Correspondence. Online services. IRS Improved Customer Service, Managed Multiple Challenges Processing Returns, and Identified More Potential Fraud and Noncompliance Compared to Last Year

		Customer Service Generally Improved During the 2018 Filing Season

IRS’s telephone, online, and in-person services generally improved during  the 2018 filing season compared to prior years. Telephone Service

During the 2018 filing season, IRS slightly improved its telephone level of  service—the percentage of callers seeking and receiving live  assistance—and reduced wait times (see fig. From January 1 through  April 21, 2018, IRS estimated that it answered 80 percent of calls seeking live assistance, which is a slight  increase from about 79 percent for the same period last year, and  reduced the average caller’s wait time to speak to an assistor from 6.5  to 5.1 minutes. However, through April 21,  2018, the overage rate of correspondence—the percentage of cases  generally not processed within 45 days of receipt by IRS—was 36.8  percent compared to 26.4 percent at the same time last year. To improve the management of taxpayer services, in 2015 we  recommended that the Secretary of the Treasury update the Department  of the Treasury’s (Treasury) performance plan to include overage rates  for handling taxpayer correspondence as a part of Treasury’s  performance goals. Treasury neither agreed nor  disagreed with our recommendation, and as of June 2018, it had not  included correspondence overage rates as a performance goal in its  performance plan. We continue to believe that this recommendation is  valid. Despite these challenges, use of IRS’s online account has increased  since its launch. IRS Managed Multiple Processing Challenges During the 2018 Filing Season Including Changes in Tax Law and Issues with Hiring and Redistributing Work Responsibilities

IRS started the filing season on January 29, 2018, approximately 1 week  later than it has in recent years to ensure the security and readiness of  processing systems and to assess the potential impact of recently passed  tax laws on 2017 tax returns. IRS Developed a Management Structure to Implement the Tax Cuts and Jobs Act and Address Associated Challenges and Took Steps to More Fully Involve Human Capital Decision Makers

		IRS Developed a Management Structure to Implement the Tax Cuts and Jobs Act and Took Steps to More Fully Involve Its Human Capital Decision Makers

To address the changes included in the Tax Cuts and Jobs Act, in  January 2018 IRS established the Tax Reform Implementation Office  (TRIO), a central office that coordinates implementation efforts. To implement the Tax Cuts and Jobs Act, IRS’s Human Capital Office  (HCO) estimated that the agency will need to hire and train staff to fill  approximately 1,100 positions requiring a variety of competencies and  provide additional training on tax law changes for current employees. Participation will help HCO to  manage its operations more strategically, for example, by planning for  training required ahead of the 2019 filing season. Based on our discussions with IRS officials about HCO’s role in tax law  implementation, in June 2018, HCO began participating in the weekly  TRIC calls. To implement 119 provisions of the Tax Cuts and  Jobs Act, IRS will need to (1) interpret the law; (2) create or revise  nearly 500 tax forms, publications, and instructions; (3) publish  guidance and additional materials; (4) reprogram 140 interrelated  return processing systems; (5) hire additional staff and train its  workforce to help taxpayers understand the law and how it applies to  them; and (6) conduct extensive taxpayer outreach. IRS officials  stated that these provisions will require extensive changes relevant to  both individual and business filers and affect all areas of IRS. One-year time frame. IRS has taken a number of steps to implement time-sensitive provisions  of the new law. IRS officials noted that while some provisions of the Tax  Cuts and Jobs Act are retroactive or relevant to the 2018 filing season,  most will not take effect until the 2019 filing season. In its written comments, IRS generally  concurred with our findings and noted a concern regarding interpretation  of correspondence overage data. IRS said that the overage rate we report  is based upon the open inventory at the end of the fiscal year.
Why GAO Did This Study

During the tax filing season, generally from January to mid-April, IRS processes over 100 million individual tax returns and provides telephone, correspondence, online, and in-person service to tens of millions of taxpayers. In 2018, IRS had to begin taking steps to implement major tax law changes passed in what is commonly referred to as the Tax Cuts and Jobs Act that affect both individuals and businesses.
GAO was asked to review IRS's performance during the 2018 filing season and its efforts to implement the Tax Cuts and Jobs Act. GAO assessed IRS's (1) performance providing service to taxpayers and processing individual tax returns and (2) early efforts to implement the Tax Cuts and Jobs Act.
GAO analyzed IRS documents and data and interviewed IRS officials.

What GAO Found

The Internal Revenue Service (IRS) generally improved its customer service during the 2018 filing season compared to prior years and managed multiple return processing challenges. For the third year in a row, IRS improved its telephone service by answering 80 percent of calls seeking live assistance and reducing wait times to about 5 minutes, as of the end of the 2018 filing season. This compares to 37.5 percent of calls answered with an average wait time of about 23 minutes during the 2015 filing season. Taxpayer use of online services also increased, including irs.gov and its online account tool for taxpayers to view their balances due. However, answering taxpayer correspondence remains a challenge—IRS was late responding to about 37 percent of correspondence as of the end of the 2018 filing season compared to about 26 percent at the same time in 2017. In 2015, GAO recommended that the Department of the Treasury (Treasury) include timeliness in handling taxpayer correspondence as part of its performance goals, but as of June 2018 Treasury had not done so. Overall, despite multiple challenges including mid-filing season changes to tax law and a computer system failure, IRS met its processing targets for individual tax returns.
In 2018, IRS began taking steps to implement significant tax law changes from Public Law 115-97—commonly referred to by the President and many administrative documents as the Tax Cuts and Jobs Act. To implement the changes, IRS established a centralized office to coordinate implementation across IRS offices and divisions. IRS officials cited the broad scope and complexity of the changes—which will require extensive changes to tax forms, publications, and computer systems—along with the 1 year time frame as key implementation challenges. Although IRS has taken steps to address these challenges, such as developing a project planning tool, GAO found that the new coordination office did not initially fully include the Human Capital Office (HCO), the division responsible for managing the agency's workforce. Based on GAO's discussions with IRS officials, representatives from HCO now attend weekly coordination meetings discussing and planning the tax law changes. Involving HCO in these discussions will better position IRS to hire new employees and train them and the existing workforce. It will also help HCO better understand training requirements and staffing needs ahead of the 2019 filing season.

What GAO Recommends

Because HCO is now attending the weekly meetings, GAO is not making a related recommendation. In addition, GAO believes that its 2015 recommendation to Treasury to include timeliness in handling correspondence as part of its performance goals, which Treasury neither agreed or disagreed with, is still valid. IRS generally concurred with GAO's findings but noted concerns with interpreting the percentage of correspondence considered “overage” (more than 45 days old). GAO clarified its report but notes that while the open inventory of overage correspondence at the end of the fiscal year is not representative of total overage items for the year, the overage rates are relatively consistent throughout the year.