By Simon Eskow

Internal Revenue Service officials said the agency is keeping pace with its reorganization and overhaul mandated by Congress in 1998, while practitioners praised the service for its progress.

Officials and CPAs participated in a panel discussion broadcast on “Tax Talk Today” in January titled “The Restructured IRS: How’s It Going?” While they praised the service’s progress, the participants said the IRS has a long way to go to complete the agency’s obligations under the IRS Revenue and Restructuring Act. The task, they said, hasn’t been easy.

“It’s like trying to fly a 747…at the same time you’re trying to rebuild the engine,” IRS Acting Commissioner Bob Wenzel said. While he couldn’t determine the amount of time it would take to completely overhaul the agency, Wenzel said assessments indicate they are about halfway through the project.

The service has evolved from a large, redundant bureaucracy organized along geographic lines, to a leaner, process-
oriented structure facilitated by a heavy reliance on technology and specialized training. An oversight board that is managing the restructuring of the IRS has relied on the advice of CPAs because of their experience in dealing with the agency in its old and new formats.

“It’s important that we hear from the constituents,” IRS Oversight Board member Steve Nickles said. “And the principle constituents to the board are the practitioners.”

Officials said that one major aspect of the service’s overhaul—the consolidation of submission processing—is “pretty much finished.” Prior to restructuring, the IRS divided the country into 33 districts and serviced taxpayers through 10 processing centers and four regional offices, each with its own management structure. Panelists said this made for inconsistent customer service. Now, the service tackles customer service through four divisions from centralized locations and nationwide reach: the Wage and Investment Operating Division, the Small Business and Self-Employed Operating Division, the Large- and Mid-Sized Business Operating Division, and the Tax-Exempt/Government Entities Operating Division.

“We have most of those changes behind us,” Accounts Management Field Director Deborah S. Decker said.

The reorganization included changes to how practitioners obtain transcripts, employer identification numbers and power of authority, all for the better, the panelists said, but not without problems.

“Practitioners really did suffer last year,” panelist and CPA Larry Gray said. “But it’s like any new program that comes along: there’s going to be bugs in the system. There were bugs in the system, but it’s a very different world.”

The use of Internet and telecommunication technology to automate customer service, hiring CPAs and training employees to specialize, and creating priority hotlines, has helped the IRS streamline customer service and allowed it to put more resources into dealing with more complicated matters.

Techno-files

Officials said the service is halfway to its goal of processing 80 million returns through E-File by the year 2007, and it has created incentives for practitioners to use the online service more.

For example, during a conversation about the 48-hour turnaround for power of attorney, Decker said that practitioners who use E-File frequently will also be able to get power of attorney through the IRS website. Panelists predicted that practitioners will also be able to get employer identification numbers and transcripts directly from the Internet.

Employing telecommunication technology has allowed the IRS to establish a Practitioner Priority hotline to handle tougher problems from tax specialists, like arranging an installment payment. Panelists said that, prior to restructuring, getting inconsistent answers from customer service was a frustrating reality, but that has started to change.

“The old hotline was being used when professionals exhausted all other methods,” Decker said. “This hotline is for all practitioners…it does provide a better service than the small lines around the country did.” The service is now working on improving response time, she said.

To listen to the full broadcast, go to www.taxtalktoday.tv.