Midyear Recap and Planning for the New Millennium.

• Author: Ezrati, Lester D.

TEI is batting three for three with the Deputy Secretary of the Treasury. Two years ago, Lawrence Summers opened the Institute's Midyear Conference by laying out Treasury's five-point plan for building a better IRS. In 1998, Mr. Summers again delivered the opening keynote address and voiced the Administration's opposition to proposals to "terminate the Code." And now last month, with CNN cameras again in tow, the Deputy Secretary opened the last Midyear Conference of the millennium by discussing the Administration's proposals to create a "culture of compliance" by attacking so-called corporate tax shelters.

While expressing the Administration's concern about the proliferation of abusive tax shelters, Mr. Summers assured TEI that Treasury understands the difficulty of the task of defining the problem, and even cited Judge Learned Hand's famous maxim -- that "any one may so arrange his affairs that his taxes shall be as low as possible" -- in support of routine tax minimization efforts.

Some conference participants suggested to me that the Deputy Secretary might have quoted Humpty Dumpty -- "When I use a word it means just what I choose it to mean, neither more nor less" -- for, as Mr. Summers acknowledged, defining the difference between legitimate and abusive efforts to reduce taxes is a daunting task. Mr. Summers pledged to engage in intensive and extensive dialogue with groups such as TEI to come to common understandings of the norms of appropriate behavior.

Although there may be disagreements over the scope of the "corporate tax shelter" problem -- and certainly over the definition of"tax shelter" and the proposed "solutions" -- most thoughtful commentators agree that the tax system is facing a challenge. As tax executives, TEI members see the challenge every day, and we respond by exercising our best judgment: saying "yes" when "yes" is both proper and in the best interests of our companies, and saying "no" when the line is crossed and "no" needs to be said. Accordingly, we welcome Treasury's recognition that its proposals need refinement as well as its request for assistance.

To respond to Treasury's call for assistance, the Institute has formed a task force drawn from members of the Federal Tax, International Tax, and IRS Administrative Affairs Committees. Led by Federal Tax Committee Chair Phil Cohen, the task force will work in the coming months to help develop measured legislative proposals that safeguard the integrity of the tax...