GAO United States General Accounting Office Report to Congressional Committees October 1995 TAX ADMINISTRATION IRS Faces Challenges in Reorganizing for Customer Service 23-595 97-17 B-261038 Results in Brief taxes, and adjust taxpayer accounts. They would absorb current IRS We reviewed the progress IRS has made toward its customer service vision because of the magnitude of the changes being undertaken, the potential for improved performance, and the complexity of the challenges IRS must overcome to make its vision a reality. This report was not prepared at the request of the Committees, but as part of our continuing efforts to provide information and analysis to improve tax administration. The report discusses (1) IRS' goals for customer service and its plans to achieve them, (2) the gap between current performance and these goals, (3) its progress to date, (4) current management concerns, and (5) several important challenges IRS faces. We believe the report will be useful as a baseline for assessing IRS' progress over the next few years. IRS' goals for its customer service vision are to (1) provide better service to The gap between IRS' current operations and its customer service vision is very great. For example, IRS plans to improve telephone accessibility by greatly reducing busy signals on its new customer service telephone system. In contrast, taxpayers who called IRS' Taxpayer Services toll-free sites in fiscal year 1994 got busy signals 73 percent of the time. IRS has made some progress toward its customer service vision, including B-261038 testing. IRS officials recently acknowledged that the transition would last beyond the original goal of full operation in 2001. A lack of clarity in management responsibilities has, to some extent, hampered IRS in implementing its customer service plans. This is reflected both at the senior management level for achieving the customer service vision and at lower management levels for specific Tax Systems Modernization (TSM) projects crucial to the vision. First, because the work units and related resources that are to make up the new customer service organization currently belong to two separate IRS organizations, Managing Accounts and Ensuring Compliance, there is no "owner" in terms of a single individual responsible for the success of all the work activities and resources that are to be transferred to customer service. IRS officials are aware of the potential for problems related to the lack of ownership for customer service and plan to resolve the issue of a single owner for customer service within the next few months. Second, at lower management levels, we found instances in which "products" were being developed for use in the customer service sites that had no clearly designated process owners. Process owners are responsible for making sure new products are successfully integrated into the organizations that are to use the products. To illustrate, an IRS project office is charged with developing numerous interactive telephone systems to allow taxpayers to resolve many issues without speaking with an IRS customer service representative. Although these interactive telephone systems are crucial to IRS' customer service vision, one of the systems was developed without a clearly designated owner. However, near the end of the pilot test for the one system, an owner was designated. This was over 2 years after the project office began the design and development of the system. The absence of an owner's involvement during project development could result in products that do not meet the owners' operational needs. It also puts the project office in the position of either making decisions that should be made by those who will use the products or stopping development. In this one case, the project office continued with development, and IRS officials told us that no adverse effects resulted. Third, we identified two other instances in which IRS officials had assumed ownership roles for interactive telephone systems, but had not carried out their duties to establish the quality measures critical to evaluating their B-261038 Background performance. In these instances, the owners did not provide timely input for quality measures. After testing of the systems had begun, the owners called for additional quality measures, resulting in a delay. IRS officials said they wanted to be involved earlier, but ongoing workloads prevented them from doing so. The management issues we identified have not had serious adverse effects because implementation of the customer service vision is still in the early stages. However, IRS documents showed and IRS officials confirmed that there was confusion about who should be assigned as an owner for TSM projects that are to support customer service operations and what those owners' responsibilities should be. IRS' top management had not made clear the criteria and responsibilities for ownership of the processes in situations that include projects such as the interactive telephone systems to support those processes. To achieve its customer service goals, IRS will have to overcome several important challenges including (1) how to manage the transition to a different organization while maintaining ongoing workload, (2) deciding how much to expect of individuals in the new position of customer service representative, (3) developing and effectively using new information technology, and (4) devising ways to measure the work of the new customer service centers and balance their competing workloads. In 1986, IRS began to modernize its technology for processing tax returns, enforcing the tax laws, and assisting taxpayers. IRS was several years into its system modernization efforts before it began to study the implications for its organization and work processes. In response to suggestions from us and others, IRS decided that it should take this opportunity to redesign its organization and processes for administering the tax laws. Hence, TSM has become part of IRS' business vision for both technological and organizational change. IRS' business vision includes the following basic organizational |