Paul Dillingham: a TEI leader for his time ... and ours.

• Author: McCormally, Timothy J.
• Position: Less Taxing Matters

Paul L. Dillingham resigned his TEI membership in 1978 when he was promoted out of the tax department of the Coca-Cola Company. This was five years after he completed his term as 1972-1973 Institute President and four years before I joined the Institute's staff. Nevertheless, I was introduced to his work my first week on the job. Paul, who died on July 15 at the age of 84, led the organization in a time of significant tension between the Internal Revenue Service and the corporate tax community. High-profile corporate failings, revealed by whistleblowers, had prompted the IRS to develop a series of 11 questions to be asked of every taxpayer involved the Coordinated Examination Program (which is now called the Coordinated Industry Case, or CIC, program). The questions addressed what were euphemistically called "sensitive payments," that is to say, corporate bribes or "slush funds."

Do you think that Schedule UTP goes too far or, by its very existence, impugns the integrity of in-house tax professionals? Consider the very first of the IRS's "Eleven Questions":

During the period from--to--did the corporation, any corporate officer, or employee or any third party acting on behalf of the corporation make, directly or indirectly, any bribes, kickbacks, or other payments to any employee, person, company, or organization, or any representative of any person, company, or organization, to obtain favorable treatment in securing business or to otherwise obtain special concessions, or to pay for favorable treatment for business secured or for special concessions already obtained?

Subsequent questions drilled more deeply, broadly asking about direct or indirect payments, loans, the provision of services, etc., to government officials, political candidates, or political parties, whether foreign or domestic, national or local. (You may be thinking, "Oh, this relates to the Foreign Corrupt Practices Act, right?" The answer is that it led to the FCPA, which was not enacted until 1977.)

It was not a particularly pleasant time to be a corporate tax director, as corporate behavior was scrutinized, both independently and as part of the whirlwind of investigations that came to be known as Watergate. At TEI's Annual Conference in 1972, Johnnie Walters, the Commissioner of Internal Revenue, forthrightly challenged the audience about the conduct of the business community. Conference participants were taken aback at the Commissioner's provocative words, qualified as...