Tax gap, legislative and regulatory initiatives focus of TEI's 57th Midyear Conference: new Ways & Means Chair, IRS Deputy Commissioner, and Treasury & OECD Officials Speak, FIN 48 commands attention.

• Position: Tax Executive Institute

The cherry blossoms may not have been in bloom, but that did not deter the nearly 600 tax executives who gathered in Washington in March to review the latest developments in financial reporting, management techniques, and business taxation. TEI's 57th Midyear Conference, held March 19-21 at the Grand Hyatt Hotel, included a legislative update and a roundup of significant federal tax cases, as well as sessions on foreign tax credit planning, the Michigan single business tax, and IRS enforcement tools.

The registrants on Tuesday morning heard the new Democratic chairman of the House Ways and Means Committee vow to work with Republicans to set the right tone and make the last two years of the Bush Administration more productive. Noting a difference of opinion over approaches to reforming the alternative minimum tax, Congressman Charles Rangel stressed that any solution to the AMT problem must be bipartisan. "There is no question what we have to do," he said, "but whether we have the gumption to do it."

Stating that the most serious problem facing the Ways and Means Committee is trade, the Congressman explained that any trade agreements must include worker protections. We need to ease the pain, he added, of any agreements that cost people jobs in the United States.

In response to a question about the research and development tax credit, Congressman Rangel emphasized the need for a permanent credit. "It doesn't make sense for people not to know from year to year what people can depend on from their government," he said. He predicted Congress would pass such legislation by the end of the year.

On Monday, Treasury's Tax Legislative Counsel Michael Desmond focused on five themes: the "pay-go" environment for tax legislation; competitiveness; the currency of the tax law; its complexity and uncertainty; and future prospects for reform. Noting that the tax gap is not an "easy fix" to the revenue need, Mr. Desmond stressed the need for more research. The $30 billion gap attributed to the corporate tax community is based on outmoded data, he acknowledged, adding that compliance rates have hovered around 85 percent as long as measurements have been made. Increasing that percentage to 90 or 95 percent cannot be done overnight, he said.

Under the competitiveness theme, Mr. Desmond cited the recent guidance on cross licensing agreements as an example of how the government can find practical solutions to audit issues in a speedy manner. He also referred to...