The Office of Chief Counsel: a renewed commitment to guidance.

• Author: Williams, B. John, Jr.
• Position: Internal Revenue Service

"Transformation" is an overused, and probably by now passe, word that was intended to describe change that certain consultants advised executives to bring to their organizations. As one who observed corporate transformations from the outside, I confess to having had substantial doubt about whether I really understood what the word meant. I will say, however, that it does accurately describe the difference between the Internal Revenue Service 20 years ago and the IRS today. The IRS today is a different institution, and its potential for offering the public a valuable service has been enormously enhanced by the structural changes that Commissioner Charles Rossotti has effected.

The mission of the Office of Chief Counsel is to serve America's taxpayers fairly and with integrity by providing correct and impartial interpretation of the internal revenue laws and the highest quality legal advice and representation for the IRS. The reorganization of the IRS provides a better platform for the fulfillment of this mission by allowing the Chief Counsel's office to focus its resources more efficiently and effectively. This gives the IRS a better opportunity to provide clear and prompt advice to the public and the field. I am committed to utilizing this new structure to ensure that such guidance is given in a timely manner.

Organization of Chief Counsel -- Yesterday and Today

In the old IRS, problems arose geographically and were resolved in an uneven fashion. The field organization was more concerned about process than substantive technical issues. There were, in effect, 33 different manifestations of the IRS, each one different from the others, some to a significant degree. Each district director had responsibility for almost all IRS operations within a geographic area. Coordination of efforts between districts was cumbersome and difficult. Today, the IRS is organized by the kind of taxpayer served. These include the Large and Mid-Size Business Division (LMSB), the Small and Self-Employed Division (SB/SE), the Tax Exempt and Government Entities Division (TE/GE), and the Wage and Income Division (W&I). The structures of these divisions differ in response to the particular needs of the taxpayers that fall within each division's responsibilities.

LMSB, which serves TEI's constituents, is structured in a way that facilitates a focus on the specific problems of tax administration, compliance, and tax policy as they arise in and affect a particular industry. LMSB has five industry aggregations: Financial Services; Heavy Manufacturing & Transportation; Retailers, Food, Pharmaceuticals & Healthcare; Natural Resources & Construction; and Communications, Technology & Media. See Chart 1: Large & Mid-Size Business Division. Each is headed by an Industry Director, who reports directly to the LMSB Commissioner, Larry Langdon. The Industry Directors supervise Directors of Field Operations (DFOs) to whom the LMSB team managers report. This streamlined organization gives a coherence and direction to the consideration of substantive issues that the IRS never before had. The new lines of authority are nationwide. Accordingly, early identification and resolution of technical issues industry-wide can be a primary goal of field operations.

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The industry aggregations provide two main benefits. First, they allow for the development of expertise in the commerce of each industry. Each industry-related group has a senior advisor who has spent much of his or her career in the private sector of that industry. This resource should assist the Industry Director and the DFOs in understanding the business context of potential issues. Second, the industry aggregations allow for the consideration of industry-specific issues. Each Industry Director has a substantive focus in addition to a managerial focus.

Division Counsel are organized in a fashion that follow the IRS's structure. See Chart 2: LMSB Counsel Structure. Although Division Counsel are not divided among industry lines, LMSB Area Counsel are placed geographically to coincide with the industry aggregations. See Chart 3: Geographic and Industry Divisions and Chart 4: LMSB Counsel Headquarters Structure. For example, an Area Counsel in the northeastern United States aligns with the Financial Services Industry of LMSB. The Area Counsel serve as counsel to the Industry Directors, allowing for better communication and understanding between the Chief Counsel's office and the client organization. These counsel also facilitate interchange with the technical counsel (Associate Chief Counsel Offices) in the National Office.

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The IRS restructuring in the field produces at least two significant benefits to taxpayers. First, it offers a better forum for discussion and resolution of industry-wide issues. For example, the Industry Issue Resolution program could not have as...