Tax Executives Institute - Internal Revenue Service liaison meeting; minutes December 2, 1994.

• Position: Liaison Meeting Special

On December 2, 1994, Tax Executives Institute held its annual liaison meeting with the Commissioner of Internal Revenue and other senior officials of the Internal Revenue Service's National Office. The agenda for the meeting is reprinted in the November-December 1994 issue of The Tax Executive. The minutes of that meeting, which have been approved by both the Institute's delegation to the meeting and the IRS, are reprinted below.

1. Introduction

   On behalf of the Internal Revenue Service, Commissioner Margaret M. Richardson welcomed the delegation from Tax Executives Institute. On behalf of Tax Executives Institute, TEI President Linda B. Burke thanked the IRS for meeting with the Institute.

   Commissioner Richardson thanked the Institute for the hospitality it had shown her during TEI's Annual Conference in October. She also referred to her recent visit to TEI's Cincinnati Chapter where she was well received. The Commissioner mentioned particularly her participation in the Commissioner's Forum during the Annual Conference, noting that all four past Commissioners had expressed their interest in-and frustration with the funding battles over - tax systems modernization (TSM). She observed that Sheldon Cohen is the only Commissioner in the past four decades to have been successful in modernizing the IRS's processing system, adding that the IRS's "system has not changed much during the intervening years." Indeed, the system installed in the 1960s is still in use.

   The Commissioner thanked TEI for its support for full funding of the TSM initiative. She explained that the next year's budget should fully fund the system and restore the funds cut from the current year. She said that some innovative TSM programs will soon be "rolled out" to New Orleans and five other districts. The Newark District is the next site for the integrated collection system (ICS).

   Commissioner Richardson also thanked TEI for its support of other programs, including the electronic filing of income tax returns and the earned income tax credit. She commented favorably on the reports she has received about employers' participation in the electronic filing program, and assured the Institute that the IRS plans an aggressive campaign to combat refund fraud during the 1995 filing season.

   With respect to the IRS's priorities for issuing guidance, the Commissioner stated that the IRS has made real progress in 1994, releasing a large number of priority projects. She asked for TEI's comments on what the agency's regulatory priorities should be for 1995.

   Finally, the Commissioner welcomed Ms. Burke as the new president of TEI and stated she looks forward to working with her.

   Ms. Burke observed that by advancing the liaison meeting to December, the IRS and TEI would be able to work together more effectively, especially on process issues. She added that although the TEI members present for the meeting worked for large companies, the Institute represents many smaller companies, as well.

2. Improving the Examination Process

   1. IRS Training. Ms. Burke referred to TEI's recent IRS Quality Survey, the results of which have already been provided to the IRS and, in fact, have been discussed by local TEI chapters with IRS district and regional officials. She confirmed that the IRS is already addressing many of the issues identified in the survey, adding that the Institute recognizes the challenge posed by TEI's comments on the need for better trained agents. Ms. Burke then referred to the IRS's November 22, 1994, request for recommendations concerning the dean of the agency's "Tax University." She congratulated the IRS for its initiative and pledged TEI's support, confirming that the Institute believes taxpayers should be supportive of and involved in the IRS's training process. Such involvement will ensure a "real world" approach in the audit process, she said. In addition, if agents are better trained, currency will be served.

      Mr. Wilson reported that several IRS districts are already involving TEI members in their training programs, just as IRS representatives have been involved in the Institute's own training sessions. He added that the agency finds TEI's assistance very helpful. He said the IRS will establish a Midwest training center for agents involved in the Coordinated Examination Program (CEP), which will emphasize industry-wide training. He added that the IRS District Directors met during the summer and that one of the topics discussed was the allocation of funds for CEP training. The IRS is also reviewing whether and how its training regimen for specialists (including engineers and economists) should be revamped.

      Ms. Burke pledged the Institute's continued support for the IRS's training initiative, adding that the Institute wants to assist the IRS in improving the process. She stated that members had commented on the desirability of agents' receiving training on improving interpersonal skills and added that some TEI members could likely also benefit from such training.

      Mr. Wilson stated that the Houston District has instituted a program to teach agents to interact better and to sharpen their writing skills. There is a greater awareness of the need to improve in these areas, he said. Ms. Monaco referred to the IRS courses on conflict resolution.

   2. Information Document Requests. Ms. Burke next referred to the quality survey's identification of information document requests (IDRs) as an area needing immediate attention. She added that in some districts (or regions) progress has clearly been made in narrowing the scope and clarifying the focus of IDRs; in others, however, taxpayers report receiving open-ended, vague requests. She gave an example of a recent IDR her company had received asking for all records pertaining to an acquisition. The agent was given a three-foot stack of documents, she noted, adding that neither the taxpayer nor the IRS is served by broad requests and undifferentiated responses. More needs to be done to focus IDRs, she concluded.

      Mr. Wilson stated that the IRS has made several efforts to improve the IDR process. He noted that a member of TEI's February delegation, Rebecca A. Muenchen of TEI's Santa Clara Valley Chapter (a former member of the Institute's Executive Committee), has volunteered to work with the IRS in reviewing the IDR process. Mr. Wilson said that the agency has had mixed results in "getting the word down" to the field.

      Ms. Burke said that TEI was very much concerned that National Office initiatives are not being uniformly communicated to, and implemented by, field personnel. Mr. Wilson explained that to enhance the National Office's communications with the field, the IRS has revised the Internal Revenue Manual, issued a new Case Manager's Hand-book, established a quarterly CEP Newsletter, and completed a report on generally acceptable auditing standards for examiners. The IRS is committed to ensuring that everyone receives adequate information about and...