March 2001

IRS Relations Committee Meets with the ‘New IRS’

Expectation that a “New IRS” means an increasingly responsive service was the sentiment expressed by several members of the NYSSCPA Relations with the IRS Committee as they gathered for the committee’s first meeting with the newly organized New York “Area” of the IRS on January 18, 2001. The New York Area, a combination of former districts, is just one result of a major restructuring of the entire agency.

Opening the meeting, committee chair Stephen Buschel of BDO Seidman stated that the key to the continued success of the relationship between the NYSSCPA and the IRS is communication.

Tax Education and Communication Area Director Ellen Murphy opened for the IRS, reflecting on the fact that as taxpayers and practitioners have become more specialized and tax regulations more complex, the Service recognized the need for change in the way it does business. Gone is the old structure of branch chiefs, district directors, and assignment of overall responsibility based simply on geography, said Murphy of the framework that had been in place since 1952. The new model, a product of the IRS Restructuring and Reform Act of 1998, was presented by Murphy as one of multifunctional operating divisions created to serve specific types of taxpayers.

The new divisions are known as Small Business/Self-Employed (SBSE), Large and Mid-Size Business (LMSB), Wage and Investment (W&I) and Tax-Exempt and Government Entities (TEGE). Functional aspects such as compliance, customer account services, and taxpayer education reside primarily within the Wage and Investment and Small Business divisions. Separate functional divisions include Appeals, Counsel, and the Taxpayer Advocate Service.

As Mike Donovan of SBSE was introduced, some practitioners present took notice when he indicated that SBSE would attempt to focus on “higher end” taxpayers in the small business, partnership, and trust areas. He also indicated that SBSE’s short-term mission is to allocate resources to “get back to the core activity of examination and collection of tax,” even though his area has effectively not hired staff from outside the Service since 1991.

The LMSB division is, in fact, hiring in the northeast, according to LMSB Industry Director David Robison. LMSB serves businesses with assets in excess of $5 million and is divided into groups along industry lines. Robison leads the financial services and healthcare group, which is based here in New York but has jurisdiction nationally. He views communication sessions such as these meetings as important to effectively dealing with practitioners, addressing industry wide issues, and developing solutions for taxpayers before returns are filed. On the matter of filing, he anticipates electronic filing of Form 1120 in the near future.

The division with the largest customer base of filers is Wage and Investment, as pointed out by Harvey Greenberg of the division. W&I deals primarily with Form 1040 filers who, he noted, are typically the most compliant due to withholding and third party reporting. Greenberg stressed that W&I’s focus is on customer service and the ability to provide full support to “walk-ins.” W&I staff are now required to have a minimum of six credits of accounting to better relate to customer needs. W&I and SBSE are probably the divisions most interconnected with the IRS customer service division, headed by Ron D’Amico.

D’Amico, along with Shelly Goldenberg of the Brookhaven Campus (formerly known as the Brookhaven Service Center) gave an overview of the Campus operations including returns processing, taxpayer ID inquiries, and the continuing efforts toward customer service and efficiency through the use of technology.

The topic of technology led to an overview of the e-filing program by Barbara Goin of the IRS. In concert with the subject matter, Goin gave a rapid fire explanation of the e-filing process including the ability to electronically attach preparer notes, add 99 Schedule D entries (5000 entries in 2002), e-file an extension request, obtain a quick refund, and, of course, electronically pay taxes. She noted that one taxpayer had paid his multimillion dollar tax bill with an American Express card, which drew a small flurry of audience comments about frequent flyer miles.

Those were not the only remarks, however. There were opinions on whether the IRS restructuring would make for timely response to client issues, eliminate the roadblocks to elevating them, or even be a hindrance when a taxpayer matter is affected by more than one division. Members of the IRS panel emphasized that, with the elimination of management layers and examination and collections responsible to one multifunctional territory manager, the tax community should find the whole process more efficient. Divisional overlap may be an issue early on, but the plan is to have one individual act as a coordinator in such instances.

Overall, the panel’s view is that the new structure will provide better service to all taxpayers in the long run. A few reacted skeptically, while others were optimistic.