An inside look at LMSB's heavy manufacturing industry group.

• Author: Dougherty, James A.
• Position: IRS Large and Mid-Size Business Division

Authors' Note: As a result of the Internal Revenue Service Restructuring and Reform Act of 1998, the IRS recently reorganized itself along "customer segments." As part of the reorganization, the Large and Mid-Size Business Division (LMSB) was formed, and within LMSB, five special industry sections have been created including one section devoted to Heavy Manufacturing and Transportation (HM). The director of this section is Thomas C. Smith. During his 32 years with the IRS, Mr. Smith has served as a Revenue Agent, CEP Case Manager, Director of International District Operations, Deputy Assistant Commissioner (International), Assistant Commissioner (Examination), and Organizational Performance Management Executive. Recently, we met with Mr. Smith to discuss the new industry group and the changes that are occurring within the LMSB division.

Taxpayer Characteristics

The Heavy Manufacturing industry group will serve almost 92,000 taxpayers, 1,500 of which are large businesses. This sector includes businesses dealing in the areas of air and ground transportation, the aerospace and automotive industries, shipping, agricultural manufacturing, heavy metals, and real estate. This group originally included the Construction industry, but to better balance the workload of all five industries, Construction was moved to the Natural Resources industry.

Tools and Techniques

Two of HM's main goals are to become a world-class tax administration and to improve the level of customer service. Some of the new programs within LMSB that should help HM achieve these goals are Pre-Filing Agreements (PFA), Comprehensive Case Resolution (CCR), and Industry Issue Resolution (IIR). These new initiatives should improve customer satisfaction by allowing taxpayers to know the answers prior to filing their returns. The new methods will allow taxpayers to achieve certainty regarding the treatment of issues and, in turn, this should eliminate examinations, appeals, and litigation of some issues. Through a cooperative effort, the program is intended to reduce the cost, burden, and delays encountered in post-filing examinations.

In the past, the IRS has employed other types of methods such as Advanced Issue Resolution and Early Referral to Appeals to improve the process, but they have not been used widely since not everyone, internally and externally, buys into them. Tom Smith believes that the new programs will succeed because whereas the case manager initiated the previous...