Area 5 Committee Meeting Minutes

Taxpayer Advocacy Panel
Area 5 Face to Face Meeting
Sheraton Lakeside Chalet
St. Louis, Missouri
February 6-7, 2004

Opening of Meeting February 6, 2004
Meeting was opened at 9:05 AM CT.

Present

• Linda Bader
• Laura DeMarais
• Dianne Glass, DFO
• Maria Hermann-Pariente
• John Hollingsworth
• Steve Landauer
• Tom Seuntjens
• Paul Smathers
• Jeana Warren
• Nan Wilson
• Lillian Woo, Chair

Absent

• Lydia Brasch
• Patrick Castleberry
• Frank Woods

Guests

• Steve Bankler, CPA
• Pam Pessin, Revenue Officer Technical Advisor, St. Louis
• Olga Rhodes, Area 5 TAS Director, Dallas
• Melanie Sturgis, Area 5 Analyst, Dallas
• Ramona Wooten, Revenue Agent Technical Adviser, St. Louis
• Joe Zelle, Local Taxpayer Advocate, St. Louis

Guest Speakers

• Bill Sonnack, Local Taxpayer Advocate, Houston
• Michelle Eldridge, Area 3 Group Manager, Field Media Relations Branch
• Kris Moore, Field Media Relations Specialist, Springfield, IL

Staff

• Sandra Ramirez, Area 5 Program Manager
• Audrey Y. Jenkins, Area 5 Program Analyst

Welcome/Announcements/Review of Minutes
Seuntjens recommended checking a draft of the January minutes to verify attendance.  He also suggested minutes should be sent to Ramirez, Glass and Woo prior to sending them out to the entire committee. Woo suggested that the minutes should be drafted more quickly after each meeting.  DeMarais made a motion to have minutes corrected and approved in a timely manner.

ACTION: Jenkins to correct January minutes for consideration/approval at March meeting.

FACA & Sub-Committees
Ramirez apologized for TAP Director Bernie Coston's absence, and conveyed his regrets. Ramirez read IRS legal counsel's response to the inquiry submitted by Sandy McQuin regarding how FACA rules apply to: 1) public availability of documents and other materials to be discussed or used at TAP meetings; 2) public availability of information and materials discussed in the TAP “subcommittees.”

The legal counsel responses were:  

1) When practical, TAP is obligated to provide to the public, documents and other materials to be discussed during open meetings (unless the documents are exempted under FOIA) either before or at the meeting. (Source: IRS, Office of Chief Counsel, General Legal Services Opinion 155355-03.)

2) If the subcommittee is engaged in information gathering and will not report directly to the IRS, TAP is not required to open the meeting or provide the materials to the public.  (Source: IRS, Office of Chief Counsel, General Legal Services Opinion 155355-03.)

DeMarais asked whether members of the public who attend meetings regularly can make one blanket request for materials and minutes or need to make a new request for each meeting.  Ramirez questioned this practice as the public would have to contact the support office each time they intend to attend a meeting, and the analyst will provide meeting information along with materials at the time of the request. Woo stated that the normal procedure has been that materials are automatically mailed to members of the public who attend meetings on a regular basis.  Woo asked Jenkins to check with Delzer about our past practice.

Rhodes suggested that it might be helpful to send handouts to the local (LTA) office or hotel prior to face-to-face meetings. Woo stated that the Committee needs to inform regular public attendees there has been a change in staff and ask them to contact Jenkins for the information and materials for the meeting.  DeMarais requested that Jenkins ask members of the public if they would like appropriate minutes and other reading materials related to the meeting as they request to be put on the call. Jenkins responded that she was willing to do so.

Minutes were not available for members at the meeting as they were sent out by e-mail.

DeMarais requested that in the future, minutes be included in meeting packets. Smathers requested that an agenda sent to members in advance of the meeting would be much appreciated. Seuntjens suggested bringing extra copies of the minutes to the meeting in the future for the committee members who do not bring their own.  Woo asked Ramirez if the FACA information she was sharing was the official opinion and could it be distributed.  Ramirez informed her that it was an official legal counsel opinion, and the attorney has requested that it not be disseminated. Ramirez offered to provide a written memo expressing the opinion.  Woo responded that the minutes should capture the essence of the opinion. Ramirez agreed.  Woo stated that she wanted the source quoted as well.

ACTION: Ramirez to prepare a written policy statement to be shared with the committee, based on IRS Counsel Advice regarding FACA and public participation at meetings.

Hermann-Pariente asked why we haven't been receiving the monthly research data reports from the website prior to our meetings. Ramirez said Jenkins will be sending them out, it was an oversight if Delzer used to do it.

ACTION: Jenkins will send out database reports prior to each meeting.

OIC Presentation- Bill Sonnack
Revision to OIC Form 656: Sonnack stated that the revisions to OIC Form 656 are designed to make it easier to understand and to file.  A new first page includes a series of questions and explanations that screen the eligibility of taxpayers to file an offer in compromise.  This simple process lets taxpayers know immediately if they are eligible to file an offer.  In addition, the revised form includes a summary checklist to assist the taxpayer in providing the OIC office with all the required information.

Testing of OIC Form 656
Sonnack indicated that, as far as he knew, there had been no testing on the revised form.  Seuntjens asked whether there was any public testing done.  He wanted to see the form to see why there was there was no testing or public feedback. Sonnack stated he asked his office assistant to look at the form to get input from someone with no knowledge of the form and no background that would help make the form more understandable. He received good feedback from this informal test. Hermann -Pariente asked whether or not the form was going to be implemented without being field tested. Sonnack stated yes.   Sonnack said the goal was to finish revisions by April. Sonnack said he and Woo had spoken about the committee looking at the new, draft form and suggesting ways to improve it, but that there would be a short turnaround time for getting suggestions to him. Sonnack will send the draft electronically to staff and they will get it to the members. Woo noted that Area 5's assessment could also be considered for the next tax cycle.

OIC cases and processing
Sonnack said that in 2003, there were 65,325 OICs, a 13% reduction from the previous year. The average OIC settlement was $0.09 on the dollar. Asked about the total dollar volume of OIC, Sonnack indicated that he would email  Woo the amount compromised in 2003.
ACTION: Sonnack will email Woo the total dollar volume of OIC in 2002.

Sonnack noted that the AICPA recommendations were considered, particularly with regard to hardship circumstances. IRM 5.8 of OIC is also being revised with a tentative delivery date of spring 2004. Sonnack explained there would be a pre-rejection letter, which will give the taxpayer an opportunity to work with the agent.
ACTION: Sonnack asked Committee members to send him anecdotal examples regarding OIC submissions and the kind of problems seen.

Application fees
Sonnack addressed the possible change in OIC application fees: waiving a second application fee for a resubmitted OIC that had originally been returned.

Financial information
SB/SE recently relaxed requirements for updated financial information. Landauer stated that since, in his limited experience, the OIC processing time is very long, taxpayers are usually asked to resubmit updated financial information.  Hermann -Pariente asked Landauer what professionals charge taxpayers for OICs.  He stated that offers take approximately takes 40 to 50 hours to work and take at least a year to process.

Length of time to settle OIC
Sonnack said that an IRC 7122 provision addresses improvements to OIC processing.  For example, one issue was the number of OICs taking 6 months to be added to the tracking database.  Hermann-Pariente asked what the fundamentals in considering offers are.  Sonnack explained that the life of the statute is considered, which can be from 10 to 15 years. Retired debt is also considered, since a retired debt can increase the taxpayers' income potential. Sonnack pointed out that there seems to be no uniform treatment among field and central OIC offices of OIC cases. Some offers are sent to centralized sites, and the more complex ones are handled in local field offices.

Volume of OIC cases 
Landauer asked for the number of OICs submitted and the number of OICs closed.  Sonnack will get this information.  Woo asked how TAP could help specific issues within OIC.  Sonnack identified the two main areas of concern: 1) the process and 2) the technical.
ACTION: Sonnack will send Woo information about the number of OICs submitted and the number of OICs closed in 2002.

OIC Form 656 current and draft: Seuntjens asked if Sonnack could send out the current form and the draft.  DeMarais requested hard copies.  DeMarais stated that the master list of TAP issues list should be checked, since other committees might be working on OIC. Seuntjens requested a copy of the open issues list.
ACTION: Jenkins will e-mail all the members the current and proposed revision of Form 656 and send copies via regular mail by February 9, 2004.

ACTION: Jenkins will locate the staffer at Forms and Publications who is responsible for OIC Form 656, relate to him/her that Area 5 is reviewing the proposed changes, and find out what the deadline is for comments.

ACTION: Woo will check the TAP issues matrix and determine what committees are researching OIC.

ACTION: Woo will invite other TAP committee members, who are examining OIC, to review the proposed changes to OIC Form 656.

ACTION: All committee members may review the draft for OIC 656 and send their comments to Smathers and Woo by Wednesday, February 18, 2004.

Collection
Sonnack noted that OICs, although around for a while, did not become popular until 1989, when then IRS commissioner Fred Goldberg attempted to address non-compliance issues. Bader asked what happens if a taxpayer submits an offer which is not accepted and has no resources to pay the bill. Sonnack stated that the taxpayer can file an appeal. In other cases, the account proceeds through the normal outstanding account process. If there are no assets, the case is declared uncollectible.
Rhodes cited a current case in a local TAS office. In this case, the taxpayer has a 401K and property, but claims he is unable to pay the debt. IRM 5.8.5 explains how the category of “non expenses” is determined for an offer. This procedure is different those used in installment agreements.

Public Input
Steve Bankler indicated that he emailed Castleberry, Glass and Jenkins a copy of the new draft Form 656 on January 13, 2004 assuming it would be distributed to Area 5 members. He agreed with the changes to the form.  Bankler also mentioned that some changes had been made to Schedule M (large income businesses). Bankler characterized as ridiculous the NTA's suggestion that one would have to back-up withholding on painters and contractors. He said that the National Taxpayer Advocate should bounce her ideas off of the public before she submits them to Congress.

Taxpayer Advocate
Rhodes asked the committee whether they have been included in LTAs' outreach efforts. Seuntjens stated that the LTAs should be contacting the panel to see if there is anything they need them to do. Ramirez offered to ask LTAs to include TAP members in their outreach. Wilson said she has been invited to a teleconference by her LTA. Zelle also encouraged the group to speak with TEC which is responsible for outreach. Seuntjens stated that he wants to go along to listen to the presentation and the questions that are asked and does not necessarily have to make presentations.  Glass stated that last year Hermann-Pariente, Bader, and Warren staffed the booth at the Tax Forum. Some Area 5 members stated that they had never been contacted by their LTAs. Hollingsworth stated that TAS should do better in notifying the committee.  Rhodes acknowledged this. Smathers said it could something simple as an email.
ACTION: Rhodes will contact LTAs reminding them to involve TAP members in LTA and IRS-sponsored events, when appropriate.

National Office Report Highlights
Glass stated that the top 20 issues noted in the NTA's Annual Report to Congress were delivered to the staffers on 1/26/04.  The number of taxpayers effected determined the top issues. The number one issue is AMT.  There are 2.4 million taxpayers currently effected but this number will increase to 30 million by 2010.

Another top issue involves the level of service at TACs. Seuntjens stated that the Ad Hoc Committee is currently examining this issue.  The Joint Committee hosted a public meeting on TACs recently.

Landauer asked whether the IRS matched 1099s to Schedule Cs. Zelle stated yes.  Seuntjens suggested that Landauer write up a proposal on itemizing 1099s on Schedule C. Ramirez noted that this is an issue more appropriate for the Schedule C Nonfiler Committee.  Page four of the Report states that the service is proposing changing the filing extension from April 15th to March 15th. Taxpayers who file extensions know by March 15th whether they will need an extension or not. Wilson stated that many years ago it was March 15th.

Progress of Elevated Issue Update

6251 suggestions
Woo stated that although it was submitted too late for inclusion in the 2003 form, the recommendations on Form 6251 have been received by Forms and Publications. These suggested changes will be considered by Forms and Pubs, and a response will be sent to the committee by April 2004.

AMT proposal
To date, Area 5 has not received any official confirmation on the AMT proposal sent to NTA in May, 2003.  However, this proposal, which recommended that AMT become a top priority of the NTA, is the #1 priority in the NTA's 2003 Annual Report to Congress.

Free File
Members of the individual e-file subcommittee felt that the program owner's response reflected either a misunderstanding or a miscommunication of the six proposals from the subcommittee. Seuntjens recommended a parallel review of the six recommendations and Lutes' response. Hermann-Pariente volunteered to draft a written response to Lutes stating there is a misunderstanding since the recommendations proposed were not directly addressed. Ramirez asked members to please send the response via the staff and not directly to Lutes.
ACTION: Hermann will draft reply to Lutes' response regarding recommendation 03-003.

Sub-committee Reports/Recommendations

E-Filing
Hollingsworth sent out an article from CBS Market Watch, which is also available in Spanish. North Dakota just worked a deal with the state to E-file state returns. E-file in this state has increased substantially.

E-File for VITA & AARP
DeMarais stated that they are beginning to do this year's returns using the E-File program, but since the filing season is just beginning, she does not have enough data to report much at this time.

Address Change
DeMarais found that there is a partnership between the Postal Service and the Internal Revenue Service in which address changes are shared. DeMarais requested Jenkins to send her any updates from SAMS since September, 2003 when Delzer did a search.   From the information DeMarais has obtained so far, it appears that there must be an exact match of first, middle initial and surname before the IRS can receive an update from the Postal Service.
ACTION: Jenkins is in the process of locating the knowledgeable individuals on the National Change of Address program to meet with subcommittee.

ACTION: Jenkins to check SAMS database for undelivered mail issues.

Forms Testing
Wilson and Landauer believe that long term benefits of forms testing outweigh the current costs of testing. Perhaps more resources could be invested in testing a larger number of forms. 450 forms/instructions were revised in 2001. Error rates went down on the forms that had been tested. It was suggested that Jenkins check with Mary Peterson because her issue committee has been looking at forms testing issues. Seuntjens asked Jenkins to send out a template for action items. Ramirez stated that we need an update of the progress of the Forms Testing Committee. EITC forms are the only forms falling in the top 20 problems (per the NTA Annual report to congress) that have been tested.
 
Landauer spoke with Michael Brostek of GAO about the IRS' forms testing process. Landauer noted that the IRS indicated that written criteria would be created for forms testing. The subcommittee needs to have a conference call with someone from the IRS that can provide an update regarding the forms testing process.
ACTION: Jenkins will find out what aspect of forms testing Peterson's committee is examining.
ACTION: Jenkins will send out template for action items to Area 5 members.
ACTION: Jenkins will set up a Subcommittee conference call with an IRS forms testing specialist.

Personnel/Training of IRS staff
There was a conference call between Landauer, Castleberry, and Adriane Thormahlen from personnel, but Landauer felt that Thormahlen was not very knowledgeable. There was a motion to drop this issue. Hermann and Smathers voted in favor of the motion. Bader suggested the issue be confined to adequate training or needed training; Wilson wanted to table the motion until Castleberry could comment. Warren agreed with Wilson. DeMarais, Hollingsworth, and Seuntjens requested more information before making a decision about this issue. Members agreed that the subcommittee should make a recommendation to the committee at the end of April. In the interim more information will be provided to subcommittee members.

ID theft
Bader handed out the FTC's ID Theft booklet printed May 2003.  Bader stated that identity theft is not limited to the IRS.  She has been in contact with area hospitals. From her research, it appears that the IRS should deactivate the social security number of a deceased person. An alternative to deactivation would be to tag the SSN of a deceased person so that if a tax return is filed with that number, the return will be flagged immediately.  In conversations with the IRS, Bader found out that the IRS has certain processes in effect.  Seuntjens agreed that all social security numbers should be deactivated.  Bader has been speaking with hospitals and is continuing working on this issue.

Audit Methodology
Seuntjens recommended this issue be placed in the parking lot.

Transcripts
Warren stated that taxpayers are no longer able to walk into the assistance centers and obtain a transcript of their account. She will continue exploring this issue.

Opening of Meeting February 7, 2004
Meeting was opened at 9:03 AM CT.

Prioritization of Issues
Woo asked that the members state the amount of time they need to develop their issues, when they think it would be ready to bring to full committee, and, what help, if any, is needed from other members.
ACTION: Woo will ask Woo ds and Brasch to select a subcommittee.

Address Change
DeMarais stated that the main concern is determining why taxpayers don't get their mail from the IRS. The SAMS information provided by Delzer shows that either the taxpayer just isn't responding to correspondence or is not receiving correspondence. Are taxpayers notifying the IRS when they move? How do they know that they have to inform the IRS when they move?  There is a need to examine current procedures and the IRS and national postal databases.  DeMarais believes that after filing season, this subcommittee can present recommendations to the full committee.

E-Filing for VITA/TCE
DeMarais, chair, and Hermann-Pariente. They feel they can work on this issue during the filing season.  Information from VITA site coordinators, whose sites provide e-file, will provide a better perspective about any improvements that should be recommended. DeMarais is not sure what, if any, attention is needed to the volunteer training component, or if there are problems with the certification and testing. Also, since only 2% of filed returns are VITA or TCE prepared, the program may need expanding. Herman-Pariente is interested in VITA along the border areas of the U.S. DeMarais and Woo feel that a discussion with someone knowledgeable about e-filing at VITA/TCE sites would be helpful as well.
ACTION: Jenkins will set up meeting with VITA/TCE site e-file specialist.

ACTION: Glass will e-mail DeMarais and Hermann -Pariente names of their local SPEC coordinators.

Free-File
Hollingsworth, Chair and Hermann-Pariente, DeMarais, Seuntjens and Woo. All agreed that Terry Lutes' written response reflected a miscommunication or misunderstanding of the recommendations. The response will also ask about the level of success with FreeFile last year, about the confidentiality of information, and for a status report on the free printing offer from IRS.
ACTION: Hollingsworth will replace Hermann as author of reply to recommendations and send to Woo for presentation to Joint Committee meeting on February 17.

Identity Theft
Bader, Chair, will continue researching issue.
 
Forms Testing
Wilson, Chair, Landauer and, Castleberry . Wilson would like information and data about forms testing in the last 2 years, what are the plans for future testing, etc. An update will be provided at the next meeting.
ACTION: Jenkins will get information and data requested by forms testing subcommittee.

Transcripts
Warren, Chair, will report by the next meeting. She also hopes to find out what has happened since the TACs stopped offering transcripts in October 2003.

OIC – Form 656 Testing
Smathers, Chair, Castleberry, and Woo. Woo will find out which other TAP committees are examining OIC.
ACTION: Woo - same as under OIC presentation.
ACTION: Committee- same as under OIC presentation.
ACTION: Smathers - same as under OIC presentation.

Itemizing 1099s on Schedule C
Seuntjens, Chair, Landauer, Warren, and DeMarais. Seuntjens suggested this issue as “an antidote” to the NTA's proposal to withhold taxes on Schedule C filers to improve compliance and reduce tax gap. He stated instructions for Schedule C need to be reviewed by the subcommittee members.

Personnel/Training (educational requirements) Issues
Landauer, Chair, Smathers, and Castleberry. Zelle and Glass said they would locate contacts for the subcommittee. Smathers indicated the following website for GAO report on training; www.gao.gov/new.items/d04291.pdf
ACTION: Glass will find IRS personnel specialist and set up conference call.

Parking Lot
VITA Locations
Audit Methodology

Outreach Report
Hollingsworth spoke with students about E-Filing.

DeMarais manned the forms rack in the Public Library.  The most frequent questions she was asked included, “Who uses a 1040?” and ”Who uses the 1040A?”  DeMarais stated that she wanted to look into eliminating Form 1040A.  She was involved with her local SPEC to help train volunteers at a South Minnesota VITA Site.

Woo attended a stakeholders meeting.

Hermann-Pariente attended meetings of the Chamber of Commerce, SBSE, VITA, and AARP.
 
Smathers informed teachers at a school about the IRS websites.  He attended a SRMLC meeting and offered to speak at a Teachers Business Club meeting.

Bader was featured in an article of the AAUW Newsletter.

Wilson was in contact with her LTA.

Warren attended a Tax Coalition of Texas CPAs meeting.

Landauer had a conference call with stakeholders.

Seuntjens had nothing to report.

Office Report
Jenkins had nothing to report.

Public Input
Steve Bankler stated that before there was the National Taxpayer Advocate Service there was the Problem Resolution Officer. In his recent dealings with the Taxpayer Advocate, he realized the old Problem Resolution Officer was empowered to cut through the red tape of the IRS. If a practitioner or taxpayer had not had success with the IRS in resolving their problem they could get into the Problem Resolution Program. They would do two things; 1) they would find out if you had a problem and then resolve the problem and 2) while they were doing that they would in turn go to the IRS and say here is a systemic problem, fix it.

After the Taxpayer Advocate Service was set up, the understanding among most practitioners was this is just a new name and, instead of reporting to the District Director of the IRS they now have their own division but they are basically the same (as the old Problem Resolution Program). What Mr. Bankler has come to find out is that it is not the same, when you have a problem at the IRS and you can't get someone to fix it and you go to the Taxpayer Advocate they have no authority to fix the problem. He described a recent hardship refund case for a client. He went to Local Taxpayer Advocate Dianne Glass's office for relief. The office determined the taxpayer should receive their refund, but they had no authority to fix the problem to release the refund. The Advocate's office had to request a manual refund from ACS Collection. Bankler said that under the old system, with the Problem Resolution Officer the taxpayer would have had the check in a matter of five days. Four weeks later we were still wondering where the check was! The Taxpayer Advocate Service is independent from the IRS, but they no longer have the authority to fix the problem. They can write up the paper work and forward to systemic. Meanwhile the taxpayer is waiting a lot longer for the problem to be solved. He does not think this is a legislative change but a delegation of authority change. He thinks that the Taxpayer Advocate Service needs to go back to the IRS/Commissioner and request re-delegation of authority to fix these problems on behalf of taxpayers and their representatives, while the IRS recommends the systemic changes to make the overall fix.

Maria Hermann-Pariente asked Bankler whether he had entered that information on the TAP web-site. Bankler stated no, because he was dealing with the Taxpayer Advocate Office, he assumed it would be forwarded. Hermann-Pariente stated that it would help if he put the information in writing at www.improveirs.org and record that. Seuntjens stated it will also be in the minutes.

Closing Comments and Adjournment
Woo closed the meeting at 11:20AM CT, February 7, 2004.

Action Items

Committee
All committee members may review the draft for OIC 656 and send their comments to Smathers and Woo by Wednesday, February 18, 2004.

Sonnack asked Committee members to send him anecdotal examples regarding OIC submissions and the kind of problems seen.

Glass
Glass will e-mail DeMarais and Hermann -Pariente names of their local SPEC coordinators.

Glass will find IRS personnel specialist and set up conference call.

Hollingsworth
Hollingsworth will replace Hermann as author of reply to recommendations and send to Woo for presentation to Joint Committee meeting on February 17.

Jenkins
Jenkins to correct January minutes for consideration/approval at March meeting.

Jenkins will send out database reports prior to each meeting.

Jenkins will e-mail all the members the current and proposed revision of From 656 and send copies via regular mail by February 9, 2004.

Jenkins will locate the staffer at Forms and Publications who is responsible for OIC Form 656, relate to him/her that Area 5 is reviewing the proposed changes, and find out what the deadline is for comments.

Jenkins is in the process of locating the knowledgeable individuals on the National Change of Address program to meet with subcommittee.

Jenkins to check SAMS database for undelivered mail issues.

Jenkins will find out what aspect of forms testing Peterson's committee is examining.

Jenkins will send out template for action items to Area 5 members.

Jenkins will set up a Subcommittee conference call with an IRS forms testing specialist.

Jenkins will set up meeting with VITA/TCE site e-file specialist.

Jenkins will get information and data requested by forms testing subcommittee.

Jenkins to distribute TAP Annual report when available.

Ramirez
Ramirez to prepare a written policy statement to be shared with the committee, based on IRS Counsel Advice regarding FACA and public participation at meetings. 

Rhodes
Rhodes will contact LTAs reminding them to involve TAP members in LTA and IRS-sponsored events, when appropriate.

Sonnack
Sonnack will email Woo the total dollar volume of OIC in 2002.

Sonnack asked Committee members to send him anecdotal examples regarding OIC submissions and the kind of problems seen.

Sonnack will send Woo information about the number of OICs submitted and the number of OICs closed in 2002.  

Woo
Woo will check the TAP issues matrix and determine what committees are researching OIC.

Woo will invite other TAP committee members, who are examining OIC, to review the proposed changes to OIC Form 656.

Woo will ask Woods and Brasch to select a subcommittee.