Detailed Information on the
Internal Revenue Service Taxpayer Advocate Service Assessment

Improve program performance by developing a unit cost measure for its casework by 2006 (delayed to 2008). Spring 2008 Update: TAS identified data limitations on the new time reporting system (automatically captures the amount of time spent on cases in the TAMIS) during Phase I implementation, and plans to address these limitations during Phase II implementation is scheduled for December 2008. Upon completion of Phase II, TAMIS (using a graphical front end screen) will allow users to capture time spent on cases even when TAMIS is not used (e.g., research, telephone calls, etc.). In order to develop cost system and eventually cost measures, TAS must have time data, fiscal data and case complexity data. In FY 2009, TAS will track reliability and utility of Phase II time data results and results from case advocacy cost indicators. In the interim, two case advocacy cost indicators have been developed: Closed Cases per Case Advocacy Full Time Equivalent (FTE) and Closed Cases per Direct FTE. Additionally, IRS will explore available opportunities for integrating the time data with performance data, a first step in development of full cost measures.

Improve program performance by exploring other means to measure effectiveness in solving systemic problems leading to taxpayer hardship. IRS will report its findings in 2006 for possible inclusion in its FY 2008 Budget. (findings delayed until 2007) Spring 2008 Update: The TAS Systemic Advocacy group administered its first internal customer satisfaction survey and completed an analysis and report of survey responses. Based on the report recommendations some procedural changes have already been implemented such as automated generation of notification to inform that TAS has accepted or rejected an issue, the reasons why, and the project created to address an accepted issue, providing periodic updates to issue submitters on the status of a project and promoting successes in periodic articles and the "Wednesday Weekly" newsletter, The rollout of SAMS (Systemic Advocacy Management System), Version 2, in early FY 2009 will include process improvements that are expected to increase customer satisfaction rates for internal (TAS & IRS) submitters of Systemic Advocacy. A second survey will be administered at the end of FY 2008. TAS is baselining its efficiency and effectiveness data and plans to establish 2009-2011 performance targets by September 2008. TAS is also developing recommendations for reducing the number of cases resulting from systemic issues by identifying underlying causes and implementing solutions as a result of a joint study with the Wage & Investment division focusing on amended returns referred to the Taxpayer Advocate for intervention due to processing delays. After implementation of the recommendations,TAS will gauge the impact using the number of systemic cases related to processing amended returns they receive. Improvements impacting the W&I cycle time for amended return processing will also be tracked. TAS has initiated a similar effort with Small Business/Self-Employed Division focusing on the cases originating in that Division from the CAWR/FUTA adjustment program.

Improve program performance by improving case quality to 91.5 percent by 2006, 93 percent by 2009, and 95 percent by 2014. Spring 2008 Update: Despite rising case receipts and declining resources, TAS has maintained a high rate of overall case quality. Thus far in FY 2008, TAS has hired 142 Case Intake Advocates and plans to hire an additional 96 in July 2008. Despite the recent increase in staff, TAS changed its case quality index goal for FY 2009 to 91.7 percent to account for the recent receipt, staffing challenges associated with training a large influx of new hires, and quality trends. TAS plans to implement new case quality standards in FY 2010. To prepare for the new standards TAS will conduct a comparative review of old and new standards along with establishing necessary long-term quality performance targets.

Measure: Case Closure to Receipt Ratio (IRS chose not to use this performance measure.)

Explanation:Shows the Advocate's ability to keep up with its taxpayer problem case workload. Greater than 100 percent indicates case inventory is dropping.

Measure: Casework Quality

Explanation:Quality based on independent evaluation of eight quality standards for a random sample of Advocate taxpayer problem cases. Actuals are based on statistical samples and are accurate within about +/- 1%.

Measure: Customer Satisfaction with Advocate Assistance (IRS chose not to use this performance measure.)

Explanation:Satisfaction of taxpayers receiving assistance from the Advocate based on random surveys (5-point scale with 1 = very dissatisfied and 5 = very satisfied).

Measure: Advocate Systemic Hardship Case Receipts (IRS chose not to use this performance measure.)

Explanation:The Advocate identifies and helps IRS resolve systemic problems that lead to taxpayer hardship. This measure captures the total cases received as a result of IRS systemic problems. This total should drop as a result of Advocate activity.

Is the program purpose clear?

Explanation: The Office of the Taxpayer Advocate (Advocate) was established in legislation to make certain that taxpayers had an independent advocate within the IRS to resolve individual problems and to propose solutions to systemic problems. Its mission is to: 1. Assist taxpayers in resolving problems with the IRS; 2. Identify areas in which taxpayers have problems in dealing with the IRS; 3. Propose changes in the administrative practices of the IRS to mitigate those problems where possible; and 4. Identify potential legislative changes which may be appropriate to mitigate such problems.

Evidence: The functions of the Advocate are prescribed by Internal Revenue Code Section 7803(c)(2). The statute specifies that the Advocate identify and propose both administrative and legislative recommendations that will mitigate taxpayer problems. Cases are accepted into the Advocate program based on criteria established by Internal Revenue Code Section 7811. The specific criteria for Advocate's acceptance of a taxpayer case fall into one of two major categories: financial/economic hardship and systemic hardship. See the National Taxpayer Advocate 2003 Annual Report to Congress.

Does the program address a specific and existing problem, interest or need?

Explanation: As a result of the Senate Finance Committee hearings of 1997, Congress concluded that some taxpayers were not being treated fairly or equitably by the IRS. The IRS Restructuring and Reform Act of 1998 established the Advocate to function as an independent entity within the IRS to represent taxpayers and to protect their rights in their dealings with IRS. The Advocate is responsible for resolving taxpayer problems on both a case-by-case and a systemic basis.

Evidence: Despite continuing improvements in IRS' taxpayer service and strengthened statutory taxpayer rights, the Advocate is still needed in some cases to ensure fair treatment. During FY 2003, the Advocate provided assistance to 205,053 taxpayers who met criteria as defined in Internal Revenue Code Section 7811.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The Advocate plays a unique role in IRS. He/she is charged to act on the taxpayer's behalf both in specific cases and system-wide. He/she is the only employee of the IRS who is allowed and required by statute to publicly take positions on taxpayer issues regardless of whether or not they differ from official IRS positions.

Evidence: Other IRS offices provide service and assistance to taxpayers. IRS' Appeals function even operates independently from other IRS enforcement functions to act as an unbiased arbitrator. However, none have the independence and broad authority of the Advocate.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There is no evidence that an alternative structure would be more effective or efficient in delivering advocate services.

Evidence: Improved service by IRS front-line divisions would reduce the need for the Advocate. If IRS handled all taxpayer cases accurately and fairly in the first place, there would be no need for the Advocate's support. However, given the size and complexity of the tax system, this is unlikely.

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The Advocate's position was created by statute to make certain that taxpayers with serious problems with IRS had recourse if normal IRS systems failed. IRS uses a variety of means to inform taxpayers of their option of contacting the Advocate, including publishing its toll free number in many publications and notices.

Evidence: The Advocate accepts taxpayer cases based on 7 criteria, five of which are statutory (26 USC 7811(a)). There is some risk that taxpayers will use the advocate to solve normal problems rather than regular IRS systems. This would raise overall costs. In future program evaluations, the Advocate should seek information on this question.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The Advocate uses balanced measures to track its success in solving taxpayer problems. This includes case quality, customer satisfaction and closure to receipt ratio. Together these indicate the degree of Advocate success in achieving its goal of helping taxpayers resolve problems with IRS.

Evidence: See IRS's annual performance plans and the Advocate's Strategy and Program Plans and National Taxpayer's Advocate Report to Congress Fiscal Year 2005 Objectives. Both case quality and customer satisfaction (surveys) are based on a random sample of actual cases.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The Advocate set long term goals for closure to receipts, case quality and customer satisfaction in its National Taxpayer's Advocate Report to Congress Fiscal Year 2005 Objectives.

Evidence: Goals include 100% closure to receipts for now through 2010, 95% case quality by 2009, and 4.53 (out of 5) customer satisfaction by 2009.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The Advocate uses the same balanced measures for annual progress as for long term progress (i.e., quality, customer satisfaction and closure to receipt ratio). It is adding "number of systemic hardship cases" as an efficiency measure starting in 2005. It needs to add a unit cost measure for its casework and explore other possible measures of its systemic advocacy function.

Evidence: See IRS's annual performance plans and the Advocate's Strategy and Program Plans and National Taxpayer's Advocate Report to Congress Fiscal Year 2005 Objectives.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Advocate has ambitious targets for its closure to receipts ratio and quality annual measures. Starting in 2005, it will begin setting ambitious goals for customer satisfaction and introduce a new efficiency measure.

Evidence: See IRS's annual performance plans and the Advocate's Strategy and Program Plans.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The Advocate provides support directly to taxpayers rather than working through partner agencies.

Evidence: The Advocate does cooperate closely with other IRS units in ensuring fair treatment of taxpayers and promoting systemic improvements. IRS also runs several grant programs to assist taxpayers (e.g., Low Income Taxpayer Clinics). However, these are not covered in this evaluation.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The Advocate is subject to regular IG audits looking at various aspects of its performance. They often include auditors examining a sample of cases to independently determine whether Advocate case workers reacted correctly. Collectively, these audits provide an independent, quality assessment of the Advocate's success in helping taxpayers resolve IRS problems.

Evidence: Examples of recent IG reports include: The Taxpayer Advocate Service Effectively Responded to Taxpayers Requesting Relief from a Significant Hardship 2001-10-073; The National Taxpayer Advocate Has Improved the Quality of Casework, but Continued Vigilance is Needed to Increase Compliance with Quality Standards 2003-10-074; and The NTA Could Enhance the Management of Systemic Advocacy Resources 2003-10-187.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: IRS has a rigorous planning, budgeting and performance management process that integrates performance planning and budgeting.

Evidence: See Treasury's integrated budget and performance plan. While IRS presents integrated performance plans and budgets, it needs to continue to refine its systems for quantifying the specific performance impacts of specific resource changes. However, IRS has committed to improving this process for the 2006 budget cycle. IRS is also proposing a new budget structure in 2006 which shows the full costs of programs such as the Advocate.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: IRS and the Advocate have processes to focus on and improve management and performance. It has set long term goals and is introducing a new efficiency measure (number of systemic hardship cases). In addition to these efforts, the Advocate should introduce a unit cost measure for its casework and work to find additional independent sources of program evaluation information.

Evidence:  

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Advocate regularly collects and analyzes performance and workload data. It also receives input from several Taxpayer Advocate Panels (citizen advisory committees). This data is used both to improve the Advocate's casework and to guide recommendations for systemic improvements.

Evidence: IRS managers receive monthly reports on the Advocate's and other IRS programs' performance. Every quarter the Advocate personally presents a full performance report to senior IRS leaders. One example of using performance data to improve performance is efforts by the Advocate to improve case quality by tailoring employee training to emphasize areas where quality standards have not been met at acceptable levels. This has contributed to the steady case quality improvements since 2001.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The performance appraisals of Advocate managers are tied to organizational goals by setting "commitments" based on organizational goals for each manager.

Evidence: IRS uses a four step Performance Management System (PMS) process to ensure management accountability for achieving strategic goals. The key features of the PMS process are expectations planning, progress monitoring, performance evaluation and performance recognition. Performance commitments and expectations are developed, during the planning stage, that tie strategic business goals with demonstrable actions. Progress toward business goals are monitored throughout the performance cycle. Managers are evaluated annually and recognized accordingly.????

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: The Advocate's budget is primarily salaries and direct expenses. It is annually assigned a financial plan by IRS's CFO and manages against that plan.

Evidence: Per IRS's financial reports, the appropriation which funds the Advocate (Tax Law Enforcement) has ended each year with a responsible level of unobligated balances at year end.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The Advocate is adding "number of systemic hardship cases" as an efficiency measure starting in 2005. It has presented data on this measure back to 2001. It should also move to measuring unit cost for its casework.

Evidence: This new efficiency measure will be presented in IRS's 2006 Budget.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Advocate collaborates closely with other IRS divisions in day to day case work and in systemic improvements. It also keeps in close contact with taxpayer representative groups outside of government.

Evidence: Recent examples of the Advocate's coordination include: ensuring taxpayer rights in the design of the private collection agent and earned income tax credit error reduction initiatives and redesign of procedures in the offers in compromise program.

Does the program use strong financial management practices?

Explanation: Weaknesses in IRS' financial systems result in a lack of reliable day-to-day management data. IRS is in the process of implementing a modernized financial management system for its administrative programs.

Evidence: Per GAO 2003 report on the IRS financial audit (GAO-04-126): IRS lacks "a financial management system that can produce timely, accurate, and useful information needed for day to day decisions."

Has the program taken meaningful steps to address its management deficiencies?

Explanation: IRS is in the process of implementing a new administrative financial accounting system (October 2004) to address the problems outlined in question 3.6. It has committed to introduce unit cost measures once this new system is functional.

Evidence: See IRS' Business Systems Modernization spending plans.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: As shown by its performance measures, the Advocate has made progress in improving case quality and in working through its case inventory. It has seen a steady decline in systemic hardship cases which it believes results from its efforts to guide improvements in IRS processes. However, it has not yet shown improvements in customer satisfaction scores (already above a 4 on a 5 point scale).

Evidence: See IRS's annual performance reports and internal Budget and Performance Review System reports. Case quality has improved from 71 percent in 2001 to 90 percent in 2004. Closures have exceeded receipts for three years in a row, reflecting the Advocate's success in reducing its backlog of cases. Customer satisfaction has remained above 4 on a 5 point scale.

Does the program (including program partners) achieve its annual performance goals?

Explanation: As noted in question 4.1 above, the Advocate has made progress in improving case quality and in working through its case inventory. Case quality has improved from 71 percent in 2001 to 90 percent in 2004.

Evidence: See IRS's annual performance reports and internal Budget and Performance Review System reports.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The Advocate is introducing a measure of the number of systemic hardship cases referred to the Advocate as a proxy measure for its success in helping IRS to fix problems with its systems that unnecessarily cause taxpayer problems. This measure has shown a steady decline (improvement) since 2001.

Evidence: Systemic hardship cases have declined from 217,000 in 2001 to an 2004 projected level of 131,000. It is possible that factors other than the Advocate's efforts impact this measure (e.g., changes in the quantity or program mix of IRS enforcement efforts). This may reduce the value of this metric for measuring the Advocate's performance.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: There are a number of other ombudsmen offices for state and federal programs. However, none are close enough in structure or mission to the advocate for valid comparisons.

Evidence: See the Advocate's 2003 study of external ombudsmen within the federal government: Independent Advocacy Agencies Within Agencies: A Survey of Federal Agency External Ombudsmen (Publication 4213, IRS Catalog Number 36988J, available at www.irs.gov).

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: A number of evaluations by the Tax IG note the Advocate's effectiveness in casework. The Advocate should seek other sources of independent evaluation to supplement the IG's work. It should also seek evaluation efforts on its systemic advocacy efforts.

Evidence: An example of the IG's evaluation efforts includes a 2003 IG report that the Advocate had "improved the quality of taxpayer service and case resolutions," but noted continuing needs to further improve compliance with case quality standards (200310074).