TEI testimony before the IRS Oversight Board February 1, 2005.

• Position: Tax Executives Institute's Executive Director Timothy J. McCormally - Transcript

On February 1, 2005, TEI Executive Director Timothy J. McCormally testified before the IRS Oversight Board on streamlining tax administration. The testimony was prepared under the aegis of the Institute's IRS Administrative Affairs Committee, whose chair is Paul O'Connor of Millipore Corporation.

Good afternoon. I am Timothy McCormally, Executive Director of Tax Executives Institute, the preeminent association of business tax professionals. The Institute is pleased to participate in today's hearing of the IRS Oversight Board.

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 5,400 members are accountants, attorneys, and other business professionals who work for 2,800 of the leading 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. 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 streamlining tax administration within the IRS and, more particularly, LMSB.

The Role of Corporate Tax Departments in Tax Administration

One topic for today's hearing is the involvement of professional organizations in protecting the integrity of the tax system. The Board recognizes that tax professionals and the organizations to which they belong play a key role in ethical and effective tax administration. In addition, the subject is tied to the IRS's strategic objective to ensure that attorneys, accountants, and other tax practitioners adhere to professional standards and follow the law. TEI believes that corporate tax departments have a role in that process.

The Internal Revenue Service recently issued final regulations relating to the standards of conduct for tax practitioners. Section 10.33 of Circular 230 now provides certain "best practices" or "aspirational standards" for rendering tax advice, including "establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law ... to the relevant facts, and arriving at a conclusion supported by the law and the facts" and "acting fairly...