Forum on State Tax Administrative Uniformity: December 13, 1991.

On December 13, 1991, Tax Executives Institute participated in a Forum on Administrative Uniformit by the Federation of Tax Administrators (FTA). The forum was devoted to a discussion of "administrat such as (1) differential interest rates and statute of limitations, (2) automatic extensions of time dates, (3) uniform protest periods and administrative appeals procedures, (4) state-imposed audit fe audits, and (5) automatic assertion of penalties. The Institute was represented at the forum by Harr Biltrite Corporation, chair of TEI's State and Local Tax Committee, Robert E. Meehan of APAC Inc., c Timothy J. McCormally, the Institute's Tax Counsel.

TEI's position on the various issues discussed during the forum had been previously presented in m FTA in connection with the Institute's liaison meetings with the organization of state tax administr agenda of the Institute's 1991 meeting, which was reprinted in the March-April 1991 issue of The Tax participating in the forum -- including the Committee on State Taxation, the American Institute of C and the American Bar Association -- had also submitted position papers on the issues far in advance an effort to minimize duplication of effort, TEI and the three aforementioned organizations coordina materials to the FTA. Specifically, the organizations identified six major issues that each of the o addressed and divvied up responsibility for outlining the various components of each issue at the fo TEI was responsible for a discussion of differential interest rates, state-imposed audit fees, and c addition, TEI representatives responded to questions on other issues discussed during the forum.

Reprinted below are three documents prepared by TEI in connection with the FTA Forum on Administra The first is the transmittal memorandum that accompanied the position papers that TEI, COST, AICPA, to the FTA. The second document is a December 20, 1991, letter from TEI President Reginald W. Kowalc President of the FTA, that supplements the Institute's previous submissions on administrative bill o up on several questions raised during the FTA forum. The third document is another letter from Mr. K also dated December 20, that addresses the retroactivity-prospectivity issue.

I. Broad Consensus Exists for Establishing Uniform Tax Administrative Rules

The Federation of Tax Administrators is to be commended for sponsoring a Forum on Administrative Uniformity. The forum will accord interested parties from taxpayer groups and the States an opportunity not only to discuss tax administration issues of common concern to business taxpayers, but also to explore how the various parties can cooperatively work together to effect meaningful change.

The lack of uniformity among the States on various tax administration issues has been a major concern for several years. Attached to this statement are the position papers previously developed by four organizations: Tax Executives Institute, Committee on State Taxation, the American Institute of Certified Public Accountants (Tax Division), and the American Bar Association (Section of Taxation). Although the positions of these four organizations were independently arrived at, they all manifest a commitment to the need to establish evenhanded procedures that vindicate basic principles of fairness and equity while maintaining the integrity of the self-assessment tax system.

In an effort to facilitate an orderly discussion of the salient issues during the Forum on Administrative Uniformity, representatives of the aforementioned four organizations will endeavor to minimize repetition of their respective organizations' positions. For example, a review of the attached statements confirms that all four of the organizations have recommended that the interest rate on tax deficiencies and tax refunds be equalized. Rather than each organization repeating that recommendation during the forum, the first of the representatives to speak will frame the issue and then invite representatives of the other three organizations (and, obviously, other participants in the Forum) to discuss the nuances of and alternative approaches to effecting the proposal. The groups' motivation in adopting this approach is not to foreclose discussion but to enhance it by limiting overlapping testimony. The goal is to move beyond a desire to score debating points and toward a meaningful dialogue.

In approaching this dialogue, the following fundamental facts should be recognized: First, the current lack of uniformity (among the States and within the States) exacts a substantial toll on taxpayers in terms of compliance costs and on the States in terms of the perception of their tax systems' relative fairness. Second, the goal of uniformity, however desirable, cannot be accomplished without cost to the affected States; the revenue implications of uniformity proposals cannot be ignored but neither should they be raised as long-term barriers to "doing the right thing." And third, the issue is one of both taxpayer rights and taxpayer responsibilities; both can be enhanced with a balanced package of legislative or administrative changes.

II. Supplemental Comments on Interest Rates, State-Imposed Fees, Contingency Fee Audits, and Penalties

On behalf of Harry McKeon, Bob Meehan, and Timothy McCormally, I want to thank you for inviting Tax Executives Institute to participate in last Friday's Forum on Administrative Uniformity. The Federation of Tax Administrators performed a valuable service by allowing interested parties to come together to discuss administrative issues of common concern. TEI believes the forum was a helpful step in the process of finding 'common ground' in the positions of taxpayer groups, practitioners, and state tax administrators. We hope you found the coordinated approach that TEI, the Committee on State Taxation, the American Institute of Certified Public Accountants, and the American Bar Association adopted conducive to the FTA's work on administrative uniformity issues.

You will recall that representatives of TEI addressed three issues directly during the forum (in addition to adding our "amens" to the comments of our confreres in other organizations): differential interest rates, state-imposed audit fees, and contingency fee audits. In addition, in response to questions from FTA members, the Institute provided substantive comments on the automatic assertion of penalties. In an effort to "complete the record," this letter summarizes the Institute's position on these issues.

A. Interest Rates

Some States (as well as the federal government) charge taxpayers a higher rate of interest on tax deficiencies than they pay on tax refunds. Indeed, in some instances no interest is paid on refund claims. Moreover, the interest rates frequently bear no relation to the market rate of interest: the rate charged on tax assessments exceeds the rate a State could earn on timely deposited funds and the rate paid on tax refunds is significantly lower than the rate at which a State could borrow the funds. The interest rate differential and the variance from the market rate can lead a State to delay the processing of refund claims or, at a minimum, to a taxpayer perception that such delays on the part of the States are volitional.

Differential interest rates may properly be characterized as punitive in nature. TEI believes that the interest rate provisions of the tax law should be designed to recompense a party for the time value of money -- nothing more and nothing less. Interest rates should not be manipulated simply to collect additional revenues or, for that matter, to encourage or discourage specific taxpayer behavior. Most fundamentally, the interest rate should not change depending on which side of the transaction the government is on. In other words, the government should not undertake to view itself as a financial institution that is free to extract a high rate of interest from taxpayers with no negotiating power while paying a lesser rate.

TEI opposes the application of different rates of interest to assessments and refund claims. Failure to pay interest or to equalize interest rates diminishes the value of the taxpayers' remedy of recovering tax monies to which they are legally entitled. It also undermines public confidence in the fairness of the tax system. Not only is the payment of a market rate of interest eminently fair, but it will minimize any incentive a State may have to unduly delay the processing of refund claims.

Finally, we note that federal legislation has been introduced that would eliminate the Internal Revenue Code's interest rate differential and that a hearing on the subject (as part of a taxpayer bill of rights initiative) was held on December 10. TEI urges the States to lead the way by jettisoning this wholly improper concept from their taxing schemes.

Following Bob Meehan's summary of the Institute's position on interest rates, a question was asked whether TEI (and the other groups) favored equalized interest rates even though the rate differential was borrowed from and still exists in the Internal Revenue Code. It was suggested that taxpayers as a group may suffer from "decoupling" state rules from the Internal Revenue Code.

TEI believes the suggestion is without merit. The concept of federal-state uniformity has never been blindly adhered to and, indeed, has generally been embraced for specific purposes in connection with the calculation of taxable income. Thus, while the States may conform (for example) to federal depreciation rules in order to achieve the attendant simplification, they have not generally viewed the conformity issue as having bearing on their systems' administrative rules. In other words, we believe a "fear of decoupling" argument has little relevance to the question whether the States should adopt uniform, evenhanded interest rates.

B. State-Imposed Audit Fees

TEI has long opposed the imposition of fees on taxpayers to offset the State's administrative costs of conducting an audit or its legal costs incurred in defending tax appeals. We believe the adoption of such a "user-fee" approach to financing tax audits and appeals is wholly inappropriate to our voluntary self-assessment tax system.

States that impose audit fees have tended to do so in an arbitrary and discriminating manner. For example, New York State averred that its recent bank audit fee was justified because a high proportion of the tax revenues from banks was perceived to be derived from the audit process. The State then proposed through regulations that an audit fee of $110 per hour be charged but set forth no justification for that amount. More important, there was no mechanism provided for challenging the hourly rate or monitoring the magnitude of the fees imposed in particular cases. Such an arbitrary and discriminatory fee undermines our voluntary self assessment system of taxation. Although the New York Supreme Court struck down the State's bank audit fee, a few states (and local jurisdictions) continue to assess the cost of audits to taxpayers.

Stated simply, it is TEI's position that taxpayers should not be required to reimburse the State for the cost of auditing their own returns. Ensuring compliance with the tax laws is a general government function and the cost of that function should be borne by all taxpayers. Although "user fees" might be appropriate under some circumstances to pay for targeted government services (for example, state park entrance fees or toll roads), it is obvious that tax audits are not conducted for the benefit of the audited taxpayers.

C. Contingency Fee Audits

In recent years, a number of jurisdictions have hired contract or third-party agents to audit tax returns and records in exchange for a percentage of the increased tax collected. In Florida, for example, the legislature has not only authorized the use of private sector auditors on a contingency fee basis, but has also provided that the fee was to be billed to the taxpayer along with the tax deficiency. Although there may be some surface appeal to contingency fee audits -- the States arguably have an opportunity to secure increased revenue with no out-of-pocket cost -- the proffered justifications for contingency fee audits are specious and the policy objections to them are overwhelming. TEI recommends that the States disclaim the use of "bounty hunters." Indeed, we submit that contingency fee audits are more inimical to the tax system's fairness than the use of quotas, which have been roundly and rightly condemned (and disavowed by the States).(1)

Contingency fee audits have been struck down as violating public policy in at least two States. In a case involving Philip Morris U.S.A., the North Carolina Property Tax Commission concluded that a contingency fee arrangement "so offended conventional standards requiring fair, impartial, and uniform treatment of this State's taxpayers that it could not stand." Similarly, the Georgia Supreme Court quickly dispatched a contingency fee scheme whereby an outside firm would audit property tax returns and receive 35 percent of any additional amount collected plus 100 percent of all first-year penalties collected. The court upheld Sears, Roebuck & Co.'s challenge to the system, stating.

The people's entitlement to fair

and impartial tax assessments

lies at the heart of our system.

Fairness and impartiality are

threatened when a private organization

has a financial stake

in the amount of tax collected

as a result of the assessment it

recommends.

TEI believes the courts have been right to focus on the deleterious effect that contingency fee arrangements can have on the impartiality and fairness of state tax systems. We are heartened that tax administrators have themselves generally recognized the policy concerns with contingency fee audits. Thus, the editors of State Legal Issues Quarterly (an FTA publication) state in their Summer 1991 issue "[b]y and large, state tax administrators agree that arrangements calling for the costs of audits to be borne by the taxpayer and contingency fees are not healthy for the tax system." The FTA publication continues that contingency fee audits "introduce extraneous issues such as motive, work habits, and the like into the audit situation -- all of which detract from the goal of objectively determining the appropriate amount of tax due."

TEI could not agree more. The Institute urges the FTA to continue to speak out forthrightly about the impropriety of contingency fee audits. In addition, even in the absence of a contingency fee arrangement, we believe the States need to exercise care in employing the services of outside auditors and experts. Taxpayers have a high level of concern about the confidentiality of taxpayer information, and TEI urges the States to adopt strict guidelines and safeguards to guarantee the legitimate privacy interest43 of taxpayers.

D. Automatic Penalties

During the forum, Walter Nagel of MCI Communications Corporation summarized the views of the ABA, AICPA, COST, and TEI on penalty schemes that provide for the imposition of penalties on an automatic, no-fault, or essentially mechanical basis. TEI agrees entirely with Walter's contention that automatic penalties have no place in state tax administration; they cannot help but undermine public confidence in the even-handedness of the tax system, thereby affecting taxpayer compliance.

Following Walter's comments, a question was raised whether TEI and the other groups agreed that the mechanical assertion of penalties (coupled with some opportunity to secure the abatement of the penalties) would, somehow, reduce the likelihood of penalties being used as a negotiating tool or even a "club." Under this theory, the auditing agent would have to assert penalties (assuming the mathematical threshold were crossed) and therefore could not hold the penalties over the taxpayer's head: "If you don't concede the substantive issue, I'll hit you with the penalty as well."

Again, we believe the suggestion betrays not only a skewed vision of what tax penalties should be designed to do, but also a misapprehension of how the "real world" works. TEI believes that civil tax penalties should be exacted only for deviation from a clearly defined standard of conduct that is timely established and promulgated, either by the legislature or appropriate administrative agency. In other words, penalties must be fault-driven. The automatic assertion of penalties (even assuming the taxpayer has the right to seek abatement of the penalty under a "reasonable cause" similar standard) shifts the burden of proof. It assumes that all tax underpayments are the result of volitional noncompliance: it presumes the taxpayer guilty. Such a philosophy is at odds with the theory that most taxpayers want to comply but that a combination of factors -- including the inherent complexity of the tax laws, the rapidity and magnitude of change, and the slow pace with which guidance is forthcoming from the government -- work together to make absolute compliance impossible. At the federal level, this theory has been embraced as part of the Internal Revenue Service's Compliance 2000 program, and in many States, too, the taxing agencies have evinced an understanding that good tax administration should be compliance, not enforcement, oriented. This is not to say that penalties should not be asserted when circumstances warrant. It is to say, however, that the tax authority should not operate from the presumption that all noncomplying taxpayers should be penalized.

Equally important, we disagree that a program of automatic penalties vitiates the "club"-like character of penalties. Indeed, we believe the shifting of the burden of proof to the taxpayer exacerbates the situation. This is because the examining agent will be compelled to justify why a penalty should not be asserted rather than why it should be asserted. The "easier" course -- because it will not require anything but a willingness to let the automatic program take its course -- will always be not to recommend abatement. We do not believe such a program, however, is consistent with the quality and customer-service initiatives that many of the States have undertaken.

III. Retroactivity and Prospectivity

During last week's Forum on Administrative Uniformity, a question was raised concerning Tax Executives Institute's position on the retroactive effect to be given to judicial decisions. Specifically, Jim Wetzler of New York suggested that taxpayers and taxpayer groups (such as TEI) were being somewhat hypocritical in urging the States to give retroactive effect to decisions invalidating state taxing statutes on constitutional grounds (such as ATA/Smith or McKesson) while recommending that the Supreme Court restrict the retroactive reach of any decision curtailing the protections enunciated in the National Bellas Hess decision. Although we find the argument ironic in light of the States' general actions following the ATA/Smith, McKesson, James Beam, and Davis cases, we wish to explain our position.

A. General Comments

In TEI's initial position paper on administrative uniformity (which was filed with the National Association of Tax Administrators in April 1987), the Institute made the following comments on the effect given to court decisions by the States:

All too often, a taxpayer's success

at the administrative level

is a hollow victory. This is because

the taxing authorities

frequently argue that decisions

favorable to taxpayers should

be given prospective only effect.

By contrast, a decision favorable

to the state is often applied

retroactively for all open

tax years against similarly situated 

taxpayers. In addition,

state and local authorities

sometimes assign insufficient

weight to decisions of other

states or even the Supreme

Court of the United States.

TEI appreciates that states

must cope with the revenue and

long-term policy effects of adverse

court decisions. We suggest,

however, that the states'

actions in this area must be

tempered by an adequate regard

of the effect of their actions

on the overall integrity

and equity of the tax system.

If all taxpayers affected by a

decision are not accorded similar

treatment, the primary tenets

of the tax system -- equality

and fairness -- will be undermined.

TEI continues to abide by those words. We have argued in briefs amicus curiae filed with the Supreme Court in McKesson and ATA/Smith that decisions striking down state taxing schemes on Commerce Clause grounds should almost always be given retroactive effect. We have argued that, while the States should be given some discretion to determine how retroactivity is to be implemented, the States should not be allowed to retain tax revenues to which they had no legal right. Finally, we have argued that this result should obtain without regard to whether the appropriate test for evaluating the retroactivity question is the Chevron three-prong test or the more demanding standard of Griffith v. Kentucky.

B. Why is Quill Different?

TEI does not believe the foregoing arguments are at all in conflict with our recommendation (set forth in our amicus brief in Quill) that any retrenchment of National Bellas Hess be given prospective-only effect. In the first instance, the Commerce Clause was intended to protect interstate businesses from improper actions by the States. It does not confer any independent rights on the States (even by negative implication), and therefore, we do not believe the States' right to tax out-of-state residents (even if permitted by the Commerce Clause) can be placed on a par with an out-of-state resident's constitutional right to be free from discriminatory or otherwise overburdensome state taxation. In other words, States would not be denied any constitutionally protected right by the prospective overruling of National Bellas Hess.

One reason why TEI has questioned the continued application of the Chevron standard to the constitutionality of state taxing statutes is that we believe the party who "makes the rules" should be held to a higher, more stringent standard than a party who simply finds itself bound by those rules. In Chevron itself, for example, a constitutional right was not at issue and the parties were both private litigants; the party against whom the retroactive rule would be applied had itself relied on an externally imposed rule (relating to the doctrine of laches), and the Supreme Court held that it would be improper to upend that reliance. In contrast, in the state tax situation the party who seeks to hide behind the prospective-only rule is the progenitor of the unconstitutional rule, not an innocent third party.

Even under Cheuron, however, it is clear that the overruling of National Bellas Hess should be prospective only. TEI explored the retroactivity issue at length in its brief in Quill. There, we wrote:

For a quarter of a century, interstate

businesses have relied

on National Bellas Hess in

structuring their business affairs.

The repudiation of the

decision's bright-line test would

represent a major departure

from long-standing principles

of Commerce Clause jurisprudence 

and, if effected at all,

should be applied on a prospective-only

basis. Indeed, the retroactive

application of any decision

curtailing the protections

afforded by National Bellas

Heas would work a major hardship

on interstate commerce 

and unjustly reward the States

for repudiating this Court's

holdings. Cf. Chevron Oil Co.

v. Huson, 404 U.S. 97, 106-07

(1971).

The retroactive abrogation of

that decision's physical presence

test would do more than

wreak havoc among the interstate

businesses that relied on

the decision: it would also send

an ominous signal to all taxpayers

concerning their ability

to rely on established rules.

Interstate taxpayers would be

deprived of the certainty necessary

to conduct their business

affairs in an orderly manner

because they would have to assume

that the Court's pronouncements

may be only transitory.

The ensuing uncertainty

would undermine the very

purpose of the Commerce

Clause.

As to the businesses that have

acted in reliance on National

Bellas Hess, the retroactive

modification of the Court's interpretation

of the Commerce

Clause to their detriment

would be especially unfair. At

issue in this case, of course, is

not a seller's primary tax obligation,

but rather an obligation

to collect and remit taxes owing

by others -- the seller's customers.

If interstate businesses

declined to collect such use

taxes in reliance on National

Bellas Hess and that decision

were overturned, they would

likely be saddled with the liability

themselves since the customers

may be nowhere to be

found. Retroactive imposition

of such a burden on a third-party

collection agent would be

inimical to basic concepts of fair

play. In American Trucking

Ass'ns v. Smith, 110 S. Ct. 2323,

2338 (1990), Justice O'Connor

explained that "[w]hen the

Court concludes that a law-changing

decision should not be

applied retroactively, its decision

is usually based on its perception

that such application

would have a harsh and disruptive

effect on those who relied

on prior law." Such a harsh

and disruptive effect would undeniably

be visited upon businesses

that relied on National

Bellas Hess.

Clearly, the standards enunciated

in Cheuron Oil for prospective-only

treatment are present

here: a decision overturning or

constricting National Bellas

Hess would establish "a new

principle of law" that was not

clearly foreseen; the non-retroactive

application of the decision

would not retard the operation

of the rule (which would

simply permit the States to

impose use tax collection obligations

on out-of-state businesses);

and the non-retroactive

application of the decision

would be necessary to avoid

injustice and hardship to the

out-of-state businesses that relied

in good faith on National

Bellas Hess. See Chevron Oil

Co., 404 U.S. at 106-07 (citing

Cipriano v. City of Houma, 395

U.S. 701, 706 (1969)); see Albin

C. Koch, Beam Resolves Taxpayer

Claims under Davis but

Quill Raises New Prospectivity

Issue, 43 Tax Executive 321,

324-25 (1991) (the equities favoring

prospective-only application

of any decision overturning

National Bellas Hess "appear

to be significant").

Moreover, in the analogous

area of an employer's responsibility

to collect Social Security

and withholding taxes from its

employees, this Court has

clearly held that the obligation

to act as a third-party collecting

agent must be unequivocal.

Specifically, in Central Illinois 

Public Service Co. u. United

States, 435 U.S. 21 (1978), the

Court said that "[b]ecause the

employer is in a secondary position

as to liability for any tax

of the employee, it is a matter

of obvious concern that ... the

employer's obligation to withhold

be precise and not speculative."

Id. at 31; see id. at 38

(Powell, J., with Burger, C.J.,

concurring) (fundamental fairness

should prompt the Government

to refrain from the

retroactive assessment of a tax

absent notice sufficiently explicit

to inform a reasonably

prudent person of the legal consequences

of failure to comply

with a law or regulation). Under

the standard set forth in

Central Illinois, interstate

businesses that relied on this

Court's decision in National

Bellas Hess should not be subject

to any use tax obligation

prior to the time that decision

is overturned.

Amicus TEI is also concerned

that the retroactive application

of any decision curtailing the

protections afforded by the

Commerce Clause and National

Bellas Hess would unduly

reward the States for their

massive resistance to this

Court's holding. The retroactive

overruling of National Bellas

Hess would send a signal to

the States that they have nothing

to lose by disregarding this

Court's holdings and "rolling

the dice" with taxpayers' commerce

Clause rights. It thus

would sanction the flip side of,

and the mirror image of the

cynicism underlying, the

States' refusal to refund taxes

held to be unconstitutional ab

initio by this Court. See Koch,

supra, 43 Tax Executive at 321-22

(discussion of James B.

Beam Distilling Co. v. Georgia,

111 S. Ct. 2439 (1991); Davis v.

Michigan Department of Treasury,

109 S. Ct. 1500 (1989);

McKesson Corp. v. Division of

Alcoholic Beverages & Tobacco

of Florida, 110 S. Ct. 2238

(1990); and American Trucking

Ass'ns, supra).

Amicus TEI believes the opposite

signal should be sent:

States should be placed on notice

that they cannot disregard

this Court's decisions with impunity 

and that they will not

be permitted to reap the benefits

of their defiance. Thus, any

decision restricting the protections

afforded by the Commerce

Clause should be applied on a

wholly prospective basis. Footnotes

omitted.)

C. The Significance of Davis

Finally, we wish to clarify our comments during the forum on the relevance of the Davis case to the prospectivity issue. In responding to a question concerning Quill, TEI questioned whether the States were interested in doing anything more than "keeping the money no matter what:" In support of this position (which, of course, we can agree to disagree about), we cited the repeated refusal of many States to issue refunds under Davis. One FTA Board member dismissed the suggestion that Davis had some bearing on the retroactivity of constitutionally impaired state taxing statutes. Specifically, he said that Davis was a statutory construction case and averred that it implicated the Constitution only because it dealt with the Supreme Court's authority under the Supremacy Clause to declare what the law is.

We disagree. Concededly, a federal statute -- 4 U.S.C. [sections] 111 -- was involved in Davis, but that law represents a waiver of an otherwise firm constitutional proscription on the States' ability to tax under the constitutional doctrine of intergovernmental immunity which had its genesis in McCulloch v. Maryland. Indeed, in Davis, the Supreme Court held that in enacting section ill Congress had drawn upon the constitutional doctrine: "[W]e conclude that the retention of immunity in [sections] 111 is coextensive with the prohibition against discriminatory taxes embodied in the modem constitutional doctrine of intergovernmental tax immunity. . . . Thus, the dispositive question in this case is whether the tax imposed on appellant is barred by the doctrine of intergovernmental tax immunity." (Emphasis added.) Later in its opinion, the Court referred to the constitutional violation' committed by the State. Thus, in Davis the question is not one of preemption, but rather one of unconstitutional discrimination by the States -- essentially the same issue involved in McKeswn, ATA/Smith, and James Beam.

We have provided these detailed comments at the risk of belaboring the issue because we believe it is important to defuse that the retroactivity-prospectivity "grenade" (which, I understand, is how you so aptly put it) as quickly as possible.

Once again, Tax Executives Institute appreciated the opportunity to participate in the FTA's December 13 forum and looks forward to working with you and the other members of the FTA Board (as well as the FTA staff) in achieving true progress in the area of administrative uniformity. If you should need any elaboration (or should wish for us to provide our comments on any other issues), please do not hesitate to call either Harry F. McKeon, Jr., chair of the Institute's State and Local Tax Committee, at [phone] (ext. 338) Timothy J. McCormally, TEI's Tax Counsel, at [phone].

Two TEI Members Appointed to Commissioner's Advisory Group

IRS Commissioner Fred T. Goldberg, Jr. has appointed 1990-1991 TEI President Michael J. Bernard to term on the Commissioner's Advisory Group and has appointed another Institute member -- Frederick E. Wells of the Cincinnati Chapter -- to chair the high-level advisory group during the coming year. Th composed of academicians, accountants, attorneys, business executives, and government officials who nominated by professional associations, IRS officials, and others interested in tax administration.

Mr. Bernard replaces William M. Burk, the Institute's 1989-1990 President, who completed his term CAG in December. Mr. Bernard is Assistant Controller-Tax Administration for Mobil Corporation, and i member of the Baltimore-Washington Chapter. Mr. Wells, who is Vice President-Taxation for the Procte Gamble Company, was appointed to a two-year term on the advisory group in 1991. As chair, he will ov group's efforts to provide advice and counsel on important goals in the IRS strategic business plan. (1) For an excellent review of the issues raised by contract audits, see Evatz & Zakrzewski, Keep the Money at Home: The Illusory Promise of Contract Audits, 43 Tax Executive 251 (July-August 1991).