Paul L. Caron
Dean


Thursday, May 27, 2010

TIGTA: Has IRS Achieved Goals of 1998 Restructuring and Reform Act?

TIGTA The Treasury Inspector General for Tax Administration today released its evaluation of whether the goals of the IRS Restructuring and Reform Act of 1998 (RRA 98) have been substantially achieved.   The Internal Revenue Service Restructuring and Reform Act of 1998 Was Substantially Implemented but Challenges Remain (2010-IE-R002):

RRA 98 was broadly scoped legislation intended to transform the IRS into a modern financial services organization. It called for reform of virtually every aspect of the IRS, including its reorganization from a geographically based organization to one that was focused primarily on providing taxpayers with customer service similar to that available from many private sector financial institutions, including electronic access to customer accounts.

TIGTA reviewed the IRS’s implementation of the major tax provisions of the law. This review included extensive research of: the law, relevant IRS Internal Revenue Manuals, the IRS Intranet website, prior reports by TIGTA and other relevant organizations including the Government Accountability Office. It further reviewed IRS strategy and policy, processes and procedures, information technology and employee/human capital to gauge IRS’s success at implementing the law.

"While the IRS has made significant strides in transforming into a modern financial services organization, our review found that major challenges remain," said J. Russell George, Treasury Inspector General for Tax Administration. "Much of this reform effort remains a work in progress," he added.

As part of the transformation process, the IRS created a new mission statement focusing on taxpayer service and adopted the new organizational performance measures of business results, customer satisfaction, and employee satisfaction. The IRS further implemented safeguards to ensure that enforcement statistics would no longer be used as a basis for employee evaluations, and engaged in efforts to modernize its computer technology and its business systems. Expanded electronic filing, creation of an extensive Web site (www.IRS.gov), and installation of a state-of-the-art telephone routing system to more effectively and efficiently answer taxpayer calls were all part of this transformation. In addition, 71 taxpayer protections and rights required by the RRA 98 were engineered into operational processes and procedures

TIGTA’s review found that additional work is needed to complete IRS’s Business Systems Modernization effort. In addition, human capital management challenges remain, including replacement of an aging workforce, measurement of training effectiveness, and implementation of a performance-based pay system.

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