What's New
Important Tax Changes for 2002
Modernization
What the Modernized Agency Means for YOU
Since January 1998 and continuing with the enactment of the Restructuring
and Reform Act of 1998, the Internal Revenue Service (IRS) has been
working to provide top quality service to taxpayers by helping them
understand and meet their tax responsibilities, and by applying
the tax law with integrity and fairness.
To accomplish this new mission, the IRS needs to understand and
solve problems from the taxpayer's point of view; ensure that managers
are more accountable; and implement balanced measures of performance
to measure taxpayer and employee satisfaction. To meet these objectives,
the new IRS structure will be organized around four major taxpayer
segments: wage and investment taxpayers; small businesses and self
employed taxpayers; large and mid-sized businesses; and tax exempt
and government entities.
Each step we take to modernize America's tax agency brings us closer
to our strategic goals: top quality service to each taxpayer, top
quality service to all taxpayers and productivity through a quality
work environment. Throughout the modernization process, we have
always been committed to maintaining and enhancing critical services
such as new procedures to ensure taxpayer rights; improved access
on the telephone; expanded availability of bilingual assistors over
the telephone for Spanish speaking taxpayers; and standardization
of operations in the Taxpayer Assistance Centers. These services
demonstrate identifiable progress already made toward developing
a more taxpayer-friendly organization. Overall, we are aiming to
make the modernization transition effort transparent from the taxpayers'
perspective to minimize disruption of service.
The new IRS structure will significantly reduce the number of management
layers and points of entry from 43 areas to four Operating Divisions,
solely dedicated to the specific needs of each taxpayer segment.
This new centralized focus will help ensure uniform and consistent
practices across geographic lines. This change will be carefully
synchronized to ensure a smooth transition to the new structure
in late 2000.
The four Operating Divisions will be fully responsible for all
of the tax administration needs of specific corresponding taxpayer
segments. The Wage and Investment Operating Division will serve
approximately 116 million taxpayers, whose taxes are primarily reported
by and collected through third parties, such as employers and financial
institutions. The Small Business/Self-Employed Operating Division
will serve approximately 45 million filers composed of fully or
partially self-employed individuals and small businesses. The Large
& Mid-size Business Operating Division will serve corporations
with assets greater than $10 million. Finally, the Tax Exempt &
Government Entities Operating Division will serve three very distinct
taxpayer segments: Employee Plans, Exempt Organizations and Government
Entities.
Working with our consultants, the IRS first validated this new
structure organized around the four Operating Divisions. IRS design
teams then developed a detailed blueprint of the new organization,
prepared comprehensive implementation plans and built broad ownership
for change within the IRS. External feedback from practitioner organizations
was solicited and considered throughout this process.
Beginning in January 2000, IRS teams will refine implementation
details with the goal of having the modernized four-division structure,
including executive leadership and budget authority, in place by
October 2000. The new divisions will become fully operational in
stages with Tax Exempt and Government Entities already operational
since December. Large and Mid-Size Business becomes operational
in March 2000, followed by Wage and Investment and Small Business/Self-Employed
in the fall of 2000. We have already selected our top management
teams for each of the four divisions.
There will be no immediate impact in 2000. This year's filing season
will be unaffected. In fact, taxpayers will not see any change in
where to file their returns or other processing changes until 2002
at the earliest. The IRS will advise those affected well in advance
of any changes in filing requirements. Taxpayer assistance will
be available at current sites, practitioner hotlines will continue
and field contacts and liaison relationships will be unchanged as
the IRS transitions to the new structure.
Once operational, most taxpayers will interact with only one Operating
Division; all decisions related to a taxpayer case will be handled
within that division by a dedicated IRS management team. All taxpayer
records will be available to authorized employees in any Operating
Division. The intended result under this new structure is that taxpayers
and their representatives will have better access to IRS management
and staff who have the necessary training, ability and decision-making
authority to resolve issues quickly.
There will be more emphasis on pre-filing services and early resolution
of complex issues for each of our Operating Divisions. A greater
proportion of IRS resources will be allocated to pre-filing activities,
such as education and outreach, and early intervention to help taxpayers
comply with the tax laws. Post-filing activities will be geared
to problem prevention and a risk-based analysis approach with targeted
enforcement activities for the noncompliant.
External liaison activities in the field will continue while a
national presence will be maintained and enhanced at IRS Headquarters.
To reduce any undue disruptions, changes to the field structure
will occur in phases during 2000. Taxpayers and practitioners will
continue to work with their current contacts unless the IRS notifies
them of a change. In addition, localities will publish directories
of local phone numbers and make contact information available on
the Digital Daily web site. At the local level, current liaison
relationships, such as District liaison groups, will continue and
become enhanced. Field Territory Managers in the Taxpayer Education
and Communication (TEC) organization will have lead responsibility
for managing relationships with practitioners in their territories,
including organizing liaison meetings and seeing that systematic
issues are addressed.
Three elements are vital to the success of the modernization effort.
First, it is essential that all participants in, and observers of,
this process acknowledge the realistic time requirements of full
implementation. Second, continued resource support is necessary
to ensure successful implementation. And third, continued interest
and support from key stakeholders are critical and must be sustained.
The modernization process is a wide-ranging and long-term endeavor
based on a private-public partnership. The IRS is committed to continuing
its stewardship of the tax administration function while implementing
a more transparent, customer-focused system that will benefit taxpayers,
practitioners and businesses well into the future.
Additional References
Ask
IRS
Modernizing America's Tax Agency
Modernization
Update
Excerpt
from the Statement of Charles O. Rossotti, Commissioner of Internal
Revenue
A
Modernized Internal Revenue Service
Overview
of Modernization
Additional
Information About the IRS Modernization