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CASE STUDY – 11
IT’S THE IRS – LET’S MAKE A DEAL!
Submitted to,
Professor Abhilash G N
On
August 13, 2014
In partial fulfillment of the requirements of
the course
Principles of Management
By
Nivin Vinoi
P14199
PGDM-B
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Table of Contents
Executive Summary…………………………………………………………………3
Situational Analysis………………………………………………………………….4
Problem Statement………………………………………………………………….4
Action Plan…………………………………………………………………………4
Implementation……………………………………………………………………..4
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EXECUTIVE SUMMARY
This case is about Internal Revenue Service (IRS) which ones regarded as the feared and relentless
collection agency changed their face through the introduction of new program called “Offer in
Compromise”. This program helped a lot of people to get out from tax debt and government to
bring revenue that might never be collected.
(Word count: 54)
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SITUATION ANALYSIS
The Internal Revenue Service (IRS) is recognized as the most feared and relentless collection
agency in United States. Abandoning its strong-arm tactics for dealing with delinquent taxpayers,
the agency reintroduced a program called “Offer in Compromise”. Offer in Compromise allows
taxpayers to get settlement offer through which they pay a portion of their tax debt in exchange
for a zero balance. District managers were given the authority necessary to accept, reject, or
withdraw compromise offers. Government is more interested in getting money in the bank today
instead of money in the bank in the future. It was a great relief for peoples like divorced couples,
failed-business owners, recovering alcoholics thatthey get a chance to get out from this tax depth.
This program helped IRS to strengthen the overall image of them.
PROBLEM STATEMENT
How to help the tax debtors to get out from that?
ACTION PLAN
Introduced new program called “Offer in Compromise”.
IMPLEMENTATION
The new program “Offer in Compromise” was a great boon for lot of people. All the tax
delinquents are not necessarily deadbeats or cheats. Due to bad business investment or family
illness they just let taxes get out of hand. This program helped them a lot to settle down their debt.
And also it is good for the government too because for searching the non-tax payers and make
them pay the amount is not an easy job. There are lot of costs like search cost, legal cost, punish
cost etc. So government feltit’sbetter to get money through this new program rather than wasting
money for these costs. This helped to end snowball effect and it encouraged people to consult the
IRS officials and tell about their bad conditions. This also helped government to get some quick
money. There were lot of people who get into debt due to bad investments. It’s duty of a
government to make good economic environment, but here they failed to provide it. It may be
also a reason why they introduced this new scheme, because they felt that as a government they
failed to do their duty. There is also a lot of disadvantages for this new scheme too. IRS doesn’t
cared about the regular tax payers. Through this new program they doesn’t get any benefits.
Actually it will be encouraging for them if the officials give some discounts or gifts for them.
Fairnesswas also an issue. Another disadvantagewasthatIRS alwaysgo after the small guys rather
than big guys. This also made a bad image about IRS among some people. For a short term this
program was good. But as a long term goal it is not that much beneficial because the debts that
are returned off will pile up year by year and it will all come up on government’s shoulders. So in
future they will have to make necessary changes in this program. Overall this IRS program was a
success. This program of negotiation and compromise helped to bring revenue that might
otherwise never be collected and also helped to rework the overall image of IRS.
(Word count: 509)
