No ceiling on Institute advocacy efforts.

PositionRecent Activities

TEI's Super Committees Address on Schedule M-3 and FATCA; Release U.S. Liaison Meeting Minutes; Urge Safe Harbors in OECD Transfer Pricing Guidelines; Support Mobile Workforce Legislation; and Dissect Canadian Budget Proposals

"TEI's advocacy process provides a stark contrast to the congressional gridlock and near U.S. government debt default in August," Institute President Paul O'Connor observed as his term as president ended in mid-August. "Although our views may occasionally diverge," he explained, "TEI members collaborate, discuss their differences, and reach consensus on the best approach or recommendations for tax policy and administration." Mr. O'Connor also observed that the "only ceiling on TEI's advocacy efforts is the interest, ambition, and energy of TEI's members and technical committees." As the pages of this issue of The Tax Executive confirm, he said, "TEI's committees have been unstinting in their advocacy efforts over the past several months."

IRS Should Abandon or Substantially Revise Schedule M-3

In a July 7, 2011, letter to the Commissioner of Internal Revenue, TEI President Paul O'Connor called upon the IRS to consider abandoning or, at least substantially revising, Schedule M-3 Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More. The introduction of Schedule UTP, Uncertain Tax Position Statement, "suggests that Schedule M-3 has not fully achieved its goals of increasing transparency, efficiency, and consistency in tax reporting." Given TEI members' reported examination experiences, the Mr. O'Connor added, "We are uncertain about the utility of Schedule M-3 as a risk-assessment diagnostic tool. Because Schedule UTP substantially duplicates the purpose of Schedule M-3, the IRS should consider abandoning Schedule M-3 as the Schedule UTP process evolves and the IRS and taxpayers become familiar with the use of Schedule UTP as a disclosure and risk-assessment tool."

Mr. O'Connor explained that, upon release of the final version of Schedule UTP in September 2010, the IRS announced the creation of an internal working group to study and revise Schedule M-3. "TEI responded," he said, "by forming a task force of members to share their expertise in the compliance burdens spawned by Schedule M-3 and their experience in how IRS agents use the schedule during examinations." The comment letter, he said, could serve as a case study in collaboration and advocating for improvements in tax administration.

The Institute's letter described the implementation and ongoing compliance burdens Schedule M-3 imposes, especially in mapping taxpayer charts of accounts--and related book-tax differences--to the various lines of the form. The comments also describe audit approaches employed by agents in examining the information on the schedule.

The letter noted that a book-to-tax reconciliation will likely be required to be included in a taxpayer's return, but recommended increasing the utility of the information to streamline return and issue selection. The Institute also recommended that the IRS update its modernized efiling system (MeF) system to permit more flexible reporting.

The Institute's comments are reprinted in this issue, beginning at page 261.

FATCA: Round Two

On June 7, 2011, in response to Notice 2011-34, TEI filed a second set of comments with the IRS relating to the Foreign Account Tax Compliance Act (FATCA) provisions, which were enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010. The Institute's earlier FATCA comments appear in the November-December 2010 issue of The Tax Executive.

FATCA adds four new sections to the Internal Revenue Code: Section 1471, Withholdable payments to foreign financial institutions; Section 1472, Withholdable payments to other foreign entities; Section 1473, Definitions; and Section 1474, Special rules. The new law establishes rules for payments to foreign financial institutions and other foreign entities, and imposes a 30-percent withholding tax on the gross amount of a "withholdable payment" made to a (i) "foreign financial institution" (FFI) if the institution does not meet certain requirements or (ii) "non-financial foreign entity" (NFFE) if the beneficial owner of such payment is an...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT