The Internal Revenue Service has been under scrutiny by the press and watchdog groups for many years. Now, it’s been reported that the IRS eliminated its “employee suggestion program” (ESP) in October 2021 without establishing a suitable replacement. According to the Treasury Inspector General for Tax Administration, the report further relates that the ESP, during its operation, was rife with inefficiencies and employee error and that many IRS employees have little confidence in leadership’s commitment to agency improvement.
TIGTA’s office advises the IRS to consult with those federal agencies that run successful ESP programs and to devise a new employee feedback mechanism. Last year, the Inflation Reduction Act that became law infused the agency with $80 billion. The agency, already over-funded, could benefit greatly from robust employee feedback. For example, in one case described in the report, an employee reported to the ESP that the IRS division processing bankruptcies was over capacity, causing administrative errors and potential taxpayer violations. The employee’s suggestion seemed to contain the required elements, yet ESP staff rejected it without notifying the employee of the reasons.
Any subsequent IRS feedback mechanism should incentivize staff accountability and rule-following and promote rapid processing of submissions, particularly in initial phases handled by non-experts. Further, those non-expert employees ought not to be allowed to dally with routine administrative tasks. The IRS’s previous ESP was rife with misconduct, effectively lacking even basic — yet necessary — quality-assurance measures.
IRS brass nixed the ESP because of high operational costs and comparatively low returns; in fiscal years 2017 to 2021, “first-year net tangible savings” totaled $225,000, while estimated costs reached nearly $21 million. During that period, “only 3.5 percent (162) of total suggestions (4,672) were adopted,” the report says. From 2018 to 2021, the adoption rate fell to 2 percent. The high cost that the IRS was worried about was a $4 million a year expenditure.
“If the IRS is going to make decisions about eliminating the ESP based almost exclusively on costs related to coordinators, it should make some effort to control those costs,” the report says. Indeed, TIGTA “questions” the efficiency of the suggestion-vetting process, noting that each “coordinator” — the non-expert employees responsible for the initial vetting of suggestions — averaged only 2.73 submissions vetted per year. Moreover, coordinators spent on average 31 hours per submission, “even though their role as coordinator did not require them to individually analyze the submissions on their merits because they were not subject matter experts.”
ESP personnel also regularly broke protocol when processing employee suggestions. In one sample analyzed by the IG’s team, 34 of 40 suggestions were improperly evaluated. “The ESP business unit evaluators did not consider the overall concept of a suggestion, instead they made their determinations based on whether a suggestion could be adopted verbatim as described in the submission,” a later section of the TIGTA report states. “However, our review of the ESP guidance found that suggestions could be adopted and awarded based on their concept or key components that lead ultimately to a change to IRS processes.” The report details several other similar staff failures.
According to the Federal Employee Viewpoint Survey for 2021, the IRS ranked 271 out of 432 total federal subcomponent agencies in “engagement and satisfaction.” In the categories of “innovation” (employee perceptions of the agency’s efforts to improve) and “recognition” (for employees’ workplace performance), the IRS ranked 360 out of 432 and 295 out of 427, respectively.
“The IRS leadership needs to give consideration to these low scores in comparison to other federal agencies and should look to improve these scores prospectively,” the report concludes.
The IRS needs external and internal accountability measures. Shutting down the ESP because of cost or lack of effectiveness says more about the leadership managing the program than about the program itself.