TEI New Jersey Chapter -- IRS New Jersey District Liaison Meeting Minutes.

November 23, 1998

Opening Comments

Frank Nixon opened the meeting by welcoming representatives of TEI's New Jersey Chapter. He said it was important for the IRS to meet periodically with stakeholders to discuss issues of mutual interest. Lisa Norton, the chapter's President, agreed that it was important to keep an open stream of communications.

Mr. Nixon suggested that it might be possible to meet with all stakeholders (TEI, CPA Society, Bar Association, et al) in combined meetings on a more frequent basis and asked TEI to consider the idea. Such meetings would be in lieu of separate annual stakeholder meetings. Ms. Norton indicated she would discuss the idea with members of the chapter's Board of Directors.

Mr. Nixon provided a status report on IRS modernization. He pointed out that the mandate from Congress is to reconfigure the agency in order to provide better service to its customers. The mandate is to organize along market segment lines as opposed to traditional, functional lines. He explained that a market-segment approach is the most practical in today's world, and said it is anticipated that there will be fewer levels of management between the taxpayer and the top level of the IRS, thus enabling the agency to be more responsive to taxpayer needs. Also, there is an expectation of greater consistency across the country. Modernization also means greater technology to manage tax accounts. Locally, little change is anticipated in terms of the number of audits the IRS is conducting.

Mr. Nixon reinforced the notion of involving taxpayers in the planning process. He said the IRS's goal is to get in and out as quickly as possible. While IRS audit teams are not interested in auditing every line on the tax return, they are looking to ensure that the tax return is substantially correct. Mr. Nixon emphasized that a key to this is the taxpayer's responsiveness to IDRs. He is committed to getting out to the audit sites to meet with taxpayers and audit teams to show his support for quality examinations.

TEI Issues

1. How do you expect IRS restructuring to affect audits in the New Jersey District, and over what time frame? In particular, will the structuring along industry rather than geographic lines cause delays owing to the travel burdens of agents and specialists?

   The restructuring of the Middle Market/Large Case market segment is expected to occur October 1, 1999. The design teams are working on the details of the plan between September 1, 1998 and April 15, 1999. District lines will disappear. We expect to have more information about the changes at that time.

   We do not expect that delays will occur on any audits as a result of the reorganization. It is expected that the majority of the agents in New Jersey will still examine local taxpayers. The Case Manager and those above in the management chain may be located outside the local area in some cases, but we do not expect that this will delay any audit. Taxpayers will continue to have ready access to Team Coordinators. We expect that increased market segment knowledge and increased computer technology will make the audits more efficient.

   The IRS in New Jersey has formed Large Business Examination Groups. Their mission is to conduct audits of large taxpayers not part of the Coordinated Examination Program (CEP), but utilizing certain CEP procedures (e.g., planning with the taxpayers, IDR management, early referral to Appeals, and others). These groups will be part of the middle market and large business segment.

2. Do you foresee problems for New Jersey District taxpayers resulting from year 2000 systems problems, and do you have any advice to taxpayers to minimize those difficulties?

   We do not anticipate any Year 2000 problems within the IRS. Our systems are being converted and will be completed in calendar year 1999. In fact, 90 percent of our systems are already compliant with a target of Spring 1999 for all else to be ready. While not expected, if any taxpayer encounters an IRS Y2K issue, the Team Coordinator or Case Manager should be notified immediately. We also expect that...