IRS Personnel Administration

Both the law and Internal Revenue Service (IRS) policy prohibit IRS managers from using records of tax enforcement results, such as dollars collected and taxes assessed, to evaluate employee performance or set production goals. The idea is to avoid having employees trying to achieve statistical benchmarks through inappropriate or unreasonable tax assessments. IRS directors reported few violations through the quarterly certification process in fiscal years 1996 and 1997, and GAO found an estimated nine percent of workers received evaluations that violated IRS' revised guidance. Nonetheless, GAO's survey of IRS employees indicated a widespread perception that managers consider tax enforcement results when preparing performance evaluations. Most employees indicated that violations occurred during talks with their supervisors, including staff meetings and performance feedback sessions, rather than in their written performance evaluations. Moreover, the use of overage and cycle-time data in evaluations may reinforce employee perceptions that tax enforcement results affect their evaluations, because they may be misconstrued as an enforcement statistic, such as hours per case. Although IRS is taking steps to strengthen its reporting of violations, weaknesses remain.

GAO noted that: (1) for fiscal years 1996 and 1997, district and service center directors submitted 368 quarterly certifications that reported 11 potential violations; (2) GAO identified several systemic weaknesses that affected the reliability of the certifications; (3) specifically, GAO found: (a) some confusion among IRS officials about what constituted a violation; (b) inadequate guidance about specific actions directors should take to identify violations; (c) a failure to integrate performance evaluations and the certification process; and (d) unclear guidance on sanctions that could be applied against managers for misusing tax enforcement results or submitting false certifications; (4) GAO's survey of a statistically representative sample of examination and collection employees showed a widespread perception that managers considered enforcement results when preparing annual performance evaluations; (5) GAO estimated that 75 percent of front-line employees and 81 percent of group managers perceived that tax enforcement results affected their most recent performance evaluation; (6) about 70 percent of front-line employees said they based their perception in part on information communicated to them verbally in staff meetings or performance feedback sessions with their managers; (7) and about 36 percent of front-line employees indicated tax enforcement results were used in their written performance evaluations; (8) 9 percent of employees received a written evaluation that contained a tax enforcement result and an estimated 69 percent contained narrative that employees could have interpreted as inappropriate references to tax enforcement results but which did not violate IRS guidance; (9) about 41 percent of the evaluations in GAO's sample mentioned process measures dealing with the age of the cases in the employee's workload inventory and the number of cases worked within guidelines established for closing cases; (10) IRS has undertaken several steps to strengthen the certification process; (11) although these actions address some of the weaknesses of the current system, IRS' revised guidance has few examples of the appropriate and inappropriate use of tax enforcement results in written evaluations; (12) the revised guidance does not clearly inform managers about potential sanctions for inappropriate use of tax enforcement results; and (13) IRS' new independent review process is geared toward identifying written violations and not violations communicated verbally.

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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