Government keynoters highlight 55th Midyear Conference.
Treasury Secretary John Snow made his second appearance at a TEI conference during the event. Other keynote speakers were Senate Finance Committee Chairman Charles Grassley, IRS Commissioner Mark Everson, and the Executive Director of the President's Advisory Panel on Federal Tax Reform, Jeffrey Kupfer.
Technical sessions on myriad federal, international, Canadian, and state and local tax issues included sessions focused on implications of the American Jobs Creation Act of 2004, Schedule M3 implementation issues, FASB's draft statement on uncertain tax positions, financial reporting issues, and other topics both timely and practical. Photographic highlights of the conference appear elsewhere in this issue.
E-Filing, Tax Shelters Dominate Commissioner's Remarks
IRS Commissioner Mark W. Everson delivered the conference's opening address on Monday, April 4, which was broadcast live on C-SPAN. The Commissioner covered a plethora of comments, including the IRS's efforts to increase audit currency, its role in federal tax reform, and the implementation of the 2004 tax act. For example, he reported that the IRS is working with the Securities and Exchange Commission and the Public Company Accounting Oversight Board to identify possible abuses. In addition, he noted positive results from the United States' partnership with Australia, Canada, and the United Kingdom in exchanging information on international transactions. He also provided an update on the progress of the pilot Compliance Assurance Process (CAP) program, where the IRS works audit issues in "real time" before the company's return is filed. Currently, 18 companies are involved, and the project is moving ahead. Finally, Commissioner Everson noted the IRS will be working to improve the Advance Pricing Agreement program.
It was the agency's recent mandate concerning the e-filing of corporate returns, however, as well as the IRS's continuing efforts in respect of tax shelters" that dominated the extensive question-and-answer period. One member raised a question about the government's more frequent practice of imposing penalties in respect of certain transactions, and in response, the Commissioner gave a spirited defense of the practice. He acknowledged that the IRS might not always "get it right," but insisted that if agency withheld action except when it was 100-percent confident of victory, the tax system would be disserved. Commissioner Everson reported that the IRS has made significant progress on its enforcement goals. He warned that the agency continue to step up compliance efforts and suggested that those who try to play the system will regret it later.
E-filing, too, was a topic on which the Commissioner engaged his TEI audience. In response to a question about mandatory e-filing for corporate returns, the Commissioner expressed confidence in the ability of software vendors to deliver compliant programs in time for filing 2005 returns electronically. When audience members expressed skepticism about the government's time line (especially in the aftermath of Schedule M-3 and the burdens imposed by the Sarbanes-Oxley Act), the Commissioner challenged the business tax community to respond with the same alacrity and ingenuity that it had demonstrated in implementing the American Jobs Creation Act. He acknowledged TEI's assistance in identifying myriad implementation issues, reiterated the IRS's commitment to developing reasonable rules in respect of the granting of hardship waivers, and assured the audience that, if appropriate, the agency would modify the e-filing mandate.
Keeping the Economy Strong
During Monday's luncheon, the Honorable John W. Snow, Secretary of the Treasury, discussed administration progress in making tax cuts permanent, tax reform, and social security reform. Secretary Snow noted that the American economy is doing well, but cautioned that important work lies ahead to keep the path clear for a solid economic future. Permanency of the tax cuts is necessary, but fundamental, lasting improvement to the tax code will be key. In addressing tax reform, the Secretary acknowledged that the no one would know better than the conference attendees that the tax code has "grown larger, bulkier, more burdensome, and lethargic with every passing year." He commended the President's Advisory Panel on Federal Tax Reform for its work thus far, concluding this portion of his remarks by saying he looks forward to receiving the panel's recommendations.
The bulk of Secretary Snow's remarks were centered on Social Security. He noted that the nation is moving closer to achieving meaningful reform. The Secretary discussed the recent Trustees' report and describe the fundamental issue with the present system as one of "basic arithmetic." He said the Bush Administration is committed to fixing the system without increasing taxes, and championed voluntary personal accounts derived from a portion of current payroll taxes.
The View from Capitol Hill
The Honorable Charles E. Grassley, the senior Senator from Iowa and Chairman of the Senate Finance Committee, addressed conference attendees on Tuesday morning and outlined his priorities for the coming year in respect of taxes. He voiced concern over the growing complexity of the tax code, expressing the readiness of the Finance Committee to receive and consider the recommendations of the President's Panel on Federal Tax Reform. He added that he expected the Finance Committee to conduct hearings on tax reform and simplification later in the year. He outlined five lessons for tax policymakers in addressing tax reform and simplification:
* Do no harm.
* Anticipate as many future consequences as possible.
* Look for ways to make things easier for taxpayers.
* Give the IRS good guidance.
* Adhere to these principles in a partisan environment.
Chairman Grassley also reported that the Finance Committee was looking at the tax provisions expiring at the end of 2005. He wants to ensure that a thoughtful review of the merits of these provisions, focusing on efficiency.
Senator Grassley concluded his remarks addressing the topic of enforcement. He said that the Finance Committee's work in respect of codification of the economic substance doctrine continues, predicting that the issue will not go away anytime soon. He also discussed the committee's extensive review of the Advance Pricing Agreement program. While he agreed that the APA program has demonstrable value, the Chairman promised that the program would be revised if the review uncovered significant problems.
Prospects for Federal Tax Reform
Jeffrey F. Kupfer, Executive Director for the President's Advisory Panel on Federal Tax Reform, spoke during the luncheon on Tuesday. He provided an informative review of the Panel's activities over its three months of operation. The panel's work can be divided into two stages. The first stage was a comprehensive review of the existing system, so panel members grasp its complexity, fairness, and affect on economic growth. He explained that the panel has tried to involve the public as much as possible, and all hearings are open to the public and are webcast. Additionally, the panel launched a website where they continue to post comments from the public (the website is www.taxreformpanel.gov.
Mr. Kupfer announced that the second stage of the panel's work (devoted to developing proposed solutions) was just beginning, and he invited submissions and comments on tax reform plans that have been developed, in addition to ideas for specific changes to the existing tax code. He added that the submissions should address how the proposal makes the tax system simpler, fairer, and promotes economic growth. Mr. Kupfer concluded by noting that the Advisory Panel will spend the next round of meetings evaluating specific proposals.
Other Government Speakers
Conference participants also heard from George A. Manousos, Tax Specialist from the U.S. Department of the Treasury; Donald B. Thomas, Project Manager with the Financial Accounting Standards Board; and Nicholas J. DeNovio, IRS Deputy Chief Counsel (Technical). Mr. Manousos participated on panel discussing the domestic manufacturing deduction under the 2004 Tax Act. Mr. Thomas addressed the FASB's draft statement on uncertain tax positions. DeNovio spoke on recent regulatory guidance, focusing in particular on guidance related to the 2004 Tax Act.
LMSB Bonus Sessions
After the Institute's conference program formally ended, attendees had the opportunity to participate in "bonus sessions" offered by the IRS LMSB Division. This was the third time in as many years LMSB has held these extra sessions. This year, there were sessions on IRS service and enforcement initiatives and tools, the nuts and bolts of international tax, e-filing, and implementation and administration of Schedule M-3.
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|Date:||Mar 1, 2005|
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