Transformation at the IRS
Antonio D. Tancredi, Isaac Trinidad, John Rodgers
Stacey Cotton Matthews, Steven Gill
Grand Canyon University
January 28, 2012
Transformation at the IRS
The manager may have the power to change an organization’s policies with the stroke of a pen but changing a deep-rooted culture may be the managers’ toughest task. Commissioner Charles Rossotti realized the task before him and the commitment it would take to produce the necessary changes at the Internal Revenue Service (IRS). Rossotti had to win the hearts and minds of the people that work at the IRS, politicians, and the American People to convince them that his proposed changes would produce a flatter organization, customer service oriented and up to date technology. The evaluation of the Transformation of the IRS case study will examine the stakeholders, what prompted the change, why the change was controversial, why the IRS considered outsourcing, and how Kotter’s 8-step model could be used in this transformation.
The primary stakeholders are the IRS, United States Government, and the American public. The IRS is the number one stakeholder because they are the collectors; they collect the taxes and fund the Government. The Government is a stakeholder because they depend on the IRS as their main source of income. The taxes collected fund the government and allow it to function. The American public is a stakeholder because they pay income taxes to fund the government through the IRS. Prior to 1998, the main focus for the IRS was to collect the taxes by whatever means necessary. After that date, it became mandated that they would provide a service to its customers first, and collect the taxes second. One of the main issues with dealing with the American public as a customer is the diversity ranging from individuals, small businesses, self-employed, large corporations, government entities and non-profit organizations. Each of these taxpayers has unique needs that need to be fulfilled. These differences made customer services a nightmare. In order for the IRS to care for stakeholders, specialized personnel were needed in each of the various fields of taxation in order to provide a top quality service. Once this was complete the IRS has been able to better deal with the primary stakeholder, the American public. The IRS success rate of collecting voluntary tax payments is the highest in the world and the new proposed changes would increase the percentage even more. The main reason for the increase projected was based on the fact that people are more willing to pay when they have a top quality service and get their questions answered (Palmer, I., Dunford, R., & Akin, G. 2009). In the last two decades of the 20th Century the IRS was constantly criticized from every aspect of tax collection, both current and delinquent taxes. The criticism came from almost every corner of the spectrum and the issues where many. The issues ranged from tax forms that where overly complex, taxpayer rights being violated, questions not be answered, and collection and compliance randomly enforced. The biggest problem with these issues was that the IRS systems were “outdated and service levels strikingly low compared with those of private-sector industries” (Edmondson & Frei, 2002). With the complaints in hand Commissioner Rossotti asked for all past studies on needed improvements and reviewed 5,000 of them before he decided that “there had to be bigger, more sweeping change” to reverse the trends and attitudes within the IRS and from the public.
First of all, the change “was not just a good idea, it was mandated by law” (Edmondson & Frei, 2002), the Restructuring and Reform Act in 1998 (RRA98) was the beginning of the transformation of the IRS. The focus was to change the image of the IRS by redirecting a majority of the efforts into customer service not just collecting taxes. The objective...