The IRS collects and accounts for over $1 trillion in revenue each year. Yet it is estimated another $100 billion of tax owed each year is not collected. In addition, millions of unnecessary taxpayer contacts are made annually requiring countless hours of taxpayers' time.

Taxpayer service also leaves much to be desired. The General Accounting Office (GAO) reported that while IRS staffers conrectly answered 89% of questions posed by test callers in 1993 (up from 88% in 1992), three out offour calls during filing season were not answered at all.

Individual taxpayers sometimes are the beneficiaries ofIRS quality problems. In 1992, the IRS sent out erroneous tax refunds in excess of $175 million to more than 270,000 filers.

a. Because the IRS cannot really “lose” customers, why would the organization worry about customer service?

b. Other than the direct monetary effects of quality problems, what indirect costs do IRS mistakes have on its customers?

c. The IRS is interested in adopting TQM. Provide at least five suggestions that might reduce quality problems at the IRS and what the benefits of those suggestions would be. (Do not suggest a change in the tax code because that is out of the Service’s control.)LO1