The AICPA hosted a number of senior IRS executives at the institute’s National Tax Conference on October 26, 2010. IRS speakers included representatives from the Small Business/Self-Employed (SB/SE) Division, the Large Business and International (LB&I) Division, the Wage and Investment (W&I) Division, and the offices of the Electronic Tax Administration (ETA), Appeals, and the National Taxpayer Advocate. This item gives an overview of the policies or programs that these speakers discussed, which will have a significant impact on the practices of CPA members and their clients.
Faris Fink, Deputy Commissioner, SB/SE Division
Small Business/Self-Employed (SB/SE) Division Deputy Commissioner Faris Fink discussed the IRS’s employment tax audits being conducted as part of its National Research Program. He mentioned that about 75% of the employment tax audits involving 2008 tax returns are currently in process, with about 10% of the examinations closed. The IRS will not announce any of the audit results until all cases have been closed.
Fink also reviewed the IRS’s upcoming program to send 10,000 letters to tax return preparers, which will be followed up with approximately 2,500 office visits with preparers from December 2010 through April 2011. He stated that the IRS will try to do a better job of targeting the preparers who have been selected for contact under the program, in answer to the significant complaints raised by tax preparers last year.
Heather Maloy, Commissioner, LB&I Division
Commissioner Heather Maloy reviewed the IRS’s rationale for changing the name of the Large and Mid-Size Business Division to the Large Business and International Division. The new name highlights LB&I’s continued focus on large business taxpayers and its emphasis on improving international tax compliance. The division’s realignment will improve the IRS’s ability to identify emerging international tax issues more quickly and will house all IRS staff with international expertise in one operating division, as opposed to having staff spread among many areas.
The LB&I’s current emphasis on the disclosure of uncertain tax positions on Schedule UTP should enable the IRS to more efficiently focus on potentially significant issues during an examination. In essence, the UTP initiative should allow the IRS to select the best examination cases to work. Maloy also discussed the IRS’s plans to make the Compliance Assurance Program (CAP) a permanent program covering taxpayers with $10 million or more in assets. CAP, which in essence places a company under continuous audit, will be available to taxpayers in three phases. The program has been very successful for companies that participated during its pilot phase.
Richard Byrd, Commissioner, W&I Division
Wage and Investment (W&I) Division Commissioner Richard Byrd emphasized the need to educate taxpayers and provide them with information about the tax laws to ensure proper completion of tax returns. Byrd highlighted the importance of improving the IRS website as a means of reaching taxpayers. He also noted the importance taxpayers place on the IRS providing high-quality telephone services, particularly at such peak times of the year as April 15, when individual returns are due.
Byrd further touched on the tax compliance challenges created by the enactment last year of the first-time homebuyer credit, a situation that appears to parallel the perennial problems the IRS has faced with taxpayer errors on returns involving the earned income tax credit.
David Williams, Director, Office of Electronic Tax Administration
David Williams, director of the Office of Electronic Tax Administration, addressed issues related to the IRS’s preparer tax identification number (PTIN) registration process. Williams spoke on the same day that IRS Commissioner Douglas Shulman announced the appointment of Williams as head of the new Return Preparer Office. The new office’s jurisdiction will involve matters related to registering for PTINs, continuing education, and testing for tax return preparers. Williams told attendees at the AICPA’s National Tax Conference that the Return Preparer Office will emphasize the need for close communication and dialogue with tax preparers.
Diane Ryan, Chief, Office of Appeals
Diane Ryan, chief of the IRS Office of Appeals, discussed the importance of training for Appeals staff. Approximately one-third of the office’s staff has been with Appeals less than two years. In addition to hiring Appeals officers for the traditional role of settling cases, Ryan mentioned that Appeals has recruited economists and others with international specialization. While stressing the growth in the Appeals caseload to 135,000 cases in 2010, she stated that the 2011 caseload is likely to grow by an additional 11%, with about 55% of those cases involving collection issues.
Nina Olson, National Taxpayer Advocate
National Taxpayer Advocate Nina Olson reiterated that the IRS’s treatment of tax liens is one of her major concerns, as detailed in her annual reports to Congress. Olson described how tax liens are automatically filed against taxpayers with federal tax liabilities, a process that can result in premature lien filings. Her office has prepared interim guidance for taxpayers and tax professionals to assist them in preparing the necessary documentation to obtain IRS withdrawal of the lien. The interim guidance is available at the taxpayer advocate’s website and should prove useful pending the release of guidance the IRS is preparing.
Olson expressed her support for repeal of the expanded Form 1099 reporting provisions enacted as part of the Patient Protection and Affordable Care Act, P.L. 111-148. Under this measure, if a business buys $600 or more in goods or services from another business entity or individual, the business (payer) must file a Form 1099-MISC, Miscellaneous Income, with the IRS and send a copy to the seller of those goods or services.
Benson Goldstein is senior technical manager (taxation) at the American Institute of CPAs in Washington, DC, and is staff liaison to the AICPA’s IRS Practice and Procedures Committee. For more information about this column, contact Mr. Goldstein at email@example.com.