About Face at the IRS

After years of using scare tactics to force people to pay delinquent taxes, the Internal Revenue Service is trying to improve its image by being nicer to taxpayers.

An audit of collection practices in the IRS's Arkansas-Oklahoma District released last week prompted new IRS Commissioner Charles Rossotti to restrict collection officers' ability to seize property. The IRS is also giving more power to the agency's taxpayer advocates, allowing them to override harsh enforcement actions, like liens and seizures, if such actions would cause people hardship.

Treasury Secretary Robert Rubin said the measures are "designed to ensure that, even as we seek to continue our work to change the culture of the IRS, we act quickly to protect taxpayer rights."

The IRS has also released the findings of a survey that showed taxpayers who went to the IRS's first "problem-solving day" at the agency's district offices on Saturday, Nov. 15 left with a positive impression of the agency and its employees. IRS employees around the country volunteered to work on problem-solving day, helping taxpayers with questions and problems. More than 6,000 people showed up to the events.

More than 75 percent of the 3,300 people who responded to an IRS survey at problem-solving day events gave the agency the top score on a customer satisfaction scale of 1 to 7. IRS district offices will continue to hold problem-solving Saturdays throughout the year.

The problem-solving days came in the wake of Senate Finance Committee hearings in September, during which the IRS admitted to ranking districts on performance statistics. That practice had a trickle-down effect, pushing front-line revenue officers to treat delinquent taxpayers harshly, disregarding laws preventing IRS employees from being evaluated on collection results. At the hearings, abused taxpayers told horror stories about IRS harassment.

But the IRS contended that it was not entirely to blame. Pressure from Congress to bring in more revenue, coupled with a push to measure performance under the 1993 Government Performance and Results Act created a climate where managers were rated on the amount of money their divisions took in, IRS officials said.

In the recent review of the Arkansas-Oklahoma district, auditors found that IRS managers placed too much emphasis on statistical goals. The Taxpayer Bill of Rights prohibits managers from evaluating employees on collection measurements. While the audit didn't find any direct references to collection goals in employee evaluations, it found a clear organizational focus on collections at the expense of customer service.

"The service's focus on productivity is unbalanced and has created an overall climate that potentially sets the stage for miscommunication to employees and managers at all levels of the organization," the audit found. "This environment could affect taxpayers' right to fair treatment, and each employee's access to an equitable evaluation system."

The auditors noted that collection statistics are a necessary measure of program performance, and enforcement actions are needed to make sure all taxpayers adhere to the law. But quality and customer service cannot be lost in the shuffle, the audit said.

Since the hearings, the IRS has stopped ranking its districts on collection figures and ended the practice of issuing revenue goals to field offices. All seizures must now be approved by a collection division chief, and seizures of a residence, its contents or perishable goods must be approved by a district director. In addition, each district is reviewing all complaints it has received since July 1 and is required to confirm that all those cases have been solved properly.

National Treasury Employees Union President Robert Tobias praised IRS management's changing focus.

"Improved customer service will surely increase voluntary compliance among taxpayers," Tobias said. "To that end, the IRS needs to develop business measures geared toward voluntary compliance rather than measures based on revenue collection."