IRS managers said to misuse performance measures

IRS managers are using enforcement statistics to measure employees' performance, even though doing so is against the law, a new audit has found.

The General Accounting Office found IRS procedures designed to protect citizens from overzealous tax collectors had become paper exercises. GAO found that while IRS managers certified quarterly that supervisors did not use enforcement statistics in employees' performance evaluations, the rosy picture painted by the certifications did not match reality.

"Our employee survey showed a widespread perception on the part of collection and examination front-line employees that tax enforcement results are considered by managers when preparing performance evaluations," GAO said in "IRS Personnel Administration: Use of Enforcement Statistics in Employee Evaluations" (GGD-99-11). "About 75 percent of front-line employees and 81 percent of examination and collection group managers believe that one or more enforcement measures were considered to some extent by their managers when preparing their most recent performance evaluation."

Since 1973, IRS policy has prohibited managers from imposing tax collection quotas or evaluating collection officers on enforcement measures such as amount of dollars collected, number of cases closed, number of hours spent per return, or number of liens, levies and seizures. Instead, managers are supposed to evaluate employees on the proper use of enforcement tools, timeliness of actions and application of tax law.

In 1988, that policy became law as part of the Taxpayer Bill of Rights. The statute requires each IRS district director to certify quarterly whether any manager has violated the policy and what corrective action was taken against the manager.

GAO reviewed the quarterly certifications for fiscal years 1996 and 1997 and found 11 potential violations were reported. The IRS determined that four of the 11 were actual violations of the policy. But GAO found that the certifications probably underreported violations.

In the first quarter of 1998, just after the September 1997 Senate Finance Committee hearings that brought to light numerous examples of IRS collectors intimidating taxpayers, district directors reported 28 potential violations, more than double the reported violations of the previous two years.

In addition, GAO's survey of employees found that 58 percent of collection officers said their managers used number of cases closed as a performance measure. About 77 percent of managers said number of cases closed affected their evaluations, while about half of employees and managers said performance quotas were established for their groups.

Though the IRS is trying to make the certification process more honest, GAO said the agency needs to help managers better understand the policy, better explain penalties for ignoring the law and survey employees regularly to see if the certifications match reality.

IRS Commissioner Charles Rossotti agreed with GAO's findings and pledged to carry out the recommendations.