The purpose of this section is to establish policy, procedures, and responsibility for organizing the mission, functions and structure of the IRS.

The definitions, principles and procedures that follow apply to all IRS organizational elements and activities. In addition, IRS organizational structures shall be established according to existing organization and staffing guidelines.

Approving official. The management official authorized to approve or disapprove implementation of a proposed reorganization or reorganization test. See list in Exhibit 1.

Chief officers and equivalent executives. Executives listed on the IRS organization chart who report to the Commissioner or Deputy Commissioner, currently the titled chief officers plus the regional commissioners, Chief Inspector, Taxpayer Advocate, National Director of Appeals, Director of Quality, and Chief, Headquarters Operations. The phase "chief officers and equivalent National Office executives" includes all except the regional commissioners.

District Office organizational levels and management titles. The head of a district office is the district director. A district may have four organizational levels under the district director: division, branch, section and unit.

Function. All or a clearly definable group of activities performed to achieve an organization's mission. The term is often used to refer to the organizations at the division level, such as " the Collection function," but every level has functions definable by a functional statement.

Management title. The title of address assigned to the head of an organizational unit, such as "chief" or "director." This may be an informal title placed in parentheses on the position description. For example: Supervisory Management Analyst (Chief, XYZ Branch). Different management titles than those defined in this publication may be proposed and decided by the approving official as long as the titles do not conflict with the defined titles. Also, titles established prior to this publication may continue until change is proposed and decided by the approving official.

Mission. A concise statement about the overall purpose of an organization expressed in terms of what the organization produces and for whom.

National Office organizational levels and management titles. The head of office for the National Office is the Deputy Commissioner, who is at the Commissioner's (or bureau) level.

Organization. A set of people working together to accomplish a mission. All organizations consist of a group of employees reporting to one manager. One organization may be divided into subordinate organizations. The lowest level organization is the first-line organization.

Organization chart. A diagram of boxes that shows the management titles of each organizational unit, and the reporting lines between them. An organization chart establishes the reporting relationships of organizations by lines between superior and subordinate organizations. See example in Exhibit 2.

Organizational level. The location of an organization within the larger office or total agency structure, such as "division " or "branch," starting at the top level (head of office) and working down through subordinate management levels.

Regional Office organizational levels and management titles. The head of a regional office is the regional commissioner, who is at the first level below the Commissioner. Regional offices may have three levels in addition to the regional commissioner: office, division and branch.

Reorganization. A change to an organization. Generally: eliminating, adding or redistributing the functions or duties of an organization. Specifically: changes to mission, function or organizational structure, including geographical boundaries and jurisdiction, reporting lines, office names and managerial titles.

Reorganization proposal. The written description and justification for a desired reorganization, describing the current and proposed organizations, the business case for change, and other facts essential for the approving official to make a well-informed decision.

Reorganization test. A reorganization implemented for a specified amount of time, to be evaluated for continuation, modification or
expansion.

Service and computing center organizational levels and management titles. The head of office for a service center or computing center is the center director who reports to an executive at the National Office, and is therefore part of the National Office organization. In both types of centers are four organizational levels under the office director: division, branch, section and unit. The respective management titles for both types of center are: division chief, branch chief, section chief and unit chief.

Staffing chart. An organization chart that lists in each box the number of positions (for each position title, series and grade) and the manager's span of control. See example in Exhibit 3.

Transfer of function. The transfer of all or part of an existing function from one organization to one that did not previously include that function.

Basic authority. Under 31 USC 321(c), the duties of officers and employees of the Internal Revenue Service are vested in the Secretary of the Treasury. The Secretary has retained the authority to approve significant bureau reorganizations and major changes in authority, function or scope of activities. The Commissioner has or has delegated to other officials the authority to approve other reorganizations.

Secretary of the Treasury authority. The Secretary defines certain aspects of the IRS organization through Treasury Orders, such as establishing or altering the Internal Revenue regions and districts (see Reorganization Plan No. 1 of 1952; IRC Section 7621; Executive Order No. 10289; and Executive Order No. 10574). Specific examples of IRS reorganizations for which the Secretary is the approving official include:

Commissioner authority. By Treasury Orders and Regulations, the Secretary has delegated most of the revenue and personnel functions and authorities to the Commissioner of Internal Revenue. The Commissioner determines the organizational structure of the Service except as reserved for the Secretary, above, or as otherwise specified by legislation or Executive Order.

Commissioner-assigned authority. The Commissioner has assigned certain organizational authority to the Deputy Commissioner and other IRS officials, as summarized in Exhibit 1.

The Commissioner is responsible for the sound organizational structure of the IRS. However, all IRS executives and managers shall continuously evaluate the effectiveness and efficiency of their organizations; plan, propose, and obtain review and approval of reorganizations as needed; and evaluate the effects of reorganizations.

Initiating offices are responsible for complying with this directive and completing the following actions.

The servicing personnel office. For all reorganizations, the personnel office that serves the affected organization provides guidance on and plans for personnel, training and labor relations actions. This includes analyzing the impact on authorized positions, work assignment criteria and incumbent employees; ensuring compliance with IRS, Treasury and government-wide directives; confirming consistency of staffing and structure with the stated mission and functions; assessing training needs; and identifying labor relations issues.

Chief, Consolidated Position Classification and National Director, Personnel Division. Any impact on the position classification of jobs (e.g., title, series, grade) is coordinated with and approved by the Atlanta, Georgia, office responsible for Servicewide position management and position classification. Changes to standard position descriptions (SPDs) or movement from SPDs to local position descriptions is approved by the Assistant Director, Performance and Position Management, at the National Office, in conjunction with the appropriate National Office function.

National Director for Budget. The National Director for Budget maintains all of the Service's financial codes and ensures that the payroll is correctly charged. For all reorganizations, the National Director for Budget provides guidance, for both National Office and field reorganizations, on the most effective financial structure; analyzes proposals for impact on the operating budget; prepares written comments on their concurrence and/or areas of concern; helps the initiating office propose an appropriate implementation date; and, when a reorganization is approved, assigns financial codes and forwards them to the Servicewide personnel payroll systems office for action. The National Director for Budget is available to provide advice and to answer any questions on proposed reorganizations.

National Director, Research and Statistics of Income Division. For all reorganization proposals, the National Director, Research and Statistics of Income Division is responsible for assigning work planning and control codes which are essential for managing all operations.

National Director, Strategic Planning Division. The National Director, Strategic Planning Division, is responsible for advising on and final review of proposals to be decided by a chief officer, equivalent executive or higher official, or for test organizations; preparing the Commissioner's proposals for reorganizations requiring the Secretary's approval; and, for providing guidance on other organizational changes.

Final reviewer. Every reorganization proposal will receive a final review on behalf of the approving official. The National Director, Strategic Planning Division conducts the final review if the approving official is a chief officer, equivalent executive or higher official. The approving official will ensure that a final review is done for other proposals. The final reviewer serves the approving official by:

Approving officials are responsible for deciding and communicating in writing whether, when and how a proposed reorganization will be implemented. The decision may be by signature on an approval line of the proposal or by other written document. The responsibilities of approving officials include:

The Service must continuously reevaluate its organization in order to adapt to changing conditions and other factors that could improve or adversely affect tax administration. Reorganization is one way to improve the effectiveness and the efficiency of IRS offices and, therefore, should generally be based on a sound cost-benefit analysis, discussed below.

Regardless of scope, all reorganizations begin with defining the need, planning changes to meet the need, and preparing the proposal to fully inform the approving official. For major reorganizations, such as those requiring high level approval, involving several functions or affecting many people, approximately five months is required from planning to implementation. Exhibit 5 is an optional checklist of the steps necessary to plan and process a reorganization.

Defining the need. A reorganization or reorganization test should be a solution to a business need or challenge, e.g., be related to business objectives and be cost beneficial. The initiating office must first identify the situation that a reorganization or test is proposed to improve or resolve; analyze information that establishes the existence of the need; and define what a reorganization or test is expected to achieve.

Planning. The initiating office analyzes the need for a reorganization and works out the details of the changes to be proposed.

Proposal. The initiating office prepares a written proposal that describes and justifies the need, the proposed changes, the expected impact, and the how the impact will be implemented and evaluated. The purpose of the proposal is to provide the approving official all information required to make a sound, informed decision. A comprehensive reorganization proposal will address all of the following subjects or explain why it is not applicable.

The planning and proposal are complete when all interested or affected offices have been duly consulted, and the proposal accounts for all the elements the approving official may need in order to make an well-informed decision.

When the proposal is complete the initiating office obtains the written comment or concurrence of the servicing personnel office, the National Director for Budget, and other officials with a line management or other business interest in the proposed reorganization, prior to forwarding the proposal to the approving official directly or through channels described below.

All reviews obtained before forwarding to the approving official must include the affected office's servicing personnel office, the National Director for Budget and, if the reorganization affects position classification, the Chief, Consolidated Position Classification. These reviewers analyze those aspects of the proposal that are specific to their responsibilities, including the organizational impact, overhead costs and labor costs from their perspective.

Final review is conducted by the approving official's office or, when the approving official is a chief officer, equivalent executive, or higher official, by the National Director, Strategic Planning Division.

For service center reorganizations and reorganization tests, the national executive in charge of service centers conducts a preliminary review and works with the National Director, Strategic Planning Division, on the final review for the approving official. (The proposal is addressed to the approving official through the National Director, Strategic Planning Division, with a simultaneous copy transmitted to the national executive in charge of service centers).

The review is complete when the concurrence or comments of all interested and affected offices have been documented, and the final review is prepared.

The proposal is transmitted to the approving official for decision. If the approving official is at a lower level than chief officer or equivalent executive, the initiating office forwards the proposal and a written analysis of the review results. If the approving official is a chief officer, equivalent executive or higher, the National Director, Strategic Planning Division forwards the proposal and a written analysis of the review results.

The approving official documents approval or disapproval in writing, and provides the initiating office any specific directions on when, how and by whom the reorganization will be implemented and evaluated. The initiating office ensures that all interested parties are informed of the decision.

Approval is complete only when the approving official communicates the decision in writing. (Earlier endorsement by an executive or even the approving official is not sufficient).

Once a reorganization is approved in writing, the implementing official (as agreed or designated by the approving official) may begin implementation. While the initiating office should plan in advance for implementation, most actions can only be taken after written approval. Following approval, at least eight weeks are required to complete the implementation, in order to notify all pertinent offices and to allow them to prepare and process personnel and other actions to effect the reorganization. The most common implementation responsibilities follow.

The implementing official notifies the various support services and other functions to take all necessary actions, communicates the reorganization to all parties with an interest in them, revises the IRM and other directives to reflect the reorganization, and ensures that all necessary actions are taken.

The National Director for Budget ensures correct financial coding and forwards the codes to the Servicewide personnel payroll office; coordinates all changes to financial systems; and officially notifies all affected financial offices.

The Servicewide personnel payroll office updates organizational titles on files; adds, changes or deletes system codes; updates report formats and the reports distribution list; and notifies the servicing personnel office when to implement changes.

The National Director, Research and Statistics of Income Division ensures that correct work planning and control coding is done, and forwards the correct codes to the affected offices.

The servicing personnel office identifies and makes personnel changes; obtains and provides guidance on employee impacts. The personnel function also, as needed, obtains special authorities such as for waiver of qualification requirements, extension of temporary appointment or temporary promotions, 90-day waiver after competitive appointment, and approval of extended details.

The labor relations staff determines labor relations implications; notifies the union; receives and analyzes union bargaining proposals; and assists in any negotiations on the impact and/or implementation of the reorganization.

The training organization helps determine the impact on employee duties in order to identify new training needs; arranges reprogramming and/or supplementing the training budget to meet training needs; develops and arranges distribution of training materials; and writes and issues implementing guidelines.

Facilities and information systems staff arrange space, property, telecommunications and computer support changes—helping the initiating office plan and complete physical moves, changes in workstations, telephone line and equipment changes, distribution/mail system changes, and security requirements; and revising the IRM correspondence handbook and records control schedules.

Implementation is complete when all Servicewide and local administrative systems are updated; personnel, facilities and other changes are done; and the IRM and other directives are revised.

At the time of approval, the approving official decides when, how and by whom the proposed evaluation plan will be carried out. The official responsible for evaluating the reorganization uses the evaluation plan (supplementing it as needed), and provides a written report to the approving official.

The initiating office may conduct the evaluation or participate in it. The National Director, Strategic Planning Division may provide guidance, and will participate if the approving official is a chief officer, equivalent executive or higher official.

The evaluation report will include conclusions about the impact of the reorganization or reorganization test, and may recommend modifications to the organization or test.