Among the themes that IRS Commissioner Doug Shulman has emphasized since his swearing in is the balancing of the agency’s compliance function with its service mission.
Critical to the way the Service performs these tasks, Shulman believes, is its ability to hire and retain the best talent available, while remaining independent of the political whirlwinds from all sides.
He reflected on these and other issues faced by the IRS in a recent conversation. Following are some of his insights; the full interview will appear in the December issue of Accounting Today. An earlier excerpt from the interview appeared last week (see IRS Commissioner Doug Shulman Wants a Real-Time Tax System).
Do you feel that the five-year term for the commissioner is working to keep politics out of the job?
Shulman: I don’t think there’s politics in the IRS, but I don’t think that the [five-year] term is the reason that politics are kept out of the IRS. It’s really a core value of this agency, and one which I emphasize that this is a nonpartisan, nonpolitical agency. And I must tell you that since I’ve been here, people in the Administration and in Congress have been very respectful of our independence, very respectful that we’re outside of the political fray, and recognize that we are here to administer the Tax Code in a fair and evenhanded manner. I think the reason for the term is continuity of leadership, so that there’s enough time for a leader to set strategy, set plans to execute that strategy, and then see the plan through. I think Congress, when it set the term, realized that stable management is incredibly important for one of the world’s largest financial services organizations, which the IRS is.
There have been and continue to be many suggestions on what the IRS can do to help close the tax gap. IRS matching programs have proved to be an effective tool to increase compliance and therefore help close the tax gap. However, some people in the small business community are concerned that the new merchant card reporting program and the IRS’s attempt to operate a matching program will add additional burdens to the small business owner. How concerned are you about the balance between taxpayer burden and closing the tax gap?
Shulman: I’ve been very clear since my first day on the job that we have a service mission and we have a compliance mission and that it’s not an “either/or” proposition. Our tax system is set up to be a voluntary compliance system. The vast majority of individuals and businesses play by the rules and are just trying to pay the right amount of taxes, not more than they owe but not less than they owe, and get on with their business. For the people who play by the rules, we need to give them world-class service, we need to educate them, we need to make sure we’re as seamless and easy to deal with as possible. But those same people who play by the rules expect us to run compliance programs to ensure that everybody pays their fair share, so I think our job is to use our compliance resources judiciously. Information reporting is a key tool that Congress has given us. I think Congress has made the calculation that this information reporting you talked about would be useful for compliance purposes and the burden wouldn’t be too high. Now we’re always going to be conscious of burden while I’m commissioner. On balance, Congress made the decision that we should have this information reporting authority and we’re going to use it judiciously.
The IRS is facing a potentially serious brain drain over the next few years. How do you plan to deal with this at the management level and in positions where experience is critical? Will you try and recruit special skills and knowledge at the executive level that may exist currently outside of government? If so how do you find and recruit these people?
Shulman: As a leader, I believe that the agency or any organization that I run is only going to be as good as its people. That’s why the first thing I did when I arrived, was create the Workforce of Tomorrow task force, with the stated goal of making the IRS the best place to work in government. From 2008 till 2010, the IRS saw the biggest gain of any large government agency in the Best Places to Work in Government survey, which is administered government wide. I think the reason for that is that our senior leadership has been laser-focused on making sure that our people’s skills are used to the fullest extent possible, that people understand how their job contributes to the mission, that managers provide value everyday and feedback to their employees, that they give career paths to their good employees, that they either remedy or move out their poor performers, and that we keep a focus on these people issues. I view it as one of the most important things, if not the most important, that I can do during my term is to make sure that I leave the IRS with a cadre of future leaders ready to take on the challenges of the next 5, 10, 20 years in the tax system. I’m very hands-on and engaged with developing our future leaders, the majority of which have come from inside the agency, but we also selectively bring in people with core skills from outside the agency. At the end of the day, Roger, I don’t think this is rocket science. It’s like with many things: what you focus on is where you’ll get results. We’ve been focused on developing leaders since the day I arrived here, and I think that has put us in good shape for the years to come.
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