
Charts Showing
Case Processing Time, Receipts, Closures, and Staffing
The
charts were removed due to their size.
To see the charts, please go to the Adobe PDF version of the report on
the TIGTA Public Web Page.
Appendix VI
Management’s
Response to the Draft Report
The response was removed due to its
size. To see the response, please go to
the Adobe PDF version of the report on the TIGTA Public Web Page.