IRS reorganization: the effect on practitioners this tax season and beyond.

Author:Rossotti, Charles O.

When I became Commissioner of Internal Revenue in 1997 I pledged to turn the IRS into an organization that would consistently deliver the highest quality service to America's taxpayers. The IRS must measure its success or failure not only by the taxes it collects but also by its effect on the people it serves. To achieve this goal, the IRS undertook a historic reorganization, the most comprehensive since the 1950s, to improve performance in all areas.

Change has been gradual and much remains to be done. A complete modernization of the IRS, especially its technology, will take the better part of a decade. Over the next three to four years, however, we will institute a number of changes that ultimately will make a major difference in how we work to better serve taxpayers.

New organization and management

One reason we reorganized the IRS is that its traditional structure did not adequately support taxpayer demands. We created a modernized organization geared to understanding and solving problems from the taxpayers' point of view. It is led by management teams with the broad range of experience needed to direct current operations while modernizing business practices and technology to achieve the IRS's mission and strategic goals.

As CPAs are aware, the current IRS structure consists of

* Four operating divisions: Wage and Investment; Small Business and self-employed; Large and Mid-Size Businesses; and Tax Exempt and Government Entities (see "Modernization Update: New IRS Up and Running," JofA, Mar. 00, page 72). This new centralized focus is helping to ensure uniform and consistent practices nationwide.

* Two service organizations: Information Systems and Agency-Wide Shared Services.

* Separate specialized independent channels for taxpayers: Appeals and the Taxpayer Advocate Service.

* Criminal Investigation, a line unit with sole responsibility for investigation of criminal violations of the tax law.

* The Office of the Chief Counsel, which provides tax advice, guidance and legislative services to all sections of the agency.

* A smaller national headquarters, which sets broad policy, reviews operating unit plans and goals and develops major improvement initiatives.

The shift to e-filing

Encouraging electronic filing is a key initiative at the IRS. The IRS Restructuring and Reform Act of 1998 mandated electronic filing of at least 80% of returns by 2007. The electronic tax administration (ETA) system provides many benefits for both taxpayers...

To continue reading