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Modernization will succeed now, but it’s not a certainty. Keeping the priority focus on modernization is vital to every element of the IRS mission.

Werfel 5-3-2023, Commissioner of the US Internal Revenue Service (“IRS Chief Talks Goals, Work with Congress, and More,” Talking Tax Podcast, Transcribed by Brett Bricker and AI)//BB

Yeah, I mean, that's, I mean, first of all, my learning was a combination of reflecting on my time in government, studying reading, but also being engaged across industries. And then I was able, from, from more of an observation standpoint, and advisory standpoint, see the different problems that were coming across public sector leaders desk and, and just kind of understanding that there's a variety of different paths you can take, how do you communicate with the workforce? How do you weigh different options? How do you think about stakeholders both inside and outside of your organization? These are things I knew how to do, and were on my radar screen 10 years ago, but like with anything with age and experience, I just I've gotten sharper, I believe it understanding and I still have a long way to go. Look, I you know, I'm always moving up the learning curve. And, you know, one of my reflections early here at the IRS is, is the leadership team here is super patient. They're excited to have a new commissioner. I think one of the things they like about me early on is that I am in listening mode. I'm not coming in with all the ideas on coming in wanting to collaborate with them on what the right things to do are to serve the mission. What do you hope to accomplish in your first six months on the job? And how do you view success in that position? Like how do you plan to measure whether or not you know you're doing a good job or whether the IRS is doing a good job and achieving, you know, various benchmarks? Yeah, it's, it's a great question. And, you know, in some ways that answer was was handed to me on my first day, which is we have a huge opportunity and responsibility to, to launch our responsibilities under the Inflation Reduction Act, and what Congress expected and the president expected when they pass a law and he signed the law. So the first six months for me are all about a successful continuation of the ramp. And those fall into three buckets, services. And for me, it's we have an opportunity to enhance, modernize and move more towards world class customer service. And there's a variety of different projects that we have spelled out in our in our strategic operating plan that was released April 6, and the priority there is for those that are in the short term, to launch them successfully. The second is enforcement or compliance. And there, the remit is to increase our capacity and performance and how we assess the wealthiest filers in America, that's individuals, corporations, and complex partnerships. And then the third part of our remit is, is what I call the backbone, the technology backbone. Think about the IRS is sitting on infrastructure or foundation. And that foundation is uneven today in terms of how modern it is, and its stability. And that's due to years of of underfunding and under-resourcing that foundation. And so that's the third part of of the priority picture. So what do I want to get accomplished in six months? I want us to be humming in each of those areas with great clarity in terms of what are the top projects that we need to do in each? What are the key steps? And your us a great question, how do we measure ourselves? What does success look like? I like to look backwards, I like to say, what's the press release, we want to write six months from now or what's the, you know, the statement of success. And let's reverse engineer into that. The last point I'll make about all of this is like, we're also trying to get ready for filing season next year. And we really think that's a huge moment of truth for us, right? Because we had a very strong filing season, it will be easily forgotten if we don't come out and think a strong next year when filing season begins. So we want to continue that momentum. And we want each year under the inflation Reduction Act and under this new Euro taxpayers to see and feel a different set of improvements and a smoother and smoother filing season each year, they should come back to our website and say, oh, there's new tools and solutions here. They should find new options when they dial into our call center for for either doing things in an automated way or or enhanced callback options or just a quicker speed to get to the person on the line they need to speak to you mentioned the strategic operating plan on the inflation Reduction Act funding that came out last month. What do you see as the biggest challenges to implementing that plan? Yeah, well, the part of the challenge is, and I refer to it as my public to do list, there's 190 projects in the plan, and we have other activities going on within the IRS. So that's a lot of plates to be spinning simultaneously. And they're all important work, you know, managing the IRS and the responsibility to administer the United States tax system is complicated. And so part of the challenge is, you know, making sure that you have really, really strong, precise organizational structures in place governance, accountable people at the IRS, and then communication is key, right. With change, you have to make sure that all the various stakeholders are aware of the change can comment on it. So another key challenge is making sure that all of these activities that are happening in concert are not only getting done, and we're following a like clockwork playbook here. And that's what I'm pushing for, but also that all our diverse stakeholders have an understanding of what we're trying to achieve and when we're trying to achieve it. So another big challenge is in a dense plan, like what we have with nearly 200 projects, how do we communicate that clearly to all the various stakeholders, so they know what's coming. One of the big components of implementing this plan is going to be hiring new personnel, especially hiring people who have the experience and skill set to audit, high income taxpayers, complex corporations and partnerships. How are you planning to step out up recruiting in those areas and where are you looking to hire people? From and sort of what's the IRS has elevator pitch, as you're, you know, trying to sell people maybe on coming from the private sector into the IRS? I love that question. I do have to work on my elevator pitch. I think so I'll practice here for a moment. But like there's two parts to your question, let me start with a pitch. And the pitch is we have a once in a generation opportunity to to transform and modernize one of the most important organizations in America. You don't have to love the IRS. But and you and you know, and you can complain about the IRS that is your your right, your free speech, right, right. But we are essential to the operations of the United States government and by extension essential to civilized society. So if you have the desire to be part of, of public service, or giving back to your country, or working in a way that that makes you feel patriotic, the IRS is a place where you can do that. And if you want to come to an organization, which is in transition, and transition to build something much better than what we've had in the past, if you want to be a challenging assignment, but one where you leave it, when you leave this organization will be significantly different and better at its job than when you got here. I mean, that's a pretty exciting opportunity. And we need a lot of different type of skill sets, as you said, you know, and I've talked publicly, in my recent hearings, about about the chasm that we have right now, where we have 2600 current staff that review or exam or audit our wealthiest taxpayers, if you go to our wealthiest levels, like above 250 million in assets for corporations or above 10 million assets for partnerships, or north of $5 million a year annual salary for an individual. So these are the really, really wealthy, there are 390,000 of those types of taxpayers that I just described. And there's only 2600 to assess. And so that that is a wide gap. And when you think about these 390,000, taxpayers, these are also our most voluminous and our most complex returns, and that complexity increases every year, it's not getting simpler for us to unpack those filings. So we need not just auditors, but specialized accountants, data scientists, engineers, lawyers, and we're looking for a mix, we're looking for people that are just starting their career, that want to learn on the job and develop a skill set, which is going to be very valuable for us and for them across their career. But also people that are, you know, kind of coming out of retirement out of the private sector or law firms or accounting firms who have been involved and understand how these structures are done so so they can help us in this situation, even the playing field when it comes to assessing these very, very complicated structures. And we have a very simple goal, which is to administer the tax code fairly. And right now, today, we have the ability, the skill set to assess middle and lower income filings, because those are relatively often straightforward, doesn't make it easy. I'm just saying that we have the capacity today, we do not have the capacity to effectively assess our highest income filers in a way that we should. So the goal is really to just even that out and make sure that we're an IRS that's not skewed towards being able to assess one part of our taxpayers, but not another. And I think people want an IRS that is that is nonpartisan, that is fair, that has has balanced of strength across different taxpayer segments. Right now we're out of balance, the inflation Reduction Act [IRA] will help us put in balance and we need people to help us on that journey. Where do you find those people? Well, there's a lot of different places. You know, first of all, you know, I think we Iris has offices all over the country. So we're not constrained to any one regional area. So we have a diverse geography, that we can spread our recruiting efforts. We can look, as I said to people that are, you know, kind of nearing the end of their private sector careers at law firms and accounting firms. We can look to universities who are looking to place students coming out with accounting or actuarial degrees or engineering degrees. I could go on and on because you know, and there are you know, what's really interesting Niomi there are companies right now out there so that you know, you hear it, they're doing significant layoffs. Right. And there's an opportunity potentially for us to sync up with, with companies that are doing layoffs, because we are we are hiring. And so look, there's a lot of matchmaking that we can do in that regard. I think we're off to a good start. In our hiring I've mentioned we've hired somewhere between five and 6000 people, and mostly focused on staffing our call center so that we're answering all the calls. The other thing that's really important to understand, because I think a lot of people think oh god, this is all Iris hiring, and, and plussing up and growing and growing, the reality is we're losing a lot of people. So not only do we have to build capacity that we don't have, we have to make up for for anticipated attrition. You mentioned that one of the challenges with implementation is going to be keeping every you know, all the stakeholders informed. One of those big stakeholders is Congress. Can you sort of talk about your strategy about how you plan to keep Congress updated on your progress, and maybe any areas where the IRS is running into any sort of difficulties? I look, I really think that there's a hugely important role that Congress plays. You know, I can focus on our authorizing committees, House Ways and Means and Senate Finance, you know, in some ways, and in many ways they oversee us, they hold us accountable. They ask questions that have us rethinking our approach, they they call on tiga, or GAO, that creates a set of recommendations that help guide priorities for us. It's an incredibly important institution. And in many ways, there are partners as well, like, I know, there's a lot of politics, and that sometimes kind of crowds the screen. But also I think there's a lot of goodwill and trying to help create a better tax experience for for their constituents. And obviously, we want to do that for all their constituents. And then I think there's a lot of interest in making sure that the tax system runs effectively, so that the nation's finances are healthy. And if we are not doing our job, then the nation's finances suffer deficits grow, the debt goes up. So there is a virtuous circle here of of the IRS operating the tax system effectively. And I think a lot of the members and their staffs believe in that. And therefore, if they're going to partner with us on it, we have to be in regular communication. So that means I making myself available for hearings, whether that's at the committee or the subcommittee level. So they can ask the question, the hearings are a really good opportunity for, for us to get on the same page in terms of what the priorities are, and what the go forward is, and for them to communicate in a very public forum, their concerns and have me answer them. But we can also do, you know, nonpublic briefings to staff and to members. You know, for example, it's hard to get into too much detail when a senator has five minutes. So often, they'll be asking me questions, and then they'll say, you know, Commissioner, can you come and brief me in my team on this so that we can have an hour or more to really dig into what your IT plans are to dig into? What are the root causes of the largest parts of the tax gap? My answer to that is always going to be without hesitation? Yes. The inflation Reduction Act directs the IRS to submit a report to Congress by mid May on the feasibility of an IRS run electronic filing system, is this report still on track to come out in mid May? And I know you've said before, that you don't want to get ahead of what the report is going to say. But once the report comes out, how much time will it take for the IRS to sort of digest the report and study it before determining how you want to proceed following the reports release? Yeah, so the report comes out in mid May, we're on track. It's certainly not complete yet.

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