Applying Lean/Six Sigma to Streamline the IRS Taxpayer Notice Communication Process
Internal Revenue Service has significantly improved service to taxpayers since the Restructuring and Reform Act of 1998. Despite the IRS’s efforts to reduce confusion, complaints and satisfaction surveys indicate that taxpayers still have problems understanding and responding to IRS’s requests. The IRS hired Citizant to analyze and improve taxpayer notification processes using Lean/Six Sigma (LSS).
In September 2008, the IRS commissioner selected a group of IRS executives to spearhead an examination of IRS’s communication with taxpayers. This team, the Taxpayer Communication Taskgroup (TACT), would focus its investigation on IRS written notices. The goal was to understand the potential barriers to effective communication and pursue solutions for improved taxpayer experience.
TACT determined that there were two primary factors that influence how taxpayers understand and respond to IRS notices: the process that prompts notice creation, and the language used in the notices. Citizant was selected to conduct an investigation of the notice creation process using LSS, while another contractor focused on the content of notices.
A Strategic Focus to Produce the Most Value
To achieve project success, the Citizant team began the process investigation with a 4-week strategic outcomes analysis. This effort established the project’s mission and objectives, captured the voice of the customer, and determined IRS process areas that directly influence taxpayer communication.
During the strategic outcomes analysis, TACT identified six process areas that directly impact taxpayers. The LSS team and TACT conducted individual value stream mapping events on the four major process areas, while conducting only shallow dives on the smaller areas. Citizant created “just do it” tasks, rapid improvement events, and long-term projects that will enhance the notice process to decrease the burden and improve experience for taxpayers.
Citizant also conducted an LSS-based "pizza simulation" to help TACT employees understand their processes from the customer’s point of view and allow them to remove wasted efforts to produce more value with less work. The simulation allowed Citizant to demonstrate to TACT on how they could use Lean/Six Sigma to improve many of their processes.
Transformation Roadmap & On-going Improvement
The value-stream mappings and shallow dive investigations yielded process flow diagrams that helped develop an holistic view of the business operations behind IRS notice creation. This was the first time a complete view of the process had been developed for IRS. With a complete view, the Citizant team was able to determine barriers to timely and effective communication with taxpayers.
One such barrier was the lack of communication and coordination between IRS process areas. The stove-piped structure of the process created a fragmented communication system with little information sharing across the process areas. Taxpayers were treated almost as different cases, or processes, in each area – rather than as a single entity throughout the communication lifecycle.
Citizant’s LSS team compiled this and other key findings into a Transformation Roadmap that documented the current process, an established future state, and guidance on how to move the notice process from its present disjointed state into an effective, coordinated taxpayer communication process. By working with and educating the TACT team throughout the process, Citizant was able to set the stage for on-going process improvement in taxpayer communications.