IRS Management:

IRS Practices Contribute to Its Resilience, but It Would Benefit from Additional Emergency Planning Efforts

GAO-09-418: Published: Apr 9, 2009. Publicly Released: May 11, 2009.

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The Internal Revenue Service (IRS) collects the revenues that fund the federal government and issues billions of dollars in refunds. Consequently, IRS's ability to demonstrate agility and speed in restoring its functions after a disruption is vital to the government and the economy. GAO (1) identified the definition and attributes of organizational resilience; (2) examined the extent to which these attributes are exhibited within IRS; and (3) reviewed the challenges and opportunities faced by the IRS in becoming more resilient. GAO gathered and analyzed the attributes of resilience based on discussions with academic and practitioner experts in the field. GAO then reviewed IRS human capital and emergency preparedness policies and strategic plans, observed campus operations and emergency working group meetings, and interviewed officials from headquarters and each of the four business units.

Organizational resilience is the quality that would enable an organization to restore itself or thrive following a disruption that substantially compromises its ability to accomplish its mission. Five categories of attributes can help an organization be more resilient: robust emergency planning, flexible organizational assets that can be accessed during times of change, leadership capacity distributed through the organization, a committed and skilled workforce, and strong relationships with internal networks and outside organizations. Although each of these categories is important, the characteristics of whatever disruption an organization faces may make some attributes more valuable than others. In its emergency planning, IRS has learned from experiences requiring organizational resilience. For example, during the peak operations of the 2008 filing season, the economic stimulus legislation required that the IRS process stimulus payments totaling $94 billion. Through adjustments to the workforce, IRS was able to implement the change and delivered a generally successful filing season, while making key trade-offs. Although the IRS has learned from past events, its current test and exercise strategy is limited. Functional or full-scale exercises--which are not part of IRS's strategy-- provide more realistic conditions and a better experience to prepare the leadership and emergency personnel to contend with an actual event. Demonstrating the ways that IRS has flexible organizational assets that can be accessed during times of change, IRS strategically has made some operations redundant, which allows work to be shifted between offices when needed. The IRS has also exhibited the capability to use seasonal workers to increase its workforce after a disruption, as was the case in the support it provided to the Federal Emergency Management Agency after Hurricane Katrina. In building leadership and a committed workforce, the IRS has numerous formal training and development initiatives to build the leadership capability of both its management team as well as its non supervisory employees. While IRS employees understand how their work contributes to the IRS's goals and priorities, currently less than half of IRS employees believe that agency leaders and managers generate motivation and commitment in the workforce. A number of IRS initiatives are now in place to address this issue, including coaching of managers based on employee feedback survey data and outreach by managers to IRS employees. Lastly, IRS is highly networked both within and outside of IRS, which provides opportunities for accessing additional resources after a disruption. IRS has requirements for including internal stakeholders in tests and exercises. When IRS has involved external stakeholders in tests and exercises, it has proven useful, but this practice is neither formalized nor widespread.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: As of February 2011, the IRS completed its planned functional exercises and one full-scale exercise. The IRS also completed a cost-benefit analysis of the exercises.

    Recommendation: To improve the resilience of IRS operations, the Commissioner of the Internal Revenue Service should direct direct the appropriate officials to establish a plan to conduct a limited number of functional or full-scale exercises to include IRS leadership and emergency personnel. These tests and exercises should be followed by an evaluation of their costs and benefits. Based on the evaluations, IRS emergency plans should be revised to reflect the degree to which the tests should be replicated more broadly.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS developed a multi-year test and exercise strategy plan in August 2009, which includes a requirement that tests of the Occupant Emergency Plan and the Shelter in Place Plan be designed to be challenging to the participants and include stressful circumstances.

    Recommendation: To improve the resilience of IRS operations, the Commissioner of the Internal Revenue Service should direct the appropriate officials to establish plans for the inclusion of some degree of stressful circumstances in the routine evacuation and shelter-in-place drills in which all IRS employees participate.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: IRS modified its test and exercise strategy in August 2009 to include external stakeholders, as appropriate.

    Recommendation: To improve the resilience of IRS operations, the Commissioner of the Internal Revenue Service should direct the appropriate officials to modify test and exercise standards to include involvement of external stakeholders.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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