IRS On its own mind

IRS Principal Deputy Commissioner Danny Werfel recently issued a report outlining

new actions and next steps to fix problems uncovered with the IRS’ review of tax-exempt

applications and improve the wider processes and operations in place at the IRS.

The three-part report covers a wide range of areas Werfel and his leadership team examined

during the past month. The report cites actions to hold management accountable

and identifies immediate steps to help put the process for approving tax-exempt applications

back on track. Werfel also outlines actions needed to protect and improve wider IRS

operations, ranging from compliance areas to taxpayer service.

“It is critical that the IRS takes steps to ensure accountability, address the problems uncovered

in recent weeks and improve the operations of the IRS to continue to carry out

our critical mission on behalf of the public,” Werfel said. “We have made a number of

changes already. More are in the works and even more will develop as we move forward.”

The initial IRS review shows no signs of intentional wrongdoing by IRS personnel or

involvement by parties outside the IRS in the activities described in the recent Treasury

Inspector General for Tax Administration (TIGTA) report. However, the report notes that

investigations are ongoing, and that the IRS is committed to a full fact-finding effort to

provide the public answers to these and other important questions.

“The IRS is committed to correcting its mistakes, holding people accountable, and establishing

control elements that will help us mitigate the risks we face,” Werfel said. “This

report is a critical first step in the process of restoring trust in this critical institution. We

have more work in front of us, but we believe we are on the right track to move forward.”

Werfel’s report, titled “Charting a Path Forward at the IRS: Initial Assessment and Plan of

Action,” covers three primary areas:

Accountability. This covers the steps being taken to ensure accountability for the mismanagement

described in the TIGTA report:

• The report finds that significant management and judgment failures occurred, as outlined

in the TIGTA report. These contributed to the inappropriate treatment of taxpayers

applying for tax-exempt status.

• To address this, new leadership has been installed across all five executive management

levels involved in the chain of command connected to these matters. In addition,

the IRS has empanelled an Accountability Review Board to provide recommendations

within 60 days (and later as needed) on any additional personnel actions that should be

taken.

© 2013 Tax Materials, Inc. TheTaxBook News 2

Fixing the problems with the review of applications for tax-exempt status. This part

covers several process improvements underway to ensure that taxpayers are treated appropriately

and effectively in the review of applications for tax-exempt status:

• The report outlines a new voluntary process to help certain applicants gain fast-track

approval to operate as a 501(c)(4) tax-exempt entity if they are being reviewed for advocacy

questions and have been in our application backlog for more than 120 days. This

self-certification process allows them a streamlined path to tax-exempt status if they

certify they will operate within specified limits and thresholds of political and social

welfare activities. In addition, the IRS has added new technical and program staff to

assist with reviewing 501(c)(4) applications.

• The IRS also suspended the use of any “be-on-the-lookout,” or BOLO lists in the application

process for tax-exempt status.

Review of IRS operations and risks. The report identifies a series of actions to ensure

taxpayers that selection criteria across the IRS is appropriate and that taxpayers are

aware of how they can seek assistance if they have concerns about the IRS. The report further

outlines steps underway to ensure that critical program or operational risks within

the IRS are identified early, raised to the right decision-makers and shared timely with

key stakeholders:

• The report calls for establishing an Enterprise Risk Management Program to provide

a common framework for capturing, reporting and addressing risk areas across the

IRS. This will improve timeliness in bringing information to the attention of the IRS

Commissioner and other IRS leaders as well as key stakeholders to help prevent future

instances of inappropriate treatment or mismanagement.

• Although there is no current evidence that selection criteria in other IRS organizations

is inappropriate, the nature of the problems identified in the tax-exempt application

process warrants a review of certain process controls within the IRS. The IRS will initiate

a comprehensive, agency-wide review of compliance selection criteria. Results will

be shared with the Department of the Treasury, the IRS Oversight Board, and the Chairpersons

of the House Ways and Means Committee and the Senate Finance Committee.

• The IRS will initiate additional internal and external education and outreach about the

role of the National Taxpayer Advocate in assisting taxpayers in resolving problems

they encounter with the IRS.

In addition to posting the report on www.IRS.gov, the IRS will regularly update the progress

made on the TIGTA report’s recommendations and provide other developments

related to this effort.

Internal Revenue Service on my mind

Folks,
    With a tax practice that keeps on growing , it is almost inevitable that there will be interplay with the Internal Revenue Service. when the whole brouhaha came to the fore earlier this summer regarding the picking of certain non-profit organizations to target I heard the public foaming from the mouth with venom against the Internal Revenue Service employees and Whats more, I watched as the Congress was huntinmg down these people to target them for a burning at the stake. Well, I thought to myself how hippocritical and surreal thios whole scene  really is. The Internal Revenue Service  agents are employees of an agency whose sole responsibility is to go out and collect thew taxes for the government so that this country may continue to function. They are asked to see to it that the taxpayers are adhering to the tax law that is in existence. These tax laws or rulings which constitute the Internal Revenue Code were enacted by the same Congress that is looking to lynch the IRS for working within these congress enacted rules. So, this is hippocrisy at its best. Sure, there are problems with the Internal Revenue SErvice, I run across problems all the time. But, for petes sake, these are people like you and me. Have some respect, and realize that the Internal Revenue Service is the ONLY arm of the government that ever collects money. All the rest just spend spend spend!!!

Independent Contractor vs Employee

There is a buzz in the air of tax land about the mistaken choice that many often make regarding the treatment of themselves as independent contractors working for companies when they should really be treated as employees by those companies. Please be aware that the Internal Revenue Service really has devoted a lot of manpower to uncover this faulty practice and know that there are whole departments in the Internal Revenue Service offices in various localities around the United States specifically dealing with this.
If you might feel that it is easier for the people working for you to pay their own taxes because you don't wish to have to deduct and pay payroll taxes, the Internal Revenue Service has eased that situation by imposing the compulsory enrollment in the EFTPS process. You don't have to do anything any more other than just pick up the phone, and phone in what the payroll tax deposit will be and the IRS will simply withdraw the funds from your business account.