IRS Discusses New Initiatives and Procedures at Annual Liaison Meeting

IRS Discusses New Initiatives and Procedures at Annual Liaison Meeting

By Anthony Sarmiento, Associate Editor, The CPA Journal

In late January Internal Revenue Service representatives met with members of the New York State Society of CPAs’ Relations with the IRS Committee about the Service’s efforts to speed up compliance programs and reengineer the business tax examination process.

During the Jan. 29 annual liaison meeting between the two groups, Committee Vice-Chair David Sands and IRS representative Kittie Hill, Manhattan TEC territory manager, put together a dynamic program that helped formulate a meaningful dialogue among the committee members and the Service. Particular emphasis was placed on the IRS’ expanded menu of electronic services, and the Service’s desire to utilize electronic forms and communications to make filing more efficient.

Ellen Murphy, area director, TEC SB/SE (Taxpayer Education and Communication, Small Business/Self-Employed Division), chaired the meeting, which took place in lower Manhattan. She introduced George Field, Brooklyn territory manager, who outlined new IRS guidance for handling in-business trust fund cases. The new procedures sort cases by risk, to make it easier for Revenue officers to address problems quickly. He reiterated the importance of the tax practitioner’s role in working with Revenue officers and confirmed that practitioners with a power of attorney would be present at field visits and notified before liens are filed. Field also reviewed the revised offer-in-compromise procedures, which give practitioners greater leeway when providing requested documentation to the IRS.

Exam reengineering was the focus of Midtown Manhattan Territory Manager Lori Friedman’s presentation. The reengineering project has resulted in a risk analysis worksheet that is intended to give structure to the agent’s decision-making process and improve the consistency of business exams conducted across the country. The program is being rolled out in stages across the United States over the next year or so; field agents in New York should complete their training by May 2004, and office examiners by August 2004.

According to Ronald Boyea, Area 2 director of compliance, the IRS will hire 8,000 to 10,000 collections and compliance officers over the next few years. Practitioners may see more on-the-job training of new IRS auditors, as well as more focused procedures in the audit process. He also updated members on the National Research Project for business entities, which is about halfway through its five-year cycle. In addition, the IRS anticipates finishing its work on the Form 1040 National Research Program by this summer.

Mark Conroy, acting operations manager, Andover campus, discussed submission processing at that location. He noted that, as the IRS centralizes different functions, the centers where practitioners used to send returns are now concentrating on other areas. Conroy also detailed the errors in submission processing that the IRS encounters most frequently, such as a mismatch between the Social Security number and the taxpayer’s name, unsigned returns, unidentified checks with returns, and erroneous applications for the 2003 advance child tax credit.

The final speaker was Richard Creamer, director of accounts management, Brookhaven campus, who talked about the Service’s new and planned electronic services. Any practitioner can apply online for a PTIN (preparer tax ID number) and EIN (employer ID number). A PTIN can be used by practitioners instead of a Social Security number. Practitioners can apply for an EIN on behalf of their clients and receive one immediately (EINs cannot, however, be issued to the same address as the practitioner).

Creamer noted that the Practitioner Priority Service, a dedicated helpline for tax practitioners, has improved its response time over the past year and shown gradual improvement in customer satisfaction. Most of the committee members said they use the service and agreed that it was beneficial.

To help reach its goal of 80 percent of returns filed electronically by 2007, the IRS is introducing new electronic services designed for the convenience of those who use e-file; the services are limited to practitioners who have e-filed more than 100 returns. These new initiatives include I-EAR (Internet Electronic Account Resolution), TDS (Transcript Delivery System) and I-DA (Internet Disclosure Authority). These components in the electronic workflow will be set up to interface with the IRS’ CAF (Centralized Authorization File). The electronic services promise to speed processing time, eliminate errors and avoid duplicate requests.

Committee members asked several questions about the details of the initiatives, which are still in the testing stage, and IRS representatives solicited feedback from practitioners.