From the U.S. Government Accountability Office, www.gao.gov Transcript for: : IRS Customer Service in 2016 Description: Audio interview by GAO staff with Jessica Lucas-Judy, Director, Strategic Issues Related GAO Work: GAO Work: GAO-17-186: 2016 Filing Season: IRS Improved Telephone Service Buy Needs to Better Assist Identity Theft Victims and Prevent Release of Fraudulent Refunds Released: January 2017 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's January 2017. The Internal Revenue Service provides a range of services to taxpayers during tax filing season. These include telephone and other customer service, assistance for identity theft victims, and efforts to prevent the release of fraudulent refunds. A team led by Jessica Lucas-Judy, a director in GAO's Strategic Issues team, recently reviewed how well the IRS provided these services during the 2016 tax filing season. Jacques Arsenault sat down with Jessica to talk about what they found. [ Jacques Arsenault: ] Your team looked at a number of customer service areas, in terms of the IRS and the 2016 tax filing season. Can you talk about what you found? [ Jessica Lucas-Judy: ] Sure. In 2016, the customer service in the filing season was a whole lot better than it was in 2015. So, we had found in prior years, in 2015, if somebody wanted to contact IRS by phone, only about one out of every three people would actually be able to get through on the phone. In 2016, by contrast, it was more like two or more than two out of three would be able to get through. In addition, the wait times were shorter, and the caller was much less likely to experience a busy signal or get disconnected. [ Jacques Arsenault: ] So, it sounds like some real improvement there. Do you have a sense of what was behind that improvement? [ Jessica Lucas-Judy: ] IRS received additional money from Congress for 2016, specifically for customer service, so they were able to hire about an additional 1000 assistors, and they placed those mainly on the phones. They also moved their existing staff into telephone service, and they paid more overtime than they did in prior years. [ Jacques Arsenault: ] So, with those that were moved from other areas, did you see a corresponding decline in service there, or did it seem to be holding steady while the telephone service was improving? [ Jessica Lucas-Judy: ] Overall, in 2016, the service in other areas was pretty good, as well. In correspondence, specifically, people who were writing in to IRS, as opposed to calling, they were able to reduce the amount of time that it takes to close a case. But, they did still struggle with what they call overage correspondence. IRS considers correspondence to be overage if it's not responded to within 45 days, and, for 2016, about half of the correspondence is considered overage. They also had more people coming to their website in 2016, and they were able to provide more types of services online. The challenge there is balancing security concerns with the need to be responsive to taxpayers. [ Jacques Arsenault: ] One of the things that you looked at, specifically, was customer service for victims of identity theft. Can you talk about what you found there? [ Jessica Lucas-Judy: ] Sure. That was another area where services generally improved in the 2016 filing season, but we did find some opportunities where they could make some improvements. Overall, IRS was processing those kinds of cases faster. They reduced the time by about half between 2012 and 2016. They also created Identity Theft Victims' Assistance Unit to help streamline the process and make it faster, make it more user-friendly to the taxpayer. Another place that we found that could be improved was waiting for documents, or the process for documents to be retrieved and scanned. That sometimes was taking a number of weeks, and was causing, seemed to be causing, quite a delay in the cases. [ Jacques Arsenault: ] In looking at these identity theft cases, I know one of the things that can often happen, IRS may pay out the refund before they realize that it's false. Is IRS still paying out a significant amount of money, in terms of those fraudulent returns? [ Jessica Lucas-Judy: ] IRS has estimated that it paid out more than $3 billion in fraudulent refunds in 2014. One of the things that we looked at in our case file review was the process, or whether any refunds were being released before the case was closed, and we did find one case where IRS ended up paying more than $9000 in a refund that should not have been paid. And, what happened there was, there had been a hold placed on the case while it was being reviewed for potential identity theft. That hold automatically expired, and the refund was issued. When we talked to IRS about that case, they had already identified it as being an erroneous refund, and they were in the process of trying to get the money back, and they had also cancelled those automatic expirations to make sure that kind of problem couldn't happen again. But, what we found in talking to assistors who work these kinds of cases in trying to figure out why did this happen, the assistors said that there was a possibility that the assistors who were not working the case might be releasing refunds when a taxpayer calls, or contacts them for assistance, trying to find out where their refund is, the assistor might not know what the code means in the system. They might not know that it's flagged for a potential identity theft, and they might be releasing it. We asked IRS about that, and we found they didn't have any data that could really show whether this was happening, the extent to which it was happening, so we're recommending that IRS either fix its data, or get additional data to help it answer those questions to determine, is this a problem, and if so, take steps to fix it. [ Jacques Arsenault: ] You mentioned a couple of the recommendations in this report. Are there any others that you wanted to highlight? [ Jessica Lucas-Judy: ] Sure. We looked at the customer service information, as I mentioned, and what we found is that it's really difficult for a taxpayer or member of the public to find that information themselves. It's out there, but it's just difficult to find. And so, we're recommending that IRS put together some kind of dashboard or other easy-to-access information on its website, so that taxpayers know what to expect, what kind of performance and service to expect from IRS on the phones, on the website, when they send in correspondence. And hopefully that can help IRS, as well, because it can help a taxpayer know when is a good time to contact IRS, or what's the best means of contacting IRS to get a response. [ Jacques Arsenault: ] And finally then, what would you say is the bottom line of this report? [ Jessica Lucas-Judy: ] Bottom line is that customer service has improved. It did improve significantly from 2015 to 2016. There are still some areas for improvement, and we think it's important, as I said, to provide that information to taxpayers. In addition, the services that IRS is providing to victims of identity theft has also been improving quite a bit, and there might still be some situations where IRS is releasing information, or releasing refunds that it shouldn't be, and so we think they need better data, just to know whether or not their controls are effective in preventing that. [ Background Music ] [ Narrator: ] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional watchdog, the U.S. Government Accountability Office.