The IRS Strategic Plan

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The IRS Strategic Plan
2006 Aim Business Meeting and Training Seminar

• Keith Taylor
• Director, Research
• Small Business/Self-Employed Division
• August 2006

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What do you think?

• What types of services does the federal
  government provide?

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What types of services are provided?FY2005
Federal Expenses
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How much do you think those services cost?

• FY2005 Total Federal Budget
• 2.5 trillion

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Where does the money come from to pay for it all?

• The IRS collected 2 trillion in FY2005.
• 270 billion from Corporations
• 880 billion from Individuals
• 770 billion from Employment taxes
• 25 billion from Estate and Gift taxes
• The difference between what was spent and what
  was collected is 500 billion.

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The Tax Gap

• The tax gap is
• The difference between what taxpayers should
  have paid and what they actually paid on a
  timely basis

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What are the components of the Tax Gap?

• The Tax Gap is made up of three different
  components
• Nonfiling
• Underpayment
• Underreporting

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What do you think is the largest component of the
Tax Gap?
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The Tax Gap - Nonfiling

• Nonfiling occurs when taxpayers who are required
  to file a return do not do so on time.
• About 8 of the Tax Gap comes from nonfiling.

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The Tax Gap - Underpayment

• Underpayment occurs when taxpayers file their
  return but fail to remit the amount due by the
  payment due date.
• About 10 of the Tax Gap comes from underpayment.

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The Tax Gap - Underreporting

• Underreporting of tax occurs when taxpayers
  either understate their income or overstate their
  deductions, exemptions and credits on timely
  filed returns.
• Underreporting accounts for 82 of the Tax Gap.

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The Tax Gap SB/SE

• SB/SE is accountable for nearly 80 of the Tax
  Gap.
• The largest single source of the gap comes from
  the misreporting of Schedule C filers. NRP
  estimates show that revenue lost due to Schedule
  C misreporting is at least 68 billion annually.

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Strategic Plans

• The purpose of a Strategic Plan is to
• Determine where an organization is going over the
  next year or more,
• Identify how it's going to get there, and
• Help determine if an organization was successful
  in reaching its goals.

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Strategic PlanningExample

• Mission To be the preeminent source of
  entertainment, music, news and information for
  the African-American consumer.
• Black Entertainment Television (BET) is the
  first television network in the United States
  primarily devoted to African American viewers.
  The BET Network was launched in 1980 and, in its
  first year, had 5.3 million subscribers. Today,
  BET reaches more than 80 million households and
  can be seen in the United States, Canada and the
  Caribbean. African Americans comprise 78 of
  BETs audience.

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Strategic PlanningExample

• Mission We plan to grow more rapidly than our
  competitors by providing customers with the
  solutions they need to capture, store, process,
  output and communicate imagesanywhere, anytime.
  
• (www.kodak.com)
• Kodak is one of the most powerful and widely
  recognized brands in the world. Each day Kodak
  touches the lives of more than a half-billion
  people. Business Week Online ranks Kodak among
  the top five most recognized brands worldwide.

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Strategic PlanningExample

• In 1996, Wal-Mart started to lose earnings and
  was deemed to be at the end of an era by the
  Wall Street Journal. How did they turn
  themselves around to become one of Fortunes top
  ten Americas Most Admired Companies in 1999?
  Strategic planning!
• Wal-Mart focused on customer needs in their
  strategic plan. Previously, Wal-Mart treated
  every store the same. As part of the planning
  effort, stores catered to their customers by
  tailoring the merchandise accordingly. As a
  result, stores that are 10 miles apart may be 20
  different in merchandise.

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The IRS Strategic Plan

• Vision
• The IRS in 2009 is a 21st Century agency with
  the human capital and technology capabilities to
  effectively and efficiently collect the taxes
  owed with the least disruption and burden to
  taxpayers.
• Mission
• Provide Americas taxpayers top-quality service
  by helping them understand and meet their tax
  responsibilities and by applying the tax law with
  integrity and fairness to all.
• Link http//publish.no.irs.gov/PUBS/PDF/31685F0
  4.PDF

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The IRS Strategic PlanStrategic Goals

• Improve Taxpayer Service
• Enhance Enforcement of the Tax Law
• Modernize the IRS through its People, Processes
  and Technology

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Goal 1Improve Taxpayer Service

• How can taxpayer services be improved?
• By enhancing services for taxpayers
• Helping all sectors of the public participate in
  the tax system.
• What was done to achieve this goal in FY05?
• Toll-free tax law accuracy hit a high of 89
• Telephone level of service was 83 - over 20
  more than just four years ago
• Customer satisfaction with toll-free service was
  a record 94
• More than 14 million people visited the SB/SE web
  pages on IRS.gov last year nearly 40 more than
  the year before

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Goal 2Enhance Enforcement

• How can enforcement be enhanced?
• By discouraging and deterring non-compliance,
• Ensuring tax practitioners adhere to professional
  standards,
• Detecting domestic and off-shore criminal
  activity, and
• Deterring abuse within tax-exempt and
  governmental entities

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Goal 2Enhance Enforcement (cont)

• What was done to achieve this goal?
• Enforcement revenues were increased by 10 to a
  record 47.3 billion in FY05
• Total audits of all taxpayers topped 1.2 million
  last year a 20 percent jump from the prior year
• Audits of individuals with incomes over 100,000
  surpassed 221,000, the highest figure in 10
  years, and well over double the 92,000 completed
  in fiscal year 2001.
• Audits of larger corporations those with assets
  over 10 million increased, up 14 from a year
  ago to 10,878. 
• The number of collection cases worked has
  increased dramatically with roughly 220,000 TDA
  and 110,000 TDI cases closed last year.

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Goal 3Modernization

• How can modernization be achieved?
• By enabling employees to be fully engaged and
  productive,
• Modernizing information systems,
• Ensuring safety and security, and
• Modernizing business processes and aligning
  infrastructure support
• What was done to achieve this goal?
• For the first time, over half of all individual
  returns were filed electronically in FY05.
• Customer Account Data Engine (CADE)

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Measuring Success

• Strategic Assessments
• Program Evaluations
• National Taxpayer Advocates Annual Report to
  Congress
• Treasury Inspector General for Tax Administration
  (TIGTA) Audits
• General Accounting Office (GAO) Audits
• Customer Satisfaction Surveys
• Employee Satisfaction Surveys

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Contact Information

• Keith Taylor, Director of SB/SE Research
• Keith.V.Taylor_at_irs.gov(202)283-2620