7.0 KEY CONSIDERATIONS

To implement the Taxpayer Experience, Training and Organizational Redesign Strategies, the IRS must create a sustainable plan, along with a program office to ensure accountability and to monitor and guide the successful transformation of the IRS.

Since the passage of the TFA in July 2019, the TFAO has served as the coordination point for the Act’s 45 provisions. The IRS will continue to operate a program office - the Strategic Planning and Legislative Implementation Office ⁴⁵ - to provide clear ownership, implementation and transition of the strategies. This office will ensure timely and effective implementation, continually assess organizational priorities, consider legislative impacts and evaluate emerging technologies. Office responsibilities will include:

• Developing program-level implementation timeline and schedule.

• Producing detailed plans for the future IRS organizational structure.

• Coordinating an agency-wide implementation roadmap of the Taxpayer Experience Strategy.

• Coordinating with the Human Capital Office on implementation of the Training Strategy. ⁴⁶

• Executing the Change Management and Communication plans outlined in subsections 7.2 and

7.3.

• Tracking TFA related measures and metrics outlined in Sections 4.2, 5.6 and 6.9.1.

Implementing these strategies is an Agency-wide effort, which will be coordinated by the Strategic Planning and Legislative Implementation Office. The following sections address the key implementation activities required to transform the IRS and achieve the goals of our TFA strategies. These activities include:

• Internal Revenue Manual (IRM) Guidance

• Change Management

• Communications

• Resource Considerations

The IRS will continuously re-evaluate and update the strategies and implementation plans. Updates will be based on funding, changes in legislative mandates or other factors that may require adjustment of IRS organizational priorities in the future.

45Described in Section 6.6.

46The Human Capital Office will maintain overall responsibility for the Training Strategy.

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7.1 INTERNAL REVENUE MANUAL GUIDANCE

Clear guidance to IRS employees is required to implement the strategies discussed in this report. The IRS’s Internal Revenue Manual (IRM) is the official source of IRS policies and procedures and the means for communicating them to our workforce, taxpayers, and other key stakeholders. IRS program owners are responsible for developing, publishing and updating procedures in the IRM related to administering their programs. Each section of the IRM must be accurate, clear and current to ensure the fair and equitable treatment of taxpayers.

The sweeping nature of the changes envisioned in the TFA strategies will require a significant rewrite of the IRM to a scope and scale not seen in 20 years. Required updates to the IRM based on the Taxpayer Experience and Training Strategies will be incorporated incrementally over time as the capabilities and procedures are fully developed by program owners, procedural content associated with the TFA capabilities is written by IRM authors, negotiated with NTEU, and published formally in the IRM. This effort of updating the IRM based on the Taxpayer Experience and Training Strategies will be completed over a multi-year timeframe.

To accomplish this vast and complex task, we will convene Agency-wide, multi-functional teams of IRM authors and subject matter experts.

As IRM Sections are updated based on the TFA capabilities and priorities, the IRS will provide appropriate training to impacted employees. The IRS Organizational Redesign plan will require updates to some IRM Sections. Implementation of the IRS Organizational Redesign will follow a different timeline than the Taxpayer Experience and Training Strategies, and identification of impacted IRM Sections will be initiated in FY2022.

Stakeholders inside and outside the Agency shared that the clarity and consistency of the IRM has a direct impact on the taxpayer experience and needs improvement. Creating a clearer and more organized IRM will require a significant investment by the IRS. We will explore ways to more quickly and effectively update IRM content based, in part, on the continuous feedback loop envisioned in the Taxpayer Experience Strategy. This enhanced process will keep our employees more informed and better equipped to assist taxpayers. The value of this investment will result in swifter issue resolution, time saved for taxpayers and our employees and an improvement in taxpayer satisfaction. Additional information on IRM guidance can be found in Appendix 9.6.5.

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76 .0 | KEY CONSIDERATIONSORGANIZATIONAL REDESIGN STRATEGY

7.2 CHANGE MANAGEMENT

Through the IRS’s continuous journey to improve the taxpayer experience and enhance internal operations, the organization has transformed in many ways over the years. Changes have been driven by both external and internal factors including; new legislation, technological advances, increased partnerships with stakeholders, realignments and reorganizations, resources and staffing, and other process improvement efforts. Today, the agency is poised to transform itself once again, re-thinking how we deliver services, and how taxpayers and stakeholders experience tax administration.

Organizational Culture and Supporting Change Change in any organization occurs in the context of the organization’s culture. Change at the IRS must factor in the different sub-cultures that have developed in more than 20 distinct operating divisions. These range in size from small, specialized programs to large divisions serving different taxpayer segments, stakeholders and employees. The existence of many overlapping sub-organizations creates special challenges in driving the enterprise change needed to create a new, overarching organizational culture.

The Organizational Change Management (OCM) program will provide tools to help teams assess the culture and identify changes needed in mindset and attitudes. Since 2017, the IRS has been intentional about building an infrastructure to support change initiatives. The OCM program was established to accelerate the IRS’s transformation efforts by advising change leaders and integrating principles of employee change into strategic initiatives. Linking to strategic initiatives enables the OCM to support efforts to mitigate the risk of failure and positively affect employee morale and program effectiveness.

Currently, more than 90 employees in 21 different IRS organizations are trained change practitioners who will be deployed to support change in their business units. These individuals will partner with teams for specific initiatives, bringing a change management discipline to support employees in driving the sweeping organizational changes envisioned in our Taxpayer Experience, Training and Organizational Redesign strategies.

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7.2 CHANGE MANAGEMENT

Strategies for Leading Change Within the Organization To achieve the vision outlined in this report, IRS employees must embrace a new way of approaching their jobs. A transformed IRS will bring changes in technology, processes and structure. Employees will experience these changes in different ways depending on where they work within the organization, but the scope of the changes will affect the entire workforce. Effective change management is essential for the IRS to successfully implement these strategies.

Leading change will begin with active and visible IRS executive sponsorship. IRS leadership will develop communications that are consistent and create an understanding of, and support for, the implemented changes. While our communications strategy is critical to driving change, it is one piece in a larger framework focused on mobilizing employees to achieve the desired outcomes of these strategies. Successfully implementing the TFA strategies will also require commitment from IRS leaders and employees to embrace, adopt and execute change. The IRS will ensure agency-wide communication strategies anticipate and address employee questions.

We need to build

a better sense of community

within the IRS – one IRS.

• IRS Employee

Our communication will be informed by best practices in leading and managing change. We will focus on ensuring employees understand why change is taking place, what is expected from them, how their work might be affected and what new skills they will need to develop. Messages will be tailored to the diverse audiences in each operating division to address their specific questions and concerns.

Changing culture takes time and requires incremental changes to structure and processes. The IRS strategy for change management will define the specific behavioral changes that can drive positive change in culture.

In the long-term, these efforts will foster a culture that embraces the vision of a taxpayer focus, instills change leadership capabilities and proactively engages employees on change initiatives. Leaders will support employees through change management. The active and visible engagement of employees will result in an improved world-class taxpayer experience.

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7.3 COMMUNICATIONS PLAN

Along with the stand-up of the TFAO, a strategic communication plan was established to engage employees, taxpayers, tax professionals and other stakeholders about the TFA legislation in a two-way dialogue. The plan included the creation of both internal and external electronic mailboxes to receive recommendations and feedback; and was also supported by extensive outreach efforts. The �������� efforts aligned with the TFAO Guiding Principles: Listen, Learn and then Design, built excitement through regular and transparent communications.

Going forward, we will maintain the electronic mailboxes, continue diverse outreach efforts with employees, taxpayers, and stakeholders. Will maintain communications with our oversight partners and NTEU as we implement the strategies outlined in this report.

We will continue to expand our community and industry stakeholder partnerships to better inform our partners and engage unique taxpayer groups like those with limited English proficiency and traditionally underserved populations. We will also leverage our social media channels.

Successful business improvements are driven by collaborative efforts of project management, communication strategies and change management practices. The Communications Plan emphasized a need for close collaboration between the TFAO and the IRS Office of Change Management.

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7.4 RESOURCE CONSIDERATIONS

For each strategy and operating division-owned provision, we have developed costing estimates that will support the future vision of the IRS while also building upon existing efforts. The costs associated with the TFA were segmented into high-level categories and various phases outlined in this report:

Taxpayer Experience Strategy: Costed over a period of five years and broken out into the phases required by Section 1101 in the TFA. This strategy builds upon existing IRS efforts to improve the taxpayer experience and levels of service the IRS provides.

Training Strategy: Costed over a period of five years and broken out into phases to support the Taxpayer Experience Strategy, including costs reviewed by the Information Technology organization.

Organizational Redesign Strategy: Costed over a period of five years, beginning in FY2021 but may be subject to modifications dependent upon our detailed implementation plan.

Taxpayer First Act Office: Costs reflect the creation and implementation of the above strategies, management of the Operating Division Provisions and drafting of this report.

Operating Division Provisions: Refers to 10 of the remaining 42 provisions assigned to specific operating divisions and IT with implementation dates effective immediately through FY2023. These costs started accruing with the passage of the Taxpayer First Act in FY2019 and continue through FY2022, but to date, no funds have been appropriated for these provisions.

These estimates were developed with the Chief Financial Officer and respective stakeholders. Additional details and the methodology for each category are included in Appendix 9.5.

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7.0 | KEY CONSIDERATIONS

7.4 RESOURCE CONSIDERATIONS

Assumptions

• Acceleration of Delivery: Efforts during the early years of these strategies will lay the

groundwork and build upon each other to accelerate the deployment of capabilities in the out-years, creating significant improvements to the taxpayer experience.

• Year 0: No funds were appropriated for FY2020 to cover costs incurred to develop these

strategies or implement specific provisions. In FY2020 the IRS spent $67.5 million on the implementation of the legislatively mandated provisions. The $67.5 million spent on the legislatively mandated Operating Division Provisions are included in the total TFA costs, outlined in Table 1, for FY2021-FY2025.

• Years 1 – 5: These cost estimates are provided in the aggregate and subject to further

refinement when incorporated into more detailed implementation plans.

Dependencies The TFA builds upon the investments and deliveries of the IRS Integrated Modernization Plan. ⁴⁷ The remaining four years of this six-year modernization plan of IT systems requires an additional estimated investment of $1.9 billion. This plan identifies the critical infrastructure needed for the implementation of by the Taxpayer First Act capabilities. Our ability to deliver on the Taxpayer First Act strategies defined in this report depends on critically needed multi-year Congressional investment in IRS resources.

47 Internal Revenue Service Integrated Modernization Business Plan, Publication 5336, April 2019.

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7.0 | KEY CONSIDERATIONS

7.4 RESOURCE CONSIDERATIONS

Taxpayer First Act Thousands of Dollars

FY2020 Actual Costs

FY2020 Legislatively Mandated Provisions (e.g., Establishment of IRS Independent Office of Appeals, Identity protection personal identification numbers, Management of IT Information, Internet platform for Form 1099 filings, Disclosure of taxpayer information for third-party income verification, Uniform standards for the use of electronic signatures, Mandatory e-filing by exempt organizations, 3rd Party Authentication for On-Line Access)

FY2021 - FY2025 Estimated Costs

TFA Cost Estimates

$67,476

Taxpayer Experience Strategy $1,227,000

Expanded Digital Services (e.g., Secure 2-Way Messaging, Taxpayer View History, Change Account Information, Digital Notifications, Business Online Account, Tax Professional Online Account, Expand Payment Options, Secure Document Exchange)

Seamless Experience (e.g., Expand Automated Callback, Wait Time Transparency, Concierge Navigation Support, 360 Degree View of Taxpayer Account by Employee, AI Powered Informational Web Chat/Digital Appointments/Employee Assistant)

Proactive Outreach and Education (e.g., Personalized Tax Updates, Social Media Strategy, Simplify and Improve Notices and Correspondence, Plain Language Communications)

Community of Partners (e.g., Build and Expand Trusted Stakeholder Network, Leverage Community Outreach Best Practices, Co-Located Government Services, Expand Community Presence, Data Sharing Opportunities)

Focused Strategies for Reaching Underserved Communities (e.g., Translate Forms/Publications/Notices, Digitally Aided Translation and Interpretation, Recruitment, Leverage Employee Multilingual Skills, Translation App, International Online Account, Focused Promotion of IRS eFile, Virtual Face-to-Face, Virtual Discussion Forums)

Enterprise Data Management and Advanced Analytics (e.g., Automated Feedback Loop, Comprehensive Data Repository, Advanced Analytics, Data Sharing Opportunities)

Training Strategy (e.g., IRS University, Taxpayer-First Training, Continuous Learning for All Employees, Utilizing Technology)

Organizational Redesign Plan/ TFAO Operations (e.g., Org Structure Design and Refine, Transition and Implement, Change Management and Communications)

Legislatively Mandated Provisions (e.g., Establishment of IRS Independent Office of Appeals, Identity protection personal identification numbers, Management of IT Information, Internet platform for Form 1099 filings, Disclosure of taxpayer information for third-party income verification, Uniform standards for the use of electronic signatures, Mandatory e-filing by exempt organizations, 3rd Party Authentication for On-Line Access)

$337,000

$378,000

$149,000

$68,000

$54,000

$241,000

$123,000

$216,000

$550,000

FY2021 - FY2025 Taxpayer First Act Costs $2,116,000

Table 1: High-level summary of the costs associated with the Taxpayer First Act

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18 .0 | COMMISSIONER’S WELCOMEIRS: NEXT STEPS