IRS Practice and Procedures Committee update.

• Author: Carlton, Lawrence

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The IRS Practice and Procedures Committee held its semiannual meeting with executives of the Internal Revenue Service at the AICPA offices in Washington, DC, on May 18 and 19, 2009. Attendees from the IRS were Chris Wagner, commissioner of the Small Business/Self Employed Division (SB/SE); Steve Miller, commissioner of the Large and Mid-Size Business Division (LMSB), along with Paul DeNard, deputy commissioner; Doug O'Donnell, director of International Operations; Rick Byrd, commissioner of the Wage and Investment Division (W&I), along with Doreen Viglione; Sarah Hall Ingram, commissioner of the Tax Exempt/Government Entities Division (TE/GE), along with Joseph Grant, deputy commissioner; Diane Ryan, chief of appeals; Nina Olson, taxpayer advocate; Floyd Williams III, director of the Office of Legislative Affairs; and David Williams, director of Electronic Tax Administration.

Each of the IRS executives made a brief statement updating the committee on what is happening within their various divisions. This was followed by a dialogue with the committee members on a number of issues. Committee members presented issues based on experiences they and other AICPA members have had.

IRS Issues

The most common theme discussed across the various divisions of the IRS was the current economic climate in the United States. Collection problems are increasing along with bankruptcies. Offer in compromise requests and installment agreements are becoming more common. The IRS expressed concern over the increased defaults in installment agreements. The Service is trying to work with taxpayers in an effort to understand their difficult financial circumstances while making sure the government is collecting taxes due. The employment tax area has received increased focus, not only in collections but also with compliance examinations. The worker classification issue is alive and well.

High-income and high-wealth taxpayers are coming under additional scrutiny. Compliance examinations are on the increase, as are examinations of flowthrough entities. Taxpayers, especially high-wealth individuals, are increasingly using flowthrough entities and multiple entities to siphon off income before it becomes a part of the individual's tax return. Specialty flowthrough examination groups have been set up and trained in the SB/SE and...