	IRS’ Business Vision

In 1992, IRS developed a new business vision for 2001 that was designed to address critical longstanding problems with its programs, such as the lack of accurate and readily accessible information on taxpayers, their accounts, and IRS operations, which are due in part to an antiquated tax return processing system that relies on labor-intensive, error-prone methods to process over 200 million, primarily paper, tax returns annually; taxpayers’ frustration in dealing with IRS as they seek to resolve tax law or account questions (these frustrations revolve around very low levels of telephone accessibility, confusing and hard-to-understand notices, and the need to repeatedly call or correspond with IRS to resolve tax issues); and a stagnant level of taxpayer compliance and a sizable inventory of accounts receivable. During the past 4 years, IRS has made some progress in modernizing its operations to reflect its business vision, but the differences between IRS’ current operations and those proposed in its vision are great. Although IRS has taken some steps to increase the number of electronic returns filed, it does not have a comprehensive business strategy to reach its electronic filing goal of 80 million filings by 2001. IRS has identified which five centers will specialize in paper processing and has consolidated the processing of paper information returns and Federal Tax Deposit coupons in those centers with the rollout of the Service Center Recognition Image Processing System (SCRIPS). However, SCRIPS is performing well below IRS’ original expectations. IRS Faces Several Challenges in Implementing Its Customer Service Vision

The second part of IRS’ business vision is to improve service to taxpayers and improve its efficiency in using resources. A key IRS goal is to resolve 95 percent of taxpayer inquiries after one contact. IRS’ strategy for improving customer service includes consolidating work units, changing work processes, and increasing the use of or implementing new information systems. Early in 1995, IRS implemented a networking capability among the 10 service centers so that employees could have access to IDRS data nationwide. It is this latter group that IRS must deal with in its efforts to collect delinquent taxes. IRS’ inventory of tax debt includes delinquent debts that may be up to 10 years old. IRS must clearly define its business needs and determine the most cost-effective means for meeting those needs to ensure that it makes effective use of funds provided for information technology projects.
Why GAO Did This Study

GAO discussed the Internal Revenue Service's (IRS) efforts to make its organization, operations, and processes more effective and efficient and improve customer service.

What GAO Found

GAO noted that: (1) during the past 4 years, IRS has made some progress in modernizing its operations to reflect its business vision; (2) although IRS has taken some actions to increase the number of electronic returns filed, it does not have a comprehensive strategy to reach its electronic filing goal by 2001; (3) IRS has consolidated the processing of paper returns in those centers with the Service Center Recognition Image Processing System (SCRIPS), but SCRIPS is performing well below IRS original expectations; (4) IRS faces several challenges in implementing its customer service vision; (5) a key IRS goal is to resolve 95 percent of taxpayer inquiries after one contact; (6) IRS strategy for improving customer service includes consolidating work units, changing work processes, and implementing new information systems; (7) IRS expects that 45 percent of all taxpayers' calls will be resolved through interactive telephone systems by 2000; (8) IRS has implemented a networking capability among its 10 service centers for employees to gain access to taxpayer data nationwide; (9) IRS must deal with its limited ability to collect delinquent taxes and manage its accounts receivable; (10) IRS inventory of tax debt includes delinquent taxes up to 10 years old; and (11) IRS must clearly define its business needs and determine the most cost-effective means for meeting those needs.