Moving a Mountain of Paper Taxes the IRS
By Albert B. Crenshaw
Behind chain-link fences topped in places with barbed wire, a scene that evokes both Charles Dickens and a science-fiction future unfolds daily in a low-rise building and a former auto-parts warehouse.
Together they house one of the Internal Revenue Service's 10 tax-processing centers, the heart of the agency's business and also some of its well-publicized problems.
In the next three days, about 25 million procrastinating Americans will finally finish their 1997 tax returns, stuff them into envelopes and send them to the IRS. And twice a day from now until the crush tapers off in a week or two, Postal Service trucks will roll up to the loading docks and dump tons of returns from the District, Maryland, Virginia, Delaware and Pennsylvania, as well as all returns filed by U.S. citizens living abroad.
The returns are handled at the beginning and end of their odyssey by technology that seems fit for the 21st century. But for most of their journey, the returns are processed with tools that are distinctly 19th century, as thousands of workers shovel mountains of paper from room to room in a mass scramble to sort, record, type and file.
One vast room reverberates with an odd thump-a-thump-a-thump-a sound as rotating shifts of workers sit, hour after hour, rubber-stamping sheafs of returns with locator numbers. In another room, employees sort returns at desks surrounded by hanging boxes; the desks are known in the agency as "Tingle tables," named after their inventor, not for any effect they may have on workers or taxpayers.
"Sometimes you get frustrated," said Lisa Bey, 29, a 12-year agency veteran. There are challenges, such as new forms when Congress changes the tax laws, but she said it beats working in a fast-food restaurant, where she was employed before joining the IRS.
Certainly it's mind-numbing work. Sometimes, the system simply can't keep up with the crush of paper. In 1985 workers who were unable to process returns here were discovered stuffing them in restroom trash cans. Now, officials say the process is under control and running smoothly, but the agency may face new turmoil as it adjusts to congressional demands that it reorganize and update its antiquated systems.
The agency had hoped by now to be operating entirely with the latest in computer technology. But repeated efforts to design and install it have failed, enraging Congress.
The failures finally prompted the Clinton administration, with Congress's enthusiastic backing, to appoint an IRS chief who is not a tax expert but knows computers. He is Charles O. Rossotti, the founder of American Management Systems Inc., a Northern Virginia technology company. Rossotti has said he is appalled by the state of the agency's systems and is working to modernize them, but that has been delayed by the need to fix software bugs in the old computer systems so they can recognize dates after 1999.
Processing 2 Billion Documents
By any measure, the agency's workload is immense. The roughly $1.7 trillion in taxes the IRS expects to collect this year is 10 times the annual revenue of General Motors Corp., the nation's biggest company. The IRS will process more than 2 billion documents this year -- returns, of course, but also W-2s, 1099s, 1098s -- many of which it seeks to match with items on individual returns. And it sends out tens of millions of letters and notices to taxpayers.
At peak times, like now, the center employs about 5,500 workers, of whom 2,800 are full-time and the rest "seasonal" who work the January-to-May filing season.
The process begins around midnight, when a convoy of mail trucks arrives.
First, workers feed standard-size envelopes into one of two giant sorting machines, which stand the envelopes on edge and speed them along a chute where they are scanned. IRS preprinted return envelopes are bar-coded to identify the contents -- returns, bills, notices and so on -- and the machines route the envelopes accordingly. Unidentified and some oversize envelopes are sorted manually.
Each machine, which processes about 30,000 envelopes an hour, also runs them over an abrasive device that sands off the bottoms, thus opening them.
At the same time the machine scans the envelopes for checks, which it can detect from the kind of ink used to print checks, and routes them to workers who pull them out and send them off to be recorded and the checks deposited. Checks are deposited once a day, though center Director Joseph H. Cloonan said that if a particularly big payment comes in, the agency may make a special trip to make sure the money goes to the government's account promptly.
Baled and opened, the envelopes are stacked on trays and taken to a large room filled with workers, mostly women, sitting at the Tingle tables. In a process that hasn't changed in decades, the workers pull the returns and other material from the envelopes and place them in the appropriate box -- 1040s here, 1040As there, other documents in other boxes.
The envelopes are boxed up and taken off for "candling," to see if anything was left in any of them by mistake. The term is an old one, from the days when envelopes were actually held up to a light. Now it is done electronically by machines that gauge each envelope's weight and thickness to determine if they're empty.
Troubles Finding Workers
The nonstop pace can be enervating, but for some workers the pay -- ranging from $7.52 to $11.97 an hour -- and possibility of a full-time government job and potential advancement to higher grades make it seem a real opportunity.
Bela Patel, for example, a 34-year-old native of India, was laid off last June from a plant that makes packaging for medicines. Now she is working at a Tingle table sorting papers. "I'd like to get full-time," she said.
For others, however, the nature of the work and the location in Philadelphia make it unappealing. Cloonan and Harry L. Thurston, the center's processing division chief, said finding and keeping workers is a constant problem.
Though center officials say it is safe enough, the urban neighborhood worries some potential workers. Others are put off by the city income tax, which they would not have to pay working a few blocks away, across the city line.
Thurston said he has no trouble filling data-entry jobs at a satellite office in Allentown, Pa., but in Philadelphia has turned to high-school students to fill out his seasonal work force.
The next step for sorted returns is up a floor to the room filled with the sounds of pounding. There, workers armed with ink pads and rubber stamps that automatically advance one number each time they come down make sure each return has a "document locator number" on it before it goes any farther.
The agency tried to automate this process with electronic equipment a few years ago. But the equipment didn't work well in some ways and was removed, so back came the rubber stamps, presumably to stay until a more successful technology is installed in the pending computer overhaul for the IRS as a whole.
Returns that include checks have taken a slightly different path through the center. A worker extracts the checks and makes sure they are properly credited to the taxpayer's account. They are placed into a machine called the "remittance processing device," which puts corresponding numbers on the check and the return. The RPD is a 1978-vintage machine, but "it's holding together," Cloonan said.
Returns with payments and those without meet again at "code and edit," where for the first time somebody actually takes a serious look at each return. The main questions: Is it complete? Is it signed? Is anything obviously out of place?
Unsigned returns are a common problem and the agency has undertaken a telephone campaign to try to call taxpayers and get them to hustle in a signed copy of the form so their refunds will not be held up. Faxes aren't yet legally acceptable; Cloonan and other officials are working to find an acceptable way to allow the agency to accept a faxed signature.
Code-and-edit workers also mark up the returns by hand to ease the way for the next step, the typing of certain data off returns into IRS computers. Workers write computer codes beside certain numbers on the return so that typists need only enter a code and a dollar amount for the system to understand what the figure means.
Each return requires "200-plus decisions" by code-and-edit people, Cloonan said. "It's not an easy job."
But several workers said they like it. Eric Talley, a 46-year-old recently retired railroad conductor working his first year as a seasonal employee, called the work challenging. And, he said with a grin, it pays just enough to cover the vacation he plans to take right after tax season.
When Talley's done, it goes to the "data transcription" people, who type information from the return into agency computers. The IRS has struggled with scanning and other types of electronic systems but none has been successful, so keyboarding remains.
About 40 percent of the data on a return is transcribed, and it takes an average of about 350 keystrokes per return, Thurston said.
The service center computers check for math mistakes and what are called "identification" errors, such as names and Social Security numbers that don't match. When something seems wrong, the return is kicked out for further checking. Between taxpayer mistakes and wrong keystrokes by the IRS's own people, the center corrects about 30,000 errors a day, Thurston said. If something truly smells, the return can be pulled and sent along to auditors or criminal investigators.
At the End of the Process
Once the data are all verified, they are stored on magnetic tape and transmitted electronically to the IRS master file in Martinsburg, W.Va.
For those with refunds due, Martinsburg generates a "refund tape," which it sends to the Treasury Department's Financial Management Services division, which issues checks from whichever of several federal disbursing centers around the country has time to do the work.
For those returns in which the taxpayer owes money or some other form of notice is required, the Philadelphia center does the printing and mailing.
It is here, at the end of the process, that the agency uses its most advanced technology. To create these mailings, entrepreneurial IRS workers in Philadelphia have devised computerized printing systems that use rolls of paper like newspaper presses, rather than the single sheets typically used by computer printers. This pushed the hourly printing speed up to 12,000 pages -- and cut 30 percent from printing costs.
The center can process 15,000 to 20,000 outgoing letters per hour, verifying addresses against Postal Service records.
So far, this year's filing season has gone well, Cloonan said, but he pointed to 1985, the year that some returns wound up in the trash can, as a warning against complacency.
"Before 1985, things ran rather smoothly, and when things run smoothly, there's a tendency to think the world is always going to operate that way," he said. "Then something changes and all of a sudden, the world turns around on you."
© Copyright 1998 The Washington Post Company