# Provide America’s Taxpayers With Top Quality Service by Helping > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A74de3220376b0aee ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text February 3, 2003 The IRS Mission Provide America’s Taxpayers With Top Quality Service by Helping Them to Understand and Meet Their Tax Responsibilities and by Applying the Tax Law With Integrity and Fairness to All. February 3, 2003 INTERNAL REVENUE SERVICE TABLE OF CONTENTS PERFORMANCE PLAN I. Strategic Context...................................................................................................................................................................................SC-1 II. Program Activities Pre-filing Taxpayer Assistance and Education ......................................................................................................................................PA-1 Filing and Account Services..................................................................................................................................................................PA-4 Compliance Services ............................................................................................................................................................................PA-8 Research and Statistics of Income (SOI) .............................................................................................................................................PA-14 Information Services ...........................................................................................................................................................................PA-16 Information Services Improvement Projects........................................................................................................................................PA-19 Business Systems Modernization ........................................................................................................................................................PA-26 Earned Income Tax Credit Program....................................................................................................................................................PA-29 Shared Services Support......................................................................................................................................................................PA-31 General Management and Administration...........................................................................................................................................PA-33 FY 2004 IRS Annual Performance Plan February 3, 2003 Table of Contents III. Supporting Material Major Management Challenges and High Risk Areas..........................................................................................................................SM-1 Cross-Cutting Coordination and Partnering Efforts ...........................................................................................................................SM-24 Validation and Verification Methodology..........................................................................................................................................SM-31 IV. Appendix Resource and Measures Summary...........................................................................................................................................................A-1 FY 2004 IRS Annual Performance Plan February 3, 2003 Table of Contents I. Strategic Context I.A. Mission/Goals/Objectives IRS’ mission is to provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. This mission statement accurately describes the IRS’ role, as well as the public’s expectation as to how we should perform that role. In the United States, the Congress passes tax laws and requires taxpayers to comply with them. The taxpayer's role is to understand and meet their tax obligations - and most do, since roughly 98% of the taxes collected are paid without active intervention by the IRS. Its role is to help the large majority of taxpayers who are willing to comply with the tax law, while seeing to it that the minority who are unwilling to comply are not allowed to burden their fellow taxpayers. The IRS recognizes that it must meet the highest of standards in performing this role. While a mission statement and clarification of the public's expectations are fundamentally important, it is equally important that the IRS defines the specific goals and objectives needed to achieve its mission. In a practical sense, these goals and objectives represent what the IRS is striving to achieve and how it will judge its success both qualitatively and quantitatively. The IRS has formulated three strategic goals: · · · Top-quality service to each taxpayer in every interaction Top-quality service to all taxpayers through fair and uniform application of the law Productivity through a quality work environment If progress is made on all three of these goals, the IRS can be confident that it is moving toward achieving its mission and meeting the public’s expectations. Major strategies are the approaches the IRS will use to achieve progress on its strategic goals over a two-to-three year timeframe. The IRS has developed these strategies based upon senior management's consideration of internal research and analysis, external stakeholder input, Treasury Inspector General for Tax Administration (TIGTA) and General Accounting Office (GAO) recommendations, and employee input on the key trends, issues, and problems that most affect the IRS. Guiding principles help link the IRS mission and goals to the everyday actions of IRS employees from all levels of the organization. It will take thousands of everyday actions to accomplish IRS goals, and the guiding principals help employees understand the relationship between their actions and its goals. The relationship between the IRS Mission, Goals and Objectives, Guiding Principles and Major Strategies is shown in Figure 1 on the following page. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-1 Figure 1 FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-2 I.B. Pre-Filing, Filing, and Post-Filing Services The IRS FY 2004 Annual Performance Plan (APP) presents the high-level programs and services that the agency carries out to accomplish its mission, goals and strategies outlined in its strategic plan. The APP is the linkage between the Strategic Plan and the program activities in the budget request. The IRS provides three primary services: Pre-Filing Services, Filing Services and Post-Filing Services. Pre-Filing Services – These are services that are provided to a taxpayer before the return is filed to assist in filing a correct return. A very strong emphasis is being placed on pre-filing education and assistance of all customers. In general, the focus is on increasing time spent on education and outreach, increasing volunteer support time and locations, expanding pre-filing agreements and rulings, and enhancing prefiling customer support through electronic media. Filing Services - These are services provided to a taxpayer in the process of filing a return and paying taxes, including electronic filing and payment. The focus is on decreasing paper returns processed and increasing electronic returns, increasing the use of electronic payments, increasing telephone and in-person customer service levels and volume of calls answered. Post-Filing Services – Traditionally known as compliance, these services are provided to taxpayers after a return is filed to identify underreporting, non-filing and nonpayment. Compliance efforts will focus on decreasing the number of abusive and frivolous returns and claims that are filed. Emphasis will be placed on high-income taxpayers, K-1 matching and flow through entities. We will target promoters of abusive tax avoidance transactions, including Internet promoters. These services are applicable to all taxpayers including wage earners, small businesses, self-employed individuals, large and mid-size businesses, tax-exempt organizations and government entities. The three primary services are also sub-divided into ten programs that are explained in the Program Activities section. To ensure a consistent approach to planning for and delivering the agency’s strategic goals, IRS organizes its strategy and program plans, budgets, financial plans and reports, and accounting systems around these three services and their underlying programs. In addition, to ensure that IRS can achieve its mission and goals, the IRS Commissioner and his Senior Management Team established a new Strategic Planning, Budgeting and Performance Management (SPBPM) process in early 2000. This new process significantly changes the prior strategic planning and performance management practices. With the SPBPM process, each organizational unit commissioner or chief executive officer works with his/her senior management team to develop and execute the Strategy and Program Plans that best address the trends, issues and problems that impact their taxpayers and that accomplish the FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-3 agency mission and goals. Strategy and Program Plans along with the Strategic Plan provide the basis for developing annual performance plans, for formulating program justification, and for evaluating and reporting progress in meeting annual performance targets. The APP reflects the major strategies, operational priorities, and improvement projects developed by every IRS organizational unit in their Strategy and Program Plans that are designed to provide internally specific program direction. A brief description of the IRS strategic framework is included to set the context for IRS’ services and programs. It is followed by sections on each of the IRS major programs that describe its annual performance goal and what specific activities, resources and performance measures will be accomplished in FY 2003 and FY 2004 to achieve these goals. This performance plan projects significant increases in performance indicators for most programs in fiscal years 2003 and 2004. These increases are projected based on goals we have established for increased productivity and effectiveness as a result of the new more focused organization structure and the benefits from technology investments and other improvement projects. They are very aggressive goals and they depend on many assumptions. We are committed to achieving these stretch goals. I.C. Programs/Performance Goals The Pre-Filing, Filing, and Post-Filing services are supported by ten high level programs. To ensure a consistent approach to planning for and delivering our strategic goals and objectives, we organize our strategy and program plans, budgets, financial plans and reports, and accounting systems around these three service categories and their supporting programs. These programs are shown below along with the corresponding annual performance goal. The subsequent sections of the Annual Performance Plan describe in more detail what specific activities, resources and performance measures will be accomplished in FY 2002 and FY 2003 to achieve these annual goals. Pre-Filing Taxpayer Assistance and Education - The IRS will provide taxpayers with greater access to information, assistance and support before they file their tax return. – IRS is taking action to promote taxpayer education, improve outreach education efforts and expand partnerships with key stakeholders. The IRS is offering enhanced electronic services including the IRS Website, electronic filing, and electronic payments. The IRS is working to have more effective pre-filing guidance and to reduce the burden of complying with the tax laws. Filing and Account Services - Improve the quality of the service provided to taxpayers in filing their tax returns. – The IRS is modernizing its work processes and expanding its partnership with individuals and organizations by providing help filing returns, increasing electronic filing options, ensuring that notices and letters and are more understandable, expanding our assistance into different languages, and paying refunds faster. Compliance Services - Identify and correct all substantive errors in filed tax returns, reporting of income, and payment of taxes. – The IRS will focus on bringing the highest risk taxpayers into compliance with the tax laws. We will also emphasize improving compliance through better and more targeted taxpayer education, better reporting, voluntary agreements, improved regulations, earlier intervention and reducing the length of the appeals process. The IRS will increase the level of enforcement activity and take appropriate action in each case. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-4 Research and SOI - Perform strategic and tactical research to anticipate and identify compliance and tax administration problems. – The IRS will collect and tabulate data with respect to individuals, corporations, partnerships, sole proprietorships, estates, nonprofit organizations and trusts. Information Services – Provide the information systems services required by IRS activities to effectively administer the nation’s tax law. – The IRS is consolidating notice printing and mid-range computers, and developing and managing telecommunication services. To keep reasonable pace with industry software advances, IRS will replace a portion of its desktop/laptop inventory annually. In addition, the IRS will perform ongoing maintenance of hardware, software, virus detection, and other standard commercial applications. Information Systems Improvement Programs - Develop and implement systems projects that respond to the specific requirements of one or more of the taxpayer groups served by IRS Operating Divisions. – The IRS will improve its financial and administrative systems, ensure the security, privacy and reliability of its Information Technology (IT) infrastructure, and standardize and expand the range of services to taxpayers and Service employees. Business Systems Modernization - Effectively manage the contract resources that support capital asset acquisition of business systems modernization. – The IRS will make fundamental improvements in the way it carries out business by taking advantage of all appropriate technology. The IRS has published and updated a comprehensive technology blueprint to guide it through this multi-year project. Initiatives to expand electronic government and increase electronic filing alternatives will be pursued. Earned Income Tax Credit - Expand customer service and enforcement activities to reduce erroneous filings and payments associated with the Earned Income Tax Credit. – IRS will attempt to address potentially erroneous claims before they are accepted for processing and before any EITC benefits are paid. Shared Services Support - Effectively provides the logistical services required by IRS activities to administer the nation’s tax laws. – The IRS is reengineering standardized processes and identifying areas to continue expanding electronic government. E-commerce alternatives are being explored to improve customer access, streamline vendor interactions and ensure effective use of stewardship and property assets. General Management and Administration - Provide effective leadership and direction in the administration of the nation’s tax laws. – The IRS’ organization and business practices are designed to reflect its customer's needs and address significant human capital issues. Competitive sourcing alternatives are being identified and financial systems are being updated to improve financial performance. The IRS is fully integrating its strategic planning, budget and performance management process to more effectively achieve its strategic goals and objectives. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-5 II. Key Strategic Issues Our success in achieving the IRS mission, goals, and objectives is influenced by the environment in which we operate. The IRS budget request is based upon key drivers identified through our Strategic Planning, Budgeting and Performance Management process that are directly related to accomplishment of our basic mission. The IRS Annual Performance Plan describes the high-level programs or services that the agency carries out to accomplish its mission, goals, objectives, and strategies as expressed in the IRS Strategic Plan. The most significant challenges have been organized around the following themes: Service to Taxpayers. Providing taxpayers with consistent, accurate account information, timely processing of tax returns, and immediate account resolution with the minimum number of encounters with employees. Providing taxpayer education opportunities and outreach programs. Communication with Taxpayers. Improving our written communications to make them easier to understand and more responsive to taxpayer needs. Improving the timeliness of notices sent to taxpayers. Providing taxpayers with easy access to our toll-free number with minimal use of voice mail and recorders. Electronic Tax Administration. Expanding operations for electronic filing, payment, communication, and other automated services. Complexity of the Tax Law. Relieving taxpayer burden by removing as much complexity from the tax law as possible. Globalization. Continually improving our globalization efforts as large and mid-sized business taxpayers continue to grow significantly in global trading and U.S. multi-national corporations are increasingly involved in foreign activities. Compliance Services. Striving to increase our examination coverage and improve the compliance rate of individual taxpayers and small business and self-employed taxpayers. Implementing a balanced compliance program and targeted education efforts to increase voluntary compliance. Combating formation, use, and impact of abusive tax non-compliance. Developing regular and up-to-date measures of overall compliance and compliance by major customer sectors. Human Resource Issues. Recruiting, developing, and maintaining a highly qualified and skilled workforce. Promoting employee satisfaction by improving practices that maintain a quality workforce. Ensuring health, safety, and security of facilities and employees. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-6 Technology in Support of Business Operations. Continuing to improve our technology to provide a level of service to taxpayers consistent with today's standards for a finance-oriented, public service institution. Shared Services in Support of Business Operations. Continuing to improve personnel and payroll processing systems and services. Ensuring health, safety, and security of facilities and employees. III. Relationship Between the Strategic Plan and the Annual Performance Plan The tax administration function is large and complex. The IRS developed goals and strategies to address these complex functions and performance goals to address our progress on our goals and toward achievement of the IRS mission. The table on the following page depicts how all of our Performance Goals support and address our three strategic goals that in turn support four of the Treasury Strategic Goals. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-7 Treasury Strategic Plan IRS Strategic Goal IRS Performance Goals Provide taxpayers with greater access to assistance before they file their tax return. Financial Mission: Improve the quality of the service provided to taxpayers in filing their tax returns. Goal (1 of 4): Collect revenue due to the Federal Government Identify and correct all substantive errors in the filing of tax returns, reporting of income, and payment of taxes. Objectives (2 of 3): Service to Each Taxpayer Provide effective leadership and direction in the administration of the nation’s tax laws. Improve and simplify tax laws Increase compliance Service to All Taxpayers Management Mission: Goal: Support the Achievement of Business Results Goal: Improve Customer Satisfaction Goal: Improve Employee Satisfaction Provide the logistical services required by IRS activities to administer the nation’s tax laws. Productivity through a Quality Work Environment Perform strategic and tactical research to anticipate and identify compliance and tax administration problems. Expand customer service and enforcement activities to reduce erroneous filings associated with the EITC. Develop and implement systems projects that respond to the specific requirements of one or more of the taxpayers groups served by the IRS Operating Divisions. Provide the information systems services required by IRS activities to effectively administer the nation’s tax law. Manage the resources associated with non-labor costs that support capital asset acquisitions of information technology systems. Treasury has 4 missions (Economic, Financial, Law Enforcement, and Management), 14 goals, and 40 objectives. The above table originally appeared in the FY 2003 IRS Annual Performance Plan. It depicts how IRS’ ten Performance Goals support and address its three Strategic Goals, and how these goals support Treasury’s Strategic Goals. FY 2004 IRS Annual Performance Plan February 3, 2003 Strategic Context SC-8 II. Program Activities PRE-FILING TAXPAYER ASSISTANCE AND EDUCATION Performance Goal: The IRS will provide taxpayers with greater access to information, assistance and support before they file their tax return. – IRS is taking action to promote taxpayer education, improve outreach education efforts and expand partnerships with key stakeholders. The IRS is offering enhanced electronic services including the IRS website, electronic filing, and electronic payments. The IRS is working to have more effective pre-filing guidance and to reduce tax law complexity. FY 2004 IRS will continue to expand and improve programs that focus pre-filing efforts on reducing taxpayer burden and increasing tax compliance. Integrated information management systems will be refined to support partnerships with key stakeholders, development and delivery of educational materials, management metrics, and the assessment of results. Expansion of education and targeted partner- and compliance-oriented outreach programs will increase the value of national and local customer education, support, and service delivery. IRS will expand automated electronic and web-based systems to provide taxpayers and partners with 24-hour access to a greater array of products and services, training, volunteer guides, and self-help frequently asked questions. Research will focus on customizing marketing tools to better address needs of taxpayer target segments. IRS will continue efforts to combat non-compliance and fraud through outreach and partnership programs. EITC law education will be provided to partners and return preparers to promote compliance and discourage fraudulent claims. Tax forms, publications, and other documents will continue to be clarified and simplified. Electronic document repositories will be expanded and the development of a multilingual centralized database will be completed. The availability and accessibility of electronic products will be enhanced for all customers. A new 1040 e-filing system will be developed. Department of Treasury, IRS, and tax industry representatives will work together to offer free online tax preparation and filing to a significant portion of individual taxpayers. Expanded electronic tax products for businesses will reduce burden and improve IRS operational efficiency and effectiveness. FY 2003 Pre-filing services provide taxpayers with the information, assistance, and support they need to understand and fulfill their tax obligations before they file their tax returns. Pre-filing services attempt to reduce taxpayer burden and increase tax compliance by making it easier for taxpayers to understand and comply with their tax responsibilities. Partnerships will be enhanced and expanded through programs that build relationships with organizations and groups actively involved in tax administration and that regularly interact with taxpayers. Volunteers will be trained and equipped FY 2004 IRS Annual Performance Plan February 3, 2003 Pre-Filing Taxpayer Assistance and Education PA-1 to assist taxpayers in meeting their annual tax filing requirements. Internal Revenue Service FY 2004 Proposed Performance Plan and FY 2003 Final Plan Education outreach programs will focus on providing products and services tailored to the needs of specific taxpayers, using more convenient, easy-to-use distribution channels. The IRS public web site (www.irs.gov) will be enhanced with registered user capability, electronic transcripts, and greater information availability. Multilingual services, including development of a multilingual document database, will be implemented to reduce burden on taxpayers with limited English proficiency. Reducing taxpayer burden is a key priority at IRS. Publications and documents will be clarified and simplified. Incentives and promotion for electronic filing of tax returns and other documents will be expanded in efforts such as the Self-Select PIN program and Internet Employee Identification Numbers. All efforts will be designed to maximize customer satisfaction and enhance service delivery. IRS will use an integrated research and customer feedback strategy to identify customer segments, values, and needs. Gaps in taxpayer understanding of tax law and emerging compliance issues and trends will be addressed. Balanced measures will be implemented and results baselined to identify taxpayer issues, filing patterns, and emerging needs. Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $570,401 $581,465 $628,440 $646,500 3,280 3,724 4,061 4,065 Pre-Filing Taxpayer Assistance and Education PA-2 Program Performance Annual Performance Goals, Measures, Indicators, and Informational Table Performance Measures 1 1. Number of taxpayers assisted (direct) 2. EP/EO determination letters 3. APAs and Negotiated Positions FY 2000 FY 2001 Performance Performance 4,662,935 FY 2002 FY 2003 FY 2004 Target Proposed Target Performance 3,693,309 3,817,000 19,772,101 7,000,000 6,000,000 109,461 109,326 190,800 129,680 189,000 128,000 N/A N/A 104 176 140 160 1 17,000,000 23,000,000 4. Number of taxpayers assisted (indirect) N/A N/A 13,400,000 100,602,546 5. Education and outreach staff-years 1,099 1,105 1,457 1,415 1,600 1,700 6. Total published guidance items published N/A 249 N/A 367 330 400 Pre-Filing Taxpayer Assistance and Education PA-3 FY2002 count includes media contacts. FY 2004 IRS Annual Performance Plan February 3, 2003 FILING AND ACCOUNT SERVICES Performance Goal: Improve the quality of the service provided to taxpayers in filing their tax returns. – The IRS is modernizing its work processes and expanding its partnership with individuals and organizations by providing help filing returns, increasing electronic filing options, ensuring that notices and letters and are more understandable, expanding our assistance into different languages, and paying refunds faster. FY 2004 IRS will continue its efforts to improve delivery, access, and customer satisfaction in processing tax returns and answering inquiries. E-filing options will increase as additional electronic forms are offered. In addition, as the growth in electronic filing achieves the projected goals, fewer return processing sites will be needed. As a result, IRS will close the Brookhaven Submission Processing site. Taxpayer communication will be enhanced by the ability to submit questions on IRS’ public web site (www.irs.gov) and by online access to filing and refund status information. Overall taxpayer services and delivery locations will continue to be expanded. Taxpayer assistance will be enhanced by the Electronic Research System, which provides high-level search capabilities that will improve response time and quality to customers. The Remittance Transaction Research system will improve the accuracy of payment posting and will assist in the resolution of missing or misapplied payments. Toll-free telephone support via live assistors and automated systems will continue, as will the expansion of service delivery locations begun in FY 2003. The Queuing Management System will be fully implemented, reducing paperwork and increasing employee efficiency. Embedded quality scores will enable IRS to better measure and improve service quality, and efforts to increase and enhance customer support and accuracy will continue. FY 2003 IRS will focus on accurate and timely processing of tax returns and payments along with electronic filing, payment of taxes, and information access. IRS will expand e-file options by offering new electronic forms and increasing credit card, phone and direct debit payment options. Online information delivery will speed access to correspondence for more efficient account management and case resolution and enable greater public and practitioner access to information. Overall service delivery locations will be increased, and the use of mobile units, alternative sites, and kiosks will be expanded. Taxpayers with limited English language proficiency will be provided with products and services to assist them in meeting their tax obligations. IRS will differentiate business and individual returns to provide more specialized service to taxpayers. IRS’ ten Submission Processing centers will continue to transition to eight individual tax return sites and two business tax return sites. Teletax automated toll-free telephone service will provide taxpayers with service 24 hours a day. Additional modifications to the intelligent call routing system will enable calls to go to sites dedicated to FY 2004 IRS Annual Performance Plan February 3, 2003 Filing and Account Services PA-4 specific types of work, as well as to specialized Customer Service Representatives. The online Electronic Account Resolution system will allow IRS to better serve the needs of the taxpayer practitioner community. The Internal Revenue Service will continually strive towards quality in its focus on improving taxpayer access levels and customer satisfaction. Enhanced tools and training will allow Customer Service Representatives to better assist taxpayers. Networking will begin on the Queuing Management System, which will reduce paperwork and increase employee efficiency. Quality review systems will be implemented to measure accuracy, professionalism, and timeliness levels in IRS service delivery. Resource Summary Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2001 FY 2002 FY 2003 FY 2004 $1,598,832 $1,578,477 $1,612,326 $1,656,745 31,140 32,039 31,137 30,543 Filing and Account Services PA-5 Program Performance Annual Performance Goals, Measures, Indicators, and Informational Table FY 2000 FY 2001 Performance Performance Performance Measures Target Performance FY 2003 FY 2004 Target Proposed 7. Individual 1040 returns (paper) (thousands) 92,319 90,586 86,000 84,740 79,000 75,000 8. Business returns (paper) (thousands) 36,690 33,883 34,080 37,126 34,000 33,000 9. Individual 1040 returns (electronic) (thousands) 35,365 40,222 46,000 46,785 54,000 60,000 10. Total primary electronic returns (thousands) 38,585 46,483 52,251 53,026 61,000 67,600 11. Total primary returns filed (thousands) 167,594 170,952 172,331 174,892 174,000 175,600 28% 31% 35% 36% 41% 44% 219,739 330,239 474,700 376,063 TBD TBD 14. Information returns filed electronically (%) 17% 22% 34% 26% TBD TBD 15. IRS Digital Daily hits (billions) 1.56 2.60 3.00 3.11 4.00 4.70 16,749,967 19,184,321 18,386,660 22,525,594 22,600,000 23,200,000 17. Teletax and toll-free automated calls (thousands) 49,700 76,117 75,000 63,796 50,000 50,000 18. Assistor calls answered (thousands) 32,300 32,091 33,750 30,525 33,700 35,000 (% satisfied) 58% 59% N/A 56% 56% 57% (% dissatisfied) 2% 2% N/A 2% 2% 2% 59.0% 56.4% 71.5% 68.0% 72.0% 73.0% 2 12. Percent of individual returns filed electronically 13. Information returns filed electronically (thousands) 16. Customer account correspondence 19. Toll-free customer satisfaction 20. Toll-free level of service 2 FY 2002 21. Toll-free tax law quality 73% 76% 78% 81% 86% 88%2 22. Toll-free account quality 60% 70% 72% 74% 77% TBD Filing and Account Services PA-6 Represents W&I performance. Previous years include SB/SE performance. FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2000 FY 2001 Performance Performance (% satisfied) 91% 90% N/A 86% 88% 88% (% dissatisfied) 6% 6% N/A 8% 7% 7% 1,092,691 1,009,390 984,000 886,797 737,000 589,000 63,380 64,366 67,438 66,029 66,200 67,100 26. IRS Digital Daily downloads (millions) 149 317 473 438 496 579 27. Tax law contacts N/A 1,787,338 N/A 1,843,000 1,900,000 2,000,000 28. Customer accounts correspondence quality 78% 79% 85% 75% 79% TBD 29. Accounts contacts N/A 3,000,0003 N/A 3,110,000 3,300,000 3,600,000 30. Toll-free tax law accuracy N/A N/A N/A N/A 87% 89% 31. Toll-free accounts accuracy N/A N/A N/A N/A 91% 93% Performance Measures 23. Customer satisfaction (walk-in) 24. Total returns prepared 25. Payment received electronically (thousands) 3 FY 2002 Target Performance FY 2003 FY 2004 Target Proposed Estimate. FY 2004 IRS Annual Performance Plan February 3, 2003 Filing and Account Services PA-7 COMPLIANCE SERVICES Performance Goal: Identify and correct all substantive errors in filed tax returns, reporting of income, and payment of taxes. – The IRS will emphasize improving compliance through better and more targeted taxpayer education, better reporting, voluntary agreements, improved regulations, earlier intervention, and reducing the length of the appeals process. The IRS will stabilize the level of enforcement activity and take proper action in each case. FY 2004 Achieving a balanced level of compliance and enforcement will be a major focus for the IRS in 2004. The overall direction will be the reassignment of resources from lower income individuals and lower asset corporate entities to higher income individuals and larger asset corporate entities. In addition, resources will be applied to areas of critical compliance risks such as abusive tax avoidance transactions, electronic crimes, refund and preparer fraud, non-filers, noncompliance with employment tax laws, flow-through entities, offshore trusts and international and domestic terrorism. Additionally, resources will be used to identify and implement alternative treatments that positively impact compliance. Filing Compliance Filing compliance initiatives in process during FY 03 will continue to be developed and enhanced during FY 04. The non-filer strategy, partnering service-wide compliance areas with Criminal Investigation, will identify new methods and efficiencies to encourage voluntary compliance and reduce taxpayer burden. Traditional compliance techniques, tailored to the high-risk taxpayers, will be utilized for those taxpayers that do not respond to voluntary compliance overtures. Payment Compliance The IRS continues to perfect case selection criteria and case building techniques through the Collection and Examination Re-engineering projects. The goal is to deliver an inventory of higher yield cases for further compliance activity. In an effort to reduce non-compliance in the area of employment tax withholding, the improved Federal Tax Deposit Alert model was tested in FY 03. This model should provide advance knowledge of pyramiding of employment taxes and will allow the IRS to develop better techniques to respond in timely and effective manner. For those taxpayers who are unable to pay their tax liabilities in full, the Automated Offer-in-Compromise program will continue to expand and will enhance customer service while reducing the need for field Offer-in-Compromise staff. These resources can be re-directed to payment compliance efforts that address those situations where the taxpayer chooses not to pay. We will continue efforts to lessen the growth of accounts receivable (A/R) through process improvements, research and analysis of A/R trends. In this regard, payment compliance has a strategic measure component known as the Potentially Collectible Inventory (PCI). PCI quantifies the portion of the A/R portfolio that will actually be collected or is potentially collectible. Finally, the Budget proposes legislation to allow IRS to supplement its collection staff with private collection agents. These contractors will be paid from receipts. This initiative will help ensure fair tax compliance, and will begin in the fourth quarter of FY 04. FY 2004 IRS Annual Performance Plan February 3, 2003 Compliance Services PA-8 Reporting Compliance Reporting compliance efforts will continue to migrate to higher income and asset cases and abusive/frivolous filing of returns and claims. Tax scheme promoters will be identified with examination and enforcement efforts appropriately focused to address those schemes. The Automated Under Reporter program will continue to be utilized to address compliance on individual returns. Research in other areas, including additional work in examination, re-engineering, e-commerce, and tax-reporting studies, will continue to help us effectively allocate resources in the future. FY 2003 IRS Compliance Services provides resources to support services to taxpayers after a return is filed, to identify and correct possible errors or underpayment. Filing Compliance focuses IRS efforts to maximize the percentage of returns that are timely filed. Payment Compliance activities are centered on assisting taxpayers owing additional taxes through the fair and uniform application of the law. Reporting Compliance encourages tax return accuracy through programs that determine taxpayer’s correct income levels and corresponding tax liabilities. Filing Compliance Business units will work together to develop and implement a cross-functional nonfiler strategy, and will profile segments of the nonfiler population. Compliance-related entities will convert the current Nonfiler Master File Odyssey Program application into a national application in order to match current state employment tax data with federal nonfiler tax information. Payment Compliance The IRS will continue to impact and deter the growth of accounts receivable through re-engineering efforts and process improvements. The IRS will also perform root cause analysis to determine accounts receivable trends. IRS business units will continue to upgrade payment compliance-related systems and equipment in an effort to improve workplace efficiency. The maturation of our Centralized Offer In Compromise program will allow experienced field collection personnel to return to more traditional duties. Reporting Compliance The IRS will focus resources on expanding the high-income and unreported-income programs (UIDIF). In this regard, the IRS will redirect audit programs to include Schedule K-1 taxpayers and other taxpayers with incomes over $100K. Compliance-related entities will continue to fully participate in the National Research Program. The IRS will profile Internet promoters of abusive tax avoidance transactions. We will also address promoters and participants of offshore abusive tax avoidance transactions or trusts and we will research offshore credit card holder information. The IRS will continue to fulfill the vision of the Examination Re-engineering project helping to identify non-compliance electronically and to automate routine examination processes. Limited Issue Focused Examinations, which concentrate examination resources on selected issues versus traditional issues, will better serve the taxpayer and the government in measuring reporting compliance. FY 2004 IRS Annual Performance Plan February 3, 2003 Compliance Services PA-9 Resource Summary Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2001 FY 2002 FY 2003 FY 2004 $3,561,147 $3,476,217 $3,638,924 $3,883,544 44,852 44,331 44,646 45,776 Compliance Services PA-10 Program Performance Annual Performance Goals, Measures, Indicators, and Informational Table FY 2000 FY 2001 Performance Performance 32. Telephone customer satisfaction (ACS) (% satisfied) 54% 56% N/A 53% 45% 48% (% dissatisfied) 2% 2% N/A 3% 7% 6% 1,052,221 1,006,600 1,012,628 950,696 1,050,000 1,138,000 34. ACS closures – Taxpayer delinquent investigations 412,150 297,791 317,906 190,411 202,000 220,500 35. Automated collection system (ACS) level of service 79% 78% 80% 69% 74% 80% 36. Customer satisfaction – collection field (% satisfied) 47% 53% N/A 51% 50% 51% (% dissatisfied) 29% 22% N/A 23% 15% 14% 37. Field collection – number of cases closed (TDA) 771,455 757,392 804,085 724,430 714,000 769,000 38. Field collection – number of cases closed (TDI) 144,764 119,451 107,119 140,737 113,000 122,000 84% 84% 85% 84% 87% 89% 40. Offers in compromised processed 69,514 97,013 185,000 110,205 124,0004 125,000 41. Automated underreporter cases 2,888,900 2,511,424 2,879,980 2,922,182 2,900,000 3,100,000 42. Automated underreporter quality 93% 95% 97% 95% 95% TBD 43. Correspondence examination customer satisfaction (% satisfied) 34% 34% N/A 33% 33% 34% (% dissatisfied) 38% 30% N/A 41% 35% 33% (EITC) N/A 479,983 N/A 367,799 349,000 364,000 (non-EITC) N/A 146,621 N/A 177,447 246,000 227,000 Compliance Services PA-11 Performance Measures 33. ACS closures – Taxpayer delinquent accounts 39. Field collection quality 44. Correspondence returns examined 4 FY 2002 Target Performance FY 2003 FY 2004 Target Proposed Due to typographical error, the FY2003 OIC target is incorrectly shown as 100,000 closures in the President’s Budget. FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2000 FY 2001 Performance Performance 45. Correspondence examination quality 70% 71% 74% 71% 73% TBD 46. Field exam customer satisfaction (% satisfied) 44% 47% N/A 47% 52% 53% (% dissatisfied) 29% 26% N/A 27% 17% 17% 47. Individual return examinations (> $100,000) N/A 55,761 5 N/A 64,911 62,000 82,000 48. Individual return examinations (< $100,000) N/A 146,790 5 N/A 140,350 121,000 148000 49. Field exam quality (SB/SE) (Office) 58% 70% 73% 74% 73% 74% (Field) 58% 70% 71% 71% 76% 78% (industry cases) N/A 70% 5 N/A 69% 75% 77% (coordinated industry cases) N/A 80% 5 N/A 78% 85% 85% 51. Business returns examined N/A 23,163 N/A 21,159 18,000 18,000 52. Corporate cases examined (large case) 369 417 566 528 486 486 53. Number of returns closed (large case) 3,578 3,734 3,453 4,851 4,100 4,100 54. EP & EO exam customer satisfaction (% satisfied) 67% 68% N/A 70% 71% 71% (% dissatisfied) 11% 10% N/A 8% 7% 7% 55. EP / EO examinations closed 19,080 15,988 11,900 13,549 15,000 20,400 56. EP / EP examination quality 83% 73% 81% 75% 79% 82% 57. Innocent spouse determinations made & claimant notified 55,698 61,011 65,000 60,730 52,000 51,000 58. Appeals cases closed (disposals) 54,986 54,748 67,560 68,015 77,000 77,000 59. Criminal investigations completed 3,499 3,340 3,280 3,201 3,250 3,400 Compliance Services PA-12 Performance Measures 50. Field exam quality (LMSB) 5 FY 2002 Target Performance FY 2003 FY 2004 Target Proposed Official computation of measure began in 2003. FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2000 FY 2001 Performance Performance 60. Total Tax Court cases (beginning inventory & receipts) 35,962 31,883 34,100 36,141 30,000 31,000 61. Taxpayer Advocate closure to receipt ratio N/A 97.6% 6 N/A 108% 105% 105% 62. Taxpayer Advocate casework quality index 65% 72% 80% 78.5% 90% 90% 63. Total enforcement revenue (billions) $33.8 $33.8 $34.8 $34.1 $33.9 $34.5 64. Agency-wide employee satisfaction 59% 51% 54% 55% 58% 62% 65. Servicewide FTE (including EITC) 97,074 97,938 99,901 99,181 99,155 100,043 66. Individual return examinations N/A 202,551 N/A 205,261 183,000 230,000 67. Number of Tax Court receipts 13,478 14,766 13,500 17,371 18,000 18,500 68. Taxpayer contact FTE positions (with EITC) 65,415 65,730 68,306 68,243 67,534 69.290 69. FTE positions per billion dollars of real GDP 10.57 10.26 10.11 10.17 9.98 TBD Compliance Services PA-13 Performance Measures 6 FY 2002 Target Performance FY 2003 FY 2004 Target Proposed Official computation of measure began in 2003. FY 2004 IRS Annual Performance Plan February 3, 2003 RESEARCH AND STATISTICS OF INCOME Performance Goal: Perform strategic and tactical research to anticipate and identify compliance and tax administration problems. – The IRS will collect and tabulate data with respect to individuals, corporations, partnerships, sole proprietorships, estates, nonprofit organizations and trusts. Approaches to measuring taxpayer compliance are being explored and developed. FY 2004 IRS will enhance analytical capabilities to address strategic goals through more efficient issue identification, risk management, workload selection, and resource allocation. Studies will continue to focus on abusive schemes, e-commerce, non-filers / underreporters, and electronic filing and paying. Efforts to create infrastructure and practices for developing, sharing, and maintaining institutional knowledge and data will continue. Efforts will be aimed at not only measuring and improving compliance, but also enhancing customer service. Through partnerships and behavioral research, IRS will identify taxpayer needs and develop services and outreach programs to help taxpayers better understand and fulfill their tax responsibilities. Improved electronic data-capturing techniques will be adopted to more efficiently process and compile statistics of income and compliance. Balanced measure studies will be undertaken to enhance customer satisfaction and service delivery at all levels. Better understanding of the drivers affecting taxpayer burden will remain a key initiative. The ultimate goal of all studies is to reduce taxpayer burden, increase overall compliance, and improve customer and employee satisfaction. Research that helps IRS better understand taxpayer knowledge and compliance trends will ensure accurate and fair service to all and better focus education, outreach, and partnership efforts. FY 2003 The IRS research community will conduct studies and develop models to support improved tax administration. Research provides analytical, statistical, and technology services that enable IRS to develop, implement, and improve critical strategies, programs, and processes. Customerdriven studies cover all areas of IRS, including compliance risks, globalization, e-filing, abusive tax avoidance transactions, and human capital. IRS will create infrastructure and practices for creating, sharing, maintaining, and storing institutional knowledge and data. The Tax Administration Toolkit / Internal Revenue Manual Knowledge Base will provide a comprehensive source of IRS administrative policies and procedures as well as tax law research. Data capture and document imaging will be expanded to increase the efficiency of statistical research. Project scheduling software will be implemented to enhance research planning, timeliness, and quality. FY 2004 IRS Annual Performance Plan February 3, 2003 Research and SOI PA-14 Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $87,291 $80,951 $90,147 $93,097 831 843 885 880 Research and SOI PA-15 INFORMATION SERVICES Performance Goal: Provide the information systems services required by IRS activities to effectively administer the nation’s tax laws. – The IRS is consolidating notice printing and mid-range computers, and developing and managing telecommunication services. To keep reasonable pace with industry software advances, IRS will replace a portion of its desktop/laptop inventory annually. In addition, the IRS will perform ongoing maintenance of hardware, software, virus detection, and other standard commercial applications. FY 2004 Information Services accounts for approximately 80% of the entire Modernization Information Technology and Security (MITS) Services budget and as such incorporates all major automation and information technology efforts in support of tax administration and internal management. This budget activity encompasses daily operations and maintenance, security, development and improvement of management processes (governance, program management, risk management, configuration management), and leadership aspects including human resources, investment portfolio management and budget planning and management. In FY 2004, the focus of activities in this area will be on transitioning modernized deliveries first to support, and then to operations and maintenance while maintaining and enhancing the supporting infrastructure and continuing the delivery of successful filing seasons. IRS will provide increases of 49% in mainframe and 150% in installed midrange server capacity, almost 100% in data network bandwidth use, 50% in the number of voice message boxes, 50% in public web site use, and 25% in the number of e-mail messages. During FY 2004, the heavy lifting of actually transitioning modernized systems into support and operations and maintenance is planned. The release plan calls for eight major project releases in FY 2004: CADE Rel 2, CAP Rel 1, e-Services Rel 2.0, HR Connect Rel 1 & 2, IFS Rel 1, and Modernized e-File Rel 1 & 2. This involves significant risk management, program management, training, hiring, resource balancing, and new hardware, software and telecommunications infrastructure within the IRS. Efforts will support ongoing operations of the IRS including telephones, toll free services, e-mail messaging, voice messaging, workstations, desktop software, application software for tax administration and internal management, and computer center operations. Based on past experience, IRS will have approximately 350 active development projects (both sustaining operations and improvement projects) during FY 2003 and FY 2004 in addition to a steady increase in the number of modernization initiatives. In FY2004, daily transactions processed will increase 12%, the number of telephones serviced will increase 2%, and end user services to IRS employees will remain constant. The new Business Integration Office will develop an Executive Communications Plan and Program, and deliver an updated Program Architecture for common business processes and commercial off the shelf use. IRS will continue to focus on identifying and implementing operational efficiencies and discontinuing less productive work to free resources to reFY 2004 IRS Annual Performance Plan February 3, 2003 Information Services PA-16 invest in our highest priority programs. IRS plans to recognize savings by significantly reducing contractor costs, implementing changes in the organization, deploying new infrastructure and effecting program improvements. Through these efforts, we have identified $19.5 million in savings in FY 2004 that will be reapplied to higher priority work. We also identified an additional $150 million of work that will be discontinued or not undertaken. Savings will be reallocated to support business priorities including expanding the Virtual Private Network Service for Revenue Agents at taxpayer sites. Funds will also be used to provide software licensing/maintenance renewal for the Tier A Customer Relationship Management Exam BNA software that becomes an operational expense in that year. IRS will continue replacement of aged e-mail servers and file/print servers delayed from FY 2003. The Human Resources (HR) Connect project will leverage Treasury’s department-wide human resources modernization efforts to provide a state-ofthe-art human resources management system. It will improve HR administration by providing a single, centralized repository of such data. It will allow staff self-service access and limited update capabilities to employee data, thereby reducing HR resource requirements, and will facilitate accurate financial data by centralizing all HR information into one database. HR Connect R1 (Pilot) will deploy a fully integrated human resources system. Release 1 will replace Position Management, Recruitment, and Personnel Action Requests (PAR) with an enterprise resource planning Commercial Off the Shelf (COTS) package for better integration and efficiency. It will also provide two new features: Employee Self-Service and Manager Self-Service. Release 2 will implement software upgrades and expand human resources management capabilities to include external recruitment. FY 2003 In FY 2003, IRS will focus on perfecting the rigorous re-balancing of resources, priorities, and projects to meet business priorities commenced in FY 2002. IRS will continue to perform an expanded level of compliance reviews, sensitive systems certifications, and other mission assurance activities. Transition to support and operations and maintenance address preparedness and acceptance of modernized systems into IRS. At present, a rough order of magnitude estimate of the total cost of this activity ranges from $85 to $150 million. Activities in this area for FY 2003 will be dominated by planning; increasing our understanding of the work of transitioning, refining schedules, timing and cost estimates; and piloting operations approaches and processes on those modernized system deployments in FY 2003. The release plan calls for five project releases in FY 2003. Recognizing the need for closer coordination and integration with the business customers of modernization, BSMO created the Business Integration Office in mid- FY 2002, headed by a Deputy Associate Commissioner. In FY 2003 the Business Integration Office will stand up as a small organization, become established and build some key relationships. While it will never be a large organization, it is expected to expand in step with the Business Systems Modernization (BSM) program as BSM grows and becomes increasingly complex. FY 2004 IRS Annual Performance Plan February 3, 2003 Information Services PA-17 Resource Summary Budget Authority ($000s) Direct FTE FY 2001 FY 2002 FY 2003 FY 2004 $1,584,682 $1,530,888 $1,582,579 $1,620,174 7,441 7,674 8,025 7,986 Program Performance Annual Performance Goals, Measures, Indicators, and Informational Table Performance Measures FY 2000 FY 2001 Performance Performance FY 2002 Target Performance FY 2003 FY 2004 Target Proposed 70. Ticket Activity - Open N/A N/A N/A 656,000 660,000 720,000 71. Ticket Activity – Closed N/A N/A N/A 649,000 660,000 720,000 72. Percent Resolution at First Contact N/A N/A N/A 47% 60% 70% 73. Percent Resolved on Time N/A N/A N/A 71% 80% 85% 74. Mean Queue Time (minutes) N/A N/A N/A 1 1 1 FY 2004 IRS Annual Performance Plan February 3, 2003 Information Services PA-18 INFORMATION SYSTEMS IMPROVEMENT PROJECTS Performance Goal: Develop and implement systems projects that respond to the specific requirements of one or more of the taxpayer groups served by IRS Operating Divisions. – The IRS will improve its financial and administrative systems, ensure the security, privacy and reliability of its Information Technology (IT) infrastructure, and standardize and expand the range of services to taxpayers and Service employees. FY 2003 / FY 2004 The Tier B program funds near-term improvement or enhancement projects that modify/enhance existing systems or processes; provide limited change in functionality; provide a bridge between current and Modernization architecture; and provide new capabilities to fill missing functional gaps in the modernized enterprise architecture. These are small to medium projects. And, although these projects are owned by a single IRS Business Unit, they may provide capability and functionality that serve multiple Business Units. Treasury Performance Budgeting Application Criteria Addressed Timeliness/Urgency – The information systems activities funded are required to maximize the effectiveness and efficiency of the modernized IRS business structure. Ties to IRS Core Mission – This activity directly supports the core mission of the IRS by supporting the information needs of the IRS Business Units in most mission areas, including submissions, compliance, filing and payment and internal management. Performance Measure(s) Proposed for Improvement IRS is requesting $49.87 million to provide quality systems that will deliver the business vision of the IRS by continuing to support current near-term and new Tier B projects that require funding in FY 2004. Tier B projects were considered with an overall enterprise view of agency-wide IT investments, as well as with a view of maintaining a strong linkage with the modernization initiatives and compliance with the Enterprise Architecture (EA). FY 2004 IRS Annual Performance Plan February 3, 2003 Information Systems Improvement Projects PA-19 The EA describes the long-term business functionality to be provided by the Tier A or BSM program. The Release Architecture (RA) is the actual business functionality delivered, deployed and transitioned to operations and maintenance over time by the Tier A program. In this context, an excellent characterization of the purpose and expected accomplishments of the Tier B program is to fill the gap between the functional requirements of the EA and the delivered functionality of the RA. That is, the Tier B program provides “stay-in-business” functionality to the business while they wait for Tier A Modernization. In addition to providing this “gap functionality,” the Tier B program also provides missing functionality from the Tier A program (i.e., some internal management functions for some functional divisions and shared services divisions). Because of this “filling the gap” role of the Tier B program, it is important that the Tier B projects are not only compliant with the Enterprise Architecture (one of the six criteria for ranking and selecting Tier B projects), but they are managed in an integrated manner with the Tier A program. Integrated planning prioritization and management within MITS ensures programmatic links among the Tier A, B and C projects. Specifically, the Tier B projects are implemented using Enterprise Life Cycle (ELC)-lite, an abbreviated version of the Tier A ELC. And, selected Tier B projects (termed Strategic Tier B) are subject to the Sub-Executive Steering Committee governance processes of the Tier A or BSM program. The recent successful transfer of two Tier B projects, 1120/1120S e-File and 990 e-File, to the Tier A Modernized e-Services project serves as evidence of this tight linkage. With an increasing business demand for Tier B projects, the prioritization and selection methodology and process are critical. This process utilizes the Business Systems Planner/Division Information Officer (BSP/DIO) Council to review all Tier B projects (a fiveday exercise) against a set of five criteria, rank the projects based on their total scores in the five criteria, and then these projects are presented to the IRS Senior Management Team (SMT) or its surrogate Enterprise Architecture Integration Council (EAIC) for approval. We took steps in FY 2002 to further improve the implementation of a comprehensive investment management framework for managing our Tier B investment portfolio. This framework (Select, Control, Evaluate) is based on the investment management process being applied across government agencies, and supports the formulation, management, and maintenance of IT investments. This process is key to ensuring that the investment portfolio adequately addresses our business strategies. In addition, we conducted the first FY 2003/2004 integrated prioritization session with an enterprise perspective. This meant that Tier B Improvement initiatives took into account the relative dependencies and impacts from Tier A Modernization initiatives and Tier C FY 2004 IRS Annual Performance Plan February 3, 2003 Information Systems Improvement Projects PA-20 Improvement initiatives, as well as gaining an understanding of IT platform infrastructure initiatives in regards to Tiers I (mainframes), II (servers), III (desktops), and IV (telecommunications). As part of the prioritization session, the BSP/DIO Council participated in an Equity Session to screen, brief and score existing and proposed Tier B projects, and considered other Tier initiatives for corresponding impacts. During the prioritization session, the BSPs and DIOs screened the IT project proposals, focusing on business value mission, impact, criticality, probability of success, and Tier A implications/dependencies. Projects were recommended for inclusion in the portfolio based on their business value and business unit priority, and this resulted in a ranked list of projects. The selected projects will follow a tailored Enterprise Life Cycle (ELC) process and the Resources Allocation and Measurement division will monitor and control these IT investments to minimize the likelihood of project failure, excessive cost, and schedule over runs. The following are the approved Tier B projects in the FY 2004 investment portfolio that total to the requested $49.9Million, along with their general project descriptions. More detailed descriptions can be found in Exhibit 53 of the Information Technology Investment Portfolio Systems (I-TIPS) database. Only one project was considered a major project (Enterprise E-Learning Strategy) and was submitted via an Exhibit 300. Business Unit PAC 3B–Tier B Improvement Projects FY 2004 Project SBSE Collection Strategy LMSB $ 0.09M Issue Management System (IMS) $ 0.45M FY 2004 IRS Annual Performance Plan February 3, 2003 Description Prioritize collection cases that will allow productive cases to be worked at an earlier time, increasing the taxpayer’s opportunity to satisfy his/her tax liability before excessive penalties and interest accumulate. An issue based tracking system that captures examination progress and results. Information to be captured includes examination planning data, audit results and timekeeping data. A key feature will be the ability to work on-line (connected to a data repository) or off-line (data is stored on the local computer for transfer to the data repository later). Information Systems Improvement Projects PA-21 Business Unit W&I LMSB PAC 3B–Tier B Improvement Projects FY 2004 Project Queuing Management System $ 3.39M RGS Enhancement System $ 3.50M LMSB Issue Based Management Information System $ 3.55M SHR Enterprise E-Learning Strategy $ 2.95M W&I Desktop Integration (Common Desktop) $ 1.80M FY 2004 IRS Annual Performance Plan February 3, 2003 Description An on-line system available at selected major taxpayer assistance centers to facilitate workload and resource distribution by screening and categorizing taxpayer needs at the point of registration. Establish an automated tool that allows 25,000 users in all operating divisions of IRS to create cases for audit through user input of taxpayer data or through the automatic download of taxpayer data from Returns Transaction File; maintain administrative case files; preplan examinations; create work papers; request taxpayer information; compute tax, penalties and interest; generate audit adjustments, forms and letters to the taxpayer; and maintain an inventory of cases. Establishes a Web-based centralized system for managing case information for tracking, planning, and reporting purposes. This provides Team Managers, Territory Managers, and Executives a centralized, online management information reporting system for Coordinated Industry Cases, Industry Cases, International Cases, and Specialist. In addition, it will allow managers the ability to report on case activity; monitor examination plans and Specialist measures and activity; and, capture vital statistics for their area of responsibility. Business strategy that leverages technology to deliver competency-based learning to ODs/FDs online, using standard interfaces, content repositories, and a learning administration system. Outcomes include increased productivity, increased direct time spent on compliance, customer service, and other mission critical work; increased access to learning for all employees. Desktop Integration will provide access to various Compliance systems (e.g. ICS and RGS) from a common Integrated Case Processing (ICP) interface. It will allow end-users to capture, manage and respond to all taxpayer inquiries or follow-up activity using a single system. In addition, it will further improve “one-stop” service by reducing the length of time spent on responding to taxpayer inquiries and increasing the number of taxpayers serviced. Information Systems Improvement Projects PA-22 Business Unit W&I TAS W&I W&I FY 2004 IRS Annual Performance Plan February 3, 2003 PAC 3B–Tier B Improvement Projects FY 2004 Project Management Information System (MIS) for SPEC Description Reduces the cost expended with use of the current system. Allows management real time monitoring of program results, providing the ability to take timely corrective action. $ 0.90M Taxpayer Advocate Service Management Information and Control Systems (TAMIS)(Taxpayer Advocate MIS Case Assignment) TAMIS provides a database that tracks the status and progress of taxpayer cases that meet Taxpayer Advocate Service criteria as mandated by Congress in the Restructuring and Reform Act of 1998 (RRA98). The TAMIS system is mission critical for: the receipt, control, processing and analysis of TAS criteria cases; the recordation and analysis of all Congressional cases, tax and non-tax related; the control of all taxpayer cases resulting from Problem Solving Day events; and taxpayer issues/concerns addressed to and forwarded from the Senate Finance Committee. The data is used in required reports to Congress and Treasury, to analyze Service processes, practices and policies as well as existing tax laws $ 0.89M with a view to changing and/or improving them if they appear burdensome or inequitable for taxpayers. Many sources such as GAO, TIGTA, and Operations, also use the data for analysis. Remittance Transaction Provides a more efficient means of researching payments. RTR will be a onestop shop for checks, images, thus eliminating search through storage archives Research System for source documents. Provide ability for real-time queries to a database for all (RTR) MIS data resulting in improved productivity. $ 0.50M An image-based correspondence system would enable the CSR's to work from a Correspondence stored image using the same workstation they use to access IDRS. IDRS Imaging connectivity would enable management, as well as the Adjustments Control Unit, to batch, control and assign cases in a more efficient manner, thereby $ 3.42M reducing the time it takes correspondence to reach the CSR for resolution. Once a case is closed, images of the correspondence and related case documentation can be retained online which will assist the CSR in subsequent contacts by the taxpayer. Information Systems Improvement Projects PA-23 Business Unit W&I SBSE CFO/NHQ TEGE CI SBSE FY 2004 IRS Annual Performance Plan February 3, 2003 PAC 3B–Tier B Improvement Projects FY 2004 Project Media & Publishing Architecture and Publication (End-ToEnd Publishing) Description Streamline end-to-end business processes associated with IRS publishing and distribution. This will include procurement and integration of multiple COTS products to improve value and address document creation, document management, printing procurement, electronic publishing, order fulfillment, warehouse management and transportation management. $ 3.60M Integrated Insolvency System This system provides for an automated proof of claim computation and an electronic claim form for filing in the court. The bankruptcy courts are imposing the requirement for electronic filing of all claims. Accurate proof of claim filing is one of the primary requirements for Insolvency. Automation will enhance that $ 1.10M effort, and accommodate the increasing number of filings. Business Performance A logical growth of IRS's efforts over the last 2 years to establish performance measures and business performance review system in response to IRS’ need to Management System measure and report on its performance, as well as to comply with the mandates of the Government Performance Review Act. $ 3.04M TE/GE Reporting and Consolidate end user (revenue agents & managers) examination tools to increase Electronic Examination the accuracy and efficiency of the examination process, and enhance management information report capabilities. System (TREES) $ 3.40M Criminal Investigation Management Information System (CIMIS) CIMIS provides the vehicle to collect, compile, and deliver accurate, real time investigative information to all levels of CI management. Much of the data is required by congressional mandates, Treasury regulations, and OMB requirements, and is relied upon heavily for preparing congressional testimony. Phase I: 10/1/2002, Phase II: 3/1/2004, Phase III: 10/1/2005 $ 2.75M Automated Trust Fund The Automated Trust Fund Recovery is an approved National Standard Application developed by Headquarters Office and The Mid-America Recovery (ATFR) Development Center in Austin, Texas. The application design divides the application into two distinct but interactive parts; the Area Office (AO) and the $ 0.98M Compliance Center (CC). The AO portion was implemented nationwide in October 2000 and the CC Phase I is currently being piloted at the Philadelphia Campus. Information Systems Improvement Projects PA-24 Business Unit W&I PAC 3B–Tier B Improvement Projects FY 2004 Project Contact Recording Project $ 5.30M TEGE Determination System Redesign -Release 2 $ 3.30M Excise Files Information Retrieval System (ExFIRS) SBSE Description Recording customer calls will support the Service’s quest to improve the quality of service provided to our customers by allowing employees to provide specific customer feedback based the actual events that did/did not occur on the call. It will focus the review discussions directly on the performance that actually occurred on the call. In addition, by setting sampling parameters to ensure that a random call sample is reviewed, we address a significant TIGTA concern with our current quality measurement system (CQRS). Call recording will enable us to more efficiently and effectively review telephone calls, develop and evaluate employees and improve the overall quality of service provided to our customers. Will fully realize TE/GE's business objective. Release 2 of the Determination System will allow for greater functionality of the system by EP, EO, and GE users. This functionality will greatly expand the capability of the system to users within the organization. Tremendously enhances the information currently available to both federal and state governments in the area of fuel tax compliance. $ 4.96M Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $33,786 $38,665 $49,865 $49,865 0 0 0 0 Information Systems Improvement Projects PA-25 BUSINESS SYSTEMS MODERNIZATION Performance Goal: Effectively manage the contract resources that support capital asset acquisition of business systems modernization. – The IRS will make fundamental improvements in the way it carries out business by taking advantage of all appropriate technology. The IRS has published and updated a comprehensive technology blueprint to guide it through this multi-year project. Initiatives to expand electronic government and increase electronic filing alternatives will be pursued. FY 2003 / FY 2004 The IRS has embarked upon a comprehensive modernization program to produce world-class information systems that meet U.S. taxpayer needs and the tax administration goals of the Nation. The U.S. tax administration system collects $2 trillion in revenues annually. The IRS is critically dependent on obsolete, fundamentally deficient, computer systems developed over the last 40 years. They do not and will not allow the IRS to administer the tax system of the Nation and provide essential service to taxpayers at an acceptable level of efficiency, effectiveness, and risk. In 2002 the Business Systems Modernization (BSM) Program implemented basic building blocks (secure online system and system management capability) and an initial taxpayer-facing application, Internet Refund/Fact of Filing. In 2003 and 2004, additional supporting infrastructure services will be added, and an increasing number of business and internal applications will be delivered, creating taxpayer value and enabling internal efficiencies. The IRS will augment the infrastructure components installed in FY 2002 to provide the capacity to handle increased numbers of users and additional applications. Security improvements will keep pace with the additional requirements, including increased usage of employee and registered user Internet portals. Increasingly, data will migrate to a modernized relational database. Taxpayers migrated to the Customer Account Data Engine (CADE) by the end of FY 2005 will include much of the 1040 family of electronically filed tax returns (full paid or refund), not including those with open issues or with power of attorney in the IRS’ Centralized Authorization File. This migration will bring an estimate of 35 million accounts onto the modernized databases and result in faster refunds through daily processing for those taxpayers and sets the stage for modernized customer service. The Internet will become an increasingly important source of information to customers, and provide increased capabilities for communicating with IRS personnel. E-services will provide practitioners and business partners additional automated service over the Internet and enable the IRS to improve relationship management among this important set of customers. It is anticipated that this will directly influence additional electronic filing. FY 2004 IRS Annual Performance Plan February 3, 2003 Business Systems Modernization PA-26 We will implement consolidated data (Individual Master File (IMF) data going to CAP for FY 2004) for research and analysis, management information, and a host of operational uses through the Custodial Accounting Project (CAP). CAP ensures effective financial management of revenue transactions including accurate and timely reporting of individual receipt and refund activity. The first release of CAP will be implemented in FY2004 and will create the repository for modernized individual taxpayer account data. The second release of CAP will be developed in FY2004 and will support the Business Master File (BMF), Non-Master File (NMF) and Information Returns Account File (IRAF). Both releases provide for information decision analytics and reporting; infrastructure support for fat clients and terminal clients; auditing capabilities for on-line analytical processes; and taxpayer account sub ledger to support FFMIA SGL. In FY 2004, the Integrated Financial System (IFS) will enable the IRS to meet regulatory and oversight financial reporting requirements through the implementation of a Commercial Off the Shelf (COTS) solution. This project will deliver the internal financial reporting capabilities needed to develop and track budgets and expenditures. Core financial capability, including general ledger, accounts receivable, accounts payable, cash, cost accounting, and financial reporting will be implemented. IFS will be a Joint Financial Management Improvement Program (JFMIP) compliant system. FY 2004 Business Projects · E-Services will provide support for the 2004 Filing Season as well as implement support structures for Modernized e-file planned for implementation later in the fiscal year. · Modernized e-file will provide electronic filing for large and medium-sized businesses (Forms 1120 and 990), as well as a new Tax Return Data Base, which will greatly improve customer service and issue resolution. This project uses state of the art XML technology that will enable a revolutionary new way to exchange electronic data in the future over the Internet. Internal Management Projects · Integrated Financial Services (IFS) will develop the detailed functional requirements for a Commercial Off the Shelf (COTS) solution to support internal management requirements for financial and management planning, execution and reporting. Each release will represent a distinct usable segment. Release 1 will replace the Core Financial Systems (CFS) and include budget formulation information, plus implementation of a Cost Accounting System. Release 2 will focus on Property Accounting/Management, Travel Management, Procurement Management, Performance Management, Seized Property Management, and administrative Data Warehousing. · The Custodial Accounting Project (CAP) will provide an integrated enterprise data warehouse to support organizational data needs, performance measurement, and tax operations process improvements for individual filers. CAP R1 will provide support for individual filers. CAP R2 will provide support for business filers. FY 2004 IRS Annual Performance Plan February 3, 2003 Business Systems Modernization PA-27 Data/Infrastructure Projects · · Customer Account Data Engine (CADE) will allow for electronic processing of selected 1040 Wage & Investment returns with additional taxpayer segments with increasingly more complex tax returns and /or balance due returns. Infrastructure Shared Services (ISS) will continue a program to build and deliver an agile infrastructure that is scalable, interoperable, flexible, manageable, and features standardized operations and a single security and enterprise systems management framework. This infrastructure will enable us to deploy modernized business systems and fully integrate with the current processing environment to support data access, databases, web based service delivery for taxpayers and internal users, and do so in a fully secure and optimally managed operational environment. ISS is an umbrella program for multiple projects including Security, Technology Infrastructure Release (STIR), Telecommunications Near-Term, and Enterprise Systems Management (ESM). FY 2003 Business Projects · · · E-Services will provide online application for third party status, authentication and authorization, access to education and communication resources available on the IRS Intranet and Intranet sites, exchange of secure communications, electronic Power of Attorney/Tax Information Authorization (POA/TIA) application, electronic Taxpayer Identification Number (TIN) matching and electronic transcript delivery request. Internet EIN will bring Internet capability to new businesses to be able to apply for an Employer Identification Number (EIN). In hearings before the IRS Oversight Board, this was one of the three most desired functions that business representatives sought. Internet Refund Fact OF Filing (IRFOF) improves customer self-service by instantly providing refund status information and instructions for resolving refund problems to taxpayers with Internet access. Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $93,616 $243,892 $380,000 $429,000 0 0 0 0 Business Systems Modernization PA-28 EARNED INCOME TAX CREDIT PROGRAM Performance Goal: Expand customer service and enforcement activities to reduce erroneous filings and payments associated with the Earned Income Tax Credit. – IRS will attempt to address potentially erroneous claims before they are accepted for processing and before any EITC benefits are paid. FY 2004 IRS will attempt to address potentially erroneous claims before they are accepted for processing and before any EITC benefits are paid by using an integrated strategy. IRS will begin to implement a certification plan for qualifying child relationship and residency to ensure that each EITC filer claiming a child meets the EITC eligibility requirements before receiving benefits. IRS will use all of its available data to determine that each EITC filer claiming a child meets the EITC relationship requirements-without requiring any additional actions on the part of the claimant. IRS will systemically certify nearly eighty percent of EITC claimants on the relationship issue. IRS will also use compliance study data and risk analysis to determine which EITC filers claiming children are most likely to meet the residency requirements. Using this information, IRS will eliminate by nearly eighty percent the number of claimants required to certify residency. In circumstances where available data is insufficient to determine whether a claimant meets the qualifying child eligibility requirements (approximately 20% of claimants), IRS will seek information from the claimant before the refund is paid. In addition, IRS will use historical data, third party data and limited additional taxpayer information, in combination with error detection systems, to detect and freeze refunds with high risk of filing status errors and will use historical data, in combination with error detection systems, to detect and freeze refunds with high risk of income misreporting. FY 2003 IRS will direct efforts to increase taxpayer and preparer compliance through a balance of research, outreach, education, assistance, and enforcement activities. These efforts will assist taxpayers and tax preparers in determining EITC eligibility and ensuring accurately filed claims. Taxpayer education will play a vital role in curbing erroneous EITC claims through extensive community education and outreach activities. IRS will refine existing Dependent Database business rules to validate EITC and other family-related issue claims. IRS will also develop EITC research strategies to include cataloguing internal and external research, understanding taxpayer behavior, identifying unique taxpayer segment treatments, and understanding reasons for noncompliance and nonparticipation. An Executive Advisory Council will provide oversight and leadership for the EITC program within IRS, ensuring timely accomplishment of operational priorities and resolution of cross-functional issues. FY 2004 IRS Annual Performance Plan February 3, 2003 Earned Income Tax Credit Program PA-29 Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $149,308 $146,000 $146,000 $251,167 2,196 2,467 2,353 2,994 Earned Income Tax Credit Program PA-30 SHARED SERVICES SUPPORT Performance Goal: Effectively provides the logistical services required by IRS activities to administer the nation’s tax laws. – The IRS is reengineering standardized processes and identifying areas to continue expanding electronic government. E-commerce alternatives are being explored to improve customer access, streamline vendor interactions and ensure effective use of stewardship and property assets. FY 2004 Efforts initiated in FY 2003 will continue. There will be continued emphasis on rent containment, prioritization and implementation of a long-term capital plan, and employee/building safety and security. IRS will continue investing in employee training and development in areas such as professional skills, cultural sensitivity, workplace diversity, and the Alternate Dispute Resolution (ADR) process. Continuing Professional Education modules will also be developed to enhance learning opportunities. Competitive sourcing programs that were introduced in FY 2002 continue to expand in FY 2003-2004 requiring significant resources. However, the program is expected to improve efficiencies and create program savings for the IRS, either through outsourcing or improved government performance. Efforts to continue expanding electronic government will continue. The use of IT in e-commerce and knowledge management will continue to be pursued. By FY 2005, HR Connect will be significantly implemented. It will provide accurate information for management of the IRS workforce, improve the accuracy and timeliness of personnel actions, and improve communications to all customers. Developing and implementing processes to promote greater financial control and accountability by operating divisions will be a special priority. FY 2003 The shared services program provides internal management of the human, logistical, contractual, and labor / management resources necessary to fulfill IRS’ mission and strategic goals. Efforts to implement and enhance automation initiatives for systems supporting space and property, rent, security and safety, and project tracking will be undertaken. IRS will pursue programs that promote employee development and continuity, such as training, succession planning, and workplace conflict prevention. A new Diversity Awareness Council will be developed to advise managers and employees on workplace conduct that supports inclusion, independence, and empowerment. IRS continues to expand its electronic capabilities through a growing number of methods for procuring products and services, such as electronic catalogs, reverse auctioning and increased interfaces. Web-based interfaces such as WebRTS (Requisition Tracking System), WebIPS (Integrated Procurement System), and e-commerce initiatives will be pursued to improve customer service and vendor access, as well as reduce costs and user FY 2004 IRS Annual Performance Plan February 3, 2003 Shared Services Support PA-31 burden. Additionally, although not a shared services' initiative, significant commitment will be made to the development and implementation of the Integrated Financial System (IFS) in order to ensure that it includes the capabilities, and performs the critical activities, necessary to achieve acceptance in the IRS financial community. Special emphasis will be given to rent containment and reduction, further development of the long-term capital plan, the availability of ergonomically appropriate furniture, and most importantly, workplace safety and security. IRS is committed to process refinements that increase efficiency and timeliness of service delivery, reduce burden, and improve customer and employee satisfaction. Resource Summary Budget Authority ($000s) Direct FTE FY 2001 FY 2002 FY 2003 FY 2004 $1,175,700 $1,190,879 $1,196,875 $1,230,970 4,640 4,917 4,837 4,604 Program Performance Annual Performance Goals, Measures, Indicators, and Informational Table Performance Measures 75. Employee health and safety – lost workday case rate FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2000 FY 2001 Performance Performance NA N/A FY 2002 Target 0.49% Performance 0.98% FY 2003 FY 2004 Target Proposed 0.49% TBD Shared Services Support PA-32 GENERAL MANAGEMENT AND ADMINISTRATION Performance Goal: Provide effective leadership and direction in the administration of the nation’s tax laws. – The IRS’ organization and business practices are designed to reflect its customer's needs and address significant human capital issues. Competitive sourcing alternatives are being identified and financial systems are being updated to improve financial performance. The IRS is fully integrating its strategic planning, budget and performance management process to more effectively achieve its strategic goals and objectives. FY 2004 IRS will continue its focus on delivering customer-defined services that meet taxpayer needs. IRS will develop and expand educational products and communication efforts to assist taxpayers and practitioners in fulfilling their tax obligations. Customer satisfaction surveys will be migrated from paper to non-paper channels to improve information timeliness and trend identification. Balanced measures will be used improve service delivery, performance, and compliance. IRS will continue to address human capital resource issues by implementing programs to recruit and retain highly skilled personnel and expand training opportunities. IRS will also continue succession planning, manager/employee relationship building, and EEO/diversity activities. Efforts to expand employee training and development will continue. Employee surveys will be used to refine the focus of new initiatives and areas for improvement. Efforts will be undertaken to provide quality service while reducing taxpayer burden. IRS will continue responding timely to inquiries from GAO, TIGTA, Congress, and other parties and communicating its message via print, broadcast, and online media. IRS will continue pursuing partnerships and data sharing opportunities with external organizations and groups that are actively involved in tax administration. FY 2003 IRS will focus on delivering customer-defined services that meet taxpayer demands in the manner most convenient and appropriate for the particular taxpayer. IRS will develop and expand educational products and communication efforts to assist taxpayers and practitioners in fulfilling their tax obligations. Customer satisfaction surveys will be used to refine objectives and critical measures. Efforts will focus on improving customer satisfaction, compliance, and internal performance. IRS will address human capital resource issues by implementing programs to align compensation with performance, recruit and retain highly skilled personnel, and expand training opportunities. Succession planning, manager/employee relationship building, and EEO/diversity activities are FY 2004 IRS Annual Performance Plan February 3, 2003 General Management and Administration PA-33 important human capital issues. IRS will expand knowledge management and training initiatives for all employees. Employee surveys will be used to refine the focus of new initiatives and areas for improvement. Competitive sourcing programs will be pursued to increase program efficiency and effectiveness. Efforts will be undertaken to provide quality service while reducing taxpayer burden. IRS will respond to inquiries from GAO, TIGTA, Congress, and other parties and communicate its message via print, broadcast, and online media. IRS will also pursue partnerships and data sharing with external organizations and groups that are actively involved in tax administration. Resource Summary FY 2001 Budget Authority ($000s) Direct FTE FY 2004 IRS Annual Performance Plan February 3, 2003 FY 2002 FY 2003 FY 2004 $548,435 $461,637 $520,696 $540,479 3,327 3,186 3,211 3,195 General Management and Administration PA-34 III. Supporting Materials Major Management Challenges and High-Risk Areas Over the last several years the General Accounting Office (GAO) and the Treasury Inspector General for Tax Administration (TIGTA) have identified several Management Challenges and High-Risk Areas facing IRS. IRS has identified specific steps and actions to address these issues through its existing program activities. Measures of these program activities serve to show progress in addressing the management challenges and high-risk areas. Below is a crosswalk showing the relationship between management challenges and IRS program activities. Systems Modernization of the IRS Complexity of the Tax Law Security of the IRS – Employees and Facilities Security of the IRS – Information Systems X X X X Integrating Performance and Financial Management – Performance Management X Integrating Performance and Financial Management – Financial Management Processing Returns & Implementing Tax Law Changes During Filing Season & Administration General Management Shared Services Business Systems Modernizatio n EITC Information Services Improvement Projects Information Services Research & SOI Compliance Filing Management Challenge or High Risk Area Pre-Filing Budget Activity X X X Tax Compliance Initiatives X X X Providing Quality Customer Service Operations Erroneous Payments; Noncompliance with EITC Taxpayer Protection and Rights Human Capital Collect Unpaid Taxes Revamp Business Practices to Meet Taxpayer Needs X X X X X X X X X X X X X X X X X X X Table: Management Challenge Crosswalk to Program Activity The following pages summarize each Management Challenge and High-Risk issue, FY 2002 accomplishments, and actions identified for completion in FY 2003 and beyond. FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-1 Management Challenge or High Risk Area: Systems Modernization of the IRS The ability to balance the goals of helping taxpayers meet their tax responsibility and improving overall compliance with tax laws depends on the successful completion of the modernization effort. Modernization of technology is crucial to implementing the new business vision of providing world-class service to taxpayers. While the development of new technology evolves, existing operations must continue, and improvements must be made to meet the needs of tax administration and demonstrate IRS’ commitment to improved service to taxpayers. FY 2002 Accomplishments: Critical to the successful modernization of IRS business processes and enabling information technology are disciplined management processes. Through focused development and implementation of repeatable management processes this year, IRS has made considerable progress in the ability to manage the Business Systems Modernization Program. Continued strict adherence to these processes will effectively allow the IRS to meet the challenges identified by GAO and TIGTA. In FY 2002, IRS addressed this challenge through the following accomplishments: § § § § § § Matured Business Systems Modernization Office (BSMO) management processes as evidenced in TIGTA audits and GAO reviews. PRIME achieved Software Acquisition Capability Maturity Model (SA-CMM) level 3 rating, first in world to do so. Delivered Internet Refund Fact of Filing (IRFoF), Secure and Technical Infrastructure Release (STIR), Enterprise Systems Management (ESM), and Enhanced Call Routing applications. Began Customer Account Data Engine Release 1 (CADE R1) pilot. Fully matured program governance (established framework for and implemented fully functional Executive Steering Committee [ESC] and Sub-Executive Steering Committee [SUB-ESC] structure), which includes extensive participation of key executives across the IRS and external stakeholders. Achieved SA-CMM level 2 rating for BSMO, first civilian government agency to achieve that level of management maturity. Actions Planned or Underway: The following actions will enhance the IRS’ ability to modernize technology: § § § § § § Implement CADE R1 to allow the first processing of individual taxpayer returns on a system other than the Individual Master File (IMF) in 40 years. (09/2003) Focus on better cost and schedule estimating and building reserves in plans. (09/2004) Implement E-Services R1.1 and R1.2, providing electronic support to third party providers. (09/2004) Implement HR Connect R1, establishing new HR system in selected business units. (09/2004) Implement Internet Employee Identification Number (EIN), providing Internet based applications for employer identification number online. (09/2004) Improving the Spend Plan process. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-2 Management Challenge or High Risk Area: Tax Compliance Initiatives IRS’ goal of providing world-class service to taxpayers hinges on the theory that if IRS provides the right mix of education, support, and up-front problem solving to taxpayers, the overall rate of voluntary compliance with the tax laws will increase. The compliance program (examining tax returns and collecting tax liabilities) addresses taxpayers that do not voluntarily comply. During the last decade, the number of tax returns selected for examination by IRS has decreased while the number of tax returns filed has increased. The challenge to IRS management is to establish a tax compliance program that identifies those citizens who do not meet their tax obligation, either by not paying the correct amount of tax or not filing proper tax returns, and effectively bring them into compliance. FY 2002 Accomplishments: In FY 2002, IRS completed the following actions: § § § § § § Analyzed Correspondence Examination programs to determine areas of non-compliance that can be addressed through the use of soft notice and math error treatments. Developed improvement strategies to address escalating and aged Offers in Compromise (OIC) inventory and to reduce open OIC inventory within six to twelve months. Enhanced and realigned the current Examination legacy systems to help identify the most productive returns to examine. Information will be made available to examiners to conduct more effective examinations. Expanded the range of information documents and returns that may be filed electronically for Corporate Taxpayers. Estimated payment compliance measures by type of tax and by Operating Division for tax year 1999; estimated filing rate measures for individual income tax for tax years 1990-1999. Completed training for all technical large and mid-size business employees on the Limited Issue Focus Examination (LIFE). Actions Planned or Underway Efforts in FY 2003 and beyond will address compliance areas through better education of the public; systematically identifying promoters and participants; improving the efficiency of exam and collection efforts through reengineering; and reinvigorating enforcement actions such as summons enforcement, injunctions and criminal investigation of promoters. IRS must continue to make significant progress in collecting better compliance and non-compliance data as well as quantifying corporate level strategic compliance measures. These two goals will be achieved in large part through the new National Research Program (NRP). The first available NRP data on payment and filing compliance recently became available, with updated measures available in FY 2003. Data on reporting compliance will be available in FY 2004. The following activities will allow IRS to implement a balanced compliance program: FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-3 § § § § § § § § § § § § § Deploy a range of initiatives using education and outreach to improve the overall rate of voluntary compliance. (09/2004) Increase efficiency and effectiveness by updating and re-engineering work processes to make better use of resources. (09/2004) Advance the use of Voluntary Compliance Agreements, reducing the need for traditional enforcement actions. (09/2003) Fully implement K-1 matching program and target enforcement efforts towards promoters and participants of abusive tax avoidance transactions. (09/2003) Implement improved processes to move to an issue-driven compliance process that will result in productivity savings and redirect these savings to the highest compliance work. (09/2003) Explore the use of limited scope examination processes to increase our ability to improve case resolution. (09/2003) Analyze the Potentially Collectible Inventory reports to identify the causes of growth and develop a course of action to impact continued growth. (09/2004) Apply alternative dispute resolution procedures and other issue resolution programs to resolve abusive tax avoidance transactions and other issues in a timely and consistent manner. (09/2004) Identify methodologies that will most positively impact non-compliant taxpayers using Research data. (02/2004) Use Filing Compliance rate estimates for individual income tax to develop dollar gap estimates. (09/2004) Continue Reporting Compliance study of individual income tax. Most examinations will be done in FY 2003 . Data will become available in FY 2004. Establish and staff the Exempt Organizations Contact Unit to improve the IRS presence in the exempt organizations community. (10/2004) Collaborate with Department of Labor to identify and contact Form 5500 nonfilers. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-4 Management Challenge or High Risk Area: Security of the IRS – Employees and Facilities Recent terrorist attacks highlighted vulnerabilities in many businesses and government agencies. This terrorist activity within the United States demonstrated very graphically that the physical security of IRS employees, equipment, and structures should be of utmost concern to IRS management. The IRS must remain vigilant to all opportunities to enhance the safety of employees. FY 2002 Accomplishments: In FY 2002, IRS addressed this challenge through the following accomplishments: § § § § § § § § § § § § Developed National Physical Standards that establish security enhancements for areas such as guard services, blast mitigation, and IRS infrastructure. Conducted an assessment of all IRS buildings and facilities based upon current and proposed security standards. Developed contingency plans for all ten IRS campuses to address hazardous materials threats for the upcoming filing season. Purchased and distributed protective equipment, such as gloves, masks, and lab coats, as a result of the anthrax threats. Consolidated and/or contained many mail-opening activities throughout IRS. Participated in government-wide programs that plan for and minimize the risk of catastrophic events on mission achievement. Developed posters, tri-fold brochures, and a Director’s briefing package to provide information and instruction to managers and employees regarding anthrax and other hazardous materials threats. Developed a plan to upgrade communications systems such as public address and closed circuit television for all ten IRS campuses. Developed an action plan to address deficiencies in offices that do not meet the National Physical Security Standards. Completed Phase 1 and 2 initiatives to contain Service Center Automated Mail Processing System and mail extraction units in all campuses to isolate these areas from other units. Enhanced and tested headquarters’ continuity of operations (COOP) capabilities Developed and tested enterprise situation awareness management capabilities (SAMC) Actions Planned or Underway IRS will continue to respond to this challenge through the following planned actions: § § § § Continue to work with GSA and law enforcement agencies to safeguard personnel and assets. (09/2004) Closely monitor procedures regarding the inspection of incoming mail and packages. (09/2004) Continue implementation of security enhancements. (09/2003) Continue to participate in government-wide programs that plan for disaster response. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-5 § § § Take actions to improve and institutionalize changes for campus mail operations. (09/2003) Continue to enhance and maintain COOP and SAMC initiatives. (09/2004) Complete security risk assessments of Level 1, 2, and 3 buildings. Implement appropriate corrective measures and/or upgrades, subject to funds availability and consistent with comparable GSA scheduling for Level 4 buildings. (09/2003) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-6 Management Challenge or High Risk Area: Security of the IRS – Information Systems Whereas the IRS’ computer security capabilities have measurably improved, the remaining computer security control weaknesses continue to expose the Service’s automated systems and taxpayer data to unacceptable risks associated with both internal and external threats. As the primary revenue collector for the United States, the IRS is a highly visible target for hackers, unhappy taxpayers, disgruntled employees, and other types of dissatisfied people. This threat has increased over the last few years with more interconnectivity of systems. In addition, business continuity, disaster recovery, asset management, and stored data became key concerns after the events of September 11, 2001. Loss of tax processing systems for extended periods would have a major economic impact and would result in lost productivity for many IRS functions that are totally dependent on these systems. FY 2002 Accomplishments: In FY 2002, IRS addressed this challenge through the following accomplishments: § § § § § § § § § Refocused Security Services organization to create corporate security solutions. Focused on evaluating and improving IRS security programs and processes, and identifying how to implement security capabilities that are balanced with operational requirements. Conducted reviews of IRS facilities and programs to evaluate and test security controls, and assisted IRS organizations to set up internal security review processes. Monitored IRS networks to prevent cyber attacks. Enhanced incident response capability (CSIRC) to 24X7 operation; initiated more detailed analysis process to better protect and defend IRS systems and networks; provided daily status reports to executive leadership. Improved certification process through deployment of an automated tool. Conducted agency-wide awareness activity to better enable employees to understand their responsibilities and use good practices. Began earlier engagements with Modernization project offices and BSMO with regard to development process to ensure consistent, satisfactory implementation of security methodologies and to ensure that all new systems meet the security certification mandate. Established in-house mainframe disaster recovery capabilities. Actions Planned or Underway IRS will continue to respond to this challenge through the following planned actions: § § Conduct reviews to evaluate security performance in key business areas, such as remittance processing, and work with IRS business units to mitigate these weaknesses. (09/2004) Improve the adequacy of physical, logical, communications, and personnel security, operating practices, software quality assurance activities FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-7 § § § § § and business resumption plans to mitigate the IRS’ computer security material weaknesses. (09/2004) Use a model facilities approach to improve the consistency of security controls across IRS facilities. (09/2004) Continue to improve the ability to prevent, identify and resolve cyber attacks by completing build-out and improving operational readiness of the Computer Security Incident Response Center. (09/2004) Conduct regular assessments of the overall state of security in IRS; use the security assessment framework as a guide to improve and better measure IRS security capabilities. (09/2004) Develop and disseminate security guidelines for the businesses that will facilitate implementation of security mechanisms, encourage business area participation and foster understanding of the business area role in the security process. (09/2004) Better define & implement the security roles and responsibilities for all IRS executives, managers, and employees to ensure compliance with security policies and new legislative requirements. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-8 Management Challenge or High Risk Area: Integrating Performance and Financial Management - Performance Management The Government Performance and Results Act of 1993 (GPRA) is intended to increase agency accountability and improve the quality and delivery of Government services. The GPRA holds Federal agencies accountable for program results by emphasizing goal setting, customer satisfaction, and results measurement. The President’s Management Reform Agenda addresses integrating performance review with budget decisions. The IRS Strategic Planning and Budget process, which includes the Annual Performance Plan and Annual Performance Report, satisfies a major requirement of the GPRA. However, IRS’ critical performance measures do not address all of the strategies listed in the IRS Strategic Plan and do not support a significant portion of the IRS’ budget request. FY 2002 Accomplishments: In FY2002, IRS completed the following actions: § § § § § § § Almost all functions have approved balanced measures composed of business results quantity and quality, customer satisfaction and employee satisfaction. Divisions used balanced measures to report to the Commissioner on executing their workplans, and also as the cornerstones for building their strategic plans. Divisions are in the process of deploying and setting targets for their balanced measures down to the Area office (or equivalent) level. Began implementing Embedded Quality (EQ), which revamps the way quality is measured, calculated, and reported in the sites. EQ will create accountability by connecting employee evaluations directly to the corporate balanced measures in a fair and meaningful way. IRS replaced the manual process to collect, collate and report performance data by automating these steps through the Data Mart and Business Performance Management System (BPMS) for most of the IRS critical measures. IRS continues to develop its strategic measures, and included seven strategic measures in the FY2004 OMB Budget Submission - four related to tax administration and three on worker safety. Three of the tax administration strategic measures in the budget had historical data: Payment Compliance, Filing Compliance and Potentially Collectible Inventory (PCI). Data for the fourth, Reporting Compliance, will be available in FY 2004. Expanded participation in American Customer Satisfaction Index. Actions Planned or Underway IRS will continue to respond to this challenge through the following actions: § § § Continue to automate data collection and reporting through Data Mart and BPMS. (09/2004) Beginning with linking collection workplans to reducing PCI, divisions are in the process of linking their operational critical measures to relevant strategic measures to better align resource decisions to achieving strategic outcomes. (09/2004) Major operating divisions are developing their own strategic measures. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-9 Management Challenge or High Risk Area: Integrating Performance and Financial Management - Financial Management The IRS’ financial management systems remain a challenge to the IRS management, despite producing, for the second consecutive year, combined financial statements covering the IRS’ tax custodial and administrative activities, and achieving an unqualified audit opinion from the General Accounting Office (GAO) on all financial statements for FY 2001. IRS’ current financial systems alone cannot produce reliable information necessary to prepare financial statements in accordance with federal accounting standards. The data produced from the current financial system has to be reconciled with other subsidiary systems to produce reliable financial statements. The IRS lacks the timely, accurate, and useful information needed to make informed management decisions on an ongoing basis. FY 2002 Accomplishments: To improve overall financial management, IRS is implementing two major systems: the Custodial Accounting Project (CAP) and the Integrated Financial System (IFS). In FY2002, IRS completed the following actions: § § § § Completed the Architecture Phase of the CAP. Merged the Enterprise Data Warehouse (EDW) project and CAP Closed the year-end books and prepared all financial statements in 45 days. Implemented new three-day month end close procedures. Actions Planned or Underway IRS will continue to respond to this challenge through the following actions: § § § The Systems Development Phase of the CAP is scheduled for completion in December 2002. End use deployment of EDW providing the first tier of detailed data in the data warehouse, first tier of summarized data in the Revenue Data Mart and the first suite of tools for data analysis and report generation is scheduled for May 2003. The first release of IFS is scheduled for deployment on October 1, 2003 and will include the Core Financial System as defined by the Joint Financial Management Improvement Program (General Ledger, Accounts Payable, Accounts Receivable, Funds and Cost Management, and Financial Reporting), as well as Budget Formulation. FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-10 Management Challenge or High Risk Area: Processing Returns & Implementing Tax Law Changes during the Filing Season The filing season impacts every American taxpayer and is therefore always a highly critical program. Many programs, activities and resources have to be planned and managed effectively for the filing season to be successful. Critical programming changes for the filing season must receive priority over other programming requests. Although the FY 2002 filing season was a great success, the IRS still needs to address some problems in processing tax returns, specifically in the areas of the Rate Reduction Credit (RRC), Additional Child Tax Credit (ACTC), undelivered refund checks and processing of small business corporate returns. FY 2002 Accomplishments: In FY 2002, IRS completed the following actions: § § § Implemented a secure transaction-based web site. Incorporated new procedures required by the Economic Growth and Tax Relief Reconciliation Act of 2001. Completed centralization of all employment tax processing, including information returns, by consolidating operations in two Submission Processing sites. Actions Planned or Underway IRS will continue to respond to this challenge through the following planned actions: § § § § § § § § Continue to use workload forecasting to ensure the required number of employees is available for each telephone product line and ensure tools are updated and available timely. (09/2004) Continue to identify training needs and develop training plans to improve performance. (09/2004) Conduct CPE training to ensure assistors are knowledgeable of tax law changes. (09/2004) Ensure the Corporate Filing Season Readiness Process is operational and covers all aspects of the filing season, including the Annual Readiness Certification. (June of each year) Conduct pilot and roll out the Remittance Transaction Research (RTR) system. (Early 2004) Implement registered user access to enable authorized third parties and practitioners to request and receive transcripts electronically and submit account inquiries, powers of attorney and disclosure authorizations electronically. (09/2003) Implement taxpayer identification number (TIN) matching with payers. (04/2003) Expand e-filing options by adding and converting additional forms. (09/2004) FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-11 Management Challenge or High Risk Area: Complexity of the Tax Law According to the FY 2000 Taxpayer Advocate’s Annual Report to the Congress, the highest-ranked problem individual and business taxpayers had with IRS was tax law complexity. The problems caused by this complexity range from individual to corporate and international tax issues. Stakeholders from diverse constituencies have informed decision-makers about the problems and recommended solutions. It is unlikely that the Internal Revenue Code will be simplified at one time. Therefore, IRS has the challenge to remove as much complexity as possible as a service to taxpayers. The effect of tax law complexity is compounded as IRS modernizes. Since complexity can be a major factor in the cost of operations, IRS must devote resources to simplifying taxes while at the same time modernizing its systems and processes. FY 2002 Accomplishments: In FY 2002, IRS completed the following actions: § § § § Integrated Probe and Response (P&R) methodology into IRS publications and made their use the standard tool for Field Assistance technical employees. Trained Customer Service Representatives in one or more technical and account topics, enabling them to be more proficient in assisting customers quickly and accurately. Issued a report on tax law complexity that highlighted areas taxpayers find to be particularly difficult. Issued regulations changing the thresholds for requiring businesses to use accrued accounting, allowing many taxpayers to use the less complicated cash accounting method. Actions Planned or Underway The following actions will enhance IRS’ ability to reduce the complexity of the tax law: § § § The National Taxpayer Advocate’s FY2001 Annual Report contains 28 legislative proposals, 19 of which are described in detail as key recommendations. The legislative recommendations, taken as a whole represent, proposals that the NTA believes will reduce complexity of the Code, reduce taxpayer burden in complying with the tax requirements, and reduce IRS’ burden in administering the tax system. (09/2004) The NTA has also identified potential legislative issues to be developed for the 2002 Annual Report to Congress and continues to work with members of Congress and their staff to increase understanding and support of the key legislative recommendations contained in the 2001 report. The NTA has addressed complex issues such as family status, alternative minimum tax, installment agreements for less than full payment, joint and several liability, penalty and interest, and collection procedures. (09/2004) The IRS will deploy a model to estimate the impact on taxpayer burden of changes to tax law or tax administration procedures for individual taxpayers. (09/2003). FY 2004 IRS Annual Performance Plan February 3, 2003 Major Management Challenges and High-Risk Areas SM-12 Management Challenge or High Risk Area: Providing Quality Customer Service Operations Providing top quality service to every taxpayer in every transaction is an integral part of IRS’ modernization plans. IRS provides customer service in many ways, including toll-free telephone service, electronic customer service, written communications to taxpayers, walk-in service, and accurate and timely tax refunds. Each of these services affects taxpayers’ ability and desire to voluntarily comply with the tax laws. FY 2002 Accomplishments: In FY 2002, IRS completed the following actions: § § § § § § § Created a bar-coding system for adjustment notices and refund checks so they can be mailed in the same envelope. Developed [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A74de3220376b0aee. Public record. Not legal advice.