TEI's statement on attracting talent and developing and retaining employees to IRS Oversight Board.

• Position: Tax Executives Institute

On February 19, 2008, TEI President Robert J. McDonough participated in a public meeting of the IRS Oversight Board on attracting talent and developing and retaining employees. His written statement follows.

As the preeminent association of business tax professionals, Tax Executives Institute is pleased to participate in today's hearing of the IRS Oversight Board.

Background

Tax Executives Institute was established in 1944 to serve the professional needs of in-house tax practitioners. Today, the Institute has 54 chapters in the United States, Canada, Europe, and Asia. Our 7,000 members are accountants, attorneys, and other business professionals who work for 3,000 of the leading global companies; they are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. TEI represents the business community as a whole, and our members deal with the tax code in all its complexity, as well as with the Internal Revenue Service, on almost a daily basis. TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike.

The companies that employ TEI's members have almost without exception been assigned to the IRS's Large and Mid-Size Business (LMSB) Division. The largest 1,600 taxpayers within LMSB are subject to ongoing audits as part of the Coordinated Industry Cases (CIC) program. We are pleased to provide information on ways in which TEI members' companies attract talent and develop and retain key employees.

Discussion

Effective recruitment and training remain high priorities for the IRS and, more particularly, LMSB. Two years ago, the Treasury Inspector General for Tax Administration (TIGTA) noted that more than 50 percent of LMSB's management and executive staff will be eligible for retirement by October 2008. According to TIGTA--

The future success of the LMSB Division is dependent upon ongoing efforts to replenish the workforce, provide education and training, and provide work inventory more effectively. Additionally, communication of workforce plans to employees and stakeholders is essential to the success of the strategic management of human capital.

Michael R. Phillips, Final Audit Report--The Large and Mid-Size Business Division Has Effectively Implemented Its Human Capital Initiatives (Reference No.: 2006-30-099) (July 26, 2006). The report also noted that LMSB has initiated processes to address this issue.

More broadly, as recently as August 22, 2007, the IRS Oversight Board noted that "human capital issues represent a major strategic challenge to the IRS as its workforce ages and key talent retires from the agency." As former Board Chairman Paul Jones noted, "About 4,000 IRS employees a year for the next four years are expected to retire, taking with them years of experience and valuable skills. Maintaining and growing workforce skills during this period of change must be addressed in a strategic manner."

TEI commends the Oversight Board and the IRS for identifying human capital management as a major challenge in the 21st Century. We are pleased that at his January 29, 2008, confirmation hearing, Commissioner-nominee Douglas Shulman cited recruitment and retention as a top priority, noting:

[L]ike other federal agencies, many experienced and knowledgeable IRS employees will be approaching retirement eligibility in the coming years. It is critical that the next Commissioner devotes significant attention to the recruitment, training and grooming of the next generation of IRS leaders. TEI suggests that the key elements of a comprehensive recruitment and retention program must--

* Adopt a long-term approach. The program must be able to withstand the ups and downs of the government's budgeting process.

* Be collaborative. Buy-in is needed from all constituencies within the IRS: management, labor, Appeals, and Counsel. Accountability should be built into the process.

* Be comprehensive, affording development opportunities--technical and non-technical--for professionals at all levels of the IRS. TEI is pleased to have participated in classes for the IRS's Executive Development ("ExD") Program. We understand that the lessons learned from this training program have been adapted to train people at the more junior levels of the agency (an "Executive Readiness" ("ExR") program). In addition, TEI members have regularly participated in LMSB's Reaching Agreement classes, which provide excellent negotiating skills training. More such face-to-face classes across a range of topics should be...