Taxpayer First Act Report Delivered

• Date: 01 March 2021
• DOI: http://doi.org/10.1002/npc.30839
• Published date: 01 March 2021

Bruce R. Hopkins’ NONPROFIT COUNSEL

8 March 2021 THE LAW OF TAX-EXEMP T ORGANIZATIONS MONTHLY

Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc

TAXPAYER FIRST ACT REPORT

DELIVERED

The IRS, on January 11, sent the Taxpayer First Act Re-

port to Congress (Pub. 5426). The agency bills this report

as a “comprehensive set of recommendations that will

reimagine the taxpayer experience, enhance employee

training and restructure the organization to increase col-

laboration and innovation” (IR-2021-07). The Taxpayer

First Act is summarized in the September 2019 issue.

The essence of this report is a description of a way to

“transform the IRS into a modern, efficient, and taxpay-

er-centric centered agency.” The strategies outlined in the

report are intended to “re-shape the IRS into a nimbler

enterprise, readily capable of taking advantage of emerg-

ing technology.” As is emphasized throughout, the report

observes that “delivering the type of experience American

taxpayers expect and deserve will require funding.”

The strategies focus on customer service, training of

employees, and modernization of the IRS’s organizational

structure. As to organizational redesign, the IRS states

that “changing times call for new ways of doing busi-

ness.” The IRS expects that the coming restructuring “will

increase agency-wide collaboration and deconstruct oper-

ational silos, thereby improving [the IRS’s] ability to pro-

vide seamless service to [its] employees and taxpayers.”

There is to be an Enterprise Change and Innovation

Division, to “coordinate annual strategic planning and

prioritization activities to streamline decision making

and enable the agency to set and meet its short and

long-term strategic goals.” A Chief Taxpayer Experience

Officer “will seek to drive strategic direction for improv-

ing the taxpayer experience across the IRS—including

both service and compliance interactions.” The current

senior executive team will be replaced by a “smaller,

taxpayer-focused” senior leadership team. Look for a

Relationships and Services Division, a Data Office and an

Enterprise Digitalization and Case Management Office,

and consolidation of examination operations into a

new Compliance Division. An Operations Management

Division is to be a “revitalized support structure that will

help the agency address many of the challenges [the

IRS faces] in today’s current tax administration environ-

ment.” In addition to the Commissioner of Internal Rev-

enue, there will be a deputy commissioner, five assistant

commissioners, and 32 chiefs (plus chief counsel).

The report says little about how existing operations are

to be integrated into this new structure. The existing four

“business units,” including Tax Exempt/Government Enti-

ties, will be folded into the Compliance Division. This is to

be done to ensure “more efficient operations and provid[e]

consistent outcomes for resolving taxpayer compliance

issues.” The roles of Chief Counsel and the National Tax-

payer Advocate will remain essentially unchanged. The Act

created an Independent Office of Appeals.

The IRS estimates that full implementation of the Tax-

payer First Act plans, along with the Integrated Moderniza-

tion Business Plan would cost $4.1 billion over FY 2021-FY

2025. Implementation of the specific mandates outlined

in the Act (other than development and implementation

of strategies) is estimated to cost $550 million during that

period. Development and implementation of the taxpayer

experience, training, and organizational redesign plans

required by the Act has an estimated price tag of $1.6 bil-

lion. The modernization plan (for updating of IRS systems,

cybersecurity, and operations) involves an estimated $1.9

billion. (See the Quote of the Month) [2.2(a)] ◆

OTHER DEVELOPMENT

◆Bloomberg Law’s Daily Tax Report for December 23

reports resolution of a criminal case involving syndicated

conservation easements by the Department of Justice,

with individuals pleading guilty to charges of conspiracy

against the US (United States v. Agee (W.D.N.C.). ◆

Each article in the newsletter on a tax-exempt organizations law topic ends with a citation to the appropriate chapter(s) or

subchapter(s) in Hopkins, The Law of Tax-Exempt Organizations, Twelfth Edition (Wiley, 2019, 2020 supplement). This is done to

provide ready access to additional and background information concerning these articles. For example, underlying information con-

cerning the first article in this issue is available in Chapter 28 § 11(i) of the book; thus, the citation is referenced as [28.11(i)]. Like-

wise, each article in the newsletter on a charitable giving law topic ends with a citation to the appropriate chapter(s) or subchapter(s)

in Hopkins, The Tax Law of Charitable Giving, Fifth Edition (Wiley, 2014, 2020 cumulative supplement). For example, underlying

information concerning the seventh article in this issue is available in Chapters 9 § 23, 21 § 3(a), and 21 § 5(a) of the book; thus,

the citation is referenced as [9.23, 21.3(a), 21.5(a)].

This newsletter is a stand-alone publication. An inventory of articles in the newsletter since its inception in 1983, and a subject

matter index, as well as an index of the court opinions, IRS revenue rulings and procedures, IRS technical advice memoranda,

and IRS private letter rulings discussed in the newsletter, are available at www.brucerhopkinslaw.com. For those who have the

books, the newsletter also provides monthly updates. Both books are annually supplemented. Questions concerning nonprofit law

developments in general may be sent to brucerhopkins@brucerhopkinslaw.com. Also, a comprehensive summary of nonprofit law

is available in the Bruce R. Hopkins Nonprofit Law Library, an e-book published by Wiley. Other law resources are referenced at

brucerhopkinsbooks.com. Follow BRHopkins_NPLaw on Twitter.

The newsletter has a dedicated Web site. Please visit wileyonlinelibrary.com/journal/npc.

Quote of the Month: Commissioner of Internal Revenue

Chuck Rettig said this about the Taxpayer First Report:

“Guided by the law, we will fundamentally change the

way we operate, building upon our strengths, with addi-

tional focus on areas to improve the important service

we provide to our great country.”