September 1998 Issue

BOOZ-ALLEN UNVEILS IRS RESTRUCTURING STUDY

In March, the IRS announced that it had hired the international professional services firm of Booz-Allen & Hamilton to conduct a validation study and risk analysis of the commissioner's January plan to restructure the IRS. The consulting firm began to report its findings and recommendations in late June. One of its findings is that the IRS should scrap its current regional structure and replace it with four operating units:

* Simple Wage and Investment Income

* Small Business, Self-employment Income, and Supplemental Income

* Middle Market and Large Corporations

* Exempt Plans/Exempt Organizations

For these purposes, Small Business includes companies with up to $5 million in assets. International taxation would become part of the Middle Market and Large Corporation unit, but would have part of its taxpayer services element housed in the Small Business, Self-employed, and Supplemental Income unit.

Booz-Allen has also announced that the chief counsel's office should remain independent of the IRS and have a hybrid structure consisting of customer (operating division counsel), functional (technical experts), and geographic segments (litigation/local counsel).

It will be interesting to watch the development of the IRS's internal restructuring efforts in conjunction with the establishment of the new, corporate-styled oversight board, created in the IRS Restructuring and Reform Bill of 1998. *

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