TEI testimony before the IRS Oversight Board: January 27, 2003.

On January 27, 2003, TEI President J.A. (Drew) Glennie testified before the IRS Oversight Board on enforcement challenges facing the Internal Revenue Service. The testimony was prepared under the aegis of the Institute's IRS Administrative Affairs Committee, whose chair is David L. Bernard of the Kimberly-Clark Corporation.

Good afternoon. I am Drew Glennie, General Manager--Tax and Insurance for Shell Canada Limited. I appear today as the President of Tax Executives Institute, the preeminent association of business tax professionals. I am accompanied by the chair of TEI's IRS Administrative Affairs Committee, David L. Bernard of the Kimberly-Clark Corporation, as well as the Institute's Executive Director, Timothy McCormally, and by our General Counsel and Director of Tax Affairs, Fred Murray. The Institute is pleased to participate in the Oversight Board's hearing.

Background

Tax Executives Institute was established in 1944 to serve the professional needs of in-house tax practitioners. Today, the Institute has 53 chapters in the United States, Canada, and Europe. Our 5,200 members are accountants, attorneys, and other business professionals who work for 2,800 of the largest companies in North America and Europe; they are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. Hence, TEI represents the business community as a whole, and our members deal with the tax code in all its complexity, as well as with the Internal Revenue Service, on almost a daily basis. TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike.

The companies that employ TEI's members have almost without exception been assigned to the IRS's Large and Mid-Size Business (LMSB) Division. The largest 1,600 taxpayers within LMSB are subject to ongoing audits as part of the Coordinated Industry Cases (CIC) program. The Institute's testimony is largely based upon our experience with this segment of IRS operations. We are pleased to offer our views on the enforcement challenges within LMSB.

The Components of an Effective Enforcement Strategy

TEI believes that a successful enforcement strategy has the following characteristics:

* Clarity. The ability to understand the tax law--and to comply with it in an efficient fashion--is a critical component of an effective tax system. Taxpayers must understand their responsibilities and commit resources to comply with the law in as efficient a...