The Internal Revenue Service has released a set of priorities for its Tax Exempt and Government Entities Division as it tries to turn the page on a scandal involving applications for tax-exempt status by conservative political groups.
The IRS released a
“These are big, broad areas that we’re going to continue to focus on,” she said. “These aren’t projects where they get done and you’re done. These are things that keep happening year after year.”
In the area of continuous improvement, the IRS plans to continue taking advantage of its Lean Six Sigma Office to work on improvements in its programs and processes. “The reason it works so well is that it’s a data driven approach,” said Lough. “It’s a very methodical approach that looks at the data so you’re making objective decisions and you utilize employees in looking at the processes because they know the best.”
She noted that her division set up a team to look at the employee plans determination letter program and as a result they changed a number of administrative processes. Starting in 2017 they will be working on individually designed plan determinations.
“We will no longer be providing determinations on amended individually designed plans so that will mean a heavy lift for our plan folks to get us there along with Counsel and Treasury,” said Lough. “We’re working very closely with them.”
In the second half of 2013 and 2014, her group looked at the application process for Section 501(c)3 tax exemptions and as a result put in place the Form 1023-EZ and a streamlined process for the Form 1023. “It’s a really good thing for taxpayers and our employees,” said Lough.
Her division is also working on machine readable data for the Form 990 information return for tax-exempt organizations. “We have worked very hard to look at that,” said Lough. “All the 990’s that are e-filed, we are committed to putting in machine readable redacted information come January 1, so people can use it to do their research, to look at trends, whatever they like. That process is moving forward very well.”
Knowledge management is also a high priority. “That’s not a project; it’s how we’re going to do business going forward,” said Lough. “That stems from many different things. Not the least of it is the resource issue. We have a huge attrition rate. We have employees in TE/GE and all of the IRS that have lots of experience and they are ready to move on either to retirement or other positions, and sometimes these are positions within the IRS’s other functions. When they leave, we lose a lot of knowledge and skill. So one of the reasons for doing knowledge management is to capture their knowledge and to be able to transfer their experiences and skills and also to be able take advantage of the skills of people who are not in headquarters, for example, employees in the field who have a tremendous amount of experiences and skills who can actually transfer their skills.”
The IRS has created five knowledge networks so far, and will be launching six more in the next month or so, according to Lough. The system will help with consistency so agents in different parts of the country will take similar positions, which will be the official government position, because they will be able to look at the resources in the IRS’s knowledge library.
Accounting Today asked Lough about the impact of the budget cuts on the IRS’s operations and the work of the tax-exempt group. “The budget has affected all of the IRS, not just TE/GE,” she responded. “The employees of the IRS are amazing. They work really hard to meet the mission of the IRS. One of the hardest parts is that they are concerned about how they’re going to do the job for the taxpayers and for compliance. You prioritize what you need to do, as we all do when it comes to funding, whether it’s personal or government. These are things that are going to help us get through attrition, things like knowledge management. Because of the budget cuts we can’t hire. We have to build a knowledge management base. Because of the budget cuts, we have to use data to make good decisions.”
She noted, however, that as IRS commissioner John Kokinen has pointed out, the IRS can’t keep doing more with less. “We have to do less with less, but you’ve got to decide what less you’re going to do,” said Lough. “So we look at the data-driven approaches to see what we can do. We are going to focus on our specific missions. That’s why our work plan is very issue focused. We have to look at noncompliance and try to use data to select returns where we can find noncompliance. While that is very important, we’re going to do some random samples of communities, so we know what the environmental scan is. We just have to do issue-focused exams because we have to use our resources in the best possible manner.”
Lough was also asked about whether the IRS has any plans to deal with the recent controversy over lavish spending by some televangelists, highlighted during a
“We get referrals,” she said. “We see things in the media, and we look at each referral and see what is the risk. We have a committee to look at referrals for certain parts of implementation, and we make a decision based on individual facts and circumstances.” However, an IRS spokesman on the call declined to comment on any specific cases or exams.
