IRS Consolidates Customer Service & Tax Processing

The Internal Revenue Service will consolidate customer service and returns processing operations as part of its plan to reinvent the way it does business. The reinvention, scheduled to be completed by the year 2001, will enable the IRS to deliver better service to taxpayers and improve the voluntary compliance rate.

IRS will consolidate 70 existing telephone contact sites into 23 customer service centers that will provide one-stop service for taxpayers on issues that do not require face-to-face personal contact. Ten of the customer service centers will be located in areas where the IRS presently operates a processing center. The others will be established at some of the current district office locations. Customer service representatives at these sites will have on-line access to all tax information needed to resolve the vast majority of the issues about which taxpayers contact the IRS today.

There will be five submission processing centers where taxpayers will file their paper tax returns. These centers will use new technologies--character recognition and imaging, in particular--to more accurately and efficiently process tax return data.

Consolidating customer service and tax return processing will result in savings of over $250 million over 10 years. In addition, productivity improvements will free up staffing that IRS will be able to reinvest in front-line service and compliance improvement activities to raise the voluntary compliance rate from 82 percent to 90 percent. Each percent of voluntary compliance equals $7 billion in federal revenue collections.

Role of Customer Service Sites

Telephone contact will be the primary way that IRS and taxpayers will communicate with each other for issues not requiring face-to-face contact. IRS' goal is to resolve issues 95% of the time at the first contact with taxpayers.

Taxpayers will be able to call a customer service center to get information about the tax law, order tax forms, ask questions about their tax accounts, as well as make needed adjustments to their accounts and pay back taxes.

The amount of contact that currently takes place between taxpayers and the IRS is staggering--about 100 million pieces of correspondence and over 70 million phone calls. Because different telephone sites handle different issues, taxpayers often must make several contacts, instead of just one, to take care of an IRS-related issue. Currently, only 60% of taxpayers get through to the IRS on their first call.

How Customer Service Sites Will Operate

IRS has determined that providing one-stop service to taxpayers using sophisticated data and telecommunications systems would be accomplished more effectively with fewer sites. The 23 customer service sites will be located in:

Andover, Mass.        Dallas, Texas            Ogden, Utah
Atlanta, Ga.          Denver, Colo.            Philadelphia, Pa.
Austin, Texas         Fresno, Calif.           Pittsburgh, Pa.
Baltimore, Md.        Indianapolis, Ind.       Portland, Ore.
Brookhaven, N.Y.      Jacksonville, Fla.       Richmond, Va.
Buffalo, N.Y.         Kansas City, Mo.         St. Louis, Mo.
Cincinnati, Ohio      Memphis, Tenn.           Seattle, Wash.
Cleveland, Ohio       Nashville, Tenn.

Data communication lines will link customer service sites to tax data bases located in IRS computing centers so that complete information needed to resolve issues with taxpayers will be readily accessible when taxpayers call. Interactive voice response applications will handle about 45% of all taxpayer call. Taxpayers with issues which cannot be resolved through interactive voice response capabilities will be connected to customer service representatives who will have on-line access to taxpayers' current and past accounts, the capability to analyze accounts and take actions, and more detailed tax law information.

Customer service representatives will also initiate telephone calls to resolve tax issues. These contacts will include information needed to complete tax return processing. IRS will also be able to contact taxpayers earlier to resolve nonfiling and nonpayment cases. Accounts receivable currently total about $27 billion and an estimated 10 million individuals and business have not filed required tax returns.

In 1994, IRS will test consolidated customer service centers in the Fresno Service Center, Nashville District and two other sites to be determined. Site preparation will begin in other locations with the installation of automated call distributors and interactive voice response units. Specific site schedules are not yet final; as the operating concepts are fully tested and sites are prepared, including extensive training for employees, the centers will be phased in through the mid-1990s.

Role of Submission Processing Sites

Although as many as 80 million taxpayers will file electronically by the year 2001, significant amounts of paper will continue to be sent to the IRS. Electronically filed returns will be sent directly to the three previously announced IRS computing centers. Paper filings will go to five submission processing centers that will convert the paper-based data to electronic data for processing. The five submission processing sites will be located in Austin, Tex.; Cincinnati, Ohio; Kansas City, Mo.; Memphis, Tenn. and Ogden, Utah. These locations are current IRS service center locations.

The submission processing centers will transmit electronically captured data to computing centers for entry into taxpayer accounts, compliance analysis and inclusion in on-line data bases. Submission processing centers also will store electronic images of tax returns.

The future system differs markedly from current processing operations. The ten service centers receive about 200 million tax returns a year from individuals and businesses. This paper goes through an extensive handling in a pipeline operation where it is sorted, checked for accuracy and prepared for manual direct data entry. The current system produces errors and delays that frequently require the service centers to contact taxpayers.

Enhanced character recognition technology for processing single-side paper documents will be piloted in the Cincinnati Service Center in 1994. Imaging technology for processing more complex multi-page documents will be piloted in the Austin Service Center in 1995.

All five submission processing centers are scheduled to have the new processing technology by 1997, with full implementation for all types of returns by the year 2000, IRS is currently looking to revise tax forms to simpler answer sheet formats that will enhance taxpayer accuracy and ease of processing.

How Customer Service and Submission Processing Sites Were Selected

In 1992 IRS conducted in-depth studies to determine the number and locations of the future customer service and submission processing centers. For the customer service center analysis, IRS considered the 44 locations of the current 70 telephone sites. For the submission processing centers, the current 10 service center locations were considered.

IRS performed a cost analysis of labor, telecommunications and space. Productivity of the current operations was also considered, as well as recruitment potential for each area and the impact that changes would have on workforce diversity.

Role of District Offices

IRS district offices, which collectively have over 600 field offices under their direction, will continue to help taxpayers who require face-to-face assistance, conduct tax return examinations, work collection cases that cannot be resolved through billing or telephone contacts and conduct civil and criminal compliance investigations.

Compliance work performed in the districts will increasingly focus on market segment analysis and a wide range of solutions to compliance problems. These solutions may include revising a rule or impractical procedure, or providing information and taxpayer education, in addition to more targeted use of traditional enforcement personnel.

Retraining, Redeployment and Reinvestment

As the IRS restructuring progresses, most jobs will be changed in some manner. Some current job categories may not be needed due to consolidating the new ways of doing business in toll-free call sites, computing centers and processing centers. In other cases, new job categories will have to be developed.

IRS has committed to the smoothest possible transition and has developed human resource policies to do so. Affected employees will be offered redeployment to comparable positions and retrained for their new jobs. IRS management has been working with the National Treasury Employees Union to develop specific guidelines about how the retraining and redeployment policies will work.

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