The Taxpayer First Act of 2019 (Pub. L. 116-25) requires the U.S. Department of the Treasury and IRS to provide Congress with a written plan to redesign the organization of the IRS by September 30, 2020. APA recommended creating a Payroll and Employment Tax Division to streamline the structure of the agency, including minimizing the duplication of services and responsibilities within the agency.
Current Infrastructure Inefficiencies
“With 69.8% of federal tax revenue collected through payroll and employment taxes (IRS 2018 Data Book), focusing IRS resources to respond to payroll professionals and their employers makes sense,” APA said.
The current IRS infrastructure is not intuitive for payroll departments and employers. The IRS’s current infrastructure includes divisions for large businesses and international companies, small businesses and self-employed, tax exempt and government entities, and wage and investment. Significant redundancies in these divisions scatter payroll and employment tax considerations.
In general, payroll professionals and employers do not contact the IRS based on employer size or business type, but by the tax issue they need resolved. Many of the federal tax consequences for payroll departments are the same, regardless of employer size or type, including authentication and risk management, income tax withholding, taxable benefits, and processing of forms.
Creation of a Payroll and Employment Tax Division
If the IRS were to create a Payroll and Employment Tax Division, efficiencies could be created where needed services are the same among all employers, APA said. Differences among employers could be addressed through sections or IRS experts within a separate Payroll and Employment Tax Division.
APA did not offer specific details on the duties and management authority for the recommended new division. Instead, APA provided a list of the types of services payroll professionals seek from the IRS, noting that the list was not all‑inclusive or in any particular order.
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Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.
