Tax Administration:

IRS and TIGTA Should Evaluate Their Processing of Employee Misconduct under Section 1203

GAO-03-394: Published: Feb 14, 2003. Publicly Released: Mar 17, 2003.

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Section 1203 of the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 outlines conditions for firing IRS employees for any of 10 acts of misconduct covering taxpayer and employee rights and tax return filing requirements. Both IRS and the Treasury Inspector General for Tax Administration (TIGTA) have responsibilities related to section 1203. Because of concerns that section 1203 may have a chilling effect on IRS enforcement staff's productivity, GAO (1) determined the number of section 1203 allegations, (2) surveyed IRS employee perceptions about section 1203, and (3) identified problems IRS and TIGTA face in processing section 1203 cases and the extent to which they have addressed them.

IRS data show that of the 3,970 section 1203 allegations IRS received from July 1998 through September 2002, IRS or TIGTA completed investigations on 3,512 allegations and substantiated 419 as violations, resulting in 71 employees being fired for section 1203 misconduct. Employee misconduct related to the two section 1203 provisions on whether employees filed their tax returns on time and accurately stated their tax liability (as opposed to the eight taxpayer and employee rights provisions) accounted for almost all of the violations and firings. Most of the IRS frontline enforcement employees who responded to GAO's survey said that they understood, but feared, section 1203. They also reported that, because of section 1203, their work takes longer and the likelihood of their taking an enforcement action, such as recommending a seizure, has decreased. However, employees also were more likely to say that other factors, such as IRS's reorganization, have had a greater impact on their ability to do their job than to say that section 1203 had a greater impact. IRS and TIGTA have taken steps intended to correct known problems in their processing of section 1203 employee misconduct cases--such as lengthy investigations and conflicts of interest during investigations--that may have negatively affected frontline employees' morale and productivity. However, the extent to which these steps have succeeded is unknown because IRS and TIGTA do not have a coordinated approach for evaluating how effectively they process section 1203 cases. Such an approach would include results-oriented goals, balanced performance measures to mark progress towards these goals, and means to collect performance data.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In developing this approach, IRS and TIGTA should develop (1) results-oriented goals for processing section 1203 cases, (2) performance measures that are balanced and can be used to assess progress towards those goals, and (3) methods for collecting and analyzing performance data related to the goals and measures.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS has implemented the spirit of our recommendation. IRS and TIGTA have coordinated in some fashion as we finished our work. Though both maintain that they are independent agencies and each handle a different stage of the S. 1203 process, IRS staff reached out to further coordinate in response to our recommendation and TIGTA chose to not coordinate any further. IRS has developed timeliness measures/goals for the S. 1203 process. By FY06, IRS was using a system to track cases and their timeliness. IRS developed an employee survey to assess employee views on the S.1203 process and case results but is not surveying "customers" and has not set related goals. On June 27, 2007, IRS shared (via letter) an update on the employee survey and its case tracking system. The letter was signed by IRS's Chief Human Capital Officer.

    Recommendation: The Acting Commissioner of Internal Revenue and the Acting Treasury Inspector General for Tax Administration should coordinate on an approach for evaluating the section 1203 process.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Not Implemented

    Comments: IRS and TIGTA have coordinated in some fashion, though both maintain that they are independent agencies and each handle a different stage of the S. 1203 process. Both also have developed timeliness measures/goals for the S. 1203 process. TIGTA has set quality goals for S. 1203 cases and randomly samples cases to evaluate quality. IRS is working on a process to review the quality of cases, but has not implemented this process. Neither has developed other measures and goals as part of a balanced measurement system (such as those for employee satisfaction or customer satisfaction). IRS's data system for evaluating the process was completed in early-2005, but there is not a lot of data in the system. Data for 2006 will present a more complete picture. Further, although not part of the evaluation of the process, IRS is completing a survey of Small Business and Self-Employed Operating Division (SBSE) enforcement employees about the impacts of S. 1203, such as their willingness to take enforcement action under the specter of S. 1203. The results of this survey will be available to GAO toward the end of 2005.

    Recommendation: The Acting Commissioner of Internal Revenue and the Acting Treasury Inspector General for Tax Administration should coordinate on an approach for evaluating the section 1203 process.

    Agency Affected:

    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In developing this approach, IRS and TIGTA should develop (1) results-oriented goals for processing section 1203 cases, (2) performance measures that are balanced and can be used to assess progress towards those goals, and (3) methods for collecting and analyzing performance data related to the goals and measures.

    Agency Affected:

    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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