Here are some of the improvements the IRS has made so far:
- Taxpayer problem-solving days. The IRS now provides taxpayers with an opportunity to meet with IRS personnel to resolve complex tax problems on specific days designated by the agency. As of mid-January, IRS employees had met face-to-face with more than 16,200 taxpayers nationwide. In addition, the agency opened district offices on Saturdays during the busiest weekends of the filing season. Rossotti notes that customer satisfaction surveys distributed at one of these Saturday sessions last year indicated that taxpayers were "extraordinarily pleased with the quality of the service they received."
- Better training for IRS personnel. The agency has held several videoconferences with employees to discuss lessons learned from the Senate hearings. It has held focus group interview sessions with more than 2,000 employees to get feedback from them on what they see as barriers to proper treatment of taxpayers and how to improve. According to Rossotti, the IRS is also training its personnel to treat taxpayers "fairly and courteously."
- Doing away with revenue goals. After the Senate hearings, the IRS stopped ranking the 33 district offices and 10 service centers based on revenue and enforcement results. It also no longer issues these kinds of performance goals to regions, districts and service centers. New procedures now require more senior levels of approval for seizures of taxpayer property. (For more on this subject, see "Tax Talk," April.)
Vice President Gore recently announced some IRS initiatives as well, several of which are designed specifically to make life easier for entrepreneurs. One change allows small-business owners to use a system called 941 TeleFile to file their quarterly Form 941 payroll returns via telephone. Similar to the TeleFile system for individual returns, 941 TeleFile is free, paperless and automatically calculates the taxes owed.
In addition, the Pacific Northwest district office in Seattle is serving as the first IRS small-business laboratory. The lab will test new approaches designed to lessen the burden of tax filing for small businesses. If successful, the strategies will be extended nationwide.
Rossotti's plans for the agency's future include a reorganization of its administrative structure to make it more accountable to taxpayers. He hopes to set up four separate units at the IRS, each designed to serve the needs of a particular group of taxpayers.
One unit would be devoted to individual taxpayers with only wage and investment income; another would be for small-business owners, including sole proprietors and small-business corporations; a third unit would cover larger businesses; and the fourth would be devoted to the tax-exempt sector, including employee plans, exempt organizations, and state and local governments.
The IRS estimates that there are about 25 million small-business filers. "This group has much more frequent and complex filing requirements, and pays much more money directly to the IRS, including tax deposits, quarterly employment returns and many other types of income tax returns and schedules," says Rossotti.
Marvin Michelman, director of IRS practice and procedure for the New York City office of Deloitte & Touche LLP, adds, "Creating a structure that is geared toward small business is going to be very helpful because you will have a whole division within the IRS dedicated to helping small-business owners."