The Internal Revenue Service is revamping the way it serves the needs of its small business customers, according to a new report from the General Accounting Office.
GAO research showed that compliance problems and poor communication plague the agency's relationship with its small business customer segment, which accounts for about 44 percent of the taxes the agency collects annually.
The report, "IRS Faces Several Challenges as It Attempts to Better Serve Small Businesses"(GGD-00-166), points out the hurdles the IRS must clear in its relationship with small businesses, including:
- Compliance: According to the IRS, small businesses are more likely than other taxpayers to have compliance problems, due to the complicated tax law. Small businesses face the same complex rules that larger businesses encounter, but may not have the same financial resources to deal with them.
- Agency operations and organization: The IRS' focus on correcting problems instead of preventing them can be a problem for businesses who could go bankrupt without the agency's help from the beginning. IRS service centers are divided along functional and geographical lines and are designed to handle a wide range of taxpayer issues. Currently, there is no center that deals with the specific needs of small businesses.
- Lack of Awareness: Many small businesses are unaware of the services the IRS offers for them, or are reluctant to go to the agency for help. According to GAO's report, 58 percent of small businesses were unaware of the small business corner on the IRS' Web site.
- Customer Service: Although GAO reported that small businesses were more satisfied than not with the overall quality of the IRS' customer service, those interviewed complained that tax publications were difficult to understand and the toll-free telephone number was not helpful in resolving problems.
The IRS Restructing and Reform Act of July 1998, required the agency to implement 71 new or modified taxpayer rights provisions. Since then, the IRS has had to restructure and reorganize itself on almost all levels.
IRS Commissioner Charles O. Rossotti said the report would help the agency improve its products and services for small businesses, and reiterated the IRS' commitment to creating a more customer-focused organization.
In a letter to GAO, Rossotti said the agency has streamlined its Tax Guide for Small Business by deleting information pertaining to larger businesses and will gather telephone service customer satisfaction data from SB/SE customers to improve operations.
GAO praised the agency's plan to open the service center, but also said the agency's diverse population could complicate the center's effort to provide focused customer service.
"[The service center's] ability to effectively focus on the needs and problems of small businesses may not be easy given the diversity of that segment of the taxpayer population and the need to find an effective way to serve taxpayers who migrate between operating divisions from year to year," said the report.