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Wednesday December 13, 2017

Washington News

Washington Hotline

Two Visions for IRS Future

At the close of this year, IRS Commissioner John Koskinen and National Taxpayer Advocate Nina Olson both outlined their visions for the future of the IRS.

Koskinen has experience as a manager of private and public turnarounds. He has sought to change the IRS to make it function like a large financial services company. In his view, this change will be beneficial, although it will inevitably require a much higher focus on online services.

Nina Olson has been the Taxpayer Advocate for the past 15 years. She warns that Koskinen's concept is a significant change in how the IRS functions. There will be less focus on personal service for taxpayers with the change to a preference for online services.

Olson stated, "I view the Future State vison - which the IRS says is a response to the funding, as well as something they should be doing anyway because they are trying to move into the 21st century ... as a radical restructuring of the relationship between the taxpayer and the tax system. It has such import that if we don't start talking about it now, by the time it is actually implemented it will be too late."

The IRS responded to Olson's statement by noting, "The National Taxpayer Advocate's Report does not paint a full picture of these evolving Future State efforts. The Advocate seems to want the IRS to continue to do business the way we did ten years ago. Our Future State work is fueled by taxpayer demand for new and different options for getting services, including expanding secure online options."

This transition by the IRS will require some specific changes. Commissioner Koskinen noted, "We have to make sure that we are not locked in and are not able to adjust to either additional thoughts from employees or stakeholders or changes in the way the digital world operates."
  1. Education - The tax system is complex. Many taxpayers need personal IRS advice. It may require taxpayer education to use an automated system to obtain tax advice.
  2. Human Support - Even if the IRS improves its computers with "natural language" capability to answer questions, there are many taxpayers who still will need personal help.
  3. MySocialSecurity - The Social Security Administration experience suggests some caution. It attempted to increase the security on the "MySocialSecurity" accounts by requiring a text to be sent to your cell phone. Over 40% of seniors could not use this system and it required major staff efforts by the Social Security Administration to correct the situation.
House Ways and Means Chairman Kevin Brady (R-TX) indicates that the Republicans are planning to "redesign" the IRS during 2017.

Editor's Note: There will be a major effort by Chairman Brady to pass tax reform by the middle of 2017. Comprehensive tax reform will be a huge undertaking. It seems likely that this change in the structure of the IRS will be delayed until tax reform is completed. Nevertheless, the need for the IRS to offer good services more efficiently will be likely to force more and more future activity online.

Published December 30, 2016
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