In one of many cultural changes mandated by the IRS Restructuring and Reform Act of 1998, the IRS set out to overhaul its employee evaluation methods. The bottom line—the IRS needed to find a way to assess employee performance that did not rely on enforcement results (for example, evaluating its employees based on the amount of tax dollars collected or assessed as a result of examinations).
In addition, the new measurement system would have to use "fair and equitable treatment of taxpayers" as one of the standards for evaluating the performance of its employees.
The proposed performance measurement system will have three major components: customer satisfaction measures, employee satisfaction measures and business results measures.
According to the proposed regulations, the IRS will survey taxpayers and use questionnaires to determine customer satisfaction with its operating units. Taxpayers will be asked whether or not they received courteous, timely and professional treatment from IRS personnel. The collected confidential information will be one element used to evaluate individual IRS employees and the service's operating units.
Employee satisfaction will also play a part in performance measurement. Service employees will be surveyed to rate their operating units. The information will then be used to assess not only employee satisfaction but also the quality of supervision in each unit and the adequacy of training and support services.
Business results measures will be determined by using both quality and quantity measures. A team of IRS employees will gather information for the quality measures. For instance, when evaluating the performance of exam or collections units, this team will determine whether taxpayers were treated properly and in a timely manner, if tax laws were correctly applied and if agents accurately answered taxpayer questions. The information will be quantified to rate employees' performance.
Quantitative measures will consist of weighing "outcome-neutral" production data, such as the number of cases closed, work items completed and hours expended on a case. In short, the information derived from such data will not be based on the actual tax enforcement results in any case.