Tax Executives Institute-Internal Revenue Service liaison meeting: November 19, 1996.

On November 19, 1996, Tax Executives Institute held its annual liaison meeting with the Commissioner of Internal Revenue and other senior officials of the IRS National Office. Reprinted below is the written agenda for the meeting, which was submitted to the IRS in October. The minutes of the liaison meeting will be published in a future issue of The Tax Executive.

1. Introduction: Times of

   Challenge and Change

   Tax Executives Institute is pleased to have this opportunity to meet with Commissioner Richardson, Chief Counsel Brown, and other senior officials of the Internal Revenue Service. TEI's liaison meetings with the Internal Revenue Service have afforded each organization an opportunity to articulate technical, policy, and process concerns and to explore how these concerns can best be addressed.

   As a new millennium approaches, the Internal Revenue Service is facing unparalleled challenges in administering the U.S. tax system, including (1) the ongoing effects of a major reorganization (and realignment of its regions and districts); (2) a proliferation of calls to "end the IRS as we know it" (and "to pull the tax system out by the roots"); (3) Congress's decision to outsource core functions (at least on a test basis) and to reduce funding for the agency (with the attendant possibility of reductions-in-force); and (4) the chartering of a National Commission on Restructuring the Internal Revenue Service.

   As an association of tax professionals who deal with the IRS on a daily basis, TEI has long been concerned about the corrosive effect that attacks on the agency's legitimacy can have on the level of voluntary compliance in the United States. We share the view that vigilant oversight of the IRS by Congress and others is absolutely necessary, but also acknowledge that the orderly collection of taxes and the efficient administration of the tax system are in the best interest of the entire country and, further, that adequate funding must be provided for those goals to be attained. Hence, we lament the sometimes virulent attacks that have been launched against the IRS and its employees. To be sure, there are flaws in the current tax system, and there are design and management issues (including those related to tax systems modernization) that must be addressed in order to restore the public's confidence that the tax system is being fairly and efficiently administered. TEI sincerely believes, however, that the focus should remain on correcting the problems, not undermining the basic legitimacy of - and hence the public's confidence in - the IRS.

   During the past few months, TEI has voiced these sentiments in statements filed with Congress and comments released to the media, and in mid-november, the Institute will underscore its views in testimony before the National Commission on Restructuring the IRS, while expressing our concerns about areas that need change.(1) During the liaison meeting, TEI requests a report on how the agency is coping with its myriad management and operational challenges. In particular, we invite a discussion of the status of the IRS's reorganization and the steps that are being taken to ensure that the realignment, coupled with recent budget cuts, will not adversely affect either taxpayer relations or the relationships between the IRS and its stakeholders. TEI, in turn, can share the results of its own regional realignment, as well as its members' concerns about the effect of recent changes on the overall performance of the agency.

   Finally, we request a report on the IRS's involvement with the Restructuring Commission.

2. Coordinated

   Examination Program

   1. Implementation of National Office Initiatives in the Field. For the past several years, TEI has actively supported the IRS's initiatives to improve the Coordinated Examination Program. We have been pleased to participate in a wide variety of initiatives, including projects relating to the taxpayer's involvement in the examination planning process, the definition of a successful CEP examination, improving the information-gathering process, and identifying other means to enhance currency. We continue to believe these initiatives hold much promise for improving the examination process to the common benefit of taxpayers and the IRS.

      Regrettably, we remain concerned about, and frustrated by, the uneven implementation of various initiatives across the country. It seems that, year after year, officials in the National Office acknowledge the need "to get the word down" to the field and yet, year after year, the "message" seems to get lost in translation. For example, in April several representatives of the Institute participated in a briefing on the IRS's CEP Systems Analysis initiative, which confirmed what TEI had long suspected: discussing the contents of an information document request (IDR) with the taxpayer before the IDR is issued has a positive effect on the taxpayer's response time. Nevertheless, all across the country, overbroad, unfocused, and irrelevant IDRs are issued in a vacuum. Similarly, the longstanding recommendation that all parts of a detailed audit plan be shared early in the process with the taxpayer has still not been uniformly implemented. Finally, even though the National Office repeatedly assures taxpayers that Case Managers control their audits, our members report concerns about Case Managers and Team Coordinators paying undue deference to various specialists (including international examiners, engineers, and economists), who often seem more interested in issuing IDRs and pursuing an independent agenda than in resolving issues and closing the examination.(2)

      During the liaison meeting, TEI invites a discussion of the status of various CEP initiatives and how taxpayers and the IRS can work together to ensure the uniform implementation of CEP improvements. For example, are examinations being completed more expeditiously? What are the current statistics on "cycle time" and currency? Are there significant...