IRS mission statement.

On August 25, 1998, Tax Executives Institute submitted the following comments to the Commissioner of Internal Revenue in response to his request for comments on a proposed revision of the Internal Revenue Service's mission statement (as required under the IRS Restructuring and Reform Act of 1998). The comments took the form of a letter from TEI President Lester D. Ezrati of Hewlett-Packard Company. For additional information on this topic, refer to the news story on page 330.

In response to your request for comments on a restatement of the Internal Revenue Service's mission, the Board of Directors of Tax Executives Institute recently considered the two draft statements that were released by the Office of Public Liaison and Small Business Affairs. As you know, TEI's 5,000 members represent the largest 2,800 companies in North America, and nearly all of them have in the past few years engaged in exercises similar to the IRS's current one -- defining their companies' core businesses, visions, and missions. Indeed, the TEI Board's discussion of the IRS mission statement was exceptionally stimulating and productive, and I believe it was positively affected by the experience so many Board members have had in contributing to their own companies' mission statements. We trust that our comments prove helpful.

Commissioner Rossotti, TEI members agree that the IRS's mission statement must declare the agency's core business, must be concise and easily understood, and must reflect the agency's direction and focus on taxpayers. We also believe that, in setting its mission, the IRS must focus on two distinct audiences: the organization's own workforce and the taxpaying public. Too internal or external a focus may well prove counterproductive. Moreover, although effectively serving specific taxpayers is key to the IRS's success, TEI sincerely believes the mission statement must reflect that the agency's "constituency" is not merely the taxpayers with whom IRS personnel come into contact with on a day-to-day basis, but the public at large.

With these comments as background, the Institute is pleased to recommend that the Internal Revenue Service adopt the following mission statement:

The Internal Revenue

Service is a service

organization whose fair

and efficient operation is

essential to fund the

federal government. The

IRS exists to help people

understand and meet

their tax responsibilities

and to administer the

tax laws in a courteous 

and consistent manner

and with the utmost

integrity.

The foregoing statement has been hewed from the two draft statements that the IRS released, and we believe it is wholly consistent with the thrust of the IRS Restructuring and Reform Act of 1998 and the need to place a greater emphasis on serving the public and meeting taxpayers' needs. We offer the following specific comments on why we propose the language we do:

* TEI believes that the IRS's mission statement should include a reference to collecting the revenue because that is, truly, the core business of the IRS. At the same time, the agency must be mindful that a substantial portion of criticism leveled at it during recent congressional hearings related to its collection activities. By including the reference to collecting revenue in the same sentence in which it affirms that it is a service organization (that "exists to help people"), the mission statement can signal that there is a "new day" at the IRS (even though revenue collection continues to be critical). We think that by beginning the mission statement with a commitment to being "fair" and ending it with a commitment to being "courteous," the message will be delivered.

* TEI recommends that the term "people" be used rather than "public" or "taxpayers" because --

(a) Not everyone the IRS serves is formally a taxpayer; for example, the agency deals with and imposes obligations upon tax-exempt organizations, as well as employers and contractors concerning withholding and information reporting obligations.

(b) TEI believes the term "public" may be too narrow; it technically may not include foreign individuals or corporations; it is also a "mass or collective noun," whereas the IRS may wish to stress that it wants to interact with its "customers" on a one-on-one, individual basis. At the same time, we believe "people" is preferable to "taxpayers" because it suggests that the IRS's obligations extend beyond specific taxpayers (be they individuals, corporations, or other enterprises) to encompass everyone (including those who voluntarily pay their fair share without ever dealing with the IRS and whose taxes may well be increased if others do not similarly meet their obligations). Finally, we note that corporations are encompassed in the term "person" (and, hence, we submit, "people") under the Internal Revenue Code.

(c) We considered whether terms such as "customer" and "client" might be used, but are disinclined to recommend those terms because they suggest -- incorrectly in our view -- that the relationship between the IRS and the people it interacts with is a wholly voluntary one. You can choose not to be a customer; a client can fire his or her "hireling." In reaching this conclusion, we drew upon the experiences of Revenue Canada, which initially adopted the term "clients" to refer to taxpayers but has recently experienced a backlash because of it. (You will recall that ten percent of TEI's members are Canadian, and many of our U.S.-based members deal regularly with Canada's tax laws and Revenue Canada officials.)

* TEI believes it would be appropriate to include the term "consistency" in the mission statement. Although "consistency" may be subsumed within the term "fair," we believe that a separate reference to consistency is desirable because we believe much of the discontent with the IRS owes itself to the perception that different rules apply to different people. Moreover, we believe a separate reference to the IRS's operating with the utmost "integrity" (or, alternatively, in an "ethical" manner) is desirable, especially given the focus at recent congressional hearings.

* TEI believes the term "administer the tax law" is better than "apply the tax law" because it accurately captures the myriad tasks and functions of the IRS (including the agency's role in interpreting the tax laws or otherwise providing guidance on the laws' requirements).

* Although the Institute's recommended mission statement uses the term "federal government" (as more succinct), a reference to "government of the United States" would accomplish the same thing.

Tax Executives Institute hopes that the foregoing is responsive to the IRS's request for comments on the agency's mission statement. If you should have any questions about TEI's views, please do not hesitate to call Michael J. Murphy, the Institute's Executive Director, at [phone].