There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: Hello everyone. It's another federal tax update podcast. I'm Roger Harris and as always, I am joined by Annie Schwab for our first post April 15th podcast. So, Annie, I know you're doing well because April 15th is past, but how are you doing otherwise?

Annie Schwab: I'm doing great. It's been a big relief to have the deadline passed [00:00:30] us. Unfortunately, I know there are a lot of states that have extended the deadlines due to disaster areas, so maybe not everyone is completely celebrating, but I'll take the 15th as a milestone.

Roger Harris: We'll, we'll we'll take that as a reason to celebrate. Um, this is also, uh, our 50th podcast, which I don't know. Annie, did you ever think we'd get to 50?

Annie Schwab: I wasn't sure we would have 50 people watching.

Roger Harris: I wasn't sure we'd get to two, but this is 50. Uh, and we felt like. Speaking of celebrating [00:01:00] that if we were going to, uh, have a 50th podcast, we should bring in a special guest. And, uh, so we have a very special guest and also someone that I consider a friend. So, Andy, why don't you introduce our our guest for our 50th podcast?

Annie Schwab: I'll be happy to. Um, it is my pleasure to have with us today, Terry Lemons. Um, he's a fabulous guy who spent 26 years at the IRS. Um, including 11 years as chief of communications and liaison. Um, where he advised the [00:01:30] IRS leadership and led outreach to Congress, the media, tax professionals, and over 100,000 employees. Um, he's launched the agency's social media program. He created what's known as the Dirty Dozen tax scam list. Um, and he co-led national efforts to fight against related tax related identity theft. Terry is a proud University of Missouri journalism grad. Um, he's appeared on the NBC today show. He's been on News Hour [00:02:00] and more before joining the IRS. He was an award winning journalist and Washington bureau chief of the Arkansas Democrat Gazette, covering the white House and Congress. And today he's a consultant, speaker and freelance writer. So welcome, Jerry. It's our pleasure to have you here.

Terry Lemons: Yeah. Thanks for having me. You guys are fabulous, and I'm delighted to join you.

Roger Harris: It's an honor to have you for our 50th and any kind of touched on it, but, um, I know Terry, you're a proud Missouri [00:02:30] graduate and fan and the Saint Louis Cardinals. And I guess the first question is, how did you get from Missouri to DC? Uh, what brought you to to DC? Because I know you obviously didn't grow up there.

Terry Lemons: Yeah, that's that's a great question, Roger. Um, I spent, uh, you know, all my, my early life and, you know, first couple of years of my professional career in Missouri. But I wound up down in Arkansas, actually, in little Rock, Arkansas, working for the newspaper [00:03:00] there in little Rock. The Arkansas Democrat Gazette went down there in 1990, which is, you know, eons ago now. But I managed to get in on the ground floor of covering Bill Clinton's presidential race in 1992. And the way events unfolded, I, you know, the president got elected and the newspaper had to add people in Washington. So my wife and I ended up coming to Washington [00:03:30] and got a ringside seat to everything that President Clinton. And at times it felt like half of Arkansas was doing in Washington. So I checked a lot of my journalism boxes covering Congress and the white House, and the babies started coming along. And, um, you know, that's when I started looking, uh, looking into the tax world. So but anyway, that's that's a little bit of my backstory and how I got to Washington.

Roger Harris: Yeah. Yeah, that's that's really interesting that politics brought you to [00:04:00] DC, which guess what, that's probably how most people ended up there some form and then kind of what was the IRS, how did that fit into. You mentioned you started having kids. And I guess maybe we're looking for something a little more. I don't know how stable the newspaper business was then, probably more stable than it is today. But, um, what what led you to the IRS?

Terry Lemons: Well, kind of a combination of factors. Roger. Um, you know, at that point, you know, the kids [00:04:30] were coming and, you know, when you're working as a reporter, um, in DC, the news cycle really is nonstop. So it's not really family friendly hours. But I also was kind of at a career crossroads. Uh, the newspaper industry was having some struggles at the time. Uh, you know, Clinton's second term was starting to, you know, you know, the end was starting to get in sight. So I had kind of a question, you know, was I going to continue with journalism, take a smaller job at a bigger newspaper and, you know, spend ten years kind of fighting [00:05:00] my way back to where I was or would I try something different? And as it turned out, in 1998, the IRS was recovering from a really brutal series of hearings up in the Senate Finance Committee, um, led by Chairman Roth at the time. And those, you know, those hearings really left the agency in, you know, they had a lot of problems going on. It led to the Restructuring Act of 1998, and an opportunity [00:05:30] presented itself, um, in the press shop at the IRS. They were looking for somebody with a journalism background, and it turned out to be a good fit. So I came to the IRS, you know, again, a long time ago in a galaxy far, far away in 1998.

Roger Harris: Yeah.

Annie Schwab: Interesting. So how many um, so obviously you've worked with several people over, over your, your time there. Um, but any memorable moments IRS commissioners that you really enjoyed working with, or stories that maybe you want to share? [00:06:00]

Terry Lemons: Oh my gosh. Um, you know, this this may be the, uh, the book for down the road, but it it's an amazing place to work at. And I know it's an agency that's really easy to stereotype. Yeah. And, you know, people in the tax community, I think, have a sense of, you know, what a big portfolio the agency has. Uh, but working inside the IRS is really interesting. Uh, the employees are incredibly dedicated. And there are, you know, some great public servants at that agency. And I was very fortunate [00:06:30] to work alongside a lot of, you know, great and interesting people. Um, and, you know, one of the more interesting things I was able to do, I think, was that I was able to work, you know, in various roles with six different commissioners at the IRS.

Roger Harris: Yeah. I think people don't realize how close Terry was to the commissioners. I mean, you very seldom saw the commissioner without seeing Terry, whether it was a congressional hearing or, I know, speaking at tax forums. And I guess one of the questions, [00:07:00] Terry, I mean, commissioners are obviously different. Their focus is different. Their backgrounds are different. Um, how much difference did the commissioner make? Because this is a big agency. I don't know. In your time there, I know it's been over 100,000 people. We we don't know where it stands today. It depends on what what today is as to how many employees are there today. But how did commissioners influence these? An agency that large or did they [00:07:30] or did they just kind of fold in. But I'm assuming they did put their stamp on it.

Terry Lemons: Oh, the commissioners have a huge influence at the IRS. It's one of two politically appointed positions in the agency. The agency traditionally has been, you know, filled with, you know, career civil servants, really going back to the 1950s. But the commissioner really is kind of like, you know, you use a football analogy which, you know, Roger, Roger and I love to do.

Roger Harris: That's right.

Terry Lemons: To use a football analogy, [00:08:00] it really he really is kind of the head coach and general manager for, for the agency. So each commissioner really is unique. And, you know, they have, uh, you know, personal goals. They're delivering goals for, you know, the administration. It's in power. And, you know, basically, you know, it's very much different Commissioner to commissioner. So, um, it's it it it changes. But it's also for me, that kind of helped keep the job fresh, because every [00:08:30] one of those commissioners had a different perspective. They had different areas to focus on. And, um, for me, I was very fortunate to be able to learn a lot from all of them.

Roger Harris: There's been a lot of discussion about the background that a commissioner should bring. Should they be a tax attorney, should they, you know, you know, and I think, you know, I'm trying to think of all the six I mean some I'm sure were attorneys. Some were not. Did does that matter? I mean, is there a is there a profile for the perfect IRS commissioner?

Terry Lemons: You [00:09:00] know, this is something that's really been been debated about, you know, what's the best approach. And there's really you know, there's been kind of two leading, you know, schools of thought. You know, traditionally, you know, if you go back 60s and 70s, you know, even in the 80s and 90s, a lot of times those commissioners, you know, had tax backgrounds. They were lawyers, you know, they'd worked in accounting fields. So they had really strong, uh, you know, tax backgrounds coming out [00:09:30] of the IRS problems in the late 1990s that led to the Restructuring and Reorganization Act of 1998. The thought was they needed a professional manager in the role. And that actually got, you know, added into some of the legislation in 1998 and that, you know, from that, you know, you got several commissioners that came out of that legacy. Commissioner Charles Rosati, who came in in the late 90s and was a real visionary, um, you know, Commissioner Mark Everson, [00:10:00] uh, Commissioner Doug Shulman, all of them had management backgrounds. Uh, but on the flip side of it, you know, we're still getting people with tax backgrounds. Commissioner Chuck Rettig, uh, for instance, you know, it's well known out in the tax community. So there's really kind of two different types, you know, two different models that have been out there. I think the real thing, though. I mean, if you're if you're going to be a commissioner, I think the biggest requirement is that you've got to have a really strong stomach.

Roger Harris: And strong stomach.

Terry Lemons: Yep. Thick skin [00:10:30] helps too. Roger.

Roger Harris: What's it like preparing a commissioner to testify before Congress? Because I'm usually. Those are not easy hearings.

Terry Lemons: No, that is for me, one of the more interesting behind the scenes thing that, you know, people may not realize. And, you know, in order to, you know, to appear before Congress, you know, Roger, I know you've been up in front of Congress a lot of times testifying, [00:11:00] but it's really kind of a unique situation, and it requires a lot of work. It requires your congressional team to have good relations with the staff up on the committees in Congress to understand what the members are looking for, what the chair chairman is looking for. Uh, but part of it is, is, you know, you've got to get the commissioner ready in terms of what the state of play at the agency is. And for an agency with a big portfolio like the IRS, that means a lot of prep work [00:11:30] has to go in. You know, the commissioner has to be comfortable with where the agency is at on things. Um, you know, so there's a lot of like, you know, reading, preparing. But the other thing is, you know, the commissioner also has to be very up on current events. The commissioner has to be, you know, familiar with what's going on, you know, with legislative proposals. So it's a really you know, it's a little bit like, you know, preparing for a doctoral thesis. You know, for those of you who've gone through the college [00:12:00] track, I mean, you know, you're you're up there and you know, you've you've got to be ready for anything. So being nimble and being on your toes is really important.

Roger Harris: Yeah, I have testified before Congress, but I was never the target of Congress when I went there. Like sometimes I know commissioners were brought in, um, to answer for things that in the congressmen or senators minds weren't going particularly well. So, uh, yeah, I don't think my experience would be quite as difficult as some of the commissioners, [00:12:30] but they were, you know, I had the pleasure of being on air SAC when Commissioner Rosati was there. So I got to know him fairly well and, uh, really liked him, uh, some, you know, more than others. But I guess before I got on air sac, I probably couldn't have told you the commissioner was. It wasn't something that in my day to day work, I really came into contact with. Now, you know, it's a different world.

Terry Lemons: Yeah. Those commissioners are really important for, [00:13:00] you know, setting the goal lines for the agency. And, you know, really making, you know, big strategic decisions in terms of where the priorities are for the agency. And, you know, speaking of, you know, Charles Rosati, I mean, his goal was really to reorganize the IRS.

Roger Harris: After the 98 act. Yeah.

Terry Lemons: Amazing visionary. Amazing visionary. And then, you know, then, uh, uh, Commissioner Mark Everson, um, you know, in the early 2000, the IRS really had not been doing a lot in the compliance [00:13:30] space. So, you know, for for Everson, a big priority was getting the IRS back into compliance and, you know, making sure the tax laws were enforced.

Roger Harris: Yeah. I'll tell you one funny story before I let Annie talk, um, I was the chair of our SAC. And as I was going out, Rosati was leaving and Everson was coming in, and this was back when the IRS actually had money. So they allowed the the sack to go to the IRS forums and do focus groups. And [00:14:00] we were in Atlantic City, and one of his security details came over and said, I never met Commissioner Everson said he would like to meet with you. And I went, okay. Um, so I was escorted to his suite at whatever hotel we were in in Atlantic City. I walk in this suite. I don't even know what he looks like. And and so I'm walking around trying to figure out, you know, which of these people is Commissioner Everson? He comes out, shake hands, sit down. He looks at me [00:14:30] and says, well, you've probably been in the IRS longer than I have. You got any plans? What should I do? And I'm thinking you're asking me. I'm like, okay, it's so that was my first introduction to Commissioner Everson. And then I exited and he stayed. I don't think he took any of my ideas, by the way, which is the smartest thing he ever did.

Terry Lemons: I don't know, but I mean, for me, that's one of the hallmarks of a good commissioner is that you can't come into the job assuming [00:15:00] you know everything. I mean, it's such a big agency and, you know, there's complex IT systems, um, you know, that the number of areas that come in and for me that, you know, that's a hallmark, not just of, you know, Commissioner Everson, but the other commissioners is coming in and listening and understanding. Um, and, you know, that's one of those things where they have a real gift for, you know, being able to come in, listen, digest this stuff. Um, people like Commissioner Koskinen, Commissioner Werfel were just amazing, you know, quick [00:15:30] studies. Um, you know, I mean, you've really got to be super sharp and, you know, have to be able to listen to a lot of different voices to run the agency.

Roger Harris: Well, right.

Annie Schwab: Yeah. Roger and I had the opportunity to sit with Warfel, um, last I think it was summer, last summer on one of the tax forms and that, um, out here in Dallas. And it was fantastic and very interesting, very open. Wanted to I mean, wanted to hear from from the group, um, wanted [00:16:00] to know what our struggles were, um, what thoughts we had on certain things. It was quite interesting and very eye opening to see, um, you know, someone in that position asking us what we thought. Um, so I enjoyed that very much.

Terry Lemons: That's really important, I think. And, you know, for tax professionals out there, um, you know, and I know at times tax professionals feel like the IRS isn't listening. Um, but it's really important for [00:16:30] the agency to listen to the tax professional community on things, you know, in settings like Annie's describing. Because ultimately, we we can't run the nation's tax system. You know, the IRS has to work in partnership, you know, with know, tax professionals, you know, groups like pageant, um, and others. I mean, this is not, you know, I mean, you can't do it alone. The IRS cannot do it alone. So, you know, having those kind of interactions, you know, with the tax professional community, um, with software [00:17:00] and financial community, you know, and with taxpayers is really important, you know, for the agency to, you know, be able to, you know, function effectively. And, you know, and ultimately, at the end of the day, we can't run the tax system without the help of tax professionals.

Annie Schwab: Yes, I, I feel that pain sometimes like that. You know, there's legislation that's coming out. But how to implement that in the real world sometimes is is hard for hard for us to accept and to understand. [00:17:30] You know what? Look at IRC, for example. I mean good intentions, but the implementation of it was disastrous. Um, and so it's sometimes it's hard to, um, as a tax professional, um, as well as I'm sure many taxpayers, you know, they they feel that the distance between what's happening in DC and in the real world where they're sitting. Um, is, is so far apart that it's hard to comprehend exactly what's happening. Um, but I understand.

Terry Lemons: Yeah. [00:18:00] And, you know, I think IRC is a great example of, you know, that that came out of a crisis situation with the pandemic. You know, Congress was hustling to head off the worst effects of the pandemic. And you have something like the IRC, the employee retention credit also called the employee retention tax credit, IRC. And that's one of those where there were good intentions in Congress, certainly on it. Uh, but when you get down to the specifics in [00:18:30] terms of, you know, how do you legally interpret the legislation, you know, it takes time for the lawyers at the IRS and at the Treasury Department to review those. They've got to review it. And then basically after that, you know, after that legal guidance is done. That's when our operational people I'm still saying our, the IRS operational people need to go in, you know, and then figure out how to actually implement it. Uh, IRC was one of the most complex, complex tax laws the IRS [00:19:00] has ever encountered. And, um, it was well intentioned, you know, and I do think the credit got to a lot of businesses that really needed it. But in those, you know, later months and years, I mean, it did, you know, there were problems that developed with it? But for me, that's kind of emblematic of, you know, what a challenge it is really delivering on the nation's tax laws, especially, you know, if you look at the tax code, it's massive, right? I mean, you know, it could fill the whole back wall here in terms of the rules and regulations on [00:19:30] it. And that really adds to the complexity of the IRS. And, um, I don't know, there's kind of a I think there's a bit of a stereotype out there where people think that the IRS enjoys the complexity. If you if you talk to any IRS employee, they do not enjoy the complexity of it. And it makes IRS employees jobs just as hard as it makes tax professionals jobs.

Roger Harris: Yeah. And I don't think people sometimes appreciate how difficult something. Well, let me say some people [00:20:00] I'm going to say Congress. The IRC, in putting it into a bill isn't complicated. We're going to give credits to people for keeping employees employed. And here's how much. And and so it's what, maybe 4 or 5 paragraphs without realizing all the work that the IRS has to do to take those 4 or 5 paragraphs or 4 or 5 pages, whatever it is, and walk through every possible scenario that is out there for that. And [00:20:30] to Terry's point, we were in the middle of a pandemic. We none of us knew what tomorrow brought. You know, when that pandemic hit and we were just trying to find ways to get money to businesses to keep the doors open while we were trying to figure out, you know, how the pandemic was going to impact us. And in hindsight, we all see things that we would have done differently. I mean, but we didn't have hindsight in 2020. We were hoping [00:21:00] to we we weren't worried about the past. We were worried about the future. But I still think that there's some learning that could be done there, both for Congress and the IRS. And I'm hoping that's that's going to be done. But I think where I want to kind of take this to, because we'll eventually have to get to the current situation we find ourselves in.

Roger Harris: But and I'll ask Terry to speak to this and Annie at the same thing. You guys have always been easy, [00:21:30] uh, targets for people, you know, and and I'm saying you, like you're still there, you know, but, uh, but, you know, people who you know, I've heard stories about not telling people you work for the IRS. You tell people you work for Treasury because I think you're, you know, you're kind of put in this group of, you know, all you do is you audit people, you take their money, you do all these bad things. But the IRS does serve a very important role in our country and in our tax system that [00:22:00] we do have a voluntary tax system. But not everybody, let's say volunteers equally, if that's the right way to say it. And, and you know, if, if I'm going to do my job to be compliant, I expect others to do the things. And and I guess I'm asking you to look inside personally. How difficult at times is it, you know, to to work around the perception that you're the bad guys when you really serve? I think, a very important role [00:22:30] in our country and one that, um, if you guys don't function, Congress doesn't have any money to spend.

Terry Lemons: Yeah, those are great points, Roger. Those are great points. And personally, I've always been amused. Um, you know, if I'm like in a social setting or something like that, let's say, um, you know, people ask, what do I do? And when I tell them I who I worked for, it's [00:23:00] a really quick way to kill a party. And. You know, all of a sudden it's like, oh, you know, people start shrinking into the background. Um, from my perspective, you know, doing communications for the IRS and various roles, I always found the the stereotype for the IRS as something we could play off. And in terms of, you know, when we did taxpayer friendly things, you know, we were able to kind of, you know, [00:23:30] play off the stereotype of the agency. See, you know, we really do have things that can help. Um, and, you know, and this is even, you know, our social media programs, uh, you know, out on Instagram and things like that. We were able to kind of gently, you know, kind of poke fun at that, you know, stereotype of the IRS. Um, you know, all we're doing is auditing people. I mean, the reality of it is, is what, you know, what the IRS does for most Americans is, you know, get their refunds out to them. Um, the number of people that are audited is, you know, you [00:24:00] know, pretty low percentage wise. Mhm. Um, but you know, that that it's just the reality. If you go back through the history, the tax collector, uh, has never been a popular figure.

Roger Harris: No he's not.

Terry Lemons: Yeah. You go back to biblical times all the way up to the Beatles. You know, it's, you know, it's an easy target. It's an easy target. And, you know, and certainly, you know, no politician has ever lost a vote, you know, going after the IRS. But, you know, at the end [00:24:30] of the day, I mean, you got to collect the revenue somehow. And, um, you know, it's just, you know, at the end of the day, we're the ones we, the IRS, are the ones providing, you know, the revenue to make things possible, like, you know, the nation's defense, education. I mean, you know, all the things that government does. And, you know, I mean, you can certainly have a debate about, you know, the size and shape of government and things like that. But at the end of the day, you've got to collect the revenue somehow.

Annie Schwab: Absolutely. [00:25:00] And just over the past couple of weeks with we've seen so much change right now at the IRS. People are being fired. Let go resigning. And and that does as a tax professional that does cause concern. Um, you know, I wonder how well the IRS is going to be run with less people. And maybe they were. Maybe there was a lot of, um, you know, fact there, I guess, um, you know, maybe maybe it wasn't so, [00:25:30] um, properly run. But it does raise concern for tax professionals and I think for taxpayers too. I mean, just this tax season, a lot of, you know, people are joke, well, I don't need to worry about my tax return. There's nobody there to look at it. And that's not true. But that is the the type of sentiment that's coming out.

Roger Harris: Um, yeah. Well let's hope that isn't true. You know that. But there is more talk about, you know, particularly in the business community, because there's not as much third party reporting. I mean, the poor guy who a woman [00:26:00] who works and gets a W2, you don't have to order them. You know what they earn. You know everything about them. But in the business community, you don't have near as much third party reporting. And so, um, you're beginning to hear some rumblings about, well, I don't have to do this. I don't have to do that. There's nobody out there to catch me. I'll, you know, you know, what's my chances of getting caught and all that sort of thing. So, you know, there's some there's some dangers, I tell you. I have to ask you one question. Did you ever carry a gun? Because [00:26:30] there seems to have been this theory that all IRS people were armed. That was going on for a while.

Terry Lemons: Yeah, I had one of my neighbors stop me in the grocery store asking me about that. Really? And I said, do you see me carrying a Glock on my, you know. Yeah. The only thing the only thing I think I had loaded, uh, you know, was my tongue. That was the only weapon I had. But, [00:27:00] you know, only a small percentage of of IRS employees in criminal investigation, um, you know, those who are trained and authorized have it. I mean, there are criminal investigations like other law enforcement. And, I mean, you know, in reality, you're talking about 2 or 3000 people, you know, out of the IRS population that, you know, that carry weapons. But again, I mean, it's an easy agency to stereotype. Oh, yeah. The reality of it is, is that, uh, you know, uh, to to steal a line from [00:27:30] Commissioner Werfel. You know, most of our people are only armed with a calculator.

Roger Harris: So but that got so much traction and I think so many people believed it. You know, when when the funding came. When was it? Three years ago. Two years ago. And the narrative became that this was going to arm 84,000 IRS agents. And I kept telling people, I said, well, if that was true, don't you think you'd have seen one by now? I mean, you know, it's been a few years and I still haven't seen an arm. Well, [00:28:00] I have I have seen an arm. Irs agent, uh, basically being the security guard for the commissioner, but, uh, but on a day to day activity and it's just it's things like that where, again, you're the agency is easy to pick on and it's easy to stereotype and it's easy to make the bad guy. And, and I think at times we just overlook the, the good that is done. Now there like everybody else, you got bad people in any agency and you got bad people in every company. And I've said for [00:28:30] years that the sad part about the IRS is you're judged by your worst, and other people don't get judged that way. They get judged, hopefully by their best. And that makes it difficult. And and we're going through a challenging time right now where I think a lot of it is, is this just an easy group of people to pick on? And yet you got to remember, there are people like Terry that work there every day and do a do a well used to work there every day. I keep still not used [00:29:00] to the fact you're not going to be there when I go there next week, but uh, it's uh, you know, it's something I think the practitioner community recognizes the importance of the IRS.

Terry Lemons: Yeah. A couple thoughts on that, Roger. I mean, first of all, I think if you talk to any IRS employee, you know, they're going to be right up front. Yeah, the agency could be more efficient. And I don't think you'll get any argument that the agency could be more efficient. There are things [00:29:30] that could be done better. Things that could be done with fewer people. The transformation effort that was underway back in 2023 and 24. You know, the long term goals out of that was to try having more technology. You know, ultimately the thought was, was that, you know, that could help reduce the size of the workforce. So, you know, you're not going to get any argument from anybody inside government. Things could not be done efficiently, efficiently. There's a lot of room for improvement out there. I think the question right now [00:30:00] for me is, you know, can that be done, particularly in a complex environment like the IRS with, you know, which is built on a lot of complex tax law? There's a lot of complex technology involved. You have a lot of staff turnover. I think the next year is going to be a really pivotal one in the history of our nation's tax history. You know, Can [00:30:30] the agency, you know, get through this period with fewer staff, major changes going on? Um, you know, it's something that, you know, you have to be really careful with. And, um, you know, the IRS gets a lot of knocks.

Terry Lemons: There's a lot of things the agency needs to do better. Um, you know, it's really easy for inspector generals or members of Congress or the press to go in and find problems at the agency. But I think at the end of the day, the IRS is able to do a lot of [00:31:00] core functions well, and people don't even realize it. Uh, the filing season, for instance. Um, you know, tens of millions of refunds went out quickly this year. I mean, a lot of them, you know, uh, just in a few days, I got my refund in eight days this year. Um, but those are the things I think people take for granted. And if you go to other agencies, they don't do some of those basic things as well as the IRS. And, um, historically, if you look at it, [00:31:30] if Congress has a really big program they need to have delivered. They'll bring it to the IRS because despite the agency's flaws, the agency is able to deliver on those things. So I think, you know, at the end of the day, um, this is going to be really interesting to see how this plays out, but it it is going to be an interesting 12 months between now and next filing season. And you know, what's next filing season going to look like? I think that's a big question. [00:32:00]

Roger Harris: Because we were talking earlier, I think any deals with most of our offices around the country during the filing season and any I won't speak for you, I'll ask you this, but I thought I think it was a fairly uneventful filing season from.

Annie Schwab: Compared to the last couple of years. Uh, that is what what I'm hearing. Um, that fairly smooth, fairly predictable. Um, I mean, just like I see in the news, there might have been some [00:32:30] more, a few more extensions than usual or or maybe a more, more clients, you know, trying to do it on their own. Um, I know direct file is is up for negotiation at this point. Um, but I do I think it was a smooth success. I would say it was a successful filing season, both from the perspective of the IRS as well as from our office owners and their clients.

Roger Harris: Yeah. And and Terry, interestingly, [00:33:00] had an op ed in the Hill that I think came out this week and kind of looked back on when filing seasons go bad, what can happen? Um, talk a little bit about what what kind of I was around then, but I remember some of it, but I'm sure you remember it a lot more than I did. But talk a little bit about your op ed that, uh, was out there and talked about the last time we had a really kind of maybe as a warning sign to. What a bad filing season can look like.

Terry Lemons: Yeah. [00:33:30] Thanks, Roger. Yeah. The. So the article I wrote for The Hill earlier this week, um, you know, basically kind of did a little compare and contrast. And, you know, going back to Andy's point, I think this is a pretty good filing season for taxpayers. Um, yeah. You know, that's not to say that there aren't, you know, the agency didn't have other issues. I mean, you know, still a lot of employee retention credit claims out there. Right. Um, you know, it's still hard to get through, you know, on [00:34:00] some of those phone lines like protection or priority service. But, you know, overall, we had a pretty good filing season. The IRS, you know, had a pretty good filing season for the nation in terms of getting, you know, tax processing and refunds go out. But I think a lot of people just kind of take that for granted. It's automatic and behind the scenes it's not automatic at all. It's a year round planning process and I've been Bend Leah to get to know. Commissioner Larry Gibbs, who served back during [00:34:30] the Reagan administration. And he had the job of cleaning up after the 1985 filing season. And that was the last year where things really got sideways. Yeah, basically, the IRS rushed in a new technology process involving, you know, trying to digitize returns and things like that.

Terry Lemons: They had hardware and software problems, and basically the system broke. That's what Commissioner Gibbs described. It broke. The refund [00:35:00] process broke for millions of taxpayers. And that means instead of getting a refund in eight days, in three weeks, those refunds didn't go out for six, seven, eight months. Um, a lot of people had to file a second tax return because the IRS simply lost the tax return. And there are some amazing stories from back then. We had ten processing centers at the time, and the employees had so much paper there, [00:35:30] and the systems weren't working, and they were doing crazy things like shoving tax returns into the ceilings. They didn't have any place to store them, and things got lost. And for me, that is a cautionary tale. If small things get sideways, it can snowball and really have a much bigger impact. And the nation has not seen a really bad tax season since then. But man, if if [00:36:00] you mess with filing season, if you mess with the taxpayer refunds, there will be utter outrage because that's the biggest check. A lot of Americans get all years their refund.

Roger Harris: Yeah, yeah.

Roger Harris: And a lot of them have already spent it and counting on it. And when it doesn't show up in time, it can create hardships. And and to your point, for all the things that we're saying and we're all careful here. I mean, IRS isn't perfect. None of us are. But most people's only interaction with the service is getting that refund check. They [00:36:30] don't deal with the auditors. They don't deal with the collection people they don't deal with. And if that check doesn't show up, you know, in a reasonable period of time, uh, it can create some real hardships. And I think you're right. They take for granted that it shows up. I think you said you got yours in eight days. I'm trying to remember when the last time I got a refund. So I'm still waiting on mine. I still don't know how far back it goes. Um, but, you know, that's that's how they judge [00:37:00] their interaction with the IRS is how fast they get that check. And you let those things start slowing down. Um, we're going to have some angry folks out there in the taxpayer community.

Annie Schwab: Yeah. I can't imagine the IRS telling me that they lost my return. You know, like you don't lose it.

Terry Lemons: Yeah, that as as I was doing some going back through, you know, some of the, you know, basically history books for this article. I [00:37:30] was just taken aback. Some of the things that would have happened then if they happened today. I mean, you know, and these were huge headlines back at the time. Um, you know, reporters won Pulitzer Prizes off, you know, off the debacle. Um, but for me, it's just it's hard to imagine. I mean, there are some changes. I mean, we've, you know, e-filing was not a thing back then.

Roger Harris: Right. Right.

Terry Lemons: E-filing came in a little, you know, a couple years later. So, I mean, you know, we don't have as much paper, but it's still really easy, uh, for some of these systems to get [00:38:00] sideways. And, you know, and we've seen, you know, indicators, you know, when problems flare up. First time homebuyers credit about a decade ago there were some problems with that that, you know, you know, only a small percentage of tax returns, um, were involved. But it affected a lot of refunds for people. And man, they were they were really angry. I mean, they were calling everybody across the IRS. So I think there's some powerful cautionary tales there that, you know, people need to keep in mind as they're working to make efficiencies across [00:38:30] the agency.

Roger Harris: Yeah, because as we look at what may be necessary cuts or whatever you want to call them to, to this agency along with others, we have the potential for some of the likelihood, maybe for a major change in tax law coming sometime this year. Most of it probably won't be affected until next year, but who knows? There could be some things affected this year. And and you've got to get forms changed. You've got to get guidance out. You've got to get systems ready for all of that. I [00:39:00] mean, so when we look at how smooth this tax season went, in addition to the cuts and, and the other things that that are going to have to be factored in, we could have some significant tax law change in. And I'm assuming that puts a pretty additional added stress to the agency when things like, you know, maybe just one little thing changes. It's a little stress. But this is the potential for a lot of changes.

Terry Lemons: Yeah. And that really has a lot of implications [00:39:30] inside the IRS. And I mean, a lot of people think, oh, you know, it's not that big a deal to handle a tax law. But in reality, when you have a tax law change, it's got to touch many different parts of the agency. That new tax law has to be interpreted by the lawyers at the IRS and chief counsel, the Treasury Department attorneys look at it once they give their reading on it, it has to go over to the taxpayer service area. [00:40:00] If it's a taxpayer, you know, filing season type thing, they've got to look at it. They got to figure out how to write the programing, put the requirements in those, go over to it so they can program our systems. And you know, in my old teams in communications and liaison would have to sit there Look at it. How do we describe this information in a way average taxpayers can understand it? And the flip side, we have worked with the attorneys to make sure the tax professional community [00:40:30] has the technical details. So I mean, you're talking about 5 or 6 different organizations inside the IRS having to interact and smooth handoffs. That stuff takes time. I mean, you know, it's a bureaucracy. It takes time. And for me, that's what's concerning is you have a major tax bill out there and a lot of other changes taking place. So there's going to be a lot of pressure on the agency in the next year.

Roger Harris: Yeah. We don't think through it. [00:41:00] You know as simple as tax on tips you know making tax on tips.

Terry Lemons: Yeah.

Roger Harris: Tax free. Well how do you stop someone like me when someone says what do I owe you? You don't owe me anything. Just give me a tip. And, you know, it's you know, there's always going to be people trying to abuse the system. So if you say tips are tax free, how do you keep the whole country from not working for tips? You know, and you know. And so the lawyer's got to think about it. Then you got. And so Congress [00:41:30] doesn't have to think about that. They just say no tax on tips. Now they they may put some limit to it. They may put something. But for the most part then you guys got to figure out how to keep crazy people like me from figuring out how to make everything I earn become a tip.

Terry Lemons: Yeah, and that's going to be, you know, if that comes into play, this is you know, that's exactly like that scenario I was talking about. I mean, you know, the attorneys are going to have to sit down and figure out, you know, definitions of tips, what the exclusions look like. Um, [00:42:00] you know, there's a lot of nuance, there's a lot of nuance on that. And then, you know, at the end of the day, you have to be able to translate that into something, you know, that average people can understand. And then, you know, at the same time, um, you know, you're trying to get accurate information out. Well, you know, you got kids in cars on TikTok, you know, dispensing tax.

Terry Lemons: Advice that people are listening instead of going to their tax professionals. So I mean, it's it's, you know, the tip situation that that could be a really challenging [00:42:30] one to implement depending on how the law is written.

Roger Harris: Yeah.

Roger Harris: But it sounds simple.

Annie Schwab: It always sounds simple at first it's.

Terry Lemons: Yeah.

Terry Lemons: Well if you go on TikTok it's super easy.

Annie Schwab: Yeah.

Roger Harris: That's right.

Annie Schwab: Yeah that's true.

Annie Schwab: So what is what is your future look like Terry? What are you going to do other than travel and enjoy your, you know, your kids and all?

Terry Lemons: Yeah.

Terry Lemons: So my retirement was planned. Um, I'd been planning it over a year. Um, I left at the end of February. I had a magic date, um, [00:43:00] on, uh, on on my calendar. So I left at the end of February. Um, I'm doing a number of things right now. Um, first of all, I mean, I'm, I'm, you know, as you can tell from the back wall, I'm passionate about baseball and the Cardinals, and I'm trying to, um, you know, catch a few games, um, you know, which was really nice. I went to my first opening day this year since I didn't have to worry about tax season for the first time in 26 years. Um, and I'm also going back to my roots doing some writing, um, [00:43:30] maybe doing some baseball writing at some point. Um, you know, I had the commentary piece in The Hill, but I've got several, um, I'll call them passion projects that I'm working on. Some are outside of the tax lanes. I've got one longer term thing involving tax that I'm working on. So I'm going to do some writing, probably write about travel a bit. And you know, I'm also going to be, you know, staying active in the tax community. I'm going to be speaking at a number of events, um, you know, through the spring and summer. Um, so, you know, even though I've [00:44:00] left the IRS, I mean, it's hard to, uh, you know, it's hard to completely step away from it. And, you know, as we like, as people inside the IRS like to say, at the end of the day, we all work for the IRS one way or the other.

Terry Lemons: So,

Roger Harris: Yeah.That's.True.

Annie Schwab: That's true.

Roger Harris: And I'm sure your phone has been ringing off the hook in your email box, filling up given everything that's going on as we wrap up. We've mentioned the tax professional community a lot today. And and I know you were very much involved in the outreach to [00:44:30] our community and talk a little bit about, I mean, I guess I'm going to ask you, like, like, you know, the answer, but, uh, I think that's an important part of a, a good functioning tax system is to have the people who interact on the day to day basis with taxpayers have their input into the service. Not that you guys always took it, but, you know, there was you listen. Um, how important is the tax professional community and is are you [00:45:00] concerned that somehow that communication could be cut off in what we're seeing in DC, or could. I would say it's probably more important if we're going to try to do more with less, not less important. And I'm concerned that that that that back and forth could, could, could end.

Terry Lemons: I can't overstate the importance of the tax professional community. The IRS cannot run the tax system without tax professionals. I mean, it [00:45:30] is the classic symbiotic relationship. You know what? Half the people in the nation have help preparing their tax returns with the tax pro. I mean, you know, the system would not work without the tax professional community. Um, I think it's vitally important, you know, for the agency to keep strong contacts with the tax community. Um, one of the things that worried me, we had basically a period of a decade at the IRS where we had very limited [00:46:00] hiring capability during that period, I felt like the amount of tax professional expertise inside the agency fell. And, you know, it was a concern to me, you know, particularly as I, you know, worked closely with Roger and others in the tax professional community that, you know, there were parts of the agency that did not, did not have enough awareness about what was important to tax professionals and how tax [00:46:30] professionals needed to operate. So I think that insight is really critical to the agency, and you've got to have a two good two way dialog. And this goes back to the thing that Annie, you mentioned earlier when you were meeting with the commissioner last summer, having that open dialog. The IRS doesn't have all the answers. The tax pros are closer to the action. So I think it's really critical for that relationship to stay there. And I think that is going to be one of the barometers, one [00:47:00] of the canaries essentially in the coal mine to watch is how does that relationship between the tax pros and the IRS play out over the next year or so, as, as these budget cuts and the staffing cuts are coming in.

Annie Schwab: It's concerning.

Annie Schwab: Yes.

Roger Harris: Yeah.

Roger Harris: Yeah. I know personally I'm sitting there thinking everybody I know Terry's just one of many, I think. Is there anybody there that I still know? You know, and I'm sure I'm not different than everybody else. Is that a lot of relationships that have been built over [00:47:30] the years and and this hasn't been critical. I mean, I can't people are being offered a retirement opportunity that they have to seriously consider given the uncertainty in hiring and firing. And and yet, my concern is that I use this analogy to somebody else. It's going back to sports, Terry, I'm going to get back into the sports thing. Since you did it, I'm going to do it. You know, it's always better to have a team full of seniors than freshmen. You know, you can be talented as a freshman, but you're not going to be as effective as you will be [00:48:00] as a senior. And if all the seniors are leaving and we're going to have the freshman team at the IRS, it's going to take a while for them to gain the knowledge and the expertise and the experience necessary because the people that are being offered the as I understand it and correct me if I'm wrong, the people who are being offered the more favorable opportunities to leave are people with more experience than than [00:48:30] what I'll call the freshmen. And that concerns me that we're going to see a lot of the institutional knowledge leaving.

Terry Lemons: I think that's a fair concern, Roger. Um, the, the buyouts that are going under, going right now, um, a lot of people that are taking them are late career. Mhm. Um, so, you know, there have been headlines out there about people on the senior team leaving. I think the thing that's really concerning are, you know, it's it's [00:49:00] the people underneath that.

Roger Harris: Right.

Terry Lemons: You've got late career people essentially the seniors that you're talking about. There's also a lot of juniors that are, you know, taking that buyout as well. I mean, and these are people who have, I'd say 5 to 10 years, you know, um, left in their career before they retire. And I think there's some concerns there. The next generation of, of IRS leaders are going to be gone, and that's going to put added strain on [00:49:30] the agency. Um, that said, though, I mean, the employees of the IRS are remarkable. And if you go back through history, whenever Congress has put a big item on the agency's plate, the agency delivers, you know, in times of national emergency, you know, during the pandemic, with things like the economic impact payments, if you go back, the aftermath of Hurricane Katrina, the aftermath of nine over 11, you [00:50:00] know, the IRS has a legacy of delivering under very tough circumstances. So part of me, on the one hand, they're losing an incredible amount of talent with these buyouts. But on the other hand, the agency has been quite resilient through tough times. That's why I say this next year is going to be a fascinating one to watch.

Roger Harris: Yeah.

Terry Lemons: But you might have a bottle of Rolaids handy just in case.

Roger Harris: Or a bottle of something. Yeah. Any [00:50:30] any final thoughts? This has been great.

Annie Schwab: Quite enjoyable. I hope we have the opportunity to get you back on another podcast. Certainly. Glad to have you on our 50th. Um, but nothing more. Nothing more than join us for our next podcast. Or we have a bunch of wonderful topics on the agenda coming up. So stay with us and share with your friends.

Roger Harris: And we'll have to get you back. Terry, I'm sure we can tell a lot more stories and do a lot more things. [00:51:00] And, uh, first of all, best of luck to you in your retirement. I'm going to miss seeing you in 1111 Constitution, but I expect to see you in other places. Other easier to navigate than 1111 and and more fun.So.

Terry Lemons: Well, well thank you.

Terry Lemons: And you know congratulations to you guys on on 50 podcasts. Uh, that's you know, that's that's a real milestone for you. And, uh, you know, I just want to, you know, thank you, you [00:51:30] guys, for for what you do for the tax community. This is important information to share out. And, uh, you know, happy to visit with you again. Um, Roger, I'm looking forward to the, uh, baseball college football podcast.

Roger Harris: Yeah. Okay. We'll have to start one of those.

Terry Lemons: Yeah. I'm looking I'm looking forward to that. So, uh, but anyway, really appreciate you guys. And, uh, you know, for the tax professional community out there, uh, personally, I just want to say thank you for everything you do. Um, you you guys don't get enough credit out there.

Roger Harris: Well, [00:52:00] Terry. Thank you. Thanks for all the help in the past. Thank you for being the guest on our 50th podcast. Uh, we will definitely have you back. And we will. We will start gradually moving into the Baseball Football podcast. We'll try to make all of our analogies relate to baseball and football. When we talk about taxes, I think it probably would enhance our listeners, make it more entertaining.

Annie Schwab: Yeah.

Terry Lemons: It'd be a real grand slam.

Roger Harris: There you [00:52:30] go. See, that's why he's in communications and we're not. All right, Terry, again, thanks a lot. We can't thank you enough for doing this. Uh, thank you, Annie, as always, for for being here for 50 podcast. And thanks to all the listeners that have been a part of some of all those podcasts. We hope we'll hear you. See you back for the 51st, and let's try to make it to 100. Thanks, everybody.