Recommendations for CEP process improvements involving specialists.

• Position: Report concerning customer service in IRS Coordinated Examination Program

In June 1999, the IRS Customer Satisfaction Task Force, established in 1998 to study the specialists' and specialist managers' involvement in the Coordinated Examination Program to improve customer satisfaction, issued the following report. Tax Executives Institue was represented on the task force by Stephen W. Boocock of Allegheny Teledyne, Inc., T. Norman Bush of Fort James Corporation, Lonnie F. Nicol of Alcoa Inc., David R. Seltzer of Hewlett-Packard Company, and Timothy J. McCormally, the Institute's General Counsel & Director of Tax Affairs.

Acknowledgment

The Task Force wishes to thank customers and stakeholders who contributed to its efforts, including Tax Executives Institute and its members, especially those in the Baltimore-Washington, Florida, New England, St. Louis, and San Francisco chapters. The Task Force also recognizes the contributions of the Internal Revenue Service regions and districts that provided resources and shared their insights and techniques for conducting examinations involving specialists. Their input and candid feedback were invaluable to the Task Force in preparing the report and finalizing its recommendations.

Executive Summary

Acting upon the recommendations of Thomas Wilson, National Director Corporate Examination, a Task Force was established to study the specialists' and specialist managers' involvement in the CEP process to improve customer satisfaction as measured by the University of Michigan study entitled "Measuring Taxpayer Burden and Attitudes for Large Corporations." To accomplish its objective, the Task Force adopted the following Mission Statement:

The Mission of IRS/TEI Customer Satisfaction Task Force is to investigate and explore the factors affecting the lower ratings specialists and their managers received in the 1992 and 1996 University of Michigan surveys. Based on our findings, the Task Force will recommend solutions designed to improve the process resulting in improved ratings. The Task Force gathered information through the use of questionnaires and interviews with internal and external customers. Information was also obtained by reviewing numerous other task forces, peer reviews, and GAO studies. Quality improvement techniques such as brainstorming, focus interviews, and flow-charting were used to analyze and develop refinements to the CEP process, as it relates to specialists and their managers.

The Task Force identified numerous common threads that were consolidated into five areas to increase customer satisfaction, as follows:

* Definition of Roles

* Team Building

* Planning

* Issue Development and Resolution

* Closing

Group focus interviews were conducted to assess the validity of the Task Force findings. The measuring stick applied was the new balanced measurement system. Each recommendation was tested to ensure customer satisfaction, employee satisfaction, and potential to improve business results.

A summary of the recommendations follows.

Recommendations

These recommendations summarize more detailed recommendations contained within the body of this report. The summarized recommendations fall into three areas: immediate process improvements, intermediate process improvements, and long-term organization improvements.

Immediate Process Improvements

* Require sharing with the taxpayer at the opening conference three documents developed by this Task Force to clarify the taxpayer and team member's understanding of their roles in the decision-making process:

* Identification of CEP examination team and IRS management * Roles of CEP team members * Decision-making flow charts for -- [] Annual planning [] Case planning [] Issue development - IDR process [] Issue resolution - 5701 process * Require that the audit plan be developed as a culmination of all team member recommendations, as outlined in the decision-making chart in the "Role Definition" section of this report. The plan must be specialist or domestic driven to reflect the overall business operations of the company. * Provide timeline software for use as a tool to manage the examination process and guide team direction. * Acknowledge that, while management skills are important to the selection of specialist managers, all CEP and specialist managers should ideally be selected with experience in the specialty that they are being expected to manage. Managers selected without experience must attend all training courses in the discipline, for which they are expected to manage. * Implement the three-prong balanced measurement tool developed by this team. Intermediate Process, People, and Training Improvements

* All specialist workload must be front-end loaded in order for specialist managers to properly plan resource utilization and better meet all customer needs. This process is outlined in the decision-making flow chart under the "Role Definition" section of this report. * The methodology used to determine specialist manager's workload must be one that is similar to that used in CEP (i.e., case pointing). A task force of branch chiefs, case managers, specialist managers, and specialists must be established to address this problem. * The team coordinator or case manager should, when appropriate, be designated by the nature of the case rather than defaulting to domestic case managers and agents. * Create GS-14 Engineer Field Assistance Program (EFASP) and Economist Field Assistance Program (ECONFASP) positions to assist with issue development and coordinate issues in the Engineering and Economist Programs. * Expand the International Field Assistance Specialization Program (IFASP) positions to assist with issue development and coordinate issues in the International Program. * Design the team building courses and process detailed in this report. * Design/refine technical and process training for all team members and managers as detailed in this report. * Critical elements must be modified to be consistent with these performance measures. Long-Term Organizational Improvements

The restructuring design teams must incorporate the Task Force recommendations in their structure. The redesigned organization must be constantly reassessed to meet customer needs identified in this report.

Mission Statement

The Mission of the IRS/TEI Customer Satisfaction Task Force is to investigate and explore the factors affecting the lower ratings specialists and their managers received in the 1992 and 1996 University of Michigan surveys. Based on its findings, the Task Force will recommend solutions designed to improve the process resulting in improved ratings.

Background Information

Recent challenges to organizational operations depicted significant problems arising from a lack of focus on customer needs. The Coordinated Examination Program (CEP) in 1992 sought assistance from the University of Michigan in identifying those needs and the level of customer satisfaction. The 1992 and subsequent 1996 surveys indicate a "somewhat ineffective" rating across the Engineering and Economist Programs. These specialties, along with the International Program, have lower ratings than team coordinators and members. Manager satisfaction ratings for all three specialties also showed a slight decline between the two surveys.

The University of Michigan Study 1992 and 1996 ratings of audit team competency data (scale 1-5, MR=mean rating):

1992 1996 Change CEP Team Member MR MR 92 to 96 Case Manager 3.38 3.47 0.09 Team Coordinator 3.58 3.68 0.10 Domestic Team Member 3.14 3.39 0.25 International Examiner 3.03 3.20 0.17 Engineer 2.79 2.80 0.01 Economist 2.48 2.52 0.04 Engineering Manager 2.98 2.85 -0.13 International Manager 2.95 2.84 -0.11 In December 1997, Ray Presley, Director of Industry Specialization Program, and Dorothy Taylor, National Engineering Program Manager, met with Timothy McCormally, General Counsel and Director of Tax Affairs for Tax Executives Institute (TEI), to discuss how the IRS could improve the "customer satisfaction" ratings received by IRS Engineers.

The following causes of concern and dissatisfaction were raised during this meeting, based upon comments from TEI members:

1. Taxpayers view engineers as not integrated into the audit team.

2. Lack of training in basic accounting principles.

3. Lack of training in a taxpayer's particular industry.

4. Lack of awareness by taxpayers of their options when dissatisfied with an engineer's performance, including the ability to involve the pertinent engineering manager.

   TEI committed at this meeting to working with the IRS to improve the agency's utilization of engineers and how engineers are perceived by taxpayers. Executives of the IRS, including the National Director Corporate, recommended broadening the scope to include international examiners, economists, and their managers.

   A multi-functional IRS work group was formed jointly with TEI representatives to identify causes and concerns, and make recommendations to improve the satisfaction ratings. This Task Force is composed of 17 members, 12 from IRS and 5 from TEI.

   From both the IRS and TEI...