An eye-opening report from the Government Accountability Office shed new light Tuesday on how the Internal Revenue Service dealt with the 2010 tax-filing season.
Last year, the IRS faced some substantial challenges, the report acknowledged, including stimulus-related tax changes like the Making Work Pay Credit. The report generally found that the IRS’s performance improved in some key areas, but noted that efficiency gains were possible in other areas. Electronic filing, for example, increased about 3 percent, to 71 percent of all tax returns. The IRS’s new e-file mandate for tax practitioners is bound to increase that proportion even higher this tax season.
However, the GAO report faulted the IRS in a number of areas, particularly on customer service.
Compared to 2009, the percentage of callers seeking live assistance who received it improved in 2010 and the accuracy of the answers from the IRS remained high, at over 90 percent, the report acknowledged. However, the average wait time increased. More tellingly, the IRS's annual goal for providing caller assistance was lower than any of the preceding five years, according to the GAO.
One of the problems, according to the report, is that the “IRS lacks a standard for what constitutes good customer telephone service that could be compared to its annual goals. Such a standard would make the gap between the annual goals and the standard more transparent.”
The IRS is using a tool called Contact Analytics to better understand the reasons why taxpayers call. However, the IRS has not assessed the costs and benefits of storing recorded calls for longer than the current 45-day period for use in Contact Analytics, and the GAO identified gaps in the process used by the IRS to solicit input on call topics from frontline IRS staff. Such input could be used to identify issues for further research using Contact Analytics, the GAO noted.
The IRS’s customer service staff also responds to taxpayer correspondence. The IRS received about 20 million pieces of correspondence in 2010, but it does not have a performance measure that addresses the timeliness of taxpayer correspondence, a key agency objective, according to the GAO. “By not having such a performance measure, IRS managers may have a less informed basis for balancing resources across telephone and correspondence services,” said the report.
The GAO also gave a black mark to the IRS's new program to provide tax refunds on debit cards. While the program was just launched by the IRS last week to the general public (see Treasury Offers Tax Refunds on Prepaid Debit Cards), the IRS offered such debit cards at certain volunteer sites last year, targeting taxpayers without bank accounts, but the cards received little use in 2010, according to the GAO. One reason may be that the IRS’s evaluation of the program did not include taxpayers or volunteers for some reason. By not including these stakeholders, the GAO warned, the IRS risks not learning the real reasons for low participation.
The GAO gave five recommendations to the IRS: to establish a customer service telephone standard, assess the costs and benefits of storing recorded calls beyond 45 days, solicit information on call trends from employees, develop a performance measure for the timeliness of taxpayer correspondence, and involve key stakeholders in its evaluation of its debit card program.
However, according to the GAO, the IRS disagreed with developing a customer service standard, not wanting to revise its measurement of phone service. Still, the GAO argued that a standard would allow the IRS to communicate to Congress what it believes constitutes good service. The IRS also disagreed with assessing the costs and benefits of storing calls beyond 45 days. The GAO suggested that further analysis could show whether the benefits of doing so currently exceed the costs. On the other hand, the IRS generally agreed with the other three recommendations. Good for them.
The GAO inspectors aren’t the only folks in government finding fault with the IRS’s customer service, by the way. Within the IRS and the Treasury Department itself, the Taxpayer Advocate Service and the Treasury Inspector General for Tax Administration have also been critical in their recent reports (see Taxpayer Advocate Pushes for Tax Reform and IRS Needs to Improve Taxpayer Service Programs). Of course, the IRS is pretty much accustomed to criticism by now. In any case, there’s always another tax season in which it can improve its report card.