Yesterday I had an opportunity to speak to the IRS on two fronts. One was a call from the IRS Taxpayer Advocacy Panel (TAP) based on a suggestion and concern I raised with the IRS about a year ago and the other was a sit down discussion with a group of IRS front line specialist managers regarding practitioner concerns when working with the IRS.
The call from the IRS TAP member allowed me to share concerns I have with the quality of IRS interactions with practitioners focusing on Small Business Self Employed (SBSE) and Large Business and International cases within the Industry Case category. What this means is that the area of focus was on cases where the assets of entities are less than $10 million and all estate and gift tax cases (SBSE), as well as the larger cases, but not the top 2,500 or so that are in the LB&I Coordinated Industry Case program. I shared what I see as concerns having worked on these types of cases with clients and from comments I received from other practitioners in the field. This was a very frank and open conversation and I applaud the volunteers in the IRS TAP for taking the time to follow up on my concerns. With the backlog at the IRS it took the IRS TAP program a year to respond to me. Since these are volunteers assisting the IRS Commissioner in this area, I appreciate their willingness to do this and recommend actions to try and improve the IRS.
In the afternoon I met with IRS specialist managers to share with them information compiled over a year ago and since updated. I was asked to speak to all IRS engineers and valuers about a year ago, so I solicited comments from a range of practitioners that I highly respect and prepared both a three page Word Document of bulleted comments and a Power Point presentation with tips to help IRS employees when working with practitioners. Many of these tips stem from my book "The Servant Manager: 203 tips from the best places to work in America". Unfortunately the IRS had to cancel that training. Fortunately, yesterday I was able to deliver this to a group of IRS specialist managers. They have a copy of my book.
The managers listened politely and professionally. They accepted what was being offered. As we began to interact they offered many examples of having received unprofessional behavior, being lied to, being provide with information to enhance the taxpayer's position orally that was later determined to be inaccurate based on the facts etc. What does this cause? It causes mistrust and entrenchment. That is something for all of us to guard against.
The IRS has a very good classification system that funnels the cases with the highest probability of audit adjustments to agents who in tern may bring on specialists on the cases with even a higher probability of adjustments. Knowing this these managers of specialists have learned from experience that there is a very high probability of adjustment on these cases. They are not out to make an adjustment. That is not their job. Their job is to determine the proper amount of tax and to enforce the tax law. However, given their experiences, they have an element of a preconceived perspective of a high likely hood of adjustment. Why is this important for you to know this and what are cautions you and they need to consider when in an area of conflict?
As a former IRS specialists, specialist manager and territory manager, I understand where they are coming from. As an experienced mediator I also realize we should not demonize the other party. That only causes position based entrenchment and stereotyping. So what should they and what should you do if you are in conflict with another party? Step back. Review the facts. Determine what the real issues are. Take them on one at a time. Explore the emotion behind the issue on your part and the other party's part. According to neuroscience 98% of brain is emotional and 2% is rational (slide 4). The implications of this are enormous.
When having been lied to it is important to bring this to the table. For example when you ...., I thought ... and I feel .... and then wait to hear the response back. It is important to bring the 600 pound gorilla to the meeting or it may never be possible to address the concerns. Once the emotion is brought forward constructively, it may be possible to identify and address interests to work towards a solution.
My hope from the session I had with the IRS managers was to encourage them and their employees to develop a relationship with the taxpayer to understand where the taxpayer is coming from and work towards an appropriate solution. Of course you cannot push a rope, you can only pull a rope. If the other party does not want to work with you, the IRS certainly has enforcement actions available.
Today I see nearly all issues as solvable if the parties are willing to work together or are open to mediation. My discussion with the IRS managers was to present real concerns by professional practitioners to help the IRS managers with their concerns so that this could be shared in a constructive format with their employees.
From my book "The Wheels are Falling Off the Wagon at the IRS", I present that the IRS is underfunded, understaffed, overworked and doing the best they can in trying circumstances. I empathize with these civil servants. I was an IRS employee for 28 years. Having been in the private sector 4 years and served many clients I have learned to apply the model with an acronym of FIFI for:
- What are the facts?
- What are the issues? (take them one at a time)
- What are the feelings? (by that I mean the emotion on your part and the emotion on the other party's part relative to the issue being discussed)
- What are the interests of both parties?
- can lead to a solution amenable to all.
Perhaps you can try this too. I have found this to be very helpful when helping parties through conflict resolution. Don't forget to apologize if you are wrong or made a mistake. I think this is good advice for the IRS and I think this advice could help you too.
About the author
Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at firstname.lastname@example.org and at (651) 633-5311. Mike has written 12 books (and co-authored two others) including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]