Area 1 Committee Meeting Minutes

June 7 & 8, 2004
Portsmouth, NH

June 7, 2004

Opening of the Meeting
The meeting opened with the members introducing themselves to TAP Director Bernie Coston.

Roll Call

Panel Members Attending

• Walter Fish, NY
• William Gedge, CT
• Peter Gorga, Jr., NY, DFO
• James Grimaldi, NY, Chair
• Paul Nagel, NY
• Eileen Shuman, VT
• Charles Silva, MA

Panel Members Absent

• Aimee Brace, NY
• Elizabeth Brodbine-Ghoniem, MA
• Diane Mignano, RI
• Shamsey Oloko, NY

TAP Staff Attending

• Bernie Coston, TAP Director
• Marisa Knispel, TAP Program Analyst
• Sandra Ramirez, TAP Program Manager

IRS Guests

• Barry Levine, W&I Program Analyst, Hartford, CT
• Janet Rumford, TAS Associate Advocate, Portsmouth, NH

Public Guest

• Wayne Croteau, Director Legal Advice and Referral Service, Concord, NH

Meeting Minutes
Grimaldi moved to accept the minutes of April 22nd and Gedge seconded the motion. Gedge asked that the Closing Assessment of the minutes of May 25th be corrected to indicate that “members decided to meet for dinner on the evening of June 6th” not ”June 26th”. With this in mind, Grimaldi moved to approve these minutes and Fish seconded the motion.

Joint Committee Report
Grimaldi said that it was announced at the Joint Committee’s face-to-face meeting that New York State’s TAP representation will officially increase from four members to five.

He also announced that this year’s TAP Annual Meeting will be held at The Hamilton Crowne Plaza Hotel in Washington, D.C. on November 4th, 5th and 6th. The hotel is a short walk from the White House.

National Office Report
Coston spoke about the current stage of the TAP’s recruitment. He explained that involvement of the current members in the interview process will allow the future members to meet their peers and become better acquainted with the TAP. Grimaldi added that Ghoniem and Shuman volunteered to participate in the interview process. Shuman specified that she had only volunteered to participate in interviews in Burlington, VT

Coston continued saying that there are currently fifty-four membership openings. The number of openings has increased due to recent resignations. The interview process will include a background investigation and fingerprinting process for primary candidates and alternates so that non-selected interviewees will be able to step into vacancies quickly as they occur.

Also under consideration is the possibility of changing the terms of membership from two to three years to allow more time for the members’ efforts to come to fruition. Grimaldi added the Joint Committee has been considering the issue of increasing the number of hours of commitment indicated in the old application to 300 hours.

Another revision to the TAP application, Coston said is being considered is to omit requesting a résumé_. There is the problem, Coston explained, that some applicants submit a thorough résumé_ highlighting their qualifications and others do not. Thus, it becomes difficult for those reviewing the applications to determine the best applicant. We need to add a standard section to the application similar to what the IRS uses, known as KSA (Knowledge, Skills and Abilities) to allow all applicants to describe their qualifications equally. Also being considered is extending the application period from one to two months for future recruitment. This would result in a wider pool of applicants.

The National Office is also planning to create a vehicle to pass along the best practices from the current members to future members such as a mentoring program. We are also writing standard operating procedures to be used by the four TAP offices to avoid differences in managing committees.

Coston also addressed the problem of the overlapping of issues experienced among the committees which Shuman raised. Silva recommended creating a national issue committee to act as liaison for all existing committees to avoid redundancy. Fish added that a common problem in the Issue Committees is that of non-related issues surfacing that deserve a committee’s attention. Thus, creating more issue committees may alleviate the problem, Fish said. Coston explained the purpose of the Ad Hoc Issue Committee, to act as a catch-all for issues and address those not related to an established committee.

Fish asked Coston why addressing legislative issues is not within the TAP’s scope? Coston explained that the charter’s description of the TAP as an IRS advisory committee does not allow it. Recommendations of legislative nature are to be addressed by the National Taxpayer Advocate (NTA) only. Nagel disagreed and said that as the sounding board for taxpayers, the TAP should also be the sounding board for legislative issues. Coston added that we must adhere to the charter as approved by the U.S. Treasury and recommended that members address legislative concerns to DFO Gorga and other Local Taxpayer Advocates (LTA) or to the NTA. The LTAs have constant communication with their congressional offices and act as the IRS’s liaisons with Congress offices. A problem with the TAP addressing legislative issues, he added, is in doing so the TAP would become a political unit rather than an advisory one.

Grimaldi expressed frustration with the lack of feedback on the issues recommended to the IRS, although he admitted communication between the TAP and the IRS has improved. He mentioned that in the past, the Citizens Advocacy Panel (CAP) did not receive timely feedback on recommendations and this created frustration among the members. He gave the example of the Brooklyn CAP’s Tax Fraud Proposal for which the members contributed a great deal of work and time. Gorga suggested that the TAP take the opportunity to report the IRS responses to all referred recommendations at the Annual Meeting. Gedge would like to learn which were the three most important TAP accomplishments in the last two years. Ramirez indicated the TAP’s Annual Report contains accomplishments. A draft can be shared with members. Silva suggested that if the TAP had two annual meetings as opposed to individual committee meetings, it would give members a better opportunity to discuss issues. Gedge added that the application for TAP membership should be more descriptive of how members will use their time. Instead of explaining that the TAP expects volunteers to commit 100 to 300 hours, he said, the application should explain that the commitment involves at least one teleconference per month, one annual meeting and one or two face-to-face meetings at different locations.

Fish suggested that alternate members join calls/e-mails so that when a member leaves they can easily step in. Coston stated that the alternates (applicants who are not originally selected) will be inactive until the time they are called upon to replace those who resign but said Fish’s idea was good. Silva suggested the remaining or exiting member of a state choose his/her replacement to represent the state.

After this discussion, members adjourned to work in two subcommittees during a closed session followed by lunch. In the afternoon, the members reconvened to continue the meeting. The second portion of the meeting was open to the public and the members were joined by IRS speakers Rumford and Levine and the director of a Low Income Tax Clinic, Wayne Croteau.

Legislative Issues
9/11 Grants – This issue concerns the taxability of disaster relief grants given to victims of this disaster and the fact that the grants provided to individuals are not taxable while those received by businesses are taxable. Grimaldi feels this inequitable tax treatment needs to be addressed to the NTA.

Some discussion followed on the issue of insurance coverage for these victims and the lack of legislative support. Fish asked whether businesses that received disaster relief are taxed on it. Once we have a comparison, Fish said, it will be easier for the Committee to address the issue to Nina Olson. Levine indicated that there is no precedent on legislation dealing with this particular type of relief. This relief is retroactive to include victims of the 1995 Oklahoma City attack.

Grimaldi concluded that he will write a letter to NTA Nina Olson expressing our concerns.

Health Insurance Deduction for Employees – Shuman related the story of the taxpayer whose situation originated this issue. However, based on the lack of information to support this legislative issue, Shuman wishes to drop it. Different members’ opinions on this issue caused Grimaldi to move that the issue be placed in the parking lot for further consideration.

Top 3 Issues in the New Hampshire TAS Office
Rumford briefed the Committee on the concerns of the New Hampshire TAS office as evidenced by the cases received in that office.

The first issue is that of the amount of time it takes to process an Offer In Compromise (OIC). Because sometimes it might take the IRS 30 days or longer to acknowledge receipt of the offer, many taxpayers seek the assistance of the TAS to receive feedback or acknowledgement on the offers submitted since there is no response or communication from the IRS. Rumford said that about 50% of the New Hampshire TAS office inventory cases involve OIC issues.

Another issue concerns the processability of these offers. When an OIC is deemed processable by the Processability Unit at the campus (Memphis or Brookhaven), it is forwarded to an OIC Specialist to review the offer. It is at this point that many offers are returned to the taxpayer as rejected because of insufficient information provided such as the inclusion of a particular tax return. The problem is that the offer specialists ask for items that the Processibility Unit should have picked up. Further, instead of the OIC Specialist researching the need for a tax return or obtaining a copy internally, the offer is returned to the taxpayer as rejected. While the OIC is being reviewed by the Specialist, the collection statute is suspended to the detriment of the taxpayer.

Also there is the issue of taxpayers being asked to provide much additional information within a short turnaround time, for example two weeks.

The New Hampshire TAS office wishes to recommend changes to Form 656 such as stating in the Form that the taxpayer must file a return.

The second most common issue deals with EITC audits and how long they take to complete. In many cases a taxpayer has a second year audited before the first audit is finalized and resolved. Of course, the earlier audit results will impact the second year’s audit determination.

Gedge asked Rumford what are the channels the TAS uses in resolving their cases. Rumford explained that the majority of the cases are resolved with the IRS Operating Divisions. Legislative cases are referred to the Systemic Advocacy unit of TAS.

The third and final most common issue Rumford reported is the backlog of cases in Appeals involving Innocent Spouse claims. Again, like in the former two situations, taxpayers refer these cases to the TAS due to the length of time to resolve and/or lack of communication.

Area 1 Field Assistance Issues
Levine spoke of attrition as being a major concern of the Taxpayer (Field) Assistance Centers (TACs) formerly known as Walk-In offices. Currently, there are 116 employees working in TAC offices for Area 1. Two TAC offices in the northeast were closed. Part of the reason is that after the filing season ends, the number of taxpayers visiting these offices and the amount of work produced by these offices reduces considerably. For the most part, taxpayers who use these offices and services off season are EITC claimants and retirees. In Plattsburgh a Congressman complained because his constituents had no IRS office nearby. In that particular situation, the office had closed due to lack of staff, but a VITA site was relocated there. The VITA site only filed 14 returns.

Shuman inquired whether having employees float between offices was considered. Levine replied that in Massachusetts this is done.

Although the law requires the TACs to provide a phone number in the local phone directories, taxpayers complain because the number only provides a recording and the opportunity to make an appointment by leaving a message. There is no staff available to answer these calls.

There was an almost 40% drop in tax preparation in Area 1 this past filing season. The requirements for free tax return preparation have been streamlined (e.g. all returns are e-filed) and most of the offices no longer offer filing of the state return. Another change in the TAC offices is that tax returns that involve an ITIN are no longer prepared. TAC employees screen visiting taxpayers and give them an appointment in order to prepare their tax returns.

The drop in TAC work has motivated the creation of additional work for TAC employees to perform outside of filing season. Employees will handle collection issues of taxpayers currently not handled by Revenue Officers. These employees will review cases of unpaid debts and fairly high-income non-filers since Revenue Officers do not handle these cases. The TAC employees in New York have been chosen for this pilot program.

Public Participation
Wayne Croteau, Director of the Legal Advice and Referral Service, an ESL LITC serving the community of Concord, NH, explained that the clinic is relatively new and it offers legal and tax services to the ESL community. The clinic also provides a phone hotline and refers some cases directly to the Bar Association. Croteau works pro-bono cases and indicated that he finds his current New Hampshire legal cases to be different than those of his previous Ohio legal practice.

Croteau said that from his observations of our meeting, he was impressed with the level of commitment from the panel members.

June 8, 2004

Opening and Recap
Grimaldi opened the meeting and announced that Media Specialist Peggy Riley would be joining at a later time to provide advice and guidance in dealing with the media. This portion of the meeting will be closed to the public.

Panel Members Attending

• Walter Fish, NY
• William Gedge, CT
• Peter Gorga, Jr., NY, DFO
• James Grimaldi, NY, Chair
• Paul Nagel, NY
• Eileen Shuman, VT
• Charles Silva, MA
  Note: Gedge and Shuman left the meeting at approximately 9:30 am. Silva left at approximately 10:30 am.

Panel Members Absent

• Aimee Brace, NY
• Elizabeth Brodbine-Ghoniem, MA
• Diane Mignano, RI
• Shamsey Oloko, NY

TAP Staff Attending

• Bernie Coston, TAP Director
• Marisa Knispel, TAP Program Analyst
• Sandra Ramirez, TAP Program Manager

Guests

• Donald Boucher, Local Taxpayer Advocate, Augusta, ME
• Wayne Croteau, Director Legal Advice and Referral Service, Concord, NH

Subcommittee Reports
Taxpayer Education Subcommittee – Acting subcommittee chair Grimaldi reported on the issues listed below and the respective decisions made concerning the issues by the subcommittee during their breakout session yesterday. Since four of ten members were absent, for purposes of this meeting, the members of this subcommittee were Grimaldi, Silva and Fish.

• Adding a TAP Statement to Common Publications/ Forms/ Instructions – The subcommittee considered and discussed the feedback given by the Joint Committee and Denise Fayne, Director of Forms and Publications. The subcommittee decided to; drop the TAP phone number from the statement and use the website address only, to use language in the statement based on TAP’s actual mission statement, and to drop the recommendation to include the statement on forms and instructions. The subcommittee will attach to the recommendation a mock-up of how the statement will appear in each publication. The subcommittee will recommend the statement go into publications 1, 5, 17, 594 and 1660. The subcommittee will revise the recommendation accordingly and e-mail it to Knispel, who will send it to the full committee before the next meeting so that the members can vote on the proposal /provide their input at the next meeting .
  
• Adding a TAP Statement to TAS Publication 1546, "How to Get Help with Unresolved Tax Problems” – Denise Fayne noted that the TAS publication 1546 did not make mention of TAP. The subcommittee decided to treat this as a separate recommendation from the issue noted above, based on Gorga’s statement that it should be feasible for TAS to adopt the recommendation. The subcommittee will draft the recommendation and forward to Knispel, who will provide it to the members for consideration and discussion at the next meeting.
  
  Coston added that he noticed that the Intranet – used by IRS employees – does not advertise the TAP and he is currently working on plans to create a TAP website within the intranet. He noted that several IRS employees submitted applications to become TAP members but regulations do not permit them to be members.
  
• Elimination of Form 2688 – The proposal, which was brought forth by Grimaldi, is to eliminate the second extension form (form 2688) or the request for additional time to file an individual tax return and to change the first or automatic extension to file form (form 4868) to allow an automatic six months to file rather than the current four months. The premise is that it appears that the IRS hardly ever denies a form 2688. If this is true then it is a waste of IRS and taxpayer time, effort, money and resources to require the filing of the form 2688 when the form 4868 can be changed to allow the full six month extension. The subcommittee reviewed the package of materials that included a study on the feasibility of eliminating the form 4868 and concluded that Grimaldi’s proposal is a good one and that certain challenges or statements made in that study can be addressed in the recommendation after certain research is completed/data obtained. Grimaldi noted that years ago the IRS changed corporate extensions to file from a two step process or from two extension forms to only one extension form. So, why couldn’t the same be done for the extensions to file for individuals?
  
  Further research/data to be completed/gathered by Knispel and to be provided to subcommittee includes:
  • History of when and why the corporate extension to file changed.
  • How many automatic extensions to file or, forms 4868 are timely filed? And, how many of those are denied? What are the reasons for denial?
  • How many requests for additional extension to file or forms 2688 are timely filed? How many of those are denied? What are the reasons for denial?
    
• Schedule D Loss Carry-forward – Issue: the 2003 1040 instructions for this schedule did not contain, as in previous years, the Capital Loss Carryover Worksheet where taxpayers calculate how much of their capital gains losses for 2003 have to be carried forward to the next tax year (2004) because of the limit or cap on capital gains loss deduction. Instead, the instructions tell the reader to wait till next year when they can use the Worksheet in the 2004 instructions. It does tell them that if they wish to figure their carryover amount, now, they can use the Capital Loss Carryover Worksheet in publication 550, Investment Income and Expenses.
  
  The subcommittee would like to make it easier for taxpayers and preparers alike to know what the carryover amount is from the prior year when a current year tax return is being prepared. The suggestions are:
  1. add a line to the Schedule D 2004 where the taxpayer shows their 2005 “short-term capital gains loss carryover” and, a line for the 2005 “long-term capital gains loss carryover” and, by;
  2. overlaying the Worksheet onto the Schedule D itself, on page 2.

  The subcommittee wondered whether there would be any computer programming barriers to adding lines. Thus, some research is needed so, Knispel will complete/gather data and provide it to the subcommittee that includes:

  • How many Schedule Ds are filed annually showing capital gains loss carryovers? Hopefully the statistics will help support the recommendation. The subcommittee believes that the recommendation would create savings in paper costs to the IRS, and improved accuracy in reporting when the information is available on the tax return itself.
  • Talk to analyst assigned the draft 2004 Schedule D to get stats above and to; 1) ascertain deadline for submitting recommendations to be considered for the 2004 version and; 2) about any programming or other barriers to adding 2 lines and a worksheet to the Schedule D.

  Because comments/changes to the draft 2004 Schedule D are currently being accepted this recommendation needs to be drafted very soon, so Knispel will provide the information to the subcommittee before the next meeting so that they may begin to draft the proposal.

• Improving the IRS Website for Practitioners - The subcommittee viewed and searched items at the IRS site during their breakout. Some items could be found but took several clicks and searching on various pages to locate. Information on yet other topics could not be easily found. The search feature returns too many options in most instances. The intent is to ease the finding of information and reduce the time it takes to navigate the site for information. Examples of information commonly used are IRS’ toll-free phone numbers and IRS’ addresses. The full committee also searched the site for office locations or telephone information – it could only be found quickly by clicking on the “contact us” tab from the home page, yet the page did not let the reader know this. Members of this subcommittee need to narrow down what it is they want improved at the site and the reasons why.

Procedures and Processes Subcommittee – Acting subcommittee chair Gedge reported on the issues listed below and the respective decisions made concerning the issues by the subcommittee during their breakout session yesterday. Since four of ten members were absent, for purposes of this meeting, the members of this subcommittee were Gedge, Shuman and Nagel.

• New ITIN Requirements – Gedge explained that the issue needs refining as indicated by emails from the TAP staff to Ghoniem. Since Ghoniem was unable to attend this meeting, the subcommittee agreed to postpone discussion and decisions on this issue
  
• Quality Control of Correspondence – This issue stemmed from a contact Schuman received from a Vermont taxpayer who had received an IRS interim letter in response to a written request he made to IRS to have an installment agreement amount changed due to financial difficulties. The interim letter – letter 2645C - did not correctly address the taxpayer’s letter or account situation as it told the taxpayer “to disregard any notices received” while they worked on his request. Also, it did not remind him that he should continue making his payments AND that penalty and interest always accrues on unpaid balances. As a result, the taxpayer disregarded his monthly installment reminder notices and his agreement defaulted. The Committee submitted a proposal to the IRS that a quality control process be implemented to review the letters and correspondence sent to taxpayers. The IRS replied that a 100% review would not be possible but that statistically valid quality sampling is done on letters.
  
  The committee felt the IRS response did not really address the issue the proposal attempted to make. The committee wishes to better define and re-submit this proposal. Therefore, Knispel found out that there are two types of IRS systems that create letter/notices and that each system works differently. CP or (computer paragraph) notices are computer generated notices triggered by computer indicators. Correspondex letters are response letters with manually selectable paragraphs. The taxpayer from Vermont received one of the latter.
  
  After further discussion, the subcommittee determined some further research is needed so, Knispel will complete research and provide it to the subcommittee that includes:
  • What are the guidelines given to/used by IRS employees who issue Correspondex letters that tells them what paragraphs to select and which not to select?
  • Is the taxpayer’s letter actually been read by the employee ‘writing’ the interim letter before they send the Interim letter?
  • Is the status of the taxpayer’s account taken into consideration when the paragraphs are selected?

• Adding a Penalty and Interest Statement to Letters - The subcommittee wishes to include a Penalty & Interest statement to letters sent to taxpayers to alert them of the continued accrual of penalty and interest on any unpaid balances, even while their problem or request is being worked or looked at. Knispel confirmed that all CP notices sent on accounts with a balance due already alert the taxpayer to this very clearly. Since this issue is related to the one above, the same research applies:
  • What are the algorithms used to define the paragraphs chosen to create a specific IRS letter? In the example of the taxpayer from Vermont, the IRS letter 2645C should have explained that the taxpayer was subject to accrual of penalty and interest because he had an unpaid balance on his account.

Media Training
Media Specialist Riley presented members with hints on establishing media contacts and behavior practices during media interviews. She also spoke about IRS press releases and ways to advertise the TAP. She offered to help the members and staff in any way that she could with regards to media in her geographic areas of responsibility which are all the Area 1 states, except for Connecticut and New York. Dianne Besunder is the Connecticut contact and Kevin McKeon is the NY contact.

Guest Comments
Fish indicated that a major problem with the IRS is that of communication via the toll-free phone line. LTA Boucher agreed saying that this problem causes many taxpayers to refer their individual tax concerns to the TAS. The most common problems related to individual taxpayers’ accounts, Boucher said, are those involving EIC, OIC and amended tax returns (1040X) issues. When Boucher described the problems concerning the amended tax returns, he explained that the most common is that of the long time it takes the IRS to process this type of return. Another common problem seems to be that amended returns frequently get lost at the campuses. Boucher said the IRS’ timeframe for providing an initial response is 45 days. The deadline is rarely met due to staffing shortages, processing delays or lost Forms 1040X.

Another problem is delays in the Appeals Office. The IRS sends taxpayers Letter 105C indicating that he/she has two years to appeal his/her case in the Federal Tax Court. However, if the taxpayer has decided to appeal via the IRS, a delay in the processing of his case could cause him/her to miss the deadline for the Tax Court appeal.

Finally, Boucher explained to the members the power of the Taxpayer Assistance Order (TAO) used in TAS as a tool to direct other IRS organizations to carry out an action.

Closing Assessment
Grimaldi thanked all the members and guests for their participation in the meeting.

The meeting closed at 11:10 AM ET.

The next meeting will be a teleconference on June 29, 2004 at 11:00 AM ET.