TEI-IRS large and mid-size business division liaison meeting.

• Position: Tax Executives Institute

On February 19, 2008, a delegation from Tax Executives Institute met with Frank Y. Ng, Commissioner of the IRS's Large and Mid-Size Business Division, and other LMSB officials. The following minutes were prepared by TEI and, although reviewed by the IRS Large and Mid-Size Business Division, they have not been formally approved by the agency.

On behalf of the Large and Mid-Size Business (LMSB) Division of the Internal Revenue Service, Commissioner Frank Y. Ng welcomed TEI President Robert J. McDonough and the other members of the delegation from Tax Executives Institute to the liaison meeting. LMSB's and TEI's delegations to the liaison meeting are set forth below.

IRS Delegation

Frank Y. Ng, LMSB Commissioner

Bruce B. Ungar, Deputy Commissioner (Operations)

Paul D. DeNard, Deputy Commissioner (Operations)-Designee

Barry B. Shott, Deputy Commissioner (International)

Christopher Sterner, LMSB Division Counsel

Cheryl P. Claybough, Director, Pre-Filing & Technical Guidance

Laura M. Prendergast, Director, Field Specialists

Donald McPartland, Director, Research & Workload Identification

Helen Bolton, Director, Management & Finance

Robert D. Adams, Senior Advisor to the LMSB Commissioner

Rosemary Sereti, Acting Executive Assistant (Operations)

Kathryn L. Gregg, Manager, Communications (Communications & Liaison)

TEI Delegation

Robert J. McDonough, Polaroid Corporation, TEI President

Vincent Alicandri, Hydro One Networks, Inc., TEI Senior Vice President

Neil D. Traubenberg, Sun Microsystems, Inc., TEI Secretary

Paul O'Connor, Millipore Corporation, TEI Treasurer

David L. Bullington, Wal-Mart Stores, Inc., TEI Executive Committee

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

Kelly A. Nall, Electronic Data Systems Corp., TEI Executive Committee

Michael J. Nesbitt, Paychex, Inc., TEI Executive Committee

Nanci S. Palmintere, Intel Corporation, TEI Executive Committee

Monika M. Siegmund, Shell Canada Limited, TEI Executive Committee

Mark C. Silbiger, The Lubrizol Corporation, TEI Executive Committee

Christopher T. Riley, Archer Daniels

Midland Co., Chair, TEI IRS Administrative Affairs Committee

Carita R. Twinem, Briggs & Stratton Corporation, Chair, TEI Federal Tax Committee

Terilea J. Wielenga, Allergan, Inc., Chair, TEI Financial Reporting Committee

Timothy J. McCormally, TEI Executive Director

Eli J. Dicker, TEI Chief Tax Counsel

Mary L. Fahey, TEI General Counsel

Shirley S. Grimmett, TEI Tax Counsel

Jeffery P. Rasmussen, TEI Tax Counsel

Opening Comments

On behalf of TEI, Mr. McDonough congratulated LMSB Commissioner Ng on his new position and said that from taxpayers' perspective the transition in the LMSB leadership has been smooth. He expressed his appreciation to Mr. Ng and other LMSB officials for meeting with the Institute. The meetings afford TEI an opportunity to discuss a number of matters in a professional manner. Mr. Ng thanked Mr. McDonough and expressed his appreciation for LMSB's good relationship with TEI. He invited the group to share its observations about LMSB's operations--what is working well and what may need improvement.

LMSB Recruiting and Training Strategy

Mr. Ng noted that IRS recruitment and retention matters were discussed in the liaison meeting earlier in the day with Acting IRS Commissioner Linda E. Stiff. Mr. McDonough concurred and invited Mr. Ng to discuss changes in LMSB's leadership since Deborah M. Nolan's retirement as LMSB Commissioner in October 2007. Mr. Ng noted that there had been turnover in a number of top LMSB positions, with many of the successors coming from within LMSB's ranks; therefore, the group is experienced, well-grounded in LMSB's mission, direction, and operations, and knows LMSB's stakeholders well. The attendant internal and external credibility has made the transition seamless. Many of the key LMSB leaders were in the room and pleased to meet with TEI. Of the ten Directors of Field Operation (DFO) positions, Mr. Ng said, four are currently filled on an "acting" basis, but those positions will soon be filled on a permanent basis.

Mr. Ng said that LMSB will hire approximately 240 new people this year and explained that one of his goals is to strengthen communication with front-line personnel. In addition, succession planning, leadership development, and training are key objectives. The training focus will enhance agents' commercial awareness, especially about the global business environment, international tax issues, and financial products. In addition, he said he has challenged Ms. Prendergast to rethink the process of how field specialists engage with examination teams and taxpayers.

Mr. McDonough asked whether the training program includes any special emphasis. Mr. Ng replied that LMSB's basic continuing professional education program will continue with specific tailoring for each individual's needs. All employees, he said, will receive standardized training about significant issues, including financial accounting, international tax matters, and Tier I and II examination issues. In addition, LMSB will develop a cadre of specialists in financial products.

Examination-Related Issues

1. International Examination Program Update. Ms. Lucchesi asked whether and how the transition in LMSB's leadership will affect LMSB's international examination priorities. Mr. Shott replied that taxpayers should not expect significant changes in LMSB's priorities of focus. The number of Tier I issues in the international area will likely not be expanded; rather, LMSB's focus is on deciding on the best approaches to examining and resolving issues that have been identified. Mr. Shott noted that Charles R. Larson, an economist formerly with PricewaterhouseCoopers, has been hired as a senior adviser on transfer-pricing issues. Mr. Larson will ensure that international examinations are informed by commercial awareness, i.e., how--and why--business practices are evolving as they are.

   Mr. Shott reported that Acting IRS Commissioner Stiff has challenged LMSB to develop, integrate, and coordinate a comprehensive IRS-wide response to issues raised by globalization. Rather than focusing exclusively on specific technical issues, he said, the Commissioner wants to look broadly at international tax administration in a global environment. To that end, a cross-functional International Tax Council has been established with personnel from the international branch of Chief Counsel's office, LMSB, and other IRS divisions. The Council's mandate is broad, ranging from operational issues, such as reviewing whether...