IRS Updates Members at Annual Liaison Meeting

Representatives of the Internal Revenue Service (IRS) updated members of the Relations with the IRS Committee on its continuing efforts to streamline departments, coordinate audits and collection with local tax authorities, and modernize the agency, among other topics.

Managers from the agency’s Brookhaven, N.Y., campus and other divisions gathered with members of the New York State Society of CPAs for the annual IRS liaison meeting at the Federal Building on Broadway on Jan. 17.

Representatives discussed plans that have been in the works for months—such as the centralization of the offers-in-compromise division—and new initiatives to encourage electronic filing and to fine-tune the criteria for audits. Much of the IRS’ efforts focused on making the services more responsive, efficient and modern, the meeting suggested.

“The current selection method (for audits) is based on the early 1980s,” said Ellen Murphy, area director for taxpayer education and communication. The IRS, she said in her introduction to the meeting, launched the National Research Program reviewing returns for 50,000 taxpayers to help develop a new selection method that should only find returns that “need to be examined” and trigger audits that are less intrusive.

Cooperation

Representatives introduced several programs designed to reduce redundancies in audits and investigations. Robert Skiba, territory manager for Large- and Mid-Sized Business Financial Services (LMSB), discussed the IRS’ role in joint audit programs with New York state and New York City. The partnership would help identify areas of “non-compliance” in corporate filings, especially in light of increased use of flow-through entities, which have been on the rise in the last few years. “It’s a clear trend,” Skiba said. In the 1999-2000 tax year, he said, 60 percent of corporate returns made use of flow-through entities. That figure went up to 62 percent in 2000-2001, and the figure was much higher in New York state.

The partnership includes two full groups of 17 agents to audit partnership returns. The joint program would look at compliance issues, capital decreases, final year returns, cancellation of debt and long-term partnerships. The partnership would help reduce “cycle times” that occurred in the past when taxing authorities would review company records at different stages of separate investigations.

The IRS has also developed a joint program for collections, according to Michael Bernstein, territory manager for compliance in the small business/self-employed division. This includes an initiative to develop joint installment agreements with New York state, which began as a pilot program in 1999. Under this program, the agreement goes through a review officer and a single representative for collection purposes. Bernstein said there were no plans for a joint Offers-in-Compromise (OIC) program.

Other Updates

Representatives also discussed continued efforts to reduce the backlog of offers in compromise and create a better employer identification number service.

Under the centralized Offers-in-Compromise Program, all cases initially will be handled by two large call centers at Brookhaven and at the IRS service center in Memphis, Tenn. According to Dotty Owens, an OIC coordinator at Brookhaven, the centers will handle all simple cases, but refer complex cases back to field offices after making the initial contact. Florence Bronleben, another coordinator there, said that when the centers are fully staffed, collections will be put on hold within 24 hours of the initial contact, the OIC system will analyze the case within 14 days, and within 30 days, the applicant should receive an offer notice.

The IRS has also implemented new systems for issuing employer identification numbers. A practitioner service line is now manned by 75 assistors, said Lorraine Hajek, branch chief at Brookhaven. These assistors should be able to handle any call, or forward special cases to specific numbers. The new system, based at Brookhaven, will handle requests from 10 states by April, helping to centralize the service from 47 locations to three centers handling calls nationwide. This system is still being worked out.