Minutes of the May 10, 1982, Sw Region Bar Association Liaison Committee Meeting
| Publication year | 1982 |
| Pages | 2987 |
1982, December, Pg. 2987. Minutes of the May 10, 1982, SW Region Bar Association Liaison Committee Meeting
The meeting commenced at 8:30 a.m. with a warm welcome from Mr. Jack Chivatero, District Director of the New Orleans District. He then introduced Bob Wherry, Chairman of the Regional Liaison Committee. A short business meeting was held. Mr. Wherry introduced our new Regional Commissioner, Mr. Rich Voskuil, who, prior to assuming his present position, was the Assistant District Director in the Iowa District, and District Director of the St. Paul, St. Louis, and Dallas Districts.
Mr. Voskuil expressed his appreciation to all of the attendees and his strong belief that Regional Liaison meetings can and should be valuable tools for both practitioners and the IRS to improve the fair and efficient administration of the Internal Revenue laws. Mr. Voskuil then discussed some of his particular concerns. The first of these is the serious compliance gap arising primarily from the underground economy, tax protesters, and abusive tax shelters. Mr. Voskuil indicated that Congress is aware of the problem and will be providing some help in the next year. The IRS plans for 500 to 600 extra compliance personnel in fiscal '83, plus 200 additional collection personnel. While the Service recognizes that the training of these individuals will present a substantial challenge in the next year, the Service plans to have these agents effectively trained and operating in the field as rapidly as possible. Mr. Voskuil indicated that the Southwest Region will place strong emphasis on the Windfall Profits Tax in the coming year, with about 100 audit personnel assigned to this project.
Finally, Mr. Voskuil noted that the Southwest Region is making a major attempt to streamline its business operations and increase efficiency. He noted that they now have automation and word processing in the Dallas and New Orleans offices and will be searching out ways to use advanced technology more efficiently and effectively in tax administration. He noted, however, that the Government hiring freezes have created a constant problem as the result of the Government's ongoing efforts to balance the Budget. A practitioner questioned whether there was anything that the organized Bar could do to help the IRS with Congress or the administrative branch so that it would not be so severely impacted by Budget problems and hiring freezes. Mr. Voskuil indicated that he welcomed whatever help could be provided by practitioners as far as talking with their elected Representatives, and noted that the American Bar Association Tax Section had been supportive of IRS requests in Washington and testified before Congress in support of IRS financing requests.
The meeting format which followed consisted of a discussion of agenda items submitted to and approved by the Service before the meeting. A written copy of the Agenda was distributed to all participants prior to the meeting. The discussion of each agenda item began with an oral summary of each question and the Internal Revenue Service response given by the IRS Regional Representative in whose area the issue is most directly involved. After each such presentation, there was a general discussion of the issue between Bar Association and Internal Revenue Service personnel. The topics covered at the meeting and a summary of the discussion are as follows:
Mr. Dais stated that it is not standard operating procedure for the IRS to send out to Taxpayers for signature consents on Form 872-A rather than Form 872. The Service's policy is that the period of the extension requested be no longer than is necessary to complete the examination and administrative action incident to the closing of the case.
Consents (Form 872) are to be secured only in cases involving unusual circumstances according to IRM 4541.1 Form 872-A(fn1) use on a restricted basis is limited to one or more issues where establishment of a Service position is required or equally meritorious circumstances exist. Circumstances where a restricted consent is appropriate are cases placed in suspense, awaiting completion of related case or another year of same Taxpayer, and/or where delay is attributable to the Service or beyond Taxpayer's control. Except for cases where flow-through issues are present, restricted consents are not used unless the examination is completed and a report is prepared, and restricted
language is approved by Quality Review. See IRM 4541.71.
If the Taxpayer prefers, a restricted Form 872 will be accepted in place of a restricted Form 872-A. See IRM 4541.8. Restricted consents are used where its use is advantageous to both the Service and the Taxpayer. The effect of restricted consents (Form 872-A) is to hold the period of limitations open for the time required for Service consideration of the case plus 90 days for closing action.
The Partnership/Tax Shelter Programs have had a significant impact on the number of restricted consents solicited. Mr. Paul Waldman, a practitioner, stated that in his experience, you could get restricted consents limited to only one issue, but that, generally, these were available only if there were two or less issues in dispute with the Internal Revenue Service.
Mr. Michael Cook, another practitioner, asked if the Taxpayer is part of a National Partnership which was under audit, but that the individual Taxpayer was no longer being audited other than with respect to the National Partnership, whether or not a restricted consent would be available. Mr. Dais indicated that the restricted consent should be available but that IRS procedures for nationally coordinated tax shelter audit procedures must be followed. Mr. Dais also indicated that there was no dollar limit on 872's vs. 872-A's, and that there should be advance contact by the Revenue Agent with the Taxpayer or professional adviser before the 872 or 872-A form was automatically mailed out.
Mr. Jack Chivatero added that where Taxpayer's return is being held up pending the outcome of an audit of the Partnership of which the Taxpayer is a part, the Agent will normally scan a return for issues before agreeing to a restricted consent. If other potential issues are identified in the scanning process, generally, an audit will be opened reasonably promptly with respect to that Taxpayer.
Mr. Blair indicated that the mechanics of handling audits of large tax shelter partnerships has not changed materially from the last meeting (see Liaison meeting minutes for the December 14, 1981 meeting). Mr. Blair further indicated that where a litigating vehicle has been reclassified as a settlement vehicle, the Taxpayer, or his representative, should have been contacted by an Appeals Officer and invited to come in for a conference. However, Appeals Officers have been contacting only those partners who have been actively involved in the ongoing litigation. Therefore, if a Taxpayer is not active with respect to the case and other partners are, in effect, representing him, he may not have been contacted. Mr. Blair indicated that reclassification from a litigating vehicle to a settlement vehicle generally means that where compliance problems are not viewed as serious, a settlement may be worked out on the basis of out-of-pocket cost to the Taxpayer.
Mr. Chivatero stated that if a Taxpayer's case is in suspense at a District Director's office, awaiting action on the Partnership at some other office where litigation is actively under way, and the Taxpayer has been part of a partnership which was originally classified as a litigating vehicle and which now may have been reclassified as a settlement vehicle, that Taxpayer would not have been contacted. Mr. Dais indicated that a very important factor in whether or not to reclassify litigation vehicles as settlement vehicles was whether or not there was a legitimate profit motive.
Mr. Chuck Meadows, a tax practitioner, asked the Service officials about a recent Form he had received from Audit personnel consisting of 52 questions and apparently aimed at the tax shelter and tax straddle area. He wondered if this Form was now standard audit procedure. Mr. Dais indicated that Regional management officials had not been aware of the form until May 6th, and that they have since contacted the local Audit officials who had been using this Form and its use has now been terminated, since the Form had not been officially approved by Regional officials through proper IRS channels.
In response to another question, it was indicated that the Service continues to have its ACE Classification Group to determine the status of tax shelters as regular cases, settlement vehicles or litigating vehicles.
Mr. Dais indicated that Rev. Proc. 80-51 has made some important and fundamental changes in the rules governing changes in accounting method. The Revenue Procedure clarifies the proper use of Form 3115 and specifies two categories of...
To continue reading
Request your trial