2.0 EXECUTIVE SUMMARY

The IRS operates at an unparalleled level of scale and complexity. We aim to provide America’s taxpayers top-quality service by helping them understand, enable them to voluntarily comply, and meet their tax responsibilities while enforcing the law with integrity and fairness to all. In FY2019, the IRS collected more than $3.56 trillion in gross taxes and issued almost 122 million refunds ¹ - all amounting to more than $452 billion in tax refunds. All of this is possible because of our workforce; the approximately 75,000 dedicated public servants that take pride in serving taxpayers and their country.

This report describes how we can transform the IRS into a modern, efficient, and taxpayercentric centered agency. One that is easily accessible for all taxpayers, including traditionally underserved communities. The report outlines three strategies that build upon one another: Taxpayer Experience, Training and Organizational Redesign. Our Taxpayer Experience, Training, and Organizational Redesign Strategies will re-shape the IRS into a nimbler enterprise, readily capable of taking advantage of emerging technology. These strategies are built upon the exceptional work the IRS is already doing, but in many other ways, they are aspirational. We intend for the strategies described in this report to reimagine the taxpayer experience. Our strategies will guide our future strategic planning efforts and we will continue to coordinate across the agency to align on new initiatives. We will leverage the Taxpayer First Act strategies to inform our FY2022-2026 Strategic Plan. While the strategies are flexible enough to adjust to budget realities, delivering the type of experience American taxpayers expect and deserve will require funding.

Scope of the Report With 45 provisions, the Taxpayer First Act reflects a wide-ranging effort to improve IRS operations. As described below, this report addresses the Act’s three most-sweeping provisions related to taxpayer service (Section 1101), employee training (Section 2402) and organizational structure (Section 1302). ² Each of these provisions mandates a report to the Congress.

1 IRS 2019 Data Book.

2 Unless otherwise specified, all Section references herein are to the Taxpayer First Act of 2019, Pub. Law No. 116-25, 133 Stat. 981 (2019). See Appendix 9.3 for more information about the other TFA provisions, many of which have already been implemented.

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2.0 | EXECUTIVE SUMMARY

• Section 1101, Comprehensive Customer Service Strategy, requires the IRS to develop a comprehensive customer service strategy that includes best practices similar to those provided by private industry to meet taxpayers’ reasonable expectations, including expanded online services, telephone callback services and employee training. The provision also requires us to assess opportunities to co-locate services with other Federal agencies. Importantly, Section 1101 requires that we identify short-term (one to two years), mid-term (three to five years) and long-term (ten years) goals and to develop metrics for measuring our progress. ³

  • Section 2402, Comprehensive Training Strategy, directs the IRS to create a comprehensive training strategy to streamline and improve our current training processes, technology and funding. Under this provision, our strategy must include annual training on taxpayer rights with a focus on ensuring that employees can resolve taxpayer issues early, fairly and efficiently. Our strategy must also ensure consistent skill development and employee evaluations throughout the IRS.

  • Section 1302, Modernization of IRS Organizational Structure, mandates the IRS develop an organizational redesign strategy that prioritizes the taxpayer experience to ensure taxpayers can easily and readily receive the help they need. The strategy will also streamline the structure of the organization and best position the IRS to combat cybersecurity and other threats. Finally, Section 1302 requires us to specifically address whether the current IRS Criminal Investigation Division should report directly to the Commissioner. Rather than prescribing a particular outcome, Section 1302 gives the IRS the flexibility to determine what type of organizational structure would best serve taxpayers.

We consolidated the reports required by Sections 1101, 2402 and 1302, because we believe our Taxpayer Experience, Training and Organizational Redesign Strategies are inextricably linked. Well-trained employees provide excellent taxpayer service, and a streamlined organizational structure makes it easier for taxpayers and employees to navigate the agency and get help when they need it.

Our three strategies represent the IRS’s vision and bring the intent of the TFA to life. Implementation of the other 42 TFA provisions complements our three strategies. Together, they will bring a game-changing focus to the agency and our workforce.

3 Throughout this report, we use the terms “taxpayer” and “customer” interchangeably. We also refer to the strategy developed under Section 1101 as our Taxpayer Experience Strategy, because the “experience” is the sum of all interactions and includes every touchpoint with a product or service.

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The Three Strategies To develop our strategies, we conducted in-depth research and devoted months to engaging with a wide array of stakeholders. We listened carefully with an emphasis on lessons learned and we strongly considered prior recommendations from our oversight partners. ⁴ As a part of our development process, we developed three overarching goals:

• Enhance the taxpayer experience

• Enhance the employee experience

• Improve operational efficiencies

Our report further details the objectives and measures that we will use to meet these three goals.

Taxpayer Experience Strategy The taxpayer experience goes beyond “customer service” to solve a problem. It encompasses all taxpayer transactions with the IRS across our service, compliance, and other program areas throughout their lifetime of interactions with the organization.

In addition to helping individual and business taxpayers meet their responsibilities and providing services to the tax professionals who represent them, the IRS devotes significant resources to meeting the special needs of tax-exempt organizations, employee retirement plans and government entities in complying with tax laws. These entities, though exempt from federal income tax, rely on IRS services and represent a significant aspect of tax administration.

4 Section 3.0 and Section 9.4 provide detailed descriptions of our outreach and research.

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With this in mind, we set out to develop a holistic strategy to meet the needs of all taxpayers and other entities that rely on the IRS for information and services. Reflecting both near-term and long-term goals, our Taxpayer Experience Strategy consists of six components:

• Expanded Digital Services to provide self-service channels by building on existing online

accounts and introducing online accounts for tax professionals and business taxpayers.

• Seamless Experience to guide taxpayers to the resources and communication channels

that will resolve their issues.

• Proactive Outreach and Education to educate taxpayers by providing information at the

time, in the language, and by the method they prefer through applying behavioral insights, using new technology, and continuing to use and expand upon our trusted partnerships.

• Focused Strategies for Reaching Underserved Communities to consolidate programs

that engage with these communities to address communication, education, transparency, trust, and other constraints some face in accessing information and services.

• Community of Partners to establish, guide and facilitate a collaborative and interactive

network of partnerships across and beyond tax administration – including the public, private and non-profit sectors – to share best practices and amplify our ability to reach taxpayers with the information they need.

• Enterprise Data Management and Advanced Analytics to develop a data management

strategy that includes an agency-wide understanding of the taxpayer experience, emerging needs and expectations, and operational data.

We will develop capabilities that are scalable across all taxpayer segments – including individuals, domestic and international businesses, tax exempt organizations, governmental entities, as well as our private industry partners and other communities. In this report, we present estimated timelines (1-2, 3-5, and 10 years), high-level costing, and measures of success for each component.

Implementing our Taxpayer Experience Strategy will give taxpayers the information they need to understand and comply with their taxes. Furthermore, taxpayers will know their feedback has been heard. As a result, taxpayers should have more confidence and trust in the IRS.

Section 4 of this report provides a detailed description of the Taxpayer Experience Strategy.

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Training Strategy With approximately 75,000 IRS employees assigned to over 500 offices across the nation, training has never been easy. Effective training and development improves employee productivity, overall job satisfaction and commitment. Additionally, it reduces employee turnover, decreases costly errors and increases overall quality of work.

Our Training Strategy will strive to improve upon existing training and employee development efforts and our unified approach will enable training to be more relevant and holistic for employees. We will enhance training technology and integrate additional technological tools to improve the employee training experience. We will build on previous efforts to develop this Service-wide approach and include new taxpayer-service concepts into our curriculum. This strategy includes five components:

• IRS University to serve as an innovative, centralized learning function to improve training

and encourage collaboration across the organization. The University will build on and unify our training and development communities and will feature four academies (Taxpayer Service, Tax Administration, Information Technology (IT) and Operations Management, and Leadership) to organize training curricula around structured yet flexible career paths.

• Taxpayer-First Training to equip all employees with a working knowledge of our Taxpayer

Experience Strategy, Taxpayer Rights and organizational awareness through a standardized curriculum, while encouraging professionalism, effective communication and empathy. The IRS will also emphasize training on civility, inclusive behaviors, cultural competency, taxpayer rights and multi-language access. We will integrate new taxpayer-service concepts into current training to ensure employees are well equipped to solve taxpayer issues.

• Continuous Learning for All Employees to build on our efforts to provide ongoing

professional training for employees from the first day on the job throughout their entire career with the organization. A fully realized continuous learning environment will equip employees to perform their current role, develop higher levels of technical expertise along a career path and support the acquisition of portable skills to allow employees to change roles within the IRS.

• Improving Technology to create accessible, high-quality and effective training programs

to optimize the employee training experience. We will implement new technology to accommodate the administration, delivery and tracking of the training lifecycle.

• Measuring Success to allow us to make necessary training adjustments and continuously

improve our training capabilities.

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Based on our research, we know that employees want to get the most out of their training. They respond well to experienced trainers who are confident in their field and adept in engaging in traditional and virtual classroom environments. IRS employees want training that is appropriately paced and allows time for practical application. Our comprehensive Training Strategy is intended to create an environment where employees receive timely training, have access to personal development resources and are equipped with the skills necessary to identify opportunities to enhance taxpayer service.

As explained in this report, we aligned our Training Strategy with our Taxpayer Experience and Organizational Redesign Strategies to create a continuous learning environment for our employees.

Section 5 of this report provides a detailed description of the Training Strategy.

Organizational Redesign Strategy While our current organizational model was, and is, effective in many areas, we recognize that changing times call for new ways of doing business for taxpayers and IRS employees. As the first high-level restructuring plan in more than 20 years, our Organizational Redesign Strategy considers areas of success and opportunities for improvement. We will capitalize on our strengths and make structural changes where needed to better serve taxpayers.

As mandated by Section 1302, the IRS built on previous strategic initiatives and insights, studied industry and global revenue agency trends and best practices, and assessed evolving taxpayer expectations. Through careful research of oversight recommendations, taxpayer insights and employee interviews, we identified efficiencies and eliminated redundancies, while ensuring leadership accountability for key components of the taxpayer experience and employee training. Our new organizational structure will increase agency-wide collaboration and deconstruct operational silos, thereby improving our ability to provide seamless service to our employees and taxpayers. By design, our new structure fully supports our Taxpayer Experience and Training Strategies.

This belongs to you; it belongs

to your clients; it belongs to every

person in the IRS workforce,

and we want to get it right.

• Charles Rettig, IRS Commissioner

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Our Organizational Redesign Strategy focuses on the following key areas:

• Improve Integration of Strategic Planning and Initiative Prioritization at the Enterprise

Level

• Create a new Enterprise Change and Innovation Division that would serve as

the IRS’s “strategic integrator”. This division would work with leadership across the agency to coordinate annual strategic planning and prioritization activities to streamline decision making and enable the agency to set and meet its short and long-term strategic goals.

• The Enterprise Change and Innovation Division would pull together the Taxpayer

Experience, Training, and Organizational Redesign Strategies described in this report as well as other work on strategic direction (e.g., The Modernization plan; the Enterprise Case Management and Digitalization strategies; and future-focused efforts being led by our Human Capital and Equity Diversity and Inclusion offices) to perpetuate an integrated, collaborative, agency level strategic direction.

• Improve the Taxpayer Experience and Provide a Continued Emphasis on Taxpayer

Rights

• Create a new senior position for a Chief Taxpayer Experience Officer, who will seek

to drive strategic direction for improving the taxpayer experience across the IRSincluding both service and compliance interactions.

• Integrate taxpayer experience related strategies and initiatives with other

agency priorities.

• Provide an enterprise level holistic view of the taxpayer experience, identify

opportunities in existing taxpayer-facing processes and drive continuous improvements in real time.

• Combine and centralize taxpayer-facing program offices to streamline responses to

taxpayer inquiries and increase coordination across the agency.

• Integrate IRS services and communication channels to facilitate a more seamless

and holistic taxpayer experience.

• Create a smaller, taxpayer-focused Senior Leadership Team ⁵ led by the

Commissioner to ensure that taxpayer rights are foremost in our long-term planning activities.

5 In the new organizational structure, the Senior Leadership Team will serve in place of the current Senior Executive Team. While the total number of direct reports to the Commissioner is increasing under this organizational structure, the Senior Leadership Team will be significantly reduced.

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• Improve Operational Efficiencies

  • Consolidate previously segmented examination operations into one function to reduce internal duplication and fragmentation of activities and provide consistent outcomes for resolving taxpayer compliance issues.

  • Create a new Relationships and Services Division that operationalizes the taxpayer experience and:

    • Consolidates all toll-free telephone and taxpayer assistance center operations

under one, “Assisted Services” organization.

• Combines all outreach activities under one organization.

• Combines all third-party partnership activities within one division.

  • Create a Data Office and an Enterprise Digitalization and Case Management Office that will improve our use of data to reduce manual processes and reliance on paper while improving compliance operations and taxpayer service initiatives.

• Increase Collaboration

  • Flatten and streamline the headquarters executive leadership structure to increase collaboration and continuity in decision making.

  • Provide the Commissioner with a more direct line of sight into operations and functions.

• Enhance Innovation

  • Establish a direct line from the Commissioner to the Information Technology Division to enhance critical focus on cutting-edge business processes and technology.

  • Continue our emphasis on innovation in existing offices that are already driving or enabling creative taxpayer approaches across the IRS, such as Procurement and Information Technology, to build an even more innovative culture throughout the organization.

• Continue to Improve Critical Operations Currently Serving Taxpayers Well

• Focus on individualized service to combat identity theft through strong identity theft and victim assistance efforts.

• Support the vital efforts of the Whistleblower Office.

• Maintain an effective Criminal Investigation Office to drive an enforcement presence aligned to other compliance offices for continued coordination and emphasis.

• Deliver filing season services by continuing the successful filing season Executive Steering Committee approach while gaining efficiencies through close coordination between our Information Technology Division and the new Relationships and Services Division.

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Key Features and Benefits of the New Organizational Structure

Figure 1: Notional Future IRS Organizational Structure

The IRS Organizational Structure as of September 2020 can be found in Section 6.1. Under the new structure, shown in Figure 1, the Commissioner would be supported by a Deputy Commissioner, a Chief of Staff and ten direct reports. This team would work together to set the direction of the agency, empower the workforce, enhance innovation and improve the taxpayer experience.

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The new Chief Taxpayer Experience Officer (CTXO) would drive strategic direction for improving the taxpayer experience across the IRS and would help ensure a consistent voice and experience across all taxpayer segments by developing agency-wide taxpayer experience guidelines and expectations. Collaborating with peers across the entire agency, the Chief Taxpayer Experience Officer would drive an enterprise-level holistic view of the taxpayer experience. Working closely with the Relationships and Services and Compliance Divisions which will be the originating source for most taxpayer interactions, and the Enterprise Change and Innovation Office (ECIO) - the “strategic integrator”, the Chief Taxpayer Experience Officer would drive continuous improvement across the service delivery operations. The Chief Taxpayer Experience Officer’s close collaboration with the ECIO would ensure that Taxpayer Experience Strategies align with overarching enterprise priorities and any key legislative initiatives. The Chief Taxpayer Experience Officer would also seek to drive consistency across many different areas, including working within the Relationships and Services Division, Compliance Division, IRS Independent Office of Appeals and Office of Chief Counsel to facilitate the use of new tools for communicating with taxpayers and their representatives. We envision the Chief Taxpayer Experience Officer as a subject matter expert with the ability to provide other organizational units with information on changing taxpayer expectations, industry trends and ways to apply customer service best practices within the framework of IRS operations and federal limitations. This enterprise-wide approach to the taxpayer experience will ensure that taxpayer-facing capabilities are developed and deployed in a way that is scalable and usable across all interactions and not for single purpose/single use/single program area. The Taxpayer Experience Office (TXO) will also identify opportunities in existing taxpayer-facing processes and drive continuous improvements in real time. This office would help to eliminate systemic breakdowns before they can have a negative impact on taxpayers.

The new Relationships and Services Division would bring together all taxpayer-facing service activities, serving as the front door to the IRS for all taxpayers and stakeholders. This division would deliver services and information to America’s taxpayers through a variety of channels – including telephone, digital, correspondence, social media and face-to-face (both in-person and through virtual technology). While the Chief Taxpayer Experience Officer would be responsible for developing and continuously evolving the Taxpayer Experience Strategy, the Assistant Commissioner of Relationships and Services would work with the Chief Taxpayer Experience Officer and Enterprise Change and Innovation Division to execute on the vision of the Taxpayer Experience Strategy. With all taxpayer-facing service channels under a single umbrella, this structure would create one division responsible for end-to-end service delivery and relationship management, while sustaining the value of having some aspect of taxpayer segmentation and specialization within the program areas. This structure would integrate channels and facilitate easier navigation of the IRS enabling a more seamless experience for taxpayers and stakeholders.

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The new Compliance Division would consolidate compliance functions across taxpayer segments into one division and establish an enterprise-level Chief Compliance Officer. This change would facilitate the development of a consolidated compliance strategy that considers emerging issues across all taxpayer segments and enables Exam and Collection leadership to identify cross-cutting behavioral trends. This coordination would reduce variability in compliance processes and, working with the Chief Taxpayer Experience Officer, provide a more consistent taxpayer experience across all taxpayer interactions. Ultimately, this consolidation aims to reduce duplicative activities related to strategic planning, issue identification, work plan development, case selection, performance monitoring, and research. Coupled with our Training Strategy, this structure would create more complete and connected career paths for IRS employees.

The new Enterprise Change and Innovation Division would serve as a “strategic integrator,” responsible for planning and overseeing the implementation of enterprise-wide initiatives. The Assistant Commissioner of the Enterprise Change and Innovation Division would work with leadership across the agency to coordinate annual strategic planning and prioritization activities to streamline decision making and enable the agency to set and meet its short and long-term strategic goals. Most immediately, the Strategic Planning and Legislative Implementation Office (SPLIO) within this division would coordinate the implementation of the TFA strategies (Taxpayer Experience, Training, and Organizational Redesign) through program management, governance, change management and other tactical implementation functions. SPLIO would partner closely with the Taxpayer Experience Office and the Relationships and Services Division on implementing the Taxpayer Experience Strategy, and with the Human Capital Office on implementing the Training Strategy. As strategic integrator, this office would bring together these and other discrete strategies developed across the IRS into an enterprise integrated strategy which would be leveraged by IRS Senior Leadership to identify and drive prioritization of investments. While SPLIO would be responsible for implementing TFA legislation, it would have the capabilities in place to effectively transition to leading other significant legislative implementations or enterprise level strategic initiatives as they arise. This would enable the IRS to strategically address legislative changes, standardize execution and coordinate with the appropriate operating divisions.

The Chief Data Officer will be part of the Enterprise Change and Innovation Division. Working closely with his or her peers across the agency, the Chief Data Officer will develop an enterprise-wide data strategy and oversee all activities related to data and data analytics. This data strategy will provide the IRS with a framework to assess, prioritize, and address data access and analytics needs across the IRS and to guide program and policy decisions. The Chief Data Officer will also incorporate new evidence building processes needed to make better decisions to meet the changing needs and expectations of taxpayers as well as ensure strategic planning business decisions are data driven and in line with documented organizational challenges and risks. The Chief Data Officer will be instrumental in the implementation of the Data Management and Advanced Analytics aspect of the Taxpayer Experience Strategy and

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will support the Enterprise Case Management and Digitalization strategies. Improved data management and analytics will feed improvements to the Compliance and Relationships and Services divisions.

The Operations Management Division will be a revitalized support structure that will help the agency address many of the challenges we face in today’s current tax administration environment. Their work will include a focus on delivering internal operations and facilitating delivery of taxpayer and external stakeholder facing programs. Operations Management links various functions throughout the organization, ensuring a smooth flow of information and ease of internal and workforce operations. This division will be comprised of many of the critical existing support functions within Operations Support’s current structure. The newly designed Operations Management Division will support critical day-to-day IRS operations, enabling other functions within the organization to increase their focus on taxpayer service. Operations Management will include the Diversity Office and the Risk Office. Due to their critical roles, the Diversity Office and Risk Offices will also have dotted line ⁶ direct reporting relationships to the IRS Commissioner.

The Assistant Commissioner Chief Information Officer will oversee the Information Technology Division and will regularly interface across the IRS to understand its technology needs. The Information Technology Division will be responsible for coordinating and leading focused initiatives on technology (e.g., Strategic Oversight, Enterprise Development, Cyber, Enterprise Operations, Computing Centers, User and Networks Service, Enterprise Architecture and Engineering, and Program Modernization) in order to better respond to taxpayer demand for innovative information technology solutions and online services. This division will be responsible for all IT services and will retain a similar operational structure to the existing IT Division, including the Cybersecurity Office. However, the Cybersecurity Office will be expanded to incorporate the various cybersecurity activities across the agency. By aligning the Information Technology Division as a direct report to the Commissioner, it better enables earlier awareness and more rapid response to critical emerging technology issues. This structure will also increase collaboration with peer direct reports to address enterprise priorities and better align with our modernization efforts.

This report also addresses the alignment of structural changes with oversight recommendations and the positioning of the IRS Criminal Investigation Office.

Additional Considerations for the Organizational Redesign Strategy The Organizational Redesign Strategy also addresses changes to our governance structure, appropriations allocation, policy and legislation, and working relationships with our oversight and advisory partners. By modernizing our structure to increase collaboration, combine similar operations and support our employees throughout their careers, we will transform

6 For daily operations, offices with dotted line reporting to the Commissioner, will report to their leadership but will have direct access to provide regular updates and guidance to the Commissioner. These offices will also serve in advisory roles to the Senior Leadership Team.

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both the taxpayer experience and our internal operations. Knowing that a restructuring of this scale cannot be realized overnight, we will take a multi-year approach to implementing our Organizational Redesign Strategy. We are committed to short-term, mid-range and longer-term improvements; however, we note that significant and long-term changes depend on continuous investment as well as legislative and policy changes. We envision dedicating FY2021 to developing an Organizational Blueprint Report that includes a detailed roadmap and project plan for restructuring the organization. Our Organizational Blueprint Report will further define the role and structure of key offices in our future organizational structure as well as an updated operating model. Lastly, we envision using FY2021 to establish and fill key new positions (e.g. Chief Taxpayer Experience Officer) and make initial organizational changes. The divisions and offices outlined in this report may change as we continue to refine our organizational structure.

Section 6 of this report provides a detailed description of the Organizational Redesign Strategy.

Implementation of the Taxpayer Experience, Training and Organizational Redesign Strategies We designed our strategies to be flexible depending on fiscal realities. Our implementation plans prioritize the tools, training and structure we need to fit within the funding we receive. This report will also illustrate how the IRS is already implementing some aspects of each strategy.

Section 7 of this report provides a detailed description of additional key considerations for the implementation of our proposed strategies. In particular, it summarizes the estimated notional costs over five years of $2.� billion in order to put this plan in place.

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S E C T I O N

3.0 | OUR APPROACH