Internal Revenue Service

Past studies of the Internal Revenue Service (IRS) have concluded that the agency needs regional offices. GAO reached the same conclusion after surveying the internal customers of regional offices--executives in IRS' National Office and field offices--and after reviewing regional office involvement in IRS' new initiative aimed at bringing nonfilers back into the tax system. IRS has about 96,000 field office workers spread over about 700 locations. Evidence suggests that regional offices are needed for effective management of such a large and far-flung organization. However, GAO found that these offices are not functioning in a way that yields the greatest returns to internal customers. Many customers, although acknowledging the need for regional offices, often responded negatively to questions about how helpful regional offices have been. With that in mind and in conjunction with upcoming changes that will shrink the number and size of regional offices, IRS needs to rethink the role of those offices. For example, regional staff should not spend valuable time funneling information between national and field offices or doing unproductive reviews of field office activities. It is also unproductive for regional offices to manage activities, such as returns processing, in which the number of sites involved is small enough for the National Office to manage directly.

GAO found that: (1) IRS needs regional offices to effectively manage its large, widespread organization and to insulate its field operations from political influences; (2) IRS regional offices have a crucial role in providing information on nonfilers and supervising field operations; (3) IRS regional offices also provide support to the field offices and resolve unclear IRS guidance; (4) IRS need for regional offices could be reduced if IRS significantly reduces the number of field offices or broadens its span of control through improved business practices or technological support; (5) IRS regional offices are not operating effectively or efficiently and customer satisfaction varies across IRS organizational levels; and (6) IRS needs to reassess the offices' roles and responsibilities by eliminating some of their unproductive activities and increasing oversight and support of other IRS activities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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