January 8, 2003

The TAP members for the Area Four Committee met via telephone on Wednesday, January 8, 2003. The purpose of the meeting was to discuss taxpayer issues.

Members in Attendance:

• James Abraham
• Robert Burke
• David Cain
• Frank Claudman
• Ivan Cotman
• Daniel Drumel
• Robin Gausebeck
• Richard Greenberg
• Larry Lexow
• Leslie Malcolmson
• Robert Meldman
• Dick Murphy
• Teresa Smedley
• Richard Morris
   
   
• TAP Analyst: Mary Ann Delzer
• TAP Program Manager: Sandy McQuin

Roll call was taken.

Discussion of Issues
Meldman began the issues discussion with comments about the focus the panel should take. The mission is to look at systemic problem at the IRS and are not a lobbying group taking on legislation. Can pass legislative issues through the Joint Committee and the to the National Taxpayer Advocate (NTA) for possible inclusion in the Report to Congress. Primary function should be to look at systemic and procedural problems that can be resolved within the IRS.

Abraham stated that taxpayers have many concerns that Congress should know about. Malcolmson stated she felt she was the one person on the panel who represented the private foundations and some problems require legislation.

Cotman stated the TAP should use the Joint Committee to forward these issues. Greenberg agreed that the TAP can most effective on systemic issues. Smedley thought the panel would only experience frustration if tried to take on legislative issues and should focus on systemic issues.

Meldman expressed concern that the members not give the public the idea that the TAP can change legislation and so need to maintain credibility. Morris stated focus should be on grassroots customer satisfaction and service. The TAP has the opportunity to relate their recommendations to the Commissioners of the Operating Divisions for real improvement.

Form 990 - Committee plans to meet in January.
ACTION: Meissner will report during the February meeting.

SIMPLE IRA - Lexow shared that the CAP had received correspondence last March from Carol Gold, Director Employee Plans, indicating that she had requested Treasury review of the position taken in Notice 98-4.
ACTION: Delzer will follow up with Gold and report back to sub-committee.

Just-in-time Notification - Smedley shared that the committee had one meeting about how the IRS can share information with individuals and business in a more timely fashion in preparation for the filing season. Claudman has prepared a report for the committee from his the point of view working for H&R Block.
ACTION: Smedley will hold a conference call and the sub-committee will report in February.

30% Depreciation - Abraham requested Gausebeck send him the research done on the issue as he has had questions as well from practitioners.
ACTION: Gausebeck will forward research to Abraham.

Simplification/reduction of excise tax paid by private foundations - Malcolmson proposed that she write a proposal for the Joint Committee as this is a legislative issue. ACTION: Malcolmson to prepare a report for presentation to Joint Committee.

Taxpayer Correspondence - No subcommittee meeting held.
ACTION: Delzer to coordinate with panel member from Area 7 and facilitate a meeting before February meeting.

Increase in Capital Loss - Abraham presented his recommendation for increasing the capitol loss deduction. Agreement to send forward to the Joint Committee as it is a legislative issue.
ACTION: Delzer to send report to Joint Committee for their consideration.

New Issues
Delzer reported four issues were received since the last meeting.

1. Abraham presented the issue: Transfer of 401Ks and IRA's to educational non-profit entities. Taxpayers can not donate the proceeds of these plans without paying the tax due. Discussion around concern that this is a legislative issue as well and that educational institutions and charities have lobbyist to work this issue.
   No ACTION.
2. Abraham presented the issue: Elimination of supporting forms for 1040A. Issue brought up by VITA and TCE volunteers who see a savings in training time and printing/processing to use the 1040 forms/schedules as opposed to those specifically designed for the 1040A. Formed sub-committee-Abraham (chair), Cain, Gausebeck, Malcolmson, Greenberg.
   ACTION: Abraham will hold sub-committee meeting.
3. Abraham presented the issue: Change to acceptability procedures for electronic filing. Issue brought up by VITA and TCE volunteers who assist people with electronic filing. Often returns reject when a dependent has been claimed on another return. IRS advises taxpayer must then file a paper return. Whether paper or electronic return, the information is the same on the return and determination is ultimately left at IRS. Why not allow electronic filing? Formed sub-committee-Cotman (chair), Abraham, Murphy, Cain.
   ACTION: Cotman will hold sub-committee meeting.
4. Web comment received concerning refund claims of non-profits for excise tax paid for telecommunication services.
   ACTION: Delzer to research refund process and determine extent of problem and report at March meeting.

Action Items
Delzer reported on the process of how backup withholding notices are to flow from the payor to the taxpayer, after the payors have been notified by the IRS.

ACTION: Delzer to research how the IRS communicates to payors as to what/how the backup withholding notices are to look. Delzer to report March meeting.

Outreach Report
Greenberg reported he developed a statement at the request of one of his non-profit contacts. Greenberg shared the text of the message. Meldman suggested the statement should be shared with the Joint Committee marketing team to develop a uniform message.

ACTION: Delzer to forward Greenberg web statement for Joint Committee consideration.

Murphy shared with his local government/business reporters the filing season message press releases for the benefit of local subscribers.

Meldman and Morris will attend Surgent's Tax Camp, sponsored by WICPA, in De Pere on January 13, 2003.

Office Report
Delzer is working on pulling together the face-to-face meeting in Cincinnati. The plan is to include a service center tour and business/public meeting. The date of the meeting will still be during the week of April 28, 2003.

ACTION: Delzer to continue to plan Cincinnati trip and give update at February meeting.

Public Comment
Susan Morgenstern, Attorney at Law, Legal Aid Society of Cleveland presented her concerns about the Refund Anticipation Loans (RAL)being offered by many tax professionals, which can turn into multi-year loans at very high interest rates.

Claudman clarified that the interest rates may be 200% annually, but most loans are for 2-5 days and so the interest is prorated or is terminated if the debt indicator alerts of a refund offset.

Morgenstern stated that she has had an experience where a client has been audited and the refund has been delayed for more than 7 months.

Morris stated that the NTA has expressed her concerns about the RAL program. This issue does impact a part of the population that do not have bank accounts and so can not take advantage of direct deposit.

ACTION: Delzer will contact Morgenstern to assist her in writing a letter which the panel can forward to the Joint Committee in support of the NTA's position on the issues.

Attachments:

Author Abraham; Limitations on Income Tax Deductions on Capital Losses
Author Abraham; New Tax Issues
Author Greenberg; Web statement

Next Scheduled meetings:
February 5, 2003, 11:00 a.m. CT

Agenda items due to Delzer by January 24, 2003

1. Sub-committee reports
2. New issues
3. Outreach report
4. Office report