Former IRS Commissioner Charles Rossotti adopted a motto during his service at the IRS (1997-2002) of “engage and then decide; rather than decide and then explain”. His reasoning was sound. In essence he recognized that in order for the IRS to be successful as an agency in the future, the IRS needed to first seek out stakeholder input and then listen before they made changes to the agency, rather than simply making decisions without the benefit of outside agency knowledge. Like former Commissioner Rossotti, I also believe in the same deliberate and well-crafted approach for the IRS. This approach seems only natural to me as a practicing CPA.
As a small business owner I am economically forced to listen to what my customers need, want and expect. This happens whether I initiate the conversation or choose to act upon it or not. Failure on my part to listen to my client’s needs will always result in me losing a client. It is a well-settled fact that if one CPA does not attempt to satisfy his client’s expectations that the client will simply move to another service provider. Our clients have choices. Our clients have options.
Unlike our clients though, we as CPAs don’t have options when it comes to interfacing with the government. One of the biggest tax practice challenges that I believe we face is a “lack of competition” within the IRS. What I mean by this is that the IRS is the sole source of tax administration information for the US government. If I am unhappy with the level of service I am receiving (or not receiving as the case may be) I simply cannot fire the IRS and seek out another service provider. I have no other options for obtaining information or interfacing with the government on tax related matters. There are no naturally-occurring market drivers that would involuntarily force meaningful change or reform within the IRS. That desire and drive to change has to come from within the agency and or from a U.S. Congress that has jurisdictional oversight.
Many of my business and social acquaintances ask me why I have to “talk to the IRS at all” when I complain about some of the inefficiencies I encounter while interacting with the IRS in my practice. “Don’t you know the tax law already” they reason? In truth, we as CPAs need the IRS for taxpayer information. We don’t look to the IRS to provide answers to tax law per se. Rather we look to them to provide us with taxpayer deposit information, resolve IRS notice disputes, grant waivers of penalties, or to respond to information requests amongst a whole host of other needs. We need the IRS to provide us with information that no one else possesses or can obtain. In short, we need access to the IRS. We need both timely and meaningful access to the IRS. My frustrations happen when the access to that information is limited and the service level encountered to obtain it is less than it could or should be.
There are few better qualified individuals in the United States than the CPAs that can help the government understand what practitioners and their clients, the US taxpayers, need or want from the IRS. CPAs are on the front-lines. We often “sit in the middle” and experience the anxiety of a client as a result of an IRS notice as well as the frustration of the IRS in being able to resolve an incomplete tax return of a taxpayer missing critical information.
CPAs are often referred to as the most trusted business advisor to our clients. I would suggest we can be just as valuable to the U.S. government when it comes to understanding how to improve the IRS.
The IRS Future State
Over the past few years, the IRS has engaged in an internal strategic vision project. The IRS has set out to redesign their organization such that the agency of today will be a much more efficiently functioning agency in the future. The project has been deemed the IRS “Future State”. You will start to read more about this vision project in the coming months I suspect. At its core, the IRS is trying to design a tax collection system that embraces technology and modern taxpayer needs, balanced with the fiscal constraints imposed upon it by the U.S. Congress. Clearly trying to address the needs of a $10 billion government agency is complicated and will take some amount of time. Because the outcome of the project has such major ramifications for the public, logic suggests that the IRS should measure twice before it cuts once. There is logic in this approach. However, this project is now starting to gain momentum and is moving forward. While no plans have yet to be formally adopted, there has been a significant amount of work that has transpired up to this point. The agency is likely to start moving forward publicly with plans as soon as practical.
The National Taxpayer Advocate (NTA), Nina Olsen is intensely focused on this Future State project. She is rightfully worried that the IRS might not be fully determining the needs of the “customer” before acting. Just like Former Commissioner Rossotti, she is concerned that the IRS get the end-product right before they start to proceed with the changes. To that end, Ms. Olsen has been holding a series of public forums throughout the country over the past few months wherein she is asking groups of interested parties and stakeholders the question of what do you want or need from the IRS (both current and in the future). She and her staff are listening closely. They are advising both Congress externally and the IRS internally on what they are hearing. Their intent is to help shape an end strategic vision for the IRS that has both the understanding of internal constraints as well as the benefit of customer feedback.
Last week I was able to testify at one of the NTA Future State Public Forums on behalf of the AICPA. The message I delivered was consistent with the directive given to the tax division from the AICPA Council last May in a unanimously passed resolution. The May 2015 AICPA Council Resolution called on Congress and other policy makers to create a bi-partisan forum to engage stakeholders to expeditiously create a path that would allow the IRS to transform itself into a modern-functioning, evolutionary and respected federal agency for the 21st century.
I also shared testimony consistent with the results of a recent informal study that our members participated in immediately after filing season. What our members need in short is meaningful and timely access to the IRS. They envision an IRS that allows them and their client’s choices in the future. Communication choices that perhaps allow them to pick up the telephone, write a letter, write an email, visit a physical office location or perhaps even participate in a video chat. Our members envision a system that allows their clients the ability to quickly grant their designated tax practitioner access to their tax account and records with the IRS in order to facilitate a prompt resolution. Our members envision an agency that is able to interact such that a simple IRS matching notice issue will be resolved in a matter of hours, instead of where we stand today where a four-month multiple letter writing effort is required. Our members know well what the IRS should look like in the future and they are amongst the most qualified to help paint that picture for the agency.
I ask each of you that as the opportunity arises within your own state societies, at a future NTA Future State Forum or as other venues present themselves that you please take the opportunity to help shape the future vision of the IRS. Your direct feedback is invaluable and amongst the most relevant. You might not have all of the answers on how to solve complicated issues such as cyber-security concerns but you can help explain how changes in approach and medium can increase the overall efficiency and effectiveness of the IRS.
I believe we all have a vested interest in the success of the IRS and I encourage each of you to take an active role in helping shape their vision as they look into the Future State.
Again I thank each of you for your continued support of the AICPA as we together work towards improving our ability to serve clients, our employers, our own business interests and other business pursuits where the tax discipline can add meaningful value.
Troy K. Lewis, CPA, CGMA
Chair, AICPA Tax Executive Committee