The Federal Tax Return Process

MBA 8155 Operations Management

Matthew BrothertonAnjanee Burns

Meenakshi SinghDouglas TarkingtonVeronica Thompson

The Income Tax Return Process supports the overallstrategy of the Internal Revenue Service (IRS) … to collect taxes

Background

Demand is the number of individual paper tax returns filed in a year

Supply is a mailed refund check from the IRS

Capacity is measured by how many the IRS can get processed quickly

Metrics

2009 FILING SEASON STATISTICS

Cumulative through the weeks ending 4/25/08 and 4/24/09

Individual Income Tax Returns 2008 2009 % Change

Total Receipts 139,928,000 131,543,000 -6.0%

Total Processed 119,100,000 117,014,000 -1.8%

E-Filing Receipts

TOTAL 85,606,000 90,639,000 5.9%

Tax Professionals 59,444,000 59,439,000 -0.01%

Self-Prepared 26,162,000 31,200,000 19.3%

Source: http://www.irs.gov/newsroom/article/0,,id=207293,00.html

Performance Measurements Analysis

103,100 IRS Employees Total

22,991 IRS Wage & Investment Division Employees(22.3% of overall IRS)

7,857 IRS Employees who process paper returns(33% of W&I Dept)

117,014,000 Total all returns processed by 04/24

26,375,000 Total paper returns processed by 04/24

35 Business Days Peak demand 03/15 to 04/24

12.41 Total Returns per person-Hour (94,200 across org)

4.83 minutes Cycle Time

14 days Throughput Time

0.20 per minute Throughput Rate

Issues with Current Process

Lack of Utilization

Buffers at every stage of the process

Hard to track buffer times

Bottlenecks

Expected Results

Improve Accountability Improve Total Quality

Management Lower Cycle Time Lower Throughput

Time Improve employee

morale

Recommendations

Promote e-filing more vigorously Improve Customer Satisfaction Be Proactive Eliminate Redundancy

Wrap-up

IRS has over 100,000 employees to handle millions of tax returns

The current process has multiple buffers creating a long throughput time

The new process will give the IRS a chance to improve quality and efficiency

No process is perfect

Questions