2006 IRPAC Report: the following report was submitted by Paul Heller of the New York chapter, who was nominated by TEI to served on the Internal Revenue Service's information reporting program advisory committee (IRPAC).

The IRS's Information Reporting Program Advisory Group is a committee of private sector representatives who meet to review and make recommendations to the IRS Commissioner about information reporting issues. During the 2006 year, there was a major effort begun to reshape the activities and goals of IRPAC. The past few years had seen a shift away from large and corporate taxpayers and issues and toward small taxpayers and practitioners. Now, the group has endeavored to refocus and discuss matters related to large corporate tax payers and integrate the effect of various proposals, legislation, etc., on corporate taxpayers. In particular, the LMSB subgroup (on which I serve) monitors the activities of the other groups to ensure that the burden on the corporate community is taken into account. For example, we have raised concerns about the basis reporting proposals offered by the practitioners and IRS because they place heavy burdens on brokers and banks to try to not only report but to validate and maintain basis information on securities all through any changes in ownership.

In addition, we worked with the IRS to create a better working environment and more contact related to information reporting concerns and issues of corporate taxpayers. We met with the LMSB Financial Services Commissioner (first Paul DeNard and then Barry Shott) to emphasize the need to have regular meetings and communication with IRPAC to discuss where there are problems and opportunities. Over the past year, we have worked and are reporting on:

* Certification of U.S. Resident status (Form 6166): Changes by the IRS have created significant delays in obtaining Form 6166. Filing this form is necessary for a US resident to obtain treaty benefits, including lower withholding tax rates on payments of interest, dividends, and royalties from foreign subsidiaries to the U.S. parent. The battle continues but the IRS has conceded that there are issues and are working with industry to change the process.

* Non-Resident Alien Withholding: We raised with the IRS concerns that they were going to commence audits of non-financial institutions related to documentation (Form W8 series), withholding, and reporting (Form 1042S) compliance related to items such as vendor payments and royalties without involving the community. This is an area identified during the recently concluded Voluntary Compliance Agreement Program, which was seemingly viewed as an unexpected source of revenue by the...