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Coronavirus delays IRS reorganization

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The novel coronavirus pandemic is throwing a monkey wrench into plans for the Internal Revenue Service to reorganize itself to provide better taxpayer service, as mandated by the Taxpayer First Act that Congress passed last year.

A new report released Wednesday by the Government Accountability Office found that so far the IRS's planning has only partially or generally reflected the main best practices for reforming an agency. For example, while there is a senior-level team leading the reorganization at the IRS, COVID-19 has delayed the planning for the restructuring. That leaves it unclear right now when or whether other key practices involving outcome-oriented goals and performance measures will be more fully addressed.

There may be some advantages to the status quo, however. For example, one advantage of the current structure, according to several officials interviewed by the GAO, is that over the years the IRS's divisions have developed specialized expertise in various types of taxpayers with similar needs, such as small businesses. Several of the people interviewed for the report think that dealing with some of the IRS's challenges may not require significant changes to the IRS's organizational structure after all. The GAO and others have identified a number of challenges and options to improve the IRS's structure, processes and operations in several areas, including customer service, communication and coordination within the IRS, technology, strategic human capital management and training.

So far, the IRS has made some progress, even though the pandemic is slowing it down. It has established a senior-level team, known as the Taxpayer First Act Office, to lead the reorganization planning. The effort has involved IRS employees and some of the agency’s key stakeholders, including tax professionals, and employed multiple sources of data and evidence to inform its planning. But while the IRS has developed some preliminary goals for its plan, it hasn’t yet finalized and communicated the goals and performance measures for the plan. The IRS has also researched some potential actions it might take to deal with some of the long-standing management challenges at IRS, such as those related to areas of fragmentation, overlap, duplication and high risk that the GAO has identified over the years. Nevertheless, the IRS hasn’t yet decided on the specific actions it will take to address those areas in its plan.

IRS officials told the GAO they intend to take those additional steps, but the pandemic has delayed the completion of its reorganization plan until next month. As a result, according to the GAO, it’s still unclear whether the reorganization plan will include any outcome-oriented goals and performance measures or whether it will identify specific actions to address the long-standing management challenges. Taking such steps could help the IRS identify and achieve the intended outcomes of the reorganization plan, while also identifying some reforms that could create long-term gains in efficiency and effectiveness for the agency.

IRS headquarters in Washington, D.C.

The GAO recommended that the IRS should finalize its goals and performance measures, and identify specific actions to address long-standing management challenges. The IRS said it plans to implement the GAO's recommendations when it submits its final reorganization plan to Congress in December.

“The IRS is dedicated to our mission of helping our nation’s taxpayers understand and meet their tax responsibilities,” wrote IRS commissioner Charles Rettig in response to the report. “We welcome the opportunity provided by the Taxpayer First Act to reimagine how we interact with taxpayers and to rethink the way we operate.”

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IRS Coronavirus GAO Charles "Chuck" Rettig Tax planning