New IRS Division Begins Work to
Break Down Barriers for
Large & Mid-Size Businesses

WASHINGTON - In another milestone for reorganizing the Internal Revenue Service, the Large and Mid-Size Business Division began operations Monday with an emphasis on helping taxpayers avoid problems before they start and streamlining the tax dispute process to ease burdens on businesses.

"We have an unprecedented opportunity to revolutionize how the IRS works with business. We envision an organization that responds rapidly to solve problems before they start and moves quicker to settle tax disputes," said Larry Langdon, Commissioner of the Large and Mid-Size Business Division (LMSB).

Langdon, along with LMSB Deputy Commissioner Deborah Nolan, will lead an organization serving 210,000 corporations and partnerships with at least $5 million in assets. These businesses are responsible for paying $712 billion annually in taxes. This is the second of the four new IRS Divisions to begin work. It’s part of the sweeping reorganization to transform the IRS from a geographic-based organization to a customer-focused agency built around the specialized needs of taxpayers. For example, LMSB will be organized by industry groups, a new specialized approach that will allow the agency to build greater expertise and improve service for specific industries.

Langdon said LMSB will embrace an innovative approach to tax administration involving the nation’s businesses.

"These businesses operate around the world, and they encounter many of the most complex and sophisticated tax issues the IRS sees," Langdon said. "Sorting through these problems can take years, which hurts the individual business and taxpayers as a whole."

"We want to take a new approach built around working with taxpayers to solve problems sooner, not later," he added.

This new LMSB strategy of problem solving includes these cornerstones:

• Assisting taxpayers with pre-filing services to avoid tax disputes.
• Seeking ways of identifying and resolving issues early between the IRS and taxpayers.
• Extensive use of Alternative Dispute Resolution techniques.
• Reducing the cost and duration of IRS examinations through pre-filing guidance and issue resolution.
• Specialized industry managers will provide consistent and timely responses on tax issues.

This cooperative approach is aimed at streamlining the tax process. Currently, some tax disputes can take up to eight or nine years to resolve, which is costly for business and the government. The new LMSB model will strive to prevent disputes from occurring and resolve other issues in a much shorter time period - while still applying the tax laws fully and fairly.

To help achieve this, LMSB is creating a streamlined management approach. Under the old IRS system, there were 10 "layers" of management. The new LMSB will feature a flatter system, with just five levels of management.

"These clearer management roles will make it less difficult, less costly and less contentious for business to work with the IRS," Langdon said.

Another key component will be a new degree of specialization in LMSB not found in the IRS’s old geographic-based structure. LMSB will be divided into five specialized industry sectors:

• Retailers, Food and Pharmaceuticals.
• Financial Services and Healthcare.
• Natural Resources.
• Communications, Technology and Media.
• Heavy Manufacturing, Construction and Transportation.

As the final pieces of LMSB are put into place in the months ahead, taxpayers should see no disruption in service. Managers and teams will remain in current locations, and they will complete current work.

Meanwhile, the reorganization process continues in other parts of the IRS. The Tax-Exempt and Government Entities Division began operation in December. Later this year, the other two new groups - the Wage and Investment Division and the Small Business and Self-Employed Division - will begin operation.

IRS Commissioner Charles O. Rossotti said the new organization will provide taxpayers with better, more efficient service.

"The IRS has the opportunity to rise to a new and much higher level of performance," Rossotti said. "If we are successful, millions of American taxpayers will benefit for years to come. They will have a tax agency serving them the way they expect to be served."

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