Momentum from tax reform could lead to IRS reorganization.

Author:Keenan, John

The IRS's last major restructuring occurred in 1998 with the passage of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), P.L. 105-206. The RRA ushered in dramatic changes in tax law as well as in the structure and functioning of the IRS. Examples of changes to the IRS's structure included: (1) the replacement of geographic regional divisions of the IRS with units designed to serve particular categories of taxpayer; (2) a five-year term of office for the commissioner of Internal Revenue; (3) the appointment of the national taxpayer advocate by the secretary of the Treasury who reports directly to the commissioner of Internal Revenue; and (4) the creation of an IRS oversight board to ensure, among other things, that taxpayers are treated properly by IRS employees.

After the enactment of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, which is the most comprehensive piece of tax legislation in more than three decades, there appears to be a renewed focus on restructuring the IRS. In April 2018, the House of Representatives passed a series of IRS reform bills, including the Taxpayer First Act (H.R. 5444). Among the actions required by the Taxpayer First Act would be for the IRS to submit to Congress a comprehensive customer service strategy within a year of enactment and a comprehensive written plan to redesign the organization of the IRS by 2020.

GOP Blueprint

Prior to the House of Representatives' recent bills to restructure the IRS, there was a June 2016 proposal to restructure the IRS in the GOP's "A Better Way" (GOP Blueprint). The GOP Blueprint discussed the creation of a new streamlined IRS dedicated to delivering world-class customer service. Under the GOP Blueprint, a newly restructured IRS would have three major units:

* A families and individuals unit focusing on state-of-the-art customer service so that taxpayers can get efficient help and answers to their tax questions.

* A business unit focusing on administering the new tax code for all businesses. This unit would include having specialists with expertise on the issues facing startup entrepreneurs and small businesses and specialists with expertise on the issues facing large domestic companies and U.S.-based global corporations.

* A small claims court unit independent of the IRS that would allow routine disputes to be resolved more quickly so as to decrease costs when resolving a dispute with the IRS.

Together, these three units would be the...

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