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IRS Large Examination Audits – Best Practices Working With Remote IRS Employees



IRS- Large Examination Audits - Best Practices Working With Remote IRS Employees

Executive Summary

Expanding the use of “remote work” for IRS examinations and projects offers many benefits to both the IRS and taxpayers.  The IRS has for many years used remote work concepts for deploying its international and engineering specialists on large examinations as an adjunct to a larger onsite examination.  In 2006, the IRS expanded the use of remote/offsite examinations as an alternative to the full scope examination for a limited number of pre-identified significant issues.  Targeted use of remote work concepts helps to better deploy IRS resources, especially for special projects requiring the use of limited resources.

The large public accounting firms have pioneered the use of remote work with clients in the performance of their audit function and the preparation of tax returns.  There has been general acceptance of remote work provided the client/taxpayer is confident that data is transmitted, maintained and accessed in a secure manner.

Background

The Subgroup was asked to provide advice on what we are seeing in the marketplace as best practices regarding the use of remote work and our thoughts on what types of issues and areas would lend themselves to a remote examination.  We were also asked to express our views regarding possible taxpayer concerns with respect to the use of remote examinations.

Our comments are focused on working remotely rather than telework arrangements with IRS employees.  Although many of the processes and technology requirements are similar, we would define teleworking as working “offsite” at almost any location, such as working from an IRS employee’s home office.  On the other hand, remote work would generally involve an IRS team located in multiple locations or at a location different from the taxpayer, (e.g., all examination team members assigned to a specific taxpayer could be working from different locations in either IRS offices or other places).  However, it may still be advisable to have certain key members of the examination team periodically or permanently at the taxpayer’s business site during the examination process.

Technology is available to enable the IRS to bring the right resources to the right place and at the right time.  The large accounting firms have pioneered the processes, data security, technology and controls necessary to implement remote work as part of their audit examination of large, and in many cases multinational, clients.  Accounting personnel from around the country (or from other countries) form audit teams that are connected through technology to provide these services.  Similar to the IRS, the accounting firms handle extremely confidential financial and tax information and have developed the technology, processes and controls to ensure that their clients’ information is secure.  Accounting firm audit clients are now accustomed to having a remote workforce with electronic access to the most confidential financial information.  In addition, the accounting firms may also prepare a client’s tax returns in a number of remote locations using different individuals with the optimal skills and availability. In that the IRS would face similar and analogous issues, much could be learned from the experiences and best practices of the large accounting firms.

Advantages – Remote Work

In addition to the significant cost and time savings, there are a number of advantages to remote work. These include:

  • Potentially more flexible work arrangements will be available and less travel will be required for IRS employees.
  • Remote work expands the potential recruiting pool by facilitating employment in locations and situations where professionals normally would not be available to work for the IRS, for example at locations that do not have an IRS office.
  • Employee relocation and travel expenses, as well as “bricks and mortar” office expenses, will be significantly reduced.
  • More efficiency will translate into shorter cycle time in handling examinations and projects due to:
    – Better spreading out of the workload and quicker redeployment of resources,
    – Less travel time and costs, and
    – Increased ability to bring people with the right skills, expertise and availability to any examination or project independent of geographic boundaries.
  • Remote work offers more diverse work experience to IRS personnel, e.g., a Boston employee can be included as part of the examination of a Texas energy company.

Accounting Firm Experience-Remote Work

A significant percentage of the professional, client-serving staff of the large accounting firms, including many partners, have dispensed with permanent physical offices in favor of “virtual” offices.  This translates into large cost savings and a greater focus on serving clients.  Many work from a client’s office, at a firm provided “visitor’s office” when traveling or in their home city, or from home.  Many of the accounting firm facilities use a “hoteling” concept where partners and employees sign in and reserve a designated visiting office, a conference room or other facilities. Appropriate office supplies, equipment such as printers and fax machines, and administrative assistance are provided.

We believe that the following considerations are important to implementing a successful remote work environment:

  • Technology is the key that enables remote work. Today’s remote worker must be supported by the technology that will enable him or her to work with multiple teams, geographies and taxpayers without being physically present.
  • All necessary information must be organized, retrievable and available on-line.
  • When working within a remote team, team members’ responsiveness and availability are paramount.
  • A simple assignment system for visitor offices needs to be established.  These visitor offices must be provided with appropriate supplies and technology (printer hook up, network access, etc.).
  • A standard technology platform across the organization is required, and it must include significant security features limiting access to laptop computers and limiting the unauthorized copying of sensitive materials.
  • Standardized processes and collaborative, project management software are needed to facilitate remote work examinations and projects.  The project software should include secure data storage, a discussion board, work flow and scheduling software, team calendar and team member profiles, instant messaging for team members, check in/check out document management software that provides version control, and the ability to easily transfer large data packages. The software may also include a secure interface allowing taxpayers access to certain information.
  • Supervisory personnel should have their own assigned “800 number” with the ability to convene conference calls, and the team or selected team members should be provided mobile internet access.
  • It is important to have a voice mail system that automatically sends an email to the IRS employee notifying him of a message in his voice mailbox.  The voice system might also have a secure capacity to reroute calls to an IRS employee’s private telephone number or to another number designated by the IRS employee.
  • An “experts to call” and a skills network should be established for a rapid response to tax technical and procedural questions.
  • Tax technical and industry knowledge should be available on line in a repository of information for employees similarly connected, (e.g., by industry focus, division, branch, etc.).

Recommendations

1. The IRS should consider significantly expanding the use of “remote work” for LB&I examinations and projects in order to obtain significant efficiency and cost savings benefits, as well as reduced disruption to taxpayers.  The IRS may want to pilot this process with a number of taxpayers presently participating in the CAP program.

2. The commitment and effort necessary for the development and design of the processes, controls and technology cannot be overestimated; however the rewards of a successful deployment are enormous.  The IRS as a first step should obtain as much information as possible from the large accounting firms, who have been operating in this manner for years, in order to obtain information on best practices and lessons learned.

3. In deploying the remote work paradigm, the IRS should work with taxpayers who have concerns.  We believe that having an IRS point of contact within the remote team is important in gaining taxpayer acceptance.  That person or persons may be “on site” at the taxpayer’s location for all or portions of the examination.  The use of remote IRS team members has been in use for years for specialists such as engineers and international tax personnel, and we believe that the transition to expand remote work will generally be well received by taxpayers.

IRS Posted

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One thought on “IRS Large Examination Audits – Best Practices Working With Remote IRS Employees

  1. willie says:

    Really solid recommendations. The need for IRS to upgrade technology and processes is critical.

    The problem that I have seen with IRS agents working remotely is the inability to correspond with taxpayers through email. For some reason, states are far better at generating secure links than the IRS. Despite a robust IT department, my very large company was unable to meet IRS requirements. We have no problems with various state auditors; in fact, IT does not get involved. Why???

    As a result, IRS has to fax or hard copy documents to us, and cannot provide excel spreadsheets.

    A second problem is that the IRS firewall limits the size of documents it will take through email.

    For a long time we transmitted large files to IRS through CD ROMs. I think I was the only person at my company who used CD ROMs long after our laptops eliminated their CD ROM drives.

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