Tax Administration

Pursuant to a congressional request, GAO reviewed the activities of the Internal Revenue Service (IRS) service centers, in particular, the Philadelphia Service Center, to: (1) develop information on problems experienced in 1985; (2) identify actions taken to prevent recurrence in 1986; and (3) comment on the status of service center operations during the 1986 processing season.

GAO found that, in 1986, the center had: (1) processed more returns and issued more refunds; (2) more computer capacity and more efficient computer programs; and (3) more staff increases and training improvements. However, despite the improvements, GAO identified two areas requiring attention, including: (1) implementation of adequate procedures and controls to ensure timely processing of computer tapes; and (2) the impact of backlog inventory levels on service center resources and service. IRS indicated that all of the service centers encountered problems during 1985 and, although some of the problems were due to insufficient computer capacity, other problems might have been due to operational inefficiencies. IRS organized a task force to study the structure, functional responsibilities, and management of its computer branch organizations. The task force recommended a reorganization that would provide: (1) managerial oversight of computer operations at all times; and (2) the necessary support functions on a continuous basis through the creation of teams which would staff the systems on 4-hour shifts. GAO believes that: (1) the reorganization seems to be an appropriate step toward improving the effectiveness of the service centers' operations, but GAO could not assess the reorganization until it was fully staffed and had time to function; and (2) the task force recommendations adequately addressed the issues.