The IRS’s Taxpayer Advocate Service may be pursuing relatively minor issues instead of truly systemic problems, according to a new report from the Treasury Inspector General for Tax Administration.
TAS and TIGTA both act as independent watchdogs for the IRS, even though they are both part of the Treasury Department. They both compile reports critiquing various aspects of the IRS, which are regularly submitted to Congress.
In its latest report, TIGTA evaluated the process the Taxpayer Advocate Service uses to identify potential systemic issues for consideration as “Systemic Advocacy Projects.” To help fulfill its mission, TAS is required to identify areas in which groups of taxpayers are experiencing problems with the IRS and recommend solutions.The Systemic Advocacy Program initiates those projects along with so-called “Immediate Interventions”—an operational issue that causes immediate, significant harm to multiple taxpayers and demands an urgent response—to identify solutions for systemic issues affecting multiple taxpayers.
The projects should result in legislative or administrative recommendations to help the IRS reduce or prevent the problems from occurring in the future, the report noted. In fiscal year 2009, TIGTA estimated that approximately 19 percent of the TAS Systemic Advocacy Program time was applied to Systemic Advocacy Projects. The Systemic Advocacy Program is also responsible for the National Taxpayer Advocate’s Annual Report to Congress (see Taxpayer Advocate Warns Against Risk of IRS Budget Cuts).
TAS management primarily relies on IRS employees and its external stakeholders to submit issues for consideration as potential Systemic Advocacy Projects. However, TIGTA found that the research that TAS performs during the screening process could be improved to better identify systemic problems affecting multiple taxpayers.
TIGTA sampled 25 of the 134 projects that TAS closed in fiscal year 2009 and found that documentation for 13 projects did not support the issue’s characterization as a systemic problem. In addition, TIGTA believes TAS management should use the existing information captured in its Case Advocacy Program, which addresses problems faced by individual or business taxpayers, to identify potentially systemic issues warranting further review in a Systemic Advocacy Project.
Further, TIGTA said it believes the current performance measures do not provide TAS management with enough information to assess whether its projects have positively benefited tax administration.
“The Taxpayer Advocate Service serves an important mission of identifying solutions for systemic IRS issues affecting multiple taxpayers,” said TIGTA Inspector General J. Russell George in a statement. “Nonetheless, our report found that improvements can be made to make it more effective. In particular, improving the screening process it uses to identify systemic issues will assist TAS management in identifying and resolving broad-based taxpayer problems, thereby preventing or reducing similar problems in the future.”
TIGTA made three recommendations in its report. TAS management agreed with two, disagreeing only with one recommendation by arguing that it is already being done.
TIGTA recommended that the National Taxpayer Advocate require TAS personnel to perform and document enough research to support the fact that a potential systemic issue exists before initiating a project. The report also said TAS should review its Case Advocacy Program data to identify systemic issues for projects, and develop additional performance measures that could capture the Systemic Advocacy Projects’ effectiveness in identifying and resolving systemic issues affecting taxpayers.
In response, TAS officials said they have already begun implementing significant changes to the issue review process and are in the process of revamping their measures for systemic problem resolution work. However, they disagreed with TIGTA’s recommendation to review program data to identify systemic issues for Advocacy Projects, saying they already use such information for this purpose. However, TAS personnel informed TIGTA inspectors during their interviews that they do not analyze Case Advocacy Program data to consider whether projects should be initiated.
Instead, they rely on IRS employees and external stakeholders to identify and submit potential systemic issues. TIGTA believes TAS should formalize and document a process to periodically analyze Case Advocacy Program data to identify potential issues that could be addressed in Systemic Advocacy Projects.
“Measuring the effectiveness of the Taxpayer Advocate Service is a significant challenge, not least because systemic problems do not lend themselves to ‘unit’ measurement and TAS usually has no direct control over whether any of our recommendations are actually implemented,” wrote National taxpayer Advocate Nina Olson in response to the report. “Moreover, by design and by statute, systemic advocacy is the responsibility of all TAS employees.”
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