TEI-Internal Revenue Service liaison meeting minutes.

• Position: Tax Executives Institute

March 11, 2010

On March 11, 2010, a delegation from Tax Executives Institute met with the Honorable Douglas H. Shulman, Commissioner of Internal Revenue, and other senior officials of the Internal Revenue Service. The following minutes were prepared by Tax Executives Institute and, although reviewed by the Internal Revenue Service, they have not been formally approved by the agency. The agenda for the meeting was published in an earlier issue of The Tax Executive magazine and on TEI's website.

IRS Commissioner Douglas H. Shulman welcomed TEI President Neil D. Traubenberg and the TEI delegation. Commissioner Shulman said the liaison meetings facilitated open discussion on issues of common interest, which promotes better tax administration.

On behalf of TEI, Mr. Traubenberg expressed the Institute's thanks to the Commissioner for the IRS's ongoing commitment to active dialogue. The IRS and TEI delegations are set forth below.

IRS Delegation

Douglas H. Shulman, Commissioner of Internal Revenue

Steven T. Miller, Deputy Commissioner (Services and Enforcement)

Ruth Perez, Deputy Chief of Staff, Internal Revenue Service

Ronald J. Schultz, Senior Adviser to the Deputy Commissioner (Services and

Enforcement)

William J. Wilkins, Chief Counsel, Internal Revenue Service

Clarissa C. Potter, Deputy Chief Counsel (Technical), Internal Revenue Service

Christopher B. Sterner, Deputy Chief Counsel (Operations), Infernal Revenue

Service

Diane S. Ryan, Chief, Appeals

W. Kurt Meier, Deputy Chief, Appeals

Heather C. Maloy, LMSB Commissioner

Paul D. DeNard, LMSB Deputy Commissioner (Operations)

Michael Danilack, LMSB Deputy Commissioner (International)

Frank Keith, Chief, Communications & Liaison

Candice V. Cromling, Director, Office of National Public Liaison

Mark J. Kirbabas, Branch Chief, Stakeholder Relations

Management, Office of National Public Liaison

Caryl Grant, Program Manager, Stakeholder Relations

TEI Delegation

Neil D. Traubenberg, TEI President

Paul O'Connor, Millipore Corporation, TEI Senior Vice President

David M. Penney, General Motors of Canada Limited, TEI Secretary

Carita R. Twinem, Briggs & Stratton Corporation, TEI Treasurer

Michael J. Bernard, Microsoft Corporation, TEI Executive Committee

Paul Heller, Royal Bank of Canada, TEI Executive Committee

Lynn B. Jordan, Performance Food Group Company, TEI Executive Committee

Janice L. Lucchesi, Akzo Nobel, Inc., TEI Executive Committee

Kelly A. Nall, Hewlett-Packard Company, TEI Executive Committee

Daniel R. Goff, Xilinx, Inc., Chair, TEI International Tax Committee

John A. Mann, Walgreen Co., Chair, TEI Federal Tax Committee

Mark C. Silbiger, Lubrizol Corporation, Chair, TEI IRS Administrative Affairs

Committee

Timothy J. McCormally, TEI Executive Director

Eli J. Dicker, TEI Chief Tax Counsel

Mary L. Fahey, TEI General Counsel

Daniel B. De Jong, TEI Tax Counsel

Jeffery P. Rasmussen, TEI Tax Counsel

Commissioner's 2010 Priorities

Commissioner Shulman reported that the IRS is responding to numerous external developments while driving its strategic agenda of providing taxpayer service and enforcing the nation's tax laws. The IRS is charged with responsibility for administering a number of new tax credits and programs enacted as part of the American Recovery and Reinvestment Act (ARRA) and, because of net operating losses incurred during the economic downturn, has issued approximately $33 billion in carryback refund claims. In addition, the IRS has issued guidance on a plethora of technical issues, including those emerging from the financial crisis as well as those arising from the stimulus act. The demands on the IRS, he said, are significant. Although the agency maintains its focus on improving taxpayer services and compliance, the incremental demands from economic recovery incentive programs, such as the new hire credit in the jobs bill and the homebuyer tax credit, have stretched the agency's resources. For example, he said, to forestall potentially fraudulent homebuyer credit claims, the IRS conducted 200,000 additional audits last year on top of the 1.3 million annual examinations the IRS undertakes. The myriad tax provisions in the health care proposals being considered by Congress, he explained, will add to the agency's workload and resource challenges.

Mr. Shulman explained that the IRS's strategic enforcement agenda is based on increasing transparency for both individual and corporate taxpayers. Improvements in tax return preparer standards, credit card and stock basis information reporting, and foreign bank reporting and withholding will enhance individual taxpayer transparency and aid the IRS in increasing individual compliance. In the corporate arena, he said, Announcement 2010-9, relating to the disclosure of uncertain tax position, is extremely important and must be kept in perspective. The IRS's traditional compliance and enforcement model is adversarial in its approach, with a post-return filing emphasis on issue identification, examination, appeals, and (as necessary) litigation. This model often results in significant examination time--up to 25 percent--being devoted to issue identification. This, in turn, can lead to controversies over minor matters, thereby hindering speedy resolution of significant issues and cases. The development of nontraditional enforcement tools allows taxpayers and the IRS to narrow the areas of disputes. The Compliance Assurance Process (CAP), he said, is the most successful example of a nontraditional approach to compliance. Taxpayers achieve greater certainty and quicker...