How to work with IRS management to resolve IRS field specialist issues.

• Author: Gregory, Michael

IRS Rules of Engagement

IRM 4.51.1 captures the formal commentary regarding the rules of engagement for what was Large and Mid-Size Business Division (LMSB) and what is now LB&I. IRM 4.51.2 indicates the purpose of the rules of engagement are to "Clarify individual roles, responsibilities and lines of authority to 1) Help ensure end-to-end accountability, and 2) Provide clear procedural guidance on how to manage tax case interactions; Facilitate getting to the right answer for a particular case or issue; Promote consistent tax treatment between similarly situated taxpayers or cases; and Reinforce the importance of integrity and ethical behavior in all case-related decision making". This article focuses on the day-to-day interactions and issue resolution approaches in "typical" large cases when there appears to be a breakdown in communication with the IRS team focusing on Field Specialist issues.

The IRM formally defines the roles of the team manager, technical advisor, and specialist leadership as set forth in the accompanying chart (Figure 4.51.1-1).

In my experience, the articulated roles (and differentiations) are noble in aspiration and can and often do work in practice. A host of variables, however, affect the effectiveness of these Internal Revenue Manual guidelines.

Who Are Field Specialists?

Field Specialists at the IRS include Computer Audit Specialists (CAS), Employment Tax agents, Engineers (all types of engineers, including business valuers, real property appraisers, foresters, and geologists), and Financial Products specialists. The Director of Field Specialists has a Director of Field Operations (DFO) West and a DFO East with an approximate geographic separation at the Mississippi River for CAS, Engineering, and Financial Products. Employment Tax is managed by one Territory Manager nationally. Although DFOs are responsible for their respective geographic area, each has dotted-line organizational responsibility for two of the Field Specialist programs--the DFO West for engineering and employment tax, and the DFO East for CAS and Financial Products. The CAS and Engineering Programs have two territory managers in east and west. Financial Products has three territory managers with one in the west and two in the east. Employment Tax has one territory manager for the program nationally. There are approximately 1,100 employees in Field Specialists.

Who Controls the Case?

The industry team manager (case manager) controls the case. Thus, the team coordinator and the case manager are the taxpayer's primary point of contact on the case. This works well as both formal and informal arrangements are made to address resources, space, priorities, timeliness, protocols, etc., between the taxpayer and the IRS team. Unofficially or looking at inferred power rather than organizational power, with a less experienced or weaker case manager and more experienced or strong willed team coordinator, the taxpayer may sometimes find the team coordinator in a stronger position than reflected in the official organization chart. A similar result can result in respect of a Field Specialist where the team coordinator or case manager may defer to the Field Specialist as the "expert" on the issue.

Regarding Field Specialists and their managers, the protocol suggests that the team speaks with one voice. Where this does not occur, the issue may be elevated to the front-line managers of the team coordinator and Field Specialist to resolve the issue internally. If not resolved at this level territory managers for each role may become involved. On very rare occasions, executives may weigh in on the issue. Complicating the situation may be opinions from the Chief Counsel attorney assigned to the case local or the national office through the Chief Counsel Office. Technical Advisors may weigh in on the issue as well. With all of these participants, the taxpayer may become confused about who controls the issues. In theory, the case manager is the decision maker, but with higher-level management offering commentary, the front line case manager may feel pressure (or be perceived to have been pressured) to resolve a matter in a particular manner. Counsel may step in to assist the parties to ensure that the positions taken are not inconsistent with current law.

When Should Issues Be Elevated in Management?

According to the IRM at 4.51.1 .5 regarding "Elevating Case Interactions Within Industries: case interactions can be triggered by teams or by leaders for a variety of reasons. In most instances, a team invites interaction from senior leaders in response to particular needs. In other instances, a leader may proactively become involved after identifying the need for interaction or uncovering a situational opportunity that warrants involvement." The criteria for elevating case interactions within an industry where teams invite senior management typically involve (IRM 4.51.1.5)--

1. Questions regarding availability of team resources; ability of the team to handle or resolve a particular issue or situation; team/manager experience levels; competing resource demands; and scheduling concerns resulting from taxpayer's untimely furnishing of documents.

2. Disputes within teams; disputes between teams and taxpayers...