Four workstreams include a wide range of examination  appeals where IRS is proposing additional tax and penalty assessments  based on auditing tax returns. For proposed examination actions to assess  additional taxes and penalties or collection actions, such as filing a notice  of federal tax lien or proposing a levy to collect delinquent taxes, IRS  notifies the taxpayer in writing about the proposed compliance action and  explains their appeal rights. The appeal request must include:  the taxpayer’s name and address, and a daytime telephone number; a statement that the taxpayer wants to appeal the IRS findings to the a copy of the letter showing the proposed changes and findings that  the taxpayer does not agree with;  the tax periods or years involved; a list of the changes that the taxpayer does not agree with, and why  the taxpayer does not agree;  the facts supporting the taxpayer’s position on any issue that the  taxpayer does not agree with;   the law or authority, if any, on which the taxpayer is relying; and a signature on the written protest, stating that it is true, under the  penalties of perjury. Appeals decision. Appeals Has Not Conducted a Skills Gap Analysis

To handle the diverse array of taxpayer appeals across all workstreams,  IRS relies on an Appeals workforce that must have sufficient numbers of  staff with expertise in all areas of tax law. As shown in figure 8, Appeals staffing levels have declined from 2,172 in  fiscal year 2010 to 1,345 in fiscal year 2017, nearly a 40 percent  decrease. Appeals anticipates a continued risk of losing subject matter expertise  given that a large share of its workforce is eligible for retirement. According to an Appeals report, at the end of fiscal year 2017, about   one-third of the Appeals workforce was eligible for retirement. IRS Does Not Monitor Timeliness of Transfers of All Incoming Appeal Requests and Appeals Does Not Communicate Total Resolution Times to Taxpayers

		Appeals Has a Data- Driven Process and Measures to Track and Manage Case Workstreams

Within the standard process that all appeal cases follow, Appeals has  developed a series of process measures that use ACDS data to monitor  the amount of time for a case to move through an Appeals workstream. For appeal cases closed from fiscal years 2014 through 2017, table 2  shows the average number of days from when IRS received a taxpayer  appeal to when the compliance unit completed its review and transferred  the case file to Appeals. With management approval, collection units may have an additional   45 days to continue working with the taxpayer to resolve the collection  issue in dispute. The IRM time requirement does not specifically apply to  offer in compromise collection appeals. In fiscal year 2017,  approximately 57 percent of collections due process appeals were  transferred in less than 45 days and approximately 93 percent of these  cases were transferred within 90 days. Our analysis of ACDS data showed that about two-thirds of all  examination appeals closed in fiscal years 2014 through 2017 had been  transferred from IRS examination compliance units within 90 days. Delays in transferring examination appeal requests can result in  increased costs for taxpayers because interest continues to accumulate  on the tax liability during the appeal process. Approximately 85 percent of all cases were  resolved within 1 year of when the taxpayer requested an appeal. Information about actual total appeal resolution times is not shared with  taxpayers. Without easily accessible information, taxpayers are not well  informed on what to expect when choosing to request an appeal. According to Appeals officials,  Appeals has conducted a customer satisfaction survey for over a decade. Without an effective mechanism to regularly consider and review  customer feedback and policy changes before implementation, Appeals is  missing an opportunity to obtain public input on policy changes that can  substantially affect the taxpayer’s experience in the appeal process. For appeal cases closed in  fiscal year 2017, approximately 4 percent of collection appeals cases and  nearly one quarter of examination appeal requests took more than   120 days to be transferred from IRS to Appeals. Appeals maintains data on the time taken to transfer appeals and  monitors the progress and time to resolve appeals within its diverse  workstreams. Improving the taxpayer experience with the appeals process also  depends on clarity on customer service standards and related  performance results. (Recommendation 2)
The Commissioner of Internal Revenue should establish timeframes and  monitoring procedures for timely transfer of taxpayer appeals requests by  examination compliance units to the Office of Appeals. (Recommendation  3)
The Commissioner of Internal Revenue should direct the Chief of Appeals  to regularly report and share with each compliance unit the data on the  time elapsed between when a taxpayer requests an appeal to when it is  received in the Office of Appeals. (Recommendation 4)
The Commissioner of Internal Revenue should provide more  transparency to taxpayers on historical average total appeal resolution  times. (Recommendation 5)
The Secretary of the Treasury, consistent with its responsibilities under  GPRAMA and Executive Orders for customer service, should ensure that  the Commissioner of Internal Revenue takes action to make Appeals  customer service standards and performance results more transparent to  the public. (Recommendation 6)
The Secretary of the Treasury, consistent with its responsibilities under  GPRAMA and Executive Orders for customer service, should ensure that  the Commissioner of Internal Revenue takes action to develop a  mechanism to solicit and consider public input and customer feedback on  a regular basis on current and proposed IRS appeal policies and  procedures. This could include leveraging existing IRS advisory bodies or  establishing an Office of Appeals advisory body representing the  taxpaying public, the tax practitioner community, and businesses to solicit  customer perspectives.
Why GAO Did This Study

The Taxpayer Bill of Rights entitles taxpayers with the right to appeal a decision of the Internal Revenue Service (IRS) in an independent forum. GAO was asked to review this administrative appeal process within IRS.
Among other things, this report (1) describes the IRS appeal process and staffing; (2) assesses how IRS monitors and manages the time to receive and resolve taxpayer appeals cases; and (3) evaluates the extent to which Appeals communicates customer service standards and assesses taxpayer satisfaction with the appeal process.
GAO reviewed IRS guidance, publications, and documentation on the appeal process. GAO analyzed IRS data for administrative appeal cases closed in fiscal years 2014 through 2017 to compare appeal case resolution time for different types of cases. GAO interviewed IRS officials and a non-generalizable sample of external stakeholders, including attorneys and accountants, knowledgeable about the appeal process. Among other things, GAO compared IRS actions to federal standards for internal control and customer service.

What GAO Found

The Internal Revenue Service (IRS) has a standard process to resolve a diverse array of taxpayer requests to appeal IRS proposed actions to assess additional taxes and penalties or collect taxes owed. The process begins with a taxpayer filing an appeal with the IRS examination or collection unit proposing the compliance action and ends with a decision from the Office of Appeals (Appeals).
Appeals must have staff with expertise in all areas of tax law to review taxpayer appeals. However, its staffing levels declined by nearly 40 percent from 2,172 in fiscal year 2010 to 1,345 in fiscal year 2017. Appeals anticipates a continued risk of losing subject matter expertise given that about one-third of its workforce was eligible for retirement at the end of last fiscal year.
Appeals monitors the number of days to resolve taxpayer appeals of examination, collection, and other tax disputes. However, IRS does not monitor the timeliness of transfers of all incoming appeal requests. GAO analysis showed that the time to transfer appeal requests from compliance units varied depending on the type of case (see table below).
Collections workstreams —taxpayer appeals where IRS (1) filed a notice of federal tax lien or proposed a levy (collection due process) or (2) rejected an offer to settle a tax liability for less than owed (offer in compromise).
The Internal Revenue Manual (IRM), IRS's primary source of instructions to staff, requires transfer to Appeals within 45 days for the largest collection workstream. With manager approval, collection staff may have an additional 45 days to work with the taxpayer. Nearly 90 percent of collection appeals closed in fiscal years 2014 to 2017 were transferred to Appeals within 90 days.
Examination workstreams —taxpayer appeals of additional tax and penalty assessments IRS proposed based on its auditing of tax returns over a wide range of examination issues.
IRS does not have an IRM requirement with guidelines and procedures for timely transfer for examination appeals. Accordingly, more than 20 percent of examination appeals closed in fiscal years 2014 to 2017 took more than 120 days to be transferred to Appeals. Delays in transferring appeals can result in increased interest costs for taxpayers.
Although Appeals maintains data on total appeal resolution time—from IRS receipt to Appeals' decision—such information is not readily transparent to IRS compliance units or the public. GAO analysis of IRS data found that, for fiscal years 2014 to 2017, about 15 percent of all appeal cases closed within 90 days (see figure below). About 85 percent of all cases were resolved within one year of when the taxpayer requested an appeal. Total resolution times differed by case type. However, without easily accessible information on resolution times, taxpayers are not well informed on what to expect when requesting an appeal.
Although Appeals has customer a service standard and conducts a customer satisfaction survey, its standard and related performance results are not readily available to the public. Under the GPRA Modernization Act of 2010 (GPRAMA) and Executive Orders, the Department of the Treasury is responsible for customer service performance. Appeals conducts outreach to the tax practitioner community but does not regularly solicit input before policy changes. Without a mechanism, such as leveraging existing IRS advisory groups or alternatively developing its own advisory body, Appeals is missing an opportunity to obtain public input on policy changes affecting the taxpayer's experience in the appeal process.

What GAO Recommends

GAO makes seven recommendations to help enhance controls over and transparency of the IRS appeals process (several of the recommendations are detailed on the following page).
GAO recommends, among other things, that the Commissioner of Internal Revenue
Establish timeframes and monitoring procedures for timely transfer of taxpayer appeals requests by examination compliance units to the Office of Appeals.
Direct the Office of Appeals to regularly report and share with each compliance unit the data on the time elapsed between when a taxpayer requests an appeal to when it is received in the Office of Appeals.
Provide more transparency to taxpayers on historical average total appeal resolution times.
GAO recommends, among other things, that the Secretary of the Treasury, consistent with its responsibilities under GPRAMA and Executive Orders for customer service, ensure that the Commissioner of Internal Revenue develops a mechanism to solicit and consider customer feedback on a regular basis on current and proposed IRS appeal policies and procedures.
Treasury and IRS agreed with GAO's recommendations, and IRS said it will provide detailed corrective action plans.