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TEI-IRS Southwest Regional liaison meeting; February 27, 1995.

On February 27, 1995, representatives of Tax Executives Institute's Region VIII held a liaison meeting with officials of the Internal Revenue Service's Southwest Region in Dallas, Texas. The minutes of the meeting are reprinted below. Certain parts of the minutes have been edited to take into account superseding events and the fact that information on the same subjects has been reprinted elsewhere (e.g., in the minutes of national level liaison meetings).

National CEP Policy Board

The liaison meeting began with opening remarks by Donald G. Karras, Vice President of TEI's Region VIII. Next Gary Booth, acting IRS Regional Commissioner, welcomed the TEI group and turned to current initiatives of the National CEP Policy Board. Gary stated that included representatives from Exam, Appeals, and Counsel make up the Policy Board, which has been in place for four years and meets each month. The Policy Board has been studying the following items:

1. Examination Settlement Authority. The Board has been looking at what the level of authority should be and whether the authority should include more than rollover issues and factual issues. The Board expects to have a report to the Commissioner by the end of March.

2. Practitioner Software Issues. The IRS would like to have access to the software itself, not just the data contained in the software. Gary stated that there is a case regarding this matter currently in court.

3. Field Service Advice. There is pending a Freedom of Information Act lawsuit, by a publication, to get access to field service advice. The Policy Board feels there is a misunderstanding about what field service advice is and what it should be.

4. Electronic Filings. The Policy Board is looking at streamlining the corporate tax return filing procedure. There is a feeling that there is too much unnecessary paper and they are reviewing the possibilities of allowing corporations to file electronically. There are problems involved in electronic filing and it is tough to carve out large cases for special treatment. There have also been proposals to allow payroll tax filings to be made electronically. Electronic filing is a "wait and see" area.

5. Large Case Measurements. The Policy Board is looking at whether the measurements they have now are effective. They would like to encourage productivity while meeting the taxpayers' needs and improving voluntary compliance.

6. Market Segment Approach. The Policy Board is looking at a market segment approach for the CEP Program although they are not convinced that it fits.

Large Case Appeals

Gene Geller, IRS, discussed large case appeals.

1. Status of Early Involvement with Appeals. In some cases, one issue is key and needs to be resolved so that other issues can be settled. There is a procedure now in place where the taxpayer can get together with the Case Manager and agree to move an issue to Appeals for resolution while Exam resolves other issues. This process is voluntary on both sides. Taxpayers appear to be reluctant to use early referral. The Southwest Region recently received its first request which it is planning to approve. After Appeals decides the issue, it will be sent back down to Exam and incorporated into the examination process. This procedure is not designed to take issues to Appeals during the latter part of the audit. Many times the exercise necessary to use this procedure and prepare for Appeals results in the settlement of the issue at Exam.

TEI members pointed out the problems that occur when the bigger issues are presented to the taxpayers at the end of the audit. IRS representatives stated they were looking at when the issues are given to the taxpayers in the area of

RELATED ARTICLE: TEI Delegation

Donald G. Karras Newmont Gold Corporation Richard W. Hutchins

AAF-McQuay Inc. Delmer R. Threadgill J.C. Penney Company, Inc Dwight E. Jeter Panhandle Eastern Corp. Mickey G. Culpepper

Baker Hughes Inc. Anthony W. Rackley The Williams Companies Gordon E. Schaechterie MAPCO Inc. Cliff O. Simpson

Novell, Inc. Paul Cherecwich, Jr. Thiokol Corporation Clement J. Wydra Diamond Shamrock, Inc

IRS Delegation

Gary Booth Acting Regional

Commissioner, SWR Michael Killfoil

Acting Chief, Compliance

Officer, SWR Bobby E. Scott

District Director, SWR Ben Hyde Regional Compliance

Director (Corporate), SWR Gene Geller

Assistant Regional Director

of Appeals, SWR Jerry Jones

Senior Regional Analyst

CEP, SWR John Buchanan EPO better measurements and are making efforts to find out what the agents are doing out there. TEI members questioned whether there was any way to use the early referral procedure in a situation where the Case Manager did not wish for the issue to go to Appeals. Case Managers must agree to the procedure and there are no formal mechanisms to go around the Case Manager. If there is a personality conflict, the taxpayer should contact the Branch Chief and request a review of the situation. It was pointed out that the primary motivation for a taxpayer to use this procedure is to avoid hot interest and close the case earlier. But the IRS stated the procedure was not designed to be used as a technique to avoid hot interest.

The procedure requires the taxpayer and examining agent to prepare position papers. If the issue is not resolved at Appeals, it will go back to the Case Manager as an unagreed issue. Technically, the book answer is that Appeals will not reconsider the issue, but as a practical matter, the issue will probably be revisited and will at least be discussed at Appeals. If the IRS and the taxpayer can move a little closer together, it is possible the issue could be settled.

TEI members questioned whether Appeals was supportive of this process in the Southwest Region, and it was pointed out that it has not gotten off to a big start. IRS representatives responded that other regions have had early referrals and that at IRS meetings there appears to be support for the procedure from Appeals. Jerry Jones, IRS, pointed out that in some cases issues are brought to Appeals for their consideration on an informal basis outside of the early referral procedures.

It was pointed out that there has been a significant drop in the number of issues going to Appeals since 1990. Exam is making efforts to have a smaller number of issues leave Exam and is trying to get the right answers at the audit level. One idea that has been discussed is to have an Appeals Team Chief be assigned to a large case audit while it is in progress, but this is unlikely to happen.

The measurements used for Exam were discussed. The old way to measure was the amount of proposed adjustments. Exam is still being measured this way to some extent but is trying to get away from this and look at the end result after settlement.

Gene Geller, IRS, addressed the question whether Appeals is going away. He said the question is not whether Appeals will be there but where will it be? Appeals is now under Regional Counsel for its functional part but remains under the Commissioner for its administration purposes. It has been suggested that Appeals would go totally under Counsel, but there was some concern expressed from the outside stakeholders on this. There has also been some discussion of whether Appeals should be strictly under Exam like Appeals used to be. The IRS is studying this right now. Some have suggested that Appeals be totally independent and report directly to the Commissioner. However, there is no question that Appeals will remain.

2. Mediation. The new mediation test is an example of the government doing new and different things to resolve issues as quickly as they can and stay out of litigation. There is some question whether the IRS has a need for mediation since, unlike many other government agencies, the IRS has been engaged in the mediation process through its Appeals Division for 67 years. It was pointed out that the legal profession has used the mediation process successfully and, since litigation is time consuming and costly, there is a need to look at different ways to resolve tax issues.

Appeals now resolves 90 percent of its cases and mediation is being considered to resolve the other 10 percent. Announcement 95-2 sets forth the mediation procedure. There were hearings the previous week involving 16 witnesses (including one from TEI) who spoke on the mediation process. Every speaker said that the process should be expanded to include small cases. The initial intention was to limit mediation to valuation issues, but the speakers suggested opening it up to factual and legal questions.

Based on the suggestions at the recent hearing, Appeals is going back to the drawing board and considering an expansion of the procedure. It was pointed out that this is a test and controls must be maintained. There are a lot of questions at Appeals regarding this procedure. Appeals feels that if they have done their best in the process and the taxpayer has given them the bottom line, there should be nothing for the mediator to do. Team chiefs see this as giving the taxpayer "another bite at the apple" and do not want the process since it may prevent the taxpayer from giving Appeals its bottom line in settlement negotiations.

There is also some controversy over who should be a mediator. Some have suggested other team chiefs but most taxpayers would not agree to team chiefs as a mediator since there is a natural bias. Others have suggested using a judge as a mediator but some feel that a judge would be too decisive and not encourage the settlement process. In the test, they plan to use both inside and outside mediators.

There is a cost issue regarding who will pay for the mediators. Most feel that companies would be willing to pay the cost. The procedure is mainly designed for one issue cases but the IRS probably will not restrict the procedure to single issue cases. Five issues will probably be the limit for the test. Mediation is nonbinding and both Appeals and the taxpayer have to agree that the issue will go to mediation.

There has been a lot of action in the mediation area and the IRS has received many calls from taxpayers who Would like to participate. At this time they are not entertaining requests for mediation.

There was some question whether the procedure would work on docketed as well as nondocketed cases and it was concluded that the procedure should work on both. The mediation process has been used on a docketed case in Houston, although, Counsel must still sign off on the settlement.

TEI members questioned what the criteria was to determine if the mediation test is successful. It was questioned whether the IRS will seek input from Appeals, the taxpayer, and the mediator and whether there will be questionnaires that will solicit input from others. The IRS responded that there are no set guidelines at this time.

There was further discussion regarding Appeals concern that a company would not exhaust its good faith effort to settle. There is probably a natural tendency for both sides, including Appeals, to hold something back if an issue is likely to go to mediation. If it is felt that the company is "gaming," then Appeals will not agree for the issue to go to mediation.

Experience has indicated that one benefit of the mediation process is that it gets the decision-makers, the team chief or higher for the IRS and the CFO or CEO for the taxpayer, at the table to hear both sides of the argument and make a decision at that time. The process ends with the signing of an agreement at the hearing.

Key CEP Initiatives

Ben Hyde of the IRS discussed some Key CEP initiatives

1. Involvement. He commented on the goal of enhancing upper management's involvement, including branch chiefs and division chiefs becoming more visible, in the examination process. Participation in the IRS-TEI workshops, with a goal of working together to get the right answer, was also mentioned.

2. Trying to Resolve Issues at the Lowest Level. Numerous tools are being used to try to get issues off the table. Advance pricing agreements are an example although there seems to be more activity in regions other than the Southwest Region. It was pointed out that, if taxpayers have section 482 issues, they should be looking at APAs as a tool to get significant issues off the table. There has been an increase in the use of Delegation Order 236 in the Southwest Region. The expanded settlement authority at Exam has also helped in this effort including the identification of rollover issues affecting subsequent years.

3. Accelerated Issue Resolution. Revenue Procedure 94-67, which discusses the use of AIRs, has finally been issued. A closing agreement is used to settle issues that carryforward to the last filed tax year. Counsel will be reviewing these closing agreements. The Joint Committee is not interested in the factual issues. AIRs are not available at this time for employee plan issues. Also, partnership items are not covered by AIRs nor are issues dealing with competent authority under a tax treaty since these issues are outside of the District Director's jurisdiction. The Department of the Treasury has jurisdiction over treaty issues.

4. Prefiling Agreements. Some of these have been utilized in the Southwest Region. There are no formal procedures for these agreements but the IRS will try to accommodate taxpayers under the correct factual situation. This is a new frontier where the IRS and the taxpayer can agree on the tax treatment provided they can agree on the facts as represented. There should be a revenue procedure coming out on prefiling agreements.

5. One-Stop Service. All CEP cases are trying to identify ways to provide complete service to the CEP taxpayers including assistance in dealing with Service Centers.

6. Measurements for CEP. The IRS is looking at the compliance burden placed on taxpayers and ways to reduce this burden. They are questioning whether arbitrary and capricious issues are being raised. They are looking at ways to do business differently to resolve issues earlier. They are promoting tax law simplification and pointing out to Congress things that need to be changed in the tax law. They are looking to maximize productivity with an emphasis on factual development.

7. Field Service Advice. The IRS stated that, with regard to field service advice, agents are dealing with their attorneys. The IRS feels that when the attorney gives advice, the attorney-client privilege shields it from the taxpayer. If a taxpayer is told that there has been field service advice, the appropriate procedure is for the taxpayer to seek technical where the taxpayer wants to ensure that the facts are being represented correctly.

TEI members pointed out that their concern was that the facts being presented for field service advice were slanted toward the IRS position and the taxpayer had no knowledge of the facts being presented to Counsel. The IRS's response was that the Team Coordinator or lead agent should discuss the facts with the taxpayer and, if there was no agreement on the facts, the taxpayer should seek technical advice. The TEI members expressed the need to send a strong message to Exam that it must encourage communication especially regarding the facts surrounding the issue. There appears to be no requirement for agents to tell taxpayers that they are going for field service advice, and there were many examples given where the IRS has refused to let the taxpayers meet with Counsel. TEI members stated that there is no real reason for refusing to allow taxpayers to meet with Counsel and questioned why this request was being denied.

The IRS response was that they did not want it to appear as if Counsel was running the audit. The IRS representatives stated that there was nothing wrong with Counsel meeting with the taxpayer along with the Case Manager although sometimes it is Counsel's decision not to meet with the taxpayer. TEI members emphasized that once a decision was made to have Counsel involved, tax: payers should be informed and should have an opportunity to meet with Counsel face-to-face.

Regional and District CEP Initiatives

Jerry Jones, IRS, discussed the current emphasis at the regional and district levels in CEP. The following are the areas of their focus.

1. Evidence of involving the taxpayer.

2. How current Exam is on cases.

3. How long it takes to do an exam. It was pointed out that they are making progress in this area as the average open years has dropped from 3.2 to 2.7 years in the Southwest Region. The average cycle time has dropped from 35.6 months to 31.1 months while many cycles have increased from two-year to three-year cycles.

4. Issue resolution agreements and use of Delegation Order 236 along with AIRs and APAs.

5. Support audits in other districts.

6. One-stop service--Case Manager helps to resolve all problems.

7. Training and development of employees including agents and specialists.

8. The use of specialists--Are they involved in the entire process including the planning phase?

Jerry reported that this year emphasis will be placed on the following items:

1. Partnership examinations since there is a feeling that partnership vehicles are being used in abusive situations.

2. Covering employment and excise tax matters.

3. Emphasizing agreement on tax issues.

4. Pension plan examinations--There are currently 35 CEP taxpayers in the Southwest Region under exam in this area.

5. VEBAs are required to be looked at in all cases (in some cases, the agents involved in pension plans will assist).

6. Cafeteria plans are being examined.

7. Compliance checks such as proper filings of W-2s, 1099s, and information returns. The IRS is encouraging electronic filing for individuals employees.

Items that are being looked at in the qualified plan area include excess contributions, hardship withdrawals, loans without proper procedures, minimum funding violations, loan periods being excessive, proper notifications and elections, ADP/ACP violations, and compensation limits not being followed.

John Buchanan, IRS, discussed the VCR program. This program is a self-audit program and approximately 100 plans in the Southwest Region are involved at this time. There is a problem with the length of the turnaround time in this program. This program has been extended indefinitely and they are attempting to turnaround VCR requests in twelve months. Once you are in the VCR program, the EPO does not come out and audit your plans.

John mentioned that they are seeing some problems which would require a disqualification of the plan, but they do not like to disqualify plans because of its impact on the employees. In this case, there are "negotiated sanctions" which the IRS feels are necessary to correct the situation. John stated that a revenue procedure provides them with the authority of sanctions equal to 60 percent of all possible taxes and penalties but they sometimes settle for less depending on the operational defects. In the Southwest Region, there have been four cases that could have been developed as disqualification issues. These cases involved $15 billion in assets and $19 million in taxes. These cases resulted in $10 to $15 million in sanctions.

The TEI members expressed concern in this area and pointed out that everyone has heard the horror stories. An example was described where it would take a $1 million payment to make the plan whole but there were possible penalties and sanctions in the $200 to $300 million range. In this situation, it was asked what the IRS's position would be since 60 percent of $300 million is a big number compared to a $1 million correction. John Buchanan would not comment on this but stated that the National Office sometimes gets involved. John also pointed out that this is where the VCR program comes into play and can work to correct the operational defects.

TEI Questions

1. Chief Counsel's Office appears to be encouraging field agents to pursue capitalization of expenses using INDOPCO theories. For examples, Barbara Walker, Assistant to the Branch Chief, made an instructional video for agents encourraging them to seek out expenses related to ISO 9000 expenditures, and capitalize them. Since most taxpayers have similar facts with respect to those expenditures, wouldn't we all be better off with a well thought-out revenue ruling in lieu of turning agents loose all over the country to develop the same issue over and over?

IRS Response: There are no plans to issue an INDOPCO revenue ruling. INDOPCO only supports the IRS position for capitalization. If it wasn't required to be capitalized before INDOPCO, it should not be required to be capitalized after INDOPCO. The IRS was not willing to give a direct response to the ISO 9000 experience, but simply provided the "canned" answer from the National Office regarding the INDOPCO situation.

2. The Ogden Service Center no longer will provide Form 6166, a certification that a corporation is a U.S. taxpayer and thus entitled to benefits under U.S. double taxation treaties. Instead, we have to write to a P.O. Box in Philadelphia, where the response time is extraordinarily slow. Why was this change made?

IRS Response: There was a consolidation since a number of Service Centers were not handling the certification correctly. The numbers of forms has increased significantly and they all go to Philadelphia. Individuals to contact:

Jim McCanless (International Analyst)

(215) 516- 2231, FAX: (215) 516-3906

Tony Skirkie, Unit Manager

(215) 516-7229, FAX: (215) 516-2555

3. Case Managers and Field Agents are becoming increasingly aware of the benefits of developing audit work plans together with taxpayers, and discussing issues before IDRs are issued so that focused requests can be prepared. Taxpayers in turn are able to respond to focused IDRs more quickly. Regional specialists do not seem to have gotten this message, however. There is still a tendency for a regional specialist to descend upon an audit and issue all encompassing IDRs, e.g., "Please provide all documents related to the [subject], including correspondence, memorandums, Board of Directors authorizationl/approval, etc." What steps are being taken to ensure that specialists agents become more realistic with their preparation of IDRs?

IRS Response: A number of specialists in this region have streamlined these groups somewhat. The key is the emphasis in training and sitting down with the tax directors to go over operations. Specialists need to participate in the planning process and Team Coordinators need to make sure that funds are available for specialists to participate in the planning process. Financial products is being expanded beyond Houston although there might be start-up problems in this area. More involvement is needed by Case Managers. There is a training problem and it's not just limited to specialists. It was suggested that if there are problems, the taxpayer should go to the Case Manager. TEI members pointed out that this does not always result in a resolution since the Case Managers are not as conversant with the specialist's issues and hesitate to overrule a decision made by the specialist.

4. The Chicago IRS District and Chicago Chapter of TEI have made a joint training video on how to conduct coordinated examination audits. Are there any plans for the Southwest Region to use this video in their training activities?

IRS Response: The IRS does have plans to use the video tape in its training and encouraged TEI to show the video to taxpayer members.

5. The Cleveland IRS District in cooperation with the Cleveland TEI Chapter have developed guidelines for the capitalization and expensing of fixed assets. Can these guidelines (or something similar) be used in the Southwest Region?

IRS Response: The IRS is reconsidering the agreement between the Cleveland IRS and Cleveland TEI and will probably withdraw the agreement. The District did not have the authority to make such an agreement and capitalization issues such as this should be approached on a case by-case basis. The problem in this area is establishing a dollar limit. Instead of establishing guidelines, agents should be discouraged from making smaller timing adjustments just for the sake of making adjustments.

6. We have heard that the St. Paul District (on behalf of its region) now has a policy against netting deficiencies and overpayments for purposes of interest computations. Since the GATT legislation, there is now a 4.5-percent spread between interest due on deficiencies and overpayments. Failure to net a deficiency against an overpayment, especially in connection with a timing adjustment made on audit, now has serious financial consequences. What is the policy of the Southwest Region with regard to netting deficiencies and liabilities for purposes of interest computations?

IRS Response: Netting for interest calculations is a hot item. The policy for the Southwest Region based on counsel's advice and consistent with the National Office is that you do not offset one type of tax with another type of tax and there is no offset of tax from one period to another period. TEI questioned whether or not netting of income taxes within the cycle was allowed and the IRS did not know how to answer that question. It was pointed out that the St. Paul District was not netting in this fashion.

Given a one-year timing adjustment, the issue is whether a taxpayer is looking at interest for a year or whether both years go forward (the underpayment and overpayment years) at different rates with a 4.5-percent spread between the underpayment and overpayment rates for years from the tax years to the present year. The IRS stated that they would send TEI a response from Counsel regarding this matter.

7. We are conducting two task force "studies" with the local District. The subjects are "Involving the Taxpayer in the Audit Process" and the "Role and Use of Specialists in CEP." It would be interesting to hear what other districts are doing to advance the National Office goal of improving the efficiency of the audit process and what Regional IRS views are toward achieving this goal.

IRS Response: There are studies going on in the local districts. TEI commented that the problem is with specialists not being managed under the CEP program; specialists seem to be separate and there is a "disconnect" in that Case Managers are not controlling specialists. The IRS responded that they do review specialists at examination meetings.

8. Two contentious areas in the "Audit Process" task force are (a) interviews with taxpayer personnel, and (b) cooperation in agreeing on facts and questions before Case Managers seek field service advice.

IRS Response: The IRS stated that agentsmust get interviews from other personnel in the corporation. Taxpayers do have the option to have someone at the interview in addition to the nontax personnel. It was also pointed out that the scope of the interview should be defined up-front and agreed to between the IRS and the taxpayer. There was no further discussion regarding field service advice since this matter was previously discussed.

9. Should the IRS be allowed access to taxpayer personnel from inside and outside the tax department to help identify potential audit areas? Or should interviews only be allowed for tax department personnel with the exception of limited interviews for focused situations where operating personnel has specific knowledge of an audit area of interest?

IRS Response: An example was pointed out where the examining agent laid issues on the table and allowed taxpayer personnel from outside of the tax department two weeks to prepare for the interview. The IRS felt that the process has worked well provided the nontax personnel are candid and that it has shortened the audit time. Comments were also made regarding interviews in the EPO area since pension departments are often not part of the tax department. The IRS wants to interview the people that are actually administering the plans.

10. Taxpayers would appreciate learning, on a timely basis, the issues on which the IRS intends to use off-site support, such as District Counsel personnel/field service advice/cross-district support, etc. Any comments?

IRS Response: It is important for the IRS and the taxpayers to work together and taxpayers should be aware of off-site support. In the majority of cases, the taxpayer should be aware of field service advice but this is a case-by-case matter and there may be exceptions.

11. Another area which has been discussed in general terms without specific answers at several of our TEI/IRS liaison meetings has been the questions regarding the change in the "scorecard" for the IRS Case Manager and other team members for closing agreed vs. unagreed cases. In other words, is it to the benefit of all the managers and team members to close an agreed case if possible or does it mean more to them in speed/pay/promotion just to close the case no matter if it is agreed/unagreed (i.e., does it pay to invest time/effort to work with taxpayers to resolve issues at lowest level)?

IRS Response: There is no scorecard. However, there are areas that are being emphasized such as AIRs and Delegation Order 236. They are looking at how they perform on these initiatives and are not emphasizing the closing of the case just to close the case. Currently, it is not more important to close the case than to get an agreed case. It was pointed out that the Southwest Region is one of the most current regions.

IRS Questions

1. From your perspective, how could/should the Coordinated Examination Program (CEP) be better structured to meet the needs of your constituents?

TEI Response: It was mentioned that the CEP appears to be working well at the present time. Communications with the field was mentioned as well as regular meetings with the Team Coordinator and Case Manager.

2. How would you recommend the IRS structure itself to better examine taxpayers who have related entities in other districts or foreign entities?

TEI Response: This is an awkward situation with no real solution. There is a need to plan with the taxpayer, which is possibly a multiple-step process. Support districts put a lower priority on the support function and off-site support does not report to the Case Manager which causes problems.

3. Would it be beneficial for the IRS to structure its CEP audit teams along market segment lines as is currently done in general field examinations?

TEI Response: It was felt that structuring audit teams along market segments would destroy some of the good things currently in the program. There would be logistic problems with nonlocal agents wanting to complete the audit in a short period of time. This is the same type of problem that taxpayers are currently experiencing with nonlocal specialists.

4. What is your opinion of the quality of support audits conducted by other districts, i.e., expertise of agents provided, use of Assistant Case Manager, etc.?

TEI Response: The opinion is that the quality is poor.

5. What barriers do you see in the IDR process for domestic, support, and foreign examinations? How could this process be changed to better serve both parties, the taxpayer and IRS?

TEI Response: There was some discussion regarding being understaffed and questioning whether or not the IRS should rotate on small CEP taxpayers.

6. What are TEI's opinions on APAs and what type of emphasis is being placed on them? What problems has TRI identified and could CEP District involvement improve the process ?

TEI Response: The process for APAs needs to be streamlined. The documentation required is horrendous and the Districts act as if they are conducting an audit. It should be pointed out that there is no perfect transfer price.

7. What is TEI doing to encourage the cooperation of its membership to work more closely with IRS CEP District personnel to work out timely information document return (IDR) turnaround? What are the problems identified? IRS caused problems? Taxpayer caused problems? Is summons the only answer with some taxpayers? How long should an audit team wait?

TEI Response: If an audit is truly jointly planned from the beginning, these problems should not be experienced. A summons should be used only as a last resort as it does not typically accomplish anything but getting the taxpayer's attention.

Other Issues

The IRS appears to be backing off on record retention agreements since it is impossible to identify all records that should be kept. Instead the taxpayers need to go to the IRS and ask them if they can get rid of records. However, in the Southwest, record retention agreements are still being encouraged. Taxpayers and the IRS should agree upfront that certain records will be provided without information document requests.

The National Office has indicated that there will be a revenue procedure out by the end of June regarding optical imaging and that taxpayers will be allowed to get rid of their paper. There was some discussion regarding the change in general ledger systems and an example was mentioned where a taxpayer changes from a mainframe system to a file server system. The taxpayer still has the requirement to maintain electronic records in electronic readable and auditable form. One solution might be to have the CAS look at future years during the current cycle.
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Title Annotation:Liaison Meeting Special
Publication:Tax Executive
Date:May 1, 1995
Words:5539
Previous Article:Chicago Chapter's liaison meeting with Midwest Regional Appeals; February 15, 1995.
Next Article:Pittsburgh Chapter's annual liaison meeting with the IRS Pittsburgh District; January 26, 1995.
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