A fully functioning Internal Revenue Service is critical to the success of the United States.
That assessment comes from IRS Commissioner Charles Rettig. It's not just a personal view, but part of Rettig's official opening message in the agency's just-released Strategic Plan for Fiscal Years 2022-2026.
To get to that point, the report says the IRS' goal must be "putting the interests of our taxpayers first in everything we do."
I know. Cynics are clicking away right now. The IRS hasn't had the best record here. To be the agency's devil's advocate — or, as a reader once described me, "tool of the government" — lack of funding hasn't helped. Neither has the COVID-19 pandemic, which created new challenges and duties for the IRS.
So I am cutting Rettig and the rest of the IRS some slack. At least by setting a goal, there's hope that some positive taxpayer centric changes might at least get underway.
The IRS' five-year strategic plan issued today (July 20) is that first step of the proverbial 1,000-mile journey.
Here's an overview of the four goals detailed in the 26-page document, officially IRS Publication 3744 in the agency's online document library.
Goal 1: Service. Provide quality and accessible services to enhance the taxpayer experience.
The growth of the United States is reflected in the increasingly diverse taxpayer world. And the IRS is struggling to catch up here. "Many historically underserved community populations are growing, yet still do not receive the same resources and opportunities as other communities," notes the strategic plan. Communities that, in the words of the IRS plan, need "additional equitable support" include minority and immigrant populations, taxpayers with disabilities, Native American communities, the elderly, the unhoused, and veterans.
One way to improve and increase taxpayer service, according to the plan, is increasing digital services. It notes that taxpayers and practitioners increasingly expect more online government services that incorporate new interactive features, like chatbots and personalized online applications, similar to those provided by banks and other private sector organizations.
However, the plan also notes the challenges in this area, acknowledging that "the IRS maintains a low appetite for activities that endanger taxpayer privacy or put taxpayer data at risk." This means the agency must work to provide service options with safeguards to protect data and privacy, while simultaneously finding new ways to address the needs of underserved and multilingual communities.
Goal 2: Enforcement. Enforce the tax law fairly and efficiently to increase voluntary compliance and narrow the tax gap.
"Taxpayers deserve to know that all taxpayers are accountable to the same tax laws and pay their fair share." That IRS plan statement is one where law-abiding, but increasingly frustrated taxpayers, and the tax agency agree.
However, notes the plan, IRS enforcement resources, those activities that we taxpayers tend to associate with criminal investigations and audits, have declined over the years (more on part of this in Goal 3). Add to that the year-over-year increase in the agency's workload, exacerbated recently by new tax laws via COVID-19 related relief. Then there are the changing expectations for digital accounts. All this has complicated IRS efforts to combat criminal fraud and tax evasion, address other noncompliance through civil enforcement processes, and provide helpful taxpayer guidance.
To get through these challenges, the plan says the IRS will continue "to enhance its enforcement capabilities and strategies to efficiently identify, prioritize and respond to non-compliance, including becoming more vigilant and responsive to noncompliance methods as they evolve." To this end, the agency adds that it is "willing to explore innovative and assertive measures to combat emerging fraud schemes where risk may exist."
Goal 3: People. Foster an inclusive, diverse and well-equipped workforce and strengthen relationships with our external partners.
One of the biggest challenges facing the IRS in this goal area is the agency's aging workforce. The plan notes that an estimated 52,000 of 83,000 are eligible to retire or resign within the next six years. The average attrition rate for federal agencies is 5.8 percent, whereas the IRS's is 7.3 percent.
"The IRS is implementing recruitment and succession planning strategies to mitigate these effects while working with congressional leadership to provide consistent funding and support for federal hiring initiatives," says the plan. The plan also calls for potential expansion of the IRS' trusted partner network, so that it can "be agile and flexible in the delivery of our mission."
Goal 4: Transformation. IRS operations to become more resilient, agile and responsive to improve the taxpayer experience and narrow the tax gap.
This goal highlights a long-standing goal of the IRS, the overdue modernization of its hardware, software, and approaches. Like many large, federal agencies, the plan notes, "The IRS has a low appetite for transformation initiatives where organizational synergies and emerging technologies are not developed, there isn't a clear benefit to IRS employees and/or the taxpayer experience or where costs outweigh benefits."
That said, the agency's five-year plan also points out that to meet all its goals and implement the overall IRS mission, the agency "must transform as an organization to keep pace with a rapidly changing world. Our transformation journey includes organizational redesign, modernization efforts, technological innovation and integrated data management capabilities We are open to exploring innovations that improve processes and lead to secure, sustainable and resilient solutions."
Just a start: Again, I hear all y'all cynical taxpayers and tax professionals. Talk is cheap, and changing the IRS is neither cheap nor easy.
And yes, this strategic plan does appear in many regards to be performative. In fact, as I was reading it, I immediately picked up on terms that, based on my years of working for Uncle Sam and private employers, are perfect for drinking games and/or buzzword bingo.
But this blueprint, a vision board of sorts, at least acknowledges the challenges facing the IRS — and taxpayers — as the agency moves toward these goals.
While that happens, or at least starts, let me pull out a buzzword that's been overused, especially as taxes and the coronavirus collided, but is always applicable in the tax world: Patience.
You also might find these items of interest:
- Former IRS execs say they know how to close Tax Gap
- House appropriations panel OKs $13.6 billion for IRS in FY23
- IRS approves some fake charities. What's a donor to do now?