Time for Another IRS Reorganization by Steve Toscher and Robert S. Horwitz
Last week, the Commissioner issued the Taxpayer First Act (TFA) report to Congress. The report will establish the framework of the IRS for the next 20 year, with a goal of improved employee training, increased taxpayer accessibility and making the IRS a more technology-driven organization.
So what is the TFA and why is there a report? The TFA was enacted in 2019 with the goal of changing the IRS’s structure, improving taxpayer service, improving enforcement procedures, and increasing IRS use of information technology and electronic systems. The TFA had four Titles, “Putting Taxpayer’s First,” “21st Century IRS,” “Miscellaneous Provisions” and “Budgetary Effects.” These Titles included subtitles, for an Independent Office of Appeals, Improved Services, Organizational Modernization, Cybersecurity and Identity Theft, Expanded Use of Information Technology and Electronic Systems, and Reform of Laws Governing IRS Employees. One of the provisions, TFA sec. 1203, dealt with innocent spouse relief. As several writers have pointed out, one of the subsections of sec. 1203 reduced the Tax Court’s scope of review in innocent spouse cases rather than putting the taxpayer first.
The TFA report focuses on three provisions of the TFA: Sec. 1101, Taxpayer Services, Sec. 2402, Employee Training, and Sec. 1302, Organizational Structure. The main focus of this blog will be the future organizational structure of the IRS.
But before turning to the IRS’s new organization, the IRS hopes to modernize taxpayer services, by making online access easier, reducing call wait times and the use of data analytics to “analyze behavioral research and other data to better identify and separate taxpayers who are intentionally violating our tax laws, minimizing compliance contacts where direct enforcement activity would not be necessary.” Employee training will include “IRS University” to centralize training, TFA training for all IRS employees and continuing education for all employees.
Now, about organizational change: Presently, there seven people in the IRS who report directly to the Commissioner: a chief of staff, Chief of Appeals, National Taxpayer Advocate, Chief Counsel, Chief of Communications & Liaison, Deputy Commissioner for Operations Support and Deputy Commissioner for Services & Enforcement. Under the Deputy Commissioner for Operations Support are things like Human Resources, CFO, procurement, diversity, etc. Under the Deputy Commissioner for Services & Enforcement are the operating divisions, including CI, LB&I, SB/SE, Wage & Investment. That structure will be gone under the IRS’s new organizational plan.
In the future there will be one Deputy Commissioner, who will fulfill such roles as assigned by the Commissioner and a Chief of Staff. Added to Appeals, NTA, Chief Counsel and Chief Communications will be a new position, Chief Taxpayer Experience Officer, since the focus of the IRS will be to give taxpayers a better experience. Also reporting directly to the Commissioner will be five Assistant Commissioners: (a) Relationships and Services; (b) Compliance; (c) Enterprise Change and Innovation; (d) Operations Management; and (e) Chief Information Officer. The people who directly report to the Commissioner will be the “Senior Leadership Team,” which will set the overall strategic direction of the IRS and manage the executives who oversee the IRS’s day-to-day operations.
The Relationships and Services Division is completely new and will oversee the groups that deliver services and information to taxpayers, including Outreach & Education, Digital Services, Submission Processing (which I assume is processing returns), Identity Theft, etc. The Report states that this division will put “all taxpayer-facing service channels under one division” and will integrate “digital, telephone, virtual and face-to-face channels seamlessly.” The report details what each sub part of the division will focus on, such as the Assisted Services Office, which will oversee walk-in centers and toll—free phone lines, online text and video chat.
The Compliance Division will be reorganized. LB&I, SB/SE, Wage & Investment, Exempt Organization will all be gone. Instead, there will be Criminal Investigation, Whistleblower, Exam and Collection. Exam will consolidate all exam operations that are currently spread among several units and Collection will be responsible for collection activities from all types of taxpayers (or as the report puts it, “all taxpayer segments”). This is a similar structure to the one that existed for over 40 years before the 1998 restructuring act, i.e., an Examination Division, a Collection Division and a Criminal Investigation Division.
Enterprise Change and Innovation Division: Like the Relationships and Services Division, this division is completely new. According to the Report this Division will “serve as the strategic planning and integration role across the agency, utilizing data management, analytics and business process improvement best practices to identify and implement enterprise-wide initiatives that would enable IRS to be more efficient and effective in serving taxpayers and administering the tax code.”
The last two Divisions, Operations Management and Information Technology, will. take over the functions currently performed by the Operations Support Division. Operations Management will take over functions such as Human Resources, Financial, Security, Procurement and Information Technology will take over cybersecurity, computing centers, networks service and similar IT functions.
According to the IRS website, the reorganization will mean for taxpayers more “seamless services,” quicker resolution of issues and more tools for interacting with the IRS. For tax professionals it will supposedly mean “a more seamless and consistent experience for tax professionals and their clients,” provide tax professionals with the “latest tools for communicating with the IRS,” and through the “Third—Party Relationships organization … facilitate collaborative networking with partners across tax administration and beyond.” For IRS employees it will mean “an organization without silos” that can adapt quickly with less duplication of effort and the ability to deliver “a seamless experience for taxpayers.”
While the new reorganization addresses some of the problems facing the IRS today how this will work out in practice is unknown, but the effort needs to be made and the goals of providing taxpayers with a more efficient and responsive IRS and improving the overall professionalism and knowledge of IRS personnel are worthy ones.
IRS management should be applauded for recognizing that the organization should strive to improve its performance and deliver on its mission of providing “America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” The TFA report is a step in that direction.
Contact Steve Toscher at email@example.com. Mr. Toscher specializes in civil and criminal tax controversy and litigation. He is a Certified Tax Specialist in Taxation, the State Bar of California Board of Legal Specialization, a Fellow of the American College of Tax Counsel and has received an “AV” rating from Martindale Hubbell. In addition to his law practice, Mr. Toscher has served as an Adjunct Professor at the USC Marshall School of Business since 1995, where he teaches tax procedure. Mr. Toscher is past-Chair of the Taxation Section of the Los Angeles County Bar Association, a member of the Accounting and Tax Advisory Board of California State University, Los Angeles, Office of Continuing Education and was the 2018 recipient of the Joanne M. Garvey Award, which is given annually to recognize lifetime achievement and outstanding contributions to the field of tax law by a senior member of the California tax bar.
Contact Robert S. Horwitz at firstname.lastname@example.org or 310.281.3200 Mr. Horwitz is a principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division. He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending criminal tax investigations and prosecutions. Additional information is available at http://www.taxlitigator.com.