Tax Executives Institute-Department of the Treasury liaison meeting: November 19, 1996.

On November 19, 1995, Tax Executives Institute held its annual liaison meeting with the acting Assistant Secretary of the Treasury for Tax Policy and other officials of the treasury Department's Office of Tax Policy. Reprinted below is the written agenda for the meeting, which was submitted to the Treasury in October. A full report on the liaison meeting will be published in a future issue of The Tax Executive.

1. Introductory Comments

   Tax Executives Institute is pleased to have this opportunity to meet with Assistant Secretary Lubick and other representatives of the Treasury Department's Office of Tax Policy. TEI's liaison meetings with the Department of the Treasury have afforded each organization an opportunity to articulate technical, policy, and process concerns and to explore how these concerns can best be addressed. We are confident that this year's meeting, focusing on the items discussed below, will be candid and productive.

2. National Commission on

   Restructuring the

   Internal Revenue Service

   As a new millennium approaches, the tax system is facing unparalleled challenges, including (1) the ongoing effects of a major reorganization of the Internal Revenue Service; (2) a proliferation of calls to "end the IRS as we know it" (and "to pull the tax system out by the roots"); and (3) the chartering of a National Commission on Restructuring the Internal Revenue Service.

   As an association of tax professionals who deal with taxes 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. 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 tax system.

   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.(1) During the liaison meeting, we request a report on the Treasury Department's involvement with the Restructuring Commission.

3. The Prospects for

   Fundamental Tax Reform

   Regardless of the outcome of the upcoming election, taxes and tax policy will continue to dominate the headlines. There will undoubtedly be renewed calls for fundamental reform of the Internal Revenue Code. Nothing will be resolved during the next few weeks, but during the liaison meeting, TEI welcomes Treasury's views on the short- and long-term future of the tax system and the role the Institute can play to ensure that in any reform effort, workable, administrable rules are adopted.

4. Proposals for Reform of

   the International Tax

   Provisions

   1. Treasury Conference on Formulary Apportionment. The Treasury Department has scheduled a conference on formulary apportionment for December 12. In announcing the conference, Deputy Secretary Summers stated that the decision to hold the conference should not be interpreted as a weakening of treasury's support for the arm's-length principle. He continued, however:

      But if the arm's-length principle

      were to become unworkable

      in the future, we would

      certainly cooperate with our

      trading partners to develop a

      consensus, multinational alternative.

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