4.90.1 FSLG Mission and Policy

Manual Transmittal

August 08, 2016

Purpose

(1) This transmits revised IRM 4.90.1, Federal, State and Local Governments, Mission and Policy.

Material Changes

(1) Rearranged and deleted sections in IRM 4.90.1.3.3.

(2) Deleted IRM 4.90.1.3.4(2).

(3) Deleted IRM 4.90.1.4.1(3).

(4) Deleted and added sections in IRM 4.90.1.5.1.

(5) Rewrote and deleted sections in IRM 4.90.1.5.2.

(6) Deleted IRM 4.90.1.5.3(2).

(7) Moved IRM 4.90.1.6 (3) through (7) to IRM 4.90.9, Procedures, Workpapers and Report Writing.

(8) Moved IRM 4.90.1.7, Congressional Correspondence, to IRM 4.90.14, Counsel Contact and Congressional Correspondence.

(9) Changed the title of IRM 4.90.1.5.1 and IRM 4.90.1.5.2

(10) Updated to meet the requirements of P.L. 111-274 (H.R. 946), the Plain Writing Act of 2010. The Act provides that writing must be clear, concise, well-organized, and follow other best practices appropriate to the subject or field and intended audience.

Effect on Other Documents

This supersedes IRM 4.90.1, Federal, State and Local Governments, Mission and Policy, dated June 27, 2014.

Audience

Tax Exempt and Government Entities
Federal, State and Local Governments

Effective Date

(08-08-2016)

Paul A. Marmolejo
Director, Federal, State and Local Governments
Tax Exempt and Government Entities

Federal, State and Local Governments Program

  1. The Federal, State and Local Governments (FSLG) function of Tax Exempt and Government Entities (TE/GE) oversees compliance and education activities for government units and their subordinate entities. FSLG:

    1. Promotes compliance with employment tax withholding/reporting and information reporting requirements.

    2. Ensures compliance with, and assists in the administration of social security and Medicare taxes under the provisions of Sections 210 and 218 of the Social Security Act.

  2. FSLG is made up of three parts:

    1. The Office of the Director

    2. Compliance and Program Management (CPM)

    3. Field Operations (FO)

  3. Each part’s responsibilities are listed below in IRM 4.90.1.3.

Goals

  1. The FSLG program combines compliance and enforcement initiatives with outreach and educational activities to accomplish these goals:

    1. Improve service to make voluntary compliance easier.

    2. Enforce the law to ensure everyone meets their federal tax obligations.

    3. Invest in high performance by maintaining a specially trained workforce through recruitment, training and technical development.

FSLG Responsibilities

  1. The following sections describe the responsibilities of FSLG’s three parts.

Office of the Director, FSLG

  1. FSLG Director responsibilities:

    a) Leads the FSLG management team in:
    • Communicating a vision for FSLG.

    • Creating new business solutions.

    • Maintaining and improving employee satisfaction.

    • Delivering FSLG goals and objectives.

    b) Works directly with the various TE/GE functions to develop strategies for various customer and compliance issues.
    c) Works with and maintains effective communications with the governmental community and key stakeholder groups including those listed, to deliver service and to improve voluntary compliance:
    • Social Security Administration (SSA)

    • TE/GE Advisory Committee (ACT)

    • National Conference of State Social Security Administrators (NCSSSA)

    d) Works with the Field Operations Manager (FO Manager) to ensure that our planning, strategy and program delivery align with our organizational goals and vision.
    e) Reviews and responds to correspondence issues.
    f) Reviews and executes closing agreements.
    g) Approves compliance initiatives, such as information gathering and examination projects.
    h) Approves and ensures the annual workplan is delivered.
    i) Reviews published guidance proposed by the Office of Chief Counsel to determine whether we can administer it.
    j) Oversees the Knowledge Network (K-Net) group.

FSLG Field Operations (FO)

  1. FO Manager responsibilities:

    1. Monitors and oversees FSLG field groups’ daily operations, identifies emerging issues for national consideration and improves work processes, systems and practices.

    2. Develops FSLG business goals including strategies to support the field operations.

    3. Works with the FSLG Director and CPM Manager to develop and deliver the annual workplan.

    4. Works with the FSLG Director to ensure planning, strategies and program delivery aligns with organizational goals and policies.

    5. Regularly briefs the FSLG Director on the status of field operations.

    6. Coordinates and develops education and outreach programs for field groups.

    7. Consults Counsel on FSLG issues.

    8. Reviews closing agreements with the CPM Manager for the FSLG Director’s approval.

    9. Collaborates with CPM to provide support for technical activities involving return classification, examination and other special initiatives, such as statistical sampling and nationwide information gathering projects.

    10. Collaborates with TE/GE Research and Analysis to identify potential noncompliance and FSLG taxpayer universe.

FSLG Compliance and Program Management

  1. CPM responsibilities:

    1. Delivers inventory.

    2. Monitors and analyzes programs.

    3. Provides program support.

    4. Measures quality.

    5. Monitors and analyzes workplan performance.

    6. Supports the overall FSLG mission through program coordination.

  2. CPM’s primary goal is developing the workplan, which includes:

    1. Strategies for delivery.

    2. Delivering the inventory necessary to meet it.

  3. CPM Manager responsibilities:

    1. Works with the FSLG Director and FO Manager to develop the annual workplan.

    2. Classifies, selects and delivers returns and non-return units (e.g. information return examinations and compliance checks) to field groups for audit.

    3. Maintains information referral procedures and records.

    4. Reviews closed audit cases subject to mandatory and quality review.

    5. Identifies and elevates trends in noncompliance and coordinate special initiatives (e.g. nationwide information-gathering projects).

    6. Assists the FSLG Director on guidance projects.

    7. Coordinates with the FSLG Director and FO Manager to develop procedural guidance for field employees.

    8. Develops and updates FSLG training materials.

FSLG Field Managers

  1. Field Managers are responsible for the supervision of FSLG Specialists (Specialists) in their geographical area.

FSLG Specialist

  1. Specialists are responsible for conducting compliance activities, including customer assistance activities, compliance checks and audits assigned by the Field Managers.

  2. Specialists may be asked to perform other duties, either individually or as part of a team, for CPM or for the FSLG Director, based on individual expertise or abilities.

  3. Specialists are expected to maintain working relationships with other federal, state and local officials in their assigned geographical areas to promote more efficient tax administration.

Compliance Strategy

  1. This section gives FSLG managers and Specialists an overview of the FSLG compliance strategy which includes:

    • Pre-filing

    • Filing

    • Post-filing

Pre-filing and Filing Activity

  1. Pre-filing and filing activities considered to be "outreach," are FSLG’s efforts directed at increasing compliance by providing guidance on general requirements, rather than reviewing individual compliance histories.

  2. The primary objective of outreach is to increase voluntary compliance by helping customers understand how to accurately and timely file employment tax returns and any other required returns. See IRM 22.40.1, Federal, State and Local Governments, Outreach, for outreach procedures.

  3. To answer taxpayer inquiries, Specialists should consult approved outreach and educational materials and publications on the FSLG website, Intranet and SharePoint sites.

Post-Filing Activity

  1. Post-filing activities consists of:

    • Compliance checks

    • Audits

    • Other contacts with customers

  2. Examples of post-filing activity cases that are included in the classification and case selection system include:

    • Claims for refund

    • Referrals from other Business Operating Divisions or TE/GE functions

    • Follow-up on customer assistance cases

    • Follow-up on Worker Classification Determinations (SS-8)

    • Follow-up on closing agreements

    • Follow-up on Section 218 Compliance Initiative cases

    • Regular classification cases

Customer Assistance

  1. Customer assistance is defined as providing assistance to individual entities initiated by either FSLG or government entities.

  2. Examples of customer assistance include the following:

    1. An entity identifies a reporting problem and requests FSLG assistance to correct it.

    2. FSLG secures information about an entity indicating it may not be in compliance and contacts the entity to offers assistance to understand its compliance obligations.

    3. An entity calls the IRS for help to resolve a compliance problem.

  3. Consider the entity for an audit or compliance check if:

    1. A customer declines IRS help.

    2. Specialists assist customers but they disagree on the outcome.

    3. Specialists determine entities have significant compliance issues and need substantial assistance to resolve the issues.

  4. Complete Form 5666, TE/GE Referral/Information Report, and send it with the customer assistance case file to CPM for classification and assignment before you do a compliance check or audit. See IRM 4.90.6, Referrals.

Federal Government Entities

  1. Critical concerns with federal entities are employment tax issues and information return reporting. While the number of federal entities are few, they have significant revenue impact due to their:

    1. High volume of expenditures, both payroll and nonpayroll.

    2. Involvement with public sector employers and employees.

  2. Section 530 of the Revenue Act of 1978 and Section 218 of the Social Security Act do not apply to federal entities.

  3. Federal entities are excluded from penalty and interest provisions under Policy Statement 20-2, IRM 1.2.20.1.2.

  4. There are unique protocols for working with federal entities, including the military.

  5. For unagreed issues related to Federal entities, see IRM 4.90.9, Procedures, Workpapers and Report Writing.

State and Local Government Entities

  1. State and local government employees are covered for social security and Medicare (FICA) in one of two ways:

    1. Section 218 Agreements.

    2. Mandatory 1991 Social Security provisions for those who are not members of a public retirement system.

    3. Mandatory Medicare

  2. State and local governments make up a majority of FSLG’s customers.

  3. Section 218 is one of the primary issues FSLG addresses.

Coordinating with Other Operating and Business Units

  1. Because FSLG shares customers and issues with other IRS functions, coordination with the following functions is often necessary to meet customer’s needs:

    • Governmental Liaison and Disclosure (GLD)

    • Wage and Investment (W&I)

    • Small Business and Self Employed (SB/SE)

    • Large Business and International (LB&I)

    • Taxpayer Advocate Service (TAS)

    • Other TE/GE functions

Governmental Liaison and Disclosure

  1. The office of Governmental Liaison and Disclosure (GLD) has a role distinct from the role of FSLG. The Governmental Liaisons (GLs) are the primary point of contact with federal, state and local entities to develop and build cooperative tax administration activities.

  2. FSLG deals with government entities in their roles as taxpaying entities.

  3. In their daily activities, GLs notify Specialists of compliance issues. Specialists contact a GL if they receive an inquiry about partnerships or joint projects with IRS.

Contacting SSA Regional Offices on Section 218 Coverage Issues

  1. The SSA is solely responsible for interpreting Section 218 Agreements and modifications. Contact the SSA for input or a determination when there is a dispute or question as to whether a position or positions are covered under an entity’s Section 218 agreement/modification.

  2. For situations where we are addressing a worker reclassification issue without question as to the position being covered under the 218 Agreement/modification, Specialists will not need to contact SSA as resolution of these issues are under the purview of the IRS.

  3. The MOU between the SSA and IRS provides that SSA is the arbiter of coverage issues relating to Section 218 Agreements. Under the Social Security Act, Sections 210 and 218, the SSA is responsible for determining coverage of state and local government employees under a state's Section 218 Agreement and modifications.

  4. Refer to IRM 4.90.9, Procedures, Workpapers and Report Writing, for the procedures to follow for Section 218 coverage issues.