LMSB realigns key management personnel for greater efficiency.

• Author: Nolan, Deborah M.
• Position: Large and Mid-Size Business Division

Several stakeholders, practitioners and business leaders have asked the IRS about recent organizational changes made to its Large and Mid-Size Business Division (LMSB), which administers taxes for businesses, partnerships and corporations with over $10 million in assets.

Most of the changes have been limited to structural modifications that will improve management efficiency and operational effectiveness. Such changes have adjusted the managerial "span of control" by correcting a long-standing imbalance in the number of employees reporting to managers; eliminated management redundancy and overlap in some field offices; and adjusted the geographic "footprints" of its Industry areas to become more compact and cohesive. Throughout this process, the IRS has sought to preserve the working relationships between revenue agents and the taxpayers assigned to them.

LMSB at Startup

LMSB first emerged as an IRS division in June 2000 following a Congressionally-mandated restructuring. The change was comprehensive and focused heavily on expanding taxpayers' rights and improving customer service. It altered the IRS in profound ways, and LMSB's formation was just one of many significant outcomes.

The designers of LMSB wanted the division to deliver high-quality services to taxpayers, vigorously promote corporate tax compliance, quickly respond to emerging compliance risks and treat taxpayers fairly and consistently. They sought to create an organization that would foster a strong sense of community within and enable employees to develop the specialized skills and knowledge they needed to perform their jobs effectively.

As a result, a unique organization emerged. Its core would consist of five industry-specific groups, more commonly known as "Industries," under the premise that certain services, enforcement issues and trends tended to be industry-specific and such an alignment would promote consistency, which is important to fair tax administration.

LMSB's original Industries included Communications, Technology and Media; Financial Services and Healthcare; Heavy Manufacturing, Construction and Transportation; Natural Resources; and Retailers, Food and Pharmaceuticals. This lineup changed slightly in 2002 when Healthcare merged with Retail, Food and Pharmaceuticals, and Construction merged with Natural Resources, but the five-Industry model remains central to LMSB's operations today.

When LMSB first emerged, just as today, its revenue agents worked...