A year of accomplishment and gratitude. (President's Corner).

It has become customary for TEI's President to use the May-June President's Corner to review the accomplishments of the year. It's hard to believe that this is my sixth column and that 12 months have passed since incoming Officers and Chapter Presidents met in Tucson to work on the Institute's 2001 Goals and Objectives. As I reflect on the past year, I am filled with pride for what TEI has accomplished; admiration for the dedication and hard work of the Institute's volunteer leaders and staff; gratitude for the courtesies extended to my family and me during my term of office; and, certainly not least, confidence in TEI's future. A year ago I said that as TEI President, I wanted to contribute to the Institute's "moving the yardsticks forward." Although we did not accomplish all we set out to do (isn't that what "stretch objectives" are all about?), I think we have made significant progress.

Rising to the Occasion

A year ago, it would have been hard to imagine the set of challenges that would confront us. From September 11th to Enron and Andersen to an economy that stubbornly declines to bounce back, we have all had to cope with events and consequences that would have been deemed fanciful a year ago. But in these unanticipated challenges--and in the anticipated ones, too--the Institute has found and harvested countless opportunities to advance our mission of serving TEI members and their employers through education, networking, and advocacy.

Nine months after the fact, the terrorist attacks on September 11 still seem unreal. The attacks forever changed how Americans and others view travel, issues of liberty and personal security, and our place in the world. No one, no organization was unaffected by the attacks, and in my view TEI responded with sensitivity, maturity, grace, and speed. We worried about our members and colleagues who were lost or personally affected by the attacks. We immediately lent assistance to the IRS and other tax agencies in addressing how tax obligations were affected by the horrific events and communicating the guidance to the tax community. We sought and received authorization from TEI's Board of Directors to make donations to September 11-related charities, and were gratified when several local TEI chapters also made substantial donations. Finally, we modified the tone of our Annual Conference, both out of respect and in recognition of the new reality, and in light of increased travel restrictions, undertook to offer more and more "distance learning" programs to TEI members.

The continuing softness of the economy also presented TEI with opportunities. Foremost among these was economic stimulus legislation, which TEI relentlessly supported. The Institute identified three priorities--a lengthening of the NOL carryback period, AMT relief, and the enactment of "bonus depreciation" rules--all three of which were achieved. No piece of legislation is perfect, but TEI's committees and members should be proud of their work on this bill.

Finally, the implosion of Enron and Arthur Andersen tested TEI and, more immediately, its members in other ways. At one level, our members were compelled to respond to company decisions to switch auditors or impose restrictions on the scope of services provided by their auditors, and several TEI chapters hosted meetings to address the myriad issues raised. More strategically, the Institute sought to ensure against overreaction (by Congress, the media, and the public at large). Precisely what happened and why--the true "lessons of Enron"--remain to be fully understood. One thing, however, is certain: How business was done in the past is not how it will be done in the future, and the changes will affect us all. I am confident that TEI will continue to be there, helping members cope with tomorrow's new reality.

Other Challenges ... Other Accomplishments

The challenges we did know about a year ago also gave the Institute opportunities to excel and make a difference. In the United States, the issues of the research tax credit and the capitalization of expenses continued to command attention. Two decades after the R&D credit was enacted, the Treasury Department presented us last December with a major rewrite of the regulations. Although the Institute prepared and submitted a detailed submission on various aspects of the regulations, our support of further refinements should not mask our sincere belief that the new regulations represent a significant step forward. In addition, we assisted LMSB in facilitating the orderly administration of the research credit (and, in particular, claims for refund).

Another recurring issue for the Institute was INDOPCO, and here too there is reason for pride ... and hope. The Treasury and IRS's release of a "advance notice of proposed rulemaking," outlining a new approach to the capitalization-expensing issue, energized the tax community, giving cautious hope that the trench warfare of the last decade might soon end. Applauding the basic thrust of the notice, TEI recommended numerous changes to aid the cause of good tax administration. We will continue to be vigilant on this issue.

The Institute maintained our excellent liaison relationships with the IRS and LMSB organizations (both in Washington and nationally), and built upon the effective relationships forged in Ottawa with the Department of Finance, Canada Customs and Revenue Agency, and (this year) the Canadian Department of Justice. An issue we discussed on both sides of the border was tax shelters, and we remain confident that the rules ultimately emerging (from the IRS, Treasury, and Congress--as well as from CCRA and the courts in Canada) will be more balanced and reasonable because of our involvement. Finally, we sought out numerous opportunities in the state and local area, including filing; comments with the Connecticut legislature and an amicus brief with the Illinois Supreme Court.

One final advocacy effort deserves special mention. Earlier this year, TEI filed an amicus brief with the Supreme Court, urging that it review a case involving Boeing and the validity of the FSC/DISC regulations. In late May, the Court--surprising many commentators--agreed to hear the case. Given the paucity of tax cases heard by the high court and remoteness of a case being heard despite the opposition of the Bush Administration, it is remarkable that the Boeing case will be heard next fall. The Supreme Court never states the reasons for its grants of certiorari, but TEI is, gratified that Boeing's tax director and outside counsel have both said they believe the Institute's brief played an instrumental part in the decision. Everyone involved in preparing the Institute's brief should take pride in the outcome.

Internal Progress As Well

Internally, too, TEI set ambitious goals, and we achieved success. For example, we conducted a thorough review of the Institute's membership criteria and adopted changes to bring the rules more in sync with the times and to expedite the processing of applications. In addition, the Membership Committee and staff worked to satisfy our objective of reducing the time it takes to process membership applications; indeed, while our goal was to shorten the time to 20 days, the average is now far less than 2 weeks. And the chapters and regions all pulled together to exceed by 5 percentage points the ambitious goal of recruiting new members equal to 10 percent of the membership. I am especially impressed that our European Chapter--chartered just three years ago--led the way and now has more than 110 members.

We also satisfied our goal of working effectively with other organizations. For example, we sponsored a joint conference on tax simplification with the AICPA and the ABA Tax Section, and we are exploring the possibility of joining seven other international organizations in sponsoring and eventually hosting the World Tax Conference. We also intend to continue our sponsorship initiative, which affords significant benefits not only to the Institute and its members, but also to the sponsoring firms. In this regard, I wish to thank the six firms that supported TEI's activities by becoming Platinum sponsors of the 2002 Midyear Conference: Deloitte & Touche, Ernst & Young, KPMG, Mayer Brown Rowe & Maw, McKee Nelson, and PricewaterhouseCoopers.

Finally, I wish to acknowledge the progress we made toward an unstated, but nevertheless extremely important, objective: effecting a successful staff transition. This is a tribute to the planning efforts of the Board, Executive Committee, Betty Wilson (chair of our Internal Affairs Committee), and retiring Executive Director Mike Murphy. Equally important, it is attributable to the unstinting efforts of those who are now at TEI's helm: Timothy McCormally, Fred Murray, Deborah Gaffney, and Debbie Giesey, as well as the rest of the staff. We have a great team at TEI, and I thank them for their support during the year.

Concluding Thoughts

All told, I don't think there is any doubt that we moved the yardsticks forward this past year. To be sure, there have been some disappointments. For example, although we have made considerable progress toward building a world-class website for our members, we have much more to do. In addition, we must renew our efforts to build a more diverse and involved membership. And we must do a better job of communicating our successes and thereby building upon them. Overall, however, I look back on the year with great pride.

I also look back with gratitude for everyone who has contributed to TEI's accomplishments. From our chapter presidents to our Executive Committee and Board of Directors, from our committee chairs to the rank-and-file members, countless individuals have weighed in and helped out. Given the economic times, it has not always been easy for members to find the time--to make the time--to volunteer. We owe a debt of gratitude to those who did. Finally, I owe the biggest of debts to my wife, Cathie, whose support during this year has been both uplifting and unending. It has been a tremendous year. I wouldn't want to have shared it with anyone else.

Robert L. Ashby
International President