TEI-IRS Southwest Regional liaison meeting; February 27, 1995.

• Position: Liaison Meeting Special

On February 27, 1995, representatives of Tax Executives Institute's Region VIII held a liaison meeting with officials of the Internal Revenue Service's Southwest Region in Dallas, Texas. The minutes of the meeting are reprinted below. Certain parts of the minutes have been edited to take into account superseding events and the fact that information on the same subjects has been reprinted elsewhere (e.g., in the minutes of national level liaison meetings).

National CEP Policy Board

The liaison meeting began with opening remarks by Donald G. Karras, Vice President of TEI's Region VIII. Next Gary Booth, acting IRS Regional Commissioner, welcomed the TEI group and turned to current initiatives of the National CEP Policy Board. Gary stated that included representatives from Exam, Appeals, and Counsel make up the Policy Board, which has been in place for four years and meets each month. The Policy Board has been studying the following items:

1. Examination Settlement Authority. The Board has been looking at what the level of authority should be and whether the authority should include more than rollover issues and factual issues. The Board expects to have a report to the Commissioner by the end of March.

2. Practitioner Software Issues. The IRS would like to have access to the software itself, not just the data contained in the software. Gary stated that there is a case regarding this matter currently in court.

3. Field Service Advice. There is pending a Freedom of Information Act lawsuit, by a publication, to get access to field service advice. The Policy Board feels there is a misunderstanding about what field service advice is and what it should be.

4. Electronic Filings. The Policy Board is looking at streamlining the corporate tax return filing procedure. There is a feeling that there is too much unnecessary paper and they are reviewing the possibilities of allowing corporations to file electronically. There are problems involved in electronic filing and it is tough to carve out large cases for special treatment. There have also been proposals to allow payroll tax filings to be made electronically. Electronic filing is a "wait and see" area.

5. Large Case Measurements. The Policy Board is looking at whether the measurements they have now are effective. They would like to encourage productivity while meeting the taxpayers' needs and improving voluntary compliance.

6. Market Segment Approach. The Policy Board is looking at a market segment approach for the CEP Program although they are not convinced that it fits.

   Large Case Appeals

   Gene Geller, IRS, discussed large case appeals.

1. Status of Early Involvement with Appeals. In some cases, one issue is key and needs to be resolved so that other issues can be settled. There is a procedure now in place where the taxpayer can get together with the Case Manager and agree to move an issue to Appeals for resolution while Exam resolves other issues. This process is voluntary on both sides. Taxpayers appear to be reluctant to use early referral. The Southwest Region recently received its first request which it is planning to approve. After Appeals decides the issue, it will be sent back down to Exam and incorporated into the examination process. This procedure is not designed to take issues to Appeals during the latter part of the audit. Many times the exercise necessary to use this procedure and prepare for Appeals results in the settlement of the issue at Exam.

   TEI members pointed out the problems that occur when the bigger issues are presented to the taxpayers at the end of the audit. IRS representatives stated they were looking at when the issues are given to the taxpayers in the area of

   RELATED ARTICLE: TEI Delegation

   Donald G. Karras Newmont Gold Corporation Richard W. Hutchins

   AAF-McQuay Inc. Delmer R. Threadgill J.C. Penney Company, Inc Dwight E. Jeter Panhandle Eastern Corp. Mickey G. Culpepper

   Baker Hughes Inc. Anthony W. Rackley The Williams Companies Gordon E. Schaechterie MAPCO Inc. Cliff O. Simpson

   Novell, Inc. Paul Cherecwich, Jr. Thiokol Corporation Clement J. Wydra Diamond Shamrock, Inc

   IRS Delegation

   Gary Booth Acting Regional

   Commissioner, SWR Michael Killfoil

   Acting Chief, Compliance

   Officer, SWR Bobby E. Scott

   District Director, SWR Ben Hyde Regional Compliance

   Director (Corporate), SWR Gene Geller

   Assistant Regional Director

   of Appeals, SWR Jerry Jones

   Senior Regional Analyst

   CEP, SWR John Buchanan EPO better measurements and are making efforts to find out what the agents are doing out there. TEI members questioned whether there was any way to use the early referral procedure in a situation where the Case Manager did not wish for the issue to go to Appeals. Case Managers must agree to the procedure and there are no formal mechanisms to go around the Case Manager. If there is a personality conflict, the taxpayer should contact the Branch Chief and request a review of the situation. It was pointed out that the primary motivation for a taxpayer to use this procedure is to avoid hot interest and close the case earlier. But the IRS stated the procedure was not designed to be used as a technique to avoid hot interest.

   The procedure requires the taxpayer and examining agent to prepare position papers. If the issue is not resolved at Appeals, it will go back to the Case Manager as an unagreed issue. Technically, the book answer is that Appeals will not reconsider the issue, but as a practical matter, the issue will probably be revisited and will at least be discussed at Appeals. If the IRS and the taxpayer can move a little closer together, it is possible the issue could be settled.

   TEI members questioned whether Appeals was supportive of this process in the Southwest Region, and it was pointed out that it has not gotten off to a big start. IRS representatives responded that other regions have had early referrals and that at IRS meetings there appears to be support for the procedure from Appeals. Jerry Jones, IRS, pointed out that in some cases issues are brought to Appeals for their consideration on an informal basis outside of the early referral procedures.

   It was pointed out that there has been a significant drop in the number of issues going to Appeals since 1990. Exam is making efforts to have a smaller number of issues leave Exam and is trying to get the right answers at the audit level. One idea that has been discussed is to have an Appeals Team Chief be assigned to a large case audit while it is in progress, but this is unlikely to happen.

   The measurements used for Exam were discussed. The old way to measure was the amount of proposed adjustments. Exam is still being measured this way to some extent but is trying to get away from this and look at the end result after settlement.

   Gene Geller, IRS, addressed the question whether Appeals is going away. He said the question is not whether Appeals will be there but where will it be? Appeals is now under Regional Counsel for its functional part but remains under the Commissioner for its administration purposes. It has been suggested that Appeals would go totally under Counsel, but there was some concern expressed from the outside stakeholders on this. There has also been some discussion of whether Appeals should be strictly under Exam like Appeals used to be. The IRS is studying this right now. Some have suggested that Appeals be...