1. Sunita B. Lough, Director
FEDERAL, STATE AND LOCAL GOVERNMENTS
Sunita B. Lough, Director

2. Government Entities Michael D. Julianelle
Director, Government Entities
Three Sub-functions:
Federal, State and Local Governments
Indian Tribal Governments
Tax Exempt Bonds

3. FSLG 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 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.

4. FEDERAL, STATE AND LOCAL GOVERNMENTS
1 PACIFIC COAST MIDWEST CENTRAL NORTHEAST
2 WESTERN GULF COAST 6 SOUTHEAST 8 FEDERAL AGENCY**
**8 Federal Agency is Nationwide.

5. 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

6. 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
Examples of Government Associations: National Conference of State Social Security Administrators (NCSSSA), associations of school board officials, such as TASBO, (Texas Association of School Board Officials), associations of fire officials, such as International Association of Fire Chiefs (IAFC) and the National Fire and Rescue Association, associations of counties/cities, etc.
Examples of Practitioner Organizations: American Payroll Association, American Bar Association, AICPA

7. 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.

8. 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?

9. 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

10. Two FSLG Compliance Initiatives
1. Federal Agency
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

11. 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