Last week I shared on my blog “Lessons Learned from Recent Negotiations with the IRS on Examination”. This was well received. Since then I have received a host of emails and comments from various sources. On my listing of over 4,200 contacts there are over 50 IRS employees. Several IRS employees and others offered me comments and pointed me to various articles with editorial comments. I did some more research. From this feedback and my research I want to share some key findings from a few sources.
I also want to offer that the IRS mission remains
“Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”
My experience when assisting clients with IRS matters is that this is not always the perceived mission by examiners. Since joining the private sector I have encountered IRS examiners that believe and have stated their role is to bring in more dollars to the Treasury. This is not the case, and when that happens consideration should be given to raise the issue in management. Not all employees are on board with the IRS mission.
Having worked in research at the IRS for nearly four years during my career at the IRS leading PhDs in economics and statistics, I know we were oriented towards increasing voluntary compliance. Reading the commentary below I think the exam function in the Large Business and International (LB&I) Division may be truly getting the message it is not about the dollars being raised on audits that really matters. What matters is increasing voluntary compliance by the taxpaying public through education and enforcement.
The LBI division is clearly targeting “low hanging fruit”. That is, the areas that may be the easiest to address first.
One IRS employee shared an article from Tax Notes Today. In the article dated November 9, 2016 entitled “LB&I Campaigns May Address Issues Beyond Tax Law” by Amanda Athansiou. She provides the following from a panel of IRS officials from a forum on November 7, 2016:
IRS campaigns might focus on a procedure, a process the IRS wants to improve, or an approach the agency wants to try, she said (Kim Edwards, LB&I Director of Western Compliance), adding, "some of it may be internal, it may not be part of the public announcement."
The target date for the initial campaign launch is late January or early February.
There will be a significant number of issues addressed in the launch.
A campaign could also be focused on educating taxpayers about things they may be doing incorrectly.
The initial campaigns may be areas the agency thinks it can address quickly based on the availability of relevant resources and training
A campaign might also be used to test the waters
One-third of the workforce is eligible to retire today, and almost two-thirds will be eligible to retire by the end of 2017. According to the Commissioner of LB&I, Douglas W. O’Donnell, “It's difficult for the IRS, but this is federal government wide”. With 40 percent of LB&I executives eligible to retire, the situation "does create a bit of concern, anxiety on the part of the person who's currently in charge," O'Donnell said.
The additional time taxpayers spend on presentations and educating agents seems to be part of a new normal and a way to establish good relationships with agents.
I also want to share some other sources I think you may find of particular interest. This article entitled “The New LB&I” in Tax Executive, The Professional Journal of Tax Executive Institute presents:
The “Campaign” Approach
A “More Agile” IRS
The Aspirational and the Practical
The Path Forward: Crowdsourcing the Solutions
This article also provides some very good footnotes regarding sources. It is well researched and right on point with where the IRS intends to go.
The IRS has yet to make public the Field Focus Guide for LB&I 2017 (overall directive for LB&I each FY beginning October 1). The FY 2016 Field Focus Guide was made public January 1, 2016. It set forth the overall framework for 2016. Look for the new Field Focus Guide for LB&I in January 2017. It should provide additional insights.
Michael Gregory, ASA, CVA, MBA is an expert in conflict resolution dedicated to making individuals, organizations, thought-leading entrepreneurs and executives more successful. Michael’s books, including his NEW BOOK Peaceful Resolutions: A 60-step illustrated guide to conflict resolution are available at this link. Free resources are available online at www.mikegreg.com. Check out the blog. Contact Mike directly at firstname.lastname@example.org or call (651) 633-5311.
About the author
Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at email@example.com 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, MBA, Qualified Mediator with the Minnesota Supreme Court]