IRS Realigns Employee Plans Technical Work
On Jan. 1, 2015, the IRS transferred responsibility for certain technical work from its Employee Plans Division to the IRS Chief Counsel’s office. This transfer was known to be coming based on previous statements made by various IRS officials. Two recent IRS issuances, IRS Announcement 2014-34 and Revenue Procedure 2015-6, formalize this change.
For those unfamiliar with how the IRS works, a little background might be helpful. In 1998, the IRS Restructuring and Reform Act was enacted. This law was intended to modernize the IRS structure in a manner similar to private sector organizations in which administrative divisions are organized around “customers.”
At the top of the IRS structure is the Commissioner’s Office, which is analogous to a “home office” that oversees the organization. There are two other high-level offices that report up to the Commissioner. The first is the Office of the Deputy Commissioner for Operations Support, which generally oversees IRS support functions such as HR and budgeting. The second is the Deputy Commissioner for Services and Enforcement, which oversees the four primary operating divisions (as well as certain related functions):
- The Wage and Investment Division, which is primarily responsible for processing individual taxpayer returns, income tax withholding and providing taxpayer assistance and education;
- The Large Business and International Division, which is responsible for tax matters of large businesses and international tax returns;
- The Small Business/Self-employed Division, which oversees tax matters for smaller businesses and self-employed individuals; and
- The Tax-Exempt and Governmental Entities Division (TE/GE), which oversees tax matters and returns related to governmental entities (such as tax-exempt government bonds), organizations exempt from federal taxes (such as charities and trade associations) and employee plans, which oversees tax qualified retirement plans and IRAs.
Within the Commissioner’s Office is the office of the IRS Chief Counsel. The Chief Counsel is an individual appointed by the president and approved by the Senate. The job of the IRS Chief Counsel and the lawyers in that office is to provide legal advice on the interpretation, administration and enforcement of the tax laws. The Chief Counsel’s office provides legal and interpretive guidance to all the various IRS divisions.
The restructuring that was formalized at the beginning of 2015 was intended to align responsibilities at the TE/GE division in a way that matches up with the structure followed by the other three IRS operating divisions. IRS Announcement 2014-34 indicates that the responsibility for preparing revenue rulings, revenue procedures and other forms of guidance was moved from the TE/GE division to the IRS Chief Counsel’s Office. This is in keeping with that office’s primary function to provide legal advice on the interpretation of the tax laws. Until this realignment, the lawyers who worked within the TE/GE division provided many of these interpretations. According to IRS officials, the TE/GE division was the only operating division in which this occurred. The new structure brings TE/GE in line with the other IRS divisions.
As a result of this change, many of the lawyers in TE/GE who worked on issues related to retirement plans have been transferred to the Chief Counsel’s Office — moving from the Employee Plans office on North Capitol Street in Washington to the main IRS office on Constitution Avenue. Though it is likely that some work duties will be adjusted, the net result is that many of the same people still will be intimately involved in providing the necessary guidance that applies to qualified plans. One likely result of the realignment is that we will see more speakers from the Chief Counsel’s office joining us at ASPPA conferences.
ASPPA’s Government Affairs Committee has enjoyed a good working relationship with the Chief Counsel lawyers who work on qualified plan issues. The meetings we have had with the IRS over the years have included representatives from TE/GE and the Chief Counsel’s Office, as well as from the Treasury Department, since qualified retirement plan guidance has been a product of this “team.” At our last IRS meeting, ASPPA GAC was assured that the realignment would not result in any diminution in our good relations with the “team.”Craig P. Hoffman, APM, is ASPPA’s General Counsel and Director of Regulatory Affairs.