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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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Highlights

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.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service 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.
Closed – Not Implemented
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.
Treasury Inspector General for Tax Administration 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.
Closed – Not Implemented
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. TIGTA has no plans to change its evaluation system. 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.
Internal Revenue Service 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.
Closed – Implemented
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.
Treasury Inspector General for Tax Administration 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.
Closed – Not Implemented
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. TIGTA had developed timeliness measures/goals for the S. 1203 process, as well as quality goals for S. 1203 cases. However, TIGTA had no plans to change its goals, measures, or evaluation system in response to our recommendation, or to do any further coordination with IRS. For example, TIGTA had no plans to develop other measures and goals as part of a balanced measurement system (such as those for employee satisfaction or customer satisfaction).

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Employee rightsEvaluation methodsMalfeasancePerformance appraisalPerformance measuresSurveysTax administrationEmployee misconductTaxpayersTax compliance