Ad Hoc Issue Committee Minutes

Taxpayer Advocacy Panel
Ad Hoc Teleconference
Monday May 24, 2004

Attendance

• Jim Grimaldi
• Jim Griffin
• Chris Lowe (in part)
• Greg Macuilla
• Buck Poalone
• Sherry Whah
• Judi Nicholas, Designated Federal Official

Staff

• Marla Ofilas, Note taker

Welcome
Judi welcomed the committee and started with a review of TAP administrative issues. Judi indicated the Ad Hoc committee would be having a second face-to-face meeting and the location would change to Seattle on August 2 and 3.

Because of the cancellation of the May face-to-face meeting, Judi and Bob felt it would be good to have at least one teleconference meeting before August to discuss possible Ad Hoc issues. Decision: The committee discussed possible dates and decided on Tuesday July 6, 2004 to have their next teleconference.

Judi informed the committee Chris Lowe will be resigning from the TAP as of Wednesday May 2004 because of personal commitments that conflict with his ability to fully participate on the TAP. Chris expressed that he enjoyed participating and getting to know everyone. He apologized for leaving the group and felt that everyone should be proud because TAP is doing a good work.

Confidentiality Sub-Committee Report Out
Judi asked Jim Griffin to provide a report on the Confidentiality Issue that his subcommittee was working on.

Jim reviewed the confidentiality referral form that was sent out to the committee. He asked if there were any comments.

Greg offered that when this issue was first discussed, he read an article about the National Science Foundation which is an independent agency of the government. It was started after World War II and their budget for the upcoming fiscal year is 5.7 billion dollars. Greg provided their website, www.nsf.gov.

Greg explained that there is a section on their site called “Computer Information Services”. In the search engine under Identification ID, you will find their main areas of interest. Greg asked if someone in the IRS could speak with this agency and explain that this is a problem the IRS is having. Greg continued that the NSF is offering grants of 30 million dollars to study this.

Judi explained that in the conversations with the Office of Professional Responsibility the committee was told that there have been no referrals or complaints about this issue. It does not mean there is no problem; just that OPR has not heard anything yet.

Judi offered to look through the website and asked the members if they had any comments or suggestions about the sub-committee’s proposal.

The committee continued to discuss the referral report. Action: Buck provided a correction under the “Barriers” #3, it should be “lack of wide spread publicity and information.” Action: Judi will send an email to members not in attendance, to seek support for the proposal and then forward the recommendation to Nina Olson. This was later amended because another committee member joined the call to make quorum. Action: Jim proposed the referral form should be changed. Currently it states “Joint Committee Referral Form.” Judi agreed to have it changed since the referral will be sent directly to Nina Olson from the Ad Hoc committee. Action: The recommendation will be forwarded to the National Taxpayer Advocate for consideration.

National Licensing of Retuned Prepares Report Out
Jim Grimaldi explained that he completed his draft report and will be sending it to the sub-committee for their comments.

Greg asked if the committee looked at tax returns for people with an income under $35,000 or less, what percentage of these tax returns filed are1040ez? Action: Judi was not sure but indicated that could be researched and she will email the information to him. Greg felt that it would be interesting to know what percentage of taxpayers with1040ez would pay some else to complete it. Sherry agreed that many people do and suggested that H&R Block would be out of business.

Judi stated that the two reports should be combined because they are related to licensing and return prepares. The issue was broken up into two sub-committees to address education and testing verses licensing and enforcement. It was agreed that Sherry and Jim would work together to produce a single report. Action: Sherry and Jim will have the report ready for the July conference call.

Sherry asked the committee for their thoughts on a new issue she received. Sherry received a call from Christy Darien with the National Association of Self-Employed. She is would like to challenge Nina Olson, National Taxpayer Advocate, on her proposal to withhold money from people who are self-employed, 1099 recipient. Christy feels that it unfairly discriminates against the self-employed person because corporations would be exempted for any withholding requirement since the law exempts them from having to receive a 1099 for services rendered. Sherry explained that in the NTA’s proposal anyone receiving a 1099 would be subject to a mandatory withholding of taxes from the income received. Sherry explained that Nina believes the tax gap is due in large part to the lack of withholding on the self-employed. Nina also feels that self-employed individuals deliberately under report or don’t report that income. Therefore, she would like the source or person paying the self-employed to withhold 5% and send it to the IRS.

Judi asked Sherry how this situation would discriminate. Sherry explained that if she had contract labor, she would be required to issue 1099 on any payment over $600. If this payment is to a corporation she would not have to issue a 1099.

Greg asked why you would not have to generate a 1099 if the person is a corporation. Sherry replied that it’s just the law and doesn’t understand why they are the ones that are exempt. Sherry stated that there is a proposal to require 1099s is issued to corporations but there are questions about what would be reported, the gross or the net income on settlement.

Judi asked Sherry if this is an issue she would like the committee to review. The committee continued to discuss the issue. Decision/Action: Judi explained that she would do additional research on this issue and provided the additional research during the face-to-face meeting in August.

Judi asked if there were any additional comments before the meeting closed. No comments were offered and Judi adjourned the meeting.