2005 promises to be a year of challenge and opportunity.

Although the calendar says that 2005 is not yet one-sixth over, Tax Executives Institute has been extremely busy since the new year began. From TEI's first Board of Directors conference call in January to our annual liaison meetings in Washington and our testimony before the IRS Oversight Board, from a telephone seminar on California's tax amnesty to a special meeting on the IRS's e-filing mandate, and from plans for our Midyear Conference to the finishing touches on our Corporate Tax Department Survey, TEI and its members have worked diligently to be effective and stay effective. If the past is a guide, January and February's challenges will be dwarfed by those to come ... whether the subject is federal tax reform, a new exposure draft on accounting for income taxes, the PCAOB's auditor independence rules, TEI's second annual Senior Tax Executive Conference, or a score of other possibilities. This column reviews the Institute's recent advocacy and other activities. (Our various "coming events" are covered in separate stories in this issue.)

Having a Voice: Liaison Meetings Bring Members' Issues to the Forefront

TEI has been meeting with government officials from its inception six decades ago. Originally, the meetings were held only with the Internal Revenue Service, but more than 30 years ago we started holding meetings in Canada, and in 1983 we held our first liaison meetings with the Treasury Department and the Congressional Joint Committee on Taxation. We have also added meetings with the Federation of Tax Administrators and the Multistate Tax Commission and--through our chapters--state, provincial, and local tax administrators.

Early February was the time for this year's Washington meetings. From the outset, the development of the agendas for our meetings with government officials has been a collaborative affair. Our committees meet (in person or via phone or email) and discuss a whole range of policy and administrative issues, our chairs work with the staff to refine the issues to the vital few, and then the Institute's Executive Committee reviews the agendas to ensure the positions espoused are neither too parochial nor divisive. This year's agendas--including those for our December 2004 meetings in Ottawa (which were published in the November-December issue of The Tax Executive) and our February sessions in D.C.--show the Institute's breadth and depth.

Consider just a sampling of the topics for this year's Washington meetings: (1) guidance under the American Jobs Creation Act, including the new deduction for domestic manufacturing and the provisions relating to the repatriation of foreign earnings; (2) new Schedule M-3; (3) Circular 230, relating to "practice before the IRS"; (4) the IRS's pilot "Compliance Assurance Process" and other initiatives to aid the goal of currency.

I am especially proud of the Institute's work on 2004 tax act guidance. Even before the President signed the bill, TEI was in communication with the Treasury and IRS about which provisions should be given priority, and through mass emails and our website, we solicited comments from the membership at large. The product of those efforts--an ever-growing list of issues that need attention--contributed significantly to the raft of helpful guidance that the IRS and Treasury released in December and January. (To aid our members, we posted updated lists on our website.)

TEI's liaison meetings, of course, are not an end unto themselves. Rather, they represent an opportunity for us to "tee up" important issues and to lay the foundation for future collaboration. That's already occurred, not only with respect to our December liaison meetings in Canada (in respect of which supplemental submissions have already been filed), but here in the United States, where we have already scheduled follow-up meetings on e-filing and Schedule M-3.

TEI's advocacy work continues on many other fronts as well. In late February, I'll have the honor of testifying on TEI's behalf before an IRS hearing on the advance pricing agreement program. The Institute will also file comments with the Public Company Accounting Oversight Board on how its proposed auditor independence regulations relate to tax services, and we will begin to grapple with the Financial Accounting Oversight Board's new exposure draft relating to uncertain tax positions under FAS 109. We also anticipate filing an amicus brief in a California case involving the research tax credit.

Two final notes about the liaison meetings: First, because of the last-minute scheduling of congressional hearings on the President's budget, our meeting with the Department of the Treasury's Office of Tax Policy was postponed; the meeting will be rescheduled for later this winter. (The agenda is nevertheless reprinted in this issue.) Second, the minutes of the meetings will be published on TEI's website (and in the magazine) as soon as they become available.

Being Effective: E-Filing Holds Promise, but Challenges and Cost Cannot Be Minimized

One issue that we discussed during our liaison meetings with LMSB and Commissioner Everson deserves special mention--mandated corporate e-filing. The IRS released temporary and proposed regulations in mid-January requiring companies to file their 2005 returns (in 2006) electronically. Although TEI has long supported efforts to increase the IRS's use of technology, we have urged caution in respect of mandating the electronic filing of returns. Thus, we were disappointed by the government's January announcement, especially because it was made without consultation with the companies that will bear the cost and burden of compliance.

TEI's specific concerns about the e-filing mandate are spelled out both in the agenda for the LMSB liaison meeting and in our testimony before the IRS Oversight Board (which is also reprinted in this issue). First, we voiced concern about the IRS's deviating from the model of collaborative tax administration that marked the development of the Compliance Assurance Process, Joint Audit Planning, and Schedule M-3. Second, we questioned the timing of the mandate--coming on the heels of all the efforts required by section 404 of the Sarbanes-Oxley Act as well as implementation efforts in respect of the 2004 tax act--and without a proper appreciation for how far in advance corporate IT resources are committed. Finally, we expressed serious reservations whether the software vendors the IRS had consulted could deliver fully operational software in time for it to be tested and used in respect of 2005 returns.

These concerns led us to recommend that the IRS consider delaying the effective date of the e-filing mandate. Although the IRS seems reluctant to delay the mandate, I am confident our concerns have been heard ... by Commissioner Mark Everson, LMSB Commissioner Debbie Nolan, and the IRS personnel who are working directly on e-filing. By mid-February, we had already held one follow-up meeting on e-filing, and scheduled another one with the IRS and software vendors in March; future meetings lie on the horizon. TEI will also testify at the IRS's March 16 hearing on the e-filing regulations. I thank those TEI members who stepped forward to provide real-time feedback on the obstacles that exist to implementing the e-filing mandate (thereby giving credibility to TEI's efforts).

Staying Current: Educational Programs and Publications

An important part of TEI's mission has always been educating our members. We continue to advance that goal in 2005. In January, for example, we held a telephone seminar on California's tax amnesty provision, which attracted more than 200 listeners. As this issue goes to press, the Institute is preparing to hold its annual tax controversy seminar. This year's IRS Audits and Appeals program promises to be as rich in content and lively as its predecessors, and it will be followed a mere five weeks later by the Institute's Midyear Conference. Look for the story about the conference elsewhere in this issue.

You don't need to travel to a TEI conference or even pick up your phone (or computer mouse) to stay current. You can simply turn the page. This issue of The Tax Executive contains several useful stories, including a piece on the repatriation provisions of the 2004 tax act, one on the IRS's new cross-border merger rules, and two articles related to standards of conduct for tax professionals--one by Cono Namorato, Director of Professional Responsibility at the IRS, and a second by two practitioners on the IRS and Treasury's new regulations on practicing before the IRS (Circular 230). I especially commend the article on Circular 230, which specifically addresses the role of in-house tax professionals. While clearly not the target of recent efforts to enhance practitioner standards (and stanch the use of "marketing provisions"), TEI members could well find their activities significantly affected by the new rules.

Staying Connected: Results of TEI's Corporate Tax Department Survey

Finally, I am pleased to say that we have completed work on our corporate tax department survey. We anticipate that the final product--both a book and a CD-ROM containing more than 12,000 tables--will be finished in March. (Members who participated in the survey will receive the materials at no charge, and other members will be allowed to purchase it at a discount. Check the website for updated information.)

We continue to find innovative ways to stay connected and better communicate TEI's goals and accomplishments. Last August, we amended the By-Laws to permit telephone meetings of the Board of Directors, and I am pleased to report that the Board's January 13 call attracted more participants than are usually able to attend our in-person meetings. Hence, it helped bridge the five-month gap between the Annual and Midyear Conferences. We're always seeking ways to improve, and we invite your suggestions.

I hope to see you at the Midyear Conference.

Acknowledgments

Tax Executives Institute expresses its appreciation to the following firms that are Platinum sponsors of the Institute's 2005 Midyear Conference:

ADP Tax Credit Services
Baker & McKenzie
Deloitte & Touche LLP
Ernst & Young LLP
KPMG LLP
Mayer, Brown, Rowe & Maw LLP
McKee Nelson LLP
PricewaterhouseCoopers LLP
RIA
Sutherland Asbill & Brennan LLP
Taxware, L.P.
Vertex, Inc.