Background

Each year during the filing season IRS accepts individual income tax  returns electronically and on paper, processes the returns, and validates  key pieces of information. IRS Exceeded Some 2010 Telephone Service Goals, but Timeliness Is Not Included in Paper Correspondence Goals and IRS Could Do More to Improve Service

The percentage of callers seeking live assistance who actually received  it—referred to as IRS’s Customer Service Representative Level of Service  (LOS)—improved to 76 percent in 2010 as compared to the previous 2  years, as shown in table 2. IRS Does Not Have a Customer Service Telephone Standard

The decline in IRS’s live telephone assistance goal from 82 percent in 2005  through 2008 to 71 percent in 2010 raises questions about what constitutes  good customer service. Once set, however, IRS officials identified several challenges  to meeting such a standard, including:  the potential need for additional resources;  the need to balance resources between telephone services, other taxpayer  services, and enforcement activities;    unexpected changes in agency priorities which require the flexibility to  shift resources to respond; and    potentially significant fluctuations in call volume, including those resulting  from tax law changes. By not consistently using existing processes  to solicit input from IRS’s frontline employees to identify issues for further  research, including contributing ideas for Contact Analytics, IRS may miss  areas of importance to taxpayers which could improve taxpayer service. IRS Does Not Have Performance Measures to Assess the Timeliness of Its Taxpayer Correspondence Services

IRS’s frontline assistor staff is trained to respond to both telephone  inquiries and taxpayer correspondence. In all, IRS has five balanced  performance measures that address the productivity of its telephone  service. Visits to IRS’s Web Site Increased and IRS Is Taking Steps to Improve Taxpayer Satisfaction

Visits to IRS’s Web site continue to increase, and in particular, the use of  automated services like “Where’s My Refund?” is substantially higher than  in 2007, as table 6 shows. application, which  determines whether the taxpayer received the $250 stimulus payment in  2009;  the Electronic Filing Personal Identification Number (PIN) application,  which enables taxpayers to request their PIN to sign and file their return  electronically;    Seven Interactive Tax Assistant topics, which use interactive question-and- response processes, similar to what is used by phone assistors, to answer  taxpayer questions about common tax law issues such as filing status,  standard deduction, and eligibility for the Child Tax Credit; and    a state-by-state partial list of volunteer tax preparation sites with contact  and availability information. Accuracy at IRS’s Walk-In Sites Improved, but IRS’s Evaluation of the Debit Card Program at Volunteer Sites Is Missing Stakeholder Input

Through April 30, 2010, IRS received 2.8 million taxpayer contacts at its  401 IRS walk-in sites, about the same as last year. Further, IRS introduced a new return preparation assistance  accuracy measure, which assesses the extent to which IRS staff prepares  accurate returns. Return preparation accuracy by  volunteers increased compared to 2009. IRS  included its partner bank institutions in its evaluation of the program’s  2010 performance, but the evaluation did not include other key  stakeholders, such as taxpayers or partners from volunteer sites where the  program was implemented. Although IRS dealt with  a number of challenges this filing season, its performance improved in  some areas and IRS met some goals. For example,  assessing the costs and benefits of storing recorded calls for longer than  the current 45-day period could help IRS use Contact Analytics to better  determine why taxpayers call. He disagreed with two  recommendations. He also agreed  with the recommendation to develop a performance measure for taxpayer  correspondence that includes providing timely service to taxpayers. However, a customer  service telephone standard would serve as a means of communicating to  Congress and others what IRS believes would constitute good customer  service. Having such a standard would make the gap between the standard  and annual performance goals more transparent. Finally, the Deputy Commissioner disagreed with the recommendation  that IRS assess its business units’ needs for holding Contact Analytics calls  beyond 45 days and store calls for this period or document that the costs  of doing so exceed the benefits. Contact Analytics should allow IRS to better  understand the reasons taxpayers call. Because further analysis could  demonstrate whether the benefits of storing calls for a longer period  currently exceed the costs, we believe this recommendation remains valid. As noted earlier in the report, IRS officials attribute the combined effect of  correcting millions of taxpayer errors and conducting targeted pre-refund  compliance checks to missing goals for refund timeliness and refund  interest paid. However, IRS also narrowly missed its goals for deposit  timeliness and efficiency.
Why GAO Did This Study

The Internal Revenue Service's (IRS) filing season is an enormous undertaking that includes processing individual income tax returns, issuing refunds, and responding to taxpayers. GAO was asked to assess IRS's 2010 filing season performance in relation to its goals and prior years' performance processing individual tax returns, answering telephones, and delivering Web and face-to-face services. To conduct the analysis, GAO analyzed data and documents from IRS, interviewed IRS officials, observed IRS operations, and interviewed tax industry experts.

What GAO Found

IRS dealt with a number of challenges this filing season, including significant tax law changes, such as the Making Work Pay credit, and corresponding changes in taxpayer behavior. IRS balanced its resources across its filing season activities with improvements in some areas but fluctuations in others. Return processing: Electronic filing, which reduces costs to IRS, increased about 3 percent, to 71 percent of all individual returns. However, IRS experienced delays in issuing millions of refunds, which IRS officials attributed primarily to correcting taxpayer errors associated with the Making Work Pay credit and conducting additional automated checks. Telephone service: Compared to 2009, the percentage of callers seeking live assistance who received it improved in 2010 and the accuracy of answers remained high, at over 90 percent. However, the average wait time increased. Further, IRS's annual goal for providing caller assistance was lower than any of the preceding 5 years. However, 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. IRS is using a tool called Contact Analytics to better understand the reasons why taxpayers call. However, 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 GAO identified gaps in the process IRS uses to solicit input on call topics from frontline IRS staff. Such input could be used to identify issues for further research using Contact Analytics. IRS's customer service staff also responds to taxpayer correspondence. 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. By not having such a performance measure, IRS managers may have a less informed basis for balancing resources across telephone and correspondence services. Web site: Visits to IRS's Web site increased and IRS is taking steps to improve content management before introducing a new Web site in 2012. Face-to-face: In 2010, taxpayer visits to IRS's walk-in sites and sites operated by volunteers remained about the same as in 2009. IRS's program to provide refunds on debit cards at certain volunteer sites, targeting taxpayers without bank accounts, received little use in 2010. IRS's evaluation of the program did not include taxpayers or volunteers. By not including these stakeholders, IRS risks not learning the real reasons for low participation. GAO's five recommendations to IRS are 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. IRS disagreed with developing a customer service standard, not wanting to revise its measurement of phone service. However, a standard would allow IRS to communicate to Congress what it believes constitutes good service. IRS also disagreed with assessing the costs and benefits of storing calls beyond 45 days. GAO's report suggests that further analysis could show whether the benefits of doing so currently exceed the costs. IRS generally agreed with the other three recommendations.