IRS indefinitely postpones TCMP audits.

• Author: Horn, Anita L.
• Position: Taxpayer Compliance Measurement Program

In mid-October, the IRS decided to delay indefinitely the start of its Taxpayer Compliance Measurement Program (TCMP) audits. Originally, the IRS had stated that such audits would be postponed from an Oct. 1, 1995 start date until Dec. 1, 1995. According to the IRS National office, that 60-day delay in TCMP audits was "due to the uncertainty around the budget for fiscal year 1996."

Initially, the Service had noted that during the 60 days between october 1 and December 1, it would "reevaluate all compliance programs." This reevaluation was to include "assessing the extent, if any, that compliance resources may be needed to deliver critical activities. or programs in other parts of the organization, such as taxpayer services .... The IRS will decide where they spend their dollars -- TCMP, telephone assistors, etc." The Service emphasized that during that delay, "support and planning activities that are needed to begin TCMP" would continue. When asked if it would discontinue TCMP altogether, the IRS said that it would would discontinue, just postpone" the audits.

The U.S. House of Representatives Ways and Means Committee's Oversight Subcommittee has held hearings to "assess the value of the TCMP program to effective tax administration and policy analysis, and to determine if there are less burdensome alternatives available to the IRS to achieve the program's primary goals." The subcommittee has been particularly concerned with the burden placed on taxpayers subject to a TCMP audit, compensating taxpayers for costs incurred and the timeliness of the compliance data taken from these audits.

On Aug. 1, 1995, the AICPA submitted written testimony on TCMP audits to the subcommittees. While the Institute supported the concept of TCMP, it also used its testimony to continue its objections to the growing use of "financial status" auditing by revenue agents examining individual tax returns, even in situations in which there is no suspicion of income underreporting. The AICPA's statement follows:

"The AICPA appreciates the opportunity to comment on the value of the Taxpayer Compliance Measurement Program (TCMP). We believe that the TCMP is an essential element in the Internal Revenue Service's audit program and should be continued. A TCMP audit is a time-consuming process, both for the taxpayer and the agent, but its benefits outweigh the costs through more efficient tax administration. While these audits impose substantial added burdens on those...