TEI-commissioner of IRS liaison meeting agenda.

• Position: Tax Executives Institute

On February 19, 2008, Tax Executives Institute held its annual liaison meeting with the acting commissioner of Internal Revenue, Linda E. Stiff, and other senior officials of the Internal Revenue Service. The agenda for the meeting follows.

1. Introduction

2. Commissioner's Program Priorities

3. Examination-Related Matters

   1. Case Management/Risk Assessment

      1. Case Currency, Cycle Time and Coverage Rates

         TEI invites a discussion on and a comparative assessment of current case management statistics; specifically:

         * Overall "coverage rate" for large business: FY07--6.8% and FY08--6.6% (estimate);

         * CIC currency rate: FY06--67.1% and FY07--84.1%;

         * Examination Cycle Time: FY06--14.3 months and FY07--14.0 months; and

         * Total Cycle Time: FY06 - 34.3 months and FY07--32.4.

         What effect have the increases/decreases in LMSB exam closure rates and cycle times had on other LMSB priorities?

      2. Tax Data Utilization Assessment (including Schedule M-3, e-filed return information)

         Improving audit currency is closely linked with efforts to identify areas of compliance risk and non-compliance. Streamlining the survey and evaluation processes permits better targeting of exam resources to areas of identified risk. Over the past few years, the IRS has developed several tools to help the examination function operate more efficiently and effectively. Schedule M-3 (Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More) is one such tool; it was designed to provide greater transparency regarding book-tax differences, thereby permitting the IRS to focus attention and resources on higher risk areas. A second example is the IRS's e-filing mandate for corporate tax returns; by affording the IRS quicker and more centralized access to return information, the survey and risk identification process can occur more efficiently.

         With regard to the M-3, TEI invites a discussion about how M-3 data have affected the IRS's currency initiative, especially in light of recent published reports that M-3 data have fallen short of expectations. See Crystal Tandon, Schedule M-3 Data Show Compliance Problems, 2007 TNT 240-4 (Dec. 13, 2007) (almost one-third of the schedules filed for tax years 2004 and 2005 contained errors, including (1) failure to tie Part 1, Line 4 to the appropriate financial statement amount, (2) omission of supporting schedules for Parts 1 and 2, (3) failure to disclose specific items, and (4) miscategorization of permanent items under the temporary column).

         TEI also invites a discussion regarding any contemplated changes to the Schedule M-3. TEI input, and that of other stakeholders, was an important aspect in the original development of the Schedule. Accordingly, we believe that possible changes to M-3 should be vetted with stakeholders (including TEI) before final decisions are made.

         In respect of e-filed returns, corporate taxpayers will shortly embark on the third filing season under the e-filing mandate.

         TEI invites a discussion on the following:

         * The measures being used to assess the e-filing program;

         * The use of e-filed return data by IRS research personnel for case and issue selection purposes; and

         * The status of online access and data assessment tools to permit examination personnel to use electronic tax return data. (Ata recent...