Ad Hoc Issue Committee Minutes

March 1, 2004

Members in Attendance

• Larry Barnard, Riggins, ID
• James Grimaldi, Brooklyn, NY
• Lawrence Lexow, Edwardsville, IL
• Chris Lowe, Placentia, CA
• Gregory Maciulla, Tucson, AZ
• Robert Meldman, Milwaukee, WI - Ad Hoc Chair
• Diane Mignano, North Kingstown, RI
• Judi Nicholas, Designated Federal Official
• Francis Paolone, Hoover, AL
• Sherry Whah, Anchorage, AK
• Lillian Woo, Bryan, TX

Members Absent

• Gerald Gensiejewski Jr, Newtown, PA
• James Griffin, Walnut Creek, CA
• Calvin Johnson, Virginia Beach, VI
• Paul Smathers, Edgeley, ND

Staff/Note Taker

• Bernie Coston, TAP Director
• Mary O'Brien, TAP Analyst

Welcome/Announcements/Review Agenda
Bob welcomed everyone and asked for a roll call. It was determined that a quorum was met. Bob moved on to the next agenda item.

Face-to-Face Meetings
Bob stated that the Ad Hoc committee has been granted a second face-to-face meeting. The panel discussed the locations of both the face-to-face meetings. By consensus, it was decided to keep the location of the first meeting in Seattle. Again, by consensus, Oklahoma City, OK was chosen for the second meeting location on August 1, 2, and 3rd.

Confidentiality Issue
Lillian Woo gave a report on the progress of the subcommittee. The committee met with David Finz (Office of Professional Responsibility). Following are the notes from their meeting.

David Finz - OPR is responsible for enforcement of the standards of practice. Standards are located in the Code of Federal Regulations and restated in Circular 230. David's is the liaison to Office of Chief Council for cases that are forwarded for litigation. OPR does not litigate cases.

The issue of confidentiality of return information retained by preparers is of growing concern despite the fact that OPR has not referred any cases for criminal prosecution. One recent news article discussed a case in Alabama where a practitioner used a client's social security number to obtain an American Express card. OPR will be looking into whether the practitioner is governed by Circular 230.

OPR cases arise out of referrals from IRS employees, the taxpayer community or practitioners. To date there have been no cases forwarded for disciplinary action. Although there could have been cases referred that were settled in some other manner. The severity of the misconduct would determine whether criminal prosecution was pursued over other sanctions. Other sanctions could include a ban from practicing before the IRS or return preparation.

OPR staffing has been increased and new staff is being hired. The new director, Cono Nomarato, expects OPR to seek out cases rather than simply waiting for referrals. He indicated that he expects OPR to begin collaborating with the ninety-four Department of Justice offices regarding cases that may not meet the DOJ threshold for prosecution but OPR would pursue. The goal is to establish the relationships to encourage DOJ to look as OPR as a place to refer cases not meting DOJ thresholds.

In the recent twelve-month period, forty-three percent of OPR cases that resulted of some sanction were related to practitioner's failure to timely file and pay their own taxes. This statistic raises the question as to whether these cases should be OPRs primary focus or whether OPR should pursue issued that impact taxpayers and tax administration. When a case is referred to OPR it is opened and investigated beginning with research into whether the practitioner is licensed. OPR does not have dollar threshold limiting the cases they open.

To respond to the sub-committee's suggestions that informing the public should be a priority and perhaps the OPR should establish a hotline within their office. While not speaking on behalf of OPR or the director, David indicated that resources might be a problem and the question is, what is the best way to get referrals. One idea discussed was to have one the IRS hotlines take the calls and refer the case to OPR who would research licensing. If Circular 230 does not govern the individual the case could be referred to Area Directors to pursue sanctions.

David also stated that IRS employees need to feel that making these referrals is important to the work they do and that management support them.

David left the group with a final thought: OPR enforcement is never going to be able to catch everyone and what is most important is to protect the public and integrity of the tax system. OPR needs a full spectrum of referrals. Expanding the universe of where leads come from will benefit everyone.

New Issues
Bob discussed the two new issues that Bernie Coston, TAP Director has presented to the Ad Hoc committee to work on.

• Office of Notice Gatekeeper (ONG) The primary responsibility is assessing the impact of notices and responses sent to taxpayers have on the toll-free environment.
• Taxpayer Assistance Centers (TAC)

Judi gave a background of the ONG issue. ONG originally approached Area 3 for a focus group to work on how useful is three of their web-based programs that they are responsible for. The programs are: the Frequently Asked Question Program, the Tax Trails Program (tax law questions), and the Tax Topics Program. What might drive taxpayers to the telephones in lieu of using these programs? They want people who use these sources.

Bob asked for a volunteer to look into this subject. Diane will work with Judi to determine then best approach to meeting the ONG's request.

Bernie discussed the conference call he had with Nina about what she would like the Ad Hoc committee to focus on concerning the TAC. As a result of the JOC meeting, TAC has decided to reconsider pulling the telephone lines out of the TAC offices. Bernie would like this committee to be aware of any type of information about shutting down any tax services and what burden it would pose to taxpayers. Bring it back to the committee to work on. Be the eyes and ears of the taxpayers. Bernie also asked the group to consider resource implications as well as the burden to taxpayers when making recommendations.

Larry Barnard will chair the TAC subcommittee. Bob suggested that an email be sent to each of the chairs to tell them that we are monitoring this and that they should inform their members to be eyes and ears also and report to the Ad Hoc committee any burden.

Education
Jim gave a report on the Education/Testing Subcommittee. The first meeting was last Friday. They went through the document by the Licensing/Enforcement Subcommittee concerning testing. The three Government testing programs they are looking at are:

• Oregon Licensing (state)
• Enrolled Agent (federal)
• VITA (federal)

Of the three program discussed, it appears that the best fit is the VITA testing program. New volunteers and returning volunteers must pass a test before they can prepare tax returns. In response to an e-mail Judi sent on behalf of the committee, the Office of Chief Counsel will provide a written paper sharing their thoughts concerning subjecting all paid return preparers to Circular 230 requirements.

Lillian stated that she would like to send to the Education/Testing Subcommittee, comments from another TAP about the VITA test. Sherry's concern with the VITA test is that it measures more about math errors than it does knowledge. She also asked the question about continuing education.

Next steps for the subcommittee are to obtain the VITA tests (Publication 1155), and get clarification of AARP's responsibility concerning the administration of the VITA program.

Ad Hoc Administrative Issues
Conference calls for subcommittees were discussed and scheduled.

• Confidentiality will meet on March 10th at 10:30am PST
• Education and Testing will meet on March 16th at 7:30am PST

Licensing and Enforcement will share notes from Education and Testing, review them and then schedule an appointment.

Next Ad Hoc Issue Committee call is scheduled for April 5th at 8am.

Conclusion/Comments
Bernie commented that the meeting was a productive meeting and that he thought this group was doing a good job. Bob asked if there were any other issues to discuss. No other issues to discuss.

Bob adjourned the meeting.