M ODERNIZING A MERICA ’ S T A X A GENCY

IRS

ORGANIZATION

BLUEPRINT

Document 11052 (Rev.4-2000)

Catalog Number 27877P 2000

IRS

ORGANIZATION

BLUEPRINT

2000
IRS Organization Blueprint 2000

Table of Contents

Foreword

Chapter 1 Overview .............................................................. 1-1

Chapter 2 W&I .............................................................. 2-1

Chapter 3 SB/SE .............................................................. 3-1

Chapter 4 LMSB ............................................................. 4-1

Chapter 5 TE/GE .............................................................. 5-1

Chapter 6 Chief Counsel ............................................................. 6-1

Chapter 7 Appeals ............................................................. 7-1

Chapter 8 Taxpayer Advocate Service..................................................... 8-1

Chapter 9 CID ............................................................. 9-1

Chapter 10 AWSS .............................................................. 10-1

Chapter 11 IS ............................................................. 11-1

Chapter 12 C&L .............................................................. 12-1

Chapter 13 National Headquarters......................................................... 13-1

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Overview

1-1

Chapter 1 Overview

Public

Expectations

and Mission

In 1952, the IRS was created in its current form to collect federal

taxes according to the law without political or corrupt influence.

Successful in this purpose, the IRS today collects $1.7 trillion, which

is more than 26 times its collections in 1952. Corruption cases are

few and are vigorously investigated and prosecuted, and the agency

is strongly insulated from political influence.

Over the last 47 years, the volume and complexity of IRS operations

expanded tremendously. The number of returns filed has more than

doubled, the number of pages in the Tax Code has expanded from

812 to approximately 3,500, and approximately 9,500 changes to the

Tax Code were made. The IRS today deals directly with more

Americans than any other institution, private or public.

For an agency that fulfilled its established purpose so well, the IRS

has been the subject of a great deal of study and criticism in the last

several years. The studies identified a wide range of problems:

inadequate technology and failure of technology modernization

programs, poor service to taxpayers, violations of taxpayer rights,

failure to follow established procedures, lack of adequate training and

resources for IRS employees, and inappropriate use of enforcement

statistics, to name some of the most prominent.

The IRS Restructuring and Reform Act of 1998 (RRA '98), which

passed with bi-partisan support, incorporated many of the

recommendations found in the studies that preceded it. The direction

given to the IRS was clear: it must do a better job in meeting the

needs of taxpayers. As required by the RRA '98, this direction is

expressed in the new IRS mission statement:

Provide America's taxpayers top quality service by

helping them understand and meet their tax

responsibilities and by applying the tax law with integrity

and fairness to all.

This mission statement describes the role of the IRS, as well as the

public's expectations as to how the IRS should perform it. The United

States Congress passes tax laws and requires taxpayers to comply

with them. It is the role of taxpayers to understand and meet their tax

obligations, and most do since roughly
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Overview

1-2

98 percent of the taxes collected are paid without active intervention

by the IRS. It is the role of the IRS to help the large majority of

taxpayers who are willing to comply with the tax law, while seeing to

it that the minority who are not willing to comply are not allowed to

burden their fellow taxpayers. The IRS must perform this role to a

top quality standard, which means that all of its services should be

seen by the people who receive them as comparable in quality to the

best they get elsewhere.

Some observers have questioned whether the new mission statement

underemphasizes the obvious need to collect taxes. On the contrary,

the mission statement calls for the IRS to be more effective in all

aspects of its mission, including application of the law to those who

are unwilling to voluntarily comply.

Establishing a new mission for the IRS and clarifying the public's

expectations are essential and meaningful steps in meeting those

expectations. However, achieving this mission requires fundamental

change in many aspects of an institution that has been built over

many years. This change must produce success in the new mission,

while retaining the essential elements that created success in the

past. Further, this change must take place while the IRS continues to

administer a very large, complex and ever-changing tax system.

Since the IRS will strive to perform at a level of quality achieved

elsewhere in the economy, a major part of this change is guided by

proven private and public sector best practices.

We refer to this whole process of change as "modernization,"

because it involves building on the essential components that made

the IRS successful in the past while bringing them up to date in a way

designed to achieve the new mission. This entire process is

summarized on the following page.

“Modernization” will require change on five major fronts: revamping

business practices; establishing customer-focused operating divisions,

creating management roles with clear accountability; instituting a

balanced performance measurement system; and overhauling the

entire technology base. While all of these changes are critical to the

success of true reform at the IRS, this paper will focus on the two

change efforts related to creating management roles with clear

accountability and establishing customer-focused operating divisions.

The focus of this document is also illustrated on the next page in

Figure 1-1.
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Overview

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Internal Revenue Service

MISSION STATEMENT

Provide America’s taxpayers top quality service by helping them understand and meet their tax

responsibilities and by applying the tax law with integrity and fairness to all.

GUIDING PRICIPLES GOALS

• Understand and solve problems from

taxpayer’s point of view

• Enable managers to be accountable -

knowledge, responsibility, authority, action

• Align measures of performance to all

organizational levels

• Foster open, honest communication

• Insist on total integrity

• Service to Each Taxpayer

• Service to All Taxpayers

• Productivity Through a Quality Work Environment

Revamped

Business

Practices

Customer

Focused

Operating

Divisions

Management

Roles with

Clear

Responsibility

Balanced

Measurement

of

Performance

New

Technology

Focus of this document

Figure 1-1: Modernizing America’s Tax Agency
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Goals While the new mission statement and clarification of the public's

expectations of the agency are fundamentally important, it is critical

in any large institution to define specific goals needed to achieve the

mission. As illustrated on the previous graphic, the IRS has

formulated three strategic goals. If progress is made on all three of

these goals, we can be confident that the IRS is moving forward to

achieve its mission and to meet the public's expectations for the

agency.

Top quality service to each taxpayer

The first strategic goal is to provide top quality service to each

taxpayer with whom the IRS deals, one at a time. The IRS has

millions of interactions with taxpayers each year, from the very

simple to the very complex. The IRS provides forms, information and

filing procedures to taxpayers who must file a

return. This process should be made ever easier and clearer,

reducing the chances of error and the time and effort required by

taxpayers. In other instances, the IRS may intervene, in the form of

an audit or a collection action, and may inform the taxpayer that the

agency believes more taxes are owed. In these cases, taxpayers

should be informed promptly and treated professionally and with full

consideration of their rights.

We will measure success in achieving this goal by the response of

taxpayers to the service they receive from the IRS. As part of the

new IRS performance management system, taxpayers who receive

specific kinds of service will be surveyed and asked to rate the

service. These transactional surveys can then be summarized to

measure the overall trend in taxpayer satisfaction with IRS service.

In addition, the overall ratings given to the IRS by taxpayers, as

compared to other private and public sector institutions with which

they deal, will be a key long-term strategic measure of success in

achieving this goal. Finally, taxpayer dissatisfaction, as measured by

taxpayer complaint and compliment trends, will be an important

indicator.

We began implementing the new balanced measures system in the

operational components of the IRS in 1999. Work will begin on

strategic measures in 2000.
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Top quality service to all taxpayers

The second strategic goal is service to all taxpayers. We must apply

the law with integrity and fairness to all, so taxpayers who do not

comply are not allowed to place a burden on those who comply. This

aspect of IRS service is important both to protect revenues flowing to

the Treasury and as a matter of fundamental fairness. Our tax

system depends on each person who is voluntarily meeting his or her

tax obligations having confidence that his or her neighbor or

competitor is also complying. Therefore, when taxpayers do not

voluntarily meet their tax obligations, the IRS must use enforcement

powers to collect the taxes that are due.

The overall measure of success in this goal is the total collection

percentage. The collection percentage is the fraction of taxes that

are actually paid as compared to those that would be paid if everyone

paid what was due under the law. Another indicator of success for

this goal is the uniformity of compliance, representing the relative

degree of compliance among various economic sectors, different

geographic areas and different demographic segments. This is

important for actual and perceived fairness of the tax administration

system.

While we do not have reliable, up-to-date measures of overall

compliance, the best extrapolations of previous studies suggest that

noncompliance of all kinds equated to about $195 billion in FY 1997,

which works out to about $1,600 per individual tax return. This same

data indicates compliance is also quite uneven. For example,

taxpayers who have primary income reported by third parties are, on

the whole, more compliant than those who rely mostly on self

reporting of income. These factors indicate that there is ample

opportunity for improvement on this strategic goal.

Productivity through a quality work environment

The third strategic goal of the IRS is to increase productivity by

providing a quality work environment for its employees. The IRS

must not only provide top quality service to taxpayers, but it must do

so efficiently, using the fewest possible resources.
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Many private sector organizations demonstrated that succeeding in

this area requires providing employees at all levels with high-quality

technology tools, adequate training, effective management and active

engagement in the goals of the organization. This is especially true in

service organizations in which most front-line employees interact

directly with customers. It is essential that employees clearly accept

ownership of the goals of the organization, are given the support they

need to provide good service to their customers and are able to

communicate upward effectively about the problems and obstacles

they perceive stand in the way of good service.

The right work environment will help unlock employee potential.

Companies and organizations that excel in customer service

invariably have employees who feel respected as individuals and

valued by management for the contribution they make to the overall

service effort. A positive work place is free of discrimination, does

not tolerate artificial ceilings and barriers to advancement, affords

equal opportunity and recognizes employee performance and

potential. It is also a work place that is highly inclusive and seeks to

make use of the diverse experience and talents of all employees.

Benefits Taxpayers and employees will benefit if the IRS achieves its three

goals. If the IRS is able to achieve these three strategic goals, the

benefits to taxpayers and employees should be concrete and

noticeable, although they will take time to become apparent. This is

one of the most important challenges. The IRS cannot succeed unless

it achieves a high level of performance on all three goals. It cannot be

successful if it collects taxes but does not provide top quality service

to each taxpayer or neglects to respect taxpayer rights. Equally, the

agency cannot be successful if it provides good service but allows

compliance to decline and thereby fails to collect taxes. And, since

resources are severely limited, it can only achieve these service goals

by increasing productivity and utilizing effectively the skills of the

workforce.

While this need to achieve multiple goals is a challenging one, it is not

unique to the IRS. Almost every business in the private sector must

make a profit in order to stay in business.
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Overview

1-7

Guiding

Principles

In order to achieve the IRS' strategic goals, many changes and

actions over many years will be required. Actions will be taken at all

levels, from front-line employees to top managers. While each

change and each action that moves the IRS toward its goals is

valuable, it is useful in the midst of such great change to articulate

some principles that guide as well as link our efforts. Articulating a

list of principles does not imply that there were no principles guiding

the IRS in the past or that this list is all inclusive. Instead, it serves to

ensure the importance of the principles that are especially useful in

the IRS today to guide our actions toward our strategic goals. These

principles are a link between our strategic goals and the tangible

changes we make and actions we take to achieve the goals.

• Understanding the customer's point of view and use this

understanding to prevent and solve problems and provide

quality service. This principle is especially important at this

point in IRS history, as it represents a significant shift in

emphasis. This shift, from an internal focus to a customer

focus, is one that many organizations undertook in the last 15

years and has powerful and pervasive implications.

• Enable managers to be accountable, with the requisite

knowledge, responsibility and authority to take action to

solve problems and achieve IRS goals. As the IRS has

grown and become more complex over the years, it has

sometimes been difficult for managers to fulfill this principle,

to the frustration of taxpayers, managers and employees

alike. Lack of adequate knowledge by managers of the

substance of a problem, or lack of authority to solve a

problem, fuels this frustration.

– Managers at all levels will be expected to

understand the substance of the matters for which

they are responsible, see that quality work is

performed and take action on solving problems

within their domain.

– Higher management must provide appropriate

guidance, structure, training, management support

and tools so that their subordinate managers can be

accountable and, then, expect them to rise to the

challenge.

– A much greater level of meaningful communication

between those responsible for policy and those

responsible for execution will also be essential.
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Overview

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• Align measures of performance at all levels. The lack of

alignment of performance measures between managers and

employees in recent years has been one of the sources of

IRS problems in service to taxpayers and has undermined

trust between employees and managers. Everyone in the

IRS shares responsibility for fulfilling the mission and making

progress toward the IRS' strategic goals. Every employee is

also evaluated against some standard of performance, which

in turn is the basis for awards and promotions. It is vital that

the standards used to measure and evaluate performance at

all levels be aligned so as to encourage and reward

performance that advances the IRS' strategic goals. It is

equally important to avoid measures or standards that reward

inappropriate actions or are subject to manipulation.

• Foster open, honest communication. It is not possible to

solve problems that one does not know about or refuses to

acknowledge. The more difficult or important the problem,

the more essential it is for those at higher levels to come to

grips with it as soon as possible. Open, honest

communication at all levels is one of the most powerful

principles of management for a large organization like the

IRS. Problems should be identified, acknowledged,

addressed and used as a learning tool for the future.

• Insist on total integrity. As an agency that succeeded

admirably in this purpose, the principle of integrity is not new

to the IRS. Now, this IRS must stress “total integrity." Total

integrity means each employee should perform all of his or

her duties in accord with the public interest and not with

regard to any personal interest. This concept includes, but is

broader than, avoiding traditional offenses of

corruption or political influence. It encompasses all matters

of public interest, such as taxpayer rights, use of government

resources, access to confidential information, internal and

external reporting, personnel practices, procurement and

travel activities, acceptance of gifts and conflicts of interest

while employed or afterwards.
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Overview

1-9

Business

Practices and

Strategies

The way the IRS interacts with taxpayers is defined by its business

practices, such as how filing is done, what notices are sent under

what circumstances, the way phones are answered, the way

collections of balances due are carried out and the way examinations

are conducted. These business practices have historically been

carried out by the IRS' functional disciplines, principally Examination,

Appeals, Collection, Criminal Investigation, Submissions Processing

and Customer Service (the latter being an amalgam of functions,

including examination and collection, which have in common that they

deal with the taxpayer by phone or mail).

Closely related to business practices are IRS strategies that guide

such practices, such as how returns are selected for examination,

what kinds of compliance issues to emphasize and how to encourage

electronic filing. Strategies are ways of deciding how best to use

limited resources to achieve defined goals.

Many IRS practices are codified in the Internal Revenue Manual and

in various rulings and regulations. Both strategies and practices are

also constrained by, and to a considerable degree determined by, the

established organization structure and the installed technology base,

the two principal instruments through which the IRS executes its

business practices and strategies. These interacting factors -

business practices, strategies, organization and technology - are so

tightly joined and interdependent that it is not possible to make

fundamental improvements in any of them without addressing all of

them in an integrated fashion. This is a key reason why past efforts

to adopt very promising improvements in compliance and customer

service practices have not been fully implemented, despite important

successes on a limited basis. Conversely, programs to improve

technology, while accomplishing important incremental improvements,

have not succeeded in replacing the old and inadequate base of

technology on which the IRS depends.

By revamping its business practices and strategy in ways that were

successful in the private and public sectors (and often on a limited

basis at the IRS), the IRS can make major strides toward all three

strategic goals. Full implementation of these changes is a major

undertaking and will take place over a period of years, depending

heavily on requisite changes in the organization structure and

technology.

As you will see, this paper illustrates the establishment of new senior

management teams, streamlined organizational structures and end-toend accountability so the IRS can make lasting improvements in

business processes and strategies. This will not happen overnight, but

revamping the organization structure is clearly the first start.
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Overview

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Organization and

Management

The previous IRS structure did not adequately support taxpayer

demands. The organization structure is the vehicle through which

decisions are made and actions carried out. The IRS structure as of

September 1, 1998, is shown on the next page in Figure 1-2. It was

built around districts and service centers, the basic organizational

units established many years ago and evolved over decades. There

were 33 districts and ten service centers. Each of these 43 units was

charged with administering the entire tax law for every kind of

taxpayer, large and small, in a defined geographical area.

Consequently, every taxpayer was serviced by both a service center

and a district, sometimes more than one. Within each of these units,

work was actually carried out by functional disciplines, principally

Examination, Appeals, Collection, Criminal Investigation, Submissions

Processing and Customer Service, the latter being an amalgam of

collections, examination and general tax law and account information

services provided by mail and telephone.

1998 IRS

Organizational

Structure

Service centers and districts each performed these functions for the

same taxpayer, the responsibility shifting depending on whether the

work was done by phone, mail or in person. For example, in the

collection area, there are three separate kinds of organizations spread

over all 43 operational units that use four separate computer systems

to collect taxes. Each of these three units and four systems collects

from every kind of taxpayer, from individuals to businesses.

Overseeing these operational units were four regions and a national

office, which also operates three large computing centers. There

were eight intermediate levels of staff and line management between

a front-line employee and the Deputy Commissioner, who is the only

manager besides the Commissioner who had responsibility over all

aspects of service to any particular taxpayer.

Modernized IRS

Organizational

Structure

This structure no longer enabled the IRS to achieve its strategic

goals. The cumbersome structure, matched by an inadequate

technology base, represented the principal obstacles to modernizing

IRS business practices and strategies and to delivering dramatic

improvements in service and productivity.

The IRS’ modernized structure is similar to one widely used in the

private sector: organized around customers’ needs, in this case

taxpayers. Just as many financial institutions have different divisions

that serve retail customers, small to medium businesses and large

multinational businesses, the taxpayer base falls naturally into similar

groups. This concept has been closely studied since it was first

proposed in early 1998. The top-level structure is shown on page 1-

12 in Figure 1-3.
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Figure 1-2: 1998 IRS Organization

10 Service Centers 33 Districts

Chief Financial

Officer

Commissioner

Deputy

Commissioner

Chief, Appeals

Chief

Counsel

Chief,

Operations

Chief Information

Officer

Chief Management

& Administration

NTEU

Taxpayer Advocate

A/C, Forms/

Submissions

A/C, Collections

Accounting

Budgeting

A/C,

Computer Centers

Dev elopment/Maint

To Regions

Technical Div isions

Western

Regiion

Miidstates

Regiion

Southeast

Regiion

Northeast

Regiion

Intermediate Management Staf s

National

Office

Diistriict Diistriict Etc.

Collllectiion

Diiv

Cust

Svc

Exam

Diiv

Criimiinall

Diiv

Taxpayer

Advocate

EP/EO

Diiv

Mgr

Staf

Branches

Walk-in

Sites

Rev

Ogde Phila Andove Dist. Counsel Kansas Memph Atlanta Br khvn Fr esn Austin Cinci

Serviice

Center

All taxpayers in

geographic area

All tax forms

(460)

A/C,

A/C,

A/C, Customer

A/C,

A/C, International

Dir, Compliance

Research

Ex c Ofcr,

Serv ice Center

A/C, Support

A/C, Procurement

Misc. Functions

Reg Counsel

Groups

Cust Sv c

Branches

Groups

ACS (Collect)

Branch(es)

Groups

Assistors Assistors

Branches

Tax pay er

Education

Rev Agents

Tax Auditors

Groups

Branches

Spec

Agents

Groups

Branches

Rev

Groups

All taxpayers in

geographic area,

with

Electronic

Filing

Submissions

Processing

Rev enue

Accounting

Info

Sy stems

To region

for budget

Corres

Phone

Cust Accts

Collection

Ex am

Matching

Criminal

Cust

Sv c

Compliance

Div

Chief

Communications

Legislativ e Af airs

Press

Chief Inspector

Tax Examiners

Assistors

Tax Examiners Organized into

branches, groups

and sections

Employee Population:

 Districts 47%

 Service Centers 30%

 Other 23%

 100%
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Commissioner /

Deputy Commissioner National Office Staff

HR, Finance,

Communications, Etc.

Chief Counsel

Stuart Brown

Appeals

Dan Black

Agency Wide

Information

Systems Services

Paul Cosgrave

National Taxpayer

Advocate

Val Oveson

Operating Divisions

Agency Wide Shared

Services

(Facilities, Personnel,

Procurement, Etc.)

William Boswell

Wage & Investment

John Dalrymple

Small Business/

Self-Employed

Joseph Kehoe

Large and Mid-Size

Business

Larry Langdon

Tax Exempt &

Government Entities

Evelyn Petschek

Criminal

Investigation

Mark Matthews

Shared Services Functional Units

Figure 1-3: Future IRS Organization
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The key operational units are four operating divisions, each charged

with full end-to-end responsibility for serving a set of taxpayers with

similar needs. These operating divisions are supported by two

service organizations: Information Systems and Agency Wide

Shared Services (providing common services such as facilities and

procurement). Appeals and the Taxpayer Advocate are nationwide

organizations that provide separate specialized independent channels

for taxpayers. Criminal Investigation will have sole responsibility for

investigation of criminal violations of the tax law and, for the first

time, will operate as a line unit within the IRS. Chief Counsel

provides tax advice, guidance and legislative services to all

components of the IRS. A smaller national office will assume an

overall role of setting broad policy, reviewing plans and goals of the

operating units and developing major improvement initiatives.

The needs and problems of the taxpayers served by each of these

operating divisions are very different, as shown below in Figure 1-4.

Figure 1-4: Taxpayer Characteristics 

Small Business &

Self-Employed

Wage &

Investment

Number of filers 88 million 45 million 210,000 2.4 million

Number of individual taxpayers

Total tax liability (billions)

Average tax liability per filer

Gross cash paid (billions)

Avg. # of transactions w/IRS per filer/year

Percent preparing own returns

Assets regulated

Average number of income tax forms

Large & Mid-Size

Business

Tax Exempt &

Government Entities

116 million

$380 $790 $466 $103

$4,310 $20,231 $2,231,274 $42,698

$46 $915 $712 $221

1-4 4-60 60+ 60+

59% 20%

$7 trillion

1.1 2.7

* Please note: numbers are estimated and subject to change

3.5 1.7
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The first of the four operating divisions will serve some 88 million

filers. This group represents 116 million individual taxpayers,

including those who file jointly, with wage and investment income

only, almost all of which is reported by third parties. Most of these

taxpayers deal with the IRS only once a year, when filing their return,

and most receive refunds. Collection problems are limited since they

pay only $46 billion in cash directly to the IRS, the balance of their

liability being paid through withholding by their employers.

Compliance issues are focused on a relatively limited range of issues,

concentrated on dependent exemptions, credits, filing status and

deductions. Roughly 60 percent of these taxpayers file their own

returns, depending directly on the IRS or volunteer groups for

education and assistance.

The second group of taxpayers includes fully or partially selfemployed individuals and small businesses. This includes about

45 million filers. This group has much more complex dealings with

the IRS than the wage and investment taxpayers. They have four to

60 transactions with the IRS per year and pay the IRS directly $915

billion in cash, representing nearly 44 percent of the total cash

collected by the IRS. This amount includes personal and corporate

income taxes, employment taxes, excise taxes and withholdings for

employees, each of which has filing and technical requirements.

Since business income and a range of taxes are involved, compliance

issues are also complex. The possibilities for errors, resulting in

collection and compliance problems, are greatest in this group

because of lack of withholding or information reporting and the large

amount of cash paid. The result is much more frequent dealings with

IRS compliance functions.

Large and mid-size businesses, comprising only about 210,000

filers, pay the IRS $712 billion in cash. This group includes

corporations with assets over $5 million. While collection issues are

rare, many complex issues such as tax law interpretation, accounting

and regulation, many with international dimensions, frequently arise.

At least 20 percent of these taxpayers interact with IRS compliance

functions each year, and the largest taxpayers deal with the IRS

continuously.

The tax-exempt and government entities sector, including pension

plans, exempt organizations and governmental entities, represents a

large economic sector with unique needs. Comprising 2.4 million

filers, this sector ranges from small local community organizations to

major universities and huge pension funds. Although generally paying

no income tax, this sector pays over $220 billion in cash in
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employment taxes and income tax withholdings and controls about

$6.7 trillion in assets. The IRS is charged with administering detailed

and complex provisions of law that are generally not intended to raise

money, but rather to ensure that these entities stay within the policy

guidelines that enable them to maintain their tax-exempt status.

Each operating division will have a tailored structure

Each of the operating divisions will be structured in a way to most

effectively meet the needs of the taxpayers they serve. The Small

Business and Self-Employed division, dealing more frequently with

taxpayers on more complex issues, will have a compliance field

organization, including both examination and collection groups,

reporting to a multi-functional manager. The Large and Mid-Size

Business division, which deals regularly with taxpayers on complex

issues, will be predominantly a field organization that will be

structured into five industry groups. The Tax Exempt and

Government Entities division will have support structures for each

type of taxpayer it will serve: exempt organizations, pension plans and

governmental entities, with common supporting elements.

The centralization of management information systems resources

under the Chief Information Officer and of other common services

under a shared services organization will provide for efficient and

standardized common services where appropriate.

The Chief Counsel will establish a senior legal executive as the

Division Counsel for each operating division to participate fully in the

plans and activities of the operating division management and to

provide high-quality legal advice and representation.

The Appeals organization will remain an independent channel for

taxpayers who have a dispute over a recommended enforcement

action.

The Taxpayer Advocate Service will be geographically distributed

to provide local contact with taxpayers, and also have a taxpayer

advocate in each operating division to identify systematic problems in

the division.

Following the recommendations of the year-long study by Judge

William Webster, Criminal Investigation (CI) will become a line

unit reporting directly to the Commissioner and Deputy

Commissioner. Operating as a nationwide line unit with 35 Special

Agent in Charge (SAIC) offices, CI will closely coordinate its

activities and strategies with the operating divisions and will be

supported by dedicated attorneys from Chief Counsel.
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The reduction in layers of management and the number of separate

major units will free up some personnel resources to increase support

for customer education and assistance programs. Similarly, the

reduction of separate operational units and the centralization of

management of key functions such as processing, customer

assistance and collection within each division, will ease

standardization of business practices and introduction of new

technology.

Modernized organization conforms to our guiding principles

As seen through our guiding principles, the benefits of this new

organization structure as compared to the current structure are

apparent.

The modernized organization is built around specific groups of

taxpayers with relatively similar needs. It is an inherently customerfocused organization, with each operating division responsible for

creating and executing business practices and strategies to meet

those needs.

The modernized organization sets forth clear, end-to-end

responsibility and authority for a top official, supported by a small topmanagement team, to serve a set of taxpayers. Equally important,

since the taxpayers served are reasonably homogeneous in their

needs, it will be possible and expected for the managers at all levels

to be knowledgeable in the substantive problems and issues that arise

in administering the tax law in their division.

In the modernized organization structure, much of our complex tax

law will not be relevant or important for the particular issues in each

division, allowing the managers to focus on that which is important for

their taxpayers. For example, the management of the Wage and

Investment Division, although responsible for serving 75 percent of all

taxpayers, will generally not have to be concerned with the 83

percent of the tax code that ordinarily does not apply to taxpayers for

which it is responsible. Therefore, we can expect managerial

accountability for understanding the problems in their area of

responsibility and for taking effective action to reach our strategic

goals. The Commissioner, Deputy Commissioners and the national

office staff, in turn, will be better able to perform their proper role of

helping the operating units set appropriate strategic goals and

overseeing their performance in meeting them, rather than engaging

in detailed operational issues.

This structure is specifically designed to facilitate direct and

meaningful two-way communication, both vertically and horizontally,

within the organization.
Working to Put Service First

Overview

1-17

The top management of the agency and of each major division will

consist of a set of teams, each of which will be linked to the next

level. For example, the agency top management will consist of the

Commissioner, Deputy Commissioners, key staff executives and the

heads of each major operating division, while top management of

each major operating division will consist of its head, deputy head and

its top four to six staff and line executives. The total number of

management layers from the front-line employee to the top official in

the operating unit will generally be about half the number found

today. In addition, many cross-unit councils and networks of

individuals with special expertise will be created (e.g., human

resources, finance, collections, examination, research, public affairs,

etc.), further helping an interchange of best practices.

Development of meaningful measures of performance that relate

directly to achieving our overall strategic goals is difficult in the

current structure because the operational units are too small and too

heterogeneous. For example, it is not meaningful to measure overall

compliance at the district level. On the other hand, the IRS as a

whole is too large and diverse for such overall measures to be useful

except as broad indicators. The modernized organization structure

will ease the development of strategic measures for each major

operating division that are both meaningful and aligned with each of

the three overall strategic goals. In addition, the clear separation in

the compliance functions of responsibility for compliance strategy,

including selection of returns for audit, from execution will advance

the use of appropriate operational measures.

Integrity in any organization is achieved primarily by clearly

articulating shared values and expectations, reinforced by consistent

leadership and decision-making, rather than by structure.

Nevertheless, the modernized structure will contribute to achieving

the principle of total integrity in two ways: by clarifying the role of

the national office as one of oversight rather than operations and by

establishing the Inspector General for Tax Administration as a totally

independent agency within the Treasury Department.

Clear management roles redefined to achieve goals

Closely related to the modernization of the organization structure is

defining the skills and experience required for senior executives. The

IRS has been a leader in the federal government in developing

executives. The demanding process by which executives are

selected and developed is very successful in producing leaders who

thoroughly understand the IRS organization and practices. The

drawback is that almost all executives have gained all their principal

experience within the IRS.
Working to Put Service First

Overview

1-18

There are many similarities between IRS activities and those of other

private and public sector organizations, and the IRS has much to gain

by synchronizing our best practices with the best of these

organizations. Doing this effectively requires some selective

recruiting of executives from outside the IRS. The current IRS

organization makes it difficult to recruit and to assimilate outside

executives and also makes it hard for IRS executives to fully learn

and draw upon best practices from the outside.

The modernized organization, modeled after well-established

structures and practices in other organizations, creates roles that are

more comparable to those on the outside. This increases the

possibility of selectively recruiting external executives with

appropriate skills and experience. This model also makes the IRS

more attractive to potential executive recruits. Their skills and

experience will complement the essential skills and experience of

executives developed internally, to the benefit of both. For example,

there has historically been a Commissioner and a Deputy

Commissioner at the top of the agency. We expect that there will be

a similar senior management team for each operating division, with

the possibility that one might be an executive recruited from the

outside and one drawn from the inside. Over the last eighteen

months, the IRS has selected virtually all top leaders of the new

organizations. These new appointees are named later in this paper in

each of their respective operating unit chapters.

As the new operating divisions are established, an important task will

be forming top management teams. These management teams must

include individuals with the broad range of experience and track

record needed to lead each unit in the challenging dual task of

managing current operations while modernizing business practices

and technology to achieve our new mission and strategic goals. A

modernized structure with redefined management roles is one of the

essential components needed to achieve our mission and strategic

goals. This new structure will make it possible to modernize our

business practices and our technology in order to deliver improved

service and higher productivity.

Information

Technology

For any information-intensive service-oriented enterprise, such as the

IRS, information technology has become, and will continue to be, a

key resource on which all organizational performance depends.

Hardly any large-scale business can sustain itself without effective,

efficient information systems. The IRS is no different, yet is faced

with some truly unique, world-class challenges that it must overcome

in order to fulfill its mission.
Working to Put Service First

Overview

1-19

Information technology currently in use

The IRS' installed inventory of information technology is the principal

tool that IRS front-line workers and managers use to deliver services

to taxpayers and to manage the organization. Nearly all IRS

employees depend on the IRS computer systems every day to do

their jobs, including over 70,000 individuals who use these systems to

provide direct service to taxpayers. In terms of resources, the cost

of IRS staff and information technology makes up nearly the entire

budget, with staff costs comprising 70 percent and information

technology making up 18 percent.

The IRS technology inventory is very large and diverse, comprising at

present approximately 147 mainframe computers from 19 vendors,

approximately 1,620 mid-range computers from 55 vendors, and over

100,000 individual computers. These computers run over 8,700

vendor-supplied software products and 82 million lines of IRSmaintained computer code. There are four major wide area data

networks and 1,182 local area networks. The IRS voice network

processes 182 million phone calls per year.

IRS core data systems are fundamentally deficient

While large in size, many of the IRS' information technology problems

are similar to those of other large organizations that have installed

technology piecemeal over a long period of time without a strong

focus on professional management of information technology

resources from the top. However, the IRS also has a very special

problem that is a serious, on-going risk and a fundamental barrier to

achieving its strategic goals.

The main system used to provide taxpayer account information was

developed in the 1960s. It consists of a series of very large tape files,

one set for individual taxpayers and another for business taxpayers.

This 40-year-old system simply does not provide employees and

taxpayers with even the basic information expected of a service

provider.

Since nearly all IRS systems and procedures require data on taxpayer

accounts, the entire IRS inventory of systems is built on a

fundamentally deficient foundation. Further complicating this matter,

the size of this inventory and databases is comparable to the largest in

the world.
Working to Put Service First

Overview

1-20

Given this situation, the IRS must replace nearly its entire inventory

of computer applications and convert its data on every taxpayer to

new systems. This must be done in conjunction with redesigned

business practices, while continuing to provide service to taxpayers

and to respond to ongoing tax law and other changes. This is a vast,

complex and risky undertaking that will require many years to

accomplish.

Modernizing IRS systems

It is important to understand the kind of process needed to modernize

IRS' systems. This process has sometimes been compared to

designing and building a new airliner or a huge office building. While

there are some similarities, this comparison fails to adequately convey

the nature of the IRS technology modernization program. A better

metaphor would be a project to redesign and rebuild a large, densely

populated city, such as New York City, complete with rebuilding all

the subways, utility lines, surface transportation and tall buildings, all

without delaying or injuring any residents or businesses and while

accommodating ongoing growth and changes in the daily pattern of

living and working. Such a program is far too big, dynamic and

complex to be implemented or even designed in detail all at once.

The approach that the IRS is taking to deal with this monumental task

is to establish an overall architecture for a set of new systems that

will accommodate all essential tax administration functions according

to modern standards of technology and financial management.

Achieving this new system architecture must then be accomplished

by defining a sequence of targeted and manageable size projects that

meet important and specific needs while, at the same time, working to

complete the overall architecture. During this process, the new and

old systems must co-exist and must exchange data accurately for an

extended period of time until data is gradually converted from old

systems to new ones.

Given this situation, the existing inventory of installed operational

systems, commonly called the "legacy systems," must not only be

maintained to reflect annual tax law and other business changes, but

it must also accommodate additional changes in order to bridge to and

from new technology systems and convert taxpayer data from old to

new formats. Therefore, the demands on the resources and

management of the legacy systems staff will increase, not decrease,

for the coming years as a result of technology modernization.

In 1997, the IRS published a "technology modernization blueprint,"

which described a detailed target architecture, including technical,

functional and data architecture. This blueprint was an important and

valuable step in the process of technology modernization.
Working to Put Service First

Overview

1-21

During 1999, a principal objective was to update the blueprint to

reflect the new plan for organization and business practices and,

given limited capacity, to decide on the major priorities for

implementation.

The speed of implementation of the technology modernization

blueprint is subject to three major limiting factors:

• Capacity to design and develop new business practices

and systems;

• Capacity of the organization to manage the process; and

• Capacity to make changes in the legacy systems needed

to support ongoing operations and temporary integration

with new systems.

Of the three factors, the capacity to manage the process and to

change the legacy environment are the most constraining. Hence,

planning of the technology modernization with the ongoing

management of the existing environment is critical.

Organizing to manage information technology

Because of the close inter-relationships, programs to modernize IRS

technology both depend on and enable modernization of the

organization and business practices. With respect to the organization,

there are two important dimensions: how the IRS is organized to

manage information technology itself, and how the operational units

that manage IRS programs work with information technology to

improve business practices and achieve our strategic goals.

Improvements in both dimensions are essential in order for

modernizing IRS technology to succeed.

Improvements in information technology organization are essential to

achieve professional, high-quality results in resource use and in

managing technology programs, including modernization of core

business systems and management of the legacy systems.
Working to Put Service First

Overview

1-22

Improvements in IRS business organization are essential to create

business owners who have the knowledge, authority and commitment

to develop improved and consistent business practices. This will also

enable them to work in partnership with the information technology

organization to develop and deploy appropriate technology that

supports modernized business practices.

Discussed in greater detail later in this paper, the management of

essentially all information systems resources was centralized under

the Chief Information Officer in October 1998. This was a first step

toward creating a professionally managed information technology

organization that will provide high-quality, efficient service to all IRS

operating units, treating the IRS operating units as customers.

The establishment of IRS operating divisions, as described throughout

this document, will enable the appropriate business owner to revamp

business practices and work with the information technology

organization to modernize supporting technology.

Performance

Measures

The techniques that an organization uses to measure its performance

go to the heart of what the organization really values. In the IRS, as

elsewhere, what the organization values is communicated through a

variety of means, both explicit and implicit, including what behavior is

rewarded, ignored or punished. Quantitative measures, being

apparently precise and objective, are an extremely powerful device

with great influence on behavior.

The importance of enforcement revenue as a measure of IRS

performance created a dilemma and a controversy that persisted for

years. The dilemma was created by the fact that each specific

enforcement action must be guided by law as applied to the specific

facts and circumstances of the case and, therefore, it has long been

considered inappropriate to give "quotas" or quantitative enforcement

goals to an individual enforcement officer.

In the 1990s, an attempt was made to increase the emphasis on

enforcement revenue by establishing a quantitative performance

index to rank the performance of the IRS district offices, an index in

which enforcement statistics comprised about 70 percent of the

weight of the index. This index was a very important factor in

evaluating the performance of the district management. However, by

law and regulation, these same measurements were not supposed to

be used to evaluate front-line employees. As is now known, this

approach resulted in a misalignment of measures for managers and

employees, in turn causing a range of serious problems including

widespread violations of the regulations on use of statistics.
Working to Put Service First

Overview

1-23

Establishing a balanced measurement system

It is essential to establish appropriate quantitative performance

measures for the IRS and its major component operations. This is

required by the Government Performance and Results Act and is

essential to the proper operation of any large organization. For this

reason, an integral part of the overall IRS modernization program is

the establishment of balanced performance measures that support

and reinforce achievement for the IRS' restated mission and overall

strategic goals.

A critical aspect of establishing an appropriate balanced

measurement system is establishing the measurements based on what

we need and want to measure in order to achieve our strategic goals

and mission, rather than simply what is most easily measured. This

balanced measurement system must define quantities that are

relevant to each of the strategic goals and that indicate, in total,

progress on all three goals. As in most good organizations, the

process of measurement can be constantly refined, but the concept of

what is being measured remains stable.

Also critical to the measurement system is following the guiding

principle that measures must be aligned at all levels, from the top to

the front-line employee. In developing measures for each

organizational level, it is important that each component of the

balanced measurement system reflect responsibility at that

organizational level. At the top of the organization, management has

control over strategies and allocation of resources. At the mid-levels,

managers have less control over these variables but do have control

over the effectiveness of training, coaching and guidance of

employees. At the individual level, each employee has control over

his or her own individual work and self-development.

An overview of the balanced measures system being implemented at

the IRS is shown on the next page in Figure 1-5. As seen in the

matrix, there will be quantitative measurements keyed to each of the

three strategic goals at both the strategic level and the operational

level. In general, quantitative measures will not be used at the

individual employee level.
Working to Put Service First

Overview

1-24

Goals

Service to each

Taxpayer

• Make filing easier

• Provide first quality

service to each taxpayer

needing help with his or

her return or account

• Provide prompt,

professional, helpful

treatment to taxpayers in

cases where additional

taxes may be due

Service to all Taxpayers

• Increase fairness of

compliance

• Increases overall

compliance

Productivity through a

quality work environment

• Increase employee job

satisfaction

• Hold agency employment

stable while economy

grows and service

improves

Strategic Management Level

• Overall customer satisfaction

with service/treatment

• Customer dissatisfaction

(complaints)

• Customer satisfaction

compared to other

organizations

• Overall compliance

percentage

• Increase in compliance

• Uniformity of compliance

• Allocation of compliance

resources-dollars vs.

resources

• Overall employee satisfaction

with working environment

• Overall workload vs. size of

workforce

Operational

Management

• Satisfaction with

particular service

• Dissatisfaction with

particular service

• Quality of particular

cases/events

(EQMS/CQMS)

• Quantity of particular

cases/events

• Employee satisfaction

with particular working

environment

Front-Line Employees

• Service to taxpayers

and treatment of

taxpayers

incorporated in critical

elements

• Case quality and time

management

incorporated in critical

elements

• Now: none

• Future: Teamwork

contributes to

improving work

environment (TQO)

• MEASURES THAT MEASURE WHAT WE REALLY WANT.

• BALANCED MEASURES DERIVED FROM THREE CORPORATE GOALS.

• MEASURES ALIGNED AT ALL ORGANIZATIONAL LEVELS.

Figure 1-5: Measuring Performance at the IRS
Working to Put Service First

Overview

1-25

Progress Update

Much work remains to be done on the measurement process. The

IRS completed balanced measures development for the Examination,

Collection and three Customer Service product lines in calendar year

(CY) 1998. In CY 1999, additional balanced measures were

approved for: Tax Exempt and Government Entities, Large and MidSize Business, Appeals, Taxpayer Advocate Service, Research,

Statistics of Income and additional Customer Service product lines.

These measures are undergoing final design and implementation.

Other measures teams underway in CY 1999 that are expected to

have approved balanced measures in early CY 2000 include:

Information Systems, Criminal Investigation, Counsel, Submission

Processing and Agency Wide Shared Services.

Strategic measures for all of the operating units and for the IRS as a

whole must be defined and implemented. In part, the strategic

measures depend on assembling data on overall compliance, which

will take longer to assemble.

Most importantly, the IRS must learn how to use balanced measures

as a tool to achieve a high level of performance on all three of our

strategic goals.

Planning,

Priorities and

Risks

The IRS is undertaking massive change to achieve a restated mission

and strategic goals that closely follow the expectations of Congress

and the American people. These changes are comprehensive and are

made up of business practices and strategies, organization and

management, information technology and performance measures.

This process, referred to as "modernization," represents a

fundamental redesign of the way the agency works, a challenging

process for any organization. These changes must take place while

current, large-scale operations continue uninterrupted, including

ongoing changes to implement new tax laws.
Working to Put Service First

Overview

1-26

Risks

The amount of change required for modernization, coupled with

current complex operations, means that there is significant risk that

unanticipated problems will arise, particular plans or milestones may

have to be changed, and operational errors will occur. When these

events occur, time and money will be needed to address them.

Given the current situation at the IRS, there is no low-risk plan. Any

attempt to retain the status quo or make modest incremental changes

would increase the gap between the IRS' ability to deliver required

services and what the public and Congress expect, while imposing

increasing direct and indirect costs on the public for administering the

tax system. In addition, the information technology on which the IRS

critically depends is fragile and deficient and cannot be fixed short of

a near total replacement. Yet, success in modernization of

technology can only be achieved with the appropriate management

and organization structure and a program to modernize business

practices.

Although there are inherent risks in the modernization process,

knowing that they exist means that they can be managed and

mitigated so that no setback is fatal, and we can be reasonably

confident of ultimate success. In this regard, two items are critical:

• Setting overall priorities in light of the limited

organizational capacity; and

• Establishing effective management over each major

change process.

Organizational capacity and priorities

The IRS, like any organization, has limited capacity to manage and

absorb change. These limitations arise from such things as the

capacity of the top managers to understand, plan and make correct

decisions about the many complex issues that arise; the capacity of

managers and employees throughout the organization to learn many

new ways of doing business, new practices and technology;

limitations on the number of subject-matter experts in highly

specialized areas, ranging from tax law to technology; time required

to consult outside and inside stakeholders; and time required to

resolve disagreements. Because the IRS is a public agency that

provides an essential service, capacity to make change rapidly is

further limited by the need to ensure that essential services, such as

the filing season, are never jeopardized and the financial integrity of

the revenue stream is maintained. The inherent limitations of

organizational capacity and the need to manage risk make it essential

to set overall priorities in light of the overall goals
Working to Put Service First

Overview

1-27

Even before the redefined mission and modernization program were

undertaken, the IRS organizational capacity was stressed to the

maximum in an attempt to respond to thousands of individual

recommendations from studies and proposals, as well as legislative

mandates and tax law changes. This reactive process used up all

available capacity without addressing the fundamental problems.

In order to deal with this issue, a set of programs was established to

manage activities and priorities in an orderly way in each major area

of change with an overall sequence that attempts to maximize the use

of available organizational capacity, while gradually expanding it.

This sequence aims at delivering on essential near-term operational

requirements and improvements in service delivery while carefully

planning and implementing longer-term changes.

Risks and schedules

An essential aspect of managing risk in this change program is

properly managing and communicating the schedules and dates for

accomplishing particular change events.

In this huge change process, there will be hundreds of specific

changes implemented on particular dates. For example, an

organizational change occurred when customer service sites began

reporting to a single customer service field organization headquarters

instead of a district or service center; a new business system and

process implementation occurred when the centralized call-routing

software began to route incoming telephone calls to call sites around

the country; and a technology change occurred when the mainframe

computer programs for the Andover Service Center began executing

on a consolidated computer in Martinsburg rather than on local

computers in Andover.

Every change of this kind carries with it risk, and the decision as to

when and how to proceed must be carefully evaluated and

reevaluated in light of all information available at each point in time.

Every specific project that composes the overall change program

should be recognized as a learning experience in which more detailed

and complete information becomes available over time. Proper risk

management depends on constantly using this information to set and

reset schedules. Failure to manage risks and schedules in this flexible

way enormously increases the likelihood of failures and frequently

ends up delaying, rather than accelerating, actual progress.

The role of high-level planning and the presentation of overall

milestones, such as those presented in this paper, are to allow for the

setting of priorities and the initiation of more detailed planning and

implementation projects.
Working to Put Service First

Overview

1-28

Given the nature of this change process, it is extremely important for

management to keep all key stakeholders informed on a regular basis

and to explain the intent of presenting various milestones and

schedules. It is important for stakeholders to understand the nature

of this process, and to evaluate the program based on overall

progress towards the strategic goals, rather than placing undue

significance on the date on which particular events occur.

Management process

Since the IRS is undergoing extensive change in each of the

dimensions described above while current operations continue

uninterrupted, an appropriate management process must be

established. Each of the dimensions of change affects various parts

of the existing operations and requires both high-level leadership and

decision making to address major issues and intensive daily

management of massive levels of detail and analysis. Finally, each

dimension of change requires special expertise and knowledge of best

practices used in other private and public sector organizations around

the country.

To manage these changes, the IRS established a tailored

management process for each area of change. In each change area,

an executive steering committee acts as the top-level governing body.

The executive steering committee consists of the Commissioner and

the senior executives responsible for all the major areas affected by

the change. In addition, the Assistant Secretary of the Treasury for

Management and the President of the NTEU are members of each

committee.

The purpose of these executive steering committees is to provide

consistent direction and prompt decision making on all major issues

that affect progress in the change areas. Under the general direction

of the executive steering committee, there is a program office headed

by a senior executive that manages the on-going program and also

provides staff support to the committee. The program office

maintains plans, performs analyses and provides detailed

management and guidance to whatever organizational components

within the IRS are necessary for implementation of changes. In most

of the change areas, organizational capacity is augmented and

knowledge of best practices is provided by an experienced lead

contractor.

Since the Commissioner, the two Deputy Commissioners, Chief

Information Officer and other top executives are common members

of these executive steering committees and also supervise all ongoing

operations, high-level communications and coordination are

facilitated.
Working to Put Service First

Overview

1-29

An essential aspect of this change program is very active, ongoing,

two-way communications within the organization at all levels and with

outside stakeholders, including Congress, Treasury and numerous

outside groups with an interest in IRS matters. In each change

program, an important function of the program office and of the top

executives is developing communications materials and personally

meeting with many individuals and groups. This activity is

coordinated through an overall modernization communications

program managed by the Chief, Communications and Liaison.
Working to Put Service First

Wage and Investment

2-1

Chapter 2 Wage and Investment

Taxpayer

Characteristics

The new Wage and Investment Division will serve

approximately 116 million customers, including those who file

jointly, accounting for 88 million returns with wage and

investment income only. These are taxpayers filing a 1040 tax

return with no accompanying schedules C, E, F or 2106 and no

international activity. Almost all of the income for this group of

taxpayers is reported by third parties, and the vast majority of

taxes are collected through third party withholding. Most of

these taxpayers deal with the IRS only once a year and the

majority of these taxpayers receive refunds.

Due to cooperation from taxpayers as well as third party

reporting of information and withholding, the W&I taxpayers

are highly compliant. When compliance issues do arise, they

are often the result of a taxpayer’s confusion regarding the tax

law or a personal event outside their control, and they are often

detected through technology-based matching programs.

The bulk of W&I taxpayers (roughly 85%) earn under $50,000

per year with 28% of them earning less than $10,000 per year.

Only 2% earn greater than $100,000. Over half of the 116

million W&I taxpayers prepare their own tax returns without

assistance from a paid preparer. This presents a great

opportunity for the IRS to provide top quality service to a large

number of taxpayers who otherwise would not receive

assistance.

Goals,

Principles and

Objectives

Redesign efforts have been focused on building a new

organization structure that provides more education and

assistance to W&I customers and enables them to understand

and satisfy their tax responsibilities. The most fundamental

change is the customer segment based structure resulting in four

operating divisions. This new structure will provide end-to-end

accountability for managers and employees, and allow

employees to become very knowledgeable of the unique needs

and characteristics of the specific taxpayers they serve.

Over the last year, IRS employees from around the country have

worked together on teams to finalize the design of the new

Wage and Investment Division. The Phase IIA teams, took the

initial design concept laid out in Phase I and designed a

preliminary organization structure all the way to the front line.

For Phase IIB, the teams focused on:
Working to Put Service First

Wage and Investment

2-2

• Defining the W&I Headquarters’ roles and

responsibilities, organization structure and staffing

• Developing service delivery models and staffing

required for providing taxpayer assistance through

new geographically dispersed field offices

• Determining the best channels through which to

provide compliance-related support and activities

• Creating a new organization structure with fewer

layers of management for the Customer Accounts

Services; and

• Finalizing the geographic footprint for the new

Stakeholder, Partnership, Education and

Communication (SPEC) organization.

As we move into Phase III, most of the design work should be

complete and the teams will focus primarily on implementation.

The teams will finalize the staffing for the entire W&I

organization and start building the new organization through

hiring new staff, realigning existing staff, preparing facilities and

shifting responsibilities from today’s structure to the new

operating division.

Once the new operating division is in place, W&I will begin

longer-term initiatives to improve business processes to offer

tailored products/services, build new supporting technology and

develop methods for compliance activities that are more

effective and less burdensome to taxpayers who want to

voluntarily comply.

Short Term

Impacts –

Organizational

Change

In the short term, most of the impacts will be seen and felt by the

IRS employees. For the remainder of fiscal year 2000, there will

be significant reorganization of staff and shifting roles and

responsibilities. For example, new job opportunities will

become available in the “pre-filing” organization, and roles and

responsibilities of the current National Office will be

decentralized into the operating divisions.

Long Term

Impacts –

Taxpayer

Interactions

The ultimate goal of the reorganization is to improve service to

the taxpayers. For W&I, with a largely compliant taxpayer base,

this means placing greater emphasis on proactive education and

assistance. W&I will analyze taxpayer needs so that IRS better

understands how to help them comply.
Working to Put Service First

Wage and Investment

2-3

Much of the design effort has been focused on this ultimate goal

but will not be evidenced by taxpayers for a few years. For

example, the new Field Assistance structure will provide new

channels for taxpayers to access the IRS, such as kiosks in

shopping malls and mobile van units to reach remote areas.

These efforts have relatively long lead times, and are currently

targeted to be implemented in time for the 2002 filing season.

Organizational

Structure

As illustrated in Figure 2-1, the Wage & Investment (W&I)

Division comprises three operating units - Communications,

Assistance, Research and Education (CARE) “pre-filing”;

Customer Account Services (CAS) “filing”; Compliance

“post-filing” and the headquarters.

• CARE’s primary role is education. Prior to a

taxpayer filing, the IRS must provide easily

understood translations of the tax code, answer basic

tax law questions and provide taxpayer service

through a variety of vehicles including: partnerships

with stakeholders, face-to-face interactions and

written correspondence.

• During filing, CAS processes returns submitted by

roughly 116 million taxpayers and validates that the

proper amount has been paid.

• A much smaller number of taxpayers may at some

point have a delinquent payment or an examination

issue and be contacted by the Compliance staff.
Working to Put Service First

Wage and Investment

2-4

Figure 2-1: Wage & Investment Division

Finance

Examination

Strategy &

Selection Unit

Compliance

Services

Human

Resources

Submission

Processing

Business

Systems

Planning

Media &

Publications

Overall Org Chart ver38. ppt

Updated 3/29/00

EEO and

Diversity Electronic Tax

Administration

Other

Functions

• Appeals

• Information Systems

• Shared Services

• Taxpayer Advocate

• Counsel

5 19 180

Field Assistance Accounts

Management

• 7 Areas (104 FTE)

• 72 SPEC Offices (697 FTE)

• 7 Areas (56 FTE)

• 34 Territories (102 FTE)

• 225 Groups (369 FTE)

• 676 Sites (2,522 FTE)

Communications

42

Customer Account

Services (CAS)

17,980 + TBD

895 3,069

10,800 + TBD 4,286 7,167 + TBD

Program Mgmt &

Finance

Research

Group

1

Area 1

Research

Group

6

Area 7 Area 7

Program Mgmt

7

TBD

• 11 Locations

Remote Compliance

Atlanta Service Center

Remote Compliance

Andover Service Center

Remote Compliance

Austin Service Center

Remote Compliance

Fresno Service Center

Remote Compliance

Kansas Service Center

Notice Clarity

Andover Service Center Baltimore Call Site

Common Service Manager

Kansas City Service Center

Common Service Manager

Fresno Service Center

Common Service Manager

Austin Service Center

Common Service Manager

Atlanta Service Center

Common Service Manager

Joint Operations

Center

TBD

37

4

Stakeholder

Partnership,

Education and

Communications

(SPEC)

961

Communications, Assistance,

Research and Education

(CARE)

4,967

3

Compliance

4,365

4

Program Mgmt

8

Program Mgmt

18

Program Mgmt

TBD

Program Mgmt

TBD

• 5 Centers

Boston Call Site

Jacksonville Call Site

Dallas Call Site

Seattle Call Site

St. Louis Call Site

Accounts Management

Andover Service Center

Accounts Management

Atlanta Service Center

Accounts Management

Austin Service Center

Accounts Management

Fresno Service Center

Accounts Management

Kansas City Service Center

Notes:

(1) All headcount numbers are best estimates of Full-Time Equivalent (FTE) work

(2) ETA will be divided into operating divisions once product is mature

Submission Processing

Andover Service Center

Submission Processing

Atlanta Service Center

Submission Processing

Austin Service Center

Submission Processing

Fresno Service Center

Submission Processing

Kansas City Service Center

Operating Division Headquarters

Joint Operations

Center OD Rep*

TBD

Strategy & Finance

159

Collection

Strategy

19 21

Brookhaven Service Center

Common Service Manager

Philadelphia Service Center

Common Service Manager

Memphis Service Center

Common Service Manager

Area 1

Product and

Partnership

Development

Submission Processing

Brookhaven Service Center

Submission Processing

Philadelphia Service Center

Submission Processing

Memphis Service Center

67

*Reporting to be determined

Tax Forms and

Publications

Multimedia

117

740

136

Field

Operations

815

2 2 2

29

• HQ Research (6 FTE)

• Field Research (86 FTE)

• Finance (17 FTE)

• S&F Other (50 FTE)

Program & Process

Assurance

9

14

Program Mgmt

8

13

27,767+ TBD

13

W&I Commissioner

and

Deputy Commissioner

Program & Process

Assurance

9

Program Mgmt13

Program & Process

Assurance

9

Finance

22

• 6 Toll Free Call Sites **

•**Will report to Service Centers

Dallas ACS Site

• 1 ACS Sites **

**Will report to Service Centers

• 5 Centers
Working to Put Service First

Wage & Investment

2-5

Senior

Management

Team

The concept of a W&I senior management team, focused on

providing overall strategic and operational direction to service its

approximately 116 million customers, is a profound change in the

way the IRS views its relationship with its largest customer base.

In the W&I Division, senior managers will focus on the mission of

serving the W&I customer segment. Focused solely on its mission

of providing world class service to this customer segment, the

members of the senior management team will be much more

interdependent on the success of one another. For example,

changes in compliance strategy will be viewed holistically across

all W&I units to determine how the changes impact both internal

operations and service to the customer. Strategic direction as well

as operational decisions will be made in the context of service to

the customer base.

Named Commissioner in December 1999, John Dalrymple brings

25 years of experience to the position. Dalrymple was named the

IRS Chief Operations Officer in August 1998 after serving two

years as Deputy Chief Operations Officer. He began his career

with the IRS as a revenue officer in 1975 and has held

management positions in several IRS district offices. John Duder,

former President of Customer Solutions Inc, was named as Deputy

Commissioner in March. He brings unique leadership and

business skills and 13+ years of private sector experience with

AT&T. John Dalrymple’s internal expertise combined with John

Duder’s external perspective and experience will provide W&I

with very strong leadership.

The new W&I Commissioner and Deputy Commissioner are now

in the process of interviewing for key executive management

positions throughout the operating division. Some of the positions

have been selected and announced. They are:

• Tyrone B. Ayers – Director, Communications,

Assistance, Research and Education (CARE)

• John R. (Ron) Watson – Director, Customer Account

Services (CAS)

• A. Jane Warriner – Director, Compliance

• Mary E. Davis – Director, Strategy and Finance

• Robert E. Barr – Director, Electronic Tax

Administration/ E-Business Executive Officer

• Mark Pursley – Director, Accounts Management

• Sherrill Fields – Director, Diversified Electronic Filing

• Jo Ann H. Blank – Director, Individual Electronic Filing

Operations

• Stephen H. Holden – Director, ETA Modernization

Executive

• Raymona Stickell – Director, Multimedia Production
Working to Put Service First

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2-6

• Sheldon Schwartz – Director, Tax Forms and

Publications

• Jimmy Smith – Director, Submission Processing

• Carol Stender-Larkin – Submission Processing Field

Director Andover

• Terry O’Brien – Submission Processing Field Director

Atlanta

• Estelle R. Tunley – Submission Processing Field

Director Austin

• James C. Gaither – Submission Processing Field

Director Brookhaven

• Jerald H. Heschel II – Submission Processing Field

Director Memphis

• Christopher J. Egger – Submission Processing Field

Director Philadelphia

• Margaret J. Connell – Accounts Management Field

Director Andover

• Ronda Hon - Accounts Management Field Director

Fresno

• Gwen A. Krauss – Compliance Field Director Atlanta

• James M. Grimes – Compliance Field Director Fresno

• Monte Simonsen – Compliance Field Director Kansas

City

• William Zachery – Director, Exam Selection and

Strategy Unit

One of the driving forces that will facilitate the close relationship

between senior-level managers is the use of a balanced

measurement system. Senior managers will be measured on their

ability to work closely together to ensure the success of the entire

division. W&I will be fully supported by internal partners:

Appeals, Counsel, Criminal Investigations, Information Systems,

Shared Services and the Taxpayer Advocate. Senior

representatives from these organizations will also be part of the

W&I senior management team.

Cooperation with and full solicitation of the partners’ input will be

accomplished through geographic and national councils that will

cross both functional and operating division boundaries.
Working to Put Service First

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2-7

W&I

Headquarters

The W&I Headquarters, located in Atlanta, will provide overall

strategic and operational direction to the W&I operating units

while providing internal support processes that can best be

provided at the operating division headquarters level. The

headquarters of W&I will provide only those services that

cannot be provided practically at lower levels of the

organization. This philosophy largely reflects the IRS

organizational direction of moving accountability closer to the

front-line organizations.

The critical operations of W&I Headquarters include the

following staff functions: Strategy and Finance, Equal

Employment Opportunity and Diversity, Human Resources,

Communications and Business Systems Planning and Electronic

Tax Administration.
Working to Put Service First

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2-8

Figure 2-2: Wage & Investment Headquarters

5

EEO and Diversity

42

Communications

Labor and Employee

Relations

Recruiting & Career

Management

Communications and Planning & Analysis

Liaison (Headquarters)

159

Strategy & Finance

Communications and

Liaison (Field)

180

Electronic Tax

Administration

W&I Commissioner

Deputy Commissioner

 37

Business Systems

Planning

Project Dev. &

Testing &

Implementation

19

Human Resources

Strategic Planning and

Policy

Program Analysis &

Review

Program Evaluation &

Risk Analysis

Research

Performance Excellence

Finance
Working to Put Service First

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2-9

Strategy and Finance

The Strategy and Finance organization provides W&I with

division-wide management of strategic planning, policy

development and research. Strategy and Finance will focus on

improving service to customers through the application of

strategic and tactical research aimed at identifying customer

needs and developing programs to address these needs. This

function will incorporate feedback from internal and external

customers, employees and business units. In this role, this

function sets the strategic direction and develops goals for all

W&I business units. This will require demographic research and

constant analysis of trends in customer characteristics and needs.

This research function will have 10 locations organized into 5

groups. Additionally, this group is responsible for:

• Providing staff support to the W&I Executive

Planning Council and others dealing with strategic

leadership.

• Managing the program analysis and review process

to assess and monitor division performance against

plan expectations.

• Preparing the W&I balanced scorecard and

developing systems to capture measures data.

• Managing the program evaluation and risk analysis

processes. Evaluating proposed programs for their

investment potential in achieving division goals.

Assessing risks with ongoing programs.

• Providing guidance to management on quality

improvement methods.

• Overseeing the process for maintaining Total

Quality Organization certification.

• Providing support to the National Partnership

Council and represents the office in coordinating

NTEU activities.

• Conducting demographic and sociological research.

• Conducting sub-segmentation at national and local

levels.

• Coordinating and collaborate with internal and

external customers.

• Assessing of the “voice of the customer”.
Working to Put Service First

Wage & Investment

2-10

• Formulating W&I’s budget submission.

• Consulting with the W&I Human Resources office,

securing funding for the overall W&I Training Plan.

• Managing the resource distribution process

including the development of a financial plan that

supports the program priorities of W&I.

• Managing the financial resources for W&I including

tracking resource usage against targets.

• Establishing financial policies, procedures and

controls for W&I in conjunction with overall

Service guidelines and procedures.

• Providing to W&I management the necessary

financial information that reflects the status of

budget execution.

• Managing the overall management

controls/accountability program in W&I. Ensures

necessary coordination and support for

internal/external financial audits.

• Conducting division-wide financial review and

develops recommendations with operating units to

achieve a balanced financial plan.

• Providing advice and assistance to operating units in

developing and executing sound business cases.

EEO and Diversity

W&I will have a dedicated staff that establishes and implements

EEO policies, procedures and programs for the Division that

conform with overall service guidelines. This staff will also

perform various tasks including:

• Advising the W&I Commissioner and other W&I

management officials on EEO and Diversity issues,

including complaint resolution.

• Establishing and implementing EEO policies,

procedures, programs and recruitment strategies for

the division in conformance with overall Service

guidelines.

• Overseeing the W&I EEO and Diversity Advisory

Committee.

• Providing training to W&I staff on EEO-related

matters and issues.

• Preparing reports and conducting analyses of key

workforce-related trends or actions to identify any

practices, regulations and procedures that may

perpetuate discrimination.
Working to Put Service First

Wage & Investment

2-11

• Establishing division policy on reasonable

accommodation, sexual harassment and other EEOrelated issues, and ensuring that it is appropriately

implemented.

• Coordinating special emphasis activities relating to

women and minorities.

• Representing W&I on the EEO and Diversity

Council.

• Developing and monitoring the W&I affirmative

employment plan in accordance with service wide

policy and the management directives of the Equal

Employment Opportunity Commission.

• Developing and monitoring EEO service level

agreements (SLAs) with Agency Wide Shared

Services.

• Developing W&I’s EEO Annual Business Plan.

• Conducting, on a timely basis, necessary inquiries

into alleged discrimination and recommending

remedial relief in an expeditious manner.

• Developing a substantial relationship with the

recognized employee groups as major stakeholders

in division Diversity initiatives and special emphasis

programs.

Communications and Liaison

The Communications and Liaison function, located at the W&I

Headquarters, is the main point of contact for relaying W&Irelated information to both internal and external stakeholders.

Among the C&L group's main responsibilities within W&I are

overseeing the Division's communications strategy, including

marketing and media relations and coordinating related activities

with the National Communications and Liaison office. The

group will also provide information and analyses to support

hearings, inquiries and budget formulation activities. In

addition, this group will serve as the central point of contact on

all W&I matters related to Fed-State and Disclosure.
Working to Put Service First

Wage & Investment

2-12

Business Systems Planning

The Business Systems Planning group, also part of W&I

Headquarters, gathers and articulates business needs for

Information Technology (IT) projects, applications and legacy

systems. Responsibilities include assessing IT solutions to

address gaps in business processes, creating business cases for

new IT projects and evaluating requests for information

services. This group will create a close partnership with the

Division Information Officer (DIO) who reports to the Chief

Information Officer. Through this partnership, the W&I needs

and services will be coordinated with all appropriate IT staff.

Some related tasks include:

• Planning and analyzing business needs for new

projects. Develops business cases. Prioritizes

business needs and process changes.

• Formulating Information Technology plans and

budgets. Manages and/or monitors funds for

business systems modernization projects.

• Developing and testing projects. Oversees business

involvement in systems testing. Establishes

information systems performance measures.

• Implementing and overseeing modernization

projects. Develops and monitors the

Implementation Action Plan. Evaluates the results

of the project on W&I operations.

• Providing support to senior leadership by providing

business expertise to complement Information

System’s knowledge of technology change.

• Developing and negotiating Service Level

Agreements (SLA) with support functions. Assesses

the effectiveness of support received.

Human Resources

The W&I Human Resources staff will ensure continuous

performance improvement and individual development through

competency and skill building, conducting needs assessments

and prioritized resource allocation. The staff will develop

education strategies and design curriculum that focuses on the

development of W&I key competencies. The primary

responsibility of this staff is to ensure that W&I personnel are

technically competent to meet customer needs. Some of the

support activities required include:
Working to Put Service First

Wage & Investment

2-13

• Supporting the Division Commissioner’s partnership

endeavors with the National Treasury Employees

Union (NTEU) throughout W&I and serving on the

W&I Partnership Council.

• Serving as the W&I representative on the Human

Resources Policy Council.

• Developing and implementing policies, guidelines

and procedures for the division within parameters

set by National Strategic Human Resources.

• Working in concert with the W&I operating units,

designing and developing an integrated divisionwide training plan.

• Proposing and allocating the training budget to W&I

operating units.

• Interfacing with the successor to the Joint

Requirements and Resources Oversight Board

(JRROB).

• Working in concert with all W&I business units,

developing and overseeing an integrated human

resources strategy including forecasts of future

needs.

• Providing workforce planning and strategic

recruitment support to the W&I operating units.

• Providing Labor Relations advice and negotiation

support for division-wide initiatives.

• Overseeing position management and career

management activity support within W&I.

• Securing and overseeing organizational

development support for W&I operating units.

• Coordinating special activities such as Combined

Federal Campaign and Savings Bond Campaign.

• Administering annual training and certification

requirements, e.g. UNAX, P-1-20, Section 1203, etc.

Monitoring the Office of Government Ethics

financial reporting requirements for the operating

units.

• Overseeing and managing the performance

management process including monitoring of

appraisals and awards within W&I.

• Overseeing the Employee Satisfaction Survey

process for the W&I Division.

Electronic Tax Administration

The mission of Electronic Tax Administration (ETA) is to

revolutionize how taxpayers transact and communicate with the

IRS. ETA provides the mechanisms for taxpayers, practitioners,
Working to Put Service First

Wage & Investment

2-14

payers and other information exchange partners to file returns,

make payments, exchange correspondence and retrieve forms,

publications and other information from the IRS electronically

with minimum reliance on paper.

Other ETA responsibilities include:

• Overseeing existing ETA programs;

• Supporting ETA information technology development

efforts;

• Improving taxpayer awareness of ETA products and

services through marketing campaigns;

• Administering the Electronic Tax Administration

Advisory Committee and the E-Business Steering

Committee; and

• Establishing and supporting national- and field-based

Account Managers who will service the needs of

Electronic Return Originators (EROs), financial

institutions, large and small employers and payroll

service providers who distribute ETA products and

services to taxpayers.

Process-Based

Organizational

Segments

The three major functional organizations (CARE, CAS and

Compliance) are process-based; that is, they have organizational

structures that manage the full life cycle of interaction with

W&I customers. This provides full accountability for a discrete

taxpayer segment with unique characteristics and needs.

Communications

Assistance,

Research and

Education (CARE)

CARE will focus on providing taxpayers with the information,

support and assistance they need in order to understand and

fulfill their tax obligations. To best serve its customers CARE

will be organized around three sub-units: Tax Publications,

Stakeholder, Partnership, Education and Communication

(SPEC) and Field Assistance as illustrated in Figure 2-3.

Media and Publications

The Media and Publications group will consist of three groups: a

new capability to focus on Tax Publications Redesign, the

current Tax Forms and Publications and the current Multimedia.

At stand-up the Multimedia group and Tax Forms and

Publications will move into W&I intact. They will maintain

their current structures and functionality. The new capability

will focus on redesigning current forms, publications and notices

to better meet customer needs and communicate requirements.

These groups will also work with Counsel to develop needed

clarification of tax law and published guidance.
Working to Put Service First

Wage & Investment

2-15

Figure 2-3: Communications, Assistance, Research and Education (CARE) Organization Structure

• SPEC and Field

Assistance Area

Manager are colocated

• One W&I Area is

equal to two SB/SE

Areas

• W&I territories

overlap with SB/SE

Compliance

territories whenever

possible

•••

•••

•••

•••

•••

• Approximately 48 SPEC territories will

exist

• Approximately 225 Total

Field Assistance Groups

Notice Clarity Program

Management

Media &

Publications

W&I CARE

Program

Management

Volunteer/

Community

Partnerships

Government Agency

Partnerships

Education

Coordination

Financial Institution

Partnerships

Educational

Institutions

Partnerships

Communications

Marketing/Coordination

Director

Field Operations

SPEC

Area Manager 7

SPEC

Area Manager 1

SPEC

Territory

Manager

1

SPEC

Territory

Manager

10

Field Assistance

Group 1

Field Assistance

Group 8

Field Assistance

Territory; Mgr. 1

Field Assistance

Territory; Mgr. 5

Field Assistance

Area Manager 1

Field Assistance

Area Manager 7

Field

Assistance

Resources &

 Program

Management

SPEC

Total FTE: 895 961 3069

Tax Forms and

Publications Multimedia

Director of Product

and Partnership

Development

Large Employer

Partnerships

Practitioner & Software

Provider Partnerships

E-Commerce

Coordination

Grants

Admin Office
Working to Put Service First

Wage & Investment

2-16

Stakeholder, Partnership, Education and Communication

(SPEC )

SPEC will assist W&I customers in satisfying their tax

responsibilities by building and maintaining partnerships with

key stakeholders who will, in turn, deliver new tailored products

and services to the intended audience (e.g., customers needing

assistance with return preparation). These partnerships will

allow the IRS to reach more customers with educational

products and assistance than they could otherwise reach by

delivering these products and services directly. SPEC will be

responsible for developing educational materials for use in prefiling, filing and post-filing customer interactions, developing

products for use in marketing and working with local and

national media to ensure that taxpayers are aware of tax law

changes and IRS services.

To fulfill these roles, SPEC will deploy Account Managers and

Marketing Specialists at the group level to establish local

partnerships. At the Headquarters level, National Account

Managers will be organized around six stakeholder groups:

volunteer and community organizations, government agencies,

educational institutions, large employers, financial institutions

and practitioners software and service providers. To ensure

service at the highest standard, account managers will draw on

the functional expertise provided by three national coordinators:

education, e-commerce and communication/marketing.

SPEC major responsibilities include:

• Building and managing partnerships with key

stakeholder groups to market and deliver

educational products and services

• Developing marketing programs

• Developing education programs and materials

• Developing mass media materials

SPEC will manage approximately 40+ groups that cover every

state and major metropolitan area in the United States. The

footprint is designed to provide SPEC access to partners whose

resources can be leveraged to serve W&I customers at a local

level. The footprint was based on criteria such as: concentration

of potential partners, concentration of customer segments

(particularly those requiring assistance), maintaining a presence

in each state and location of current facilities and staff. The

recommended footprint will consist of home offices where

sufficient customer and partner presence exists and satellite

offices where a full-scale presence is not practical.
Working to Put Service First

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2-17

Whenever possible, SPEC offices will be co-located with Field

Assistance Offices. SPEC is a primary driver for reducing peak

demand on the Field Assistance organizations by effectively

leveraging community partnerships. With each coming year, the

need to provide peak support to Field Assistance will decline

but, in the interim, SPEC will be a key source of detailed-in staff

during peak periods.

Seven Area offices, co-located with Field Assistance Area

offices, will provide support for the group offices and will assist

the groups in customizing products to local characteristics. The

SPEC Headquarters will provide a central location to develop a

range of products that address customer needs. Headquarters

will also fulfill managerial and oversight roles for the SPEC

organization. This structure will enable SPEC to develop

products at a national level, customize the products to satisfy

regional needs and preferences, and deliver them through

established local channels.

Field Assistance

Field Assistance will provide comprehensive, face-to-face

assistance for taxpayers that require this mode of interaction.

Most W&I customers have no compliance issues and, of those

that do, most can be resolved remotely via telephone or written

correspondence. Therefore, the face-to-face assistance provided

must be capable of delivering cross-functional, customerfocused problem solving and education to those customers who

want to voluntarily comply but require assistance. In addition,

some face-to-face exams will be required for a small percentage

of taxpayers whose returns can be more effectively examined in

this way. Field Assistance major responsibilities include:

• Providing assistance in the preparation of returns as well

as resolution of less complex accounts and compliance

issues for taxpayers that require face-to-face assistance

• Deploying new strategies to reach taxpayers, especially

in rural areas, such as mobile sites

• Selecting locations for assistance sites

• Working closely with Counsel to clarify tax law and

guidance

To fulfill these roles, a new W&I Tax Resolution Representative

(TRR) position will be created. This new IRS position will

institutionalize the success of IRS “Problem Solving Days” into

our daily interaction with customers. Problem Solving Days

have been widely accepted by both employees and taxpayers as

being highly successful in terms of resolving taxpayer problems.

In these special events, taxpayers visit convenient locations to

meet face-to-face with a team of IRS experts with a wide variety
Working to Put Service First

Wage & Investment

2-18

of skills. With the new TRR, the knowledge of the team of

experts is now resident in one position.

The TRR will provide assistance, education and compliance

support to taxpayers and will provide 100% of W&I’s field

compliance support. The TRR will be trained with crossfunctional skills and knowledge needed to resolve the vast

majority of tax law questions and routine compliance issues,

such as responding to a notice or establishing an installment

agreement. Cases involving complex examination issues or

requiring enforcement action will be subcontracted to the SB/SE

Division. Small business taxpayers will be supported by

specialized Field Assistance staff and managers, a hotline to

handle more complex SB/SE inquiries and, in some cases,

temporarily or permanently assigned SB/SE staff.

The decision to assign W&I compliance responsibilities to Field

Assistance was made in part to provide localized resources for

compliance work that requires face-to-face support. However,

another significant driver was to reduce the seasonality in Field

Assistance demand. Today, approximately 2000 people are

“detailed in” to Field Assistance during the period from early

January through the end of April (the tax season). Because

compliance work can be handled in non-peak periods, TRRs can

conduct compliance activities during non peak. This allows for

an increase in full-time Field Assistance staff while also

reducing the need to detail-in.

TRRs will work in Taxpayer Assistance Centers (TAC), which

will be full-service sites and will replace the current walk-in

services offered at current IRS locations. In addition to

expanding services at current locations, new Taxpayer

Assistance Centers will be conveniently located for taxpayers in

shopping malls, community group locations and local

government offices. Field Assistance service coverage will be

increased by introducing a variety of facility types ranging from

large, conventional walk-ins to self-serve kiosks in local malls.

Service will even be provided through mobile units that travel to

rural areas and to locations where large concentrations of target

customers are likely to be present.

By deploying facilities of various sizes, Field Assistance will

increase service coverage. Approximately 85% of the target

population will have access to service within 45 minutes, and

over 96% of the population will have access within 75 minutes.

The field structure for CARE is based on seven Area offices for

SPEC and Field Assistance. These Area offices are further

divided into Territories. Figure 2-4 illustrates this base field

structure.
Working to Put Service First

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2-19

Figure 2-4: Wage & Investment Areas

San Francisco

Sacramento Wilmington

Baltimore

Boston

Portsmouth

Augusta

Oklahoma City

St. Paul

St.

Louis

New

Orleans

Birmingham Atlanta

Jacksonville

Ft. Lauderdale

Nashville

Milwaukee

Louisville

Denver

Phoenix

Las Vegas

Seattle

Portland

Bronx

Manhattan

Greensboro

Richmond

Newark

Philadelphia

Albany

Brooklyn

Hartford

Cincinnati

Chicago

Austin

Dallas

San Jose

Los Angeles

San Diego

Buffalo

Area 1

Area 2

Area 3

Area 4

Area 5

Area 6

Area 7

Houston

Laguna

Niguel

Parkersburg

Columbia

Jackson

Detroit

Des Moines

Omaha

Fargo

Aberdeen

Wichita

Little

Rock

Burlington

Providence

Pittsburgh

Cleveland

Helena

Boise

Cheyenne

Salt

Lake

City

Albuquerque

Honolulu

Anchorage

= SPEC Territory Co-Located with

 Field Assistance Territory Office (Illustrative)

 = SPEC & Field Assistance Area Office

= SPEC Group (illustrative)

Oakland

Indianapolis

Springfield

= Field Assistance Territory Office (illustrative)

Customer

Account

Services (CAS)

CAS, located at the eight service centers (Andover, Atlanta,

Austin, Fresno, Kansas City, Philadelphia, Memphis and

Brookhaven), is responsible for taxpayer relationships through

the filing process, including processing tax return submissions,

payments and refunds. In addition, CAS is responsible for

providing taxpayers with the information on the status of their

returns or refunds and for resolving the majority of issues and

questions about settling their accounts. These responsibilities

naturally divide into two sub-units: Processing and Accounts

Management (AM). AM will manage the telephone inquiries of

the W&I customer base.
Working to Put Service First

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2-20

Figure 2-5: Customer Account Services (CAS) Organization Structure

Submission

Processing

Accounts

Management

Customer Account

Services (CAS)

17,980 + TBD

10,800 + TBD 7,167 + TBD

Program Mgmt &

Finance

TBD

Baltimore Call Site Andover Service Center

Common Service Manager

Kansas City Service Center

Common Service Manager

Fresno Service Center

Common Service Manager

Austin Service Center

Common Service Manager

Atlanta Service Center

Common Service Manager

Joint Operations

Center

TBD

Program Mgmt

TBD

Program Mgmt

TBD

Boston Call Site

Jacksonville Call Site

Dallas Call Site

Seattle Call Site

St. Louis Call Site

Accounts Management

Andover Service Center

Accounts Management

Atlanta Service Center

Accounts Management

Austin Service Center

Accounts Management

Fresno Service Center

Accounts Management

Kansas City Service Center

Submission Processing

Andover Service Center

Submission Processing

Atlanta Service Center

Submission Processing

Austin Service Center

Submission Processing

Fresno Service Center

Submission Processing

Kansas City Service Center

• 6 Toll Free Sites**

• **Will report to Service Centers

Joint Operations

Center OD Rep*

TBD

Brookhaven Service Center

Common Service Manager

Philadelphia Service Center

Common Service Manager

Memphis Service Center

Common Service Manager

Submission Processing

Brookhaven Service Center

Submission Processing

Philadelphia Service Center

Submission Processing

Memphis Service Center

*Reporting to be determined

Program & Process

Assurance

9
Working to Put Service First

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2-21

Submission Processing

Submission processing activities include processing of paper

and electronic returns, tax payments and refunds. Taxpayers

should notice little difference in these interactions, other than

the ongoing migration toward electronic commerce. However,

new opportunities will become available for employees in this

area. Dual-role positions may be created by training employees

who currently work in the “pipeline” responsible for receipt and

processing of taxpayer returns to work in remote compliance

functions during the off-season. This new employment

opportunity could (1) help to prepare pipeline employees for

diminished workload due to the growth of e-file; (2) yield a

more permanent service center workforce; and (3) meet the

increased demands for remote compliance resources in W&I. In

the long run, this will also improve customer service as

individual employees will enjoy a fuller understanding of the

range of customer interactions with the IRS.

Phase IIB design teams developed a detailed organization

structure for each of the service center Processing organizations.

This structure seeks to group activities together to minimize

disruption to the processing flow while facilitating better

communication among the management levels. The proposed

structure has two support functions: Planning and Analysis and

Common Services, and five Technical functions: Receipt &

Control, Document Perfection, Data Conversion, Input

Correction and Processing Support.

• Planning and Analysis is responsible for developing

work plans and staffing plans in preparation for the

filing season, analyzing program delivery and

monitoring execution.

• Common Services will address needs related to

personnel and facilities across each site,

coordinating with Processing, Accounts

Management and Compliance.

• Receipt & Control groups incoming correspondence

and routes it to the appropriate area.

• Document Perfection Area corrects any errors in

return information before returns are key punched

into the system, resolves issues related to taxpayer

name, address and taxpayer identification number

(TIN); and assigns every return a document location

number.
Working to Put Service First

Wage and Investment

2-22

• Data Conversion Area enters taxpayers data into an

automated system.

• Input Correction Area resolves any errors resulting

from mistakes made during the data conversion

process.

• Processing Support Area includes follow-on

functions responsible for processing taxpayer

payments, filing returns and matching returns with

data entered into the automated system to identify

errors before notices are sent.

Accounts Management

Account Management activities include responding to customer

technical and account inquiries, resolving customer account

issues, providing account settlement (payment) options and

working related issues. Accounts representatives will be able to

provide tax law, account resolution and payment information

across several platforms (phone, paper, electronic), which will

shift in response to changing customer demands. Because W&I

accounts representatives will face a more limited set of issues

due to the homogeneous nature of the tax base, these employees

will become more effective across a broader range of functions,

thereby improving their own job satisfaction as well as the

service to customers.

Phase IIB design teams developed a detailed organization

structure for each of the service center Accounts Management

organizations. The W&I taxpayers characteristics and the

workload characteristics drive the creation of the Accounts

Management structure. W&I taxpayers, by definition, are a

fairly homogeneous group and therefore their interactions with

Accounts Management will be limited to a very narrow set of

issues.

Additionally, the CAS organization structure is significantly

different from today’s service center structure and incorporates a

unique new position at each site known as the Common Services

Manager. Under the new design, the existing service center will

be divided into four different organizations: Processing,

Accounts Management, Compliance and Common Services.

The Common Services Manager will coordinate the interface

with support organizations such as Shared Services and

Information Systems on behalf of the site and will provide the

staff support to the Service Center Council.
Working to Put Service First

Wage and Investment

2-23

The Service Center Council will be the primary integrative

mechanism, providing coordination and cooperation across

organizations as well as unified, consistent policies and

procedures for crosscutting issues that affect the entire site. This

would include facilities concerns, recruitment and sharing of

employees.

Compliance The W&I Compliance function manages the relationship with

taxpayers who have a high risk of not paying or whose return

has a high risk of noncompliance. This organization will utilize

risk-based approaches to collection actions and examinations,

design and conduct examination programs, and prioritize and

follow up on collection cases.

The application of risk-based approaches to examination and

collection will be a new model for the IRS. A risk-based

approach to collection and examination will position the Service

to more clearly differentiate between those taxpayers who are

attempting to comply but need assistance versus that very small

segment that intentionally does not comply. Unlike our current

systems, this differentiation allows the Service to select varying

approaches based on each taxpayer’s circumstances. The

Service thus positions itself to move from a “one size fits all”

approach to a philosophy of “the right treatment, for the right

taxpayer, at the right time.”

Another key role that Compliance will play is to provide

feedback to the CARE organization on how to improve

customer service and communication. Since the compliance

process brings many customer service issues to light, it is in the

best interest of W&I to capitalize on this knowledge to improve

its performance. There are several options for providing input to

the CARE organization to enhance customer service and

satisfaction. For example, formal councils may be established to

ensure regular interaction between CARE and Compliance.

Other options range from utilizing ad hoc groups to enlisting

Compliance personnel in the design of new CARE programs and

services.

Significant effort will continue to determine the appropriate

integrative mechanisms to facilitate this feedback loop along

with other critical relationships. Several key interactions have

been identified as requiring integrative mechanisms and

preliminary linkages have been outlined. The major

relationships will be with SB/SE compliance, Field Assistance,

CID and Appeals.
Working to Put Service First

Wage and Investment

2-24

Compliance activities for W&I taxpayers will be centrally

managed at the five service centers (Andover, Atlanta, Austin,

Fresno and Kansas City). The Phase IIB design teams

developed a detailed organization structure for each of the

service center Compliance organizations. The design

recommendation differs from the Phase IIA recommendation.

The Phase IIB team recognized that the Compliance structure at

the service center level needs broad-based leadership to manage

anticipated developments, such as blending activities across

functional lines, the introduction of risk-based compliance

techniques and new customer-focused activities. Given the

planned moved to risk-based systems, the Phase IIB teams also

felt that the new organization should not reconstruct

Examination and Collection silos. Therefore, Exam and

Collection were combined under the leadership of a Compliance

Executive at each site. This modernized approach to

compliance emphasizes compliance as an integrated activity.

The Compliance Operating Unit will also be supported by four

offices: Compliance Services, Compliance Policy Unit, Exam

Strategy and Selection Unit and Program Management. The

following figure represents the Compliance Organization.
Working to Put Service First

Wage and Investment

2-25

Figure 2-6: Compliance Organization Structure

 Compliance Director

1-SES

1-GS-343-15 Operations Advisor

1-GS-318-10 Secretary

1-ES/SL Senior Technical Advisor

 4

Finance

1-GS-501-15 Supvr. Fin Mgmt

Specialist

1-GS-344-07 Management

Assistant

2-GS-343-14 Sr. Program Analyst

3-GS-560-13 Budget Analyst

2-GS-560-12 Budget Analyst

3-GS-343-13 Program Analyst

1-GS-561 07 Budget Assistant

146

 Policy & Procedures

 1-GS-343-15 Program Mgr

 1-GS-343-14 Senior Analyst

 7-GS-343-13 Prg Analyst

 1-GS-318-07 Secretary

 10

 Collection Strategy Unit

 1-SES

 1-GS-318-09 Secretary

 2

 Risk Based Collection *

 1-GS-343-15 Program Mgr

 1-GS-343-14 Senior Analyst

 4-GS-343-13 Prg Analyst

 1-GS-318-07 Secretary

 7

* Risk Based Collection will not be

functional until 2001

 Policy & Procedures

 1-GS-343-15 Program Mgr

 2-GS-343-14 Senior Analyst

 4-GS-343-13 Prg Analyst

 1-GS-318-07 Secretary

 8

 Exam Strategy &

 Selection Unit (ESSU)

 1-SES

 1-GS-318-09 Secretary

 2

 Strategy & Selection

 1-GS-343-15 Program Mgr

 3-GS-343-14 Senior Analyst

 6-GS-343-13 Prg Analyst

 1-GS-318-07 Secretary

 11

Program Management

1-GS-343-15 Manager

1-GS-343-14 Program Analyst

1-GS-318-07 Secretary

10-GS-343-13 Program Analyst

1-Legislative Affairs

1-TIGTA/GAO

1-ETA/Senior Council Liaison

2-MIS

1-IRM Coordinator

1-Quality Coordinator

2-Business Planning (Balanced

Measures)

 1-Fraud 13

Program/Process Assurance

1-GS-343-15 Supervisory Program

Analyst

3-GS-343-14 Program Analyst

4-GS-343-13 Program Analyst

1 GS-343-11 Management Analyst

 9

 Compliance Services

1-SES

1-GS-318-09 Secretary

 2

 Operations 3

1-GS-340-14 Program Mgr

1-GS-318-06 Secretary

1-GS-343-14 Senior Analyst

15-GS-343-13 Prg Analyst

 1 =Field Support

 1 = IRM

 7 = AUR

 2 = ASFR

 4 = Return Delinquency

 18

Operations 1

1-GS-340-14 Program Mgr

1-GS-318-06 Secretary

1-GS-343-14 Senior Analyst

15-GS-343-13 Prg Analyst

 7 = CORR

 5 = EITC

 1 = Automation

 2 = Innocent Spouse

 18

Operations 2

1-GS-340-14 Program Mgr

1-GS-318-06 Secretary

1-GS-343-14 Senior Analyst

15-GS-343-13 Prg Analyst

 5 = ACS

 6 = Nonfiler

 2 = Payor Comp

 1 = OIC

 1 = Install Agree / CNC

 18

 Monitoring

1-GS-343-15 Program Mgr.

1-GS-318-07 Secretary

1-GS-343-14 Senior Analyst

8-GS-343-13 Prg Analyst

 4 - MIS (Workload Mgt.)

 2 - Quality

 2 - MIS (Process Analysis)

 11

Remote Compliance

Atlanta Service Center

Remote Compliance

Andover Service Center

Remote Compliance

Austin Service Center

Remote Compliance

Fresno Service Center

Remote Compliance

Kansas Service Center

Note: Compliance Remote Sites will not become

part of W&I structure until FY 2001.

13

67 21 19

22
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Wage and Investment

2-26

Compliance Services

Under the direction of the Compliance Services Field Director,

this unit will provide fair and equitable treatment to those

taxpayers that require contact. The Remote Examination and

Collection functions will use effective and efficient techniques

for timely interaction with taxpayers.

Collection Strategy Unit

Collection Strategy will provide significant and continuous

oversight and coordination of policy within the Compliance

Operation Division and between other W&I operating units:

• To identify trends and develop strategies designed to address

the needs of the W&I taxpayers through a comprehensive

approach including tax compliance, education, outreach, and

quality assurance.

• To conduct research and analysis in setting short and longrange goals and develop risk based models.

Exam Selection & Strategy Unit (ESSU)

ESSU was created to improve overall exam activities. This unit

will bring the selection of every return for examination to the

national level and separate this decision from those who actually

conduct the exam. The ESSU will develop processes and

procedures to ensure that standard criteria are applied and audit

trails exists. Risk-based exam selection strategies and models

will also be developed and maintained within this group to drive

overall W&I compliance strategies and objectives.

Program Management

Program Management will provide support to the Compliance

Operating Unit by coordinating the communication of issues

from organizations outside of Compliance:

• Serve as the primary liaison with Legislative Affairs,

TIGTA, GAO, ETA, and Council.

• Assist the Director of Compliance by addressing Balanced

Measures and Quality issues.
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2-27

Geographic

Footprint

The geographic footprint of the Wage & Investment Division

will consist of a headquarters, located in Atlanta, Georgia, and a

national geographic footprint comprised of SPEC and Field

Assistance areas, territories and groups, as well as Customer

Account Services functions currently located in service centers

and customer service sites.

Figure 2-4 located previously in this section illustrates the W&I

national geographic footprint. Seven areas are shown on the

map with headquarters located in Buffalo NY, Greensboro NC,

New Orleans LA, Springfield IL, St. Louis MO, Phoenix AZ

and San Francisco CA.
Working to Put Service First

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2-28

Implementation

Schedule

In December 1999, John

Dalrymple was named the W&I

Commissioner, and in March

2000 John Duder was selected as

the W&I Deputy Commissioner.

In mid-2000, the remainder of the

headquarters staff will have been

recruited and selected. In January

2002, customers will be filing tax

returns with W&I Service

Centers, and employees in the

W&I Service Centers will be

exclusively dedicated to W&I

work. Figure 2-7 and Table 1 (on

the next page) illustrate the W&I

high-level implementation plan as

well as a description of each

major milestone.

Figure 2-7: W&I Implementation Plan

W&I Commissioner Selected

W&I Top Management Selected (2nd level, including Operating Units Heads, CFO, etc.)

National And Regional Office Resources redeployed to W&I HQ

W&I HQ And Operating Unit HQ Staffing Completed / W&I HQ Transition Complete

Business Process Changes Ongoing

 SPEC And Field Assistance Top Management Selected

Employees Aligned To SPEC HQ/District Research sites Aligned To Strategy & Finance

Begin National Level SPEC Operations

 Business Process Changes Ongoing

Walk-In Employees Report To W&I Field Assistance, TRRs Staffed in W&I Field

Assistance/ SPEC field staffing begins, All District Office Resources Aligned

SPEC Fully Functioning / Training, Facilities and

System Changes Complete / New Processes and

Integrative Mechanisms with SB/SE in place

Pipeline continues to report to EOSCO, Non-pipeline reports to Chief of Customer Service Field Ops

Accounts Management and Processing Directors Selected

Submissions Processing Aligned to Operating Divisions; Call Sites Aligned

to Operating Divisions; JOC aligned to W&I CAS

Calls routed based on customer’s Operating Division

Business Process Changes Ongoing

Service Centers Workload Redistributed and Employee

Inventory of Work Changed Begin Routing Calls

To CAS or Compliance

Based On Risk

Compliance Top Management Selected

Staffing of Support Functions Complete

Begin pilot of Risk-based

collections on limited scale

Business Process Changes Ongoing

CY1999 CY2000 CY2001 CY2002 CY2003

HQ

CARE

CAS

Compliance

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Working to Put Service First

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2-29

Table 1: Description of W&I Major Milestones

Timeline Initiative

2Q CY 99: Phase IIB kick-off, initially focusing on driving the design down to the front line

and refining estimates of headcounts, training, etc.

4Q CY 99: The W&I Commissioner in place and the Customer Service Field Operations

established. Submissions Processing will continue to report centrally (EOSCO).

2Q CY 00: The second level of W&I senior management in place, including the leaders of

CARE, CAS and Compliance Operating Units.

3Q CY 00: W&I headquarters will be staffed. Leaders of the following sub-operating units

will also be in place: Tax Publications, SPEC, Field Assistance, Processing,

Accounts Management, Compliance.

3Q CY 00: Staffing for SPEC and Field Assistance management for the field will have been

completed. SPEC headquarters staff, Compliance support functions will have

been recruited and selected by this time.

4Q CY 00: The transition to the W&I Headquarters will have been completed and selected

field employees will begin to align to W&I.

1Q CY 01: Alignment of field and service center employees to W&I will be completed.

Also, SPEC (National Level) can begin operations.

3Q CY 01: Call routing to operating divisions will begin at this time.

1Q CY 02: Organizations such as SPEC and Field Assistance will be fully functioning by

this time. For filing season 2002, customers will file in new service centers and a

small pilot of risk-based collections will begin.

1Q CY 03: Call routing to Customer Account Services or Compliance using a customer risk

assessment will begin at this time.
Working to Put Service First

Small Business/Self-Employed

3-1

Chapter 3 Small Business/

Self-Employed

The Small Business/Self-Employed (SB/SE) Division serves

approximately 45 million taxpayers. These taxpayers include fully or

partially self-employed individuals and small businesses. This group

has much more complex dealings with the IRS than wage and

investment taxpayers. They have four to 60 routine transactions with

the IRS per year and pay the IRS nearly $559 billion in cash,

representing nearly 40% of the total cash collected by the IRS. This

amount includes personal and corporate income taxes, employment

taxes, excise taxes and withholdings for employees, each of which has

filing and technical requirements. Since business income and a range

of taxes are involved, compliance issues are also complex. The

probability for errors, resulting in collection and compliance problems,

are greatest in this group because of the lack of withholding or

information reporting and the large amount of cash paid. The result is

much more frequent dealings with the IRS.

Small Businesses

Approximately 7 million small businesses will be served by this

operating division, including corporations and partnerships with assets

less than or equal to $5 million. These businesses are separate legal

entities, requiring separation from their owners’ and managers’

personal obligations. These taxpayers generally file forms 1120S (Scorporation), 1065 (partnerships) and 1120 (small-incorporated

businesses). A significant portion of this group’s tax liabilities is

employment taxes. Small business employment taxes are

approximately one-third of their total tax obligations with the other

two-thirds comprised of income tax obligations (including estate and

gift taxes).

Small businesses are often corporations and face some of the

complicated tax issues of large corporations, but usually do not have

the financial resources to have tax professionals on staff. While

compliance issues with large businesses stem heavily from differences

in tax law interpretation, compliance issues in small businesses are

varied and include a lack of understanding of the tax law requirements,

lack of adequate accounting practices and resources and cash flow

problems. For these reasons, small businesses require specialized

service from the IRS, with greater emphasis on working with small

businesses and their representatives to educate and develop less

burdensome and more practical means of complying.

Taxpayer

Characteristics
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Small Business/Self-Employed

3-2

Self-Employed and Supplemental Income Earners

The SB/SE Division also serves approximately 33 million self-employed

and supplemental income earners with business-like characteristics. These

taxpayers are individuals filing income tax form 2106 (business expenses)

and schedules C (self-employed), E (rental properties and royalties) and F

(farmer). Although these taxpayers are individual filers and, therefore, have

characteristics similar to those in the Wage & Investment (W&I) Division,

they have much more complicated tax issues. Self-employed and

supplemental income earners have substantial differences with wage earners

including: substantially higher incomes (nearly four times the average tax

obligation and filing over twice as many forms and schedules per return),

requiring roughly twice as much time to prepare returns and a much heavier

reliance on paid tax preparers. These factors not only increase the

sophistication of the tax returns but also increase the demand for IRS

expertise. For this reason, these taxpayers have been included with

complicated small business taxpayers.

Although not completely the same, small businesses and selfemployed/supplemental income earners have much in common. Both share

the following characteristics: 1) relatively limited resources for record

keeping, 2) close relationships between business and personal transactions,

3) similar size of operations, and 4) frequent interactions with the IRS.

Other SB/SE Taxpayers

The SB/SE Division will also have responsibility for servicing a third set of

taxpayers – estate and gift taxpayers, fiduciary returns and all individual

taxpayers with international tax returns. These taxpayer groups were

included in the SB/SE customer base primarily because:

• The SB/SE geographical footprint facilitates the hands-on

documentation and valuation needed;

• SB/SE information systems already have access to the historical

records of these complex individual filers; and

• The specialized legal knowledge required for these tax issues

pertain in large part to small business ownership.

In addition, SB/SE will have responsibility for processing all tax returns,

including income tax, employment tax and excise tax returns, submitted by

taxpayers serviced by the Large & Mid-Size Business (LMSB) and Tax

Exempt & Government Entities (TE/GE) Divisions. This service will be

provided to LMSB and TE/GE using an internal service agreement.

Lastly, SB/SE will support customer service needs of U.S. citizens living

abroad through LMSB’s International Posts of Duty (PODs) and will

continue to process all individual tax returns at a centralized service center.

This will provide accountability and a single point of contact for all

processing of these returns.
Working to Put Service First

Small Business/Self-Employed

3-3

During Phase IIA, the SB/SE design team worked to better understand their

customer base by researching customer characteristics, interviewing external

stakeholders, and meeting and surveying internal managers and employees

with expertise in providing service to SB/SE taxpayers. They also studied

best practices in both the private and public sectors. The SB/SE team then

designed the basic organizational structure and illustrated the need for new

business processes to support its customer base. The Modernization

Executive Steering Committee approved this design and the basic concepts

associated with the business process changes.

In Phase IIB, a new team of IRS executives, managers and employees began

work to take the skeleton organization structure and build it to the front-line

employee level. This was a difficult task due to the need to minimize the

movement of over 40,000 employees, while restructuring the organization to

fit the new design. The team was successful in providing far more detail to

the design and will be submitting shortly it to the Commissioner for

approval. At that time, the National Treasury Employees Union (NTEU) will

be provided with the staffing and personnel data for each and every SB/SE

location and work unit across the country. Shortly after notification to

NTEU, employees will receive a notification regarding the overall changes to

the organization structure. It is anticipated that by July 2000, employees will

understand how the organization affects them personally.

Due to the complexities associated with reorganizing the most geographically

dispersed organization structure within the IRS, SB/SE will be one of the last

units to be implemented. Over the previous quarter, the SB/SE goals were

to:

• Appoint the Operating Division Commissioner and Deputy

Commissioner;

• Design the organization down to front-line level

• Design the organizational structure of specialty taxes (e.g.,

excise tax, gift tax);

• Resolve all other outstanding organizational design issues

needed to obtain Commissioner’s approval before the end of

the 2nd FY 2000 quarter;

• Perform transition planning;

• Recommend transition strategies and plans as well as socialize/

communicate to stakeholders; and

• Coordinate key planning issues.

Small businesses, self-employed and supplemental income earners, while

having more complex tax issues, are best suited for a process-based

organization structure similar to that of the Wage and Investment Division.

It is important to establish an organization and a management team that is

accountable for every component of customer service. To accomplish this,

the SB/SE Division will be staffed by approximately 37,000 employees and

organized around three major processes called operating units: “pre-filing”

(Taxpayer Education and Communication), “filing” (Customer Account

Services) and “post-filing” (Compliance). The organization for these three

processes is illustrated on the next page in Figure 3-1.

Goals,

Principles

and

Objectives

Organization

Structure
Working to Put Service First

Small Business/Self-Employed

3-4

Figure 3-1: SB/SE Organization Structure

Commissioner

SB/SE Division Commissioner’s office EEO & Diversity

Strategy, Research

 and Performance Mgmt. Business Systems Planning Management & Finance Human Resources Communication

Strategy Planning Program Analysis

Performance Excellence Research

Planning & Analysis

Project Development &

Implementation

HQ Financial

Management Administration

TEC Financial

Management

Compliance Financial

Management

CAS Financial

Management

Personnel Management Internal/ External

Communication

Customer Liaison

Operating Unit &

Field HQ Support

Taxpayer Education &

Communication (TEC)

Partnership Outreach

Product Development &

Management Govt. Agencies &

Educational Institutions

Small Business

Organizations

Practitioner & Payroll

Groups

Professional, Trade,

Service Organizations

Electronic Businesses

Compliance

Area x 16 Compliance

Services

Compliance

Policy

Insolvency

Remote Compliance x5

Program

Administration

Customer Account

Services (CAS)

Centralized Workload

Selection & Delivery

Program

Support

Brookhaven

Philadelphia

Cincinnati

Memphis

Ogden

Area x 15
Working to Put Service First

Small Business/Self-Employed

3-5

In today’s IRS structure, management is focused on “functions” such as

Customer Service, field Collection and field Examination work, which act

independently of each other. This functional structure worked well for the

current organization, but does not lend itself to an organization focused on

delivering excellence to discrete customer segments. The SB/SE Division

will require a much higher level of interaction with its customers at its senior

management level.

The SB/SE Commissioner and Deputy Commissioner have been selected to

lead the SB/SE team. Recently named Commissioner, Joseph Kehoe comes

to the IRS after a 25-year career with Pricewaterhouse Coopers, where he

provided professional consulting services to both private and public sector

clients. He served as Global Service’s Industry Leader and Managing

Partner. His consulting experience has been in Business Process

Reengineering Operations, Strategy and Change Management. Dale Hart,

the new Deputy Commissioner, has over 33 years of experience with the

IRS, serving in virtually every level of management. Dale’s contribution to

the Modernization effort is also noteworthy as she was the lead executive in

designing the new Agency Wide Shared Services organization.

The SB/SE senior management team also includes the heads of its three

major functional organizations (TEC, CAS and Compliance) and the heads of

its staff functions (Strategy, Research and Performance Management,

Management and Finance, Communication, EEO & Diversity, Business

Systems Planning and Human Resources). The new SB/SE Commissioner

and Deputy Commissioner are now in the process of interviewing for key

executive leadership positions throughout the operating division. Some of

the positions have been selected and announced. They are:

• Gerald J. Songy – Director, Taxpayer Education and

Communication

• Robert L Hunt – Deputy Director, Taxpayer Education and

Communication

• John A. Ressler – Director, Customer Account Services

• Brien T. Downing – Deputy Director, Customer Account Services

• Glenn E. Henderson – Director, Compliance

• Thomas R. Hull – Deputy Director, Compliance

• Charles W. Peterson – Director, Strategy, Research and

Performance Management

• Robert C. Wilkerson – Director, Business Systems Planning

• Richard J. Morgante – Director, Management and Finance

This top management team will develop service and compliance strategies

that best address the needs of SB/SE taxpayers. The Taxpayer Education and

Communication (TEC) unit will develop targeted educational materials to

communicate through channels and partnerships most appropriate for SB/SE

taxpayers. Compliance can then address the same topics in post-filing

activities, assess taxpayer behavior and provide feedback to TEC, which will

then modify the educational approach as necessary. This constant feedback

loop is essential to best understand and address the needs of this taxpayer

segment. In addition, SB/SE will work closely with Counsel to ensure that

guidance is issued, alert the Taxpayer Advocate and Appeals of the issue and

Senior

Management

Team
Working to Put Service First

Small Business/Self-Employed

3-6

possible workload impact, and work with IS to develop technology

enhancements to achieve this strategy.

SB/SE Headquarters will provide strategic leadership to all three components

of the SB/SE organization. The headquarters will provide one central contact

point for small business customers, develop and monitor unique SB/SE

business processes, and control and manage activities such as capital

budgeting, forecasting and financial management for the SB/SE organization.

All three of the SB/SE processes will be supported by headquarters, which

will perform all necessary support activities. Figure 3-2 illustrates the entire

SB/SE headquarters structure including: the Commissioner’s staff support,

Management and Finance; Communication; Strategy, Research and

Performance Management; Human Resources; Business Systems Planning;

Equal Employment Opportunity and Diversity.

Headquarters
Working to Put Service First

Small Business/Self-Employed

3-7

Figure 3-2: SB/SE Division Headquarters

EEO & Diversity

Sr. Mgr. Director

Communication

Commissioner

SB/SE Division

Business

Systems Planning

Strategy, Research

and Performance

Management

Management

& Finance

Human Resources
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Small Business/Self-Employed

3-8

Strategy, Research and Performance Management

Strategy, Research and Performance Management will develop the SB/SE

strategic plan, develop and implement balanced measures, ensure performance

excellence, conduct research and coordinate across operating units. This unit

will identify and analyze emerging trends affecting SB/SE. This includes

gathering customer needs and analyzing trends and demographics in filing,

payment and reporting patterns by customers to support strategic planning and

to develop internal policy and program decisions. In this role, this function

sets the strategic direction and develops goals for all SB/SE business units.

Additionally, this group is responsible for:

• Providing staff support to the SB/SE Executive Planning Council and

others dealing with strategic leadership.

• Managing the program analysis and review process to assess and monitor

division performance against plan expectations.

• Developing SB/SE balanced scorecard and systems to capture measures

data.

• Managing all the research activities and needs of the SB/SE Division and

conducting strategic and tactical research on customer educational needs.

• Managing the program evaluation and risk analysis processes.

Evaluating proposed programs for their investment potential in achieving

division goals. Assessing risks with ongoing programs.

• Providing guidance to management on achieving performance

excellence.

The high priority of the Research function will be, via market-based research,

to identify the educational needs and demographic trends of SB/SE taxpayers.

In addition, it will determine SB/SE customer satisfaction with TEC and

SB/SE services and programs to ensure that high quality service is being

provided to SB/SE taxpayers. To conduct this research, teams will be built

around specific topics and issues utilizing both permanently assigned staff and

temporary team members that are technical experts from other parts of the

organization (e.g., CAS, Compliance, HQ, etc.). These teams will perform

internal and external research to identify the characteristics and needs of

SB/SE customers.

Research will work with TEC Partnership Outreach and the Taxpayer

Education field force to provide strategic direction for education programs, as

well as ensure that these programs are meeting customer needs. They will

partner with SB/SE Compliance and CAS to identify emerging issues that

require proactive education services. They will also partner with other IRS

research operations (e.g., W&I research, LMSB research, HQ research) as

necessary to perform joint research and ensure overall effective customer

service.
Working to Put Service First

Small Business/Self-Employed

3-9

Management and Finance

Management and Finance will manage the overall SB/SE budget process and

administrative accounting. The following represents some of the duties and

responsibilities of this staff.

• Developing the integrated budget submission for the entire SB/SE

organization and responding to inquiries from external stakeholders

(Department of the Treasury, Office of Management and Budget, and

Congress).

• Managing the resource distribution process, including the development of a

financial plan that supports the program priorities of SB/SE.

• Managing the financial resources for SB/SE, including tracking resource

usage against targets.

• Establishing financial policies, procedures and controls for SB/SE in

conjunction with overall Service guidelines and procedures.

• Managing the authorized staffing pattern and issuing reports to ensure

adherence to the authorized staffing pattern.

• Providing reports to the SB/SE operating units to help them monitor and

track expenditures.

• Managing the overall Federal Managers Financial Integrity Act program in

SB/SE.

• Serving as SB/SE liaison with Agency Wide Shared Services on facilities

issues.

• Monitoring the Office of Government Ethics reporting requirements.

• Managing contractual relationships with IS, AWSS and other operating

divisions and functions.

Human Resources

The SB/SE Human Resources staff will ensure continuous performance

improvement and individual development through competency and skill building

and conducting needs assessments and prioritized resource allocation. The staff

will develop education strategies and design curriculum that focuses on the

development of SB/SE key competencies. The primary responsibility of this

staff is to ensure that SB/SE personnel are technically competent to meet

customer needs. Some of the support activities required include:

• Fostering partnerships with NTEU throughout SB/SE and serving on the

SB/SE/NTEU Partnership Council.

• Serving as the SB/SE representative on the Human Resources Policy

Council.

• Developing and implementing policies, guidelines and procedures for the

division within parameters set by the National Strategic Human Resources.

• Working in concert with the SB/SE operating units to design, develop and

oversee an integrated human resources strategy.

• Designing, developing and overseeing an integrated training plan.

• Proposing and allocating the training budget to the SB/SE operating units.
Working to Put Service First

Small Business/Self-Employed

3-10

• Providing labor relations, workforce planning and strategic recruitment

guidance and support.

• Conducting negotiations with NTEU.

• Overseeing and managing the performance management process,

including monitoring of appraisals and awards.

Communication

The Communication function, located at the SB/SE Headquarters, is the main

point of contact for relaying SB/SE-related information to both internal and

external stakeholders. Among the Communication function’s main

responsibilities within SB/SE are overseeing the Division's communications

strategy, including marketing and media relations, and coordinating related

activities with the National Communications and Liaison office. This group will

serve as the central point of contact on all SB/SE matters related to FedState and

Disclosure.

EEO and Diversity

SB/SE will have a dedicated staff that establishes and implements EEO policy,

procedures and programs for the Division in conformance with overall Service

guidelines. This staff will also perform various tasks including:

• Advising the SB/SE Commissioner and other SB/SE management

officials on EEO and Diversity issues, including complaint resolution.

• Establishing and implementing EEO policies, procedures, programs and

recruitment strategies for the Division in conformance with overall

Service guidelines.

• Overseeing the SB/SE EEO and Diversity Advisory Committee.

• Providing training to SB/SE staff on EEO-related matters and issues.

• Preparing reports and conducting analyses of key workforce-related

trends or actions to identify any practices, regulations and procedures

that may perpetuate discrimination.

• Establishing Division policy on reasonable accommodation, sexual

harassment and other EEO-related issues, and ensuring that it is

appropriately implemented.

• Coordinating special emphasis activities relating to women and

minorities.

• Representing SB/SE on the EEO and Diversity Council.

• Developing and monitoring the SB/SE affirmative employment plan in

accordance with Servicewide policy and the management directives of

the Equal Employment Opportunity Commission.

• Developing and monitoring EEO Service Level Agreements (SLAs) with

Agency Wide Shared Services.

• Developing SB/SE’s EEO Annual Business Plan.

• Conducting, on a timely basis, necessary inquiries into alleged

discrimination and recommending remedial relief in an expeditious

manner.
Working to Put Service First

Small Business/Self-Employed

3-11

• Developing a substantial relationship with the recognized employee

groups as major stakeholders in division diversity initiatives and special

emphasis programs.

Business Systems Planning

The Business Systems Planning group, also part of the SB/SE Headquarters,

gathers and articulates business needs for Information Technology projects,

applications and legacy systems. Responsibilities include assessing IT

solutions to address gaps in business processes, creating business cases for

new IT projects and evaluating requests for information services. This group

will create a close partnership with the Division Information Officer (DIO)

who reports to the Chief Information Officer. Through this partnership, the

SB/SE needs and services will be coordinated with all appropriate IT staff.

Some related tasks include:

• Planning and analyzing business needs for new projects. Developing

business cases. Prioritizing business needs and process changes.

• Formulating Information Technology plans and budgets. Managing

and/or monitoring funds for business systems modernization projects.

• Developing and testing projects. Overseeing business involvement in

systems testing. Establishing information systems performance

measures.

• Implementing and overseeing modernization projects. Developing and

monitoring the Implementation Action Plan. Evaluating the results of

the project on SB/SE operations.

• Providing support to senior leadership by providing business expertise

to complement Information System’s knowledge of technology

change.

• Developing and negotiating Service Level Agreements (SLA) with

support functions. Assessing the effectiveness of support received.

The three major organizations (TEC, CAS and Compliance) are processbased; that is, they have organizational structures that, together, manage the

full life-cycle of interaction with SB/SE customers. This provides end-to-end

accountability for a discrete taxpayer segment with unique characteristics and

needs.

Process-Based

Organizational

Segments
Working to Put Service First

Small Business/Self-Employed

3-12

Taxpayer Education and Communication (TEC) will be a customer-focused

organization that educates and informs SB/SE taxpayers about their tax

obligations by:

• Conducting strategic and tactical research on customer educational

needs;

• Developing products and services focused on these needs;

• Working with external partner organizations to educate the members and

customers of these partner organizations;

• Delivering educational products and services; and

• Collecting and analyzing customer and partner input and feedback to

improve products and services.

Taxpayers will benefit with improved end-to-end accountability for educating

taxpayers, consistent policy setting and program guidance, and timely and

effective communication with taxpayers and employees throughout the SB/SE

organization. The Taxpayer Education and Communication organization will

have two components: 1) Partnership Outreach and 2) Taxpayer Education

Areas. The Taxpayer Education and Communication organization is

illustrated below in Figure 3-3.

Taxpayer

Education and

Communication

Organization

Figure 3-3: Taxpayer Education Communication (TEC) Organization

Taxpayer Education

and Communication

Headquarters

Taxpayer Education

Area 1*

Partnership Outreach

Professional, Trade and

Service Organizations

Taxpayer

Education

Territories **

Taxpayer

Education

Territories **

* There will be 15 Taxpayer Education Areas: 14 Domestic and 1 International. The domestic Area boundaries mirror SB/SE Compliance Area boundaries with the

exception of Southern California.

Global

Territory

Commonwealths

Territory

through

Government Agencies and

Educational Institutions

Small Business

Organizations

Electronic Businesses

Payroll and Practitioner

Groups

Product

Development and

Management

Taxpayer Education

Area 14*

Shading denotes

position in the field

No shading denotes

position in the HQ

Taxpayer Education

Area 15

(International)

84 domestic territories, two international territories and 219 posts of duty
Working to Put Service First

Small Business/Self-Employed

3-13

TEC Product Development and Management will work with Research, TEC area

offices, Partnership Outreach units and external and internal partners to design,

develop and refine products and services to meet the needs of SB/SE customers

and partners to help insure that SB/SE customers understand and meet their tax

obligations. The Phase IIB team conducted baseline research and developed a

basic model for determining what initial products and services are needed for

SB/SE customers. This new framework is shown below in Figure 3-4 and on the

next page in Figure 3-5.

Figure 3-4: Products and Services Based On Customer Needs and Characteristics

Completed

Completed

50% Completed

DEFINE NEEDS OF

SB/SE CUSTOMERS

DEFINE SERVICES

FOR SB/SE

CUSTOMERS

REFINE

STAFFING

• Define needs of customers in each segment

• Determine who is meeting that need (if anyone) and

the extent that the need is met

• Any needs that are not met will be considered unmet

needs

• Determine the risk associated with meeting (or not meeting) each need

• Define services to serve most critical needs

• For each service to be offered determine

– Target market

– Needs addressed

– Effort required

– Channels used

– Skills required for delivery

• Determine the skills required to deliver each service

• Determine the resources required to deliver each service

• Determine the demand for each service

• Determine the resources required in start-up vs. steady-state

REFINE TEC

ORGANIZATION

DETERMINE

CHARACTERISTICS

AND BEHAVIOR

• For each group or segment of SB/SE taxpayers, determine the

characteristics and behaviors that distinguish them from other

SB/SE taxpayers, e.g.

– Internet or computer use

– Level of assistance required

– Types of taxes owed

– % of taxes withheld

• Group skills and people required into appropriate functional groups

• Decide on location and structure of each functional group
Working to Put Service First

Small Business/Self-Employed

3-14

Figure 3-5: Key Customer Characteristics for SB/SE Customers

• 1M new filers a year

• 2.7M 1040 with 2106 only

• 29.6M 1040 with C, E or F

• 6.2M 1065, 1120 or 1120S

• 35.2M (88%) use paid preparer

• 4.8M (12%) do not use paid preparer

• 65% of small businesses use the web in some form

• 81% of small businesses have internet access

• Self-employed and home-based businesses will number

 50M by 2002, with 38 million having PCs

• 19% of small businesses file electronically

• Filing complexity increases with employees

• 81% of the small businesses polled are not aware of tax

 provisions intended to help small business

• Over 70% of small businesses polled didn’t know how new

 small business tax laws affect their business

ß 1995 IRS Small Business Customer

 Satisfaction Survey (Final Report)

• Results of SB TEC team site visits:

 - Dallas, TX

 - New York City, NY

 - Buffalo, NY

 - Seattle, WA

 - Los Angeles, CA

 - Oakland, CA

 - Atlanta, GA

• Testimony to Senate Committee on Small

 Business

• Yankee Group survey (1999)

• Arthur Andersen Enterprise Survey (1999)

• Small Business News Clips - 9/28/99

• Visa International (Spring 1999 Survey)

Data Sources

Key Customer

Key Findings Characteristics  

(1) New vs. Existing Filers

(2) Type of Forms Filed

(3) Self vs. Paid Preparer

(4) Technology Use

(5) Number of Employees

(6) Tax Knowledge

Small Business / Self-Employed

Customer Base
Working to Put Service First

Small Business/Self-Employed

3-15

TEC Partnership Outreach

TEC Partnership Outreach will proactively manage product development and

partner with government agencies, small business organizations, practitioner

groups and other professional and volunteer organizations. While it is not all

inclusive, Figure 3-6 represents numerous examples of organizations that have

potential for building partnerships and beginning outreach efforts.

Figure 3-6: Potential SB/SE Partners

ELECTRONIC

BUSINESSES

GOVERNMENT

AGENCIES,

EDUCATIONAL

INSTITUTIONS,

COMMUNITY &

VOLUNTEER

ORGANIZATIONS

SMALL BUSINESS

ORGANIZATIONS

PROFESSIONAL,

TRADE AND

SERVICE

ORGANIZATIONS

PRACTITIONER

AND PAYROLL

ORGANIZATIONS

• WebChamber.com

• Dow Jones

Business Directory

(DowJones.com)

• eBusinessWorld

• eComInfoCenter.

com

• Association for

Interactive Media

• Cisco Resource

Center

• Internet Business

Users Group

• Direct Marketing

Association

• Oracle

• Yahoo

• XMLconnect.net

• Small Business

Administration

(SBA)

• Small Business

Development

Center (SBDC)

• Service Core of

Retired Executives

(SCORE)

• Women’s Business

Center (WBC)

• Social Security

Administration

(SSA)

• Department of

Labor

• Department of

Commerce

• Immigration and

Naturalization

• Census Bureau

• Bureau of Labor

Statistics

• National Federation

of Independent

Contractors

• National

Association for the

Self Employed

• National Federation

of Independent

Businesses (NFIB)

• American

Subcontractors

Association

• National Small

Business United

• Small Business

Council of America

• Small Business

Legislative Council

• Small Business

Innovation

Research (SBIR)

• American Bankers

Association

• National Foundation

for Women

Business Owners

• National Council of

Chain Restaurants

• National Restaurant

Association

• Council for

Electronic Revenue

Communication

Advancement

• Information

Technology

Association of

America

• American Trucking

Association

• American Farm

Bureau Association

• American

Association of

Retired Persons

• Chambers of

Commerce

• National

Association of

Nonprofit

Associations

• National

Association of

Enrolled Agents

• American

Association of

Attorney-Certified

Public Accountants

• American Institute

of Certified Public

Accountants Tax

Division

• American

Association of

Attorney-CPA’s

• American Bar

Association Section

of Taxation

• National

Association of Tax

Practitioners

• National

Conference of CPA

Practitioners

• National Society of

Accountants

• American Society of

Payroll

Management

• American Payroll

Association (APA)

• National Society of

Accountants
Working to Put Service First

Small Business/Self-Employed

3-16

These partnerships will improve our ability to provide: non-traditional sites

for serving customers resulting in convenient and comprehensive levels of

service, more channels to reach customers (e.g., seminars, newsletters,

magazines) and an audience for us to share ideas, understand and educate our

customers and receive feedback on our progress. These partners will be

leveraged as additional resources to develop and deliver products and

services that can assist SB/SE customers. In this way, TEC will be able to

reach a larger number of taxpayers with a relatively small permanent staff of

IRS employees.

A major objective of TEC is to provide the SB/SE customer base a means of

proactively interacting with the SB/SE Division on topics important to both

parties such as searching for ways to utilize electronic commerce and

establishing voluntary agreements on process issues.

TEC Taxpayer Education Areas

TEC Taxpayer Education area offices will provide customer-focused

products, services and assistance to educate SB/SE customers. Educational

activities will be available for any business transaction that impacts tax

obligations such as hiring employees, expanding a business, converting from

a sole proprietorship, incorporating or exiting business. The Taxpayer

Education area offices will work with the following three groups:

1) partnership groups at the local level to provide tax law and filing

information as well as training and education services, 2) Research to

identify customer needs and determine how best to meet those needs and 3)

SB/SE Compliance to educate customers as part of the daily work routine.

The Taxpayer Education offices will establish a close relationship with

Compliance in order to understand SB/SE taxpayer compliance issues. This

understanding will enable the Taxpayer Education staff to proactively offer

customized assistance to taxpayers. To facilitate this interaction, the

geographic footprint for both Taxpayer Education and Compliance is similar

– in fact they are the same with the exception of TEC Area 14 which was

split into two Compliance Areas. Figure 3-7 on the next page illustrates the

area, state, city and number of territories for all areas.

Taxpayer Assistance Centers

Walk-in services for SB/SE will be provided by W&I-managed Taxpayer

Assistance Centers (TACs). Although TACs will be managed by W&I,

assistance will be provided to all customers. To ensure proper service for

SB/SE taxpayers, SB/SE will provide extensive training to TAC

staff/managers, establish a hotline to support TAC staff on SB/SE inquiries

and, in some cases, temporarily/permanently staff TACs with SB/SE

employees.
Working to Put Service First

Small Business/Self-Employed

3-17

Figure 3-7: TEC Territory Footrprint (86 Offices Including 2 International Locations)

Area State City

# of

Territories Area State City

# of

Territories Area State City

# of

Territories

1 Connecticut Hartford 1 6 Kentucky Louisville 1 10 Oklahoma Oklahoma City 1

Massachusetts Boston 1 Michigan Detroit 1 Texas Austin 1

Springfield 1 Grand Rapids 1 Dallas 1

Maine Augusta 1 Ohio Cincinnati 1 Houston 1

New Hampshire Portsmouth 1 Cleveland 1 San Antonio 1

Rhode Island Providence 1 West Virginia Charleston 1 Total 5

Vermont Burlington 1 Total 6

Total 7 11 Arizona Phoenix 1

7 Illinois Chicago 1 Colorado Denver 1

2 New York Albany 1 Downers Grove 1 Montana Helena 1

Buffalo 1 Springfield 1 New Mexico Albuquerque 1

Hauppauge 1 Indiana Indianapolis 1 Nevada Las Vegas 1

Brooklyn 1 South Bend 1 Utah Salt Lake City 1

Manhattan 2 Wisconsin Milwaukee 1 Wyoming Cheyenne 1

Total 6 Total 6 Total 7

3 New Jersey Cherry Hill 1 8 Alabama Birmingham 1 12 Alaska Anchorage 1

Fairfield 1 Arkansas Little Rock 1 Hawaii Honolulu 1

Pennsylvania Philadelphia 2 Georgia Atlanta 1 Idaho Boise 1

Pittsburgh 1 Macon 1 Oregon Portland 1

Total 5 Louisiana New Orleans 1 Washington Seattle 1

Mississippi Jackson 1 Total 5

4 District of Columbia Washington 1 Tennessee Memphis 1

Delaware Wilmington 1 Nashville 1 13 California Fresno 1

Maryland Baltimore 1 Total 8 Oakland 1

North Carolina Charlotte 1 Sacramento 1

Greensboro 1 9 Iowa Des Moines 1 San Jose 1

South Carolina Columbia 1 Kansas Wichita 1 Total 4

Virginia Norfolk 1 Minnesota St. Paul 1

Richmond 1 Missouri Kansas City 1 14 California Los Angeles 1

Total 8 St. Louis 1 San Bernadino 1

North Dakota Fargo 1 San Diego 1

5 Florida Fort Lauderdale 1 Nebraska Omaha 1 Santa Ana 1

Jacksonville 1 South Dakota Aberdeen 1 Total 4

Miami 1 Total 8

Orlando 1 15 District of Columbia Washington 1

Tampa 1 Puerto Rico San Juan 1

Total 5 Total 2

Grand Total 86
Working to Put Service First

Small Business/Self-Employed

3-18
Working to Put Service First

Small Business/Self-Employed

3-19

Customer Account Services (CAS) will be responsible for assisting

customers in submitting accurate tax returns and remitting the proper amount

of tax. The focus will be on processing returns timely and accurately,

assisting customers with account specific questions and adjusting their

accounts when necessary. Figure 3-8 illustrates the overall CAS organization

structure.

Figure 3-8: Customer Account Service Organization (CAS)

The activities within CAS naturally fall into either Submission Processing or

Accounts Management. Submission Processing activities are high volume,

repetitive and include processing of paper returns, electronic submissions,

payments and refunds. Accounts Management activities are transactional

and taxpayer specific and include responding to customer inquiries, solving

customer problems, providing options to settle accounts and working issues

received through telephone calls, written correspondence and e-mail. These

CAS activities are supported by a headquarters staff of program analysts

experienced in related tax law, policies and procedures. These technical

experts provide guidance and direction to the submission processing and

accounts management operations at the Small Business/Self-Employed sites.

Customer

Account

Services

Organization

Cust Service

Sites

Individual

Customer Account

Services

Support

Business

Specialty

Accounts

Management

Call

Site

Individual

Business

CS Sites Call Sites

Brookhaven

Philadelphia

Ogden

Cincinnati

Memphis

Buffalo

Pittsburgh

Richmond

Oakland

Denver

Cleveland

Indianapolis

Nashville

Processing

Common

Services

Planning and

Analysis

Cincinnati

SP Site

Ogden

SP Site

Document

Perfection

Receipts &

Control

Input

Correction

Data

Conversion

Statistics of

Income

Processing

Support
Working to Put Service First

Small Business/Self-Employed

3-20

Submission Processing

Submission Processing activities include processing of paper and electronic

returns, tax payments and refunds. Taxpayers should notice little difference

in these interactions, since this area is already one of the most efficient and

effective operations within the IRS. Additionally, with the emphasis on

processing business returns, the Small Business/Self-Employed Division will

be positioned to further improve service to these business customers. In the

short term, however, TEC will be working to migrate toward electronic

commerce.

Phase IIB design teams developed a detailed organization structure for each

of the Submission Processing organizations. This structure seeks to group

activities together to minimize disruption to the processing flow while

facilitating better communication among the management levels. The

proposed structure has two support functions - Planning and Analysis and

Common Services - and five Technical functions: Receipt & Control,

Document Perfection, Data Conversion, Input Correction and Processing

Support.

• Planning and Analysis is responsible for developing work plans and

staffing plans in preparation for the filing season, analyzing program

delivery and monitoring execution.

• Common Services will address needs related to personnel and

facilities across each site, coordinating with Submission Processing,

Accounts Management and Compliance.

• Receipt & Control receives, sorts and routes incoming

correspondence to the appropriate area.

• Document Perfection Area corrects any errors in return information

before returns are key punched into the system. Also resolves issues

related to taxpayer name, address and taxpayer identification number

(TIN); and assigns every return a document locator number.

• Data Conversion Area enters taxpayer data into an automated

system.

• Input Correction Area resolves errors from the data conversion

process and from unpostables.

• Processing Support Area includes follow-up functions responsible

for processing taxpayer payments, filing returns and matching

returns with data entered into the automated system to identify errors

before notices are sent.

Accounts Management

Accounts Management activities include responding to customer technical

and account inquiries, resolving customer account issues, providing account

settlement (payment) options and working related issues. Accounts

representatives will be able to provide tax law, account resolution and

payment information across several platforms (telephone, paper, electronic),

which will shift in response to changing customer demands. SB/SE accounts
Working to Put Service First

Small Business/Self-Employed

3-21

representatives will be specifically trained to resolve the routine and complex

issues affecting this taxpayer base. This will enable these employees to

become more effective at meeting the needs of a specific group of taxpayers,

across a broader range of functions, thereby improving their own job

satisfaction as well as service to the customers.

To accomplish the specialization of Submission Processing and Accounts

Management work, in a service center environment, we have divided the

service centers' pipeline and non-pipeline operations into three functions:

Submissions Processing, Accounts Management and Remote Compliance.

Submissions Processing and Accounts Management will report to CAS.

Figure 3-9 provides a comparison of today’s Customer Service organization

responsibilities and how those duties migrate to the either Accounts

Management or move to the Remote Compliance organization.

Figure 3-9: Today’s Customer Service Organization Aligned with the New CAS

Structure

CUSTOMER SERVICE

TODAY

ACCOUNTS

MANAGEMENT

ß Toll-free Activity

ß Adjustments/

Correspondence

ß Accounts

Maintenance

ß Statutes

ß Disclosure

ß TeleTIN, FaxTIN,

PCTIN

ß CAF/Power of

Attorney

ß Refund Activity

2002 (Dedication)

REMOTE

COMPLIANCE

ß Correspondence

Exam

ß Document Matching

ß EITC Program

ß Estate & Gift Tax

ß FedState Program

ß Audit

Reconsideration

ß District Office

Support

ß Research &

Development

ß ACS

ß ACS Support

ß Delinquent Return

Program

ß Balance Due Program

ß Installment

Agreement Program

ß Insolvency

ß Offer-in-Comprise

ß Trust Fund Recovery

ß SFR/ASFR (W & I)

ß TEFRA (SB/SE)

ß SSA & Wage

Discrepancy (SB/SE)

ß CAWR/FUTA (SB/SE)

ß Excise (CSC Only)

ß Innocent Spouse (CSC

Only)

ß 6020(b) (SB/SE)
Working to Put Service First

Small Business/Self-Employed

3-22

Business Master File (BMF) returns will be processed at two submission

processing sites: Cincinnati and Ogden. Additionally, in order to complete

the Accounts Management function, the following eight district phone sites

are to be dedicated to the five SB/SE Account Management Sites: Buffalo,

Pittsburgh, Richmond, Oakland, Denver, Cleveland, Indianapolis and

Nashville. (Note: The following current call site operations will also be

dedicated to SB/SE and will report through the Compliance organization:

Denver, Oakland, Indianapolis, Cleveland, Nashville, Brookhaven,

Jacksonville, Philadelphia, Buffalo, Seattle/Portland and St. Louis.) The

footprint of the Customer Account Services organization is illustrated in

Figure 3-10.

Figure 3-10: Customer Account Service Organization (CAS) Geographic Footprint

1

1

2

3

2

3

4

5

4

5

Call Sites

1. Oakland

2. Nashville

3. Indianapolis

4. Cleveland

5. Richmond

6. Pittsburgh

Accounts

Management Sites

1. Ogden

2. Memphis

3. Cincinnati

4. Philadelphia

5. Brookhaven

8

6

7

7. Denver

8. Buffalo

The SB/SE Compliance organization mission is to provide prompt,

professional and helpful service to all customers. This focus will include

increasing overall compliance and the fairness of compliance programs as we

study and evaluate small business needs and trends. Compliance will

provide educational guidance and community outreach and apply appropriate

compliance treatments based on facts, circumstances and risk. The

Compliance workforce will be empowered, flexible and accountable in

providing world-class customer service.

This new Compliance organization structure will result in three

overwhelming improvements: 1) increased managerial accountability, 2)

cross-functional management of exam and collection issues resulting in faster

Compliance

Organization
Working to Put Service First

Small Business/Self-Employed

3-23

case resolution and 3) improved compliance through an improved flow of

information from Compliance to the pre-filing organization.

The compliance activities have been divided into those that require face-toface interaction and those that do not. The structure of the Compliance

organization is aligned around these activities. The organization structure for

the Compliance function is illustrated in Figure 3-11.

A geographically deployed field force will handle exam and collection

activities requiring significant face-to-face interaction with the taxpayer.

This organization will consist of 16 areas, 175 territories and 1,394 groups.

This significant field presence will ensure that taxpayers are afforded the

opportunity to meet face-to-face with IRS Compliance staff when needed.

While the TEC staff will take the lead role, Compliance staff will also be

assisting taxpayers during the filing season with face-to-face assistance in

interpreting the tax law, preparing returns and other taxpayer requirements.

The field organization will be segmented into geographic sections: areas,

territories and groups. The locations for the areas are illustrated on the next

page in Figure 3-12.

Area 1 Area 2 Area 3 Compliance Services Compliance Policy

Compliance

Insolvency

Service Center

Compliance Ogden

Service Center

Compliance Philadelphia

Service Center

Compliance Brookhaven

Service Center

Compliance Memphis

Service Center

Compliance Cincinnati

Program

Administration

Centralized Workload

Selection & Delivery

Program

Support

Area 4 Area 5 Area 6

Area 7 Area 8 Area 9

Area 10 Area 11 Area 12

Area 13 Area 14 Area 15

1047

181

1529 1091

1143 978 1338

1219 1487 1116

1502 1006 738

1094

1218

TBD

TBD

TBD

TBD

TBD

94

52

97

5

Area 16

962

888

Support

Territories

3819

22,606+ Total

Figure 3-11: Compliance Organization Structure
Working to Put Service First

Small Business/Self-Employed

3-24

Figure 3-12: The Compliance Organization Geographic Footprint

Area 12

Area 11

Area 13

Area 14

Area 9

Area 10

Area 7

Area 6

Area 1

Area 2

Area 3

Area 4

Area 5

Area 16 Area 8

Area 15

1-Boston; 2-Manhattan; 3-Philadelphia; 4-Baltimore;

5-Jacksonville; 6-Detroit; 7-Chicago; 8-Nashville;

9-St.Paul/Minneapolis; 10-Dallas; 11-Denver; 12-Seattle;

13-Oakland; 14-Laguna Niguel; 15-International;

16-Los Angeles
Working to Put Service First

Small Business/Self-Employed

3-25

A Compliance Services Organization will handle those compliance

activities not requiring significant face-to-face interaction with taxpayers.

Under the direction of the Compliance Services Field Director, the three

functional groups in this organization include : 1) Insolvency; 2) Remote

Exam, which includes examinations conducted through correspondence and

our automated system used to detect underreporting of income (currently the

Automated Under Reporter – AUR); and 3) Remote Collection, which

includes collection activity that can be handled by telephone (currently the

Automated Collection System (ACS) and Service Center Collection Branch).

A Compliance Policy Group consisting of Specialty Tax, Compliance

Systems Administration, Technical Advice, and Penalties, Interest and Fraud

will be composed of both examination and collection staff to ensure that

policies and procedures are sound and reflect SB/SE organizational priorities.

This staff will also work with other components of the IRS to ensure that

SB/SE compliance policies are consistent with the overall goals of the

Service. In addition, SB/SE will centralize all its exam selection activities

into the Compliance Policy Group to ensure adequate separation of selection

and conduct of examination.

Due to the complexity of the SB/SE tax issues, the potential for errors,

misunderstandings and confusion to result in a compliance action is high.

For this reason, we must move away from our “one-size-fits-all” compliance

program to a more tailored approach. To accomplish this, we will utilize

risk-based compliance programs to identify taxpayer segments, and develop

and employ effective treatments (including education and outreach) to bring

them into compliance. The goal of this program is to intervene as quickly as

possible to notify taxpayers that they have a balance due on their account and

determine an appropriate course of action. The earlier we are able to begin

working with the delinquent taxpayer, the higher the likelihood of avoiding

further action by the IRS collection staff. In addition to reaching SB/SE

taxpayers quickly, we must also determine the taxpayer’s past payment/filing

history with the IRS. Similar to commercial financial institutions, we will

provide more flexibility to those taxpayers that do not have a long-standing

pattern of late payments or willful noncompliance. It is our strong belief that

the majority of taxpayers finding themselves in a non-compliance situation

are not willfully being non-compliant but are experiencing temporary

difficulties. In short, our new risk-based approach will help us to tailor our

compliance activities based on a taxpayer risk profile.

An important aspect of increasing overall compliance will be the information

sharing process between Compliance and TEC. Information gained during

compliance activities will help direct TEC assistance initiatives. For

example, during many examinations, either local or national, we may

discover that taxpayers are making similar errors. In the future, this

information will be systematically provided to the SB/SE TEC organization

to develop and deploy outreach activities to quickly notify taxpayers of the

trend and how to properly handle the situation. In addition to creating

tailored educational products and services, we may hold meetings with

stakeholders and taxpayer representatives to ask them to pass along this

valuable information. While education may be the answer, in some cases we

may want to elevate this issue to the Chief Counsel, the Taxpayer Advocate

or the Treasury Department to obtain an interpretation, clarification or
Working to Put Service First

Small Business/Self-Employed

3-26

modification to the tax law. These are just some of the benefits gained by

taxpayers when we systematically use the valuable information gained during

compliance activities.

There are 20 high-level initiatives associated with migrating to the new

SB/SE organization – each brings the IRS one step closer to its desired future

state (see Table 3-1). These 20 initiatives extend over a period of three

years.

Table 3-1: Implementation Milestones

LINE

ORGANIZATION

# INITIATIVES

Headquarters 1. Submit Commissioner Package

• Division Commissioner has been selected and is on board

• Working with the Strategic Human Resource organization the

Executive/Management selection process has been followed and

key positions filled

• Management has been educated on the vision, structure, functions,

etc. of the new division

2. Submit draft PDs

3. Announce Positions

Taxpayer Education &

Communication

4. Select candidates

Customer Account

Services

5. TIMIS Database validation completed (most personnel actions have

been completed to non-competitively and competitively realign)

• The Restructuring Agreement selection process and notification

processes have been adhered to in the populating of the new

division

• Personnel actions have been processed for all employees to be

realigned

• Most competitive actions have been completed and those employees

will have received their position descriptions and Critical Elements

and Standards

• Key support positions, embedded and co-located, have been filled

• Strategies have been developed to manage employees during the

status quo period

6. Submit "To/From" Listing

7. Deliver Notice #

Compliance

8. Complete SF-52's for employees not being "swept"

Cross - line organization 9. Budget authority transferred to new Division (Budget has been created

and responsibilities transferred to the Division Commissioner)

• Financial codes have been created and financial, personnel and

administrative systems updated with new codes/cross-walks

• Embedded CFO organization has been designed and implemented.

Key headquarters and field financial staff are in place to manage the

division's fiscal programs

• FY 2000 Financial Plan has been developed and is ready to be

executed. FY 2000 resources have been allocated to the appropriate

Financial Plan Manager

Implementation

Timing
Working to Put Service First

Small Business/Self-Employed

3-27

LINE

ORGANIZATION

# INITIATIVES

10. Re-validate interim Division delegation orders (The Division has the

delegated authority to fulfill its mission)

• Current best thinking is that the Divisions will need to have:

–Functional statements for the new organization similar to those that

appear in IRM 1.1 Organization and Staffing for the "old"

organization; and

–Delegation Orders as contained in IRM Handbook 1218 that have

been revised to include the positions in the new unit that need

the authority

• Functional Statements will need to be developed by the design teams

by pulling available information from the Blueprints and

reformatting them into functional statement style

• Delegation Orders will need to be appended/edited to include the

new positions in the division that need authority while retaining the

authority in the regions and districts needed to operate until they

are phased out

11. Create and execute delegation orders to the appropriate level in the new

division

12. Update IRM procedures and policies as needed (pending GLS opinion)

(Management systems or workarounds have been developed and are in

place to allow the division to function)

• Clearly define changes needed to legacy systems

• Workarounds need to be in place

13. Validate legacy RIS submissions and track changes

14. Submit appropriate forms (5081's) to ensure necessary access

changes/updates

15. Develop Division Agreements to agree on services to be provided by

other divisions

16. Headquarters facilities are complete

17. IS connectivity for HQ facilities is complete

18. Develop work assignment process for Section 2

19. Develop training delivery plan

20. Identify from the transition templates critical transition issues and

processes to be addressed
Working to Put Service First

Small Business/Self-Employed

3-28

Figure 3-13: SB/SE Implementation Plan

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

CY 1999 CY 2000 CY 2001 CY 2002 CY 2003

CAS HQ TEC COMPLIANCE

SBSE Commissioner & Deputy in place

TEC Director & Deputy in place

Compliance Director & Deputy in place

CAS Director in place

Directors BSP, SRPM, M&F, Communication, HR, EEO in place

Area Directors in place

Area Directors in place

Compliance Territory Managers in place

HQ Staff in place(competitive)

HQ balance staff realigned/ reassigned (SPPQ Research)

Directors Account Management, Submissions Processing in place

CAS Managers in place

CAS balance staff realigned/reassigned

HQ Managers in place

Director PO, PDM in place

TEC Field Territory Managers

TEC Territory Staff

Balance TEC HQ staff in place

Balance Compliance HQ staff in place (competitive)

Directors Compliance Policy, Compliance Services in place

Balance Compliance staff realigned/reassigned

During July 1999, the first

SB/SE initiative began with

the establishment of the

SB/SE Headquarters. The

SB/SE Commissioner and

Deputy were identified in

January 2000. In March

2000, the top executives for

the operating units (TEC,

CAS and Compliance) were

named. In June 2000, three

tiers of management will be

in place and we will begin

aligning selected employees

and programs to the SB/SE

Headquarters.

Starting in April 2000, the

leaders of the three

operating units will begin

implementation of their

operating units. The

operating units will be fully

aligned by October 2000.

The workload would be

fully aligned by October

2001 for TEC and October

2002 for Compliance.
Working to Put Service First

Large and Mid-Size Business

4-1

Chapter 4 Large and Mid-Size

Business

Taxpayer

Characteristics

The Large and Mid-Size Business (LMSB) Division includes

roughly 210,000 of the largest filers, with assets over $5 million.

This operating division will be organized into industry segments

to best address the needs of unique groups of large corporations.

The taxpayers served by the new Large and Mid-Size Division

have unique needs that required fundamentally re-thinking the

way the IRS currently provides service and ensures compliance.

Taxpayers with greater than $5 million in assets require a

dedicated IRS business unit to address sophisticated tax planning

capabilities and complex filing requirements.

This LMSB business unit will serve corporations, sub-chapter S

corporations and partnerships with assets greater than $5 million.

These businesses are responsible for an annual tax liability of

$466 billion. Approximately 10% of these taxpayers are

examined each year and the largest of these taxpayers deal with

the IRS continuously.

These businesses generally have large employee bases and “inhouse” tax organizations. They also have access to large legal

and accounting organizations for the most complex issues. While

collection issues are rare, many other complicated issues such as

tax law interpretation, accounting principles and regulatory issues

arise frequently, particularly those with international dimensions.

Approximately 18% of the largest corporate taxpayers are owned

by Foreign Controlled Corporations (FCC). These Coordinated

Exam Program (CEP) returns contained approximately $40

billion in foreign tax credits in 1997, which represented over 80%

of all credits claimed.

Goals,

Principles and

Objectives

The LMSB Phase IIB team followed the basic vision, structure

and processes of the Phase IIA design. The LMSB Phase IIB

team completed more work in a compressed time frame than

other Operating Divisions, such as Small Business/SelfEmployed (SB/SE) and Wage & Investment (W&I) due to an

accelerated implementation schedule. To accomplish this

aggressive schedule, the Phase IIB team operated some sub-teams

that were in the design stages, while others were beginning

implementation.
Working to Put Service First

Large and Mid-Size Business

4-2

LMSB had major accomplishments on an operating division

level, the most significant being the Commissioner’s approval of

the organization design. This marked the official birth of the

Large and Mid-Sized Division by giving approval to the final

organizational structure, including all positions, staffing levels,

layers of management and spans of control. After approval of the

“Commissioner’s package,” formal notification was sent to all

impacted employees informing them of the new organizational

design. In addition, LMSB began populating the new

organization. Twenty-five executive positions were announced

and filled, including the Industry Heads and Field and

Headquarters Directors.

The LMSB commitment to improving the business operations at

all levels is evident in the Phase IIB designs. Interviews with

large corporations and external stakeholder associations

identified four themes for change.

• First, the new IRS organization must strive to create

an atmosphere of teamwork between the LMSB

taxpayer representatives and the LMSB IRS staff.

• Second, the IRS must have knowledgeable, welltrained staff members who are universally recognized

as experts on the tax code sections affecting large

and middle market corporations.

• Third, the IRS should offer more pre-filing services

to all large and mid-size business taxpayers. The

offering of pre-filing services extends to pretransactional advice and will require close

coordination with Counsel.

• Fourth, compliance strategies can also be improved

by more actively working with Counsel to produce

guidance and clarify unclear areas of the tax code.

Addressing these four overarching themes requires revamping

much of what currently exists, including: an industry aligned

organizational structure, new and improved business processes,

new tailored products and services, better trained employees,

better technologically equipped employees, more managerial

involvement in casework and improved compliance strategies.

While these success factors will require changes in business

processes, they also clearly demand a complete transformation of

the current organizational structure. The following represents just

some of the improvements taxpayers will recognize:

• fewer delays resolving tax issues

• well trained industry experts

• more direct contact with IRS managers

• taxpayer input to performance evaluations
Working to Put Service First

Large and Mid-Size Business

4-3

• more accurate and timely information through

technological enhancements

These dramatic improvements will have clear benefits for LMSB

taxpayers. The IRS will be proactively resolving taxpayer

questions, concerns and issues. In the future, taxpayer

interactions will be less difficult, less time consuming, less

expensive and less contentious.

To begin efforts to achieve this goal, LMSB is in the advanced

design stage of a new Pre-filing Agreement designed to reach

early agreement on high risk or record intensive issues. The new

process will promote close cooperation between the IRS and the

taxpayer to quickly identify the information necessary to resolve

the issue and prepare a closing agreement. LMSB is expecting to

launch a pilot early in Phase III to test the procedure and the

benefits to the IRS and the taxpayer of this new Pre-filing

Agreement process.

The pilot program will involve a cross section of the largest

LMSB taxpayer population and will run for a period of six

months. LMSB will then assess the level of success and

determine what changes, if any, are necessary to prepare for

national implementation.

Those taxpayers who wish to work in this mutually efficient

manner will discover that both parties can benefit. The IRS will

conserve scarce resources that can be better used to address

compliance issues. Likewise, taxpayers may also conserve

resources and obtain a faster resolution to their tax issues. The

new organizational design is built around this framework of

cooperation and applying expert resources to the needs of these

sophisticated taxpayers.

The LMSB Managers and dedicated employees will also receive

great benefits from a revamped organizational structure. These

benefits include:

• industry-specific knowledge

• more involvement in identifying and solving issues

• more decision-making authority

• cooperation from Counsel on LMSB specific issues

• conflict resolution training

• new technology enabling improved taxpayer service

• training to better utilize key technological tools

• performance measures aligned with key objectives
Working to Put Service First

Large and Mid-Size Business

4-4

One example of our commitment to LMSB personnel is the

newly developed concept of the knowledge transfer system.

Initiated during Phase IIB and continuing during Phase III, this

effort will provide field employees significant flexibility and

responsiveness while conducting examination. The system will

be designed to institutionalize the knowledge within LMSB by

quickly recording and disseminating the know-how and

experience across the LMSB organization.

This system will offer a very effective platform to deliver

relevant and timely training to LMSB employees. Taxpayers will

also benefit from this system as Revenue Agents will be in a

position to quickly access the IRS’ position (e.g. Published

Guidance, Private letter Ruling, etc.) leading to more uniform tax

treatment.

New

Organizational

Model

The Large and Mid-Size Business Division vision is to be a

world-class organization responsive to the needs of our

customers in a global environment while applying innovative

approaches to customer service and compliance. We will apply

the tax laws with integrity and fairness through a highly skilled

and satisfied workforce, in an environment of inclusion where

each employee can make a maximum contribution to the

mission of the team.

To achieve the vision, LMSB needs to create a new operating

model that provides better consistency in customer focus,

ownership and accountability to taxpayers and other

stakeholders. This new model is illustrated in Figure 4-1.
Working to Put Service First

Large and Mid-Size Business

4-5

Figure 4-1: The New LMSB Operating Model Results in Significant Benefits for All

 Stakeholders

NEW OPERATING MODEL BUSINESS RESULTS

• Increased rate of voluntary

compliance

• Increase in tax collected

• Less costly tax

administration

CUSTOMER

SATISFACTION

Structure

• Aligning along industry lines ensures depth of industryspecific knowledge and improves responsiveness to taxpayers

People

• Specialization provides for increased levels of expertise among

Revenue Agents and Field Specialists

• Shift in focus toward taxpayer needs improves working

relationship with taxpayers

• Proactive to industry trends, improving response times and the

ability to identify significant issues earlier in the process

• Global tax administration

• Less time-consuming

examination process

improves examination

currency

• Improved working

relationship with taxpayer

EMPLOYEE

SATISFACTION

Process

• Strong accountability empowers employees to make decisions

• Industry-specific knowledge and technical training develops

more skilled employees

• Engaging Counsel earlier in issue resolution improves

communication within the IRS and speeds up examination

process

• Initiatives to reduce taxpayer dependence on Appeals should

improve taxpayer satisfaction and increase compliance

• Employees better equipped

with tools and industryspecific training

• Increased accountability

results in more ownership

of process
Working to Put Service First

Large and Mid-Size Business

4-6

Organizational

Structure

The LMSB structure will be aligned by industry versus the current

geographic alignment. The industry aligned staffs will focus on

taxpayer needs, have deep technical/industry expertise and will

respond proactively to industry trends. In addition to improving

compliance strategies, the IRS will also be increasing efforts to educate

taxpayers prior to filing their tax returns and to work much more

actively with Counsel to produce guidance and clarify unclear areas of

the tax code. This increased focus on pre-filing activities will help

reduce the issues arising in a post-filing/compliance situation.

The division will be aligned by industry groupings and will continue to

have field offices throughout the nation, allowing the IRS to meet onsite with its customers. The largest component of the approximately

7,100 staff will be located in field offices. However, approximately

600 will be located at the division headquarters. The overall structure

is illustrated on the next page in Figure 4-2.

At a high-level, the Industry Headquarters office will oversee the

execution of fair and timely examinations, deploy resources across

examination teams and resolve operational issues. Industry research

specialists will provide technical support and expertise and identify the

drivers of industry-specific compliance behaviors and address them

through the various compliance initiatives. After identifying specific

compliance areas needing attention, the Industry Director will work

closely with Counsel to ensure that tax law interpretation and guidance

adequately address the tax issues involved.

Field Operations Directors will interface with the Territory Managers

whom they oversee to resolve issues and ensure the Exam plan is

carried out fairly and effectively. They will also develop operational

plans for resource deployment across examination teams.

Territory Managers will ensure that the appropriate resources are

available to resolve issues referred by team managers. Team managers

will manage the front-line examination process. They will plan, direct

and monitor examination cases. They will also continue to coordinate

with specialist managers, Appeals and Counsel to acquire the necessary

expertise.

The Revenue Agents will continue to conduct examinations, develop

working relationships with taxpayers and obtain in-depth industry

knowledge through training and seminars.

International Field Specialists provide tax administration services from

pre-filing educational outreach to post-filing compliance activities, as

well as specialty assistance in resolving International tax issues. The

goal of the International Specialists is to meet the international needs

of large and mid-size businesses within assigned industries.

Other specialists include Computer Audit Specialists, Economists,

Engineers, Financial Products and Transactions. These examination

Specialist Programs will focus on supporting the examination function

by conducting efficient, fair and timely examinations in their respective

specialty areas.
Working to Put Service First

Large and Mid-Size Business

4-7

Figure 4-2: LMSB Division

LMSB Commissioner

------------------------------------------

Deputy Commissioner

National Headquarters

Support Functions

Internal Partners

• Shared Services

• Taxpayer Advocate

• Criminal Investigation

• Appeals

• Counsel

• Information Systems

Exam Specialist

Field

Specialist

Director

Specialist Staff

Territory

Managers

Team

Managers

Financial Services &

Healthcare

Retailers, Food &

Pharmaceuticals

Natural

Resources

Communication

Technology & Media

Heavy Manufacturing

Construction &

Transportation

Pre-Filing &

Technical Guidance

Strategy, Research &

Program Planning

Quality Assurance

And Performance

Management

National

Headquarters

Team

Industry

Director

Sr. Technical

Advisor

Industry

Headquarters

Staff

(3)

Directors Field

Operations

Team

Industry

Director

Sr. Technical

Advisor

Industry

Headquarters

Staff

(2)

Directors Field

Operations

Team

Industry

Director

Sr. Technical

Advisor

Industry

Headquarters

Staff

(2)

Directors Field

Operations

Team

Industry

Director

Sr. Technical

Advisor

Industry

Headquarters

Staff

(2)

Directors Field

Operations

Team

Industry

Director

Sr. Technical

Advisor

Industry

Headquarters

Staff

(3)

Directors Field

Operations

Team

Field

Territory

Managers

Team

Managers

Territory

Managers

Team

Managers

Territory

Managers

Team

Managers

Territory

Managers

Team

Managers

Territory

Managers

Team

Managers

• Equal Employment

Opportunity and Diversity

• Management and Finance

• Communication and Liaison

• Business Systems Planning

International

(U.S. Competent

Authority)

Manager,

International

Programs

International

Program

Operations

Director, International

------------------------------

Deputy Director,

International

Manager, Tax

Treaty

Tax Treaty

Operations

Manager,

Overseas

Operations

Overseas

Operations
Working to Put Service First

Large and Mid-Size Business

4-8

Senior

Management

Team

The concept of a LMSB senior management team, focused on

providing overall strategic and operational direction to service its

approximately 210,000 customers, is a profound change in the way the

IRS views its relationship with this very large customer base. Focused

solely on its mission of providing world-class service to this customer

segment, the members of the senior management team will be much

more interdependent on the success of one another. For example,

changes in the compliance strategy will be viewed holistically across

all LMSB units and industries to determine how these changes impact

both internal operations and service to customers. Strategic direction

as well as operational decisions will be made in the context of service

to this customer base.

The LMSB senior management team is composed of:

• Larry Langdon – LMSB Commissioner;

• Debbie Nolan – Deputy Commissioner;

And the heads of its five industry groups:

• Financial Services and Healthcare – David Robison;

• Retailers, Food and Pharmaceuticals – Bob Brazzil;

• Natural Resources – Bobby Scott;

• Communications, Technology and Media – Tom Wilson;

• Heavy Manufacturing, Construction and Transportation – Tom

Smith.

In addition, the LMSB top management team will include:

• Director of Field Specialists – Keith Jones;

• Director International – Carol Dunahoo;

• Deputy Director International – Elvin Hedgpeth;

• Director Strategy, Research & Program Planning - Dick Teed

(Acting);

• Director Pre-filing & Technical Guidance – Gerald Reese;

• Director Management & Finance – Jim O'Malley;

• Director Business Systems Planning - Julie Rushin;

• Director EEO & Diversity - TBD;

• Director Quality Assurance & Performance Management – Arlene

Kay;

• Director Communications & Liaison – Susan Linden

The Senior Management team met in early January with Larry

Langdon and Debbie Nolan for an orientation to the new operating

division and culture. During this overview, several new ways of doing

business were discussed, focusing specifically on new ways of

communicating and interacting both internally and externally. LMSB

held an Executive Retreat in mid-February entitled "Leaders Make a

Difference." Topics for discussion incorporated the new vision and

included items such as “Building the LMSB Community,” “The

Organizational Adhesive” and “Toward an Integrated LMSB Culture.”

In addition to these topics, a strong emphasis was placed on improving

communications and relationship building in a team environment.

Over the next several months, the LMSB senior management team will

be going “on the road” across the country to share information about

the new LMSB Division and to address issues concerning field

personnel.
Working to Put Service First

Large and Mid-Size Business

4-9

All industry groups will be supported by an Industry Headquarters

operation that will perform all necessary support activities. Internal

partnerships will be developed within the LMSB Headquarters and with

Shared Services, the Taxpayer Advocate, Criminal Investigation,

Appeals, Counsel and Information Systems. Although our partners are

not directly managed by LMSB, we are creating strong internal

partnerships with them to ensure taxpayers and employees receive the

best service possible. This new organization structure with internal

partnerships is illustrated previously in Figure 4-2.

Beyond the immediate organization, the IRS Chief Counsel’s office

continues to be critical to the success of providing top quality advice to

taxpayers. Due to the complexity of the issues raised by taxpayers, the

IRS often relies on the Chief Counsel’s office to interpret the tax law

and recommend a course of action. In order to ensure that Counsel’s

services meet the needs of the operating divisions, a strong partnership

is being established between the LMSB business unit and the Office of

the Chief Counsel. The partnership with Counsel will be facilitated by

the newly created Operating Division Counsel (ODC) position. The

ODC will be an integral part of the strategic oversight throughout the

LMSB organization to achieve our taxpayer service and compliance

goals.

The strong partnership between LMSB and Counsel will directly focus

on ensuring timely and responsive advice to the Compliance staff,

especially during the planning stage. In an examination, dedicated

teams of subject matter experts will develop strategies and provide legal

advice and litigation support with respect to specific industry tax issues.

This team includes the Operating Division Counsel (ODC) and is

designed to focus more closely on providing LMSB taxpayers quality

service. In addition, Field Attorneys will be provided by Counsel to

work in direct partnership with examiners in the field. The ODC and

the LMSB Commissioner will work together to escalate and resolve

emerging LMSB issues and prioritize Counsel resources for developing

and executing litigation and non-docketed case strategies. The ODC

will identify and forward litigation vehicles to promote compliance and

resolve significant industry issues. All of these efforts will directly

improve the timeliness and responsiveness of Counsel’s services.
Working to Put Service First

Large and Mid-Size Business

4-10

LMSB

Headquarters

Larry Langdon, Commissioner, and Debbie Nolan, Deputy

Commissioner, will lead the LMSB Headquarters, both having

management responsibility for the strategic leadership of the LMSB

Division. The LMSB Headquarters will provide strategic leadership and

focus in the development of capabilities unique to the organization,

management of organizational activities, strategic planning and

budgeting, forecasting and financial management. The LMSB

Headquarters will interact significantly with the IRS National

Headquarters and other operating division functions to fulfill its roles

and responsibilities. This redesigned headquarters organization will

improve both service and accountability to taxpayers and improve

consistency across geographies. In addition, improved LMSB processes

and systems will allow the LMSB Headquarters to respond more

proactively to changes in industry compliance behavior.

Some of the headquarters structures currently exist within IRS, while

others are new and will take longer to establish. The International

organization is an example of an existing function that will now reside

within LMSB. While there will be new business processes created to

improve operations, the personnel in these types of functions will move

virtually intact. On the other hand, newly created functions such as Prefiling and Technical Guidance have no existing structure and will need

to be fully developed. Due to the magnitude of this task, further details

will be refined by the Directors of these functions after initial

implementation is complete.
Working to Put Service First

Large and Mid-Size Business

4-11

Figure 4-3: LMSB Headquarters Structure

CHIEF,

FINANCIAL

OFFICER

MANAGER,

HUMAN

RESOURCES

SENIOR

PROGRAM

ANALYST

(5) PROGRAM

ANALYST

LMSB COMMISSIONER

AND DEPUTY

COMMISSIONER

DIRECTOR,

 STRATEGY,

RESEARCH &

PROGRAM PLANNING

& DEPUTY

MGR., RESEARCH

AND PLANNING

MGR., RESEARCH

AND PLANNING

MANAGER,

OPERATIONS

SUPPORT

U.S. COMPETENT

AUTHORITY

AND DEPUTY

MANAGER,

INTERNATIONAL

PROGRAMS

MANAGER,

TAX TREATY

MANAGER,

OVERSEAS

OPERATIONS

DIRECTOR,

QUAL. ASSURANCE

& PERFORMANCE

MANAGEMENT

MANAGER,

JOINT

COMMITTEE

MANAGER,

QUALITY

ASSURANCE

MANAGER,

QUALITY

ASSURANCE

(Team)

DIRECTOR,

EEO AND

DIVERSITY

SPECIALIST

SPECIALIST

EEO

ASSISTANT

DIRECTOR,

BUS. SYSTEMS

PLANNING

(6) PROGRAM

ANALYSTS

RGS

DEVELOPMENT

STAFF

CRM EXAM

PROJECT

MANAGER,

COMMUNICATIONS

AND LIAISON

MANAGER,

COMMUNICATIONS

MANAGER,

LEGISLATIVE

AFFAIRS & LIAISON

DIRECTOR,

PRE -FILING &

TECHNICAL

GUIDANCE &

DEPUTY

MANAGER,

PRE- FILING

SERVICES

(7) MANAGER,

TECHNICAL

ADVISORS

MANAGER,

IFASP

MANAGER,

TREASURY

AND COUNSEL

LIAISON

DIRECTOR,

MANAGEMENT

& FINANCE

MANAGER,

E- COMMERCE
Working to Put Service First

Large and Mid-Size Business

4-12

LMSB Headquarters include the following organizations:

International

Service to international customers is the responsibility of LMSB

Headquarters. International teams are physically located in

cities where customers are concentrated. The responsibilities of

this organization cover a wide range of issues under the

international tax code. Some of these duties include:

• Providing timely and effective implementation of Tax

Treaty and Tax Information Exchange Agreements and

relaying Treaty information to taxpayers.

• Helping taxpayers avoid double taxation consistent with

U.S. Income Tax Conventions.

• Identifying emerging international tax issues.

• Providing tax assistance to U.S. taxpayers residing

overseas through the Revenue Services Representatives

and staffs located at the foreign posts.

• Assisting foreign governments in strengthening their

internal tax systems.

• Working to achieve global consistency with U.S. tax

laws.

• Ensuring consistency along with fair and equitable

treatment of taxpayers within the U.S. who face

international issues.

• Delivering International Specialist services across

industries.

• Advising the Commissioner, LMSB Division regarding

proposed Regulations/Rulings and litigation.

• Working closely with Treasury and Counsel on issues

affecting LMSB customers.

Pre-filing & Technical Guidance

The LMSB structure contains an organization that is dedicated

to providing pre-filing services to customers. Pre-filing

personnel will:

• Provide guidance, assistance and support of industry

practices and resolution of tax issues for both domestic

and international issues.

• Help coordinate resolution of complex tax issues with

Counsel and Treasury.

• Build leveraged partnerships and collaborate with

stakeholders and industry experts to increase taxpayer

education, develop industry expertise and clarify core

issues.

• Support each industry research component and Strategy,

Research and Program Planning in identifying trends in

emerging tax issues.
Working to Put Service First

Large and Mid-Size Business

4-13

Strategy, Research & Program Planning

The Strategy, Research & Program Planning organization

provides LMSB with division-wide support required to conduct

ongoing operations and prepare for the future. Responsibilities

include developing objectives, examination plans and criteria for

audit selection for LMSB.

The team coordinates staffing and funding issues and supports

budget formulation with Management and Finance. Strategy,

Research & Program Planning is responsible for establishing

return coverage across industry units and supporting cross

industry research based on voluntary compliance objectives.

Cross industry research includes the development of

mathematical models and expert systems to support audit

selection including a “marginal yield to cost” model designed to

provide industry information by return types and audit classes.

Maintaining communications with both LMSB organizations

and external groups involved in research and planning is a key

to success for the organization. Personnel will work with

Industry Research, Pre-filing and Technical Guidance and

Counsel to address plans for changing customer needs and

emerging compliance trends. Responsibilities include

coordinating with Business Systems Planning and Information

Systems to design and establish automated systems to monitor

examination plan execution, track examination processes, gather

key compliance information, capture management information,

and provide statistical results.

Some other important functions performed by this office will be

to coordinate with Counsel, analyze tax law changes and assess

compliance problems in order to aide in the production, design

and development of LMSB publications, and coordinate the

printing and distribution of such forms with Agency Wide

Shared Services. They will be responsible for developing IRM

guidelines and policies relating to examination and operational

activities and monitoring and executing the examination plan

designed to carry out the strategic initiatives of the

Commissioner, LMSB Division.

Quality Assurance and Performance Management

This function will provide expertise and staff support to the

LMSB Commissioner and Industry executives to ensure proper

checks and balances to programs and processes are

implemented. This objective includes such responsibilities as:

• Providing the LMSB Commissioner, Industry Directors,

Field Specialist Director and Field Operations Directors

with assessments of operational effectiveness.
Working to Put Service First

Large and Mid-Size Business

4-14

• Performing quality review checks on examined cases

and analyzing results. As a result, creating program

policies and directives to address issues identified.

• Employing objective measures to ensure high quality

examinations reach correct technical conclusions based

on full factual development.

• Using quality measurements to provide ideas and

guidelines for improving customer satisfaction,

employee satisfaction and business results.

Equal Employment Opportunity & Diversity

LMSB will have a dedicated staff that establishes and

implements EEO policies, procedures and programs for the

division in conformance with overall Service guidelines. This

staff will also perform various tasks including:

• Advising the LMSB Commissioner and other LMSB

management officials on EEO and Diversity issues,

including complaint resolution.

• Establishing and implementing EEO policies,

procedures, programs and recruitment strategies for

the division in conformance with overall Service

guidelines.

• Overseeing the LMSB EEO and Diversity Advisory

Committee.

• Providing training to LMSB staff on EEO-related

matters and issues.

• Preparing reports and conducts analyses of key

workforce-related trends or actions to identify any

practices, regulations and procedures that may

perpetuate discrimination.

• Establishing division policy on reasonable

accommodation, sexual harassment and other EEOrelated issues, and ensuring that it is appropriately

implemented.

• Coordinating special emphasis activities relating to

women and minorities.

• Representing LMSB on the EEO and Diversity

Council.

• Developing and monitoring the LMSB affirmative

employment plan in accordance with Servicewide

policy and the management directives of the Equal

Employment Opportunity Commission.

• Developing and monitoring EEO Service Level

Agreements (SLA) with Agency Wide Shared

Services.

• Developing LMSB’s EEO Annual Business Plan.
Working to Put Service First

Large and Mid-Size Business

4-15

• Conducting, on a timely basis, necessary inquiries

into alleged discrimination and recommending

remedial relief in an expeditious manner.

• Developing a substantial relationship with the

recognized employee groups as major stakeholders

in division Diversity initiatives and special emphasis

programs.

Management & Finance

The Management & Finance function oversees various financial

planning and resource allocation tasks, as well as numerous

human resources programs. Some of these roles and

responsibilities include:

Resource Allocation

• Formulating LMSB’s budget submission.

• Managing resource distributions and ensuring that

financial plans support division priorities.

• Tracking resource usage against targets and establishing

financial policies, procedures and controls in

coordination with overall Service guidelines and

procedures.

• Providing budgetary guidance to industries and

specialist organization.

Human Resources

• Ensuring continuous performance improvement and

individual development through competency and skill

building, conducting needs assessments and resource

allocation, developing education strategy and designing

curriculum focusing on the development of LMSB key

competencies.

• Planning for future staffing and competency needs to

ensure that technically competent personnel are

available to meet all LMSB customer needs.

• Providing workforce planning and strategic recruitment

guidance.

• Partnering with other divisions to develop career paths

that span division boundaries.

• Fostering partnership with National Treasury Employees

Union throughout LMSB and serving on the

LMSB/NTEU Partnering Council.
Working to Put Service First

Large and Mid-Size Business

4-16

Communications & Liaison

The Communications and Liaison function, located at the LMSB

Headquarters, is the main point of contact for relaying LMSBrelated information to both internal and external stakeholders.

Among the C&L Group's main responsibilities within LMSB are

overseeing the Division's communications strategy, including

marketing and media relations, and coordinating related

activities with the National Communications and Liaison office..

This group will also serve as the central point of contact on all

LMSB matters related to FedState and Disclosure.

Business Systems Planning

The Business Systems Planning Group, also part of LMSB

Headquarters, gathers and articulates business needs for

Information Technology (IT) projects, applications and legacy

systems. Responsibilities include assessing IT solutions to

address gaps in business processes, creating business cases for

new IT projects and evaluating requests for information

services. This group will create a close partnership with the

Division Information Officer (DIO) who reports to the Chief

Information Officer. Through this partnership, the LMSB needs

and services will be coordinated with all appropriate IT staff.

Some related tasks include:

• Planning and analyzing business needs for new

projects. Developing business cases. Prioritizing

business needs and process changes.

• Formulating Information Technology plans and

budgets. Managing and/or monitoring funds for

business systems modernization projects.

• Developing and testing projects. Overseeing

business involvement in systems testing.

Establishing information systems performance

measures.

• Implementing and overseeing modernization

projects. Developing and monitoring the

Implementation Action Plan. Evaluating the results

of the project on LMSB operations.

• Providing support to senior leadership by providing

business expertise to complement Information

System’s knowledge of technology change.

• Developing and negotiating Service Level

Agreements (SLA) with support functions.

Assessing the effectiveness of support received.
Working to Put Service First

Large and Mid-Size Business

4-17

LMSB Field

Organizations

The LMSB field organizations consist of the Field Specialists

and the five Industries.

Field Specialists

Field specialists will administer all domestic and international

federal tax laws and tax treaty provisions and ensure consistency

in treatment among taxpayers. In addition to consistent

administration of tax laws, field specialists will design, develop

and implement programs, including the administration of prefiling and educational activities, which assist customers in

understanding their tax responsibilities and complying with tax

laws. The increased focus on pre-filing activities will help

reduce the issues arising in post-filing/compliance situations.

Figure 4-4: LMSB Industry Headquarters Organization Chart (including Field

Specialists)

L&MSB COMMISSIONER

& DEPUTY

DIRECTOR,

FIELD

SPECIALISTS

DIRECTOR

FINANCIAL SERVICES

& HEALTHCARE

DIRECTOR

RETAILERS, FOOD &

PHARMACEUTICALS

DIRECTOR

NATURAL

RESOURCES

DIRECTOR

COMMUNICATIONS

TECHNOLOGY & MEDIA

DIRECTOR

HEAVY MANUFACTURING,

CONSTRUCTION &

TRANSPORTATION

MANAGEMENT

SUPPORT

MANAGEMENT

SUPPORT

MANAGEMENT

SUPPORT

MANAGEMENT

SUPPORT

MANAGEMENT

SUPPORT

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

MANAGER, COMPUTER

AUDIT SPECIALISTS

MANAGER,

ENGINEERING

MANAGER,

FINANCIAL

PRODUCTS

MANAGER,

ECONOMISTS

PROGRAM

ANALYST

PROGRAM

ANALYST

BUDGET

ANALYST

SENIOR

TECHNICAL

ADVISOR

DIRECTOR,

FIELD

OPERATIONS

SENIOR

TECHNICAL

ADVISOR

DIRECTOR,

FIELD

OPERATIONS

SENIOR

TECHNICAL

ADVISOR

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

SENIOR

TECHNICAL

ADVISOR

DIRECTOR,

FIELD

OPERATIONS

DIRECTOR,

FIELD

OPERATIONS

SENIOR

TECHNICAL

ADVISOR

DIRECTOR,

FIELD

OPERATIONS
Working to Put Service First

Large and Mid-Size Business

4-18

Industry

Segmentation

As stated above, the LMSB structure will be aligned by industry

versus the current geographic alignment. The industry staff will

focus on taxpayer needs, have deep technical/industry expertise

and will respond proactively to industry trends.

Industry groups will administer all domestic and international

federal tax laws and tax treaty provisions applicable to LMSB

industry-specific customers and ensure consistency in treatment

among industry taxpayers. In addition to consistent

administration of tax laws, industries will design, develop and

implement programs, including the administration of pre-filing

and educational activities, which assist customers in

understanding their industry-specific tax responsibilities and

complying with tax laws. The increased focus on pre-filing

activities will help reduce the issues arising in postfiling/compliance situations.

Industry groups will be in continuous communication with

industry stakeholders and industry experts to increase taxpayer

education, improve business practices and clarify and resolve

common tax issues. Industries will also conduct on-going

research to identify emerging global industry trends and issues

for use in the development of strategic initiatives to improve

customer service and compliance.
Working to Put Service First

Large and Mid-Size Business

4-19

Figure 4-5: LMSB Financial Services and Healthcare Organization

Financial Services and Healthcare

This industry group consists of

taxpayers related to commercial

banking, savings and loans,

securities and financial services,

health care and insurance. All of

these industries are highly related to

each other and are universally

understood to be a distinct market

sector. Today, this sector is

experiencing widespread

consolidation across industries. In

the near future, this sector expects

to experience the largest growth

from international expansion and

sub-sectors (e.g., asset management,

discount brokerage).

These 46,600 taxpayers include

approximately 5,000 large

businesses and 41,600 mid-size

businesses.

Manhattan

Manhattan

Manhattan

Manhattan

New Haven

Fairfax

Baltimore

Wash. D.C.

Wash. D.C.

Pittsburgh

Hartford

Hartford

Norwalk

Providence

Stoneham

Stoneham

Stoneham

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

NY-Queens

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Brooklyn

Center

Brooklyn

Center

Des Moines

Colorado

Springs

Omaha

Dallas

Tulsa

Houston

Dallas

New Orleans

Dallas

Glendale

Glendale

Director, Field

Operations

Manhattan

Total field Ops. Directors: 3

Total Territory Managers: 15

Total Team Managers: 99

Glendale

Laguna

Niguel

Santa Ana

El Segundo

Glendale

Dallas St. Paul Chicago Indianapolis Manhattan Manhattan Hartford Baileys

Crossroad San Fran Philadelphia Manhattan

Director, Field

Operations

Southern California

Director,

Financial Services & Healthcare

Manhattan

San Fran

SanFran

Seattle

Seattle

San Fran

Chicago

Madison

Bloomington

Waukesha

Chicago

Downers

Grove

Detroit

Carmel

Lorain

Columbus

Independence

Louisville

Ft. Wayne

Manhattan

Mountainside

Buffalo

King of

Prussia

Exec Exec

Exec

Director, Field

Operations

Chicago

Exec

Nashville Charlotte Chicago

Stoneham

Portsmouth

Charlotte

Charlotte

Town &

Country

Memphis

Nashville

Nashville

Nashville

Town &

Country

Birmingham

Marietta

Charlotte

Downers

Grove

SanFran

Houston

Glendale

Greensboro

Mountainside

Schaumburg

Chicago

Birmingham

Ft.

Lauderdale

Jacksonville

Knoxville

Territory

Manager

GS-15

Team

Manager

GS-14

El Monte

Baileys

Crossroad
Working to Put Service First

Large and Mid-Size Business

4-20

Figure 4-6: LMSB Retailers, Food and Pharmaceuticals Organization

Retailers, Food and Pharmaceuticals

This industry group consists of

taxpayers related to food and beverage,

retailing, pharmaceuticals, agricultural

commodities and farms. This grouping

of industries reflects the “food chain,”

with all supporting segments of the

chain. In addition, retailing is included

due to the similarity of the financial

reporting. For example, a grocery store

chain fulfills the same basic

requirements as a retail chain in terms

of balance sheets, inventory

management and investor

accountability/reporting. In addition,

both types of store chains have similar

growth patterns and geographic

dispersion.

These 29,200 taxpayers include

approximately 1,000 large businesses

and 28,200 mid-size businesses.

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

New YorkKings

Columbus

Baltimore

Wheaton

Cincinati

Bloomington

Bloomington

Bloomington

Bloomington

Bismark

Town &

Country

Springfield,

IL

Omaha

TBD, NE

Davenport

Springfield

Des Moines

Atlanta

Raleigh

West Palm

Beach

Tampa

Columbia

Gulfport

San

Francisco

San

Francisco

Boise

Walnut

Creek

Honolulu

Director, Field

Operations

Chicago

Total Directors: 2

Total Territory Managers: 14

Total Team Managers: 91

Chicago Cincinnati Manhattan Mountainside Boston

Director, Field

Operations

Southern

California

Director,

Retailers, Food & Pharmaceuticals

Chicago

Norwalk

King of

Prussia

South

Portland

Westboro

Brockton

Tulsa

Dallas

Fort Worth

Houston

Laredo

San

Francisco Jacksonv

ille

Dallas St. Louis St. Paul

Mountainside

Edison

Edison

Jersey

Paterson

Philadelphia

Chicago

Schaumburg

Schaumburg

Schaumburg

Chicago

Chicago

White

Plains

Town &

Country

El Paso

San

Francisco

Glendale

Brooklyn

Center

Dallas

IE

LA

Cincinnati

Bridgeport

Manhattan

Manhattan

Paterson

Edison

IE

Manhattan Detroit

Louisville

Detroit

Detroit

Kalamazo

o

Grand

Rapids

Livonia

Columbus

Morton

Grove

Downers

Grove

King of

Prussia

Warwick

Reading

Garden City

Philadelphia

Glendale

ElSegundo

Los

Angeles

El Monte

San Diego

Salt Lake

City

LA

Territory

Manager

GS-15

Team

Manager

GS-14

Van Nuys

Santa Ana
Working to Put Service First

Large and Mid-Size Business

4-21

Figure 4-7: LMSB Natural Resources Organization.

Natural Resources

This industry group consists

of taxpayers related to oil

and gas, mining, forest

products and utilities. This

industry grouping reflects

chemical engineering,

energy-related industries

and all natural resources.

These are process intensive

industries that are expecting

significant growth from

overseas activities. The

utilities component of this

industry grouping is

experiencing significant

merger activities similar to

the trend in the financial

services industry.

These 17,400 taxpayers

include 1,300 large

businesses and 16,100 midsize businesses.

New Orleans

Manhattan

Manhattan

Stoneham

Wilmington

Independence

Wheaton

Wilmington

Wilmington

Bailey’s

Crossroads

Richmond

Wheeling

Waterbury

Stoneham

Norwalk

Providence

Springfield

Edison

Mountainside

Pittsburgh

Pittsburgh

Fairfield

Manhattan

Manhattan

Manhattan

Manhattan

Rochester

Albany

Portland

Portland

Cheyenne

Spokane

Anchorage

Greensboro

New Orleans

Louisville

Atlanta

Lexington

Nashville

Tampa

Houston

Houston

Director,

Field Operations

New Jersey

Total Field Ops. Directors: 2

Total Territory Managers: 13

Total Team Managers: 78

Houston

Houston

Houston

Houston

Houston

Houston

New Orleans Oklahoma

City

Dallas Seattle Los Angeles Dallas Mountainside Manhattan Providence Baltimore Chicago Philadelphia

Director,

Field Operations

Houston

Director,

Natural Resources

Houston

Dallas

Dallas

Fort Worth

San

Antonio

Houston

Albuquerque

Oklahoma

City

Tulsa

Kansas City

Oklahoma

City

Town &

Country

Phoenix

Glendale

Glendale

El Monte

Salt Lake City

Oklahoma

City

Phoenix

Houston

Glendale

Dallas

Laguna

Niguel

San

Francisco

Schaumburg

Chicago

Green Bay

Detroit

Greenwood

Denver Boise Independence

Territory

Manager

GS-15

Team

Manager

GS-14
Working to Put Service First

Large and Mid-Size Business

4-22

Figure 4-8: LMSB Communications, Technology and Media Organization

Communications, Technology And Media

This industry is comprised of three basic

types of taxpayers: 1) those that produce

computers and related equipment; 2) those

related to media, including communications

and software; and 3) various types of sports

franchises and recreational firms. This

industry grouping is experiencing extremely

high growth with significant industry

convergence. This grouping of taxpayers

represents differences in financial reporting

such as balance sheets and income

statements. These differences are primarily

due to variations between “hard”

manufacturing products and “soft”

media/entertainment. It is also fairly

common in this industry grouping to have

sports franchises and recreational businesses

being linked to media companies. In these

cases, the source revenue is often

intertwined, which makes it practical to

include them in the same industry grouping.

These 14,100 taxpayers include

approximately 500 large businesses and

13,600 mid-size businesses.

Norwalk

Boston

Norwalk

Danbury

Nashua

Stoneham

Boston

San Jose

Laguna

Niguel

San Jose

Glendale

San Francisco

San Jose

Seattle

Wheaton

Cherry Hill

King of

Prussia

Pittsburgh

Edison

Syracuse

Director, Field

Operations

Manhattan

Total Directors: 2

Total Territory Managers: 11

Total Team Mangers: 80

Boston Manhattan Mountainside Chicago Atlanta

Director,

Communications, Technology & Media

Bay Area

Schaumburg

Downers

Grove

Kansas City

Bloomington

Chicago

Schaumburg

Atlanta

Cincinnati

Dayton

Ft. Lauderdale

Richmond

Nashville

Denver

Denver

Seattle

Englewood

Medford

Bay Area Phoenix Denver Austin San Jose

Dallas

Dallas

Little Rock

San Antonio

San Jose

San Jose

San Jose

San Jose

San Jose

SanFran

Walnut Creek

Glendale

Phoenix

Las Vegas

Phoenix

El Monte

Los Angeles

Glendale

San Jose

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

Director, Field

Operations

Northern California

Manhattan

Boston

Manhattan

Stoneham

Denver

Philadelphia

Schaumburg

San Antonio

Maitland Austin

Las Vegas

Jackson

Austin

Manhattan

Garden City

Hauppauge

Columbus

Territory

Manager

GS-15

Team

Manager

GS-14

Euless

Dallas
Working to Put Service First

Large and Mid-Size Business

4-23

Figure 4-9: LMSB Heavy Manufacturing, Construction and Transportation Organization

Heavy Manufacturing, Construction

and Transportation

This industry group consists of

taxpayers involved in air and ground

transportation, aerospace, motor

vehicles, shipping, construction and

real estate. This industry group

reflects heavy manufacturing

businesses that are very sensitive to

interest rate changes/volatility. These

industries are highly cyclical and are

expecting slow to moderate growth.

With the exception of the real estate

firms, the financial reporting

obligations of this industry are similar

(e.g., balance sheets). In addition, the

real estate market is closely tied to

activities in the construction industry.

These 102,700 taxpayers include

approximately 1,500 large businesses

and 101,200 mid-size businesses.

Garden City

Manhattan

Manhattan

Manhattan

Manhattan

Manhattan

NY-Kings

Cincinnati

Independence

Independence

Independence

Town &

Country

Town &

Country

Kansas City

Bloomington

Wichita

Denver

Fort Worth

Dallas

Houston

San Antonio

Tempe

Norfolk

Wheaton

Paterson

Wheaton

Paramus

Roanoke

Hartford

Providence

Stoneham

Syracuse

Southern

California

Long Beach

Director, Field

Operations

New Jersey

Total Field Ops. Directors: 2

Total Territory Managers: 14

Total Team Managers: 101

Santa Ana

San Diego

Long Beach

St. Louis Los Angeles Detroit Cleveland Manhattan Hartford Baltimore Houston Pittsburgh Mountainside

Director, Field

Operations

Southern California

Director, Heavy Manufacturing,

Construction & Transportation

New Jersey

Pittsburgh

Pittsburgh

King of

Prussia

Albany

Buffalo

Albany

Honolulu

Glendale

Glendale

Glendale

Glendale

Seattle

Portland

Detroit

Detroit

Detroit

Detroit

Carmel

Pontiac

King of

Prussia

Wethersfield

Manhattan

Buffalo

Ft. Lauderdale

Atlanta

Edison

Albany

San Diego Akron

Youngstown

Toledo

Wethersfield

New Haven

Albany

Wilkes Barre

Director, Field

Operations

Detroit

Chicago

Peoria

Waukesha

Waukesha

Ft. Lauderdale Milwaukee

Atlanta

Tampa Bay

Ft. Lauderdale

Ft. Lauderdale

Jacksonville

Memphis

St.

Petersburg

Waukesha

Olympia Fields

Cincinnati

Laguna Niguel

Stoneham

Oxnard,

CA

Kansas City, KS

Laguna Niguel

Detroit

Seattle

Independence

Waukesha

Atlanta

Greensboro

Paterson Pittsburgh

Miami

Livonia

Mission, KS

Territory

Manager

GS-15

Team

Manager

GS-14

Baltimore
Working to Put Service First

Large and Mid-Size Business

4-24

Geographic

Footprint

The five industry groups will be headquartered in cities with a

high concentration of that industry’s taxpayers. The

headquarters office will be staffed with the appropriate resources

required to fulfill the key operating support functions.

The following charts and tables contain details pertaining to

geographic locations and staffing numbers.

Figure 4-10: LMSB Industry Headquarters Table

DIRECTOR

AND STAFF

FIELD

NATIONAL HEADQUARTERS WASHINGTON, DC 565 -

SPECIALISTS WASHINGTON, DC 8 1,111

INDUSTRY HEADQUARTERS DIRECTOR

AND STAFF

FIELD

Financial Services and Healthcare Manhattan 18 1,168

Communication, Technology and Media San Francisco Bay Area 18 865

Natural Resources Houston 18 931

Retailers, Food and Pharmaceuticals Chicago 18 1,069

Heavy Manufacturing, Construction and

Transportation

Central New Jersey 18 1,228
Working to Put Service First

Large and Mid-Size Business

4-25

Figure 4-11: LMSB Geographic Footprint

WASHINGTON D.C. -

NATIONAL HEADQUARTERS

• LMSB Commissioner

• LMSB Deputy Commissioner

• U.S. Competent Authority

• Deputy U.S. Competent Authority

• Director, Pre-filing and Technical

Guidance

• Director, Strategy Research , &

Program Planning

• Director, Quality Assurance &

Performance Management

• Director, Management & Finance

• Director, Business Systems Planning

• Director, Field Specialists

MANHATTAN - FINANCIAL SERVICES &

HEALTHCARE INDUSTRY

• Director, Financial Services &

Healthcare Industry

• Director, Field Operations (Financial

Services & Healthcare)

• Director, Field Operations (Comm.,

Technology & Media)

NEW JERSEY - HEAVY MANF.,

CONSTRUCTION & TRANSPORTATION

INDUSTRY

• Director , Heavy Manufacturing,

Construction & Transportation Industry

HOUSTON

NATURAL RESOURCES INDUSTRY

• Director, Natural Resources Industry

• Director, Field Operations (Natural

Resources)

SOUTHERN CALIFORNIA

• Director, Field Operations (Financial

Services & Healthcare)

• Director, Field Operations (Retailers

Food & Pharmaceuticals)

• Director , Field Operations (Heavy

Manufacturing, Construction &

Transportation)

SF BAY AREA - COMMUNICATIONS,

TECHNOLOGY & MEDIA INDUSTRY

• Director, Communications,

Technology & Media Industry

• Director, Field Operations

(Communications, Technology,

& Media)

CHICAGO - RETAILERS, FOOD &

PHARMACEUTICALS INDUSTRY

• Director, Retailers, Food, &

Pharmaceuticals Industry

• Director, Field Operations (Financial

Services & Healthcare)

• Director, Field Operations (Retailers,

Food & Pharmaceuticals)

DETROIT

• Director, Field Operations (Heavy

Manufacturing, Construction &

Transportation)

• Senior Technical Advisor

• Senior Technical Advisor

• Senior Technical Advisor

• Senior Technical Advisor

• Senior Technical Advisor

• Deputy Director, Pre-filing and

Technical Guidance

• Deputy Director, Strategy, Research

& Program Planning

• Director, Field Operations (Natural

Resources)

• Director, Field Operations (Heavy

Manufacturing, Construction &

Transportation)
Working to Put Service First

Large and Mid-Size Business

4-26

FINANCIAL

SERVICES &

HEALTHCARE

RETAILERS, FOOD, &

PHARMACEUTICALS

NATURAL

RESOURCES

COMMUNICATIONS,

TECHNOLOGY & MEDIA

HEAVY

MANUFACTURING,

CONSTRUCTION &

TRANSPORTATION TOTAL

FIELD

SPECIALISTS**

TOTAL

GRADE FIELD

* Includes International Field Specialist Territory Managers

** Field Specialists include Computer Audit Specialists, Engineering, Economists, and Financial Products Specialists

15

Territory Managers* 67

99

Team Managers 449

838

Revenue Agents

3,440

153

Secretary / Support

705

84

536

4,330

4 Specialist

Program Mngrs

13 Territory Mngrs

87

Team Managers

890

Field Specialists

124

Secretary / Support

Total: 1,186 1,087 949 883 1,246 5,351

15

14

12/13/14

Sec’y /

Support

63

International Field

Specialists 12/13 603 603

829

1,119 6,470

3

Field Operations

Directors 12 13

1

Field Specialist

Exec Director

14

Territory Managers*

91

Team Managers

677

Revenue Agents

143

Secretary / Support

145

International Field

Specialists

2

Field Operations

Directors

13

Territory Managers*

78

Team Managers

597

Revenue Agents

122

Secretary / Support

122

International Field

Specialists

2

Field Operations

Directors

11

Territory Managers*

80

Team Managers

539

Revenue Agents

119

Secretary / Support

117

International Field

Specialists

2

Field Operations

Directors

14

Territory Managers*

101

Team Managers

789

Revenue Agents

168

Secretary / Support

156

International Field

Specialists

3

Field Operations

Directors

1

Senior Tech. Advisor

13

Industry

Headquarters Staff

Exec

13/14/15

1

Industry Director

Exec

1

Senior Tech. Advisor

13

Industry

Headquarters Staff

1

Industry Director

1

Senior Tech. Advisor

13

Industry

Headquarters Staff

1

Industry Director

1

Senior Tech. Advisor

13

Industry

Headquarters Staff

1

Industry Director

1

Senior Tech. Advisor

13

Industry

Headquarters Staff

1

Industry Director

5

5

65

Figure 4-12: LMSB Field Organization
Working to Put Service First

Large and Mid-Size Business

4-27

Figure 4-13: LMSB Implementation Plan

STAND UP HEADQUARTERS 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr OWNER

1999 2000

3rd Qtr 4th Qtr

Commissioner and key management positions selected

Personnel actions

• Competitive

– All SES selected

• Non-competitive (Restructuring Agreement)

– Commissioners packet signed

– Notice 1

– Notice 2

Budget

Delegation of Authority to LMSB

Key personnel and financial systems operational

DIVISION OPERATIONAL

Personnel Actions

• Select GS-15 Territory Managers

• Select GS-14 Managers

• Transfer GS-14 Managers

• BU report date

• Select/transfer balance of staff (NBU)

Establishment Phase – Restructuring Agreement

• Adjustment Phase

• Bargaining Phase

• Implementation Phase

• Workforce Migration Complete

Occupy L&MSB Facilities

• National HQ

• Industry HQ

Systems/Processes

• Key internal/external processes in place

• IRM procedure

• Best Practices implementation

• Pre-filing Agreement & Compr . Issue Resolution rollout

• ERCS Inventory system populated

Delegation of Authority Throughout LMSB

12/15

5/1

5/12

4/24

10/18

6/4

6/4

11/14

11/14

1/15

9/1

6/4

6/4

2/25

ERB/LMSB

ERB/LMSB

OES /LMSB

OES /LMSB

 LMSB

Finance/ LSMB

 Done

LMSB

 LMSB

 LMSB

 LMSB

LMSB

Real Estate

 Real Estate

LMSB

 LMSB

 LMSB

LMSB

IS/ LMSB

LMSB

10/18

11/8

8/14

5/31

5/8

 5/19

6/4

7/5

2/14

1/14

6/1

10/18

12/1

The LMSB Modernization team has already

reached several significant milestones in the last six

months. The project took a major step forward

when the LMSB design and the implementation

plan was approved by Commissioner Rossotti on

October 18, 1999. The first Notice announcing the

new organizational structure was issued to the

entire IRS. By December, Industry Director

positions, in addition to the LMSB Commissioner

and Deputy Commissioner, were selected. Through

a competitive selection process, all SES were

selected by early January. The LMSB National

Headquarters office transitioned to the new

Washington, DC, Mint Building office during midMarch 2000.

The implementation phase will be structured into

two sets of activities. The first set will focus on

items that are critical for LMSB stand-up, while the

second will enable LMSB's vision beyond stand-up.

Moving forward, LMSB's main challenges will be

to complete the staffing process for its field

operations. With the selection of GS-15 Territory

Managers and GS-14 managers, LMSB's

nationwide management structure will be solidified.

Furthermore, close interaction with the other

Operating Divisions and various shared services

will also prove to be challenging.
Working to Put Service First

Tax Exempt and Government Entities

5-1

Chapter 5 Tax Exempt and

Government Entities

Taxpayer

Characteristics

The Tax Exempt and Government Entities (TE/GE) Division was

created to serve the needs of three very distinct taxpayer segments:

Employee Plans, Exempt Organizations and Government Entities.

The customers range from small local community organizations and

municipalities to major universities, pension funds, state

governments and complex tax exempt bond deals. These

organizations represent a large economic sector with unique needs

and are governed by highly specialized provisions of the tax law.

For example, in the employee plans and exempt organizations areas,

these provisions are not designed to generate revenue, but rather to

ensure that the entities fulfill the policy goals that their tax

exemption was designed to achieve. Although generally paying no

income tax, this sector does pay over $198 billion in employment

taxes and income tax withholding and controls approximately $6.7

trillion in assets.

Employee Plans comprises private retirement plans and public

retirement plans that control roughly $4.1 trillion in assets. Exempt

Organizations comprises over 1.5 million tax exempt organizations

including an estimated 350,000 religious organizations controlling

assets of over $1.3 trillion. Government Entities includes 270,000

outstanding tax exempt bond issuances with a total value of $1.3

trillion, 86,000 federal, state and local entities and over 550 federally

recognized Indian Tribes.

Background,

Goals,

Principles and

Objectives

Over the past year and a half, groups of IRS managers and

employees from across the nation joined together to develop an

organization structure that best suits the tax exempt and government

entities sectors. There have been three separate phases to the

modernization project.

Phase IIA began in September 1998 and was completed May 1999.

During this phase, 13 employees were selected to be fulltime

members of the TE/GE Design Team to work along with four

consultants from the management consulting firm of Booz-Allen &

Hamilton (BAH). These individuals represented NTEU, IRS and

Counsel executives, and every level of management within EP/EO.

Phase IIA involved the development of a detailed blueprint for each

major component of the new structure. In developing the proposal

for the new operating division, the TE/GE Design Team did not rely

solely on their collective IRS experience, but met with over 35

customer/stakeholder groups and over 550 IRS employees currently
Working to Put Service First

Tax Exempt and Government Entities

5-2

performing this work. These information-gathering meetings were

used to learn more about the characteristics of TE/GE customers and

the services they need from the IRS. During these meetings, we

began to learn what was successful in our current operation, where

we could improve existing programs, and what new programs we

needed to develop to meet the needs of our customers.

Phase IIB began in June 1999 and was completed in December 1999.

Phase IIB took the detailed blueprint from Phase IIA and developed

a comprehensive Implementation Plan and detailed designs for

process and systems changes. During this phase, 34 employees were

working full-time with six BAH consultants. We again solicited

input and validated recommendations with customer/stakeholder

groups and other IRS employees.

Phase III began in January 2000 with the selection of 55 employees

and five BAH consultants. During Phase III, the TE/GE teams are

focusing on refining design and implementation plans, implementing

the new organizational structure and installing new processes and

procedures. Throughout the redesign effort, we will continue to

approach every aspect of our analysis from the customer’s point of

view and involve our customer/stakeholder groups and IRS

employees not on the design team.

The mission developed for the new Tax Exempt and Government

Entities Division reflects this customer focus:

“To provide Tax Exempt and Government Entities customers top

quality service by helping them understand and comply with

applicable tax laws and to protect the public interest by applying the

tax law with integrity and fairness to all.”

With the objective of providing timely, accurate, consistent and fair

service to customers, a number of key success factors and

capabilities have been developed that are necessary for TE/GE to

achieve this objective. While TE/GE has just begun to operate as a

new organization, we have been able to start building critical

capabilities. These are highlighted in Table 5-1.
Working to Put Service First

Tax Exempt and Government Entities

5-3

Table 5-1: Key Success Factors, Capabilities and Accomplishments

KEY SUCCESS

FACTORS

CAPABILITIES SHORT TERM GOALS AND

ACCOMPLISHMENTS

Continuous Emphasis on

Understanding the

Customer

• Assessing customer needs

• Identifying service delivery

gaps

• Tailoring programs to

customer segments

• Measuring customer service

performance

• Held focus group sessions with

external stakeholders to establish

service needs

• Established 3 distinct customer

segments: Employee Plans, Exempt

Organizations and Government

Entities

• Initiated 4 key processes – Customer

Education & Outreach, Rulings &

Agreements, Examination and

Customer Account Services

End-to-End

Accountability

• Clear roles and

responsibilities

• Controlled resources for key

processes

• Balanced performance

measures

• Integrated information

systems

• Established control of TE/GE budget

• Created balanced measures specific

to TE/GE

• Organized TE/GE along 3 customer

segments

• Revised information systems to

provide technology for enhancing

end-to-end accountability

Well Informed

Employees Empowered

to Make Decisions

• Timely training

• Integrated information

systems

• Emphasis on customer

service

• Management encouraging

decision making

• Selected top management to reflect

new organizational philosophy

• Refined for consistency in key

processes: Voluntary Compliance,

Review and Classification

• Assessed training needs and

developed multi-year training plan to

meet TE/GE goals

Use of New Technology

to Meet TE/GE

Customers’ Needs

• Use of the Internet

• Integrated information

systems

• Universal voicemail and

e-mail

• Flexible customer service

options

• Assessed all TE/GE functions

technology needs

• Conducting an ongoing analysis of

system technology requirements

• Expanded Intranet and Internet use

for internal/external communications
Working to Put Service First

Tax Exempt and Government Entities

5-4

KEY SUCCESS

FACTORS

CAPABILITIES SHORT TERM GOALS AND

ACCOMPLISHMENTS

Open, Honest and Clear

Lines of Communication

• Clear lines of authority

• Increased communications

• Rewarding appropriate

decision making

• Successful

management/NTEU

partnership

• Designed new organizational

structure to include embedded

communication staff at HQ level.

• Provided modernization information

via the TE/GE modernization

newsletter, the TE/GE hotline and a

TE/GE web site.

• Continuing partnership with NTEU

through the Joint Transition

Partnership Team

Quality Control Over

Key Processes

• Quality review system for all

key processes

• Review results used to

improve customer service and

training

• Designed centralized processes in

Exam, Voluntary Compliance

Resolution, Walk-in Closing

Agreement Program and Tax

Sheltered Annuity Voluntary

Correction

• Developed quality review processes

for Government Entities

• Assigned responsibility to capture

data on quality performance

• Refined quality review standards to

reflect new Servicewide balanced

measures approach

Organizational

Structure

After thoroughly researching and analyzing the characteristics of

TE/GE customers, we determined that they fell into three very

different groups with distinct characteristics: Employee Plans,

Exempt Organizations and Government Entities. These three

customer groups have minimal overlap in governing law, different

annual filing requirements and widely varying needs. As a

consequence, the division is divided into three functional units based

on these three customer segments, plus a cross-segment Customer

Account Services.

Organizing the division around customer segments will provide a

number of advantages. It will provide direct end-to-end

accountability for each distinct customer grouping and allow

programs to be tailored to meet the specific needs of the customer. It

will also promote a high degree of technical excellence, since each

customer group is governed by distinct provisions of the tax law and

has unique technical issues. Thus, the structure will promote a clear

focus on the customer and customer needs at all levels of the new

organization. Figure 5-2 illustrates this new organization structure.
Working to Put Service First

Tax Exempt and Government Entities

5-5

Figure 5-2: Tax Exempt and Government Entities Division Organization Structure

Director Customer

Account Services

Director Service

Center Programs

 Director

Customer Service

Management

 Analysts

 Manager

Quality Review

Systems

Analysts

Customer

Service Group Managers

Human Resources

Strategic Planning and Finance

Criminal Investigation

Agency Wide Shared Services

Appeals

Counsel

Communication and Liason

Business Systems Planning

EEO

Research and Analysis

Senior Technical Advisor

 Administrative Services

HQ Support

Functions Internal Partners

TE/GE Commissioner

& Deputy Commissioner w

w

w

w

w

w

w

w

w

w

w

w

w

w

Information Systems

Taxpayer Advocate

Program

Management Staff

EP Customer Education

and Outreach Staff

Director EP Customer

Education and Outreach

Manager EP

Determinations

Manager EP

Determinations

Quality Assurance

Manager EP

Technical

Manager EP Technical

Quality Assurance

and Guidance

Manager EP Voluntary

Compliance

Director EP Rulings

and Agreements

Manager EP Examination

Programs and Review

EP Examination

Area Managers

Six Areas

Director EP

Examinations

Director

Employee Plans

Program

Management Staff

EO Customer Education

and Outreach Staff

Director EO Customer

Education and Outreach

Manager EO

Determinations

Manager EO

Determinations

Quality Assurance

Manager EO

Technical

Manager EO Technical

Quality Assurance

and Guidance

Manager EO Projects

and Voluntary

Compliance

Director EO Rulings

and Agreements

Manager EO Examination

Programs and Review

EO Examination

Area Managers

Six Areas

Director EO

Examinations

Director

Exempt Organizations

Manager FSL

Outreach, Planning

and Review

Federal, State and Local

Field Group Managers

Director Federal, State

and Local Governments

Manager ITG

Outreach, Planning

and Review

Indian Tribal Government

Field Group Managers

Director Indian Tribal

Governments

Manager TEB

Outreach, Planning

and Review

Manager TEB

Field Operations

Director Tax

Exempt Bonds

Director

Government Entities
Working to Put Service First

Tax Exempt and Government Entities

5-6

Senior

Management

Team

The concept of a TE/GE senior management team -- focused on

providing overall strategic and operational direction to service its

over 2 million customers within three major segments -- is a change

in the way the IRS views its relationship with its large customer

base. The senior managers in TE/GE will focus on the mission of

serving three distinct customer segments including exempt

organizations; sponsors and participants of employee benefit plans;

and government entities composed of tax exempt bond issuers,

federal, state, and local governments, and Indian tribes. The

members of the senior management staff will work closely together

to realize its mission of providing all TE/GE customers top quality

service by helping them understand and comply with applicable tax

laws. Changes in compliance strategy will be reviewed throughout

all TE/GE segments to determine how these changes impact both

internal operations and service to customers.

The TE/GE division is headed by the Division Commissioner,

Evelyn Petschek. and Deputy Division Commissioner, Darlene

Berthod, who will share the strategic and management leadership of

the organization. The TE/GE top management team includes:

• Carol Gold – Director Employee Plans;

• Steven Miller – Director Exempt Organizations;

• Edward Weiler – Director Government Entities; and

• John Ricketts – Director Customer Account Services.

In addition, the Division Counsel and representatives of Appeals, the

Taxpayer Advocate Service and Information Systems will be part of

the senior management team to integrate key internal stakeholder and

supporting activities. The newly created and selected Operating

Division Counsel (ODC), Sarah Hall Ingram, will facilitate the

partnership between TE/GE and Counsel. The ODC will be an

integral part of the strategic oversight throughout the TE/GE

organization to achieve our customer service and compliance goals.

This senior management team will provide internal support and

leadership and, in turn, build a network of relationships throughout

the IRS with other operating divisions, National Headquarters

functions, Agency Wide Shared Services and Criminal

Investigations.

To support the guiding principles of understanding and solving

problems from the taxpayer’s point of view, TE/GE will continue to

maintain strong collaborative relationships with outside stakeholders.

The recently selected senior managers have already begun

participating in meetings with key stakeholders. Key players in this

process will include the top management team, the communications

and liaison office and the customer education and outreach functions.

External stakeholders include other federal and state agencies,

specialized practitioner groups, trade associations and umbrella

organizations. Communication with these external groups will keep
Working to Put Service First

Tax Exempt and Government Entities

5-7

TE/GE focused on the needs and concerns of their customers.

To institutionalize a forum for this communication, a new

stakeholder advisory committee is being set up to facilitate ongoing

input to the division. The selection and implementation of this

committee is currently a top priority of senior management. Names

of volunteers for this new TE/GE Advisory Committee, with

members drawn from each customer community, have been solicited

and received.

In general, the senior management team’s focus over the next few

months includes:

• Selecting the membership of the TE/GE Advisory

Committee and developing operating procedures for the

Committee.

• Completing the selection and reporting process of midand top-level managers within TE/GE.

• Conducting orientation and training meetings with the

new management team to ensure consistency in

expectations of role and responsibilities for all managers

and employees within TE/GE.

• Implementing recruiting for new staffing within the

TE/GE workforce.

• Overseeing the implementation process of the TE/GE

design as the business owners in TE/GE.
Working to Put Service First

Tax Exempt and Government Entities

5-8

Tax Exempt and

Government

Entities

Headquarters

The TE/GE headquarters, located in Washington DC, will provide

overall strategic and operational direction to the TE/GE operating

units while providing internal support processes that can best be

provided at the operating division headquarters level. The

headquarters of TE/GE will provide only those services that cannot

be provided practically at lower levels of the organization. This

philosophy largely reflects the IRS organizational direction of

moving accountability closer to the front-line organizations.

The critical operations of the TE/GE headquarters include the

following staff functions: a Senior Technical Advisor, Planning and

Finance, Human Resources, Communication and Liaison, Business

Systems Planning, Research and Analysis, Equal Employment

Opportunity and Diversity, and Administrative Services.

Senior Technical Advisor

The Senior Technical Advisor provides technical advice to the

TE/GE Commissioner and assists the organization in highly

technical and confidential matters of importance to the

Commissioner, the Department of the Treasury, the Department of

Justice, other government agencies, state government agencies and

congressional committees. In addition, this senior advisor is

responsible for:

• Overseeing and coordinating meetings of the TE/GE

Advisory Committee.

• Conducting studies of technical issues to determine if

legislation, regulations or other public guidance is

needed on a particular tax issue.

Planning and Finance

The Planning and Finance organization handles the strategic

planning activities and various financial planning and resource

allocation tasks. Some of these tasks include:

Strategic Planning

• Establishing the strategic direction for the division and

operating units and developing business goals and

performance measures.

• Coordinating the business planning activities, including

developing business cases, determining funding

priorities and preparing resource justifications.
Working to Put Service First

Tax Exempt and Government Entities

5-9

Resource Allocation

• Developing the budget submission for TE/GE and

responding to inquiries from external stakeholders

(Department of the Treasury, Office of Management and

Budget and Congress).

• Managing the resource distribution process, including

the development of a financial plan that supports the

program priorities of TE/GE.

• Managing the financial resources for TE/GE, including

tracking resource usage against targets.

• Establishing financial policies, procedures and controls

for TE/GE in conjunction with overall Service

guidelines and procedures.

Human Resources

The Human Resources organization will ensure continuous

performance improvement and individual development through

competency and skill building. This staff will conduct needs

assessments and ensure that the resource allocation for human

resources is prioritized to produce the maximum benefit to TE/GE

personnel and customers. This includes:

• Developing and implementing policies, guidelines and

procedures for the division within parameters set by

National Strategic Human Resources.

• Developing an education strategy and designing

curriculum focusing on the development of TE/GE key

competencies.

• Designing and developing TE/GE-specific training and

developing division-wide training plan in coordination

with EP, EO, GE and CAS.

• Planning for future staffing and competency needs to

ensure that technically competent personnel are available

to meet all TE/GE customer needs.

• Partnering with other divisions to develop career paths

that span division boundaries.

• Fostering partnership with National Treasury Employees

Union throughout TE/GE and serving on the TE/GE /

NTEU Partnership Council.

• Serving as the TE/GE representative on the Human

Resources Policy Council.

• Conducting negotiations with NTEU.

• Providing workforce planning and strategic recruitment

guidance.

• Managing position management activity within TE/GE.

• Overseeing and managing the performance management

process within TE/GE.
Working to Put Service First

Tax Exempt and Government Entities

5-10

Communication and Liaison

The Communications and Liaison function, located at the TE/GE

headquarters, is the main point of contact for relaying TE/GE-related

information to both internal and external stakeholders. Among the

C&L function’s main responsibilities within TE/GE are overseeing

the division's communications strategy, including marketing and

media relations, and coordinating related activities with the

headquarters Communications and Liaison office. The C&L groups

will serve as the central point of contact on all TE/GE matters related

to FedState and Disclosure.

Business Systems Planning

The Business Systems Planning function, also part of TE/GE

headquarters, gathers and articulates business needs for Information

Technology projects, applications and legacy systems.

Responsibilities include assessing IT solutions to address gaps in

business processes, creating business cases for new IT projects and

evaluating requests for information services. This group will create a

close partnership with the Division Information Officer (DIO), who

reports to the Chief Information Officer. Through this partnership,

TE/GE’s needs and services will be coordinated with all appropriate

IT staff. Some related tasks include:

• Planning and analyzing business needs for new projects.

Developing business cases. Prioritizing business needs

and process changes.

• Formulating Information Technology plans and budgets.

Managing and/or monitoring funds for business systems

modernization projects.

• Developing and testing projects. Overseeing business

involvement in systems testing. Establishing information

systems performance measures.

• Implementing and overseeing modernization projects.

Developing and monitoring the Implementation Action

Plan. Evaluating the results of the project on TE/GE

operations.

• Providing support to senior leadership by providing

business expertise to complement Information System’s

knowledge of technology change.

• Developing and negotiating Service Level Agreements

(SLA) with support functions. Assessing the

effectiveness of support received.

Research and Analysis

The Research and Analysis function is responsible for monitoring

key indicators of TE/GE organizational performance as well as

trends in customer needs. Some of these responsibilities include:
Working to Put Service First

Tax Exempt and Government Entities

5-11

• Identifying and analyzing emerging compliance trends

affecting TE/GE customers; communicating the results

to the appropriate operating unit.

• Conducting studies to determine causes for and changes

in taxpayer behavior.

• Evaluating and performing benefit analyses of different

compliance treatments.

• Analyzing internal work practices to maximize

efficiencies and improve quality.

• Performing analyses to substantiate and/or test

hypotheses proposed by the operating units.

• Analyzing the impact of policy decisions on the mission

and compliance activities of TE/GE.

EEO and Diversity

TE/GE will have a dedicated staff that establishes and implements

EEO policies, procedures and programs for the division in

conformance with overall service guidelines. This staff will also

perform various tasks including:

• Advising the TE/GE Commissioner and other

management officials on EEO and Diversity issues,

including complaint resolution.

• Establishing and implementing EEO policies,

procedures, programs and recruitment strategies for the

division in conformance with overall Service guidelines.

• Overseeing the TE/GE EEO and Diversity Advisory

Committee.

• Providing training to TE/GE staff on EEO-related

matters and issues.

• Preparing reports and conducting analysis of key

workforce-related trends or actions to identify any

practices, regulations and procedures that may perpetuate

discrimination.

• Establishing division policy on reasonable

accommodation, sexual harassment and other EEOrelated issues, and ensuring that it is appropriately

implemented.

• Coordinating special emphasis activities relating to

women and minorities.

• Representing TE/GE on the EEO and Diversity Council.

• Developing and monitoring the TE/GE affirmative

employment plan in accordance with Servicewide policy

and the management directives of the Equal Employment

Opportunity Commission.

• Developing and monitoring EEO Service Level

Agreements (SLA) with Agency Wide Shared Services.
Working to Put Service First

Tax Exempt and Government Entities

5-12

• Developing TE/GE’s EEO Annual Business Plan.

• Conducting, on a timely basis, necessary inquiries into

alleged discrimination and recommending remedial relief

in an expeditious manner.

• Developing a substantial relationship with the recognized

employee groups as major stakeholders in division

Diversity initiatives and special emphasis programs.

Administrative Services

The Administrative Services staff is responsible for various tasks

critical to the success of the TE/GE headquarters organization. The

primary function of this group is to ensure consistency of

information gathered and provided by the TE/GE headquarters.

Some of these tasks include:

• Managing the authorized staffing pattern and issuing

reports to ensure adherence to the authorized staffing

pattern.

• Providing reports to the operating units to help them

monitor and track expenditures.

• Overseeing the appraisal process to ensure that

employees’ appraisals are prepared in a timely manner

and that any awards are processed appropriately.

• Coordinating special emphasis activities, such as

Combined Federal Campaign and Savings Bond

Campaign.

• Serving as TE/GE liaison with Agency Wide Shared

Services on facilities issues.

• Monitoring the Office of Government Ethics reporting

requirements.

• Managing the mailroom, user fee process and records

control unit.

• Serving as the TRAS/VMS administrator.

• Overseeing the procurement process including Corporate

Express, contract services and credit card expenditures.
Working to Put Service First

Tax Exempt and Government Entities

5-13

Figure 5-3: Tax Exempt and Government Entities Division Organization

Counsel CIO

ODC DIO

Office of the

Division

Commissioner

Indirect Operating

Relationship

Gulf Coast 2

Mid-Atlantic 11

Northeast 2

Washington DC 71

Pacific Coast 2

Cincinnati 1

Any POD 27

Strategy

and

Program Planning

Budget Formulation

and

Business Planning

Budget Execution

and

Plan Development

Planning

and

Finance

EEO

and

Diversity

Education and

Development

(EP & CS)

Education and

Development

(EO & GE)

Personnel

Services

Human

Resources

Senior

Technical

Advisor

Research

and

Analysis

Business

Systems

Communication

and

Liasion

Administrative

Services

# FTEs: 24 3 36 5 9 11 6 16 Total FTEs: 115
Working to Put Service First

Tax Exempt and Government Entities

5-14

Process-based

Organizational

Segments

After a thorough review and analysis of TE/GE customer needs, we

determined that these needs fell into four key categories: customer

education and outreach, rulings and agreements, customer account

services and examination. While the management of the Customer

Account Services function will be centralized, the other three key

processes serve as the foundation for each of the three functional

organizations (Employee Plans, Exempt Organizations and

Government Entities).

The customer education and outreach process is a newly created

organization within TE/GE and will focus on helping customers

understand their tax responsibilities. Within each customer segment,

education and outreach activities will be tailored to the specific

needs of the customer. To assist in formulating educational

products, Customer Education and Outreach (CE&O) staff will

routinely interact with Examinations and Rulings and Agreements.

In addition, Examinations will provide insight into the level of

success that educational efforts are having on compliance. A variety

of delivery mechanisms will be used. These will include web sites,

conferences, workshops, newsletters and publications specifically

designed to reach the intended audience. The TE/GE examinations

staff, located throughout the country, will also be used to assist in the

delivery of customer education and outreach services and products.

In addition, relationships with stakeholder groups and national

organizations will be leveraged to ensure that education and outreach

efforts are effective in reaching members and local chapters. The

selection of the leaders of the new CE&O and recruitment of their

staffs should occur in the next several months.

The rulings and agreements process will provide a strong emphasis

on up-front compliance programs, such as the determination

program, voluntary compliance programs and the private letter ruling

program. These programs focus primarily on customer-initiated

requests for pre-transactional confirmation of the tax results. They

also include mechanisms that allow customers to correct selfidentified compliance problems. A separate Rulings and

Agreements function will facilitate a greater emphasis and shift to

front-end compliance strategies. The selection of the directors of

Rulings and Agreements and their managers in the Determinations

function should be completed soon and be in place by April 30,

2000. Any additional workforce staffing will be realigned into this

new organization within the next twelve months.

The examinations process will focus on identifying and correcting

noncompliance. Examinations activities will be customized within

each customer segment and will use compliance checks,

correspondence exams and on-site examinations, as appropriate. To

facilitate face-to-face interaction, Examinations staff will be located

throughout the country. A strong partnership will be developed with

the Customer Education and Outreach function, as well as the

Rulings and Agreement function. This will ensure that
Working to Put Service First

Tax Exempt and Government Entities

5-15

noncompliance trends identified by the Examinations staff will be

used in the development of proactive outreach and education

initiatives, as well as up-front compliance programs. It will also

facilitate leveraging Examinations staff to deliver outreach programs

designed by the CE&O staff to increase customer awareness of selfcorrection programs. Most of the Examination leadership has been

selected, and most of the Examination resources have been realigned

in their current positions at their current locations. However, the

realignment of Examination staff to some of the newly created

positions should be completed within the next twelve months.

An important aspect of increasing overall compliance will be the

information sharing process between Examinations and the CE&O

staff. Information gained during compliance activities will help

direct customer education and outreach assistance initiatives. For

example, during many examinations, either locally or nationally, we

may discover that taxpayers are making similar errors. This

information will be systematically provided to CE&O so they can

develop and deploy outreach efforts and quickly notify taxpayers of

the trend and explain how to properly handle the issue. In addition

to creating tailored educational products and services, we may hold

meetings with stakeholders and taxpayer representatives to ask them

to pass along this valuable information.

Customer Account Services will focus on efficient processing of

customer filings as well as providing accurate and timely responses

to customer telephone inquiries and correspondence. The

centralization of customer inquiries in Cincinnati will enhance the

quality and efficiency the customer service TE/GE provides. Service

agreements will be developed with various Service Centers

responsible for processing returns for TE/GE customers. As noted

above, our analysis showed that this process can be more efficiently

performed centrally for all three TE/GE customer segments. The

Ogden Service Center has been designated to handle TE/GE

customer filing. (See Figure 5-4)
Working to Put Service First

Tax Exempt and Government Entities

5-16

Figure 5-4: TE/GE Customer Account Services

Manager

Service Center

Programs

Management

Analysts

Manager

Quality

Review

System

Analysts

Customer

Service

Groups

Manager

Customer

Service

Director

Customer Account

Services

# FTEs: 14 2 75 Total FTEs: 94*

* Note: Total FTEs include Office of the Director Customer Account Services.
Working to Put Service First

Tax Exempt and Government Entities

5-17

Employee Plans

(EP)

The EP organization will serve a wide range of employee plans

customers. These include all types of qualified plans, such as

pension plans, profit-sharing plans, money purchase plans and

401(k) plans. EP customers also include tax-sheltered annuities

(403(b) plans) and government retirement plans (457 plans). Tax

practitioners, with varying degrees of expertise in employee benefits

law, generally represent these customers. Most of these customers

file an annual information return (Form 5500). In addition, most

plan sponsors file requests for determination letters to confirm the

tax-qualified status of the plan. These requests are typically filed

when the plan is first established and as necessary thereafter,

consistent with tax law changes and plan modifications.

The vast majority of EP customers are plans with fewer than 250

participants. These small and medium-sized plans typically rely on

third-party administrators. While large plans represent only a small

fraction of the customer population, the vast majority of employees

who participate in employer-sponsored plans are covered by these

large plans. These plans are sophisticated customers with

knowledgeable in-house benefits staff. Needs of these customers

vary, from plain-language publications and easy access to basic tax

information to specific responses to complex issues and access to

highly technical customer service personnel. These customers also

need outreach programs tailored to their level of sophistication and

plan type. Similarly, self-correction programs will have to be

tailored to meet these varied customer needs.

By creating an organization with end-to-end accountability for

service delivery to the wide range of EP customers, top quality

service and tailored programs will be created that meet the specific

needs of the customers. Based on the input from customers and

employees, we determined that the primary products and services

provided by TE/GE to this customer segment could be grouped into

four general process categories: customer education and outreach;

rulings and agreements; examinations; and customer account

services, as previously discussed.

The EP customer segment will be organized around the first three of

these processes. The fourth, customer account services, has been

centrally organized to better service TE/GE customers. Figure 5-5

shows the EP organizational structure and envisioned staffing.
Working to Put Service First

Tax Exempt and Government Entities

5-18

Figure 5-5: Employee Plans Organization Structure

* The prototype staff will ultimately

report to the Manager, Determinations.

This should occur after the significant

increase in prototype receipts that is

expected in FY 2000 and 2001.

EP Program

Management Staff

EP Customer

Education

and Outreach

Director

EP Customer

Education

and Outreach

Manager

EP Determination

& Quality Assurance

EP

Determination

Groups

Manager

EP

Determinations

EP Compliance

Voluntary Groups

Manager

EP Voluntary

Compliance

Actuarial

Groups

EP Technical

Groups

Manager

Prototype

Programs*

Manager

EP

Technical

Manager

EP

Technical and

Quality Assurance

Director

 EP Rulings

and

Agreements

EP Large

Case Groups

EP Special Emphasis/

Large Case Groups

EP General

Program Groups

Manager

EP

Areas

Manager EP

Mandatory review

Manager EP

Special Review

Manager Exam

Planning & Programs

Manager EP

Classification

Manager EP Exam

Special Support

Manager EP Exam

Support processing

Manager

EP Examinations

Director

EP

Examination

Director

Employee Plans

* Note: Total FTEs include Office of Directors, Employee Plans, EP Customer Education & Outreach, EP Rulings & Agreements and EP Examinations.

Central Mountain 35

Great Lakes 116

Gulf Coast 135

Mid-Atlantic 129

Northeast 165

Pacific Coast 158

Cincinnati 206

Washington DC 132

To BE Determined 7

# FTEs: 16 12 193 41 91 12 622 88 1092

Total

FTEs:
Working to Put Service First

Tax Exempt and Government Entities

5-19

With the stand-up of TE/GE in December 1999, the Employee Plans

segment was populated with 912 EP employees realigned from the former

EP/EO organization. An interim structure was put in place at first to assure

a successful continuation of current operations while mid-level managers

were being selected and system changes implemented. Former EP/EO

division managers were named as acting Area Managers for the four area

transition structures corresponding to the former KDO geographic

boundaries.

By the end of April 2000, key management positions (above the first line

level) for the new structure are expected to be selected with the majority in

place and with system changes ready for implementation. The transition

from the KDO and EP/EO headquarters structure to the new TE/GE

organization structure has begun and will be implemented in phases

corresponding with the processes identified above.

Because the EP Customer Education and Outreach office is a new

function, it will need to be established from the ground up. This will

require longer lead times. However, a Phase III design team began work in

late February to establish consistent and comprehensive customer education

and outreach processes across EP and EO. This team will develop detailed

requirements for system infrastructures (for example, library and web page

changes) and prepare a full-scale implementation plan.

The EP Rulings and Agreements (R&A) section, comprising 137

employees, will be responsible for up-front, customer-initiated activities

such as the determination application process, private letters rulings and

voluntary compliance requests. The key centralized locations for the R&A

will be Cincinnati for determination activities and Washington, DC, for the

technical section. Upon implementation, 69 people were assigned to

positions in Cincinnati and 68 people were assigned within the Washington

area to that activity.

Based on an analysis of customer needs, the EP Examination activity will

be organized around specific customer sub-segments: general program

examinations, large case examinations and special emphasis examinations.

Large case activity represents a significant commitment for EP resources.

There are interdependencies with LMSB and formalized procedures and

policies for approaching these examinations. Special emphasis groups are

recommended to provide service to those customers represented by multiemployer and multiple employer plan entities, IRC 403(b) -- also known as

tax sheltered annuities -- and IRC 457 governmental plans. Using this

specialized approach, we will be able to provide customers with service

from highly skilled employees who are knowledgeable about the specific

customer’s needs.

In December 1999, 755 employees from the existing EP/EO organization

were realigned to the examination activity. Development of the large case

and special emphasis groups will be occurring within the next 12 months.

A Phase III design team will begin operation in the third quarter CY 2000.

This team will be responsible to baseline best practices, propose a

geographic footprint and prepare a full-scale implementation plan.
Working to Put Service First

Tax Exempt and Government Entities

5-20

Exempt

Organizations

(EO)

Exempt Organizations customers represent a very diverse segment

ranging from churches and small local clubs to large national

organizations. Common types of exempt organizations include

charities, churches, private foundations, trade associations, unions

and social clubs. The tax law governing these organizations is

highly specialized and differs depending on the type of exempt

organization in question. Customer needs vary widely in this

segment, from plain-language publications to complex private letter

requests. These customers also need outreach programs tailored to

their level of sophistication, as well as self-correction programs.

Most EO customers file determination letters confirming their

exempt status when they are first set up. Larger exempt

organizations are required to file an annual information return (Form

990). However, approximately 75% of the exempt organizations

(churches and organizations that fall below the $25,000 annual filing

threshold) are not required to file an annual return. Many exempt

organizations are also employers and have employment tax

responsibilities.

As noted above, most small exempt organizations do not have to

meet an annual filing requirement. These organizations are often

staffed with volunteers and typically are not represented by

practitioners. In addition, there may be annual turnover in key

record keeping positions such as treasurer. At the other end of the

spectrum, the largest exempt organizations represent increasingly

complex and diverse operations and file more complex returns.

Their operations may involve multiple entities (both taxable and

exempt) with wide geographic presence. They usually have in-house

tax and accounting expertise that support their complex filings.

By creating an organization with end-to-end accountability for

service delivery to the wide range of EO customers, we will facilitate

top quality service and tailored programs that meet the specific needs

of the various types of exempt organizations. We also determined

from customer feedback that the appropriate balance among

customer education efforts, up-front compliance programs and the

examinations process could best be achieved by the creation of

organization sub-units, each of which would focus specifically on

one of those three key processes.

The EO customer segment will be organized around the first three of

these processes. As stated above, Customer Account Services, has

been centrally organized. Figure 5-6 shows the EO organizational

structure and envisioned staffing.
Working to Put Service First

Tax Exempt and Government Entities

5-21

Figure 5-6: Exempt Organization Structure

EP Program

Management Staff

EO Customer

Education

and Outreach

Director

EO Customer

Education

and Outreach

Manager

EO Determination

& Quality Assurance

EO

Determination

Groups

Manager EP/EO

Processing Support

Manager EP/EO

Adjustments

Manager EP/EO

Records

Manager

Centralized Files

Manager Determination

Processing (EPEO)

Manager

EO

Determinations

Manager

Projects/Voluntary

Compliance

EO Technical

Groups

Manager

EO

Technical

Manager

EO Technical

 Guidance and

Quality Assurance

Director

 EO Rulings

and

Agreements

EO Large

Case Groups

EO General

Program Groups

EO Automation

groups

EO Examination

Area Managers

Manager EO

Mandatory review

Manager EO Special

Review

Manager EO Exam

Planning & Programs

Manager EO

Classification

Manager EO Exam

Special Support

Manager EO Exam

Support processing

Manager

EO Examination

Programs & Review

Director

EO

Examination

Director

Exempt

Organizations

Central Mountain 45

Great Lakes 89

Gulf Coast 142

Mid-Atlantic 82

Northeast 112

Pacific Coast 115

Cincinnati 264

Washington DC 106

To BE Determined 7

* Note: Total FTEs include Office of Directors of Exempt Organizations, EO Customer Education & Outreach, EO Rulings & Agreements and EO Examinations.

# FTEs: 15 12 275 12 50 12 489 79 962*

Total

FTEs:
Working to Put Service First

Tax Exempt and Government Entities

5-22

With the implementation of TE/GE in December 1999, the Exempt

Organizations segment was populated with 841 EO employees

realigned from the former EP/EO organization. An interim structure

was put in place at start-up to assure continued operations while midlevel managers were being selected and system changes

implemented. Former EP/EO division managers were named as

acting Area Managers for the four area transition structure

corresponding to the former KDO geographic boundaries.

By the end of April 2000, key management positions (above the first

line level) for the new structure are expected to be selected with the

majority of managers in place and system changes ready for

implementation. The transition from the KDO and EP/EO

headquarters structure to the new TE/GE organization structure has

begun and will be implemented in phases corresponding with the

processes identified above.

Because the EO Customer Education and Outreach office is a new

function, it will need to be established from the ground up. This will

require longer lead times. However, a Phase III design team began

work in late February to establish consistent and comprehensive

customer education and outreach processes across EP and EO. This

team will develop detailed requirements for system infrastructures

(for example, library and web page changes) and prepare a full-scale

implementation plan.

The EO Rulings and Agreements (R&A) section, comprising 230

employees, will be responsible for up-front, customer-initiated

activities such as the determination application process, private

letters rulings and voluntary compliance requests. The key

centralized locations for the R&A will be Cincinnati for

determination activities and Washington, DC, for the technical

section. Upon stand-up, 181 people were pointed to positions in

Cincinnati and 49 people were realigned within the Washington area.

Based on analysis of customer needs, the EO Examination activity

will be organized around specific customer sub-segments: general

program examinations and large case examinations. Large case

activity represents a significant commitment for EO resources. Using

this specialized approach, customers will receive service from highly

skilled employees knowledgeable about the specific customer’s

needs.

In December 1999, 591 employees from the existing EP/EO

organization were assigned to the examination activity. Additional

large case groups will be developed within the next 12 months. A

Phase III design team will begin operation in the third quarter CY

2000. This team’s responsibilities include baselining best practices,

proposing a geographic footprint and preparing an overall

implementation plan.
Working to Put Service First

Tax Exempt and Government Entities

5-23

Government

Entities (GE)

The Government Entities customer segment comprises three very

distinct sub-segments: Tax Exempt Bonds; Federal, State and Local

Governments; and Indian Tribal Governments. These governmental

customers are similar in that they are generally not subject to income

tax at the entity level and they have special relationships with the

federal government. Beyond that, GE customers have highly diverse

needs ranging from educational seminars and products to

sophisticated rulings on complex issues.

One customer sub-segment in GE is Tax Exempt Bonds. Over $1.4

trillion is currently invested in tax exempt bonds, which are typically

issued by a government entity. The bond deals vary in size and

complexity, and the governing tax law is highly specialized. These

customers need services tailored for their varying economic and legal

sophistication.

The second customer sub-segment is Federal, State and Local

Governments. While not subject to federal income tax, these entities

often have significant tax responsibilities arising from their status as

employers, such as employment tax withholding and reporting. They

may also have other tax issues such as excise taxes and employee

plans issues. These customers need highly tailored services at least

in part due to governmental budgetary and legislative cycles.

The third sub-segment in GE is Indian Tribal Governments. These

customers have a special government-to-government relationship

with the United States under individual treaties, Supreme Court

Decisions and Presidential Executive Orders. There has been a

significant increase in interaction between these customers and the

IRS in recent years. Increased economic development by the tribal

governments, especially but not exclusively due to gaming activities,

has raised federal tax issues relating to governments as employers,

distributions to tribal members and the establishment of

governmental programs, trusts and businesses. Services on the very

wide range of federal tax issues must be tailored within the special

government-to-government framework.

Due to the special relationships and distinct characteristics and needs

of these three groups, the structure for GE is based on the customer

sub-segments. Each of these sub-segments (Tax Exempt Bonds;

Federal, State and Local Governments; and Indian Tribal

Governments) is composed of a centralized office of Outreach,

Planning and Review, and a decentralized workforce of

outreach/examination groups. This structure, designed to address the

needs of diverse groups of customers, will allow us to provide endto-end services to each sub-segment. The GE organization will

comprise approximately 270 employees.

One of the challenges GE faces is the need to create these three

programs from the ground up. In the past, different functions within

the Service held jurisdiction over the activities of each sub-segment.
Working to Put Service First

Tax Exempt and Government Entities

5-24

With the creation of the GE function, these sub-segments will have

cohesive education, outreach and compliance programs. The

migration of employees into these new functions is expected to

continue through FY 2001. Hiring has already been completed for

the upper level management within each of the sub-segments.

With the completion of the organizational design recommendations,

the focus within GE has shifted to the design of integral processes.

Four processes will be the subject of refinement: the transition of

caseloads from the old organization into GE; case closing and

review; return classification and referrals; and communications,

education and outreach. The recommendations regarding these

refinements will be made in the next three months, prior to fully

staffing GE. Figure 5-7 shows the GE structure and envisioned

staffing.
Working to Put Service First

Tax Exempt and Government Entities

5-25

Figure 5-7: Government Entities Organization Structure

Manager TEB

Outreach,

Planning

and Review

TEB

Examination

Groups

Manager

TEB Field

Operations

Director

Tax Exempt

Bonds

Manager

FSL and

Outreach

Plan/Review

FSL

Examination

Groups

Director

Federal, State &

Local Governments

Manager ITG

Outreach,

Planning

and Review

ITG

Examination

Groups

Director

Indian Tribal

Governments

Director

Government

Entities

# FTEs: 12 73 18 96 10 55 276*

Total FTEs:

* Note: Total Ftes include offices of Directors of Government Entities, Tax Exempt Bonds, Federal, State & Local Governments and Indian Tribal Governments.

Central Mountain 9

Great Lakes 13

Gulf Coast 15

Mid-Atlantic 6

Northeast 16

Washington DC 40

To be Determined 4

Any POD 154
Working to Put Service First

Tax Exempt and Government Entities

5-26

Geographic

Footprint

As is true today, the examination workforce for each TE/GE

customer segment will be dispersed throughout the United States to

provide face-to-face service to customers. As discussed earlier, the

examination employee resources will be increasingly leveraged to

support education and outreach services over the next several years.

TE/GE will begin staffing the education functions within the next six

months. This will greatly enhance the availability and delivery of

up-front liaison services for customers around the country. For

TE/GE employees, this will create a broader role in facilitating

customer compliance while minimizing employee movement.

For the Employee Plans and the Exempt Organizations segments, the

workforce will be managed through six geographic areas. These

areas, as shown in Figure 5-8, were developed based on customer

locations, workforce size and current employee locations, and area

boundaries for the other operating divisions. Figure 5-9 shows the

locations of EP and EO groups. Figure 5-10 identifies the locations

of the current workforce realigned within TE/GE by function and

area (note: 77 of the personnel included in the 1,956 workforce were

not realigned to specific TE/GE positions at standup). In turn, the

recommended locations for managers (the two National Directors of

Examination and 12 Area Managers) were based on workforce

locations, proximity to customers and efficient internal management

processes. Note that these numbers are subject to change as

workload and budget demands fluctuate.

Due to the small number of resources and the newness of the

Government Entities segment, these programs will be managed as

national programs with various posts-of-duty. The geographic

locations will be based on the current locations of employees

working in the GE bond program and of employees moving into the

GE programs for Indian tribal governments and federal, state and

local governments. This flexibility will enhance the application of

resources to customer locations and unique procedures and projects.

As these programs grow, there may be a need for a more complex

geographic footprint similar to the one for EP and EO.
Working to Put Service First

Tax Exempt and Government Entities

5-27

Figure 5-8: EP and EO Examination Areas

PACIFIC COAST 

GREAT LAKES 

NORTHEAST 

MID-ATLANTIC 

GULF COAST 

CENTRAL MOUNTAIN 

Los Angeles

Brooklyn

Philadelphia

Baltimore

Atlanta

Dallas

Saint Paul

Denver

Chicago

EO Exam Headquarters

EP Exam Headquarters

EO Area Manager Location

EP Area Manager Location

Figure 5-9: EP and EO Examination Group Locations

Exempt Organizations

Employee Plans

Dallas

Baltimore

2

4

4

8

5

2

4

2

2

4

5

2

2
Working to Put Service First

Tax Exempt and Government Entities

5-28

Figure 5-10: TE/GE Employee Locations

Areas EP EO GE CAS HQS TBD * Total

Central Mountain 37 47 6 0 0 0 90

Cincinnati 78 189 0 63 1 6 337

Great Lakes 113 84 5 1 1 4 208

Gulf Coast 133 129 11 0 2 11 286

Mid-Atlantic 120 80 4 0 2 8 214

Northeast 157 101 0 0 1 6 265

Pacific Coast 166 121 4 4 0 15 310

Washington DC 108 90 1 0 20 27 246

Total 912 841 31 68 27 77 1956

* To Be Determined

Employees
Working to Put Service First

Tax Exempt and Government Entities

5-29

Figure 5-11: TE/GE Implementation Plan

A high-level implementation plan has been

developed for the transition to the new

TE/GE organization. TE/GE officially

became operational as a new organization

within the IRS on Dec. 5, 1999. The first

step toward implementation was the selection

of the TE/GE Commissioner in April 1999.

Other top TE/GE executives continued to be

hired through December 1999. The majority

of the workforce was realigned as part of

startup activities. This aligned more than

80% of the new TE/GE Division. With the

exception of the tax exempt bonds program,

the Government Entities segment does not

have existing organizational groups to draw

from for the creation of the new organization.

As a result, the implementation of this

segment will be accomplished over a longer

period. An extensive communication effort

will be made throughout the transition and

implementation to promote discussion of the

TE/GE with employees, customers and

stakeholders.

Implementation activities (Phase III) began

in January 2000 and are expected to continue

through October 2000. The plan is to

transfer new functions to the new business

owners gradually

ID Task Name

1 STAND UP HEADQUARTERS

2 Commissioner and Key Management positions selected

3 Personnel Actions

4 Competitive

5 All SES Selections

6 NON-competitive (Restructuring Agreement)

7 Commissioner's packet signed

8 Notice 1

9 Notice 2

10 Budget

11 Delegation of Authority throughout TE/GE

12 Key Personnel and financial systems operational

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2

1999 2000
Working to Put Service First

Tax Exempt and Government Entities

5-30

Phase III team members will finalize

design work turned over from Phase IIB

and prepare detailed implementation plans

for each function. Success depends on

communication and cooperation with the

new business owners during

implementation. Table 5-11 identifies

eight sub-teams that began

implementation work in January and their

objectives. These teams are expected to

complete most of their objectives by May

2000. At least 14 future sub-teams have

been identified and will begin work in the

second and third quarters of 2000.

ID Task Name

13 DIVISION OPERATIONAL

14 Personnel Actions

15 Select GS-15 Area managers

16 Transfer GS-14 Managers

17 BU Report Date

18 Select/transfer balance of staff (NBU)

19 Restructuring Agreement

20 Establishment Phase

21 Adjustment Phase

22 Bargaining Phase

23 Implementation Phase

24 Workforce Migration complete

25 Occupy TE/GE facilities

26 National Exam

27 Headquarters

28 Systems/Processes

29 Key EP/EO processes in place

30 Critical SYSTems changes in place

31 Centralized classification and review processes in place

32 Full-scale implementation of CE&O prepared

33 Key GE processes in place

34 Key headquarters processes in place

Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4

2000
Working to Put Service First

Tax Exempt and Government Entities

5-31
Working to Put Service First

Tax Exempt and Government Entities

5-32

Figure 5-12: TE/GE Phase III First Quarter 2000 Implementation Sub-Teams

Phase III Sub-team Objectives

TE/GE Implementation Program

Management

• Provide program oversight and integration

with overall IRS modernization

• Coordinate work activities across TE/GE

Phase III teams

GE Development Team • Develop uniform criteria regarding caserelated processes

• Standardize and refine current procedures

• Begin developing CE&O and communications

procedures

Business System Capabilities

Development Team

• Establish TE/GE business systems processes

and linkages with IS

• Coordinate with IS to ensure timely

implementation of TE/GE business

requirements

Strategic Planning & Budgeting

Team

• Establish strategic planning and budgeting

processes useful in guiding the direction of

TE/GE work that will cover external planning

requirements “up” to NHQ SP&B and internal

planning requirements “down” to TE/GE

functional units (EP, EO, CAS and GE)

• Ensure processes are consistent with the

outcome of the Strategic Planning, Budgeting

and Research modernization team

Communications Team • Facilitate internal and external stakeholder

communications

• Define the Legislative and Congressional

Affairs program within the TE/GE HQ

Communications and Liaison office

EP Voluntary Compliance

Development Team

• Finalize EP Voluntary Compliance Org

Design

• Fully develop nationwide EP Voluntary

Compliance processes promoting consistency

and coordination across programs

Joint CE&O Development Team • Establish consistent and comprehensive

customer education and outreach processes

across EP and EO

Joint Exam Centralized Processes

Team

• Fully develop centrally managed processes for

exam planning and case classification, review

and closing

• Finalize comprehensive implementation plan

for all centralized processes
Working to Put Service First

Office of Chief Counsel

6-1

Chapter 6 Office of Chief Counsel

Customer

Characteristics

Goals and

Guiding

Principles

The IRS Office of Chief Counsel will continue to provide the

highest quality legal services to the IRS and taxpayers. However,

the guiding principles of the IRS Modernization and revised

business practices will fundamentally change Counsel’s workload

and practices, as it provides legal advice and assistance to the new

IRS operating divisions and their taxpayers.

The new IRS direction in tax administration generally will result in

substantially increased client demand for published guidance, legal

advice services and training services in support of pre-filing

strategies designed to educate taxpayers, reduce burden and simplify

tax administration. IRS operating division post-filing and

compliance strategies also will demand more specialized legal

advice service from Counsel field and national office components as

they work in close partnership with the new IRS operating divisions.

IRS compliance initiatives will likely result in more targeted

litigation workload that focuses on specific areas of noncompliance.

The Office of Chief Counsel will partner with the IRS operating

divisions in such strategic areas as the Strategic Planning &

Budgeting Process, Balanced Measures and Performance Reviews,

and will participate in the newly formed Published Guidance

Advisory Committee (PGAC). The PGAC has been established to

enhance the process for issuing regulations, revenue rulings and

other items of published guidance, by providing a mechanism for

coordination among the different components of the IRS, the Office

of Chief Counsel and the Office of Tax Policy, Department of the

Treasury.

The Office of Chief Counsel will also continue to play a critical role

in dealing with external stakeholders. Input from stakeholder groups

is a particularly important element of IRS efforts to service

taxpayers on a pre-filing basis through regulations and other

published guidance. These groups also provide a critical avenue of

communication to the general public to help deliver important IRS

messages.

The Office of the Chief Counsel is expected to provide the correct

legal interpretation of the internal revenue laws, to represent the IRS

in litigation and to provide all other legal support the IRS needs to

carry out its mission of serving America’s taxpayers. To accomplish

these goals, Counsel provides a wide variety of specific services to

many different customers, including taxpayers and IRS components.
Working to Put Service First

Office of Chief Counsel

6-2

For example, Counsel’s work includes:

• Drafting regulations, rulings and other published legal guidance;

• Handling cases in Tax Court and the Bankruptcy courts; and

• Providing specific legal advice and determinations to taxpayers

and various IRS functions, both before and after returns are

filed.

In carrying out these responsibilities, Counsel must interpret the law

with complete impartiality, so that taxpayers will know the law is

being applied with integrity and fairness.

As part of the overall IRS modernization effort, the Office of the

Chief Counsel has been reevaluating its current organization and

processes in order to improve services to both its internal and

external customers. Three basic principles have guided the Counsel

redesign effort:

• Design an organization that will be capable of providing the

highest quality legal services to the IRS, both now and in the

future;

• Create an organization that will make it as easy as possible for

all parts of the Chief Counsel’s office to work in active

partnership with colleagues in the IRS, Treasury and Justice

Department to help accomplish the IRS mission; and

• Build an organizational structure that will help ensure that the

legal advice Counsel provides reflects an impartial professional

judgment as to the correct interpretation of the law.

With these basic principles in mind, the Counsel Design Team

worked in close coordination with other design teams to analyze

customer needs and determine the optimal way to organize Counsel

resources to meet those needs. This effort involved consultation with

a broad range of stakeholders within the IRS, at the Departments of

Treasury and Justice, at the Tax Court and across the private sector.

The proposed design builds on the strengths of the current Counsel

organization and addresses those areas in need of change in light of

the new IRS structure.

Previous Design

Phases

During the previous phases of the modernization process, the

Counsel Design Team developed the framework of a new

organizational structure. This new structure was based on an

analysis of customer needs (both internal and external), considered

in light of the new IRS organizational design and the three guiding

principles previously discussed.

Several key decisions helped determine critical components of the

new Counsel structure:
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Office of Chief Counsel

6-3

• To maintain consistency, uniformity and impartiality in tax law

interpretations, all Counsel personnel will continue to be part of

a unified, nationwide Chief Counsel organization;

• To develop an active, working partnership with the new IRS

operating divisions, Counsel will establish four new SES-level

Division Counsel (DC) positions that will be co-located with the

Operating Division Commissioners. Each of these four Offices

of Division Counsel will have a staff of attorneys at its

headquarters location that will be dedicated to serving the needs

of the particular operating division;

• Most of the Counsel field attorneys will be assigned to one or

another of the DC. Over time, this alignment will both enhance

the expertise of the attorneys in the areas of tax law most

relevant to the operating division they serve, and will also help

them develop close working relationships with employees,

managers and executives of the operating divisions; and

• Counsel’s National Office technical experts will remain in

Washington, DC, and will continue to be organized primarily on

the basis of the tax law technical subject areas required by the

Internal Revenue Code. This should help preserve Counsel’s

depth of technical expertise and also ensure that legal

interpretations are consistent for all taxpayers and all operating

divisions.

These key decisions from the previous phase of the modernization

design effort formed the foundation for the work that was

accomplished during the current phase.

Phase IIB In this phase of the modernization process, the Counsel Design

Team focused on organizational structure design details, process

improvement recommendations and career development activities.

The Design Team worked closely with the Chief Counsel and

members of the Counsel organization to perform the following:

• Develop a new organizational structure for the technical

organization;

• Develop detailed organizational structures for the DC;

• Determine integrative mechanisms and develop them as

appropriate to support the new organizational structure; and

• Develop an approach to career development that supports the

growth and development of employees within the new structure.

Figure 6-1 shows the new overall Counsel structure. The

recommended structure consists of a headquarters, technical

organization, and taxpayer-aligned Division Counsel/field offices.
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6-4

Figure 6-1: Counsel Organization

Technical

Organization

The Counsel technical organization will maintain its historic role of

providing authoritative legal interpretations of the tax law. The

Counsel technical experts will continue to be located together in

Washington, DC, and will be organized primarily on the basis of the

substantive tax law knowledge required by related Code sections.

Finally, the technical organization will maintain its current

responsibilities for many of the key processes that directly affect

taxpayers; for example, issuing regulations, revenue rulings and

other published guidance, as well as private letter rulings, technical

advice and advance pricing agreements.

Figure 6-2 shows the new technical organization consisting of nine

Associate Chief Counsel Offices: Income Tax & Accounting;

Passthroughs & Special Industries; Corporate; Financial Institutions

& Products; International; Procedure & Administration; General

Legal Services; Tax Exempt & Government Entities; and Criminal

Tax. (These last two offices also serve as Division Counsel.) These

offices are made up of branches organized primarily according to tax

law technical subject areas required by the Internal Revenue Code.

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

EEO

Division Counsel

• LMSB

• SB/SE

• W&I

Finance & Management

Special

Counsel

Associate

• Corporate

•

Income Tax & Accounting

• Financial Inst & Products

• Passthroughs & Special

Industries

•

International

• Procedure & Administration

• General Legal Services

Counsel to

National Taxpayer Advocate

Division Counsel/Associate

• TE/GE

• CT
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6-5

Figure 6-2: Counsel Technical Organization

ü Partnerships

ü S Corps

ü Trusts

ü Depletion/

Natural

Resources

ü Estate and Gift

Taxes

ü Depreciation /

Amortization

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

I. Income Tax &

Accounting

II. Passthroughs &

Special Industries III. Corporate

IV. Financial

Institutions and

Products

V. International VI. Procedure &

Administration

VII. Tax Exempt

& Government

Entities (DC/ACC)

VIII. Criminal Tax

(DC/ACC)

IX. General

Legal Services

ü Individual

Income &

Deductions

ü Individual

Credits

ü Gains &

Losses

ü Tax

Accounting

ü Subchapter C

ü Consolidated

Returns

ü Other

Corporate

Issues

ü RICs, REITs,

REMICs

ü Banks and

S&Ls

ü Insurance

ü Financial

Products

ü International ü Determination,

Assesment,

and Collection

Procedures

ü Return Filing

and Payment

Procedures

ü Judicial

Procedures

ü Disclosure,

FOIA, Privacy

Act

ü Employee

Benefits

ü Exempt

Organizations

ü Employment

Taxes

ü Government

Entities

ü Criminal Tax

Provisions

ü Currency

Crimes

ü Labor

Relations

ü Procurement

ü Tort claims

ü Other Legal

Services

Technical Divisions

• The National Office will maintain responsibility for providing authoritative legal interpretations of the tax law. This fixes “Code Accountability” on technical

interpretations and ensures uniformity and consistency.

• The National Office will maintain responsibility for many key products that directly affect taxpayers: Published Guidance, Private Letter Rulings, Technical Advice

and Field Service Advice.
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6-6

Division

Counsel

The new Division Counsel (DC) organizations will work closely

with each operating division on strategy and program planning

matters, such as identifying and prioritizing emerging issues and

developing published guidance needs, as well as on operations

matters, such as day-to-day legal advice and field litigation.

Headquarters. The DC is a critical part of the new Counsel

organization. Four DC Offices will be established, one to serve each

of the IRS operating divisions. Each of the DC will be headed by an

SES-level attorney – the Division Counsel – who will report directly

to the Chief Counsel. The DC will be co-located with the Operating

Division Commissioner. Additional DC offices, managed by an

Area Counsel or Associate Area Counsel, will also be in other key

operating division locations.

Field Counsel. Most of Counsel’s current field organization will be

assigned to one of the DC. This specialization will help the attorneys

develop greater expertise in the specific areas of the tax law most

relevant to the needs of the particular operating division they serve.

It should also encourage development of strong working

partnerships between the Field Counsel and the executives,

managers and employees of the operating division they support.

Field Counsel will continue to represent the IRS in the Tax Court

and Bankruptcy Courts and provide legal advice to operating

division personnel.

Figure 6-3 shows all of the Counsel office locations. Area Counsel

and Associate Area Counsel will be located at the 49 PODs in use

today, while the DC headquarters will co-locate with each operating

division commissioner.
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6-7

Figure 6-3: Counsel Field Office Locations

W&I CT TE/GE

Operating

 Division

Washington, DC Washington, DC Washington, D.C. Washington, DC Washington, DC

Area Counsel

Manhattan Manhattan

Chicago Chicago Chicago

New Jersey Philadelphia Brooklyn

Houston Jacksonville Los Angeles

SF Bay Area

 Richmond

Dallas

Los Angeles

Denver

 SF Bay Area

Associate Area Boston Chicago Boston Nashville Austin Dallas (Dep. A.C.)

 Counsel Hartford Dallas Hartford New Orleans Dallas

Philadelphia

 Baltimore (Dep. A.C.)

Brooklyn Houston Brooklyn Cincinnati Houston

Baltimore

 San Fancisco (Dep. A.C.)

Manhattan Buffalo Cleveland Oklahoma City

Atlanta

Denver

Manhattan Detroit Honolulu

Chicago

Newark Phoenix

Newark Louisville Portland

Dallas

Philadelphia Seattle

Philadelphia Chicago Seattle

Laguna Niguel

San Francisco

Pittsburgh Indianapolis Sacramento

Washington, DC

San Jose

Baltimore Milwaukee San Francisco

Cincinnati

Laguna Niguel

Kansas City San Jose

Cleveland

Los Angeles Washington, DC

Omaha Laguna Niguel

Detroit

Greensboro

St. Louis Los Angeles

Ft. Lauderdale/ San Diego

Ft. Lauderdale/ St. Paul Thousand Oaks

 Miami

 Miami Denver San Diego

Jacksonville

 Jacksonville Las Vegas

Atlanta

Atlanta Phoenix

St. Paul

Birmingham St. Lake City

LMSB SB/SE
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6-8

Large and Mid-Size

Business Division

Counsel

The LMSB DC design consists of a headquarters and a field

organization that is geographically managed but has strong industry

alignment. Figure 6-4 shows the LMSB DC organizational

structure.

The LMSB DC will include seven executives (DC, Deputy DC and

five Area Counsel), approximately 55 managers (Associate Area

Counsel and HQ attorneys) and 37 special trial attorneys. It will

also include approximately 200 attorneys located in 35 field groups,

for a total of approximately 300 attorneys.

Figure 6-4: LMSB District Counsel Organizational Structure

HQ Staff

Field Attorneys STA ISP

Area Counsel

Manhattan, New Jersey,

Chicago, Houston,

San Francisco Bay Area

DC (LMSB)

Deputy DC (LMSB)

(Washington, DC)

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

• DC headquarters will be co-located with the LMSB Division Commissioner.

• Five SES Area Counsel will be co-located with the five LMSB Industry Directors.

• Special Trial Attorneys and Industry Counsel attorneys will report to Area Counsel.

• Area Counsel will supervise field attorney groups within a geographic area and also provide program & strategy

advice to their Industry Director.
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6-9

Small Business /SelfEmployed Division

Counsel

The SB/SE DC organizational structure consists of a headquarters

organization that mirrors the SB/SE Division and a field

organization that serves both the SB/SE and W&I Divisions. Figure

6-5 shows the DC (SB/SE) and (W&I) organizational structures.

The SB/SE DC will consist of eleven executives (Division Counsel,

two Deputy Division Counsel and 8 Area Counsel), approximately

75 managers (Associate Area Counsel and HQ attorneys) and 375

attorneys, for a total of approximately 460 attorneys. The new

design includes eight Area Counsel responsible for a total of 70

groups.

Wage and Investment

Operating Division

Counsel

The W&I DC will provide targeted legal assistance in the areas

where the W&I Division requires Counsel support. The W&I DC

will consist of one executive, 1 manager and 1 attorney. As noted in

the previous section, most of the Counsel field work for the W&I

Division will be performed by the SB/SE DC field attorneys. Figure

6-5 shows the DC (SB/SE) and (W&I) organizational structures.

• The DC (W&I) will not have a field footprint.

• W&I field work will be assigned to SB/SE field attorneys.

HQ Staff

DC (W&I)

 (Washington, D.C.)

HQ Staff

Area Staff

Field Attorneys

Area Counsel

DC (SB/SE)

Deputy DC (SB/SE) (2)

(Washington, DC)

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

Figure 6-5: W&I and SB/SE Division Counsel Organizational Structures
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6-10

Division

Counsel/Associate

Chief Counsel Offices

Two other Counsel organizational units were designed in conjunction

with other IRS design teams:

• TE/GE DC/ACC: The TE/GE DC/ACC was designed by the

Counsel organization on an accelerated schedule in conjunction

with the TE/GE Division design team. The Commissioner and

General Counsel approved the TE/GE DC/ACC Stand-up

Package in September 1999. The TE/GE DC/ACC organization

includes four executives, the Division Counsel/Associate Chief

Counsel (TE/GE), Deputy DC/ACC (TE/GE), Assistant Chief

Counsel (Exempt Organizations/Employment Tax/Government

Entities) and Assistant Chief Counsel (Employee Benefits). Its

national office function will include nine branches consisting of

nine branch chiefs, five senior technician reviewers and

approximately 85 attorneys. Its field organization will consist of

three areas, Northeast & Mid-Atlantic, Great Lakes & Gulf Coast

and Pacific Coast & Central Mountain. Each area will include an

Area Counsel and Deputy Area Counsel. The field organization

will include 28 attorneys at stand-up. Figure 6-6 provides further

detail of the TE/GE DC organizational structure.

HQ Staff

Technical Branches

Assistant Chief Counsel

 EO/ET/GE

Employee Benefits

Field Attorneys

Area Counsel

(Brooklyn, Chicago,

Los Angeles)

DC/Associate (TE/GE)

Deputy DC/Associate (TE/GE)

Washington, DC

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

• The DC/Associate (TE/GE) will be co-located with the TE/GE Division Commissioner and will supervise the technical subject

experts for employee benefits, exempt organizations, employment taxes and government entities issues, as well as TE/GE field

attorneys.

• Three Area Counsel will supervise approximately 30 TE/GE field attorneys in six locations within geographic areas corresponding

to multiple SB/SE areas.

Figure 6-6: TE/GE Division Counsel/Associate Chief Counsel Organizational Structure
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6-11

• Criminal Tax DC/ACC: The Counsel design team worked closely

with the Criminal Investigation design team to develop the

Criminal Tax organizational structure. The CT organization will

include two executives, the Division Counsel/Associate Chief

Counsel (CT) and the Deputy DC/ACC (CT). Its national office

function will include four managers and six attorneys. Its field

organization function will consist of six areas, each managed by

an Area Counsel, and will include six Senior Litigation Assistants

and 54 attorneys at stand-up. Figure 6-7 provides further detail

of the CT organizational structure.

HQ Staff

Technical Branch

Field Attorneys

Area Counsel

Baltimore, Atlanta, Chicago

Philadelphia, Dallas

Laguna Niguel

DC/Associate (CT)

Deputy DC/Associate (CT)

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)

• Six Area Counsel will be co-located with the CID Area Managers.

• Field Criminal Tax attorneys will be substantially dedicated to Criminal Investigation Division issues & will

report to the Area Counsel from about 30 posts of duty.

Figure 6-7: Criminal Tax Division Counsel/Associate Chief Counsel Organizational Structure
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6-12

General Legal

Services

GLS will continue to provide the full range of nontax legal services to

the IRS. In the future, all Counsel’s GLS attorneys will be managed

on a centralized basis by the Associate Chief Counsel (GLS) in

Washington, DC. The Commissioner and General Counsel approved

the GLS Stand-up Package in October 1999. The GLS organization

will include two executives, the Associate Chief Counsel and Deputy

Associate Chief Counsel. It will have three branches in the national

office and six field areas. At stand-up, GLS will include sixteen

managers and 59 attorneys. Figure 6-8 provides further detail of the

GLS organizational structure.

• Six Area Counsel will supervise approximately 40 GLS field attorneys in six locations within geographic areas corresponding to multiple

SB/SE areas.

• GLS field and national office attorneys will provide labor relations, procurement, tort claim and other GLS legal services for all IRS

operating divisions and functional units.

Figure 6-8: General Legal Services Associate Chief Counsel Organizational Structure

HQ Staff

Technical Branches (3)

Field Attorneys

Area Counsel

Wash DC, Manhattan, Chicago

San Francisco

Dallas,Atlanta

Associate (GLS)

Deputy Associate (GLS) (2)

Chief Counsel

Deputy Chief Counsel (Technical)

Deputy Chief Counsel (Operations)
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6-13

Integrative

Mechanisms

In addition to designing the Counsel organizational structure, the

design team identified and developed key integrative mechanisms

for the new structure. These integrative mechanisms are necessary to

ensure successful partnership across Counsel organizational units.

The design team recommended the following integrative

mechanisms to address workload management, post of duty

management and overall coordination:

• For the issue of workload management, the design team defined

processes for assigning incoming work within each DC,

developed a process for rebalancing work when required and

specified clear accountabilities for workload management within

the new structure.

• For the issue of post of duty management, the design team

analyzed head of office reports and other input regarding post of

duty management and recommended approaches for local office

policy and ongoing management responsibilities.

• For the issue of overall coordination, the design team

recommended an approach to determining and achieving client

expectations and developed clear links between strategic plans,

managerial objectives and measurements of service

performance.

For each of the integrative mechanisms, the design team

recommended next steps to be performed by the Counsel

organization during implementation.

Career

Development

Finally, the Counsel design team recommended an approach to

career development that supports the growth and development of

employees within the new structure. Figure 6-9 shows the

recommended career development process.
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6-14

Figure 6-9: Career Development Process

CAREER DEVELOPMENT PROCESS 

• Coordinate assessment of individual

and organizational needs

• Conduct assessment within and

across organizational lines

• Further develop career counseling program

• Use formal career development plans

• Establish new career paths/ladders

• Improve communication re: available

training/growth opportunities

• Employ a more structured/coordinated

approach to selection for

training/growth opportunities

• Ensure prompt initial training (i.e., within first year)

•

Increase availability of internal continuing education

• Facilitate greater utilization of external continuing education

• Develop a more structured continuing education curriculum for attorneys

and managers

• Employ a more structured/coordinated approach to development

through cross-training within National Office and Division Counsel,

among Division Counsel, and between National Office and

Division Counsel

• Education/Training

• Developmental

Assignments

• Reassignments

• Advancement

• Annual/Ongoing

• Formal/Informal

• Improved competency

• Improved

performance

• Enhanced motivation

• Commitment to

learning &

development

• Focus on

improvement

• Better service

ASSESSMENT PLANNING IMPLEMENTATION

Results: 

Evaluate

Opportunities

Organization

Needs

Employee

Interests

Employee

Performance/

Potential

EmployeeOrganization

 Gap Analysis

Career

Dev. Plan/

Career Path

Monitor/

Evaluate

Progress

Execute

 Against Plan
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6-15

Implementation

Phase

The new structure provides several career development

opportunities including:

• Increased specialization that offers opportunities to better

develop expertise;

• Ability to target education/training efforts; and

• Enhanced specialization that will allow the DC to better

serve the operating divisions.

In addition, the new structure presents career development

challenges including:

• Career development could require movement among DC;

• Procedural mechanisms are needed to encourage attorneys

to move across organizational and functional lines; and

• Standards and measures are needed to regulate attorney

cross-training and developmental assignments.

The design team proposed improvement to several key career

development processes including career counseling, training and

developmental opportunities. The team also defined roles and

responsibilities for career development activities and developed an

implementation plan.

Counsel’s Phase III implementation will focus primarily on

activities needed to “stand up” the organization. Five critical

elements need to be completed to stand up the new Counsel

organization:

• The Associate or Division Counsel in place and the key

management positions filled;

• All personnel actions completed to realign employees into

their new organizational units in the field and national

office;

• Budget created and responsibilities transferred to the

Associate or Division Counsel;

• The Associate or Division Counsel organization delegated

the authority to fulfill its mission; and

• Management Systems or workarounds developed and in

place to allow the Associate or Division Counsel

organization to function.

Counsel’s implementation will be conducted by a program

management team, 3 cross-functional teams and 10 functional

teams:
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6-16

Program Management Team. Provide coordination and support

for implementation teams and the Counsel Implementation

Executive Steering Committee; track and monitor

accomplishment of all implementation activities; identify and

resolve crosscutting issues; provide liaison to IRS Program

Management.

Cross-functional Teams

• Workforce Transition. Plan and execute migration of

Counsel employees to positions in the new organization.

• Field Workload Transition. Plan reassignment of current

field workload to proper offices in the new organization, and

coordinate with national office functional teams on

reassignment of current workload items involving

field/national office co-responsibility.

• Administrative Support and Clerical Functions. Develop

appropriate design for management of administrative support

and clerical functions, consistent with Phase IIB

recommendation to manage those functions on a centralized

basis.

Functional Teams

• Division Counsel (LMSB)

• Division Counsel (SB/SE & W&I)

• Division Counsel/Associate Chief Counsel (TE/GE)

• Associate Chief Counsel (CORP)

• Associate Chief Counsel (FI&P)

• Associate Chief Counsel (IT&A)

• Associate Chief Counsel (P&SI)

• Associate Chief Counsel (P&A)

• Division Counsel/Associate Chief Counsel (CT)

• Associate Chief Counsel (GLS)

Each of these teams will focus on changes needed to current

Counsel processes to ensure efficient workload assignment

and management, office management and proper

coordination among Counsel functions and client

organizations. These teams also will work closely with the

Workforce Transition and Administrative Support and

Clerical Functions teams on support matters.

The entire Counsel organization will stand up by October 1,

2000. However, some components of Counsel will complete

their requirements for stand-up earlier than others. The

Associate Chief Counsel (GLS) and the Associate Chief

Counsel (F&M) completed their stand-up on January 16,

2000. Figure 6-10 provides further detail of the Counsel

implementation timeline.
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6-17

Figure 6-10: Counsel Implementation Schedule (based on Calendar Year 2000)

Task Name

Phase III Program Management

Workforce Transition

Field Workload Transition

Support Functions

DC LMSB

DC SB/SE & W&I

DC/Assoc TE/GE

Corp

FI&P

IT&A

P&SI

P&A

CT

GLS

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3

The entire Counsel organization 2000 2001

will stand up by

October 1, 2000. However,

some components of Counsel

will complete their

requirements for stand-up

earlier than others. The

Associate Chief Counsel (GLS)

and the Associate Chief Counsel

(F&M) completed their standup on January 16, 2000. This

figure provides further detail of

the Counsel implementation

timeline.
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Appeals

7-1

Chapter 7 Appeals

Customer

Characteristics

Goals, Principles

and Objectives

The Appeals function is the alternative dispute resolution

forum for any taxpayer contesting an IRS compliance

action. Independent by statute, Appeals ensures all

taxpayers receive an impartial review of their cases after

an examination of a return is complete or collection

action is proposed. This impartial review is essential to

the integrity of the American tax system. It is the last

opportunity the IRS and the taxpayer have to resolve

controversies prior to litigation.

The Appeals organization has four primary goals:

• Provide high quality dispute resolution service to

all taxpayers.

• Respond to the needs and expectations of

external customers.

• Maintain flexibility to meet changing customer

expectations and operating environments.

• Provide a work environment that fosters job

satisfaction and career development for

employees.

Approximately 25 team members, grouped into four subteams, drove the Phase IIB redesign process. They

brought definition to the concepts and high-level plans

that were developed during Phase IIA. The specific

goals identified during Phase IIA were to develop an

organization tailored to the larger Internal Revenue

Service's structure, focus processes on customer needs

and empower our workforce, with the over-arching aim

of providing substantial benefits for taxpayers and

employees.

In Phase IIA, to ensure our modernization efforts would

result in increased taxpayer satisfaction, we interviewed

practitioners, associations and other stakeholders. One

practitioner stated, "Clearly, the IRS is focusing on more

resolutions earlier. That's good for everybody."
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Appeals

7-2

New

Organizational

Model

During Phase IIB, our focus turned toward working with

internal customers and the current organization to effect a

workable set of implementation plans for the process and

organizational design. The redesign of Appeals business

processes coming out of Phase IIB enables the

organization to provide more timely and focused

customer service. Specifically, Appeals Modernization

objectives were to:

• Create a new process to settle taxpayer disputes

sooner.

• Move to a team-based environment aimed at

increasing quality and responsiveness.

• Re-delegate settlement authority directly to frontline appeals officers (within given parameters).

• Improve case review and internal feedback

processes to ensure high quality case development.

We considered many options during our redesign effort

for both building on the success of the current Appeals

organization and finding areas for improvement in

service to taxpayers. Throughout our deliberations we

considered three critical objectives:

• Maintain the independent structure of Appeals so

taxpayers continue to receive impartial assistance on

sensitive tax matters.

• Ensure that our staff is located in areas convenient

for taxpayers and, at the same time, minimize the

need for relocating employees. Because the work

continues to be similar and Appeals staff is already

located in many cities across the nation, this will not

pose a significant challenge.

• Design new products and services as well as process

improvements to reduce taxpayer burden during the

Appeals process. The end result of all our redesign

efforts must be improved taxpayer and employee

satisfaction with the services provided by Appeals.

To ensure that our redesign effort results in dramatic

improvements, we have placed a major emphasis on

more efficient case resolution and increased teamwork

from Appeals staff to ensure that the highest level of

expertise is invested in resolving cases.

The new Appeals organization structure builds on past

successes of impartiality and adds new mechanisms that

serve taxpayers effectively. It creates a new operating

model designed to provide better consistency, quality,

customer focus, ownership and accountability to

taxpayers and other stakeholders. This new model is

illustrated in Figure 7-1.
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Appeals

7-3

• Speed

• Customer focus

• Ownership

• Accountability

• Reduced taxpayer

burden

BENEFITS TO

OTHER

STAKEHOLDERS

•

Employees have

tools, technology

and training

• Less costly and

less timeconsuming tax

administration

Structure

• Geographic alignment by

taxpayer characteristics

People

•

• Select Appeals officers

 trained in mediation to

 quickly resolve cases

• Strong accountability

• Increased coordination for

timely case hand-off

• Streamlined process

 to emphasize early issue

 resolution

Structure

• Geographic

People

• Administrative

• Focus is on internal

issues

Process

• Minimal accountability

• Disengaged from IRS

operating units

• Lengthy appeals process,

lasting an average of

293 days

BENEFITS TO

TAXPAYERS

CURRENT OPERATING

MODEL

Process

FUTURE OPERATING

MODEL

Create empowered teams

of Appeals officers

Figure 7-1: New Operating Model
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Appeals

7-4

Organizational

Structure

The mission of the Appeals function is to resolve tax controversies,

without litigation, on a basis which is fair and impartial to both the

government and the taxpayer and in a manner that will enhance

voluntary compliance and public confidence in the integrity and

efficiency of the Service.

The new Appeals will be headquartered in Washington, DC, but will

maintain the geographic location of current offices. At the

headquarters, the activities will focus on addressing the policy issues

and strategic planning. The following organizational chart illustrates

this new structure.

FOIA Appeals

* SB/SE-TEGE

Area Directors

Notes:

 W&I will be staffed from SB/SE-TEGE after Appeals W&I stands-up.

 FOIA and Real Estate Appraisers will be placed in SB/SE-TEGE Field Office.

Deputy Chief,

(Office of Strategic

Planning)

EEO

Diversity &

Employee

Services &

Budget

LMSB

Operations

Measures,

Analysis

& Planning

Service Center

Director

Strategic HR

Employee

Services &

Budget

W&I Operations

Measures,

Analysis

& Planning

Strategic

Planning &

Communications

Planning

& Finance

Business

System

sPlanning

Director, Appeals

LMSB

Director, & Deputy

Director, Appeals

SB/SE-TEGE

Director, Appeals

W&I

Director of

Practice

Chief,

Appeals

SB/SE-TEGE

Operations

Measures,

Analysis &

Planning

Real Estate

 Appraisers

Employee

Services &

Budget

Executive

Assistant

Art Appraisers

Field Positions

Headquarters Positions

 * LMSB

Area Directors

Teams & Team

Leaders

Teams & Team

Leaders

* The number of areas is contingent on the outcome of the Appeals staffing realignment.

Figure 7-2: Appeals Organization
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Appeals

7-5

Key to the functionality of the headquarters is the Office of the Deputy

Chief, which will ensure the focus on strategic issues. It managers four

primary functions:

• Strategic Planning and Communications will be responsible

for Appeals-wide strategic planning and business planning

activities. A key component of strategic planning is conducting

research and analysis aimed at determining Appeals-wide

trends, the impact of tax law changes and shifts in customer

needs. Fully understanding these needs will assist us in creating

more focused products and services. Constantly updating our

knowledge of the tax law will increase the quality of our

casework and improve our ability to keep taxpayers informed.

• Strategic Human Resources is an internal, process-based

organization that will handle organizational personnel and

training matters for Appeals. It will ensure employees are

provided the necessary tools to deliver top-quality service. The

office will maintain continuous performance improvement and

individual development through competency and skill building.

This staff will conduct needs assessments to ensure the resource

allocation for human resources is prioritized to produce the

maximum benefit to Appeals personnel and customers,

including:

• Developing and implementing policies, guidelines and

procedures for the division within parameters set by the

National Strategic Human Resources.

• Developing an education strategy and designing a

curriculum that focuses on developing key competencies

for the staff in each of the operating units.

• Planning for future staffing and competency needs to

ensure that technically competent personnel are available

to meet Appeals customer needs.

• Fostering partnership with National Treasury Employees

Union and serving on the Appeals National Partnership

Council.

• Serving as the Appeals representative on the Human

Resources Policy Council.

• Providing workforce planning and strategic recruitment

guidance.

• Managing position management activity.

• Overseeing and managing the performance management

process.
Working to Put Service First

Appeals

7-6

• Planning and Finance oversees various financial planning and

resource allocation tasks for the Appeals organization including:

• Developing the budget submission and responding to

inquiries from external stakeholders (Department of the

Treasury, Office of Management and Budget and

Congress).

• Managing the resource distribution process, including the

development of a financial plan that supports the program

priorities.

• Managing the financial resources for including tracking

resource usage against targets.

• Establishing financial policies, procedures and controls in

conjunction with overall Service guidelines and procedures.

• Business Systems Planning, also part of the Deputy's staff, gathers

and articulates business needs for Information Technology (IT)

projects, applications and legacy systems. Responsibilities include

assessing IT solutions to address gaps in business processes,

creating business cases for new IT projects and evaluating requests

for information services. This group will create a close

partnership with the Division Information Officer (DIO), who

reports to the Chief Information Officer. Through this partnership,

Appeals needs and services will be coordinated with all

appropriate IT staff. Some related tasks include:

• Planning and analyzing business needs for new projects.

• Developing business cases and prioritizing business needs

and process changes.

• Formulating Information Technology plans and budgets as

well as managing and/or monitoring funds for business

systems modernization projects.

• Developing and testing projects, overseeing business

involvement in systems testing and establishing information

systems performance measures.

• Implementing and overseeing modernization projects

including development, monitoring and evaluation.

• Supporting senior leadership by providing business

expertise to complement Information System’s knowledge

of technology change.

• Developing and negotiating Service Level Agreements

(SLA) with support functions and assessing the

effectiveness of support received.
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7-7

There are a number of other small offices that are located in

headquarters and report directly to the Chief, Appeals.

The Director of Equal Employment Opportunity and Diversity

provides guidance to the Chief Appeals on equal employment and

diversity policy and issues. Responsibilities for the office include:

• Establishing and implementing EEO policies, procedures and

programs for the division in conformance with overall Service

guidelines.

• Overseeing the Appeals EEO and Diversity Advisory Committee.

• Providing training to Appeals staff on EEO-related matters and

issues.

• Preparing the reports and conducting analyses on key workforcerelated trends and actions.

• Coordinating special emphasis activities relating to women and

minorities.

The Office of the Director of Practice oversees the enrollment of

agents and recommends or takes disciplinary action against individual

tax practitioners when necessary. Specific areas of responsibility

include:

• Providing outreach services to internal and external stakeholders.

• Giving technical advice to taxpayers, tax practitioners and IRS

employees on matters related to Conference and Practice and

Power of Attorney.

• Participating on the Joint Board for the Enrollment of Actuaries

including reviewing applications for enrollment and disciplinary

matters.

• Providing Administrative Appeal for all individuals denied entry

into the E-filer Program.

The staff in the Office of Art Appraisal Services manages the

processes for evaluating art objects, including the Commissioner's Art

Advisory Panel, a board composed of professionals outside the IRS

with expertise in valuing art. Other areas of responsibility include:

• Managing art object appraisals not included in the art panel

process.

• Appraising the value of gifts to government officials.

• Providing expert witness testimony in litigated cases.

• Performing external and internal outreach through public

speaking, training classes and meetings.
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7-8

Apart from the staff in the headquarters, Appeals will have personnel in

field offices to interact locally with taxpayers and other IRS offices.

The new structure also calls for a realignment of the field staff to

closely mirror the new operating division structure (Figure 7-2). Three

Appeals operating units will manage operations for each of the

taxpayer segments. They are:

• Appeals Large and Mid-Size Business (LMSB)

• Appeals Small Business/Self-Employed-Tax

 Exempt/Government Entities (SB/SE-TEGE)

• Appeals Wage and Investment (W&I)

Field operations in Appeals LMSB Operating Unit handle our largest

cases, those referred by the Service's Large and Mid-Size Business

Division.

Appeals officers in Appeals SB/SE-TEGE will hear cases from both

the Small Business/Self-Employed Division and Tax ExemptGovernment Entities. Their casework forms the vast majority of cases

heard by Appeals. Under the redesign, we will also include in their

work those cases where the Service has denied taxpayer requests for

information under the Freedom of Information Act.

Appeals W&I will resolve cases from Wage and Investment Division,

primarily work from the service centers. The design is in the early

stages at this point, and the unit will not be operational in the

immediate future. A team will form during Phase III to refine the basic

outline and draw up implementation plans. Until the structure has been

drawn up and the unit operational, Appeals SB/SE-TEGE will work

those cases. We will populate Appeals W&I from the SB/SE-TEGE

unit when it stands up.
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Appeals

7-9

Senior

Management

Team

The new design for Appeals calls for a flat management structure. At

the top of the organization, Chief Appeals Daniel L. Black, Jr. heads

the Appeals senior management team and is a member of the

Commissioner's senior staff. Mr. Black formerly held leadership

positions as a regional director of Appeals, assistant district director

and district director, and leader of a major task group working on a

consolidation effort in the Service. Other members of the senior

leadership team include:

• Linda Garrard, Deputy Chief, Appeals and formerly the

Southeast Regional Director of Appeals.

• John Piper, the Appeals SB/SE-TEGE Operating Unit

Director, the prior Deputy National Director of Appeals.

• Earl Blanche, Jr., Director for Appeals LMSB, formerly

assistant director in Gulf Coast District.

The senior management team is responsible for providing the strategic

leadership and integrative mechanism within the Appeals organization.

As a team, with support from the strategic planning and analysis

formulated in the Deputy's office, they will identify and address those

issues that cut across the entire Appeals organization. They will also

provide input on trends and needs within the operating units for the

strategic planning process.

Individually, the operating unit directors will have ultimate

responsibility for the programs and operations delivering service to

their particular customer segment. Their role is to ensure that the

operating unit meets the needs and requirement for the specific

taxpayer segment served by that operating unit. Some of the key

functions of the position include:

• Identifying and implementing new processes in conjunction

with corresponding IRS operating division.

• Deploying resources required to meet the needs of taxpayers

and internal customers.

• Ensuring the operating unit addresses needs identified in

balanced measures.

• Managing programs within the operating unit.

• Fulfilling role of third-level reviewers in efforts to resolve

NTEU and LR issues.

The next level of management is the area director. Deployed in the

field, the area directors are second-line managers responsible for

managing the teams and their managers across wide geographic zones.

Their key roles fulfill functions similar to the operating directors', but

at a lower level within the organization. They include:
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Appeals

7-10

Partnerships

• Working with IRS operating unit managers at the same

organizational level to implement new processes.

• Overseeing implementation of new processes within

area.

• Developing an operational plan for effective use of

resources across teams within the area.

• Taking an active role in sensitive, high-profile cases

(Congressionals, controlled correspondence, etc.).

• Establishing constructive relationships with taxpayers

and representative groups.

• Ensuring the area addresses needs identified in

balanced measures.

• Fulfilling role of second-level reviewers in efforts to

resolve NTEU and LR issues.

The team manager fills the management roll at the front-line level. As

another outcome of the redesign, Appeals has moved to a team-based

process for handling cases. In many instances, managers and appeals

officers will work in teams to resolve cases. This team-based

environment will ensure that we capitalize on all of the expertise

available when determining the correct course of action. By

involving managers in the case decision process, rather than having

them review settlement proposals after the fact, we anticipate some

timesavings. This approach is also designed to improve the quality

and consistency of case decisions.

To ensure that the Phase II B design changes can be implemented,

several key internal and external partnerships have been created. First,

liaisons will be strengthened between Appeals and all of the new

operating divisions (W&I, SB/SE, LMSB and TE/GE). Emphasis will

shift to resolving disputes at the lowest possible level in the IRS.

When issues are not resolved by the operating division, these liaisons

will ensure cases are forwarded to Appeals in a timely manner. The

combined effort of Appeals and the operating division will decrease

the average time required to complete cases, resolve factual issues at

lower levels in the IRS organization, and ensure issues are developed

properly and facts are correct so taxpayers do not experience

unnecessary delays.

An internal partnership with the Compliance functions in the IRS

operating divisions focuses on resolving taxpayer disputes at the

lowest level in IRS. After instituting a new process, fast track

mediation, Appeals will provide mediation services to taxpayers and

the Service without requiring the case be transferred to Appeals. The

goal is to resolve disputes in 20-30 days rather than the nine months it

frequently takes now.
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7-11

Geographic

Footprint

In cases where the taxpayer and Appeals are unable to reach

agreement over a dispute, the IRS may decide to forward the case for

litigation. Appeals will work to design processes and feedback

mechanisms that ensure docketed cases flow smoothly between

Appeals and Counsel. This allows the taxpayer to easily move to the

next phase of case resolution. The Appeals function will work

cooperatively with Counsel to ensure that disputes do not

unnecessarily linger in the system.

A key issue in drawing a geographic footprint for Appeals was the

placement of the operating unit directors: should they be co-located

with their counterparts in the operating units, or should they reside in

one location with the Chief. In the end, it was decided that all

members of the Appeals leadership team would co-locate with the

Chief in Washington, DC. A critical factor in this decision was the

need to maintain the perception of Appeals' independence. The IRS

Restructuring and Reform Act of 1998 mandates that Appeals be

independent, and customer surveys indicate that independence is

essential to Appeals external stakeholders.

Co-locating the directors of Appeals operating units also enables them

to coordinate and assign work across the entire Appeals organization

and ensure that program information and expertise is consistently

communicated throughout the operating units.

In the field, the sites where Appeals employees currently serve

taxpayers will not change. However the new design calls for a

realignment of the offices into areas that define the geographic

footprint. Each of the future Appeals operating units will have a

unique footprint that will align roughly to the footprint of the

corresponding IRS operating division. The size of each area will be

determined on the basis of span of control and the number of teams in

a geographic region. The number of areas and the boundaries for each

will be decided once the correct staffing for Appeals has been

determined.

The Appeals LMSB Operating Unit will be administered

geographically rather than by industry, as is the case with the larger

LMSB Division. In addition to managing the teams in their area, the

area directors in these geographic centers will have the responsibility

for acting as liaison to the industry that aligns with their area. In that

role, they will disseminate throughout Appeals the industry-specific

information gained through their linkage with the LMSB Area

Director.
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Appeals

7-12

Process

Changes

During Phase IIB, the team brought definition to the process changes

that were proposed in Phase IIA, specifically fast track mediation and

the closed-case review process.

Fast track mediation focuses on resolving the tax controversies at the

lowest level. When taxpayers disagree with any or all of the IRS

findings in their case, they may request a meeting with the manager of

the examiner or revenue officer who issued the findings. Mediation

can take place at that meeting or afterwards. To begin the process,

both the taxpayer and the IRS manager must sign a simple agreement

form. Most cases qualify for fast track mediation. In general, a

taxpayer may use the process if the case has a proposed tax deficiency

of $100,000 or less and is not docketed in any court. An offer in

compromise must be less than $50,000 to qualify.

The goal of mediation is to provide an impartial forum for taxpayers

and the IRS to resolve the dispute. The mediator's role is to facilitate

communication. The mediator will work with the taxpayer and the IRS

to obtain the information necessary to understand the nature of the

dispute including the issues involved and the positions of both parties.

A resolution agreed to during mediation would not be binding for any

taxable years other than those covered by the agreement. The

mediator has no authority to require either party to accept any

resolution. If any issues remain unresolved, the taxpayer will retain all

the usual appeal rights.

Under the redesign, Appeals will replace the current closed-case

review process with a more comprehensive process that provides

statistically valid data. The design calls for a staff dedicated solely to

performing reviews on closed cases and providing reports at the

operating unit and area director levels of the organization.

The Appeals Quality Measurement System (AQMS) will generate key

output measures that will be used to assess organizational

performance. The system provides the quality measure of the

Business Results component of Appeals balanced measures. Each

operational unit will have a customized set of output performance

measures within the balanced measures framework. Benefits that

AQMS will provide Appeals management and customers include:

• Ensuring taxpayer rights are protected.

• Increasing consistency in Appeals settlements.

• Identifying training needs for appeals officers.

• Providing feedback to management on areas requiring

improvement in the Appeals process.

• Providing feedback to Compliance on the “fit for use” of

cases sent to Appeals.
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7-13

Figure 7-3: Appeals Implementation Plan

ID Task Name

1 Personnel Actions (Competitive Process)

2 National Chief Appeals Selected

3 All SES selected

4 Select GS-15 Area Directors & Operating Unit Managers

5 Select New GS-15/14 Front Line Manager Positions

6 Select New NBU/BU Positions

7 Non-competitive (Restructuring Agreement)

8 Establishment Phase

9 Commissioners' Package Signed

10 Notice 1

11 Notice 2

12 Realign/Reassign Balance of Employees

13 Adjustment Phase

14 Bargaining Phase

15 Implementation Phase

16 Infrastructure/Facilities/Systems/Processes

17 Infrastructure and Facilities

18 IRM Procedures

19 Delegation of Authority Throughout Appeals

20 ACDS Inventory Realignment/Reassignment

21 Budget

22 Fully Implement Quality Review Function (AQMS)

12/31

1/7

5/1

5/22

6/26

3/17

4/3

7/13

8/4

4/7

8/4

9/19

10/2

Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4

2000 2001 During Phase III, Appeals

will move ahead with

implementing the

restructuring of the

organization and

implementing the process

changes. The team will

move forward on the design

for the Appeals W&I

Operating Unit as well as

developing a system for

providing feedback to the

IRS operating divisions on

the quality of cases referred

to Appeals.
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Taxpayer Advocate Service

8-1

Chapter 8 Taxpayer Advocate

Service

Taxpayer

Characteristics

and

Responsibilities

The Taxpayer Advocate Service helps any taxpayer who has

encountered a problem that is not resolved by the IRS through

systemic processes. It is critical that all taxpayers are afforded an

opportunity to receive independent, objective assistance when

resolving problems with the IRS. In 1999, the Advocate handled

approximately 200,000 taxpayer cases.

In addition to serving taxpayers one at a time, the National Taxpayer

Advocate also serves all taxpayers by reporting regularly to the

Congress of the United States. It is the responsibility of the National

Taxpayer Advocate to keep Congress fully up-to-date on the

Advocate’s success at resolving taxpayer problems as well as to

report any systemic issues that may be adversely affecting taxpayers.

The National Taxpayer Advocate publishes two reports each year

that are submitted to the House Ways and Means Committee and the

Senate Finance Committee. The first report, submitted by June 30th

of each year, explains the objectives of the Advocate organization for

the coming year. The second report, submitted by December 31st of

each year, describes the activities of the Advocate’s office and

specific information about problem areas and initiatives for solving

problems. The report also identifies areas of the tax law that impose

significant compliance burdens on either the taxpayer or the IRS and

proposes remedies for these situations. In addition, the Congress is

informed of the ten most litigated issues causing taxpayers to have

difficulty with the tax law.

For the Fiscal Year 1999 Report, the National Taxpayer Advocate

considered input from multiple stakeholders in prior years. The 20

most serious problems represent a consensus ranking. Input from

individual and small business groups, tax practitioners, and the IRS

were given equal weight in the ranking process. Input by the IRS

was provided by the field Taxpayer Advocates. They based their

input on Taxpayer Advocate Service major issue analysis, direct

taxpayer contact, casework, Problem Solving Day issues, and

correspondence forwarded by the Senate Finance Committee equally

important. No group’s input was considered more important than

any others.

Overview The105th Congress strengthened the independent role and enhanced

the responsibilities of the Taxpayer Advocate, known as the

Taxpayer Advocate Service within the Internal Revenue Service. To

begin adapting to this new independence, the Taxpayer Advocate

Service created a new mission: We help taxpayers solve problems

with the IRS and recommend changes that will prevent the

problems. To support this new mission, the Advocate organization

clearly articulated new roles and responsibilities for all of its
Working to Put Service First

Taxpayer Advocate Service

8-2

managers/employees:

• To effectively represent the interests of individual

taxpayers in disputes with the IRS;

• To quickly and accurately address taxpayer problems

when there is a failure of systems, policies or

procedures;

• To operate with the utmost independence while

continuing to work toward the IRS mission;

• To continuously drive procedural, systemic and

legislative changes to benefit taxpayers;

• To effectively communicate with and educate

stakeholders and taxpayers to ensure awareness of

Advocate services; and

• To solicit feedback from taxpayers and key stakeholders

about IRS problems.

Goals,

Principles and

Objectives

The goal of the Taxpayer Advocate Service is to develop an

organization with highly skilled employees who will challenge the

IRS to be more customer focused, take a more aggressive and

proactive approach to advocacy, and play a larger role in policy

development and decisions affecting taxpayers.

During the previous design phase, Phase IIA, a team of managers

and employees from across the country reevaluated the Taxpayer

Advocate organization structure to ensure that it met the

requirements set by Congress and complimented the new design for

the IRS. Beginning in October 1999, the Taxpayer Advocate Service

received funding to support this restructured organizational design in

a separate financial plan, under the centralized control of the

National Taxpayer Advocate. This strengthened the independent

structure of the National Taxpayer Advocate and ensured that the

funds were used solely for the support of Taxpayer Advocate Service

program needs and initiatives.

During Phase IIB, which ended in December 1999, the Taxpayer

Advocate service had already begun implementation activities.

Local site assessment/activation teams, composed of the local

Taxpayer Advocate, Compliance Operations and National Treasury

Employees Union representatives, were established. These teams

ensured that TAS offices received space, furniture and equipment

according to national standards. Funding was provided at the

national level to fully support this effort. Resources were also

provided to increase capacity of the Taxpayer Advocate

Management Information System and align the system to the new

work processes.

The National Taxpayer Advocate also established a Communications

Liaison team to support the organizational transition and develop an

effective communications infrastructure. The Taxpayer Advocate

Service’s communication objectives are to develop and deliver a

comprehensive marketing campaign to increase public awareness of

the Taxpayer Advocate Service. The Taxpayer Advocate continues

to build and maintain a sustainable communications infrastructure
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Taxpayer Advocate Service

8-3

throughout the organization, educate Taxpayer Advocate Service

employees regarding effective communications, and establish a

culture of effective communications among Taxpayer Advocate

Service employees.

Taxpayer Advocate Service organizational measures aligned to

advocacy, casework and outreach work processes were developed

and approved in concept. Groups composed of Taxpayer Advocate

Service managers and NTEU representatives are in the process of

designing diagnostic tools and reports related to each measure, and

are developing implementation action plans.

A comprehensive training program, requiring a substantial

commitment of resources, has been developed for delivery in fiscal

year 2000. The program includes training in new work processes

and procedures as well as in development of required technical

competencies, interpersonal communications and leadership skills.

Figure 8-1: Taxpayer Advocate Service Customer Needs

Customer Customer Needs Accomplishments Objectives

Taxpayers Taxpayers need easy

access to the Taxpayer

Advocate Service when

they experience a problem

with IRS that can not be

resolved through the

normal process. They

expect prompt, error-free

and fair handling of their

tax case. To this end,

they need efficient IRS

policies, procedures and

systems to ensure fair

treatment and quality

service.

The Taxpayer Advocate

has created a new

organizational structure

and hired employees with

increased independence

and authority over

casework decisions. We

have expanded outreach

efforts as well as the

ability for taxpayers to

reach us when they need

help. The Taxpayer

Advocate’s toll-free

phone number is now

staffed 7 days a week, 24

hours per day. Last year,

over 70% of taxpayers

who applied for assistance

were provided some

degree of relief.

The Taxpayer Advocate

Service will continue to

develop and empower

employees who will

challenge the IRS to be

more customer focused,

take a more aggressive

and proactive approach to

advocacy, and play a

larger role in policy

development and

decisions affecting

taxpayers. The

organization will increase

case quality, with an

emphasis on complex

cases.

Congress Congress needs easy

access to the Taxpayer

Advocate Service and an

efficient and fair system

for handling constituent

tax cases. They expect

IRS policies and

procedures to be

Working with the

operating divisions,

Taxpayer Advocate has

advocated for various

systemic and technical

improvements. As a

result of recent advocacy

efforts, there are

The Taxpayer Advocate

will continually make

improvements in the

Congressional Report

process and content.

Outreach efforts will

include ongoing

Congressional staff

briefings for
Working to Put Service First

Taxpayer Advocate Service

8-4

Customer Customer Needs Accomplishments Objectives

implemented that will

enable IRS employees to

provide efficient, effective

and customer-oriented

service to taxpayers.

They need annual plans

and reports of Taxpayer

Advocate Service

objectives and

accomplishments to assist

them in evaluating

possible legislative

actions.

improved procedures for

liens, examinations,

penalties, electronic

filing, innocent spouse

and the offer-incompromise process.

Chief Counsel has also

provided the Taxpayer

Advocate with a team of

experienced lawyers to

provide independent legal

counsel.

constituent assistance.

The Taxpayer Advocate

will also continue to

monitor the success of

new procedures in place

to ensure they are

resulting in improved

service to taxpayers.

Advocate

Employees

Taxpayer Advocate

employees need high

quality systems and

communications with

operating divisions for

efficient interactions on

taxpayer cases. They

need career opportunities

and developmental

options both inside and

outside the Advocate

organization. They also

need continuing education

to keep them

knowledgeable and

effective as advocates.

Taxpayer Advocate

employees now have an

established career path

with greater opportunities

for those wishing to make

a career in the Taxpayer

Advocate Service.

Training plans have been

developed that will

provide a high level of

expertise in all functional

procedures. Orientation

training to the new

organization has already

been completed for many

new employees.

The Taxpayer Advocate

Service will emphasize

delivery of

comprehensive training to

all employees and actions

to enhance the skills and

abilities of leaders within

the Advocate

organization. They will

develop a technology and

systems improvement

plan, including an internet

site.

Operating

Divisions

The operating divisions

need an objective and

knowledgeable Advocate

staff with strong technical

skills in cases involving a

dispute with a taxpayer, or

to provide relief when

standard policies and

procedures have failed.

They need the Taxpayer

Advocate Service to help

reach a balance between

service to taxpayers and

enforcement objectives to

ensure all taxpayers are

treated fairly within the

confines of the law.

The Taxpayer Advocate

Service has actively

participated in

implementation of many

Revenue Restructuring

Act (RRA 98) procedures.

Taxpayer Advocate input

has helped to balance the

focus of implementation

planning. The Advocate’s

organization has

developed and formalized

the Taxpayer Equity

Committee and serves as

sponsor of four regional

Citizen Advocacy Panels.

Activities of these high

profile groups have

resulted in many adopted

improvements to IRS

general programs.

The Taxpayer Advocate

Service will clarify

guidelines for case

acceptance and handling

in coordination with the

operating divisions.

There will be special

emphasis to support the

work of the Citizen

Advocacy Panels and to

clarify Taxpayer

Assistance Order (TAO)

authority. Taxpayer

Advocates will be colocated with the operating

divisions. Advocacy

processes to identify

systemic improvements

will be identifed as the

new operating divisions

are implemented.
Working to Put Service First

Taxpayer Advocate Service

8-5

Organizational

Structure

As a result of Section 1102(D) of RRA 98, the Taxpayer Advocates

in regions, districts and service centers report to the National

Taxpayer Advocate in Washington, DC. To ensure both

independence and objectivity on the part of Advocates in dealing

with tax-related concerns, in the new Advocate organization, all

employees will report directly to the National Taxpayer Advocate

(see Figure 8-2). This provides the taxpayers with an independent

perspective and ensures that they get a second review.

The Taxpayer Advocate Service will be organized around two major

functions: the Casework Function and the Systemic Analysis and

Advocacy Function. The Casework Function will be responsible for

resolving all individual taxpayer problems that meet Taxpayer

Advocate criteria. The Systemic Analysis and Advocacy Function

will be responsible for working with the operating divisions to

identify systemic problems, analyze root causes, implement solutions

and proactively identify potential problems with new systems and

procedures. The advantages of the functional structure include:

• Providing clear accountability for advocacy results;

• Ensuring greater consistency of casework;

• Allowing greater flexibility in assigning Advocate resources

between offices to cover workload fluctuations; and

• Minimizing the likelihood of Taxpayer Advocate staff being

redirected to cover IRS compliance cases.

Figure 8-2 on the next page illustrates this new organization

structure.
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Taxpayer Advocate Service

8-6

Figure 8-2: Overall Taxpayer Advocate Organization

NTA

DNTA

(N.O. = 75)

Financial

 Operations

Taxpayer

Account

Operations

Program

Planning

and Quality

Human

Resources

CAP,

Communications

and Liaison

EEO & Diversity

Executive Assistant to

NTA

Executive Assistant to

DNTA

Areas

1-9

Technical Advisor 2 ODTA Executives

SB/SE / LMSB

W&I/TEGE

2 ODTA

Directors

W&I

SB/SE

Analysts

assigned

to

Operating

Divisions

Counsel Advisor IRS Office of Chief Counsel
Working to Put Service First

Taxpayer Advocate Service

8-7

Headquarters

Casework

The Casework Function will be organized geographically with at

least one Taxpayer Advocate in every state and every service center.

There will be nine Area Advocates responsible for managing all

local Taxpayer Advocates – seven will oversee the local offices and

two will oversee the service centers.

To effectively accomplish the casework, three new types of positions

have been developed: an Associate Advocate (AA), a Senior

Associate Advocate (SAA) and a technical advisor.

Associate Advocates will possess extensive knowledge of individual

and employment tax issues, return processing, liability determination

and collection procedures. In addition, they will maintain a

multifunctional perspective for resolving taxpayers’ problems using

a holistic approach.

Senior Associate Advocates will possess strong technical,

negotiation, interpersonal and conflict management skills. They will

have the ability to make independent case judgements and act on

decisions. Their focus will be on cases that are more complex.

Technical Advisors will have strong interpersonal, negotiation and

technical skills, including substantive knowledge of current tax law,

regulations and IRS policies and procedures, comprehensive

knowledge of compliance procedures and an understanding of

accounting principles and business practices.

All AAs and SAAs will be cross-functional generalists handling

problems from taxpayers in all business units. The technical

advisors will be members of cross-functional teams. Each

geographical area will have at least one team comprised of revenue

agents and revenue officers that will handle more complex cases.

The three new positions are being filled through a competitive

process affording all employees the opportunity to apply. This

process will ensure that the Advocate staff has the appropriate

knowledge, skills and abilities to serve our taxpayers and it will

provide career paths within the Taxpayer Advocate Service

organization.

Systemic

Analysis and

Advocacy

The Systemic Analysis and Advocacy Function will be aligned to

operating divisions’ Taxpayer Advocates. One Term Executive will

be assigned to the Wage and Investment and the Tax Exempt and

Government Entities Divisions, and a second Term Executive will be

assigned to the Small Business/Self-Employed and the Large and

Mid-Size Business Divisions. In addition, Grade 15 Taxpayer

Advocates will be assigned to both the Wage and Investment and the

Small Business/Self-Employed Divisions.
Working to Put Service First

Taxpayer Advocate Service

8-8

Taxpayer problems will be classified into "routine" and "complex,"

with the AAs handling routine problems and the SAAs and

Technical Advisors will be responsible for the complex cases. A

case will be classified routine or complex based on set criteria; for

example, a case with a single issue that can be resolved with standard

procedures with no significant hardship would most likely be

classified as routine. A case might be classified as complex if there

are multiple issues or significant cross-functional issues, if the

taxpayer has a dispute with the operating division, or if the taxpayer

faces a significant hardship as a result of the IRS action. These

specific criteria are currently being refined.

Approximately 2,000 of the 2,300 total Taxpayer Advocate Service

staff will be assigned to the Casework Function. The remaining 300

employees will work in the Systemic Analysis and Advocacy

Function and the National Office functions.

Geographic

Footprint

There will be seven Area Advocates overseeing local offices (located

in Manhattan, NY; Richmond, VA; Fort Lauderdale, FL; Milwaukee,

WI; Dallas, TX; Seattle, WA; and Oakland, CA) and two Area

Advocates overseeing the service centers (located in Atlanta, GA,

and Cincinnati, OH). The two Term Executives for the Operating

Division Advocates will be co-located with the respective

headquarters organizations in New Carrollton, MD, and Atlanta, GA.

Area boundaries were based on the assumption that the majority of

cases resolved in local offices will belong to small business, selfemployed and supplemental income taxpayers. Area Advocates will

be directly responsible for management of two Small Business/SelfEmployed areas and the corresponding Wage and Investment areas.

City locations were determined based on the location of current

regional Advocates, the location of Small Business key states and the

need to maintain a service-wide geographic presence.
Working to Put Service First

Taxpayer Advocate Service

8-9

NTA

DNTA

(N.O. = 75)

Counsel Advisor IRS Office of

Chief Counsel

Area 1

New York

/New

England

Area 2

Richmond

Area 3

SE/

International

Area 4

Milwaukee

Area 5

Dallas

Area 6

Seattle

Area 7

Oakland

Area 8

Cincinnati

SC:

SB/SE;

LMSB

Area 9

Atlanta SC

W&I; TE/GE

10 Local

Areas:

Boston, MA

Augusta, ME

Portsmouth,

NH

Burlington, VT

Hartford, CT

Providence, RI

Brooklyn, NY

Manhattan,

NY

Albany, NY

Buffalo, NY

8 Local

Areas:

Springfield, NJ

Pittsburgh, PA

Philadelphia,

PA

Wilmington,

DE

Baltimore, MD

Richmond, VA

Greensboro,

NC

Columbia, SC

9 Local

Areas:

Atlanta, GA

Jacksonville,

FL

Ft. Lauderdale,

FL

Nashville, TN

Birmingham,

AL

New Orleans,

LA

Jackson, MS

Little Rock,

AR

9 Local

Areas:

Cincinnati, OH

Cleveland, OH

Detroit, MI

Indianapolis,

IN

Parkersburg,

WV

Louisville, KY

Chicago, IL

Springfield, IL

Milwaukee,

WI

11 Local

Areas:

Des Moines, IA

Omaha, NE

St. Paul, MN

Fargo, ND

Aberdeen, SD

Wichita, KS

St. Louis, MO

Oklahoma City,

OK

Austin, TA

Dallas, TX

Houston, TX

12 Local

Areas:

Denver, CO

Boise, ID

Helena, MT

Salt Lake City,

UT

Cheyenne, WY

Phoenix, AZ

Albuquerque,

NM

Las Vegas, NV

Anchorage, AK

Honolulu, HI

Portland, OR

Seattle, WA

5 Local

Areas:

Laguna Nigel,

CA

San Jose, CA

Oakland, CA

Sacramento,

CA

Los Angeles,

CA

5 SC Areas:

Covington, KY

Brookhaven,

NY

Philadelphia,

PA

Ogden, UT

Memphis, TN

5 SC Areas:

Chamblee, GA

Andover, MA

Kansas City,

MO

Austin, TX

Fresno, CA

2 ODTA

Executives

SB/SE / LMSB

W&I / TE/GE

2 ODTA

Directors

W&I

SB/SE

Analysts

assigned

to

Operating

Divisions

Headquarters Staff

• Financial Operations

• EEO and Diversity

• Program Planning and Quality

• Taxpayer Account Operations

• Strategic Human Resources

• CAP, Communications & Liaison
Working to Put Service First

Taxpayer Advocate Service

8-10

Figure 8-4: Taxpayer Advocate Areas

Implementation

Schedule

The Taxpayer Advocate officially “stood-up” organizationally on

March 12, 2000. They have established and competitively filled

most of their Executive and top management positions. In additional

more than 60% of the technical positions have been filled. Support

positions are in the process of being realigned within the Taxpayer

Advocate Service. Remaining technical positions will be filled by

June 2000.

Area 6

(Seattle)

Area 7

(Oakland)

Area 5

(Dallas) Area 3

(Ft. Lauderdale)

Area 1

(Manhattan)

Area 2

(Richmond)

W&I/ SC

(Atlanta)

SB/SE LMSB

ODTA

(New Carrolton)

Area 4

(Milwaukee)

SB/SE SC

(Cincinnati)

W&I & TE/GE

ODTA

(Atlanta)
Working to Put Service First

Criminal Investigation

9-1

Chapter 9 Criminal Investigation

Taxpayer

Characteristics

Criminal Investigation interacts with the portion of the American

public who willfully and intentionally violate their known legal duty

of voluntarily filing income tax returns and/or paying their income

tax due and owed. This segment includes individuals and businesses

who attempt to evade taxes on income earned from legal sources as

well as those who launder funds obtained through illegal activities.

Goals,

Principles and

Objectives

Criminal Investigation’s (CI’s) mission is to serve the American

public by investigating potential criminal violations of the Internal

Revenue Code and related financial crimes in a manner that fosters

confidence in the tax system and compliance with the law.

The goal of modernization is to equip CI with the structures, systems

and processes to deliver its mission. CI began its preliminary design

phase (Phase IIA) in April 1999 after the conclusion of a

comprehensive review led by Judge William Webster. This phase

developed the concept of a new Criminal Investigation organization

and concluded in August of the same year. From September through

December 1999, the CI Phase IIB team refined the recommendations

made in Phase IIA.

The challenge of the Phase IIA and IIB design teams was to design a

new organization that encompassed many of the law enforcement

specific recommendations contained in the Webster Report while

ensuring that the redesigned CI would fit into the new vision of the

IRS. The design teams worked toward designing an organization

that would revitalize CI’s mission in tax enforcement and recognize

CI’s unique role as a law enforcement function within the IRS.

To accomplish this, the Criminal Investigation design efforts were

segmented into five areas of concentration:

Headquarters

The Headquarters work established CI’s membership in and

responsibilities for the IRS Compliance Council and the CI

Leadership Team. It refined designs for the Planning and Strategy,

Operations Policy and Support, Communications and Education, and

EEO functions, including staffing requirements, strategy processes

and linkages, and roles and responsibilities. Additionally, it

established requirements for the transfer of CI Information Systems

staff to the IRS Chief Information Officer.
Working to Put Service First

Criminal Investigation

9-2

Lead Development Center (LDC)/Fraud Referral

The LDC/Fraud Referral segment refined the lead development

structure and key processes. Major structural components of the

LDCs included internal structure, staffing requirements, roles and

responsibilities and implementation planning. Key processes

included interfaces with task forces, Financial Crimes Enforcement

Network (FinCEN) and the operating divisions and methods to

select, develop and assign leads. Fraud referral structures and

processes were established through working closely with operating

division design teams.

Counsel

The Counsel component refined the integrated case management

process and the structure for a dedicated Criminal Tax Counsel

organization. It designed Counsel review content, interaction

processes and external interfaces. It refined Counsel structure,

Counsel staffing requirements, deployment and related

implementation planning. It also addressed Centralized Case Review

in terms of staffing, location and responsibilities in the integrated

case management process.

Field

The Field Management design refined field management processes

to incorporate direct line authority and defined office requirements

including investigative and support staffing levels. The team

determined roles and responsibilities, key line management

processes and related implementation planning. These efforts will

develop the organization’s capability to participate in strategy

development and execute those strategies in accordance with the IRS

National Compliance Strategy.

Refund Crimes

The Refund Crimes team standardized the former Criminal

Investigation Branches (CIBs) and incorporated them into the CI

organization. This team developed Fraud Detection Center (FDC)

internal processes, linkages with Operations Policy and Support,

processes for FDC interaction with operating divisions and CI

interfaces. It also determined roles and responsibilities, allocated

resources to service centers and created implementation plans.
Working to Put Service First

Criminal Investigation

9-3

New Operating

Model

The Criminal Investigation’s newly defined mission to serve the

American public by investigating potential criminal violations of the

Internal Revenue Code and related financial crimes in a manner that

fosters confidence in the tax system and compliance with the law

required a revamped operational model. This new operating model

will provide a better focus on tax administration issues, a streamlined

investigative review process and an alignment that is more consistent

with the U.S. attorney’s offices. This new model will help to reduce

taxpayer burden and provide more consistency in investigative

procedures. In addition, each CI function will have clear lines of

authority and greater accountability for their contribution to the

mission. The Figure 9-1 represents this new operating model.

Figure 9-1: The New Operating Model Results in Significant Benefits for Taxpayers

CURRENT

OPERATING

MODEL

NEW OPERATING MODEL BENEFITS TO

TAXPAYERS

• Consistency

• Accountability

• Clear lines of

responsibility

• Reduced taxpayer

burden

BENEFITS TO

OTHER

STAKEHOLDERS

Structure

• Geographic

• Functional

People

• Broad mission

• Training emphasis

on general law

enforcement

techniques

Process

• Counsel engaged

primarily as

reviewer

Structure

• Geographic

• Functional

• Direct line into Headquarters

• Centralized lead development

People

• Clear focus on tax administration

• Focus on taxpayer needs

• Alignment of field offices consistent

with U.S. Attorney offices

• Enhanced tax administration training

Process

• Counsel engaged throughout

investigative process

• Streamlined investigative review

process

• Single point of contact

for other law

enforcement agencies
Working to Put Service First

Criminal Investigation

9-4

Senior

Management

Team

The concept of a CI Senior Management Team is designed to ensure

that all components of the new organization understand their role in

achieving the mission. In addition, each senior team member will

work with other functions and within CI to ensure that the overall

strategy is being accomplished. Members of the CI Leadership Team

will include the Chief CI, Mark Matthews and the Deputy Chief CI,

Dennis Crawford; six (6) Area Directors; the Directors of Strategy,

Operations Policy and Support, and Refund Crimes; and CI’s

Division Information Officer. The Figure 9-2 represents the

relationships between each member of the CI senior management

team.

Figure 9-2: CI Senior Management Team

CI LEADERSHIP TEAM

PARTICIPANTS

Key Leadership

Supporting Roles

Director,

Operations Support

Division Information

Officer (DIO)

Director,

Strategy

Chief Deputy CI

Director, Refund

Crimes

(6) Area

Directors

• Director,

Communication

and Education

• Head of Planning

and Strategy

• Head of Research

• Head of Review

and Program

Evaluation

• Head of Finance

COORDINATION REQUIREMENTS

• Establish high level policies and procedures and ensure consistent deployment of CI’s

operations

• Ensure CI information systems support and priorities align with CI priorities and IRS

National Compliance Strategy

• Support development of CI priorities

• Used by Compliance Council when setting IRS National Compliance Strategy

• Used by CI organization to focus efforts and allocate resources

• Adjusted as needed to ensure alignment with IRS National Compliance Strategy

• Implement IRS National Compliance Strategy and CI priorities within CI

• Tailor strategy and priorities to account for regional differences

• Ensure sum of regional strategies aligns with IRS National Compliance Strategy

and CI priorities

• Develop and coordinate implementation plans

• Evaluate implementation progress and program effectiveness
Working to Put Service First

Criminal Investigation

9-5

In addition to ensuring that the CI Senior Management operates as a

cohesive, unified team, CI must also work closely with other

functions within the IRS. For example, the Webster Review

recommended that Counsel become an integral part of the criminal

investigation process. In response to Webster’s recommendation,

Chief Counsel will establish a division with attorneys dedicated to

CI. Criminal Tax (CT) Counsel will be a line organization which

will report directly to Criminal Tax National Office. Criminal Tax

attorneys will partner with CI throughout the criminal investigation

process. Their legal expertise will ensure proper case development

and timely identification of case weaknesses in tax and money

laundering investigations.

In addition to establishing a stronger partnership with the Counsel

organization, the new CI organization will also play an integral role

in the development and implementation of an IRS National

Compliance Strategy. An IRS Compliance Council composed of key

internal and external compliance stakeholders, including CI’s

Director of Strategy, will establish the strategy. Participation of

internal stakeholders (e.g., operating divisions) and external

stakeholders (e.g., US Attorneys, DOJ Tax Division, other law

enforcement agencies) will play a key role in CI’s ability to manage

case mix and ensure prosecution of successful investigations. Figure

9-3 represents CI’s involvement in the development/delivery of an

overall IRS Compliance strategy.

Figure 9-3: IRS Compliance Council

COMPLIANCE COUNCIL MEMBERSHIP

(1) Chairman role will rotate on an annual basis

(2) EOUSA , Dept. Of Justice, Treasury Enforcement

Commissioner

Representative

• Ensure a strategic, coordinated approach to

compliance issues, programs, and systems

throughout pre-filing, filing, and post-filing efforts

• Address cross -cutting / national Service-wide

compliance issues with multiple compliance

solutions

• Identify strategic cross-functional issues and

Service-wide priorities

• Conduct high level performance reviews of

strategic compliance initiatives

• Determine Service-wide staffing and budget

allocation according to strategic priorities

• Ensure external stakeholder support of Servicewide compliance initiatives and priorities

External

Stakeholders(2)

NTEU

CI Director,

Strategy

W&I

L&MSB

Counsel

COMPLIANCE COUNCIL ROLES

AND RESPONSIBILITIES

SB/SE

TEGE

Chairman(1)
Working to Put Service First

Criminal Investigation

9-6

Organizational

Structure

Criminal Investigation’s (CI’s) mission is to serve the American

public by investigating potential criminal violations of the Internal

Revenue Code and related financial crimes in a manner that fosters

confidence in the tax system and compliance with the law.

In the modernized IRS, the Chief CI will report directly to the IRS

Commissioner and CI will have direct line authority over all CI

employees. As a result, there will be significant changes to both CI

headquarters and the field management structure and processes.

CI headquarters will add Strategy, Refund Crimes and EEO

functions. There will also be changes within the Operations Policy

& Support and Communications functions to ensure clear lines of

authority. Roles, responsibilities and processes will also be changed

to support the modernized CI and IRS objectives.
Working to Put Service First

Criminal Investigation

9-7

Figure 9-4: CI Organizational Structure

4

(1)

Chief, CI

1

(0)

1

(0)

1

(0)

Director, EEO

621

(10)

2

(1)

1 2

(4)

Director,

Refund Crimes

Program Manager

2

(0)

2

(0)

2

(0)

1

(0)

Director,

Communications

& Education

Internal

Communications

Public

Communications

Disclosure

EEO Specialist

EEO Assistant

TOTAL

HEADCOUNT

Deputy Chief, CI

3

(2)

Director, Strategy

Deputy

123 (49) 201 (87) 3437 (2778) 633 (15) 7 (0) 3 (0)

Area

Directors (6)

24

(12)

Special Agents

in Charge (35)

3382

(2735)

Lead Development

Managers (13)

126

(13)

Centralized Case

Review Managing

Analysts (6)

31

(31)

1 2

(0)

Research

1 5

(0) Finance

39

(24)

National CI

Training Academy

1

(1)

Treasury

Enforcement

Liaison

2

(2) Legislative Liaison

9

(0)

Human Resources

1 2

(6)

Planning & Strategy

1 3

(4)

Business Systems

Planning

Review & Program

Evaluation

(Peer Review 12

and IRM 4)

17

(10)

3

(2)

Director, Operations

Policy & Support

Deputy

International

16

(13)

59

(0)

Transcription Center

10

(3)

Equipment &

Technology Evaluation

21

(15)

Special Investigative

Techniques

19

(17)

19

(11)

Warrants and

Forfeitures

Narcotics

17

(15)

Financial Crimes

37

(11)

Forensics

Resident Agents in

Charge

(Fraud Detection

Centers 10)

Program & Admin

GRAND TOTAL: 4408 (2930)

Note: # 1811s in parentheses

Note: Total numbers exclude Lead Development Managers and employees pending transfer to IS

Note: Grade and FTE levels are subject to position classification, final staffing alignment and budgetary constraints. Division HQ staffing (e.g. HR,

Finance, Strategic Planning, etc.) remains subject to review against the final design of National Office HQ (e.g. Strategic Planning and Budget).
Working to Put Service First

Criminal Investigation

9-8

Strategy

The Strategy organization’s primary role is to develop, support and

measure CI’s business plans and priorities to ensure successful

implementation of a national compliance strategy. In addition to

providing support to CI on strategic objectives, this staff will be

responsible for other support activities including: resource allocation

programs, Human Resources initiatives and Communication and

Liaison activities. Some of these duties include:

Strategy

• Representing CI on the National Compliance Council.

• Providing strategic linkage to the operating divisions and

external stakeholders.

• Leading the development of local implementation plans.

• Developing and supporting CI programs and action plans to

deliver strategic objectives.

• Serving as the link between the CI organization and the

dedicated CI group within Information Systems.

• Providing Servicewide input and support regarding fraud

prevention through tax administration policies and

procedures.

• Researching criminal compliance issues to support the

development of strategic priorities and improve operational

effectiveness.

• Reviewing all aspects of CI operations to ensure alignment

with the National Compliance Strategy and compliance with

IRM standards.

Resource Allocation

• Developing and administering the CI budget according to

national priorities.

Human Resources

• Implementing IRS Strategic Human Resource programs and

supports CI specific human resource needs.

• Developing and delivering CI law enforcement training

consistent with national compliance strategy.

Communication and Liaison Activities

• Representing the CI perspective to Congress, by working

with the IRS Communication and Liaison function.

• Monitoring and assessing changes to law enforcement

policies and initiatives affecting CI and Treasury through
Working to Put Service First

Criminal Investigation

9-9

liaison with law enforcement counterparts and Treasury

Executives. Coordinates implementation of Treasury law

enforcement policies and special programs within CI.

Operations, Policy and Support

The Operations, Policy and Support organization provides policy and

direction on various programs related to law enforcement actions

taken by CI. Some of these responsibilities include:

• Providing policy, direction, oversight and support to the field

offices relating to the narcotics program.

• Developing, directing and overseeing the use of special

investigative techniques in CI matters.

• Providing policy, direction, oversight and support to the field

offices relating to seizures, forfeitures, protective services

and law enforcement actions. This includes oversight of the

CIS Program and the fugitive programs (TECS/NCIC).

• Providing policy, direction, review, oversight and support to

the field offices on tax, narcotics and money laundering

programs.

• Ensuring proper investigative equipment is selected for and

in support of the field and oversees the national radio

program.

• Setting policy and facilitating the acquisition of evidence

from foreign countries.

• Providing support in the input and processing of evidence for

the field operations.

• Providing scientific processing of evidence in support of

field operations.

Area Directors

Area Directors support the National Compliance Strategy through

the investigation of potential criminal violations of the Internal

Revenue Code and related financial crimes in a manner that fosters

confidence in the tax system. These Area Directors are responsible

for managing field CI staff that are responsible for:

• Planning, developing, directing and implementing a

comprehensive criminal investigation program that enhances

compliance, ensures consistency in taxpayer treatment and

continuously improves business systems and processes.
Working to Put Service First

Criminal Investigation

9-10

• Investigating tax and other financial crimes.

• Linking with the operating divisions to stimulate the referral

of legal source tax cases and helping ensure these cases are

developed into quality referrals.

• Supporting the operating divisions' fraud coordinators who

are responsible for assessing information for criminal

potential developed as part of a civil case worked by revenue

agents, office auditors or revenue officers.

• Providing protection and protective escort services to

personnel from the operating divisions.

• Using appropriate investigative techniques for quality case

development, including telephone and non-telephonic

monitoring, undercover operations, wiretaps and search

warrants.

• Maintaining a positive relationship with the US Attorney

offices to ensure the prosecution of tax and money

laundering cases and to facilitate the development of

additional cases.

• Supporting the US Attorney offices through assistance with

pre-trial preparation and assistance in the investigation of tax

and money laundering cases.

• Maintaining relationships with other law enforcement

agencies to facilitate the identification and development of

additional tax cases and to obtain their assistance in the

investigation of tax and/or money laundering cases.

• Supporting the Secret Service by supporting protection

services as required.

• Ensuring prosecution recommendations meet legal

sufficiency, accuracy and consistency through the

centralized case review process.

• Promoting the effective use of resources by using the Lead

Development Centers to do database research on initial

primary investigations and ensuring that leads align with the

IRS’s National Compliance Strategy and associated CI

priorities.

• Interfacing with and obtaining legal advice from Counsel's

Criminal Tax Attorneys on all investigations from initiation

through prosecution.

• Supporting the Organized Crime and Drug Enforcement

Task Force (OCDETF) by participating in multi-agency

investigations of high-level drug traffickers.
Working to Put Service First

Criminal Investigation

9-11

• Supporting High Intensity Drug Trafficking Area (HIDTA)

initiatives by working with other federal, state and local law

enforcement agencies to investigate drug traffickers.

• Ensuring employees are adequately trained in law

enforcement practices, investigative techniques and all

criminal statutes within CI’s jurisdiction.

Refund Crimes

In support of the overall IRS Mission, Refund Crimes detects

fraudulent returns and prevents issuance of related false refunds and

supports the mission of Criminal Investigation field operations

relative to tax administration and related financial crimes, in order to

achieve, directly or indirectly, voluntary compliance with the

Internal Revenue laws. These activities include:

• Continuing to detect refund fraud and identify prevention

measures, including the coordination of special runs against

the Master File and expanded use of secondary databases in

scheme development. Providing the training necessary to

ensure continued support of the program.

• Implementing and supporting national fraud programs.

• Managing the Electronic Fraud Detection System that

supports the fraud detection and prevention program.

Providing field operations with support as it relates to

service center activities.

• Coordinating with CI Strategy Organization (Tax

Administration Advisory Group) and Electronic Tax

Administration on criteria for monitoring e-file program

participants and their ERO (Electronic Return Originator)

related support.

• Coordinating with the operating divisions and CI Field to

expand their use of the Electronic Fraud Detection System.

• Expanding investigations into BMF-based refund fraud

schemes.

• Expanding collaboration with CI Field on refund fraud

scheme development.

• Communicating and educating Service Center personnel on

fraud awareness and detection.

• Ensuring employees are adequately trained on fraud

detection processes and necessary criminal statutes.
Working to Put Service First

Criminal Investigation

9-12

Communications and Education

The Communications and Education staff is responsible for:

• Designing, developing and disseminating CI’s internal and

external communications and education activities.

• Linking with operating divisions and national

communications groups to integrate and coordinate

communication programs.

• Compiling field level communications activities into

targeted educational tools.

• Communicating significant media-related activities to the

Chief, CI.

• Coordinating disclosure matters relating to CI.

Equal Employment Opportunity (EEO)

CI will have a dedicated staff that establishes and implements EEO

policies, procedures and programs for the entire organization in

conformance with overall Service guidelines. This staff will also

perform various tasks including:

• Establishes and implements EEO policies, procedures and

programs for CI in conformance with overall Service

guidelines.

• Serves as CI representative on the EEO and Diversity

Counsel.

• Provides training to the CI staff on EEO and Diversity

related matters.

• Assists and advises the Chief, CI; Deputy Chief, CI; CI

Headquarter Directors; Area Directors; Special Agents in

Charge; Assistant Special Agents in Charge; and managers

in planning, implementing and reviewing organizational

programs.

• Prepares reports and conducts analyses on work force related

trends and actions within CI.

• Establishes functional policy on reasonable accommodation

in conformance with Servicewide policy and ensures that it

is appropriately implemented.
Working to Put Service First

Criminal Investigation

9-13

Changes to

Existing

Organization

There are seven major changes in the way CI will operate.

Compliance – CI will increase focus on a coordinated strategy

through establishment of a Strategy organization within CI and the

creation of an IRS Compliance Council involving all key internal

and external stakeholders.

Direct Line Authority – Criminal Investigation will have direct line

authority over all CI employees, and the Chief will report directly to

the Commissioner, IRS. This will impact both field management

and Fraud Detection Centers (FDC, formerly CIB). FDCs will now

be fully aligned with CI to better support their criminal function.

Lead Development Centers (LDC) – LDCs will be a part of the Area

Director’s staff. They will serve as a resource to the field by

performing database analysis, developing leads to the level required

for Primary Investigation (PI) assignment and reviewing leads for

alignment with the IRS National Compliance Strategy. The Lead

Development Manager (LDM) will work with field management to

assign Primary Investigations to CI groups for investigation.

Fraud Referral – Both structural and process changes will be

established in the operating divisions to revive the referral program.

Both CI and operating division resources will be dedicated to fraud

at key organizational levels. Formal educational, referral and

feedback processes will be established.

Field Management – Review and approval processes will be

streamlined to align accountability with responsibility. Field

resource requirements and deployment will be finalized. Roles and

responsibilities will be established to support key processes,

including Integrated Case Management.

Counsel - There will be a Criminal Tax (CT) Division with attorneys

dedicated to CI. CT will be involved with CI at critical touch points

to provide timely legal assistance and foster an effective partnership.

These touch points include case initiation, group visitations, prereferral assistance, special investigative techniques, summons

enforcement and SAR review.

Information Systems – ACI and most computer-related support will

be transferred to Information Systems organization with Business

Systems Planning responsibilities remaining in CI. Design efforts

are underway to ensure the new design continues to support CI

service level and security requirements.
Working to Put Service First

Criminal Investigation

9-14

Geographic

Footprint

The majority of CI’s front-line field employees will be at the same

location doing the same job. However, CI field management

structure will be changed to align with the new IRS footprint, and

review and approval processes will be streamlined to align

accountability with responsibility.

Six (6) Area Directors will report directly to the CI Chief/Deputy and

will be responsible for all CI activity in a given geographic area.

Area Directors will have direct line authority over 3-6 Centralized

Case Reviewers (CCR), 5-7 Special Agents in Charge (SAC’s) and

the Lead Development Centers (LDC’s) within their areas. In

addition, Area Directors will be the key interface with their operating

division counterparts to ensure an effective Fraud Referral Program.

Thirty-five (35) SACs will have direct line authority over Group

Managers (GMs) and will be responsible for all CI activity in a given

geographic territory. Seventeen (17) territories will also utilize a

total of twenty (20) Assistant Special Agents in Charge (ASACs).

Thirteen (13) of these ASAC’s, in territories consisting of between 6

and 11 GMs, will serve as deputies to the SAC. In the three major

metropolitan cities (Los Angeles, New York, and Chicago) where 13

- 20 GMs belong to a given territory, 2-3 ASACs will serve as a

management layer between the SAC and GMs. Group Managers

will maintain an average span of control of 10-12 Special Agents.

Special Agents will use Title 26, Title 18 and Title 31 Criminal

Statutes to investigate tax fraud and money laundering violations

involving both legal source and illegal source income.

The new CI organization will have direct line authority over the

Fraud Detection Centers (FDC, formerly CIB). Each FDC will have

a manager, known as the Resident Agent in Charge (RAC), who will

report to the Director, Refund Crimes. Each RAC will have a seat on

the respective Service Center Council and will participate with

Service Center management to coordinate efforts and set priorities.

FDC’s will be geographically deployed to maintain a local CI

presence at each Service Center.
Working to Put Service First

Criminal Investigation

9-15

Figure 9-5: Area Director/Special Agent-in-Charge Location Summary

AREA DIRECTOR

LOCATIONS

SPECIAL AGENT IN CHARGE LOCATIONS

Boston, MA Springfield, NJ

New York, NY Philadelphia, PA

Philadelphia, PA Buffalo, NY Pittsburgh, PA

Cincinnati, OH Detroit, MI

Baltimore, MD Cleveland, OH

Baltimore, MD Charlotte, NC Louisville, KY

Alexandria, VA

Tampa, FL New Orleans, LA

Plantation, FL Atlanta, GA

Atlanta, GA Nashville, TN

Chicago, IL Minneapolis/St Paul, MN

Milwaukee, WI St. Louis, MO

Chicago, IL Indianapolis, IN

OK City, OK San Antonio, TX

Dallas/Ft. Worth, TX Las Vegas, NV

Dallas, TX Houston, TX Denver, CO

Phoenix, AZ

Seattle, WA Los Angeles, CA

Los Angeles, CA Portland, OR San Diego, CA

Metro Area San Francisco/Oakland, CA
Working to Put Service First

Criminal Investigation

9-16

Figure 9-6: Criminal Investigation Implementation Plan

1999 2000

Stand Up 3

rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr

Chief Selected

Deputy Chief Selected

Personnel Actions

 All SES Selected

 SACs and HQ Mgt

Selected

 ASACs Selected

 Realignments

Commissioner’s packet

signed

Notice 1

Notice 2

Implementation

Schedule

The stand-up for the new

Criminal Investigation

organization is scheduled for

June 2000. A pilot Lead

Development Center will be

launched in mid-2000 to refine

processes and capabilities. The

pilot will be followed by fullscale implementation over the

next two years. The timing of

the transfer of IS support is still

being determined.
Working to Put Service First

Shared Services

10-1

Chapter 10 Shared Services

Customer

Characteristics

The Agency Wide Shared Services (AWSS) Support Organization

serves over 98,000 IRS employees directly and all taxpayers

indirectly. The employees served are located in over 700 different

locations across the country, from service centers where thousands

work to small posts-of-duty. AWSS provides administrative

services, such as agency-wide procurement, printing and publication

of internal and taxpayer forms and documents, design and execution

of space moves, processing of vacancy and promotional application

packages, support to management and the National Treasury

Employees Union (NTEU) during grievance processes and ensuring

that each IRS employee receives a timely paycheck each pay period.

Goals,

Principles and

Objectives

The AWSS vision for the future supports the operating divisions in

providing world class service to America's taxpayers. In turn,

AWSS will provide world-class customer service to its internal

customers – IRS employees. While we work toward our future

vision, our short-term priority is to provide all of the support

required for the transition to the new operating division structure

while continuing to meet the day-to-day operational business needs.

Phase IIA: Developing the vision

The guiding principles of the AWSS design focused on providing

best-in-class products and services using a business enterprise model.

Under this model, AWSS will strive to become the provider of

choice for administrative services, offering services that our

customers value, identifying and deploying best practices quickly

and providing an environment where work is rewarding and

employee satisfaction is high.

The key results in developing this new structure include:

• A decision to align by service delivery function to create

professional communities;

• Ensuring proactive customer relationship management at all

levels in the organization.

Phase IIB: Designing the Organization

The Phase IIB Design built from the earlier Phase IIA design work

and developed the organizational components required for the new

AWSS. The team analyzed each functional area's requirements and

designed the organization's footprint and reporting structure.
Working to Put Service First

Shared Services

10-2

Senior

Management

Team

The senior management team will work together to make the AWSS

vision a reality. During Phase IIB, the AWSS Senior Management

Team was selected:

• Bill Boswell became the Chief, Agency Wide Shared Services;

• Greg Rothwell was selected as Deputy Chief, Agency Wide

Shared Services.

Additionally, the executives for each functional area were selected:

• Tom Liberti will head the Facilities organization;

• Rich Cronin will lead the Personnel Services organization;

• Jim Williams will run the Procurement organization;

• Thelma Harris was chosen to head EEO Field Services;

• Steve Kunze will be the Director of Finance – which includes

managing the entire AWSS budget.

This dedicated team will work to provide the best service to AWSS

employees – striving to exceed customer expectations. To ensure

coordination across operating divisions, the Chief, AWSS will sit on

the Commissioners' Senior Management Team, forging relationships

with the customer operating and functional divisions.

Business

Enterprise

Model

Figure 10-1 illustrates the key elements for the new AWSS business

model.

Figure 10-1: Key Elements of the AWSS Business Model

ELEMENT DESCRIPTION/PURPOSE

Portfolio of Services • A standardized definition of each service offered will establish clear expectations

for service delivery with the customer

• Establishes the "product" mentality within Shared Services that all products will

evolve and improve

• Represents groupings of like services to create synergies

Service Level Agreements / Memos

of Understanding

• Establishes clear expectations with customers on the quantity, quality, location and

price of services to be provided

• Forms a plan that can be managed by both parties

• Establishes accountability

• Provides a multi-year phased approach, starting with a Memo of Understanding

Governance • Establishes strong linkages to operating divisions at various levels

• Enables services to be planned and developed with customer feedbac k

Customer Relationship Management • Provides operational linkage with customer base

• Creates an advocate for the customer

• Enables cross-functional coordination when necessary—builds a team approac h
Working to Put Service First

Shared Services

10-3

While each element is important, two (Service Level

Agreements/Memoranda of Understanding and Governance) are of

primary importance to customer engagement and satisfaction.

Service Level

Agreements

Service Level Agreements (SLA) / Memoranda of Understanding

(MOUs) will improve customer satisfaction by clearly establishing

the expectations of both the customer and the service provider and

by providing a mechanism for ensuring accountability.

MOUs will be the forerunner to SLAs, starting the process with a

phased approach. As additional information on customer

expectations and service delivery is collected and tracked, MOUs

will evolve into fully-functioning SLAs.

Governance In order to create a market-based partnership between the operating

divisions and service providers, AWSS will operate in a governance

system. The proposed governance system provides strategic and

tactical linkages to our customers.

Proposed Governing Entities

• Governance Board: Comprised of each of the operating

division heads, this group focuses on broad direction setting

for AWSS. Example: Implementing a new Servicewide

initiative in Facilities

• Geographic Councils: These councils will resolve a broad

range of local issues, including those connected to AWSS

functions. These may include Facilities issues (e.g.,

allocating space in a building shared by two operating

divisions) or Personnel issues (e.g., coordinating a largescale hiring)

AWSS

Organization

Structure

The new AWSS organization will be functionally aligned by service

delivery area (See Figure 10-2). This will provide clear lines of

authority, focus on improving program delivery, enable accurate cost

management and provide customer focus and accountability.
Working to Put Service First

Shared Services

10-4

Figure 10-2: AWSS Organizational Structure

Chief, Agency Wide Shared Services

HQ Support Deputy Chief, Agency Wide Shared Services

Architecture

and

Engineering

Facilities

Policy

Records and

Facilities

Systems

Security

Property

Budget and

Administration

Support

Area 1

Area 2

Area 3

Area 4

Area 5

Program and

Administration

TCP Operations

Centralized Activities

Personnel Security

Area A

Area B

Area C

Area D

Procurement Policy

Information Systems

Acquisition

Tax Systems

Acquisition

Contract

Administration

Technical Contract

Management

Regional Procurement

Operations

Procurement

Operations

Personnel Operations

Area 1, Atlanta

Area 2, Cincinnati

Area 3, Washington,

DC

Area 4, Manhattan,

NY

Area 5, Dallas

Area 6, Chicago

Area 7, San Francisco

Bay Area

Facilities Personnel Services Procurement EEO and Diversity Field

Services

Operations

Executive
Working to Put Service First

Shared Services

10-5

Each of the functional service groups will be organized to meet

customer needs and enable efficient and effective service delivery.

Generally, Facilities Management will be functionally aligned and

geographically distributed. Personnel Services will generally be

aligned by customer with each operating division assigned a

personnel office to coordinate services. Procurement will continue

to deliver its services as a single, nationally focused organization.

EEO field delivery has a geographic footprint covering the entire

country.

Some components that will be functionally aligned but centralized

include, Architect and Engineering, Worker’s Compensation,

Employee Tax Cases and Wage Garnishments. Procurement will

generally be functionally aligned and centralized.

Facilities The Facilities organization will provide best in class Facilities

services to all customer segments. The new organization will merge

the existing national organization and the field delivery structure into

a single, cohesive organization. Program decisions and field delivery

will be closely tied together, providing a unified structure to provide

facilities services.

Figure 10-3 depicts the Facilities organization structure. The A&E

(Architecture & Engineering) Planning and Support, Facilities

Policy, Personal Property, Security and Records & Facilities Systems

Branches are program-specific branches developing policy and

procedures for implementation by the branch-level operating

functions. These branches have common program management and

oversight responsibilities. These responsibilities include:

• Consulting and advising on Servicewide policy and program

issues for top-level management; evaluating program

effectiveness and economy and initiating improvements as

indicated;

• Planning, coordinating and establishing operating methods and

procedures for the accomplishment of Servicewide programs;

• Developing and maintaining policy relating to standards and

guidelines for program-related operations;

• Planning, developing, promoting and establishing standards and

guidelines to carry out the scope and mission of the program(s).
Working to Put Service First

Shared Services

10-6

Figure 10-3: Facilities Organizational Structure

FACILITIES MANAGEMENT

DIRECTOR

Director MODERNIZATION

PROJECT

DIVISION

A&E Planning

& Support

Branch

Security

Branch

Records &

Facilities

Systems Branch

Facilities Policy

Branch

Property

Branch

Facilities Operations Executive

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

Budget and

Administrative

Support

• Denver, CO

• Laguna Niguel, CA

• Oakland, CA

• Seattle, WA

Facilities Operations

Manager -Atlanta, GA

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

Facilities Operations

Manager -LocationTBD

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

Facilities Operations

Manager -LocationTBD

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

FM Branch Chiefs FM Branch Chiefs FM Branch Chiefs

Branch

Locations:

• Andover, MA

• Atlanta, GA

• Austin, TX

• Fresno, CA

• Kansas City, MO

• Southeast (Atlanta)

• Chicago, IL

• Detroit, MI

• Dallas, TX

• St. Louis, MO

• St. Paul, MN

# of FTE 93 310 229

Area 1

Facilities Operations

Manager -Wash., DC

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

FM Branch Chiefs

• Richmond, VA

• HQ Ops (includes

Martinsburg Computing

Center)

574

Area 3

Facilities Operations

Manager - LocationTBD

• Secretary

• Management Analyst

• Management Assistant

• Finance Support

• Client Services

FM Branch Chiefs

• Brookhaven, NY

• Covington, KY

• Memphis, TN

• Philadelphia, PA

• Ogden, UT

• New York, NY

575

Area 2 Area 4 Area 5

194

Note: FTE Counts do not

include 21 FTE in Facilities

Executive office,

Modernization Project

Office Division and

Facilities Operation

Executive Office
Working to Put Service First

Shared Services

10-7

These branches, along with the Modernization Project Office, also

have program specific roles and responsibilities.

• Modernization Project Office: Develops program policies

and objectives to guide Servicewide implementation of

Facilities programs supporting the IRS Modernization effort;

• Architecture & Engineering Planning and Support:

Executes and administers contracts for Architecture &

Engineering services, facilities planning and relocation

management services;

• Facilities Policy: Advises, reviews and supports IRS

Headquarters, management and field locations in real estate

related activities including acquisition, utilization, control,

transfer and disposal of real estate;

• Personal Property Branch: Advises and assists the

Headquarters Office and field locations in the purchase,

distribution, utilization, control, transfer and disposition of

property. Defines employee responsibilities for properly

using and effectively managing Government property issued

to them or included within their jurisdiction;

• Security Branch: Develops and implements Servicewide

physical security policy and procedures;

• Records and Facilities Systems Branch: Manages the

Servicewide Records program, develops new records control

schedules and reviews existing schedules transfers

permanent records to NARA;

• Budget and Administrative Support Branch: Establishes

financial policies, procedures and controls for Facilities

Management. Formulates and manages the IRS rent budget;

reviews, approves and obligates funds for payment on all

IRS real estate transactions;

• Field Operations: Delivers Facilities services to the IRS

community, including Real Estate Management, Property

Management and Physical Security.

The field delivery structure for Facilities is separated into five areas

each managed by an operations manager. Facilities Management for

the Service Centers was grouped together in recognition of the

common issues specific to this environment. This placement will

allow each operation manager to focus on his or her customer

division. The remaining three areas are arranged on a geographical

basis. New customer advocate positions at the Area level and at the

Executive level will be a critical liaison to customers. Customer

advocates will work on a range of issues, from assisting a division in

its overall Facilities planning to coordinating specific projects.
Working to Put Service First

Shared Services

10-8

Personnel The PersonnelServices organization will provide best in class

personnel services efficiently and effectively to all customer

segments. This organization will be responsible for all

labor/employee relations, employment and transactional processing

(e.g. Payroll) of personnel services. Policy issues will be handled

outside of AWSS by Strategic HR.

Generally, Personnel Services will be aligned to customer divisions

with each personnel office serving one or more operating divisions.

(See Figure 10-4.) This alignment will help to direct each office's

focus to specific customer needs. From a customer standpoint, a

single point of contact for Personnel Services will allow close

coordination of service delivery and issue resolution.

The personnel services organization contains multiple functions at

the headquarters, plus the field operations where the majority of

resources exist.

• Director, Personnel Services: Overall accountability

for the entire Personnel Services Organization. The

organization will have management and oversight

responsibility for the TPC Operations, Centralized

Activities, Personnel Security and Program Management

and Administration;

• Chief, Program Management and Administration:

Provides program specific AWSS policy and guidance to

the field personnel functions (program areas include

Workforce Relations, Customer Outreach,

Administrative Support and Planning and

Implementation);

• Personnel Services Operations: Overall accountability

for the four Personnel Services Operations Managers;

• Personnel Operations/Personnel Operations

Managers: Serve as a single point of contact for the

operating, functional and support divisions. Each

Operating Manager will supervise staffs that provide

employment support (i.e. qualification determination,

recruitment support) and employee/labor relations

support (i.e. negotiations, grievance and conduct case

processing) to appropriate business divisions;

TPC Operations: Assumes overall responsibility for the nine

Transactional Processing Centers (TPC) and Payroll/Processing

administration. The nine TPC’s are aligned to provide transactional

processing support to all personnel offices and their customers.
Working to Put Service First

Shared Services

10-9

Figure 10-4: Personnel Organizational Structure

DIRECTOR, PERSONNEL

SERVICES OPERATIONS

• Client Services

DIRECTOR, PERSONNEL

SERVICES

• Client Services

Personnel

Operations Manager

A - Atlanta, GA

• Client Services

Personnel

Operations Manager

B - TBD

• Client Services

Chief, Centralized

Activities

,

• Workers

Compensation

Center

• Employee

Connection

• EmployeeTax

Compliance

• Special

Programs

• Chief, BeST

• National

Personnel

Information

Team

• Client

Services

,

Chief, Personnel

Security

• National

Background

Investigations

Center

• Client

Services

• TE/GE

• Counsel

• Appeals

• LMSB

• Distribution Centers

• 17,000 customers

• I/S

• National

Operations

• AWSS

• CI

• TA

• 21,000 customers

• W&I

• 31,000 customers

• SB/SE

• 39,000 customers

Personnel

Operations Manager

C - Wash., DC

• Client Services

Personnel

Operations Manager

D - Wash., DC

• Client Services

TPC Operations

Mgr -

Washington, DC

• Team Leader

TAPS / TIMIS

• Personnel

Management

Specialists

• Team Leader

Program

Management

• Personnel

Management

Specialists

• Client Services

TPC

Chiefs

PROGRAM

MANAGEMENT

AND

ADMINISTRATION

• Administrative

Support

• Personnel Policy

• Labor Relations

• Quality

Assurance

Personnel Branch

Chiefs

• Atlanta, GA

• Fresno, CA

• Austin, TX

• Kansas City, MO

• Andover, MA

• Seattle, WA

Personnel Branch

Chief

• Ogden, UT

• Brookhaven , NY

• Covington, KY

• Memphis, TN

• Philadelphia, PA

• Laguna Niguel, CA

• New York, NY

Personnel Branch

Chief

• St. Paul, MN

• St. Louis, MO

• Denver, CO

• Detroit, MI

• HQ Ops

Personnel Branch

Chief

• Chicago, IL

• Richmond, VA

• Dallas, TX

• Oakland, CA

• Southeast

(Atlanta)
Working to Put Service First

Shared Services

10-10

Procurement

• Centralized Activities: Provides management oversight to all

AWSS centralized support organizations (e.g., workers’

compensation, employee tax compliance, garnishment of wages

and employee benefits processing).

• Personnel Security: Coordinates the processing of all

background investigations through the National Background

Investigation Center. This organization has responsibility for

ensuring all employee investigations are timely and accurately

conducted and processed for all personnel offices.

The Procurement Organization (shown below in Figure 10-5) will

provide best-in-class Procurement services to all customer segments.

This includes providing Servicewide program development and

direction for Procurement services. The organization will achieve a

high degree of success as measured by customer satisfaction

measures, employee satisfaction measures and business results

measures.

Figure 10-5: Procurement Organizational Structure

Director, Procurement

• Deputy Director

• Managing Assets Team

• Solution Center

Chief, Information

Systems Acquisition

• Department

Systems

• Communication

Systems

• Corporate

Systems

• End User

Systems

Chief, Tax Systems

Acquisition

• Systems

Modernization

• Tax Processing

Systems

• Systems

Integration

Chief, Contract

Administration

• Communications

and Support

Administration

• Tax Systems

Adminstration

• Multi-User

Administration

Chief, Technical

Contract

Management

• Compliance and

Investments

Management

• Corporate

Computing

• Modernization

Services

• Tax Processing

and End User

Computing

• TIPSS

• Telecommunications

Chief, Regional

Procurement

Operations

• Northeast Region

New York, NY

• Midstates Region

Dallas, TX

• Martinsburg

Computing Center

Kearneysville, WV

• Southeast Region

Atlanta, GA

• Western Region San

Francisco, CA

• Detroit Computing

Center

Detroit, MI

Chief, Procurement

Operations

• Support

Contracts

• Building

Operations

Chief,

Procurement Policy

• Branch Chief,

Cost & Price

Analysis

• Branch Chief,

Policy &

Procedures

• Branch Chief,

Quality Assurance
Working to Put Service First

Shared Services

10-11

EEO The EEO and Diversity Field Services organization will support the

IRS mission, providing customers with top quality service by helping

employees understand diversity and their EEO rights and

responsibilities and by applying the civil rights laws with integrity

and fairness to all. The AWSS EEO & Diversity organization will

be responsible for all EEO & Diversity operational activities. Policy

issues will continue to be handled by the Office of the Chief, EEO &

Diversity National Headquarters. Each business division will have a

small embedded EEO staff to handle business-specific, strategic

issues.

Illustrated below in Figure 10-6, EEO and Diversity Field Services is

geographically aligned, with 7 areas covering the IRS Footprint.

Area 1 includes the W&I Service Centers; Area 2 includes SB/SE

Service Centers. This placement will allow each Area Manager to

focus on his or her customer division. The remaining five areas

are arranged on a geographical basis, although each Area Manager

will be designated as a point of contact for one or more customer

divisions. EEO & Diversity Field Services’ major program

responsibilities include execution of the Complaint Processing

process, overall field program management and advice and

consultation to all divisions on EEO operational issues.

Figure 10-6: EEO Organizational Structure

Area 1 Area 2 Area 3

# Of

Customers:

# AWSS/

EEO

Employees:

• 11,561

Director, EEO &

Diversity - MidAtlantic

Managers, EEO

& Diversity

• Washington, DC

• Richmond, VA

• Baltimore, MD

• Martinsburg, WV

• 29

• 12,136

Director, EEO &

Diversity -

Southern

Managers, EEO

& Diversity

• New Orleans, LA

• Jacksonville, FL

• Ft. Lauderdale,

 FL

• Nashville, TN

• Greensboro, NC

• Dallas, TX

• Houston, TX

• 33

Area 4 Area 5 Area 6 Area 7

• 25,208

Director, EEO &

Diversity - Wage

and Investment

Managers, EEO

& Diversity

• Atlanta, GA

 (2 sites)

• Andover, MA

• Austin, TX

 (2 sites)

• Fresno, CA

• Kansas City,

• 47

• 33,024

Director, EEO &

Diversity - Small

Business, Self

Employed

Managers, EEO

& Diversity

• Holtsville , NY

 (Brookhaven )

• Covington, KY

 (2 sites)

• Memphis, TN

• Ogden, UT

• Philadelphia, PA

 (2 sites)

• 46

Director, EEO Field

Services

• Operations Director

• Customer Liaison

• Administrative Support

(2)

• Program Management

and Administrative (8)

(13)

Director, EEO &

Diversity -

Northeast

Managers, EEO

& Diversity

• 10,947

• Manhattan, NY

 (2 sites)

• Boston, MA

• Detroit, MI

 (2 sites)

• Buffalo, NY

• Hartford, CT

• Newark, NJ

• 30

• 11,657

Director, EEO &

Diversity -

Western

Managers, EEO

& Diversity

• Laguna Niguel,

 CA

• Oakland, CA

• Seattle, WA

• Los Angeles, CA

• Denver, CO

• San Jose, CA

• 28

• 10,587

Director, EEO &

Diversity -

Midwest

Managers, EEO &

Diversity

• St. Louis, MO

• Phoenix, AZ

• Chicago, IL

• Milwaukee, WI

• Indianapolis, IN

• Oklahoma

 City ,OK

• St. Paul, MN

• 32

MO
Working to Put Service First

Shared Services

10-12

Organizational

Footprint

In the Phase IIB design, AWSS staffing exceeds 5,400 FTEs. The

structure of the AWSS organization has realigned FTEs in several

ways:

• Reductions in staffing due to components of Personnel and

Education being realigned to the National Office staff or

embedded in the operating divisions (Labor Relations

Oversight, Policy and National Negotiations; Strategic

Recruiting, Education; Career Counseling and

Organizational Development; and Centralized Position

Management and Position Classification);

• Adding staff from Information Systems to Procurement to

manage technical contracts;

• Adding a new organization – EEO Field Services;

• Additions in staffing due to Meeting Services being moved

from Education to Facilities.

Frontline and first-level manager positions will remain relatively

unchanged. The vast majority of employees moving into AWSS will

continue to perform the same jobs in their existing locations.

Minimal disruption will support our goal of ensuring that all current

and transition business needs are met during the stand-up of each

operating division.
Working to Put Service First

Shared Services

10-13

BU

SIN

ES

S

MO

DE

L

OR

GA

NIZ

ATI

ON

AL

SHARED SERVICES REORGANIZATION ACTIVITIES

4Q 1Q 2Q 3Q 4Q

CY1999

1Q 2Q 3Q 4Q

CY2000

1Q 2Q 3Q 4Q

CY2001

1Q 2Q 3Q 4Q

CY98 CY2002

PhaseIIB Implementation Phase

IIA

KEY ACTIVITIES

• Establish top level management team

– Realign regional DSS

– Recruit Shared Services executive

– Install Shared Services functional

executive

• Set up governance structure

• Develop and institute accountability

mechanisms

– Develop formal SLA and charge

back levels

– Develop performance monitoring

systems and processes

– Selectively execute process

improvements

• Develop Shared Services support

organization / relationships

– Develop financial management &

fee for service capabilities

– Develop operations management

structure

Start-up: Build Capabilities

Growth Phase

Full

Functionality

Phase 2004+ Start-up: Build Capabilities

Growth Phase

AWSS has begun to function under an

October 1, 1999 interim realignment. At

that time, the Regional Directors of

Support Services, the A/C Procurement,

Chief Headquarters Operations and

National Office Facilities Management

& Personnel Services organizations were

all brought under the same organization

reporting to the Chief, AWSS. Prior to

stand-up, Facilities, Personnel and EEO

Field Services will have their executive

leaders selected. By October 1, 2000,

the AWSS organization will be

functionally aligned, ending the regional

/ host site structure and aligning purely

along functional lines.

After "standing-up" the new

organization, AWSS will able to develop

Shared Service Business Model

capabilities. These include rolling out

Memos of Understanding to the AWSS

customer divisions, identifying process

standardization issues and implementing

performance monitoring processes under

the Balanced Measures program.

Figure 10-7: AWSS Implementation Plan
Working to Put Service First

Information Systems

11-1

Chapter 11 Information Systems

Customer

Characteristics

Over 70,000 IRS employees depend on a highly diverse information

technology (IT) inventory of computer hardware, software and data

networks to provide high-quality customer service directly to

taxpayers. The current IT configuration relies on a tape-based

Master File system to hold all taxpayer account data. This system

feeds many other operational systems and causes a week or longer

delay in placing current information on systems used by IRS

customer service representatives.

The current IT configuration includes 41 mainframe computers, 713

mid-range computers from 7 vendors, over 100,000 personal

computers and 8,000 vendor-supplied software products. IRS’ web

of systems poses a fundamental barrier to quick, efficient service to

taxpayers, including high costs, long timelines to implement changes

and improvements, and difficult control and security issues. This

translates into a serious risk for the IRS to achieve its strategic goals.

Over the next several years, the IRS will resolve technology barriers.

In the short-term, the IRS will implement several small

improvements that will equate to real leaps in the ability to provide

top quality customer service. Success of these efforts will depend on

transitioning the current Master File to a modern database.

In redesigning the Information Systems organization, the IS Phase

IIB team focused on creating work processes that would improve the

way the IRS plans, prioritizes and manages organization-wide

systems initiatives. The traditional IS organization structure created

a number of challenges.

• Multiple points of contact between business users and IS

create a confusing environment to adequately respond to

new service requests;

• Operational processes are complex and inefficient; thus, enduser problems take too long to resolve;

• Resources are locked up in operational activities leaving

very few staff available for new strategic capabilities such as

new applications. Only about 13% of IS resources are

available for “discretionary” demand;

• Technical and managerial skills are concentrated on legacy

systems (e.g., ALC, Cobol) and need to be upgraded to

support technology modernization needs; and

• Lack of standards and non-integrated systems across the IS

organization result in fragmented delivery and expensive,

time-consuming roll-out of applications.
Working to Put Service First

Information Systems

11-2

The new IS Division addresses these challenges through building in

key organization features that focus the organization on serving

customers. These include:

• A strategic customer service capability to better manage IS’

relationships with customers;

• Service management functions created to provide service

delivery accountability and cost effectiveness;

• A systems development organization that acts as a shared

service; and

• Technical resources consolidated to manage cost-effective

services end-to-end.

Goals,

Principles and

Objectives

The Information Systems (IS) Organization Phase IIB team’s

objective was to enable IS to meet overall demand more efficiently

and to increase resources available for new, strategic capabilities.

Four IS strategic goals guided the Phase IIB efforts:

• develop a strong partnership between IS and the customer

divisions;

• maintain or increase service levels throughout the

organization and technology modernization processes;

• reallocate IS resources to support proposed modernization

initiatives while maintaining legacy systems; and

• achieve day-to-day operational efficiencies and realize

savings opportunities.

With the completion of IIB, the IS organization is positioned to

support modernization and achieve dramatic service improvements

for the business. IS had major accomplishments on an operating

division level, the most significant being the approval by the

Commissioner and the subsequent realignment of the IS organization

into the high-level organization configuration designed in IIA. This

structure is shown in Figure 11-1.
Working to Put Service First

Information Systems

11-3

Security,

Privacy

Oversight

Dir. DCC

Dir. TCC

Dir. Mainframe

Consolidation

Dir. Corporate

Computing

Dir. End User

Dir. MCC

Dir. Architecture Dir. Submissions/ETA

Dir. Customer

Service/Taxpayer

Advocate

Dir. Compliance

Dir. Corporate Systems

Dir. Financial &

Admin Systems

Dir. School of Info Tech

Dir. EEO &

Diversity

Dir. Staffing &

Career Dev.

Dir. Fin

 Planning & Budget

Dir. Admin

Management

AD IT Midstates

AD IT Northeast

AD IT Southeast

AD IT Western

AD IT DC Metro

Dir. Tele

Req & Dev

Dir. Tele Eng

& Proj Mgmt

Dir Tele Svs

& Premises

Dir Network

Mgmt &

Wide Area

Ops

Andover IS Dir.

Atlanta IS Dir.

Austin IS Dir.

Cincinnati IS Dir.

Fresno IS Dir.

Kansas City IS Dir.

Memphis IS Dir.

Ogden IS Dir.

Philadelphia IS Dir.

Brookhaven IS

Dir.

OFFICE OF THE CIO

Dir. Compliance

Systems

Dir. Submission

Testing

Dir. Electronic

Submission

Testing

Dir. Corporate

Testing

Dir. Master File

Testing

Dir. Integration,

Test, and

Control Center

Dir. CDC Test

Office/

Modernization

Office

EEO

CIO

DCIO

Systems

DCIO

Operations

National Dir.

I/S Strategic

Planning and

CS

National Dir.

Information

Resources

Mgmt.

National Dir.

Pgm. Mgmt.

&

Architecture

National

Director

Product

Assurance

National Dir.

Systems

Development

National Dir.

Enterprise

Operations

National Dir.

I/S Service

Center

Operations

National

Director

Telecom

National Dir.

Field

Operations

Infrastructure PMO

Counsel

Dir. Century Date Chg Appeals

Dir. Systems Resource

Planning

Dir. Systems Support

Dir. Research &

Management Systems

Performance

Management

IS & Budget

Strategies

DIO TE/GE

DIO M&F /

SS / Core

DIO LMSB

DIO SB/SE

DIO W&I

Dir. Prog

Oversight &

Mgmt Controls

Dir. Workforce

Analysis & Decision

Support

Dir Systems

Mgmt Center

Figure 11-1: Information Systems Design Implemented October 1999
Working to Put Service First

Information Systems

11-4

In October and November 1999, IS employees were realigned to

populate the new high-level structure, per the Restructuring

Agreement, and IS and NTEU formed a Joint Transition Planning

Team to address implementation issues. All IS staff in the regional,

service center and district offices report to the Chief Information

Officer (CIO). The CIO gained centralized control of the $1.6

billion IRS IS budget. Working closely with customer divisions, IS

completed the centralization of about 235 non-IS employees

performing IS work from Appeals, Counsel, International and

EP/EO. Phase IIB identified and began negotiations for an additional

354 employees.

Phase IIB also identified opportunities across the IS organization to

realign approximately 650 systems staff to support priority projects

and improve service levels and to reallocate $271 million based on

specific improvement opportunities in telecommunications, desktop,

Tier 1, Tier 2 and Systems service areas.

Finally, IS Phase IIB completed design of 20 customer-focused

processes which guided the design and sizing of the IS organization

down to the work unit level. An aggressive migration approach was

developed to guide Phase III implementation of the savings and

realignment opportunities, the roll out of the new processes and the

final steps of organizational change.
Working to Put Service First

Information Systems

11-5

IS PROCESS FRAMEWORK

INITIATIVE

MANAGEMENT

• Client Services -

Demand

Management

• Service Request

Management

SERVICE DELIVERY

• Client Services - Service Level Agreements

• Client Services - Issues Management

• HR - End-User Training

• Asset Management - Inventory Management

• Engineering, Design, and Implementation

• Telecom-Network Management

• System Operations-Systems Support

• End-User Support

• Security and Privacy Oversight

• Project Management

• Program Management

• Application Development, Testing, Integration

& Implementation

• Strategic Planning

• Financial

Management - IS

Planning & Budget

Formulation

• HR - Workforce

Planning

• Architecture &

Standards

• Performance

Measures

Management

INTERNAL SUPPORT

• Financial Management - Budget Execution and Monitoring

• Financial Management - IS Service Rate Development

• Human Resources - Recruiting

• Human Resources - IS Internal Training

• Core Business Systems/Modernization Project Support

• IS Communications

• Knowledge Management

• Asset Management - Vendor Management

• Human Resources - IS SSG Staffing

CUSTOMER

• User Support

• Applications

• Data Access

• Communications Tools 

IS Service Areas 

 (User View)

CUSTOMER

PLANNING

Phase IIB developed the detailed organization design by first defining critical customer-oriented processes. Six principles guided the design of IS processes:

• design around customer needs;

• ensure proper business representation and accountability;

• design a market competitive service provider organization;

• create an organization that allows people to develop;

• maximize shared knowledge and assets where possible; and

• leverage a cross functional process approach.

The processes form four logical groups – planning, initiative management, service delivery and internal support – and provide the basis for the new organization

structure. Figure 11-2 shows the IS process framework. To start, the team designed the processes required to deliver IS services – the processes identified the

roles/jobs and the necessary skills to perform them.

The IIB team next designed the organizational structure needed to perform the processes and then sized the organization based on the process work drivers.

Figure 11-2: Information Systems Process Framework
Working to Put Service First

Information Systems

11-6

Dir. Security,

Privacy &

Oversight

OFFICE OF THE CIO

Dir. EEO

CIO

DCIO

Systems

DCIO

Operations

W&I DIO

SB/SE DIO

LMSB DIO

TE/GE DIO

Counsel DIO

Appeals DIO

TA DIO

CI DIO

Core/AWSS

DIO

Director

Information

Resources

Mgmt.

Workforce Relations

& Perfomance Mgmt.

Manager

Career & Position

Mgmt. Manager

EEO & Diversity

Manager

Oversight &

Controls Manager

IS Human Resource

Planning Manager

Financial Planning

and Budget Office

Manager

IS Communications

Manager

School ofInfor.

Technology Manager

IRAP Manager

Dir. Enterprise

Services &

Asset Mgmt.

(ESAM)

Director IS

Strategic

Planning and

Client Services

IS Org.

Performance

Assessment

Manager

IS Strategy &

Program Budget

Devel. Manager

Technology

Planning &

Analysis Manager

IS Program

Monitoring &

Analysis Manager

IT Portfolio

Maintenance &

Analysis Manager

Director

Desktop

Operations

Desktop Field

Service Delivery

Manager

Desktop Service

Analysis & Mgmt.

Manager

Desktop

Engineering

Manager

Director

Telecom

Telecom Field

Operations

Manager

Telecom Service

Analysis & Mgmt.

Manager

Telecom

Engineering

Manager

Director

Computing

Center

Operations

MCC Director

TCC Director

DCC Director

Computing Center

Engineering

Manager

End-User

Support Manager

Inventory

Management

Manager

Director

Product

Assurance

SSG Director

Testing

SSG Director

Specialty Group

Testing/Integration &

Control

Director

Systems

Development

Shared Services Group

(SSG)(1) Director

Software Development

SSG Director Specialty

Group Software

Development

SSG(2) Director

Software Development

SSG(3) Director

Software Development

SSG(4) Director

Software Development

SSG(5) Director

Software Development

Dir. Enterprise

Technology Engineering

(ETE)

Infrastructure Project

Mgmt. Office Director

Computing Center

Service Analysis &

Mgmt. Manager

Corporate

Processing Director

Total = 7,572

(8)

(11) (8)

(99) (3)

(151) (209) (1,890) (452) (2,526) (629) (1,110) (407)

(38)

(31)

FTE 151 209 1890 452 2526 629 1110 407

TOTAL 7572

Figure 11-3: Phase IIB IS Organizational Design (Projected for 2002)
Working to Put Service First

Information Systems

11-7

Organization

Structure

As illustrated in Figure 11-3, accountability and responsibility for

each IS process delivering services to customers will lie with a single

executive. The planning and initiative management processes align

with Strategic Planning/Client Services. Service delivery processes

align to the Systems and Operations organizations. Internal support

processes align with Information Resources Management. The key

organizational characteristics are functional and customer focused

under central management rather than a traditional geographic

orientation. For example, software programmers continue to work in

many locations; they are centrally managed by the Director Systems

Development.

Office of the

Chief

Information

Officer (CIO)

The Office of the CIO works with the IRS leadership to drive

organizational change and service improvements. The CIO and the

Deputy CIO (DCIO) Systems and DCIO Operations work as a team.

All Directors are aligned to one individual in the office – the CIO,

DCIO Systems or DCIO Operations. The Director Security Privacy

Oversight and the Director EEO provide the CIO and DCIOs with

policy advice in their respective program areas.

Division

Information

Officers

The Division Information Officers (DIO) are dedicated senior-level

IS points of contacts for each operating, functional or support

division commissioner. The small DIO staff is aligned along the two

major functions of the DIO – ensuring customer needs are being met

and aiding the customer with balancing service demand with supply.

DIOs and staff will be co-located with their customer’s headquarters.

Figure 11-4 shows the projected structure of the DIO offices. Each

office will consist of the DIO, four IS technical staff and an

administrative support person; the three largest and most complex

offices from a service perspective, W&I, SB/SE and AWSS will

have appropriately larger staffs. During a transition period, the DIOs

are also managing the non–IS staffs doing IS work centralized from

Appeals, Counsel, EP/EO and International.
Working to Put Service First

Information Systems

11-8

CIO National Dir.

SP/CS

W&I DIO

Core/AWSS

DIO

CI DIO

SB/SE DIO LMSB DIO TE/GE DIO Counsel DIO Appeals DIO

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Managers

Requirements

Analysts

Admin Asst

Customer

Service

Manager

Requirements

Analyst

HR

Manager

Core/ AWSS

Services

Managers(1)

Finance

Manager

(Same for HR and Other)

Taxpayer

Advocate DIO

Admin Asst

Customer

Service

Managers

Requirements

Analysts

(1) Includes everything except Finance & HR)

Note: Core/AWSS DIO’s office covers a breadth of functions (e.g., Finance, HR) and two organizations – given the complexity, the level of

coordination needed across functions, this office has a functional substructure

Figure 11-4: Division Information Officer Organization
Working to Put Service First

Information Systems

11-9

Strategic

Planning and

Client Services

Under the leadership of an SES executive who is a member of the

CIO’s senior management team, SP/CS is organized into five offices

to provide performance measures development and assessment

functions; strategic planning capability; technical alternatives

analysis for the operating divisions; independent program monitoring

for the CIO and customers; and, maintenance of the IT work

portfolio providing a consolidated view of all current and proposed

IS work. Consisting of 151 positions, these offices are located in the

Washington DC metropolitan area.

Figure 11-5 shows the SP/CS organizational structure. This office

works so closely with the DIOs that the IIB team emphasized this by

showing a dotted line relationship. DIOs are linked to SP/CS to

ensure customer needs are incorporated in all aspects of IS planning,

performance assessment and service delivery.

Director, Strategic

Planning & Client

Services

IS Organization

Performance

Assessment

Note: All DIOs report directly

to the Office of the CIO

IS Strategy &

Program Budget

Development

DIO Technology

Planning &

Analysis

IS Program

Monitoring &

Analysis

IT Portfolio

Maintenance &

Analysis

CIO

DCIO

Systems

DCIO

Operations

Figure 11-5: Strategic Planning/Client Services Organization
Working to Put Service First

Information Systems

11-10

Information

Resources

Management

Information Resources Management (IRM) provides financial,

human resources and administrative support to the IS organization.

The Director is a member of the IS senior management team.

Through the Workforce relations and Performance Management, the

Career and Position Management and EEO and Diversity offices,

IRM ensures that agency-wide Human Resources policies and

strategies are executed in IS.

The IS Human Resources Planning office and the School of

Information Technology work closely with SP/CS to position the IS

workforce to meet the needs of customers by planning and delivering

the recruitment, retention and training programs needed to maintain a

skilled IS workforce.

The Financial Planning and Budgeting (FPB) office translates the IS

Strategic Plan into an annual budget request and shepherds this

request through the appropriation approval process. FPB will direct

the development of spending and financial plans, track actual

spending and work with IS managers to develop service rates.

IS Communications will craft, deliver and archive key messages

throughout the IS organization. Oversight and Controls will

represent IS in TIGTA and GAO audits and for other oversight

inquiries. Finally, the Information Resources Accessibility Program

assists in making IS systems and applications accessible by assuring

the consistent availability of adaptive equipment across IRS.

Overall, IRM will have 209 positions located primarily in the

Washington DC metropolitan area with School of IT components

continuing in Cincinnati OH, Austin TX and Martinsburg WV.

Figure 11-6 shows the IRM high-level organization chart.
Working to Put Service First

Information Systems

11-11

Indicates organizations detailed in Phase IIB. Other organizations’ detail and sizing to be taken from 10/99 Yellow Book

IS

COMMUNICATIONS

• Communications

consulting services

• Periodic

Communications

• Audience, Distribution

and Archival

FINANCIAL

PLANNING &

BUDGET OFFICE

• IS Planning & Budget

Formulation

• Budget Monitoring &

Execution

• Rate Development

• Controller Functions

WORKFORCE

RELATIONS &

PERFORMANCE

MANAGEMENT

• Labor/Employee

Relations

• Performance

Management

IRAP Director IRM

IS HUMAN

RESOURCE

PLANNING

• Workforce Planning/

Staffing

• Recruiting

• Space Planning

Coordination

SCHOOL OF

INFORMATION

TECHNOLOGY

• Internal IS Training

• End-user Training

OVERSIGHT &

CONTROLS

• Oversight & Controls

• FMFIA

EEO & DIVERSITY

• EEO & Diversity

CAREER AND

POSITION

MANAGEMENT

• Career Path

Development

• Position Classification

• Reorg Support

Figure 11-6: Information Resources Management Organization
Working to Put Service First

Information Systems

11-12

Systems The Systems organizations are Systems Development and Product

Assurance. Each are headed by an SES Director who is a member of

the IS senior management team and who ensures IS delivers high

quality software applications meeting customer demand. The IIB

team proposed, and IRS senior management approved the adoption

of, a new organizational model for software development,

maintenance and testing.

The future Systems organization will consist of multiple shared

services groups (SSG) supported by specialty teams. An SSG is a

flexible organization. Each SSG will have logically assigned

functional/organizational tasks. Developers and testers are assigned

to projects for short time periods based on project need, staff skills

and career goals. Figure 11-7 shows the SSG model from an

employee prospective and Figure 11- 8 on the next page shows the

overall Systems organizational structure.

Project Manager

Project 2

Mentor

Employee

Jones

Mentoring / Appraisal

Relationship

Project

Relationship

– Work assignments

– Deliverables

– Project performance review

...his/her mentor for:

Career development

– Non-project related training

– Career development,

guidance, and counseling

Jones would report to ...

assignment related activities...

Appraiser/Manager

of Record

...his/her appraiser/manager of

 record for:

– Overall performance appraisal

– Conduct and Ethics Issues

– Project related training

–

his/her current project manager for all

Figure 11-7: Shared Services Group Model in Systems Organization
Working to Put Service First

Information Systems

11-13

DCIO

Systems

Director of

Systems

Development

Staffing

Manager

Employee

Development Mgr

/ Staffing Manager

Shared Service

Groups Software

Development

Director of

Product

Assurance

SSG Director

Testing

Employee

Development

Manager

SSG Director

Specialty

Group Software

Development

SSG Director

Specialty

Group Testing/

Integration &

Control

Employee

Development

Manager

Shared Service

Specialty Group

Software Development

Shared Service

Specialty Group Testing/

Integration & Control

Shared Service Group

Testing

Staffing

Manager

Employee

Development Mgr

/ Staffing Manager

SSG Director

SSG Director

SSG Director

SSG Director

SSG Director

Software

Development

Figure 11-8: Deputy CIO Systems Organization
Working to Put Service First

Information Systems

11-14
Working to Put Service First

Information Systems

11-15

Operations Operations is structured for service delivery along functional lines,

centrally managed and geographically deployed. The three service

management organizations, each headed by an executive service

manager, provide daily infrastructure services to all IRS employees.

These service delivery organizations are: Desktop Operations,

Telecommunications and Computing Center Operations. Three

organizations span all operations services. Enterprise Services and

Asset Management provides the end user with a single point of

contact for all their requirements and provides problem management,

network monitoring and user account management. Enterprise

Technology Engineering engineers, designs and operationalizes IRS

infrastructure changes, enterprise-wide. The Infrastructure Project

Management Office coordinates all modernization efforts, major

projects and system demand from Strategic Planning and Systems

with Operations. Figure 11- 9 provides the Operations

organizational picture.

2002 OPERATIONS ORGANIZATION

DCIO

Operations

Dir. Enterprise

Services & Asset

Management

Dir. Enterprise

Technology

Engineering

Director

Telecom

Director

Desktop

Operations

Director

Computing

Center

Operations

IPMO

Figure 11-9: Deputy CIO Operations Organization
Working to Put Service First

Information Systems

11-16

Senior

Management

Team

The IS Senior Management Team is a team of professionals,

customer focused, who provide quality information systems to

deliver the business vision of the IRS. The Senior Management

Team is composed of:

Paul Cosgrave – Chief Information Officer

Bob Albicker – Deputy Chief Information Officer Systems

Toni Zimmerman – Deputy Chief Information Officer Operations

Len Baptiste, Director Security and Privacy Oversight

In addition, the IS top management team includes:

Ed Curvey – Acting Director Strategic Planning/Client Services

Al Mazei – Acting Director Architecture, Engineering and Technical

Support

Dave Junkins – Director Information Resources Management

Martin Baer – Director Systems Development

Renee Shaw – Director Product Assurance

Dick Trainor – Director Enterprise Operations

Tom Dega – Director IS Service Center Operations

Al Whitley – Director Telecommunications

Dave Gaugler – Director Field Operations

Jim Dumais – DIO W&I

Vince Conti – DIO NHQ/AWSS

Tony Forte (Acting) – DIO TE/GE

Jim Gaul (Acting) – DIO LMSB

Richard Lehman (Acting) – DIO SB/SE

Rick Hynek (Acting) – DIO Counsel

Bill O’Meara (Acting) – DIO Appeals

Gene Barbato (Acting) - DIO Submission Processing/ETA

Brad Strohecker – Director Systems Resource Planning Office

John Fay – Director Systems Support

Lauretta Brown – Director Infrastructure Program Management

Office

The top management team brings the customer focus and technical

expertise needed to inform the strategic and operational decision

making of the senior team.

IS Role in the

New

Management

Structure

The CIO is part of the IRS Commissioner’s top management team.

The CIO advises the Commissioner on IT matters, manages all IRS

IT resources and assumes responsibility for delivering and

maintaining modernized IT systems throughout the IRS.

The CIO works closely with the chief executives of each operating

division to ensure delivery of quality IT systems and services. The

DIOs represent the CIO in carrying out this critical customer service

responsibility. This balance between managing IS as a national

resource and delivering specific services to each operating division is

at the heart of the new IS management role. The new IS

organizational structure mixes current and new offices with

redesigned responsibilities to help manage these responsibilities.
Working to Put Service First

Information Systems

11-17

Geographic

Footprint

The IS organization footprint will remain similar to the current

footprint; minor adjustments will take place over time as customer

divisions stand up. Since IS is primarily aligned functionally with

central management, IS employees in the same metropolitan area may

work for different parts of the IS organization. Figure 11-10

identifies main locations supported by IS.

IS

ORGANIZATION

MAIN LOCATIONS

Strategic Planning

and Client Services

(SP&CS)

• Atlanta

• Washington Metro

Area

• Austin

• Baltimore

• Birmingham

• Boston

• Chicago

• Cincinnati

• Cleveland

• Dallas

• Denver

• Detroit

• Hartford

• Houston

• Indianapolis

• Jacksonville

• Laguna Niguel

• Las Vegas

• Long Island

• Los Angeles

• Miami

• Milwaukee

• New York

• Newark

• Oklahoma

• Philadelphia

• Phoenix

• Pittsburgh

• Portland

• Puerto Rico

• Salt Lake City

• San Diego

• San Francisco

• San Jose

• Seattle

• St. Louis

• St. Paul

Information

Resource

Management (IRM)

• Washington Metro

Area • Cincinnati • Austin • Martinsburg

Operations • Aberdeen

• Albany

• Albuquerque

• Anchorage

• Andover

• Austin

• Atlanta

• Baltimore

• Birmingham

• Bloomington

• Boston

• Brooklyn

• Buffalo

• Chamblee

• Chicago

• Cincinnati

• Columbia

• Covington

• Dallas

• Denver

• Detroit

• Cleveland

• Fargo

• Fitchburg

• Ft Lauderdale

• Fresno

• Greensboro

• Hartford

• Houston

• Honolulu

• Holtsville/

Brookhaven

• Indianapolis

• Jackson

• Jacksonville

• Kansas City

• Laguna Nigel

• Las Vegas

• Louisville

• Los Angeles

• Manhattan

• Martinsburg

• Memphis

• Milwaukee

• Minneapolis/St

Paul

• Nashville

• New Orleans

• Oklahoma City

• Ogden/

Salt Lake City

• Overland Park

• Philadelphia

• Phoenix

• Pittsburgh

• Plantation

• Portland

• Providence

• Puerto Rico

• Richmond

• Sacramento

• San Antonio

• San Francisco

• San Jose

• Seattle

• Springfield, NJ

• St Louis

• San Bernadino

• San Diego

• Santa Ana/Long

Beach

• Springfield, IL

• Washington Metro

• Wichita

Systems • Andover

• Atlanta

• Brookhaven

• Charlotte

• Cincinnati

• Cleveland

• Dallas

• Detroit

• Florence

• Fresno

• Houston

• Indianapolis

• Las Vegas

• Martinsburg

• Minnesota

• Nashville

• Ogden

• Philadelphia

• Pittsburgh

• Portland

• Portsmouth

• Puerto Rico

• Washington Metro

Area

Security and Privacy

Oversight (SPO)

• Washington Metro

Area • TBD

Figure 11-10: Deputy CIO Systems Organization
Working to Put Service First

Information Systems

11-18

Migration As described earlier, the Information Systems Division began

implementing its new organization in October 1999 by centralizing

offices nationwide under the direction of the Chief Information

Officer. Over the next several years, IS will migrate from its current

state to a more cost-effective and service-oriented organization.

The overall timeframe for the migration is approximately three years,

as shown in Figure 11-11.

Business

Systems

Modernization

Organization

The Business Systems Modernization Organization (BSMO) is

jointly led by executives from the Information Systems Division and

the operating divisions. The BSMO is responsible for planning,

developing and implementing new redesigned business processes

and new technology.

While not part of the Phase IIB Design, the Business Systems

Modernization Organization will have significant interactions with

the new IRS organization. Each new operating division contains a

Business Systems Planning Office. These staff will work closely

with the Division Information Officers and the Business Systems

Modernization Office to identify necessary investments in new

systems and prioritize all systems investments across the Service.
Working to Put Service First

Information Systems

11-19

Figure 11-11: IS Division Migration Schedule
Working to Put Service First

Information Systems

11-20

IS Organization Phase III Initiatives -- Preliminary

CY2000 CY2001 CY2002 CY2003 CY2004 CY2005

2.2 Implement Strategic Plan

Development Process

2.3 Pilot and Implement Demand

Management Process

2.4 Implement Customer Issue

Management

4.0 Standardize and

Optimize Infrastructure

1.1 Implement Centralization of IS Resources

1.2 Shared Services Implementation

1.0 Build the Organization

3.4 Implement Zero-Based Customer Budgets

3.0 Implement Process

Improvements

2.0 Implement Customer

Service Capabilities

3.3 Improve Operations Processes

4.1 Create Circuit/services database for

capacity planning

4.2 Optimize Current Network

4.3 Eliminate dedicated X.25 Network

4.4 Consolidate Tier II Systems

4.5 Streamline account maintenance and

migrate responsibility to ESAM

4.6 Complete helpdesk and desktop initiatives

1.3 Build Operations Organization

2.1 Implement Service Management

1.4 Build IRM Organization

1.5 Realign School of IT

1.6 Build SP&CS organization

3.7 Pilot and Implement Service Level Agrmnt

3.1 Implement Workload Mgmt

3.2 Restructure Testing

3.5 Implement IS Comm. Processes

3.6 Implement Competency-based Skills

Management Program

Indicates a “Top priority” Phase III initiative -

should be started first

3.8 Implement Improved Service Request

 Tracking

Lower priority Phase III initiatives - start dates

to be determined by final prioritization

TBD

TBD

TBD
Working to Put Service First

Communications & Liaison

12-1

Chapter 12 Communications and

Liaison

Customer

Characteristics

Communications and Liaison (C&L) provides services to both internal and

external customers. Within the IRS, C&L communicates with managers and

employees to provide timely, credible, concise and consistent information.

Transition activities related to the stand-down of today’s IRS and stand-up of

the new IRS are the major focus of internal communication messages for the

short term.

External customers include wage and investment taxpayers, large, mid-size,

and small business groups, tax exempt organizations, practitioners, Congress,

state governments and special interest groups. C&L will focus on the

customer service improvement aspects of modernization when

communicating with wage and investment taxpayers. Business groups

require information that is tailored to their specific interests, as well as a

means for providing feedback to the IRS. Communications with

practitioners will focus on ensuring the opportunities for input and feedback

in the short term, and improving the practitioner's ability to service clients in

the long term. The objective of communications with Congress is to inform

members about IRS progress on reform and ensure continued support for the

modernization effort.

Goals,

Principles and

Objectives

The goal of the C&L Phase IIB team was to design the C&L organization.

C&L did not have a Phase IIA design team. The Phase IIB C&L team was

composed of approximately 25 people.

The design team started the Phase IIB effort by reviewing some Phase IIA

decisions made by the Core design team:

• National Headquarters C&L will comprise Governmental Liaison and

Disclosure, External Communications, Internal Communications,

National Public Liaison and Legislative Affairs.

• Marketing and Internal Communications activities specific to an OD will

be owned by that OD (i.e., will not be the responsibility of NHQ C&L).

• The field external communicator position reporting to NHQ C&L will be

geographically dispersed and will focus on local media relations, acting

as a point of entry for the media and providing information to them.
Working to Put Service First

Communications and Liaison

12-2

• The Office of National Public Liaison/IRPAC will proactively

manage national public liaison stakeholder and professional

relationships. This office will also assume the responsibility for

the coordination of policy direction and relationship

management component of IRP. An executive position will be

created for these policy level and liaison management issues.

• An executive position will be created to manage Governmental

Liaison and Disclosure, and will report to the Chief of C&L.

• Disclosure personnel will report centrally to the Head of

Disclosure in the NHQ C&L.

The Phase IIA decisions left several questions to be addressed during Phase

IIB. For example, how should the C&L roles be split between NHQ and

ODs/other divisions and how does IRS ensure that activities and partnerships

are not lost in the transition process? Similarly, what are the linkage

requirements on communications matters across the organization and what

are the most effective mechanisms to provide those linkages? What is an

optimal structure and staffing for NHQ C&L and where would Disclosure

and Governmental Liaison Managers and field communicators be best

placed.

To address those outstanding issues, the Phase IIB team worked with the

ODs/FDs to determine optimal allocation and ownership of activities and

identify key linkages, researched communications best practices and

maintained dialogue with key stakeholders to obtain feedback and buy-in

regarding C&L geographical structure. Phase IIB conducted detailed

workload analysis of current and projected C&L activities and initiatives and

determined each C&L sub-team's optimal footprint based on estimated

workload and interaction with the divisions and stakeholder needs in the

field.

Organizational

Structure

The mission of Communications and Liaison is to "provide IRS employees

and external stakeholders a communications capability that promotes

understanding of the corporate mission and goals, promotes two-way

dialogue, enhances relationships with legislative, executive, state, business

and professional stakeholders, balances confidentiality rights with rights to

access information, and helps taxpayers understand and meet their tax

responsibilities."

The future organization of Communications and Liaison will be composed of

a National Headquarters and of four divisions: Communications,

Governmental Liaison and Disclosure (GLD), Legislative Affairs and

National Public Liaison. All of those divisions are located in Washington,

DC. The Communications and GLD divisions also have a field component.

The future C&L structure is illustrated in Figure 12-1.
Working to Put Service First

Communications & Liaison

12-3

Figure 12-1: Organizational Structure of Communications and Liaison

Corporate TV

Internal

Communications

Marketing

National Media

Relations

Media Relations

Managers

Media Relations

Specialists

Field Media Relations

100

Communications

Planning &

Advisory Councils

Business

Liaison

Public

Liaison

2 5

National Public

Liaison

WASHINGTON

GEOGRAPHICALLY

 DISPERSED

Legislation & Reports

Congressional

Affairs

Congressional

Correspondence

3 6

Legislative Affairs

FedState

Disclosure

410

Communications

& Liaison

Area Managers

Governmental Liaison

Disclosure Staff

Governmental

Liaison &

Disclosure

HEADQUARTERS FIELD

DESCRIPTION ROLE DESCRIPTION ROLE

• 169 FTEs

• All located in DC

• Sets strategic direction for

Communications, Governmental Liaison

& Disclosure, Legislative Affairs and

Public Liaison

• Handles Congressional, state and

national stakeholders relationships and

issues

• Handles national media contacts

• Ensures Agency compliance with

Disclosure & Privacy laws

• Identifies emerging issues

• Coordinates cross-cutting issues

• Manages cross-cutting processes, audits

and legislation implementation

• 374 Governmental & Liaison &

Disclosure field FTEs

– 7 F/S and Disclosure Area

– 59 FSGL

– 292 Disclosure (incl. 10

Service Center Disclosure

Offices)

• 42 Media Relations FTEs

– 4 Media Relations Areas

Managers

– 38 Media Specialists

• Coordinates local

Governmental & Liaison

relationships and initiatives

with the Divisions

• Represents IRS to local

congressional offices

• Handles Disclosure requests

• Manages local Media

relationships

Total: 585 FTEs
Working to Put Service First

Communications and Liaison

12-4

Senior

Management

Team

The Chief of C&L reports directly to the Commissioner of the IRS and is a

member of the Commissioner's senior management team.

The C&L Senior Management team will provide seamless customer service

to IRS stakeholders. Communications, Governmental Liaison and

Disclosure, Legislative Affairs and National Public Liaison leaders will

coordinate and facilitate a cross-functional approach to communications and

liaison opportunities. To ensure a cross-functional approach, the senior

management team will drive a strategic relationship integration and delivery

team ("STRIDE"). Membership on the STRIDE team will be selected from

each C&L functional area.

Modernization will change the way C&L senior managers interact with their

internal customers. Prior to IRS modernization, C&L was a primary

communicator for the IRS, in addition to communications experts distributed

throughout the districts. In the new IRS, the business units will have

embedded communications and liaison capabilities. Therefore, the IRS

needs effective coordination among the different embedded capabilities and

between the business units and C&L. Coordination will be assured by a

Servicewide Communications and Liaison Council.

The Servicewide Communications and Liaison Council will provide the

mechanism to facilitate "one voice, one ear" for the Agency. It will also:

• Develop strategy for external stakeholder engagement including

Legislative Affairs, National Public Liaison, Media Relations,

Marketing, Internet, etc.

• Facilitate and institutionalize an integrated communications

approach.

• Ensure buy-in, coordination and timely information sharing across

the Agency.

• Leverage communication expertise and processes.

• Provide a forum for resolution of issues.

The assumption is that the Council will be composed of a working and an

executive group. The following represents each group’s respective roles.

• A working group consisting of key Agency communications and

liaison professionals, to share and coordinate information, strategies

and messages, and to identify and resolve issues

• An executive group consisting of the highest-level executive

leadership in the Agency, to provide strategic guidance and resolve

outstanding conflicts

The current concept is illustrated in Figure 12-2.
Working to Put Service First

Communications & Liaison

12-5

Figure 12-2: Servicewide C&L Council

Internal

Communications

Media

Relations

Communications & Liaison Branches

• Service-wide Strategy

• Coordinated Messages

• Expected Timing of Major

Changes/Events

• Constituencies Affected by Initiatives

• Standards and Guidelines

• Existing Communication Channels

• Existing Products and Processes

• Constituencies Expecting

Communication

• Timing of External

Communication Opportunities

• Standards and Guidelines

• Best Practices

• Measures and Feedback Servicewide

Communications &

Liaison Council

Servicewide

Communications

• Congress

• Media

• Stakeholder

Organizations

• All Employees

• Product Content

• Expected Timing of Major

Changes/Events

• Constituencies Affected by Initiatives

• Initiative-specific Communication

Products

• Proposed Communication Strategy

• Best Practices

• Measures and Feedback

Communicating Groups

• Coordinated Strategies &

Messages

• Product Timing

• Opportunities for Integration

• General Communication

Requirements

• Standards and Guidelines

• Best Practices

Timed and Coordinated Initiative-specific Products and Strategies

Public Liaison

Shared Services

Groups

Marketing Legislative

Affairs

Functional

Divisions

Operating

Divisions

I n

p

u t

s

O

u t

p

u t

s

Communications

Division

The mission of the Communications Division is "to create understanding

among internal and external stakeholders of the corporate vision, mission

and goals and influence behavior by listening to employees and taxpayers

while sharing consistent, Servicewide messages."

The Director, Communications Division, reports directly to the Chief,

Communications & Liaison, and is responsible for planning, managing,

directing and executing Servicewide communications and all media

relations. The five branches that make up the Communications Division are

Internal Communications, Marketing, Corporate Television, National

Media Relations and Field Media Relations, including four area managers

who supervise 38 field media relations personnel.

Figure 12-3 on the next page illustrates the new structure of the

Communications Division.
Working to Put Service First

Communications and Liaison

12-6

Figure 12-3: Communications Division Organization

National Director

Communications

Areas 1-4

4 GS-1035-14 Media Relations Area Managers

38 GS-1035-13 Media Relations Specialists

Internal

Communications Marketing Media Relations

Branch 1

(National Media)

Corporate

TV

Media Relations

Branch 2

(Field Media)

Administrative

Office

1 GS-343-14 Staff Advisor

1 GS-343-12 Budget Analyst

1 GS 318-10 Secretary

1 GS-344-8 Management Assistant

1 GS-343-15 Branch Chief

10 GS-343-14 Program

Analysts

2 GS-343-13 Program

Analysts

2 GS-343-12 Program

Analysts

1 GS-344-8 Management

Assistant

1 GS-343-15 Branch Chief

5 GS -343-14 Program

Analysts

5 GS-343-14 Program

Analysts

1 GS-344-8 Management

Assistant

1 GS-1035-15 Branch

Chief

3 GS-1035-14 Media

Relations Specialists

3 GS-1035-13 Media

Relations Specialists

2 GS-343-12 Program

Analysts

1 GS-344--8 Management

Assistant

1 GS-301-14 Branch Chief

2 GS-343-13 Program

Analysts

8 GS-1071-13 Production

Specialist

2 GS-856-12 Electrical

Technicians

1 GS-1035-15 Branch

Chief

1 GS-344-8 Management

Assistant

4 FTEs

16 FTEs 12 FTEs 10 FTEs 44 FTEs 13 FTEs

Total: 100 FTEs

WASHINGTON

GEOGRAPHICALLY

 DISPERSED

Internal Communications Branch

The Internal Communications Branch is responsible for developing and

implementing the Servicewide strategy to communicate the IRS’s corporate

vision, mission and goals to IRS managers and employees. This branch

develops Servicewide standards and guidelines, coordinates strategies,

messages and products with the OD/FD/SD, and supports NHQ executives.

The branch oversees the IRS Intranet and participates in the Servicewide

Communications & Liaison Council.

Marketing Branch

The Marketing branch is responsible for collaborating with ODs/FDs/SDs to

define the overall standards and guidelines for all IRS marketing campaigns.

The branch develops Servicewide marketing campaigns, messages and

products with OD/FD/SS input and collaborates with OD/FD/SS on all

OD/FD/SS-specific marketing efforts.
Working to Put Service First

Communications & Liaison

12-7

National and Field Media Relations Branches

The Media Relations Branches are responsible for developing and

implementing overall media strategy in support of each OD within the

overall National strategy. The staffs also serve as the IRS’s single point of

contact for all media. This includes handling media requests by directly

interacting with media and coordinating responses with OD/FD/SS or NHQ

executives. The National Media Relations serves as single point of contact

for national media, national stories or NHQ issues. The new field media

specialist positions, which are geographically distributed and report to the

Field Media Relations Branch, will serve as single point of contact for local

media, local stories or field geographic issues.

Corporate Television Branch

The Corporate Television Branch is responsible for developing and

implementing a Servicewide broadcasting strategy to communicate the

corporate vision, mission and goals. This includes supporting all executives

in the development and implementation of strategies to communicate

Servicewide and organization specific messages.

Governmental

Liaison &

Disclosure

Division

The mission of the Governmental Liaison and Disclosure Division is "to

provide oversight and education to IRS and external partners to ensure

protection of taxpayer and employee confidentiality rights while addressing

the public's rights to access information; and, through partnerships with

federal, state and local governmental agencies, to simplify the ability of

taxpayers to meet their tax obligations, with focus on customer service,

integrity and fairness to all."

The Director, Governmental Liaison and Disclosure, reports directly to the

Chief, Communications & Liaison (C&L), and is responsible for planning,

managing, directing and executing the full range of programs Servicewide

for Disclosure and Governmental Liaison relations. Two branches and seven

Areas make up the Governmental Liaison and Disclosure Division. The

branches are Disclosure and Governmental Liaison, and the seven areas

represent jointly managed Disclosure and Governmental Liaison operations.

Figure 12-4 illustrates the overall structure of Governmental Liaison and

Disclosure.
Working to Put Service First

Communications and Liaison

12-8

Figure 12-4: Governmental Liaison and Disclosure Organization

Governmental Liaison and Disclosure (GLD) Areas

GLD includes seven geographic areas where Governmental Liaison and

Disclosure functions are performed. Each area manager is responsible for full

integration of the Governmental Liaison and Disclosure programs within a

specific area.

The 59 field Governmental Liaison staff are distributed across the seven areas,

with at least one in each state, plus the District of Columbia/International. These

employees serve as a single point of contact for state, local and Federal agencies,

and local congressional offices seeking partnerships or information (other than

casework related) from the Service. Among the 310 Field Disclosure employees

located throughout the country, there are forty-five Disclosure Officers who are

responsible for providing expertise and guidance to the IRS and outside agencies.

The officers ensure understanding of, and compliance with, the confidentiality

statutes and ensure the proper balance between protecting IRS-held information

and providing public access to this information. Disclosure Officers supervise

staff located throughout the country.

The placement of GLD Area staff is based on state population, geographical

coverage, number of tax agency, non-tax agency and federal partners, number of

tape extract exchanges, Governmental Liaison initiative activity, and the FTEs

required to support the Congressional Affairs Program. Figure 12-5 on the next

page shows the results of the area placement analysis.

13 FTEs

Gov Liaison

Director

1 GS-301-15 Director Disclosure

3 GS-343-14 Senior Program Analysts

5 GS-343-14 OD/FD Technical Advisor

4 GS-343-13 Program Analyst

2 GS-987-13 Tax Law Specialist

1 GS-318-7 Secretary

1 GS-343-15 Director FedState

5 GS-343-14 Senior Program Analysts

4 GS-343-13 Program Analysts

2 GS-343-12 Program Analysts

1 GS-318-7 Secretary

GLD Area

Managers

Disclosure

Director

59 FTEs

16 FTEs

Admin Staff

5 FTEs 1 GS-343-14 Program Analyst

2 GS-343-13 Program Analyst

1 GS-987-13 Program Analyst

1 GS-318-9 Secretary

23 FTEs

21 GS-301-14 Disclosure Officers

24 GS 13 Disclosure Officers

14 GS 13 Disclosure Technicians

233 GS 2 to 12 Disclosure Personnel

19 GS-301-14 FSGL Program Managers

32 GS-301-13 FSGL Program Managers

8 GS-301-13 FSGL Program Analysts

Disclosure

FedState

Governmental

 Liaison

292 FTEs

Director Governmental

Liaison & Disclosure

Total: 410 FTEs

Technical Advisor

1 FTE

1 GS 301 15 Technical Advisor

7 GS-340-15 Area Managers

2 GS-343-14S r. Program Analysts

7 GS-343-13 Technical Analysts

7 GS-318-7 Secretaries
Working to Put Service First

Communications & Liaison

12-9

Figure 12-5: GLD Areas Location Matrix

STATE POTENTIAL FEDSTATE LOCATION STATE POTENTIAL FEDSTATE LOCATION

Alabama Birmingham (FSPM) Montana Helena (FSPM)

Alaska Anchorage (FSPM) Nebraska Omaha (FSPM)

Arizona Phoenix (FSPM) Nevada Las Vegas (FSPM)

Arkansas Little Rock (FSPM) New Hampshire Portsmouth (FSPM)

California* Sacramento (FSPM), Los Angeles (PA), Laguna

Niguel (PA), San Jose (PA)

New Jersey Trenton (FSPM)

Colorado Denver (FSPM) New Mexico Albuquerque (FSPM)

Connecticut Hartford (FSPM) New York* Albany (FSPM, PA), New York City (PA)

Delaware Wilmington (FSPM) North Carolina Greensboro (FSPM)

District of Columbia

- International

District of Columbia/International (FSPM) North Dakota Bismarck (FSPM)

Florida* Jacksonville (FSPM), Fort Lauderdale (PA) Ohio Columbus (FSPM)

Georgia Atlanta (FSPM) Oklahoma Oklahoma City (FSPM)

Hawaii Honolulu (FSPM) Oregon Portland (FSPM)

Idaho Boise (FSPM) Pennsylvania Philadelphia (FSPM)

Illinois Chicago (FSPM) Rhode Island Providence (FSPM)

Indiana Indianapolis (FSPM) South Carolina Columbia (FSPM)

Iowa Des Moines (FSPM) South Dakota Aberdeen (FSPM)

Kansas Topeka (FSPM) Tennessee Nashville (FSPM)

Kentucky Louisville (FSPM) Texas* Austin (FSPM), Dallas (PA), Houston (PA)

Louisiana New Orleans (FSPM) Utah Salt Lake City (FSPM)

Maine Augusta (FSPM) Vermont Montpelier (FSPM)

Maryland Baltimore (FSPM) Virginia Richmond (FSPM)

Massachusetts Boston (FSPM) Washington Seattle (FSPM)

Michigan Detroit (FSPM West Virginia Charleston (FSPM)

Minnesota St. Paul (FSPM Wisconsin Milwaukee (FSPM)

Mississippi Jackson (FSPM) Wyoming Cheyenne (FSPM)

Missouri* St. Louis (FSPM)

*Based on workload matrix, several states were determined to require more than one FTE.

NOTE : Abbreviations FSPM=FedState Program Manager; PA=Program Analyst
Working to Put Service First

Communications and Liaison

12-10

Governmental Liaison

The Governmental Liaison branch (headquarters and field) is responsible for

liaison and partnership between IRS and its federal and state partners to simplify

the ability of taxpayers to meet their tax obligations. The branch facilitates the

exchange of taxpayer data and provides assistance to taxpayers to improve

compliance and enhance communications. The branch also provides support for

the Congressional Affairs Program. Data exchange responsibilities include

partnering with Disclosure and IRS offices to provide guidance, training

seminars and information to federal and state agencies to ensure they meet their

obligations under the Taxpayer Browsing Protection Act and related safeguards.

Taxpayer assistance activities include arranging reciprocal forms bulk

distribution in IRS and state locations, and identifying opportunities for

development of mutually beneficial taxpayer advocacy initiatives such as joint

problem solving events, joint outreach and education related to local issues.

Because the National Taxpayer Advocate is independent by statute and does not

speak for the Commissioner or the IRS, CAP will remain with Communications

& Liaison. CAP activities include managing relationships with local

congressional offices in every state and serving as the local primary point of

contact for coordinating congressional correspondence relating to tax

administration and general Agency issues (non-casework). In addition to the

Governmental Liaison staff located throughout the seven areas, each IRS

operating division will have their own embedded liaison with the C&L

Governmental Liaison organization both in headquarters and the field. The

Governmental Liaison Steering Committee will be the main cross-functional

integration mechanism for the Governmental Liaison program, responsible for

overall strategic direction and coordination with the operating divisions.

Figure 12-6 on the next page illustrates the new Governmental Liaison

organization.
Working to Put Service First

Communications & Liaison

12-11

Figure 12-6: The New Governmental Liaison Organization

Chief C&L

Communic . Leg Affairs Public Liaison Director Gov .

Liaison & Discl .

MODERNIZED GOVERNMENTAL LIAISION AND

DISCLOSURE ORGANIZATION

Area

Managers

Disclosure

Director

Gov Liaison

Director

Disclosure

Officers

Governmental

 Liaisons

OD / FD HQ

OD/FD

Head of C&L

Governmental Liaison

Program Manager

OPERATING/FUNCTIONAL

DIVISIONS

Governmental Liaison

Steering Committee

(FTA, MTC, etc.)

OD/FD FIELD

FIELD Staff

•Policymaking

•Strategic planning

• Manage overall

Gov Liaison program

•Act as the liaison between the

state agencies and the IRS

•Coordinate local initiatives and

initiate opportunities for joint

programs with the states, ODs,

and the business process

owners

• Manage and coordinate, ODspecific initiatives

•Service the needs of the

Operating Division and liaison

with the Gov Liaison Headquarters

and Local Governmental Liaison

managers

•Manage span of control of Local

Governmental Liaison managers

•Manage operations within area

•Coordinate with ODs/ FDs /SS as necessary

•Resolve joint Gov Liaison and Disclosure issues

•Own, support, and

maintain ongoing

initiatives

•Provide strategic oversight, policy

development, and key stakeholder

participation in developing a business

vision for the Gov Liaison Programs

•Provide a forum for consideration

/approval/coordination of major

Gov Liaison initiatives involving OD/ FDs

OD/FD Area

Gov Liaison Mgr

•Develop, manage, and

coordinate OD/Gov Liaison

efforts within the area

•Manage local initiatives and

coordinate with Gov Liaison

and Disclosure

Disc/GL Tech.

Advisor
Working to Put Service First

Communications and Liaison

12-12

Disclosure

The Disclosure branch is responsible for promoting awareness of, reviewing

adherence to, and reporting activity related to disclosure of taxpayer and

employee information.

The branch develops Servicewide standards and guidelines to ensure

Servicewide quality of activities under Internal Revenue Code 6103, the

Privacy Act, the Freedom of Information Act, the Taxpayer Browsing

Protection Act and Treasury order 150-29, which provides for tax checks on

government officials. Disclosure Officers located throughout the country

respond to requests for taxpayer information from corporations and individuals,

conduct technical training to Service employees on their responsibility to

protect taxpayer rights to privacy and confidentiality, and perform

quality/awareness reviews of Headquarters and field functions. Headquarters

acts as the liaison with Congress by collecting and maintaining the information

needed to comply with mandated and ad-hoc reporting requirements.

Disclosure employees maintain the Service’s Freedom of Information Reading

Room, ensure timely and accurate processing of Exparte Court Orders from

United States District Courts and initiate testimony authorizations and records

release authority in response to subpoenas or requests for IRS witnesses and

records in non-tax cases. Figure 12-7 below illustrates the new Disclosure

organization.

Figure 12-7: New Disclosure Organization

Chief C&L

Communic. Leg Affairs Public Liaison Director Gov.

Liaison & Discl.

MODERNIZED GOVERNMENTAL LIAISON AND DISCLOSURE

ORGANIZATION

Area

Managers

7

Gov Liaison

Director

Disclosure

Director

Governmental

Liaisons

51

Disclosure

Officers

45

OD / FD

HQ

OD / FD

Head of C&L

Disclosure

Staff

1-2

OPERATING / FUNCTIONAL DIVISIONS

OD / FD

FIELD

FIELD Staff

•Policymaking

•Strategic Planning

•Disclosure Liaison

•Manage local disclosure prgm

•Advise and train stakeholders

•Provide oversight for 6103,

FOIA, Privacy Act

•Manage span of control of Territory managers

•Manage operations within area

•Coordinate with ODs/ FDs /SS as necessary

•Resolve joint Gov Liaison and Disclosure issues

OD / FD

Area Manager

•Manage local

initiatives and

coordinate with

Gov Liaison and

Disclosure

Disclosure Tech.

& support staff

247

Functional coordinators will facilitate

the disclosure process and secure

ensure necessary resources

OD/FD

Advisors

•Advise OD/FD mgmnt

•Liaison for field issues

•Process casework with

assistance of OD/FD

functional coordinators

•Provide technical advice and

training to all stakeholders

•Assist OD/FD mgmnt

•Liaison with OD/FD

advisors

•Ensure functional

coordinator placement

Disc/GL Tech.

Advisor
Working to Put Service First

Communications & Liaison

12-13

The mission of the Legislative Affairs Division is “to manage and enhance

IRS’ relationships with Members of Congress and their staffs, to serve as the

central coordinating point that enables IRS to achieve its legislative

objectives and to assist the IRS in ensuring continued Congressional support

for modernization.”

The National Director for Legislative Affairs reports to the Chief,

Communications and Liaison, and is responsible for planning, managing

directing and executing the efforts of the division, and for keeping the Chief,

the Commissioner and other top officials appraised of significant

congressional activities. Figure 12-8 shows the three branches that make up

the Legislative Affairs Division – Legislation and Reports, Congressional

Affairs and Congressional Correspondence.

Legislation and Reports Branch

The Legislation and Reports branch is responsible for tracking pending tax

and non-tax legislation to determine administrative implications for

taxpayers and the IRS and recommending changes to reduce burden.

Employees work with OD/FD/SS’s to develop legislative proposals that

enhance tax administration, form plans to implement provisions of newlyenacted tax legislation and manage the GAO/TIGTA review process.

National Director

Deputy Director

Management Assistants

Legislation & Reports

Branch

Congressional

Correspondence Branch

Support

Group

 Congressional Affairs

Branch

• 1 GS 343-14 Staff Advisor

• 1 GS 343-12 Database Specialist

• 1 GS 1410-12 Librarian

• 1 GS 343-09 Program Analyst

• 1 GS 344-08 Publication Specialist

• 1 GS 344-08 Management Assistant

• 1 GS 343-15 Branch Chief

• 1 GS 301-15 Sr. ProjectMgr

• 4 GS 343-14 Program Analysts

• 1 GS 343-09 Program Analyst

• 1 GS 318-06 Secretary

• 1 GS 343-14 Staff Advisor

• 1 GS 343-12 Database Specialist

• 1 GS 1410-12 Librarian

• 1 GS 343-09 Program Analyst

• 1 GS 344-08 Publication Specialist

• 1 GS 344-08 Management Assistant

• 1 GS 343-15 Branch Chief

• 1 GS 301-15 Sr. ProjectMgr

• 4 GS 343-14 Program Analysts

• 1 GS 343-09 Program Analyst

• 1 GS 318-06 Secretary

9 FTEs

• 1 GS 343-14 Staff Advisor

• 1 GS 343-12 Database Specialist

• 1 GS 1410-12 Librarian

• 1 GS 343-09 Program Analyst

• 1 GS 344-08 Publication Specialist

• 1 GS 344-08 Management Assistant

• 1 GS 343-15 Branch Chief

• 1 GS 301-15 Sr. ProjectMgr

• 4 GS 343-14 Program Analysts

• 1 GS 343-09 Program Analyst

• 1 GS 318-06 Secretary

Total: 36 FTEs

6 FTEs

8 FTEs 9 FTEs

• 1 GS 340- 15 Branch Chief

• 2 GS 343- 14 Program Analysts

• 1 GS 343- 12 Program Analyst

• 2 GS 301- 12 Cong Comm Spec

• 2 GS 343- 11 Program Analyst

• 1 GS 344- 08 Management Asst

• 1 ES-340 National Director

• 1 GS 343-15 Deputy Director

• 2 GS 344- 08 Management Assistant

• 1 GS 343-15 Branch Chief

• 1 GS 301-15 Sr. ProjectMgr

• 4 GS 343-14 Program Analysts

• 1 GS 343-12 Program Analyst

• 1 GS 343-09 Program Analyst

• 1 GS 318-06 Secretary

Figure 12-8: The Legislative Affairs Organization

Legislative

Affairs

Division
Working to Put Service First

Communications and Liaison

12-14

Congressional Affairs Branch

The Congressional Affairs Branch manages the relationship between IRS,

members of Congress and their staffs. Responsibilities include developing

outreach efforts to provide congressional offices with information and materials

on tax administration issues and identifying critical meetings between the

Commissioner of IRS, other IRS officials and Members of Congress. Branch

employees collaborate with ODs to prepare testimony and briefing materials for

congressional hearings and determine the best strategy for witness preparation.

The branch coordinates with the Director, Governmental Liaison and

Disclosure, in managing the Congressional Affairs Program, which provides

IRS field executives and staffs help in establishing ongoing, positive

relationships with local congressional offices.

Congressional Correspondence Branch

This branch manages the processing of congressional correspondence sent to

the Commissioner of IRS. Key activities include evaluating IRS responses to

members of Congress, taking action to improve accuracy, tone and messages in

all IRS outgoing correspondence and identifying trends in congressional

activity. The branch also provides executive level Servicewide training on

written responses to congressional correspondence and serves as the primary

point of contact for congressional phone calls.

The Congressional Affairs Program (CAP) is a key aspect of the IRS

Legislative Affairs function. Because the National Taxpayer Advocate (NTA)

is independent by statute and does not speak for the Commissioner or the IRS,

CAP will remain with Communications & Liaison. Policy, standards and

guidelines for the CAP are the responsibility of Legislative Affairs. CAP duties

will be performed as collateral duties by the Governmental Liaison field

personnel. Local Taxpayer Advocates will continue to perform the constituent

casework activities generated by local congressional offices.
Working to Put Service First

Communications & Liaison

12-15

National Public

Liaison

Division

The mission of the National Public Liaison Division is "to enhance, promote

and manage the IRS’ relationships with professional and business entities to

improve and increase voluntary compliance and reduce burden."

The Director, National Public Liaison (NPL), reports to the Chief,

Communication and Liaison, and serves as the Commissioner’s

representative in dealing with external organizations and other federal

agencies on an extensive range of issues, including high-level policy matters

related to tax administration. National Public Liaison is responsible for

managing relationships with national stakeholder organizations, business and

professional associations, IRS Advisory Council and other national level

organizations with an interest in tax administration and IRS activities and

programs. The three branches that make up the National Public Liaison

Division are Public Liaison, Planning & Advisory Councils and Business

Liaison.

Figure 12-9 illustrates the new National Public Liaison structure.

Figure 12-9: National Public Liaison Organization

Total: 25 FTEs

National Director

Public Liaison Branch Business Liaison Branch

 Admin

 Planning & Advisory

Councils Branch

• 1 ES-340 National Director

• 1 GS 343-14 Staff Advisor

• 1 GS 343-12 Program Analyst

• 1 GS 344-08 Management Assistant

• 1 GS 343-15 Branch Chief

• 2 GS 343-14 Program Analysts

• 3 GS 343-13 Program Analyst

• 1 GS 344-08 Management

Assistant

• 1 GS 343-15 Branch Chief

• 1 GS 343-15 Program Analyst

• 2 GS 343-14 Program Analysts

• 2 GS 343-12 Program Analysts

• 1 GS 343-15 Branch Chief

• 4 GS 343-14 Program Analysts

• 1 GS 343-13 Program Analysts

• 1 GS 343-12 Program Analysts

Tech

Advisor

• 1 GS 343-15 Tech Advisor

6 FTEs

3 FTEs

7 FTEs 7 FTEs
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Communications and Liaison

12-16

Public Liaison Branch

The Public Liaison Branch is responsible for the strategic direction of the

non-business external liaison program, which includes national tax

professional, payroll, electronic commerce, volunteer taxpayer assistance and

other associations/organizations. The branch maintains an effective

communications program to keep stakeholders informed of IRS initiatives,

policies, procedures and regulations and solicits input and ideas from

national stakeholders to identify emerging national issues, provide awareness

to internal and external customers and track follow-up issues. The branch

manages the National Public Liaison and National Speakers’ Corner sites on

the IRS Intranet and manages the Tax Pro Corner site of the IRS Internet.

Planning and Advisory Councils Branch

The Planning and Advisory Councils Branch develops the strategic direction

of the business external liaison program and ensures that national business

liaison relationships are maintained and enhanced. Key branch activities

include keeping stakeholders informed of IRS initiatives, policies,

procedures and regulations, soliciting ideas from national stakeholders to

identify emerging national issues, responding to national business

stakeholder requests and facilitating resolution of stakeholder issues.

Business Liaison Branch

This branch plans, coordinates and manages the activities of the Internal

Revenue Service Advisory Council (IRSAC) and the Information Reporting

Program Advisory Committee (IRPAC). Branch employees coordinate and

maintain communications links and vehicles, including the National

Speakers' Corner and the Tax Professional's Corner, and work with internal

and external stakeholders to identify IRS small business tax products and

services for development or improvement.

C&L Field

Footprint

An optimal and integrated C&L geographic footprint required analysis of the

potential collateral duties in the field, as well as the options to share support

functions. The process to define the C&L integrated footprint involved

estimating each functions' FTE requirements, defining their location criteria

and mapping staff on a combined footprint. In parallel of each sub-teams'

individual analysis, a matrix identifying the locations of the future IRS

players and of key communications criteria was developed. This included

identifying: the location of each OD, FD, service centers and computing

centers; the location of the top 50 radio/TV markets, the largest 50 cities, the

state capitals and the locations of current C&L family components.
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Communications & Liaison

12-17

The results of this analysis indicated that Governmental Liaison and

Disclosure have a combined field footprint of seven areas, while media

relations requires four. The areas are driven mainly by workload

distribution, future division locations and current location of C&L staff.

Figure 12-10 illustrates the C&L future footprint.

Figure 12-10: Communications and Liaison Future Footprint

A

D C

B

6

7

5

4

3

2

1

A

 through D denote Media Relations areas

1

 through 7 denote Governmental Liaison & Disclosure areas

• denote Media Relations field locations

Phase III and

Implementation

Timing

The focus for Phase III will be to resolve outstanding issues from Phase IIB

and support stand up of the new C&L organization. C&L's implementation

objective is to accomplish a smooth transition with minimal impact on

customers and employees.

C&L hopes to be fully stood up by the end of the year 2000. The key C&L

implementation milestones are shown in Figure 12-11 on the next page.
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Communications and Liaison

12-18

ID Task Name

1 Competitive Personnel Actions

2 All SES Selected

3 Area Managers Selected

4 GS-15 Managers Selected

5 Select Balance of Staff

6 Non Competitive Actions

7 Commisioners Packet Signed

8 Notice 1

9 Notice 2

10 Workforce Migration Complete

11 Effective Date of Stand up

12 Budget Authority

13 Budget Authority Transferred

14 Key Personnel and Finance Systems Operational

15 Systems / Processes

16 Revalidate Interim Delegation Orders

17 Ensure Necessary IRM Changes are Made

18 Establish Necessary Linkages with OD/FD/SS Embedded Staffs

Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4

2000 2001 2002

Figure 12-11: C&L Implementation Plan
Working to Put Service First

National Headquarters

13-1

Chapter 13 National Headquarters

Goals,

Principles and

Objectives

Organization

Structure

The National Headquarters will be comprised of 6 principal

organizations:

• Chief, EEO and Diversity

• Chief Financial Officer

• Strategic Human Resources

• Office of Tax Administration Coordination

• Research, Analysis and Statistics of Income

• Complaint Processing and Analysis Group

The organizational design for the above listed functions is currently

underway. This effort is an accelerated process that combines Phase

IIA, Phase IIB and Phase III decisions. The key functions to be

performed by the National Headquarters were initially proposed in

December 1999, when realignment of key National Headquarters

functions were researched by the Core Design Team. Through the

current design effort, National Headquarters has established

baselines for existing organizations that will map to the new

organization. The National Headquarters functions are presently

defining their future missions, functions, work-streams and

customers.

A high-level organizational structure of the National Headquarters

organization has been drafted, but not approved and is therefore not

included in this document. However, each of the National

Headquarters organizations is described in more detail on the pages

which follow. The organizations are in differing stages of the design

process, with some undergoing little change from their current state

and others either being developed from mergers and modifications of

existing organizations, or being created as new functions.

EEO and

Diversity

The National Headquarters Office of the Chief, EEO and Diversity

provides overall policy direction and program oversight for the

Service’s equal employment opportunity, diversity and external civil

rights programs. Through these programs, this office creates awareness

of prohibited discriminatory actions and establishes complaint

prevention and resolution programs, thus encouraging a work

environment that is free from discrimination and which encourages

equal and fair treatment of all employees and taxpayers.

The Chief, EEO and Diversity serves as the principal advisor on matters

relating to equal employment opportunity, affirmative employment and

diversity. Through strategic partnerships with other functions within

the Service, the office develops Servicewide EEO and diversity

strategies, guiding principles and policies.
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National Headquarters

13-2

The National Headquarters EEO and Diversity office is composed of

three staffs, which are responsible for the various programs for which

the EEO and Diversity function is responsible.

Servicewide EEO and Diversity Staff is responsible for primary

development and oversight of EEO and Diversity policy in such areas

as:

• Affirmative Employment

• Complaint Administration

• Prevention of Sexual Harassment

• Disability Compliance

• Diversity

In addition to serving in an advisory capacity to AWSS EEO field staff,

the office is also responsible for development of Servicewide

affirmative employment plans and policy statements, monitoring

complaint activity, conducting program reviews and delivering

Treasury policy to IRS. The staff, through ongoing monitoring of

Servicewide complaint and workforce data, identifies and analyzes

trends and makes recommendations for addressing concerns.

The External Civil Rights Unit is responsible for ensuring that no

person in the United States, on the grounds of race, color, national

origin, sex, age or disability, is excluded from participation in, denied

the benefits of, subjected to discrimination in any program or activity

funded or conducted by the Internal Revenue Service. In conformity

with the Restructuring and Reform Act of 1998, the external civil rights

unit is responsible for enforcing and implementing the following:

• Title VI of the Civil Rights Act of 1964;

• Section 504 of the Rehabilitation Act of 1973, as amended;

• Title IX of the Education Amendments of 1972; and

• Age Discrimination Act of 1975.

These civil rights programs involve our external customers, i.e.,

taxpayers, educational institutions, tax clinics, etc., that are federallyfunded or federally-conducted programs. The enforcement of the IRS

external civil rights program will be achieved through continued data

collection, reporting, compliance reviews and, if necessary,

investigation for remedial and enforcement sanctions.

The Discrimination Complaint Review Unit (DCRU) was created in

support of the Restructuring and Reform Act of 1998 to review

settlement agreements and findings of discrimination to determine if

potential 1203 violations exist. The DCRU is responsible for:
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National Headquarters

13-3

• Making a preliminary determination, based on the record, that a

prima facie case of intentional discrimination exists, i.e., a

person was treated differently on the basis of race, color,

religion, sex, national origin, reprisal, age or disability, as

defined by the civil rights statutes.

• Conducting onsite fact-findings to determine whether a

potential violation of 1203(b)(3)(B) has occurred.

• Making referrals to the Treasury Inspector General for Tax

Administration (TIGTA) for further investigation, if warranted.

If the DCRU’s review determines that there is a 1203(b)(3)(B)

violation, the Head of Office will be notified and will coordinate the

next steps with Labor Relations. Labor Relations will then forward the

case to the Review Board, which is responsible for considering

mitigating factors such as the nature of the misconduct, the employee’s

work history, and for making the final recommendation to the

Commissioner.

The purpose of the EEO and Diversity Council is to provide functional

leadership by ensuring a coordinated approach to Servicewide equal

employment opportunity and diversity programs, issues, systems and

strategies. The Council will identify and make recommendations to the

National Headquarters on such cross-cutting issues and emerging

priorities as budget, training, staffing, information systems and program

measures. The Council will also ensure that cross-division linkages are

in place, thus facilitating cross-functional communication and

coordination.

The Council, chaired by the Chief, EEO and Diversity, will be

composed of the EEO and Diversity Directors from operating divisions,

functional units and shared services, as well as representatives from

Counsel and Department of Treasury (see Figure 13-1 on the next

page). Members of the Council will play unique roles. The

Chairperson will drive the Council agenda and represent Servicewide

interests. Other IRS members will represent their own organizations

and the needs of its employees while also considering the needs and

priorities of the Service as a whole. In addition, the Director, Office of

Equal Opportunity Program in Treasury, will represent the Complaint

Centers and Departmental EEO program.
Working to Put Service First

National Headquarters

13-4

Figure 13-1: EEO and Diversity Council

Chief, EEOD

Nat’l HQ

Chief,

Strategic HR

Director, OEOP

Treasury

AWSS EEOD

Director

Field Services

Director, AWSS

W&I EEOD

Director

SB/SE EEOD

Director

LMSB EEOD

Director

TE/GE EEOD

Director

CI EEOD Director

IS EEOD Director

Taxpayer

Advocate EEOD

Director

Appeals EEOD

Director

Counsel EEOD

Director
Working to Put Service First

National Headquarters

13-5

Chief Financial

Officer

The Chief Financial Officer (CFO) is responsible for the acquisition,

planning, control and management of all Service financial resources,

including administrative and revenue accounting.

The Chief Financial Officer organization will undergo several

changes from its present state. First, the Strategic Planning and

Budgeting organization will be integrated into the CFO organization.

Responsibility for the Internal Revenue Accounting System (IRACS)

and oversight of the ESC FMC process will also be acquired. Finally,

the Office of Revenue Analysis will be transferred to the new

Research, Analysis and Statistics of Income organization.

The CFO organization consists of four divisions: the Revenue

Accounting Division, the Financial Analysis Division, the

Administrative Accounting, Systems and Policies Division, and the

Strategic Planning and Budgeting Division. These divisions and their

sub-units are depicted in Figure 13-2.

Office of Unpaid

Assessment Analysis

Office of Revenue

Reporting

Office of Audit

Oversite and Analysis

Office of

Revenue Systems

Revenue Accounting

Office of

Management Controls

Office of Cost

Accounting & Analysis

Office of

Management Support

Financial Analysis

Office of Accounting

Standards & Reports

Office of

Financial Systems

Office of Travel

Mgmt. & Relocation

Office of Financial

Applications Support

& Technology

Office of

Accounting Policy

Beckley Administrative

Services Center

located in West Virginia

Administrative Accounting

Systems and Policies

Deputy CFO

Finance

Office Of

Strategic Planning

Office of Budget

Formulation & Policy

Office of Program

& Cost Analysis

Office of

Budget Execution

Office of

Economic Analysis

Deputy CFO

Strategic Planning & Budgeting*

CFO

Figure 13-2: Chief Financial Officer Organization

* Indicates organizational structure is subject to change.
Working to Put Service First

National Headquarters

13-6

Revenue Accounting key responsibilities include:

• monitoring and providing guidance to senior program managers

on issues related to the long-term financial management of the

Service;

• coordinating with the General Accounting Office (GAO) on the

audit of custodial financial statements;

• developing and managing the IRS revenue accounting process,

including coordinating key issues related to reporting accounts

receivable in the financial statements and other reports;

• preparing and issuing the IRS financial statements;

• ensuring compliance with the CFO Act;

• establishing policy and guidance related revenue accounting;

and

• maintaining and ensuring the integrity of master file reports for

revenue accounting.

Financial Analysis key responsibilities include:

• coordinating and providing program guidance on meeting the

Service’s Internal Control objectives;

• supporting the Executive Steering Committee for Financial

Management Controls;

• monitoring the progress of FMFIA, FFMIA and financial

statement audit corrective actions and preparing the Service’s

annual assurance letter;

• coordinating organization, staffing and training issues for the

CFO and embedded finance staffs;

• developing cost accounting systems requirements; and

• conducting cost/benefit analyses and studies of cross-functional

issues.

Administrative Accounting, Systems and Policies key responsibilities

include:

• preparing the IRS administrative financial statements and other

financial reports;

• coordinating the annual administrative financial audit and

serving as liaison with field financial offices, Treasury,

Financial Management Service and Office of Management and

Budget on financial reconciliation, reports and reporting

requirements;

• establishing and prescribing IRS financial policies for

administrative accounting operations, budgeting, and reporting;

• maintaining the Servicewide Automated Financial System

(AFS);

• developing and administering IRS travel policy and relocation

services; and

• administering Servicewide financial accounting functions for

cash management, disbursements, management reporting, data

entry, customer assistance, quality assurance and internal

control.
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National Headquarters

13-7

The Strategic Planning and Budgeting key responsibilities include:

• providing Servicewide strategic planning policies, guidance

and procedures;

• managing the development, consolidation, communication, and

distribution of the IRS Strategic Plan;

• preparing and coordinating budget submissions, appeals and

hearing materials;

• ensuring quality and realistic costing of IRS budget

submissions and labor force;

• managing and controlling budgetary resources;

• developing and implementing financial operating guidelines;

• ensuring compliance with statutory budgetary requirements;

and

• developing and maintaining the Investment Decision Making

process.

The IRS strategic planning process is based on three main themes:

• Start with a thorough understanding of strategic forces and

their future impact. The process should identify key external

forces and understand their implications, allocate resources to

efforts that address issues raised in the understanding of key

forces, take a multi-year approach, and drive high-level

strategic decisions.

• Use a clearly defined strategic planning process linked to

budgeting. This process should include clearly defined and

logical steps, key deliverables for each phase, development

roles for senior management and operating units, and

operations strategy and investment programs.

• Encourage heads of the operating units to propose and

execute most of the programs. Identify and develop programs

which address key strategic issues, use programs to seek

resources and manage effort, develop explicit deliverables,

align resources to programs, structure programs accordingly –

within or across organizations, and allocate resources in ways

that link them to strategic priorities.

Figure 13-3 on the next page shows the Strategic Planning and

Budgeting Process. While senior management leads the process, it

integrates participation from across the IRS, and its success requires

close cooperation between the IRS and Treasury department. Success

will also require a common understanding of timing, responsibilities,

and deliverables.
Working to Put Service First

National Headquarters

13-8

5. Develop Multi-Year

Budget and Plan

• Formulation

• Budget & Plan Review

6. Update Budget & Plan

• Review Requirements

• Modify/Re-Prioritize Programs

• Update Budget & Plan

7. Execute & Measure/

Monitor Results

• Execute

• Measure & Monitor

8. Review Strategy,

Program &Budget

• Strategic Performance Review

• Analyze Results

3. Identify Key Strategy &

ProgramIssues

• Identify Key Issues

• Senior Management Review

• Identify Research Needs

1. ReviewEnvironment

• Research & Gather Data

• Analysis

• Review

2. Issue Commissioner’s

Planning Guidance

• Develop/Validate Vision

• Prepare Guidance

• Issue Guidance

4. Develop Operations

Strategy &Programs (OS&Ps)

• Develop OS&Ps, Investment

Programs

• Review Finalize OS&Ps, IPs

Inputs 

• Stakeholder/Customer Input

• Research

• Internal data (e.g., Emp. Sat.)

Outputs 

• Summary of Implications

• External Environment Review

Output 

• Commissioner’s

Guidance

• Updated Vision

& Goals

Inputs 

• Strategic Performance

Evaluation

• Existing Strategic Plan

Inputs 

• Strategic Performance Reviews

• External Environment Reviews

Outputs 

• List of Key Issues

and prioriities

• Input to Research

work programs

Inputs 

• Commissioner's Guidance

• Prioritized List of Key Issues

Output 

• OS&Ps & IPs

• Strategic Plan

Inputs 

• Prior year budget &

plan results

• Overall Budget Estimates

Outputs 

• IRS Budget Request

• Prelim. Business Plan

• Prelim. Performance Plan

Inputs 

• OMB Pass Back

• Appropriation action

• Change in environment

Outputs 

• Updated OS&Ps, IPs

• Updated business &

performance plans

Inputs 

• Execution data

• Strategic Plans

• Business &

Performance Plans

Outputs 

• Program activities & services

• Performance vs. plan

• Spending vs. plan

• Action to resolve

ineffectiveness programs

Inputs 

• Strategic Plan

• Performance reports & data

• Customers/Stakeholder input

Outputs 

• Conclusions about

program/strategy success

• Input to future plan cycles

Figure 13-3: Strategic Planning and Budgeting Process
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National Headquarters

13-9

Strategic Human

Resources

The Strategic Human Resources (SHR) organization devises new

strategies and develops HR policy focusing on agency-wide people

issues. These issues include instilling core values; leading and

developing employees; promoting partnership; and ensuring a

positive work environment.

This new organization which was designed in Phase IIA, and

implemented in Phase IIB, will enable the IRS workforce to perform

at its full potential by supporting a high-performance work

environment. Strategic Human Resources is composed of experts in

key Human Resources (HR) fields whose collective role is to set the

overall agency strategy for human resources, align that strategy with

the mission of the Modernized IRS, and design high performance HR

systems that work effectively within and across the operating

divisions.

Four main elements were necessary to create a Strategic Human

Resources capability:

• new and enhanced processes;

• new competencies of our Human Resources professionals;

• enabling technologies and systems; and

• a supporting organization structure.

These elements are guided by an overarching philosophy on

attracting, retaining, and developing employees. Eight functions now

align HR responsibilities to business priorities.

The following is a description of their major roles.

• Workforce Planning provides a planning process and

analytical capability to measure and compare the current

workforce (supply) with the future workforce (demand). The

process provides insight into the best policies and initiatives

needed to recruit, develop, and retain a highly competent,

committed, and customer focused workforce. The function

also has a critical role in developing the personnel

requirements system, which is linked to strategic planning

and budgeting, recurring recruitment needs, and training

requirements.

• Career Management and Recruitment provides an integrated

approach for managing the development and progression of

employees in order to field a workforce with the competencies

necessary to achieve current and future organizational

performance. Career Management develops the framework to

identify competencies required for Service occupations, create

tools to assess those competencies, and prepare roadmaps for

career planning within and among major occupations,

workforce components, and organizational units such as the

new operating divisions. The Recruitment function develops
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National Headquarters

13-10

recruiting programs and guidelines and creates and

implements approaches to market IRS as an employer of

choice.

• Leadership and Organizational Development designs and

delivers education and training for Service executives,

managers, and supervisors and is responsible for the Service’s

efforts to build and implement a leadership development

system. The function provides products and services that

support business improvement outcomes and manages the IRS

change management program.

• Learning and Education function develops and delivers

training and education services and products to all IRS

employees. In FY 2000, over 10 million hours of sustainment

training and 2.4 million hours of modernization training will

be delivered. A major redesign initiative is currently

underway that will result in the realignment of certain

institutes and functions to the operating divisions. This

realignment is projected for FY 2001.

• Workforce Relations establishes policy and provides expertise

and support with regard to national IRS labor and employee

relations. The Labor Relations function provides technical

guidance on the current national labor contract, prepares the

Service for future national negotiations, and negotiates midterm agreements as well as issues related to the Service’s

modernization. The Employee Relations function provides

technical and policy guidance for programs such as employee

discipline and adverse actions, RRA 98, Section 1203,

employee tax compliance, background investigations,

Whistleblower Protection, and Ethics and Standards of

Conduct.

• Personnel Policy leads the Service in the development and

implementation of comprehensive strategies and policies for

numerous functions in personnel management such as

classification and compensation, performance management

and recognition, staffing and worklife, and transition issues.

The function establishes agency-wide policies that enable the

Service to place the right people in the right jobs; enhance

recruitment and retention of the most qualified individuals;

provide incentives to maximize the potential of the most

qualified individuals and the workforce; provide effective

compensation strategies; and provide personnel strategies for

an effective restructuring and maintenance effort.
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National Headquarters

13-11

• Human Resource (HR) Technologies designs, develops, and

implements the enterprise-wide HR systems in support of the

IRS mission, goals and objectives. The function helps to

determine the appropriate technology solution to apply to

business problems associated with HR processes, training, and

employee performance.

• Program Integration is responsible for the oversight and

coordination of all aspects of SHR including program and

resource management. Viewing all resources from a strategic

perspective, this function provides oversight for the SHR

budget, acquisition and contract review, and internal

personnel planning. Program Integration provides support to

the HR Policy Council and the systematic dissemination of

HR policies and guidelines; provides oversight and direction

to the Senior Account Executives; and coordinates externally

mandated activities such as TSI, RRA 98 and GAO audits. In

addition, the newly created Merit System Assessment

function monitors and evaluates Service-wide trends and

conditions in personnel, labor relations and training programs. 

On the next page in Figure 13-4, the Strategic Human Resources

organization can be seen in its entirety.
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National Headquarters

13-12

Figure 13-4: Strategic Human Resources Organization

Office of Strategic

Human Resources

6

Workforce

Planning

Career

Management

14

Workforce

Relations

22

Leadership &

Organizational

Development

81

Program

Integration

21

Learning &

Education

735

Personnel

Policy

57

HR

Technologies

11

HR Policy Council

PHASE III

Implementation

Merit Systems

Assessment

Policy,

Resources, & R/D *

Learning Design

and Development *

Learning Delivery *

Organizational

Development

Leadership

Development

Staffing & Worklife

Policy

Performance Mgt.

and Recognition

Policy

Classification &

Compensation

Policy

Workforce

Transition

Employee

Relations

Labor Relations Integrated

Personnel System

Requirements

People Transition

Strategy

Strategic

Recruiting

Program

Competency

Modeling

Career

Counseling

Balanced

Measures

Training

Technology

Support *36

EPSS

ACES - Ongoing

Customer Support

6

*

* Indicates organization currently under major redesign during Phase III implementation.
Working to Put Service First

National Headquarters

13-13

The Operating Division Human Resources Function

A mirror structure in the operating division headquarters will ensure

that strategic HR capabilities are aligned with both the goals of the

Service and the needs of the business. Designed in Phase IIB, a

structure similar to core HR is to be embedded in each operating

division during Phase III. This structure will customize HR programs

and processes to satisfy each operating division’s unique needs and

optimize overall performance. While the SHR is responsible for HR

functions relating to the IRS as a whole, each operating division will

have an embedded HR that focuses on creating HR systems and

procedures tailored to their unique needs. Examples include career

paths for predominant occupations, the development of operating

division unique training, job-specific career counseling, and external

recruiting for specific occupations.

Strategic Human Resources Policy Council

A separate component of the HR network is the Strategic HR Policy

Council. This Council provides governance, assurance, and

functional leadership. The Council addresses crosscutting HR issues

that cannot be resolved at lower levels. Issues are screened and

prioritized for inclusion on the regularly scheduled meeting agenda

or handled through an offline process used when their input is

urgently needed prior to the next formal meeting. The Council

examines agency-wide people issues and ensures that agency-wide

decisions do not adversely impact any facet of the organization. It is

the sole body within the IRS responsible for approval of new HR

policies. The Council ensures that issues crossing division lines are

coordinated. The Council monitors the activities of the AgencyWide Shared Services organization in delivering HR support. In

their advisory capacity, the Council provides strategic HR advice and

recommendations to the Commission and IRS senior staff.

The Chief Human Resource Officer chairs the Council, and senior

executives representing each operating and functional division are

voting members. NTEU and EEO/Diversity also participate on the

Council as voting members. The Council also includes advisors as

non-voting members who provide advice and make

recommendations based on their areas of expertise and/or

responsibility. They represent professional organizations, SHR

divisions, and other interested stakeholders.

The Council is viewed as an impartial, professional and insightful

entity that can assume several potential duties. It can identify and

analyze issues for discussion, evaluate policy effects, make HR

policy, and support the implementation of decisions.
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13-14

Office of Tax

Administration

Coordination

The Office of Tax Administration Coordination manages the Tax

Administration Council, provides the Office of the Commissioner,

operating divisions and functional divisions with strategic guidance

on Service business strategies and priorities, provides standards and

guidance on the development and use of performance measures,

coordinates and compiles internal and external reports on measures,

manages the Business Performance Review System, provides

business improvement assistance, and manages both the customer

and employee satisfaction survey process.

The Chief of Office of Tax Administration Coordination reports to

the Assistant Deputy Commissioner for Operations and is

responsible for the planning, managing, and directing of a full range

of services and activities to ensure the accomplishments of OTAC.

The Office is divided into two business functions: Program and

Project Coordination and Measures and Organizational Performance.

The Office of Tax Administration Coordination:

• Manages the Tax Administration Council

• Provides the Office of the Commissioner and the operating

divisions strategic guidance on Service business strategies

and priorities

• Oversees near-term improvement projects that cross

operating division lines or are of such importance as to affect

tax administration as a whole and fall under the jurisdiction

of the Tax Administration Council

• Manages the implementation of recently enacted legislation

• Oversees the development of strategic measures of

performance for each taxpayer

• Refines standards and guidance on performance measures

• Manages the Business Performance Review System

• Provides business improvement assistance

• Manages both the customer and employee satisfaction

survey process

Program and

Project

Coordination

Division

The Program and Project Coordination Division manages the Tax

Administration Council, provides the Office of the Commissioner

and the operating divisions strategic guidance on Service business

strategies and priorities, oversees near-term improvement projects

that cross operating division lines or are of such importance as to

affect tax administration as a whole and fall under the jurisdiction of

the Tax Administration Council, and manages the implementation of

recently enacted legislation.

The Director of Program and Project Coordination Division reports

directly to the Chief, Office of Tax Administration Coordination

(OTAC), and is responsible for planning, managing, and directing

the full range of activities to ensure program accomplishment.
Working to Put Service First

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13-15

The Program and Project Coordination staff:

• Manages the Tax Administration Council.

• Oversees the analysis of cross-division issues identified

by the Commissioner, the operating divisions, Treasury,

and external groups.

• Assesses impact of policies across taxpayer groups.

• Assists the Council to ensure consistency of taxpayer

treatment or determine when differences are justified.

• Manages the Council’s responsibility regarding

implementing newly enacted tax legislation.

• Manages the meeting by coordinating the agenda,

recording the minutes and resulting decisions, and

ensuring follow-up actions.

• Provides strategic guidance by:

• Assisting the Commissioner in identification of

Operational Priorities and Improvement Projects

through the Strategic Planning and Budgeting

Process (SP&B Process) based on an analysis of

operating division and functional division Strategic

Assessments.

• Providing a standard prioritization criteria and

guidance to Operating and Functional Divisions for

scoping program plans.

• Analyzing draft program plans to ensure appropriate

coordination and balance across Operating and

Functional Divisions.

• Provides governance for selected high impact crossdivisional improvement initiatives from the current TSI

portfolio, and for future cross-divisional initiatives

proposed by the operating divisions.

• Aligns priorities to strategic goals and ensuring that

these adhere to priorities set in the SP&B Process.

• Assigns executive ownership and accountability.

• Ensures cross-functional coordination.

• Facilitates decisions on recommendations.

• Manages the ranking or prioritization process for

competing initiatives of issues that are raised outside of

the normal SP&B cycle.

• Oversees tax legislation implementation.

• Oversees the development of comprehensive

implementation plans for new legislation and assigns

executive ownership and accountability.

• Establishes a risk-based monitoring process.

• Identifies issues that need to be escalated to and resolved

by the Tax Administration Council.

• Provides common database tools and procedures.

• Establishes uniform formats and database applications so

information can be effectively monitored and shared and

organizational capacity conserved.
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Measures and

Organizational

Performance

Division

The Measures and Organizational Performance Division oversees the

development of strategic measures of performance for each taxpayer

segment and for the IRS as a whole, manages the ongoing efforts to

refine standards and guidance on the development and use of

performance measures, manages the new Business Performance

Review System (BPRS), provides business improvement assistance,

and manage both the customer and employee satisfaction survey

process.

The Director of Measures and Organizational Performance Division

reports directly to the Chief, Office of Tax Administration

Coordination (OTAC), and is responsible for planning, managing,

directing and executing the full range of activities related to program

accomplishment.

The Measures and Organizational Performance Division also:

• Establishes and maintains organizational measures, develops a

policy framework for performance measures and standards, and

coordinates Servicewide strategic measures.

• Assesses new and revised measures for consistency with

Balanced Measures Regulation and Policy.

• Coordinates compilation of data for mid-year and end-of-year

reports.

• Maintains records of any changes to the methodology of

collecting data.

• Interacts with external stakeholders (i.e. Capitol Hill, GAO,

TIGTA) regarding performance measures.

• Manages the Business Performance Review Process.

• Coordinates reviews for the Commissioner.

• Integrates review results into the Strategic Planning and

Budgeting Process.

• Analyzes operating division results against program plan

expectations.

• Develops and maintains a liaison relationship with external

entities, both government and private sector, on business

improvement.

• Provides business improvement consultation to operating

divisions.

• Develops and maintains standards and guidance for Servicewide

business improvement initiatives.

• Establishes policy, standards and guidance for the 1204

Certification Process.

• Administers the requirements for the 1204 Certification Process.

• Coordinates with Oversight and support groups.

• Plans and executes the 1204 Certification Process.

• Coordinates the administration of the IRS Customer Satisfaction

Surveys used to measure customer segments' satisfaction.

• Prepares OMB clearance requests for IRS customer surveys and

focus groups.
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• Manages the Servicewide strategic customer satisfaction

measures.

• Provides customer survey and focus group guidance and

consulting services.

• Provides guidance and technical assistance to the Operating and

Functional Divisions on measuring customer satisfaction. The

management and performance of the work includes survey

administration, assisting in the design of customer surveys, and

facilitating the Office of Management and Budget survey

approval process and providing inputs to the SP&B process.

• Designs and develops the census survey and sample surveys.

• Administers surveys and conducts training.

• Surveys research, results tabulation and analysis, and report

distribution.

• Integrates employee satisfaction data with customer satisfaction

and business results data.

• Serves as the IRS representative to the Office of National

Partnering for Reinventing (NPR) Government for the

Government-wide Employee Satisfaction Survey data.

• Establishes a process to annually produce employee-generated

data (via a census survey) focused specifically on Employee

Satisfaction for managers, NTEU stewards and employees.

• Establishes an employee survey process on work processes for

use by IRS senior executives and NTEU Leadership.

Research,

Analysis and

Statistics of

Income

Research, Analysis and Statistics of Income is a merger and

realignment of several organizations: National Office of Research,

Office of Performance Evaluation and Risk Analysis (OPERA), the

Office of Revenue Analysis (from the CFO organization), and

Statistics of Income (SOI).

The Office of Research is responsible for conducting research and

analysis for key internal and external stakeholders and customers. It

supports and enables IRS enterprise-wide research and analysis by

building and maintaining data, systems, and human resource

infrastructures for conducting research and analysis and by providing

consulting, methodological, and quality assurance assistance to the

research community. The Office of Research develops and

maintains the framework and methodologies for IRS Knowledge

Management and leads implementation efforts enterprise-wide.

National Headquarters research has been selected as the incubator

organization for an IRS-wide knowledge management system. An

effort to define IRS knowledge management needs, design an

appropriate system, and establish a framework is about to begin

within the present Office of Research. This effort, though housed in

Research, Analysis and SOI, will include other interested IRS

organizations on an Advisory Board. Key steps in the effort are to:

Office of

Research
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• Review and analyze best practices.

• Inventory and catalogue IRS knowledge assets (see Figure

13-5).

• Develop and demonstrate an IRS knowledge management

program model.

• Develop an implementation plan.

Figure 13-5: Model for "mapping" IRS Knowledge Assessments

Integration Model

ß Systematic, repeatable work

(across multiple functions)

ß Highly reliant on formal processes

& methodologies

Transaction Model

ß Routine work

ß Highly reliant on formal rules,

procedures and training

Collaboration Model

ß Find and re-use work

ß Highly reliant on deep expertise

across functions

Expert Model

ß Judgment -oriented work

ß Highly reliant on individual

expertise and experience

Routine Interpretation

Complexity of Work

High

(Collaborative

Groups)

Low 

(Individual 

Performers) Level of Interdependence

Several on-going initiatives are also present in the Office of Research:

• Research and Analysis Community Leadership. This activity

collaborates on the establishment of R&A standards and strategic

agenda, collaborates on measures for R&A community,

coordinates R&A conferences and CPE activities, coordinates

KM for R&A community, and coordinates CRM enterprisewide.

• Strategic Research and Analysis. This activity has several key

functions:

• Implements an enterprise-wide program analysis and

strategic assessments (which assess program

effectiveness), and develops standards and methodologies.

• Provides enterprise-wide consulting services to improve

operational processes, implement econometric modeling

and resource allocation, and develop projections and

forecasts.

• Develops and applies strategic methodologies for

measuring and monitoring taxpayer compliance and

burden, estimating and projecting tax gap and enforcement
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revenue, identifying, measuring, and reducing tax

administration and tax code complexity, and monitoring

Congressionally mandated compliance initiatives.

This activity also builds and supports corporate risk

management capability by assessing risks in ongoing

programs and proposed major investments, implements

risk management processes, models, and methodologies

(ELC, IDM, Business Case Guide), and assesses

effectiveness of risk mitigation strategies.

• Shared Data Infrastructure. This function provides data

structures that facilitate single-use and ongoing research and

analysis products for the entire community. Key activities

include data and systems requirements analysis, Business

Systems Planning Group coordination, and evaluation of new

methodologies and products for use by the research and analysis

community.

The Office of Revenue Analysis has several key functions:

• Tracks enforcement revenue for all enforcement activities.

• Integrates enforcement data and master file data into the

Enforcement Revenue Information System (ERIS), and

analyzes ERIS data and provides reports and analyses to IRS

management.

• Coordinates the Service's enforcement revenue estimation

activities.

• Works with the functional areas to improve their estimating

models and methodologies.

• Analyzes and validates revenue projections.

• Develops Congressional Report on IRS Revenue and

Compliance Initiatives.

The Office of Program Analysis provides the senior leadership team

with accurate and timely analysis of ongoing and proposed IRS

programs and investments to support quality, data driven strategic

thinking and decision making across the organization. The Office of

Program Analysis supports the senior leadership team's efforts to

develop interactive Service-wide strategies to achieve the Service's

mission, vision, goals, and values, and has several key functions:

• Strategy development to address enterprise wide issues

impacting key external stakeholders;

• Program evaluation involving analysis of existing and

proposed programs to assess their investment potential;

• Risk analysis including assessing risks to the

accomplishment of strategic objectives as well as

opportunities for mitigation and managing risk (risk analyses

are underway in support of IRS major investment

capabilities while enterprise wide risk management is under

development); and

Office of Revenue

Analysis

Office of Program

Analysis
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• Manage and facilitate customer satisfaction surveys for the

major service functions.

Statistics of Income (SOI) will continue to perform its present roles

and serve its key customer, the Department of the Treasury's Office

of Tax Analysis (OTA). SOI's mission is to compile and publish

statistical data based on tax returns, including individual, corporate,

partnership, exempt organization, estate, as well as returns related to

foreign activities, mandated by the Internal Revenue Code. SOI data

is used for evaluating tax law changes, estimating revenue

collections, and estimating GDP and other basic research. SOI's key

products and services include the following:

• preparing statistical data mandated by section 6108 of the

Internal Revenue Code for publication in quarterly and

annual reports;

• conducting statistical studies from tax returns for the

development of Federal tax policy as determined by the

Office of Tax Analysis and the Joint Committee on

Taxation;

• preparing special statistical studies on a reimbursable basis

for customers such as the Bureau of Economic Analysis and

the Census Bureau;

• responding to requests for statistical data from the private

sector for research activities; and

• overseeing Federal-State data exchanges and inter-agency

liaison committees; and making available more than 800 SOI

data sets on the IRS internet website.

Complaint

Processing &

Analysis Group

The mission of the Complaint Processing and Analysis Group is to

enhance the responsiveness to employee and taxpayer complaints,

and improves the integrity of IRS operations by:

• Identifying, managing, tracking and analyzing complaints

received by or referred to the Commissioner;

• Monitoring and coordinating with other IRS complaint

systems;

• Operating the Central Adjudication Unit;

• Providing employee relations support for Executive/GS-15,

Criminal Investigation and Unauthorized access cases

• Disseminating information on complaint disposition

throughout the service; and

• Conducting problem solving inquiries as needed to develop

facts pertaining to complaints.

This organization serves as the clearinghouse for any employee

complaint, concern or issue, regardless of the source of referral.

After an initial analysis and categorization is completed, the

complaint/issue is then assigned or referred to the appropriate IRS

management or other organization (Treasury Inspector General for

Statistics of

Income
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Tax Administration or the National Director EEO and Diversity) for

inquiry and investigation. The complaint or issue is then tracked and

monitored to ensure that it has been properly dealt with, including a

review of the final disposition. The Complaint Processing &

Analysis Group also conducts reviews and problem solving inquires

as needed to develop facts pertaining to particular complaints that

may be unusual, complex or require special attention for some other

reason.