Taxpayer Bill of Rights  

Press Release # 105-277-1

Outline of Chairman Roth's IRS Restructuring Mark

I. Restructuring and Establishment of an IRS Board

A. Statutory Language -Organizational Structure

1. Direct the Commissioner of Internal Revenue to restructure the IRS by eliminating the three-tier (nation/region/district) structure and replacing current geographically based organizational units with operating units serving particular groups of taxpayers with similar needs.

2. Direct the IRS to revise its mission statement to provide greater emphasis on serving the needs of taxpayers.

B. Establish an IRS Board

1. Generally follow the House bill which would create a Board to oversee the management and operations of the IRS. As in the House bill, the Board would be authorized to review and approve strategic plans, the Commissioner's plan for major reorganization, and the Commissioner's budget request, etc.

2. The Board would be composed of the Commissioner and 6 "private-life" experts in certain fields. As in the House bill, the Chairman of the Board would be a "private-life" member and serve a 2 year term. The Board shall be part-time and have an independent staff.

3. The "private-life" experts will be subject to the same conflict-of-interest restrictions as other employees who provide limited services to the Government. In addition, the "private-life" experts will not be allowed to represent parties on any matter before the Board or the IRS during their term. Nor can the "private-life" experts represent any party on tax related matters before the Treasury. As in the House bill, the "private life" experts will be subject to (a) the public financial disclosure rules and (b) the 1-year post-employment restriction.

4. In addition to the responsibilities provided in the House bill, the Board must ensure that the IRS has proper procedures in effect to carry out its mission. The Board will have "big picture" authority over IRS law enforcement and collection activities. It will have limited 6103 authority with the ability to receive information (including unredacted reports) prepared by the Treasury Inspector General or made available by the Commissioner. The Board shall not intervene or be involved in particular taxpayer matters or individual personnel matters. Board members would be subject to the same "browsing" rules as other IRS employees.

5. If the Board identifies a potential problem, it may request the Inspector General to investigate and report. The Board may receive unredacted reports that may include 6103 information. The Board will review the Commissioner's policies to address issues. If the IRS fails to fix a problem identified by the Board, the Board shall consult the chairmen of the tax writing committees.

6. The Board shall provide the Secretary of Treasury with 3 candidates for the position of Taxpayer Advocate. The Taxpayer Advocate will report to the Commissioner and the Board.

7. The Treasury Inspector General shall report to the Secretary and to the Board as to IRS matters.

8. The Board will sunset on September 30, 2008.

9. The Board shall consult with employee representatives relating to board issues concerning affected employees.


A. Commissioner of Internal Revenue (House bill)

Establish a 5-year term for the Commissioner and require the Secretary of Treasury to notify Congress of any change of authority delegated to the IRS Commissioner.

B. Require the IRS Chief Counsel to Report to the Commissioner

Require the IRS Chief Counsel to report to the Commissioner rather than to the Treasury General Counsel. The Chief Counsel's powers and duties would not change unless the Secretary provides notice to Congress. The Chief Counsel would represent the IRS but would not have any tax policy authority.

C. Structure of Employee Plans & Exempt Organizations ("EP&EO" Division) (House bill)

Retain the Office of EP&EO and expand its responsibilities to include nonqualified deferred compensation arrangements. Consistent with current practice, appropriate funding would be subject to Congressional appropriations.

D. Taxpayer Advocate

1. Establish an independent Taxpayer Advocate modeled after Senator Breaux's bill (S.1308). The Taxpayer Advocate will be selected by the Secretary of Treasury from 3 candidates recommended by the Board. Candidates may include IRS employees. The Taxpayer Advocate may not be employed by the IRS within 2 years before and 5 years after working in the Office of Taxpayer Advocate.

2. Revise the Taxpayer Advocate's responsibilities and reporting requirements (e.g., providing line authority over local taxpayer advocates who will be more independent from the IRS).

3. The shall be at least one local taxpayer advocate in each state.

III.Transfer IRS Office of Chief Inspector Function to Treasury Inspector General

A. Transfer approximately 900 FTEs from IRS Internal Security and portions of Internal Audit to the Treasury Inspector General. The Commissioner will retain an appropriate number of internal auditors for management matters. At least 900 of the approximately 1200 Treasury Inspector General FTEs must be dedicated to IRS matters.

B. The Treasury Inspector General will be appointed by the President and confirmed by the Senate. In addition to the standard qualifications for an Inspector General (e.g., appointed solely on the basis of integrity and demonstrated successful ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations), the Treasury Inspector General should have experience in tax administration and the demonstrated ability to lead a significant organization.

C. The Treasury Inspector General, Deputy Inspector General, and two Assistant Deputies (Auditing and Inspection) may not be employed by the IRS within 2 years before and 5 years after working at the Treasury Inspector General's office.

D. The Treasury Inspector General must have access to tax return and return information.

E. Congress must be notified if the Secretary interferes with an ongoing investigation.

F. In addition to standard reporting requirements the Treasury Inspector General should be responsible for reporting:

1. The number of taxpayer complaints during the period;

2. The number of employee misconduct and taxpayer abuse allegations received during the period from taxpayers, IRS employees, and other sources;

3. The current status of each complaint and allegation;

4. The disposition of each complaint including the outcome of any Justice Department action and any monies paid to settle suits; and

5. Whether restrictions on the use of enforcement statistics to evaluate IRS employees are being followed and that required procedures to protect taxpayer rights during collection enforcement actions are being followed.

G. The Commissioner of Internal Revenue may request the Treasury Inspector General to conduct investigations and audits. The Treasury Inspector General shall timely comply and respond to the Commissioner's requests.

H. The Treasury Inspector General shall make it a priority to ensure the security and integrity of the IRS computer systems (e.g., detection and prevention of fraud, unauthorized access, or abuse).

IV. Prohibition on Executive Branch Influence over Audits and Personnel Flexibilities

A. Prohibition on Executive Branch Influence Over Taxpayer Audits (House bill)

Prohibit high level Executive Branch Officials (subject to certain exceptions) from requesting the IRS to conduct or terminate an audit or investigation of any particular taxpayer.

B. IRS Personnel Flexibilities

Provide personnel tools that will enable the Commissioner to reorganize the IRS.

1. Flexibilities for Senior Management, Professional and Technical Positions

In order to give the IRS commissioner the ability to bring the type of executives to the IRS that he feels is necessary to effect the change in the organization, there would need to be changes in the current personnel programs. Currently, the number of employees the Commissioner can appoint and the pay and other remuneration that can be given to these employees is limited. For example, the Commissioner can only appoint three individuals to senior positions who are not IRS career service employees. These changes would be as follows:

a. Give the IRS Commissioner the authority to fill senior executive service positions which were reserved for IRS career service employees with limited or temporary appointments of individuals who have not had a career with the IRS. These individuals would have time limits on their employment of up to three years (which could be extended). It is anticipated that these type of employees would be brought into the IRS to perform specific functions and then return to the private sector.

b. Provide that the Treasury Secretary may appoint up to 40 senior executives with technical, professional and management expertise at pay levels not in excess of the compensation of the Vice President without approval of the OPM and OMB. In addition, the Treasury Secretary may appoint individuals to critical positions other than those established under the streamlined authority for senior executives at pay levels not in excess of the compensation of the Vice President, with the approval of OMB. The recruitment, retention, and relocation incentives that the IRS can provide for these type of senior executives would be expanded, subject to the approval of the OPM.

c. As part of the return to a service-oriented culture and to reward these new critical executives for attaining specified performance results, the IRS will be given the authority to provide for variable compensation (i.e., bonuses) in excess of amounts currently allowed for up to 25 senior IRS executives. Any variable compensation award in excess of 20% of basic pay would have to be approved by the Treasury Secretary. In addition, the amount of the award when combined with other compensation of an individual cannot exceed the compensation of the Vice President

2. Flexibilities for the General Workforce

a. Extend the voluntary separation incentive pay program that ended December 31, 1997 to December 31, 2002.

b. Establish streamlined demonstration authority to establish new human resource programs within a specified time period. The streamlining eliminates or shortens some of the waiting periods and comment periods that are usually applicable with demonstration projects. The demonstration project will be subject to the review of the OPM.

c. As the IRS decreases the levels of management in its organization, the traditional ways of rewarding superior performers by giving them higher management authority (along with commensurate pay increases) will not be as available as before. The Treasury Secretary is given the authority (subject to criteria established by the OPM) to restructure employee pay rates in connection with implementing a broad banded employee pay system which will provide for increases in pay based on increases in job competencies, but without the need for moving to a higher level of management. This will be different from the current government pay and grading system.

d. The Treasury Secretary may establish a new performance management system, developing individual accountability for performance reviews. In conjunction with this new performance review system, the Treasury Secretary may also establish a new incentive awards program which awards up to $25,000 without OPM approval.

3. Any of the personnel flexibilities that affect employees represented by a union must be agreed to between the IRS and the union. If the union and the IRS cannot agree, then the matter will be brought before the Federal Impasse Panel for resolution.

4. Tentative Government Affairs Committee Recommendations

The Government Affairs Committee generally approves the personnel flexibility changes discussed above. However, they suggest a number of changes:

a. All the personnel flexibility changes that are discussed above should be included in a demonstration project. This would mean that prior to implementing these changes, there would be notification of the each House of Congress and to the employees likely to be affected by the change.

A demonstration project would normally last 5 years and a decision would be made at that point whether to make the demonstration project official or whether to cancel these changes. It is also possible for the Treasury and the OPM to terminate the demonstration project during its term.

b. They propose limitations on extensions of the voluntary incentive pay program so that payments are made only if actual employee headcount reductions are made.

c. With regard to broad banding pay policies discussed above, they recommend that cost controls be established in the implementation plan.

d. Finally, they believe that the personnel flexibility measures concerning incentive awards and recruitment, retention and relocation bonuses should be instituted government wide. Streamlined demonstration authority should also be available government wide.

5. Require the IRS to develop employee performance measures that favor taxpayer service.

6. Require the IRS to terminate an employee if any of the following conduct relating to the employees official duties is proven in a disciplinary or other proceeding:

a. Failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer's home, personal belongings, or business assets.

b. Perjury (e.g., false testimony in a taxpayer's case, failure to provide truthful information in the course of a criminal investigation, or false information in a deposition or affidavit)

c. Falsifying or destroying documents concerning a particular taxpayer to cover-up employee mistakes.

d. Assault or battery on a taxpayer or other IRS employee.

e. Violation of the civil rights of a taxpayer or other IRS employee.

f. Violation of the Internal Revenue Code, Treasury Regulations, or policies of the IRS (including the Internal Revenue Manual) for the purpose of retaliating or harassing a taxpayer or other IRS employee.

The Commissioner of Internal Revenue would have the non-delegable authority to consider mitigating factors that, in the Commissioner sole discretion, mitigate against terminating the employee. The Treasury Inspector General must track the instances of employee termination as well as instances where the employee is not terminated because the Commissioner believed there were mitigating circumstances.

V. Electronic Filing

A. Include the House proposal providing that paperless filing should be preferred and that by 2007, it should be a goal to have no more than 20% of all tax and information returns filed on paper. The Secretary would be required to establish an electronic commerce advisory group (which would report to Congress) and establish a plan to meet this paperless filing goal.

B. Include the House provision extending from February 28th to March 31st, the time for electronically filing information returns.

C. Include the House provision requiring the Secretary of Treasury to develop an alternative to written signatures. This proposal will enhance electronic filing. However, this proposal would delete the presumption that an unsigned return (absent an alternative authorized by the IRS) would be presumed to be signed for criminal and civil purposes.

D. Include the House provision requiring the Secretary to develop procedures to implement a return free tax system for appropriate individuals for tax years beginning after 2007. Treasury must report on its progress.

E. Include the House provision which requires the Secretary to develop by 2007 procedures to allow taxpayers to review their account electronically if proper safeguards are established.

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