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Atlanta conference a real "peach".

More than 600 TEI members and guests descended on Atlanta for the Institute's 58th Annual Conference in October. Demonstrating its ongoing commitment to timely and innovative programs, TEI offered sessions on European and other international tax issues, implementing Sarbanes-Oxley Act internal control provisions, and the latest developments in respect of tax shelters at the federal and state level. Other topics addressed were the Large and Mid-Size Business Division's LIFE program, professional responsibility for tax departments, the implications of the drive to "paperless offices," and a comparative assessment of Canada's general anti-avoidance rules, U.S. federal proposals to codify the economic substance doctrine, and comparable state developments (most notably, in California). The conference was held at the Hyatt Regency Atlanta, in the heart of downtown.

The conference began with M. Michele Burns, Executive Vice President & CFO of Delta Air Lines and Carol B. Tome, Executive Vice President-CFO of The Home Depot, sharing their perspective on the role of the tax department and, notably, how that role has changed in the aftermath of the Sarbanes-Oxley Act. Ms. Tome described how the tax department contributes to the success of Home Depot's overall operation, and concluded by describing the tax department as "a strategic, value-adding partner." Ms. Burns also discussed the contributions of the tax department, and described a transformative process undertaken at Delta to enhance tax department participation in company strategy.

A presentation on implementing the section 404 internal control provisions in the tax department immediately followed. The session incorporated the use of a high-tech audience response system to poll members on key issues during the presentation--a first for TEI conferences. The system provided nearly 400 tax executives the real-time opportunity to gauge issues in respect of compliance with section 404. Read more about the survey on page 437.

During Monday's luncheon, former LMSB Commissioner Larry R. Langdon was presented with the Institute's Distinguished Service Award. Mr. Langdon, a former International President of TEI, was recognized for his significant contributions as the first commissioner of the IRS's Large and Mid-Size Business Division. He was praised for developing processes to allow the IRS and business taxpayers to better manage complex tax issues and resolve tax controversy, such as pre-filing agreements, fast-track appeals procedures, the industry issue resolution program, and the LIFE process. In presenting the award, TEI President Ray Rossi noted from his appointment in 1999 to his retirement in May 2003, Mr. Langdon was an enthusiastic, innovative, thoughtful, and effective government official. He added that Mr. Langdon helped inspire, design, and implement a number of creative programs, and noted that he also built a strong working relationship with the Treasury Department and the Office of Chief Counsel. (Mr. Langdon also made a technical presentation during the conference on recent IRS audit initiatives.)

The luncheon address on Monday was delivered by John Petrella, LMSB Industry Director for Heavy Manufacturing and Transportation. Mr. Petrella, who was heavily involved in the development of several LMSB initiatives, explained that speeding up audits has become a top priority for LMSB. Noting that the average audit time for a large business is 60 months and for a medium-size company, 30 months, he reported that IRS Commissioner Everson is committed to shortening this timeframe considerably. Mr. Petrella said that workgroups of IRS executives, managers, revenue agents, and specialists are working to identify strategies to improve cycle time and increase currency while minimizing any adverse effect on compliance. Key to the initiative is risk analysis of current cases to assess whether current audits are worth the resources being expended. Mr. Petrella cited TEI's cooperative efforts in developing the Joint Audit Planning Process with LMSB, saying that when the IRS and the taxpayer establish communication, trust, and openness, "great things happen." He attempted to assuage concerns that the IRS will abandon the emphasis on customer service as it steps up enforcement saying that "customer service and enforcement are not an either-or proposition, rather just the opposite."

(Note: Mr. Petrella rearranged his travel schedule to participate in the conference after more senior IRS officials--specifically, Commissioner Mark Everson and Deputy Commissioner, Services and Enforcement Mark Matthews--were detained in Washington for a congressional hearing on tax shelters. Following the conference, the Commissioner and Deputy Commissioner participated in a conference call with TEI's Board of Directors and committee chairs, during which the new officials outlined their priorities. In addition, the Commissioner has already committee to participating in TEI's Midyear Conference in March.)

On Tuesday morning in Atlanta, Helen M. Hubbard, Tax Legislative Counsel in the Treasury Department's Office of Tax Policy, addressed the conference. Ms. Hubbard stated the focus of the Office of Chief Counsel continues to be on published guidance. She remarked that published guidance tends to be issued in the second and fourth quarters of the year, but noted that the Treasury Department and IRS were striving to promulgate rulings and regulations more evenly throughout the year. She told the conference that expedited guidance will also remain a focus for 2004. She then talked about the significant guidance projects in the business plan. Guidance on the research tax credit should be issued soon, she said. Other priority guidance projects include final regulations under sections 162 and 263 regarding the deduction and capitalization of expenditures for intangible assets. Ms. Hubbard stated that Treasury hopes to issue final regulations later this year. During the question-and-answer period, Mr. Hubbard addressed legislative topics, including proposals for a manufacturing credit and for a reduced tax rate on repatriated earnings.

Tuesday's luncheon featured remarks by Cynthia J. Mattson, LMSB Division Counsel. Ms. Mattson, who has been with the Office of Chief Counsel for 26 years, provided often humorous insights into the changes within the Office of Chief Counsel during her tenure, but observed that while much has changed over the years in the area of tax shelters, much has remained the same. The IRS established a national tax shelter examination program in 1974, Ms. Mattson said, the same year in which the Coordinated Examination Program was created. She described tax shelters as a problem for every division of the IRS, highlighting the need to strengthen the integrity of the tax system through better enforcement.

She expounded on the three-pronged approach that LMSB is taking to deal with the tax shelter problem. The first prong is the promoter examination program; Ms. Mattson said that currently more than 100 promoters were being examined by LMSB. She said, "The goal of the program is very simple--we want to make clear that the promotion of abusive tax avoidance transactions is an enterprise to abandon now and avoid in the future." She also told the conference that efforts to obtain investor lists is not an attempt to undermine attorney-client privilege, asserting the IRS position that in the context of tax shelters, the identity of the client is not protected by the privilege.

The second prong is a program of investor examinations. Expressing a preference for settlement, she said that where appropriate LMSB is fully prepared to litigate cases.

The last prong of LMSB's strategy is published guidance, which will have the effect of keeping everyone informed and promoting consistency. She described the overall strategy as "early intervention, interdiction, and publication," and stressed that issue resolution remains a cornerstone of LMSB, exemplified by the continuation of industry issues resolution, pre-filing agreements, and fast-track mediation.

Adjusting to breaking developments in Washington, TEI altered the conference schedule to add a keynote slot on Wednesday morning in order to allow conference registrants to hear from Pamela F. Olson, Assistant Treasury Secretary for Tax Policy. The Assistant Secretary provided an update on tax shelters, an issue that had been the subject of a hearing the previous day. The Assistant Secretary noted that "sunshine is a powerful disinfectant" for tax shelters. Liking the disclosure area to putting a window in the from of a car, Ms. Olson said that Treasury has filled some holes in the regulations, but Congress needs to act to close the gap in other areas. After discussing international tax reform and simplification, she thanked TEI for its undying support for tax policy and its use of measured tones in discussing often contentious issues.

Conference participants also heard from Daniel C. Callahan, an LMSB case manager for the Natural Resources Industry, participated in a panel presentation discussing the IRS's recent limited issue focused examination (LIFE) experiences. In addition, John Davies, Chief Counsel for California's Franchise Tax Board, Bart L. Graham, the new Commissioner for Georgia's Department of Revenue, and R. Bruce Johnson, a Utah State Commissioner and current chair of the Multistate Tax Commissioner discussed developments in state taxes.

During the banquet Tuesday evening, the Institute presented its Distinguished Service Award to Kevin M. Hennessey, a retired partner with PricewaterhouseCoopers. Mr. Hennessey is a nationally recognized tax practitioner, author, and speaker, specializing in consolidated return issues. His support for TEI's educational mission and programs has been unflagging for more than 30 years, and includes being a mainstay of TEI's Federal Tax Course faculty, multiple presentations at TEI Midyear and Annual Conferences, and presentations at seminars, as well as regional and chapter programs. In giving the award, TEI President Ray Rossi acknowledged that as clients, practitioners, and students of taxation, "TEI members have benefited enormously from Kevin's knowledge, insights, and counsel; moreover, the tax system itself, and several generations of practitioners, have benefited from his dedication and professionalism in teaching and explaining the intricacies of the consolidated tax return regime." Mr. Rossi noted that this marks the first time the Institute's Distinguished Service Award has been given to someone for their service as a private practitioner (as contrasted with government service).

Conference materials on CD-ROM will be sent to all registrants by the end of the year. (They are also available for sale; for further information please call 202.638.5601.) Photographic highlights of the 58th Annual Conference begin on page 434.
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Title Annotation:Tax Executives Institute 58th Annual Conference
Publication:Tax Executive
Date:Nov 1, 2003
Previous Article:IRS names TEI member director for international tax matters and U.S. Competent Authority.
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