January 01, 1998
IRS Takes Further Actions in Response to
Internal Audit Review of the Use of
Enforcement Statistics in the Collection Field Function
In September 1997, the Senate Finance Committee held hearings in
which allegations of IRS employee evaluations based on enforcement
statistics and abuses of taxpayer rights surfaced. The Internal
Revenue Service took those allegations very seriously, and took a
number of steps to determine the degree to which those allegations
were true, as well as actions to reevaluate and change, if
necessary, policies and procedures that may cause unintended
consequences for taxpayers.
At the request of the then-acting Commissioner and the Chief
Inspector, a number of internal reviews were initiated. The first of
three reports on those reviews was released in December 1997, and
focused on the use of enforcement statistics in the Arkansas-
Oklahoma district. The second report was delivered to the Senate
Finance Committee on Jan. 13, 1998. The third report will likely be
issued in March.
Summary of Internal Audit Findings
The second report reviews the use of enforcement statistics in
the Collection Field function at the national and regional levels,
and in 12 districts (three from each of the IRS's four regions). The
12 districts were: Midstates Region - Arkansas-Oklahoma, North
Central and South Texas districts; Northeast Region - Connecticut-
Rhode Island, New Jersey and New England districts; Southeast Region
- Georgia, Gulf Coast and North Florida districts; Western Region -
Northern California, Pacific Northwest and Southwest districts.
The report concluded that the IRS has created an environment
driven by statistical accomplishments that places taxpayer rights
and a fair employee evaluation system at risk. The report presented
the following four issues that collectively created this
The IRS's corporate performance measurement system, through a
statistical ranking of the districts, encouraged the Collection
Field function to emphasize enforcement results without
corresponding emphasis on case quality; adherence to law, policy,
and procedure; or taxpayer rights.
- Three of the five corporate measures for the Collection Field
Function fiscal year 1997 involved dollars collected.
- District offices were ranked from number one through
thirty-three based on the achievement of their goals.
- The achievement of these goals was heavily cited in the
self-assessments and annual evaluations of many branch chiefs,
division chiefs and executives.
- This emphasis led to an environment that heavily focused on
achieving enforcement goals.
Guidance on the use of statistics focused on productivity, did not
reflect Chief Counsel advice, was developed with insufficient
oversight, and encouraged sharing group goals and achievements.
- To provide updated guidance to managers on effectively using
statistics to manage programs and increase productivity, a task
group convened early in FY 1995 to revise the Managing
Statistics desk guide, first published in 1988, and updated in
1989 and 1992.
- The resulting Document 9429, Managing Statistics: A Discussion
Leaders'. Guide for Collection Managers, published in July 1995,
contained language that demonstrated a shift from customer
service to increasing productivity.
- Chief Counsel's review of the initial draft document
identified questionable language that Collection did not appear
to adequately resolve.
Although Internal Audit did not identify widespread use of
enforcement statistics in revenue officer evaluations, they did
identify considerably more use in group manager (managers who are in
charge of a group of revenue officers) evaluations. Revenue officers
and group managers work in an environment that stresses statistical
goals and achievements, and the use of enforcement tools.
- The report did not identify widespread use of enforcement
statistics in revenue officer evaluations. Only three percent of
1,565 evaluations contained direct references to enforcement
statistics. Seven of the 12 districts had no violations, and 39
of the 52 violations occurred in one district.
- Considerably more use of enforcement statistics were
identified in group manager evaluations. References to
enforcement statistics were contained in 129 of 339 group
manager evaluations. Only two districts did not have any
- Approximately one-fourth of the revenue officers and group
managers stated that they feel pressure to achieve enforcement
goals and take enforcement actions.
The TBOR-required certification process as practiced by management
is essentially perfunctory in nature. National and regional
oversight of the use of enforcement statistics and goals is limited.
- TBOR requires district directors to certify quarterly whether
any violations on the use of enforcement statistics have
occurred. The process practiced by districts is perfunctory in
nature; group managers and/or branch chiefs initiate the process
by self-assessing that violations have not occurred.
How the IRS is Responding to the Findings
The IRS has already taken a number of steps in response to both
the Senate Finance Committee hearings, and to the first audit report
released in December. Those steps already taken will address many of
the issues raised in the second audit report. Specifically, the IRS
Suspended the distribution of goals relating to revenue
production to field offices, and stopped the practice of ranking
the 33 districts on results.
Required the Collection division chief's approval of all
proposed seizures, and required the district director's approval
of seizures of a residence, its contents, or perishable goods
(effective Nov. 24, 1997)
Redirected the efforts of the IRS's Measures Advisory Group to
identity performance measures that will promote quality and
appropriate case actions consistent with customer service and
taxpayer rights issues.
Started a review of all liens and levy procedures and practices.
The IRS has also taken a number of steps to improve its customer
service to taxpayers, and provide a forum for their complaints. The
Initiated a Problem Solving Day in every district once a month
that provides taxpayers the opportunity to meet face-to-face
with district officials to resolve their tax problems.
Opened the customer service help lines six days a week, 16 hours
Initiated with a contractor the development of a customer
satisfaction survey for all business areas which interact with
Developed an employee feedback system with employees nationwide
who interact with taxpayers to determine what poor treatment of
taxpayers exists, what the causes of that poor treatment are,
and suggested solutions.
In response to the specific findings of the second audit report,
the IRS has taken the additional following steps:
On December 22, 1997, the Deputy Commissioner recalled Document
9429, Managing Statistics Within the Collection Function.
Collection personnel were directed to rely on the overall
guidance contained in Document 7300, Managing Statistics (1992).
New guidance revisions are scheduled to be available by March
At the IRS's request, GAO is currently conducting an overall
review of the quarterly certification process. Immediate action
is being taken to include reviews of employee performance file
materials and evaluations of managers in the certification
process. The independence of the review process will also be
increased. These changes in the certification process will
result in new regular reviews of each district's compliance with
the Taxpayer Bill of Rights, and will be effected by Feb. 15,
The IRS will administratively apply TBOR to all enforcement
activities, not just Collection, and it will expand P-1-20 to
front line managers of enforcement personnel. Guidance
communicating these changes will be issued by Feb. 15, 1998.
Each of the compliance functions is currently reviewing all
materials that influence the way compliance activities are
managed in order to clarify expectations for all levels of
management on the way in which they should be involved in the
monitoring and management of case activity and engagement with
their employees. These materials will be revised by May 1, 1998.
The procedures that govern the clearance of documents containing
reference to interpretation of Service policy will be
strengthened so that any legal concerns raised by Chief Counsel
will be adequately addressed. These strengthened procedures will
be issued by Commissioner memorandum by Feb. 1, 1998.
These measures will remedy the specific issues raised by the
second report. Additionally, the IRS Commissioner announced on Jan.
13 the following initiatives:
A panel will be created to objectively determine disciplinary
actions to be taken in cases arising from the Chief Inspector's
Based on the results of the report, the IRS is reviewing the
need to examine activities in all other IRS offices.
The Commissioner is issuing a directive to all employees
underscoring the importance of and the need to comply with the
provisions of the Taxpayer Bill of Rights, and the severe
consequences of failing to do so.
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