TEI Means Opportunity ... for Education, for Networking, for Results.

The Midyear Conference looms on TEI's horizon and a brief review of its key features confirms that the program offers unparalleled opportunities for tax executives. Our keynote speakers will include Congressman Bill Archer, Chairman of the House Ways and Means Committee; Jon Talisman, acting Assistant Secretary of the Treasury for Tax Policy; and Larry Langdon, the former president of TEI who is now Commissioner of the IRS's new Large and Mid-Size Business Division. These key government officials, joined by other speakers, will discuss pending budget and tax legislation, regulatory developments, recent administrative initiatives, and the status of the IRS's modernization efforts.

As was the case at the Annual Conference last October, the topic of corporate tax shelters is likely to garner much attention at the Midyear, which convenes in Washington on March 18. Thus, we expect not only to hear from Chairman Archer and Commissioner Langdon on this most sensitive of subjects, but we will also address it in our technical sessions, including a provocative program entitled "Cutting-Edge Transactional Tax Strategies -- Practical and Ethical Issues." (Note: Judge David Laro's Annual Conference remarks on business purpose and the economic substance test are reprinted in this issue.)

A special feature of this year's Midyear will be the involvement of the IRS industry group leaders in our 22 industry sessions. These sessions, which have always afforded tax executives the opportunity to exchange key information with their colleagues in a very informal atmosphere, will thus give TEI members a chance to learn -- on a before-the-fact basis -- how the IRS's new industry orientation will affect how the agency does business with them in the coming years. For up-to-the-minute information about the conference, including confirmation of other keynoters and updates on our Canadian, Corporate Tax Management, and State and Local sessions, please check TEI's website.

Liaison Activities

Many of the issues on the agenda for the Midyear Conference will also be discussed at TEI's annual liaison meetings with the IRS, Treasury Department, and Joint Committee. Whether the subject is the confidentiality of taxpayer information, the impending Subpart F study, the World Trade Organization's challenge to the foreign sales corporation regime, or the IRS's new "pre-filing agreement" initiative, these meetings are expected to provide the avenue for an open exchange of information and a candid exchange of views between the government and the corporate community. Thus, at both the Treasury and Joint Committee meetings, TEI will follow up on its January testimony before a Ways and Means Subcommittee on reforming the interest and penalty provisions of the Code and its earlier comments on corporate tax shelters.

The liaison meetings in Washington, moreover, are only part of the Institute's outreach efforts. As previously reported, in December TEI held four different liaison meetings in Ottawa with Canadian tax officials, and our local chapters and regions continue to meet with tax administrators. In addition, our members and staff continue to meet informally with U.S. and Canadian tax officials in respect of the redesign of the two countries' tax systems. TEI is especially proud of its efforts in respect of the IRS's new "pre-filing agreement" initiative, which holds much promise. We are even more proud that several of our members have already volunteered to participate in a pilot project that was announced in Notice 2000-12.

These traditional efforts to highlight corporate concerns continually pay dividends. For example, although TEI was hardly alone in pressing the IRS and Treasury to issue more guidance on so-called INDOPCO issues, I believe our "broken-record" comments in written submissions and at liaison meetings for the past several years contributed to the atmosphere in which the IRS issued taxpayer-favorable rulings on the deductibility of ISO-9000 certification expenses (Revenue Ruling 2000-4) and the costs of removal (Revenue Ruling 2000-7).

Collaborative Efforts Pay Dividends

In an earlier column, I discussed TEI's efforts to try new approaches to achieving its historical goals, including working with other organizations. For example, for the past several months TEI has been working with the American Institute of Certified Public Accountants' Tax Division and the American Bar Association's Section of Taxation on a joint tax simplification initiative. In December, the three organizations submitted separate letters to the tax-writing committees on good and bad aspects of the legislation that Congress considered in 1999, and in the last week of February we unveiled joint recommendations to simplify and improve the Code. (This latter submission was completed too late for inclusion in this issue, but may be accessed on TEI On-Line.) TEI remains hopeful that this marks the first of many collaborative efforts with the ABA and AICPA.

Two other efforts deserve mention. In early February, the Tax Council Policy Institute sponsored a two-day program entitled "INDOPCO: Past, Present, and Future,' which featured presentations by several TEI members (including Margaret Curry, Hal Gann, and Joe Luby, as well as Timothy McCormally from TEI's legal staff) and which the Institute itself helped promote. I am particularly pleased that so many TEI members participated in a survey that was commissioned in connection with the conference and that served to catalog and quantify the capitalization issues that have been spawned since the Supreme Court's misbegotten 1992 decision in INDOPCO. A particularly salutary feature of the conference was the involvement of government officials (from the IRS and Treasury, Congress, the Solicitor General's Office, and the Tax Court) as well as practitioners, academics, and tax executives. I remain hopeful that, by shining light on this most contentious of issues, we are working toward development of a global solution.

Last but not least, TEI was pleased to be a cosponsor of a January conference on IRS modernization. This two-day meeting, which was broadcast on C-SPAN and beamed to IRS offices throughout the country, afforded Commissioner Rossotti and the new IRS leadership team the opportunity to share much helpful information with the tax community. The leaders of the ABA, AICPA, the National Association of Enrolled Agents, and the American Tax Policy Institute all deserve credit for working together (along with a team from TEI) in putting this conference together. I was pleased to moderate a conference session on the Large and Mid-Size Business Division, and publicly thank Bob Ashby and Mike Murphy for participating in other sessions. Together with the numerous TEI members who attended the conference and asked insightful questions during the breakout sessions, they helped make the conference a success.

Please be assured that TEI remains on the lookout for opportunities to build alliances with other organizations.

Charles W. Shewbridge, III International President