IRS to Create Efficiencies with Taxpayer Assistance Centers

See - IR-2005-77, Everson Praises Congress for Funding, Suspends Plan to Close TACs

IR-2005-63, May 27, 2005

WASHINGTON — The Internal Revenue Service announced today that it plans to close a portion of its Taxpayer Assistance Centers as part of the agency's continuing efforts to create efficiencies, modernize operations and reduce costs while maintaining its commitment to taxpayer service.

The IRS currently operates 400 Taxpayer Assistance Centers (TACs) that provide walk-in service for taxpayers. The agency will close 68 of those locations this fall following an extensive review. The decision was based on an objective model that weighed five criteria with multiple components, including workload considerations, geographic factors, demographics, employee costs and facility costs.

The closures reflect fundamental changes in how taxpayers file their taxes and access tax information. In recent years, the use of IRS.gov and e-filing increased rapidly, while face-to-face interactions with taxpayers declined. This year, the majority of tax returns were filed electronically, marking the first time in history that e-filing outpaced paper returns.

Adjusting the number of TAC sites will allow the IRS to focus on activities that provide the most efficient services. At the same time, taxpayers will still have access to a variety of IRS services, either by phone, through IRS.gov and from neighboring TAC offices and IRS volunteer tax assistance programs. As the IRS is modernizing how taxpayers receive service, the agency remains committed to improving service and meeting the needs of taxpayers.

“We’ve made significant improvements in service in recent years.  The walk-in sites are our most costly service vehicle, and we find taxpayers prefer to use our toll-free phone lines where their questions can be routed to subject matter experts,” said IRS Commissioner Mark W. Everson “Like most other federal agencies, we’re being asked to create efficiencies and be responsible with taxpayers’ dollars.  Using objective criteria, we’re creating these efficiencies where they’ll have the least impact on good service.”

In recent testimony assessing the IRS FY 2006 budget request, the Government Accountability Office stated: “In light of the current budget environment and IRS’s improvements in taxpayer service over the last several years, this is an opportune time to reconsider the menu of services it provides.” Further, in its testimony dated May 19, 2005, GAO credited IRS for identifying savings, including closing walk-in offices, noting that demand for walk-in services has continued to decrease. They also recognized that savings could be used to help maintain the quality of other services.

The IRS recognizes the cost benefits of alternates to walk-in offices for services as well.  For example, the IRS’s cost of preparing a tax return at a VITA site is $19, compared to the $46 it costs to prepare the same return at a TAC.  Downloading forms from the IRS website costs less than one dollar, while distributing a form at a TAC costs $9. Tax law questions can also be answered much less expensively ($11) – and with more accuracy and a higher customer satisfaction rate – through the toll-free lines than at a TAC ($22).

Face-to-face contact is the most expensive method of customer service, and the number of visitors to TACs has dropped as use of the IRS web site has dramatically increased. In Fiscal Year 2004, visitors to TACs were down 1.26 million from the prior year, and down nearly 2 million from Fiscal Year 2002.  At the same time, the number of visits to IRS.gov and the number of web page views climbed 128 percent and 155 percent, respectively, between fiscal 2002 and 2004.

The use of “Where’s My Refund,” an on-line service that provides refund status information formerly available only by calling the toll-free line or visiting a TAC, was up 1,316 percent from FY 2002 to FY 2004. Internet based services such as “Where’s My Refund” enable taxpayers to get answers without going to an IRS office.

The continued growth of e-filing also is a factor, with 66.5 million tax returns e-filed this year. There are fewer taxpayer errors with electronic filing, which means fewer calls and visits to the IRS following up on tax return issues.

Out of 2,300 employees who operate the TACs nationwide, fewer than 450 employees are located in the affected centers. As the agency’s budget allows, qualifying employees may be offered early out retirements and buyouts. Most employees should be entitled to priority placement for other jobs within the IRS and other Treasury bureaus.

*Decline partially a result of on-line “Where’s My Refund.” Following is the complete list of Taxpayer Assistance Centers that will close later this year:

Related Items:

• Taxpayer Assistance Center -- Criteria for Selection PDF
• Statement by Commissioner Mark W. Everson PDF

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