Can paying your taxes bring more satisfaction than chomping down on a Big Mac? It can if they're paid electronically.
According to a USA Today survey, Americans are giving a higher customer satisfaction rating to the Internal Revenue Service than to Mickey D. How can "the most unpopular organization in America" beat out the fast food chain that has consistently set standards for efficiency and quality control?
The answer is local area resident Terence Lutes, associate CIO, Information Technology Services, IRS, U.S. Department of the Treasury. He led the development of the popular eFile system that has allowed millions of taxpayers to get their refunds in less than 10 days after filing. His system also has cut processing costs by 90 percent, according to accounting statistics.
Lutes has taken the dreaded IRS from paper filing to "point and click." He has transformed the way the majority of taxpayers interact with IRS. His system reduces the burden on the taxpayer while simultaneous improving the speed and accuracy of filing operations.
For his achievements, Lutes was named a "Service to America Medal Winner" at a recent black-tie ceremony at the Andrew W. Mellon Auditorium in Washington, D.C. He was one of only nine Federal Government employees to be recognized by Atlantic Media Company and Partnership for Public Service to receive their distinguished "Sammie" Award.
LUTES RECEIVED the Social Services Medal for "his significant contribution to the nation in activities related to social services which includes economic development and assistance, education, health care, housing, labor and transportation. His medal was accompanied by a $3,000 award.
In recognizing Lutes' nomination, Max Stier, president and CEO, Partnership for Public Service, said, "His work in developing online tax filing and speeding refund checks to taxpayers has made the IRS more popular than MacDonalds."
"A big part of what we have accomplished has to do with the taxpayer and computer technology. It has helped us to build a good relationship," Lutes said.
"The American Customer Satisfaction Index shows that people who file electronically have a much higher positive attitude than those who file paper returns. We have tried to operate like a company selling its products," he said.
Electronic tax filing began in 1986, but in 1997 Lutes and his co-workers began the process of making it more accessible to the individual taxpayer. The key to his success was his ability to build a positive relationships with the tax preparation and software development communities, according to the medals selection committee.
For years, those communities "had an adversarial relationship with the IRS," the committee noted. Lutes was able to turn that into a cooperative relationship so that by the late 1990s, the industry and IRS were working together.
Today, over 90 percent of returns filed with the IRS are filed electronically, according to Lutes. And, over 80 percent of taxpayers receive refunds.
THE BREAKTHROUGH came in 2002 when Lutes brokered an agreement to address one of the remaining barriers to electronic filing — cost. He negotiated a deal to provide free online commercial tax preparation and electronic filing services to at least 60 percent of individual taxpayers.
In 2003, nearly three million people used the free service, known as Free File, according to the medal presentation biography. That number grew by 26 percent in 2004 and doubled in 2005.
Out of the more than 100,000 IRS employees, of which nearly 15,000 are seasonal workers at tax time, Lutes' operation accounts for only 750 employees. Yet, they process 90 percent of the returns.
"Since we have begun we have processed 400 million returns with no security problems. The technology experts say the government has the highest security standards of any organization in the nation. If we didn't the system would fall because people would not have confidence in us," Lutes said.
Electronic filing is not only for those that expect a refund, it is also used by those making payments to the IRS. "A taxpayer can file in January, tell us the date they want the payment made, and we will do so. Over 90 percent of the money collected by IRS today is collected electronically," Lutes said.
The money is deducted directly from the taxpayer's bank account with all the same safe guards and restrictions as apply to paying other bills electronically, according to Lutes. "We are subject to the same laws as everyone else. Growth in electronic payments is attributable to people's confidence in our systems," he said.
AS FOR FRAUD, "There's not much difference in those statistics between paper filing and electronic filing. We are able to check returns in hours and inform the taxpayer of any mistakes," Lutes said.
"Once we have accepted a return, the taxpayer is 40 times less likely to get a letter from us than when filing a paper return. We don't hold returns or refunds. We acknowledge receipt of a return immediately," he said.
A resident of Kingstowne, Lutes has been with the IRS for 28 years. Prior to that he served a seven-year stint in the U.S. Air Force.