Problem-solving days and automated filing systems are improving the Internal Revenue Service's troubled relations with taxpayers. But a few thieves in the IRS workforce threaten to further taint the agency's image.
Two new General Accounting Office reports on IRS operations show that customer service initiatives at the IRS are paying off. For example, taxpayer problem-solving days are helping citizens figure out how to clean up their tax records, while the automated TeleFile system is cutting millions of hours out of the time taxpayers must spend on tax forms.
But another GAO report, "Internal Revenue Service: Immediate and Long-Term Actions Needed to Improve Financial Management" (AIMD-99-16), highlight security problems that have allowed corrupt IRS employees to steal money from the government.
From January 1995 to July 1997, the IRS discovered 80 actual and alleged embezzlements totaling about $5.3 million. That's a tiny fraction of the more than $1 trillion the IRS collects each year, but the cases point to security weaknesses that could be corrected, GAO said.
In one scheme, an IRS employee changed the payee on a taxpayer check from "I.R.S." to "I. R. Smith," and then deposited the check in a personal bank account. In nine cases, employees stole cash and check receipts by smuggling them from their work stations in duffle bags, purses or lunch boxes. In another case, a taxpayer discovered that IRS employees had stolen a $590,000 check made out to the IRS and duplicated the check into several fraudulent blank checks. The taxpayer discovered the theft after several of the checks had been cashed.
"Due to the nature of IRS' receipt processing operations, the volume of transactions processed and the number of employees involved, there is no internal control system, no matter how well designed and operated that can completely eliminate the potential for embezzlement or theft," GAO said. "However, there are a number of steps that IRS can take immediately to reduce the risk of loss and provide better safeguarding of assets at its service centers."
GAO suggested that the IRS consider installing surveillance cameras to monitor employees, prevent workers from bringing handbags, briefcases and duffle bags into mail rooms and train staff on proper procedures to reduce the number of stolen and lost receipts.
GAO studies of other federal agencies have found similar internal security weaknesses. The Social Security Administration and the Defense Department have also uncovered employee fraud in the past few years.
Meanwhile, the IRS is making headway in its uphill effort to improve customer service.
Although not all taxpayers who have taken advantage of IRS problem-solving days have solved their problems, most had a favorable opinion of their treatment by IRS employees.
"Although most of the surveyed taxpayers' problems were not immediately resolved through the initiative, a majority of them reported that they were informed of the steps they needed to take to get their problems resolved," GAO said in "Tax Administration: IRS' Problem-Solving Days" (GGD-99-1). "Most of the surveyed taxpayers also reported that they were treated courteously by the IRS employees that they dealt with."
The IRS' TeleFile system is also helping taxpayers comply with the law more easily. In 1996, taxpayers saved 3.7 million hours of their time by using the telephone-based filing system. Businesses are also taking advantage of TeleFile. In fiscal 1998, companies saved 14 million hours of work by using the phone to complete the Employer's Quarterly Federal Tax Return.
Despite IRS efforts, however, the paperwork burden imposed on Americans by the IRS grew 7.5 percent between 1995 and 1998. IRS officials told GAO that new statutes have required the agency to collect more information from taxpayers, resulting in the higher paperwork load ("Paperwork Reduction Act: Implementation at IRS" GGD-99-4).
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