IRS RESPONSE TO RECOMMENDATION: Most CIPs begin as a Part 1 at the local level, frequently as the result of a suggestion from local field employees. Area CIP coordinators make presentations at group meetings where they encourage field employees to contact them with recommendations for possible CIPs. When we identify issues that appear to be widespread, we leverage that knowledge to expand to a Part 2 CIP incorporating outreach and education into the strategy. This process serves to improve voluntary compliance, reduce the tax gap, and significantly contribute to the IRS’s store of knowledge. In addition, Communication and Stakeholder Outreach work closely with IRS advisory groups including the IRSAC, IRPAC and Taxpayer Advisory Panel (TAP). The advisories review products, services and initiatives, work with subject matter experts, conduct research, and provide recommendations on how to make improvements. For 2015, IRSAC and TAP are looking at how to improve outreach to Schedule C filers. SB/SE Research is supporting this effort by providing data on a number of variables, including geographic location. Within SBSE, both Exam and Collection have geographically based areas with Directors responsible for the states within that geographic area. Cross-divisional local compliance councils also already exist.  Additionally, Stakeholder Liaison (SL) Field is using technology to reach taxpayers and partners. SL Field hosts virtual Practitioner Liaison Meetings and Small Business Forums that make it possible for taxpayers and stakeholders to attend from all 50 states.  We, therefore believe our efforts are efficiently capturing both local and non-geographic taxpayer and compliance needs. 

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS appreciates the IRS’s efforts to achieve geographic presence with limited resources.  However, we do not believe that the IRS and taxpayers can realize the benefits of local presence discussed in the Most Serious Problem through technology without having the employees physically located in each state.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: ​SB/SE Exam recently completed a Virtual Service Delivery (VSD) pilot in Campus Exam and is considering reestablishing the pilot in one location. SB/SE Field Exam has had an ongoing interest in the VSD initiative and keeps abreast of the status of the program. However, VSD will not be expanded to office audit or office collection visits at this time due to technological and resource limitations including budget and staffing.

CORRECTIVE ACTION: N/A

TAS RESPONSE: We understand that the IRS has to prioritize its limited resources in this budgetary environment.  However, we believe the IRS decisions are short sighted.  The downstream impact of these investments will pay off in the long term.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: Campus Exam does not assign cases to an examiner to complete an audit of a taxpayer from beginning to end.  This process enables examiners to be available for interaction sooner after inquiries are received. Audits are initiated via automation (Batch/ACE processing) and assigned to an examiner when correspondence is received.  This allows for more resources to work correspondence and answer telephone calls.  Exam works to assign subsequent replies to the same examiner. However, to ensure the correspondence is worked in first in first out order this is not always possible.  The Single server model in a multi-phased process does not match demand to available resources.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The National Taxpayer Advocate appreciates the IRS’s efforts to achieve geographic presence with limited resources.  However, the IRS cannot reasonably conclude it is inefficient to assign one employee for the duration of a correspondence exam case.  First, it is ignoring the congressional intent behind RRA 98 § 3705(b).  Second, the IRS has not studied the costs associated with implementation of such recommendation, taking into account the cost savings realized by avoiding downstream consequences.  Third, the IRS has failed to analyze such case assignment from a taxpayer’s perspective and balance the feasibility with the impact on the taxpayer’s rights.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The use of state boundaries to apportion the administrative appeal resources in our Federal tax system in an era of increasing complexity of tax issues and increasing use of and comfort with virtual technologies would be arbitrary. Matching the expertise of the Appeals employee to the issue(s) presented is more critical to settling a case properly than the physical presence of two employees in each state, who could possess insufficient expertise to cover all issues in the case.  Further, two Appeals employees could not handle effectively the broad scope of issues arising in a some states thus, circuit riding would still be required in many cases.  Appeals Officers are familiar with the laws of multiple states when necessary to determine federal tax consequences (e.g., definition of alimony), which enables them to cover larger geographic areas.  While regional economics are often relevant to tax administration, a state based approach does not, among other things, account for multiple jurisdictions within a single local economy (e.g., Kansas City or Texarkana).   Appeals regularly circuit rides to areas where there is no permanent Appeals presence, conserving taxpayer dollars by scheduling as many convenient meeting dates and locations as possible during the travel.  It is not a good use of taxpayer money to add two Appeals Officers in both Vermont and Rhode Island where nearly 2.5 million residents already live within 200 miles of an Appeals office, while well over 10 million residents in the western states live more than 200 miles from the nearest office.  We note that this issue was also raised in the NTA’s 2009 report to Congress and the recommendation was rejected at that time for substantially similar reasons.

CORRECTIVE ACTION: N/A

TAS RESPONSE: While the appeals and settlement officers may have expertise in the subject matter in question, the IRS can realize the benefits of local presence discussed in the Most Serious Problem by having employees physically located in each state.  Senators Grassley and Thune acknowledged the benefits of this recommendation by including similar language in the recently introduced Taxpayer Bill of Rights Enhancement Act of 2015.  Not all Appeals’ cases are as complex as the IRS response indicates.  In fact, the majority of Appeals staffing today is concentrated in IRS campuses, which handle, by Appeals’ own admission, “less complex” cases.  Many of these cases involve taxpayers who would benefit from employees who have knowledge of local conditions as they hinge on local fact patterns and practices.  Moreover, having a modest local Appeals presence does not exclude Appeals from identifying experts in more complex issues who can assist local Appeals officers and help develop greater professionalism and expertise.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: In order to ensure we are reaching the maximum amount of external stakeholders (including both taxpayers and practitioners) with our available resources, we have adopted a virtual outreach business model that has garnered positive support from our stakeholders.  Our SB/SE Division hosts outreach meetings in person and virtually that reach stakeholders across the country. Virtually, the Stakeholder Liaison (SL) Field function hosts interactive Practitioner Liaison Meetings (PLMs) and Small Business Forums (SBFs) that make it possible for taxpayers and stakeholders to attend from every corner of the country. SB/SE also offers national webinars that include live question and answer sessions.  In addition to virtual events, SL Field hosts PLMs and SBFs in many states. If partners are unable to attend in their state, SB/SE encourages them to look for opportunities in nearby states.  Our Stakeholder Partnerships, Education & Communication (SPEC) function in the W&I Division provides oversight of the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.  These programs serve low to moderate-income taxpayers, senior citizens, persons with disabilities, those with limited English proficiency, and Native Americans.  To ensure geographical coverage, SPEC currently has employees located in every state who leverage national and local partners to deliver free tax preparation and outreach programs to millions of taxpayers throughout the nation. SPEC also provides virtual support to partners and volunteers thru the use of WebInterpoint technology. This technology provides the IRS with the technical and visual capability to conduct virtual meetings and training sessions. The IRS beleives using these methods provides an appropriate level of outreach and education to our stakeholders without the necessity of a physical presence of one person in each state.

CORRECTIVE ACTION: N/A

TAS RESPONSE: While the National Taxpayer Advocate appreciates the IRS’s attempt to virtually reach taxpayers throughout the country, she is perplexed by the IRS’s dual standard for outreach and education of SB/SE taxpayers and W&I taxpayers.  In its response, the IRS makes a compelling case for why it has SPEC employees in each state to network with stakeholders and taxpayers therein.  For small business and self-employed taxpayers, however, the IRS somehow rationalizes the lack of staffing in each state.  The IRS’s failure to have a robust education and outreach presence for small business and self-employed taxpayers increases the likelihood these taxpayers will be subject to IRS adversarial enforcement actions.  The downstream impact of these investments in outreach and education will pay off in the long term.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: IRS has decided to invest its resources in more efficient web-based and live services that will allow it to serve a greater number of taxpayers.  During 2008 through 2011 in North Dakota, IRS used Tax Tours, a “mobile” concept where temporary offices were setup at alternative locations, such as Community Colleges and Universities. The IRS used radio, newspaper, and flyers to advertise the dates and times we would be available at these alternative locations. The number of taxpayers served during these tours was 76 in 2008, 12 in 2009, 13 in 2010, and 13 in 2011.

The IRS concluded taxpayers do not come to sites that are not established and staffed on a regular basis and determined that the use of mobile vans was not the best use of resources.

CORRECTIVE ACTION: N/A

TAS RESPONSE: While the IRS did not have a positive experience with temporary offices in the past, we encourage the IRS to discuss the migration to web services with the HMRC in the UK.  As part of the migration, the UK performed comprehensive research and determined which taxpayers had enhanced support needs.  Rather than provide mobile services to all taxpayers, the UK only provided these services to the limited population that truly needed these services.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A