Ready for some more schadenfreude about the woes of the IRS?
The Treasury Inspector General for Tax Administration recently released a report on how Declining Resources Have Contributed to Unfavorable [sic] Trends in Several Key Automated Collection System Business Results.
The IRS has three tiers of response to people like me who don’t pay their taxes. The first and least resource-intensive is called the “Notice Stream” — a series of computer-generated letters. The second tier — “Automated Collection System” — involves actual agency employees, who answer incoming calls from delinquent taxpayers and go hunting for assets to levy. A third tier — “Collection Field function” — is a more assertive version of this, and may initiate contact with delinquent taxpayers, visit them, or even in rare cases seize property.
This report has to do with the decay of the second tier under the pressure of budget cuts and the need to shift personnel to cover new challenges. Some highlights:
, 39 percent of the ACS workforce has been lost due to attrition or reassignment.
The inability to hire behind attrition losses over has caused the ACS to lose 684 (24 percent) of the 2,824 contact representatives who were working in . In addition to ACS employee attrition, three ACS call sites were taken offline in to work AM function inventory. IRS management made this decision to free up AM function resources to address the IRS’s growing inventory of identity theft cases. The initiative was originally scheduled to continue for three months, but was subsequently extended and was ongoing at the conclusion of our field work. This reallocation was the equivalent of losing an additional 410 contact representatives because the employees in these three ACS call sites were answering taxpayer questions rather than working ACS inventory. As a result of this, combined with ACS employee attrition, the number of ACS contact representatives in was 39 percent less than in .
The IRS made a decision to prioritize being able to answer calls from delinquent taxpayers, believing that such a taxpayer who calls in is the easiest sort to squeeze. But in order to be able to handle the same volume of incoming calls with fewer employees, they had to deprioritize working on the rest of the cases in their inventory.
In , 35% of ACS employee hours were devoted to the inventory; this shrank to 24% in — a decrease of “43 percent, from 695,860 to 396,386 [hours].” As a result, the inventory increased from 5.94 million accounts to 7.79 million accounts (a 31% increase), while the average age of the accounts in inventory has increased from 46 to 62 weeks (a 35% increase).
[W]e reviewed ACS business results for and determined that:
- New inventory [of delinquent tax cases] is outpacing case closures, so the inventory is growing.
- Inventory is taking longer to close, so the cases in inventory are aging.
- Revenue declined and more cases were closed as Currently Not Collectible (CNC)
- Fewer enforcement actions (liens and levies) were taken.
- More, and older, cases were transferred to the Queue [where cases sit between the time when ACS gives up on them and when Collection Field function begins work on them], which further reduces the probability of collection by the CFf.
In , the ACS collected $3.22 billion and wrote off $3.65 billion as “currently not collectible.” The equivalent numbers for were $2.82 billion and $4.03 billion. Levies and liens have also dropped during this span, from 2.94 million and 0.55 million respectively to 1.22 million and 0.22 million.
These drops are in part a direct effect of the agency having fewer employees to initiate collection actions, but also an indirect effect of the agency wanting to meet its “Level of Service” goals — that is, how many incoming phone calls it is able to answer successfully. Because enforcement actions often lead to calls from upset taxpayers, the agency has been engaging in fewer such actions merely as a way to cut down on call volume!
ACS management advised us that they take certain steps to control and manage the volume of incoming calls in an effort to assist the ACS in achieving its Level of Service goal. In addition, the Joint Operations Center advised us that under the direction of IRS Headquarters, the ACS decreased the number of enforcement actions taken to proactively reduce the volume of incoming calls.