I recently read a news story in the tax press about recommended changes to the IRS as part of the mandated report due next October under the Taxpayer First Act, P.L. 116-25. The act mandates a report to Congress relating to potential reorganization changes to the IRS. Although this act is directed at the Internal Revenue Service, and the Office of Chief Counsel is not part of the IRS but of the general counsel in the Treasury Department, I thought it appropriate to note that the time has long ago come to sever off the partnership branches of P&SI and create a new and separate partnership division with its own associate and deputy associate chief counsel.
At present, there are relatively few audits of technical partnership issues and there is very little guidance in the letter ruling process for partnership technical issues. This is caused, at least in part, by the absence of partnership technical expertise in both the Office of Chief Counsel in the national office, and in LB&I in the IRS. Yes, I know, there are special and senior counsel in P&SI that help stem the tide and who do an excellent job of bringing up the expertise and experience level but it is just not enough. And there is expertise in the Office of Tax Policy at Treasury in the partnership area, but clearly not enough.
The P&SI division is a very large hodge-podge of various specialty areas such as excise taxes, estate and gift, some tax credits, oil and gas, S corporations and then partnerships. The associate and deputy associate of the division have historically done as good a job as is possible in the circumstances but ever since the 90s, the expertise level has nevertheless been declining and the branches which work on partnerships has also been shrinking. Why is this happening?
To me, the answer lies in the ability of the partnership branches to attract experience and expertise throughout the branches and I think that this is caused by the historic failure of P&SI to attract both leadership capability and branch expertise because the leaders of that division must deal with the myriad of important issues facing the division other than partnerships. That is too hard a job for anyone, much less for someone who does not have true national partnership expertise and experience.
This is not to say that the leadership of P&SI over the years has not worked hard and long for not enough money. And it is also not to say that the leadership there over the years has not been very smart and dedicated. Far from it. Under the circumstances, having worked in that building, the job that is done is the best anyone could expect under the circumstances.
But the truth is that improvement starts at the top and then flows down the organizational chart. By that I mean that the branches who do partnerships need leadership which is truly expert and experienced and respected as such in the partnership tax community. Attracting such talent, I believe, requires making the job one where you can concentrate solely on partnership tax law. And attracting and retaining such leadership, I believe, will happen if the partnership branches were a separate division of Chief Counsel at 1111.
With such leadership in place, I believe that more new attorneys will opt to join the new partnership division instead of joining a law firm or an accounting firm because they will seek the mentoring and experience of distinguished partnership tax law national experts along with the lessened pressures of government work as compared to the impossible burdens put on associates today in the outside world.
At present, there is a very large expertise gap between the Chief Counsel partnership personnel, and those in LB&I and SBSE, as compared to those specialists in law and accounting firms. This knowledge and experience gap is narrowed some by the addition of senior and special counsel but that is only a small band aid on a very large wound.
I have the utmost respect for those who do the job today inside Counsel on partnerships. But given this limited potential opportunity for a new and separate partnership division in a future Counsel reorganization, the time has come to start the process of reversing this knowledge and experience gap.