4.81.10  Quality Review

Manual Transmittal

September 06, 2012

Purpose

(1) This transmits the revised IRM 4.81, Quality Review of Tax Exempt Bonds Examination Cases.

Material Changes

(1) Procedures for the Quality Review of Tax Exempt Bonds Examination Cases have been updated to include additional case types subject to quality review.

Effect on Other Documents

IRM 4.81.10 dated November 1, 2008 is being superseded.

Audience

TE/GE

Effective Date

(09-06-2012)

Clifford J. Gannett
Director, Tax Exempt Bonds

4.81.10.1  (09-06-2012)
Tax Exempt Bonds Quality Measurement Program Overview

  1. Tax Exempt Bonds Quality Measurement Program (TEBQMP) is a system designed to measure the quality of FO and CPM examinations including claim cases and penalty determination cases. TEBQMP will provide management and examiners analytical information and identify areas of improvement which are expected to enhance case quality. The program is also expected to improve customer service and satisfaction, promote consistency in the examination process and provide comparable treatment to TEB's customers.

4.81.10.2  (09-06-2012)
Organizational References

  1. The following references defined below will be applicable throughout IRM 4.81.10.

    1. TEBQMP will refer to the Tax Exempt Bonds Quality Measurement Program.

    2. TEB will refer to the Tax Exempt Bonds function of TEGE.

    3. CPM will refer to the Compliance & Program Management program within TEB.

    4. FO will refer to the Field Operations program within TEB.

    5. TEBQMP Coordinator will refer to the senior tax law specialist assigned by the Manager of CPM to coordinate the TEBQMP.

    6. Reviewer will refer to a CPM/FO revenue agent or tax law specialist assigned to review selected cases.

    7. Examiner will refer to a CPM/FO revenue agent or tax law specialist responsible for the examination of returns.

4.81.10.3  (09-06-2012)
TEB Quality Measurement Program

  1. The incentive for developing new quality standards was initiated by the enactment of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) and the Service’s increased awareness of the need to focus on customer service and satisfaction. Balanced Measures consists of Customer Satisfaction, Employee Satisfaction and Business Results.

  2. Business Results include a Balanced Performance Measurement System which requires that organizational case quality and quantity be numerically scored. Organizational measures serve as an indicator of the progress the Service is making in achieving high-level strategic goals.

  3. TEBQMP is a management tool used to measure case quality and identify trends. Management will use TEBQMP to:

    1. Identify improvement opportunities in case quality;

    2. Increase customer satisfaction by identifying common examination procedures needing improvement;

    3. Identify possible training and Continuing Professional Education (CPE) needs; and

    4. Increase consistency in examinations.

  4. CPM is responsible for the administration and oversight of TEBQMP.

4.81.10.4  (09-06-2012)
Quality Review Standards

  1. FO and CPM examination cases are rated for seven quality standards. For a detailed discussion of the quality standards for examination cases refer to Document 12872, Tax Exempt Bonds Quality Measurement Program Reference Guide.

  2. Standards can be rated either "Yes" , "No" or "N/A" . The desired answer to all questions is "Yes" . Each quality standard is weighted equally.

  3. The organizational score for examinations is calculated by dividing the total number of standards passed by the total number of standards rated.

    Example:

    During the fiscal year, 50 cases are sampled for quality review. The total number of standards rated equals 350 (50 x 7). Of the 350 standards rated, 300 standards are passed (i.e., answered "Yes" ). The organizational score would be 86% (300/350).

4.81.10.5  (09-06-2012)
Case Selection

  1. The cases selected for review will be based on the projected number of examination case closures delineated in the TEB Work Plan for the fiscal year. The closed case population used in the selection process will consist of all closed FO and CPM examination cases.

  2. The TEBQMP Coordinator will utilize a sample size calculator to determine the number of cases selected for review. This number may be adjusted to reflect modifications to the projected total number of examinations to be closed. The sample size calculator uses the following parameters for selection.

    • Total Projected Closures: population size for the calculation.

    • Compliance Rate: estimated based on historical compliance rates. There is no correct value. The higher the rate, the lower the sample size will be and conversely, the lower the rate, the higher the sample size.

    • Margin of Error: the selected tolerance level for error in the sample. The lower the value the better. Values between .08 and .10 are normal for sampling.

  3. Once the sample size has been calculated, this number will then be divided into the population to define the case selection number. The case selection number will be used to select the cases for review.

    Example:

    The population of Total Projected Closures is 1,000 and the determined sample size is 50. The case selection number would be determined by dividing 1,000/50 = 20. Every 20th closed case would be selected for quality review.

4.81.10.6  (09-06-2012)
Reviewers

  1. The review cadre is comprised of three individuals from FO and three from CPM. CPM reviewers will be appointed by the Manager, CPM and will be GS-13 revenue agents and tax law specialists. FO reviewers will be appointed by the Manager, FO and will be GS-13 revenue agents.

  2. QMP reviewers will review all selected FO and CPM examination cases.

  3. Reviewers should be experienced and highly competent personnel who:

    1. Possess a comprehensive knowledge of generally accepted accounting and auditing principles or possess superior skill in interpreting and applying tax laws, regulations, and court decisions;

    2. Are knowledgeable in Service policies and procedures;

    3. Have a fair and impartial attitude;

    4. Merit the highest respect and cooperation of TEB personnel;

    5. Have demonstrated an ability to assume responsibility and take positive action when warranted;

    6. Communicate ideas and opinions clearly, tactfully, and objectively; and

    7. Apply good judgment.

4.81.10.7  (09-06-2012)
Review Process

  1. When a closed case has been selected for review using the selection process defined in section 4.81.10.5 of this IRM, the assigned analyst will pull the paper case file, and forward the paper case file to the TEBQMP Coordinator. Upon receipt of a paper case file, the TEBQMP Coordinator will request the RCCMS electronic file be pulled from the case library and be assigned to the applicable reviewer. Paper case files will be forwarded to the assigned Reviewers.

  2. Each selected case will be reviewed by two reviewers to enhance consistency in applying the quality standards. The two reviewers will independently review the same selected cases and input their findings into the TEBQMP database.

  3. Reviewers will use the Tax Exempt Bonds Quality Measurement Program Reference Guide, Document 12872, as an aid in conducting their reviews of the selected cases. The Reviewers may use the TEBQMP Examination Case Review Input Form or may directly input their findings into the TEBQMP database file located on the secure TEGE share drive (TEGE\CPM\QMP). The Reviewer will rate each quality element and standard applicable to the particular case being reviewed. Some elements and standards may not apply to all of the examination cases. The Reviewer will use his/her discretion in evaluating the applicable elements and standards in these cases and will annotate the input form within the database file that those elements and standards that do not apply will be marked "NA" .

  4. Upon completion of the case review(s), the Reviewer(s) will notify the Coordinator that the review findings have been input into the database file. The Coordinator will review the findings and consult with the Reviewers on any questionable items noted. Coordinator will then request the transfer of the RCCMS case files back to the Case Library and forward the paper files to the Ogden Service Center.

4.81.10.8  (09-06-2012)
Reports and Newsletter

  1. Quarterly reports will be sent to the Manager, CPM for review and forwarding to the Director, TEB and Manager, FO. Information contained in the reports is derived from the TEBQMP database.

  2. Reports are intended to provide an indicator of the extent to which completed case files meet the quality elements and standards. These reports will not provide evaluative information for individual employees. Reviewed cases are assigned a case review number and all information is reported with this number, providing for anonymity.

  3. Quarterly reports may be used for a trend analysis, as the following information will be included:

    1. The current quarter results;

    2. Fiscal year to date results; and

    3. Results from the prior fiscal year.

  4. The following reports will be prepared each quarter:

    1. Success Rate Report: This report lists cases reviewed by each quarter of the fiscal year and provides the percentage scores for each individual standard. The report also provides a cumulative score for each quarter and for the year.

    2. Quarterly Comments Report: This report includes all specific comments made by the reviewer during the quarter.

  5. The TEBQMP Coordinator, on a semiannual basis, will prepare a newsletter for dissemination to all TEB employees. This newsletter will summarize results of reviews for the six month period, including increase and/or decreases in quality of specific standards. The newsletter will also provide suggestions on how quality may be improved. The Coordinator will forward the newsletter to the Manager, CPM and Manager, FO for comments prior to distribution to all TEB employees.

4.81.10.9  (09-06-2012)
Case Return Criteria

  1. Cases will be returned to the group, with the concurrence of the Manager, FO, when any of the following conditions exist:

    1. There is clear evidence that an incorrect determination has been reached with regard to the tax-favored status of a bond. However, an underdeveloped case will not be returned unless it is evident in the case file that the bond is not tax-exempt.

    2. There is a "clearly defined substantial" error based on an established Service position existing at the time of the examination. Clearly defined means the error is clearly apparent as opposed to being vague or uncertain. Substantial refers to the dollar amount of an arbitrage or rebate violation. Any proposed tax change should involve an additional amount of arbitrage or rebate of $10,000 to be considered "substantial" .

    3. There is evidence of fraud, malfeasance, collusion, concealment, or misrepresentation by the taxpayer or representative.

    4. Other circumstances exist that indicate failure to return the case would be a serious administrative omission.

  2. Prior to a case being returned for further development, a Reviewer’s Memorandum will be prepared. This memorandum will be forwarded to the Manager, FO through the Manager, CPM. Generally quality review cases are not returned to the group for further development.


More Internal Revenue Manual