TEI response to IRS questionnaire on the Appeals Large Case Program.

• Position: Tax Executives Institute IRS Administrative Affairs Committee

On June 19, 1996, Tax Executives Institute submitted the following comments to the Internal Revenue Service in response to an IRS questionnaire on the Appeals Large Case Program. The Institute's comments took the form of a letter from TEI President Jack R. Skinner to Thomas R. Roley, Executive Assistant to the National Director of Appeals. They were prepared under the aegis of TEI's IRS Administrative Affairs Committee, which is chaired by Robert L. Ashby of Northern Telecom Inc. In addition to Mr. Ashby, the following members contributed materially to the preparation of TEI's comments: Ralph J. Coselli of Shell Oil Company, Robert H. Proehl of BellSouth Corporation, and Thomas B. Rogers of Apple Computer, Inc.

Thank you very much for your letter dated May 28, with which you enclosed a questionnaire concerning the IRS Appeals Large Case Program. Tax Executives Institute is delighted to have the opportunity to respond to the questionnaire, and we hope that these comments are helpful to the Internal Revenue Service, and to Appeals in particular, as it weighs possible changes in the structure of Appeals. Our members interact with Appeals Team Chiefs and members of their teams on a daily basis, and they have a vital interest in the effective management of the Appeals function.

General Comments

Tax Executives Institute remains a strong advocate of an efficient and independent Appeals organization. We believe the key is for Appeals to provide an independent, fair-minded review of adjustments proposed by the Examination function and protested by the taxpayer. We believe that Appeals should facilitate settlement of issues (and cases) by guarding against extreme or over-aggressive interpretations, and should provide meaningful feedback to the Examination function on how future cases or audit cycles can be handled more efficiently.

The current organizational structure of Appeals (and its Large Case Program) is transparent to most taxpayers. Many, if not most, TEI members likely have interacted only infrequently with the senior Appeals management at either the regional or national level. This does not mean, however, that TEI members have no interest in the structure and management of Appeals. Indeed, as our comments on the specific questions underscore, we believe that structural changes may well serve to advance the goal of an efficient, effective Appeals organization. Structure, however, can only get you so far. The personnel operating within the structure (whatever it is) are of paramount importance. Hence, we would be less than candid if we did not express our concern about the exodus from the IRS, and the Appeals organization in general, of many qualified people whose technical expertise and judgment have been critical to the organization's prior successes. Regardless of Appeals' structure, therefore, we urge the IRS to devote adequate resources to retaining qualified Appeals Officers and to training less experienced personnel and otherwise to ensure that the personnel assigned to manage cases (i.e., Appeal Team Chiefs) have sufficient technical expertise to resolve issues on a fair and informed basis.

Responses to Large Case Appeals Questionnaire

1. Do you believe a change in our structure from what is currently a Regional management structure to either a National or Local Office structure would be good or bad? Why?

   The current management structure of Appeals has the same limitations as the IRS's management structure in general: The decentralized matrix structure seemingly assigns responsibility but limits accountability for the effective implementation of national programs and the resolution of cases. Further, the current structure, where the National Director of Appeals has program (or functional) authority but not line authority, arguably vitiates the...