federal, state and local governments sunita b. lough, director

FEDERAL, STATE AND LOCAL GOVERNMENTS

Sunita B. Lough, Director

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Government Entities

• Michael D. Julianelle Director, Government Entities

Three Sub-functions:

• Federal, State and Local Governments

• Indian Tribal Governments

• Tax Exempt Bonds

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FSLG Organizational DesignFSLG Organizational Design

• Compliance and Program Management Staff– Manager, with a staff of 12 Analysts

– CPM staff is responsible for development, implementation, and monitoring of the annual Workplan through project development, workload selection, case processing, and data analysis. In addition, staff analysts are responsible for maintaining the FSLG Website at http://www.irs.gov/govt/fslg/index.html, the semiannual FSLG Newsletter, as well as all outreach and education tools, including technical and procedural guidance for the Field Specialists.

• Field Operations– 8 Groups

– 78 Field Specialists in 71 PODs

– The Field Groups conduct exams, compliance checks of Federal agencies and state and local governments. In addition, they conduct outreach and educational activities with our taxpayers.

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FEDERAL, STATE AND LOCAL GOVERNMENTS

1 PACIFIC COAST 3 MIDWEST 5 CENTRAL 7 NORTHEAST2 WESTERN 4 GULF COAST 6 SOUTHEAST 8 FEDERAL AGENCY**

**8 Federal Agency is Nationwide.

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FSLG Historical Overview

• Governments historically underserved

• Previously, issues handled by a small workforce in the former “Examination Division”

• Since 1987, IRS responsible for employment tax compliance activities for government entities

FSLG External Customers/Partners

• Federal government agencies

• State government agencies

• Local government entities

• Quasi-governmental entities

• Social Security Administration

• National Conference of State Social Security Administrators (NCSSSA)

• Government associations

• Practitioner organizations

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Examples Of Quasi- Governmental Agencies

• United States Postal Service

• Federal Deposit Insurance Corp (FDIC)

• Government National Mortgage Association

• Resolution Trust• Tennessee Valley

Authority

• National Railroad Passenger Corp. (Amtrak)

• Federal Election Commission

• Overseas Private Investment Corp.

• St. Lawrence Seaway Development Corp.

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Unique FSLG Environment

• Impact on public services• Political sensitivity• Application of Section 218 of the Social Security

Act for State and Local Governments• Joint responsibility with Social Security

Administration for Social Security and Medicare tax compliance

• Income tax-exempt status – creates potential for accommodation of abusive transactions

• IRC Section 115, i.e., what is a government?

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FSLG Compliance Issues

• Information Return Filing

• Employment Taxes (FITW, Social Security, Medicare)

• Incorrect or no Taxpayer Identification Numbers (TINs)

• Worker Classification

• Fringe Benefits

• Backup Withholding

• Settlement Payments

• Taxation of Foreign Workers/Vendors

• Abusive Tax Avoidance Transactions

• Excise Taxes

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Two FSLG Compliance Initiatives

1. Federal Agency

2. Large Entities (payrolls in excess of $40M)

– The customers of these two initiatives represent 38% of all governmental employers, accounting for 98% of government wage earners and taxes paid.

– FY2005 through 2007 closures:• 19 Federal Agency examinations• 54 Large entity examinations

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FY2007 GE Enforcement Emphasis

• Increase in complexity of examinations

• Improvement in compliance check selection process

• Analysis of type of compliance treatment - Focused examinations - Taxpayer burden reduction - Voluntary compliance programs - Role of education and outreach