IRS Oversight Board

IRS Oversight Board

Raymond T. Wagner, Jr., Chair

1500 Pennsylvania Avenue, NW

Washington, DC 20220

Dear Mr. Wagner:

It is a pleasure to have the National Society of Tax Professionals respond to your request regarding the Proposed IRS Long Term Measures. NSTP immediately emailed our members the document and receiving numerous comments from our membership on our web site at Our members are Tax Professionals, many who are Enrolled Agents, Certified Public Accountants, Attorneys and Financial Planners. NSTP is a true reflection of the Tax Professional community.

Responding to each of the Measures and Goals:

#1. E-file Rate

The Tax Professional community has overwhelming endorsed e-file, acting as an agent for change on the filing process for the American Taxpayer. Realistically, IRS, on its own initiative, cannot affect an 80 per cent rate, however with more and more states requiring electronic filing, the effect will be to increase the federal filing. To measure IRS on the percentage method alone would be inappropriate and ill-determined. Other factors will drive the increase in e-filed returns. The Tax Professional community which has been reluctant to file electronically would be greatly encouraged if IRS technology was updated to make the 1040 platform as efficient as the 1120/1065/990 platform.

#2. ACSI All Individual Taxpayer Score

The use of the ACSI customer satisfaction metric is an acceptable form of measurement if the analysis behind the numbers is complete. To receive a 69 out of 100 by 2009 because taxpayers can go to the web site at and get a tax form without having to go to the post office or a library is a different scenario than if 69 taxpayers out of 100 who owed the IRS substantial sums of money and were unable to pay were treated fairly and courteously and IRS employees worked to get the taxpayer compliant. It is said that the devil is in the details and no phrase would be more evident when applied to this measurement.

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Noticeably absent from this measure is the customer satisfaction of the taxpayer representative. This is where the ranking of 69 would be significant. Tax Professionals are effective partners in tax administration. The Office of Professional Responsibility is making a concerted effort to make taxpayer representatives more responsible. This action should be met with the equal yet opposite reaction that the IRS treats taxpayer representatives with more respect. Responsibility for Respect, now that is a measure of success.

#3. Employee Engagement

The Gallup Organization poll is futile at best. NSTP believes that IRS like any large corporation has employees who perform at different levels. Productivity and quality is the measurement of engaged employees. Perhaps a measurement based on the productivity and quality of IRS divisions would lend itself to a much better interpretation of employee engagement. NSTP members, who are former IRS, report that they would participate in the poll if their manager encouraged them to do so and if they liked their manager, or contrary, if they disliked their manager.

#4. Voluntary Compliance Rate

While the National Research Program (NRP) was designed to measure the voluntary compliance rate of taxpayers you are aware of the pitfall of the data becoming old the moment the data is retrieved. With the rapidly changing economy and the increasingly complex diversity of the American taxpayer, the IRS must seek non-traditional methods of acquiring data to ensure voluntary compliance.

While the IRS pays for research studies and then analyses the detail, they should also poll the Tax Professional community. NSTP members are in tune with their taxpayers, hearing the tax horror stories, the scam opportunities and the claims of the tax practitioners down the street. IRS would be well-advised to consult with local Tax Professionals in their respective communities about these types of activities and be prepared to swiftly address them utilizing the power of the Criminal Investigation Division and the Department of Justice when appropriate.

#5 Non-revenue Enforcement Activity

The wide-ranging roles of the IRS recognize the agency’s ability to balance compliance with service in the area of Tax Exempt and Government Entities. This non-traditional operating division has decided to measure based upon target values for the non revenue activity. While the activity is non revenue, the importance of this activity is

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without question. Recent publicity on tax exempt entities as well as pension reform further magnifies the importance of efforts in this division. Certainly a 10 percent increase in FY2009 of the index will be an ambitious but achievable measure.

Relating these long-term measures to the three strategic goals for guiding the future direction of the IRS:

Improve Taxpayer Service – nothing in the long-term measure addresses a diminishing trained workforce at the IRS. Where is the issue of evaluating the performance of employees in their respective jobs? Where is the measurement of the effectiveness of training programs? The e-file participation rate, if tied directly to how fast a taxpayer receives their refund, is a minor issue on the scale of customer service. Most of the e-file service is due to the efforts of the Tax Professional, a fact that IRS repeatedly overlooks.

In the area of Individual Taxpayer Satisfaction – again, the Tax Professional is overlooked. Granted, IRS should be interested in taxpayer satisfaction, however, dealing with a taxpayer representative should be viewed by IRS as dealing with the taxpayer. No measurement of satisfaction is directed toward the Tax Professional.

Employee engagement is much more a cause then an effect. Are employees productive? Did they do their job efficiently and productively? If they did, they were engaged. If they are engaged then without question they will improve taxpayer service.

Voluntary compliance rate will be marginally impacted by e-file. The low hanging fruit has already been picked and greater efforts will have to be introduced to reach those taxpayers remaining reluctant to use e-file. One of the largest impairments to e-file is the 1099-B, Brokerage Statement reporting with multiple stock sales for the year. Often these statements have insufficient data to be used as attachments requiring the returns to be filed by paper or to have the Tax Professional enter every entry causing additional cost to the taxpayer which would not be incurred if filing by paper.

Non-revenue enforcement activity index will measure the effectiveness of the Tax Exempt and Government Entities Division and will ultimately reduce the time in releasing determination letters for tax exempt status.

Enhance Enforcement of the Tax Law, with this strategic goal it seems unconscionable to the Tax Professional community that IRS has no apparent plan to go after the “cash” economy. Every taxpayer knows someone, if not multiple someones, who get paid

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in cash and do not report the income. In an increasingly growing period of non-compliance, the impact an outright initiative on this non-compliant segment of the population would bring a wide-spread corrective response to the entire taxpaying public.

To continue to ignore is to breed non-compliance!

Modernize the IRS through its People, Processes, and Technology, certainly the IRS must continue to modernize and through technology and improved processes the challenging task of effective tax administration will be improved, however, IRS managers must be trained to embrace innovation and reward productivity. Mediocrity should not be encouraged. Inefficiency, poor quality and lack of performance should be addressed, counseled and acted upon. Performance reviews should be meaningful and documented. Employees should be challenged with goals and objectives, milestones measured and evaluated and certainly, recognition for a job well-done should be a reward of accomplishment. IRS will not have to measure; the cultural change will be evident.

Additional comments from NSTP members include:

The IRS could offer workshops to Tax Professionals allowing a better understanding of the process of collection and the steps taken by IRS. This would result in the Tax Professional informing taxpayers of the importance of following required steps as well as the consequences they will face for not cooperating with the IRS. Taxpayers are more comfortable speaking with their Tax Professional then with the IRS.

IRS agents should be more clear when speaking with Tax Professionals and avoid being abrupt. We are working together for the same end result, to get the taxpayer to pay the tax liability or to file a tax return.

If the IRS would more readily accept an “Offer in Compromise” by the taxpayer or their representative this would alleviate some 10 to 15 percent of old or past due cases. Far more taxpayers are willing to pay-out amounts due but the IRS has not accepted most of the offers.

Mr. Wagner, the entire NSTP membership thanks you for the opportunity to comment. Realizing the difficult role of the IRS Oversight Board, we appreciate the opportunity to express our opinion and our concern. NSTP feels that we are an important partner in effective tax administration and being a good partner means sharing our concerns.

Sincerely,

Laurie Conner Jarrett

President of the Board of Directors