Taxpayer Advocate Service: Caseload Has Grown and Taxpayers Report Being Satisfied, but Additional Measures of Efficiency and Effectiveness Are Needed
Published: 2007-02-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress created the Taxpayer Advocate Service (TAS) to assist taxpayers in resolving problems with the Internal Revenue Service (IRS) and to propose changes to IRS's practices to mitigate problems affecting taxpayers in general. TAS uses case advocacy and systemic advocacy, respectively, to address these two goals. GAO was asked to address (1) why TAS's caseload has increased since 2004, (2) how well TAS conducted its case advocacy activities in terms of measures such as customer satisfaction and quality, and (3) how well TAS measures and reports its systemic advocacy efforts. GAO interviewed TAS and IRS managers and other staff, reviewed TAS and IRS documents, and analyzed TAS and IRS data.
section_title: What GAO Found
paragraphs: The number of individual taxpayer cases opened by TAS increased substantially in fiscal years 2005 and 2006 and our analysis of TAS and IRS data shows that these increases correlated with increases in IRS enforcement activities both overall and in some specific IRS enforcement programs. For example, changes in the number of tax refunds frozen by IRS coincided with changes in the number of frozen refund cases at TAS. While TAS made changes after fiscal year 2004 to its guidance for accepting new taxpayer cases, this did not notably influence TAS's caseload increase in fiscal years 2005 and 2006. For example, TAS created two additional case acceptance criteria in fiscal year 2006 that resulted in a little more than 500 of the approximately 244,000 cases received that year. TAS measures customer satisfaction and found that the taxpayers TAS serves remained satisfied from fiscal years 2002 to 2006. TAS also measures the quality of its case advocacy and found that this improved from 2002 to 2004 and stayed about the same in 2005 and 2006. While these case advocacy measures are sound, there is important missing information in that TAS does not have meaningful measures of case advocacy efficiency or cost. A meaningful measure of efficiency would consider the ratio of cases closed to the time spent on them and take into account case complexity and the quality of the work, and unit cost information is needed to fully understand this information. TAS is developing the means to capture time per case, the key component of unit cost, and case complexity. TAS currently does not measure the effectiveness of its systemic advocacy efforts. TAS is piloting a program to study systemic advocacy effectiveness in a few areas, but not broadly. Also, it is difficult to determine what actions were taken to address systemic issues raised in the annual report to Congress, TAS's primary method for providing information to Congress and the public about its systemic advocacy efforts. For example, the report describes serious problems faced by the taxpayers but does not include the status of addressing those issues.

section_title: Letter
paragraphs: In response to concerns about the Internal Revenue Service’s (IRS)  handling of taxpayers’ problems, Congress created the Taxpayer Advocate  Service (TAS). TAS was designed to be largely independent of the rest of  IRS and able to promptly and fairly handle taxpayer problems not resolved  through normal IRS channels. TAS divides its work into two primary  functions: assisting taxpayers in resolving individual problems with IRS,  called case advocacy, and proposing administrative and legislative  changes to mitigate problems affecting groups of taxpayers, called  systemic advocacy.
TAS deals with a range of taxpayer problems including delays in cases,  lost payments, and economic hardship (for example, when a refund check  needs to be expedited). In fiscal year 2006 TAS assisted over 240,000  taxpayers, or about 0.2 percent of all individual tax return filers. Between  fiscal years 2004 and 2006, TAS’s case advocacy caseload has grown  substantially, increasing by 43 percent. Such growth matters for at least  two reasons. First, it may be an indicator of TAS and IRS performance at  preventing and resolving taxpayer problems. Second, it is relatively costly  for TAS to get involved in resolving taxpayers’ problems—TAS’s budget  was about $170 million and TAS employed 1,894 staff, or about 2 percent  of IRS’s workforce, in 2006.
Because of Congress’s concerns about whether taxpayers’ issues are  addressed and the resources devoted to TAS, you asked us to review TAS’s  performance. Specifically, you asked us to determine    why TAS’s caseload has increased since 2004,    how well TAS conducted its case advocacy activities in terms of measures  such as customer satisfaction and quality, and    how well TAS measures and reports its systemic advocacy efforts.
To address our objectives, we reviewed and analyzed relevant documents  including federal legislation and related legislative histories; sections of  the Internal Revenue Manual (IRM); the National Taxpayer Advocate’s  2002–5 annual reports to Congress on TAS activities and 2002–7 annual  objectives reports to Congress; Treasury Inspector General for Tax  Administration (TIGTA) reports; TAS guidance related to handling  individual and systemic advocacy activities and the criteria for accepting  individual cases, creating systemic advocacy projects, and for reporting  systemic issues; TAS documents related to its performance measures; and  TAS documents related to the Taxpayer Advocate Management  Information System (TAMIS) and the Systemic Advocacy Management  System (SAMS), the TAS information systems used to track individual and  systemic advocacy activities, respectively. We assessed the reliability of  TAMIS data and determined the data were sufficiently reliable for our  purposes. We compared the existing TAS performance measures to  attributes of successful performance measures using criteria we have  previously developed. In terms of reporting systemic advocacy efforts, we  focused on the annual reports to Congress since they are the primary  method used by TAS to report on systemic advocacy efforts. We  interviewed the National Taxpayer Advocate (the head of TAS, hereafter  referred to as the Advocate) and TAS officials involved with both case and  systemic advocacy in both headquarters and TAS field offices. We also  interviewed officials in the Wage and Investment Division (W&I), Small  Business/Self Employed Division (SB/SE), and Criminal Investigation (CI)  office to obtain their views about coordinating and collaborating with TAS  in order to address taxpayers’ problems and why TAS’s caseload has  increased. We performed our work from September 2005 through  December 2006 in accordance with generally accepted government  auditing standards. Our scope and methodology are described in greater  detail in appendix I.
subsections: section_title: Background
paragraphs: TAS is an independent office within IRS created to assist taxpayers in  resolving problems with IRS, identify areas in which taxpayers have  problems in dealing with IRS, and propose administrative and legislative  changes to mitigate such problems. TAS is the successor to the Problem  Resolution Program (PRP) which IRS founded in 1976 to provide an  independent means of helping taxpayers solve problems that they  encountered in dealing with IRS. Initially, PRP units were established in  IRS district offices. In 1979, IRS expanded PRP to its service centers and  created the position of Taxpayer Ombudsman to head PRP. Generally,  PRP personnel were district or service center employees who did not  report directly to the Ombudsman. The Ombudsman was appointed by and  reported to the Commissioner of Internal Revenue.
Congress has since renamed the Ombudsman the “National Taxpayer  Advocate” and taken steps to enhance the independence of the Advocate.
While the Advocate continues to report to the Commissioner of Internal  Revenue, the Advocate is now appointed by the Secretary of the Treasury  after consultation with the Commissioner of Internal Revenue and the IRS  Oversight Board. In the IRS Restructuring and Reform Act of 1998,  Congress required that the individual not be an IRS employee for 2 years  preceding his or her appointment and that the individual agrees to not  accept a position elsewhere in IRS for 5 years following his or her tenure  as the Advocate. In addition, Congress replaced the prior PRP  organization with an independent reporting structure of taxpayer  advocates who report directly to the Advocate and mandated that a local  taxpayer advocate be available to taxpayers in each state. TAS currently  has 65 local offices with at least one in each state, Puerto Rico, and the  District of Columbia. TAS also has 10 offices located at IRS campuses. The  current Advocate was appointed in 2001.
Section 7803 of the Internal Revenue Code, as amended by the  Restructuring Act of 1998, provides that the National Taxpayer Advocate is  entitled to compensation at the same rate as the highest rate of basic pay  established for the Senior Executive Service under 5 U.S.C. Section 5382  or, if the Secretary of the Treasury so determines, at a rate fixed under the  streamlined critical pay authority set out in 5 U.S.C. § 9503 (up to the  equivalent of the Vice President’s salary, or $212,100 in 2006). The  Advocate is also eligible to receive bonuses. On January 10, 2001, the  Secretary of Treasury approved the appointment of Nina Olson as the  National Taxpayer Advocate under section 7803 and chose to set her pay  using the streamlined critical pay authority. The Advocate’s salary was  $162,100 and her bonus was $22,900 in 2006.
TAS has two primary functions—case advocacy and systemic advocacy,  although it is also responsible for administering the Low Income Taxpayer  Clinic (LITC) Grant Program and overseeing the Taxpayer Advocacy Panel  (TAP). Figure 1 shows TAS’s primary functions as well as sources of work.
TAS receives case advocacy cases through several sources including  referrals from IRS, direct taxpayer contact via walk-in, phone calls, or  mail, and the National Taxpayer Advocate toll-free line. The acceptance  criteria for case advocacy fall into four general categories: economic  burden, systemic burden, best interest of the taxpayer, and public policy.  Economic burden cases involve a tax-related issue that has caused  financial difficulty for the taxpayer. Procedural burden cases involve an  IRS process, system, or procedure that has failed to operate as intended  and, as a result, IRS has failed to resolve or respond to the taxpayer issue.  Best interest of the taxpayer cases are those that raise questions of equity  or taxpayer’s rights in how the tax laws are administered. Finally, public  policy cases are those that the Advocate decided should be worked based  on specific issues or areas of public concern. TAS uses TAMIS to track its  case advocacy activities.
In some cases, TAS is able to use its statutory or delegated authorities to  take the necessary steps to resolve a case. When TAS does not have  statutory or delegated authority to take action, TAS issues an Operations  Assistance Request (OAR) to the function within IRS that can take the  needed action to resolve the taxpayer’s problem. If IRS and TAS are  unable to agree on the proper course of action, TAS might use a Taxpayer  Assistance Order (TAO) to require IRS to take a certain action as  permitted by law, cease an action currently being taken, review an action,  refrain from taking any action, or release property previously levied. In  fiscal year 2006, TAS issued 46 TAOs. Figure 2 provides an overview of the  case advocacy process.
Currently, TAS and IRS are renegotiating the procedures TAS and IRS  functions will follow to process an OAR. Also, officials told us that the  Advocate has reviewed TAS’s delegated authorities with Office of Chief  Counsel, Appeals, Tax Exempt/Government Entities, W&I, and SB/SE  officials and plans to make recommendations to the Commissioner on  possible changes.
TAS receives suggestions for systemic advocacy projects from TAS and  IRS employees and the public. Systemic advocacy officials evaluate each  suggestion to determine if it meets the definition of an immediate  intervention—an administrative issue which could cause immediate,  significant harm to multiple taxpayers that needs quick resolution. For  those issues that do not become immediate interventions, systemic  advocacy officials apply the general criteria described in figure 1 in order  to score each issue. TAS creates a systemic advocacy project for those  issues that meet or exceed the current threshold for converting an issue  into a systemic advocacy project. This threshold can change depending on  available resources to work on systemic advocacy projects. For immediate  interventions and advocacy projects, systemic analysts research the issue  and develop recommendations for IRS. For additional details about  creating immediate interventions and systemic advocacy projects  including a complete list of the criteria used to score systemic issues, see  appendix II.
TAS also conducts systemic advocacy through participation in TAS and  IRS research initiatives and task forces, hosting town hall meetings,  conducting focus groups, and through TAS’s two required annual reports  to Congress. One of the two reports, the annual report to Congress,  hereafter referred to as the annual report, is due by December 31, and  summarizes TAS’s activities during the prior fiscal year. It must include,  among other things, a discussion of at least 20 of the most serious  problems encountered by taxpayers and administrative and legislative  recommendations for resolving taxpayer problems. For details about how  the most serious problems are selected, see appendix IV. The other report,  due by June 30 of each year, must identify the objectives of the Office of  the Taxpayer Advocate for the fiscal year beginning in that calendar year.
Responsibility for the LITC Grant Program was transferred from W&I to  TAS in May 2003. The IRS Restructuring and Reform Act of 1998  established the LITC Grant Program to help accredited academic  institutions and nonprofit organizations represent low-income taxpayers in  controversies with IRS and operate programs to inform individuals for  whom English is a second language about their rights and responsibilities.  TAS has responsibility for selecting LITC grant recipients and conducting  site visits to ensure that LITCs are fulfilling their obligations. See appendix  V for more information on the LITC Grant Program. TAS also has  responsibility for overseeing the TAP, which was established in October  2002 under the Federal Advisory Committee Act as a way of improving IRS  responsiveness to taxpayers’ needs. The panel, consisting of  approximately 104 volunteers nationwide including every state, Puerto  Rico, and the District of Columbia, provides input on IRS’s strategic  initiatives and provides a venue for raising issues identified by citizens.
TAS’s budget is part of the overall IRS appropriation and does not have a  separate line item in the budget. TAS resources are spread across three  appropriations: processing, assistance, and management; tax law  enforcement; and information systems.
TAS’s budget increased from about $135.4 million in fiscal year 2001 to  about $170.3 million in fiscal year 2006. Over 86 percent of TAS’s fiscal  year 2006 budget was for its case advocacy function, while the rest was  split between systemic advocacy, the LITC Grant Program, TAP, and  other expenses such as training, travel, and support. TAS’s full-time  equivalent (FTE) staff years decreased slightly from 2,064 in fiscal year  2001 to 1,894 in fiscal year 2006. Table 1 summarizes TAS’s budget and  staffing.
section_title: Growth in TAS’s Caseload since Fiscal Year 2004 Correlates with Increases in IRS Enforcement Activity
paragraphs: The growth in TAS’s caseload was not uniform over types of taxpayer  problems, but was correlated with increases in IRS enforcement activity.
subsections: section_title: TAS’s Caseload Increased Significantly in Fiscal Years 2005 and 2006
paragraphs: After decreasing from fiscal years 2002 through 2004, TAS’s case receipts  increased 43 percent from fiscal year 2004 to 2006, as shown in figure 3.  Case receipts increased by 28,660 cases or 17 percent in fiscal year 2005  over fiscal year 2004 and another 45,021 cases or 23 percent in fiscal year  2006. Since fiscal year 2004, by comparison, TAS staffing decreased by 171  FTEs as was shown in table 1.
Figure 3 also shows that the number of cases that TAS closed each year  followed a similar pattern as case receipts, with declines in fiscal years  2002–4 and increases in fiscal years 2005 and 2006. In the earlier years the  closure rate exceeded the number of cases coming in, so TAS was  decreasing its backlog of cases. In fiscal years 2005 and 2006, however,  TAS closed fewer cases than it received, and its backlog of cases increased  by around 7,500 cases in each of those years. TAS officials said that the  growing number of cases is posing a challenge to staff, but that the  challenge has not become overwhelming.
The growth in TAS’s caseload after fiscal year 2004 varied across types of  taxpayer problems. (TAS tracks taxpayer problems by assigning one of 114  primary issue codes to each case. Specific issue codes include processing  an original or amended return, lien release, and stolen identity. See app. VI  for a full breakdown of cases by issue code for fiscal years 2002 through  2006.) Furthermore, the percentage of each type of issue, in terms of total  caseload, varied over time. Data on taxpayer issues showed the following:    The growth in caseload was distributed across many issues with 7 issues  increasing by more than 1,000 cases in fiscal year 2005 and 17 doing so in  fiscal year 2006. (See app. VII for a breakdown of issues that increased by  more than 1,000 cases in fiscal years 2005 and 2006.)
The growth in caseload was not uniformly distributed by issue over time.
None of the 5 issues with the greatest growth in fiscal year 2005 were  among the top 5 in fiscal year 2006. Also, the most common issue in both  fiscal year 2005 and 2006, criminal investigation (CI), increased  substantially in fiscal year 2005, but declined in fiscal year 2006.
Total caseload was distributed over many issues with no single issue  accounting for more than 8 percent of the total in fiscal year 2006. For  example, although CI was the largest issue in fiscal years 2005 and 2006, it  accounted for only 14 percent of cases in fiscal year 2005 and 8 percent in  fiscal year 2006.
The issues with the highest number of cases varied from year to year. Of  the 5 issues with the highest number of cases in fiscal year 2002, only 2  remained in the top 5 in fiscal year 2006.
section_title: Growth in TAS’s Caseload since Fiscal Year 2004 Was Correlated with Increases in IRS Enforcement Activities and Specific Enforcement Programs
paragraphs: According to the Advocate, the majority of the increase in TAS’s caseload  in fiscal years 2005 and 2006 was due to an increase in IRS enforcement  activities. For example, the National Taxpayer Advocate’s 2007 Objectives  Report to Congress states that “The impact of the IRS’s substantial  increases in enforcement activities is evident in the corresponding  increase in TAS Taxpayer Delinquent Investigation, Levy, and Automated  Underreporter case receipts.” Data from TAS and IRS are consistent with  this argument, showing a correlation between increases in TAS’s caseload  and increases in IRS’s overall enforcement activities since fiscal year  2004. The data also show correlations between the growth in particular  IRS enforcement programs and the corresponding TAS issues.
However, IRS’s enforcement programs were also growing between fiscal  years 2002 and 2004, a time when TAS’s caseload was shrinking. A senior  TAS official said that increases in IRS enforcement were leading to new  TAS cases in fiscal years 2002–4, but that the increases in caseload were  more than offset by declines for other reasons. For example, the official  stated that in 2000–1, TAS was still clearing out a backlog of taxpayer  problems from the late 1990s and new problems were also arising from  confusion stemming from the major reorganization of IRS from divisions  based on processes to divisions based on types of taxpayers being served.  As TAS dealt with the backlog of cases and as the IRS reorganization was  completed, the number of cases fell. Data for testing this explanation were  not available.
Overall, IRS enforcement activities have been increasing, as shown by the  number of individual examinations in figure 4 and the amount of  enforcement revenue collected in figure 5.
At the same time, the majority of the growth in TAS’s caseload was due to  issues that are enforcement related, as shown in table 2. Table 2 combines  TAS’s 114 types of taxpayer issues into a few broad categories. Categories  that consist largely of enforcement issues, as shown by the shaded rows in  the table, accounted for over half of the growth in TAS caseload between  fiscal years 2004 and 2006. Moreover, there are also enforcement-related  issues in other categories. For example, a case that TAS classifies as  “document processing” may involve a taxpayer having trouble filing an  amended return after an audit.
The correlation between TAS caseload growth and IRS enforcement  increases can also be seen for particular enforcement actions. The two  types of TAS cases that increased the most—CI cases in fiscal year 2005  and levy cases in fiscal year 2006—are examples. While we could not  verify that there was a causal relationship between IRS activity and TAS  caseload, for CI and levy cases, we found a positive correlation. The  number of CI refund freezes increased by 23 percent in fiscal year 2005  over fiscal year 2004 and at the same time the number of TAS CI cases  increased by roughly 71 percent, as shown in figure 6. In December 2005,  the Advocate issued a report critical of the number of taxpayers whose  refunds were frozen and then later released, as well as the lack of  information given to taxpayers about the status of their refund in these  cases and the number of years that freezes are in effect. CI officials said  that they subsequently made significant changes to the program in early  2006, freezing fewer refunds in 2006 and issuing fewer multiyear freezes.  TAS and CI officials said that this likely caused the number of taxpayers  seeking TAS assistance for refund freezes to decrease. While data on the  number of CI refund freezes for fiscal year 2006 were not yet available  when we completed our work, the number of TAS CI cases decreased by  25 percent that year.
Similarly, as shown in figure 7, the number of IRS levy cases increased  between fiscal years 2002 and 2005, including a 35 percent increase in  fiscal year 2005 over fiscal year 2004. The number of TAS levy cases also  increased by 27 percent in fiscal year 2005 over fiscal year 2004.
Although there is a correlation between growth in overall IRS enforcement  activity and growth in TAS caseload, as well as a correlation between  growth in some specific IRS programs and corresponding TAS issues, the  correlation does not always hold. For example, as shown in figure 8, the  number of TAS lien cases increased by 27 percent in fiscal year 2005 while  the number of IRS liens decreased by 2 percent.
section_title: Other Factors Have Also Been Cited as Contributing to TAS’s Increased Caseload
paragraphs: As previously shown in table 2, non-enforcement-related TAS cases also  increased since fiscal year 2004. TAS officials said that increased TAS  outreach and external factors, such as taxpayers with problems related to  the disruptions caused by Hurricane Katrina and changes in the overall  economy, contributed to the caseload increase.
IRS officials and others also said that changes made to TAS’s case  acceptance guidance may have contributed to TAS’s caseload increase.  However, our analysis of TAS data does not support this. The Advocate  made changes to TAS’s case acceptance guidance twice since fiscal year  2004, which is when TAS’s caseload started to increase. On January 13,  2005, the Advocate issued an internal memorandum to all TAS staff called  “Common Sense and Good Judgment in Case Processing.” According to  the Advocate, the memo did not change the criteria but sought to clarify  the criteria and ensure that staff were not creating unnecessary obstacles  for taxpayers seeking TAS assistance. In January 2006, TAS implemented  an expanded version of its case acceptance criteria. The revisions included  slight modifications to some of the existing criteria and the creation of  criteria 8 and 9.
The January 2005 memorandum clarified that TAS should accept all cases  (1) where a taxpayer specifically requests TAS assistance and (2) that  were referred from IRS even if the case does not meet TAS’s case  acceptance criteria to avoid sending the taxpayer back to IRS. According  to the memorandum, in these situations, the case should be classified as  meeting criteria 7—a system or procedure failed to operate as intended or  failed to resolve the taxpayer’s problem. Therefore, if following the  memorandum contributed to the increase in TAS’s caseload, we would  expect to see a disproportionate increase in criterion-7 cases. However,  criterion-7 cases did not increase disproportionately in 2005 and 2006,  rather the number of these cases grew at a slower rate than other cases, as  shown in table 3. Furthermore, the changes made by TAS in January 2006  did not significantly affect TAS’s caseload given that the two added criteria  resulted in just over 500 of the approximately 244,000 cases received in  fiscal year 2006.
section_title: Taxpayers Report Being Satisfied, and Quality Improved in Most Years, but TAS Lacks Measures of Efficiency and Cost
paragraphs: TAS tracks its case advocacy performance in several dimensions. Two of  TAS’s performance measures, customer satisfaction and case quality, meet  all of the criteria that GAO developed as attributes of successful  performance measures. However, its employee satisfaction survey suffers  from a declining response rate and TAS does not measure some important  dimensions of performance such as cost per case.
subsections: section_title: Taxpayers Report Being Satisfied, and Case Quality Improved since Fiscal Year 2002 with a Slight Decline in Fiscal Year 2006
paragraphs: TAS case advocacy performance measures include measures of customer  satisfaction, case quality, and employee satisfaction. Table 4 shows TAS’s  performance against its goals for fiscal years 2002–6.
Taxpayers who have used TAS have consistently reported being satisfied  to very satisfied since fiscal year 2002, as shown by the customer  satisfaction survey results in table 4. TAS determines customer  satisfaction through an independent and confidential telephone survey  process to gauge the opinions of a random selection of taxpayers and their  representatives who had recently closed cases. The survey uses a five- point scale where 5 represents “very satisfied” and 4 represents  “somewhat satisfied.” TAS’s customer satisfaction scores varied only  slightly from fiscal years 2002 to 2006 with customers remaining on  average somewhere between somewhat satisfied and very satisfied. As  shown in table 4, there was only a small amount of change in this measure  from year to year, and only a small difference between actual performance  and the goals for fiscal years 2005 and 2006. For additional information on  TAS’s customer satisfaction results, see appendix VIII.
TAS’s case quality improved between fiscal years 2002 and 2004 (the  changes are statistically significant) and then leveled off, also shown in  table 4. The slight increase in 2005 and the slight decline in 2006 are not  different in a statistically significant sense from the 2004 results. As shown  in table 4, TAS met its case quality goals for 2004 and 2005 but did not do  so in 2006. To calculate the quality index, TAS randomly selects cases each  month and measures them against eight quality standards. These standards  are meaningful in that they cover aspects of quality—timeliness and  technical correctness, for example—that IRS has found important to  measure in other contexts, such as telephone service. The eight standards  and their point values are shown in table 5.
In the past, TIGTA has raised issues with TAS’s timeliness and has made  recommendations that TAS take additional steps to improve timeliness.  TIGTA based its findings on a review of a sample of cases. Although the  Advocate disagreed with TIGTA’s conclusions on specific cases, the  Advocate agreed to make changes to improve timeliness by introducing  two types of case management reviews. The first type is an early  intervention review where a TAS manager must be involved in a minimum  of 25 percent of open cases within 10 calendar days from the received date  for criteria 1–4 cases and within 30 calendar days for criteria 5–9 cases.  The second type of review is a 100-day review where a manager must  review all cases that have been open for 100 days within 15 days of  reaching the 100-day mark, and a minimum of once every 60 days  thereafter. According to the Advocate, these reviews help ensure that  cases are resolved in a timely manner. TAS’s efforts to improve timeliness  are reflected in three timeliness standards that are part of the TAS quality  standards shown in table 5. For example, the score for timeliness standard  number 3, “Did TAS take all subsequent actions timely?” increased from  81.5 percent in fiscal year 2004 to 86.5 percent in fiscal year 2005. Also,  TAS improved on the average number of days it takes to close a case,  which declined from 67.6 in fiscal year 2003 to 51.2 in fiscal year 2006.
Employee satisfaction increased from fiscal year 2002 to 2004 but the  results for 2005 and 2006 (all shown in table 4) may not be accurate  because of declining survey response rates. TAS determines employee  satisfaction through an annual IRS-wide survey conducted by an  independent organization using a five-point scale where 5 represents  “extremely satisfied.” In fiscal years 2002 through 2004, 80 percent or more  of TAS employees responded to the survey while only 48 percent and 33  percent responded in fiscal years 2005 and 2006 respectively. Survey  response rates also declined throughout IRS during this period. Response  rates this low may bias the results if nonrespondents have different  opinions than respondents.
The measures of customer satisfaction and case quality on which the  previous description of case advocacy performance is based are sound,  according to criteria we have previously used for assessing IRS’s  performance measures. These two measures have all the attributes of  successful measures as shown in table 6, including clarity, objectivity, and  reliability. While it is conceptually sound to measure employee satisfaction  with a survey, as already discussed, the employee satisfaction measure  does not satisfy the objectivity and reliability criteria because of the  possibility of nonresponse bias in the survey in recent years.
This attribute applies to the overall suite of  measures. IRS considers these measures to  be balanced since they address priorities  such as employee and customer satisfaction  and business results. However, additional  measures such as cost of service could  improve the balance of TAS priorities.
section_title: TAS Does Not Measure True Case Advocacy Efficiency or Cost
paragraphs: TAS has an additional case advocacy measure called “efficiency” but it  does not measure efficiency as conventionally defined. Nor does TAS have  a measure of cost per case. The efficiency measure, which TAS defines as  the percentage of total case receipts that are procedural burden cases  (cases accepted under criteria 5–7) is missing important attributes of a  successful performance measure, including linkage and clarity. TAS is  working to develop processes to capture components of a meaningful case  advocacy efficiency measure, which will be useful for the development of  a useful efficiency measure in the future.
TAS’s case advocacy efficiency measure is not linked to TAS’s case  advocacy mission. According to the Advocate, TAS developed its  efficiency measure with the thought that the percentage of procedural  burden case receipts should eventually decrease as IRS fixes systemic  problems in response to TAS’s systemic advocacy efforts. However, the  current TAS measure is really a measure of systemic advocacy  effectiveness rather than case advocacy efficiency. The Office of  Management and Budget (OMB) agrees. OMB’s Program Assessment  Rating Tool (PART) review described TAS’s efficiency measure as a proxy  measure for TAS’s success in helping IRS fix systemic problems. However,  it provides only limited information on the success of TAS’s systemic  advocacy mission because it is sensitive to a number of outside factors  unrelated to TAS activities. For example, the number of procedural burden  cases could increase because of an increase in new IRS errors, regardless  of how well TAS had identified corrections for earlier systemic problems.
In addition, TAS’s efficiency measure lacks clarity because it is not a true  measure of efficiency. Simply put, efficiency is the ratio of the outcome or  output to the input of any program. TAS’s efficiency measure includes no  information on inputs into the program, such as time, and does not  adequately measure output.
To develop a true measure of case advocacy efficiency, TAS would need  information on case advocacy outputs, such as the number of cases  closed, and inputs—primarily the amount of time spent on those cases.
Currently, TAS managers do not have information on inputs because TAS  does not track the amount of time spent working each case; however, TAS  plans on implementing a method to track time in January 2007. TAS would  also need to adjust the number of cases closed for the complexity of the  cases and the quality of the work. In a past report, we said that efficiency  measures that are not adjusted for quality and complexity could yield  misleading information. For example, an increase in cases closed per  case advocate would not be a true increase in efficiency if cases were  becoming less complex.
According to TAS officials, cases have been becoming more complex in  recent years; however, we could not verify this because TAS only has a  limited way to measure complexity. At this time, TAS classifies cases as  routine or complex. However, TAS is in the process of developing a more  sophisticated method for determining case complexity. TAS is currently  testing a model for determining the complexity of a case and plans on  making changes to TAMIS in order to collect complexity data. A more  sophisticated complexity index should provide the ability to adjust case  output to reflect changes in complexity over time.
TAS also does not have information on the cost of working each case,  preventing interpretation of efficiency information in light of cost  effectiveness. Having data on the cost of each case would allow TAS  managers, and external stakeholders, to make better decisions about  where to allocate both TAS’s case advocacy resources and systemic  advocacy efforts. Without such data, TAS managers do not know if some  categories of taxpayer issues are noticeably more costly to resolve than  others. The high cost of case advocacy might become a factor in deciding  how to prioritize systemic advocacy efforts. OMB also recommended in its  PART report that TAS introduce a case advocacy unit cost measure. TAS  officials indicated that they will start collecting unit cost data once they  implement a method for tracking time on case.
section_title: TAS and IRS Are Working Jointly to Improve Coordination
paragraphs: As discussed in the Background section, TAS has limited authorities to  take action on some cases. When TAS does not have authority to take  action on a case, it must request that IRS take the action through an  Operations Assistance Request (OAR). TAS and IRS operating divisions  have agreements in place that govern the OAR process. Several IRS and  TAS officials identified coordination problems regarding the OAR process  that could delay the resolution of taxpayer problems. Some of the  problems that IRS officials identified include the following:    TAS sends OARs when TAS could have resolved the case using their  authorities or conversely TAS takes the action when they should have sent  an OAR.
TAS does not always do the necessary research or collect the necessary  documentation before sending an OAR.    OARs have to either be mailed or faxed.    TAS routes OARs to the incorrect area.    TAS accepts cases that do not meet its criteria or where the taxpayer has  not taken the necessary steps to resolve his or her problem with IRS,  which increases OAR volume and circumvents normal case processing.
Some TAS officials also reported some confusion over the OAR process.  For example, officials stated that it is not always clear what  documentation is required and the procedures for taking certain actions in  the Internal Revenue Manual are vague, leaving room for interpretation.  The Advocate’s 2007 Objectives Report to Congress stated that it is a  challenge for TAS employees to identify when an OAR should be sent,  given the continuing state of change in IRS operating division personnel  and procedures. These types of issues could lead to IRS rejecting more  OARs, which causes delays for the taxpayer and unnecessary rework for  TAS and IRS.
The Advocate plans to take actions to reduce the number of rejected  OARs, including identifying TAS and IRS operating division training needs,  improving the clarity of the IRM, and working with IRS operating divisions  to ensure TAS routes OARs to the right place. TAS is also working with  IRS operating divisions to develop a method to send OARs electronically.
TAS has taken actions to deal with past issues related to TAS-IRS  coordination. In 2002, TIGTA found that TAS employees were taking  actions on taxpayer cases that were outside of their authority. In  response to TIGTA’s findings, the Advocate agreed that there was  confusion about the scope of TAS authorities and outlined corrective  actions TAS had taken. As part of those actions, TAS provided additional  training and modified the case quality review to include an accuracy  standard that ensures actions taken are technically and procedurally  correct and within TAS’s authorities. TAS is looking for ways to improve  the quality review and one of the proposals is to isolate the OAR process  during the review so that they can better identify gaps in the OAR process.  Senior TAS officials have provided the Advocate with recommendations  for improving the quality review.
IRS and TAS are also currently reviewing the need to change TAS’s  authorities. The Advocate said that she supports certain additional  authorities, but only those that do not undermine the unique responsibility  of TAS, namely, advocating for the taxpayer inside the IRS. The Advocate  said that she is concerned that her role may become blurred if she is  asking IRS to take an action while simultaneously possessing authority to  take the same action directly. Furthermore, the Advocate said that there  are benefits to having the IRS confront taxpayer issues and become aware  of recurring issues, which may not happen if TAS had the authority to  make the changes itself without IRS involvement.
section_title: TAS Does Not Measure the Effectiveness of Systemic Advocacy, and Reporting on Systemic Issues Is Not as Useful as It Could Be
paragraphs: TAS’s systemic advocacy efforts have the potential to benefit large  numbers of taxpayers. However, since TAS is just beginning to pilot a  process to measure the effectiveness of its systemic advocacy efforts, TAS,  IRS, Congress, and other stakeholders do not know how successful TAS is  at accomplishing its systemic advocacy mission.
subsections: section_title: TAS Is Piloting Process to Measure the Effectiveness of Systemic Advocacy
paragraphs: TAS is piloting a process to analyze a few systemic issues in depth to  assess progress in correcting underlying problems, but does not have a  process for measuring systemic advocacy effectiveness more broadly. TAS  worked with W&I to develop a process for using information from TAMIS  and SAMS, feedback from TAS case workers on new problems observed in  TAS cases, and input from the TAP to identify top systemic issues. TAS  and the operating divisions will then collaborate to identify the root causes  of those issues, implement needed changes to IRS procedures and  systems, and assess whether progress is being made in correcting the  underlying problems. If TAS management decides that the number of  occurrences has been sufficiently reduced, the issues will be replaced by  others. TAS is now piloting this process.
In August 2006, TAS used TAMIS data to identify the top issues. TAS and  W&I officials agreed to address the issue of problems related to processing  amended returns. If the pilot is successful, TAS plans to concurrently  apply the process to three additional issues, replacing each one as the  incidence of the issue has been sufficiently reduced. By using data to  identify issues, testing to determine progress in addressing issues, and  piloting the new process before determining if it should become standard  procedure, TAS has taken the first steps towards developing a system to  measure the effectiveness of its systemic advocacy activities.
While gathering in-depth information about a few systemic advocacy  issues is important, this approach will not provide TAS managers, IRS, or  Congress with an assessment of TAS’s systemic advocacy efforts more  broadly. Using information from TAMIS on the types of new issues coming  in from individual taxpayers and the systemic projects being suggested  through SAMS, TAS managers could develop measures of the extent to  which systemic issues are recurring, which would in turn, provide a  measure of TAS success in identifying and addressing the root causes of  these problems. Past reports by the IRS Oversight Board, TIGTA, and GAO  have also noted the need for TAS to have better information about  systemic advocacy effectiveness.
section_title: Annual Report to Congress Omits Important Information about Whether Systemic Issues Were Addressed
paragraphs: The National Taxpayer Advocate’s annual report to Congress does not  include adequate information about steps taken to address systemic  issues, either new issues or issues raised in the past. IRS managers and  other interested parties, including Congress, need this information to  know whether issues have been addressed to TAS’s satisfaction and  whether additional steps need to be taken.
subsections: section_title: Report Does Not Include the Status of All Legislative Recommendations
paragraphs: The annual report does not provide a way to track the status of TAS’s  legislative recommendations. A table is included in the annual report but it  provides only limited information (see table 7 for a copy of the 2005 table).  We found that the table does not provide potentially useful information,  making it difficult to determine what has happened as a result of a specific  legislative recommendation. For example, the table    does not list all past recommendations, listing only recommendations for  which the current Congress took some action,    omits information about actions taken by prior Congresses either on the  listed recommendations or on previous recommendations,    does not include summaries of the recommendations or how the  recommendations are addressed by proposed legislation, and    does not show the date of the recommendations it includes.
Each annual report includes information on actions IRS has taken or  intends to take related to the most serious systemic problems covered in  that report. The annual reports do not include such information related to  the problems included in previous annual reports. By not including this  information, it is difficult to determine which problems have been  addressed and are no longer serious problems, and what actions, if any,  have been taken or remain to be taken to address a particular problem.
TAS sent the recommendations included in the 2004 and 2005 annual  reports to IRS. IRS provided information about the actions it had taken for  the 2004 recommendations and, as of November 2006, was in the process  of providing TAS with similar information for the 2005 recommendations.  TAS officials said they plan to include an update of IRS actions in response  to recommendations made in the annual reports and that this update may  be included in the annual report or posted on the TAS Web site.
section_title: TAS Does Not Explain Why Most Serious Problems Are Different Each Year
paragraphs: By law, the annual report must include a summary of at least 20 of the  most serious problems encountered by taxpayers. These do not have to be  the 20 worst problems, however, and the Advocate is free to list different  problems from year to year. The annual report does not explain this,  however, and it does not explain what happened to the problems in the  earlier reports. As a result, readers may have the impression that the  problems described in an annual report are the top problems facing the  taxpayers that year. Also, when a problem is included in one year’s annual  report and not in the next, readers may mistakenly think that the problem  has been resolved.
A discussion of prior serious taxpayer problems may be helpful to IRS  stakeholders, including Congress, because the problems cited by TAS vary  from year to year. For example, of the 21 most serious problems included  in the 2005 annual report, only 4 were included in any of the prior three  reports, as shown in table 8.
In addition, TAS’s analysis of the most serious problems included in the  2005 annual report showed that nine problems had not been specifically  addressed in previous reports while the remaining problems were related  to serious problems included in previous annual reports. For example, a  serious problem included in the 2005 annual report was entitled “trends in  taxpayer service” while a problem in the 2003 report was entitled  “taxpayer assistance centers” and a problem in the 2004 report was  entitled “taxpayer access: face-to-face interaction.”
The Advocate said that it is a balancing act each year to decide which  taxpayer problems to include. She said that TAS should not issue an  annual report that repeats many taxpayer problems from year to year  because the annual report is the primary way that TAS informs Congress  and the public about systemic problems. As there are more than just 20  problems facing taxpayers, reporting on new problems every year is the  best approach. Other TAS management officials expressed similar  viewpoints.
In addition, as previously described, the Advocate must also prepare  another report that identifies TAS’s objectives for that year. According to  the Advocate, she uses the objectives report as TAS’s strategic plan and  the report gives her a midyear chance to discuss the effect of IRS  initiatives on taxpayers. The Advocate believes both reports are important  and if they were combined, she would lose a communication tool that  allows her to keep Congress informed about problems taxpayers are  encountering and TAS’s plans to mitigate those problems.
section_title: Conclusions
paragraphs: Congress established TAS to help taxpayers with problems that were not  resolved through normal IRS channels as well as to reduce the number of  such problems through systemic advocacy. The recent increase in TAS  caseload may raise questions about the effectiveness of TAS systemic  advocacy at preventing new taxpayer problems from arising. However, the  available data—particularly the varied makeup of TAS’s taxpayer cases  from year to year—suggest that the increase in caseload may not be an  indicator of TAS and IRS performance at preventing taxpayer problems  but be due to other factors such as increases in IRS enforcement activities  or changes in the economy. As IRS’s enforcement actions have changed  over time, so has the nature of the problems taxpayers bring to TAS. As  certain problems have been reduced in number, other problems have  taken their place.
On the other hand, conclusions about the effectiveness of both case and  systemic advocacy are necessarily limited by a lack of some performance  information. Without measures of case advocacy efficiency and cost, TAS  management lacks information potentially useful for managing its case  advocacy staff and prioritizing its systemic advocacy efforts.  Understanding efficiency is especially important in light of the challenge  posed by a growing caseload. Without a broad-based measure of the  effectiveness of systemic advocacy, TAS, IRS, and Congress lack  information about whether efforts to prevent taxpayer problems, rather  than resolve them after they arise, are achieving any success. Similarly,  TAS’s current reporting leaves key information about the status of the  issues it raises and IRS and congressional responses to past  recommendations unmentioned. TAS may have options about the best way  to provide more complete information to Congress and the public and to  do so does not necessarily mean adding to the length of the annual report.  For example, it might be preferable for TAS to use the Internet to make  available tables listing both current and past recommendations and  summarizing IRS and legislative actions to date. We note that TAS is  already considering posting to its Web site the actions IRS has taken to  address the recommendations related to the most serious problems in the  2004 annual report.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the National Taxpayer Advocate  improve TAS case advocacy performance measures with the addition of a  true measure of efficiency that incorporates case complexity and quality  and a cost measure;    supplement the detailed information on specific systemic advocacy issues  currently being developed with a broad measure of the effectiveness of  systemic advocacy; and  improve TAS reporting by (1) describing actions taken in response to TAS  legislative recommendations, (2) describing actions taken by IRS to  address the most serious problems encountered by taxpayers, and   (3) making it clear that the most serious problems included in the annual  report to Congress are at least 20 of the most serious problems but not  necessarily all of the top problems faced by taxpayers.
section_title: Agency Comments and Our Evaluation
paragraphs: The National Taxpayer Advocate provided written comments on a draft of  this report in a February 12, 2007, letter which is reprinted in appendix IX.  The Advocate agreed with our recommendations. Her letter notes that TAS  already collects quality data which will be needed to develop an efficiency  measure, has taken the first steps to collect case complexity and time  spent on cases to be used to develop cost data, and has submitted work  requests to collect additional case complexity and time spent on case data.  Her letter says that TAS will then use this data to develop a method for  measuring case advocacy efficiency. She also noted that TAS recognizes  the value of a broad measure of the effectiveness of systemic advocacy  and said that TAS will develop one. TAS is implementing an enhanced  process to monitor actions taken in response to TAS legislative  recommendations and the outcomes will be included in the annual report  to Congress and be posted on the TAS web site. TAS will monitor the  status of recommendations included in the annual report that address  serious problems and post the results semiannually on the TAS web site.  TAS included language in the 2006 annual report to Congress to clarify  that the most serious problems included in the report are at least 20 of the  most serious problems but not necessarily all of the top problems faced by  taxpayers.
We also provided a draft of this report to the Commissioner of Internal  Revenue for his review and comment. The draft report did not include any  recommendations addressed to the Commissioner. The IRS Office of  Legislative Affairs provided informal technical comments, and we  incorporated them as appropriate.
As agreed with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after its  date. At that time, we will send copies of this report to the National  Taxpayer Advocate, the Secretary of the Treasury, the Commissioner of  Internal Revenue, and other interested parties. This report is available at  no charge on GAO’s web site at http://www.gao.gov.
If you or your staffs have any questions, please contact me at (202) 512- 9110 or whitej@gao.gov. Key contributors to this report were David Lewis,  Assistant Director; Shellee Soliday; Lindsey Houston; John Mingus; Shirley  Jones; and Jennifer Gravelle.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our first objective was to determine why the Taxpayer Advocate Service’s  (TAS) caseload increased since 2004. To address this objective, we  reviewed the case advocacy process; TAS’s case acceptance criteria,  changes made to the criteria by TAS, and TAS guidance for applying the  criteria; the legal requirements for TAS’s case acceptance criteria; TAS  documents that included discussions of why their caseload was  increasing, and the fiscal years 2002–5 National Taxpayer Advocate’s  annual reports to Congress, hereafter referred to as the annual report. We  analyzed TAS caseload data from the Taxpayer Advocate Management  Information System (TAMIS) for fiscal years 2002–6. To conduct our  analyses, we associated cases with the fiscal year in which they were  opened. Also, for cases that TAS closed and subsequently reopened, all of  our analyses relate to the original case. To assess the reliability of the  TAMIS data, we reviewed TAS documentation, conducted interviews with  key officials, and conducted electronic testing of key variables. Based on  this work, we determined that the TAMIS data were sufficiently reliable  for our purposes. We also analyzed data related to Internal Revenue  Service (IRS) enforcement activities for fiscal years 2002–5 that were  included in the IRS Data Books or obtained from IRS officials. We  interviewed several TAS officials including the National Taxpayer  Advocate, hereafter referred to as the Advocate, the Executive Director of  Case Advocacy, the Acting Director of Management Accountability, Policy  and Strategy, and Local Taxpayer Advocates in three state offices and one  campus office. We also interviewed Wage and Investment (W&I), Small  Business/Self Employed (SB/SE), and Criminal Investigation (CI) officials  to obtain their views about why IRS referrals to TAS were increasing.
Our second objective was to determine how well TAS conducted its case  advocacy activities in terms of measures such as customer satisfaction and  quality. To address this objective, we reviewed TAS’s performance  measures for case advocacy; TAS’s performance results and targets for  fiscal years 2002–6; TAS’s fiscal year 2002–5 annual reports; previous GAO  reports on performance measures and other performance measure  literature; and the Office of Management and Budget’s (OMB) 2004  Program Assessment Rating Tool (PART) report that discussed TAS’s  measures. We assessed TAS’s performance measures using criteria  previously established by GAO. We interviewed TAS officials, including  the Advocate and the Executive Director of Case Advocacy. We also  interviewed W&I, SB/SE, and CI officials to obtain their views about  coordinating with TAS to resolve taxpayer cases. In addition, we reviewed  the Treasury Inspector General for Tax Administration’s (TIGTA) report  on the timeliness of TAS’s case advocacy process and GAO’s report on  restructuring the Office of the Taxpayer Advocate, which included an  evaluation of the adequacy of the Advocate’s measures.
Our third objective was to determine how well TAS measures and reports  its systemic advocacy efforts. To address this objective, we reviewed  TAS’s performance measures for systemic advocacy to determine if they  addressed the effectiveness of systemic advocacy. We interviewed TAS  systemic advocacy officials including the Executive Director for Systemic  Advocacy, Acting Director of Systemic Advocacy Projects, Director of  Immediate Interventions, the Project Manager for the Annual Report to  Congress, and the Senior Advisor to the National Taxpayer Advocate and  the Annual Report to Congress. In addition, we reviewed OMB’s report  that summarized the results of its use of PART to assess TAS for the year  2004, TIGTA’s report on the effectiveness of systemic advocacy efforts,  and GAO’s report on restructuring the Office of the Taxpayer Advocate to  identify any issues raised related to measuring systemic advocacy  activities. We reviewed the 2002–5 annual reports to determine what  information they included about actions taken to address systemic issues  identified in them. We focused on the annual reports to Congress since  they are the primary method used by TAS to report on systemic advocacy  efforts. In addition, we reviewed the legal requirements for the annual  report and the Department of the Treasury report that summarized the  actions TAS took to address the recommendations included in a 2003  Treasury Inspector General for Tax Administration report related to the  management of systemic advocacy.
We performed our work from September 2005 through December 2006 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Process for Creating Immediate Interventions and Systemic Advocacy Projects
subsections: section_title: Immediate Interventions
paragraphs: Taxpayer Advocate Service (TAS) systemic advocacy staff analyze  systemic issues to determine if they meet the definition of an immediate  intervention. Immediate interventions are administrative issues which  cause immediate, significant harm to multiple taxpayers and demand an  urgent response. Also, the issues have clear sources; are highly visible and  sensitive locally, areawide, or nationally; and require that a resolution be  identified within 3–5 calendar days. The staff does not have written  guidance for determining if an issue meets the definition and instead use  factors such as their knowledge of Internal Revenue Service (IRS)  operations and problems taxpayers are having with IRS to assess whether  the issues meet the definition.
If the systemic advocacy staff determines an issue meets the definition of  an immediate intervention, they elevate the issue to the Director of  Immediate Interventions who decides on whether to create an immediate  intervention. If an intervention is not created, then the staff applies the  TAS criteria used to determine if an issue should become a systemic  advocacy project. These criteria are described in the following section.
An example of TAS’s use of the immediate intervention process was when  a taxpayer submitted an issue to TAS’s Systemic Advocacy Management  System (SAMS) describing an experience while using a publicly shared  computer at a library to access www.irs.gov. The taxpayer used the  computer to complete and download IRS forms. After signing off and  exiting the Web site, the taxpayer’s personal information remained on the  computer. TAS immediately raised the issue to the level of an immediate  intervention due to the sensitive nature of the issue and the potential  disclosure of taxpayer information via the external IRS Web site. TAS  worked with other offices within IRS and the software vendor to correct  this problem.
section_title: Systemic Advocacy Projects
paragraphs: TAS systemic advocacy staff use written criteria to score each systemic  issue that does not become an immediate intervention. The scores are  used to determine which issues will become systemic advocacy projects.  Such issues are systemic and affect a segment of taxpayers; require study,  analysis, recommendations, and action to effect positive results; involve  systems, processes, procedures, or legislation; and involve more than one  taxpayer.
TAS systemic advocacy staff use the following 14 criteria, which are  divided into five categories, to score the issues.
Extent of the problem: The following three factors help determine how  widespread a problem may be. The greater the number of taxpayers  potentially affected, the more widespread the problem, and the greater the  frequency of occurrence, the more criteria points awarded.    Potential volume of taxpayers affected within the identified segment  (i.e., individuals, small businesses): Of the taxpaying population within  the identified segment, how many could be affected by this issue?  Designate as high, medium, or low the number of affected taxpayers  relative to the overall segment of taxpayers.
Geographic scope: Does the issue affect taxpayers across the nation  (national), in clustered areas (area, region), or only in certain places  (local)?  Issue frequency: Does the issue happen on a recurring or cyclical basis,  on a limited or sporadic basis, or only one time?
Interest/visibility/sensitivity: The following three factors help determine  the amount of interest, visibility, or sensitivity associated with the  problem. The higher the level of congressional, community, and media  interest or support, the more criteria points awarded.    Congressional interest/support: How much support or interest has  Congress expressed about this issue? Did the support or interest come  from one member’s office or is it widespread in the House or Senate or  both (high, moderate, or low)?
Community/external stakeholder interest/support: How much support  or interest have external stakeholders expressed about this issue? Was  the support from one specific group (i.e., AARP) or spread across  various sectors such as accountants, lawyers, and other special interest  groups (high, moderate, or low)?
Media interest/publicity: How much interest have the media shown in  this issue? What level of coverage does this issue rate (high, moderate,  or low)?
Taxpayer burden: The following four factors help determine the level of  burden placed on the taxpayer trying to resolve the issue from the  taxpayer’s point of view. The more effort, time, and money required to  straighten out the problem, the more criteria points awarded. If taxpayers  are treated disparately, the issue is awarded criteria points.    How long to resolve: How long does it take, from the taxpayer’s  perspective, to resolve this issue? The choices range from “less than 3  months” to “greater than 1 year.” The longer it takes, the more points  are awarded.
Effort: How much effort is required, from the taxpayer’s or other  stakeholder’s perspective, to resolve this issue (minimal, moderate, or  significant? The more effort it takes to resolve the issue, the more  points are awarded.
Financial: What is the financial effect on the taxpayer excluding tax,  penalties, and interest (minimal, moderate, or significant)? Factors  include issues such as the cost of representation, whether the taxpayer  has money available for this expense, the cost of repeated photocopies  or express mail for documentation, and so on.
Fairness: Is this taxpayer treated disparately compared to other  taxpayers? If the taxpayer is treated fairly, the issue is not awarded  criteria points. If the taxpayer is not treated fairly, the issue is awarded  criteria points.
Taxpayer rights: The following two factors help determine how the  problem affects taxpayers’ rights. If rights are negatively affected, or if  rights are enhanced, the issue is awarded criteria points.    Denial of taxpayer rights: Did the taxpayer have the opportunity to  exercise a right or was he or she denied something that the taxpayer  had the right to (i.e., privacy, collection, appeal)? If taxpayers’ rights  are violated, the issue is awarded criteria points; otherwise no points  are awarded.
Enhancement of taxpayer rights: Does this issue enhance taxpayers’  rights? If taxpayers’ rights are enhanced, the issue is awarded criteria  points; otherwise no points are awarded.
Ability to effect change: The following two factors help identify issues that  may not be resolved without TAS intervention. If the operating division is  likely to implement a change without TAS influence, minimal criteria  points are awarded. If TAS is likely to influence operating division actions  or influence change, more points are awarded.    Likelihood of independent operating division action: How likely is it  that the operating division will fix the problem without TAS  intervention? The higher the likelihood of independent action, the  fewer criteria points awarded.
TAS ability to influence change: How likely is it that TAS will be able to  influence the operating division to address the issue? The higher the  likelihood of TAS influencing change, the more criteria points awarded.
When applying criteria, staff use their knowledge of IRS operations;  information contained in IRS systems, obtained from IRS officials, or  developed by IRS Research offices; and current events.
After the staff enter information into SAMS for each criterion, SAMS  assigns a score. Each week, the staff then sends a list of scored issues to  the Director of Immediate Interventions indicating which issues met or  exceeded the current threshold for converting an issue into a systemic  advocacy project. This threshold can change depending on available  resources to work on systemic advocacy projects. The Director of  Immediate Interventions, Director of Advocacy Projects, and the systemic  advocacy portfolio managers review the issues and decide which will  become systemic advocacy projects.
An example of a systemic advocacy project was the tip compliance  project. The project stemmed from complaints from taxpayers and  practitioners about the manner in which IRS was conducting tip  compliance examinations. Problems included, among others, inconsistent  requirements for substantiating income, insistence that original tip diaries  be sent to IRS, and refusal to provide detail supporting any IRS  adjustments. The issue potentially affected a high number of taxpayers;  was geographically national in scope; had high congressional, external  stakeholder, and media interest; involved significant efforts by taxpayers  to resolve the issue; and affected the equitable treatment of taxpayers,  among other things, according to the scoring sheet used to rank the issue.  TAS worked with Wage and Investment (W&I) and Small Business/Self  Employed (SB/SE) staff involved in the examinations. TAS was able to  resolve some of the issues at lower levels of W&I and SB/SE. For other  issues, TAS submitted an Advocacy Proposal to the management of the  Employment Tax Group within SB/SE. These SB/SE officials agreed to  correct the issues TAS raised. TAS is monitoring these cases to make sure  the problems are not experienced by other taxpayers.
section_title: Appendix III: Information to Be Included in the National Taxpayer Advocate’s Annual Report to Congress
paragraphs: The National Taxpayer Advocate is required to prepare an annual report  that describes the Taxpayer Advocate Service’s activities for the previous  year that shall contain full and substantive analysis, in addition to  statistical information, and shall  1.  Identify the initiatives the Office of the Taxpayer Advocate has taken  on improving taxpayer services and Internal Revenue Service  responsiveness.  2.  Contain recommendations received from individuals with the authority  to issue Taxpayer Assistance Orders under section 7811.  3.  Contain a summary of at least 20 of the most serious problems  encountered by taxpayers, including a description of the nature of  such problems.  4.  Contain an inventory of the items described in 1, 2, and 3 for which  action has been taken and the result of such action.  5.  Contain an inventory of the items described in 1, 2, and 3 for which  action remains to be completed and the period during which each item  has remained on such inventory.  6.  Contain an inventory of the items described in 1, 2, and 3 for which no  action has been taken, the period during which each item has  remained on such inventory, the reasons for the inaction, and identify  any Internal Revenue Service official who is responsible for such  inaction.  7.  Identify any Taxpayer Assistance Order which was not honored by the  Internal Revenue Service in a timely manner, as specified under  section 7811 (b).  8.  Contain recommendations for such administrative and legislative  action as may be appropriate to resolve problems encountered by  taxpayers.  9.  Identify areas of the tax law that impose significant compliance  burdens on taxpayers or the Internal Revenue Service, including  specific recommendations for remedying these problems.  10. Identify the 10 most litigated issues for each category of taxpayers,  including recommendations for mitigating such disputes.  11. Include such other information as the National Taxpayer Advocate  may deem advisable.
section_title: Appendix IV: Taxpayer Advocate Service Process for Selecting Problems to Include in the Annual Report to Congress
paragraphs: Prior to 2006, Taxpayer Advocate Service (TAS) systemic advocacy  officials who prepared the annual report to Congress used input from the  National Taxpayer Advocate, the Advocate’s advisors, local taxpayer  advocates, and Taxpayer Advocate Management Information System  (TAMIS) and Systemic Advocacy Management System (SAMS) data to  identify serious problems that taxpayers were encountering. TAS officials  considered several factors when developing the list including effect on  taxpayer rights, the number or percentage of taxpayers affected,  congressional interest, effect of noncompliance on tax administration or  tax revenue, and barriers to taxpayer compliance. The Advocate and the  systemic advocacy officials then met and developed a list of serious  problems which was sent to the Internal Revenue Service (IRS) for  comment. If IRS officials provided information that illustrated one of the  proposed problems was not a serious issue, TAS dropped the issue.  Systemic advocacy officials then prepared the final list of serious  problems and the Advocate made the final decision on which problems  were included in the annual report.
When preparing the 2006 annual report, TAS officials used essentially the  same process, plus additional sources of information to identify the  serious problems. First, TAS officials summarized an environmental scan  of documents that described issues that taxpayers have with IRS.  Examples of documents included newspaper articles, letters to the  Commissioner of Internal Revenue, and a Department of the Treasury  news release. Examples of issues included the alternative minimum tax  and offers in compromise. Second, TAS officials analyzed the “most  serious problems” included in the 2001–5 annual reports. This process  involved ranking the problems as critical, high, medium, low, or resolved  based on the steps IRS had taken to address them. Third, they reviewed  information related to immediate interventions, task forces, operations  assistance requests, and low-income taxpayer clinics. They combined  these three sources of data with input from the Advocate, the Advocate’s  advisors, and the local taxpayer advocates along with TAMIS and SAMS  data in order to develop the proposed list of serious problems for the 2006  annual report. The Advocate made the final decision on which problems to  include in the report.
section_title: Appendix V: Low-Income Taxpayer Clinic (LITC) Grant Program
paragraphs: Responsibility for the LITC Grant Program was transferred from the Wage  and Investment division (W&I) to the Taxpayer Advocate Service (TAS) in  May 2003. The LITC Grant Program helps accredited academic institutions  and nonprofit organizations represent low-income taxpayers in  controversies with IRS and operate programs to inform individuals for  whom English is a second language about their rights and responsibilities.  TAS has responsibility for selecting LITC grant recipients and conducting  site visits to ensure that LITCs are fulfilling their obligations.
LITC grant applications go through a three-step selection process  involving an eligibility screening, a technical evaluation, and a program  office evaluation. To be eligible, grantees must offer services for free or for  no more than a nominal fee and either represent low-income taxpayers in  controversies with IRS or provide information to English as a second  language (ESL) taxpayers about their rights and responsibilities as U.S.  taxpayers. Next, a panel of TAS staff knowledgeable about the purpose  and mission of LITCs conducts a technical evaluation of the eligible  applicants. Panel members rank each LITC applicant based on four  weighted criteria: the quality of their programs, their experience in  sponsoring a clinic, the quality of their grant administration and  accounting procedures, and the number of low-income or ESL taxpayers  in the geographic area. Finally, LITC program staff conduct the program  office evaluation during which they evaluate the rankings for  inconsistencies or discrepancies. The LITC Program Office Director makes  recommendations to the National Taxpayer Advocate who makes the final  decision on who will receive the grants.
TAS conducts several types of site visits to LITC grantees. Someone from  the LITC Program Office visits each new clinic during the first 6 months to  educate them on program requirements and to verify operational  requirements listed in the grant guidelines such as keeping taxpayer  information in a secure location and developing and maintaining  relationships with other community-based organizations in order to reach  targeted audiences. There are three tiers of additional site visits. The first  tier visit is conducted by the local taxpayer advocate and includes  checking items such as are the clinic’s hours posted and easily visible, are  brochures and posters visible, and does file security appear adequate. The  second tier site visit is usually done by someone from the LITC Program  Office and is more in-depth than the first tier visit. He or she reviews 30  items such as determining if the goals stated in the program plan are  reflected in the program’s actual activities, client records are maintained  in a confidential manner, and the clinic has a written process to control  and monitor costs and expenditures. If as a result of the second tier visit,  the staff member identifies issues that need further review, then the LITC  Program Office Director conducts a third tier visit. During this visit, the  Director reviews requirements including financial/Office of Management  and Budget, personnel, and program requirements in addition to other  items including standards of operation and ethical considerations. Third  tier visits can result in freezing funds for a grantee.
For the 2006 grant cycle, TAS awarded $8 million in matching grants,  ranging from $5,000 to $97,250, to 150 nonprofit organizations and  accredited academic institutions. According to the National Taxpayer  Advocate’s 2007 Objectives Report to Congress, during 2006, TAS  expanded the coverage of clinics into rural and other areas where  disadvantaged taxpayers had very limited access to assistance, funding 11  new clinics in areas that were underrepresented.
section_title: Appendix VI: Number of Taxpayer Advocate Service Cases by Primary Issue Code, Fiscal Years 2002–6
subsections: section_title: Civil Penalties other than Trust Fund Recovery Penalty (TFRP)
paragraphs: Unable to Pay–(Currently Not Collectible (CNC))
Multiple/Mixed Taxpayer Identification Number (TIN)
Offer in Compromise (OIC)–Doubt as to Collectibility  Form W-7/Individual Taxpayer Identification Number (ITIN)/Adoption  Taxpayer Identification Number (ATIN)
Scrambled Social Security Numbers (SSN)
Refund Statute (Refund Statute Expiration Date (RSED))
Other Technical, Procedural, or Statute Issues  Application for Exempt Status (F1023/1024)
Individual Retirement Account (IRA) Penalty  Carryback / Carryforward Claims (Net Operating Losses (NOL),  F 1045/1139)
Streamlined IA (Unpaid Balance of Assessment under $25k and  able to full pay in 60 months)
Collection Statute Expiration Date (CSED)
Form 843 (other than interest abatement)
Electronic Federal Tax Payment System (EFTPS)
Tax Exempt/Government Entity (TE/GE) (Employment  Plans/Exempt Organizations (EP/EO)) Technical  Formal Interest Abatement Request (F 843)
SS-4, Application for Employer Identification Number (EIN)
Invalid Social Security Number (SSN) (Primary / Secondary)
FPLP Levy-Office of Personnel Management (OPM) Retirement  Income  Alien Taxation Problems/inquiries regarding determinations of alien  status for income tax purposes.
Exclusion of Foreign Earned Income Problems/inquiries regarding  the exclusion of income.
Assessment Statute (Assessment Statute Expiration Date (ASED))
Collection Appeals Program (CAP) Appeals  EITC Certification (Automated Underreporter)
section_title: Appendix VII: Types of Taxpayer Advocate Service (TAS) Cases That Increased by More than 1,000 in Fiscal Years 2005 and 2006
paragraphs: Appendix VII: Types of Taxpayer Advocate  Service (TAS) Cases That Increased by More  than 1,000 in Fiscal Years 2005 and 2006 Closed Under Reporter Program (URP)
Open Audit (Non Remittance Processing System,  EITC)
Other Refund Inquiries / Issues  Taxpayer Delinquent Return (TDI) – Substitute for  Return (SFR) / 6020B  Combined Annual Wage Reporting/Federal  Unemployment Taxes  “Other” consists of the remaining 114 issue codes that TAS tracks. These codes either increased by  fewer than 1,000 cases or decreased.
section_title: Appendix VIII: Taxpayer Advocate Service Customer Satisfaction Survey Results
section_title: Appendix IX: Comments from the National Taxpayer Advocate