Appeals' role in tax shelter settlement: independence affirmed.

• Author: Robison, David B.
• Position: IRS's National Director of Appeals David B. Robison - Interview

On January 17, 2006, Tax Executives Institute sent a letter to IRS Commissioner Mark W. Everson, expressing concern about Announcement 2005-80 on the independence of the Appeals function. The letter, which was reprinted in the January-February 2006 issue of The Tax Executive, gave rise to a discussion at TEI'S annual liaison with Commissioner Everson and other senior officials of the Internal Revenue Service, including David B. Robison, the IRS's National Director of Appeals, about the role of Appeals in tax administration. Following that meeting, TEI sat down with Mr. Robison to get him to expand on his comments during the meeting. (Note: The minutes of the TEI-IRS liaison meeting will be reprinted in the May-June issue of the magazine.) TEI's questions are printed in italics; Mr. Robison's responses in regular (roman) type.

Do you have any general responses to that letter?

First, I appreciate the strong support for Appeals expressed in the article. As acknowledged in the article, Appeals makes a pivotal contribution to ensuring our tax system is administered fairly. Appeals employees are very aware that our independence and impartiality are essential to our fulfilling our mandate. It is my experience--including that of the recent tax shelter initiatives--the Service also recognizes and supports our Appeals mission and our need to be independent.

But what is independence?

Basically, it means we exercise our independent judgment surrounding both the legal and factual disagreements in arriving at a particular settlement offer. We look at and consider the positions taken by the taxpayer and the Service during the examination. We evaluate the relative quality merits of the evidence presented and positions taken by all parties. But we also must consider all of the regulations, revenue rulings, procedures, and other published IRS guidance. Appeals is not independent from the IRS, it is independent within the IRS; we cannot ignore IRS guidance or the Service's decisions such as designating an issue for litigation.

Historically, Appeals' case resolution practices have not changed. For example, Appeals still secures agreement in approximately 85 percent of the cases we consider. This percentage holds true for traditional Appeals, Fast Track Settlement, and Post-Appeals Mediation. We continue to return approximately 15 to 20 percent of the largest cases to Compliance--and this, too, has remained unchanged for many years.

Compliance continues to...